EVZ Limited
Annual Financial Report
For the year ended 30 June 2020
ACN 010 550 357
Page | 1
Chairman’s report
I would like to commence my report by thanking our shareholders for their continued support in a difficult period
for all Australians, as well as for EVZ. The directors and management of EVZ are committed to adapting the company
to new market conditions and opportunities and returning to profit in the 2021 financial year.
I would also like to commend the senior management in each business as well as their teams for their ongoing
commitment to their customers’ needs, and the quality products and services they consistently deliver. They
represent the EVZ Group in the best possible way in doing so. I also thank my fellow directors Rob Edgley and Ian
Luck for their tireless work on the governance and direction of EVZ.
The following comments summarise the results for the financial year:
•
•
For the 2020 financial year, the group recovered to deliver a profitable second half year following a
disappointing first half year FY2020 result. The consolidated full year EBITDA loss was $0.4M (EBITDA loss
in first half of $1.6M). This result included financial recognition and full contract settlement after completion
of our major Victorian tank project which was handed over to a very satisfied customer in June 2020.
Sales revenue declined from FY2019 due to the focus on several larger projects and the slower
commencement of further large projects in the liquid fuel storage sector.
• On 6th July, 2020 a 16 month extension of the existing CBA banking facility was agreed on like terms.
• COVID-19 impacts, notably on project delivery timelines and restrictions in customer site access, peaked in
April and May before returning to conditions more closely aligned to normal operations from mid-June
2020. The group was able to access the JobKeeper payment for the June 2020 quarter.
Activities of the three operating divisions are summarised below:
Brockman Engineering successfully completed the major Victorian crude tank project during the second
half of the financial year. This was Brockman’s largest project to date with collateral benefits of increased
skills and management systems as a long-term benefit. The second half profit reversed the disappointing
first half loss to produce a second half profit. Brockman continues to be a lead player in petrochemical and
water tank construction, maintenance and piping fabrication sector. Brockman currently has a consistent
workload for the ensuing six months and is actively bidding and providing advisory roles on new and
upcoming larger scale projects in the fuel terminal and refinery sector.
Syfon Systems continues to be the leading syphonic roof stormwater drainage company in Australia and
South East Asia. While still producing a profitable operating performance in the 2020 financial year, its
Malaysian business was impacted by international travel and movement restrictions within the country
itself in response to the COVID-19 pandemic. The Malaysian business is expected to rebound in the 2021
financial year. Syfon remains committed to expanding in other Asian countries to continue a progressive
geographic expansion strategy.
TSF Power is steadily growing capability and reach for its power generation breakdown and maintenance
services. The 2020 financial year divisional loss was due to the combined impact of COVID-19 and costs
involved in better locating the New South Wales operation and growing its skilled technical team. TSF
Power is well placed to return to profitability in the 2021 financial year.
Sincerely
Graham Burns
Chairman
Page | 2
Annual financial report
2020
Contents
Section
Page
Chairman’s report ....................................................................................................................... 2
Contents ...................................................................................................................................... 3
Corporate directory .................................................................................................................... 4
Directors’ report .......................................................................................................................... 5
Remuneration report (audited) .................................................................................................. 9
Corporate governance statement ............................................................................................ 14
Auditor’s independence declaration ....................................................................................... 23
Consolidated statement of profit or loss ................................................................................ 24
Consolidated statement of comprehensive income .............................................................. 25
Consolidated statement of financial position ........................................................................ 26
Consolidated statement of changes in equity ....................................................................... 27
Consolidated statement of cash flows ................................................................................... 28
Notes to the consolidated financial statements .................................................................... 29
Directors’ declaration ............................................................................................................... 73
Independent auditors’ report ................................................................................................... 74
Additional shareholder information ........................................................................................ 77
Page | 3
Corporate directory
Directors
G Burns
R Edgley
I Luck
(Non-Executive Chairman)
(Non-Executive Director)
(Non-Executive Director)
Chief Executive Officer
S Farthing
Chief Financial Officer &
Company Secretary
P van der Wal
Registered & principal office
Share registry
Auditors
115 | 838 Collins Street
Melbourne Vic 3008
Telephone: (03) 9545 5288
Facsimile: (03) 9542 6061
Email: pieter.vanderwal@evz.com.au
Computershare Investor Services Pty Ltd
452 Johnston Street
Abbotsford Vic 3067
Telephone: 1300 137 328
Facsimile: 1300 137 341
Grant Thornton
Collins Square, Tower 5
727 Collins Street
Melbourne Vic 3008
Bankers
Commonwealth Bank of Australia
Stock exchange listing
Australian Securities Exchange Limited
(Home exchange – Melbourne)
ASX Code: EVZ
Page | 4
Directors’ report
The Directors present their report on the financial statements of the Company and consolidated entity for the
year ended 30 June 2020. 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:
Graham Burns
Robert Edgely
Ian Luck
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 65, 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 holds a Master of Business Administration in Technology from the Australian
Graduate School of Management and is a Fellow of the Institute of Company Directors.
He is a member of the Remuneration, Audit and Nomination Committees.
Interest in EVZ Limited Shares:
9,489,894 ordinary shares
Other current directorships:
None
Previous directorships (last 3 years):
None
Robert Edgley
Appointed 26 August 2011 – Non-Executive Director.
Mr Edgley, age 55, has significant experience and skills in strategic planning,
performance management and marketing and has proven abilities
in building
businesses. His career has been predominantly focused in International Finance and
Investment Banking in Australia, the UK and throughout Asia.
Mr Edgley holds a bachelor’s degree in Economics from Monash University together with
a second degree in Japanese language.
Mr Edgley is Chairman of the Audit Committee and a member of the Remuneration and
Nomination Committees.
Interest in EVZ Limited Shares:
2,295,715 ordinary shares.
Other current directorships:
Self Wealth Limited (SWF)
(Appointed 16 April 2019)
Previous directorships (last 3 years):
None
Page | 5
Directors’ report (continued)
Information on directors (continued)
Ian Luck
Appointed 3 July 2017– Non-Executive Director.
Mr Luck, age 68, has significant experience in the engineering and construction sector with
40 years’ experience in business leadership in Australia. His career features a balanced
blend of complex business leadership, strategy and governance roles that focus on
creating high performing teams to deliver outstanding growth and profitability. He
currently is a Non-Executive Director of McConnell Dowell (an Australian design and
construction group which is a fully owned subsidiary of Aveng Limited, which is listed on
the Johannesburg Stock Exchange in South Africa). Previously he has been the Managing
Director of Baulderstone and a key manager in Leighton Contractors.
Mr Luck has a B Tech. Civil Engineering, is a Fellow of the Institute of Engineers Australia
and is a CPEng (Ret).
Mr Luck is a member of the Audit Committee and Nomination Committee and Chairman
of the Remuneration Committee.
Interest in EVZ Limited Shares:
625,000 ordinary shares
Other current directorships:
McConnell Dowell Corporation Limited
Previous directorships (last 3 years):
None
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: 13
G Burns
R Edgley
I Luck
Remuneration Committee Meetings
Total number of meetings held: 3
G Burns
R Edgley
I Luck
No. Attended
13
13
13
No. Held
Whilst a Director
13
13
13
No. Attended
3
3
3
No. Held
Whilst a Member
3
3
3
Page | 6
Directors’ report (continued)
Audit committee meetings
Total number of meetings held: 5
R Edgley – Chairman
I Luck
G Burns
No. Attended
5
3
5
No. Held
Whilst a Member
5
5
5
There were no meetings of the Nomination Committee held during the year.
Company secretary
The Company Secretary is Pieter van der Wal. He was appointed 4 September 2017. Mr van der Wal has a
Bachelor of Business and is a Chartered Accountant with company secretarial experience.
Principal activities
The Group operates in the engineering and energy services sectors and its principal activities are:
• Design, manufacture, service and maintenance of large steel tanks for use in the water, petrochemical
and chemical industries.
• Design, construction, on-site installation, maintenance and shutdown engineering services to the mining,
wood chip, petrochemical, aluminium, glass, cement, defence and agriculture industries.
• Design and installation of syphonic roof drainage systems to major buildings including airports, shopping
centres and sporting venues throughout Australia and South East Asia.
• Design, installation and maintenance of clean energy solutions, base and back-up power generation
equipment, communications equipment, marine installations and provision of mobile generation
capabilities.
Operating results
The net loss for the Group for the year after income tax expense was ($2,751,440) compared to a net profit
after income tax expense in 2019 of $1,624,975.
The Directors provide the following comments for the financial year:
• Following a disappointing first half to FY2020 result (Earnings before Interest, Taxes, Depreciation and
Amortisation (EBITDA) loss of - $1.6M) the Group recovered to deliver a profitable second half and record
a consolidated full year EBITDA loss of $0.4M.
• Sales revenue reduced from FY2019 due to the completion of larger projects and the slower
commencement of new larger projects in the liquid fuels sector.
• The company agreed with Commonwealth Bank an extension of its existing banking facility on the same
terms until 31 October 2021.
• The impact of COVID-19 on project delivery timelines and customer site access peaked in April and May
before returning to conditions more closely aligned to normal operations by mid-June 2020. The Group
was able to access to the Job Keeper Payment for Q2 and Q3 2020.
Dividends
No dividends were declared or paid during the year.
Page | 7
Directors’ report (continued)
Changes in state of affairs
There was no change in the state of affairs.
Subsequent events
On 6th of July 2020, the Group’s bank loan facility was agreed to be extended for 16 months from 1 July 2020 to 31
October 2021. There have not been any other matters or circumstances, 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 Group, the results of those operations, or the state
of affairs of the Group in future financial years after the financial year.
Future developments and outlook
The Group will continue its focus on investing in growth across all its businesses and the reduction/retirement
of debt. However, the economic outlook both locally and internationally remains uncertain due to COVID-19.
While it is likely that the ongoing COVID-19 pandemic may lead to further economic stimulus, which should be
favourable to the Group, the future financial performance of the Group will be dependant how the pandemic
impacts our clients and our people.
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.
Environmental regulation
The Group is not subject to any significant environmental regulations under a Commonwealth, State or
Territory Law.
Insurance of officers
During the financial year the Company insured the Directors and Officers of the Company against legal costs
that may be brought against the Directors and Officers in their capacity as Officers of the Company. The policy
provides for confidentiality with respect to its premium.
Non-audit services
During the current year there was $2,500 (2019: Nil) of 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, Grant Thornton. This is included on page 23 of this financial report.
Page | 8
Directors’ report (continued)
Remuneration report (audited)
This report details the nature and amount of remuneration for each Director of the Company and for Key
Management Personnel.
Remuneration policy
The remuneration policy of the Company 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 Group’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 Group, 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
Group 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
Group’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 Group’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 incentives paid/payable for the year were $nil, (2019: $105,766).
Long term incentives, linked with performance rights issued under the Company’s’ Directors’ and Employees’
Benefits Plan, were not met during the year and no performance rights, options or shares were issued.
Executives receive a superannuation guarantee contribution as required by the Government and do not receive
any other retirement benefits. Individuals may choose to sacrifice part of their salary to increase payments
towards superannuation. All remuneration paid to Executives is valued at the cost to the Company and
expensed.
Director remuneration
The Board’s policy is to remunerate Non-Executive Directors at appropriate market rates. The Remuneration
Committee recommends the fee structure for Non-Executive Directors which will be determined by reference
to market practice, duties performed, time, commitment and accountability. Director fees are reviewed
annually by the Remuneration Committee.
Page | 9
Directors’ report (continued)
Remuneration report (continued)
The Remuneration Committee may seek independent advice in determining appropriate fee structures for
Directors.
The maximum aggregate amount of fees payable to Non-Executive Directors is subject to approval by
shareholders at the Annual General Meeting. Fees for Non-Executive Directors are not linked to the
performance of the Group. However, to align Directors’ interests with shareholder interests, the Directors are
encouraged to hold shares in the Company and may be able to participate in any employee share/option plan
introduced.
All remuneration paid to Directors is valued at the cost to the Company and expensed.
Shares and options Issued as part of remuneration
Shareholders had previously approved the EVZ Directors’ and Employees’ Benefits Plan (the “Plan”) which
allows employees, Directors and others (“Eligible Persons”) to be granted shares, options and performance
rights in the Company. The object of this Plan is to help the Company recruit, reward, retain and motivate its
employees and Directors.
Such shares, options and performance rights would be offered only to those Eligible Persons entitled to receive
an invitation. Those Eligible Persons would be:
•
•
•
a Director or Secretary of a Group Company;
an employee in permanent full-time or permanent part-time employment of a Group Company; or
a contractor to a Group Company who is selected by the Board to participate in the Plan.
Invitations to Eligible Persons will be made by the Board and may be made subject to such conditions and rules
as the Board determines, including:
•
•
In the case of Options, the exercise period, the exercise price and the exercise conditions.
In the case of Shares, the issue price payable on acceptance of the application by the Company and issue
of the shares and any other specific terms and conditions of issue.
In the case of Performance Rights, the performance criteria and the performance period in which those
performance criteria must be satisfied.
•
The issue of any securities (including options or performance rights) issued to any Director or their associates
will still require shareholder approval under ASX Listing Rule 10.14.
The maximum number of shares issued pursuant to the Plan would be not more than 5% of the equity interests
in the Company.
There were no share-based payments during the year.
Performance based remuneration
During the year to 30 June 2020, there was no performance-based remuneration paid or payable. The
payments made in 2019 of $105,766 related to 2018 financial performance. No Incentives were paid or payable
for the 2019 financial year performance.
Short term performance-based payments were based on achieving certain key performance indicators which
were quantitative measures based on business profitability and improvement in forward work in hand. Both
measures are considered to be drivers of shareholder value.
Page | 10
Directors’ report (continued)
Remuneration report (continued)
Company performance, shareholder wealth and directors’ and executives’ remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders and Directors
and Executives.
Details of remuneration for the year ended 30 June
The remuneration for each Director and each of Key Management Personnel of the Group during the year was
as follows:
Page | 11
DirectorsShort-term employee benefitsPost-employment benefitsSalaryFeesSuperannuation ContributionsOtherTotal2020$ $ $ $ G Burns- 77,333 - - 77,333 R Edgley - 48,333 - - 48,333 I Luck- 48,333 - - 48,333 - 174,000 - - 174,000 2019G Burns- 80,000 - - 80,000 R Edgley - 50,000 - - 50,000 I Luck- 50,000 - - 50,000 - 180,000 - - 180,000 Key management personnel of the Consolidated entityKey management personnel of the Consolidated entityShort-term employee benefitsPost-employment benefitsSalary Profit share & bonus Non cash benefits Superannuation ContributionsTermination benefitsTotal2020$ $ $ $ $ S Farthing(Chief Executive Officer)367,570 - - 20,964 - 388,534 P van der Wal(Chief Financial Officer & Company Secretary)211,866 - - 21,001 - 232,867 A Bellgrove(General Manager, Syfon Systems)275,988 - 28,608 21,002 - 325,598 C Bishop(General Manager, Brockman Engineering)275,876 - - 25,000 - 300,876 J Hughes (appointed 15 October 2018)(General Manager, TSF Power)196,153 - - 18,635 - 214,788 1,327,453 - 28,608 106,602 - 1,462,663 Short-term employee benefitsPost-employment benefitsSalary Profit share & bonus Non cash benefits Superannuation ContributionsTermination benefitsTotal2019$ $ $ $ S Farthing(Chief Executive Officer)397,716 - - 20,451 - 418,167 P van der Wal(Chief Financial Officer & Company Secretary)219,178 - - 20,822 - 240,000 A Bellgrove(General Manager, Syfon Systems)284,063 39,737 34,200 20,531 - 378,531 C Bishop(General Manager, Brockman Engineering)280,371 7,229 - 25,551 - 313,151 J Hughes (appointed 15 October 2018)(General Manager, TSF Power)138,461 - - 13,154 - 151,615 I Whitford (Resigned 28 September 2018)(General Manager, TSF Power)52,698 - - 5,006 - 57,704 1,372,487 46,966 34,200 105,515 - 1,559,168
Directors’ report (continued)
Remuneration report (continued)
Remuneration and other terms of employment for key Executives are formalised in employment service
agreements. Each of these agreements may provide for the provision of other benefits including car
allowances. These agreements have no fixed term. There are no other standard termination provisions
excluding notice periods. Notice periods are generally between three and six months.
Additional disclosures relating to key management personnel
The number of ordinary shares held by key management personnel of the Group during the financial year is as
below. There were no share options or rights held by key management personnel during the financial year:
This concludes the remuneration report, which has been audited.
Page | 12
2020Balance at beginning of yearGranted as remunerationPurchased or (Sold)Balance at end of yearG Burns8,135,200 - 1,354,694 9,489,894 R Edgley2,295,715 - - 2,295,715 I Luck500,000 - 125,000 625,000 S Farthing1,487,728 - 129,112 1,616,840 P van der Wal100,000 - - 100,000 C Bishop- - - - A Bellgrove1,369,171 - - 1,369,171 J Hughes- - - - 13,887,814 - 1,608,806 15,496,620 2019Balance at beginning of yearGranted as remunerationPurchased or (Sold)10:1 Share ConsolidationBalance at end of yearG Burns80,000,000 - 1,352,000 (73,216,800) 8,135,200 R Edgley22,957,142 - - (20,661,427) 2,295,715 I Luck5,000,000 - - (4,500,000) 500,000 S Farthing11,640,483 3,236,794 - (13,389,549) 1,487,728 P van der Wal1,000,000 - - (900,000) 100,000 C Bishop- - - - - A Bellgrove12,405,493 1,286,215 - (12,322,537) 1,369,171 J Hughes (appointed 15 October 2018)- - - - - I Whitford (resigned 28 September 2018)- - - - - 133,003,118 4,523,009 1,352,000 (124,990,313) 13,887,814
Directors’ report (continued)
Signed in accordance with a resolution of the Board of Directors.
Director – G Burns
Signed at Melbourne this 25th day of September 2020.
Page | 13
Corporate governance statement
For the year ended 30 June 2020
Introduction
The Board of the Company is committed to protecting shareholders’ interests and ensuring investors are fully
informed about the performance of the company’s business. The Directors have undertaken to perform their
duties with honesty, integrity, care and diligence, according to the law and in a manner that reflects the highest
standards of corporate governance.
The policies and practices of the company are in accordance with the ASX Corporate Governance Council’s
“Corporate Governance Principles and Recommendations – 3rd Edition”.
Unless otherwise indicated, the best practice principles of the ASX Corporate Governance Council and
suggested disclosures, have been adopted by the company for the year ended 30 June 2020 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 Board charter sets out the function and responsibilities of the Board. The Directors of the Company are
accountable to shareholders for the proper management of business and affairs of the company.
establish, monitor and modify the corporate strategies of the company;
ensure proper corporate governance;
The key responsibilities of the Board are to:
•
•
• monitor and evaluate the performance of management of the company;
•
ensure that appropriate risk management systems, internal control and reporting systems and compliance
frameworks are in place and are operating effectively;
assess the necessary and desirable competencies of Board members, review Board succession plans,
evaluate its own performance and consider the appointment and removal of Directors;
consider Executive remuneration and incentive policies, the company’s recruitment, retention and
termination policies and procedures for senior management and the remuneration framework for Non-
Executive Directors;
• monitor financial performance;
•
approve decisions concerning the capital, including capital restructures, and dividend policy of the
company; and
comply with the reporting and other requirements of the law.
•
•
•
The Board delegates responsibility for day-to-day management of the company to the Chief Executive Officer
(CEO), subject to certain financial limits. The CEO must consult the Board on matters that are sensitive,
extraordinary, of a strategic nature or matters outside the permitted financial limits.
Page | 14
Corporate governance statement (continued)
For the year ended 30 June 2020
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.
Written agreements have now been implemented for all new director appointments. The duties of the
Directors as detailed above were provided to all directors.
Recommendation 1.4: Company secretary
The appointment and removal of the Company Secretary is a decision of the Board. The Company Secretary is
accountable directly to the Board, through the Chairman, on all matters relating to the proper functioning of
the Board and is responsible for ensuring compliance with Board procedures and governance matters. All
Directors have direct access to the Company Secretary.
Recommendation 1.5: Diversity policy
The Group’s ultimate success is under-pinned by its employees. To maximise success, the Group encourages
a diverse population of employees within its operations.
Diversity is defined to include race, ethnicity, gender, sexual orientation, socio-economic status, culture, age,
physical ability, education, skill levels, family status, religious, political and other beliefs and work styles. The
Group recognises that differences in ideas, backgrounds, patterns of thinking and approaches to work can
generate value for the Group’s stakeholders: its customers, shareholders, personnel and the communities in
which it operates. It is the Group’s policy to promote these differences within a productive, inclusive and
performance-based environment in which everybody feels valued, where their skills are fully utilised, their
performance is recognised, professional accountability is expected and organisational goals are met.
The Group’s approach to diversity is based on the following objectives:
•
retain, promote and hire the best people possible, focusing on actual and potential contribution in terms
of performance, competence, collaboration and professional accountability;
foster an inclusive culture and ensure that current and future employee opportunities are based on
competence and performance, irrespective of race, ethnicity, gender, sexual orientation, socio-economic
status, culture, age, physical ability, education, family status, religious, political and other beliefs and work
styles. This includes being intolerant of behaviour that denigrates or otherwise diminishes such attributes
or that discriminates on the basis of such attributes;
create and manage appropriate human resource processes which take a unified and talent-based
approach to recruitment, training and development, performance management, retention and succession
planning;
provide a fair level of reward in order to attract and retain high calibre people – and build a culture of
achievement by providing a transparent link between reward and performance; and
be compliant with all mandatory diversity reporting requirements.
•
•
•
•
Page | 15
Corporate governance statement (continued)
For the year ended 30 June 2020
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
2020
2019
No.
31
-
-
%
10
-
-
No.
31
-
-
%
8
-
-
This includes both employees and specific contractors engaged by the Group.
Recommendation 1.6: Board and committee performance
The Board and its committees undertook self-assessment in accordance with their relevant charters during the
financial year. The Chairman conducts annual one-on-one personal performance discussions with each of the
individual Directors.
The Board was provided with all company information it needed in order to effectively discharge its
responsibilities and were entitled to, and did, request additional information when considered necessary or
desirable.
Recommendation 1.7: Senior executive performance
Reviews of the performance of Senior Executives are undertaken annually against established key performance
indicators. At the same time goals and targets for the coming year are discussed and implemented. The annual
evaluation of the CEO’s performance is a specific function of the Remuneration Committee.
Principle 2: Structure the board to add value
Recommendation 2.1: Nomination committee
The company has a duly appointed nomination committee. The committee operates pursuant to a nomination
committee charter. The charter sets out the responsibilities of the committee including reviewing Board
succession plans to ensure an appropriate balance of skills and expertise, developing policies and procedures
for the appointments of Directors and identifying Directors with appropriate qualifications to fill Board
committee vacancies. The term of Non-Executive Directorships is set out in the company’s constitution.
Given the size of the Board, the Board has determined it appropriate for the nomination committee to consist
of the full Board of Directors.
Recommendation 2.2 and 2.3: Board composition
The Company’s Board is comprised of Non-Executive Directors.
Details of Directors and relevant skills are detailed in the following tables:
Page | 16
Corporate governance statement (continued)
For the year ended 30 June 2020
Details of directors
Director
Graham Burns
Robert Edgley
Ian Luck
Term in office
Appointed 1 February 2008 MBA (Tech), FAICD
Appointed 26 August 2011
Appointed 3 July 2017
Qualifications
B Ec
B Tech. Civil Engineering,
FIE Australia, CPEng (Ret).
Status
Independent
Independent
Independent
Areas of competence and skills of the board of directors
Area
Leadership
Competence and skills
Business leadership
Public listed company experience
Business & Finance
Sustainability and Stakeholder management
Accounting expertise
Business strategy
Corporate turnarounds
Corporate financing
Mergers and acquisitions
Risk management
Commercial agreements
Corporate governance
Remuneration
Market and Industry
Financial services expertise
International
Geographical experience and international business
management
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 sought. The Board has adopted the
following principles and guidelines in determining the composition of the Board:
To be independent, a Director ought to be Non-Executive and:
•
•
•
•
•
not a current Executive of the company;
ideally not held an Executive position in the company in the previous three years;
not a nominee or associate of a shareholder holding more than 10% of the company’s shares;
not significantly involved in the value chain of the organisation, either upstream or downstream; and
not a current advisor to the company receiving fees or some other benefit, except for approved Director’s
fees.
Page | 17
Corporate governance statement (continued)
For the year ended 30 June 2020
Directors are encouraged to be long term shareholders in the company. Directors shareholdings 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. He is responsible for the leadership of the Board
and he has no other positions that hinder the effective performance of this role. The role of Chairman is
independent to the role of CEO, which is held by Scott Farthing. There is a clear division of responsibility
between these roles.
Recommendation 2.6: Induction and training
Any new Director will receive a letter of appointment. Directors are provided access to the company’s policies
including the Board’s Charter. At Board meetings Directors receive regular updates and also undertake site
visits, attend customer and financier meetings as required. These assist Directors to keep abreast of relevant
market and industry developments.
Principle 3: Act ethically and responsibly
Recommendation 3.1: Code of conduct
The company has developed codes of conduct to guide all of the company’s employees, particularly Directors,
the CEO, the CFO and other senior Executives, in respect of ethical behaviour. These codes are designed to
maintain confidence in the company’s integrity and the responsibility and accountability of all individuals
within the company for reporting unlawful and unethical practices. These codes of conduct embrace such
areas as:
•
•
•
•
•
•
•
•
•
conflicts of interest
corporate opportunities
confidentiality
fair dealing and trade practices
protection of assets
compliance with laws, regulations and industry codes
‘whistle-blowing’
security trading
commitment to and recognition of the legitimate interests of stakeholders
Principle 4: Safeguard integrity in corporate reporting
Recommendation 4.1: Audit committee
The Board-appointed audit committee operates in accordance with the audit committee charter. The details
of the committee meetings held during the year and attendance at those meetings are detailed in the Directors’
meeting schedule in the Directors’ report.
The audit committee consists of:
•
Robert Edgley - Chairperson
•
Ian Luck
• Graham Burns
Page | 18
Corporate governance statement (continued)
For the year ended 30 June 2020
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 Grant Thornton. The Auditor has and will continue to attend the Annual General
Meeting in order to be available to answer questions relating to the audit raised by security holders.
Principle 5: Make timely and balanced disclosure
The Board recognises that the company, as an entity listed on the ASX, has an obligation to make timely and
balanced disclosure in accordance with the requirements of the Australian Securities Exchange Listing Rules
and the Corporations Act 2001. The Board also is of the view that an appropriately informed shareholder base
and market is essential to an efficient market for the company’s securities. The Board is committed to ensuring
that shareholders and the market have timely and balanced disclosure of matters concerning the company. In
demonstration of this commitment, the company has adopted a formal external communications policy
including a continuous disclosure policy.
In order to ensure the company meets its obligations of timely disclosure of such information, the company
has adopted the following policies:
•
immediate notification to the ASX of information concerning the company that a reasonable person would
expect to have a material effect on the price or value of the company’s securities as prescribed under
listing rule 3.1, except where such information is not required to be disclosed in accordance with the
exception provisions of the listing rules;
the company has a website where all relevant information disclosed to the ASX will be promptly placed
on the website following receipt of confirmation from the ASX and, where it is deemed desirable, released
to the wider media; and
the company will not respond to market rumours or speculation, except where required to do so under
the listing rules.
•
•
Page | 19
Corporate governance statement (continued)
For the year ended 30 June 2020
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 and 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 lodgement 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 | 20
Corporate governance statement (continued)
For the year ended 30 June 2020
The Company allows electronic lodgement of proxies for its meetings.
Principle 7: Recognise and manage risk
Recommendation 7.1: Risk committee
Overall risk management is the responsibility of the Audit Committee and covered within that Committee’s
Charter.
The Board has overall responsibility to all stakeholders for the identification, assessment, management and
monitoring of the risks faced by the company. The company currently has informal policies and procedures
for risk management and the audit committee seeks to ensure compliance with regulatory requirements. The
operational risks are managed at the senior management level and escalated to the Board for direction where
the issue is exceptional, non-recurring or may impose a material financial or operational burden on the
company. The relatively small size of the company means that communication and decision-making is
predominantly centralised allowing early identification of risks by senior management. It also allows senior
management to respond to each risk as appropriate without the need for a written risk management policy. In
addition, a monthly risk report is tabled at the Board meeting for consideration.
Recommendation 7.2: Risk management framework
Given the relatively small and centralised management team, the nature of the business of the company and
that a majority of independent Directors sit on the audit committee, the Board is continuously kept informed
of the effectiveness of the company’s internal control systems. In addition, a monthly risk report is tabled at
the Board meeting for consideration.
Recommendation 7.3: Internal audit
The Company does not currently have any internal audit function. The Board considers that given the
Company’s current size there is no benefit in having an internal audit function. Independent advice will be
sought as necessary. The Board has overall responsibility for the identification, assessment, management and
monitoring of the risks faced by the company.
Recommendation 7.4: Risk management
The Board monitors its exposure to all risks, including economic, environmental and social sustainability risks
on a monthly basis. Any material business risks will be disclosed in the annual report, which also outlines the
activities, performance, financial position of the Company and its businesses.
Principle 8: Remunerate fairly and responsibly
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:
•
Ian Luck
• Graham Burns
•
Rob Edgley
Page | 21
Corporate governance statement (continued)
For the year ended 30 June 2020
The Company’s approach to remuneration is set out in the Remuneration Report contained within this annual
report.
The primary responsibilities of the remuneration committee are:
•
Establish appropriate remuneration policies for Directors, the CEO and other senior Executives which are
effective in attracting and/or retaining the best Directors and Executives to monitor and manage EVZ
Limited, whilst ensuring goal congruence between shareholders, Directors and Executives.
Ensuring appropriate disclosure of remuneration in line with the Corporations Act, ASX Listing Rules and
Corporate Governance guidelines.
•
Non-Executive Directors are remunerated by way of fees. They may receive options (subject to shareholder
approval) but there is no scheme for retirement benefits, other than statutory superannuation. Executives are
paid a salary and may be provided, under the Directors’ and Employees’ Benefits Plan, with shares,
performance rights and/or options and bonuses as part of their remuneration and incentive package.
There are no Executive Directors.
Recommendation 8.3: Equity based remuneration scheme
There is currently in place an EVZ Directors’ and Employees’ Benefits Plan (the “Plan”) which allows employees,
Directors and others (“Eligible Persons”) to be granted shares, options and performance rights in the Company.
The object of this Plan is to help the Company recruit, reward, retain and motivate its employees and Directors.
Such shares, options and performance rights would be offered only to those Eligible Persons entitled to receive
an invitation. Those Eligible Persons would be:
•
•
•
a Director or Secretary of a Group Company;
an employee in permanent full-time or permanent part-time employment of a Group Company; or
a contractor to a Group Company.
Invitations to Eligible Persons will be made by the Board and may be made subject to such conditions and rules
as the Board determines, including:
•
•
In the case of Options, the exercise period, the exercise price and the exercise conditions.
In the case of Shares, the issue price payable on acceptance of the application by the Company and issue
of the shares and any other specific terms and conditions of issue.
In the case of Performance Rights, the performance criteria and the performance period in which those
performance criteria must be satisfied.
•
The issue of any securities (including options or performance rights) issued to any Director or their associates
will still require shareholder approval under ASX Listing Rule 10.14.
The maximum number of shares issued pursuant to the Plan would be not more than 5% of the equity interests
in the Company.
Page | 22
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of EVZ Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of EVZ Limited
for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
B L Taylor
Partner – Audit & Assurance
Melbourne, 25 September 2020
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Page
23 |
Consolidated statement of profit or loss
For the year ended 30 June 2020
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
Page | 24
Notes20202019 $ $Continuing operationsRevenue66,224,710 78,042,293 Cost of sales(59,347,320) (65,643,997) Gross profit6,877,390 12,398,296Other Income2(a)1,757,443 72,777 Administration and business development costs(9,348,065) (8,965,536) Corporate costs(1,324,540) (1,365,164) Profit/(loss) before finance costs and income tax(2,037,772) 2,140,373Net finance costs2(c)(722,164) (411,955)Profit/(loss) before income tax from continuing operations(2,759,936) 1,728,418Income tax (expense)/benefit38,496 (103,443)Profit/(loss) for the year attributed to members after tax(2,751,440) 1,624,975Earnings per shareCentsCentsOverall operations:Basic earnings per share17(2.863)1.735Diluted earnings per share17(2.863)1.708Continuing operations:Basic earnings per share 17(2.863)1.735Diluted earnings per share 17(2.863)1.708Consolidated entityDue to the net loss for the 30 June 2020 period, dilutive earnings per share is the same as basic earnings per share.
Consolidated statement of comprehensive income
For the year ended 30 June 2020
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Page | 25
Notes20202019 $ $Profit/(loss) for the year after tax(2,751,440) 1,624,975 Other comprehensive income:Items that may be reclassified subsequently to profit or loss:Exchange differences arising on translation of foreign operations16(b)(31,271) 35,647 Total comprehensive income for the year attributable to owners of the company(2,782,711) 1,660,622 Consolidated entity
Consolidated statement of financial position
As at 30 June 2020
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
Page | 26
Notes20202019 $ $Current assetsCash and cash equivalents225,869,679 2,772,182 Trade and other receivables410,659,607 16,540,057 Contract assets52,014,330 3,156,104 Inventories6(a)2,317,810 2,313,984 Financial assets6(b)306,441 189,612 Total current assets21,167,867 24,971,939 Non-current assetsTrade and other receivables41,092,338 1,612,075 Property, plant and equipment77,522,609 4,870,664 Deferred tax assets82,610,870 2,604,954 Intangibles912,072,010 12,072,010 Total non-current assets23,297,827 21,159,703 Total assets44,465,694 46,131,642 Current liabilitiesTrade and other payables1011,258,671 13,853,414 Contract liabilities51,578,399 1,584,027 Tax liabilities8 - 31,335 Short-term borrowings114,337,430 3,300,000 Short-term lease liabilities11698,921 72,272 Provisions133,184,008 2,926,188 Total current liabilities21,057,429 21,767,236 Non-current liabilitiesLong-term lease liabilities122,097,427 284,397 Deferred tax liabilities849,623 50,549 Provisions-non current1355,992 41,526 Total non-current liabilities2,203,042 376,472 Total liabilities23,260,471 22,143,708 Net assets21,205,223 23,987,934 EquityIssued capital1456,457,180 56,457,180 Reserves16245,900 277,171 Accumulated losses16(35,497,857)(32,746,417)Total equity21,205,223 23,987,934 Consolidated entity
Consolidated statement of changes in equity
For the year ended 30 June 2020
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Page | 27
Consolidated entityIssued capitalAccumulated lossesShare options reserveForeign currency translation reserveTotalAs at 30 June 2019$$$$Balance at 30 June 201956,457,180(32,746,417)300,000(22,829)23,987,934Total comprehensive profit for periodProfit/(loss) for period- (2,751,440)- - (2,751,440)Foreign currency translation reserve- -- (31,271)(31,271)Total comprehensive income for period- (2,751,440)- (31,271)(2,782,711)Transactions with owners, recorded directly in equity:Shares issued- - - - - Share Issue Costs- - - - - Balance at 30 June 202056,457,180(35,497,857)300,000(54,100)21,205,223Consolidated entityIssued capitalAccumulated lossesShare options reserveForeign currency translation reserveTotalAs at 30 June 2018$$$$Balance at 30 June 201852,972,129(34,371,392)300,000(58,476)18,842,261Total comprehensive profit for periodProfit/(loss) for period- 1,624,975- - 1,624,975Foreign currency translation reserve- -- 35,64735,647Total comprehensive income for period- 1,624,975- 35,6471,660,622Transactions with owners, recorded directly in equity:Shares issued3,681,061- - - 3,681,061Share Issue costs(196,010)- - - (196,010)Balance at 30 June 201956,457,180(32,746,417)300,000(22,829)23,987,934
Consolidated statement of cash flows
For the year ended 30 June 2020
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Page | 28
Notes20202019 $ $Cash flows from operating activitiesReceipts from customers (inclusive of GST)78,757,999 82,525,701 Payments to suppliers and employees (inclusive of GST)(75,165,348)(79,501,810)JobKeeper subsidy received996,000 - Interest received694 9,090 Finance costs(685,428)(421,046)Income tax paid(30,505)(147,125)Net cash provided by operating activities223,873,412 2,464,810 Cash flows from investing activitiesProceeds from sale of plant and equipment 32,367 5,169 Purchase of plant and equipment7(903,853)(1,738,659)Net cash used in investing activities(871,486)(1,733,490)Cash flows from financing activitiesProceeds from equity raising - 3,484,850 Share issue costs - (196,010)Proceeds from loans1,000,000 - Repayment of loans - (3,248,951)Proceeds from finance leases - 294,090 Repayment of leases(904,429) - Net cash provided by financing activities95,571 333,979 Net increase/(decrease) in cash held3,097,497 1,065,299 Cash at beginning of the period2,772,182 1,706,883 Cash at end of the period225,869,679 2,772,182 Consolidated entity
Notes to the consolidated financial statements
For the year ended 30 June 2020
1.
Summary of significant accounting policies
General information and statement of compliance
This financial report includes the consolidated financial statements and notes of EVZ Limited and
controlled entities (‘Consolidated Entity’ or ‘Group’).
The consolidated financial statements of the Group have been prepared in accordance with the
requirements of the Australian Accounting Standards Board (AASB). Compliance with Australian
Accounting Standards results in full compliance with the International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
Basis of preparation
The Group’s financial statements have been prepared on an accrual basis and under the historical cost
convention. They assume that the Group operates on a going concern basis.
(a) New standards adopted as at 1 July 2019
The Group has adopted the new accounting pronouncements which have become effective this year,
and are as follows:
AASB 16 – Leases
AASB 16 ‘Leases’ replaces IAS 17 ‘Leases’ along with three Interpretations (IFRIC 4 ‘Determining whether
an Arrangement contains a Lease’, SIC 15 ‘Operating Leases-Incentives’ and SIC 27 ‘Evaluating the
Substance of Transactions Involving the Legal Form of a Lease’). The new Standard has been applied
using the modified retrospective approach. Prior periods have not been restated.
For contracts in place at the date of initial application, The Group has elected to apply the definition of
a lease from IAS 17 and IFRIC 4 and has not applied AASB 16 to arrangements that were previously not
identified as lease under IAS 17 and IFRIC 4.
The Group has elected not to include initial direct costs in the measurement of the right-of-use asset for
operating leases in existence at the date of initial application of AASB 16, being 1 July 2019. At this date,
The Group has also elected to measure the right-of-use assets at an amount equal to the lease liability
adjusted for any prepaid or accrued lease payments that existed at the date of transition.
Instead of performing an impairment review on the right-of-use assets at the date of initial application,
The Group has relied on its historic assessment as to whether leases were onerous immediately before
the date of initial application of AASB 16.
On transition, for leases previously accounted for as operating leases with a remaining lease term of less
than 12 months and for leases of low-value assets the Group has applied the optional exemptions to not
recognise right-of-use assets but to account for the lease expense on a straight-line basis over the
remaining lease term.
For those leases previously classified as finance leases, the right-of-use asset and lease liability are
measured at the date of initial application at the same amounts as under IAS 17 immediately before the
date of initial application.
Page | 29
Notes to the consolidated financial statements
For the year ended 30 June 2020
1.
Summary of significant accounting policies (continued)
(a) New standards adopted as at 1 July 2019 (continued)
AASB 16 – Leases (continued)
On transition to AASB 16 the weighted average incremental borrowing rate applied to lease liabilities
recognised under AASB 16 was 6.95%.
The Group has benefited from the use of hindsight for determining lease term when considering options
to extend and terminate leases. The following is a reconciliation of total operating lease commitments
at 30 June 2019 to the lease liabilities recognised at 1 July 2019:
The lease asset recognised equals the lease liability at 1 July 2019. Lease assets are included within the
Group’s property, plant and equipment.
Interpretation 23 – Uncertainty over income tax treatments
Interpretation 23 clarifies the application of AASB 112 to accounting for income tax treatments that have
yet to be accepted by tax authorities, in scenarios where it may be unclear how tax law applies to a
particular transaction or circumstance, or whether a taxation authority will accept an entity’s tax
treatment. There was no significant effect from the adoption of Interpretation 23 on the Group.
(b)
Principles of consolidation
A controlled entity is any entity EVZ Limited is exposed, or has rights, to variable returns from its
involvement with the subsidiary and has the ability to affect those returns through its power over the
subsidiary. A list of controlled entities is contained in Note 29 to the financial statements. All controlled
entities have a June financial year-end. All inter-company balances and transactions between entities in
the Group, 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 Group during the year, their operating results have
been included/excluded from the date control was obtained or until the date control ceased.
Page | 30
Total operating lease commitments disclosed at 30 June 20192,599,193 Recognition exemptions:▪ Leases of low value assets(2,667)▪ Leases with remaining lease term of less than 12 months(738,368)Variable lease payments not recognised- Other minor adjustments relating to commitment disclosures- Total Recognition exemptions:(741,035)Operating lease liabilities before discounting1,858,158Discounted using incremental borrowing rate(540,935)Operating lease liabilities1,317,223Reasonably certain extension options1,023,494 Finance lease obligations356,669Total lease liabilities recognised under IFRS 16 at 1 July 20192,697,386
Notes to the consolidated financial statements
For the year ended 30 June 2020
1.
Summary of significant accounting policies (continued)
(b)
Principles of consolidation (continued)
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 (i.e. parent entity).
The business combination will be accounted for as at the acquisition date, which is the date that control
over the acquiree is obtained by the parent entity. At this date, the parent shall recognise, in the
consolidated accounts, and subject to certain limited exceptions, the fair value of the identifiable assets
acquired and liabilities assumed. In addition, contingent liabilities of the acquiree will be recognised
where a present obligation has been incurred and its fair value can be reliably measured.
The acquisition may result in the recognition of goodwill (refer to Note 1(i)) or a gain from a bargain
purchase. The method adopted for the measurement of goodwill will impact on the measurement of
any Non-controlling interest to be recognised in the acquiree where less than 100% ownership interest
is held in the acquiree.
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.
(c)
Income tax
The income tax expense (benefit) for the year comprises current income tax expense (income) and
deferred tax expense (benefit). Current income tax expense charged to the profit or loss is the tax
payable on taxable income calculated using applicable income tax rates enacted, or substantially
enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts
expected to be paid to (recovered from) the relevant tax authority.
Page | 31
Notes to the consolidated financial statements
For the year ended 30 June 2020
1.
Summary of significant accounting policies (continued)
(c)
Income tax (continued)
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.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and
liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-
off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities where it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur in
future periods in which significant amounts of deferred tax assets or liabilities are expected to be
recovered or settled.
EVZ Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated Group
under the tax consolidation regime. Each entity in the Group recognises its own current and deferred
tax liabilities, except for any deferred tax liabilities resulting from unused tax losses and credits which
are immediately assumed by EVZ Limited. The current tax liability of each Group entity is then
subsequently assumed by EVZ Limited. The Group notified the Australian Taxation Office that it had
formed an income tax consolidated Group to apply from 7 June 2004. The tax consolidated Group has
entered a tax sharing arrangement whereby each company in the Group contributes to the income tax
payable in proportion to their contribution to the net profit before tax of the tax consolidated Group.
Page | 32
Notes to the consolidated financial statements
For the year ended 30 June 2020
1.
Summary of significant accounting policies (continued)
(d)
Inventories
Inventories are measured at 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.
(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 a cost basis.
The carrying amount of plant and equipment is reviewed annually by Directors.
The cost of fixed assets constructed within the Group includes the cost of materials, direct labour,
borrowing costs.
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 statement of profit or loss 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 Group commencing from the time
the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the
remaining term 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.
Page | 33
Notes to the consolidated financial statements
For the year ended 30 June 2020
1.
Summary of significant accounting policies (continued)
(f)
Leased assets
As described in Note 1(a), the Group has applied AASB 16 using the modified retrospective approach
and therefore comparative information has not been restated. This means that comparative information
is still reported under IAS 17 and IFRIC 4.
i.
Leases accounting policy applicable from 1 July 2019
The Group as a lessee:
For any new contracts entered into on or after 1 July 2019, the Group considers whether a contract is,
or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use
an asset (the underlying asset) for a period of time in exchange for consideration’.
To apply this definition the Group assesses whether the contract meets three key evaluations which are
whether:
•
the contract contains an identified asset, which is either explicitly identified in the contract or
implicitly specified by being identified at the time the asset is made available to the Group;
the Group has the right to obtain substantially all of the economic benefits from use of the identified
asset throughout the period of use, considering its rights within the defined scope of the contract;
the Group has the right to direct the use of the identified asset throughout the period of use. The
Group assess whether it has the right to direct ‘how and for what purpose’ the asset is used
throughout the period of use.
•
•
Measurement and recognition of leases as a lease:
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the
balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement
of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle
and remove the asset at the end of the lease, and any lease payments made in advance of the lease
commencement date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement
date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The
Group also assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease
payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily
available or the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments
(including in substance fixed), variable payments based on an index or rate, amounts expected to be
payable under a residual value guarantee and payments arising from options reasonably certain to be
exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for
interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-
substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use
asset, or profit and loss if the right-of-use asset is already reduced to zero.
Page | 34
Notes to the consolidated financial statements
For the year ended 30 June 2020
1.
Summary of significant accounting policies (continued)
(f)
Leased assets (continued)
The Group has elected to account for short-term leases and leases of low-value assets using the practical
expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to
these are recognised as an expense in profit or loss on a straight-line basis over the lease term.
On the statement of financial position, right-of-use assets have been included in property, plant and
equipment and lease liabilities have been included as short-term or long-term lease liabilities.
ii.
Leases accounting policy applicable before 1 January 2019
The Group as a lessee:
Finance leases:
Management applies judgment in considering the substance of a lease agreement and whether it
transfers substantially all the risks and rewards incidental to ownership of the leased asset. Key factors
considered include the length of the lease term in relation to the economic life of the asset, the present
value of the minimum lease payments in relation to the asset’s fair value, and whether the Group obtains
ownership of the asset at the end of the lease term.
For leases of land and buildings, the minimum lease payments are first allocated to each component
based on the relative fair values of the respective lease interests. Each component is then evaluated
separately for possible treatment as a finance lease, taking into consideration the fact that land normally
has an indefinite economic life.
See Note 1(e) for the depreciation methods and useful lives for assets held under finance leases. The
interest element of lease payments is charged to profit or loss, as finance costs over the period of the
lease.
Operating leases:
All other leases are treated as operating leases. Where the Group is a lessee, payments on operating
lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated
costs, such as maintenance and insurance, are expensed as incurred.
(g)
Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the financial instrument, and are measured initially at fair value adjusted by
transactions costs, except for those carried at fair value through profit or loss (FVPL), which are
measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are
described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and all substantial risks and rewards are transferred. A financial
liability is derecognised when it is extinguished, discharged, cancelled or expires.
Page | 35
Notes to the consolidated financial statements
For the year ended 30 June 2020
1.
Summary of significant accounting policies (continued)
(g)
Financial instruments (continued)
Classification and subsequent measurement of financial assets
The Group classifies its financial assets in the following measurement category:
• those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows.
Impairment of financial assets
AASB 9’s impairment requirements use forward looking information to recognize expected credit losses
– the ‘expected credit losses (ECL) model’.
The Group considers a broader range of information when assessing credit risk and measuring expected
credit losses, including past events, current conditions, reasonable and supportable forecasts that affect
the expected collectability of the future cash flows of the instrument.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as
contract assets under AASB 15 and records the loss allowance at the amount equal to the expected
lifetime credit losses. In using this practical expedient, the Group uses its historical experience, external
indicators and forward-looking information to calculate the expected credit losses using a provision
matrix.
Classification and measurement of financial liabilities
The Group’s financial liabilities include borrowings and trade and other payables.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction
costs unless the Group designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method
except for derivatives and financial liabilities designated at FVPL, which are carried subsequently at fair
value with gains or losses recognised in profit or loss.
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in
profit or loss are included within finance costs or finance income.
(h)
Impairment of assets
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to
determine whether there is any indication that those assets have been impaired. If such an indication
exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell
and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over
its recoverable amount is expensed to the statement of profit or loss.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
Page | 36
Notes to the consolidated financial statements
For the year ended 30 June 2020
1.
Summary of significant accounting policies (continued)
(h)
Impairment of assets (continued)
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.
(i)
(j)
It has been determined that the balances of the goodwill have an indefinite life. The excess of the fair
value of net assets over the purchase price of the businesses acquired has been allocated to goodwill
rather than be allocated to other intangible assets. The acquisition of the businesses that generate the
goodwill was determined on the abilities of the entities, as a whole, to generate future profits and hence
other intangibles have not been recognised.
Goodwill is allocated to cash-generating units which coincide with the Group’s individual companies. All
businesses operate in the engineering services industry sector.
Goodwill
Goodwill is 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 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 statement of
profit or loss. 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 statement of profit or loss.
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.
Page | 37
Notes to the consolidated financial statements
For the year ended 30 June 2020
1.
Summary of significant accounting policies (continued)
(j)
Foreign currency transactions and balances (continued)
Group companies (continued)
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 statement of profit or loss in the period in which the operation is disposed.
(k)
Employee benefits
Provision is made for the Group’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.
(n)
Revenue
Revenue is recognised when an entity satisfies a performance obligation by transferring control of a
promised good or service to a customer.
To determine whether to recognise revenue, the Group follows a 5-step process:
Identifying the contract with a customer;
Identifying the performance obligations;
1
2
3 Determining the transaction price,
4 Allocating the transaction price to the performance obligations; and
5 Recognising revenue when/as performance obligation(s) are satisfied.
Page | 38
Notes to the consolidated financial statements
For the year ended 30 June 2020
1.
Summary of significant accounting policies (continued)
(n)
Revenue (continued)
The core principle of AASB 15 is that an entity shall recognise revenue to depict the transfer of promised
goods and services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. This means that revenue will be recognised when
control of goods or services is transferred rather than on transfer of risks and rewards.
Construction revenue
The contractual terms and the way in which the Group operates its construction contracts is
predominantly derived from projects containing one performance obligation. Due to the high degree of
interdependence between the various elements of these projects, they are accounted for as a single
performance obligation. Contracted revenue is recognised over time by comparing costs incurred with
total estimated costs required to deliver the project to measure progress. Estimated costs are reviewed
on a monthly basis. The requirements of over time measurement are met as the construction creates
assets with no alternative use to the Group and there is an enforceable right to payment for performance
completed.
Contract variations are assessed to determine whether they represent a separate contract with the
customer or are modifications to the original contract.
Most contracts are billed according to approved monthly progress claim schedules or in some cases
according to contracted milestone schedules. When payments received from customers exceed revenue
recognised to date on a particular contract, an excess (a contract liability)) is reported in the statements
of financial position. Alternatively, where revenue to be recognised exceeds amounts invoiced to
customers, the excess (contract asset) is reported.
Services revenue
Services revenue arises from maintenance and other services supplied to infrastructure assets and
facilities which may involve a range of services and processes.
Under AASB 15, these are recognised over time with reference to inputs (time and materials) as services
are provided. These services have been determined to be one performance obligation as they are highly
inter-related and fulfilled over time therefore revenue is recognised over time.
As with construction revenue, contract variations are assessed to determine whether they represent a
separate contract with the customer or are modifications to the original.
(o) Other income - Government grants
Government grants are recognised when there is a reasonable certainty that the grant will be received
and all grant conditions are met.
Government grants include amounts received or receivable under the Federal Government’s JobKeeper
payment scheme, which provides temporary subsidies to eligible businesses significantly affected by
COVID-19.
Page | 39
Notes to the consolidated financial statements
For the year ended 30 June 2020
1.
Summary of significant accounting policies (continued)
(p)
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 statement of profit or loss in the period in which they
are incurred.
(q) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables
and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented
in the statement of cash flows on a gross basis, except for the GST component of investing and financing
activities, which are disclosed as operating cash flows.
(r)
(s)
Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes
in presentation for the current financial year.
Critical accounting estimates and judgments
The Directors evaluate estimates and judgments incorporated into the financial report based on
historical knowledge and best available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and economic data, obtained both
externally and within the Group.
Key estimates
Impairment
The Group assesses the potential for existence of impairment of non-financial assets other than Goodwill
at each reporting date by evaluating conditions specific to each asset or cash generating unit that
indicates the existence of impairment. 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.
Expected credit losses
The Group estimates expected credit losses using its historical experience, external indicators and
forward-looking information.
At 30 June 2020, a provision for impairment of $327,226 (2019: $327,273) was raised against receivables
from continuing operations. There is no provision raised for impairment against work in progress.
(2019: $nil).
Page | 40
Notes to the consolidated financial statements
For the year ended 30 June 2020
1.
Summary of significant accounting policies (continued)
(s)
Critical accounting estimates and judgments (continued)
Recognition of deferred tax assets
The Group has recognised deferred tax assets in relation to Provisions and Other payables of $1,286,727
(2019: $1,280,811) and Un-recouped tax losses $1,324,143 (2019: $1,351,968).
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 2020.
(t)
Going concern
The financial report for the year ended 30 June 2020 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.
In considering the going concern basis for the Group, the director’s noted that the following factors are
significant:
• On 6th of July 2020, the groups bank loan facility was agreed to be extended for 16 months from 1
July 2020 to 31 October 2021.
• The economic outlook both locally and internationally remains uncertain due to COVID-19. While it
is likely that the ongoing COVID-19 pandemic may lead to further economic stimulus, which should
be favourable to the Group, the future financial performance of the Group will be dependent how
the pandemic impacts the Group’s clients and its’ people.
Page | 41
Notes to the consolidated financial statements
For the year ended 30 June 2020
Page | 42
20202019 $ $2.Profit/(loss) from continuing operations(a)Other incomeSundry income160,993 72,777 Job keeper subsidy1,596,450 - 1,757,443 72,777 (b)ExpensesImpairment - receivables(47) 204,691 Total employee costs31,483,365 32,246,006 Defined contribution superannuation expense1,726,320 2,730,708 Foreign exchange gains(27,212) (83,132)Profit on sale of plant and equipment(32,367) (5,169)Operating lease payments210,363 1,143,125 Depreciation of plant and equipment 1,591,957 747,300 (c)Net finance costs:Finance costs 555,846 421,045 Interest expense on lease liabilities 167,012 - Interest income (694) (9,090)Net finance costs from continuing operations 722,164 411,955 3.Income tax(a)The prima facie tax on profit/(loss) before income tax from continuing operations is reconciled to income tax as follows:Profit/(loss) before income tax(2,759,936)1,728,418Income tax calculated at 30% (2019: 30%)(827,981)518,525Tax effect of permanent differences97,2988,652Recognition of additional tax losses- (500,000)Current year tax losses not booked724,767- Taxation expense / (benefit) - offshore subsidiary(2,580)76,266Income tax expense/(benefit)(8,496)103,443The applicable weighted average effective tax rates are:0%6%(b)The components of tax expense comprise:Current tax(2,580)604,091Deferred tax(5,916)(648)Recognition of additional tax losses- (500,000)(8,496)103,443Consolidated entity
Notes to the consolidated financial statements
For the year ended 30 June 2020
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:
Page | 43
Notes20202019 $ $4.Trade and other receivablesCurrentTrade receivables9,145,846 15,494,869 Provision for impairment(327,226) (327,273) 8,818,620 15,167,596 Retention receivables626,291 495,972 9,444,911 15,663,568 Other debtors and receivables1,214,696 876,489 10,659,607 16,540,057 Non-currentRetention receivables1,092,338 1,612,075 1,092,338 1,612,075 Consolidated entity20202019 $ $Australia8,824,098 13,529,062 Asia3,255,073 4,950,343 12,079,171 18,479,405 Consolidated entity
Notes to the consolidated financial statements
For the year ended 30 June 2020
4. Trade and 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.
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.
Whilst the Group has experienced a reduction in aged receivables, the expected credit loss rate has increased
due to the currently economic uncertainties with Covid-19 which have been factored into the provision at
balance date.
Page | 44
Gross AmountPast Due & ImpairedPast Due not Impaired (Days Overdue)Within Trading TermsConsolidated entity<30 Days31-60 Days>61 Days$$$$$$2020Trade & term receivables10,864,475333,5462,561,522593,342830,6466,545,419Other receivables1,214,696- - - - 1,214,696 12,079,171333,5462,561,522593,342830,6467,760,1152019Trade & term receivables17,602,916333,8959,375,2363,510,4212,119,7472,263,617Other receivables876,489- - - - 876,48918,479,405333,8959,375,2363,510,4212,119,7473,140,10620202019 $ $Provision for impairment of receivablesOpening balance as at 1 January per AASB 139327,27313,644Adjustment for adoption of AASB 9- 108,938 Adjusted opening balance as at 1 July327,273122,582Receivables written off(95,554)(12,469)Provision recognised95,507217,160Closing balance327,226327,273Consolidated entity
Notes to the consolidated financial statements
For the year ended 30 June 2020
Contract assets
Contract assets are balances due from customers under long term contracts as work is performed and
therefore a contract asset is recognised over the period in which the performance obligation is fulfilled. This
represents the Group’s right to consideration for the services transferred to date. Amounts are generally
reclassified to accounts receivable when there is an unconditional right to receive payment.
Contract liabilities
Contract liabilities relating to construction contracts are balances due to customers under construction
contracts. These arise if a milestone payment exceeds the revenue recognised to date. Revenue recognised in
the reporting period that was included in the contract liability balance at the beginning of the period was
$1,584,027 (2019: $1,853,116).
Contract assets and contract liabilities are offset where they relate to the same contract.
Contract assets and contract liabilities at the start of the reporting period was $3,156,104 (2019: 1,853,116)
and $1,584,027 (2019: 1,465,268). All contracts assets recognised at the start of the reporting period have
been reclassified to accounts receivable during the financial year and all contract liabilities have been
recognised as revenue during the financial year.
The decrease in contract assets is a result of the timing of contracts in progress at 30 June 2020.
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.
Funds on deposit represent security deposits covering a guarantee for property lease obligations and contract
performance bonds.
Page | 45
20202019 $ $5.Contract assets and contract liabilitiesContract assets related to contracts2,014,330 3,156,104 Contract liabilities related to contracts1,578,399 1,584,027 Consolidated entity20202019 $ $6(a)InventoriesCurrentRaw materials and stores - at cost2,317,8102,313,9842,317,8102,313,984Consolidated entity20202019 $ $6(b)Financial assetsFunds on deposit306,441189,612306,441189,612Consolidated entity
Notes to the consolidated financial statements
For the year ended 30 June 2020
Other than AASB 16 right of use assets, 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.
Page | 46
7.Property, plant and equipmentDetails of the Group's property, plant and equipment and their carrying amounts are as follows:2020BuildingsPlant and equipmentTotalAt cost2,793,42813,627,82916,421,257 Accumulated depreciation(598,372)(8,300,276)(8,898,648) Total carrying amount2,195,056 5,327,553 7,522,609 Movement in carrying amountsCarrying amount - opening balance- 4,870,6644,870,664 Adjustments on transition to AASB 16 - Leases2,340,717 - 2,340,717 Additions207,559 1,699,6851,907,244 Disposals- - - Depreciation(598,372) (993,585)(1,591,957) Exchange rate movement- (4,059)(4,059) Carrying amount - closing balance1,949,904 5,572,705 7,522,609 2019BuildingsPlant and equipmentTotalAt cost- 12,305,56012,305,560 Accumulated depreciation- (7,434,896)(7,434,896) Total carrying amount- 4,870,664 4,870,664 Movement in carrying amountsCarrying amount - opening balance- 3,869,4643,869,464 Additions- 1,738,6591,738,659 Disposals- - - Depreciation- (747,300)(747,300) Exchange rate movement- 9,8419,841 Carrying amount - closing balance- 4,870,664 4,870,664 Included in the net carrying amount of property, plant and equipment are right-of-use assets as follows:20202019Buildings1,742,691 - Plant and equipment263,200 - Right-of-use assets at carrying amount2,005,891 - The depreciation expense attributable to right-of-use assets during the financial year:Buildings(598,026) - Plant and equipment(11,793) - Right-of-use assets depreciation expense(609,820) - Consolidated entity
Notes to the consolidated financial statements
For the year ended 30 June 2020
The company has considered it appropriate to not recognize in the financial accounts the benefit of all tax
losses available to the Company at the end of the financial year.
The company has extrapolated profit projections based on 0% growth for the year ending 30 June 2021 due to
the impact of the COVID-19 pandemic and then 2% for subsequent years. These projections support the
recovery of the carrying value of deferred tax assets at 30 June 2020 of $2,610,870 within a five 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.
As a result, gross tax losses not recognized at 30 June 2020 are $8,045,473 (2019: $5,629,582).
Page | 47
20202019 $ $8.Tax assetsCurrent- - Non-current2,610,8702,604,954Deferred tax assets2,610,8702,604,954Deferred tax assets comprise:Provisions1,192,2671,112,663Other94,460168,148Un-recouped tax losses1,324,1431,324,1432,610,8702,604,954The movement in deferred tax assets for each temporary difference during the year is as follows:ProvisionsOpening balance1,112,6631,090,488Credited/(expensed) to income account79,60422,175Closing balance1,192,2671,112,663OtherOpening balance168,148189,675Credited/(expensed) to income account(73,688)(21,527)Closing balance94,460168,148Unrecouped tax lossesOpening balance1,324,1431,351,968Tax losses recognised/(recouped)- (27,825)1,324,143 1,324,143Closing balance of tax assets2,610,8702,604,954Consolidated entity
Notes to the consolidated financial statements
For the year ended 30 June 2020
It has been determined that the balances of the goodwill have an indefinite life. The excess of the purchase
price over the fair value of net assets of the businesses acquired has been allocated to goodwill.
Page | 48
20202019 $ $8.Tax assets (continued)Tax liabilitiesCurrentIncome Tax- 31,335Non-currentProvision for deferred tax49,62350,549Opening balance50,54949,200Additional / (Reduction) in provisions raised during year(353)- Exchange rate movement(573)1,349Closing balance49,62350,549Consolidated entity9.Intangible assetsGoodwill – at cost27,889,29027,889,290Less accumulated impairment(15,817,280)(15,817,280)Total Intangible assets12,072,01012,072,010Movements in goodwill carrying amounts:Opening balance12,072,01012,072,010Movement in the year- - Closing Balance12,072,01012,072,010Goodwill by cash generating unit (CGU):Water Group - Syfon Systems3,282,5323,282,532Engineering Group - Brockman Engineering8,789,4788,789,47812,072,01012,072,010
Notes to the consolidated financial statements
For the year ended 30 June 2020
9.
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 (engineering and water) 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 discount rate determined individually for each CGU and reflects current market
assessment of the time value of money and segment-specific risk factors. 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. The forecasts used in the value-in-use calculations are based on the management approved
budgets.
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 correlation of
these factors, assumptions for growth rates and discount rates are the most sensitive in the value-in-use
calculation.
The following assumptions were used in the value-in-use calculations:
2020
2019
Growth Rates Discount Rates Growth Rates Discount Rates
Water (Syfon Systems Group):
Growth year 1
Growth subsequent years
Engineering (Brockman Eng.):
Growth year 1
Growth subsequent years
-9%
2%
28%
2%
13%
13%
13%
13%
5%
5%
5%
5%
15%
15%
15%
15%
The change in discount rates during 2020 arose from a detailed management review of the inputs utilised
in determining the discount rate. The risk factor incorporated in the discount rate is consistent with the
prior year.
The year one growth rate modelled for Syfon Systems is negative 9% for revenue on the conservative
basis that COVID-19 impedes growth. Gross margin is not expected to be impacted. For Brockman, a
revenue rebound of 28% has been modelled as the prior year revenue was impacted significantly due to
the business taking a significant project write-down which produced an operating loss.
Subsequent years model a conservative 2% growth rate reflecting the minimum expected growth that is
expected in each of the relevant CGUs.
All growth rates consider forward work-in-hand levels, weighted project prospects, consideration of
future expected activities and giving consideration to historical growth rates achieved.
Page | 49
Notes to the consolidated financial statements
For the year ended 30 June 2020
9.
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 and the results of the sensitivity analysis are:
2020
2019
Growth Rates Discount Rates Growth Rates Discount Rates
Water (Syfon Systems Group):
Growth year 1
Growth subsequent years
Engineering (Brockman Eng.):
Growth year 1
Growth subsequent years
-9%
0%
18%
0%
18%
18%
18%
18%
Value of impairment to carrying value of goodwill based on
sensitivity analysis:
Water (Syfon Systems Group)
Engineering (Brockman Engineering)
3%
3%
3%
3%
2020
$
-
-
-
20%
20%
20%
20%
2019
$
-
-
-
The sensitivity discount rate for 2020 has been reduced to 18% to reflect current market conditions.
Growth rates for subsequent years have been reduced to nil. As a result, there is no impairment in either
Syfon Systems group or Brockman Engineering.
Page | 50
20202019 $ $10.Trade and other payablesTrade payables9,073,9039,517,171Sundry payables and accrued expense2,184,768 4,336,243 11,258,67113,853,414Consolidated entity
Notes to the consolidated financial statements
For the year ended 30 June 2020
Bank loans - secured
On 6th of July 2020, the bank loan facility was agreed to be extended for 16 months from 1 July 2020 to 31
October 2021. As the agreement was not formally completed until after the 30 June 2020 reporting period,
the loan is required to be classified as current in accordance with AASB 101 – Presentation of financial
statements.
The interest rate on the remaining 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 in arrears. The
current interest rate is 5.46%.
The extended loan facility contains the following financial covenants:
• Minimum EBITDA requirements of $500,000 per quarter for the duration of the agreement.
• Mandatory repayments on the marker rate loan of $150,000 per quarter from 30 September 2020.
• An annual limit on capital expenditure to $1,000,000 without prior bank approval.
• No dividend distributions for the term of the facility without prior bank approval.
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, Syfon
International Pty Ltd, Brockman Engineering Pty Ltd, TSF Power Pty Ltd and TSF Engineering Pty Ltd. Also
refer to Note 32 for quantification of assets secured by Australian entities.
At 30 June 2020, the Group has $ Nil in undrawn bank loan facilities (2019: Nil).
Other loans - unsecured
During the year, the Group arranged and fully drew down an unsecured $1,000,000 loan from a director
related entity at an interest rate of 6%. The loan is repayable by 31 March 2021.
Page | 51
Notes20202019 $ $11.Short-term borrowingsBank loans - secured3,300,000 3,300,000 Other Loans - unsecured1,037,430 - Lease liabilities - secured24.698,921 72,272 5,036,3513,372,272Consolidated entityCurrent3,300,000 3,300,000 1 to 2 years- - 2 to 3 years- - Total bank loans3,300,0003,300,000
Notes to the consolidated financial statements
For the year ended 30 June 2020
Also refer to Note 24 leases for further information on lease liabilities, reconciliation and maturity details.
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).
Page | 52
20202019 $ $12.Long-term borrowingsLease liabilities - secured24.2,097,427 284,397 2,097,427284,397 Consolidated entity13.ProvisionsCurrentEmployee benefits3,184,0082,926,1883,184,0082,926,188Movement in employee benefits:Opening employee balance2,926,1882,986,944Provisions created/(utilised) during year257,820(60,756)Closing balance3,184,0082,926,188Non currentEmployee benefits55,992 41,526 Other non current provisions- - 55,992 41,526 Movement in employee benefits:Opening employee balance41,52621,903Provisions created/(utilised) during year14,46619,623Closing balance55,99241,52614.Issued capitalIssued and paid up2020: 96,116,734 ordinary shares 2019: 96,116,734 ordinary shares14(a)56,457,18056,457,18056,457,18056,457,180(a)Issued and fully paid up ordinary sharesOpening balance56,457,18052,972,129Shares issued- 3,681,061Share issue costs- (196,010)Closing balance56,457,18056,457,180
Notes to the consolidated financial statements
For the year ended 30 June 2020
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.
During 2017, 1,500,000 Unlisted Options were issued in connection with the Capital Raising during the
year. The Unlisted Options were issued for nil cash consideration and vested upon issue. The Unlisted
Options are exercisable at $0.20 per share and expire 4 years after their issue date (7 June 2017).
(c)
Capital management:
Management controls the capital of the Group in order to maintain an appropriate debt to equity ratio,
provide shareholders with adequate returns and ensure the Group can fund its operations and continue
as a going concern. The Group’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 Group’s
capital by assessing the Group’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 Group’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 2020 the Group’s gearing ratio was 6% (2019: 4%).
Page | 53
(a)Issued and fully paid up ordinary shares (continued)No. of sharesNo. of sharesOpening balance96,116,73483,027,195Shares issued- 13,089,539Closing balance 96,116,734 96,116,734(b)Share optionsNo. of optionsNo. of optionsOpening balance1,500,0001,500,000Options issued- - Closing balance 1,500,0001,500,00015.DividendsInterim fully franked ordinary dividend - - Final fully franked ordinary dividend - - Total dividends- - Balance of franking account1,813,7971,813,797
Notes to the consolidated financial statements
For the year ended 30 June 2020
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 R Edgley
Mr I Luck
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Mr S Farthing
Mr P van der Wal
Mr A Bellgrove
Mr C Bishop
Mr J Hughes (appointed 15 October 2019)
Mr I Whitford (Resigned 28 September 2019)
Chief Executive Officer
Chief Financial Officer and Company Secretary
General Manager of Syfon Systems Group
General Manager of Brockman Engineering
General Manager of TSF Power
General Manager of TSF Power
Page | 54
20202019 $ $16.Reserves and accumulated losses(a)Accumulated losses:Accumulated losses at the beginning of the financial year(32,746,417)(34,262,454)Adjustment on adoption of AASB 9- financial Instruments- (108,938)Net profit/(loss) attributable to members of the parent entity(2,751,440)1,624,975Accumulated losses at the end of the financial year(35,497,857)(32,746,417)(b)Reserves:Foreign currency translation and share option reserves:Reserves at beginning of year277,171 241,524 Movement for year - share option reserve- - Movement for year - Foreign currency translation reserve(31,271) 35,647 Reserves at end of year245,900277,171Consolidated entity17.Earnings per share(a)Weighted average number of ordinary shares outstanding during the year used in calculation of basic earnings per share96,116,73493,662,110(b)Weighted average number of ordinary shares outstanding during the year used in calculation of diluted earnings per share96,116,73495,162,110Due to the net loss for the 30 June 2020 period, dilutive earnings per share is the same as basic earnings per share.
Notes to the consolidated financial statements
For the year ended 30 June 2020
Refer to disclosures in Note 20 for other transactions with Directors and Key Management Personnel.
Refer to disclosures in the Directors report for the number of ordinary shares held by each Key
Management Personnel of the Group during the financial year.
There were no share options issued for the year ended 30 June 2020 (2019: Nil).
Remuneration policy
The remuneration policy of the Company 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 Group’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 Group, 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 Group 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
Group’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 Group’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.
Page | 55
20202019 $ $18.Key management personnel (continued)Remuneration of key management personnel is:Short term employee benefits1,530,0611,633,653Post-employment benefits106,602105,5151,636,6631,739,168Consolidated entity
Notes to the consolidated financial statements
For the year ended 30 June 2020
18. Key management personnel (continued)
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. During the
financial year no Executives met these key performance indicators and therefore the Remuneration
Committee did not approve any short term incentive payments (2019: Nil). 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.
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.
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 Group. 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.
Page | 56
20202019 $ $19.Auditors remunerationRemuneration paid/payable to auditors for:audit or review of financial report 100,500 90,000 non-audit services 2,500 - taxation services- - 103,000 90,000 Consolidated entity
Notes to the consolidated financial statements
For the year ended 30 June 2020
20. Related party disclosures
(a)
(b)
The directors of EVZ Limited during the financial year were:
• Mr G Burns
• Mr R Edgley
• Mr I Luck
Transactions with director related entities
• G Burns: Directors fees paid of $80,000 (2019: $86,667) and $17,333 (2019: $20,000) is payable.
•
•
R Edgely: Directors fees paid of $50,000 (2019: $50,000) and $6,667 (2019: $8,333) is payable.
I Luck: Directors fees paid of $50,000 (2019: $50,000) and $6,667 (2019: $8,333) is payable.
During the year, the Group arranged and fully drew down an unsecured $1,000,000 loan from a director
related entity at an interest rate of 6%. Accrued Interest payable at 30 June 2020 is $37,430. The loan is
repayable by 31 March 2021.
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.
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.
Page | 57
Notes to the consolidated financial statements
For the year ended 30 June 2020
21.
Segment reporting (continued)
ii. Energy
The energy segment designs and installs constant load power stations, back-up power generation
equipment and sustainable/clean energy solutions. In addition, the segment services, maintains
and hires all types of generators and associated equipment.
iii. Water
The water segment designs syphonic 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.
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
Page | 58
Notes to the consolidated financial statements
For the year ended 30 June 2020
21.
Segment reporting (continued)
Page | 59
(a) Segment reporting - continuing operationsEngineeringEnergyWaterCorporateTotalTwelve months ended 30 June 2020: $ $ $ $ $RevenueExternal sales37,413,130 7,175,772 21,635,808 -66,224,710 Total segment revenue37,413,130 7,175,772 21,635,808 - 66,224,710 Reconciliation of segment revenue to group revenue:Total group revenue37,413,130 7,175,772 21,635,808 -66,224,710 Segment net profit /(loss) before interest and tax(1,842,515)(287,339)1,416,622 (1,324,540)(2,037,772)Reconciliation of net profit before interest and tax to group net profit/(loss) before taxUnallocated itemsNet finance costs from continuing operations(722,164)Net profit/(loss) before tax from continuing operations(2,759,936)Included in segment net profit before interest and tax:Depreciation823,013 226,494 500,769 41,681 1,591,957 Impairment:Receivables - - (47) - (47)
Notes to the consolidated financial statements
For the year ended 30 June 2020
21.
Segment reporting (continued)
Page | 60
(a)Segment Reporting - continuing operations (continued)EngineeringEnergyWaterCorporateTotalTwelve months ended 30 June 2019: $ $ $ $ $RevenueExternal sales53,091,236 5,271,972 19,679,085 -78,042,293 Inter-segment sales-----Total segment revenue53,091,236 5,271,972 19,679,085 - 78,042,293 Reconciliation of segment revenue to group revenue:Inter-segment elimination-----Total group revenue53,091,236 5,271,972 19,679,085 -78,042,293 Segment net profit /(loss) before interest and tax2,550,624 (461,509)1,416,421 (1,365,163)2,140,373 Reconciliation of net profit before interest and tax to group net profit/(loss) before taxUnallocated itemsOther non-operating - Net finance costs from continuing operations(411,955)Net profit/(loss) before tax from continuing operations1,728,418 Included in segment net profit before interest and tax:Depreciation469,924 72,146 201,117 4,113 747,300 Impairment:Receivables - - 204,691 - 204,691
Notes to the consolidated financial statements
For the year ended 30 June 2020
21.
Segment reporting (continued)
Page | 61
Twelve months ended 30 June 2020:EngineeringEnergyWaterCorporateTotalSegment assetsSegment Assets22,563,013 3,247,537 23,256,002 7,796,765 56,863,317 Inter-segment elimination(12,397,623)Total group assets44,465,694Segment asset increases for the period:Capital expenditure63,184 60,875 779,794 - 903,853 63,184 60,875 779,794 0 903,853 Segment liabilitiesSegment liabilities16,500,478 5,936,391 4,028,301 4,745,678 31,210,848 Inter-segment elimination(7,950,377)Total group liabilities23,260,471 Twelve months ended 30 June 2019:EngineeringEnergyWaterCorporateTotalSegment assetsSegment Assets25,050,443 2,069,816 22,403,573 8,259,141 57,782,973 Inter-segment elimination(11,651,331)Total group assets46,131,642Segment asset increases for the period:Capital expenditure1,396,530 178,474 100,164 63,491 1,738,659 1,396,530 178,474 100,164 63,491.00 1,738,659 Segment liabilitiesSegment liabilities16,744,777 4,447,458 4,455,857 3,660,520 29,308,612 Inter-segment elimination(7,164,904)Total group liabilities22,143,708
Notes to the consolidated financial statements
For the year ended 30 June 2020
21.
Segment reporting (continued)
Major customers
The Group has a number of customers to whom it provides products and services. In the current year, the
Group had two major customers in the Engineering segment who account for 29% and 12% respectively (2019:
30% and 14%) of external revenue. There are no other significant client accounts.
Page | 62
(c)Revenue by category: EngineeringEnergy WaterCorporate TotalAll revenue is recognised over time $$ $$ $For the year ended 30 June 2020RevenueConstruction contracts 37,413,130 - 21,635,808 - 59,048,938 Services revenue - 7,175,772 - 7,175,772 Total revenue from contracts 37,413,130 7,175,772 21,635,808 - 66,224,710 For the year ended 30 June 2019RevenueConstruction contracts 53,091,236 - 19,677,312 - 72,768,548 Services revenue - 5,273,745 - 5,273,745 Total group revenue 53,091,236 5,273,745 19,677,312 - 78,042,293 (d)Revenue by geographical locations: EngineeringEnergy WaterCorporate Total $$ $$ $For the year ended 30 June 2020RevenueAustralia 37,413,130 7,175,772 16,698,959 - 61,287,861 Asia - - 4,936,849 - 4,936,849 Total revenue from contracts 37,413,130 7,175,772 21,635,808 - 66,224,710 For the year ended 30 June 2019RevenueAustralia 53,091,236 5,273,745 13,884,095 - 72,249,076 Asia - - 5,793,217 - 5,793,217 Total group revenue 53,091,236 5,273,745 19,677,312 - 78,042,293 (e)Assets by geographical locations:Consolidated entity20202019 $ $Australia37,483,135 37,950,629 Asia 6,982,559 8,181,013 Total assets 44,465,694 46,131,642
Notes to the consolidated financial statements
For the year ended 30 June 2020
Standby arrangements and unused credit facilities
23.
Controlled entities in the Group have Contingent Liability Bank Guarantee facilities and Letter of Credit
Facilities totalling $4,900,000 available to them as at 30 June 2020 (2019: $5,500,000). Of this total facility,
$4,839,886 has been utilised and $60,114 (2019: $182,429) remained unused and available for the controlled
entities use as at 30 June 2020. The facilities are secured by a registered equitable mortgage over the assets
and undertakings of all Australian companies in the Group.
In addition to the above facility, the Group has provided a cash backed bank guarantee of $ nil at 30 June, 2020
(2019: $292,199) as performance security on a major project. The bank guarantee is secured by a term deposit
of the same amount.
For further information on bank guarantees, please also refer to Note 30, subsequent events.
Page | 63
20202019 $ $22.Consolidated statement of cash flowsCash balances comprise:Cash on hand5,869,679 2,772,182Closing cash balance5,869,679 2,772,182Reconciliation of the operating profit after tax to net cash flows from operations:Operating profit after tax(2,751,440) 1,624,975 (Gain)/Loss on sale of plant and equipment(32,367) (5,169) Depreciation - plant & equipment1,591,957 747,300 (Gain)/loss on foreign currency translation(27,212) (83,132) Share based payments- 196,211 Changes in assets and liabilities adjusted for effects of acquisition/disposal of operations during financial year:Increase/(decrease) in provisions for employee entitlements273,109 (41,129) (Increase)/decrease in inventories(3,825) (342,883) (Increase)/decrease in trade and other receivables7,425,132 (2,791,607) (Increase)/decrease in deferred tax assets(6,842) 28,525 Increase/(decrease) in payables(2,562,941) 3,203,926 Increase/(decrease) in tax liabilities(32,159) (72,207) Net cash provided/(used) by operating activities3,873,412 2,464,810Consolidated entity
Notes to the consolidated financial statements
For the year ended 30 June 2020
26.
Contingent liabilities
Apart from drawn bank guarantee facilities (refer Note 23), there were no contingent liabilities as at 30
June 2020 (2019: Nil).
Page | 64
20202019 $ $24.LeasesLease liabilities recognised in the statement of financial position:Current698,921 72,272 Non-current2,097,427 284,397 Total lease liability2,796,348 356,669 Within 1-2 2-3 3-4 4-5 After Total20201 yearyearsyearsyearsyears5 yearsLease payments974,241 865,741 650,196 370,076 252,532 42,294 3,155,079 Finance charges(155,029) (104,265) (58,162) (28,814) (12,097) (365) (358,731)Net present values819,212 761,476 592,034 341,262 240,435 41,929 2,796,348Within 1-2 2-3 3-4 4-5 After Total20191 yearyearsyearsyearsyears5 yearsLease payments75,645 55,932 240,722 - - - 372,299 Finance charges(3,176) (2,348) (10,106) - - - (15,630)Net present values72,469 53,584 230,616 - - - 356,66925.Lease payments not recognised as a liabilityThe expense relating to payments not included in the measurement of the lease liability is as follows:Consolidated entity2020 $Short term leases210,363 Leases of low value assets- Total lease liability210,363 Consolidated entityThe group has elected not to recognise a lease liability for short term leases (leases with an expected term of 12 months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis. The lease liabilities are secured by the related underlying assets. Future minimum lease payments are as follows:
Notes to the consolidated financial statements
For the year ended 30 June 2020
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.
The main purpose of Non-derivative financial instruments is to raise finance for Group operations.
(i)
(ii)
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 Group is exposed to through its financial instruments are interest rate risk, foreign
currency risk, liquidity risk and credit risk.
•
Interest rate risk
Of the total consolidated entity’s borrowings, $3,300,000 (2019: $3,300,000) take the form of bank
loans. All bank loans are scheduled to mature on 31 October 2021. The interest cost for these bank
loans is comprised of a fixed line fee plus the prevailing bank bill rate.
•
•
•
Foreign currency risk
The Group is exposed to fluctuations in foreign currencies arising from the sale and purchase of
goods and services in currencies other than the Group’s measurement currency. The Group
monitors its foreign exchange exposure on a regular basis.
Liquidity risk
The Group 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 Group does not have any material credit risk exposure to any single
receivable or Group of receivables under financial instruments entered into by the Group.
(a)
Interest rate risk exposures
The Group’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 Group 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.
Page | 65
Notes to the consolidated financial statements
For the year ended 30 June 2020
27.
Financial instruments (continued)
Page | 66
Consolidated entityFloating Interest rateNon Interest BearingTotal< 1 year1 to 5 years> 5 years$$$$$$2020Financial assetsCash & cash equivalents- - - - 5,869,679 5,869,679 Trade & other receivables- - - - 11,751,945 11,751,945 Financial assets- - - - 306,441 306,441 Total financial assets- - - - 17,928,065 17,928,065 Weighted average interest rate0.00%0.00%Financial liabilitiesTrade & other payables- - - - 10,640,931 10,640,931 Borrowings3,300,000 1,037,430 - - - 4,337,430 Finance Lease liabilities- 42,156 37,872 - - 80,028 Total financial liabilities3,300,000 1,079,586 37,872 - 10,640,931 15,058,389 Weighted average interest rate5.46%6.39%0.00%Net financial assets/(liabilities)(3,300,000) (1,079,586) (37,872) - 7,287,134 2,869,676 2019Financial assetsCash & cash equivalents- - - - 2,772,182 2,772,182 Trade & other receivables- - - - 18,152,132 18,152,132 Financial assets- - - - 189,612 189,612 Total financial assets- - - - 21,113,926 21,113,926 Weighted average interest rate0.00%0.00%Financial liabilitiesTrade & other payables- - - - 11,293,537 11,293,537 Borrowings3,300,000 - - - - 3,300,000 Finance Lease liabilities- 72,272 284,397 - - 356,669 Total financial liabilities3,300,000 72,272 284,397 - 11,293,537 14,950,206 Weighted average interest rate6.95%6.89%0.00%Net financial assets/(liabilities)(3,300,000) (72,272) (284,397) - 9,820,389 6,163,720 20202019Reconciliation of Net Financials Assets/(Liabilities) to Net Assets $ $Net financial assets/(liabilities)2,869,676 6,163,720 Add/(subtract) Non-financial assets and liabilities:Contract Assets2,014,330 3,156,104 Inventories2,317,810 2,313,984Plant and equipment7,522,609 4,870,664Deferred tax assets2,610,870 2,604,954Intangible assets12,072,010 12,072,010Contract Liabilities(1,578,399) (1,584,027) AASB 16 Lease Liabilities(2,716,320) - Provisions(3,289,623) (3,018,263)Accruals(617,740) (2,591,212)Net Assets21,205,223 23,987,934 Fixed InterestConsolidated entity
Notes to the consolidated financial statements
For the year ended 30 June 2020
27.
Financial instruments (continued)
(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 Group approximate their carrying value.
Liquidity risk
Refer to Note 27(a) for a maturity analysis of financial assets and liabilities. All floating interest rate
balances and all non interest bearing balances except for retention receivables totalling $1,718,629
(2019: $2,108,047), (refer Note 4) are current and due within 12 months.
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.
Foreign currency risk
Refer Note 21 for a breakdown of revenue and assets by geographic location. Whilst the Group monitors
its foreign exchange risk, it does not believe there is any material risk associated with its foreign
exchange exposure.
Price risk
The Group believes it has minimal exposure to price risk as costs of major materials and components are
set at the time of project tender.
(c)
(d)
(e)
(f)
28.
Share based payments
There were no share-based payments in the year ended 30 June 2020.
29.
Investment in controlled entities
Name of entity
Country of
incorporation
Class of shares
Equity holdings
Syfon Systems Pty Ltd
Syfon Systems Sdn Bhd
Syfon Systems Pte Ltd
Syfon Systems SE Asia, Inc.
Syfon Systems Vietnam Co Ltd
Syfon International Pty Ltd
Brockman Engineering Pty Ltd
TSF Engineering Pty Ltd
TSF Power Pty Ltd
Australia
Malaysia
Singapore
Philippines
Vietnam
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2020
2019
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
Cost of parent entity’s
investment
2020
$
3,700,650
34,504
-
-
-
-
-
-
-
2019
$
3,700,650
34,504
-
-
-
-
-
-
-
3,735,154
3,735,154
Syfon International Pty Ltd and TSF Power Pty Ltd did not trade during the year or the prior year.
Page | 67
Notes to the consolidated financial statements
For the year ended 30 June 2020
30.
Subsequent events
On 6th of July 2020, the groups bank loan facility was agreed to be extended for 16 months from 1 July 2020
to 31 October 2021.
The economic outlook both locally and internationally remains uncertain due to COVID-19. While it is likely
that the ongoing COVID-19 pandemic may lead to further economic stimulus, which should be favourable to
the Group, the future financial performance of the Group will be dependant how the pandemic impacts our
clients and our people.
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 Group, the results of those operations, or the
state of affairs of the Group in future financial years after the financial year.
Contacts which have remaining performance obligations at 30 June 2020 total $32,128,712
Page | 68
20202019 $ $31.Construction contractsAggregate amount of contract revenue recognised during the financial year59,046,186 72,768,652 Aggregate of contract costs incurred and profits recognised (including losses recognised) to date on contracts in progress 60,214,736 63,998,908 Progress billings(59,778,805) (62,426,831) Receipts in advance1,578,399 1,584,027 Amounts due from customers for contract work in progress2,014,330 3,156,104 Total receivable from customers for contract work in progress as included in Note 47,772,205 14,465,143 Retention receivables as included in Note 41,718,629 2,108,047
Notes to the consolidated financial statements
For the year ended 30 June 2020
32. Deed of cross guarantee
During the financial year;
A deed of cross guarantee between EVZ Ltd (Parent Entity) and TSF Engineering Pty Ltd, Brockman
Engineering Pty Ltd, Danum Engineering Pty Ltd, A.C.N. 124919508 Pty Ltd, Syfon Systems Pty Ltd,
NuSource Water Pty Ltd, Syfon International 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.
In the 2017 financial year, the EVZ Group gave as security for a loan from TSF Corporation Pty Ltd, the
shares and assets of TSF Power Pty Ltd (“TSFP”). A further condition of the loan was the
deconsolidation/removal of TSFP from the deed of cross guarantee. TSFP was subsequently removed
from the deed of cross guarantee during the 2017 financial year. The loan from TSF Corporation was
repaid in full during the 2019 financial year.
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:
Page | 69
Notes to the consolidated financial statements
For the year ended 30 June 2020
32. Deed of cross guarantee (continued)
Page | 70
20202019 $ $Financial information in relation to:(i)Statement of profit or loss and other comprehensive incomeProfit/(loss) before income tax(2,759,936) 1,728,418 Deconsolidation of TSF Power Pty Ltd & Syfon Systems Sdn Bhd506,881 5,191,854 Income tax (expense)/benefit5,917 (27,177) Profit/(Loss) after income tax(2,247,138) 6,893,095 Profit/(Loss) attributable to members of the parent entity(2,247,138) 6,893,095 (ii)Retained earningsRetained losses at the beginning of the year(32,956,571) (39,849,666) Profit/(Loss) after income tax(2,247,138) 6,893,095 Retained losses at the end of the year(35,203,709) (32,956,571) (iii)Statement of financial positionCurrent assetsCash and cash equivalents4,605,522 2,221,124 Trade and other receivables9,507,035 15,186,892 Inventories877,930 885,768 Total current assets14,990,487 18,293,784 Non-current assetsProperty, plant and equipment5,875,167 4,100,494 Deferred tax asset2,610,870 2,604,954 Other receivables6,246,356 6,553,557 Intangible assets12,072,010 12,072,010 Total non-current assets26,804,403 25,331,015 Total assets41,794,890 43,624,799 Current liabilitiesTrade and other payables and provisions14,231,743 16,448,115 Short-term borrowings5,036,350 3,366,016 Total current liabilities19,268,093 19,814,131 Non-current liabilitiesLong-term provisions and other payables1,309,626 325,925 Total non-current liabilities1,309,626 325,925 Total liabilities20,577,719 20,140,056 Net assets21,217,171 23,484,743 EquityIssued capital56,120,880 56,141,314 Reserves300,000 300,000 Accumulated losses(35,203,709) (32,956,571) 21,217,171 23,484,743 Closed group & parties to deed of cross guarantee
Notes to the consolidated financial statements
For the year ended 30 June 2020
33.
Parent entity disclosures
Information relating to the parent entity, EVZ Limited, is as follows:
(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, 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, Syfon International Pty Ltd
(previously EVZ Energy 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 | 71
20202019 $ $(i)Financial positionAssetsCurrent assets133,600 381,573 Non-current assets7,657,249 7,904,745 Total assets7,790,849 8,286,318 LiabilitiesCurrent liabilities4,564,146 318,991 Non-current liabilities181,533 3,341,529 Total liabilities4,745,679 3,660,520 Net assets3,045,170 4,625,798 EquityIssued capital56,759,485 56,759,485 Accumulated losses(53,714,315) (52,133,687) Total equity3,045,170 4,625,798 (ii)Financial performanceComprehensive incomeProfit/(Loss) for the year(1,553,451) (23,135,597) Transfer from capital profits reserve- - Total comprehensive income/(loss)(1,553,451) (23,135,597) Parent Entity
Notes to the consolidated financial statements
For the year ended 30 June 2020
34.
Company details
The registered office and principal place of business of:
EVZ Limited is
115/838 Collins Street, Docklands, Victoria 3008
Australia
The principal place of business of:
Brockman Engineering Pty Ltd is:
87 St Georges Road, Norlane, 3214
Australia
Syfon Systems Pty Ltd is:
22 Hargreaves Street, Huntingdale, 3166
Australia
Syfon Systems Sdn Bhd is:
6 & 8, Jalan Angklung 33/20, Shah Alam Technology Park
40460 Shah Alam, Selangor Darul Ehsan
Malaysia
Syfon Systems Pte Ltd is:
10 Anson Road, #18-17, International Plaza
Singapore 079903
Syfon Systems SE Asia, Inc. is:
30/F Burgundy Corporate Tower
Sen. Gil Puyat Avenue, Makati City
Philippines
Syfon Systems Vietnam Co Ltd is:
No. 20, Street No. 7, Tan Kieng Ward
District 7, Ho Chi Minh City
Vietnam
TSF Engineering Pty Ltd is:
Unit 3, 74 Glendenning Rd, Glendenning, NSW, 2761
Australia
TSF Power Pty Ltd is:
Unit 3, 74 Glendenning Rd, Glendenning, NSW, 2761
Australia
Page | 72
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 Group; 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 Corporations (Wholly-owned companies) instrument 2016/785 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 25th day of September 2020.
Page | 73
Independent Auditor’s Report
To the Members of EVZ Limited
Report on the audit of the financial report
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Opinion
We have audited the financial report of EVZ Limited (the Company) and its subsidiaries (the Group), which comprises the
consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the
year then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial performance for
the year then ended; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Page
74 |
Key audit matter
How our audit addressed the key audit matter
Revenue from contracts with customers (Notes 5 and 21)
For the year ended 30 June 2020 the Group recognised revenue from
construction contracts of $66,224,710. Revenue for these contracts is
recognised over time with reference to the input method to determine
revenue to be recognised.
Our procedures included, amongst others:
Assessing the revenue recognition policies for appropriateness and
compliance with AASB 15;
Performing detailed testing of a sample of revenue transactions
In accordance with AASB 15 Revenue from Contracts with Customer,
revenues from goods and services are recognised based on the
completion of performance obligations under each contract.
during the year by agreeing to supporting documentation and cash
receipts to verify occurrence;
Reviewing the terms and condition of individual contracts to test
The determination of the appropriate timing of revenue recognition
requires estimation of the inputs (costs) remaining in the contract and
the expected margins earned on the contracts which requires
management judgement.
This area is a key audit matter due to the high level of estimation and
management judgement required to determine the revenue
recognised from each contract.
Goodwill impairment (Note 9)
As at 30 June 2020, the Group has goodwill of $12,072,010 across
two cash generating units (“CGU’s”). The Group is required to perform
an annual impairment test of goodwill in accordance with AASB 136
Impairment of Assets.
The Group estimates the recoverable of its CGU’s by employing a
discounted cash flow model and, in doing so, must determine the
following key inputs and assumptions:
forecast cash flows from operations;
working capital adjustments;
capital expenditure estimates;
discount and growth rates; and
a terminal value
This area is a key audit matter due to management estimation and
judgement involved in the assessment.
Recoverability of deferred tax assets (Note 8)
Australian Accounting Standards require deferred tax assets to be
recognised only to the extent that it is probable that sufficient future
taxable profits will be generated in order for the benefits of the
deferred tax assets to be realised.
The Group has recognised a deferred tax asset of $2,610,870 at 30
June 2020, of which $1,324,143 relates to tax losses carried forward.
This is a key audit matter due to the magnitude of the deferred tax
assets recognised and the judgment involved in determining the
recoverability of the tax asse
1
whether revenue was recognised correctly in accordance with AASB
15;
Performing analytical review of revenue and gross margin analysis
across the Group;
Reviewing of contracts assets at 30 June 2020 to ensure the
calculations are accurate and the assumptions utilised in
determining these assets (and the revenue recognised) are
reasonable and supported;
Reviewing information subsequent to balance date to confirm that
key assumptions utilised in management’s estimates were accurate
at 30 June 2020; and
Reviewing appropriateness of financial statement disclosures.
Our procedures included, amongst others:
Obtaining management’s discounted cash flow model;
Assessing management's determination of the Group’s cash
generating units (“CGUs”) based on our understanding of the nature
of the Group’s business;
Evaluating the key assumptions in the model for reasonableness by
obtaining corroborating evidence, this included considering the
reasonableness of the revenue and cost forecasts against historical
actuals;
Performing a sensitivity analysis on the key assumptions;
Testing the mathematical accuracy of the model;
Using our internal valuation specialist to assess reasonableness of
the model and discount rates utilised; and
Assessing the adequacy of financial report disclosures.
Our audit procedures included, among others:
Testing the accuracy of managements deferred tax calculations;
Reviewing management's calculation for the expected timing and
nature of the recovery of the tax losses;
Assessing the Group’s financial forecasts to ensure the forecast
assumptions are reasonable given the current and historical
performance of the business; and
Reviewing the Group’s taxation disclosures in the financial report.
Page
75 |
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The Directors of the 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 gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1_2020.pdf. This description forms part of
our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 9 to 12 of the directors’ report for the year ended 30 June 2020.
In our opinion, the Remuneration Report of EVZ Limited, for the year ended 30 June 2020, complies with section 300A of the
Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
B L Taylor
Partner – Audit & Assurance
Melbourne, 25 September 2020
Page
76 |
Additional shareholder information
As at 2 September 2020
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1.Substantial shareholdersRankNameUnits Held% of Total held1UBS NOMINEES PTY LTD18,285,82219.02%2AIRLIE BEACH HOLDINGS PTY LIMITED9,489,8949.87%3BOND STREET CUSTODIANS LIMITED 9,186,9779.56%36,962,69338.46%2.Distribution of shareholding Range of Holding No of Shareholders Units Held% of Units1to10001,165 346,579 0.36%1,001to5,000317 747,313 0.78%5,001to10,000103 785,151 0.82%10,001to100,000147 5,374,679 5.59%100,001and over87 88,863,012 92.45%Company totals1,819 96,116,734 100.00%Unmarketable shareholder parcels of less than $500 at $0.088/unit1,505 1,218,144 1.27%3.Names of 20 largest shareholdersRankNameHolding% Held1UBS NOMINEES PTY LTD18,285,82219.02%2BOND STREET CUSTODIANS LIMITED 9,186,9779.56%3AIRLIE BEACH HOLDINGS PTY LIMITED 5,989,8946.23%4AIRLIE BEACH HOLDINGS PTY LIMITED 3,500,0003.64%5ONMELL PTY LTD 2,643,4622.75%6HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED2,598,5612.70%7MYALL RESOURCES PTY LTD 2,545,7542.65%8BT PORTFOLIO SERVICES LIMITED 2,477,2502.58%9H&C TRUONG PTY LTD 2,314,3792.41%10RUSTICA PTY LTD 2,253,7602.34%11TAYCO INVESTMENTS PTY LTD2,199,9642.29%12THIRD RETURN SUPER PTY LTD 2,000,0002.08%13RANGEWORTHY PTY LTD 1,936,3962.01%14ARCHWIN PTY LTD 1,635,8381.70%15STF ENTERPRISES PTY LTD1,616,8401.68%16MR ADAM BELLGROVE + MRS ANDREA BELLGROVE 1,368,6211.42%17EXPLORER CORPORATION PTY LTD1,079,6281.12%18BOND STREET CUSTODIANS LIMITED 1,000,0001.04%19POWIS SUPERANNUATION PTY LTD 1,000,0001.04%20MS SERENA SALANITRI900,0000.94%21T R B MANAGEMENT PTY LIMITED 900,0000.94%Total top 21 holders of ordinary fully paid shares67,433,14670.16%Total remaining holders balance28,683,58829.84%Total ordinary shares96,116,734100.00%
Additional shareholder information (continued)
4.
Voting rights
A registered holder of shares in the Company may attend general meetings of the Company in person or by
proxy and on a poll may exercise one vote for each share held. There are no voting rights attached to options
for ordinary shares until the options have been exercised.
5.
General
The name of the company secretary is Pieter van der Wal.
The address of the principal registered office is:
115 / 838 Collins Street,
Docklands Vic 3008
Telephone:
Email:
(03) 9545 5288
pieter.vanderwal@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
6.
Stock exchange listing
The Company’s ordinary securities are listed on the Australian Securities Exchange Limited.
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