The directors present their report on the consolidated entity (referred to hereafter as the ‘consolidated entity’ or ‘Group’) consisting of Norfolk Group Limited and the entities it controlled for the period ended 31 March 2008.

Directors

The following persons were directors of Norfolk Group Limited during the financial period and up to the date of this report:

Rod Keller (appointed 31 May 2007)

Glenn Wallace (appointed 31 May 2007)

Peter Abery (appointed 31 May 2007)

Paul Chrystall (appointed 31 May 2007)

Deborah O’Toole (appointed 1 May 2007)

Peter Lowe (appointed 8 April 2008)

Paul Jeffares is the Company Secretary and was appointed to that position on 28 September 2007.

Since the end of the Company’s financial period, Rod Keller replaced Peter Abery as Chairman with effect from 7 April 2008 and Peter Lowe was appointed to the Board with effect from 8 April 2008.

In addition, Rod Keller stepped down from being a member of the Audit and Risk Committee and Peter Abery and Peter Lowe were appointed with effect from 29 April 2008. Peter Lowe replaced Deborah O’Toole as Chairman of the Audit and Risk Committee with effect from 22 May 2008.

Rod Keller also stepped down from being a member of the Nomination and Remuneration Committee and Glenn Wallace and Peter Lowe were appointed with effect from 29 April 2008.

Principal activities

During the financial period the principal activities of the consolidated entity consisted of integrated electrical communications, heating ventilation and air-conditioning (HVAC), passive fire protection and property services and products. The consolidated entity has operations in Australia, New Zealand and India.

Dividends – Norfolk Group Limited

Consistent with disclosures made in the Company’s prospectus, the directors of the Company did not declare a dividend during the financial period. On 27 May 2008, the directors of the Company declared a fully franked dividend of 5.7 cents on each of the issued ordinary shares of the Company. The dividend will be payable on 29 July 2008 to shareholders of record on 8 July 2008.

Review of operations

The operating profit for the consolidated entity after providing for income tax and minority interests amounted to $18,892,000.

For the review of operations please refer to the Chairman’s report, Managing Director’s report and the Review of Operations sections of this annual report.

Significant changes in the state of affairs

Norfolk Group Limited was incorporated on 31 May 2007. On 21 June 2007 the Company purchased the shares in the Norfolk Group of Companies. This purchase has been treated as a business combination under common control whereby the difference between the purchase price paid by the Company and the amount that the acquired assets and liabilities are recorded at is recognised as a reserve within equity. The Company listed on the Australian Stock Exchange (ASX) on 27 July 2007, with issued shares of 130,000,000 raising $183,157,000 of share capital net of costs. The funds raised were used to partially finance the acquisition of the Norfolk Group of Companies.

Matters subsequent to the end of the financial period

On 27 May 2008, the directors of the Company declared a fully franked dividend of 5.7 cents on each of the issued ordinary shares of the Company. The dividend will be payable on 29 July 2008 to shareholders of record on 8 July 2008.

Apart from the dividend declared discussed above, no other matter or circumstance has arisen since 31 March 2008 that has significantly affected, or may significantly affect the consolidated entity’s operations in future financial years, the results of those operations in future financial years, or the consolidated entity’s state of affairs in future financial years.

Likely developments and expected results of operations

Please refer to the Chairman’s report and Managing Director’s report.

Further information on likely developments in the operations of the consolidated entity and the expected results of operations has not been included in this annual report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity.

Environmental regulation

Norfolk Group Limited is subject to a range of environmental regulations and continually looks at ways to reduce its impact on the environment and improve its environmental performance. During the financial period there were no environmental incidents which required reporting.

Information on directors as at 11 June 2008

	Rod Keller Non-executive Chairman (appointed 7 April 2008) Qualifications Bachelor of Engineering (Mechanical) from the University of Sydney and is a Fellow of the Institute of Engineers, Australia. Experience and expertise Rod brings over 36 years’ experience in the engineering sector and has previously held management positions with Fletcher Construction Australia, the State Government of South Australia, Esso Australia, Woodside Petroleum and Santos and was Managing Director of GPU International Australia from 1995 to 1999. Other current directorships A non-executive director of Dyno Nobel Limited and Macquarie Communications Infrastructure Group Limited. Former directorships (in the past three years) Chairman of the GasNet Australia Group from its listing in 2000 to its takeover in 2006. Special responsibilities Non-executive Chairman, former member of the Audit and Risk Committee and the Nomination and Remuneration Committee. Interests in shares 25,000 ordinary shares held originally by Rodney Keller from 31 July 2007 with legal title transferred to Rodney Keller and Dianne Keller as trustees for the Keller Superannuation Fund effective 15 November 2007.
	Glenn Wallace Managing Director Qualifications Diploma in Leadership Management from the Macquarie Business School, and completed the Advanced Management Program at the University of Hawaii in 1996. A NSW Council member in the Australian Industry Group and is a Member of the Australian Institute of Company Directors. Experience and expertise Glenn Wallace is the Managing Director of Norfolk and was appointed to the role in 2004, following his role in the successful acquisition of the businesses now forming Norfolk. With more than 15 years’ experience in management roles both in New Zealand and Australia, Glenn works with other members of management to develop the strategy and business development tactics for Norfolk. Prior to joining Norfolk, Glenn held a number of senior roles including Managing Director of Tyco, having held various roles within Tyco since joining the company as National Sales Manager in 1987, and Managing Director of the Tiri Group from 2003. Other current directorships Non-executive director of Maui Capital Limited. Former directorships (in the past three years) Managing Director of the Tiri Group. Special responsibilities Member of the Nomination and Remuneration Committee. Interests in shares 2,600,000 ordinary shares held in the name of Henson Limited.
	Peter Abery Non-executive director (Chairman until 7 April 2008) Qualifications Bachelor and a Masters degree in Engineering (Electrical Engineering) from the University of Natal and a Masters of Business Administration from the University of South Africa. A Member of the Australian Institute of Company Directors, a Member of the Institute of Engineering and Technology (London) and a Member of the Chartered Institute of Management (United Kingdom). A graduate of the Harvard Business School’s International Senior Managers Program. Experience and expertise Peter has a strong understanding of the industries in which Norfolk operates, gained through many years of working in the engineering and related sectors. Peter is currently a director of National Grid Australia and pieNetworks, and previously was a director and Chairman of Digital Television Services (a joint venture in the United Kingdom between BSkyB, the BBC and Crown Castle) and a non-executive director of National Grid Australia (Basslink Limited). Peter has previously been Chief Executive Officer or Managing Director of a number of Australian and English companies including HPM Industries, National Grid Wireless (formerly Crown Castle UK), Crown Castle Australia, Vodafone Network and OPSX Communications, and has held senior management positions with Telstra Corporation and AWA. Other current directorships Director of pieNetworks Limited. Former directorships (in the past three years) None. Special responsibilities Chair of the Nomination and Remuneration Committee and member of the Audit and Risk Committee. Interests in shares 50,000 ordinary shares held by Peter Abery directly and 50,000 ordinary shares held by Yreba Investments Pty Ltd ATF the Yreba Investments Superannuation Fund.
	Paul Chrystall Non-executive director Qualifications Bachelor of Commerce from the University of Auckland, during the completion of which he received various senior prizes, including the Alfred P Foggarty Award for excellence in Economics. Experience and expertise Paul is currently Managing Director of Maui Capital Limited, a New Zealand-based private equity firm and has been a director of Norfolk since 2004. He was, until September 2007, the Head of Private Equity at Goldman Sachs JBWere (NZ) Limited and prior to joining Goldman Sachs JBWere (NZ) Limited in April 2001, Paul held a number of senior corporate finance roles in a variety of industries. Other current directorships Maui Capital Limited, Maui Capital Indigo Fund Limited, Sea+City Projects Limited. Former directorships (in the past three years) Principal executive and managing director of each of the Hauraki Private Equity No. 1 Fund and the Hauraki Private Equity No. 2 Fund Limited managed by JBWere (NZ) Private Equity Limited and was either Chairman or a director of Guardian Healthcare Group Limited, Hirepool Limited, Tiri Group Limited, Vision Senior Living Limited and BildNZ Limited. Special responsibilities Member of the Audit and Risk Committee. Interests in shares No shares held directly but Paul has an ongoing interest in the Hauraki Private Equity No. 2 Fund Limited which itself has a 19.9% interest in Norfolk Group Limited.
	Deborah O’Toole Non-executive director Qualifications Bachelor of Laws from the University of Queensland and is a Member of the Australian Institute of Company Directors. Experience and expertise Deborah has experience in finance, corporate strategy and law. Deborah is currently a director and Chair of the Audit Committee of CSIRO, a Member of the Advisory Committee for Banking and Finance of the Queensland University of Technology, a Member of the Queensland Biotech Advisory Council, as well as Chair of its Finance Committee and is currently the Chief Financial Officer for Queensland Rail. In addition to many non-executive roles, Deborah previously held a number of senior management positions with MIM Holdings, including Chief Financial Officer and was also Chief Financial Officer of Queensland Cotton Holdings. Deborah has previously held directorships with Queensland Country Health, the Workers Compensation Board of Queensland and certain subsidiaries of MIM Holdings. Other current directorships None. Former directorships (in the past three years) None. Special responsibilities Member (former Chair) of the Audit and Risk Committee. Interests in shares 10,000 ordinary shares held by Deborah O’Toole and Christopher Jones as trustees for The Raheny Superannuation Fund.
	Peter Lowe Non-executive director (appointed 8 April 2008) Qualifications Bachelor of Commerce and Master of Business Administration from Melbourne University, Member of the Australian Institute of Company Directors and a Fellow of CPA Australia. Experience and expertise Peter Lowe’s principal experience is in finance and corporate strategy in listed corporates. He is currently Chairman of United Energy Distribution Holdings Pty Ltd, and Multinet Group Holdings Pty Ltd, since July 2003 and Alinta Network Holdings Pty Ltd, since August 2007. He is also a director of Citywide Solutions Pty Ltd, Aurora Energy Pty Ltd and Snowy Hydro Limited. Peter has previously held senior management positions with CPA Australia, UtiliCorp United Inc., United Energy Limited and Fosters Brewing Group Limited. Other current directorships None. Former directorships (in the past three years) Former director of Clever Communications Limited (formerly Access Providers Limited) and GasNet Limited. Special responsibilities Chair of the Audit and Risk Committee and member of the Nomination and Remuneration Committee. Interests in shares None.

Company Secretary

Paul Jeffares was appointed Norfolk’s General Counsel and Company Secretary in September 2007. He is responsible for advising the Board and Norfolk senior management and for legal management and policy across the Group as well as acting as Company Secretary. Paul has an extensive background in general counsel, company secretarial and law firm roles with the Australian Gas Light Company, Duke Energy International, Ebsworth and Ebsworth, the National Australia Bank, Gadens and Amro Australia Limited. Paul has a Bachelor of Arts with Honours from the University of Sydney, a Bachelor of Law from the University of New South Wales, and an Executive Master of Business Administration from the Australian Graduate School of Management. He is a Fellow of the Chartered Institute of Secretaries and Administrators.

Meetings of directors

The numbers of meetings of the Company’s Board of Directors and of each Board committee held during the period ended 31 March 2008, and the numbers of meetings attended by each director were:

Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.

Remuneration report (audited)

The remuneration report is set out under the following main headings:

A   Principles used to determine the nature and amount of remuneration

B   Details of remuneration

C   Service agreements

D   Share-based compensation

The information provided under headings A–D includes remuneration disclosures that are required under Accounting Standard AASB 124 Related Party Disclosures. These disclosures have been transferred from the financial report and have been audited.

A   Principles used to determine the nature and amount of remuneration

The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders, and conforms with market best practice for delivery of reward. The Board ensures that executive reward satisfies the following key criteria for good reward governance practices:

• competitiveness and reasonableness
• acceptability to shareholders
• performance linkage/alignment of executive compensation
• transparency
• capital management.

In consultation with external remuneration consultants, the Group has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the organisation.

Alignment to shareholders’ interests:

• has economic profit as a core component of plan design
• focuses on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant return on assets as well as focusing the executive on key non-financial drivers of value
• attracts and retains high calibre executives.

Alignment to programme participants’ interests:

• rewards capability and experience
• reflects competitive reward for contribution to growth in shareholder wealth
• provides a clear structure for earning rewards
• provides recognition for contribution.

Non-executive director fees

Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors’ fees and payments are reviewed annually by the Board. The Board has also agreed to act on advice of independent remuneration consultants to ensure non-executive directors’ fees and payments are appropriate and in line with the market. The Chairman’s fees are determined independently to the fees of non-executive directors based on comparative roles in the external market. The Chairman is not present at any discussions relating to determination of his own remuneration.

Non-executive directors do not receive share options. The Company has adopted a non-executive directors Share Acquisition Plan (‘NEDSAP’) to facilitate the tax efficient acquisition of shares by non-executive directors to further align their interests with those of shareholders. Under the NEDSAP, eligible non-executive directors may sacrifice a portion of their annual directors’ fees and shares in lieu. The shares are issued or acquired at the market price of shares at the time of issue or acquisition and determined in accordance with NEDSAP rules. All Australian-resident non-executive directors are eligible to participate in the NEDSAP at the invitation of the Board.

Under the terms of the NEDSAP, the eligible non-executive directors must not sell, transfer or create a security interest or otherwise deal in the shares until a withdrawal notice has been accepted by the Board, or its delegated authority. A withdrawal notice may only be lodged within a share trading window determined by the Board and may not be lodged until:

• the vesting conditions, if any, in respect of the share have been satisfied or waived
• the earlier of the expiration of any restriction period set by the Board, the time when the eligible non-executive director ceases to be a non-executive director or an earlier time at the Board’s discretion.

The legal title to shares issued or acquired under NEDSAP will be held by a trust, for the benefit of the eligible non-executive director, for this purpose.

The current base remuneration was last reviewed with effect at 27 July 2007. The aggregate maximum annual remuneration for non-executive directors assessed at this time was $395,000. The base fee for the Chairman is $140,000 and $85,000 for the non-executive directors. There are no additional fees paid to non-executive directors.

Director fees

The Constitution provides that the directors are entitled to the remuneration the directors determine, but the remuneration of non-executive directors must not exceed, in aggregate, a maximum annual amount fixed by the Company in general meeting for that purpose.

Executive pay

There are several components of remuneration provided to reward executives, presenting a balance of fixed and at-risk portion as well as short and long-term rewards.

The Company’s executive remuneration has been structured to ensure that it:

• is reasonable
• provides a competitive compensation programme to retain, attract and reward key employees
• achieves clear alignment between total remuneration and delivered business and personal performance over the short and long term
• is an appropriately balanced mix of fixed and at-risk compensation.

In light of competitive labour markets within which it operates at the current time, the Company places great importance on the need to retain key employees, thereby avoiding disruption to operations. Accordingly, the use of both time-based and performance-based reward is designed to ensure the Company’s leadership is retained and delivers sustainable, long-term shareholder returns. The directors believe that the at-risk components of the remuneration framework will effectively align management’s interests with those of shareholders.

The Company is unable to provide information comparing executive compensation with historical investor return because it only listed in July 2007.

The executive pay and reward framework has three components:

• base pay and benefits including superannuation
• short-term performance incentives
• long-term performance incentives.

Base pay

Structured as a total employment cost package which may be delivered as a combination of cash and prescribed non-financial benefits at the executives’ discretion. Non-financial benefits may include car allowances and superannuation sacrifices.

Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. External remuneration consultants provide analysis and advice to ensure base pay is set to reflect the market for a comparable role. Base pay for executives is reviewed annually to ensure the executive’s pay is competitive with the market. An executive’s pay is also reviewed on promotion.

There are no guaranteed base pay increases included in any executives’ contracts.

Short-term performance incentives

The Company has established its Key Incentive Plan (‘KIP’) to provide incentives for its employees to achieve specific objectives that are determined by the Board on an annual basis. The KIP aims to:

• focus employees on achieving key financial, safety and operational targets
• align individual efforts with annual operating performance objectives
• reward superior individual and Company performance.

The KIP rewards senior executives and other Company employees for their achievement during a financial year of specific key performance indicators. The incentive earned under the KIP, if any, will vary depending on relative performance against a variety of targets, as detailed more fully below. Except in certain circumstances, all participants in the KIP must remain employed with the Company on the date incentives are paid to receive any award.

The potential incentives available under the KIP range between 15% and 35% of an employee’s base salary depending on the employees’ seniority and role. Of that potential incentive, 70% is linked to financial performance targets, 20% is linked to safety performance targets and the balance is linked to personal performance targets relevant to the employee’s role.

The Nomination and Remuneration Committee approves the annual targets, both financial and non-financial, for the KIP. Targets are set at both threshold and stretch levels. The committee’s philosophy in setting those targets is to establish threshold targets that represent the desired minimum outcome for each goal and stretch targets that are realistically achievable with excellent execution of the Company’s annual plan. The financial performance indicators adopted by the Board as the most appropriate measures in the current year for determining the incentives payable under the KIP are net profit after tax and net cash flow. At the end of financial period, the committee assesses the level of achievement against financial and non-financial targets. The financial determination of performance measures is determined after reviewing the Company’s audited financial results.

Long-term performance incentives (‘LTIP’)

The Company has adopted the LTIP under which eligible participants may be granted sales bonus rights, performance rights (entitling the grantee to shares for no consideration) or performance options (entitling the grantee to shares for an exercise price determined by the Board), in each case exercisable on achievement of preset time or performance hurdles. In relation to performance options granted in respect of listing:

• 50% of options are exercisable if the Company achieves a total shareholder return Compounded Annual Growth Rate (CAGR) of 15%
• Additional options are exercisable, on a linear sliding scale, if the Company achieves a total shareholder return CAGR of greater than 15%, with all options being exercisable if the Company achieves a total shareholder return CAGR of 20%.

The exercise price of performance options will be determined by the Board, but typically will be the market price of the shares, at the date of grant, determined in accordance with the LTIP rules.

The Board has discretion to determine eligible participants under the LTIP.

The performance incentives that are the subject of the LTIP lapse in certain circumstances, including on:

• expiry
• cessation of employment for cause
• cessation of employment for other specified reasons if not exercised within a period determined by the Board.

The Board has discretion to set vesting conditions, determine other lapse events and set restrictions on the disposal of, or other dealing with, the performance incentives that are the subject of the LTIP or shares issued on exercise of a performance incentive.

B   Details of remuneration

Amounts of remuneration

Details of the remuneration of the directors, the key management personnel of the Group (as defined in AASB 124 Related Party Disclosures) and specified executives of Norfolk Group Limited are set out in the following tables.

The key management personnel of the Group are the directors of Norfolk Group Limited and key executives that report directly to the Managing Director being:

• Anthony O’Shannessy – Chief Financial Officer
• Darren Robinson – Human Resource Director
• David Lee – Chief Executive – Electrical & Communications division
• David Rafter – Chief Executive – Mechanical division
• Ian Stewart – Chief Executive – Fire & Property Services division (employment terminated on 14 September 2007).

Parent – 2008

The parent employed all non-executive directors. All other directors were employed by subsidiaries of the parent.

C    Service agreements

Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows:

D    Share-based compensation

Issue of shares

Prior to the listing, Norfolk had in place an Equity Appreciation Rights (‘EAR’) plan pursuant to which a number of senior management were issued EARs. The IPO constituted a vesting acceleration event under that plan, entitling each participant to the value of the EARs allocated to him or her, payable in cash or shares at the discretion of the body administering that plan. The Board issued in aggregate 584,108 shares at the time of listing. No further shares have been issued in relation to share-based compensation during the period ended 31 March 2008.

Options

As part of the LTIP, eligible key executives of management were granted Sale Bonus Rights (‘SBR’) each being an entitlement to share options. This award included a benefit for past services and includes a further required three year service period. Following expiration of their service period, the SBRs will be exercisable by the eligible executives at no cost to them. As at 31 March 2008, the number of SBRs on issue was 1,559,766.

The terms and conditions of each grant of options affecting remuneration in this or future reporting periods are as follows:

Options granted carry no dividend or voting rights.

Details of options over ordinary shares issued to directors and key management personnel during the period ended 31 March 2008 are set out below:

With the exception of the SBR, the option price is based on the offer price at the time of listing.

The plan rules contain a restriction on removing the ‘at-risk’ aspect of the instruments granted to executives. Plan participants may not enter into any transaction designed to remove the ‘at-risk’ aspect of an instrument before it vests.

The assessed fair value at grant date of options granted to the individuals is allocated equally over the period from grant date to vesting date, and the amount is included in the remuneration table above. Fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, 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.

Shares under option

Unissued ordinary shares of Norfolk Group Limited under option at the date of this report are as follows:

Insurance of officers

During the financial period, the Company paid a premium in respect of a contract to insure the directors and officers of the Company against liabilities incurred in acting as director or officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of liability and the amount of the premium.

Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

Non-audit services

Details of the amounts paid or payable to the auditor for non-audit services provided during the financial period by the auditor are outlined in note 29 in the financial report.

The directors are satisfied that the provision of non-audit services, during the period, by the auditor (or by another person or firm on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The directors are of the opinion that the services as disclosed in note 29 in the financial report do not compromise the external auditor’s independence for the following reasons:

• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on the following page.

Rounding of amounts

The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the ‘rounding-off’ of amounts in the directors’ report. Amounts in the directors’ report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

Auditor

PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

The Company does not currently have any on-market buy-back of shares.

This report is made in accordance with a resolution of directors.

On behalf of the directors

Rod Keller
Chairman
Norfolk Group Limited

11 June 2008
Sydney