EVZ LIMITED — Annual Report 2017

Aug 29, 2017

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APPENDIX 4E

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Preliminary Final Report Results for Announcement to the Market

30 August 2017, Melbourne : EVZ Limited (ASX: EVZ) has delivered its Preliminary Final Results for the year ending 30 June 2017. The Directors are pleased to confirm Revenue and EBITDA results in line with guidance provided to the market in May 2017.

RESULTS SUMMARY Revenue from ordinary activities EBITDA EBIT Net profit before income tax expense Net Profit from ordinary activities after tax Earnings per share	FY2017 $		FY2016 $		Change $
	51,902,016 882,143 87,074 5,403,095 3,609,689 1.47		63,986,789 709,264 (228,061) (2,222,908) (2,438,195) (1.16) cents		(12,084,773) 172,879 315,135 7,626,003 6,047,884 -

The financial information provided in this report remains subject to finalisation of the audit process.

COMMENTARY

The Directors are pleased to report the following significant achievements were concluded successfully during financial year:

• Reduction in interest bearing debt to $6.0M (from $13.3M) by forgiveness agreement with the Commonwealth Bank of Australia.

• Negotiation and execution of a new three year banking facility agreement with the Commonwealth Bank of Australia providing the group with a stable platform from which to drive growth and profitability.

• Successful raising of $4.4M new equity through a placement and pro-rata entitlement offer.

• Achievement of Practical Completion of the Melbourne Airport Trigeneration Power Plant. The completion of this project delivered a world-class 8MV Tri Generation plant for Melbourne Airport. Resources and Capital engaged in this long term project are now free to be allocated to the Groups core areas of growth moving forward

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EVZ is now well positioned to grow revenues and profits by utilising the talented management team and skilled technical resource base in conjunction with the restored balance sheet in specialist engineering sectors.

OUTLOOK

EVZ Limited operates three business subsidiaries that are well positioned in their chosen markets to establish further growth and profitability.

BROCKMAN ENGINEERING

Brockman is one of Australia’s leading and most capable specialist mechanical contractors servicing the oil and fuel industry; providing unsurpassed bulk storage tank and pipework design and construction services in addition to shutdown maintenance services for critical repair and plant improvement.

Brockman currently has a consistent workload for the ensuing six months including a wide range of tank construction projects and is actively bidding and providing advisory roles on new and upcoming larger scale projects in the fuel terminal and refinery sector. Currently delivering projects for Esso, Mobil, Viva Energy and Caltex with solid and growing contracted work in hand underpinned by our efficient value enhancement approach to projects and client partnerships.

The outlook for Brockman is consistent growth aligning with the predicted higher level of activity in the oil industry as the fuel supply chain continues to respond to rising population and increased ground and air transport movements throughout Australia. Brockman are seeking to exploit a market opportunity as a mid tier provider of value added services to the fuel industry.

SYFON SYSTEMS

Syfon Systems is the leading syfonic roof stormwater drainage company in Australia and South East Asia. Holding greater than 70% market share in Australia and Malaysia, Syfon is endeavouring in upcoming planning periods to expand in Vietnam and subsequent other Asian countries to continue a progressive geographic expansion strategy.

Syfon is also undertaking market research for future expansion into the plumbing supplies industry including pipe manufacture and fitting prefabrication and supply to improve earnings consistency and diversity.

The outlook for Syfon in Australia is moderate aligning with the building and construction sector cycle. Syfon is consistently appointed in major construction projects across the nation, most recently being appointed on the Royal Hobart Hospital project, value $0.5M. Growth outlook in Asia is expected to be more fast paced gaining from the dual dimensions of increased building and construction sector activity and conversion of the industry from traditional gravity drainage to syfonic drainage.

TSF MAINTENANCE

TSF Maintenance Services is a manufacturer independent power generation maintenance provider currently expanding its reach throughout Australia. Offering high value and independence from large prime mover multinationals allows customers improved flexibility and responsive service.

TSF Maintenance provides service through multi year contracts to Australia’s large telephone and data providers in addition to utilities, healthcare and large-scale corporate office complexes. Outlook

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for power reliability maintenance services in these sectors is expected to grow as the need for greater reliability and community expectations of uptime availability grow.

Additional financial information is provided in the enclosed Appendix 4E: Preliminary Final Report.

EVZ Limited is an industrial group with a portfolio of specialist businesses in the engineering services sector. EVZ operates in the areas of specialist mechanical services including bulk storage tank and pipework design and construction, syfonic stormwater and roof drainage systems and power generation maintenance through subsidiaries; Brockman Engineering, Syfon Systems and TSF Maintenance. Additional information can be obtained from our website www.evz.com.au

For further information contact Scott Farthing, CEO +613 9545 5288

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EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017

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CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2017

Revenue Cost of sales Gross profit Other income Administration and business development costs Corporate costs Debt forgiveness Impairment of other assets Impairment of plant and equipment Impairment of intangibles Profit/(Loss) before financing costs and income tax Net finance costs Profit /(Loss) before income tax from continuing operations Income tax (expense)/benefit Net Profit/(Loss) for year Net Profit/(Loss) attributable to: Members of the parent entity Non-controlling interest Earnings per Share: Overall operations Basic earnings per share Diluted earnings per share Continuing operations Basic earnings per share Diluted earnings per share	Economic Entity 2017 $ 2016 $ 51,902,016 63,986,789 (41,949,860) (53,223,235)
	9,952,156 10,763,554 93,345 46,604 (9,474,695) (10,408,568) (1,127,360) (1,089,499) 7,285,000 - (67,786) - (64,132) -
	6,596,528 (687,909) (1,193,433) (1,534,999)
	5,403,095 (2,222,908) (1,793,406) (215,287)
	3,609,689 (2,438,195)
	3,609,689 (2,438,195) - -
	3,609,689 (2,438,195)
	Cents per share Cents per share 1.47 (1.16) 1.46 (1.16) 1.47 (1.16) 1.46 (1.16)

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EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2017

Profit/(Loss) for the year Other comprehensive income: Exchange differences arising on translation of foreign operations Total comprehensive income/(loss) for the year attributable to Owners of the company	Economic Entity 2017 $ 3,609,689 2016 $ (2,438,195) (172,609) (40,486)
	3,437,080 (2,478,681)

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EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017

CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Financial assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables Plant and equipment Deferred tax assets Intangible assets Financial assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Provisions Tax liabilities Short-term borrowings TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Long-term borrowings Deferred tax liabilities Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY	Economic Entity 2017 $ 2016 $ 1,551,970 1,561,574 11,858,174 11,249,768 1,607,744 1,764,881 28,487 31,417
	15,046,375 14,607,640
	1,119,934 1,449,202 3,777,140 4,688,822 2,668,652 4,313,415 12,072,010 12,072,010 - -
	19,637,736 22,523,449
	34,684,111 37,131,089
	10,819,022 14,478,636 2,666,446 3,081,940 79,970 94,554 1,085,286 13,317,789
	14,650,724 30,972,919
	6,033,330 122,958 45,198 43,237 386,834 206,997
	6,465,362 373,192
	21,116,086 31,346,111
	13,568,025 5,784,978
	50,434,876 46,088,909 (262,417) (89,808) (36,604,434) (40,214,123)
	13,568,025 5,784,978

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EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017

30 June 2017 Balance at 1 July 2016 Total comprehensive income for year Profit for year Foreign currency translation reserve Total comprehensive profit for year Transactions with owners, recorded directly in equity Shares Issued Dividends Balance at 30 June 2017 30 June 2016 Balance at 1 July 2015 Total comprehensive income for year Loss for year Foreign currency translation reserve Total comprehensive loss for year Transactions with owners, recorded directly in equity Shares Issued Dividends Balance at 30 June 2016	Issued Capital $ Accumulated Losses $ Foreign Currency Translation Reserve $ Total $ 46,088,909 (40,214,123) (89,808) 5,784,978
	- 3,609,689 - 3,609,689 - - (172,609) (172,609)
	- 3,609,689 (172,609) 3,437,080
	4,345,967 - - 4,345,967 - - - -
	50,434,876 (36,604,434) (262,417) 13,568,025
	46,088,909 (37,775,928) (49,322) 8,263,659
	- (2,438,195) - (2,438,195) - - (40,486) (40,486)
	- (2,438,195) (40,486) (2,478,681)
	- - - - - - - -
	46,088,909 (40,214,123) (89,808) 5,784,978

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EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017

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

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Income tax paid Interest received Finance costs NET CASH FLOWS PROVIDED/(USED) BY OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of plant and equipment Purchase of plant and equipment NET CASH FLOWS (USED) BY INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from bank loans Repayment of bank loans Proceeds from equity raising Proceeds from other loans Payments for lease financing NET CASH FLOWS PROVIDED/(USED) BY FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH HELD Cash at beginning of financial year CASH AT END OF FINANCIAL YEAR	Economic Entity 2017 $ 2016 $ 56,292,930 75,268,312 (59,977,746) (72,495,316) (163,227) (120,733) 3,505 10,529 (1,196,938) (1,545,528)
	(5,041,476) 1,117,264
	175,198 276,792 (367,162) (591,619)
	(191,964) (314,827)
	- 5,200,000 - (250,000) 4,345,967 - 1,000,000 - (122,131) (126,933)
	5,223,836 4,823,067
	(9,604) 5,625,504 1,561,574 (4,063,930)
	1,551,970 1,561,574

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2017

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BASIS OF PREPARATION OF PRELIMINARY FINANCIAL STATEMENTS

The preliminary report has been prepared on an accruals basis and is based on historical costs modified, where appropriate, by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

The accounting policies applied in this preliminary report are consistent with applicable accounting standards.

PROFIT/(LOSS) FROM CONTINUING ACTIVITIES

(a) OTHER INCOME Sundry income (b) EXPENSES Bad debts Impairment – receivables Total employee costs Defined contribution superannuation expense Foreign exchange losses/(gains) (Profit)/Losses on sale of plant and equipment Operating lease payments Depreciation of plant and equipment Impairment – other assets Impairment – fixed assets	Economic Entity 2017 $ 2016 $ 93,345 46,604
	93,345 46,604
	290,928 118,603 (80,848) (291,336) 31,535,892 36,229,543 2,238,567 2,747,491 273,877 (103,522) 208,789 118,280 920,376 835,170 795,069 937,325 67,786 - 64,132 -

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EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017

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(c) NET FINANCE COSTS Finance costs Interest income INCOME TAX (a) The prima facie tax on profit from continuing activities before income tax is reconciled to income tax as follows: Profit/(Loss) before income tax Income tax calculated at 30% (2016: 30%) Tax effect of permanent differences Under provision/(over provision) in prior years Tax losses not recognised Taxation expense - offshore subsidiary Income tax expense/(benefit) The applicable weighted average effective tax rates are: (b) The components of tax expense comprise: Current tax Deferred tax Under provision/(over provision) in prior years	Economic Entity 2017 $ 2016 $ 1,196,938 1,545,528 (3,505) (10,529)
	1,193,433 1,534,999
	5,403,095 (2,222,908)
	1,620,929 (666,872) 23,834 (118,002) 66,736 - - 784,874 81,907 215,287
	1,793,406 215,287
	33% -
	1,726,670 215,287 - - 66,736 -
	1,793,406 215,287

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EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017

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ISSUED CAPITAL Issued and paid up 678,810,138 ordinary shares (2016: 210,548,789 ordinary shares) Issued and fully paid up ordinary shares Opening balance Shares issued Closing balance Opening balance Shares issued Closing balance OPTIONS Opening balance Options issued Closing balance	Economic Entity 2017 $ 2016 $ 50,434,876 46,088,909
	50,434,876 46,088,909
	46,088,909 46,088,909 4,345,967 -
	50,434,876 46,088,909
	No. No. 210,548,789 210,548,789 468,261,349 -
	678,810,138 210,548,789
	- - 15,000,000 -
	15,000,000 -

15,000,000 Unlisted Options were issued in connection with the Capital Raising during the year. The Unlisted Options were issued for nil cash consideration. The Unlisted Options are exercisable at $0.02 per share and expire 4 years after their issue date (7 June 2017).

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EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017

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EARNINGS PER SHARE Weighted average number of ordinary shares outstanding during the year used in calculation of Basic Earnings per Share Weighted average number of ordinary shares outstanding during the year used in calculation of Diluted Earnings per Share INTANGIBLE ASSETS Goodwill on consolidation Less impairment Goodwill on acquisition Less impairment	2017 No. 2016 No. 245,656,708 210,548,789
	246,634,202 210,548,789
	2017 $ 2016 $ 3,282,532 3,282,532 - -
	3,282,532 3,282,532
	24,606,758 24,606,758 (15,817,280) (15,817,280)
	8,789,478 8,789,478
	12,072,010 12,072,010

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EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017

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		Economic	Entity
		2017	2016
		$	$
STATEMENT OF CASH FLOWS
(i)	Cash balances comprise:
	Cash on hand	1,551,970	1,561,574
	Bank overdraft	-	-
	Closing cash balance	1,551,970	1,561,574
(ii)	Reconciliation of the operating profit/(loss) after tax to net cash flows from operations:
	Operating profit/(loss) after tax	3,609,689	(2,438,195)
	(Gain)/loss on sale of plant and equipment	208,789	118,280
	Depreciation - plant & equipment	795,069	937,325
	Debt forgiveness	(7,285,000)	-
	Foreign currency translation	(136,953)	(31,510)
	Impairment - receivables	(80,848)	(291,336)
	Impairment - plant & equipment	64,132	-
	Impairment – other assets	67,786	-
	Impairment Work In Progress	150,000	-
	Impairment - goodwill	-	-
	Changes in assets and liabilities adjusted for effects of
	acquisition/disposal of operations during financial year
	Increase/(Decrease) in provisions for employee entitlements	(235,657)	11,539
	(Increase)/Decrease in inventories	89,351	60,183
	(Increase)/Decrease in trade and other receivables	(345,360)	3,385,519
	(Increase)/Decrease in fixed assets	-	(356,074)
	(Increase)/Decrease in Deferred Tax Assets	1,644,763	-
	Increase/(Decrease) in trade and other payables	(3,574,614)	(392,789)
	Increase/(Decrease) in tax liabilities	(12,623)	114,322
	Net cash provided/(used) by operating activities	(5,041,476)	1,117,264

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EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017

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SEGMENT REPORTING CONTINUING OPERATIONS:

Identification of reportable segments

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.

Operating segments are managed primarily on the basis of product category and service offerings. Executive management monitors segment performance based on EBIT.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted:

Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision - makers with respect to operating segments are determined in accordance with accounting policies that are consistent with those adopted in the annual financial statements of the Group. Inter-segment transactions:

All such transactions are eliminated on consolidation for the Group’s financial statements.

– Segment Reporting Continuing Operations

Segment Reporting– Continuing Operations	erations
Engineering Energy Water Corporate 30 June 2017 $ $ $ $ REVENUE External sales 25,629,563 6,247,444 20,025,009 - Inter-segment sales - - - - Total segment revenue 25,629,563 6,247,444 20,025,009 - Reconciliation of segment revenue to group revenue Inter-segment elimination Total group revenue Segment net profit/(loss) before interest and tax 592 (995,013) 1,704,664 5,886,285 Reconciliation of segment result to group net profit before tax Unallocated items Net finance costs Other costs Net profit/(loss) before tax from continuing operations	Engineering Energy Water Corporate $ $ $ $ 25,629,563 6,247,444 20,025,009 - - - - -	Total $ 51,902,016 -
	25,629,563 6,247,444 20,025,009 -	51,902,016 -
		51,902,016
		6,596,528 (1,193,433) -
		5,403,095

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EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017

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Engineering Energy 30 June 2017 $ $ Included in segment net profit before interest and tax Depreciation 411,980 119,010 Impairment Other Assets - 67,786 Plant and Equipment - 64,132 Work in Progress - - Receivables 16,656 - Goodwill - - 30 June 2016 External sales 34,309,073 7,039,326 Inter-segment sales 2,544 - Total segment revenue 34,311,617 7,039,326 Reconciliation of segment revenue to group revenue Inter-segment elimination Total group revenue Segment net profit/(loss) before interest and tax (862,771) (756,946) Reconciliation of segment result to group net profit before tax Unallocated items Net finance costs Other costs Net profit/(loss) before tax from continuing operations Included in segment net profit before interest and tax Depreciation 493,700 146,387 Impairment Receivables - - Goodwill - -	Engineering Energy $ $ interest and tax 411,980 119,010 - 67,786 - 64,132 - - 16,656 - - -	Water Corporate $ $ 262,218 1,861 - - - - - 150,000 (97,504) - - -	Total $ 795,069 67,786 64,132 150,000 (80,848) -
	34,309,073 7,039,326 2,544 -	22,638,390 - - -	63,986,789 2,544
	34,311,617 7,039,326	22,638,390 -	63,989,333 (2,544)
		2,021,307 (1,089,499)
			63,986,789
			(687,909) (1,534,999) -
		290,815 6,423 (291,336) - - -
			(2,222,908)
			937,325 (291,336) -

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EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017 Engineering Energy $ $ Secondary Reporting– including Discontinued Operations 30 June 2017 ASSETS Segment assets 21,357,858 (2,735,104) Reconciliation of segment assets to group assets Inter-segment eliminations Total group assets Segment asset increases for the period Capital expenditure 159,042 82,301 159,042 82,301 LIABILITIES Segment liabilities 25,452,599 19,231,821 Reconciliation of segment liabilities to group liabilities Inter-segment eliminations Total group liabilities 30 June 2016 ASSETS Segment assets 21,117,699 (2,546,759) Reconciliation of segment assets to group assets Inter-segment eliminations Total group assets Segment asset increases for the period Capital expenditure 445,453 9,320 445,453 9,320 LIABILITIES Segment liabilities 25,213,774 18,349,465 Reconciliation of segment liabilities to group liabilities Inter-segment eliminations Total group liabilities	EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017 Engineering Energy $ $ Secondary Reporting– including Discontinued Operations 30 June 2017 ASSETS Segment assets 21,357,858 (2,735,104) Reconciliation of segment assets to group assets Inter-segment eliminations Total group assets Segment asset increases for the period Capital expenditure 159,042 82,301 159,042 82,301 LIABILITIES Segment liabilities 25,452,599 19,231,821 Reconciliation of segment liabilities to group liabilities Inter-segment eliminations Total group liabilities 30 June 2016 ASSETS Segment assets 21,117,699 (2,546,759) Reconciliation of segment assets to group assets Inter-segment eliminations Total group assets Segment asset increases for the period Capital expenditure 445,453 9,320 445,453 9,320 LIABILITIES Segment liabilities 25,213,774 18,349,465 Reconciliation of segment liabilities to group liabilities Inter-segment eliminations Total group liabilities	Water Corporate $ $ 15,850,098 32,299,642	Total $ 66,772,494 (32,088,383) 34,684,111 367,162 367,162 55,670,643 (34,554,557) 21,116,086 64,544,802 (27,413,713) 37,131,089 591,619 591,619 62,887,830 (31,541,719) 31,346,111
		125,819 -
	159,042 82,301	125,819 -
	25,452,599 19,231,821	3,792,556 7,193,667
		16,224,647 29,749,215
		136,846 -
	445,453 9,320	136,846 -
	25,213,774 18,349,465	5,383,579 13,941,012

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EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017

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REVENUE BY GEOGRAPHICAL REGION

Revenue, including revenue from discontinued operations, attributable to external customers is disclosed below, based on the location of the external customer:

Australia Asia Total revenue	Economic Entity 2017 $ 2016 $ 44,495,372 56,438,135 7,406,644 7,548,654
	51,902,016 63,986,789

ASSETS BY GEOGRAPHICAL REGION

The location of segment assets by geographical location of the assets is disclosed below:

Australia Asia Total assets	2017 $ 2016 $ 27,797,039 29,572,486 6,887,072 7,558,603
	34,684,111 37,131,089

SUBSEQUENT EVENTS

At balance date the EVZ Ltd Group has a loan outstanding to a related entity of $1,000,000 which matures on 15 December 2017. Subsequent to balance date the Directors have convened a general meeting of shareholders to seek approval for a partial conversion of the related entity loan into equity in the company. The co mpany is seeking shareholder approval to convert $600,000 of the related entity loan into fully paid ordinary shares in the company at an issue price of $0.0139 per ordinary share. If the debt for equity conversion is approved by shareholders the company will issue 43,165,467 fully paid ordinary shares. Subject to the approval of this debt for equity conversion the maturity of remaining loan of $400,000 will be e xtended to 15 June 2018.

The general meeting will be held on 1 September 2017.

There have not been any other matters or circumstances, other than that referred to in the financial statements or notes thereto, that have arisen since the end of the financial year, that have significantly affected, or may significantly affect, the operations of the economic entity, the results of those operations, or the state of affairs of the economic entity in future financial years after the financial year.

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EVZ Limited Appendix 4E Preliminary Final Report Year ended 30 June 2017

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ADDITIONAL INFORMATION

Reporting period

The applicable reporting period is 1 July 2016 to 30 June 2017. The previous corresponding reporting period was 1 July 2015 to 30 June 2016.

	2017	2016
Net tangible assets
Net tangible assets per ordinary share	0.22 cents	(3.0)cents
Details of entities over which control has been gained or lost during the period
Name of entity
Control gained/lost
Contribution of entity to reporting entity’s from ordinary activities
during the period
Loss of entity during the whole of the previous corresponding year	Not applicable
Dividends and Distributions
Date on which each dividend or distribution is payable
Amount per security of foreign sourced dividend or distribution	Not applicable
Details of dividend or distribution reinvestment plans	Not applicable
Material interests in entities which are not controlled entities	Not applicable
Compliance Statement – The accounts are in the process of being audited.

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