2018 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2018 ABN 51 128 698 108 CORPORATE DIRECTORY Directors Peter Cassidy Chairman Andrew Stocks Managing Director Jerry Ellis AO Non-Executive Director Leigh Hall AM Non-Executive Director Glen Chipman Non-Executive Director Ian Hume Non-Executive Director General Manager Larry Ingle Company Secretary Jaroslaw (Jarek) Kopias Share Registry Security Transfer Registrars 770 Canning Highway Applecross WA 6153 Telephone 08 9315 2333 registrar@securitytransfer.com.au Auditors PricewaterhouseCoopers Level 11, 70 Franklin Street Adelaide SA 5001 Telephone 08 8218 7000 Corporate Governance Statement http://www.ironroadlimited.com.au/ about-us/corporate-governance Registered Office Iron Road House Level 6, 30 Currie Street Adelaide SA 5000 Telephone 08 8214 4400 Postal Address GPO Box 1164 Adelaide SA 5001 ASX Code IRD www.ironroadlimited.com.au admin@ironroadlimited.com.au ABN 51 128 698 108 O V E R V I E W CONTENTS OVERVIEW OPERATIONS REPORT Corporate Directory Chairman's Letter Central Eyre Iron Project Global Mineral Resource and Ore Reserve Statement 2 4 9 DIRECTORS' REPORT 10 Directors' report overview 14 Remuneration report OPERATING AND FINANCIAL REVIEW 22 Company strategy and operating activities FINANCIAL STATEMENTS 24 Financial statements overview 25 Consolidated Income Statement 26 Consolidated Statement of Financial Position 27 Consolidated Statement of Change in Equity 28 Consolidated Statement of Cash Flows 29 Notes to the financial statements SIGNED STATEMENTS 46 Directors' declaration ASX INFORMATION 52 ASX Additional Information 47 Independent auditor's report IRON ROAD ANNUAL REPORT 2018 1 1 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION CHAIRMAN'S LETTER On behalf of the Board of Iron Road Limited, it is with pleasure I present to you the Annual Report for the year ended 30 June 2018. 2 2 IRON ROAD ANNUAL REPORT 2018 Dear Shareholder Iron Road continued to advance the Central Eyre Iron Project (CEIP) during the year. The team incorporated several significant enhancements, such as bringing forward iron concentrate production in the mine plan as well as continuing to progress through the government approvals processes. Secondary approval submissions were made to the Government of South Australia in late 2017 and the final primary approval was granted by the Federal Government in March 2018. Following on from the project commercialisation programme with China Railway Group, the two teams moved onto development of the delivery strategy and draft construction agreements. Despite achieving novel outcomes beneficial to both parties, certain aspects have been drawn-out and progress in general has been slow. As a consequence, Iron Road continues to seek out and engage with other potential partners and investors with an interest in the Company and the CEIP alongside the development of a ‘grain first’ export strategy. IRON ROAD ANNUAL REPORT 2018 I C H A R M A N S ' Our continual commitment to communities builds understanding of the challenges presented by change and is expected to ultimately deliver tangible benefits. An example of this is the grain first strategy, where we are working closely with Eyre Peninsula Cooperative Bulk Handling (EPCBH), a recently established grain cooperative, to assess the viability of developing a new grain distribution and supply chain network based at the Cape Hardy port. If successful, the port would be developed ahead of the mining and beneficiation business. The iron ore market continues its evolution towards premium products, with higher and lower quality products continuing to diverge further from the 62% iron benchmark price. Despite the benchmark prices oscillating recently in the range US$60-70/dmt, index prices for iron ore with 65% iron content have continued to trend higher. Furthermore, realised prices for below benchmark grade products have been impaired by discounts for high levels of impurities. When considered in isolation, iron ore benchmark prices persisting below US$70/ dmt are unlikely to incentivise greenfield mine developments requiring associated route-to-market infrastructure. However, strong price premiums for high quality iron concentrates and pellet feed, such as CEIP concentrate, remains a positive market trend that is increasingly being acknowledged as sustainable and reflective of a structural and environmentally-driven Chinese steel industry shift. 40.00 The Growing Preference for Quality t m d / $ S U 30.00 20.00 10.00 0 -10.00 -20.00 Jan 16 Jul 16 Jan 17 Jul 17 Jan 18 Jul 18 65-62% premium 58-62% discount Source: Platts and Metal Bulletin As at July 2018, 65% iron prices exceed Iron Road’s long-term modelled price assumption for CEIP’s higher quality 66.7% iron concentrate. I would like to take this opportunity to thank my fellow directors and our staff for their significant contributions to Iron Road, with special thanks to director Julian Gosse who stepped down from the Board after nine years of service. I also thank you, our shareholders, for your continued support during the year. Peter Cassidy Chairman L E T T E R 3 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION OPERATIONS REPORT Location of the CEIP, showing the mine, infrastructure corridor and port Central Eyre Iron Project (CEIP, IRD 100%) The CEIP is located on the Eyre Peninsula, South Australia. The proposed mine at Warramboo is located approximately 30 kilometres southeast of the regional centre of Wudinna and the proposed port is seven kilometres south of Port Neill at Cape Hardy. The mine and the port are planned to be linked by an infrastructure corridor containing rail, water and power. The CEIP will produce a high quality, low impurity iron concentrate that will serve as a clean, superior blending product for steel mill customers. An output of 24Mtpa of approximately 67% iron concentrate is planned over 30 years. With a competitive projected operating cost, CEIP iron concentrate is well positioned to actively displace lower quality iron ores as customers increasingly focus on high quality, low impurity steel making feedstocks. Iron Road continues to work towards development of a new credible and cost competitive iron concentrate export and infrastructure business, unlocking significant benefits well beyond the life of the mining and ore processing operations. The proposed deep water port at Cape Hardy, capable of handling Cape class bulk cargo vessels, alongside a substantial heavy haulage railway, will be a first for South Australia and a radical improvement on the State’s existing infrastructure base. Iron Road is also pursuing a ‘grain first’ export strategy that envisages the staged construction and commissioning of a globally competitive grain terminal and export facility at Cape Hardy. 4 IRON ROAD ANNUAL REPORT 2018 OPERATIONS REPORT CENTRAL EYRE IRON PROJECT (CEIP, IRD 100%) Project Commercialisation Programme Grain First Export Strategy A detailed Project Commercialisation Programme has been carried out by Iron Road and China Railway Group Limited (CREC), one of the world’s largest construction companies, resulting in the identification of capital savings of approximately US$295 million. The Iron Road and CREC teams have since moved into detailed discussions in relation to the construction framework. The AS4300 Design and Construct contract structure was selected as the basis for the contract between the two parties for the delivery of the CEIP. Iron Road and CREC are in negotiations over those parts of the contract linked to the commercial aspects of the Project, including financing. Progress has slowed and anticipated initial equity commitments by CREC have been delayed in part due to sustained Chinese government controls on outbound investment until at least all necessary regulatory processes have been completed. Iron Road has made considerable efforts to manage this challenge and continues to work closely with CREC to realise a satisfactory outcome. As a consequence, Iron Road is also exploring other avenues to unlock value in the CEIP through continued engagement with alternative potential partners and investors. This includes a re-examination of further reduced capital options through staged and scalable development and providing a reduced initial funding requirement to produce well over half a billion tonnes of concentrate (66.7% iron) defined in the CEIP life-of- mine schedule (previously disclosed to the market October 2015). A review of the mine plan and schedule by Thiess-RWE focused on opportunities relating to early ore access and optimisation of the mining equipment system design and set-up. Results from this work were beneficial and have brought iron concentrate production forward two years. The review also reduced the upfront mine capital requirement by US$130 million to US$965 million. In-house engineering studies have continued with reviews of all model assumptions and further calculations to support flowsheet design undertaken. Discussions with various equipment suppliers continue, ensuring the project design is evolving with technological developments. In November 2017, a Memorandum of Understanding (MoU) was signed with Eyre Peninsula Cooperative Bulk Handling (EPCBH) with a view to establishing a grains export business with facilities at Cape Hardy, thereby increasing competitiveness of the Eyre Peninsula’s grain industry. This relationship is complementary to the existing partnership with Emerald Grain, a wholly owned subsidiary of Sumitomo. This follows on from the Registration of Preliminary Interest process undertaken by Regional Development Australia Whyalla and Eyre Peninsula (RDAWEP) on behalf of Iron Road during the period December 2016 – August 2017. The level of interest shown by companies from a wide range of industries was encouraging and confirmed Iron Road’s opinion that the Cape Hardy precinct is well placed to serve as a genuine, multi-user, bulk- commodity and general goods export/ import facility. The ‘grain first’ export strategy may be implemented prior to iron concentrate export and options are currently being assessed and costed, including the development of a new grain distribution and supply chain network. Preliminary engineering work has been undertaken in-house by Iron Road, supplemented by more detailed work by others. The additional government approvals required, over those already secured for the CEIP, have been identified. Cape Hardy Port artistic impression R E P O R T O P E R A T O N S I 5 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION OPERATIONS REPORT CENTRAL EYRE IRON PROJECT (CEIP, IRD 100%) Project Approvals & Environmental Primary approvals The final major approval required for the CEIP was obtained in March 2018 when the Federal Minister for the Environment and Energy provided Iron Road with an approval decision pursuant to the Environment Protection and Biodiversity Conservation Act 1999 (EPBC). Iron Road was notified in July 2014 that consent would be required in relation to the proposed Cape Hardy port by reason of increased shipping movements in the Spencer Gulf to potentially impact the Southern Right Whale population. The approval is subject to conditions and has effect until 31 December 2046. Details may be viewed or downloaded from Iron Road’s website. A condition of both Iron Road’s Mineral Lease and Development Approval require the Company to prepare a Social Management Plan (SMP) to confirm that all strategies, initiatives and commitments made in the application documents are addressed. These include a range of important matters such as health, education, training, employment, housing affordability, safety and security and opportunities for local businesses. Iron Road is preparing a draft SMP for consultation with stakeholders, including relevant government agencies and impacted District Councils. The Community Engagement Plan (CEP) has supported the Company’s engagement activities for the CEIP since 2011. The CEP has evolved through regular reviews, taking into consideration local knowledge and stakeholder feedback as well as the South Australian Government’s “Guidelines for Developing a Community Engagement Plan for Mining Operations”. A condition of ML 6467 is that the Company’s CEP must be submitted to the Director of Mines for approval. Iron Road sought comment on an updated CEP from community members and other stakeholders and the final version was approved by the Director of Mines in October 2017. A copy may be viewed or downloaded from Iron Road’s website. Secondary approvals Iron Road’s Program for Environment Protection and Rehabilitation (PEPR) in relation to the Mineral Lease was submitted to the South Australian government in December 2017. Stakeholder consultation on the PEPR had been undertaken during August and September 2017 and comments received, where relevant, were incorporated. A Construction Environmental Management Plan (CEMP) for the CEIP infrastructure components was also submitted for assessment by government agencies in late 2017. A draft CEMP had formed part of Iron Road’s Environmental Impact Statement (dated 5 November 2015) and this was used as the basis for a more comprehensive document that took into account comments received from stakeholders during the statutory consultation period. The CEMP was also updated to include all relevant conditions of the Development Approval, granted on 3 May 2017. Community & Stakeholder Engagement Iron Road held open day sessions in Wudinna to provide opportunity for stakeholders to hear more about the PEPR that the Company was preparing in relation to ML 6467. In addition, all households and businesses (550) within the Wudinna District Council area were provided with a PEPR summary document and invited to attend an information session and/or meet one-on- one with the Company. Iron Road continues to liaise with the Wudinna District Council on the establishment of a Council led CEIP Community Development Group, as it will be an important forum for all stakeholders. In addition, all four impacted District Councils (Wudinna, Kimba, Cleve and Tumby Bay) met with Iron Road staff for an update on the CEIP and to discuss working relationships. During the past 12 months presentations were made to the Resources Infrastructure and Investment Task Force and to the CEIP Task Force that was established by the previous State government in December 2017. The purpose of the CEIP Task Force is to explore all third party opportunities the Project may provide, particularly for the people of the Eyre Peninsula. CEIP Task Force members have made several visits to the project area. Iron Road presented at the annual Eyre Peninsula Local Government Association (EPLGA) conference in Port Lincoln in February 2018, focussing on the proposed port at Cape Hardy and the implications of the development for the region. Presentations were also made at various forums, with feedback indicating significant support for Cape Hardy, particularly as a staged development. Following the EPLGA conference, the 11 member Councils passed a motion supporting Cape Hardy as the most suitable location for a new multi- commodity deep-sea port on the Spencer Gulf. 6 IRON ROAD ANNUAL REPORT 2018 OPERATIONS REPORT CENTRAL EYRE IRON PROJECT (CEIP, IRD 100%) Iron Ore Market t m d / $ S U 40.00 30.00 20.00 10.00 0 -10.00 -20.00 quality iron concentrates and pellet feed, such as CEIP concentrate, remains a positive market trend that is increasingly being acknowledged as sustainable and reflective of a structural Chinese steel industry shift. As at July 2018, 65% iron prices exceed Iron Road’s long-term modelled price assumption for CEIP’s higher quality 66.7% iron concentrate. 10 R E P O R T O P E R A T O N S I 65-62% premium 58-62% discount Jan 16 Jul 16 Jan 17 Jul 17 Jan 18 Jul 18 65% premium and 58% discount to benchmark 62% iron ore* Iron ore purchasers continue to transition to premium products, with a strong preference for low impurity steel inputs. Driving this transition is China’s efforts to reduce pollution and steel manufacturing capacity, while maintaining or increasing steel production levels. High quality ores enable steel mills to improve production and reduce coke usage. Despite the benchmark price recently oscillating in the range US$60-70/dmt, index prices for iron ore with 65% iron content trend higher and realised prices for below benchmark grade products are being further impaired by discounts for high levels of impurities. The Company believes that, when considered in isolation, iron ore benchmark prices persisting below US$70/dmt are unlikely to incentivise greenfield mine developments requiring associated route-to-market infrastructure. However, the strong price premiums realised for high t m d / $ S U 8 6 4 2 0 2016 2017 Jan Apr Jul Oct Jan Apr Jul Oct Jan 2018 Apr Jul 1.0-2.5% Al2O3 Penalty differential per 1% alumina* 3.0 2.5 2.0 1.5 1.0 0.5 0 t m d / $ S U CEIP Indicative Concentrate Specification – 106 micron (P80) 2016 2017 Jan Apr Jul Oct Jan Apr Jul Oct Jan 2018 Apr Jul Iron (Fe) 66.7% Corporate Silica (SiO2) Alumina (Al2O3) Phosphorous (P) 0.09-0.12% P 3.36% 1.90% 0.009% Penalty differential per 0.01% phosphorus* Note* - Source: Platts and Metal Bulletin During March 2018 the Iron Road Board announced the appointment of Mr Glen Chipman as Non-Executive Director. The appointment coincided with the resignation of Mr Julian Gosse as a Non-Executive Director. Mr Chipman is a private equity investment professional at Sentient Equity Partners and represents Iron Road’s major shareholder, the Sentient Global Resources Funds. Since 2013 he has been engaged with Iron Road management in the areas of project optimisation, commercial evaluation, business development, capital raising and finance planning activities. The Company was encouraged by the broad and open support for Iron Road’s plans by the major political parties in the lead up to the 17 March 2018 South Australian general election. The newly elected State Government plans to draft enabling legislation, expected to be enacted by September 2018, allowing Infrastructure South Australia to assess, plan and coordinate major infrastructure projects in South Australia. Of the ten major projects identified is a grain/ minerals port on the Eyre Peninsula. Iron Road received A$3 million in debt finance from the Sentient Group that attracts a zero rate of interest and does not bear any fees. Although progress in formalising strategic project partner equity investment has been slower than anticipated, Sentient remains encouraged by levels of engagement, further CEIP capital cost reduction opportunities and other critical project de-risking activities. With major studies and primary project approvals complete and secondary approvals submitted to the State Government for assessment, Iron Road has reduced corporate and administrative overheads, significantly reducing annual spend. 7 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION OPERATIONS REPORT GAWLER IRON PROJECT (GIP, IRD 81-90% OF THE IRON RIGHTS) Collection from dust deposition gauge near proposed mine site at Warramboo Gawler Iron Project (GIP, IRD 81-90% of the iron rights) The Gawler Iron Project (GIP) is located approximately 25km north of the standard gauge Trans-Australian Railway that connects to the Central Australia Railway at Tarcoola. The GIP hosts mineralisation anticipated to support a small to medium scale magnetite iron ore mining operation with the potential to produce a quality iron concentrate using a simple beneficiation process. Final rehabilitation obligations relating to various drill sites and an exploration camp were met early in 2018. Iron Road has been working with Challenger Gold Operations Pty Ltd and Tyranna Resources Limited to formalise a Gawler Joint Venture in relation to the GIP. Management continue to focus all efforts on the CEIP and as such minimal evaluation activity has been conducted on the GIP. 8 IRON ROAD ANNUAL REPORT 2018 OPERATIONS REPORT GLOBAL MINERAL RESOURCE AND ORE RESERVES STATEMENT CEIP Ore Reserve Summary 2017 and 2018 Resource Classification Proved Probable Total Dry Tonnes (Mt) 2,131 1,550 3,681 Fe (%) 15.55 14.40 15.07 SiO2 (%) 53.78 53.58 53.70 Al2O3 (%) 12.85 12.64 12.76 R E P O R T O P E R A T O N S I The Ore Reserves estimated for CEIP involving mine planning is based on and fairly represents information and supporting documentation compiled by Mr Bob McCarthy, a Member of the Association of Professional Engineers and Geoscientists of British Columbia (Canada) and a full time employee of SRK Consulting (North America). Mr McCarthy has sufficient experience relevant to the style of mineralisation and the type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr McCarthy consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The Ore Reserves estimated for the CEIP involving aspects other than mine planning is based on and fairly represents information and supporting documentation compiled by Mr Larry Ingle, a Member of the Australian Institute of Mining and Metallurgy and a full time employee of Iron Road Limited. Mr Ingle has sufficient experience relevant to the style of mineralisation and the type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Ingle consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. This report includes results that have previously been released under JORC 2012 by the Company on 2 May 2016. The Company is not aware of any new information or data that materially affects the information included in this announcement and all material assumptions and technical parameters underpinning the Ore Reserve continue to apply and have not materially changed. CEIP Global Mineral Resource 2017 and 2018 Location Classification Murphy South/Rob Roy Boo-Loo/Dolphin Total Measured Indicated Inferred Indicated Inferred Tonnes (Mt) Fe (%) 2,222 15.69 474 15.6 667 16 796 16.0 351 17 4,510 16 SiO2 (%) 53.70 53.7 53 53.3 53 53 Al2O3 (%) 12.84 12.8 12 12.2 12 13 P (%) 0.08 0.08 0.08 0.07 0.09 0.08 LOI (%) 4.5 4.5 4.3 0.6 0.7 3.5 The Murphy South/Rob Roy Mineral Resource estimate was carried out following the guidelines of the JORC Code (2004) by Iron Road Limited and peer reviewed by Xstract Mining Consultants. The Murphy South - Boo-Loo/Dolphin oxide and transition Resource estimate was carried out following the guidelines of the JORC Code (2004) by Coffey Mining Limited. The Boo-Loo/Dolphin fresh Mineral Resource estimate was carried out following the guidelines of the JORC Code (2012) by Iron Road Limited and peer reviewed by AMC Consultants. This report includes results that have previously been released under JORC 2004 and JORC 2012 by the Company on 30 June 2010, 28 May 2013 and 27 February 2015. The Company is not aware of any new information or data that materially affects the information included in this announcement and all material assumptions and technical parameters underpinning the Mineral Resource continue to apply and have not materially changed. CEIP Indicative Concentrate Specification – 106 micron (P80)* Iron (Fe) 66.7% Silica (SiO2) 3.36% Alumina (Al2O3) 1.90% Phosphorous (P) 0.009% * The concentrate specifications given here are based on current data from metallurgical test work, bulk samples and simulation modelling designed specifically to emulate the proposed beneficiation plant. 9 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION DIRECTORS' REPORT Above: Proposed port precinct located at Cape Hardy, Spencer Gulf Right: Larry Ingle, General Manager and Tim Scholz, Principal Advisor – Stakeholder Engagement Your directors present their report on the consolidated entity consisting of Iron Road Limited and the entities it controlled at the end of or during the year ended 30 June 2018. Throughout this report, the consolidated entity is referred to as the Group. Directors and Company Secretary The following persons were directors of Iron Road Limited during the whole of the financial year and up to the date of this report (unless otherwise disclosed): Peter Cassidy Andrew Stocks Jerry Ellis AO Leigh Hall AM Ian Hume Glen Chipman – appointed director 26 March 2018 Jaroslaw Kopias – Company Secretary Julian Gosse – resigned as director 26 March 2018 10 IRON ROAD ANNUAL REPORT 2018 Principal activities The principal activity of the Group during the year was the exploration and evaluation of the Group’s iron ore interests at its principal project, the Central Eyre Iron Project (CEIP) in South Australia. Dividends No dividends were paid, declared or recommended during the year ended 30 June 2018. Corporate governance statement Iron Road Limited and the Board are committed to achieving and demonstrating high standards of corporate governance. Iron Road’s corporate governance statement was approved by the Board on 14 September 2018 and can be viewed at www. ironroadlimited.com.au/about-us/ corporate-governance. Review of operations Information on the operations and financial position of the Group and its business strategies and prospects is set out in the review of operations and activities on page 22 of this report. Significant changes in the state of affairs There were no significant changes in the state of affairs of the Group during the financial year. Events since the end of the financial year The Group received $800,000 in short term debt finance from its major shareholder, The Sentient Group in July 2018. The loan attracts nil interest and is repayable in March 2019. On 5 September 2018 the Group announced a 1 for 30 non-renounceable rights issue at $0.075 per share to raise up to $1.7 million. Iron Road’s largest shareholder, Sentient Fund IV, has undertaken to participate fully in the issue with the aggregate amount of approximately $1.0 million to be received from Sentient Fund IV. The rights issue opened on 12 September 2018 and closes on 9 October 2018. Likely developments and expectedresults of operations Likely developments in the operations of the Group and expected results of these operations in future financial years have been included in the Operating and Financial Review. Environmental regulation The Group’s operations are subject to environmental regulation in respect to mineral tenements relating to exploration activities on those tenements. No on- ground exploration or other work was undertaken during the financial year and there were subsequently no breaches of any environmental requirements. The Group’s proposed CEIP Infrastructure is subject to the Environment Protection and Biodiversity Conservation Act 1999 (Cth) as this element of the Project was declared a ‘Controlled Action’ on the 26 August 2014. The Group has reviewed its energy consumption and greenhouse gas emissions for the reporting year, with both found to be below the reporting threshold as specified within the National Greenhouse and Energy Reporting Act 2007 (Cth) (NGER). R E P O R T I D R E C T O R S ' 11 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION DIRECTORS' REPORT Peter Cassidy Chairman Andrew Stocks Managing Director Jerry Ellis AO Non-executive director Dr Cassidy has been an international private capital investor since the 1990s. He holds a degree in geology and a first class honours degree in chemistry from the University of Tasmania and a PhD in coal science from Monash University. No other directorships of listed companies have been held in the last three years. Mr Stocks is a Mining Engineer with approximately thirty years’ experience in the resources sector, primarily in mining operations and corporate roles. He has been particularly active in the areas of business optimisation, cost and production efficiency improvements, project evaluation and development of mining projects in Australia and overseas. Mr Stocks has led Iron Road as Managing Director from its inception. No other directorships of listed companies have been held in the last three years. Mr Ellis has had a long and distinguished career in business, particularly in the resources sector. Mr Ellis’ career included three decades at BHP Ltd, Chairing the company from 1997 to 1999. He also served on the boards of a number of listed companies and governing bodies including Newcrest Mining, Aurora Gold, the International Copper Association, Australia and New Zealand Banking Group, the International Council on Metals and the Environment and the American Mining Congress. Mr Ellis is the former Chairman of Alzheimers Australia (NSW), former Chancellor of Monash University, former President of the Minerals Council of Australia and former Chairman of the Australia-Japan Foundation and the Australian National Occupational Health and Safety Commission. In the three years immediately prior to the end of the financial year, Mr Ellis served as a director of the following companies: » MBD Energy Limited 12 IRON ROAD ANNUAL REPORT 2018 DIRECTORS' REPORT Leigh Hall AM Non-executive director Ian Hume Non-executive director Glen Chipman Non-executive director Mr Hall is a highly experienced company director, with a strong background in finance and investment from a career spanning senior executive positions at AMP, membership of a range of investment oversight boards, board positions at securities industry organisations, and significant participation in government advisory boards related to the securities, corporate law, managed funds and superannuation sectors. Mr Hall is a Member of the Order of Australia, with a citation for service to business and commerce, in particular to the improvement of ethical and professional standards and the efficiency of the Australian securities markets. Mr Hall is also a Fellow of the Institute of Chartered Accountants in Australia and a Fellow of the Australian Institute of Company Directors. In the three years immediately prior to the end of the financial year, Mr Hall served as a director of the following companies: » Funds SA » Enirgi Group Corporation » Compliance Committee, Lazard Asset Management Pacific* (Chairman) * denotes current directorships Mr Ian Hume's career in the resources industry stretches back several decades, primarily in the fields of managed fund investments, capital raising and project development. Mr Hume was a Founding Partner of The Sentient Group, a manager of closed end private equity funds specialising in global investments in the natural resource industries. Prior to the founding of The Sentient Group, Mr Hume was a consultant to AMP’s Private Capital Division. In the three years immediately prior to the end of the financial year, Mr Hume served as a director of the following companies: » Golden Minerals Company* » Silver City Minerals Limited » African Energy Resources Limited* * denotes current directorships Mr Chipman is a private equity investment professional at Sentient Equity Partners and represents Iron Road’s major shareholder, the Sentient Global Resources Funds. Since 2013 he has been engaged with Iron Road management in the areas of project optimisation, commercial evaluation, business development, capital raising and finance planning activities. Prior to joining Sentient in 2012 Mr Chipman was a sell-side analyst with Bank of America Merrill Lynch and Citi covering global diversified miners as well as mid- tier and smaller capitalised companies in the natural resources industry. He has a chemical engineering background and over 15 years of combined industry, commodity and equity capital markets experience. In the three years immediately prior to the end of the financial year, Mr Chipman served as a director of the following company: » Ferrous Resources Limited* * denotes current directorship R E P O R T I D R E C T O R S ' 13 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION DIRECTORS' REPORT REMUNERATION REPORT Meetings of directors There were four board meetings held during the year ended 30 June 2018 with attendance as follows: Ian Hume Julian Gosse Leigh Hall AM Jerry Ellis AO Andrew Stocks Peter Cassidy 0 2 4 Board meeting attendance Glen Chipman was appointed a director after the final board meeting for the year. 14 Remuneration report The directors present the Iron Road Limited 2018 remuneration report, outlining key aspects of the remuneration policy and framework and the remuneration awarded during the year. The report is structured as follows: a) Key management personnel (KMP) covered in this report b) Remuneration policy and link to performance c) Elements of remuneration d) Remuneration expenses for executive KMP's e) f) Contractual arrangements for executive KMP's Non-executive director arrangements g) Additional statutory information a) Key management personnel covered in this report Executive and Non-executive directors: Peter Cassidy – Chairman Andrew Stocks – Managing director Jerry Ellis AO – Non-executive director Leigh Hall AM – Non-executive director Ian Hume – Non-executive director Glen Chipman – Non-executive director (appointed 26 March 2018) Julian Gosse – Non-executive director (resigned 26 March 2018) Other key management personnel: Larry Ingle – General Manager b) Remuneration policy and link to performance The remuneration policy of Iron Road Limited has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long term incentives based on key performance areas. The Board of Iron Road Limited believes the remuneration policy is appropriate and effective in its ability to attract and retain high calibre executives and directors to manage the Group. The remuneration policy, detailing the terms and conditions for the executive director and other senior executives, was developed by the Board. All executives receive a base salary (which is determined by factors such as skills and relevant experience) and superannuation. The Board reviews executive packages annually by reference to the Group’s results, executive performance and relevant information on prevailing remuneration practices across the resources sector for comparable roles within other listed organisations. The Board sought shareholder approval for an Equity Incentive Plan at the Annual General Meeting on 28 November 2014. This plan forms part of the Group’s remuneration policy and provides the Group with a mechanism for driving long term performance for shareholders and the retention of executives. The Board has the discretion to issue shares or rights to acquire shares and offers may be subject to performance criteria consistent with the Group’s key strategic objectives. The plan is administered by the Board which has the discretion to determine which persons are eligible to participate in the plan. Additional information on the Equity Incentive Plan is contained in section c). IRON ROAD ANNUAL REPORT 2018 DIRECTORS' REPORT REMUNERATION REPORT In the event of serious misconduct or a material misstatement in the Group’s financial statements, the Board can cancel or defer performance based remuneration and may also claw back performance based remuneration paid in previous financial years. Directors, executives and other employees receive a superannuation guarantee contribution required by the government and do not receive any other retirement benefits. Some individuals, however, may choose to sacrifice part of their salary towards superannuation. Statutory performance indicators The Board aims to align executive remuneration to strategic and business objectives. As required by the Corporations Act 2001 (Cth), the figures below show the Group’s financial performance over the last five years. However, these are not necessarily consistent with the measures used in determining the variable amounts of remuneration to be awarded to KMP. As a consequence, there may not always be a direct correlation between the statutory key performance measures and the variable remuneration awarded. c) Elements of remuneration Fixed annual remuneration Executives receive their fixed remuneration as cash and statutory superannuation. Fixed remuneration is reviewed annually by the Board and benchmarked against market data for comparable roles in listed companies across the resources sector. In the year ended 30 June 2018, fixed remuneration of executives and KMP remained unchanged. Long term incentives The remuneration policy has been designed to align the long term objectives between the Group, its directors and executives by encouraging strong performance in the realisation of the Group’s growth strategy and the enhancement of shareholder value. In prior years, this has been facilitated through the Employee Share Option Plan and the issue of share options which were granted for no consideration, but may contain performance related vesting conditions (share price) or milestone related vesting conditions which must be satisfied within defined timeframes in order for the options to be exercised. Once vested, the options must be exercised prior to their expiry date. There are no participating rights or entitlements inherent in the options. To address future incentive arrangements, the Board adopted the Iron Road Equity Incentive Plan dated 8 October 2014, directed at attracting, motivating and retaining persons with the skills and experience to deliver successful outcomes in pursuit of the Group’s key strategic goals. Awards under the plan may be structured as either shares or performance rights to acquire shares and the Board may grant such awards with specific performance criteria that are to be satisfied within defined time restrictions. For details of individual interests in options and performance rights at year end, refer to page 18. Revenue Loss before tax Share price at 30 June Basic loss per share (cents) 30 June 2018 $ 30 June 2017 $ 30 June 2016 $ 30 June 2015 $ 30 June 2014 $ 1,844 4,407 5,481 321,831 1,232,188 (3,253,530) (3,926,284) (6,674,238) (4,910,678) (4,207,036) 0.100 (0.48) 0.175 (0.58) 0.110 (1.16) 0.065 (0.86) 0.300 (0.83) R E P O R T I D R E C T O R S ' 15 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION DIRECTORS' REPORT REMUNERATION REPORT Hydrology and Geotechnical monitoring site near Warramboo d) Remuneration expenses for executive KMP The following table shows details of the remuneration expense recognised for the Group’s executive KMP for the current and previous financial year measured in accordance with the requirements of the accounting standards. Name Managing Director Andrew Stocks Other key management personnel General Manager Larry Ingle Total Executive Director and KMP Fixed remuneration Short term employee benefits Long term benefits Cash salary Year $ Non- monetary benefits $ Annual and long service leave $ Post employment benefits Superannuation Variable remuneration Share based payments Performance rights* $ $ Total $ 2018 2017 375,000 365,297 - - 66,906 23,968 25,000 34,703 15,060 481,966 68,119 492,087 2018 2017 2018 2017 310,400 306,301 685,400 671,598 - - 45,866 556 112,772 24,524 25,000 29,099 50,000 63,802 10,039 391,305 45,412 381,368 25,099 113,531 873,271 873,455 * Performance rights under the executive LTI scheme are expensed over the vesting period. Refer to page 18 for additional information. No cash bonuses were paid to executive KMP during the financial year. 16 IRON ROAD ANNUAL REPORT 2018 DIRECTORS' REPORT REMUNERATION REPORT e) Contractual arrangements for executive KMP Andrew Stocks Managing Director Larry Ingle General Manager Fixed remuneration * $400,000 including statutory superannuation $335,400 including statutory superannuation Contract duration No fixed term arrangement No fixed term arrangement Notice by the individual/company Three months Three months Termination of employment If employment ceases due to genuine redundancy, resignation under reasonable circumstances as determined by the Board, death or invalidity, some or all of the unvested performance rights will not lapse and may vest or the performance criteria may be waived. *From 1 July 2018 fixed remuneration has been reduced to 90% of the levels disclosed above until the funding for CEIP has been received. f) Non-executive director g) Additional statutory arrangements information Non-executive directors received a board fee of $50,000 per annum plus statutory superannuation until 31 March 2018 after which point the fee was reduced to $5,000 per annum as a cash management measure. Non-executive directors do not receive performance based remuneration, retirement allowances or termination benefits. The maximum aggregate amount of fees that can be paid to non executive directors is currently $400,000 which was approved by shareholders at the 2012 AGM on 23 November 2012. Remuneration mix for financial year 2018 Andrew Stocks 96.9% 3.1% Peter Cassidy Jerry Ellis AO Leigh Hall AM Julian Gosse Ian Hume Glen Chipman 100% 100% 100% 100% 100% 100% Larry Ingle 97.4% 2.6% 80% 85% 90% 95% 100% Fixed At Risk - LTI Long term incentives are currently provided exclusively by way of performance rights and are calculated on the value of the right expensed during the year. There was no performance based remuneration granted during the year. R E P O R T I D R E C T O R S ' 17 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION DIRECTORS' REPORT REMUNERATION REPORT Terms and conditions of share-based payment arrangements Performance rights The Iron Road Equity Incentive Plan was implemented in December 2014 as part of the Group’s remuneration policy to encourage long term performance and the retention of executives. It is targeted at Iron Road’s Managing Director and KMP whose responsibilities provide them with opportunity to significantly influence long term shareholder value. The plan is administered by the Board which has discretion over persons eligible to participate and the performance criteria attached to performance rights. Performance rights under the Equity Incentive Plan expire five years from the date of issue if the applicable vesting conditions as set by the Board are not met. Satisfaction of any vesting condition will not automatically trigger the exercise of the performance right. The fair value of the rights is determined by the market price of Iron Road Limited shares at the grant date. Rights are granted under the plan for nil consideration and carry no dividend or voting rights. Once vested and exercised, any share acquired by participants will rank equally with all existing shares of the same class. Performance rights on issue At the Board’s discretion, the Managing Director and General Manager were granted 5,000,000 performance rights at a fair value of $0.16 for nil consideration, with an exercise price of nil. All performance rights granted have vesting conditions in relation to securing funding for the advancement of the CEIP and will lapse if not exercised within five years from grant date. Should the participant’s employment cease due to genuine redundancy, resignation under reasonable circumstances if so determined by the Board, death or invalidity, the unvested performance rights will not lapse and may vest or the performance criteria may be waived. This may constitute a benefit for the purposes of Section 200B of the Corporations Act 2001 resulting in the Board seeking shareholder approval and a 99.6% "Yes" vote at the Annual General Meeting on 28 November 2014. There were no performance rights granted during the year ended 30 June 2018. Options The Employee Option Plan is designed to provide long term incentives for directors and KMP to deliver long term shareholder returns. Participants are granted options, some of which vest on issue and others that vest if certain market and non- market vesting conditions are met. Options are granted under the plan for nil consideration, carry no dividend or voting rights and expire if not exercised within five years from issue. When exercisable, each option is convertible into one ordinary share. Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the Plan or to receive any guaranteed benefits. There are no unissued ordinary shares of Iron Road Limited under option for directors and executives as at 30 June 2018. 2018 KMP and Grant date Balance at the start of the year Balance at the end of the year Vested and exercisable Unvested Maximum value yet to vest* Andrew Stocks 23 December 2014 3,000,000 Larry Ingle 23 December 2014 2,000,000 Total 5,000,000 - - - 3,000,000 $53,058 2,000,000 $35,373 5,000,000 $88,431 * The maximum value of performance rights yet to vest has been determined as the amount of the grant date fair value that is yet to be expensed. The minimum value of performance rights yet to vest is nil, as the rights will be forfeited if the vesting conditions are not met. 18 IRON ROAD ANNUAL REPORT 2018 DIRECTORS' REPORT REMUNERATION REPORT Shareholdings There were no changes to directors’ holdings over the year to 30 June 2018 as shown below: Ordinary Shares held by: 30 June 2018 30 June 2017 Peter Cassidy Andrew Stocks Jerry Ellis AO Leigh Hall AM Ian Hume Glen Chipman 8,409,652 8,409,652 2,915,938 2,915,938 315,556 444,444 315,556 444,444 5,723,559 5,723,559 - - Total 17,809,149 17,809,149 Julian Gosse held 656,667 shares at the time of his retirement as a director on 26 March 2018 which was unchanged from 30 June 2017 and Glen Chipman had nil shares upon his appointment on the same date. None of the shares above are held nominally by the directors or KMP. Voting of shareholders Annual General Meeting held on 17 November 2017 Iron Road Limited received more than 99% of “yes” votes on its remuneration report for the 2017 financial year. The company did not receive any specific feedback at the Annual General Meeting or throughout the year on its remuneration practices. This is the end of the audited remuneration report. R E P O R T I D R E C T O R S ' 19 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION DIRECTORS' REPORT Insurance of directors and officers Non-audit services During the financial year, Iron Road Limited paid an insurance premium to insure the directors and officers of the Group and its controlled entities. No details of the nature of the liabilities covered and the amount of premium paid in respect of the directors and officers liability insurance policy have been disclosed as such disclosure is prohibited under the terms of the policy. The Group has also entered into a Deed of Indemnity, Insurance and Access with each director. In summary, the Deed provides for: » access to corporate records for each director for a period after ceasing to hold office in the company; » the provision of directors and officers liability insurance; and » indemnity for legal costs incurred by directors in carrying out the business affairs of the company. Proceedings on behalf of the company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking responsibility on behalf of the Group for all or part of those proceedings. The Group may decide to engage the auditor on assignments additional to their statutory audit duties where the auditors expertise and experience with the Group are important. The Board is satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 and none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers, Australia) for audit and non-audit services provided during the year are set out in Note 16. Auditor’s independence declaration A copy of the Auditor's Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 21. Signed in accordance with a resolution of the directors, for and on behalf of the Board by: Andrew Stocks Managing Director 17 September 2018 20 IRON ROAD ANNUAL REPORT 2018 DIRECTORS' REPORT Auditor’s Independence Declaration As lead auditor for the audit of Iron Road Limited for the year ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Iron Road Limited and the entities it controlled during the period. M. T. Lojszczyk Partner PricewaterhouseCoopers Adelaide 17 September 2018 PricewaterhouseCoopers, ABN 52 780 433 757 Level 11, 70 Franklin Street, ADELAIDE SA 5000, GPO Box 418, ADELAIDE SA 5001 T: +61 8 8218 7000, F: +61 8 8218 7999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. R E P O R T I D R E C T O R S ' 21 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION OPERATING AND FINANCIAL REVIEW CORPORATE AND SOCIAL RESPONSIBILITY C O RE VALUES S AFETY I M P R O V EMENT ETHOS C R E A T ING VALUE I N N O VATION AND I O N AL EXCELLENCE T A R E P O ENT M E G A G N E R E D L O H E K A T S OUR OBJECTIVE To develop a world class magnetite mine and infrastructure in South Australia S U S T A I N A B I L IT Y COOPERATIVE REL A T I O N S H IP S SOCIAL RESPO N S I B I Y T I L IN T E G R I T Y O U T S T A N D I N G P E O P L E A C C O UNTABILITY RESPONSIBILIT Y E C N A I L P M O C C O L L A B O R ATION 22 IRON ROAD ANNUAL REPORT 2018 OPERATING AND FINANCIAL REVIEW Company strategy and operating activities The Group’s main focus during the year has been on the commercialisation of the Central Eyre Iron Project (CEIP). Iron Road and China Railway Group Limited (CREC) continued to work closely on the contracting framework and implementation strategies for the project and the Group also continued to seek out and engage with other potential partners and investors with both direct and indirect interest in the Company and the CEIP. The Group concurrently progressed its ‘grain first’ export strategy for a globally competitive grain terminal and export facility planned at Cape Hardy with Eyre Peninsula Co-operative Bulk Handling Limited (EPCBH) and further CEIP enhancements and capital cost savings from mine plan and schedule reviews. The final major approval for the CEIP was received from the Federal Minister for the Environment and Energy under the Commonwealth Government’s Environment Protection and Biodiversity Conservation Act 1999 in the March 2018 quarter. Two secondary approvals were progressed during the year with the Program for Environment Protection and Rehabilitation (PEPR) submitted to the Department of the Premier & Cabinet (DPC) for assessment and the Construction Environmental Management Plan (CEMP) for the CEIP infrastructure components circulated to relevant government agencies and others for comment. Work on a Social Management Plan (SMP) also continued during the year. On the community engagement front a Memorandum of Understanding and Terms of Reference was adopted by the Wudinna District Council for the CEIP Community Development Group and DPC approved the Group’s CEIP Community Engagement Plan. Numerous stakeholders were engaged during the year including site visits to the CEIP mine, rail and port locations. Operating results for the year The principal activities of the Group during the year were the CEIP commercialisation programme, progression of government approvals and optimisation of mining & process solutions, with an additional focus on the efficient delivery of both port and rail infrastructure solutions. The Group incurred an operating loss after income tax for the year ended 30 June 2018 of $3,253,530 (2017: $3,926,284) reflecting a number of cost saving initiatives. Total exploration and evaluation expenditure was also lower this year $1,467,267 (2017: $1,753,739) as the Group focussed on obtaining project financing for the CEIP. Changes in financial position The Group’s net assets decreased by 2% this year (2018: $126,228,476 from 2017: $129,456,908) as $3 million in loan funds from the Sentient Group were applied towards administrative expenses. A further $800,000 was received in July 2018 to cover working capital requirements. This facility attracts nil interest and is repayable in March 2019. Risk management Operational, financial, environmental and regulatory risks are considered and addressed by management, with specific areas of significant risk referred by management to the Board. The Board considers that at this stage of the Group’s project development operations, it is important for all Board members to be a part of this process and as such the Board has not established a separate risk management committee. O P E R A T N G A N D I I F N A N C A L R E V I I E W Regional centre of Wudinna 23 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Contents Financial statements Notes to the financial statements Consolidated Income Statement Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Structure of notes and materiality Page 25 Page 26 Page 27 Page 28 Page 29 Note disclosures are split into five sections shown below to enable a better understanding of how the Group performed. Key numbers Structures Capital Additional Information Unrecognised Items 1. Cash 9. Controlled entities 13. Equity and reserves 16. Remuneration of auditors 19. Commitments 2. Exploration 10. Segment information 14. Share based payments 17. Accounting policies 20. Contingencies 3. Property, plant and equipment 11. Related parties 15. Loss per share 18. Risk management 21. Events after reporting date 4. Operating activities 12. Parent entity information 5. Provisions 6. Taxation 7. Prepayments and other receivables 8. Trade payables Accounting policies and critical accounting judgements applied to the preparation of financial statements have been moved to the relevant section. Information is only being included in the Notes to the extent that is has been considered material and relevant to the understanding of the financial statements. 24 IRON ROAD ANNUAL REPORT 2018 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2018 Revenue from continuing operations Interest income Expenses Impairment of exploration expenses Depreciation Employee benefits expense General expenses Professional fees Travel and accommodation Marketing Rent and administration Loss before income tax Income tax expense Loss for the year Other comprehensive loss for the year Total comprehensive loss for the year attributable to owners of Iron Road Limited Note 2018 $ 2017 $ 2 3 4 4 6 1,844 4,407 (27,712) (74,500) (3,791) (183,408) (1,728,199) (1,611,003) (132,378) (580,779) (157,982) (123,696) (430,128) (3,253,530) - (3,253,530) - (248,047) (858,578) (298,300) (168,867) (558,697) (3,926,284) - (3,926,284) - (3,253,530) (3,926,284) Loss per share attributable to the ordinary equity holders of the company: Basic and diluted loss per share (cents) 15 Cents (0.48) Cents (0.58) S T A T E M E N T S The above consolidated income statement should be read in conjunction with the notes to the consolidated financial statements. I F N A N C A L I 25 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018 ASSETS Current assets Cash and cash equivalents Bank Term deposits Receivables and prepayments Total current assets Non-current assets Exploration and evaluation expenditure Property, plant and equipment Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Provisions Total current liabilities Non-current liabilities Provisions Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity Reserves Accumulated losses Total equity Note 1 1 7 2 3 8 5 5 13 13 2018 $ 161,521 90,000 37,523 289,044 2017 $ 1,262,109 90,000 120,287 1,472,396 121,864,653 9,896,547 131,761,200 132,050,244 120,397,386 9,968,272 130,365,658 131,838,054 5,225,971 569,953 5,795,924 1,884,400 456,361 2,340,761 25,844 25,844 5,821,768 126,228,476 160,916,191 5,078,327 (39,766,042) 126,228,476 40,385 40,385 2,381,146 129,456,908 160,916,191 5,053,229 (36,512,512) 129,456,908 The above consolidated statement of financial position should be read in conjunction with the notes to the consolidated financial statements. 26 IRON ROAD ANNUAL REPORT 2018 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018 Balance at 1 July 2016 Loss for the year Transactions with owners in their capacity as owners: Contributions to equity net of transaction costs Share based payments Balance at 30 June 2017 Attributable to owners of Iron Road Limited Contributed Equity Accumulated losses Reserves Total Equity Note $ $ $ $ 152,423,991 (32,586,228) 4,939,698 124,777,461 - (3,926,284) - (3,926,284) 13 14 8,492,200 - - - - 8,492,200 113,531 113,531 160,916,191 (36,512,512) 5,053,229 129,456,908 Loss for the year - (3,253,530) - (3,253,530) Transactions with owners in their capacity as owners: Share based payments Balance at 30 June 2018 14 - - 25,098 25,098 160,916,191 (39,766,042) 5,078,327 126,228,476 The above consolidated statement of changes in equity should be read in conjunction with the notes to the consolidated financial statements. S T A T E M E N T S I F N A N C A L I 27 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018 Cash flows from operating activities Payments to suppliers and employees (inclusive of GST) Interest received Note 2018 $ 2017 $ (3,133,482) (3,624,797) 2,793 4,695 Net cash outflow from operating activites 4 (3,130,689) (3,620,102) Cash flows from investing activities Payments for term deposits Receipts from term deposits Payments for exploration and evaluation Payments for property and equipment (270,000) 270,000 (967,125) (2,775) (90,000) 90,000 (1,231,198) (1,949) Net cash outflow from investing activities (969,900) (1,233,147) Cash flows from financing activities Proceeds of issue from shares Proceeds/ (repayment) of borrowings Share issue transaction costs Net cash inflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 13 1 - 3,000,000 - 8,509,938 (3,000,000) (252,993) 3,000,000 5,256,945 (1,100,589) 1,262,109 161,521 403,696 858,413 1,262,109 The above consolidated statement of cash flows should be read in conjunction with the notes to the consolidated financial statements. 28 IRON ROAD ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS: KEY NUMBERS FOR THE YEAR ENDED 30 JUNE 2018 $160m SPENT TO DATE 1. Cash Where we spent money Per the Consolidated Statement of Cash Flows, total cash expended during the year was significantly lower than prior years as the Group’s consolidated its focus in the regulatory and commercial arena. $4,103,381 2018 Exploration and evaluation Employee benefits expense Professional fees Rent and administration Share issue transaction costs Property, plant and equipment Other $967,125 $1,687,598 $580,779 $583,426 - 2,775 $281,678 $4,857,944 2017 Exploration and evaluation Employee benefits expense Professional fees Rent and administration Share issue transaction costs Property, plant and equipment Other $1,231,198 $1,497,472 $847,927 $558,697 $252,993 $1,949 $467,708 Cash and cash equivalents at 30 June 2018 was $161,521 (2017: $1,262,109) and bank term deposits held were $90,000 (2017: $90,000). The bank term deposit of $90,000 is held as security for the Group’s credit card facility. Cash at bank earns a floating interest rate based on the at call daily rate. Funds held in a term deposit facility for greater than 3 months have been reclassified to bank term deposits in the consolidated statement of financial position per AASB 107. 2. Exploration Exploration and evaluation expenditure in relation to the CEIP’s exploration licence 5932 for the year ended 30 June 2018 was $1,494,979 (2017: $1,757,530). 130 120 110 100 S T A T E M E N T S million 2016 2017 2018 2016 Opening balance 1 July 2016 Additions during the period Impairment of exploration expenses 2017 Closing balance 30 June 2017 Additions during the period Impairment of exploration expenses 2018 Closing balance 30 June 2018 $118,643,647 $1,757,530 ($3,791) $120,397,386 $1,494,979 ($27,712) $121,864,653 The CEIP asset is tested for impairment periodically or when events or circumstances indicate the carrying value may not be recoverable. For the year ended 30 June 2018, the directors deemed the current capitalisation of development of the CEIP resource to be appropriate, as the Group continues to refine mining and processing methods and capital cost estimates. The Group’s exploration and evaluation policy is to capitalise and carry forward exploration and evaluation expenditure where a JORC compliant resource has been identified. This appropriately recognises that these projects are in the advanced exploration, evaluation or feasibility phase. Expenditure incurred in the acquisition of rights to explore is capitalised, classified as tangible or intangible and recognised as an exploration and evaluation asset. Exploration and evaluation assets are measured at cost at recognition. Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. The Group fully impaired iron ore rights of $27,712 (2017: $3,791) in the Gawler Iron Project (GIP) during the year as its focus remains on the CEIP. I F N A N C A L I 29 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION NOTES TO THE FINANCIAL STATEMENTS: KEY NUMBERS FOR THE YEAR ENDED 30 JUNE 2018 $1,494,979 EXPLORATION AND EVALUATION EXPENDITURE FOR THE YEAR 2017 For areas of interest where a JORC compliant resource is yet to be identified or where exploration rights are no longer current, the capitalised values are subsequently impaired and charged to the profit and loss. There was no expenditure or impairment on exploration licence 5496 in the year (2017: nil). Recoverability of exploration and evaluation assets The Group’s accounting policy requires management make certain assumptions as to future events and circumstances. Exploration and evaluation costs are carried forward based on the accounting policy set out above. Should development not be possible, or the existence of reserves does not allow for economic development, amounts recorded may require impairment in future periods. Iron Road periodically evaluates the economic potential of the CEIP using discounted cashflow modelling techniques. The model includes assumptions for production volumes, forecast iron ore pricing, foreign exchange rates and project costs, which are updated for the latest available data. Iron concentrate from the CEIP, South Australia 30 IRON ROAD ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS: KEY NUMBERS FOR THE YEAR ENDED 30 JUNE 2018 CEIP $9,025,418 LAND PURCHASED 3. Property, plant and equipment LAND AND BUILDINGS PLANT AND EQUIPMENT Year ended 30 June 2017 Opening net book value Additions Depreciation charge Land $ 9,025,418 Buildings & Improvements $ 791,047 - Equipment $ 324,166 1,949 (54,045) (123,038) Closing net book amount 9,025,418 737,002 203,077 Motor Vehicles $ 9,100 - (6,325) 2,775 Total $ 10,149,731 1,949 (183,408) 9,968,272 At 30 June 2017 Cost or fair value 9,025,418 1,040,190 Accumulated depreciation - (303,188) Net book amount 9,025,418 737,002 Year ended 30 June 2018 Opening net book value Additions Depreciation charge 9,025,418 737,002 - - - (21,467) 1,081,409 (878,332) 203,077 203,077 2,775 (52,560) 64,839 (62,064) 11,211,856 (1,243,584) 2,775 9,968,272 2,775 - (473) 9,968,272 2,775 (74,500) Closing net book amount 9,025,418 715,535 153,292 2,302 9,896,547 At 30 June 2018 Cost or fair value 9,025,418 1,040,190 Accumulated depreciation - (324,655) 1,084,184 (930,892) 64,839 (62,537) 11,214,631 (1,318,084) Net book amount 9,025,418 715,535 153,292 2,302 9,896,547 During the year ended 30 June 2018, the Group invested $2,775 in property, plant and equipment (2017: $1,949). All property, plant and equipment are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Reconciliation of the carrying amounts of property, plant and equipment on table above. Depreciation methods and useful lives Subsequent costs are included in the assets’ carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred. Land is not depreciated and on other assets is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives as follows: » Computer equipment 3 - 4 years » Office equipment 3 - 20 years » Plant and equipment 3 - 20 years » Buildings & improvements 4 - 40 years » Motor vehicles 5 - 10 years In the case of leasehold improvements, the allocation of cost is over the term of the lease. 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 and included in profit or loss. S T A T E M E N T S I F N A N C A L I 31 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION NOTES TO THE FINANCIAL STATEMENTS: KEY NUMBERS FOR THE YEAR ENDED 30 JUNE 2018 Reconciliation of profit after income tax to net cash outflow from operating activities is as follows: 2018 $ 2017 $ Net loss for the period (3,253,530) (3,926,284) Depreciation 74,500 183,408 Share based payments 25,098 113,531 Non cash - rent incentive Formation Impairment of exploration expenses Change in operating assets and liabilities Decrease in trade and other receivables Increase/(Decrease) in trade payables Increase/(Decrease) in other provisions Net cash outflow from operating activities - - (29,167) 993 27,712 3,791 49,135 8,231 (152,665) 72,881 99,050 (47,487) (3,130,689) (3,620,102) 4. Operating activities Operating expenses were $3,255,374 for the year ended 30 June 2018 (2017: $3,930,691) and include the following: Employee benefits expense 1,500,000 1,200,000 900,000 600,000 300,000 0 -300,000 Salaries and wages Superannuation Directors’ fees Share based payments Other employee benefits 2018 2017 $1,728,199 $1,611,003 $1,304,576 $1,167,752 $97,211 $118,347 $193,884 $245,834 $25,098 $113,531 $107,430 ($34,461) Total Salaries and wages Superannuation Directors’ fees Share based payments Other employee benefits Professional fees 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Consulting Legal Accounting & audit ASX & ASIC Total Consulting Legal Accounting & audit ASX & ASIC 2018 2017 $580,779 $858,578 $362,472 $648,929 $29,301 $48,377 $126,825 $113,644 $62,181 $47,628 32 IRON ROAD ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS: KEY NUMBERS FOR THE YEAR ENDED 30 JUNE 2018 $496,746 TOTAL CARRYING AMOUNT AS AT 30 JUNE 2017 5. Provisions Provisions CURRENT PROVISIONS NON CURRENT PROVISIONS Annual leave $ Long service leave $ Sub-total $ Long service leave $ Total $ Carrying amount as at 1 July 2017 274,505 181,856 456,361 40,385 496,746 Additional provision recognised during the year 255,613 19,659 275,272 (14,541) 260,731 Amounts used during the year (161,680) - (161,680) - (161,680) Carrying amount as at 30 June 2018 368,438 201,515 569,953 25,844 595,797 The employee benefits provision covers the Group’s liability for long service leave and annual leave. This provision represents a present obligation as a result of past events, where it is probable that an outflow of resources will be required to settle the obligation. The current portion of this liability includes all of the accrued annual leave and the unconditional entitlements to long service leave where employees have completed the required period of service. However, based on past experience, the Group does not expect all employees to take the full amount of accrued leave or require payment within twelve months. Other long term employee benefit obligations The liabilities for long service leave and annual leave are not expected to be settled wholly within twelve months after the end of the period in which the employees render the related service. They are therefore recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Short term employee benefit obligations Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. All other short-term employee benefit obligations are presented as payables. Notwithstanding the classification of annual leave as a long term employee benefit, the related obligations are presented as current liabilities in the balance sheet if the Group does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when actual settlement is expected to occur. S T A T E M E N T S The following amounts reflect leave that is not expected to be taken or paid within twelve months: I F N A N C A L I Annual leave obligations expected to be settled after twelve months 2018 $ 2017 $ 221,063 164,703 Current long service leave obligations to be settled after twelve months 227,359 181,856 Total current leave obligations expected to be settled after twelve months 448,422 346,559 33 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION NOTES TO THE FINANCIAL STATEMENTS: KEY NUMBERS FOR THE YEAR ENDED 30 JUNE 2018 Deferred tax assets and liabilities 2018 $ 2017 $ The balance of deferred tax assets comprises temporary differences attributable to: Tax losses 43,479,116 42,344,723 Business related costs 11,521 111,414 Accrued expenses 219,988 189,574 Total recognised and unrecognised deferred tax assets 43,710,625 42,645,711 The balance of deferred tax liabilities comprises temporary differences attributable to: Accrued income - 371 Exploration expenditure 34,357,302 34,171,778 Total deferred tax liabilities 34,357,302 34,172,149 Net deferred tax assets 9,353,323 8,473,562 Deferred tax assets not recognised (9,353,323) (8,473,562) Net deferred tax assets - - A net deferred tax asset of $9,353,323 (2017: $8,473,562) has not been recognised as it is not probable within the immediate future that taxable profits will be available against which temporary differences and tax losses can be utilised. The Group is subject to income taxes in Australia. Significant judgement is required in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group estimates its tax liabilities based on the Group’s understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. $43,479,116 TAX LOSSES 6. Taxation Iron Road Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements. This note provides an analysis of the Group’s income tax expense, amounts recognised and deferred tax assets and liabilities. The income tax expense of nil for the year ended 30 June 2018 (2017: nil) represents the tax payable on the current period’s taxable loss adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Deferred income tax is determined using a tax rate applicable at the end of the reporting period and expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Reconciliation of income tax benefit to prima facie tax Loss from continuing operations before income tax benefit 2018 $ 2017 $ (3,253,530) (3,926,284) Tax at the Australian tax rate of 30% (2017: 30%) (976,059) (1,177,885) Tax effect of amounts which are not deductible in calculating taxable income 8,244 34,624 Current year tax losses not recognised 967,815 1,143,261 Income tax expense - - Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is also recognised in other comprehensive income or directly in equity. 34 IRON ROAD ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS: KEY NUMBERS FOR THE YEAR ENDED 30 JUNE 2018 DEBT REDUCTION 7. Prepayments and other receivables Prepayments and other receivables for the year ended 30 June 2018 were $37,523 (2017: $120,287) which is largely due to a reduction in prepayments and GST receivable. 8. Trade payables Trade payables Accruals 2018 $ 1,109,222 2017 $ 770,906 99,258 112,122 Short term loan facility 4,000,000 1,000,000 Other payables 17,491 1,372 Total trade and other payables 5,225,971 1,884,400 Trade and other payables for the year ended 30 June 2018 were $5,225,971 (2017: $1,884,400). The Group received $3,000,000 in short term debt finance from its major shareholder, The Sentient Group, which is reflected in other payables. The loan attracts nil interest and is repayable in March 2019. All amounts are unsecured and are presented as current liabilities unless payment is not due within 12 months from the reporting date. The carrying amount of trade and other payables are assumed to approximate their fair values, due to their short term nature. S T A T E M E N T S $37,523 2018 GST receivable Interest receivable Prepayments Other receivables $14,657 - $22,489 $378 $120,287 2017 GST receivable Interest receivable Prepayments Other receivables $48,285 $949 $70,571 $482 As at 30 June 2018, other receivables that were past due or impaired were nil (2017: nil). At initial recognition, the Group measures a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Exposure to risk is considered in Note 18(a). Due to the short term nature of current receivables, their carrying amount is assumed to approximate fair value. I F N A N C A L I 35 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION NOTES TO THE FINANCIAL STATEMENTS: STRUCTURES FOR THE YEAR ENDED 30 JUNE 2018 10. Segment information Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors and management of the Group. These internal management reports are reviewed on a monthly basis and are aligned with the information provided in the statement of comprehensive income, statement of financial position and statement of cash flows. The Group does not have any customers or operating segments with discrete financial information and all of the Group’s assets and liabilities are located within Australia, as a result no reconciliation is required. 9. Controlled entities Iron Road Limited has the following subsidiaries, all of which are 100% owned (2017: 100%) and located and incorporated in Australia.. The following are subsidiaries of Iron Road Limited: IRD Corporate Services Pty Ltd IRD Group Finance Pty Ltd IRD Port Assets Midco Pty Ltd IRD Port Assets Pty Ltd IRD Port Assets Holdings Pty Ltd IRD Rail Assets Holdings Pty Ltd IRD (Central Eyre) Pty Ltd IRD (Gawler) Pty Ltd IRD Train Operations Pty Ltd IRD Track Services Pty Ltd IRD Marine Operations Pty Ltd IRD Cargo Services Pty Ltd IRD Mining Operations Pty Ltd Eyre Exploration Pty Ltd IRD Rail Assets Midco Pty Ltd 36 Stages of grinding media IRON ROAD ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS: STRUCTURES FOR THE YEAR ENDED 30 JUNE 2018 $1,135,689 TOTAL 2017 TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL HAVING AUTHORITY AND RESPONSIBILITY OVER THE SENTIENT GROUP’S ACTIVITIES 11. Related parties The parent entity of the Group and the ultimate parent entity and controlling party is The Sentient Group (incorporated in the Cayman Islands) which at 30 June 2018 owned 73.73% (2017: 73.73%) of the issued ordinary shares of Iron Road Limited. Transactions with Key Management Personnel having authority and responsibility over the Group’s activities are as follows: 1,000,000 800,000 600,000 400,000 200,000 0 -200,000 12. Parent entity information The individual financial statements for the parent entity show the following amounts: 2018 $ 2017 $ 11,281,670 12,409,810 121,074,419 119,697,620 132,356,089 132,107,430 5,795,924 2,340,761 25,844 5,821,768 40,385 2,381,146 126,534,320 129,726,284 ASSETS Total current assets Total non-current assets Total assets LIABILITIES Total current liabilities Total non-current liabilities Total liabilities Net assets EQUITY Short term employee benefits Long term employee benefits Post employment benefits Performance rights expenses 2018 2017 Issued capital 160,916,191 160,916,191 Reserves Accumulated losses Total equity 5,078,327 5,053,229 (39,460,197) (36,243,137) 126,534,321 129,726,284 Total $1,075,786 $1,135,689 Loss for the year (3,217,060) (3,880,543) Short term employee benefits Long term employee benefits Post employment benefits Performance rights expenses $877,228 $112,772 $60,687 $25,099 $921,598 $22,508 $78,052 $113,531 Detailed remuneration disclosures are provided in the Remuneration Report on page 14. Total comprehensive loss for the year (3,217,060) (3,880,543) The financial information for the parent entity, Iron Road Limited, has been prepared on the same basis as the consolidated financial statements, except as set out below. (i) Investments in subsidiaries, associates and joint ventures. Investments in subsidiaries are accounted for at cost in the financial statements of Iron Road Limited. S T A T E M E N T S The following additional transactions occurred with The Sentient Group: (ii) Tax consolidation Reimbursement of travel related expenditure Directors' fees Capital raising costs Consulting fees Total 2018 $ 2017 $ 4,325 18,255 40,806 50,000 - 302 116,669 201,879 161,800 270,436 Of the above, $7,056 (2017: $17,000) remained outstanding as at 30 June 2018 and has been disclosed within trade payables. All transactions were made on standard commercial terms and conditions and at market rates other than the engagement of Mr Chipman at no cost to Iron Road. Iron Road Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head entity, Iron Road Limited, and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand-alone taxpayer in its own right. In addition to its own current and deferred tax amounts, Iron Road Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. The company has not provided any financial guarantees as at 30 June 2018 and has no contingent liabilities as at 30 June 2018. I F N A N C A L I 37 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION NOTES TO THE FINANCIAL STATEMENTS: CAPITAL FOR THE YEAR ENDED 30 JUNE 2018 678 MILLION SHARES ON ISSUE AT 30 JUNE 2018 13. Equity and reserves Share capital Opening balance 1 July 677,554,286 592,454,904 160,916,191 152,423,991 2018 Shares 2017 Shares 2018 $ 2017 $ Shares issued as part of institutional placement Cost of capital raising Balance 30 June - - 85,099,382 - - - 8,509,938 (17,738) 677,554,286 677,554,286 160,916,191 160,916,191 During the year there we no shares issued (2017: 85,099,382). Reserves Ordinary shares entitle the holder to participate in dividends and to share in the proceeds of winding up of the Group in proportion to the number of and amounts paid on the shares held. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Ordinary shares have no par value and the company does not have a limited amount of authorised capital. Performance rights Information relating to the IRD Employee Option Plan and Equity Incentive Plan including details of options issued, exercised and lapsed during the financial year and outstanding at the end of the reporting period are set out in Note 14. The share based payment reserve is used to recognise the value of options and performance rights issued. Options are vested on issue and are fully expensed whereas performance rights have vesting conditions that are yet to be satisfied. Performance rights are expensed throughout the vesting period and should they fail to vest before the expiry date, no amount is recognised per AASB 2. During the year, $25,098 of performance rights were expensed in the profit and loss (2017: $113,531) Dividends There have been no dividends paid during the current or prior financial years. 38 IRON ROAD ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS: CAPITAL FOR THE YEAR ENDED 30 JUNE 2018 14. Share-based payments Share-based compensation benefits are provided to Directors and KMP through the Iron Road Limited Employee Option Plan and the Iron Road Equity Incentive Plan. During the year, $25,098 of share based payments were expensed in the profit and loss (2017: $113,531). Employee Option Plan There were no options on issue, granted or exercised during the year ended 30 June 2018 (2017: nil). Equity Incentive Plan – Long term incentive The Board adopted the Iron Road Equity Incentive Plan issued on 8 October 2014, aimed at attracting, motivating and retaining persons with the skills and experience to deliver exceptional performance and outcomes in pursuit of the Group's key strategic outcomes. The plan forms part of the Group's remuneration policy and provides a mechanism for driving long term performance and the retention of executives. Under the plan, participants are granted performance rights, all of which have performance related vesting conditions. Performance rights are granted under the plan for no consideration and carry no dividend or voting rights. When exercisable, each right is convertible into one ordinary share with an exercise price of nil. Participating in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. The fair value of the rights is determined by the market price of Iron Road Limited shares at grant date and assuming no dividend pay-out during the five year period. All performance rights granted have vesting conditions in relation to securing funding for the advancement of the CEIP and will lapse if not exercised within five years. Set out below is a summary of performance rights under the plan: Grant date Expiry date Fair value at grant date Balance at start of period Granted during the year Forfeited during the year Balance at end of period Vested and exercisable at end of period 30 June 2018 23 December 2014 24 December 2019 $0.16 3,000,000 23 December 2014 13 January 2020 $0.16 2,000,000 Total 30 June 2017 23 December 2014 5,000,000 24 December 2019 $0.16 3,000,000 23 December 2014 13 January 2020 $0.16 2,000,000 Total 5,000,000 - - - - - - - - - - - - 3,000,000 2,000,000 5,000,000 3,000,000 2,000,000 5,000,000 - - - - - - S T A T E M E N T S There were no rights granted or exercised during the reporting period ended 30 June 2018 (2017: nil) and the weighted average remaining contractual life of all rights at this date is 1.51 years (2017: 2.51). Total expenses arising from share-based payment transactions recognised during the year is disclosed in Note 13 – Reserves. I F N A N C A L I 39 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION NOTES TO THE FINANCIAL STATEMENTS: CAPITAL FOR THE YEAR ENDED 30 JUNE 2018 15. Loss per share Basic earnings per share is calculated by dividing: i) the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares, and ii) the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account: i) the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and ii) the weighted average number of additional ordinary shares that would have been outstanding, assuming the conversion of all dilutive potential ordinary shares. Basic and diluted earnings per share 2018 cents 2017 cents Total basic loss per share attributable to the ordinary equity owners of the company (0.48) (0.58) Total diluted loss per share attributable to the ordinary equity owners of the company (0.48) (0.58) Loss from continuing operations attributable to the members of the group used in calculating basic earnings per share: (3,253,530) (3,926,284) Weighted average number of shares used as the denominator is 677,554,286 (2017: 673,057,915). 40 IRON ROAD ANNUAL REPORT 2018 Iron concentrate from the CEIP, South Australia IRON ROAD ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS: ADDITIONAL INFORMATION FOR THE YEAR ENDED 30 JUNE 2018 16. Remuneration of auditors During the year ended 30 June 2018, total fees paid or payable for services provided by PricewaterhouseCoopers and its related practices were as follows: PricewaterhouseCoopers (Australia) Total remuneration for audit and other assurance services 2018 $ 2017 $ 71,714 59,786 Total remuneration for tax services 14,331 17,697 17. Accounting policies Summary of significant accounting policies The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Iron Road Limited and its controlled entities. The financial statements were authorised for issue by the directors on 17 September 2018. The directors have the power to amend and reissue the financial statements. Total remuneration of PricewaterhouseCoopers (Australia) 86,045 77,483 (a) Basis of preparation of historical It is the Group’s policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit duties where PricewaterhouseCoopers expertise and experience is important. These assignments are principally audit and assurance services and taxation advice. PricewaterhouseCoopers is awarded assignments on a competitive basis and it is the Group’s policy to seek competitive tenders for all major projects. financial information These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Iron Road Limited is a for-profit entity for the purpose of preparing the financial statements. Iron Road Limited is a company limited by shares, incorporated and domiciled in Australia. The financial statements are presented in Australian Dollars. (i) Compliance with IFRS The consolidated financial statements of Iron Road Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). (ii) Historical cost convention These financial statements have been prepared under the historical cost convention. (iii) Critical accounting estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statement are disclosed in Note 17(g). (iv) Going concern As at 30 June 2018, the Group’s current liabilities exceed its current assets by $5,506,880. The Group has also experienced an operating loss of $3,253,530 and negative cash flows of $1,100,589 during the financial year ending 30 June 2018. S T A T E M E N T S I F N A N C A L I 41 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION NOTES TO THE FINANCIAL STATEMENTS: ADDITIONAL INFORMATION FOR THE YEAR ENDED 30 JUNE 2018 The Group currently has no cash generating assets in operation and $161,521 of available cash at 30 June 2018. The Group has drawn a further $800,000 of the interest free loan made available from Sentient Equity Partners in July 2018. Therefore, the continuing viability of the Group and its ability to continue as a going concern and meet its debts and commitments as they fall due is dependent on the Group being successful in its rights issue announced on 5 September 2018. The rights issue is expected to close on 9 October 2018 and raise up to $1.7 million. Based on forecast cash flows, additional funds will be required beyond the rights issue. Therefore, the Group needs to be successful in: 1) further capital raising; and/or 2) receiving the continuing support and extension of terms from its shareholder, including the ongoing subordination of the shareholder’ loan with a current balance of $4.8 million which as at the date of this report is yet to be contractually deferred; and/or 3) funding from a project partner; and/or 4) sale of assets. As a result of these matters, there is a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business. However, the directors believe that the Group will be successful in implementing a combination of the above matters and, accordingly, have prepared the financial report on a going concern basis. If the above matters are not executed successfully, the going concern assumption may not be appropriate and result in the Group having to potentially realise assets and extinguish liabilities at amounts different to those stated in the financial report. No allowance for such circumstances has been made. (v) New standards and interpretations not yet adopted. There are no standards that are not yet effective and that are expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. (b) Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all controlled entities of Iron Road Limited as at 30 June 2018 and the results of all controlled entities for the year then ended. Iron Road Limited and its controlled entities together are referred to in this financial report as the Group. Controlled entities are all entities (including special purpose entities) over which the Group has control. The Group controls an entity when the Group is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Controlled entities are fully consolidated from the date on which control is transferred to the Group. They are de- consolidated from the date that control ceases. The acquisition method of accounting is used to account for business combinations by the Group. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of controlled entities have been changed where necessary to ensure consistency with the policies adopted by the Group. c) Goods and service tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. d) Investment and other financial assets The Group classifies its financial assets as loans and receivables. Management determines the classification of its investments at initial recognition. Financial assets are initially measured at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. For loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. 42 IRON ROAD ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS: ADDITIONAL INFORMATION FOR THE YEAR ENDED 30 JUNE 2018 RISK MANAGEMENT The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a Group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or Group of financial assets that can be reliably estimated. e) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Iron Road Limited’s functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss. f) Revenue recognition Interest income on bank term deposits is calculated on the term of the deposit and the bank interest rate at lodgement date and accrued in revenue from continuing operations. g) Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed in the respective notes: (i) Exploration and evaluation assets (Note 2) (ii) Taxation (Note 6) 18. Risk management The Group's activities expose it to a variety of financial and market risks (including interest rate risk and price risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the Group through regular reviews of the risks, to minimise potential adverse effects on the financial performance and position of the Group. a) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial asset fails to meet its contractual obligations and arises principally from the Group’s receivables, cash and cash equivalents and bank term deposits. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of cash and cash equivalent and bank term deposit. Exposure to credit risk The carrying amount of the Groups financial assets represents the maximum credit exposure. There are no significant concentrations of credit risks, whether through exposure to individual customers or specific industry sectors. The Group’s maximum exposure to credit risk at the reporting date was $289,044 (2017: $1,472,396). The credit quality of financial assets that are neither past due not impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates. Financial assets that are neither past due nor impaired are as follows: 2018 $ 2017 $ Counterparties without an external credit rating: Financial assets with no default in the past 37,523 120,287 Cash at bank and fixed term deposits with a credit rating: AA- A Total 251,521 1,324,524 - 27,585 289,044 1,472,396 S T A T E M E N T S I F N A N C A L I 43 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION NOTES TO THE FINANCIAL STATEMENTS: ADDITIONAL INFORMATION FOR THE YEAR ENDED 30 JUNE 2018 b) Liquidity risk c) Market risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates which will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising returns. The following market risk exposures have been assessed: The Group manages liquidity risk by maintaining adequate reserves and continuously monitoring forecast and actual cash flows. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. The Group incurred short term debt to meet operational expenses of $3,000,000 during the year ended 30 June 2018 (2017: $1,000,000), which has been disclosed in trade and other payables. The following are the contractual maturities of undiscounted financial liabilities, including estimated interest payments and excluding the impact of netting agreements: Contractual maturities of financial liabilities Less than 6 months Total contractual cash flows Carrying amount At 30 June 2018 Trade and other payables 5,225,971 5,225,971 5,225,971 Total non-derivatives 5,225,971 5,225,971 5,225,971 At 30 June 2017 Trade and other payables 1,884,400 1,884,400 1,884,400 Total non-derivatives 1,844,400 1,844,400 1,844,400 There are no derivative financial instruments. (i) Currency risk The Group operates in Australian dollars with infrequent and low value transactions in other currencies. Such transactions present immaterial currency risk. (ii) Interest rate risk Exposure arises from assets bearing variable interest rates. With consideration of the cash balance at 30 June 2018 and the Group’s intention to hold fixed rate assets to maturity, the impact of interest rate risk is considered to be immaterial. (iii) Price Risk Changes in commodity prices may impact the Group's projected cash flows in future years and may impact the assessment of the carrying value of its assets. However, given the company is not yet in production, changes in commodity prices do not currently impact the Group's profit or loss or its cash flows. d) Capital risk management The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern. There were no changes to the Group’s approach to capital management during the year. The Group is not subject to externally imposed capital requirements. 44 IRON ROAD ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS: UNRECOGNISED ITEMS FOR THE YEAR ENDED 30 JUNE 2018 LEASES 19. Commitments Mining tenements All of the Group tenements are situated in the South Australia. In order to maintain an interest in the mining and exploration tenements, the Group is committed to meet the conditions under which the tenements were granted. The timing and amount of exploration expenditure commitments and obligations of the Group are subject to the minimum expenditure commitments required as per the Mining Act 1971. The following obligations are not provided for in the financial report: Exploration expenditure commitments Within one year Later than one year but no later than five years 2018 $ 277,862 2017 $ - - 684,388 Total exploration expenditure commitments 277,862 684,388 The Group's interest in mining tenements is as follows: South Australia Tenement Reference Warramboo ML6467 Lock Mulgathing EL5934 EL5496 EL6012 EL5298 EL5661 EL5720 EL5767 EL5998 EL5732 Interest 100% 100% 100% 90% Iron Ore rights 90% Iron Ore rights 90% Iron Ore rights 90% Iron Ore rights 90% Iron Ore rights 81% Iron Ore rights 81% Iron Ore rights Lease commitments The Group’s lease on its office in Adelaide expired in 2017 and a long term lease has not been entered into. The Lessor has agreed to a month by month tenancy for the foreseeable future. Consequently, the total commitments for minimum payments in relation to operating leases for the year ended 30 June 2018 were nil (2017: nil): Capital commitments There were no outstanding contractual commitments as at 30 June 2018 (2017: nil). 20. Contingencies There are no material contingent liabilities or contingent assets of the Group at reporting date. 21. Events after reporting date The Group received $800,000 in short term debt finance from its major shareholder, The Sentient Group in July 2018. The loan attracts nil interest and is repayable in March 2019. On 5 September 2018 the Group announced a 1 for 30 non-renounceable rights issue at $0.075 per share to raise up to $1.7 million. Iron Road’s largest shareholder, Sentient Fund IV, has undertaken to participate fully in the issue with the aggregate amount of approximately $1.0 million to be received from Sentient Fund IV. The rights issue opened on 12 September 2018 and closes on 9 October 2018. S T A T E M E N T S I F N A N C A L I 45 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION DIRECTORS' DECLARATION IRON ROAD LIMITED AND ITS CONTROLLED ENTITIES The directors’ of the Group declare that: 1. The consolidated financial statements, comprising the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and accompanying notes are in accordance with the Corporations Act 2001 and: a) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and b) give a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance for the financial year ended on that date. 2. In the directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable. 3. The remuneration disclosures included in the directors’ report (as part of audited Remuneration Report), for the year ended 30 June 2018, comply with section 300A of the Corporations Act 2001. 4. The directors’ have been given the declarations by the chief executive officer and finance manager required by section 295A of the Corporations Act 2001. 5. The Group has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. This declaration is made in accordance with a resolution of the Board of directors and is signed for and on behalf of the directors by Andrew Stocks. Andrew Stocks Managing Director 17 September 2018 46 IRON ROAD ANNUAL REPORT 2018 INDEPENDENT AUDITOR'S REPORT I S G N E D R E P O R T S 47 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION INDEPENDENT AUDITOR'S REPORT 48 IRON ROAD ANNUAL REPORT 2018 INDEPENDENT AUDITOR'S REPORT I S G N E D R E P O R T S 49 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION INDEPENDENT AUDITOR'S REPORT 50 IRON ROAD ANNUAL REPORT 2018 INDEPENDENT AUDITOR'S REPORT I S G N E D R E P O R T S 51 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION ASX ADDITIONAL INFORMATION FOR THE YEAR ENDED 30 JUNE 2018 Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is shown below. All information is current as at 31 August 2018. Distribution of equity securities Analysis of number of equity security holders by size of holding: Spread of holding 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001 and over Number of holders 179 469 277 610 146 Shares held 82,457 1,421,095 2,242,879 19,740,927 Percentage of ordinary fully paid shares 0.01% 0.21% 0.33% 2.91% 654,066,928 96.53% Substantial shareholder These substantial shareholders have notified the company in accordance with section 671B of the Corporations Act 2001: Shares held Sentient Executive GP II, Limited 29,131,005 Sentient Executive GP III, Limited 51,558,593 Sentient Executive GP IV, Limited 418,881,392 Total holding 499,570,990 Total holdings on register 1,681 677,554,286 100.00% Voting rights There were 703 holders of less than a marketable parcel of ordinary shares. All ordinary shares are fully paid and carry one vote per share without restriction. Twenty largest shareholders The names of the twenty largest shareholders of quoted ordinary shares are: Performance rights Holder name Shares held HSBC Custody Nominees Australia Limited 574,331,539 Percentage of ordinary fully paid shares 84.77% Carry no dividend or voting rights. On issue - 5,000,000 Number of holders - 2 SANBA II Inv Company DEVIPO Pty Ltd Cedarose Pty Ltd SEISUN Capital Pty Ltd JEM Investment Fund Holdings Pty Ltd Paul, Geoffrey John Anderson, CM & SM BNP Paribas Nominees Pty Ltd HSBC Custody Nominees Australia Ltd Citicorp Nominees Pty Ltd Kiritsopoulos A and Ford J Stonecot Pty Ltd Stocks, Claire Margaret Stocks, Andrew James Bond Street Custodians Ltd Leadville Investments Pty Ltd Rilat Lty Ltd Faltas Abraham Coldicutt, Susan Total 9,861,112 5,723,559 4,535,624 3,874,028 3,400,000 2,920,450 2,900,000 2,684,189 2,660,150 2,531,952 2,200,000 1,680,000 1,442,657 1,442,656 1,321,000 1,130,000 1,100,000 1,000,360 870,000 1.46% 0.84% 0.67% 0.57% 0.50% 0.43% 0.43% 0.40% 0.39% 0.37% 0.32% 0.25% 0.21% 0.21% 0.19% 0.17% 0.16% 0.15% 0.13% 627,609,276 92.62% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 52 IRON ROAD ANNUAL REPORT 2018 53 IRON ROAD ANNUAL REPORT 2018OVERVIEWCHAIRMAN'S LETTEROPERATIONS REPORTOPERATING AND FINANCIAL REVIEWFINANCIAL STATEMENTSDIRECTORS' REPORTSIGNED REPORTSASX INFORMATION I R O N R O A D A n n u a l R e p o r t 2 0 1 8 IRON ROAD HOUSE ABN 51 128 698 108 ASX Code IRD Level 6, 30 Currie Street Adelaide SA 5000 Telephone: +61 8 8214 4400 www.ironroadlimited.com.au