l y n o e s u l a n o s r e p r o F `Annual Report 31 December 2019 E4G Investment Holdings Pty Ltd and Controlled Entities ACN 614 735 474 Aerison Pty Ltd | www.aerison.com Contents 2 DIRECTORS REPORT ....................................................................................................................................... 3 INDEPENDENT AUDITORS REPORT .............................................................................................................. 5 INDEPENDENCE DECLARATION .................................................................................................................... 7 GENERAL INFORMATION ................................................................................................................................ 8 FINANICAL 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 2019 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 2019. 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 $4,115,639 (2018: $1,256,208). Dividends Dividends paid during the year was $576,000 (2018: $521,486). 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. 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. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2019 ANNUAL REPORT 4 Directors' report continued 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. l y n o e s u l a n o s r e p Giuseppe Leone CEO and Executive Director Dated this 9th March 2021 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 2019, 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 2019 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 2019 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 2019, 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 2019 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 2019 ANNUAL REPORT 9 Finanical Report Statement of profit or loss and other comprehensive income For the year ended 31 December 2019 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 2019 $ 2018 $ 3 3 4 5 80,058,696 50,485,254 (68,521,219) (44,530,494) 11,537,477 5,954,760 13,220 (1,002,536) (1,836,525) (1,385,833) (153,091) (338,922) (920,364) 5,913,426 (1,797,787) 34,410 (522,558) (660,325) (853,474) (104,078) (1,220,664) (591,961) 2,036,110 (779,902) 4,115,639 1,256,208 - - 4,115,639 1,256,208 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 2019 ANNUAL REPORT 10 Statement of financial position As at 31 December 2019 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 Right of use assets Intangible assets Deferred tax assets Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Lease liabilities Employee benefits Total current liabilities Non-current liabilities Borrowings Trade and other payables Lease Liabilities Employee benefits Deferred tax liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Retained earnings Total equity Note Consolidated Entity 2019 $ 2018 $ 7 8 9 10 11 12 5 13 14 15 16 14 13 15 16 5 17 9,509,555 2,255,898 32,010,779 16,995,857 635,918 282,020 42,156,252 19,533,775 2,453,866 2,928,240 301,661 11,011 2,202,303 4,968,841 - 73,710 4,029,844 7,031,794 47,125,093 26,565,569 16,785,920 14,459,139 270,135 1,919,657 7,812,455 6,525,468 - 1,045,751 33,434,851 15,383,674 - - 62,217 76,040 99,295 88,189 983,922 - 67,682 129,051 237,552 1,268,844 33,672,403 16,652,518 13,452,690 9,913,051 3,328,647 10,124,043 3,328,647 6,584,404 13,452,690 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 2019 ANNUAL REPORT 11 Statement of changes in equity For the year ended 31 December 2019 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 issued, net of transaction costs Contributions of equity, net of transaction costs (note 17) Dividends paid (note 18) Balance at 31 December 2018 Consolidated Balance at 1 January 2019 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: Contributions of equity, net of transaction costs (note 17) Dividends paid (note 18) Balance at 31 December 2019 l y n o e s u l a n o s r e p r o F 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 Issued Capital $ Reserves Retained Total Equity $ Profits $ $ 3,328,647 - - - - - 3,328,647 - - - - - - - 6,584,404 9,913,051 4,115,639 4,115,639 - - 4,115,639 4,115,639 - - (576,000) (576,000) 10,124,043 13,452,690 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 2019 ANNUAL REPORT 12 Statement of cash flows For the year ended 31 December 2019 l y n o e s u l a n o s r e p r o F Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Finance costs Income tax paid Note Consolidated Entity 2019 $ 2018 $ 73,417,437 47,522,444 (70,761,370) (48,218,531) 14,785 (1,314,857) - 22,585 (553,839) - Net cash generated from operating activities 27 1,355,995 (1,227,341) Cash flows from investing activities Proceeds from disposal of property, plant & equipment Purchase of property, plant and equipment Disposal (purchase) of intangible assets Net cash used in investing activities Cash flows from financing activities Proceeds from short-term borrowings Dividends declared and paid Loan repaid to related parties Repayment of lease liabilities Proceeds from issue of convertible notes Repayment of convertible notes Repayment of financing costs 18 - (587,125) 62,698 (524,427) 8,296,867 (576,000) - (1,055,773) 485,000 (702,800) (25,205) 34,500 (543,725) (7,000) (516,225) 771,596 (521,486) (113,826) - 2,202,940 - - Net cash provided by financing activities 6,422,089 2,339,224 Net change in cash held Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 7 7,253,657 2,255,898 9,509,555 595,658 1,660,240 2,255,898 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 2019 ANNUAL REPORT 13 Notes to the financial statements 31 December 2019 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 16 Leases The consolidated entity has adopted AASB 16 from 1 January 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (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 improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing activities. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. Impact of adoption AASB 16 was adopted using the modified retrospective adoption and as such the comparatives have not been restated. The impact of adoption on opening retained profits as at 1 January 2019 was as follows: Operating lease commitments as at 1 January 2019 (AASB 117) – Note 26 Operating lease commitments discount based on weight average incremental borrowing rate of 8.3% (AASB 16) Finance lease commitments as at 1 January 2019 (AASB 117) – Note 26 Short-term leases not recognised as a right-of-use assets (AASB 16) Low-value assets leases not recognised as a right-of-use assets (AASB 16) Right-of-use assets (AASB 16) Lease liabilities – current (AASB 16) Lease liabilities – non-current (AASB 16) Increase in net profits as at 1 January 2019 1 January 2019 $ 1,174,209 (97,856) 311,771 - - 1,388,124 (1,055,773) (332,351) - 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 2019 ANNUAL REPORT 14 Notes to the financial statements 31 December 2019 Note 1. Statement of significant accounting policies continued l y n o e s u l a n o s r e p r o F 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 22. 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 2019 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. Business combinations The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired. 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 2019 ANNUAL REPORT 15 Notes to the financial statements 31 December 2019 Note 1. Statement of significant accounting policies continued 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. 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. 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. 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 2019 ANNUAL REPORT 16 Notes to the financial statements 31 December 2019 Note 1. Statement of significant accounting policies continued 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. 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. 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. 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 2019 ANNUAL REPORT 17 Notes to the financial statements 31 December 2019 Note 1. Statement of significant accounting policies continued Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. 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. 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. 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 2019 ANNUAL REPORT 18 Notes to the financial statements 31 December 2019 Note 1. Statement of significant accounting policies continued 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.. 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. Right-of-use assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payment made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2019 ANNUAL REPORT 19 Notes to the financial statements 31 December 2019 Note 1. Statement of significant accounting policies continued Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of-use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. l y n o e s u Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. l a n o s r e p r o F Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. 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. 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. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2019 ANNUAL REPORT 20 Notes to the financial statements 31 December 2019 Note 1. Statement of significant accounting policies continued l y n o e s u l a n o s r e p r o F 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. 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. 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 2019 ANNUAL REPORT 21 Notes to the financial statements 31 December 2019 Note 1. Statement of significant accounting policies continued 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. Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. 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. 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 2019. Critical accounting estimates and judgments 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. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2019 ANNUAL REPORT 22 Notes to the financial statements 31 December 2019 Note 2. Critical accounting estimates and judgments continued l y n o e s u 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. 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 2019 ANNUAL REPORT 23 Notes to the financial statements 31 December 2019 Revenue and other income Disaggregation of revenue The disaggregation of revenue from contracts with customers is as follows: Sales revenue: Provision of services and sale of goods Other income (charges): Interest income Other revenue (charges) 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 l y n o e s u l a n o s r e p r o F Consolidated Entity 2019 $ 2018 $ 80,058,696 80,058,696 50,485,254 50,485,254 14,785 (1,565) 13,220 22,585 11,825 34,410 Consolidated Entity 2019 $ 2018 $ 74,911,060 1,540,432 3,607,204 80,058,696 47,601,694 1,279,560 1,604,000 50,485,254 80,056,757 49,972,128 1,939 513,126 80,058,696 50,485,254 80,058,696 80,058,696 50,485,254 50,485,254 Consolidated Entity 2019 $ 2018 $ Profit before income tax from continuing operations includes the following specific expenses: Cost of sales Cost of sales 68,521,219 44,530,494 E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2019 ANNUAL REPORT 24 Notes to the financial statements 31 December 2019 Note 4. Expenses continued l y n o e s u l a n o s r e p r o F Plant & machinery, fixtures, fittings & office equipment Depreciation Leasehold improvements Motor vehicles Computer equipment & software Right of use assets Total depreciation Finance costs Finance costs expensed Leases Minimum lease repayments Superannuation expense Superannuation expense Income tax expense Interest and finance charges on borrowings Interest and finance charges on lease liabilities 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 b) Accounting profit before tax Accounting profit before tax: Prima facie tax payable on profit before income tax at 30% (2018: 30%): Tax effect of: - Non-allowable items - Business blackhole expenditure - Under provision in respect of prior years Income tax expense (benefit) Consolidated Entity 2019 $ 187,074 119,584 297,752 388,124 843,991 2018 $ 63,687 139,145 251,015 206,478 - 1,836,525 660,325 1,318,968 829,380 66,865 24,094 1,385,833 853,474 - 526,112 2,385,956 1,627,121 Consolidated Entity 2019 $ 2018 $ - - 1,776,960 20,827 1,797,787 609,949 169,953 779,902 5,913,426 2,036,110 1,774,028 610,833 10,334 (7,402) 20,827 1,797,787 6,518 (7,402) 169,953 779,902 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 2019 ANNUAL REPORT 25 Notes to the financial statements 31 December 2019 Note 5. Income tax expense continued Consolidated Entity Non-current Deferred tax assets and liabilities: 1 January 2019 $ Recognised in income $ Recognised in equity $ 31 December 2019 $ Other assets Property, plant and equipment Employee benefits Provisions Other 28,875 (82,523) 165,514 50,444 (31,528) 16,162 65,460 67,451 79,267 31,833 Unused tax losses 3,770,011 (2,057,960) 3,900,793 (1,797,787) l Recognised as: Deferred tax assets Deferred tax liabilities 4,029,844 (129,051) 3,900,793 - - - - - - - 45,037 (17,063) 232,965 129,711 305 1,712,053 2,103,008 2,202,303 (99,295) 2,103,008 Consolidated Entity Non-current Deferred tax assets and liabilities: 1 January 2018 $ Recognised in income $ Recognised in equity $ 31 December 2018 $ 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 Recognised as: Deferred tax assets Deferred tax liabilities 4,703,049 (51,960) 4,651,089 4,029,844 (129,051) 3,900,793 E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2019 ANNUAL REPORT 26 Notes to the financial statements 31 December 2019 Auditors remuneration l y n o e s u l a n o s r e p r o F Remuneration of the auditor for: Auditing the financial statements Tax compliance services IT support services IT equipment procurement Cash and cash equivalents Cash at banks and in hand 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: Cash and cash equivalents Trade and other receivables Trade receivables Other receivables – contract assets Accrued revenue – contract assets Total current trade and other receivables Consolidated Entity 2019 $ 87,000 13,500 34,477 206,161 341,138 2018 $ 64,000 20,350 - - 84,350 Consolidated Entity 2019 $ 5,586,837 3,922,718 9,509,555 2018 $ 858,656 1,397,242 2,255,898 9,509,555 2,255,898 Consolidated Entity 2019 $ 2018 $ 21,271,451 12,758,448 1,777,426 8,961,902 31,337 4,206,072 32,010,779 16,995,857 A fixed and floating charge over the short-term bank deposits is held as part of the guarantee facility provided. 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 2019. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2019 ANNUAL REPORT 27 Notes to the financial statements 31 December 2019 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: Opening balance Additions Transfer to income statement Closing balance 31,337 1,450,771 1,777,426 31,337 (31,337) (1,450,771) 1,777,426 31,337 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 a n o s r e p r o F Opening balance l Additions Transfer to trade receivables Closing balance Other assets Property, plant and equipment Prepayments Inventory Total other assets Plant and equipment At cost Accumulated depreciation Total plant and equipment 4,206,072 8,961,902 (4,206,072) 8,961,902 946,855 4,206,072 (946,855) 4,206,072 Consolidated Entity 2019 $ 495,918 140,000 635,918 2018 $ 232,020 50,000 282,020 Consolidated Entity 2019 $ 2018 $ 8,181,065 7,757,266 (5,727,199) (4,829,026) 2,453,866 2,928,240 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 2019 ANNUAL REPORT 28 Notes to the financial statements 31 December 2019 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: Leasehold Improvements Motor Vehicles Comp. Equip & Software Consolidated Balance at 1 January 2018 Additions Disposals Depreciation expense Balance at 31 December 2018 $ 339,466 - - (63,687) 275,779 Additions Disposals Depreciation expense Balance at 31 December 2019 - - (187,074) 88,705 Right of use assets Land & building right-of-use Less Accumulated depreciation Total intangible assets Plant & Mach. Fixt & Office Equip $ Total $ $ $ 666,348 1,067,671 - 317,616 - (139,145) (251,015) 1,134,272 527,203 1,035,645 3,109,130 543,725 (64,290) (660,165) 2,928,240 226,109 - (64,290) (206,478) 990,986 587,125 - (68,965) (65,219) (119,584) (992,534) 342,400 1,176,613 846,148 2,453,866 244,350 (1,064) (388,124) 342,775 (2,682) (297,752) Consolidated Entity 2019 $ 1,239,679 (938,018) 301,661 2018 - - - Additions to the right to use assets during the year were NIL. The consolidated entity leases land and buildings for its offices and workshop facilities under one-year term agreements with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated. The consolidated entity also leases plant and equipment under agreements of between one to two years. Intangible assets Non-current Capitalised legal costs Software licenses Total intangible assets Consolidated Entity 2019 $ - 11,011 11,011 2018 $ 62,699 11,011 73,710 E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2019 ANNUAL REPORT 29 Notes to the financial statements 31 December 2019 Trade and other payables All amounts are short term and the carrying values are considered to be a reasonable approximation of fair value. 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: l y n o e s u l a n o s r e p r o F Current Trade payables Sundry payables and accrued expenses Deferred income – contract liabilities Payable to vendors - conditional Total current trade and other payables Opening balance Additions Transfer to sales revenue Closing balance Non-current Payable to vendors – conditional Total non-current trade and other payables Borrowings Current Commonwealth Bank of Australia facility Insurance premium funding (IPF) facility Convertible notes Octet Finance Pty Ltd facility Hire purchase liabilities Consolidated Entity 2019 $ 7,691,065 8,099,892 11,041 983,922 2018 $ 3,623,646 3,922,819 265,990 - 16,785,920 7,812,455 265,990 11,041 99,482 265,990 (265,990) (99,482) 11,041 265,990 Consolidated Entity 2019 $ - - 2018 $ 983,922 983,922 Consolidated Entity 2019 $ 11,871,258 111,626 2,476,255 - - 14,459,139 2018 $ - 58,042 2,341,201 3,902,643 223,582 6,525,468 E4G Investment Holdings Pty Limited ABN 77 614 735 474 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. E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2019 ANNUAL REPORT 30 Notes to the financial statements 31 December 2019 Note 14. Borrowings continued l y n o Non-current Hire purchase liabilities Consolidated Entity 2019 $ - - 2018 $ 88,189 88,189 e s u Commonwealth Bank of Australia The Commonwealth Bank facilities are (i) a bank guarantee facility with a limit of $8M, (ii) a trade debtor financing facility with a limit of $15M, and (iii) an overdraft facility with a limit of $1.5M. Convertible Notes l 2,160,000 (2018: 2,307,000) convertible notes Note issue costs Redemption premium At the beginning of reporting period Notes issued Notes redeemed Note issue cost Note issue cost amortised Redemption premium At reporting date a n o s r e p r o F Consolidated Entity 2019 $ 2,160,000 (34,346) 2018 $ 2,307,000 (74,309) 350,601 108,510 2,476,255 2,341,201 2,341,201 500,000 (647,000) (15,000) 54,963 242,091 - 2,307,000 - (104,060) 29,751 108,510 2,476,255 2,341,201 During the year, convertible notes were issued on 14 June 2019. 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 of and an issue price of $1.00. In the prior year, convertible notes were issued under the same terms. 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 2019 ANNUAL REPORT 31 Notes to the financial statements 31 December 2019 Note 14. Borrowings continued Financing arrangements Unrestricted access was available at the reporting date to the Following lines of credit: Total facilities Commonwealth Bank of Australia Octet Finance Pty Ltd Used at the reporting date Commonwealth Bank of Australia Octet Finance Pty Ltd Unused at the reporting date Commonwealth Bank of Australia Octet Finance Pty Ltd Consolidated Entity 2019 $ 24,500,000 - 18,006,300 - 6,493,700 - 2018 $ - 5,700,000 - 3,902,643 - 1,797,357 Used amount at reporting date (Commonwealth Bank of Australia) is comprised of $11,871,258 relating to the trade financing facility and $6,135,042 relating to the bank guarantee facility included as contingent liabilities. Overdraft facility is unused at reporting date. Assets pledged as security The Commonwealth Bank of Australia facility is secured by a fixed and floating charge over certain short-term bank deposits and multiple facility guarantees. Refer to note 19 for further information on financial instruments and financial arrangements. Lease liabilities Current Right-of-use asset lease liabilities Non-current Right-of-use asset lease liabilities Consolidated Entity 2019 $ 270,135 62,217 2018 $ - - Assets pledged as security The leases are secured by term deposits and security over the underlying leased assets Refer to note 19 for further information on financial instruments and financial arrangements. 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 2019 ANNUAL REPORT 32 Notes to the financial statements 31 December 2019 Employee benefits Current Annual leave provision Long service leave provision Other employment related payables and provisions Non-current Long service leave provision Consolidated Entity 2019 $ 907,230 440,299 572,128 2018 $ 444,082 382,468 219,201 1,919,657 1,045,751 76,040 67,682 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 Balance Issue of shares Share issue transaction costs, net of tax Balance Balance Consolidated Entity 2019 2018 2019 2018 Shares Shares $ $ 1,373,014 1,373,014 3,328,647 3,328,647 Date Shares Issue price $ 1 January 2018 30 March 2018 30 March 2018 1,343,250 29,764 - 3,160,005 170,027 (1,385) $5.7125 $0.00 31 December 2018 1,373,014 3,328,647 31 December 2019 1,373,014 3,328,647 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. 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 2019 ANNUAL REPORT 33 Notes to the financial statements 31 December 2019 Note 17. Equity – Issued Capital continued 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 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 the 31 December 2018 Annual Report. l Equity - dividends Dividends Dividends paid during the financial year were as follows: $144,000 per B class share (2018: $126,243) and $144,000 per C class share (2018: $269,000) Consolidated Entity 2019 $ 2018 $ 576,000 521,486 E4G Investment Holdings Pty Ltd holds 100% of the ordinary shares of Aerison Holdings Pty Ltd. As at 31 December 2019, there were also 2 fully paid B class and 2 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 2019 $ 2018 $ 2,687,732 2,934,591 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. 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 2019 ANNUAL REPORT 34 Notes to the financial statements 31 December 2019 Note 19. Financial instruments continued 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 Commonwealth Bank debtor financing facility is the only material 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. 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: Commonwealth Bank of Australia Octet Finance Pty Ltd Total Consolidated Entity 2019 $ 6,493,700 2018 $ - - 1,797,357 6,493,700 1,797,357 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. E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2019 ANNUAL REPORT 35 Notes to the financial statements 31 December 2019 Note 19. 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 $ $ $ $ $ - - - - 7,691,055 8,074,892 25,000 983,922 20.02% 2,476,255 - - - - - 7.30% 270,135 62,216 2.70% 11,871,258 1.75% 111,626 - - 31,504,143 62,216 - - - - - - - - - - - - - - - 7,691,055 8,074,892 25,000 983,922 2,476,255 332,351 - 11,871,258 - 111,626 - 31,566,359 Weighted average interest rate % 1 year or less Between 1 and 2 years Between 2 and 5 years Over 5 years Remaining contractual maturities $ $ $ $ $ l y n o Consolidated 2019 Non-derivatives Non-interest bearing Trade payables Sundry payables Payable to director Payable to vendors - conditional Interest-bearing - fixed rate Convertible notes l Lease liability Commonwealth Bank facility Insurance premium funding Total non-derivatives Consolidated 2018 Non-derivatives Non-interest bearing e s u a n o s r e p r o F 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 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 - - - - - - - - - - - - - - - - 3,623,646 3,897,819 25,000 983,922 2,341,201 311,771 58,042 - 3,902,643 - 15,144,044 Fair value of financial instruments Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. 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 2019 ANNUAL REPORT 36 Notes to the financial statements 31 December 2019 Key management personnel disclosures Compensation The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below: Short-term employee benefits Post-employment benefits Long-term benefits Total compensation Consolidated Entity 2019 $ 1,072,107 73,007 - 2018 $ 633,505 59,991 - 1,145,114 693,496 Related party transactions l Parent entity E4G Investment Holdings Pty Ltd is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 23. Associates There are no interests in associates. Key management personnel Disclosures relating to key management personnel are set out in note 20. Transactions with related parties The following transactions occurred with related parties: Repayment of related party loan from director (G Leone) Repayment of unsecured loan from director (D Hibbs) Consulting fee paid to director (M Fennell) Consolidated Entity 2019 $ - - 15,000 2018 $ 37,076 76,750 - Receivable from and payable to related parties The following balances are outstanding at the reporting date in relation to transactions with related parties: Receivables from related parties: Receivable from Director (G Leone) Receivable from Director (D Hibbs) Consolidated Entity 2019 $ 105,760 76,998 2018 $ 105,760 76,998 E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2019 ANNUAL REPORT 37 Notes to the financial statements 31 December 2019 Note 21. Related party transactions continued Consolidated Entity 2019 $ 2018 $ 25,000 25,000 Current payables: Payables to director (G Leone, consultancy fees) Loans to/from related parties There are no loans to/from related parties Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates. Parent entity information l 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 a n o s r e p r o F Profit after income tax Total comprehensive income Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Total equity Parent Entity 2019 $ - - Parent Entity 2019 $ 12,332 6,943,499 3,614,852 3,614,852 2018 $ - - 2018 $ 1,850 6,933,017 2,620,448 3,604,370 3,328,647 3,328,647 3,328,647 3,328,647 Guarantees entered into by the parent entity in relation to the debts of its subsidiaries E4G Investment Holdings Pty Ltd has provided guarantees for the finance lease facilities that Aerison Pty Ltd has with the Commonwealth Bank of Australia. Contingent liabilities E4G Investment Holdings Pty Ltd has provided a corporate guarantee, for the bank guarantee facilities of Aerison Pty Ltd, to the Commonwealth Bank of Australia and Westpac Banking Corporation, totalling $6,875,720. The facilities are secured by a fixed and floating charge over certain short-term bank deposits. 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 2019 ANNUAL REPORT 38 Notes to the financial statements 31 December 2019 Note 22. Parent entity information continued Capital commitments The parent entity had no capital commitments for property, plant and equipment as at 31 December 2019 and 31 December 2018. 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: Aerison Holdings Pty Limited Aerison Services Pty Ltd Aerison Pty Ltd Aerison Mechanical and Electrical Technology Pty Ltd (Dormant) Non-cash investing and financing activities Acquisition of plant and equipment by means of leases Principal place of business/ Country of Incorporation Australia Australia Australia Australia Ownership Interest 2019 % 100 100 100 25 2018 % 100 100 100 25 Consolidated Entity 2019 $ - 2018 $ - The impact of the adoption of Accounting standard for right-of-use assets is disclosed in note 1. There were nil additions of right-of-use assets during the reporting period. Changes in liabilities arising from financing activities Consolidated Balance at 1 January 2018 Net cash used in financing activities Non-cash redemption premium and costs Convertible Notes $ IPF Facility CBA facility Lease Liability Total $ $ $ $ - 25,747 2,591,045 572,334 3,189,126 2,202,940 32,295 1,311,598 (260,563) 3,286,270 138,261 - - - 138,261 Balance at 31 December 2018 2,341,201 58,042 3,902,643 311,771 6,613,657 Net cash used in financing activities (217,800) 53,584 7,968,615 (1,055,773) 6,748,626 Non-cash redemption premium and costs Leases recognised on the adoption of AASB 16 352,854 - - - - - - 352,854 1,076,353 1,076,353 Balance at 31 December 2018 2,476,255 111,626 11,871,258 332,351 14,791,490 E4G Investment Holdings Pty Limited ABN 77 614 735 474 E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2019 ANNUAL REPORT 39 Notes to the financial statements 31 December 2019 Committments l y n o e s u a n o s r e p r o F 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 l - between 12 months and five years Cash flow information Reconciliation of cash flow from operations with profit after income tax Profit after income tax Non-cash flows adjustments: Depreciation expense Interest expense Net on disposal of property, plant and equipment 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 Consolidated Entity 2019 $ 2018 $ - - - - - - - 234,681 98,534 (21,444) 311,771 898,385 275,824 1,174,209 Consolidated Entity 2019 $ 2018 $ 4,115,639 1,256,208 1,836,525 70,976 - 660,325 298,374 29,789 (15,014,922) (6,388,534) (186,373) 8,175,381 1,797,785 560,984 (139,802) 2,662,897 779,902 (386,500) Net cash generated from / (used in) operating activities 1,355,995 (1,227,341) 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 2019 ANNUAL REPORT 40 Notes to the financial statements 31 December 2019 Contingent assets and liabilities Contingent assets The Group has no contingent assets. Contingent liabilities The Commonwealth Bank of Australia and Westpac Banking Corporation provided the Group with bank guarantee facilities totalling $6,875,720. 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 a) b) l y n o c) d) e s u E4G INVESTMENT HOLDINGS PTY LTD AND CONTROLLED SUBSIDIARIES 2019 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 2019 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. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors. Giuseppe Leone Director Dated this 9th March 2021 l a n o s r e p r o F E4G Investment Holdings Pty Limited ABN 77 614 735 474
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