Queste Communications Ltd
Annual Report 2019

Plain-text annual report

2019 ANNUAL REPORT A.B.N 58 081 688 164 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 CONTENTS CORPORATE DIRECTORY Directors’ Report 2 BOARD Remuneration Report Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income 8 15 16 Farooq Khan (Chairman and Managing Director) (Executive Director) (Non-Executive Director) Victor Ho Yaqoob Khan COMPANY SECRETARY Victor Ho Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity 17 PRINCIPAL & REGISTERED OFFICE Level 2 18 23 Ventnor Avenue West Perth, Western Australia 6005 Telephone: Facsimile: (08) 9214 9777 (08) 9214 9701 info@queste.com.au www.queste.com.au Consolidated Statement of Cash Flows 19 Email: Website: Notes to the Consolidated Financial 20 Statements Directors’ Declaration Independent Audit Report Additional ASX Information 48 49 52 AUDITORS Rothsay Auditing Chartered Accountants Level 1, Lincoln House 4 Ventnor Avenue West Perth, Western Australia 6005 Telephone: Website: (08) 9486 7094 www.rothsayresources.com.au STOCK EXCHANGE Australian Securities Exchange Perth, Western Australia ASX CODE QUE Queste’s 2019 Corporate Governance Statement can be found at the following URL on the Company’s website: http://www.queste.com.au/corporate-governance SHARE REGISTRY Advanced Share Registry Limited (ASX:ASW) Main Office 110 Stirling Highway Nedlands, Western Australia 6009 Local Telephone: Telephone: Facsimile: Email: 1300 113 258 (08) 9389 8033 (08) 9262 3723 admin@advancedshare.com.au Visit www.queste.com.au for: • • • • • Market Announcements Financial Reports Corporate Governance Forms Email subscription Investor Web: www.advancedshare.com.au Sydney Office Suite 8H, 325 Pitt Street Sydney, New South Wales 2000 Telephone: (02) 8096 3502 ANNUAL REPORT | 1 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 DIRECTORS’ REPORT The Directors present their report on Queste Communications Ltd ABN 58 081 688 164 (Company or QUE) and its controlled entities (Queste or the Consolidated Entity) for the financial year ended 30 June 2019 (Balance Date). QUE is a public company limited by shares that is incorporated and domiciled in Western Australia and has been listed on the Australian Securities Exchange (ASX) since November 1998. (ASX Code: QUE) Queste’s results incorporate the results of controlled entity, ASX-listed investment company, Orion Equities Limited ABN 77 000 742 843 (Orion or OEQ). The Company has a 59.86% (9,367,653 shares) shareholding interest in Orion (30 June 2018: 59.86% (9,367,653 shares)). PRINCIPAL ACTIVITIES The principal activity of the Company during the financial year was the management of its assets. The principal activities of controlled entity, Orion, during the financial year were the management of its investments, including investments in listed and unlisted securities and real estate held for development and resale. FINANCIAL POSITION COMPANY Cash and cash equivalents Current investments - equities Investment in controlled entity (OEQ) Receivables Deferred tax assets Other assets Total Assets Tax liabilities (current and deferred) Other payables and liabilities Net Assets Issued capital Reserves Accumulated losses Total Equity OPERATING RESULTS COMPANY Total revenues Net gain/(loss) on financial assets Share of Associate entity’s profit/(loss) Other Expenses Profit/(Loss) before tax Income tax expense Profit/(Loss) for the year 2019 $ 36,672 3 Restated 2018 $ 123,108 15,302 1,124,118 1,545,663 15,970 523,632 40,222 3,906 523,632 54,325 1,740,617 2,265,936 - - (227,656) (202,789) 1,512,961 2,063,148 6,239,370 2,347,229 6,239,370 2,347,229 (7,073,638) (6,523,451) 1,512,961 2,063,148 2019 $ 182,773 (421,844) Restated 2018 $ 233,614 - - (46,955) (311,116) (144,170) (550,187) 42,489 - - (550,187) 42,489 ANNUAL REPORT | 2 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 DIRECTORS’ REPORT EARNINGS PER SHARE CONSOLIDATED ENTITY Basic and diluted loss per share (cents) 2019 (3.36) Restated 2018 (2.80) Weighted average number of fully paid ordinary shares in the Company outstanding during the year used in the calculation of basic and diluted earnings per share 27,072,332 27,158,058 DIVIDENDS The Company’s Directors have not declared a dividend. SECURITIES ON ISSUE At the Balance Date (and currently), the Company had 27,072,332 listed fully paid ordinary shares (30 June 2018: 27,072,332 fully paid ordinary shares) on issue. All such shares are listed on ASX. The Company does not have other securities on issue. REVIEW OF OPERATIONS 1. Orion Equities Limited (ASX: OEQ) 1.1. Current Status of Investment in Orion Orion is an investment entity. The Company holds 9,367,653 shares in Orion, being 59.86% of its issued ordinary share capital (2018: 9,367,653 shares and 59.86%). Orion has been recognised as a controlled entity and included as part of the Queste’s results since 1 July 2002. Queste shareholders are advised to refer to the 30 June 2019 Full Year Report and monthly NTA disclosures lodged by Orion for further information about the status and affairs of the company. Information concerning Orion may be viewed from its website: www.orionequities.com.au Orion’s market announcements may also be viewed from the ASX website (www.asx.com.au) under ASX code “OEQ”. Sections 1.2 and 1.3 below contain information extracted from Orion’s public statements. 1.2. Orion’s Portfolio Details as at 30 June 2019 Asset Weighting Australian equities Agribusiness 1 Property held for development and resale Net tax liabilities (current-year and deferred tax assets/liabilities) Net cash/other assets and provisions TOTAL % of Net Assets 2019 36% - 43% - 21% 100% 2018 45% 35% 31% - (11)% 100% 1 Agribusiness net assets include olive grove land, olive trees, buildings and plant and equipment which were sold in October 2018. ANNUAL REPORT | 3 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 DIRECTORS’ REPORT Major Holdings in Securities Portfolio Equities Bentley Capital Limited Strike Resources Limited TOTAL Fair Value $’million % of Net Assets ASX Code 1.54 0.45 77% 23% BEL SRK 1.99 100% Industry Sector Exposures Diversified Materials 1.3. Orion’s Assets (a) Bentley Capital Limited (ASX: BEL) Bentley is a listed investment company. Queste holds 1.61% (1,225,752 shares) of Bentley’s issued ordinary share capital with Orion holding 26.95% (20,513,783 shares) of Bentley’s issued ordinary share capital (2018: Queste held 1,225,752 shares (1.61%) and Orion held 20,513,783 shares (26.95%)). Bentley’s asset weighting as at 30 June 2019 was 98% Australian equities (2018: 95%) and 2% net cash/other assets (2018: 3.9%). Bentley had net assets of $6.35 million as at 30 June 2019 (2018: $9.347 million) and incurred an after- tax net loss of $2.458 million for the financial year (2018: $1.844 million after-tax net profit). During the financial year, Bentley paid a 0.50 cent fully franked dividend that was distributed in July 2018. Queste and Orion received a total of $108,698 dividends from Bentley during the financial year (2018: $109,069). Shareholders are advised to refer to the 30 June 2019 Full Year Report and monthly NTA disclosures lodged by Bentley for further information about the status and affairs of the company. Information concerning Bentley may be viewed from its website: www.bel.com.au. Bentley’s market announcements may also be viewed from the ASX website (www.asx.com.au) under ASX code “BEL”. (b) Strike Resources Limited (ASX: SRK) Strike owns the high grade Apurimac Magnetite Iron Ore Project and Cusco Magnetite Iron Ore Project in Peru and the Paulsens East Iron Ore Project in Western Australia. Strike is also developing a number of battery minerals related projects around the world, including the highly prospective Solaroz Lithium Brine Project in Argentina, the Burke Graphite Project in Queensland and a lithium exploration tenement in Western Australia.2 As at 30 June 2019, Orion holds 10,000,000 Strike shares (6.88%) (2018: 10,000,000 shares (6.88%)) while Associate entity, Bentley, holds 52,553,493 Strike shares (36.16%) (2018: 52,553,493 SRK shares (36.16%). Therefore, Orion has a deemed relevant interest in 62,553,493 Strike shares (43.041%3). On 18 July 2019, Strike raised $0.981 million through a placement of 21,800,000 shares. Accordingly, Orion’s interest in Strike has diluted to 5.983%, Bentley’s interest in Strike has diluted to 31.4%4, and Orion’s deemed relevant interest in Strike has diluted to 37.427%5. 2 Refer SRK’s ASX Announcement dated 27 July 2019: June 2019 Quarterly Reports 3 Refer Orion’s ASX Announcement dated 4 September 2015: Change in Substantial Holding Notice 4 Refer Bentley’s ASX Announcement dated 22 July 2019: Change in Substantial Holding in SRK 5 Refer Orion’s ASX Announcement dated 22 July 2019: Change in Substantial Holding Notice ANNUAL REPORT | 4 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 DIRECTORS’ REPORT Information concerning Strike may be viewed from its website: www.strikeresources.com.au Strike’s market announcements may also be viewed from the ASX website (www.asx.com.au) under ASX code “SRK”. (c) Other Assets In October 2018, Orion sold its 143 hectare commercial olive grove operation (which was on care and maintenance) located in Gingin, Western Australian for $1.46 million (gross). Orion generated a net gain of $0.202 million from the sale. Orion also owns a property held for redevelopment or sale but currently rented out located in Mandurah, Western Australia. 2. Queste’s Other Assets In addition to the investment in controlled entity, Orion, Queste has a direct share investment in Associate entity, Bentley, being 1,225,752 shares (or 1.61% of Bentley’s issued ordinary share capital) (2018: 1,225,752 shares and 1.61%). The Company notes that it lodges Monthly and Quarterly Cash Flow Reports on ASX, which may be viewed and downloaded from the Company’s website: www.queste.com.au or the ASX website (www.asx.com.au) under ASX Code: “QUE”. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There were no significant changes in the state of affairs of the Consolidated Entity that occurred during the financial year not otherwise disclosed in this Directors’ Report or the Consolidated Financial Statements. FUTURE DEVELOPMENTS The Consolidated Entity intends to continue its investment activities in future years. The results of these investment activities depend upon the performance of the underlying companies and securities in which the Consolidated Entity invests. The investments’ performances depend on many economic factors and also industry and company specific issues. In the opinion of the Directors, it is not possible or appropriate to make a prediction on the future course of markets, the performance of the Consolidated Entity’s investments or the forecast of the likely results of the Consolidated Entity’s activities. ENVIRONMENTAL REGULATION The Consolidated Entity is not subject to any particular or significant environmental regulation under Australian Commonwealth or State legislation. ANNUAL REPORT | 5 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 DIRECTORS’ REPORT DIRECTORS Information concerning Directors in office during or since the financial year: Farooq Khan Executive Chairman and Managing Director Appointed 10 March 1998 Qualifications BJuris, LLB (Western Australia) Experience Mr Khan is a qualified lawyer having previously practised principally in the field of corporate law. Mr Khan has extensive experience in the securities industry, capital markets and the executive management of ASX-listed companies. In particular, Mr Khan has guided the establishment and growth of a number of public listed companies in the investment, mining and financial services sectors. He has considerable experience in the fields of capital raisings, mergers and acquisitions and investments. Relevant interest in shares 5,344,872 shares6 Other current directorships in listed entities (1) (2) (3) Executive Chairman of Bentley Capital Limited (ASX:BEL) (since 2 December 2003) Executive Chairman of Orion Equities Limited (ASX:OEQ) (since 23 October 2006) Chairman (appointed 18 December 2015) of Strike Resources Limited (ASX:SRK) (Director since 1 October 2015) Former directorships in other listed entities in past 3 years None Victor P. H. Ho Executive Director and Company Secretary Appointed Executive Director since 3 April 2013; Company Secretary since 30 August 2000 Qualifications BCom, LLB (Western Australia), CTA Experience Mr Ho has been in Executive roles with a number of ASX listed companies across the investments, resources and technology sectors over the past 19 years. Mr Ho is a Chartered Tax Adviser (CTA) and previously had 9 years’ experience in the taxation profession with the Australian Tax Office (ATO) and in a specialist tax law firm. Mr Ho has been actively involved in the investment management of listed investment companies (as an Executive Director and or a member of the Investment Committee), the structuring and execution of a number of corporate, M&A and international joint venture (in South America, Indonesia and the Middle East) transactions, capital raisings and capital management initiatives and has extensive experience in public company administration, corporations’ law and stock exchange compliance and investor/shareholder relations. Relevant interest in shares 17,500 shares 7 Other current positions held in listed entities (1) (2) (3) (4) Executive Director and Company Secretary of Orion Equities Limited (ASX:OEQ) (Secretary since 2 August 2000 and Director since 4 July 2003) Director and Company Secretary of Strike Resources Limited (ASX:SRK) (Director since 24 January 2014 and Company Secretary since 1 October 2015) Company Secretary of Bentley Capital Limited (ASX:BEL) (since 5 February 2004) Company Secretary of Keybridge Capital Limited (ASX:KBC) (since 13 October 2016) Former positions in other listed entities in past 3 years None 6 Refer Farooq Khan’s Change of Director’s Interest Notices dated 10 July 2019 and 8 January 2018 7 Refer Victor Ho’s Initial Director’s Interest Notice dated 3 April 2013 ANNUAL REPORT | 6 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 DIRECTORS’ REPORT Yaqoob Khan Non-Executive Director Appointed 10 March 1998 Qualifications BCom (Western Australia), Master of Science in Industrial Administration (Carnegie Mellon) Experience After working for several years in the Australian Taxation Office, Mr Khan completed his postgraduate Masters degree and commenced work as a senior executive responsible for product marketing, costing systems and production management. Mr Khan has been an integral member of the team responsible for the pre-IPO structuring and IPO promotion of a number of ASX floats and has been involved in the management of such companies. Mr Khan brings considerable international experience in key aspects of corporate finance and the strategic analysis of listed investments. Relevant interest in shares 68,345 shares 8 Other current directorships in listed entities Non-Executive Director of Orion Equities Limited (ASX:OEQ) (since 5 November 1999). Former directorships in other listed entities in past 3 years None At the Balance Date, Yaqoob Khan is a resident overseas. At the Company’s 2018 AGM9: • Victor Ho retired as a Director (by rotation) pursuant to the Company’s Constitution and was re-elected a Director at that AGM. DIRECTORS' MEETINGS The following table sets out the numbers of meetings of the Company's Directors held during the financial year (including Directors’ circulatory resolutions), and the numbers of meetings attended by each Director of the Company: Name of Director Meetings Attended Maximum Possible Meetings Farooq Khan Yaqoob Khan Victor Ho 4 4 4 4 4 4 There were no meetings of committees of the Board of the Company. Board Committees During the financial year and as at the date of this Directors’ Report, the Company did not have separate designated Audit or Remuneration Committees. In the opinion of the Directors, in view of the size of the Board and nature and scale of the Queste’s activities, matters typically dealt with by an Audit or Remuneration Committee are dealt with by the full Board. 8 Refer Yaqoob Khan’s Change of Director’s Interest Notice dated 6 September 2011 9 Refer Queste’s ASX announcement dated 28 November 2018: Results of 2018 Annual General Meeting ANNUAL REPORT | 7 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 REMUNERATION REPORT This Remuneration Report details the nature and amount of remuneration for each Director and Company Executive (being a company secretary or senior manager) (Key Management Personnel) of Queste. The information provided under headings (1) to (6) below has been audited for compliance with section 300A of the Corporations Act 2001 (Cth) as required under section 308(3C). (1) Remuneration Policy The Board determines the remuneration structure of all Key Management Personnel having regard to the Company’s strategic objectives, scale and scope of operations and other relevant factors, including experience and qualifications, length of service, the duties and accountability of Key Management Personnel, the frequency of Board meetings, market practice (including available data concerning remuneration paid by other listed companies and in particular, companies of comparable size and nature) and the objective of maintaining a balanced Board which has appropriate expertise and experience, at a reasonable cost to the Company. Corporate Governance Principles: The Company’s Corporate Governance Statement (CGS) also addresses matters pertaining to the Board, Senior Management and Remuneration. The latest version of the CGS may be downloaded from the Company’s website: http://queste.com.au/corporate-governance Fixed Cash Short Term Employment Benefits: The Key Management Personnel of the Company are paid a fixed amount per annum plus applicable employer superannuation contributions. The Non- Executive Directors of the Company are paid a maximum aggregate base remuneration of $75,00010 per annum inclusive of minimum employer superannuation contributions where applicable, to be divided as the Board determines appropriate. The Board has determined the following fixed cash remuneration for current Key Management Personnel during the year as follows: Executive Director (1) Mr Farooq Khan (Executive Chairman and Managing Director) - a base salary of $31,250 (previously voluntarily reduced from $62,500 to $31,250 (with effect on 1 April 2016) and from $125,000 to $62,500 (with effect on 1 April 2013) to assist the Company in reducing its corporate overheads) per annum plus employer superannuation contributions; and (2) Mr Victor Ho (Executive Director and Company Secretary) - a base salary of $22,500 (previously voluntarily reduced from $45,000 to $22,500 (with effect on 1 April 2016) to assist the Company in reducing its corporate overheads) per annum plus employer superannuation contributions. Mr Ho also agreed to join the Board as an Executive Director on 3 April 2013 at no further cost to the Company. Non – Executive Director (3) Mr Yaqoob Khan (Non-Executive Director) - a base fee of $15,000 per annum. Key Management Personnel can also opt to “salary sacrifice” their cash fees/salary and have them paid wholly or partly as further employer superannuation contributions or benefits exempt from fringe benefits tax. 10 As approved by shareholders at the Annual General Meeting held on 30 November 1999; refer Queste’s ASX announcement dated 30 November 1999: Results of Annual General Meeting of Shareholders ANNUAL REPORT | 8 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 REMUNERATION REPORT Special Exertions and Reimbursements: Pursuant to the Company’s Constitution, each Director is entitled to receive: (a) (b) Payment for reimbursement of all travelling, hotel and other expenses reasonably incurred by a Director for the purpose of attending meetings of the Board or otherwise in and about the business of the Company; and In respect of Non-Executive Directors, payment for the performance of extra services or the making of special exertions for the benefit of the Company (at the request of and with the concurrence of the Board). Short-Term Benefits: The Company does not have any short-term incentive (STI) cash bonus schemes (or equivalent) in place for Key Management Personnel. Long-Term Benefits: The Company does not have any long-term incentive (LTI) cash bonus schemes (or equivalent) in place for Key Management Personnel. Equity Based Benefits: The Company does not presently have any equity (shares or options) based remuneration arrangements for any personnel pursuant to any executive or employee share or option plan or otherwise. Post-Employment Benefits: The Company does not presently provide retirement benefits to Key Management Personnel. Other than early termination benefits disclosed in ‘Employment Agreement’ below, Key Management Personnel also have no right to termination payments save for payment of accrued unused annual and long service leave (where applicable) (these accrued employee entitlements are not applicable in respect of Non-Executive Directors). The Company notes that shareholder approval is required where a Company proposes to make a “termination payment” (for example, a payment in lieu of notice, a payment for a post-employment restraint and payments made as a result of the automatic or accelerated vesting of share based payments) in excess of one year’s “base salary” (defined as the average base salary over the previous 3 years) to a director or any person who holds a managerial or executive office. Performance-Related Benefits and Financial Performance of Company: The Company does not presently provide short- or long-term incentive/performance based benefits related to the Company’s performance to Key Management Personnel, including payment of cash bonuses. The current remuneration of Key Management Personnel is fixed, is not dependent on the satisfaction of a performance condition and is unrelated to the Company’s performance. The Board does not believe that it is appropriate at this time to implement an equity-based benefit scheme or a performance related/variable component to Key Management Personnel remuneration or remuneration generally linked to the Company’s performance but reserves the right to implement these remuneration measures if appropriate in the future (subject to prior shareholder approval where applicable). In considering the Company's performance and its effects on shareholder wealth, Directors have had regard to the data set out below for the latest financial year and the previous four financial years. 2019 Restated 2018 2017 2016 2015 Loss Before Income Tax ($) (1,369,019) (1,151,518) (2,122,392) (896,730) (1,055,911) Basic Earnings/(Loss) per Share (cents) (3.36) (2.80) (5.11) (2.35) (2.52) Dividends Paid ($) VWAP Share Price on ASX for financial year (cents) Closing Bid Share Price at 30 June (cents) - 7 6 - 7 7 - 7 7 - 7 5 - 7 6 ANNUAL REPORT | 9 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 REMUNERATION REPORT (2) Employment Agreement Details of the material terms of an employment agreement entered by the Company with a Key Management Personnel are as follows: Key Management Personnel and Position(s) Held Victor Ho Company Secretary (since 30 August 2000) Executive Director (since 3 April 2013) Relevant Date(s) Base Salary/Fees per annum Other Material Terms 25 January 2000 (date of employment agreement) $45,000 (but voluntarily reduced to $22,500) 2009/2010 (date of effect of current remuneration) plus employer superannuation contributions (currently 9.5% of base salary) • The agreement has no fixed term or fixed rolling terms of service. • Standard annual leave (20 days) and personal/sick leave (10 days paid) entitlements plus entitlement to long service leave of 60 days after 7 years of service with an additional 5 days after each year of service thereafter. • One month’s notice of termination by the Company or employee. Immediate termination without notice if employee commits any serious act of misconduct. The Company does not presently have formal service agreements or employment agreements with any other Key Management Personnel. (3) Details of Remuneration of Key Management Personnel Details of the nature and amount of each element of remuneration of each Key Management Personnel of the Company paid or payable by the Consolidated Entity during the financial year are as follows: Paid by the Company (Queste) to its Key Management Personnel 2019 Performance related Short-term Benefits Post- Employment Benefits Other Long- term Benefits Key Management Person Executive Directors: Farooq Khan Victor Ho Non-Executive Director: Yaqoob Khan Cash, salary and commissions $ % Non-cash benefit $ Superannuation $ 31,250 22,500 15,000 - - - 2,969 2,138 - Long service leave $ - - - 2018 Key Management Person Executive Directors: Farooq Khan Victor Ho Non-Executive Director: Performance related Short-term Benefits Post- Employment Benefits Other Long-term Benefits Cash, salary and commissions $ 31,249 22,500 % - - Non-cash benefit $ Superannuation $ - - - 2,968 2,138 - Long service leave $ - - - Yaqoob Khan - 15,000 Equity Based Shares & Options $ - - - Equity Based Shares & Options $ - - - Total $ 34,219 24,638 15,000 Total $ 34,217 24,638 15,000 ANNUAL REPORT | 10 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 REMUNERATION REPORT Paid by Orion to Key Management Personnel (who are also KMP of Queste) 2019 Key Management Personnel Performance related % Short-term Benefits Cash, salary and commissions $ Non-cash benefit $ Post- Employment Benefits Other Long-term Benefits Superannuation $ Executive Directors: Farooq Khan Victor Ho Non-Executive Director: Yaqoob Khan 201,250 97,500 25,000 - - - 19,119 9,263 - 2018 Key Management Personnel Performance related % Short-term Benefits Cash, salary and commissions $ Non-cash benefit $ Post- Employment Benefits Other Long-term Benefits Superannuation $ Executive Directors: Farooq Khan Victor Ho Non-Executive Director: Yaqoob Khan - - - 201,249 97,499 25,000 - - - 19,119 9,262 - Victor Ho is also Company Secretary of Queste and Orion. Equity Based Shares & Options $ - - - Equity Based Shares & Options $ - - - Total $ 220,369 106,763 25,000 Total $ 220,368 106,761 25,000 Long service leave $ - - - Long service leave $ - - - The tables above may be aggregated to arrive at the aggregate amount of each element of remuneration of each Key Management Personnel paid or payable by the Queste and Orion during the financial year. (4) Other Benefits Provided to Key Management Personnel No Key Management Personnel has during or since the end of the financial year, received or become entitled to receive a benefit, other than a remuneration benefit as disclosed above, by reason of a contract made by the Company or a related entity with the Director or with a firm of which he is a member, or with a Company in which he has a substantial interest. (5) Engagement of Remuneration Consultants The Company has not engaged any remuneration consultants to provide remuneration recommendations in relation to Key Management Personnel during the year. The Board has established a policy for engaging external Key Management Personnel remuneration consultants which includes, inter alia, that the Non-Executive Directors on the Remuneration Committee be responsible for approving all engagements of and executing contracts to engage remuneration consultants and for receiving remuneration recommendations from remuneration consultants regarding Key Management Personnel. Furthermore, the Company has a policy that remuneration advice provided by remuneration consultants be quarantined from Management where applicable. ANNUAL REPORT | 11 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 REMUNERATION REPORT (6) Shares held by Key Management Personnel The number of ordinary shares in the Company held by Key Management Personnel is set below: Key Management Personnel Executive Directors: Farooq Khan Victor Ho Non-Executive Director: Yaqoob Khan Balance at 30 June 2018 Additions Received as part of remuneration Disposals 5,344,872 17,500 68,345 - - - - - - - - - Balance at 30 June 2019 5,344,872 17,500 68,345 Note: The disclosures of shareholdings above are in accordance with the accounting standards which require disclosure of shares held directly, indirectly or beneficially by each key management person, a close member of the family of that person, or an entity over which either of these persons have, directly or indirectly, control, joint control or significant influence (as defined under Accounting Standard AASB 124 Related Party Disclosures). (7) Voting and Comments on the Remuneration Report at the 2018 AGM At the Company’s most recent (2018) AGM, a resolution to adopt the prior year (2018) Remuneration Report was put to the vote and passed on a show of hands with the proxies received also indicating majority support in favour of adopting the Remuneration Report 11. No comments were made on the Remuneration Report that was considered at the AGM. This concludes the audited Remuneration Report. 11 Refer Queste’s ASX announcement dated 30 November 2018: Results of 2018 Annual General Meeting ANNUAL REPORT | 12 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 DIRECTORS’ REPORT DIRECTORS’ AND OFFICERS’ INSURANCE The Company and Orion each insure Directors and Officers against liability they may incur in respect of any wrongful acts or omissions made by them in such capacity (to the extent permitted by the Corporations Act 2001 (Cth)) (D&O Policy). Details of the amount of the premium paid in respect of the insurance policies are not disclosed as such disclosure is prohibited under the terms of the contract. DIRECTORS DEEDS In addition to the rights of indemnity provided under the Company’s Constitution (to the extent permitted by the Corporations Act 2001 (Cth)), the Company has also entered into a deed with each of the Directors and the Company Secretary (Officer) to regulate certain matters between the Company and each Officer, both during the time the Officer holds office and after the Officer ceases to be an officer of the Company, including the following matters: (a) (b) The Company’s obligation to indemnify an Officer for liabilities or legal costs incurred as an officer of the Company (to the extent permitted by the Corporations Act 2001 (Cth)); and Subject to the terms of the deed and the Corporations Act 2001 (Cth), the Company may advance monies to the Officer to meet any costs or expenses of the Officer incurred in circumstances relating to the indemnities provided under the deed and prior to the outcome of any legal proceedings brought against the Officer. LEGAL PROCEEDINGS ON BEHALF OF CONSOLIDATED ENTITY No person has applied for leave of a court to bring proceedings on behalf of the Consolidated Entity or intervene in any proceedings to which the Consolidated Entity is a party for the purpose of taking responsibility on behalf of the Consolidated Entity for all or any part of such proceedings. The Consolidated Entity was not a party to any such proceedings during and since the financial year. AUDITORS Details of the amounts paid or payable to the Auditors for audit and non-audit services (tax services) provided during the financial year are set out below: Auditor Rothsay Auditing Consolidated Entity Non-Audit Services Audit & Review Fees $ 36,000 $ - Total $ Audit & Review Fees $ 36,000 14,000 Company Non-Audit Services $ - Total $ 14,000 The Board is satisfied that the provision of non-audit services by the auditor during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 (Cth). The Board is satisfied that the nature of the non-audit services disclosed above did not compromise the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants: Professional Independence, including reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Company, acting as advocate for the Company or jointly sharing economic risk and rewards. Rothsay Auditing continues in office in accordance with section 327B of the Corporations Act 2001 (Cth). AUDITORS’ INDEPENDENCE DECLARATION A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 (Cth) forms part of this Directors Report and is set out on page 15. This relates to the Auditor’s Independent Review Report, where the Auditors state that they have issued an independence declaration. ANNUAL REPORT | 13 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 DIRECTORS’ REPORT EVENTS SUBSEQUENT TO BALANCE DATE The Directors are not aware of any other matters or circumstances at the date of this Directors’ Report, other than those referred to in this Directors’ Report (in particular, in Review of Operations) or the financial statements or notes thereto (in particular Note 27, that have significantly affected or may significantly affect the operations, the results of operations or the state of affairs of the Company in subsequent financial years. Signed for and on behalf of the Directors in accordance with a resolution of the Board. Farooq Khan Executive Chairman and Managing Director 30 August 2019 Victor Ho Executive Director and Company Secretary ANNUAL REPORT | 14  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year ended 30 June 2019 Revenue Other Net gain on sale of non-current assets Net gain on financial assets at fair value through profit or loss Other revenue Total revenue Expenses Share of Associate entity's loss Net loss on financial assets at fair value through profit or loss Land operation expenses Personnel expenses Occupancy expenses Corporate expenses Finance expenses Administration expenses Loss from continuing operations Loss from discontinued operations Income tax expense Loss after income tax OTHER COMPREHENSIVE INCOME Revaluation of assets, net of tax Note 2 3 5 6 18 2019 $ 56,650 201,786 - - 258,436 Restated 2018 $ 40,221 - 133,447 132 173,800 (662,455) (87,200) (128,704) (477,959) (40,141) (55,350) (912) (117,974) (1,312,259) (530,962) - (10,053) (440,899) (36,983) (57,653) (3,005) (140,389) (1,046,144) (56,760) (38,973) (1,407,992) (105,374) (22,233) (1,173,751) (61,504) (35,086) Total comprehensive loss for the year (1,469,496) (1,208,837) Loss attributable to: Owners of Queste Communications Ltd Non-controlling interest Total comprehensive loss for the year is attributable to: Continuing operations Discontinued operations Owners of Queste Communications Ltd Continuing operations Discontinued operations Non-controlling interest (910,108) (497,884) (1,407,992) (759,577) (414,174) (1,173,751) (978,878) (33,976) (1,012,854) (433,859) (22,783) (456,642) (755,114) (63,077) (818,191) (348,349) (42,297) (390,646) (1,469,496) (1,208,837) Basic and diluted loss per share (cents) attributable to the ordinary equity holders of the Company 7 (3.36) (2.80) The accompanying notes form part of these consolidated financial statements ANNUAL REPORT | 16  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2019 Current assets Cash and cash equivalents Financial assets at fair value through profit or loss Receivables Other current assets Note 8 9 12 2019 $ 850,739 450,003 29,720 7,138 2018 $ 158,883 567,203 86,091 6,196 Total current assets 1,337,600 818,373 Non current assets Receivables Property held for development or resale Investment in Associate entity Property, plant and equipment Deferred tax asset Total non current assets Total assets Current liabilities Payables Provisions Total current liabilities Non current liabilities Deferred tax liability Total non current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Parent interest Non-controlling interest Total equity 12 13 23 14 6 15 16 6 17 18 19 23,182 1,100,000 477,718 16,458 - 22,010 1,220,000 1,242,742 1,420,221 38,973 1,617,358 3,943,946 2,954,958 4,762,319 374,852 151,482 644,566 139,417 526,334 783,983 - - 38,973 38,973 526,334 822,956 2,428,624 3,939,363 6,239,370 5,427,285 (10,780,510) 886,145 6,239,370 6,145,896 (10,029,625) 2,355,641 1,542,479 1,583,722 2,428,624 3,939,363 The accompanying notes form part of these consolidated financial statements ANNUAL REPORT | 17  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2019 Issued capital $ Reserves $ Accumulated losses $ Non- controlling interest $ Total $ Balance at 1 Jul 2017 6,149,888 3,182,215 (6,281,531) 2,088,208 5,138,780 Loss for the year Profits reserve transfer Other comprehensive income Total comprehensive loss for the year Transactions with owners in their capacity as owners: Transactions with non-controlling interest Dividends paid Partly-paid shares Equal access share buy-back - - - - - - 106,615 (17,133) - 2,988,517 (58,614) 2,929,903 (759,577) (2,988,517) - (3,748,094) (414,174) - 23,528 (390,646) (1,173,751) - (35,086) (1,208,837) 90,312 (56,534) - - - - - - (113,840) - - - (23,528) (56,534) 106,615 (17,133) Balance at 30 Jun 2018 6,239,370 6,145,896 (10,029,625) 1,583,722 3,939,363 Balance at 1 Jul 2018 6,239,370 6,145,896 (10,029,625) 1,583,722 3,939,363 Loss for the year Profits reserve transfer Other comprehensive income Total comprehensive loss for the year Transactions with owners in their capacity as owners: Transactions with non-controlling interest - - - - - (159,223) (102,746) (261,969) (910,108) 159,223 - (750,885) (497,884) - 41,242 (456,642) (1,407,992) - (61,504) (1,469,496) - (456,642) - 415,399 (41,243) Balance at 30 Jun 2019 6,239,370 5,427,285 (10,780,510) 1,542,479 2,428,624 The accompanying notes form part of these consolidated financial statements ANNUAL REPORT | 18  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 30 June 2019 Cash flows from operating activities Receipts from customers Dividends received Interest received Other income Payments to suppliers and employees Interest paid Sale of financial assets at fair value through profit or loss Purchase of financial assets at fair value through profit or loss 2019 $ 212,795 108,698 12,821 - (1,133,728) (48) 82,844 - 2018 $ 40,842 218,804 1,855 132 (396,773) (31) 40,142 (28,000) Net cash used in operating activities 8(a) (716,618) (123,029) Cash flows from investing activities Purchase of plant and equipment Proceeds from disposal of agricultural assets Commission from sale of agricultural assets 413 1,451,786 (43,500) (4,898) - - Net cash provided by/(used in) investing activities 1,408,699 (4,898) Cash flows from financing activities Proceeds from calls on partly paid shares Orion dividends paid Queste off-market share buy-back Net cash used in financing activities - (225) - 106,615 (49,570) (5,711) (225) 51,334 Net increase/(decrease) in cash held 691,856 (76,593) Cash and cash equivalents at beginning of financial year 158,883 235,476 Cash and cash equivalents at end of financial year 8 850,739 158,883 The accompanying notes form part of these consolidated financial statements ANNUAL REPORT | 19 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 1. ABOUT THIS REPORT 1.1 Background financial report covers This financial statement of the consolidated entity consisting of Queste Communications Ltd, its subsidiary and investment in its associate (the Consolidated Entity or Queste). The financial report is presented in the Australian currency. the consolidated Queste Communications Ltd (the Company) is a company limited by shares, incorporated in Western Australia, Australia and whose shares are publicly traded on the Australian Securities Exchange (ASX). These financial statements have been prepared on a streamlined basis where key information is grouped together for ease of understanding and readability. The notes include information which is required to understand the financial statements and is material and relevant to the operations, financial position and performance of the Consolidated Entity. Information is considered material and relevant if, for example: (a) (b) (c) (d) the amount in question is significant because of its size or nature; it is important for understanding the results of the Consolidated Entity; (e) it helps to explain the impact of significant changes in the Consolidated Entity’s business – for example, acquisitions; or it relates to an aspect of the Consolidated Entity’s future important operations performance. that its to is The notes are organised into the following sections: (a) line Key Performance: Provides a breakdown of the key individual of comprehensive income that the Directors consider most relevant to understanding performance and shareholder returns for the year: statement items the in Notes 2 3 4 5 6 Revenue Expenses Segment information Tax Loss per share (b) Financial Risk Management: Provides information about the Consolidated Entity’s exposure and management of various financial risks and explains how these affect the Consolidated Entity’s financial position and performance: Notes 7 8 9 10 Cash and cash equivalents Financial assets at fair value through profit or loss Financial risk management Fair value measurement of financial instruments (c) Other Assets and Liabilities: Provides information on other balance sheet assets and liabilities that do not materially affect performance or give rise to material financial risk: Notes 11 12 13 14 15 16 Receivables Property held for resale Property, plant and equipment Olive trees Payables Provisions (d) Capital Structure: This section outlines how the Consolidated Entity manages its capital structure and related financing costs, as well as capital adequacy and reserves. It also provides details on the dividends paid by the Company: Notes 17 18 19 20 Issued capital Reserves Non-controlling interest Dividends Consolidated Entity Structure: Provides details and disclosures relating to the parent entity of the Consolidated Entity, controlled entities, investments in associates and any acquisitions and/or disposals of businesses in the year. Disclosure on related parties is also provided in the section: Notes 21 22 23 24 Parent entity information Investment in controlled entity Investment in associate entity Related party transactions (f) Other: Provides information on items which require disclosure to comply with Australian Accounting Standards and other regulatory pronouncements however, in understanding the financial performance or position of the Consolidated Entity: considered significant are not Notes 25 26 27 Auditors' remuneration Contingencies Events occurring after the reporting period Significant and other accounting policies that summarise the measurement basis used and presentation policies and are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements. ANNUAL REPORT | 20 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 1.2. Basis of preparation 1.6. Impairment of Assets These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, the Australian other authoritative pronouncements of Accounting Accounting Board, Interpretations and the Corporations Act 2001 (Cth), as appropriate for for-profit entities. Standards Australia Compliance with IFRS The consolidated financial statements of the Consolidated Entity also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Reporting Basis and Conventions The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied. 1.3. Principles of Consolidation The consolidated financial statements incorporate the assets and liabilities of the subsidiary of Queste Communications Ltd as at 30 June 2019 and the results of its subsidiary for the year then ended. Queste Communications Ltd and its subsidiary are referred to in this financial statement as the Consolidated Entity. The controlled entity has a June financial year-end. All inter- company balances and transactions between entities in the Consolidated Entity, including any unrealised profits or losses, have been eliminated on consolidation. 1.4. Comparative Figures Certain comparative figures have been adjusted to conform to changes in presentation for the current financial year. 1.5. Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST. Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. At each reporting date, the Consolidated Entity reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over is expensed to the profit or loss. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the Consolidated Entity estimates the recoverable amount of the cash- generating unit to which the asset belongs. its recoverable amount 1.7. Dividends Policy Provision is made for the amount of any dividend declared; being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at the Balance Date. ANNUAL REPORT | 21 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 1.8. Restatement of 2018 Comparatives The comparative information for year ending/balance date as at 30 June 2018 has been restated to reflect the correct presentation of the Consolidated Entity’s share of the Associate entity’s net loss and the carrying value of the Investment in the Associate entity. The Company and its controlled entity, Orion, each holds a direct interest in the Associate entity (being Bentley). Under the equity method of accounting for Associate entities, when the Company’s carrying value of its investment in Bentley has been reduced from cost to nil, the Company is not required thereafter to recognise a share of Bentley’s net loss. During the previous year ended 30 June 2018, the Consolidated Entity did recognise a share of Bentley’s net loss attributable to the Company’s interest in Bentley, thereby increasing the Consolidated Entity’s net loss reported in the Statement of Profit or Loss and Other Comprehensive Income and decreasing the carrying value of the investment in the Associate entity, which impacts on the Statement of Financial Position. In the restated comparatives for 2018, there is a change to profit before tax, other comprehensive income or earnings/(loss) per share as a result of these presentational changes. Consolidated Statement of Profit or Loss and Other Comprehensive Income Revenue Other Net gain on sale of non-current assets Net gain on financial assets at fair value through profit or loss Other revenue Total revenue Expenses Share of Associate entity's loss Net loss on financial assets at fair value through profit or loss Land operation expenses Personnel expenses Occupancy expenses Corporate expenses Finance expenses Administration expenses Loss from continuing operations Loss from discontinued operations Income tax expense Loss after income tax OTHER COMPREHENSIVE INCOME Revaluation of assets, net of tax Total comprehensive loss for the year Loss attributable to: Owners of Queste Communications Ltd Non-controlling interest Total comprehensive loss for the year is attributable to: Continuing operations Discontinued operations Owners of Queste Communications Ltd Continuing operations Discontinued operations Non-controlling interest Adjustment $ 55,586 55,586 55,586 Reported 2018 $ 40,221 - 133,447 132 173,800 (586,548) - (10,053) (440,899) (36,983) (57,653) (3,005) (140,389) (1,101,730) (105,374) (22,233) (1,229,337) (35,086) (1,264,423) (815,163) (414,174) (1,229,337) (810,700) (63,077) (873,777) (348,349) (42,297) (390,646) (1,264,423) Restated 2018 $ 40,221 - 133,447 132 173,800 (530,962) - (10,053) (440,899) (36,983) (57,653) (3,005) (140,389) (1,046,144) (105,374) (22,233) (1,173,751) (35,086) (1,208,837) (759,577) (414,174) (1,173,751) (755,114) (63,077) (818,191) (348,349) (42,297) (390,646) (1,208,837) Basic and diluted loss per share (cents) attributable to the ordinary equity holders of the Company (3.00) (2.80) ANNUAL REPORT | 22 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 1.8 Restatement of 2018 Comparatives (continued) Consolidated Statement of Financial Position Current assets Cash and cash equivalents Financial assets at fair value through profit or loss Receivables Other current assets Total current assets Non current assets Receivables Property held for development or resale Investment in Associate entity Property, plant and equipment Deferred tax asset Total non current assets Total assets Current liabilities Payables Provisions Total current liabilities Non current liabilities Deferred tax liability Total non current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Parent interest Non-controlling interest Total equity Adjustment $ 55,586 Reported 2018 $ 158,883 567,203 86,091 6,196 818,373 22,010 1,220,000 1,187,156 1,420,221 38,973 3,888,360 4,706,733 644,566 139,417 783,983 38,973 38,973 822,956 Restated 2018 $ 158,883 567,203 86,091 6,196 818,373 22,010 1,220,000 1,242,742 1,420,221 38,973 3,943,946 4,762,319 644,566 139,417 783,983 38,973 38,973 822,956 3,883,777 3,939,363 6,239,370 6,145,896 6,239,370 6,145,896 (10,085,211) 2,300,055 55,586 (10,029,625) 2,355,641 1,583,722 3,883,777 1,583,722 3,939,363 ANNUAL REPORT | 23 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 1.9. Summary of Accounting Standards Issued but not yet Effective The Consolidated Entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the AASB that are mandatory for the current reporting period. Any new, revised or amending Accounting Standards or Interpretations that are not mandatory have not been early adopted. The following new Accounting Standards and Interpretations (which have been released but not yet adopted) have been considered and is expected to have limited material impact on the Consolidated Entity’s financial statements or the associated notes therein. AASB reference Title and Affected Standard(s) AASB 16 Leases Nature of Change AASB 16 requires lessees to account for all leases under a single on-balance sheet model in a similar way to finance leases under AASB 117 Leases. The standard includes two recognition exemptions for lessees – leases of ’low- value’ assets (e.g. personal computers) and short-term leases (i.e. leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e. the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right- of-use asset). Application date Annual reporting periods beginning on or after 1 January 2019 Lessees will be required to separately recognise the the interest expense on depreciation expense on the right-of-use asset. liability and lease the Lessees will be required to re-measure the lease liability upon the occurrence of certain events (e.g. a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the re-measurement of the lease liability as an adjustment to the right-of-use asset. Lessor accounting is substantially unchanged from today’s accounting under AASB 117. Lessors will continue to classify all leases using the same classification principle as in AASB 117 and distinguish between two types of leases: operating and finance leases. ANNUAL REPORT | 24  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 2. REVENUE The Consolidated Entity's operating loss before income tax includes the following items of revenue: Revenue Rental revenue Dividend revenue Interest revenue Other Net gain on sale of non-current assets Net gain on financial assets at fair value through profit or loss Other revenue 2019 $ 37,700 6,129 12,821 56,650 2018 $ 37,700 666 1,855 40,221 201,786 - - 258,436 - 133,447 132 173,800 Accounting policy Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Consolidated Entity and the revenue can be reliably measured. All revenue is stated net of the amount of Goods and Services Tax (GST) except where the amount of GST incurred is not recoverable from the Australian Tax Office. The following specific recognition criteria must also be met before revenue is recognised: (a) Sale of financial assets, goods and other assets Revenue from the sale of financial assets, goods or other assets is recognised when the Consolidated Entity has passed control of the financial assets, goods or other assets to the buyer. (b) Interest revenue Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. (c) Dividend revenue Dividend revenue is recognised when the right to receive a dividend has been established. The Consolidated Entity brings dividend revenue to account on the applicable ex-dividend entitlement date (d) Other revenues Other revenues are recognised on a receipts basis. 3. EXPENSES The Consolidated Entity's operating loss before income tax includes the following items of expenses: Share of Associate entity's loss Net loss on financial assets at fair value through profit or loss Olive grove operations Depreciation of olive grove assets Impairment of olive trees Other expenses Land operations Impairment loss on property held for development or resale Other expenses Salaries, fees and employee benefits Occupancy expenses Finance expenses Corporate expenses ASX fees Share registry Other corporate expenses 2019 $ 662,455 87,200 3,566 - 53,193 120,000 8,704 477,959 40,141 912 32,406 9,297 13,647 Restated 2018 $ 530,962 26,441 65,500 13,433 - 10,053 440,899 36,983 3,005 42,955 11,126 3,572 ANNUAL REPORT | 25  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 3. EXPENSES (continued) Administration expenses Professional fees Audit fees Legal fees Depreciation Other administration expenses 4. SEGMENT INFORMATION 2019 Segment revenues Revenue Other Total segment revenues Personnel expenses Finance expenses Administration expenses Depreciation expenses Other expenses Total segment loss Segment assets Cash and cash equivalents Financial assets Property held for development or resale Investment in Associate entity Property, plant and equipment Other assets Total segment assets 2018 Segment revenues Revenue Other Total segment revenues Personnel expenses Finance expenses Administration expenses Depreciation expenses Other expenses Total segment loss Investments $ 43,829 - 43,829 - - (4,432) - 878,017 (829,756) Olive grove $ - 201,786 201,786 - - 50,863 3,566 2,065 145,292 - - - - - - - - - - - 450,003 1,100,000 477,718 - - 2,027,721 40,221 133,447 173,668 - 95 530,962 - 11,802 (369,191) 2019 $ 17,923 36,000 6,120 5,942 51,989 1,627,454 2018 $ 21,350 36,000 1,933 5,713 75,393 1,325,318 Corporate $ 12,821 - 12,821 477,959 915 122,467 5,942 90,093 (684,555) 850,739 - - - 16,458 60,040 927,237 Total $ 56,650 201,786 258,436 477,959 915 168,898 9,508 970,175 (1,369,019) 850,739 450,003 1,100,000 477,718 16,458 60,040 2,954,958 - 132 132 40,221 133,579 173,800 - 101 2,732 91,950 10,590 (105,373) 440,899 2,910 93,702 5,735 133,840 (676,954) 440,899 3,106 627,396 97,685 156,232 (1,151,518) ANNUAL REPORT | 26  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 4. SEGMENT INFORMATION (continued) Segment assets Cash and cash equivalents Financial assets Property held for development or resale Investment in Associate entity Property, plant and equipment Other assets Total segment assets Investments $ - 567,203 1,220,000 1,242,742 - - 3,029,945 Olive grove $ 62 - - - 907,547 492,679 1,400,288 Corporate $ 158,821 - - - 20,221 153,044 332,086 Total $ 158,883 567,203 1,220,000 1,242,742 927,768 645,723 4,762,319 Accounting policy The operating segments are reported in a manner consistent with the internal reporting provided to the "Chief Operating Decision Maker" (CODM). The Consolidated Entity's CODM is the Board of Directors who is responsible for allocating resources and assessing performance of the operating segments. The Board has considered the business and geographical perspectives of the operating results and determined that the Consolidated Entity operates only within Australia, with the main segments being Investments and Olive Grove. Corporate items are mainly comprised of corporate assets, office expenses and income tax assets and liabilities. Description of segments (a) Investments comprise equity investments in companies listed on the Australian Securities Exchange (ASX), unlisted managed funds and liquid financial assets; (b) Olive grove is in relation to the olive grove farm in Gingin; (c) Corporate items comprise corporate assets and operations. Liabilities Liabilities are not reported to the Board of Directors by segment. All liabilities are assessed at a consolidated entity level. 5. DISCOUNTINUED OPERATIONS On 11 October 2018, the Company completed the sale of its Olive Grove Agribusiness Assets in consideration of $1.45 million cash. Financial information relating to the discontinued operations are as follows: Financial incorporated into the Income Statement is as follows: information relating to the discontinued operation which has been Revenue Expenses Loss before income tax Income tax expense Loss after income tax Gain on sale of Olive Grove Agribusiness Assets Income tax Gain on sale of Olive Grove Agribusiness Assets after tax Reversal of revaluation of assets, net of tax Net gain on sale of non-current assets 2019 $ - (56,760) (56,760) (38,973) (95,733) 201,786 (38,973) 162,813 (102,746) 60,067 2018 $ - (105,374) (105,374) (22,233) (127,607) - - - - - ANNUAL REPORT | 27  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 5. DISCOUNTINUED OPERATIONS (continued) The carrying amount of the assets and liabilities of the operation at the date of cessation were: Total assets Total liabilities Net liabilities 2019 $ 1,403,475 (5,008,507) (3,605,032) 2018 $ 1,401,600 (4,951,201) (3,549,601) The net cash flows of the operations, which have been incorporated into the Cash Flow Statement are as follows: Net cash used in operating activities Net cash provided by investing activities Effect on cash flows (9,695) 1,413,000 1,403,305 (13,423) - (13,423) Details of sale of operations: Consideration received in cash Carrying amount of net assets sold Gain on sale of Olive Grove Agribusiness Assets Income tax Reversal of revaluation of assets, net of tax Net gain on sale of non-current assets 1,456,500 (1,396,433) 60,067 38,973 99,040 102,746 201,786 Critical accounting judgement and estimate Judgements have been made in the determination of consideration pertaining to assets sold during the financial year. In making these judgements, the Consolidated Entity has considered the conditions and probability of receipt pursuant to the relevant sale agreements. Accounting policy A discontinued operation is a component of the Consolidated Entity’s business where the operations and cash flows can be clearly distinguished from the rest of the Consolidated Entity and which:    represents a separate major line of business or geographical area of operations; is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or is a subsidiary acquired exclusively with a view to re-sale. Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative year. 6. TAX The components of tax expense comprise: Current tax Deferred tax - discontinued operations 2019 $ - 38,973 38,973 2018 $ - 22,233 22,233 ANNUAL REPORT | 28  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 6. TAX (continued) (a) The prima facie tax on operating loss before income tax is reconciled to the income tax as follows: Prima facie tax payable on operating loss before income tax at 27.5% (2018: 27.5%) Adjust tax effect of: Other assessable income Non-deductible expenses Share of Associate entity's loss Current year tax losses not brought to account Prior year's deferred tax assets recognition reversal Income tax attributable to entity 2019 $ 2018 $ (376,479) (316,667) 38,905 2,116 182,175 153,283 38,973 38,973 104,022 1,425 161,301 49,919 22,233 22,233 Deferred tax assets Deferred tax liabilities (b) Fair value losses (i) Movements - deferred tax assets Fair value losses Opening balance (Credited)/charged to income statement Closing balance (ii) Movements - deferred tax liabilities Fair value gains Opening balance Charged/(Credited) to the profit and loss Closing balance (iii) 2019 $ - 2018 $ 38,973 2019 $ - 2019 $ 38,973 (38,973) - 2018 $ 38,973 2018 $ 61,206 (22,233) 38,973 38,973 (38,973) - 61,206 (22,233) 38,973 Deferred tax recognised directly in Other Comprehensive Income Revaluations of land & intangible assets 38,973 22,233 Unrecognised deferred tax balances Unrecognised deferred tax asset - revenue losses Unrecognised deferred tax asset - capital losses Unrecognised deferred tax asset - timing differences 4,805,446 254,768 1,504,086 6,564,300 4,069,081 276,732 1,516,399 5,862,212 Critical accounting judgement and estimate The above deferred tax assets have not been recognised in respect of the above items because it is not probable that future taxable profit will be available against which the Consolidated Entity can utilise the benefits. Revenue and capital tax losses are subject to relevant statutory tests. ANNUAL REPORT | 29  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 6. TAX (continued) Accounting policy The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the notional income tax rate for each taxing jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses (if applicable). Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each taxing jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The amount of deferred tax assets benefits brought to account or which may be realised in the future, is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Consolidated Entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax balances attributable to amounts recognised directly in other comprehensive income or equity are also recognised directly in other comprehensive income or equity. 7. LOSS PER SHARE Basic and diluted loss per share (cents) The following represents the loss and weighted average number of shares used in the loss per share calculations: Loss after income tax attributable to Owners of Queste Communications Ltd ($) Weighted average number of ordinary shares 2019 Restated 2018 (3.36) (2.80) (910,108) (759,577) Number of shares 27,072,332 27,158,058 Under AASB 133 Earnings per Share, potential ordinary shares such as partly-paid shares will only be treated as dilutive when their conversion to ordinary shares would increase the earnings/(loss) per share. Diluted earnings/(loss) per share is not calculated as it does not increase the earnings/(loss) per share. ANNUAL REPORT | 30  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 7. LOSS PER SHARE (continued) Accounting policy Basic earnings per share is determined by dividing the operating result after income tax by the weighted average number of ordinary shares on issue during the financial period. Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking into account amounts unpaid on ordinary shares and any reduction in earnings per share that will probably arise from the exercise of options outstanding during the financial period. Under AASB 133 Earnings per Share, potential ordinary shares such as partly-paid shares will only be treated as dilutive when their conversion to ordinary shares would increase the loss per share. Diluted loss per share is not calculated as it does not increase the loss per share. 8. CASH AND CASH EQUIVALENTS Cash at bank (a) Reconciliation of operating loss after income tax to net cash used in operating activities Loss after income tax Add non-cash items: Depreciation Write off fixed assets Net loss/(gain) on financial assets at fair value through profit or loss Impairment of olive trees Loss on land held for development or resale Share of Associate entity's loss Changes in assets and liabilities: Financial assets at fair value through profit or loss Receivables Other current assets Investment in Associate entity Agricultural assets Payables Provisions Deferred tax 2019 $ 850,739 2018 $ 158,883 (1,407,992) (1,173,751) 9,508 2,122 93,202 - 120,000 662,455 24,000 98,699 (942) 102,569 (201,786) (269,716) 12,290 38,973 (716,618) 32,154 - (133,446) 65,500 - 530,962 60,604 (44,876) 376 218,138 - 293,889 5,188 22,233 (123,029) Accounting policy Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts (if any) are shown within short-term borrowings in current liabilities on the Statement of Financial Position. ANNUAL REPORT | 31  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 9. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS Listed securities at fair value 2019 $ 450,003 2018 $ 567,203 Accounting policy Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition, financial assets at fair value through profit and loss acquired principally for the purpose of selling in the short term or if so designated by management and within the requirements of AASB 139: Recognition and Measurement of Financial Instruments will recognise its realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the Statement of Profit or Loss and Other Comprehensive Income in the period in which they arise. The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the balance sheet date which is the current bid price. The fair value of the unlisted managed fund is determined from unit price information provided by investment manager. The Consolidated Entity’s investment portfolio is accounted for as a “financial assets at fair value through profit and loss” and is carried at fair value. 10. FINANCIAL RISK MANAGEMENT The Consolidated Entity's financial instruments consist of deposits with banks, accounts receivable and payable, investments in listed securities, and other unlisted securities. The principal activity of the Consolidated Entity is the management of these investments - "financial assets at fair value" (refer to Note 9). The Consolidated Entity's investments are subject to market (which includes interest rate and price risk), credit and liquidity risks. The Board of Directors is responsible for the overall internal control framework (which includes risk management) but no cost-effective internal control system will preclude all errors and irregularities. The system is based, in part, on the appointment of suitably qualified management personnel. The effectiveness of the system is continually reviewed by management and at least annually by the Board. The financial receivables and payables of the Consolidated Entity in the table below are due or payable within 30 days. The financial investments are held for trading and are realised at the discretion of the Board of Directors. The Consolidated Entity holds the following financial assets and liabilities: Cash and cash equivalents Financial assets at fair value through profit or loss Receivables Payables Net financial assets Note 8 9 12 15 2019 $ 850,739 450,003 29,720 1,330,462 (374,852) 955,610 2018 $ 158,883 567,203 86,091 812,177 (644,566) 167,611 ANNUAL REPORT | 32  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 10. FINANCIAL RISK MANAGEMENT (continued) (a) Market risk Market risk is the risk that the fair value and/or future cash flows from a financial instrument will fluctuate as a result of changes in market factors. Market risk comprises of price risk from fluctuations in the fair value of equities and interest rate risk from fluctuations in market interest rates. (i) Price risk The Consolidated Entity is exposed to equity securities price risk. This arises from investments held by the Consolidated Entity and classified in the Statement of Financial Position at fair value through profit or loss. The Consolidated Entity is not exposed to commodity price risk, save where this has an indirect impact via market risk and equity securities price risk. The value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual instrument or its issuer or factors affecting all instruments in the market. By its nature as an investment company, the Consolidated Entity will always be subject to market risk as it invests its capital in securities that are not risk free - the market price of these securities can and will fluctuate. The Consolidated Entity does not manage this risk through entering into derivative contracts, futures, options or swaps. Equity price risk is minimised through ensuring that investment activities are undertaken in accordance with Board established mandate limits and investment strategies. The Consolidated Entity has performed a sensitivity analysis on its exposure to market price risk at balance date. The analysis demonstrates the effect on the current year results and equity which could result from a change in these risks. The ASX All Ordinaries Accumulation Index was utilised as the benchmark for the unlisted and listed share investments which are financial assets available-for-sale or at fair value through profit or loss. ASX All Ordinaries Accumulation Index Increase 15% Decrease 15% (ii) Interest rate risk Impact on post-tax profit Impact on other components of equity 2019 $ 17,425 (17,425) 2018 $ 22,546 (22,546) 2019 $ 17,425 (17,425) 2018 $ 22,546 (22,546) Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The Consolidated Entity's exposure to market risk for changes in interest rates relate primarily to investments held in interest bearing instruments. The average interest rate for the year for the table below is 1.1% (2018: 1.35%). The revenue exposure is immaterial in terms of the possible impact on profit or loss or total equity. Cash at bank and in hand 2019 $ 850,739 2018 $ 158,883 ANNUAL REPORT | 33  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 10. FINANCIAL RISK MANAGEMENT (continued) (b) Credit risk Credit risk refers to the risk that a counterparty under a financial instrument will default (in whole or in part) on its contractual obligations resulting in financial loss to the Consolidated Entity. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, including outstanding receivables and committed transactions. Concentrations of credit risk are minimised primarily by undertaking appropriate due diligence on potential investments, carrying out all market transactions through approved brokers, settling non-market transactions with the involvement of suitably qualified legal and accounting personnel (both internal and external), and obtaining sufficient collateral or other security (where appropriate) as a means of loss from defaults. The Consolidated Entity's business activities do not mitigating the risk of financial necessitate the requirement for collateral as a means of mitigating the risk of financial loss from defaults. The credit quality of the financial assets are neither past due nor impaired and can be assessed by reference to external credit ratings (if available with Standard & Poor's) or to historical information about counterparty default rates. The maximum exposure to credit risk at reporting date is the carrying amount of the financial assets as summarised below: Cash and cash equivalents AA- Receivables (due within 30 days) No external credit rating available 2019 $ 849,585 2018 $ 158,729 29,720 86,091 The Consolidated Entity measures credit risk on a fair value basis. The carrying amount of financial assets recorded in the financial statements, net any provision for losses, represents the Consolidated Entity's maximum exposure to credit risk. (c) Liquidity risk Liquidity risk is the risk that the Consolidated Entity will encounter difficulty in meeting obligations associated liabilities. The Consolidated Entity has no borrowings. The Consolidated Entity's non-cash with financial investments can be realised to meet trade and other payables arising in the normal course of business. The financial liabilities disclosed in the above table have a maturity obligation of not more than 30 days. 11. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS Fair value hierarchy AASB 13 (Fair Value Measurement) requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: (i) (ii) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). (iii) 2019 Financial assets at fair value through profit or loss: Listed securities at fair value Total Level 1 $ Level 2 $ Level 3 $ Total $ 450,003 450,003 - - - - 450,003 450,003 ANNUAL REPORT | 34  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 11. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS (continued) 2018 Financial assets at fair value through profit or loss: Level 1 $ Level 2 $ Level 3 $ Total $ Listed securities at fair value Land at independent valuation Total 567,203 - 567,203 - - - - 1,259,608 1,259,608 567,203 1,259,608 1,826,811 There have been no transfers between the levels of the fair value hierarchy during the financial year. (a) Valuation techniques The fair value of the listed securities traded in active markets is based on closing bid prices at the end of the reporting period. These investments are included in Level 1. The fair value of any assets that are not traded in an active market are determined using certain valuation techniques. The valuation techniques maximise the use of observable market data where it is available, or independent valuation and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. At Level 3, the land was valued by an independent qualified valuer (a Certified Practising Valuer and Associate Member of the Australian Property Institute) as at 15 June 2017 was sold (Note 5). These assets have been valued based on similar assets, location and market conditions or Direct Comparison or Comparative Sales Approach. The land value per hectare based on rural land sold in the general location provided a rate which included ground water licence. (b) Level 3 assets At 1 Jul 2017 Revaluation/(Impairment) At 30 Jun 2018 Disposal At 30 Jun 2019 (c) Fair values of other financial assets and liabilities Cash and cash equivalents Receivables Payables Land $ 1,340,455 (80,847) 1,259,608 (1,259,608) - Olive trees $ 65,500 (65,500) - - - 2019 $ 850,739 29,720 880,459 (374,852) 505,607 Total $ 1,405,955 (146,347) 1,259,608 (1,259,608) - 2018 $ 158,883 86,091 244,974 (644,566) (399,592) Due to their short-term nature, the carrying amounts of cash, current receivables and current payables is assumed to approximate their fair value. ANNUAL REPORT | 35  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 11. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS (continued) Accounting policy The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the Balance Date. The quoted market price used for financial assets held by the Consolidated Entity is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price. The fair value of financial instruments that are not traded in an active market (for example over-the-counter derivatives) is determined using valuation techniques, including but not limited to recent arm’s length transactions, reference to similar instruments and option pricing models. The Consolidated Entity may use a variety of methods and makes assumptions that are based on market conditions existing at each Balance Date. Other techniques, such as estimated discounted cash flows, are used to determine fair value for other financial instruments. trade receivables and payables are assumed to The nominal value less estimated credit adjustments of approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Consolidated Entity for similar financial instruments. The Consolidated Entity’s investment portfolio (comprising listed and unlisted securities) is accounted for as “financial assets at fair value through profit and loss” and is carried at fair value based on the quoted last bid prices at the reporting date (refer Note 8). 12. RECEIVABLES Current Deposit GST receivable Other receivables Non current Bonds and guarantees 2019 $ 27,500 - 2,220 29,720 2018 $ 27,500 5,747 52,844 86,091 23,182 22,010 Risk exposure The Consolidated Entity’s exposure to credit and interest rate risks is discussed in Note 9.   Impaired trade receivables None of the Consolidated Entity's receivables are impaired or past due. Accounting policy AASB 9: Financial Instruments introduces a new expected credit loss (ECL) impairment model that requires the Consolidated Entity to adopt an ECL position across the Consolidated Entity’s financial assets at 1 July 2018. The Consolidated Entity’s receivables balance comprises deposits and GST refunds from the Australian Tax Office. At each reporting date, the Consolidated Entity reviews the carrying value of its financial assets based on the ECL model under AASB 9, which proposes three approaches in assessing impairment: (i) the simplified approach (which will be applied to most trade receivables) which requires the recognition of lifetime ECLs by considering forward-looking assumptions and information regarding expected future conditions affecting historical customer default rates; ANNUAL REPORT | 36  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 12. RECEIVABLES (continued) Accounting policy (continued) (ii) the general approach (which will be applied to most loans and debt securities) whereby ECL is recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, the Consolidated Entity will provide for credit losses that result from default events that are possible within the next 12 months. For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance will arise for credit losses expected over the remaining life of exposure, irrespective of the timing of the default; and (iii) For purchased or originated credit-impaired receivables, the fair value at initial recognition already takes into account lifetime expected losses. At each reporting date, the Consolidated Entity updates its estimated cash flows and adjusts the loss allowance accordingly. The loss allowances for financial assets are based on the assumptions about risk of default and expected loss rates. The Consolidated Entity uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Consolidated Entity’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. The Consolidated Entity has not recognised any additional impairment to its current receivables or non-current receivables as a result of the application of AASB 9. This is due to the fact that the Consolidated Entity does not consider that there are any further ECL to the current carrying values of its current receivables or its non-current receivables. 13. PROPERTY HELD FOR RESALE Property held for development or resale Revaluation of property 2019 $ 3,797,339 (2,697,339) 1,100,000 2018 $ 3,797,339 (2,577,339) 1,220,000 Critical accounting judgement and estimate Property held for development or resale was last valued by an independent qualified valuer (a Certified Practising Valuer and Associate Member of the Australian Property Institute) as at 30 June 2019. The revaluation impairment of $120,000 has been recognised in the Statement of Profit or Loss and Other Comprehensive Income. Accounting policy Property held for resale is valued at the lower of cost and net realisable value. Cost includes the cost of acquisition, development, borrowing costs and holding costs until completion of development. Finance costs and holding charges incurred after development are expensed. Profits are brought to account on the signing of an unconditional contract of sale. 14. PROPERTY, PLANT AND EQUIPMENT Accumulated Total 2019 Plant and equipment 2018 Freehold land Buildings Plant and equipment Cost $ 102,951 102,951 Additions Depreciation $ $ 3,267 3,267 (89,760) (89,760) $ 16,458 16,458 1,117,889 124,867 1,393,490 2,636,246 141,719 - - 141,719 - (70,211) (1,287,533) (1,357,744) 1,259,608 54,656 105,957 1,420,221 ANNUAL REPORT | 37  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 14. PROPERTY, PLANT AND EQUIPMENT (continued) Movements in carrying amounts At 1 July 2017 Revaluation Additions Depreciation expense At 30 June 2018 At 1 July 2018 Additions Disposals Depreciation expense At 30 June 2019 Freehold land $ 1,340,455 (80,847) - - 1,259,608 1,259,608 - (1,259,608) - - Buildings $ 59,088 - - (4,432) 54,656 54,656 - (53,973) (683) - Plant and equipment $ 128,781 - 4,898 (27,722) Total $ 1,528,324 (80,847) 4,898 (32,154) 105,957 1,420,221 105,957 4,301 (84,975) (8,825) 16,458 1,420,221 4,301 (1,398,556) (9,508) 16,458 Critical accounting judgement and estimate In assessing the recoverable amount of the Consolidated Entity's farm property, plant and equipment, management monitors the worldwide olive oil prices annually in determining if the Gingin olives should be harvested. As such the property, plant and equipment is carried at its written down value and continues to be depreciated as it is in a condition to be used to generate economic benefits to the Consolidated Entity at such time as required and the assets are maintained in fair condition and therefore their recoverable amount has been assessed to be in excess of their carrying values at reporting date. Accounting policy All plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Freehold land is not depreciated. Increases in the carrying amounts arising on revaluation of land are recognised, net of tax, in other comprehensive income and accumulated in reserves in equity. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first recognised in profit or loss. Decreases that reverse previous increases of the same asset are first recognised in other comprehensive income to the extent of the remaining surplus attributable to the asset; all other decreases are charged to profit or loss. It is shown at fair value, based on periodic valuations by external, independent valuers. The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present value in determining the recoverable amount. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Consolidated Entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Profit or Loss and Other Comprehensive Income during the financial period in which they are incurred. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each Balance Date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the profit or loss. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. Class of Fixed Asset Buildings Plant and Equipment Rate 7.50% 5-75% Method Diminishing Value Diminishing Value ANNUAL REPORT | 38  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 15. PAYABLES Current Trade payables Dividend payable GST payable Other payables and accrued expenses Directors' fees and entitlements 2019 $ 17,749 6,739 13,827 40,097 296,440 374,852 2018 $ 15,586 - 14,716 223,607 390,657 644,566 Risk exposure The Consolidated Entity’s exposure to risks arising from current payables is set out in Note 10. Accounting policy These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. 16. PROVISIONS Current Employee benefits - annual leave Employee benefits - long service leave 2019 $ 2018 $ 36,191 115,291 151,482 14,457 124,960 139,417 (a) Amounts not expected to be settled within 12 months The provision for annual leave and long service leave is presented as current since the Consolidated Entity does not have an unconditional right to defer settlement for any of these employee benefits. Long service leave covers all unconditional entitlements where employees have completed the required period of service and also where employees are entitled to pro-rata payments in certain circumstances. Based on past experience, the employees have never taken the full amount of long service leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months: Leave obligations expected to be settled after 12 months 2019 $ 115,291 2018 $ 124,960 Accounting policy Short-term obligations Provision is made for the Consolidated Entity’s liability for employee benefits arising from services rendered by employees to the Balance Date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year from the Balance Date have been measured at the present value of the estimated future cash outflows to be made for those benefits. Employer superannuation contributions are made by the Consolidated Entity in accordance with statutory obligations and are charged as an expense when incurred. Other long-term employee benefit obligations The liability for long-service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. ANNUAL REPORT | 39  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 17. ISSUED CAPITAL Fully paid ordinary shares 2019 Number 27,072,332 2018 Number 27,072,332 2019 $ 6,239,370 2018 $ 6,239,370 Movement in fully paid ordinary shares At 1 Jul 2017 Issue of shares Equal access share buy-back - refer (b) Partly-paid shares cancelled At 30 Jun 2018 Movement in partly-paid ordinary shares At 1 Jul 2017 Call on partly-paid shares - refer (b) Partly-paid shares cancelled Equal access share buy-back - refer (b) Partly-paid shares cancelled At 30 Jun 2018 Date of issue 19-Oct-17 Issue price $ 0.20 0.20 Number of shares 26,578,358 577,000 (83,026) - 27,072,332 5,770,000 (577,000) (5,193,000) - $ 5,935,679 115,400 (4,151) 192,442 6,239,370 214,209 106,615 (115,400) (12,982) (192,442) - There was no movement in the Company's issued capital during the financial year. (a) Call on partly-paid ordinary shares On 19 October 2017 there was a conversion of 577,000 partly-paid shares respectively into fully paid shares upon payment of a call made by the Company in relation to 100% of the outstanding balance (being $0.184775 each or $106,615 in total) due and payable in respect of these 577,000 partly-paid shares. (b) Equal access share buy-back On 5 January 2018, the Company's Off-Market Equal Access Share Buy-Back (approved by shareholders at the Annual General Meeting held on 30 November 2017) (Buy-Back) closed with the following shares being bought-back and cancelled: 83,026 fully paid ordinary shares were bought back for 5 cents per share at a cost of $4,151; and (i) (ii) 5,193,000 partly-paid ordinary shares were bought back for 0.25 cent per share at a total cost of $12,983, with the total cost of the Buy-Back being $17,134. The Buy-Back consideration was satisfied as follows: (i) Cash Component: One-third (by value) of an accepting shareholder’s Buy-Back consideration was satisfied by Queste paying cash; and Scrip Component: Two-thirds (by value) of an accepting shareholder’s Buy-Back consideration was satisfied by Queste distributing shares in Bentley Capital Limited (ASX:BEL) based on a deemed value of 15.3846 cents per BEL share (rounded to the nearest whole share in BEL). (ii) (c) Capital risk management The Company's objectives when managing its capital are to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain a capital structure balancing the interests of all shareholders. The Board will consider capital management initiatives as is appropriate and in the best interests of the Company and shareholders from time to time, including undertaking capital raisings, share Buy-backs, capital reductions and the payment of dividends. The Consolidated Entity has no external borrowings. The Consolidated Entity's non-cash investments can be realised to meet accounts payable arising in the normal course of business. ANNUAL REPORT | 40  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 17. ISSUED CAPITAL (continued) Accounting policy Ordinary shares are classified as equity. Fully paid ordinary shares carry one vote per share and the right to dividends. At any meeting, each shareholder present in person or by proxy, attorney, or representative has one vote for each fully paid ordinary share held either upon a show of hands or by a poll. Holders of partly-paid ordinary shares have a fraction of a vote for each partly-paid share held, with the fractional vote of each share being equivalent to the proportion of the total amount paid and payable (excluding amounts credited) that has actually been paid (not credited) for each share. Amounts paid in advance of a call are ignored when calculating proportions. The holder of a partly-paid ordinary share is not entitled to vote at a meeting in respect of those shares on which calls are outstanding. The profits of the Consolidated Entity, which the Directors may from time to time determine to distribute to shareholders by way of dividends, will be divisible amongst the shareholders in proportion to the amounts paid on the shares. An amount paid in advance of a call is not to be included as an amount paid on a share for the purposes of calculating an entitlement to dividends. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business, are included in the cost of the acquisition as part of the purchase consideration. 18. RESERVES Profits reserve Option premium reserve Asset revaluation reserve Revaluations of freehold land Deferred tax on revaluations Non-controlling interest Other reserve Dilution movement Non-controlling interest 2019 $ 2,918,053 2,138,012 2018 $ 3,077,276 2,138,012 - - - - 141,719 (38,973) (41,242) 61,504 1,071,663 (700,443) 371,220 1,071,663 (202,559) 869,104 Total reserves 5,427,285 6,145,896 Movements in Profits reserve Opening balance Profits reserve transfer OEQ Dividends paid to non-controlling interest (Note 20) Closing balance Movements in Asset revaluation reserve Opening balance Revaluations of freehold land Disposal of freehold land Deferred tax on revaluations Non-controlling interest Closing balance 3,077,276 (159,223) - 145,293 2,988,517 (56,534) 2,918,053 3,077,276 61,504 - (141,719) 38,973 41,242 - 96,590 (80,847) - 22,233 23,528 61,504 ANNUAL REPORT | 41  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 18. RESERVES (continued) The Asset Revaluation Reserve relates to the revaluation of Orion's Olive Grove Land which has been sold (Note 5). Other Reserve relates the differences which may arise as a result of transactions with non-controlling interests that do not result in a loss of control. Profits Reserve increase will arise when the Company or its subsidiaries generates a net profit (after tax) for a relevant financial period (i.e. half year or full year) which the Board determines to credit to the company’s Profits Reserve. Dividends may be paid out of (and debited from) the Company’s Profits Reserve, from time to time. 19. NON-CONTROLLING INTEREST Issued capital Asset revaluation reserve Other reserve Accumulated losses 2019 $ 7,549,512 - 700,443 (6,707,476) 1,542,479 Restated 2018 $ 7,549,512 41,242 202,559 (6,209,591) 1,583,722 The non-controlling interest is a 40.14% (2018: 40.14%) equity holding in Orion Equities Limited (not held by the Company). Accounting policy The Consolidated Entity treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Consolidated Entity. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve (refer to Note 18) within equity attributable to owners of Queste Communications Ltd. 20. DIVIDENDS Dividends paid in cash during the financial year: by OEQ - 0.90 cent per share fully franked dividend Paid On 29-Sep-17 2019 $ 2018 $ - 140,843 OEQ Franking credits available for subsequent periods based on a tax rate of 27.5% 3,093,275 3,030,179 The above amounts represent the balance of the franking account as at the end of the reporting period, adjusted for: (a) Franking credits that will arise from the receipt of dividends recognised as receivables at balance date; (b) Franking credits that will arise from the payment of the amount of the provision for income tax; and (c) Franking debits that will arise from the payment of dividends recognised as a liability at balance date. The franking credits attributable to the Consolidated Entity include franking credits that would be available to the parent entity if distributable profits of subsidiaries were paid as dividends. ANNUAL REPORT | 42  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 21. PARENT ENTITY INFORMATION The following information provided relates to the Company, Queste Communications Ltd, as at 30 June 2019. Statement of profit or loss and other comprehensive income Profit/(Loss) for the year Other comprehensive income Total comprehensive loss for the year Statement of financial position Current assets Non current assets Total assets Current liabilities Total liabilities Net assets Issued capital Option premium reserve Accumulated losses Equity 2019 $ (550,187) Reported 2018 $ 57,220 Adjustment (14,731) (550,187) 57,220 $ 58,693 1,681,924 1,740,617 138,411 2,211,749 2,350,160 227,656 227,656 202,789 202,789 1,512,961 2,147,371 6,239,370 2,347,229 (7,073,638) 1,512,961 6,239,370 2,347,229 (6,439,229) 2,147,371 (84,223) (84,223) Restated 2018 $ 42,489 - 42,489 $ 138,411 2,127,526 2,265,937 202,789 202,789 2,063,148 6,239,370 2,347,229 (6,523,452) 2,063,148 The restatement relates to the accounting of the Company's investment in an Associate entity under the equity method. Where the Company has recognised a share of the Associate entity's losses such that the carrying value has been reduced to nil, the Company is not required to recognise any further share of the Associate entity's losses - in 2018, the Company recognised an excessive share of the Associate entity's losses such that the carrying value was reduced to below nil. There was also a restatement in Non-Current Assets in relation to the elimination of the Company's market value of its investment in the Associate entity. 22. INVESTMENT IN CONTROLLED ENTITY The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary with non-controlling interest: Ownership Interest Orion Equities Limited Incorporated Australia Parent 2019 59.86% Non-Controlling Interest 2018 59.86% 2019 40.14% 2018 40.14% Summarised financial information of consolidated entity are set out below: the subsidiary with non-controlling interests that are material to the Summarised statement of profit or loss and other comprehensive income Revenue Expenses Loss from continuing operations Loss from discontinued operations Income tax expense Loss after income tax expense Other comprehensive income Total comprehensive loss for the year 2019 $ 250,758 (1,434,372) (1,183,614) (56,760) (38,973) (1,279,347) (102,746) (1,382,093) 2018 $ 169,379 (1,099,137) (929,758) (105,374) (22,233) (1,057,365) (58,614) (1,115,979) ANNUAL REPORT | 43  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 22. INVESTMENT IN CONTROLLED ENTITY (continued) Summarised Statement of Financial Position Current assets Non-current assets Total Assets Current liabilities Non-current liabilities Total Liabilities Net Assets Statement of cash flows Net cash from operating activities Net cash used in investing activities Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Other financial information Profit/(Loss) attributable to non-controlling interest Accumulated non-controlling interest at the end of the year 2019 $ 1,278,904 1,583,190 2,862,094 222,491 76,187 298,678 2018 $ 658,580 3,907,099 4,565,679 581,197 38,973 620,170 2,563,416 3,945,509 (629,769) 1,408,286 (225) 778,292 (36,603) (1,446) (133,879) (171,928) (497,884) 1,542,479 (414,174) 1,583,722 Accounting policy Subsidiaries are all entities (including structured entities) over which the Consolidated Entity has control. The Consolidated Entity controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Consolidated Entity. They are deconsolidated from the date that control ceases. Subsidiaries are fully consolidated from the date on which control is transferred to the Consolidated Entity. They are de-consolidated from the date that control ceases. The controlled entity has a June financial year-end. All inter- company balances and transactions between entities in the Consolidated Entity, including any unrealised profits or losses, have been eliminated on consolidation. Changes in Ownership Interests When the Consolidated Entity ceases to have control, any retained interest in the entity is re-measured to its fair value with the change in carrying amount recognised in profit or loss. The fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Consolidated Entity has directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. 23. INVESTMENT IN ASSOCIATE ENTITY Carrying Amount Bentley Capital Limited (ASX:BEL) Ownership Interest 2019 28.56% 2018 28.56% Movements in carrying amounts Opening balance Share of net loss after tax Reversal of QUE over-recognition of share of net loss Dividends received Disposal of shares through Equal access share buy-back Closing balance 2019 $ 477,718 1,242,742 (662,455) - (102,569) - 477,718 Restated 2018 $ 1,242,742 2,003,264 (586,548) 55,586 (218,138) (11,422) 1,242,742 ANNUAL REPORT | 44  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 23. INVESTMENT IN ASSOCIATE ENTITY (continued) Fair value (at market price on ASX) of investment in Associate entity 2019 $ 1,630,465 2018 $ 2,065,256 Net asset backing value of investment in Associate entity 1,813,602 2,669,174 Summarised statement of profit or loss and other comprehensive income Revenue Expenses Loss before income tax Income tax expense Loss after income tax Other comprehensive income Total comprehensive income 296,380 (2,754,789) (2,458,409) 1,291,720 (3,135,545) (1,843,825) - - (2,458,409) (1,843,825) - - (2,458,409) (1,843,825) Summarised statement of financial position Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets 6,694,371 22,364 6,716,735 7,092,182 2,593,165 9,685,347 363,900 1,929 365,829 323,579 14,805 338,384 6,350,906 9,346,963 Accounting policy Associates are all entities over which the Consolidated Entity has presumed significant influence but not control or joint control, generally accompanying a shareholding of between approximately 20% and 50% of the voting rights. Investments in Associates in the consolidated financial statements are accounted for using the equity method of accounting. On initial recognition investment in associates are recognised at cost, for investments which were classified as fair value through profit or loss, any gains or losses previously recognised are reversed through profit or loss. Under this method, the Consolidated Entity’s share of the post-acquisition profits or losses of Associates are recognised in the consolidated Statement of Profit or Loss and Other Comprehensive Income, and its share of post-acquisition movements in reserves is recognised in Other Comprehensive Income. The cumulative post- acquisition movements are adjusted against the carrying amount of the investment. A share of an Associate entity's net gain increases the investment (and a share of net loss decreases the investment) and dividend income received from an Associate entity decreases the investment. When the Consolidated Entity’s share of losses in an Associate equals or exceeds its interest in the Associate, including any other unsecured long-term receivables, the Consolidated Entity does not recognise further losses, unless it has incurred obligations or made payments on behalf of the Associate. Where applicable, unrealised gains on transactions between the Consolidated Entity and its Associates are eliminated to the extent of the Consolidated Entity’s interest in the Associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The accounting policies of Associates are aligned to ensure consistency with the policies adopted by the Consolidated Entity, where practicable. ANNUAL REPORT | 45  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 24. RELATED PARTY TRANSACTIONS The Company has control of Orion Equities Limited (ASX:OEQ) (Orion) as it holds 59.86% (9,367,653 shares) of Orion's issued capital (2018: 59.86% and 9,367,653 shares). During the year there were transactions between the Company, Orion and Associate Entity, Bentley Capital Limited (ASX:BEL), pursuant to shared office and administration expense arrangements. There were no outstanding amounts at the reporting date. Bentley Capital Limited Dividends Received (a) Transactions with key management personnel 2019 $ 108,698 2018 $ 109,069 Refer to the Remuneration Report contained in the Directors' Report for details of the remuneration paid or payable to each member of the Consolidated Entity's KMP for the year ended 30 June 2019. The total remuneration paid to KMP of the Consolidated Entity during the year is as follows: Directors Short-term employment benefits Post-employment benefits 2019 $ 392,500 33,488 425,988 2018 $ 392,497 33,488 425,985 During the year, the Consolidated Entity generated $37,700 rental income from a KMP/close family member of KMP (the KMP being Queste and Orion Director, Farooq Khan), pursuant to a standard form residential tenancy agreement in respect of Property Held for Resale (held by Orion subsidiary, Silver Sands Developments Pty Ltd) (2018: $37,700). 25. AUDITORS' REMUNERATION During the year the following fees were paid for services provided by the auditor of the parent entity: Rothsay Auditing Audit and Review of Financial Statements 26. CONTINGENCIES 2019 $ 36,000 2018 $ 36,000 (a) Directors' Deeds The Company has entered into Deeds of Indemnity with each of its Directors indemnifying them against liability incurred in discharging their duties as Directors/Officers of the Consolidated Entity. At the end of the financial period, no claims have been made under any such indemnities and accordingly, it is not possible to quantify the potential financial obligation of the Consolidated Entity under these indemnities. (b) Tenement Royalties The Consolidated Entity is entitled to receive a royalty of 2% of gross revenues (exclusive of GST) from any commercial exploitation of any minerals from the Paulsens East (Iron Ore) Project tenement (currently a Retention Licence RL 47/7) in Western Australia currently held by Strike Resources Limited (ASX:SRK). ANNUAL REPORT | 46  30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2019 27. EVENTS OCCURRING AFTER THE REPORTING PERIOD No other matter or circumstance has arisen since the end of the financial year that significantly affected, or may significantly affect, the operations of the Consolidated Entity, the results of those operations, or the state of affairs of the Consolidated Entity in future financial years. ANNUAL REPORT | 47 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 DIRECTORS’ DECLARATION The Directors of the Company declare that: (1) (2) (3) (4) The financial statements, Consolidated Statement of Profit or Loss and Other Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of Cash Flows, Consolidated Statement of Changes in Equity, and accompanying notes as set out on pages 16 to 47 are in accordance with the Corporations Act 2001 (Cth) and: (a) (b) comply with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting; and give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2019 and of its performance for the year ended on that date; In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; The Directors have been given the declarations required by section 295A of the Corporations Act 2001 (Cth) by the Executive Chairman/Managing Director (the person who, in the opinion of the Directors, performs the Chief Executive Officer function) and Company Secretary (the person who, in the opinion of the Directors, performs the Chief Financial Officer function); and The Company has included in the notes to the Financial Statements an explicit and unreserved statement of compliance with the International Financial Reporting Standards. This declaration is made in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001 (Cth). Farooq Khan Executive Chairman and Managing Director 30 August 2019 Victor Ho Executive Director and Company Secretary ANNUAL REPORT | 48 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 ADDITIONAL ASX INFORMATION as at 11 October 2019 CORPORATE GOVERNANCE STATEMENT The Company has adopted the Corporate Governance Principles and Recommendations (3rd Edition, March 2014) issued by the ASX Corporate Governance Council in respect of the financial year ended 30 June 2019. Pursuant to ASX Listing Rule 4.10.3, the Company’s 2019 Corporate Governance Statement (dated on or about 22 October 2019) and ASX Appendix 4G (Key to Disclosures of Corporate Governance Principles and Recommendations) can be Internet website: http://queste.com.au/corporate-governance following URL on the Company’s found at the VOTING RIGHTS Subject to any rights or restrictions for the time being attached to any class or classes of shares (at present there are none), at meetings of shareholders of the Company: (1) (2) (3) Each shareholder entitled to vote may vote in person or by proxy or by power of attorney or, in the case of a shareholder which is a corporation, by representative; Every person who is present in the capacity of shareholder or the representative of a corporate shareholder shall, on a show of hands, have one vote; Every shareholder who is present in person, by proxy, by power of attorney or by corporate representative shall, on a poll, have one vote in respect of every fully paid share held by him; and SUBSTANTIAL SHAREHOLDERS Substantial Shareholders Registered Shareholder Shareholding Azhar Chaudhri, Chi Tung Investments Limited and Renmuir Holdings Limited1 Farooq Khan and Associate2 Geoff Wilson and Associates3 Fred Woollard and Samuel Terry Asset Management Pty Ltd ATF Samuel Terry Absolute Return Fund4 Chi Tung Investments Ltd Renmuir Holdings Ltd Mr Azhar Chaudhri Mr Farooq Khan & Ms Rosanna De Campo Island Australia Pty Ltd Dynasty Peak Pty Ltd J P Morgan Nominees Australia Limited Total Shares %Voting Power5 8,322,737 30.74% 5,344,872 19.74% 3,608,956 3,277,780 1,436,001 4,921,295 423,577 4,391,975 4,391,975 16.22% 3,875,568 Frederick Raymond Woollard 21,862 3,902,430 14.41% Rag & Bone Securities Pty Ltd 5,000 Notes: (1) (2) (3) (4) (5) Based on the substantial shareholding notice filed by Azhar Chaudhri and associates dated 23 October 2017 (updated to reflect current registered shareholdings and percentage voting power). Based on the Change of Interests of Substantial Holder notice filed by Farooq Khan and associates dated 20 November 2014 and the Change of Director’s Interest Notice filed by Farooq Khan dated 10 July 2019 (updated to reflect current registered shareholdings and percentage voting power). Based on the Change of Interests of Substantial Holder Notice filed by Geoff Wilson and associates dated 14 February 2018. Based on the Notice of Initial Substantial Holder notice filed by Samuel Terry Asset Management Pty Ltd dated 5 February 2018 (updated to reflect current registered shareholdings and percentage voting power). Movements of less than 1% in voting power are not required to be disclosed to ASX via an updated substantial shareholding notice and accordingly, there may be variances between the shareholdings recorded in the table above and the most recent substantial shareholding notices lodged on ASX. Current registered shareholdings have been disclosed (where applicable). ANNUAL REPORT | 52 30 JUNE 2019 QUESTE COMMUNICATIONS LTD A.B.N. 58 081 688 164 ADDITIONAL ASX INFORMATION as at 11 October 2019 DISTRIBUTION OF LISTED ORDINARY FULLY PAID SHARES Spread of Holdings 1 1,001 5,001 10,001 100,001 Total - - - - - 1,000 5,000 10,000 100,000 and over Number of Holders 17 44 58 86 21 Number of Units 8,811 121,362 520,496 2,398,667 24,022,996 % of Total Issue Capital 0.03% 0.45% 1.92% 8.86% 88.74% 226 27,072,332 100.00% UNMARKETABLE PARCELS Spread of Holdings Number of Holders Number of Shares % of Total Issued Capital 1 - 8,064 8,065 Total - over 78 148 226 244,520 26,827,812 27,072,332 0.90% 99.10% 100.00% An unmarketable parcel is considered, for the purposes of the above table, to be a shareholding of 8,064 shares or less, being a value of $500 or less in total, based upon the Company’s last sale price on ASX as at 10 October 2019 of $0.062 per share. TOP 20 ORDINARY FULLY PAID SHAREHOLDERS Rank Shareholder Shares Held Total Shares % Issued Capital 1 2 3 4 5 6 7 8 9 CHI TUNG INVESTMENTS LTD MR AZHAR AMIN CHAUDHRI RENMUIR HOLDINGS LTD ISLAND AUSTRALIA PTY LTD MR FAROOQ KHAN + MS ROSANNA DE CAMPO DYNASTY PEAK PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED MS ROSANNA DE CAMPO GA & AM LEAVER INVESTMENTS PTY LTD GLENVIEW SERVICES PTY LTD GIBSON KILLER PTY LTD MR AYUB KHAN 10 MRS AFIA KHAN 11 ROSEMONT ASSET PTY LTD MR SIMON KENNETH CATO + MRS KAYE LOUISE HOPKINS 12 TOMATO 2 PTY LTD 13 MR JOHN CHENG-HSIANG YANG + MS PEGA PING PING MOK 14 MR ANTHONY NEALE KILLER + MRS SANDRA MARIE KILLER 15 MR EUGENE RODRIGUEZ 16 MRS MARY THERESE CAMILLERI 17 MRS LINDA ANN OATES 18 DR SIEW NAM UN 19 MRS WENDY MARGARET BELL 20 MANAR NOMINEES PTY LTD Total 3,608,956 1,436,001 3,277,780 Sub-total 423,577 4,921,295 Sub-total 75,000 118,000 Sub-total 8,322,737 30.74 5,344,872 4,391,975 3,875,568 268,100 250,600 250,000 220,000 215,000 215,000 193,000 185,019 136,125 130,000 110,000 100,000 100,000 87,500 75,000 72,247 19.74 16.22 14.32 0.99 0.93 0.92 0.81 0.79 0.79 0.71 0.68 0.50 0.48 0.41 0.37 0.37 0.32 0.28 0.27 24,542,743 90.64 ANNUAL REPORT | 53 ASX Code: QUE Queste Communications Ltd A.B.N. 58 081 688 164 PRINCIPAL & REGISTERED OFFICE: Level 2 23 Ventnor Avenue West Perth, Western Australia 6005 T | (08) 9214 9777 F | (08) 9214 9701 E | info@queste.com.au W | www.queste.com.au SHARE REGISTRY: Advanced Share Registry Limited Western Australia – Main Office 110 Stirling Highway Nedlands, Western Australia 6009 PO Box 1156, Nedlands Western Australia 6909 Local T | 1300 113 258 T | (08) 9389 8033 F | (08) 9262 3723 E | admin@advancedshare.com.au New South Wales – Branch Office Suite 8H, 325 Pitt Street Sydney, New South Wales 2000 PO Box Q1736 Queen Victoria Building, New South Wales 1230 T | (02) 8096 3502 W | www.advancedshare.com.au 

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