l y n o e s u l a n o s r e p r o F `Annual Report 31 December 2018 E4G Investment Holdings Pty Ltd and Controlled Entities ACN 614 735 474 Aerison Pty Ltd | www.aerison.com E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 2 Contents DIRECTORS REPORT ....................................................................................................................................... 3 INDEPENDENT AUDITORS REPORT .............................................................................................................. 5 INDEPENDENCE DECLARATION .................................................................................................................... 7 GENERAL INFORMATION ................................................................................................................................ 8 FINANCIAL REPORT ........................................................................................................................................ 9 DIRECTORS' DECLARATION ........................................................................................................................ 41 l y n o e s u l a n o s r e p r o F l y n o e s u l a n o s r e p r o F E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 3 Directors Report The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘consolidated entity’) consisting of E4G Investment Holdings Pty Ltd (referred to hereafter as “the Company” or ‘parent entity’) and its controlled entities at the end of, or during, the financial year ended 31 December 2018. Directors The names of the directors in office at any time during, or since the end of, the year are: Giuseppe Leone Daniel Hibbs Michael Fennell (Appointed 7 June 2019) Min Lu (Resigned 11 March 2020) Qiudong Qiao (Appointed 11 March 2020) Directors have been in office since the beginning of the year to the date of this report unless otherwise stated. Review of Operations The profit for the consolidated entity after providing for income tax and non-controlling interest amounted to $1,256,208 (2017: $913,604 loss). Dividends Dividends paid during the year was $521,486 (2017: $500,000). Principal activities The consolidated entity’s primary activity is engineering and construction and self-performs engineering, design, fabrication, installation, maintenance and commissioning for projects in the mining & minerals, oil & gas and infrastructure sectors. No significant change in the nature of these activities occurred during the year. Significant changes in the state of affairs There were no significant changes in the state of affairs of the consolidated entity during the financial year. Events subsequent to the end of the reporting date On 11 March 2020 Novel Coronavirus (COVID-19) was declared a global pandemic by the World Health Organisation. The impact of COVID-19 on the consolidated entity is likely to have a material impact on operational revenue and expenses if either the Australian Federal Government or Western Australian State Government were to impose a restrictive lock-down on essential services that effects the consolidated entity’s operational sites. As at the date of this report: a) The consolidated entity has the ability to materially curtail its activities during the forthcoming financial year in response to any government restrictions and social distancing requirements; b) The impacts on operational revenue and expenses cannot yet be reliably estimated; and c) The consolidated entity believes it has sufficient cash reserves to support its curtailed activities. Future development, prospects and business strategies Likely developments in the operations of the consolidated entity and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the consolidated entity. Environmental issues The consolidated entity is subject to environmental regulations under a law of the Commonwealth or of a state or territory of Australia. The consolidated entity is not aware of any breach of any environmental regulations. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 4 Directors' report continued Options No options over issued shares or interests in E4G Investment Holdings Pty Ltd were granted during or since the end of the financial year and there were no options outstanding at the date of this report. Indemnification of auditor The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company against a liability incurred by the auditor. During the year, the company has not paid a premium in respect of a contract to insure the auditor of the company. Indemnities given and insurance premiums paid to officers During the year, the company paid a premium to insure officers of the company. The officers of the company covered by the insurance policy include all directors. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the company, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the company. Details of the amount of the premium paid in respect of the insurance policies are not disclosed as such disclosure is prohibited under the terms of the contract. Proceedings on behalf of the company No person has applied for leave of Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company or 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 any part of those proceedings. The company was not a party to any such proceedings during the year. Auditor’s independence declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included within the financial report. This director’s report is signed in accordance with a resolution of the Board of Directors, pursuant to section 298(2)(a) of the Corporation Act 2001. Giuseppe Leone CEO and Executive Director Dated this 9 March 2021 l y n o e s u l a n o s r e p r o F E4G Investment Holdings Pty Limited ABN 77 614 735 474 RSM Australia Partners Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844 T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111 www.rsm.com.au INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF E4G INVESTMENT HOLDINGS PTY LIMITED Opinion We have audited the financial report of E4G Investment Holdings Pty Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 2018, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group's financial position as at 31 December 2018 and of its financial performance for the year then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. l y n o e s u l a n o s r e p r o F THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036 Liability limited by a scheme approved under Professional Standards Legislation Other Information l y n o e s u l a n o s r e p The directors are responsible for the other information. The other information comprises the information included in the Group's annual report for the year ended 31 December 2018 but does not include the financial report and the auditor's report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/auditors_responsibilities/ar4.pdf. This description forms part of our auditor's report. r o F RSM AUSTRALIA PARTNERS Perth, WA Dated: 9 March 2021 TUTU PHONG Partner l y n o e s u RSM Australia Partners Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844 T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111 www.rsm.com.au AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of E4G Investment Holdings Pty Limited for the year ended 31 December 2018, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. l RSM AUSTRALIA PARTNERS TUTU PHONG Partner a n o s r e p Perth, WA Dated: 9 March 2021 r o F THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036 Liability limited by a scheme approved under Professional Standards Legislation E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 8 General Information The financial statements cover E4G Investment Holdings Pty Ltd as a consolidated entity consisting of E4G Investment Holdings Pty Ltd and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is E4G Investment Holdings Pty Ltd’s functional and presentation currency. E4G Investment Holdings Pty Ltd is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business are: Registered office 60 Havelock Street West Perth WA 6005 Principal place of business 1st floor, 56 Ord Street West Perth WA 6005 A description of the nature of the consolidated entity's operations and its principal activities are included in the directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on the ninth day of March 2021. The directors have the power to amend and reissue the financial statements. l y n o e s u l a n o s r e p r o F E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 9 Financial Report Statement of profit or loss and other comprehensive income For the year ended 31 December 2018 l y n o e s u l a n o s r e p r o F Revenue Cost of sales Gross profit Other income Administration expenses Depreciation and amortisation expense Finance costs Marketing expenses Occupancy expenses Other expenses Profit before income tax Income tax expense Profit after income tax Other comprehensive income Total comprehensive income for the year Note Consolidated Entity 2018 $ 2017 $ 3 3 4 5 50,485,254 30,291,601 (44,530,494) (27,905,689) 5,954,760 2,385,912 34,410 (522,558) (660,325) (853,474) (104,078) 89,907 (427,862) (660,165) (282,806) (163,938) (1,220,664) (1,480,889) (591,961) 2,036,110 (779,902) 1,256,208 (666,169) (1,206,010) 292,406 (913,604) - - 1,256,208 (913,604) The accompanying notes form part of these financial statements. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 10 Statement of financial position As at 31 December 2018 l y n o e s u l a n o s r e p r o F Current assets Cash and cash equivalents Trade and other receivables Other assets Total current assets Non-current assets Property, plant and equipment Intangible assets Deferred tax assets Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Employee benefits Total current liabilities Non-current liabilities Borrowings Trade and other payables Employee benefits Deferred tax liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Retained earnings Total equity Note Consolidated Entity 2018 $ 2017 $ 7 8 9 10 11 5 12 13 14 13 12 14 5 15 15 2,255,898 1,818,998 16,995,857 10,607,323 282,020 142,218 19,533,775 12,568,539 2,928,240 3,109,130 73,710 4,029,844 7,031,794 66,709 4,703,049 7,878,888 26,565,569 20,447,427 7,812,455 6,525,468 1,045,751 5,971,245 2,991,193 878,870 15,383,674 9,841,308 88,189 983,922 67,682 129,051 311,759 983,922 80,149 51,960 1,268,844 1,427,790 16,652,518 11,269,098 9,913,051 9,178,329 3,328,647 - 6,584,404 9,913,051 3,160,005 168,642 5,849,682 9,178,329 The accompanying notes form part of these financial statements. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 11 Statement of changes in equity For the year ended 31 December 2018 Consolidated Balance at 1 January 2017 Profit after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: Convertible notes issued, net of transaction costs Contributions of equity, net of transaction costs (note 15) Dividends paid (note 16) l Balance at 31 December 2017 Consolidated Balance at 1 January 2018 Profit after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: Convertible notes redeemed, net of transaction costs Contributions of equity, net of transaction costs (note 15) Dividends paid (note 16) Balance at 31 December 2018 l y n o e s u a n o s r e p r o F Issued Capital $ Reserves Retained Total Equity $ Profits $ $ 250,000 - - - - - - - 7,263,286 7,513,286 (913,604) (913,604) - - (913,604) (913,604) - 168,642 2,910,005 - - - - - 168,642 2,910,005 (500,000) (500,000) 3,160,005 168,642 5,849,682 9,178,329 Issued Capital $ Reserves Retained Total Equity $ Profits $ $ 3,160,005 168,642 5,849,682 9,178,329 - - - - - - 1,256,208 1,256,208 - - 1,256,208 1,256,208 - (168,642) 168,642 - 3,328,647 - - - - - (168,642) 168,642 (521,486) (521,486) 6,584,404 9,913,051 The accompanying notes form part of these financial statements. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 12 Statement of cash flows For the year ended 31 December 2018 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Finance costs Income tax paid Note Consolidated Entity 2018 $ 2017 $ 47,522,444 25,240,530 (48,218,531) (28,639,299) 22,585 (553,839) - 15,582 (282,816) - Net cash generated from operating activities 25 (1,227,341) (3,666,003) Cash flows from investing activities Proceeds from disposal of property, plant and equipment Purchase of property, plant and equipment Purchase of intangible assets Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from short-term borrowings Proceeds from issue of convertible notes Dividends declared and paid Loan repaid to related parties Net cash provided by financing activities 15 16 Net change in cash held Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 7 34,500 22,500 (543,725) (7,000) (516,225) - 771,596 2,202,940 (521,486) (113,826) 2,339,224 595,658 1,660,240 2,255,898 (641,024) (15,401) (633,925) 3,000,005 2,353,670 170,027 (500,000) (86,605) 4,937,097 637,169 1,023,071 1,660,240 l y n o e s u l a n o s r e p r o F The accompanying notes form part of these financial statements. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 13 Notes to the financial statements 31 December 2018 l y n o e s u l a n o s r e p r o F Statement of significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. New and amended accounting standards and interpretations adopted The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following Accounting Standards and Interpretations are most relevant to the consolidated entity: AASB 9 Financial Instruments The consolidated entity has adopted AASB 9 from 1 January 2018. The standard introduced new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available. AASB 15 Revenue from Contracts with Customers The consolidated entity has adopted AASB 15 from 1 January 2018. The standard provides a single comprehensive model for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. This is described further in the accounting policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract period. AASB 9 Financial Instruments and AASB15 Revenue from Contracts with Customers Impact of adoption: AASB 9 and AASB 15 (which make amendments to AASB 101) were adopted using the full retrospective approach. The impact of adoption was not material to the comparative amounts in the statement of profit and loss and other comprehensive income for the year ended 31 December 2017, the statement of financial position as at 31 December 2017 and were not restated. The change to significant accounting policies and presentation of financial statements have been reflected in this report. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 14 Notes to the financial statements 31 December 2018 l y n o e s u l a n o s r e p r o F Note 1. Statement of significant accounting policies continued Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB'). Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive income, investment properties, certain classes of property, plant and equipment and derivative financial instruments. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 20. Principles of consolidation The consolidated financial statements incorporate the assets, liabilities of all subsidiaries of E4G Investment Holdings Pty Ltd (‘company’ or ‘parent entity’) as at 31 December 2018 and results of all subsidiaries for the year then ended. E4G Investment Holdings Pty Ltd and its subsidiaries together are referred to in these financial statements as the ‘consolidated entity’. Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non- controlling interest in full, even if that results in a deficit balance. Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 15 Notes to the financial statements 31 December 2018 l y n o e s u l a n o s r e p r o F Note 1. Statement of significant accounting policies continued Revenue recognition The consolidated entity recognises revenue as follows: Revenue from contracts with customers Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity : identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are initially recognised as deferred revenue in the form of a separate refund liability Sale of goods Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is generally at the time of delivery. Rendering of services Revenue from a contract to provide services is recognised over time as the services are rendered based on either a fixed price or an hourly rate. Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. Income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: • When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or • When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 16 Notes to the financial statements 31 December 2018 l y n o e s u l a n o s r e p r o F Note 1. Statement of significant accounting policies continued Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement of financial position. Trade and other receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Contract assets Contract assets are recognised when the consolidated entity has transferred goods or services to the customer but where the consolidated entity is yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment purposes. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 17 Notes to the financial statements 31 December 2018 l y n o e s u l a n o s r e p r o F Note 1. Statement of significant accounting policies continued Inventories Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value on a 'weighted average cost' basis. Cost comprises of direct materials and delivery costs, direct labour, import duties and other taxes, an appropriate proportion of variable and fixed overhead expenditure based on normal operating capacity, and, where applicable, transfers from cash flow hedging reserves in equity. Costs of purchased inventory are determined after deducting rebates and discounts received or receivable. Stock in transit is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of rebates and discounts received or receivable. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Property, plant and equipment Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation. Plant and equipment Plant and equipment are measured at cost less depreciation and impairment losses. The cost of fixed assets constructed within the consolidated entity includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets including building and capitalised leased assets, but excluding freehold land, is depreciated on a diminishing value basis over their useful lives to the consolidated entity commencing from the time the asset is held ready for use. Leased assets are depreciated over the shorter of either the unexpired year of the lease or the estimated useful lives of the assets. The depreciation rates used for each class of depreciable assets are: Class of fixed asset Depreciation rate Plant & machinery, fixtures, fittings & office equip Motor vehicles Computer equipment and software Leasehold improvements 5% - 25% 20% 10% - 40% 5% - 15% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting period date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter. An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 18 Notes to the financial statements 31 December 2018 l y n o e s u l a n o s r e p r o F Note 1. Statement of significant accounting policies continued Intangible assets Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period. Software Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life. Leases The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits. Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability. Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term. Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease. Impairment of non-financial assets Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value- in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. Trade and other payables Trade and other payables represent the liabilities for goods and services received by the consolidated entity that remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 19 Notes to the financial statements 31 December 2018 l y n o e s u l a n o s r e p r o F Note 1. Statement of significant accounting policies continued Contract liabilities Contract liabilities represent the consolidated entity's obligation to transfer goods or services to a customer and are recognised when a customer pays consideration, or when the consolidated entity recognises a receivable to reflect its unconditional right to consideration (whichever is earlier) before the consolidated entity has transferred the goods or services to the customer. Refund liabilities Refund liabilities are recognised where the consolidated entity receives consideration from a customer and expects to refund some, or all, of that consideration to the customer. A refund liability is measured at the amount of consideration received or receivable for which the consolidated entity does not expect to be entitled and is updated at the end of each reporting period for changes in circumstances. Historical data is used across product lines to estimate such returns at the time of sale based on an expected value methodology. Borrowings Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement of financial position, net of transaction costs. Finance costs Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred. Employee benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Other long-term employee benefits The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Defined contribution superannuation expense Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred. Provisions Provisions are recognised when the consolidated entity has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of amounts required to settle the obligation at the end of the reporting year. Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 20 Notes to the financial statements 31 December 2018 l y n o e s u l a n o s r e p r o F Note 1. Statement of significant accounting policies continued Fair value measurement When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement. For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. Issued capital 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. Dividends Dividends are recognised when declared during the financial year and no longer at the discretion of the company. Business combinations The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired. The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss. On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date. Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss. Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 21 Notes to the financial statements 31 December 2018 l y n o e s u l a n o s r e p r o F Note 1. Statement of significant accounting policies continued The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non- controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer. Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value. Goods and Services Tax ('GST') and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. New accounting standards and interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 31 December 2018. The consolidated entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below. AASB 16 Leases This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The consolidated entity will adopt this standard from 1 January 2019. The present value of the payments relating to lease commitments, in commitment note 24, would give rise to a right of use asset and lease liabilities being recognised under AASB 16. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 22 Notes to the financial statements 31 December 2018 l y n o e s u l a n o s r e p r o F Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. Revenue recognised over time The consolidated entity has revenue where the performance obligation is satisfied over time. Revenue is recognised over time by measuring the progress toward complete satisfaction of that performance obligation. A single method is applied consistently for measuring progress for each performance obligation satisfied over time. Judgment is required when selecting a method (output or input methods) for measuring progress toward complete satisfaction of a performance obligation. Assessing the satisfaction of performance obligations over time requires judgment and the consideration of many criteria that should be met to qualify. Events and circumstances frequently do not occur as expected. Even if the events anticipated under the assumptions occur, actual results are still likely to be different from the estimates since other anticipated events frequently do not occur as expected and the variation may be material. Allowance for expected credit losses The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales experience and historical collection rates. Estimation of useful lives of assets The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down. Impairment of non-financial assets other than goodwill and other indefinite life intangible assets The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions. Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Employee benefits provision As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 23 Notes to the financial statements 31 December 2018 Disaggregation of revenue The disaggregation of revenue from contracts with customers is as follows: l y n o e s u l a n o s r e p r o F Revenue and other income Sales revenue: Provision of services and sale of goods Other income: Interest income Other revenue Total other income Sectors Natural resources Non-mining infrastructure Utilities Geographical regions Western Australia Queensland Timing of revenue recognition Goods/services transferred over time Expenses Consolidated Entity 2018 $ 2017 $ 50,485,254 30,291,601 50,485,254 30,291,601 22,585 11,825 34,410 15,582 74,325 89,907 Consolidated Entity 2018 $ 2017 $ 47,601,694 19,943,551 1,279,560 1,604,000 50,485,254 2,335,654 8,012,396 30,291,601 49,972,128 28,985,110 513,126 1,306,491 50,485,254 30,291,601 50,485,254 50,485,254 30,291,601 30,291,601 Consolidated Entity 2018 $ 2017 $ Profit before income tax from continuing operations includes the following specific expenses: Cost of sales Cost of sales 44,530,494 27,905,689 E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 24 Notes to the financial statements 31 December 2018 Note 4. Expenses continued Depreciation Leasehold improvements Motor vehicles Computer equipment & software Total depreciation Finance costs Plant & machinery, fixtures, fittings & office equipment Interest and finance charges on borrowings Interest and finance charges on lease liabilities l Finance costs expensed Rental expense relating to operating leases Minimum lease payments Superannuation expense Superannuation expense Income tax expense l y n o e s u a n o s r e p r o F b) a) The components of tax expense comprise: Current tax expense Current year Deferred tax Origination and reversal of temporary differences Under provision in respect of prior years Accounting profit before tax Accounting profit before tax: Prima facie tax payable on profit before income tax at 30% (2017: 30%): Tax effect of: - Non-allowable items - Business blackhole expenditure - Under provision in respect of prior years Income tax expense (benefit) Consolidated Entity 2017 $ 2018 $ 63,687 139,145 251,015 206,478 660,325 829,380 24,094 853,474 71,197 161,264 212,098 215,606 660,165 252,012 30,794 282,806 526,112 990,168 1,627,121 1,114,158 Consolidated Entity 2017 $ 2018 $ - - 609,949 169,953 779,902 (355,773) 63,367 (292,406) 2,036,110 (1,206,010) 610,833 (361,802) 6,518 (7,402) 169,953 779,902 6,029 - 63,367 (292,406) E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 25 Notes to the financial statements 31 December 2018 Note 5. Income tax expense continued l y n o Consolidated Entity Non-current Deferred tax assets and liabilities: 1 January 2018 $ Recognised in income $ Recognised in equity $ 31 December 2018 $ e s u Other assets Property, plant and equipment Employee benefits Provisions Other 5,363 (38,763) 338,427 12,000 (13,197) (6,094) (43,760) (172,913) 38,444 (18,331) Unused tax losses 4,347,259 (577,248) 29,606 - - - - - 28,875 (82,523) 165,514 50,444 (31,528) 3,770,011 4,651,089 (779,902) 29,606 3,900,793 l Recognised as: Deferred tax assets Deferred tax liabilities 4,703,049 (51,960) 4,651,089 4,029,844 (129,051) 3,900,793 a n o s r e p r o F Consolidated Entity Non-current Deferred tax assets and liabilities: Other assets Property, plant and equipment Employee benefits Provisions Other Unused tax losses Recognised as: Deferred tax assets Deferred tax liabilities 1 January 2017 $ Recognised in income $ Recognised in equity $ 31 December 2017 $ 15,530 - (109,922) (149,521) (23,162) 559,481 292,406 (10,167) (38,763) 448,349 161,521 9,965 3,787,778 4,358,683 4,410,437 (51,754) 4,358,683 - - - - - - - 5,363 (38,763) 338,427 12,000 (13,197) 4,347,259 4,651,089 4,703,049 (51,960) 4,651,089 E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 26 Notes to the financial statements 31 December 2018 Auditors remuneration Remuneration of the auditor for: Auditing the financial statements Tax compliance services Total remuneration of the auditor Cash and cash equivalents Cash at banks and in hand l Short-term bank deposits Total cash and cash equivalents Reconciliation of cash Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows: Balances as above Funds held in trust - directors Cash and cash equivalents Trade and other receivables l y n o e s u a n o s r e p r o F Consolidated Entity 2018 $ 64,000 20,350 84,350 2017 $ 48,000 17,475 65,475 Consolidated Entity 2018 $ 858,656 1,397,242 2,255,898 2017 $ 663,403 1,155,595 1,818,998 2,255,898 - 2,255,898 1,818,998 (158,758) 1,660,240 Consolidated Entity 2018 $ 12,758,448 31,337 4,206,072 2017 $ 8,209,697 1,450,771 946,855 Trade receivables Other receivables – contract assets Accrued revenue – contract assets Total current trade and other receivables 16,995,857 10,607,323 Allowance for expected credit losses The consolidated entity has not recognised any losses in the profit or loss in respect of the expected credit losses for the year ended 31 December 2018. E4G Investment Holdings Pty Limited ABN 77 614 735 474 A fixed and floating charge over the short-term bank deposits is held as part of the guarantee facility provided. E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 27 Notes to the financial statements 31 December 2018 Note 8. Trade and other receivables continued Other receivables – contract assets Reconciliation of the written down values at the beginning and end of the current and previous financial year are set out below: Accrued revenue – contract assets Reconciliation of the written down values at the beginning and end of the current and previous financial year are set out below: l y n o e s u l a n o s r e p r o F Opening balance Additions Transfer to income statement Closing balance Opening balance Additions Transfer to trade receivables Closing balance Other assets Prepayments Inventory Total other assets Plant and equipment At cost Accumulated depreciation Total plant and equipment Property, plant and equipment 1,450,771 31,337 (1,450,771) 31,337 36,999 1,450,771 (36,999) 1,450,771 946,855 4,206,072 (946,855) 4,206,072 2,800,810 946,855 (2,800,810) 946,855 Consolidated Entity 2018 $ 232,020 50,000 282,020 2017 $ 142,218 - 142,218 Consolidated Entity 2018 $ 2017 $ 7,757,266 7,352,491 (4,829,026) (4,243,361) 2,928,240 3,109,130 E4G Investment Holdings Pty Limited ABN 77 614 735 474 l y n o e s u l a n o s r e p r o F E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 28 Notes to the financial statements 31 December 2018 Note 10. Property, plant and equipment continued Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Balance at 1 January 2017 Additions Disposals Depreciation expense Balance at 31 December 2017 $ 407,933 2,730 - (71,197) 339,466 Leasehold Improvements Motor Vehicles Comp. Equip & Software $ $ 705,172 1,170,016 129,428 110,021 (6,988) (161,264) (212,098) 1,067,671 666,348 Total Plant & Mach. Fixt & Office Equip $ 876,810 3,159,931 641,024 (31,660) (660,165) 3,109,130 398,845 (268) (24,404) (215,606) 1,035,645 $ Additions Disposals Depreciation expense Balance at 31 December 2018 - - (63,687) 275,779 - - (139,145) 527,203 317,616 - (251,015) 1,134,272 226,109 (64,290) (206,478) 990,986 543,725 (64,290) (660,325) 2,928,240 Intangible assets Capitalised legal costs Software licenses Total intangible assets Trade and other payables Current Trade payables Sundry payables and accrued expenses Deferred income – contract liabilities Payable to vendors - conditional Consolidated Entity 2018 $ 62,699 11,011 73,710 2017 $ 55,698 11,011 66,709 Consolidated Entity 2018 $ 3,623,646 3,922,819 265,990 - 2017 $ 2,288,046 3,355,612 99,482 228,105 Total current trade and other payables 7,812,455 5,971,245 All amounts are short term and the carrying values are considered to be a reasonable approximation of fair value. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 29 Notes to the financial statements 31 December 2018 Note 12. Trade and other payables continued Deferred income – contract liabilities Reconciliation of the written down values at the beginning and end of the current and previous financial year are set out below: Opening balance Additions Transfer to sales revenue Closing balance l Non-current Payable to vendors – conditional Total non-current trade and other payables Under the share purchase agreement for Aerison Holdings Pty Ltd executed in November 2016, the remaining consideration is subject to contain conditions and the maximum amount payable is $983,922. The milestone will be measured as at 31 December 2019. As at 31 December 2018, the contingent liability is booked to non- current liabilities as trade and other payables. 99,482 265,990 317,307 99,482 (99,482) (317,307) 265,990 99,482 Consolidated Entity 2018 $ 983,922 983,922 2017 $ 983,922 983,922 Consolidated Entity 2018 $ - 58,042 2,341,201 3,902,643 223,582 - 2017 $ 37,076 25,747 - 2,591,045 260,575 76,750 6,525,468 2,991,193 Borrowings Current Related party loan from director Insurance premium funding (IPF) facility Convertible notes Octet Finance Pty Ltd facility Hire purchase liabilities Unsecured loan from director l y n o e s u a n o s r e p r o F Unsecured and related party loan represents balances owing to directors incurring no interest. Non-current Hire purchase liabilities Consolidated Entity 2018 $ 88,189 88,189 2017 $ 311,759 311,759 E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 30 Notes to the financial statements 31 December 2018 Consolidated Entity 2018 $ 2,307,000 (74,309) 108,510 2,341,201 - 2,307,000 (104,060) 29,751 108,510 2,341,201 2017 $ - - - - - - - - - - Note 13. Borrowings continued Convertible Notes 2,307,000 (2017: nil) convertible notes Note issue costs Redemption premium At the beginning of reporting period Notes issued Note issue cost Note issue cost amortised Redemption premium At reporting date l y n o e s u l a n o s r e p r o F During the year, convertible notes were issued on 27 February 2018, 26 May 2018 and 6 June 2018. They are convertible into ordinary shares in the Parent entity under certain conditions and are an unsecured obligation of the Parent entity that rank pari-passu with all other unsecured indebtedness of the Parent. The notes bear interest and have a principal amount and an issue price of $1.00 per note. Financing arrangements Unrestricted access was available at the reporting date to the Following lines of credit: Total facilities Octet Finance Pty Ltd Used at the reporting date Octet Finance Pty Ltd Unused at the reporting date Octet Finance Pty Ltd Consolidated Entity 2018 $ 2017 $ 5,700,000 3,000,000 3,902,643 2,591,045 1,797,357 408,955 Refer to Note 17 for further information on financial instruments. E4G Investment Holdings Pty Limited ABN 77 614 735 474 l y n o e s u l a n o s r e p r o F E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 31 Notes to the financial statements 31 December 2018 Employee benefits Annual leave provision Long service leave provision Other employment related payables and provisions Non-current Long service leave provision Consolidated Entity 2018 $ 444,082 382,468 219,201 1,045,751 2017 $ 413,616 422,878 42,376 878,870 67,682 80,149 The current portion of these liabilities represents the consolidated entity’s obligations to which the employee has a current legal entitlement. These liabilities arise mainly from accrued annual leave and long service leave entitlements at reporting date. A provision has been recognised for employee benefits relating to long service leave for employees. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based upon historical data. The measurement and recognition criteria for employee benefits are described note 1. Equity - Issued capital Ordinary shares - fully paid Movements in ordinary share capital Details Consolidated Entity 2018 2017 2018 2017 Shares Shares $ $ 1,373,014 1,343,250 3,328,647 3,160,005 Date Shares Issue price $ Balance Issue of shares Share issue transaction costs, net of tax 1 January 2017 7 July 2017 7 July 2017 Balance Issue of shares Share issue transaction costs, net of tax 31 December 2017 30 March 2018 30 March 2018 1,000,000 343,250 - 1,343,250 29,764 250,000 $8.74 3,000,005 (90,000) $0.00 $5.7125 $0.00 3,160,005 170,027 (1,385) Balance 31 December 2018 1,373,014 3,328,647 E4G Investment Holdings Pty Limited ABN 77 614 735 474 l y n o e s u l a n o s r e p r o F E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 32 Notes to the financial statements 31 December 2018 Note 15. Equity - Issued capital continued Convertible notes reserve (2017: 170,027) convertible notes Issue costs a) Convertible notes At the beginning of reporting period Notes issued Notes converted into shares Share issue cost At reporting date Consolidated Entity 2018 $ - - - 168,642 - (170,027) 1,385 - 2017 $ 170,027 (1,385) 168,642 - 170,027 - (1,385) 168,642 Convertible notes were issued on 17 February 2017. They are convertible into ordinary shares in the Company automatically upon maturity. The convertible note reserve represents the equity component of convertible notes issued on 17 February 2017. Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Capital risk management The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The consolidated entity is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year. The capital risk management policy remains unchanged from 31 December 2017. E4G Investment Holdings Pty Limited ABN 77 614 735 474 l y n o e s u l a n o s r e p r o F E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 33 Notes to the financial statements 31 December 2018 Equity - dividends Dividends paid during the financial year were as follows: $126,243 per B class share (2017: $250,000) and $269,000 per C class share (2017: NIL) Consolidated Entity 2018 $ 2017 $ 521,486 500,000 E4G Investment Holdings Pty Ltd holds 100% of the ordinary shares of Aerison Holdings Pty Ltd. As at 31 December 2018, there were also 2 fully paid B class and 1 fully paid C class shares of Aerison Holdings Pty Ltd, held by Araosc Financial Investments Pty Ltd and S2S Investment Holdings Pty Ltd respectively. These special class shares participate in dividends and are entitled to one vote when a poll is called at shareholders’ meetings. Franking credits Consolidated Entity 2018 $ 2017 $ 2,934,591 3,132,393 Franking credits available for subsequent financial years based on a tax rate of 30% Financial instruments Financial risk management objectives The consolidated entity's activities expose it to a variety of financial risks: market risk (including price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate and other price risks and ageing analysis for credit risk. Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors ('the Board'). These policies include identification and analysis of the risk exposure of the consolidated entity and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the consolidated entity's operating units. Finance reports to the Board on a monthly basis. Market risk Price risk The consolidated entity is not exposed to any significant price risk. Interest rate risk The consolidated entity's main interest rate risk arises from borrowings. Borrowings obtained at variable rates expose the consolidated entity to interest rate risk. Borrowings obtained at fixed rates expose the consolidated entity to fair value risk. The Octet business transaction and debtor financing facilities are the only borrowing obtained at variable rates. Due to the nature of the facility, wherein the drawdowns are generally fully repaid within 1-2 months, upon receipt of payments from customers, the consolidated entity does not have material interest rate exposure typically associated with regular variable rate bank borrowings. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 34 Notes to the financial statements 31 December 2018 Note 17. Financial instruments continued Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The consolidated entity obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The consolidated entity does not hold any collateral. Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year. Liquidity risk Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable. The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. Financing arrangements Unused borrowing facilities at the reporting date: Octet Finance Pty Ltd Total Consolidated Entity 2018 $ 2017 $ 1,797,357 408,955 1,797,357 408,955 Remaining contractual maturities The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. l y n o e s u l a n o s r e p r o F E4G Investment Holdings Pty Limited ABN 77 614 735 474 l y n o e s u a n o s r e p r o F E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 35 Notes to the financial statements 31 December 2018 Note 17. Financial instruments continued Weighted average interest rate % 1 year or less Between 1 and 2 years Between 2 and 5 years Over 5 years Remaining contractual maturities $ $ $ $ $ Consolidated 2018 Non-derivatives Non-interest bearing Trade payables Sundry payables Payable to director Payable to vendors - conditional - - - - 3,623,646 3,897,819 25,000 - - - - 983,922 Interest-bearing - fixed rate l Convertible notes 22.2% 2,341,201 - Hire purchase liability 4.41% 223,582 88,189 Insurance premium funding 1.75% 58,042 Interest-bearing – variable rate Octet Finance Pty Ltd facility 7.85% 3,902,643 - - Total non-derivatives 14,071,933 1,072,111 - - - - - - - - - Weighted average interest rate % 1 year or less Between 1 and 2 years Between 2 and 5 years Over 5 years $ $ $ $ $ Consolidated 2017 Non-derivatives Non-interest bearing Trade payables Sundry payables Payable to director Payable to vendors- unconditional Payable to vendors- conditional Loan from director Unsecured loan from director - - - - - - - 2,288,046 3,330,612 37,076 228,105 - 25,000 76,750 Interest-bearing - fixed rate Insurance premium funding 1.75% 25,747 - - - - - - - - - - - - 983,922 - - - Hire purchase liability 4.41% 260,575 223,570 88,189 Interest-bearing – variable rate Octet Finance Pty Ltd facility Total non-derivatives 7.85% 2,591,045 - - - 2,591,045 8,862,956 223,570 1,072,111 - 10,158,638 E4G Investment Holdings Pty Limited ABN 77 614 735 474 - - - - - - - 3,623,646 3,897,819 25,000 983,922 2,341,201 311,771 58,042 - 3,902,643 - 15,144,044 Remaining contractual maturities - - - - - - - - - 2,288,046 3,330,612 37,076 228,105 983,922 25,000 76,750 25,747 572,334 l y n o e s u l a n o s r e p E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 36 Notes to the financial statements 31 December 2018 Note 17. Financial instruments continued Fair value of financial instruments Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. Key management personel disclosures Compensation The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below: Consolidated Entity 2018 $ 633,505 59,991 - 2017 $ 408,634 38,821 - 693,496 447,455 Short-term employee benefits Post-employment benefits Long-term benefits Total compensation Related party transactions Parent entity E4G Investment Holdings Pty Ltd is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 21. Associates There are no interests in associates. Key management personnel Disclosures relating to key management personnel are set out in note 18. Transactions with related parties The following transactions occurred with related parties: r o F Repayment of related party loan from director (G Leone) Partial payment of outstanding payable to director for consultancy fees (G Leone) Repayment of unsecured loan from director (D Hibbs) Consolidated Entity 2018 $ 37,076 - 76,750 2017 $ - 50,000 86,605 E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 37 Notes to the financial statements 31 December 2018 Note 19. Related party transactions continued Receivable from and payable to related parties The following balances are outstanding at the reporting date in relation to transactions with related parties: Consolidated Entity Current payables: Payables to director (G Leone, consultancy fees) Receivables from related parties: Receivable from Director (G Leone) Receivable from Director (D Hibbs) Current borrowings: Related party loan from director (G Leone) Unsecured loan from director (D Hibbs) 2018 $ 2017 $ 25,000 25,000 Consolidated Entity 2018 $ 105,760 76,998 2017 $ - - Consolidated Entity 2018 $ - - 2017 $ 37,076 76,750 Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income l y n o e s u l a n o s r e p r o F Profit after income tax Total comprehensive income Parent Entity 2018 $ - - 2017 $ - - E4G Investment Holdings Pty Limited ABN 77 614 735 474 Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Total equity l y n o e s u l a n o s r e p r o F E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 38 Notes to the financial statements 31 December 2018 Note 20. Parent entity information continued Statement of financial position Parent Entity 2018 $ 2017 $ 1,850 6,933,017 2,620,448 3,604,370 3,328,647 3,328,647 158,758 4,782,925 470,356 1,454,278 3,328,647 3,238,647 Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity has provided guarantees for the finance lease facilities that Aerison Pty Ltd has with the Commonwealth Bank of Australia. The amount owing under guarantee as at 31 December 2018 is $311,771 (2017: $572,334) and is included in Borrowings (refer to note 13). Contingent liabilities The parent entity has provided a corporate guarantee for the bank guarantee facilities of Aerison Pty Ltd to Commonwealth Bank of Australia and Westpac Banking Corporation bank guarantee facilities totalling $1,397,242. The facilities are secured by a fixed and floating charge over certain short-term bank deposits. Capital commitments The parent entity had no capital commitments for property, plant and equipment as at 31 December 2018 and 31 December 2017. Significant accounting policies The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following wholly- owned subsidiaries in accordance with the accounting policy described in note 1: Principal place of business/ Country of Incorporation 2018 % 2017 % Ownership Interest Aerison Holdings Pty Limited Aerison Services Pty Ltd Aerison Pty Ltd Aerison Mechanical and Electrical Technology Pty Ltd (Dormant) Australia Australia Australia Australia 100 100 100 100 100 100 25 25 E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 39 Notes to the financial statements 31 December 2018 Consolidated Entity 2018 $ 2017 $ - 164,420 Convertible Notes $ IPF Facility Octet Finance Lease Liability Total $ $ $ $ - - - - - - 742,178 742,178 25,747 2,591,045 (334,264) 2,282,528 - - 164,420 164,420 25,747 2,591,045 572,334 3,189,126 2,202,940 138,261 32,295 - 1,311,598 (260,563) 3,286,270 - - 138,261 2,341,201 58,402 3,902,643 311,771 6,613,657 l y n o e s u l a n o s r e p r o F Non-cash investing and financing activities Acquisition of plant and equipment by means of lease Changes in liabilities arising from financing activities Consolidated Balance at 1 January 2017 Net cash provided by (used in) financing activities Acquisition of plant and equipment by means of leases Balance at 31 December 2017 Net cash provided by (used in) financing activities Non-cash redemption premium and costs Balance at 31 December 2018 Committments a) Finance lease commitments Payable - minimum lease payments - not later than 12 months - between 12 months and five years Less future finance charges Present value of minimum lease payments b) Operating lease commitments Non-cancellable operating leases contracted for but not capitalised in the financial statements - not later than 12 months - between 12 months and five years Consolidated Entity 2018 $ 2017 $ 234,681 98,534 (21,444) 311,770 284,671 333,215 (45,551) 572,335 898,385 275,824 526,112 665,992 1,174,209 1,192,104 E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 40 Notes to the financial statements 31 December 2018 l y n o e s u l a n o s r e p r o F Cash flow information Reconciliation of cash flow from operations with profit after income tax Profit after income tax Non-cash flows adjustments: Depreciation expense Net on disposal of property, plant and equipment Interest expense Changes in operating assets and liabilities; - trade and other receivables - prepayments and other assets - trade and other payables - deferred tax assets and liabilities - employee benefits Net cash generated from / (used in) operating activities Contingent assets and liabilities Contingent assets The Group has no contingent assets. Consolidated Entity 2018 $ 2017 $ 1,256,208 (913,604) 660,325 29,789 298,374 660,165 9,164 - (6,388,534) (2,979,295) (139,802) 2,662,897 779,902 (386,500) 20,775 133,769 (292,406) (304,571) (1,227,341) (3,666,003) Contingent liabilities The Commonwealth Bank of Australia and Westpac Banking Corporation provided the Group with bank guarantee facilities totalling $1,397,242. The facilities are secured by a fixed and floating charge over certain short-term bank deposits. Events after the reporting date On 11 March 2020 Novel Coronavirus (COVID-19) was declared a global pandemic by the World Health Organisation. The impact of COVID-19 on the company is likely to have a material impact on operational revenue and expenses if either the Australian Federal Government or Western Australian State Government were to impose a restrictive lock-down on essential services that effects the Company’s operational sites. As at the date of this report: a) The Company has the ability to materially curtail its activities during the forthcoming financial year in response to any government restrictions and social distancing requirements; b) The impacts on operational revenue and expenses cannot yet be reliably estimated; and c) The Company believes it has sufficient cash reserves to support its curtailed activities. Company details The registered office is: 60 Havelock Street WEST PERTH WA 6005 The principal place of business is: 1st Floor, 56 Ord Street WEST PERTH WA 6005 E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2018 ANNUAL REPORT 41 Directors' Declaration In the directors’ opinion: the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements; the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 31 December 2018 and of its performance for the financial year ended on that date; and there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. l y n o a) b) c) d) e s u Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. l On behalf of the directors. Giuseppe Leone Director Dated this 9 March 2021 a n o s r e p r o F E4G Investment Holdings Pty Limited ABN 77 614 735 474
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