LaserBond Limited
Annual Report 2019

Plain-text annual report

Shareholder’s Annual Report LaserBond Limited ABN 24 057 636 692 2019 A N N U A L R E P O R T LaserBond Limited N.S.W. Division: 2 / 57 Anderson Road SMEATON GRANGE NSW 2567 Ph: +61 2 4631 4500 Fax: +61 2 4631 4555 S.A. Division: 112 Levels Road CAVAN SA 5094 Phone: +61 8 8262 2289 www.laserbond.com.au Contents Chairman’s Letter Directors’ Report Directors’ Declaration Auditor’s Independence Declaration Independence Auditor’s Report Statement of Profit or Loss & Other Comprehensive Income Statement of Financial Position Statement of Cash Flow Statement of Change in Equity Notes to the Financial Statements Shareholder Information Page 6 8 19 20 21 25 26 27 28 29 47 Corporate Directory Directors: Mr. Philip Suriano Chairman / Non-Executive Director Mr. Wayne Hooper Executive Director Mr. Gregory Hooper Executive Director Company Secretary: Mr. Matthew Twist Registered Office, Principal place of business: South Australia Division: 2 / 57 Anderson Road SMEATON GRANGE NSW 2567 Phone: +61 2 4631 4500 +61 2 4631 4555 Fax: 112 Levels Road CAVAN SA 5094 Phone: +61 8 8262 2289 Website: www.laserbond.com.au Share Registry: Auditor: Solicitor: Bankers: Boardroom Pty Ltd Grosvenor Place Level 12, 225 George Street SYDNEY NSW 2000 LNP Audit and Assurance Pty Ltd Level 14, 309 Kent Street SYDNEY NSW 2000 HWL Ebsworth Lawyers Level 14, Australia Square 264-278 George Street SYDNEY NSW 2000 Phone: +61 2 9334 8555 Commonwealth Bank of Australia Corporate Financial Services Sydney South-West Centric Park Central CAMPBELLTOWN NSW 2560 Stock Exchange Listing: LaserBond Ltd shares are listed on the Australian Securities Exchange (ASX) under LBL. 4 About Us LaserBond is a specialist surface engineering company founded in 1992 that focuses on the development and application of materials using advanced additive manufacturing technologies to increase operating performance and life of wearing components in capital-intensive industries. Within these industries, the wear of components can have a profound effect on the productivity and total cost of ownership of their capital equipment. Almost all components fail at the surface, through a combination of abrasion, erosion, corrosion, cavitation, heat and impact, so a tailored surface metallurgy can be used to dramatically extend life and enhance performance. LaserBond’s technology has applications across many industries where surface engineering can deliver significant cost effective improvements in productivity and/or lower total cost of equipment ownership. They include resources and energy, agriculture, fluid handling, steel and aluminium production, heavy transport, advanced manufacturing, defence and infrastructure construction. Our growth has been built on the pursuit of leadership in innovation and technology across three surface engineering foundations; ›› The tribology of wear and performance in heavy industrial components. ›› Metallurgy and science of high performance materials. ›› Optimisation of a wide range of materials and application methodologies. This is supported by marketing and sales focus that seeks opportunities offering productivity and sustainable gains; ›› Identifying components, equipment or applications that benefit from our technologies. ›› Customer partners with established needs and markets. Our customers are typically internationally recognised Original Equipment Manufacturers (OEMs) and large end users in capital-intensive heavy industries that endure high costs whenever their equipment is out of production for maintenance. In addition to the significant cost savings and productivity improvements we deliver, these customers recognise LaserBond’s focus on WH&S, quality assurance, and the environment which is delivered through our certified PAS99 integrated management system. Importantly our customers also achieve WHS benefits, and the positive contribution to the environment by utilising our services. WHS benefits are often realised because of the maintenance of equipment and replacement of worn parts is often carried out in potentially hazardous environments (e.g. on mine sites) and/or involves handling of difficult and heavy components. Many of our customers recognise that by reducing the frequency of required maintenance, the utilisation of LaserBond’s services significantly lowers the risk of injury to personnel. Environmental benefits arise from LaserBond’s ability to remanufacture and provide performance improvements to machine parts that would have typically been scrapped and replaced with new parts. The typical carbon footprint for a LaserBond remanufactured part is less than 1% of a new part, and with life improvements of between 2 to 20 times of a standard part, a carbon footprint of much less than 1% is achieved. LaserBond operates from facilities in New South Wales and South Australia. LASERBOND LIMITED - ANNUAL REPORT 20195 LASERBOND LIMITED - ANNUAL REPORT 20196 Chairman’s Letter Dear Shareholder, After my first full year as Chairman I am both extremely proud and excited to present the company results for the 2019 fiscal year. During this period LaserBond’s share price has risen by 212%. Whilst this growth has occurred over the past 12 months it has been the culmination of a number of years work by management and staff, implementing and executing structural and strategic change to the business. The Board has been delighted that our loyal shareholders have been rewarded for their patience and continued trust in the company and the direction that the Board has set for it.. LaserBond has achieved its goals and exceeded forecasts for FY2019, providing shareholders with continued confidence in their investment. The company’s continued performance has provided market certainty that has led to greater investor interest and has seen our shareholder base grow by 47%. 30 June 2019 30 June 2018 Revenues $22.667 M Up 44.9% from $15.648 M Services Division $11.175 M Up 11.3% from $10.040 M Products Division $9.132 M Up 62.8% from $5.608 M Technology Division $2.360 M No FY2018 Revenue $- EBITDA NPAT $4.904 M Up 120.6% from $2.223 M $2.809 M Up 190.3% from $0.968 M Earnings per share (cents) 2.972c Up 185.8% from 1.04 c The results in all divisions surpassed our annual expectations (refer Directors’ Report for commentary) and as a direct result of the company’s performance the Board is pleased to announce an increase to our final dividend to 0.5 cents per share. This brings the yearly dividends to 1.0 cent per share, fully franked, an increase of 67% over FY2018. The Board would like to take this opportunity to thank all our staff for the tremendous level of commitment that they have shown to the business over the past twelve months and our shareholders that continue to show their support. This year has provided LaserBond with greater recognition and reputation globally of our technology, products and services. LaserBond is attracting interest from larger companies and the Board is satisfied that we are well positioned and have advisors on-hand to assist with any future opportunities. Looking forward to the year ahead the forecast is to organically achieve double digit growth in revenue year on year. The business plan remains unaltered with the $40 million revenue target by 2022. The company continues to review expansion opportunities in strategic areas and markets in its quest to gain greater scale and presence in order to fulfil customer requirements in a timely manner with a reduction to transportation distance and cost. Yours sincerely Philip Suriano Chairman LaserBond Limited LASERBOND LIMITED - ANNUAL REPORT 2019Chairman’s Letter 7 LASERBOND LIMITED - ANNUAL REPORT 20198 Directors’ Report The Directors present their report together with the financial statements of LaserBond Limited for the financial year ended 30th June 2019. Principal Activity LaserBond is a specialist surface engineering company that focuses on the development and application of materials using advanced additive manufacturing technologies to increase operating performance and life of wearing components in capital-intensive industries. Within these industries, the wear of components can have a profound effect on the productivity and total cost of ownership of their capital equipment. Almost all components fail at the surface, through a combination of abrasion, erosion, corrosion, cavitation, heat and impact, so a tailored surface metallurgy can be used to dramatically extend life and enhance performance. LaserBond operates from facilities in New South Wales and South Australia. Review of Operations & Financial Results During the 2019 financial year LaserBond achieved tremendous growth with continued investment in order to deliver on future planned growth. The focus of the organisation was on: 1. Increasing staff skill, capacity and capabilities, through recruitment and ongoing training. 2. Increasing equipment capacity and capabilities, through investment in plant and equipment at both facilities. 3. Continued growth, through our on-going research and development activities. 4. Development of the LaserBond technology offering to provide higher productivity for LaserBond and its licensees. 5. Improving customer satisfaction through improved delivery times. SKILL AND CAPABILITIES Our continued investment in people throughout the 2019 financial year was based on a plan to have a more fully manned afternoon shifts at both facilities, increasing capacity and reducing the burden of overtime. Finding personnel with the base trade skills we need has been a challenge for some time, but with a number of recent recruits and the successful employment of six employees on skilled visa programs, our NSW afternoon shift has increased to nine full time employees, with a further three to move to afternoon shift in the next few months. This is an increase from four afternoon shift employees in June 2018. Our SA facility capabilities have increased with the employment of an additional 33% of shop floor staff. The company continues to train apprentices and graduate engineers to provide the skills it needs for the future. It is noteworthy that aside from the founders, the longest serving employee, now a key member of the management team in NSW, started as an apprentice in January 1997. Investment in personnel will continue in order to increase capabilities further at both facilities and deliver on the planned growth. LASERBOND LIMITED - ANNUAL REPORT 2019Directors’ Report 9 Our growing afternoon shift providing increased skill and capacity. LASERBOND LIMITED - ANNUAL REPORT 201910 CAPACITY AND CAPABILITIES During the 2019 financial year the company fully commissioned two significant equipment investments: 1. Automated dual station high power LaserBond® cladding system adding significant capacity in South Australia. 2. An additional large capacity CNC horizontal borer in New South Wales, doubling capacity for this work. In accordance with its practice since establishment, the company will continue appropriate and measured investment in FY2020 to allow increased capacity, capability and improved productivity at both facilities. This is necessary to deliver the planned future growth and increased profits. Equipment is usually financed by equipment finance facilities provided by our bank. LaserBond® cladding system recently commissioned for a global manufacturing company. Newly commissioned Horizontal Borer more than doubling capacity. LASERBOND LIMITED - ANNUAL REPORT 2019RESEARCH AND DEVELOPMENT ACTIVITIES Our R&D efforts focus mainly on the development of application oriented coating systems, the development of new materials and the associated processing parameters for all our coating technologies: Laser Cladding, Thermal Spraying and Surface Brazing. This includes a focus on increasing productivity, which has included the significant improvements in production cycles realised with our new 16 kW Laser source. For example, the deposition rate has been improved by more than 100 % on a number of our high volume applications with a subsequent improvement of critical overlay properties. Our collaborative work with the University of South Australia and Boart Longyear through the CRC-P is continuing with a number of applications having commercial possibilities. In the last year further products where identified where LaserBond’s coatings exhibit tremendous potential to significantly reduce both wear and downtime in Reverse Circulation and Down-the-Hole drilling applications. After the development of coating strategies, parts for on-site testing are currently being carried out on a drill site near Olary, SA. A second research project has just commenced - the Training Centre “Surface Engineering for Advanced Materials (SEAM)”, supported by the Australian Research Council. SEAM will be Australia’s premier manufacturing Research and Development centre that focuses on applied research with tangible outcomes to nurture and cultivate the industrial innovation leaders of tomorrow. The Centre aspires to provide an excellent environment for carrying out research, explore projects with industry, government and other organisation. Within the frame of SEAM, LaserBond will focus on Additive Manufacturing using Direct Laser Deposition Techniques. The work will be carried out in close collaboration with the Future Industries Institute of UniSA and Swinburne University. Within the frame of the project one additional Research Assistant, two PhD students and several international students will support LaserBond’s efforts in continuing its advance in laser cladding. 11 Further industry-oriented research projects have been initiated. Within the frame of one of them the aim is to transfer LaserBond’s cladding technologies to a new industrial area (Transportation). Another industrial sector, where LaserBond’s coating technologies are believed to have a major impact is agriculture, with our LaserBond® cladding being investigated with regard to their application for new products. So far results are very promising with an example being when wear by erosion or abrasion limits components lifetimes. In abrasion testing, our claddings prove less than a fifth of the wear rate compared to commercially available coated products. Across multiple industries worldwide, for environmental reasons, “hardchrome plating” is becoming more and more of an issue with considerable research having been conducted over a couple of decades by many companies to try and come up with an environmentally friendly and cost efficient alternative. We have for many years been conducting our own research and development for a cost effective alternative to hardchrome plating. Considerable success has been accomplished over the last 12 months. Development of materials and process parameters for both our LaserBond Cladding and Thermal Spraying processes has enabled the deposition of surface layers that exhibit wear and corrosion properties that exceed those of hardchrome coatings. Two different coating systems have been developed, with one representing the best technical solution and the other one a very economical alternative. Both are outperforming existing hardchrome coatings with regards to corrosion and wear resistance. LASERBOND LIMITED - ANNUAL REPORT 201912 Results by Reportable Segments Explanation of Results Revenue by division FY’17 FY’18 FY’19 12M 10M 8M 6M 4M 2M 0 Services Products Technology ›› Revenue from operations was $22.667 million, up by 44.9% on FY2018. ›› Services Division achieved revenue of $11.175 million, up 11.3% on FY2018. ›› Products Division achieved revenue of $9.132 million, up 62.8% on FY2018. ›› Technology Division reports revenue of $2.360 million, 600 with no revenue in FY2018. 500 3.0M 400 .2.5M 300 2.0M 200 1.5M 1.0M 100 0.5M 0 0 0 -0.5M -1.0M EBITDA by division FY’17 FY’18 FY’19 Services Products Technology Research & Development ›› EBITDA from operations was $4.904 million, up by 120.6% on FY2018. ›› Services Division achieved EBITDA of $2.575 million, up 27.7% on FY2018. ›› Products Division achieved EBITDA of $2.654 million, up 252.4% on FY2018. ›› Technology Division achieved EBITDA of $0.342 million, after a FY2018 loss of <$0.039 million>. ›› R&D Division represented a cost of $0.667 million, after a FY2018 cost of $0.501 million. SERVICES DIVISION The Services Division achieved revenue for FY2019 of $11.175 million representing 11.3% growth on FY2018 revenue of $10.040 million. The NSW facility provides 87.8% of this revenue based on its long standing surface engineering repair and reclamation business, and achieved 9.3% growth. Whilst most of South Australia’s revenue is from the sale of products, this facility achieved a 28.1% increase in Services Division revenue based on sales strategies developed for growth in services. The second half of FY2019 reported a small decrease in Services Division revenue from the first half, directly related to some capacity constraints caused by the manufacture of equipment for the technology division sale. With the growing capabilities in NSW future impact from the technology division will be reduced. This division provided EBITDA of $2.575 million, representing a 27.7% growth on FY2018 EBITDA of $2.016 million. It is expected the Services Division will continue to deliver growth in revenue at similar rates, largely based on increasing demand from a growing customer base and the increasing capacity and capabilities from investment in resources (human and equipment). It is also expected that this division will achieve growing profit margins due to the productivity improvements gained from the investment in resources. PRODUCTS DIVISION The Products Division achieved revenue for FY2019 of $9.132 million representing a 62.8% growth on FY2018 revenue of $5.608 million. The focus of the South Australian facilities has been on products, and represents 61.8% of this revenue. The balance of 38.2% is generated from contract manufacturing of products for long standing original equipment manufacturers. Growth in products revenue is expected to continue to grow largely in South Australia due to the increasing investment in resources (both human and equipment) and the improved output due to the completed commissioning of the automated LaserBond® cladding system. The Products Division achieved $2.654 million EBITDA representing a 252.4% growth on FY2018 EBITDA of $0.753 million. LASERBOND LIMITED - ANNUAL REPORT 2019The Products Division is expected to continue to provide the most revenue growth for the business particularly with the growing market for our existing product offerings to large OEM’s and our own long-life composite carbide steel mill rolls in North America and other countries. LaserBond is now receiving repeat orders from mills in the USA, and is working towards developing customers in other countries. The steel mill roll market in the United States alone is estimated to be well over fifteen times that of Australia, and Australian steel mills provided $285k revenue in FY2019 (and growing). A testimonial from an Australian steel company has been provided: “The Maintenance Engineering Team at OneSteel had heard of some of the application successes of a local company called LaserBond Ltd. with their Carbide Composite technology. Within a time period of less than 6 months LaserBond has become an Integral Supply Chain Partner with our Procurement and Maintenance Teams. In every case the Carbide Composite components that are manufactured and supplied to us by LaserBond have far exceeded our expectations in terms of the service life we are now achieving.” A great result for another superior product application from LaserBond, providing tremendous opportunities for growth domestically and around the world. LaserBond continues to develop export and domestic markets for other products. TECHNOLOGY DIVISION Laser cladding in recent years has become more globally recognised as a superior solution for wear problems in many industries. This recognition has also created a desire globally for large businesses, particularly original equipment manufacturers, to develop their own surface engineered products for improved market differentiation. Over twenty-seven years LaserBond has developed a culture of innovation that continually develops innovative surface engineering technology and applications, and an accumulated knowledge of the mechanics of wear to vital machine components that experience some of the fastest wear rates in abrasive and chemically hostile environments. LaserBond has developed global recognition in our own laser cladding solutions, with components exported internationally including to the United States, Canada, South America, South Africa, Europe and Asia. Further, some laser suppliers have recently introduced equipment for laser cladding, but most suppliers do not have a history of research and development of applications to enable the best wear performance results. LaserBond are able to provide immediate and superior solutions to businesses looking to invest in laser cladding. Our Technology division customers become partners with LaserBond who we assist with integrating the equipment, developing the software systems, in-depth operator training including the understanding of the metallurgy, and building the quality assurance process. 13 In the 4th quarter of FY2019, LaserBond delivered its second Technology Division sale to a multi-billion-dollar global manufacturer that will utilise LaserBond’s technology in its product offerings. The training and support will continue over a seven-year period in return for equipment utilisation based licensing fees. The equipment is now fully installed, commissioned and operating for license fee returns commencing in FY2020. This division achieved $2.360 million revenue with an EBITDA of $0.342 million after an overhead recovery allowance provided from the NSW facilities fixed costs. This revenue is made up of $1.945m for the sale of the LaserBond® laser cladding equipment and a further $0.415 million for the provision of laser cladding consumables which will form an ongoing need by the customer which is contractually obligated to purchase these specialised consumables from LaserBond. LaserBond’s aim is to provide continued revenue from the Technology Division in the form of: a) LaserBond® laser cladding equipment as an off-the-shelf design or custom built to suit a customer’s needs. Value will be dependent on the design however an off-the-shelf design would typically provide revenue of approximately $1.2 - $1.7 million. The target is to provide one additional equipment sale during FY20 and two each year from FY21. b) Ongoing licensing fees for the term of each agreement. The revenue from licensing fees depends on the utilisation of the equipment but can be in the hundreds of thousands annually for each system supplied. This license revenue leverages the detailed technical knowledge and other IP LaserBond has developed over many years with little in the way of additional costs. c) Where practical, ongoing consumables supply for the term of each agreement with each piece of equipment supplied capable of using up to $1 million per annum in consumables, depending on utilisation and the type of work carried out. This revenue leverages LaserBond’s buying power for consumables, but in order to maintain competitiveness, has low margins relative to other revenue streams. LASERBOND LIMITED - ANNUAL REPORT 201914 Research & Development This division reported an EBITDA cost of $667,004. Net R&D increased by over a third due to the necessary continued research into new products and / or applications crucial for LaserBond’s continuing growth. For further information, refer to the commentary on Research & Development Activities on page 11 of this Directors’ Report. Outlook During FY2020 LaserBond is targeting continued double digit revenue growth from the Services & Products divisions (including targets from the steel mill products internationally), plus a growing customer base for equipment and ongoing licensing and consumables from our Technology division. This is expected to reflect in similar net profitability rates to those achieved in FY2019 after improvements to gross profitability based on increasing productivity and after reduction of Other Income due to the completion of the Next Generation Manufacturing Investment Program (NGMIP) in FY2019. The NGMIP provided an allocation of $0.47 million government funding during FY2019 as part of the $3.22 million project to improve our capacity and capabilities in South Australia. There will be continued investment in resources (human and equipment) as well as research and development to deliver future growth. Further, the Board remains focused on its strategic plan aiming to achieve $40 million revenue within three years. This plan remains focused largely on: 1. Organisational Structure The ongoing development of a structure that provides an increasingly successful management team, scaled for growth and reducing reliance on the current Executive Directors for operational matters. 2. Capacity & Capabilities Increasing capacity and capabilities of all facilities, including through an improved shop floor shift structure to increase capacity and reduce the burden on select skilled staff, process optimisation to increase machine uptime and effectiveness, and a focus on the ongoing increasing of skill and capabilities of operational staff. 3. Growth Options A focus on international business development, including through both Technology Licensing and maximising the potential and return of opportunities with global customers within the Products and Services divisions. 4. Investment A focus on continued investment in resources (human and equipment) and growth through acquisitions or development of further “greenfield” sites in strategic domestic and/or international locations. Directors and Company Secretary Details of the company’s Directors during the financial year and up to the date of the report are as follows (Directors have been in office for the entire period unless otherwise stated): Director: Position Held In Office Since Ceased to Hold Office Wayne Hooper CEO/ Executive Director 21 April 1994 Gregory Hooper CTO/ Executive Director 30 September 1992 Philip Suriano Chairman / Non-Executive Director 6 May 2008 Matthew Twist Company Secretary 30 March 2009 LASERBOND LIMITED - ANNUAL REPORT 2019Information on Directors and Company Secretary (currently holding office) Wayne Hooper GAICD – Chief Executive Officer, Audit and Risk committee member Wayne is a professional engineer with significant technical and management experience within the surface engineering, general engineering and manufacturing industries. His engineering experience includes design, maintenance and project management. He started his career within the electricity generation industry, followed by high volume manufacturing. Prior to joining the company in 1994, Wayne also held senior roles in marketing within the building products industry. Wayne holds degrees in Science, Engineering (Honours Class 1) and an MBA. As CEO, Wayne is responsible for sales, marketing, administration and compliance to ensure a smoothly functioning, efficient organisation. Gregory Hooper – Chief Technology Officer Gregory has a mechanical engineering background with over 35 years of hands on experience, as well as sales and management experience in the engineering, metallurgy, welding and thermal spray industries. Before founding LaserBond® Gregory held key positions with multinational surface engineering equipment and specialty welding consumable manufacturers. Gregory founded the Company with his parents in 1992, and has been responsible for the research, integration and development of the company’s materials and Thermal Spray and LaserBond® cladding processes. Gregory’s responsibility as CTO is the general management and overseeing of Workshop, Technology, and Research and Development management within the group, as well as working closely with his brother (CEO), the board, and the rest of the Laserbond team to deliver on the goals targeted. Philip Suriano GAICD – Chairman / Non-Executive Director, Audit and Remuneration committee member Philip has been a Director since 2008. He began his career in corporate banking with the State Bank of Victoria (Commonwealth Bank). He holds a degree in banking & finance (B.Bus. (Bkg & Fin)). He spent 16 years in senior positions within the Australian Media Industry. Philip has gained wide knowledge & experience to give him a strong background in operations, sales and marketing in such roles as National Sales Director, MCN (Austar and Foxtel TV sales JV) and Group Sales Manager at Network Ten. Prior to joining MCN, Philip was employed within the Victor Smorgon Group. For the past 15 years he has been working in corporate finance. Matthew Twist GIA (Cert) – Company Secretary, and Risk committee member Matthew Twist has over 25 years financial management experience, encompassing financial and operational control and systems development in manufacturing companies. Matthew has been the company’s Chief Financial Officer since March 2007, and was appointed Company Secretary on 30 March 2009. Matthew has a Certificate in Governance Practice, and is an affiliated member of the Governance Institute of Australia. 15 Remuneration Report The directors present the LaserBond Limited 2019 remuneration report, outlining key aspects of our remuneration policy and framework, and remuneration awarded this year. The report is structured as follows: (a) Key management personnel (KMP) covered in this report. (b) Remuneration policy and link to performance (c) Link between remuneration and performance (d) KMP remuneration (e) Contractual arrangements for executive KMP’s (f ) Non-executive director arrangements (a) Key management personnel (KMP) covered in this report All directors of the company and the Company Secretary are considered as key management personnel (KMP’s) for the management of its affairs, and are covered by this report. (b) Remuneration policy and link to performance Remuneration levels for KMP’s are competitively set to attract, motivate and retain appropriately qualified and experienced personnel. Remuneration levels are reviewed annually by the Board through the Remuneration Committee including a reference to the company’s performance. The remuneration policy attempts to align reward with the achievement of strategic objectives and the creation of value for shareholders. Please refer to the Corporate Governance Statement on our website, http://www.laserbond.com.au/investor- relations/governance-statement.html, for details. (c) Link between remuneration and performance The company has performance based bonuses for executive directors and additional non-cash (equity based) payments for non-executive directors who hold office for the full twelve months of a fiscal year. During current financial year, one non-executive director received non-cash (equity based) payments amounting to $18,750. Executive Director’s performance based bonuses are subject to the achievement of set key performance indicators, reviewed annually by the Remuneration Committee. LASERBOND LIMITED - ANNUAL REPORT 201916 Remuneration Report (continued) Non-cash (equity based) payments for non-executive directors are reviewed annually by the Board and are subject to shareholder approval prior to issue at the next Annual (or Extraordinary) General Meeting. Further detail can be found under Note 20 b). The following table shows the gross revenue, profits and dividends for the last five years for the group as well as the share prices at the end of the respective financial years. 2019 $ 2018 $ 2017 $ 2016 $ 2015 $ Revenue 22,667,200 15,648,146 13,751,417 10,515,581 9,546,595 Net Profit after Tax 2,809,404 967,749 1,112,892 78,745 366,766 Share price at year end (Cents) Dividends paid (Cents) 39.00 0.9 12.50 0.6 12.50 0.5 8.10 0.4 13.00 0.4 (d) KMP Remuneration The following table shows details of the remuneration expense recognised for the company Key Management Personnel for the current and previous financial year. KMP’s received a fixed remuneration in the year ended 30 June 2018 and 30 June 2019 Salaries and fees Superannuation Share based payments Long Service Leave Wayne Hooper1 Gregory Hooper1 Philip Suriano2 Matthew Twist Totals 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 313,272 308,650 319,880 308,335 30,000 28,750 155,310 151,653 818,462 797,388 54,477 46,650 30,139 29,031 - - 14,549 14,273 99,165 89,954 - - - - 18,750 12,500 1,000 1,000 19,750 13,500 - - - - - - - - - 1 Wayne and Gregory Hooper’s remuneration is inclusive of their spouse’s remuneration for any period they were actively employed by the company. Note 15 a) reports all remuneration through payroll for all relatives of executive directors, including spouses. 2 Philip Suriano’s remuneration includes only fees related to their non-executive director remuneration. Any additional consulting fees related to support of executive functions in reported within Note 15 b). LASERBOND LIMITED - ANNUAL REPORT 201917 Remuneration Report (continued) (e) Contractual arrangements for executive KMP’s KMP’s who are active employees of the company are hired following current human resources policies and procedures, and each are required to have employment contracts, job descriptions and key performance indicators relevant to their roles and responsibilities. (f) Non-executive director arrangements Non-executive directors are employed based on the company’s commitment to develop a Board with a blend of skills, experience and attributes appropriate for the business’ goals and strategic plans. If a non-executive director holds their Board position for the full twelve months of each reporting period they may be eligible for non-cash benefits of a fixed quantity of LaserBond shares reviewed annually by the Board. The Board has not agreed on the volume of shares to be issued to Philip Suriano at the time of lodgement of this report. Any issue is subject to shareholder approval with the price based on the closing share price on the day of approval. (g) Shares held by key management personnel The number of ordinary shares in the company during the 2019 financial year held by each of the company’s key management personnel, including their related parties, is set out below: Wayne Hooper Gregory Hooper Philip Suriano Matthew Twist Balance at 30 June 2018 Granted as remuneration 10,569,793 9,576,859 545,131 65,708 - - 150,000 2,597 Other changes 321,390 - 13,174 2,604 Balance at 30 June 2019 10,891,183 9,576,859 708,305 70,909 (h) Loans to key management personnel The company allows its employees to take short term loans and this facility is also available to its key management personnel. The table below provides aggregate information relating to company’s loans to key management personnel during the year: The loans to key management personnel are generally for a short term. These loans are unsecured and interest free. Loans to key management personnel End of remuneration report. Director’s Meetings During the financial year ended 30th June 2019, the number of meetings held, and attended, by each Director were as follows: 2019 4,174 2018 16,174 Director Board Meetings Audit and Risk Committee Meetings Remuneration Committee Meetings Eligible Attended Eligible Attended Eligible Attended Wayne Hooper Gregory Hooper Philip Suriano 6 6 6 6 6 6 3 - 2 3 - 2 - - 1 - - 1 Please refer to the Corporate Governance Statement at http://www. laserbond.com.au/investor-relations/governance-statement.html for further information. LASERBOND LIMITED - ANNUAL REPORT 201918 Significant Changes in State of Affairs Auditors’ Independence Declaration A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 20. Signed in accordance with a resolution of the Board of Directors. Director Wayne Hooper Director Gregory Hooper Dated this 20th day of August 2019 During the financial year there was no significant change in the state of affairs of the company other than that referred to in the financial statements or notes thereto. Future Developments Any future developments required to be disclosed as per ASX Listings Rules have either been disclosed previously or are included in commentary or notes to this report. Any future items requiring to be disclosed will be disclosed according to recent listing rules. Environmental Regulation The company’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a state or territory. Matters Subsequent to the End of the Financial Year The final dividend has been recommended and will be paid as detailed below. DIVIDENDS 2018 final dividends of 0.4 cents per share and 2019 interim dividends of 0.5 cents per share were paid during the year. The directors have recommended the payment of a final dividend for FY2019 of 0.5 cents per fully-paid ordinary share (FY2018: 0.4c), fully franked based on tax paid at 27.5%. The dividend is expected to be paid on 11th October 2019. Subject to the company continuing to develop in accordance with future plans, the Board expects to continue to maintain future dividends. Directors’ and Auditors’ Information Insurance premiums of $9,224 have been paid to insure a Director’s legal liability to third parties for alleged breach of duty arising out of a claim for which the Director is not indemnified by the corporation. No insurance premiums have been paid in respect of Auditors. Non-Audit Fees paid to Auditor During the financial year, there have been no fees paid to LNP Audit and Assurance for non-audit services. LASERBOND LIMITED - ANNUAL REPORT 201919 Directors’ Declaration Corporate Governance The directors of the company support and adhere to the principles of corporate governance, recognising the need for the highest standard of corporate behaviour and accountability. A review of the company’s corporate governance practices was undertaken during the year. As a result, new practices were adopted and existing practices optimised to reflect industry best practice. Please refer to the Corporate Governance Statement at: http://www. laserbond.com.au/investor-relations/governance-statement.html The directors of the company declare that: 1. The financial statements and notes, as set out on pages 25 to 46 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 financial position as at 30th June 2019 and of the performance for the financial year ended on that date of the company. 2. In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The directors have been given the declarations by the chief executive officer and chief financial officer required by Section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Board of Directors. Director Wayne Hooper Director Gregory Hooper Dated this 20th day of August 2019. LASERBOND LIMITED - ANNUAL REPORT 201920 www.lnpaudit.com ABN 65 155 188 837 L14 309 Kent St Sydney NSW 2000 +61 2 9290 8515 L24 570 Bourke Street Melbourne VIC 3000 +61 3 8658 5928 L1 180 Main Street Kangaroo Point QLD 4169 +61 7 3391 6322 AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF LASERBOND LIMITED As lead auditor of Laserbond Limited for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been: 1. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and 2. no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Laserbond Limited during the financial year. LNP Audit and Assurance Pty Ltd Anthony Rose Director Sydney 20 August 2019 Liability limited by a scheme approved under Professional Standards Legislation 20 LASERBOND LIMITED - ANNUAL REPORT 2019 ABN 65 155 188 837 www.lnpaudit.com ABN 65 155 188 837 L14 309 Kent St Sydney NSW 2000 L14 309 Kent St Sydney NSW 2000 T +61 2 9290 8515 +61 2 9290 8515 L24 570 Bourke Street Melbourne VIC 3000 T +61 3 8658 5928 L24 570 Bourke Street Melbourne VIC 3000 www.lnpaudit.com +61 3 8658 5928 21 INDEPENDENT AUDIT REPORT TO THE MEMBERS OF LASERBOND LIMITED L1 180 Main Street Kangaroo Point QLD 4169 +61 7 3391 6322 AUDITOR’S INDEPENDENCE DECLARATION Opinion UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 We have audited the financial report of Laserbond Limited, which comprises the statement of TO THE DIRECTORS OF LASERBOND LIMITED financial position as at 30 June 2019, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then As lead auditor of Laserbond Limited for the year ended 30 June 2018, I declare that, to the best of my ended, notes comprising a summary of significant accounting policies and other explanatory knowledge and belief, there have been: information and the Directors’ Declaration of the Company. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and In our opinion: 1. The accompanying financial report of Laserbond Limited is in accordance with the Corporations Act 2001, including: 2. no contraventions of any applicable code of professional conduct in relation to the audit. i. Giving a true and fair view of the company’s financial position as at 30 June 2019 and of its financial performance for the year ended on that date; and This declaration is in respect of Laserbond Limited during the financial year. ii. Complying with Australian Accounting Standards and the Corporations Regulations 2001. LNP Audit and Assurance Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the company in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Anthony Rose Standards Board’s APES110 Code of Ethics for Professional Accountants (the Code) that are relevant Director to our audit of the financial report in Australia; and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained Sydney, 27 August 2018 is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. Our description of how our audit addressed the matter is provided in that context. Liability limited by a scheme approved under Professional Standards Legislation 21 20 LASERBOND LIMITED - ANNUAL REPORT 2019 22 Key Audit Matter How our audit addressed the matter Implementation of new revenue accounting policy (refer to note 1) We performed amongst others: the following procedures, The company adopted a new revenue accounting policy during the year due to the mandatory introduction of AASB 15 Revenue from Contract with Customers. The new policy is disclosed in note 2. The adoption of a new revenue accounting policy was a key audit matter due to the: • • • significance of revenue to understanding the financial results for users if the financial report. complexity involved in applying the new AASB 15 requirements to contracts with customers. judgement required by the company in applying the new AASB 15 requirements, such as whether contracts contain multiple performance obligations which should be accounted for separately and when to recognise revenue based on when control transfers to a customer. • Developed an understanding of and evaluated the operating effectiveness of relevant key internal control. • Assessed the adequacy of methodology used the company for determining the extent of contract reviews required to identify AASB 15 impact. • Assessed whether the company’s new accounting policies were in accordance with the requirements of AASB 15 through of company’s analysis in relation to AASB 15. consideration the • Considered identification obligations invoices contracts. and issued in the of company’s performance sales these inspecting fulfilling Other information The Directors are responsible for the other information. The other information comprises the information included in the annual report for the year ended 30 June 2019 but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based upon the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 22 LASERBOND LIMITED - ANNUAL REPORT 2019 Directors’ Responsibilities ABN 65 155 188 837 L14 309 Kent St Sydney NSW 2000 T +61 2 9290 8515 23 The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. www.lnpaudit.com L24 570 Bourke Street Melbourne VIC 3000 T +61 3 8658 5928 AUDITOR’S INDEPENDENCE DECLARATION In preparing the financial report, the Directors are responsible for assessing the company’s ability to UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 continue as a going concern, disclosing, as applicable, matters related to going concern and using TO THE DIRECTORS OF LASERBOND LIMITED the going concern basis of accounting unless the Directors either intend to liquidate the company or cease operations, or have no realistic alternative but to do so. As lead auditor of Laserbond Limited for the year ended 30 June 2018, I declare that, to the best of my Auditor’s Responsibilities for the Audit of the Financial Report knowledge and belief, there have been: Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report 1. that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are 2. considered material if, individually or in the aggregate, they could reasonably be expected to This declaration is in respect of Laserbond Limited during the financial year. influence the economic decisions of users taken on the basis of this financial report. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: LNP Audit and Assurance • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Anthony Rose Director • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Sydney, 27 August 2018 • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. • Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting in the preparation of the financial report. We also conclude, based on the audit evidence obtained, whether a material uncertainty exists related to events and conditions that may cast significant doubt on the entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report to the disclosures in the financial report about the material uncertainty or, if such disclosures are inadequate, to modify the opinion on the financial report. However, future events or conditions may cause an entity to cease to continue as a going concern. Liability limited by a scheme approved under Professional Standards Legislation 23 20 LASERBOND LIMITED - ANNUAL REPORT 2019 • Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the company to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the company audit. We remain solely responsible for our audit opinion. • We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. • We are also required to provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. • From the matters communicated to the Directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Opinion on the Remuneration Report We have audited the Remuneration Report included on pages 15 to 17 of the Directors' Report for the year ended 30 June 2019. In our opinion, the Remuneration Report of Laserbond Limited for the year ended 30 June 2019, complies with section 300A of the Corporations Act 2001. Responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. The engagement partner on the audit resulting in this independent auditor’s report is Anthony Rose. LNP Audit and Assurance Pty Ltd Anthony Rose Director Sydney, 20 August 2019 24 2019 FINANCIAL STATEMENTS 25 Statement of Profit or Loss and Other Comprehensive Income for the Year Ended 30th June 2019 2019 2018 Revenue from continuing operations Cost of Sales Gross Profit from continuing operations Other Income Advertising & Promotional Expenses Depreciation & Amortisation Employment Expenses Property Expenses Administration Expenses Repairs & Maintenance Finance Costs Research & Development Other Expenses Note 22 2 $ 22,667,200 (11,924,478) 10,742,722 547,586 (182,183) (886,070) (2,550,761) (773,650) (1,721,481) (244,945) (176,708) (552,826) (366,817) Profit before income tax expense from continuing operations 4, 22 3,834,867 $ 15,648,146 (8,686,048) 6,962,098 665,418 (162,208) (717,499) (2,071,643) (730,733) (1,575,956) (163,085) (110,774) (470,091) (223,334) 1,402,193 Income tax expense 4, 22 (1,025,463) (434,444) Profit after income tax expense from continuing operations 2,809,404 967,749 Other comprehensive income - - Total comprehensive income attributable to members of LaserBond Limited 2,809,404 967,749 Earnings per share for profit attributable to members: Basic and diluted earnings per share (cents) 5 2.972 1.040 This Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. LaserBond Ltd 2019 Annual Report | Page 21 LaserBond Limited - Financial Statements 2019 26 2019 FINANCIAL STATEMENTS Statement of Financial Position As at 30th June 2019 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Total current assets NON-CURRENT ASSETS Property, plant and equipment Deferred tax assets Intangible assets Total non-current assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Employee Benefits Financial liabilities Current Tax Liabilities Total current liabilities NON-CURRENT LIABILITIES Financial liabilities Employee Benefits Total non-current liabilities Note 6 7 8 10 9 11 2019 $ 2,192,535 5,395,681 2,547,508 10,135,724 5,862,445 363,355 39,680 6,265,480 2018 $ 1,379,062 5,362,441 2,487,605 9,229,108 3,086,473 288,040 23,387 3,397,900 16,401,204 12,627,008 2,037,970 998,778 641,201 386,327 4,064,276 2,213,062 63,642 2,276,704 1,867,497 792,429 441,988 225,832 3,327,746 1,480,879 43,386 1,524,265 TOTAL LIABILITIES 6,340,980 4,852,011 NET ASSETS EQUITY Issued capital Retained earnings TOTAL EQUITY 10,060,224 7,774,997 12 6,725,293 3,334,931 10,060,224 6,406,948 1,368,049 7,774,997 This Statement of Financial Position should be read in conjunction with the accompanying notes. LaserBond Ltd 2019 Annual Report | Page 22 LaserBond Limited - Financial Statements 2019 Statement of Cash Flows for the Year Ended 30th June 2019 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest paid Interest received Income taxes paid Net cash inflow from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment Repayments of loans to employees Net cash outflow from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Payments for share issue costs Payments for financial leases Dividends paid Net cash outflow from financing activities INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of period CASH AND CASH EQUIVALENTS AT END OF YEAR Note 18 27 2019 FINANCIAL STATEMENTS 2019 2018 $ $ 25,467,090 (20,315,706) (176,708) 6,783 (900,428) 4,081,031 (3,432,839) (22,600) (3,455,439) (9,408) 742,347 (545,058) 187,881 813,473 1,379,062 18,906,545 (18,043,530) (110,774) 7,190 (372,589) 386,842 (273,216) (25,400) (298,616) (12,784) (455,660) (252,356) (720,800) (632,574) 2,011,636 2,192,535 1,379,062 This Statement of Cash Flows should be read in conjunction with the accompanying notes. LaserBond Ltd 2019 Annual Report | Page 23 LaserBond Limited - Financial Statements 2019 28 Statement of Changes in Equity Statement of Changes in Equity for the Year Ended 30th June 2019 for the Year Ended 30th June 2019 2019 FINANCIAL STATEMENTS 2019 FINANCIAL STATEMENTS Issued capital Issued capital $ $ Retained earnings Retained earnings $ $ Total equity Total equity $ $ Opening Balance at 1st July 2017 Opening Balance at 1st July 2017 6,186,816 6,186,816 858,401 858,401 7,045,217 7,045,217 Profit for the year Profit for the year - - 967,749 967,749 Issue of Share Capital, net of cost Issue of Share Capital, net of cost 220,132 220,132 - - 967,749 967,749 220,132 220,132 Dividends paid during the year Dividends paid during the year - - (458,101) (458,101) (458,101) (458,101) Closing Balance at 30th June 2018 Closing Balance at 30th June 2018 6,406,948 6,406,948 1,368,049 1,368,049 7,774,997 7,774,997 Profit for the year Profit for the year - - 2,809,404 2,809,404 Issue of Share Capital. net of cost Issue of Share Capital. net of cost 318,345 318,345 - - Dividends Paid during the year Dividends Paid during the year - - (842,522) (842,522) 2,809,404 2,809,404 318,345 318,345 (842,522) (842,522) Closing Balance at 30th June 2019 Closing Balance at 30th June 2019 6,725,293 6,725,293 3,334,931 3,334,931 10,060,224 10,060,224 This Statement of Changes in Equity should be read in conjunction with the accompanying notes. This Statement of Changes in Equity should be read in conjunction with the accompanying notes. LaserBond Ltd 2019 Annual Report | Page 24 LaserBond Ltd 2019 Annual Report | Page 24 LaserBond Limited - Financial Statements 2019 SHAREHOLDER INFORMATION 29 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 Corporate Information LaserBond Limited is a for-profit listed public company, incorporated and domiciled in Australia. The company specialises in developing technologies and implementing its metal cladding methodologies to increase operating performance and wear life of capital -intensive machinery component. General Information and Statement of compliance The financial report was authorised for issue in accordance with a resolution of the directors on 20th August 2019. These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations and the Corporations Act 2001, and comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB). The financial report has been prepared on an accruals basis. CHANGE IN ACCOUNTING POLICY AASB 9 Financial Instruments AASB 9 sets out new requirements for the classification and measurement of financial assets and liabilities and include forward-looking expected loss impairment model. This standard replaces AASB 139 Financial Instruments: Recognition and Measurement. The adoption of AASB 9 did not have a significant effect on the company’s accounting policy relating to financial liabilities. Trade receivables is the only financial asset that has been impacted by the adoption of the standard, specifically the measurement basis for the impairment of trade receivables which is now based on expected credit loss (ECL). When determining the credit risk for trade receivables, the company uses quantitative and qualitative information and analysis, based on the company’s historical experience and informed credit assessment including forward looking information. The company applies the AASB 9 simplified model of recognising lifetime expected credit losses for all trade receivables as these items do not have a significant financing component. In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they possess shared credit risk characteristics. They have been grouped based on the days past due and also according to the geographical location of customers which is predominantly Australia. The expected loss rates are based on the payment profile for sales over the past 36 months before 30 June 2019 as well as the corresponding historical credit losses during that period. The historical rates are adjusted to reflect current and forwarding looking economic factors affecting the customer’s ability to settle the amount outstanding. The company has identified the borrowing rate for small to large business and the unemployment rate to be the most relevant factors and accordingly adjusts historical loss rates for expected changes with reference to these factors. However, given the short period exposed to credit risk, the impact of these economic factors has not been considered significant within the reporting period. Trade receivables are written off when there is no reasonable expectation of recovery. Failure to make payments and to communicate alternative payment arrangements may be considered indicators of no reasonable expectation of recovery. Given the prudent approach to estimating losses on receivables in accordance with the previous standards, the company did not need to adjust the estimated recoverability of trade receivables on transition to AASB 9. AASB 15 Revenue from Contracts with Customers AASB 15 introduces a changed process for revenue recognition based on identifying when performance obligations are met. Revenue from sale of goods are recognised by the company when the goods are transferred to the customer, namely from the time the customer gains controls of the goods. Revenue from services is recognised at the point the services are provided. Where the company’s contracts comprise a variety of performance obligations including, but not limited to, equipment delivery, training, and installation, under AASB 15, the company must evaluate the separability of the promised goods or services based on whether they are ‘distinct’. A promised good or service is ‘distinct’ if both:  the customer benefits from the item either on its own or together with other readily available resources;  it is ‘separately identifiable’ (i.e. the company does not provide a significant service integrating, modifying or customising it). While this represents significant new guidance, the implementation of this new guidance did not have a significant impact on the timing or amount of revenue recognised by the company during the year. Application of AASB 15 did not impact the way in which the company accounts for revenue from sale of goods or provision of services. LaserBond Ltd 2019 Annual Report | Page 25 LaserBond Limited - Financial Statements 2019 30 SHAREHOLDER INFORMATION Other amended standard adopted by the Group which do not have a material impact on the financial statements: AASB 2016-5 Amendments to Australian Accounting Standards - Classification and Measurement of Share-based Payment Transactions. NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES a) Revenue and other income For current year Revenue from contracts with customers The core principle of AASB 15 is that revenue is recognised on a basis that reflects the transfer of promised goods or services to customers at an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. Revenue is recognised by applying a five-step model as follows: 1. Identifying the contract with a customer Identifying the performance obligations 2. 3. Determining the transaction price 4. Allocating the transaction price to the performance obligations 5. Recognising revenue when/as performance obligation(s) are satisfied. Revenue from sale of goods and services Revenue from sale of goods to customers is recognised when control of the goods has transferred to the customer, being the point in time when the goods are received by the customer. Revenue from services is recognised at the point the services are provided. For comparative year Revenue arises from sale of products and services. It is measures with reference to the fair value of the consideration received or receivable. Revenue is recognised in the following manner: Sale of Goods Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods. Revenue from sale of good with no significant service obligation is recognised on delivery. Interest Revenue from interest is recognised on accrual basis. Other Income Revenue from other income streams is recognised when the company receives it or as an accrual if the group are aware of the entitlement to the other income. b) Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The chief operating decision makers, who are responsible for allocating resources and assessing performance of the operating segments, have been identified as the Board. LaserBond Ltd 2019 Annual Report | Page 26 LaserBond Limited - Financial Statements 2019 SHAREHOLDER INFORMATION 31 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) c) Income Tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction does not affect either accounting or taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected to apply when the assets are recovered or liabilities settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. d) Foreign Currency Translation The functional and presentation currency of the company is Australian dollars. Foreign currency transactions are translated into the functional currency using the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. Foreign exchange gains and losses resulting from settling foreign currency transactions, as well as from restating foreign currency denominated monetary assets and liabilities, are recognised in the Statement of Profit or Loss and Other Comprehensive Income, except for differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when fair value was determined. e) Comparative Information Where necessary, comparative amounts have been reclassified and repositioned for consistency with current year accounting policy and disclosures. If there are any such changes, details on the nature and reason for the amounts that may have been reclassified and repositioned for consistency with current year accounting policy and disclosures, where considered material, are referred to separately in the financial statements or notes thereto. f) Cash and Cash Equivalents For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. g) Financial Instruments For current year Financial instruments are recognised initially on the date that the Company becomes party to the contractual provisions of the instrument. On initial recognition, all financial instruments are measured at fair value plus transaction costs (except for instruments measured at fair value through profit or loss where transaction costs are expensed as incurred). Financial assets All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets. LaserBond Ltd 2019 Annual Report | Page 27 LaserBond Limited - Financial Statements 2019 32 SHAREHOLDER INFORMATION NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Classification On initial recognition, the Company classifies its financial assets at amortised cost. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets. Assets measured at amortised cost are financial assets where the business model is to hold assets to collect contractual cash flows and the contractual terms give rise on specified dates to cash flows are solely payments of principal and interest on the principal amount outstanding. The Company's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the statement of financial position. Subsequent to initial recognition, these assets are carried at amortised cost using the effective interest rate method less provision for impairment. Interest income, foreign exchange gains or losses and impairment are recognised in profit or loss. Gain or loss on derecognition is recognised in profit or loss. Impairment of financial assets Impairment of financial assets is recognised on an expected credit loss (ECL) basis for financial assets measured at amortised cost. When determining whether the credit risk of a financial assets has increased significant since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company's historical experience and informed credit assessment and including forward looking information. Credit losses are measured as the present value of the difference between the cash flows due to the Company in accordance with the contract and the cash flows expected to be received. This is applied using a probability weighted approach. Impairment of trade receivables and contract assets have been determined using the simplified approach in AASB 9 which uses an estimation of lifetime expected credit losses. The Company has determined the probability of non-payment of the receivable and contract asset and multiplied this by the amount of the expected loss arising from default. Financial liabilities The Company measures all financial liabilities initially at fair value less transaction costs, subsequently financial liabilities are measured at amortised cost using the effective interest rate method. The financial liabilities of the Company comprise trade payables and finance lease liabilities. For comparative year Financial assets The company classifies its financial assets in the following categories: financial assets at fair value through profit or loss, and loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition. Financial liabilities Financial liabilities are recognised when the company becomes a party to the contractual agreements of the instrument. All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included in the income statement line items "interest paid". Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities depending on the purpose for which the liability was acquired The company‘s financial liabilities include trade and other payables including finance lease liabilities, which are measured at amortised cost using the effective interest rate method. Trade and other payables represent liabilities for goods and services provided to the company prior to the year end and which are unpaid. These amounts are unsecured and are usually paid within 30 to 60 days of recognition. Recognition and initial measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).Financial instruments are initially measured at fair value plus transaction costs. LaserBond Ltd 2019 Annual Report | Page 28 LaserBond Limited - Financial Statements 2019 SHAREHOLDER INFORMATION 33 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 to 90 days from date of invoice. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expire or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. Subsequent Measurement Loans and receivables are carried at amortised cost using the effective interest method or cost. Impairment The company assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. Impairment losses are recognised as profit or loss. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, the probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable maybe impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short term receivables are not discounted if the effect of discounting is immaterial. The amount of any impairment loss is recognised in profit or loss within administration expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other income in profit or loss. h) Inventory Raw materials, finished goods and work in progress are stated at the lower of cost or net realisable value. Cost of work in progress comprises direct materials, direct labour and any external sub-contract costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. i) Property, Plant and Equipment Property plant and Equipment are measured at cost less depreciation and any impairment losses. Depreciation on property, plant and equipment is calculated on a reducing balance basis using the following rates: - Plant and equipment 4.5% - 65% - Motor Vehicles 18.75% - 30% - Development equipment 20% - 50% j) Intangible assets Patents Patents are recognised and amortised from the date at which the patent was granted. Patent expenditures are amortised at 7.5% per annum. LaserBond Ltd 2019 Annual Report | Page 29 LaserBond Limited - Financial Statements 2019 34 SHAREHOLDER INFORMATION NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Software Software costs are recorded and amortised from the date at which the software is installed for use. Software expenditures are amortised at 40%-70% per annum. k) Impairment of Assets Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. l) Leases Leases of plant and equipment, where the company as lessee has substantially all the risks and rewards of ownership, are classified as finance liabilities. Financed assets are capitalised at their inception at the fair value of the leased equipment or, if lower, the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The equipment acquired under finance agreements are depreciated over the shorter of the asset’s useful life and the lease term. Leases in which a significant portion of the risks and rewards of ownership are not transferred to the company as lessee are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit or Loss and Other Comprehensive Income on a straight-line basis over the period of the lease. m) Issued Capital 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. n) Goods and Services Tax Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the Australian Taxation Office. 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 Australian Taxation Office 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 flow. o) Employee benefits (i) Short-term obligations Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be wholly settled within 12 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. The liability for annual leave and long service leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables. LaserBond Ltd 2019 Annual Report | Page 30 LaserBond Limited - Financial Statements 2019 SHAREHOLDER INFORMATION 35 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (ii) Other long-term employee benefit obligations The liability for employee entitlements which are not expected to be settled within 12 months after the end of the period in which employees render the related service is 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. Discount rates are based on the market yield on Commonwealth Government Securities with maturity dates close to the expected date the employee will reach 10 years of service. The obligations are presented as current liabilities in the Statement of Financial Position if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur. The current provision for employee benefits includes accrued annual leave and long service leave. For long service leave it covers all unconditional entitlements where employees have completed the required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. Where employees have completed the required period of service, this entire amount is presented as current, since the group does not have an unconditional right to defer settlement for any of these obligations. However, based on past experiences, the group does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. (iii) Share-based payments Share-based compensation benefits are provided to employees via an employee share scheme. The fair value of options granted under the employee share scheme is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the shares granted, including the impact of any vesting conditions. Vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the numbers of shares that are expected to vest based on the vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. The grant by the company of options over its equity instruments to the employees of subsidiary undertakings in the company is treated as a capital contribution to that subsidiary undertaking. The fair value of the employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity. p) Dividends Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at reporting date. q) Earnings per share (i) Basic Earnings per share Basic earnings per share is calculated by dividing: - - The profit attributable to members of the company, excluding any costs of servicing equity other than ordinary shares. By the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. (ii) Diluted Earnings per share There are no outstanding ordinary shares therefore diluted earnings per share is the same as basic earnings per share. LaserBond Ltd 2019 Annual Report | Page 31 LaserBond Limited - Financial Statements 2019 36 SHAREHOLDER INFORMATION NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) r) Government Grants Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met. Grants relating to expense items are recognised as income over the periods necessary to match the grant to the costs they are compensating. Government grants relating to assets are initially taken to deferred income and then offset against the carrying amount of the asset when construction of the asset has been completed. s) Impact of Standards Issued but not yet applied by the Entity (i) AASB 16 Leases (Effective Date: 1 January 2019) AASB 16 introduces a new model requiring lessees to recognise all leases on the balance sheet, except for short term leases and leases of low value assets. A short term lease is defined as a lease which has a term of twelve months or less at the commencement date. The assessment of low value asset is based on the absolute value of the leased asset when new. The changes in AASB 16 will lead to recognition of an asset (the right to use an asset) and a financial liability (to pay rentals) on the balance sheet. The company currently has $2,583,057 worth of operating leases most of which we anticipate will be brought onto the statement of financial position. Interest and amortisation expense will increase and rental expense will decrease. The company is applying the modified retrospective approach and therefore will not restate comparatives. NOTE 2: OTHER INCOME Grant Income Other NOTE 3: EXPENSES 2019 $ 468,606 78,980 547,586 2018 $ 640,772 24,656 665,418 Profit before Income Tax from continuing operations includes the following specific expenses Auditors Remuneration - Audit Services – audit and review of Financial Reports 67,000 60,000 NOTE 4: INCOME TAX Reconciliation of Income Tax Expense from continuing operations Profit before Income Tax expense 3,834,867 1,402,193 Prima Facie Tax at the Australian tax rate of 27.5% (2018: 30%) Deferred Tax Asset adjustments R&D Tax Concession Non-deductible expense Adjustment to Prior Year Income Tax Provisions Total Income Tax Expenses NOTE 5: EARNINGS PER SHARE 1,054,588 99,317 (88,682) 7,208 (46,968) 1,025,463 420,658 54,903 (63,723) 4,926 17,680 434,444 Basic and diluted earnings per share (cents) 2.972 1.040 There are no current options to affect diluted earnings per share. LaserBond Ltd 2019 Annual Report | Page 32 LaserBond Limited - Financial Statements 2019 (a) Weighted Average Shares on Issue Opening Balance as at 1st July 2018 Shares issued as at 12th October 2018 Shares issued as at 23rd October 2018 Shares issued as at 25th February 2019 Shares issued as at 5th April 2019 Closing Balance as at 30th June 2019 NOTE 6: TRADE AND OTHER RECEIVABLES Trade Receivables Provision – Impairment of Receivables (a) Loans – Key Management Personnel Loans – Employees Prepayments 37 SHAREHOLDER INFORMATION No. of Shares 93,073,489 Weighted No. 93,073,489 812,074 150,000 59,731 444,148 580,689 102,740 20,456 104,649 94,539,442 93,882,023 2019 $ 4,822,307 (7,740) 4,174 6,642 570,298 5,395,681 2018 $ 3,478,783 (13,135) 16,174 2,789 1,877,830 5,362,441 Prepayments include progress payments on patent applications, deposits on equipment to increase capabilities and the provision for an expense reimbursement claim from the Collaborative Research Centre Project. Gross Amount $,000 Past due (and impaired) $,000 4,822 574 5,396 3,479 1,883 5,362 8 - 8 13 - 13 2019 Trade receivables Other receivables 2018 Trade receivables Other receivables Within Trade Terms (not impaired) <30 $,000 2,902 574 3,476 1,696 1,883 3,579 31-60 $,000 1,379 - 1,379 1,153 - 1,153 61-90 $,000 >90 $,000 153 - 153 608 - 608 380 - 380 9 - 9 Total $,000 4,822 574 5,396 3,479 1,883 5,362 LaserBond Ltd 2019 Annual Report | Page 33 LaserBond Limited - Financial Statements 2019 38 NOTE 7: INVENTORY Stock on Hand – Raw Materials Stock on Hand – Finished Goods Work in Progress NOTE 8: PROPERTY, PLANT & EQUIPMENT Plant & Equipment At Cost Less Accumulated Depreciation Office Equipment At Cost Less Accumulated Depreciation Motor Vehicles At Cost Less Accumulated Depreciation SHAREHOLDER INFORMATION 2019 $ 1,492,517 392,188 662,803 2,547,508 9,411,567 (3,865,580) 5,545,987 234,734 (138,487) 96,247 569,383 (349,172) 220,211 2018 $ 1,139,935 382,659 965,011 2,487,605 6,042,366 (3,221,727) 2,820,639 214,240 (156,697) 57,543 534,035 (325,744) 208,291 TOTAL PROPERTY, PLANT & EQUIPMENT 5,862,445 3,086,473 (a) Movements in Carrying Amounts Plant & Equipment Office Equipment Motor Vehicles Total 2019 Financial Year Balance at the beginning of the year Additions Sale / Disposal of Asset Depreciation Expense Carrying Amount at the end of the year 2018 Financial Year Balance at the beginning of the year Additions Sale / Disposal of Asset Depreciation Expense Carrying Amount at the end of the year (b) Asset Additions financed $ 2,820,639 3,455,136 (85,936) (643,852) 5,545,987 $ 2,273,951 1,140,237 (88) (593,461) 2,820,639 57,543 88,133 (70,878) 21,449 96,247 $ 32,498 51,630 (249) (26,336) 57,543 $ 208,291 100,256 (64,908) (23,428) 220,211 $ 231,061 68,800 - (91,570) 208,291 The values for asset additions purchased utilising finance leases or hire purchase agreements are: 2019 1,495,157 $ 3,086,473 3,643,525 (221,722) (645,831) 5,862,445 $ 2,537,510 1,260,675 (337) (711,367) 3,086,473 2018 1,011,041 LaserBond Ltd 2019 Annual Report | Page 34 LaserBond Limited - Financial Statements 2019 39 SHAREHOLDER INFORMATION NOTE 9: INTANGIBLES 2019 Financial Year Balance at the beginning of the year Additions Disposals Amortisation Expense Carrying Amount at the end of the year 2018 Financial Year Balance at the beginning of the year Additions Disposals Amortisation Expense Carrying Amount at the end of the year Patents and Trademarks $ 5,508 12,491 - (1,906) 16,093 5,955 - - (447) 5,508 Other Intangibles $ 17,879 27,271 (3,383) (18,180) 23,587 33 24,231 (700) (5,685) 17,879 Amortisation charges are included in depreciation and amortisation in the statement of profits and loss. NOTE 10: DEFERRED TAX ASSETS Deferred tax assets comprise temporary differences attributable to: Employee Benefits Accruals Deferred tax assets expected to be recovered within 12 months Deferred tax assets expected to be recovered after more than 12 months 2019 $ 292,166 71,189 363,355 223,280 140,075 363,355 Total $ 23,387 39,762 (3,383) (20,086) 39,680 5,988 24,231 (700) (6,132) 23,387 2018 $ 250,744 37,296 288,040 160,562 127,478 288,040 At June 2017 (Charged) / credited - to profit or loss - directly to equity At June 2018 (Charged) / credited - to profit or loss - directly to equity At June 2019 NOTE 11: TRADE AND OTHER PAYABLES Trade Payables Superannuation Dividends Other payables and accrued Expenses Employee Benefits Expense Accruals Total 203,211 29,926 233,137 47,533 - 250,744 41,422 - 292,166 7,370 - 37,296 33,893 - 71,189 2019 $ 1,280,494 44,094 33,955 679,427 2,037,970 54,903 - 288,040 75,315 - 363,355 2018 $ 1,036,909 38,070 28,631 763,887 1,867,497 LaserBond Ltd 2019 Annual Report | Page 35 LaserBond Limited - Financial Statements 2019 40 NOTE 12: CONTRIBUTED EQUITY Issued and Paid Up Capital Opening Balance Issued Shares SHAREHOLDER INFORMATION 2019 Shares 93,073,489 1,465,953 94,539,442 2019 $ 6,406,948 318,345 6,725,293 2018 Shares 91,132,465 1,941,024 93,073,489 2018 $ 6,186,816 220,132 6,406,948 (a) Ordinary Shares Date Details 1st July 2017 Opening Balance 9th October 2017 13th October 2017 21st December 2017 6th April 2018 Non.Exec. Director Remuneration Dividend Reinvestment Plan Employee Share Plan Dividend Reinvestment Plan 30th June 2018 Closing Balance 12th October 2018 23rd October 2018 25th February 2019 5th April 2019 Dividend Reinvestment Plan Non.Exec. Director Remuneration Employee Share Plan Dividend Reinvestment Plan 30th June 2019 Closing Balance (b) Capital Risk Management No. Shares 91,132,465 100,000 979,480 152,008 709,536 93,073,489 812,074 150,000 59,731 444,148 94,539,442 Issue Price (Cents per Share) 12.50 12.54 15.00 11.40 15.91 12.50 38.50 36.68 $ 10,662 118,212 14,866 76,392 220,132 127,464 16,866 14,677 159,338 318,345 Management effectively manages the company’s capital by assessing the group’s financial risks and adjusting its financial structure in response to those risks. These responses include the management of debt levels and distributions to shareholders. The company has no borrowings and no externally imposed capital requirements. In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. NOTE 13 : CAPITAL AND LEASING COMMITMENTS (a) Hire Purchase / Finance Lease Commitments Payable: Within one (1) year Later than one (1) year but not later than five (5) years Minimum Hire Purchase / Finance Lease payments: Less future finance charges Total Hire Purchase / Finance Lease Liability 2019 $ 786,441 2,453,481 3,239,922 (385,659) 2,854,263 2018 $ 546,473 1,648,390 2,194,863 (271,996) 1,922,867 The company’s hire purchase and finance lease commitments are in relation to plant & equipment and motor vehicles. These are under agreements expiring currently within 1 to 5 years. Under the Terms of Agreements, the company has the option to acquire the financed assets by payment of the final instalment. This option lapses in the event of a default of the finance lease agreement. LaserBond Ltd 2019 Annual Report | Page 36 LaserBond Limited - Financial Statements 2019 (b) Operating Lease Commitments Payable Within one (1) year Later than one (1) year but not later than five (5) years Later than five (5) years) NOTE 14: CONTINGENT ASSETS & LIABILITIES SHAREHOLDER INFORMATION 41 2019 $ 766,256 1,816,801 - 2,583,057 2018 $ 744,378 2,583,057 - 3,327,435 The directors are not aware of any contingent assets or contingent liabilities that would have an effect on these financial statements. (2018: Nil) NOTE 15: RELATED PARTY TRANSACTIONS Transactions with related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. (a) Other Related Parties Labour Costs Payroll persons related to executive directors 163,363 171,984 Note: this is exclusive of executive director remuneration which is included in the remuneration report within the Directors’ Report of this Annual Report. (b) Key Management Personnel Transactions Consultants Hawkesdale Group Sam Holdings (Aust.) 51,875 - 51,875 2,500 57,450 59,950 These consultant fees are all paid to non-executive director related entities and relate to services to support executive functions. Fees relative to a non-executive director’s board fees are included in the remuneration report within the Directors’ Report of this Annual Report. Hawkesdale Group provided consultancy services related to sales support and strategy development. This is a director related entity. Loans Director Loan – Gregory Hooper 4,174 16,174 All Loans are classified as current, unsecured and interest free. This is payable on demand. Superannuation Contribution to superannuation funds on behalf of key management personnel NOTE 16: KEY MANAGEMENT PERSONNEL 94,652 89,954 The key management personnel of the company for management of its affairs are all executive directors and the company secretary. (a) Remuneration Details in relation to the remuneration of the key management personnel of the company for management of its affairs are included in the remuneration Report within the Directors’ Report of this Annual Report. . LaserBond Ltd 2019 Annual Report | Page 37 LaserBond Limited - Financial Statements 2019 42 SHAREHOLDER INFORMATION (b) Options Held There were no options held at 30 June 2019 or 30 June 2018. There were no options issued during the financial year. (c) Shares Held Interest Wayne Hooper Direct Wayne Hooper Indirect Greg Hooper Direct Greg Hooper Indirect Philip Suriano Indirect Matthew Twist Direct Shares Held as at 30th June 2018 Issued Purchased / (Sold) Shares Held as at 30th June 2019 9,351,932 1,217,861 5,639,659 3,936,900 545,131 65,708 20,757,191 273,753 47,637 - - 163,174 5,201 489,765 - - - - - - - 9,625,685 1,265,498 5,639,659 3,936,900 708,305 70,909 21,246,956 Interest Shares Held as at 30th June 2017 Issued Purchased / (Sold) Shares Held as at 30th June 2018 Wayne Hooper Direct Wayne Hooper Indirect Greg Hooper Direct Greg Hooper Indirect Philip Suriano Indirect Allan Morton1 Indirect Matthew Twist Direct 9,067,779 1,132,427 5,412,926 3,778,625 439,296 1,454,964 56,554 19,887,607 284,153 47,434 226,733 158,275 105,835 - 9,154 831,584 - 38,000 - - - - - 38,000 9,351,932 1,217,861 5,639,659 3,936,900 545,131 1,454,9642 65,708 20,757,191 1 Allan Morton resigned on 4 October 2017. 2 These were the amount of shares held at the date of Allan Morton’s resignation. NOTE 17: DIVIDENDS Declared 2019 fully franked interim ordinary dividend of 0.50 (2018: 0.40) cents per share franked at the tax rate of 27.5% (2018: 27.5%) 2019 $ 2018 $ 470,339 184,728 Declared 2018 fully franked final ordinary dividend of 0.40 (2018: 0.30) cents per share franked at the tax rate of 27.5% (2017: 30%) 372,183 273,373 Total dividends per share for the period 0.90 cents 0.50 cents Dividends paid in cash or satisfied by the issues of shares under the dividend reinvestment plan during the year were as follows: Paid in cash Satisfied by the issue of shares 550,380 292,142 842,522 254,389 203,712 458,101 Dividends not recognised during the reporting period Since year end the directors have recommended the payment of a final dividend of 0.5 cents per fully-paid ordinary share (2018: 0.4) fully franked based on tax paid at 27.5%. The aggregate amount of the proposed dividend expected to be paid on 11th October 2019 out of retained earnings at 30 June 2019, but not recognised as a liability at year end is $472,697 The debit expected to franking account arising from this dividend is $129,992. LaserBond Ltd 2019 Annual Report | Page 38 LaserBond Limited - Financial Statements 2019 SHAREHOLDER INFORMATION 43 Franking credits Franking credits available for subsequent periods based on a tax rate of 27.5% (2018: 27.5%) 2,253,059 1,672,208 NOTE 18: CASH FLOW INFORMATION Reconciliation of profit after income tax to net cash flows from operating activities Profit after Income Tax for the year Non-cash flows in operating surplus Depreciation, Amortisation & Impairment (Profit) / loss on disposal of property, plant & equipment Changes in assets and liabilities (Increase) / Decrease in trade and other receivables (Increase) / Decrease in inventories (Increase) / Decrease in deferred tax assets Increase / (Decrease) in trade and other payables Increase / (Decrease) in current provisions Increase / (Decrease) in current tax liabilities Increase / (Decrease) in non-current provisions 2019 $ 2,809,404 886,070 (3,558) (33,240) (59,903) (75,315) 170,473 206,349 160,495 20,256 2018 $ 967,749 783,048 (337) (1,308,428) (702,288) (54,903) 422,775 161,838 120,781 (3,393) Net cash provided by operating activities 4,081,031 386,842 NOTE 19: FINANCIAL INSTRUMENTS Financial Risk Management Policies Activities undertaken may expose the company to credit risk, liquidity risk and cash flow interest rate risk. The group’s risk management policies and objectives are therefore reviewed to minimise the potential impacts of these risks on the results of the company. The Board of Directors monitors and manages financial risk exposures of the company and reviews the effectiveness of internal controls relating these risks. The overall risk management strategy seeks to assist the company in meeting its financial targets, while minimising potential adverse effects on financial performance, including the review of credit risk policies and future cash flow requirements. Maturity of financial liabilities at 30th June 2019 Trade and other payables Hire Purchase / Finance Lease Within 1 Year $ 2,037,970 641,201 1 to 5 Years $ - 2,213,062 Total $ 2,037,970 2,854,263 Total financial liabilities 2,679,171 2,213,062 4,892,233 Maturity of financial liabilities at 30th June 2018 Trade and other payables Hire Purchase / Finance Lease Within 1 Year $ 1,878,381 441,988 1 to 5 Years $ - 1,480,879 Total $ 1,878,381 1,922,867 Total financial liabilities 2,320,369 1,480,879 3,801,248 LaserBond Ltd 2019 Annual Report | Page 39 LaserBond Limited - Financial Statements 2019 44 SHAREHOLDER INFORMATION Credit Risk Exposure The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognise financial assets is the carrying amount, net of any provisions for doubtful debts, as disclosed in the balance sheet and notes to the financial statements. Liquidity Risk Liquidity risk is the risk that the group may encounter difficulties raising funds to meet commitments. The group manages this risk by monetary cash flow forecasts Net fair value of financial assets and liabilities The carrying amount of cash, cash equivalents and non-interest bearing monetary financial assets and liabilities (e.g. accounts receivable and payable) are at approximate net fair value. Sensitivity Analysis The company has performed a sensitivity analysis relating to its exposure to interest rate risk and foreign currency risk. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks. Interest Rate Sensitivity Analysis: The company as 30th June 2019 held a quantity of cash on hand in an interest bearing bank account. The Director’s do not consider that any reasonably possible movement in interest rates would cause a material effect on profit or equity. Foreign Currency Risk Sensitivity Analysis: The company purchases certain raw material from overseas due to non-availability in Australia or savings due to bulk buying power overseas. The company continues to expand its operation and has some overseas customers. 100% of those overseas customers invoiced in foreign currency and 95% of overseas suppliers paid in foreign currency are affected by movement in the US dollar exchange rate. To mitigate foreign currency risk for US dollar transactions the group has a US dollar bank account. Payments made from this US dollar account are from foreign customer deposits or transfers of cash at a time the exchange rate is deemed positive (which is reviewed on a daily basis). The Directors do not consider that any reasonably possible movement in foreign currency rates would cause a material effect on profit or equity. NOTE 20: SHARE BASED PAYMENTS a) Employee Share Plan A scheme under which shares may be issued by the company to employees for no cash consideration was approved by shareholders through the prospectus. Eligibility to participate is based on an employee being a full-time employee of the company (or any of its 100% owned subsidiaries), the employee is an Australian resident for income tax purposes and the employees has been directly employed by the group (or any of its 100% owned subsidiaries) for at least as period of 36 continuous months in a permanent position. Each eligible employee will be entitled to a maximum of $1,000 of fully-paid ordinary shares annually, with the number of shares calculated based on the closing price of the group on the day each issue is formally passed by the Board. Offers under the scheme are at the discretion of the Board. Shares issued are vested for a period of three years from date of issue, with one third released annually on each anniversary date of the Board approved issue date. If employment is ceased for any reason any shares still currently vested and not released will be forfeited by the employee. Shares are issued as fully-paid ordinary shares and rank equally with existing shares on issue. Number of new shares issued under the plan to participating employees: (refer to Note 12 a) for detail of issue) b) Non-Executive Director Remuneration (Non-Cash) 2019 $ 59,731 2018 $ 152,008 Non-Executive Directors may be paid remuneration through both cash fees and non-cash benefits in the form of equity issues. The fees will be a fixed sum determined annually that reflects the time, commitment and responsibilities of their role, financial forecasts and cash-flow position of the company. LaserBond Ltd 2019 Annual Report | Page 40 LaserBond Limited - Financial Statements 2019 SHAREHOLDER INFORMATION Liquidity risk is the risk that the group may encounter difficulties raising funds to meet commitments. The group manages The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognise financial assets is the carrying amount, net of any provisions for doubtful debts, as disclosed in the balance sheet and notes Credit Risk Exposure to the financial statements. Liquidity Risk this risk by monetary cash flow forecasts Net fair value of financial assets and liabilities Sensitivity Analysis risks. Interest Rate Sensitivity Analysis: The carrying amount of cash, cash equivalents and non-interest bearing monetary financial assets and liabilities (e.g. accounts receivable and payable) are at approximate net fair value. The company has performed a sensitivity analysis relating to its exposure to interest rate risk and foreign currency risk. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these The company as 30th June 2019 held a quantity of cash on hand in an interest bearing bank account. The Director’s do not consider that any reasonably possible movement in interest rates would cause a material effect on profit or equity. Foreign Currency Risk Sensitivity Analysis: The company purchases certain raw material from overseas due to non-availability in Australia or savings due to bulk buying power overseas. The company continues to expand its operation and has some overseas customers. 100% of those overseas customers invoiced in foreign currency and 95% of overseas suppliers paid in foreign currency are affected by movement in the US dollar exchange rate. To mitigate foreign currency risk for US dollar transactions the group has a US dollar bank account. Payments made from this US dollar account are from foreign customer deposits or transfers of cash at a time the exchange rate is deemed positive (which is reviewed on a daily basis). The Directors do not consider that any reasonably possible movement in foreign currency rates would cause a material effect on profit or equity. NOTE 20: SHARE BASED PAYMENTS a) Employee Share Plan A scheme under which shares may be issued by the company to employees for no cash consideration was approved by shareholders through the prospectus. Eligibility to participate is based on an employee being a full-time employee of the company (or any of its 100% owned subsidiaries), the employee is an Australian resident for income tax purposes and the employees has been directly employed by the group (or any of its 100% owned subsidiaries) for at least as period of 36 continuous months in a permanent position. Each eligible employee will be entitled to a maximum of $1,000 of fully-paid ordinary shares annually, with the number of shares calculated based on the closing price of the group on the day each issue is formally passed by the Board. Offers under the scheme are at the discretion of the Board. Shares issued are vested for a period of three years from date of issue, with one third released annually on each anniversary date of the Board approved issue date. If employment is ceased for any reason any shares still currently vested and not released will be forfeited by the employee. Shares are issued as fully-paid ordinary shares and rank equally with existing shares on issue. Number of new shares issued under the plan to participating employees: (refer to Note 12 a) for detail of issue) b) Non-Executive Director Remuneration (Non-Cash) 2019 $ 59,731 2018 $ 152,008 45 Non-Executive Directors may be paid remuneration through both cash fees and non-cash benefits in the form of equity issues. The fees will be a fixed sum determined annually that reflects the time, commitment and responsibilities of their role, financial forecasts and cash-flow position of the company. SHAREHOLDER INFORMATION No shares will be issued until shareholder approval is gained at the next Annual (Or Extraordinary) General Meeting. Where the issue of shares results in the aggregate amount of fees to exceed the sum approved last by shareholders, shareholder approval may be sought to modify the agreed aggregate amount of fees. LaserBond Ltd 2019 Annual Report | Page 40 Where the issue of shares results in a non-executive director’s total remuneration for a fiscal year to be in any way deemed ‘unreasonable remuneration’, shareholder approval will be sought to approve any recommended issue. Unreasonable remuneration is defined as the aggregate amount of fees most recently approved by shareholders divided by the total number of non-executive directors. The required approval, if any, will be determined by the Board prior to the next Annual (or Extraordinary) General meeting. A non-executive director is ineligible for non-cash benefits in the form of equity issues if the non-executive director has not held a position on the Board for the full twelve months of each fiscal year. At the 2018 Annual General Meeting shareholder approval was sought and gained for the issue of 150,000 shares to one non-executive director who held office for the full twelve months of fiscal year 2018. No approval has as yet been sought or gained for the 2019 fiscal year. c) Expense arising transactions from share based payment Shares Issued under employee share plan Shares Issued under Non-Executive Director Remuneration NOTE 21: CONTROLLED ENTITIES 2019 $ 16,861 18,750 35,611 2018 $ 16,704 12,500 29,204 The group owns 100% of LaserBond (Qld) Pty Ltd, which is a non-trading entity incorporated in Australia. NOTE 22: SEGMENT REPORTING The company has identified its operating segment based on internal reports that are reviewed and used by the executive directors (chief decision makers) in assessing performance and determining allocation of resources. The company operates entirely within Australia. Segment information for the reporting period is as provided below. Other category consists of the Technology and Research and Development segments. 30 June 2019 Services Products Technology R&D Total 11,175,053 9,132,229 2,359,918 - 22,667,200 2,575,341 2,653,777 342,313 (667,004) 4,904,427 Revenue EBITDA Interest Depreciation & Amortisation 404,191 494,011 93,509 76,416 - - - 1.433 169,925 899,635 Profit Before Income Tax 2,077,641 2,083,350 342,313 (668,437) 3,834,867 Income tax expense (555,222) (557,448) (91,536) 178,743 (1,025,463) Profit after Income Tax 1,522,419 1,525,902 250,777 (489,694) 2,809,404 Assets Liabilities 16,401,204 (6,340,980) LaserBond Ltd 2019 Annual Report | Page 41 LaserBond Limited - Financial Statements 2019 Revenue EBITDA Interest Assets Liabilities Revenue EBITDA Interest SHAREHOLDER INFORMATION No shares will be issued until shareholder approval is gained at the next Annual (Or Extraordinary) General Meeting. Where the issue of shares results in the aggregate amount of fees to exceed the sum approved last by shareholders, shareholder approval may be sought to modify the agreed aggregate amount of fees. Where the issue of shares results in a non-executive director’s total remuneration for a fiscal year to be in any way deemed ‘unreasonable remuneration’, shareholder approval will be sought to approve any recommended issue. Unreasonable remuneration is defined as the aggregate amount of fees most recently approved by shareholders divided by the total number of non-executive directors. The required approval, if any, will be determined by the Board prior to the next Annual (or Extraordinary) General meeting. A non-executive director is ineligible for non-cash benefits in the form of equity issues if the non-executive director has not held a position on the Board for the full twelve months of each fiscal year. At the 2018 Annual General Meeting shareholder approval was sought and gained for the issue of 150,000 shares to one non-executive director who held office for the full twelve months of fiscal year 2018. No approval has as yet been sought or gained for the 2019 fiscal year. c) Expense arising transactions from share based payment Shares Issued under employee share plan Shares Issued under Non-Executive Director Remuneration 46 NOTE 21: CONTROLLED ENTITIES 2019 $ 16,861 18,750 35,611 2018 $ 16,704 12,500 29,204 The group owns 100% of LaserBond (Qld) Pty Ltd, which is a non-trading entity incorporated in Australia. NOTE 22: SEGMENT REPORTING The company has identified its operating segment based on internal reports that are reviewed and used by the executive directors (chief decision makers) in assessing performance and determining allocation of resources. The company operates entirely within Australia. Segment information for the reporting period is as provided below. Other category consists of the Technology and Research and Development segments. 30 June 2019 Services Products Technology R&D Total 11,175,053 9,132,229 2,359,918 - 22,667,200 2,575,341 2,653,777 342,313 (667,004) 4,904,427 Depreciation & Amortisation 404,191 494,011 93,509 76,416 - - - 1.433 169,925 899,635 Profit Before Income Tax 2,077,641 2,083,350 342,313 (668,437) 3,834,867 Income tax expense (555,222) (557,448) (91,536) 178,743 (1,025,463) Profit after Income Tax 1,522,419 1,525,902 250,777 (489,694) 2,809,404 SHAREHOLDER INFORMATION 16,401,204 (6,340,980) 30 June 2018 Services Products Technology R&D Total 10,040,123 5,608,023 - - 15,648,146 2,016,499 753,018 64,161 46,613 LaserBond Ltd 2019 Annual Report | Page 41 2,230,466 (500,513) (38,538) - - - 110,774 1,942 717,499 Depreciation & Amortisation 393,556 322,001 Profit Before Income Tax 1,558,782 384,404 (38,538) (502,455) 1,402,193 Income tax expense (478,587) (118,155) 11,561 150,737 (434,444) Profit after Income Tax Assets Liabilities 1,080,195 266,249 (26,977) (351,718) 967,749 12,627,008 (4,852,011) NOTE 23: MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR a) Dividends The directors have recommended the payment of a final dividend of 0.5 cents per fully-paid ordinary share (2018: 0.4), fully franked based on tax paid at 27.5%. The aggregate amount of the proposed dividend is expected to be paid on 11th October 2019. Subject to the group continuing to develop in accordance with future plans, the Board expects to continue to maintain future dividends. NOTE 24: ECONOMIC DEPENDENCY Revenues of $10,504,279 (2018 - $7,216,681) are derived from two independent customers. LaserBond Ltd 2019 Annual Report | Page 42 LaserBond Limited - Financial Statements 2019 SHAREHOLDER INFORMATION 47 1. Substantial Shareholders at 29th July 2019 Holder LaserBond Limited Ms Diane Constance Hooper Mr Wayne Edward Hooper Mr Wayne Edward Hooper (W&D Hooper Investments Pty Ltd) Mr Rex John Hooper Ms Lillian Hooper Mr Gregory John Hooper Mr Gregory John Hooper (Grendy Super Fund A/C) Lornat Pty Ltd 2. Distribution of Shareholders as at 29th July 2019 Holdings Ranges 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001- 9,999,999,999 Totals Holders 51 125 110 301 90 677 Total Units 13,338 377,323 891,763 10,546,607 82,710,411 94,539,442 % 10.182 10.182 1.339 7.705 7.550 5.965 4.164 5.229 Number of Ordinary Fully Paid Shares Held 9,625,685 9,625,685 1,265,498 7,283,916 7,137,590 5,639,659 3,936,900 4,943,344 % 0.014 0.399 0.943 11.156 87.488 100.000 Holdings less than a marketable parcel 46 8,338 0.00882 3. Twenty Largest Shareholders as at 29th July 2019 Holder LaserBond Limited Ms Diane Constance Hooper Mr Wayne Edward Hooper Ms Rex John Hooper Mr Lillian Hooper Mr Gregory John Hooper Lornat Pty Ltd (WK & LM Peachey S/Fund A/C) Mr Gregory John Hooper (Grendy Super Fund A/C) Mr Ian Davies Myall Resources Pty Ltd Mr Keith Knowles Parks Australia Pty Ltd Fortitude Enterprises Pty Ltd Mr Brendan Thomas Birthistle W&D Hooper Investments Pty Ltd Mr Makram Hanna & Mrs Rita Hanna (Hanna & Co P/L Super A/C) Honne Investments Pty Limited Mr William Ross Fenner Dixson Trust Pty Limited Fortitude Enterprises Pty Ltd Mr David Webster & Mrs Janine Florence Webster Number of Ordinary Fully Paid Shares Held 9,625,685 9,625,685 7,283,916 7,137,590 5,356,842 4,943,344 3,936,900 2,736,555 2,580,000 2,561,224 2,000,060 1,453,543 1,414,937 1,265,498 1,200,397 1,000,000 884,333 869,560 809,629 % 10.182 10.182 7.705 7.550 5.666 5.229 4.164 2.895 2.729 2.709 2.116 1.537 1.497 1.339 1.270 1.058 0.935 0.920 0.856 SHAREHOLDER INFORMATION Totals for Top 20 573,988 67,259,686 0.607 71.145 Security Totals LaserBond Ltd 2019 Annual Report | Page 43 94,539,442 4. Voting Rights The voting rights attached to each class of equity securities are: a) Ordinary shares - on a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. b) Options – No voting rights. 5. Restricted Securities The group has no restricted securities. 6. Securities subject to voluntary escrow Total number of shares Escrow Release Date 1 Escrow Release Date 2 Escrow Release Date 3 held in escrow 39,990 21 Nov 2019 – 39,990 shares 193,358 16 Dec 2019 – 46,662 shares 16 Dec 2020 – 46,684 shares 57,134 21 Feb 2020 – 19,052 shares 21 Feb 2021 – 19,052 shares 21 Feb 2022 – 19,030 shares LaserBond Ltd 2019 Annual Report | Page 44 LaserBond Limited - Financial Statements 2019 48 4. Voting Rights SHAREHOLDER INFORMATION Totals for Top 20 67,259,686 71.145 Security Totals 94,539,442 The voting rights attached to each class of equity securities are: a) Ordinary shares - on a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. b) Options – No voting rights. 5. Restricted Securities The group has no restricted securities. 6. Securities subject to voluntary escrow Total number of shares held in escrow 39,990 193,358 57,134 Escrow Release Date 1 Escrow Release Date 2 Escrow Release Date 3 21 Nov 2019 – 39,990 shares 16 Dec 2019 – 46,662 shares 21 Feb 2020 – 19,052 shares 16 Dec 2020 – 46,684 shares 21 Feb 2021 – 19,052 shares 21 Feb 2022 – 19,030 shares LaserBond Ltd 2019 Annual Report | Page 44 LaserBond Limited - Financial Statements 2019 2018 A N N U A L R E P O R T Shareholder’s Annual Report Laserbond Limited ABN 24 057 636 692 LaserBond Limited 2 / 57 Anderson Road SMEATON GRANGE NSW 2567 Ph: +61 2 4631 4500 Fax: +61 2 4631 4555 LaserBond (SA) 112 Levels Road CAVAN SA 5094 Ph: +61 8 8262 2289 www.laserbond.com.au Quality 9001, Environment 14001, Health & Safety 4801 

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