LOCALITY PLANNING ENERGY
HOLDINGS LIMITED
Annual Report
2018
The electricity supplier
supporting communities
LOCALITY PLANNING ENERGY
HOLDINGS LIMITED
ABN 90 147 867 301
CONTENTS
Corporate Directory
Chairman’s Letter
CEO Report
Why We Do What We Do
Directors’ Report
Remuneration Report - Audited
Auditor’s Independence Declaration
Shareholder Information
Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
1
2
3
5
10
14
15
18
23
43
44
Locality Planning Energy (ASX: LPE) is an
electricity and utility supplier specialising
in servicing strata communities
throughout South-East QLD.
CORPORATE
DIRECTORY
Non-Executive Chairman
Mr Andrew Pierce
Executive Directors
Mr Damien Glanville
Mr Ben Chester
Chief Financial Officer
Ms Melissa Farrell
Company Secretary
Mr Bill Lyne
Principal & Registered Office
Suite 306, Tower 1, Kon-Tiki Business Centre
55 Plaza Parade, Maroochydore, QLD, 4558
Phone: 1800 040 168
Auditors
Bentleys
Level 9, 123 Albert Street
Brisbane, QLD, 4000
Phone: +61 7 3222 9777
Lawyers
Gadens
Level 11, 111 Eagle Street
Brisbane, QLD, 4000
Phone: +61 7 3231 1692
Share Registrar
Link Market Services Limited
10 Eagle Street
Brisbane City, QLD, 4000
Phone: +61 1300 554 474
Stock Exchange Listing
Australian Securities Exchange
Code: LPE
CHAIRMAN’S
LETTER
Dear Shareholders,
I am pleased to report your company continues on its growth path and is entering into its next phase, which
includes the introduction of new products.
The past year has seen LPE mature beyond a start-up into a growing enterprise. The company strives to
support and improve its energy offerings to the communities it services. We do this by providing innovative
solutions to the broader problems that strata communities face in regard to their electricity and utility needs,
while maintaining a transparent, honest and service-driven outcome. Our commitment to our customers is
why LPE has seen a consistent and now increasing uptake of our services.
During the 2018 financial year, your board developed a high growth strategic plan that included product and
geographic expansion as well as continuing to mature our existing market. It is encouraging to see these
plans able to be implemented by utilising the increased operational capabilities of the company.
The innovative nature of LPE has led to the effective introduction of a direct to market consumer offering.
This development provided the platform for the company to introduce a solar product that is dedicated to
providing access to sustainable and renewable solar electricity for the vast majority of strata communities.
LPE will now navigate this next stage of its growth with the clear purpose of ensuring commitment to
leading the electricity industry servicing strata communities. The company will continue to bring innovation
and superior service to the industry, while maintaining shareholder value and operating ethically and openly.
The past year has seen the electricity market fall from unprecedented highs into consumer uncertainty. LPE
has maintained a consistent and forward-looking purchasing strategy that has weathered these events and
laid the groundwork for a stable financial future.
Financially, our revenues have increased to over $20 million, an increase of nearly 100%, and our margins
have increased markedly whilst our growing operating costs have been restrained. Additionally, despite
increased resources being allocated to our new products, the operating loss has reduced to $1.43 million.
The board is mindful of the funding requirements necessary for its ongoing operations and announced
earlier this year that it had secured certain funding. With the company’s new product offerings, your board is
looking at more comprehensive funding to satisfy our growing needs, which we expect to resolve in the near
future.
Our board is highly skilled and gaining valuable experience as a cohesive group. As the demands on the
current board members grow, the introduction of a non-executive member is to be considered over the
coming year. There is a robust structure in the leadership group that has a broad understanding of the
challenges at hand. This ensures delivery of our products and services at the highest level of customer
experience.
Finally, on behalf of the Board, I wish to express our thanks to all shareholders and other stakeholders for
their continued support so that we may achieve our long-term goals. In addition, I would like to thank our
staff and management for their dedicated service and commitment to the company’s vision and ideals,
including increased value for our shareholders.
Andrew Pierce
Non-Executive Chairman
Page 1
CEO
REPORT
Dear Shareholders,
With another twelve months having passed, we have continued to mature as a business improving
operations and maintaining strong customer growth. We continually review our performance internally and
externally to ensure that we are achieving the best outcomes for our customers and the successful growth
of our business.
We have further cemented our reputation as experts in the supply of electricity and utility services to the
strata industry by delivering on our vision and ensuring our communities receive the full benefit of an LPE
embedded network. This trust is a true validation of LPE’s brand, particularly with the current criticism of the
energy market.
We have has positioned ourselves as the electricity supplier supporting strata communities, a vision that
guides our operational and customer-facing business decisions. Included in this annual report are some
impact indicators that show the quantifiable benefits LPE’s communities experience.
While we are immensely proud of our exceptional customer experiences, a significant amount of background
work has gone into developing LPE into the maturing enterprise that it is today. At board level, the drive to
sustain our substantial growth and exceed the expectations of our stakeholders remains paramount.
Building on last year’s success and the additional funding acquired, the company has sustained its rapid
growth. LPE’s strong purchasing mechanism has continued to insulate the company from the volatility of the
energy market, while our enthusiastic investors have allowed for expansion.
To continue the growth of LPE and to cement our position as the leading supplier of electricity to strata
communities we have successfully launched our direct market electricity offer, supplying electricity to
communal areas for communities that are not suited to an embedded network.
Along with this evolution we continually question how we can help our customers reduce the cost of
electricity for their communities. With this vision in mind we recently launched a solar solution enabling a
whole community to benefit from lower priced renewable energy. This also supports the demands of our
customers who are looking for sustainable energy solutions.
As the CEO and co-founder of LPE, I am incredibly proud of the company’s progress. Our rapidly increasing
customer numbers and the satisfaction of those customers are testimony to LPE’s vision and business ethos.
We are passionate about what we do and will continue to cement this drive in our company culture and
staff. Thank you to all LPE’s staff, without whom, the company’s success could not have been achieved and
we look forward to providing further success in the years to come as we continue to challenge the market
and ourselves.
Damien Glanville
CEO
Damien Glanville
CEO
Page 2
WHY WE DO
WHAT WE DO
LPE is an all-Australian electricity supplier focused on supporting communities
through competitive electricity rates, innovative supply solutions and
exceptional, local customer service.
The co-founders and directors of LPE, Ben Chester and Damien Glanville,
recognised that the electricity market had become very complicated,
particularly for consumers looking for the best deal. With the goal of
de-mystifying this space, LPE aims for transparency in all communications. This
is reflected in our electricity rates, which are presented as simple, flat rates with
no confusing discounts.
There is a general lack of understanding regarding electricity supply, especially
in the strata community space. Body Corporates are often under-educated
regarding their options and, as a result, are paying more than they should. LPE’s
focus is on providing innovative supply solutions to these under-serviced
communities, simplifying the process and significantly reducing electricity bills.
With our head office based on the Sunshine Coast, QLD, LPE understands the
importance of communities and the role local companies play in them. The
Company is now providing over 30 local people with employment and
continues to invest money in local sporting and community clubs.
As the cost of living continues to rise and more companies choose to outsource
work overseas, LPE remains dedicated to supporting local communities with
money-saving electricity supply solutions and local jobs.
Page 3
THE IMPACT OF LPE
ON OUR COMMUNITIES
When the data from all LPE communities over the past 12 months is compiled, the impact of
LPE becomes apparent. LPE have delivered over $6,000,000 in savings to our communities,
this is money that is directly re-invested into local communities and contributes to income
support for our customers.
Market
Average
Energy Affordability - average annual electricity bill
$1441
$950.13
Debt Levels - customers repaying debt
2.3%
($580 Avg in overdue amounts)
0.002%
($327 Avg in overdue amounts)
Bills as Percentage of Income
4.3%
(Based on low income median)
2.9%
(Based on low income median)
Disconnections - for non-payment
1.97%
0.005%
Hardship - customers on hardship plans
1.02%
(Avg amount owing $776)
Zero Customers
Savings Over Standard Market Energy Offers
Average $171
Average $463
All reference values are from the Australian Energy Regulator
‘Performance of the Retail Energy Market Queensland 2016-17’
Page 4
Mr Andrew Pierce
Non-Executive Chairman
and Director
Mr Damien Glanville
Executive Director, Co-founder
and Chief Executive Officer
DIRECTORS’
REPORT
Your Directors present their
report on the consolidated
entity consisting of Locality
Planning Energy Holdings
Limited and its controlled
entities at the end of, or during
the year ended, 30 June 2018.
The Directors
Qualifications
FCA
The following persons were
directors of the company
during the financial year
and up to the date of this
report.
Appointment Date
17 March 2014
Appointment Date
11 December 2015
Experience
Mr Pierce is an accomplished and
highly regarded accountant and
director, having served on the
boards of Variety The Children’s
Charity (NSW), Guide Dogs
(NSW/ACT), Royal Guide Dogs
Australia and the Centre For Eye
Health Limited. He is highly skilled
in the areas of financial reporting
and company regulatory &
governance areas. During the past
three years, Mr Pierce has not
served as a director of any other
ASX listed company.
Mr Pierce is a Fellow of Chartered
Accountants Australia and New
Zealand, having been in private
practice as a partner or principal
since 1972.
Mr Pierce is a member of the
Audit and Risk Management
Committee.
In accordance with the ASX
Corporate Governance Council’s
definition of independence and
the materiality thresholds set, the
directors consider Mr Pierce to be
independent.
Special Responsibilities
Chairman
Interest in Shares and Options
20,000,000 fully paid ordinary
shares
Directorships Held in Other
Listed Entities
Nil
Experience
Mr Glanville has sixteen years
experience in senior management,
logistics and Executive Director
roles, the last seven specifically
focused in the renewable energy
on-site generation and solar PV
industry.
Mr Glanville is a co-founder and
architect of the electricity retail
model that successfully enabled
LPE to obtain their Australian
Energy Regulator Authorisation
and is also listed as the Chief
Executive Officer for the
management components of the
Australian Energy Regulators
authorisation to retail electricity.
Special Responsibilities
Chief Executive Officer
Interest in Shares and Options
421,299,756 fully paid ordinary
shares
Directorships Held in Other
Listed Entities
Nil
Page 5
Mr Ben Chester
Executive Director, Co-founder
and Chief Operating Officer
Mr Bill Lyne
Company Secretary
Ms Melissa Farrell
Chief Financial Officer
Qualifications
B. Eng
Appointment Date
11 December 2015
Experience
Mr Chester has eight years
experience in large scale
development and deployment of
energy assets, along with ‘energy
to market’ strategy. He spent four
years in an ASX listed company
specialising in renewable projects,
as the principal design and
projects engineer for several
commercial and utility scale
deployments.
Mr Chester has contributed to
several Australian, State and
Federal Government advisory
panels and with the Government
of Thailand on generation,
deployment strategies and
network integration.
Mr Chester is a co-founder and
architect of the electricity retail
model that successfully enabled
LPE to obtain their Australian
Energy Regulator Authorisation
and is listed as the Chief
Operating Officer for the
functional and compliance
components of the Australian
Energy Regulator’s authorisation
to retail electricity.
Special Responsibilities
Chief Operating Officer
Interest in Shares and Options
421,299,756 fully paid ordinary
shares
Directorships Held in Other
Listed Entities Nil
Qualifications
BBus, CPA, Master Finance
Appointment Date
31 May 2017
Experience
Melissa has eighteen years
experience working in accounting
and finance. She has worked in
various sectors including banking
and mining both in Australia and
overseas for publicly listed
companies.
Special Responsibilities
Chief Financial Officer
Interest in Shares and Options
N/A
Directorships Held in Other
Listed Entities
N/A
Qualifications
BCom, CA, FCIS, FGIA, FAICD,
FFIN
Appointment Date
31 May 2017
Experience
Mr Lyne is the principal of the
Australian Company Secretary
Service, providing company
secretarial, compliance and
governance services to public
companies. He is currently
secretary of three other listed
companies and has a wealth of
experience in corporate
governance principles and
practice.
Special Responsibilities
Company Secretary
Interest in Shares and Options
N/A
Directorships Held in Other
Listed Entities
Director of Jumbo Interactive
Limited, appointed 30 October
2009
Page 6
Principal Activities of the Consolidated Entity
The principal activity of the consolidated entity is the sale of electricity and utility services to
residential, commercial and retail customers throughout the Australian National Electricity
Market.
Operating Results
The net result of operations of the consolidated entity for the year ended 30 June 2018 was a loss of
$1,431,303 (2017 – loss of $15,873,397) which included:
•
•
•
Electricity sales totalling $20,153,430 (2017: $10,261,154),
employee costs of $3,038,296 (2017: $2,449,914),
other expenses of $3,364,552 (2017: $1,908,229).
The Company invested $1,899,946 during the year (2017: $2,568,733) in the development and/or
conversion of strata title sites for the purpose of supplying electricity.
Dividends
The directors do not recommend the payment of a dividend and no amount has been paid or
declared by way of a dividend since 30 June 2018 and to the date of this report.
Review of Activities and Business Strategies
As of 30 June 2018, LPE had 204.73 GWh of annualised billable electricity sales. This is an
increase of 91.7% from the previous year. The overall contract term length had a minor
retraction through the year from 7.6 to 7.2 years, this shift is a natural adjustment due to the
higher 5 year contracts compared to 10 years.
The monthly contract growth by GWh has remained very consistent with an upturn in the
backend of the year increasing the average to 8.53GWh per month which is an increase of 18%
over the previous average of 6.97GWh per month.
LPE has been able to maintain a great value proposition and high service levels to our niche
consumer base in embedded electricity networks whilst also expanding our direct market
offering. Management are continuing to innovate with particular product offerings like our
solar electricity product, which is seeing high uptake numbers in the early stages of taking it
to market.
LPE maintained a solid focus on our core offering into our niche market sector with the scale
of growth giving rise to new products which are significantly broadening the addressable
market.
Page 7
Outlook
Throughout FY19 the Company will broaden the focus of the past years from just embedded
networks to electricity sales into strata communities. Embedded Networks will remain the
core product, with the aim to meet the high customer demand for a product suite that is all
things electricity. This larger product suite will offer more opportunity and predictably higher
sales numbers.
The year saw an increase in the Gross margin to 24% where management believe that Gross
margins will make a correction due to market and government influence to the range of 18%
to 19% for the FY19.
Legislative changes are likely to influence only a small segment of the market, where larger
incumbent retailers will be effected on a broader scale, LPE anticipate that key opportunities
will arise and can accelerate growth into potential gaps that may be created.
The Directors understand that to maintain the company’s planned growth rate there will be a
requirement for expansion of funding which presently is being finalised, the directors have
confidence that this facility will be secured in the near term.
Significant Changes in the State of Affairs
There are no matters or circumstances that would significantly affect the state of affairs of
the consolidated entity.
Events Subsequent to Balance Date
There are no matters or circumstances that have arisen since the end of the year which
significantly affected or could significantly affect the operations of the consolidated entity,
the results of those operations or the state of affairs of the consolidated entity in future
financial years.
Company Health and Safety Policy
It is the responsibility of all employees to act in accordance with occupational health and
safety legislation, regulations and policies applicable to their respective organisations and to
use security and safety equipment provided.
Specifically all employees are responsible for safety in their work area by:
•
•
•
following the safety and security directives of management;
advising management of areas where there is a potential problem in safety and
reporting suspicious occurrences; and
minimising risks in the workplace.
Page 8
Directors’ Meetings
Director
Andrew Pierce
Damien Glanville
Ben Chester
Meetings of
Directors Held*
Meetings of
Directors Attended
12
12
12
12
11
12
Director
Audit & Risk
Committee
Meetings Held*
Audit and Risk Committee
Meetings Attended
Andrew Pierce
Damien Glanville
Ben Chester
2
2
2
2
2
2
Director
Remuneration
Committee
Meetings Held*
Remuneration Committee
Meetings Attended
Andrew Pierce
Damien Glanville
Ben Chester
1
1
1
*of which eligible to attend
1
1
1
Page 9
REMUNERATION
REPORT - AUDITED
Remuneration Practices
The Company has established a Remuneration Committee as a Committee of the Board.
The primary purpose of the Committee is to support and advise the Board in fulfilling its
responsibilities to shareholders by:
a)
b)
reviewing and approving the executive remuneration policy to enable the Company to
attract and retain executives and Directors who will create value for shareholders;
ensuring that the executive remuneration policy demonstrates a clear relationship
between senior executive performance and remuneration;
c)
recommending to the Board the remuneration of executive Directors;
d)
e)
f)
fairly and responsibly rewarding executives having regard to the performance of the
Company, the performance of the executive and the prevailing remuneration
expectations in the market;
reviewing the Company’s recruitment, retention and termination policies and
procedures for senior management;
reviewing and approving the remuneration of the Chief Executive Officer/Managing
Director and, as appropriate, other senior executives; and
g)
reviewing and approving any equity based plans and other incentive schemes.
The Committee shall have the right to seek any information it considers necessary to
fulfil its duties, which includes the right to obtain appropriate external advice at the
Company’s expense.
The key management personnel of Locality Planning Energy Holdings Limited and the
consolidated entity includes the directors of the Parent Entity and the Chief Financial Officer.
Page 10
2018 Remuneration
Short-
Term
Employee
Benefits
Share Based
Remuneration
Post-
Employment
Benefits
Total
Performance
Related %
%
Consisting
of Options
Salary &
Fees
Conversion of
Performance
Shares
Super-
annuation
$
%
$
-
115,000
20,048
331,233
20,048
346,094
15,883
183,075
55,979
975,402
0
0
0
0
0
%
0
0
0
0
0
$
$
Directors
Andrew Pierce
115,000
Damien Glanville
311,185
Ben Chester
326,040
Executives
Melissa Farrell
167,192
Total
919,417
-
-
-
-
-
2017 Remuneration
Short-
Term
Employee
Benefits
Share Based
Remuneration
Post-
Employment
Benefits
Total
Performance
Related %
%
Consisting
of Options
Salary &
Fees
Conversion of
Performance
Shares
Super-
annuation
$
$
Directors
Andrew Pierce
98,333
-
$
-
$
%
%
98,333
0
0
Damien Glanville
254,086
3,901,243
23,890
4,179,219
93.35
Ben Chester
254,086
3,901,243
23,890
4,179,219
93.35
Total 606,505
7,802,486
47,780
8,456,771
92.26
0
0
0
Page 11
Shareholdings of Key Management Personnel
Balance
Shares
Shares
Balance
1 July 2017
Acquired
Disposed
30 June 2018
Directors
Andrew Pierce
18,960,641
1,039,359
-
20,000,000
Damien Glanville 436,299,756
Ben Chester 436,299,756
Executives
Melissa Farrell
-
-
-
-
-
-
15,000,000
421,299,756
15,000,000
421,299,756
-
-
-
-
Page 12
Environmental
Whilst it was not an environmental issue for the Company, under the Renewable Energy
Target, the Company is obliged to purchase and surrender an amount of large-scale
generation certificates, and small-scale technology certificates, based on the volume of
electricity the Company acquires each year. This administrative function is managed through
the purchase of electricity.
Indemnification and Insurance of Officers or Auditor
Each of the Directors and the Secretary of the Company have entered into a Deed with the
Company whereby the Company has provided certain contractual rights of access to books
and records of the Company to those Directors and the Secretary. The Company has insured
all of the Directors and Officers of Locality Planning Energy Holdings Limited. The contract of
insurance prohibits the disclosure of the nature of the liabilities covered and amount of the
premium paid. The Corporations Act 2001 does not require disclosure of the information in
these circumstances. The Company has not indemnified or insured its auditor.
Non-Audit Services
The Directors are satisfied that the provision of non-audit services is consistent with the
independence standard for auditors under the corporations act 2001.
The non-audit services did not substantially impact the subject matter of the audit.
Proceedings on Behalf of Company
No person has applied for leave of court to bring proceedings on behalf of the Company or
intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or any part of those proceedings. The
Company was not a party to any other such proceedings during the year.
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2018 has been received
and forms part of this directors’ report and can be found on the following page.
Andrew Pierce
Non-Executive Director
Dated: 28 September 2018
Page 13
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF LOCALITY PLANNING ENERGY HOLDINGS LIMITED
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2018
there have been:
i.
no contraventions of
Corporations Act 2001 in relation to the audit; and
the auditor
independence
requirements as set out
in
the
ii. no contraventions of any applicable code of professional conduct in relation to the audit.
Bentleys Brisbane (Audit) Pty Ltd
Chartered Accountants
Stewart Douglas
Director
Brisbane
28 September 2018
Page 14
SHAREHOLDER
INFORMATION
Shareholder Information
Additional information required by the Australian Securities Exchange (ASX) and not shown
elsewhere in the Annual Report, current as at 21 September 2018, is advised hereunder.
Stock Exchange Quotation
The Company’s shares are quoted on the ASX under the code “LPE”.
Classes of Securities
The Company has the following equity securities on issue:
ASX quoted: 2,510,536,387 ordinary shares, each fully paid, held by 1,121 shareholders
Voting Rights
The voting rights attaching to ordinary shares are set out in Clause 13.13 of the Company’s
Constitution and are summarised as follows:
•
•
•
each shareholder entitled to vote may vote in person or by proxy, attorney or
representative;
on a show of hands, every person present who is a shareholder or a proxy, attorney or
representative of a shareholder has one vote (even though he or she may represent
more than one shareholder); and
on a poll, every person present who is a shareholder or a proxy, attorney or
representative of a shareholder shall, in respect of each full paid share held by him, or in
respect of which he is appointed proxy, attorney or representative, have one vote for the
share.
Holders of options have no voting rights until such options are exercised.
Restricted Securities
800,000,000 ordinary shares, subject to voluntary escrow until 13 February 2019.
On-market Buy-backs
There is no current on-market buy-back of any securities.
Page 15
Distribution of Security Holders
Distribution of shares and the number of holders by size of holding are:
Shareholding Range
Number of Holders
Number of Shares
Ordinary Shares
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Totals
29
10
94
366
622
1,121
3,198
33,882
902,406
18,716,605
2,490,880,296
2,510,536,387
There are 231 shareholders holding less than a marketable parcel of ordinary shares based on
the closing price of 1.8 cents per share on 21 September 2018.
Twenty Largest Security Holders
The names of the twenty largest shareholders, the number of shares and the percentage
capital each holds, are;
NAME
NUMBER OF
SHARES
% OF
CAPITAL
1
2
3
4
5
6
7
8
LUMBER CO PTY LTD < CHESTER FAMILY A/C>
421,299,756
16.78
DAMIEN IAN GLANVILLE
421,299,756
16.78
PETTETT PTY LTD
415,089,426
16.53
JARWILL PTY LTD
186,900,170
7.44
NATIONAL NOMINEES LIMITED
101,750,000
4.05
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
86,326,309
3.44
DEFENDER EQUITIES PTY LTD
45,200,000
1.80
MR STEPHEN CON KRITICOS
24,117,519
0.96
9 WOODVILLE SUPER PTY LIMITED
23,500,000
0.94
10
11
12
13
14
15
16
17
18
19
20
GINGA PTY LTD
22,500,000
0.90
FERNSHA PTY LIMITED
20,765,228
0.83
J P MORGAN NOMINEES AUSTRALIA LIMITED
20,500,100
0.82
NETWEALTH INVESTMENTS LIMITED
20,274,047
0.81
BNP PARIBAS NOMINEES PTY LTD
19,559,772
0.78
SORE TOOTH PTY LIMITED
19,000,000
0.76
EMS ARCADIA PTY LTD
14,000,010
0.56
MR RODNEY PATRICK CALLAHAN
THIRTY SIXTH VILMAR PTY LTD
11,512,665
10,741,100
0.46
0.43
BOND STREET CUSTODIANS LIMITED
10,000,000
0.40
MR JASON PLEHN
10,000,000
0.40
Total top 20 holders of LPE ordinary fully paid shares
1,904,335,858
75.85
Total remaining holders
606,200,529
24.15
Page 16
Substantial Shareholders
The names of substantial shareholders who have notified the Company in accordance with
section 671B of the Corporations Act are:
Name
CHESTER FAMILY A/C
GLANVILLE FAMILY A/C
PETTETT FAMILY A/C
JARWILL INVESTMENT A/C
Number of Shares
421,299,756
421,299,756
415,089,426
186,900,170
Corporate Governance Statement
The Corporate Governance Statement is available on the Company’s website at
https://www.localityenergy.com.au/site/company/corporate-governance.
Page 17
FINANCIAL
STATEMENTS
Page 18
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
Revenue
Electricity Sales
Less cost of goods sold
Energy usage charges
Network charges
Other COGS
Total cost of goods sold
Gain from trading
Other Income
Interest received
Other receipts
Other expenses
Bad and doubtful debts
Interest expense
Depreciation and amortisation
Employee costs
Gain/(loss) on disposal of assets
Other expenses
Professional costs
Share-based payments
Loss from continuted operation
Loss before income taxes
Income tax benefit/(expense)
Net loss for the period
Other comprehensive income
Other comprehensive income net of tax
Total comprehensive loss for the year
Basic/diluted earnings/(loss) per share (dollars per share)
Note
2018
$
2017
$
5
20,153,430
10,261,154
-7,499,849
-5,773,809
-1,935,702
-15,209,360
4,944,070
-3,596,925
-4,021,783
-881,835
-8,500,543
1,760,611
8,553
18,919
44,333
49,079
-121,964
-156,048
-905,818
-3,038,296
-5,768
-1,366,909
-808,045
0
-1,431,303
-1,431,303
-79,187
-117,774
-392,899
-2,449,914
-5,463
-809,859
-503,046
-13,369,577
-15,873,697
-15,873,697
0
-1,431,303
0
-15,873,697
0
0
-1,431,303
(0.0006)
0
0
-15,873,697
(0.0089)
5
5
14
6
16
The Consolidated Statement of Profit and Loss should be read in conjunction with the Notes
to the Financial Statements
Page 19
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
AS AT 30 JUNE 2018
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Plant and equipment
Leasehold improvements
Intangibles
Total non-current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
GST payable
Employee entitlements - leave provisions
Borrowings
Total current liabilities
Non-current liabilities
Employee entitlements - leave provisions
Borrowings
Total non-current liabilities
TOTAL LIABILITIES
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
2018
$
2017
$
21
7
8
9
10
11
12
12
13
15
1,364,363
2,386,669
180,390
3,931,422
3,977,705
1,872,142
91,862
5,941,709
534,396
407,925
5,027,448
5,969,769
528,777
459,050
3,576,211
4,564,038
9,901,191
10,505,747
2,317,759
4,247
180,862
1,283,857
3,786,724
1,586,117
0
158,649
45,524
1,790,290
21,769
67,220
88,989
0
1,258,677
1,258,677
3,875,713
3,048,967
6,025,477
7,456,780
39,064,880
0
-33,039,402
6,025,477
39,064,880
125,000
-31,733,100
7,456,780
The Consolidated Statement of Financial Position should be read in conjunction with the
Notes to the Financial Statements
Page 20
CONSOLIDATED STATEMENT OF CASH FLOWS
AS AT 30 JUNE 2018
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
Note
2018
$
2017
$
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Net cash provided by/(used in) operating activities
21
Cash flows from investing activities
Payment for plant and equipment
Payment for leasehold improvements
Payment for intangibles
Proceeds from sale of assets
Net cash provided by/(used in) investing activities
Cash flows from financing activities
Proceeds from issues of shares
Financing costs paid
Proceeds from loans
Repayment of loans
Net cash provided by/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents opening balance
Cash and cash equivalents closing balance
21
19,665,182
-19,859,994
18,211
-156,048
-332,649
-215,871
-22,533
-2,095,529
31,364
-2,302,569
0
-25,000
98,181
-51,305
21,876
-2,613,341
3,977,704
1,364,363
10,248,163
-12,235,782
34,675
-104,237
-2,057,181
-337,491
-459,175
-2,646,911
60,909
-3,382,668
5,683,200
0
1,150,000
-47,154
6,786,046
1,346,197
2,631,507
3,977,704
The Consolidated Statement of Cash Flows should be read in conjunction with the Notes to
the Financial Statements
Page 21
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
Is s ued
ca pita l
$
Optio ns Accumula ted
res erve
$
lo s s es
$
To ta ls
$
Ba la nce a t 1 July 2016
Profit/(Loss) after income tax
Share based payments
Shares issued during the year
Expired options
Options converted
Ba la nce a t 30 June 2017
14, 584, 86 2 6 , 535, 9 9 0
0
0
13,369,577
0
5,683,200
0
-983,749
0
-18,796,818
18,796,818
125, 000
39 , 06 4, 880
-16 , 843, 152
-15,873,697
0
0
983,749
0
-31, 733, 100
4, 277, 700
-15,873,697
13,369,577
5,683,200
0
0
7, 456 , 780
Ba la nce a t 1 July 2017
Profit/(Loss) after income tax
Expired options
Ba la nce a t 30 June 2018
39,064,880
0
0
39 , 06 4, 880
125,000
0
-125,000
-31,733,100
-1,431,302
125,000
0 -33, 039 , 402
7,456,780
-1,431,302
0
6 , 025, 478
The Consolidated Statement of Changes in Equity should be read in conjunction with the
Notes to the Financial Statements
END OF FINANCIALS STATEMENTS
Page 22
NOTES TO THE
FINANCIAL
STATEMENTS
Page 23
1 REPORTING ENTITY
The financial statements of Locality Planning Energy Holdings Limited (“the Company”) for the year
ended 30 June 2018 covers the Consolidated Entity consisting of Locality Planning Energy Holdings
Limited and the entities it controlled from time to time throughout the year (“the Group” or “Consoli-
dated Entity”) as required by the Corporations Act 2001. Locality Planning Energy Holdings Limited is
a for-profit entity for the purpose of preparing these financial statements.
The financial statements are presented in Australian dollars, which is the functional currency.
The address of the Group’s registered office and principal place of business is Suite 306, Tower One,
55 Plaza Parade, Maroochydore, QLD, 4558.
2 BASIS OF PREPARATION
A. Statement of compliance
The Financial Report has been prepared in accordance with requirements of Australian Accounting
Standards, other authoritative pronouncements of the Australian Accounting Standards Board (AASB)
and the Corporations Act 2001.
This report is to be read in conjunction with any other public announcements made by the Group
during the year in accordance with the continuous disclosure requirements of the Corporations Act
2001.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also
comply with International Financial Reporting Standards.
The accounting policies adopted are consistent with those of the previous financial year, unless stated
otherwise.
B. Basis of measurement
The financial statements have been prepared on the historical cost basis.
C. Use of estimates and judgements
The preparation of financial statements in conformity with AASB’s requires management to make
judgements, estimates and assumptions that effect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimates are revised and in any future periods
affected. Information about critical estimates and judgements in applying accounting policies that
have the most significant effect on the amounts recognised in the financial statements are outlined
below:
Impairment
The Group assesses impairment at the end of each reporting period by evaluating conditions specific
to the Group that may lead to impairment of other assets and financial assets. This assessment
includes the recoverable amount of the intangible assets, which comprise the cost of securing a con-
tract to supply electricity to a strata title property, plus the cost of establishing the metering infra-
structure at that site. These costs are amortised over the life of the contract, which is generally 5 or 10
years. Where an impairment trigger exists, the recoverable amount of the asset is determined. Val-
ue-in-use calculations are performed or market based information is obtained in assessing recoverable
amounts that incorporate a number of key estimates.
Page 24
2 BASIS OF PREPARATION (Cont'd)
D. Going Concern
The financial statements have been prepared on a going concern basis which contemplates the conti-
nuity of normal business activities and the realisation of assets and discharge of liabilities in the ordi-
nary course of business. The Group has incurred a net loss after tax for the year ended 30 June 2018
of $1,431,303 and a net cash outflow from operations of $332,649. At 30 June 2018, the Group’s cur-
rent assets exceeded its current liabilities by $144,698.
The Company has prepared budgets based on its current growth plans and is examining funding
opportunities to fund this growth. This includes long term funding.
The consolidated entity has sufficient net working capital to maintain continuity of normal business
activity and pay its debts as and when they fall due.
3 SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements, and have been applied by all entities in the Group.
A. Basis of consolidation
The consolidated financial statements comprise the financial statements of Locality Planning Energy
Holdings Limited and its subsidiaries for the year ended 30 June 2018 ("the Group"). Subsidiaries are
entities (including structured entities) over which the Group has control. The Group has control over
an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the
entity, and has the ability to use its power to affect those returns. Subsidiaries are consolidated from
the date on which control is transferred to the Group and are deconsolidated from the date that con-
trol ceases.
All intercompany balances and transactions, including unrealised profits arising from intragroup trans-
actions have been eliminated. Unrealised losses are also eliminated unless the transaction provides
evidence of the impairment of the asset transferred.
B. Income Tax
The charge for current income tax expense is based on the profit/loss for the year adjusted for any
non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are
substantively enacted by the balance date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differ-
ences arising between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. No deferred income tax will be recognised from the initial recognition of an asset or liabili-
ty, excluding a business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is
realised or liability is settled. Current and deferred tax is recognised in the profit or loss, except where
it relates to items recognised in the other comprehensive income or directly in equity. In this case the
tax is recognised in the other comprehensive income or directly in equity respectively.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will
be available against which deductible temporary differences or tax losses can be utilised. To the extent
that any rebates are received from Government taxation authorities, they are recognised in profit or
loss as an income tax benefit.
.
Page 25
3 SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
C. Plant and Equipment
Plant and equipment are measured on the cost basis less depreciation and impairment losses.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow
to the consolidated entity and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to the profit or loss during the financial period in which they are incurred.
All assets are depreciated on either a straight line basis or diminishing value basis over their useful
lives to the consolidated entity commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Depreciation Rate & Method
Plant and equipment
10-50% per annum straight line or diminishing value
Motor Vehicles
25% per annum, diminishing value
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting
date.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount.
These gains and losses are included in the profit or loss.
D. Intangible assets
Intangible assets include the cost of securing a contract to supply electricity to a strata title property,
plus the cost of establishing the metering infrastructure at that site. These costs are then amortised
over the life of the contract, which is generally 5 or 10 years.
E. Leasehold Improvements
Leasehold improvements are amortised over the shorter of either the unexpired period of the lease or
the estimated useful lives of the improvements.
F. Trade and other payables
Trade and other payables represent liablities for goods and services provided to the Group prior to the
year end and which are unpaid. These amounts are unsecured and have 30-60 day payment terms.
They are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method.
.
Page 26
3 SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
G. Impairment of Financial Assets
A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objec-
tive evidence of impairment as a result of one of more events (a "loss event") having occurred, which
has an impact on the estimated future cash flows of the financial asset(s).
For financial assets carried at amortised cost (including loans and receivables), a separate allowance
account is used to reduce the carrying amount of financial assets impaired by credit losses. After
having taken all possible measures of recovery, if management establishes that the carrying amount
cannot be recovered by any means, at that point the written-off amounts are charged to the allowance
account or the carrying amount of impaired finanical assets is reduced directly if no impairment
amount was previously recognised in the allowance amount.
H. Impairment of Non-Financial Assets
At each reporting date, the Consolidated Entity reviews the carrying values of its tangible and intangi-
ble assets to determine whether there is any indication that those assets have been impaired. If such
an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less
costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s
carrying value over its recoverable amount is expensed in the profit or loss.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
I. Share-based payments
The Consolidated Entity may make share-based payments to directors and employees. The fair value
of the equity to which employees become entitled is measured at grant date and recognised as an
expense over the vesting period, with a corresponding increase to an equity account. The fair value of
shares is ascertained as the market bid price. The fair value of options is ascertained using a valuation
which incorporates all market vesting conditions. The number of shares and options expected to vest
is reviewed and adjusted at each reporting date such that the amount recognised for services received
as consideration for the equity instruments granted shall be based on the number of equity instru-
ments that eventually vest.
J. Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term
highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank
overdrafts are shown within short-term borrowings in current liabilities on the statement of financial
position.
K. Revenue
Revenue is measured at the fair value of the consideration received or receivable, less any trade or
volume discounts. Interest revenue is recognised using the effective interest rates applicable to the
financial assets. Revenue from the sale of goods is recognised at the point of delivery as this corre-
sponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of
all involvement in those goods. Revenue from rendering of services is measured by reference to the
stage of completion of the service provided.
All revenue is stated net of the amount of goods and services tax (GST).
Page 27
3 SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
L. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables
and payables in the Consolidated Statement of Financial Position are shown inclusive of GST. Cash
flows are presented in the statement of cash flows on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as operating cash flows.
M. Issued Capital
Ordinary shares are classified as equity. Costs directly attributable to the issue of new shares or
options are shown as a deduction from equity.
N. Earnings per share
The Consolidated Entity presents basic and diluted earnings per share (EPS) data for its ordinary
shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of
the Company by the weighted average number of ordinary shares outstanding during the period.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding, adjusted for the effects of all dilutive poten-
tial ordinary shares.
O. Leases
Leases of property, plant and equipment, where substantially all the risks and benefits incidental to the
ownership of the asset, but not legal ownership, are transferred to the Consolidated Entity are classi-
fied as finance leases. Currently there are no leases classified as finance leases.
Finance leases are capitalised recording an asset and a liability equal to the present value of the mini-
mum lease payments, including any guaranteed residual value. Leased assets are amortised over the
shorter of the asset’s useful life and the lease term. Lease payments are allocated between the reduc-
tion of the lease liability and the lease interest expense for the period.
Lease payments under operating leases, where substantially all the risks and benefits remain with the
lessor, are charged to the profit or loss on a straight line basis over the period of the lease.
Page 28
3 SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
P. Financial Instruments
Recognition
Financial instruments are initially measured at fair value on trade date, which includes transaction
costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these
instruments are measured as set out below.
Loans and receivables
These financial assets consist of trade and other receivables, which are measured at cost less any
accumulated impairment losses. There is no significant concentration of credit risk.
Financial Assets at fair value through profit or loss
Financial assets are valued at ‘fair value through profit or loss’ when they are either held for trading for
the purpose of short term profit taking, derivatives not held for hedging purposes, or when they are
designated as such to avoid an accounting mismatch or to enable performance evaluation where a
group of financial assets is managed by key management personnel on a fair value basis in accordance
with a documented risk management or investment strategy. Such assets are subsequently measured
at fair value with changes in carrying value being included in profit or loss.
Held-to-maturity investments
These investments have fixed maturities, and it is the Group’s intention to hold these investments to
maturity. Any held-to-maturity investments held by the Group are stated at amortised cost.
Available-for-sale financial assets
Available-for-sale financial assets include any financial assets not included in the above categories.
Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from
changes in fair value are taken directly to equity, except where losses are considered to be prolonged
and extensive, in which case such losses are recognised in profit or loss.
Financial liabilities
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less
principal payments and amortisation.
Derivative instruments
Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value
are taken to the statement of comprehensive income unless they are designated as hedges. At pres-
ent, the Group does not have any derivative instruments.
Fair Value
Fair value is determined based on current bid prices for all quoted investments.
Impairment
At each reporting date, the Group assesses whether there is objective evidence that a financial instru-
ment has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in
the value of the instrument is considered to determine whether an impairment has arisen. Impairment
losses are recognised in the statement profit and loss.
Page 29
3 SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Q. Employee Entitlements
Provision is made for the Group’s liability for employee benefits arising from services rendered by
employees to balance date.
Employee benefits that are expected to be settled within one year have been measured at the
amounts expected to be paid when the liability is settled. Long-term employee benefits are only
recognised to the extent that it is considered probable that employees will reach the eligible service
period.
R. New Accounting Standards issued but not yet applicable
There are a number of new accounting standards and interpretations that have been issued that do
not take effect in the current accounting period, but will impact future accounting periods. Manage-
ment has decided against early adoption of any of these standards.
The major potential impacts of the new standards is expected to be as follows:
AASB 16 Leases
This standard removes the distinction between operating and financing leases for lessees as previously
defined by AASB 117 Leases. Instead, an entity recognises a ‘right-of-use’ asset for all leases entered
into, along with corresponding lease liabilities for the discounted value of future payments due under
the lease, subject to various adjustments.
Management expects this standard to have some impact on the financial statements as it is currently
party to a number of operating leases that are not in the Statement of Financial Position.
Had all of the leases in place at 30 June 2018 been accounted for in accordance with AASB 117, man-
agement believes there would have been an additional right-to-use asset and corresponding liability of
approximately $450,000 in addition to the existing finance lease liability.
This standard takes effect for reporting periods beginning on or after 1 January 2019.
AASB 9 Financial Instruments
This standard makes changes to naming conventions of financial assets and to conditions required to
apply hedge accounting. In addition, the standard introduces an ‘expected credit losses’ model for
assessing impairment of financial assets.
Management has not yet conducted a detailed analysis of receivables using the expected credit losses
model, however management does not expect the model would result in any substantial changes to
the existing provision for impairment of receivables. This standard takes effect for reporting periods
beginning on or after 1 January 2018.
In addition, there are changes to the recognition criteria for hedging relationships. This would not have
impacted the financial report as at 30 June 2018, but management is likely to consider hedging
arrangements in the future and will be mindful of the new requirements. It is not possible to quantify
the impact of such arrangements at this time as the exact timing and extent is unknown.
AASB 15 Revenue from Contracts with Customers
This standard introduces a new 5-step process for recognition of revenue which involves identifying
the ‘performance obligations’ (also known as the ‘promises’ made to customers) in the contracts with
customers, and then determining how and when those ‘promises’ have been fulfilled.
Management will review contracts with customers and formulate a policy for identifying promises and
when they are fulfilled. Management expects to do this in the next 12-18 months, however preliminary
expectations are that the fulfilment of promises will likely result in a similar result to the current
approach of recognising revenue in accordance with the ‘percentage completion’ method applied
under AASB 118.
This standard takes effect for reporting periods beginning on or after 1 January 2018.
Page 30
4 SEGMENT REPORTING
The Group has identified its operating segments as being the energy retail sector in Australia. Manage-
ment currently identifies the energy retail sector as being the Group’s sole operating segment.
There have been no changes in the operating segments during the year. Accordingly, all significant
operating decisions are based upon analysis of the Group as one segment. The financial results from
the segment are equivalent to the financial statements of the Group as a whole.
5 REVENUE AND OTHER INC OME
Electricity sales
Interest revenue
Other receipts
Total revenue and other income
C o ns o lida ted C o ns o lida ted
Entity
2018
$
Entity
2017
$
20,153,430
8,553
18,919
20,180,903
10,261,154
44,333
49,079
10,354,566
Page 31
6 INCOME TAX
Components of tax expense/(benefit) comprise:
Current tax
Prior year tax
Deferred tax
Income Tax Expense/(Benefit)
Consolidated Consolidated
Entity
2018
$
Entity
2017
$
0
0
0
0
0
0
0
0
Numerical reconciliation of income tax benefit to prima facie tax payable
Loss from operations before tax for the year
The prima facie income tax benefit on loss before income tax at a tax
rate of 27.5% (2017: 27.5%)
-1,431,303
-15,873,697
-393,608
-4,365,267
Tax effect amounts which are not (deductable)/taxable in calculating
taxable income:
Deferred tax asset not brought to account
Total income tax benefit
3,923
389,685
-0
3,681,073
684,194
0
Net unrecognised deferred tax assets
Net Deductable temporary differences
Unused tax losses
Net unrecognised deferred tax asset
-16,879
76,904
2,101,863
2,084,984
1,575,104
1,652,008
The above potential tax benefit for tax losses has not been recognised in the statement of financial
position. These tax losses can only be utilised in the future if the continuity of ownership test is
passed, or failing that, the same business test is passed.
The above potential tax benefit, which excludes tax losses, for deductible temporary differences has
not been recognised in the statement of financial position as the recovery of this benefit is uncertain.
The consolidated entity has no franking credits
Page 32
7 TRADE & OTHER RECEIVABLES
Trade receivables
Other receivables
GST receivable
Consolidated Consolidated
Entity
2018
$
Entity
2017
$
2,386,669
0
0
2,386,669
1,768,273
28,109
75,760
1,872,142
Current trade receivables are interest bearing and are generally receivable within 14 days. A provision
for impairment is recognised against sales where there is objective evidence that an individual trade
receivable is impaired.
2018
Trade Receivables
Less provisions for impairment
Other receivables
Total
2017
Trade Receivables
Less provisions for impairment
Other receivables
Total
Gross
Past due
Amount and impaired
Past due but not impaired
Days (overdue)
<30
$
31-45
$
>45
$
2,392,096
-5,426
0
2,386,669
1,797,927
-29,654
103,869
1,872,142
5,426 224,605
24,385
83,771
5,426 224,605
24,385
83,771
29,654
99,910
26,824
161,303
29,654
99,910
26,824
161,303
The entity does not hold any financial assets whose terms have been renegotiated, but which would
otherwise be past due or impaired.
The >45 day amount is subject to contractual arrangements
Collateral held as security
No collateral is held as security for any of the trade and other receivable balances.
Collateral pledged
No collateral has been pledged for any of the trade and other receivable balances.
Page 33
8 OTHER CURRENT ASSETS
Bond paid
Deposits paid
Prepayments
Prepaid financing costs
Employee Loans
Inventory
9 PLANT & EQUIPMENT
Plant & equipment at cost
Accumulated depreciation
Motor vehicles at cost
Accumulated depreciation
Reconciliation
Consolidated Consolidated
Entity
2018
$
Entity
2017
$
2,943
0
170,919
0
3,190
3,338
180,390
640,668
-200,048
440,620
174,036
-80,260
93,776
534,396
2,943
10,000
78,920
0
0
0
91,862
448,606
-84,840
363,766
228,047
-63,036
165,011
528,777
Reconciliations of the carrying amount of each class of plant and equipment between the beginning
and the end of the financial year.
Plant and equipment
Balance at the beginning of the year
Additions
Depreciation
Write off plant and equipment
Balance at the end of the year
Motor Vehicles
Balance at the beginning of the year
Additions
Disposals
Depreciation
Balance at the end of the year
363,766
195,958
-117,032
-2,071
440,620
165,011
0
-35,423
-35,812
93,776
112,825
301,605
-50,664
0
363,766
164,357
60,786
-5,464
-54,668
165,011
Page 34
10 LEASEHOLD IMPROVEMENTS
Leasehold improvements at cost
Accumulated depreciation
Reconciliation
Consolidated Consolidated
Entity
2018
$
Entity
2017
$
481,708
-73,783
407,925
473,405
-14,354
459,050
Reconciliations of the carrying amount of leasehold improvements between the beginning and
the end of the financial year.
Leashold improvements
Balance at the beginning of the year
Additions
Depreciation
Balance at the end of the year
Reconciliation
459,050
8,303
-59,429
407,925
0
473,405
-14,354
459,050
Reconciliations of the carrying amount of site comversion costs between the beginning and
the end of the financial year.
Site Conversion Costs
Balance at the beginning of the year
Additions
Amortisation
Write off intangibles
Balance at the end of the year
12 BORROWINGS
Current
Site conversion loans
Insurance financing
Owing to related parties
Non-current
Site conversion loans
Owing to related parties
3,576,212
2,164,590
-693,545
-19,809
5,027,448
1,280,690
2,568,733
-273,211
0
3,576,212
45,524
88,333
1,150,000
1,283,857
45,524
0
0
45,524
67,220
0
67,220
108,677
1,150,000
1,258,677
Page 35
13 ISSUED CAPITAL
(a) Issued and paid up capital
Ordinary shares fully paid no par value
(b) Movement in ordinary shares on issue
Balance at 30 June 2017
Conversion of performance shares to ordinary shares
Institutional placement
Exercise of options
Balance at 30 June 2018
Ordinary shares
2018
Number
2,510,536,387
2017
Number
2,510,536,387
Number
2,510,536,387
0
0
0
2,510,536,387
$
39,064,880
0
0
0
39,064,880
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of
the company in proportion to the number of and amounts paid on the shares held.
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.
Ordinarily shares have no par value and the Company does not have a limited amount of authorised
capital.
Share buy-back
There is no current on-market share buy-back.
(c) Share options
At the end of the period, there were NIL options over unissued shares.
Capital risk management
The consolidated entity's objectives when managing capital are to safeguard its ability to continue as
a going concern so that it can provide returns for shareholders and benefits for other stakeholders and
to maintain an optimum capital structure to reduce the cost of capital.
In common with many other newly listed companies, the parent raises finance for the consolidated
entity's working capital and asset development activities.
The consolidated entity is not subject to externally imposed capital requirements.
14 SHARE-BASED PAYMENTS
There were NIL share-based payments during the year.
Page 36
15 RESERVES
Options reserve
Opening balance
Options vested
Expired options
Options converted to ordinary shares
Closing balance
Consolidated Consolidated
Entity
2018
$
125,000
0
-125,000
0
0
Entity
2017
$
6,535,990
13,369,577
-983,750
-18,796,817
125,000
The option reserve account is to account for outstanding share options issued as a result of share
based payments.
16 EARNINGS PER SHARE
Weighted average number of shares used as the denominator in
calculating basic and diluted earnings per share
2,510,536,385
1,786,258,101
2018
Number
2017
Number
Net loss after tax used in calculating basic earnings per share
Net loss after tax used in calculating diluted earnings per share
Basic/diluted earnings/(loss) per share (dollars per share)
17 CONTROLLED ENTITIES
$
-1,431,303
-1,431,303
-0.0006
$
15,873,697
-15,873,697
-0.0089
Investment in controlled entities
Country of
Class of % of ownership % of ownership
Locality Planning Energy Pty Ltd
Locality Embedded Networks Pty Ltd
incorporation shares
Australia
Australia
Ord
Ord
2018
100%
100%
2017
100%
N/A
Page 37
18 LEASE COMMITMENTS
Total operating lease payments
Within 1 year
1 to 5 years
Total
Total finance lease payments
Within 1 year
1 to 5 years
Total
Less Future interest charges
Total
Reconciliation to lease liabilities
Current - Note 12
Non-current - Note 12
Total
Consolidated Consolidated
Entity
2018
$
Entity
2017
$
200,680
299,902
500,582
178,708
508,250
686,958
58,930
70,031
128,961
-16,218
112,744
45,524
67,220
112,744
58,933
127,252
186,185
-31,983
154,202
45,524
108,677
154,201
19 CONTINGENT LIABILITIES AND ASSETS
The Directors are not aware of any contingent liabilities or contingent assets that are likely to have a
material effect on the results of the Group as disclosed in these financial statements. (2017:nil)
20 RELATED PARTIES
Key management personnel compensation
Short term employee benefits
Post-employment benefits
Share based payments
Other related party transactions
Consolidated Consolidated
Entity
2018
$
Entity
2017
$
752,231
40,097
0
792,327
606,505
47,780
7,802,485
8,456,770
Directors loans to the Group totalling $1,150,000 as disclosed at note 12.
Loans are repayable in full, 2 years of being granted, and a commercial rate of interest is charged.
Loans are secured by the borrowers' interest in a list of Installation of Works Agreements.
Page 38
21 CASH FLOW INFORMATION
Consolidated Consolidated
Entity
2018
$
Entity
2017
$
Reconciliation of cash flow from operations with profit / (loss) after tax
Profit / (loss) after tax
Non-cash flows:
Depreciation and amortisation
Loss on disposal of assets
Non-cash donation
Share-based payments
-1,431,303
-15,873,697
905,818
5,768
363
0
-519,354
392,899
5,463
13,369,577
-2,105,758
Changes in operating assets and liabilities
Increase in receivables
Decrease / (increase) in other assets
(Decrease) / increase in creditors and payables
Increase in employee entitilements
Net cash used in operating activities
Reconciation of liabilities arising from financing activities
Borrowings
Cashflows
Non-cash changes
-878,001
-64,216
917,345
73,449
-2,057,181
-514,527
-88,528
745,779
43,982
-332,649
1,304,201
46,876
0
1,351,077
Cash and cash equivalents in the Consolidated Statement of Cash Flows include:
Cash on hand
Cash at bank
Cash on deposit
0
1,344,363
20,000
1,364,363
151
2,477,554
1,500,000
3,977,705
Page 39
22 FINANCIAL INSTRUMENTS
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recogni-
tion, the basis of measurement and the basis on which income and expense are recognised, in respect
of each class of financial asset, financial liability, and equity instrument are disclosed in Note 3 to the
financial statements.
Financial risk management objectives
The financial risks of the Consolidated Entity include price risk, interest rate risk, liquidity risk and
credit risk. The consolidated entity does not hedge these risk exposures. The Consolidated Entity
does not enter into or trade financial instruments, including derivative financial instruments, for specu-
lative purposes.
Price risk
Price risk is the risk of changes to market prices in the supply of electricity. This risk applies to both
the price at which the Company sells electricity to its customers and the price it pays for that electrici-
ty. The Company manages this risk by signing up customers and suppliers to long-term contracts
where possible.
Interest rate risk
Interest rate risks are caused by fluctuations in interest rates which, in turn, are due to market forces.
The Consolidated Entity’s main interest rate risk arises from cash and cash equivalents. The following
table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other
variables held constant, of the Consolidated Entity’s profit or loss before taxes through the impact on
cash and cash equivalents and held to maturity investments with a decrease or an increase of 0.25% in
interest rates.
The Consolidated Entity’s activities are also exposed to the financial risks of changes in interest rates
on its borrowings and cash and cash equivalents. It is the policy of the Consolidated Entity to manage
their risks by continuously monitoring interest rates.
Cash and cash equivalents and other financial assets
Borrowings
Sensitvity
Effect on profit or loss before taxes
Increase 0.25%
Decrease 0.25%
Consolidated Consolidated
Entity
2018
$
Entity
2017
$
1,364,363
-1,351,078
13,285
3,977,705
-1,304,201
2,673,504
33
-33
6,684
-6,684
Page 40
22 FINANCIAL INSTRUMENTS (Cont'd)
Liquidity risk management
Liquidity risks are caused by the inability to raise the money needed to meet payment of liabilities as
and when they fall due. The Consolidated Entity manages liquidity risk by maintaining of reserves and
by continually monitoring forecast and actual cash flows and cash balances. The Company is actively
pursuing financing possibilities to fund its future growth plans.
At 30 June 2018 current assets exceeded current liabilities by $344,756 (2017: current assets exceeded
current liabilities by $4,151,418). Financial liabilities comprised trade payables, accruals and loans. All
trade payables and accruals have a contractual maturity of 6 months or less.
Credit risk management
In relation to financial assets, credit risk arises from the potential failure of counterparties to meet their
obligations under a contract or arrangements. Credit risk for the Consolidated Entity arises from cash
and cash equivalents and outstanding receivables. The Consolidated Entity partially reduces credit
risk by the use of direct debit facilities with its customers. In addition, the Company has the right to
withhold the supply of electricity to secure payment. All cash & cash equivalents are held with Austra-
lian regulated banks. The maximum exposure to credit risk is the carrying amount of the financial
assets recognised in the Consolidated Statement of Financial Position.
Fair values
The carrying amounts of all financial assets and liabilities primarily comprising cash and cash equiva-
lents, trade and other receivables, trade and other payables, employee entitlements, and loans are
stated at their fair value.
Consolidated Consolidated
Entity
2018
$
Entity
2017
$
23 AUDITORS REMUNERATION
Amounts paid/payable for audit or review of the financial statements
Amounts paid/payable for tax and other services
75,000
4,650
79,650
80,000
5,000
85,000
24 SUBSEQUENT EVENTS
There have been no other matters or circumstances that have arisen since the end of the year which
significantly affected or could significantly affect the operations of the Consolidated Entity, the results
of those operations or the state of affairs of the Consolidated Entity in future financial years.
Page 41
25 PARENT ENTITY DISCLOSURES
The following information has been extracted from the books and records of the legal parent
entity Locality Planning Energy Holdings Limited.
2018
$
2017
$
Results of parent entity
Profit/(loss) for the year
Other comprehensive income/(loss) for the year
Total comprehensive income/(loss) before tax
Income tax benefit
Total comprehensive income before tax
Financial position of parent entity at year end
Current Assets
Total Assets
Current Liabilities
Total Liabitlies
Net Assets
Total equity of the parent entity comprising:
Issued capital
Reserves
Accumulated losses
Total equity
-697,587
0
-697,587
0
-697,587
-14,051,627
0
-14,051,627
0
-14,051,627
12,093,798
12,093,798
12,798,636
12,798,636
1,207,295
1,207,295
1,214,546
1,214,546
10,886,503
11,584,090
38,763,236
0
-27,876,733
10,886,503
39,064,880
125,000
-27,605,789
11,584,091
Page 42
DIRECTORS’
DECLARATION
The Directors of the Company declare that:
The attached financial statements and notes are in accordance with the Corporations Act 2001,
including:
(a) complying with Australian Accounting Standards (including Australian Accounting Interpretations)
and the Corporations Regulations 2001; and
(b) giving a true and fair view of the financial position as at 30 June 2018 and performance for the
year ended on that date of the consolidated entity,
The financial statements also comply with International Financial Reporting Standards as disclosed in
note 2.
The Remuneration Report as set out in the Directors’ Report complies with Section 300A of The
Corporations Act 2001.
The Chief Executive Officer and Chief Financial Officer have declared that:
(a) the financial records of the company for the financial year have been properly maintained in
accordance with Section 286 of the Corporations Act 2001;
(b) the financial statements and notes for the financial year comply with the Australian Accounting
Standards (including Australian Accounting Interpretations); and
(c) the financial statements and notes for the financial year give a true and fair view.
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.
This declaration is made in accordance with a resolution of the Board of Directors.
Andrew Pierce
Non-Executive Chairman
28 September 2018
Page 43
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF LOCALITY PLANNING ENERGY HOLDINGS LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Locality Planning Energy Holdings Limited (the
Company”) and its controlled entities (the “Group”), which comprises the consolidated
statement of financial position as at 30 June 2018 and the consolidated statement of
comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended, notes to the financial statements
comprising a summary of significant accounting policies and other explanatory information,
and the director’s declaration.
In our opinion the accompanying consolidated financial report of the Group is in accordance
with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as at 30 June 2018
and of its performance for the year then ended; and
complying with Australian Accounting Standards and
Regulations 2001.
the Corporations
Basis for Opinion
We conducted our audit
in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Financial Report section of our report. We are independent of the Group
in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Australian Professional and Ethical Standards Board’s APES
110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of
the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of the Company, would be in the same terms if given to the
directors as at the time of this auditor's report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Material Uncertainty Related to Going Concern
Without modifying our opinion, we draw attention to Note 2(D) in the financial report, which
indicates that the Group incurred a net loss of $1,431,303 and a net cash outflow from
operating activities of $332,649 during the year ended 30 June 2018. These conditions,
along with other matters as set forth in Note 2(D), indicate the existence of a material
uncertainty that may cast significant doubt on the Group’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
Page 44
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF LOCALITY PLANNING ENERGY HOLDINGS LIMITED
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed the key audit matter
1. Recognition and Recording Revenue
We focused on this area as a key audit matter
due to:
Our procedures included, amongst others:
(cid:31)
(cid:31)
(cid:31)
(cid:31)
The strong growth in sales in recent years
resulting in the need for substantially increased
human and information technology capabilities
and resources to ensure accurate recording.
revenue
The significance of sales revenue and projected
sales
in calculating share-based
payments and potentially the value-in-use of
certain key assets.
The estimation and complexity required
in
determining the amount and timing of accrued
but unbilled revenue.
The complexity of the new billing system used
by the organization.
(cid:31)
(cid:31)
(cid:31)
(cid:31)
(cid:31)
Testing key controls within the sales and accounts
receivable process to ensure completeness and
accuracy of sales invoices recorded in the ledger.
procedures
unusual
Analytical
transactions or trends in sales data that may be
indicative of material misstatement.
identify
to
Cut-off procedures to ensure that only sales related
to the 2017-2018 financial year are recorded in
these financial statements.
Detailed recalculation of accrued and unbilled
revenue.
Challenging managements’ assumptions and
estimates in relation to key inputs used in the
calculation of unbilled
revenue accruals and
collectability of sales. These estimates are
summarised in Note 1 to the financial statements.
Page 45
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF LOCALITY PLANNING ENERGY HOLDINGS LIMITED
Information Other than the Financial Report and Auditor's Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group's annual report for the year ended 30 June 2018, but does
not include the financial report and our auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in this
regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and
the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that gives a true and fair view and
is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the
Group to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend
to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a
whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on
the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
(cid:31)
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.
Page 46
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF LOCALITY PLANNING ENERGY HOLDINGS LIMITED
Auditor’s Responsibilities for the Audit of the Financial Report (continued)
(cid:31) 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 Group's internal control.
(cid:31) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
(cid:31) Conclude on the appropriateness of the directors' use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the Group's ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor's report to the
related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor's report. However, future events or conditions may cause the
Group to cease to continue as a going concern.
(cid:31) Evaluate the overall presentation, structure and content of the financial report,
including the disclosures, and whether the financial report represents the underlying
transactions and events in a manner that achieves fair presentation.
(cid:31) Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial
report. We are responsible for the direction, supervision and performance of the
Group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance 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 also 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 with the directors, we determine those matters that were of
most significance in the audit of the financial report of the current period 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.
Page 47
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF LOCALITY PLANNING ENERGY HOLDINGS LIMITED
(Continued)
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year
ended 30 June 2018.
In our opinion, the Remuneration Report of Locality Planning Energy Holdings Limited, for
the year ended 30 June 2018, 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
Bentleys Brisbane (Audit) Pty Ltd
Chartered Accountants
Stewart Douglas
Director
Brisbane
28 September 2018
Page 48
Locality Planning Energy Holdings Limited
Suite 306, Level 3, Tower 1, Kon-Tiki Business Centre
55 Plaza Parade, Maroochydore
QLD 4558
Australia
1800 040 168
www.localityenergy.com.au