EVZ LIMITED — Annual Report 2019

Sep 26, 2019

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EVZ Limited Annual Financial Report

For the year ended 30 June 2019

ACN 010 550 357

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Chairman’s report

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During the 2019 Financial Year the EVZ Group delivered the following significant achievements:

• Revenues from ordinary activities increased by 20% to $78.0 million.

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

• EBITDA profit was $2.9 million.

• Successful raising of $3.5M new equity through an institutional placement in August 2018.

• Reduction in interest bearing debt to $3.3M from $6.0M.

Activities of the three operating divisions are summarised below:

Brockman Engineering produced a solid financial performance for the financial year and continues to be a lead player in petrochemical and water tank construction, maintenance and piping fabrication sector. 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.

Syfon Systems continues to be the leading syphonic roof stormwater drainage company in Australia and South East Asia. While still producing a profitable operating performance in the 2019 financial year, its Malaysian business was impacted by a temporary general industry slow-down following the change of government. The Malaysian business is expected to rebound in the 2020 financial year and in addition, Syfon remains committed to expanding in Vietnam and subsequent other Asian countries to continue a progressive geographic expansion strategy.

TSF Power provides power generation breakdown and maintenance services. The 2019 financial year involved business restructuring costs and during this time it did not produce the required revenue levels to achieve a profitable result. However, the business is now well placed to return to profitability in the 2020 financial year.

I would like to thank our loyal shareholders for their support and welcome new shareholders who have joined us on the expectation of improved value from growth in operational turnover and profitability. The Directors and Management of EVZ limited are totally committed to furthering the success gained to date and achieving greater and more successful outcomes in the future.

I would also like to thank the senior management teams and their people for their ongoing commitment to their quality products and customers and who represent the EVZ Group in the best possible way in doing so. I also thank my fellow Directors Rob Edgley and Ian Luck.

I commend the 2019 Annual Report to you.

Sincerely

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Graham Burns Chairman

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Annual financial report 2019

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Contents
Section Page
Chairman’s report ..................................................................................................................... 2
Contents .................................................................................................................................... 3
Corporate directory .................................................................................................................. 4
Directors’ report ........................................................................................................................ 5
Corporate governance statement .......................................................................................... 14
Auditor’s independence declaration ..................................................................................... 23
Consolidated statement of profit or loss .............................................................................. 24
Consolidated statement of comprehensive income ............................................................. 25
Consolidated statement of financial position ....................................................................... 26
Consolidated statement of changes in equity ...................................................................... 27
Consolidated statement of cash flows .................................................................................. 28
Notes to the consolidated financial statements ................................................................... 29
Directors’ declaration ............................................................................................................. 73
Independent auditors’ report ................................................................................................. 74
Additional shareholder information ...................................................................................... 77

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Corporate directory

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Directors	G Burns (Non-Executive Chairman)
	R Edgley (Non-Executive Director)
	I Luck (Non-Executive Director)
Chief Executive Officer	S Farthing
Chief Financial Officer &	P van der Wal
Company Secretary
Registered & principal office	115
	Melbourne Vic 3008
	Telephone: (03) 9545 5288
	Facsimile: (03) 9542 6061
	Email: pieter.vanderwal@evz.com.au
Share registry	Computershare Investor Services Pty Ltd
	452 Johnston Street
	Abbotsford Vic 3067
	Telephone: 1300 137 328
	Facsimile: 1300 137 341
Auditors	Grant Thornton
	Collins Square, Tower 5
	727 Collins Street
	Melbourne Vic 3008
Bankers	Commonwealth Bank of Australia
Stock exchange listing	Australian Securities Exchange Limited
	(Home exchange – Melbourne)
	ASX Code: EVZ

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Directors’ report

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The Directors present their report on the financial statements of the Company and consolidated entity for the year ended 30 June 2019. To comply with the provisions of the Corporations Act, the Directors report as follows:

Directors

The following persons were Directors of the Company during the financial year and up to the date of this report:

Graham Burns Robert Edgely Ian Luck

Information on directors

Details of the Directors of the Company in office at the date of this report are:

Graham Burns Appointed 1 February 2008 – Non-Executive Chairman. Mr Burns was appointed Chairman on 5 July 2016. Mr Burns, age 64, has extensive managerial skills and experience in the property, retail and manufacturing sectors. He is currently the Chief Executive of Hunter Land which is a significant industrial developer in regional New South Wales.

	Mr Burns FAICD, is a member of the Remuneration, Audit and Nomination Committees.
	Interest in EVZ Limited Shares: 8,135,200 ordinary shares
	Other current directorships: None
	Previous directorships (last 3 years): None
Robert Edgley	Appointed 26 August 2011 – Non-Executive Director.
	Mr Edgley, age 54, holds a bachelor’s degree in Economics from Monash University
	together with a second degree in Japanese language. Mr Edgley’s career has been
	predominantly focused in International Finance and Investment Banking in Australia, the
	UK and throughout Asia.

Mr Edgley has significant experience and skills in strategic planning, performance management and marketing and has proven abilities in building businesses.

Mr Edgley is Chairman of the Audit Committee and a member of the Remuneration and Nomination Committees.

Interest in EVZ Limited Shares:	2,295,715 ordinary shares.
Other current directorships:	Self Wealth Limited (SWF)
	(Appointed 16 April 2019)
Previous directorships (last 3 years):	Praemium Limited (PPS)
	(Resigned 12 May 2017)

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Directors’ report (continued)

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Information on directors (continued)

Ian Luck Appointed 3 July 2017– Non-Executive Director.

Mr Luck, age 67, has significant experience in the Engineering and Construction Sector with 40 years’ experience in business leadership in Australia. His career features a balanced blend of complex business leadership, strategy and governance roles that focus on creating high performing teams to deliver outstanding growth and profitability. He currently is a Non-Executive Director of McConnell Dowell (an Australian design and construction group which is a fully owned subsidiary of Aveng Limited, which is listed on the Johannesburg Stock Exchange in South Africa). Previously he has been the Managing Director of Baulderstone and a key manager in Leighton Contractors.

Mr Luck has a B Tech. Civil Engineering, a FIE Aust and a CPEng

Mr Luck is a member of the Audit Committee and Nomination Committee and Chairman of the Remuneration Committee.

Interest in EVZ Limited Shares:	500,000 ordinary shares
Other current directorships:	McConnell Dowell Corporation Limited
Previous directorships (last 3 years):	None

Directors’ Meetings

The following table sets out the number of Directors’ Meetings (including meetings of any committee of Directors) held during the financial year and the number of meetings attended by each Director (whilst they were a Director or Committee member):

Directors’ Meetings

Directors’ Meetings
Total number of meetings held: 14
	No. Attended	No. Held
		Whilst a Director
G Burns	14	14
R Edgley	14	14
I Luck	13	14
Remuneration Committee Meetings
Total number of meetings held: 5
	No. Attended	No. Held
		Whilst a Member
G Burns	5	5
R Edgley	5	5
I Luck	5	5

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Directors’ report (continued)

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Audit committee meetings Total number of meetings held: 3

	No. Attended	No. Held
		Whilst a Member
R Edgley – Chairman	4	4
I Luck	4	4
G Burns	4	4

There were no meetings of the Nomination Committee held during the year.

Company secretary

The Company Secretary is Pieter van der Wal. He was appointed 4 September 2017. Mr van der Wal has a Bachelor of Business and is a Chartered Accountant with company secretarial experience.

Principal activities

The consolidated entity operates in the engineering and energy services sectors and its principal activities are:

• Design, manufacture, service and maintenance of large steel tanks for use in the water, petrochemical and chemical industries.

• Design, construction, on-site installation, maintenance and shutdown engineering services to the mining, wood chip, petrochemical, aluminium, glass, cement, defence and agriculture industries.

• Design and installation of syphonic roof drainage systems to major buildings including airports, shopping centres and sporting venues throughout Australia and South East Asia.

• Design, installation and maintenance of clean energy solutions, base and back-up power generation equipment, communications equipment, marine installations and provision of mobile generation capabilities.

Operating results

The net profit for the consolidated entity for the year after income tax expense was $1,624,975 compared to a net profit after income tax expense in 2018 of $2,341,980.

The following significant achievements occurred during the financial year:

• Revenues from ordinary activities increased by 20% to $78.0 million for 2019.

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

• Successful raising of $3.5M new equity through an institutional placement in August 2018.

• Reduction in interest bearing debt to $3.3M from $6.0M.

• 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 statement of financial position in specialist engineering sectors.

Dividends

No dividends were declared or paid during the year.

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Directors’ report (continued)

Changes in state of affairs

There was no change in the state of affairs.

Subsequent events

There have not been any 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 consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years after the financial year.

Future developments

The Group will continue its focus on investing in growth across all its businesses and the reduction/retirement of debt.

Proceedings on behalf of the company

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under Section 237 of the Corporations Act 2001.

Environmental regulation

The consolidated entity is not subject to any significant environmental regulations under a Commonwealth, State or Territory Law.

Insurance of officers

During the financial year the Company insured the Directors and Officers of the Company against legal costs that may be brought against the Directors and Officers in their capacity as Officers of the Company. The policy provides for confidentiality with respect to its premium.

Non-audit services

During the current and prior year there were no Non-audit services provided by the Company’s auditors.

Auditors’ independence declaration

As required under Section 307C of the Corporations Act 2001, EVZ Limited has obtained an Independence Declaration from its auditors, Grant Thornton. This is included on page 23 of this financial report.

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Directors’ report (continued)

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Remuneration report

This report details the nature and amount of remuneration for each Director of the Company and for Key Management Personnel.

Remuneration policy

The remuneration policy of the Company has been designed to align Director and Executive remuneration with shareholder and business objectives by providing a fixed remuneration component and where appropriate offering specific short and long-term incentives based on key performance areas affecting the consolidated entity’s financial results. The Board believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best Directors and Executives to govern and manage the consolidated entity, as well as to create goal congruence between Directors, Executives and Shareholders.

Executive remuneration

The Board’s policy for determining the nature and amount of remuneration for key senior Executives for the consolidated entity is as follows:

• The remuneration policy, setting the terms and conditions for Executive officers, was developed by the Remuneration Committee and approved by the Board after seeking professional advice where appropriate from independent external consultants.

• All Executives receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits and where appropriate performance incentives.

The Remuneration Committee reviews Executive remuneration packages annually with reference to the consolidated entity’s performance, each Executive’s performance and comparable information from industry sectors and listed companies in similar industries. The performance of each Executive is measured against criteria agreed and is predominantly measured by comparing actual growth against forecast growth of the consolidated entity’s profits and shareholders’ value. Bonuses and incentives will be linked to predetermined performance criteria. The Board may, however, exercise its discretion in relation to approving incentives, bonuses and options, and can recommend changes to the Remuneration Committee’s recommendations. Any changes must be justified by reference to measurable performance criteria. The policy is designed to attract the highest calibre of Executives and reward them for performance that results in long-term growth in shareholder wealth.

The Remuneration Committee set certain key performance indicators for the key Executives in the Group to determine eligibility for short term incentive payments. The key performance indicators were both quantitative and qualitative measures. Short term incentives paid/payable for the year were $105,766 (2018: $218,195).

Long term incentives, linked with performance rights issued under the Company’s’ Directors’ and Employees’ Benefits Plan, were not met during the year and no performance rights, options or shares were issued.

Executives receive a superannuation guarantee contribution as required by the Government and do not receive any other retirement benefits. Individuals may choose to sacrifice part of their salary to increase payments towards superannuation. All remuneration paid to Executives is valued at the cost to the Company and expensed.

Director remuneration

The Board’s policy is to remunerate Non-Executive Directors at appropriate market rates. The Remuneration Committee recommends the fee structure for Non-Executive Directors which will be determined by reference to market practice, duties performed, time, commitment and accountability. Director fees are reviewed annually by the Remuneration Committee.

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Directors’ report (continued)

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Remuneration report (continued)

The Remuneration Committee may seek independent advice in determining appropriate fee structures for Directors.

The maximum aggregate amount of fees payable to Non-Executive Directors is subject to approval by shareholders at the Annual General Meeting. Fees for Non-Executive Directors are not linked to the performance of the consolidated entity. However, to align Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the Company and may be able to participate in any employee share/option plan introduced.

All remuneration paid to Directors is valued at the cost to the Company and expensed.

Shares and options Issued as part of remuneration

Shareholders had previously approved the EVZ Directors’ and Employees’ Benefits Plan (the “Plan”) which allows employees, Directors and others (“Eligible Persons”) to be granted shares, options and performance rights in the Company. The object of this Plan is to help the Company recruit, reward, retain and motivate its employees and Directors.

Such shares, options and performance rights would be offered only to those Eligible Persons entitled to receive an invitation. Those Eligible Persons would be:

• a Director or Secretary of a Group Company;

• an employee in permanent full-time or permanent part-time employment of a Group Company; or

• a contractor to a Group Company who is selected by the Board to participate in the Plan.

Invitations to Eligible Persons will be made by the Board and may be made subject to such conditions and rules as the Board determines, including:

• In the case of Options, the exercise period, the exercise price and the exercise conditions.

• In the case of Shares, the issue price payable on acceptance of the application by the Company and issue of the shares and any other specific terms and conditions of issue.

• In the case of Performance Rights, the performance criteria and the performance period in which those performance criteria must be satisfied.

The issue of any securities (including options or performance rights) issued to any Director or their associates will still require shareholder approval under ASX Listing Rule 10.14.

The maximum number of shares issued pursuant to the Plan would be not more than 5% of the equity interests in the Company.

There were no share-based payments during the year.

Performance based remuneration

During the year to 30 June 2019, performance-based remuneration paid/payable totalled $105,766 (2018: $218,195). The payments made in 2019 of $105,766 related to 2018 financial performance. No Incentives were paid or payable for the 2019 financial year performance.

Short term performance-based payments were based on achieving certain key performance indicators which were quantitative measures based on business profitability and improvement in forward work in hand. Both measures are considered to be drivers of shareholder value.

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Directors’ report (continued)

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Remuneration report (continued)

Company performance, shareholder wealth and directors’ and executives’ remuneration

The remuneration policy has been tailored to increase goal congruence between shareholders and Directors and Executives.

Details of remuneration for the year ended 30 June 2019

The remuneration for each Director and each of Key Management Personnel of the consolidated entity during the year was as follows:

Directors		Short-term employee benefits Post-employment benefits Salary Fees Superannuation Contributions Other Total
2019 G Burns R Edgley I Luck 2018 G Burns R Edgley I Luck		$ $ $ $ - 80,000 - - 80,000 - 50,000 - - 50,000 - 50,000 - - 50,000
		- 180,000 - - 180,000
		- 80,000 - - 80,000 - 50,000 - - 50,000 - 50,000 - - 50,000
		- 180,000 - - 180,000

Key management personnel of the Consolidated entity

Key management personnel of the Consolidated entity	Key management personnel of the Consolidated entity	Short-term employee	benefits	Post-employment benefits	Post-employment benefits
	Salary	Profit share & bonus	Non cash benefits	Superannuation Contributions	Termination benefits	Total
2019	$		$	$		$
S Farthing
(Chief Executive Officer)	397,716	-	-	20,451	-	418,167
P van der Wal
(Chief Financial Officer & Company Secretary)	219,178	-	-	20,822	-	240,000
A Bellgrove
(General Manager, Syfon Systems)	284,063	39,737	34,200	20,531	-	378,531
C Bishop
(General Manager, Brockman Engineering)	280,371	7,229	-	25,551	-	313,151
J Hughes(appointed 15 October 2018)
(General Manager, TSF Power)	138,461	-	-	13,154	-	151,615
I Whitford(Resigned 28 September 2018)
(General Manager, TSF Power)	52,698	-	-	5,006	-	57,704
	1,372,487	46,966	34,200	105,515	-	1,559,168

		Short-term employee	benefits	Post-employment benefits
	Salary	Profit share & bonus	Non cash benefits	Superannuation Contributions	Termination benefits	Total
2018	$		$	$		$
S Farthing
(Chief Executive Officer)	355,041	135,750	-	20,049	-	510,840
I Wallace(resigned 4 September 2017)
(Chief Financial Officer & Company Secretary)	85,747	-	-	8,146	58,587	152,479
P van der Wal(appointed 4 September 2017)
(Chief Financial Officer & Company Secretary)	175,631	-	-	16,652	-	192,283
A Bellgrove
(General Manager, Syfon Systems)	274,977	23,645	23,353	20,049	-	342,023
C Bishop
(General Manager, Brockman Engineering)	262,469	58,800	-	25,480	-	346,749
I Whitford
(General Manager, TSF Power)	168,950	-	-	16,050	-	185,000
	1,322,814	218,195	23,353	106,426	58,587	1,729,374

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Directors’ report (continued)

Remuneration report (continued)

Remuneration and other terms of employment for key Executives are formalised in employment service agreements. Each of these agreements may provide for the provision of other benefits including car allowances. These agreements have no fixed term. There are no other standard termination provisions excluding notice periods. Notice periods are generally between three and six months.

Additional disclosures relating to key management personnel

The number of ordinary shares held by key management personnel of the Group during the financial year is as below. There were no share options or rights held by key management personnel during the financial year:

2019	Balance at beginning of year Granted as remuneration Purchased or (Sold) 10:1 Share Consolidation Balance at end ofyear
G Burns R Edgley	80,000,000 - 1,352,000 (73,216,800) 8,135,200 22,957,142 - - (20,661,427) 2,295,715
I Luck S Farthing P van der Wal C Bishop A Bellgrove J Hughes(appointed 15 October 2018) I Whitford(resigned 28 September 2018)	5,000,000 - - (4,500,000) 500,000 11,640,483 3,236,794 - (13,389,549) 1,487,728 1,000,000 - - (900,000) 100,000 - - - - - 12,405,493 1,286,215 - (12,322,537) 1,369,171 - - - - - - - - - -
	133,003,118 4,523,009 1,352,000 (124,990,313) 13,887,814
2018	Balance at beginning of year Granted as remuneration Purchased or (Sold) Balance at end ofyear
G Burns R Edgley I Luck(appointed 3 July 2017) S Farthing P van der Wal(appointed 4 September 2017) C Bishop A Bellgrove I Whitford(resigned 28 September 2018) M Findlay(resigned 3 July 2017) I Wallace(resigned 4 September 2017)	48,380,141 - 31,619,859 80,000,000 10,543,473 - 12,413,669 22,957,142 - - 5,000,000 5,000,000 8,762,785 - 2,877,698 11,640,483 - - 1,000,000 1,000,000 - - - - 12,405,493 - - 12,405,493 - - - - 4,007,228 - (65,106) 3,942,122 211,387 - - 211,387
	84,310,507 - 52,846,120 137,156,627

This concludes the remuneration report, which has been audited.

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Directors’ report (continued)

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Signed in accordance with a resolution of the Board of Directors.

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Director – G Burns

Signed at Melbourne this 26[th] day of September 2019.

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Corporate governance statement For the year ended 30 June 2019

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Introduction

The Board of the Company is committed to protecting shareholders’ interests and ensuring investors are fully informed about the performance of the company’s business. The Directors have undertaken to perform their duties with honesty, integrity, care and diligence, according to the law and in a manner that reflects the highest standards of corporate governance.

The policies and practices of the company are in accordance with the ASX Corporate Governance Council’s “Corporate Governance Principles and Recommendations – 3[rd] Edition”.

Unless otherwise indicated, the best practice principles of the ASX Corporate Governance Council and suggested disclosures, have been adopted by the company for the year ended 30 June 2019 as relevant to the size and complexity of the company and its operations.

The Corporate Governance Statement is current at the date of approval of the annual report and has been approved by the Board of Directors.

Principle 1: Lay Solid Foundations for Management and Oversight

Recommendation 1.1: Respective roles and responsibilities of the Board and management.

The Board charter sets out the function and responsibilities of the Board. The Directors of the Company are accountable to shareholders for the proper management of business and affairs of the company.

The key responsibilities of the Board are to:

• establish, monitor and modify the corporate strategies of the company;

• ensure proper corporate governance;

• monitor and evaluate the performance of management of the company;

• ensure that appropriate risk management systems, internal control and reporting systems and compliance frameworks are in place and are operating effectively;

• assess the necessary and desirable competencies of Board members, review Board succession plans, evaluate its own performance and consider the appointment and removal of Directors;

• consider Executive remuneration and incentive policies, the company’s recruitment, retention and termination policies and procedures for senior management and the remuneration framework for NonExecutive Directors;

• monitor financial performance;

• approve decisions concerning the capital, including capital restructures, and dividend policy of the company; and

• comply with the reporting and other requirements of the law.

The Board delegates responsibility for day-to-day management of the company to the Chief Executive Officer (CEO), subject to certain financial limits. The CEO must consult the Board on matters that are sensitive, extraordinary, of a strategic nature or matters outside the permitted financial limits.

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Corporate governance statement (continued) For the year ended 30 June 2019

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Recommendation 1.2: Directors appointment

Non-Executive Directors appointed during the year hold office until the next annual general meeting, where they must stand for re-election. Each year one third of the Board of Directors (excluding the Managing Director) must retire and if they wish seek re-election at the annual general meeting. Board support for a Director’s reelection is not automatic and is subject to satisfactory Director performance.

Appropriate background checks are undertaken before a Director is nominated. At the annual general meeting shareholders are provided with all material information concerning the Director seeking election or re-election.

Recommendation 1.3: Terms of appointment

The Company has written agreements with all senior executives setting out the terms of their appointment. Written agreements have now been implemented for all new director appointments. The duties of the Directors as detailed above were provided to all directors.

Recommendation 1.4: Company secretary

The appointment and removal of the Company Secretary is a decision of the Board. The Company Secretary is accountable directly to the Board, through the Chairman, on all matters relating to the proper functioning of the Board and is responsible for ensuring compliance with Board procedures and governance matters. All Directors have direct access to the Company Secretary.

Recommendation 1.5: Diversity policy

The Group’s ultimate success is under-pinned by its employees. To maximise success, the Group encourages a diverse population of employees within its operations.

Diversity is defined to include race, ethnicity, gender, sexual orientation, socio-economic status, culture, age, physical ability, education, skill levels, family status, religious, political and other beliefs and work styles. The Group recognises that differences in ideas, backgrounds, patterns of thinking and approaches to work can generate value for the Group’s stakeholders: its customers, shareholders, personnel and the communities in which it operates. It is the Group’s policy to promote these differences within a productive, inclusive and performance-based environment in which everybody feels valued, where their skills are fully utilised, their performance is recognised, professional accountability is expected and organisational goals are met.

The Group’s approach to diversity is based on the following objectives:

• retain, promote and hire the best people possible, focusing on actual and potential contribution in terms of performance, competence, collaboration and professional accountability;

• foster an inclusive culture and ensure that current and future employee opportunities are based on competence and performance, irrespective of race, ethnicity, gender, sexual orientation, socio-economic status, culture, age, physical ability, education, family status, religious, political and other beliefs and work styles. This includes being intolerant of behaviour that denigrates or otherwise diminishes such attributes or that discriminates on the basis of such attributes;

• create and manage appropriate human resource processes which take a unified and talent-based approach to recruitment, training and development, performance management, retention and succession planning;

• provide a fair level of reward in order to attract and retain high calibre people – and build a culture of achievement by providing a transparent link between reward and performance; and

• be compliant with all mandatory diversity reporting requirements.

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Corporate governance statement (continued) For the year ended 30 June 2019

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The group’s measurable objective and current gender profile:

The Group’s measurable objective for increasing gender diversity is to increase the representation of women at all levels of its organisation over time. The Group’s progress towards achieving that objective, along with the proportion of women employees within the Group, women in senior Executive positions and women NonExecutive Directors, is set out in the table below:

		2019			2018
Measure	No.		%	No.		%
Women employees	31		8	25		7
Women Senior Executives *	-		-	-		-
Women Non-Executive Directors	-		-	-		-

• This includes both employees and specific contractors engaged by the Group.

Recommendation 1.6: Board and committee performance

The Board and its committees undertook self-assessment in accordance with their relevant charters during the financial year. The Chairman conducts annual one-on-one personal performance discussions with each of the individual Directors.

The Board was provided with all company information it needed in order to effectively discharge its responsibilities and were entitled to, and did, request additional information when considered necessary or desirable.

Recommendation 1.7: Senior executive performance

Reviews of the performance of Senior Executives are undertaken annually against established key performance indicators. At the same time goals and targets for the coming year are discussed and implemented. The annual evaluation of the CEO’s performance is a specific function of the Remuneration Committee.

Principle 2: Structure the board to add value

Recommendation 2.1: Nomination committee

The company has a duly appointed nomination committee. The committee operates pursuant to a nomination committee charter. The charter sets out the responsibilities of the committee including reviewing Board succession plans to ensure an appropriate balance of skills and expertise, developing policies and procedures for the appointments of Directors and identifying Directors with appropriate qualifications to fill Board committee vacancies. The term of Non-Executive Directorships is set out in the company’s constitution.

Given the size of the Board, the Board has determined it appropriate for the nomination committee to consist of the full Board of Directors.

Recommendation 2.2 and 2.3: Board composition

The Company’s Board is comprised of Non-Executive Directors.

Details of Directors and relevant skills are detailed in the following tables:

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Corporate governance statement (continued) For the year ended 30 June 2019

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Details of directors

Director Term in office Qualifications Graham Burns Appointed 1 February 2008 FAICD Robert Edgley Appointed 26 August 2011 BEc Ian Luck Appointed 3 July 2017 B Tech. Civil

Status

FAICD Independent BEc Independent B Tech. Civil Independent Engineering

Areas of competence and skills of the board of directors

Area Competence and skills Leadership Business leadership Public listed company experience Business & Finance Accounting expertise Business strategy Corporate turnarounds Corporate financing Mergers and acquisitions Risk management Commercial agreements Sustainability and Stakeholder management Corporate governance Remuneration Market and Industry Financial services expertise International Geographical experience and international business management

Recommendation 2.4: Director independence

All Directors including the chairman, are Non-Executive and independent Directors. Profiles of the Directors are set out in this annual report. All Directors are subject to retirement by rotation in accordance with the Company’s constitution but may stand for re-election by the shareholders. The composition of the Board is determined by the Board and, where appropriate, external advice is sought. The Board has adopted the following principles and guidelines in determining the composition of the Board:

To be independent, a Director ought to be Non-Executive and:

• not a current Executive of the company;

• ideally not held an Executive position in the company in the previous three years;

• not a nominee or associate of a shareholder holding more than 10% of the company’s shares;

• not significantly involved in the value chain of the organisation, either upstream or downstream; and

• not a current advisor to the company receiving fees or some other benefit, except for approved Director’s fees.

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Corporate governance statement (continued) For the year ended 30 June 2019

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Directors are encouraged to be long term shareholders in the company. Directors shareholdings are disclosed in the annual report. Any change in Directors’ shareholdings are disclosed in accordance with ASX Listing Rules. The Company’s policies allow Directors to seek independent advice at the Company’s expense.

Recommendation 2.5: Independence of chairman

The chairman, Graham Burns, is an Independent Director. He is responsible for the leadership of the Board and he has no other positions that hinder the effective performance of this role. The role of Chairman is independent to the role of CEO, which is held by Scott Farthing. There is a clear division of responsibility between these roles.

Recommendation 2.6: Induction and training

Any new Director will receive a letter of appointment. Directors are provided access to the company’s policies including the Board’s Charter. At Board meetings Directors receive regular updates and also undertake site visits, attend customer and financier meetings as required. These assist Directors to keep abreast of relevant market and industry developments.

Principle 3: Act ethically and responsibly

Recommendation 3.1: Code of conduct

The company has developed codes of conduct to guide all of the company’s employees, particularly Directors, the CEO, the CFO and other senior Executives, in respect of ethical behaviour. These codes are designed to maintain confidence in the company’s integrity and the responsibility and accountability of all individuals within the company for reporting unlawful and unethical practices. These codes of conduct embrace such areas as:

• conflicts of interest

• corporate opportunities

• confidentiality

• fair dealing and trade practices

• protection of assets

• compliance with laws, regulations and industry codes

• ‘whistle-blowing’

• security trading

• commitment to and recognition of the legitimate interests of stakeholders

Principle 4: Safeguard integrity in corporate reporting

Recommendation 4.1: Audit committee

The Board-appointed audit committee operates in accordance with the audit committee charter. The details of the committee meetings held during the year and attendance at those meetings are detailed in the Directors’ meeting schedule in the Directors’ report.

The audit committee consists of:

• Robert Edgley - Chairperson

• Ian Luck

• Graham Burns

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Corporate governance statement (continued) For the year ended 30 June 2019

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Each of the members of the committee is an independent, Non-Executive Director and the Chairman of the committee is not the Chairman of the Board. The CEO and the CFO/Company Secretary may attend the meetings at the invitation of the committee. All members of the committee are financially literate (i.e. they are able to read and understand financial statements) and have an understanding of the industry in which the company operates.

The audit committee provides an independent review of:

• financial information produced by the company;

• the accounting policies adopted by the company;

• the effectiveness of the accounting and internal control systems and management reporting which are designed to safeguard company assets;

• the quality of the external audit functions;

• external auditor’s performance and independence as well as considering such matters as replacing the external auditor where and when necessary; and

• identifying risk areas.

Recommendation 4.2: CEO and CFO assurance

The CEO and CFO have provided to the Board formal declarations that the integrity of the financial statements is founded on a system of risk management and internal control which supports the policies adopted by the Board and that the company’s risk management and internal control system is operating effectively in all material respects to manage the company’s material business risks.

Recommendation 4.3: Auditor attendance

The Company’s Auditor is Grant Thornton. The Auditor has and will continue to attend the Annual General Meeting in order to be available to answer questions relating to the audit raised by security holders.

Principle 5: Make timely and balanced disclosure

The Board recognises that the company, as an entity listed on the ASX, has an obligation to make timely and balanced disclosure in accordance with the requirements of the Australian Securities Exchange Listing Rules and the Corporations Act 2001. The Board also is of the view that an appropriately informed shareholder base and market is essential to an efficient market for the company’s securities. The Board is committed to ensuring that shareholders and the market have timely and balanced disclosure of matters concerning the company. In demonstration of this commitment, the company has adopted a formal external communications policy including a continuous disclosure policy.

In order to ensure the company meets its obligations of timely disclosure of such information, the company has adopted the following policies:

• immediate notification to the ASX of information concerning the company that a reasonable person would expect to have a material effect on the price or value of the company’s securities as prescribed under listing rule 3.1, except where such information is not required to be disclosed in accordance with the exception provisions of the listing rules;

• the company has a website where all relevant information disclosed to the ASX will be promptly placed on the website following receipt of confirmation from the ASX and, where it is deemed desirable, released to the wider media; and

• the company will not respond to market rumours or speculation, except where required to do so under the listing rules.

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Corporate governance statement (continued) For the year ended 30 June 2019

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Based on information provided to the company secretary by Directors, officers and employees, the company secretary is responsible for determining which information is to be disclosed and for the overall administration of this policy.

Principle 6: Respect the rights of shareholders

Recommendation 6.1: Website

The Company has a website which includes details of the Company and the operating entities in the Group. The website also includes the Company’s annual report which contains within it the Company’s Corporate Governance statement. The Company is currently updating this website to include a separate Corporate Governance page.

Recommendation 6.2: Communications with investors

The Board recognises that shareholders are the beneficial owners of the company and respects their rights and is continually seeking ways to assist shareholders in the exercise of those rights. The Board also recognises that as owners of the company the shareholders may best contribute to the company’s growth, value and prosperity if they are appropriately informed. To this end the Board seeks to empower shareholders by:

• communicating effectively with shareholders;

• enabling shareholders to have access to balanced and understandable information about the company and its operations; and

• promoting shareholder participation in general meetings.

All shareholders are entitled to receive a copy of the company’s annual report. In addition, the company’s website will provide opportunities to shareholders to access company announcements, media releases and financial reports.

Recommendation 6.3: Participation at meetings by security holders

The Board is committed to assisting shareholders’ participation in meetings and has adopted the following measures:

• adoption of the ASX Corporate Governance Council’s recommendation and guidelines as published in the Council’s Corporate Governance Principles and Recommendations in respect of notices of meetings;

• providing sufficient time and adequate opportunity at meetings for shareholders to ask questions and make comments to the Board, and

• ensuring that a representative of the company’s external auditor, subject to availability, is present at all annual general meetings and that shareholders have adequate opportunity to ask questions of the auditor at that meeting concerning the audit and preparation and content of the auditor’s report.

The current size of the Company prohibits technology such as live webcasting and meetings across multiple venues linked by live telecommunications. The Company allows electronic lodgement of proxies for its meetings.

Recommendation 6.4: Electronic communication

The Company provides security holders with the option to receive communications from the entity and its security registry, such as notice of meetings, explanatory memorandums, proxy forms and annual reports electronically. A corporate email address is provided via the website to allow security holders to communicate with the Company.

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Corporate governance statement (continued) For the year ended 30 June 2019

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The Company allows electronic lodgement of proxies for its meetings.

Principle 7: Recognise and manage risk

Recommendation 7.1: Risk committee

Overall risk management is the responsibility of the Audit Committee and covered within that Committee’s Charter.

The Board has overall responsibility to all stakeholders for the identification, assessment, management and monitoring of the risks faced by the company. The company currently has informal policies and procedures for risk management and the audit committee seeks to ensure compliance with regulatory requirements. The operational risks are managed at the senior management level and escalated to the Board for direction where the issue is exceptional, non-recurring or may impose a material financial or operational burden on the company. The relatively small size of the company means that communication and decision-making is predominantly centralised allowing early identification of risks by senior management. It also allows senior management to respond to each risk as appropriate without the need for a written risk management policy. In addition, a monthly risk report is tabled at the Board meeting for consideration.

Recommendation 7.2: Risk management framework

Given the relatively small and centralised management team, the nature of the business of the company and that a majority of independent Directors sit on the audit committee, the Board is continuously kept informed of the effectiveness of the company’s internal control systems. In addition, a monthly risk report is tabled at the Board meeting for consideration.

Recommendation 7.3: Internal audit

The Company does not currently have any internal audit function. The Board considers that given the Company’s current size there is no benefit in having an internal audit function. Independent advice will be sought as necessary. The Board has overall responsibility for the identification, assessment, management and monitoring of the risks faced by the company.

Recommendation 7.4: Risk management

The Board monitors its exposure to all risks, including economic, environmental and social sustainability risks on a monthly basis. Any material business risks will be disclosed in the annual report, which also outlines the activities, performance, financial position of the Company and its businesses.

Principle 8: Remunerate fairly and responsibly

Recommendation 8.1 and 8.2: Remuneration committee and policies

The company has a duly appointed remuneration committee. The committee operates pursuant to the remuneration committee charter.

The remuneration committee consists of:

• Ian Luck

• Graham Burns

• Rob Edgley

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Corporate governance statement (continued) For the year ended 30 June 2019

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The Company’s approach to remuneration is set out in the Remuneration Report contained within this annual report.

• The primary responsibilities of the remuneration committee are:

• Establish appropriate remuneration policies for Directors, the CEO and other senior Executives which are effective in attracting and/or retaining the best Directors and Executives to monitor and manage EVZ Limited, whilst ensuring goal congruence between shareholders, Directors and Executives.

• Ensuring appropriate disclosure of remuneration in line with the Corporations Act, ASX Listing Rules and Corporate Governance guidelines.

Non-Executive Directors are remunerated by way of fees. They may receive options (subject to shareholder approval) but there is no scheme for retirement benefits, other than statutory superannuation. Executives are paid a salary and may be provided, under the Directors’ and Employees’ Benefits Plan, with shares, performance rights and/or options and bonuses as part of their remuneration and incentive package.

There are no Executive Directors.

Recommendation 8.3: Equity based remuneration scheme

There is currently in place an EVZ Directors’ and Employees’ Benefits Plan (the “Plan”) which allows employees, Directors and others (“Eligible Persons”) to be granted shares, options and performance rights in the Company. The object of this Plan is to help the Company recruit, reward, retain and motivate its employees and Directors.

Such shares, options and performance rights would be offered only to those Eligible Persons entitled to receive an invitation. Those Eligible Persons would be:

• a Director or Secretary of a Group Company;

• an employee in permanent full-time or permanent part-time employment of a Group Company; or

• a contractor to a Group Company.

Invitations to Eligible Persons will be made by the Board and may be made subject to such conditions and rules as the Board determines, including:

• In the case of Options, the exercise period, the exercise price and the exercise conditions.

• In the case of Shares, the issue price payable on acceptance of the application by the Company and issue of the shares and any other specific terms and conditions of issue.

• In the case of Performance Rights, the performance criteria and the performance period in which those performance criteria must be satisfied.

The issue of any securities (including options or performance rights) issued to any Director or their associates will still require shareholder approval under ASX Listing Rule 10.14.

The maximum number of shares issued pursuant to the Plan would be not more than 5% of the equity interests in the Company.

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Auditor’s independence declaration

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Consolidated statement of profit or loss For the year ended 30 June 2019

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Notes Continuing operations Revenue Cost of sales Gross profit Other Income 2(a) Administration and business development costs Corporate costs Profit before finance costs and income tax Net finance costs 2(c) Profit before income tax from continuing operations Income tax (expense)/benefit 3 Profit for the year attributed to members after tax Earnings per share Overall operations: Basic earnings per share 17 Diluted earnings per share 17 Continuing operations: Basic earnings per share 17 Diluted earnings per share 17	2019 2018 $ $ 78,042,293 64,928,395 (65,643,997) (51,793,049) Consolidated entity
	12,398,296 13,135,346 72,777 96,694 (8,965,536) (8,700,181) (1,365,164) (1,427,327)
	2,140,373 3,104,532 (411,955) (619,721)
	1,728,418 2,484,811 (103,443) (142,831)
	1,624,975 2,341,980
	Cents Cents 1.735 3.155 1.708 3.093 1.735 3.155 1.708 3.093

The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.

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Consolidated statement of comprehensive income For the year ended 30 June 2019

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Consolidated statement of comprehensive income For the year ended 30 June 2019
Notes Profit for the year after tax Other comprehensive income: Items that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations 16(b) Total comprehensive income for the year attributable to owners of the company	2019 2018 $ $ 1,624,975 2,341,980 35,647 203,941 Consolidated entity
	1,660,622 2,545,921

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

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Consolidated statement of financial position As at 30 June 2019

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Notes Current assets Cash and cash equivalents 22 Trade and other receivables 4 Contract assets 5 Inventories 6(a) Financial assets 6(b) Total current assets Non-current assets	2019 2018 $ $ 2,772,182 1,706,883 16,540,057 16,939,999 3,156,104 - 2,313,984 1,971,101 189,612 178,570 Consolidated entity
	24,971,939 20,796,553
Trade and other receivables 4	1,612,075 1,587,673
Plant and equipment 7	4,870,664 3,869,464
Deferred tax assets 8	2,604,954 2,632,131
Intangibles 9 Total non-current assets Total assets Current liabilities Trade and other payables 10 Contract liabilities 5 Tax liabilities 8 Short-term borrowings 11 Provisions 13 Total current liabilities Non-current liabilities Long-term borrowings 12 Deferred tax liabilities 8 Provisions-non current 13 Total non-current liabilities Total liabilities Net assets Equity Issued capital 14 Reserves 16 Accumulated losses 16 Total equity	12,072,010 12,072,010
	21,159,703 20,161,278
	46,131,642 40,957,831
	13,853,414 12,233,514 1,584,027 - 31,335 103,542 3,372,272 511,529 2,926,188 2,986,944
	21,767,236 15,835,529
	284,397 6,000,000 50,549 49,200 41,526 121,903
	376,472 6,171,103
	22,143,708 22,006,632
	23,987,934 18,951,199
	56,457,180 52,972,129 277,171 241,524 (32,746,417) (34,262,454)
	23,987,934 18,951,199

The above consolidated statement of financial position should be read in conjunction with the accompanying notes

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Consolidated statement of changes in equity For the year ended 30 June 2019

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Consolidated entity As at 30 June 2019	Issued capital Accumulated losses Share options reserve Foreign currency translation reserve Total $ $ $ $
Balance at 30 June 2018 Adjustment on adoption of AASB 9 Balance at 1 July 2018 Total comprehensive profit for period Profit/(loss) for period Foreign currency translation reserve Total comprehensive income for period Transactions with owners, recorded directly in equity: Shares issued Share Issue Costs Balance at 30 June 2019	52,972,129 (34,262,454) 300,000 (58,476) 18,951,199 - (108,938) - (108,938)
	52,972,129 (34,371,392) 300,000 (58,476) 18,842,261 - 1,624,975 - - 1,624,975 - - - 35,647 35,647
	- 1,624,975 - 35,647 1,660,622
	3,681,061 - - - 3,681,061 (196,010) - - - (196,010)
	56,457,180 (32,746,417) 300,000 (22,829) 23,987,934
Consolidated entity	Issued capital Accumulated losses Share options reserve Foreign currency translation reserve Total
As at 30 June 2018	$ $ $ $
Balance at 1 July 2017 Total comprehensive profit for period Profit/(loss) for period Foreign currency translation reserve Total comprehensive income for period Transactions with owners, recorded directly in equity: Shares issued Share Issue costs Balance at 30 June 2018	50,434,876 (36,604,434) - (262,417) 13,568,025
	- 2,341,980 - - 2,341,980 - - - 203,941 203,941
	- 2,341,980 - 203,941 2,545,921
	3,282,506 - - - 3,282,506 (745,253) 300,000 (445,253)
	52,972,129 (34,262,454) 300,000 (58,476) 18,951,199

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

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Consolidated statement of cash flows For the year ended 30 June 2019

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Notes Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Finance costs Income tax paid Net cash provided by / (used in) operating activities 22 Cash flows from investing activities Proceeds from sale of plant and equipment Purchase of plant and equipment 7 Net cash used in investing activities Cash flows from financing activities Proceeds from equity raising Share issue costs Repayment of loans Procceds from / (repayment) of finance leases Net cash provided by financing activities Net increase/(decrease) in cash held Cash at beginning of the period Cash at end of the period 22	2019 2018 $ $ 82,525,701 65,230,179 (79,501,810) (65,944,908) 9,090 3,999 (421,046) (623,720) (147,125) (78,735) Consolidated entity
	2,464,810 (1,413,185)
	5,169 (1,208) (1,738,659) (762,961)
	(1,733,490) (764,169)
	3,484,850 2,982,506 (196,010) (145,253) (3,248,951) (448,950) 294,090 (56,036)
	333,979 2,332,267
	1,065,299 154,913 1,706,883 1,551,970
	2,772,182 1,706,883

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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1. Summary of significant accounting policies

General information and statement of compliance

This financial report includes the consolidated financial statements and notes of EVZ Limited and controlled entities (‘Consolidated Entity’ or ‘Group’).

The consolidated general-purpose financial statements of the Group have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board (AASB). Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). EVZ Limited is a forprofit entity statements prepared on accruals basis under the historical cost convention.

They have been consistently applied unless otherwise stated.

(a) New and amended accounting standards adopted by the consolidated entity

A number of new or amended standards became applicable for the current reporting period and the consolidated entity had to change its accounting policies and make retrospective adjustments as a result of adopting the following standards:

• AASB 9 Financial Instruments, and

• AASB 15 Revenue from Contracts with Customers.

The other standards did not have any impact on the consolidated entity’s accounting policies and did not require retrospective adjustments.

AASB 9 Financial Instruments - accounting policies applied from 1 July 2018

Impact of adoption

AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: recognition and measurement. It makes major changes to the previous guidance on the classification and measurement of financial assets and introduces an ‘expected credit loss’ model for impairment of financial assets.

When adopting AASB 9, the Group has applied transitional relief and opted not to restate prior periods. Differences arising from the adoption of AASB 9 in relation to classification, measurement, and impairment are recognised in opening retained earnings as at 1 July 2018.

Classification and measurement of financial assets

From 1 July 2018, the consolidated entity classifies its financial assets in the following measurement category:

• those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. The classifications adopted by the Group from 1 July 2018 are unchanged from the previous period classifications.

Measurement of financial assets

At initial recognition, the consolidated entity measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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1. Summary of significant accounting policies (continued)

• (a) New and amended accounting standards adopted by the consolidated entity (continued)

Impairment of financial assets

For trade receivables and contract assets under AASB 15 the Group applies a simplified approach of recognising lifetime expected credit losses as these items do not have a significant financing component. The impairment allowance for trade receivables was increased by $108,938 at 1 July 2018.

Classification and measurement of financial liabilities

As the accounting for financial liabilities remains largely unchanged from AASB 139, the consolidated entity’s financial liabilities were not impacted by the adoption of AASB 9.

AASB 15 Revenue from contracts with customers – accounting policies applied from 1 July 2018

Impact of adoption

The consolidated entity has adopted AASB 15 Revenue from contracts with customers from 1 July 2018.

In accordance with the transition provisions in AASB 15, the consolidated entity has adopted the new rules at 1 July 2018 without applying the changes to comparatives. There was no impact on the measurement of retained earnings at 1 July 2018 or on the amounts recognised in profit or loss for the period ending 30 June 2019 from the adoption of this standard.

Classification and measurement of revenue from contracts with customers

The impact on classification is as follows:

• At 1 July 2018, $2,146,276 of contract assets were reclassified from trade and other receivables to contract assets. At 30 June 2019, this reclassification amounts to $3,156,104.

• At 1 July 2018, $1,465,267 of contract liabilities were reclassified from trade and other payables to contract liabilities. At 30 June 2019, this reclassification amounts to $1,584,027.

Policies applied from 1 July 2018

Details of the new requirements of AASB 15 as well as the judgments and estimates used in determining any possible impacts are described below.

The core principle of AASB 15 is that an entity shall recognise revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This means that revenue will be recognised when control of goods or services is transferred rather than on transfer of risks and rewards.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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1. Summary of significant accounting policies (continued)

• (a) New and amended accounting standards adopted by the consolidated entity (continued)

Construction revenue

The contractual terms and the way in which the consolidated entity operates its construction contracts is predominantly derived from projects containing one performance obligation. Contracted revenue will continue to be recognised over time using the cost incurred to measure progress. The requirements of over time measurement are met as the construction creates assets with no alternative use to the consolidated entity and there is an enforceable right to payment including a reasonable profit margin, for performance completed.

The consolidated entity has also reviewed variable consideration such as incentives, as well as accounting for claims and variations as contract modifications which all impart a higher threshold of probability for recognition. As is required in the new standard, revenue is being recognised when it is highly probable that a significant reversal of revenue will not occur for these modifications.

Services revenue

Services revenue arises from maintenance and other services supplied to infrastructure assets and facilities which may involve a range of services and processes. Under AASB 15, these are predominantly to be recognised over time with reference to inputs on satisfaction of the performance obligations. The services that have been determined to be one performance obligation are highly inter-related and fulfilled over time therefore revenue will continue to be recognised over time. As with construction revenue, incentives, variations and claims exist which are subject to the same higher threshold criteria of only recognising revenue to the extent it is highly probable that a significant reversal of revenue will not happen.

Tender costs

Costs incurred during the tender process across the consolidated entity will be expensed. Under the new standard costs can only be capitalised if they are both expected to be recovered and either would not have been incurred if the contract had not been won or if they are intrinsic to the delivery of a project.

Impact of standards issued but not yet applied by the entity

AASB 16 – Leases

AASB 16 Leases specifies how to recognise, measure and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise right-of-use assets and lease liabilities for almost all leases. The exceptions being short-term (less than 12 months) and low value leases. Lessor accounting remains similar to the current standard – i.e. lessors continue to classify leases as finance or operating leases. AASB 16 applies to annual reporting periods beginning on or after 1 January 2019 and replaces AASB 117 Leases and the related interpretations.

As at the reporting date, the group has non-cancellable operating lease commitments of $2.6 million. Refer also to Note 25: Operating lease commitments.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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1. Summary of significant accounting policies (continued)

Impact of standards issued but not yet applied by the entity (continued)

AASB 16 – Leases (continued)

The consolidated entity manages its owned and leased assets to ensure there is an appropriate level of equipment to meet its current obligations and to tender for new work. The decision as to whether to lease or purchase an asset is dependent on a broad range of considerations at the time including financing, risk management and operational strategies following the anticipated completion of a project. Management has completed the identification of the provisions of the standard which will most impact the consolidated entity.

From the assessment of the new standard completed to date on all of the Group’s existing leasing arrangements except for some minor arrangements, the following impacts are expected on implementation date:

• Total assets and total liabilities will increase, due to the recognition of a “right of use asset” and a “lease liability” grossing up the assets and liabilities in the Consolidated statement of financial position. On 1 July 2019 the Group expects the value of the right to use assets and lease liabilities to be both approximately $2.058 million;

• Interest expense will increase due to the effective interest rate implicit in the lease, where the interest expense component is higher on early years of the lease;

• Depreciation charge will increase as the right of use assets is recognised;

• Lease rental expenses will decrease due to the recognition of interest and depreciation noted above; and

• Operating cash flows will be higher as repayment of the principle portion of all lease liabilities will be classified as financing activities.

AASB 16 needs to be implemented retrospectively, either with the restatement of comparatives or with the cumulative impact of application recognised as at 1 July 2019 under the modified retrospective approach. AASB 16 contains a number of practical expedients, one of which permits the classification of existing contracts as leases under current accounting standards to be carried over to AASB 16. Under the modified retrospective approach, on a lease by-lease basis, the right of use of an asset may be deemed to be equivalent to the liability at transition or calculated retrospectively as at inception of the lease.

The consolidated entity has completed its assessment of the available options for transition and will adopt a modified retrospective approach on 1 July 2019.

(b) Principles of consolidation

A controlled entity is any entity EVZ Limited is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. A list of controlled entities is contained in Note 29 to the financial statements. All controlled entities have a June financial year-end. All inter-company balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Where controlled entities have entered or left the consolidated entity during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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1. Summary of significant accounting policies (continued)

(b) Principles of consolidation (continued)

Business combinations

Business combinations occur where an acquirer obtains control over one or more businesses and results in the consolidation of its assets and liabilities.

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The acquisition method requires that for each business combination one of the combining entities must be identified as the acquirer (i.e. parent entity). The business combination will be accounted for as at the acquisition date, which is the date that control over the acquiree is obtained by the parent entity. At this date, the parent shall recognise, in the consolidated accounts, and subject to certain limited exceptions, the fair value of the identifiable assets acquired and liabilities assumed. In addition, contingent liabilities of the acquiree will be recognised where a present obligation has been incurred and its fair value can be reliably measured.

The acquisition may result in the recognition of goodwill (refer to Note 1(i)) or a gain from a bargain purchase. The method adopted for the measurement of goodwill will impact on the measurement of any Non-controlling interest to be recognised in the acquiree where less than 100% ownership interest is held in the acquiree.

The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements. Consideration may comprise the sum of the assets transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the acquiree and the equity interests issued by the acquirer.

Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of profit or loss and other comprehensive income. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to profit or loss.

Included in the measurement of consideration transferred is any asset or liability resulting from a contingent consideration arrangement. Any obligation incurred relating to contingent consideration is classified as either a financial liability or equity instrument, depending upon the nature of the arrangement. Rights to refunds of consideration previously paid are recognised as a receivable. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or a liability is remeasured each reporting period to fair value through the statement of profit or loss and other comprehensive income unless the change in value can be identified as existing at acquisition date.

All transaction costs incurred in relation to the business combination are expensed to the statement of profit or loss and other comprehensive income.

(c) Income tax

The income tax expense (benefit) for the year comprises current income tax expense (income) and deferred tax expense (benefit). Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant tax authority.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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1. Summary of significant accounting policies (continued)

(c) Income tax (continued)

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses. Current and deferred income tax expense (benefit) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period where the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of setoff exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

EVZ Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated Group under the tax consolidation regime. Each entity in the Group recognises its own current and deferred tax liabilities, except for any deferred tax liabilities resulting from unused tax losses and credits which are immediately assumed by EVZ Limited. The current tax liability of each Group entity is then subsequently assumed by EVZ Limited. The Group notified the Australian Taxation Office that it had formed an income tax consolidated Group to apply from 7 June 2004. The tax consolidated Group has entered a tax sharing arrangement whereby each company in the Group contributes to the income tax payable in proportion to their contribution to the net profit before tax of the tax consolidated Group.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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1. Summary of significant accounting policies (continued)

(d) Inventories

Inventories are measured at the lower of cost and net realisable value.

The carrying amount of inventories is reviewed annually by Directors to ensure it is not in excess of the recoverable amount from these assets.

(e) Plant and equipment

Each class of plant and equipment is carried at cost less where applicable, any accumulated depreciation and impairment losses.

Plant and equipment is measured on a cost basis.

The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

The cost of fixed assets constructed within the consolidated entity includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when probable future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of profit or loss during the financial period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets and capitalised lease assets, is depreciated on either a straight-line or diminishing value basis over their useful lives to the consolidated entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset Plant and equipment	Depreciation Rate
	5 to 30%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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1. Summary of significant accounting policies (continued)

(f) Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to entities in the consolidated entity are classified as finance leases.

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Leased assets are depreciated on a straight-line basis over their estimated useful lives.

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged on a straight-line basis over the period of the lease.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

(g) Financial instruments

Recognition, initial measurement and derecognition

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument, and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss (FVPL), which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are described below.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Classification and subsequent measurement of financial assets

From 1 July 2018, the consolidated entity classifies its financial assets in the following measurement category:

• those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

Impairment of financial assets

AASB 9’s impairment requirements use more forward looking information to recognize expected credit losses – the ‘expected credit losses (ECL) model’.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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1. Summary of significant accounting policies (continued)

(g) Financial instruments (continued)

Impairment of financial assets (continued)

The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

Trade and other receivables and contract assets

The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets under AASB 15 and records the loss allowance at the amount equal to the expected lifetime credit losses. In using this practical expedient, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.

The impairment allowance for trade receivables was increased by $108,938 at 1 July 2018.

Classification and measurement of financial liabilities

As the accounting for financial liabilities remains largely unchanged from AASB 139, the Group’s financial liabilities were not impacted by the adoption of AASB 9. However, for completeness, the accounting policy is disclosed below.

The Group’s financial liabilities include borrowings and trade and other payables.

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss.

Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss.

All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income.

(h) Impairment of assets

At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of profit or loss.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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1. Summary of significant accounting policies (continued)

(h) Impairment of assets (continued)

It has been determined that the balances of the goodwill have an indefinite life. The excess of the fair value of net assets over the purchase price of the businesses acquired has been allocated to goodwill rather than be allocated to other intangible assets. The acquisition of the businesses that generate the goodwill was determined on the abilities of the entities, as a whole, to generate future profits and hence other intangibles have not been recognised.

Goodwill is allocated to cash-generating units which are based on the Group’s individual companies. All businesses operate in the engineering services industry sector.

(i) Intangibles

Goodwill

Goodwill and goodwill on consolidation are initially recorded at the amount by which the purchase price for a business or for an ownership interest in a controlled entity exceeds the fair value attributed to its net assets at date of acquisition. Goodwill on the acquisitions of subsidiaries is included in intangible assets. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(j) Foreign currency transactions and balances Functional and presentation currency

The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction.

Exchange differences arising on the translation of monetary items are recognised in the statement of profit or loss. Exchange differences arising on the translation of Non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in the statement of profit or loss.

Group companies

The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows:

• assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;

• income and expenses are translated at average exchange rates for the period; and

• retained profits are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency translation reserve in the statement of financial position. These differences are recognised in the statement of profit or loss in the period in which the operation is disposed.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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1. Summary of significant accounting policies (continued)

(k) Employee benefits

Provision is made for the consolidated entity’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

Defined contribution plans

Contributions to defined superannuation plans are expensed when incurred.

Share based payments

The Group operates an equity-settled share-based payment employee share scheme. The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense with a corresponding increase to an equity account. The shares issued under the employee share scheme vest immediately.

(l) Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(m) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and which are subject to insignificant risk of changes in value, and bank overdrafts.

(n) Revenue

Revenue was previously recognised when a good was delivered to a customer or when it was probably that work performed would result in revenue whereas under the new standard, revenue is recognised when an entity satisfies a performance obligation by transferring control of a promised good or service to a customer.

To determine whether to recognise revenue, the Group follows a 5-step process:

• 1 Identifying the contract with a customer;

• 2 Identifying the performance obligations;

• 3 Determining the transaction price,

• 4 Allocating the transaction price to the performance obligations; and

• 5 Recognising revenue when/as performance obligation(s) are satisfied.

The core principle of AASB 15 is that an entity shall recognise revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This means that revenue will be recognised when control of goods or services is transferred rather than on transfer of risks and rewards.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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1. Summary of significant accounting policies (continued)

(n) Revenue (continued)

Construction revenue

The contractual terms and the way in which the consolidated entity operates its construction contracts is predominantly derived from projects containing one performance obligation. Due to the high degree of interdependence between the various elements of these projects, they are accounted for as a single performance obligation. Contracted revenue will continue to be recognised over time by comparing costs incurred with total estimated costs required to deliver the project to measure progress. The requirements of over time measurement are met as the construction creates assets with no alternative use to the consolidated entity and there is an enforceable right to payment for performance completed.

The consolidated entity has also reviewed variable consideration such as incentives, as well as accounting for claims and variations as contract modifications which all impart a higher threshold of probability for recognition. As is required in the new standard revenue is being recognised when it is highly probable that a significant reversal of revenue will not occur for these modifications. Contract variations are assessed to determine whether they represent a separate contract with the customer or are modifications to the original contract.

Most contracts are billed accordingly to approved monthly progress claims or in some cases accordingly to contracted milestone schedules. When payments received from customers exceed revenue recognised to date on a particular contract, an excess (a contract liability)) is reported in the statements of financial position. Alternatively, where revenue to be recognised exceeds amounts invoiced to customers, the excess (contract asset) is reported.

Services revenue

Services revenue arises from maintenance and other services supplied to infrastructure assets and facilities which may involve a range of services and processes. Under AASB 15, these are predominantly to be recognised over time with reference to inputs (time and materials) as services are provided. The services that have been determined to be one performance obligation are highly inter-related and fulfilled over time therefore revenue will continue to be recognised over time. As with construction revenue, incentives, variations and claims exist which are subject to the same higher threshold criteria of only recognising revenue to the extent it is highly probable that a significant reversal of revenue will not happen.

Tender costs

Costs incurred during the tender process across the consolidated entity will be expensed. Under the new standard costs can only be capitalised if they are both expected to be recovered and either would not have been incurred if the contract had not been won or if they are intrinsic to the delivery of a project.

(o) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended used or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in the statement of profit or loss in the period in which they are incurred.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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1. Summary of significant accounting policies (continued)

(p) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(q) Comparative figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(r) Critical accounting estimates and judgments

The Directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.

Key estimates

Impairment

The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the cash generating unit is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates. Refer Note 9 for key estimates used in the assessment of Goodwill.

At 30 June 2019, a provision for impairment of $327,273 (2018: $13,644) was raised against receivables from continuing operations. There is no provision raised for impairment against work in progress. (2018: $nil).

Recognition of deferred tax assets

The Group has recognised deferred tax assets in relation to Provisions and Other payables of $1,280,811 (2018: $1,280,163) and Un-recouped tax losses $1,324,143 (2018: $1,351,968).

The realisation of these deferred tax assets is dependent upon generating sufficient taxable profit in the coming years.

The Group has projected its profits over the next five years and believes that future taxable profit will be available against which the benefits of the deferred tax assets can be utilised.

Construction contracts and work-in-progress

Construction profits and losses are recognised on the stage-of-completion basis and measured by comparing construction contract costs incurred to date against expected final costs and recoveries of the construction contract.

Page | 41

Notes to the consolidated financial statements For the year ended 30 June 2019

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1. Summary of significant accounting policies (continued)

• (r) Critical accounting estimates and judgments (continued)

Construction contracts and work-in-progress (continued)

Expected final costs are estimated following an assessment of each contract and a determination of expected costs still to be incurred.

Whilst expected final costs can vary, the Group believes that the expected final costs in its various construction contracts are appropriate at 30 June 2019.

(s) Going concern

The financial report for the year ended 30 June 2019 has been prepared on a going concern basis, which assumes continuity of normal business activities and realisation of assets and the settlement of liabilities in the ordinary course of business.

Page | 42

Notes to the consolidated financial statements For the year ended 30 June 2019

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Notes to the consolidated financial statements For the year ended 30 June 2019
2. Profit/(loss) from continuing operations (a) Other income Sundry income (b) Expenses Bad debts Impairment - receivables Total employee costs Defined contribution superannuation expense Foreign exchange losses/(gains) (Profit) / Loss on sale of plant and equipment Operating lease payments Depreciation of plant and equipment (c) Net finance costs: Finance costs Interest income Net finance costs from continuing operations 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 Income tax calculated at 30% (2018: 30%) Tax effect of permanent differences Under provision/(over provision) in prior years Recognition of additional tax losses 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 Recognition of additional tax losses	2019 2018 $ $ 72,777 96,694 Consolidated entity
	72,777 96,694
	- (36,651) 204,691 46,195 32,246,006 31,814,107 2,730,708 2,450,151 (83,132) 203,941 (5,169) 3,846 1,143,125 1,143,273 747,300 670,637
	421,045 623,720 (9,090) (3,999)
	411,955 619,721
	1,728,418 2,484,811
	518,525 745,443 8,652 (272,010) - 266,820 (500,000) (703,731) 76,266 106,309
	103,443 142,831
	6% 6% 604,091 595,715 (648) (15,973) - 266,820 (500,000) (703,731)
	103,443 142,831

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Notes to the consolidated financial statements For the year ended 30 June 2019

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Notes 4. Trade and other receivables Current Trade receivables Provision for impairment Retention receivables Other debtors and prepayments Non-current Retention receivables	2019 2018 $ $ 15,494,869 13,549,390 (327,273) (13,644) Consolidated entity
	15,167,596 13,535,746 495,972 277,494
	15,663,568 15,666,356 876,489 1,273,643
	16,540,057 16,939,999
	1,612,075 1,587,673
	1,612,075 1,587,673

All trade and other receivables are classified as financial assets (refer Note 27).

Market practices provide for the retention of monies from progress and final billings on certain construction contracts. The monies are received after a contracted period of time has elapsed following completion of the construction.

Current trade receivables are non-interest bearing and generally on 30 days terms. Non-current trade receivables are assessed for recoverability based on the underlying terms of the contract. A provision for impairment is recognised when there is objective evidence that an individual trade or term receivable is impaired.

There are no other balances other than those impaired within trade and other receivables that contain assets that are impaired. It is expected these balances will be received when due. Impaired assets are provided for in full.

Credit risk – trade and other receivables

The Group has no significant concentration of credit risk with respect to any single counter party or Group of counter parties. The class of assets described as Trade and Other Receivables is considered to be the main source of credit risk related to the Group.

On a geographical basis, the Group has credit risk exposures in Australia and Asia given the substantial operations in those regions. The Group’s exposure to credit risk for receivables at reporting date in those regions is as follows:

Australia Asia	2019 2018 $ $ 13,529,062 13,458,518 4,950,343 5,082,798 Consolidated entity
	18,479,405 18,541,316

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Notes to the consolidated financial statements For the year ended 30 June 2019

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4. Trade and other receivables (continued)

The following table details the Group’s trade and other receivables exposed to credit risk with ageing analysis and impairment provided for thereon. Amounts are considered as ‘past due’ when the debt has not been settled within the terms and conditions agreed between the Group and the customer or counter party to the transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there are specific circumstances indicating that the debt may not be fully repaid to the Group.

the Group.
	Gross Amount Past Due & Impaired Past Due not Impaired(Days Overdue) Within Trading Terms
Consolidated entity 2019 Trade & term receivables Other receivables 2018 Trade & term receivables Other receivables	<30 Days 31-60 Days >61 Days $ $ $ $ $ $ 17,602,916 333,895 9,375,236 3,510,421 2,119,747 2,263,617 876,489 - - - - 876,489
	18,479,405 333,895 9,375,236 3,510,421 2,119,747 3,140,106
	15,414,557 13,644 6,969,090 4,410,813 1,918,241 2,102,769 1,273,643 - - - - 1,273,643
	16,688,200 13,644 6,969,090 4,410,813 1,918,241 3,376,412

The consolidated entity holds no financial assets with terms that have been negotiated, but which would otherwise be past due or impaired.

Trade and other receivables pertaining to the Australian entities in the Group, as disclosed in Note 32, are provided as security against the Group’s bank facilities. Also refer Notes 11 and 12.

Provision for impairment of receivables Opening balance as at 1 January per AASB 139 Adjustment for adoption of AASB 9 Adjusted opening balance as at 1 July Receivables written off Provision recognised / (reversed) Closing balance	2019 2018 $ $ 13,644 32,447 108,938 - Consolidated entity
	122,582 32,447 (12,469) (46,854) 217,160 28,051
	327,273 13,644

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Notes to the consolidated financial statements For the year ended 30 June 2019

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Notes to the consolidated financial statements For the year ended 30 June 2019
5. Contract assets and contract liabilities Contract assets related to contracts Contract liabilities related to contracts	2019 2018 $ $ Consolidated entity
	3,156,104 -
	1,584,027 -

Contract assets

Contract assets are balances due from customers under long term contracts as work is performed and therefore a contract asset is recognised over the period in which the performance obligation is fulfilled. This represents the Group’s right to consideration for the services transferred to date. Amounts are generally reclassified to accounts receivable when there is an unconditional right to receive payment.

Refer also to Note 1(a), where the effects of the initial application of AASB 15 – Revenue from construction contracts, have been detailed.

Contract liabilities

Contract liabilities relating to construction contracts are balances due to customers under construction contracts. These arise if a milestone payment exceeds the revenue recognised to date. Revenue recognised in the reporting period that was included in the contract liability balance at the beginning of the period was $1,853,116.

6(a) Inventories Current Raw materials and stores - at cost	2019 2018 $ $ 2,313,984 1,971,101 Consolidated entity
	2,313,984 1,971,101

Inventories pertaining to the Australian entities in the Group, as disclosed in Note 32, are provided as security against the Group’s bank facilities. Also refer Notes 11 and 12.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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6(b) Financial assets Funds on deposit	2019 2018 $ $ 189,612 178,570 Consolidated entity
	189,612 178,570

Funds on deposit represent security deposits covering a guarantee for property lease obligations and contract performance bonds.

7. Plant and equipment At cost Accumulated depreciation Movement in carrying amounts Carrying amount - opening balance Additions Disposals Depreciation Exchange rate movement Carrying amount - closing balance	12,305,560 10,948,923 (7,434,896) (7,079,459)
	4,870,664 3,869,464
	3,869,464 3,777,140 1,738,659 762,961 - (5,054) (747,300) (670,637) 9,841 5,054
	4,870,664 3,869,464

Plant and equipment pertaining to the Australian entities in the Group, as disclosed in Note 32, are provided as security against the Group’s bank facilities. Also refer Notes 11 and 12.

8. Tax assets

Current Non-current Deferred tax assets Deferred tax assets comprise: Provisions Other Un-recouped tax losses	- - 2,604,954 2,632,131
	2,604,954 2,632,131
	1,112,663 1,090,488 168,148 189,675 1,324,143 1,351,968
	2,604,954 2,632,131

The movement in deferred tax assets for each temporary difference during the year is as follows:

Provisions Opening balance Credited/(expensed) to income account Closing balance Other Opening balance Credited/(expensed) to income account Closing balance	1,090,488 511,369 22,175 579,119
	1,112,663 1,090,488
	189,675 49,090 (21,527) 140,585
	168,148 189,675

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Notes to the consolidated financial statements For the year ended 30 June 2019

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8. Tax assets (continued) Unrecouped tax losses Opening balance Tax losses recognised/(recouped)	2019 2018 $ $ 1,351,968 2,108,193 (27,825) (756,225) Consolidated entity
	1,324,143 1,351,968
Closing balance of tax assets	2,604,954 2,632,131

The company has considered it appropriate to not recognize in the financial accounts the benefit of all tax losses available to the Company at the end of the financial year.

The company has extrapolated profit projections based on a 5% growth path. These projections support the recovery of the carrying value of deferred tax assets at 30 June 2019 of $2,604,954 within a five year time frame. The Directors consider this to be an acceptable timeframe for assessing the recovery of the carrying value of deferred tax assets as probable.

As a result, tax losses not recognized at 30 June 2019 are $5,629,582. If these losses had been recognized at 30 June 2019 the net profit after tax would have increased by $1,688,875. Correspondingly the carrying values of deferred tax assets in the Statement of Financial Position would increase by $1,688,875.

Tax liabilities Current Income Tax Non-current Provision for deferred tax Opening balance Additional / (Reduction) in provisions raised during year Exchange rate movement Closing balance	31,335 103,542
	50,549 49,200
	49,200 45,198 - (735) 1,349 4,737
	50,549 49,200

Page | 48

Notes to the consolidated financial statements For the year ended 30 June 2019

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9. Intangible assets Goodwill on consolidation – at cost Less accumulated impairment Goodwill on acquisition – at cost Less accumulated impairment Total Intangible assets Movements in carrying amounts Goodwill on consolidation: Opening balance Movement in the year Closing Balance Goodwill on acquistion: Opening balance Movement in the year Closing Balance	2019 2018 $ $ 3,282,532 3,282,532 - - Consolidated entity
	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
	3,282,532 3,282,532 - -
	3,282,532 3,282,532
	8,789,478 8,789,478 - -
	8,789,478 8,789,478

It has been determined that the balances of the goodwill have an indefinite life. The excess of the fair value of net assets over the purchase price of the businesses acquired has been allocated to goodwill rather than be allocated to other intangible assets. The acquisition of the businesses that generate the goodwill was determined on the abilities of the entities, as a whole, to generate future profits and hence other intangibles have not been recognised.

Goodwill is allocated to cash-generating units which are based on the Group’s individual companies. All businesses operate in the engineering services industry sector.

Goodwill by individual company: Water Group - Syfon Systems Engineering Group - Brockman Engineering Energy Group - TSF Engineering Impairment - TSF Engineering	3,282,532 3,282,532 8,789,478 8,789,478 - 15,817,280 - (15,817,280) 12,072,010 12,072,010

Page | 49

Notes to the consolidated financial statements For the year ended 30 June 2019

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9. Intangible assets (continued)

Impairment disclosures

The EVZ Group assesses at each annual reporting date the potential impairment to the carrying value of Goodwill of the relevant cash generating unit (CGU).

The recoverable amount of each CGU (Brockman Engineering, Syfon Systems and TSF Engineering) is determined based on value-in-use calculations. Value-in-use is calculated based on the present value of cash flow projections over a five year period adjusted for the estimated terminal value of the cash generating unit. The cash flows are discounted using a rate reflecting the Group’s weighted average cost of capital plus an appropriate margin for risk factors at the beginning of the budget period. All discount rates are pre-tax.

Budgets use estimated weighted average growth rates to project revenue. Costs are calculated taking into account historical gross margins as well as estimated weighted average inflation rates over the periods which are consistent with inflation rates applicable to the locations in which the businesses operate.

Other key assumptions in the value-in-use calculation include gross margin, additional allowances for potential capital expenditure and normalisation of working capital changes. Due to the correlation of these factors, assumptions for growth rates and discount rates are the most sensitive in the value-in-use calculation.

The following assumptions were used in the value-in-use calculations:

		2019		2018
	Growth	Discount	Growth	Discount
	Rates	Rates	Rates	Rates
Syfon Systems Group	5%	15%	5%	18%
Brockman Engineering	5%	15%	5%	18%

The change in discount rates during 2019 arose from a detailed management review of the inputs utilised in determining the discount rate.

The risk factor incorporated in the discount rate is consistent with the prior year.

The growth rates used in the value-in-use calculations are conservative rates reflecting the minimum expected growth in each of the relevant CGUs. These rates are based on forward work-in-hand levels, weighted project prospects, consideration of future expected activities and giving consideration to historical growth rates achieved.

Page | 50

Notes to the consolidated financial statements For the year ended 30 June 2019

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9. Intangible assets (continued)

Key estimates

The following sensitivity analysis was undertaken with respect to the value in use calculations and the imbedded assumptions and estimates used in performing the impairment testing on the carrying value of goodwill.

In performing impairment testing on the carrying values of goodwill, certain discount rates and growth rates have been assumed as part of the value-in-use calculations.

The following table illustrates sensitivities to changes in those discount rates and growth rates. The discount and growth rates used and the results of the sensitivity analysis are:

Impairment to carrying value of goodwill - sensitivity analysis: Syfon Systems Group: Growth rates Discount rates Brockman Engineering: Growth rates Discount rates Value of impairment to carrying value of goodwill based on sensitivity analysis: Syfon Systems Group Brockman Engineering	2019 2018 3% 3% 20% 25% 3% 3% 20% 25% $ - 2,324,491 - -
	- 2,324,491

The Discount rate for 2019 has been reduced to 20% to reflect current market conditions. As a result, there is no impairment in either Syfon Systems group or Brockman Engineering.

		Consolidated	entity
		2019	2018
		$	$
10.	Trade and other payables
	Trade payables	9,517,171	7,347,386
	Sundry payables and accrued expense	4,336,243	4,886,128
		13,853,414	12,233,514

Page | 51

Notes to the consolidated financial statements For the year ended 30 June 2019

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Notes 11. Short-term borrowings Bank loans - secured Other Loans - secured Lease liabilities - secured 24.	2019 2018 $ $ 3,300,000 - - 448,950 72,272 62,579 Consolidated entity
	3,372,272 511,529

Bank loans - secured

The interest rate on the remaining Bank Loans is variable at balance date. The interest on these loans is charged at the prevailing bank bill rate plus an applicable line fee. Interest is payable monthly in arrears.

The facility contains the following covenants:

• Minimum annual EBITDA requirements for each of the remaining years in the facility term starting at $2,500,000 for 2019 and increasing to $3,000,000 by 30 June 2020.

• Net Debt Cover Ratio commencing at 4:1 at 30 June 2019 reducing to 3:1 by 30 June 2020.

• An annual limit on capital expenditure to $1,000,000 without prior bank approval.

• An annual limit of Dividend distribution to 10 % of EBIT for the term of the facility without prior bank approval.

Current 1 to 2 years 2 to 3 years Total bank loans	3,300,000 - - 6,000,000 - -
	3,300,000 6,000,000

Bank loans are secured by a registered equitable mortgage over the assets and undertakings of EVZ Limited and an unlimited guarantee from EVZ Limited’s Australian controlled entities: Syfon Systems Pty Ltd, Brockman Engineering Pty Ltd, NuSource Water Pty Ltd, A.C.N. 124919508 Pty Ltd and TSF Engineering Pty Ltd. Also refer to Note 32 for quantification of assets secured by Australian entities.

At 30 June 2019, the consolidated entity has $ Nil in undrawn bank loan facilities (2018: Nil).

Other loans - secured

During the year, the Group repaid the $400,000 principal balance and interest of its term loan from the Directors and management.

Page | 52

Notes to the consolidated financial statements For the year ended 30 June 2019

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12. Long-term borrowings Bank loans - secured Lease liabilities - secured 24.	2019 2018 $ $ - 6,000,000 284,397 - Consolidated entity
	284,397 6,000,000

Also refer to Note 11, Short term borrowings and Note 30, subsequent events for further information on bank loans.

13. Provisions Current Employee benefits Movement in employee benefits: Opening employee balance Provisions created/(utilised) during year Closing balance Non current Employee benefits Other non current provisions Movement in employee benefits: Opening employee balance Provisions created/(utilised) during year Closing balance	2,926,188 2,986,944
	2,926,188 2,986,944
	2,986,944 2,666,446 (60,756) 320,498
	2,926,188 2,986,944
	41,526 21,903 - 100,000
	41,526 121,903
	21,903 386,834 19,623 (364,931)
	41,526 21,903

A provision has been recognised for employee entitlements relating to long service leave. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based on historical data. The measurement and recognition criteria relating to employee benefits are disclosed in Note 1(k).

14. Issued capital

Issued and paid up 2019: 96,116,734 ordinary shares (2018: 83,027,195 ordinary shares) 14(a) (a) Issued and fully paid up ordinary shares Opening balance Shares issued Share issue costs Closing balance	56,457,180 52,972,129
	56,457,180 52,972,129
	52,972,129 50,434,876 3,681,061 2,682,506 (196,010) (145,253)
	56,457,180 52,972,129

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Notes to the consolidated financial statements For the year ended 30 June 2019

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14. Issued capital (continued) (a) Issued and fully paid up ordinary shares (continued) Opening balance Shares issued Closing balance	2019 2018 No. of shares No. of shares 83,027,195 67,881,014 13,089,539 15,146,181 Consolidated entity
	96,116,734 83,027,195

Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. The ordinary shares have no par value.

shares have no par value.
(b) Share options Opening balance Options issued Closing balance	No. of options No. of options 1,500,000 1,500,000 - -
	1,500,000 1,500,000

During 2017, 1,500,000 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 $0.20 per share and expire 4 years after their issue date (7 June 2017).

(c) Capital management:

Management controls the capital of the consolidated entity in order to maintain a good debt to equity ratio, provide shareholders with adequate returns and ensure the consolidated entity can fund its operations and continue as a going concern. The consolidated entity’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets.

There are no externally imposed capital requirements. Management effectively manages the consolidated entity’s capital by assessing the consolidated entity’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.

The consolidated entity’s gearing ratio is represented as net debt as a percentage of total capital and is determined as follows:

• Net debt is total borrowings less cash and cash equivalents.

• Total capital is total equity and net debt.

As at 30 June 2019 the consolidated entity’s gearing ratio was 4% (2018: 21%).

15. Dividends

Interim fully franked ordinary dividend Final fully franked ordinary dividend Total dividends Balance of franking account	- - - -
	- -
	1,813,797 1,813,797

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Notes to the consolidated financial statements For the year ended 30 June 2019

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16. Reserves and accumulated losses (a) Accumulated losses: Accumulated losses at the beginning of the financial year Adjustment on adoption of AASB 9- financial Instruments Net profit/(loss) attributable to members of the parent entity Accumulated losses at the end of the financial year (b) Reserves: Foreign currency translation and share option reserves: Reserves at beginning of year Movement for year - share option reserve Movement for year - Foreign currency translation reserve Reserves at end of year	2019 2018 $ $ (34,262,454) (36,604,434) (108,938) - 1,624,975 2,341,980 Consolidated entity
	(32,746,417) (34,262,454)
	241,524 (262,417) - 300,000 35,647 203,941
	277,171 241,524
17. Earnings per share (a) Weighted average number of ordinary shares outstanding during the year used in calculation of basic earnings per share (b) Weighted average number of ordinary shares outstanding during the year used in calculation of diluted earnings per share	93,662,110 74,223,880
	95,162,110 75,723,880

18. Key management personnel

Names and positions of Directors and key management personnel in office at any time during the financial year are:

Mr G Burns Mr R Edgley Mr I Luck

Non-Executive Chairman Non-Executive Director Non-Executive Director

Mr S Farthing Mr P van der Wal Mr A Bellgrove Mr C Bishop Mr J Hughes (appointed 15 October 2018) Mr I Whitford (Resigned 28 September 2018)

Chief Executive Officer

Chief Financial Officer and Company Secretary General Manager of Syfon Systems Group General Manager of Brockman Engineering General Manager of TSF Maintenance Services General Manager of TSF Maintenance Services

Page | 55

Notes to the consolidated financial statements For the year ended 30 June 2019

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18. Key management personnel (continued) Remuneration of key management personnel is: Short term employee benefits Post-employment benefits	2019 2018 $ $ 2019 2018 $ $ 1,633,653 1,802,948 105,515 106,426 Consolidated entity
	1,739,168 1,909,374

Refer to disclosures in Note 20 for other transactions with Directors and Key Management Personnel.

Refer to disclosures in the Directors report for the number of ordinary shares held by each Key Management Personnel of the Group during the financial year.

There were no share options issued for the year ended 30 June 2019 (2018: Nil).

Remuneration policy

The remuneration policy of the Company has been designed to align Director and Executive remuneration with shareholder and business objectives by providing a fixed remuneration component and where appropriate offering specific short and long-term incentives based on key performance areas affecting the consolidated entity’s financial results. The Board believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best Directors and Executives to govern and manage the consolidated entity, as well as to create goal congruence between Directors, Executives and Shareholders.

Executive remuneration

The Board’s policy for determining the nature and amount of remuneration for key senior Executives for the consolidated entity is as follows:

• The remuneration policy, setting the terms and conditions for Executive officers, was developed by the Remuneration Committee and approved by the Board after seeking professional advice where appropriate from independent external consultants.

• All Executives receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits and where appropriate performance incentives.

The Remuneration Committee reviews Executive remuneration packages annually with reference to the consolidated entity’s performance, each Executive’s performance and comparable information from industry sectors and listed companies in similar industries. The performance of each Executive is measured against criteria agreed with each Executive and is based predominantly on forecast growth of the consolidated entity’s profits and shareholders’ value. Bonuses and incentives will be linked to predetermined performance criteria. The Board may, however, exercise its discretion in relation to approving incentives, bonuses and options, and can recommend changes to the Remuneration Committee’s recommendations. Any changes must be justified by reference to measurable performance criteria. The policy is designed to attract the highest calibre of Executives and reward them for performance that results in long-term growth in shareholder wealth.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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18. Key management personnel (continued)

The Remuneration Committee set certain key performance indicators for the key Executives in the Group. The key performance indicators were both quantitative and qualitative measures. During the financial year no Executives met these key performance indicators and therefore the Remuneration Committee did not approve any short term incentive payments (2018: $218,195). Long term incentives, linked with performance rights issued under the EVZ Directors’ and Employees’ Benefits Plan, were not met during the current year and no performance rights, options or shares were issued in respect of the current year.

Executives receive a superannuation guarantee contribution as required by the Government and do not receive any other retirement benefits. Individuals may choose to sacrifice part of their salary to increase payments towards superannuation. All remuneration paid to Executives is valued at the cost to the Company and expensed.

Director remuneration

The Board’s policy is to remunerate Non-Executive Directors at appropriate market rates. The Remuneration Committee recommends the fee structure for Non-Executive Directors which will be determined by reference to market practice, duties performed, time, commitment and accountability. Director fees are reviewed annually by the Remuneration Committee.

The Remuneration Committee may seek independent advice in determining appropriate fee structures for Directors.

The maximum aggregate amount of fees payable to Non-Executive Directors is subject to approval by shareholders at the Annual General Meeting. Fees for Non-Executive Directors are not linked to the performance of the consolidated entity. However, to align Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the Company and may be able to participate in any employee share/option plan introduced.

All remuneration paid to Directors is valued at the cost to the Company and expensed.

19. Auditors remuneration Remuneration paid/payable to auditors for: audit or review of financial report taxation services	2019 2018 $ $ 90,000 112,000 - - Consolidated entity
	90,000 112,000

Page | 57

Notes to the consolidated financial statements For the year ended 30 June 2019

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20. Related party disclosures

(a) The directors of EVZ Limited during the financial year were:

• Mr G Burns

• Mr R Edgley

• Mr I Luck

(b) Transactions with director related entities

• G Burns: Directors fees paid of $86,667 (2018: $143,083) and $20,000 (2018: $26,667) is payable.

• R Edgely: Directors fees paid of $50,000 (2018: $78,125) and $8,333 (2018: $8,333) is payable.

• I Luck: Directors fees paid of $50,000 (2018: $41,667) and $8,333 (2018: $8,333) is payable.

21. Segment reporting

Segment Information

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.

The Group is managed primarily on the basis of product category and service offerings as the diversification of the Group’s operations inherently have notably different risk profiles and performance assessment criteria. Operating segments are therefore determined on the same basis.

Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following:

• the products sold and/or services provided by the segment;

• the manufacturing process;

• the type or class of customer for the products or services;

• the distribution method; and

• any external regulatory requirements

Types of products and services by segment

i. Engineering

The engineering segment designs, manufactures and installs large steel tanks, silos, cooling towers, pipe spooling, pressure vessels and fabricates structural steel. All products produced are aggregated as one reportable segment as the products are similar in nature, manufactured and distributed to similar types of customers and subject to a similar regulatory environment.

The engineering segment is also involved in the installation process and provides ongoing support and maintenance for its products. Support is provided to existing customers for maintenance required for products under warranty.

ii. Energy

The energy segment designs and installs constant load power stations, back-up power generation equipment and sustainable/clean energy solutions. In addition, the segment services, maintains and hires all types of generators and associated equipment.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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21. Segment reporting (continued)

iii. Water

The water segment designs syphonic roof drainage systems for large and/or complex roof structures, supplies and installs fibreglass panel tanks and prefabricated hydraulic systems.

Basis of accounting for purposes of reporting by operating segments

i. Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors, being the chief decision maker with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

• ii. Inter-segment transactions

• Inter-segment sales are based on values that would be realised in the event the sale was made to an external party at arm’s length. All such transactions are eliminated on consolidation of the Group’s financial statements.

Inter-segment loans payable and receivable are initially recognised at the consideration received/to be received net of transaction costs. If inter-segment loans receivable and payable are not on commercial terms, these are not adjusted to fair value based on market interest rates. This policy represents a departure from that applied to the statutory financial statements.

iii. Segment assets

Where an asset is used across multiple segments, the asset is allocated to that segment that receives majority economic value from that asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location.

iv. Segment liabilities

Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of the segment. Tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables and certain direct borrowings.

• v. Unallocated items

The following items of revenue, expenses, assets and liabilities are not allocated to operating segments as they are not considered part of the core operations of any segment:

• Impairment of assets and other Non-recurring items of revenue or expense

• Income tax expense

• Current tax liabilities

• Other financial liabilities

Page | 59

Notes to the consolidated financial statements For the year ended 30 June 2019

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21. Segment reporting (continued)

(a) Segment reporting - continuing operations
Twelve months ended 30 June 2019:	Engineering Energy Water Corporate Total $ $ $ $ $
Revenue External sales Total segment revenue Reconciliation of segment revenue to group revenue: Total group revenue Segment net profit /(loss) before interest and tax Reconciliation of net profit before interest and tax to group net profit/(loss) before tax Unallocated items Net finance costs from continuing operations Net profit/(loss) before tax from continuing operations Included in segment net profit before interest and tax: Depreciation Impairment: Receivables	53,091,236 5,271,972 19,679,085 - 78,042,293
	53,091,236 5,271,972 19,679,085 - 78,042,293
	53,091,236 5,271,972 19,679,085 - 78,042,293
	2,550,624 (461,509) 1,416,421 (1,365,163) 2,140,373 (411,955) 1,728,418 469,924 72,146 201,117 4,113 747,300 - - 204,691 - 204,691

Page | 60

Notes to the consolidated financial statements For the year ended 30 June 2019

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21. Segment reporting (continued)

(a) Segment Reporting - continuing operations(continued)	(a) Segment Reporting - continuing operations(continued)
Twelve months ended 30 June 2018:	Engineering Energy Water Corporate Total $ $ $ $ $
Revenue External sales Inter-segment sales Total segment revenue Reconciliation of segment revenue to group revenue: Inter-segment elimination Total group revenue Segment net profit /(loss) before interest and tax 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 Net profit/(loss) before tax from continuing operations Included in segment net profit before interest and tax: Depreciation Impairment: Receivables	37,833,603 5,573,629 21,521,163 - 64,928,395 - - - - -
	37,833,603 5,573,629 21,521,163 0 64,928,395
	- - - - -
	37,833,603 5,573,629 21,521,163 - 64,928,395
	2,237,539 (228,540) 2,672,858 (1,577,325) 3,104,532 - (619,721) 2,484,811 370,646 62,458 233,531 4,002 670,637 - - 46,195 - 46,195

Page | 61

Notes to the consolidated financial statements For the year ended 30 June 2019

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21. Segment reporting (continued)

(b) Secondary segment reporting -including discontinued operations	(b) Secondary segment reporting -including discontinued operations
Twelve months ended 30 June 2019:	Engineering Energy Water Corporate	Total
Segment assets Segment Assets Inter-segment elimination Total group assets Segment asset increases for the period: Capital expenditure Segment liabilities Segment liabilities Inter-segment elimination Total group liabilities	25,050,443 2,069,816 22,403,573 8,259,141	57,782,973 (11,651,331)
	1,396,530 178,474 100,164 63,491
		46,131,642
		1,738,659
	1,396,530 178,474 100,164 63,491	1,738,659
	16,744,777 4,447,458 4,455,857 3,660,520	29,308,612 (7,164,904)
		22,143,708
Twelve months ended 30 June 2018:	Engineering Energy Water Corporate	Total
Segment assets Segment Assets Inter-segment elimination Total group assets Segment asset increases for the period: Capital expenditure Segment liabilities Segment liabilities Inter-segment elimination Total group liabilities	20,064,479 1,954,531 19,385,680 32,636,880	74,041,570 (33,083,739)
	493,100 109,092 145,133 15,636
		40,957,831
		762,961
	493,100 109,092 145,133 15,636.00	762,961
	22,059,758 24,217,449 4,697,870 6,681,543	57,656,620 (35,649,988)
		22,006,632

Page | 62

Notes to the consolidated financial statements For the year ended 30 June 2019

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21. Segment reporting (continued)

21.	Segment reporting (continued)
(c)	Revenue by category: Engineering Energy Water Corporate Total All revenue is recognised over time $ $ $ $ $
	For the year ended 30 June 2019 Revenue Construction contracts 53,091,236 - 19,677,312 - 72,768,548 Services revenue - 5,273,745 - 5,273,745
	Total revenue from contracts 53,091,236 5,273,745 19,677,312 - 78,042,293
	For the year ended 30 June 2018 Revenue Construction contracts 37,830,079 - 21,521,163 - 59,351,242 Services revenue - 5,577,153 - - 5,577,153
	Totalgroup revenue 37,830,079 5,577,153 21,521,163 - 64,928,395
(d)	Revenue by geographical locations: Engineering Energy Water Corporate Total $ $ $ $ $
	For the year ended 30 June 2019 Revenue Australia 53,091,236 5,273,745 13,884,095 - 72,249,076 Asia - - 5,793,217 - 5,793,217
	Total revenue from contracts 53,091,236 5,273,745 19,677,312 - 78,042,293
	For the year ended 30 June 2018 Revenue Australia 37,830,079 5,577,153 14,076,445 57,483,677 Asia - - 7,444,718 7,444,718
	Totalgroup revenue 37,830,079 5,577,153 21,521,163 - 64,928,395
(e)	Assets by geographical locations: Consolidated entity 2019 2018 $ $
	Australia 37,590,460 32,776,818 Asia 8,541,182 8,181,013
	Total assets 46,131,642 40,957,831

Major customers

The Group has a number of customers to whom it provides products and services. In the current year, the Group had two major customers in the Engineering segment who account for 30% and 14% respectively (2018: 5% and 22%) of external revenue. There are no other significant client accounts.

Page | 63

Notes to the consolidated financial statements For the year ended 30 June 2019

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22. Consolidated statement of cash flows Cash balances comprise: Cash on hand Closing cash balance Reconciliation of the operating profit after tax to net cash flows from operations: Operating profit after tax (Gain)/Loss on sale of plant and equipment Depreciation - plant & equipment (Gain)/loss on foreign currency translation Share based payments Impairment/(write back) - receivables Changes in assets and liabilities adjusted for effects of acquisition/disposal of operations during financial year: Increase/(decrease) in provisions for employee entitlements (Increase)/decrease in inventories (Increase)/decrease in trade and other receivables (Increase)/decrease in deferred tax assets Increase/(decrease) in payables Increase/(decrease) in tax liabilities Net cash provided/(used) by operating activities	2019 2018 $ $ 2,772,182 1,706,883 Consolidated entity
	2,772,182 1,706,883
	1,624,975 2,341,980 (5,169) 3,846 747,300 670,637 (83,132) 203,941 196,211 - - 46,195 (41,129) (44,434) (342,883) (363,357) (2,791,607) (5,780,211) 28,525 40,524 3,203,926 1,444,122 (72,207) 23,572
	2,464,810 (1,413,185)

23. Standby arrangements and unused credit facilities

Controlled entities in the consolidated entity have Contingent Liability Bank Guarantee facilities and Letter of Credit Facilities totalling $5,500,000 available to them as at 30 June 2019 (2018: $2,800,000). Of this total facility, $5,317,571 has been utilised and $182,429 (2018: $182,367) remained unused and available for the controlled entities use as at 30 June 2019. The facilities are secured by a registered equitable mortgage over the assets and undertakings of all Australian companies in the consolidated entity.

In addition to the above facility, the consolidated entity has provided a cash backed bank guarantee of $292,199 (2018: 292,199) as performance security on a major project. The bank guarantee is secured by a term deposit of the same amount.

For further information on bank guarantees, please also refer to Note 30, subsequent events.

Page | 64

Notes to the consolidated financial statements For the year ended 30 June 2019

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24. Lease commitments Leases are payable as follows: Not later than 12 months Later than 12 months but not later than 2 years Later than 2 years but not later than 5 years Later than 5 years Future lease finance charges Lease liabilities recognised in the statement of financial position: Current Non-current Total lease liability	2019 2018 $ $ 75,645 66,129 55,932 - 240,722 - - - Consolidated entity
	372,299 66,129 (15,630) (3,550)
	356,669 62,579
	72,272 62,579 284,397 -
	356,669 62,579

The weighted average interest rate implicit in these leases is 4.20% pa (2018: 5.37% pa). Leases pertain to various plant, equipment and motor vehicles and are secured against the asset to which they relate.

25. Operating lease commitments Property: Not later than 12 months Between 12 months but not later than 5 years Plant and equipment: Not later than 12 months Between 12 months but not later than 5 years Total commitments not recognised in the financial statements	663,060 676,841 1,106,927 728,320
	1,769,987 1,405,161
	376,757 329,700 452,448 430,005
	829,206 759,705
	2,599,193 2,164,866

Property leases and plant and equipment leases are Non-cancellable with a maximum five year term, with rent payable in advance. Property leases have contingent rental provisions within the lease agreement which require the minimum lease payments to be increased by at least the CPI per annum. Options exist to renew certain leases at the end of their lease term. With the approval of the lessors the property leases may be extended for further terms.

26. Contingent liabilities

Apart from drawn bank guarantee facilities (refer Note 23), there were no contingent liabilities as at 30 June 2019 (2018: Nil).

For further information on bank guarantees, please also refer to Note 30, subsequent events.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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27. Financial instruments

The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, loans to and from subsidiaries, bank bills and leases.

The main purpose of Non-derivative financial instruments is to raise finance for Group operations.

(i) Treasury risk management

The Board of Directors is responsible for monitoring treasury risk. Currency and interest rate exposures are reviewed regularly to ensure any risk associated with these exposures is minimized.

(ii) Financial risks

The main risks the consolidated entity is exposed to through its financial instruments are interest rate risk, foreign currency risk, liquidity risk and credit risk.

• Interest rate risk

• Of the total consolidated entity’s borrowings, $3,300,000 (2018: $6,000,000) take the form of bank loans. All bank loans are scheduled to mature on 30 June 2020. The interest cost for these bank loans is comprised of a fixed line fee plus the prevailing bank bill rate.

• Foreign currency risk

• The consolidated entity is exposed to fluctuations in foreign currencies arising from the sale and purchase of goods and services in currencies other than the consolidated entity’s measurement currency. The consolidated entity monitors its foreign exchange exposure on a regular basis.

• Liquidity risk

• The consolidated entity manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash reserves are maintained.

• Credit risk

• The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The consolidated entity does not have any material credit risk exposure to any single receivable or Group of receivables under financial instruments entered into by the consolidated entity.

(a)

Interest rate risk exposures

The consolidated entity’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial assets and financial liabilities is set out below. Exposures arise predominantly from assets and liabilities bearing variable interest rates as the consolidated entity intends to hold fixed rate, assets and liabilities to maturity. The table below shows the Group’s interest rate risk exposure as at 30 June.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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27. Financial instruments (continued)

Consolidated entity Floating Interest rate $	Non Interest Bearing Total < 1 year 1 to 5 years > 5 years $ $ $ $ $ Fixed Interest
2019 Financial assets Cash & cash equivalents - Trade & other receivables - Contract Assets - Financial assets -	- - - 2,772,182 2,772,182 - - - 18,152,132 18,152,132 - - - 3,156,104 3,156,104 - - - 189,612 189,612
Total financial assets - Weighted average interest rate	- - - 24,270,030 24,270,030 0.00% 0.00%
Financial liabilities Trade & other payables - Contract Liabilities - Borrowings 3,300,000 Lease liabilities -	- - - 13,884,749 13,884,749 - - - 1,584,027 1,584,027 - - - - 3,300,000 72,272 284,397 - - 356,669
Total financial liabilities 3,300,000	72,272 284,397 - 15,468,776 19,125,445
Weighted average interest rate 6.95%	6.89% 0.00%
Net financial assets/(liabilities) (3,300,000) (72,272) (284,397) - 8,801,254 5,144,585
2018 Financial assets Cash & cash equivalents - - - - 1,706,883 1,706,883 Trade & other receivables - - - - 18,527,672 18,527,672 Financial assets - - - - 178,570 178,570
Total financial assets - - - - 20,413,125 20,413,125 Weighted average interest rate 0.00% 0.00%
Financial liabilities Trade & other payables - - - - 12,337,056 12,337,056 Borrowings 6,000,000 448,950 - - - 6,448,950 Lease liabilities - 62,579 - - - 62,579
Total financial liabilities 6,000,000 511,529 - - 12,337,056 18,848,585 Weighted average interest rate 6.95% 3.73% 0.00%
Net financial assets/(liabilities) (6,000,000) (511,529) - - 8,076,069 1,564,540
2019 2018 $ $ Reconciliation of Net Financials Assets/(Liabilities) to Net Assets Net financial assets/(liabilities) 5,144,585 1,564,540 Add/(subtract) Non-financial assets and liabilities: Inventories 2,313,984 1,971,101 Plant and equipment 4,870,664 3,869,464 Intangible assets 12,072,010 12,072,010 Deferred tax assets 2,604,954 2,632,131 Provisions (3,018,263) (3,158,047) Consolidated entity
Net Assets 23,987,934 18,951,199

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Notes to the consolidated financial statements For the year ended 30 June 2019

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27. Financial instruments (continued)

(b) Net fair value of financial assets and liabilities

The net fair value of cash and cash equivalents and Non-interest bearing monetary financial assets and financial liabilities of the consolidated entity approximate their carrying value.

(c) Liquidity risk

Refer to Note 27(a) for a maturity analysis of financial assets and liabilities. All floating interest rate balances and all non interest bearing balances except for retention receivables totalling $2,108,047 (refer Note 4) are current and due within 12 months.

(d) Sensitivity analysis

The interest rate on Bank loans is variable. The Group believes it has minimal exposure to interest rate risk for the remainder of the facility term given the current economic stability in interest rates.

(e) Foreign currency risk

Refer Note 21 for a breakdown of revenue and assets by geographic location. Whilst the consolidated entity monitors its foreign exchange risk, it does not believe there is any material risk associated with its foreign exchange exposure.

(f) Price risk

The consolidated entity believes it has minimal exposure to price risk as costs of major materials and components are set at the time of project tender.

28. Share based payments

There were no share-based payments in the year ended 30 June 2019.

29. Investment in controlled entities

Name of entity Country of incorporation Class of shares Equity holdings 2019 2018 Syfon Systems Pty Ltd Australia Ordinary 100% 100% Syfon Systems Sdn Bhd Malaysia Ordinary 100% 100% Syfon Systems Pte Ltd Singapore Ordinary 100% 100% Syfon Systems SE Asia, Inc. Philippines Ordinary 100% 100% Syfon Systems Vietnam Co Ltd Vietnam Ordinary 100% - Syfon International Pty Ltd Australia Ordinary 100% 100% Brockman Engineering Pty Ltd Australia Ordinary 100% 100% TSF Engineering Pty Ltd Australia Ordinary 100% 100% TSF Power Pty Ltd Australia Ordinary 100% 100% NuSource Water Pty Ltd Australia Ordinary 100% 100% Danum Engineering Pty Ltd Australia Ordinary 100% 100% A.C.N. 124919508 Pty Ltd Australia Ordinary 100% 100% EVZ Engineering Pty Ltd Australia Ordinary 100% 100%

Cost of parent entity’s investment 2019 $ 2018 $ 3,700,650 3,700,650 34,504 34,504 - - - - - - - - - - - - - - - - - - - - - -

3,735,154 3,735,154

Syfon International Pty Ltd did not trade during the year.

NuSource Water Pty Ltd, Danum Engineering Pty Ltd, A.C.N. 124919508 Pty Ltd and EVZ Engineering Pty Ltd did not trade during the year and were deregistered.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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30. Subsequent events

There have not been any 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 consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years after the financial year.

31. Construction contracts Aggregate amount of contract revenue recognised during the financial year Aggregate of contract costs incurred and profits recognised (including losses recognised) to date on contracts in progress Progress billings Receipts in advance Amounts due from customers for contract work in progress Total receivable from customers for contract work in progress as included in Note 4 Retention receivables as included in Note 4	2019 2018 $ $
	72,768,652 51,925,062
	63,998,908 35,689,892 (62,426,831) (34,652,593) 1,584,027 815,817
	3,156,104 1,853,116
	14,465,143 9,011,058
	2,108,047 1,865,167

32. Deed of cross guarantee

During the financial year;

A deed of cross guarantee between EVZ Ltd (Parent Entity) and TSF Engineering Pty Ltd, Brockman Engineering Pty Ltd, Danum Engineering Pty Ltd, A.C.N. 124919508 Pty Ltd, Syfon Systems Pty Ltd, NuSource Water Pty Ltd, Syfon International Pty Ltd and EVZ Engineering Pty Ltd (Group Entities) existed and relief is obtained from preparing financial statements for those Group Entities under ASIC Class Order 98/1418.

In the prior year, the EVZ Group gave as security for a loan from TSF Corporation Pty Ltd, the shares and assets of TSF Power Pty Ltd [TSFP] (Refer Note 11). A further condition of loan was the deconsolidation/removal of TSFP from the Deed of Cross Guarantee. This condition was satisfied during the prior year.

Under the deed, EVZ Ltd and the Group Entities jointly guarantee to support the liabilities and obligations of the Group Entities. EVZ Ltd and the Group Entities are the only parties to the Deeds of Cross Guarantee and form the Closed Group. The following are the aggregate totals, for each category, relieved under the deed:

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Notes to the consolidated financial statements For the year ended 30 June 2019

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32. Deed of cross guarantee (continued)

32. Deed of cross guarantee (continued)
Financial information in relation to: (i) Statement of profit or loss and other comprehensive income Profit/(loss) before income tax Deconsolidation of TSF Power Pty Ltd Income tax (expense)/benefit Profit/(Loss) after income tax Profit/(Loss) attributable to members of the parent entity (ii) Retained earnings Retained losses at the beginning of the year Profit/(Loss) after income tax Retained losses at the end of the year (iii) Statement of financial position Current assets Cash and cash equivalents Trade and other receivables Inventories Total current assets Non-current assets Property, plant and equipment Deferred tax asset Other receivables Intangible assets Total non-current assets Total assets Current liabilities Trade and other payables and provisions Short-term borrowings Total current liabilities Non-current liabilities Long-term borrowings Long-term provisions and other payables Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses	2019 2018 $ $ 1,728,418 1,700,244 5,191,854 120,983 (27,177) (36,521) Closed group & parties to deed of cross guarantee
	6,893,095 1,784,706
	6,893,095 1,784,706
	(39,740,727) (41,525,433) 6,893,095 1,784,706
	(32,847,632) (39,740,727)
	2,221,124 1,273,467 15,186,892 12,824,328 885,768 930,987
	18,293,784 15,028,782
	4,100,494 3,206,371 2,604,954 1,899,652 6,553,557 553,626 12,072,010 12,242,295
	25,331,015 17,901,944
	43,624,799 32,930,726
	16,448,115 13,428,431 3,366,016 46,744
	19,814,131 13,475,175
	- 6,000,000 325,925 33,088
	325,925 6,033,088
	20,140,056 19,508,263
	23,484,743 13,422,463
	56,141,314 52,972,129 300,000 300,000 (32,956,571) (39,849,666)
	23,484,743 13,422,463

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Notes to the consolidated financial statements For the year ended 30 June 2019

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33. Parent entity disclosures

Information relating to the parent entity, EVZ Limited, is as follows:

(i) Financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets Equity Issued capital Accumulated losses Total equity (ii) Financial performance Comprehensive income Profit/(Loss) for the year Transfer from capital profits reserve Total comprehensive income/(loss)	2019 2018 $ $ 381,573 371,512 7,904,745 23,122,731 Parent Entity
	8,286,318 23,494,243
	318,991 659,641 3,341,529 6,021,902
	3,660,520 6,681,543
	4,625,798 16,812,700
	56,759,485 53,272,142 (52,133,687) (36,459,442)
	4,625,798 16,812,700
	(23,135,597) (1,987,905) - -
	(23,135,597) (1,987,905)

(iii) Guarantees entered into by the parent entity in relation to the debts of its subsidiaries

A deed of cross guarantee between EVZ Ltd (Parent Entity) and TSF Engineering Pty Ltd, Brockman Engineering Pty Ltd, Danum Engineering Pty Ltd, A.C.N. 124919508 Pty Ltd (formerly National Engineering Pty Ltd), Syfon Systems Pty Ltd, NuSource Water Pty Ltd, Syfon International Pty Ltd (previously EVZ Energy Pty Ltd) and EVZ Engineering Pty Ltd (Group Entities) is enacted and relief was obtained from preparing financial statements for those Group Entities under ASIC Class Order 98/1418. Under the deed, EVZ Ltd and the Group Entities jointly guarantee to support the liabilities and obligations of the Group Entities. EVZ Ltd and the Group Entities are the only parties to the Deeds of Cross Guarantee and form the Closed Group.

There are no contingent liabilities of the Parent Entity or commitments for the acquisition of property, plant and equipment by the Parent Entity.

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Notes to the consolidated financial statements For the year ended 30 June 2019

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34. Company details

The registered office and principal place of business of:

EVZ Limited is 115/838 Collins Street, Docklands, Victoria 3008 Australia

The principal place of business of:

Brockman Engineering Pty Ltd is 87 St Georges Road, Norlane, 3214 Australia

Syfon Systems Pty Ltd is 22 Hargreaves Street, Huntingdale, 3166 Australia

Syfon Systems Sdn Bhd is 6 & 8, Jalan Angklung 33/20, Shah Alam Technology Park 40460 Shah Alam, Selangor Darul Ehsan Malaysia

Syfon Systems Pte Ltd is 10 Anson Road, #18-17, International Plaza Singapore 079903

Syfon Systems SE Asia, Inc. is 30/F Burgundy Corporate Tower Sen. Gil Puyat Avenue, Makati City Philippines Syfon Systems Vietnam Co Ltd is No. 20, Street No. 7, Tan Kieng Ward District 7, Ho Chi Minh City Vietnam TSF Engineering Pty Ltd is Unit F41, 16 Mars Road, Lane Cove West, 2066 Australia TSF Power Pty Ltd is Unit F41, 16 Mars Road, Lane Cove West, 2066 Australia

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Directors’ declaration

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The Directors of EVZ Limited declare that:

• (a) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;

• (b) the financial statements are in compliance with International Financial Reporting Standards, as stated in Note 1 to the financial statements;

• (c) in the Directors’ opinion, the financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity; and

• (d) the Directors have been given the declarations required by s.295A of the Corporations Act 2001.

At the date of this declaration, the Company is within the class of companies affected by ASIC Class Order 98/1418. The nature of the deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of any debt in accordance with the deed of cross guarantee.

In the Directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Corporations (Wholly-owned companies) instrument 2016/785 applies, as detailed in Note 32 to the financial statements will, as a Group, be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee.

SIGNED in accordance with a resolution of the Board of Directors made pursuant to s.295(5) of the Corporations Act 2001.

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…………………………

Director – G Burns

Signed at Melbourne this 26[th] day of September 2019.

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Independent auditors’ report

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Independent auditor’s report (continued)

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Independent auditor’s report (continued)

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Additional shareholder information As at 2 September 2019

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1. Substantial shareholders

Name	Ordinary shares
UBS NOMINEES PTY LTD	17,885,822
BOND STREET CUSTODIANS LIMITED	8,904,919
AIRLIE BEACH HOLDINGS PTY LIMITED	8,135,200

2. Distribution of shareholding

Range of Holding	Range of Holding		No of Shareholders	Units Held	% of Units
1	to	1,000	1181	355,394	0.37%
1,001	to	5,000	338	798,860	0.83%
5,001	to	10,000	105	786,115	0.82%
10,001	to	100,000	158	5,366,968	5.58%
100,001	and	over	93	88,809,397	92.40%
Totals			1875	96,116,734	100.00%
Number of shareholders with less than a marketable parcel of
$500 at $0.1750/unit			1424	781,180	0.81%

3. Names of 20 largest shareholders

**Rank **	Name	Holding	% Held
1	UBS NOMINEES PTY LTD	17,885,822	18.61
2	BOND STREET CUSTODIANS LIMITED	8,904,919	9.26
3	AIRLIE BEACH HOLDINGS PTY LIMITED	4,635,200	4.82
4	AIRLIE BEACH HOLDINGS PTY LIMITED	3,500,000	3.64
5	ONMELL PTY LTD	2,643,462	2.75
6	MYALL RESOURCES PTY LTD	2,600,000	2.71
7	HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	2,551,033	2.65
8	BT PORTFOLIO SERVICES LIMITED	2,477,250	2.58
9	RUSTICA PTY LTD	2,318,182	2.41
10	H&C TRUONG PTY LTD	2,314,379	2.41
11	SARGON CT PTY LTD	2,296,429	2.39
12	TAYCO INVESTMENTS PTY LTD	2,199,964	2.29
13	THIRD RETURN SUPER PTY LTD	2,000,000	2.08
14	RANGEWORTHY PTY LTD	1,936,396	2.01
15	ARCHWIN PTY LTD	1,635,838	1.70
16	STF ENTERPRISES PTY LTD	1,487,728	1.55
17	MR ADAM BELLGROVE + MRS ANDREA BELLGROVE <BELLGROVE SUPER FUND	1,368,621	1.42
18	POWIS SUPERANNUATION PTY LTD	1,150,000	1.20
19	HARRINGTON PARTNERS FUND 1 PTY LTD	1,050,000	1.09
20	BOND STREET CUSTODIANS LIMITED	1,000,000	1.04
Total	top 20 holders of ordinary fully paid shares	65,955,223	68.61
Total	remaining holders balance	30,161,511	31.39
Total	ordinary shares	96,116,734	100.00

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Additional shareholder information (continued) As at 2 September 2019

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4. Voting rights

A registered holder of shares in the Company may attend general meetings of the Company in person or by proxy and on a poll may exercise one vote for each share held. There are no voting rights attached to options for ordinary shares until the options have been exercised.

5. General

The name of the Company Secretary is Pieter van der Wal.

The address of the principal registered office is: 115 / 838 Collins Street, Docklands Vic 3008 Telephone Number: (03) 9545 5288 Facsimile Number: (03) 9542 6061 Email: pieter.vanderwal@evz.com.au

A register of securities is kept at: Computershare Investor Services Pty Ltd 452 Johnston Street Abbotsford, Victoria, 3067 Telephone Number: 1300 137 328

6. Stock exchange listing

The Company’s ordinary securities are listed on the Australian Securities Exchange Limited.

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www.evz.com.au

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