2018
ANNUAL
REPORT
2
0
1
8
A
N
N
U
A
L
R
E
P
O
R
T
2018
ANNUAL FINANCIAL REPORT
CONTENTS
Company Highlights
Page 1
Directors’ Report
Page 10
Chairman’s Report
Page 2
Directors’ Declaration
Page 24
Business Unit Overview
Page 4
Managing Director &
CEO’s Report
Page 6
Auditor’s Independence
Declaration
Page 25
Independent Auditor’s
Report
Page 26
Financial Report
Page 31
This Annual Report includes the Engenco Limited Directors’ Report, the Annual Financial Report
and Independent Audit Report for the financial year ended 30 June 2018 lodged with the Australian
Securities and Investments Commission and ASX Limited. The Annual Report is available on the
Engenco website www.engenco.com.au. A copy of our full Corporate Governance Statement and ASX
Appendix 4G outlining compliance with ASX Corporate Governance Principles and Recommendations
is available on our website at www.engenco.com.au.
Engenco Limited
ABN 99 120 432 144
02
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportDirectors’ Report COMPANY
HIGHLIGHTS
Revenue from continuing operations $000
EBITDA from continuing operations $000
FY16 $6,722
Net Assets $000
FY16 $132,764
FY17 $129,319
FY18 $157,336
FY17 $12,785
FY18 $17,320
FY16 $49,094
FY17 $57,011
FY18 $73,218
Basic Earnings
Per Share
FY16 1.23c
FY17 2.67c
FY18 5.74c
+30+60
+21+49
FY18 $0.49
FY17 $0.21
Share Price
At 30 June
FY16 $0.10
The past
financial
year marked
another
period of
significant
progress and
achievement
for Engenco
including net
profit before
tax which
increased
by 56% on
the previous
year’s result.
01
Engenco Limited 2018 Annual Report10
10
“The past financial year marked another period of significant progress and
achievement for Engenco including net profit before tax which increased by
56% on the previous year’s result.”
At the Company’s 2010 Annual General Meeting, your Board embarked upon a
3 – 5 year plan in which we were aiming to turn around the Company’s fortunes
from what had been a tumultuous start to life as an ASX listed business. We said,
“We do not promise the future will always be smooth sailing or that we will not
face various challenges along the way however what we can assure you (our
shareholders) of, is our commitment to your Company.”
So what can we now take from those 2010 predictions?
First of all we were correct – the journey has not always been smooth. But our
commitment has also been unwavering.
On the matter of timing, the “3 – 5 years” should maybe have been “3 + 5”
years! However after a series of significant annual losses as we recalibrated
and refocused, FY18 was the third successive year of improving profitability and
positive net operating cashflow.
Over the past year each Engenco business unit once again grew its market
presence with their high quality products and services, and overall capabilities,
resulting in the Group developing even stronger relationships with an array of
“tier 1” customers and global suppliers.
Balance sheet & capital management
As the saying goes, it’s very difficult to build something which will last without
a strong foundation and in the current environment in which business must now
operate, this has never been more true. Engenco’s balance sheet provides such
a foundation from which the Company can sensibly and sustainably continue to
grow.
We ended FY18 as we had commenced, in a net cash position, and entered
the new financial year with a positive net cash position of $8.3 million. A few
weeks ago, we were very pleased to announce an agreement with the National
Australia Bank to establish a new A$12.6 million debt facility extending over a
three year term. The new facility will coincide with the early extinguishment of
Engenco’s A$10 million line of credit facility with Elph which is currently undrawn.
The establishment of the new NAB facility is another important milestone
representing one of the key final steps in the recalibration of the Company’s
balance sheet.
CHAIRMAN’S
REPORT
HIGHLIGHTS
56
Percent
NPBT Increase
$8.3
Million
Net Cash
1
Cent
Per Share Dividend
02
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual Report CHAIRMAN’S
REPORT
Dividend
After last year paying the Company’s first dividend in almost a
decade, we were again able to reward our shareholders with another
final dividend of 1 cent per share (fully franked), representing an
increase of 100% over the previous year.
Governance
There has been much public commentary in recent times regarding
the role of public company boards including considerable debate
on the subject of governance which is far from settled with quite
divergent points of view being expressed. The Engenco Board is
very cognisant of its responsibilities and aims to meet the highest
standards of good and appropriate governance. In doing so, the
Board will continue doing what it has done since commencing the
turnaround in 2010 and that is to act in a common sense manner,
with integrity and in the best interests of all relevant stakeholders,
including each and every Engenco shareholder.
What’s ahead
As another year passes, the Engenco “flywheel” continues to turn
just a little bit easier with this being reflected in the Company’s
performance and financial stability. The sectors in which the Group
operates are generally experiencing positive sentiment. However,
there are signs emerging in the broader economy (both domestic
and international) which would suggest that some caution should
also be exercised. Subject to those ever present influences which
remain beyond our control, we remain optimistic for the year ahead
and expect further improvement in the Company’s top and bottom
line financial performance through organic growth and ongoing
efficiency initiatives.
On behalf of the Board, I wish to extend our sincere thanks
and appreciation to our customers for their support and to our
shareholders for their patience as we continue to strive to deliver
superior value to you both.
Finally, none of this could be achieved without the commitment and
collective efforts of our people whom we thank and congratulate
on the important roles they all play in serving our customers and
shareholders and for delivering another great result which represents
the realisation of much hard work over a number of years. We look
forward to continued success in the year ahead.
“WE...ENTERED THE
NEW FINANCIAL
YEAR
WITH A POSITIVE
NET CASH POSITION
OF
$8.3 MILLION”.
03
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportChairman’s Report BUSINESS
UNIT OVERVIEW
Drivetrain
Contribution to Revenue (%)
Contribution to Revenue (%)
Key Operations
Key Operations
– Mobile powertrain genuine component
– Locomotive and wagon maintenance
and spare parts distribution
– Through-life support solutions
– Technical products and provision of
and refurbishment service
– Rail sector wheelset, bearing and bogie
services
engineering services
– Engineering , design and manufacturing
services
Achievements
Achievements
– Refined business structures to focus
on growth opportunities in the mining,
transport, energy and defence industries
– Investments in strategic inventory and
– Positive
revenue
trajectory driven
by expansion of heavy maintenance
activities
– Increased maintenance and network
expansion of the product range
capacity
– The successful introduction of a range of
innovative products
– Continued establishment of alliances
with globally recognised OEM partners
Revenue $000
Revenue $000
FY17 $39,013
FY18 $52,915
FY17 $51,303
FY18 $54,196
EBITDA $000
EBITDA $000
FY17 $6,409
FY18 $11,134
FY17 $11,376
FY18 $9,462
Outlook
Outlook
Further growth prospects, particularly
in the mining sector; new product and
service offerings.
The changing nature of rail operators’
maintenance regimes has led to increased
service outsourcing, providing greater
opportunities for the business. Expansion
of activities on the east coast is expected
to contribute positively to the business in
the future.
04
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual Report
RAIL
TRAINING
Contribution to Revenue (%)
Contribution to Revenue (%)
Contribution to Revenue (%)
Key Operations
Key Operations
Key Operations
– Highly skilled rail operations personnel
– Track protection services
– Rail infrastructure maintenance services
– Registered Training Organisation (RTO)
– Nationally recognised training services
– Development and
training programs
implementation of
– Manufacture of dry bulk goods tankers
for road transportation
– Distribution of imported aluminium dry
bulk tankers
– Maintenance, repair and overhaul, parts
sales and servicing capability
Achievements
Achievements
Achievements
– Continued to build on its reputation as an
employer of choice and a prime provider
of supplementary rail personnel
– Reduction in operational costs delivering
improved profitability to the business
– Rail vocational training demand captured
and expanded
– Strategically placed to ensure compliant,
responsive and cost-effective service to
national clients
– Extension of RTO training scope, now
offering courses to the logistics industry
– Cost saving initiatives (including a new
improved
tanker design) resulting
production efficiency
in
– Capitalised on strong demand
for
tankers, particularly
from customers
engaged in the numerous construction
and
infrastructure projects around
Australia
Revenue $000
Revenue $000
Revenue $000
FY17 $10,493
FY18 $19,001
FY17 $9,370
FY18 $12,280
FY17 $13,507
FY18 $15,593
EBITDA $000
EBITDA $000
EBITDA $000
FY17 $1,807
FY18 $3,000
FY17 $1,526
FY18 $3,590
FY17 $1,160
FY18 $1,437
Outlook
Outlook
Outlook
the continued
With
industry growth,
Momentum is well positioned to contribute
to nation-building projects, working closely
with “tier 1” infrastructure customers.
Growth opportunities are stimulated by
demand for rail operations training and
certification.
Further focus on maintaining production
efficiency improvements and providing a
higher quality product.
05
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportBusiness Unit Overview MANAGING DIRECTOR
& CEO’S REPORT
HIGHLIGHTS
22
Percent
Revenue Increase
$17.3
Million
EBITDA
$18
Million
NPAT for period
06
It is pleasing to report to shareholders that Engenco has had another positive year
in many different ways. We entered the 2018 financial year with a good degree of
confidence; we planned for further improvements on the encouraging trend and
worked hard to maintain the businesses’ performance and growth momentum.
The Company delivered strong financial performance, with consolidated
revenue of $157m for the year, representing a 22% increase over the previous
year. This was particularly satisfying since it was driven by revenue growth in each
segment. Revenue growth was mainly organic, and the strategy of expanding
the range of products and services offered, whilst remaining true to our core
business, is proving to be successful. Equally satisfying was the significant
advance in consolidated EBITDA margin from 10% to 11%, delivering EBITDA of
$17.3m for the year. This demonstrated our ability to take advantage of operating
leverage as fixed costs remained under control whilst there were efficiency
gains. As a consequence, the Group’s growth in earnings before interest and tax
was a healthy 48%.
The net outcome of these very pleasing numbers is that the Group recorded a net
profit before tax of $13m and, after recognising a portion of our carried-forward
tax losses, a net profit after tax of $18m.
During the year, $4m of residual borrowings were repaid, and the Group
remained debt free for most of the year while continuing to generate positive
cash flow. There was some modest capital expenditure including growth
programmes as we expanded branch networks and capabilities, whilst working
capital requirements were commensurate with an expanding business.
We have a motivated and passionate team of staff right across the Group, and
ensuring the safety and welfare of more than 800 people, including contractors,
is of paramount importance. Further evolving our ethos of personal responsibility
regarding safety, we have improved safety performance. Previous coordinated
efforts to establish key measurable safety objectives and targets, coupled with
early risk identification and surveillance activities, are positively affecting the
Group’s Total Recordable Injury Frequency Rate (TRIFR).
Thanks to the continued efforts of our combined management and employee
safety leadership, the Group’s TRIFR decreased by approximately 60% year-on-
year. The TRIFR at June 2018 was 13.72 compared to 34.10 at June 2017, which
is especially pleasing considering that total Group working hours increased by
approximately 19%.
Employee welfare is another cornerstone of the Engenco Group values; and
we appreciate the need for the application and education of contemporary
workplace policies to ensure a continuing safe work environment. The Group took
the opportunity to refresh its Equal Employment Opportunity, Discrimination,
Harassment and Bullying Policy and facilitated extensive management and
employee briefings in order to convey behavioural expectations. Another
important advancement has been the launch of our “MyCentral” on-line portal.
This personalised tool supports individual performance and development goals
for every employee, driving a high-performance culture and encouraging regular
conversations between manager and employee to meet these goals.
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual Report Operational performance
As previously mentioned, each of the business units generated
higher revenue in the year as a result of our growth strategies.
Drivetrain operates mainly in Australia, and also serves customers
in New Zealand and parts of Asia. The Drivetrain business structure
matured further in the year as operations focussed on opportunities
in the mining, transport, energy and defence industries.
Several new customers were brought on board as Drivetrain
delivered value through its technical service and product offerings
– leveraging the national branch network which has been developed
over a number of years. Investments in strategic inventory and
expansion of the product range helped boost new business as
demand for mining equipment maintenance returned, and further
advances were made into the on-highway market.
Gross profit was lower on reduced volumes and margins in
our Forrestfield wheel shop and the expiry of a large wagon
rental contract. Expansion of activities on the east coast, with the
opening of a new rolling stock and rotables maintenance facility in
the Hunter Valley in the second half, contributed to an increase in
operating expenses. The ramp-up of output from this new facility is
expected to contribute positively to the business in the future. While
overall revenue was higher, softer volumes in some traditional
revenue streams and increased expansion expenses resulted in the
moderation of EBITDA during the year.
The Total Momentum business performed well, with a strong
rebound in revenue growth. Momentum continues to build on
its reputation as an employer of choice and a prime provider of
supplementary rail personnel, particularly in the train operations,
rail infrastructure skills and track protection segments. The higher
revenue resulted in a solid improvement in gross profit and an
increase in EBITDA, helped by prudent operating expense control.
Emphasis on developing our specialist product
and service offerings for the natural gas
compression industry began to bear fruit. The
successful introduction of a range of innovative
products for compression applications, together
with completion of a gas compression package
project, helped underpin higher revenue. Our
support of both land and marine assets for the
Australian defence industry, although complex
and with highly variable demand patterns,
remains an important revenue stream.
Further operational efficiencies were realised.
In particular,
facility was
the Newcastle
consolidated, with the opening of a new
purpose-built branch to service the New South
Wales coal and industrial markets and housing
a warehouse to service the east coast branch
network. As a result of the higher revenue, Drivetrain benefitted
from greater operating leverage leading to healthy operating profit
growth.
Gemco Rail’s revenue trajectory continued positively during the
year driven by expansion of heavy maintenance activities in our
Forrestfield, Western Australia and Dynon, Victoria operations. The
changing nature of rail operators’ maintenance regimes has led to
increased service outsourcing, providing greater opportunities for
the business. Investments in the past year increased wheel bearing
refurbishment capacity, resulting in greater and more efficient
throughput in support of the north-west mining segment. Gemco’s
product sales strategy, aligning with premium quality, globally
recognised OEM partners, continued to gain pace.
“THE GROUP RECORDED
A NET PROFIT BEFORE
TAX OF $13M”
With significant government and private capital investment programs
committed to rail infrastructure, Momentum is well positioned to
contribute to these nation-building projects, working closely with
“tier 1” infrastructure customers.
Revenue growth in CERT Training was again robust as rail vocational
training demand expanded nationally. CERT’s training centres and
trainers are strategically placed in all mainland states to ensure
compliant, responsive and cost-effective service to national clients.
Strong demand for rail corridor work skills training, particularly in
Victoria, was largely driven by the growing number of construction
and infrastructure projects that are underway. A general shortage of
train drivers helped stimulate demand for rail operations training and
certification, and this was further boosted by an improved level of
government funding.
07
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportManaging Director & CEO’s Report Gemco Rail
Locomotive Maintenance Facility,
Melbourne, VIC
Expenditure on courseware updates and modernisation was not as
high as in the previous year, but the efficiency benefits gained from
previous investments in this area enhanced profitability. Following
strong demand in Victoria, a training centre at Ballarat train station
was established, and in New South Wales a new, purpose-built
facility was opened in Thornton. CERT has succeeded in extending its
RTO training scope in keeping with the Group strategy of expanding
product offerings that are close to its core business, and now courses
are being offered to the logistics industry in areas such as working at
heights and operating forklifts and cranes.
Hedemora Turbo & Diesel in Sweden continues to support legacy
Hedemora diesel engines still in operation, including in Australia,
and this remains an important but declining revenue stream. Market
development of the HS Turbocharger range is accelerating and we
began to penetrate the retrofit market in various parts of the world,
replacing original OEM turbochargers with these modern, high-
efficiency units.
Convair Engineering improved its revenue and profit, recovering
from a period of relatively low demand and compressed margins.
There was reasonably strong demand for tankers, particularly from
customers engaged in the numerous construction and infrastructure
projects currently underway around Australia, especially along the
east coast. Imported tankers compete strongly and we are focusing
on maintaining production efficiency improvements and providing a
higher quality product.
Looking ahead
We entered the new financial year with good momentum on a
number of fronts. We continue to work on internal improvements
and regard the quest to provide our customers with greater value
service as never-ending. Not surprisingly, our status as a leading
supplier in various fields has been elevated further. Our businesses
are well prepared to address markets that previously were difficult
to penetrate, and business conditions in Australia remain healthy
in most of our market segments. We have normalised our bank
funding arrangements and have established a far more stable capital
base, allowing us to work hard to convert the significant growth
opportunities that we have before us.
I wish personally to thank the Group’s entire team of management
and staff who have, through their dedication and passion, contributed
greatly to our successful performance. The Company has improved
to its current state from what was a difficult period a few years ago,
and working with a very supportive board of directors to lead this
business transition has been a great honour. We look forward to the
next chapter as we take the business forward.
08
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual Report Gemco Rail
Rolling Stock Overhaul and Maintenance Facility,
Perth WA
09
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportBusiness Unit Overview DIRECTORS’
REPORT
The directors present their report, together
with the consolidated financial statements
the Group, comprising of Engenco
of
Limited (“the Company”) and its controlled
entities, for the financial year ended 30 June
2018 and the auditor’s report thereon.
Directors
The directors of the Company at any time
during or since the end of the financial
year are:
10
Vincent De Santis
BCom, LLB (Hons)
Kevin Pallas
BCom, MAICD
Chairman since 24 March 2016,
Non-Executive Director since 19 July 2010,
Member of Audit and Risk Committee since
31 July 2013.
Vince
is the Managing Director of the
Elphinstone Group, which he joined in 2000,
initially as the Group’s Legal Counsel and
Finance & Investment Manager. In addition
to his Chairmanship of the Engenco Limited
Board, he is also a director of various other
Elphinstone Group companies. Prior to
commencing with the Elphinstone Group,
Vince was a Senior Associate in the Energy
Resources & Projects team at national
in
law firm Corrs Chambers Westgarth
Melbourne. Vince
is a member of the
University of Tasmania’s North West
Advisory Board and the Tasmanian Rhodes
Scholarship Selection Committee.
Member of the Board since 17 December
2014, Managing Director & CEO since
1 February 2015.
and manufacturing
Kevin possesses senior management and
leadership experience through a 26 year
in engineering, mining supplies,
career
metals
industries.
Holding a Bachelor of Commerce degree,
Kevin specialised in the areas of financial
and cost accounting systems’ design
and development, and operational and
commercial management for a number of
multinationals in South Africa, New Zealand,
Singapore and Australia prior to joining the
Group in 2007. He served in the position of
Chief Financial Officer from 1 March 2013
to 31 January 2015. In February 2015, Kevin
was appointed Managing Director and Chief
Executive Officer.
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual Report
DIRECTORS’
REPORT
Dale Elphinstone
FAICD
Alison von Bibra
BSc, MBA
Ross Dunning AC
BE (Hons), BCom, FIE Aust, FIRSE, REPQ
Non-Executive Director since 19 July 2010.
Independent Non-Executive Director and
Member of the Audit and Risk Committee
since 17 January 2017.
Independent Non-Executive Director and
Member of Audit and Risk Committee since 8
November 2010, Chairman of Audit and Risk
Committee since 21 February 2017.
Dale
is the Executive Chairman of the
Elphinstone Group which he founded in
1975. Dale has considerable experience
the engineering, manufacturing and
in
heavy machinery
industries and among
other things is one of the longest serving
Caterpillar dealers’ principal in Australia,
having acquired the Caterpillar dealership
in Victoria and Tasmania in 1987. Dale is
the Co-Chair of the Joint Commonwealth
and Tasmanian Economic Council and
was a director of the Tasmanian Health
Organisation North-West until 30 June 2015.
He was a director of Caterpillar subsidiary,
Caterpillar Underground Mining Pty Ltd until
December 2008 and of the formerly publicly
listed Queensland Gas Company Limited
from October 2002 to November 2008. Dale
was also a director of ASX listed National
Hire Group Limited until December 2011.
Alison has held key positions at a number
10
including almost
of organisations
years at ASX
listed multi-national, CSL
Limited. During her time at CSL, Alison’s
roles
included Senior Director, Human
Resources based in the USA and General
Manager, Human Resources located at the
company’s Melbourne head office. Alison
also has experience in a range of board
roles
including among others, the CSL
Superannuation Fund and Westernport
Regional Water Corporation. Alison was a
Director of the Ballarat General Cemetaries
Trust until September 2017. She is currently
a Member of the Dental Board of Australia.
Ross has extensive exposure to the rail
industry having served as the Commissioner
for Railways
in Queensland, President
of
the Australian Railways Association
and Managing Director of Evans Deakin
Industries Limited (the predecessor to the
ASX listed company, Downer EDI Limited).
Ross has been awarded the Companion
of the Order of Australia and has held
non-executive positions with a number
including Toll
of ASX
Holdings Limited and Downer EDI Limited,
Government
in
Queensland and New South Wales and on
unlisted public companies. He is also the
Chairman of the Board of Indec Pty Ltd.
listed companies
corporations
owned
11
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportDirectors’ Report
Directors’ Report
Engenco Limited and its controlled entities
Meetings of Directors
The number of directors’ meetings (including meeting of committees of directors) and number of meetings attended by each of the directors
of the Company during the financial year are:
Board Member
Number of Meetings
Vincent De Santis
Kevin Pallas
Dale Elphinstone
Alison von Bibra
Ross Dunning
Directors’ Shareholdings
Vincent De Santis
Kevin Pallas
Dale Elphinstone
Alison von Bibra
Ross Dunning
Directors’ Meetings
Audit and Risk Committee Meetings
12
12/12
12/12
12/12
12/12
11/12
4
4/4
-
-
4/4
4/4
Ordinary Shares
378,951
72,632
202,406,914
34,793
182,948
Changes in Directors and Executives Subsequent to Year End
Linda Dillon resigned from the position of Company Secretary and Chief Financial Officer on 1 August 2018. Andrew Nightingale was appointed
Company Secretary on the same day.
Company Secretary
Andrew Nightingale
BCom, LLB
Linda Dillon
CA, CS, BCom, GDipAppFin, DipInvestRel
Graeme Campbell
FCA, BSc
Company Secretary since 1 August 2018.
Company Secretary and Chief Financial
Officer from 6 April 2018 to 1 August 2018.
Resigned from Positions of Company
Secretary and Chief Financial Officer on 6
April 2018.
for
including working
Andrew is a lawyer with over 10 years’
experience,
a
corporate regulator, an ombudsman and a
variety of in-house teams. Andrew holds
a Bachelor of Laws and a Bachelor of
Commerce from the University of Otago,
and has also practiced law in the United
Kingdom and New Zealand.
Linda has previously gained deep experience
as a CFO and Company Secretary of a
number of ASX Listed entities and
in a wide range
multinational groups
of industries. Linda holds a Bachelor of
Commerce degree, a Graduate Diploma
in Applied Finance, a Diploma in Investor
Relations, and is a Chartered Accountant and
Chartered Secretary.
12
in
in different
Graeme started his career in audit with
PricewaterhouseCoopers
the United
Kingdom and has over 20 years’ of finance
industry sectors.
experience
He has held a number of senior finance
roles with blue chip companies
in the
UK
including Shepherd Group, Premier
Farnell and R&R Ice Cream. Graeme holds
a Bachelor of Science in Mathematics from
the Imperial College of Science, Technology
and Medicine in London. He is a fellow of
the Institute of Chartered Accountants in
England and Wales.
Engenco Limited 2018 Annual Report
Principal Activities
The Group provides a diverse range of engineering services and products through two business streams: Power & Propulsion and Rail & Road.
Engenco businesses specialise in:
– Maintenance, repair and overhaul of heavy duty engines, powertrain, propulsion and gas compression systems;
– Maintenance, repair and overhaul of locomotives;
– Manufacture and maintenance of wagons, carriages and associated rail equipment;
– Project management, training and workforce provisioning; and
– Manufacture and supply of road transport and storage tankers for dry bulk products.
The Group services a diverse client base across the defence, resources, marine, power generation, rail, heavy industrial and infrastructure sectors
The Group operates globally and employs nearly 500 people (full-time equivalent) in over twenty locations in three countries.
Group Overview
Rail &
Road
Power &
Propulsion
RAIL
TRAINING
TURBO & DIESEL
13
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportDirectors’ Report Drivetrain
Gemco Rail
Drivetrain’s services span the complete engineering product
large-frame
life-cycle for heavy mobile powertrain systems,
turbochargers, heavy diesel and gas power generation and gas
compression equipment.
Drivetrain is organised around the following business streams:
– Mobile Powertrain
– Turbocharger, Power and Compression
– Hedemora Turbo & Diesel (Sweden)
Gemco Rail has been a well-known supplier of quality services and
products to the rail sector for many years. Building on this solid
reputation and experience, the business specialises in providing
fleet-management services to national rail operators and in the
manufacture, refurbishment and overhaul of rail equipment.
Gemco Rail provides wagon and locomotive scheduled and ad-
hoc maintenance services and manufactures custom designed and
engineered new and refurbished wagons, bogie component parts
and associated rail equipment. Gemco Rail also supplies a broad
range of rail track maintenance equipment and parts.
Services include:
Services include:
– Maintenance, repair, and overhaul
– Design, installation and commissioning
– Genuine component and spare parts distribution
– Field service
– Technical and engineering services in remote locations
– Equipment life extension
Drivetrain has facilities and service centres in eight locations in the
ANZ region. Hedemora Turbo & Diesel is based in Sweden.
– Manufacture and maintenance of
freight wagons, other
rollingstock and rail equipment
– Locomotive and wagon maintenance, repair and overhaul
– Fleet asset management
– Custom maintenance, modification, retrofit and upgrades
– Bogie, wagon and wheel refurbishment
– Field service crews
– Train inspections
– RailBAM acoustic analysis
The flagship facility in Forrestfield WA is complemented by other
facilities strategically located on main lines in Victoria, South
Australia and New South Wales.
14
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportDirectors’ Report
RAIL
TRAINING
Total Momentum
Centre for Excellence in Rail Training
(CERT)
Convair Engineering (Convair)
and
upgrades.
Total Momentum offers a range of workforce
provisioning services from providing skilled
individuals to fully-supervised and equipped
crews to carry out rail track construction,
maintenance
Total
Momentum plan, implement and manage
safe working solutions for rail clients, from
hand-signallers and
to highly
experienced Principal Protection Officers
and Locomotive Drivers. Operating out of
branches in Forrestfield WA, Norwood SA,
Thornton NSW and Port Melbourne VIC,
Total Momentum’s strategic presence
is
well placed to service the rail and resource
sectors.
lookouts
CERT is a registered training organisation
(RTO) that provides responsive, flexible
and
innovative training, assessment and
recertification services to the Australian rail
industry. CERT delivers nationally accredited
and industry-based training programs on
a regular basis, and provides customised
courses to suit individual business needs.
The business has training centres in Perth,
Port Hedland, Sydney, Newcastle, Ipswich,
Norwood, Melbourne and Ballarat with the
flexibility to train on-site Australia wide.
designs
Convair
and manufactures
tankers for the transportation of dry bulk
products by road. The business provides
repairs, maintains and supplies spare
parts for all makes of dry bulk tankers and
offers distribution, service and repair of
compressors and ancillary equipment
used in the support of dry bulk materials
handling. Convair is an agent for Feldbinder
Spezialfahrzeugwerke GmbH of Germany,
supplementing the company’s range of
products with aluminium dry bulk tankers
and stainless steel liquid tankers. With its
manufacturing facility based in Melbourne,
Convair services customers
throughout
Australia and New Zealand.
15
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportDirectors’ Report
Operating and Financial Review
Operating Results
The Group reported a net profit after tax, including non-controlling interests, of $18,003,000 for the year ended 30 June 2018. The consolidated
result for the year is summarised as follows:
Revenue from continuing operations
EBITDA from continuing operations2
EBIT from continuing operations1
Profit / (loss) after tax from continuing operations
Profit / (loss) from discontinued operations, net of tax
Net operating cash flow
Net assets
Net cash / (debt)
2018
$000
157,336
17,320
13,490
18,003
-
8,292
73,218
8,318
2017
$000
129,319
12,785
9,137
8,478
(209)
6,400
57,011
4,697
1 EBIT is earnings before finance costs and income tax expense.
2 EBITDA is EBIT before depreciation and amortisation.
Note – EBIT and EBITDA are non-IFRS financial measures, which have not been subject to review or audit by the Group’s external auditors. These measures are presented to assist
understanding of the underlying performance of the Group.
Review of Principal Businesses
Events Subsequent to Reporting Date
Disclosure of information regarding principal business performance
and likely developlments has been made in the Chairman’s and
Managing Director’s sections in this report.
Linda Dillon resigned from the positions of Company Secretary and
Chief Financial Officer on 1 August 2018. Andrew Nightingale was
appointed Company Secretary on the same day.
Significant Changes in the State of Affairs
In the opinion of the directors there were no significant changes in
the state of affairs of the Group that occurred during the financial
year under review.
Dividends
Since the end of the previous financial year, the Board declared a final
dividend of 0.5 cents per ordinary share (fully franked) on 23 August
2017 and subsequently paid the dividend on 28 September 2017.
On 3 August 2018, the Group agreed terms with the National
Australia Bank for a $10.0m Revolving Credit Facility and $2.6m
interchangeable facility to be used between the issuance of bank
guarantees, letters of credit and business card facility with a term
of three years. The facilities are subject to final documentation and
the satisfaction of certain conditions precedent, which are usual for
a facility of this nature. The new facility is expected to be finalised
no later than 5 October 2018. The new financing arrangements,
when completed, will replace the existing funding facility of $10.0m
with Elph Pty Ltd and Bank Guarantee Facility of $2.0m with the
Commonwealth Bank.
On 29 August 2018, the Board resolved to declare a final dividend
of 1 cent per share (fully franked). Payment of the dividend to
shareholders will take place on 27 September 2018.
On 29 August 2018, the Board resolved to declare a final dividend
of 1 cent per share (fully franked). Payment of the dividend to
shareholders will take place on 27 September 2018.
Other than the above, there has not arisen, in the interval between
the end of the financial year and the date of this report, any item,
transaction or event which would have a material effect on the
financial statements of the Group at 30 June 2018.
16
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportDirectors’ Report
Environmental Regulation
Group operations are subject to significant environmental regulation
under Commonwealth, State and
including
noise, air emissions and the use, handling, haulage and disposal of
dangerous goods and wastes.
international
law,
The Group follows practices that minimise adverse environmental
impacts and comply with environmental requirements.
The Board is not aware of any significant breaches during the periods
covered by this report nor does it consider the Group is subject to any
material environmental liabilities.
National Greenhouse and Energy Reporting Guidelines
The Group’s environmental obligations are regulated under both
Federal and State law. The Group is not subject to the conditions
imposed by the registration and reporting requirements of the
National Greenhouse and Energy Reporting Act 2007.
Indemnification and Insurance of Officers
The Company has indemnified and paid premiums to insure each of
the Company’s directors and executives against liabilities for costs
and expenses incurred by them in defending any legal proceedings
arising out of their conduct while acting in their capacity, other than
conduct involving a wilful breach of duty in relation to the Company.
Non-Audit Services
During the year KPMG, the Group’s auditor, has performed certain
other services in addition to the audit and review of the financial
statements.
The Board has considered the non-audit services provided during the
year by the auditor and is satisfied that the provision of those non-
audit services during the year by the auditor is compatible with, and
did not compromise, the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
– All non-audit services were subject to the corporate governance
procedures adopted by the Group and have been reviewed by
the Audit and Risk Committee to ensure they do not impact the
integrity and objectivity of the auditor; and
– The non-audit services provided do not undermine the general
principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants, as they did not
involve reviewing or auditing the auditor’s own work, acting in a
management or decision making capacity for the Group, acting
as an advocate for the Group or jointly sharing risks and rewards.
Details of the amounts paid to the auditor of the Group, KPMG
Australia, and its network firms for audit and non-audit services
provided during the year are set out below:
SERVICES OTHER THAN AUDIT AND REVIEW
OF FINANCIAL STATEMENTS:
Other Services
Taxation compliance services
AUDIT AND REVIEW OF FINANCIAL
STATEMENTS
TOTAL PAID TO KPMG
2018
$000
13,834
13,834
310,980
324,814
Lead Auditor’s Independence Declaration
The lead auditor’s independence declaration is set out on page 25
and forms part of the Directors’ Report for the financial year ended
30 June 2018.
Rounding Off
The Group is of a kind referred to in ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191 dated 1 April 2016
and in accordance with that Instrument, amounts in the consolidated
financial statements and Directors’ Report have been rounded off to
the nearest thousand dollars, unless otherwise stated.
17
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportDirectors’ Report Gemco Rail
Rolling Stock and Rotables Maintenance Facility,
Telarah NSW
Remuneration Report - Audited
Remuneration Policy
This report details the nature and amount of remuneration for
all directors and key executives of the Group who have a strategic
commercial impact upon the Group’s activities.
The Board’s policy for determining the nature and amount of
remuneration for board members and key executives of the Group
is as follows:
– All executive directors and key executives receive a salary
package comprised of a base salary, superannuation and other
long-term benefits.
– The Board reviews executive packages annually by reference
to the Group’s performance, executive performance and
comparable market information.
– The performance of executives is measured against criteria
agreed annually with each executive and is based predominantly
on the forecast growth of the Group’s NPAT, which are aligned
with shareholder value.
– The directors and key executives receive a superannuation
guarantee contribution required by the government (which was
9.5% during the year) and do not receive any other retirement
benefits. Some individuals, however, have chosen to sacrifice part
of their salary to increase superannuation contributions.
– All remuneration paid to directors and executives is valued at cost
to the Group and expensed.
– The Board policy is to remunerate non-executive directors at
market rates for time, commitment and responsibilities. The
Board determines payments to non-executive directors and
reviews their remuneration annually, based on market practice,
duties and accountability. The maximum aggregate amount of
fees that can be paid to non-executive directors is subject to
approval by shareholders.
– To align directors’ interests with shareholder interests, the
directors are encouraged to hold shares in the Company.
Performance Conditions Linked to Remuneration
The remuneration level for key management personnel is based on
a number of factors, including skills and qualifications, achievements
of performance metrics and demonstrated management capability.
The contracts for service between the Group and key management
personnel are on a continuing basis.
Consequences of Performance on Shareholder Wealth
There are currently no non-discretionary short-term incentives
available to key management personnel.
The following table shows the gross revenue, profits and dividends
for the last 5 years for Engenco Limited, as well as the share prices at
the end of the respective financial years.
18
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportDirectors’ Report Remuneration Report - Audited (cont’d)
2014
$
2015
$
2016
$
2017
$
2018
$
Revenue
140,273,000
133,834,000
135,318,000
129,399,000
157,336,000
NPAT attributable to members
(11,257,000)
(27,593,000)
3,828,000
8,309,000
18,003,000
EBITDA
EBIT
Operating income growth 1
Share price at year-end
% Change in share price
1,692,000
(20,668,000)
11,078,000
12,765,000
17,320,000
(8,836,000)
(30,128,000)
5,503,000
9,117,000
13,490,000
89%
$0.12
(18%)
(241%)
$0.10
(17%)
n/a
$0.10
0%
66%
$0.21
121%
48%
$0.49
133%
Capital employed 2
80,348,000
46,448,000
49,988,000
57,565,000
74,400,000
Return on capital employed 3
Dividends paid
(11%)
-
(65%)
-
11%
-
16%
-
18%
1,567,000
1 Operating income growth is the movement in EBIT year-on-year
2 Capital employed is total assets less current liabilities
3 Return on capital employed is EBIT over capital employed
Non-Executive Directors
Total compensation for all non-executive directors was last voted upon by shareholders at the 2017 Annual General Meeting. The base fee for
the Chairperson is $160,000 per annum. Base fees for other non-executive directors do not exceed $80,000 per annum.
Directors’ base fees cover all main board activities. Non-executive director members who sit on a committee receive an additional fee of
$6,000 per annum. Non-executive director members who hold the position of Chairperson on a committee receive an additional fee of
$6,000 per annum.
Non-executive directors do not receive performance-related compensation and are not provided with retirement benefits apart from
statutory superannuation (paid in addition to the base fees noted above).
19
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportDirectors’ Report
d %
e
t
a
l
e
R
e
c
n
a
m
r
o
f
r
e
P
n
o
i
t
a
r
e
n
u
m
e
R
l $
a
t
o
T
s $
t
i
f
e
n
e
B
e $
v
a
e
L
t $
i
f
e
n
e
B
l $
a
t
o
T
-
b
u
S
n
o
i
t
a
n
m
r
e
T
i
e
c
i
v
r
e
S
g
n
o
L
n
o
i
t
a
u
n
n
a
r
e
p
u
S
m
r
e
T
-
g
n
o
L
r
e
h
t
O
t
n
e
m
y
o
l
p
m
E
-
t
s
o
P
t $
i
f
e
n
e
B
y
r
a
n
o
i
t
e
r
c
s
i
D
e
c
n
a
m
r
o
f
r
e
P
r
e
h
t
O
s $
t
i
f
e
n
e
B
m
r
e
T
-
t
r
o
h
S
-
n
o
N
s $
t
i
f
e
n
e
B
y
r
a
t
e
n
o
M
s $
e
e
F
&
y
r
a
l
a
S
:
e
r
a
,
p
u
o
r
G
e
h
t
f
o
l
e
n
n
o
s
r
e
p
t
n
e
m
e
g
a
n
a
m
y
e
k
r
e
h
t
o
d
n
a
,
y
n
a
p
m
o
C
e
h
t
f
o
r
o
t
c
e
r
i
d
h
c
a
e
r
o
f
n
o
i
t
a
r
e
n
u
m
e
r
f
o
t
n
e
m
e
l
j
e
r
o
a
m
h
c
a
e
f
o
t
n
u
o
m
a
d
n
a
e
r
u
t
a
n
e
h
t
f
o
s
l
i
a
t
e
D
-
-
-
-
-
-
-
-
-
-
-
-
%
0
7
1
.
%
6
.
1
1
%
0
7
1
.
%
6
.
1
1
%
1
.
9
%
0
6
.
0
7
7
,
1
8
1
5
8
0
5
7
1
,
0
0
6
,
7
8
0
0
8
3
8
,
0
4
7
,
0
0
1
8
4
9
6
9
,
0
7
1
,
4
9
9
8
2
,
1
4
-
4
4
0
0
4
,
6
6
1
,
7
3
4
0
8
2
,
4
6
4
0
9
2
,
6
3
5
9
6
2
,
3
7
4
0
9
2
,
6
3
5
9
6
2
,
3
7
4
5
3
4
0
1
9
,
,
0
7
5
0
0
0
,
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
0
7
,
1
1
1
2
6
9
,
1
2
6
9
,
2
0
7
,
1
1
2
0
7
,
1
1
1
2
6
9
,
0
7
7
,
5
1
5
8
8
7
,
0
0
6
,
7
0
0
8
3
,
0
4
7
,
8
2
7
8
4
3
,
0
7
1
,
8
2
8
5
3
,
-
4
7
4
3
,
3
1
6
3
5
,
0
8
2
0
4
,
2
1
5
,
5
4
4
2
2
0
4
,
2
1
5
,
5
4
4
2
2
0
4
,
2
9
7
,
5
8
7
3
8
3
9
,
0
0
0
6
6
1
,
0
0
2
7
6
1
,
0
0
0
0
8
,
0
0
0
0
8
,
0
0
0
2
9
,
6
7
0
2
6
,
7
0
7
7
3
,
0
0
0
6
8
,
-
0
7
5
6
3
,
0
0
0
4
2
4
,
3
5
5
3
8
3
,
6
7
0
9
7
4
,
4
2
4
3
2
4
,
6
7
0
9
7
4
,
4
2
4
3
2
4
,
,
6
7
0
3
0
9
,
7
7
9
6
0
8
-
-
-
-
-
-
-
-
-
-
-
-
4
2
3
,
1
9
5
9
7
4
5
,
4
2
3
,
1
9
5
9
7
4
5
,
4
2
3
,
1
9
5
9
7
4
5
,
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0
0
0
6
6
1
,
0
0
2
7
6
1
,
0
0
0
0
8
,
0
0
0
0
8
,
0
0
0
2
9
,
6
7
0
2
6
,
7
0
7
7
3
,
0
0
0
6
8
,
-
0
7
5
6
3
,
0
0
0
4
2
4
,
3
5
5
3
8
3
,
2
5
7
,
7
8
3
,
9
2
6
8
6
3
2
5
7
,
7
8
3
,
9
2
6
8
6
3
2
5
7
,
1
1
8
2
8
1
,
2
5
7
8
1
0
2
7
1
0
2
8
1
0
2
7
1
0
2
8
1
0
2
7
1
0
2
8
1
0
2
7
1
0
2
8
1
0
2
7
1
0
2
8
1
0
2
7
1
0
2
8
1
0
2
7
1
0
2
8
1
0
2
7
1
0
2
8
1
0
2
7
1
0
2
s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N
s
r
o
t
c
e
r
i
D
1
s
i
t
n
a
S
e
D
V
n
a
m
r
i
a
h
C
1
e
n
o
t
s
n
h
p
i
l
E
D
i
g
n
n
n
u
D
R
7
1
0
2
n
a
J
7
1
d
e
t
n
o
p
p
a
i
:
i
a
r
b
B
n
o
v
A
2
6
1
0
2
v
o
N
3
2
d
e
r
i
t
e
r
:
r
o
t
c
e
H
D
’
s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N
l
a
t
o
T
-
b
u
S
’
s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
l
a
t
o
T
-
b
u
S
n
o
i
t
a
r
e
n
u
m
e
R
n
o
i
t
a
r
e
n
u
m
e
R
’
s
r
o
t
c
e
r
i
D
l
a
t
o
T
O
E
C
&
r
o
t
c
e
r
i
D
g
n
g
a
n
a
M
i
s
a
l
l
a
P
K
s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
n
o
i
t
a
r
e
n
u
m
e
R
8
1
0
2
e
n
u
J
0
3
d
e
d
n
E
r
a
e
Y
r
o
f
s
l
i
a
t
e
D
n
o
i
t
a
r
e
n
u
m
e
R
s
r
e
c
i
f
f
’
O
e
v
i
t
u
c
e
x
E
y
e
K
d
n
a
s
r
o
t
c
e
r
i
D
’
)
d
’
t
n
o
c
(
d
e
t
i
d
u
A
-
t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
t
r
o
p
e
R
’
s
r
o
t
c
e
r
i
D
20
Engenco Limited 2018 Annual ReportEngenco Limited and its controlled entitiesDirectors’ Report
-
-
-
-
-
-
%
1
.
6
%
7
4
.
%
0
7
.
%
6
5
.
d %
e
t
a
l
e
R
e
c
n
a
m
r
o
f
r
e
P
n
o
i
t
a
r
e
n
u
m
e
R
l $
a
t
o
T
-
7
0
8
5
7
,
2
9
3
,
7
3
2
9
2
3
,
1
0
3
-
4
6
5
8
8
,
9
9
1
,
3
1
3
3
9
8
9
8
3
,
9
6
7
,
3
1
3
,
1
,
8
2
3
0
0
3
,
1
n
o
i
t
a
n
m
r
e
T
i
e
c
i
v
r
e
S
g
n
o
L
n
o
i
t
a
u
n
n
a
r
e
p
u
S
m
r
e
T
-
g
n
o
L
r
e
h
t
O
t
n
e
m
y
o
l
p
m
E
-
t
s
o
P
s $
t
i
f
e
n
e
B
e $
v
a
e
L
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
1
9
2
1
,
1
1
9
2
1
,
2
0
7
,
1
1
2
3
5
2
2
,
t $
i
f
e
n
e
B
-
7
7
5
,
6
-
2
6
4
4
1
,
9
1
5
0
2
,
0
0
3
7
1
,
9
3
0
,
1
2
9
1
8
7
3
,
,
1
3
8
6
0
1
6
5
6
,
1
3
1
l $
a
t
o
T
-
b
u
S
-
0
3
2
9
6
,
-
0
3
9
,
2
2
2
9
9
8
7
6
2
,
4
6
2
,
1
7
3
6
1
,
9
3
3
0
6
1
,
2
9
2
6
3
2
,
5
9
1
,
1
0
4
1
,
6
4
1
,
1
t $
i
f
e
n
e
B
y
r
a
n
o
i
t
e
r
c
s
i
D
e
c
n
a
m
r
o
f
r
e
P
r
e
h
t
O
s $
t
i
f
e
n
e
B
m
r
e
T
-
t
r
o
h
S
-
n
o
N
s $
t
i
f
e
n
e
B
y
r
a
t
e
n
o
M
s $
e
e
F
&
y
r
a
l
a
S
-
-
-
-
-
-
5
6
2
8
1
,
5
6
2
8
1
,
4
2
3
,
1
9
0
6
0
3
7
,
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0
3
2
9
6
,
-
0
3
9
,
2
2
2
4
3
6
9
4
2
,
4
6
2
,
1
7
0
6
1
,
2
9
2
8
9
8
0
2
3
,
,
2
1
9
3
0
1
,
1
,
0
8
0
3
7
0
,
1
8
1
0
2
7
1
0
2
8
1
0
2
7
1
0
2
8
1
0
2
7
1
0
2
8
1
0
2
7
1
0
2
8
1
0
2
7
1
0
2
3
y
r
a
t
e
r
c
e
S
y
n
a
p
m
o
C
&
r
e
c
ffi
O
i
l
a
c
n
a
n
F
f
e
h
C
i
i
y
r
a
t
e
r
c
e
S
y
n
a
p
m
o
C
/
r
e
c
ffi
O
i
l
a
c
n
a
n
F
f
e
h
C
i
i
n
o
i
t
a
r
e
n
u
m
e
R
’
s
r
e
c
i
f
f
O
e
v
i
t
u
c
e
x
E
l
a
t
o
T
’
s
r
e
c
i
f
f
O
e
v
i
t
u
c
e
x
E
d
n
a
’
s
r
o
t
c
e
r
i
D
l
a
t
o
T
n
o
i
t
a
r
e
n
u
m
e
R
y
r
a
t
e
r
c
e
S
y
n
a
p
m
o
C
/
l
e
s
n
u
o
C
l
a
g
e
L
6
1
0
2
c
e
D
2
2
d
e
n
g
s
e
r
i
:
t
t
o
B
S
8
1
0
2
l
i
r
p
A
6
d
e
n
g
s
e
r
i
:
l
l
e
b
p
m
a
C
G
r
e
m
r
o
F
8
1
0
2
l
i
r
p
A
6
d
e
t
n
o
p
p
a
i
:
n
o
l
l
i
D
L
s
e
v
i
t
u
c
e
x
E
)
d
’
t
n
o
c
(
8
1
0
2
e
n
u
J
0
3
d
e
d
n
E
r
a
e
Y
r
o
f
s
l
i
a
t
e
D
n
o
i
t
a
r
e
n
u
m
e
R
s
r
e
c
i
f
f
’
O
e
v
i
t
u
c
e
x
E
y
e
K
d
n
a
s
r
o
t
c
e
r
i
D
’
)
d
’
t
n
o
c
(
d
e
t
i
d
u
A
-
t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
.
i
i
i
l
y
n
a
p
m
o
C
e
h
t
f
o
y
t
r
a
p
d
e
t
a
l
e
r
a
s
h
c
h
w
d
t
L
y
t
P
)
t
s
u
A
(
p
u
o
r
G
e
n
o
t
s
n
h
p
E
h
t
i
w
s
t
n
e
m
e
e
r
g
a
a
v
d
a
p
e
r
a
e
n
o
t
s
n
h
p
E
D
d
n
a
s
i
t
n
a
S
e
D
V
f
o
s
e
c
v
r
e
s
e
h
t
r
o
f
s
e
e
F
l
i
i
i
i
1
.
i
i
y
n
a
p
m
o
C
e
h
t
f
o
y
t
r
a
p
d
e
t
a
l
e
r
a
s
a
w
h
c
h
w
d
t
L
y
t
P
G
S
S
k
c
s
s
a
r
G
h
t
i
w
t
n
e
m
e
e
r
g
a
n
a
a
v
d
a
p
e
r
e
w
r
o
t
c
e
H
D
o
t
s
e
e
F
2
i
i
.
d
e
t
a
t
s
e
r
n
e
e
b
e
v
a
h
s
e
v
i
t
a
r
a
p
m
o
c
7
1
0
2
e
h
t
t
n
e
m
s
s
e
s
s
a
e
r
i
s
h
t
f
o
t
l
u
s
e
r
a
s
A
.
l
e
n
n
o
s
r
e
p
t
n
e
m
e
g
a
n
a
m
y
e
k
e
b
o
t
d
e
m
e
e
d
e
r
e
w
t
a
h
t
l
s
e
o
r
e
h
t
d
e
s
s
e
s
s
a
e
r
p
u
o
r
G
e
h
t
,
r
a
e
y
e
h
t
g
n
i
r
u
D
21
.
8
1
0
2
t
s
u
g
u
A
1
d
e
n
g
s
e
r
n
o
i
l
l
i
D
L
3
Engenco Limited 2018 Annual ReportEngenco Limited and its controlled entitiesDirectors’ Report
Remuneration Report - Audited (cont’d)
Loans to Key Management Personnel and their Related Parties
The balance of loans to key management personnel and their related parties outstanding as at 30 June 2018 is $NIL (2017: $NIL).
Service Contracts
The employment conditions of most key management personnel are formalised in contracts of employment. The employment contract does
not stipulate a term of employment period but does stipulate a notice period for resignation and periods of remuneration and conditions
under termination. Termination payments are not payable on resignation or dismissal for serious misconduct. In the instance of serious
misconduct, the Company can terminate employment at any time.
V De Santis
K Pallas
D Elphinstone
A von Bibra
R Dunning
D Hector
L Dillon
G Campbell
S Bott
Terms of Agreement
Termination Benefit
Ongoing director agreement
N/A - Non-Executive Director
Permanent employment contract
8 weeks’ pay
Ongoing director agreement
N/A - Non-Executive Director
Ongoing director agreement
N/A - Non-Executive Director
Ongoing director agreement
N/A - Non-Executive Director
Ongoing director agreement
N/A - Non-Executive Director
Permanent employment contract
Permanent employment contract
Permanent employment contract
3 months’ pay
8 weeks’ pay
4 weeks’ pay
Options and Rights Over Equity Instruments Granted
In the 2017 and 2018 financial years no executive directors, non-executive directors or key management personnel had any options or rights.
Other Transactions with Key Management Personnel
A number of key management personnel, or their related parties, hold positions in other entities that result in them having control or joint
control over the financial or operating policies of those entities.
A number of these entities transacted with the Group during the year. The terms and conditions of the transactions with key management
personnel and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on
similar transactions to non-key management personnel related entities on an arm’s-length basis.
From time to time, directors of the Group, or their related entities, may purchase goods from the Group. These purchases are on the same
terms and conditions as those entered into by other Group employees or customers and are trivial in nature.
22
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportDirectors’ Report Remuneration Report - Audited (cont’d)
Movements in Shares
The movement during the reporting period in the number of ordinary shares in Engenco Limited held, directly, indirectly or beneficially, by
each key management person, including their related parties, is as follows:
2018
V De Santis
K Pallas
Balance
1 July 2017
378,951
72,632
D Elphinstone
202,406,914
A von Bibra
R Dunning
D Hector
L Dillon
G Campbell
S Bott
-
182,948
113,163
-
-
-
Received as
compensation
Other changes*
-
-
-
-
-
-
-
-
-
-
-
-
34,793
-
-
-
-
-
Balance
30 June 2018
378,951
72,632
202,406,914
34,793
182,948
113,163
-
-
-
*Other changes represent shares that were purchased or sold during the year.
This report of the directors is made in accordance with a resolution of the Board of Directors.
Vincent De Santis
Chairman
Dated 29 August 2018
23
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportDirectors’ Report
DIRECTORS’
DECLARATION
1.
In the opinion of the directors of Engenco Limited (the Company):
a.
the consolidated financial statements and notes that are set out on pages 32 to 77 and the Remuneration Report on pages 18 to 23
in the Directors’ Report, are in accordance with the Corporations Act 2001, including:
i.
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance for the financial year
ended on that date; and
ii.
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b.
there are reasonable grounds to believe that the Company will be asble to pay its debts as and when they become due and payable.
2. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer
and Chief Financial Officer for the financial year ended 30 June 2018.
3. The directors draw attention to Note 1 to the financial statements, which includes a statement of compliance with International Financial
Reporting Standards.
Signed in accordance with a resolution of the directors:
Vincent De Santis
Chairman
Dated 29 August 2018
24
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual Report
AUDITOR’S INDEPENDENCE
DECLARATION
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Engenco Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Engenco Limited for the
financial year ended 30 June 2018 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Suzanne Bell
Partner
Melbourne
29 August 2018
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
25
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual Report
INDEPENDENT AUDITOR’S
REPORT
Independent Auditor’s Report
To the shareholders of Engenco Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Engenco Limited (the Company).
In our opinion, the accompanying
Financial Report of the Company is in
accordance with the Corporations Act
2001, including:
giving a true and fair view of the
Group's financial position as at 30
June 2018 and of its financial
performance for the year ended on
that date; and
•
•
The Financial Report comprises:
•
•
Consolidated statement of financial position as at 30
June 2018
Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of cash
flows for the year then ended
• Notes including a summary of significant accounting
policies
• Directors' Declaration.
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Group consists of the Engenco Limited (the Company)
and the entities it controlled at the year-end or from time to
time during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
have fulfilled our other ethical responsibilities in accordance with the Code.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
26
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual Report
Key Audit Matters
The Key Audit Matters we identified
are:
• Valuation of the wagon fleet
• Revenue recognition
Valuation of wagon fleet ($7,319K)
Refer to Note 13 to the Financial Report
Key Audit Matters are those matters that, in our professional
judgement, were of most significance in our audit of the
Financial Report of the current period.
These matters were addressed in the context of our audit of
the Financial Report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
The key audit matter
How the matter was addressed in our audit
A key audit matter for us was the
Group’s impairment assessment of its
wagon fleet, given the size of the
balance (approximately 8% of total
assets) as at 30 June 2018 and the
market conditions.
In particular, the wagon rental market in
which the Group operates has been
depressed in recent years. This resulted
in a majority of the Group’s wagon lease
tenure towards short to medium term.
We focused on the significant forward-
looking and other assumptions the
Group applied in the impairment
assessment for the wagon fleet.
Our procedures included:
• We considered the appropriateness of the impairment
review methodology applied by the Group against the
requirements of the accounting standards.
• We used our knowledge of the Group, its current year
performance, business and customers, and our industry
experience along with reviewing published studies of
industry trends and expectations to inform our
understanding of the wagon rental market.
• We involved our senior audit team members to evaluate
the external independent valuation obtained by the Group
regarding the carrying value of the wagon fleet at
reporting date by assessing the valuation methodology
adopted and competence of the external expert.
• We assessed the disclosures in the financial report using
our understanding of this key audit matter obtained from
our testing and against the requirements of the
accounting standards.
27
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual Report
Revenue recognition ($157,336K)
Refer to Note 5 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Revenue recognition was a key audit matter for
us due to multiple revenue streams and the
financial significance of the amount.
The Group’s revenue consists of various
revenue streams comprising maintenance,
repair and overhaul of powertrain systems,
manufacture and maintenance of wagons and
associated rail equipment, leasing of wagons,
manufacture and supply of road and storage
tankers and training and workforce provisioning
services within the rail industry.
This necessitated greater involvement by the
audit team to determine appropriate revenue
recognition including timing and measurement.
In addition, the Group disclosed the expected
impact of AASB 15 Revenue from Contracts
with Customers, when it will be adopted at 1
July 2018. Given the significance of changes to
accounting standards for Revenue, additional
audit effort was applied to these disclosures.
Our procedures included:
•
•
•
•
•
•
evaluating the appropriateness of the Group’s
revenue recognition policies against the
requirements of AASB 118 Revenue and/or
AASB 117 Leases;
for a sample of revenue transactions, we
checked to underlying records and inspected
the terms and conditions of the revenue
contract for consistency to the Group’s policy
for timing and measurement of revenue
recognition;
comparing cash receipts to revenue
recognised during the period;
testing a sample of revenue transactions from
immediately before and immediately after year
end, across different revenue streams,
comparing the year in which the revenue was
recognised to terms of the underlying contract;
testing a sample credit notes issued post year-
end to identify any significant reversals of
revenue recognised pre year-end;
reading a sample of customer contracts to
evaluate the change, if any, in revenue
recognition in accordance with the transition
impact of AASB 15 and comparing to the
Group’s disclosure.
Other Information
Other Information is financial and non-financial information in Engenco Limited’s annual reporting which is
provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the
Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and
will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
28
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual Report
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
•
•
preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error
assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend to
liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf.
This description forms part of our Auditor’s Report.
29
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual Report
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration
Report of Engenco Limited for the year
ended 30 June 2018, complies with
Section 300A of the Corporations Act
2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration Report in
accordance with Section 300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in pages 18
to 23 of the Directors’ report for the year ended 30 June 2018.
Our responsibility is to express an opinion on the Remuneration
Report, based on our audit conducted in accordance with
Australian Auditing Standards.
KPMG
Suzanne Bell
Partner
Melbourne
29 August 2018
30
Engenco Limited 2018 Annual Report
Engenco Limited and its controlled entities
CONTENTS
Consolidated Statement
of Profit or Loss and
Other Comprehensive
Income
Page 32
Consolidated Statement
of Financial Position
Page 33
Consolidated Statement
of Changes in Equity
Page 34
Consolidated Statement
of Cash Flows
Page 35
Shareholder Information
Page 78
Corporate Directory
Page 80
Note 21
Issued Capital and
Reserves
Page 68
Note 22
Parent Entity Disclosures
Page 69
Note 23
Cash Flow Information
Page 70
Note 24
Financial Risk
Management
Page 72
Note 25
Related Party Transactions
Page 75
Note 26
Auditor’s Remuneration
Page 77
Note 27
Events Subsequent to
Reporting Date
Page 77
Notes to the Consolidated Financial Statements
Page 36-77
Note 1
Significant Accounting
Policies
Page 36
Note 2
Controlled Entities
Page 44
Note 3
Operating Segments
Page 45
Note 11
Inventories
Page 60
Note 12
Other Assets
Page 60
Note 13
Property, Plant and
Equipment
Page 61
Note 4
Discontinued Operation
Page 52
Note 14
Net Tangible Assets
Page 62
Note 5
Revenue and Other
Income
Page 53
Note 15
Intangible Assets
Page 63
Note 6
Expenses
Page 54
Note 7
Tax
Page 55
Note 8
Earnings Per Share
Page 58
Note 9
Cash and Cash Equivalents
Page 58
Note 10
Trade and Other
Receivables
Page 59
Note 16
Trade and Other Payables
Page 64
Note 17
Financial Liabilities
Page 64
Note 18
Provisions
Page 65
Note 19
Capital and Leasing
Commitments
Page 66
Note 20
Contingent Liabilities
Page 67
Engenco Limited 2018 Annual Report
31
31
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2018
Consolidated Group
2018
$000
Consolidated Group
2017
$000
Note
5
5
6
6
7
4
8
8
157,336
1,335
5,004
(74,413)
(54,918)
(3,830)
(90)
(476)
(913)
(1,178)
(1,063)
(5,983)
28
(7,825)
-
13,014
4,989
18,003
-
18,003
18,003
-
18,003
(229)
(229)
17,774
17,774
-
17,774
Cents
5.74
5.74
129,319
1,052
2,745
(58,662)
(43,818)
(3,648)
(208)
(783)
(1,079)
(1,329)
(1,214)
(6,218)
46
(7,734)
(115)
8,354
124
8,478
(209)
8,269
8,309
(40)
8,269
(811)
(811)
7,458
7,498
(40)
7,458
Cents
2.67
2.72
Revenue
Other income
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expense
Impairment of inventory
Finance costs
Subcontract freight
Repairs and maintenance
Insurances
Rent and outgoings
Foreign exchange movements
Other expenses
Share of profit / (loss) of equity-accounted investee, net of tax
PROFIT / (LOSS) BEFORE INCOME TAX
Income tax benefit / (expense)
PROFIT / (LOSS) FROM CONTINUING OPERATIONS
DISCONTINUED OPERATION
Profit / (loss) from discontinued operation, net of tax
TOTAL PROFIT / (LOSS) FOR THE PERIOD
Profit / (loss) attributable to:
Owners of the Company
Non-controlling interest
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of overseas subsidiaries
Other comprehensive income for the period, net of tax
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
Total comprehensive income attributable to:
Owners of the Company
Non-controlling interest
EARNINGS PER SHARE
Basic & Diluted earnings per share (cents per share)
From continuing operations:
Basic & Diluted earnings per share (cents per share)
The notes on pages 36 to 77 are an integral part of the consolidated financial statements.
32
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportConsolidated Financial Statements
Consolidated Statement of Financial Position
as at 30 June 2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Assets held for sale
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Financial liabilities
Current tax liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Profit reserve
Accumulated losses
TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY
Non-controlling interest
TOTAL EQUITY
The notes on pages 36 to 77 are an integral part of the consolidated financial statements.
Consolidated Group
2018
$000
Consolidated Group
2017
$000
Note
9
10
11
12
13
7
15
16
17
7
18
18
7
21
8,656
28,275
33,944
3,315
-
74,190
-
16,839
5,575
248
22,662
96,852
15,453
338
132
6,529
22,452
488
694
1,182
23,634
73,218
302,719
(351)
271
(223,592)
79,047
(5,829)
73,218
8,960
26,009
28,940
3,020
100
67,029
7
17,376
295
398
18,076
85,105
15,919
4,263
750
6,609
27,541
481
72
553
28,094
57,011
302,719
(122)
-
(239,757)
62,840
(5,829)
57,011
33
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportConsolidated Financial Statements Consolidated Statement of Changes in Equity
for the year ended 30 June 2018
Consolidated Group
BALANCE AT 1 JULY 2016
Profit / (loss)
Other comprehensive income, net of tax
TOTAL COMPREHENSIVE INCOME
TRANSACTIONS WITH OWNERS OF THE
COMPANY
Contributions and Distributions:
Shares issued during the year
Transaction costs
TOTAL CONTRIBUTIONS AND
DISTRIBUTIONS
BALANCE AT 30 JUNE 2017
BALANCE AT 1 JULY 2017
Profit / (loss)
Transfer to profit reserve
Other comprehensive income, net of tax
TOTAL COMPREHENSIVE INCOME
TRANSACTIONS WITH OWNERS OF THE
COMPANY
Contributions and Distributions:
Dividends Paid
TOTAL CONTRIBUTIONS
AND DISTRIBUTIONS
BALANCE AT 30 JUNE 2018
Share Capital
$000
302,260
-
-
-
Accumulated
Losses
$000
(248,066)
8,309
-
8,309
473
(14)
459
-
-
-
302,719
(239,757)
302,719
-
-
-
-
(239,757)
18,003
(1,838)
-
16,165
Foreign
Currency
Translation
Reserve
$000
689
-
(811)
(811)
Sub-Total
$000
54,883
8,309
(811)
7,498
Non-
controlling
Interest
$000
(5,789)
(40)
-
(40)
Total Equity
$000
49,094
8,269
(811)
7,458
-
-
-
473
(14)
459
-
-
-
473
(14)
459
(122)
62,840
(5,829)
57,011
Profit Reserve
$000
-
-
-
-
-
-
-
-
-
-
1,838
-
1,838
(122)
-
-
(229)
(229)
62,840
18,003
-
(229)
17,774
(5,829)
-
-
-
-
57,011
18,003
-
(229)
17,774
-
-
-
-
(1,567)
(1,567)
-
-
(1,567)
(1,567)
-
-
(1,567)
(1,567)
302,719
(223,592)
271
(351)
79,047
(5,829)
73,218
The notes on pages 36 to 77 are an integral part of the consolidated financial statements.
34
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportConsolidated Financial Statements Consolidated Statement of Cash Flows
for the year ended 30 June 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs
Income tax paid
NET CASH FROM / (USED IN) OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of non-current assets
Purchase of non-current assets
NET CASH FROM / (USED IN) INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital
Payment of transaction costs related to issue of share capital
Dividends paid
Repayment of borrowings
NET CASH FROM / (USED IN) FINANCING ACTIVITIES
Net increase / (decrease) in cash and cash equivalents
Cash (net of bank overdrafts) at beginning of financial year
CASH (NET OF BANK OVERDRAFTS) AT END OF FINANCIAL YEAR
The notes on pages 36 to 77 are an integral part of the consolidated financial statements.
Consolidated Group
2018
$000
Consolidated Group
2017
$000
Note
172,013
(162,987)
30
(476)
(288)
8,292
801
(3,905)
(3,104)
-
-
(1,567)
(4,000)
(5,567)
(379)
8,697
8,318
137,326
(129,766)
46
(972)
(234)
6,400
5,635
(2,429)
3,206
473
(14)
-
(12,674)
(12,215)
(2,609)
11,306
8,697
23(b)
23(a)
35
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportConsolidated Financial Statements NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the year ended 30 June 2018
Note 1 - Significant Accounting Policies
Except for the changes explained here within, the Group has
consistently applied the following accounting policies to all periods
presented in these consolidated financial statements.
Reporting Entity
Engenco Limited (the ‘Company’) is domiciled in Australia. The
Company’s registered office is at Level 22, 535 Bourke Street,
Melbourne, VIC 3000. These consolidated financial statements
comprise the Company and its subsidiaries (collectively ‘the Group’
and individually ‘Group companies’). The Group is a for-profit entity
and is involved in the delivery of a diverse range of engineering
services and products.
Basis of Accounting
Statement of Compliance
The consolidated financial statements are general purpose
financial statements which have been prepared in accordance with
Australian Accounting Standards (AASBs) adopted by the Australian
Accounting Standards Board (AASB) and the Corporations Act 2001.
The consolidated financial statements comply with International
Financial Reporting Standards (IFRS) adopted by the International
Accounting Standards Board (IASB).
The consolidated financial statements were authorised for issue by
the Board of Directors on 29 August 2018.
Functional and Presentation Currency
These consolidated financial statements are presented in AUD,
which is the Company’s functional currency. All amounts have been
rounded to the nearest thousand, unless otherwise indicated.
Use of Judgements and Estimates
In preparing these consolidated financial statements, management
has made judgements, estimates and assumptions that affect the
application of the Group’s accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised prospectively.
Assumptions and Estimation Uncertainties
Information about assumptions and estimation uncertainties that
may have a risk of resulting in a material adjustment in the year
ended 30 June 2018 is included in the following notes:
– Note 7 – Tax. Balances disclosed in the financial statements
and the notes thereto, related to taxation, are based on the
best estimates of directors. These estimates take into account
both the financial performance and position of the Company
as they pertain to current income taxation legislation, and the
directors’ understanding thereof. No adjustment has been made
for pending or future taxation legislation. The current income
tax position represents the directors’ best estimate, pending an
assessment by taxable authorities in relevant jurisdictions.
– Note 10 – Trade and Other Receivables. Trade receivables are
reviewed and impaired where significant uncertainty is identified
as to the recoverability of amounts due, and where the amounts
to which the uncertainty relates can be quantified.
– Note 11 – Inventories. Inventory and WIP values are determined
using the net realisable value, where the cost is in excess of
this value.
– Note 13 – Property, Plant and Equipment. The recoverable
amount of certain wagons (part of
‘property, plant and
equipment’) is determined using an external valuation report
which utilises multiple valuation techniques with a primary
focus on depreciated replacement cost approach. Impairment is
recognised when the carrying amount exceeds the recoverable
amount. Where rollingstock is held by the Group, but the leasing
opportunities are limited due to market conditions, the assets are
held at salvage value.
36
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 1 - Significant Accounting Policies (cont’d)
Basis of Measurement
Significant Accounting Policies
The consolidated financial statements have been prepared on the
historical cost basis except for non-derivative financial instruments
at fair value through profit or loss, which are measured at fair value.
a. Basis of Consolidation
Non-controlling interests
Going Concern
The consolidated financial statements have been prepared on the
going concern basis, which contemplates the continuity of normal
business activity, and the realisation of assets and the settlement of
liabilities in the ordinary course of business.
The directors are satisfied that the Group will have sufficient cash
and undrawn facilities to continue to operate and pay its debts as and
when they fall due (for at least the 12 month period from the date of
signing this financial report).
Non-controlling interests (NCI) are measured at their proportionate
share of the acquiree’s identifiable net assets at the date of acquisition.
Changes in the Group’s interest in a subsidiary that do not result in a
loss of control are accounted for as equity transactions.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls
an entity when it is exposed to, or has the right to, variable returns
from its involvement with the entity and has the ability to affect those
returns through its power over the entity. The financial statements
of subsidiaries are included in the consolidated financial statements
from the date on which control commences until the date on which
control ceases.
Loss of control
When the Group loses control over a subsidiary, it derecognises
the assets and liabilities of the subsidiary, and any related NCI and
other components of equity. Any resulting gain or loss is recognised
in profit or loss. Any interest retained in the former subsidiary is
measured at fair value when control is lost.
Interests in equity-accounted investees
The Group’s interests in equity-accounted investees comprise of
interest in a joint venture.
A joint venture is an arrangement in which the Group has joint control,
whereby the Group has rights to the net assets of the arrangement,
rather than rights to its assets and obligations for its liabilities.
Interest in the joint venture is accounted for using the equity
method. It is recognised initially at cost, which includes transaction
costs. Subsequent to initial recognition, the consolidated financial
statements include the Group’s share of the profit or loss and other
comprehensive income (OCI) of equity-accounted investees, until
the date on which joint control ceases.
37
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 1 - Significant Accounting Policies (cont’d)
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated.
Unrealised gains arising from transactions with equity-accounted
investees are eliminated against the investment to the extent of the
Group’s interest in the investee. Unrealised losses are eliminated in
the same way as unrealised gains, but only to the extent that there is
no evidence of impairment.
b. Construction Contracts in Progress
Construction contracts in progress represents the gross amount
expected to be collected from customers for contract work
performed to date. It is measured at costs incurred plus profits
recognised to date (see Note 5) less progress billings and recognised
losses.
In the Statement of Financial Position, construction contracts in
progress are presented as work in progress. Advances received from
customers are presented as deferred income/revenue.
c.
Impairment
Non-derivative financial assets
Financial assets not classified as at fair value through profit or loss,
including an interest in an equity-accounted investee, are assessed at
each reporting date to determine whether there is objective evidence
of impairment.
Objective evidence that financial assets are impaired includes:
– Default or delinquency by a debtor;
– Restructuring of an amount due to the Group on terms that the
Group would not consider otherwise;
– Indications that a debtors or issuer will enter bankruptcy;
– Adverse changes in the payment status of borrowers and issuers;
– The disappearance of an active market for a security because of
financial difficulties; or
– Observable data indicating that there is a measurable decrease in
the expected cash flows from a group of financial assets.
For an investment in an equity security, objective evidence of
impairment includes a significant or prolonged decline in its fair
value below its cost.
The Group considers evidence of impairment for financial assets
measured at amortised cost at both an individual asset and a
collective level. All individually significant assets are individually
assessed for impairment. Those found not to be impaired are then
collectively assessed for any impairment that has been incurred
but not yet individually identified. Assets that are not individually
significant are collectively assessed for impairment. Collective
assessment is carried out by grouping together assets with similar
risk characteristics.
In assessing collective
impairment, the Group uses historical
information on the timing of recoveries and the amount of loss
incurred, and makes an adjustment if current economic and credit
conditions are such that the actual losses are likely to be greater or
lesser than suggested by historical trends.
An impairment loss is calculated as the difference between an asset’s
carrying amount and the present value of the estimated future cash
flows discounted at the asset’s original effective interest rate. Losses
are recognised in profit or loss and reflected in an allowance account.
When the Group considers that there are no realistic prospects of
recovery of the asset, the relevant amounts are written off. If the
amount of impairment loss subsequently decreases and the decrease
can be related objectively to an event occurring after the impairment
was recognised, then the previously recognised impairment loss is
reversed through profit or loss.
An impairment loss in respect of an equity-accounted investee is
measured by comparing the recoverable amount of the investment
with its carrying amount. An impairment loss is recognised in profit
or loss, and is reversed if there has been a favourable change in the
estimates used to determine the recoverable amount.
Non-financial assets
At each reporting date, the Group reviews the carrying amounts
of its non-financial assets (other than inventories and deferred tax
assets) to determine whether there is any indication of impairment.
If any such indication exists, then the asset’s recoverable amount is
estimated. Goodwill is tested annually for impairment.
For impairment testing, assets are grouped together into the
smallest group of assets that generates cash inflows from continuing
use that are largely independent of the cash inflows of other assets
or cash generating units (CGUs). Goodwill arising from a business
combination is allocated to CGUs or groups of CGUs that are
expected to benefit from the synergies of the combination.
The recoverable amount of an asset or CGU is the greater of its value
in use and its fair value less costs to sell. Value in use is based on the
estimated future cash flows, 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 or CGU. An
impairment loss is recognised if the carrying amount of an asset or
CGU exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. They are allocated
first to reduce the carrying amount of any goodwill allocated to the
CGU, and then to reduce the carrying amounts of the other assets in
the CGU on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For other
assets, an impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
38
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 1 - Significant Accounting Policies (cont’d)
d. Foreign Currency
e. Finance Income and Finance Costs
Foreign currency transactions
The Group’s finance income and finance costs include:
Transactions in foreign currencies are translated to the respective
functional currencies of Group companies at exchange rates at
the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies are translated into the functional
currency at the exchange rate at the reporting date. Non-monetary
assets and liabilities that are measured at fair value in a foreign
currency are translated into the functional currency at the exchange
rate when the fair value was determined. Non-monetary items that
are measured based on historical cost in a foreign currency are
translated at the exchange rate at the date of the transaction. Foreign
currency differences are generally recognised in profit or loss.
– Interest income;
– Interest expense;
– The net gain or loss on financial assets at fair value through profit
or loss;
– The foreign currency gain or loss on financial assets and financial
liabilities; and
– Impairment losses recognised on financial assets (other than
trade receivables).
Interest income or expense is recognised using the effective interest
method.
However, foreign currency differences arising from the translation of
the following items are recognised in OCI:
f. Government Grants
– available-for-sale equity investments (except on impairment
in which case foreign currency differences that have been
recognised in OCI are reclassified to profit or loss);
– a financial liability designated as a hedge of the net investment in
a foreign operation to the extent that the hedge is effective; and
– qualifying cash flow hedges to the extent that the hedges are
effective.
Foreign operations
The assets and liabilities of foreign operations, including goodwill
and fair value adjustments arising on acquisition, are translated into
the functional currency at the exchange rates at the reporting date.
The income and expenses of foreign operations are translated into
the functional currency at the exchange rates at the dates of the
transactions.
Foreign currency differences are recognised in OCI and accumulated
in the translation reserve, except to the extent that the translation
difference is allocated to NCI.
When a foreign operation is disposed of in its entirety or partially
such that control, significant influence or joint control is lost, the
cumulative amount in the translation reserve related to that foreign
operation is reclassified to profit or loss as part of the gain or loss on
disposal. If the Group disposes of part of its interest in a subsidiary
but retains control, then the relevant proportion of the cumulative
amount is reattributed to NCI. When the Group disposes of only part
of an associate or joint venture while retaining significant influence
or joint control, the relevant proportion of the cumulative amount is
reclassified to profit or loss.
Grants that compensate the Group for expenses incurred are
recognised in profit or loss on a systematic basis in the periods in
which the expenses are recognised.
g. Goods and Services Tax (GST)
Revenues, expenses and non-financial assets are recognised net of
the amount of GST, except where the amount of GST incurred is not
recoverable from the Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of
an item of the expense. Receivables and payables in the Statement of
Financial Position are shown inclusive of GST.
Cash flows are presented in the Statement of Cash Flows on a gross
basis, except for the GST component of investing and financing
activities, which are disclosed as operating cash flows.
h. Comparative Figures
When required by Accounting Standards, comparative figures have
been adjusted to conform to changes in presentation for the current
financial year.
When the Group applies an accounting policy retrospectively, makes
a retrospective restatement or reclassifies items in its financial
statements, a Statement of Financial Position as at the beginning of
the earliest comparative period will be disclosed.
i. Rounding of Amounts
The Group has applied the relief available to it under ASIC
Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191 and accordingly, amounts in the financial statements and
Directors’ Report have been rounded off to the nearest thousand
dollars (unless otherwise indicated).
39
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements The following new or amended standards are not expected to have a
significant impact on the Group’s consolidated financial statements:
– Disclosure Initiative (Amendments to IAS 7)
– Recognition of Deferred Tax Assets for Unrealised Losses
(Amendments to IAS 12)
– Annual Improvements to IFRS 2014-2016 Cycle-various standards
(Amendments to IFRS 12).
Standards issued but not yet effective
A number of new standards are effective for annual periods
beginning after 1 January 2018 and earlier adoption is permitted;
however, the Group has not early adopted the new or amended
standards in preparing these consolidated financial statements.
The following standards are expected to have a material impact on
the Group’s financial statements in the period of initial adoption.
IFRS 9: FINANCIAL INSTRUMENTS (EFFECTIVE 1 JULY 2018)
IFRS 9 Financial Instruments sets out requirements for recognising
and measuring financial assets, financial liabilities and some
contracts to buy or sell non-financial items. This standard replaces
IAS 39 Financial Instruments: Recognition and Measurement.
The Group has assessed the impact of the adoption of IFRS 9 on
the Group’s consolidated financial statements. The new standard
requires the Group to revise its accounting processes and internal
controls related to reporting financial instruments, which are in the
process of being finalised.
As the Group currently does not apply hedge accounting for its
foreign currency transactions, this component of IFRS 9 will not
impact the consolidated financial statements unless the Group
decides to implement hedge accounting in future reporting periods.
Note 1 - Significant Accounting Policies (cont’d)
j. New Accounting Standards and Interpretations
New accounting standards adopted
The Group has adopted the new and revised Standards and
Interpretations issued by the Australian Accounting Standards Board
(the “AASB”) that are relevant to its operations and effective for the
current reporting period.
A number of new standards, amendments to standards and
interpretations were available for early adoption but have not been
applied by the Group in these financial statements:
i. AASB 9 Financial Instruments
AASB 9, published in July 2014, replaces the existing
guidance in AASB 139 Financial Instruments: Recognition
and Measurement. AASB 9
includes revised guidance
the classification and measurement of financial
on
instruments, a new expected credit
loss model for
impairment on financial assets, and new
calculating
It
accounting
general
also
recognition and
the guidance on
carries
derecognition of financial instruments from AASB 139.
hedge
forward
requirements.
AASB 9 is effective for annual reporting periods beginning
on or after 1 January 2018, with early adoption permitted.
ii. AASB 15 Revenue from Contracts with Customers
AASB 15 establishes a comprehensive framework for
determining whether, how much, and when revenue
is recognised. It replaces existing revenue recognition
guidance, including AASB 18 Revenue, AASB 11 Construction
Contracts, and IFRIC 13 Customer Loyalty Programmes.
AASB 15 is effective for annual reporting periods beginning
on or after 1 January 2018, with early adoption permitted.
iii. AASB 16 Leases
AASB 16 introduces a single lessee accounting model and
requires a lessee to recognise assets and liabilities for
all leases with a term of more than 12 months, unless the
underlying asset is of low value. A lessee is required to
recognise a right-of-use asset representing its right to use
the underlying leased asset and a lease liability representing
its obligations to make
It replaces
existing lessee accounting guidance in AASB 117 Leases.
lease payments.
AASB 16 substantially carries forward the lessor accounting
requirements in AASB 117 Leases. Accordingly, a lessor
continues to classify its leases as operating leases or finance
leases, and to account for those two types of leases differently.
AASB 16 is effective for annual reporting periods beginning
on or after 1 January 2019, with early adoption permitted. The
Group is assessing the potential impact on its consolidated
financial statements resulting from the application of
AASB 16.
40
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements
Note 1 - Significant Accounting Policies (cont’d)
i. Classification of financial assets and financial liabilities
iii. Presentation and disclosure
IFRS 9 contains three principal classification categories for financial
assets:
– Measured at amortised cost;
– Measured at fair value through other comprehensive income
(FVOCI); and
IFRS 9 requires extensive new disclosures, particularly surrounding
credit risk and expected credit losses. The Group’s assessment
included an analysis to identify data gaps against current processes
to enable the capturing of the required data. The revised accounting
processes are in the process of being finalised.
– Measured at fair value through profit or loss (FVTPL).
iv. Transition
The existing categories of held to maturity, loans and receivables,
and available-for-sale are removed. The existing requirements for
financial liabilities is largely retained.
The general principle in IFRS 9 is for retrospective application of the
standard upon initial application. Retrospective application means
that the new requirements are applied to transactions, other events
and conditions as if those requirements had always been applied.
A financial asset is classified as being subsequently measured at
amortised cost if the asset is held within a business model whose
objective is to collect contractual cash flows, and the contractual
terms of the financial asset give rise to cash flows that are solely
payments of principal and interest (SPPI).
The Group currently classifies its non-derivative financial assets
into the categories of FVTPL, loans and receivables, and available-
for-sale. With the removal of loans and receivables and available-
for-sale categories under IFRS 9, loans and receivables will become
measured at amortised cost and be subject to the business model
and SPPI criterion assessments. Available-for-sale assets will
become measured at FVTPL. There are no impacts to the current
carrying values of non-derivative financial assets as a result of these
measurement changes.
ii.
Impairment
IFRS 9 replaces the ‘incurred cost’ model with an ‘expected credit
loss’ model. The new model uses a dual measurement approach,
under which the loss allowance is measured as either:
– 12-month expected credit losses (result from possible default
events within the 12 months after the reporting date); or
– Lifetime expected credit losses (result from all possible default
events over the expected life of a financial instrument).
A simplified approach is available for trade receivables, contract
assets and lease receivables, allowing or requiring the recognition of
lifetime expected credit losses at all times.
The Group currently only recognises a credit loss when there is
objective evidence that impairment has occurred. The new expected
credit loss model requires estimates of 12-month or lifetime
expected credit losses to be recognised upon initial recognition of
the financial asset, and when there is a significant change in credit
risk. Based on the Group’s assessment of historical provision rates
and forward-looking analysis the impact on adoption will be an
increase in the impairment provision in the order of $700,000
recognised through opening retained earnings. An additional
specifically identified expected credit loss provision of $200,000
will be recognised through opening retained earnings, as a result
of the transition impacts from IFRS 15 Revenue from Contracts with
Customers (see page 42, ii. Rendering of Services).
impairment. These
IFRS 9 contains certain exemptions from full retrospective
application for the classification and measurement requirements,
including
include an exemption from the
requirement to restate comparative information. If an entity does not
restate comparative information in prior periods, it recognises any
difference between the previous carrying amount and the carrying
amount at the date of initial application in the opening retained
earnings balance. Entities are allowed to restate comparatives only
if this is possible without the use of hindsight.
The Group will utilise the above mentioned exemptions upon initial
application.
IFRS 15: REVENUE FROM CONTRACTS WITH CUSTOMERS
(EFFECTIVE 1 JULY 2018)
IFRS 15 Revenue from Contracts with Customers establishes a
comprehensive framework for determining whether, how much and
when revenue is recognised. The new standard replaces existing
revenue recognition guidance, including IAS 18 Revenue, IAS 11
Construction Contracts and IFRIC 13 Customer Loyalty Programs.
Entities will apply a five-step model to determine when to recognise
revenue, and at what amount. The model specifies that revenue
should be recognised when (or as) an entity transfers control of
goods or services to a customer at the amount to which the entity
expects to be entitled. Depending on whether certain criteria are
met, revenue is recognised:
– Over time, in a manner that depicts the entity’s performance; or
– At a point in time, when control of the goods or services is
transferred to the customer.
The Group’s assessment of the impact the adoption of IFRS 15 would
have on the Group’s consolidated financial statements involved
the detailed review of numerous customer contracts across all
main revenue streams. The findings resulted in a limited impact on
the Group’s consolidated financial statements. The new standard
requires the Group to revise its accounting processes and internal
controls related to contracts with customers and revenue reporting,
which are in the process of being finalised.
41
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 1 - Significant Accounting Policies (cont’d)
i. Sale of goods
iv.
Construction contracts
The Group engages in the sale of spare parts and components
for various rail, road, powertrain and gas compression industry
sectors. The Group currently recognises revenue from the sale of
goods when the significant risks and rewards of ownership have
been transferred to the customer, recovery of the consideration is
probable, the associated costs and possible return of goods can be
reliably estimated, there is no continuing management involvement
with the goods, and the amount of revenue can be reliably measured.
Revenue is measured net of returns, trade discounts and volume
rebates.
Under IFRS 15, revenue will be recognised when a customer obtains
control of the goods. The Group has not identified any material impact
to the recognition of revenue on the sale of goods domestically or
internationally upon initial adoption of IFRS 15. However, changes to
accounting processes have been required to ensure the recognition
of revenue on the sale of goods domestically and internationally is
accounted for accordance with IFRS 15 in future periods.
The Group is involved in the manufacture of wagons, carriages,
rail equipment and dry bulk tankers. Contract revenue currently
includes the initial amount agreed in the contract plus any variations
in contract work, claims and incentive payments, to the extent that
it is probable that they will result in revenue and can be reliably
measured. Revenue is then recognised in profit or loss with reference
to the stage of completion on the contract, which is assessed based
on surveys of work performed.
Under IFRS 15, claims and variations will be included in the contract
accounting when they are approved. Revenue can only be recognised
over time if it satisfies one of three criteria, otherwise revenue is to
be recognised at a point in time. Of the customer contracts reviewed
as part of the Group’s assessment process, there were no material
impacts identified on the Group’s consolidated financial statements
arising from the adoption of IFRS 15. However, improvements to
internal controls and accounting procedures have been required,
which are in the process of being finalised.
ii. Rendering of services
v. RTO training and government grants
The Group currently performs a number of services to various
industry sectors, including maintenance, repairs and overhauls. The
Group currently recognises revenue from the rendering of these
services with reference to the stage of completion of the transaction
at the reporting date. The stage of completion is assessed based on
surveys of work performed.
Of the customer contracts reviewed as part of the Group’s
assessment process, one contract for the provision of consultancy
services (a non-standard service) was identified as having a material
impact on the Group’s consolidated financial statements arising
from the adoption of IFRS 15. The new standard requires the revenue
relating to satisfied performance obligations to be recognised,
which will result in an increase through opening retained earnings
of $200,000. The Group has determined this amount to be at credit
risk, and will also raise the necessary expected credit loss provision
through opening retained earnings (see page 41, ii. Impairment).
The Group’s RTO entity (CERT) delivers nationally accredited and
industry-based training courses. It may also receive government
grants for the delivery of its training courses. Currently, the revenue
from these grants is recognised in profit or loss on a systematic basis
in the periods in which the expenses are recognised.
There is no material impact on the current revenue accounting for
training or government grants under IFRS 15, however slight changes
in grant accounting have been required to ensure consistency across
the Group.
vi. Transition
The Group will adopt IFRS 15 using the Modified Retrospective
(Cumulative Effect) approach. As a result, the Group will not
be required to restate its prior year comparatives. Instead, the
cumulative impact of adopting IFRS 15 will be adjusted through
opening retained earnings.
No other material impacts to the Group’s consolidated financial
statements have been identified; however, improvements to internal
controls and accounting procedures have been required to be
implemented, which are in the process of being finalised.
This transitional approach will require the following additional
disclosures in the notes to the Group’s consolidated financial
statements:
iii. Rental income
The Group leases out its fleet of rollingstock and certain items
of property, plant and equipment to customers. Rental income is
currently recognised as revenue on a straight-line basis over the term
of the lease. Lease incentives granted are recognised as an integral
part of the total rental income, over the term of the lease.
Customer contracts which fall within the scope of IFRS 16: Leases are
not within scope for IFRS 15. The Group’s rental income will continue
to be subject to the lessor accounting requirements under IFRS 16,
and as there are limited changes enacted under the new leasing
standard for lessors, the impact on the Group will be minimal.
– The amount by which each financial statement line item is
affected in the current year as a result of applying IFRS 15; and
– A qualitative explanation of the significant changes between
reported results under the IFRS 15 and the previous revenue
guidance.
The Group will use the practical expedient for contract modifications
upon initial application of IFRS 15. This means that for contracts that
were modified before the beginning of the earliest period presented
in the consolidated financial statements, an entity may reflect the
aggregate effect of all contract modifications when identifying
separate performance obligations and determining and allocating
the transaction price on transition.
42
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements As at the reporting date, the Group has non-cancellable operating
lease commitments of $20,311,000, mainly relating to the land
and buildings the Group leases for the purposes of operating
its various businesses. A preliminary assessment indicates that
these arrangements will meet the definition of a lease under IFRS
16 and the Group will recognise the right-of-use asset and the
corresponding liability in respect of these leases unless they meet
the exemption criteria as short-term leases or leases of low value
assets. Furthermore, under IFRS 16, the Group will recognise the
depreciation charge for right-of-use assets and interest expense on
lease liabilities.
ii. Transition
On transition to IFRS 16, a lessee is permitted to use one of two
approaches:
– Retrospective approach; or
– Modified retrospective approach with practical expedients.
The Group plans to adopt IFRS 16 initially on 1 July 2019, using the
modified retrospective approach with the cumulative effect of
initially applying the Standard being recognised within opening
retained earnings. When applying the modified retrospective
approach to leases previously classified as operating leases under
AASB 17, the lessee can elect, on a lease-by-lease basis, whether to
apply a number of practical expedients on transition. The Group is
assessing the potential impact of using these practical expedients.
Other Accounting Standards
The following new or amended standards are not expected to have a
significant impact on the Group’s consolidated financial statements:
– IFRIC 22 Foreign Currency Transactions and Advance Consideration
– IFRIC 23 Uncertainty over Income Tax Treatments
– Sales or Contributions of Assets between an Investor and its
Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)
– Annual Improvements to IFRS 2014-2016 Cycle-various standards
(Amendments to IFRS 1 and IAS28).
Note 1 - Significant Accounting Policies (cont’d)
IFRS 16: LEASES (EFFECTIVE 1 JULY 2019)
In January 2016, the International Accounting Standards Board issued
the new leasing standard IFRS 16: Leases. The new standard requires
entities to bring most leases on-balance sheet, recognising new
assets and liabilities. There are also changes in accounting treatment
over the life of the lease, in particular recognising a front-loading
pattern of expenses on most leases even when the rental payments
are constant.
The effective date of IFRS 16 is reporting dates commencing on or
after 1 January 2019, with early adoption only permitted if IFRS 15:
Revenue from Contracts with Customers is also adopted. IFRS 16 will
become applicable to the Group from the annual reporting period
beginning on 1 July 2019.
The Group’s assessment of the potential impact on its consolidated
financial statements is still ongoing. The Group holds leasing
arrangements as both a lessee and lessor. Whilst the changes
to lessor accounting are minimal and are not expected to have a
significant impact on the Group, the changes to lessee accounting
are substantial and will have a significant impact on the Group’s
consolidated financial statements as well as policies and controls.
The key change under IFRS 16, and impact on the Group, is the
requirement that operating leases be recognised on-balance sheet
through the recognition of a Right-of-Use (ROU) Asset and Lease
Liability. Lease expenditure is also no longer recognised as operating
expenditure, but instead as depreciation and interest. This change
directly impacts EBITDA (earnings before finance costs, income tax
expense, and depreciation and amortisation), which is a key metric
used by the Group.
i. Lease definition
IFRS 16 eliminates the current operating/finance
lease dual
accounting model for leases. Instead, there is a single, on-balance
sheet accounting model, similar to current finance lease accounting.
The assessment of whether a contract contains a lease determines
whether the arrangement is recognised on- or off-balance sheet.
A contract is, or contains, a lease if the contracts conveys the right
to control the use of an identified asset for a period of time in
exchange for consideration. There are three key elements of the new
lease definition, and all three must be met in order for the contract
to contain a lease and the entity therefore be able to apply lease
accounting under IFRS 16:
– Contract contains an identified asset;
– The lessee obtains substantially all the economic benefits from
the use of the asset; and
– The lessee directs the use of the asset.
43
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 2 - Controlled Entities
Note: Subsidiaries are indented beneath their parent entity
– Engenco Limited
–
–
–
Convair Engineering Pty Ltd
Engenco Logistics Pty Ltd
– Asset Kinetics Pty .Ltd
Engenco Investments Pty Ltd
– Australian Rail Mining Services Pty Ltd
– Centre for Excellence in Rail Training Pty Ltd
– EGN Rail Pty Ltd
– EGN Rail (NSW) Pty Ltd
– Midland Railway Company Pty Ltd
– Momentum Rail (Vic) Pty Ltd
– Momentum Rail (WA) Pty Ltd
– Sydney Railway Company Pty Ltd
– Greentrains Limited 1
– Greentrains Leasing Pty Ltd
– Drivetrain Power and Propulsion Pty Ltd
– Drivetrain Australia Pty Ltd
– DTPP Energy Pty Ltd
– Drivetrain Philippines Inc
– Drivetrain Singapore Pte Ltd
– Drivetrain Limited
– Drivetrain USA Inc
– Hyradix Inc
– Hedemora Investments AB
– Hedemora Turbo & Diesel AB
– Gemco Rail Pty Ltd
– Railway Bearings Refurbishment Services Pty Ltd
– New RTS Pty Ltd
– Hedemora Pty Ltd
–
Industrial Powertrain Pty Ltd
– PC Diesel Pty Ltd
Total Momentum Pty Ltd
–
Country of
Incorporation
Date of
Control
Percentage
Owned
2018
Percentage
Owned
2017
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Philippines
Singapore
New Zealand
USA
USA
Sweden
Sweden
Australia
Australia
Australia
Australia
Australia
Australia
Australia
1 Jul 06
1 Jul 06
1 Jul 06
18 Apr 07
30 Apr 07
30 Apr 07
30 Apr 07
30 Apr 07
30 Apr 07
30 Apr 07
30 Apr 07
30 Apr 07
17 Jul 09
18 Jun 08
1 Jul 06
1 Jul 06
25 May 10
1 Jul 07
1 Jul 07
1 Jul 07
31 Dec 08
31 Dec 08
1 Jul 06
1 Jul 06
1 Jul 07
1 Jul 07
3 Dec 08
1 Jul 06
1 Jul 07
1 Jul 06
30 Apr 07
100
100
100
100
100
100
100
100
100
100
100
100
81
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
81
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1 Total Engenco Group ownership of Greentrains Ltd is 81% (split between Engenco Investments Pty Ltd, 61%, and Engenco Ltd, 20%).
44
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 3 - Operating Segments
Basis of Segmentation
Identification of Reportable Segments
The Group has identified its operating segments based on the internal
reports that are reviewed and used by the Managing Director/CEO
(chief operating decision maker) in assessing performance and
determining the allocation of resources.
The Group is managed primarily on the basis of service offerings
since the diversification of the Group’s operations inherently have
notably different risk profiles and performance assessment criteria.
Operating segments are therefore determined on the same basis.
Types of Products and Services by Segment
The chief operating decision maker considers the business from
a Business Line perspective and has identified six (6) reportable
segments as follows:
a. Drivetrain
Drivetrain is a provider of technical sales and services to the mining,
oil & gas, rail, transport, defence, marine, construction, materials
handling, automotive, agriculture, and power generation industries.
A broad product and service offering includes engine and powertrain
maintenance, repair and overhaul, new components and parts, fluid
connector products, power generation design and construction,
technical support, professional engineering and training services.
b. Centre for Excellence in Rail Training (CERT)
CERT provides specialist rail training including the provision of
competency based training; issuing of certificates of competency;
rail incident investigation training; security (transit guard) training;
first aid training; company inductions and course design; and
management of apprenticeship and trainee schemes to major
infrastructure and rail clients.
c. Convair Engineering (Convair)
Convair is a manufacturer of bulk pneumatic road tankers and
mobile silos for the carriage and storage of construction materials,
grains, and other dry bulk materials. Additional services include
maintenance, repair and overhaul, and provisioning of ancillary
equipment and spare parts sales.
d. Total Momentum
Total Momentum is a provider of personnel and project management
services to freight rail and mining rail infrastructure managers.
Services include professional recruitment, training and workforce
solutions, including managing and provisioning track construction
and maintenance projects.
e. Gemco Rail
Gemco Rail specialises
in the remanufacture and repair of
locomotives, wagons, bearings and other rail products for rail
operators and maintainers. Gemco Rail provides wheel-set, bogie
and
in-field wagon maintenance and manufactures new and
refurbished wagons, bogie component parts, customised remote
controlled ballast car discharge gates, and a range of rail maintenance
equipment and spares.
f. Greentrains
Greentrains leases rollingstock to freight rail operators throughout
Australia. This segment was classified as a discontinued operation in
the 2016 financial year.
g. All Other
This includes the parent entity, non-reportable segments and
consolidation / inter-segment elimination adjustments.
Basis of Reporting by Operating Segments
a.
Basis of reporting
Unless stated otherwise, all amounts reported to the Managing
Director/CEO as the chief operating decision maker with respect to
operating segments are determined in accordance with accounting
policies that are consistent to those adopted in the annual financial
statements of the Group.
b.
Inter-segment transactions
An internal transfer price is set for all inter-segment sales. This price
is set based on what would be realised in the event the sale was
made to an external party at arm’s length. All such transactions are
eliminated on consolidation of the Group’s financial statements.
c. Segment assets
Unless indicated otherwise in the segment assets note, deferred tax
assets have not been allocated to operating segments.
d. Segment liabilities
Liabilities are allocated to segments where there is nexus between
the incurrence of the liability and the operations of the segment.
Unless indicated otherwise in the segment liabilities note, deferred
tax liabilities have not been allocated to operating segments.
e. Unallocated items
The following items of expenses, assets and liabilities are not
allocated to operating segments as they are not considered part of
the core operations of any segment:
– Deferred tax assets and liabilities.
45
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements e
v
i
t
c
e
p
s
e
r
e
h
t
f
o
s
t
l
u
s
e
r
e
h
t
g
n
i
t
a
u
l
a
v
e
n
i
t
n
a
v
e
l
e
r
t
s
o
m
e
h
t
s
i
n
o
i
t
a
m
r
o
f
n
i
i
s
h
t
s
e
v
e
i
l
e
b
t
n
e
m
e
g
a
n
a
m
e
s
u
a
c
e
b
e
c
n
a
m
r
o
f
r
e
p
e
r
u
s
a
e
m
o
t
d
e
s
u
s
i
I
A
D
T
B
E
t
n
e
m
g
e
S
.
l
w
o
e
b
t
u
o
t
e
s
s
i
t
n
e
m
g
e
s
e
l
b
a
t
r
o
p
e
r
h
c
a
e
o
t
d
e
t
a
l
e
r
n
o
i
t
a
m
r
o
f
n
I
s
t
n
e
m
g
e
S
e
l
b
a
t
r
o
p
e
R
t
u
o
b
a
n
o
i
t
a
m
r
o
f
n
I
)
d
’
t
n
o
c
(
s
t
n
e
m
g
e
S
g
n
i
t
a
r
e
p
O
-
3
e
t
o
N
46
0
0
0
$
p
u
o
r
G
0
3
0
1
4
3
,
6
0
3
,
7
5
1
6
4
7
,
0
6
1
)
0
1
4
3
(
,
6
3
3
,
7
5
1
0
2
3
,
7
1
)
0
3
8
3
(
,
)
6
7
4
(
4
1
0
3
1
,
d
e
t
a
d
i
l
o
s
n
o
C
n
o
i
t
a
r
e
p
O
d
e
u
n
i
t
n
o
c
s
i
D
0
0
0
$
i
s
n
a
r
t
n
e
e
r
G
0
0
0
$
l
a
t
o
T
-
b
u
S
0
0
0
$
r
e
h
t
O
l
l
A
0
0
0
$
l
i
a
R
o
c
m
e
G
s
n
o
i
t
a
r
e
p
O
g
n
u
n
i
t
n
o
C
i
l
a
t
o
T
0
0
0
$
m
u
t
n
e
m
o
M
0
0
0
$
r
i
a
v
n
o
C
0
0
0
$
T
R
E
C
0
0
0
$
i
n
a
r
t
e
v
i
r
D
-
-
-
-
-
-
-
-
-
-
0
3
0
1
4
3
,
6
0
3
,
7
5
1
6
4
7
,
0
6
1
)
0
1
4
3
(
,
6
3
3
,
7
5
1
0
2
3
,
7
1
)
0
3
8
3
(
,
)
6
7
4
(
4
1
0
3
1
,
2
7
5
,
3
9
5
1
,
3
0
3
1
6
7
,
6
1
5
3
,
3
)
0
1
4
3
(
,
)
3
0
3
,
1
1
(
)
9
0
8
(
)
1
0
4
(
)
3
1
5
,
2
1
(
-
-
-
5
2
-
-
-
0
4
6
9
1
,
4
5
6
7
9
8
1
,
3
9
5
,
5
1
0
4
2
,
2
1
6
9
1
,
4
5
1
0
0
9
1
,
3
9
5
,
5
1
0
8
2
,
2
1
-
6
9
1
,
4
5
2
6
4
9
,
)
5
(
1
2
2
,
7
)
6
3
2
,
2
(
-
1
0
0
9
1
,
0
0
0
3
,
)
1
(
)
8
4
(
1
5
9
,
2
-
7
3
4
,
1
3
9
5
,
5
1
)
2
8
2
(
)
6
(
9
4
1
,
1
-
0
8
2
,
2
1
0
9
5
,
3
)
5
6
(
)
0
4
(
5
8
4
3
,
9
2
7
,
2
5
-
6
8
1
5
1
9
,
2
5
-
5
1
9
,
2
5
4
3
1
,
1
1
)
3
2
(
)
0
9
3
(
1
2
7
,
0
1
.
s
e
i
r
t
s
u
d
n
i
e
m
a
s
e
h
t
n
i
e
t
a
r
e
p
o
t
a
h
t
s
e
i
t
i
t
n
e
r
e
h
t
o
o
t
e
v
i
t
a
l
e
r
s
t
n
e
m
g
e
s
:
x
a
t
e
r
o
f
e
b
)
s
s
o
l
(
/
t
fi
o
r
p
t
e
n
p
u
o
r
G
o
t
A
D
T
B
E
t
n
e
m
g
e
s
I
f
o
n
o
i
t
a
i
l
i
c
n
o
c
e
R
:
e
u
n
e
v
e
r
p
u
o
r
G
o
t
e
u
n
e
v
e
r
t
n
e
m
g
e
s
f
o
n
o
i
t
a
i
l
i
c
n
o
c
e
R
n
o
i
t
a
n
m
i
i
l
e
t
n
e
m
g
e
s
-
r
e
t
n
I
E
U
N
E
V
E
R
P
U
O
R
G
L
A
T
O
T
I
A
D
T
B
E
T
N
E
M
G
E
S
X
A
T
E
R
O
F
E
B
)
S
S
O
L
(
/
T
I
F
O
R
P
T
E
N
n
o
i
t
a
s
i
t
r
o
m
a
d
n
a
n
o
i
t
a
c
e
r
p
e
D
i
s
t
s
o
c
e
c
n
a
n
F
i
e
c
n
a
m
r
o
f
r
e
P
t
n
e
m
g
e
S
.
i
J
8
1
0
2
e
n
u
0
3
d
e
d
n
e
r
a
e
Y
s
t
n
e
m
g
e
S
e
l
b
a
t
r
o
p
e
R
e
u
n
e
v
e
r
l
a
n
r
e
t
x
E
E
U
N
E
V
E
R
E
U
N
E
V
E
R
T
N
E
M
G
E
S
L
A
T
O
T
e
u
n
e
v
e
r
t
n
e
m
g
e
s
-
r
e
t
n
I
e
u
n
e
v
e
r
t
s
e
r
e
t
n
I
Engenco Limited 2018 Annual ReportEngenco Limited and its controlled entitiesNotes to the Consolidated Financial Statements
0
0
0
$
p
u
o
r
G
7
2
1
1
8
6
,
1
2
7
2
9
2
1
,
0
8
0
,
1
3
1
)
1
8
6
,
1
(
9
9
3
9
2
1
,
5
6
7
,
2
1
)
2
7
9
(
5
4
1
,
8
)
8
4
6
3
(
,
d
e
t
a
d
i
l
o
s
n
o
C
n
o
i
t
a
r
e
p
O
d
e
u
n
i
t
n
o
c
s
i
D
0
0
0
$
i
s
n
a
r
t
n
e
e
r
G
0
0
0
$
l
a
t
o
T
-
b
u
S
0
0
0
$
r
e
h
t
O
l
l
A
0
0
0
$
l
i
a
R
o
c
m
e
G
-
-
0
8
0
8
-
0
8
)
0
2
(
-
)
9
8
1
(
)
9
0
2
(
7
2
1
1
8
6
,
1
2
9
1
,
9
2
1
0
0
0
,
1
3
1
)
1
8
6
,
1
(
,
9
1
3
9
2
1
5
8
7
,
2
1
)
3
8
7
(
4
5
3
8
,
)
8
4
6
3
(
,
4
2
8
5
,
4
7
3
,
1
6
1
1
4
1
3
7
,
)
1
8
6
,
1
(
3
3
6
5
,
)
3
9
4
9
(
,
)
9
7
6
(
)
2
1
7
(
)
4
8
8
0
1
(
,
-
2
3
1
7
2
,
1
5
3
0
3
,
1
5
-
3
0
3
,
1
5
6
7
3
,
1
1
)
2
4
1
,
2
(
)
5
(
9
2
2
9
,
s
n
o
i
t
a
r
e
p
O
g
n
u
n
i
t
n
o
C
i
l
a
t
o
T
0
0
0
$
m
u
t
n
e
m
o
M
0
0
0
$
r
i
a
v
n
o
C
6
5
4
0
1
,
6
0
5
3
1
,
-
7
3
3
9
4
0
1
,
-
3
9
4
0
1
,
7
0
8
,
1
)
1
(
)
3
9
(
3
1
7
,
1
-
1
7
0
5
3
1
,
-
0
6
1
,
1
7
0
5
3
1
,
)
6
(
3
1
9
)
1
4
2
(
0
0
0
$
T
R
E
C
4
3
3
9
,
-
6
3
0
7
3
9
,
-
0
7
3
9
,
6
2
5
,
1
)
5
7
(
)
3
3
(
8
1
4
,
1
1
0
8
8
3
,
0
1
2
0
2
3
1
0
9
3
,
-
3
1
0
9
3
,
9
0
4
6
,
)
8
1
4
(
)
6
2
(
5
6
9
5
,
0
0
0
$
i
n
a
r
t
e
v
i
r
D
:
x
a
t
e
r
o
f
e
b
)
s
s
o
l
(
/
t
fi
o
r
p
t
e
n
p
u
o
r
G
o
t
A
D
T
B
E
t
n
e
m
g
e
s
I
f
o
n
o
i
t
a
i
l
i
c
n
o
c
e
R
:
e
u
n
e
v
e
r
p
u
o
r
G
o
t
e
u
n
e
v
e
r
t
n
e
m
g
e
s
f
o
n
o
i
t
a
i
l
i
c
n
o
c
e
R
n
o
i
t
a
n
m
i
i
l
e
t
n
e
m
g
e
s
-
r
e
t
n
I
E
U
N
E
V
E
R
P
U
O
R
G
L
A
T
O
T
I
A
D
T
B
E
T
N
E
M
G
E
S
X
A
T
E
R
O
F
E
B
)
S
S
O
L
(
/
T
I
F
O
R
P
T
E
N
n
o
i
t
a
s
i
t
r
o
m
a
d
n
a
n
o
i
t
a
c
e
r
p
e
D
i
s
t
s
o
c
e
c
n
a
n
F
i
)
d
’
t
n
o
c
(
s
t
n
e
m
g
e
S
g
n
i
t
a
r
e
p
O
-
3
e
t
o
N
J
7
1
0
2
e
n
u
0
3
d
e
d
n
e
r
a
e
Y
s
t
n
e
m
g
e
S
e
l
b
a
t
r
o
p
e
R
e
u
n
e
v
e
r
l
a
n
r
e
t
x
E
E
U
N
E
V
E
R
E
U
N
E
V
E
R
T
N
E
M
G
E
S
L
A
T
O
T
e
u
n
e
v
e
r
t
n
e
m
g
e
s
-
r
e
t
n
I
e
u
n
e
v
e
r
t
s
e
r
e
t
n
I
.
l
l
s
t
n
e
m
g
e
s
e
b
a
t
r
o
p
e
r
-
n
o
n
s
a
s
t
n
e
m
g
e
s
g
n
i
t
a
r
e
p
o
e
b
a
i
f
i
t
n
e
d
i
f
o
n
o
i
t
a
c
i
f
i
s
s
a
l
c
r
a
e
y
t
n
e
r
r
u
c
e
h
t
r
o
f
d
e
t
a
t
s
e
r
n
e
e
b
e
v
a
h
s
e
v
i
t
a
r
a
p
m
o
c
7
1
0
2
47
Engenco Limited 2018 Annual ReportEngenco Limited and its controlled entitiesNotes to the Consolidated Financial Statements
0
0
0
$
p
u
o
r
G
-
8
4
2
3
7
5
,
3
7
6
3
,
2
9
)
1
1
9
4
(
,
5
7
5
,
5
2
5
8
6
9
,
d
e
t
a
d
i
l
o
s
n
o
C
6
9
-
-
-
-
-
6
9
-
8
4
2
3
7
5
,
3
1
7
2
,
2
9
)
1
1
9
4
(
,
5
7
5
,
5
6
5
7
,
6
9
-
-
-
1
6
5
8
4
2
)
3
4
9
,
7
(
-
-
-
-
-
-
-
-
3
9
3
,
1
4
6
3
,
2
3
1
0
1
8
4
2
,
8
0
0
0
$
i
s
n
a
r
t
n
e
e
r
G
0
0
0
$
l
a
t
o
T
-
b
u
S
0
0
0
$
r
e
h
t
O
l
l
A
0
0
0
$
l
i
a
R
o
c
m
e
G
l
a
t
o
T
0
0
0
$
m
u
t
n
e
m
o
M
n
o
i
t
a
r
e
p
O
d
e
u
n
i
t
n
o
c
s
i
D
s
n
o
i
t
a
r
e
p
O
g
n
u
n
i
t
n
o
C
i
-
-
-
-
0
0
0
$
r
i
a
v
n
o
C
9
5
4
6
1
,
0
0
2
,
1
0
0
0
$
T
R
E
C
7
5
7
4
7
,
1
1
-
-
-
-
-
-
-
-
0
0
0
$
i
n
a
r
t
e
v
i
r
D
1
6
2
6
9
3
,
1
3
)
4
3
1
,
7
(
7
5
7
,
3
3
9
4
3
,
8
9
5
6
,
7
1
4
0
8
,
1
1
7
5
6
,
1
3
)
s
e
l
i
b
g
n
a
t
n
i
d
n
a
s
t
n
e
m
t
s
e
v
n
i
,
e
r
u
t
i
d
n
e
p
x
e
l
a
t
i
p
a
c
.
l
c
x
e
(
s
t
e
s
s
a
t
n
e
m
g
e
S
:
s
t
e
s
s
a
p
u
o
r
G
o
t
s
t
e
s
s
a
t
n
e
m
g
e
s
f
o
n
o
i
t
a
i
l
i
c
n
o
c
e
R
e
r
u
t
i
d
n
e
p
x
e
l
a
t
i
p
a
C
s
t
n
e
m
t
s
e
v
n
I
s
e
l
i
b
g
n
a
t
n
I
s
n
o
i
t
a
n
m
i
i
l
e
t
n
e
m
g
e
S
:
s
m
e
t
I
d
e
t
a
c
o
l
l
a
n
U
s
t
e
s
s
a
x
a
t
d
e
r
r
e
f
e
D
S
T
E
S
S
A
L
A
T
O
T
)
d
’
t
n
o
c
(
s
t
n
e
m
g
e
S
g
n
i
t
a
r
e
p
O
-
3
e
t
o
N
s
t
e
s
s
A
t
n
e
m
g
e
S
.
i
i
8
1
0
2
e
n
u
0
3
t
a
s
A
J
s
t
n
e
m
g
e
S
e
l
b
a
t
r
o
p
e
R
S
T
E
S
S
A
48
Engenco Limited 2018 Annual ReportEngenco Limited and its controlled entitiesNotes to the Consolidated Financial Statements
0
0
0
$
p
u
o
r
G
7
8
9
3
4
4
4
2
,
4
0
7
6
8
,
)
3
4
7
4
(
,
5
9
2
5
0
1
,
5
8
d
e
t
a
d
i
l
o
s
n
o
C
-
-
-
-
-
2
1
1
2
1
1
7
8
9
3
2
9
5
6
8
,
4
4
4
2
,
)
3
4
7
4
(
,
5
9
2
3
9
9
4
8
,
-
8
3
3
8
9
3
)
1
0
2
4
(
,
-
-
-
-
-
-
-
-
-
-
2
7
9
0
8
0
2
3
,
5
0
2
4
5
8
4
,
0
0
0
$
i
s
n
a
r
t
n
e
e
r
G
0
0
0
$
l
a
t
o
T
-
b
u
S
0
0
0
$
r
e
h
t
O
l
l
A
0
0
0
$
l
i
a
R
o
c
m
e
G
l
a
t
o
T
0
0
0
$
m
u
t
n
e
m
o
M
n
o
i
t
a
r
e
p
O
d
e
u
n
i
t
n
o
c
s
i
D
s
n
o
i
t
a
r
e
p
O
g
n
u
n
i
t
n
o
C
i
-
-
-
-
0
0
0
$
r
i
a
v
n
o
C
8
5
5
2
0
3
5
1
,
0
0
0
$
T
R
E
C
9
3
1
7
4
2
8
,
-
-
-
-
7
-
-
-
2
3
2
0
1
3
0
3
,
0
0
0
$
i
n
a
r
t
e
v
i
r
D
)
5
6
4
3
(
,
2
5
0
3
3
,
9
5
0
5
,
0
6
8
5
1
,
6
8
3
8
,
9
4
5
0
3
,
)
s
e
l
i
b
g
n
a
t
n
i
d
n
a
s
t
n
e
m
t
s
e
v
n
i
,
e
r
u
t
i
d
n
e
p
x
e
l
a
t
i
p
a
c
.
l
c
x
e
(
s
t
e
s
s
a
t
n
e
m
g
e
S
s
t
n
e
m
g
e
S
e
l
b
a
t
r
o
p
e
R
S
T
E
S
S
A
:
s
t
e
s
s
a
p
u
o
r
G
o
t
s
t
e
s
s
a
t
n
e
m
g
e
s
f
o
n
o
i
t
a
i
l
i
c
n
o
c
e
R
e
r
u
t
i
d
n
e
p
x
e
l
a
t
i
p
a
C
s
t
n
e
m
t
s
e
v
n
I
s
e
l
i
b
g
n
a
t
n
I
s
n
o
i
t
a
n
m
i
i
l
e
t
n
e
m
g
e
S
:
s
m
e
t
I
d
e
t
a
c
o
l
l
a
n
U
s
t
e
s
s
a
x
a
t
d
e
r
r
e
f
e
D
S
T
E
S
S
A
L
A
T
O
T
)
d
’
t
n
o
c
(
s
t
n
e
m
g
e
S
g
n
i
t
a
r
e
p
O
-
3
e
t
o
N
7
1
0
2
e
n
u
0
3
t
a
s
A
J
.
s
t
n
e
m
g
e
s
e
l
b
a
t
r
o
p
e
r
-
n
o
n
s
a
s
t
n
e
m
g
e
s
g
n
i
t
a
r
e
p
o
e
l
b
a
fi
i
t
n
e
d
i
f
o
n
o
i
t
a
c
fi
s
s
a
l
c
i
r
a
e
y
t
n
e
r
r
u
c
e
h
t
r
o
f
d
e
t
a
t
s
e
r
n
e
e
b
e
v
a
h
s
e
v
i
t
a
r
a
p
m
o
c
7
1
0
2
49
Engenco Limited 2018 Annual ReportEngenco Limited and its controlled entitiesNotes to the Consolidated Financial Statements
0
0
0
$
p
u
o
r
G
1
5
8
,
7
2
)
1
1
9
4
(
,
4
9
6
4
3
6
3
2
,
d
e
t
a
d
i
l
o
s
n
o
C
n
o
i
t
a
r
e
p
O
d
e
u
n
i
t
n
o
c
s
i
D
0
0
0
$
i
s
n
a
r
t
n
e
e
r
G
0
0
0
$
l
a
t
o
T
-
b
u
S
0
0
0
$
r
e
h
t
O
l
l
A
0
0
0
$
l
i
a
R
o
c
m
e
G
s
n
o
i
t
a
r
e
p
O
g
n
u
n
i
t
n
o
C
i
l
a
t
o
T
0
0
0
$
m
u
t
n
e
m
o
M
0
0
0
$
r
i
a
v
n
o
C
7
7
5
0
2
,
4
7
2
,
7
)
9
7
7
,
3
3
1
(
4
1
5
9
7
,
8
9
5
,
1
0
2
3
,
5
-
-
7
7
5
0
2
,
)
1
1
9
4
(
,
4
9
6
7
5
0
3
,
-
-
-
-
-
-
-
-
)
9
7
7
,
3
3
1
(
4
1
5
9
7
,
8
9
5
,
1
0
2
3
,
5
2
7
1
,
1
9
4
4
3
5
,
S
E
I
T
I
I
I
L
B
A
L
L
A
T
O
T
0
0
0
$
T
R
E
C
2
7
1
,
1
-
-
-
-
0
0
0
$
i
n
a
r
t
e
v
i
r
D
9
4
4
3
5
,
)
d
’
t
n
o
c
(
s
t
n
e
m
g
e
S
g
n
i
t
a
r
e
p
O
-
3
e
t
o
N
s
e
i
t
i
l
i
b
a
i
L
t
n
e
m
g
e
S
.
i
i
i
8
1
0
2
e
n
u
0
3
t
a
s
A
J
s
t
n
e
m
g
e
S
e
l
b
a
t
r
o
p
e
R
50
S
E
I
T
I
I
L
B
A
L
I
:
s
e
i
t
i
l
i
b
a
i
l
p
u
o
r
G
o
t
s
e
i
t
i
l
i
b
a
i
l
t
n
e
m
g
e
s
f
o
n
o
i
t
a
i
l
i
c
n
o
c
e
R
s
e
i
t
i
l
i
b
a
i
l
t
n
e
m
g
e
S
s
n
o
i
t
a
n
m
i
i
l
e
t
n
e
m
g
e
S
s
e
i
t
i
l
i
b
a
i
l
x
a
t
d
e
r
r
e
f
e
D
:
s
m
e
t
I
d
e
t
a
c
o
l
l
a
n
U
Engenco Limited 2018 Annual ReportEngenco Limited and its controlled entitiesNotes to the Consolidated Financial Statements
d
e
t
a
d
i
l
o
s
n
o
C
n
o
i
t
a
r
e
p
O
d
e
u
n
i
t
n
o
c
s
i
D
0
0
0
$
p
u
o
r
G
5
6
7
,
2
3
)
3
4
7
4
(
,
2
7
4
9
0
8
2
,
3
9
5
0
2
,
2
7
1
,
2
1
)
8
7
3
7
2
1
(
,
9
2
7
,
3
8
-
-
3
9
5
0
2
,
)
3
4
7
4
(
,
2
7
1
0
5
7
,
-
-
-
-
)
8
7
3
7
2
1
(
,
9
2
7
,
3
8
0
0
0
$
i
s
n
a
r
t
n
e
e
r
G
0
0
0
$
l
a
t
o
T
-
b
u
S
0
0
0
$
r
e
h
t
O
l
l
A
0
0
0
$
l
i
a
R
o
c
m
e
G
s
n
o
i
t
a
r
e
p
O
g
n
u
n
i
t
n
o
C
i
0
1
7
-
-
0
1
7
l
a
t
o
T
0
0
0
$
m
u
t
n
e
m
o
M
0
0
0
$
r
i
a
v
n
o
C
6
8
3
4
,
-
-
6
8
3
4
,
0
0
0
$
T
R
E
C
4
8
7
-
-
4
8
7
1
4
9
9
4
,
0
0
0
$
i
n
a
r
t
e
v
i
r
D
-
-
1
4
9
9
4
,
:
s
e
i
t
i
l
i
b
a
i
l
p
u
o
r
G
o
t
s
e
i
t
i
l
i
b
a
i
l
t
n
e
m
g
e
s
f
o
n
o
i
t
a
i
l
i
c
n
o
c
e
R
s
e
i
t
i
l
i
b
a
i
l
t
n
e
m
g
e
S
s
n
o
i
t
a
n
m
i
i
l
e
t
n
e
m
g
e
S
s
e
i
t
i
l
i
b
a
i
l
x
a
t
d
e
r
r
e
f
e
D
:
s
m
e
t
I
d
e
t
a
c
o
l
l
a
n
U
S
E
I
T
I
I
I
L
B
A
L
L
A
T
O
T
)
d
’
t
n
o
c
(
s
t
n
e
m
g
e
S
g
n
i
t
a
r
e
p
O
-
3
e
t
o
N
7
1
0
2
e
n
u
0
3
t
a
s
A
J
s
t
n
e
m
g
e
S
e
l
b
a
t
r
o
p
e
R
S
E
I
T
I
I
L
B
A
L
I
.
l
l
s
t
n
e
m
g
e
s
e
b
a
t
r
o
p
e
r
-
n
o
n
s
a
s
t
n
e
m
g
e
s
g
n
i
t
a
r
e
p
o
e
b
a
i
f
i
t
n
e
d
i
f
o
n
o
i
t
a
c
i
f
i
s
s
a
l
c
r
a
e
y
t
n
e
r
r
u
c
e
h
t
r
o
f
d
e
t
a
t
s
e
r
n
e
e
b
e
v
a
h
s
e
v
i
t
a
r
a
p
m
o
c
7
1
0
2
51
Engenco Limited 2018 Annual ReportEngenco Limited and its controlled entitiesNotes to the Consolidated Financial Statements
Note 3 - Operating Segments (cont’d)
iv. Geographical Information
The geographical information analyses the Group’s revenue and assets by the Company’s country of domicile and other countries. In
presenting the geographical information, segment revenue has been based on the geographical location of the selling party and segment
assets were based on the geographical location of the assets.
Revenue
Australasia
Europe
United States of America
TOTAL REVENUE
v. Major customers
2018
$000
150,741
6,595
-
157,336
2017
$000
122,320
7,079
-
129,399
Assets
Australasia
Europe
United States of America
TOTAL ASSETS
2018
$000
85,355
11,457
40
96,852
2017
$000
72,590
12,451
64
85,105
Revenue from one customer of the Group, across multiple segments, represents greater than 10% of the Group’s total revenue in the
current year.
Note 4 - Discontinued Operation
A discontinued operation is a component of the Group’s business,
the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
– represents a separate major line of business or geographical area
of operations;
– is part of a single co-ordinated plan to dispose of a separate
major line of business or geographical area of operations; or
– is a subsidiary acquired exclusively with a view to re-sale.
Results of Discontinued
Operation
Revenue
Reversal / (impairment) of
property, plant and equipment
Expenses
RESULTS FROM
OPERATING ACTIVITIES
Income tax
Classification as a discontinued operation occurs at the earlier of
disposal or when operation meets the criteria to be classified as
held-for-sale.
PROFIT / (LOSS) FROM
DISCONTINUED OPERATION, NET
OF TAX
When an operation is classified as a discontinued operation, the
comparative Statement of Profit or Loss and OCI is re-presented
as if the operation had been discontinued from the start of the
comparative year.
The Greentrains segment was first classified as a discontinued
operation in the 2016 financial year, and continues to be classified
as such.
Basic earnings per share (cents)
Diluted earnings per share (cents)
Cash Flows from / (used in)
Discontinued Operation
Net cash from / (used in)
operating activities
Net cash from / (used in)
investing activities
Net cash from / (used in)
financing activities
NET CASH FLOWS FOR THE YEAR
2018
$000
-
-
-
-
-
-
-
-
2018
$000
84
-
-
84
2017
$000
80
350
(639)
(209)
-
(209)
(0.05)
(0.05)
2017
$000
(919)
5,482
(4,766)
(203)
52
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 5 - Revenue and Other Income
Sale of Goods
Construction Contracts
Revenue is recognised when the significant risks and rewards of
ownership have been transferred to the customer, recovery of the
consideration is probable, the associated costs and possible return of
goods can be estimated reliably, there is no continuing management
involvement with the goods, and the amount of revenue can be
measured reliably. Revenue is measured net of returns, trade
discounts and volume rebates.
Rendering of Services
The Group recognises revenue from rendering of services in
proportion to the stage of completion of the transaction at the
reporting date. The stage of completion is assessed based on surveys
of work performed.
Contract revenue includes the initial amount agreed in the contract
plus any variations in contract work, claims and incentive payments,
to the extent that it is probable that they will result in revenue and can
be measured reliably.
If the outcome of a construction contract can be estimated reliably,
then contract revenue is recognised in profit or loss in proportion to
the stage of completion of the contract. The stage of completion is
assessed with reference to surveys of work performed. Otherwise,
contract revenue is recognised only to the extent of contract costs
incurred that are likely to be recoverable.
Contract expenses are recognised as incurred unless they create an
asset related to future contract activity (see Note 1(b)). An expected
loss on a contract is recognised immediately in profit or loss.
Rental Income
Rental income from leased plant and equipment is recognised as
revenue on a straight-line basis over the term of the lease. Lease
incentives granted are recognised as an integral part of the total
rental income, over the term of the lease.
SALES REVENUE
Sales of goods and services
Lease rental income
TOTAL SALES REVENUE
OTHER REVENUE
Interest received – external
TOTAL OTHER REVENUE
TOTAL REVENUE
OTHER INCOME
Gain on disposal of property, plant
and equipment
Other gains
TOTAL OTHER INCOME
Continuing Operations
Discontinued Operation
Total Consolidated Group
2018
$000
155,091
2,215
157,306
30
30
157,336
305
1,030
1,335
2017
$000
126,013
3,179
129,192
127
127
129,319
46
1,006
1,052
2018
$000
2017
$000
-
-
-
-
-
-
-
-
-
-
80
80
-
-
80
-
-
-
2018
$000
155,091
2,215
157,306
30
30
157,336
305
1,030
1,335
2017
$000
126,013
3,259
129,272
127
127
129,399
46
1,006
1,052
53
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements
Note 6 - Expenses
FINANCE COSTS
Interest – related parties
Other finance costs
TOTAL FINANCE COSTS
EMPLOYEE BENEFITS EXPENSE
Wages and salaries
Annual leave expense
Long service leave expense
Termination costs
Defined contribution plan
TOTAL EMPLOYEE BENEFITS EXPENSE
RENTAL EXPENSE ON OPERATING LEASES
Lease payments
TOTAL RENTAL EXPENSE ON
OPERATING LEASES
Continuing Operations
Discontinued Operation
Total Consolidated Group
2018
$000
43
433
476
48,711
1,938
490
9
3,770
54,918
4,555
4,555
2017
$000
308
475
783
38,323
1,779
375
93
3,248
43,818
4,828
4,828
2018
$000
-
-
-
-
-
-
-
-
-
-
-
2017
$000
189
-
189
-
-
-
-
-
-
-
-
2018
$000
43
433
476
48,711
1,938
490
9
3,770
54,918
4,555
4,555
2017
$000
497
475
972
38,323
1,779
375
93
3,248
43,818
4,828
4,828
54
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 7 - Tax
Tax Consolidation
Engenco Limited and its wholly-owned Australian subsidiaries have
formed an income tax consolidated group under tax consolidation
legislation. Each entity in the group recognises its own current and
deferred tax assets and liabilities. Such taxes are measured using the
‘stand-alone taxpayer’ approach to allocation. Current tax liabilities/
assets and deferred tax assets arising from unused tax losses and
tax credits in the subsidiaries are immediately transferred to the
head entity. The Group notified the Australian Tax Office that it had
formed an income tax consolidated group to apply from 31 October
2007. The tax consolidated group has entered into a tax funding
arrangement whereby each company in the group contributes to the
income tax payable by the group in proportion to their contribution
to the group’s taxable income. Differences between the amounts
of net tax assets and liabilities derecognised and the net amounts
recognised pursuant to the funding arrangement are recognised as
either a contribution by, or distribution to the head entity.
Income tax expense/benefit comprises current and deferred tax. It
is recognised in profit or loss except to the extent that it relates to a
business combination, or items recognised directly in equity or OCI.
Current Tax
Current tax comprises the expected tax payable or receivable on
the taxable income or loss for the year, and any adjustment to the
tax payable or receivable in respect of previous years. The amount
of current tax payable or receivable is the best estimate of the tax
amount expected to be paid or received that reflects uncertainty
related to income taxes, if any. It is measured using tax rates enacted
or substantively enacted at the reporting date. Current tax also
includes any tax arising from dividends.
Deferred Tax
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:
– Temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
– Temporary differences related to investments in subsidiaries,
associates and joint arrangements to the extent that the Group
is able to control the timing of the reversal of the temporary
differences and it is probable that they will not reverse in the
foreseeable future; and
– Taxable temporary differences arising on the initial recognition of
goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax
credits and deductible temporary differences to the extent that it is
probable that future taxable profits will be available against which
they can be used. Future taxable profits are determined based on
business plans for individual subsidiaries in the Group. Deferred tax
assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be
realised; such reductions are reversed when the probability of future
taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting
date and recognised to the extent that it has become probable that
future taxable profits will be available against which they can be
used.
Current tax assets and liabilities are offset only if certain criteria
are met.
Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, using tax rates
enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that
would follow from the manner in which the Group expects, at the
reporting date, to recover or settle the carrying amount of its assets
and liabilities.
Deferred tax assets and liabilities are offset only if certain criteria
are met.
55
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 7 - Tax (cont’d)
CURRENT
Income tax payable
TOTAL
a. The components of tax expense / (benefit) comprise:
Current income tax expense / (benefit)
- Current income tax expense / (benefit)
- Adjustment for prior years
Deferred income tax expense / (benefit)
- Origination and reversal of temporary differences
Income tax expense / (benefit) on continuing operations reported in the Statement of Profit or Loss and OCI
b. A reconciliation between tax expense / (benefit) and the product of accounting profit before income tax
multiplied by the Group’s applicable income tax rate is as follows:
Accounting profit / (loss) before tax from continuing operations
At the Company’s statutory domestic income tax rate of 30% (2017: 30%)
Add / (Less) tax effect of:
- Foreign tax rate adjustment
- Utilisation of tax losses not previously recognised
- Other non-allowable items
- Adjustment for prior years
- Movements in unrecognised temporary differences
- Other (partial recognition of prior year loses)
Income tax expense / (benefit)
The tax payable relates to the Group companies outside the Australian Tax Consolidated Group.
2018
$000
132
132
2018
$000
(79)
(456)
(4,454)
(4,989)
13,014
3,904
(957)
(6,369)
3,312
(456)
31
(4,454)
(4,989)
2017
$000
750
750
2017
$000
447
-
(571)
(124)
8,354
2,506
(4)
(2,394)
103
-
(335)
-
(124)
56
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 7 - Tax (cont’d)
NON-CURRENT
Deferred tax liabilities:
Other
Balance at 30 June 2017
Other
Balance at 30 June 2018
Deferred tax assets:
Provisions
Accruals
Losses
Other
Balance at 30 June 2017
Provisions
Accruals
Losses
Balance at 30 June 2018
Opening
Balance
$000
Balance
Acquired
$000
(Credited) /
Charged to
Income
$000
Charged
Directly to
Equity
$000
Changes in
Tax Rate
$000
Exchange
Differences
$000
Consolidated Group
473
473
72
72
142
-
-
(17)
125
295
-
-
295
-
-
-
-
-
-
-
-
-
-
-
-
-
(401)
(401)
826
826
153
-
-
17
170
826
-
4,454
5,280
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other
$000
-
-
(204)
(204)
-
-
-
-
-
-
-
-
-
Closing
Balance
$000
72
72
694
694
295
-
-
-
295
1,121
-
4,454
5,575
The Company has estimated Australian carry forward operating tax losses of $94,368,624 at June 2018 (2017: $108,107,624) which are not
fully recognised. The ability to utilise the operating tax losses will be subject to satisfying relevant eligibility criteria for the recoupment of
carry forward tax losses.
A deferred tax asset of $4,454,000 has been partially recognised from previously unrecognised tax losses, based on the probable nature
that future taxable profits would be available against which the tax losses can be recovered and, therefore, the related deferred tax asset can
be realised.
57
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 8 - Earnings Per Share
The calculation of basic earnings per share has been based on the following profit attributable to ordinary shareholders and weighted-
average number of ordinary shares outstanding.
The calculation of diluted earnings per share has been based on the following profit attributable to ordinary shareholders and weighted-
average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.
a. RECONCILIATION OF EARNINGS TO PROFIT OR LOSS
Profit / (loss) for the year
(Profit) / loss for the year, attributable to non-controlling interest
Earnings used to calculate basic EPS
Earnings used in the calculation of dilutive EPS
b. RECONCILIATION OF EARNINGS TO PROFIT OR LOSS FROM CONTINUING OPERATIONS
Profit / (loss) for the year from continuing operations
(Profit) / loss for the year, attributable to non-controlling interest in respect of continuing operations
Earnings used to calculate basic EPS from continuing operations
Earnings used in the calculation of dilutive EPS from continuing operations
c. RECONCILIATION OF EARNINGS TO PROFIT OR LOSS FROM DISCONTINUED OPERATION
Profit / (loss) for the year from discontinued operation
(Profit) / loss for the year, attributable to non-controlling interest in respect of discontinued operation
Earnings used to calculate basic EPS from discontinued operation
Earnings used to in the calculation of dilutive EPS from discontinued operation
d. WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING DURING THE YEAR USED IN
CALCULATING BASIC EPS
Weighted average number of dilutive options outstanding
Weighted average number of ordinary shares outstanding during the year used in calculating dilutive EPS
Note 9 - Cash and Cash Equivalents
2018
$000
18,003
-
18,003
18,003
18,003
-
18,003
18,003
-
-
-
-
No. ‘000
313,381
-
313,381
2017
$000
8,269
40
8,309
8,309
8,478
-
8,478
8,478
(209)
40
(169)
(169)
No. ‘000
311,192
-
311,192
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original
maturities of three months or less, and bank overdrafts. Bank overdrafts, where the Group does not have the legal right and the intention to
settle on a net basis, are shown within short-term borrowings in current liabilities on the Statement of Financial Position.
CASH AT BANK AND IN HAND
2018
$000
8,656
8,656
2017
$000
8,960
8,960
As at the reporting date, where the Group has the legally enforceable right of set-off and the intention to settle on a net basis within the CBA
facility, the Group has set-off bank overdrafts of $26,239,011 (2017: $23,746,799) against cash and cash equivalents of $31,192,557 (2017:
$28,784,487) resulting in a net positive cash position of $4,953,546 (2017: $5,037,688).
58
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 10 - Trade and Other Receivables
CURRENT
Trade receivables
Provision for impairment of receivables
Total trade receivables
Accrued income
Sundry receivables
Total other receivables
TOTAL CURRENT TRADE AND OTHER RECEIVABLES
a. Provision for Impairment of Receivables
2018
$000
26,338
(324)
26,014
1,983
278
2,261
28,275
2017
$000
24,864
(405)
24,459
1,402
148
1,550
26,009
Current trade and other receivables are non-interest bearing and generally on terms of 30 to 60 days from end of month. Trade and other
receivables are assessed for recoverability based on the underlying terms of the contract. A provision for impairment is recognised when
there is objective evidence that an individual trade or term receivable is impaired. These amounts have been included in impairment of
accounts receivable and other expenses in the Statement of Profit or Loss and OCI.
Movement in the provision for impairment of receivables is as follows:
2018
Current trade receivables
2017
Current trade receivables
Opening
Balance
1 Jul 2017
$000
(405)
(405)
Consolidated Group
Reversed /
(Charged) for
the Year
$000
61
61
Amounts
Written Off
$000
20
20
Closing Balance
30 Jun 2018
$000
(324)
(324)
Consolidated Group
Opening
Balance
1 Jul 2016
$000
(368)
(368)
Reversed /
(Charged) for
the Year
$000
(147)
(147)
Amounts
Written Off
$000
110
110
Closing Balance
30 Jun 2017
$000
(405)
(405)
The following table details the Group’s trade and other receivables exposed to credit risk with ageing analysis and impairment provided
thereon. Amounts are considered as ‘past due’ when the debt has not been settled, within the terms and conditions agreed between the
Group and the customer or counter party to the transaction. Receivables that are past due are assessed for impairment by ascertaining
solvency of the debtors and are provided for where there are specific circumstances indicating that the debt may not be fully repaid to the
Group. The balances of receivables that remain within initial trade terms (as detailed in the table) are considered to be of high credit quality.
59
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 10 - Trade and Other Receivables (cont’d)
2018
Trade receivables
Other receivables
Total
2017
Trade receivables
Other receivables
Total
Consolidated Group
Gross
Amount
$000
Past Due and
Impaired
$000
< 30 days
$000
Past due but not impaired
31 – 60 days
$000
61 – 90 days
$000
> 90 days
$000
Within Trade
Terms
$000
26,338
2,261
28,599
24,864
1,550
26,414
324
-
324
405
-
405
4,068
-
4,068
3,264
-
3,264
273
-
273
1,742
-
1,742
649
-
649
540
-
540
659
-
659
496
-
496
20,365
2,261
22,626
18,417
1,550
19,967
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the
date credit was initially granted up to the reportable date. The concentration of credit risk is limited to the customer base being large and
unrelated. Accordingly, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.
Note 11 - Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of finished goods includes direct materials, direct labour and
an appropriate portion of variable and fixed overheads included in bringing them to their existing location and condition. Costs are assigned
on the basis of weighted average costs.
The cost of raw materials includes all costs to transport the goods to a location ready for use including any duties and charges on items
purchased overseas.
CURRENT
At cost:
- Work in progress
- Finished goods
At net realisable value:
- Work in progress
- Finished goods
TOTAL INVENTORY
2018
$000
2017
$000
5,460
16,679
22,139
-
11,805
11,805
33,944
5,611
11,614
17,225
-
11,715
11,715
28,940
The Group has completed a comprehensive review of the carrying value of inventory. As a result of the review, inventory has been impaired
by $90,000 (2017: $208,000).
Note 12 - Other Assets
CURRENT
Other current assets
Prepayments
TOTAL CURRENT OTHER ASSETS
60
2018
$000
2,236
1,079
3,315
2017
$000
2,085
935
3,020
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 13 - Property, Plant and Equipment
Recognition and Measurement
Depreciation
Items of property, plant and equipment are measured at cost less
accumulated depreciation and any accumulated impairment losses.
If significant parts of an item of property, plant and equipment have
different useful lives, then they are accounted for as separate items
(major components) of property, plant and equipment. Any gain
or loss on disposal of an item of property, plant and equipment is
recognised in profit or loss.
Depreciation is calculated to write off the cost of items of property,
plant and equipment less their estimated residual values using the
straight-line or diminishing returns method over their estimated
useful lives, and is generally recognised in profit or loss. Leased
assets are depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the Group will obtain
ownership by the end of the lease term. Land is not depreciated.
Subsequent Expenditure
The depreciation rates used for each class of depreciable assets are:
Subsequent expenditure is capitalised only when it is probable that
the future economic benefits associated with the expenditure will
flow to the Group.
Class of Property, Plant and Equipment
Leasehold improvements
Plant and equipment
Leased plant and equipment
Buildings
Depreciation Rate
10% - 100%
5% - 67%
30% - 67%
2.50%
Depreciation methods, useful lives and residual values are reviewed
at each reporting date and adjusted if appropriate.
LAND AND BUILDINGS
Freehold land:
- At cost
TOTAL FREEHOLD LAND
Buildings:
- At cost
- Less accumulated depreciation
TOTAL BUILDINGS
TOTAL LAND AND BUILDINGS
PLANT AND EQUIPMENT
Plant and equipment:
- At cost
- Accumulated depreciation and impairment
- Transfer to Assets Held for Sale
TOTAL PLANT AND EQUIPMENT
Leasehold improvements:
- At cost
- Accumulated depreciation
TOTAL LEASEHOLD IMPROVEMENTS
Leased plant and equipment:
- Capitalised leased assets
- Accumulated depreciation
TOTAL LEASED PLANT AND EQUIPMENT
TOTAL PLANT AND EQUIPMENT
TOTAL PROPERTY, PLANT AND EQUIPMENT
2018
$000
53
53
806
(630)
176
229
81,681
(65,677)
-
16,004
3,260
(2,907)
353
1,173
(920)
253
16,610
16,839
2017
$000
53
53
806
(599)
207
260
78,781
(62,431)
(100)
16,250
3,077
(2,538)
539
1,247
(920)
327
17,116
17,376
61
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 13 - Property, Plant and Equipment (cont’d)
a. Security
c. Leased Property, Plant and Equipment
Property, Plant and Equipment of $16,117,000 (2017: $16,305,000)
was pledged as security as part of the Group’s total financing
arrangements as at the reporting date.
b.
Impairment Loss and Subsequent Reversal
In previous reporting periods, the carrying value of rollingstock
property, plant and equipment had been
impaired following
comprehensive
impairment and valuation reviews. During the
previous financial year, Greentrains Limited sold a locomotive asset
which resulted in a reversal of impairment of $250,000.
On 17 March 2017, Greentrains Limited entered into an asset sale
agreement to sell the majority of its wagon fleet to Access Trading
Company. As at 30 June 2017 the wagon fleet was classified as
assets held for sale. The assets held for sale are stated at the
lower of the carrying amount and fair value less costs to sell. The
remeasurement of the property, plant and equipment assets upon
the reclassification to assets held for sale resulted in a reversal of
impairment of $100,000.
Leases of property, plant and equipment that transfer to the Group
substantially all the risks and rewards of ownership are classified as
finance leases. The leased assets are measured initially at an amount
equal to the lower of their fair value and the present value of the
minimum lease payments. Subsequent to initial recognition, the
assets are accounted for in accordance with the accounting policy
applicable to that asset.
Assets held under other leases are classified as operating leases and
are not recognised in the Group’s Statement of Financial Position.
Payments made under operating leases are recognised in profit
or loss on a straight-line basis over the term of the lease. Lease
incentives received are recognised as an integral part of the total
lease expense, over the term of the lease.
d. Reconciliation of Carrying Amounts
Movement in the carrying amounts for each class of property, plant
and equipment between the beginning and the end of the current
financial year.
BALANCE AT 1 JULY 2016
Additions
Disposals
(Impairment) / reversal of impairment
Transfer to asset held for sale
Depreciation expense
BALANCE AT 30 JUNE 2017
Additions
Disposals
Depreciation expense
BALANCE AT 30 JUNE 2018
Freehold
Land
$000
53
-
-
-
-
-
53
-
-
-
53
Consolidated Group
Buildings
$000
229
-
-
-
-
(22)
207
Leasehold
Improvements
$000
800
115
(4)
-
-
(372)
539
-
-
(31)
176
183
-
(369)
353
Plant and
Equipment
$000
17,080
2,329
(414)
350
(100)
(2,995)
16,250
3,390
(390)
(3,246)
16,004
Leased
Plant and
Equipment
$000
327
-
-
-
-
-
327
-
(74)
-
253
Total
$000
18,489
2,444
(418)
350
(100)
(3,389)
17,376
3,573
(464)
(3,646)
16,839
The Plant and Equipment category contains 192 PQGY wagons with a net book value of $7,319,000 (2017: $8,429,000). An independent
external evaluation has been obtained as at 30 June 2018. No impairment of the wagon valuation has been booked in the current financial year
(2017: $NIL). Property, plant and equipment had a reversal of impairment of $350,000 in the previous financial year.
Note 14 - Net Tangible Assets
Net tangible assets per ordinary share: 313,380,943 shares (2017: 313,380,943 shares )
2018
Cents
23.6
2017
Cents
19.9
62
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 15 - Intangible Assets
Recognition and Measurement
Subsequent Expenditure
Goodwill arising on the acquisition of subsidiaries is measured at cost
less accumulated impairment losses.
Expenditure on research activities is recognised in profit or loss as
incurred.
Subsequent expenditure is capitalised only when it increases the
future economic benefits embodied in the specific asset to which
it relates. All other expenditure, including expenditure on internally
generated goodwill and brands, is recognised in profit or loss as
incurred.
Development expenditure is capitalised only if the expenditure
can be measured reliably, the product or process is technically
and commercially feasible, future economic benefits are probable
and the Group intends to and has sufficient resources to complete
development and to use or sell the asset. Otherwise, it is recognised
in profit or loss as incurred. Subsequent to initial recognition,
development expenditure is measured at cost less accumulated
amortisation and any accumulated impairment losses.
Other intangible assets, including customer relationships, patents
and trademarks, and computer software, that are acquired by
the Group and have finite useful lives are measured at cost less
accumulated amortisation and any accumulated impairment losses.
Amortisation
Amortisation is calculated to write off the cost of intangible assets
less their estimated residual values using the reducing-balance
method over their estimated useful lives, and is generally recognised
in profit or loss. Goodwill is not amortised.
The estimated useful lives for current and comparative periods are
as follows:
Class of Intangible Asset
Customer-related intangibles
Patents and trademarks
Development costs
Other intangible assets
Useful Life
3-10 years
Up to 13 years
Life of project
5-8 years
Amortisation methods, useful lives and residual values are reviewed
at each reporting date and adjusted if appropriate.
OTHER IDENTIFIABLE INTANGIBLES
Cost:
Opening balance
Additions
Closing balance
Accumulated amortisation:
Opening balance
Amortisation for the year
Closing balance
NET BOOK VALUE
TOTAL INTANGIBLE ASSETS
At cost
Accumulated amortisation and impairment
NET BOOK VALUE
2018
$000
2017
$000
12,959
34
12,993
(12,561)
(184)
(12,745)
248
12,993
(12,745)
248
12,959
-
12,959
(12,302)
(259)
(12,561)
398
12,959
(12,561)
398
Intangible assets have finite useful lives. The current amortisation charges for intangible assets are included under depreciation and
amortisation expense in the Consolidated Statement of Profit or Loss and OCI.
63
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 16 - Trade and Other Payables
Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the Group
during the reporting period which remains unpaid. The balance is recognised as a current liability if expected to be settled within 12 months.
CURRENT
Unsecured liabilities:
Trade payables
Sundry payables and accrued expenses
Deferred income
TOTAL TRADE AND OTHER PAYABLES
Note 17 - Financial Liabilities
2018
$000
11,953
2,730
770
15,453
2017
$000
12,386
1,938
1,595
15,919
Non-derivative Financial Liabilities – Measurement
a. Collateral Provided
Other non-derivative financial liabilities are initially measured at fair
value less any directly attributable transaction costs. Subsequent to
initial recognition, these liabilities are measured at amortised cost
using the effective interest method.
Non-derivative Financial Liabilities – Recognition and
Derecognition
The Group initially recognises loans and receivables and debt
securities issued on the date when they are originated. All other
financial liabilities are initially recognised on the trade date, when
the entity becomes a party to the contractual provisions of the
instrument.
Bank facility
The bank facility of $2.0m with the Commonwealth Bank of Australia
(CBA) is secured by a cash deposit into a secured bank account. The
facility expires on 30 June 2019.
On 3 August 2018, the Group agreed terms with the National
Australia Bank for a $10.0m Revolving Credit Facility and $2.6m
interchangeable facility to be used between the issuance of bank
guarantees, letters of credit and business card facility with a term
of three years. The facilities are subject to final documentation and
the satisfaction of certain conditions precedent, which are usual for
a facility of this nature. The new facility is expected to be finalised no
later than 5 October 2018.
The Group derecognises a financial liability when its contractual
obligations are discharged or cancelled, or expire.
Related party debt and facility
Financial liabilities are offset, and the net amount presented in the
Statement of Financial Position when, and only when, the Group has
a legally enforceable right to offset the amounts and intends either
to settle them on a net basis or to realise the asset and settle the
liability simultaneously.
The related party debt with Elph Pty Ltd (Elph) is secured by first
registered fixed and floating charges over certain assets owned by
Engenco Limited and its subsidiaries. The Group has a funding facility
of $10.0m with Elph of which none was drawn down as at 30 June
2018.
Note
23(a)
25(b)
CURRENT
Secured liabilities:
Bank overdrafts
Loans from related parties
TOTAL CURRENT
FINANCIAL LIABILITIES
2018
$000
338
-
338
2017
$000
263
4,000
4,263
The financial covenant agreed between the Group and Elph is:
i. Debt Service Cover Ratio, (the ratio of EBITDA to gross
interest expense) to be greater than 5.0 times.
The funding facility with Elph expires on 30 April 2019.
Defaults and breaches
Information about the Group’s exposure to interest rate, foreign
currency and liquidity risk is included in Note 24 – Financial
Risk Management.
There were no defaults or breaches during the year ended 30 June
2018 on any of the above-mentioned facilities.
Lease liabilities
Lease liabilities are secured by underlying leased assets.
64
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 17 - Financial Liabilities (cont’d)
b. Debt Facilities and Credit Standby Arrangements
A summary of the Group’s loan facilities is provided in the table below:
– Working Capital Multi
Option Facility
– Swedish Overdraft Facility
(SEK)
– Elph Funding Facility
Facility
Available
2018
$000
Facility Used
2018
$000
Maturity
Dates
2018
Facility
Available
2017
$000
Facility Used
2017
$000
Maturity
Dates
2017
2,000*
1,420
Jun-19
2,000*
1,559
Jun-18
906
10,000
12,906
-
-
1,420
Dec-18
Apr-19
1,890
15,000
18,890
-
4,000
5,559
Dec-17
Apr-18
Interest
Basis
Floating
Floating
Fixed
* Comprises net bank overdrafts, off balance sheet bank guarantees and business credit cards and other trade products.
Note 18 - Provisions
Provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of
the time value of money, and the risks specific to the liability. The
unwinding of the discount is recognised as a finance cost.
Provision for Long-term Employee Benefits
A provision has been recognised for employee entitlements relating
to long service leave. In calculating the present value of future cash
flows in respect of long service leave, the probability of long service
leave being taken is based on historical data.
Restructuring
is recognised when the Group
A provision for restructuring
has approved a detailed and formal restructuring plan, and the
restructuring either has commenced or has been announced
publicly. Future operating losses are not provided for. Restructuring
provisions include make-good costs and redundancies announced
before the reporting date.
Legal
There are a number of ongoing legal proceedings involving the
Group at the reporting date. Provisions have been taken up for some
of these exposures based on the Board’s determination.
Site Restoration
A provision for site restoration in respect of contaminated land,
and the related expense, is recognised when the land is found to
be contaminated.
Onerous Contracts
A provision for onerous contracts is measured at the present value
of the lower of the expected cost of terminating the contract and
the expected net cost of continuing with the contract. Before a
provision is established, the Group recognises any impairment loss
on the assets associated with that contract (see Note 1(c)). The Group
has identified loss making contracts which are non-cancellable. The
obligation for expected future losses has been provided for as at the
reporting date.
Other Provisions
Other provisions relate to various categories including provisions
for warranty costs and other costs required to be incurred under
contractual obligations.
65
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 18 - Provisions (cont’d)
BALANCE AT 1 JULY 2017
Provisions raised
Transfer in / (out)
Provisions used
BALANCE AT 30 JUNE 2018
Current
Non-current
BALANCE AT 30 JUNE 2018
Long Service
Leave
Employee
Benefits
$000
2,334
490
-
(110)
2,714
Annual Leave
Employee
Benefits
$000
2,625
1,938
-
(1,766)
2,797
2,226
488
2,714
2,797
-
2,797
Legal
$000
225
-
(15)
(210)
-
-
-
-
Onerous
Contracts
$000
239
-
-
(3)
236
Restructuring
$000
214
9
-
(214)
9
236
-
236
9
-
9
Other
$000
1,453
664
-
(856)
1,261
1,261
-
1,261
Total
$000
7,090
3,101
(15)
(3,159)
7,017
6,529
488
7,017
Note 19 - Capital and Leasing Commitments
Determining Whether an Arrangement Contains a Lease
Lease Payments
Payments made under operating leases are recognised in profit
or loss on a straight-line basis over the term of the lease. Lease
incentives received are recognised as an integral part of the total
lease expense, over the term of the lease.
Minimum
leases are
lease payments made under finance
apportioned between the finance expense and the reduction of the
outstanding liability. The finance expense is allocated to each period
during the lease term so as to produce a constant periodic rate of
interest on the remaining balance of the liability.
The Group also leases a number of sites under operating leases
which include land and buildings for the purpose of operating its
business. The leases typically run for a period of between 3 and 10
years, sometimes with an option to renew the leases after that date.
None of the leases include contingent rentals.
At inception of an arrangement, the Group determines whether such
an arrangement is or contains a lease.
At inception or on reassessment of an arrangement that contains
a lease, the Group separates payments and other consideration
required by the arrangement into those for the lease and those for
other elements on the basis of their relative fair values. If the Group
concludes for a finance lease that it is impracticable to separate the
payments reliably, then an asset and a liability are recognised at an
amount equal to the fair value of the underlying asset; subsequently,
the liability is reduced as payments are made and an imputed finance
cost on the liability is recognised using the Group’s incremental
borrowing rate.
Leased Assets
Leases of property, plant and equipment that transfer to the Group
substantially all the risks and rewards of ownership are classified as
finance leases. The leased assets are measured initially at an amount
equal to the lower of their fair value and the present value of the
minimum lease payments. Subsequent to initial recognition, the
assets are accounted for in accordance with the accounting policy
applicable to that asset.
Assets held under other leases are classified as operating leases and
are not recognised in the Group’s Statement of Financial Position.
66
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 19 - Capital and Leasing Commitments (cont’d)
Leases as a Lessee
a. Finance Lease Commitments
As at 30 June 2018, the Group is not a party to any finance lease arrangements (2017: NIL).
b. Operating Lease Commitments
Non-cancellable operating leases contracted for but not capitalised in the financial statements
Payable - minimum lease payments:
– not later than 12 months
– between 12 months and 5 years
– greater than 5 years
2018
$000
2017
$000
4,500
11,558
4,253
20,311
4,110
12,721
5,946
22,777
During the year-ended 30 June 2018, $4,555,000 was recognised as an expense in the Statement of Profit or Loss and OCI in respect of
operating leases (2017: $4,828,000).
c. Contractual Commitments
At 30 June 2018, the Group had not entered into any contractual commitments for the acquisition of property, plant and equipment and other
intangible assets (2017: NIL).
Leases as a Lessor
d. Operating Lease Receivables
Receivable - minimum lease payments:
– not later than 12 months
– between 12 months and 5 years
– greater than 5 years
2018
$000
1,358
1,553
316
3,227
2017
$000
1,724
1,110
438
3,272
The Group leases out portions of its fleet of rollingstock as well as other select items of property, plant and equipment to customers. At the
end of the reporting period, the future minimum lease payments under non-cancellable leases are receivable as shown above.
Note 20 - Contingent Liabilities
There are a number of legal claims and exposures which arise from the ordinary course of business. There is significant uncertainty as to
whether a future liability will arise in respect to these items. The amount of the liability, if any, which may arise cannot be reliably measured
at the reporting date.
The Group has arranged for its bankers to guarantee its performance to third parties. The maximum amount of these guarantees at 30 June
2018 is $1,419,512 (2017: $1,558,696).
67
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 21 - Issued Capital and Reserves
a. Share Capital
313,380,943 (2017: 313,380,943) fully paid ordinary shares
Ordinary shares
2018
$000
302,719
302,719
2017
$000
302,719
302,719
Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity. Income tax relating to
transaction costs of an equity transaction are accounted for in accordance with AASB 112: Income Taxes.
At beginning of reporting period
Shares issued during the year
AT REPORTING DATE
2018
$000
313,380,943
-
313,380,943
2017
$000
310,891,432
2,489,511
313,380,943
Ordinary shares are eligible to participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of
shares on issue.
At shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a
show of hands.
b. Nature and Purpose of Reserves
Foreign currency translation reserve
The foreign currency translation reserve records exchange differences arising on translation of overseas subsidiaries.
Profit reserve
The profit reserve comprises a transfer of net profits and characterises profits available for distribution as dividends in future years.
c. Dividends
After the reporting date, the following final dividend was declared by the board of directors. The dividend has not been recognised as a
liability as at 30 June 2018, and there are no tax consequences.
a. FINAL DIVIDEND DECLARED
1 cent per ordinary share (2017: 0.5 cents)
b. FRANKING CREDIT BALANCE
Amount of franking credits available to shareholders of Engenco Limited for subsequent financial years are:
Franking account balance as at the end of the financial year at 30% (2017: 30%)
2018
$000
3,134
2017
$000
1,567
10,582
11,253
68
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 22 - Parent Entity Disclosures
As at, and throughout the financial year ended, 30 June 2018 the parent entity of the Group was Engenco Limited. The ultimate controlling
party of the Company at reporting date was Elph Investments Pty Ltd, incorporated in Australia.
a. Financial Position of Parent Entity at year end
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Profit reserve
Accumulated losses
TOTAL EQUITY
b. Result of Parent Entity
Profit / (loss) for the year
Other comprehensive income
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE PERIOD
2018
$000
2017
$000
2,903
31,461
34,364
27,205
4,624
31,829
2,535
302,720
271
(300,456)
2,535
(3,014)
-
(3,014)
3,380
36,211
39,591
30,241
3,800
34,041
5,550
302,720
-
(297,170)
5,550
(10,592)
-
(10,592)
c. Parent Entity Guarantees in respect of the debts of its subsidiaries
The parent entity acts as guarantor for debt facilities. Details of these facilities can be found in Note 17(b) – Financial Liabilities.
d. Parent Entity Contingent Liabilities
At 30 June 2018, the parent entity has no significant contingent liabilities (2017: NIL).
e. Parent Entity Capital Commitments for acquisition of property, plant and equipment
At 30 June 2018, the parent entity had not entered into any contractual commitments for the acquisition of property, plant and equipment and
other intangible assets (2017: NIL).
69
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 23 - Cash Flow Information
a. Reconciliation of Cash at End of Financial Year
Cash and cash equivalents
Bank overdrafts
CASH (NET OF BANK OVERDRAFTS) AT END OF FINANCIAL YEAR
Note
9
17
b. Reconciliation of Cash Flow from Operating Activities with Profit / (Loss) after Income Tax
PROFIT / (LOSS) AFTER INCOME TAX
Adjustments for non-cash items:
– Depreciation
– Other intangibles amortisation
– (Reversal of) / impairment losses on property, plant and equipment
– (Reversal of) / impairment losses on inventory
– Net finance costs
– Income tax expense / (benefit)
– Gain on sale of property, plant and equipment
Changes in:
– (Increase) / decrease in trade and other receivables
– (Increase) / decrease in prepayments
– (Increase) / decrease in inventories
– Increase / (decrease) in trade payables and accruals
– Increase / (decrease) in provisions
Cash provided by / (used in) operating activities
– Net interest paid
– Income taxes paid
CASH FLOW PROVIDED BY / (USED IN) OPERATIONS
2018
$000
8,656
(338)
8,318
2018
$000
18,003
3,646
184
-
90
446
(4,989)
(305)
17,075
(2,226)
(144)
(5,094)
(424)
(161)
9,026
(446)
(288)
8,292
2017
$000
8,960
(263)
8,697
2017
$000
8,269
3,389
259
(350)
208
925
(124)
(46)
12,530
(6,487)
(75)
(2,954)
4,578
(33)
7,559
(925)
(234)
6,400
70
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 23 - Cash Flow Information (cont’d)
c. Reconciliation of Financial Liabilities in Financing Activities
Related Party Funding Facility
Bank Overdraft
TOTAL FINANCIAL LIABILITIES
d. Cash Flow from Discontinued Operation
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Finance costs
NET CASH FROM / (USED IN) OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of non-current assets
NET CASH FROM / (USED IN) INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings
NET CASH FROM / (USED IN) FINANCING ACTIVITIES
Net increase / (decrease) in cash and cash equivalents
Cash at beginning of financial year
CASH AT END OF FINANCIAL YEAR
2017
$000
4,000
263
4,263
Cash Flows
$000
(4,000)
-
(4,000)
Non-Cash
Changes
$000
-
75
75
2018
$000
88
(4)
-
84
-
-
-
-
84
12
96
2018
$000
-
338
338
2017
$000
1,030
(1,801)
(148)
(919)
5,482
5,482
(4,766)
(4,766)
(203)
215
12
71
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements a.
Interest Rate Risk
Exposure to interest rate risk arises on financial liabilities recognised
at reporting date whereby a future change in interest rates will affect
future cash flows or the fair value of fixed rate financial instruments.
Currently the Group’s operations are financed using a mixture of
fixed and floating rate debt. The Group has not currently entered into
any interest rate swaps to fix its floating rate debt.
The variable interest rate borrowings exposes the Group to interest
rate risk which will impact future cash flows and interest charges and
is indicated by the following floating interest rate financial liabilities:
FLOATING RATE
INSTRUMENTS
Bank Overdrafts
Swedish Overdraft Facility
Total
Note
17(b)
b. Liquidity Risk
2018
$000
338
-
338
2017
$000
263
-
263
Liquidity risk is the risk that the Group will encounter difficulty in
meeting its obligations associated with its financial liabilities that
are settled by delivering cash or another financial asset. The Group
manages this risk through the following mechanisms:
– preparing forecast cash flow analysis in relation to its operational,
investing and financing activities;
– monitoring undrawn credit facilities;
– obtaining funding from a variety of sources;
– managing credit risk related to financial assets; and
– monitoring the maturity profile of financial liabilities.
The following table reflects an undiscounted contractual maturity
analysis for financial liabilities.
Cash flows realised from financial assets reflect management’s
expectations as to the timing of realisation. Actual timing may
therefore differ from that disclosed. The timing of cash flows
presented in the table to settle financial liabilities reflects the earliest
contractual settlement dates and does not reflect management’s
expectations that banking facilities will be rolled forward.
Note 24 - Financial Risk Management
The Group’s financial instruments consist mainly of investments,
accounts receivable and payable, loans from external and related
parties and leases.
FINANCIAL ASSETS
Cash and cash equivalents
Other assets
Trade and other
receivables
FINANCIAL LIABILITIES
Financial liabilities at
amortised cost:
– Trade and other
payables
– Borrowings
Note
9
10
16
17
2018
$000
8,656
-
28,275
36,931
15,453
338
15,791
2017
$000
8,960
7
26,009
34,976
15,919
4,263
20,182
i. Treasury Risk Management
Management, consisting of senior executives of the Group,
discusses and monitors financial risk exposure and evaluates
treasury management strategies in the context of current economic
conditions and forecasts. Management’s overall risk management
strategy seeks to assist the Group in meeting its financial targets,
while minimising potential adverse effects on financial performance.
Management operates under the supervision of members of the
Board of Directors. Risk management transactions are approved by
senior management personnel.
ii. Financial Risk Exposures and Management
The main risks the Group is exposed to through its financial
instruments are interest rate risk, currency risk, liquidity risk and
credit risk.
The Company’s Audit and Risk Committee has overall responsibility
for the establishment and oversight of the Group’s risk management
framework, and is responsible for developing and monitoring the
Group’s risk management policies.
The Group’s risk management policies are established to identify
and analyse the risks faced by the Group, to set appropriate risk
limits and controls and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect
changes in market conditions and the Group’s activities. The Group,
through its training and management standards and procedures,
aims to maintain a disciplined and constructive control environment
in which all employees understand their roles and obligations.
The Audit and Risk Committee oversees how management
monitors compliance with the Group’s risk management policies
and procedures, and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group.
72
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 24 - Financial Risk Management (cont’d)
Financial Liability Maturity Analysis
FINANCIAL LIABILITIES DUE
FOR PAYMENT
Bank overdrafts and loans
Trade and other payables
Total Expected Outflows
c. Currency Risk
Within 1 Year
2018
$000
2017
$000
1 to 5 Years
2018
$000
2017
$000
Over 5 Years
2018
$000
2017
$000
Total
2018
$000
Consolidated Group
338
15,453
15,791
4,263
15,919
20,182
-
-
-
-
-
-
-
-
-
-
-
-
338
15,453
15,791
2017
$000
4,263
15,919
20,182
The Group is exposed to currency risk to the extent that there is a
mismatch between the currencies in which sales, purchases and
borrowings are denominated and the AUD functional currency of the
Group.
The majority of financial liabilities and assets of the Group are
denominated in the functional currency of the operational location.
These are primarily Australian Dollars and Swedish Krona.
d. Credit Risk
On a geographical basis the Group has significant credit risk
exposures in Australia given the substantial operations in this region.
Details with respect of the credit risk of Trade and Other Receivables
can be found in Note 10.
Trade and other receivables that are neither past due or impaired are
considered to be of high credit quality. Aggregates of such amounts
are detailed in Note 10.
Balances held with banks are with AA rated financial institutions,
details of these holdings can be found in Note 9 – Cash and Cash
Equivalents.
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from
customers and investments in debt securities.
iii. Net Fair Values
Fair Value Estimation
The fair values of financial assets and financial liabilities are presented
in the following table and can be compared to their carrying values
as presented in the Statement of Financial Position. Fair values are
those amounts at which an asset could be exchanged, or a liability
settled, between knowledgeable, willing parties in an arm’s length
transaction.
Fair values derived may be based on information that is estimated
or subject to judgment, where changes in assumptions may have a
material impact on the amounts estimated. Estimates, judgments
and the associated assumptions have been detailed below. Where
possible, valuation information used to calculate fair value is
extracted from the market, with more reliable information available
from markets that are actively traded. In this regard, fair values for
listed securities are obtained from quoted market bid prices.
Credit risk is managed through the maintenance of procedures (such
procedures include monitoring of exposures, payment cycles and
monitoring of the financial stability of significant customers and
counter parties) ensuring to the extent possible, that customers and
counter-parties to transactions are of sound credit worthiness. Such
monitoring is used in assessing receivables for impairment. Credit
terms differ between each key business but are generally 30 to 60
days from end of month.
Where the Group is unable to ascertain a satisfactory credit risk profile
in relation to a customer or counter-party, then risk may be further
managed through title retention clauses over goods or obtaining
security by way of personal or commercial guarantees over assets
of sufficient value which can be claimed against in the event of any
default. The Group has established procedures to ensure Personal
Property Securities Act 2009 (Cth) registration is performed for all
relevant assets.
The maximum exposure to credit risk by class of recognised financial
assets at balance date, excluding the value of any collateral or
security held, is equivalent to the carrying value and classification
of those financial assets (net of any provisions) as presented in the
Consolidated Statement of Financial Position.
73
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 24 - Financial Risk Management (cont’d)
FINANCIAL ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
FINANCIAL LIABILITIES
Trade and other payables
Loans and borrowings
Consolidated Group
Consolidated Group
2018
Carrying Value
$000
2018
Fair Value
$000
2017
Carrying Value
$000
2017
Fair Value
$000
8,656
28,275
-
36,931
15,453
338
15,791
8,656
28,275
-
36,931
15,453
338
15,791
8,960
26,009
7
34,976
15,919
4,263
20,182
8,960
26,009
7
34,976
15,919
4,263
20,182
The fair values disclosed in the above table have been determined
based on the following methodologies:
c. Currency Risk Sensitivity Analysis
– Cash and cash equivalents, trade and other receivables and trade
and other payables are short-term instruments in nature whose
carrying value is equivalent to fair value.
– Loans and receivables have carrying values equivalent to fair
value. The majority of these facilities have floating rates and
those that are fixed are expected to be held to maturity and as
such when discounted bear little resemblance to the carrying
value.
– For other assets, closing quoted bid prices at reporting date are
used where appropriate.
iv. Sensitivity Analysis
a.
Interest Rate Risk and Currency Risk
The following tables illustrate sensitivities to the Group’s exposures
to changes in interest rates and foreign currency exchange rates. The
tables indicate the impact on how profit and equity values reported
at balance date would have been affected by changes in the relevant
risk variable that management considers to be reasonably possible.
These sensitivities assume that the movement in a particular variable
is independent of other variables.
b.
Interest Rate Sensitivity Analysis
The Group is not sensitive to the effect on earnings and equity as a
result of changes in the interest rate. As at reporting date, the Group
does not carry any debt balances subject to a floating interest rate.
The effect on earnings and equity as a result of changes in the value
of the Australian Dollar to the Swedish Krona, with all other variables
remaining constant would be as follows:
CHANGE IN EARNINGS
– Improvement in AUD to SEK
by 5%
– Decline in AUD to SEK by 5%
CHANGE IN EQUITY
– Improvement in AUD to SEK
by 5%
– Decline in AUD to SEK by 5%
2018
$000
(15)
15
(472)
472
2017
$000
(14)
14
(497)
497
The Group does not currently hedge against foreign exchange
movements in net assets of its Swedish subsidiaries.
v. Capital Management
Management monitors the capital of the Group in an effort
to maintain an appropriate debt to equity ratio, provide the
shareholders with adequate returns and ensure that the Group can
fund its operations. The Group’s debt and capital includes ordinary
shares and financial liabilities. The gearing ratios as at 30 June 2018
and 2017 are as follows:
Total Borrowings
Net Debt / (Cash)
Total Equity
TOTAL EQUITY AND NET DEBT
GEARING RATIO
2018
$000
338
(8,318)
73,218
64,900
(11%)
2017
$000
4,263
(4,697)
57,011
52,314
(8%)
The gearing ratio has decreased in the year largely due to the
reduction in borrowings in the current financial year.
74
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 25 - Related Party Transactions
a. Transactions with Key Management Personnel
i. Key Management Personnel Compensation
Short-term employee benefits
The totals of remuneration paid to key management personnel
during the year (including termination benefits) are as follows:
Short-term employee benefits are expensed as the related service is
provided. A liability is recognised for the amount expected to be paid
if the Group has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
Defined contribution plans
Obligations for contributions to defined contribution plans are
expensed as the related service is provided. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a
reduction in future payments is available.
Other long-term employee benefits
The Group’s net obligation in respect of long-term employee
benefits is the amount of future benefit that employees have earned
in return for their service in the current and prior periods. That benefit
is discounted to determine its present value. Remeasurements are
recognised in profit or loss in the period in which they arise.
Termination benefits
Termination benefits are expensed at the earlier of when the Group
can no longer withdraw the offer of those benefits and when the
Group recognises costs for a restructuring. If benefits are not
expected to be settled wholly within 12 months of the reporting date,
then they are discounted.
Short-term employee benefits
Post-employment benefits
Termination benefits
Other long-term benefits
TOTAL
2018
$
1,195,236
106,831
-
11,702
1,313,769
2017
$
2,651,620
299,452
-
47,221
2,998,293
Compensation of the Group’s key management personnel includes
salaries, superannuation and post-employment benefits.
ii. Key Management Personnel Transactions
A number of key management personnel, or their related parties,
hold positions in other companies that result in them having control
or significant influence over these companies.
A number of these companies transacted with the Group during
the year. The terms and conditions of these transactions were no
more favourable than those available, or which might reasonably
be expected to be available, in similar transactions with non-key
management personnel related companies on an arm’s length basis.
From time to time directors of the Group, or their related entities, may
buy goods from the Group. These purchases are on the same terms
and conditions as those entered into by other Group employees or
customers.
75
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 25 - Related Party Transactions (cont’d)
The aggregate value of transactions and outstanding balances related to key management personnel and entities over which they have
control or significant influence were as follows:
Related Party
Elph Pty Ltd 1
Elphinstone Group (Aust) Pty Ltd 2
William Adams Pty Ltd 3
United Equipment Pty Ltd 4
Grassick SSG Pty Ltd 5
Specialised Vehicle Solutions Pty Ltd 6
Southern Prospect Pty Ltd 7
Elphinstone Pty Ltd 8
Director
V De Santis/D Elphinstone
V De Santis/D Elphinstone
V De Santis/D Elphinstone
V De Santis/D Elphinstone
D Hector
D Elphinstone
D Elphinstone
D Elphinstone
Revenue / (Cost)
for the year ended 30 June
2018
$
(279,824)
(471,807)
(115,615)
(350,958)
-
-
-
3,697,372
2017
$
(768,215)
(358,519)
(24,151)
(301,494)
(45,245)
1,432,644
77,173
664,469
Receivable / (Payable)
as at 30 June
2018
$
-
(38,489)
3,904
(37,799)
-
-
-
20,531
2017
$
-
(22,382)
(23,783)
(25,734)
-
-
33,603
682,291
1 Line Fees were incurred and paid to Elph Pty Ltd in relation to the related party funding facility with the Group. Interest was also charged by Elph Pty Ltd on its related party loan to
Greentrains Limited in the previous financial year. Vincent De Santis is a director of Elph Pty Ltd. Dale Elphinstone is also a director and the Chairman of this entity
2 Director fees and travel expense reimbursements were paid to Elphinstone Group (Aust) Pty Ltd for the services of Dale Elphinstone (Non-Executive Director) and Vincent De
Santis (Chairman). Legal service fees were also paid to Elphinstone Group (Aust) Pty Ltd during the year. Vincent De Santis is a director of Elphinstone Group (Aust) Pty Ltd. Dale
Elphinstone is also Chairman of this entity.
3 Goods were purchased from and sold to William Adams Pty Ltd during the period. Dale Elphinstone is the Chairman and a director, and Vincent De Santis is a director of this entity.
4 Goods were purchased from and sold to United Equipment Pty Ltd in the period. Dale Elphinstone is a director of this entity.
5 Director fees and travel expense reimbursements were paid to Grassick SSG Pty Ltd for services in the previous financial year of Donald Hector (Non-Executive Director). Donald
Hector is the Principal of this entity.
6 Goods were sold to Specialised Vehicle Solutions Pty Ltd during the previous financial year. Dale Elphinstone is a director of this entity.
7 Goods were sold to Southern Prospect Pty Ltd during the previous financial year. Dale Elphinstone is the Chairman of this entity.
8 Goods were sold to Elphinstone Pty Ltd during the period. Dale Elphinstone is a director and the Chairman of this entity.
b. Other Related Party Transactions
The Group has the following balances outstanding at the reporting date in relation to transactions with related parties:
Related Party Transaction
Current receivables (parent entity):
Receivables from subsidiaries
Loans to/from other related parties:
Funding Facility drawdown from Elph Pty Ltd
2018
$000
502
2017
$000
1,059
-
4,000
The intercompany loans extended from Engenco Limited to its wholly owned subsidiaries are extended on the following terms:
Term:
Rate:
Revolving Facility repayable when subsidiary is in a position to do so or as otherwise decided by the Company.
Fixed rate reviewable quarterly.
At the reporting date, the related party funding facility from Elph Pty Ltd to Engenco Limited was on arms’-length terms for up to $10,000,000
maturing not earlier than 30 April 2019.
76
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Note 26 - Auditor’s Remuneration
Audit and Review Services
Auditors of the Company
– KPMG Australia – audit and review of financial statements
– KPMG Overseas – audit and review of financial statements
Other auditors
– Audit and review of financial statements
TOTAL AUDIT AND REVIEW SERVICES
Other Services
Auditors of the Company
– KPMG Australia – in relation to taxation compliance services
– KPMG Overseas – in relation to taxation compliance services
TOTAL OTHER SERVICES
Note 27 - Events Subsequent to Reporting Date
2018
$
2017
$
270,000
40,980
-
310,980
2,772
11,062
13,834
325,000
52,723
7,841
385,564
10,655
3,937
14,592
Linda Dillon resigned from the positions of Company Secretary and Chief Financial Officer on 1 August 2018. Andrew Nightingale was
appointed Company Secretary on the same day.
On 3 August 2018, the Group agreed terms with the National Australia Bank for a $10.0m Revolving Credit Facility and $2.6m interchangeable
facility to be used between the issuance of bank guarantees, letters of credit and business card facility with a term of three years. The facilities
are subject to final documentation and the satisfaction of certain conditions precedent, which are usual for a facility of this nature. The new
facility is expected to be finalised no later than 5 October 2018. The new financing arrangements, when completed, will replace the existing
funding facility of $10.0m with Elph Pty Ltd and Bank Guarantee Facility of $2.0m with the Commonwealth Bank.
On 29 August 2018, the Board resolved to declare a final dividend of 1 cent per share (fully franked). Payment of the dividend to shareholders
will take place on 27 September 2018.
Other than the above, there has not arisen, in the interval between the end of the financial year and the date of this report, any item, transaction
or event which would have a material effect on the financial statements of the Group at 30 June 2018.
77
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Shareholder Information
Additional Information for Listed Companies at 13 August 2018.
The following information is provided in accordance with the ASX Listing Rules.
1. Shareholding
a. Distribution of Shareholders
Category (size of holding)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
No. of Shareholders
127
163
129
265
105
789
% No. Ordinary Shares
26,904
539,493
1,028,423
9,023,149
302,762,974
313,380,943
0.01%
0.17%
0.33%
2.88%
96.61%
100.00%
b. The number of shareholdings held in less than marketable parcels (less than $500 in value) is 121.
c. 20 largest shareholders – ordinary shares
Position
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Name
Elph Investments Pty Ltd
Elph Pty Ltd
UBS Nominees Pty Limited
RAC & JD Brice Superannuation Pty Ltd
HSBC Custody Nominees (Australia) Limited
Marford Group Pty Ltd
Mr Clarence John Kelly, & Mrs Robyn Suzanne Kelly
Mr Hugh William Maguire, & Mrs Susan Anna Maguire
JP Morgan Nominees Australia Limited
Mr Neville Leslie Esler, & Mrs Cheryl Anne Esler
Mr Dennis Graham Austin, & Mrs Marilyn Alice Austin
Neko Super Pty Ltd
Mr Hugh William Maguire
Jared Charles Lawrence
Prussner Investments Pty Ltd
T B I C Pty Ltd
Mrs Margaret Jane Lindemann, & Mr Luke Charles Lindemann
P J M Super Pty Ltd
BFA Super Pty Ltd
Mr Benjamin Pinwill & Mrs Carly Anne Pinwill
Number of Ordinary
Fully Paid Shares Held
109,060,536
93,346,378
23,802,310
19,232,030
13,802,228
4,387,029
3,655,000
3,370,000
2,512,153
2,396,925
1,645,000
1,365,581
1,300,000
1,053,661
1,010,000
1,000,000
950,000
897,901
595,027
501,703
285,883,462
% Held of Issued
Ordinary Capital
34.80%
29.79%
7.60%
6.14%
4.40%
1.40%
1.17%
1.07%
0.80%
0.76%
0.52%
0.44%
0.41%
0.34%
0.32%
0.32%
0.30%
0.29%
0.19%
0.16%
91.22%
d. Shareholders holding in excess of 10% of issued capital were listed in the holding company’s register as follows:
Shareholder
Elph Investments Pty Ltd
Elph Pty Ltd
e.
Voting Rights
No. Ordinary Shares
109,060,536
93,346,378
%
34.80%
29.79%
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a
show of hands.
78
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Shareholder Information (cont’d)
2. The name of the Company Secretary is:
Andrew Nightingale
3. The address of the principal registered office in Australia is:
Level 22, 535 Bourke Street, Melbourne, VIC 3000
4. Registers of securities are held at the following address:
Level 9, Suite 913, 530 Little Collins Street, Melbourne VIC 3000
5. Securities Exchange Listing
Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the ASX Limited.
6. Unquoted Securities
N/A.
7. Other Information
Engenco Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.
79
Engenco Limited and its controlled entitiesEngenco Limited 2018 Annual ReportNotes to the Consolidated Financial Statements Corporate Directory
Corporate Office
Directors
Engenco Limited
Level 22
535 Bourke Street
Melbourne VIC 3000
T: +61 (0)3 8620 8900
F: +61 (0)3 8620 8999
investor.relations@engenco.com.au
www.engenco.com.au
Vincent De Santis
BCom, LLB (Hons)
Non-Executive Chairman
Kevin Pallas
BCom, MAICD
Managing Director & CEO
Dale Elphinstone
FAICD
Non-Executive Director
Auditors
KPMG
Tower Two
Collins Square
727 Collins Street
T: +61 (0)3 9288 5555
F: +61 (0)3 9288 6666
Share Registry
Security Transfer Registrars Pty Ltd
Registered Office
Engenco Limited
Level 22
535 Bourke Street
Melbourne VIC 3000
T: +61 (0)3 8620 8900
F: +61 (0)3 8620 8999
Alison von Bibra
BSc, MBA
Independent Non-Executive Director
Level 9, Suite 913
530 Little Collins Street
Melbourne VIC 3000
Ross Dunning
BE (Hons), BCom, FIE Aust, FIRSE, REPQ
Independent Non-Executive Director
T: +61 (0)3 9628 2200
F: +61 (0)8 9315 2233
Company Secretary
Andrew Nightingale
BCom, LLB
80
Engenco Limited 2018 Annual Report
Engenco Limited and its controlled entities