ENECO REFRESH LTD — Annual Report 2017

Aug 24, 2017

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Appendix 4E

Preliminary Final Report period ending 30 June 2017

Results for announcement to the market

Financial Results			June 2017	June 2016
Revenue from ordinary activities	Up	1%	6,178,586	6,120,013
Comprehensive Profit / (Loss) from ordinary activities after tax attributable to members	Up	107%	75,932	36,718

Dividends	2017 Final Dividend	2016 Final Dividend
Amount per Ordinary Security	nil	nil
Franked amount per Security	N/A	N/A
Record date for determining entitlements to final dividend	N/A

Net Tangible Asset Backing	June 2017	June 2016
Net tangible asset backing per ordinary security	$0.04	$0.04

REFRESH GROUP LIMITED and its controlled entities

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COMMENTARY

The slowdown of the Western Australia economy has affected Refresh badly. Compared to the previous financial year, revenue was down a massive $523k or 14% - one of our biggest decline ever. However, profit was up 6%. This was achieved primarily because our Perth factory is now producing most of the bottles we use. The forward planning in capital equipment has helped reduce costs and increase margins.

Our New South Wales operations continued to do well with an increase of 10% in revenue and 1% in profit.

Victoria operations turned into a loss mainly because of our having based a new national Business Development Manager there. Revenue grew by 6% but the additional expenses turned the operations into a small loss. It took a while for results to be achieved and sales are now coming in which should help boost revenue and profit herewith.

A new General Manager was appointed in January 2016 to our associate company in Queensland. He has turned operations around from a loss of $40k to a profit of $14k. We have sorted out problems with blowing our own bottles there. On top of that, a new distiller was acquired, financed by the majority shareholder, Saisan Co. Ltd. We expect to see a much-improved result this financial year from this two prong solution.

In August 2016, we did 2 placements raising A$1.1 million. New directors were appointed and several older directors retired. This has resulted in a more aggressive growth strategy with 3 acquisitions/investment made over a 5-month period.

The Company undertook a diversification programme to acquire one of our plastics supplier who has been in the business for 41 years. This vertical integration would allow Refresh to have 2 revenue streams to expand and grow. Profit from the acquisition of Ampi Plastics has helped us deliver a better-consolidated result. The full impact would only be realised this financial year.

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2017

Revenue Cost of Sales Gross Profit Other income Marketing Expenses Distribution Expenses Administrative Expenses Occupancy Expenses Other Expenses Share of Net Profits/ (Loss) of associates Results from operating activities Finance income Finance costs Profit before income tax Income tax expense Profit for the year from continuing operations Profit for the year from discontinued operations Profit for the year Other comprehensive income Fair value gains on available-for-sale financial assets Total comprehensive income for the period Basic earnings per share (cents per share)	Note	CONSOLIDATED 2017 $ 2016 $
	2a 2b 2c 2d	6,178,586 6,120,013 (2,899,343) (2,787,260)
		3,279,243 3,332,753 (7,079) (10,086) (583,304) (514,101) (904,754) (975,494) (1,336,741) (1,297,727) (470,386) (471,783) (6,000) (6,000) 14,045 (36,999)
		(14,976) 20,563 36,896 24,812 (20,988) (8,657)
		932 36,718 - -
		932 36,718 - -
		932 36,718 75,000 -
		75,932 36,718
		0.00 0.03

The accompanying notes form part of the Statement of Comprehensive Income

REFRESH GROUP LIMITED and its controlled entities

PRELIMINARY FINAL REPORT CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017

ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories Total Current Assets Non-Current Assets Other receivables Property, plant and equipment Intangible assets Investment in Associate Other financial assets Total Non-current assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Financial liabilities Short-term provisions and accruals Total Current Liabilities Non-current Liabilities Financial liabilities Long-term provisions Total Non-current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Financial Assets Revaluation Reserve 2014 Profit Reserve Accumulated losses TOTAL EQUITY	Notes	CONSOLIDATED 2017 2016 $ $
	3 4 3 7 8 5	981,698 963,086 881,300 628,958 1,424,988 847,489
		3,287,986 2,439,533
		292,851 346,521 2,617,212 1,866,057 861,042 313,042 491,720 477,676 375,000 -
		4,637,825 3,003,296
		7,925,811 5,442,829
		544,436 400,654 258,544 55,871 450,168 320,162
		1,253,148 776,687
		942,199 200,748 126,105 64,264
		1,068,304 265,012
		2,321,452 1,041,699
		5,604,359 4,401,130
		10,495,698 9,368,401 191,712 191,712 75,000 - 356,409 356,409 (5,514,460) (5,515,392)
		5,604,359 4,401,130

The accompanying notes form part of the Statement of Financial Position

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2017

Balance at 1 July 2015 Equity fund raising costs Issue of share capital Total Profit/(Loss) for the year Balance at 30 June 2016 Balance at 1 July 2016 Equity fund raising costs Issue of share capital Fair value gain on available- for sale financial assets Total Profit/(Loss) for the year Balance at 30 June 2017	Issued Capital Other Reserves Financial Assets Revaluation Reserve 2014 Profit Reserve Accumulated Losses Total 9,368,401 191,712 - 468,205 (5,552,110) 4,476,208 - - - - - - - - - (111,796) - (111,796)
	9,368,401 191,712 - 356,409 (5,552,110) 4,364,412 - - - - 36,718 36,718
	9,368,401 191,712 - 356,409 (5,515,392) 4,401,130
	9,368,401 191,712 - 356,409 (5,515,392) 4,401,130 (40,683) - - - - (40,683) 1,167,980 - - - - 1,167,980 - - 75,000 - - 75,000
	10,495,698 191,712 75,000 356,409 (5,515,392) 5,603,427 - - - - 932 932
	10,495,698 191,712 75,000 356,409 (5,514,460) 5,604,359

The accompanying notes form part of the Statements of Changes in Equity

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Borrowing costs Interest received Net cash flows provided by operating activities Cash flows from investing activities Proceeds from sale of property, plant and equipment, and investment Investment in Eve Investment Acquisition of Aquazuro Australia Acquisition of AMPI Plastics Purchase of property, plant and equipment Net cash flows provided by/(used in) investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from borrowings Share Issue expenses Dividends Paid Repayments of borrowings Net cash flows provided by/(used in) financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	CONSOLIDATED 2017 2016 $ $
	5,969,350 6,271,437 (5,769,431) (6,077,679) (20,988) (8,657) 36,896 24,812
	215,827 209,913
	7,322 21,712 (300,000) - (200,000) (6,364) (1,484,791) (291,172) (189,446)
	(2,268,641) (174,098)
	1,167,980 - 1,000,000 298,000 (40,683) - - (111,796) (55,871) (41,381)
	2,071,426 144,823
	18,612 180,638 963,086 782,448
	981,698 963,086

The accompanying notes form part of the Statement of Cash Flows

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2017

1. SEGMENT INFORMATION

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

In identifying its operating segments, management follows the geographical location of the Group’s bottled water business but show its new acquisition of Refresh Plastics separately. Corporate costs are included under “Other”. Segment information can be analysed as follows for the reporting period under review.

30 June 2017 Revenue from external customers Other Income Other Expense Interest Expense Depreciation Expense Segment operating profit/(loss) Total assets Total liabilities 30 June 2016 Revenue from external customers Other Income Other Expense Interest Expense Depreciation Expense Segment operating profit/(loss) Total assets Total liabilities

WA NSW VIC Plastics OTHER (Corporate) TOTAL

3,238,212 1,668,085 898,786 373,503 - 6,178,586 (7,079) - - - - (7,079) - - 6,000 - - 6,000 10,474 - - 10,514 - 20,988 172,642 53,444 48,096 5,436 - 279,618 272,6691 169,712 (14,743) 60,835 (487,541) 932 3,353,274 872,852 541,149 2,064,207 1,094,329 7,925,811 756,040 4,015 837 362,646 1,197,914 2,321,452 3,761,565 1,514,463 843,985 - - 6,120,013 (5,727) 2,021 (6,380) - - (10,086) - - 6,000 - - 6,000 (8,657) - - - - (8,657) 180,240 59,859 45,386 - - 285,485 206,4311 168,318 137,413 - (475,444) 36,718 3,545,041 717,419 466,252 - 714,117 5,442,829 830,788 4,908 1,864 - 204,139 1,041,699

[1 ] Include Profit/(Loss) from Associate

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2017

2. REVENUE AND EXPENSES

a. Revenue Sale of bottled water, accessories and beverages; plastics blow moulding b. Cost of Sales Inventory expensed Inventory write-off c. Finance Income Interest received d. Finance Costs Bank loans and other borrowings Finance charges payable under finance leases and hire purchase contracts e. Employee Benefits Expense Wages and salaries Workers compensation costs Superannuation costs Provisions for annual and long service leave Other employee benefits expense f. Depreciation & Amortisation Depreciation expense Amortisation	CONSOLIDATED 2017 2016 $ $
	6,178,586 6,120,013
	6,178,586 6,120,013
	2,833,549 2,686,658 65,794 100,602
	2,899,343 2,787,260
	36,896 24,812
	36,896 24,812
	- - 20,988 8,657
	20,988 8,657
	2,066,461 1,911,473 37,348 42,884 219,615 209,325 48,225 278 62,005 49,555
	2,433,654 2,213,515
	279,618 285,485 6,000 6,000
	285,618 291,485

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2017

3. TRADE AND OTHER RECEIVABLES

				CONSOLIDATED	CONSOLIDATED
				2017	2016
Current				$	$
Trade receivables				804,036	447,068
Provision for impairment of receivables				(7,245)	(2,204)
				796,791	444,864
Other receivables				73,928	39,429
Prepayments				10,581	144,665
				881,300	628,958
Non-Current
Loan to Associate				292,851	346,521
				292,851	346,521
		Past due			Within
	Gross	and	Past due but not impaired		initial trade
	Amount	impaired	(days overdue)		terms
			31-60	61-90 >90
Consolidated
2017
Trade receivables	804,036	7,245	262,150	7,645 18,560	508,436
Other receivables	73,928	-	-	- -	73,928
	877,964	7,245	262,150	7,645 18,560	582,364
2016
Trade receivables	447,068	2,204	161,209	8,591 15,104	259,960
Other receivables	39,429	-	-	- -	39,429
	486,497	2,204	161,209	8,591 15,104	299,389

4. INVENTORIES

Raw materials (at cost) Finished goods (at cost) Total inventories at cost Provision for slow moving inventories	CONSOLIDATED 2017 2016 $ $
	756,108 473,895 710,172 415,674
	1,466,280 889,569 (41,292) (42,080)
	1,424,988 847,489

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2017

5. TRADE AND OTHER PAYABLES

Current Trade payables Other payables	CONSOLIDATED 2017 2016 $ $
	327,837 246,762 216,599 153,892
	544,436 400,654

Trade payables are non-interest bearing and are normally settled on 60-day terms.

6. ACQUISITIONS

1 April 2017 – Acquired Aquazuro Australia, a Sydney-based bottled water company, for $200,000 cash. 15 May 2017 – Acquired Ampi Plastics, a Melbourne-based plastics blow moulder, for $1,484,791 cash.

7. ASSOCIATE

7. ASSOCIATE
	Place of	Proportion of Ordinary
	Business/	Share Interests /	Measurement
Name of Associate	Incorporation	Participating Share	Method	Carrying	Amount
		2017 2016		2017	2016
		% %		$	$
Refresh Waters	Queensland,	49 49	Equity	491,720	477,676
Queensland Pty Ltd	Australia

8. INVESTMENT

29 Dec 2016 – Acquired 37,500,000 shares in Eve Investments Ltd (ASX: EVE) for $300,000 cash. Eve is a major shareholder of Omniblend Innovation Pty Ltd which creates unique and specialised products that can be used by people with chronic and lifestyle diseases.

Eve is currently in the process of acquiring Jenbrook Pty Ltd; a certified organic tea tree farm looking into producing Meluka honey and medicinal cannabis honey.

As at 30 June 2017, the investment valued at $375,000. This resulted in a fair value gain of $75,000 recognised in other comprehensive income.

9. SIGNIFICANT EVENTS

Nil

10. EVENTS AFTER THE BALANCE SHEET DATE

Nil

11. CONTINGENT ASSETS & LIABILITIES

There is no contingent liability between 30 June 2017 and the date of this report.

REFRESH GROUP LIMITED and its controlled entities

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PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2017

12. BASIS FOR PREPARATION

This preliminary final report has been prepared in accordance with ASX listing rule 4.3A and the disclosure requirements of ASX Appendix 4E. The accounting policies adopted in the preparation of the preliminary final report are consistent with those adopted in the preparation of the annual financial report.

13. UNAUDITED APPENDIX 4E

This report is in the process of being audited.

REFRESH GROUP LIMITED and its controlled entities

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