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2023 ReportAnnual Financial Report 2019 i L y c o p o d u m A n n u a l i F n a n c i a l R e p o r t 2 0 1 9 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 - Notes to the Consolidated Financial Statement Directors’ Declaration Independent Auditor’s Audit Report to the members Shareholder Information Corporate Directory 1 22 29 30 31 32 33 90 91 95 97 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 30 September 2019. 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 Financial Report 2019 Lycopodium Annual Financial Report 2019 • D I R E C T O R S ’ R E P O R T Lycopodium Annual Financial Report 2019 • 1 LycopodiumLimitedDirectors'report30June2019YourDirectorspresenttheirreportonthegroupconsistingofLycopodiumLimitedandtheentitiesitcontrolledattheendof,orduring,theyearended30June2019.DirectorsThefollowingpersonswereDirectorsofLycopodiumLimitedduringthewholeofthefinancialyearanduptothedateofthisreport:MichaelJohnCarattiPeterDeLeoRodneyLloydLeonardRobertJosephOsmettiBrunoRuggieroPeterAnthonyDawsonLawrenceWilliamMarshallStevenJohnMicheilChadwickPrincipalactivitiesTheprincipalactivitiesofthegroupduringthefinancialyearconsistedofengineeringconsultinginthemining,metallurgical,railandmanufacturingindustries.Therewerenosignificantchangesinthenatureofthegroup'sprincipalactivitiesduringthefinancialyear.DividendsDividendspaidtomembersduringthefinancialyearwereasfollows:2019$2018$Finalfullyfrankeddividendfortheyearended30June2018of18.0cents(2017:9.0cents)perfullypaidsharepaidon12October2018(2017:13October2017).7,151,8273,575,914Interimfullyfrankeddividendfortheyearended30June2019of15.0cents(2018:12.0cents)perfullypaidsharepaidon12April2019(2018:10April2018)5,959,8564,767,88513,111,6838,343,799Inadditiontotheabovedividends,sincetheendofthefinancialyeartheDirectorshaverecommendedthepaymentofafinalfullyfrankeddividendof$5,959,856(15.0centsperfullypaidshare)tobepaidon11October2019outofretainedearningsat30June2019(2018:$7,151,827).Thisbringsthetotaldividenddeclaredfortheyearended30June2019to30.0cents(2018:30.0cents).ReviewofoperationsThepastyearhasbeenbusyandsuccessfulforLycopodium.Muchhasbeenaccomplishedasweevolvetomeetthechallengesandopportunitieswithinourindustry.Wehavecontinuedtopursueourstrategyofgrowingastrongbusinesswithdepthandbreadthofskillstodeliverqualityservicesacrossthediversifiedsectorsofresources,infrastructureandindustrialprocesses.Thisstrategyisreflectedintheresultsfortheyear.FullYearResultsForthefinancialyearended30June2019,Lycopodiumderivedrevenuesof$154millionandanetprofitaftertaxof$16.51million.TheDirectorshaveresolvedtopayafinaldividendof15cents,whichisinlinewiththedividendpolicy.Thetotaldividendfortheyearis30centsfullyfranked.1 D I R E C T O R S ’ R E P O R T C O N T I N U E D 2 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedDirectors'report30June2019(continued)Reviewofoperations(continued)ActivitiesforthepastyearWithinthemineralresourcessectorwehavecontinuedtobuildonthenumberofgeographiesinwhichwedeliverstudiesandprojects,workingacrossawidevarietyofcommoditiesandforalltiersofclientfromexplorersthroughtomajors.InadditiontoourtraditionalAustralianandWestAfricangeographies,wearedeliveringprojectsinAsia,Europe,theAmericasandCanada.ToassistindeliveringprojectsinAfricawehaveopenedadditionalofficesinCapeTownandJohannesburgwherewewillbetappingintothesignificantavailabilityofqualitypersonneltogrowaroundourexistingSouthAfricanteams.WehavemovedourManilaoperationintonewpremisesintheBonfacioGlobalCity(BGC)areaofManila.ThenewpremisesprovideourManilabasedteamafreshhomeandmodernfacilitiestocontinuedeliveringtheirhighqualityoutputs,insupportofallofourglobaloperationsinanefficientandeffectivemanner.Asreportedlastyearwecontinuetoworktoensurethatourserviceofferingisofaconsistentlyhighqualityacrossourvariousmineralresourcerelatedoperations.Duringthepasttwelvemonthswehavecontinuedourorganisationalconnectednesstosupportgreatercollaboration,workshareandultimatelyeffectivenessinthewaywedeliverourservicesacrosstheglobe.Intheinfrastructuresectorwehavecontinuedtorefineourtargetmarketandhavefocusedoureffortsonrailinfrastructuremanagement(RIM),railrelatedengineeringandprojectdeliveryservices,mineralresourcerelatednon-processinfrastructureandinfrastructurerelatedassetmanagement.Intheindustrialprocessessectorwehavecontinuedtodiversifyawayfromourtraditionalmarketssuchasmanufacturingandhaveusedourskillsonarangeofbriefsincludingrenewableenergy,cannabinoidandsustainabilityrelatedprojects.WehaveembracedIndustry4.0.Wehaveestablishedanewjointventurecompany(seebelow)whichoffersoperatingminesrealtimeprocessoptimisationservices;weareintimatelyinvolvedinDeBeers’leadingedge'PlantoftheFuture'work;andwearealwaystesting,developingandrollingoutadvancedengineeringtoolsinsupportofouroperationalefforts.WehavecontinuedtodevelopprojectsonarangeofcontractingmodelsandhaveprovenourabilitytosuccessfullydeliverprojectsonanEPCbasistocomplementourlongandsuccessfultrackrecordinEPCMservicedelivery.SuccessionplanningOurlongtermsuccessionplanningwasputintopracticethisyearwithKarlCicanesesucceedingRodLeonardastheleaderofourMineralsdivisionandAndrewCarniesucceedingBobOsmettiasManagingDirectorofMondiumPtyLtd,ourincorporatedjointventurewithMonadelphousLimited.TheseareveryimportanttransitionsasbothRodandBobwerefoundingdirectorsofLycopodiumandhavebeeninstrumentalinestablishingthesuccessandcultureofthecompany.Thesuccessionhasbeenmanagedcarefullyandsmoothly,withKarlandAndrewseamlesslytakingontheresponsibilitiesofthoseroles,whileRodandBobhavetransitionedintonon-executivedirectorrolesontheboardofLycopodiumLimited.2 Lycopodium Annual Financial Report 2019 • 3 LycopodiumLimitedDirectors'report30June2019(continued)Reviewofoperations(continued)OutlookWeoperateininterestingtimeswhichemphasisestheneedtoremainnimbleandflexibleinhowweapproachourmarkets.Intheresourcessectoroverthepasttwelvemonthswehavebeenactiveongold,copper,nickel,cobalt,ironore,phosphate,diamonds,rubies,lithiumandgraphiteprojects.Thecurrentoutlookacrossthisbasketofmineralsismixed.Whereasthegoldpriceisathistoricalhighs,forecastpricesforothercommoditiesarelessclear.However,thebroadrangeofcommoditiesandgeographieswithinwhichweoperateallowsustotakeadvantageoftheopportunitiesandmeetthechallengesthemarketpresents.Wehaveastrongpipelineofprojectsandkeyprospectsthatwebelievewillunderpinouroperationalandfinancialperformance.Asmentionedearlier,withintheinfrastructuresectorwerationalisedourtargetmarkettorail,assetmanagementandresourceprojectrelatedinfrastructure,areasweconsideridealfortheservicesweprovide.Intheindustrialprocessessectorwecontinuetoleverageourexpertisein,amongotherthings,complexchemistry,heatandmasstransferandsolid/liquidseparation,intoemergingopportunitiessuchascannabinoids,lightmetalsandwaterpurification.Theindustrialprocessesmarketremainsverycompetitiveandquitebroad.Ourleadershipteamiscontinuingtolookathowtoleverageourexpertiseforgreaterreturn.OperationalhighlightsRefertoourShareholderReportformoredetailhoweverthefollowingprovidesasummaryofouroperationalhighlightsfortheyear.ResourcesCobréPanamaProjectWehavebeenworkingwithFirstQuantumMineralsLtd(FQML)since2013ontheCobréPanamaProject.ThisprojectcontinuesourcollaborationwithFQMLtosupportitsprojectdevelopmentstylealongwithbudgetandscheduletargetsnowspanningoversixprojectsinAustraliaandAfrica.ThroughitsPanamaniansubsidiary,MineraPanamaS.A.,FQMLisdevelopingthislargeconcession.Theprojectinvolvesthelargestunitprocessingequipmentintheworldresultinginafacilitycapableofprocessing85Mtpaofprimaryoretoproduceconcentrateofcopperaswellasanumberofotherminerals/metals.Overthepastyear,Lycopodiumhascompletedtheprocessplantdesignandtheservicestonon-processinfrastructurebuildingsaswellasprovidingsomefieldengineeringandplantcommissioningsupportpersonnelinPanama.WeareveryproudofourassociationwithFQMLaswellasourroleonthisworldclassprojectwhichhasanexpectedminelifeof40years.ItyProjectIn2017EndeavourMiningCorporation(Endeavour)awardedtheEPCMservicescontractforthedeliveryoftheItyProjecttoLycopodium.Ity,locatedapproximately700kmnorthwestofAbidjan,hasthelongesthistoryofanygoldmineinCôted’Ivoireproducingmorethan1.2millionouncesofgoldovermorethan25yearsofproduction.LycopodiumprovidedthefullEPCMservicesforthegoldCILplant,capableof4Mtpaofablendedgoldbearingore.In2018wealsoundertookadebottleneckingreviewoftheItymineplantdesigntoincreasetheplantnameplatecapacityto5Mtpa.Theupgradewasapprovedandthroughthethirdquarterof2018engineeringandprocurementwascompletedinparallelwiththeconstructionoftheexistingproject.WeareproudtobeassociatedwiththisprojectwhichachievedfirstgoldinMarch2019somefourmonthsaheadofschedule.3 D I R E C T O R S ’ R E P O R T C O N T I N U E D 4 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedDirectors'report30June2019(continued)Reviewofoperations(continued)TokaTindungProjectOverthepastfewyearsLycopodiumhasworkedwithPTArchiIndonesia(Archi),anIndonesianbasedgoldminingcompany,toupgradetheplantprocessingfacilitiesatTokaTindungsite.FromMarch2017throughtoNovember2018,LycopodiumprovidedfullEPCMservicesforathroughputupgradefrom2.4Mtpato3Mtpaoftheprocessplantfacilities.Theupgradewassuccessfullyexecutedwithinbudgetandschedule,withPracticalCompletionachieved1November2018.WaghnionInlate2017TerangaGoldCorporation(Teranga),awardedLycopodiumacontracttoprovideEPCMservicesfortheprocessdesign,engineeringdesign,procurement,constructionmanagementandcommissioningofthe2.0to2.7Mtpa(averageLOMthroughputrateof2.5Mtpa)processplantforWahgnion.Engineeringdesignwascompletedforsupportinfrastructureincludingtheaccommodationvillage.Commissioningoftheprocessplantisinprogresswiththefirstgoldpourexpectedin3Q2019withproductionrampupin4Q2019.Theprojectissettomeetbudgetandscheduletargetshavingachievedanexcellenthealthandsafetyrecord.BonasikaInJune2018,LycopodiumwasawardedthecontractfortheprovisionofdetailedengineeringandtechnicalprocurementsupportforthegreenfieldBonasikabauxiteprojectdevelopedbyGuyanaIndustrialMinerals(GINMIN)nearGeorgetowninGuyana.Theprojectisestimatedtohaveaminelifeof25yearsandwillprocess350,000tonnesofrawbauxiteayear,foruseinsinteredbauxiteproducts.ByJune2019Lycopodium’sscopehadeffectivelybeencompleted.MontepuezRubyMines-RecoveryPlantInlate2018Lycopodium(viaADPMarineandModular)completedtheinstallationoftheMRMRubyRecoveryPlant.ThefinalrecoverywasdesignedtoincorporateUV-sortingtechnologytorecoverrubiesfromDMSconcentratethatwasproducedfromprocessingbothprimaryandsecondaryalluvialorebodies.Thisprocessplantwasdesignedtofitinto36modulesallofwhichhavethesameouterdimensionsandthisbeingthesameasastandard6mhighcubecontainer.AftertransporttositeinMozambiquethemoduleswereallassembled,interconnectingservicescompletedandthefacilitysuccessfullycommissioned.Lycopodiumhassubsequentlybeenrequestedtoprovidefurtherengineeringserviceswithaviewtofurtherplantupgrades.SanbradoInOctober2018WestAfricanResourcesawardedLycopodiumthecontracttoprovidefullEngineeringandProcurement(EP)servicesontheSanbradoGoldProjectinBurkinaFaso,withsubsequentawardofthebalanceofConstructionManagement(CM)servicesinthe1H19.TheSanbradoProject,isfullyfundedtoproductionandexpectedtopourfirstgoldinQ3CY2020.ThisprojectrepresentsLycopodium’sseventhprojectinthiscountryinthepastfiveyears.BotoInOctober2018,IAMGOLDCorporation(IAMGOLD)announcedtothemarketspositiveresultsfromtheFeasibilityStudyforitsBotoGoldProjectinSenegal,WestAfrica.ThisFeasibilityStudy,completedjointlybyIAMGOLDandLycopodium,outlinedaneconomicallyrobustprojectwithananticipatedlowcostofproductionandlongoperatinglife.InFebruary2019,afteracompetitivetenderingprocess,LycopodiumwasissuedwithaLetterofIntentbyIAMGOLDappointingLycopodiumasthepreferredEPCMpartnerfortheBotoexecutionstage,pendingadecisiontoconstruct.Althoughthefullprojectgo-aheadremainstobereceivedinMay2019wehavecommencedworkonastudyupdatelookingatfurtheroptimisationoftheBotoplantandinfrastructurewithanincreasedplantthroughput.4 Lycopodium Annual Financial Report 2019 • 5 LycopodiumLimitedDirectors'report30June2019(continued)Reviewofoperations(continued)ToliaraUsingthePFSasabasis,Lycopodium,inconjunctionwithMineralTechnologies,ismanagingtheproductionoftheDefinitiveFeasibilityStudy(DFS)withascopeofservicesthatwillseethecompletionofallworknecessarytoprovideacompleteDFSfortheToliaraprojectinMadagascar.Theprojectwillproduceilmenite,zirconandrutile.Theowner,BaseResources(Base),isanAustraliandomiciled,Africanfocused,mineralsandsproduceranddeveloperthatoperatestheestablishedKwaleOperationinKenya.TheDFSwilldetermineprojectdesign,executionplanningandfinancingandisduetobecompletedbylate2019.AfinalinvestmentdecisionisexpectedtobegivenbyBaseinthefirsthalfof2020withtheaimofhavingtheprojectinproductionbyearly2022.YanqulTheYanqulProjectissituatedintheAdDhahirahGovernate,approximately50kmnorthofIbriinSaudiArabia.LycopodiumwasappointedinSeptember2018tomanageaDefinitiveFeasibilityStudyofthisproject.TheworkinprogressincludesmanagementofconsultantsaswellasworkdonebyLycopodiuminhouse.Anopenpitminingoperationwithaprocessingplantonsiteisbeinginvestigated.MtCattlinLycopodiumviaMondiumwasawardedthedesignandconstructionoffournewprocessmodulestoincreaseyieldoptimisationoftheGalaxyResourcesMtCattlinplant.TheworksincludedtheoptimisationoftheexistinglithiumprocessingfacilitywithengineeringundertakenoutofourPerthofficewithprocessexpertisesupportedbyourCapeTownoffice.Theworkwassuccessfullycompletedinthefirsthalfof2019.BomboréLycopodiumcontinueditsworkonOrezoneGoldCorporation’s(Orezone)BomboréProjectinBurkinaFaso.OneofthelargestundevelopedandfullypermittedgolddepositsinWestAfrica.Bomboréislocated85kmeastofthecapitalcity,Ouagadougou,adjacenttonationalpavedhighwayRN4.Theworkundertakenthisyearhasbeenintheformofanupdatetothepreviousfeasibilitystudywhichlookedatastagedhigher-gradesulphideexpansioninadditiontotheoxidemineplaninthe2018FeasibilityStudy(FS).The2019updateincorporatesthecombinedoxideandsulphidecircuitsandwillbebasedonanexpandedplantthroughputof5.2Mtpaasopposedtothe4.5Mtpausedinthe2018FS.WehavekickedoffFrontEndEngineeringandDesign(FEED)fortheoxidephaseoftheproject.InfrastructureNewcastleLightRailO&MSupportNewcastleLightRailisahighcapacity,frequentandreliableservicethroughthecitycentre,connectingkeyactivityprecinctsandopeningupurbanrenewalopportunities.Lycopodiumwasengagedtosupportthedevelopmentoftheoperatingandmaintenancemanualsoftheproject’sinfrastructure.Lycopodiumauthoredamaterialnumberofthemanualsdevelopedfortheprojectandalsomanagedthedevelopmentoftheremainingmanualsbyothercontractorsandvendorstoensurethecontentwasofaconsistenthighquality,meetingthedemandsoftherailregulatorandthatofTransportforNSW.PacificNationalRIMServicesPacificNationalCorporation(PacificNational)isAustralia’slargestrailprovider,haulingcoal,steel,automotive,agricultural,mineralsandcontainerisedfreighttoallmainlandstatesandterritoriesinAustralia.LycopodiumcontinuedtheprovisionofitsRailInfrastructureManagement(RIM)servicesforPacificNational,workingthroughits3(plus1)yearagreementtoinspect,certifyandmanagedefectsat62sitesAustraliawide.InspectionsatthesesitescommencedinApril2018requiringsubstantialpriorplanningandgroundwork.RIMservicescompriseprocessesandsystemstoensureinfrastructureisfit-for-purpose,abletosupportsafeandefficientoperations.Inadditionandmostimportantly,theserviceensuresriskismanagedinaccordancewiththerequirementsofrailsafetylegislation.PacificNationalhasexpandedourscopetoincludederailmentinvestigations,specialoradhocinspectionsandgeotechnicalinvestigations5 D I R E C T O R S ’ R E P O R T C O N T I N U E D 6 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedDirectors'report30June2019(continued)Reviewofoperations(continued)ProcessIndustriesGeo40SilicaExtractionPlantLycopodiumwasengagedbyNewZealand-basedtechnologycompanyGeo40todesignandcommissionanewfacilityfortheextractionofsilicafromgeothermalfluidsintheTauporegionofNewZealand.Theprocessextractssilicaasaby-productfromtheheatedfluidsalreadybeingusedtoproduceenergyontheOhaakigeothermalfield.LycopodiumperformedapreliminarydesignandaCapitalCostEstimatereportinparallelwithdetaildesignforthenewplant.MagnesiumRecoveryPlantEcoMagLtdhasdevelopedaprocesstoproducehighpurityHydratedMagnesiumCarbonate(HMC)fromthewastestreams-knownasbitterns-leftoverfromsea-saltproduction.LycopodiumwasengagedtofurtherdeveloptheoverallplantdesignprocessthroughaFeasibilityStudyReport,includingaCapitalCostEstimate,OperatingCostEstimateandImplementationPlanforthedetaileddesign,constructionandcommissioningphaseoftheproject.CSLCentrifugeCoolingSkidsInAugustof2018,LycopodiumwasawardedthecontractforthedetaileddesignofcentrifugecoolingskidsatCSLBehring’sBroadmeadows,Victoriafacility.ThecentrifugesystemwillbepartofanewCSLfacilitytoprocesshumanplasmaintoprotein-basedtherapies.InnovationAkeyLycopodiumstrategicpillaristhepursuitofnewandinnovativeinitiatives.OfnoteinthispastyearLycopodiumsubsidiarycompanyOrwayMineralConsultants(W.A.)PtyLtdandProcessIQPtyLtdhaveformedOrwayIQPtyLtd,todeliveraremoteoptimisationconsultingservice-MillROC(MillingRemoteOptimisationConsulting)tothemineralsprocessingindustry,initiallyfocussedoncomminutioncircuits.ThejointventuredrawsonOrwayMineralConsultants’(OMC)expertiseincomminutiondesign,modellingandoptimisationandProcessIQ’sexpertiseintheIIoT(IndustrialInternetofThings),cloud-basedcomputing,processcontrol,automationandinstrumentation.ThejointventurecompanyisalignedwiththeMETSIgnitedinitiativetoassistwiththegrowthandinnovationofthebusiness.METSIgnitedisanindustry-led,governmentfunded,growthcentrefortheMiningEquipment,TechnologyandServices(METS)sector.OMC,ProcessIQandnowOrwayIQareattheforefrontofthedigitaltransformationintheminingindustry,havingbeenrecognisedfortheirground-breakingcollaborativeworkinthisspacereceivingaMETSIgnitedgranttocommercialisetheproduct.HSEandCommunityLycopodium’sprimaryfocusisonthehealthandsafetyofitsstaffandallpersonnelworkingonitsprojects.Wecontinuetosetandachieveahighstandardofhealthandsafetyacrossallourprojectsandgiventhehighlyinternationalnatureofouractivitieswehaveworkedproactivelytoensurethesecurity,safetyandwellbeingofourpersonnelwherevertheymaybe.In2018/19therewere4.1millionmanhoursworkedacrosstheLycopodiummanagedprojectswithazeroLTIFRagainstan8.1constructionindustryaverage.Onthecommunityside,LycopodiumcontinuedtofocusoneducationasameansofstrengtheningcommunitiesandinlinewiththisremainedanactivesponsorandsupporteroftheClontarfFoundation,acharitablenot-for-profitorganisationinAustraliaimprovingtheeducation,discipline,self-esteem,lifeskillsandemploymentprospectsofyoungAboriginalmen.SupportwasalsoprovidedaroundakeyannualeventfortheMurlpirrmarraConnection,anot-for-profitorganisationthatexiststoprovideAboriginalyouthintheremotecommunitiesofWiluna,LeonoraandsurroundingregionsinWesternAustralia,witheducationalopportunities.6 Lycopodium Annual Financial Report 2019 • 7 LycopodiumLimitedDirectors'report30June2019(continued)Reviewofoperations(continued)Intermsofindustryengagement,LycopodiumretaineditsplatinumsponsorshipoftheAustralianAfricanMiningandEnergyGroupthepeakbodyrepresentingAustraliancompaniesengagedinthedevelopmentofAfrica’sresourceindustry.TheCompanyalsocontinuedtoprovidematerialsupporttoanumberofcharitableinitiativeschampionedbystaff.AcknowledgementTheBoardofDirectorsrecognisesthattheCompany’sabilitytocontinuedeliveringworldclassservicestoourclientsandtomaintainandenhancetheCompany’sperformanceandcapabilityisdependentonthecontinuedcommitmentandsupportofourpersonnel.OnbehalfofmyfellowDirectorsItakethisopportunitytosincerelythankallpersonnelfortheirhighlyvaluedcontribution.WewouldalsoliketothankourclientsfortheircontinuedtrustinLycopodiumtodeliverservicestotheirprojectsandstudies.Wewillasalwaysworkhardtomaintainthesevaluedrelationships.7 D I R E C T O R S ’ R E P O R T C O N T I N U E D 8 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedDirectors'report30June2019(continued)Reviewofoperations(continued)Asummaryofconsolidatedrevenuesandresultsfortheyearbysignificantreportingsegmentsissetoutbelow:SegmentrevenuesSegmentresults2019$2018$2019$2018$Minerals-AsiaPacific81,606,278117,508,88321,951,93318,469,665Minerals-NorthAmerica26,492,80617,163,3031,368,6241,167,134Minerals-Africa31,712,53032,673,738371,7831,705,232Projectservices-Africa6,451,67022,382,7542,101,0634,559,880ProcessIndustries5,800,9859,840,954158,922(76,389)Other23,756,74524,018,094(777,625)1,403,965Intersegmenteliminations(22,490,221)(29,692,284)--Goodwillimpairment---(1,095,048)Unallocated702,616635,715(1,630,948)(378,950)Total154,033,409194,531,15723,543,75225,755,489Incometaxexpense(7,144,537)(7,096,593)Profitfortheyear16,399,21518,658,896Less:Loss/(profit)attributabletonon-controllinginterest108,163(163,201)ProfitattributabletoownersofLycopodiumLtd16,507,37818,495,695MatterssubsequenttotheendofthefinancialyearSinceyearendthedirectorshaverecommendedthepaymentofafinaldividendonordinarysharesinrespectofthe2019financialyear.Thetotalamountofdividendis$5,959,856whichrepresentsafullyfrankeddividendof15.0centsperfullypaidordinaryshare.Withtheexceptionoftheabove,noothermatterorcircumstancehasarisensince30June2019thathassignificantlyaffected,ormaysignificantlyaffect:(a)thegroup'soperationsinfuturefinancialyears,or(b)theresultsofthoseoperationsinfuturefinancialyears,or(c)thegroup'sstateofaffairsinfuturefinancialyears.LikelydevelopmentsandexpectedresultsofoperationsThegroupwillcontinuetoprovideengineeringconsultancyservicesasdetailedabove.RefertotheReviewofOperationssectionwithintheDirectors'Reportforinformationregardingthelikelydevelopmentsandexpectedresults.EnvironmentalregulationThegroup'soperationsarenotsubjecttosignificantenvironmentalregulationunderalawoftheCommonwealthorofaStateorTerritoryinrespectofitsconsultingactivities.8 Lycopodium Annual Financial Report 2019 • 9 LycopodiumLimitedDirectors'report30June2019(continued)InformationonDirectorsMichaelJohnCarattiBE(Elec)(Hons).Non-executiveChairman.ExperienceandexpertiseFormerManagingDirectorofLycopodiumMineralsPtyLtd,MrCarattihasover40yearsexperienceinthemineralprocessingindustryandhashadamajorroleinthedevelopmentofthegroup'sriskmanagementandqualitycontrolprogrammes.MrCarattiisaDirectorofOrwayMineralsConsultants(WA)PtyLtd.OthercurrentdirectorshipsNoneFormerdirectorshipsinlast3yearsNoneSpecialresponsibilitiesChairmanoftheBoardChairmanoftheCorporateGovernanceCommitteeChairmanoftheRemunerationCommitteeInterestsinsharesandoptionsOrdinarysharesofLycopodiumLimited9,104,637PeterDeLeoBE(Civ)CPEngFIEAust.ManagingDirector.ExperienceandexpertiseMrDeLeohasover30yearsexperienceintheconstructionandengineeringfields.MrDeLeoistheManagingDirectorofLycopodiumLimitedandwaspreviouslytheManagingDirectorofLycopodiumMineralsPtyLtd.OthercurrentdirectorshipsDirectorofMondiumPtyLtd.DirectorofAustralia-AfricaMineralsandEnergyGroupLimited.Formerdirectorshipsinlast3yearsNoneSpecialresponsibilitiesMemberoftheCorporateGovernanceCommitteeMemberoftheAuditCommitteeInterestsinsharesandoptionsOrdinarysharesofLycopodiumLimited1,171,711RodneyLloydLeonardBE(Hons),MSc,MAusIMM.ExecutiveDirector(Non-executivefrom1July2019)ExperienceandexpertiseMrLeonardhasinexcessof30yearsexperienceinthemineralprocessingindustryandwastheManagingDirectorofLycopodiumMineralsPtyLtdupthroughto30June2019andaNon-executiveDirectorofADPHoldings(Pty)Limited.OthercurrentdirectorshipsNon-executiveDirectorofWestAfricanResourcesLimited.Formerdirectorshipsinlast3yearsNoneSpecialresponsibilitiesMemberoftheCorporateGovernanceCommitteeMemberoftheAuditCommitteeInterestsinsharesandoptionsOrdinarysharesofLycopodiumLimited2,154,2159 D I R E C T O R S ’ R E P O R T C O N T I N U E D 10 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedDirectors'report30June2019(continued)InformationonDirectors(continued)RobertOsmettiBE(Civ),MIEAust,CPEng.ExecutiveDirector(Non-executivefrom1July2019)ExperienceandexpertiseMrOsmettihasover38yearsexperienceintheprojectmanagementandconstructionofminerals,oilrefiningandmanufacturingprojects.MrOsmettiisaDirectorofLycopodiumMineralsCanadaLimitedandwaspreviouslytheManagingDirectorofMondiumPtyLtd.OthercurrentdirectorshipsNon-executiveDirectorofQuantumGraphiteLimited.Formerdirectorshipsinlast3yearsNoneSpecialresponsibilitiesMemberoftheCorporateGovernanceCommitteeInterestsinsharesandoptionsOrdinarysharesofLycopodiumLimited266,148BrunoRuggieroBE(Mech),GradDipMinSc,GradCertEngTech,MIEAust.ExecutiveDirector.ExperienceandexpertiseMrRuggierohasover30yearsexperienceinthemineralsindustry.HecurrentlyservesastheGroupTechnicalDirectorforLycopodiumLimitedhavingoverarchingresponsibilityfortheCompany’stechnicalknowledgebase,capabilitiesanddirection.MrRuggieroisaDirectorofLycopodiumMineralsPtyLtd.OthercurrentdirectorshipsNon-executiveDirectorofECGEngineeringPtyLtdandQuantumGraphiteLimited.Formerdirectorshipsinlast3yearsNoneSpecialresponsibilitiesMemberoftheCorporateGovernanceCommitteeInterestsinsharesandoptionsOrdinarysharesofLycopodiumLimited3,167,332PeterAnthonyDawson,BSc(Hons).ExecutiveDirector.ExperienceandexpertiseMrDawsonhas30yearsexperienceintheresourcessector,initiallyinoperationsandsubsequentlyincorporateroles,includingasanexecutivedirectoroflistedpubliccompaniesandasaPartnerintheCorporateFinancedivisionofKPMG.MrDawsonisaDirectorofLycopodiumProcessIndustries,LycopodiumInfrastructurePtyLtdandADPHoldings(Pty)Limited.OthercurrentdirectorshipsNoneFormerdirectorshipsinlast3yearsNoneSpecialresponsibilitiesMemberoftheCorporateGovernanceCommitteeInterestsinsharesandoptionsNone-10 Lycopodium Annual Financial Report 2019 • 11 LycopodiumLimitedDirectors'report30June2019(continued)InformationonDirectors(continued)LawrenceWilliamMarshallB.Bus(Acc)CPA.Non-executiveDirector.ExperienceandexpertiseMrMarshallinhisroleastheformerManagingDirectorofLycopodiumLimitedandwithover40yearsexperiencehasplayedamajorroleinthedevelopmentofthegroup'sinformation,accounting,managementandriskmanagementsystems.OthercurrentdirectorshipsNoneFormerdirectorshipsinlast3yearsNoneSpecialresponsibilitiesChairmanoftheAuditCommitteeMemberoftheCorporateGovernanceCommitteeMemberoftheRemunerationCommitteeInterestsinsharesandoptionsOrdinarysharesofLycopodiumLimited1,272,332StevenChadwickBASc(Metallurgy).Non-executiveDirector.ExperienceandexpertiseMrChadwickhasover40yearsexperienceintheminingindustry,incorporatingtechnical,operatingandmanagementroles,aswellasastrongmetallurgicalbackground.MrChadwickisnowametallurgicalconsultantspecialisinginprojectmanagementwitharangeoflocalandinternationalclients.HewasafoundingDirectorofBCIronandaformerManagingDirectorofCoventryResources,PacMinMiningandNorthernGold.MrChadwickisaNon-executiveDirectorofLycopodiumLimited.OthercurrentdirectorshipsNon-executiveDirectorofQuantumGraphiteLimitedandLiontownResourcesLimited.Formerdirectorshipsinlast3yearsCoventryResourcesLimitedSpecialresponsibilitiesMemberoftheCorporateGovernanceCommitteeMemberoftheRemunerationCommitteeInterestsinsharesandoptionsNone-CompanysecretaryThecompanysecretaryisKeithJohnBakkerB.Bus(Acc),FCPA.Keithhasinexcessof30yearsexperienceinseniorfinanceandcompanysecretarialroleswithintheairline,humanresourceconsultingandminingservicessectors.HeistheChiefFinancialOfficerofLycopodiumLimited.11 D I R E C T O R S ’ R E P O R T C O N T I N U E D 12 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedDirectors'report30June2019(continued)MeetingsofDirectorsThenumbersofmeetingsoftheCompany'sboardofDirectorsandofeachboardcommitteeheldduringtheyearended30June2019,andthenumbersofmeetingsattendedbyeachDirectorwere:FullmeetingsMeetingsofMeetingsofcommitteesofdirectorsnon-executivedirectorsAuditNominationRemunerationABABABABABMichaelCaratti1212--**---11PeterDeLeo1212*-22--**-RodneyLeonard1112*-22--**-RobertOsmetti1112*-**---**-BrunoRuggerio1112*-**---**-PeterDawson1212*-**---**-LawrenceMarshall1112--12--11StevenChadwick1212--**---11Remunerationreport-auditedTheDirectorspresenttheLycopodiumLimited2019remunerationreport,outliningkeyaspectsofourremunerationpolicyandframework,andremunerationawardedthisyear.DirectorsandkeymanagementpersonneldisclosedinthisreportNamePositionMichaelCarattiChairman,Non-executiveDirectorPeterDeLeoManagingDirectorRodneyLeonardExecutiveDirectoruntil30June2019.Non-executivefrom1July2019.RobertOsmettiExecutiveDirectoruntil30June2019.Non-executivefrom1July2019.BrunoRuggieroExecutiveDirectorPeterDawsonExecutiveDirectorLawrenceMarshallNon-executiveDirectorStevenChadwickNon-executiveDirectorKeithBakkerCompanySecretary,ChiefFinancialOfficeruntil20September2019.RoleoftheremunerationcommitteeTheremunerationcommitteeisprimarilyresponsibleformakingrecommendationson:•RemunerationlevelsofexecutiveDirectorsandotherkeymanagementpersonnel,•Theover-archingexecutiveremunerationframeworkandoperationofanyincentiveplan,and•Keyperformanceindicatorsandperformancehurdlesfortheexecutiveteam.Theobjectiveistoensurethatremunerationpoliciesandstructuresarefairandcompetitiveandalignedwiththelong-terminterestsofthecompany.Non-executiveDirectorremunerationpolicyFeesandpaymentstonon-executiveDirectorsreflectthedemandswhicharemadeon,andtheresponsibilitiesof,theDirectors.Non-executiveDirectors’feesandpaymentsarereviewedannuallybytheBoardtoensurethattheyareappropriateandin-linewiththemarket.Non-executiveDirectorsarealsopaidanhourlyrateforadhocservices,asrequired.12 Lycopodium Annual Financial Report 2019 • 13 LycopodiumLimitedDirectors'report30June2019(continued)Remunerationreport-audited(continued)Non-executiveDirectorremunerationpolicy(continued)Non-executiveDirectorsdonotreceiveperformance-basedpay.Directors'feesThecurrentbasefeeswerelastreviewedwitheffectfrom1July2019.Thefeesareinclusiveofcommitteefees.DetailsonDirectorsfeesaredisclosedunderserviceagreementsonpage15.ExecutiveremunerationpolicyandframeworkIndeterminingexecutiveremuneration,theBoardaimstoensurethatremunerationpracticesare:•Competitiveandreasonable,enablingthecompanytoattractandretainkeytalent,•Alignedtothecompany’sstrategicandbusinessobjectivesandthecreationofshareholdervalue,•Transparent,and•Acceptabletoshareholders.Theexecutiveremunerationframeworkhasthreecomponents:•Fixedannualremuneration,includingsuperannuation,•Servicebonus,and•Equity.Fixedannualremunerationisstructuredasatotalemploymentcostpackagewhichisdeliveredasacombinationofsalaryandprescribednonfinancialbenefitspartlyattheexecutive’sdiscretion.Fixedannualremunerationisreviewedataminimumannuallytoensuretheexecutive’spayiscompetitivewiththemarket.Anexecutive’spayisalsoreviewedonpromotion.Aserviceorseniormanagementbonusmaybeprovidedtocertainseniorsalariedemployeespayableannually,atthediscretionofthecompany.Votingandcommentsmadeatthecompany'sAnnualGeneralMeetingTheremunerationreportforthe2018financialyearwasunanimouslyapprovedbyshareholdersduringtheAGM.ThecompanydidnotreceiveanyspecificfeedbackattheAGMorthroughouttheyearonitsremunerationpractices.CompanyperformanceTheprofitafterincometaxexpenseandbasicearningspershareforthegroupforthelastfiveyearsisasfollows:20192018(^)201720162015Revenue($)154,033,409194,531,157216,616,442124,460,218122,811,332Profit/(Loss)beforeincometax($)23,543,75225,755,48914,307,6205,215,629(1,620,068)Incometaxexpense/(benefit)($)7,144,5377,096,5933,934,0911,889,219(604,655)Profit/(Loss)afterincometax($)16,399,21518,658,89610,373,5293,326,410(1,015,413)BasicEPS(cents)41.546.625.98.0(2.3)BasicEPSgrowth,yearonyear(%)(10.9%)79.9%223.8%447.8%(123.0%)Fullyfrankeddividendspershare(cents)30.030.018.05.51.5Changeinshareprice*($)0.191.501.050.84(0.84)Returnonequity(%)20.66%25.12%15.53%5.22%(1.61%)*calculatedasthedifferencebetweentheclosingsharepriceatthestartandendoftherespectivefinancialyears.^adjustmentonadoptionofAASB913 D I R E C T O R S ’ R E P O R T C O N T I N U E D 14 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedDirectors'report30June2019(continued)Remunerationreport-audited(continued)DetailsofremunerationThefollowingtableshowsdetailsoftheremunerationexpenserecognisedforthegroup'sexecutivekeymanagementpersonnelforthecurrentandpreviousfinancialyearmeasuredinaccordancewiththerequirementsoftheaccountingstandards.2019Short-termemployeebenefitsPost-employmentbenefitsNameCashsalaryandfeesCashbonusNon-monetarybenefitsSuper-annuationTotalPerfor-mancerelated$$$$$%Non-executiveDirectorsMichaelCaratti68,493-12,3016,50787,301-LawrenceMarshall100,363-12,30125,000137,664-StevenChadwick71,250---71,250-Sub-totalnon-executivedirectors240,106-24,60231,507296,215-ExecutiveDirectorsPeterDeLeo565,00031,00012,30125,000633,301-RodneyLeonard515,00026,00012,30125,000578,301-RobertOsmetti465,00026,00012,30125,000528,301-BrunoRuggiero460,619-12,30125,000497,920-PeterDawson469,46920,37312,30120,531522,674-OtherkeymanagementpersonnelKeithBakker352,50015,000-25,000392,500-Totalkeymanagementpersonnelcompensation(group)3,067,694118,37386,107177,0383,449,212-Noelementoftheaboveremunerationisconditionaluponmeetingkeyperformanceindicators.2018Short-termemployeebenefitsPost-employmentbenefitsNameCashsalaryandfeesCashbonusNon-monetarybenefitsSuper-annuationTotalPerfor-mancerelated$$$$$%Non-executiveDirectorsMichaelCaratti54,794-11,7645,20671,764-LawrenceMarshall94,416-11,76425,000131,180-StevenChadwick79,200---79,200-Sub-totalnon-executivedirectors228,410-23,52830,206282,144-ExecutiveDirectorsPeterDeLeo500,00038,75011,76425,000575,514-RodneyLeonard425,00032,50011,76425,000494,264-RobertOsmetti305,00032,50011,76425,000374,264-BrunoRuggiero381,641-11,76425,000418,405-PeterDawson332,410-9,23516,657358,302-OtherkeymanagementpersonnelKeithBakker336,088--25,000361,088-Totalkeymanagementpersonnelcompensation(group)2,508,549103,75079,819171,8632,863,981-Noelementoftheaboveremunerationisconditionaluponmeetingkeyperformanceindicators.14 Lycopodium Annual Financial Report 2019 • 15 LycopodiumLimitedDirectors'report30June2019(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,ExecutiveDirectorNofixedtermFixedhourlyrateof$216.15forpartofyearandchangedto$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$377,500p.a.*Fixedremunerationpayablefrom1July2018andreviewedannuallybytheRemunerationCommittee.15 D I R E C T O R S ’ R E P O R T C O N T I N U E D 16 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedDirectors'report30June2019(continued)Remunerationreport-audited(continued)Serviceagreements(continued)EquityinstrumentdisclosuresrelatingtokeymanagementpersonnelThetablebelowshowsthenumberof:(i)Sharesinthecompanythatwereheldduringthefinancialyearbykeymanagementpersonnelofthegroup,includingtheirclosefamilymembersandentitiesrelatedtothem.Therewerenosharesgrantedduringthereportingperiodascompensation.(ii)ShareholdingsThenumbersofsharesintheCompanyheldduringthefinancialyearbyeachDirectorofLycopodiumLimitedandotherkeymanagementpersonnelofthegroup,includingtheirpersonallyrelatedparties,aresetoutbelow.Therewerenosharesgrantedduringthereportingperiodascompensation.2019NameBalanceatthestartoftheyearReceivedduringtheyearontheexerciseofoptionsOtherchangesduringtheyearBalanceatendoftheyearDirectorsofLycopodiumLimitedOrdinarysharesMichaelCaratti9,104,367--9,104,367PeterDeLeo1,171,711--1,171,711RodneyLeonard2,154,215--2,154,215RobertOsmetti266,148--266,148BrunoRuggiero3,167,332--3,167,332LawrenceMarshall1,272,332--1,272,332OtherkeymanagementpersonnelofthegroupOrdinarysharesKeithBakker40,874--40,87416 Lycopodium Annual Financial Report 2019 • 17 LycopodiumLimitedDirectors'report30June2019(continued)Remunerationreport-audited(continued)LoanstokeymanagementpersonnelDetailsofloansmadetoDirectorsofLycopodiumLimitedandotherkeymanagementpersonnelofthegroup,includingtheirpersonallyrelatedparties,aresetoutbelow.(i)AggregatesforkeymanagementpersonnelBalanceatthestartoftheyear$Interestpaidandpayablefortheyear$Interestnotcharged$Balanceatendoftheyear$Numberingroupattheendoftheyear201935,357--27,1071201840,607--35,3571Loansoutstandingattheendofthecurrentandprioryearincludealoantoakeymanagementpersonnelundertheseniormanagershareacquisitionplan.Allotherloanstokeymanagementpersonnelareshort-termadvancesinnatureandareinsignificant.Nowrite-downsorallowancesfordoubtfulreceivableshavebeenrecognisedinrelationtoanyloansmadetokeymanagementpersonnel.Endofremunerationreport.17 D I R E C T O R S ’ R E P O R T C O N T I N U E D 18 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedDirectors'report30June2019(continued)SharesunderoptionUnissuedordinarysharesofLycopodiumLimitedunderthekeyemployeeretentioninitiativeatthedateofthisreportareasfollows:DateoptionsgrantedExpirydateIssuepriceofsharesNumberunderoption1July201930June2024$-50,000InsuranceofofficersDuringthefinancialyear,LycopodiumLimitedtookoutinsurancecoverfortheDirectors,secretariesandseniorofficersofthecompanyanditscontrolledentities.Theliabilitiesinsuredarecostsandexpensesthatmaybeincurredindefendingcivilorcriminalproceedingsthatmaybebroughtagainsttheofficersintheircapacityasofficersofentitiesinthegroup,andanyotherpaymentsarisingfromliabilitiesincurredbytheofficersinconnectionwithsuchproceedings,otherthanwheresuchliabilitiesariseoutofconductinvolvingawilfulbreachofdutybytheofficersortheimproperusebytheofficersoftheirpositionorofinformationtogainadvantageforthemselvesorsomeoneelseortocausedetrimenttothecompany.Thedirectorshavenotincludedspecificdetailsofthepremiumpaidassuchdisclosureisprohibitedunderthetermsofthecontract.IndemnityofauditorsLycopodiumLimitedhasagreedtoindemnifytheirauditors,GrantThorntonAuditPtyLtd,totheextentpermittedbylaw,againstanyclaimbyathirdpartyarisingfromLycopodiumLimited'sbreachoftheiragreement.TheindemnitystipulatesthatLycopodiumLimitedwillmeetthefullamountofanysuchliabilitiesincludingareasonableamountoflegalcosts.ProceedingsonbehalfofthecompanyNopersonhasappliedtotheCourtundersection237oftheCorporationsAct2001forleavetobringproceedingsonbehalfoftheCompany,ortointerveneinanyproceedingstowhichtheCompanyisaparty,forthepurposeoftakingresponsibilityonbehalfoftheCompanyforallorpartofthoseproceedings.NoproceedingshavebeenbroughtorintervenedinonbehalfoftheCompanywithleaveoftheCourtundersection237oftheCorporationsAct2001.18 Lycopodium Annual Financial Report 2019 • 19 LycopodiumLimitedDirectors'report30June2019(continued)Non-auditservicesTheCompanymaydecidetoemploytheauditoronassignmentsadditionaltotheirstatutoryauditdutieswheretheauditor'sexpertiseandexperiencewiththeCompanyand/orthegroupareimportant.Detailsoftheamountspaidorpayabletotheauditor(GrantThorntonAuditPtyLtd)forauditandnon-auditservicesprovidedduringtheyeararesetoutbelow.TheboardofDirectorshasconsideredthepositionand,inaccordancewithadvicereceivedfromtheAuditCommittee,issatisfiedthattheprovisionofthenon-auditservicesiscompatiblewiththegeneralstandardofindependenceforauditorsimposedbytheCorporationsAct2001.TheDirectorsaresatisfiedthattheprovisionofnon-auditservicesbytheauditor,assetoutbelow,didnotcompromisetheauditorindependencerequirementsoftheCorporationsAct2001forthefollowingreasons:•allnon-auditserviceshavebeenreviewedbytheAuditCommitteetoensuretheydonotimpacttheimpartialityandobjectivityoftheauditor•noneoftheservicesunderminethegeneralprinciplesrelatingtoauditorindependenceassetoutinAPES110CodeofEthicsforProfessionalAccountants.Duringtheyearthefollowingfeeswerepaidorpayablefornon-auditservicesprovidedbytheauditoroftheparententity,itsrelatedpracticesandnon-relatedauditfirms:Consolidated2019$2018$TaxationservicesFirmrelatedtoGrantThorntonAuditPtyLtd:Taxcomplianceservices(includingincometaxreturns)77,94563,440NetworkfirmofGrantThorntonAuditPtyLtd:Taxcomplianceservices(includingincometaxreturns)4,85240,529Non-GrantThorntonAuditPtyLtdauditfirms:Taxcomplianceservices(includingincometaxreturns)39,79115,275Totalremunerationfortaxationservices122,588119,244OtherservicesFirmrelatedtoGrantThorntonAuditPtyLtd:Otherservices31,96839,870Non-GrantThorntonAuditPtyLtdauditfirms:Otherservices127,61757,168Totalremunerationforotherservices159,58597,038Totalremunerationfornon-auditservices282,173216,28219 D I R E C T O R S ’ R E P O R T C O N T I N U E D 20 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedDirectors'report30June2019(continued)Auditor'sindependencedeclarationAcopyoftheauditor'sindependencedeclarationasrequiredundersection307CoftheCorporationsAct2001issetoutonpage21.ThisreportismadeinaccordancewitharesolutionofDirectors.PeterDeLeoPerth30September201920 Lycopodium Annual Financial Report 2019 • 21 C O R P O R A T E G O V E R N A N C E S T A T E M E N T 22 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedCorporategovernancestatement30June2019CorporategovernancestatementTheBoardofDirectorsofLycopodiumLimitedisresponsiblefortheoverallcorporategovernanceofthecompany.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:22 Lycopodium Annual Financial Report 2019 • 23 LycopodiumLimitedCorporategovernancestatement30June2019(continued)1.0COUNCILPRINCIPLE1:LAYSOLIDFOUNDATIONSFORMANAGEMENTANDOVERSIGHT(continued)1.5CouncilRecommendation1.5:(continued)(i)therespectiveproportionsofmenandwomenontheBoard,inseniorexecutivepositionsandacrossthewholeorganisation(includinghowtheentityhasdefined'seniorexecutive'forthesepurposes);or(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;or23 C O R P O R A T E G O V E R N A N C E S T A T E M E N T C O N T I N U E D 24 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedCorporategovernancestatement30June2019(continued)2.0COUNCILPRINCIPLE2:STRUCTURETHEBOARDTOADDVALUE(continued)2.1CouncilRecommendation2.1:(continued)(b)ifitdoesnothaveanominationcommittee,disclosethefactandtheprocessitemploystoaddressBoardsuccessionissuesandtoensurethattheBoardhastheappropriatebalanceofskills,knowledge,experience,independenceanddiversitytoenableittodischargeitsdutiesandresponsibilitieseffectively.TheCompanydoesnotcomplywiththisrecommendation.TheroleofthenominationcommitteeiscarriedoutbythefullBoard.TheBoardintendstoreconsidertheformationofaseparateNominationCommitteeastheCompany'soperationsevolve.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.24 Lycopodium Annual Financial Report 2019 • 25 LycopodiumLimitedCorporategovernancestatement30June2019(continued)2.0COUNCILPRINCIPLE2:STRUCTURETHEBOARDTOADDVALUE(continued)2.6CouncilRecommendation2.6:Alistedentityshouldhaveaprogramforinductingnewdirectorsandprovideappropriateprofessionaldevelopmentopportunitiesfordirectorstodevelopandmaintaintheskillsandknowledgeneededtoperformtheroleasdirectorseffectively.TheCompanycomplieswiththisrecommendation.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.25 C O R P O R A T E G O V E R N A N C E S T A T E M E N T C O N T I N U E D 26 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedCorporategovernancestatement30June2019(continued)4.0COUNCILPRINCIPLE4:SAFEGUARDINTEGRITYINCORPORATEREPORTING(continued)4.3CouncilRecommendation4.3:AlistedentitythathasanAGMshouldensurethatitsexternalauditorattendsitsAGMandisavailabletoanswerquestionsfromsecurityholdersrelevanttotheaudit.TheCompanycomplieswiththisrecommendation.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:RECOGNISEANDMANAGERISK26 Lycopodium Annual Financial Report 2019 • 27 LycopodiumLimitedCorporategovernancestatement30June2019(continued)7.0COUNCILPRINCIPLE7:RECOGNISEANDMANAGERISK(continued)7.1CouncilRecommendation7.1: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.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.27 C O R P O R A T E G O V E R N A N C E S T A T E M E N T C O N T I N U E D 28 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedCorporategovernancestatement30June2019(continued)7.0COUNCILPRINCIPLE7:RECOGNISEANDMANAGERISK(continued)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;or(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.28 C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S A N D O T H E R C O M P R E H E N S I V E I N C O M E F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9 Lycopodium Annual Financial Report 2019 • 29 LycopodiumLimitedConsolidatedstatementofprofitorlossandothercomprehensiveincomeFortheyearended30June2019ConsolidatedNotes2019$2018$Revenuefromcontractswithcustomers5(a)151,141,564192,016,864Interestincome1,809,9661,883,705Otherincome1,081,879630,588Totalincome154,033,409194,531,157Employeebenefitsexpense(66,674,748)(67,562,580)Depreciationandamortisationexpense6(1,452,682)(1,228,479)Projectexpenses(5,488,508)(5,338,038)Equipmentandmaterials(18,418,452)(23,838,936)Contractors(32,128,652)(41,753,703)Occupancyexpense(8,111,165)(8,577,494)Impairmentofgoodwill16-(1,095,048)Otherexpenses(12,164,121)(8,293,117)Warrantyprovisionreversal/expenses1813,361,009(12,080,213)Financecosts(72,270)(120,741)Shareofnetprofitofassociatesandjointventuresaccountedforusingtheequitymethod659,9321,112,681Profitbeforeincometax23,543,75225,755,489Incometaxexpense7(7,144,537)(7,096,593)Profitfortheyear16,399,21518,658,896OthercomprehensiveincomeItemsthatmaybereclassifiedtoprofitorlossExchangegains/(losses)ontranslationofforeignoperations327,699(26,508)Totalcomprehensiveincomefortheyear16,726,91418,632,388Profitfortheyearisattributableto:OwnersofLycopodiumLimited16,507,37818,495,695Non-controllinginterests(108,163)163,20116,399,21518,658,896Totalcomprehensiveincomefortheyearisattributableto:OwnersofLycopodiumLimited16,835,07718,469,187Non-controllinginterests(108,163)163,20116,726,91418,632,388CentsCentsEarningspershareforprofitattributabletotheordinaryequityholdersoftheCompany:Basicearningspershare34(a)41.546.6Dilutedearningspershare34(b)41.546.6Theaboveconsolidatedstatementofprofitorlossandothercomprehensiveincomeshouldbereadinconjunctionwiththeaccompanyingnotes.29LycopodiumLimitedConsolidatedstatementofprofitorlossandothercomprehensiveincomeFortheyearended30June2019ConsolidatedNotes2019$2018$Revenuefromcontractswithcustomers5(a)151,141,564192,016,864Interestincome1,809,9661,883,705Otherincome1,081,879630,588Totalincome154,033,409194,531,157Employeebenefitsexpense(66,674,748)(67,562,580)Depreciationandamortisationexpense6(1,452,682)(1,228,479)Projectexpenses(5,488,508)(5,338,038)Equipmentandmaterials(18,418,452)(23,838,936)Contractors(32,128,652)(41,753,703)Occupancyexpense(8,111,165)(8,577,494)Impairmentofgoodwill16-(1,095,048)Otherexpenses(12,164,121)(8,293,117)Warrantyprovisionreversal/expenses1813,361,009(12,080,213)Financecosts(72,270)(120,741)Shareofnetprofitofassociatesandjointventuresaccountedforusingtheequitymethod659,9321,112,681Profitbeforeincometax23,543,75225,755,489Incometaxexpense7(7,144,537)(7,096,593)Profitfortheyear16,399,21518,658,896OthercomprehensiveincomeItemsthatmaybereclassifiedtoprofitorlossExchangegains/(losses)ontranslationofforeignoperations327,699(26,508)Totalcomprehensiveincomefortheyear16,726,91418,632,388Profitfortheyearisattributableto:OwnersofLycopodiumLimited16,507,37818,495,695Non-controllinginterests(108,163)163,20116,399,21518,658,896Totalcomprehensiveincomefortheyearisattributableto:OwnersofLycopodiumLimited16,835,07718,469,187Non-controllinginterests(108,163)163,20116,726,91418,632,388CentsCentsEarningspershareforprofitattributabletotheordinaryequityholdersoftheCompany:Basicearningspershare34(a)41.546.6Dilutedearningspershare34(b)41.546.6Theaboveconsolidatedstatementofprofitorlossandothercomprehensiveincomeshouldbereadinconjunctionwiththeaccompanyingnotes.29 C O N S O L I D A T E D B A L A N C E S H E E T A S A T 3 0 J U N E 2 0 1 9 30 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedConsolidatedbalancesheetAsat30June2019ConsolidatedNotes2019$2018$ASSETSCurrentassetsCashandcashequivalents860,451,04874,287,788Tradeandotherreceivables934,394,83937,616,637Contractandotherassets5(b)1,497,4672,669,078Inventories884,337819,844Currenttaxreceivables1,783,9661,334,151Othercurrentassets103,835,6511,740,851Totalcurrentassets102,847,308118,468,349Non-currentassetsInvestmentsinlistedequities11(a)801,9451,256,106Property,plantandequipment143,768,4523,434,487Intangibleassets166,737,4476,792,017Otherreceivables12241,252332,356Deferredtaxassets154,062,9958,350,798Investmentsaccountedforusingtheequitymethod131,392,4652,767,690Totalnon-currentassets17,004,55622,933,454Totalassets119,851,864141,401,803LIABILITIESCurrentliabilitiesTradeandotherpayables1721,938,77619,798,860Contractandotherliabilities5(b)13,793,24114,619,449Borrowings11(c)419,344696,905Derivativefinancialliabilities11(b)163,04427,694Currenttaxliabilities494,4129,568,881Provisions183,000,00016,361,009Totalcurrentliabilities39,808,81761,072,798Non-currentliabilitiesBorrowings11(c)296,216562,066Provisions20328,931416,531Totalnon-currentliabilities625,147978,597Totalliabilities40,433,96462,051,395Netassets79,417,90079,350,408EQUITYContributedequity2120,823,77220,823,772Reserves22(602,928)(930,627)Retainedearnings2359,636,15456,480,343Parententityinterest79,856,99876,373,488Non-controllinginterests24(439,098)2,976,920Totalequity79,417,90079,350,408Theaboveconsolidatedbalancesheetshouldbereadinconjunctionwiththeaccompanyingnotes.30LycopodiumLimitedConsolidatedbalancesheetAsat30June2019ConsolidatedNotes2019$2018$ASSETSCurrentassetsCashandcashequivalents860,451,04874,287,788Tradeandotherreceivables934,394,83937,616,637Contractandotherassets5(b)1,497,4672,669,078Inventories884,337819,844Currenttaxreceivables1,783,9661,334,151Othercurrentassets103,835,6511,740,851Totalcurrentassets102,847,308118,468,349Non-currentassetsInvestmentsinlistedequities11(a)801,9451,256,106Property,plantandequipment143,768,4523,434,487Intangibleassets166,737,4476,792,017Otherreceivables12241,252332,356Deferredtaxassets154,062,9958,350,798Investmentsaccountedforusingtheequitymethod131,392,4652,767,690Totalnon-currentassets17,004,55622,933,454Totalassets119,851,864141,401,803LIABILITIESCurrentliabilitiesTradeandotherpayables1721,938,77619,798,860Contractandotherliabilities5(b)13,793,24114,619,449Borrowings11(c)419,344696,905Derivativefinancialliabilities11(b)163,04427,694Currenttaxliabilities494,4129,568,881Provisions183,000,00016,361,009Totalcurrentliabilities39,808,81761,072,798Non-currentliabilitiesBorrowings11(c)296,216562,066Provisions20328,931416,531Totalnon-currentliabilities625,147978,597Totalliabilities40,433,96462,051,395Netassets79,417,90079,350,408EQUITYContributedequity2120,823,77220,823,772Reserves22(602,928)(930,627)Retainedearnings2359,636,15456,480,343Parententityinterest79,856,99876,373,488Non-controllinginterests24(439,098)2,976,920Totalequity79,417,90079,350,408Theaboveconsolidatedbalancesheetshouldbereadinconjunctionwiththeaccompanyingnotes.30 C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9 Attributable to members of Lycopodium Limited Consolidated Notes Contributed equity $ Retained earnings $ Foreign currency translation reserve $ Available for sale investment revaluation reserve $ Performance rights reserve $ Non- controlling interests $ Total equity $ Balance at 1 July 2017 Adjustment on adoption of AASB 9 (net of tax) Adjusted balance as 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 25 20,823,772 46,412,369 (904,119) (83,923) - (83,923) - 83,923 20,823,772 46,328,446 (904,119) - - - - - - 18,495,695 - - (26,508) 18,495,695 (26,508) - (8,343,798) (8,343,798) - - - Balance at 30 June 2018 20,823,772 56,480,343 (930,627) Balance at 1 July 2018 20,823,772 56,480,343 (930,627) Profit for the year Other comprehensive income / (expense) Total comprehensive income for the year Transactions with owners in their capacity as owners: Non-controlling interests on acquisition of subsidiary Foreign currency translation with non-controlling interest Dividends provided for or paid 30 25 - - - - - - - 16,507,378 - - 327,699 16,507,378 327,699 (239,884) - (13,111,683) (13,351,567) - - - - Balance at 30 June 2019 20,823,772 59,636,154 (602,928) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2,975,233 69,223,332 - - 2,975,233 69,223,332 163,201 18,658,896 - (26,508) 2,976,920 79,350,408 (161,514) (161,514) - (8,343,798) (161,514) (8,505,312) 2,976,920 79,350,408 2,976,920 79,350,408 (108,163) 16,399,215 - 327,699 (108,163) 16,726,914 (3,122,048) (3,361,932) (185,807) (185,807) - (13,111,683) (3,307,855) (16,659,422) (439,098) 79,417,900 Lycopodium Annual Financial Report 2019 • 31 LycopodiumLimitedConsolidatedbalancesheetAsat30June2019ConsolidatedNotes2019$2018$ASSETSCurrentassetsCashandcashequivalents860,451,04874,287,788Tradeandotherreceivables934,394,83937,616,637Contractandotherassets5(b)1,497,4672,669,078Inventories884,337819,844Currenttaxreceivables1,783,9661,334,151Othercurrentassets103,835,6511,740,851Totalcurrentassets102,847,308118,468,349Non-currentassetsInvestmentsinlistedequities11(a)801,9451,256,106Property,plantandequipment143,768,4523,434,487Intangibleassets166,737,4476,792,017Otherreceivables12241,252332,356Deferredtaxassets154,062,9958,350,798Investmentsaccountedforusingtheequitymethod131,392,4652,767,690Totalnon-currentassets17,004,55622,933,454Totalassets119,851,864141,401,803LIABILITIESCurrentliabilitiesTradeandotherpayables1721,938,77619,798,860Contractandotherliabilities5(b)13,793,24114,619,449Borrowings11(c)419,344696,905Derivativefinancialliabilities11(b)163,04427,694Currenttaxliabilities494,4129,568,881Provisions183,000,00016,361,009Totalcurrentliabilities39,808,81761,072,798Non-currentliabilitiesBorrowings11(c)296,216562,066Provisions20328,931416,531Totalnon-currentliabilities625,147978,597Totalliabilities40,433,96462,051,395Netassets79,417,90079,350,408EQUITYContributedequity2120,823,77220,823,772Reserves22(602,928)(930,627)Retainedearnings2359,636,15456,480,343Parententityinterest79,856,99876,373,488Non-controllinginterests24(439,098)2,976,920Totalequity79,417,90079,350,408Theaboveconsolidatedbalancesheetshouldbereadinconjunctionwiththeaccompanyingnotes.30 C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9 32 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedConsolidatedstatementofcashflowsFortheyearended30June2019ConsolidatedNotes2019$2018$CashflowsfromoperatingactivitiesReceiptsfromcustomers(inclusiveofGST)158,276,427170,346,647Paymentstosuppliersandemployees(inclusiveofGST)(146,585,727)(168,124,948)11,690,7002,221,699Interestreceived1,809,1791,847,145Incometaxespaid(12,381,019)(5,909,452)Netcashinflow/(outflow)fromoperatingactivities331,118,860(1,840,608)CashflowsfrominvestingactivitiesDividendsreceivedfromjointventuresandassociate2,035,157572,726Paymentsforacquisitionofnon-controllinginterests30(3,361,932)-Paymentsforproperty,plantandequipment14(1,605,111)(1,053,110)Proceedsfromsaleofproperty,plantandequipment1,06420,240Paymentsforintangibleassets16(144,819)(631,529)Proceedsfrominvestmentsinlistedequities970,8381,187,036Paymentsforinvestmentsinlistedequities-(75,000)Netcash(outflow)/inflowfrominvestingactivities(2,104,803)20,363CashflowsfromfinancingactivitiesProceedsfromborrowings461,8411,274,258Repaymentsofborrowings(691,959)(1,203,222)Repaymentsofhirepurchaseandleaseliabilities(544,955)(504,329)Loansrepaid/(advanced)from/tojointventure400,000(884,000)Repaymentofloansfromassociate-387,500Rebatesfromleaseholdimprovementallowance171,865-Dividendspaidtocompany'sshareholders(13,111,682)(8,343,798)Proceedsfromrepaymentofloansundertheseniormanagershareacquisitionplan91,104110,261Netcashoutflowfromfinancingactivities(13,223,786)(9,163,330)Netdecreaseincashandcashequivalents(14,209,729)(10,983,575)Cashandcashequivalentsatthebeginningofthefinancialyear74,287,78885,334,768Effectsofexchangeratechangesoncashandcashequivalents372,989(63,405)Cashandcashequivalentsattheendoffinancialyear860,451,04874,287,788Theaboveconsolidatedstatementofcashflowsshouldbereadinconjunctionwiththeaccompanyingnotes.32LycopodiumLimitedConsolidatedstatementofcashflowsFortheyearended30June2019ConsolidatedNotes2019$2018$CashflowsfromoperatingactivitiesReceiptsfromcustomers(inclusiveofGST)158,276,427170,346,647Paymentstosuppliersandemployees(inclusiveofGST)(146,585,727)(168,124,948)11,690,7002,221,699Interestreceived1,809,1791,847,145Incometaxespaid(12,381,019)(5,909,452)Netcashinflow/(outflow)fromoperatingactivities331,118,860(1,840,608)CashflowsfrominvestingactivitiesDividendsreceivedfromjointventuresandassociate2,035,157572,726Paymentsforacquisitionofnon-controllinginterests30(3,361,932)-Paymentsforproperty,plantandequipment14(1,605,111)(1,053,110)Proceedsfromsaleofproperty,plantandequipment1,06420,240Paymentsforintangibleassets16(144,819)(631,529)Proceedsfrominvestmentsinlistedequities970,8381,187,036Paymentsforinvestmentsinlistedequities-(75,000)Netcash(outflow)/inflowfrominvestingactivities(2,104,803)20,363CashflowsfromfinancingactivitiesProceedsfromborrowings461,8411,274,258Repaymentsofborrowings(691,959)(1,203,222)Repaymentsofhirepurchaseandleaseliabilities(544,955)(504,329)Loansrepaid/(advanced)from/tojointventure400,000(884,000)Repaymentofloansfromassociate-387,500Rebatesfromleaseholdimprovementallowance171,865-Dividendspaidtocompany'sshareholders(13,111,682)(8,343,798)Proceedsfromrepaymentofloansundertheseniormanagershareacquisitionplan91,104110,261Netcashoutflowfromfinancingactivities(13,223,786)(9,163,330)Netdecreaseincashandcashequivalents(14,209,729)(10,983,575)Cashandcashequivalentsatthebeginningofthefinancialyear74,287,78885,334,768Effectsofexchangeratechangesoncashandcashequivalents372,989(63,405)Cashandcashequivalentsattheendoffinancialyear860,451,04874,287,788Theaboveconsolidatedstatementofcashflowsshouldbereadinconjunctionwiththeaccompanyingnotes.32 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 Lycopodium Annual Financial Report 2019 • 33 LycopodiumLimitedNotestothefinancialstatements30June2019ContentsofthenotestothefinancialstatementsPage1Summaryofsignificantaccountingpolicies342Financialriskmanagement493Criticalaccountingestimatesandassumptions534Segmentinformation545Revenue586Expenses597Incometaxexpense598Currentassets-Cashandcashequivalents619Currentassets-Tradeandotherreceivables6110Currentassets-Othercurrentassets6211Financialassetsandfinancialliabilities6312Non-currentassets-Otherreceivables6613Non-currentassets-Investmentsaccountedforusingtheequitymethod6614Non-currentassets-Property,plantandequipment6915Non-currentassets-Deferredtaxassets7016Non-currentassets-Intangibleassets7117Currentliabilities-Tradeandotherpayables7418Currentliabilities-Provisions7519Non-currentliabilities-Deferredtaxliabilities7620Non-currentliabilities-Provisions7621Contributedequity7724Non-controllinginterests7925Dividends7926Remunerationofauditors8127Contingencies8228Commitments8229Relatedpartytransactions8430Businesscombination8631Subsidiaries8632Eventsoccurringafterthereportingperiod8633Reconciliationofprofitafterincometaxtonetcashinflowfromoperatingactivities8734Earningspershare8735Share-basedpayments8836Parententityfinancialinformation8933 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 34 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1SummaryofsignificantaccountingpoliciesTheprincipalaccountingpoliciesadoptedinthepreparationofthisconsolidatedfinancialreportaresetoutbelow.Thesepolicieshavebeenconsistentlyappliedtoalltheyearspresented,unlessotherwisestated.ThefinancialreportcomprisesthefinancialstatementsforthegroupconsistingofLycopodiumLimitedanditssubsidiaries.(a)BasisofpreparationThisgeneralpurposefinancialreporthasbeenpreparedinaccordancewithAustralianAccountingStandardsandInterpretationsissuedbytheAustralianAccountingStandardsBoardandtheCorporationsAct2001.LycopodiumLimitedisafor-profitentityforthepurposeofpreparingthefinancialreport.(i)CompliancewithIFRSTheconsolidatedfinancialreportoftheLycopodiumLimitedgroupcomplieswithInternationalFinancialReportingStandards(IFRS)asissuedbytheInternationalAccountingStandardsBoard(IASB).(ii)NewandamendedstandardsadoptedbythegroupTheaccountingpoliciesadoptedinthepreparationoftheannualfinancialreportsareconsistentwiththosefollowedinthepreparationoftheGroup'sannualfinancialstatementsfortheyearended30June2018.Anumberofneworamendedstandardsbecameapplicableforthecurrentreportingperiodasdetailedbelow.AASB9FinancialInstrumentsEffective1January2018,AASB9replacesAASB139FinancialInstruments:RecognitionandMeasurement.AASB9includesrevisedguidanceontheclassificationandmeasurementoffinancialinstruments,anewexpectedcreditlossmodelforcalculationofimpairmentonfinancialassets,andnewgeneralhedgeaccountingrequirements.TheGrouphasappliedAASB9retrospectively,withtheinitialapplicationdateof1July2017.(a)ClassificationandmeasurementUnderAASB9,theGroupinitiallymeasuresafinancialassetatitsfairvalueplustransactioncosts.Financialassetsaresubsequentlymeasuredatfairvaluethroughprofitorloss(FVPL),amortisedcost,orfairvaluethroughothercomprehensiveincome(FVOCI).Theclassificationisbasedontwocriteria:TheGroup'sbusinessmodelformanagingtheassets;andwhethertheinstruments'contractualcashflowsrepresent'solelypaymentsofprincipalandinterest'ontheprincipalamountoutstanding(the'SPPIcriterion').ForfinancialassetsthatareEquityinvestmentswhichfortheGroup,areinvestmentsinlistedshareswithquotedmarketpriceonstockexchanges,theGrouptreatsfairvaluegainsandlossesthroughprofitandloss.ThenewclassificationandmeasurementoftheGroup'sdebtfinancialassetsare,asfollows:•DebtinstrumentsatamortisedcostforfinancialassetsthatareheldwithinabusinessmodelwiththeobjectivetoholdthefinancialassetsinordertocollectcontractualcashflowsthatmeettheSPPIcriterion.ThisincludestheGroup'stradeandotherreceivables,anddepositundertheothercurrentassets.TheassessmentoftheGroup'sbusinessmodelswasmadeasofthedateofinitialapplication,1July2018,andthenappliedretrospectivelytothosefinancialassetsthatwerenotderecognisedbefore1July2018.Theassessmentofwhethercontractualcashflowsondebtinstrumentsaresolelycomprisedofprincipalandinterestwasmadebasedonthefactsandcircumstancesasattheinitialrecognitionoftheassets.TheaccountingfortheGroup'sfinancialliabilitiesremainslargelythesameasitwasunderAASB139.TheadoptionofAASB9onlyimpactedthetreatmentofEquityinvestments.Underthesupersededstandard(AASB139),unrealisedfairvaluemovementsinEquityinvestmentswererecordedthroughOtherComprehensiveIncome.Theimpactofthischangehasbeenappliedfully,retrospectivelytocomparativeperiodsinthisfinancialreport.Theeffectsareasfollows:34 Lycopodium Annual Financial Report 2019 • 35 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(a)Basisofpreparation(continued)(ii)Newandamendedstandardsadoptedbythegroup(continued)•a(decrease)/increaseinRetainedEarningsasat1July2017of($83,923)andasat30June2018of$241,588withacorrespondingincrease/(decrease)respectivelyinAssetRevaluationReserve.•adecreaseinOtherComprehensiveIncomeof$325,511withacorrespondingincreaseinProfitorLossAfterTaxfortheyearended30June2018•anincreasetoInvestmentsinlistedequitiesof$1,256,106at30June2018,whichwasre-classifiedfromthepreviousclassificationofAvailable-for-salefinancialassets.TherewerenoothersignificantimpactontheGroupandthereforenofurtheradjustmentstoRetainedEarningsofpreviousperiodspresentedinthisFinancialReport.(b)ImpairmentAASB9introducesaforward-lookingexpectedcreditloss(ECL)approachtoaccountforimpairmentlossesforfinancialassets.ThishasreplacedAASB139'sincurredlossapproach.AASB9requirestheGrouptorecordanallowanceforECLsforallloansandotherdebtfinancialassetsnotheldatfairvaluethroughprofitorloss(FVPL).ECLsarebasedonthedifferencebetweenthecontractualcashflowsdueinaccordancewiththecontractandallthecashflowsthattheGroupexpectstoreceive.Theshortfallisthendiscountedatanapproximationtotheasset'soriginaleffectiveinterestrate.ForTradeandotherreceivables,theGrouphasappliedthestandardssimplifiedapproachandhascalculatedECLsbasedonlifetimeexpectedcreditlosses.TheGrouptakesupaprovisionfordoubtfuldebtsbasedontheGroup'shistoricalcreditlossexperience,adjustedforforward-lookingfactorsspecifictothedebtorsandtheeconomicenvironment.TheGroupconsidersafinancialassetindefaultwheninternalorexternalinformationindicatesthattheGroupisunlikelytoreceivetheoutstandingcontractualamountsinfullbeforetakingintoaccountanycreditenhancementheldbytheGroup.TheadoptionoftheECLrequirementsofAASB9didnotresultinanychangeinimpairmentallowancefortheGroup'sdebtfinancialassets.AASB15RevenuefromContractswithCustomersAASB15RevenuefromContractswithCustomersreplacesAASB118andisbasedontheprinciplethatrevenueisrecognisedwhencontrolofagoodorservicetransferstoacustomer.TheGroupadoptedthenewaccountingstandardinthefinancialyearusingthefullretrospectiveapproach.However,therewerenoadjustmentsrecognisedupontransitiontoopeningretainedearnings.ManagementhasundertakenadetailedreviewofAASB15togetherwithadetailedreviewofallmaterialrevenuecontracts.Thisreviewincludedassessingallcontracttypesfortheallrevenuestreamsbeing(i)Engineeringandrelatedservicesand(ii)ConstructionContractsagainstthe5-stepmodelforrecognisingrevenueoutlinedinAASB15.Thereviewconsideredpotentialchangesinthetimingofrevenuerecognition,measurementoftheamountofrevenueandnotedisclosurechangesbetweenthecurrentstandard,AASB118,andAASB15.Financialstatementreclassificationswereappliedretrospectivelyto30June2018andresultedin$2,669,078beingre-classifiedfromTradeandotherreceivablestoContractAssetsand$14,619,449beingre-classifiedfromTradeandotherpayablestoContractLiabilities.(iii)HistoricalcostconventionThesefinancialstatementshavebeenpreparedunderthehistoricalcostconvention,asmodifiedbythefinancialassets/liabilitiesatfairvaluethroughprofitandloss.35 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 36 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(a)Basisofpreparation(continued)(iv)CriticalaccountingestimatesThepreparationoffinancialreportrequirestheuseofcertaincriticalaccountingestimates.Italsorequiresmanagementtoexerciseitsjudgementintheprocessofapplyingthegroup'saccountingpolicies.Theareasinvolvingahigherdegreeofjudgementorcomplexity,orareaswhereassumptionsandestimatesaresignificanttothefinancialreport,aredisclosedinnote3.(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.LycopodiumLimitedhasjointventurearrangements.JointventuresInterestinjointventuresareaccountedforusingtheequitymethod(see(v)below),afterinitiallybeingrecognisedatcostintheconsolidatedbalancesheet.(iv)AssociatesAssociatesareallentitiesoverwhichthegrouphassignificantinfluencebutnotcontrolorjointcontrol.Thisisgenerallythecasewherethegroupholdsbetween20%and50%ofthevotingrights.Investmentsinassociatesareaccountedforusingtheequitymethodofaccounting(see(v)below),afterinitiallybeingrecognisedatcost.(v)Equitymethod36 Lycopodium Annual Financial Report 2019 • 37 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(b)Principlesofconsolidation(continued)(v)Equitymethod(continued)Undertheequitymethodofaccounting,theinvestmentsareinitiallyrecognisedatcostandadjustedthereaftertorecognisethegroup'sshareofthepost-acquisitionprofitsorlossesoftheinvesteeinprofitorloss,andthegroup'sshareofmovementsinothercomprehensiveincomeoftheinvesteeinothercomprehensiveincome.Dividendsreceivedorreceivablefromassociatesandjointventuresarerecognisedasareductioninthecarryingamountoftheinvestment.Whenthegroup'sshareoflossesinanequity-accountedinvestmentequalsorexceedsitsinterestintheentity,includinganyotherunsecuredlong-termreceivables,thegroupdoesnotrecognisefurtherlosses,unlessithasincurredobligationsormadepaymentsonbehalfoftheotherentity.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)RevenueandotherincomerecognitionRevenuefromcontractswithcustomersTheGrouprecognisesrevenueonan“overtime”basis.ThisappliestothetwoservicesofwhichtheGroupprovides:•Engineeringandrelatedservices•ConstructionContractsTodeterminewhethertorecogniserevenue,theGroupfollowsa5-stepprocess:(1)Identifyingthecontractwithacustomer(2)Identifyingtheperformanceobligations(3)Determiningthetransactionprice(4)Allocatingthetransactionpricetotheperformanceobligations(5)Recognisingrevenuewhen/asperformanceobligation(s)aresatisfied37 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 38 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(d)Revenueandotherincomerecognition(continued)Forworkbeingperformedinthecompletionofcontractswithfixedprices,thecustomercontrolstheassetsasitiscreatedorenhanced.Progresstowardscompletionofthecontractismeasuredaccordingtotheproportionofcontractcostsincurredforworkperformedtodaterelativetotheestimatetotalcontractcosts.Whenitisprobablethattotalcontractcostswillexceedtotalcontractrevenue,theexpectedlossisrecognisedasanexpenseimmediately.Whererecognisedrevenuesexceedprogressbillings,thesurplusisshowninContractAssets.Forcontractswhereprogressbillingsexceedrecognisedrevenues,thesurplusisshownasContractLiabilities.Certaincustomercontractsareman-hoursandexpensebased.Inthesecircumstances,revenueisrecognisedovertimeastheGrouphasarighttoconsiderationfromthecustomerinanamountthatcorrespondsdirectlywiththevaluetothecustomeroftheentity’sperformancecompletedatthetimeofbilling.TheGroupthereforerecognisesrevenueintheamounttowhichtheGrouphastherighttoinvoice.InterestandOtherincomeInterestrevenueisrecognisedonanaccrualbasis.Dividendincomeisrecognisedwhenthedividendisdeclared.Rentalincomeisrecognisedonastraightlinebasisoverthetermoftheoperatinglease.(e)Foreigncurrencytranslation(i)FunctionalandpresentationcurrencyItemsincludedinthefinancialreportofeachofthegroup'sentitiesaremeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates('thefunctionalcurrency').TheconsolidatedfinancialreportarepresentedinAustraliandollars,whichisLycopodiumLimited'sfunctionalandpresentationcurrency.(ii)TransactionsandbalancesForeigncurrencytransactionsaretranslatedintothefunctionalcurrencyusingtheexchangeratesprevailingatthedatesofthetransactions.Foreignexchangegainsandlossesresultingfromthesettlementofsuchtransactionsandfromthetranslationatyearendexchangeratesofmonetaryassetsandliabilitiesdenominatedinforeigncurrenciesarerecognisedinprofitandloss.Translationdifferencesonfinancialassetsandliabilitiescarriedatfairvaluearereportedaspartofthefairvaluegainorloss.Translationdifferencesonnon-monetaryassetsandliabilitiessuchasequitiesheldatfairvaluethroughprofitorlossarerecognisedinprofitorlossaspartofthefairvaluegainorloss.Translationdifferencesonnon-monetaryassetssuchasequitiesclassifiedasavailable-for-salefinancialassetsarerecognisedinothercomprehensiveincome.(iii)ConsolidatedentitiesTheresultsandfinancialpositionofforeignoperations(noneofwhichhasthecurrencyofahyperinflationaryeconomy)thathaveafunctionalcurrencydifferentfromthepresentationcurrencyaretranslatedintothepresentationcurrencyasfollows:•assetsandliabilitiesforeachbalancesheetpresentedaretranslatedattheclosingrateatthedateofthatbalancesheet•incomeandexpensesforeachstatementofcomprehensiveincomearetranslatedataverageexchangerates(unlessthisisnotareasonableapproximationofthecumulativeeffectoftheratesprevailingonthetransactiondates,inwhichcaseincomeandexpensesaretranslatedatthedatesofthetransactions),and•allresultingexchangedifferencesarerecognisedinothercomprehensiveincome.38 Lycopodium Annual Financial Report 2019 • 39 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(e)Foreigncurrencytranslation(continued)(iii)Consolidatedentities(continued)Onconsolidation,exchangedifferencesarisingfromthetranslationofanynetinvestmentinforeignoperations,andofborrowingsandotherfinancialinstrumentsdesignatedashedgesofsuchinvestments,arerecognisedinothercomprehensiveincome.Whenaforeignoperationissoldoranyborrowingsformingpartofthenetinvestmentarerepaid,associatedexchangedifferencesarerecognisedintheprofitandloss,aspartofthegainorlossonsalewhereapplicable.(f)IncometaxTheincometaxexpenseorcreditfortheyearisthetaxpayableonthecurrentyear'staxableincomebasedontheapplicableincometaxrateforeachjurisdictionadjustedbychangesindeferredtaxassetsandliabilitiesattributabletotemporarydifferencesandtounusedtaxlosses.ThecurrentincometaxchargeiscalculatedonthebasisofthetaxlawsenactedorsubstantivelyenactedattheendofthereportingyearinthecountrieswheretheCompanyanditssubsidiariesandassociatesoperateandgeneratetaxableincome.Managementperiodicallyevaluatespositionstakenintaxreturnswithrespecttosituationsinwhichapplicabletaxregulationissubjecttointerpretation.Itestablishesprovisionswhereappropriateonthebasisofamountsexpectedtobepaidtothetaxauthorities.Deferredincometaxisprovidedinfull,usingtheliabilitymethod,ontemporarydifferencesarisingbetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsintheconsolidatedfinancialreport.However,deferredtaxliabilitiesarenotrecognisediftheyarisefromtheinitialrecognitionofgoodwill.Deferredincometaxisalsonotaccountedforifitarisesfrominitialrecognitionofanassetorliabilityinatransactionotherthanabusinesscombinationthatatthetimeofthetransactionaffectsneitheraccountingnortaxableprofitorloss.Deferredincometaxisdeterminedusingtaxrates(andlaws)thathavebeenenactedorsubstantiallyenactedbytheendofthereportingyearandareexpectedtoapplywhentherelateddeferredincometaxassetisrealisedorthedeferredincometaxliabilityissettled.Deferredtaxassetsarerecognisedonlyifitisprobablethatfuturetaxableamountswillbeavailabletoutilisethosetemporarydifferencesandlosses.DeferredtaxliabilitiesandassetsarenotrecognisedfortemporarydifferencesbetweenthecarryingamountandtaxbasesofinvestmentsinforeignoperationswheretheCompanyisabletocontrolthetimingofthereversalofthetemporarydifferencesanditisprobablethatthedifferenceswillnotreverseintheforeseeablefuture.Deferredtaxassetsandliabilitiesareoffsetwhenthereisalegallyenforceablerighttooffsetcurrenttaxassetsandliabilitiesandwhenthedeferredtaxbalancesrelatetothesametaxationauthority.Currenttaxassetsandtaxliabilitiesareoffsetwheretheentityhasalegallyenforceablerighttooffsetandintendseithertosettleonanetbasis,ortorealisetheassetandsettletheliabilitysimultaneously.LycopodiumLimitedanditswholly-ownedAustraliancontrolledentitieshaveimplementedthetaxconsolidationlegislationeffective1July2013.Asaconsequence,theseentitiesaretaxedasasingleentityandthedeferredtaxassetsandliabilitiesoftheseentitiesaresetoffintheconsolidatedfinancialreport.Currentanddeferredtaxisrecognisedinprofitorloss,excepttotheextentthatitrelatestoitemsrecognisedinothercomprehensiveincomeordirectlyinequity.Inthiscase,thetaxisalsorecognisedinothercomprehensiveincomeordirectlyinequity,respectively.39 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 40 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(g)LeasesLeasesofproperty,plantandequipmentwherethegroup,aslessee,hassubstantiallyalltherisksandrewardsofownershipareclassifiedasfinanceleases.Financeleasesarecapitalisedatthelease'sinceptionatthefairvalueoftheleasedpropertyor,iflower,thepresentvalueoftheminimumleasepayments.Thecorrespondingrentalobligations,netoffinancecharges,areincludedinothershort-termandlong-termpayables.Eachleasepaymentisallocatedbetweentheliabilityandfinancecost.Thefinancecostischargedtoprofitorlossovertheleaseperiodsoastoproduceaconstantperiodicrateofinterestontheremainingbalanceoftheliabilityforeachperiod.Theproperty,plantandequipmentacquiredunderfinanceleasesisdepreciatedovertheasset'susefullifeorovertheshorteroftheasset'susefullifeandtheleasetermifthereisnoreasonablecertaintythatthegroupwillobtainownershipattheendoftheleaseterm.Leasesinwhichasignificantportionoftherisksandrewardsofownershiparenottransferredtothegroupaslesseeareclassifiedasoperatingleases(note28).Paymentsmadeunderoperatingleases(netofanyincentivesreceivedfromthelessor)arechargedtoprofitorlossonastraight-linebasisovertheperiodofthelease.(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'sfairvaluelesscostsofdisposalandvalueinuse.Forthepurposesofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiablecashinflowswhicharelargelyindependentofthecashinflowsfromotherassetsorgroupsofassets(cash-generatingunits).Non-financialassetsotherthangoodwillthatsufferedanimpairmentarereviewedforpossiblereversaloftheimpairmentattheendofeachreportingyear.40 Lycopodium Annual Financial Report 2019 • 41 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(j)CashandcashequivalentsForcashflowstatementpresentationpurposes,cashandcashequivalentsincludescashonhand,depositsheldatcallwithfinancialinstitutions,othershort-term,highlyliquidinvestmentswithoriginalmaturitiesofthreemonthsorlessthatarereadilyconvertibletoknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue,andbankoverdrafts.(k)TradereceivablesTradereceivablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod,lessexpectedcreditloss.Tradereceivablesaregenerallydueforsettlementwithin30days.Collectabilityoftradereceivablesisreviewedonanongoingbasis.Debtswhichareknowntobeuncollectiblearewrittenoffbyreducingthecarryingamountdirectly.Anallowanceaccount(expectedcreditlossontradereceivables)isusedwhenthereisobjectiveevidencethatthegroupwillnotbeabletocollectallamountsdueaccordingtotheoriginaltermsofthereceivables.Significantfinancialdifficultiesofthedebtor,probabilitythatthedebtorwillenterbankruptcyorfinancialreorganisation,anddefaultordelinquencyinpayments(morethan30daysoverdue)areconsideredindicatorsthatthetradereceivableisimpaired.Theamountoftheimpairmentallowanceisthedifferencebetweentheasset'scarryingamountandthepresentvalueofestimatedfuturecashflows,discountedattheoriginaleffectiveinterestrate.Cashflowsrelatingtoshort-termreceivablesarenotdiscountediftheeffectofdiscountingisimmaterial.Theamountoftheimpairmentlossisrecognisedintheprofitandlosswithin‘administrationandmanagementcosts’.Whenatradereceivableforwhichanimpairmentallowancehadbeenrecognisedbecomesuncollectibleinasubsequentperiod,itiswrittenoffagainsttheallowanceaccount.Subsequentrecoveriesofamountspreviouslywrittenoffarecreditedagainst'administrationandmanagementcosts'intheprofitandloss.(l)InventoriesContractworkinprogressContractworkinprogressisstatedattheaggregateofcontractcostsincurredtodateplusrecognisedprofitslessrecognisedlossesandprogressbillings.Iftherearecontractswhereprogressbillingsexceedtheaggregatecostsincurredplusprofitslesslosses,thenetamountispresentedundercontractliabilities.Contractcostsincludeallcostsdirectlyrelatedtospecificcontracts,coststhatarespecificallychargeabletothecustomerunderthetermsofthecontractandanallocationofoverheadexpensesincurredinconnectionwiththegroup'scontractactivitiesingeneral.(m)Non-derivativefinancialassets(i)ClassificationEffective1July2017,theGroupclassifiesitsfinancialassetsinthefollowingmeasurementcategories:•Thosetobemeasuredsubsequentlyatfairvalue(eitherthroughothercomprehensiveincome,orthroughprofitorloss),and•Thosetobemeasuredatamortisedcost.TheclassificationdependsontheGroup’sbusinessmodelformanagingfinancialassetsandthecontractualtermsofthecashflows.Forassetsmeasuredatfairvalue,gainsandlosseswilleitherberecordedinprofitorlossorothercomprehensiveincome.Forinvestmentsindebtinstruments,thiswilldependonthebusinessmodelinwhichtheinvestmentisheld.ForInvestmentsinequityinstrumentsthatarenotheldfortrading,thiswilldependonwhethertheGrouphasmadeanirrevocableelectionatthetimeofinitialrecognitiontoaccountfortheequityinvestmentatfairvaluethroughothercomprehensiveincome.TheGroupreclassifiesdebtinvestmentswhenitsbusinessmodelformanagingthoseassetschanges.41 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 42 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(m)Non-derivativefinancialassets(continued)(ii)MeasurementAtinitialrecognition,theGroupmeasuresafinancialassetatitsfairvalueplus,inthecaseofafinancialassetnotatfairvaluethroughprofitorloss,transactioncoststhataredirectlyattributabletotheacquisitionofthefinancialasset.Transactioncostsoffinancialassetscarriedatfairvaluethroughprofitorlossareexpensedinprofitorloss.Measurementofcashandcashequivalentsandtradeandotherreceivablesremainsatamortisedcostconsistentwiththecomparativeperiod.DebtinstrumentsSubsequentmeasurementofdebtinstrumentsdependsontheGroup’sbusinessmodelformanagingtheassetandthecashflowcharacteristicsoftheasset.TherearetwomeasurementcategorieswhichtheGroupclassifiesitsdebtinstruments:•Amortisedcost:Assetsthatareheldforcollectionofcontractualcashflows,wherethosecashflowsrepresentsolelypaymentsofprincipalandinterestaremeasuredatamortisedcost.Againorlossonadebtinvestmentthatissubsequentlymeasuredatamortisedcostandisnotpartofahedgingrelationshipisrecognisedinprofitorlosswhentheassetisderecognisedorimpaired.Interestincomefromthesefinancialassetsisincludedinfinanceincomeusingtheeffectiveinterestratemethod.•Fairvaluethroughothercomprehensiveincome(FVOCI):Assetsthatareheldforcollectingcontractualcashflowsandthroughsaleonspecifieddates.AgainorlossonadebtinvestmentthatissubsequentlymeasuredatFVOCIisrecognisedinothercomprehensiveincome.NonearecurrentlyheldbytheGroup.•Fairvaluethroughprofitorloss(FVPL):AssetsthatdonotmeetthecriteriaforamortisedcostorFVOCIaremeasuredatfairvaluethroughprofitorloss.Againorlossonadebtinvestmentthatissubsequentlymeasuredatfairvaluethroughprofitorlossandisnotpartofahedgingrelationshipisrecognisedinprofitorlossandpresentednetinthestatementofprofitorlosswithinothergains/(losses)intheperiodinwhichitarises.NonearecurrentlyheldbytheGroup.EquityinstrumentsTheGroupsubsequentlymeasuresallequityinvestmentsatfairvalue.WheretheGroup’smanagementhaselectedtopresentfairvaluegainsandlossesonequityinvestmentsinothercomprehensiveincome,thereisnosubsequentreclassificationoffairvaluegainsandlossestoprofitorlossfollowingthederecognitionoftheinvestment.DividendsfromsuchinvestmentscontinuetoberecognisedinprofitorlossasotherincomewhentheGroup’srighttoreceivepaymentsisestablished.Impairmentlosses(andreversalofimpairmentlosses)onequityinvestmentsmeasuredatFVOCIarenotreportedseparatelyfromotherchangesinfairvalue.Changesinthefairvalueoffinancialassetsatfairvaluethroughprofitorlossarerecognisedeitherinotherincomeorinotherexpensesinthestatementofprofitorloss.(iii)ImpairmentTheGroupassessesonaforwardlookingbasistheexpectedcreditlossesassociatedwithitsdebtinstrumentscarriedatamortisedcostandFVOCI.Theimpairmentmethodologyapplieddependsonwhethertherehasbeenasignificantincreaseincreditrisk.Fortradereceivablesandotherreceivables,theGroupappliesthesimplifiedapproachpermittedbyAASB9,whichrequiresexpectedlifetimelossestoberecognisedfrominitialrecognitionofthereceivables.(n)Non-derivativefinancialliabilitiesInterestbearingliabilitiesAllloansandborrowingsareinitiallyrecognisedatfairvalue,beingtheamountreceivedlessattributabletransactioncosts.Afterinitialrecognition,interestbearingliabilitiesarestatedatamortisedcostwithanydifferencebetweencostandredemptionvaluebeingrecognisedinthestatementofprofitorlossovertheperiodoftheborrowingsonaneffectiveinterestbasis.Tradeandotherpayables42 Lycopodium Annual Financial Report 2019 • 43 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(n)Non-derivativefinancialliabilities(continued)Liabilitiesarerecognisedforamountstobepaidforgoodsorservicesreceived.TradepayablesaresettledontermsalignedwiththenormalcommercialtermsintheGroup’scountriesofoperation.(o)DerivativefinancialinstrumentsDerivativefinancialinstrumentsarestatedatfairvalue,withchangesinfairvaluerecognisedinthestatementofprofitorloss.Wherederivativefinancialinstrumentsqualifyforhedgeaccounting,recognitionofchangesinfairvaluedependsonthenatureoftheitembeinghedged.Hedgeaccountingisdiscontinuedwhenthehedgingrelationshipisrevoked,thehedginginstrumentexpires,issold,terminated,exercised,ornolongerqualifiesforhedgeaccounting.TheGroupdocumentsattheinceptionofthehedgingtransactiontheeconomicrelationshipbetweenhedginginstrumentsandhedgeditemsincludingwhethertheinstrumentisexpectedtooffsetchangesincashflowsofhedgeditems.TheGroupdocumentsitsriskmanagementobjectiveandstrategyforundertakingvarioushedgetransactionsattheinceptionofeachhedgerelationship.CashflowhedgeTheeffectiveportionofchangesinthefairvalueofderivativesthataredesignatedandqualifyascashflowhedgesisrecognisedinthecashflowhedgereservewithinequity,limitedtothecumulativechangeinfairvalueofthehedgeditemonapresentvaluebasisfromtheinceptionofthehedge.Thegainorlossrelatingtotheineffectiveportionisrecognisedimmediatelyinprofitorloss,withinotherexpenses.Whenoptioncontractsareusedtohedgeforecasttransactions,theGroupdesignatesonlytheintrinsicvalueoftheoptioncontractasthehedginginstrument.Gainsorlossesrelatingtotheeffectiveportionofthechangeinintrinsicvalueoftheoptioncontractsarerecognisedinthecashflowhedgereserveinequity.Thechangesinthetimevalueoftheoptioncontractsthatrelatetothehedgeditem(‘alignedtimevalue’)arerecognisedwithinothercomprehensiveincomeinthecostsofhedgingreservewithinequity.Whenforwardcontractsareusedtohedgeforecasttransactions,theGroupgenerallydesignatesonlythechangeinfairvalueoftheforwardcontractrelatedtothespotcomponentasthehedginginstrument.Gainsorlossesrelatingtotheeffectiveportionofthechangeinthespotcomponentoftheforwardcontractsarerecognisedinthecashflowhedgereserveinequity.Thechangeintheforwardelementofthecontractthatrelatestothehedgeditemisrecognisedwithinothercomprehensiveincomeinthecostsofhedgingreservewithinequity.Insomecases,theentitymaydesignatethefullchangeinfairvalueoftheforwardcontract(includingforwardpoints)asthehedginginstrument.Insuchcases,thegainsorlossesrelatingtotheeffectiveportionofthechangeinfairvalueoftheentireforwardcontractarerecognisedinthecashflowhedgereservewithinequity.Amountsaccumulatedinequityarereclassifiedintheperiodswhenthehedgeditemaffectsprofitorloss,asfollows:•Thegainorlossrelatingtotheeffectiveportionofforwardandoptioncontractsareultimatelyrecognisedinprofitorlossasthehedgeditemaffectsprofitorlosswithinexpenses.•Thegainorlossrelatingtotheeffectiveportionoftheinterestrateswapshedgingvariablerateborrowingsisrecognisedinprofitorlosswithin‘financecost’.Whenahedginginstrumentexpires,orissoldorterminated,orwhenahedgenolongermeetsthecriteriaforhedgeaccounting,anycumulativedeferredgainorlossanddeferredcostsofhedginginequityatthattimeremainsinequityuntiltheforecasttransactionoccurs,resultingintherecognitionofanon-financialassetsuchasinventory.Whentheforecasttransactionisnolongerexpectedtooccur,thecumulativegainorlossanddeferredcostsofhedgingthatwerereportedinequityareimmediatelyreclassifiedtoprofitorloss.Hedgeineffectivenessisrecognisedinprofitorlosswithinotherexpenses.Accountingpoliciesforremaininghedgesandderivativesareconsistentwiththecomparativeperiod.43LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(m)Non-derivativefinancialassets(continued)(ii)MeasurementAtinitialrecognition,theGroupmeasuresafinancialassetatitsfairvalueplus,inthecaseofafinancialassetnotatfairvaluethroughprofitorloss,transactioncoststhataredirectlyattributabletotheacquisitionofthefinancialasset.Transactioncostsoffinancialassetscarriedatfairvaluethroughprofitorlossareexpensedinprofitorloss.Measurementofcashandcashequivalentsandtradeandotherreceivablesremainsatamortisedcostconsistentwiththecomparativeperiod.DebtinstrumentsSubsequentmeasurementofdebtinstrumentsdependsontheGroup’sbusinessmodelformanagingtheassetandthecashflowcharacteristicsoftheasset.TherearetwomeasurementcategorieswhichtheGroupclassifiesitsdebtinstruments:•Amortisedcost:Assetsthatareheldforcollectionofcontractualcashflows,wherethosecashflowsrepresentsolelypaymentsofprincipalandinterestaremeasuredatamortisedcost.Againorlossonadebtinvestmentthatissubsequentlymeasuredatamortisedcostandisnotpartofahedgingrelationshipisrecognisedinprofitorlosswhentheassetisderecognisedorimpaired.Interestincomefromthesefinancialassetsisincludedinfinanceincomeusingtheeffectiveinterestratemethod.•Fairvaluethroughothercomprehensiveincome(FVOCI):Assetsthatareheldforcollectingcontractualcashflowsandthroughsaleonspecifieddates.AgainorlossonadebtinvestmentthatissubsequentlymeasuredatFVOCIisrecognisedinothercomprehensiveincome.NonearecurrentlyheldbytheGroup.•Fairvaluethroughprofitorloss(FVPL):AssetsthatdonotmeetthecriteriaforamortisedcostorFVOCIaremeasuredatfairvaluethroughprofitorloss.Againorlossonadebtinvestmentthatissubsequentlymeasuredatfairvaluethroughprofitorlossandisnotpartofahedgingrelationshipisrecognisedinprofitorlossandpresentednetinthestatementofprofitorlosswithinothergains/(losses)intheperiodinwhichitarises.NonearecurrentlyheldbytheGroup.EquityinstrumentsTheGroupsubsequentlymeasuresallequityinvestmentsatfairvalue.WheretheGroup’smanagementhaselectedtopresentfairvaluegainsandlossesonequityinvestmentsinothercomprehensiveincome,thereisnosubsequentreclassificationoffairvaluegainsandlossestoprofitorlossfollowingthederecognitionoftheinvestment.DividendsfromsuchinvestmentscontinuetoberecognisedinprofitorlossasotherincomewhentheGroup’srighttoreceivepaymentsisestablished.Impairmentlosses(andreversalofimpairmentlosses)onequityinvestmentsmeasuredatFVOCIarenotreportedseparatelyfromotherchangesinfairvalue.Changesinthefairvalueoffinancialassetsatfairvaluethroughprofitorlossarerecognisedeitherinotherincomeorinotherexpensesinthestatementofprofitorloss.(iii)ImpairmentTheGroupassessesonaforwardlookingbasistheexpectedcreditlossesassociatedwithitsdebtinstrumentscarriedatamortisedcostandFVOCI.Theimpairmentmethodologyapplieddependsonwhethertherehasbeenasignificantincreaseincreditrisk.Fortradereceivablesandotherreceivables,theGroupappliesthesimplifiedapproachpermittedbyAASB9,whichrequiresexpectedlifetimelossestoberecognisedfrominitialrecognitionofthereceivables.(n)Non-derivativefinancialliabilitiesInterestbearingliabilitiesAllloansandborrowingsareinitiallyrecognisedatfairvalue,beingtheamountreceivedlessattributabletransactioncosts.Afterinitialrecognition,interestbearingliabilitiesarestatedatamortisedcostwithanydifferencebetweencostandredemptionvaluebeingrecognisedinthestatementofprofitorlossovertheperiodoftheborrowingsonaneffectiveinterestbasis.Tradeandotherpayables42LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(n)Non-derivativefinancialliabilities(continued)Liabilitiesarerecognisedforamountstobepaidforgoodsorservicesreceived.TradepayablesaresettledontermsalignedwiththenormalcommercialtermsintheGroup’scountriesofoperation.(o)DerivativefinancialinstrumentsDerivativefinancialinstrumentsarestatedatfairvalue,withchangesinfairvaluerecognisedinthestatementofprofitorloss.Wherederivativefinancialinstrumentsqualifyforhedgeaccounting,recognitionofchangesinfairvaluedependsonthenatureoftheitembeinghedged.Hedgeaccountingisdiscontinuedwhenthehedgingrelationshipisrevoked,thehedginginstrumentexpires,issold,terminated,exercised,ornolongerqualifiesforhedgeaccounting.TheGroupdocumentsattheinceptionofthehedgingtransactiontheeconomicrelationshipbetweenhedginginstrumentsandhedgeditemsincludingwhethertheinstrumentisexpectedtooffsetchangesincashflowsofhedgeditems.TheGroupdocumentsitsriskmanagementobjectiveandstrategyforundertakingvarioushedgetransactionsattheinceptionofeachhedgerelationship.CashflowhedgeTheeffectiveportionofchangesinthefairvalueofderivativesthataredesignatedandqualifyascashflowhedgesisrecognisedinthecashflowhedgereservewithinequity,limitedtothecumulativechangeinfairvalueofthehedgeditemonapresentvaluebasisfromtheinceptionofthehedge.Thegainorlossrelatingtotheineffectiveportionisrecognisedimmediatelyinprofitorloss,withinotherexpenses.Whenoptioncontractsareusedtohedgeforecasttransactions,theGroupdesignatesonlytheintrinsicvalueoftheoptioncontractasthehedginginstrument.Gainsorlossesrelatingtotheeffectiveportionofthechangeinintrinsicvalueoftheoptioncontractsarerecognisedinthecashflowhedgereserveinequity.Thechangesinthetimevalueoftheoptioncontractsthatrelatetothehedgeditem(‘alignedtimevalue’)arerecognisedwithinothercomprehensiveincomeinthecostsofhedgingreservewithinequity.Whenforwardcontractsareusedtohedgeforecasttransactions,theGroupgenerallydesignatesonlythechangeinfairvalueoftheforwardcontractrelatedtothespotcomponentasthehedginginstrument.Gainsorlossesrelatingtotheeffectiveportionofthechangeinthespotcomponentoftheforwardcontractsarerecognisedinthecashflowhedgereserveinequity.Thechangeintheforwardelementofthecontractthatrelatestothehedgeditemisrecognisedwithinothercomprehensiveincomeinthecostsofhedgingreservewithinequity.Insomecases,theentitymaydesignatethefullchangeinfairvalueoftheforwardcontract(includingforwardpoints)asthehedginginstrument.Insuchcases,thegainsorlossesrelatingtotheeffectiveportionofthechangeinfairvalueoftheentireforwardcontractarerecognisedinthecashflowhedgereservewithinequity.Amountsaccumulatedinequityarereclassifiedintheperiodswhenthehedgeditemaffectsprofitorloss,asfollows:•Thegainorlossrelatingtotheeffectiveportionofforwardandoptioncontractsareultimatelyrecognisedinprofitorlossasthehedgeditemaffectsprofitorlosswithinexpenses.•Thegainorlossrelatingtotheeffectiveportionoftheinterestrateswapshedgingvariablerateborrowingsisrecognisedinprofitorlosswithin‘financecost’.Whenahedginginstrumentexpires,orissoldorterminated,orwhenahedgenolongermeetsthecriteriaforhedgeaccounting,anycumulativedeferredgainorlossanddeferredcostsofhedginginequityatthattimeremainsinequityuntiltheforecasttransactionoccurs,resultingintherecognitionofanon-financialassetsuchasinventory.Whentheforecasttransactionisnolongerexpectedtooccur,thecumulativegainorlossanddeferredcostsofhedgingthatwerereportedinequityareimmediatelyreclassifiedtoprofitorloss.Hedgeineffectivenessisrecognisedinprofitorlosswithinotherexpenses.Accountingpoliciesforremaininghedgesandderivativesareconsistentwiththecomparativeperiod.43LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(n)Non-derivativefinancialliabilities(continued)Liabilitiesarerecognisedforamountstobepaidforgoodsorservicesreceived.TradepayablesaresettledontermsalignedwiththenormalcommercialtermsintheGroup’scountriesofoperation.(o)DerivativefinancialinstrumentsDerivativefinancialinstrumentsarestatedatfairvalue,withchangesinfairvaluerecognisedinthestatementofprofitorloss.Wherederivativefinancialinstrumentsqualifyforhedgeaccounting,recognitionofchangesinfairvaluedependsonthenatureoftheitembeinghedged.Hedgeaccountingisdiscontinuedwhenthehedgingrelationshipisrevoked,thehedginginstrumentexpires,issold,terminated,exercised,ornolongerqualifiesforhedgeaccounting.TheGroupdocumentsattheinceptionofthehedgingtransactiontheeconomicrelationshipbetweenhedginginstrumentsandhedgeditemsincludingwhethertheinstrumentisexpectedtooffsetchangesincashflowsofhedgeditems.TheGroupdocumentsitsriskmanagementobjectiveandstrategyforundertakingvarioushedgetransactionsattheinceptionofeachhedgerelationship.CashflowhedgeTheeffectiveportionofchangesinthefairvalueofderivativesthataredesignatedandqualifyascashflowhedgesisrecognisedinthecashflowhedgereservewithinequity,limitedtothecumulativechangeinfairvalueofthehedgeditemonapresentvaluebasisfromtheinceptionofthehedge.Thegainorlossrelatingtotheineffectiveportionisrecognisedimmediatelyinprofitorloss,withinotherexpenses.Whenoptioncontractsareusedtohedgeforecasttransactions,theGroupdesignatesonlytheintrinsicvalueoftheoptioncontractasthehedginginstrument.Gainsorlossesrelatingtotheeffectiveportionofthechangeinintrinsicvalueoftheoptioncontractsarerecognisedinthecashflowhedgereserveinequity.Thechangesinthetimevalueoftheoptioncontractsthatrelatetothehedgeditem(‘alignedtimevalue’)arerecognisedwithinothercomprehensiveincomeinthecostsofhedgingreservewithinequity.Whenforwardcontractsareusedtohedgeforecasttransactions,theGroupgenerallydesignatesonlythechangeinfairvalueoftheforwardcontractrelatedtothespotcomponentasthehedginginstrument.Gainsorlossesrelatingtotheeffectiveportionofthechangeinthespotcomponentoftheforwardcontractsarerecognisedinthecashflowhedgereserveinequity.Thechangeintheforwardelementofthecontractthatrelatestothehedgeditemisrecognisedwithinothercomprehensiveincomeinthecostsofhedgingreservewithinequity.Insomecases,theentitymaydesignatethefullchangeinfairvalueoftheforwardcontract(includingforwardpoints)asthehedginginstrument.Insuchcases,thegainsorlossesrelatingtotheeffectiveportionofthechangeinfairvalueoftheentireforwardcontractarerecognisedinthecashflowhedgereservewithinequity.Amountsaccumulatedinequityarereclassifiedintheperiodswhenthehedgeditemaffectsprofitorloss,asfollows:•Thegainorlossrelatingtotheeffectiveportionofforwardandoptioncontractsareultimatelyrecognisedinprofitorlossasthehedgeditemaffectsprofitorlosswithinexpenses.•Thegainorlossrelatingtotheeffectiveportionoftheinterestrateswapshedgingvariablerateborrowingsisrecognisedinprofitorlosswithin‘financecost’.Whenahedginginstrumentexpires,orissoldorterminated,orwhenahedgenolongermeetsthecriteriaforhedgeaccounting,anycumulativedeferredgainorlossanddeferredcostsofhedginginequityatthattimeremainsinequityuntiltheforecasttransactionoccurs,resultingintherecognitionofanon-financialassetsuchasinventory.Whentheforecasttransactionisnolongerexpectedtooccur,thecumulativegainorlossanddeferredcostsofhedgingthatwerereportedinequityareimmediatelyreclassifiedtoprofitorloss.Hedgeineffectivenessisrecognisedinprofitorlosswithinotherexpenses.Accountingpoliciesforremaininghedgesandderivativesareconsistentwiththecomparativeperiod.43 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 44 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(p)Property,plantandequipmentProperty,plantandequipmentisstatedathistoricalcostlessdepreciation.Historicalcostincludesexpenditurethatisdirectlyattributabletotheacquisitionoftheitems.Subsequentcostsareincludedintheasset'scarryingamountorrecognisedasaseparateasset,asappropriate,onlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtothegroupandthecostoftheitemcanbemeasuredreliably.Thecarryingamountofanycomponentaccountedforasaseparateassetisderecognisedwhenreplaced.Allotherrepairsandmaintenancearechargedtoprofitorlossduringthereportingyearinwhichtheyareincurred.Depreciationonplantandequipmentiscalculatedusingthestraightlineordiminishingvaluemethodtoallocatetheircost,netoftheirresidualvalues,overtheirestimatedusefullives,asfollows:-Plantandequipment3-10years-Vehicles5-7years-Furniture,fittingsandequipment3-8years-Leaseholdimprovements3-6years-Leasedplantandequipment3-5yearsTheassets'residualvaluesandusefullivesarereviewed,andadjustedifappropriate,attheendofeachreportingyear.Anasset'scarryingamountiswrittendownimmediatelytoitsrecoverableamountiftheasset'scarryingamountisgreaterthanitsestimatedrecoverableamount(note1(i)).Gainsandlossesondisposalsaredeterminedbycomparingproceedswithcarryingamount.Theseareincludedintheprofitandloss.(q)Intangibleassets(i)GoodwillGoodwillismeasuredasdescribedinnote1(h).Goodwillonacquisitionsofsubsidiariesisincludedinintangibleassets.Goodwillisnotamortisedbutitistestedforimpairmentannually,ormorefrequentlyifeventsorchangesincircumstancesindicatethatitmightbeimpaired,andiscarriedatcostlessaccumulatedimpairmentlosses.Gainsandlossesonthedisposalofanentityincludethecarryingamountofgoodwillrelatingtotheentitysold.Goodwillisallocatedtocash-generatingunitsforthepurposeofimpairmenttesting.Theallocationismadetothosecash-generatingunitsorgroupsofcash-generatingunitsthatareexpectedtobenefitfromthebusinesscombinationinwhichthegoodwillarose,identifiedaccordingtooperatingsegments(note4).(ii)SoftwareIntangibleassetsalsocomprisecapitalisedcomputersoftware.Computersoftwarehasafiniteusefullifeandiscarriedatcostlessaccumulatedamortisation.Amortisationiscalculatedusingthestraightlinemethodtoallocatethecostofthecomputersoftwareovertheirestimatedusefullives,being3years.(r)BorrowingcostsGeneralandspecificborrowingcoststhataredirectlyattributabletotheacquisition,constructionorproductionofaqualifyingassetarecapitalisedduringtheyearoftimethatisrequiredtocompleteandpreparetheassetforitsintendeduseorsale.Qualifyingassetsareassetsthatnecessarilytakeasubstantialyearoftimetogetreadyfortheirintendeduseorsale.Otherborrowingcostsareexpensedintheyearinwhichtheyareincurred.44 Lycopodium Annual Financial Report 2019 • 45 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(s)ProvisionsProvisionsforlegalclaims,servicewarrantiesandmakegoodobligationsarerecognisedwhenthegrouphasapresentlegalorconstructiveobligationasaresultofpastevents,itisprobablethatanoutflowofresourceswillberequiredtosettletheobligationandtheamountcanbereliablyestimated.Provisionsarenotrecognisedforfutureoperatinglosses.Wherethereareanumberofsimilarobligations,thelikelihoodthatanoutflowwillberequiredinsettlementisdeterminedbyconsideringtheclassofobligationsasawhole.Aprovisionisrecognisedevenifthelikelihoodofanoutflowwithrespecttoanyoneitemincludedinthesameclassofobligationsmaybesmall.Provisionsaremeasuredatthepresentvalueofmanagement'sbestestimateoftheexpenditurerequiredtosettlethepresentobligationattheendofthereportingyear.Thediscountrateusedtodeterminethepresentvalueisapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheliability.Theincreaseintheprovisionduetothepassageoftimeisrecognisedasinterestexpense.(t)Employeebenefits(i)Short-termobligationsLiabilitiesforwagesandsalaries,includingnon-monetarybenefitsexpectedtobesettledwhollywithin12monthsaftertheendoftheperiodinwhichtheemployeesrendertherelatedservicesarerecognisedinrespectofemployees'servicesuptotheendofthereportingperiodandaremeasuredattheamountsexpectedtobepaidwhentheliabilitiesaresettled.Allothershort-termemployeebenefitobligationsarepresentedaspayables.(ii)Otherlong-termemployeebenefitsobligationsTheliabilityforlongserviceleaveandannualleavewhichisnotexpectedtobesettledwhollywithin12monthsaftertheendoftheperiodinwhichtheemployeesrendertherelatedserviceisthereforerecognisedintheprovisionforemployeebenefitsandmeasuredasthepresentvalueofexpectedfuturepaymentstobemadeinrespectofservicesprovidedbyemployeesuptotheendofthereportingperiodusingtheprojectedunitcreditmethod.Considerationisgiventoexpectedfuturewageandsalarylevels,experienceofemployeedeparturesandperiodsofservice.Expectedfuturepaymentsarediscountedusingmarketyieldsattheendofthereportingperiodofhighqualitycorporatebondswithtermsandcurrencythatmatch,ascloselyaspossible,theestimatedfuturecashoutflows.Remeasurementsasaresultofexperienceadjustmentsandchangesinactuarialassumptionsarerecognisedinprofitorloss.Theobligationsarepresentedascurrentliabilitiesintheconsolidatedbalancesheetiftheentitydoesnothaveanunconditionalrighttodefersettlementforatleasttwelvemonthsafterthereportingdate,regardlessofwhentheactualsettlementisexpectedtooccur.(iii)RetirementbenefitobligationsContributionstodefinedcontributionfundsarerecognisedasanexpenseastheybecomepayable.Prepaidcontributionsarerecognisedasanassettotheextentthatacashrefundorareductioninthefuturepaymentsisavailable.(iv)Share-basedpayments45 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 46 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(t)Employeebenefits(continued)(iv)Share-basedpayments(continued)Share-basedcompensationbenefitsareprovidedtocertainexecutivedirectorsandotherdesignatedemployeesviathePerformanceRightsPlans.Informationrelatingtothisschemeissetoutinnote35.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.EmbeddedderivativeTheseniormanagerloanreceivableisaloanwithanembeddedderivativewiththeseniormanagerhavinganoptiontoputbackthesharetothegroupinfullsettlementoftheloanafterthe3yearperiod.Astheembeddedderivativeiscloselyrelatedtotheseniormanagerloan,thefinancialinstrumentismeasuredatfairvaluethroughprofitorloss.(u)ContributedequityOrdinarysharesareclassifiedasequity.Incrementalcostsdirectlyattributabletotheissueofnewsharesareshowninequityasadeduction,netoftax,fromtheproceeds.46 Lycopodium Annual Financial Report 2019 • 47 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(v)DividendsProvisionismadefortheamountofanydividenddeclared,beingappropriatelyauthorisedandnolongeratthediscretionoftheentity,onorbeforetheendofthereportingyearbutnotdistributedattheendofthereportingyear.(w)Earningspershare(i)BasicearningspershareBasicearningspershareiscalculatedbydividing:•theprofitattributabletoownersoftheCompany,excludinganycostsofservicingequityotherthanordinaryshares•bytheweightedaveragenumberofordinarysharesoutstandingduringthefinancialyear,adjustedforbonuselementsinordinarysharesissuedduringtheyear.(ii)DilutedearningspershareDilutedearningspershareadjuststhefiguresusedinthedeterminationofbasicearningspersharetotakeintoaccount:•theafterincometaxeffectofinterestandotherfinancingcostsassociatedwithdilutivepotentialordinaryshares,and•theweightedaveragenumberofadditionalordinarysharesthatwouldhavebeenoutstandingassumingtheconversionofalldilutivepotentialordinaryshares.(x)GoodsandServicesTax(GST)Revenues,expensesandassetsarerecognisednetoftheamountofassociatedGST,unlesstheGSTincurredisnotrecoverablefromthetaxationauthority.Inthiscaseitisrecognisedaspartofthecostofacquisitionoftheassetoraspartoftheexpense.ReceivablesandpayablesarestatedinclusiveoftheamountofGSTreceivableorpayable.ThenetamountofGSTrecoverablefrom,orpayableto,thetaxationauthorityisincludedwithotherreceivablesorpayablesintheconsolidatedbalancesheet.Cashflowsarepresentedonagrossbasis.TheGSTcomponentsofcashflowsarisingfrominvestingorfinancingactivitieswhicharerecoverablefrom,orpayabletothetaxationauthority,arepresentedasoperatingcashflows.47 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 48 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)1Summaryofsignificantaccountingpolicies(continued)(y)NewaccountingstandardsnotyeteffectiveCertainnewaccountingstandardsandinterpretationshavebeenpublishedthatarenotmandatoryfor30June2019reportingperiods.Thegroup'sassessmentoftheimpactofthesenewstandardsandinterpretationsissetoutbelow.(i)AASB16LeasesAASB16replacesAASB117Leasesandsomelease-relatedInterpretations.Insummary,AASB16:•requiresallleasestobeaccountedfor‘on-balancesheet’bylessees,otherthanshort-termandlowvalueassetleases;•providesnewguidanceontheapplicationofthedefinitionofleaseandonsaleandleasebackaccounting;•largelyretainstheexistinglessoraccountingrequirementsinAASB117;and•requiresnewanddifferentdisclosuresaboutleases.Basedontheentity’sassessment,itisexpectedthatthefirsttimeadoptionoftheStandardfortheyearending30June2020willhaveamaterialimpactonthetransactionsandbalancesrecognisedinthefinancialstatementsinparticular:•leaseassetsandfinancialliabilitiesonthebalancesheetwillincreaseby$12.4mand$12.4mrespectively(basedonthefactsatthedateofassessment);•thereportedequitywillreduceasthecarryingamountofleaseassetswillreducemorequicklythanthecarryingamountofleaseliabilities;•EBITinthestatementofprofitorlossandothercomprehensiveincomewillbehigherastheimplicitinterestinleasepaymentsforformeroffbalancesheetleaseswillbepresentedaspartoffinancecostsratherthanbeingincludedinoperatingexpenses;•operatingcashoutflowswillbelowerandfinancingcashflowswillbehigherinthestatementofcashflowsasprincipalrepaymentsonallleaseliabilitieswillnowbeincludedinfinancingactivitiesratherthanoperatingactivities.Interestcanalsobeincludedwithinfinancingactivities.(z)ParententityfinancialinformationThefinancialinformationfortheparententity,LycopodiumLimited,disclosedinnote36hasbeenpreparedonthesamebasisastheconsolidatedfinancialreport,exceptassetoutbelow.(i)Investmentsinsubsidiaries,associatesandjointventureentitiesInvestmentsinsubsidiaries,associatesandjointventureentitiesareaccountedforatcostinthefinancialreportofLycopodiumLimited.Dividendsreceivedfromassociatesarerecognisedintheparententity'sprofitorloss,ratherthanbeingdeductedfromthecarryingamountoftheseinvestments.(ii)SharebasedpaymentsThegrantbytheCompanyofoptionsoveritsequityinstrumentstotheemployeesofsubsidiaryundertakingsinthegroupistreatedasacapitalcontributiontothatsubsidiaryundertaking.Thefairvalueofemployeeservicesreceived,measuredbyreferencetothegrantdatefairvalue,isrecognisedoverthevestingperiodasanincreasetoinvestmentinsubsidiaryundertakings,withacorrespondingcredittoequity.48 Lycopodium Annual Financial Report 2019 • 49 LycopodiumLimitedNotestothefinancialstatements30June2019(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.ExposureThegroup'sexposuretoforeigncurrencyriskatthereportingperiod,expressedinAustraliandollar,wasasfollows:30June201930June2018USD$PHP$USD$PHP$Cashandcashequivalents2,334,396226,8054,340,880197,520Tradeandotherreceivables-34,215-35,411Othercurrentassets-702,821-623,895Tradeandotherpayables(1,474,879)(345,568)(2,660,357)(207,859)Netexposure859,517618,2731,680,523648,967GroupsensitivityBasedonthefinancialinstrumentsheldat30June2019,hadtheAustraliandollarweakened/strengthenedby10%againsttheUSdollarwithallothervariablesheldconstant,thegroup'spost-taxprofitandequityfortheyearwouldhavebeen$85,952higher/$85,952lower(2018:$168,052higher/$168,052lower),mainlyasaresultofforeignexchangegains/lossesontranslationofUSdollardenominatedfinancialinstrumentsasdetailedintheabovetable.ProfitislesssensitivetomovementsintheAustraliandollar/USdollarexchangeratesin2019than2018becauseoftheloweramountofUSdollardenominatedcashandcashequivalents.Basedonthefinancialinstrumentsheldat30June2019,hadtheAustraliandollarweakened/strengthenedby10%againstthePhilippinePesowithallothervariablesheldconstant,thegroup'spost-taxprofitandequityfortheyearwouldhavebeen$61,827higher/$61,827lower(2018:$64,897higher/$64,897lower),mainlyasaresultofforeignexchangegains/lossesontranslationofPhilippinePesodenominatedfinancialinstrumentsasdetailedintheabovetable.ProfitislesssensitivetomovementsintheAustraliandollar/PhilippinePesoexchangeratesin2019than2018mainlybecauseoftheloweramountofPhilippinePesodenominatedcashandcashequivalents.49 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 50 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)2Financialriskmanagement(continued)(a)Marketrisk(continued)(i)Foreignexchangerisk(continued)Groupsensitivity(continued)Exposurestoforeignexchangeratesvaryduringtheyeardependingonthevolumeofoverseastransactions.Nonetheless,theanalysisaboveisconsideredtoberepresentativeoftheGroup’sexposuretocurrencyrisk.(ii)PriceriskThegroupexposuretoequitysecuritiespriceriskwiththeexposure,however,beingminimal.Equitysecuritiespriceriskarisesfrominvestmentsinequitysecurities.TheequityinvestmentsarepubliclytradedontheAustralianSecuritiesExchange("ASX").Thepriceriskforthelistedsecuritiesisimmaterialintermsofapossibleimpactonprofitandlossortotalequityandassuchasensitivityanalysishasnotbeencompleted.ThegroupdoesnothaveariskmanagementpolicysurroundingpriceriskinplaceastheBoardconsiderstheriskminimal.(iii)InterestrateriskThegroupisexposedtointerestrateriskarisingmainlyfromborrowingsandcashbalancesheld.Theriskisconsideredminimalasthegroup'sborrowingsareminimal.ThegroupdoesnotenterintoanyspecificswapsorhedgestocoveranyinterestratevolatilityanddoesnothaveariskmanagementpolicysurroundingcashflowandinterestrateriskastheBoardconsiderstheseriskstobeminimal.GroupsensitivityAt30June2019,ifinterestrateshadchangedby-/+50basispointsfromtheyearendrateswithallothervariablesheldconstant,post-taxprofitandequityfortheyearwouldhavebeen$211,402lower/higher(2018:-/+50basispoints:$259,482lower/higher),asaresultoflower/higherinterestincomefromcashandcashequivalents.(b)CreditriskCreditriskarisesfromthefinancialassetsofthegroup,whichcomprisecashandcashequivalents,tradeandotherreceivablesandothercurrentassets.Thegroup'sexposuretocreditriskarisesfrompotentialdefaultofthecounterparty,withamaximumexposureequaltothecarryingamountoftheseinstruments.Otherreceivablescomprisesoftheloanundertheseniormanagementshareacquisitionplan.Thegroupisnotexposedtocreditriskastheloanissecuredunderthetermsoftheloan(note1(t)).Thecarryingamountoffinancialassetsrepresentsthemaximumcreditexposure.Themaximumexposuretocreditriskatthereportingdatewas:Consolidated2019$2018$Cashandcashequivalents60,451,04874,287,788Tradeandotherreceivables34,394,83937,616,637Depositsheldwithbanks(note10)775,879778,40195,621,766112,682,826CashandcashequivalentsThecreditriskoncashandcashequivalentsislimitedbecausethegroup'sprimarybankisratedAA-byaninternationalcredit-ratingagency.TradeandotherreceivablesThegroup’sexposuretocreditriskisinfluencedmainlybytheindividualcharacteristicsofeachcustomer.However,managementalsoconsidersthedemographicsofthegroup’scustomerbase,includingthedefaultriskoftheindustryandcountryinwhichcustomersoperate,asthesefactorsmayhaveaninfluenceoncreditrisk.50 Lycopodium Annual Financial Report 2019 • 51 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)2Financialriskmanagement(continued)(b)Creditrisk(continued)Thegrouptradesonlywithrecognised,creditworthythirdparties,andassuchcollateralisnotrequestednorisitthegroup'spolicytosecuritiseitstradeandotherreceivables.Allreceivablesatbalancedatethatareneitherpastduenorimpairedcomplywiththegroup'spolicyoncreditquality.Itisthegroup'spolicythatallcustomerswhowishtotradeoncredittermsaresubjecttocreditverificationproceduresincludinganassessmentoftheirfinancialposition,pastexperienceandindustryreputation.Inaddition,receivablebalancesaremonitoredonanongoingbasiswiththeresultthatthegroup'sexposuretobaddebtsisminimised.Therearenosignificantconcentrationsofcreditriskwithinthegroup.Thegroupminimisesconcentrationsofcreditriskinrelationtotradereceivablesbyundertakingtransactionswithanumberofcustomersthatoperatepredominantlyintheminingandextractiveindustrysectorincludingthemajorplayersintheindustryandthejunior/emergingplayers.Therearemultiplecontractswithoursignificantcustomers,acrossanumberoftheirsubsidiaries,divisionswithinthosesubsidiariesandlocations.DepositsheldwithbanksThecreditriskondepositsheldwithbanksarelimitedastheycomprisedepositsheldwithbankswithhighcreditratingsassignedbyinternationalcredit-ratingagencies.(c)LiquidityriskPrudentliquidityriskmanagementimpliesmaintainingsufficientcashandmarketablesecuritiesandtheavailabilityoffundingthroughanadequateamountofcommittedcreditfacilities.Thegroupmanagesliquidityriskbycontinuouslymonitoringforecastandactualcashflowsandmatchingthematurityprofilesoffinancialassetsandliabilities.FinancingarrangementsThegrouphadaccesstothefollowingundrawnborrowingfacilitiesatthereportingdate:Consolidated2019$2018$Leasingfacility1,853,0001,523,000Standbycreditfacility10,893,19510,784,328Insurancebonds16,862,78514,119,23929,608,98026,426,567MaturitiesoffinancialliabilitiesThefollowingtablesdetailthegroup'sremainingcontractualmaturityforitsnon-derivativefinancialliabilities.Thetableshavebeendrawnupbasedontheundiscountedcashflowsoffinancialliabilitiesbasedontheearliestdateonwhichthegroupcanberequiredtopay.Thetableincludesbothinterestandprincipalcashflows.51 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 52 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)2Financialriskmanagement(continued)(c)Liquidityrisk(continued)Maturitiesoffinancialliabilities(continued)1yearorlessBetween1and2yearsBetween2and5yearsOver5yearsTotalcontrac-tualcashflowsCarryingamountliabilitiesConsolidated-At30June2019$$$$$$Non-derivativesTradepayables11,183,336---11,183,33611,183,336Financeleaseliabilities823,24069,693--892,933715,560Total12,006,57669,693--12,076,26911,898,896Consolidated-At30June20181yearorless$Between1and2years$Between2and5years$Over5years$Totalcontrac-tualcashflows$Carryingamountliabilities$Non-derivativesTradepayables9,632,074---9,632,0749,632,074Insurancepremiumfunding218,689---218,689218,689Financeleaseliabilities526,584516,25169,693-1,112,5281,040,282Total10,377,347516,25169,693-10,963,29110,891,045InassessingandmanagingliquidityrisksofitsderivativefinancialinstrumentstheGroupconsidersbothcontractualinflowsandoutflows.ThecontractualcashflowsoftheGroup’sderivativefinancialassetsandliabilitiesareallcurrent(within12months).Derivativefinancialinstrumentsreflectforwardexchangecontracts(seeNote11(b))thatwillbesettledonagrossbasis.52 Lycopodium Annual Financial Report 2019 • 53 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)3CriticalaccountingestimatesandassumptionsThegroupmakesestimatesandassumptionsconcerningthefuture.Theresultingaccountingestimateswill,bydefinition,seldomequaltherelatedactualresults.Theestimatesandassumptionsthathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyeararediscussedbelow.(i)ImpairmenttestingofgoodwillThegrouptestsannuallywhethergoodwillhassufferedanyimpairment,inaccordancewiththeaccountingpolicystatedinnote1(i).Therecoverableamountsofcash-generatingunitshavebeendeterminedbasedonvalue-in-usecalculations.Thesecalculationsrequiretheuseofassumptions.Refertonote16fordetailsoftheseassumptionsandthepotentialimpactofchangestotheassumptions.(ii)ServiceandequipmentwarrantiesInaccordancewiththeaccountingpolicystatedinnote1(t),thegrouphasrecognisedwarrantyprovisionsattheendofthefinancialyearinrespectofpotentialclaimsforrectificationworkonsomeofitsEPCcontracts.Refertonote18inrelationtotheservicewarrantyprovisionsprovidedatperiodend.Theamountsprovidedtakesintoaccountthepercentagecompletionoftheproject,forecasttocompletecostsplusanyclose-outobligationsandpotentialcontractualliabilitiesduringthewarrantyperiod.(iii)Fixed-pricecontractsThegroupusescostinputstoestimateitsrevenuefromfixed-sumcontracts.Thestageofcompletionismeasuredbyreferencetothecontractcostsincurredtodatecomparedtotheestimatedtotalcostsforthecontract.Significantassumptionsarerequiredtoestimatethetotalcontractcostsandtherecoverablevariationsworkthatwillaffectthestageofcompletionandthecontractrevenuerespectively.Inmakingtheseestimates,thegrouphasreliedonpastexperienceandbestavailableinformation.53 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 54 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)4Segmentinformation(a)DescriptionofsegmentsTheBoardconsidersthebusinessfrombothaproductandgeographicperspectiveandhasidentifiedfouroperatingsegmentsofwhichthree(2018:three)arereportableinaccordancewiththerequirementsofAASB8.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.ManagementhasdeterminedtheoperatingsegmentsbasedonthereportsreviewedbytheBoardofDirectorsthatareusedtomakestrategicdecisions.54 The segment information provided to the Board of Directors for the reportable segments for the year ended 30 June 2019 and 30 June 2018 are as follows: 2019 Asia Pacific Minerals North America Africa Project Services - Africa Industrial Process Other Total Total segment revenue $ 81,606,278 $ 26,492,806 $ 31,712,530 $ 6,451,670 $ 5,800,985 $ 23,756,745 $ 175,821,014 Inter-segment revenue (830,401) (13,798,369) - - (330,193) (7,531,258) (22,490,221) Revenue from external customers Profit / (Loss) before tax Interest in the profit of equity accounted joint ventures Depreciation and amortisation Income tax benefit / (expense) 80,775,877 12,694,437 31,712,530 16,451,670 5,470,792 16,225,487 153,330,793 21,951,933 1,368,624 371,783 2,101,063 158,922 (777,625) 25,174,700 15,951 - - 805,066 76,893 224,618 - - - - 15,951 66,720 278,446 1,451,743 (7,292,057) (121,113) (423,535) (564,432) (18,105) 899,301 (7,519,941) Total segment assets 47,337,497 10,695,072 17,504,999 6,919,620 3,976,347 11,301,005 97,734,540 Total assets includes: Investment in joint ventures Additions to non-current assets (other than financial assets and deferred tax) Total segment liabilities - - - 473,908 148,719 231,845 - - - - - 7,561 849,446 1,711,479 20,733,662 6,852,573 6,725,915 5,280,265 1,470,309 3,756,064 44,818,788 Lycopodium Annual Financial Report 2019 • 55 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)4Segmentinformation(continued)(b)SegmentinformationprovidedtotheBoardofDirectorsThesegmentinformationprovidedtotheBoardofDirectorsforthereportablesegmentsfortheyearended30June2019and30June2018areasfollows:MineralsProjectServices-AfricaProcessIndustriesOther2019AsiaPacificNorthAmericaAfricaTotal$$$$$$$Totalsegmentrevenue81,606,27826,492,80631,712,5306,451,6705,800,98523,756,745175,821,014Inter-segmentrevenue(830,401)(13,798,369)-(330,193)(7,531,258)(22,490,221)Revenuefromexternalcustomers80,775,87712,694,43731,712,5306,451,6705,470,79216,225,487153,330,793Profit/(Loss)beforetax21,951,9331,368,624371,7832,101,063158,922(777,625)25,174,700Interestintheprofitofequityaccountedjointventures15,951-----15,951Depreciationandamortisation805,06676,893224,61866,720278,4461,451,743Incometaxbenefit/(expense)(7,292,057)(121,113)(423,535)(564,432)(18,105)899,301(7,519,941)Totalsegmentassets47,337,49710,695,07217,504,9996,919,6203,976,34711,301,00597,734,540Totalassetsincludes:Investmentinjointventures------Additionstonon-currentassets(otherthanfinancialassetsanddeferredtax)473,908148,719231,845-7,561849,4461,711,479Totalsegmentliabilities20,733,6626,852,5736,725,9155,280,2651,470,3093,756,06444,818,78855 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 2018 Asia Pacific Minerals North America $ $ Project Services - Africa Industrial Process Other Africa $ $ $ $ Total segment revenue 117,508,883 17,163,303 32,673,738 22,382,754 9,840,954 24,018,094 Total $ 223,587,726 Inter-segment revenue (4,659,510) (6,777,315) - (8,665,611) (334,146) (9,255,702) (29,692,284) Revenue from external customers Profit / (Loss) before tax Interest in the profit of equity accounted joint ventures Depreciation and amortisation Income tax benefit / (expense) 112,849,373 10,385,988 32,673,738 13,717,143 9,506,808 14,762,392 193,895,442 18,469,665 1,167,134 1,705,232 4,559,880 (76,389) 1,403,965 27,229,487 416,194 - - - - - 416,194 716,478 70,962 219,818 1,653 59,249 160,166 1,228,326 (5,055,650) (302,819) (776,598) (1,179,354) (52,701) (172,728) (7,539,850) Total segment assets 67,792,701 9,446,818 17,106,363 7,641,097 5,118,600 11,782,914 118,888,493 Total assets includes: Investment in joint ventures Additions to non-current assets (other than financial assets and deferred tax) Total segment liabilities 1,274,049 - - 864,816 129,863 256,563 - - - - 1,274,049 142,493 543,909 1,937,644 441,894,169 5,982,709 5,876,314 5,772,947 2,753,378 4,308,840 66,588,3570 56 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)4Segmentinformation(continued)(b)SegmentinformationprovidedtotheBoardofDirectors(continued)MineralsProjectServices-AfricaProcessIndustriesOther2018AsiaPacificNorthAmericaAfricaTotal$$$$$$$Totalsegmentrevenue117,508,88317,163,30332,673,73822,382,7549,840,95424,018,094223,587,726Inter-segmentrevenue(4,659,510)(6,777,315)-(8,665,611)(334,146)(9,255,702)(29,692,284)Revenuefromexternalcustomers112,849,37310,385,98832,673,73813,717,1439,506,80814,762,392193,895,442Profit/(Loss)beforetax18,469,6651,167,1341,705,2324,559,880(76,389)1,403,96527,229,487Interestintheprofitofequityaccountedjointventures416,194-----416,194Depreciationandamortisation716,47870,962219,8181,65359,249160,1661,228,326Incometaxbenefit/(expense)(5,055,650)(302,819)(776,598)(1,179,354)(52,701)(172,728)(7,539,850)Totalsegmentassets67,792,7019,446,81817,106,3637,641,0975,118,60011,782,914118,888,493Totalassetsincludes:Investmentinjointventures1,274,049-----1,274,049Additionstonon-currentassets(otherthanfinancialassetsanddeferredtax)864,816129,863256,563-142,493543,9091,937,644Totalsegmentliabilities41,894,1695,982,7095,876,3145,772,9472,753,3784,308,84066,588,35756 Lycopodium Annual Financial Report 2019 • 57 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)4Segmentinformation(continued)(c)SegmentrevenueSalesbetweensegmentsarecarriedoutatarm'slengthandareeliminatedonconsolidation.Therevenuefromexternalpartiesreportedtotheboardofdirectorsismeasuredinamannerconsistentwiththatintheconsolidatedstatementofprofitorlossandothercomprehensiveincome.TheentityisdomiciledinAustralia.TheresultofitsrevenuefromexternalcustomersinAustraliais$25,819,835(2018:$57,699,725),andthetotalofrevenuefromexternalcustomersfromothercountriesis$125,321,729(2018:$134,317,139).Segmentrevenuesareallocatedbasedonthecountryinwhichthecustomerislocated.Revenuesofapproximately$28,177,025(2018:$70,186,213)arederivedfromthetop3customers.TheserevenuesareattributabletotheMineralssegment.(d)SegmentprofitbeforetaxTheboardofDirectorsassessestheperformanceoftheoperatingsegmentsbasedonameasureofadjustedprofitbeforetax.Areconciliationofsegmentprofitbeforetaxtotheprofitbeforetaxintheconsolidatedstatementofprofitorlossandothercomprehensiveincomeisprovidedasfollows:Consolidated2019$2018$Segmentprofitbeforetax25,174,70027,229,487Goodwillimpairment-(1,095,048)Unallocated(1,630,948)(378,950)Profitbeforeincometaxasperstatementofcomprehensiveincome23,543,75225,755,489(e)SegmentassetsTheamountsprovidedtotheboardofDirectorswithrespecttototalassetsaremeasuredinamannerconsistentwiththatofthefinancialreport.Theseassetsareallocatedbasedontheoperationsofthesegmentandthephysicallocationoftheasset.Reportablesegments'assetsarereconciledtototalassetsasfollows:ConsolidatedSegmentassets97,734,540118,888,493Intersegmenteliminations(4,786,796)(6,091,111)Intangiblesarisingonconsolidation6,126,2286,126,228Unallocated20,777,89222,478,193Totalassetsaspertheconsolidatedbalancesheet119,851,864141,401,803Thetotalofnon-currentassetsotherthanfinancialinstrumentsanddeferredtaxassetsinAustraliais$7,722,872(2018:$9,858,725),andothercountriesis$4,416,744(2018:$3,467,825).57 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 58 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)4Segmentinformation(continued)(f)SegmentliabilitiesTheamountsprovidedtotheboardofDirectorswithrespecttototalliabilitiesaremeasuredinamannerconsistentwiththatofthefinancialreport.Theseliabilitiesareallocatedbasedontheoperationsofthesegment.Reportablesegments'liabilitiesarereconciledtototalliabilitiesasfollows:ConsolidatedSegmentliabilities44,818,78866,588,357Intersegmenteliminations(4,731,316)(6,039,199)Unallocated346,4921,502,237Totalliabilitiesaspertheconsolidatedbalancesheet40,433,96462,051,3955Revenue(a)Disaggregationofrevenuefromcontractswithcustomers20192018Engineering&relatedservicesConstructioncontractsTotalEngineering&relatedservicesConstructioncontractsTotal$$$$$$.Minerals113,987,71711,195,127125,182,844111,301,82144,607,279155,909,100ProjectServices-Africa6,451,670-6,451,67013,717,143-13,717,143ProcessIndustries5,470,792-5,470,7929,506,808-9,506,808Other14,036,258-14,036,25812,883,813-12,883,813Totalrevenue139,946,43711,195,127151,141,564147,409,58544,607,279192,016,864(b)AssetsandliabilitiesrelatedtocontractswithcustomersConsolidated2019$2018$Assetrecognisedforcostsincurredtofulfilacontract1,497,4672,669,078Totalcontractassets1,497,4672,669,078Advancesreceivedforconstructioncontractwork7,910,4555,183,825Deferredservicesincome5,882,7869,435,624Totalcontractliabilities13,793,24114,619,449(i)SignificantchangesincontractassetsandliabilitiesAdvancesreceivedforconstructioncontractworkanddeferredservicesincomerepresentcustomerpaymentsreceivedinadvanceofperformance(contractliabilities)thatareexpectedtoberecognisedasrevenuein2020.Theamountsrecognisedasacontractliabilitywillgenerallybeutilisedwithinthenextreportingperiod.58 Lycopodium Annual Financial Report 2019 • 59 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)6ExpensesConsolidated2019$2018$Profitbeforeincometaxincludesthefollowingspecificexpenses:DepreciationFixturesandfittings580,145528,652Leaseholdimprovements186,15952,830Motorvehicles10,0919,956Leasedplantandequipment474,044454,110Totaldepreciation1,250,4391,045,548AmortisationComputersoftware202,243182,931Totaldepreciationandamortisation1,452,6821,228,479Netforeignexchange(gains)/losses(43,993)(543,812)Occupancyexpense8,111,1658,577,494Definedcontributionsuperannuationexpense2,906,2802,791,8047Incometaxexpense(a)IncometaxexpenseConsolidated2019$2018$Currenttaxonprofitsfortheyear3,917,22211,980,891Deferredtaxonprofitsfortheyear4,197,604(4,533,986)Adjustmentsforcurrenttaxofpriorperiods(970,289)(350,314)7,144,5377,096,591Deferredincometaxexpense/(benefit)includedinincometaxexpensecomprises:Decease/(increase)indeferredtaxassets(note15)4,573,765(4,345,535)Decreaseindeferredtaxliabilities(note19)(376,161)(188,451)4,197,604(4,533,986)59 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 60 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)7Incometaxexpense(continued)(b)NumericalreconciliationofincometaxexpensetoprimafacietaxpayableConsolidated2019$2018$Profitbeforeincometaxexpense23,543,75225,755,489TaxattheAustraliantaxrateof30%(2018:30%)7,063,1267,726,647Taxeffectofamountswhicharenotdeductible(taxable)incalculatingtaxableincome:Goodwillimpairment-328,514Sundryitems43,456191,858Withholdingtaxgross-up733,072-7,839,6548,247,019Adjustmentsforcurrenttaxofpriorperiods-under/(over)provisionofprioryearincometax(970,290)(350,314)Differenceinoverseastaxrates(99,300)(567,357)Deferredtaxesnotrecognised202,723101,048Shareofnetprofitofjointventuresaccountedforusingtheequitymethod(181,880)(333,804)Unfrankeddividendsreceivedfromjointventuresaccountedforusingtheequitymethod353,630-Totalincometaxexpense7,144,5377,096,592(30,688,289)(32,852,081)(c)TaxconsolidationThecompanyandits100%ownedAustralianentitiesformedataxconsolidatedgroupon1July2013.MembersoftheconsolidatedgrouphaveenteredintoataxsharingagreementinordertoallocateincometaxexpensetothewhollyownedAustralianentitiesonapro-ratabasis.Theagreementprovidesfortheallocationofincometaxliabilitiesbetweentheentitiesshouldtheheadentitydefaultonitstaxpaymentobligations.Atbalancedate,thepossibilityofdefaultisremote.TheheadentityofthetaxconsolidatedgroupisLycopodiumLimited.TaxeffectaccountingbymembersofthetaxconsolidatedgroupMembersofthetaxconsolidatedgrouphaveenteredintoataxfundingagreementeffectivefrom1July2013.Thetaxfundingagreementprovidesfortheallocationofcurrenttaxestomembersofthetaxconsolidatedgroup.Deferredtaxesareallocatedtomembersofthetaxconsolidatedgroupinaccordancewiththegroupallocationapproach,whichisconsistentwiththeprinciplesofAASB112IncomeTaxes.Theallocationoftaxesunderthetaxfundingagreementisrecognisedasanincrease/(decrease)inthememberentities’intercompanyaccountswiththetaxconsolidatedgroupheadcompany,LycopodiumLimited.Inthisregard,thecompanyhasassumedthebenefitoftaxlossesfromthememberentitiesasofthebalancedate.Thenatureofthetaxfundingagreementissuchthatnotaxconsolidatedcontributionsbyordistributionstoparticipant'sequityarerequired.60 Lycopodium Annual Financial Report 2019 • 61 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)8Currentassets-CashandcashequivalentsConsolidated2019$2018$Cashatbankandinhand60,451,04874,287,788(a)RiskexposureThegroup'sexposuretointerestrateriskisdiscussedinnote2.Themaximumexposuretocreditriskattheendofthereportingperiodisthecarryingamountofeachclassofcashandcashequivalentsmentionedabove.9Currentassets-TradeandotherreceivablesConsolidated2019$2018$Tradereceivables30,245,59832,933,663Allowanceforexpectedcreditloss(a)(902,701)(877,744)Tradereceivableretention28,212-29,371,10932,055,919GSTandotherreceivables4,134,8634,305,390Cashadvancedtoemployees48,86735,328Loantojointventures840,0001,220,0005,023,7305,560,71834,394,83937,616,637(a)AllowanceforexpectedcreditlossMovementsinallowanceforexpectedcreditlossoftradereceivablesareasfollows:Consolidated2019$2018$At1July877,7442,342,737Allowanceforexpectedcreditlossrecognisedduringtheyear112,21265,567Receivableswrittenoffduringtheyearasuncollectible(47,852)(546,798)Unusedamountreversed(45,578)(988,877)Exchangedifference6,1765,115At30June902,702877,744Theotherclasseswithintradeandotherreceivablesdonotcontainimpairedassets.61 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 62 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)9Currentassets-Tradeandotherreceivables(continued)(a)Allowanceforexpectedcreditloss(continued)Theexpectedcreditlossfortradereceivablesasat30June2019and30June2018areasfollows:30June2019CurrentMorethan30dayspastdueMorethan60dayspastdueMorethan90dayspastdueTotalExpectedcreditlossrate0%0%0%26.5%-Grosscarryingamount18,583,1195,671,9202,586,0053,404,55430,245,598Lifetimeexpectedcreditloss---902,701902,70130June2018CurrentMorethan30dayspastdueMorethan60dayspastdueMorethan90dayspastdueTotalExpectedcreditlossrate0%0%0%12.7%-Grosscarryingamount12,954,5579,982,5503,109,0896,887,46732,933,663Lifetimeexpectedcreditloss---877,744877,744(b)RiskexposureInformationaboutthegroup'sexposuretoforeignexchangeriskandinterestrateriskisprovidedinnote2.(c)FairvalueandcreditriskDuetotheshort-termnatureofthesereceivables,theircarryingamountisassumedtoapproximatetheirfairvalue.Themaximumexposuretocreditriskatthereportingdateisthefairvalueofeachclassofreceivablesmentionedabove.Thegroupdoesnotholdanycollateralassecurity.Refertonote2formoreinformationontheriskmanagementpolicyofthegroup.10Currentassets-OthercurrentassetsConsolidated2019$2018$Othercurrentassets(a)775,879778,401Prepayments3,059,772962,4503,835,6511,740,851(a)OthercurrentassetsOthercurrentassetsconsistofdepositsheldwithlicensedbanksassecurity/bondonthevariouspropertiesleasedbythegroup.62 Lycopodium Annual Financial Report 2019 • 63 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)11Financialassetsandfinancialliabilities(a)CategoriesoffinancialassetsandliabilitiesNotes1(m)and1(n)providesadescriptionofeachcategoryoffinancialassetsandliabilitiesandtherelatedaccountingpolicies.Thecarryingamountsoffinancialassetsandliabilitiesineachcategoryareasfollows:FinancialassetsConsolidated-At30June2019NoteFairValuethroughprofitorloss$Amortisedcost$Total$Cashandcashequivalents8-60,451,04860,451,048Tradeandotherreceivables9-34,394,83934,394,839Depositsheldwithbanks10-775,879775,879Investmentinlistedequities11(d)801,945-801,945OtherReceivables12-241,252241,252801,94595,863,01896,664,963Consolidated-At30June2018Cashandcashequivalents8-74,287,78874,287,788Tradeandotherreceivables9-37,616,63737,616,637Depositsheldwithbanks10-778,401778,401Investmentinlistedequities11(d)1,256,106-1,256,106OtherReceivables12-332,356332,3561,256,106113,015,182114,271,288FinancialliabilitiesConsolidated-At30June2019NoteFairValuethroughprofitorloss$Amortisedcost$Total$Tradeandotherpayables-11,183,33611,183,336Borrowings11(c)-715,560715,560Derivativefinancialliabilities163,044-163,044163,04411,898,89612,061,940Consolidated-At30June2018Tradeandotherpayables-9,632,0749,632,074Borrowings11(c)-1,258,9711,258,971Derivativefinancialliabilities11(d)27,694-27,69427,69410,891,04510,918,739AdescriptionoftheGroup’sfinancialinstrumentrisks,includingriskmanagementobjectivesandpoliciesisgiveninNote2.ThemethodsusedtomeasurefinancialassetsandliabilitiesreportedatfairvaluearedescribedinNote2.63 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 64 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)11Financialassetsandfinancialliabilities(continued)(b)DerivativefinancialinstrumentsTheGroup’sderivativefinancialinstrumentsaremeasuredatfairvalueandaresummarisedbelow:Consolidated2019$2018$CurrentliabilitiesOtherhedginginstruments163,04427,694Totalcurrentderivativefinancialinstrumentliabilities163,04427,694TheGroupusesforwardforeignexchangecontractstomitigateexchangerateexposurearisingpredominantlyfromforecastsalesinUSdollars.Allforwardexchangecontractsareconsideredbymanagementtobepartofeconomichedgearrangementsbuthavenotbeenformallydesignated.TheGroup’sUS-dollarforwardcontractsrelatetocashflowsthathavebeenforecastedforJuly2019toMarch2020.Allforecasttransactionsareexpectedtooccur.During2019alossof$135,350(2018:lossof$483,288)wasrecognisedinprofitandlossasaresultoffair-valuingthederivativeinstrumentatyearend.(c)BorrowingsBorrowingsincludethefollowingfinancialliabilities:Consolidated20192018Current$Non-current$Total$Current$Non-current$Total$SecuredLeaseliabilities419,344296,216715,560478,216562,0661,040,282Totalsecuredborrowings419,344296,216715,560478,216562,0661,040,282UnsecuredOtherloans---218,689-218,689Totalunsecuredborrowings---218,689-218,689Totalborrowings419,344296,216715,560696,905562,0661,258,971AllborrowingsaredenominatedinAUD.BankborrowingsaresecuredbyplantandequipmentownedbytheGroup.Currentinterestratesarevariableandaverage6.06%(2018:5.57%).Thecarryingamountofbankborrowingsisconsideredtobeareasonableapproximationoffairvalue.64 Lycopodium Annual Financial Report 2019 • 65 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)11Financialassetsandfinancialliabilities(continued)(d)FairvaluemeasurementFinancialassetsandliabilitiesmeasuredatfairvalueintheBalanceSheetaregroupedintothreeLevelsofafairvaluehierarchy.ThethreeLevelsaredefinedbasedontheobservabilityofsignificantinputstothemeasurement,asfollows:•Level1:quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities•Level2:inputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectlyorindirectly•Level3:unobservableinputsfortheassetorliability.ThefollowingtableshowstheLevelswithinthehierarchyoffinancialassetsandliabilitiesmeasuredatfairvalueonarecurringbasisat30June2019and30June2018.Level1Level2Level3TotalConsolidated-At30June2019$$$$Financialassets/(liabilities)ListedSecurities801,945--801,945Foreigncurrencyforwardcontracts-(163,044)-(163,044)Netfairvalue801,945(163,044)-638,901Level1Level2Level3TotalConsolidated-At30June2018$$$$Financialassets/(liabilities)ListedSecurities1,256,106--1,256,106Foreigncurrencyforwardcontracts-(27,694)-(27,694)Netfairvalue1,256,106(27,694)-1,228,412TherewerenotransfersbetweenLevel1andLevel2in2019and2018.MeasurementoffairvalueoffinancialinstrumentsTheGroup’sfinanceteamperformsvaluationsoffinancialitemsforfinancialreportingpurposes,inconsultationwiththirdpartyvaluationspecialistsforcomplexvaluations,whererequired.Valuationtechniquesareselectedbasedonthecharacteristicsofeachinstrument,withtheoverallobjectiveofmaximisingtheuseofmarket-basedinformation.ThefinancialteamreportsdirectlytotheChiefFinancialOfficerandtotheauditcommittee.ThevaluationtechniquesusedforinstrumentscategorisedinLevel2aredescribedbelow:Foreigncurrencyforwardcontracts(Level2)TheGroup’sforeigncurrencyforwardcontractsarenottradedinactivemarkets.Thesehavebeenfairvaluedusingobservableforwardexchangeratesandinterestratescorrespondingtothematurityofthecontract.Theeffectsofnon-observableinputsarenotsignificantforforeigncurrencyforwardcontracts.65 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 66 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)12Non-currentassets-OtherreceivablesConsolidatedNotes2019$2018$Loansunderseniormanagementshareacquisitionplan35(a)241,252332,356(a)ImpairedreceivablesandreceivablespastdueNoneofthenon-currentreceivablesareimpairedorpastduebutnotimpaired.13Non-currentassets-InvestmentsaccountedforusingtheequitymethodConsolidated2019$2018$Investmentinjointventures-1,274,049Investmentinassociates1,392,4651,493,6411,392,4652,767,690(a)InvestmentinjointventuresThegrouphasthefollowingjointventures:ProportionofOwnershipInterestHeldbytheGroupNameofJointVentureCountryofIncorporation&PrincipalPlaceofBusinessPrincipalActivities20192018PilbaraEPCMPtyLtd("PEPL")AustraliaEngineering,procurement,constructionmanagementservices50%50%MondiumPtyLtd("Mondium")AustraliaEngineeringandconstructionservices40%40%TheinvestmentsinPEPLandMondiumareaccountedforusingtheequitymethodinaccordancewithAASB128.66 Lycopodium Annual Financial Report 2019 • 67 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)13Non-currentassets-Investmentsaccountedforusingtheequitymethod(continued)20192018$$Currentassets(a)-2,636,218Non-currentassets--Totalassets-2,636,218Currentliabilities(b)-65,125Non-currentliabilities(c)--Totalliabilities-65,125a.Includescashandcashequivalents-2,636,218b.Includescurrentfinancialliabilities(excludingtradeandotherpayablesandprovisions)--c.Includesnon-currentfinancialliabilities(excludingtradeandotherpayablesandprovisions)--20192018$$Revenue-37,428Profitfortheyear-23,001Depreciationandamortisation--Interestincome-37,428Interestexpense--Taxexpense--AreconciliationoftheabovesummarisedfinancialinformationtothecarryingamountoftheinvestmentinPEPLissetoutbelow:20192018$$TotalnetassetsofPEPL-2,548,098ProportionofownershipinterestheldbytheGroup50%50%CarryingamountoftheinvestmentinPEPL-1,274,049DividendsreceivedduringtheyearfromPEPLof$1,290,000(2018:$Nil).PEPLisaprivatecompany,withnoquotedmarketpricesavailableforitsshares.Theinvestmentiscurrentlyofintheprocessofbeingwound-up.In2017,Lycopodium(40%)andMonadelphousGroupLtd(60%)formedanincorporatedjointventure,MondiumPtyLtd.Mondiumisaprivatecompany,withnoquotedmarketpricesavailableforitsshares.Theinvestmentiscurrentlycarriedatanilvalue(2018:Nil).67 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 68 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)13Non-currentassets-Investmentsaccountedforusingtheequitymethod(continued)(b)InvestmentinassociatesTheGrouphasonematerialinvestmentinassociate,ECGEngineeringPtyLtd,anelectricalengineeringconsultancybasedinPerth,Australia.ProportionofOwnershipInterestHeldbytheGroupNameofJointVentureCountryofIncorporation&PrincipalPlaceofBusinessPrincipalActivities20192018ECGEngineeringPtyLtdAustraliaElectricalengineering31%31%SummarisedfinancialinformationoftheGroup'sshareintheassociates:20192018$$Profitfromcontinuingoperations643,981696,487Othercomprehensiveincome--Totalcomprehensiveincome643,981696,487.CarryingamountoftheGroup'sinterestinassociates1,392,4651,493,64168 Lycopodium Annual Financial Report 2019 • 69 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)14Non-currentassets-Property,plantandequipmentFixturesandfittings$Motorvehicles$Leaseholdimprovements$Leasedplantandequipment$Total$At1July2017Costorfairvalue6,935,104186,962798,3311,379,6639,300,060Accumulateddepreciation(5,507,660)(139,846)(318,208)(160,172)(6,125,886)Netbookamount1,427,44447,116480,1231,219,4913,174,174Yearended30June2018Openingnetbookamount1,427,44447,116480,1231,219,4913,174,174Additions981,618-71,490253,0061,306,114Disposals(2,482)---(2,482)Depreciationcharge(528,652)(9,956)(52,830)(454,110)(1,045,548)Exchangedifferences(2,674)(141)5,044-2,229Closingnetbookamount1,875,25437,019503,8271,018,3873,434,487At30June2018Costorfairvalue7,480,514179,528862,3321,632,66810,155,042Accumulateddepreciation(5,605,260)(142,509)(358,505)(614,281)(6,720,555)Netbookamount1,875,25437,019503,8271,018,3873,434,487Yearended30June2019Openingnetbookamount1,875,25437,019503,8271,018,3873,434,487Additions941,3943,882659,836-1,605,112Disposals(1,616)-(28,909)-(30,525)Depreciationcharge(580,712)(10,091)(185,592)(474,045)(1,250,440)Transfers(290,395)-290,395--Exchangedifferences25,481539(16,202)-9,818Closingnetbookamount1,969,40631,3491,223,355544,3423,768,452At30June2019Cost8,278,724188,6941,644,1991,632,66811,744,285Accumulateddepreciation(6,309,318)(157,345)(420,844)(1,088,326)(7,975,833)Netbookamount1,969,40631,3491,223,355544,3423,768,45269 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 70 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)15Non-currentassets-DeferredtaxassetsConsolidated2019$2018$Thebalancecomprisestemporarydifferencesattributableto:Unusedtaxlosses86,411138,371Employeebenefits2,627,7502,513,522Doubtfuldebts53,64524,688Accruedexpenses95,056107,421Deferredrevenue96,017649,359Otherprovisions1,400,7285,446,746Financeleases168,620312,0844,528,2279,192,191Set-offofdeferredtaxliabilitiespursuanttoset-offprovisions(note19)(465,232)(841,393)Netdeferredtaxassets4,062,9958,350,798Deferredtaxassetsexpectedtoberecoveredwithin12months3,693,5058,385,756Deferredtaxassetsexpectedtoberecoveredaftermorethan12months834,722806,4354,528,2279,192,191MovementsDoubtfuldebts$Employeebenefits$Deferredrevenue$Accruedexpenses$Otherprovisions$Financeleases$Unusedtaxlosses$Total$At1July2017408,8772,177,976209,886110,9651,516,230366,41937,4224,827,775Credited/(charged)-toprofitorloss(384,189)335,546439,473(3,544)4,070,021(54,335)(57,437)4,345,535AdjustmentonadoptionofAASB9----(139,505)--(139,505)Recognisedlosses------158,386158,386At30June201824,6882,513,522649,359107,4215,446,746312,084138,3719,192,191MovementsDoubtfuldebts$Employeebenefits$Deferredrevenue$Accruedexpenses$Otherprovisions$Financeleases$Unusedtaxlosses$Total$At1July201824,6882,513,522649,359107,4215,446,746312,084138,3719,192,191(Charged)/credited-toprofitorloss28,957114,228(553,342)(12,365)(3,955,820)(143,464)(51,960)(4,573,766)Exchangeratedifferences----(90,198)--(90,198)At30June201953,6452,627,75096,01795,0561,400,728168,62086,4114,528,22770 Lycopodium Annual Financial Report 2019 • 71 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)16Non-currentassets-IntangibleassetsGoodwill$Software$Customercontracts$Total$At1July2017Cost8,885,4061,878,728315,00011,079,134Accumulatedamortisationandimpairment(1,583,084)(1,759,877)(315,000)(3,657,961)Netbookamount7,302,322118,851-7,421,173Yearended30June2018Openingnetbookamount7,302,322118,851-7,421,173Additions-631,529-631,529Amortisationcharge*-(182,931)-(182,931)Impairmentlossrecognised(1,095,048)--(1,095,048)Disposal-17,895-17,895Exchangedifferences-(601)-(601)Closingnetbookamount6,207,274584,743-6,792,017Cost8,885,4062,478,811315,00011,679,217Accumulatedamortisationandimpairment(2,678,132)(1,894,068)(315,000)(4,887,200)Netbookamount6,207,274584,743-6,792,017Goodwill$Software$Customercontracts$Total$Yearended30June2019Openingnetbookamount6,207,274584,743-6,792,017Additions-144,819-144,819Amortisationcharge*-(202,243)-(202,243)Exchangedifferences-2,854-2,854Closingnetbookamount6,207,274530,173-6,737,447At30June2019Cost8,885,4062,644,899315,00011,845,305Accumulatedamortisation(2,678,132)(2,114,726)(315,000)(5,107,858)Netbookamount6,207,274530,173-6,737,447*Groupamortisationof$202,243(2018:$182,931)isincludedindepreciationandamortisationexpenseinthestatementofcomprehensiveincome.71 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 72 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)16Non-currentassets-Intangibleassets(continued)(a)ImpairmenttestsforgoodwillGoodwillisallocatedtothegroupcash-generatingunits(CGUs)identifiedaccordingtobusinesssegmentandcountryofoperation.Asegment-levelsummaryofthegoodwillallocationispresentedbelow.2019Australia$Othercountries$Total$Minerals3,622,9912,465,0266,088,017Metallurgical119,257-119,2573,742,2482,465,0266,207,2742018Australia$Othercountries$Total$Minerals3,622,9912,465,0266,088,017Metallurgical119,257-119,2573,742,2482,465,0266,207,274(b)Keyassumptionsusedforvalue-in-usecalculationsTherecoverableamountofeachCGUwithinthebusinesssegmentisdeterminedonthebasisofvalue-in-use('VIU').Thefollowingdescribestheassumptionsonwhichmanagementhasbaseditscashflowprojectionswhendeterminingvalueinuse:GrowthratesDiscountrates2019%2018%2019%2018%Minerals2.52.51.13.2Metallurgical2.52.51.13.2GrowthrateThegrowthraterepresentsasteadyindexationratewhichdoesnotexceedmanagement'sexpectationsofthelongtermaveragegrowthrateforthebusinessinwhicheachCGUoperates.DiscountrateFortheAustralianCGUs,thepre-taxdiscountrateappliedtocashflowprojectionsis1.1%(2018:3.2%)andfortheMineralsCGUsinothercountries,thepre-taxdiscountrateis9.04%(2018:9.20%).CashflowsVIUcalculationsusecashflowprojectionsfromapprovedbudgetsbasedonpastperformanceanditsexpectationsforthefuturecoveringathreeyearperiod.72 Lycopodium Annual Financial Report 2019 • 73 LycopodiumLimitedNotestothefinancialstatements30June2019(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.73 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 74 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)17Currentliabilities-TradeandotherpayablesConsolidated2019$2018$Tradepayables3,947,8436,198,804Goodsandservicestax(GST)payable2,380,1362,330,610Sundrycreditorsandaccruedexpenses7,235,4933,433,270Employeebenefitobligations(a)8,375,3047,836,17621,938,77619,798,860Includedintheabovearefinancialliabilitiesof$11,183,336(2018:$9,632,074).(a)Amountsnotexpectedtobesettledwithinthenext12monthsEmployeebenefitobligationsincludeaccrualsforannualleaveandunconditionalentitlementsoflongserviceleave.Theentireobligationispresentedascurrent,sincethegroupdoesnothaveanunconditionalrighttodefersettlement.However,basedonpastexperience,thegroupdoesnotexpectallemployeestotakethefullamountofaccruedleavewithinthenext12months.Thefollowingamountsreflectleavethatisnotexpectedtobetakenwithinthenext12months:Consolidated2019$2018$Annualleaveobligationexpectedtobesettledafter12months1,107,2751,142,739Longserviceleaveobligationexpectedtobesettledafter12months1,346,1991,118,0002,453,4742,260,739(b)RiskexposuresDetailsofthegroup'sexposuretoforeignexchangeriskisprovidedinnote2.74 Lycopodium Annual Financial Report 2019 • 75 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)18Currentliabilities-ProvisionsConsolidated2019$2018$Serviceandequipmentwarranties3,000,00016,361,009(a)MovementsinprovisionsMovementsineachclassofprovisionduringthefinancialyear,otherthanemployeebenefits,aresetoutbelow:(b)Movementsinprovisions2019Serviceandequipmentwarranties$Total$Carryingamountatbeginningofyear16,361,00916,361,009Expiredwarrantyprovisionsreversed(13,361,009)(13,361,009)Carryingamountatendofyear3,000,0003,000,000TheGrouprecognisesserviceandequipmentwarrantyprovisionsinaccordancewithitscurrentpolicy.Theamountprovidedtakesintoaccountthepercentagecompletionoftheproject,forecasttocompletecostsplusanyclose-outobligationsandpotentialcontractualliabilitiesduringthewarrantyperiod.75 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 76 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)19Non-currentliabilities-DeferredtaxliabilitiesConsolidated2019$2018$Thebalancecomprisestemporarydifferencesattributableto:Accruedincome241,381299,562Otherprovisions66,01815,973Depreciation&Amortisation117,128485,481Prepaidexpenses40,70540,377465,232841,393Set-offofdeferredtaxliabilitiespursuanttoset-offprovisions(note15)(465,232)(841,393)Netdeferredtaxliabilities--Deferredtaxliabilitiesexpectedtobesettledwithin12months348,104355,912Deferredtaxliabilitiesexpectedtobesettledaftermorethan12months117,128485,481465,232841,393MovementsDepreciation&amortisation$Accruedincome$Otherprovisions$Prepaidexpenses$Total$At1July2017525,882318,275145,04940,6391,029,845Charged/(credited)-profitorloss(40,401)(18,713)(129,076)(262)(188,452)At30June2018485,481299,56215,97340,377841,393At1July2018485,481299,56215,97340,377841,393Charged/(credited)-profitorloss(368,353)(58,181)50,045328(376,161)At30June2019117,128241,38166,01840,705465,23220Non-currentliabilities-ProvisionsConsolidated2019$2018$Employeebenefits-longserviceleave328,931416,53176 Lycopodium Annual Financial Report 2019 • 77 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)21Contributedequity(a)Sharecapital2019Shares2018Shares2019$2018$OrdinarysharesFullypaid39,732,37339,732,37320,823,77220,823,772Nomovementinordinarysharecapitalduringtheyearending30June2019.(b)OrdinarysharesOnashowofhandseveryholderofordinarysharespresentatameetinginpersonorbyproxy,isentitledtoonevote,anduponapolleachshareisentitledtoonevote.(c)CapitalriskmanagementThegroup'sobjectiveswhenmanagingcapitalaretosafeguarditsabilitytocontinueasagoingconcern,sothatitcancontinuetoprovidereturnsforshareholdersandbenefitsforotherstakeholdersandtomaintainanoptimalcapitalstructuretoreducethecostofcapital.Inordertomaintainoradjustthecapitalstructure,thegroupmayadjusttheamountofdividendspaidtoshareholders,returncapitaltoshareholders,issuenewsharesorsellassetstoreducedebt.Consistentwithothersintheindustry,thegroupmonitorscapitalonthebasisofthegearingratio.Thisratioiscalculatedasnetdebtdividedbytotalcapital.Netdebtiscalculatedastotalborrowings(including'borrowings'and'tradeandotherpayables'asshownintheconsolidatedbalancesheet)lesscashandcashequivalents.Totalcapitaliscalculatedas'equity'asshownintheconsolidatedbalancesheet(includingnon-controllinginterests)plusnetdebt.77 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 78 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)21Contributedequity(continued)(c)Capitalriskmanagement(continued)During2019,thegroup'sstrategywastomaintainagearinglessthan40%.Thegearingratiosat30June2019and30June2018wereasfollows:Consolidated2019$2018$Totalborrowings(includingpayables)34,950,11033,008,203Less:cashandcashequivalents(60,451,048)(74,287,788)Netdebt(25,500,938)(41,279,585)Totalequity79,417,90079,350,408Totalcapital53,916,96238,070,823Gearingratio(32)%(52)%22ReservesForeigncurrencytranslationreserveConsolidated2019$2018$Foreigncurrencytranslationreserve(602,928)(930,627)Consolidated2019$2018$Movements:ForeigncurrencytranslationreserveBalance1July(930,627)(904,119)Currencytranslationdifferencesarisingduringtheyear327,699(26,508)Balance30June(602,928)(930,627)Exchangedifferencesarisingontranslationofforeigncontrolledentitiesarerecognisedinothercomprehensiveincomeasdescribedinnote1(e)andaccumulatedinaseparatereservewithinequity.Thecumulativeamountisreclassifiedtoprofitorlosswhenthenetinvestmentisdisposedof.78 Lycopodium Annual Financial Report 2019 • 79 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)23RetainedearningsConsolidated2019$2018$Balance1July56,480,34346,328,446Profitfortheyear16,507,37818,495,695Dividendspaidorpayable(13,111,683)(8,343,798)Acquisitionofnon-controllinginterests(Note30)(3,361,932)-Transferfromnon-controllinginterests(Note30)3,122,048-Balance30June59,636,15456,480,34324Non-controllinginterestsConsolidated2019$2018$Sharecapital14,93714,937Reserves4,377(1,986)Non-controllinginterestonacquisition2,833,8082,833,808Retainedearnings(170,172)130,161Transfertoretainedearnings(3,122,048)-(439,098)2,976,92025Dividends(a)OrdinarysharesParententity2019$2018$Finaldividendsforyearended30June2018of18.0cents(2017:9.0cents)perfullypaidsharepaidon12October2018(2017:10October2017)Fullyfrankedbasedontaxpaid@30%(2017:30%)7,151,8273,575,914Interimdividendfortheyearended30June2019of15.0cents(2018:12.0cents)perfullypaidsharepaidon12April2019(2018:10April2018)Fullyfrankedbasedontaxpaid@30%(2018:30%)5,959,8564,767,885Totaldividendsprovidedfororpaid13,111,6838,343,79979 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 80 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)25Dividends(continued)(b)DividendsnotrecognisedattheendofthereportingperiodParententity2019$2018$Inadditiontotheabovedividends,sinceyearendtheDirectorshaverecommendedthepaymentofafinaldividendof15.0centsperfullypaidordinaryshare(2018:18.0cents),fullyfrankedbasedontaxpaidat30%.Theaggregateamountoftheproposeddividendexpectedtobepaidon11October2019outofretainedearningsat30June2019,butnotrecognisedasaliabilityatyearend,is5,959,8567,151,827(c)FrankeddividendsConsolidated2019$2018$Frankingcreditsavailableforsubsequentreportingperiodsbasedonataxrateof30%(2018:30%)17,087,88619,842,221Theaboveamountsarecalculatedfromthebalanceofthefrankingaccountasattheendofthereportingyear,adjustedforfrankingcreditsanddebitsthatwillarisefromthesettlementofliabilitiesorreceivablesforincometaxanddividendsaftertheendoftheyear.(a)frankingcreditsthatwillarisefromthepaymentoftheamountoftheprovisionforincometax(b)frankingdebitsthatwillarisefromthepaymentofdividendsrecognisedasaliabilityatthereportingdate,and(c)frankingcreditsthatwillarisefromthereceiptofdividendsrecognisedasreceivablesatthereportingdate.Theconsolidatedamountsincludefrankingcreditsthatwouldbeavailabletotheparententityifdistributableprofitsofsubsidiarieswerepaidasdividends.Theimpactonthefrankingaccountofthedividendrecommendedbythedirectorssinceyearend,butnotrecognisedasaliabilityatyearend,willbeareductioninthefrankingaccountof$2,554,224(2018:$3,065,069).80 Lycopodium Annual Financial Report 2019 • 81 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)26RemunerationofauditorsDuringtheyearthefollowingfeeswerepaidorpayableforservicesprovidedbytheauditoroftheparententity,itsrelatedpracticesandnon-relatedauditfirms:(a)GrantThorntonAustraliaLtd(i)AuditandotherassuranceservicesConsolidated2019$2018$AuditandotherassuranceservicesAuditandreviewoffinancialreports190,000190,000TaxationservicesTaxcomplianceservices(includingincometaxreturns)77,94563,440Totalremunerationfortaxationservices77,94563,440OtherservicesOtherservices31,96839,870Totalremuneration299,913293,310(b)NetworkfirmsofGrantThorntonAuditPtyLtd(i)AuditandotherassuranceservicesConsolidated2019$2018$AuditandotherassuranceservicesAuditandreviewoffinancialstatements9,989110,072TaxationservicesTaxcomplianceservices(includingincometaxreturns)4,85240,529TotalremunerationofnetworkfirmsofGrantThorntonAuditPtyLtd14,841150,60181 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 82 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)26Remunerationofauditors(continued)(c)Non-GrantThorntonAuditPtyLtdConsolidated2019$2018$AuditandotherassuranceservicesAuditandreviewoffinancialstatements178,42049,087TaxationservicesTaxcomplianceservices(includingincometaxreturns)39,79115,275Totalremunerationfortaxationservices39,79115,275OtherservicesOtherservices127,61757,168Totalremunerationofnon-GrantThorntonAuditPtyLtdauditfirms345,828121,530Totalauditors'remuneration660,582565,441Itisthegroup'spolicytoemployGrantThorntonAuditPtyLtdonassignmentsadditionaltotheirstatutoryauditdutieswhereGrantThorntonAuditPtyLtdexpertiseandexperiencewiththegroupareimportant.Theseassignmentsareprincipallytaxadviceandduediligencereportingonacquisitions,orwhereGrantThorntonAuditPtyLtdisawardedassignmentsonacompetitivebasis.Itisthegroup'spolicytoseekcompetitivetendersforallmajorconsultingprojects.27ContingenciesThegrouphadcontingentliabilitiesat30June2019and30June2018inrespectof:(a)Contingentliabilities(i)GuaranteesGuaranteesaregiveninrespectofrentalbondsfor$1,830,584(2018:$1,830,584).Theseguaranteesmaygiverisetoliabilitiesintheeventthatthegroupdefaultsonitsobligationsunderthetermsoftheleaseagreementforitspremisesat1AdelaideTerrace,EastPerth,60LeichhardtStreet,SpringHill,253-269WellingtonRoad,Mulgrave,138-140BeaumontStreet,Hamilton,CentennialPlace,CenturyBoulevard,CenturyCity,CapeTown,SouthAfricaandGolfPark,CapeTown,SouthAfrica.Nomateriallossesareanticipatedinrespectofanyoftheabovecontingentliabilities(2018:Nil).28Commitments(a)CapitalcommitmentsTherewerenocapitalexpenditurecontractedforatthereportingdatewhichhavenotbeenrecognisedasliabilities(2018:Nil).82 Lycopodium Annual Financial Report 2019 • 83 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)28Commitments(continued)(b)Leasecommitments:groupaslessee(i)Non-cancellableoperatingleasesThePerthpropertyunderoperatingleasebyLycopodiumMineralsPtyLtdisanoncancellableleasewitha120monthtermending31January2021.Minimumleasepaymentsarecontingentuponboth4%fixedannualincreasesandmarket-basedreviewsduringthetermofthelease.Theleaseallowsforsublettingofallleaseareas,subjecttotheconsentofthelandlord.TheMelbournepropertyunderoperatingleasebyLycopodiumProcessIndustriesPtyLtdisanoncancellableleasewitha36monthtermending15September2021,withanoptiontorenewtheleaseattheendofthetermforafurther36months.Theagreementprovidesforanannualincreaseintherentalpaymentsof3.5%overthepreviousyear'srental.TheManilapropertyunderoperatingleasebyLycopodium(Philippines)PtyLtdisanoncancellableleasewitha60monthtermending20August2023.Theagreementprovidesforanincreaseintherentalpaymentsof5%perannum.TheBrisbanepropertyunderoperatingleasebyLycopodiumMineralsPtyLtdisanon-cancellableleasewitha36monthtermending28February2021,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.Consolidated2019$2018$Commitmentsforminimumleasepaymentsinrelationtonon-cancellableoperatingleasesarepayableasfollows:Withinoneyear7,819,4437,554,801Laterthanoneyearbutnotlaterthanfiveyears6,845,17114,822,35914,664,61422,377,16083 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 84 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)28Commitments(continued)(b)Leasecommitments:groupaslessee(continued)(ii)FinanceleasesandhirepurchasecommitmentsThegrouphasfinanceleasesandhirepurchasecontractsforvariousitemsofplantandequipmentwithacarryingamountof$544,342(2018:$1,018,386).Theseleasecontractsexpirewithin1to5years.Underthetermsoftheleases,thegrouphastheoptiontoacquiretheleasedassets.ConsolidatedNotes2019$2018$Commitmentsinrelationtofinanceleasesarepayableasfollows:Withinoneyear669,745526,584Laterthanoneyearbutnotlaterthanfiveyears69,693585,944Minimumleasepayments739,4381,112,528Futurefinancecharges(23,878)(72,246)Totalleaseliabilities715,5601,040,282Representingleaseliabilities:Current(note11(c))419,344478,216Non-current(note11(c))296,216562,066715,5601,040,282Theweightedaverageinterestrateimplicitintheleasesandhirepurchasesis6.06%(2018:5.57%).29Relatedpartytransactions(a)ParententitiesTheparententitywithinthegroupisLycopodiumLimited,whichisincorporatedinAustralia.(b)SubsidiariesInterestsinsubsidiariesaresetoutinnote31.(c)KeymanagementpersonnelConsolidated2019$2018$Short-termemployeebenefits3,272,1752,692,118Post-employmentbenefits177,039171,8633,449,2142,863,981Detailedremunerationdisclosuresareprovidedintheremunerationreportonpages12to17.84 Lycopodium Annual Financial Report 2019 • 85 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)29Relatedpartytransactions(continued)(d)TransactionswithotherrelatedpartiesThefollowingtransactionsoccurredwithrelatedparties:Consolidated2019$2018$PurchasesofgoodsandservicesPurchasesfromassociates6,849,1128,188,821SaleofgoodsandservicesSalestoassociatesandjointventures5,041,6051,967,192(e)Outstandingbalancesarisingfromsales/purchasesofgoodsandservicesThefollowingbalancesareoutstandingattheendofthereportingyearinrelationtotransactionswithrelatedparties:Consolidated2019$2018$CurrentpayablesAssociates39,75518,007(f)Loansto/fromrelatedpartiesConsolidated2019$2018$LoanstojointventuresBeginningoftheyear1,220,000723,500Loansadvanced-884,000Repaymentsmade(400,000)(387,500)Endoftheyear820,0001,220,000Thereisnoallowanceaccountforimpairedreceivablesinrelationtoanyoutstandingbalances,andnoexpensehasbeenrecognisedinrespectofimpairedreceivablesduefromrelatedparties.(g)TermsandconditionsPurchasesandsalesofgoodsandserviceswithstatutoryjointventuresaremadeatcost.Purchasesandsalesofgoodsandserviceswiththeassociatearemadeatarms-length.Loansadvancedtothejointventureisinterest-freeandrepayablewithin12months.Interestispayableontheloanatarateof3.25%perannum.Outstandingbalancesareunsecuredandarerepayableincash.85 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 86 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)30BusinesscombinationAcquisitionofadditionalinterestinADPHoldings(Pty)LtdOn30November2018,Lycopodiumacquiredtheremaining26%oftheissuedsharecapitalofADPHoldings(Pty)Ltd("ADP"),increasingitsownershipinterestto100%.Cashconsiderationof$3,361,932waspaidtothenon-controllingshareholders.FollowingisascheduleofadditionalinterestacquiredinADP:2019$Cashconsiderationpaidtonon-controllingshareholders3,361,932CarryingvalueoftheadditionalinterestinADP(3,122,048)Differencerecognisedinretainedearnings239,88431Subsidiaries(a)SignificantinvestmentsinsubsidiariesTheconsolidatedfinancialreportincorporatetheassets,liabilitiesandresultsofthefollowingprincipalsubsidiariesinaccordancewiththeaccountingpolicydescribedinnote1(b):NameofentityCountryofincorporation/PrincipalactivityClassofsharesEquityholding2019%2018%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)Ordinary10074(1)Engineering,procurement,constructionmanagementservices(2)Offshoreprojectsupportservices32EventsoccurringafterthereportingperiodSinceyearendthedirectorshaverecommendedthepaymentofafinaldividendonordinarysharesinrespectofthe2019financialyear.Thetotalamountofthedividendis$5,959,856(2018:$7,151,827),whichrepresentsafullyfrankeddividendof15.0(2018:18.0)centsperfullypaidordinaryshare.Withtheexceptionoftheabove,noothermatterorcircumstanceshavearisensincetheendofthefinancialyearwhichsignificantlyaffectedormaysignificantlyaffect:(a)thegroup'soperationsinfuturefinancialyears,or(b)theresultsofthoseoperationsinfuturefinancialyears,or(c)thegroup'sstateofaffairsinfuturefinancialyears.86 Lycopodium Annual Financial Report 2019 • 87 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)33ReconciliationofprofitafterincometaxtonetcashinflowfromoperatingactivitiesConsolidated2019$2018$Profitfortheyear16,399,21518,658,896Depreciationandamortisation1,452,6821,228,479Impairmentofgoodwill-1,095,048Loans(repaid)/advancedfrom/tojointventure(inclatcashflowsfromfinancingactivities)(400,000)884,000Repaymentofloansfromassociate(inclatcashflowfromfinancingactivities)-(387,500)Proceedsfrominvestmentsinlistedequities(inclatcashflowfrominvestingactivities)(970,838)(1,187,036)Non-cashsharesreceivedinlieuofpaymentforservices59,909(1,204,384)Netloss/(gain)onsaleofnon-currentassets25,575(35,653)Shareofnetprofitofassociateandjointventureaccountedforusingtheequitymethod(659,932)(1,112,681)Interestrelatingtofinancingactivities59,79796,617Otherexpenses154,368-Changeinoperatingassetsandliabilities:Decrease/(increase)intradedebtorsandotherreceivables3,221,798(697,349)Decrease/(increase)incontractassets1,171,611(2,669,078)Increaseininventories(64,493)(492,414)Decrease/(increase)indeferredtaxassets4,287,803(4,552,868)(Increase)/decreaseinotheroperatingassets(2,094,800)408,836Increase/(decrease)intradecreditors2,139,916(44,282,109)(Decrease)/increaseincontractliabilities(826,208)14,619,449(Decrease)/increaseinprovisionforincometaxespayable(9,524,284)5,600,504Decreaseinderivativefinancialassets135,350192,688(Decrease)/increaseinotherprovisions(13,448,609)11,995,947Netcashinflow/(outflow)fromoperatingactivities1,118,860(1,840,608)34Earningspershare(a)BasicearningspershareConsolidated2019Cents2018CentsBasicearningspershareattributabletotheordinaryequityholdersofthecompany41.546.6(b)DilutedearningspershareConsolidated2019Cents2018CentsDilutedearningspershareattributabletotheordinaryequityholdersofthecompany41.546.687 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 88 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)34Earningspershare(continued)(c)ReconciliationofearningsusedincalculatingearningspershareConsolidated2019$2018$BasicearningspershareProfitattributabletotheordinaryequityholdersofthecompanyusedincalculatingbasicearningspershare16,507,37818,495,695DilutedearningspershareUsedincalculatingdilutedearningspershare16,507,37818,495,695(d)WeightedaveragenumberofsharesusedasdenominatorConsolidated2019Number2018NumberWeightedaveragenumberofordinarysharesusedasthedenominatorincalculatingbasicearningspershare39,732,37339,732,37335Share-basedpayments(a)SeniormanagershareacquisitionplanTheseniormanagershareacquisitionplanwasintroducedinNovember2009.Undertheplaneligibleseniormanagersareprovidedwithaninterestfreelimitedrecourseloanforaperiodof3yearstoacquiresharesinLycopodiumLimited.Thepurchaseoftheshareswillbedoneviatheemployeesharetrust.Theloanwillbeinterestfreeiftheparticipatingseniormanagerstayswiththegroupformorethan3years.Intheeventtheparticipatingseniormanagerleaveswithin3years,interestwillbechargedequaltomarketrateofinterestthatwouldhaveaccruedontheloanfromthedateofadvanceofthefundstotherepaymentdate.EligibilitywillbedecidedbytheboardofDirectors.Thevalueoftheloantoeachparticipatingseniormanagerisbasedonthevalueofthesharesallocatedtotherespectiveseniormanager.Thesharesareallocatedata1centdiscounttothevolumeweightedaverageofthepricesatwhichthesharesweretradedontheASXduringtheoneweekperioduptoandincludingthedateofallocation.Duringthefinancialyearended30June2010,607,500shareswereacquiredonandoffmarket.Thedifferencebetweenthepriceofthesharesacquiredandthevalueofsharesallocatedtotheparticipatingseniormanagerswasexpensedinthefinancialyearended30June2010.Thisamountedto$125,855.(b)Expensesarisingfromshare-basedpaymenttransactionsTotalexpensesarisingfromshare-basedpaymenttransactionsrecognisedduringtheperiodaspartofemployeebenefitexpensewerenil.88 Lycopodium Annual Financial Report 2019 • 89 LycopodiumLimitedNotestothefinancialstatements30June2019(continued)36Parententityfinancialinformation(a)SummaryfinancialinformationTheindividualfinancialreportfortheparententityshowthefollowingaggregateamounts:2019$2018$BalancesheetCurrentassets18,228,37420,254,065Non-currentassets33,854,20030,065,700Totalassets52,082,57450,319,765Currentliabilities341,2101,484,003Non-currentliabilities5,28218,236Totalliabilities346,4921,502,239Netassets51,736,08248,817,526(155,208,246)(146,452,578)Shareholders'equityContributedequity20,823,77220,823,772Retainedearnings30,912,31027,993,75451,736,08248,817,526Profitfortheyear16,030,23710,197,001Totalcomprehensiveincome16,030,23710,197,001(b)GuaranteesenteredintobytheparententityIn2018,theparententityenteredintoanarrangementwithainsurerforastandbyinsurancebondingfacilityof$20.0m.Inreturn,theparententityandLycopodiumMineralsPtyLtdjointlyexecutedacrossguaranteeandindemnityassecurityforthefacility.(c)ContingentliabilitiesoftheparententityTheparententitydidnothaveanycontingentliabilitiesasat30June2019or30June2018.(d)Contractualcommitmentsfortheacquisitionofproperty,plantorequipmentTheparententitydidnothaveanycontractualcommitmentsfortheacquisitionofproperty,plantandequipmentasat30June2019or30June2018.89 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 3 0 J U N E 2 0 1 9 ( C O N T I N U E D ) 90 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedDirectors'declaration30June2019IntheDirectors'opinion:(a)thefinancialreportandnotessetoutonpages29to89areinaccordancewiththeCorporationsAct2001,including:(i)complyingwithAccountingStandards,theCorporationsRegulations2001andothermandatoryprofessionalreportingrequirements,and(ii)givingatrueandfairviewofthegroup'sfinancialpositionasat30June2019andofitsperformancefortheyearendedonthatdate,and(b)therearereasonablegroundstobelievethattheCompanywillbeabletopayitsdebtsasandwhentheybecomedueandpayable.TheDirectorshavebeengiventhedeclarationsbytheManagingDirectorandChiefFinancialOfficerrequiredbysection295AoftheCorporationsAct2001.ThisreportismadeinaccordancewitharesolutionofDirectors.PeterDeLeoPerth30September2019 Lycopodium Annual Financial Report 2019 • 91 D I R E C T O R ’ S D E C L A R A T I O N 92 • Lycopodium Annual Finanical Report 2019 A U D I T R E P O R T Lycopodium Annual Financial Report 2019 • 93 A U D I T R E P O R T C O N T I N U E D 94 • Lycopodium Annual Finanical Report 2019 S H A R E H O L D E R I N F O R M A T I O N Lycopodium Annual Financial Report 2019 • 95 LycopodiumLimitedShareholderinformation30June2019Theshareholderinformationsetoutbelowwasapplicableasat9September2019.A.DistributionofequitysecuritiesAnalysisofnumbersofequitysecurityholdersbysizeofholding:HoldingTotalHolders1-10004871,001-5,0005815,001-10,00019510,001-100,000186100,001andover281,477Therewere71holdersoflessthanamarketableparcelofordinaryshares.B.EquitysecurityholdersThenamesofthetwentylargestholdersofquotedequitysecuritiesarelistedbelow:OrdinarysharesNameNumberheldPercentageofUnits1ReeshPty9,046,22122.772HSBCCustodyNominees(Australia)Limited4,068,88710.243LualaPtyLtd3,167,3327.974BNPParibasNomineesPtyLimited2,687,4176.765JPMorganNomineesAustraliaLimited2,382,6336.006AccedePtyLtd1,272,3323.207CaddyFoxPtyLtd1,154,2152.908AccbellNomineesPtyLtd1,000,0002.529CiticorpNomineesPtyLtd917,2622.3110CiticorpNomineesPtyLtd(ColonialFirstStateInvA/C)709,0001.7811MonadelphousGroupLimited603,5111.5212NationalNomineesLimited542,0001.3613MrDavidJamesTaylor463,0001.1714MrPeterDeLeo&MrsTianaDeLeo412,3001.0415DeLeoNomineesPtyLtd(TheDeLeoInvestmentA/C)407,9001.0316DeLeoNomineesPtyLtd(TheDeLeoFamilyA/C)343,5710.8617SelsoPtyLtd266,1480.6718CSFourthNomineesPtyLimited263,1090.6619LycopodiumSharePlanPtyLtd222,5000.5620BotechPtyLtd188,9590.4830,118,29775.8095 S H A R E H O L D E R I N F O R M A T I O N C O N T I N U E D 96 • Lycopodium Annual Finanical Report 2019 LycopodiumLimitedShareholderinformation30June2019(continued)C.SubstantialholdersSubstantialholdersintheCompanyaresetoutbelow:NameNumberheldPercentageofUnits1ReeshPtyLtd9,046,22122.772HSBCCustodyNominees(Australia)Limited4,068,88710.243LualaPtyLtd3,167,3327.974BNPParabisNomineesPtyLtd2,687,4176.765JPMorganNomineedAustraliaLimited2,382,6336.00D.VotingrightsThevotingrightsattachingtoeachclassofequitysecuritiesaresetoutbelow:(a)OrdinarysharesOnashowofhandseverymemberpresentatameetinginpersonorbyproxyshallhaveonevoteanduponapolleachshareshallhaveonevote.96 C O R P O R A T E D I R E C T O R Y Lycopodium Annual Financial Report 2019 • 97 DirectorsMichaelJohnCarattiPeterDeLeoRodneyLloydLeonardRobertJosephOsmettiBrunoRuggieroPeterAnthonyDawsonLawrenceWilliamMarshallStevenJohnMicheilChadwickCompanySecretaryKeithJohnBakkerRegisteredandPrincipalOfficeLevel5,1AdelaideTerraceEastPerthWA6004AustraliaT:+61(0)862105222www.lycopodium.com.auShareRegistryComputershareInvestorServicesPtyLimitedLevel11,172StGeorgesTerracePerthWA6000T:+61(0)893232000www.computershare.com.auLawyerstotheCompanyClyde&Co.Level28,197StGeorgesTerracePerthWA6000T:+61(0)861451700www.clydeco.comAuditorGrantThorntonAuditPtyLtdLevel43,152-158StGeorgesTerracePerthWA6000T:+61(0)894802000www.grantthornton.com.au This page has been left blank intentionally 98 • Lycopodium Annual Finanical Report 2019 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 - Notes to the Consolidated Financial Statement Directors’ Declaration Independent Auditor’s Audit Report to the members Shareholder Information Corporate Directory 1 22 29 30 31 32 33 90 91 95 97 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 30 September 2019. 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 Financial Report 2019 Lycopodium Annual Financial Report 2019 • Annual Financial Report 2019 i L y c o p o d u m A n n u a l i F n a n c i a l R e p o r t 2 0 1 9 Level 5, 1 Adelaide Terrace East Perth Western Australia 6004 T: + 61 (0)8 6210 5222 www.lycopodium.com.au
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