eLectro optic systeMs HoLDings LiMiteD
acn 092 708 364
www.eos‑aus.com
2017 annUaL
report
contents
review of operations
Directors’ report
auditors’ report
Directors’ Declaration
consolidated statement of profi t or Loss and other
comprehensive income
consolidated statement of financial position
consolidated statement of changes in equity
consolidated statement of cash flows
notes to and forming part of the financial statements
asX additional information
twenty Largest ordinary shareholders
1
4
15
21
22
23
24
25
26
67
68
corporate Directory
Directors
Share Registry
Mr Fred Bart (Chairman)
Computershare Investor Services Pty Limited
Dr Ben Greene (Chief Executive Offi cer)
Level 3, 60 Carrington Street
Mr Ian Dennis
Lt Gen Peter Leahy AC
Air Marshall Geoff Brown
Company Secretary
Mr Ian Dennis
Registered Offi ce
Suite 3, Level 12
75 Elizabeth Street
Sydney NSW 2000
Australia
Telephone +61 2 9233 3915
Facsimile +61 2 9232 3411
Web site www.eos‑aus.com
Telephone 1300 855 080 or +61 3 9611 5711
Sydney NSW 2000
GPO Box 7045
Sydney NSW 1115
Australia
outside Australia
Facsimile 1300 137 341
Auditors
Deloitte Touche Tohmatsu
Chartered Accountants
8 Brindabella Circuit
Brindabella Business Park
Canberra Airport ACT 2609
Australia
4893 Designed and Produced by RDA Creative www.rda.com.au
review of operations
1. RESULTS FOR FULL‑YEAR
ENDING 31 DECEMBER 2017
The consolidated entity (“EOS”) reported an operating
loss after tax of $9,399,930 for the year ended
31 December 2017 [2016: $886,692] based on revenues
totalling $23,259,794 [2016: $25,797,200].
The consolidated entity reported net cash used by
operations for the year totalling $25,949,693 [2016:
$2,673,487]. At 31 December 2017, the consolidated
entity held cash totalling $9,989,953 [2016: $8,874,967].
Cash of $119,025 [2016: $195,127] is restricted as it
secures bank guarantees relating to performance on
some contracts.
The operating loss of $9.4 million is due to losses in
both the EOS Space Systems Sector [“EOS Space”]
and EOS Defence Systems Sector [“EOS Defence”].
The EOS Defence loss of $5.7 million was principally due
to one‑time costs associated with scaling production
up x10 over 30 months from mid‑2017 to early 2019.
The EOS Space loss of $2.9 million was principally due
to transferring most effort in 2017 to testing of space
network performance prior to committing the next phase
of infrastructure deployment. Corporate unallocated
overheads amounted to $0.8 million.
In each case the outlays were planned to reduce risk
as part of the company’s preparation for a substantial
period of further growth. The overall results are
therefore in line with management expectations and the
company is now well‑positioned to undertake major new
delivery programs.
2. EOS DEFENCE
This sector develops, markets, manufactures and
supports remote weapon systems [RWS] and related
products in selected global markets. The technology
embodied in the products restricts EOS’ customers
to countries which are approved by both the USA and
Australia for receipt of advanced military technology.
Additional filters related to sovereign risk, sovereign
credit rating, and international corruption index are not
often invoked due to the highly selective nature of the
export license process.
Today over 15,000 RWS have been sold in the world‑wide
market and the replacement and upgrade cycle for this
equipment will soon commence. In addition, countries
aligned with the US and Australia are now faced with
specific threats arising from new weapons provided by
strategic competitors. Based on customer intelligence
it was clear to EOS that a technological response
was required to restore RWS over‑match and tactical
superiority to coalition forces.
Over the period 2010‑2016 EOS Defence invested
significant resources in the development of
next‑generation RWS which offer major improvements in
size, weight, combat effectiveness, firepower, accuracy
and cost over all existing RWS. This next‑generation
product’s outstanding performance was demonstrated
to key customers from 2014 to encourage procurement
activity. From 2016 it was offered in several significant
competitive tenders to qualified sovereign customers.
The market response to this product has been
exceptional. In the twelve months to 31 December 2017
EOS was selected as the preferred bidder in over
$1 billion of RWS tenders. This represented 100% of bids
submitted by EOS.
1
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 review of operations (cont)
The company needed most of 2017 to prepare the
production ramp. It is confident that the steps it has
taken through 2017 will deliver long‑term benefits to all
its production programs going forward.
3. EOS SPACE
The $2.9 million operating loss from EOS Space arises
from a transitional focus on new product testing and
qualification at the expense of revenue generation.
EOS Space has developed tracking sensors that can
cost‑effectively obtain accurate orbital data for space
debris and satellites. This information degrades rapidly
after acquisition, so it must be continuously updated
with new observations, almost daily. The requirement
for high quality, fresh space data is persistent and
long term.
On 1 February 2017 EOS announced that it had
achieved initial operations at its new space tracking
site at Learmonth in Western Australia [WA]. Since
then full operational capability has been achieved and
qualifying tests mandated and funded by key customers
have commenced.
By mid‑2018 EOS and its customers will complete an
extended period of space data acquisition and analysis
for a cluster of four [4] EOS space sensors deployed to
the Learmonth site. These tests are extremely valuable
because the WA site is an essential site but it is also a
worst‑case test site because:
■ Coastal. The Learmonth site is at sea level, and
within 1 km of the ocean. The combination of
altitude, cyclone conditions and permanently
salty air combine to make this site much higher in
maintenance, and much lower in productivity, than
any other site contemplated in the future.
■ Remote. The transport access for the Learmonth
site is permanently problematic, with EOS support
staff requiring 24 hours of travel in each direction,
if required. This remoteness enforces reliable,
autonomous operation as required for high data
yield and productivity.
■ Communications. The site has the lowest
bandwidth communications of all contemplated
sites, forcing compressed bandwidth for both
control and data transfer.
For EOS selection as preferred bidder from a tender
process usually leads to contract award within
12 months. At the date of this report around $600 million
of delivery contracts had been executed by EOS, and
approximately $400 million in further contract awards
was proceeding normally towards contract during 2018.
None of these orders is associated with replacement or
upgrade of the vast installed base of RWS globally.
RWS contracts are typically deliverable over 4‑5 years
with deliveries commencing 6‑12 months after contract.
The $600 million of contracts on hand will require
production at $7 million per month from early 2018,
rising to $20 million per month from early 2019.
This represents x10 increase in RWS production over
less than 30 months from Q3 2016 to Q1 2019. Risk
associated with this ramp were addressed from 2016 by
a series of risk mitigation activities:
■ A new development and production facility was
planned over many months and initiated in
Q3 2017;
■ An initial batch of around 100 units of
next‑generation RWS were produced from
2016‑2017 to allow production issues to
be addressed;
■ A batch of 20 production units, representing one
month of 2018 production, were manufactured
multiple times [i.e. manufactured, dis‑assembled
and re‑manufactured] in late 2017 to improve
production processes;
■ Investment in production documentation and
training increased progressively from 2016;
■ Supply chain management was intensified and
single point failures received closer attention;
■ Staff recruitment action was initiated for new
positions identified as production increased;
■ An organisational restructure to allow rapid
expansion of internal production capacity as well
as through leveraging existing product licensees in
key foreign markets; and
■ Long term working capital arrangements were
addressed through Australian government‑sourced
facilities which leverage the select nature of
EOS customers.
This risk mitigation activity has caused disruption to 2017
operations resulting in a significant operating loss of
$5.7 million for this sector. At 31 December 2017 the risk
mitigation effort was largely complete and the sector was
on plan for production to commence from Q1 2018.
2
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 review of operations (cont)
The technical performance, reliability, responsiveness
and data quality observed over many months of testing
so far meet all project requirements, with over 75% of
all testing completed. Provided the last phases of testing
are also successful the site will serve as the template for
expansion of capacity by replication on other sites.
EOS had until recently intended to deploy a new site for
space operations in central Queensland by 2019. However
recent results from the Learmonth testing are sufficiently
strong, especially considering its worst‑case status, to
justify placing a temporary hold on this deployment pending
a review of whether multiple sites [including the proposed
Queensland site] should be added simultaneously in the
next phase. The EOS Space team and its suppliers are
evaluating the feasibility of this option.
4. FORECAST AND OUTLOOK
The operating loss of $9,399,930 for the 12 months
ending 31 December 2017 was within management
expectations. This expense was used to position both
EOS Defence and EOS Space for strong growth.
In the case of EOS Defence the growth will occur from
early in 2018 as the sector has a backlog of $600 million
in orders for its R‑400S Mk2 RWS product and
reasonably expects to add around $400 million more in
orders during 2018 from the same product. Production of
this pipeline of orders commences from February 2018
after the normal production plant closure for summer.
The company expects the new market opened by
the R‑400S Mk2 will increase rapidly from 2019, but
the beneficial impact of this for EOS will be offset by
competitors entering the market, initially with cheaper
products offering lower performance. The company’s
cumulative market share for all permitted customers is
expected to fall from 100% [2017] to below 50% by 2025.
Because overall market addressable by EOS is expected
to exceed $5 billion EOS aims to achieve cumulative
sales of around $2.5 billion for the R‑400S and its
successor products.
EOS Defence plans to release another product in 2019
based on its R‑2000 remotely operated turret which has
undergone the same comprehensive development and
testing process as the R‑400S RWS. Based on customer
plans, EOS expects the addressable market for this product
type will exceed $11 billion to 2025 and that competing
products already surfacing will likely limit EOS market
share to a specific segment of approximately 20%. Although
this market share is smaller than in RWS, the addressable
market is larger and the cumulative EOS sales revenue is
expected to be similar to RWS in the long term.
Key competitors of EOS Defence are sovereign‑owned
companies which have access to almost unlimited
funds at low, non‑market rates. On 30 January 2018 the
Commonwealth Government announced that defence
export companies like EOS would have access to $3.8
billion of sovereign funds through Efic [Export Finance
and Insurance Corporation] for working capital for export
sales. This is a positive development which will improve
EOS’ competitiveness.
In the medium term from 2021 EOS also expects revenue
growth from the replacement or upgrade of many of
the 15,000+ conventional RWS deployed before 2010.
At around the same time [2021] revenue will commence
from repairs, spares and support for R‑400S RWS now
deploying. EOS customers typically provision around
150% of the initial acquisition cost over 15 years for
repairs, spare parts and other support. If EOS achieves
its near‑term sales targets there will be a very long
period of sustained revenue.
EOS Defence expects to exceed $90 million in 2018
revenue, biased towards the second half due to the
continuous ramping of output volume. Revenue for
2019 is expected to exceed $200 million based on
current orders, and these may increase during 2018.
Given substantial historic investment in risk and cost
reduction, which has all been fully expensed, EOS
expects to achieve EBIT margins of around 10% for the
delivery of EOS Defence contracts going forward.
Based on the strong performance of the multi‑sensor
space site at Learmonth, the outlook for EOS Space
is also positive. However this sector is not expected
to transition through break‑even to profit before late
in 2019. The sector operating loss for 2018 is expected
to be approximately $4 million in the full year if planned
outlays continue towards securing further network
deployment and data contracts.
Financial uncertainties can adversely impact the
governments which are EOS customers. The company
cannot be certain that future customer procurements
will continue as usual or that business conditions will
not deteriorate from current expectations.
The financial statements have been prepared on the
basis of a going concern as detailed in Note 1.
Ben Greene
Chief Executive Officer
22 March 2018
3
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 Directors’ report
The directors of Electro Optic Systems Holdings Limited submit herewith the annual financial report of the company
for the year ended 31 December 2017. In order to comply with the provisions of the Corporations Act 2001, the directors
report as follows:
Directors
The names and particulars of the directors of the company during or since the end of the financial year are:
Name
Particulars
Fred Bart
Chairman (Age 63). He has been Chairman and Director of numerous public and private companies
since 1980, specialising in manufacturing, property, technology and marketable securities.
Mr Bart is Chairman of Immunovative Therapies Limited, an Israeli company involved in the
manufacture of cancer vaccines for the treatment of most forms of cancer. He is a member of the
Remuneration Committee. Appointed to the Board on 8 May 2000.
Dr Ben Greene BE (Hons), Phd in Applied Physics (Age 67) is the Chief Executive Officer of Electro Optic Systems.
Ian Dennis
Lt Gen Peter
Leahy AC
Dr Greene was involved in the formation of Electro Optic Systems. He is published in the subject
areas of weapon system design, laser tracking, space geodesy, quantum physics, satellite design,
laser remote sensing, and the metrology of time. Dr Greene is Deputy Chair of the Western
Pacific Laser Tracking Network (WPLTN) and has recently served as member of Australia’s Prime
Ministers Science, Engineering and Innovation Council (PMSEIC) and CEO of the Cooperative
Research Centre for Space Environment Management. Appointed to the Board on 11 April 2002.
BA, C.A. (Age 60) is a Chartered Accountant with experience as director and secretary in various
public listed companies and unlisted technology companies in Australia and overseas. He has been
involved in the investment banking industry and stockbroking industry for the past twenty five years.
Prior to that, he was with KPMG, Chartered Accountants in Sydney. Appointed to the Board on
8 May 2000. He is a member of the Audit Committee and Remuneration Committee. He is also
company secretary of Electro Optic Systems Holdings Limited.
Non‑executive director (Age 65). Appointed to the Board on 4 May 2009. Peter Leahy AC retired
from the Australian Army in July 2008 as a Lieutenant General in the position of Chief of Army.
Among his qualification he holds a BA (Military Studies), a Master of Military Arts and Science
and is a member of the Australian Institute of Company Directors. He is a Professor and the
foundation Director of the National Security Institute at the University of Canberra. He is a director
of Codan Limited, Citadel Group Limited, a member of the Defence South Australia Advisory Board,
Chairman of the Red Shield Appeal in the ACT and the charity Soldier On and a Trustee of the
Prince’s Charities Australia. In 2014 he was appointed by the Minister for Defence as a member of
the First Principles Review of Defence and in 2016 accepted the position as the Chairman of the
Australian International Military Games, which will bring the Invictus Games to Australia in 2018.
He is Chairman of the Audit Committee and Remuneration Committee.
Air Marshal
Geoff Brown AO
Non‑executive director (Age 59). Appointed to the Board on 21 April 2016. Geoff Brown AO retired
from the Royal Australian Air Force in July 2015 as Air Marshal in the position of Chief of Air Force.
Among his qualifications he holds a BEng (Mech), a Master of Arts (Strategic Studies), Fellow of the
Institute of Engineering Australia and is a Fellow of the Royal Aeronautical Society. He is a Director
of Lockheed Martin (Australia) Pty Limited, Chairman of the Sir Richard Williams Foundation and
Chairman of the Advisory Board of CAE Asia Pacific. He is a member of the Audit Committee.
4
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 Directors’ report (cont)
Name
Particulars
Mark Ureda
Kevin Scully
Non‑executive director (Age 63). Appointed to the Board on 28 April 2005. Retired on 12 May 2017.
Mark was vice president, Strategy and Technology for Northrop Grumman Corporation, a global
defence company until August 2010. Mark is now Senior Vice President, Products and Technology,
Professional Solutions Division, Harman International. Mark received a bachelor’s degree in
Engineering from the University of California at Los Angeles, a master’s degree in Acoustics from
the Pennsylvania State University and a master’s degree in Finance from the UCLA Graduate School
of Management.
Non‑executive director (Age 61). Appointed to the Board on 19 September 2011. Resigned on
20 December 2017. Kevin Scully has more than 30 years of experience in equities research and
analysis, corporate advisory and related matters. He has worked in various positions such as the
head of research and director of Schroders, HSBC and the Netresearch group (which he founded).
Kevin was an advisor to two regulatory authorities of the Singaporean Government (Commercial
Affairs Department and the Monetary Authority of Singapore) for 16 years. In March 2014 he was
appointed Adjunct Professor in the School of Human Development and Social Services at SIM
University. He was a member of the Audit Committee.
The above named directors held office during and since the end of the financial year apart from Mark Ureda who retired
as a director at the Annual General Meeting held on 12 May 2017 and Kevin Scully who resigned on 20 December 2017.
Directorships of Other Listed Companies
Directorships of other listed companies held by directors in the three years immediately before the end of the financial
year were as follows:
name
Fred Bart
Ian Dennis
Lt Gen Peter Leahy AC
Kevin Scully
Principal Activities
company
period of directorship
Audio Pixels Holdings Limited
5 September 2000 to date
Audio Pixels Holdings Limited
5 September 2000 to date
Codan Limited
Citadel Group Limited
Sen Yue Holdings Limited
JEP Holdings Limited
19 September 2008 to date
27 June 2014 to date
11 April to 20 December 2017
1 May 2015 to 20 December 2017
The principal activities of the consolidated entity are in the space and defence systems business.
The company is listed on the Australian Securities Exchange.
Review of Operations
A detailed review of operations is included on pages 1 to 3 of this financial report.
Changes to the State of Affairs
There was no significant changes in the state of affairs of the consolidated entity that occurred during the
financial period.
5
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 Directors’ report (cont)
Subsequent Events
On 30 January 2018, the Company announced that it had been awarded an A$410m contract to supply significant
quantities of its new R‑400S‑Mk2 remote weapon systems to an overseas customer.
On 6 February 2018, the Company announced a placement of 10,471,434 new ordinary shares at $2.91 to sophisticated
and professional investor clients of Petra Capital Pty Limited raising a total of $30.5m. These new shares were
allotted on 12 February 2018. These funds will be used for working capital to lodge performance bonds and offset
bonds in respect of the new contract announced on 30 January 2018 and optimising the supply chain. Additionally
in the same announcement the Company announced a further tranche of the placement of 10,147,123 new ordinary
shares at $2.91 to sophisticated and professional investor clients of Petra Capital Pty Limited raising a total of $29.5m.
These shares were issued on 16 March 2018 following shareholder approval at an Extraordinary General Meeting held
on 13 March 2018 to refresh the 15% placement ability.
On 6 February 2018, the Company also announced a Share Placement Plan to all existing shareholders registered
on 5 February 2018 at the same price as the institutional placement of $2.91 to raise a maximum of $5m. The Share
Placement Plan closed on 14 March 2018 raising $1.4m resulting in the issue of 495,758 new ordinary shares on
21 March 2018. The Directors decided not to place any further shares up to the maximum of $5m.
On 6 February 2018, the Company announced a new restructure of the management team with Grant Sanderson
appointed as Chief Executive Officer for EOS Defence and Peter Short being made Chief Operating Officer for the Group.
Both of these positions report directly to Dr Ben Greene, Group Chief Executive Officer.
On 22 February 2018, the Company entered into a lease of premises at 2865 Wall Triana Highway, Huntsville, Alabama
for a period of five years from 1 March 2018. The Company has an option to purchase the property for US$6.5m prior to
the expiry of the lease on 28 February 2023.
Apart from the above, there has not been any matter or circumstance that has arisen since the end of the financial year,
that has significantly affected or may significantly affect the operations of the consolidated entity, the results of those
operations or the state of affairs of the consolidated entity in future financial years.
Future Developments
The company will continue to operate in the space and defence systems business.
Please see the review of operations for further details.
Environmental Regulations
In the opinion of the directors the consolidated entity is in compliance with all applicable environmental legislation
and regulations.
Dividends
The directors recommend that no dividend be paid and no amount has been paid or declared by way of dividend since
the end of the previous financial year and up to the date of this report.
Share Options
Share options granted to directors and executives
No options were granted to any director, executive or staff member during the year.
Share options on issue at year end or exercised during the year
There were 5,620,000 options outstanding at year end and no options were exercised during the year.
There were no shares or interests issued during the financial year as a result of exercise of an option.
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Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 Directors’ report (cont)
Indemnification and Insurance of Officers and Auditors
During the financial year, the company paid a premium in respect of a contract insuring the Directors and Officers of the
Company and any related body corporate against a liability incurred as such a Director or Officer to the extent permitted
by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the coverage provided
and the amount of the premium. The Company has agreed to indemnify the current Directors, Company Secretary and
Executive Officers against all liabilities to other persons that may arise from their position as Directors or Officers of the
Company and its controlled entities, except where to do so would be prohibited by law. The agreement stipulates that
the Company will meet the full amount of any such liabilities, including costs and expenses.
The Company has not, during or since the financial year indemnified or agreed to indemnify an auditor of the company
or of any related body corporate against any liability incurred as such an auditor.
Directors’ Meetings
The following table sets out the number of directors’ meetings (including meetings of committees of directors)
held during the financial year and the number of meetings attended by each director (while they were a director
or committee member). During the financial year, 18 Board meetings, two Audit committee meetings and no
Remuneration committee meetings were held.
Directors
Mr Fred Bart
Dr Ben Greene
Mr Ian Dennis
Mr Mark Ureda
Lt Gen Peter Leahy AC
Mr Kevin Scully
Air Marshal Geoff Brown AO
Board of directors
Audit committee
Remuneration committee
Held
Attended
Held
Attended
Held
Attended
18
18
18
7
18
17
18
18
18
18
7
17
14
17
‑
‑
2
‑
2
2
‑
‑
‑
2
‑
2
2
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
Directors’ Shareholdings
The following table sets out each Director’s relevant interest in shares and options of the company or a related body
corporate as at the date of this report.
Directors
Mr Fred Bart
Dr Ben Greene
Mr Ian Dennis
Lt Gen Peter Leahy AC
Air Marshall Geoff Brown AO
Mr Mark Ureda
Mr Kevin Scully
Fully paid ordinary shares
Unlisted Options
5,314,230
3,964,485
175,205
38,755
5,000
‑
‑
200,000
2,000,000
200,000
200,000
200,000
200,000
200,000
There has been no movement in Director shareholdings during the 2017 year apart from the participation in the Share
Purchase Plan. The unlisted options are exercisable at $3.00 each and expire on 31 January 2019.
7
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 Directors’ report (cont)
Remuneration Report (Audited)
The key management personnel of Electro Optic Systems Holdings Limited during the year were:
Mr Fred Bart (Chairman, Non‑executive director)
Dr Ben Greene (Chief Executive Officer and director)
Mr Ian Dennis (Non‑executive director)
Mr Mark Ureda (Non‑executive director) Resigned 12 May 2017
Lt Gen Peter Leahy AC (Non‑executive director)
Mr Kevin Scully (Non‑executive director) Resigned 20 December 2017
Air Marshall Geoff Brown (Non‑executive director)
Dr Craig Smith (Chief Executive Officer of EOS Space Systems Pty Limited)
Mr Scott Lamond (Chief Financial Officer ‑ Electro Optic Systems Pty Limited)
Dr Warwick Holloway (Chief Executive Officer of EOS Defence Systems Pty Limited)
This report outlines the remuneration arrangements in place for Directors and Executives of the Group.
The Directors are responsible for remuneration policies and packages applicable to the Board members and executives
of the Group. The Group has a separate Remuneration Committee. The broad remuneration policy is to ensure the
remuneration package properly reflects the persons duties and responsibilities.
Remuneration structure
In accordance with best practice corporate governance, the structure of Non‑Executive Director and senior manager
remuneration is separate and distinct.
Non‑Executive Director remuneration
Objective
The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and
retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
Structure
The Company’s Constitution and the Australian Securities Exchange Listing Rules specify the aggregate remuneration
of Non‑ Executive Directors shall be determined from time to time by a General Meeting of shareholders. An amount
not exceeding the amount determined is then divided between the Directors as agreed. The latest determination was at
the Annual General Meeting held on 12 May 2017, when shareholders approved a maximum aggregate remuneration of
$500,000 per year excluding options.
The amount of aggregate remuneration approved by shareholders, the manner in which it is apportioned amongst
Directors, and the policy of granting options to Directors, are reviewed by directors at least every two years.
Each Non‑Executive Director receives a fee for serving as a Director of the Company. No additional fees are paid to any
Director for serving on a committee of the Board. A company associated with Mr Ian Dennis receives a fee in recognition
of additional services provided to the Group.
8
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 Directors’ report (cont)
Remuneration Report (cont)
Executive Director and Senior Management remuneration
Objective
The Group aims to award Executives with a level and mix of remuneration commensurate with their position and
responsibilities within the Group and so as to:
■ reward Executives for Group and individual performance against targets set by reference to suitable benchmarks;
■ align the interests of Executives with those of shareholders; and
■ ensure that the total remuneration paid is competitive by market standards.
Structure
The remuneration paid to Executives is set with reference to prevailing market levels and typically comprises a fixed
salary and option component. Options are granted to Executives in line with their respective levels of experience and
responsibility. Details of the amounts paid and the number of options granted to Executives are disclosed elsewhere in
the Directors’ Report.
Employment contracts
There are no employment contracts in place with any Non‑Executive Director of the Group. Executive Directors and
Senior Management are employed under standard employment contracts which contain no unusual terms. Beyond
accrued leave benefits, there are no other termination payments or golden parachutes for any directors or senior
executives. The CEO has a 180 day notice period under his employment contract and the other senior management have
90 day notice periods under their employment contracts.
9
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 Directors’ report (cont)
Remuneration Report (cont)
Director remuneration
The following tables disclose the remuneration of the directors of the Company:
2017
Mr Fred Bart
Dr Ben Greene*
Mr Ian Dennis#
Mr Mark Ureda
Lt Gen Peter Leahy AC
Mr Kevin Scully
Air Marshall Geoff
Brown AO
Short term
Post Employment
Equity
Salary &
Fees
$
61,000
415,400
157,500
17,031
37,500
40,875
37,500
766,806
Non‑
monetary
$
‑
26,163
‑
‑
‑
‑
‑
26,163
Superannuation
$
5,795
35,000
3,563
‑
3,563
‑
3,563
51,484
Options
$
22,901
229,012
22,901
22,901
22,901
22,901
41,847
385,364
Other
Long Term
Benefits
$
‑
41,787
‑
‑
‑
‑
‑
Total
$
89,696
747,362
183,964
39,932
63,964
63,776
82,910
41,787
1,271,604
* Executive Director during the financial year
# Includes fees for company secretarial and accounting consultancy services provided of $120,000 (2016: $120,000)
2016
Mr Fred Bart
Dr Ben Greene*
Mr Ian Dennis#
Mr Mark Ureda
Lt Gen Peter Leahy AC
Mr Kevin Scully
Air Marshall Geoff
Brown AO
Short term
Post Employment
Equity
Salary &
Fees
$
Non‑
monetary
$
Superannuation
$
61,000
417,605
157,500
40,875
37,500
40,875
25,859
781,214
‑
20,125
‑
‑
‑
‑
‑
20,125
5,795
31,459
3,563
‑
3,563
‑
2,456
46,836
Options
$
49,798
497,984
49,798
49,798
49,798
49,798
40,279
787,253
Other
Long Term
Benefits
$
Total
$
‑
116,593
52,897
1,020,070
‑
‑
‑
‑
‑
210,861
90,673
90,861
90,673
68,594
52,897
1,688,325
* Executive Director during the financial year
# Includes fees for company secretarial and accounting consultancy services provided of $120,000 (2016: $120,000).
10
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 Directors’ report (cont)
Remuneration Report (cont)
Executive remuneration
No executives are employed by the holding company. The following table discloses the remuneration of the executives of
the consolidated entity:
2017
Dr Craig Smith
Mr Scott Lamond
Dr Warwick
Holloway
2016
Dr Craig Smith
Mr Scott Lamond
Dr Warwick
Holloway
Short term
Post Employment
Equity
Salary &
Fees
$
212,960
212,960
175,700
601,620
Non‑
monetary
$
Superannuation
$
‑
‑
‑
‑
20,231
20,231
16,720
57,182
Options
$
34,352
25,764
17,176
77,292
Short term
Post Employment
Equity
Salary &
Fees
$
212,766
212,766
173,938
599,470
Non‑
monetary
$
Superannuation
$
‑
‑
‑
‑
20,213
20,213
16,524
56,950
Options
$
74,698
56,023
37,348
168,069
Other
Long Term
Benefits
$
9,137
12,459
4,590
26,186
Other
Long Term
Benefits
$
16,324
13,699
9,260
39,283
Total
$
276,680
271,414
214,186
762,280
Total
$
324,001
302,701
237,070
863,772
No options were granted to, or exercised by any director or executive during 2017. During the financial year, 3,000,000
options were granted to Directors on 5 February 2016 and 200,000 options on 30 May 2016 at an exercise price of $3.00
with an expiry date of 31 January 2019.
During the previous financial year, 2,515,000 options were issued to staff on 5 February 2016 at an exercise price of
$3.00 with an expiry date of 31 January 2019. 900,000 of these options were issued to senior executives included as part
of the key management personnel.
11
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 Directors’ report (cont)
Remuneration Report (cont)
The following table sets out each key management personnel’s equity holdings (represented by holdings of fully paid
ordinary shares in Electro Optic Systems Holdings Limited).
Balance at
1/1/17
Granted as
remuneration
Received on
exercise of
options
Net other
change
Balance at
31/12/17
Mr Fred Bart
Dr Ben Greene
Mr Ian Dennis
Mr Mark Ureda
Lt Gen Peter Leahy AC
Mr Kevin Scully
Air Marshal Geoff Brown AO
Dr Craig Smith
Mr Scott Lamond
Dr Warwick Holloway
No.
5,309,075
3,954,185
170,050
‑
33,600
‑
‑
89,450
11,000
‑
No.
No.
No.
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
No.
5,309,075
3,954,185
170,050
‑
33,600
‑
‑
89,450
11,000
‑
Elements of remuneration related to performance
There are no performance conditions other than service attached to the above remuneration to directors and executives.
Directors and senior executives receive options as disclosed which are not subject to specific performance conditions
other than service. The overall performance of the company as measured by the share price will determine whether the
options are exercised and whether the director or executive receives any benefit from these options. The time service
condition has been chosen by the Board as an appropriate condition as it helps in the retention and motivation of staff.
Options issued to certain directors and executives are also subject to vesting provisions as disclosed below.
Key management personnel option holdings
There were 4,100,000 options outstanding at the end of the previous financial year. During the previous financial year,
4,100,000 unlisted options exercisable at $3.00 each with an expiry date of 31 January 2019 were issued to the following
key management personnel:
Directors
Mr Fred Bart
Dr Ben Greene
Mr Ian Dennis
Mr Mark Ureda
Lt Gen Peter Leahy AC
Mr Kevin Scully
Air Marshall Geoff Brown AO
Dr Craig Smith
Mr Scott Lamond
Dr Warwick Holloway
Date of Issue
5 February 2016
5 February 2016
5 February 2016
5 February 2016
5 February 2016
5 February 2016
30 May 2016
5 February 2016
5 February 2016
5 February 2016
Unlisted Options at the date
of this report held by KMP
200,000
2,000,000
200,000
200,000
200,000
200,000
200,000
400,000
300,000
200,000
4,100,000
These options vest as to 50% of the number after one year with the balance of 50% vesting after two years from the date of issue.
12
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 Directors’ report (cont)
Remuneration Report (cont)
Other transactions with key management personnel
During the year, the Company paid a total of $66,795 (2016: $66,795) to 4F Investments Pty Limited, a company
associated with Mr Fred Bart in respect of directors fees and superannuation for Fred Bart.
During the year, the Company paid $41,063 (2016: $28,315) to Dennis Corporate Services Pty Limited, a company
associated with Mr Ian Dennis in respect of directors fees and superannuation for Ian Dennis.
During the year, the Company paid $41,063 (2016: $41,063) to GCB Stratos Consulting Pty Limited, a company
associated with Air Marshall Geoff Brown in respect of directors fees and superannuation for Geoff Brown.
During the year, the Company paid $120,000 (2016: $120,000) to Dennis Corporate Services Pty Limited, a company
associated with Mr Ian Dennis in respect of consulting fees for company secretarial and accounting services.
During the year, the Company paid $22,955 (2016: $22,478) to Audio Pixels Holdings Limited, a company of which
Fred Bart and Ian Dennis are directors and shareholders in respect of shared Sydney office facilities.
The table below sets out summary information about the company’s earnings and movements in shareholder wealth for
the last 5 financial years.
31 December 2017
$
31 December 2016
$
31 December 2015
$
31 December 2014
$
31 December 2013
$
Revenue
23,259,794
25,797,200
30,500,748
23,476,433
29,882,393
Net (loss) /
profit before tax
Net (loss)/ profit
after tax
Share price at
start of year
Share price at
end of year
Dividends paid
(9,319,930)
(2,918,477)
3,032,442
(3,017,546)
1,562,746
(9,319,930)
(886,692)
3,032,442
(3,017,546)
1,562,746
31 December 2017
$
31 December 2016
$
31 December 2015
$
31 December 2014
$
31 December 2013
$
1.73
2.45
‑
1.49
1.73
‑
0.815
1.49
‑
0.42
0.815
‑
0.30
0.42
‑
Audit Committee
The Board appointed three non‑executive directors to form the committee, with a majority of independent directors
and the Chairman being an independent person. The current members of the Committee are Lt Gen Peter Leahy AC
(Chairman), Mr Ian Dennis and Mr Geoff Brown.
Remuneration Committee
The Board appointed three non‑executive directors to form the committee, with a majority of independent directors
and the Chairman being an independent person. The current members of the Committee are Lt Gen Peter Leahy AC
(Chairman), Mr Ian Dennis and Mr Fred Bart.
13
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 Directors’ report (cont)
Non‑audit Services
The Directors are satisfied that the provision of non‑audit services, during the year, by the auditor (or by another person
or firm on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001. The Directors have formed this view based on the fact that the nature and scope of each type of
non‑audit service provided means that the audit independence was not compromised.
Details of amounts paid or payable to the auditor for non‑audit services provided during the year by the auditor are
contained in note 8 to the financial statements.
Auditor’s Independence Declaration
The auditor’s independence declaration is included on page 15 of the annual report.
Signed in accordance with a resolution of directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the Directors
I A Dennis
Director
Dated at Sydney this 22 day of March 2018
14
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 7
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Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017
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1818
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1919
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017
8 to 13
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20
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017
Directors’ DecLaration
The directors declare that:
(a) in the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as
and when they become due and payable;
(b) in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the
Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the
financial position and performance of the company and the consolidated entity;
(c) the directors have been given the declarations required by s.295A of the Corporations Act 2001; and
(d) the attached financial statements are in compliance with International Financial Reporting Standards, as stated in
note 1 to the financial statements.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
I A Dennis
Director
Dated at Sydney this 22 day of March 2018
21
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 consoLiDateD stateMent of profit or Loss
anD otHer coMpreHensive incoMe
for tHe financiaL year enDeD 31 DeceMber 2017
Revenue
Changes in inventories of work in progress
Raw materials and consumables used
Employee benefits expense
Administration expenses
Finance costs
Depreciation and amortisation of property, plant and equipment
(Loss) on disposal of fixed assets
Foreign exchange gains/ (losses)
Occupancy costs
Other expenses
(Loss) before income tax benefit
Income tax benefit
(Loss) for the year
Other comprehensive income
Note
2(a)
31 December
2017
$
31 December
2016
$
23,259,794
25,797,200
(2,699,765)
(447,550)
(8,473,543)
(10,346,026)
2(b)
(14,692,849)
(13,600,306)
(4,304,914)
(3,756,612)
2(b)
2(b)
2(b)
2(b)
2
4
(34,985)
(193,325)
(2,007)
(695,061)
(1,188,969)
(374,306)
(27,663)
(98,859)
(110)
610,447
(796,222)
(252,776)
(9,399,930)
(2,918,477)
‑
2,031,785
17
(9,399,930)
(886,692)
Items that may be reclassified subsequently to profit and loss
Exchange differences arising on translation of foreign operations
363,703
(74,898)
Total comprehensive (Loss) for the year
(9,036,227)
(961,590)
(Loss) per share
Basic (cents per share)
Diluted (cents per share)
Notes to the financial statements are included on pages 26 to 66.
3
3
(15.1)
(15.1)
(1.6)
(1.6)
22
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 consoLiDateD stateMent of financiaL position
as at 31 DeceMber 2017
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other
TOTAL CURRENT ASSETS
NON‑CURRENT ASSETS
Property, plant and equipment
Trade and other receivables
Other
TOTAL NON‑CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
NON‑CURRENT LIABILITIES
Provisions
TOTAL NON‑CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Notes to the financial statements are included on pages 26 to 66.
Consolidated
December
2017
$
December
2016
$
Note
18
5
6
7
9
5
7
10
11
11
14
16
17
9,989,953
8,874,967
11,662 007
3,805,560
13,795,574
3,478,996
2,390,931
459,228
37,838,465
16,618,751
1,405,347
459,791
609,864
7,751,938
‑
‑
9,767,149
459,791
47,605,614
17,078,542
18,084,358
7,176,569
5,091,560
5,553,555
23,175,918
12,730,124
859,076
859,076
301,419
301,419
24,034,994
13,031,543
23,570,620
4,046,999
103,342,071
75,383,567
9,344,928
8,379,881
(89,116,379)
(79,716,449)
23,570,620
4,046,999
23
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 consoLiDateD stateMent of cHanges in eqUity
for tHe year enDeD 31 DeceMber 2017
Accumulated
losses
$
Total
$
Issued
capital
$
Foreign
currency
translation
reserve
$
Employee
equity settled
benefits
reserve
$
2017
Balance at 1 January 2017
4,046,999
(79,716,449)
75,383,567
(604,840)
8,984,721
(Loss) for the year
(9,399,930)
(9,399,930)
Exchange differences arising on
translation of foreign operations
Total comprehensive (loss) for
the year
363,703
‑
(9,036,227)
(9,399,930)
‑
‑
‑
Issue of 3,863,638 new shares at
$2.20 each
Issue of 9,100,000 new shares at
$2.30 each
Recognition of share
based payments
8,075,004
19,883,500
601,344
‑
‑
‑
8,075,004
19,883,500
‑
‑
363,703
363,703
‑
‑
‑
‑
‑
‑
‑
‑
601,344
Balance at 31 December 2017
23,570,620
(89,116,379)
103,342,071
(241,137)
9,586,065
2016
Balance at 1 January 2016
3,751,671
(78,829,757)
75,383,567
(529,942)
7,727,803
(Loss) for the year
(886,692)
(886,692)
Exchange differences arising on
translation of foreign operations
Total comprehensive (loss)/ income
for the year
(74,898)
‑
(961,590)
(886,692)
Recognition of share
based payments
1,256,918
‑
‑
‑
‑
‑
‑
(74,898)
(74,898)
‑
‑
‑
‑
1,256,918
Balance at 31 December 2016
4,046,999
(79,716,449)
75,383,567
(604,840)
8,984,721
Notes to the financial statements are included on pages 26 to 66.
24
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 consoLiDateD stateMent of casH fLows
for tHe year enDeD 31 DeceMber 2017
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Tax benefit received
Interest received
Interest and other costs of finance paid
Consolidated
31 December
2017
$
31 December
2016
$
Note
22,253,859
26,238,130
(48,363,455)
(31,075,678)
‑
2,031,785
194,888
(34,985)
159,939
(27,663)
Net cash (outflows) from operating activities
18(b)
(25,949,693)
(2,673,487)
Cash flows from investing activities
Payment for property, plant and equipment
Net cash (outflows) from investing activities
Cash flows from financing activities
Proceeds from issue of new shares
Net cash inflows from financing activities
(1,140,947)
(402,977)
(1,140,947)
(402,977)
27,958,504
27,958,504
‑
‑
Net increase/(decrease) in cash and cash equivalents
867,864
(3,076,464)
Cash and cash equivalents at the beginning of the financial year
8,874,967
11,894,300
Effects of exchange rate fluctuations on the balances of cash held in
foreign currencies
247,122
57,131
Cash and cash equivalents at the end of the financial year
18(a)
9,989,953
8,874,967
Notes to the financial statements are included on pages 26 to 66.
25
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017
1. Summary of Accounting Policies
Statement of compliance
The financial statements are general purpose
financial statements which have been prepared
in accordance with the Corporations Act 2001 and
Accounting Standards and complies with other
requirements of the law. The financial statements
comprise the consolidated financial statements
of the Group. For the purposes of preparing the
consolidated financial statements, the Company
is a for‑profit entity. Accounting Standards include
Australian equivalents to International Financial
Reporting Standards (“AASB”). Compliance with
AASB ensures that the financial statements and
notes of the company and the consolidated entity
comply with International Financial Reporting
Standards (“IFRS”).
The financial statements were authorised for issue
by the Directors on 22 March 2018.
Basis of preparation
The financial report has been prepared on the basis
of historical cost. Cost is based on the fair values
of the consideration given in exchange for assets.
All amounts are presented in Australian dollars,
unless otherwise stated.
The following significant accounting policies have
been adopted in the preparation and presentation of
the financial report:
(a) Going Concern
The financial report has been prepared on the basis
that the consolidated entity is a going concern, which
assumes continuity of normal business activities
and the realisation of assets and the settlement of
liabilities in the ordinary course of business.
The consolidated entity incurred a net loss during
the year of $9,399,930 (2016: $886,692 ‑ loss) and
used net cash in operating activities of $25,949,693
(2016: $2,673,487 used by). As at 31 December 2017,
the consolidated entity had cash of $9,989,953 (2016:
$8,874,967) of which $119,025 (2016: $195,127) is
restricted as it secures bank guarantees on existing
contracts with local and overseas customers.
The consolidated entity made the following
announcements to the ASX:
■ On 30 January 2018, the Company announced
that it had been awarded an A$410m contract
to supply its new R‑400S‑Mk2 remote weapon
system to an overseas customer;
■ On 6 February 2018, the company announced a
placement of 10,471,434 new ordinary shares at
$2.91, raising a net $28.8m. These funds will be
used for working capital to lodge performance
bonds and offset bonds in respect of the new
contract announced on 30 January 2018 and
optimising the supply chain. In the same
announcement the company announced a
further tranche of the placement of 10,147,123
new ordinary shares at $2.91, raising a
net $27.9m. These shares were issued on
16 March 2018 following shareholder approval
at an Extraordinary General Meeting held on
13 March 2018 to refresh the 15% placement
ability; and
■ On 6 February 2018, the Company also
announced a Share Placement Plan to all existing
shareholders registered on 5 February 2018 at
the same price as the institutional placement
of $2.91 to raise a maximum of $5m. On
21 March 2018, it was announced that 495,758
shares were allotted at $2.91 raising $1.4m.
In the opinion of the directors, the ability of the
consolidated entity to continue as a going concern
and pay its debts as and when they become due and
payable is dependent upon:
■ the continued ability of the consolidated entity to
deliver contracts on hand on time, to the required
specification and within budgeted costs;
■ the likelihood of key military and government
customers to make timely payments for goods
supplied in accordance with contractual terms;
■ the future trading prospects of the consolidated
entity including obtaining the required export
permits, lodgement of the required performance
bonds, the successful lodgement of offset bonds
in relation to executed contracts and successfully
obtaining and negotiating commercial contract
terms in relation to potential customers; and
■ the ability to raise capital from existing or new
shareholders should the need arise.
In the opinion of the directors, the consolidated
entity can continue as a going concern and pay its
debts as and when they become due and payable.
Given the current financial position, performance
and prospects of the consolidated entity the
directors believe it is appropriate to prepare the
financial report on the going concern basis.
26
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
1. Summary of Accounting Policies (cont)
(f) Employee benefits
(b) Borrowings
Borrowings are recorded initially at fair value, net of
transaction costs. Subsequent to initial recognition,
borrowings are measured at amortised cost with any
difference between the initial recognised amount
and the redemption value being recognised in profit
or loss over the period of the borrowing using the
effective interest rate method.
(c) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand,
cash in banks and investments in money market
instruments, net of outstanding bank overdrafts.
Cash and cash equivalents includes restricted cash
to the extent it relates to operating activities.
(d) Construction contracts and work
in progress
Where the outcome of a construction contract can be
estimated reliably, revenue and costs are recognised
by reference to the stage of completion of the
contract activity at the reporting date. The state
of completion is measured by the proportion that
contract costs incurred for work performed to date
as a percentage of the estimated total contract
costs, except where this would not be representative
of the stage of completion. Variations in contract
work, claims and incentive payments are included
to the extent that they have been agreed with
the customer.
Where the outcome of a construction contract
cannot be estimated reliably, contract revenue is
recognised to the extent of contract costs incurred
that it is probable will be recoverable. Contract
costs are recognised as expenses in the period
in which they are incurred. When it is probable
that total contract costs will exceed total contract
revenue, the expected loss is recognised as an
expense immediately.
Deferred revenue is represented by advance billings
on contracts and the basis of recognition is the
percentage of completion basis.
(e) Embedded derivatives
Derivatives embedded in other financial instruments
or other host contracts are treated as separate
derivatives when their risks and characteristics are
not closely related to those of host contracts and the
host contracts are not measured at fair value with
changes in fair value recognised in profit or loss.
Provision is made for benefits accruing to employees
in respect of wages and salaries, annual leave,
and long service leave when it is probable that
settlement will be required and they are capable of
being measured reliably.
Provisions made in respect of short term employee
benefits are measured at their nominal values using
the remuneration rate expected to apply at the time
of settlement.
Provisions made in respect of long term employee
benefits are measured as the present value of the
estimated future cash outflows to be made by the
consolidated entity in respect of services provided by
employees up to the reporting date.
Defined contribution plans ‑ Contributions to defined
benefit contribution superannuation plans are
expensed when incurred.
(g) Financial assets
Subsequent to initial recognition, investments in
subsidiaries at the company level are measured at
cost less any impairment.
Other financial assets are classified into the
following specified categories: held to maturity
investments and loans and receivables.
The classification depends on the nature and
purpose of the financial assets and is determined at
the time of the initial recognition.
Held to maturity investments
Bills of exchange are recorded at amortised cost
using the effective interest method less impairment,
with revenue recognised on an effective yield
basis. The effective interest method is a method of
calculating the amortised cost of a financial asset
and of allocating interest income over the relevant
period. The effective interest rate is the rate that
exactly discounts estimated future cash receipts
through the expected life of the financial asset, or,
where appropriate, a shorter period.
Loans and receivables
Trade receivables, loans and other receivables are
recorded at amortised cost less impairment.
27
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
1. Summary of Accounting Policies (cont)
(j) Goods and services tax
Revenues, expenses and assets are recognised net of
the amount of goods and services tax (GST), except:
i. where the amount of GST incurred is not
recoverable from the taxation authority, it is
recognised as part of the cost of acquisition of an
asset or as part of an item of expense; or
ii. for receivables and payables which are recognised
inclusive of GST.
The net amount of GST recoverable from, or payable
to, the taxation authority is included as part of
receivables or payables.
Cash flows are included in the statement of cash
flows on a gross basis. The GST component of cash
flows arising from investing and financing activities
which is recoverable from, or payable to, the taxation
authority is classified as operating cash flows.
(k) Government grants
Government grants are assistance by the
government in the form of transfers of resources to
the consolidated entity in return for past or future
compliance with certain conditions relating to the
operating activities of the entity. Government grants
include government assistance where there are
no conditions specifically relating to the operating
activities of the consolidated entity other than
the requirement to operate in certain regions or
industry sectors.
Government grants relating to income are recognised
as income over the periods necessary to match
them with the related costs. Government grants
that are receivable as compensation for expenses or
losses already incurred or for the purpose of giving
immediate financial support to the consolidated entity
with no future related costs are recognised as income
in the period in which it becomes receivable.
(h) Financial instruments issued
by the company
Debt and equity instruments
Debt and equity instruments are classified as
either liabilities or as equity in accordance with the
substance of the contractual arrangement.
Transaction costs on the issue of
equity instruments
Transaction costs arising on the issue of equity
instruments are recognised directly in equity as a
reduction of the proceeds of the equity instruments
to which the costs relate. Transaction costs are the
costs that are incurred directly in connection with
the issue of those equity instruments and which
would not have been incurred had those instruments
not been issued.
Interest
Interest is classified as an expense consistent with
the statement of financial position classification of
the related debt.
(i) Foreign currency
Foreign currency transactions
All foreign currency transactions during the
financial year are bought to account using the
exchange rate in effect at the date of the transaction.
Foreign currency monetary items at reporting date
are translated at the exchange rate existing at
reporting date. Non‑monetary assets and liabilities
carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at
the date when the fair value was determined.
Exchange differences are recognised in profit or loss
in the period they arise.
Foreign operations
On consolidation, the assets and liabilities of the
consolidated entity’s overseas operations are
translated at exchange rates prevailing at the
reporting date. Income and expense items are
translated at the average exchange rates for the
period unless exchange rates fluctuate significantly.
Exchange differences arising, if any, are recognised
in the foreign currency translation reserve,
and recognised in profit or loss on disposal of the
foreign operation.
28
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
1. Summary of Accounting Policies (cont)
periods is recognised as a liability (or asset) to the
extent that it is unpaid (or refundable).
(l) Impairment of assets
At each reporting date, the consolidated entity
reviews the carrying amounts of its tangible and
intangible assets to determine whether there is
any indication that those assets have suffered
an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated
in order to determine the extent of the impairment
loss (if any). Where the asset does not generate
cash flows that are independent from other assets,
the consolidated entity estimates the recoverable
amount of the cash‑generating unit to which the
asset belongs.
Goodwill, intangible assets with indefinite useful
lives and intangible assets not yet available for
use are tested for impairment annually and
whenever there is an indication that the asset may
be impaired. An impairment of goodwill is not
subsequently reversed. Recoverable amount is the
higher of fair value less cost of disposal and value in
use. In assessing value in use, the estimated future
cash flows are discounted to their present value using
a pre‑tax discount rate that reflects current market
assessments of the time value of money and the risks
specific to the asset for which the estimates of future
cash flows have not been adjusted.
If the recoverable amount of an asset
(or cash‑generating unit) is estimated to be less
than its carrying amount, the carrying amount
of the asset (cash‑generating unit) is reduced to
its recoverable amount. An impairment loss is
recognised in profit or loss immediately.
Where an impairment loss subsequently reverses,
the carrying amount of the asset (cash‑generating
unit) is increased to the revised estimate of its
recoverable amount, but only to the extent that the
increased carrying amount does not exceed the
carrying amount that would have been determined
had no impairment loss been recognised for
the asset (cash‑generating unit) in prior years.
A reversal of an impairment loss is recognised in
profit or loss immediately.
(m) Income tax
Current tax
Current tax is calculated by reference to the amount
of income taxes payable or recoverable in respect
of the taxable profit or tax loss for the period.
It is calculated using tax rates and tax laws that
have been enacted or substantively enacted by
reporting date. Current tax for current and prior
Deferred tax
Deferred tax is recognised on temporary differences
arising from differences between the carrying
amount of assets and liabilities in the financial
statements and the corresponding tax base of
those items.
In principle, deferred tax liabilities are recognised
for all taxable temporary differences. Deferred tax
assets are recognised to the extent that it is probable
that sufficient taxable amounts will be available
against which deductible temporary differences or
unused tax losses and tax offsets can be utilised.
However, deferred tax assets and liabilities are not
recognised if the temporary differences giving rise
to them arise from the initial recognition of assets
and liabilities (other than as a result of business
combination) which affects neither taxable income
nor accounting profit. Furthermore, a deferred
tax liability is not recognised in relation to taxable
temporary differences arising from goodwill.
Deferred tax liabilities are recognised for taxable
temporary differences arising on investments in
subsidiaries except where the consolidated entity
is able to control the reversal of the temporary
differences and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred tax assets arising from deductible
temporary differences associated with these
investments and interests are only recognised to the
extent that it is probable that there will be sufficient
taxable profits against which to utilise the benefits of
the temporary differences and they are expected to
reverse in the foreseeable future.
Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply to the
period(s) when the assets and liabilities giving
rise to them are realised or settled, based on
tax rates (and tax laws) that have been enacted
or substantively enacted by reporting date.
The measurement of deferred tax liabilities and
assets reflects the tax consequences that would
follow from the manner in which the consolidated
entity expects, at the reporting date, to recover
or settle the carrying amount of its assets
and liabilities.
Deferred tax assets and liabilities are offset when
they relate to income taxes levied by the same
taxation authority and the company/consolidated
entity intends to settles its current tax assets and
liabilities on a net basis.
29
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
1. Summary of Accounting Policies (cont)
Current and deferred tax for the period
Current and deferred tax is recognised as an
expense or income in the statement of profit or loss
and other comprehensive income, except when it
relates to items credited or debited directly to equity,
in which case the deferred tax is also recognised
directly in equity, or where it arises from the initial
accounting for a business combination, in which
case it is taken into account in the determination of
goodwill or excess.
Tax consolidation
The company and all its wholly‑owned Australian
resident entities are part of a tax consolidated
group under Australian taxation law. Electro Optic
Systems Holdings Limited is the head entity in
the tax‑consolidated group. Tax expense/income,
deferred tax liabilities and deferred tax assets
arising from temporary differences of the members
of the tax‑consolidated group are recognised in the
separate financial statements of the members of the
tax‑consolidated group using the ‘separate taxpayer
within the group’ approach.
Current tax liabilities and assets and deferred
tax assets arising from unused tax losses and tax
credits of the members of the tax‑consolidated
group are recognised by the company (as head entity
in the tax‑consolidated group).
There are no formal tax funding arrangements
within companies within the tax‑consolidated entity.
(n) Intangible assets
Research and development costs
Expenditure on research activities is recognised
as an expense in the period in which it is incurred.
Where no internally‑generated intangible assets
can be recognised, development expenditure is
recognised as an expense in the period as incurred.
Intangible assets acquired in a
business combination
Intangible assets acquired in a business combination
are identified and recognised separately from
goodwill where they satisfy the definition of
an intangible asset and their fair value can be
measured reliably.
Subsequent to initial recognition, intangible
assets acquired in a business combination are
reported at cost less accumulated amortisation and
accumulated impairment losses, on the same basis
as intangible assets acquired separately.
(o) Inventories
Inventories are measured at the lower of cost and
net realisable value. Costs are assigned on a first‑in
first‑out basis. Net realisable value represents the
estimated selling price less all estimated costs of
completion and costs to be incurred in marketing,
selling and distribution.
(p) Leased assets
Leases are classified as finance leases whenever the
terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee. All other
leases are classified as operating leases.
Consolidated entity as lessee
Assets held under finance leases are initially
recognised at their fair value or, if lower, at amounts
equal to the present value of the minimum lease
payments, each determined at the inception of
the lease. The corresponding liability to the lessor is
included in the statement of financial position as a
finance lease obligation.
Lease payments are apportioned between finance
charges and reduction of the lease obligation so
as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges
are charged directly against income.
Finance leased assets are amortised on a straight
line basis over the estimated useful life of the asset.
Operating lease payments are recognised as an
expense on a straight‑line basis over the lease term,
except where another systematic basis is more
representative of the time pattern in which economic
benefits from the leased assets are consumed.
Lease incentives
In the event that lease incentives are received to
enter into operating leases, such incentives are
recognised as a liability. The aggregate benefits of
incentives are recognised as a reduction of rental
expenses on a straight‑line basis, except where
another systematic basis is more representative of
the time pattern in which economic benefits from
the leased assets are consumed.
30
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
1. Summary of Accounting Policies (cont)
(q) Payables
Trade payable and other accounts payable are
recognised when the consolidated entity becomes
obliged to make future payments resulting from the
purchase of goods and services.
(r) Basis of consolidation
The consolidated financial statements incorporate
the financial statements of the Company and entities
controlled by the Company. Control is achieved when
the Company:
■ Has power over the investee;
■ Is exposed, or has rights, to variable returns from
its involvement with the investee; and
of each asset over its expected useful life to its
estimated residual value. Leasehold improvements
are depreciated over the period of the lease or
estimated useful life, whichever is the shorter, using
the straight line method. The estimated useful lives,
residual values and depreciation method is reviewed
at the end of each annual accounting period.
The following estimated useful lives are used in the
calculation of depreciation:
Plant and equipment
Leasehold improvements
Leased assets
Office equipment
5 to 15 years
3 to 5 years
3 to 5 years
5 to 15 years
Furniture, fixture and fittings
5 to 15 years
Motor vehicles
3 to 5 years
■ Has the ability to use its power to affect its returns.
(t) Provisions
The Company reassesses whether or not it controls
an investee if facts and circumstances indicate
that there are changes to one or more of the three
elements of control listed above.
Consolidation of a subsidiary begins when the
Company obtains control over the subsidiary and
ceases when the Company loses control of the
subsidiary. Specifically, income and expenses of a
subsidiary acquired or disposed of during the year
are included in the consolidated statement of profit
or loss and other comprehensive income from the
date the Company gains control until the date when
the Company ceases to control the subsidiary.
All intra group assets and liabilities, equity, income,
expenses, and cash flows relating to transactions
between members of the group are eliminated in full
on consolidation.
(s) Property, plant and equipment
Plant and equipment, leasehold improvements and
equipment under finance lease are stated at cost
less accumulated depreciation and impairment.
Cost includes expenditure that is directly
attributable to the acquisition of an item. In the
event that settlement of all or part of the purchase
consideration is deferred, cost is determined by
discounting the amounts payable in the future to
their present value as at the date of acquisition.
Depreciation is provided on property, plant and
equipment. Depreciation is calculated so as to
write off the net cost or other revalued amount
Provisions are recognised when the consolidated
entity has a present obligation, the future sacrifice
of economic benefits is probable, and the amount of
the provision can be measured reliably.
When some or all of the economic benefits required
to settle a provision are expected to be recovered
from a third party, the receivable is recognised
as an asset if it is probable that recovery will be
received and the amount of the receivable can be
measured reliably.
The amount recognised as a provision is the best
estimate of the consideration required to settle
the present obligation, taking into account the
risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash
flows estimated to settle the present obligation,
its carrying amount is the present value of those
cash flows.
Warranties ‑ Provisions for warranty costs are
recognised as agreed in individual sales contracts,
at the directors best estimate of the expenditure
required to settle the consolidated entity’s liability.
Contract losses ‑ Present obligations arising under
onerous contracts are recognised and measured as
a provision. An onerous contract is considered to
exist where the Group has a contract under which
the unavoidable costs of meeting the obligations
under the contract exceed the economic benefits
expected to be received under it.
31
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
1. Summary of Accounting Policies (cont)
(w) Interests in joint operations
Decommissioning cost‑ a provision for
decommissioning cost is recognised when there is
a present obligation, it is probable that an outflow
of economic benefits will be required to settle the
obligation, and the amount of the provision can be
measured reliably. The estimated future obligations
include the costs of removing the facilities and
restoring the premises.
(u) Revenue recognition
Construction revenue is recognised on the basis of
the terms of the contract adjusted for any variations
or claims allowable under the contract.
Revenue from contracts to provide services is
recognised as services are performed in accordance
with the services contracts.
Interest income is recognised as it accrues.
Revenue from the sale of goods is recognised when
the consolidated entity has transferred to the buyer
the significant risks and rewards of ownership of
the goods.
A joint operation is a joint arrangement whereby the
parties that have joint control of the arrangement
have rights to the assets, and obligations for the
liabilities, relating to the arrangement. Joint control
is the contractually agreed sharing of control of
an arrangement, which exists only when decisions
about the relevant activities require unanimous
consent of the parties sharing control.
When a group entity undertakes its activities under
joint operations, the Group as a joint operator
recognises in relation to its interest in a joint operation:
■ its assets, including its share of any assets
held jointly;
■ its liabilities, including its share of any liabilities
incurred jointly;
■ its revenue from the sale of its share of the output
arising from the joint operations;
■ its share of the revenue from the sale of the
output by the joint operation; and
■ its expenses, including its share of any expenses
(v) Share based payments to employees
incurred jointly.
Equity‑settled share‑based payments are measured
Equity‑settled share‑based payments are measured
at fair value at the date of the grant. Fair value
is measured by use of the Black Scholes model.
The expected life used in the model has been
adjusted, based on management best estimates,
for the effects of non‑transferability, exercise
restrictions and behavioural considerations.
The fair value determined at the grant date of the
equity‑settled share based payments is expensed on
a straight‑line basis over the vesting period, based
on the consolidated entity’s estimate of shares that
will eventually vest.
The Group accounts for the assets, liabilities,
revenues and expenses relating to its interest in
a joint operation in accordance with the AASB’s
applicable to the particular assets, liabilities
revenues and expenses.
When a group entity transact with a joint operation
in which a group entity is a joint operator (such
as a sale or contribution of assets), the Group is
considered to be conducting the transaction with
the other parties to the joint operation, and gains
or losses resulting from the transactions are
recognised in the Group’s consolidated financial
statements only to the extent of other parties’
interest in the joint operation.
When a group entity transacts with a joint operation
in which a group entity is a joint operator (such as a
purchase of assets), the Group does not recognise
its share of the gains and losses until it resells those
assets to a third party.
32
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
1. Summary of Accounting Policies (cont)
(x) Application of New and Revised Accounting Standards
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current year.
New and revised Standards and amendments thereof and Interpretations effective for the current year that are
relevant to the Group include:
■ AASB 2016‑1 Amendments to Australian Accounting Standards ‑ Recognition of Deferred Tax Assets for
Unrealised Losses
■ AASB 2016‑2 Amendments to Australian Accounting Standards ‑ Disclosure Initiative: Amendments to AASB 107
■ AASB 2017‑2 Amendments to Australian Accounting Standards ‑ Further Annual Improvements 2014‑2016 Cycle
The application of the above has not had any material impact on the amounts recognised in the consolidated
financial statements.
Standards and Interpretations in issue not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in
issue but not yet effective.
Standard/Interpretation
AASB 9 Financial Instruments, and the relevant amending standards
AASB 15 Revenue from Contracts with Customers AASB 2014‑5
Amendments to Australian Accounting Standards arising from
AASB 15 and AASB 2015‑8 Amendments to Australian Accounting
Standards ‑ Effective Date of AASB 15
AASB 2016‑3 Amendments to Australian Accounting Standards ‑
Clarifications to AASB 15
AASB 16 Leases
2017‑1 Amendments to Australian Accounting Standards ‑ Transfers
of Investment Property, Annual Improvements 2014‑2016 Cycle and
Other Amendments
2017‑5 Amendments to Australian Accounting Standards ‑ Effective Date
of Amendments to AASB 10 and AASB 128 and Editorial Corrections
AASB 2016‑5 Amendments to Australian Accounting Standards ‑
Classification and Measurement of Share‑based Payment Transactions
Effective for
annual reporting
periods beginning
on or after
Expected to be
initially applied
in the financial
year ending
1 Jan 2018
1 Jan 2018
31 Dec 2018
31 Dec 2018
1 Jan 2019
1 Jan 2018
31 Dec 2019
31 Dec 2018
1 Jan 2018
31 Dec 2018
1 Jan 2018
31 Dec 2018
The directors are still assessing the impact of AASB 9, AASB 15 and AASB 16. The directors anticipate that the
adoption of all other Standards and Interpretations in future periods will have no material financial impact on the
financial statements of the company or the consolidated entity but may change disclosures made.
33
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
1. Summary of Accounting Policies (cont)
Deferred tax
(y) Critical accounting judgements
In the application of the consolidated entity’s
accounting policies, management is required to
make judgements, estimates and assumptions
about carrying values of assets and liabilities
that are not readily apparent from other sources.
The estimates and associated assumptions are
based on historical experience and various other
factors that are believed to be reasonable under the
circumstance, the results of which form the basis of
making these judgements. Actual results may differ
from these estimates.
The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in
which the estimate is revised if the revision affects
only that period, or in the period of the revision and
future periods if the revision affects both current and
future periods.
Key sources of estimation uncertainty
The following are the key assumptions concerning
the future, and other key sources of estimation
uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within
the next financial year:
Recoverable amount of property, plant
and equipment
The directors made a critical judgement in relation
to the recoverable amount of property, plant and
equipment included in Note 9. Judgement is made
regarding the value of second hand manufacturing
equipment and the future cash flows of the cash
generating units.
The directors made a critical judgement in relation
to not recognising the deferred tax balances
described in Note 4(b). The directors do not currently
consider it probable that sufficient taxable amounts
will be available against which deductible temporary
differences can be utilised.
Inventory obsolescence
The directors made a critical judgement in relation
to the net realisable value of inventory included
in note 6. Judgement is required in determining if
inventory items can be utilised in projects, given
the individual nature of the consolidated entity’s
contracts, and the specific nature of inventory items.
Warranty provision
The directors made a critical judgement in relation
to the valuation of the provision for warranty costs
described in Note 12. The valuation is determined
based on the director’s best estimate of the
expenditure required to settle the consolidated
entity’s liability under its warranty program.
Construction contract revenue recognition
The directors made a critical judgement in relation
to the recognition of revenue for construction
contracts as described in Note 27. Revenue is
recognised based on the stage of completion of
individual contracts, calculated on the proportion of
total costs incurred at the reporting date compared
to management‘s estimation of total costs of the
contract. Judgement is required in forecasting total
cost to complete at initiation of the contract and
re‑measuring costs based on events or conditions
that occur during the contract.
34
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
2. (Loss) from operations
(a) Revenue
Revenue from operations consisted of the following items:
Revenue from the sale of goods
Revenue from the rendering of services
Grant revenue
Construction contract revenue
Interest revenue:
Other
Bank deposits
Other
Other
Consolidated
31 December
2017
$
31 December
2016
$
19,290,114
15,597,244
1,648,412
1,882,798
‑
122,268
2,125,292
8,033,495
23,063,818
25,635,805
‑
194,888
194,888
62,895
97,044
159,939
1,088
1,456
23,259,794
25,797,200
35
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
2. (Loss) from operations (cont)
(b) (Loss) before income tax has been arrived at after charging the
following expenses:
Borrowing costs
Finance charges
Depreciation and amortisation ‑ property, plant and equipment
Loss on sale of property, plant and equipment
Foreign exchange loss (gains)
Operating lease rental expenses:
Minimum lease payments
Employee benefit expense:
Share based payments:
Equity settled
Contributions to defined contribution superannuation plans
Other employee benefits
3. (Loss) per Share
Basic (loss) per share
Basic (Loss) per Share
(Loss) (a)
Weighted average number of ordinary shares (b)
31 December
2017
$
31 December
2016
$
34,985
193,325
2,007
27,663
98,859
110
695,061
(610,477)
801,986
585,864
601,344
1,256,918
1,171,747
1,065,345
12,919,758
11,278,043
14,692,849
13,600,306
31 December
2017
$
31 December
2016
$
(15.1 cents)
(1.6 cents)
(9,399,930)
(866,692)
62,260,622
56,845,926
(a) (Loss) used in the calculation of basic earnings per share are the same as the net (loss) in the statement of profit or loss and
other comprehensive income.
(b) There are no potential ordinary shares and hence diluted earnings per share is the same as basic earnings per share.
The unlisted options outstanding are not in the money at 31 December 2017 and are not considered dilutive.
36
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017
notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
4. Income Tax
(a) The prima facie income tax benefit on pre‑tax accounting (loss) from operations reconciles to the income tax
benefit in the financial statements as follows:
(Loss) from operations
Income tax (benefit) calculated at 30%
Effect of different tax rates of subsidiaries operating in other jurisdictions
Share based payments
R & D tax refund received
Other non‑deductible/ non assessable items
Consolidated
31 December
2017
$
31 December
2016
$
(9,399,930)
(2,918,477)
(2,818,979)
(875,543)
(133,752)
180,403
(97,421)
377,075
‑
2,031,785
34,444
(371,781)
(2,737,884)
1,064,115
Deferred tax assets not previously recognised now bought to account
‑
Unused tax losses and tax offsets not recognised as deferred tax assets
2,737,884
967,670
Income tax benefit attributable to operating (Loss)/ profit
‑
2,031,785
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities
on taxable profits under Australian tax law, 25% in Germany, 17% in Singapore and the federal tax rate applicable in
the USA and the State of Arizona has been assumed to approximate a combined rate 40% as their tax rates apply on a
sliding scale. There has been no change in the corporate tax rate when compared with the previous reporting period.
(b) Unrecognised deferred tax balances
The following deferred tax assets have not been bought to account as assets
Tax losses ‑ revenue
Temporary differences
Tax consolidation
Consolidated
31 December
2017
$
31 December
2016
$
22,550,998
19,813,114
1,647,998
1,756,492
24,198,996
21,569,606
Relevance of tax consolidation to the consolidated entity
The company and its wholly‑owned Australian resident entities have formed a tax‑consolidated group with
effect from 1 January 2003 and are therefore taxed as a single entity from that date. The head entity within the
tax‑consolidated group is Electro Optic Systems Holdings Limited. The members of the tax‑consolidated entity
group are identified in Note 20.
Nature of tax funding arrangements and tax sharing agreements
There are no formal tax funding or tax sharing arrangements within the tax‑consolidated group.
37
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
5. Trade and other receivables
Current
Trade receivables
GST receivable
Amounts due from customers under construction contracts (Note 27)
Other debtors
Non‑current
Trade receivables
Consolidated
31 December
2017
$
31 December
2016
$
11,389,405
2,778,292
228,825
7,613
36,164
72,152
951,271
3,845
11,662,007
3,805,560
609,864
‑
The average credit period on sales of goods is 30 days. No interest is charged on late payments and no general
allowance for doubtful debts has been made as most contracts are with governments and government agencies.
63,526
2,187
10,778
12,239
88,730
‑
‑
255,707
‑
‑
3,289
258,996
‑
‑
10,529,141
2,814,939
‑
3,266,433
97,389
566,668
13,795,574
3,478,996
Ageing of past due not impaired
31‑60 days
61‑90 days
91‑120 days
120 days +
Ageing of past due and impaired
120 days +
Total
6. Current Inventories
Raw materials ‑ at net realisable value
Finished goods
Work in progress ‑ at cost
38
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
7. Other Assets
Current
Prepayments
Non‑current
Prepayment
Consolidated
31 December
2017
$
31 December
2016
$
2,390,931
459,228
7,751,938
‑
This prepayment relates to a prepayment made to a supplier for the delivery of component parts in relation to a
future order.
8. Auditors Remuneration
(a) Auditor of the Parent Entity
Audit or review of the financial report
Taxation services
(b) Other Auditor
Audit or review of the financial report
Taxation services
The auditor of Electro Optic Systems Holdings Limited is Deloitte Touche Tohmatsu.
155,003
5,000
160,003
2,839
852
3,691
179,466
6,195
185,661
2,929
879
3,808
39
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
9. Property, Plant and Equipment
(a) Plant and equipment ‑ at cost
Less accumulated depreciation and impairment
(b) Leased assets ‑ at cost
Less accumulated amortisation and impairment
(c) Office equipment ‑ at cost
Less accumulated depreciation and impairment
(d) Furniture, fixtures and fittings ‑ at cost
Less accumulated depreciation and impairment
(e) Leasehold improvements ‑ at cost
Less accumulated depreciation and impairment
(f) Motor vehicle ‑ at cost
Less accumulated depreciation and impairment
(g) Satellite ‑ at cost
Less impairment
Total net book value of Property, Plant and Equipment
40
Consolidated
31 December
2017
$
31 December
2016
$
7,649,696
7,889,339
(7,188,427)
(7,557,401)
461,269
331,938
23,551
(23,551)
‑
26,245
(26,245)
‑
3,955,490
4,306,943
(3,563,079)
(4,180,466)
392,411
126,477
826,911
646,962
(585,429)
(645,586)
241,482
1,376
1,205,945
983,701
(940,851)
(983,701)
265,094
‑
60,682
(15,591)
45,091
13,630
(13,630)
‑
7,000,000
7,000,000
(7,000,000)
(7,000,000)
‑
‑
1,405,347
459,791
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
9. Property, Plant and Equipment (cont)
Cost
Plant and equipment
Balance at beginning of year
Additions
Transfers
Disposals
Net foreign currency exchange differences
Balance at end of year
Leased assets
Balance at beginning of year
Net foreign currency exchange differences
Balance at end of year
Office equipment
Balance at beginning of year
Additions
Disposals
Net foreign currency exchange differences
Balance at end of year
Consolidated
31 December
2017
$
31 December
2016
$
7,889,339
7,095,548
240,957
‑
(3,750)
(476,850)
293,466
3,746
(10,793)
507,372
7,649,696
7,889,339
26,245
(2,694)
23,551
18,919
7,326
26,245
4,306,943
4,219,365
338,623
109,511
‑
(981,673)
(690,076)
959,740
3,955,490
4,306,943
41
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
9. Property, Plant and Equipment (cont)
Furniture, fixtures and fittings
Balance at beginning of year
Additions
Disposals
Net foreign currency exchange differences
Balance at end of year
Leasehold improvements
Balance at beginning of year
Additions
Net foreign currency exchange differences
Balance at end of year
Motor vehicle
Balance at beginning of year
Additions
Transfers
Balance at end of year
Satellite
Balance at beginning of year
Balance at end of year
Consolidated
31 December
2017
$
31 December
2016
$
646,962
242,131
‑
(62,182)
826,911
983,701
272,185
(49,941)
1,205,945
13,630
47,052
‑
60,682
454,123
‑
23,734
169,105
646,962
847,887
‑
135,814
983,701
‑
‑
13,630
13,630
7,000,000
7,000,000
7,000,000
7,000,000
42
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
9. Property, Plant and Equipment (cont)
Accumulated Depreciation/Amortisation/ Impairment
Plant and equipment
Balance at beginning of year
Depreciation
Disposals
Transfers
Net foreign currency exchange differences
Balance at end of year
Leased plant and equipment
Balance at beginning of year
Net foreign currency exchange differences
Balance at end of year
Office equipment
Balance at beginning of year
Depreciation
Disposals
Net foreign currency exchange differences
Balance at end of year
Consolidated
31 December
2017
$
31 December
2016
$
(7,557,401)
(7,050,572)
(109,617)
1,743
‑
(6,504)
10,793
(3,746)
476,848
(507,372)
(7,188,427)
(7,557,401)
(26,245)
2,694
(23,551)
(18,919)
(7,326)
(26,245)
(4,180,466)
(4,113,435)
(72,631)
‑
(88,779)
981,564
690,018
(959,816)
(3,563,079)
(4,180,466)
43
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
9. Property, Plant and Equipment (cont)
Furniture, fixtures and fittings
Balance at beginning of year
Depreciation
Disposals
Net foreign currency exchange differences
Balance at end of year
Leasehold improvements
Balance at beginning of year
Depreciation
Net foreign currency exchange differences
Balance at end of year
Motor vehicle
Balance at beginning of year
Depreciation
Transfers
Balance at end of year
Satellite
Balance at beginning of year
Balance at end of year
Consolidated
31 December
2017
$
31 December
2016
$
(645,586)
(449,171)
(2,025)
‑
62,182
(585,429)
(3,576)
(23,734)
(169,105)
(645,586)
(983,701)
(847,887)
(7,091)
49,941
(940,851)
‑
(135,814)
(983,701)
(13,630)
(1,961)
‑
(15,591)
‑
‑
(13,630)
(13,630)
(7,000,000)
(7,000,000)
(7,000,000)
(7,000,000)
Aggregate depreciation, impairment and amortisation allocated during the period is recognised as an expense and
disclosed in Note 2 to the financial statements.
Impairment of property, plant and equipment
The consolidated entity has assessed the carrying amount of plant and equipment and determined an impairment
(reversal) charge for the year of Nil (2016: Nil). The basis to assess for any potential impairment was fair value less cost
for disposal and fair value determined by reference to an active market for second hand manufacturing equipment.
44
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017
notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
10. Current Trade and Other Payables
Trade payables
Accruals
Unearned revenue
Consolidated
31 December
2017
$
31 December
2016
$
5,905,060
1,572,571
773,735
413,063
11,346,649
3,564,309
Amounts due to customers under construction contracts (Note 27)
58,914
1,626,626
18,084,358
7,176,569
The average credit period on purchases of goods is 30 days and no interest is payable on goods purchased within
agreed credit terms. The consolidated entity has financial risk management policies in place to ensure that all
payables are paid within the credit timeframe.
11. Provisions
Current
Employee benefits (Note 13)
Provision for straight lining of rent
Decommissioning costs
Warranty (Note 12)
Non‑current
Employee Benefits (Note 13)
Make good of premises
Warranty (Note 12)
3,594,345
3,182,010
7,225
250,000
‑
250,000
1,239,990
2,121,545
5,091,560
5,553,555
457,311
80,000
321,765
859,076
301,419
‑
‑
301,419
45
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
11. Provisions (cont)
Movement in contract loss provision
Balance at 1 January
(Decrease)/ Increases resulting from re‑measurement
Balance as at 31 December
Consolidated
31 December
2017
$
31 December
2016
$
‑
‑
‑
603,416
(603,416)
‑
The provision for contract losses is based on assessment by management of the additional costs to complete
existing contracts not recoverable from the customer.
Movement on decommissioning costs
Balance at 1 January
Balance as at 31 December
250,000
250,000
250,000
250,000
The provision for decommissioning costs relate to an obligation to dismantle and refurbish a telescope at a future date.
Movement in straight lining of rental
Balance at 1 January
Increase during the period from new lease
Balance as at 31 December
Movement in make good of premises
Balance at 1 January
Increase during the period from new lease
Balance as at 31 December
12. Warranty Provisions
Movement in warranty provision
Balance at 1 January
Reductions resulting from re‑measurement
Additional provisions recognised
Balance as at 31 December
Current (Note 11)
Non‑Current (Note 11)
‑
7,225
7,225
‑
80,000
80,000
‑
‑
‑
‑
‑
‑
2,121,545
2,931,530
(1,402,265)
(2,056,864)
842,475
1,246,879
1,561,755
2,121,545
1,239,990
2,121,545
321,765
‑
The provision for warranty claims represents the present value of the directors’ best estimate of the future sacrifice
of economic benefits that will be required under the consolidated entity’s warranty program for military products
and telescopes. The estimate has been made on the basis of historical industry accepted warranty trends and may
vary as a result of new materials, altered manufacturing processes or other events affecting product quality.
46
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
13. Employee Benefits
The aggregate employee benefits liability recognised in the financial statements is as follows:
Provision for employee entitlements
Current (Note 11)
Non‑Current (Note 11)
14. Issued Capital
Consolidated
31 December
2017
$
31 December
2016
$
3,594,345
3,182,010
457,311
301,419
Balance at the beginning of the financial year ‑ Ordinary shares
75,383,567
75,383,567
Issue of 3,863,638 new shares at $2.20 each on 30 March 2017 at $2.20 each (net
of issuance costs)
Issue of 9,100,000 new shares at $2.30 each on 22 September 2017 at $2.30 each
(net of issuance costs)
8,075,004
19,883,500
‑
‑
Balance at the end of the financial year
103,342,071
75,383,567
Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share
capital from 1 July 1998. Therefore, the company does not have a limited amount of authorised capital and issued
shares do not have a par value.
Fully Paid Ordinary Shares
Balance at the beginning of financial year
Issue of new shares at $2.20 each on 27 March 2017
Issue of new shares at $2.30 each on 22 September 2017
Balance at end of financial year
Number
Number
56,845,926
56,845,926
3,863,638
9,100,000
‑
‑
69,809,564
56,845,926
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
47
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
15. Directors and Employee Share Option Plan
The consolidated entity has an ownership‑based compensation scheme for employees (including directors) of
the company. In accordance with the provisions of the scheme, as approved by shareholders at a previous annual
general meeting, employees with more than three months service with the company may be granted options to
purchase ordinary shares at exercise prices determined by the directors based on market prices at the time the
issue of options were made.
Each share option converts to one ordinary share in Electro Optic Systems Holdings Limited. No amounts are paid
or payable by the recipient on receipt of the options. The options carry neither rights to dividends nor voting rights.
Options may be exercised at any time from the date of vesting to the date of expiry.
The number of options granted is determined by the directors and takes into account the company’s and individual
achievements against both qualitative and quantitive criteria.
On 28 June 2002, shareholders approved the adoption of an Employee Share Option Plan.
(a) Unlisted Options issued under the Employee Share Option Plan
2017
2016
Weighted
average
exercise price
$
Number
Balance at the beginning of the financial year (i)
5,715,000
Granted during the year (ii)
Exercised during the year (iii)
Lapsed during the year (iv)
Balance at the end of the financial year (v)
Exercisable at end of the year
(i) Balance at the beginning of the year
‑
‑
95,000
5,620,000
2,810,000
3.00
‑
3.00
3.00
3.00
Weighted
average
exercise price
$
‑
3.00
‑
‑
3.00
‑
Number
‑
5,715,000
‑
‑
5,715,000
‑
2017
2016
Number
Grant date
Expiry date
5,715,000
Various
31/1/19
‑
‑
‑
Exercise
Price
Fair value at
grant date
3.00
‑
1,919,058
‑
Staff and Director options carry no rights to dividends and no voting rights.
48
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
15. Directors and Employee Share Option Plan (cont)
(ii) Granted during the year
2017
None
2016
Staff options
Director options
Director options
Number
Grant date
Expiry date
Exercise
Price
Fair value at
grant date
‑
‑
‑
‑
‑
2,515,000
3,000,000
5/2/16
5/2/16
200,000
30/5/16
31/1/19
31/1/19
31/1/19
$3.00
$3.00
$3.00
5,715,000
705,458
1,122,000
91,600
1,919,058
Options were priced using the Black Scholes model. Where relevant, the expected life used in the model has been
adjusted based on management’s best estimate for the effects of non‑transferability, exercise restrictions and
behavioural conditions. Expected volatility is based on the historical share price volatility over a two year period.
The following inputs were used in the model for the grants made on 5 February 2016:
Dividend yield
Expected volatility (linearly interpolated)
Risk free interest rate
Expected life of options
Grant date share price
Exercise price
The following inputs were used in the model for the grant made on 30 May 2016:
Dividend yield
Expected volatility (linearly interpolated)
Risk free interest rate
Expected life of options
Grant date share price
Exercise price
(iii) Exercised during the year
There were no options exercised during the year.
(iv) Lapsed during the year
95,000 Staff options lapsed during the year.
‑
82.77%
1.745%
1,085 days
$1.18
$3.00
‑
82.77%
1.745%
975 days
$1.40
$3.00
49
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
15. Directors and Employee Share Option Plan (cont)
(v) Balance at the end of the financial year
2017
Staff options
Director options
Director options
2016
Staff options
Director options
Director options
Number
Grant date
Expiry date
Exercise
Price
Fair value at
grant date
2,420,000
3,000,000
5/2/16
5/2/16
200,000
30/5/16
5,620,000
2,515,000
3,000,000
5/2/16
5/2/16
200,000
30/5/16
5,715,000
31/1/19
31/1/19
31/1/19
31/1/19
31/1/19
31/1/19
$3.00
$3.00
$3.00
$3.00
$3.00
$3.00
678,810
1,122,000
91,600
1,892,410
705,458
1,122,000
91,600
1,919,058
Staff and Director options carry no rights to dividends and no voting rights.
All options granted to directors and staff vest on the basis of 50% after one year and 50 % after two years from the
date of issue.
The difference between the total market value of the options issued during the financial year, at the date of issue,
and the total amount received from the employees (nil) is recognised in the financial statements over the vesting
period as disclosed in Note 16 to the financial statements.
50
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
16. Reserves
Foreign currency translation
Employee equity‑settled benefits
Foreign currency translation
Balance at beginning of financial year
Translation of foreign operations
Balance at end of financial year
Consolidated
31 December
2017
$
31 December
2016
$
(241,137)
(604,840)
9,586,065
8,984,721
9,344,928
8,379,881
(604,840)
(529,942)
363,703
(74,898)
(241,137)
(604,840)
Exchange differences relating to the translation from US dollars, being the functional currency of the consolidated
entity’s foreign controlled entities in the USA, Euros, being the functional currency of the consolidated entity’s
foreign controlled entity in Germany and Singaporean dollars, being the functional currency of the consolidated
entity’s foreign controlled entity in Singapore, into Australian dollars are brought to account by entries made
directly to the foreign currency translation reserve. Exchange differences previously accumulated in the foreign
currency translation reserve (in respect to translating the net assets of foreign operations) are reclassified to profit
or loss on disposal of the foreign operation.
Employee equity‑settled benefits
Balance at beginning of financial year
Share based payment
Balance at end of financial year
8,984,721
7,727,803
601,344
1,256,918
9,586,065
8,984,721
The employee equity‑settled benefits reserve arises on the grant of share options to directors and executives under
the Employee Share Option plan. Further information about share‑based payments to employees is made in note
15 to the financial statements. Items included in employee equity‑settled benefits reserve will not be reclassified
subsequently to profit or loss.
17. Accumulated Losses
Balance at beginning of financial year
Net (loss) attributable to members of the parent entity
Balance at end of financial year
(79,716,449)
(78,829,757)
(9,399,930)
(886,692)
(89,116,379)
(79,716,449)
51
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
18. Notes to the Cash Flow Statement
(a) Reconciliation of Cash and cash equivalents
For the purposes of the statement of cash flows, cash includes cash on hand and at call deposits with banks or
financial institutions, investments in money market instruments maturing within less than two months and net of
bank overdrafts. Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the
related items in the statement of financial position as follows:
Cash and cash equivalents
(b) Reconciliation of (loss) for the year to net cash flows from operating activities
Consolidated
31 December
2017
$
31 December
2016
$
9,989,953
8,874,967
(Loss) for the year
(9,399,930)
(886,692)
Loss on disposal of fixed assets
Equity settled share‑based payments
Depreciation of fixed assets
Foreign exchange movements
(Increase)/decrease in assets
Current receivables
Inventories
Other current assets
Increase/(decrease) in liabilities
Provisions
Trade and other payables
2,007
601,344
193,325
116,640
110
1,256,918
98,859
(131,954)
(8,466,311)
2,731,212
(10,316,578)
738,904
(9,683,641)
1,000,890
95,662
(1,073,207)
4,693,161
(2,505,828)
Deferred income and amounts due to customers under construction contracts
6,214,628
(3,902,699)
Net cash (outflows) from operating activities
(25,949,693)
(2,673,487)
52
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
19. Related Party Disclosures
(a) Equity interests in related parties
Details of the percentage of ordinary shares held in subsidiaries are disclosed in Note 20.
(b) Key management personnel compensation
The aggregate compensation of the key management personnel of the consolidated entity is set out below:
31 December
2017
$
31 December
2016
$
1,394,589
1,400,809
108,666
462,656
67,973
103,786
955,322
92,180
2,033,884
2,552,097
Short term benefits
Post‑employment benefits
Share based payments
Long term benefits
(c) Transactions with other related parties
Other related parties includes:
■ the parent entity;
■ entities with significant influence over the consolidated entity; and
■ subsidiaries.
(d) Other transactions with key management personnel
During the year, the Company paid a total of $66,795 (2016: $66,795) to 4F Investments Pty Limited, a company
associated with Mr Fred Bart in respect of directors fees and superannuation for Fred Bart.
During the year, the Company paid $41,063 (2016: $41,063) to Dennis Corporate Services Pty Limited, a company
associated with Mr Ian Dennis in respect of directors fees and superannuation for Ian Dennis.
During the year, the Company paid $41,063 (2016: $41,063) to GCB Stratos Consulting Pty Limited, a company
associated with Mr Geoff Brown in respect of directors fees and superannuation for Geoff Brown.
During the year, the Company paid $120,000 (2016: $120,000) to Dennis Corporate Services Pty Limited, a company
associated with Mr Ian Dennis in respect of consulting fees for company secretarial and accounting services.
During the year, the Company paid $22,955 (2016: $22,478) to Audio Pixels Holdings Limited, a company of which
Fred Bart and Ian Dennis are directors and shareholders in respect of shared Sydney office facilities.
(e) Parent entity
The parent entity in the consolidated group is Electro Optic Systems Holdings Limited.
53
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
20. Controlled Entities
Name of Entity
Parent Entity
Country of
Incorporation
December 2017
%
December 2016
%
Electro Optic Systems Holdings Limited
Australia #
Controlled Entities
Electro Optic Systems Pty Limited
Australia #
EOS Defence Systems Pty Limited
(formerly Fire Control Systems Pty Limited)
FCS Technology Holdings Pty Limited
EOS Space Systems Pty Limited
EOS UAE Holdings Pty Limited
EOS Optronics GmbH
EOS Defense Systems Pte Limited
EOS USA, Inc. (Inc in Nevada)
EOS Technologies, Inc. (Inc in Arizona)
EOS Defense Systems, Inc (Inc in Arizona)
Australia #
Australia #
Australia #
Australia #
Germany
Singapore
USA
USA
USA
# These companies form part of the Australian consolidated tax entity.
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Deloitte Touche Tohmatsu is the auditor of the Group. EOS Defense Systems Pte Limited is the only entity with a
separately appointed statutory auditor.
21. Joint Operations
The group is party to a joint operation. The group has a share in the operation based on capital contributions that
entitles it to a proportionate share of revenue earnt from the operation.
The operation is not yet active.
22. Contingent Liabilities
Entities within the consolidated entity are involved in contractual disputes in the normal course of contracting operations.
The directors believe that the entities within the consolidated entity can settle any contractual disputes with customers
and should any customers commence legal proceedings against the company, the directors believe that any actions can
be successfully defended. As at the date of this report no legal proceedings have been commenced against any entity
within the group.
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Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
23. Commitments
(a) Capital commitments and guarantees
An entity within the group has committed to spend up to Nil (2016: $504,840) under an agreement on capital
infrastructure.
On 14 July 2015, the parent entity provided a guarantee to the Commonwealth of Australia for $2,750,000 in respect
of advance payments received of $3,950,000 GST inclusive in relation to a space sector project.
Consolidated
31 December
2017
$
31 December
2016
$
629,070
946,009
‑
244,405
104,242
‑
1,575,079
348,647
(b) Operating lease commitments
Non‑cancellable operating leases contracted for but not recognised in the
financial statements:
Payable:
not later than one year
later than one year and not later than five years
later than five years
Operating Leases
Leasing arrangements
Operating leases relate to:
Premises at 2500 N. Tucson Boulevard, Suite 100, Tucson Arizona with a lease term which expires on
30 September 2018. There is an option to renew after 30 September 2018 for a further 12 months. There is no
option to purchase the property.
Premises at 2112 N. Dragoon, Units 6 and 18, Tucson Arizona are subject to an expired lease. The company
occupies the property on a month to month basis and there is no make good requirement.
Premises in Queanbeyan, Australia for a 5 year period to 31 December 2008 with a 5 year option. The Company
has the first right of refusal in respect of the purchase of the property. The Company is on a month to month basis
whilst a new lease is negotiated.
Premises at 46 Bayldon Road, Queanbeyan with a lease term which expired on 2 August 2016. The company
occupies the property on a month to month basis. There is no make good provision or option to purchase
the property.
Premises at 90 Sheppard Street, Hume, ACT for a period to 31 March 2021. There is no option to purchase this
property. There is a make good provision in the lease, however EOS has made significant improvements to the
property which will reduce any make good costs.
Shared premises in Sydney which are on a month to month arrangement with Audio Pixels Holdings Limited, a
company associated with directors Mr Fred Bart and Mr Ian Dennis.
The Commonwealth and EOS Space Systems Pty Limited (EOS) have entered into a Services Agreement (executed
10 June 2015) to provide Space Situational Awareness (SSA) Tracking Data to the Commonwealth. In addition to the
Services Agreement the Commonwealth and EOS have also entered into a Lease Agreement for Defence property
in Learmonth WA on which EOS is permitted to build SSA Tracking Infrastructure in order to deliver SSA Tracking
Services. The term of the lease is for ten years from 26 November 2015 at an annual rental of $1 per annum.
55
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
24. Subsequent Events
On 30 January 2018, the Company announced that it had been awarded an A$410m contract to supply significant
quantities of its new R‑400S‑Mk2 remote weapon systems to an overseas customer.
On 6 February 2018, the Company announced a placement of 10,471,434 new ordinary shares at $2.91 to
sophisticated and professional investor clients of Petra Capital Pty Limited raising a total of $30.5m. These new
shares were allotted on 12 February 2018. These funds will be used for working capital to lodge performance bonds
and offset bonds in respect of the new contract announced on 30 January 2018 and optimising the supply chain.
Additionally in the same announcement the Company announced a further tranche of the placement of 10,147,123
new ordinary shares at $2.91 to sophisticated and professional investor clients of Petra Capital Pty Limited raising
a total of $29.5m. These shares were issued on 16 March 2018 following shareholder approval at an Extraordinary
General Meeting held on 13 March 2018 to refresh the 15% placement ability.
On 6 February 2018, the Company also announced a Share Placement Plan to all existing shareholders registered
on 5 February 2018 at the same price as the institutional placement of $2.91 to raise a maximum of $5m. The Share
Placement Plan closed on 14 March 2018 raising $1.4m resulting in the issue of 495,758 new ordinary shares on
21 March 2018. The Directors decided not to place any further shares up to the maximum of $5m.
On 6 February 2018, the Company announced a new restructure of the management team with Grant Sanderson
appointed as Chief Executive Officer for EOS Defence and Peter Short being made Chief Operating Officer for the
Group. Both of these positions report directly to Dr Ben Greene, Group Chief Executive Officer.
On 22 February 2018, the Company entered into a lease of premises at 2865 Wall Triana Highway, Huntsville,
Alabama for a period of five years from 1 March 2018. The Company has an option to purchase the property for
US$6.5m prior to the expiry of the lease on 28 February 2023.
Apart from the above, the Directors are not aware of any significant subsequent events since the end of the financial
period and up to the date of this report.
25. Financial Risk Management Objectives and Policies
The Group’s principal financial instruments comprise receivables, payables, borrowings, finance leases, cash and
short term deposits.
Due to the small size of the group significant risk management decisions are taken by the board of directors. These
risks include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity
risk and cash flow interest rate risk.
The Group does not use derivative financial instruments to hedge these risk exposures.
The directors consider that the carrying amount of financial assets and liabilities recognised in these financial
statements approximate their fair values.
56
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
25. Financial Risk Management Objectives and Policies (cont)
Risk Exposures and Responses
(a) Interest rate risk
The Group’s exposure to market interest rates relates primarily to the Group’s cash holdings.
At balance date, the Group had the following mix of financial assets and liabilities exposed to interest rate risk that
are not designated in cash flow hedges:
Financial assets
Cash and cash equivalents
Consolidated
2017
$
2016
$
9,989,953
8,874,967
The Group constantly analyses its interest rate exposure. Within this analysis consideration is given to potential
renewals of existing positions, alternative financing and the mix of fixed and variable interest rates.
At 31 December 2017, if interest rates had moved, as illustrated in the table below, with all other variables held
constant, post tax (loss) and equity would have been affected as follows:
Judgements of reasonably
possible movements
Consolidated
+1% (100 basis points)
‑.5% (50 basis points)
Post Tax (Loss)
Higher/(Lower)
Equity
Higher/(Lower)
2017
$
2016
$
2017
$
2016
$
99,900
(49,950)
88,750
(44,375)
99,900
(49,950)
88,750
(44,375)
The movements in profits are due to lower interest rates on cash balances. The cash balances were higher in 2017
than in 2016 and accordingly the sensitivity is higher.
57
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
25. Financial Risk Management Objectives and Policies (cont)
(b) Foreign currency risk
As a result of purchases of inventory denominated in United States Dollars, the Group’s statement of financial
position can be affected significantly by movements in the US$/A$ exchange rates. Exchange rates are managed
within approved policy parameters using natural hedges and no derivatives are used.
The Group also has transactional currency exposures. Such exposures arise from sales or purchases by an
operating entity in currencies other than the functional currency.
The policy of the Group is to convert surplus foreign currencies to Australian dollars. The group also holds cash
deposits in US dollars to secure US dollar bank guarantees to overseas customers.
At 31 December 2017, the Group had the following exposure to US$ foreign currency:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure
Consolidated
2017
$
2016
$
571,773
3,441,828
10,367,157
1,780,300
10,938,930
5,222,128
730,696
1,100,705
10,208,234
4,121,423
All US$ denominated financial instruments were translated to A$ at 31 December 2017 at the exchange rate of
0.7805 (2016: 0.7197).
At 31 December 2017, had the Australian Dollar moved, as illustrated in the table below, with all other variables
held constant, post tax profit and equity would have been affected as follows:
Judgements of reasonably
possible movements
Consolidated
AUD/USD +10%
AUD/USD ‑5%
Post Tax Profit
Higher/(Lower)
Equity
Higher/(Lower)
2017
$
2016
$
2017
$
2016
$
(928,021)
(374,675)
(928,021)
(374,675)
537,275
216,917
537,275
216,017
Management believes the balance date risk exposures are representative of risk exposure inherent in financial instruments.
As noted, foreign currency transactions entered into during the financial year are managed within approved policy
parameters using natural hedges. The director’s do not consider that the net exposure to foreign currency transactions is
material after considering the effect of natural hedges.
58
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
25. Financial Risk Management Objectives and Policies (cont)
(c) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial
loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties which are
continuously monitored.
The credit risk on liquid funds is limited because the counterparties are banks with high credit‑ratings assigned by
international credit agencies.
(d) Liquidity risk management
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due.
Ultimate responsibility for liquidity risk management rests with the board of directors, who has built an appropriate
risk management framework for the management of the Group’s short, medium and long term funding and liquidity
requirements. The Group manages liquidity by maintaining adequate cash reserves by continuously monitoring
forecast and actual cash flows and managing maturity profiles of financial assets. Significant uncertainties relating
to the ability of the company and the consolidated entity to continue as going concerns and pay their debts as and
when they fall due are set out in Note 1(a).
Liquidity and interest tables
The following tables detail the Group’s remaining contractual maturity for its non‑derivative financial liabilities.
The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest
date on which the Group can be required to pay. The table includes both interest and principal cash flows.
Weighted
average
effective
interest rate
%
Less than
1 month
$
1‑3 months
$
3 months
to 1 year
$
1‑5 years
$
Consolidated
2017
Other non‑interest bearing liabilities
2016
Other non‑interest bearing liabilities
‑
‑
7,724,391
1,985,634
‑
‑
‑
‑
‑
‑
59
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
25. Financial Risk Management Objectives and Policies (cont)
(d) Liquidity risk management (cont)
The following tables detail the Group’s remaining contractual maturity for its non‑derivative financial assets.
The tables have been drawn up based on the undiscounted contractual maturities of the financial assets including
interest that will be earned on these assets except where the Company/Group anticipates that the cash flow will
occur in a different period.
Weighted
average
effective
interest rate
%
Less than
1 month
$
1‑3 months
$
3 months
to 1 year
$
1‑5 years
$
Consolidated
2017
Non‑interest bearing
Receivables
‑
‑
641,004
12,035,434
Fixed interest rate instruments
1.78
9,345,768
2016
Non‑interest bearing
Receivables
22,022,206
‑
‑
3,668,535
2,778,292
Fixed interest rate instruments
1.11
5,194,227
11,641,054
(e) Price risk
‑
‑
‑
‑
‑
‑
‑
‑
‑
17,050
17,050
‑
‑
17,031
17,031
‑
‑
‑
‑
‑
‑
‑
The Group’s exposure to commodity price risk is minimal. The Group does not make investments in equity securities.
60
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
26. Segment Information
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the
Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the
segment and to assess performance.
The identification of the Group’s reportable segments has not changed from those disclosed in the previous 2016
Annual Report. The Group’s reportable segments are Defence Systems and Space.
The consolidated entity operates in Australia, USA, Singapore and Germany in the development, manufacture and
sale of telescopes and dome enclosures, laser satellite tracking systems and the manufacture of electro‑optic fire
control systems.
Product and Services within each Segment
Space
EOS’s laser‑based space surveillance systems have been demonstrated in customer trials and EOS is now
well‑placed to be a major contributor to the next generation of space tracking capability. Future business is
dependent on large government contracts being awarded in the space sector.
In addition, EOS has substantial space resources in its own right, and may enter the market for space data provision
in the future.
The space sector also manufactures and sells telescopes and dome enclosures for space projects.
Defence Systems
EOS develops, manufactures and markets advanced fire control, surveillance, and weapon systems to approved
military customers. These products either replace or reduce the role of a human operator for a wide range of
existing and future weapon systems in the US, Australasia, Middle East and other markets.
61
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
26. Segment Information (cont)
Segment Revenues
Space
Defence systems
Total of all segments
Consolidated
31 December
2017
$
31 December
2016
$
3,472,975
9,591,762
19,591,931
16,045,499
23,064,906
25,637,261
Unallocated interest received
194,888
159,939
Total
Segment Results
Space
Defence systems
23,259,794
25,797,200
(2,893,122)
(2,146,398)
(5,701,590)
367,500
Total of all segments
(8,594,712)
(1,778,898)
Unallocated holding company costs
(805,218)
(1,139,579)
(Loss) before income tax expense
(9,399,930)
(2,918,477)
Income tax benefit
‑
2,031,785
(Loss)/ profit for the year
(9,399,930)
(886,692)
The revenue reported above represents revenue from external customers. There were no intersegment sales
during the period. There were no discontinued operations during the period.
The consolidated entity has three customers who provided in excess of 10% of consolidated revenue.
Three customers are within the Defence segment and provided combined revenue of $18,071,014.
62
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
26. Segment Information (cont)
Segment Assets and Liabilities
Space
Defence systems
Assets
Liabilities
31 December
2017
$
31 December
2016
$
31 December
2017
$
31 December
2016
$
552,047
1,327,933
6,189,379
7,541,602
37,063,614
6,875,642
17,845,565
5,489,941
Total all segments
37,615,661
8,203,575
24,034,944
13,031,543
Unallocated cash
9,989,953
8,874,967
‑
‑
Consolidated
47,605,614
17,078,542
24,034,944
13,031,543
Assets used jointly by reportable segments are allocated on the basis of the revenue earned by the individual
reportable segments.
Depreciation, impairment
and amortisation of
segment assets
Acquisition of
segment assets
31 December
2017
$
31 December
2016
$
31 December
2017
$
31 December
2016
$
23,353
136,371
22,537
20,692
41,422
1,099,525
65,491
337,486
Other Segment Information
Space
Defence systems
Total all segments
159,724
43,229
1,140,947
402,977
Unallocated management
33,601
55,630
‑
‑
Consolidated
193,325
98,859
1,140,947
402,977
63
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
26. Segment Information (cont)
Information on Geographical Segments
31 December 2017
Revenue from
External Customers
$
23,258,706
‑
1,088
23,259,794
Revenue from
External Customers
$
25,702,034
93,710
1,456
25,797,200
Geographical Segments
Australasia
North America
Germany
Total
31 December 2016
Geographical Segments
Australasia
North America
Germany
Total
27. Construction Contracts
Segment Assets
$
46,484,717
1,116,897
4,000
47,605,614
Segment Assets
$
16,958,686
113,966
5,890
17,078,542
Acquisition of
Segment Assets
$
1,140,075
‑
872
1,140,947
Acquisition of
Segment Assets
$
402,977
‑
‑
402,977
Construction work in progress
Less
Provision for losses
Progress billings
Recognised and included in the financial statements as amounts due:
From customers under construction contracts:
Current (note 5)
To customers under construction contracts:
Current (note 10)
64
Consolidated
31 December
2017
$
31 December
2016
$
24,716,854
26,760,211
‑
‑
(24,768,155)
(27,435,566)
(51,301)
(675,355)
7,613
951,271
(58,914)
(1,626,626)
(51,301)
(675,355)
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
28. Parent entity disclosure
Financial position
Assets
Current assets
Non‑current assets
Total assets
Liabilities
Current liabilities
Non‑current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
(Accumulated losses)
Total equity
Financial performance
(Loss) for the period
Other comprehensive income
31 December
2017
$
31 December
2016
$
7,403,521
4,701,680
‑
‑
7,403,521
4,701,680
70,698
72,925
‑
‑
70,698
72,925
7,332,823
4,628,755
103,342,071
75,383,567
9,141,068
8,984,721
(105,150,316)
(79,739,533)
7,332,823
4,628,755
(25,410,783)
(801,656)
‑
‑
(25,410,783)
(801,656)
65
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 notes to anD forMing part of tHe financiaL stateMents
for tHe year enDeD 31 DeceMber 2017 (cont)
29. Additional Company Information
Electro Optic Systems Holdings Limited is a listed public company in Australia, incorporated in Australia.
The company and its subsidiaries operate in Australia, North America, Singapore and Germany.
Registered Office
Principal Place of Business
90 Sheppard Street
Hume
ACT 2620
Australia
Tel: 02 6222 7900
Fax: 02 6299 7687
German Operations
Ulrichsberger Str. 17
D‑94469 Deggendorf
Germany
Tel: +49 991 3719 1883
Fax: +49 991 3719 1884
Suite 3, Level 12
75 Elizabeth Street
Sydney NSW 2000
Australia
Tel: 02 9233 3915
Fax: 02 9232 3411
USA Operations
2500 N. Tucson Boulevard
Suite 114
Tucson, Arizona 85716
USA
Tel: +1 (520) 624 6399
Fax: +1 (520) 624 1906
Singapore Operations
4 Shenton Way #28‑01
SGX Centre II
Singapore 068807
Tel: +65 6224 0100
Fax: +65 6227 6002
66
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 asX aDDitionaL inforMation
Additional information required by the Australian Stock Exchange Listing Rules and not disclosed elsewhere in this report.
HOME EXCHANGE
The Company’s ordinary shares are quoted on the Australian Stock Exchange Limited under the trading symbol “EOS”.
The Home Exchange is Sydney.
SUBSTANTIAL SHAREHOLDERS
At 21 March 2018 the following substantial shareholders were registered:
Fred Bart Group
Industry Super Holdings Pty Limited
Northrop Grumman Space and Mission Systems Corp.
Ordinary Shares
5,314,230
5,355,088
5,000,000
Percentage of total
Ordinary shares
5.84%
5.89%
5.50%
VOTING RIGHTS
At 21 March 2018 there were 2,922 holders of fully paid ordinary shares.
Rule 74 of the Company’s Constitution stipulates the voting rights of members as follows:
“Subject to any rights or restrictions for the time being attached to any class or classes of shares and to this Constitution:
(a) on a show of hands every person present in the capacity of a Member or a proxy, attorney or representative (or in more
than one of these capacities) has one vote; and
(b) On a poll every person present who is a Member or proxy, attorney or Representative has member present has:
(i) For each fully paid share that the person holds or represents ‑ one vote; and
(ii) For each share other than a fully paid share that the person holds or represents ‑ that proportion of one vote that
the amount paid (not credited) on the shares bears to the total amount paid and payable on the share (excluding
amounts credited).”
OTHER INFORMATION
In accordance with Listing Rule 4.10.19, the Company has used the cash and assets in a form readily convertible to cash
that it had at the time of admission in a way consistent with its business objectives.
The Company has a sponsored Level 1 American Depositary Receipt (ADR) program on the Over‑The‑Counter (OTC)
market in the USA with the ADR ticker symbol of EOPSY. The ration of ADR’s to Ordinary shares is 1:5 and the CUSIP
Number is 28520B1070. The local custodian is National Australia Bank Limited and the US Depositary Bank is
BNY Mellon.
67
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 asX aDDitionaL inforMation (cont)
DISTRIBUTION OF SHAREHOLDINGS
At 21 March 2018 the distribution of shareholdings were:
Range
1‑1,000
1,001 ‑ 5,000
5,001 ‑ 10,000
10,001 ‑ 100,000
100,001 and over
Ordinary Shareholders
Number of Shares
1,242
847
325
412
96
2,922
446,105
2,313,815
2,603,156
12,311,769
73,249,034
90,923,879
There were 560 ordinary shareholders with less than a marketable parcel.
There is no current on‑market buy‑back.
TWENTY LARGEST ORDINARY SHAREHOLDERS
At 21 March 2018 the 20 largest ordinary shareholders held 62.19% of the total issued fully paid quoted ordinary shares
of 90,923,879.
Shareholder
Fully Paid Ordinary Shares
Percentage of Total
1. Citicorp Nominees Pty Limited
2. JP Morgan Nominees Australia Limited
3. National Nominees Limited
4. HSBC Custody Nominees (Australia) Limited
5. HSBC Custody Nominees (Australia) Limited ‑ A/C 2
6. N & J Properties Pty Limited
7. Washington H. Soul Pattinson and Company
8. Technology Transformations Pty Limited
9. Emichrome Pty Limited
10. UBS Nominees Pty Ltd
11. Link Traders (Aust) Pty Limited
12. Capitol Enterprises Limited
13. A & D Wire Limited
14. BNP Paribus Noms Pty Ltd
15. Technology Investments Pty Limited
16. Emichrome Pty Limited
17. Landed Investments NZ Limited
18. Kam Superannuation Fund Pty Limited
19. 7Sundays Pty Ltd
20. Merrill Lynch (Australia) Nominees Pty Limited
68
7,893,648
7,753,066
5,387,001
4,209,785
4,202,500
4,090,000
3,816,207
2,759,340
2,603,236
2,289,194
1,886,189
1,550,000
1,457,276
1,368,283
1,205,155
1,097,450
1,010,000
693,000
650,000
622,670
8.68%
8.53%
5.93%
4.63%
4.62%
4.50%
4.20%
3.03%
2.86%
2.52%
2.08%
1.70%
1.60%
1.50%
1.33%
1.21%
1.11%
0.76%
0.72%
0.68%
56,544,000
62.19%
Electro Optic Systems Holdings Limited and Controlled Entities | ANNUAL REPORT 2017 contents
review of operations
Directors’ report
auditors’ report
Directors’ Declaration
consolidated statement of profi t or Loss and other
comprehensive income
consolidated statement of financial position
consolidated statement of changes in equity
consolidated statement of cash flows
notes to and forming part of the financial statements
asX additional information
twenty Largest ordinary shareholders
1
4
15
21
22
23
24
25
26
67
68
corporate Directory
Directors
Share Registry
Mr Fred Bart (Chairman)
Dr Ben Greene (Chief Executive Offi cer)
Mr Ian Dennis
Lt Gen Peter Leahy AC
Air Marshall Geoff Brown
Company Secretary
Mr Ian Dennis
Registered Offi ce
Suite 3, Level 12
75 Elizabeth Street
Sydney NSW 2000
Australia
Telephone +61 2 9233 3915
Facsimile +61 2 9232 3411
Web site www.eos‑aus.com
Computershare Investor Services Pty Limited
Level 3, 60 Carrington Street
Sydney NSW 2000
GPO Box 7045
Sydney NSW 1115
Australia
Telephone 1300 855 080 or +61 3 9611 5711
outside Australia
Facsimile 1300 137 341
Auditors
Deloitte Touche Tohmatsu
Chartered Accountants
8 Brindabella Circuit
Brindabella Business Park
Canberra Airport ACT 2609
Australia
4893 Designed and Produced by RDA Creative www.rda.com.au
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2017 annUaL
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