ENERGY TECHNOLOGIES LIMITED — Annual Report 2017

Aug 29, 2017

Appendix 4E Preliminary final report

APPENDIX 4E

Preliminary final report

1. Company Details

Name of entity

ENERGY TECHNOLOGIES LIMITED

ABN or equivalent company reference Financial year ended (‘current period’) 38 002679469 30 June 2017 2. Results for announcement to the market	ABN or equivalent company reference Financial year ended (‘current period’) 38 002679469 30 June 2017 2. Results for announcement to the market	Financial year ended (‘previous period’) 30 June2016 $A'000	Financial year ended (‘previous period’) 30 June2016 $A'000
2.1 Revenues from operating activities 2.2 Loss from operating activities after tax attributable to members 2.3 Loss for the period attributable to members	Up 27% to 14,297 Down 43.3% to (2,942) Down 43.3% to (2,942)
2.4 Dividends	Amountper security		Franked amountper security
Final dividend	NIL		NIL
Interimdividend	NIL		NIL
2.5 Record date for determining entitlements to the dividend	Not applicable
2.6 Brief explanation of any of the figures in 2.1 to 2.4 necessary to enable the figures to be understood: Energy Technologies Limited (EGY) has reported a consolidated loss for the year after tax and minority interests of $2,941,203 (FY2016 loss of $2,052,216). The FY2017 results include a loss after tax of $1,484,904 (FY2016 loss of $1,035,248) reported by subsidiary Bambach Wires and Cables Pty Ltd (BWC). There will be further discussion of the result below.

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3. Details of Individual and Total Dividends

		Date dividend is payable	Amount per security	Franked amount per security at 30% tax	Amount per security of foreign source dividend
	Final dividend: Current year Previous year		-¢ -¢	-¢ -¢	-¢ -¢
	Interim dividend: Current year		-¢ -¢	-¢ -¢	-¢ -¢
	Previous year

Total dividend per security (interim plus final)

Ordinary securities Preference securities	Current year	Previous year
	-¢ -¢	-¢ -¢

4. Dividend reinvestment plan

Details of any dividend reinvestment plans in operation:

The last date for the receipt of an election notice for participation in any dividend or distribution reinvestment plan:

5. Statement of retained earnings

	Accumulated losses at the beginning of the financial year Net profit/(loss) attributable to members Accumulated losses at the end of the financialyear	Current period - $A'000	Previous corresponding period-$A'000
		(8,695) (2,942) (11,637)	(6,643) (2,052) (8,695)

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6.1 Net Tangible Asset backing	Current period		Previous corresponding period
Net tangible asset backing per ordinary security	(1.74c)		(0.57c)
6.2 Earnings per security (EPS)	Current period	Previous corresponding period
Basic EPS (cents) Net profit / (loss) after tax for the period attributable to members ($’000s) Weighted average number of ordinary securities	(0.90c)	(0.74c)
	(2,942)	(2,052)
	326,507,732	276,350,678

7. Details of entities over which control has been gained or lost during the period

7.1 A Name of entity No entities were acquired during the period 7.2 A Date from which control was gained 7.3 A Where material to an understanding of the report – the contribution of such entities to the reporting entity’s profit from operating activities during the period and the profit or loss of such entities during the whole of the previous corresponding period 7.1 B Name of entities

No entities were disposed of during the period

7.2 B Date from which control was gained / lost 7.3 B Where material to an understanding of the report – the contribution of such entities to the reporting entity’s profit from operating activities during the period and the profit or loss of such entities during the whole of the previous corresponding period

8. Details of Associates and Joint Ventures:

Name of entity	Percentage holding 30 Jun 17	Percentage holding 30 Jun 16
Dulhunty Poles Pty Ltd	8.41%	36.82%

8.1 Where material to an understanding of the report - aggregate share of profits (losses) of these entities, details of contributions to net profit for each of these entities, and with comparative figures for each of these disclosures for the previous corresponding period:

EGY has fully impaired its investment in Dulhunty Poles Pty Ltd (DPPL).

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9 - Comments by directors

EGY has reported an increased consolidated loss after tax and minorities for FY2017 of $2,941,203 (FY2016 loss after tax and minorities $2,052,216). Wholly owned subsidiary Bambach Wires and Cables Pty Ltd (BWC) reported a loss after tax of $1,484,904 (FY2016 loss $1,035,248).

BWC reported a loss after tax of $1,205,344 for the Half Year to 31 December 2016 and has had significantly improved trading in the second half of FY2017. BWC revenue for FY2017 was 27% higher than reported for FY2016 and invoiced sales for the second half of the financial year were up month on month by an average 39% improvement over the comparable period last year. New orders for 2HFY2017 were 31% up on the previous period. Margins on purchased product were, however, impacted by currency movements and price increases, although overall margins held firm when compared to FY2016.

Included in FY2017 revenue is a further $1,189,865 R&D Grant (FY2016 R&D Grant revenue $880,480) which partially recovered the continuing significant research and development expenditure undertaken by BWC in new product development, cable projects and testing.

BWC results were also impacted by transitional costs in relation to opening a new branch and strengthening sales support, as well as costs in relation to the updating of factory equipment under the business plan. Margin benefits as a result of commissioning of new equipment are expected to be significantly reflected in FY2018 results.

BWC’s entry into the infrastructure and rail market sectors is beginning to show results and overall trading conditions are expected to continue to improve as major rail, road, and defense projects come on stream. The current order book is strong and the company has many live bids on which it is awaiting the outcome.

As reported in the December 2016 Half Year report, the company continues to be supported by its investors and over the period has raised required funds to support the business. Funds totaling $6,816,000 have been raised through the issue of secured Debenture Notes and the NAB facility previously in place has been retired.

Overall the business is becoming a far more sophisticated and capable manufacturer than it was one or two years ago. New warehouses and sales staff in South Australia and new sales staff appointed in QLD, Victoria and NSW over the past 6 months are providing a strong sales presence. This is expected to continue sales growth as the new BWC products come to market and the company can offer reduced lead times and price competitive cables across a broad spectrum due to its factory equipment upgrade.

The loss position of the company continues to be of great concern but the board and management are convinced that the BWC business plan in place is the correct plan to bring the company to a situation of sustained profitability. In summary, the plan includes an expansion of the product offering, a focus on infrastructure and defense markets and the installation of new more efficient production equipment.

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1. This report is based on accounts to which one of the following applies.

 The accounts have been  The accounts have been audited. subject to review.  The accounts are in the  The accounts have not yet process of being audited been audited or reviewed. or subject to review.

1. Description of likely dispute or qualification if the accounts have not yet been audited or subject to review or are in the process of being audited or subjected to review:

2. Description of dispute or qualification if the accounts have been audited or subject to review:

Sign here:

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Print name: Alfred Chown Managing Director

Date: 30 August 2017

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ENERGY TECHNOLOGIES LIMITED

CONSOLIDATED INCOME STATEMENT

For the year ended 30 June 2017

Notes CONTINUING OPERATIONS Sale of goods 2a Cost of sales Gross profit Rendering of services 2a Other revenue 2b Marketing expenses Occupancy expenses Administrative expenses Borrowing costs 3 Depreciation and amortisation expenses 3 Other expenses LOSS FOR THE YEAR BEFORE INCOME TAX Income tax benefit (expense) LOSS FOR THE YEAR AFTER INCOME TAX (PROFIT) LOSS ATTRIBUTABLE TO MINORITY INTEREST LOSS ATTRIBUTABLE TO MEMBERS OF ENERGY TECHNOLOGIES LIMITED	CONSOLIDATED 2017 2016 $’000 $’000 12,913 10,198 (10,777) (7,878) 2,136 2,320 131 45 1,253 992 (49) (44) (582) (524) (4,226) (3,637) (1,116) (742) (284) (245) (241) (132) (2,978) (1,967) 21 (58) (2,957) (2,025) 15 (27) (2,942) (2,052)	CONSOLIDATED 2017 2016 $’000 $’000 12,913 10,198 (10,777) (7,878) 2,136 2,320 131 45 1,253 992 (49) (44) (582) (524) (4,226) (3,637) (1,116) (742) (284) (245) (241) (132) (2,978) (1,967) 21 (58) (2,957) (2,025) 15 (27) (2,942) (2,052)
		2,320 45 992 (44) (524) (3,637) (742) (245) (132)
		(1,967) (58)
		(2,025) (27)
		(2,052)

The accompanying notes form part of these financial statements.

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ENERGY TECHNOLOGIES LIMITED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2017

LOSS FOR THE YEAR OTHER COMPREHENSIVE INCOME FOR THE PERIOD AFTER TAX: (a) Items that will be reclassified subsequently to profit or loss when specific conditions are met: Movement in foreign exchange relating to translation of controlled foreign entities Exchange difference on foreign exchange relating to minorities TOTAL OTHER COMPREHENSIVE INCOME (LOSS) TOTAL COMPREHENSIVE LOSS FOR THE PERIOD TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO: Members of the parent entity Minority equity interest Earnings per Share From continuing operations: Basic loss per ordinary share (cents) Diluted loss per ordinary share (cents) The accompanying notes form part of these financial statements.	CONSOLIDATED 2017 2016 $’000 $’000 (2,957) (2,025) 1 (1) 1 (1) 2 (2) (2,955) (2,027) (2,941) (2,053) (14) 26 (2,955) (2,027) (0.90) (0.74) (0.90) (0.74)	CONSOLIDATED 2017 2016 $’000 $’000 (2,957) (2,025) 1 (1) 1 (1) 2 (2) (2,955) (2,027) (2,941) (2,053) (14) 26 (2,955) (2,027) (0.90) (0.74) (0.90) (0.74)
		(2)
		(2,027)
		(2,053) 26
		(2,027)
		(0.74) (0.74)

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ENERGY TECHNOLOGIES LIMITED

CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2017

Notes CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangibles Deferred tax assets Other receivables TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Financial liabilities Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Financial liabilities Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET LIABILITIES EQUITY Issued capital 5 Reserves Accumulated losses Parent interests Minority interests TOTAL DEFICIENCY	CONSOLIDATED 2017 2016 $’000 $’000 699 11 3,957 3,342 4,657 3,609 107 146 9,420 7,108 3,018 2,049 1,727 842 187 166 74 45 5,006 3,102 14,426 10,210 5,062 3,838 8,045 2,587 676 577 13,783 7,002 4,507 4,128 106 95 4,613 4,223 18,396 11,225 (3,970) (1,015) 9,279 9,279 (1,050) (1,051) (11,637) (8,695) (3,408) (467) (562) (548) (3,970) (1,015)	CONSOLIDATED 2017 2016 $’000 $’000 699 11 3,957 3,342 4,657 3,609 107 146 9,420 7,108 3,018 2,049 1,727 842 187 166 74 45 5,006 3,102 14,426 10,210 5,062 3,838 8,045 2,587 676 577 13,783 7,002 4,507 4,128 106 95 4,613 4,223 18,396 11,225 (3,970) (1,015) 9,279 9,279 (1,050) (1,051) (11,637) (8,695) (3,408) (467) (562) (548) (3,970) (1,015)
		7,108
		2,049 842 166 45
		3,102
		10,210
		3,838 2,587 577
		7,002
		4,128 95
		4,223
		11,225
		(1,015)
		9,279 (1,051) (8,695)
		(467) (548)
		(1,015)

The accompanying notes form part of these financial statements.

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ENERGY TECHNOLOGIES LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY As at 30 June 2017

Balance at 1 July 2015 Comprehensive income Loss for the year Other comprehensive loss for the year Total comprehensive loss for the year Transactions with owners, in their capacity as owners, and other transfers Equity contributions Total transaction with owners, in their capacity as owners, and other transfers Balance at 30 June 2016 Comprehensive income Loss for the year Other comprehensive loss for the year Total comprehensive loss for the year Transactions with owners, in their capacity as owners, and other transfers Equity contributions Total transaction with owners, in their capacity as owners, and other transfers Balance at 30 June 2017	Issued Reserve Accumulated Minority Total Capital Losses Interest $’000 $’000 $’000 $’000 $’000 8,374 (1,050) (6,643) (574) 107 - - (2,052) 27 (2,025) - (1) - (1) (2)
	- (1) (2,052) 26 (2,027)
	905 - - - 905 - 9,279 (1,051) (8,695) (548) (1,015)
	- - (2,942) (15) (2,957) - 1 - 1 2
	- 1 (2,942) (14) (2,955)
	- - - - -
	9,279 (1,050) (11,637) (562) (3,970)

The accompanying notes form part of these financial statements.

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ENERGY TECHNOLOGIES LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2017

Notes CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Borrowing costs NET CASH (OUTFLOWS) FROM OPERATING ACTIVITIES 4 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment Purchases of intangible development assets NET CASH FLOWS (USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds of share issue Proceeds of issue of Debenture loan Proceeds from other borrowings Repayment of borrowings Proceeds of Loans from directors NET CASH INFLOWS FROM FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH HELD Add: Opening cash brought forward Effect of exchange rate fluctuations on the balances of cash held in foreign currencies CLOSING CASH AT THE END OF THE YEAR	CONSOLIDATED 2017 2016 $’000 $’000 13,725 10,609 (15,609) (11,551) - 194 (1,368) (695) (3,252) (1,443) (1,220) (256) (929) (565) (2,149) (821) - 905 6,816 - 1,243 771 (1,970) (80) - 580 6,089 2,176 688 (88) 11 99 - - 699 11	CONSOLIDATED 2017 2016 $’000 $’000 13,725 10,609 (15,609) (11,551) - 194 (1,368) (695) (3,252) (1,443) (1,220) (256) (929) (565) (2,149) (821) - 905 6,816 - 1,243 771 (1,970) (80) - 580 6,089 2,176 688 (88) 11 99 - - 699 11
		(1,443)
		(256) (565)
		(821)
		905 - 771 (80) 580
		2,176
		(88) 99 -
		11

The accompanying notes form part of these financial statements.

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ENERGY TECHNOLOGIES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2017

1. BASIS OF PREPARATION

a) Basis of preparation

The preliminary final report does not include all the notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

The preliminary final report should be read in conjunction with the half-year financial report of Energy Technologies Limited as at 31 December 2016. It is also recommended that the financial report be considered together with any public announcements made by Energy Technologies Limited and its controlled entities during the year ended 30 June 2017 in accordance with the continuous disclosure requirements arising under the Corporations Act 2001 .

This preliminary final report has been prepared in accordance with the requirements of the Australian Securities Exchange listing rules.

This preliminary final report does not constitute the full financial report for the year ended 30 June 2017.

b) Statement of compliance

Compliance with Australian Accounting Standards ensures that the financial statements and notes comply with International Financial Reporting Standards issued by the IASB.

c) Going Concern

The consolidated entity incurred a loss after tax attributable to members of $2,941,203 (2016: $2,052,216), incurred negative cash flows from operations of $3,251,666 for the year ended 30 June 2017 (2016: negative $1,443,349). At balance date, including Debenture Notes totaling $6,816,000, current liabilities exceeded current assets by $4,361,986. The Debentures have a maturity date of 31 December 2020 and Directors’ do not expect the Debenture Notes will be redeemed within the twelve month period following the date of this report.

These matters give rise to a significant material uncertainty that may cast significant doubt upon the consolidated entity’s ability to continue as a going concern. The ongoing operation of the consolidated entity is dependent upon it:

(a) achieving cash flow positive trading operations from its existing business; and

(b) continued financial support from its current financiers;

Management have prepared a cash flow projection for the period to 30 September 2018 that supports the ability of the consolidated entity to continue as a going concern. The FY2018 budget on which the cash flow projection is based forecasts a 38% increase in sales revenues for the FY2018 from the FY2017 actual year, including a new branch operation and identified infrastructure and rail projects. The cash flow projection also assumes the secured debenture facility remains in place.

In the event that the consolidated entity is unable to achieve the matters detailed above, it may not be able to continue as a going concern and therefore the consolidated entity may not be able to realise its assets and extinguish its liabilities in the ordinary course of operations and at the amounts stated in the financial statements.

No adjustments have been made to the recoverability and classification of recorded asset values and the amount and classification of liabilities that might be necessary should the consolidated entity and company not continue as going concerns.

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ENERGY TECHNOLOGIES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2017

2. REVENUES FROM CONTINUING OPERATIONS a) Revenue from continuing operations Sale of goods Services revenue b) Other revenues from continuing operations - R&D Grant - Finance revenue - Other income Total revenues from continuing operations	CONSOLIDATED 2017 2016 $’000 $’000 12,913 10,198 131 45 13,044 10,243 1,190 880 61 72 2 40 1,253 992 14,297 11,235	CONSOLIDATED 2017 2016 $’000 $’000 12,913 10,198 131 45 13,044 10,243 1,190 880 61 72 2 40 1,253 992 14,297 11,235
		10,243
		880 72 40
		992
		11,235

3. EXPENSES

EXPENSES
Included in the determination of net profit / (loss) before tax from continuing operations are the following expenses. Depreciation and amortisation of: non-current assets Plant and equipment Building and leasehold improvements Furniture, fixtures and fittings Motor vehicles Computer equipment Intangibles Total depreciation and amortisation of non-current assets Borrowing costs expensed: Borrowing expense Interest expense Superannuation contributions Operating lease rental expense: Minimum lease payments	205 3 6 20 6 44	197 3 6 20 6 13
	284 48 1,068 1,116 429 880	245 30 712 742 371 729

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ENERGY TECHNOLOGIES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2017

4. STATEMENT OF CASH FLOWS Reconciliation of the net loss after tax to the net cash flows from operations Loss from operating activities after income tax Add / (less) Non-cash items Depreciation of non-current assets Amortisation of intangible assets Unrealised foreign exchange movements HP interest Transaction cost of Debentures Non-operating cash flow cash items Loss on sale of assets Convertible Notes issued in lieu of Director Fees Convertible Notes issued in lieu of Director Interests Changes in assets and liabilities (Increase) / decrease in inventories (Increase) / decrease in trade and other receivables (Decrease) / Increase in payables (Increase) / decrease in deferred tax asset (Increase) / decrease in other-current assets (Increase) / decrease in other-non-current receivables Net movement in provisions for employee entitlements Net cash (used in) operating activities	CONSOLIDATED 2017 2016 $’000 $’000 (2,957) (2,025) 240 232 44 13 2 43 26 - (277) - 11 - - 14 - 47 (1,048) (106) (615) (450) 1,224 544 (21) 58 38 115 (29) - 110 72 (3,252) (1,443)	CONSOLIDATED 2017 2016 $’000 $’000 (2,957) (2,025) 240 232 44 13 2 43 26 - (277) - 11 - - 14 - 47 (1,048) (106) (615) (450) 1,224 544 (21) 58 38 115 (29) - 110 72 (3,252) (1,443)
		(1,443)

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ENERGY TECHNOLOGIES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2017

		CONSOLIDATED	CONSOLIDATED
5.	CONTRIBUTED EQUITY	2017	2016
	Issued capital	$	$
	326,507,732 (326,507,732 – 2016) ordinary shares fully paid	9,279,071	9,279,071

Terms and conditions

Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders’ meetings. In the event of winding up of the company, ordinary shareholders rank after creditors and are fully entitled to any proceeds of liquidation.

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ENERGY TECHNOLOGIES LIMITED

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2017

6. Segment Reporting

Primary reporting - Business segments

	Energy/Energy	Energy/Energy	Investment	Investment	Total
	Infrastructure
	2017	2016	2017	2016	2017	2016
	$’000	$’000	$’000	$’000	$’000	$’000
Revenue	14,236	11,235	61	-	14,297	11,235
Segment result before income tax	(1,524)	(883)	(1,454)	(1,084)	(2,978)	(1,967)
Income tax (expense)/benefit	21	(58)	-	-	21	(58)

The group’s primary business segment is Energy/Energy Infrastructure products.

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ENERGY TECHNOLOGIES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2017

7. SUBSEQUENT EVENTS

There has not arisen since the end of the financial period any other matter of circumstance which, in the opinion of the directors of the Company, significantly affects the operation of the Company, the results of those operations, or the state of affairs of the Company in subsequent financial years

Compliance statement

1. Compliance with Australian Accounting Standards ensures that the financial statements and notes comply with International Financial Reporting Standards issued by the IASB.

2. 2 This preliminary report, and the accounts upon which the report is based (if separate), use the same accounting policies.

3. 3 This preliminary report does give a true and fair view of the matters disclosed.

4. 4 The accounts are in the process of being audited.

5. 5 The entity has a formally constituted audit committee.

Sign here:

==> picture [137 x 66] intentionally omitted <==

Print name: Alfred Chown Managing Director

Date: 30 August 2017

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