DURATEC LIMITED — Annual Report 2018

Nov 2, 2020

DURATEC AUSTRALIA PTY LTD AND CONTROLLED ENTITIES

ABN: 94141 614 075

Financial Report For The Year Ended 30 June 2018

DURATEC AUSTRALIA PTY LTD AND CONTROLLED ENTITIES

ABN: 94141 614 075

Financial Report For The Year Ended 30 June 2018

Financial Report For The Year Ended 30 June 2018
CONTENTS	Page
Directors' Report	1
Auditor's Independence Declaration	3
Consolidated Statement of Profit or Loss and Other Comprehensive Income	4
Consolidated Statement of Financial Position	5
Consolidated Statement of Changes in Equity	6
Consolidated Statement of Cash Flows	7
Notes to the Financial Statements	8
Directors' Declaration	26
Independent Auditor's Report	27

DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES DIRECTORS' REPORT

Your directors present their report on the consolidated group for the financial year ended 30 June 2018.

Directors

The names of the directors in office at any time during, or since the end of, the year are:

James Robert Giumelli Gavin Robert Miller Robert Phillip Harcourt Dean Gerald Diprose Christopher John Oates James Patrick Giumelli

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

Review of Operations

The consolidated profit of the consolidated group for the financial year after providing for income tax amounted to $6,018,612 (2017:$3,988,291).

A review of the operations of the consolidated group during the financial year and the results of those operations found that changes in market demand and competition have seen an increase in sales of 46.5% to $126,346,884. The increase in sales has contributed to an increase in the consolidated group’s gross profit of 8.8% to $23,726,889.

Significant Changes in the State of Affairs

No significant changes in the consolidated group’s state of affairs occurred during the financial year.

Principal Activities

The principal activities of the consolidated group during the financial year were concrete remediation works. No significant change in the nature of these activities occurred during the year.

Events Subsequent to the End of the Reporting Period

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the company, the results of those operations, or the state of affairs of the company in future financial years other than those disclosed in Note 23 of the financial statement.

Likely Developments and Expected Results of Operations

Likely developments in the operations of the consolidated group and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the consolidated group.

Environmental Regulation

The consolidated group’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a state or territory.

Dividends

Dividends paid or declared since the start of the financial year were $4,731,500 (2017: $564,450).

Options

No options over issued shares or interests in the company or a controlled entity were granted during or since the end of the financial year and there were no options outstanding at the date of this report.

No shares were issued during or since the end of the year as a result of the exercise of an option over unissued shares or interests.

Indemnification of Officers

No indemnities have been given or insurance premiums paid, during or since the end of the financial year, for any person who is or has been an officer or auditor of the consolidated group.

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Ernst & Young Tel: +61 8 9429 2222 11 Mounts Bay Road Fax: +61 8 9429 2436 Perth WA 6000 Australia ey.com/au GPO Box M939 Perth WA 6843

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Auditor’s Independence Declaration to the Directors of Duratec Australia Pty Ltd

As lead auditor for the audit of Duratec Australia Pty Ltd for the period ended 30 June 2018, I declare to the best of my knowledge and belief, there have been:

• a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit ; and

• b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Duratec Australia Pty Ltd and the entities it controlled during the financial year.

Ernst & Young

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Darryn Hall Partner 14 December 2018

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Page 3

DH:DA:ERTECH:015

DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2018

Note Sales revenue 3 Contracting cost of sales 4(a) Other income 3 Employee benefits expense Administration expense Audit expenses Occupancy expense Goodwill write off Depreciation and amortisation expense Finance costs 4(a) Other expenses Profit before income tax Tax expense 5(a) Profit for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Profit/(loss) attributable to: Members of the parent entity Non-Controlling Interest Total comprehensive income/(loss) attributable to: Members of the parent entity Non-Controlling Interest	2018 2017 $ $ 126,346,884 86,241,748 (102,619,995) (64,427,510) Consolidated Group
	23,726,889 21,814,238 460,667 23,378 (9,870,448) (6,733,430) (2,252,929) (7,125,801) (111,665) - (1,574,311) (1,233,144) (90,432) - (1,254,733) (1,020,172) (132,930) (170,059) (65,152) (163,101)
	8,834,956 5,391,909 (2,816,344) (1,403,618)
	6,018,612 3,988,291
	- -
	6,018,612 3,988,291
	6,606,472 3,792,816 (587,860) 195,475
	6,018,612 3,988,291
	6,606,472 3,792,816 (587,860) 195,475
	6,018,612 3,988,291

The accompanying notes form part of these financial statements.

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DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018

Note ASSETS CURRENT ASSETS Cash and cash equivalents 7 Trade and other receivables 8 Inventories 9 Other assets 10 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Financial assets 12 Property, plant and equipment 14 Deferred tax assets 17 Other assets 10 TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables 15 Borrowings 16 Current tax liabilities 17 Provisions 18 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Borrowings 16 Provisions 18 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 19 Retained earnings Non-controlling interest TOTAL EQUITY	2018 2017 $ $ 13,915,299 1,755,636 19,187,463 12,494,615 209,098 118,338 223,339 523,293 Consolidated Group
	33,535,199 14,891,882
	200,049 - 5,610,383 4,019,826 1,895,492 1,925,328 72,850 53,852
	7,778,774 5,999,006
	41,313,973 20,890,888
	25,340,691 7,010,634 917,880 597,576 766,665 1,741,706 1,944,058 1,103,391
	28,969,294 10,453,307
	1,646,135 960,630 570,804 636,323
	2,216,939 1,596,953
	31,186,233 12,050,260
	10,127,740 8,840,628
	500,000 500,000 10,046,554 8,171,582 (418,814) 169,046
	10,127,740 8,840,628

The accompanying notes form part of these financial statements.

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DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018

Note 6 6 Balance at 30 June 2018 Shares issued during the year Dividends paid or provided for Transactions with owners Total comprehensive income/(loss) for the year Other comprehensive income for the year Profit/(loss) for the year Balance at 30 June 2017 Dividends paid or provided for Comprehensive income Balance at 1 July 2017 Comprehensive income Transactions with owners Other comprehensive income for the year Consolidated Group Balance at 1 July 2016 Profit for the year Total comprehensive income for the year	Ordinary Retained Earnings Non-controlling Interests Total $ $ $ $
	500,000 4,943,216 (26,429) 5,416,787 - 3,792,816 195,475 3,988,291 - - - -
	500,000 8,736,032 169,046 9,405,078 - (564,450) - (564,450)
	500,000 8,171,582 169,046 8,840,628
	500,000 8,171,582 169,046 8,840,628 - 6,606,472 (587,860) 6,018,612 - - - -
	500,000 14,778,054 (418,814) 14,859,240 - - (4,731,500) - (4,731,500)
	500,000 10,046,554 (418,814) 10,127,740

The accompanying notes form part of these financial statements.

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DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018

Note CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Interest received/other income Payments to suppliers and employees Interest paid Income tax paid Net cash provided by operating activities 22(a) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment Purchase of investments Acquisition of subsidiary net of cash Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings - other Loan repayments to related parties Repayment of borrowings - other Payment of dividend on ordinary shares Net cash used in financing activities Net increase/(decrease) in cash held Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year 7	2018 2017 $ $ 122,669,238 72,947,636 238,498 3,378 (100,162,364) (68,787,470) (132,930) (170,059) (3,761,548) (1,633,894) Consolidated Group
	18,850,894 2,359,591
	45,953 73,530 (2,832,455) (947,762) (49) - (178,989) -
	(2,965,540) (874,232)
	1,955,827 906,683 - (3,691,254) (950,018) (1,010,619) (4,731,500) (564,450)
	(3,725,691) (4,359,640)
	12,159,663 (2,874,281) 1,755,636 4,629,917
	13,915,299 1,755,636

The accompanying notes form part of these financial statements.

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DURATEC AUSTRALIA PTY LTD ABN: 94141614075

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 1 Summary of Significant Accounting Policies

Basis of Preparation

Duratec Australia Pty Ltd is a company limited by shares, incorporated and domiciled in Australia.

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards – Reduced Disclosure Requirement and interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for for-profit entities.

Historical cost convention

The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, investment properties, certain classes of property, plant and equipment and derivative financial instruments.

The financial report is presented in Australian dollars and all values are rounded to the nearest dollar.

The accounting policies that have been adopted in the preparation of this report are as follows:

The financial report was authorised for issue on ____ December 2018 by the directors of the company.

(a) Income Tax

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted at statement of financial position date.

Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited direct to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of 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 company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by law.

(b) Inventories

Inventories are measured at the lower of cost and net realisable value.

(c) Construction Contracts and Work in Progress

Construction work in progress represents the gross unbilled amount expected to be collected from customers for construction work performed to date. Construction work in progress is stated at cost, plus profit recognised to date less an allowance for foreseeable losses and progress billings. Cost includes both variable fixed costs relating to specific contracts, and those costs that are attributable to the contract activity in general and that can be allocated on a reasonable basis.

Construction profits are recognised on the percentage of completion basis measured using the proportion of costs incurred to date as compared to expected total costs. Where losses are anticipated they are provided for in full.

Construction revenue has been recognised on the basis of progress claims under the terms of the contract adjusted for any variations or claims allowable under the contract.

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DURATEC AUSTRALIA PTY LTD ABN: 94141614075 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 1 Summary of Significant Accounting Policies (continued)..

(d) Plant and Equipment

Plant & equipment are measured on the cost basis less, where applicable, any accumulated depreciation and impairment losses. Assets previously measured at valuation are now carried at deemed cost less, where applicable, any accumulated depreciation.

Depreciation

The depreciable amount of all fixed assets including capitalised lease assets, is depreciated over the asset's useful life commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset	Depreciation Rate
Plant and Machinery	4 - 50%
Furniture, Fittings and Equipment	8 - 50%
Motor Vehicles	16 - 50%
Computers	20 – 100%

The assets’ residual values and useful lives are reviewed and adjusted if appropriate at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater that its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income. When re-valued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained earnings.

Impairment

The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired.

The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit to which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value.

An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash generating unit is then written down to its recoverable amount.

For plant and equipment, impairment losses are recognised in the statement of comprehensive income.

Derecognition and disposal

An item of property, plant and equipment is derecognised upon disposal or when no further economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive income in the year the asset is derecognised.

(e) Leases

Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset are transferred to the company are classified as finance leases. Finance leases are capitalised recording an asset and a liability equal to the present value of the minimum lease payments, including any guaranteed residual value. Leased assets are depreciated over their estimated useful lives. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Lease payments under operating leases are charged as expenses in the periods in which they are incurred.

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DURATEC AUSTRALIA PTY LTD ABN: 94141614075

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 1 Summary of Significant Accounting Policies (continued)..

(f) Employee Benefits

The amounts expected to be paid to employees for their pro-rata entitlement to annual leave and long service leave is accrued annually at current pay rates, having regard to experience of employees' departures and period of service. Employee benefits have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs.

Contributions are made by the company to an employee superannuation fund and are charged as expenses when incurred. The company has no legal obligation to provide benefits to employees on retirement.

(g) Provisions

Provisions are recognised when the company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result, and that outflow can be reliably measured. Provisions are measured at the best estimate of the amounts required to settle the obligation at the end of the reporting period.

(h) Cash and Cash Equivalents

For the purposes of the statement of cash flows, cash includes cash on hand and on call current account with banks and financial institutions.

(i) Revenue and Other Income

Construction Revenue:

Revenue from construction contracts is recognised by reference to the stage of completion of the contract. The stage of completion is determined as follows:

• i. Contract income is recognised by reference to the actual costs incurred at the end of the reporting period relative to the proportion of actual costs expected to be incurred over the life of the contract;

• ii. Adjustments are made for any variations or claims allowable under the contract.

Interest Revenue:

Interest Revenue is recognised on a proportional basis taking into account the interest rates applicable to financial assets.

All revenue is stated net of the amount of goods and services tax (GST).

(j) Trade and Other Payables

Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the company prior to the end of the financial year that are unpaid and arise when the company becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months.

(k) Borrowing Costs

Borrowing costs are recognised in the statement of comprehensive income in the period in which they are incurred.

(l) Trade and other receivables

Trade receivables are measured on initial recognition at fair value less any allowance for impairment. Trade receivables are generally due for settlement within period ranging from 30 to 60 days.

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DURATEC AUSTRALIA PTY LTD ABN: 94141614075 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 1 Summary of Significant Accounting Policies (continued)..

(m) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Statement of Financial Position. Cash Flows are stated with the amount of GST included.

(n) Critical Accounting Estimates and Judgements

The directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the company.

Key estimates

Impairment - general

The Company assesses impairment at the end of each reporting period by evaluating the conditions and events specific to the Company that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions.

Construction Contracts and Work in Progress

The company determines the carrying value of work-in-progress as the difference between the book margin on the project and the profit claimable to date on the project. Profit claimable to date is calculated as projected profit on the job (contract value + contract variations - actual costs - estimated costs to complete the project) multiplied by the percentage completion of the job. Percentage complete on job is calculated as revenue billed to date for the job divided by the final contract value of the project (including variations). The costs to complete the project are estimated based on quantities of work identified as yet to be completed at that point in time.

Key judgments

Provision for impairment of receivables

The directors believe that the full amount of the debt in receivables is recoverable, and therefore no provision for impairment has been made.

(o) Adoption of new and revised standards

The Consolidated Entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Consolidated Entity.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted and the Consolidated Entity are in the process of assessing the impact thereof.

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DURATEC AUSTRALIA PTY LTD ABN: 94141614075 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 1 Summary of Significant Accounting Policies (continued)..

(p) Comparatives

Where required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(q) Investment in associates

The Group’s investments in its associate are accounted for using the equity method. Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate.

Impairment

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its associate.

If there is objective evidence that the investment is impaired, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value, and then recognises the loss as ‘Share of loss of an associate’ in the statement of profit or loss.

(r) Parent entity financial information

The financial information for the parent entity, Duratec Australia Pty Ltd, disclosed in Note 2 has been prepared on the same basis as the consolidated financial statements, except as set out below:

(i) Investments in subsidiaries

Investment in subsidiaries and associates are accounted for at cost in the financial statements of Duratec Australia Pty Ltd. Dividends received from associates are recognised in the parent entity profit or loss, rather than being deducted from carrying value of these investments.

• (s) Principles of Consolidation

A controlled entity is any entity that Duratec Australia Pty Ltd has the power to control the financial and operating policies of the entity so as to obtain benefits from its activities.

A list of controlled entities is contained in Note 13 to the financial statements. All controlled entities have a June financial year end. Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the consolidated group and are presented separately in the statement of comprehensive income and within equity in the statement of financial position.

All inter-company balances and transactions between entities in the consolidated group, including any unrealised profits or losses have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Where controlled entities have entered or left the consolidated group during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.

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DURATEC AUSTRALIA PTY LTD ABN: 94141614075 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 2 Parent Information

The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian Accounting Standards.

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Sales revenue Contracting cost of sales Other income Employee benefits expense Administration expense Occupancy expense Depreciation and amortisation expense Finance costs Other expenses Share of net profits of associates and joint ventures Profit before income tax Tax expense Profit for the year Other comprehensive income for the year Total comprehensive income for the year	2018 2017 $ $ 81,062,405 65,677,506 (60,802,937) (48,312,288)
	20,259,468 17,365,218 358,478 80,835 (6,738,436) (4,779,444) (383,189) (5,824,863) (1,209,270) (929,465) (927,567) (808,457) (103,120) (147,920) (65,153) (157,216) 200,000 -
	11,391,211 4,798,688 (3,373,457) (1,461,980)
	8,017,754 3,336,708
	- -
	8,017,754 3,336,708

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DURATEC AUSTRALIA PTY LTD ABN: 94141614075 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 2 Parent Information (continued)..

STATEMENT OF FINANCIAL POSITION ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Investment in subsidiary Property, plant and equipment Deferred tax assets Other non-current assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Borrowings Current tax liabilities Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Trade and other payables Borrowings Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Retained earnings TOTAL EQUITY	2018 2017 $ $ 7,885,030 843,359 14,548,381 10,362,849 172,642 118,338 233,237 471,980
	22,839,290 11,796,526
	800,049 350,000 4,251,439 3,017,154 1,003,837 1,585,539 - 40,260
	6,055,325 4,992,953
	28,894,615 16,789,479
	12,223,375 3,608,430 713,447 457,772 741,548 1,711,341 1,453,988 823,157
	15,132,358 6,600,700
	- 290,060 1,281,436 635,253 567,424 636,323
	1,848,860 1,561,636
	16,981,218 8,162,336
	11,913,397 8,627,143
	500,000 500,000 11,413,397 8,127,143
	11,913,397 8,627,143

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DURATEC AUSTRALIA PTY LTD ABN: 94141614075 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 2 Parent Information (continued)..

STATEMENT OF CHANGES IN EQUITY

Balance at 1 July 2016 Comprehensive income Profit for the year Other comprehensive income for the year Total comprehensive income for the year Transactions with owners Dividends paid or provided for Total transactions with owners Balance at 30 June 2017 Balance at 1 July 2017 Comprehensive income Profit for the year Other comprehensive income for the year Total comprehensive income for the year Transactions with owners Dividends paid or provided for Total transactions with owners Balance at 30 June 2018	Issued Capital Retained Earnings Total $ $ $
	500,000 5,354,885 5,854,885 - 3,336,708 3,336,708 - - -
	- 3,336,708 3,336,708
	(564,450) (564,450)
	- (564,450) (564,450)
	500,000 8,127,143 8,627,143
	500,000 8,127,143 8,627,143 - 8,017,754 8,017,754 - - -
	- 8,017,754 8,017,754
	(4,731,500) (4,731,500)
	- (4,731,500) (4,731,500)
	500,000 11,413,397 11,913,397

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DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 3 Revenue and Other Income

Sales revenue: — provision of services Total sales revenue Other income: — — — Total other Income (a) — — Note (a) 17 (b) — — — — — — — The weighted average effective tax rates are as follows: Income tax attributable to entity Current tax under provision in respect of prior years Tax effect of: Current tax Add: Total finance costs Profit before income tax from continuing operations includes the following specific expenses: Profit before Income Tax Shares of net profits of associates Interest received consolidated group Interest expense on financial liabilities not at fair value through profit or loss Deferred tax under provision in respect of prior years other non-allowable items Goodwill write off non-deductible The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax as follows: The components of tax expense income comprise: Expenses Note 5 external related entities Cost of sales under-provision for income tax in prior years Less: Tax effect of: R&D Tax claim Prima facie tax payable on profit from ordinary activities before income tax at 30% (2017: 30%) Tax Expense Deferred tax Note 4 other income Prior Year Adjustment share of associate's net profit Prior Year Adjustment share of associate's net loss	2018 2017 $ $ 126,346,884 86,241,748 Consolidated Group
	126,346,884 86,241,748
	238,498 3,378 200,000 - 22,169 20,000
	460,667 23,378
	2018 2017 $ $ 102,619,995 64,427,510 Consolidated Group
	119,415 90,264 13,515 79,795
	132,930 170,059
	2018 2017 $ $ 2,908,187 2,685,643 (121,679) - (266,735) (1,241,299) 296,571 (40,726) Consolidated Group
	2,816,344 1,403,618
	2,650,487 1,617,573 174,892 - 23,835 14,092 - 60,000 27,130 -
	2,876,344 1,691,665 - 288,047 60,000 -
	2,816,344 1,403,618
	31.9% 26.0%

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DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 6

Dividends

Declared fully franked ordinary dividend of $4,731,500 (2017: $564,450) franked at the tax rate of 30% (2017: 30%).

Consolidated Group 2018 2017 $ $ 4,731,500 564,450

Note 7 Cash and Cash Equivalents

Cash and Cash Equivalents Note 7
CURRENT Cash at bank and on hand Short-term bank deposits	2018 2017 $ $ 13,898,299 1,755,636 17,000 - Consolidated Group
	13,915,299 1,755,636

Note 8 Trade and Other Receivables

Note CURRENT Trade receivables Provision for impairment Amounts due from customers for construction contracts Other receivables Loans to other related parties 24(e) Total current trade and other receivables (a) Construction contracts Contract costs incurred Recognised profits Progress billings Amounts due from customers for contract work Amounts due to customers	2018 2017 $ $ 19,142,845 18,950,262 (1,003,090) (3,895,070) Consolidated Group
	18,139,755 15,055,192 989,260 (2,679,612) 53,497 - 4,951 119,035
	19,187,463 12,494,615
	92,393,608 57,397,235 37,537,323 16,997,476
	129,930,931 74,394,711 (128,941,671) (77,074,323)
	1,768,826 2,725,843
	(779,566) (5,405,455)

Note 9 Inventories

CURRENT At cost: Raw materials and stores	2018 2017 $ $ 209,098 118,338 Consolidated Group
	209,098 118,338

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DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 10 Other Assets

CURRENT Prepayments NON-CURRENT Prepayments Advance credit card payments	2018 2017 $ $ 105,151 341,722 118,188 181,571 Consolidated Group
	223,339 523,293
	72,850 53,852
	72,850 53,852

Note 11 Interest in joint ventures and associates

a. Information about Joint Venture

Duratec Australia – Dundee Rock JV Pty Ltd (DDR) is registered as an incorporated company. DDR is a joint venture arrangement between its shareholders, Dundee Rock Pty Ltd (DRPL), which owns 51% of the issued shares in DDR, and Duratec Australia Pty Ltd (DAPL), which owns the remaining 49% of issued shares. The purpose of the JV is to carry out Commonwealth and State Government works, whether directly or via Government contractors, where there is an indigenous procurement policy.

b. Information about associate

The Group has 40% interest in Fortec Australia Pty Ltd which is involved in specialised concrete works. Set out below is the summarised financial information for the Group’s material investments in Fortec Australia Pty Ltd. Unless otherwise stated, the disclosed information reflects the amounts presented in the financial statements of the associates.

Summarised financial position Summarised financial performance Note NON-CURRENT Other Investments 12(a) Total Non-Current Assets (a) Other investments Total non-current assets Group's share (%) Shares in Duratec Australia - Dundee Rock JV Financial Assets Shares in Fortec Australia Pty Ltd Note 12 Group's share of associate's profit after tax from continuing operations Total current assets Total current liabilities Total non-current liabilities Profit after tax from continuing operations Group's share of associate's net assets/(liabilities) Revenue Net assets/(liabilities)	2018 $ 2017 $ 2,390,566 2,499,846 1,294,564 810,660 2,232,608 3,266,349 772,099 167,523 Fortec Australia Pty Ltd
	680,423 (123,366)
	40% 40% 272,169 (49,346) 2018 $ 2017 $ 14,141,989 10,142,909 803,789 334,020 321,516 133,608 2018 2017 $ $ 200,049 - Consolidated Group
	200,049 -
	200,000 - 49 -
	200,049 -

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DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 13 Interests in Subsidiaries

a. Information about Principal Subsidiaries

The subsidiaries listed below have share capital consisting solely of ordinary shares, which are held directly by the Group. The proportion of ownership interests held equals the voting rights held by the Group. Each subsidiary’s principal place of business is also its country of incorporation or registration.

incorporation or registration.
			Ownership interest held by		Proportion of non-controlling
		Note	the Group		interests
			2018	2017	2018	2017
Name of subsidiary	Principal place of business		(%)	(%)	(%)	(%)
Duratec Australia (ES) Pty Ltd	Australia		70%	70%	30%	30%
MeND Consulting Pty Ltd	Australia	25	100%	0%	0%	0%

Subsidiary financial statements used in the preparation of these consolidated financial statements have also been prepared as at the same reporting date as the Group’s financial statements.

Note 14 Property, Plant and Equipment

PLANT AND EQUIPMENT Plant and equipment: At cost Accumulated depreciation Total plant and equipment At cost Accumulated depreciation Office furniture, fixtures and fittings Accumulated depreciation Accumulated depreciation At cost Motor Vehicles At cost Information Technology Leasehold Improvement Accumulated depreciation Capital Work in Progress At cost At cost	2018 2017 $ $ 5,154,047 4,151,085 (2,606,948) (2,089,025) Consolidated Group
	2,547,099 2,062,060
	4,224,448 2,895,138 (1,800,185) (1,375,792)
	2,424,263 1,519,346
	207,541 171,717 (101,458) (84,383)
	106,083 87,334
	103,609 20,067 (22,674) (14,153)
	80,935 5,914
	675,340 532,221 (283,542) (209,049)
	391,798 323,172
	60,205 22,000
	60,205 22,000
	5,610,383 4,019,826

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DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 14 Property, Plant and Equipment (continued)..

(a) Movements in carrying amounts

Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year

financial year
	Plant and	Motor	Office	Information	Leasehold
	Equipment	Vehicles	Furniture	Technology	Improvement	Capital WIP	Total
	$	$	$	$	$	$	$
Consolidated Group:
Balance at 1 July 2016	2,295,610	1,581,897	89,524	16,075	345,761	-	4,328,867
Additions	375,808	504,275	14,763	-	30,916	22,000	947,762
Disposals - written down value	(107,531)	(119,243)	(3,343)	(6,514)	-	-	(236,631)
Depreciation expense	(501,827)	(447,583)	(13,610)	(3,647)	(53,505)	-	(1,020,172)
Carrying amount at 30 June 2017	2,062,060	1,519,346	87,334	5,914	323,172	22,000	4,019,826
Additions	1,112,564	1,457,603	8,864	72,100	143,119	38,205	2,832,455
Disposals - written down value	(74,773)	(34,001)	(2,333)	-	-	-	(111,107)
Additions through acquisition of
entity	66,460	15,000	31,036	11,445	-	-	123,941
Depreciation expense	(619,212)	(533,685)	(18,818)	(8,524)	(74,493)	-	(1,254,732)
Carrying amount at 30 June 2018	2,547,099	2,424,263	106,083	80,935	391,798	60,205	5,610,383

Note 15 Trade and Other Payables

Trade and Other Payables Note 15
CURRENT Unsecured liabilities Trade payables Sundry payables and accrued expenses Other payables (net amount of GST payable) Amounts payable to: — — other related parties ultimate parent entity Employee entitlements	2018 2017 $ $ 7,050,703 3,875,598 15,449,318 929,688 1,280,405 983,778 563,781 657,484 103,703 13,074 892,781 551,012 Consolidated Group
	25,340,691 7,010,634

Amounts payable to ultimate parent entity and other related entities are repayable within 30 days from end of month. Interest is payable for amounts not paid within 30 days terms.

Note 16 Borrowings

Note 16 Borrowings
		Consolidated Group
		2018	2017
	Note	$	$
CURRENT
Lease liability secured		917,880	597,576
Total current borrowings		917,880	597,576
NON-CURRENT
Lease liability secured		1,646,135	960,630
Total non-current borrowings		1,646,135	960,630
Total borrowings	20	2,564,015	1,558,206

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DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 17 Tax

2018 2017 $ $ CURRENT Income tax payable 766,665 1,741,706 TOTAL 766,665 1,741,706 NON-CURRENT Deferred tax assets 1,895,492 1,925,328 TOTAL 1,895,492 1,925,328 NON-CURRENT Opening Balance (Charged)/ Credited to Profit or Loss Closing Balance $ $ $ 384,782 136,572 521,354 (1,298,660) 92,713 (1,205,947) 1,354,489 (101,919) 1,252,570 57,620 (3,673) 53,947 177,921 (177,921) - 7,877 1,054,415 1,062,292 - 241,112 241,112 684,029 1,241,299 1,925,328 521,354 233,113 754,467 (1,205,947) (477,168) (1,683,115) 1,252,570 479,305 1,731,875 53,947 46,502 100,449 - 705,058 705,058 1,062,292 (775,534) 286,758 241,112 (241,112) - 1,925,328 (29,836) 1,895,492 Analysis of Provisions CURRENT 2018 2017 Employee Benefits $ $ Opening balance at 1 July 1,103,391 392,134 Additional provisions raised during year 2,573,547 2,581,928 Amounts used (1,732,880) (1,870,671) Balance at 30 June 1,944,058 1,103,391 NON-CURRENT Employee Benefits Opening balance at 1 July 636,323 208,330 Additional provisions in excess of transfers to current provisions during year - 427,993 Amounts transferred to current provisions in excess of provisions (65,519) - Balance at 30 June 570,804 636,323 R&D tax offset receivable Provisions and accruals Book asset WDV R&D tax offset receivable Note 18 Tax loss carried forward Balance at 30 June 2017 Provision - doubtful debts Tax asset WDV Provisions and accruals Accrued expenses Consolidated Group Consolidated Group Book asset WDV Deferred tax assets Tax asset WDV Consolidated Group Tax loss carried forward Balance at 30 June 2018 Accrued expenses Provision - doubtful debts Provisions	2018 2017 $ $ 766,665 1,741,706 766,665 1,741,706 1,895,492 1,925,328 1,895,492 1,925,328 Opening Balance (Charged)/ Credited to Profit or Loss Closing Balance $ $ $ 384,782 136,572 521,354 (1,298,660) 92,713 (1,205,947) 1,354,489 (101,919) 1,252,570 57,620 (3,673) 53,947 177,921 (177,921) - 7,877 1,054,415 1,062,292 - 241,112 241,112 Consolidated Group	2018 2017 $ $ 766,665 1,741,706 Consolidated Group
		766,665 1,741,706
		1,895,492 1,925,328
		1,895,492 1,925,328
	684,029 1,241,299 1,925,328
	521,354 233,113 754,467 (1,205,947) (477,168) (1,683,115) 1,252,570 479,305 1,731,875 53,947 46,502 100,449 - 705,058 705,058 1,062,292 (775,534) 286,758 241,112 (241,112) -
	1,925,328	(29,836) 1,895,492
		2018 2017 $ $ 1,103,391 392,134 2,573,547 2,581,928 (1,732,880) (1,870,671) Consolidated Group
		1,944,058 1,103,391
		636,323 208,330 - 427,993 (65,519) -
		570,804 636,323

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DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 19 Issued Capital

Issued Capital Note 19
(a) Ordinary Shares At the beginning of the reporting period At the end of the reporting period 1,000 (2017: 1,000) fully paid ordinary shares	2018 2017 $ $ 500,000 500,000 Consolidated Group
	500,000 500,000
	No. No. 1,000 1,000
	1,000 1,000

Ordinary shareholders participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held.

At the shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

(b) Capital Management

Note 16 15 7 Note (a) Finance Lease Commitments Payable — minimum lease payments — not later than 12 months — between 12 months and five years Minimum lease payments Less future finance charges Present value of minimum lease payments 16 (b) Operating Lease Commitments Payable — minimum lease payments — not later than 12 months — between 12 months and five years Total capital Total debt Capital and Leasing Commitments Total equity Gearing ratio Note 20 Net debt Total borrowings Less cash and cash equivalents Trade and other payables Non-cancellable operating leases contracted for but not recognised in the financial statements	2018 2017 $ $ 2,564,015 1,558,206 25,340,691 7,010,634 Consolidated Group
	27,904,706 8,568,840
	(13,915,299) (1,755,636)
	13,989,407 6,813,204 10,127,740 8,840,628
	24,117,147 15,653,832
	58% 44% 2018 2017 $ $ 1,016,304 657,351 1,736,833 1,007,960 Consolidated Group
	2,753,137 1,665,311 (189,122) (107,105)
	2,564,015 1,558,206
	685,249 591,275 77,873 254,860
	763,122 846,135

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DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 21 Contingent Liabilities

Consolidated Group 2018 2017 $ $ 12,620,771 5,583,702

Estimates of the potential financial effect of contingent liabilities that may become payable:

Contract Guarantees and Bonds

The company uses Bank Guarantee and Performance Bond facilities to guarantee contract completion obligations and maintain period liabilities in respect of contracts undertaken. These guarantees and inurance bonds can be activated only in the event of a failure by the company to meet its obligations under the contract.

Note 22 Cash Flow Information

(a) Net profit Non-cash flows in profit — — — — — Changes in assets and liabilities: — — — — — — — Net cash provided by operating activities increase in trade and other receivables with profit after income tax decrease in other assets net loss on disposal of plant and equipment bad and doubtful debts decrease/(increase) in deferred income tax assets increase in provisions depreciation (increase)/decrease in inventories (decrease)/increase in income taxes payable impairment of goodwill increase in trade and other creditors Reconciliation of cash flows from operating activities share of associates' and joint ventures’ net profit/losses

2018 2017 $ $ 6,018,612 3,988,291 1,254,733 1,020,172 - 3,540,973 90,432 - 65,152 163,101 (200,000) - (6,614,797) (8,710,079) 280,956 550,889 (90,760) 21,345 29,836 (1,241,299) 18,229,354 1,730,638 (987,772) 1,011,020 775,148 284,540 Consolidated Group

18,850,894 2,359,591

Note 23 Events After the Reporting Period

The directors are not aware of any significant events since the end of the reporting period.

Note 24 Related Party Transactions

The Group's main related parties are as follows:

(a) Key Management Personnel:

All directors (whether executive or otherwise) of the entities in the group are considered key management personnel.

(b) Entities subject to significant influence by the group:

An entity that has the power to participate in the financial and operating policy decisions of an entity, but does not have control over those policies, is an entity that holds significant influence. Significant influence may be gained by share ownership, statute or agreement.

Fortec Australia Pty Ltd is an entity over which the group exercises significant influence by holding 40% voting power.

For details of interests held in associates, refer to Note 11.

(c) Joint ventures in which the parent is a venturer:

The Group has a 49% interest in the joint venture Duratec Australia – Dundee Rock JV Pty Ltd.

For details of interests held in joint ventures, refer to Note 11.

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DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 24 Related Party Transactions (continued)..

(d) The Ultimate parent

The ultimate parent of the Group is Ertech Holdings Pty Ltd and is based in Australia.

(e) Other entities

Subsidiaries of the ultimate company that are not subject to significant influence by the group.

Transactions with related parties:

The following transactions occurred with related parties:

Sales to related parties $ (i) 2018 - 2017 - (ii) 2018 - 2017 - (iii) 2018 1,194,027 2017 - (iv) 2018 316,932 2017 414,208 2018 - 2017 - 2018 - 2017 - 2018 - 2017 - Compensation of key management personnel of the Group Short-term employee benefits Total compensation paid to key management personnel Joint venture in which the parent is a venturer Entity subject to significant influence by the group: Ertech EC Pty Ltd Ultimate parent Fortec Australia Pty Ltd Ertech Holdings Pty Ltd Duratec Australia – Dundee Rock JV Pty Ltd. Other entities Ertech Pty Ltd Ertech Plant Holdings Pty Ltd Ertech (Queensland) Pty Ltd

Purchases from related parties Amounts in Trade Receivables for related parties Amounts in Trade Payables for related parties Loan balances payable to related parties Loan balances recievable from related parties $ $ $ $ $ - - - 563,781 - - - - 657,484 - 5,725 - - 78,514 - 211,642 98,237 - - 114,035 - 797,024 - - 4,951 - - - - 5,000 40,372 304 - 9,401 - 1,245,939 248,694 317,260 12,884 - - - - 15,787 - - - - 114 - 75,058 - - - - 14,248 - - - - 68,608 - - - - - - - 77 - 2018 2017 $ $ 1,931,717 1,822,510 1,931,717 1,822,510 Consolidated Group

The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management personnel.

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DURATEC AUSTRALIA PTY LTD ABN: 94141 614 075 AND CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Note 25 Acquisition of MeND Consulting Pty Ltd

(a) Acquisition

On 1st December 2017, the Group acquired 100% of the shares and voting rights in MeND Consulting Pty Ltd. The total cost of the acquisition was $250,000. Acquisition related costs are included in the administration costs in the statement of comprehensive income.

(b) Assets acquired and liabilities assumed at the date of acquisition

The group has recognised the fair values of the identifiable assets and liabilities of MeND Consulting Pty Ltd based upon the best information available as of the reporting date. The goodwill on acquisition has been impaired since then.

Identifiable assets acquired and liabilities assumed Cash and Cash equivalents Trade and other receivables Property, plant & equipment Trade and Other payables Value of identifiable net assets Goodwill on acquisition Total consideration	$ 71,011 78,051 123,941 (113,435)
	159,568
	90,432
	250,000

Note 26 Company Details

The registered office of the company is: Duratec Australia Pty Ltd 108 Motivation Drive, Wangara, WA 6065

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Ernst & Young Tel: +61 8 9429 2222 11 Mounts Bay Road Fax: +61 8 9429 2436 Perth WA 6000 Australia ey.com/au GPO Box M939 Perth WA 6843

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Independent auditor's report to the Members of Duratec Australia Pty Ltd

Opinion

We have audited the financial report of Duratec Australia Pty Ltd (the Company) and its subsidiaries (collectively the Consolidated Entity), which comprises the Consolidated Entity’s statement of financial position as at 30 June 2018, the Consolidated Entity’s statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report is in accordance with the Corporations Act 2001 , including:

• a) giving a true and fair view of the Consolidated Entity's financial position as at 30 June 2018 and of their financial performance for the year ended on that date; and

• b) complying with Australian Accounting Standards– Reduced Disclosure Requirements and the Corporations Regulations 2001 .

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Consolidated Entity in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Information other than the financial report and auditor’s report thereon

The Directors are responsible for the other information. The other information is the Directors’ report accompanying the financial report.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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Responsibilities of the Directors for the financial report

The Directors of the Consolidated Entity are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards – Reduced Disclosure Requirements and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the Directors are responsible for assessing the Consolidated Entity’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Consolidated Entity or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Consolidated Entity’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Consolidated Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Consolidated Entity to cease to continue as a going concern.

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• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Ernst & Young

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Darryn Hall Partner Perth 14 December 2018

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