EVZ LIMITED
A.B.N.87 010 550 357
AND CONTROLLED ENTITIES
ANNUAL REPORT
2015
EVZ LIMITED
Chairman’s Report
Significant progress has been made since 30 June 2015 which now allows the EVZ Group to
finalise its 30 June 2015 Annual Report. Specifically:
• The EVZ Group has been able to execute an extension to its maturing banking facilities. The
Company’s financier the Commonwealth Bank of Australia continues to support the EVZ Group and
has has extended the existing banking facilities to 31 March 2017.
• Concurrently, the EVZ Group has entered into a commercial agreement with Australia Pacific
Airports (Melbourne) Pty Ltd to provide an appropriate commercial and financial framework for the
completion of the Melbourne Airport Tri-Generation facility.
These two milestones provide the necessary stability to the EVZ Group going forward and allows
the EVZ Group to continue to determine and pursue the appropriate avenues to improve the capital
and debt positions of the EVZ Group.
It is also pleasing to advise that the EVZ Group has returned to a positive trading platform post 30
June 2015 which will be reflected in the 31 December 2015 half-year results.
Our tank construction and piping operation, Brockman Engineering, continues to be a lead player in
that market and has built a strong reputation over an extended client base. The return to profitability
of Brockman started in FY2015 and continues into FY2016.
In FY2016 to date there a has been a re-emergence of the EVZ Group’s Siphonic drainage
operation, Syfon Systems. In late FY2015 Syfon Australia undertook a significant internal evaluation
of processes which has resulted in a pleasing return to trading profitability in Australia. The Asian
operation maintained its profitability and has continued to win significant contracts resulting in record
levels of forward work in hand.
The energy operation, TSF, has had varying success since the close of FY2015. The Engineering
component has been restrained whilst a commercial agreement to the completion of the Melbourne
Airport Tri-Generation project was being negotiated and finalised. However, the Maintenance
business continues to be profitable and is focused on expanding its geographic and client base.
Whilst the economy in which the EVZ Group operates remains constrained and extremely
competitive, the EVZ Group now sits in a stronger position than it did at the close of FY2015.
A considerable amount of gratitude must go to our workforce who continue to perform and represent
the EVZ Group in the best possible way.
Finally, I would like to thank our loyal shareholders for their patience whilst the milestone
agreements with our financier and the Melbourne Airport project were being negotiated and
executed. Your Board of Directors remain committed to achieve improved value for our
shareholders.
Max Findlay - Chairman
EVZ LIMITED
ANNUAL REPORT 2015
CONTENTS
CORPORATE DIRECTORY ....................................................................................................... 4
DIRECTORS’ REPORT .............................................................................................................. 5
CORPORATE GOVERNANCE STATEMENT .......................................................................... 15
AUDITOR’S INDEPENDENCE DECLARATION ...................................................................... 24
CONSOLIDATED STATEMENT OF PROFIT OR LOSS .......................................................... 25
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME .......................................... 26
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................... 27
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ................................................... 28
CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................ 29
NOTES TO AND FORMING PART OF THE ACCOUNTS........................................................ 30
DIRECTORS’ DECLARATION ................................................................................................. 69
INDEPENDENT AUDIT REPORT TO THE MEMBERS ............................................................ 70
ADDITIONAL SHAREHOLDER INFORMATION ..................................................................... 72
Page 3
EVZ LIMITED
CORPORATE DIRECTORY
DIRECTORS
M Findlay
G Burns
R Edgley
(Non-Executive Chairman)
(Non-Executive Director)
(Non-Executive Director)
CHIEF EXECUTIVE OFFICER
S Farthing
CHIEF FINANCIAL OFFICER &
COMPANY SECRETARY
I Wallace
REGISTERED & PRINCIPAL OFFICE
SHARE REGISTRY
AUDITORS
22 Hargreaves Street
HUNTINGDALE Vic 3166
Telephone:
Facsimile:
Email:
(03) 9545 5288
(03) 9542 6061
ian.wallace@evz.com.au
Computershare Investor Services Pty Ltd
452 Johnston Street
ABBOTSFORD Vic 3067
Telephone:
Facsimile:
1300 137 328
1300 137 341
Crowe Horwath Melbourne
Level 17
181 William Street
MELBOURNE VIC 3000
BANKERS
Commonwealth Bank of Australia
STOCK EXCHANGE LISTING
Australian Securities Exchange Limited
(Home Exchange – Melbourne)
ASX Code: EVZ
Page 4
EVZ LIMITED
DIRECTORS’ REPORT
The Directors present their report on the financial statements of the Company and economic entity
for the year ended 30 June 2015. In order to comply with the provisions of the Corporations Act, the
Directors report as follows:
DIRECTORS
The following persons were Directors of the Company during the financial year and up to the date of
this report:
Maxwell FINDLAY
Graham BURNS
Robert EDGLEY
Raelene MURPHY (Resigned 4 March 2016)
INFORMATION ON DIRECTORS
Details of the Directors of the Company in office at the date of this report are:
Maxwell Findlay Appointed 14 May 2008 – Non-Executive Chairman.
Mr Findlay, age 70, was the Managing Director of Programmed Maintenance
Services Limited from 1988 to 2008 and accumulated significant and relevant
experience in the strategy, planning, management and marketing of a growing
industrial organisation.
Mr Findlay holds a Bachelor’s degree in Economics and is a Fellow of the
Australian Institute of Company Directors.
Mr Findlay is a member of the Audit Committee, Nomination Committee and
Remuneration Committee.
Mr Findlay is also Chairman of SMEC Holding Ltd.
Interest in Shares: 1,644,500 ordinary shares
Graham Burns
Appointed 1 February 2008 – Non-Executive Director.
Mr Burns, age 60, has extensive managerial skills and experience in the
property, retail and manufacturing sectors. He is currently the Chief Executive
of Hunter Land which is a significant industrial developer in regional New South
Wales.
Mr Burns GAICD, is Chairman of the Remuneration Committee and a member
of the Nomination Committee.
Interest in Shares: 10,543,985 ordinary shares
Robert Edgley
Appointed 26 August 2011 – Non-Executive Director.
Mr Edgley, age 50, holds a Bachelor’s degree in Economics from Monash
University together with a second degree in Japanese language. Mr Edgley’s
career has been predominantly focused in International Finance and Investment
Banking in Australia, the UK and throughout Asia.
in strategic planning,
Mr Edgley has significant experience and skills
performance management and marketing and has proven abilities in building
businesses.
Page 5
EVZ LIMITED
DIRECTORS’ REPORT
INFORMATION ON DIRECTORS (Continued)
Mr Edgley is Chairman of the Audit Committee and a member of the
Remuneration and Nomination Committees.
Mr Edgley is also a non-executive Director of Praemium Limited, an ASX listed
company.
Interest in Shares: 3,741,232 ordinary shares.
DIRECTORS’ MEETINGS
The following table sets out the number of Directors’ Meetings (including meetings of any committee
of Directors) held during the financial year and the number of meetings attended by each Director
(whilst they were a Director or Committee member):
DIRECTORS’ MEETINGS
Total number of meetings held: 16
M Findlay – Chairman
G Burns
R Edgley
R Murphy (Resigned 4 March 2016)
REMUNERATION COMMITTEE MEETINGS
Total number of meetings held: 2
G Burns – Chairman
M Findlay
R Edgley
No. Attended
16
15
16
14
No. Held
Whilst a Director
16
16
16
16
No. Attended
2
2
2
No. Held
Whilst a Member
2
2
2
Page 6
EVZ LIMITED
DIRECTORS’ REPORT
AUDIT COMMITTEE MEETINGS
Total number of meetings held: 2
R Murphy – Chairperson (Resigned 4 March 2016)
M Findlay
R Edgley – (Appointed Chairperson 8 March 2016)
No. Attended
1
2
2
No. Held
Whilst a Member
2
2
2
There were no meetings of the Nomination Committee held during the year.
COMPANY SECRETARY
The Company Secretary is Ian Wallace. Mr Wallace is a Bachelor of Economics (Hons), and a
Chartered Accountant with accounting and company secretarial experience in listed and unlisted
companies.
PRINCIPAL ACTIVITIES
The economic entity operates in the energy and engineering services sectors and its principal
activities are:
• Design, manufacture, service and maintenance of large steel tanks for use in the water,
petrochemical and chemical industries.
• Design, construction, on-site installation, maintenance and shutdown engineering services to
the mining, wood chip, petrochemical, aluminium, glass, cement, defence and agriculture
industries.
• Design and installation of syfonic roof drainage systems to major buildings including airports,
shopping centres and sporting venues throughout Australia and South East Asia.
• Design, installation and maintenance of clean energy solutions, base and back-up power
generation equipment, communications equipment, marine installations and provision of mobile
generation capabilities.
OPERATING RESULTS
The net loss for the economic entity for the year after income tax expense was $10,426,791
compared to a net loss after income tax expense in 2014 of $6,211,495. The current year net loss
includes impairments taken of $4,003,799.
The financial year has seen some significant challenges within the EVZ Group of businesses which
has led to a deterioration in the financial results for the Group.
The deterioration in results stems from the commercial resolution of a number of key projects
completed or near completion in the Groups energy division and the Australian arm of the Groups
water division. These projects are now nearing completion and expected future costs have been
provided at reporting date. These projects have also impacted on the Groups cash position.
In addition to this, continuing higher interest costs associated with the Groups debt has also negatively
impacted the financial results.
The Groups Engineering division continues its strong turnaround and has delivered a marked
improvement across the financial year. It has a significant contracted pipeline of work for FY16. The
Groups Asian subsidiary of its water division is also experiencing high levels of contracted work for
FY16.
The continued uncertainty which persists with respect to the government’s position on energy and its
pricing has stalled the roll out of the Groups clean energy strategy. Whilst the clean energy solutions
being offered by TSF have supportable benefits to prospective clients, there is a general reluctance to
commit to invest in these solutions by the end user until the federal government establishes its energy
Page 7
EVZ LIMITED
DIRECTORS’ REPORT
and pricing position. As such TSF continues to face protracted lead times on clean energy
opportunities.
The Directors have therefore considered it prudent to fully impair the carrying value of goodwill in TSF.
This has resulted in a $4m impairment expense in the year to 30 June 2015.
The Groups bank facilities matured on 1 October 2015. Subsequent to balance date the Group’s
financier, the Commonwealth Bank of Australia extended the existing banking facilities to 31 March
2017. In addition the Bank allowed the conversion of the exiting bank overdraft into a market rate loan
facility. The covenants associated with this facility remain unchanged being an interest cover covenant
(of 3 times EBIT) and a current ratio covenant (of 1.25 times). The security over the extended facility
remains unchanged.
The EVZ Group has also successfully reached a commercial agreement which will allow the
Melbourne Airport Tri-Generation project to be completed. This commercial agreement appropriately
compensates EVZ for the estimated costs of completion of this project and realigns the required
completion date of the project to the end of December 2016.
DIVIDENDS
No dividends were declared or paid during the year.
REVIEW OF ACTIVITIES
During the year under review the Company:
• Faced difficult trading conditions resulting from the prevailing economic conditions which have
resulted in delays in the awarding and commencement of contracted work.
• Continued to expand its customer, product and geographic base from an increased investment
in business development.
CHANGES IN STATE OF AFFAIRS
There was no change in the state of affairs.
Page 8
EVZ LIMITED
DIRECTORS’ REPORT
SUBSEQUENT EVENTS
Subsequent to balance date the Group’s financier, the Commonwealth Bank of Australia extended the
existing banking facilities to 31 March 2017. In addition the Bank allowed the conversion of the exiting
bank overdraft into a market rate loan facility. The covenants associated with this facility remain
unchanged being an interest cover covenant (of 3 times EBIT) and a current ratio covenant (of 1.25
times). The security over the extended facility remains unchanged.
Subsequent to balance date the EVZ Group has also successfully reached a commercial agreement
which will allow the Melbourne Airport Tri-Generation project to be completed. This commercial
agreement appropriately compensates EVZ for the estimated costs of completion of this project and
realigns the required completion date of the project to the end of December 2016.
Other than the matters noted above, there have not been any matters or circumstances, other than that
referred to in the financial statements or notes thereto, that have arisen since the end of the financial
year, that have significantly affected, or may significantly affect, the operations of the economic entity,
the results of those operations, or the state of affairs of the economic entity in future financial years
after this financial year.
FUTURE DEVELOPMENTS
The Group will continue its focus on investing in growth across all of its businesses and the
reduction/retirement of debt.
PROCEEDINGS ON BEHALF OF THE COMPANY
No proceedings have been brought or intervened in on behalf of the Company with leave of the
Court under Section 237 of the Corporations Act 2001.
SHARE OPTIONS
There are no share options.
ENVIRONMENTAL REGULATION
The economic entity is not subject to any significant environmental regulations under a
Commonwealth, State or Territory Law.
INSURANCE OF OFFICERS
During the financial year the Company insured the Directors and Officers of the Company against
legal costs that may be brought against the Directors and Officers in their capacity as Officers of the
Company. The policy provides for confidentiality with respect to its premium.
NON-AUDIT SERVICES
During the current and prior year there were no non-audit services provided by the Company’s
auditors.
AUDITORS’ INDEPENDENCE DECLARATION
As required under Section 307C of the Corporations Act 2001, EVZ Limited has obtained an
Independence Declaration from its auditors, Crowe Horwath. This is included on page 24 of this
financial report.
Page 9
EVZ LIMITED
DIRECTORS’ REPORT
REMUNERATION REPORT
This report details the nature and amount of remuneration for each Director of EVZ Limited and for
Key Management Personnel.
Remuneration Policy
The remuneration policy of EVZ Limited has been designed to align Director and Executive
remuneration with shareholder and business objectives by providing a fixed remuneration
component and where appropriate offering specific short and long-term incentives based on key
performance areas affecting the economic entity’s financial results. The Board believes the
remuneration policy to be appropriate and effective in its ability to attract and retain the best
Directors and Executives to govern and manage the economic entity, as well as to create goal
congruence between Directors, Executives and Shareholders.
Executive Remuneration
The Board’s policy for determining the nature and amount of remuneration for key senior Executives
for the economic entity is as follows:
• The remuneration policy, setting the terms and conditions for Executive officers, was developed
by the Remuneration Committee and approved by the Board after seeking professional advice
where appropriate from independent external consultants.
• All Executives receive a base salary (which is based on factors such as length of service and
experience), superannuation, fringe benefits and where appropriate performance incentives.
The Remuneration Committee reviews Executive remuneration packages annually with reference to
the economic entity’s performance, each Executive’s performance and comparable information from
industry sectors and listed companies in similar industries. The performance of each Executive is
measured against criteria agreed and is predominantly measured by comparing actual growth
against forecast growth of the economic entity’s profits and shareholders’ value. Bonuses and
incentives will be linked to predetermined performance criteria. The Board may, however, exercise
its discretion in relation to approving incentives, bonuses and options, and can recommend changes
to the Remuneration Committee’s recommendations. Any changes must be justified by reference to
measurable performance criteria. The policy is designed to attract the highest calibre of Executives
and reward them for performance that results in long-term growth in shareholder wealth.
The Remuneration Committee set certain key performance indicators for the key Executives in the
Group. The key performance indicators were both quantitative and qualitative measures. Certain
Executives met some of these key performance indicators and the Remuneration Committee
approved short term incentive payments totaling $22,765 (2014: $41,750).
Long term incentives, linked with performance rights issued under the EVZ Directors’ and
Employees’ Benefits Plan, were not met during the year and no performance rights, options or
shares were issued.
Executives receive a superannuation guarantee contribution as required by the Government and do
not receive any other retirement benefits. Individuals may choose to sacrifice part of their salary to
increase payments towards superannuation. All remuneration paid to Executives is valued at the
cost to the Company and expensed.
Director Remuneration
The Board’s policy is to remunerate Non-Executive Directors at appropriate market rates. The
Remuneration Committee recommends the fee structure for Non-Executive Directors which will be
determined by reference to market practice, duties performed, time, commitment and accountability.
Director fees are reviewed annually by the Remuneration Committee.
The Remuneration Committee may seek independent advice in determining appropriate fee
structures for Directors.
Page 10
EVZ LIMITED
DIRECTORS’ REPORT
REMUNERATION REPORT (Continued)
The maximum aggregate amount of fees payable to Non-Executive Directors is subject to approval
by shareholders at the Annual General Meeting. Fees for Non-Executive Directors are not linked to
the performance of the economic entity. However, to align Directors’ interests with shareholder
interests, the Directors are encouraged to hold shares in the Company and may be able to
participate in any employee share/option plan introduced.
All remuneration paid to Directors is valued at the cost to the Company and expensed.
Shares and Options Issued as part of Remuneration
Shareholders had previously approved the EVZ Directors’ and Employees’ Benefits Plan (the
“Plan”) which allows employees, Directors and others (“Eligible Persons”) to be granted shares,
options and performance rights in the Company. The object of this Plan is to help the Company
recruit, reward, retain and motivate its employees and Directors.
Such shares, options and performance rights would be offered only to those Eligible Persons
entitled to receive an invitation. Those Eligible Persons would be:
•
•
a Director or Secretary of a Group Company;
an employee in permanent full-time or permanent part-time employment of a Group Company;
or
a contractor to a Group Company
•
who is selected by the Board to participate in the Plan.
Invitations to Eligible Persons will be made by the Board and may be made subject to such
conditions and rules as the Board determines, including:
•
•
In the case of Options, the exercise period, the exercise price and the exercise conditions.
In the case of Shares, the issue price payable on acceptance of the application by the
Company and issue of the shares and any other specific terms and conditions of issue.
In the case of Performance Rights, the performance criteria and the performance period in
which those performance criteria must be satisfied.
•
The issue of any securities (including options or performance rights) issued to any Director or their
associates will still require shareholder approval under ASX Listing Rule 10.14.
The maximum number of shares issued pursuant to the Plan would be not more than 5% of the
equity interests in the Company.
During the year the CEO accepted his prior year bonus of $33,750 in fully paid ordinary shares. This
resulted in 2,109,375 fully paid ordinary shares being issued during the current year. There were no
other share based payments.
Performance Based Remuneration
During the year to 30 June 2015, performance based remuneration paid/payable totalled $22,765
(2014: $41,750). These short term performance based payments were based on achieving certain
key performance indicators which were quantitative measures based on business profitability and
improvement in forward work in hand. Both measures are considered to be drivers of shareholder
value.
During the year the CEO accepted his prior year bonus of $33,750 in fully paid ordinary shares. This
resulted in 2,109,375 fully paid ordinary shares being issued during the current year. There were no
other share based payments.
Page 11
EVZ LIMITED
DIRECTORS’ REPORT
REMUNERATION REPORT (Continued)
Company Performance, Shareholder Wealth and Directors’ and Executives’ Remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders and
Directors and Executives.
Details of Remuneration for the Year ended 30 June 2015
The remuneration for each Director and each of Key Management Personnel of the economic entity
during the year was as follows:
Directors
2015
M Findlay
G Burns
R Edgley
R Murphy (Resigned 4 March 2016)
2014
M Findlay
G Burns
R Edgley
R Murphy
Short-term
Employee
Benefits
Salary
$
-
-
-
-
-
-
-
-
-
-
Fees
$
100,000
40,000
38,333
40,000
218,333
120,000
45,000
45,000
45,000
255,000
Post-Employment
Benefits
Superannuation
Contributions
$
-
-
-
-
-
-
-
-
-
-
Total
$
100,000
40,000
38,333
40,000
218,333
120,000
45,000
45,000
45,000
255,000
Key Management Personnel of the Economic Entity
Short Term Employee Benefits
Post-
Employment
Benefits
Super-
annuation
Contributions
$
Salary
$
356,027
213,661
Profit Share &
Bonus
$
Non Cash
Benefits
$
-
-
3,113
18,973
1,468
35,000
280,960
17,765
240,959
5,000
137,180
-
-
-
-
18,605
24,861
Termination
Benefits
$
Total
$
-
-
-
-
378,113
250,129
317,330
270,820
16,009
51,674
204,863
2015
S Farthing
(Chief Executive Officer)
I Wallace
(Chief Financial Officer &
Company Secretary)
A Bellgrove
(General Manager, Syfon
Systems Group)
C Bishop
(General Manager,
Brockman Engineering
Pty Ltd)
A Green
(General Manager, TSF
Engineering Group-
resigned 12/2/15)
I Whitford
(Manager, TSF
Maintenance Pty Ltd –
appointed 1/7/14)
109,225
1,338,012
-
22,765
-
4,581
11,466
124,914
-
51,674
120,691
1,541,946
Page 12
EVZ LIMITED
DIRECTORS’ REPORT
REMUNERATION REPORT (Continued)
Short Term Employee Benefits
Salary
$
Profit Share &
Bonus
$
Non Cash
Benefits
$
Post-
Employment
Benefits
Super-
annuation
Contributions
$
358,530
33,750
2,998
17,775
234,000
-
1,793
25,000
273,041
8,000
255,782
244,802
-
-
-
-
-
15,775
24,519
22,841
159,717
1,525,872
-
41,750
-
4,791
14,148
120,058
Termination
Benefits
$
Total
$
-
-
-
-
-
-
-
413,053
260,793
296,816
280,301
267,643
173,865
1,692,471
2014
S Farthing
(Chief Executive Officer)
I Wallace
(Chief Financial Officer &
Company Secretary)
A Bellgrove
(General Manager, Syfon
Systems Group)
C Bishop
(General Manager,
Brockman Engineering
Pty Ltd – appointed
1/7/13)
A Green
(General Manager, TSF
Engineering Group)
C Flanagan
(Manager, TSF
Maintenance Pty Ltd –
resigned 1/5/14)
Remuneration and other terms of employment for key Executives are formalised in employment service
agreements. Each of these agreements may provide for the provision of other benefits including car
allowances. These agreements have no fixed term. There are no other standard termination
provisions excluding notice periods. Notice periods are generally between three and six months.
Additional disclosures relating to key management personnel
The number of ordinary shares held by each Key Management Personnel of the Group during the
financial year is as follows:
30 June 2015
M Findlay
G Burns
R Edgley
Ms R Murphy (Resigned 4 March
2016)
S Farthing
I Wallace
C Bishop
A Bellgrove
A Green (resigned 12/2/15)
I Whitford
Balance at
beginning of year
1,644,500
10,000,000
3,741,232
42,500
Granted as
remuneration
-
-
-
-
1,000,000
75,008
-
4,401,949
132,000
-
21,037,189
-
-
-
-
-
-
-
Other
changes
-
543,985
-
-
2,109,375
-
-
-
(132,000)
-
Balance at
end of year
1,644,500
10,543,985
3,741,232
42,500
3,109,375
75,008
-
4,401,949
-
-
2,521,360
23,558,549
Page 13
EVZ LIMITED
DIRECTORS’ REPORT
This concludes the remuneration report, which has been audited
Signed in accordance with a resolution of the Board of Directors.
Director – M Findlay
Signed at Melbourne this 14th day of April 2016.
Page 14
EVZ LIMITED
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
Introduction
The board of EVZ Limited is committed to protecting shareholders’ interests and ensuring investors
are fully informed about the performance of the company’s business. The directors have
undertaken to perform their duties with honesty, integrity, care and diligence, according to the law
and in a manner that reflects the highest standards of corporate governance.
The policies and practices of the company are in accordance with the ASX Corporate Governance
Council’s “Corporate Governance Principles and Recommendations – 3rd Edition”.
Unless otherwise indicated, the best practice principles of the ASX Corporate Governance Council
and suggested disclosures, have been adopted by the company for the year ended 30 June 2015
as relevant to the size and complexity of the company and its operations.
The Corporate Governance Statement is current at the date of approval of the annual report and
has been approved by the Board of Directors.
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
Recommendation 1.1: Respective roles and responsibilities of the board and management.
The EVZ Limited board charter sets out the function and responsibilities of the board. The directors
of the company are accountable to shareholders for the proper management of business and affairs
of the company.
establish, monitor and modify the corporate strategies of the company;
ensure proper corporate governance;
The key responsibilities of the board are to:
•
•
• monitor and evaluate the performance of management of the company;
•
ensure that appropriate risk management systems, internal control and reporting systems and
compliance frameworks are in place and are operating effectively;
assess the necessary and desirable competencies of board members, review board succession
plans, evaluate its own performance and consider the appointment and removal of directors;
consider executive remuneration and incentive policies, the company’s recruitment, retention
and termination policies and procedures for senior management and the remuneration
framework for non-executive directors;
• monitor financial performance;
•
approve decisions concerning the capital, including capital restructures, and dividend policy of
the company; and
comply with the reporting and other requirements of the law.
•
•
•
The board delegates responsibility for day-to-day management of the company to the chief
executive officer (CEO), subject to certain financial limits. The CEO must consult the board on
matters that are sensitive, extraordinary, of a strategic nature or matters outside the permitted
financial limits.
Page 15
EVZ LIMITED
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
Recommendation 1.2: Directors Appointment
Non-executive directors appointed during the year hold office until the next annual general meeting,
where they must stand for re-election. Each year one third of the board of directors (excluding the
managing director) must retire and if they wish seek re-election at the annual general meeting.
Board support for a director’s re-election is not automatic and is subject to satisfactory director
performance.
Appropriate background checks are undertaken before a director is nominated. At the annual
general meeting shareholders are provided with all material information concerning the director
seeking election or re-election.
Recommendation 1.3: Terms of Appointment
The Company has written agreements with all senior executives setting out the terms of their
appointment. Historically written agreements have not been used for director appointments,
including current directors. However, the duties of the Directors as detailed above were provided to
all directors. Written agreements will be implemented for all future director appointments.
Recommendation 1.4: Company Secretary
The appointment and removal of the Company secretary is a decision of the Board. The Company
secretary is accountable directly to the Board, through the Chairman, on all matters relating to the
proper functioning of the Board and is responsible for ensuring compliance with Board procedures
and governance matters. All directors have direct access to the Company Secretary.
Recommendation 1.5: Diversity Policy
The Group’s ultimate success is under-pinned by its employees. To maximise success, the Group
encourages a diverse population of employees within its operations.
Diversity is defined to include race, ethnicity, gender, sexual orientation, socio-economic status,
culture, age, physical ability, education, skill levels, family status, religious, political and other beliefs
and work styles. The Group recognises that differences in ideas, backgrounds, patterns of thinking
and approaches to work can generate value for the Group’s stakeholders: its customers,
shareholders, personnel and the communities in which it operates. It is the Group’s policy to
promote these differences within a productive, inclusive and performance-based environment in
which everybody feels valued, where their skills are fully utilised, their performance is recognised,
professional accountability is expected and organisational goals are met.
The Group’s approach to diversity is based on the following objectives:
•
retain, promote and hire the best people possible, focusing on actual and potential contribution
in terms of performance, competence, collaboration and professional accountability;
foster an inclusive culture and ensure that current and future employee opportunities are based
on competence and performance, irrespective of race, ethnicity, gender, sexual orientation,
socio-economic status, culture, age, physical ability, education, family status, religious, political
and other beliefs and work styles. This includes being intolerant of behaviour that denigrates or
otherwise diminishes such attributes or that discriminates on the basis of such attributes;
create and manage appropriate human resource processes which take a unified and talent-
based approach to recruitment, training and development, performance management, retention
and succession planning;
provide a fair level of reward in order to attract and retain high calibre people – and build a
culture of achievement by providing a transparent link between reward and performance; and
be compliant with all mandatory diversity reporting requirements.
•
•
•
•
Page 16
EVZ LIMITED
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
The Group’s Measurable Objective and Current Gender Profile:
The Group’s measurable objective for increasing gender diversity is to increase the representation
of women at all levels of its organisation over time. The Group’s progress towards achieving that
objective, along with the proportion of women employees within the Group, women in senior
executive positions and women non-executive directors, is set out in the table below:
Measure
Women employees
Women senior executives *
Women non-executive directors
2015
2014
No.
%
No.
%
16
0
1
4
0
25
17
0
1
5
0
25
∗ This includes both employees and specific contractors engaged by the Group.
Recommendation 1.6: Board and Committee Performance
The board and its committees undertook self-assessment in accordance with their relevant charters
during the financial year. The Chairman conducts annual one-on-one personal performance
discussions with each of the individual directors.
The board was provided with all company information it needed in order to effectively discharge its
responsibilities and were entitled to, and did, request additional information when considered
necessary or desirable.
Recommendation 1.7: Senior Executive Performance
Reviews of the performance of Senior Executives are undertaken annually against established key
performance indicators. At the same time goals and targets for the coming year are discussed and
implemented. The annual evaluation of the CEO’s performance is a specific function of the
Remuneration Committee.
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
Recommendation 2.1: Nomination Committee
The company has a duly appointed nomination committee. The committee operates pursuant to a
nomination committee charter. The charter sets out the responsibilities of the committee including
reviewing board succession plans to ensure an appropriate balance of skills and expertise,
developing policies and procedures for the appointments of directors and identifying directors with
appropriate qualifications to fill board committee vacancies. The term of non-executive directorships
is set out in the company’s constitution.
Given the size of the board, the board has determined it appropriate for the nomination committee to
consist of the full board of directors.
Recommendation 2.2 and 2.3: Board Composition
The Company’s Board is comprised of non-executive directors.
Details of directors and relevant skills are detailed in the following tables:
Page 17
EVZ LIMITED
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
Details of Directors
Director
Maxwell Findlay
(Chairman)
Graham Burns
Robert Edgley
Raelene Murphy
(Resigned 4 March 2016)
Term in Office
Appointed 14 May
2008
Appointed 1 February
2008
Appointed 26 August
2011
Appointed 28
September 2012
Qualifications
BEc, FAICD
Status
Independent
GAICD
BEc
Independent
Independent
BBus, CA, MAICD
Independent
Areas of competence and skills of the Board of Directors
Leadership
Area
Business & Finance
Sustainability and Stakeholder management
Competence and skills
Business leadership
Public listed company experience
Accounting expertise
Business strategy
Corporate turnarounds
Corporate financing
Mergers and acquisitions
Risk management
Commercial agreements
Corporate governance
Remuneration
Market and Industry
Financial services expertise
International
Geographical experience and
business management
international
Recommendation 2.4: Director Independence
During the financial year, the board comprised of four directors, all of whom, including the chairman,
are non-executive and independent directors. Profiles of the directors are set out in this annual
report. All directors are subject to retirement by rotation in accordance with the Company’s
constitution but may stand for re-election by the shareholders.
The composition of the board is determined by the board and, where appropriate, external advice is
sought. The board has adopted the following principles and guidelines in determining the
composition of the board:
To be independent, a director ought to be non-executive and:
•
•
•
•
not a current executive of the company;
ideally not held an executive position in the company in the previous three years;
not a nominee or associate of a shareholder holding more than 10% of the company’s shares;
not significantly involved in the value chain of the organisation, either upstream or downstream;
and
not a current advisor to the company receiving fees or some other benefit, except for approved
director’s fees.
•
Page 18
EVZ LIMITED
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
Directors are encouraged to be long term shareholders in the company. Directors shareholders are
disclosed in the annual report. Any change in directors shareholdings are disclosed in accordance
with ASX Listing Rules.
The Company’s policies allow directors to seek independent advice at the Company’s expense.
Recommendation 2.5: Independence of Chairman
The chairman, Max Findlay, is an independent director. He is responsible for the leadership of the
board and he has no other positions that hinder the effective performance of this role.
The role of chairman is independent to the role of CEO, which is held by Scott Farthing. There is a
clear division of responsibility between these roles.
Recommendation 2.6: Induction and Training
Any new director will receive a letter of appointment. Directors are provided access to the
company’s policies including the Board’s Charter. At Board meetings directors receive regular
updates and also undertake site visits, attend customer and financier meetings as required. These
assist directors to keep abreast of relevant market and industry developments.
PRINCIPLE 3: ACT ETHICALLY AND RESPONSIBLY
Recommendation 3.1: Code of Conduct
The company has developed codes of conduct to guide all of the company’s employees, particularly
directors, the CEO, the CFO and other senior executives, in respect of ethical behaviour. These
codes are designed to maintain confidence in the company’s integrity and the responsibility and
accountability of all individuals within the company for reporting unlawful and unethical practices.
These codes of conduct embrace such areas as:
•
•
•
•
•
•
•
•
•
conflicts of interest
corporate opportunities
confidentiality
fair dealing and trade practices
protection of assets
compliance with laws, regulations and industry codes
‘whistle-blowing’
security trading
commitment to and recognition of the legitimate interests of stakeholders
PRINCIPLE 4: SAFEGUARD INTEGRITY IN CORPORATE REPORTING
Recommendation 4.1: Audit Committee
The board-appointed audit committee operates in accordance with the audit committee charter. The
details of the committee meetings held during the year and attendance at those meetings are
detailed in the directors’ meeting schedule in the directors’ report.
The audit committee consists of:
• Raelene Murphy - Chairperson (Resigned 4 March 2016)
• Max Findlay
• Robert Edgley (Appointed Chairperson 8 March 2016)
Page 19
EVZ LIMITED
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
Each of the members of the committee is an independent, non-executive director and the chairman
of the committee is not the chairman of the board. The CEO and the CFO/Company Secretary may
attend the meetings at the invitation of the committee. All members of the committee are financially
literate (i.e. they are able to read and understand financial statements) and have an understanding
of the industry in which the company operates.
The audit committee provides an independent review of:
•
financial information produced by the company;
•
the accounting policies adopted by the company;
•
the effectiveness of the accounting and internal control systems and management reporting
which are designed to safeguard company assets;
the quality of the external audit functions;
external auditor’s performance and independence as well as considering such matters as
replacing the external auditor where and when necessary; and
identifying risk areas.
•
•
•
Recommendation 4.2: CEO and CFO Assurance
The CEO and CFO have provided to the board formal declarations that the integrity of the financial
statements is founded on a system of risk management and internal control which supports the
policies adopted by the board and that the company’s risk management and internal control system
is operating effectively in all material respects to manage the company’s material business risks.
Recommendation 4.3: Auditor Attendance
The Company’s Auditor is Crowe Horwath. The Auditor has and will continue to attend the Annual
General Meeting in order to be available to answer questions relating to the audit raised by security
holders.
PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE
The board recognises that the company, as an entity listed on the ASX, has an obligation to make
timely and balanced disclosure in accordance with the requirements of the Australian Securities
Exchange Listing Rules and the Corporations Act 2001. The board also is of the view that an
appropriately informed shareholder base and market is essential to an efficient market for the
company’s securities. The board is committed to ensuring that shareholders and the market have
timely and balanced disclosure of matters concerning the company. In demonstration of this
commitment, the company has adopted a formal external communications policy including a
continuous disclosure policy.
In order to ensure the company meets its obligations of timely disclosure of such information, the
company has adopted the following policies:
•
immediate notification to the ASX of information concerning the company that a reasonable
person would expect to have a material effect on the price or value of the company’s securities
as prescribed under listing rule 3.1, except where such information is not required to be
disclosed in accordance with the exception provisions of the listing rules;
the company has a website where all relevant information disclosed to the ASX will be promptly
placed on the website following receipt of confirmation from the ASX and, where it is deemed
desirable, released to the wider media; and
the company will not respond to market rumours or speculation, except where required to do so
under the listing rules.
•
•
Page 20
EVZ LIMITED
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
Based on information provided to the company secretary by directors, officers and employees, the
company secretary is responsible for determining which information is to be disclosed and for the
overall administration of this policy.
PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS
Recommendation 6.1: Website
The Company has a website which includes details of the Company and the operating entities in the
Group. The website also includes the Company’s annual report which contains within it the
Company’s Corporate Governance statement. The Company is currently updating this website to
include a separate Corporate Governance page.
Recommendation 6.2: Communications with investors
The board recognises that shareholders are the beneficial owners of the company and respects
their rights and is continually seeking ways to assist shareholders in the exercise of those rights.
The board also recognises that as owners of the company the shareholders may best contribute to
the company’s growth, value and prosperity if they are appropriately informed. To this end the
board seeks to empower shareholders by:
•
•
communicating effectively with shareholders;
enabling shareholders to have access to balanced and understandable information about the
company and its operations; and
promoting shareholder participation in general meetings.
•
All shareholders are entitled to receive a copy of the company’s annual report. In addition, the
company’s website will provide opportunities to shareholders to access company announcements,
media releases and financial reports.
Recommendation 6.3: Participation at meetings by security holders
The board is committed to assisting shareholders’ participation in meetings and has adopted the
following measures:
•
adoption of the ASX Corporate Governance Council’s recommendation and guidelines as
published in the Council’s Corporate Governance Principles and Recommendations in respect
of notices of meetings;
providing sufficient time and adequate opportunity at meetings for shareholders to ask
questions and make comments to the Board, and
ensuring that a representative of the company’s external auditor, subject to availability, is
present at all annual general meetings and that shareholders have adequate opportunity to ask
questions of the auditor at that meeting concerning the audit and preparation and content of the
auditor’s report.
•
•
The current size of the Company prohibits technology such as live webcasting and meetings across
multiple venues linked by live telecommunications. The Company is currently investigating the use
electronic lodgment of proxies for its meetings.
Recommendation 6.4: Electronic communication
The Company provides security holders with the option to receive communications from the entity
and its security registry, such as notice of meetings, explanatory memorandums, proxy forms and
annual reports electronically. A corporate email address is provided via the website to allow security
holders to communicate with the Company.
Page 21
EVZ LIMITED
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
The Company is currently investigating the use of electronic lodgment of proxies for its meetings.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
Recommendation 7.1: Risk Committee
Overall risk management is the responsibility of the Audit Committee and covered within that
Committee’s Charter.
The board has overall responsibility to all stakeholders for the identification, assessment,
management and monitoring of the risks faced by the company. The company currently has
informal policies and procedures for risk management and the audit committee seeks to ensure
compliance with regulatory requirements. The operational risks are managed at the senior
management level and escalated to the board for direction where the issue is exceptional, non-
recurring or may impose a material financial or operational burden on the company. The relatively
small size of the company means that communication and decision-making is predominantly
centralised allowing early identification of risks by senior management. It also allows senior
management to respond to each risk as appropriate without the need for a written risk management
policy. In addition a monthly risk report is tabled at the Board meeting for consideration.
Recommendation 7.2: Risk Management Framework
Given the relatively small and centralised management team, the nature of the business of the
company and that a majority of independent directors sit on the audit committee, the board is
continuously kept informed of the effectiveness of the company’s internal control systems. In
addition a monthly risk report is tabled at the Board meeting for consideration.
Recommendation 7.3: Internal Audit
The Company does not currently have any internal audit function. The Board considers that given
the Company’s current size there is no benefit in having an internal audit function. Independent
advice will be sought as necessary. The board has overall responsibility for the identification,
assessment, management and monitoring of the risks faced by the company.
Recommendation 7.4: Risk Management
The Board monitors its exposure to all risks, including economic, environmental and social
sustainability risks on a monthly basis. Any material business risks will be disclosed in the annual
report, which also outlines the activities, performance, financial position of the Company and its
businesses.
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBILY
Recommendation 8.1 and 8.2: Remuneration Committee and Policies
The company has a duly appointed remuneration committee. The committee operates pursuant to
the remuneration committee charter.
The remuneration committee consists of:
• Graham Burns (Chairman)
• Max Findlay
• Rob Edgley
Page 22
EVZ LIMITED
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
The Company’s approach to remuneration is set out in the Remuneration Report contained within
this annual report.
The primary responsibilities of the remuneration committee are:
• Establish appropriate remuneration policies for directors, the CEO and other senior executives
which are effective in attracting and/or retaining the best directors and executives to monitor
and manage EVZ Limited, whilst ensuring goal congruence between shareholders, directors
and executives.
• Ensuring appropriate disclosure of remuneration in line with the Corporations Act, ASX Listing
Rules and Corporate Governance guidelines.
Non-executive directors are remunerated by way of fees. They may receive options (subject to
shareholder approval) but there is no scheme for retirement benefits, other than statutory
superannuation. Executives are paid a salary and may be provided, under the Directors’ and
Employees’ Benefits Plan, with shares, performance rights and/or options and bonuses as part of
their remuneration and incentive package.
There are no executive directors.
Recommendation 8.3: Equity based remuneration scheme
There is currently in place an EVZ Directors’ and Employees’ Benefits Plan (the “Plan”) which allows
employees, Directors and others (“Eligible Persons”) to be granted shares, options and performance
rights in the Company. The object of this Plan is to help the Company recruit, reward, retain and
motivate its employees and Directors.
Such shares, options and performance rights would be offered only to those Eligible Persons
entitled to receive an invitation. Those Eligible Persons would be:
•
•
a Director or Secretary of a Group Company;
an employee in permanent full-time or permanent part-time employment of a Group Company;
or
a contractor to a Group Company
•
who is selected by the Board to participate in the Plan.
Invitations to Eligible Persons will be made by the Board and may be made subject to such
conditions and rules as the Board determines, including:
•
•
In the case of Options, the exercise period, the exercise price and the exercise conditions.
In the case of Shares, the issue price payable on acceptance of the application by the
Company and issue of the shares and any other specific terms and conditions of issue.
In the case of Performance Rights, the performance criteria and the performance period in
which those performance criteria must be satisfied.
•
The issue of any securities (including options or performance rights) issued to any Director or their
associates will still require shareholder approval under ASX Listing Rule 10.14.
The maximum number of shares issued pursuant to the Plan would be not more than 5% of the
equity interests in the Company.
Page 23
Auditor Independence Declaration Under
S307C of the Corporations Act 2001 to the
Directors of EVZ Limited
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2015 there have
been no contraventions of
I.
II.
The auditor independence requirements as set out in the Corporations Act 2001 in relation to the
audit; and
Any applicable code of professional conduct in relation to the audit.
CROWE HORWATH MELBOURNE
DAVID MUNDAY
Partner
Melbourne, Victoria
14 April 2016
Crowe Horwath Melbourne is a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and
independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omission
of financial services licensees.
EVZ LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 30 JUNE 2015
Revenue
Cost of sales
Gross profit
Other income
Administration and business development costs
Corporate costs
Impairment of other assets
Impairment of plant and equipment
Impairment of intangibles
Economic Entity
Notes
2015
$
2014
$
2(a)
70,311,742
(62,854,962)
64,433,155
(53,051,154)
7,456,780
11,382,001
71,743
(10,729,945)
(1,357,508)
(162,855)
-
(4,003,799)
109,397
(11,434,477)
(1,439,895)
(373,712)
(343,409)
(3,913,481)
Profit/(Loss) before finance costs and income tax
Net finance costs
Profit /(Loss) before income tax from continuing operations
Income tax (expense)/benefit
2(c)
3
(8,725,584)
(1,664,230)
(6,013,576)
(1,099,611)
(10,389,814)
(36,977)
(7,113,187)
901,692
Profit/(Loss) for year attributed to members
(10,426,791)
(6,211,495)
Overall operations
Basic earnings per share
Diluted earnings per share
Continuing operations
Basic earnings per share
Diluted earnings per share
Cents per
share
Cents per
share
17
17
17
17
(4.99)
(4.99)
(4.99)
(4.99)
(2.98)
(2.98)
(2.98)
(2.98)
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
Page 25
EVZ LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
Profit/(Loss) for the year
Other comprehensive income:
Items that may be reclassified subsequently to profit or
loss
Exchange differences arising on translation of foreign
operations
Total comprehensive income/(loss) for the year
attributable to owners of the company
Notes
Economic Entity
2015
$
2014
$
(10,426,791)
(6,211,495)
16(b)
56,598
(64,987)
(10,370,193)
(6,276,482)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Page 26
EVZ LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2015
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Financial assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Plant and equipment
Deferred tax assets
Intangible assets
Financial assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Tax liabilities
Short-term borrowings
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Long-term borrowings
Deferred tax liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Notes
Economic Entity
2015
$
2014
$
22
4
5
6
4
7
8
9
6
10
8
11
13
12
8
13
1,013,866
14,782,087
1,825,064
63,729
17,684,746
2,047,109
16,373,386
1,983,863
9,947
20,414,305
978,754
5,082,502
4,313,415
12,072,010
-
22,446,681
525,189
4,648,282
4,313,415
16,075,809
52,091
25,614,786
40,131,427
46,029,091
14,871,425
-
13,454,208
3,127,660
31,453,293
13,817,399
750
3,666,849
2,380,563
19,865,561
241,268
23,469
149,738
414,475
7,455,614
47,219
60,595
7,563,428
31,867,768
27,428,989
8,263,659
18,600,102
14
16
16
46,088,909
(49,322)
(37,775,928)
46,055,159
(105,920)
(27,349,137)
8,263,659
18,600,102
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Page 27
EVZ LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
ECONOMIC ENTITY
Issued
Capital
Accumulated
Losses
30 June 2015
$
$
Foreign
Currency
Translation
Reserve
$
Total
$
Balance at 1 July 2014
46,055,159
(27,349,137)
(105,920)
18,600,102
Total comprehensive loss
for year
Loss for year
Foreign currency translation
reserve
Total comprehensive loss
for year
Transactions with owners,
recorded directly in equity
Shares Issued
Dividends
-
-
-
(10,426,791)
-
(10,426,791)
-
56,598
56,598
(10,426,791)
56,598
(10,370,193)
33,750
-
-
-
-
-
33,750
-
Balance at 30 June 2015
46,088,909
(37,775,928)
(49,322)
8,263,659
30 June 2014
Balance at 1 July 2013
46,055,159
(21,137,642)
(40,933)
24,876,584
Total comprehensive loss
for year
Profit for year
Foreign currency translation
reserve
Total comprehensive loss
for year
Transactions with owners,
recorded directly in equity
Shares Issued
Dividends
-
-
-
-
-
(6,211,495)
-
(6,211,495)
-
(64,987)
(64,987)
(6,211,495)
(64,987)
(6,276,482)
-
-
-
-
-
-
Balance at 30 June 2014
46,055,159
(27,349,137)
(105,920)
18,600,102
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Page 28
EVZ LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Income tax paid
Interest received
Finance costs
NET CASH FLOWS PROVIDED/(USED) BY OPERATING
ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of plant and equipment
Purchase of plant and equipment
NET CASH FLOWS (USED) BY INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayment of bank loans
Proceeds from lease financing
Payments for lease financing
NET CASH FLOWS PROVIDED/(USED) BY FINANCING
ACTIVITIES
NET DECREASE IN CASH HELD
Cash at beginning of financial year
Notes
Economic Entity
2015
$
2014
$
77,816,484
(78,685,268)
(61,477)
15,142
(1,679,372)
69,219,847
(67,610,243)
(28,641)
7,345
(1,106,956)
22(ii)
(2,594,491)
481,352
94,603
(1,106,368)
327,754
(557,819)
(1,011,765)
(230,065)
-
102,556
(32,651)
(1,000,000)
110,929
(82,553)
69,905
(971,624)
(3,536,351)
(527,579)
(720,337)
192,758
CASH AT END OF FINANCIAL YEAR
22(i)
(4,063,930)
(527,579)
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Page 29
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.
This financial report includes the consolidated financial statements and notes of EVZ Limited and
controlled entities (‘Economic Entity’ or ‘Group’).
Basis of Preparation
The financial report is a general purpose financial report that has been prepared in accordance with
Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards
Board and the Corporations Act 2001, as appropriate for for-profit orientated entities. These
financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
They have been consistently applied unless otherwise stated.
The financial report has been prepared on an accruals basis and is based on historical costs.
Accounting Policies
(a) Principles of Consolidation
A controlled entity is any entity EVZ Limited has the power to control the financial and
operating policies of so as to obtain benefits from its activities. A list of controlled entities is
contained in Note 29 to the financial statements. All controlled entities have a June financial
year-end. All inter-company balances and transactions between entities in the economic
entity, including any unrealised profits or losses, have been eliminated on consolidation.
Accounting policies of subsidiaries have been changed where necessary to ensure
consistencies with those policies applied by the parent entity.
Where controlled entities have entered or left the economic entity during the year, their
operating results have been included/excluded from the date control was obtained or until the
date control ceased.
Business Combinations
Business combinations occur where an acquirer obtains control over one or more
businesses and results in the consolidation of its assets and liabilities.
A business combination is accounted for by applying the acquisition method, unless it is a
combination involving entities or businesses under common control. The acquisition method
requires that for each business combination one of the combining entities must be identified
as the acquirer (ie parent entity). The business combination will be accounted for as at the
acquisition date, which is the date that control over the acquiree is obtained by the parent
entity. At this date, the parent shall recognise, in the consolidated accounts, and subject to
certain limited exceptions, the fair value of the identifiable assets acquired and liabilities
assumed. In addition, contingent liabilities of the acquiree will be recognised where a
present obligation has been incurred and its fair value can be reliably measured.
The acquisition may result in the recognition of goodwill (refer to Note 1(i)) or a gain from a
bargain purchase. The method adopted for the measurement of goodwill will impact on the
measurement of any non-controlling interest to be recognised in the acquiree where less
than 100% ownership interest is held in the acquiree.
Page 30
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.
(a) Principles of Consolidation (Continued)
The acquisition date fair value of the consideration transferred for a business combination
plus the acquisition date fair value of any previously held equity interest shall form the cost of
the investment in the separate financial statements. Consideration may comprise the sum of
the assets transferred by the acquirer, liabilities incurred by the acquirer to the former
owners of the acquiree and the equity interests issued by the acquirer.
Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of
profit or loss and other comprehensive income. Where changes in the value of such equity
holdings had previously been recognised in other comprehensive income, such amounts are
recycled to profit or loss.
Included in the measurement of consideration transferred is any asset or liability resulting
from a contingent consideration arrangement. Any obligation incurred relating to contingent
consideration is classified as either a financial liability or equity instrument, depending upon
the nature of the arrangement. Rights to refunds of consideration previously paid are
recognised as a receivable. Subsequent to initial recognition, contingent consideration
classified as equity is not remeasured and its subsequent settlement is accounted for within
equity. Contingent consideration classified as an asset or a liability is remeasured each
reporting period to fair value through the statement of profit or loss and other comprehensive
income unless the change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to the business combination are expensed to the
statement of profit or loss and other comprehensive income.
(b)
Income Tax
The income tax expense (benefit) for the year comprises current income tax expense (income)
and deferred tax expense (benefit). Current income tax expense charged to the profit or loss
is the tax payable on taxable income calculated using applicable income tax rates enacted, or
substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore
measured at the amounts expected to be paid to (recovered from) the relevant tax authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax
liability balances during the year as well as unused tax losses. Current and deferred income
tax expense (benefit) is charged or credited directly to equity instead of the profit or loss when
the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. Deferred tax assets also result where amounts have been fully expensed but
future tax deductions are available. No deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business combination, where there is no effect
on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to
the period where the asset is realised or the liability is settled, based on tax rates enacted or
substantively enacted at reporting date. Their measurement also reflects the manner in which
management expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised
only to the extent that it is probable that future taxable profit will be available against which the
benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation
to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets
and liabilities are not recognised where the timing of the reversal of the temporary difference
can be controlled and it is not probable that the reversal will occur in the foreseeable future.
Page 31
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
1.
(b)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Tax (Continued)
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists
and it is intended that net settlement or simultaneous realisation and settlement of the
respective asset and liability will occur. Deferred tax assets and liabilities are offset where a
legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income
taxes levied by the same taxation authority on either the same taxable entity or different
taxable entities where it is intended that net settlement or simultaneous realisation and
settlement of the respective asset and liability will occur in future periods in which significant
amounts of deferred tax assets or liabilities are expected to be recovered or settled.
EVZ Limited and its wholly-owned Australian subsidiaries have formed an income tax
consolidated Group under the tax consolidation regime. Each entity in the Group recognises
its own current and deferred tax liabilities, except for any deferred tax liabilities resulting from
unused tax losses and credits which are immediately assumed by EVZ Limited. The current
tax liability of each Group entity is then subsequently assumed by EVZ Limited. The Group
notified the Australian Taxation Office that it had formed an income tax consolidated Group to
apply from 7 June 2004. The tax consolidated Group has entered a tax sharing arrangement
whereby each company in the Group contributes to the income tax payable in proportion to
their contribution to the net profit before tax of the tax consolidated Group.
(c)
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of
manufactured products includes direct materials, direct labour and an appropriate portion of
variable and fixed overheads. Overheads are applied on the basis of normal operating
capacity. Costs are assigned on the basis of weighted average costs.
The carrying amount of inventories is reviewed annually by Directors to ensure it is not in
excess of the recoverable amount from these assets.
(d) Construction Contracts and Work in Progress
Construction work in progress is valued at cost, plus profit recognised to date less any
provision for anticipated future losses. Cost includes both variable and fixed costs relating to
specific contracts, and those costs that are attributable to the contract activity in general and
that can be allocated on a reasonable basis.
Construction profits are recognised on the stage of completion basis and measured using the
proportion of costs incurred to date as compared to expected actual costs. Where losses are
anticipated they are provided for in full. Construction revenue has been recognised on the
basis of the terms of the contract adjusted for any variations or claims allowable under the
contract.
(e) Plant and Equipment
Each class of plant and equipment is carried at cost less where applicable, any accumulated
depreciation and impairment losses.
Plant and equipment is measured on the cost basis.
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is
not in excess of the recoverable amount from these assets. The recoverable amount is
assessed on the basis of the expected net cash flows that will be received from the assets
employment and subsequent disposal. The expected net cash flows have been discounted to
their present values in determining recoverable amounts.
Page 32
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.
(e) Plant and Equipment (Continued)
The cost of fixed assets constructed within the economic entity includes the cost of materials,
direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when probable future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to the income statement during the financial period in which they are
incurred.
Depreciation
The depreciable amount of all fixed assets and capitalised lease assets, is depreciated on
either a straight-line or diminishing value basis over their useful lives to the economic entity
commencing from the time the asset is held ready for use. Leasehold improvements are
depreciated over the shorter of either the unexpired period of the lease or the estimated useful
lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
• Plant and equipment
Depreciation Rate
5 to 30%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the
end of each reporting period. An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than its estimated recoverable
amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying
amount. These gains and losses are included in the income statement.
(f)
Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the
ownership of the asset, but not the legal ownership, are transferred to entities in the economic
entity are classified as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the amounts
equal to the fair value of the leased property or the present value of the minimum lease
payments, including any guaranteed residual values. Lease payments are allocated between
the reduction of the lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over their estimated useful lives.
Lease payments for operating leases, where substantially all the risks and benefits remain
with the lessor, are charged on a straight line basis over the period of the lease.
Lease incentives under operating leases are recognised as a liability and amortised on a
straight-line basis over the life of the lease term.
(g) Financial instruments
Recognition and Initial Measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised
when the entity becomes a party to the contractual provisions of the instrument. Trade date
accounting is adopted for financial assets that are delivered within timeframes established by
marketplace convention.
Page 33
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.
(g) Financial Instruments (Continued)
Financial instruments are initially measured at fair value plus transactions costs where the
instrument is not classified as at fair value through profit or loss. Transaction costs related to
instruments classified as at fair value through profit or loss are expensed to profit or loss
immediately. Financial instruments are classified and measured as set out below.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires
or the asset is transferred to another party whereby the entity no longer has any significant
continuing involvement in the risks and benefits associated with the asset. Financial liabilities
are derecognised where the related obligations are either discharged, cancelled or expire.
The difference between the carrying value of the financial liability extinguished or transferred to
another party and the fair value of consideration paid, including the transfer of non-cash assets
or liabilities assumed, is recognised in profit or loss.
Financial Assets
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market and are stated at amortised cost using the effective
interest rate method.
Financial Liabilities
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt
less principal payments and amortisation.
Impairment
At each reporting date, the Group assesses whether there is objective evidence that a financial
instrument has been impaired. Impairment losses are recognised in the income statement.
(h)
Impairment of Assets
At each reporting date, the Group reviews the carrying values of its tangible and intangible
assets to determine whether there is any indication that those assets have been impaired. If
such an indication exists, the recoverable amount of the asset, being the higher of the asset’s
fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any
excess of the asset’s carrying value over its recoverable amount is expensed to the income
statement.
Impairment testing is performed annually for goodwill and intangible assets with indefinite
lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
It has been determined that the balances of the goodwill have an indefinite life. The excess of
the fair value of net assets over the purchase price of the businesses acquired has been
allocated to goodwill rather than be allocated to other intangible assets. The acquisition of the
businesses that generate the goodwill was determined on the abilities of the entities, as a whole,
to generate future profits and hence other intangibles have not been recognised.
Goodwill is allocated to cash-generating units which are based on the Group’s individual
companies. All businesses operate in the engineering services industry sector.
Page 34
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(i)
(j)
Intangibles
Goodwill
Goodwill and goodwill on consolidation are initially recorded at the amount by which the
purchase price for a business or for an ownership interest in a controlled entity exceeds the
fair value attributed to its net assets at date of acquisition. Goodwill on the acquisitions of
subsidiaries is included in intangible assets. Goodwill is tested annually for impairment and
carried at cost less accumulated impairment losses. Gains and losses on the disposal of an
entity include the carrying amount of goodwill relating to the entity sold.
Foreign Currency Transactions and Balances
Functional and Presentation Currency
The functional currency of each of the Group’s entities is measured using the currency of the
primary economic environment in which that entity operates. The consolidated financial
statements are presented in Australian dollars which is the parent entity’s functional and
presentation currency.
Transaction and Balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are translated at the
year-end exchange rate. Non-monetary items measured at historical cost continue to be
carried at the exchange rate at the date of the transaction.
Exchange differences arising on the translation of monetary items are recognised in the
income statement.
Exchange differences arising on the translation of non-monetary items are recognised directly
in equity to the extent that the gain or loss is directly recognised in equity; otherwise the
exchange difference is recognised in the income statement.
Group Companies
The financial results and position of foreign operations whose functional currency is different
from the Group’s presentation currency are translated as follows:
•
assets and liabilities are translated at year-end exchange rates prevailing at that reporting
date;
income and expenses are translated at average exchange rates for the period; and
retained profits are translated at the exchange rates prevailing at the date of the
transaction.
•
•
Exchange differences arising on translation of foreign operations are transferred directly to the
Group’s foreign currency translation reserve in the statement of financial position. These
differences are recognised in the income statement in the period in which the operation is
disposed.
Page 35
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.
(k) Employee Benefits
Provision is made for the economic entity’s liability for employee benefits arising from services
rendered by employees to balance date. Employee benefits that are expected to be settled
within one year have been measured at the amounts expected to be paid when the liability is
settled, plus related on-costs. Employee benefits payable later than one year have been
measured at the present value of the estimated future cash outflows to be made for those
benefits.
Defined Contribution Plans
Contributions to defined superannuation plans are expensed when incurred.
Share Based Payments
The Group operates an equity-settled share-based payment employee share scheme. The fair
value of the equity to which employees become entitled is measured at grant date and
recognised as an expense with a corresponding increase to an equity account. The shares
issued under the employee share scheme vest immediately.
(l)
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of
past events, for which it is probable that an outflow of economic benefits will result and that
outflow can be reliably measured.
(m) 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 which are
subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are
shown within short-term borrowings in current liabilities on the balance sheet.
(n) Revenue
Revenue from the sale of goods is recognised upon the delivery of goods to customers.
Interest revenue is recognised on a proportional basis taking into account the interest rates
applicable to the financial assets. Contract revenue is recognised in accordance with Note
1(d).
(o) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that
necessarily take a substantial period of time to prepare for their intended used or sale, are
added to the cost of those assets, until such time as the assets are substantially ready for their
intended use or sale. All other borrowing costs are recognised in the income statement in the
period in which they are incurred.
(p) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the
amount of GST incurred is not recoverable from the Australian 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 balance sheet 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.
(q) Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform
to changes in presentation for the current financial year.
Page 36
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.
(r) Critical Accounting Estimates and Judgments
The Directors evaluate estimates and judgments incorporated into the financial report based
on historical knowledge and best available current information. Estimates assume a
reasonable expectation of future events and are based on current trends and economic data,
obtained both externally and within the Group.
Key Estimates
Impairment
The Group assesses impairment at each reporting date by evaluating conditions specific to the
Group that may lead to impairment of assets. Where an impairment trigger exists, the
recoverable amount of the cash generating unit is determined. Value-in-use calculations
performed in assessing recoverable amounts incorporate a number of key estimates. Refer
Note 9 for key estimates used in the assessment of Goodwill. Following the impairment
assessment, the carrying value of Goodwill was impaired by $4,003,799.
At 30 June 2015, receivables from continuing operations were impaired by $404,631 (2014:
$189,005).
In the prior year an impairment of $343,409 was recognised in respect of plant and equipment.
In the prior year an impairment of $373,712 was recognised in respect of other assets.
Recognition of Deferred Tax Assets
The Group has recognised deferred tax assets in relation to Provisions ($891,679), Other
($60,571) and Un-recouped tax losses ($3,361,165).
The realisation of these deferred tax assets is dependent upon generating sufficient taxable
profit in the coming year.
The Group has projected its profits over the next five years and believes that future taxable
profit will be available against which the benefits of the deferred tax assets can be utilised.
Construction Contracts and Work-in-Progress
Construction profits are recognised on the stage-of-completion basis and measured by
comparing construction contract costs incurred to date against expected final costs of the
construction contract.
Expected final costs are estimated following an assessment of each contract and a
determination of expected costs still to be incurred.
Whilst expected final costs can vary, the Group believes that the expected final costs in its
various construction contracts are appropriate at 30 June 2015.
(s) Going Concern
The financial report for the year ended 30 June 2015 has been prepared on a going concern
basis, which assumes continuity of normal business activities and realisation of assets and the
settlement of liabilities in the ordinary course of business.
Subsequent to balance date the Group’s financier, the Commonwealth Bank of Australia
extended the existing banking facilities to 31 March 2017. In addition the Bank allowed the
conversion of the exiting bank overdraft into a market rate loan facility. The covenants associated
with this facility remain unchanged being an interest cover covenant (of 3 times EBIT) and a
current ratio covenant (of 1.25 times). The security over the extended facility remains unchanged.
Page 37
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
EVZ is currently determining the optimum strategy for a structured debt reduction which may
include a change to the capital structure and/or the orderly divestment of some of the Group’s
operations and assets.
The Group’s ability to continue as a going concern continues to be dependent on the
Commonwealth Bank continuing to support the Group as it determines and executes its
structured debt reduction program and the Group’s ability to continually meet its profit
forecasts. Should either of these matters not occur, the Group may not be able to realise its
assets and settle its liabilities in the ordinary course of business.
The directors have concluded that these circumstances represent a material uncertainty that
may cast significant doubt about the group’s ability to continue as a going concern.
Nevertheless, after making enquiries and considering uncertainties described above the
directors have a reasonable expectation that the group has adequate resources to continue in
operational existence for the foreseeable future. For these reasons they continue to adopt the
going concern basis in preparing the financial report of EVZ and its controlled entities at 30
June 2015.
(t) New and Amended Accounting Standards
During the current year the Group adopted all of the new and revised Australian Accounting
Standards and Interpretations applicable to its operations which became mandatory. There
has been no financial impact on their adoption. Refer to Note 33 for new, revised or
amending Accounting Standards or Interpretations that are not yet mandatory and have not
been early adopted.
The financial report was authorised for issue on 14 April 2016 by the Board of Directors.
Page 38
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
PROFIT/(LOSS) FROM CONTINUING OPERATIONS
2.
(a) OTHER INCOME
Sundry income
(b) EXPENSES
Bad debts
Impairment – receivables
Total employee costs
Defined contribution superannuation expense
Foreign exchange losses/(gains)
(Profit)/Losses on sale of plant and equipment
Operating lease payments
Depreciation of plant and equipment
Impairment – other assets
Impairment – plant and equipment
Impairment – goodwill
(c) NET FINANCE COSTS
Finance costs – other persons
Interest income – other persons
INCOME TAX
3.
(a) The prima facie tax on profit/(loss) before income tax from continuing
operations is reconciled to income tax as follows:
Profit/(Loss) before Income Tax
Income tax calculated at 30% (2014: 30%)
Tax effect of permanent differences
Under provision/(over provision) in prior years
Tax Losses not recognized
Taxation expense - offshore subsidiary
Income tax expense/(benefit)
Economic Entity
2015
$
2014
$
71,743
109,397
71,743
109,397
264,911
131,322
37,553,593
2,487,306
(82,759)
(10,144)
1,009,553
846,388
162,855
-
4,003,799
91,495
189,005
29,575,151
2,163,004
(36,130)
2,144
1,020,594
807,481
373,712
343,409
3,913,481
1,679,372
(15,142)
1,106,956
(7,345)
1,664,230
1,099,611
(10,389,814)
(7,113,187)
(3,116,944)
(2,133,956)
1,111,553
(3,687)
2,009,078
36,977
1,209,051
16,205
-
7,008
36,977
(901,692)
The applicable weighted average effective tax rates are as follows:
-
-
(b)
The components of tax expense comprise:
Current tax
Deferred tax
Under provision/(over provision) in prior years
40,664
-
(3,687)
36,977
(687,434)
(230,463)
16,205
(901,692)
Page 39
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
4.
TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Provision for impairment
Amounts due from customers for construction contracts (refer Note 31)
Retention receivables
Other debtors and prepayments
Non-Current
Retention receivables
Economic Entity
2015
$
2014
$
14,350,618
(404,631)
13,945,987
(457,684)
503,889
13,992,192
789,895
10,280,936
(273,309)
10,007,627
2,359,617
437,064
12,804,308
3,569,078
14,782,087
16,373,386
978,754
525,189
978,754
525,189
All trade and other receivables are classified as financial assets (refer Note 27).
Market practices provide for the retention of monies from progress and final billings on certain
construction contracts. The monies are received after a contracted period of time has elapsed
following completion of the construction.
Current trade receivables are non-interest bearing and generally on 30 days terms. Non-current
trade receivables are assessed for recoverability based on the underlying terms of the contract.
A provision for impairment is recognised when there is objective evidence that an individual trade
or term receivable is impaired.
There are no other balances other than those impaired within trade and other receivables that
contain assets that are impaired. It is expected these balances will be received when due.
Impaired assets are provided for in full.
Credit Risk – Trade and Other Receivables
The Group has no significant concentration of credit risk with respect to any single counter
party or Group of counter parties. The class of assets described as Trade and Other
Receivables is considered to be the main source of credit risk related to the Group.
On a geographical basis, the Group has credit risk exposures in Australia and Asia given the
substantial operations in those regions. The Group’s exposure to credit risk for receivables at
reporting date in those regions is as follows:
Australia
Asia
Economic Entity
2015
$
12,495,625
3,265,216
2014
$
14,100,962
2,797,613
15,760,841
16,898,575
Page 40
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
4.
TRADE & OTHER RECEIVABLES (continued)
The following table details the Group’s trade and other receivables exposed to credit risk with
ageing analysis and impairment provided for thereon. Amounts are considered as ‘past due’
when the debt has not been settled within the terms and conditions agreed between the Group
and the customer or counter party to the transaction. Receivables that are past due are assessed
for impairment by ascertaining solvency of the debtors and are provided for where there are
specific circumstances indicating that the debt may not be fully repaid to the Group.
Gross
Amount
Past Due not Impaired (Days Overdue)
Within
Trading
Terms
Past Due
&
Impaired
$
$
<30 Days
31-60
Days
>61 Days
$
$
$
$
15,375,577
789,895
16,165,472
404,631
-
404,631
4,277,472 1,013,807
-
4,277,472 1,013,807
-
1,054,505
-
1,054,505
8,625,162
789,895
9,415,057
13,602,806
3,569,078
17,171,884
273,309
-
273,309
2,248,772
-
2,248,772
938,730
-
938,730
1,521,496
-
1,521,496
8,620,499
3,569,078
12,189,577
Economic Entity
2015
Trade & term receivables
Other receivables
2014
Trade & term receivables
Other receivables
The economic entity holds no financial assets with terms that have been negotiated, but which
would otherwise be past due or impaired.
Trade and other receivables pertaining to the Australian entities in the Group, as disclosed in Note
32, are provided as security against the Group’s bank facilities. Also refer Notes 11 and 12.
Provision for Impairment of Receivables
Opening balance
Charge for year
Closing balance
5.
INVENTORIES
Current
Raw materials and stores – at cost
Economic Entity
2015
$
273,309
131,322
2014
$
84,304
189,005
404,631
273,309
1,825,064
1,983,863
1,825,064
1,983,863
Inventories pertaining to the Australian entities in the Group, as disclosed in Note 32, are provided
as security against the Group’s bank facilities. Also refer Notes 11 and 12.
6.
FINANCIAL ASSETS
Current assets
Funds on deposit
63,729
63,729
9,947
9,947
Page 41
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
6.
FINANCIAL ASSETS (continued)
Non-current assets
Funds on deposit
Economic Entity
2015
$
2014
$
-
-
52,091
52,091
Funds on deposit represent security deposits covering a guarantee for property lease obligations
and contract performance bonds.
7. PLANT AND EQUIPMENT
Plant and equipment
At cost
Accumulated depreciation
Movement in carrying amounts
Carrying amount – opening balance
Additions
Disposals
Depreciation
Impairment of plant and equipment
Reclassification of stock
Exchange rate adjustment
Carrying amount – closing balance
10,965,005
(5,882,503)
9,752,888
(5,104,606)
5,082,502
4,648,282
4,648,282
1,106,368
(84,459)
(846,388)
-
245,400
13,299
5,586,374
557,819
(329,898)
(807,481)
(343,409)
-
(15,123)
5,082,502
4,648,282
Plant and equipment pertaining to the Australian entities in the Group, as disclosed in Note 32,
are provided as security against the Group’s bank facilities. Also refer Notes 11 and 12.
8.
TAX ASSETS
NON-CURRENT
Deferred tax assets
Deferred tax assets comprise:
Provisions
Other
Un-recouped tax losses
4,313,415
4,313,415
891,679
60,571
3,361,165
891,679
60,571
3,361,165
4,313,415
4,313,415
The movement in deferred tax assets for each temporary difference during the year is as follows:
Provisions
Opening balance
Credited/(expensed) to income account
Other
Opening balance
Credited/(expensed) to income account
891,679
-
891,679
60,571
-
60,571
670,918
220,761
891,679
50,868
9,703
60,571
Page 42
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
8.
TAX ASSETS (Continued)
Unrecouped tax losses
Opening balance
Tax losses recognised/(recouped)
Prior year adjustment
Closing balance
Economic Entity
2015
2014
$
$
3,361,165
-
-
3,361,165
2,682,929
694,441
(16,205)
3,361,165
4,313,415
4,313,415
The company has considered it appropriate, given the quantum of the accounting losses in the
financial year, to not recognize in the financial accounts the benefit of additional tax losses which
relate to the current financial year. These additional tax losses total $4,030,491. If these losses
had been recognized at 30 June 2015 the net loss after tax would have reduced by $1,202,147.
Correspondingly the carrying values of deferred tax assets in the Statement of Financial Position
would increase by $1,202,147.
The company has extrapolated profit projections based on a modest 5% growth path. These
projections support the recovery of the carrying value of deferred tax assets at 30 June 2015 of
$4,313,415 within a six year time frame. The Directors consider this to be an acceptable
timeframe for assessing the recovery of the carrying value of deferred tax assets as probable.
TAX LIABILITIES
CURRENT
Income tax
NON-CURRENT
Provision for deferred tax
Opening balance
Additional provisions raised during year
Exchange rate movement
Closing balance
-
750
23,469
47,219
47,219
(25,818)
2,068
49,588
(119)
(2,250)
23,469
47,219
Page 43
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
9.
INTANGIBLE ASSETS
Goodwill on consolidation – at cost
Less accumulated impairment
Goodwill on acquisition – at cost
Less accumulated impairment
Movements in carrying amounts
Goodwill on consolidation
Opening balance
Movement in the year
Closing balance
Goodwill on acquisition
Opening balance
Movement in year:
Impairment – TSF Engineering
Closing balance
Economic Entity
2015
$
2014
$
3,282,532
-
3,282,532
-
3,282,532
3,282,532
24,606,758
(15,817,280)
8,789,478
24,606,758
(11,813,481)
12,793,277
12,072,010
16,075,809
3,282,532
-
3,282,532
-
3,282,532
3,282,532
12,793,277
16,706,758
(4,003,799)
(3,913,481)
8,789,478
12,793,277
It has been determined that the balances of the goodwill have an indefinite life. The excess of
the fair value of net assets over the purchase price of the businesses acquired has been
allocated to goodwill rather than be allocated to other intangible assets. The acquisition of the
businesses that generate the goodwill was determined on the abilities of the entities, as a whole,
to generate future profits and hence other intangibles have not been recognised.
Goodwill is allocated to cash-generating units which are based on the Group’s individual
companies. All businesses operate in the engineering services industry sector.
Water Group – Syfon Systems
Engineering Group – Brockman Engineering
Energy Group - TSF Engineering
Impairment – TSF Engineering
3,282,532
8,789,478
15,817,280
(15,817,280)
3,282,532
8,789,478
15,817,280
(11,813,481)
12,072,010
16,075,809
Page 44
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
9.
INTANGIBLE ASSETS (Continued)
The current uncertainty which persists with respect to the Government’s position on energy
and its pricing has significantly delayed the roll out of the Group’s clean energy strategy. The
clean energy solutions being offered by TSF have supportable benefits to prospective clients.
However, there is a general reluctance to commit to invest in these solutions by the end users
until the Federal Government establishes its energy and pricing position. As such TSF
continues to face protracted lead times on clean energy opportunities.
Given these prevailing externally driven hurdles which the Group’s clean energy strategy is
facing, the Directors considered it appropriate to further impair at 30 June 2015 the remaining
carrying value of goodwill in TSF. This resulted in an impairment at 30 June 2015 of
$4,003,799. At 30 June 2015 the carrying value of the TSF Engineering Goodwill was $Nil.
Impairment Disclosures
The EVZ Group assesses at each annual reporting date the potential impairment to the carrying
value of Goodwill of the relevant cash generating unit (CGU).
The recoverable amount of each CGU (Brockman Engineering, Syfon Systems and TSF
Engineering) is determined based on value-in-use calculations. Value-in-use is calculated based
on the present value of cash flow projections over a five year period adjusted for the estimated
terminal value of the cash generating unit. The cash flows are discounted using a rate reflecting
the Group’s weighted average cost of capital plus an appropriate margin for risk factors at the
beginning of the budget period. All discount rates are pre-tax.
Page 45
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2014
9.
INTANGIBLE ASSETS (Continued)
Budgets use estimated weighted average growth rates to project revenue. Costs are calculated
taking into account historical gross margins as well as estimated weighted average inflation rates
over the periods which are consistent with inflation rates applicable to the locations in which the
businesses operate. The following assumptions were used in the value-in-use calculations:
Syfon Systems Group
Brockman Engineering Group
TSF Engineering Group
2015
2014
Growth
Rates
Discount
Rates
Growth
Rates
Discount
Rates
5%
5%
-
18%
18%
-
5%
5%
1 to 5%
18%
18%
18%
The Risk factor incorporated in the Discount rate is consistent with the prior year.
The growth rates used in the value-in-use calculations are conservative rates reflecting the minimum
expected growth in each of the relevant CGUs. These rates are based on forward work-in-hand
levels, weighted project prospects and/or historical growth rates achieved. In addition, each CGU is in
a niche market which has limited competitive influence.
Sensitivity Analysis
In performing impairment testing on the carrying values of goodwill, certain discount rates and
growth rates have been assumed as part of the value-in-use calculations.
The following table illustrates sensitivities to changes in those discount rates and growth rates.
The discount and growth rates used in the sensitivity analysis are:
Syfon Systems Group
Brockman Engineering Group
Growth Rates Discount Rates
3%
3%
25%
25%
Syfon Systems Group
Brockman Engineering Group
10. TRADE AND OTHER PAYABLES
Current – unsecured
Trade payables
Sundry payables and accrued expense
Impairment to Carrying
Value of Goodwill
1,416,578
-
Economic Entity
2015
$
2014
$
7,775,116
7,096,309
10,139,039
3,678,360
14,871,425
13,817,399
Page 46
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
11. BORROWINGS – SHORT TERM
Bank loans – secured
Bank overdraft - secured
Lease liabilities (Note 24) – secured
Economic Entity
2015
$
2014
$
8,250,000
5,077,796
126,412
1,000,000
2,574,688
92,161
13,454,208
3,666,849
Bank Loans - Secured
At 30 June 2015 Bank loans are in the form of a Market Rate Loan. The loan matured on 1 October
2015. In prior years the loans were in the form of Commercial Bank Bills. During the year $1 million
was converted from a bank overdraft facility into the Market Rate Loan. During the year Bank loans of
$1m were repaid.
Current
1 to 2 years
2 to 3 years
Total Bank Loans
8,250,000
-
-
1,000,000
7,250,000
-
8,250,000
8,250,000
The interest rates on outstanding bank loans are variable. In the prior year Bank loans totalling
$1,500,000 had been fixed as follows:
2015
$
2014
$
1,500,000
1,500,000
-
-
Interest Rates
2014
2015
-
3.63%
The interest rate on Bank Loans is variable at balance date. The interest on these loans is charged at
the prevailing bank bill rate plus an applicable line fee. Interest is payable quarterly in arrears.
Bank loans are secured by a registered equitable mortgage over the assets and undertakings of EVZ
Limited and an unlimited guarantee from EVZ Limited’s Australian controlled entities: Syfon Systems
Pty Ltd, Brockman Engineering Pty Ltd, NuSource Water Pty Ltd, A.C.N. 124919508 Pty Ltd, TSF
Engineering Pty Ltd and TSF Maintenance Services Pty Ltd. Also refer to Note 32 for quantification of
assets secured by Australian entities.
At 30 June 2015 the economic entity has $Nil in undrawn bank loan facilities (2014: Nil).
Subsequent to balance date the Group’s financier, the Commonwealth Bank of Australia
extended the existing banking facilities to 31 March 2017. In addition the Bank allowed the
conversion of the exiting bank overdraft into a market rate loan facility. The covenants associated
with this facility remain unchanged being an interest cover covenant (of 3 times EBIT) and a
current ratio covenant (of 1.25 times). The security over the extended facility remains unchanged.
Page 47
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
12. BORROWINGS - LONG-TERM
Bank loans – secured
Lease liabilities (Note 24) – secured
Also refer to Note 11 for further information on bank loans.
13. PROVISIONS
Current
Employee benefits
Movement in employee benefits:
Opening employee balance
Provisions created/(utilised) during year
Closing balance
Non-current
Employee benefits
Movement in employee benefits:
Opening employee balance
Provisions created/(utilised) during year
Closing balance
Economic Entity
2015
$
2014
$
-
241,268
7,250,000
205,614
241,268
7,455,614
3,127,660
2,380,563
3,127,660
2,380,563
2,380,563
747,097
2,162,396
218,167
3,127,660
2,380,563
149,738
149,738
60,595
89,143
149,738
60,595
60,595
55,934
4,661
60,595
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. The measure and recognition criteria
relating to employee benefits are disclosed in Note 1(k).
14.
ISSUED CAPITAL
Issued and paid up
210,548,789 ordinary shares
(2014: 208,439,414 ordinary shares) – refer Note 14(a)
(a)
Issued and fully paid up ordinary shares
Opening balance
Issue
Closing balance
46,088,909
46,055,159
46,088,909
46,055,159
46,055,159
33,750
46,055,159
-
46,088,909
46,055,159
Page 48
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
14.
ISSUED CAPITAL (Continued)
Opening balance
Issue
Closing balance
2015
No.
208,439,414
2,109,375
2014
No.
208,439,414
-
210,548,789
208,439,414
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in
proportion to the number of shares held. 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. The ordinary shares have no par value.
(b) Share options
There are no share options on issue at 30 June 2015 (2014: Nil).
(c) Capital management:
Management controls the capital of the economic entity in order to maintain a good debt to equity
ratio, provide shareholders with adequate returns and ensure the economic entity can fund its
operations and continue as a going concern. The economic entity’s debt and capital includes
ordinary share capital and financial liabilities, supported by financial assets.
There are no externally imposed capital requirements. Management effectively manages the
economic entity’s capital by assessing the economic entity’s financial risks and adjusting its
capital structure in response to changes in these risks and in the market. These responses
include the management of debt levels, distributions to shareholders and share issues.
The economic entity’s gearing ratio is represented as net debt as a percentage of total capital
and is determined as follows:
• Net debt is total borrowings less cash and cash equivalents.
• Total capital is total equity and net debt.
As at 30 June 2015 the economic entity’s gearing ratio was 61% (2014: 33%).
15. DIVIDENDS
Interim fully franked ordinary dividend
Final fully franked ordinary dividend
-
-
-
-
-
-
Balance of franking account
1,813,797
1,813,797
16. RESERVES AND ACCUMULATED LOSSES
(a) Accumulated Losses
Accumulated losses at the beginning of the financial year
Net profit/(loss) attributable to members of the parent entity
(27,349,137)
(10,426,791)
(21,137,642)
(6,211,495)
Accumulated losses at the end of the financial year
(37,775,928)
(27,349,137)
Page 49
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
RESERVES AND ACCUMULATED LOSSES (Continued)
16.
(b) Reserves
Foreign Currency Translation Reserve
Reserve at beginning of year
Movement for year
Reserve at end of year
17. EARNINGS PER SHARE
(a) Weighted average number of ordinary shares outstanding during
the year used in calculation of Basic Earnings per Share
Economic Entity
2015
$
2014
$
(105,920)
56,598
(49,322)
(40,933)
(64,987)
(105,920)
Economic Entity
2014
No.
2015
No.
209,052,000
208,439,414
(b)
Weighted average number of ordinary shares outstanding during
the year used in calculation of Diluted Earnings per Share
209,052,000
208,439,414
18. KEY MANAGEMENT PERSONNEL
Names and positions of Directors and Key Management Personnel in office at any time during the
financial year are:
Mr M Findlay
Mr G Burns
Mr R Edgley
Ms R Murphy (Resigned 4 March 2016)
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Mr S Farthing
Mr I Wallace
Mr A Bellgrove
Mr C Bishop
Mr A Green (Resigned 12/2/15)
Mr I Whitford (Appointed 1/7/14)
Chief Executive Officer
Chief Financial Officer and Company
Secretary
General Manager of Syfon Systems Group
General Manager of Brockman Engineering
General Manager of TSF Engineering
Group
Manager of TSF Maintenance Services
Remuneration of Key Management Personnel is:
Page 50
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
18. KEY MANAGEMENT PERSONNEL (Continued)
• Short term employee benefits
• Post-employment benefits
2015
$
1,635,365
124,914
2014
$
1,827,413
120,058
1,760,279
1,947,471
Refer to disclosures in Note 20 for other transactions with directors and Key Management
Personnel.
The number of ordinary shares held by each Key Management Personnel of the Group during
the financial year is as follows:
30 June 2015
M Findlay
G Burns
R Edgley
R Murphy (Resigned 4 March
2016)
S Farthing
I Wallace
C Bishop
A Bellgrove
A Green (resigned 12/2/15)
I Whitford
30 June 2014
M Findlay
G Burns
R Edgley
R Murphy
S Farthing
I Wallace
C Bishop
M Goddard
A Bellgrove
A Green
C Flanagan
Balance at
beginning of year
1,644,500
10,000,000
3,741,232
42,500
Granted as
remuneration
-
-
-
-
1,000,000
75,008
-
4,401,949
132,000
-
21,037,189
1,644,500
8,999,021
2,800,000
42,500
1,000,000
75,008
-
421,949
4,401,949
132,000
6,500
19,523,427
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other
changes
-
543,985
-
-
2,109,375
-
-
-
(132,000)
-
Balance at
end of year
1,644,500
10,543,985
3,741,232
42,500
3,109,375
75,008
-
4,401,949
-
-
2,521,360
23,558,549
-
1,000,979
941,232
-
-
-
-
(421,949)
-
-
(6,500)
1,644,500
10,000,000
3,741,232
42,500
1,000,000
75,008
-
-
4,401,949
132,000
-
1,513,762
21,037,189
Page 51
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
18. KEY MANAGEMENT PERSONNEL (Continued)
There are no share options issued at 30 June 2015 (2014: Nil).
Remuneration Policy
The remuneration policy of EVZ Limited has been designed to align Director and Executive
remuneration with shareholder and business objectives by providing a fixed remuneration
component and where appropriate offering specific short and long-term incentives based on key
performance areas affecting the economic entity’s financial results. The Board believes the
remuneration policy to be appropriate and effective in its ability to attract and retain the best
Directors and Executives to govern and manage the economic entity, as well as to create goal
congruence between Directors, Executives and Shareholders.
Executive Remuneration
The Board’s policy for determining the nature and amount of remuneration for key senior
Executives for the economic entity is as follows:
• The remuneration policy, setting the terms and conditions for Executive officers, was
developed by the Remuneration Committee and approved by the Board after seeking
professional advice where appropriate from independent external consultants.
• All Executives receive a base salary (which is based on factors such as length of service and
experience), superannuation, fringe benefits and where appropriate performance incentives.
The Remuneration Committee reviews Executive remuneration packages annually with reference
to the economic entity’s performance, each Executive’s performance and comparable information
from industry sectors and listed companies in similar industries. The performance of each
Executive is measured against criteria agreed with each Executive and is based predominantly on
forecast growth of the economic entity’s profits and shareholders’ value. Bonuses and incentives
will be linked to predetermined performance criteria. The Board may, however, exercise its
discretion in relation to approving incentives, bonuses and options, and can recommend changes
to the Remuneration Committee’s recommendations. Any changes must be justified by reference
to measurable performance criteria. The policy is designed to attract the highest calibre of
Executives and reward them for performance that results in long-term growth in shareholder
wealth.
The Remuneration Committee set certain key performance indicators for the key Executives in the
Group. The key performance indicators were both quantitative and qualitative measures. Certain
Executives met some of these key performance indicators and the Remuneration Committee
approved short term incentive payments totaling $22,765 (2014: $41,750). Long term incentives,
linked with performance rights issued under the EVZ Directors’ and Employees’ Benefits Plan,
were not met during the current year and no performance rights, options or shares were issued in
respect of the current year. During the year the CEO accepted his prior year bonus of $33,750 in
fully paid ordinary shares. This resulted in 2,109,375 fully paid ordinary shares being issued
during the current year. There were no other share based payments.
Executives receive a superannuation guarantee contribution as required by the Government and
do not receive any other retirement benefits. Individuals may choose to sacrifice part of their
salary to increase payments towards superannuation. All remuneration paid to Executives is
valued at the cost to the Company and expensed.
Director Remuneration
The Board’s policy is to remunerate Non-Executive Directors at appropriate market rates. The
Remuneration Committee recommends the fee structure for Non-Executive Directors which will be
determined by reference
time, commitment and
accountability. Director fees are reviewed annually by the Remuneration Committee.
to market practice, duties performed,
Page 52
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
18. KEY MANAGEMENT PERSONNEL (Continued)
The Remuneration Committee may seek independent advice in determining appropriate fee
structures for Directors.
The maximum aggregate amount of fees payable to Non-Executive Directors is subject to
approval by shareholders at the Annual General Meeting. Fees for Non-Executive Directors are
not linked to the performance of the economic entity. However, to align Directors’ interests with
shareholder interests, the Directors are encouraged to hold shares in the Company and may be
able to participate in any employee share/option plan introduced.
All remuneration paid to Directors is valued at the cost to the Company and expensed.
19. AUDITORS’ REMUNERATION
Remuneration paid/payable to auditors for:
- audit or review of financial report
- taxation services
Economic Entity
2015
$
2014
$
88,000
-
84,650
-
88,000
84,650
20. RELATED PARTY DISCLOSURES
(a) The Directors of EVZ Limited during the financial year were:
Mr M Findlay
Mr G Burns
Mr R Edgley
Ms R Murphy (Resigned 4 March 2016)
(b) Transactions with Director related entities
• Directors fees of $66,666 (2014: $100,000) were paid and $98,333 (2014: $65,000) is
payable to M Findlay.
• Directors fees of $33,750 (2014: $45,000) were paid and $17,500 (2014: $11,250) is
payable to G Burns.
• Directors fees of $31,250 (2014: $41,250) were paid and $14,583 (2014: $7,500) is
payable to R Edgley.
• Directors fees of $45,000 (2014 $11,250) were paid and $40,000 (2014: $45,000) is
payable to R Murphy.
21. SEGMENT REPORTING
Segment Information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are
reviewed and used by the Board of Directors (chief operating decision makers) in assessing
performance and determining the allocation of resources.
The Group is managed primarily on the basis of product category and service offerings as 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.
Page 53
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
21 SEGMENT REPORTING (Continued)
Reportable segments disclosed are based on aggregating operating segments where the
segments are considered to have similar economic characteristics and are also similar with
respect to the following:
•
•
•
•
•
the products sold and/or services provided by the segment;
the manufacturing process;
the type or class of customer for the products or services;
the distribution method; and
any external regulatory requirements
Types of products and services by segment
i. Engineering
The engineering segment designs, manufactures and installs large steel tanks, silos,
cooling towers, pipe spooling, pressure vessels and fabricates structural steel. All
products produced are aggregated as one reportable segment as the products are similar
in nature, manufactured and distributed to similar types of customers and subject to a
similar regulatory environment.
The engineering segment is also involved in the installation process and provides ongoing
support and maintenance for its products. Support is provided to existing customers for
maintenance required for products under warranty.
ii. Energy
The energy segment designs and installs constant load power stations, back-up power
generation equipment and sustainable/clean energy solutions. In addition, the segment
services, maintains and hires all types of generators and associated equipment.
iii. Water
The water segment designs syfonic roof drainage systems for large and/or complex roof
structures, supplies and installs fibreglass panel tanks and prefabricated hydraulic
systems.
Basis of accounting for purposes of reporting by operating segments
i. Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors, being the chief
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.
ii.
Inter-segment transactions
Inter-segment sales are based on values that 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.
Inter-segment loans payable and receivable are initially recognised at the consideration
received/to be received net of transaction costs. If inter-segment loans receivable and
payable are not on commercial terms, these are not adjusted to fair value based on
market interest rates. This policy represents a departure from that applied to the statutory
financial statements.
Page 54
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
21 SEGMENT REPORTING (Continued)
iii. Segment assets
Where an asset is used across multiple segments, the asset is allocated to that segment
that receives majority economic value from that asset. In the majority of instances,
segment assets are clearly identifiable on the basis of their nature and physical location.
iv. Segment liabilities
Liabilities are allocated to segments where there is a direct nexus between the incurrence
of the liability and the operations of the segment. Tax liabilities are generally considered
to relate to the Group as a whole and are not allocated. Segment liabilities include trade
and other payables and certain direct borrowings.
v. Unallocated items
The following items of revenue, expenses, assets and liabilities are not allocated to
operating segments as they are not considered part of the core operations of any
segment:
• Impairment of assets and other non-recurring items of revenue or expense
• Income tax expense
• Current tax liabilities
• Other financial liabilities
Segment Reporting – Continuing Operations
Engineering Energy
$
$
Water
$
Corporate
$
Total
$
30 June 2015
REVENUE
External sales
Inter-segment sales
1,447,835
-
-
Total segment revenue
33,037,438 15,054,393 23,667,746
31,589,603 15,054,393 23,667,746
-
-
-
70,311,742
1,447,835
71,759,577
(1,447,835)
70,311,742
Reconciliation of segment revenue
to Group revenue
Inter-segment elimination
Total Group revenue
Included in segment net profit
before interest and tax
Depreciation
Impairment
• Receivables
• Goodwill
438,266
130,814
267,554
9,754
846,388
(83,813)
-
215,135
-
4,003,799
-
-
-
131,322
4,003,799
Page 55
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
21. SEGMENT REPORTING (Continued)
30 June 2015
Engineering
Energy
Water
Corporate
Total
$
$
$
$
$
Segment net profit/(loss) before
interest and tax
Reconciliation of segment result to
Group net profit before tax
1,658,224 (8,670,745)
(265,554)
(1,447,509)
(8,725,584)
Unallocated items
• Net finance costs
Net loss before tax from continuing operations
30 June 2014
REVENUE
External sales
19,376,766 23,413,989 21,642,400
Inter-segment sales
1,675,373
-
-
Total segment revenue
21,052,139 23,413,989 21,642,400
(1,664,230)
(10,389,814)
-
-
-
64,433,155
1,675,373
66,108,528
(1,675,373)
64,433,155
Reconciliation of segment revenue
to Group revenue
Inter-segment elimination
Total Group revenue
Included in segment net profit
before interest and tax
Depreciation
Impairment
• Receivables
• Plant and equipment
• Other assets
• Goodwill
392,363
172,109
233,078
9,931
807,481
1,791
-
187,214
-
-
-
343,409
373,712
3,913,481
-
-
-
-
-
-
-
189,005
343,409
373,712
3,913,481
Segment net profit/(loss) before
interest and tax
(1,701,533) (4,282,061)
1,847,515
(1,439,895)
(5,575,974)
Reconciliation of segment result to
Group net profit before tax
Unallocated items
• Net finance costs
• Other costs
Net loss before tax from continuing operations
(1,099,611)
(437,602)
(7,113,187)
Page 56
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
21 SEGMENT REPORTING (Continued)
Secondary Reporting
30 June 2015
Engineering
Energy
Water
Corporate
Total
$
$
$
$
$
ASSETS
Segment assets
Reconciliation of segment assets to
Group assets
Inter-segment eliminations
Total Group assets
Segment asset increases for the
period
Capital expenditure
LIABILITIES
Segment liabilities
Reconciliation of segment liabilities
to Group liabilities
Inter-segment eliminations
Total Group liabilities
30 June 2014
Segment assets
Reconciliation of segment assets to
Group assets
Inter-segment eliminations
Total Group assets
Segment asset increases for the
period
Capital expenditure
LIABILITIES
Segment liabilities
Reconciliation of segment liabilities
to Group liabilities
Inter-segment eliminations
Total Group liabilities
21,661,180
846,210 15,217,723 26,722,341
64,447,454
(24,316,027)
40,131,427
581,338
135,669
389,361
581,338
135,669
389,361
-
-
1,106,368
1,106,368
24,903,777 20,355,449
6,510,467
8,964,621
60,734,314
(28,866,546)
31,867,768
18,683,863
9,048,242 16,089,982 29,598,347
73,420,434
(27,391,343)
46,029,091
106,813
106,813
53,669
53,669
397,337
397,337
-
-
557,819
557,819
23,593,839 19,312,407
6,518,311
9,596,550
59,021,107
(31,592,118)
27,428,989
Page 57
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
21. SEGMENT REPORTING (Continued)
REVENUE BY GEOGRAPHICAL REGION
Revenue, including revenue from discontinued operations, attributable to external customers is
disclosed below, based on the location of the external customer:
Australia
Asia
Total revenue
Economic Entity
2015
$
2014
$
64,973,643
5,338,099
60,613,175
3,819,980
70,311,742
64,433,155
ASSETS BY GEOGRAPHICAL REGION
The location of segment assets by geographical location of the assets is disclosed below:
Australia
Asia
Total assets
34,185,782
5,945,645
40,942,022
5,087,069
40,131,427
46,029,091
MAJOR CUSTOMERS
The Group has a number of customers to whom it provides products and services. In the current year,
the Group has a single customer in the Energy segment who accounts for 56% (2014: 77%) of external
revenue. There are no other significant client accounts.
22. STATEMENT OF CASH FLOWS
Cash balances comprise:
(i)
Cash on hand
Bank overdraft
Closing cash balance
(ii)
Reconciliation of the operating profit/(loss) after tax to net
cash flows from operations:
Operating profit/(loss) after tax
Gain/loss on sale of plant and equipment
Depreciation - plant & equipment
Foreign currency translation
Impairment - receivables
Impairment - plant and equipment
Impairment - other assets
Impairment - goodwill
Changes in assets and liabilities adjusted for effects of
acquisition/disposal of operations during financial year
Increase/(Decrease) in provisions for employee entitlements
(Increase)/Decrease in inventories
1,013,866
(5,077,796)
2,047,109
(2,574,688)
(4,063,930)
(527,579)
(10,426,791)
(10,144)
846,388
43,299
131,322
162,855
-
4,003,799
(6,211,495)
2,144
807,481
(49,864)
189,005
343,409
373,712
3,913,481
836,240
(249,456)
222,828
(280,400)
Page 58
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
22. STATEMENT OF CASH FLOWS (Continued)
(Increase)/Decrease in trade and other receivables
(Increase)/Decrease in deferred tax assets
Increase/(Decrease) in payables
Increase/(Decrease) in tax liabilities
Net cash provided/(used) by operating activities
Economic Entity
2015
$
1,004,721
-
1,087,776
(24,500)
(2,594,491)
2014
$
(1,600,582)
(908,700)
3,711,343
(31,010)
481,352
23. STANDBY ARRANGEMENTS AND UNUSED CREDIT FACILITIES
Controlled entities in the economic entity have Contingent Liability Bank Guarantee facilities and
Letter of Credit Facilities totalling $4,182,925 available to them as at 30 June 2015 (2014:
$7,730,332). Of this total facility, $3,742,013 had been utilised and $440,912 (2014: $2,231,142)
remained unused and available for the controlled entities use as at 30 June 2015. The facilities
are secured by a registered equitable mortgage over the assets and undertakings of all Australian
companies in the economic entity.
Controlled entities in the economic entity had Bank Overdraft facilities totaling $5,080,000
available to them as at 30 June 2015 (2014: $2,629,668). Of the total available facilities, $2,204
(2014: $54,980) remained unused and available for use. The facilities are secured by registered
equitable mortgages over the assets and undertakings of all Australian companies in the
economic entity.
In March 2016 the Group’s financier, the Commonwealth Bank of Australia extended the existing
banking facilities to 31 March 2017. In addition the Bank allowed the conversion of the existing
bank overdraft into a market rate loan facility.
24. LEASE COMMITMENTS
Leases are payable as follows:
Not later than 12 months
Later than 12 months but not later than 2 years
Later than 2 years but not later than 5 years
Later than 5 years
Future lease finance charges
Lease liabilities recognised in the statement of financial position:
Current
Non-current
Total lease liability
143,934
130,670
127,540
-
402,144
(34,464)
108,949
91,162
131,136
4,974
336,221
(38,446)
367,680
297,775
126,412
241,268
92,161
205,614
367,680
297,775
The weighted average interest rate implicit in these leases is 4.77% pa (2014: 5.82% pa).
Leases pertain to various plant, equipment and motor vehicles and are secured against the asset
to which they relate.
Page 59
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
25. OPERATING LEASE COMMITMENTS
Property
Not later than 12 months
Between 12 months but not later than 5 years
Plant and equipment
Not later than 12 months
Between 12 months but not later than 5 years
Economic Entity
2015
$
2014
$
732,382
438,464
1,170,846
764,636
874,550
1,639,186
158,240
413,766
572,006
77,436
137,847
215,283
Total commitments not recognised in the financial statements
1,742,852
1,854,469
Property leases and plant and equipment leases are non-cancellable with a maximum five year
term, with rent payable in advance. Property leases have contingent rental provisions within the
lease agreement which require the minimum lease payments to be increased by at least the CPI
per annum. Options exist to renew certain leases at the end of their lease term. With the
approval of the lessors the property leases may be extended for further terms.
26. CONTINGENT LIABILITIES
Apart from drawn bank guarantee facilities (refer Note 23), there were no contingent liabilities as
at 30 June 2015 (2014: Nil).
27. FINANCIAL INSTRUMENTS
The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and
payable, loans to and from subsidiaries, bank bills and leases.
(i)
The main purpose of non-derivative financial instruments is to raise finance for Group operations.
Treasury Risk Management
The Board of Directors is responsible for monitoring treasury risk. Currency and interest rate
exposures are reviewed regularly to ensure any risk associated with these exposures is
minimized.
(ii) Financial Risks
The main risks the economic entity is exposed to through its financial instruments are interest
rate risk, foreign currency risk, liquidity risk and credit risk.
•
Interest rate risk
The majority of the economic entity’s borrowings take the form of bank loans. All bank loans
matured on 1 October 2015. Subsequent to balance date the Group’s financier, the
Commonwealth Bank of Australia extended the existing banking facilities to 31 March 2017.
In addition the Bank allowed the conversion of the exiting bank overdraft into a market rate
loan facility.
• Foreign currency risk
The economic entity is exposed to fluctuations in foreign currencies arising from the sale and
purchase of goods and services in currencies other than the economic entity’s measurement
currency. The economic entity monitors its foreign exchange exposure on a regular basis.
Page 60
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
27. FINANCIAL INSTRUMENTS (Continued)
•
Liquidity risk
The economic entity manages liquidity risk by monitoring forecast cash flows and ensuring
that adequate cash reserves are maintained.
• Credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security,
at balance date to recognised financial assets, is the carrying amount, net of any provisions
for impairment of those assets, as disclosed in the statement of financial position and notes
to the financial statements. The economic entity does not have any material credit risk
exposure to any single receivable or Group of receivables under financial instruments
entered into by the economic entity.
(a)
Interest Rate Risk Exposures
The economic entity’s exposure to interest rate risk and the effective weighted average interest
rate for each class of financial assets and financial liabilities is set out below. Exposures arise
predominantly from assets and liabilities bearing variable interest rates as the economic entity
intends to hold fixed rate, assets and liabilities to maturity.
2015
Financial Assets
Cash & cash equivalents
Trade & other
receivables
Financial assets
Weighted average
interest rate
Financial Liabilities
Trade & other payables
Borrowings
Lease liabilities
Weighted average
interest rate
Net financial assets
(liabilities)
2014
Financial Assets
Cash & cash
equivalents
Trade & other receivables
Financial assets
Weighted average
interest rate
Fixed Interest
Floating
interest
rate
$
1 year or
less
$
1-5 years
$
More
than
5 years
$
Non-
interest
bearing
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,327,796
-
13,327,796
-
-
126,412
126,412
-
-
241,268
241,268
9.61%
4.77%
4.77%
(13,327,796)
(126,412)
(241,268)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,013,866
1,013,866
15,760,841 15,760,841
63,729
63,729
16,838,436 16,838,436
-
-
14,871,425 14,871,425
- 13,327,796
367,680
-
14,871,425 28,566,901
-
-
1,967,011
(11,728,465)
2,047,109
2,047,109
16,898,575
62,038
19,007,722
16,898,575
62,038
19,007,722
-
-
Page 61
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
27. FINANCIAL INSTRUMENTS (Continued)
2014
Financial Liabilities
Trade & other payables
Borrowings
Lease liabilities
Weighted average
interest rate
Net financial assets
(liabilities)
Fixed Interest
Floating
interest
rate
$
1 year or
less
$
1-5 years
$
More
than
5 years
$
Non-
interest
bearing
$
Total
$
-
2,574,688
-
2,574,688
-
8,250,000
92,161
8,342,161
-
-
201,082
201,082
-
-
4,532
4,532
13,817,399
-
-
13,817,399
13,817,399
10,824,688
297,775
24,939,862
12.48%
6.7%
6.75%
5.82%
-
-
(2,574,688)
(8,342,161)
(201,082)
(4,532)
5,190,323
(5,932,140)
Reconciliation of Net Financials Assets/(Liabilities) to Net Assets
Net financial assets/(liabilities)
Add/(subtract) non-financial assets and liabilities:
Inventories
Plant and equipment
Intangible assets
Deferred tax assets
Provisions
Net Assets
Economic Entity
2015
$
2014
$
(11,728,465)
(5,932,140)
1,825,064
5,082,502
12,072,010
4,313,415
(3,300,867)
1,983,863
4,648,282
16,075,809
4,313,415
(2,489,127)
8,263,659
18,600,102
(b) Net Fair Value of Financial Assets and Liabilities
The net fair value of cash and cash equivalents and non-interest bearing monetary financial
assets and financial liabilities of the economic entity approximate their carrying value.
(c) Liquidity Risk
Refer to Note 27(a) for a maturity analysis of financial assets and liabilities. All floating interest
rate balances and all non-interest bearing balances except for Retention Receivables totalling
$978,754 (refer Note 4) are current and due within 12 months.
(d) Sensitivity Analysis
The interest rate on Bank loans is variable (2014: Fixed - $1,500,000). The Group believes it has
minimal exposure to interest rate risk for the remainder of the facility term given the current
economic stability in interest rates.
(e) Foreign Currency Risk
Refer Note 21 for a breakdown of revenue and assets by geographic location. Whilst the
economic entity monitors its foreign exchange risk, it does not believe there is any material risk
associated with its foreign exchange exposure.
(f) Price Risk
The economic entity believes it has minimal exposure to price risk as costs of major materials
and components are set at the time of project tender.
Page 62
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
28. SHARE BASED PAYMENTS
During the year the CEO accepted his prior year bonus of $33,750 in fully paid ordinary
shares. This resulted in 2,109,375 fully paid ordinary shares being issued during the current
year. There were no other share based payments.
29.
INVESTMENT IN CONTROLLED ENTITIES
Name of Entity
Country of
Incorporation
Class of
Shares
Syfon Systems Pty Ltd
Syfon Systems Sdn Bhd
Brockman Engineering Pty Ltd
NuSource Water Pty Ltd
Danum Engineering Pty Ltd
A.C.N. 124919508 Pty Ltd
TSF Engineering Pty Ltd
Syfon Systems Pte Ltd
EVZ Engineering Pty Ltd
EVZ Energy Pty Ltd
Australia
Malaysia
Australia
Australia
Australia
Australia
Australia
Singapore
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Equity
Holdings
2015
2014
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
Cost of Parent Entity’s
Investment
2015
$
3,700,650
34,504
-
-
-
-
-
-
-
-
2014
$
3,700,650
34,504
-
-
-
-
-
-
-
-
3,735,154
3,735,154
EVZ Engineering Pty Ltd, EVZ Energy Pty Ltd and NuSource Water Pty Ltd did not trade during
the year.
30. SUBSEQUENT EVENTS
Subsequent to balance date the Group’s financier, the Commonwealth Bank of Australia
extended the existing banking facilities to 31 March 2017. In addition the Bank allowed the
conversion of the exiting bank overdraft into a market rate loan facility. The covenants associated
with this facility remain unchanged being an interest cover covenant (of 3 times EBIT) and a
current ratio covenant (of 1.25 times). The security over the extended facility remains unchanged.
The EVZ Group has also successfully reached a commercial agreement which will allow the
Melbourne Airport Tri-Generation project to be completed. This commercial agreement
appropriately compensates EVZ for the estimated costs of completion of this project and
realigns the required completion date of the project to the end of December 2016.
Other than the matters noted above, there have not been any matters or circumstances, other
than that referred to in the financial statements or notes thereto, that have arisen since the end of
the financial year, that have significantly affected, or may significantly affect, the operations of the
economic entity, the results of those operations, or the state of affairs of the economic entity in
future financial years after this financial year.
Page 63
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
31. CONSTRUCTION CONTRACTS
Aggregate amount of contract revenue recognised during the financial
year
Aggregate of contract costs incurred and profits recognised (including
losses recognised) to date on contracts in progress
Progress billings
Receipts in advance
Economic Entity
2015
$
2014
$
60,033,239
52,186,677
65,183,435
74,356,908
65,641,119
71,717,282
-
(280,009)
Amounts due from customers for contract work in progress
(457,684)
2,359,617
Total receivable from customers for contract work in progress as
included in Note 4
10,938,712
7,795,685
Retention receivables as included in Note 4
1,482,643
962,253
Page 64
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015
32 DEED OF CROSS GUARANTEE
During the financial year, a deed of cross guarantee between EVZ Ltd (Parent Entity) and TSF
Engineering Pty Ltd, TSF Maintenance Services Pty Ltd, Brockman Engineering Pty Ltd, Danum
Engineering Pty Ltd, A.C.N. 124919508 Pty Ltd, Syfon Systems Pty Ltd, NuSource Water Pty
Ltd, EVZ Energy Pty Ltd and EVZ Engineering Pty Ltd (Group Entities) existed and relief is
obtained from preparing financial statements for those Group Entities under ASIC Class Order
98/1418. Under the deed, EVZ Ltd and the Group Entities jointly guarantee to support the
liabilities and obligations of the Group Entities. EVZ Ltd and the Group Entities are the only
parties to the Deeds of Cross Guarantee and form the Closed Group. The following are the
aggregate totals, for each category, relieved under the deed:
(i)
Financial information in relation to:
Statement of Profit or Loss and Other Comprehensive Income
Profit/(Loss) before income tax
Income tax (expense)/benefit
Profit/(Loss) after income tax
Profit/(Loss) attributable to members of the parent entity
(ii) Retained Earnings
Retained losses at the beginning of the year
Profit/(Loss) after income tax
Retained losses at the end of the year
(iii) Statement of Financial Position
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Financial assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Deferred tax asset
Other receivables
Financial assets
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Short-term borrowings
TOTAL CURRENT LIABILITIES
Closed Group & Parties to
Deed of Cross Guarantee
2015
$
2014
$
(10,710,026)
-
(10,710,026)
(10,710,026)
(7,212,102)
908,700
(6,303,402)
(6,303,402)
(28,617,778)
(10,710,026)
(39,327,804)
(22,314,376)
(6,303,402)
(28,617,778)
836,174
12,324,091
1,050,092
23,449
14,233,806
1,939,540
14,037,368
1,553,249
-
17,530,157
4,728,814
4,313,415
2,113,776
-
12,242,295
23,398,300
37,632,106
4,344,691
4,313,415
1,140,837
23,449
16,246,094
26,068,486
43,598,643
17,148,002
13,404,434
30,552,436
15,039,710
3,646,538
18,686,248
Page 65
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THEYEAR ENDED 30 JUNE 2015
32 DEED OF CROSS GUARANTEE (Continued)
NON-CURRENT LIABILITIES
Long-term borrowings
Long-term provisions and other payables
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Retained losses
Closed Group & Parties to
Deed of Cross Guarantee
2015
$
2014
$
174,864
143,701
318,565
30,871,001
6,761,105
7,414,419
60,595
7,475,014
26,161,262
17,437,381
46,088,909
(39,327,804)
6,761,105
46,055,159
(28,617,778)
17,437,381
33. NEW AND AMENDED ACCOUNTING STANDARDS
The company adopted all of the new, revised or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current
reporting period. At the date of authorisation of these financial statements, the Standards and
Interpretations listed below were in issue but not yet effective. The company is still assessing the
impact on reported results on adoption of these pronouncements. Adoption of these pronouncements
may result in changes to information currently disclosed in these financial statements. The company
does not intend to adopt any of these pronouncements before the effective dates.
Standard
AASB 9 “Financial Instruments”
The consolidated entity will adopt this standard
from 1 July 2018 but the impact of its adoption
is yet to be assessed by the consolidated
entity.
AASB 15 “Revenue from Contracts with
Customers”
The consolidated entity will adopt this standard
from 1 July 2017 but the impact of its adoption
is yet to be assessed by the consolidated
entity.
AASB 2014-4 “Amendments to Australian
Accounting Standards – Clarification of
Acceptable methods of Depreciation and
Amortisation”
AASB 2015-1 “Amendments to Australian
Accounting Standards – Annual Improvements
to Australian Accounting Standards 2012-2014
Cycle”
AASB 2015-2 “Amendments to Australian
Accounting Standards – Disclosure Initiative:
Amendments to AASB 101”
AASB 2015-3 “Amendments to Australian
Accounting Standards arising from the
withdrawal of AASB 1031 Materiality”
Effective for
annual reporting
periods beginning
on or after
1 January 2018
Expected to be
initially applied in the
financial year ending
30 June 2019
1 January 2017
30 June 2018
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 July 2015
30 June 2016
Page 66
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THEYEAR ENDED 30 JUNE 2015
34. PARENT ENTITY DISCLOSURES
Information relating to the Parent Entity, EVZ Limited, is as follows:
(i)
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Accumulated losses
Total equity
(ii) Financial Performance
Comprehensive income
Profit/(Loss) for the year
Transfer from capital profits reserve
Total comprehensive income/(loss)
Parent Entity
2015
$
2014
$
171,865
17,407,840
17,579,705
101,770
19,315,799
19,417,569
8,964,621
-
8,964,621
2,375,292
7,250,000
9,625,292
46,088,909
(37,473,825)
8,615,084
46,055,159
(36,262,882)
9,792,277
(1,210,943)
-
(1,210,943)
(4,188,476)
-
(4,188,476)
(iii) Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
A deed of cross guarantee between EVZ Ltd (Parent Entity) and TSF Engineering Pty Ltd, TSF
Maintenance Services Pty Ltd, Brockman Engineering Pty Ltd, Danum Engineering Pty Ltd,
A.C.N. 124919508 Pty Ltd (formerly National Engineering Pty Ltd), Syfon Systems Pty Ltd,
NuSource Water Pty Ltd, EVZ Energy Pty Ltd (previously Cellular Beams Pty Ltd) and EVZ
Engineering Pty Ltd (Group Entities) is enacted and relief was obtained from preparing financial
statements for those Group Entities under ASIC Class Order 98/1418. Under the deed, EVZ Ltd
and the Group Entities jointly guarantee to support the liabilities and obligations of the Group
Entities. EVZ Ltd and the Group Entities are the only parties to the Deeds of Cross Guarantee
and form the Closed Group.
There are no contingent liabilities of the Parent Entity or commitments for the acquisition of
property, plant and equipment by the Parent Entity.
Page 67
EVZ LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THEYEAR ENDED 30 JUNE 2015
35. COMPANY DETAILS
The registered office and principal place of business of
EVZ Limited is
22 Hargreaves Street, Huntingdale, 3166
Principal place of business of:
Syfon Systems Pty Ltd is
22 Hargreaves St, Huntingdale, 3166
Brockman Engineering Pty Ltd is
340 Forest Rd, Corio, 3214
TSF Engineering Pty Ltd is
Unit A, 31-33 Sirius Road, Lane Cove, 2066
TSF Maintenance Services Pty Ltd is
Unit A, 31-33 Sirius Road, Lane Cove, 2066
Page 68
EVZ LIMITED
DIRECTORS’ DECLARATION
The Directors of EVZ Limited declare that:
(a)
in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able
to pay its debts as and when they become due and payable;
the financial statements are in compliance with International Financial Reporting Standards, as
stated in Note 1 to the financial statements;
in the Directors’ opinion, the financial statements and notes thereto are in accordance with the
Corporations Act 2001, including compliance with accounting standards and giving a true and fair
view of the financial position and performance of the consolidated entity; and
the Directors have been given the declarations required by s.295A of the Corporations Act 2001.
(b)
(c)
(d)
At the date of this declaration, the Company is within the class of companies affected by ASIC Class
Order 98/1418. The nature of the deed of cross guarantee is such that each company which is party to
the deed guarantees to each creditor payment in full of any debt in accordance with the deed of cross
guarantee.
In the Directors’ opinion, there are reasonable grounds to believe that the Company and the companies
to which the ASIC Class Order applies, as detailed in Note 32 to the financial statements will, as a
Group, be able to meet any obligations or liabilities to which they are, or may become, subject by virtue
of the deed of cross guarantee.
SIGNED in accordance with a resolution of the Board of Directors made pursuant to s.295(5) of the
Corporations Act 2001.
…………………………
Director – M Findlay
Signed at Melbourne this 14th day of April 2016.
Page 69
Independent Auditor’s Report to the
Members of EVZ Limited
Report on the financial report
We have audited the accompanying financial report of EVZ Limited, which comprises the consolidated
statement of financial position as at 30 June 2015, the consolidated statement of profit or loss, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information and the directors’ declaration of the
consolidated entity comprising the company and the entities it controlled at the year’s end or from time to
time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also
state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that the
financial statements comply with International Financial Reporting Standards (IFRS).
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
An audit also includes evaluating the appropriateness of accounting policies used and the
control.
reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Crowe Horwath Melbourne is a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and
independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omission
of financial services licensees.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001.
Auditor’s opinion
In our opinion:
a)
the financial report of the company is in accordance with the Corporations Act 2001, including:
I.
II.
giving a true and fair view of the consolidated entity’s financial position as at 30 June
2015 and of their performance for the year ended on that date; and
complying with Australian Accounting Standards (including Australian Accounting
Interpretations) and the Corporations Regulations 2001.
b)
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
Report on the Remuneration Report
We have audited the remuneration report included in pages 10 to 13 of the directors’ report for the year
ended 30 June 2015. The directors of the company are responsible for the preparation and presentation
of the remuneration report in accordance with s300A 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.
Auditor’s opinion
In our opinion the remuneration report of EVZ Limited for the year ended 30 June 2015 complies with
s300A of the Corporations Act 2001.
Emphasis of Matter
Without modification to our conclusion, we draw attention to Note 1 in the financial report, which indicates
that subsequent to 30 June 2015, the Commonwealth Bank of Australia (the “Bank”) extended the
Company and its controlled entities’ (collectively the “Group”) existing banking facilities to 31 March 2017
to allow sufficient time for EVZ Limited to pursue a structured debt reduction.
The Group is currently determining the optimum strategy for its structured debt reduction which may
include a change in capital structure and/or the orderly divestment of some of the Group’s operations and
assets.
The Group’s ability to continue as a going concern is dependent on the Commonwealth Bank continuing to
support the Group as it determines and executes its structured debt reduction program and the Group’s
ability to continue to meet its profit forecasts. At this stage there is nothing to suggest that the Company
would not be able to roll its existing banking facilities past 31 March 2017 or that it won’t meet its profit
forecasts. Should existing banking facilities not be extended or if the Group does not meet its profit
forecasts, the Group may not be able to realise its assets and settle its liabilities in the ordinary course of
business.
These conditions, along with other matters as set forth in Note 1, indicate the existence of a material
uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.
2
CROWE HORWATH MELBOURNE
DAVID MUNDAY
Partner
Melbourne, Victoria
14 April 2016
3
EVZ LIMITED
ADDITIONAL SHAREHOLDER INFORMATION
AS AT 31 AUGUST 2015
1.
Substantial Shareholders
UBS Nominees Pty Ltd
Airlie Beach Holdings Pty Ltd
2.
Distribution of Shareholding
Range of Holding
1
1,001
5,001
10,001
-
-
-
-
1,000
5,000
10,000
100,000
100,001 and over
Number of shareholders with less than a marketable parcel of $500 at
$0.01/unit
3. Names of the 20 Largest Shareholders
1. UBS Nominees Pty Ltd
2. Stuart Andrew Pty Ltd (Campaspe Family A/c)
3. Powis Superannuation Pty Ltd (Powis Super Fund A/c)
4. Myall Resources Pty Ltd (Myall Group Super Fund A/c)
5. Smithley Super Pty Ltd (Smith Super Fund A/c)
6. Linwierik Super Pty Ltd (Linton Super Fund A/c)
7. Airlie Beach Holdings Pty Limited (ABI Super Fund A/c)
8. Airlie Beach Holdings Pty Limited (Burns Family A/c)
9. Mr Keith Andrew Fagg & Mrs Heather Elizabeth Fagg (KA & HE
Fagg S/Fund A/c)
CJ Arms Superannuation Fund Pty Ltd (CJ Arms Super Fund
A/c)
10.
11. Mr Adam Bernard Bellgrove (Ingodwi Family A/c)
12. Onmell Pty Ltd (ONM PBSF A/c)
13. Rangeworthy Pty Ltd (The Edgley Family A/c)
14. BT Portfolio Services Limited (Juchima Super Fund A/c)
15. STF Enterprises Pty Ltd
16. Suntaneous Pty Ltd (GB Clients Emp S/F A/c)
17. TRB Management Pry Ltd (Bowden Super Fund A/c)
18. DIP Holdings Pty Ltd
19. NLA Investments Pty Ltd (N & L Allen Family A/c)
20. Mr Peter Howells
17,620,429 Ordinary Shares
10,543,985 Ordinary Shares
No. of Shareholders
Ordinary Shares
287
757
249
536
192
2,021
1,689
Shares
held
17,620,429
8,700,000
8,571,949
7,650,000
7,000,000
5,855,181
5,543,985
5,000,000
4,828,001
4,570,178
4,400,000
3,612,581
3,466,232
3,285,654
3,109,375
3,008,197
3,000,000
2,600,000
2,576,853
2,300,000
%
Holding
8.37
4.13
4.07
3.63
3.32
2.78
2.63
2.37
2.29
2.17
2.09
1.72
1.65
1.56
1.48
1.43
1.42
1.23
1.22
1.09
106,698,615
50.68
4.
Voting Rights
A registered holder of shares in the Company may attend general meetings of the Company in
person or by proxy and on a poll may exercise one vote for each share held. There are no voting
rights attached to options for ordinary shares until the options have been exercised.
5.
Unlisted Options
There are no unlisted options on issue.
Page 72
EVZ LIMITED
ADDITIONAL SHAREHOLDER INFORMATION
AS AT 31 AUGUST 2015 (Continued)
6. General
The name of the Company Secretary is Ian Wallace.
The address of the principal registered office is:
22 Hargreaves Street, Huntingdale, Victoria, 3166
Telephone Number: (03) 9545 5288
(03) 9542 6061
Facsimile Number:
ian.wallace@evz.com.au
Email:
A register of securities is kept at:
Computershare Investor Services Pty Ltd
452 Johnston Street
Abbotsford, Victoria, 3067.
Telephone Number: 1300 137 328
7.
Stock Exchange Listing
The Company’s ordinary securities are listed on the Australian Securities Exchange Limited.
Page 73