EVZ Limited Annual Report 2016

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EVZ LIMITED

A.B.N.87 010 550 357

AND CONTROLLED ENTITIES

ANNUAL REPORT

2016

EVZ LIMITED

Chairman’s Report

The Financial year 2016 has seen the EVZ Group deliver a significant improvement in its operations
compared to FY2015. This has been achieved whilst the group companies continue to operate within an
extremely competitive and difficult economy.

There have been two significant matters which have occurred subsequent to the end of the financial year
which have supported the Group’s financial stability.

1. The Group has worked closely with the support of its financier and has been able to renegotiate
the terms of its Banking Facilities with the Commonwealth Bank of Australia. The revised facility
terms include; an extension of the facility out to 31 December 2017, a significant reduction in the
cost of funding and a moratorium on loan repayments until maturity date.

2. The Directors and the Chief Executive Officer have advanced the Group $1 million to assist the
Group’s working capital. This advance matures on 15 December 2017 and will be secured,
subject to shareholder approval, by security over one of the Group’s businesses, TSF
Maintenance Services Pty Ltd.

As a result of the above mentioned events the EVZ Group now sits in a stronger financial position than it
did at the close of FY2016.

Summarising recent events within each of our businesses individually:

 Our tank construction, maintenance and piping operation, Brockman Engineering, continues to
be a lead player in these markets. A relocation of premises completed in July has delivered
significant operating efficiencies and an increased capacity for work going forward. The business
has a significant tender pipeline and has secured increased tank maintenance work for FY 17
and beyond.

 The Groups siphonic drainage operation, Syfon Systems has continued to improve its financial

performance during FY16. The Australian business continues to experience strong forward work
and the Asian operation in particular has been growing significantly in both size and profitability.
It currently holds record forward work in hand.

 The Groups energy operation, TSF is approaching the conclusion of its very large Melbourne
Airport Tri-Generation project. This project is expected to meet its project completion plan and
conclude later this calendar year. The maintenance business within TSF continues to be
profitable and has recently been awarded maintenance contracts which will see it achieve solid
progress on its objective of expanding its geographic and client base.

I would like to thank all my fellow Directors for their ongoing commitment and support. In particular,
sincere thanks must go to Max Findlay for his steadfastness as the Chairman of the EVZ Group to the
beginning of the new financial year. Max has stepped down from the Chair due to his other work
commitments. However, Max will continue to act as a Non-Executive Director of EVZ Limited.

Considerable gratitude must go to the EVZ management and workforce who, on an ongoing basis,
undertake their roles and represent the EVZ Group in the best possible way.

Finally, I would like to thank our loyal shareholders for their ongoing support. Your Board of Directors
remain committed to achieve improved value for our shareholders.

Graham Burns - Chairman

EVZ LIMITED

ANNUAL REPORT 2016

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.................................................................................................71

INDEPENDENT AUDIT REPORT TO THE MEMBERS............................................................ 72

ADDITIONAL SHAREHOLDER INFORMATION ..................................................................... 75

Page 3

EVZ LIMITED

CORPORATE DIRECTORY

DIRECTORS

G Burns
M Findlay
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 2016.
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:

Graham Burns

Appointed 1 February 2008 – Non-Executive Chairman. Mr Burns was
appointed Chairman on 5 July 2016.
Mr Burns, age 61, 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,
Committees.

is a member of

the Remuneration and Nomination

Interest in Shares: 11,210,652 ordinary shares

Maxwell Findlay

Appointed 14 May 2008 – Non-Executive Director.
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 and Nomination Committee and
Chairman of the Remuneration Committee.

Mr Findlay is also Chairman of SMEC Holding Ltd and Boom Logistics Ltd

Interest in Shares: 1,644,500 ordinary shares

Robert Edgley

Appointed 26 August 2011 – Non-Executive Director.
Mr Edgley, age 51, 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.

Mr Edgley has significant experience and skills in strategic planning,
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
Remuneration and Nomination Committees.

the Audit Committee and a member of

the

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: 14

M Findlay – (resigned as Chairman 5 July 2016)
G Burns – (appointed Chairman 5 July 2016)
R Edgley
R Murphy (Resigned 4 March 2016)

REMUNERATION COMMITTEE MEETINGS
Total number of meetings held: 1

G Burns – (resigned as Chairman 5 July 2016)
M Findlay – (Appointed Chairman 5 July 2016)
R Edgley

No. Attended

14
13
14
8

No. Held
Whilst a Director
14
14
14
8

No. Attended

1
1
0

No. Held
Whilst a Member
1
1
1

Page 6

EVZ LIMITED

DIRECTORS’ REPORT

AUDIT COMMITTEE MEETINGS
Total number of meetings held: 2

R Edgley – Chairman (Appointed 8 March 2016)
M Findlay
R Murphy – Chairperson (Resigned 4 March 2016)

No. Attended

2
2
1

No. Held
Whilst a Member
2
2
1

There were no meetings of the Nomination Committee held during the year.

COMPANY SECRETARY
The Company Secretary is Ian Wallace. Mr Wallace has a Bachelor of Economics (Hons), and is a
Chartered Accountant with accounting and company secretarial experience in listed and unlisted
companies.

PRINCIPAL ACTIVITIES
The economic entity operates in the engineering and energy services sectors and its principal
activities are:
 Design, manufacture, service and maintenance of

tanks for use in the water,

large steel

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
compared to a net loss after income tax expense in 2015 of $10,426,791.

loss for the economic entity for the year after income tax expense was $2,438,195

FY16 has seen a significant improvement in performance compared to FY15.

However, during the 2nd half of FY16 the Group faced different market circumstances when compared
to the first six months of FY16, including:

 A constant delay in the awarding of contracts which has resulted in competitive tension with

respect to pricing as businesses compete for available work.

 Highly competitive pricing from inexperienced engineering businesses exiting the mining sector

and willing to buy work in the engineering segment.

 A wetter than expected winter period has hampered project delivery.
 Unexpected and prolonged expenditure freezes by major customers in the power maintenance

segment.

The Group’s water segment in Australia has returned to profitability during the year and this same
water segment in Asia has increased its profitability. Both Australia and Asia enter the new financial
year with strong levels of forward work in hand. Growth in the Asian region continues to present
further geographic spread and opportunities for the Asia water business. The engineering segment
also has significant forward prospect/tendered work.

Page 7

EVZ LIMITED

DIRECTORS’ REPORT

Continuing high interest costs associated with the Group’s debt has impacted the financial result.

Subsequent to balance date the Group has agreed a refinancing package with its financier, the
Commonwealth Bank of Australia which will incorporate a significant reduction in the cost of funding,
a moratorium on loan repayments until 31 December 2017 and an extension of the banking facilities
to the same date. This agreement was executed on 30 August 2016.

In addition, subsequent to balance date, the Group has been able to arrange a term loan from the
Directors and management for $1 million to assist with the Group’s working capital position.

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
As at 30 June 2016, existing bank facilities were due to mature on 31 March 2017. Subsequent to
30 June 2016, the Group has agreed a refinancing package with its financier, the Commonwealth
Bank of Australia which will incorporate a significant reduction in the cost of funding, a moratorium
on loan repayments until 31 December 2017 and an extension of the banking facilities to the same
date. This agreement was executed on 30 August 2016.

In addition, subsequent to balance date, the Group has been able to arrange a term loan from the
Directors and management for $1 million to assist with the Group’s working capital position. The
loan matures 15 December 2017 and has an attached interest rate of 3.5%pa. The loan, subject to
shareholder approval will be secured by a general security agreement and a put and call option over
the assets and shares of a 100% owned subsidiary, TSF Maintenance Services Pty Ltd.

There have not been any other matters or circumstances, other than that referred to in the financial
that have
that have arisen since the end of
statements or notes thereto,
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 the
financial year.

the 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
Commonwealth, State or Territory Law.

to any significant environmental

regulations under a

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 to determine eligibility for short term incentive payments. The key performance indicators
were both quantitative and qualitative measures. Short term incentive payments for the year were
$Nil (2015: $22,765).

Long term incentives,
the EVZ Directors’ and
linked with performance rights issued under
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;

 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.

There were no share based payments during the year. In the prior year the CEO accepted his
accrued bonus of $33,750 in fully paid ordinary shares. This resulted in 2,109,375 fully paid ordinary
shares being issued in the prior year. There were no other share based payments.

Performance Based Remuneration
During the year to 30 June 2016, performance based remuneration paid/payable totaled $Nil (2015:
$22,765). 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.

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 2016
The remuneration for each Director and each of Key Management Personnel of the economic entity
during the year was as follows:

Directors

2016
M Findlay
G Burns
R Edgley
R Murphy (Resigned 4 March 2016)

2015
M Findlay
G Burns
R Edgley
R Murphy

Short-term
Employee
Benefits

Post-Employment
Benefits

Salary
$
-
-
-
-
-
$
-
-
-
-
-

Fees
$
80,000
35,000
35,000
23,333
173,333
$
100,000
40,000
38,333
40,000
218,333

Superannuation
Contributions
$
-
-
-
-
-
$
-
-
-
-
-

Total
$
80,000
35,000
35,000
23,333
173,333
$
100,000
40,000
38,333
40,000
218,333

Key Management Personnel of the Economic Entity

Short Term Employee Benefits

Post-
Employment
Benefits

Super-
annuation
Contributions
$

Termination
Benefits
$

Profit Share &
Bonus
$

Non Cash
Benefits
$

2016

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)
I Whitford
(Manager, TSF
Maintenance Pty Ltd)

Salary
$

356,027

196,170

276,898

250,030

136,986
1,216,111

-
-

2,949

18,973

176

35,000

20,037

25,000

15,000
18,125

13,014
112,024

-
-

Total
$

377,949

231,346

296,935

275,030

165,000
1,346,260

Page 12

EVZ LIMITED

DIRECTORS’ REPORT

REMUNERATION REPORT (Continued)

Short Term Employee Benefits

Post-
Employment
Benefits

Super-
annuation
Contributions
$

Termination
Benefits
$

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

Total
$

378,113

250,129

317,330

270,820

16,009

51,674

204,863

2015

109,225
1,338,012

-
22,765

-
4,581

11,466
124,914

-
51,674

120,691
1,541,946

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

Page 13

EVZ LIMITED

DIRECTORS’ REPORT

REMUNERATION REPORT (Continued)

The number of ordinary shares held by each Key Management Personnel of the Group during the
financial year is as follows:

30 June 2016
G Burns
M Findlay
R Edgley
R Murphy (Resigned 4 March
2016)
S Farthing
I Wallace
C Bishop
A Bellgrove
I Whitford

Balance at
beginning of year
10,543,985
1,644,500
3,741,232
42,500

Granted as
remuneration
-
-
-
-

Other
changes
666,667
-
-
(42,500)

Balance at
end of year
11,210,652
1,644,500
3,741,232
-

3,109,375
75,008
-
4,401,949
-

23,558,549

-
-
-
-
-

3,109,375
75,008
-
4,401,949
-

624,167

24,182,716

This concludes the remuneration report, which has been audited

Signed in accordance with a resolution of the Board of Directors.

Director – G Burns

Signed at Melbourne this 29 th day of September 2016.

Page 14

EVZ LIMITED

CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2016

Introduction
The board of EVZ Limited is committed to protecting shareholders’ interests and ensuring investors
are fully informed about
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 company’s business.

the performance of

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 2016
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.

The key responsibilities of the board are to:
 establish, monitor and modify the corporate strategies of the company;
 ensure proper corporate governance;
 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 2016

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
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 stakeholders:

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 2016

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

2016

2015

No.

 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
Remuneration Committee.

the CEO’s performance is a specific function of

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 2016

Details of Directors

Director

Graham Burns

Maxwell Findlay

Robert Edgley

Raelene Murphy
(Resigned 4 March
2016)

Term in Office
Appointed 1 February
2008
Appointed 14 May
2008
Appointed 26 August
2011
Appointed 28
September 2012,

Qualifications

GAICD

Status

Independent

BEc, FAICD

Independent

BEc

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
business management

experience

and

international

Recommendation 2.4: Director Independence

All directors 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
The board has adopted the following principles and guidelines in determining the
sought.
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 2016

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, Graham Burns,
is an independent director (appointed 5 July 2016). He is
responsible for the leadership of the board and he has no other positions that hinder the effective
performance of this role. During the year to 30 June 2016 Max Findlay held the position of
Chairman. During his tenure he was responsible for the leadership of the board and he had no other
positions that hindered 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:
 Robert Edgley (Appointed Chairperson 8 March 2016)
 Max Findlay
 Raelene Murphy (Resigned 4 March 2016)

Page 19

EVZ LIMITED

CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2016

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
In demonstration of this
timely and balanced disclosure of matters concerning the company.
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 2016

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 allows 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 2016

The Company allows 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.

responsibility to all stakeholders for

The board has overall
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
the senior
compliance with regulatory requirements.
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
the company means that communication and decision-making is predominantly
small size of
It also allows senior
centralised allowing early identification of risks by senior management.
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.

The operational risks are managed at

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
In
continuously kept
addition a monthly risk report is tabled at the Board meeting for consideration.

the company’s internal control systems.

the effectiveness of

informed of

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

including economic, environmental and social
The Board monitors its exposure to all risks,
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 (resigned as Chairman on 5 July 2016)
 Max Findlay (appointed as Chairman on 5 July 2016)
 Rob Edgley

Page 22

EVZ LIMITED

CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2016

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
than statutory
shareholder approval) but
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.

retirement benefits, other

there is no scheme for

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.

 a contractor to a Group Company
who is selected by the Board to participate in the Plan.

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 2016 there have
been no contraventions of

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
29 September 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 2016

Revenue
Cost of sales

Gross profit

Other income
Administration and business development costs
Corporate costs
Impairment of other assets
Impairment of intangibles

Profit/(Loss) before finance costs and income tax
Net finance costs

Profit /(Loss) before income tax from continuing operations
Income tax (expense)/benefit

Economic Entity

Notes

2016
$

2015
$

63,986,789
(53,223,235)

70,311,742
(62,854,962)

10,763,554

7,456,780

402,678
(10,666,538)
(1,089,499)
(98,104)
-

71,743
(10,729,945)
(1,357,508)
(162,855)
(4,003,799)

(687,909)
(1,534,999)

(8,725,584)
(1,664,230)

(2,222,908)
(215,287)

(10,389,814)
(36,977)

2(a)

2(c)

Profit/(Loss) for year attributed to members after tax

(2,438,195)

(10,426,791)

Overall operations
Basic earnings per share
Diluted earnings per share

Continuing operations
Basic earnings per share
Diluted earnings per share

Cents per
share

17
17

(1.16)
(1.16)

(4.99)
(4.99)

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 2016

Profit/(Loss) for the year after tax
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

2016
$

2015
$

(2,438,195)

(10,426,791)

16(b)

(40,486)

56,598

(2,478,681)

(10,370,193)

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 2016

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

2016
$

2015
$

22
4
5
6

4
7
8
9
6

10
8
11
13

12
8
13

1.561,574
11,249,768
1,764,881
31,417
14,607,640

1,013,866
14,782,087
1,825,064
63,729
17,684,746

1,449,202
4,688,822
4,313,415
12,072,010
-
22,523,449

978,754
5,082,502
4,313,415
12,072,010
-
22,446,681

37,131,089

40,131,427

14,478,636
94,554
13,317,789
3,081,940
30,972,919

14,871,425
-
13,454,208
3,127,660
31,453,293

122,958
43,237
206,997
373,192

241,268
23,469
149,738
414,475

31,346,111

31,867,768

5,784,978

8,263,659

14
16
16

46,088,909
(89,808)
(40,214,123)

46,088,909
(49,322)
(37,775,928)

5,784,978

8,263,659

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 2016

ECONOMIC ENTITY

Issued
Capital

Accumulated
Losses

30 June 2016

Foreign
Currency
Translation
Reserve
$

Total

Balance at 1 July 2015

46,088,909

(37,775,928)

(49,322)

8,263,659

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

(2,438,195)

(40,486)

(2,438,195)

(40,486)

(2,478,681)

Balance at 30 June 2016

46,088,909

(40,214,123)

(89,808)

5,784,978

30 June 2015

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)

56,598

(10,426,791)

56,598

(10,370,193)

33,750

Balance at 30 June 2015

46,088,909

(37,775,928)

(49,322)

8,263,659

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 2016

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

Notes

Economic Entity

2016
$

2015
$

75,268,312
(72,495,316)
(120,733)
10,529
(1,545,528)

77,816,484
(78,685,268)
(61,477)
15,142
(1,679,372)

22(ii)

1,117,264

(2,594,491)

276,792
(591,619)

94,603
(1,106,368)

NET CASH FLOWS (USED) BY INVESTING ACTIVITIES

(314,827)

(1,011,765)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans
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

5,200,000
(250,000)
-
(126,933)

-
-
102,556
(32,651)

4,823,067

69,905

5,625,504
(4,063,930)

(3,536,351)
(527,579)

CASH AT END OF FINANCIAL YEAR

22(i)

1,561,574

(4,063,930)

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 2016

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
inter-company balances and transactions between entities in the economic
year-end. All
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
In addition, contingent liabilities of the acquiree will be recognised where a
assumed.
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 2016

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
tax liabilities (assets) are therefore
substantially enacted, as at reporting date. Current
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 2016

1.
(b)

is intended that net settlement or simultaneous realisation and settlement of

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
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 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 lower of cost and net realisable value.

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 2016

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
to the
ownership of the asset, but not the legal ownership, are transferred to entities in the economic
entity are classified as finance leases.

fixed assets where substantially all

the risks and benefits incidental

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
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.

instruments, incorporating financial assets and financial

Page 33

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

1.
(g)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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
If
assets to determine whether there is any indication that those assets have been impaired.
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
companies. All businesses operate in the engineering services industry sector.

is allocated to cash-generating units which are based on the Group’s individual

Page 34

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

(i)

(j)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 2016

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
In these
amount of GST incurred is not recoverable from the Australian Tax Office.
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 2016

1.
(r)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Critical Accounting Estimates and Judgments
The Directors evaluate estimates and judgments incorporated into the financial report based
on historical knowledge and best available current
Estimates assume a
reasonable expectation of future events and are based on current trends and economic data,
obtained both externally and within the Group.

information.

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.

At 30 June 2016, a provision for impairment of $113,295 (2015: $404,631) was raised against
receivables from continuing operations.

Recognition of Deferred Tax Assets
The Group has recognised deferred tax assets in relation to Provisions ($891,679), Other
payables ($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 years.

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 and losses are recognised on the stage-of-completion basis and
measured by comparing construction contract costs incurred to date against expected final
costs and recoveries 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 2016.

(s) Going Concern

The financial report for the year ended 30 June 2016 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 has agreed a refinancing package with its financier,
the Commonwealth Bank of Australia which will incorporate a significant reduction in the cost
of funding, a moratorium on loan repayments until 31 December 2017 and an extension of the
banking facilities to the same date. This agreement was executed on 30 August 2016.

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 currently remains unchanged.

Page 37

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In addition, subsequent to balance date, the Group has been able to arrange a term loan from
the Directors and management for $1 million to assist with the Group’s working capital
position.

The Group’s ability to continue as a going concern is dependent on:

 The Commonwealth Bank continuing to support the Group, including the granting of
any waiver relating to covenants. Historically the Commonwealth Bank has granted
such waivers and the Directors expectation is that the CBA will continue to grant such
waivers through to maturity of the facility 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 circumstances noted above represent a material
The directors have concluded that
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 the directors continue to adopt the going concern basis in preparing the
financial report of EVZ and its controlled entities at 30 June 2016.

(t)

New and Amended Accounting Standards
During the current year the Group adopted the following new Australian Accounting Standards
and Interpretations applicable to its operations which became mandatory at 30 June 2016:

AASB 2013-9 Amendments to Australia Accounting standards – Conceptual
Framework, Materiality and Financial Instruments.
This standard contains three main parts and makes amendments to a number of standards
and interpretations.
Part A of AASB 2013-9 makes consequential amendments arising from the issuance of AASB
CF 2013-1.
Part B makes amendments to particular Australian Accounting Standards to delete references
to AASB 1031 and also makes minor editorial amendments to various other standards.
Part C makes amendments to a number of Australian Accounting Standards, including
incorporating Chapter 6 Hedge Accounting in to AASB 9 Financial Instruments.

AASB 2015-3 Amendments to Australia Accounting Standards arising from the
Withdrawal of AASB 1031 Materiality
Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031
materiality. The standard completes the AASB‘s project to remove Australian guidance on
materiality from Australian Accounting Standards.
Australian Accounting Standards to delete references to AASB 1031 and also makes minor
There has been no financial impact on their adoption.

Page 38

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

(t)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

New and Amended Accounting Standards (Continued)

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 29th September 2016 by the Board of Directors.

Page 39

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

PROFIT/(LOSS) FROM CONTINUING OPERATIONS

2.
(a) OTHER INCOME
Sundry income
Gain on acquisition of assets

(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 – goodwill

Finance costs
Interest income

3.
(a)

INCOME TAX
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% (2015: 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

2016
$

2015
$

46,604
356,074

71,743
-

402,678

71,743

118,603
(291,336)
36,229,543
2,747,491
(103,522)
118,280
980,162
937,325
98,104
-

264,911
131,322
37,553,593
2,487,306
(82,759)
(10,144)
1,009,553
846,388
162,855
4,003,799

1,545,528
(10,529)

1,679,372
(15,142)

1,534,999

1,664,230

(2,222,908)

(10,389,814)

(666,872)

(3,116,944)

(118,002)
-
784,874
215,287

1,111,553
(3,687)
2,009,078
36,977

215,287

36,977

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

215,287
-
-
215,287

40,664
-
(3,687)
36,977

Page 40

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

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
2016
$

2015
$

9,613,809
(113,295)
9,500,514
580,161
418,554
10,499,229
750,539

14,350,618
(404,631)
13,945,987
(457,684)
503,889
13,992,192
789,895

11,249,768

14,782,087

1,449,202

978,754

1,449,202

978,754

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
2016
$
8,273,824
4,425,146

2015
$
12,495,625
3,265,216

12,698,970

15,760,841

Page 41

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

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

12,061,726
750,539
12,812,265

113,295
-
113,295

2,011,219
-
2,011,219

933,365
-
933,365

1,689,935
-
1,689,935

7,313,912
750,539
8,064,451

15,375,577
789,895
16,165,472

404,631
-
404,631

4,277,472
-
4,277,472

1,013,807
-
1,013,807

1,054,505
-
1,054,505

8,625,162
789,895
9,415,057

Economic Entity

2016
Trade & term receivables
Other receivables

2015
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

INVENTORIES
Current
Raw materials and stores – at cost

Economic Entity

2016
$
404,631
(291,336)

2015
$
273,309
131,322

113,295

404,631

1,764,881

1,825,064

1,764,881

1,825,064

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.

FINANCIAL ASSETS
Current assets
Funds on deposit

31,417

63,729

Page 42

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

Funds on deposit represent security deposits covering a guarantee for property lease obligations
and contract performance bonds.

Economic Entity

2016
$

2015
$

PLANT AND EQUIPMENT
Plant and equipment
At cost
Accumulated depreciation

Movement in carrying amounts
Carrying amount – opening balance
Additions
Disposals
Depreciation
Assets acquired – nil consideration
Reclassification of stock
Exchange rate adjustment

Carrying amount – closing balance

11,133,324
(6,444,502)

10,965,005
(5,882,503)

4,688,822

5,082,502

5,082,502
591,619
(395,072)
(937,325)
356,074
-
(8,976)

4,648,282
1,106,368
(84,459)
(846,388)
-
245,400
13,299

4,688,822

5,082,502

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.

TAX ASSETS
NON-CURRENT
Deferred tax assets
Deferred tax assets comprise:
Provisions
Other
Un-recouped tax losses

4,313,415

891,679
60,571
3,361,165

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

891,679
-
891,679

60,571
-
60,571

Page 43

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

TAX ASSETS (Continued)
Unrecouped tax losses
Opening balance
Tax losses recognised/(recouped)
Prior year adjustment

Closing balance

Economic Entity
2015
2016
$
$

3,361,165
-
-
3,361,165

4,313,415

The company has considered it appropriate, given the quantum of the accounting losses in the
current 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 $3,323,142. If these losses had been recognized at 30 June
2016 the net loss after tax would have reduced by $996,943. Correspondingly the carrying values
of deferred tax assets in the Statement of Financial Position would increase by $996,943.

Also in the previous financial year the company considered it appropriate, given the quantum of
the accounting losses in that financial year, to not recognize in the financial accounts the benefit
of additional tax losses which relate to the 30 June 2015 financial year.

For the prior year the tax losses not recognized totaled $4,030,491. If these losses had been
recognized at 30 June 2016 the net loss after tax would have reduced by a further $1,202,147.
Correspondingly the carrying values of deferred tax assets in the Statement of Financial Position
would increase by a further $1,202,147.

The company has extrapolated profit projections based on a 5% growth path. These projections
support the recovery of the carrying value of deferred tax assets at 30 June 2016 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

94,554

43,237

23,469

23,469
20,364
(596)

47,219
(25,818)
2,068

43,237

23,469

Page 44

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

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

2016
$

2015
$

3,282,532
-

3,282,532

24,606,758
(15,817,280)
8,789,478

12,072,010

3,282,532
-

3,282,532

8,789,478

12,793,277

(4,003,799)

8,789,478

Goodwill
companies. All businesses operate in the engineering services industry sector.

is allocated to cash-generating units which are based on the Group’s individual

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)

12,072,010

Page 45

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

INTANGIBLE ASSETS (Continued)

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.

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.

Other key assumptions in the value-in-use calculation include gross margin, additional allowances
for potential capital expenditure and normalisation of working capital changes. Due to the
these factors, assumptions for growth rates and discount rates are the most
correlation of
sensitive in the value-in-use calculation.

The following assumptions were used in the value-in-use calculations:

2016

2015

Growth
Rates

Discount
Rates

Growth
Rates

Discount
Rates

Syfon Systems Group
Brockman Engineering Group

5%
5%

18%
18%

5%
5%

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, consideration of future expected activities and giving
consideration to historical growth rates achieved.

Page 46

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

INTANGIBLE ASSETS (Continued)

Key Estimates
The following sensitivity analysis was undertaken with respect to the value in use calculations and
the imbedded assumptions and estimates used in performing the impairment testing on the
carrying value of goodwill.

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

10. TRADE AND OTHER PAYABLES

Current – unsecured
Trade payables
Sundry payables and accrued expense

Growth Rates Discount Rates

3%
3%

25%
25%

Impairment to Carrying
Value of Goodwill
1,813,977
-

Economic Entity
2016
$

2015
$

6,779,377
7,699,259

7,775,116
7,096,309

14,478,636

14,871,425

Page 47

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

11. BORROWINGS – SHORT TERM

Bank loans – secured
Bank overdraft - secured
Lease liabilities (Note 24) – secured

Economic Entity
2016
$

2015
$

13,200,000
-
117,789

8,250,000
5,077,796
126,412

13,317,789

13,454,208

Bank Loans - Secured
During the year the Group’s financier advanced $5,200,000 by way of a market rate loan and the
proceeds were applied against an existing bank overdraft of $5,080,000. During the year Bank loans
of $250,000 were repaid. At 30 June 2016 the maturity structure of Bank loans was as follows:

Current
1 to 2 years
2 to 3 years

Total Bank Loans

13,200,000
-
-

8,250,000
-
-

13,200,000

8,250,000

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 monthly and 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 2016 the economic entity has $Nil in undrawn bank loan facilities (2015: Nil).

to balance date the Group’s financier,

Subsequent
the Commonwealth Bank of Australia
extended the existing banking facilities to 31 December 2017 and also capitalised interest
outstanding totaling $85,000. Under the revised facility agreement no principal repayments are
required prior to expiration of the facility. The covenants associated with this new 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 currently remains unchanged.

In addition, subsequent to balance date, the Group has been able to arrange a term loan from the
Directors and management for $1 million to assist with the Group’s working capital position. The
loan matures 15 December 2017 and has an attached interest rate of 3.5%pa. The loan, subject
to shareholder approval will be secured by a general security agreement and a put and call option
over the assets and shares of a 100% owned subsidiary, TSF Maintenance Services Pty Ltd.

Page 48

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

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

2016
$

-
122,958

122,958

2015
$

-
241,268

241,268

3,081,940

3,127,660

3,081,940

3,127,660

3,127,660
(45,720)

2,380,563
747,097

3,081,940

3,127,660

206,997

149,738
57,259

206,997

149,738

60,595
89,143

149,738

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 measurement 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
(2015: 210,548,789 ordinary shares) – refer Note 14(a)

(a)

Issued and fully paid up ordinary shares
Opening balance
Issue

Closing balance

46,088,909

46,088,909
-

46,055,159
33,750

46,088,909

Page 49

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

14.

ISSUED CAPITAL (Continued)

Opening balance
Issue

Closing balance

2016
No.
210,548,789
-

2015
No.
208,439,414
2,109,375

210,548,789

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 2016 (2015: Nil).

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 2016 the economic entity’s gearing ratio was 67% (2015: 61%).

15. DIVIDENDS

Interim fully franked ordinary dividend
Final fully franked ordinary dividend

-
-

Balance of franking account

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

(37,775,928)
(2,438,195)

(27,349,137)
(10,426,791)

Accumulated losses at the end of the financial year

(40,214,123)

(37,775,928)

Page 50

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

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

2016
$

2015
$

(49,322)
(40,486)
(89,808)

(105,920)
56,598
(49,322)

Economic Entity
2015
No.

2016
No.

210,548,789

209,052,000

(b) Weighted average number of ordinary shares outstanding during
the year used in calculation of Diluted Earnings per Share

210,548,789

209,052,000

18. KEY MANAGEMENT PERSONNEL

Names and positions of Directors and Key Management Personnel in office at any time during the
financial year are:
Mr G Burns
Mr M Findlay
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 I Whitford

Chief Executive Officer
Chief Financial Officer and Company
Secretary
General Manager of Syfon Systems Group
General Manager of Brockman Engineering
General Manager of TSF Maintenance
Services

Remuneration of Key Management Personnel is:

Page 51

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

18. KEY MANAGEMENT PERSONNEL (Continued)

 Short term employee benefits
 Post-employment benefits

2016
$

1,407,569
112,024

2015
$
1,635,365
124,914

1,519,593

1,760,279

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 2016
G Burns
M Findlay
R Edgley
R Murphy (Resigned 4 March
2016)
S Farthing
I Wallace
C Bishop
A Bellgrove
I Whitford

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

Balance at
beginning of year
10,543,985
1,644,500
3,741,232
42,500

Granted as
remuneration
-
-
-
-

Other
changes
666,667
-
-
(42,500)

Balance at
end of year
11,210,652
1,644,500
3,741,232
-

3,109,375
75,008
-
4,401,949
-

23,558,549

1,644,500
10,000,000
3,741,232
42,500

1,000,000
75,008
-
4,401,949
132,000
-

21,037,189

-
-
-
-
-

-
-
-
-

-
-
-
-
-
-

-
-
-
-
-

3,109,375
75,008
-
4,401,949
-

624,167

24,182,716

-
543,985
-
-

2,109,375
-
-
-
(132,000)
-

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 52

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

18. KEY MANAGEMENT PERSONNEL (Continued)

There are no share options issued at 30 June 2016 (2015: Nil).

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 $Nil (2015: $22,765). 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. In the prior year the CEO accepted his bonus of $33,750 in 2,109,375
fully paid ordinary shares. 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 to market practice, duties performed,
time, commitment and
accountability. Director fees are reviewed annually by the Remuneration Committee.

Page 53

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

18. KEY MANAGEMENT PERSONNEL (Continued)

The Remuneration Committee may seek independent advice in determining appropriate fee
structures for Directors.

to
The maximum aggregate amount of
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.

fees payable to Non-Executive Directors is subject

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

2016
$

2015
$

105,000
-

88,000
-

105,000

88,000

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 $6,000 (2015: $66,666) were paid and $134,500 (2015: $48,333) is

payable to M Findlay.

 Directors fees of $6,000 (2015: $33,750) were paid and $50,875 (2015: $17,500) is

payable to G Burns.

 Directors fees of $6,000 (2015: $31,250) were paid and $44,167 (2015: $14,583) is

payable to R Edgley.

 Directors fees of $66,000 (2015: $45,000) were paid and $3,666 (2015: $40,000) 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 54

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

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
In addition, the segment
generation equipment and sustainable/clean energy solutions.
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 55

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

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 2016

REVENUE

External sales

34,309,073

7,039,326 22,638,390

Inter-segment sales

2,544

Total segment revenue

34,311,617

7,039,326 22,638,390

Reconciliation of segment revenue
to Group revenue

Inter-segment elimination

Total Group revenue

63,986,789

2,544

63,989,333

(2,544)

63,986,789

Page 56

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2015

21. SEGMENT REPORTING (Continued)

30 June 2016

Engineering

Energy

Water

Corporate

Total

Segment net profit/(loss) before
interest and tax

(862,771)

(756,946)

2,021,307 (1,089,499)

(687,909)

Reconciliation of segment result to
Group net profit before tax

Unallocated items
 Net finance costs
Net loss before tax from continuing operations

Included in segment net profit
before interest and tax

(1,534,999)

(2,222,908)

493,700

146,387

290,815

6,423

937,325

Depreciation

Impairment

 Receivables

 Goodwill

30 June 2015
External sales

(291,336)

31,589,603 15,054,393 23,667,746

Inter-segment sales

1,447,835

Total segment revenue

33,037,438 15,054,393 23,667,746

(291,336)

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

Segment net profit/(loss) before
interest and tax

1,658,224 (8,670,745)

(265,554)

(1,447,509)

(8,725,584)

Reconciliation of segment result to
Group net profit before tax

Unallocated items
 Net finance costs
Net loss before tax from continuing operations

(1,664,230)

(10,389,814)

Page 57

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

SEGMENT REPORTING (Continued)

Included in segment net profit
before interest and tax

Depreciation

Impairment

 Receivables

 Goodwill

Secondary Reporting

438,266

130,814

267,554

9,754

846,388

(83,813)

215,135

4,003,799

131,322

4,003,799

30 June 2016

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 2015

Segment assets

Reconciliation of segment assets to
Group assets

Inter-segment eliminations

Total Group assets

21,117,699 (2,546,759) 16,224,647 29,749,215

64,544,802

(27,413,713)

37,131,089

445,453

9,320

136,846

591,619

25,213,774 18,349,465

5,383,579 13,941,012

62,887,830

(31,541,719)

31,346,111

21,661,180

846,210 15,217,723 26,722,341

64,447,454

(24,316,027)

40,131,427

Page 58

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

SEGMENT REPORTING (Continued)

Segment asset increases for the
period

Capital expenditure

LIABILITIES

Segment liabilities

Reconciliation of segment liabilities
to Group liabilities

Inter-segment eliminations

Total Group liabilities

581,338

135,669

389,361

1,106,368

24,903,777 20,355,449

6,510,467

8,964,621

60,734,314

(28,866,546)

31,867,768

Page 59

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

21. SEGMENT REPORTING (Continued)

REVENUE BY GEOGRAPHICAL REGION
Revenue,
disclosed below, based on the location of the external customer:

including revenue from discontinued operations, attributable to external customers is

Australia
Asia

Total revenue

Economic Entity

2016
$

2015
$

56,438,135
7,548,654

64,973,643
5,338,099

63,986,789

70,311,742

ASSETS BY GEOGRAPHICAL REGION

The location of segment assets by geographical location of the assets is disclosed below:

Australia
Asia

Total assets

29,572,486
7,558,603

34,185,782
5,945,645

37,131,089

40,131,427

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 40% (2015: 56%) 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/(write back) - receivables
Impairment - plant and equipment
Impairment - goodwill
Gain on acquisition of fixed assets
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

1,561,574
-

1,013,866
(5,077,796)

1,561,574

(4,063,930)

(2,438,195)
118,280
937,325
(31,510)
(291,336)
-
-
(356,074)

(10,426,791)
(10,144)
846,388
43,299
131,322
162,855
4,003,799
-

11,539
60,183

836,240
(249,456)

Page 60

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

22. STATEMENT OF CASH FLOWS (Continued)

(Increase)/Decrease in trade and other receivables
Increase/(Decrease) in payables
Increase/(Decrease) in tax liabilities

Net cash provided/(used) by operating activities

Economic Entity

2016
$

3,385,519
(392,789)
114,322
1,117,264

2015
$

1,004,721
1,087,776
(24,500)
(2,594,491)

23. STANDBY ARRANGEMENTS AND UNUSED CREDIT FACILITIES

Controlled entities in the economic entity have Contingent Liability Bank Guarantee facilities and
Letter of Credit Facilities totaling $3,509,340 available to them as at 30 June 2016 (2015:
$4,182,925). Of this total facility, $3,163,972 had been utilised and $345,368 (2015: $440,912)
remained unused and available for the controlled entities use as at 30 June 2016. Subsequent to
balance date a new Facility agreement has been executed and the available Contingent Bank
Guarantee facility limits have been reduced to $3,247,500. 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 have no Bank Overdraft facilities available to them as at
30 June 2016 (2015: $5,080,000).
In March 2016 the Bank allowed the conversion of the existing
bank overdraft into a market rate loan facility. In the prior year $2,204 remained unused and
available for use.

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

129,575
93,689
34,525
-
257,789
(17,042)

143,934
130,670
127,540
-
402,144
(34,464)

240,747

367,680

117,789
122,958

126,412
241,268

240,747

367,680

The weighted average interest rate implicit in these leases is 6.80% pa (2015: 4.77% pa).
Leases pertain to various plant, equipment and motor vehicles and are secured against the asset
to which they relate.

Page 61

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

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

2016
$

2015
$

490,809
737,214

732,382
438,464

1,228,023

1,170,846

263,214
578,676
841,890

158,240
413,766
572,006

Total commitments not recognised in the financial statements

2,069,913

1,742,852

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 2016 (2015: 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)

(ii)

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.

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
were scheduled to mature on 31 March 2017. Subsequent to balance date the Group’s
financier, the Commonwealth Bank of Australia extended the existing banking facilities to 31
December 2017.

 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 62

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

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. The table below shows the Group’s
interest rate risk exposure as at 30 June.

2016

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)

2015
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
$

-
-

-
13,200,000
-
13,200,000

-
-
117,789
117,789

-
-
122,958
122,958

8.75%

6.80%

(13,200,000)

(117,789)

(122,958)

-
-
-

-
-

-
-
-
-

-
-
-

1,561,574

1,561,574
12,698,970 12,698,970

31,417

31,417
14,291,961 14,291,961

14,478,636
-
-
14,478,636

14,478,636
13,200,000
240,747
27,919,383

(186,675)

(13,627,422)

1,013,866

15,760,841
63,729
16,838,436

Page 63

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

27. FINANCIAL INSTRUMENTS (Continued)

2015

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
$

-
13,327,796
-
13,327,796

-
-
126,412
126,412

-
-
241,268
241,268

9.61%

4.77%

(13,327,796)

(126,412)

(241,268)

-
-
-
-

14,871,425
-
-
14,871,425

14,871,425
13,327,796
367,680
28,566,901

1,967,011 (11,728,465)

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

2016
$

2015
$

(13,627,422)

(11,728,465)

1,764,881
4,688,822
12,072,010
4,313,415
(3,426,728)

1,825,064
5,082,502
12,072,010
4,313,415
(3,300,867)

5,784,978

8,263,659

(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 totaling
$1,449,202 (refer Note 4) are current and due within 12 months.

(d) Sensitivity Analysis

The interest rate on Bank loans is variable. 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. Also subsequent to balance date the Group’s financier has reduced the line fee
applicable on its market rate loans.

(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.

Page 64

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

(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.

28. SHARE BASED PAYMENTS

There were no share based payments in the year ended 30 June 2016. In the prior year 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 prior year.

29.

INVESTMENT IN CONTROLLED ENTITIES

Name of Entity

Country of
Incorporation

Class of
Shares

Equity
Holdings

Cost of Parent Entity’s
Investment

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

2016

2015

100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%

2016
$
3,700,650
34,504
-
-
-
-
-
-
-
-

2015
$
3,700,650
34,504
-
-
-
-
-
-
-
-

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

As at 30 June 2016, existing bank facilities were due to mature on 31 March 2017.
Subsequent to 30 June 2016, the Group has agreed a refinancing package with its financier,
the Commonwealth Bank of Australia which will incorporate a significant reduction in the cost
of funding, a moratorium on loan repayments until 31 December 2017 and an extension of
the banking facilities to the same date. This agreement was executed on 30 August 2016.

In addition, subsequent to balance date, the Group has been able to arrange a term loan
from the Directors and management for $1 million to assist with the Group’s working capital
position. The loan matures 15 December 2017 and has an attached interest rate of 3.5%pa.
The loan, subject to shareholder approval will be secured by a general security agreement
and a put and call option over the assets and shares of a 100% owned subsidiary, TSF
Maintenance Services Pty Ltd.

There have not been any other 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 the financial year.

Page 65

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

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

2016
$

2015
$

51,202,022

60,033,239

38,106,619

65,183,435

39,056,095

65,641,119

1,529,637

Amounts due from customers for contract work in progress

580,161

(457,684)

Total receivable from customers for contract work in progress as
included in Note 4

5,602,456

10,938,712

Retention receivables as included in Note 4

1,867,756

1,482,643

Page 66

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2016

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)

(ii)

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

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

2016
$

2015
$

(2,630,680)
-
(2,630,680)
(2,630,680)

(10,710,026)
-
(10,710,026)
(10,710,026)

(39,327,804)
(2,630,680)
(41,958,484)

(28,617,778)
(10,710,026)
(39,327,804)

1,265,290
8,112,175
837,184
-
10,214,649

4,324,331
4,313,415
3,173,725
-
12,242,295
24,053,766
34,268,415

836,174
12,324,091
1,050,092
23,449
14,233,806

4,728,814
4,313,415
2,113,776
-
12,242,295
23,398,300
37,632,106

16,557,510
13,277,003
29,834,513

17,148,002
13,404,434
30,552,436

Page 67

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THEYEAR ENDED 30 JUNE 2016

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

33. NEW AND AMENDED ACCOUNTING STANDARDS

Closed Group & Parties to
Deed of Cross Guarantee

2016
$

2015
$

99,148
204,329
303,477
30,137,990
4,130,425

174,864
143,701
318,565
30,871,001
6,761,105

46,088,909
(41,958,484)
4,130,425

46,088,909
(39,327,804)
6,761,105

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 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.

the date of authorisation of

these financial statements,

Standard

AASB 9 “Financial Instruments”
AASB 15 “Revenue from Contracts with
Customers”.
AASB 16 Leases
AASB 2015-1 “Amendments to Australian
Accounting Standards” – Annual
Improvements to Australian Accounting.
AASB 2015-2 “Amendments to Australian
Accounting Standards” – Presentation of
financial statements.
AASB 2016-2 Statement of Cash Flows
disclosures

Effective for
annual reporting
periods beginning
on or after
1 January 2018
1 January 2017

Expected to be
initially applied in the
financial year ending

30 June 2019
30 June 2018

1 January 2019
1 January 2016

30 June 2020
30 June 2017

1 January 2016

30 June 2017

1 January 2017

30 June 2018

Page 68

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THEYEAR ENDED 30 JUNE 2016

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

2016
$

2015
$

89,261
20,517,318
20,606,579

171,865
17,407,840
17,579,705

13,937,385
3,627
13,941,012

8,964,621
-
8,964,621

46,088,909
(39,423,342)
6,665,567

46,088,909
(37,473,825)
8,615,084

(1,949,517)
-
(1,949,517)

(1,210,943)
-
(1,210,943)

(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 69

EVZ LIMITED

NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THEYEAR ENDED 30 JUNE 2016

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
87 St Georges Road, Norlane, 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 70

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 – G Burns

Signed at Melbourne this 29 th day of September 2016.

Page 71

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 2016, 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.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001.

Auditor’s opinion

In our opinion:

the financial report of the company is in accordance with the Corporations Act 2001, including:

II.

giving a true and fair view of the consolidated entity’s financial position as at 30 June
2016 and of its performance for the year ended on that date; and

complying with Australian Accounting Standards (including Australian Accounting
Interpretations) and the Corporations Regulations 2001.

the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.

Emphasis of Matter

Without modification to our conclusion, we draw attention to Note 1 in the financial report, which indicates
the financial report for the year ended 30 June 2016 has been prepared on a going concern basis.

Further, Note 1 states that subsequent to balance date the Group has agreed a refinancing package with
its financier, the Commonwealth Bank of Australia which will incorporate a significant reduction in the cost
of funding, a moratorium on loan repayments until 31 December 2017 and an extension of the banking
facilities to the same date. The covenants associated with this facility and the security over the extended
facility remains unchanged.

The Group’s ability to continue as a going concern is dependent on the Commonwealth Bank continuing to
support the Group, including the granting of any waiver relating to covenants, 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
continue to receive such waivers from the Commonwealth Bank, or that it won’t meet its profit forecasts.
Should such waivers not be granted, 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.

Report on the Remuneration Report

We have audited the remuneration report included in pages 10 to 14 of the directors’ report for the year
ended 30 June 2016. 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 2016 complies with
s300A of the Corporations Act 2001.

CROWE HORWATH MELBOURNE

DAVID MUNDAY
Partner

Melbourne, Victoria
29 September 2016

EVZ LIMITED

ADDITIONAL SHAREHOLDER INFORMATION
AS AT 31 AUGUST 2016

Substantial Shareholders
UBS Nominees Pty Ltd
Airlie Beach Holdings Pty Ltd

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

Names of the 20 Largest Shareholders

1.
2.
3.
4.
5.
6.
7.
8.
9.

10.

11.
12.
13.
14.

15.
16.
17.
18.
19.
20.

UBS NOMINEES PTY LTD
STUART ANDREW PTY LTD
POWIS SUPERANNUATION PTY LTD
MYALL RESOURCES PTY LTD
SMITHLEY SUPER PTY LTD
LINWIERIK SUPER PTY LTD
AIRLIE BEACH HOLDINGS PTY LIMITED
AIRLIE BEACH HOLDINGS PTY LIMITED
MR KEITH ANDREW FAGG + MRS HEATHER ELIZABETH FAGG
CJ ARMS SUPERANNUATION FUND PTY LTD
MR ADAM BERNARD BELLGROVE
ONMELL PTY LTD
RANGEWORTHY PTY LTD
MR VAZ JUCHIMA + MRS HELEN ANN JUCHIMA
T R B MANAGEMENT PTY LIMITED
STF ENTERPRISES PTY LTD
SUNTANEOUS PTY LTD
DIP HOLDINGS PTY LTD
NLA INVESTMENTS PTY LTD
MR WILLIAM MARK CASTLEDEN

17,620,429 Ordinary Shares
11,210,652 Ordinary Shares

No. of Shareholders
Ordinary Shares

286
751
241
497
192
1,967

1,651

Shares
held
17,620,429
8,700,000
8,571,949
7,650,000
7,000,000
5,855,181
5,666,667
5,543,985

4,828,001

4,570,178

4,400,000
3,612,581
3,466,232

3,285,654

3,250,000
3,109,375
3,008,197
2,600,000
2,576,853
2,465,029

%
Holding
8.37
4.13
4.07
3.63
3.32
2.78
2.69
2.63

2.29

2.17

2.09
1.72
1.65

1.56

1.54
1.48
1.43
1.23
1.22
1.17

107,780,311

51.19

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.

Unlisted Options
There are no unlisted options on issue.

Page 75

EVZ LIMITED

ADDITIONAL SHAREHOLDER INFORMATION
AS AT 31 AUGUST 2016 (Continued)

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:
Facsimile Number:
Email:

(03) 9545 5288
(03) 9542 6061
ian.wallace@evz.com.au

A register of securities is kept at:
Computershare Investor Services Pty Ltd
452 Johnston Street
Abbotsford, Victoria, 3067.
Telephone Number: 1300 137 328

Stock Exchange Listing
The Company’s ordinary securities are listed on the Australian Securities Exchange Limited.

Page 76