EVZ LIMITED — Annual Report 2018

Aug 23, 2018

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Appendix 4E Preliminary Final Report Results for Announcement to the Market

24 August 2018, Melbourne : EVZ Limited (ASX: EVZ) has delivered its Preliminary Final Results for the year ending 30 June 2018. The Directors are pleased to confirm Revenue and EBIT results are in line with guidance provided to the market in June 2018.

Results Summary	FY2018	FY2017	Change	Change
	$	$	$	%
Revenue from ordinary activities	64,928,395	51,902,016	13,026,379	25%
EBITDA	3,491,816	882,143	2,609,673	296%
EBIT	2,821,179	87,074	2,734,105	3140%
Profit from ordinary activities before tax	2,484,811	5,403,095	(2,918,284)
Profit from ordinary activities after tax	1,805,594	3,609,689	(1,804,095)
Earnings per share (cents)	0.24	1.47

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:

• Profitable trading during all periods of the financial year to deliver a $2.8M EBIT.

• Growth in revenue as a result of successful delivery of projects and recurrent revenue contracts to a range of clients.

• Successful raising of $2.4M new equity through an institutional placement in March 2018.

• Increase in contracted work in hand as a result of successful negotiation and competitive strategy. The “Order Book” is currently valued at $77M a 123% increase on FY17.

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• EVZ is now well positioned to further grow revenues and profits by utilising the talented management team and skilled technical resource base in conjunction with the strengthened 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 high workload for the ensuing eighteen 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 to enhance revenue and earnings growth.

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. Growth outlook in Asia is expected to be more consistently expanding 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.

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

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Consolidated statement of profit or loss Notes	Economic Entity
For the year ended 30 June 2018	30 June 2018 30 June 2017
	$ $
Continuing Operations
Revenue	64,928,395 51,902,016
Cost of Sales	(51,793,049) (41,949,860)
Gross Profit	13,135,346 9,952,156
Other Income 2	96,694 93,345
Administration and business development costs	(8,700,181) (9,474,695)
Corporate costs	(1,427,327) (1,127,360)
Debt Forgiveness	- 7,285,000
Impairment of other assets	- (67,786)
Impairment ofplant and equipment	- (64,132)
Profit before finance costs and income tax	3,104,532 6,596,528
Net finance costs 2	(619,721) (1,193,433)
Profit before income tax from continuing operations	2,484,811 5,403,095
Income tax(expense)/benefit 3	(679,217) (1,793,406)
Profit/(Loss) for theyear attributed to members after tax	1,805,594 3,609,689
Earnings Per Share
	Cents Cents
Overall Operations: 4
Basic earnings per share	0.243 1.470
Diluted earnings per share	0.238 1.464
Continuing Operations: 4
Basic earnings per share	0.243 1.470
Diluted earnings per share	0.238 1.464

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EVZ Limited Appendix 4E Preliminary Final Report

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	Consolidated statement of comprehensive income	Economic Entity	Economic Entity
	For the year ended 30 June 2018	30 June 2018	30 June 2017
		$	$
	Profit/(Loss) for the year after tax	1,805,594	3,609,689
	Other comprehensive income:
	Items that may be reclassified subsequently to profit or loss:
	Exchange differences arising on translation of foreign operations	203,941	(172,609)
	Total comprehensive income for the year attributable to owners of the company	2,009,535	3,437,080

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EVZ Limited Appendix 4E Preliminary Final Report

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Consolidated statement of financial position Notes	Economic Entity	Economic Entity
For the year ended 30 June 2018	30 June 2018	30 June 2017
	$	$
Current Assets
Cash and cash equivalents	1,706,883	1,551,970
Trade and other receivables	16,939,999	11,858,174
Inventories	1,971,101	1,607,744
Financial assets	178,570	28,487
Total current assets	20,796,553	15,046,375
Non-current assets
Trade and other receivables-non current	1,587,673	1,119,934
Plant and equipment	3,869,464	3,777,140
Deferred tax assets	2,095,745	2,668,652
Intangibles 5	12,072,010	12,072,010
Total non-current assets	19,624,892	19,637,736
Total Assets	40,421,445	34,684,111
Current liabilities
Trade and other payables	12,333,514	10,819,022
Tax liabilities	103,542	79,970
Short-term borrowings	511,529	1,085,286
Provisions	2,585,364	2,666,446
Total current liabilities	15,533,949	14,650,724
Non-current liabilities
Long-term borrowings	6,000,000	6,033,330
Deferred tax liabilities	49,200	45,198
Provisions-non current	423,483	386,834
Total non-current liabilities	6,472,683	6,465,362
Total Liabilities	22,006,632	21,116,086
Net Assets	18,414,813	13,568,025
Equity
Issued Capital 6	52,972,129	50,434,876
Reserves	241,524	(262,417)
Accumulated losses	(34,798,840)	(36,604,434)
Total Equity	18,414,813	13,568,025

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EVZ Limited Appendix 4E Preliminary Final Report

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Consolidated statement of changes in equity
For the year ended 30 June 2018	Issued Capital Accumulated Losses Share Option Reserve Foreign Currency Translation Reserve Total
	$ $ $ $
Balance at 1 July 2017	50,434,876 (36,604,434) - (262,417) 13,568,025
Total comprehensive profit for period
Profit/(loss) for period	- 1,805,594 - - 1,805,594
Foreign currencytranslation reserve	- - - 203,941 203,941
Total comprehensive income forperiod	- 1,805,594 - 203,941 2,009,535
Transactions with owners, recorded directly in equity:
Shares issued	2,682,506 - - - 2,682,506
Share Issue Costs	(145,253) - - - (145,253)
Options issued	- - 300,000 - 300,000
Dividends	- - - - -
Balance at 30 June 2018	52,972,129 (34,798,840) 300,000 (58,476) 18,414,813
For the year ended 30 June 2017	Issued Capital Accumulated Losses Share Options Reserve Foreign Currency Translation Reserve Total
	$ $ $ $
Balance at 1 July 2016	46,088,909 (40,214,123) - (89,808) 5,784,978
Total comprehensive profit for period
Profit/(loss) for period	- 3,609,689 - - 3,609,689
Foreign currencytranslation reserve	- - - (172,609) (172,609)
Total comprehensive income forperiod	- 3,609,689 - (172,609) 3,437,080
Transactions with owners, recorded directly in equity:
Shares issued	4,682,614 - - - 4,682,614
Share Issue Costs	(336,647) (336,647)
Dividends	- - - - -
Balance at 30 June 2017	50,434,876 (36,604,434) - (262,417) 13,568,025

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EVZ Limited Appendix 4E Preliminary Final Report

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Consolidated statement of cash flows		Notes		Economic Entity
For the year ended 30 June 2018				30 June 2018 30 June 2017
				$ $
Cash flows from operating activities
Receipts from customers (inclusive of GST)				65,881,229 56,292,930
Payments to suppliers and employees (inclusive of GST)				(65,844,907) (59,977,746)
Interest received				3,999 3,505
Finance costs				(623,720) (1,196,938)
Income tax paid				(78,735) (163,227)
Net cashprovided by / (used in) operating activities				(662,134) (5,041,476)
Cash flows from investing activities
Proceeds from sale of plant and equipment				(1,208) 175,198
Purchase of plant and equipment				(762,961) (367,162)
Net cash used in investing activities				(764,169) (191,964)
Cash flows from financing activities
Proceeds from equity raising				2,382,506 4,682,614
Share issue costs				(145,253) (336,647)
Proceeds / (repayment) of other loans				(600,000) 1,000,000
Payments for lease financing				(56,036) (122,131)
Net cashprovided/(used) by financing activities				1,581,217 5,223,836
Net increase/(decrease) in cash held				154,914 (9,604)
Cash at beginningof theperiod				1,551,970 1,561,574
Cash at end of theperiod		7		1,706,884 1,551,970

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EVZ Limited Appendix 4E Preliminary Final Report

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Notes to the consolidated financial statements

1. 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.

Notes to the consolidated financial statements	Economic Entity
For the year ended 30 June 2018	30 June 2018 30 June 2017
	$ $
2. Profit/(loss) from continuing operations
(a) Other income
Sundry income	96,694 93,345
Gain on acquisition of assets	- -
	96,694 93,345
(b) Expenses
Bad debts	36,651 290,928
Impairment - receivables	46,195 (80,848)
Total employee costs	31,814,107 31,535,892
Defined contribution superannuation expense	2,450,151 2,238,567
Foreign exchange losses/(gains)	(203,679) 273,877
Losses on sale of plant and equipment	3,846 208,789
Operating lease payments	1,143,273 920,376
Depreciation of plant and equipment	670,637 795,069
Impairment - other assets	- 67,786
Impairment -plant and equipment	- 64,132
(c) Net finance costs:
Finance costs	623,720 1,196,938
Interest income	(3,999) (3,505)
Net finance costs from continuing operations	619,721 1,193,433

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EVZ Limited Appendix 4E Preliminary Final Report

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Notes to the consolidated financial statements	Notes to the consolidated financial statements	Notes to the consolidated financial statements	Economic Entity	Economic Entity
For	the year ended 30 June 2018		30 June 2018	30 June 2017
			$	$
3.		Income tax
(a)		The prima facie tax on profit before income tax from continuing operations is reconciled to income tax as follows:
		Profit/(Loss) before Income Tax	2,484,811	5,403,095
		Income tax calculated at 30% (2017: 30%)	745,443	1,620,929
		Tax effect of permanent differences	(279,229)	23,834
		Under provision/(over provision) in prior years	106,694	66,736
		Tax Losses not recognized	-	-
		Taxation expense - offshore subsidiary	106,309	81,907
		Income tax expense/(benefit)	679,217	1,793,406
		The applicable weighted average effective tax rates are:	27%	33%
(b)		The components of tax expense comprise:
		Current tax	(511,014)	(850,621)
		Deferred tax	1,083,537	2,577,291
		Underprovision/(overprovision)inprioryears	106,694	66,736
			679,217	1,793,406

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EVZ Limited Appendix 4E Preliminary Final Report

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Notes to the consolidated financial statements	Economic Entity	Economic Entity
For the year ended 30 June 2018	30 June 2018	30 June 2017
	$	$
4. Earnings per share
(a) Weighted average number of ordinary shares outstanding during the year used in calculation of Basic Earnings per Share	742,238,800	245,565,708
(b) Weighted average number of ordinary shares outstanding during the year used in calculation of Diluted Earnings per Share	757,238,800	246,634,202
5. Intangible assets
Goodwill on consolidation – at cost	3,282,532	3,282,532
Less accumulated impairment		-
	3,282,532	3,282,532
Goodwill on acquisition – at cost	24,606,758	24,606,758
Less accumulated impairment	(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

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Notes to the consolidated financial statements	Economic Entity
For the year ended 30 June 2018	30 June 2018 30 June 2017
	$ $
6. Issued Capital
Issued and paid up
830,271,945 ordinary shares
(2017: 678,810,138 ordinaryshares)	52,972,129 50,434,876
	52,972,129 50,434,876
Issued and fully paid up ordinary shares
Opening balance	50,434,876 46,088,909
Shares issued	2,682,506 4,682,614
Share issue costs	(145,253) (336,647)
Closing balance	52,972,129 50,434,876
	No. of shares No. of shares
Opening balance	678,810,138 210,548,789
Shares issued	151,461,807 468,261,349
Closing balance	830,271,945 678,810,138
Share options	No. of options No. of options
Opening balance	15,000,000 15,000,000
Options issued	-
Closing balance	15,000,000 15,000,000
Dividends
Interim fully franked ordinary dividend	- -
Final fullyfranked ordinarydividend	- -
Total dividends	- -
Balance of franking account	1,813,797 1,813,797

15,000,000 Unlisted Options were issued in connection with the Capital Raising during the prior 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

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Notes to the consolidated financial statements	Economic Entity
For the year ended 30 June 2018	30 June 2018 30 June 2017
	$ $
7. Consolidated statement of cash flows
Cash balances comprise:
Cash on hand	1,706,883 1,551,970
Bank overdraft	- -
Closing cash balance	1,706,883 1,551,970
Reconciliation of the operating profit after tax to net cash flows from operations:
Operating profit after tax	1,805,594 3,609,689
Loss on sale of plant and equipment	3,846 208,789
Depreciation - plant & equipment	670,637 795,069
Debt forgiveness	- (7,285,000)
Foreign currency translation	203,941 (136,953)
Impairment/(write back) - receivables	- (80,848)
Impairment - plant and equipment	- 64,132
Impairment - Work in Progress	- 150,000
Gain on acquisition of fixed assets	- -
Changes in assets and liabilities adjusted for effects of acquisition/disposal of operations during financial year:
Increase/(Decrease) in provisions for employee entitlements	(44,434) (235,657)
(Increase)/Decrease in inventories	(1,736,657) 157,137
(Increase)/Decrease in trade and other receivables	(3,709,665) (345,360)
(Increase)/Decrease in deferred tax assets	576,910 1,644,763
Increase/(Decrease) in payables	1,544,122 (3,574,614)
Increase/(Decrease)in tax liabilities	23,572 (12,623)
Net cashprovided/(used) by operating activities	(662,134) (5,041,476)

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EVZ Limited Appendix 4E Preliminary Final Report

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Notes to the consolidated financial statements

For the year ended 30 June 2018 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.

Notes to the consolidated financial statements

For the year ended 30 June 2018

8.	Segment Reporting - Continuing Operations
			Engineering Energy Water Corporate	Total
(a)	Twelve months ended 30 June 2018:		$ $ $ $	$
	Revenue
	External sales		37,833,603 5,573,629 21,521,163 -	64,928,395
	Inter-segment sales		- - - -	-
	Total segment revenue		37,833,603 5,573,629 21,521,163	64,928,395
	Reconciliation of segment revenue to group revenue:
	Inter-segment elimination		- - - -	-
	Total group revenue		37,833,603 5,573,629 21,521,163 -	64,928,395
	Segment net profit /(loss) before interest and
	tax		2,237,539 (228,540) 2,672,858 (1,577,325)	3,104,532
	Reconciliation of net profit before interest and tax to group net profit/(loss) before tax
	Unallocated items
	Net finance costs from continuingoperations			(619,721)
	Netprofit/(loss) before tax from continuing			2,484,811
	Included in segment net profit before interest and tax:
	Depreciation		370,646 62,458 233,531 4,002	670,637
	Impairment:
	Receivables		- - 46,195 -	46,195

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EVZ Limited Appendix 4E Preliminary Final Report

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Notes to the consolidated financial statements
For the year ended 30 June 2018
8. Segment Reporting - Continuing Operations
	Engineering Energy Water Corporate	Total
(b) Twelve months ended 30 June 2017:	$ $ $ $	$
Revenue
External sales	25,629,563 6,247,444 20,025,009 -	51,902,016
Inter-segment sales	- - - -	-
Total segment revenue	25,629,563 6,247,444 20,025,009 0	51,902,016
Reconciliation of segment revenue to group revenue:
Inter-segment elimination	- - - -	-
Total group revenue	25,629,563 6,247,444 20,025,009 -	51,902,016
Segment net profit /(loss) before interest and tax	592 (995,013) 1,704,664 5,886,285	6,596,528
Reconciliation of net profit before interest and tax to group net profit/(loss) before tax
Unallocated items
Other non-operating		-
Net finance costs from continuing operations		(1,193,433)
Net profit/(loss) before tax from continuing operations		5,403,095
Included in segment net profit before interest and tax:
Depreciation	411,980 119,010 262,218 1,861	795,069
Impairment:
Other Assets	- 67,786 - -	67,786
Plant and Equipment	- 64,132 - -	64,132
Work in Progress	- - - 150,000	150,000
Receivables	16,656 - (97,504) -	(80,848)
Goodwill	- - - -	0

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EVZ Limited Appendix 4E Preliminary Final Report

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Notes to the consolidated financial statements

For the year ended 30 June 2018

9. Secondary Segment Reporting - Including Discontinued Operations	9. Secondary Segment Reporting - Including Discontinued Operations	9. Secondary Segment Reporting - Including Discontinued Operations
(a) Twelve months ended 30 June 2018:		Engineering Energy Water Corporate	Total
Segment Assets
Segment Assets		20,064,479 1,954,531 19,385,680 32,636,880	74,041,570
Inter-segment elimination			(33,620,125)
Total Group Assets			40,421,445
Segment asset increases for the period:
Capital Expenditure		493,100 109,092 145,133 15,637	762,961
		493,100 109,092 145,133 15,637	762,961
Segment Liabilities
Segment liabilities		22,059,758 24,217,449 4,697,870 6,681,543	57,656,620
Inter-segment elimination			(35,649,988)
Total Group Liabilities			22,006,632
(b) Twelve months ended 30 June 2017:		Engineering Energy Water Corporate	Total
Segment Assets
Segment Assets		21,357,858 (2,735,104) 15,850,098 32,299,642	66,772,494
Inter-segment elimination			(32,088,383)
Total Group Assets			34,684,111
Segment asset increases for the period:
Capital Expenditure		159,042 82,301 125,819 -	367,162
		159,042 82,301 125,819 -	367,162
Segment Liabilities
Segment liabilities		25,452,599 19,231,821 3,792,556 7,193,667	55,670,643
Inter-segment elimination			(34,554,557)
Total Group Liabilities			21,116,086

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EVZ Limited Appendix 4E Preliminary Final Report

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Notes to the consolidated financial statements

For the year ended 30 June 2018

10. Revenue by Geographical Segment

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

		disclosed below, based on the location of the external customer:
				Economic Entity
				30 June 2018 30 June 2017
				$ $
		Australia		57,369,762 44,495,372
		Asia		7,558,633 7,406,644
		Total Revenue		64,928,395 51,902,016

11. Assets by Geographical Segment

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

			Economic Entity
			30 June 2018 30 June 2017
			$ $
	Australia		32,240,432 27,797,039
	Asia		8,181,013 6,887,072
	Total Assets		40,421,445 34,684,111

12. Subsequent Events

On 23[rd] July 2018, the company announced a capital raising to strengthen the company’s balance sheet by paying down term debt and providing capacity to support and deliver Brockman Engineering’s recent contract appointments totalling $27M.

To proceed with the issuing of shares for this current Capital Raising, the previous Capital Raising in March 2018 is now required to be ratified by shareholders at a general meeting. The general meeting will be held on 30 August 2018.

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

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Notes to the consolidated financial statements	Notes to the consolidated financial statements	Economic Entity
For the year ended 30 June 2018		30 June 2018 30 June 2017
13.	Net Tangible Assets
	Net Tangible Assets per ordinary share (cents per share)	0.76 0.22

14. Additional Information

Reporting period

The applicable reporting period is 1 July 2017 to 30 June 2018. The previous corresponding reporting period was 1 July 2016 to 30 June 2017

Details of entities over which control has been gained or lost during the period
Name of entity	Not applicable
Date of the control gained or lost	Not applicable
Contribution of entity to reporting entity’s profit from ordinary activities during the period	Not applicable
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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