4 September 2019
ANNUAL REPORT
Locality Planning Energy Holdings Limited (ASX: LPE) (the Company or LPE) is pleased to present to
shareholders and the market the Annual Report for FY19.
Ends
About Locality Planning Energy Holdings Limited (LPE)
LPE’s wholly owned subsidiary Locality Planning Energy Pty Ltd, holds an Australian Energy Regulator
(AER) Authority to sell electricity and utility services to residential, commercial and industrial customers
throughout the National Energy Market. LPE specialises in electricity sales to strata communities, both
existing and new developments; generating significant savings on electricity delivered to its customers.
LPE’s unique purchasing model is matched against 5 to 10-year supply contracts providing LPE with
consistent recurring revenues. LPE is transforming the electricity supply industry by providing an
intelligent solution to help its customers reduce high electricity costs, with no risk and no upfront cost with
no risk and no upfront cost. LPE is at the forefront of innovative electricity supply with a commitment to
the integration of technology to provide the highest savings and consumer advocacy to its customers.
Locality Planning Energy Holdings LTD (ASX:LPE)
T1.306 55 Plaza Parade, Maroochydore QLD 4558
Telephone 1800 040 168
www.localityenergy.com.au
ACN 147 867 301
AER E14005
LOCALITY PLANNING ENERGY
HOLDINGS LIMITED
Annual Report
201(cid:266)
The electricity supplier
supporting communities
1
LOCALITY PLANNING ENERGY
HOLDINGS LIMITED
ABN 90 147 867 301
CONTENTS
Corporate Directory
Chairman’s Letter
Message from the Joint
Managing Director and CEO
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
3
4
5
7
8
15
19
20
23
28
52
53
Locality Planning Energy (ASX: LPE) is an
electricity and utility supplier specialising
in servicing strata communities
throughout South-East QLD.
2
CORPORATE
DIRECTORY
Non-Executive Chairman
Mr Andrew Pierce
Non-Executive Director
Mr Neale O’Connell
Executive Directors
Mr Damien Glanville
Mr Ben Chester
Chief Financial Offi cer
Ms Melissa Farrell
Company Secretary
Mr Bill Lyne
Principal & Registered Offi ce
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
3
3
CHAIRMAN’S
LETTER
Dear Shareholders,
Throughout FY19, LPE has continued to solidify its position as a leader in the energy
marketplace by successfully navigating its next phase of growth, further building its executive
team with new expertise and welcoming new customers who have put their trust in LPE.
LPE’s strong leadership has been a key component in executing the aggressive growth plan
established in FY18, with a robust team now in place to ensure that each step of our journey
is taken with consideration of all factors – from financial impact to customer experience. This
year, we addressed the growing demand on our current board members by introducing an
independent non-executive member to offer new perspectives and contribute to our overall
strategy. We filled this position with Neale O’Connell, a widely experienced senior financial
executive with proven success in multinational and listed environments. Previously the Chief
Financial Officer of Tatts Group Limited, Neale has vast experience navigating companies
through periods of financial growth and is already proving to be a valued member of the LPE
team. His contributions will help ensure that LPE stays on its path of continued growth to
maximise shareholder value.
To put numbers on FY19 growth compared to the previous year, LPE delivered revenue of
$28.5 million, an increase of $6.5 million or 29%, and customer numbers increased by 43% to
21,555. The Company’s new solar electricity offering has seen solid market uptake from LPE’s
innovative solar solutions, further demonstrating our commitment to delivering sustainable
energy.
As we enter the next phase of growth, LPE’s mission remains steadfast – to provide innovative
energy solutions at cost-effective rates with a customer-first focus. Our commitment to
customer satisfaction and providing world-class service has not wavered, and we believe
this is what differentiates us from our competitors. As we head into the next year, we remain
focused on innovation, outstanding service and transparency – all with the goal of increasing
shareholder value.
In closing, on behalf of the Board, I would like to thank our shareholders and stakeholders for
their continued support and trust. We have excellent leadership and staff at LPE, all of whom
are dedicated to our mission and long-term goals. It is the combined effort of the entire LPE
team that is successfully driving our mission forward.
Andrew Pierce
Non-Executive Chairman
4
MESSAGE FROM THE
JOINT MANAGING
DIRECTOR AND CEO
Financial year 18/19 was a difficult year with the later than anticipated finalisation of our debt facility,
delaying growth in the first half. The LPE team, new and existing, responded outstandingly resulting in a
huge second half of the financial year to generate strong customer growth.
Summary of the Year
The topic of electricity has been front-of-mind these past 12 months with media and Government both
having plenty to say about how much we should be paying for electricity. Legislation has changed,
effecting the operation of embedded networks moving forward, all in our favour.
We have shifted away from being just an electricity provider specialising in the sale of electricity
to embedded networks, to encompass a greater electricity offering to our target market of strata
communities.
Securing the $30 million debt facility with BlackRock was a landmark moment for LPE, demonstrating
that our company is robust and can meet the rigorous due-diligence process of the world’s largest
investment fund. It is a true testament of the hard work and professionalism of our team.
Being LPE
The energy market is a constantly changing space, as we see a shift towards sustainable energy
generation (and transparency for the end customer). LPE is the leader in our target market of strata for
innovation, transparency and providing exceptional customer service. LPE is clear on why we do what
we do, the important things that make us stand out, and what our success will look like.
LPE is defined by how the outside world sees us, which is a product of our organisational culture and
the decisions we make. The ethical behaviour of our employees – from the sales team through to the
executives – and the continuous focus on the customer and the communities in which we operate, are
things we can be proud of. We are driven by:
• Our hunger to be the best electricity provider to strata communities and the greater
communities we serve;
• Our desire to constantly improve on our capabilities, through the talent we attract;
• Outstanding operational leadership, innovation and capital discipline;
• Values that guide our behaviour, our ethical responsibilities to each other, integrity
collaboration and accountability – all of which impact how we begin each day.
Sustainability
We have a long history of creating innovative and sustainable electricity solutions. FY20 is the year
we bring this innovation to multi-tenancy living, providing all customers that live within these types of
environments access to renewable energy as we strive to create energy sustainable strata communities.
Investing in Growth
LPE has unlimited potential. I have yet to meet a person who could not benefit from our services. The
human demand and appetite for electricity grows daily as we seek to electrify our lives.
Harnessing this potential can only be accomplished through continued investment in growth. The last
half of FY19 has seen LPE invest a further $1 million dollars into growing our sales teams and improving
systems through unique software development – ensuring we are at the forefront of this opportunity
in time.
5
MESSAGE FROM THE
JOINT MANAGING DIRECTOR
AND CEO (CONT’D)
We will continue to invest in our systems and our people as we seek to find efficiencies that enable us
to keep our contact service teams on shore, as we see this as a unique selling point that our customers
appreciate and expect.
Growth will see us expand our direct market customer numbers as we transition away from being a
specialist embedded network electricity retailer and increase our electricity service offering for all
customer types within and outside of multi-tenancy living. We will also extend our focus to small
business to ensure they, too, receive honest and transparent electricity service.
Investment in growth will see LPE;
• Continually improve on customer service for a greater customer experience
• Increase our product offering past multi-tenancy living
• Be the leader in delivering innovative renewable energy solutions to all customer types within strata
• Be defined as the leading electricity provider for strata communities
FY20 Operating Priorities
In the meantime, we remain focused on our core market of embedded networks and ensuring a great
customer experience while we nurture the expansion of our new product offerings.
As our teams grow and with more people on the road, we are increasing our focus on road safety and
driving hours. The health and safety of all our staff is paramount to our success, as we want to see all
team members get home safely.
With increased customer numbers comes an increased number of inbound calls, and to alleviate
customer service pressures we will continue with our educational videos to help customers understand
their electricity bill as we focus on creating more informative bills.
Managing customers experiencing financial hardship is always difficult, and the great work and effort
that goes into this delicate process from our specialised collections team doesn’t go unnoticed as we
continue to improve on bad debt which sits currently less than 0.004%.
As for all businesses, our number one priority for FY20 is to deliver strong financial results. While the
company remains in a period of rapid growth, we firmly believe we have created the right foundation for
FY20 to be the year where we reach profitability.
In closing, I would like to acknowledge the hard-working staff at LPE who makes this all happen day-
to-day. They are the voices and faces that our customers interact with daily and are largely responsible
for the impressive reputation that LPE has established in such a short amount of time. I commend their
dedication to LPE’s goals and ideals, and I look forward to the coming year with their continued support
and strong work ethic.
Damien Glanville
Mr Damien Glanville
Joint Managing Director & CEO
6
WHY WE DO
WHAT WE DO
LPE continues to work towards its mission to become Australia’s market leader in
innovative energy solutions, while offering the lowest rates and world-class customer
service. LPE remains focused on operating with an open and transparent business
model and pricing structure – honest energy – with the ultimate goal being to build
long-term trust with the residents we serve.
What further differentiates LPE is its strong local focus – supporting local residents and
SME businesses so the entire community grows and prospers together. The company’s
“local first” focus goes beyond the exceptional services it offers. It also means that local
jobs are prioritised – there is no outsourcing unlike the competition – therefore money
is fed back into our communities for an enhanced quality of life for our customers.
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
now provides 73 local people with employment, and continues to invest money in the
local community.
In FY19, the company’s aggressive growth plan included an expanded geographic
area of service, now servicing NSW in addition to QLD. This expansion has not and will
not disrupt LPE’s local community philosophy or its focus on honest energy. It simply
means that more of Australia’s residents will benefit from our business model and
philosophy.
LPE sets itself apart from other energy providers with its innovative offerings for SME
businesses and strata communities. The company focuses on educating businesses
and Body Corporates about their energy options, how to save money for themselves
and residents, and solutions for assisting under-serviced communities. The creation
of an embedded network for existing strata communities has been a mainstay for the
last five years, providing long-term, secure electricity at costs well below the standard
direct market offer. By offering access to the direct electricity market to both SME and
residential customers, LPE has positioned itself for exceptional growth with its solar
products – making this a significant focus in the coming year.
We remain committed to innovation, cost-savings for customers, transparency and
outstanding customer service. This business model is responsible for our exceptional
growth to date and will continue to position LPE as an energy leader for the
communities we serve.
7
7
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 2019
The Directors
The following persons were directors of the company during the financial year
and up to the date of this report.
Mr Andrew Pierce
Non-Executive Chairman and Director
Mr Neale O’Connell
Non-Executive Director
Qualifications
FCA
Appointment Date
17 March 2014
Qualifications
BBus, CA
Appointment Date
19 March 2019
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. 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 and Chairman Nominations Committee
Interest in Shares and Options
400,000 fully paid ordinary shares
Directorships Held in Other Listed Entities
Nil
8
Experience
Mr O’Connell is a widely experienced senior
financial executive with a strong background in
public companies. He was recently appointed as
Global CFO for Corporate Travel Management
(CTM). Prior to this Mr O’Connell was Group
CFO at Tatts Group, where he spent 14 years
before departing in 2018 following the merger
with Tabcorp. He also spent six years as Group
Financial Controller for Smorgon Steel. Mr
O’Connell is a Chartered Accountant and he
is also a member of the Australian Institute
of Company Directors, and the Finance and
Treasury Association. In accordance with the
ASX Corporate Governance Council’s definition
of independence and the materiality thresholds
set, the directors consider Mr O’Connell to be
independent.
Special Responsibilities
Chairman Audit and Risk Management
Committee and Chairman Remuneration
Committee
Interest in Shares and Options
Nil
Directorships Held in Other Listed Entities
Nil
The Directors
The following persons were directors of the company during the financial year
and up to the date of this report.
Mr Damien Glanville
Executive Director, Co-founder
and Chief Executive Officer
Appointment Date
11 December 2015
Experience
Mr Glanville has seventeen 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
and Joint Managing Director
Interest in Shares and Options
8,500,995 fully paid ordinary shares
Directorships Held in Other Listed Entities
Nil
Mr Ben Chester
Executive Director, Co-founder
and Chief Operating Officer
Qualifications
B. Eng
Appointment Date
11 December 2015
Experience
Mr Chester has nine 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
and Joint Managing Director
Interest in Shares and Options
8,510,995 fully paid ordinary shares
Directorships Held in Other Listed Entities
Nil
9
Ms Melissa Farrell
Chief Financial Officer
Qualifications
BBus, CPA, Master Finance
Appointment Date
31 May 2017
Experience
Melissa has twenty years experience working
in accounting and finance, five of which have
been in senior executive roles. She has worked
in various sectors including banking and mining,
both in Australia and overseas for publicly listed
companies. She is highly skilled in the areas of
financial control, reporting and risk management.
Ms Farrell is a member of Certified Practicing
Accountants and has a Masters in Applied
Finance.
Special Responsibilities
Chief Financial Officer
Interest in Shares and Options
Nil
Directorships Held in Other Listed Entities
Nil
Mr Bill Lyne
Company Secretary
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
Nil
Directorships Held in Other Listed Entities
Director of Jumbo Interactive Limited,
appointed 30 October 2009
10
Principal Activities of the Consolidated Entity
The principal activity of the consolidated entity is the sale of electricity and utility services to
residential and commercial customers throughout the Australian National Electricity Market.
Operating Results
The net result of operations of the consolidated entity for the year ended 30 June 2019 was a
loss of $2.2 million (2018 – loss of $1.1 million) which included:
• Revenue and Other Income $28.5 million (2018: $22.1 million);
• Costs of goods sold $22.6 million (2018: $17.5 million);
• Interest expense $0.4 million (2018: $0.2 million);
• Employee costs of $4.0 million for FY19, and $3.0 million for FY18;
• Other expenses of $4.0 million (2018: $2.7 million).
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 2019 and to the date of
this report.
Review of Activities and Business Strategies
With FY19 came the appointment of Neale O’Connell as an independent non-executive
member, to help alleviate increasing demand on board members. Neale brings expertise
and new perspective to LPE, and he will be instrumental in navigating LPE through its next
phase of growth and creation of shareholder value. He is a widely experienced senior financial
executive with a proven track record in multinational and listed companies.
The expected (July 2018) finalisation of the BlackRock debt facility was delayed which created
some unexpected obstacles, that resulted in lower than anticipated growth in the first half of
FY19. While we experienced an increase in electricity sales of 53.2% year-over-year, residential
customer growth was limited to just 2,000 for the first half of the year. Now completed, the
BlackRock debt facility is allowing LPE to accelerate delivery of its solar energy solution and
deliver significant growth in customer numbers, resulting in 29% growth in revenue and other
income FY19 to $28.5 million.
To support LPE’s growth, a National General Manager of Sales and Marketing was added to
the team, as well as 32 new salespeople, including a National Hot Water Manager. Collectively,
these new additions to the LPE team will be responsible for delivering significant growth as we
head into the next 12 months.
Efforts to grow the direct market offer were strong this year, with LPE remaining focused and
committed to servicing SME businesses, body corporate common areas and all customer types
not suited to an embedded network.
(cid:2)
11
Business Risks
The Company has identified the following risks as having the potential to materially affect
LPE’s ability to meet its business objectives:
Regulatory policy
LPE is exposed to regulatory policy change and government interventions. Changes in
energy market design and climate change policies for example, have the potential to impact
the financial outcomes of the Company. LPE contributes to policy process by actively
participating in public policy debate, proactively engaging with policy makers and participating
in public forums, industry associations and research.
Competition
LPE operates in a highly competitive industry which can put pressure on margins. Our
strategy to mitigate this risk is to effectively build customer loyalty and trust by delivering an
exceptional customer service experience based on openness and transparency, and by offering
innovative energy solutions that come with longer length supply terms.
Changes in demand for energy
A decrease in demand for energy could possibly reduce LPE’s revenues and adversely affect
the Company’s future financial performance. LPE cannot control the habits or consumption
patterns of our customers, however LPE works to mitigate the impact of this risk by utilising
data analytics to better predict customer demand.
Technological developments/disruption
Technology is allowing consumers to understand and manage their electricity usage through
smart appliances, having the potential to disrupt the Company’s existing relationship with
consumers. Advances in technology have the potential to create new business models
and introduce new competitors. LPE actively monitors and participates in technological
developments and is exploring investments in new innovative products to enhance customer
experience and reduce cost to serve.
Cyber security
A cyber security incident could lead to disruption of critical business operations. It could
also lead to a breach of privacy, and loss of and/or corruption of commercially sensitive data
which could adversely affect customers. LPE regularly assesses its cyber security profile. All
Employees undertake cyber awareness training, including how to identify scam emails and how
to keep data safe.
Climate change
The ongoing decarbonisation of energy markets and the decreasing demand for fossil fuels
provides both risks and opportunities for LPE. The Company is focused and committed to
growth and innovation of its Solar products.
12
Outlook
LPE recognises that the demand for solar electricity is growing rapidly in Australia, as
our country is leading the way in renewable energy. LPE’s Solar for Small Communities
commitment is the first of its kind in Australia, allowing Body Corporates to make solar
available in common property areas with individual occupants choosing to opt-in if they
wish. At no upfront cost to the Body Corporate or residents for installation, equipment or
maintenance, this option presents a long-term solution for cost savings to strata communities
while establishing low-rate, and long-term contracts for LPE.
The Company continues to be open to new revenue opportunities to diversify revenue stream
and customer base with approval from the AER currently pending for a retail gas authority.
Significant Changes in the State of Affairs
Adoption of new accounting standard AASB15, effective 1st July 2019, has resulted in the
Company no longer recognising site conversion costs as intangible assets, and as such we have
had to restate prior year’s financial statements. Revenue from site conversions are now treated
as receivables, and the associated costs are expensed as costs of goods sold, at the point
in time an embedded network goes live. This accounting standard also requires us to report
separately the implied financing component of site conversions as ‘interest’ with FY19 revenue
of $28.5 million effectively being split between ‘electricity sales’ $27.7 million and ‘interest’ $0.8
million. With the implied financing component of site conversion revenue now being reported
separately, electricity margins are now 18.5% for FY19 (2018: 18.1% restated from 24.5%).
This change in accounting treatment has also impacted the presentation of our cash flow
statement, with payments for site conversions previously being recognised as cashflows from
investing activities, now being recognised as cashflows from operating activities. The impact to
the FY19 cashflow statement is $1.1 million (2018: $2.1 million).
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.
13
Directors’ Meetings
Director
Andrew Pierce
Damien Glanville
Ben Chester
Neale O’Connell
Director
Andrew Pierce
Damien Glanville
Ben Chester
Director
Andrew Pierce
Damien Glanville
Ben Chester
Director
Andrew Pierce
Damien Glanville
Ben Chester
Meetings of
Directors Held*
Meetings of
Directors Attended
13
13
13
3
12
13
13
3
Audit & Risk
Comittee
Meetings Held*
Audit & Risk
Committee
Meetings Attended
2
2
2
2
2
2
Remuneration
Committee
Meetings Held*
Remuneration
Committee
Meetings Attended
2
2
2
2
2
2
Nomination
Committee
Meetings Held*
Nomination
Committee
Meetings Attended
1
1
1
1
1
1
14
14
* of which eligible to attend
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)
reviewing and approving the executive remuneration policy to enable the Company to attract
and retain executives and Directors who will create value for shareholders;
b) 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) 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;
e) reviewing the Company’s recruitment, retention and termination policies and procedures for
senior management;
f) 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 (KMP) of Locality Planning Energy Holdings Limited and the
consolidated entity includes the directors of the Parent Entity.
Remuneration Policy
The Board’s policy for determining the nature and amount of remuneration for KMP of the
Consolidated Group is based on the following:
• The remuneration policy is to be developed by the remuneration committee and approved by the
Board after professional advice is sought from independent external consultants.
• All KMP receive a base salary (which is based on factors such as length of service and
experience), and superannuation.
• The Remuneration committee reviews KMP packages annually by reference to the Consolidated
Group’s performance, executive performance and comparable information from industry sectors.
The Board’s policy is to remunerate non-executive directors at market rates for time, commitment
and responsibilities. The remuneration committee determines payments to the non-executive
directors and reviews their remuneration annually, based on market practice, duties and
accountability. Independent external advice is sought when required.
Engagement of Remuneration Consultants
During the financial year, Diamond Impact Pty Ltd was engaged by the remuneration committee to
review elements of KMP remuneration and provide recommendations. In addition, Diamond Impact
provided the followings services to the Company during the year:
• Facilitation of the Board’s annual performance evaluation processes.
• Expatriate advisory services.
Diamond Impact was paid $18,500 for the remuneration recommendations relating to the
review of the elements of KMP remuneration and $12,000 for all other services.
15
2019 Remuneration
Short Term
Employee Benefits
Salary & Fees
Post-Employment
Benefits
Superannuation
Long Term
Employment
Benefits
Total
Directors
Andrew Pierce
$125,000
Damien Glanville
$325,070
Ben Chester
$325,070
Neale O’Connell *
$15,000
Executives
-
$22,594
$22,594
$1,425
-
$125,000
$5,145
$5,121
$352,809
$352,785
-
$16,425
Melissa Farrell
$171,755
$16,304
$894
$188,953
Total
$961,895
$62,917
$11,160
$1,035,972
* Appointed 19 March 2019
2018 Remuneration
Short Term
Employee Benefits
Salary & Fees
Post-Employment
Benefits
Superannuation
Long Term
Employment
Benefits
Directors
Andrew Pierce
$115,000
Damien Glanville
$311,185
Ben Chester
$326,040
-
$20,048
$20,048
-
$1,485
$1,484
Executives
Total
$115,000
$332,718
$347,572
Melissa Farrell
$167,192
$15,883
$351
$183,426
Total
$919,417
$55,979
$3,320
$978,716
16
Loans from Key Management Personnel
Temporary loans advanced and repaid during the year incur interest at 12% per annum.
Balance at beginning of the year
Loans advanced
Loan repayments made
Interest charged
Interest paid
Balance at end of the year
$
1,150,000
150,000
(1,300,000)
61,733
(61,733)
-
Shareholdings of Key Management Personnel
Balance
1 July 2018
Consolidate
Shares 50 to 1
Shares
Acquired
Shares
Disposed
Balance
30 June 2019
Directors
Andrew Pierce
20,000,000
19,600,000
-
Damien Glanville
421,299,756
412,873,761
75,000
Ben Chester
421,299,756
412,873,761
85,000
Neale O’Connell
Executives
Melissa Farrell
-
-
-
-
-
-
-
-
-
-
-
400,000
8,500,995
8,510,995
-
-
17
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 2019 has been received
and forms part of this directors’ report and can be found on the following page.
Andrew Pierce
Non-Executive Director
Dated: 04 September 2019
18
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 2019
there have been:
i.
no contraventions of
the auditor
independence
requirements as set out
in
the
Corporations Act 2001 in relation to the audit; and
ii. no contraventions of any applicable code of professional conduct in relation to the audit.
Bentleys Brisbane (Audit) Pty Ltd
Chartered Accountants
Ashley Carle
Director
Brisbane
04 September 2019
19
SHAREHOLDER
INFORMATION
Shareholder Information
Additional information required by the Australian Securities Exchange (ASX) and not shown
elsewhere in the Annual Report, current as at 31 July 2019, 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: 50,210,736 ordinary shares, each fully paid, held by 1,004 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 fully 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
16,000,000 ordinary shares, subject to voluntary escrow until 13 March 2020.
On-market Buy-backs
There is no current on-market buy-back of any securities.
Corporate Governance Statement
The Corporate Governance Statement is available on the Company’s website at
https://www.localityenergy.com.au/site/company/corporate-governance
20
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
1-1,000
1,001-5,000
5,001 - 10,000
10,001-100,000
100,001 and over
Totals
335
284
117
226
42
162,199
791,965
909,024
7,163,289
41,184,259
1,004
50,210,736
Twenty Largest Security Holders
Shareholder
Lumber Co Pty Ltd
No. of
Shares
% of
Capital
8,510,995
16.95%
Mr Damien Ian Glanville
8,388,995
16.71%
Pettett Pty Ltd
7,850,000
15.63%
Jarwill Pty Ltd
National Nominees Limited
3,738,003
2,490,000
Defender Equities Pty Ltd
1,400,000
BNP Paribas Nominees Pty Ltd Hub 24 Custodial Serv Ltd DRP
913,976
Ginga Pty Ltd
Fernsha Pty Limited
10 Woodville Super Pty Limited Woodville Super Pty Limited
Mr Anthony Bracks
Netwealth Investments Limited
Sore Tooth Pty Limited
Ems Arcadia Pty Ltd
Mr Michael Charles Bowden
7.44%
4.96%
2.79%
1.82%
1.50%
1.39%
1.36%
0.85%
0.84%
0.82%
0.80%
0.60%
0.56%
0.56%
0.51%
0.48%
0.44%
753,222
700,000
683,845
427,839
420,100
410,000
400,000
300,000
256,665
239,253
221,744
Harrington Partners Fund 1 Pty Ltd
282,427
M&S Kriticos SMSF Pty Ltd
280,606
Equity Trustees Superannuation Limited
Mr Rodney Patrick Callahan
20 Mr Stephen Con Kriticos
Total Top 20 Holders of LPE Ordinary Fully Paid Shares
38,667,670
77.01%
Total Remaining Holders
11,543,066
22.99%
21
1
2
3
4
5
6
7
8
9
11
12
13
14
15
16
17
18
19
Substantial Shareholders
The names of substantial shareholders who have notified the Company in accordance with
section 671B of the Corporations Act are:
Name
BEN CHESTER / LUMBER CO PTY LTD
DAMIEN GLANVILLE FAMILY / SUPER FUND
PETTETT PTY LTD
JARWILL PTY LTD
No of Shares
8,510,995
8,500,995
7,850,000
3,738,003
22
FINANCIAL
STATEMENTS
23
23
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
Note
2019
$
2018
Restated*
$
Revenue
Electricity sales
Less cost of goods sold
Energy usage charges
Network charges
Unrealised gain/losses on derivatives
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
Loss from operations
Loss before income taxes
5
27,722,990
21,348,695
(10,493,261)
(7,854,489)
42,945
(4,300,110)
(7,499,849)
(5,773,809)
-
(4,209,178)
(22,604,915)
(17,482,836)
5,118,075
3,865,859
5
5
753,535
-
751,878
18,919
(122,489)
(403,338)
(248,589)
(4,041,043)
(29,771)
(2,355,208)
(852,862)
(121,964)
(156,048)
(219,683)
(3,038,296)
(5,768)
(1,366,909)
(808,045)
(2,181,690)
(1,080,057)
(2,181,690)
(1,080,057)
Income tax benefi t/(expense)
6
-
-
Net loss for the period
(2,181,690)
(1,080,057)
Other comprehensive income
Other comprehensive income net of tax
-
-
-
-
Total comprehensive loss for the year
(2,181,690)
(1,080,057)
Basic/diluted earnings/(loss) per share (dollars per share)
15
(0.0435)
(0.0215)
* See note 25 for details about restatements for changes in accounting policies
The Consolidated Statement of Profi t or Loss and Other Comprehensive Income should be read
in conjunction with the Notes to the Financial Statements.
24
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
AS AT 30 JUNE 2019
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
Current assets
Cash and cash equivalents
Trade and other receivables
Site conversion receivables
Financial assets - derivatives
Other current assets
Total current assets
Non-current assets
Site conversion receivables
Plant and equipment
Leasehold improvements
Intangibles
Total non-current assets
Note
20
7
7
8
7
9
10
11
2019
$
3,306,072
3,065,010
1,554,644
42,945
337,181
2018
Restated*
$
1,364,363
2,386,669
1,311,224
-
626,114
8,305,852
5,688,370
3,965,663
448,655
372,371
162,154
3,851,330
322,410
407,925
218,851
1 July 2017
Restated*
$
3,977,705
1,872,142
757,602
-
668,124
7,275,573
2,466,362
450,908
459,050
90,300
4,948,843
4,800,516
3,466,620
TOTAL ASSETS
13,254,695
10,488,886
10,742,193
Current liabilities
Trade and other payables
GST payable
Employee entitlements - leave provisions
12
Borrowings
3,292,863
19,359
248,307
35,784
2,317,761
4,247
180,862
1,283,857
1,586,116
-
158,649
45,524
Total current liabilities
3,596,313
3,786,727
1,790,289
Non-current liabilities
Employee entitlements - leave provisions
12
Borrowings
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
44,177
5,182,725
5,226,902
21,769
67,220
88,989
-
1,258,677
1,258,677
8,823,215
3,875,716
3,048,966
4,431,480
6,613,170
7,693,227
13
14
39,064,880
39,064,880
-
-
(34,633,400)
(32,451,710)
39,064,880
125,000
(31,496,653)
4,431,480
6,613,170
7,693,227
* See note 25 for details about restatements for changes in accounting policies
The Consolidated Statement of Financial Position should be read
in conjunction with the Notes to the Financial Statements.
25
CONSOLIDATED STATEMENT
OF CASH FLOWS
AS AT 30 JUNE 2019
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
Cash fl ows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Net cash provided by/(used in) operating
activities
Cash fl ows from investing activities
Payment for plant and equipment
Payment for leasehold improvements
Payment for intangibles
Proceeds from sale of assets
Note
2019
$
26,713,354
(28,630,798)
749,638
(399,995)
2018
Restated*
$
18,921,857
(21,955,523)
761,536
(156,048)
20
(1,567,801)
(2,428,178)
(240,490)
(25,732)
(49,261)
-
(47,913)
(8,304)
(182,187)
31,364
Net cash provided by/(used in) investing activities
(315,483)
(207,040)
Cash fl ows from fi nancing activities
Financing costs paid
Proceeds from loans
Repayment of loans
Net cash provided by/(used in) fi nancing activities
(1,033,000)
6,877,710
(2,019,717)
3,824,993
(25,000)
98,181
(51,305)
21,876
Net increase/(decrease) in cash and cash equivalents
1,941,709
(2,613,342)
Cash and cash equivalents opening balance
Cash and cash equivalents closing balance
20
1,364,363
3,306,072
3,977,705
1,364,363
* See note 25 for details about restatements for changes in accounting policies
The Consolidated Statement of Cash Flows should be read
in conjunction with the Notes to the Financial Statements.
26
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
Issued
Capital
Options
Reserve
$
Accumulated
Losses
$
Total
$
Balance at 1 July 2017
39,064,880
125,000
(31,733,100)
7,456,780
Adjustment due to AASB 15 implementation*
-
-
236,447
236,447
Restated total equity at 1 July 2017
39,064,880
125,000
(31,496,653)
7,693,227
Profi t/(Loss) after income tax
Expired options
-
-
-
(1,080,057)
(1,080,057)
(125,000)
125,000
-
Restated Balance at 30 June 2018
39,064,880
-
(32,451,710)
6,613,170
Restated Balance at 1 July 2018
39,064,880
-
(32,451,710)
6,613,170
Profi t/(Loss) after income tax
-
-
(2,181,690)
(2,181,690)
Balance at 30 June 2019
39,064,880
- (34,633,400)
4,431,480
* See note 25 for details about restatements for changes in accounting policies
The Consolidated Statement of Changes in Equity should be read
in conjunction with the Notes to the Financial Statements.
27
NOTES TO THE
FINANCIAL
STATEMENTS
2828
1 REPORTING ENTITY
The financial statements of Locality Planning Energy Holdings Limited (“the Company”) for the
year ended 30 June 2019 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 “Consolidated 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 be indicative of impairment triggers. Impairment of financial assets
(trade receivables and financial assets) are assessed for impairment as described in Note 3G. Note
3H describes the processing for assessing impairment for non-financial assets (property, plant and
equipment, intangible assets and other assets).
29
2 BASIS OF PREPARATION (Cont’d)
C. Use of estimates and judgements (Cont’d)
Site Conversion Revenue
Site conversion revenue is recognised upon installation, however customers are able to make
payment over a 5 to 10 year period. The Group has assessed that where this payment is deferred,
the transaction contains a significant financing component and therefore the revenue must be
adjusted for the effects of the time value of money. Judgement is therefore required to determine
the amount of the consideration that relates to the site conversion revenue, and the amount
relating to the financing of the purchase. See note 3K for further details.
D. Going Concern
The financial statements have been prepared on a going concern basis which contemplates the
continuity of normal business activities and the realisation of assets and discharge of liabilities in
the ordinary course of business. The Group incurred a net loss after income tax for the year ended
30 June 2019 of $2,181,690 (2018: $1,080,057) and a net cash outflow from operations of $1,567,801
(2018: $2,428,178). These factors, prima facie, indicate that there is material uncertainty on whether
the Group will continue as a going concern.
Notwithstanding this, the Group has prepared budgets based on its current growth plans, which
indicate that the Group will become profitable in the near future. The Group also has access to a
financing facility of $30 million, of which only $6.1 million has been used at 30 June 2019, which will
assist with any working capital requirements in the short term. For these reasons the directors have
determined the Group has access to sufficient net working capital to maintain continuity of normal
business activity and pay its debts as and when they fall due, and therefore that it is appropriate to
prepare the financial report on a going concern basis.
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 2019 (“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 control ceases.
All intercompany balances and transactions, including unrealised profits arising from intragroup
transactions have been eliminated. Unrealised losses are also eliminated unless the transaction
provides evidence of the impairment of the asset transferred.
30
3 SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
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
differences 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 liability, 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.
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 software and legal costs. Software has an estimated useful life
of between three and ten years. It is assessed annually for impairment.
31
3 SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
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 a mortised cost
using the effective interest method.
G. Impairment of Financial Assets
The Group applies the simplified approach to providing for expected credit losses prescribed by
AASB 9, which prescribes the use of the lifetime expected loss provision for all trade receivables.
To measure the expected credit losses, trade receivables have been grouped based on shared
credit risk characteristics and the days past due, and a provision matrix is used.
The “amounts written off” are all due to customers declaring bankruptcy, or term receivables that
have now become unrecoverable.
At each reporting date, the Group recognises the movement in the loss allowance as an impairment
gain or loss in the Statement of Profit or Loss and Other Comprehensive Income.
H. Impairment of Non-Financial Assets
At each reporting date, the Consolidated Entity reviews the carrying values of its tangible and
intangible assets to determine whether there is any indication that those assets have been
impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the
asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any
excess of the asset’s carrying value over its recoverable amount is expensed 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 instruments 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.
32
3 SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
K. Revenue
Revenue for the Group can be categorised as follows:
- Supply of electricity
- Supply of embedded network infrastructure (including installation)
Supply of electricity
Revenue from the supply of electricity is recognised as the customer obtains a benefit from
the supply, which occurs over time as the customer consumes the electricity. Consumption is
determined by meter readings. Between meter readings, consumption is estimated using industry
and historical customer consumption patterns, along with consumption reports from the Group’s
suppliers.
Costs associated with the supply of the electricity are expensed over time in line with customers’
consumption.
Supply of embedded network infrastructure
The Group arranges to supply and install embedded network infrastructure on customers’
premises. The performance obligation is the installation of the infrastructure, and therefore revenue
is recognised at a point in time upon installation.
Customers have the option to pay for this embedded network infrastructure over the life of a
related electricity supply contract, ranging from 5 to 10 years. Therefore a significant financing
component has been identified within these contracts. The revenue is therefore discounted to
remove the financing component. Consideration receivable in respect of this revenue is recognised
as ‘site conversion receivables’ in the Statement of Financial Position. The financing component has
been assessed by the Group at a rate of 12% per annum, and this is recognised as interest revenue
over time until the customer has paid all consideration.
Costs incurred to supply and install the embedded network infrastructure are expensed when
the revenue is recognised, upon installation. For costs incurred on site conversions where the
embedded network has not yet been installed, and therefore no revenue yet recognised, the costs
are capitalised within the inventory balance contained within ‘Other Assets’ in the Statement of
Financial Position.
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.
33
3 SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
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 potential 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
classified as finance leases. There are currently 4 motor vehicles under finance leases.
Finance leases are capitalised recording an asset and a liability equal to the present value of the
minimum 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 reduction 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.
P. Financial Instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions to the instrument. For financial assets, this is the date that the Group
commits itself to either the purchase or sale of the asset (ie trade date accounting is adopted).
Financial instruments (except for trade receivables) are initially measured at fair value plus
transaction costs, except where the instrument is classified “at fair value through profit or loss”, in
which case transaction costs are expensed to profit or loss immediately. Where available, quoted
prices in an active market are used to determine fair value. In other circumstances, valuation
techniques are adopted.
Classification and subsequent measurement
Financial Liabilities
Financial liabilities are subsequently measured at:
- Amortised cost; or
- Fair value through profit or loss.
A financial liability is measured at fair value through profit and loss if the financial liability is:
- A contingent consideration of an acquirer in a business combination to which AASB 3:
Business Combinations applies;
- Held for trading; or
- Initially designated at fair value through profit or loss.
All other financial liabilities are subsequently measured at amortised cost using the effective
interest method.
34
3 SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
P. Financial Instruments (Cont’d)
The effective interest method is a method of calculating the amortised cost of a debt instrument
and of allocating interest expense in profit or loss over the relevant period. The effective interest
rate is the internal rate of return of the financial asset or liability. That is, it is the rate that exactly
discounts the estimated future cash flows through the expected life of the instrument to the net
carrying amount at initial recognition.
A financial liability is held for trading if:
- It is incurred for the purpose of repurchasing or repaying in the near term;
- Part of a portfolio where there is an actual patter of short-term profit taking; or
- A derivative financial instrument (except for a derivative that is in a financial guarantee
contract or a derivative that is in an effective hedging relationship).
The Group currently does not recognise any financial liabilities at fair value through profit or loss,
with all financial liabilities being at amortised cost.
Financial Assets
Financial assets are subsequently measured at:
- Amortised cost;
- Fair value through other comprehensive income; or
- Fair value through profit or loss.
Measurement is on the basis of two primary criteria:
- The contractual cash flow characteristics of the financial asset; and
- The business model for managing financial assets.
A financial asset that meets the following conditions is subsequently measured at amortised cost:
- The financial asset is managed solely to collect contractual cashflows; and
- The contractual terms within the financial asset give rise to cashflows that are solely payments
of principal and interest on the principal amount outstanding on specified dates.
A financial asset that meets the following conditions is subsequently measured at fair value through
other comprehensive income:
- The contractual terms within the financial asset give rise to cashflows that are solely payments
of principal and interest on the principal amount outstanding on specified dates;
- The business model for managing the financial assets comprises both contractual cashflows
and the selling of the financial asset.
By default, all other financial assets that do not meet the measurement conditions of amortised
cost and fair value through other comprehensive income are subsequently measured at fair value
through profit or loss.
The Group currently has futures contracts that are recognised within financial assets in the
Statement of Financial Position that are recognised at fair value through profit or loss. All other
financial assets are recognised at amortised cost.
35
3 SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
P. Financial Instruments (Cont’d)
Derecognition
Derecognition refers to the removal of a previously recognised financial asset or financial liability
from the statement of financial position.
Derecognition of financial liabilities
A liability is derecognised when it is extinguished (ie when the obligation in the contract is
discharged, cancelled or expires). An exchange of an existing financial liability for a new one with
substantially modified terms, or a substantial modification to the terms of a financial liability is
treated as an extinguishment of the existing liability and recognition of a new financial liability.
The difference between the carrying amount of the financial liability derecognised and the
consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is
recognised in profit or loss.
Derecognition of financial assets
A financial asset is derecognised when the holder’s contractual rights to its cash flows expire, or
the asset is transferred in such a way that all the risks and rewards of ownership are substantially
transferred.
All of the following criteria need to be satisfied for Derecognition of financial asset:
- The right to receive cash flows from the asset has been expired or been transferred;
- All risk and rewards of ownership of the asset have been substantially transferred; and
- The Group no longer controls the asset.
On derecognition of a financial asset measured at amortised cost, the difference between the
asset’s carrying amount and the sum of the consideration received and receivable is recognised in
profit or loss.
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.
36
3 SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
R. New Accounting Standards Issued but not yet Applicable
Certain new accounting standards and interpretations have been issued that do not take effect
in the current accounting period, but will impact future accounting periods. The Directors have
decided against early adoption of any of these standards. The significant changes are discussed
below.
AASB 16 Leases
This standard removes the distinction between operating and financing leases for lessees as
previously defined by AASB 16 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 2019 been accounted for in accordance with AASB 16,
management believes there would have been an additional right-to-use asset and corresponding
liability of approximately $277,000 in addition to the existing finance lease liability.
This standard takes effect for reporting periods beginning on or after 1 January 2019.
4 SEGMENT REPORTING
The Group has identified its operating segments as being the energy retail sector in Australia.
Management 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 INCOME
Electricity sales
Interest revenue
Other receipts
Consolidated
Entity 2019
$.......
27,722,990
753,535
-
Consolidated
Entity 2018 Restated
$.......
21,348,695
751,878
18,919
Total revenue and other income
28,476,525
22,119,492
37
6 INCOME TAX
Components of tax expense/(benefit) comprise:
Current tax
Prior year tax
Deferred tax
Income Tax Expense/(Benefit)
Consolidated
Entity 2019
$.......
Consolidated
Entity 2018
Restated
$.......
-
-
-
-
-
-
-
-
Numerical reconciliation of income tax benefit to prima facie tax payable
Loss from operations before tax for the year
(2,181,690)
(1,080,057)
The prima facie income tax benefit on loss before income tax
at a tax rate of 27.5% (2018: 27.5%)
(599,965)
(297,016)
Tax effect amounts which are not (deductable)/taxable
in calculating taxable income:
1,765
3,923
Deferred tax asset not brought to account
598,200
293,093
Total income tax benefit
-
-
Net unrecognised deferred tax assets
Net Deductable/(Assessable) temporary differences
(314,709)
(178,495)
Unused tax losses
2,890,633
2,101,863
Net unrecognised deferred tax aset
2,575,924
1,923,368
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.
38
7 TRADE & OTHER RECEIVABLES
Trade receivables
Interest receivables
Consolidated
Entity 2019
$.......
Consolidated
Entity 2018
Consolidated
Restated
Entity 2018
$.......
3,061,113
2,386,669
3,897
-
3,065,010
2,386,669
Site conversion receivables (current)
1,554,644
1,311,224
Site conversion receivables (non-current)
3,965,663
3,851,330
8,585,317
7,549,223
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.
2019
Gross Amount
Amount
Past due
& impaired
Past due but not impaired
Days (overdue)
31-45
$
<30
$
>45
$
Trade receivables
3,081,217
20,104
147,697
9,901
29,459
Interest receivable
3,897
Site conversion receivables
5,520,307
-
-
-
-
-
-
-
-
Total
2018
8,605,421
20,104
147,697
9,901
29,459
Trade receivables
2,392,095
5,426
224,605
24,385
83,771
Interest receivable
-
Site conversion receivables
5,162,554
-
-
-
-
-
-
-
-
Total
7,554,649
5,426
224,605
24,385
83,771
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.
39
8 OTHER CURRENT ASSETS
Bond paid
Prepayments
Employee Loans
Inventory
9 PLANT & EQUIPMENT
Plant & equipment at cost
Accumulated depreciation
Motor vehicles at cost
Accumulated depreciation
Consolidated
Entity 2019
$.......
Consolidated
Entity 2018
Consolidated
Restated
Entity 2018
$.......
3,796
87,089
-
2,943
170,919
3,190
246,296
449,062
337,181
626,114
463,001
349,893
(194,866)
(121,259)
268,135
228,634
297,907
174,036
(117,387)
(80,260)
180,520
93,776
448,655
322,410
Reconciliation
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
Disposals
228,634
117,840
(73,607)
(4,732)
285,897
14,170
(68,806)
(2,627)
Balance at the end of the year
268,135
228,634
Motor Vehicles
Balance at the beginning of the year
Additions
Depreciation
Disposals
93,776
123,871
(37,127)
-
165,011
-
(35,812)
(35,423)
Balance at the end of the year
180,520
93,776
40
10 LEASEHOLD IMPROVEMENTS
Leasehold improvements at cost
Accumulated depreciation
Consolidated
Entity 2019
$.......
507,440
(135,069)
Consolidated
Consolidated
Entity 2018
Entity 2018
Restated
$.......
481,708
(73,783)
372,371
407,925
Reconciliation
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
11 INTANGIBLES
Intangibles at cost
Accumulated amortisation
407,925
25,732
(61,286)
459,050
8,304
(59,429)
372,371
407,925
312,357
(150,203)
319,347
(100,496)
162,154
218,851
Reconciliation
Reconciliations of the carrying amount of intangibles between the beginning
and the end of the financial year.
Intangibles
Balance at the beginning of the year
Additions
Amortisation
Write off intangibles
218,851
49,261
(76,569)
(29,389)
90,300
182,187
(53,636)
-
Balance at the end of the year
162,154
218,851
12 BORROWINGS
Current
Site conversion loans
Insurance financing
Motor vehicle financing
Owing to related parties
Non-current
Site conversion loans
Motor vehicle financing
Blackrock funding facility
-
-
35,784
-
45,524
88,333
-
1,150,000
35,784
1,283,857
-
55,448
5,127,277
5,182,725
67,220
-
-
67,220
The $30 million Blackrock funding facility was drawn down by $6.1 million as at 30 June 2019. This
is presented above net of borrowing costs. The remaining balance of the facility is $23.9 million.
41
13 ISSUED CAPITAL
(a) Issued and paid up capital
2019
Number
2018
Number
Ordinary shares fully paid no par value
50,210,736
2,510,536,387
(b) Movement in ordinary shares on issue
Number
$.......
Balance at 30 June 2018
2,510,536,387
39,064,880
Consolidation of Shares (50:1)
(2,460,325,651)
-
Balance at 30 June 2019
50,210,736
39,064,880
Ordinary shares
Ordinary shares entitle the holder to paricipate 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.
Ordinary 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 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.
42
14 RESERVES
Options reserve
Opening balance
Expired options
Closing balance
Consolidated
Entity 2019
$.......
Consolidated
Entity 2018
$.......
-
-
-
125,000
(125,000)
-
The option reserve account is to account for outstanding share options issued as a result of share
based payments.
15 EARNINGS PER SHARE
Weighted average number of shares used as the denominator
in calculating basic and diluted earnings per share
2019
Number
2018 Restated
Number
50,210,736
50,210,736*
$.......
$.......
Net loss after tax used in calculating basic earnings per share
(2,181,690)
(1,080,057)
Net loss after tax used in calculating diluted earnings per share
(2,181,690)
(1,080,057)
Basic/diluted earnings/(loss) per share (dollars per share)
(0.0435)
(0.0215)
* Due to a share consolidation occurring in the 2019 year, the weighted average number of shares
used to calculate earnings per share and diluted earnings per share for 2018 has been restated for
comparability purposes. Refer to Note 13 for movement in shares due to consolidation.
16 CONTROLLED ENTITIES
Investment in controlled entities
Country of
incorporation
Class of
shares
Locality Planning Energy Pty Ltd
Australia
Locality Embedded Networks Pty Ltd
Australia
LPE Infrastructure Pty Ltd
Australia
Ord
Ord
Ord
% of
% of
ownership ownership
2019
100%
100%
100%
2018
100%
100%
-
43
17 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
Entity 2019
$.......
Consolidated
Entity 2018
$.......
176,445
200,680
123,457
299,902
299,902
500,582
39,188
57,491
96,679
(5,447)
58,930
70,031
128,961
(16,217)
91,232
112,744
35,784
55,448
45,524
67,220
91,232
112,744
18 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 (2018: nil).
19 RELATED PARTIES
Key management personnel compensation
Short term employee benefits
Post-employment benefits
Long-term benefits
Consolidated
Entity 2019
$.......
Consolidated
Entity 2018
$.......
961,894
62,917
11,160
919,417
55,979
3,320
1,035,971
978,716
Other related party transactions
Directors loans to the Group were repaid during the year, with a total balance at 30 June 2019 of
$0 as disclosed at note 12 (2018: $1,150,000). Interest paid on Directors loans during the year were
at a rate of 12% per annum, totalling $61,733 (2018: $138,000). Directors loans were entered into on
an arms length basis.
44
20 CASH FLOW INFORMATION
Reconciliation of cash flow from operations
with profit / (loss) after tax
Profit / (loss) after tax
Non-cash flows:
Consolidated
Entity 2019
$.......
Consolidated
Entity 2018
Consolidated
Restated
Entity 2018
$.......
(2,181,690)
(1,080,057)
Depreciation and amortisation
248,589
219,683
Loss on disposal of assets
Non-cash donation
Unrealised (gain) / loss on derivatives
29,771
-
(42,945)
5,768
363
-
Expenditure classified as financing activities
45,568
57,297
(1,900,707)
(796,945)
Changes in operating assets and liabilities
Decrease / (increase) in receivables
(1,036,094)
(2,453,117)
Decrease / (increase) in other assets
288,933
42,010
(Decrease) / increase in creditors and payables
990,214
735,892
Increase in employee entitilements
89,853
43,982
Net cash used in operating activities
(1,567,801)
(2,428,178)
Reconciliation of liabilities arising from financing activities
Borrowings
Cashflows
Non-cash changes
Cash and cash equivalents in the Consolidated Statement
of Cash Flows include:
Cash at bank
Cash on deposit
1,351,077
1,304,201
3,824,993
46,876
42,439
-
5,218,509
1,351,077
2,856,072
1,344,363
450,000
20,000
3,306,072
1,364,363
45
21 FINANCIAL INSTRUMENTS
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for
recognition, 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
speculative 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
electricity. 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 held
to maturity investments, and borrowings. 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 borrowings with a decrease or an increase of 0.25% in interest rates.
It is the policy of the Consolidated Entity to manage their risks by continuously monitoring interest
rates.
Consolidated
Entity 2019
$.......
Consolidated
Entity 2018
$.......
Cash and cash equivalents and other financial assets
3,306,072
1,364,363
Borrowings
Sensitivity
Effect on profit or loss before taxes
Increase 0.25%
Decrease 0.25%
(5,218,509)
(1,351,078)
(1,912,437)
13,285
(4,781)
4,781
33
(33)
46
21 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.
At 30 June 2019 current assets exceed current liabilities by $4,709,539 (2018: current assets
exceeded current liabilities by $1,901,643). Financial liabilities comprised trade payables, accruals
and other payables. 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 Australian 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
equivalents, trade and other receivables, trade and other payables, employee entitlements,
derivatives and loans approximate their fair value.
22 AUDITORS REMUNERATION
Consolidated
Entity 2019
$.......
Consolidated
Entity 2018
$.......
Amounts paid/payable for audit or review of the financial statements
90,000
Amounts paid/payable for tax and other services
4,556
75,000
4,650
94,556
79,650
23 SUBSEQUENT EVENTS
There have been no other maters 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
result of those operations or the state of affairs of the Consolidated Entity in future financial years.
47
24 PARENT ENTITY DISCLOSURES
2019....
$.......
2018....
$.......
The following information has been extracted from the books and records
of the legal parent entity Locality Planning Energy Holdings Limited.
Results of parent entity
Profit/(loss) for the year
(1,270,399)
(697,587)
Other comprehensive income/(loss) for the year
-
-
Total comprehensive income/(loss) before tax
(1,270,399)
(697,587)
Income tax benefit
-
-
Total comprehensive income before tax
(1,270,399)
(697,587)
Financial position of parent entity at year end
Current Assets
Total Assets
Current Liabilities
Non Current Liabilities
Total Liabilities
14,884,735
12,093,798
14,884,735
12,093,798
141,354
1,207,295
5,127,277
-
5,268,631
1,207,295
Net Assets
9,616,104
10,886,503
Total equity of the parent entity comprising:
Issued capital
Accumulated losses
Total equity
Contingent liabilities
39,064,880
39,064,880
(29,448,776)
(28,178,377)
9,616,104
10,886,503
As at 30 June 2019, Locality Planning Energy Holdings Ltd is not aware of any contingent liabilities.
Contractual commitments
At 30 June 2019, contractual commitments entered into by Locality Planning Energy Holdings Ltd
is $Nil (2018: $Nil).
Guarantees
Locality Planning Energy Holdings Ltd has not entered into any guarantees, in the current or
previous financial years, in relation to debts of its subsidiaries.
48
25 CHANGES IN ACCOUNTING POLICIES
(a) Revenue
The Group applied AASB 15 Revenue from Contracts with Customers for the first time during the
year.
The Group determined that the revenue recognition in respect of the supply of electricity had not
changed due to the new Standard, and this will continue to be recognised over time in line with
consumption.
For the supply of embedded network infrastructure, it was determined that there was a significant
change to how the revenue was calculated as a result of applying AASB 15. Previously the revenue
associated with the supply of the embedded network infrastructure was recognised over the life of
the associated electricity supply contract. Costs to supply the embedded network infrastructure
(“site conversion costs”) were capitalised within intangible assets, and amortised over the life of the
contract with the customer.
Under AASB 15, it was determined that the performance obligation was satisfied once the
infrastructure was installed on the customer’s premises, and revenue recognised at this stage.
As some of the contracts allow the customer to pay over 5 to 10 years, these contracts contain
a significant financing component. The Group therefore discounts the consideration receivable
to present value at the time of installation and recognises this as revenue, with the consideration
remaining recognised as “site conversion receivables” in the Statement of Financial Position. These
‘site conversion receivables’ are adjusted each year to unwind the discount and recognise the
interest revenue in respect of the financing component.
As the revenue is now recognised upon installation of the embedded network infrastructure, the
cost associated with this should be recognised at the same time. For this reason, the Group has
determined it is no longer appropriate to recognise the costs within intangible assets, and these are
now expensed when the revenue is recognised. For costs incurred on site conversions where the
embedded network has not yet been installed, and therefore no revenue yet recognised, the costs
are capitalised within the inventory balance contained within ‘Other Assets’ in the Statement of
Financial Position.
The Group has adopted the full retrospective approach in adopting AASB 15, and has therefore
restated all comparative information as if the accounting policy had always been in place. The
impact of this on both the Statement of Profit and Loss and Other Comprehensive Income and the
Statement of Financial Position is presented below.
(b) Software
The Group previously capitalised software and included this under ‘Plant and Equipment’ in the
Statement of Financial Position. Given the nature of software, it was deemed more appropriate for
this to be classified as an intangible asset. This asset was reclassified from plant and equipment to
intangible assets.
This adjustment has been applied retrospectively, and comparative information adjusted.
49
25 CHANGES IN ACCOUNTING POLICIES (Cont’d)
(c) Adjustments for Changes in Accounting Policies
The below shows a reconciliation from previously reported figures to the adjusted figures now
presented as comparative information in the Statement of Profit or Loss and Other Comprehensive
Income and the Statement of Financial Position:
Statement of Profit or Loss and Other Comprehensive Income
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
2018 Previously
Reported
$.......
Adjustments
for Revenue
$.......
2018
Restated
$.......
20,153,430
1,195,265
21,348,695
(7,499,849)
(5,773,809)
(1,935,702)
(15,209,360)
4,944,070
(2,273,476)
(7,499,849)
(5,773,809)
(4,209,178)
(17,482,836)
3,865,859
8,553
18,919
743,325
751,878
18,919
686,135
(121,964)
(156,048)
(905,818)
(3,038,296)
(5,768)
(1,366,909)
(808,045)
-
(1,431,303)
(1,431,303)
(121,964)
(156,048)
(219,683)
(3,038,296)
(5,768)
(1,366,909)
(808,045)
-
(1,080,057)
(1,080,057)
-
(1,080,057)
-
-
Income tax benefit/(expense)
-
Net loss for the period
(1,431,303)
Other comprehensive income
Other comprehensive income net of tax
-
-
Total comprehensive loss for the year
(1,431,303)
(1,080,057)
50
25 CHANGES IN ACCOUNTING POLICIES (Cont’d)
Statement of Financial Position
2017 Previously Adjustments Adjustments
for Software
$.......
for Revenue
$.......
Reported
$.......
Current assets
Cash and cash equivalents
Trade and other receivables
Receivables - site conversions
Other current assets
3,977,705
1,872,142
-
91,862
757,602
576,262
2017
Restated
$.......
3,977,705
1,872,142
757,602
668,124
Total current assets
5,941,709
1,333,864
-
7,275,573
Non-current assets
Receivables - site conversions
Plant and equipment
Leasehold improvements
Intangibles
-
2,466,362
528,777
459,050
3,576,211
(77,869)
(3,563,780)
77,869
2,466,362
450,908
459,050
90,300
Total non-current assets
4,564,038
(1,097,418)
-
3,466,620
TOTAL ASSETS
10,505,747
236,446
-
10,742,193
Equity
Issued capital
Reserves
Accumulated losses
Total equity
39,064,880
125,000
(31,733,100)
236,446
39,064,880
125,000
(31,496,653)
7,456,780
236,446
-
7,693,227
2018 Previously Adjustments Adjustments
for Software
$
for Revenue
$
Reported
$
Current assets
Cash and cash equivalents
Trade and other receivables
Receivables - site conversions
Other current assets
1,364,363
2,386,669
-
180,390
1,311,224
445,724
2018
Restated
$
1,364,363
2,386,669
1,311,224
626,114
Total current assets
3,931,422
1,756,948
-
5,688,370
Non-current assets
Receivables - site conversions
Plant and equipment
Leasehold improvements
Intangibles
-
3,851,330
534,396
407,925
5,027,448
(211,986)
(5,020,583)
211,986
3,851,330
322,410
407,925
218,851
Total non-current assets
5,969,769
(1,169,253)
-
4,800,516
TOTAL ASSETS
9,901,191
587,695
-
10,488,886
Equity
Issued capital
Reserves
Accumulated losses
Total equity
39,064,880
-
(33,039,402)
587,695
39,064,880
-
(32,451,710)
6,025,477
587,695
-
6,613,170
51
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 2019 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
Director
Dated: 04 September 2019
52
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 2019 and the consolidated statement of profit or
loss and other comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, 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 2019
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 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 $2,181,690 and a net cash outflow from
operating activities of $1,567,801 during the year ended 30 June 2019. 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.
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.
53
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF LOCALITY PLANNING ENERGY HOLDINGS LIMITED
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:120)
(cid:120)
(cid:120)
(cid:120)
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.
The estimation and complexity required
in
determining the amount and timing of accrued
but unbilled revenue.
The estimation
the
financing component of the embedded network
revenue.
in determining
involved
The complexity of the new billing system used
by the organization.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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 2018-2019 financial year are recorded in
these financial statements.
Detailed recalculation of accrued and unbilled
revenue.
Reviewing the reasonableness of the financing
component allocated by management
the
embedded network revenue.
to
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
financial
summarised
statements.
in Note 2(C)
the
to
2. Existence and Valuation of Site Conversion Receivables
We focused on this area as a key audit matter
due to:
Our procedures included, amongst others:
The site conversion
receivables balance
contributing towards a significant portion of total
assets as at 30 June 2019.
long-term
Given
the
receivables, subject
impairment.
nature
to a higher
of
these
risk of
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Testing contracts of new embedded network
customers during the 2018-2019 financial year to
ensure
the site conversion receivable balance
recognised is appropriately valued and free from
material misstatement.
Testing costs incurred to complete site conversion
works on new embedded network customer
premises, to ensure contracted receivables are not
overstated or deemed uncollectable from date of
recognition.
Confirming new 2018-2019 embedded network
customer accounts are live and receiving energy
during the period, to ensure existence of the new
customers, existence of the site conversion works
completed, and consequently existence of the site
conversion receivables recognised in 2018-2019.
embedded
pre-existing
network
Reviewing
customer accounts
the customers
continue to remain live, and that the corresponding
to be
site conversion
collectable.
receivable continues
to ensure
(cid:120)
(cid:120)
54
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 2019, 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.
(cid:120)
As part of an audit in accordance with Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
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.
55
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF LOCALITY PLANNING ENERGY HOLDINGS LIMITED
(cid:120) 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:120) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
(cid:120) 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:120) 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:120) 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.
56
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF LOCALITY PLANNING ENERGY HOLDINGS LIMITED
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 2019.
In our opinion, the Remuneration Report of Locality Planning Energy Holdings 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
Bentleys Brisbane (Audit) Pty Ltd
Chartered Accountants
Ashley Carle
Director
Brisbane
04 September 2019
57
Locality Planning Energy (cid:8)(cid:43)(cid:40)(cid:32)(cid:37)(cid:42)(cid:35)(cid:47)(cid:335)(cid:12)(cid:37)(cid:41)(cid:37)(cid:48)(cid:33)(cid:32)
Suite 306, Level 3, Tower 1, Kon-Tiki Business Centre(cid:335)
55 Plaza Parade, Maroochydore
QLD 4558
Australia
1800 040 168
www.localityenergy.com.au
58