ENECO REFRESH LTD — Annual Report 2020

Aug 30, 2020

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Eneco Refresh Limited ( ACN 079 681 244) 17 Denninup Way, Malaga WA 6090 Tel: (08) 9248 3006 Fax: (08) 9248 7233 Email: info@eneco-refresh.com.au Website: www.eneco-refresh.com.au

Appendix 4E

Preliminary Final Report period ending 30 June 2020

Results for announcement to the market

Financial Results			June 2020	June 2019
Revenue from ordinary activities	Up	24%	11,284,764	9,086,063
Comprehensive (Loss) from ordinary activities after tax attributable to members	Down	6%	(1,044,466)	(1,108,409)

Dividends	2020 Final Dividend	2019 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 2020	June 2019
Net tangible asset backing per ordinary security	$0.04	$0.04

ENECO REFRESH LIMITED and its controlled entities 1

COMMENTARY

Eneco Refresh Ltd (Group) is pleased to announce that it has achieved a 24% increase in revenue and trimmed its loss by 6% compared to the previous financial year. The effect of COVID-19 lockdowns have been felt across the country and have impacted on our sales. However, the Group has done well despite being in the midst of the pandemic. The Federal and State government packages have helped in reducing losses.

Refresh Waters

60% of revenue for Refresh Waters comes from the delivery of bulk water to homes and businesses. Unfortunately, many businesses have been closed or started working from home arrangements in March 2020. This has had a significant impact on our business delivery.

Despite this, all Cash Generating Units have had revenue increases except for New South Wales (NSW) which had a negative revenue variance because of a substantial drop in our custom labelled bottled water sales. Fortunately, profit only dropped by 1%, and NSW remains our most profitable branch.

With the pick up in mining activities, Western Australia (WA) had a 4% revenue growth and achieved a good profitability variance of 842% compared to the previous year.

Victoria (VIC) had a marginal revenue increase reflecting a reduced profit. Sales from our acquisition of JB’s Purified Drinking Water only started to flow through in June 2020 and so have not yet been reflected in the accounts,

Queensland (QLD) saw an increase in revenue although numbers on the table below have a high variance because the previous period was for half a year; our buyback of the operation having only happened on 2 January 2019. Going forward, it will continue to contribute profit to the Group profitability. Unfortunately, we had to impair Goodwill in Queensland, adding $244k to our loss.

NT Beverages’ business in Darwin was acquired on 3 April 2019. This is the biggest factory in Refresh Waters and we continue to build up sales. However, losses from its first full year of operation have weighed heavily on our financials, being more than half of our total loss. NT Beverages lost $23 million over its 4 years of operations before going into receivership and being acquired by Refresh Waters. We have already seen significantly reduced losses since acquisition. We are confident that we will steer it towards profitability.

Refresh Plastics

Refresh Plastics had a good 27% increase in sales, helping to halve its loss. Sales of our bottles, containers, and jerrycans remain strong as more sanitisers and disinfectants are being made locally. The lockdowns have resulted in parents finding more ways to keep their children occupied. Demand for our Ampi activity toys continue to be strong with revenue more than double compared to the same period last year.

Corporate

Corporate cost has reduced substantially, the previous year being higher because of expenses when Eneco took a 51% stake in the Company.

A breakdown by Cash Generating Units is presented below.

ENECO REFRESH LIMITED and its controlled entities 2

COMMENTARY (continued)

Revenue WA NSW VIC QLD1 Refresh Waters Refresh Plastics NT2 Total Profit/(Loss) WA NSW VIC QLD1 Refresh Waters Refresh Plastics NT2 Goodwill Impairment Corporate Expenses Total	FY 2020 FY2019 $'000 $'000 2,981 2,879 1,875 2,042 1,263 1,234 1,836 889 7,955 7,044 2,470 1,946 10,425 8,990 860 96 11,285 9,086 179 19 203 206 68 143 57 -1 507 367 -266 -462 241 -95 -567 51 -326 -44 -244 -344 -474 -720 -1,044 -1,108	Variance 4% -8% 2% 107% 13% 27% 16% 796% 24% 842% -1% -52% 5800% 38% 42% -354% -1212% 641% -29% 34%

1 consolidated only from 2 Jan 2019

2 acquired business on 3 Apr 2019

ENECO REFRESH LIMITED and its controlled entities 3

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

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

Note Revenue 2a Cost of Sales 2b Gross Profit Other Income Marketing Expenses Distribution Expenses Administrative Expenses Occupancy Expenses Share of Net Profit of associate Loss on remeasuring previously held investment Impairment of Goodwill Results from operating activities Finance Income 2c Finance Costs 2d (Loss) before income tax Income tax expense Profit/ (Loss) for the year from continuing operations (Loss) after income tax Other comprehensive income Fair value (loss) on financial assets at fair value through OCI Total comprehensive loss for the period Basic earnings/(loss) per share (cents per share)	Note	CONSOLIDATED 2020 $ 2019 $
		11,284,764 9,086,063 (6,960,122) (4,943,005)
		4,324,642 4,143,058 366,971 19,622 (715,347) (723,213) (1,637,376) (1,402,907) (2,138,033) (1,836,108) (1,042,005) (826,846) - 15,808 - (344,356) (243,549) -
		(1,084,697) (954,942) 37,657 18,265 (34,480) (60,570)
		(1,081,520) (997,247) - -
		(1,081,520) (997,247)
		(1,081,520) (997,247) 37,054 (111,162)
		(1,044,466) (1,108,409)
		(0.40) (0.56)

The accompanying notes form part of the Statement of Comprehensive Income

ENECO REFRESH LIMITED and its controlled entities 4

PRELIMINARY FINAL REPORT CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020

ASSETS Current Assets Cash and cash equivalents Trade and other receivables Prepayments Inventories Current tax asset Total Current Assets Non-Current Assets Property, plant and equipment Intangible assets Financial assets at fair value through OCI Investment in associate Right of use asset Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Financial liabilities Short-term provisions and accruals Lease liabilities Total Current Liabilities Non-current Liabilities Financial liabilities Long-term provisions Lease liabilities Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves 2014 profit reserve Financial asset revaluation reserve Accumulated losses TOTAL EQUITY	Notes	CONSOLIDATED 2020 2019 $ $
	3 4 7 5	1,426,733 2,264,877 1,167,604 988,632 106,557 89,755 2,067,551 2,107,655 34,361 34,903
		4,802,806 5,485,822
		6,768,068 7,023,878 562,171 704,798 222,324 185,270 50,000 - 1,831,383 -
		9,433,946 7,913,946
		14,236,752 13,399,768
		734,418 827,582 232,906 261,355 964,918 660,033 313,300 -
		2,245,542 1,748,970
		200,000 419,490 63,017 48,242 1,589,593 -
		1,852,610 467,732
		4,098,152 2,216,702
		10,138,600 11,183,066
		18,320,875 18,320,875 191,712 191,712 356,409 356,409 (74,108) (111,162) (8,656,288) (7,574,768)
		10,138,600 11,183,066

The accompanying notes form part of the Statement of Financial Position

ENECO REFRESH LIMITED and its controlled entities 5

PRELIMINARY FINAL REPORT CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2020

Balance at 1 July 2018 Issue of share capital Equity fund raising costs Fair value gain/(loss) on available-for sale financial assets Total Profit/(Loss) for the year Balance at 30 June 2019 Balance at 1 July 2019 Issue of share capital Equity fund raising costs Fair value gain/(loss) on available-for sale financial assets Total Profit/(Loss) for the year Balance at 30 June 2020	Issued Capital Other Reserves 10,495,698 191,712 8,234,165 - (408,988) - - -	Financial Assets Revaluation Reserve - - - (111,162)	2014 Profit Reserve 356,409 - - -	Accumulated Losses Total (6,577,521) 4,466,298 - 8,234,165 - (408,988) - (111,162)
	18,320,875 191,712 - -	(111,162) -	356,409 -	(6,577,521) 12,180,313 (997,247) (997,247)
	18,320,875 191,712	(111,162)	356,409	(7,574,768) 11,183,066
	18,320,875 191,712 - - - - - -	(111,162) - - 37,054	356,409 - - -	(7,574,768) 11,183,066 - - - - - 37,054 (7,574,768) 11,220,120 (1,081,520) (1,081,520) (8,656,288) 10,138,600
	18,320,875 191,712 - -	(74,108) -	356,409 -
	18,320,875 191,712	(74,108)	356,409

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

ENECO REFRESH LIMITED and its controlled entities 6

PRELIMINARY FINAL REPORT CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Borrowing costs Interest received Government grants and tax incentives Net cash flows provided by operating activities Cash flows from investing activities Proceeds from sale of property, plant and equipment, and investment Acquisition of a subsidiary, net of cash acquired Purchase of property, plant and equipment Investment Intellectual property 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 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 2020 2019 $ $
	11,585,583 9,566,541 (12,215,499) (10,548,494) (34,480) (60,570) 37,657 18,265 344,883 -
	(281,856) (1,024,258)
	70,642 41,683 - (401,827) (228,612) (4,287,992) (50,000) - (100,380) -
	(308,350) (4,648,136)
	- 8,234,165 - 106,309 - (408,988) (247,938) (372,343)
	(247,938) 7,559,143
	(838,144) 1,886,749 2,264,877 378,128
	1,426,733 2,264,877

The accompanying notes form part of the Statement of Cash Flows

ENECO REFRESH LIMITED and its controlled entities 7

PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2020

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.

							OTHER
	WA	**NSW **	VIC	NT	QLD	Plastics	(Corporate)	TOTAL
30 June 2020
Revenue from external customers	2,980,956	1,874,603	1,263,191	860,582	1,835,660	2,469,772	-	11,284,764
EBITDA	343,596	251,972	121,981	(553,651)	(98,866)	(198,867)	(518,250)	(652,085)
Depreciation Expense	(163,635)	(48,654)	(53,701)	(13,521)	(87,929)	(68,351)	-	(435,791)
Finance Income	701	-	-	-	421	859	35,676	37,657
Interest Expense	(2,100)	-	-	-	-	-	(32,380)	(34,480)
Segment operating
profit/(loss)	178,562	203,319	68,280	(567,172)	(186,374)	(266,359)	(514,954)	(1,084,698)
Material items include:
Impairment of goodwill	-	-	-	-	(243,549)	-	-	(243,549)
Total assets	2,684,144	843,021	595,001	4,418,801	1,137,666	3,560,754	997,366	14,236,752
Total liabilities	947,455	119,076	710	-	96,866	2,273,974	660,071	4,098,152
30 June 2019
Revenue from external
customers	2,878,494	2,041,804	1,234,217	96,693	889,098	1,945,756	-	9,086,063
EBITDA	167,153	254,446	193,094	52,691	36,254	(399,129)	(896,039)	(591,530)
Depreciation Expense	(162,820)	(48,008)	(49,971)	(2,011)	(37,795)	(62,807)	-	(363,412)
Finance Income	8,845	-	-	-	19	108	9,293	18,265
Interest Expense	(9,814)	-	-	-	114	-	(50,870)	(60,570)
Segment operating profit/(loss)	3,3641	206,438	143,123	50,680	(1,408)	(461,828)	(937,616)	(997,247)
Material items include:
Loss on remeasuring
previously held investment	-	-	-	-	-	-	(344,356)	(344,356)
Total assets	2,366,405	764,852	497,692	4,328,607	1,400,285	1,839,614	2,167,409	13,364,865
Total liabilities	905,963	3,118	1,029	-	85,113	393,824	792,752	2,181,799
1Includes Profit from Associate

ENECO REFRESH LIMITED and its controlled entities 8

PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2020

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/(write-back) c. Finance Income Interest received d. Finance Costs 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	CONSOLIDATED 2020 2019 $ $
	11,284,764 9,086,063
	11,284,764 9,086,063
	6,994,137 5,051,686 (34,015) (108,681)
	6,960,122 4,943,005
	37,657 18,265
	37,657 18,265
	34,480 60,570
	34,480 60,570
	2,687,188 2,486,525 94,055 78,547 391,646 302,604 82,180 3,631 242,451 -
	3,497,520 2,871,307
	435,791 363,412
	435,791 363,412

ENECO REFRESH LIMITED and its controlled entities 9

PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2020

3. TRADE AND OTHER RECEIVABLES

TRADE AND OTHER RECEIVABLES
Current Trade receivables Provision for impairment of receivables Other receivables	CONSOLIDATED 2020 2019 $ $
	1,039,089 876,929 (23,409) (15,378)
	1,015,680 861,551 151,924 127,081
	1,167,604 988,632

Consolidated 2020 Trade receivables Other receivables 2019 Trade receivables Other receivables	Gross Amount Past due and impaired Past due but not impaired (days overdue) Within initial trade terms 31-60 61-90 >90
	1,039,089 23,409 271,187 77,226 - 667,267 151,924 - - - - 151,924
	1,191,013 23,409 271,187 77,226 - 819,191
	876,929 15,378 280,509 23,581 - 557,461 127,081 - - - - 127,081
	1,004,010 15,378 280,509 23,581 - 684,542

4. INVENTORIES

Raw materials (at cost) Finished goods (at cost) Total inventories at cost Provision for slow moving inventories	CONSOLIDATED 2020 2019 $ $
	1,290,715 1,379,155 817,587 774,052
	2,108,302 2,153,207 (40,751) (45,552)
	2,067,551 2,107,655

ENECO REFRESH LIMITED and its controlled entities 10

PRELIMINARY FINAL REPORT NOTES TO AND FORMING PART OF PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2020

5. TRADE AND OTHER PAYABLES

Current Trade payables Other payables	CONSOLIDATED 2020 2019 $ $
	520,970 573,918 213,448 253,664
	734,418 827,582

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

6. ACQUISITION

On 1 June 2020, Eneco Refresh bought the business of JB’s Purified Drinking Water in Melbourne. This is made up of: Goodwill $98,950 Stock $ 50 $99,000

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

On 30 June 2020, Refresh Eneco owns 37,053,974 shares in Eve Investments Ltd, which is listed on the Australian Securities Exchange (ASX:EVE). This is carried in its books at $0.006 per share, being the last traded price on ASX as at 30 June 2020.

8. SIGNIFICANT EVENTS

Nil

9. EVENTS AFTER THE BALANCE SHEET DATE

Nil

10. CONTINGENT ASSETS & LIABILITIES

There is no contingent liability between 30 June 2020 and the date of this report.

11. 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.

12. UNAUDITED APPENDIX 4E

This report is in the process of being audited.

ENECO REFRESH LIMITED and its controlled entities 11