ENECO REFRESH LTD — Annual Report 2018

Aug 30, 2018

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Appendix 4E

Preliminary Final Report period ending 30 June 2018

Results for announcement to the market

Financial Results			June 2018	June 2017
Revenue from ordinary activities	Up	42%	8,784,287	6,178,586
Comprehensive Profit / (Loss) from ordinary activities after tax attributable to members	Down	1599%	(1,138,061)	75,932

Dividends	2018 Final Dividend	2017 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 2018	June 2017
Net tangible asset backing per ordinary security	$0.03	$0.04

REFRESH GROUP LIMITED and its controlled entities

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COMMENTARY

The weaker Western Australia economy has affected us quite badly with revenue down again. This has resulted in a big drop in profit. With the outlook for mining improving, we should be able to achieve better sales this financial year.

Our New South Wales (NSW) operations continued to do well with an increase of 12% in revenue. Revenue growth was partly contributed by the acquisition of Aquazuro on 1 April 2017. Unfortunately, with higher operating costs, profit dipped by 4%. However, we are glad that despite the drop, NSW became our most profitable segment for the first time.

Victoria operations did very well with a 31% increase in revenue and a turnaround from loss to profit of $137k. This was mainly because of new sales secured by the former Business Development Manager who was not replaced when he left. Melbourne’s increase in profit was also contributed by the acquisition of Ampi Plastics. Bottles are now transferred at cost because they are deemed inter-company transfers. Unfortunately, it has conversely affected the bottom line of Refresh Plastics.

Overall we are glad that Refresh Waters managed to grow by 4% and its profit also increased by 4%.

The acquisition of Ampi Plastics on 15 May 2017 helped increase revenue by $2.7 million. Unfortunately, a loss of $590k was incurred resulting in total write-off of the goodwill of $409k. The loss arose from the following:  The die-setter left in July 2017 on short notice after working 24 years in Ampi. This didn’t give us enough time to look for a replacement. The replacement die-setter could not do a good job. A good die-setter has since been employed. The use of contractors during the changes resulted in higher expenses.

 Rising petroleum price has resulted in increased cost of plastic resins. We have increased prices to customers but this takes time for the increase to flow through.

 Ampi was run for 41 years as a family business. Refresh has since revamped their accounting system to comply with accounting standards.

 We have upgraded a number of machines in preparation of business growth, resulting in higher once-off expenditure.

 Because of inter-company transfers at cost, Refresh Plastics had to forego profits from sale to Refresh but this is reflected in the higher profit at Refresh Melbourne.

We are shifting our focus to produce more of our own products than contract manufacture of other companies’ products. Currently, a higher excise duty is levied on beer sold in containers smaller than 48 litres. The cut-off will be reduced to 8 litres. As we produce one-way Petainer PET kegs of only up to 30 litres, this will help us sell more kegs.

Revenue WA NSW VIC Refresh Waters Refresh Plastics Refresh Group Profit/Loss WA NSW VIC Refresh Waters Refresh Plastics Goodwill written off Corporate Operating Profit/(Loss)		FY 2018 $'000 3,007 1,873 1,180	FY 2017 Variance $'000 3,238 -7% 1,668 12% 899 31% 5,805 4% 374 628% 6,179 42% 273 -47% 170 -4% -15 1013% 428 4% 61 -1067% - - -488 -5% 1 -106400%	Variance -7% 12% 31% 4% 628% 42% -47%
		6,060 2,724
		8,784
		145 164 137
				-4%
		446 -590 -409 -510
		-1,063

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 2018

Note Revenue 2a Cost of Sales 2b Gross Profit Other income Marketing Expenses Distribution Expenses Administrative Expenses Occupancy Expenses Impairment of Goodwill Other expense Share of Net Profit of associate Results from operating activities Finance income 2c Finance costs 2d Profit/ (Loss) before income tax Income tax expense Profit/ (Loss) for the year from continuing operations Profit/ (Loss) for the year from discontinued operations Profit/ (Loss) for the year Other comprehensive income Fair value gain/ (loss) on available-for-sale financial assets Total comprehensive income/ (loss) for the period Basic earnings per share (cents per share)	Note	CONSOLIDATED 2018 $ 2017 $
		8,784,287 6,178,586 (5,363,787) (2,899,343)
		3,420,500 3,279,243 3,702 (7,079) (628,981) (583,304) (1,183,396) (904,754) (1,498,300) (1,336,741) (709,484) (470,386) (409,000) - (500) (6,000) 495 14,045
		(1,004,964) (14,976) 12,902 36,896 (70,999) (20,988)
		(1,063,061) 932 - -
		(1,063,061) 932 - -
		(1,063,061) 932 (75,000) 75,000
		(1,138,061) 75,932
		(0.80) 0.00

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 2018

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 2018 2017 $ $
	3 4 3 7 8 5	378,128 981,698 1,049,207 881,300 1,279,474 1,424,987
		2,706,809 3,287,985
		246,010 292,851 2,480,154 2,617,212 451,542 861,042 492,216 491,721 300,000 375,000
		3,969,922 4,637,826
		6,676,731 7,925,811
		684,598 544,436 261,355 258,544 468,838 450,168
		1,414,791 1,253,148
		680,844 942,199 114,798 126,105
		795,642 1,068,304
		2,210,433 2,321,452
		4,466,298 5,604,359
		10,495,698 10,495,698 191,712 191,712 - 75,000 356,409 356,409 (6,577,521) (5,514,460)
		4,466,298 5,604,359

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 2018

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 Balance at 1 July 2017 Equity fund raising costs Issue of share capital Fair value loss on available- for sale financial assets Total Profit/(Loss) for the year Balance at 30 June 2018	Issued Capital Other Reserves Financial Assets Revaluation Reserve 2014 Profit Reserve Accumulated Losses Total 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
	10,495,698 191,712 75,000 356,409 (5,514,460) 5,604,359 - - - - - - - - - - - - - - (75,000) - - (75,000)
	10,495,698 191,712 - 356,409 (5,514,460) 5,529,359 - - - - (1,063,061) (1,063,061)
	10,495,698 191,712 - 356,409 (6,577,521) 4,466,298

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 2018

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Borrowing costs Interest received Net cash flows provided by (used in) 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 2018 2017 $ $
	9,153,438 5,969,350 (9,237,184) (5,810,759) (70,999) (20,988) 7,006 36,896
	(147,739) 174,499
	8,773 5,454 - (300,000) - (200,000) - (1,484,791) (206,060) (247,976)
	(197,287) (2,227,313)
	- 1,167,980 - 1,000,000 - (40,683) - - (258,544) (55,871)
	(258,544) 2,071,426
	(603,570) 18,612 981,698 963,086
	378,128 981,698

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 2018

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 Refresh Plastics separately. Corporate costs are included under “Other”. Segment information can be analysed as follows for the reporting period under review.

30 June 2018 Revenue from external customers Other Income Impairment of Goodwill Other Expense Interest Expense Depreciation Expense Segment operating profit/(loss) Total assets Total liabilities 30 June 2017 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

3,006,708 1,873,162 1,179,822 2,724,595 - 8,784,287 (298) 4,000 - - - 3,702 - - - 409,000 - 409,000 - - 500 - - 500 8,168 - - 62,708 123 70,999 169,564 54,938 49,875 58,121 - 332,498 144,8661 164,304 137,087 (999,237) (510,081) (1,063,061) 3,205,003 821,654 514,366 1,673,527 462,181 6,676,731 799,900 3,484 95 382,744 1,024,210 2,210,433 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

[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 2018

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 2018 2017 $ $
	8,784,287 6,178,586
	8,784,287 6,178,586
	5,270,998 2,833,549 92,789 65,794
	5,363,787 2,899,343
	12,902 36,896
	12,902 36,896
	- - 70,999 20,988
	70,999 20,988
	2,756,224 2,066,461 61,428 37,348 302,411 219,615 6,685 48,225 55,176 62,005
	3,181,924 2,433,654
	332,498 279,618 500 6,000
	332,998 285,618

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 2018

3. TRADE AND OTHER RECEIVABLES

				CONSOLIDATED	CONSOLIDATED
				2018	2017
Current				$	$
Trade receivables				844,495	804,036
Provision for impairment of receivables				(10,625)	(7,245)
				833,870	796,791
Other receivables				53,710	73,928
Prepayments				161,627	10,581
				1,049,207	881,300
Non-Current
Loan to Associate				246,010	292,851
				246,010	292,851
		Past due			Within
	Gross	and	Past due but not impaired		initial trade
	Amount	impaired	(days overdue)		terms
			31-60	61-90 >90
Consolidated
2018
Trade receivables	844,495	10,625	343,052	44,673 5,968	440,177
Other receivables	53,710	-	-	- -	53,710
	898,205	10,625	343,052	44,673 5,968	493,887
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

4. INVENTORIES

Raw materials (at cost) Finished goods (at cost) Total inventories at cost Provision for slow moving inventories	CONSOLIDATED 2018 2017 $ $
	661,813 756,108 649,861 710,171
	1,311,674 1,466,279 (32,200) (41,292)
	1,279,474 1,424,987

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 2018

5. TRADE AND OTHER PAYABLES

Current Trade payables Other payables	CONSOLIDATED 2018 2017 $ $
	464,803 327,837 219,795 216,599
	684,598 544,436

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

6. ACQUISITIONS

Nil

7. ASSOCIATE

7. ASSOCIATE
	Place of	Proportion of Ordinary
	Business/	Share Interests /	Measurement
Name of Associate	Incorporation	Participating Share	Method	Carrying	Amount
		2018 2017		2018	2017
		% %		$	$
Refresh Waters	Queensland,	49 49	Equity	492,216	491,721
Queensland Pty Ltd	Australia

8. INVESTMENT

Refresh acquired 37,500,000 shares in Eve Investments Ltd (ASX:EVE) on 29 Dec 2016 for $300,000 cash. EVE invests in technology companies with a focus on the medical nutrition sector. The company’s investment strategy has a three-pronged approach:

1. To invest in businesses that are in the early growth phase with the aim to support their expansion programs.

2. To identify products that have unique medicinal properties and a global reach application.

3. Preference for natural organic products that have demonstrated medical benefits.

As at 30 June 2018, the investment was valued at $300,000. This resulted in a fair value loss of $75,000 recognised in other comprehensive income.

9. SIGNIFICANT EVENTS

Nil

10. EVENTS AFTER THE BALANCE SHEET DATE

Nil

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 2018

11. CONTINGENT ASSETS & LIABILITIES

There is no contingent liability between 30 June 2018 and the date of this report.

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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