Lycopodium Limited Annual Report 2018

Plain-text annual report

A N N U A L F I N A N C I A L R E P O R T 2 0 1 8 A N N U A L F I N A N C I A L R E P O R T 2 0 1 8 Level 5, 1 Adelaide Terrace East Perth Western Australia 6004 T: + 61 (0)8 6210 5222 www.lycopodium.com.au Contents Directors’ Report Corporate Governance Statement Financial Report - Consolidated Statement of Profit or Loss and Other Comprehensive Income - Consolidated Balance Sheet - Consolidated Statement of Changes in Equity - Consolidated Statement of Cash Flows 1 24 31 32 33 34 - Notes to the Consolidated Financial Statement 35 Directors’ Declaration Independent Auditor’s Audit Report to the members Shareholder Information Corporate Directory 94 95 99 101 This financial report is the consolidated financial report of the group consisting of Lycopodium Limited and its subsidiaries. The financial report is presented in the Australian currency. Lycopodium Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Lycopodium Limited Level 5, 1 Adelaide Terrace East Perth WA 6004 A description of the nature of the group’s operations and its principal activities is included in the directors’ report on page 1, which is not part of this financial report. The financial report was authorised for issue by the Directors on 20 September 2018. The Directors have the power to amend and reissue the financial report. Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases, financial reports and other information are available at our Shareholders’ Centre on our website: www.lycopodium.com.au Lycopodium Annual Finanical Report 2018 Lycopodium Annual Financial Report 2018 Directors’ Report Lycopodium Annual Financial Report 2018 • 1 LycopodiumLimitedDirectors'report30June2018Directors'reportYourDirectorspresenttheirreportonthegroupconsistingofLycopodiumLimitedandtheentitiesitcontrolledattheendof,orduring,theyearended30June2018.DirectorsThefollowingpersonswereDirectorsofLycopodiumLimitedduringthewholeofthefinancialyearanduptothedateofthisreport:MichaelJohnCarattiPeterDeLeoRodneyLloydLeonardRobertJosephOsmettiBrunoRuggieroPeterAnthonyDawsonLawrenceWilliamMarshallStevenJohnMicheilChadwickPrincipalactivitiesTheprincipalactivitiesofthegroupduringthefinancialyearconsistedofengineeringconsultinginthemining,metallurgical,railandmanufacturingindustries.Therewerenosignificantchangesinthenatureofthegroup'sprincipalactivitiesduringthefinancialyear.DividendsDividendspaidtomembersduringthefinancialyearwereasfollows:2018$2017$Finalfullyfrankeddividendfortheyearended30June2017of9.0cents(2017:4.0cents)perfullypaidsharepaidon10October2017(2017:13October2016).3,575,9141,589,295Interimfullyfrankeddividendfortheyearended30June2017of12.0cents(2017:9.0cents)perfullypaidsharepaidon10April2018(2017:13April2017)4,767,8853,575,9148,343,7995,165,209In addition to the above dividends, since the end of the financial year the Directors have recommended the payment of a final fully franked dividend of $7,151,827 (18.0 cents per fully paid share) to be paid on 12 October 2018 out of retained earnings at 30 June 2018 (2017: $3,575,914). This brings the total dividend declared for the year ended 30 June 2018 to 30.0 cents (2017: 18.0 cents).Review of operationsLycopodium has had a busy and successful year. Operationally we have delivered five West African gold projects on time, on budget and on specification. Financially we have delivered a good profit result, added to our already strong balance sheet and paid a fully franked dividend of 30 cents per share to shareholders.Above all else, we have achieved these results while keeping our people safe and healthy.We continue to be flexible in the form of contract we use to deliver our services. Of the five projects commissioned this financial year, two were delivered under EPC contracts while the remaining three were delivered under EPCM contracts.EPC•MakoProjectforToroGoldLtd(Toro)inSenegal•SissinguéProjectforPerseusMiningLimited(Perseus)inCôted'IvoireEPCM•HoundéProjectforEndeavourMiningCorporation(Endeavour)inBurkinaFaso•NatougouProjectforSEMAFOInc.(SEMAFO)alsoinBurkinaFaso;and•FekolaProjectforB2GoldCorporation(B2Gold)inMali.1Directors’ Report (continued) 2 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedDirectors'report30June2018(continued)Review of operations (continued)Looking forward for the next year we have kicked off two new greenfield gold projects - the Ity Project in Côte d'Ivoire for Endeavour and the Waghnion Project for Teranga Gold Corporation in Burkina Faso. We are also completing the Karma Upgrade for Endeavour in Burkina Faso. Subject to market conditions discussed below, our pipeline looks reasonable for 2018/19.The delivery of major West African gold projects in the past year masks the diversity of our business. As examples of this diversity:•we have continued to provide EP (Engineering and Procurement) services at the Cobré Panama Projectfor First Quantum Minerals Ltd (FQM), the largest greenfield copper project in the world.•we are progressing the Toka Tindung Expansion in North Sulawesi for PT Arci Indonesia.•we have designed, delivered and are currently commissioning the Final Recovery Plant on theMontepuez Ruby Mine in Mozambique for Gemfields plc.•we continue to provide a broad range of specialist diamond processing and engineering services to DeBeers Group (De Beers) in South Africa, Botswana and Namibia.•we are jointly preparing the Pre-feasibility Study for the Toliara Minerals Sands Project for Base MineralsLimited in Mozambique.•we are undertaking studies and delivering projects in battery minerals including graphite, lithium, cobaltand nickel.4In addition, our infrastructure services continued at a steady rate across the year with a number of material briefs awarded and executed. These included the Stockingbingal to Parkes study package on the Australian Inland Rail Project, study services on the Pipers Flat Coal Unloader for Energy Australia, ongoing professional services as part of the Main Roads of Western Australia Project Management Panel and design services on BHP’s Jimblebar Stretch Assist Project.In our process industries business we executed the design and construct contract for a Cotton Seed De-linting package in NSW and the EPC work associated with the Mt Piper Air Cannon Project.This is a broad portfolio of commodities, geographies and sectors within which we operate.Our staff numbers have reduced modestly over the year reflecting the rise and fall associated with our project delivery activities. It is with great pride that we can report that all our projects and studies are being delivered very well across the business and as always that is a reflection of our great people and teams.Full Year ResultsFor the financial year ended 30 June 2018, Lycopodium derived revenues of $194.6 million and a net profit after tax of $18.2 million.The Directors have resolved to pay a final dividend of 18 cents per share, which is in line with the dividend policy. The total dividend for the year is 30 cents per share fully franked.2Directors’ Report (continued) Lycopodium Annual Financial Report 2018 • 3 LycopodiumLimitedDirectors'report30June2018(continued)Review of operations (continued)OutlookGeneral viewThe markets within which we operate are in a relatively steady state. We are always adapting to changes in mining legislation, tax structures and security issues in the normal course of our business. Subject to any material impacts associated with trade wars and tariffs on commodities we expect this to continue. In practical terms a steady state translates to a reasonable level of work and opportunity in the market which we expect will translate to reasonable financial returns for the business.ResourcesThe gold price this time last year sat at around US$1,310/oz, peaked at over US$1,360/oz and subsequently weakened to US$1,173/oz in mid-August 2018 before rallying to approximately US$1,200/oz in mid-September.Although this has not had a material effect on our level of activity on gold projects to date, we expect we will see some future delay to near term gold related prospects whilst project owners deal with more arduous routes to project funding.At time of writing the copper price is also down 10% from this time last year yet the medium to long term outlook for copper sees a production deficit which will exert an upward influence on the price. This has been the general story across many of the commodities with which Lycopodium has historically worked. The result is that whilst there is significant activity in the sector the activity is predominantly in the development phase of the existing project order book. Timeline slippage is being seen in those projects which are at the pre-development and funding phase making predicting project award dates somewhat difficult. Notwithstanding the steady outlook for those more traditional mineral resources we have during the year made significant inroads into the battery metals market having taken on and executed studies and projects in lithium, cobalt, graphite and nickel.Process IndustriesIn general we are seeing an increase in engineering services in the chemical processing sector and the water, waste water and waste management sectors, which has offset the decline being experienced in the food and beverage sector and the pharmaceuticals sectors.InfrastructureWe have seen a steadily improving level of activity within the sectors we service. During the year we have strengthened our position on the east coast of Australia in Rail Infrastructure Management (RIM) services particularly in NSW and have also continued to build our presence in Victoria. We secured a key package on the Inland Rail Project for Australian Rail Track Corporation (ARTC) and a significant multiyear contract with Pacific National Corporation (Pacific National) which should benefit our ability as a business to secure similar future briefs.Corporate overviewDuring the course of the year we undertook a thorough strategic planning process involving the full leadership team across our global business. This has culminated in the development of a strategic plan and a series of strategic initiatives to take the business forward.The outcome of this work can be summarised as:•Remainingfocussedonsuretyofoutcomeforourclients,shareholdersandstaff.•Enhancingourtraditionofinnovationindesignandinnovationinimplementationbyestablishinganinnovationcentrewithinthebusinessgiventhebreadthofchangesnowconfrontingallofus.•Pursuingstrategiesthathavethepotentialtobroadenourofferinginthemarket.AllofthisdeliveredfromourhubsinAustralia,CanadaandSouthAfricasupportedbyourManilabasedoperation.3Directors’ Report (continued) 4 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedDirectors'report30June2018(continued)Review of operations (continued)A key initiative reported last year was the establishment of Mondium Pty Ltd (Mondium). This business is a standalone joint venture company owned by Lycopodium and Monadelphous Ltd, a highly respected engineering and construction company listed on the ASX.Mondium has been established to service the mineral resources market in Australia and selected other regions by delivering projects on an EPC or Lump Sum Turnkey basis. During the past year Mondium secured a number of EPC briefs and successfully completed its first project at Talison Lithium’s Greenbushes site in Western Australia. This team has continued to build a reputation for delivering quality outcomes and although the number of large EPC opportunities is low we remain highly confident that Mondium will be successful in developing into a significant asset for Lycopodium.Growing our business, adapting and embracing change, responding to new market conditions - these are challenges to be addressed by Lycopodium’s people. Developing our people so that they, individually, are able to reach their full potential remains at the very core of Lycopodium’s business and culture.Operational highlightsResourcesWe have a world class skill set within our business.•Gold - we continued building our track record as the preeminent international engineer for gold projects inWest Africa•Copper - we are providing engineering and procurement services on the largest greenfield copper projectunder construction in the world (Cobre Panama)•Diamonds - we continue to deliver leading edge diamond process and engineering services to key clientsincluding De Beers.•Comminution - we provide world-leading comminution circuit modelling, design, commissioning andoptimisation services through our wholly owned subsidiary, Orway Mineral Consultants (OMC).We have worked hard to deliver bespoke solutions for our clients, working with them to resolve problems unique to their own projects and in so doing to increase the probability of project development or alternatively, to de-risk project delivery. The following are a few highlights from the year:Cobré Panama Project - FQM -PanamaWehavebeenactiveonthisprojectsince2014.OneoftheuniquefeaturesofthisprojectisthatFQMhasaphilosophyof,andaverystrongcapabilityin,self-performingandmanagingprojectdelivery.Holdingtotheseprinciplesforaprojectofthismagnitude(85Mtpa)isveryunusualandacredittothestrengthoftheFQMorganisation.LycopodiumprovidedtheEPcomponentoftheprocessfacilityandhasworkedverymuchhandinglovewithFQMthroughoutthepast4years.TheCobréProjectrepresentsacontinuationofalongrelationshipwithFQMthatcommencedwiththeKMTProjectin2008andhasnowcontinuedacrosssixprojects,includingCobré.SissinguéIn 2015 Lycopodium completed the Feasibility Study, a Mill Option Study and subsequently the Front End Engineering Design (FEED) for the Sissingué Project of Perseus. Lycopodium provided EPC services to deliver the process plant and related project infrastructure. The project involved a standard 1 Mtpa gold plant however was unique in that it was tailored as a fit for purpose design to suit the relatively short term life of mine.Typical of Lycopodium plants the Sissingué process plant ramped up to nameplate production levels quickly, meeting or exceeding client expectations.Sissingué is a transformative asset for Perseus, making the company a multi-mine, multi-jurisdiction gold producer. Perseus is now pursuing the development of the larger Yaouré Project in neighbouring Côte d'Ivoire. Lycopodium has been awarded the FEED for this project.4Directors’ Report (continued) Lycopodium Annual Financial Report 2018 • 5 LycopodiumLimitedDirectors'report30June2018(continued)Reviewofoperations(continued)NatougouSEMAFO’sNatougouProjectislocated320kmfromthecapitalofOuagadougou,inthesoutheastofBukinaFaso.LycopodiumcompletedapositiveFeasibilityStudyinFebruary2016whichconfirmedtheeconomicviabilityofanopenpit,carboninpulpproject.InMay2016wewereawardedthecontractsfortheprovisionofoffshoreEP(engineering,procurementandprojectmanagement)services,andonshoreCM(fieldengineering,constructionmanagementandcommissioning)servicesforthegreenfieldprocessplantandassociatedfacilities.TheprocessplantconcreteworkscommencedinApril2017,plantconstructionworkwascompletedinMaywiththewetcommissioningcompletedinJune2018.ChallengesuniquetoNatougouincludedtheremotenessofthesitebeinginthefareastofBurkinaFasoaswellastherelativelackoflocalskilledandsemi-skilledlabourresourcesavailableinsupportoftheconstructionefforts.HoundéInApril2016,LycopodiumwasawardedtheEPCMcontractforthedeliveryofEndeavour’s90%-ownedHoundéprojectinBurkinaFaso.Withaninitialcapitalcostestimatedat$328million,the3Mtpaprojectcomprisedthedeliveryofagoldprocessingplantandassociatedinfrastructure,includingafullyintegratedowneroperatedminingfleet.Havingundertakenthedetailedfeasibilitystudyandparticipatedinprojectoptimisationreviews,wewereabletomovequicklyfromstudytodetailedengineering,withsiteactivitiesquicklyfollowingon.TheprojectwasinterestinginthatEndeavourself-performedtheprojectinfrastructure,whileLycopodiumfocussedprimarilyontheprocessingfacilityandmineservicesareas.TheprojectdeliverystrategyworkedwellandwiththefirstgoldpouroccurringinOctober2017.Endeavourofficiallyannouncedtothemarketsthattheminehadbeensuccessfullybuilt,aheadofscheduleandbelowbudget.Nameplatecapacitywasachievedwithinweeksfollowingtheintroductionoforeintothemill.Lycopodium’sinvolvementinthedevelopmentofthisprojectwasacontinuationofasuccessfulassociationwithEndeavouracrosstheNzemaProjectinGhana,AgbaouProjectinCôted'IvoireandKarmaExpansionProjectinBurkinaFaso.ThisassociationcontinueswiththecurrentinvolvementwiththeItyProjectinCôted'Ivoire,aprojectsimilarinscaletotheHoundéProject.FekolaThis reporting year Lycopodium continued working with B2Gold on the commissioning of the Fekola mine in south western Mali, some 400 km west of the capital Bamako. Overall Lycopodium scope of services included the process design, detailed engineering and design of the new facilities; delivering procurement services for equipment and materials purchases as well as providing a team of engineers who were integrated with B2Gold’s construction and commissioning teams to deliver site technical and scheduling support.The process plant was originally designed to process nominally 4 Mtpa primary run of mine ore however in 2016 B2Gold announced that, as a result of positive drill results and exploration potential, they had decided to expand throughput at Fekola and proceed with an expansion of the mill. Design factors built into the Optimised Feasibility Study by Lycopodium / B2Gold included 5 Mtpa assumptions for plant design, general infrastructure and tailings dam design and location, thus enabling ore throughput capacity to reach up to 5 Mtpa from the onset of initial production.Construction of the project started in February 2015 and in November 2017 B2Gold announced that Fekola had achieved commercial production, one month ahead of the revised schedule and four months ahead of the schedule announced in the Optimised Feasibility Study. Production ramp-up to design throughput was achieved on schedule and B2Gold reports that plant operation continues to exceed both throughput and gold recovery nameplate design.5Directors’ Report (continued) 6 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedDirectors'report30June2018(continued)Reviewofoperations(continued)Lycopodium’sinvolvementinthedevelopmentofthisprojectwasacontinuationofasuccessfulassociationwithB2GoldfollowingonfrompreviousinvolvementontheirOtjikotoProjectinNamibiaandMasbateProjectinthePhilippines.Thisassociationcontinueswiththecurrentinvolvementwiththeexpansionprojects/studiesforboththeMasbatemineandtheElLimonmineinNicaragua.MakoInAugust2016,wewereawardedtheEPCcontractforthedeliveryoftheMakoProjectineasternSenegal.MakoistheflagshipassetofToro,aprivateexploration,developmentandproductioncompanyfocusedonWestAfrica.TheMakoProjectisuniqueinthatthedepositcomprisesaparticularlyhardandabrasiveore.FollowingextensivetestworkourmodellingofthecomminutioncircuitshowedthatanoptimumgrindcouldbeachievedonthisveryhardorewithasinglestageSAGmill,anaggressivecircuitbutonedeliveringsignificantcapitalandoperatingcostsavingstoToro.Followingcompletionofthepre-feasibilityanddefinitivestudyphasesin2015and2016,Lycopodiumsuccessfullydeliveredthecontractscope(treatmentplant,mineservicesarea,tailingsmanagementfacility,riverabstractionfacility,rawwaterstoragedam,campandsupportinfrastructure)onanEPCbasis.Inaddition,theprojectbordersaUNESCOlistedparksothatveryhighenvironmentalprotectionstandardswereimplementedindesignandconstruction.TheMakominepoureditsfirstgoldinJanuary2018,withtheprojectcominginbelowbudgetandaheadofschedule.Theprojecthascontinuedtooperateatnameplatecapacityanddesignrecoveriessincecommissioning.XRTTechnologyAcquisitionProject,VenetiaDiamondMinesTheVenetiadiamondmine,whichopenedin1992,isDeBeersflagshipoperationinSouthAfrica.Itisthecountry’slargestdiamondproducerandyieldsapproximately40%ofSouthAfrica’sannualdiamondproduction.DeBeersisnowintheprocessofdevelopinganundergroundminingoperationatVenetiaasitisapproachingthedepthlimitofopen-pitoperations.Theundergroundmineisexpectedtocommenceoperationin2022andduringitslifetimewilltreat132milliontonnesoforecontaininganestimated94millioncarats.Theundergrounddevelopmentisexpectedtoextendthelifeofthemineto2046.Lycopodiumhasbeeninvolvedinsuccessfullyimplementingvariousplantimprovementprojectsattheminesince2011,specificallyintheReconcentrateAreaaswellasintheRecoveryPlant.Wewereengagedattheendof2017onacostreimbursablebasistoundertakethedetaildesignofanX-RayTransmission(XRT)facilitytobeincorporatedintotheDenseMediaSeparationconcentratestream,inordertoalleviatethebottle-neckthathighyieldingmaterialcreatesinthefinalRecoveryPlant.Theprojectisscheduledforcompletionattheendof2018.AquariumIntegratedSortHouse,JwanengMine,BotswanaTheJwanengminelocatedinSouthernBotswanaistherichestdiamondmineintheworldandisownedbyDebswana(apartnershipbetweenDeBeersandtheGovernmentofBotswana).Debswanacurrentlyhasanold,stand-aloneSorthousefacilitylocatedatJwanengthatishandlingconcentrateproducedfromalloftheDebswanamines.AdecisionwasmadetorelocateandintegratethisfinaldiamondsortingfacilityintotheexistingfullyintegratedSorthousebuilding(locatedatthemine).TheobjectiveofthenewSorthousefacilityistohandleupto50millioncaratsofdiamondsperannum.DebswanaengagedLycopodium,throughourlocalBotswanaoffice,onacostreimbursablebasistoundertakethedetaileddesignofthenewSorthouse.Theprojectisscheduledforcompletionattheendof2018.6Directors’ Report (continued) Lycopodium Annual Financial Report 2018 • 7 LycopodiumLimitedDirectors'report30June2018(continued)Reviewofoperations(continued)ProcessIndustriesLycopodium’sProcessIndustriesgroupdeliversprocessdesign,engineeringandprojectdeliveryservicesinspecialtyareassuchaschemicals,pharmaceuticals,foodandbeveragerenewablesandwater/wastewatersectors.Severalhighlightsinclude:DensoBitumenMixingFacilityUpgradeDensohasrecentlyundertakentherelocationofitsmanufacturingoperationstoanewpurposebuiltfacilityinCampbellfield,Victoria.Aspartofarelocationtothenewfacility,Densotooktheopportunitytoupgradeitsbitumenstorageandmanufacturingcapability.LycopodiumassistedDensowiththedesignandconstructionofthenewproductionfacilityincludingthedetaildesignoftheproductblendingtanks,heating,agitationandproducttransfersystems.Theprojectwasdeliveredonagreenfieldsiteunderalumpsumcontract.Theprojectwasdeliveredonschedulewithnosafetyorenvironmentalincidents.PfizerAsepticManufacturingFacilityPfizeristhesecondlargestpharmaceuticalscompanyonaglobalbasis.Lycopodiumhasbeenprovidingon-goingprojectengineeringsupporttoPfizeratitsPerthAsepticManufacturingFacilityforseveralyears.Thefacilitymanufacturesplasticvials(Cytosafe®)containingliquidoncologymedicines,andplasticampoules(Sterisafe®)containingsterilesolutions.AltonaSaltReductionPlantLycopodiumdesignedandconstructedonaD&Cbasisanewhydrochloricacid(HCl)dosingsystemfordeliveryofHClliquidtoreverseosmosisunitsattheAltonaSaltReductionPlantofVictorianGovernment’sCityWestWater.Theprojectwasdeliveredonabrownfieldsiteunderalumpsumcontractwithnointerruptionorimpacttoplantoperations.Wewereresponsibleforthedesignoftheconcretebundarea,newpipebridge,integrationofpipeworkandtie-intotheexistingplantincludinginstallingnewpipeworktoexistingtankerunloadingarea.EcoMagMagnesiumSaltRecoveryProjectLycopodiumwasrecentlyawardedadetailedfeasibilitystudyforEcoMagLimitedbasedonrecyclingbitternsgeneratedbysea-saltproductiontoextracthighpuritymagnesiumcompounds.InfrastructureLycopodium’sInfrastructuregroupprovidesservicesacrossthegeneralinfrastructure,transport(roadandrail)andassetmanagementsectorswiththefollowinghighlights:JimblebarMobileMaintenanceFacilityBGCContractingPtyLtd(BGC)isoneofAustralia’slargestprivateminingandconstructioncontractorsandprovidesminingandconstructionservicesacrosstheresources,energyandinfrastructuresectors.BGCwasengagedtoundertakethedesignandconstructionofnewandrefurbishedMobileMaintenancefacilitiesattheJimblebarMine,oneoftheBHPBillitonLimited(BHP)ironoresitesinthePilbararegionofWesternAustralia,some40kmeastofNewman.TheMobileMaintenancefacilityupgradewillsupportexpansionofthemine’sfleetcapacity.Previously,LycopodiumdesignedthewarehouseandworkshopattheSinoIronProject,whichwasultimatelyconstructedbyBGC.Recognisingthequalityofdesignandsupportprovidedonthatproject,BGCinvitedLycopodiumtotenderandsubsequentlyawardeddesignservicesfortheJimblebarproject.PacificNationalRIMServicesPacificNationalCorporation(PacificNational)isAustralia’slargestrailprovider,haulingcoal,steel,automotive,agricultural,mineralsandcontainerisedfreighttoallmainlandstatesandterritoriesinAustralia.LycopodiumwasengagedbyPacificNationaltoprovideRIMservices,ona3yearplus1yearagreementtoinspect,certifyandmanagedefectsat62sitesAustraliawide.InspectionsatthesesitescommencedinApril2018requiringsubstantialpriorplanningandgroundwork.7Directors’ Report (continued) 8 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedDirectors'report30June2018(continued)Reviewofoperations(continued)RIMservicescompriseprocessesandsystemstoensureinfrastructureisfit-for-purpose,abletosupportsafeandefficientoperations.Inadditionandmostimportantly,theserviceensuresriskismanagedinaccordancewiththerequirementsofrailsafetylegislation.Sincecommencing,PacificNationalhasexpandedourscopetoincludederailmentinvestigations,specialoradhocinspectionsandgeotechnicalinvestigations.HSEandCommunityLycopodium’sprimaryfocusisonthehealthandsafetyofitsstaffandallpersonnelworkingonitsprojects.Wecontinuetosetandachieveahighstandardofhealthandsafetyacrossallourprojectsandgiventhehighlyinternationalnatureofouractivitieswehaveworkedproactivelytoensurethesecurity,safetyandwellbeingofourpersonnelwherevertheymaybe.In2017/18therewere4.14millionmanhoursworkedacrosstheLycopodiummanagedprojectswithaLTIFRof0.23againstan11.5constructionindustryaverage.Onthecommunityside,LycopodiumcontinuedtofocusoneducationasameansofstrengtheningcommunitiesandinlinewiththisremainedanactivesponsorandsupporteroftheClontarfFoundation,acharitablenot-for-profitorganisationinAustraliaimprovingtheeducation,discipline,self-esteem,lifeskillsandemploymentprospectsofyoungAboriginalmen.SupportwasalsoprovidedaroundakeyannualeventfortheMurlpirrmarraConnection,anot-for-profitorganisationthatexiststoprovideAboriginalyouthintheremotecommunitiesofWiluna,LeonoraandsurroundingregionsinWesternAustralia,witheducationalopportunities.Intermsofindustryengagement,LycopodiumbecameaplatinumsponsoroftheAustralianAfricanMiningandEnergyGroupthepeakbodyrepresentingAustraliancompaniesengagedinthedevelopmentofAfrica’sresourceindustry.TheCompanyalsocontinuedtoprovidematerialsupporttoanumberofcharitableinitiativeschampionedbystaff.AcknowledgementTheBoardofDirectorsrecognisesthattheCompany’sabilitytocontinuedeliveringworldclassservicestoourclientsandtomaintainandenhancethecompany’sperformanceandcapabilityisdependentonthecontinuedcommitmentandsupportofourpersonnel.OnbehalfofmyfellowDirectorsItakethisopportunitytosincerelythankallpersonnelfortheirhighlyvaluedcontribution.WewouldalsoliketothankourclientsfortheircontinuedtrustinLycopodiumtodeliverservicestotheirprojectsandstudies.Wewillasalwaysworkhardtomaintainthesevaluedrelationships.8Directors’ Report (continued) Lycopodium Annual Financial Report 2018 • 9 LycopodiumLimitedDirectors'report30June2018(continued)Reviewofoperations(continued)Asummaryofconsolidatedrevenuesandresultsfortheyearbysignificantreportingsegmentsissetoutbelow:SegmentrevenuesSegmentresults2018$2017$2018$2017$Corporateservices14,216,66514,854,323(378,949)788,088Minerals-AsiaPacific117,526,791137,132,98418,004,6499,080,813Minerals-NorthAmerica17,163,30321,649,5881,167,134(746,232)Minerals-Africa32,692,36341,116,8561,705,232984,779Projectservices-Africa22,382,75416,834,8044,559,8802,784,941IndustrialProcess9,840,9544,179,161(76,389)(199,343)Other24,019,29421,989,9691,403,9661,877,816Intersegmenteliminations(43,273,233)(41,141,243)--Goodwillimpairment--(1,095,048)(263,242)Total194,568,891216,616,44225,290,47514,307,620Incometaxexpense(6,957,088)(3,934,091)Profitfortheyear18,333,38710,373,529Less:Profitattributabletonon-controllinginterest(163,201)(81,446)ProfitattributabletoownersofLycopodiumLtd18,170,18610,292,083MatterssubsequenttotheendofthefinancialyearSinceyearendthedirectorshaverecommendedthepaymentofafinaldividendonordinarysharesinrespectofthe2018financialyear.Thetotalamountofdividendis$7,151,827whichrepresentsafullyfrankeddividendof18.0centsperfullypaidordinaryshare.Withtheexceptionoftheabove,noothermatterorcircumstancehasarisensince30June2018thathassignificantlyaffected,ormaysignificantlyaffect:(a)thegroup'soperationsinfuturefinancialyears,or(b)theresultsofthoseoperationsinfuturefinancialyears,or(c)thegroup'sstateofaffairsinfuturefinancialyears.LikelydevelopmentsandexpectedresultsofoperationsThegroupwillcontinuetoprovideengineeringconsultancyservicesasdetailedabove.RefertotheReviewofOperationssectionwithintheDirectors'Reportforinformationregardingthelikelydevelopmentsandexpectedresults.EnvironmentalregulationThegroup'soperationsarenotsubjecttosignificantenvironmentalregulationunderalawoftheCommonwealthorofaStateorTerritoryinrespectofitsconsultingactivities.9Directors’ Report (continued) 10 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedDirectors'report30June2018(continued)InformationonDirectorsMichaelJohnCarattiBE(Elec)(Hons).Non-executiveChairman.Age68.ExperienceandexpertiseFormerManagingDirectorofLycopodiumMineralsPtyLtd,MrCarattihasover40yearsexperienceinthemineralprocessingindustryandhashadamajorroleinthedevelopmentofthegroup'sriskmanagementandqualitycontrolprogrammes.MrCarattiisaDirectorofOrwayMineralsConsultants(WA)PtyLtd.SpecialresponsibilitiesChairmanoftheBoard.ChairmanoftheCorporateGovernanceCommittee.ChairmanoftheRemunerationCommittee.Interestsinsharesandoptions9,104,637ordinarysharesofLycopodiumLimited.Formerdirectorshipsinthelast3yearsNone.PeterDeLeoBE(Civ)CPEngFIEAust.ManagingDirector.Age52.ExperienceandexpertiseMrDeLeohasover29yearsexperienceintheconstructionandengineeringfields.MrDeLeoistheManagingDirectorofLycopodiumLimitedandaNon-executiveDirectorofMondiumPtyLtd.SpecialresponsibilitiesMemberoftheCorporateGovernanceCommittee.MemberoftheAuditCommittee.Interestsinsharesandoptions1,171,711ordinarysharesofLycopodiumLimited.Formerdirectorshipsinthelast3yearsNone.RodneyLloydLeonardBE(Hons),MSc,MAusIMM.ExecutiveDirector.Age57.ExperienceandexpertiseMrLeonardhasinexcessof30yearsexperienceinthemineralprocessingindustryandistheManagingDirectorofLycopodiumMineralsPtyLtdandaNon-executiveDirectorofADPHoldings(Pty)Limited.SpecialresponsibilitiesMemberoftheCorporateGovernanceCommittee.MemberoftheAuditCommittee.Interestsinsharesandoptions2,154,215ordinarysharesofLycopodiumLimited.Formerdirectorshipsinthelast3yearsNone.10Directors’ Report (continued) Lycopodium Annual Financial Report 2018 • 11 LycopodiumLimitedDirectors'report30June2018(continued)InformationonDirectors(continued)RobertOsmettiBE(Civ),MIEAust,CPEng.ExecutiveDirector.Age62.ExperienceandexpertiseMrOsmettihasover38yearsexperienceintheprojectmanagementandconstructionofminerals,oilrefiningandmanufacturingprojects.MrOsmettiisaDirectorofLycopodiumMineralsCanadaLimitedandManagingDirectorofMondiumPtyLtd.SpecialresponsibilitiesMemberoftheCorporateGovernanceCommittee.Interestsinsharesandoptions266,148ordinarysharesofLycopodiumLimited.Formerdirectorshipsinthelast3yearsNone.BrunoRuggieroBE(Mech),GradDipMinSc,GradCertEngTech,MIEAust.ExecutiveDirector.Age54.ExperienceandexpertiseMrRuggierohasover30yearsexperienceinthemineralsindustry.HecurrentlyservesastheTechnicalDirectorforLycopodiumMineralshavingoverarchingresponsibilityfortheCompany’stechnicalknowledgebase,capabilitiesanddirection.MrRuggerioisaDirectorofLycopodiumMineralsPtyLtdandaNon-executiveDirectorofECGEngineeringPtyLtdandQuantumGraphiteLimited.SpecialresponsibilitiesMemberoftheCorporateGovernanceCommittee.Interestsinsharesandoptions3,167,332ordinarysharesinLycopodiumLimited.Formerdirectorshipsinthelast3yearsNone.PeterAnthonyDawson,BSc(Hons).ExecutiveDirector.Age60.ExperienceandexpertiseMrDawsonhas30yearsexperienceintheresourcessector,initiallyinoperationsandsubsequentlyincorporateroles,includingasanexecutivedirectoroflistedpubliccompaniesandasaPartnerintheCorporateFinancedivisionofKPMG.MrDawsonisaDirectorofLycopodiumProcessIndustries,LycopodiumInfrastructurePtyLtdandaNon-executiveDirectorofADPHoldings(Pty)Limited.SpecialresponsibilitiesMemberoftheCorporateGovernanceCommittee.InterestsinsharesandoptionsNil.Formerdirectorshipsinthelast3yearsNone.11Directors’ Report (continued) 12 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedDirectors'report30June2018(continued)InformationonDirectors(continued)LawrenceWilliamMarshallB.Bus(Acc)CPA.Non-executiveDirector.Age65.ExperienceandexpertiseMrMarshallinhisroleastheformerChiefExecutiveOfficerofLycopodiumLimitedandwithover40yearsexperiencehasplayedamajorroleinthedevelopmentofthegroup'sinformation,accountingandmanagementandriskmanagementsystems.SpecialresponsibilitiesChairmanoftheAuditCommittee.MemberoftheCorporateGovernanceCommittee.MemberoftheRemunerationCommitee.Interestsinsharesandoptions1,272,332ordinarysharesofLycopodiumLimited.Formerdirectorshipsinthelast3yearsNone.StevenChadwickBASc(Metallurgy).Non-executiveDirector.Age64.ExperienceandexpertiseMrChadwickhasover40yearsexperienceintheminingindustry,incorporatingtechnical,operatingandmanagementroles,aswellasastrongmetallurgicalbackground.MrChadwickisnowametallurgicalconsultantspecialisinginprojectmanagementwitharangeoflocalandinternationalclients.HewasafoundingDirectorofBCIronandaformerManagingDirectorofCoventryResources,PacMinMiningandNorthernGold.MrChadwickisaNon-executiveDirectorofLycopodiumLimitedandQuantumGraphiteLimited.SpecialresponsibilitiesMemberoftheCorporateGovernanceCommittee.MemberoftheRemunerationCommitee.Formerdirectorshipsinthelast3yearsCoventryResources.CompanysecretaryThecompanysecretaryisKeithJohnBakkerB.Bus(Acc),FCPA.Age65.Keithhasinexcessof30yearsexperienceinseniorfinanceandcompanysecretarialroleswithintheairline,humanresourceconsultingandminingservicessectors.HeistheChiefFinancialOfficerofLycopodiumLimited.12Directors’ Report (continued) Lycopodium Annual Financial Report 2018 • 13 LycopodiumLimitedDirectors'report30June2018(continued)MeetingsofDirectorsThenumbersofmeetingsoftheCompany'sboardofDirectorsandofeachboardcommitteeheldduringtheyearended30June2018,andthenumbersofmeetingsattendedbyeachDirectorwere:FullmeetingsMeetingsofMeetingsofcommitteesofdirectorsnon-executivedirectorsAuditNominationRemunerationABABABABABMichaelCaratti1111--**---22PeterDeLeo1111*-33--**-RodneyLeonard1011*-13--**-RobertOsmetti1011*-**---**-BrunoRuggerio1011*-**---**-PeterDawson99*-**---**-LawrenceMarshall911--33--22StevenChadwick1111--**---22A=NumberofmeetingsattendedB=NumberofmeetingsheldduringthetimetheDirectorheldofficeorwasamemberofthecommitteeduringtheyear*=Notanon-executiveDirector**=Notamemberoftherelevantcommittee13Directors’ Report (continued) 14 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedDirectors'report30June2018(continued)Remunerationreport-auditedTheDirectorsarepleasedtopresentyourCompany's2018remunerationreportwhichsetsoutremunerationinformationforLycopodiumLimited'snon-executiveDirectors,executiveDirectorsandotherkeymanagementpersonnel.DirectorsandkeymanagementpersonneldisclosedinthisreportNamePositionMichaelCarattiChairman,Non-executiveDirectorPeterDeLeoManagingDirectorRodneyLeonardExecutiveDirectorRobertOsmettiExecutiveDirectorBrunoRuggieroExecutiveDirectorPeterDawsonExecutiveDirectorLawrenceMarshallNon-executiveDirectorStevenChadwickNon-executiveDirectorKeithBakkerCompanySecretary,ChiefFinancialOfficerRoleoftheremunerationcommitteeTheremunerationcommitteeisprimarilyresponsibleformakingrecommendationson:•RemunerationlevelsofexecutiveDirectorsandotherkeymanagementpersonnel•Theover-archingexecutiveremunerationframeworkandoperationofanyincentiveplan,and•Keyperformanceindicatorsandperformancehurdlesfortheexecutiveteam.Theobjectiveistoensurethatremunerationpoliciesandstructuresarefairandcompetitiveandalignedwiththelong-terminterestsofthecompany.Non-executiveDirectorremunerationpolicyFeesandpaymentstonon-executiveDirectorsreflectthedemandswhicharemadeon,andtheresponsibilitiesof,theDirectors.Non-executiveDirectors’feesandpaymentsarereviewedannuallybytheBoardtoensurethattheyareappropriateandin-linewiththemarket.Non-executiveDirectorsarealsopaidanhourlyrateforadhocservices,asrequired.Non-executiveDirectorsdonotreceiveperformance-basedpay.Directors'feesThecurrentbasefeeswerelastreviewedwitheffectfrom1July2018.Thefeesareinclusiveofcommitteefees.DetailsonDirectorsfeesaredisclosedunderserviceagreementsonpage17.ExecutiveremunerationpolicyandframeworkIndeterminingexecutiveremuneration,theBoardaimstoensurethatremunerationpracticesare:•Competitiveandreasonable,enablingthecompanytoattractandretainkeytalent•Alignedtothecompany’sstrategicandbusinessobjectivesandthecreationofshareholdervalue•Transparent,and•Acceptabletoshareholders.Theexecutiveremunerationframeworkhasthreecomponents:•Fixedannualremuneration,includingsuperannuation,and•Servicebonus,and•Equity.14Directors’ Report (continued) Lycopodium Annual Financial Report 2018 • 15 LycopodiumLimitedDirectors'report30June2018(continued)Remunerationreport-audited(continued)Executiveremunerationpolicyandframework(continued)Fixedannualremunerationisstructuredasatotalemploymentcostpackagewhichisdeliveredasacombinationofsalaryandprescribednonfinancialbenefitspartlyattheexecutive’sdiscretion.Fixedannualremunerationisreviewedataminimumannuallytoensuretheexecutive’spayiscompetitivewiththemarket.Anexecutive’spayisalsoreviewedonpromotion.Aserviceorseniormanagementbonusmaybeprovidedtocertainseniorsalariedemployeespayableannually,atthediscretionofthecompany.Votingandcommentsmadeatthecompany's2017AnnualGeneralMeetingTheremunerationreportforthe2017financialyearwasunanimouslyapprovedbyshareholdersduringtheAGM.ThecompanydidnotreceiveanyspecificfeedbackattheAGMorthroughouttheyearonitsremunerationpractices.CompanyperformanceTheprofitafterincometaxexpenseandbasicearningspershareforthegroupforthelastfiveyearsisasfollows:20182017201620152014Revenue($)194,568,891216,616,442124,460,218122,811,332154,765,985Profit/(Loss)beforeincometax($)25,290,47514,307,6205,215,629(1,620,068)7,682,592Incometaxexpense/(benefit)($)6,957,0883,934,0911,889,219(604,655)3,973,206Profit/(Loss)afterincometax($)18,333,38710,373,5293,326,410(1,015,413)3,709,386BasicEPS(cents)45.725.98.0(2.3)10.0BasicEPSgrowth,yearonyear(%)76.4%223.8%447.8%(123.0%)(82.3%)Fullyfrankeddividendspershare(cents)30.018.05.51.56.5Changeinshareprice*($)1.501.050.84(0.84)(2.17)Returnonequity(%)24.68%15.53%5.22%(1.61%)5.61%*calculatedasthedifferencebetweentheclosingsharepriceatthestartandendoftherespectivefinancialyears.15Directors’ Report (continued) 16 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedDirectors'report30June2018(continued)Remunerationreport-audited(continued)DetailsofremunerationThefollowingtablesshowdetailsoftheremunerationreceivedbytheDirectorsandthekeymanagementpersonnelofthegroupforthecurrentandpreviousfinancialyear.2018Short-termemployeebenefitsPost-employmentbenefitsNameCashsalaryandfeesCashbonusNon-monetarybenefitsOtherSuper-annuationTotalPerfor-mancerelated$$$$$$%Non-executiveDirectorsMichaelCaratti54,794-11,764-5,20671,764-LawrenceMarshall94,416-11,764-25,000131,180-StevenChadwick79,200----79,200-Sub-totalnon-executivedirectors228,410-23,528-30,206282,144-ExecutiveDirectorsPeterDeLeo500,00038,75011,764-25,000575,514-RodneyLeonard425,00032,50011,764-25,000494,264-RobertOsmetti305,00032,50011,764-25,000374,264-BrunoRuggiero381,641-11,764-25,000418,405-PeterDawson332,410-9,235-16,657358,302-OtherkeymanagementpersonnelKeithBakker336,088---25,000361,088-Totalkeymanagementpersonnelcompensation(group)2,508,549103,75079,819-171,8632,863,981-Noelementoftheaboveremunerationisconditionaluponmeetingkeyperformanceindicators.2017Short-termemployeebenefitsPost-employmentbenefitsNameCashsalaryandfeesCashbonus*Non-monetarybenefitsOtherSuper-annuationTotalPerfor-mancerelated$$$$$$%Non-executiveDirectorsMichaelCaratti54,794-11,378-5,20671,378-LawrenceMarshall94,470-11,378-35,000140,848-StevenChadwick108,180----108,180-Sub-totalnon-executivedirectors257,444-22,756-40,206320,406-ExecutiveDirectorsPeterDeLeo493,450-11,378-35,000539,828-RodneyLeonard427,700-11,378-34,000473,078-RobertOsmetti475,785-9,1555,10035,000525,040-BrunoRuggiero384,278-11,378-35,000430,656-OtherkeymanagementpersonnelKeithBakker317,17515,000--35,000367,175-Totalkeymanagementpersonnelcompensation(group)2,355,83215,00066,0455,100214,2062,656,183-Noelementoftheaboveremunerationisconditionaluponmeetingkeyperformanceindicators.16Directors’ Report (continued) Lycopodium Annual Financial Report 2018 • 17 LycopodiumLimitedDirectors'report30June2018(continued)Remunerationreport-audited(continued)ServiceagreementsRemunerationandothertermsofemploymentfortheDirectorsandkeymanagementpersonnelareformalisedinemploymentcontracts.Eachcontractdealswithfixedannualremuneration.Othermajorprovisionsoftheagreementsrelatingtoremunerationaresetoutbelow.AllemploymentcontractswithDirectorsandexecutivesmaybeterminatedbyeitherpartywithonemonth’snotice.Noneofthedirectorsorexecutivesareprovidedwithterminationbenefits.NameTermofagreementFixedRemunerationincludingsuperannuation*MichaelCaratti,ChairmanandNon-executiveDirectorNofixedtermDirectorsfeeof$75,000p.a.PeterDeLeo,ManagingDirectorNofixedterm$590,000p.a.RodneyLeonard,ExecutiveDirectorNofixedterm$540,000p.a.RobertOsmetti,ExecutiveDirectorNofixedterm$415,000p.a.Directorsfeeof$75,000p.a.BrunoRuggiero,ExecutiveDirectorNofixedterm$415,000p.a.Directorsfeeof$75,000p.a.PeterDawson,ExecutiveDirectorNofixedterm$415,000p.a.Directorsfeeof$75,000p.a.LawrenceMarshall,Non-executiveDirectorNofixedtermFixedhourlyrateof$216.15Directorsfeeof$75,000p.a.StevenChadwick,Non-executiveDirectorNofixedtermDirectorsfeeof$75,000p.a.KeithBakker,CompanySecretaryandChiefFinancialOfficerNofixedterm$370,000p.a.*Fixedremunerationpayablefrom1July2018andreviewedannuallybytheRemunerationCommittee.17Directors’ Report (continued) 18 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedDirectors'report30June2018(continued)Remunerationreport-audited(continued)Serviceagreements(continued)EquityinstrumentdisclosuresrelatingtokeymanagementpersonnelThetablebelowshowsthenumberof:(i)Sharesinthecompanythatwereheldduringthefinancialyearbykeymanagementpersonnelofthegroup,includingtheirclosefamilymembersandentitiesrelatedtothem.Therewerenosharesgrantedduringthereportingperiodascompensation.(i)ShareholdingsThenumbersofsharesintheCompanyheldduringthefinancialyearbyeachDirectorofLycopodiumLimitedandotherkeymanagementpersonnelofthegroup,includingtheirpersonallyrelatedparties,aresetoutbelow.Therewerenosharesgrantedduringthereportingperiodascompensation.2018NameBalanceatthestartoftheyearReceivedduringtheyearontheexerciseofoptionsOtherchangesduringtheyearBalanceatendoftheyearDirectorsofLycopodiumLimitedOrdinarysharesMichaelCaratti9,104,367--9,104,367PeterDeLeo1,171,711--1,171,711RodneyLeonard2,354,215-(200,000)2,154,215RobertOsmetti1,808,148-(1,542,000)266,148BrunoRuggiero3,167,332--3,167,332PeterDawson----LawrenceMarshall1,942,332-(670,000)1,272,332StevenChadwick----OtherkeymanagementpersonnelofthegroupOrdinarysharesKeithBakker46,874-(6,000)40,87418Directors’ Report (continued) Lycopodium Annual Financial Report 2018 • 19 LycopodiumLimitedDirectors'report30June2018(continued)Remunerationreport-audited(continued)LoanstokeymanagementpersonnelDetailsofloansmadetoDirectorsofLycopodiumLimitedandotherkeymanagementpersonnelofthegroup,includingtheirpersonallyrelatedparties,aresetoutbelow.(i)AggregatesforkeymanagementpersonnelBalanceatthestartoftheyear$Interestpaidandpayablefortheyear$Interestnotcharged$Balanceatendoftheyear$Numberingroupattheendoftheyear201840,607--35,3571201749,134--40,6071Loansoutstandingattheendofthecurrentandprioryearincludealoantoakeymanagementpersonnelundertheseniormanagershareacquisitionplan.Allotherloanstokeymanagementpersonnelareshort-termadvancesinnatureandareinsignificant.Nowrite-downsorallowancesfordoubtfulreceivableshavebeenrecognisedinrelationtoanyloansmadetokeymanagementpersonnel.Endofremunerationreport.19Directors’ Report (continued) 20 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedDirectors'report30June2018(continued)SharesunderoptionTherewerenounissuedordinarysharesofLycopodiumLimitedunderoptionatthedateofthisreport.InsuranceofofficersDuringthefinancialyear,LycopodiumLimitedtookoutinsurancecoverfortheDirectors,secretariesandseniorofficersofthecompanyanditscontrolledentities.Theliabilitiesinsuredarecostsandexpensesthatmaybeincurredindefendingcivilorcriminalproceedingsthatmaybebroughtagainsttheofficersintheircapacityasofficersofentitiesinthegroup,andanyotherpaymentsarisingfromliabilitiesincurredbytheofficersinconnectionwithsuchproceedings,otherthanwheresuchliabilitiesariseoutofconductinvolvingawilfulbreachofdutybytheofficersortheimproperusebytheofficersoftheirpositionorofinformationtogainadvantageforthemselvesorsomeoneelseortocausedetrimenttothecompany.Thedirectorshavenotincludedspecificdetailsofthepremiumpaidassuchdisclosureisprohibitedunderthetermsofthecontract.IndemnityofauditorsLycopodiumLimitedhasagreedtoindemnifytheirauditors,GrantThorntonAuditPtyLtd,totheextentpermittedbylaw,againstanyclaimbyathirdpartyarisingfromLycopodiumLimited'sbreachoftheiragreement.TheindemnitystipulatesthatLycopodiumLimitedwillmeetthefullamountofanysuchliabilitiesincludingareasonableamountoflegalcosts.ProceedingsonbehalfofthecompanyNopersonhasappliedtotheCourtundersection237oftheCorporationsAct2001forleavetobringproceedingsonbehalfoftheCompany,ortointerveneinanyproceedingstowhichtheCompanyisaparty,forthepurposeoftakingresponsibilityonbehalfoftheCompanyforallorpartofthoseproceedings.NoproceedingshavebeenbroughtorintervenedinonbehalfoftheCompanywithleaveoftheCourtundersection237oftheCorporationsAct2001.20Directors’ Report (continued) Lycopodium Annual Financial Report 2018 • 21 LycopodiumLimitedDirectors'report30June2018(continued)Non-auditservicesTheCompanymaydecidetoemploytheauditoronassignmentsadditionaltotheirstatutoryauditdutieswheretheauditor'sexpertiseandexperiencewiththeCompanyand/orthegroupareimportant.Detailsoftheamountspaidorpayabletotheauditor(GrantThorntonAustraliaLtd)forauditandnon-auditservicesprovidedduringtheyeararesetoutbelow.TheboardofDirectorshasconsideredthepositionand,inaccordancewithadvicereceivedfromtheAuditCommittee,issatisfiedthattheprovisionofthenon-auditservicesiscompatiblewiththegeneralstandardofindependenceforauditorsimposedbytheCorporationsAct2001.TheDirectorsaresatisfiedthattheprovisionofnon-auditservicesbytheauditor,assetoutbelow,didnotcompromisetheauditorindependencerequirementsoftheCorporationsAct2001forthefollowingreasons:•allnon-auditserviceshavebeenreviewedbytheAuditCommitteetoensuretheydonotimpacttheimpartialityandobjectivityoftheauditor•noneoftheservicesunderminethegeneralprinciplesrelatingtoauditorindependenceassetoutinAPES110CodeofEthicsforProfessionalAccountants.Duringtheyearthefollowingfeeswerepaidorpayablefornon-auditservicesprovidedbytheauditoroftheparententity,itsrelatedpracticesandnon-relatedauditfirms:Consolidated2018$2017$TaxationservicesFirmrelatedtoGrantThorntonAustraliaLtd:Taxcomplianceservices(includingincometaxreturns)63,44032,300NetworkfirmofGrantThorntonAustraliaLtd:Taxcomplianceservices(includingincometaxreturns)40,52956,926Non-GrantThorntonAustraliaLtdauditfirms:Taxcomplianceservices(includingincometaxreturns)15,27533,951Totalremunerationfortaxationservices119,244123,177OtherservicesFirmrelatedtoGrantThorntonAustraliaLtd:Otherservices39,87015,183Non-GrantThorntonAustraliaLtdauditfirms:Otherservices57,16824,536Totalremunerationforotherservices97,03839,719Totalremunerationfornon-auditservices216,282162,89621Directors’ Report (continued) 22 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedDirectors'report30June2018(continued)Auditor'sindependencedeclarationAcopyoftheauditor'sindependencedeclarationasrequiredundersection307CoftheCorporationsAct2001issetoutonpage23.ThisreportismadeinaccordancewitharesolutionofDirectors.PeterAnthonyDawsonDirectorPerth20September201822LycopodiumLimitedDirectors'report30June2018(continued)Auditor'sindependencedeclarationAcopyoftheauditor'sindependencedeclarationasrequiredundersection307CoftheCorporationsAct2001issetoutonpage23.ThisreportismadeinaccordancewitharesolutionofDirectors.PeterAnthonyDawsonDirectorPerth20September201822Directors’ Report (continued) Lycopodium Annual Financial Report 2018 • 23 Corporate Governance Statement 24 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedCorporategovernancestatement30June2018CorporategovernancestatementTheBoardofDirectorsofLycopodiumLimitedisresponsiblefortheoverallcorporategovernanceofthecompany.TheBoardhasimplementedtheRecommendationsoftheASXCorporateGovernanceCounciltotheextentconsideredappropriateforthesizeandnatureoftheCompany’scurrentoperations.LycopodiumLimited’spracticesareconsistentwiththeASXCorporateGovernanceCouncil’sPrinciplesandRecommendations(3rdEdition)(‘Principles’)withanyexceptionsnoted.1.0COUNCILPRINCIPLE1:LAYSOLIDFOUNDATIONSFORMANAGEMENTANDOVERSIGHT1.1CouncilRecommendation1.1:Alistedentityshould:(a)disclosetherespectiverolesandresponsibilitiesoftheBoardandManagement(b)disclosethosemattersexpresslyreservedtotheBoardandthosedelegatedtoManagement.TheCompanycomplieswiththisrecommendation.1.2CouncilRecommendation1.2:Alistedentityshould:(a)undertakeappropriatechecksbeforeappointingaperson,orputtingforwardtosecurityholdersacandidateforelectionasaDirector(b)providesecurityholderswithallmaterialinformationinitspossessionrelevanttoadecisionwhetherornottoelectorre-electaDirector.TheCompanycomplieswiththisrecommendation.1.3CouncilRecommendation1.3:AlistedentityshouldhaveawrittenagreementwitheachDirectorandseniorexecutivesettingoutthetermsoftheirappointment.TheCompanycomplieswiththisrecommendation.1.4CouncilRecommendation1.4:TheCompanySecretaryofalistedentityshouldbeaccountabledirectlytotheBoard,throughtheChair,onallmatterstodowiththeproperfunctioningoftheBoard.TheCompanycomplieswiththisrecommendation.1.5CouncilRecommendation1.5:Alistedentityshould:(a)haveadiversitypolicywhichincludesrequirementsfortheBoardorarelevantcommitteeoftheBoardtosetmeasurableobjectivesforachievinggenderdiversityandtoaccessannuallyboththeobjectivesandtheentity'sprogressinachievingthem;(b)disclosethatpolicyorasummaryofit;and(c)discloseasattheendofeachreportingperiodthemeasurableobjectivesforachievinggenderdiversitysetbytheBoardorarelevantcommitteeoftheBoardinaccordancewiththeentity'sdiversitypolicyanditsprogresstowardsachievingthem,andeither:(i)therespectiveproportionsofmenandwomenontheBoard,inseniorexecutivepositionsandacrossthewholeorganisation(includinghowtheentityhasdefined'seniorexecutive'forthesepurposes);or24Corporate Governance Statement Lycopodium Annual Financial Report 2018 • 25 LycopodiumLimitedCorporategovernancestatement30June2018(continued)1.0COUNCILPRINCIPLE1:LAYSOLIDFOUNDATIONSFORMANAGEMENTANDOVERSIGHT(continued)1.5CouncilRecommendation1.5:(continued)(ii)iftheentityisa'relevantemployer'undertheWorkplaceGenderEqualityAct,theentity'smostrecentpublished'GenderEqualityIndicators',asdefinedinundertheAct.TheCompanydoesnotcomplywithrecommendation1.5(a)or1.5(c)(i).Asaglobalparticipant,theCompanyrecruitsstafffromeverycontinentandhasanestablishedpolicyofequalopportunityemployment.1.6CouncilRecommendation1.6:Alistedentityshould:(a)haveanddiscloseaprocessforperiodicallyevaluatingtheperformanceoftheBoard,itscommitteesandindividualDirectors;and(b)disclose,inrelationtoeachreportingperiod,whetheraperformanceevaluationwasundertakeninthereportingperiodinaccordancewiththatprocess.TheCompanycomplieswiththisrecommendation.1.7CouncilRecommendation1.7:Alistedentityshould:(a)haveanddiscloseaprocessforperiodicallyevaluatingtheperformanceofitsseniorexecutives;and(b)disclose,inrelationtoeachreportingperiod,whetheraperformanceevaluationwasundertakeninthereportingperiodinaccordancewiththatprocess.TheCompanycomplieswiththisrecommendation.2.0COUNCILPRINCIPLE2:STRUCTURETHEBOARDTOADDVALUE2.1CouncilRecommendation2.1:TheBoardofalistedentityshould:(a)haveanominationcommitteewhich:(i)hasatleast3members,amajorityofwhichareindependentdirectors;and(ii)ischairedbyanindependentdirector;anddisclose(iii)thecharterofthecommittee;(iv)themembersofthecommittee;and(v)asattheendofeachreportingperiod,thenumberoftimesthecommitteemeetthroughouttheperiodandtheindividualattendancesofthemembersatthesemeetings;or(b)ifitdoesnothaveanominationcommittee,disclosethefactandtheprocessitemploystoaddressBoardsuccessionissuesandtoensurethattheBoardhastheappropriatebalanceofskills,knowledge,experience,independenceanddiversitytoenableittodischargeitsdutiesandresponsibilitieseffectively.TheCompanydoesnotcomplywiththisrecommendation.TheroleofthenominationcommitteeiscarriedoutbythefullBoard.TheBoardintendstoreconsidertheformationofaseparateNominationCommitteeastheCompany'soperationsevolve.25Corporate Governance Statement (continued) 26 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedCorporategovernancestatement30June2018(continued)2.0COUNCILPRINCIPLE2:STRUCTURETHEBOARDTOADDVALUE(continued)2.2CouncilRecommendation2.2:AlistedentityshouldhaveanddiscloseaBoardskillsmatrixsettingoutthemixofskillsanddiversitythattheBoardcurrentlyhasorislookingtoachieveinitsmembership.TheCompanydoesnotcomplywiththisrecommendation.TheBoardconsidersthateachofitscurrentdirectorspossessskillsandexperienceappropriatetomanaginganddevelopingtheCompany.Anyadditionalinformationorspecificadvicecanbemoreappropriatelyandeconomicallyobtainedbyengagingindependentexternalexpertconsultants.2.3CouncilRecommendation2.3:Alistedentityshoulddisclose:(a)thenamesofdirectorsconsideredbytheBoardtobeindependentdirectors;(b)ifadirectorhasaninterest,position,associationorrelationshipthatmightcausedoubtabouttheindependenceofthedirectorbuttheBoardisoftheopinionthatitdoesnotcompromisetheindependenceofthedirector,thenatureoftheinterest,position,associationorrelationshipinquestionandanexplanationofwhytheBoardisofthatopinion;and(c)thelengthofserviceofeachdirector.TheCompanycomplieswiththisrecommendation.2.4CouncilRecommendation2.4:AmajorityoftheBoardofalistedentityshouldbeindependent.TheCompanydoesnotcomplywiththisrecommendationasonlyonedirectorisindependent.TheBoardconsidersthatatthistimetheshareholdersarebetterservedbydirectorswhohaveavestedinterestintheCompany.2.5CouncilRecommendation2.5:TheChairoftheBoardofalistedentityshouldbeanindependentdirectorand,inparticular,shouldnotbethesamepersonastheCEOoftheentity.TheCompanydoesnotfullycomplywiththisrecommendationastheChairpersonisnotanindependentdirector.TheBoardconsidersthatatthisstageinthedevelopmentoftheCompany,anindependentChairpersonwouldnotaddsufficientexpertisetotheBoardtojustifytheassociatedcostandanyadditionalinformationorspecificadvicerequiredcanbemoreappropriatelyandeconomicallyobtainedfromindependentexternalexpertconsultants.2.6CouncilRecommendation2.6:Alistedentityshouldhaveaprogramforinductingnewdirectorsandprovideappropriateprofessionaldevelopmentopportunitiesfordirectorstodevelopandmaintaintheskillsandknowledgeneededtoperformtheroleasdirectorseffectively.TheCompanycomplieswiththisrecommendation.26Corporate Governance Statement (continued) Lycopodium Annual Financial Report 2018 • 27 LycopodiumLimitedCorporategovernancestatement30June2018(continued)3.0COUNCILPRINCIPLE3:ACTETHICALLYANDRESPONSIBLY3.1CouncilRecommendation3.1:Alistedentityshould:(a)haveacodeofconductforitsdirectors,seniorexecutivesandemployees;and(b)disclosethatcodeorasummaryofit.TheCompanycomplieswiththisrecommendation.4.0COUNCILPRINCIPLE4:SAFEGUARDINTEGRITYINCORPORATEREPORTING4.1CouncilRecommendation4.1:Theboardofalistedentityshould:(a)haveanauditcommitteewhich:(i)hasatleastthreemembers,ofallwhomarenon-executivedirectorsandamajorityareindependentdirectors;and(ii)ischairedbyanindependentdirector,whoisnotthechairoftheBoard,anddisclose;(iii)thecharterofthecommittee;(iv)therelevantqualificationsandexperienceofthemembersofthecommittee;and(v)inrelationtoeachreportingperiod,thenumberoftimesthecommitteemetthroughouttheperiodandtheindividualattendancesofthemembersatthesemeetings;or(b)ifitdoesnothaveanauditcommittee,disclosethatfactandtheprocessesitemploysthatindependentlyverifyandsafeguardtheintegrityofitscorporatereporting,includingtheprocessesfortheappointmentandremovaloftheexternalauditorandtherotationoftheauditengagementpartner.TheCompanydoesnotfullycomplywiththisrecommendationinthattheAuditCommitteeconsistsofthreedirectorsonlyoneofwhichisanon-executiveandnoneareindependent.4.2CouncilRecommendation4.2:TheBoardofalistedentityshould,beforeitapprovestheentity'sfinancialstatementsforafinancialperiod,receivefromitsCEOandCFOadeclarationthat,intheiropinion,thefinancialrecordsoftheentityhavebeenproperlymaintainedandthatthefinancialstatementscomplywiththeappropriateaccountingstandardsandgiveatrueandfairviewofthefinancialpositionandperformanceoftheentityandthattheopinionhasbeenformedonthebasisofasoundsystemofriskmanagementandinternalcontrolwhichisoperatingeffectively.TheCompanycomplieswiththisrecommendation.4.3CouncilRecommendation4.3:AlistedentitythathasanAGMshouldensurethatitsexternalauditorattendsitsAGMandisavailabletoanswerquestionsfromsecurityholdersrelevanttotheaudit.TheCompanycomplieswiththisrecommendation.27Corporate Governance Statement (continued) 28 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedCorporategovernancestatement30June2018(continued)5.0COUNCILPRINCIPLE5:MAKETIMELYANDBALANCEDDISCLOSURE5.1CouncilRecommendation5.1:Alistedentityshould:(a)haveawrittenpolicyforcomplyingwithitscontinuousdisclosureobligationsunderthelistingRules;and(b)disclosethatpolicyorasummaryofit.TheCompanycomplieswiththisrecommendation.6.0COUNCILPRINCIPLE6:RESPECTTHERIGHTSOFSECURITYHOLDERS6.1CouncilRecommendation6.1:Alistedentityshouldprovideinformationaboutitselfanditsgovernancetoinvestorsviaitswebsite.TheCompanycomplieswiththisrecommendation.6.2CouncilRecommendation6.2:Alistedentityshoulddesignandimplementaninvestorrelationsprogramtofacilitateeffectivetwo-waycommunicationwithinvestors.TheCompanycomplieswiththisrecommendation.6.3CouncilRecommendation6.3:Alistedentityshoulddisclosethepoliciesandprocessesithasinplacetofacilitateandencourageparticipationatmeetingsofsecurityholders.TheCompanydoesnotcurrentlycomplywiththisrecommendation,althoughthematterwillbeassessedinthelightofwhatemergesinthemarketandwillberespondedtoasappropriate.6.4CouncilRecommendation6.4:Alistedentityshouldgivesecurityholderstheoptiontoreceivecommunicationsfrom,andsendcommunicationsto,theentityanditssecurityregistryelectronically.TheCompanycomplieswiththisrecommendation.7.0COUNCILPRINCIPLE7:RECOGNISEANDMANAGERISK7.1CouncilRecommendation7.1:TheBoardofalistedentityshould:(a)haveacommitteeorcommitteestooverseerisk,eachofwhich:(i)hasatleast3members,amajorityofwhomareindependentdirectors;and(ii)ischairedbyanindependentdirector,anddisclose;(iii)thecharterofthecommittee;(iv)themembersofthecommittee;and(v)asattheendofeachreportingperiod,thenumberoftimesthecommitteemetthroughouttheperiodandtheindividualattendancesofthemembersatthosemeetings;or(b)ifitdoesnothaveariskcommitteeorcommitteesthatsatisfy(a)above,disclosethatfactandtheprocessesitemploysforoverseeingtheentity'sriskmanagementframework.TheCompanycomplieswith(b)ofthisrecommendation.28Corporate Governance Statement (continued) Lycopodium Annual Financial Report 2018 • 29 LycopodiumLimitedCorporategovernancestatement30June2018(continued)7.0COUNCILPRINCIPLE7:RECOGNISEANDMANAGERISK(continued)7.1CouncilRecommendation7.1:(continued)TheBoardconsidersriskmanagementasoneofitsprimaryresponsibilities.TheBoardhasadoptedaRiskManagementPolicy,whichprovidesthat:•AllmembersoftheBoardareresponsibleforriskmanagementandoversightofinternalcontrols.ThedaytodayresponsibilitiesforriskmanagementandinternalcontrolsrestwiththeManagingDirector.•TheManagingDirectorreportsonriskmanagementandinternalcontrols,usinganexceptionreportingbasis,tothefullBoardaspartofamonthlywrittenreporttodirectors.TheCompanyhasaninternalcontrolframeworkcoveringallareasofidentifiedriskwithintheCompany’soperationsandhasdocumentedthesepoliciesinordertocentralisethecontrolsandintendsthattheRiskManagementPolicywillbeenhancedasitsoperationsevolve.Theareasofriskcoveredbytheinternalcontrolframeworkaretenders/proposals,clientcontractnegotiationandmanagement,financialcontrolandreporting,commercial/corporatecontrolandreporting,operationalcontrolandreporting,personnelmanagement,procurementandpurchasingandsuppliercontractnegotiationandmanagement.7.2CouncilRecommendation7.2:TheBoardoracommitteeoftheBoardshould:(a)Reviewtheentity'sriskmanagementframeworkatleastannuallytosatisfyitselfthatitcontinuestobesound;and(b)Disclose,inrelationtoeachreporting,whethersuchareviewhastakenplace.TheCompanycomplieswiththisrecommendation.7.3CouncilRecommendation7.3:Alistedentityshoulddisclose:(a)ifithasaninternalauditfunction,howthefunctionisstructuredandwhatroleitperforms;or(b)ifitdoesnothaveaninternalauditfunction,thatfactandtheprocessesitemploysforevaluatingandcontinuallyimprovingtheeffectivenessofitsriskmanagementandinternalcontrolprocesses.TheCompanycomplieswith(b)ofthisrecommendation.7.4CouncilRecommendation7.4:Alistedentityshoulddisclosewhetherithasanymaterialexposuretoeconomic,environmentalandsocialsustainabilityrisksand,ifitdoes,howitmanagesorintendstomanagetheserisks.TheCompanyisoftheviewthatitisnotmateriallyexposedtotherisksoutlinedinthisrecommendation.8.0COUNCILPRINCIPLE8:REMUNERATEFAIRLYANDRESPONSIBLY8.1CouncilRecommendation8.1:TheBoardofalistedentityshould:(a)havearemunerationcommitteewhich:(i)hasatleastthreemembers,amajorityofwhomareindependentdirectors;and(ii)ischairedbyanindependentdirector,anddisclose;(iii)thecharterofthecommittee;(iv)themembersofthecommittee;and(v)asattheendofeachreportingperiod,thenumberoftimesthecommitteemetthroughouttheperiodandtheindividualattendancesofthemembersatthosemeetings;or29Corporate Governance Statement (continued) 30 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedCorporategovernancestatement30June2018(continued)8.0COUNCILPRINCIPLE8:REMUNERATEFAIRLYANDRESPONSIBLY(continued)8.1CouncilRecommendation8.1:(continued)(b)ifitdoesnothavearemunerationcommittee,disclosethatfactandtheprocessesitemploysforsettingthelevelandcompositionofremunerationfordirectorsandseniorexecutivesandensuringthatsuchremunerationisappropriateandnotexcessive.TheCompanydoesnotfullycomplywiththisrecommendationastheRemunerationCommitteedoesnothaveamajorityofindependentdirectorsnorisitchairedbyanindependentdirector.TheroleoftheRemunerationCommitteeiscarriedoutbythefullBoard.TheCompanyhasaremunerationcommitteecharterwhichispublishedonitswebsite.StatisticsregardingparticipationatremunerationcommitteemeetingsarepublishedineachAnnualReport.8.2CouncilRecommendation8.2:Alistedentityshouldseparatelydiscloseitspoliciesandpracticesregardingtheremunerationofnon-executivedirectorsandtheremunerationofexecutivedirectorsandotherseniorexecutives.TheCompanycomplieswiththisrecommendation.8.3CouncilRecommendation8.3:Alistedentitywhichhasanequitybasedremunerationschemeshould:(a)haveapolicyonwhetherparticipantsarepermittedtoenterintotransactions(whetherthroughtheuseofderivativesorotherwise)whichlimittheeconomicriskofparticipatinginthescheme;and(b)disclosethatpolicyorasummaryofit.ThisrecommendationdoesnotapplyastheCompanyhasnotenteredintoanyschemewhichenablesparticipantstohedgeorotherwiselimittheeconomicriskofparticipationwithoutpriordisclosureandtheapprovalofsecurityholdersatageneralmeeting.30Corporate Governance Statement (continued) Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2018 Lycopodium Annual Financial Report 2018 • 31 LycopodiumLimitedConsolidatedstatementofprofitorlossandothercomprehensiveincomeFortheyearended30June2018ConsolidatedNotes2018$2017$Revenuefromoperations5194,568,891216,616,442Employeebenefitsexpense(67,562,580)(61,898,213)Depreciationandamortisationexpense6(1,228,479)(1,171,764)Projectexpenses(17,418,251)(9,843,966)Equipmentandmaterials(23,838,936)(74,207,912)Contractors(41,753,703)(38,255,322)Occupancyexpense(8,577,494)(8,052,368)Impairmentofgoodwill16(1,095,048)(263,242)Otherexpenses(8,793,785)(9,540,001)Lossondisposalofasset(2,080)(1,634)Financecosts6(120,741)(93,651)Shareofnetprofitofassociatesandjointventuresaccountedforusingtheequitymethod1,112,6811,019,251Profitbeforeincometax25,290,47514,307,620Incometaxexpense7(6,957,088)(3,934,091)Profitfortheyear18,333,38710,373,529OthercomprehensiveincomeItemsthatmaybereclassifiedtoprofitorlossChangesinthefairvalueofavailable-for-salefinancialassets22(a)325,5117Exchangegains/(losses)ontranslationofforeignoperations22(a)(26,508)111,932Othercomprehensiveincomefortheyear,netoftax299,003111,939Totalcomprehensiveincomefortheyear18,632,39010,485,468Profitfortheyearisattributableto:OwnersofLycopodiumLimited18,170,18610,292,083Non-controllinginterests163,20181,44618,333,38710,373,529Totalcomprehensiveincomefortheyearisattributableto:OwnersofLycopodiumLimited18,469,18910,404,022Non-controllinginterests163,20181,44618,632,39010,485,468CentsCentsEarningspershareforprofitattributabletotheordinaryequityholdersoftheCompany:Basicearningspershare32(a)45.725.9Dilutedearningspershare32(b)45.725.9Theaboveconsolidatedstatementofprofitorlossandothercomprehensiveincomeshouldbereadinconjunctionwiththeaccompanyingnotes.31Consolidated Balance Sheet As at 30 June 2018 32 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedConsolidatedbalancesheetAsat30June2018ConsolidatedNotes2018$2017$ASSETSCurrentassetsCashandcashequivalents874,287,78885,334,768Tradeandotherreceivables937,616,63736,919,288Inventories819,844327,430Currenttaxreceivables1,334,1511,344,040Othercurrentassets101,740,8512,149,687Derivativefinancialassets11(c)-164,994Totalcurrentassets115,799,271126,240,207Non-currentassetsInvestmentsaccountedforusingtheequitymethod132,767,6902,227,735Available-for-salefinancialassets11(b)1,256,106102,963Property,plantandequipment143,434,4873,174,174Intangibleassets166,792,0177,421,173Otherreceivables12332,356442,616Deferredtaxassets158,350,7983,797,930Totalnon-currentassets22,933,45417,166,591Totalassets138,732,725143,406,798LIABILITIESCurrentliabilitiesTradeandotherpayables1731,749,22964,080,966Borrowings11(d)696,905509,731Derivativefinancialliabilities11(c)27,694-Currenttaxliabilities9,568,8813,978,266Provisions1816,361,0094,280,795Totalcurrentliabilities58,403,71872,849,758Non-currentliabilitiesBorrowings11(d)562,066832,912Provisions20416,531500,796Totalnon-currentliabilities978,5971,333,708Totalliabilities59,382,31574,183,466Netassets79,350,41069,223,332EQUITYContributedequity2120,823,77220,823,772Reserves22(a)(689,039)(988,042)Retainedearnings22(b)56,238,75746,412,369Parententityinterest76,373,49066,248,099Non-controllinginterests232,976,9202,975,233Totalequity79,350,41069,223,332Theaboveconsolidatedbalancesheetshouldbereadinconjunctionwiththeaccompanyingnotes.32Consolidated Balance Sheet As at 30 June 2018 Consolidated Statement of Changes in Equity For the year ended 30 June 2018 Attributable to members of Lycopodium Limited Consolidated Contributed equity $ Retained earnings $ Notes Foreign currency translation reserve $ Available for sale investment revaluation reserve $ Performance rights reserve $ Non- controlling interests $ Total equity $ Balance at 1 July 2016 20,823,772 41,285,494 (1,016,051) (83,930) 259,037 3,062,695 64,331,017 Profit for the year Other comprehensive income / (expense) Total comprehensive income for the year Transactions with owners in their capacity as owners: Foreign currency translation with non-controlling interest Dividends provided for or paid Performance rights - expired 23 24 22 - - - - - - - 10,292,083 - - 111,932 10,292,083 111,932 - 111,932 (5,165,208) - (5,165,208) - - - - 7 7 7 - - - - - - - - (259,037) 81,446 10,373,529 - 111,939 81,446 10,485,468 (168,908) (168,908) - - (5,165,208) (259,037) (259,037) (168,908) (5,593,153) Balance at 30 June 2017 20,823,772 46,412,369 (904,119) (83,923) - 2,975,233 69,223,332 Consolidated statement of changes in equity For the year ended 30 June 2018 Lycopodium Limited Balance at 1 July 2017 20,823,772 46,412,369 (904,119) (83,923) Attributable to members of Lycopodium Limited 2,975,233 69,223,332 - Profit for the year Other comprehensive income / Consolidated (expense) - - 18,170,186 - Notes Contributed - equity (26,508) $ 325,511 Retained - earnings $ - Total comprehensive income for the year Balance at 1 July 2016 Transactions with owners in Profit for the year their capacity as owners: Other comprehensive income / (expense) Foreign currency translation with non-controlling interest Total comprehensive income for the year Transactions with owners in their capacity as owners: Dividends provided for or paid Foreign currency translation with non-controlling interest Dividends provided for or paid Performance rights - expired Balance at 30 June 2018 20,823,772 23 24 - - - - (8,343,798) (8,343,798) 56,238,757 18,170,186 (26,508) 325,511 20,823,772 41,285,494 - - - (930,627) - - - 10,292,083 - - 10,292,083 - - - - 241,588 - - - (5,165,208) - (5,165,208) Foreign currency 163,201 - translation reserve - $ - 18,333,387 Available for sale investment revaluation reserve $ 299,003 Performance rights reserve $ Non-con- trolling interests $ Total equity $ - - - - - 163,201 18,632,390 (1,016,051) - 111,932 111,932 (161,514) (161,514) - (161,514) 2,976,920 (8,343,798) (8,505,312) 79,350,410 - - - - (83,930) 259,037 3,062,695 64,331,017 - 7 7 - - - - (259,037) (259,037) Balance at 30 June 2017 Balance at 1 July 2017 Profit for the year Other comprehensive income / (expense) Total comprehensive income for the year Transactions with owners in their capacity as owners: Foreign currency translation with non-controlling interest Dividends provided for or paid 20,823,772 46,412,369 (904,119) (83,923) 2,975,233 69,223,332 20,823,772 46,412,369 - - - - - - 18,170,186 - 18,170,186 - (8,343,798) (8,343,798) (904,119) - (26,508) (26,508) - - - (83,923) - 325,511 325,511 - - - 23 24 22 23 24 Balance at 30 June 2018 20,823,772 56,238,757 (930,627) 241,588 2,976,920 79,350,410 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 33 Lycopodium Annual Financial Report 2018 • 33 81,446 10,373,529 111,939 81,446 10,485,468 (168,908) (168,908) (168,908) (5,165,208) (259,037) (5,593,153) 2,975,233 69,223,332 163,201 163,201 18,333,387 299,003 18,632,390 (161,514) (161,514) (161,514) (8,343,798) (8,505,312) - - - - - - - - - - - - - - - - - - - Consolidated Statement of Cash Flows For the year ended 30 June 2018 34 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedConsolidatedstatementofcashflowsFortheyearended30June2018ConsolidatedNotes2018$2017$CashflowsfromoperatingactivitiesReceiptsfromcustomers(inclusiveofgoodsandservicestax)170,346,647237,498,193Paymentstosuppliersandemployees(inclusiveofgoodsandservicestax)(168,124,948)(187,908,401)2,221,69949,589,792Interestreceived1,847,1451,557,922Incometaxespaid(5,909,452)(1,814,985)Netcash(outflow)/inflowfromoperatingactivities31(1,840,608)49,332,729CashflowsfrominvestingactivitiesDividendsreceivedfromjointventuresandassociate572,726560,267Paymentsforproperty,plantandequipment14(1,053,110)(335,812)Proceedsfromsaleofproperty,plantandequipment20,2406,311Paymentsforintangibleassets16(631,529)(50,116)Proceedsfromsaleofavailable-for-salefinancialassets1,187,036-Paymentforavailable-for-salefinancialassets11(b)(75,000)-Netcash(outflow)/frominvestingactivities20,363180,650CashflowsfromfinancingactivitiesProceedsfromborrowings1,274,2581,231,311Repaymentsofborrowings(1,203,222)(1,229,832)Repaymentsofhirepurchaseandleaseliabilities(504,329)(227,765)Loansadvancedtojointventure(884,000)(336,000)Repaymentofloansfromassociate387,500-Dividendspaidtocompany'sshareholders(8,343,798)(5,165,208)Proceedsfromrepaymentofloansundertheseniormanagershareacquisitionplan110,26179,282Netcashoutflowfromfinancingactivities(9,163,330)(5,648,212)Net(decrease)/increaseincashandcashequivalents(10,983,575)43,865,167Cashandcashequivalentsatthebeginningofthefinancialyear85,334,76841,547,756Effectsofexchangeratechangesoncashandcashequivalents(63,405)(78,155)Cashandcashequivalentsattheendoffinancialyear874,287,78885,334,768Theaboveconsolidatedstatementofcashflowsshouldbereadinconjunctionwiththeaccompanyingnotes.34Consolidated Statement of Cash Flows For the year ended 30 June 2018 Notes to the Consolidated Financial Statements 30 June 2018 Lycopodium Annual Financial Report 2018 • 35 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018ContentsofthenotestotheconsolidatedfinancialstatementsPage1Summaryofsignificantaccountingpolicies362Financialriskmanagement513Criticalaccountingestimatesandjudgements554Segmentinformation565Revenue606Expenses617Incometaxexpense628Currentassets-Cashandcashequivalents649Currentassets-Tradeandotherreceivables6410Currentassets-Othercurrentassets6611Financialassetsandliabilities6612Non-currentassets-Otherreceivables6913Non-currentassets-Investmentsaccountedforusingtheequitymethod7014Non-currentassets-Property,plantandequipment7315Non-currentassets-Deferredtaxassets7416Non-currentassets-Intangibleassets7517Currentliabilities-Tradeandotherpayables7818Currentliabilities-Provisions7919Non-currentliabilities-Deferredtaxliabilities8020Non-currentliabilities-Provisions8021Contributedequity8122Reservesandretainedearnings8223Non-controllinginterests8324Dividends8425Remunerationofauditors8526Contingencies8627Commitments8628Relatedpartytransactions8829Subsidiaries9030Eventsoccurringafterthereportingperiod9031Reconciliationofprofitafterincometaxtonetcashinflowfromoperatingactivities9132Earningspershare9133Share-basedpayments9234Parententityfinancialinformation9335Notes to the Consolidated Financial Statements 30 June 2018 (continued) 36 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1SummaryofsignificantaccountingpoliciesTheprincipalaccountingpoliciesadoptedinthepreparationofthisconsolidatedfinancialreportaresetoutbelow.Thesepolicieshavebeenconsistentlyappliedtoalltheyearspresented,unlessotherwisestated.ThefinancialreportcomprisesthefinancialstatementsforthegroupconsistingofLycopodiumLimitedanditssubsidiaries.(a)BasisofpreparationThisgeneralpurposefinancialreporthasbeenpreparedinaccordancewithAustralianAccountingStandardsandInterpretationsissuedbytheAustralianAccountingStandardsBoardandtheCorporationsAct2001.LycopodiumLimitedisafor-profitentityforthepurposeofpreparingthefinancialreport.(i)CompliancewithIFRSTheconsolidatedfinancialreportoftheLycopodiumLimitedgroupcomplieswithInternationalFinancialReportingStandards(IFRS)asissuedbytheInternationalAccountingStandardsBoard(IASB).(ii)NewandamendedstandardsadoptedbythegroupTherewerenoneworamendedstandardsissuedbytheAustralianAccountingStandardsBoardthatwerematerialtotheGroupandneedbedisclosedinthisfinancialreport.AllstandardsapplicablefortheperiodwerethereforeadoptedwithnomaterialimpactontheGroup.(iii)EarlyadoptionofstandardsThegrouphasnotelectedtoapplyanypronouncementsbeforetheiroperativedateintheannualreportingperiodbeginning1July2017.(iv)HistoricalcostconventionThesefinancialstatementshavebeenpreparedunderthehistoricalcostconvention,asmodifiedbytherevaluationofavailable-for-salefinancialassetsandfinancialassetsatfairvaluethroughprofitandloss.(v)CriticalaccountingestimatesThepreparationoffinancialreportrequirestheuseofcertaincriticalaccountingestimates.Italsorequiresmanagementtoexerciseitsjudgementintheprocessofapplyingthegroup'saccountingpolicies.Theareasinvolvingahigherdegreeofjudgementorcomplexity,orareaswhereassumptionsandestimatesaresignificanttothefinancialreport,aredisclosedinnote3.36Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 37 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1Summaryofsignificantaccountingpolicies(continued)(b)Principlesofconsolidation(i)SubsidiariesSubsidiariesareallentities(includingstructuredentities)overwhichthegrouphascontrol.Thegroupcontrolsanentitywhenthegroupisexposedto,orhasrightsto,variablereturnsfromitsinvolvementwiththeentityandhastheabilitytoaffectthosereturnsthroughitspowertodirecttheactivitiesoftheentity.Subsidiariesarefullyconsolidatedfromthedateonwhichcontrolistransferredtothegroup.Theyaredeconsolidatedfromthedatethatcontrolceases.Theacquisitionmethodofaccountingisusedtoaccountforbusinesscombinationsbythegroup(refertonote1(h)).Intercompanytransactions,balancesandunrealisedgainsontransactionsbetweencompaniesinthegroupareeliminated.Unrealisedlossesarealsoeliminatedunlessthetransactionprovidesevidenceoftheimpairmentoftheassettransferred.Accountingpoliciesofsubsidiarieshavebeenchangedwherenecessarytoensureconsistencywiththepoliciesadoptedbythegroup.Non-controllinginterestsintheresultsandequityofsubsidiariesareshownseparatelyintheconsolidatedstatementofcomprehensiveincome,consolidatedstatementofchangesinequityandconsolidatedbalancesheet,respectively.(ii)EmployeeShareTrustThegrouphasformedatrusttoadministerthegroup'semployeesharescheme.Thistrustisconsolidated,asthesubstanceoftherelationshipisthatthetrustiscontrolledbythegroup.(iii)JointarrangementsUnderAASB11JointArrangementinvestmentsinjointarrangementsareclassifiedaseitherjointoperationsorjointventures.Theclassificationdependsonthecontractualrightsandobligationsofeachinvestor,ratherthanlegalstructureofthejointarrangement.LycopodiumLimitedhasajointventurearrangement.JointventuresInterestinjointventuresareaccountedforusingtheequitymethod(see(v)below),afterinitiallybeingrecognisedatcostintheconsolidatedbalancesheet.(iv)AssociatesAssociatesareallentitiesoverwhichthegrouphassignificantinfluencebutnotcontrolorjointcontrol.Thisisgenerallythecasewherethegroupholdsbetween20%and50%ofthevotingrights.Investmentsinassociatesareaccountedforusingtheequitymethodofaccounting(see(v)below),afterinitiallybeingrecognisedatcost.(v)EquitymethodUndertheequitymethodofaccounting,theinvestmentsareinitiallyrecognisedatcostandadjustedthereaftertorecognisethegroup'sshareofthepost-acquisitionprofitsorlossesoftheinvesteeinprofitorloss,andthegroup'sshareofmovementsinothercomprehensiveincomeoftheinvesteeinothercomprehensiveincome.Dividendsreceivedorreceivablefromassociatesandjointventuresarerecognisedasareductioninthecarryingamountoftheinvestment.Whenthegroup'sshareoflossesinanequity-accountedinvestmentequalsorexceedsitsinterestintheentity,includinganyotherunsecuredlong-termreceivables,thegroupdoesnotrecognisefurtherlosses,unlessithasincurredobligationsormadepaymentsonbehalfoftheotherentity.37Notes to the Consolidated Financial Statements 30 June 2018 (continued) 38 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1Summaryofsignificantaccountingpolicies(continued)(b)Principlesofconsolidation(continued)(v)Equitymethod(continued)Unrealisedgainsontransactionsbetweenthegroupanditsassociatesandjointventuresareeliminatedtotheextentofthegroup'sinterestintheseentities.Unrealisedlossesarealsoeliminatedunlessthetransactionsprovidesevidenceofanimpairmentoftheassettransferred.Accountingpoliciesofequityaccountedinvesteeshavebeenchangedwherenecessarytoensureconsistencywiththepoliciesadoptedbythegroup.Thegrouptreatstransactionswithnon-controllingintereststhatdonotresultinalossofcontrolastransactionswithequityownersofthegroup.Achangeinownershipinterestresultsinanadjustmentbetweenthecarryingamountsofthecontrollingandnon-controllingintereststoreflecttheirrelativeinterestsinthesubsidiary.Anydifferencebetweentheamountoftheadjustmenttonon-controllinginterestsandanyconsiderationpaidorreceivedisrecognisedinaseparatereservewithinequityattributedtoownersofLycopodiumLimited.(vi)ChangesinownershipinterestsWhenthegroupceasestohavecontrol,jointcontrolorsignificantinfluence,anyretainedinterestintheentityisremeasuredtoitsfairvaluewiththechangeincarryingamountrecognisedinprofitorloss.Thefairvaluebecomestheinitialcarryingamountforthepurposesofsubsequentlyaccountingfortheretainedinterestasanassociate,jointventureorfinancialasset.Inaddition,anyamountspreviouslyrecognisedinothercomprehensiveincomeinrespectofthatentityareaccountedforasifthegrouphaddirectlydisposedoftherelatedassetsorliabilities.Thismaymeanthatamountspreviouslyrecognisedinothercomprehensiveincomearereclassifiedtoprofitorloss.Iftheownershipinterestinajointventureoranassociateisreducedbutjointcontrolorsignificantinfluenceisretained,onlyaproportionateshareoftheamountspreviouslyrecognisedinothercomprehensiveincomearereclassifiedtoprofitorlosswhereappropriate.(c)SegmentreportingOperatingsegmentsarereportedinamannerconsistentwiththeinternalreportingprovidedtothechiefoperatingdecisionmaker.Thechiefoperatingdecisionmaker,whoisresponsibleforallocatingresourcesandassessingperformanceoftheoperatingsegments,hasbeenidentifiedastheBoardofDirectors.(d)Foreigncurrencytranslation(i)FunctionalandpresentationcurrencyItemsincludedinthefinancialreportofeachofthegroup'sentitiesaremeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates('thefunctionalcurrency').TheconsolidatedfinancialreportarepresentedinAustraliandollars,whichisLycopodiumLimited'sfunctionalandpresentationcurrency.(ii)TransactionsandbalancesForeigncurrencytransactionsaretranslatedintothefunctionalcurrencyusingtheexchangeratesprevailingatthedatesofthetransactions.Foreignexchangegainsandlossesresultingfromthesettlementofsuchtransactionsandfromthetranslationatyearendexchangeratesofmonetaryassetsandliabilitiesdenominatedinforeigncurrenciesarerecognisedinprofitandloss.Translationdifferencesonfinancialassetsandliabilitiescarriedatfairvaluearereportedaspartofthefairvaluegainorloss.Translationdifferencesonnon-monetaryassetsandliabilitiessuchasequitiesheldatfairvaluethroughprofitorlossarerecognisedinprofitorlossaspartofthefairvaluegainorloss.Translationdifferencesonnon-monetaryassetssuchasequitiesclassifiedasavailable-for-salefinancialassetsarerecognisedinothercomprehensiveincome.(iii)ConsolidatedentitiesTheresultsandfinancialpositionofforeignoperations(noneofwhichhasthecurrencyofahyperinflationaryeconomy)thathaveafunctionalcurrencydifferentfromthepresentationcurrencyaretranslatedintothepresentationcurrencyasfollows:38Notes to the Consolidated Financial Statements 30 June 2018 (continued) .................. Lycopodium Annual Financial Report 2018 • 39 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1Summaryofsignificantaccountingpolicies(continued)(d)Foreigncurrencytranslation(continued)(iii)Consolidatedentities(continued)•assetsandliabilitiesforeachbalancesheetpresentedaretranslatedattheclosingrateatthedateofthatbalancesheet•incomeandexpensesforeachstatementofcomprehensiveincomearetranslatedataverageexchangerates(unlessthisisnotareasonableapproximationofthecumulativeeffectoftheratesprevailingonthetransactiondates,inwhichcaseincomeandexpensesaretranslatedatthedatesofthetransactions),and•allresultingexchangedifferencesarerecognisedinothercomprehensiveincome.Onconsolidation,exchangedifferencesarisingfromthetranslationofanynetinvestmentinforeignoperations,andofborrowingsandotherfinancialinstrumentsdesignatedashedgesofsuchinvestments,arerecognisedinothercomprehensiveincome.Whenaforeignoperationissoldoranyborrowingsformingpartofthenetinvestmentarerepaid,associatedexchangedifferencesarerecognisedintheprofitandloss,aspartofthegainorlossonsalewhereapplicable.(e)RevenuerecognitionRevenueismeasuredatthefairvalueoftheconsiderationreceivedorreceivable.Amountsdisclosedasrevenuearenetofreturns,tradeallowances,rebatesandamountscollectedonbehalfofthirdparties.Thegrouprecognisesrevenuewhentheamountofrevenuecanbereliablymeasured,itisprobablethatfutureeconomicbenefitswillflowtotheentityandspecificcriteriahavebeenmetforeachofthegroup'sactivitiesasdescribedbelow.Thegroupbasesitsestimatesonhistoricalresults,takingintoconsiderationthetypeofcustomer,thetypeoftransactionandthespecificsofeacharrangement.Revenueisrecognisedforthemajorbusinessactivitiesasfollows:(i)RenderingofservicesRevenuefromconsultingservicesisrecognisedintheaccountingperiodinwhichtheservicesarerendered.Forfixed-pricecontracts,revenueisrecognisedunderthepercentageofcompletionmethod,basedontheactualserviceprovidedasaproportionofthetotalservicestobeprovided.Ifcircumstancesarisethatmaychangetheoriginalestimatesofrevenues,costsorextentofprogresstowardcompletion,estimatesarerevised.Theserevisionsmayresultinincreasesordecreasesinestimatedrevenuesorcostsandarereflectedinprofitorlossintheperiodinwhichthecircumstancesthatgiverisetotherevisionbecomeknownbymanagement.(ii)RentalrevenueRentalrevenueisaccountedforonastraight-linebasisovertheleasetermasthismatchestheprofileofthemannerinwhichrentalisearned.Contingentrentalincomeisrecognisedasincomeintheperiodsinwhichitisearned.(iii)InterestincomeInterestincomeisrecognisedusingtheeffectiveinterestmethod.Whenareceivableisimpaired,thegroupreducesthecarryingamounttoitsrecoverableamount,beingtheestimatedfuturecashflowdiscountedattheoriginaleffectiveinterestrateoftheinstrument,andcontinuesunwindingthediscountasinterestincome.Interestincomeonimpairedloansisrecognisedusingtheoriginaleffectiveinterestrate.(iv)DividendsDividendsarerecognisedasrevenuewhentherighttoreceivepaymentisestablished.39Notes to the Consolidated Financial Statements 30 June 2018 (continued) 40 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1Summaryofsignificantaccountingpolicies(continued)(f)IncometaxTheincometaxexpenseorrevenuefortheperiodisthetaxpayableonthecurrentperiod'staxableincomebasedontheapplicableincometaxrateforeachjurisdictionadjustedbychangesindeferredtaxassetsandliabilitiesattributabletotemporarydifferencesandtounusedtaxlosses.ThecurrentincometaxchargeiscalculatedonthebasisofthetaxlawsenactedorsubstantivelyenactedattheendofthereportingperiodinthecountrieswheretheCompany'ssubsidiariesandassociatesoperateandgeneratetaxableincome.Managementperiodicallyevaluatespositionstakenintaxreturnswithrespecttosituationsinwhichapplicabletaxregulationissubjecttointerpretation.Itestablishesprovisionswhereappropriateonthebasisofamountsexpectedtobepaidtothetaxauthorities.Deferredincometaxisprovidedinfull,usingtheliabilitymethod,ontemporarydifferencesarisingbetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsintheconsolidatedfinancialreport.However,deferredtaxliabilitiesarenotrecognisediftheyarisefromtheinitialrecognitionofgoodwill.Deferredincometaxisalsonotaccountedforifitarisesfrominitialrecognitionofanassetorliabilityinatransactionotherthanabusinesscombinationthatatthetimeofthetransactionaffectsneitheraccountingnortaxableprofitorloss.Deferredincometaxisdeterminedusingtaxrates(andlaws)thathavebeenenactedorsubstantiallyenactedbytheendofthereportingperiodandareexpectedtoapplywhentherelateddeferredincometaxassetisrealisedorthedeferredincometaxliabilityissettled.Deferredtaxassetsarerecognisedfordeductibletemporarydifferencesandunusedtaxlossesonlyifitisprobablethatfuturetaxableamountswillbeavailabletoutilisethosetemporarydifferencesandlosses.Deferredtaxliabilitiesandassetsarenotrecognisedfortemporarydifferencesbetweenthecarryingamountandtaxbasesofinvestmentsinforeignoperationswherethecompanyisabletocontrolthetimingofthereversalofthetemporarydifferencesanditisprobablethatthedifferenceswillnotreverseintheforeseeablefuture.Deferredtaxassetsandliabilitiesareoffsetwhenthereisalegallyenforceablerighttooffsetcurrenttaxassetsandliabilitiesandwhenthedeferredtaxbalancesrelatetothesametaxationauthority.Currenttaxassetsandtaxliabilitiesareoffsetwheretheentityhasalegallyenforceablerighttooffsetandintendseithertosettleonanetbasis,ortorealisetheassetandsettletheliabilitysimultaneously.LycopodiumLimitedanditswholly-ownedAustraliancontrolledentitieshaveimplementedthetaxconsolidationlegislationeffective1July2013.Asaconsequence,theseentitiesaretaxedasasingleentityandthedeferredtaxassetsandliabilitiesoftheseentitiesaresetoffintheconsolidatedfinancialreport.Currentanddeferredtaxisrecognisedinprofitorloss,excepttotheextentthatitrelatestoitemsrecognisedinothercomprehensiveincomeordirectlyinequity.Inthiscase,thetaxisalsorecognisedinothercomprehensiveincomeordirectlyinequity,respectively.(g)LeasesLeasesofproperty,plantandequipmentwherethegroup,aslessee,hassubstantiallyalltherisksandrewardsofownershipareclassifiedasfinanceleases.Financeleasesarecapitalisedatthelease'sinceptionatthefairvalueoftheleasedpropertyor,iflower,thepresentvalueoftheminimumleasepayments.Thecorrespondingrentalobligations,netoffinancecharges,areincludedinothershort-termandlong-termpayables.Eachleasepaymentisallocatedbetweentheliabilityandfinancecost.Thefinancecostischargedtoprofitorlossovertheleaseperiodsoastoproduceaconstantperiodicrateofinterestontheremainingbalanceoftheliabilityforeachperiod.Theproperty,plantandequipmentacquiredunderfinanceleasesisdepreciatedovertheasset'susefullifeorovertheshorteroftheasset'susefullifeandtheleasetermifthereisnoreasonablecertaintythatthegroupwillobtainownershipattheendoftheleaseterm.Leasesinwhichasignificantportionoftherisksandrewardsofownershiparenottransferredtothegroupaslesseeareclassifiedasoperatingleases(note27).Paymentsmadeunderoperatingleases(netofanyincentivesreceivedfromthelessor)arechargedtoprofitorlossonastraight-linebasisovertheperiodofthelease.40Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 41 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1Summaryofsignificantaccountingpolicies(continued)(h)BusinesscombinationsTheacquisitionmethodofaccountingisusedtoaccountforallbusinesscombinations,regardlessofwhetherequityinstrumentsorotherassetsareacquired.Theconsiderationtransferredfortheacquisitionofasubsidiarycomprisesthefairvaluesoftheassetstransferred,theliabilitiesincurredandtheequityinterestsissuedbythegroup.Theconsiderationtransferredalsoincludesthefairvalueofanyassetorliabilityresultingfromacontingentconsiderationarrangementandthefairvalueofanypre-existingequityinterestinthesubsidiary.Acquisition-relatedcostsareexpensedasincurred.Identifiableassetsacquiredandliabilitiesandcontingentliabilitiesassumedinabusinesscombinationare,withlimitedexceptions,measuredinitiallyattheirfairvaluesattheacquisition-date.Onanacquisition-by-acquisitionbasis,thegrouprecognisesanynon-controllinginterestintheacquireeeitheratfairvalueoratthenon-controllinginterest'sproportionateshareoftheacquiree'snetidentifiableassets.Theexcessoftheconsiderationtransferredandtheamountofanynon-controllinginterestintheacquireeoverthefairvalueofthenetidentifiableassetsacquiredisrecordedasgoodwill.Ifthoseamountsarelessthanthefairvalueofthenetidentifiableassetsofthesubsidiaryacquiredandthemeasurementofallamountshasbeenreviewed,thedifferenceisrecogniseddirectlyinprofitorlossasabargainpurchase.Wheresettlementofanypartofcashconsiderationisdeferred,theamountspayableinthefuturearediscountedtotheirpresentvalueasatthedateofexchange.Thediscountrateusedistheentity'sincrementalborrowingrate,beingtherateatwhichasimilarborrowingcouldbeobtainedfromanindependentfinancierundercomparabletermsandconditions.Contingentconsiderationisclassifiedeitherasequityorafinancialliability.Amountsclassifiedasafinancialliabilityaresubsequentlyremeasuredtofairvaluewithchangesinfairvaluerecognisedinprofitorloss.(i)ImpairmentofassetsGoodwillandintangibleassetsthathaveanindefiniteusefullifearenotsubjecttoamortisationandaretestedannuallyforimpairment,ormorefrequentlyifeventsorchangesincircumstancesindicatethattheymightbeimpaired.Otherassetsaretestedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.Animpairmentlossisrecognisedfortheamountbywhichtheasset'scarryingamountexceedsitsrecoverableamount.Therecoverableamountisthehigherofanasset'sfairvaluelesscoststosellandvalue-in-use.Forthepurposesofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiablecashinflowswhicharelargelyindependentofthecashinflowsfromotherassetsorgroupsofassets(cash-generatingunits).Non-financialassetsotherthangoodwillthatsufferedanimpairmentarereviewedforpossiblereversaloftheimpairmentattheendofeachreportingperiod.(j)CashandcashequivalentsForcashflowstatementpresentationpurposes,cashandcashequivalentsincludescashonhand,depositsheldatcallwithfinancialinstitutions,othershort-term,highlyliquidinvestmentswithoriginalmaturitiesofthreemonthsorlessthatarereadilyconvertibletoknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue,andbankoverdrafts.(k)TradereceivablesTradereceivablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod,lessprovisionforimpairment.Tradereceivablesaregenerallydueforsettlementwithin30days.41Notes to the Consolidated Financial Statements 30 June 2018 (continued) 42 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1Summaryofsignificantaccountingpolicies(continued)(k)Tradereceivables(continued)Collectabilityoftradereceivablesisreviewedonanongoingbasis.Debtswhichareknowntobeuncollectiblearewrittenoffbyreducingthecarryingamountdirectly.Anallowanceaccount(provisionforimpairmentoftradereceivables)isusedwhenthereisobjectiveevidencethatthegroupwillnotbeabletocollectallamountsdueaccordingtotheoriginaltermsofthereceivables.Significantfinancialdifficultiesofthedebtor,probabilitythatthedebtorwillenterbankruptcyorfinancialreorganisation,anddefaultordelinquencyinpayments(morethan30daysoverdue)areconsideredindicatorsthatthetradereceivableisimpaired.Theamountoftheimpairmentallowanceisthedifferencebetweentheasset'scarryingamountandthepresentvalueofestimatedfuturecashflows,discountedattheoriginaleffectiveinterestrate.Cashflowsrelatingtoshort-termreceivablesarenotdiscountediftheeffectofdiscountingisimmaterial.Theamountoftheimpairmentlossisrecognisedintheprofitandlosswithin‘administrationandmanagementcosts’.Whenatradereceivableforwhichanimpairmentallowancehadbeenrecognisedbecomesuncollectibleinasubsequentperiod,itiswrittenoffagainsttheallowanceaccount.Subsequentrecoveriesofamountspreviouslywrittenoffarecreditedagainst'administrationandmanagementcosts'intheprofitandloss.(l)InventoriesContractworkinprogressContractworkinprogressisstatedattheaggregateofcontractcostsincurredtodateplusrecognisedprofitslessrecognisedlossesandprogressbillings.Iftherearecontractswhereprogressbillingsexceedtheaggregatecostsincurredplusprofitslesslosses,thenetamountispresentedunderotherliabilities.Contractcostsincludeallcostsdirectlyrelatedtospecificcontracts,coststhatarespecificallychargeabletothecustomerunderthetermsofthecontractandanallocationofoverheadexpensesincurredinconnectionwiththegroup'scontractactivitiesingeneral.(m)InvestmentsandotherfinancialassetsClassificationThegroupclassifiesitsfinancialassetsinthefollowingcategories:financialassetsatfairvaluethroughprofitorloss,loansandreceivablesandavailable-for-salefinancialassets.Theclassificationdependsonthepurposeforwhichtheinvestmentswereacquired.Managementdeterminestheclassificationofitsinvestmentsatinitialrecognitionandre-evaluatesthisdesignationateachreportingdate.(i)FinancialassetsatfairvaluethroughprofitorlossFinancialassetsatfairvaluethroughprofitandlossarefinancialassetsheld-for-trading.Afinancialassetisclassifiedinthiscategoryifacquiredprincipallyforthepurposeofsellingintheshortterm.Derivativesareclassifiedasheld-for-tradingunlesstheyaredesignatedashedges.Assetsinthiscategoryareclassifiedascurrentassets.(ii)LoansandreceivablesLoansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.Theyareincludedincurrentassets,exceptforthosewithmaturitiesgreaterthan12monthsafterthereportingperiodwhichareclassifiedasnon-currentassets.Loansandreceivablesareincludedintradeandotherreceivablesinthebalancesheet.(iii)Available-for-salefinancialassetsAvailable-for-salefinancialassets,comprisingprincipallymarketableequitysecurities,arenon-derivativesthatareeitherdesignatedinthiscategoryornotclassifiedinanyoftheothercategories.Theyareincludedinnon-currentassetsunlesstheinvestmentmaturesormanagementintendstodisposeoftheinvestmentwithin12monthsoftheendofthereportingperiod.Investmentsaredesignatedasavailable-for-saleiftheydonothavefixedmaturitiesandfixedordeterminablepaymentsandmanagementintendstoholdthemforthemediumtolong-term.42Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 43 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1Summaryofsignificantaccountingpolicies(continued)(m)Investmentsandotherfinancialassets(continued)Financialassets-reclassificationThegroupmaychoosetoreclassifyanon-derivativetradingfinancialassetoutoftheheld-for-tradingcategoryifthefinancialassetisnolongerheldforthepurposeofsellingitinthenearterm.Financialassetsotherthanloansandreceivablesarepermittedtobereclassifiedoutoftheheld-for-tradingcategoryonlyinrarecircumstancesarisingfromasingleeventthatisunusualandhighlyunlikelytorecurinthenearterm.Inaddition,thegroupmaychoosetoreclassifyfinancialassetsthatwouldmeetthedefinitionofloansandreceivablesoutoftheheld-for-tradingoravailable-for-salecategoriesifthegrouphastheintentionandabilitytoholdthesefinancialassetsfortheforeseeablefutureoruntilmaturityatthedateofreclassification.Reclassificationsaremadeatfairvalueasofthereclassificationdate.Fairvaluebecomesthenewcostoramortisedcostasapplicable,andnoreversalsoffairvaluegainsorlossesrecordedbeforereclassificationdatearesubsequentlymade.Effectiveinterestratesforfinancialassetsreclassifiedtoloansandreceivablesaredeterminedatthereclassificationdate.Furtherincreasesinestimatesofcashflowsadjusteffectiveinterestratesprospectively.RecognitionandderecognitionRegularwaypurchasesandsalesoffinancialassetsarerecognisedontrade-date-thedateonwhichthegroupcommitstopurchaseorselltheasset.Financialassetsarederecognisedwhentherightstoreceivecashflowsfromthefinancialassetshaveexpiredorhavebeentransferredandthegrouphastransferredsubstantiallyalltherisksandrewardsofownership.Whensecuritiesclassifiedasavailable-for-salearesold,theaccumulatedfairvalueadjustmentsrecognisedinothercomprehensiveincomearereclassifiedtoprofitorlossasgainsandlossesfrominvestmentsecurities.MeasurementAtinitialrecognition,thegroupmeasuresafinancialassetatitsfairvalueplus,inthecaseofafinancialassetnotatfairvaluethroughprofitorloss,transactioncoststhataredirectlyattributabletotheacquisitionofthefinancialasset.Transactioncostsoffinancialassetscarriedatfairvaluethroughprofitorlossareexpensedinprofitorloss.Loansandreceivablesaresubsequentlycarriedatamortisedcostusingtheeffectiveinterestmethod.Available-for-salefinancialassetsandfinancialassetsatfairvaluethroughprofitorlossaresubsequentlycarriedatfairvalue.Gainsorlossesarisingfromchangesinthefairvalueofthe'financialassetsatfairvaluethroughprofitorloss'categoryarepresentedinprofitorlosswithinotherincomeorotherexpensesintheperiodinwhichtheyarise.Dividendincomefromfinancialassetsatfairvaluethroughprofitorlossisrecognisedinprofitorlossaspartofrevenuefromcontinuingoperationswhenthegroup'srighttoreceivepaymentsisestablished.Interestincomefromthesefinancialassetsisincludedinthenetgains/(losses).Changesinthefairvalueofmonetarysecuritiesdenominatedinaforeigncurrencyandclassifiedasavailable-for-saleareanalysedbetweentranslationdifferencesresultingfromchangesinamortisedcostofthesecurityandotherchangesinthecarryingamountofthesecurity.Thetranslationdifferencesrelatedtochangesintheamortisedcostarerecognisedinprofitorloss,andotherchangesincarryingamountarerecognisedinothercomprehensiveincome.Changesinthefairvalueofothermonetaryandnon-monetarysecuritiesclassifiedasavailable-for-salearerecognisedinothercomprehensiveincome.Detailsonhowthefairvalueoffinancialinstrumentsisdeterminedaredisclosedinnote2.43Notes to the Consolidated Financial Statements 30 June 2018 (continued) 44 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1Summaryofsignificantaccountingpolicies(continued)(m)Investmentsandotherfinancialassets(continued)ImpairmentThegroupassessesattheendofeachreportingperiodwhetherthereisobjectiveevidencethatafinancialassetoragroupoffinancialassetsisimpaired.Afinancialassetoragroupoffinancialassetsisimpairedandimpairmentlossesareincurredonlyifthereisobjectiveevidenceofimpairmentasaresultofoneormoreeventsthatoccurredaftertheinitialrecognitionoftheasset(a'lossevent')andthatlossevent(orevents)hasanimpactontheestimatedfuturecashflowsofthefinancialassetorgroupoffinancialassetsthatcanbereliablyestimated.Inthecaseofequityinvestmentsclassifiedasavailable-for-sale,asignificantorprolongeddeclineinthefairvalueofthesecuritybelowitscostisconsideredanindicatorthattheassetsareimpaired.(i)AssetscarriedatamortisedcostForloansandreceivables,theamountofthelossismeasuredasthedifferencebetweentheasset'scarryingamountandthepresentvalueofestimatedfuturecashflows(excludingfuturecreditlossesthathavenotbeenincurred)discountedatthefinancialasset'soriginaleffectiveinterestrate.Thecarryingamountoftheassetisreducedandtheamountofthelossisrecognisedinprofitorloss.Ifaloanhasavariableinterestrate,thediscountrateformeasuringanyimpairmentlossisthecurrenteffectiveinterestratedeterminedunderthecontract.Asapracticalexpedient,thegroupmaymeasureimpairmentonthebasisofaninstrument'sfairvalueusinganobservablemarketprice.If,inasubsequentperiod,theamountoftheimpairmentlossdecreasesandthedecreasecanberelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised(suchasanimprovementinthedebtor'screditrating),thereversalofthepreviouslyrecognisedimpairmentlossisrecognisedinprofitorloss.Impairmenttestingoftradereceivablesisdescribedinnote1(k).(ii)Assetsclassifiedasavailable-for-saleIfthereisobjectiveevidenceofimpairmentforavailable-for-salefinancialassets,thecumulativeloss-measuredasthedifferencebetweentheacquisitioncostandthecurrentfairvalue,lessanyimpairmentlossonthatfinancialassetpreviouslyrecognisedinprofitorloss-isremovedfromequityandrecognisedinprofitorloss.Impairmentlossesonequityinstrumentsthatwererecognisedinprofitorlossarenotreversedthroughprofitorlossinasubsequentperiod.Ifthefairvalueofadebtinstrumentclassifiedasavailable-for-saleincreasesinasubsequentperiodandtheincreasecanbeobjectivelyrelatedtoaneventoccurringaftertheimpairmentlosswasrecognisedinprofitorloss,theimpairmentlossisreversedthroughprofitorloss.(n)DerivativesfinancialinstrumentsTheGroupentersintoforeignexchangeforwardcontractstomanageitsexposuretoforeignexchangeraterisk.FurtherdetailsofderivativefinancialinstrumentsaredisclosedinNote11(c).Derivativesareinitiallyrecognisedatfairvalueatthedateofthederivativecontractisenteredintoandaresubsequentlyremeasuredtotheirfairvalueattheendofeachreportingperiod.Theresultinggainorlossisrecognisedinprofitorlossimmediatelyunlessthederivativeisdesignatedandeffectiveasahedginginstrument,inwhicheventhetimingoftherecognitioninprofitorlossdependsonthenatureofthehedgerelationship.(o)Property,plantandequipmentProperty,plantandequipmentisstatedathistoricalcostlessdepreciation.Historicalcostincludesexpenditurethatisdirectlyattributabletotheacquisitionoftheitems.Subsequentcostsareincludedintheasset'scarryingamountorrecognisedasaseparateasset,asappropriate,onlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtothegroupandthecostoftheitemcanbemeasuredreliably.Thecarryingamountofanycomponentaccountedforasaseparateassetisderecognisedwhenreplaced.Allotherrepairsandmaintenancearechargedtoprofitorlossduringthereportingperiodinwhichtheyareincurred.44Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 45 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1Summaryofsignificantaccountingpolicies(continued)(o)Property,plantandequipment(continued)Depreciationonplantandequipmentiscalculatedusingthestraightlineordiminishingvaluemethodtoallocatetheircost,netoftheirresidualvalues,overtheirestimatedusefullives,asfollows:-Plantandequipment3-10years-Vehicles5-7years-Furniture,fittingsandequipment3-8years-Leaseholdimprovements3-6years-Leasedplantandequipment3-5yearsTheassets'residualvaluesandusefullivesarereviewed,andadjustedifappropriate,attheendofeachreportingperiod.Anasset'scarryingamountiswrittendownimmediatelytoitsrecoverableamountiftheasset'scarryingamountisgreaterthanitsestimatedrecoverableamount(note1(i)).Gainsandlossesondisposalsaredeterminedbycomparingproceedswithcarryingamount.Theseareincludedintheprofitandloss.(p)Intangibleassets(i)GoodwillGoodwillismeasuredasdescribedinnote1(h).Goodwillonacquisitionsofsubsidiariesisincludedinintangibleassets.Goodwillisnotamortisedbutitistestedforimpairmentannually,ormorefrequentlyifeventsorchangesincircumstancesindicatethatitmightbeimpaired,andiscarriedatcostlessaccumulatedimpairmentlosses.Gainsandlossesonthedisposalofanentityincludethecarryingamountofgoodwillrelatingtotheentitysold.Goodwillisallocatedtocash-generatingunitsforthepurposeofimpairmenttesting.Theallocationismadetothosecash-generatingunitsorgroupsofcash-generatingunitsthatareexpectedtobenefitfromthebusinesscombinationinwhichthegoodwillarose,identifiedaccordingtooperatingsegments(note4).(ii)CustomercontractsCustomercontractsacquiredaspartofabusinesscombinationarerecognisedseparatelyfromgoodwill.Thecustomercontractsarecarriedattheirfairvalueatthedateofacquisitionlessaccumulatedamortisationandimpairmentlosses.Amortisationiscalculatedbasedonthetimingofprojectedcashflowsofthecontractsovertheirestimatedusefullives,whichcurrentlyvaryfrom1to5years.(iii)SoftwareIntangibleassetsalsocomprisecapitalisedcomputersoftware.Computersoftwarehasafiniteusefullifeandiscarriedatcostlessaccumulatedamortisation.Amortisationiscalculatedusingthestraightlinemethodtoallocatethecostofthecomputersoftwareovertheirestimatedusefullives,being3years.(q)TradeandotherpayablesTheseamountsrepresentliabilitiesforgoodsandservicesprovidedtothegrouppriortotheendoffinancialyearwhichareunpaid.Theamountsareunsecuredandareusuallypaidwithin30daysofrecognition.Tradeandotherpayablesarepresentedascurrentliabilitiesunlesspaymentisnotduewithin12monthsfromthereportingdate.Theyarerecognisedinitiallyattheirfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod.(r)BorrowingsBorrowingsareinitiallyrecognisedatfairvalue,netoftransactioncostsincurred.Borrowingsaresubsequentlymeasuredatamortisedcost.Anydifferencebetweentheproceeds(netoftransactioncosts)andtheredemptionamountisrecognisedinprofitorlossovertheperiodoftheborrowingsusingtheeffectiveinterestmethod.45Notes to the Consolidated Financial Statements 30 June 2018 (continued) 46 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1Summaryofsignificantaccountingpolicies(continued)(r)Borrowings(continued)Borrowingsareremovedfromthebalancesheetwhentheobligationspecifiedinthecontractisdischarged,cancelledorexpired.Thedifferencebetweenthecarryingamountofafinancialliabilitythathasbeenextinguishedortransferredtoanotherpartyandtheconsiderationpaid,includinganynon-cashassetstransferredorliabilitiesassumed,isrecognisedinprofitorlossasotherincomeorfinancecosts.Borrowingsareclassifiedascurrentliabilitiesunlessthegrouphasanunconditionalrighttodefersettlementoftheliabilityforatleast12monthsafterthereportingperiod.(s)BorrowingcostsBorrowingcostsincurredfortheconstructionofanyqualifyingassetarecapitalisedduringtheperiodoftimethatisrequiredtocompleteandpreparetheassetforitsintendeduseorsale.Otherborrowingcostsareexpensed.(t)ProvisionsProvisionsforlegalclaims,servicewarrantiesandmakegoodobligationsarerecognisedwhenthegrouphasapresentlegalorconstructiveobligationasaresultofpastevents,itisprobablethatanoutflowofresourceswillberequiredtosettletheobligationandtheamounthasbeenreliablyestimated.Provisionsarenotrecognisedforfutureoperatinglosses.Wherethereareanumberofsimilarobligations,thelikelihoodthatanoutflowwillberequiredinsettlementisdeterminedbyconsideringtheclassofobligationsasawhole.Aprovisionisrecognisedevenifthelikelihoodofanoutflowwithrespecttoanyoneitemincludedinthesameclassofobligationsmaybesmall.Provisionsaremeasuredatthepresentvalueofmanagement'sbestestimateoftheexpenditurerequiredtosettlethepresentobligationattheendofthereportingperiod.Thediscountrateusedtodeterminethepresentvalueisapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheliability.Theincreaseintheprovisionduetothepassageoftimeisrecognisedasinterestexpense.(u)Employeebenefits(i)Short-termobligationsLiabilitiesforwagesandsalaries,includingnon-monetarybenefitsexpectedtobesettledwhollywithin12monthsaftertheendoftheperiodinwhichtheemployeesrendertherelatedservicesarerecognisedinrespectofemployees'servicesuptotheendofthereportingperiodandaremeasuredattheamountsexpectedtobepaidwhentheliabilitiesaresettled.Allothershort-termemployeebenefitobligationsarepresentedaspayables.(ii)Otherlong-termemployeebenefitsobligationsTheliabilityforlongserviceleaveandannualleavewhichisnotexpectedtobesettledwhollywithin12monthsaftertheendoftheperiodinwhichtheemployeesrendertherelatedserviceisthereforerecognisedintheprovisionforemployeebenefitsandmeasuredasthepresentvalueofexpectedfuturepaymentstobemadeinrespectofservicesprovidedbyemployeesuptotheendofthereportingperiodusingtheprojectedunitcreditmethod.Considerationisgiventoexpectedfuturewageandsalarylevels,experienceofemployeedeparturesandperiodsofservice.Expectedfuturepaymentsarediscountedusingmarketyieldsattheendofthereportingperiodofhighqualitycorporatebondswithtermsandcurrencythatmatch,ascloselyaspossible,theestimatedfuturecashoutflows.Remeasurementsasaresultofexperienceadjustmentsandchangesinactuarialassumptionsarerecognisedinprofitorloss.Theobligationsarepresentedascurrentliabilitiesintheconsolidatedbalancesheetiftheentitydoesnothaveanunconditionalrighttodefersettlementforatleasttwelvemonthsafterthereportingdate,regardlessofwhentheactualsettlementisexpectedtooccur.46Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 47 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1Summaryofsignificantaccountingpolicies(continued)(u)Employeebenefits(continued)(iii)RetirementbenefitobligationsContributionstodefinedcontributionfundsarerecognisedasanexpenseastheybecomepayable.Prepaidcontributionsarerecognisedasanassettotheextentthatacashrefundorareductioninthefuturepaymentsisavailable.(iv)Share-basedpaymentsShare-basedcompensationbenefitsareprovidedtocertainexecutivedirectorsandotherdesignatedemployeesviathePerformanceRightsPlans.Informationrelatingtothisschemeissetoutinnote33.ThefairvalueofrightsgrantedunderthePerformanceRightsPlansarerecognisedasanemployeebenefitexpensewithacorrespondingincreaseinequity.Thefairvalueismeasuredatgrantdateandrecognisedovertheperiodduringwhichtheemployeesbecomeunconditionallyentitledtotheoptions.ThefairvalueatgrantdateisindependentlydeterminedusingaBinomialTreeoptionpricingmodelthattakesintoaccounttheexerciseprice,thetermoftheoption,thevestingandperformancecriteria,theimpactofdilution,thenon-tradeablenatureoftheoption,thesharepriceatgrantdateandexpectedpricevolatilityoftheunderlyingshare,theexpecteddividendyieldandtherisk-freeinterestrateforthetermoftheoption.(v)SeniormanagershareacquisitionplanTheseniormanagershareacquisitionplanwasapprovedatthecompany'sAnnualGeneralMeetingon24November2009.TheaimoftheplanwastoallowtheBoardtoassistmanagers,whointheBoard'sopinionhavedemonstratedthequalitiesanddedicationtobecomethenextgenerationofseniormanagers,totakeupasignificantshareholdingsoastoensuretheircommitmentandthefutureofthecompany.EligibleSeniorManagersincludebothfull-timeseniormanagersandexecutivedirectorsofthegrouporsuchotherpersonsastheBoarddetermines.Abroadoutlineoftheplanissummarisedbelow:•ThecompanywillloanfundstoparticipatingSeniorManagerstopurchaseLycopodiumLimitedsharesviatheLycopodiumSharePlanTrust.•TheloanwillbealimitedrecourseloanprovidedtheSeniorManagerstayswiththegroupforgreaterthan3years.•TheloanwillbeinterestfreeiftheSeniorManagerremainsemployedbythegroupforgreaterthan3years.•IntheeventthattheSeniorManagerleaveswithin3years,interestwillbechargedequaltothemarketrateofinterestthatwouldhaveaccruedontheloanfromthedateofadvanceofthefundstotherepaymentdate.•Duringthetermoftheloan,dividendswillbeoffsetagainsttheoutstandingloanbalance.•ThesharesareallocatedtotheSeniorManagersata1centdiscounttothevolumeweightedaverageofthepricesatwhichthesharesofLycopodiumLimitedweretradedontheASXduringtheoneweekperioduptoandincludingthedateofallocation.Thegrouphasthefollowingastheresultofthistransaction:SharebasedpaymentThedifferencebetweenthevalueofthesharespurchasedandthevalueofthesharesallocatedtotheseniormanagersrepresentsthecosttothecompanyforprovidingtheloantotheemployees.Thisamountisexpensedintheprofitandloss.47Notes to the Consolidated Financial Statements 30 June 2018 (continued) 48 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1Summaryofsignificantaccountingpolicies(continued)(u)Employeebenefits(continued)(v)Seniormanagershareacquisitionplan(continued)EmbeddedderivativeTheseniormanagerloanreceivableisaloanwithanembeddedderivativewiththeseniormanagerhavinganoptiontoputbackthesharetothegroupinfullsettlementoftheloanafterthe3yearperiod.Astheembeddedderivativeiscloselyrelatedtotheseniormanagerloan,thefinancialinstrumentismeasuredatfairvaluethroughprofitorloss.(v)ContributedequityOrdinarysharesareclassifiedasequity.Incrementalcostsdirectlyattributabletotheissueofnewsharesareshowninequityasadeduction,netoftax,fromtheproceeds.(w)DividendsProvisionismadefortheamountofanydividenddeclared,beingappropriatelyauthorisedandnolongeratthediscretionoftheentity,onorbeforetheendofthereportingperiodbutnotdistributedattheendofthereportingperiod.(x)Earningspershare(i)BasicearningspershareBasicearningspershareiscalculatedbydividing:•theprofitattributabletoownersoftheCompany,excludinganycostsofservicingequityotherthanordinaryshares•bytheweightedaveragenumberofordinarysharesoutstandingduringthefinancialyear,adjustedforbonuselementsinordinarysharesissuedduringtheyear.(ii)DilutedearningspershareDilutedearningspershareadjuststhefiguresusedinthedeterminationofbasicearningspersharetotakeintoaccount:•theafterincometaxeffectofinterestandotherfinancingcostsassociatedwithdilutivepotentialordinaryshares,and•theweightedaveragenumberofadditionalordinarysharesthatwouldhavebeenoutstandingassumingtheconversionofalldilutivepotentialordinaryshares.(y)GoodsandServicesTax(GST)Revenues,expensesandassetsarerecognisednetoftheamountofassociatedGST,unlesstheGSTincurredisnotrecoverablefromthetaxationauthority.Inthiscaseitisrecognisedaspartofthecostofacquisitionoftheassetoraspartoftheexpense.ReceivablesandpayablesarestatedinclusiveoftheamountofGSTreceivableorpayable.ThenetamountofGSTrecoverablefrom,orpayableto,thetaxationauthorityisincludedwithotherreceivablesorpayablesintheconsolidatedbalancesheet.Cashflowsarepresentedonagrossbasis.TheGSTcomponentsofcashflowsarisingfrominvestingorfinancingactivitieswhicharerecoverablefrom,orpayabletothetaxationauthority,arepresentedasoperatingcashflows.48Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 49 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1 Summary of significant accounting policies (continued)(z) New accounting standards not yet effectiveCertain new accounting standards and interpretations have been published that are not mandatory for 30 June 2018 reporting periods. The group's assessment of the impact of these new standards and interpretations is set out below.(i) AASB 9 Financial InstrumentsAASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139.The effective date is for annual reporting periods beginning on or after 1 January 2018.The company has performed its detailed assessment. When this standard is first adopted for the year ending 30 June 2019, there will be no material impact on the transactions and balances recognised in the financial statements.(ii) AASB 15 Revenue from Contracts with CustomersAASB 15 replaces AASB 118: Revenue, AASB 111 Construction Contracts and some revenue-related Interpretations. In summary, AASB 15:•establishesanewrevenuerecognitionmodel;•changesthebasisfordecidingwhetherrevenueistoberecognisedovertimeatapointintime;•providesanewandmoredetailedguidanceonspecifictopics(egmultipleelementarrangements,variablepricing,rightsofreturnandwarranties);and•expandsandimprovesdisclosuresaboutrevenue.The company has performed its detailed assessment. When this standard is first adopted for the year ending 30 June 2019, there will be no material impact on the transactions and balances recognised in the financial statements.(iii)AASB16LeasesAASB16replacesAASB117Leasesandsomelease-relatedInterpretations.Insummary,AASB16:•requiresallleasestobeaccountedfor‘on-balancesheet’bylessees,otherthanshort-termandlowvalueassetleases;•providesnewguidanceontheapplicationofthedefinitionofleaseandonsaleandleasebackaccounting;•largelyretainstheexistinglessoraccountingrequirementsinAASB117;and•requiresnewanddifferentdisclosuresaboutleases.Basedontheentity’spreliminaryassessment,thelikelyimpactonthefirsttimeadoptionoftheStandardfortheyearending30June2020includes:•asignificantincreaseinleaseassetsandfinancialliabilitiesrecognisedonthebalancesheet;•thereportedequitywillreduceasthecarryingamountofleaseassetswillreducemorequicklythanthecarryingamountofleaseliabilities;•EBITinthestatementofprofitorlossandothercomprehensiveincomewillbehigherastheimplicitinterestinleasepaymentsforformeroffbalancesheetleaseswillbepresentedaspartoffinancecostsratherthanbeingincludedinoperatingexpenses;49Notes to the Consolidated Financial Statements 30 June 2018 (continued) 50 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)1Summaryofsignificantaccountingpolicies(continued)(z)Newaccountingstandardsnotyeteffective(continued)(iii)(continued)•operatingcashoutflowswillbelowerandfinancingcashflowswillbehigherinthestatementofcashflowsasprincipalrepaymentsonallleaseliabilitieswillnowbeincludedinfinancingactivitiesratherthanoperatingactivities.Interestcanalsobeincludedwithinfinancingactivities.(aa)ParententityfinancialinformationThefinancialinformationfortheparententity,LycopodiumLimited,disclosedinnote34hasbeenpreparedonthesamebasisastheconsolidatedfinancialreport,exceptassetoutbelow.(i)Investmentsinsubsidiaries,associatesandjointventureentitiesInvestmentsinsubsidiaries,associatesandjointventureentitiesareaccountedforatcostinthefinancialreportofLycopodiumLimited.Dividendsreceivedfromassociatesarerecognisedintheparententity'sprofitorloss,ratherthanbeingdeductedfromthecarryingamountoftheseinvestments.(ii)SharebasedpaymentsThegrantbytheCompanyofoptionsoveritsequityinstrumentstotheemployeesofsubsidiaryundertakingsinthegroupistreatedasacapitalcontributiontothatsubsidiaryundertaking.Thefairvalueofemployeeservicesreceived,measuredbyreferencetothegrantdatefairvalue,isrecognisedoverthevestingperiodasanincreasetoinvestmentinsubsidiaryundertakings,withacorrespondingcredittoequity.50Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 51 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)2FinancialriskmanagementThegroupmanagesitsexposuretokeyfinancialrisks,includinginterestrateandcurrencyriskinaccordancewiththegroup'sfinancialriskmanagementpolicy.Theobjectiveofthepolicyistosupportthedeliveryofthegroup'sfinancialtargetswhilstprotectingfuturefinancialsecurity.Themainrisksarisingfromthegroup'sfinancialinstrumentsareinterestraterisk,foreigncurrencyrisk,creditriskandliquidityrisk.Thegroupusesdifferentmethodstomeasureandmanagedifferenttypesofriskstowhichitisexposed.Theseincludemonitoringlevelsofexposuretointerestrateandforeignexchangeriskandassessmentsofmarketforecastsforinterestratesandforeignexchange.Ageinganalysesandmonitoringofspecificcreditallowancesareundertakentomanagecreditrisk,andliquidityriskismonitoredthroughthedevelopmentoffuturerollingcashflowforecasts.TheprimaryresponsibilityforidentificationandcontroloffinancialrisksrestswiththeBoard.TheBoardreviewsandagreespoliciesformanagingeachoftherisksidentifiedabove.(a)Marketrisk(i)ForeignexchangeriskThegroupoperatesinternationallyandisexposedtoforeignexchangeriskarisingfromvariouscurrencyexposures,primarilywithrespecttotheUSdollar(USD)andPhilippinePeso(PHP).Exchangerateexposuresaremanagedwithapprovedpolicyparametersutilisingforwardexchangecontracts.Foreignexchangeriskariseswhenfuturecommercialtransactionsandrecognisedfinancialassetsandfinancialliabilitiesaredenominatedinacurrencythatisnottheentity’sfunctionalcurrency.Thegroup'sexposuretoforeigncurrencyriskatthereportingperiod,expressedinAustraliandollar,wasasfollows:30June201830June2017USD$PHP$USD$PHP$Cashandcashequivalents4,340,880197,52026,491,471203,126Tradeandotherreceivables-35,411-32,356Othercurrentassets-623,895-184,017Tradeandotherpayables(2,660,357)(207,859)(10,621,049)(161,669)Netexposure1,680,523648,96715,870,422257,830GroupsensitivityBasedonthefinancialinstrumentsheldat30June2018,hadtheAustraliandollarweakened/strengthenedby10%againsttheUSdollarwithallothervariablesheldconstant,thegroup'spost-taxprofitandequityfortheyearwouldhavebeen$168,052higher/$168,052lower(2017:$1,587,042higher/$1,587,042lower),mainlyasaresultofforeignexchangegains/lossesontranslationofUSdollardenominatedfinancialinstrumentsasdetailedintheabovetable.ProfitislesssensitivetomovementsintheAustraliandollar/USdollarexchangeratesin2018than2017becauseoftheloweramountofUSdollardenominatedcashandcashequivalents.Basedonthefinancialinstrumentsheldat30June2018,hadtheAustraliandollarweakened/strengthenedby10%againstthePhilippinePesowithallothervariablesheldconstant,thegroup'spost-taxprofitandequityfortheyearwouldhavebeen$64,897higher/$64,897lower(2017:$25,783higher/$25,783lower),mainlyasaresultofforeignexchangegains/lossesontranslationofPhilippinePesodenominatedfinancialinstrumentsasdetailedintheabovetable.ProfitismoresensitivetomovementsintheAustraliandollar/PhilippinePesoexchangeratesin2018than2017mainlybecauseofthehigheramountofPhilippinePesodenominatedcashandcashequivalents.51Notes to the Consolidated Financial Statements 30 June 2018 (continued) 52 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)2Financialriskmanagement(continued)(a)Marketrisk(continued)(i)Foreignexchangerisk(continued)Exposurestoforeignexchangeratesvaryduringtheyeardependingonthevolumeofoverseastransactions.Nonetheless,theanalysisaboveisconsideredtoberepresentativeoftheGroup’sexposuretocurrencyrisk.(ii)PriceriskThegroupisexposedtoequitysecuritiespriceriskwiththeexposure,however,beingminimal.Equitysecuritiespriceriskarisesfrominvestmentsinequitysecurities.TheequityinvestmentsarepubliclytradedontheAustralianSecuritiesExchange("ASX").Thepriceriskforthelistedsecuritiesisimmaterialintermsofapossibleimpactonprofitandlossortotalequityandassuchasensitivityanalysishasnotbeencompleted.ThegroupdoesnothaveariskmanagementpolicysurroundingpriceriskinplaceastheBoardconsiderstheriskminimal.(iii)InterestrateriskThegroupisexposedtointerestrateriskarisingmainlyfromborrowingsandcashbalancesheld.Theriskisconsideredminimalasthegroup'sborrowingsareminimal.ThegroupdoesnotenterintoanyspecificswapsorhedgestocoveranyinterestratevolatilityanddoesnothaveariskmanagementpolicysurroundingcashflowandinterestrateriskastheBoardconsiderstheseriskstobeminimal.GroupsensitivityAt30June2018,ifinterestrateshadchangedby-/+50basispointsfromtheyearendrateswithallothervariablesheldconstant,post-taxprofitandequityfortheyearwouldhavebeen$259,482lower/higher(2017:-/+50basispoints:$298,419lower/higher),asaresultoflower/higherinterestincomefromcashandcashequivalents.(b)CreditriskCreditriskarisesfromthefinancialassetsofthegroup,whichcomprisecashandcashequivalents,tradeandotherreceivablesandothercurrentassets.Thegroup'sexposuretocreditriskarisesfrompotentialdefaultofthecounterparty,withamaximumexposureequaltothecarryingamountoftheseinstruments.Otherreceivablescomprisesoftheloanundertheseniormanagementshareacquisitionplan.Thegroupisnotexposedtocreditriskastheloanissecuredunderthetermsoftheloan(note1(u)).52Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 53 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)2Financialriskmanagement(continued)(b)Creditrisk(continued)Thecarryingamountoffinancialassetsrepresentsthemaximumcreditexposure.Themaximumexposuretocreditriskatthereportingdatewas:Consolidated2018$2017$Cashandcashequivalents74,287,78885,334,768Tradeandotherreceivables37,616,63736,919,288Depositsheldwithbanks(note10)778,401569,742112,682,826122,823,798CashandcashequivalentsThecreditriskoncashandcashequivalentsislimitedbecausethegroup'sprimarybankisratedAA-byaninternationalcredit-ratingagency.TradeandotherreceivablesThegroup’sexposuretocreditriskisinfluencedmainlybytheindividualcharacteristicsofeachcustomer.However,managementalsoconsidersthedemographicsofthegroup’scustomerbase,includingthedefaultriskoftheindustryandcountryinwhichcustomersoperate,asthesefactorsmayhaveaninfluenceoncreditrisk.Thegrouptradesonlywithrecognised,creditworthythirdparties,andassuchcollateralisnotrequestednorisitthegroup'spolicytosecuritiseitstradeandotherreceivables.Allreceivablesatbalancedatethatareneitherpastduenorimpairedcomplywiththegroup'spolicyoncreditquality.Itisthegroup'spolicythatallcustomerswhowishtotradeoncredittermsaresubjecttocreditverificationproceduresincludinganassessmentoftheirindependentcreditrating,financialposition,pastexperienceandindustryreputation.Inaddition,receivablebalancesaremonitoredonanongoingbasiswiththeresultthatthegroup'sexposuretobaddebtsisminimised.Therearenosignificantconcentrationsofcreditriskwithinthegroup.Thegroupminimisesconcentrationsofcreditriskinrelationtotradereceivablesbyundertakingtransactionswithanumberofcustomersthatoperatepredominantlyintheminingandextractiveindustrysectorincludingthemajorplayersintheindustryandthejunior/emergingplayers.Therearemultiplecontractswithoursignificantcustomers,acrossanumberoftheirsubsidiaries,divisionswithinthosesubsidiariesandlocations.DepositsheldwithbanksThecreditriskondepositsheldwithbanksarelimitedastheycomprisedepositsheldwithbankswithhighcreditratingsassignedbyinternationalcredit-ratingagencies.(c)LiquidityriskPrudentliquidityriskmanagementimpliesmaintainingsufficientcashandmarketablesecuritiesandtheavailabilityoffundingthroughanadequateamountofcommittedcreditfacilities.Thegroupmanagesliquidityriskbycontinuouslymonitoringforecastandactualcashflowsandmatchingthematurityprofilesoffinancialassetsandliabilities.53Notes to the Consolidated Financial Statements 30 June 2018 (continued) 54 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)2Financialriskmanagement(continued)(c)Liquidityrisk(continued)FinancingarrangementsThegrouphadaccesstothefollowingundrawnborrowingfacilitiesatthereportingdate:Consolidated2018$2017$Leasingfacility1,523,0001,850,000Standbycreditfacility10,784,32811,658Insurancebonds14,119,2393,238,47926,426,5675,100,137MaturitiesoffinancialliabilitiesThefollowingtablesdetailthegroup'sremainingcontractualmaturityforitsnon-derivativefinancialliabilities.Thetableshavebeendrawnupbasedontheundiscountedcashflowsoffinancialliabilitiesbasedontheearliestdateonwhichthegroupcanberequiredtopay.Thetableincludesbothinterestandprincipalcashflows.1yearorlessBetween1and2yearsBetween2and5yearsOver5yearsTotalcontrac-tualcashflowsCarryingamountliabilitiesConsolidated-At30June2018$$$$$$Non-derivativesTradepayables-----12,980,390Insurancepremiumfunding218,689---218,689218,689Financeleaseliabilities526,584516,25169,693-1,112,5281,040,282Total745,273516,25169,693-1,331,21714,239,361Consolidated-At30June20171yearorless$Between1and2years$Between2and5years$Over5years$Totalcontrac-tualcashflows$Carryingamountliabilities$Non-derivativesTradepayables23,401,728---23,401,72823,401,728Insurancepremiumfunding121,247---121,247121,247Financeleaseliabilities450,053450,053439,719-1,339,8251,221,396Total23,973,028450,053439,719-24,862,80024,744,37154Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 55 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)2Financialriskmanagement(continued)(c)Liquidityrisk(continued)InassessingandmanagingliquidityrisksofitsderivativefinancialinstrumentstheGroupconsidersbothcontractualinflowsandoutflows.ThecontractualcashflowsoftheGroup’sderivativefinancialassetsandliabilitiesareallcurrent(within12months).Derivativefinancialinstrumentsreflectforwardexchangecontracts(seeNote11(c))thatwillbesettledonagrossbasis.3CriticalaccountingestimatesandjudgementsEstimatesandjudgementsarecontinuallyevaluatedandarebasedonhistoricalexperienceandotherfactors,includingexpectationsoffutureeventsthatmayhaveafinancialimpactontheentityandthatarebelievedtobereasonableunderthecircumstances.(a)CriticalaccountingestimatesandassumptionsThegroupmakesestimatesandassumptionsconcerningthefuture.Theresultingaccountingestimateswill,bydefinition,seldomequaltherelatedactualresults.Theestimatesandassumptionsthathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyeararediscussedbelow.(i)ImpairmenttestingofgoodwillThegrouptestsannuallywhethergoodwillhassufferedanyimpairment,inaccordancewiththeaccountingpolicystatedinnote1(i).Therecoverableamountsofcash-generatingunitshavebeendeterminedbasedonvalue-in-usecalculations.Thesecalculationsrequiretheuseofassumptions.Refertonote16fordetailsoftheseassumptionsandthepotentialimpactofchangestotheassumptions.(ii)ServiceandequipmentwarrantiesInaccordancewiththeaccountingpolicystatedinnote1(t),thegrouphasrecognisedwarrantyprovisionsattheendofthefinancialyearinrespectofpotentialclaimsforrectificationworkonsomeofitsEPCcontracts.Refertonote18inrelationtotheservicewarrantyprovisionsprovidedatperiodend.Theamountsprovidedtakesintoaccountthepercentagecompletionoftheproject,forecasttocompletecostsplusanyclose-outobligationsandpotentialcontractualliabilitiesduringthewarrantyperiod.(iii)Fixed-pricecontractsThegroupusesthepercentageofcompletionmethodinaccountingforitsrevenuefromfixed-sumcontracts.Thestageofcompletionismeasuredbyreferencetothecontractcostsincurredtodatecomparedtotheestimatedtotalcostsforthecontract.Significantassumptionsarerequiredtoestimatethetotalcontractcostsandtherecoverablevariationsworkthatwillaffectthestageofcompletionandthecontractrevenuerespectively.Inmakingtheseestimates,thegrouphasreliedonpastexperienceandbestavailableinformation.55Notes to the Consolidated Financial Statements 30 June 2018 (continued) 56 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)4Segmentinformation(a)DescriptionofsegmentsManagementhasdeterminedtheoperatingsegmentsbasedonthereportsreviewedbytheBoardofDirectorsthatareusedtomakestrategicdecisions.TheBoardconsidersthebusinessfrombothaproductandgeographicperspectiveandhasidentifiednineoperatingsegmentsofwhichfour(2017:four)arereportableinaccordancewiththerequirementsofAASB8.TheCorporateServicessegmentconsistsofmanagerialandlegalservicesprovidedtothegroupinadditiontostrategicinvestmentholdings.TheMineralssegmentconsistsofengineeringandrelatedservicesprovidedtotheextractiveminingindustry.Theclients,includingjuniorexplorationcompaniesandmajormultinationalproducers,aredevelopingprojectsforawiderangeofcommodities.Theseprojectsrangeinscopefromlargegreenfieldprojectsinvolvingprocessplantandequipment,civil,buildingworks,controlsystems,servicesandinfrastructuretosmallskid-mountedpilotplants.TheProcessIndustriessegmentconsistsofengineeringandrelatedservicesprovidedtothemanufacturingandrenewableenergyfacilitiesthroughoutAustraliaandSouthEastAsia.TheProjectServices-Africasegmentconsistsofprojectmanagement.constructionmanagementandcommissioningservicesprovidedtotheextractiveminingindustryinAfrica.Allotheroperatingsegmentsarenotreportableoperatingsegments,astheyfallunderthequantitativethresholdsofAASB8.Theresultsoftheseoperationsareincludedinthe'Other'column.Theremainingoperatingsegmentsthatarenotreportableconsistsof:Infrastructure:assetmanagement,engineering,architecturalandprojectdeliveryservicestoawiderangeofprivateandpublicclientsacrossAustralia.Metallurgical:metallurgicalconsultingprovidingarangeofservicestothemineralprocessingcommunity,primarilyinthefieldofcomminution,hydrometallurgyandmineralprocessingdesign.ProjectServicesAsia:provisionofdraftingservicestooffshoreLycopodiumentities.(b)SegmentinformationprovidedtotheBoardofDirectorsThesegmentinformationprovidedtotheBoardofDirectorsforthereportablesegmentsfortheyearended30June2018and30June2017areasfollows:56Notes to the Consolidated Financial Statements 30 June 2018 (continued) Corporate Services 2018 Asia Pacific Minerals North America Africa Project Services - Africa Industrial Process Other Total Total segment revenue $ 14,216,665 $ 117,526,791 $ 17,163,303 $ 32,692,363 $ 22,382,754 $ 9,840,954 $ 24,019,294 $ 237,842,124 Inter-segment revenue (13,580,951) (4,659,510) (6,777,315) - (8,665,611) (334,146) (9,255,700) (43,273,233) Revenue from external customers Profit / (Loss) before tax Interest in the profit of equity accounted joint ventures Depreciation and amortisation Income tax benefit / (expense) 635,714 112,867,281 10,385,988 32,692,363 13,717,143 9,506,808 14,763,594 194,568,891 (378,949) 18,004,649 1,167,134 1,705,232 4,559,880 (76,389) 1,403,966 26,385,523 696,487 416,194 - - - - - 1,112,681 153 716,478 70,962 219,818 1,653 59,249 160,166 1,228,479 443,258 (4,916,146) (302,819) (776,598) (1,179,354) (52,701) (172,728) (6,957,088) Total segment assets 22,478,193 65,123,623 9,446,818 17,106,363 7,641,097 5,118,600 11,782,914 138,697,608 Total assets includes: Investment in joint ventures Additions to non-current assets (other than financial assets and deferred tax) Total segment liabilities 1,493,641 1,274,049 - - - 864,816 129,863 256,563 - - - - 2,767,690 142,493 543,909 1,937,644 1,502,239 39,225,091 5,982,709 5,876,314 5,772,947 2,753,378 4,308,836 65,421,514 Lycopodium Annual Financial Report 2018 • 57 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)4Segmentinformation(continued)(b)SegmentinformationprovidedtotheBoardofDirectors(continued)CorporateServicesMineralsProjectServices-AfricaIndustrialProcessOther2018AsiaPacificNorthAmericaAfricaTotal$$$$$$$$Totalsegmentrevenue14,216,665117,526,79117,163,30332,692,36322,382,7549,840,95424,019,294237,842,124Inter-segmentrevenue(13,580,951)(4,659,510)(6,777,315)(8,665,611)(334,146)(9,255,700)(43,273,233)Revenuefromexternalcustomers635,714112,867,28110,385,98832,692,36313,717,1439,506,80814,763,594194,568,891Profit/(Loss)beforetax(378,949)18,004,6491,167,1341,705,2324,559,880(76,389)1,403,96626,385,523Interestintheprofitofequityaccountedjointventures696,487416,194-----1,112,681Depreciationandamortisation153716,47870,962219,8181,65359,249160,1661,228,479Incometaxbenefit/(expense)443,258(4,916,146)(302,819)(776,598)(1,179,354)(52,701)(172,728)(6,957,088)Totalsegmentassets22,478,19365,123,6239,446,81817,106,3637,641,0975,118,60011,782,914138,697,608Totalassetsincludes:Investmentinjointventures1,493,6411,274,049-----2,767,690Additionstonon-currentassets(otherthanfinancialassetsanddeferredtax)-864,816129,863256,563-142,493543,9091,937,644Totalsegmentliabilities1,502,23939,225,0915,982,7095,876,3145,772,9472,753,3784,308,83665,421,51457Notes to the Consolidated Financial Statements 30 June 2018 (continued) Corporate Services 2017 Asia Pacific Minerals North America Africa Project Services - Africa Industrial Process Other Total Total segment revenue $ 14,854,323 $ 137,132,984 $ 21,649,588 $ 41,116,856 $ 16,834,804 $ 4,179,161 $ 21,989,969 $ 257,757,685 Inter-segment revenue (14,741,676) (3,427,752) (7,614,681) (114,273) (5,316,980) (353,497) (9,572,384) (41,141,243) Revenue from external customers Profit / (Loss) before tax Interest in the profit of equity accounted joint ventures Depreciation and amortisation Income tax benefit / (expense) 112,647 133,705,232 14,034,907 41,002,583 11,517,824 3,825,664 12,417,585 216,616,442 788,088 9,080,813 (746,232) 984,779 2,784,941 (199,343) 1,877,816 14,570,862 927,295 91,956 - - - - - 1,019,251 153 593,629 76,075 309,152 3,831 31,048 157,876 1,171,764 711,881 (2,910,830) 80,616 (650,065) (402,807) 59,258 (822,144) (3,934,091) Total segment assets 22,748,913 66,636,322 4,725,219 17,556,315 14,545,417 4,082,881 10,070,508 140,365,575 Total assets includes: Investment in joint ventures Additions to non-current assets (other than financial assets and deferred tax) Total segment liabilities 1,369,880 857,855 - - - 1,482,555 16,935 58,764 - - - - 2,227,735 1,398 205,939 1,765,591 3,749,923 49,142,644 2,461,174 6,374,583 11,501,412 1,588,570 3,386,944 78,205,250 58 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)4Segmentinformation(continued)(b)SegmentinformationprovidedtotheBoardofDirectors(continued)CorporateServicesMineralsProjectServices-AfricaIndustrialProcessOther2018AsiaPacificNorthAmericaAfricaTotal$$$$$$$$Totalsegmentrevenue14,216,665117,526,79117,163,30332,692,36322,382,7549,840,95424,019,294237,842,124Inter-segmentrevenue(13,580,951)(4,659,510)(6,777,315)(8,665,611)(334,146)(9,255,700)(43,273,233)Revenuefromexternalcustomers635,714112,867,28110,385,98832,692,36313,717,1439,506,80814,763,594194,568,891Profit/(Loss)beforetax(378,949)18,004,6491,167,1341,705,2324,559,880(76,389)1,403,96626,385,523Interestintheprofitofequityaccountedjointventures696,487416,194-----1,112,681Depreciationandamortisation153716,47870,962219,8181,65359,249160,1661,228,479Incometaxbenefit/(expense)443,258(4,916,146)(302,819)(776,598)(1,179,354)(52,701)(172,728)(6,957,088)Totalsegmentassets22,478,19365,123,6239,446,81817,106,3637,641,0975,118,60011,782,914138,697,608Totalassetsincludes:Investmentinjointventures1,493,6411,274,049-----2,767,690Additionstonon-currentassets(otherthanfinancialassetsanddeferredtax)-864,816129,863256,563-142,493543,9091,937,644Totalsegmentliabilities1,502,23939,225,0915,982,7095,876,3145,772,9472,753,3784,308,83665,421,51457Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 59 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)4Segmentinformation(continued)(c)Othersegmentinformation(i)SegmentrevenueSalesbetweensegmentsarecarriedoutatarm'slengthandareeliminatedonconsolidation.TherevenuefromexternalpartiesreportedtotheboardofDirectorsismeasuredinamannerconsistentwiththatintheconsolidatedstatementofprofitorlossandothercomprehensiveincome.TheentityisdomiciledinAustralia.TheresultofitsrevenuefromexternalcustomersinAustraliais$59,271,697(2017:$24,016,675),andthetotalofrevenuefromexternalcustomersfromothercountriesis$135,297,193(2017:$192,599,767).Segmentrevenuesareallocatedbasedonthecountryinwhichthecustomerislocated.Revenuesofapproximately$70,186,213(2017:$91,090,536)arederivedfromthetop3customers.TheserevenuesareattributabletotheMineralssegment.(ii)SegmentprofitbeforetaxTheboardofDirectorsassessestheperformanceoftheoperatingsegmentsbasedonameasureofadjustedprofitbeforetax.Areconciliationofsegmentprofitbeforetaxtotheprofitbeforetaxintheconsolidatedstatementofprofitorlossandothercomprehensiveincomeisprovidedasfollows:Consolidated2018$2017$Segmentprofitbeforetax26,385,52314,570,862Goodwillimpairment(1,095,048)(263,242)Profitbeforeincometaxasperstatementofcomprehensiveincome25,290,47514,307,620(iii)SegmentassetsTheamountsprovidedtotheboardofDirectorswithrespecttototalassetsaremeasuredinamannerconsistentwiththatofthefinancialreport.Theseassetsareallocatedbasedontheoperationsofthesegmentandthephysicallocationoftheasset.Reportablesegments'assetsarereconciledtototalassetsasfollows:Consolidated2018$2017$Segmentassets138,697,608140,365,575Intersegmenteliminations(6,091,111)(4,180,052)Intangiblesarisingonconsolidation6,126,2287,221,276Totalassetsaspertheconsolidatedbalancesheet138,732,725143,406,799Thetotalofnon-currentassetsotherthanfinancialinstrumentsanddeferredtaxassetsinAustraliais$13,303,765(2017:$9,968,180),andothercountriesis$1,278,891(2017:$3,400,482).59Notes to the Consolidated Financial Statements 30 June 2018 (continued) 60 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)4Segmentinformation(continued)(c)Othersegmentinformation(continued)(iv)SegmentliabilitiesTheamountsprovidedtotheboardofDirectorswithrespecttototalliabilitiesaremeasuredinamannerconsistentwiththatofthefinancialreport.Theseliabilitiesareallocatedbasedontheoperationsofthesegment.Reportablesegments'liabilitiesarereconciledtototalliabilitiesasfollows:Consolidated2018$2017$Segmentliabilities65,421,51478,205,250Intersegmenteliminations(6,039,199)(4,021,783)Totalliabilitiesaspertheconsolidatedbalancesheet59,382,31574,183,4675RevenueConsolidated2018$2017$FromoperationsSalesrevenueContractrevenue192,016,864214,817,550OtherrevenueRentsandsub-leaserentals68,88859,803Bankinterest1,883,7051,639,559Otherrevenue599,43499,5302,552,0271,798,892Totalrevenuefromoperations194,568,891216,616,44260Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 61 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)6ExpensesConsolidated2018$2017$Profitbeforeincometaxincludesthefollowingspecificexpenses:DepreciationFixturesandfittings528,652649,407Leaseholdimprovements52,83060,331Leasedplantandequipment454,110160,172Motorvehicles9,95618,826Totaldepreciation1,045,548888,736AmortisationComputersoftware182,931283,028Totaldepreciationandamortisation1,228,4791,171,764FinancecostsInterestandfinancechargespaid/payable120,74193,651Netforeignexchange(gains)/losses(543,812)433,067Netlossondisposalofproperty,plantandequipment2,0801,634RentalexpenserelatingtooperatingleasesMinimumleasepayments8,577,4948,052,368Definedcontributionsuperannuationexpense2,791,8042,604,28861Notes to the Consolidated Financial Statements 30 June 2018 (continued) 62 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)7Incometaxexpense(a)IncometaxexpenseConsolidated2018$2017$Currenttax11,841,3884,879,361Deferredtax(4,533,986)(1,184,980)Adjustmentsforcurrenttaxofpriorperiods(350,314)239,7106,957,0883,934,091Deferredincometaxexpense/(benefit)includedinincometaxexpensecomprises:Increaseindeferredtaxassets(note15)(4,345,535)(1,464,815)(Decrease)/increaseindeferredtaxliabilities(note19)(188,451)279,835(4,533,986)(1,184,980)(b)NumericalreconciliationofincometaxexpensetoprimafacietaxpayableConsolidated2018$2017$Profitbeforeincometaxexpense25,290,47514,307,620TaxattheAustraliantaxrateof30%(2017:30%)7,587,1434,292,286Taxeffectofamountswhicharenotdeductible(taxable)incalculatingtaxableincome:Goodwillimpairment328,51478,973Sundryitems191,858278,6888,107,5154,649,947Adjustmentsforcurrenttaxofpriorperiods-under/(over)provisionofprioryearincometax(350,314)239,710Differenceinoverseastaxrates(567,357)(267,374)Previouslyunrecognisedtaxlossesnowrecoupedtoreducecurrenttaxexpense-(466,812)Deferredtaxesnotrecognised101,04884,395Shareofnetprofitofjointventuresaccountedforusingtheequitymethod(333,804)(305,775)Totalincometaxexpense/(benefit)6,957,0883,934,091(32,247,563)(18,241,711)62Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 63 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)7Incometaxexpense(continued)(c)AmountsrecogniseddirectlyinequityConsolidated2018$2017$Aggregatecurrentanddeferredtaxarisinginthereportingperiodandnotrecognisedinnetprofitorlossorothercomprehensiveincomebutdirectlydebitedorcreditedtoequity:Currenttax-debiteddirectlytoequity139,5053(d)TaxconsolidationThecompanyandits100%ownedAustralianentitiesformedataxconsolidatedgroupon1July2013.MembersoftheconsolidatedgrouphaveenteredintoataxsharingagreementinordertoallocateincometaxexpensetothewhollyownedAustralianentitiesonapro-ratabasis.Theagreementprovidesfortheallocationofincometaxliabilitiesbetweentheentitiesshouldtheheadentitydefaultonitstaxpaymentobligations.Atbalancedate,thepossibilityofdefaultisremote.TheheadentityofthetaxconsolidatedgroupisLycopodiumLimited.TaxeffectaccountingbymembersofthetaxconsolidatedgroupMembersofthetaxconsolidatedgrouphaveenteredintoataxfundingagreementeffectivefrom1July2013.Thetaxfundingagreementprovidesfortheallocationofcurrenttaxestomembersofthetaxconsolidatedgroup.Deferredtaxesareallocatedtomembersofthetaxconsolidatedgroupinaccordancewiththegroupallocationapproach,whichisconsistentwiththeprinciplesofAASB112IncomeTaxes.Theallocationoftaxesunderthetaxfundingagreementisrecognisedasanincrease/(decrease)inthememberentities’intercompanyaccountswiththetaxconsolidatedgroupheadcompany,LycopodiumLimited.Inthisregard,thecompanyhasassumedthebenefitoftaxlossesfromthememberentitiesasofthebalancedate.Thenatureofthetaxfundingagreementissuchthatnotaxconsolidatedcontributionsbyordistributionstoparticipant'sequityarerequired.63Notes to the Consolidated Financial Statements 30 June 2018 (continued) 64 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)8Currentassets-CashandcashequivalentsConsolidated2018$2017$Cashatbankandinhand74,287,78885,334,768(a)RiskexposureThegroup'sexposuretointerestrateriskisdiscussedinnote2.Themaximumexposuretocreditriskattheendofthereportingperiodisthecarryingamountofeachclassofcashandcashequivalentsmentionedabove.9Currentassets-TradeandotherreceivablesConsolidated2018$2017$Tradereceivables32,933,66336,833,250Allowanceforimpairmentofreceivables(a)(877,744)(2,342,738)32,055,91934,490,512GSTandotherreceivables4,305,3901,593,490Cashadvancedtoemployees35,32862,420Loantoassociates1,220,000772,8665,560,7182,428,77637,616,63736,919,288(a)ImpairedtradereceivablesAsat30June2018,currenttradereceivablesofthegroupwiththevalueof$877,743(2017:$2,342,738)wereimpaired,withtheamountsbeingfullyprovidedfor.Theageingofthesereceivablesareasfollows:Consolidated2018$2017$61to90days-43,47591to120days-207,520121to210days-381,674211daysorover877,7431,710,069877,7432,342,73864Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 65 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)9Currentassets-Tradeandotherreceivables(continued)(a)Impairedtradereceivables(continued)Movementsintheprovisionforimpairmentofreceivablesareasfollows:Consolidated2018$2017$At1July2,342,737859,424Provisionforimpairmentrecognisedduringtheyear65,5671,527,262Receivableswrittenoffduringtheyearasuncollectable(546,798)(288,079)Unusedamountsreversed(988,877)244,625Exchangedifference5,114(495)At30June877,7432,342,737Theotherclasseswithintradeandotherreceivablesdonotcontainimpairedassets.(b)PastduebutnotimpairedAsof30June2018,tradereceivablesof$9,118,811(2017:$6,634,696)werepastduebutnotimpaired.Theserelatetoanumberofindependentcustomersforwhomthereisnorecenthistoryofdefault.Theageinganalysisofthesetradereceivablesisasfollows:Consolidated2018$2017$31to60days3,109,0894,236,36261to90days4,325,781503,73391to120days540,8351,183,188121to210days671,938330,939211daysandover471,168380,4749,118,8116,634,696(c)RiskexposureInformationaboutthegroup'sexposuretoforeignexchangeriskandinterestrateriskisprovidedinnote2.(d)FairvalueandcreditriskDuetotheshort-termnatureofthesereceivables,theircarryingamountisassumedtoapproximatetheirfairvalue.Themaximumexposuretocreditriskatthereportingdateisthefairvalueofeachclassofreceivablesmentionedabove.Thegroupdoesnotholdanycollateralassecurity.Refertonote2formoreinformationontheriskmanagementpolicyofthegroup.65Notes to the Consolidated Financial Statements 30 June 2018 (continued) 66 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)10Currentassets-OthercurrentassetsConsolidated2018$2017$Othercurrentassets(a)778,401569,742Prepayments962,4501,579,9451,740,8512,149,687(a)OthercurrentassetsOthercurrentassetsconsistofdepositsheldwithlicensedbanksassecurity/bondonthevariouspropertiesleasedbythegroup.11Financialassetsandliabilities(a)CategoriesoffinancialassetsandliabilitiesNote1(m)providesadescriptionofeachcategoryoffinancialassetsandliabilitiesandtherelatedaccountingpolicies.Thecarryingamountsoffinancialassetsandliabilitiesineachcategoryareasfollows:FinancialassetsConsolidated-At30June2018NoteAvailableforsale$Derivativesusedforhedging$Loansandreceivablesatamortisedcost$Total$Cashandcashequivalents8--74,287,78874,287,788Tradeandotherreceivables9--37,616,63737,616,637Depositsheldwithbanks10--778,401778,401Available-for-salefinancialassets11(b)1,256,106--1,256,106OtherReceivables12--332,356332,3561,256,106-113,015,182114,271,288Consolidated-At30June2017Cashandcashequivalents8--85,334,76985,334,769Tradeandotherreceivables9--36,919,28836,919,288Depositsheldwithbanks10--569,742569,742Derivativefinancialassets-164,994-164,994Available-for-salefinancialassets11(b)102,963--102,963OtherReceivables12--442,616442,616102,963164,994123,266,415123,534,37266Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 67 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)11Financialassetsandliabilities(continued)(a)Categoriesoffinancialassetsandliabilities(continued)FinancialliabilitiesConsolidated-At30June2018NoteLiabilitiesatfairvaluethroughprofitorloss$Derivativesusedforhedging$Liabilitiesatamortisedcost$Total$Tradeandotherpayables--12,980,39312,980,393Borrowings11(d)--1,258,9711,258,971Derivativefinancialliabilities-27,694-27,694-27,69414,239,36414,267,058Consolidated-At30June2017Tradeandotherpayables--23,401,72523,401,725Borrowings11(d)--1,342,6431,342,643--24,744,36824,744,368AdescriptionoftheGroup’sfinancialinstrumentrisks,includingriskmanagementobjectivesandpoliciesisgiveninNote2.ThemethodsusedtomeasurefinancialassetsandliabilitiesreportedatfairvaluearedescribedinNote2.(b)AvailableforsalefinancialassetsThedetailsandcarryingamountsofAFSfinancialassetsareasfollows:Consolidated2018$2017$Balanceatthebeginningoftheyear102,963102,953Revaluationgaintransferredtoequity465,01510Saleofavailable-for-salefinancialassets(265,747)-Sharesreceivedinlieuofpaymentofservices878,875-Purchasesofavailable-for-salefinancialassets75,000-Balanceatendofyear1,256,106102,96367Notes to the Consolidated Financial Statements 30 June 2018 (continued) 68 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)11Financialassetsandliabilities(continued)(c)DerivativefinancialinstrumentsTheGroup’sderivativefinancialinstrumentsaremeasuredatfairvalueandaresummarisedbelow:Consolidated2018$2017$CurrentassetsOtherhedginginstruments-164,994Totalcurrentderivativefinancialinstrumentassets-164,994CurrentliabilitiesOtherhedginginstruments27,694-Totalcurrentderivativefinancialinstrumentliabilities27,694-(27,694)164,994TheGroupusesforwardforeignexchangecontractstomitigateexchangerateexposurearisingpredominantlyfromforecastsalesinUSdollars.Allforwardexchangecontractsareconsideredbymanagementtobepartofeconomichedgearrangementsbuthavenotbeenformallydesignated.TheGroup’sUS-dollarforwardcontractsrelatetocashflowsthathavebeenforecastedforJuly2018toDecember2018.Allforecasttransactionsareexpectedtooccur.During2018alossof$483,288(2017:lossof$257,091)wasrecognisedinprofitandlossasaresultoffair-valuingthederivativeinstrumentatyearend.(d)BorrowingsBorrowingsincludethefollowingfinancialliabilities:Consolidated20182017Carryingamountatamortisedcosts:Current$Non-current$Total$Current$Non-current$Total$SecuredLeaseliabilities478,216562,0661,040,282388,484832,9121,221,396Totalsecuredborrowings478,216562,0661,040,282388,484832,9121,221,396UnsecuredOtherloans218,689-218,689121,247-121,247Totalunsecuredborrowings218,689-218,689121,247-121,247Totalborrowings696,905562,0661,258,971509,731832,9121,342,643AllborrowingsaredenominatedinAUD.BankborrowingsaresecuredbyplantandequipmentownedbytheGroup.Currentinterestratesarevariableandaverage5.57%(2017:7.22%).Thecarryingamountofbankborrowingsisconsideredtobeareasonableapproximationoffairvalue.68Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 69 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)11Financialassetsandliabilities(continued)(e)FairvaluemeasurementFinancialassetsandliabilitiesmeasuredatfairvalueintheBalanceSheetaregroupedintothreeLevelsofafairvaluehierarchy.ThethreeLevelsaredefinedbasedontheobservabilityofsignificantinputstothemeasurement,asfollows:•Level1:quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities•Level2:inputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectlyorindirectly•Level3:unobservableinputsfortheassetorliability.ThefollowingtableshowstheLevelswithinthehierarchyoffinancialassetsandliabilitiesmeasuredatfairvalueonarecurringbasisat30June2018and30June2017.Level1Level2Level3TotalConsolidated-At30June2018$$$$Financialassets/(liabilities)ListedSecurities1,256,106--1,256,106Foreigncurrencyforwardcontracts-(27,694)-(27,694)Netfairvalue1,256,106(27,694)-1,228,412Level1Level2Level3TotalConsolidated-At30June2017$$$$Financialassets/(liabilities)ListedSecurities102,963--102,963Foreigncurrencyforwardcontracts-164,994-164,994Netfairvalue102,963164,994-267,957TherewerenotransfersbetweenLevel1andLevel2in2018and2017.MeasurementoffairvalueoffinancialinstrumentsTheGroup’sfinanceteamperformsvaluationsoffinancialitemsforfinancialreportingpurposes,inconsultationwiththirdpartyvaluationspecialistsforcomplexvaluations,whererequired.Valuationtechniquesareselectedbasedonthecharacteristicsofeachinstrument,withtheoverallobjectiveofmaximisingtheuseofmarket-basedinformation.ThefinancialteamreportsdirectlytotheChiefFinancialOfficerandtotheauditcommittee.ThevaluationtechniquesusedforinstrumentscategorisedinLevel2aredescribedbelow:Foreigncurrencyforwardcontracts(Level2)TheGroup’sforeigncurrencyforwardcontractsarenottradedinactivemarkets.Thesehavebeenfairvaluedusingobservableforwardexchangeratesandinterestratescorrespondingtothematurityofthecontract.Theeffectsofnon-observableinputsarenotsignificantforforeigncurrencyforwardcontracts.12Non-currentassets-OtherreceivablesConsolidatedNotes2018$2017$Loansunderseniormanagementshareacquisitionplan33(a)332,356442,616(a)ImpairedreceivablesandreceivablespastdueNoneofthenon-currentreceivablesareimpairedorpastduebutnotimpaired.69Notes to the Consolidated Financial Statements 30 June 2018 (continued) 70 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)13Non-currentassets-InvestmentsaccountedforusingtheequitymethodConsolidated2018$2017$Investmentinjointventures1,274,049857,856Investmentinassociates1,493,6411,369,8792,767,6902,227,735(a)InvestmentinjointventuresThegrouphasonematerialjointventure,PilbaraEPCMPtyLtd("PEPL").ProportionofOwnershipInterestHeldbytheGroupNameofJointVentureCountryofIncorporation&PrincipalPlaceofBusinessPrincipalActivities20182017PilbaraEPCMPtyLtdAustraliaEngineering,procurement,constructionmanagementservices50%50%TheinvestmentinPEPLisaccountedforusingtheequitymethodinaccordancewithAASB128.SummarisedfinancialinformationforPEPLissetoutbelow:20182017$$Currentassets(a)2,636,2182,661,470Non-currentassets--Totalassets2,636,2182,661,470Currentliabilities(b)65,125333,855Non-currentliabilities(c)-611,908Totalliabilities65,125945,763a.Includescashandcashequivalents2,636,2182,653,672b.Includescurrentfinancialliabilities(excludingtradeandotherpayablesandprovisions)--c.Includesnon-currentfinancialliabilities(excludingtradeandotherpayablesandprovisions)--70Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 71 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)13Non-currentassets-Investmentsaccountedforusingtheequitymethod(continued)20182017$$Revenue37,4281,605,130Profitfortheyear23,001183,912Depreciationandamortisation--Interestincome37,42830,973Interestexpense--Taxexpense-66,784AreconciliationoftheabovesummarisedfinancialinformationtothecarryingamountoftheinvestmentinPEPLissetoutbelow:20182017$$TotalnetassetsofPEPL2,548,0981,715,707ProportionofownershipinterestheldbytheGroup50%50%CarryingamountoftheinvestmentinPEPL1,274,049857,856NodividendswerereceivedduringtheyearfromPEPL(2017:$250,000).PEPLisaPrivateCompany;thereforenoquotedmarketpricesareavailableforitsshares.Theinvestmentiscurrentlyintheprocessofbeingwound-up.In2017,Lycopodium(40%)andMonadelphousGroupLtd(60%)formedanincorporatedjointventure,MondiumPtyLtd("Mondium").Mondium'spurposeistotargetanddeliverengineering,procurementandconstruction(EPC)projectsinthemineralsprocessingsector,domesticallyandwithinselectedinternationalmarkets.Mondiumisaprivatecompany,withnoquotedmarketpricesavailableforitsshares.Theinvestmentiscurrentlycarriedatanilvalue(2017:Nil).71Notes to the Consolidated Financial Statements 30 June 2018 (continued) 72 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)13Non-currentassets-Investmentsaccountedforusingtheequitymethod(continued)(b)InvestmentinassociatesTheGrouphasonematerialinvestmentinassociate,ECGEngineeringPtyLtd,anelectricalengineeringconsultancybasedinPerth,Australia.ProportionofOwnershipInterestHeldbytheGroupNameofJointVentureCountryofIncorporation&PrincipalPlaceofBusinessPrincipalActivities20182017ECGEngineeringPtyLtdAustraliaElectricalengineering31%31%SummarisedfinancialinformationoftheGroup'sshareintheassociates:20182017$$Profitfromcontinuingoperations696,487927,295Othercomprehensiveincome--Totalcomprehensiveincome696,487927,295.CarryingamountoftheGroup'sinterestinassociates1,493,6411,369,87972Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 73 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)14Non-currentassets-Property,plantandequipmentFixturesandfittings$Motorvehicles$Leaseholdimprovements$Leasedplantandequipment$Total$At1July2016Costorfairvalue6,798,763212,142783,485-7,794,390Accumulateddepreciation(5,035,009)(143,096)(272,489)-(5,450,594)Netbookamount1,763,75469,046510,996-2,343,796Yearended30June2017Openingnetbookamount1,763,75469,046510,996-2,343,796Additions297,450-38,3621,379,6631,715,475Disposal(4,180)(4,904)--(9,084)Depreciationcharge(649,407)(18,826)(60,331)(160,172)(888,736)Transferstointangibleassets(9,650)---(9,650)Exchangedifferences29,4771,800(8,904)-22,373Closingnetbookamount1,427,44447,116480,1231,219,4913,174,174At30June2017Costorfairvalue6,935,104186,962798,3311,379,6639,300,060Accumulateddepreciation(5,507,660)(139,846)(318,208)(160,172)(6,125,886)Netbookamount1,427,44447,116480,1231,219,4913,174,174Yearended30June2018Openingnetbookamount1,427,44447,116480,1231,219,4913,174,174Additions981,618-71,490253,0061,306,114Disposal(2,482)---(2,482)Depreciationcharge(528,652)(9,956)(52,830)(454,110)(1,045,548)Exchangedifferences(2,674)(141)5,044-2,229Closingnetbookamount1,875,25437,019503,8271,018,3873,434,487At30June2018Cost7,480,514179,528862,3321,632,66810,155,042Accumulateddepreciation(5,605,260)(142,509)(358,505)(614,281)(6,720,555)Netbookamount1,875,25437,019503,8271,018,3873,434,48773Notes to the Consolidated Financial Statements 30 June 2018 (continued) 74 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)15Non-currentassets-DeferredtaxassetsConsolidated2018$2017$Thebalancecomprisestemporarydifferencesattributableto:Unusedtaxlosses138,37137,422Employeebenefits2,513,5222,177,976Doubtfuldebts24,688408,877Accruedexpenses107,421110,965Deferredrevenue649,359209,886Otherprovisions5,446,7461,516,230Financeleases312,084366,4199,192,1914,827,775Set-offofdeferredtaxliabilitiespursuanttoset-offprovisions(note19)(841,393)(1,029,845)Netdeferredtaxassets8,350,7983,797,930Deferredtaxassetsexpectedtoberecoveredwithin12months8,385,7564,108,718Deferredtaxassetsexpectedtoberecoveredaftermorethan12months806,435719,0579,192,1914,827,775MovementsDoubtfuldebts$EmployeeBenefits$Deferredrevenue$Accruedexpenses$Otherprovisions$FinanceLeases$Unusedtaxlosses$Total$At1July2016142,4422,089,752160,935174,696(4,299)-969,0253,532,551Credited/(charged)-toprofitorloss266,43588,22448,951(63,731)1,520,532366,419(762,016)1,464,814-directlytoequity----(3)--(3)Utilisationofrecognisedlosses------(161,657)(161,657)Exchangeratedifferences------(7,930)(7,930)At30June2017408,8772,177,976209,886110,9651,516,230366,41937,4224,827,775At1July2017408,8772,177,976209,886110,9651,516,230366,41937,4224,827,775(Charged)/credited-toprofitorloss(384,189)335,546439,473(3,544)4,070,021(54,335)(57,437)4,345,535-directlytoequity----(139,505)--(139,505)Reversalofrecognisedlosses------158,386158,386At30June201824,6882,513,522649,359107,4215,446,746312,084138,3719,192,19174Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 75 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)16Non-currentassets-IntangibleassetsGoodwill$Software$Customercontracts$Total$At1July2016Cost8,885,4061,934,790315,00011,135,196Accumulatedamortisationandimpairment(1,319,822)(1,592,621)(315,000)(3,227,443)Netbookamount7,565,584342,169-7,907,753Yearended30June2017Openingnetbookamount7,565,564342,169-7,907,733Additions-50,116-50,116Amortisationcharge*-(283,028)-(283,028)Impairmentlossrecognised(263,242)--(263,242)Transfersfromproperty,plantandequipment-9,650-9,650Exchangedifferences-(56)-(56)Closingnetbookamount7,302,322118,851-7,421,173Cost8,885,4061,878,728315,00011,079,134Accumulatedamortisationandimpairment(1,583,084)(1,759,877)(315,000)(3,657,961)Netbookamount7,302,322118,851-7,421,173Goodwill$Software$Customercontracts$Total$Yearended30June2018Openingnetbookamount7,302,322118,851-7,421,173Additions-631,529-631,529Amortisationcharge*-(182,931)-(182,931)Impairmentlossrecognised(1,095,048)--(1,095,048)Disposal-17,895-17,895Exchangedifferences-(601)-(601)Closingnetbookamount6,207,274584,743-6,792,017At30June2018Cost8,885,4062,478,811315,00011,679,217Accumulatedamortisation(2,678,132)(1,894,068)(315,000)(4,887,200)Netbookamount6,207,274584,743-6,792,017*Groupamortisationof$182,931(2017:$283,028)isincludedindepreciationandamortisationexpenseinthestatementofcomprehensiveincome.75Notes to the Consolidated Financial Statements 30 June 2018 (continued) 76 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)16Non-currentassets-Intangibleassets(continued)(a)ImpairmenttestsforgoodwillGoodwillisallocatedtothegroupcash-generatingunits(CGUs)identifiedaccordingtobusinesssegmentandcountryofoperation.Asegment-levelsummaryofthegoodwillallocationispresentedbelow.2018Australia$Othercountries$Total$Minerals3,622,9912,465,0266,088,017Metallurgical119,257-119,2573,742,2482,465,0266,207,2742017Australia$Othercountries$Total$Minerals3,622,9912,465,0266,088,017Infrastructure(previouslyMaintenance)1,095,048-1,095,048Metallurgical119,257-119,2574,837,2962,465,0267,302,322(b)Keyassumptionsusedforvalue-in-usecalculationsTherecoverableamountofeachCGUwithinthebusinesssegmentisdeterminedonthebasisofvalue-in-use('VIU').Thefollowingdescribestheassumptionsonwhichmanagementhasbaseditscashflowprojectionswhendeterminingvalueinuse:GrowthratesDiscountrates2018%2017%2018%2017%Minerals2.52.53.24.0ProcessIndustries---4.0Infrastructure1.02.53.24.0Metallurgical2.52.53.24.0GrowthrateThegrowthraterepresentsasteadyindexationratewhichdoesnotexceedmanagement'sexpectationsofthelongtermaveragegrowthrateforthebusinessinwhicheachCGUoperates.DiscountrateFortheAustralianCGUs,thepre-taxdiscountrateappliedtocashflowprojectionsis3.2%(2017:4.0%)andfortheMineralsCGUsinothercountries,thepre-taxdiscountrateis9.2%(2017:9.0%).CashflowsVIUcalculationsusecashflowprojectionsfromapprovedbudgetsbasedonpastperformanceanditsexpectationsforthefuturecoveringathreeyearperiod.76Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 77 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)16Non-currentassets-Intangibleassets(continued)(b)Keyassumptionsusedforvalue-in-usecalculations(continued)RevenueValue-in-usemodelisbasedonbudgetapprovedbytheBoard.Theforecastbudgetprocesswasdevelopedbasedonrevenueexpectationsfortheyearbuiltaroundexistingcustomercontractsalongwiththepotentialtodevelopnewmarketsandsustaingrowth.SensitivitiesTheBoardhasperformedsensitivitiesaroundallkeyassumptionsdisclosedabove.TherearenofluctuationstoanyoftheassumptionsthatcouldreasonablyoccurthatwouldcausetherecoverableamountoftheCGUtobeequivalenttothatofthecarryingamountoftheCGUsassets.(c)CashflowassumptionsMinerals,InfrastructureandMetallurgicalTheforecastwasadjustedin2018forthedeclineinassetmanagementservicesintheInfrastructuresegmentduetoincreasedcompetitioninthesector.Asaresult,theBoardexpectslowergrowthanddecliningprofitmarginsforthissegment.Impairmenttesting,takingintoaccounttheselatestdevelopments,resultedinareductioningoodwillin2018of$1,095,048.Therelatedgoodwillimpairmentlossof$1,095,048wasincludedwithinimpairmentofnon-financialassets.Apartfromtheconsiderationdescribedindeterminingthevalue-in-useofthecash-generatingunitsdescribedabove,theBoardisnotcurrentlyawareofanyotherprobablechangesthatwouldnecessitatechangesinitskeyestimates.77Notes to the Consolidated Financial Statements 30 June 2018 (continued) 78 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)17Currentliabilities-TradeandotherpayablesConsolidated2018$2017$Tradepayables6,198,80410,225,530Revenuereceivedinadvance8,602,05332,659,785Goodsandservicestax(GST)payable2,330,610708,415Sundrycreditorsandaccruedexpenses6,781,58613,176,194Employeebenefitobligations(a)7,836,1767,311,04231,749,22964,080,966Includedintheabovearefinancialliabilitiesof$12,980,390(2017:$23,401,725).(a)Amountsnotexpectedtobesettledwithinthenext12monthsEmployeebenefitobligationsincludeaccrualsforannualleaveandunconditionalentitlementsoflongserviceleave.Theentireobligationispresentedascurrent,sincethegroupdoesnothaveanunconditionalrighttodefersettlement.However,basedonpastexperience,thegroupdoesnotexpectallemployeestotakethefullamountofaccruedleavewithinthenext12months.Thefollowingamountsreflectleavethatisnotexpectedtobetakenwithinthenext12months:Consolidated2018$2017$Annualleaveobligationexpectedtobesettledafter12months1,142,739922,499Longserviceleaveobligationexpectedtobesettledafter12months1,118,000973,5632,260,7391,896,062(b)RiskexposuresDetailsofthegroup'sexposuretoforeignexchangeriskisprovidedinnote2.78Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 79 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)18Currentliabilities-ProvisionsConsolidated2018$2017$Serviceandequipmentwarranties16,361,0094,280,795(a)Movementsinprovisions2018Serviceandequipmentwarranties$Total$Carryingamountatbeginningofyear4,280,7954,280,795Provisionsrecognised12,080,21412,080,214Carryingamountatendofyear16,361,00916,361,009Thegrouprecognisesserviceandequipmentwarrantyprovisionsinaccordancewithitscurrentpolicy.Theamountprovidedtakesintoaccountthepercentagecompletionoftheproject,forecasttocompletecostsplusanyclose-outobligationsandpotentialcontractualliabilitiesduringthewarrantyperiod.Theincreaseinthebalanceforthefinancialyearended30June2018reflectsmultiplemajorprojectsnearingcompletionorhavingbeencompleted.79Notes to the Consolidated Financial Statements 30 June 2018 (continued) 80 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)19Non-currentliabilities-DeferredtaxliabilitiesConsolidated2018$2017$Thebalancecomprisestemporarydifferencesattributableto:Accruedincome299,562318,275Otherprovisions15,973145,049Depreciation&Amortisation485,481525,882Prepaidexpenses40,37740,639841,3931,029,845Set-offofdeferredtaxliabilitiespursuanttoset-offprovisions(note15)(841,393)(1,029,845)Netdeferredtaxliabilities--Deferredtaxliabilitiesexpectedtobesettledwithin12months355,912503,963Deferredtaxliabilitiesexpectedtobesettledaftermorethan12months485,481525,882841,3931,029,845MovementsDepreciation&amortisation$Accruedincome$Otherprovisions$Prepaidexpenses$Total$At1July2016235,475321,126169,38824,021750,010Charged/(credited)-profitorloss290,407(2,851)(24,339)16,618279,835At30June2017525,882318,275145,04940,6391,029,845At1July2017525,882318,275145,04940,6391,029,845Charged/(credited)-profitorloss(40,401)(18,713)(129,076)(262)(188,452)At30June2018485,481299,56215,97340,377841,39320Non-currentliabilities-ProvisionsConsolidated2018$2017$Employeebenefits-longserviceleave416,531500,79680Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 81 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)21Contributedequity(a)Sharecapital2018Shares2017Shares2018$2017$OrdinarysharesFullypaid39,732,37339,732,37320,823,77220,823,772(b)MovementsinordinarysharecapitalDateDetailsNumberofsharesIssueprice$1July2016Openingbalance39,732,37320,823,772Nomovementsduringtheperiod--30June2017Closingbalance39,732,37320,823,7721July2017Openingbalance39,732,37320,823,772Nomovementsduringtheperiod--30June2018Closingbalance39,732,37320,823,772(c)OrdinarysharesOnashowofhandseveryholderofordinarysharespresentatameetinginpersonorbyproxy,isentitledtoonevote,anduponapolleachshareisentitledtoonevote.(d)CapitalriskmanagementThegroup'sobjectiveswhenmanagingcapitalaretosafeguarditsabilitytocontinueasagoingconcern,sothatitcancontinuetoprovidereturnsforshareholdersandbenefitsforotherstakeholdersandtomaintainanoptimalcapitalstructuretoreducethecostofcapital.Inordertomaintainoradjustthecapitalstructure,thegroupmayadjusttheamountofdividendspaidtoshareholders,returncapitaltoshareholders,issuenewsharesorsellassetstoreducedebt.Consistentwithothersintheindustry,thegroupmonitorscapitalonthebasisofthegearingratio.Thisratioiscalculatedasnetdebtdividedbytotalcapital.Netdebtiscalculatedastotalborrowings(including'borrowings'and'tradeandotherpayables'asshownintheconsolidatedbalancesheet)lesscashandcashequivalents.Totalcapitaliscalculatedas'equity'asshownintheconsolidatedbalancesheet(includingnon-controllinginterests)plusnetdebt.81Notes to the Consolidated Financial Statements 30 June 2018 (continued) 82 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)21Contributedequity(continued)(d)Capitalriskmanagement(continued)During2018,thegroup'sstrategywastomaintainagearinglessthan40%.Thegearingratiosat30June2018and30June2017wereasfollows:Consolidated2018$2017$Totalborrowings(includingpayables)33,008,20365,423,613Less:cashandcashequivalents(74,287,788)(85,334,768)Netdebt(41,279,585)(19,911,155)Totalequity76,373,48666,248,097Totalcapital35,093,90146,336,942Gearingratio(54)%(30)%22Reservesandretainedearnings(a)OtherreservesConsolidated2018$2017$Available-for-saleinvestmentrevaluationreserve241,588(83,923)Foreigncurrencytranslationreserve(930,627)(904,119)(689,039)(988,042)Consolidated2018$2017$Movements:Available-for-saleinvestmentrevaluationreserveBalance1July(83,923)(83,930)Revaluation-gross465,01510Deferredtax(139,504)(3)Balance30June241,588(83,923)PerformancerightsreserveBalance1July-259,037Expiryofperformancerights-(259,037)Balance30June--ForeigncurrencytranslationreserveBalance1July(904,119)(1,016,051)Currencytranslationdifferencesarisingduringtheyear(26,508)111,932Balance30June(930,627)(904,119)82Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 83 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)22Reservesandretainedearnings(continued)(b)RetainedearningsConsolidated2018$2017$Balance1July46,412,36941,285,494Profitfortheyear18,170,18610,292,083Dividendspaidorpayable(8,343,798)(5,165,208)Balance30June56,238,75746,412,369(c)Natureandpurposeofotherreserves(i)Available-for-saleinvestmentsrevaluationreserveChangesinthefairvalueandexchangedifferencesarisingontranslationofinvestments,suchasequities,classifiedasavailable-for-salefinancialassets,arerecognisedinothercomprehensiveincomeasdescribedinnote1(m)andaccumulatedinaseparatereservewithinequity.Amountsarereclassifiedtoprofitorlosswhentheassociatedassetsaresoldorimpaired.(ii)PerformancerightsreserveTheperformancerightsreserveisusedtorecognisedthefairvalueofrightsissuedtocertainDirectorsoremployeesduringtheyear.(iii)ForeigncurrencytranslationreserveExchangedifferencesarisingontranslationofforeigncontrolledentitiesarerecognisedinothercomprehensiveincomeasdescribedinnote1(d)andaccumulatedinaseparatereservewithinequity.Thecumulativeamountisreclassifiedtoprofitorlosswhenthenetinvestmentisdisposedof.23Non-controllinginterestsConsolidated2018$2017$Sharecapital14,93714,937Reserves(1,986)4,230Non-controllinginterestonacquisition2,833,8082,833,808Retainedearnings130,161122,2582,976,9202,975,23383Notes to the Consolidated Financial Statements 30 June 2018 (continued) 84 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)24Dividends(a)OrdinarysharesParententity2018$2017$Finaldividendsforyearended30June2017of9.0cents(2017:4.0cents)perfullypaidsharepaidon10October2017(2017:13October2016)Fullyfrankedbasedontaxpaid@30%(2017:30%)3,575,9141,589,295Interimdividendfortheyearended30June2018of12.0cents(2017:9.0cents)perfullypaidsharepaidon10April2018(2017:13April2017)Fullyfrankedbasedontaxpaid@30%(2017:30%)4,767,8853,575,914Totaldividendsprovidedfororpaid8,343,7995,165,209(b)DividendsnotrecognisedattheendofthereportingperiodParententity2018$2017$Inadditiontotheabovedividends,sinceyearendtheDirectorshaverecommendedthepaymentofafinaldividendof18.0centsperfullypaidordinaryshare(2017:9.0cents),fullyfrankedbasedontaxpaidat30%.Theaggregateamountoftheproposeddividendexpectedtobepaidon12October2018outofretainedearningsat30June2018,butnotrecognisedasaliabilityatyearend,is7,151,8273,575,914(c)FrankeddividendsConsolidated2018$2017$Frankingcreditsavailableforsubsequentreportingperiodsbasedonataxrateof30%(2017:30%)19,842,22110,713,752Theaboveamountsrepresentthebalanceofthefrankingaccountasattheendofthereportingperiod,adjustedfor:(a)frankingcreditsthatwillarisefromthepaymentoftheamountoftheprovisionforincometax(b)frankingdebitsthatwillarisefromthepaymentofdividendsrecognisedasaliabilityatthereportingdate,and(c)frankingcreditsthatwillarisefromthereceiptofdividendsrecognisedasreceivablesatthereportingdate.Theconsolidatedamountsincludefrankingcreditsthatwouldbeavailabletotheparententityifdistributableprofitsofsubsidiarieswerepaidasdividends.Theimpactonthefrankingaccountofthedividendrecommendedbythedirectorssinceyearend,butnotrecognisedasaliabilityatyearend,willbeareductioninthefrankingaccountof$3,065,069(2017:$1,532,534).84Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 85 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)25RemunerationofauditorsDuringtheyearthefollowingfeeswerepaidorpayableforservicesprovidedbytheauditoroftheparententity,itsrelatedpracticesandnon-relatedauditfirms:(a)GrantThorntonAustraliaLtdConsolidated2018$2017$AuditandotherassuranceservicesAuditandreviewoffinancialreports190,000190,000TaxationservicesTaxcomplianceservices(includingincometaxreturns)63,44032,300Totalremunerationfortaxationservices63,44032,300OtherservicesOtherservices39,87015,183Totalremuneration293,310237,483(b)NetworkfirmsofGrantThorntonAustraliaLtdConsolidated2018$2017$AuditandotherassuranceservicesAuditandreviewoffinancialstatements110,072106,687TaxationservicesTaxcomplianceservices(includingincometaxreturns)40,52956,926TotalremunerationofnetworkfirmsofGrantThorntonAustraliaLtd150,601163,61385Notes to the Consolidated Financial Statements 30 June 2018 (continued) 86 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)25Remunerationofauditors(continued)(c)Non-GrantThorntonAustraliaLtdConsolidated2018$2017$AuditandotherassuranceservicesAuditandreviewoffinancialstatements49,08748,804TaxationservicesTaxcomplianceservices(includingincometaxreturns)15,27533,951Totalremunerationfortaxationservices15,27533,951OtherservicesOtherservices57,16824,536Totalremunerationofnon-GrantThorntonAustraliaLtdauditfirms121,530107,291Totalauditors'remuneration565,441508,387Itisthegroup'spolicytoemployGrantThorntonAustraliaLtdonassignmentsadditionaltotheirstatutoryauditdutieswhereGrantThorntonAustraliaLtdexpertiseandexperiencewiththegroupareimportant.Theseassignmentsareprincipallytaxadviceandduediligencereportingonacquisitions,orwhereGrantThorntonAustraliaLtdisawardedassignmentsonacompetitivebasis.Itisthegroup'spolicytoseekcompetitivetendersforallmajorconsultingprojects.26ContingenciesThegrouphadcontingentliabilitiesat30June2018and30June2017inrespectof:(a)Contingentliabilities(i)GuaranteesGuaranteesaregiveninrespectofrentalbondsfor$1,830,584(2017:$1,910,888).Theseguaranteesmaygiverisetoliabilitiesintheeventthatthegroupdefaultsonitsobligationsunderthetermsoftheleaseagreementforitspremisesat1AdelaideTerrace,EastPerth,60LeichhardtStreet,SpringHill,253-269WellingtonRoad,Mulgrave,138-140BeaumontStreet,Hamilton,CentennialPlace,CenturyBoulevard,CenturyCity,CapeTown,SouthAfricaandGolfPark,CapeTown,SouthAfrica.Nomateriallossesareanticipatedinrespectofanyoftheabovecontingentliabilities(2017:Nil).27Commitments(a)CapitalcommitmentsTherewerenocapitalexpenditurescontractedforatthereportingdatewhichhavenotbeenrecognisedasliabilities(2017:Nil).86Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 87 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)27Commitments(continued)(b)Leasecommitments:groupaslessee(i)Non-cancellableoperatingleasesThePerthpropertyunderoperatingleasebyLycopodiumMineralsPtyLtdisanoncancellableleasewitha120monthtermending31January2021.Minimumleasepaymentsarecontingentuponboth4%fixedannualincreasesandmarket-basedreviewsduringthetermofthelease.Theleaseallowsforsublettingofallleaseareas,subjecttotheconsentofthelandlord.TheMelbournepropertyunderoperatingleasebyLycopodiumProcessIndustriesPtyLtdisanoncancellableleasewitha36monthtermending25September2018,withanoptiontorenewtheleaseattheendofthetermforafurther36months.Theagreementprovidesforanannualincreaseintherentalpaymentsof3.5%overthepreviousyear'srental.TheManilapropertyunderoperatingleasebyLycopodium(Philippines)PtyLtdisanoncancellableleasewitha60monthtermending20August2023.Theagreementprovidesforanincreaseintherentalpaymentsof5%perannum.TheBrisbanepropertyunderoperatingleasebyLycopodiumMineralsPtyLtdisanon-cancellableleasewitha36monthtermending28February21,withanoptiontorenewfor36months.Theleaseagreementprovidesforannualincreaseintherentalpaymentsof3.25%overthepreviousyear'srental.Theleaseallowsforsub-lettingofallleaseareassubjecttopriorconsentofthelandlord.ThePerthpropertyunderoperatingleasebyLycopodiumInfrastructurePtyLtdisanoncancellableleasewitha96monthtermending31January2021,withanoptiontorenewafurther60monthterm.Minimumleasepaymentsarecontingentupona4.5%fixedannualincrease.Theleaseallowsforsublettingofallleaseareas,subjecttotheconsentofthelandlord.TheTorontopropertyunderleasebyLycopodiumMineralsCanadaLtdisanon-cancellableleasewitha63monthtermending31October2022.Noprovisionforincreaseinbaserental.TheNewcastlepropertyunderoperatingleasebyLycopodiumInfrastructurePtyLtdisanon-cancellableleasewitha36monthtermending1November2020,withanoptiontorenewtheleaseattheendofitstermforafurther72months.MinimumleasepaymentsarecontingentuponannualCPImovementsduringthetermsofitslease.TheCenturyCitypropertyunderleasebyADPHoldings(Pty)Limitedisanon-cancellableleasewitha37monthtermending31May2021.Theagreementprovidesforanannualincreaseintherentalpaymentsof8%overthepreviousyear'srental.Theleaseallowsforsub-lettingofallleaseareassubjecttopriorconsentofthelandlord.TheGolfParkpropertyunderleasebyADPHoldings(Pty)Limitedisanon-cancellableleasewitha36monthtermending31May2021.Consolidated2018$2017$Commitmentsforminimumleasepaymentsinrelationtonon-cancellableoperatingleasesarepayableasfollows:Withinoneyear7,554,8017,807,360Laterthanoneyearbutnotlaterthanfiveyears14,822,35917,492,39122,377,16025,299,75187Notes to the Consolidated Financial Statements 30 June 2018 (continued) 88 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)27Commitments(continued)(b)Leasecommitments:groupaslessee(continued)(ii)FinanceleasesandhirepurchasecommitmentsThegrouphasfinanceleasesandhirepurchasecontractsforvariousitemsofplantandequipmentwithacarryingamountof$1,018,386(2017:$1,219,491).Theseleasecontractsexpirewithin1to5years.Underthetermsoftheleases,thegrouphastheoptiontoacquiretheleasedassets.Consolidated2018$2017$Commitmentsinrelationtofinanceleasesarepayableasfollows:Withinoneyear526,584450,053Laterthanoneyearbutnotlaterthanfiveyears585,944889,772Minimumleasepayments1,112,5281,339,825Futurefinancecharges(72,246)(118,429)Totalleaseliabilities1,040,2821,221,396Representingleaseliabilities:Current(note11(d))478,216388,484Non-current(note11(d))562,066832,9121,040,2821,221,396Theweightedaverageinterestrateimplicitintheleasesandhirepurchasesis5.57%(2017:7.22%).28Relatedpartytransactions(a)ParententitiesTheparententitywithinthegroupisLycopodiumLimited,whichisincorporatedinAustralia.(b)SubsidiariesInterestsinsubsidiariesaresetoutinnote29.(c)KeymanagementpersonnelConsolidated2018$2017$Short-termemployeebenefits2,692,1182,441,977Post-employmentbenefits171,863214,2062,863,9812,656,183Detailedremunerationdisclosuresareprovidedintheremunerationreportonpages14to19.88Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 89 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)28Relatedpartytransactions(continued)(d)TransactionswithotherrelatedpartiesThefollowingtransactionsoccurredwithrelatedparties:Consolidated2018$2017$PurchasesofgoodsandservicesPurchasesfromassociates8,188,8214,927,903SaleofgoodsandservicesSalestoassociatesandjointventures-337,291(e)Outstandingbalancesarisingfromsales/purchasesofgoodsandservicesThefollowingbalancesareoutstandingattheendofthereportingperiodinrelationtotransactionswithrelatedparties:Consolidated2018$2017$CurrentpayablesAssociates18,007278,393(f)Loansto/fromrelatedpartiesConsolidated2018$2017$LoanstoassociatesBeginningoftheyear723,500387,500Loansadvanced884,000336,000Repaymentsmade(387,500)-Endofyear1,220,000723,500Thereisnoallowanceaccountforimpairedreceivablesinrelationtoanyoutstandingbalances,andnoexpensehasbeenrecognisedinrespectofimpairedreceivablesduefromrelatedparties.(g)TermsandconditionsPurchasesandsalesofgoodsandserviceswithstatutoryjointventuresaremadeatcost.Purchasesandsalesofgoodsandserviceswiththeassociatearemadeatarms-length.Loansadvancedtothejointventureandassociateareinterest-freeandrepayablewithin12months.Outstandingbalancesareunsecuredandarerepayableincash.89Notes to the Consolidated Financial Statements 30 June 2018 (continued) 90 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)29Subsidiaries(a)SignificantinvestmentsinsubsidiariesTheconsolidatedfinancialreportincorporatetheassets,liabilitiesandresultsofthefollowingprincipalsubsidiariesinaccordancewiththeaccountingpolicydescribedinnote1(b):NameofentityCountryofincorporation/PrincipalactivityClassofsharesEquityholding2018%2017%LycopodiumMineralsPtyLtdAustralia(1)Ordinary100100LycopodiumProcessIndustriesPtyLtdAustralia(1)Ordinary100100OrwayMineralConsultants(WA)PtyLtdAustralia(1)Ordinary100100LycopodiumGhanaLtdGhana(2)Ordinary100100LycopodiumAssetManagementPtyLtdAustralia(1)Ordinary100100LycopodiumBurkinaFasoSARLBurkinaFaso(2)Ordinary100100LycopodiumInfrastructurePtyLtdAustralia(1)Ordinary100100LycopodiumMineralsCanadaLtdCanada(1)Ordinary100100LycopodiumMauritiusMauritius(2)Ordinary100100LycopodiumPhilippinesPtyLtdAustralia(1)Ordinary100100MetcoGlobalLimitedAngola(2)Ordinary7474OrwayMineralConsultants(Canada)LtdCanada(1)Ordinary100100LycopodiumRailPtyLtdAustralia(1)Ordinary100100ADPHoldings(Pty)LimitedSouthAfrica(1)Ordinary7474(1)Engineering,procurement,constructionmanagementservices(2)Offshoreprojectsupportservices30EventsoccurringafterthereportingperiodSinceyearendthedirectorshaverecommendedthepaymentofafinaldividendonordinarysharesinrespectofthe2018financialyear.Thetotalamountofthedividendis$7,151,827(2017:$3,575,914),whichrepresentsafullyfrankeddividendof18.0(2017:9.0)centsperfullypaidordinaryshare.Withtheexceptionoftheabove,noothermatterorcircumstanceshavearisensincetheendofthefinancialyearwhichsignificantlyaffectedormaysignificantlyaffect:(a)thegroup'soperationsinfuturefinancialyears,or(b)theresultsofthoseoperationsinfuturefinancialyears,or(c)thegroup'sstateofaffairsinfuturefinancialyears.90Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 91 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)31ReconciliationofprofitafterincometaxtonetcashinflowfromoperatingactivitiesConsolidated2018$2017$Profitfortheyear18,333,38710,373,528Depreciationandamortisation1,228,4791,171,764Impairmentofgoodwill1,095,048263,242Loansadvancedtojointventure(inclatcashflowsfromfinancingactivities)884,000336,000Repaymentofloansfromassociate(inclatcashflowfromfinancingactivities)(387,500)-Proceedsfromavailable-for-salefinancialassets(inclatcashflowfrominvestingactivites)(1,187,036)-Non-cashemployeebenefitsexpense-share-basedpayments-(259,037)Non-cashsharesreceivedinlieuofpaymentforservices(878,875)-Net(gain)/lossonsaleofnon-currentassets(35,653)1,634Shareofnetprofitofassociateandjointventureaccountedforusingtheequitymethod(1,112,681)(1,019,251)Interestrelatingtofinancingactivities96,61756,377Financeleaseexpense-43,011Changeinoperatingassetsandliabilities:Increaseintradedebtorsandotherreceivables(697,349)(10,393,981)(Increase)/decreaseininventories(492,414)376,256Increaseindeferredtaxassets(4,552,868)(866,965)Decrease/(increase)inotheroperatingassets408,836(356,658)(Decrease)/increaseintradecreditors(32,331,738)42,644,013Increaseinprovisionforincometaxespayable5,600,5042,986,072Increaseinotherprovisions11,995,9474,141,718Decrease/(increase)inderivativefinancialassets192,688(164,994)Netcashinflowfromoperatingactivities(1,840,608)49,332,72932Earningspershare(a)BasicearningspershareConsolidated2018Cents2017CentsBasicearningspershareattributabletotheordinaryequityholdersofthecompany45.725.9(b)DilutedearningspershareConsolidated2018Cents2017CentsDilutedearningspershareattributabletotheordinaryequityholdersofthecompany45.725.991Notes to the Consolidated Financial Statements 30 June 2018 (continued) 92 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)32Earningspershare(continued)(c)ReconciliationofearningsusedincalculatingearningspershareConsolidated2018$2017$BasicearningspershareProfitattributabletotheordinaryequityholdersofthecompanyusedincalculatingbasicearningspershare18,170,18610,292,083DilutedearningspershareUsedincalculatingdilutedearningspershare18,170,18610,292,083(d)WeightedaveragenumberofsharesusedasdenominatorConsolidated2018Number2017NumberWeightedaveragenumberofordinarysharesusedasthedenominatorincalculatingbasicearningspershare39,732,37339,732,37333Share-basedpayments(a)SeniormanagershareacquisitionplanTheseniormanagershareacquisitionplanwasintroducedinNovember2009.Undertheplaneligibleseniormanagersareprovidedwithaninterestfreelimitedrecourseloanforaperiodof3yearstoacquiresharesinLycopodiumLimited.Thepurchaseoftheshareswillbedoneviatheemployeesharetrust.Theloanwillbeinterestfreeiftheparticipatingseniormanagerstayswiththegroupformorethan3years.Intheeventtheparticipatingseniormanagerleaveswithin3years,interestwillbechargedequaltomarketrateofinterestthatwouldhaveaccruedontheloanfromthedateofadvanceofthefundstotherepaymentdate.EligibilitywillbedecidedbytheboardofDirectors.Thevalueoftheloantoeachparticipatingseniormanagerisbasedonthevalueofthesharesallocatedtotherespectiveseniormanager.Thesharesareallocatedata1centdiscounttothevolumeweightedaverageofthepricesatwhichthesharesweretradedontheASXduringtheoneweekperioduptoandincludingthedateofallocation.Duringthefinancialyearended30June2010,607,500shareswereacquiredonandoffmarket.Thedifferencebetweenthepriceofthesharesacquiredandthevalueofsharesallocatedtotheparticipatingseniormanagerswasexpensedinthefinancialyearended30June2010.Thisamountedto$125,855.(b)Expensesarisingfromshare-basedpaymenttransactionsTotalexpensesarisingfromshare-basedpaymenttransactionsrecognisedduringtheperiodaspartofemployeebenefitexpensewerenil.92Notes to the Consolidated Financial Statements 30 June 2018 (continued) Lycopodium Annual Financial Report 2018 • 93 LycopodiumLimitedNotestotheconsolidatedfinancialstatements30June2018(continued)34Parententityfinancialinformation(a)SummaryfinancialinformationTheindividualfinancialreportfortheparententityshowthefollowingaggregateamounts:2018$2017$BalancesheetCurrentassets20,254,06520,757,301Non-currentassets30,065,70029,956,945Totalassets50,319,76550,714,246Currentliabilities1,484,0033,705,820Non-currentliabilities18,23644,102Totalliabilities1,502,2393,749,922Netassets48,817,52646,964,324(146,452,578)(140,892,972)Shareholders'equityContributedequity20,823,77220,823,772Retainedearnings27,993,75426,140,55248,817,52646,964,324Profitfortheyear10,197,00111,916,083Totalcomprehensiveincome10,197,00111,916,083(b)GuaranteesenteredintobytheparententityIn2016,theparententityenteredintoanarrangementwithainsurerforastandbyinsurancebondingfacilityof$15.0m.Inreturn,theparententityandLycopodiumMineralsPtyLtdjointlyexecutedacrossguaranteeandindemnityassecurityforthefacility.Thisfacilitywasincreasedto$20.0mduringtheyearended30June2018.(c)ContingentliabilitiesoftheparententityTheparententitydidnothaveanycontingentliabilitiesasat30June2018or30June2017.(d)Contractualcommitmentsfortheacquisitionofproperty,plantorequipmentTheparententitydidnothaveanycontractualcommitmentsfortheacquisitionofproperty,plantandequipmentasat30June2018or30June2017.93Directors’ Declaration 94 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedDirectors'declaration30June2018IntheDirectors'opinion:(a)thefinancialreportandnotessetoutonpages31to93areinaccordancewiththeCorporationsAct2001,including:(i)complyingwithAccountingStandards,theCorporationsRegulations2001andothermandatoryprofessionalreportingrequirements,and(ii)givingatrueandfairviewofthegroup'sfinancialpositionasat30June2018andofitsperformancefortheyearendedonthatdate,and(b)therearereasonablegroundstobelievethattheCompanywillbeabletopayitsdebtsasandwhentheybecomedueandpayable.Note1(a)confirmsthatthefinancialreportalsocomplieswithInternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard.TheDirectorshavebeengiventhedeclarationsbytheManagingDirectorandChiefFinancialOfficerrequiredbysection295AoftheCorporationsAct2001.ThisreportismadeinaccordancewitharesolutionofDirectors.PeterAnthonyDawsonDirectorPerth20September201894LycopodiumLimitedDirectors'declaration30June2018IntheDirectors'opinion:(a)thefinancialreportandnotessetoutonpages31to93areinaccordancewiththeCorporationsAct2001,including:(i)complyingwithAccountingStandards,theCorporationsRegulations2001andothermandatoryprofessionalreportingrequirements,and(ii)givingatrueandfairviewofthegroup'sfinancialpositionasat30June2018andofitsperformancefortheyearendedonthatdate,and(b)therearereasonablegroundstobelievethattheCompanywillbeabletopayitsdebtsasandwhentheybecomedueandpayable.Note1(a)confirmsthatthefinancialreportalsocomplieswithInternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard.TheDirectorshavebeengiventhedeclarationsbytheManagingDirectorandChiefFinancialOfficerrequiredbysection295AoftheCorporationsAct2001.ThisreportismadeinaccordancewitharesolutionofDirectors.PeterAnthonyDawsonDirectorPerth20September201894Directors’ Declaration Audit Report Lycopodium Annual Financial Report 2018 • 95 Audit Report (continued) 96 • Lycopodium Annual Finanical Report 2018 Audit Report (continued) Lycopodium Annual Financial Report 2018 • 97 Audit Report (continued) 98 • Lycopodium Annual Finanical Report 2018 Audit Report (continued) Shareholder Information Lycopodium Annual Financial Report 2018 • 99 LycopodiumLimitedShareholderinformation30June2018Theshareholderinformationsetoutbelowwasapplicableasat31August2018.A.DistributionofequitysecuritiesAnalysisofnumbersofequitysecurityholdersbysizeofholding:HoldingTotalHolders1-10003381,001-5,0004645,001-10,00013510,001-100,000163100,001andover281,128Therewere76holdersoflessthanamarketableparcelofordinaryshares.B.EquitysecurityholdersThenamesofthetwentylargestholdersofquotedequitysecuritiesarelistedbelow:OrdinarysharesNameNumberheldPercentageofUnits1ReeshPty9,104,36722.912HSBCCustodyNominees(Australia)Limited4,981,30012.543BNPParibasNomineesPtyLimited3,235,1578.144LualaPtyLtd3,167,3327.975JPMorganNomineesAustraliaLimited3,067,5697.726CaddyFoxPtyLtd2,154,2155.427AccedePtyLtd1,272,3323.208CiticorpNomineesPtyLtd821,0002.079MonadelphousGroupLimited603,5111.5210MrDavidJamesTaylor447,6351.1311DeLeoNomineesPtyLtd(TheDeLeoInvestmentA/C)407,9001.0312MrPeterDeLeo&MrsTianaDeLeo407,0711.0213DeLeoNomineesPtyLtd(TheDeLeoFamilyA/C)348,8000.8814SelsoPtyLtd266,1480.6715CiticorpNomineesPtyLtd(ColonialFirstStateInvA/C)265,4750.6716RBCInvestorServicesAustraliaNomineesPtyLtd252,4840.6317LycopodiumSharePlanPtyLtd235,0000.5918FiftySecondCelebrationPtyLtd202,9470.5119BotechPtyLtd188,9590.4820NancrisPtyLtd175,0000.4431,604,20279.5499Shareholder Information (continued) 100 • Lycopodium Annual Finanical Report 2018 LycopodiumLimitedShareholderinformation30June2018(continued)C.SubstantialholdersSubstantialholdersinthecompanyaresetoutbelow:NameNumberheldPercentageofUnits1ReeshPtyLtd9,104,36722.912HSBCCustodyNominees(Australia)Limited4,981,30012.543BNPParabisNomineesPtyLtd3,235,1578.144LualaPtyLtd3,167,3327.975JPMorganNomineedAustraliaLimited3,067,5697.72D.VotingrightsThevotingrightsattachingtoeachclassofequitysecuritiesaresetoutbelow:(a)OrdinarysharesOnashowofhandseverymemberpresentatameetinginpersonorbyproxyshallhaveonevoteanduponapolleachshareshallhaveonevote.100Shareholder Information (continued) Corporate Directory Lycopodium Annual Financial Report 2018 • 101 LycopodiumLimitedCorporatedirectoryDirectorsCompanySecretaryRegisteredandPrincipalOfficeShareRegistryLawyerstotheCompanyAuditorMichael John CarattiPeter De LeoRodney Lloyd LeonardRobert Joseph OsmettiBruno RuggieroPeter Anthony DawsonLawrence William MarshallSteven John Micheil ChadwickKeith John BakkerLevel 5, 1 Adelaide TerraceEast Perth WA 6004AustraliaT: +61 (0)8 6210 5222www.lycopodium.com.auComputershare Investor Services Pty Limited Level 11, 172 St Georges TerracePerth WA 6000T: +61 (0)8 9323 2000www.computershare.com.auClyde & Co.Level 28, 197 St Georges TerracePerth WA 6000T: +61 (0)8 6145 1700www.clydeco.comGrant Thornton Audit Pty LtdLevel 43, 152 - 158 St Georges Terrace Perth WA 6000T: +61 (0)8 9480 2000www.grantthornton.com.au101This page has been left blank intentionally 102 • Lycopodium Annual Finanical Report 2018 Contents Directors’ Report Corporate Governance Statement Financial Report - Consolidated Statement of Profit or Loss and Other Comprehensive Income - Consolidated Balance Sheet - Consolidated Statement of Changes in Equity - Consolidated Statement of Cash Flows 1 24 31 32 33 34 - Notes to the Consolidated Financial Statement 35 Directors’ Declaration Independent Auditor’s Audit Report to the members Shareholder Information Corporate Directory 94 95 99 101 This financial report is the consolidated financial report of the group consisting of Lycopodium Limited and its subsidiaries. The financial report is presented in the Australian currency. Lycopodium Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Lycopodium Limited Level 5, 1 Adelaide Terrace East Perth WA 6004 A description of the nature of the group’s operations and its principal activities is included in the directors’ report on page 1, which is not part of this financial report. The financial report was authorised for issue by the Directors on 20 September 2018. The Directors have the power to amend and reissue the financial report. Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases, financial reports and other information are available at our Shareholders’ Centre on our website: www.lycopodium.com.au Lycopodium Annual Finanical Report 2018 Lycopodium Annual Financial Report 2018 A N N U A L F I N A N C I A L R E P O R T 2 0 1 8 A N N U A L F I N A N C I A L R E P O R T 2 0 1 8 Level 5, 1 Adelaide Terrace East Perth Western Australia 6004 T: + 61 (0)8 6210 5222 www.lycopodium.com.au

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