2024 Annual Report Revenue $’000 Net Assets $’000 2022 $188,642 2023 $217,082 2024 $214,847 2022 $93,131 2023 $94,280 2024 $96,932 Net Profit Before Tax (NPBT) $’000 2022 Dividend cents 2.0 2023 0.5 2024 0.5 2022 $4,460 2023 $5,519 2024 $5,246 Operating Cash Flow $’000 2022 $10,557 2023 $2,987 2024 $25,103 We keep our customers moving Engenco Limited and its controlled entities Annual Report 2024 The Engenco Group provides a diverse range of innovative products and solutions for transportation, employing over 500 people (full-time equivalent) in over twenty locations in two countries. Contents Company Highlights IFC Chairman’s Report 2 Managing Director & CEO’s Report 4 Business Unit Overview 8 Directors’ Report 18 Directors’ Declaration 32 Auditor’s Independence Declaration 33 Independent Auditor’s Report 34 Financial Report 38 This Annual Report includes the Engenco Limited’s Directors’ Report, the Annual Financial Report and Independent Audit Report for the financial year ended 30 June 2024 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 https://www.engenco.com.au/investor- center/governance/. Engenco Limited ABN 99 120 432 144 Revenue $214.8m Drivetrain $65.1m Convair $31.6m Hedemora $8.3m Gemco Rail $93.6m Workforce Solutions $18.1m Engenco Limited and its controlled entities Annual Report 2024 1 Dear Fellow Shareholders, Group revenue was stable falling slightly by just over 1% to $214.8 million (FY23: $217.1 million). Drivetrain achieved modest revenue growth of 4% (FY24: $65.1 million; FY23 $62.5 million) and pleasingly there was a material uplift in profitability at the Drivetrain business unit level. After a strong year in FY23, Gemco Rail’s revenue was down by almost 12% (FY24: $93.6 million; FY23 $106.2 million), and Workforce Solutions’ revenue fell by 24% (FY24: 18.1 million; FY23 $23.9 million) with the latter largely attributable to the challenges faced by CERT and Momentum Rail. From a profitability perspective, it was a year of side-ways movement with net profit before tax of $5.2 million (FY23: $5.5 million) which was frustrating given ambitions we had for the year. While inflationary pressures within the broader economy have somewhat subsided, there also appear to be signs of softening demand. Any material improvement in financial performance over the next year will be dependent on the maintenance spend of our customers in the rail sector returning to normal and sustained levels. A key financial metric of our operational effectiveness is our return on capital employed (ROCE) and after having enjoyed some strong gains over several years (albeit from a low base), in more recent times, our ROCE in both trend and absolute terms has not yet reached the desired levels. That being said, the foundations of the Group remain strong. Over the past year, net operating cashflows were robust with a notable increase over the prior year (FY24: $25.1 million; FY23: $3.0 million). While the uplift included receipts related to government grants ($6.8 million) for which the funds are committed towards the establishment of our new rail facility in Karratha, WA, the result was nonetheless pleasing and meant that at the end of the year, the Group was once again back in a net positive cash position (FY24: $4.7 million (net cash); FY23: $4.5 million (net debt)). As we continue to invest in building the capacity and capabilities of the business, just over $8.0 million was outlaid on new capital expenditure (FY23: $2.6 million) with most of this directed towards the establishment of the Karratha rail facility which is expected to commence operation in FY25. The Board did not declare an interim dividend during the year, however given the enhanced net operating cashflows (particularly in the second half of FY24), and solid balance sheet position, the Board was pleased to declare a final dividend of 0.5 cents per share. This will be unfranked and payable on 26 September 2024. We remain committed to making Engenco a safe and inclusive place to work, where our people are engaged and motivated to perform at their best. Employee engagement survey results are showing encouraging signs and throughout the year we have focussed on recognising the achievements of our people, further developing partnerships to strengthen our commitment to diversity, and improving our commitment to social responsibility, a key initiative highlighted as a priority from previous engagement surveys. As the challenges of a tight labour market continue, employee turnover remains higher than we would like, although there are indications that is beginning to moderate, and we did finish the year with some improvement. Given the strong connections between employee engagement, turnover and company performance, improving employee engagement The past year has seen a combination of successes and challenges. Chairman’s Report Vince De Santis Chairman We remain committed to making Engenco a safe and inclusive place to work, where our people are engaged and motivated to perform at their best. Engenco Limited and its controlled entities Annual Report 2024 2 and reducing employee turnover remain a key focus for the Group’s employee programs. We were pleased with the progress made in reducing the Group’s Lost Time injury frequency rate (LTIFR) to 1.1 at the end of FY24 compared with 4.18 at the beginning of the year. However, our TRIFR (Total Recordable Injury Frequency Rate), regressed from 10.45 at the start of the year to 18.67 at the end. This was very disappointing, and the Board and Executive Leadership are committed to turning this decline around via a variety of means, including greater levels of accountability. In April 2024, we were pleased to welcome Chris McFadden as an Independent Non-Executive Director of the Company. Chris’ deep experience especially in investment markets, M&A and business development, are a welcome addition and complement the existing skill set and experience of the Board. During the year, we bid farewell to Ms Alison von Bibra who resigned as a Independent Non-Executive Director, having joined the Board in January 2017. There was also some movement within the executive leadership team with the permanent appointment of Garth Campbell-Cowan as Chief Financial Officer (having served in an interim capacity beforehand), along with a change to the executive leadership of Workforce Solutions, and the appointment of an executive manager responsible for the Group’s digital and information technology capabilities. The Group’s unifying purpose is “to keep our customers moving” and there are many extremely dedicated and passionate people within the Group working hard to deliver high quality transportation related products and services to our customers. While Engenco may not be a large organisation when compared to some of our major competitors, the ripple effect of our activities in the transportation sector, which is so critical to the smooth functioning of our economy, is significant. We have previously made references to Engenco being too small to be big, and too big to be small, in having the capacity and capability of a larger organisation, but also with this, carrying the burden of extra costs and overheads which we are yet to fully leverage. The Board is also acutely aware of the illiquidity of the Engenco share register and the issue this presents for our existing (and prospective) investors. Addressing these two key challenges remains a Board priority. In prior years we have said that our primary goals are for Engenco to be a company for whom great people want to work; to be a trusted and valued provider of high-quality products and services to its customers; and to generate superior returns for its investors in a sustainable and responsible manner. We not only remain committed to the achievement of these goals and to keeping our customers moving, but to also facilitate some movement/liquidity returning to our share register as well. Vince De Santis Chairman $3.9m Net profit after tax +1.24 cents Earnings per share Engenco Limited and its controlled entities Annual Report 2024 3 Health and Safety The health, safety and wellbeing of our employees is our number one priority. We continue to develop a proactive approach to drive a culture where everyone takes a personal responsibility for safety, to create a safe working environment. Positively, Lost Time Injuries (LTI) across the Group were down 74% to 1.1 incidents per million hours. Despite this achievement, we faced challenges to maintain safety performance in other areas and are not satisfied with the result. Some of the positive progress we achieved last year was not sustained and our Total Recordable Injury Rate which had decreased from 22.45 in FY22 to 10.45 in FY23, increased, disappointingly, to 18.67 in FY24. In response we reaffirm our commitment to prioritise safety, across all leadership levels, in a renewed effort to positively impact our safety culture. Effective safety leadership remains a priority for the future of our business and drives the development and recruitment of our leaders. Quality management safety standards are integrated across our sites. These provide assurance for customers and help ensure our people go home safely every day. ISO9001 Quality and ISO 45001 accreditation has now been achieved at our Rutherford and Forrestfield sites, whilst Midvale, Gladstone, Thornton, Telarah, and Welshpool retain accreditation. We have further integrated Skytrust, our workplace health and safety management system to enhance our capability and have implemented revised hazard identification and incident reporting procedures, improving risk mitigation strategies. Financial Performance This was a challenging year, as our result fell short of expectations. We focused on better understanding and strengthening our value proposition for customers, with a goal to harness the potential of our platforms. While this work continues in line with the ever-evolving business environment, we were encouraged by a stronger second half which, although softer than anticipated, delivered an improvement on the first half. A key achievement was the improvement of margins in the Drivetrain and Gemco businesses, which partially offset the effect of lower revenue. Net profit before tax (NPBT) was $5.2 million, slightly lower than the previous year. Net profit after tax (NPAT) was $3.9 million. The prior year NPAT was $5.9m, reflecting the benefit from recognising unbooked prior year tax losses amount to $2.5m. Revenue fell slightly to $214.8 million, impacted by a broad deferral of maintenance spending by Gemco Rail customers and changing legislation which has led to a shift in customer preference toward insourced arrangements affecting Workforce Solutions. Power and Propulsion operations performed well, primarily through Drivetrain improving its market segmentation and value proposition for customers. Hedemora achieved material revenue growth. Convair benefited from strong revenue growth, but profitability was disappointing, due to a combination of adverse foreign exchange movements, higher sea freight costs and long-term fixed contracts to rebuild our margins. Costs on new orders are being passed on to customers. Net working capital reduced, with better management of customer credit and an effective integrated supply chain. Capital expenditure was $8.0 million. Whilst cost of debt increased and Group finance costs rose on increased borrowings used during the year, we completed the year with a net cash position. Managing Director and CEO’s Report Dean Draper Managing Director and CEO Our team drives our progress and growth, and many individuals contribute to the Group’s success. Engenco Limited and its controlled entities Annual Report 2024 4 Sustainability Our progress as an organization is driven by a vision of inspired people creating sustainable transportation solutions. As we work towards our vision, we will consider ways to integrate sustainable practices into our business. This includes understanding where we generate our emissions to support development of decarbonisation plans in alignment with a wider sustainability strategy. We have partnered with customers, suppliers, and industry experts to evaluate our environmental, social and governance responsibilities, working towards a net zero future. Towards this goal, we established an employee run MakeSustainable Committee in March 2024, to advise on sustainability actions and opportunities, including environmental management, greenhouse gas emissions reduction strategies and initiatives. The Committee is still researching opportunities to recommend to Executive Management. People Our team drives our progress and growth, and many individuals contribute to the Group’s success. We are committed to recognising accomplishments and believe this is integral in retaining and attracting skilled talent. The Engenco Leaders Program has demonstrated positive results, enabling current and future leaders to develop skills and lead their teams successfully. Further, in support of our people the Certificate in Leadership scholarship program will commence in the first quarter of FY25. We continue to support apprentices across the business as we build a sustainable skills pipeline for future success. There are now numerous initiatives which demonstrate our commitment to our people. We have extended our employee recognition program, Elevate a Workmate, introduced paid parental leave for both primary and secondary care givers in support of new families, and provide paid volunteer leave. We have seen positive improvements in employee engagement through our twice-yearly Engagement Survey in line with our commitment to social responsibility. The positive impact of the integrated approach to people and community has bound us closer to the communities in which we work. The Group’s Diversity and Inclusion Plan aims to build a more respectful and inclusive workplace, prioritsing positive relationships within the community. One example is our partnership with the Clontarf Foundation, which exists to improve the education, self-esteem, life skills and employment prospects of young Aboriginal and Torres Strait Islander men and equip them to participate more meaningfully in society. We have welcomed numerous Clontarf academies to our sites and look forward to continuing support of the Foundation and indigenous communities. We are preparing to launch a Reflect Reconciliation Action Plan, which will outline our structured approach to advance reconciliation. The Group has participated in indigenous cultural awareness training, delivered by an Australian Human Rights Commission recommended organisation, Evolve Communities. The cultural awareness this provides supports our commitment to creating a more inclusive culture where all employees feel valued and included. $96.9m Net assets $4.7m Net cash Engenco Limited and its controlled entities Annual Report 2024 5 Digital Strategy Engenco has embarked on a technology transformation to modernise our applications and services, open new digital channels to integrate more closely with our customers and drive innovation. Our transformation will be built on the cloud services provided by global scale partners. The next twelve months will be focussed on the foundational elements of our digital journey. Our digital journey will accelerate in the second year through opening B2B customer integration channels, embedding innovation as a process and increasing our automation and digitisation of back-office processes to provide a foundation of scalable growth. We are engaging both SAP and Microsoft to work with us to explore different use cases for artificial intelligence in our manufacturing processes to drive cost efficiency, embed automated process quality testing and use technology to deliver a safe working environment for our team members. Power and Propulsion Drivetrain leverages a global network of partners, coupled with a growing network of workshops to deliver innovative products and services. In alignment with customer demand, the business expansion strategy has continued and a new facility at Mount Isa opened in April 2024. There is a firm focus on strategies to further develop core business. Investment in workshop capacity improved operational productivity. Work from supporting mining operations nationally continued to grow. Sales of the Kovatera underground utility vehicle expanded from mining to civil construction markets and to provide flexibility for customers, a new long-term rental fleet model is being introduced. Improved management of inventory profile and cost structures has delivered a material improvement in margins. Convair, a leading supplier of innovative dry and specialised liquid bulk transportation solutions, maintained its strong order book of pneumatic dry bulk tankers. Having reduced exposure to supply chain costs, the business is exploring opportunities to expand its product range. Hedemora Turbo & Diesel, the original manufacturer of Hedemora turbochargers and Hedemora diesel engines, experienced growth driven by HS7800 turbocharger sales. Revenue and profitability increased significantly with the completion of a turbocharger retrofit program in Mongolia. Trials of the HS7800 turbocharger for a Canadian rail operator are progressing well. The new turbocharger offers significant environmental benefits and fuel efficiencies to rail operators. Rail Gemco Rail continued to expand its capabilities as a leading independent provider of rollingstock maintenance, products, and services to the Australian and New Zealand rail markets. While there was a large one-off sale of bearings in FY23, this was largely replaced with new repeatable business in FY24. However, customers deferred maintenance spending, and although expected to be recovered in future years, this impacted revenue. Responding to customer demand, a new wagon maintenance facility has been opened in Altona, Victoria. Capacity in Newcastle was expanded and a new rotables asset management facility established at Rutherford. ‘Rotables’ is a term used for reusable components such as rail wheelset and bogie maintenance, and this boosted capability strengthens Engenco’s market presence. The facility will provide services for bulk rail and east coast passenger rail operators. Combined with Gemco’s Telarah facility, these three facilities provide full life cycle asset maintenance for Tier-1 rail customers. Gemco Rail’s capacity to deliver wagon manufacture services at Forrestfield, Western Australia also grew, making first deliveries to customers in June 2024. Establishment of the Karratha facility is progressing in line with plan, with the property purchase completed and specialised equipment being sourced. Workforce Solutions Workforce Solutions businesses were adversely affected by a softening of customer demand in the rail labour hire and training segments. In response to customers’ recent preference to insource, the Momentum business is refocusing its strategy to serve complementary industry segments and provide alternate service offerings. Revenue decreased across training with the loss of a key customer contract. We are focused on the expansion of services to target new markets and on improving training quality. Consequently, CERT’s quality systems have been reviewed and verified by the training regulator, Australian Skills Quality Authority (ASQA). Demand for training has stabilised, and trainer utilisation is improving. Eureka 4WD Training benefited from consistent demand and profitability. Managing Director and CEO’s Report continued The Australian business environment is resilient, and current demand for Engenco’s services and products is steady. Engenco Limited and its controlled entities Annual Report 2024 6 Outlook The Australian business environment is resilient, and current demand for Engenco’s services and products is steady. The transport, mining, defence and energy markets that we serve are robust. We are cautiously optimistic of future outcomes. We are focussed on operating efficiently and delivering returns to our shareholders. Our core businesses provide a stable platform which we can leverage, exploiting our expertise, unique service offering and strong customer focus. At Drivetrain, we continue to implement measures that improve inventory management and control supply chain costs. Strong focus on customers in mining and defence is expected to support revenue growth, as is the further establishment of the Kovatera rental fleet. Convair’s order book remains strong. Initial trials of bulk liquid tankers have been positive and provide scope to increase capabilities in FY25. Hedemora continues to support the Australian Navy’s Collins Class submarine program and anticipates further growth in turbocharger sales with multiple rail operators. We are benefiting from strong demand for local Australian wagon manufacture. Encouraged by Gemco Rail’s strong order book for new wagons, we plan investment in innovative technologies that support the safe delivery of customer orders and drive efficiencies. Our east coast operations are expected to benefit from secured wagon repair and maintenance work and establishment of operations at Karratha are on track to commence in the second half of FY25. The Workforce Solutions division is undergoing significant change in response to a market shift from traditional labour hire models. We are committed to redefining our strategy in line with market demand and expect improved performance. Eureka 4WD Training is expected to benefit from continued solid demand. It is my pleasure to thank our customers for their continued support and partnership. Our businesses are committed to working with our customers and providing innovative, sustainable solutions for the transportation industry. I would also like to thank our employees for their ongoing commitment and diligence as we continue our journey, their dedication and hard work keeps our customers moving. Dean Draper Managing Director and CEO 0.5 cents Dividend per share +214.8m Total revenue Engenco Limited and its controlled entities Annual Report 2024 7 With over 35 years of experience, Drivetrain is a leading supplier of technical products, services and engineering solutions for the mining, energy, transport, rail and land and sea defence industries. With a growing national network of specialised workshops and superior technical and supply capability, Drivetrain provides customised solutions that optimise operations, reduce downtime and drive productivity for customers. Capabilities include engineering and supply of new mining and energy assets and equipment, through to service, maintenance, repair and overhaul, parts support and advanced fleet diagnostics. Drivetrain’s partnerships with leading global brands deliver innovative and effective through-life support to industrial companies spanning the full product life cycle. Key Achievements ●Drivetrain Mount Isa Branch opened in 2024, providing maintenance support to mining customers. ●Investment in leadership training and workshop capability contributing to improved performance. ●Revenue increase driven by strong demand from the mining sector. Outlook ●Mining and defense activities continue to be highly focused in supporting our customers. ●Hydrogen blend gas fuel Gauscor engine sales anticipated in FY25, as part of a broader energy strategy. ●Establishment of Kovatera rental fleet, to complement sales and lease purchase options. Business Unit Overview Power and Propulsion Drivetrain supplies world-class equipment, powertrain components, servicing and onsite support to some of the world’s most demanding sectors. Total Revenue $’000 Total NPBT $’000 FY23 2H $33,930 FY24 2H $34,019 FY24 1H $31,035 FY23 1H $28,587 FY23 2H $4,574 FY24 2H $4,807 FY24 1H $3,906 FY23 1H $619 Engenco Limited and its controlled entities Annual Report 2024 8 Drivetrain continues to expand the fleet of Kovatera KT200 underground utility vehicles in the Australian Market. In support of West Australian underground mining operations, additional machines have been supplied to the Goldfields region. Designed and purpose built for underground mining operations, these vehicles exhibit a range of safety features, including a fail-safe braking system, automatic speed‑limiting capabilities, roll-over protection and falling object protection (ROPs and FOPs) safety certification, while offering a reliable Drivetrain expands the KT200 Australian fleet Expanding into new markets and more sustainable transportation option to its mining customers. The versatility of the KT200, coupled with its high load capacity has driven diversification into the civil construction segment, with Drivetrain supplying vehicles and maintenance support to ACCIONA, for Stage 2 of NSW Government project, Western Harbour Tunnel, in Sydney. Engenco Limited and its controlled entities Annual Report 2024 9 Convair specialises in the design, manufacture and supply of pneumatic dry bulk tankers. Convair’s range of tankers, blowers, compressors and pinch valves leverage a wealth of knowledge and the latest technology from around the world, resulting in highly efficient and durable transportation solutions for the food, chemical, construction, and oil and gas industries. Convair is an agent for Feldbinder Spezialfahrzeugwerke GmbH of Germany (FFB), supplementing the Company’s range of products with aluminium dry bulk tankers and stainless-steel liquid tankers. Our tanker manufacturing facility at Epping (VIC) also supports spare part sales, tanker servicing and repairs for the Australian and New Zealand transportation industry. Key Achievements ●Revenue growth due to increased throughput, and a strong order workbook. ●Introduction of Convair designed stainless steel FFB built liquid tankers to the market to food grade and dangerous goods specifications. ●Implementation of a business wide continuous improvement training program (LEAN) to improve safety, efficiency and reduce operating costs. Outlook ●Expansion of new stainless steel liquid tanker offering to the market. ●Acceleration of LEAN manufacturing project, to enhance production performance. ●Focus on developing AKO pinch value, compressor, blower and aftermarket spare parts offerings. Total Revenue $’000 Total NPBT $’000 Business Unit Overview Power and Propulsion Convair Engineering designs and manufactures tankers for the transportation of dry bulk products and specialised liquids, by road and rail. FY23 2H $10,307 FY24 2H $15,563 FY24 1H $16,014 FY23 1H $10,374 FY23 2H $406 FY24 2H $515 FY24 1H $841 FY23 1H $861 Engenco Limited and its controlled entities Annual Report 2024 10 In response to customer needs to improve transport efficiencies, Convair has collaborated with Feldbinder (FFB) to deliver an innovative tanker solution. Drawing on Convair’s extensive industry knowledge, coupled with FFB’s technical capabilities, a stainless- steel liquid tanker solution was developed, using Performance Based Standards (PBS) road regulations. The result, a tanker capable of transporting a class 3 flammable liquid, while operating in a 30-meter-long road-train double achieving a payload that surpasses customer expectations. Convair drives tanker innovation for customers The expansion of Convair’s product range to include stainless-steel tankers complements the prevailing pneumatic dry bulk transportation solutions proficiently delivered by the manufacturer in support of their customers’ transportation requirements. Developing innovative solutions Engenco Limited and its controlled entities Annual Report 2024 11 Operating from Hedemora, Sweden, with customers around the world, our experienced and highly skilled team perform installation, overhaul, training, turbocharger testing and balancing to support customer needs. From design, manufacture and installation to ongoing product support, Hedemora provides comprehensive solutions for the rail, power generation and marine industries. Key Achievements ●Expansion into the North American market is progressing, with the installation of a HS7800 onto a GE 7FDL locomotive. ●Increased turbocharger fleet in Kazakhstan, with the installation of turbochargers on both GE 7FDL and GE EVO engines. ●Completion of turbocharger retrofit program in Mongolia. Outlook ●EPA certification for turbocharger HS7800 for GE EVO engines in North America. ●Support for the Collins Class submarine program is continuing. ●Continued turbocharger market penetration with orders expected from multiple rail operators. Total Revenue $’000 Total NPBT $’000 Power and Propulsion Hedemora Turbo & Diesel is the original manufacturer of Hedemora Turbochargers and Hedemora Diesel Engines. FY23 2H $3,247 FY24 2H $4,249 FY24 1H $4,072 FY23 1H $2,507 FY23 2H $109 FY24 2H $1,000 FY24 1H $526 FY23 1H $(297) Business Unit Overview Engenco Limited and its controlled entities Annual Report 2024 12 Hedemora is providing innovative solutions, through the replacement of older diesel and gas engine turbochargers with modern equipment. The HS7800 turbocharger improves locomotive performance in several areas including reduced fuel consumption, improved temperature control, and quicker speed response, in addition to reducing carbon emissions. Partnering with a key customer, Hedemora is currently trialling the HS7800 turbocharger on an GE 7FDL engine. Hedemora expands its presence in the North American market Hedemora’s skilled technicians travelled to Calgary, Alberta to facilitate the installation and commissioning of the new turbocharger, in collaboration with the customer’s team. The trial will span 12 months, providing data to validate the efficiencies and performance improvements the turbochargers delivers. Following the trial’s success Hedemora anticipate additional turbocharger installations to North American locomotive fleets. Driving efficiences and reducing emissions Engenco Limited and its controlled entities Annual Report 2024 13 Gemco Rail specialises in the manufacture, maintenance and overhaul of wagons, locomotives, passenger cars, rollingstock components and track maintenance equipment to support our customers to maintain their operations effectively and efficiently and maximise the life of their assets. Our flagship rollingstock service facility in Forrestfield, Western Australia is complemented by an Australian wide footprint of modern and efficient manufacturing and maintenance facilities, strategically located in the major freight rail operating regions in Victoria, South Australia, New South Wales and Queensland. Strong partnership alliances, coupled with a team of skilled engineers and tradespeople deliver high quality products and services to the Australasian rail industry. Key Achievements ●New repeatable business secured in FY24, with improved margins. ●Wagon maintenance facility in Altona commenced operations, coupled with expansion in Newcastle to service increased demand. ●Investment in developing leadership capabilities and skills. Outlook ●Strong new wagon order book entering FY25. ●Leveraging new technologies including large-scale robotic welding and inspection equipment. ●Securing freight wagon repair and maintenance volumes in the east coast. ●Establishment of a new facility in Karratha to undertake rollingstock manufacture and rotable servicing in future periods. Total Revenue $’000 Total NPBT $’000 Rail Gemco Rail is the leading independent provider of rollingstock maintenance, products and services to the Australian and New Zealand rail markets. FY23 2H $58,273 FY24 2H $46,061 FY24 1H $47,536 FY23 1H $47,939 FY23 2H $6,746 FY24 2H $5,801 FY24 1H $4,168 FY23 1H $6,349 Business Unit Overview Engenco Limited and its controlled entities Annual Report 2024 14 Working in conjunction with our key strategic global supply partners, Gemco Rail is providing overhaul works for BHP’s EMD SD70 locomotive bogie fleet, which transport iron ore from mine to port, in the Pilbara region of Western Australia. The bogie overhaul program utilises Gemco’s core wheel, bearing, machining and mechanical fitting capabilities, and is delivered by our highly skilled tradespeople, from our flagship rollingstock maintenance facility in Forrestfield. Leveraging prototyping work undertaken in prior periods, Gemco is undertaking refurbishment and overhaul activities, to the complete locomotive bogie Gemco Rail supports West Australian mining operations system. To ensure the safety and reliability of the bogies, the overhaul program involves a comprehensive examination, replacement of worn components and requalification in line with customer and OEM specifications. The overhaul program will extend the operational life of the bogies while improving efficiencies for BHP’s SD70 locomotive fleet. Leveraging our technical capabilities Engenco Limited and its controlled entities Annual Report 2024 15 Workforce Solutions provides customised and total end-to-end workforce management solutions for the Australian Rail and Transportation industries. This includes up-skilling and re-skilling, formal education programs, government funded employment, career development pathways and diversity programs. Workforce Solutions works in collaboration with customers to provide holistic and practical solutions. The Workforce Solutions division includes Momentum Rail, and the Registered Training Organisations, Centre for Excellence in Rail Training (CERT) and Eureka 4WD & Truck Training. Key Achievements ●Improved training quality standards, supported by a new Quality Management System (QMS), verified by the Training Regulator (ASQA). ●Stabilization of training revenue. ●Competency development program established for trainers across Workforce Solutions. Outlook ●Increasing market share, across both CERT and Eureka, driven by innovative training products and delivery methods. ●Execution of revised Momentum business strategy, with a focus on complementary industry segments and alternate service offerings. Total Revenue $’000 Total NPBT $’000 Workforce Solutions Providing tailored workforce solutions to the Australian Rail and Transportation industries. FY23 2H $11,584 FY24 2H $8,290 FY24 1H $9,762 FY23 1H $12,288 FY23 2H $968 FY24 2H $249 FY24 1H $506 FY23 1H $(382) 4WD & TRUCK TRAINING Business Unit Overview Engenco Limited and its controlled entities Annual Report 2024 16 The Rail Industry Safety Standards Board (RISSB) has partnered with CERT to deliver a tailored course for the Mass Transit Railway (MTR) in Hong Kong. RISSB courses are designed to drive technical innovation and industry improvements for a safer, more productive, and sustainable rail industry and the opportunity to share this knowledge with the MTR was welcomed by CERT. The diploma level program was developed in line with the national code of practice and derailment guideline “TLIF5023 Undertake a Derailment Investigation”. The three-day course was delivered to 25 students across two venues, with the theoretical component completed at the MTR Academy in the Hung Hom railway station complex, and a practical assessment, held at the Pat Heung Railway Maintenance Yard. CERT delivers successful training outcomes in Hong Kong. Encompassing all aspects of incident investigation, the course educates students on how to correctly review, gather and collate relevant evidence, and conduct a thorough investigation of both the site of occurrence and contributing management practices. In addition, students practice compiling the findings of the investigation into a detailed report. Leveraging its experience in rail training, in collaboration with RISSB, CERT anticipates further opportunities to deliver training abroad. Expanding our service offering Engenco Limited and its controlled entities Annual Report 2024 17 Directors’ Report for the year ended 30 June 2024 The directors present their report, together with the consolidated financial statements of the Group, comprising of Engenco Limited (“the Company”) and its controlled entities, for the financial year ended 30 June 2024 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: Vincent De Santis BCom, LLB (Hons) CHAIRMAN SINCE 24 MARCH 2016, NON-EXECUTIVE DIRECTOR SINCE 19 JULY 2010, INDEPENDENT NON‑EXECUTIVE DIRECTOR SINCE 1 JANUARY 2022, MEMBER OF AUDIT AND RISK COMMITTEE SINCE 31 JULY 2013. Vince is an executive director of T8 Advisory Partners and a non-executive director of the Tasmanian Development Board and Tasmanian Gas Pipeline Pty Ltd. Vince was Managing Director of the Elphinstone Group for 10 years until December 2018 after having commenced in 2000 as the Group’s Legal Counsel and Finance & Investment Manager. During his time with the Group, he also held a number of board roles on various subsidiary and joint venture companies. Prior to that time, Vince was a Senior Associate in the Energy, Resources & Projects team at national law firm Corrs Chambers Westgarth, based in Melbourne. Dean Draper MBA, BBus CHIEF EXECUTIVE OFFICER SINCE 21 NOVEMBER 2022, MANAGING DIRECTOR SINCE 18 SEPTEMBER 2023. Dean is an experienced executive having held senior roles in the industrial sector both in Australia and overseas. Most recently, Dean held the roles of Managing Director and CEO of Ixom (former Orica Chemicals business), based in Melbourne. Prior to leading the Ixom business, Dean spent over 17 years in several senior executive positions at BASF, a large multi‑national chemicals company. This included 4 years as Managing Director of BASF’s operations across the ASEAN region. Dean holds a Master of Business Administration (MBA) from Monash Mt Eliza Business school, a Bachelor of Business from Monash University in Melbourne, and has completed the Advanced Management program at INSEAD Business School, France. Dale Elphinstone AO FAICD NON-EXECUTIVE DIRECTOR SINCE 19 JULY 2010. Dale is the Executive Chairman of the Elphinstone Group which he founded in 1975. Dale has considerable experience in the engineering, manufacturing, mining, and heavy machinery industries and among other things is the longest serving Caterpillar dealer principal in Australia, having acquired the Caterpillar dealership in Victoria and Tasmania in 1987. Dale was the Co-Chair of the Joint Commonwealth and Tasmanian Economic Council from 2014 – 2017 and remains Chair of the industry members of this Council. From 2020 – 2021 he was a member of the Tasmanian Premier’s Economic and Social Recovery Advisory 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 from 1995 until December 2008 and 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. Scott Cameron BCom, FCA, FAICD INDEPENDENT NON-EXECUTIVE DIRECTOR AND MEMBER OF THE AUDIT AND RISK COMMITTEE SINCE 1 SEPTEMBER 2020, CHAIRMAN OF THE AUDIT AND RISK COMMITTEE SINCE 18 NOVEMBER 2020. Scott has more than 27 years’ experience in senior management with exposure to a broad range of relevant industry sectors. He commenced his professional career at PricewaterhouseCoopers and then spent 27 years with leading Malaysian listed industrial services conglomerate, Sime Darby Berhad in various roles including Finance Director and then Managing Director of Australian based Caterpillar Dealer, Hastings Deering. Prior to his retirement from executive management at the end of 2019, Scott had spent the last 13 years as an Executive Vice-President of Sime Darby Industrial. He was appointed as a non-executive director of Sime Darby Berhad in 2023. Engenco Limited and its controlled entities Annual Report 2024 18 Kelly Elphinstone Adv Dip Bus (Mktg), GAICD NON-EXECUTIVE DIRECTOR AND MEMBER OF THE AUDIT AND RISK COMMITTEE SINCE 19 SEPTEMBER 2022. Kelly has been part of the Elphinstone Group of Companies for 30 years and currently holds the position of Executive Director. Kelly has held several leadership roles, predominantly within the Mining Equipment, Technology and Services (METS) and Earthmoving industries, the most recent being Managing Director of the Elphinstone Group’s underground mining manufacturing business. Kelly studied Marketing at RMIT, has completed an executive leadership program with Stanford University and is a Graduate of the AICD Company Director’s program. Kelly holds multiple directorships (including a Chair position) and participates on various Government advisory councils. Chris McFadden MBA, BCom, LLB INDEPENDENT NON-EXECUTIVE DIRECTOR SINCE 17 APRIL 2024. Chris is a lawyer and has more than 20 years’ experience in senior management roles with a deep understanding of the resources sector, international markets and M&A activities in particular. Chris previously held the role of Manager, Business Development at Newcrest Mining Limited and before that was Head of Commercial, Strategy and Corporate Development at Tigers Realm Coal Limited. Prior to his time at Tigers Realm, he was a Commercial General Manager at Rio Tinto where he had a 12-year career spanning legal and commercial roles. Chris is currently the Chair of NexGen Energy Limited (which is listed on the ASX, New York Stock Exchange and Toronto Stock Exchange), and a Director of Toronto Stock Exchange listed company, IsoEnergy Limited. Above from left: Scott Cameron, Vincent De Santis, Kelly Elphinstone, Chris McFadden, Dean Draper and Dale Elphinstone. Engenco Limited and its controlled entities Annual Report 2024 19 Directors’ Report for the year ended 30 June 2024 Alison von Bibra BSc, MBA INDEPENDENT NON-EXECUTIVE DIRECTOR AND MEMBER OF THE AUDIT AND RISK COMMITTEE SINCE 17 JANUARY 2017. RESIGNED 18 SEPTEMBER 2023. Alison has held key positions at a number of organisations including almost 10 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 Dental Board of Australia, Chiropractic Board of Australia, the Ballarat General Cemeteries Trust, CSL Superannuation Fund and Westernport Regional Water Corporation. She is currently a Member of the Swan Hill District Health Board and Director of Australian Trailer Solutions Group and Queensland Trailer Sales. Meetings of Directors The number of directors’ meetings (including meetings of committees of directors) and number of meetings attended by each of the directors of the Company during the financial year are: Board Member Director Meetings Audit and Risk Committee Meetings Vincent De Santis 13/13 5/6 Dean Draper 10/10 – Dale Elphinstone 13/13 – Scott Cameron 13/13 6/6 Kelly Elphinstone 12/13 5/6 Chris McFadden 3/3 – Alison von Bibra 1/3 2/3 Directors’ Shareholdings The directors’ shareholding of ordinary shares as at 30 June 2024 are: Board Member Ordinary shares Vincent De Santis 378,951 Dean Draper – Dale Elphinstone 216,554,707 Scott Cameron 163,500 Kelly Elphinstone – Chris McFadden – Company Officers Garth Campbell-Cowan BCom, FCA INTERIM CHIEF FINANCIAL OFFICER SINCE 10 MAY 2023. PERMANENT CHIEF FINANCIAL OFFICER SINCE 18 SEPTEMBER 2023. Garth is an experienced Chief Financial Officer with over 30 years’ experience heading up finance functions with both a strategic and commercial focus. Garth started his career with Arthur Anderson, before moving into various finance roles in the Banking and Finance, Telecommunications, and Mining industries. Garth holds a Bachelor of Commerce with Honours from the University of Cape Town, South Africa, and is a Fellow of Chartered Accountants Australia and NZ. Garth has also completed a Diploma of Applied Finance and Investment with the Securities Institute of Australia. Company Secretary Meredith Rhimes BA, LLB, FGIA COMPANY SECRETARY SINCE 30 MARCH 2020. Meredith is a lawyer with over 19 years’ experience, including working in private practice and in-house for a multinational corporation. Meredith holds a Bachelor of Arts from Queen’s University (Canada) and a Bachelor of Laws from Western University (Canada) and has practiced law in Canada, the United Arab Emirates and Australia. Engenco Limited and its controlled entities Annual Report 2024 20 Principal Activities The Engenco Group provides a diverse range of innovative products and solutions for transportation, employing over 500 people (full‑time equivalent) in over twenty locations in two countries. The Engenco Group is a national transport services business with proven capability around Australia with well-established facilities and strong relationships with industry leading customers. Across the Group we strive to source, develop, and adapt products and services that help increase our customers’ competitiveness and efficiency. Through the Group’s three business streams: Power and Propulsion, Rail, and Workforce Solutions, the Engenco businesses provide high-quality transportation products and solutions for customers in the defence, resources, marine, power generation, rail, heavy industrial, mining and infrastructure industries. With a strong focus on customer service and providing sustainable solution and superior value for our customers, the Group specialises in: ●Maintenance, repair and overhaul of heavy-duty engines, powertrain, propulsion, and gas compression systems. ●Design and manufacture of road and rail transportation and storage tankers, for dry bulk products. ●Product development, manufacture, installation, maintenance and spare parts services for Hedemora Diesel Engines, for customers in all parts of the world. ●Maintenance, repair, and overhaul of locomotives. ●Rollingstock maintenance, products, and services for the Australian and New Zealand rail markets. ●Nationally accredited training, contract labour solutions and outsourced workforce management for the Australian rail and transportation industries. We keep our customers moving. Group Overview WORKFORCE SOLUTIONS POWER AND PROPULSION TURBO & DIESEL RAIL Engenco Limited and its controlled entities Annual Report 2024 21 Directors’ Report for the year ended 30 June 2024 Operating and Financial Review Operating Results The Group reported a net profit after tax of $3,930,000 (FY23: $5,932,000) for the year. Net profit before tax for the year was $5,246,000 (FY23: $5,519,000). The prior year net profit after tax reflects the benefit to the tax expense of recognising unbooked tax losses amounting to $2,522,000. Earnings before interest and tax (EBIT) was $7,793,000 (FY23: $7,398,000), which included insurance proceeds of $1,148,000 (FY23: $1,376,000) related to Gemco Rail’s Gladstone workshop that was subject to a severe flood event in 2022. While revenue generated in the current year at $214,847,000 was marginally lower than the prior year (FY23: $217,082,000), the result benefitted from a significant improvement in gross profit margins in the Gemco Rail and Drivetrain business units. Higher depreciation and amortisation expense in the current year associated with right-of-use assets resulted in net profit before tax being 4.9% lower than the prior year. The consolidated result for the year is summarised in the table below. 2024 $’000 2023* $’000 Revenue 214,847 217,082 EBIT1 7,793 7,398 EBIT excluding significant items2 6,645 6,022 Net profit before tax 5,246 5,519 Net profit before tax excluding significant items2 4,098 4,143 Profit after tax 3,930 5,932 Net operating cash flow 25,103 2,987 Net assets 96,932 94,280 Net cash / (debt) 4,736 (4,522) * 2023 comparative figures have been restated. Full details are disclosed in Note 1. 1 EBIT is earnings before finance costs and income tax expense. 2 Significant item in FY24 relates to insurance proceeds of $1,148,000 (FY23: $1,376,000). EBIT is a non-IFRS financial measure, which has not been subject to review or audit by the Group’s external auditors. This measure is presented to assist understanding of the underlying performance of the Group. Balance Sheet and Cash Flows Net operating cash flows were $25,103,000 (FY23: $2,987,000). which included grants from the West Australian (WA) Government of $6,840,000 (FY23: NIL) and reduced working capital requirements. Purchase of non‑current assets during the year was a total of $8,041,000 comprising the purchase of land and buildings in Karratha, Western Australia for $4,485,000, Gemco Rail’s expenditure to develop the Karratha facility of $365,000 and purchased other plant and equipment of $3,191,000 (FY23: 2,782,000). The Company’s banking facility was drawn to $10,000,000 at 30 June 2024 (30 June 2023: $13,000,000), in addition to the non-current borrowings of $4,250,000 used to fund the acquisition of the Karratha property. Net cash at 30 June 2024 was $4,736,000 (FY23: net debt of $4,522,000). Review of Principal Businesses Disclosure of information regarding principal business performance and likely developments has been made in the Chairman’s and Managing Director’s section of this report. 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 unfranked dividend of 0.5 cents per ordinary share on 31 August 2023 and subsequently paid the dividend on 28 September 2023. On 28 August 2024, the Board resolved to declare a final unfranked dividend of 0.5 cents per share. Payment of the dividend to shareholders will take place on 26 September 2024. Events Subsequent to Reporting Date On 28 August 2024, the Board resolved to declare a final unfranked dividend of 0.5 cents per share. Payment of the dividend to shareholders will take place on 26 September 2024. 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 2024. Engenco Limited and its controlled entities Annual Report 2024 22 Environmental Regulation Group operations are subject to significant environmental regulation under Commonwealth, State and international law, including noise, air emissions and the use, handling, haulage and disposal of dangerous goods and wastes. 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. The Group continues to comply with environmental regulations in all material respects. 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. Risk Management The Group has an established risk management framework which it continues to develop and evolve to support diligent and defensible decision making. The Group acknowledges that risk is an inherent part of operating the businesses, with effective risk management considered important to delivering on our objectives and continued growth. The Group is committed to enhancing the effective identification, assessment and management of risk associated with its corporate activities and operations to ensure the sustainability and growth of its business. The Group’s approach to risk management is underpinned by a view that management, employees and contractors are collectively responsible for identifying and managing the Group’s risks, with the Board responsible for oversight of risk management and setting the risk appetite of the organisation. The risk appetite is demonstrated through the Group’s risk assessment criteria, enterprise risk register, policies, standards and Code of Conduct. The focus of the Board and Executive Management is on ensuring that all major business decisions are made with due regard to the risks and opportunities associated with such decisions. An important element underpinning the Group’s risk management in its Company culture. The Group’s culture is guided by our Code of Conduct and core values being integrity, commitment, collaboration and excellence. Risk Management Framework The corporate and operational risk management activities are guided by the Group’s risk management framework, comprising a Risk Management Policy, Risk Appetite Statement, Enterprise Risk Register and risk assurance system. The framework is aligned to ISO 31000 Risk Management guidelines and provides a consistent approach to the assessment, management and reporting of risks across the Group. The framework is overseen by the Audit & Risk Committee. The Audit and Risk Committee makes recommendations to the Board on the risk management framework and monitors the key risks. Key Risks The achievement of the Group’s strategic objectives is subject to various risks and uncertainties, some of which are beyond its control. Set out below is a summary of the Group’s key risks, being those with the potential to have a material impact on the achievement of strategic objectives, including impacting on business, operating and/or financial results and performance. The Group’s risk reporting and control mechanisms are designed to ensure strategic, safety, environment, operational, legal, financial, tax, reputational and other risks are identified, assessed and appropriately managed. These risks may arise individually, simultaneously or in combination and are not intended as an exhaustive list of all the risks and uncertainties associated with the Group’s business. Rolling quarterly reviews of specific risks are undertaken with accountable Executive risk owners, with any changes and emerging risks presented to the Audit & Risk Committee and Board. An annual review of the Company’s full strategic risk profile is also undertaken by the Board. The Group’s key risks and the strategies devised to mitigate these risks are summarised below. Economic and Market Factors The Group’s revenue and earnings are influenced by a range of factors outside of its control and that can significantly impact the overall economic environment, including commodity and energy prices, prolonged cost escalation, fluctuating freight costs and foreign exchange rates. To mitigate the risk of a material impact on the Group we monitor macroeconomic indicators and trends, maintain a strong balance sheet and implement hedging strategies where appropriate. In addition, the Group seeks to standardise commercial terms for new contracts to address some of these risks. These factors assist the Group in mitigating the potential impact of any material slowdown in economic activity or increased competitive conditions. Engenco Limited and its controlled entities Annual Report 2024 23 Directors’ Report for the year ended 30 June 2024 Health and Safety The nature of the Group’s rail related activities carry inherent health and safety risks. However, the Group has a no risk appetite for work policies, processes and activities that may cause injury or loss of life. As such the Group has a comprehensive Occupational Health and Safety management system in place, designed to ensure proactive health and safety risk identification, mitigation and management strategies are employed at all times across all our locations. The Group is committed to continuous improvement of its safety culture and management practices already adopted in all workplaces. Legal, Regulatory and Compliance Risk The Group’s businesses are subject to various legal frameworks, laws and regulations including, but not limited to, anti-bribery and anti-corruption, modern slavery, sanctions regimes and anti-trust laws, as well as domestic and international laws. Risks of non-compliance or breach of local and international laws includes, amongst other impacts, damage to the Group’s reputation. Significant changes to legislative and regulatory frameworks can introduce new requirements and restrictions. Legislation and regulatory changes relating to areas including environment, taxation, sustainability reporting, cyber security, privacy and industrial relations could have a material impact on the Group’s financial performance. Further, non‑identification of relevant changes may lead to a compliance breach resulting in financial penalties, regulatory scrutiny and reputation damage. To monitor changes to laws and identify regulatory risks, the Group engages with industry associations and regulatory bodies, consultants, and other advisors to provide independent advisory services. Risk mitigation efforts include internal legal resourcing and the implementation of contractual requirements for significant suppliers’ compliance with all laws. Regular employee training on policies and procedures is undertaken. People Risk The ongoing shortage of skilled labour continues to place pressure on our ability to attract, grow and retain critical and diverse talent across all the Group’s workforces. In addition, there are also risks of disruptions due to industrial relations leading to financial loss. The Group aims to mitigate these risks through remunerating competitively in relevant employment markets, identification of critical roles, and the implementation of succession and retention plans. Efforts are continuing to support, attract and develop skilled labour through leadership and development, apprenticeship and skills training programs across the business. Supply Chain Risk There is a significant reliance on the supply of goods and services to manufacture products and deliver services to customers. Supply chain disruption can arise from natural disasters, pandemic outbreaks, disruption to energy supply, cyber attack, geopolitical events and accidents. Disruption to supply may result in schedule delays, operational disruption and increased costs. The Group is reliant on strategic global suppliers for products used in manufacturing operations and to supply goods to customers. To mitigate these risks there is regular and early contact with suppliers to identify and address anticipated delays or suspension in supply and where appropriate, to broaden supply choices. Competition The markets and industries the Group operates in are competitive and the Group may face increased pressure from existing competitors and/or new competitors. Increased competition could have an adverse effect on the financial performance, industry position and future prospects of the Group. The risk is managed through maintaining strong relationships with customers and monitoring developments within the industries and sectors it operates. Significant and/or Sustained Business Disruption Event There are a variety of events that have the potential to cause significant disruption to business operations such as major fixed plant failure, natural disasters and extreme weather, pandemics, fire resulting in loss of access to site. An event of this nature could lead to financial loss, harm to people, the environment and reputation damage. To mitigate this risk the Group has in place emergency and crisis management plans, availability of critical spares, business continuity plans and business disruption insurance. Information Technology and Cyber Attack The Group’s operations are supported by information technology systems, consisting of infrastructure, networks, applications and service providers. The Group could be subject to network and systems interference or disruptions from a number of sources, including security breaches, cyber-attacks and system failures. The impact of information technology systems interferences or disruption could include operational downtime or delays, destruction or corruption of data, disclosure of sensitive information and data breaches, any of which could have a material impact on the Group’s business, operations, financial condition and performance. Disaster recovery plans are in place for all of the Group’s major sites and critical information technology systems. Engenco Limited and its controlled entities Annual Report 2024 24 During the year, the Group continued its program to develop, and to update, its IT policies, procedures and practices relating to all material areas including the use of company information, personal storage devices, IT systems and IT security. In addition to the cyber security controls mentioned above, to mitigate risk there are ongoing efforts to improve the Group’s technical controls deployed and a strategy to migrate IT operations to the Cloud with recognised global providers, implement advanced threat protection and introduce improved security monitoring systems. Insurance The Group maintains insurance to protect against certain risks. However, the Group’s insurance may not cover all the potential risks associated with the Group’s operations. The Group may also be unable to maintain insurance to cover these risks at economically feasible premiums. Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. Availability of financing Access to funding, including ongoing availability of debt finance, supports the Group in funding business operations and growth initiatives. Any inability to fund operations and growth, for example as a result of constrained ability to maintain banking facilities, could have a negative impact on financial performance and position. The Group manages this risk through careful management of working capital and capital expenditure, maintaining banking facilities and ongoing monitoring of liquidity. 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. Details of the premium are subject to a confidentiality clause under the contract of insurance. Non-Audit Services The Group may decide to employ the Auditor on assignments additional to their statutory audit duties where the Auditor’s expertise and experience with the Company or Group are important. During the year, the Company changed auditors’ appointing Grant Thornton Australia to replace KPMG Australia. Grant Thornton Australia did not perform other services in addition to the audit and review of the financial statements. Details of the amounts paid to the auditor of the Group, Grant Thornton Audit Pty Ltd, and its network firms for audit and non-audit services provided during the year are set out below: 2024 $ SERVICES OTHER THAN AUDIT AND REVIEW OF FINANCIAL STATEMENTS: Other Services – AUDIT AND REVIEW OF FINANCIAL STATEMENTS 288,400 TOTAL PAID TO GRANT THORNTON AUSTRALIA 288,400 Lead Auditor’s Independence Declaration The lead auditor’s independence declaration as required by section 307C of the Corporations Act 2001 is set out on page 33 and forms part of the Directors’ Report for the financial year ended 30 June 2024. Rounding Off The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 dated 1 April 2016 relating to the “rounding off” of amounts in the financial statements. 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. Engenco Limited and its controlled entities Annual Report 2024 25 Directors’ Report for the year ended 30 June 2024 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, short-term incentive and superannuation. ●The Board reviews executive packages annually by reference to the Group’s performance, executive performance and comparable market information. ●The performance objectives of each executive are agreed at the beginning of each fiscal year and recorded via the annual Short-Term Incentive Plan. These performance objectives are based predominantly on achievement of the Board approved budget targets, including net profit before tax for the given year and improvements in the key safety measure of Total Recordable Injury Frequency Rate. Performance against other recorded objectives is also monitored and linked to the achievement of the Group’s strategy and overall development. Other than those made under the Short-Term Incentive Plan, incentive payments are at the discretion of the Board of Directors. All performance objectives are aligned with increasing shareholder value. ●The directors and key executives receive a superannuation guarantee contribution required by the government (which was 11.0% during the year) and do not receive any other retirement benefits. Some individuals, however, may choose 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, achievement of performance metrics and demonstrated management capability. The contracts for service between the Group and key management personnel are on a continuing basis. Engenco Limited and its controlled entities Annual Report 2024 26 Consequences of Performance on Shareholder Wealth No Short-Term performance benefits have been awarded in the current financial year related to the achievement of the annual Short-Term Incentive Plan. 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. 2020 $ 2021 $ 2022 $ 2023* $ 2024 $ Revenue 178,063,000 165,593,000 188,642,000 217,082,000 214,847,000 NPAT attributable to members 13,423,000 11,961,000 5,667,000 5,932,000 3,930,000 EBIT 11,596,000 9,713,000 5,685,000 7,398,000 7,793,000 Operating income growth1 (11%) (16%) (41%) 30% 5% Share price at year-end $0.45 $0.53 $0.44 $0.40 $0.18 % Change in share price 7% 18% (17%) (9%) (55%) Capital employed2 99,338,000 100,225,000 97,146,000 95,599,000 109,441,000 Return on capital employed3 12% 10% 6% 8% 7% Dividends paid 6,268,000 6,268,000 6,308,000 4,717,000 1,567,000 * 2023 comparative figures have been restated. Full details are disclosed in Note 1. 1 Operating income growth is the movement in EBIT year-on-year. 2 Capital employed is total assets less current liabilities (excluding deferred tax balances). 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 2019 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). Directors’ and Key Executive Officers’ Remuneration Details for Year Ended 30 June 2024 Details of the nature and amount of each major element of remuneration for each director of the Company, and key management personnel of the Group, are set out in the following table: Engenco Limited and its controlled entities Annual Report 2024 27 Directors’ Report for the year ended 30 June 2024 Short-Term Post Employment Long-Term % Remuneration Performance Related Salary and Fees $ Non- monetary $ Performance Benefit $ Sub-Total $ Superannuation Benefit $ Long Service Leave $ Termination Benefits $ Total $ DIRECTORS NON-EXECUTIVE DIRECTORS V De Santis 2024 166,000 – – 166,000 18,260 – – 184,260 – Chairman 2023 166,000 – – 166,000 17,430 – – 183,430 – D Elphinstone1 2024 80,000 – – 80,000 8,800 – – 88,800 – 2023 80,000 – – 80,000 8,400 – – 88,400 – S Cameron 2024 92,000 – – 92,000 10,120 – – 102,120 – 2023 92,000 – – 92,000 9,660 – – 101,660 – K Elphinstone2 2024 86,000 – – 86,000 9,460 – – 95,460 – 2023 68,800 – – 68,800 7,224 – – 76,024 – C McFadden3 2024 16,308 – – 16,308 1,809 – – 18,117 – 2023 – – – – – – – – – A von Bibra4 2024 21,500 – – 21,500 2,365 – – 23,865 – 2023 86,000 – – 86,000 9,030 – – 95,030 – SUB – TOTAL NON-EXECUTIVE DIRECTORS’ REMUNERATION 2024 461,808 – – 461,808 50,814 – – 512,622 – 2023 492,800 – – 492,800 51,744 – – 544,544 – EXECUTIVE DIRECTORS D Draper5 2024 651,820 – – 651,820 27,500 – – 679,320 – Managing Director & CEO 2023 371,646 – 100,000 471,646 16,923 – – 488,569 20.5% K Pallas6 2024 – – – – – – – – – Managing Director & CEO 2023 320,458 – – 320,458 11,635 3,177 – 335,270 – SUB – TOTAL EXECUTIVE DIRECTORS’ REMUNERATION* 2024 651,820 – – 651,820 27,500 – – 679,320 – 2023 692,104 – 100,000 792,104 28,558 3,177 – 823,839 12.1% Engenco Limited and its controlled entities Annual Report 2024 28 Short-Term Post Employment Long-Term % Remuneration Performance Related Salary and Fees $ Non- monetary $ Performance Benefit $ Sub-Total $ Superannuation Benefit $ Long Service Leave $ Termination Benefits $ Total $ TOTAL DIRECTORS’ REMUNERATION* 2024 1,113,628 – – 1,113,628 78,314 – – 1,191,942 – 2023 1,184,904 – 100,000 1,284,904 80,302 3,177 – 1,368,383 7.3% EXECUTIVES G Campbell-Cowan7 2024 321,152 – – 321,152 24,258 – – 345,410 – Chief Financial Officer 2023 57,600 – – 57,600 – – – 57,600 – K Sperl8 2024 – – – – – – – – – Chief Financial Officer & Company Secretary 2023 78,097 – – 78,097 5,837 – 24,978 108,912 – P Burrows9 2024 – – – – – – – – – Chief Financial Officer & Company Secretary 2023 141,725 3,980 – 145,705 11,635 – – 157,340 – TOTAL EXECUTIVE OFFICERS’ REMUNERATION* 2024 321,152 – – 321,152 24,258 – – 345,410 – 2023 277,422 3,980 – 281,402 17,472 – 24,978 323,852 – TOTAL DIRECTORS’ AND EXECUTIVE OFFICERS’ REMUNERATION 2024 1,434,780 – – 1,434,780 102,572 – – 1,537,352 – 2023 1,462,326 3,980 100,000 1,566,306 97,774 3,177 24,978 1,692,235 5.9% * 2023 prior year comparatives have been reclassified in line with the 2024 key management personnel classification. 2023 prior year comparatives have also been updated following the performance related payments made subsequent to 30 June 2023 reporting. 1 Fees for the services of D Elphinstone were paid via agreements with Elphinstone Group (Aust) Pty Ltd which is a related party of the Company. 2 K Elphinstone was appointed on 19 September 2022. Fees for the services of K Elphinstone were paid via agreements with Elphinstone Group (Aust) Pty Ltd which is a related party of the Company. 3 C McFadden was appointed on 17 April 2023. 4 A von Bibra resigned on 18 September 2023. 5 D Draper was appointed as CEO on 21 November 2022, and subsequently appointed as Managing Director and CEO on 18 September 2023. 6 K Pallas resigned on 18 November 2022. 7 G Campbell-Cowan was appointed as interim CFO on 10 May 2023, and subsequently appointed permanently on 18 September 2023. 8 K Sperl was appointed on 16 January 2023 and subsequently resigned on 5 April 2023. 9 P Burrows resigned on 18 November 2022. Engenco Limited and its controlled entities Annual Report 2024 29 Directors’ Report for the year ended 30 June 2024 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 2024 is $NIL (2023: $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. Terms of Agreement Termination Benefit V De Santis Ongoing director agreement N/A – Non-Executive Director D Elphinstone Ongoing director agreement N/A – Non-Executive Director D Draper Permanent employment contract 12 weeks’ pay S Cameron Ongoing director agreement N/A – Non-Executive Director K Elphinstone Ongoing director agreement N/A – Non-Executive Director C McFadden Ongoing director agreement N/A – Non-Executive Director G Campbell-Cowan Permanent employment contract 8 weeks’ pay Options and Rights Over Equity Instruments Granted In the 2023 and 2024 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 non-material in nature. Engenco Limited and its controlled entities Annual Report 2024 30 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: 2024 Balance 1 July 2023 Received as compensation Other changes* Balance 30 June 2024 V De Santis 378,951 – – 378,951 D Draper – – – – D Elphinstone 216,554,707 – – 216,554,707 S Cameron 163,500 – – 163,500 K Elphinstone – – – – C McFadden – – – – A von Bibra 34,793 – – 34,793 G Campbell-Cowan – – – – * 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 28 August 2024 Engenco Limited and its controlled entities Annual Report 2024 31 Directors’ Declaration for the year ended 30 June 2024 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 39 to 83 and the Remuneration Report on pages 26 to 31 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 2024 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 able to pay its debts as and when they become due and payable. c. the consolidated entity disclosure statement on pages 84 to 85 is true and correct. d. at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified in Note 3 will be able to meet any liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in Note 3. 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 2024. 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 28 August 2024 Engenco Limited and its controlled entities Annual Report 2024 32 Auditor’s Independence Declaration for the year ended 30 June 2024 Grant Thornton Audit Pty Ltd Level 22 Tower 5 Collins Square 727 Collins Street Melbourne VIC 3008 GPO Box 4736 Melbourne VIC 3001 T +61 3 8320 2222 www.grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. Auditor’s Independence Declaration To the Directors of Engenco Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Engenco Limited for the year ended 30 June 2024, I declare that, to the best of my knowledge and belief, there have been: a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b no contraventions of any applicable code of professional conduct in relation to the audit. Grant Thornton Audit Pty Ltd Chartered Accountants M J Climpson Partner – Audit & Assurance Melbourne, 28 August 2024 Engenco Limited and its controlled entities Annual Report 2024 33 Engenco Limited and its controlled entities Annual Report 2024 33 Independent Auditor’s Report for the year ended 30 June 2024 Grant Thornton Audit Pty Ltd Level 22 Tower 5 Collins Square 727 Collins Street Melbourne VIC 3008 GPO Box 4736 Melbourne VIC 3001 T +61 3 8320 2222 www.grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report To the Members of Engenco Limited Report on the audit of the financial report Key audit matters 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. Opinion We have audited the financial report of Engenco Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2024, the 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, and notes to the consolidated financial statements, including material accounting policy information, the consolidated entity disclosure statement and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a giving a true and fair view of the Group’s financial position as at 30 June 2024 and of its performance for the year ended on that date; and b complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Engenco Limited and its controlled entities Annual Report 2024 34 Grant Thornton Audit Pty Ltd Key audit matter How our audit addressed the key audit matter Revenue recognition – Note 5 Revenue recorded from contracts with customers amounted to $214.618 million for the year ended 30 June 2024. The Group enters into transactions that involve a range of products and services. Revenue is recognised either at a point in time or over time as the Group satisfies the performance obligations in line with AASB 15 Revenue from Contracts with Customers. This represents a key audit matter given management judgement is required in determining the appropriate recognition of revenue and the material nature of revenue to the Group’s overall performance. Our procedures included, amongst others: • Documenting the nature of revenue streams and reviewing recognition policies for compliance with AASB 15; • Performing detailed testing on a sample of revenue transactions during the year and assessing whether revenue has been recognised in accordance with AASB 15, including; - Reviewing the relevant contracts with customers; - Assessing management’s determination of performance obligations within the contracts and the allocation of the transaction price to those obligations; • Testing a sample of sales transactions immediately pre and post-year-end to assess whether revenue is recognised in the correct period; • Selecting a sample of accrued revenue transactions and checking the actual costs to underlying information (including inventory pricing and employee timesheets) and challenging management’s estimate of profit margin with relevant historical data from completed contracts; and • Assessing the adequacy of relevant financial statement disclosures. Valuation of assets – Note 16 In accordance with AASB 136 Impairment of Assets, the Group is required to assess at the end of each reporting period whether there is any indication an asset may be impaired. Due to the net assets of the Group exceeding the Groups’ market capitalisation as at 30 June 2024, an impairment indicator exists and impairment testing is required. The group has determined the recoverable amount of each cash-generating unit (‘CGU’). This is a key audit matter due to the high degree of management judgment and estimation required in identifying CGU’s and determining the recoverable amount of CGU’s. Our procedures included, amongst others: • Obtaining an understanding of the underlying processes for the asset impairment process, through discussions with individuals across the organisation and review of relevant documentation; • Assessing the design and implementation of relevant controls in relation to the asset impairment process at year-end; • Assessing the adequacy of management’s determination of CGU’s based on the nature of the business and how independent cash flows are generated; • Evaluating management’s assessment of impairment indicators at year-end; • Reviewing management’s value-in-use calculations by; - Evaluating the calculations against the requirements of AASB 136; Engenco Limited and its controlled entities Annual Report 2024 35 Independent Auditor’s Report for the year ended 30 June 2024 Grant Thornton Audit Pty Ltd - Testing the mathematical accuracy of the calculations; - Critically challenging the assumptions underlying forecast cash inflows and outflows to be derived by the CGU’s assets; - Assessing estimates and judgements for growth rates applied; - Assessing discount rates applied to forecast future cash flows for reasonableness; - Performing sensitivity analysis on the significant inputs and assumptions made by management; - Engaging our internal valuation specialists to assess management’s discounted cash flow model and to evaluate the reasonableness of key assumptions and methodology applied; and • Assessing the adequacy of relevant financial statement disclosures. Information other than the financial report and auditor’s report thereon The Directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2024, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the financial report The directors of the Group are responsible for the preparation of: a the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 (other than the consolidated entity disclosure statement); and b the consolidated entity disclosure statement that is true and correct in accordance with the Corporations Act 2001, and for such internal control as the directors determine is necessary to enable the preparation of: i the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and ii the consolidated entity disclosure statement that is true and correct and is free of misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Engenco Limited and its controlled entities Annual Report 2024 36 Grant Thornton Audit Pty Ltd Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1_2020.pdf.This description forms part of our auditor’s report. Report on the remuneration report Responsibilities 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 responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Grant Thornton Audit Pty Ltd Chartered Accountants M J Climpson Partner – Audit & Assurance Melbourne, 28 August 2024 Opinion on the remuneration report We have audited the Remuneration Report included in pages 26 to 31 of the Directors’ report for the year ended 30 June 2024. In our opinion, the Remuneration Report of Engenco Limited, for the year ended 30 June 2024 complies with section 300A of the Corporations Act 2001. Engenco Limited and its controlled entities Annual Report 2024 37 Consolidated Financial Statements Table of Contents for the year ended 30 June 2024 Contents Consolidated Statement of Profit or Loss and Other Comprehensive Income 39 Consolidated Statement of Financial Position 40 Consolidated Statement of Changes in Equity 41 Consolidated Statement of Cash Flows 42 Consolidated Entity Disclosure Statement 84 Shareholder Information 86 Corporate Directory 88 Notes to the Consolidated Financial Statements 43 Note 1 – Material Accounting Policies 43 Note 2 – Controlled Entities 48 Note 3 – Deed of Cross Guarantee 49 Note 4 – Operating Segments 51 Note 5 – Revenue and Other Income 56 Note 6 – Expenses 58 Note 7 – Tax 58 Note 8 – Earnings Per Share 62 Note 9 – Cash and Cash Equivalents 62 Note 10 – Trade and Other Receivables 63 Note 11 – Inventories 64 Note 12 – Leases and Commitments 64 Note 13 – Other Assets 66 Note 14 – Property, Plant and Equipment 66 Note 15 – Net Tangible Assets 68 Note 16 – Intangible Assets 68 Note 17 – Trade and Other Payables 70 Note 18 – Financial Liabilities 70 Note 19 – Provisions 71 Note 20 – Contingent Assets and Liabilities 72 Note 21 – Issued Capital and Reserves 72 Note 22 – Parent Entity Disclosures 74 Note 23 – Cash Flow Information 75 Note 24 – Financial Risk Management 76 Note 25 – Related Party Transactions 81 Note 26 – Auditor’s Remuneration 83 Note 27 – Events Subsequent to Reporting Date 83 Engenco Limited and its controlled entities Annual Report 2024 38 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2024 Consolidated Group Note 2024 $’000 2023* $’000 Revenue 5 214,847 217,082 Other income 5 3,071 4,005 Changes in inventories of finished goods and work in progress (1,599) 12,480 Raw materials and consumables used (106,860) (124,674) Employee benefits expense 6 (69,667) (70,041) Depreciation and amortisation expense (9,250) (7,817) Reversal of / (Impairment of) inventory 121 (2,729) Finance costs 6 (2,547) (1,879) Subcontract freight (2,218) (2,028) Repairs and maintenance (2,506) (2,217) Insurances (1,677) (1,630) Rent and outgoings (3,591) (3,123) Foreign exchange losses (365) (212) Computer expenses (2,739) (2,317) Other expenses (9,774) (9,381) PROFIT BEFORE INCOME TAX 5,246 5,519 Income tax benefit / (expense) 7 (1,316) 413 TOTAL PROFIT FOR THE YEAR 3,930 5,932 Profit attributable to: Owners of the Company 3,930 5,932 Non-controlling interest – – 3,930 5,932 OTHER COMPREHENSIVE INCOME Items that may be reclassified subsequently to profit: Exchange differences on translation of overseas subsidiaries 392 (132) Cashflow hedge loss for the year (154) – Other comprehensive income for the year, net of tax 4,168 (132) TOTAL COMPREHENSIVE INCOME FOR THE YEAR 4,168 5,800 Total comprehensive income attributable to: Owners of the Company 4,168 5,800 Non-controlling interest – – 4,168 5,800 EARNINGS PER SHARE Cents Cents Basic & Diluted earnings per share (cents per share) 8 1.24 1.88 * 2023 comparative figures have been restated. Full details are disclosed in Note 1. The notes on pages 43 to 83 are an integral part of the consolidated financial statements. Engenco Limited and its controlled entities Annual Report 2024 39 39 Engenco Limited and its controlled entities Annual Report 2024 Consolidated Statement of Financial Position as at 30 June 2024 Consolidated Group Note 2024 $’000 2023* $’000 CURRENT ASSETS Cash and cash equivalents 9 18,986 8,478 Trade and other receivables 10 31,590 38,296 Contract assets 5 7,419 6,962 Inventories 11 61,217 59,617 Current tax asset 7 – 30 Other current assets 13 3,200 2,103 TOTAL CURRENT ASSETS 122,412 115,҆486 NON-CURRENT ASSETS Property, plant and equipment 14 26,559 22,174 Right-of-use assets 12 22,800 16,279 Deferred tax assets 7 15,499 16,866 Intangible assets 16 3,226 3,407 TOTAL NON-CURRENT ASSETS 68,084 58,726 TOTAL ASSETS 190,496 174,212 CURRENT LIABILITIES Trade and other payables 17 28,257 29,677 Contract liabilities 5 12,712 5,176 Current tax liabilities 7 92 – Financial liabilities 139 – Lease liabilities 12 5,328 4,489 Short-term borrowings 18 10,000 13,000 Provisions 19 9,028 9,405 TOTAL CURRENT LIABILITIES 65,556 61,747 NON-CURRENT LIABILITIES Lease liabilities 12 18,957 13,260 Long-term borrowings 18 4,250 – Provisions 19 4,752 4,589 Deferred tax liabilities 7 49 336 TOTAL NON-CURRENT LIABILITIES 28,008 18,185 TOTAL LIABILITIES 93,564 79,932 NET ASSETS 96,932 94,280 EQUITY Issued capital 21 303,951 303,900 Reserves (202) (594) Hedge reserve (154) – Profit reserve 18,795 16,432 Accumulated losses (219,629) (219,629) TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 102,761 100,109 Non-controlling interest (5,829) (5,829) TOTAL EQUITY 96,932 94,280 * 2023 comparative figures have been restated. Full details are disclosed in Note 1. The notes on pages 43 to 83 are an integral part of the consolidated financial statements. Engenco Limited and its controlled entities Annual Report 2024 40 Consolidated Statement of Changes in Equity for the year ended 30 June 2024 Consolidated Group Share Capital $’000 Accumulated Losses $’000 Profit Reserve $’000 Hedge Reserve $’000 Foreign Currency Translation Reserve $’000 Sub- Total $’000 Non- controlling interest $’000 Total Equity $’000 BALANCE AT 1 JULY 2022 303,834 (219,629) 15,217 – (462) 98,960 (5,829) 93,131 COMPREHENSIVE INCOME Profit – – 5,932 – – 5,932 – 5,932 Other comprehensive income, net of tax – – – – (132) (132) – (132) TOTAL COMPREHENSIVE INCOME – – 5,932 – (132) 5,800 – 5,800 TRANSACTIONS WITH OWNERS OF THE COMPANY Contributions and Distributions: Employee share purchase plan 66 – – – – 66 – 66 Dividends paid – – (4,717) – – (4,717) – (4,717) TOTAL CONTRIBUTIONS AND DISTRIBUTIONS 66 – (4,717) – – (4,651) – (4,651) RESTATED BALANCE AT 30 JUNE 2023* 303,900 (219,629) 16,432 – (594) 100,109 (5,829) 94,280 * 2023 comparative figures have been restated. Full details are disclosed in Note 1. Consolidated Group Share Capital $’000 Accumulated Losses $’000 Profit Reserve $’000 Hedge Reserve $’000 Foreign Currency Translation Reserve $’000 Sub- Total $’000 Non- controlling interest $’000 Total Equity $’000 RESTATED BALANCE AT 1 JULY 2023* 303,900 (219,629) 16,432 – (594) 100,109 (5,829) 94,280 COMPREHENSIVE INCOME Profit – – 3,930 – – 3,930 – 3,930 Other comprehensive income, net of tax – – – (154) 392 238 – 238 TOTAL COMPREHENSIVE INCOME – – 3,930 (154) 392 4,168 – 4,168 TRANSACTIONS WITH OWNERS OF THE COMPANY Contributions and Distributions: Employee share purchase plan 51 – – – – 51 – 51 Dividends paid – – (1,567) – – (1,567) – (1,567) TOTAL CONTRIBUTIONS AND DISTRIBUTIONS 51 – (1,567) – – (1,516) – (1,516) BALANCE AT 30 JUNE 2024 303,951 (219,629) 18,795 (154) (202) 102,761 (5,829) 96,932 * 2023 comparative figures have been restated. Full details are disclosed in Note 1. The notes on pages 43 to 83 are an integral part of the consolidated financial statements. Engenco Limited and its controlled entities Annual Report 2024 41 41 Engenco Limited and its controlled entities Annual Report 2024 Consolidated Statement of Cash Flows for the year ended 30 June 2024 Consolidated Group Note 2024 $’000 2023 $’000 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 245,089 230,143 Receipt from government grants* 6,840 – Payments to suppliers and employees (225,704) (226,496) Interest received 229 – Finance costs (1,185) (707) Income tax paid (166) 47 NET CASH FROM OPERATING ACTIVITIES 23 (b) 25,103 2,987 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of non-current assets 132 333 Purchase of non-current assets (8,041) (2,782) NET CASH USED IN INVESTING ACTIVITIES (7,909) (2,449) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid (1,567) (4,717) Proceeds from borrowings 11,250 15,000 Repayment of borrowings (10,000) (2,000) Payment of lease liabilities (6,369) (5,089) NET CASH FROM / (USED IN) FINANCING ACTIVITIES (6,686) 3,194 Net increase in cash and cash equivalents 10,508 3,732 Cash at beginning of financial year 8,478 4,746 CASH AT END OF FINANCIAL YEAR 23 (a) 18,986 8,478 * Relates to grant funds received from the West Australian Government for the acquisition of assets associated with the Karratha facility. The notes on pages 43 to 83 are an integral part of the consolidated financial statements. Engenco Limited and its controlled entities Annual Report 2024 42 Note 1 – Material Accounting Policies Except for the changes explained herein, 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 14, 140 William 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 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 28 August 2024. 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 2024 are included in the following notes: ●Note 5 – Revenue and Other Income ●Note 7 – Tax ●Note 10 – Trade and Other Receivables ●Note 11 – Inventories ●Note 12 – Leases and Commitments ●Note 16 – Intangibles Changing Market Conditions and Uncertainties Inflation The increase in global inflation has seen price increases for goods generally and labour which has been further compounded by skilled labour shortages across all industries in Australia. Additionally, the rise in inflation has resulted in Central Banks increasing interest rates, resulting in an increase in incremental borrowing rates and discount rates used for various purposes, including lease calculations and impairment calculations. Geopolitical Geopolitical developments in FY2024, have resulted in various price increases such as global energy rates, which have, in turn, contributed to the rise in supply side global inflation. These geopolitical developments have directly impacted sales of Hedemora Turbochargers into Eastern Europe and disrupted supply chains, affecting inventory levels. In respect of these financial statements, the impact of the inflation, and geopolitical tensions are primarily relevant to estimates of future performance, which is in turn applicable to the areas of recoverability of receivables (Note 10), net realisable value of inventory (Note 11), impairment of non‑financial assets (right-of-use assets) (Note 12), and property plant and equipment (Note 14), recoverability of income tax losses (Note 7), and intangible assets (Note 16). In making estimates of future performance, the Group has applied the following assumptions and judgements about estimating uncertainties. Actual results may differ from these estimates under different assumptions and conditions. ●Engenco’s operations are nationally diverse across the Australian states and regions, with material functions separated across all the major states. ●Engenco operates within the Transportation industry, a broad and diverse industry with significant growth drivers, including population growth and mining exports. ●Central banks will successfully manage inflation to historical normalised levels over the cycle. ●Skilled migration will return to historical levels, improving staff availability to meet customer demand. ●Geopolitical tensions across the globe will remain at heightened levels for the near term. Notes to the Consolidated Financial Statements for the year ended 30 June 2024 Engenco Limited and its controlled entities Annual Report 2024 43 43 Engenco Limited and its controlled entities Annual Report 2024 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 Basis of Preparation 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. 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. Significant Accounting Policies (a) Basis of Consolidation Non-controlling interests 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. 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) Impairment 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. (c) Foreign Currency Foreign currency transactions 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. Note 1 – Material Accounting Policies (continued) Engenco Limited and its controlled entities Annual Report 2024 44 However, foreign currency differences arising from the translation of the following items are recognised in OCI: ●Fair Value through Other Comprehensive Income (FVTOCI) 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. (d) Finance Income and Finance Costs The Group’s finance income and finance costs include: ●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. (e) Government Grants 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. Grants related to the acquisition of assets are presented in the statement of financial position by deducting the grant in arriving at the carrying amount of the asset. The value of grants received but not yet used to acquire assets is recorded within Trade Payables in the Statement of Financial Position. (f) 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. (g) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. (h) 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). Engenco Limited and its controlled entities Annual Report 2024 45 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 (i) Prior Year Correction Deferred tax assets were overstated in the 2023 financial year, with the corresponding income tax expense understated by $512,000. This has been corrected with the prior year comparatives being restated. Refer to the tables below. Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income: 30 June 2023 $’000 Restated 30 June 2023 $’000 Change $’000 Profit before Income Tax 5,519 5,519 – Income tax benefit / (expense) 925 413 (512) TOTAL PROFIT FOR THE YEAR 6,444 5,932 (512) Profit attributable to: Owners of the Company 6,444 5,932 (512) TOTAL COMPREHENSIVE INCOME FOR THE YEAR 6,312 5,800 (512) Profit attributable to: Owners of the Company 6,312 5,800 (512) EARNINGS PER SHARE Cents Cents Cents Basic & Diluted earnings per share (cents per share) 2.04 1.88 (0.16) Condensed Consolidated Statement of Financial Position: 30 June 2023 $’000 Restated 30 June 2023 $’000 Change $’000 Deferred tax assets 17,378 16,866 (512) NON-CURRENT ASSETS 59,238 58,726 (512) TOTAL ASSETS 174,724 174,212 (512) NET ASSETS 94,792 94,280 (512) Profit reserve 16,944 16,432 (512) TOTAL EQUITY 94,792 94,280 (512) Note 1 – Material Accounting Policies (continued) Engenco Limited and its controlled entities Annual Report 2024 46 Condensed Consolidated Statement of Changes in Equity: 30 June 2023 $’000 Restated 30 June 2023 $’000 Change $’000 Profit 6,444 5,932 (512) TOTAL COMPREHENSIVE INCOME 6,312 5,800 (512) Profit reserve 16,944 16,432 (512) TOTAL EQUITY 94,792 94,280 (512) (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. New and revised Standards and Interpretations effective for the current reporting period that are relevant to the Group include: ●Disclosure Initiative: Accounting Policies (Amendments to IAS 1) ●Definition of Accounting Estimates (Amendments to IAS 8) ●Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) ●Insurance Contracts (Amendments to AASB 17) The new standards adopted did not have a material impact to the Group. STANDARDS ISSUED BUT NOT YET EFFECTIVE Other Accounting Standards The following new or amended standards are not expected to have a significant impact on the Group’s consolidated financial statements: ●Classification of Liabilities as Current or Non-Current (Amendment to AASB 101). ●IFRIC Agenda Decision: Classification of debt with covenant as current or non-current. Engenco Limited and its controlled entities Annual Report 2024 47 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 Note 2 – Controlled Entities Note: Subsidiaries are indented beneath their parent entity Country of Incorporation Date of Control Percentage Owned 2024 Percentage Owned 2023 ●Engenco Limited Australia – Convair Engineering Pty Ltd Australia 1 Jul 06 100 100 – Engenco Logistics Pty Ltd Australia 1 Jul 06 100 100 – Engenco Investments Pty Ltd Australia 18 Apr 07 100 100 – Workforce Solutions Pty Ltd Australia 30 Apr 07 100 100 – Centre for Excellence in Rail Training Pty Ltd Australia 30 Apr 07 100 100 – EGN Rail Pty Ltd Australia 30 Apr 07 100 100 – Greentrains Pty Ltd1 Australia 17 Jul 09 81 81 * Greentrains Leasing Pty Ltd Australia 18 Jun 08 100 100 – Eureka 4WD Training Pty Ltd Australia 1 Jul 21 100 100 * MRH Training Apps Pty Ltd Australia 1 Jul 21 100 100 – Drivetrain Power and Propulsion Pty Ltd Australia 1 Jul 06 100 100 – Drivetrain Australia Pty Ltd Australia 1 Jul 06 100 100 * Drivetrain Singapore Pte Ltd2 Singapore 1 Jul 07 – 100 * Drivetrain Limited New Zealand 1 Jul 07 100 100 * HS Turbochargers America, Inc. USA 31 Dec 08 100 100 – Hyradix Inc. USA 31 Dec 08 100 100 * Hedemora Investments AB Sweden 1 Jul 06 100 100 – Hedemora Turbo & Diesel AB Sweden 1 Jul 06 100 100 – Gemco Rail Pty Ltd Australia 1 Jul 07 100 100 – Industrial Powertrain Pty Ltd Australia 1 Jul 07 100 100 – Total Momentum Pty Ltd Australia 30 Apr 07 100 100 1 Total Engenco Group ownership of Greentrains Pty Ltd is 81% (split between Engenco Investments Pty Ltd, 61%, and Engenco Ltd, 20%). 2 Drivetrain Singapore Pte Ltd was deregistered on 4 March 2024. Engenco Limited and its controlled entities Annual Report 2024 48 Note 3 – Deed of Cross Guarantee Pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785, the wholly owned subsidiaries listed below are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports, and Directors’ reports. The subsidiaries subject to the Deed are: ●Gemco Rail Pty Ltd ●Drivetrain Australia Pty Ltd ●Drivetrain Power and Propulsion Pty Ltd ●Convair Engineering Pty Ltd ●Workforce Solutions Pty Ltd ●Total Momentum Pty Ltd ●Centre for Excellence in Rail Training Pty Ltd ●Eureka 4WD Training Pty Ltd ●Engenco Investments Pty Ltd ●Engenco Logistics Pty Ltd The subsidiaries entered into the Deed of Cross Guarantee with each other and Engenco Limited on 12 May 2023. A consolidated statement of comprehensive income and consolidated statement of financial position, comprising the Company and controlled entities which are a party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, for the year ended 30 June 2024 is set out as follows: 2024 $’000 2023* $’000 Revenue 206,526 212,669 Other income 3,068 3,584 Changes in inventories of finished goods and work in progress 2,170 13,156 Raw materials and consumables used (106,526) (123,690) Employee benefits expense (67,853) (68,273) Depreciation and amortisation expense (9,120) (7,699) Reversal of / (Impairment) of inventory 74 (2,815) Finance costs (2,538) (1,865) Subcontract freight (2,160) (1,978) Repairs and maintenance (2,432) (2,152) Insurances (1,649) (1,603) Rent and outgoings (3,768) (2,849) Foreign exchange losses (191) (344) Computer expenses (2,646) (2,205) Other expenses (9,242) (8,598) PROFIT BEFORE INCOME TAX 3,713 5,338 Income tax benefit / (expense) (1,046) 494 TOTAL PROFIT FOR THE YEAR 2,667 5,832 * 2023 comparative figures have been restated. Full details are disclosed in Note 1. Engenco Limited and its controlled entities Annual Report 2024 49 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 2024 $’000 2023* $’000 CURRENT ASSETS Cash and cash equivalents 17,105 8,161 Trade and other receivables 31,047 36,668 Contract assets 7,411 6,956 Inventories 54,424 52,254 Intercompany loans 6,018 6,221 Other current assets 3,045 1,997 TOTAL CURRENT ASSETS 119,050 112,257 NON-CURRENT ASSETS Property, plant and equipment 19,223 14,821 Right-of-use assets 22,800 16,279 Deferred tax assets 14,851 16,140 Intangible assets 3,226 3,407 TOTAL NON-CURRENT ASSETS 60,100 50,647 TOTAL ASSETS 179,150 162,904 CURRENT LIABILITIES Trade and other payables 27,123 28,092 Contract liabilities 12,712 5,176 Lease liabilities 5,328 4,489 Financial liabilities 139 – Short-term borrowings 10,000 13,000 Provisions 8,775 9,161 TOTAL CURRENT LIABILITIES 64,077 59,918 NON-CURRENT LIABILITIES Lease liabilities 18,957 13,260 Long-term borrowings 4,250 – Provisions 4,752 4,589 Deferred tax liabilities 49 336 TOTAL NON-CURRENT LIABILITIES 28,008 18,185 TOTAL LIABILITIES 92,085 78,103 NET ASSETS 87,065 84,801 EQUITY Issued capital 303,951 303,900 Hedge reserve (154) – Reserves (37) (41) Profit reserve 18,795 16,432 Accumulated losses (235,490) (235,490) TOTAL EQUITY 87,065 84,801 * 2023 comparative figures have been restated. Full details are disclosed in Note 1. Note 3 – Deed of Cross Guarantee (continued) Engenco Limited and its controlled entities Annual Report 2024 50 Note 4 – 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 five (5) 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) 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. (c) Hedemora Turbo & Diesel Hedemora Turbo & Diesel is the original manufacturer of Hedemora Turbochargers and Hedemora Diesel Engines. Operating from Sweden, Hedemora Turbo & Diesel performs installation, overhaul, turbocharger testing and balancing to support customer needs. From design, manufacture and installation to ongoing product support, Hedemora provides comprehensive solutions for the rail, power generation and marine industries. (d) 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. (e) Workforce Solutions Workforce Solutions is Engenco’s people focused business, providing training and labour hire under the brands of Centre for Excellence in Rail Training (CERT), Total Momentum and Eureka 4WD Training. (f) 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 Assets are allocated to segments where there is a nexus between control and ownership of the asset and the operations of the business. Segment assets are disclosed at the net of capital expenditure, investments and intangibles. 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 a 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. Information about Reportable Segments Information related to each reportable segment is set out below. Segment EBITDA is used to measure performance because management believes this information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industries. Engenco Limited and its controlled entities Annual Report 2024 51 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 (i) Segment Performance Year ended 30 June 2024 Reportable Segments Drivetrain $’000 Convair $’000 Hedemora Turbo & Diesel $’000 Gemco Rail $’000 Workforce Solutions $’000 All Other $’000 Group $’000 REVENUE External revenue 64,905 31,577 6,681 93,596 17,859 – 214,618 Inter-segment revenue 149 – 1,636 1 193 – 1,979 Interest revenue – – 4 – – 225 229 TOTAL SEGMENT REVENUE 65,054 31,577 8,321 93,597 18,052 225 216,826 Reconciliation of segment revenue to Group revenue: Inter-segment eliminations – – – – – (1,979) (1,979) TOTAL GROUP REVENUE 65,054 31,577 8,321 93,597 18,052 (1,754) 214,847 SEGMENT EBITDA 10,033 1,987 1,617 16,485 1,719 (14,798) 17,043 Reconciliation of segment EBITDA to Group net profit / (loss) before tax: Depreciation and amortisation (1,104) (545) (82) (5,729) (863) (927) (9,250) Finance costs (216) (86) (9) (787) (101) (1,348) (2,547) NET PROFIT / (LOSS) BEFORE TAX 8,713 1,356 1,526 9,969 755 (17,073) 5,246 Year ended 30 June 2023* Reportable Segments Drivetrain $’000 Convair $’000 Hedemora Turbo & Diesel $’000 Gemco Rail $’000 Workforce Solutions $’000 All Other $’000 Group $’000 REVENUE External revenue 62,465 20,681 4,414 106,120 23,402 – 217,082 Inter-segment revenue 52 – 1,340 92 470 – 1,954 TOTAL SEGMENT REVENUE 62,517 20,681 5,754 106,212 23,872 – 219,036 Reconciliation of segment revenue to Group revenue: Inter-segment eliminations – – – – – (1,954) (1,954) TOTAL GROUP REVENUE 62,517 20,681 5,754 106,212 23,872 (1,954) 217,082 SEGMENT EBITDA 6,355 1,803 (102) 18,533 1,538 (12,912) 15,215 Reconciliation of segment EBITDA to Group net profit / (loss) before tax: Depreciation and amortisation (993) (460) (73) (4,704) (854) (733) (7,817) Finance costs (169) (76) (13) (734) (98) (789) (1,879) NET PROFIT / (LOSS) BEFORE TAX 5,193 1,267 (188) 13,095 586 (14,434) 5,519 * 2023 prior year comparatives have been restated for the current year classification of segments. Note 4 – Operating Segments (continued) Engenco Limited and its controlled entities Annual Report 2024 52 (ii) Segment Assets As at 30 June 2024 Reportable Segments Drivetrain $’000 Convair $’000 Hedemora Turbo & Diesel $’000 Gemco Rail $’000 Workforce Solutions $’000 All Other $’000 Group $’000 ASSETS Segment assets 54,250 15,620 10,235 88,796 13,177 (14,202) 167,876 Capital expenditure 689 185 105 1,867 23 5,158 8,027 Intangibles – – – – 495 2,731 3,226 Reconciliation of segment assets to Group assets: Inter-segment eliminations – – – – – – (4,132) Unallocated items: Deferred tax assets – – – – – – 15,499 TOTAL ASSETS 54,939 15,805 10,340 90,663 13,695 (6,313) 190,496 As at 30 June 2023* Reportable Segments Drivetrain $’000 Convair $’000 Hedemora Turbo & Diesel $’000 Gemco Rail $’000 Workforce Solutions $’000 All Other $’000 Group $’000 ASSETS Segment assets 46,107 13,229 10,170 75,122 14,050 (2,499) 156,179 Capital expenditure 398 233 34 1,780 49 155 2,649 Intangibles – – – – 618 2,789 3,407 Reconciliation of segment assets to Group assets: Inter-segment eliminations – – – – – – (4,889) Unallocated items: Deferred tax assets – – – – – – 16,866 TOTAL ASSETS 46,505 13,462 10,204 76,902 14,717 445 174,212 * 2023 comparatives have been restated for the current year classification. 2023 comparatives have also been corrected for the prior period error disclosed in Note 1. Engenco Limited and its controlled entities Annual Report 2024 53 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 (iii) Segment Liabilities As at 30 June 2024 Reportable Segments Drivetrain $’000 Convair $’000 Hedemora Turbo & Diesel $’000 Gemco Rail $’000 Workforce Solutions $’000 All Other $’000 Group $’000 LIABILITIES Segment liabilities 59,006 13,819 1,162 76,970 8,027 (61,337) 97,647 Reconciliation of segment liabilities to Group liabilities: Inter-segment eliminations – – – – – – (4,132) Unallocated items: Deferred tax liabilities – – – – – – 49 TOTAL LIABILITIES 59,006 13,819 1,162 76,970 8,027 (61,337) 93,564 As at 30 June 2023* Reportable Segments Drivetrain $’000 Convair $’000 Hedemora Turbo & Diesel $’000 Gemco Rail $’000 Workforce Solutions $’000 All Other $’000 Group $’000 LIABILITIES Segment liabilities 54,580 11,058 1,575 65,623 8,352 (56,703) 84,485 Reconciliation of segment liabilities to Group liabilities: Inter-segment eliminations – – – – – – (4,889) Unallocated items: Deferred tax liabilities – – – – – – 336 TOTAL LIABILITIES 54,580 11,058 1,575 65,623 8,352 (56,703) 79,932 * 2023 prior year comparatives have been restated for the current year classification. Note 4 – Operating Segments (continued) Engenco Limited and its controlled entities Annual Report 2024 54 (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 2024 $’000 2023 $’000 Australasia 206,526 211,329 Europe 8,321 5,753 TOTAL REVENUE 214,847 217,082 Assets 2024 $’000 2023* $’000 Australasia 180,156 163,930 Europe 10,340 10,204 United States of America – 78 TOTAL ASSETS 190,496 174,212 * 2023 comparatives have also been corrected for the prior period error disclosed in Note 1. (v) Major Customers The Group has a large and diverse customer base. No individual customer has contributed in excess of 10% to overall Group revenue. Engenco Limited and its controlled entities Annual Report 2024 55 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 Note 5 – Revenue and Other Income Revenue is recognised as contract performance obligations are satisfied. The total contract consideration is allocated to the performance obligations based on their observable stand alone selling prices. Revenue is 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. Sale of Goods The Group engages in the sale of spare parts and components for various rail, road, powertrain and gas compression industry sectors. Revenue is recognised at a point in time when a customer obtains control of the goods. Revenue is measured net of returns, trade discounts and volume rebates. Rendering of Services The Group performs a number of services to various industry sectors, including maintenance, repairs and overhauls. Revenue is recognised as contract performance obligations are satisfied over time. The total contract consideration is allocated to the performance obligations based on their observable stand alone selling prices. Construction Contracts The Group is involved in the manufacture of wagons, carriages, rail equipment and dry bulk tankers. Revenue is recognised as contract performance obligations are satisfied over time. The total contract consideration is allocated to the performance obligations based on their observable stand alone selling prices. Claims and variations are included in the contract consideration only when they are approved. RTO Training The Group’s RTO entities (CERT Training and Eureka 4WD Training) deliver nationally accredited and industry-based training courses. Revenue is recognised at the point in time when the performance obligation is satisfied. Lease Rental Income The Group leases out certain items of property, plant and equipment to customers in the form of operating lease arrangements. Rental income from leased plant and equipment is recognised 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. Engenco Limited and its controlled entities Annual Report 2024 56 2024 $’000 2023 $’000 SALES REVENUE Sales of goods and services 214,159 216,569 Lease rental income 459 513 TOTAL SALES REVENUE 214,618 217,082 OTHER REVENUE Interest received – external 229 – TOTAL OTHER REVENUE 229 – TOTAL REVENUE 214,847 217,082 OTHER INCOME Gain on disposal of property, plant and equipment 80 199 Other gains 2,991 3,806 TOTAL OTHER INCOME 3,071 4,005 During the year the Group received insurance proceeds of $1,148,000 (2023: $1,376,000) included in Other gains relating to the open insurance claim for Gemco Rail’s Gladstone workshop which was subject to a severe flood event that impacted the Northeast Coast of Australia in 2022. Other gains also include $1,538,000 of sale of scrap metals (2023: $1,316,000). Set out below is the disaggregation of the Group’s revenue from contracts with customers: Revenue Stream Revenue Recognition 2024 $’000 2023 $’000 Sale of goods Point in time 54,914 56,283 Rendering of services Over time 49,094 47,880 Construction contracts Over time 100,012 101,475 RTO training Point in time 10,139 10,931 Lease rental income Over time 459 513 TOTAL SALES REVENUE 214,618 217,082 Contract Assets and Liabilities Contract assets are recognised as the right to consideration in exchange for work completed on construction contracts and services rendered but not billed on the reporting date. Contract liabilities are recognised when the Group has an obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. 2024 $’000 2023 $’000 Contract assets 7,419 6,962 Contract liabilities 12,712 5,176 Engenco Limited and its controlled entities Annual Report 2024 57 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 Note 6 – Expenses 2024 $’000 2023 $’000 FINANCE COSTS Finance costs – leases 1,363 1,172 Other finance costs 1,184 707 TOTAL FINANCE COSTS 2,547 1,879 EMPLOYEE BENEFITS EXPENSE Wages and salaries 59,904 60,351 Annual leave expense 3,377 3,502 Long service leave expense 301 492 Restructuring 162 209 Defined contribution plan 5,923 5,487 TOTAL EMPLOYEE BENEFITS EXPENSE 69,667 70,041 RENTAL EXPENSE ON OPERATING LEASES Operating lease payments* 1,433 1,311 TOTAL RENTAL EXPENSE ON OPERATING LEASES 1,433 1,311 * The operating lease payments expense disclosed above relates to outgoings, short term and low value leases (all of which are not lease accounted or contained within Note 12). 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. Estimates and Judgements 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. 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. Current tax assets and liabilities are offset only if certain criteria are met. Engenco Limited and its controlled entities Annual Report 2024 58 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. 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. 2024 $’000 2023 $’000 CURRENT Income tax receivable / (payable) (92) 30 TOTAL CURRENT INCOME TAX (92) 30 The tax receivable and payable relates to the Group companies outside the Australian Tax Consolidated Group. Engenco Limited and its controlled entities Annual Report 2024 59 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 2024 $’000 2023* $’000 (a) The components of tax expense / (benefit) comprise: Current income tax expense / (benefit) – Current income tax expense / (benefit) 112 (8) Deferred income tax expense / (benefit) – Origination and reversal of temporary differences 1,204 (405) Income tax expense / (benefit) reported in the Statement of Profit or Loss and OCI 1,316 (413) (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 before tax 5,246 5,519 At the Company’s statutory domestic income tax rate of 30% (2023: 30%) 1,574 1,656 Add / (Less) tax effect of: – Foreign tax rate adjustment (99) (38) – Non-deductible depreciation and amortisation (34) – – Losses for which no deferred tax asset is recognised 16 1 – Instant asset write-off – (805) – Adjustments for prior years (1,841) 90 – Other assessable items1 2,052 – – Other non-allowable items – 168 – Movements in recognised temporary differences (352) 1,037 – Deferred tax recognition of prior year unbooked losses – (2,522) Income tax expense / (benefit) 1,316 (413) * 2023 comparative figures have been restated. Full details are disclosed in Note 1. 1 Relates to the grant funds received from the West Australian Government for the acquisition of assets, which is assessable income for taxation purposes but is not treated as income for accounting in the Statement of Profit or Loss. Note 7 – Tax (continued) Engenco Limited and its controlled entities Annual Report 2024 60 Consolidated Group Opening Balance $’000 Balance Acquired $’000 (Credited)/ Charged to Income $’000 Charged Directly to Equity $’000 Changes in Tax Rate $’000 Exchange Differences $’000 Other $’000 Closing Balance $’000 NON-CURRENT Deferred tax liabilities: Other 586 – (250) – – – – 336 Balance at 30 June 2023 586 – (250) – – – – 336 Other 336 – (287) – – – – 49 Balance at 30 June 2024 336 – (287) – – – – 49 Deferred tax assets: Provisions 4,957 – (95) – – – – 4,862 Accruals – – – – – – – – Losses 11,754 – 250 – – – – 12,004 Balance at 30 June 2023* 16,711 – 155 – – – – 16,866 Provisions 4,862 – 1,896 – – – – 6,758 Accruals – – – – – – – – Losses 12,004 – (3,263) – – – – 8,741 Balance at 30 June 2024 16,866 – (1,367) – – – – 15,499 * 2023 comparative figures have been restated. Full details are disclosed in Note 1. The Group has estimated carried forward operating tax losses of $29,135,903 at June 2024 (2023: $40,013,535) relating to the Australian Tax Consolidated Group which are fully recognised. The Group has estimated carried forward operating tax losses from other Australian entities of $11,967,438 at June 2024 (2023 $11,967,438) which are not recognised. The ability to utilise the operating tax losses will be subject to satisfying relevant eligibility criteria for the recoupment of carried forward tax losses. Engenco Limited and its controlled entities Annual Report 2024 61 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 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. 2024 $’000 2023* $’000 (a) RECONCILIATION OF EARNINGS TO PROFIT OR LOSS Profit for the year 3,930 5,932 Profit for the year, attributable to non-controlling interest – – Earnings used to calculate basic and dilutive EPS 3,930 5,932 No. $’000 No. $’000 (b) WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING DURING THE YEAR USED IN CALCULATING BASIC AND DILUTIVE EPS 315,761 315,613 Weighted average number of dilutive options outstanding – – * 2023 comparative figures have been restated. Full details are disclosed in Note 1. Note 9 – Cash and Cash Equivalents 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. 2024 $’000 2023 $’000 CASH AT BANK AND IN HAND 18,986 8,478 As at the reporting date, where the Group had the legally enforceable right of set-off within its bank pooling arrangement and the intention is to settle on a net basis within its banking facilities, the Group has set-off $31,587,928 (2023: $17,458,201) against cash and cash equivalents of $38,722,503 (2023: $22,705,806) resulting in a net positive cash position for these accounts of $7,134,575 (2023: $5,247,605). Engenco Limited and its controlled entities Annual Report 2024 62 Note 10 – Trade and Other Receivables 2024 $’000 2023 $’000 CURRENT Trade receivables 31,788 38,863 Expected Credit Loss (ECL) provision (347) (659) TOTAL TRADE RECEIVABLES 31,441 38,204 Sundry receivables 149 92 TOTAL OTHER RECEIVABLES 149 92 TOTAL CURRENT TRADE AND OTHER RECEIVABLES 31,590 38,296 (a) Expected Credit Loss Provision for Impairment of Receivables The Group has a Credit Management Policy under which each new customer application is analysed individually for creditworthiness before the Group offers any form of credit, or any variation to the standard terms and conditions. Credit facilities are generally offered on terms of 30 to 60 days from end of month. The Group’s review procedure includes the utilisation of external ratings, credit agency information and other industry information. Credit limits are established and monitored for each customer with any sales exceeding these limits requiring approval. The Group monitors the economic environments in which it operates, and proactively takes any necessary actions to limit its credit exposure to customers and industries that are experiencing economic volatility. The Group has adopted the simplified approach when calculating its expected credit loss provisions. This allows the recognition of lifetime expected credit losses at all times. This provision is reassessed when there is a significant change in credit risk. These amounts have been included in the provision for impairment of accounts receivable. The Group uses a provisions matrix to measure the expected credit losses of trade receivables from individual customers. Loss rates are calculated using a “roll rate” method based on the probability of a receivable progressing through successive stages of delinquency to write-off. Roll rates are calculated separately per Group company. Loss rates are based on actual credit loss experience over the past three years, which are adjusted where deemed necessary for economic factors to reflect differences in economic conditions over which the historical data has been collected, current conditions and the Group’s view of economic conditions over the expected lives of the receivables. The expected credit loss allowances for trade receivables are calculated based on key assumptions that determine the weighted average loss rates and overall loss allowance. 2024 2023 Weighted average loss rate % Gross carrying amount $’000 Loss allowance $’000 Weighted average loss rate % Gross carrying amount $’000 Loss allowance $’000 Credit impaired Current (not past due) 0.17% 29,066 50 0.12% 33,178 39 No 1 – 30 days past due 2.56% 2,071 53 1.96% 1,736 34 No 31 – 60 days past due 6.89% 334 23 5.51% 272 15 No 61 – 90 days past due 26.32% 19 5 9.18% 839 77 No More than 90 days past due 54.70% 181 99 17.41% 2,838 494 Yes Total ECL Provision 31,671 230 38,863 659 Specific provisions 117 117 – – 31,788 347 38,863 659 Engenco Limited and its controlled entities Annual Report 2024 63 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 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. 2024 $’000 2023 $’000 CURRENT At cost: – Work in progress 10,873 8,360 – Finished goods 42,989 41,740 53,862 50,100 At net realisable value: – Work in progress – – – Finished goods 7,355 9,517 7,355 9,517 TOTAL INVENTORY 61,217 59,617 The Group has completed a comprehensive review of the carrying value of inventory, taking into consideration macroeconomic factors. As a result of the review, reversal of impaired inventory by $121,000 was recognised in the statement of profit or loss (2023: impairment of $2,729,000). Note 12 – Leases and Commitments Leasing Activities and Accounting Policy The Group leases various properties and equipment. Property leases typically are for a period of 2 to 10 years and often have extension options and equipment leases are typically for a period of 3 to 5 years. The Group accounts for these leases under AASB 16: Leases which requires operating leases to be recognised on-balance sheet through the recognition of a Right-of-Use (ROU) Asset and Lease Liability. Lease expenditure is recognised as depreciation and interest. Under AASB 16, there is a single, on balance sheet accounting model, similar to previous 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 contract 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 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 AASB 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. Judgements and Estimates The Group applies judgement to determine the lease term for some contracts in which it is a lease that includes renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts on the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognised. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension term. Extension options are only included in the lease term if the lease is reasonably certain to be extended. The assessment is reviewed if a significant event or change in circumstance occurs which affects this assessment and that is within the control of the lessee. Engenco Limited and its controlled entities Annual Report 2024 64 Engenco applies a number of the practical expedients and exemptions including: ●The application of a single discount rate to a portfolio of leases with reasonably similar characteristics; ●Recognition exemption for short-term and low-value leases – Leases which have a lease term of less than 12 months or are less than A$10,000 in annual value will not be accounted for under AASB 16. Another practical expedient that is available to the Group, is to not separate non-lease components from lease components, and instead account for each lease component and any associated non-lease components as a single lease component. The Group has not elected to combine lease and non-lease components for its property leases. As such, the calculated lease liability excludes an estimate of the stand-alone price of the non-lease component. Movements in the Period 1 Jul 2023 Additions $’000 Depreciation $’000 Modifications/ De-recognition $’000 30 Jun 2024 $’000 RIGHT-OF-USE ASSETS Property 14,917 7,749 (5,035) 4,246 21,877 Equipment 1,362 70 (509) – 923 TOTAL RIGHT-OF-USE ASSETS 16,279 7,819 (5,544) 4,246 22,800 1 Jul 2023 Additions $’000 Lease Payments $’000 Modifications/ De-recognition $’000 30 Jun 2024 $’000 LEASE LIABILITIES Property 16,318 7,499 (5,037) 4,311 23,091 Equipment 1,431 70 (307) – 1,194 TOTAL LEASE LIABILITIES 17,749 7,569 (5,344) 4,311 24,285 Current lease liabilities 4,489 5,328 Non-current lease liabilities 13,260 18,957 (a) Leases as a Lessor The Group leases out 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 which are receivable are shown below. 2024 $’000 2023 $’000 OPERATING LEASE RECEIVABLES Receivable – minimum lease payments: – not later than 12 months 128 123 – between 12 months and 5 years 65 193 – greater than 5 years – – 193 316 Engenco Limited and its controlled entities Annual Report 2024 65 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 Note 13 – Other Assets 2024 $’000 2023 $’000 CURRENT Other current assets 200 213 Prepayments 3,000 1,890 TOTAL CURRENT OTHER ASSETS 3,200 2,103 Note 14 – Property, Plant and Equipment Recognition and Measurement 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. Subsequent Expenditure Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure will flow to the Group. Depreciation Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line 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 or 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. The depreciation rates used for each class of depreciable assets are: Class of Property, Plant & Equipment Depreciation Rate Buildings 2.5% Leasehold improvements 10% – 100% Plant and equipment 5% – 67% Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Assets under Construction Relates to Gemco Rail’s 25% share of Karratha facility establishment asset expenditure incurred to 30 June 2024. The government grants received from the West Australian government contributes 75% towards this asset. Engenco Limited and its controlled entities Annual Report 2024 66 2024 $’000 2023 $’000 LAND AND BUILDINGS Freehold land: – At cost 7,620 5,520 TOTAL LAND 7,620 5,520 Buildings: – At cost 4,590 2,205 – Less accumulated depreciation (878) (789) TOTAL BUILDINGS 3,712 1,416 TOTAL LAND AND BUILDINGS 11,332 6,936 PLANT AND EQUIPMENT – At cost 97,444 94,922 – Accumulated depreciation and impairment (84,520) (81,701) TOTAL PLANT AND EQUIPMENT 12,924 13,221 LEASEHOLD IMPROVEMENTS – At cost 8,599 7,699 – Accumulated depreciation (6,296) (5,682) TOTAL LEASEHOLD IMPROVEMENTS 2,303 2,017 TOTAL PROPERTY, PLANT AND EQUIPMENT 26,559 22,174 (a) 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. Consolidated Group Freehold Land $’000 Buildings $’000 Leasehold Improvements $’000 Plant and Equipment $’000 Total $’000 BALANCE AT 30 JUNE 2022 5,520 1,458 2,417 13,741 23,136 Additions – – 171 2,478 2,649 Disposals – – – (247) (247) Depreciation expense – (42) (571) (2,751) (3,364) BALANCE AT 30 JUNE 2023 5,520 1,416 2,017 13,221 22,174 Additions 2,100 2,385 901 2,276 7,662 Assets under construction – – – 365 365 Disposals – – – (120) (120) Depreciation expense – (89) (615) (2,818) (3,522) BALANCE AT 30 JUNE 2024 7,620 3,712 2,303 12,924 26,559 Engenco Limited and its controlled entities Annual Report 2024 67 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 Note 15 – Net Tangible Assets The Group’s Net Tangible Assets (NTA) are calculated as net assets (excluding net deferred tax, non-controlling interest and intangible assets) over fully paid ordinary shares. There was no change to the Group’s approach to calculating NTA. 2024 Cents 2023 Cents Net tangible assets per ordinary share: 315,793,413 shares (2023: 315,650,256 shares) 26.6 25.4 Note 16 – Intangible Assets Recognition and Measurement Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. 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. Subsequent Expenditure 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. 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 Useful Life Customer-related intangibles 3 – 10 years Patents and trademarks Up to 13 years Development costs Life of project Other intangible assets 5 – 8 years Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Engenco Limited and its controlled entities Annual Report 2024 68 2024 $’000 2023 $’000 GOODWILL Cost: Opening balance 2,631 2,631 CLOSING BALANCE 2,631 2,631 TOTAL GOODWILL 2,631 2,631 OTHER IDENTIFIABLE INTANGIBLES Cost: Opening balance 14,222 14,141 Additions - 81 Closing balance 14,222 14,222 Accumulated amortisation and impairment: Opening balance (13,446) (13,239) Amortisation for the year (181) (207) Closing balance (13,627) (13,446) TOTAL OTHER IDENTIFIABLE INTANGIBLES 592 776 NET BOOK VALUE 3,226 3,407 TOTAL INTANGIBLE ASSETS At cost: 16,853 16,853 Accumulated amortisation and impairment (13,627) (13,446) NET BOOK VALUE 3,226 3,407 Annual Impairment Testing As at 30 June 2024, the market capitalisation of the Group was below the carrying value of its net assets. As this is considered an indicator of potential impairment an impairment assessment was performed over the cash generating units (CGUs) within the Group. For the purposes of impairment testing, the Group’s CGUs have been determined as the businesses which represent the lowest level within the Group that is monitored for internal management purposes, consistent with the Operating Segments of the Group. The Group’s CGUs are as follows: ●Drivetrain ●Convair ●Hedemora Turbo & Diesel ●Gemco Rail ●Workforce Solutions The recoverable amount of CGUs is based on value in use calculations, determined by discounting the future cash flows to be generated from the continuing use of the CGUs. The key management judgements and assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key assumptions represent management’s business plans and forecasts, including the assessment of future trends in the relevant industries, and have been based on historical data from both external and internal sources. Percentages 2024 Discount rate 14.8% Inflation rate 3.0% Terminal value growth rate 1.0% The discount rate was a pre-tax measure estimate based on the CGU’s weighted average cost of capital. The cash flow projections included specific estimates for five years and a terminal growth rate thereafter. The terminal growth rate was determined based on management’s estimate of a conservative long-term compound EBITDA growth rate, consistent with the assumptions that a market participant would make. Engenco Limited and its controlled entities Annual Report 2024 69 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 Budgeted EBITDA was estimated considering the following year’s budget and plan, extended over a five-year period using a growth factor relevant to the industry and strategic business plan. There was no impairment of any of the Group’s assets, with a satisfactory excess of recoverable values over asset carrying values for all identified CGUs. The directors have determined that, given the excess of estimated recoverable value over asset carrying value, there are no foreseeable changes in assumptions which could occur to cause the carrying amounts of the CGUs to exceed the recoverable amounts. Note 17 – 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 remain unpaid. The balance is recognised as a current liability if expected to be settled within 12 months. 2024 $’000 2023 $’000 CURRENT Unsecured liabilities: Trade payables* 19,518 24,118 Sundry payables and accrued expenses 8,739 5,559 TOTAL TRADE AND OTHER PAYABLES 28,257 29,677 * Includes $5,585,000 of West Australian Government grant funding not yet used in the acquisition of assets as at 30 June 2024. Note 18 – Financial Liabilities Non-Derivative Financial Liabilities – Measurement 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. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. 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. Information about the Group’s exposure to interest rate, foreign currency and liquidity risk is included in Note 24 – Financial Risk Management. (a) Collateral Provided Bank facility The bank facility with the National Australia Bank (NAB) is comprised of a $20,000,000 Revolving Credit Facility, a $6,000,000 Bank Guarantee Facility, and a $600,000 Credit Card Facility. These facilities are secured against the Australian assets of the Group. The revolving credit facility expires on 31 October 2024, with the other facilities renewed annually. The NAB Non-Revolving Cash Advance Facility property loan of $4,250,000 expires on 19 February 2028 and is secured against the Karratha property assets. Defaults and breaches The Revolving Credit Facility with the NAB is subject to bank covenant requirements of which there were no defaults or breaches during the year ended 30 June 2024. Note 16 – Intangible Assets (continued) Engenco Limited and its controlled entities Annual Report 2024 70 (b) Debt Facilities and Credit Standby Arrangements A summary of the Group’s loan facilities is provided in the table below: Facility Available 2024 $’000 Balance of facility used as at 30 June 2024 $’000 Maturity Dates 2024 Facility Available 2023 $’000 Balance of facility used as at 30 June 2023 $’000 Maturity Dates 2023 Interest Basis – NAB Revolving Credit Facility* 26,600 10,000 Oct–24 27,100 13,000 Oct–23 Floating – NAB Non-Revolving Cash Advance Facility 4,250 4,250 Feb–28 – – – Floating – Swedish Overdraft Facility (SEK)** 860 – Dec–24 830 – Dec–23 Floating 31,710 14,250 27,930 13,000 * Comprises net bank loans, off balance sheet bank guarantees and business credit cards and other trade products. ** Facility is denominated in SEK, and presented in AUD above Note 19 – 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 A provision for restructuring is recognised when the Group 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 closure costs and redundancies announced before the reporting date. Makegood A provision has been recognised for makegood obligations at the end of the lease term for leased property. The Group calculates the provisions on the present value of future cash flows in respect of meeting contract obligations. Engenco Limited and its controlled entities Annual Report 2024 71 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 Other Provisions Other provisions relate to various categories including provisions for warranty costs and other costs required to be incurred under contractual obligations. Long Service Leave Employee Benefits $’000 Annual Leave Employee Benefits $’000 Restructuring $’000 Makegood $’000 Other $’000 Total $’000 BALANCE AT 1 JULY 2023 3,211 4,388 52 4,143 2,200 13,994 Provisions raised 301 3,377 162 517 847 5,204 Provisions released – – – – – – Provisions used (508) (3,398) (109) (177) (1,226) (5,418) BALANCE AT 30 JUNE 2024 3,004 4,367 105 4,483 1,821 13,780 Current 2,497 4,367 105 238 1,821 9,028 Non-current 507 – – 4,245 – 4,752 BALANCE AT 30 JUNE 2024 3,004 4,367 105 4,483 1,821 13,780 Note 20 – Contingent Assets and Liabilities The Group has arranged for its bankers to guarantee its performance to third parties. The maximum amount of these guarantees at 30 June 2024 is $2,498,098 (2023: $2,543,521). Note 21 – Issued Capital and Reserves (a) Share Capital 2024 $’000 2023 $’000 315,793,413 (2023: 315,650,256) fully paid ordinary shares 303,951 303,900 Ordinary Shares 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. 2024 No. 2023 No. At beginning of reporting period 315,650,256 315,495,882 Employee share purchase plan 143,157 154,374 BALANCE AS AT 30 JUNE 315,793,413 315,650,256 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. Note 19 – Provisions (continued) Engenco Limited and its controlled entities Annual Report 2024 72 Employee Share Purchase Plan At the 2020 Annual General Meeting, shareholders approved an Employee Share Purchase Plan (ESPP). The ESPP is available to all eligible employees each year to acquire ordinary shares in the Company from future remuneration (before tax). Shares to be issued or transferred under the ESPP will be valued at a 5% discount to the volume-weighted average price of the Company’s shares traded on the Australian Securities Exchange during the five business days immediately preceding the day the shares are issued. Shares issued under the ESPP are not allowed to be sold, transferred or otherwise disposed of until the earlier of an initial three-year period, or the participant ceasing continuing employment with the Company. The value of shares issued under the ESPP that were recognised during the year was $51,000 (2023: $66,000). (b) Nature and Purpose of Reserves Foreign currency translation reserve The foreign currency translation reserve records exchange differences arising on translation of overseas subsidiaries. Hedging reserve The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in foreign currency hedges pending subsequent recognition in OCI or directly included in the initial cost or other carrying amount of a non-financial asset or non-financial liability. 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 2024, and there are no tax consequences. 2024 $’000 2023 $’000 (a) INTERIM DIVIDEND DECLARED NIL cents per ordinary share (2023: NIL) – – (b) FINAL DIVIDEND DECLARED 0.5 cents per ordinary share (2023: 0.5 cents) 1,579 1,578 (c) 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% (2023: 30%) – – Engenco Limited and its controlled entities Annual Report 2024 73 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 Note 22 – Parent Entity Disclosures As at, and throughout the financial year ended 30 June 2024, 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. 2024 $’000 2023* $’000 (a) Financial Position of Parent Entity at year end ASSETS Current assets 3,134 1,902 Non-current assets 87,070 71,734 TOTAL ASSETS 90,204 73,636 LIABILITIES Current liabilities 41,120 31,927 Non-current liabilities 7,991 3,030 TOTAL LIABILITIES 49,111 34,957 NET ASSETS 41,093 38,679 EQUITY Issued capital 303,951 303,900 Profit reserve 18,795 16,432 Accumulated losses (281,653) (281,653) TOTAL EQUITY 41,093 38,679 (b) Result of Parent Entity Profit for the year 3,930 5,932 Other comprehensive income – – TOTAL COMPREHENSIVE INCOME FOR THE YEAR 3,930 5,932 * 2023 comparative figures have been restated. Full details are disclosed in Note 1 The Parent entity’s current liabilities relate to Group banking facilities secured against the subsidiaries’ assets within the Group. Details of these facilities can be found in Note 9 – Cash and Cash Equivalents. (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 18(a) – Financial Liabilities. (d) Parent Entity Contingent Liabilities At 30 June 2024, the parent entity has no significant contingent liabilities (2023: NIL). (e) Parent Entity Capital Commitments for acquisition of property, plant and equipment At 30 June 2024, the parent entity had not entered into any contractual commitments for the acquisition of property, plant and equipment and other intangible assets (2023: NIL). Engenco Limited and its controlled entities Annual Report 2024 74 Note 23 – Cash Flow Information (a) Reconciliation of Cash at End of Financial Year Note 2024 $’000 2023 $’000 Cash and cash equivalents 9 18,986 8,478 Bank loans 18 (14,250) (13,000) CASH (NET OF BANK LOANS) AT END OF FINANCIAL YEAR 4,736 (4,522) (b) Reconciliation of Cash Flow from Operating Activities with Profit after Income Tax 2024 $’000 2023* $’000 PROFIT AFTER INCOME TAX 3,930 5,932 Adjustments for non-cash items: – Depreciation 9,065 7,610 – Other intangibles amortisation 181 207 – (Reversal of) / Impairment losses on inventory (121) 2,729 – Movement in ECL provision 312 395 – Net finance costs 956 707 – Income tax expense / (benefit) 1,316 (413) – Gain on lease modification (45) (473) – Gain on sale of property, plant and equipment (80) (199) 15,514 16,495 Changes in: – (Increase) / decrease in trade and other receivables 5,925 (8,940) – (Increase) / decrease in prepayments (1,112) (186) – (Increase) / decrease in inventories (1,479) (7,881) – Increase / (decrease) in trade payables and accruals 6,837 3,382 – Increase / (decrease) in provisions 540 777 Cash provided by / (used in) operating activities 26,225 3,647 – Net interest paid (956) (707) – Income taxes paid (166) 47 CASH FLOW PROVIDED BY OPERATIONS 25,103 2,987 * 2023 comparative figures have been restated. Full details are disclosed in Note 1. Engenco Limited and its controlled entities Annual Report 2024 75 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 Note 24 – Financial Risk Management The Group’s financial instruments consist mainly of accounts receivable and payable, bank loans, contract assets and liabilities, and leases. Note 2024 $’000 2023 $’000 FINANCIAL ASSETS Cash and cash equivalents 9 18,986 8,478 Trade and other receivables 10 31,590 38,296 Contract assets 5 7,419 6,962 57,995 53,736 FINANCIAL LIABILITIES Trade and other payables 17 28,257 29,677 Bank loans 18 14,250 13,000 Financial liabilities 139 – Contract liabilities 5 12,712 5,176 Lease liabilities 12 24,285 17,749 79,643 65,602 The Group measures Trade and other receivables along with Trade and other payables at amortised costs. The Group designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in foreign exchange rates. The Group initially measures derivatives at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and any changes therein are recognised in other comprehensive income. The Group’s treasury risk management policy is to hedge its estimated foreign currency exposure in respect of highly probable forecast sales and the associated purchases. The Group uses forward exchange contracts to hedge its currency risk, most with a maturity of less than one year from the reporting date. These contracts are designated as cash flow hedges with a 1:1 hedge ratio. At inception of the designated hedging relationship, the Group documents the risk management objective and strategy for undertaking the hedge. The Group also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other. When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in OCI and accumulated in the hedging reserve. The effective portion of changes in the fair value of the derivative that is recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. The Group designates only the change in fair value of the spot element of forward exchange contracts as the hedging instrument in cash flow hedging relationships. The change in fair value of the forward element of forward exchange contracts (forward points) is separately accounted for as a cost of hedging, recognised in other comprehensive income and accumulated in a separate component of equity. When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as inventory, the amount accumulated in the hedging reserve and the cost of hedging reserve is included directly in the initial cost of the non-financial item when it is recognised. For all other hedged forecast transactions, the amount accumulated in the hedging reserve and the cost of hedging reserve is reclassified to profit or loss in the same period or periods during which the hedged expected future cash flows affect profit or loss. i. Treasury Risk Management Treasury risk management is centralised within the corporate office and the treasury function monitors financial risk exposure and evaluates treasury management strategies in Engenco Limited and its controlled entities Annual Report 2024 76 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 in accordance with Board approved delegations of authority. 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 approving 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. a. Interest Rate Risk Exposure to interest rate risk arises on financial liabilities recognised at the 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 floating rate debt. The Group has not 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 could impact future cash flows and interest charges and is indicated by the following floating interest rate financial liabilities: 2024 $’000 2023 $’000 FLOATING RATE INSTRUMENTS Bank loans 14,250 13,000 Total Floating Rate Instruments 14,250 13,000 b. Liquidity Risk 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 regular forecast cash flow analysis in relation to its operational, investing and financing activities; ●Monitoring undrawn credit facilities; ●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. Engenco Limited and its controlled entities Annual Report 2024 77 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 Financial Liability Maturity Analysis Consolidated Group Within 1 Year 1 to 5 Years Over 5 Years Total 2024 $’000 2023 $’000 2024 $’000 2023 $’000 2024 $’000 2023 $’000 2024 $’000 2023 $’000 FINANCIAL LIABILITIES DUE FOR PAYMENT Trade and other payables 28,257 29,677 – – – – 28,257 29,677 Bank loans 10,000 13,000 4,250 – – – 14,250 13,000 Financial liabilities 139 – – – – – 139 – Contract liabilities 12,712 5,176 – – – – 12,712 5,176 Lease liabilities 5,328 4,489 12,410 10,489 6,547 2,771 24,285 17,749 Total Expected Outflows 56,436 52,342 16,660 10,489 6,547 2,771 79,643 65,602 c. Currency Risk 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 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 cash balances with financial institutions. 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. 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 – Trade and Other Receivables. Balances held with banks are with AA rated financial institutions, details of these holdings can be found in Note 9 – Cash and Cash Equivalents. 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 Note 24 – Financial Risk Management (continued) Engenco Limited and its controlled entities Annual Report 2024 78 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. Consolidated Group 2024 Carrying Value $’000 2024 Fair Value $’000 2023 Carrying Value $’000 2023 Fair Value $’000 FINANCIAL ASSETS Cash and cash equivalents 18,986 18,986 8,478 8,478 Trade and other receivables 31,590 31,590 38,296 38,296 Contract assets 7,419 7,419 6,962 6,962 57,995 57,995 53,736 53,736 FINANCIAL LIABILITIES Trade and other payables 28,257 28,257 29,677 29,677 Bank loans 14,250 14,250 13,000 13,000 Financial liabilities 139 139 – – Contract liabilities 12,712 12,712 5,176 5,176 Lease liabilities 24,285 24,285 17,749 17,749 79,643 79,643 65,602 65,602 The fair values disclosed in the above table have been determined based on the following methodologies: ●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 borrowings have carrying values equivalent to fair value. The majority of these facilities have floating rates. 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 effect on earnings and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows: 2024 $’000 2023 $’000 CHANGE IN EARNINGS – Increase in interest rates by 100 basis points (274) (153) – Decrease in interest rates by 100 basis points 274 153 CHANGE IN EQUITY – Increase in interest rates by 100 basis points (274) (153) – Decrease in interest rates by 100 basis points 274 153 Engenco Limited and its controlled entities Annual Report 2024 79 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 Note 24 – Financial Risk Management (continued) c. Currency Risk Sensitivity Analysis 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: 2024 $’000 2023 $’000 CHANGE IN EARNINGS – Improvement in AUD to SEK by 5% (49) (25) – Decline in AUD to SEK by 5% 49 25 CHANGE IN EQUITY – Improvement in AUD to SEK by 5% 420 436 – Decline in AUD to SEK by 5% (420) (436) 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 2024 and 2023 are as follows: 2024 $’000 2023* $’000 Total borrowings 14,250 13,000 Net debt / (cash) (4,736) 4,522 Total equity 96,932 94,280 TOTAL EQUITY AND NET DEBT 92,196 98,802 GEARING RATIO (5%) 5% * 2023 comparative figures have been restated. Full details are disclosed in Note 1. Engenco Limited and its controlled entities Annual Report 2024 80 Note 25 – Related Party Transactions (a) Transactions with Key Management Personnel Short-term employee benefits 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. (i) Key Management Personnel Compensation The totals of remuneration paid to key management personnel during the year (including termination benefits) are as follows: 2024 $ 2023* $ Short-term employee benefits 1,434,780 1,566,306 Post-employment benefits 102,572 97,774 Termination benefits – 24,978 Other long-term benefits – 3,177 TOTAL 1,537,352 1,692,235 * 2023 prior year comparatives have been updated following the performance related payments made subsequent to 30 June 2023 reporting. Compensation of the Group’s key management personnel includes salaries, superannuation and post‑employment benefits. Engenco Limited and its controlled entities Annual Report 2024 81 Notes to the Consolidated Financial Statements for the year ended 30 June 2024 (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. 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: Revenue/(Cost) for the year ended 30 June Receivable/(Payable) for the year ended 30 June 2024 $ 2023 $ 2024 $ 2023 $ Elphinstone Group (Aust) Pty Ltd1 D Elphinstone / K Elphinstone (298,414) (116,945) (1,872) – William Adams Pty Ltd2 D Elphinstone (12,166) (7,865) – – United Equipment Pty Ltd3 D Elphinstone / K Elphinstone (128,957) (638,122) (29,171) 51,139 Southern Prospect Pty Ltd4 D Elphinstone / K Elphinstone – 384 – – Elphinstone Pty Ltd5 D Elphinstone / K Elphinstone 1,287,612 2,961,438 76,699 1,270,314 Gekko Systems Pty Ltd6 D Elphinstone / K Elphinstone 47,047 78,089 6,618 16,181 1 Director fees and travel expense reimbursements were paid to Elphinstone Group (Aust) Pty Ltd for the services of Dale Elphinstone (Non-Executive Director) and Kelly Elphinstone (Non-Executive Director). Dale Elphinstone is Chairman of this entity. Kelly Elphinstone is also a director of this entity. 2 Goods were purchased from William Adams Pty Ltd during the period. Dale Elphinstone is the Chairman and a director. 3 Goods were purchased from and sold to United Equipment Pty Ltd in the period. Kelly Elphinstone is a director (Chair) of this entity. Dale Elphinstone is also a director of this entity. 4 Goods were sold to Southern Prospect Pty Ltd during the prior period. Dale Elphinstone is the Chairman of this entity. Kelly Elphinstone is also a director of this entity. 5 Goods were sold to Elphinstone Pty Ltd during the period. Dale Elphinstone is a director and the Chairman of this entity. Kelly Elphinstone is also a director of this entity. 6 Goods were sold to Gekko Systems Pty Ltd during the period. Kelly Elphinstone is a director of this entity. Dale Elphinstone was also a director of this entity during the prior period. (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 2024 $’000 2023 $’000 Current receivables (parent entity): Receivables from subsidiaries 26 835 The intercompany loans extended from Engenco Limited to its wholly owned subsidiaries are extended on the following terms: Term: Revolving Facility repayable when subsidiary is in a position to do so or as otherwise decided by the Company. Rate: Fixed rate reviewable quarterly. Note 25 – Related Party Transactions (continued) Engenco Limited and its controlled entities Annual Report 2024 82 Note 26 – Auditor’s Remuneration 2024 $ 2023 $ AUDIT AND REVIEW SERVICES Auditors of the Company – Grant Thornton Audit Pty Ltd 288,400 – – KPMG Australia 70,229 437,000 – KPMG Overseas 31,850 31,689 390,479 468,689 OTHER SERVICES Auditors of the Company – KPMG Australia – in relation to tax services – 5,822 TOTAL OTHER SERVICES – 5,822 Note 27 – Events Subsequent to Reporting Date On 28 August 2024, the Board resolved to declare a final unfranked dividend of 0.5 cents per share. Payment of the dividend to shareholders will take place on 26 September 2024. 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 2024. Engenco Limited and its controlled entities Annual Report 2024 83 Consolidated Entity Disclosure Statement for the year ended 30 June 2024 Note: Subsidiaries are indented beneath their parent entity Type of Entity Trustee, partner or participant in Joint Venture % of Share Capital Country of Incorporation Australian or Foreign tax resident Jurisdiction for Foreign tax resident ●Engenco Limited Body Corporate – – Australia Australian N/A – Convair Engineering Pty Ltd Body Corporate N/A 100% Australia Australian N/A – Engenco Logistics Pty Ltd Body Corporate N/A 100% Australia Australian N/A – Engenco Investments Pty Ltd Body Corporate N/A 100% Australia Australian N/A – Workforce Solutions Pty Ltd Body Corporate N/A 100% Australia Australian N/A – Centre for Excellence in Rail Training Pty Ltd Body Corporate N/A 100% Australia Australian N/A – EGN Rail Pty Ltd Body Corporate N/A 100% Australia Australian N/A – Greentrains Pty Ltd1 Body Corporate N/A 81% Australia Australian N/A * Greentrains Leasing Pty Ltd Body Corporate N/A 100% Australia Australian N/A – Eureka 4WD Training Pty Ltd Body Corporate N/A 100% Australia Australian N/A * MRH Training Apps Pty Ltd Body Corporate N/A 100% Australia Australian N/A – Drivetrain Power and Propulsion Pty Ltd Body Corporate N/A 100% Australia Australian N/A – Drivetrain Australia Pty Ltd Body Corporate N/A 100% Australia Australian N/A * Drivetrain Limited Body Corporate N/A 100% New Zealand Foreign New Zealand * HS Turbochargers America, Inc. Body Corporate N/A 100% USA Foreign USA – Hyradix Inc. Body Corporate N/A 100% USA Foreign USA * Hedemora Investments AB Body Corporate N/A 100% Sweden Foreign Sweden – Hedemora Turbo & Diesel AB Body Corporate N/A 100% Sweden Foreign Sweden – Gemco Rail Pty Ltd Body Corporate N/A 100% Australia Australian N/A – Industrial Powertrain Pty Ltd Body Corporate N/A 100% Australia Australian N/A – Total Momentum Pty Ltd Body Corporate N/A 100% Australia Australian N/A 1 Total Engenco Group ownership of Greentrains Pty Ltd is 81% (split between Engenco Investments Pty Ltd, 61%, and Engenco Ltd, 20%). Engenco Limited and its controlled entities Annual Report 2024 84 Basis of preparation This consolidated entity disclosure statement (CEDS) has been prepared in accordance with the Corporations Act 2001 and includes information for each entity that was part of the consolidated entity as at the end of the financial year in accordance with AASB 10: Consolidated Financial Statements. Determination of tax residency Section 295 (3A)(vi) of the Corporations Act 2001 defines tax residency as having the meaning in the Income Tax Assessment Act 1997. The determination of tax residency involves judgement as there are different interpretations that could be adopted, and which could give rise to a different conclusion on residency. In determining tax residency, the consolidated entity has applied the following interpretations: ●Australian tax residency; The consolidated entity has applied current legislation and judicial precedent, including having regard to the Tax Commissioner’s public guidance in Tax Ruling TR 2018/5. ●Foreign tax residency; Where necessary, the consolidated entity has used independent tax advisers in foreign jurisdictions to assist in its determination of tax residency to ensure applicable foreign tax legislation has been complied with (see section 295(3A)(vii) of the Corporations Act 2001). Engenco Limited and its controlled entities Annual Report 2024 85 Shareholder Information for the year ended 30 June 2024 Additional Information for Listed Companies at 19 August 2024. The following information is provided in accordance with the ASX Listing Rules. 1. Shareholding (a) Distribution of shareholders Category (size of holding) No. of Shareholders No. Ordinary Shares % 1 – 1,000 143 31,093 0.01% 1,001 – 5,000 282 842,881 0.27% 5,001 – 10,000 149 1,153,431 0.36% 10,001 – 100,000 199 7,090,439 2.25% 100,001 – and over 100 306,675,569 97.11% 873 315,793,413 100% (b) The number of shareholdings held in less than marketable parcels (less than $500 in value) is 291. (c) 20 largest shareholders – ordinary shares Position Name Number of Ordinary Fully Paid Shares Held % Held of Issued Ordinary Capital 1 Elph Investments Pty Ltd 117,248,040 37.13% 2 Elph Pty Ltd 99,306,667 31.45% 3 UBS Nominees Pty Ltd 33,966,932 10.76% 4 RAC & JD Brice Superannuation Pty Ltd 17,287,249 5.47% 5 Mr Hugh William Maguire & Mrs Susan Anne Maguire 5,439,167 1.72% 6 Mr Neville Leslie Esler & Mrs Cheryl Anne Esler 2,296,925 0.73% 7 Strategic Value Pty Ltd 1,538,400 0.49% 8 HSBC Custody Nominees (Australia) Limited 1,513,024 0.48% 9 Mr Dennis Graham Austin & Mrs Marilyn Alice Austin 1,481,860 0.47% 10 Dr Jared Charles Lawrence & Mrs Kathryn Helen Zaccaria 1,394,535 0.44% 11 Prussner Investments Pty Ltd 1,170,688 0.37% 12 Neko Super Pty Ltd 1,100,000 0.35% 13 BFA Super Pty Ltd 944,950 0.30% 14 Delacorp Pty Ltd 853,000 0.27% 15 Rayneman Enterprises Pty Ltd 849,702 0.27% 16 Robroz Pty Ltd 700,000 0.22% 17 Mr Geoffrey Bruce Thorn & Mrs Vanessa Thorn 557,230 0.18% 18 Keltrabrod Pty Ltd 550,000 0.17% 19 Bryan & Jean Hiscock Superannuation Pty Ltd 550,000 0.17% 20 TB & Ek Nominees Pty Ltd 532,000 0.17% 289,280,369 91.61% Engenco Limited and its controlled entities Annual Report 2024 86 (d) Shareholders holding in excess of 5% of issued capital were listed in the holding company’s register as follows: Shareholder No. Ordinary Shares % Elph Investments Pty Ltd 117,248,040 37.13% Elph Pty Ltd 99,306,667 31.45% Thorney Investment Group Pty Ltd 33,966,932 10.76% RAC & JD Brice Superannuation Pty Ltd 17,287,249 5.47% (e) Voting Rights 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. 2. The name of the Company Secretary is: Meredith Rhimes 3. The address of the principal registered office in Australia is: Level 14, 140 William Street, Melbourne, VIC 3000 4. Registers of securities are held at the following address: Automic Group Level 5, 126 Phillip Street Sydney NSW 2000 GPO Box 5193 Sydney NSW 2001 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. Engenco Limited and its controlled entities Annual Report 2024 87 Corporate Directory for the year ended 30 June 2024 Corporate Office Engenco Limited Level 14 140 William 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 Registered Office Engenco Limited Level 14 140 William Street Melbourne VIC 3000 T: +61 (0)3 8620 8900 F: +61 (0)3 8620 8999 Directors Vincent De Santis BCom, LLB (Hons) Independent Non-Executive Chairman Dean Draper MBA, BBus Managing Director & CEO Dale Elphinstone AO FAICD Non-Executive Director Scott Cameron BCom, FCA, FAICD Independent Non-Executive Director Kelly Elphinstone Adv Dip Bus (Mktg), GAICD Non-Executive Director Chris McFadden MBA, BCom, LLB Independent Non-Executive Director Company Secretary Meredith Rhimes BA, LLB, FGIA Company Secretary Auditors Grant Thornton Audit Pty Ltd Collins Square Tower 5, Level 22 727 Collins Street Melbourne VIC 3000 T: +61 (0)3 9288 5555 F: +61 (0)3 9288 6666 Share Registry Automic Group Level 5 126 Phillip Street Sydney NSW 2000 GPO Box 5193 Sydney NSW 2001 T: +61 (0)2 8072 1400 hello@automicgroup.com.au automicgroup.com.au Engenco Limited and its controlled entities Annual Report 2024 88 www.engenco.com.au