EVZ LIMITED — Interim / Quarterly Report 2016

Aug 30, 2016

31 August 2016, Melbourne : EVZ Limited (ASX: EVZ) has delivered its Preliminary Final Results for the year ending 30 June 2016. In summary the Groups results were:

RESULTS FOR ANNOUNCEMENT TO THE MARKET

RESULTS SUMMARY	FY2016	FY2015	Change
	$	$	$
Revenue from continuing activities	63,986,789	70,311,742	(6,324,953)
EBITDA	709,264	(3,379,210)	4,088,474
EBIT	(228,061)	(4,225,598)	3,997,537
Profit (loss) from continuing activities before tax & impairment	(2,222,908)	(6,386,015)	4,163,107
Profit (loss) from continuing activities before tax	(2,222,908)	(10,389,814)	8,166,906
Net profit (loss) for the period	(2,438,195)	(10,426,791)	7,988,596
Earnings per share	(1.16) cents	(4.99) cents

No dividend has been declared or paid in the year ending 30 June 2016.

The following Appendix 4E financial information is subject to the finalisation of the audit process.

FY16 has seen a significant improvement in performance compared to FY15 with the Group reporting an EBITDA of $709,264.

During the 2[nd] half of FY16 the Group faced different market circumstances when compared to the first six months of FY16, including:

• A constant delay in the awarding of contracts which has resulted in competitive tension with respect to pricing as businesses compete for available work.

• Highly competitive pricing from inexperienced engineering businesses exiting the mining sector and willing to buy work in the engineering segment.

• A wetter than expected winter period has also hampered project delivery.

• Unexpected and prolonged expenditure freezes by major customers in the power maintenance segment.

The Group’s water segment in Australia has returned to profitability during the year and this same water segment in Asia has increased its profitability. Both Australia and Asia enter the new financial year with strong levels of forward work in hand. Growth in the Asian region continues to present further geographic spread and opportunities for the Asia water business. The engineering segment also has significant forward prospect/tendered work.

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Continuing high interest costs associated with the Groups debt has impacted the financial result.

Subsequent to balance date the Group has agreed a refinancing package with its financier, the Commonwealth Bank of Australia which will incorporate a significant reduction in the cost of funding, a moratorium on loan repayments until 31 December 2017 and an extension of the banking facilities to the same date. This agreement was executed on 30 August 2016.

In addition, subsequent to balance date, the Group has been able to arrange a term loan from the Directors and management for $1 million to assist with the Group’s working capital position.

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

EVZ Limited is an industrial group with a portfolio of specialist businesses in the engineering services sector. EVZ operates in the areas of power generation, bulk storage tank design, engineering and construction and stormwater management through subsidiaries TSF Engineering, Brockman Engineering and Syfon Systems. For further information please visit our website www.evz.com.au

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

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2016

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2016

Revenue Cost of sales Gross profit Other income Administration and business development costs Corporate costs Impairment of other assets Impairment of plant and equipment Impairment of intangibles Profit/(Loss) before financing costs and income tax Net finance costs Profit /(Loss) before income tax from continuing operations Income tax (expense)/benefit Net Profit/(Loss) for year Net Profit/(Loss) attributable to: Members of the parent entity Non-controlling interest Earnings per Share: Overall operations Basic earnings per share Diluted earnings per share Continuing operations Basic earnings per share Diluted earnings per share	Economic Entity 2016 $ 2015 $ 63,986,789 70,311,742 (53,223,235) (62,854,962)
	10,763,554 7,456,780 46,604 71,743 (10,408,568) (10,729,945) (1,089,499) - - - (1,357,508) (162,855) - (4,003,799)
	(687,909) (8,725,584) (1,534,999) (1,664,230)
	(2,222,908) (10,389,814) (215,287) (36,977)
	(2,438,195) (10,426,791)
	(2,438,195) (10,426,791) - -
	(2,438,195) (10,426,791)
	Cents per share Cents per share (1.16) (4.99) (1.16) (4.99) (1.16) (4.99) (1.16) (4.99)

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2016

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016

Profit/(Loss) for the year Other comprehensive income: Exchange differences arising on translation of foreign operations Total comprehensive income/(loss) for the year attributable to owners of the company	Economic Entity 2016 $ (2,438,195) 2015 $ (10,426,791) (40,486) 56,598
	(2,478,681) (10,370,193)

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2016

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016

CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Financial assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables Plant and equipment Deferred tax assets Intangible assets Financial assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Provisions Tax liabilities Short-term borrowings TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Long-term borrowings Deferred tax liabilities Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY	Economic Entity 2016 $ 2015 $ 1.561,574 1,013,866 11,249,768 14,782,087 1,764,881 1,825,064 31,417 63,729
	14,607,640 17,684,746
	1,449,202 978,754 4,688,822 5,082,502 4,313,415 4,313,415 12,072,010 12,072,010 - -
	22,523,449 22,446,681
	37,131,089 40,131,427
	14,478,636 14,871,425 3,081,940 3,127,660 94,554 - 13,317,789 13,454,208
	30,972,919 31,543,293
	122,958 241,268 43,237 23,469 206,997 149,738
	373,192 414,475
	31,346,111 31,867,768
	5,784,978 8,263,659
	46,088,909 46,088,909 (89,808) (49,322) (40,214,123) (37,775,928)
	5,784,978 8,263,659

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2016

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2016

30 June 2016 Balance at 1 July 2015 Total comprehensive income for year Loss for year Foreign currency translation reserve Total comprehensive loss for year Transactions with owners, recorded directly in equity Shares Issued Dividends Balance at 30 June 2016 30 June 2015 Balance at 1 July 2014 Total comprehensive income for year Loss for year Foreign currency translation reserve Total comprehensive loss for year Transactions with owners, recorded directly in equity Shares Issued Dividends Balance at 30 June 2015	Issued Capital $ Accumulated Losses $ Foreign Currency Translation Reserve $ Total $ 46,088,909 (37,775,928) (49,322) 8,263,659
	- (2,438,195) - (2,438,195) - - (40,486) (40,486)
	- (2,438,195) (40,486) (2,478,681)
	- - - - - - - -
	46,088,909 (40,214,123) (89,808) 5,784,978
	46,055,159 (27,349,137) (105,920) 18,600,102
	- (10,426,791) - (10,426,791) - - 56,598 56,598
	- (10,426,791) 56,598 (10,370,193)
	33,750 - - 33,750 - - - -
	46,088,909 (37,775,928) (49,322) 8,263,659

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2016

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2016

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Income tax paid Interest received Finance costs NET CASH FLOWS PROVIDED/(USED) BY OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of plant and equipment Purchase of plant and equipment NET CASH FLOWS (USED) BY INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from bank loans Repayment of bank loans Proceeds from lease financing Payments for lease financing NET CASH FLOWS PROVIDED/(USED) BY FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH HELD Cash at beginning of financial year CASH AT END OF FINANCIAL YEAR	Economic Entity 2016 $ 2015 $ 75,268,312 77,816,484 (72,495,316) (78,685,268) (120,733) (61,477) 10,529 15,142 (1,545,528) (1,679,372)
	1,117,264 (2,594,491)
	276,792 94,603 (591,619) (1,106,368)
	(314,827) (1,011,765)
	5,200,000 - (250,000) - - 102,556 (126,933) (32,651)
	4,823,067 69,905
	5,625,504 (3,536,351) (4,063,930) (527,579)
	1,561,574 (4,063,930)

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2016

BASIS OF PREPARATION OF PRELIMINARY FINANCIAL STATEMENTS

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

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

Going concern

Existing bank facilities were due to mature on 31 March 2017. The Group has agreed a refinancing package with its financier, the Commonwealth Bank of Australia which will incorporate a significant reduction in the cost of funding, a moratorium on loan repayments until 31 December 2017 and an extension of the banking facilities to the same date. This agreement was executed on 30 August 2016.

In addition, subsequent to balance date, the Group has been able to arrange a term loan from the Directors and management for $1 million to assist with the Group’s working capital position.

For these reasons Directors continue to adopt the going concern basis in preparing this financial report of EVZ and its controlled entities.

PROFIT/(LOSS) FROM CONTINUING ACTIVITIES

(a) OTHER INCOME Sundry income (b) EXPENSES Bad debts Impairment – receivables Total employee costs Defined contribution superannuation expense Foreign exchange losses/(gains) (Profit)/Losses on sale of plant and equipment Operating lease payments Depreciation of plant and equipment Impairment – other assets Impairment – goodwill	Economic Entity 2016 $ 2015 $ 46,604 71,743
	46,604 71,743
	118,603 264,911 (291,336) 131,322 36,229,543 37,553,593 2,747,491 2,487,306 (103,522) (82,759) 118,280 (10,144) 835,170 1,009,553 937,325 846,388 - 162,855 - 4,003,799

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2016

(c) NET FINANCE COSTS Finance costs Interest income INCOME TAX (a) The prima facie tax on profit from continuing activities before income tax is reconciled to income tax as follows: Profit/(Loss) before income tax Income tax calculated at 30% (2015: 30%) Tax effect of permanent differences Under provision/(over provision) in prior years Tax losses not recognised Taxation expense - offshore subsidiary Income tax expense/(benefit) The applicable weighted average effective tax rates are as follows: (b) The components of tax expense comprise: Current tax Deferred tax Under provision/(over provision) in prior years		Economic Entity 2016 $ 2015 $ 1,545,528 1,679,372 (10,529) (15,142) 1,534,999 1,664,230 (2,222,908) (10,389,814)
		(666,872) (3,116,944) (118,002) 1,111,553 - (3,687) 784,874 2,009,078 215,287 36,977
		215,287 36,977
		- -
		215,287 40,664 - - - (3,687)
		215,287 36,977

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2016

ISSUED CAPITAL Issued and paid up 210,548,789 ordinary shares (2015: 210,548,789 ordinary shares) Issued and fully paid up ordinary shares Opening balance Shares issued Closing balance Opening balance Shares issued Closing balance	Economic Entity 2016 $ 2015 $ 46,088,909 46,088,909 46,088,909 46,088,909 46,088,909 46,055,159 - 33,750
	46,088,909 46,088,909
	2016 No. 2015 No. 210,548,789 208,439,414 - 2,109,375
	210,548,789 210,548,789

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2016

EARNINGS PER SHARE Weighted average number of ordinary shares outstanding during the year used in calculation of Basic and Diluted Earnings per Share INTANGIBLE ASSETS Goodwill on consolidation Less impairment Goodwill on acquisition Less impairment	2016 No. 2015 No. 210,548,789 209,052,000
	2016 $ 2015 $ 3,282,532 3,282,532 - -
	3,282,532 3,282,532
	24,606,758 (15,817,280) 24,606,758 (15,817,280)
	8,789,478 8,789,478
	12,072,010 12,072,010

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2016

		Economic	Entity
		2016	2015
		$	$
STATEMENT OF CASH FLOWS
(i)	Cash balances comprise:
	Cash on hand	1,561,574	1,013,866
	Bank overdraft	-	(5,077,796)
	Closing cash balance	1,561,574	(4,063,930)
(ii)	Reconciliation of the operating profit/(loss) after tax to net cash
	flows from operations:
	Operating profit/(loss) after tax	(2,438,195)	(10,426,791)
	(Gain)/loss on sale of plant and equipment	118,280	(10,144)
	Depreciation - plant & equipment	937,325	846,388
	Foreign currency translation	(31,510)	43,299
	Impairment - receivables	(291,336)	131,322
	Impairment - plant & equipment	-	-
	Impairment – other assets	-	162,855
	Impairment - goodwill	-	4,003,799
	Changes in assets and liabilities adjusted for effects of
	acquisition/disposal of operations during financial year
	Increase/(Decrease) in provisions for employee entitlements	11,539	836,240
	(Increase)/Decrease in inventories	60,183	(249,456)
	(Increase)/Decrease in trade and other receivables	3,385,519	1,004,721
	(Increase)/Decrease in fixed assets	(356,074)	-
	Increase/(Decrease) in trade and other payables	(392,789)	1,087,776
	Increase/(Decrease) in tax liabilities	114,322	(24,500)
	Net cash provided/(used) by operating activities	1,117,264	(2,594,491)

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2016

SEGMENT REPORTING CONTINUING OPERATIONS:

Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision-makers) in assessing performance and determining the allocation of resources.

Operating segments are managed primarily on the basis of product category and service offerings.

Executive management monitors segment performance based on EBIT.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted:

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

Inter-segment transactions:

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

– Segment Reporting Continuing Operations

30 June 2016 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 segment result to group net profit before tax Unallocated items Net finance costs Other costs Net profit/(loss) before tax from continuing operations	Engineering Energy Water Corporate $ $ $ $ 34,309,073 7,039,326 22,638,390 - 2,544 - - -	Total $ 63,986,789 2,544
	34,311,617 7,039,326 22,638,390 -	63,989,333 (2,544)
	(862,771) (756,946) 2,021,307 (1,089,499)
		63,986,789
		(687,909) (1,534,999) -
		(2,222,908)

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2015

EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2015
30 June 2016 Included in segment net profit before interest and tax Depreciation Impairment Receivables Goodwill 30 June 2015 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 segment result to group net profit before tax Unallocated items Net finance costs Other costs Net profit/(loss) before tax from continuing operations Included in segment net profit before interest and tax Depreciation Impairment Receivables Goodwill	Engineering Energy Water Corporate $ $ $ $ 493,700 146,387 290,815 6,423 - - (291,336) - - - - -	Total $ 937,325 (291,336) -
	31,589,603 15,054,393 23,667,746 - 1,447,835 - - -	70,311,742 1,447,835
	33,037,438 15,054,393 23,667,746 -	71,759,577 (1,447,835)
	1,658,224 (8,670,745) (265,554) (1,447,509)
		70,311,742
		(8,725,584) (1,664,230) -
	438,266 130,814 267,554 9,754 (83,813) - 215,135 - - 4,003,799 - -
		(10,389,814)
		846,388 131,322 4,003,799

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2016

Engineering Energy Water Corporate $ $ $ $ Secondary Reporting – including Discontinued Operations 30 June 2016 ASSETS Segment assets 21,117,699 (2,546,759) 16,224,647 29,749,215 Reconciliation of segment assets to group assets Inter-segment eliminations Total group assets Segment asset increases for the period Capital expenditure 445,453 9,320 136,846 - 445,453 9,320 136,846 - LIABILITIES Segment liabilities 25,213,774 18,349,465 5,383,579 13,941,012 Reconciliation of segment liabilities to group liabilities Inter-segment eliminations Total group liabilities 30 June 2015 ASSETS Segment assets 21,661,180 846,210 15,217,723 26,722,341 Reconciliation of segment assets to group assets Inter-segment eliminations Total group assets Segment asset increases for the period Capital expenditure 581,338 135,669 389,361 - 581,338 135,669 389,361 - LIABILITIES Segment liabilities 24,903,777 20,355,449 6,510,467 8,964,621 Reconciliation of segment liabilities to group liabilities Inter-segment eliminations Total group liabilities	Engineering Energy Water Corporate $ $ $ $ Secondary Reporting – including Discontinued Operations 30 June 2016 ASSETS Segment assets 21,117,699 (2,546,759) 16,224,647 29,749,215 Reconciliation of segment assets to group assets Inter-segment eliminations Total group assets Segment asset increases for the period Capital expenditure 445,453 9,320 136,846 - 445,453 9,320 136,846 - LIABILITIES Segment liabilities 25,213,774 18,349,465 5,383,579 13,941,012 Reconciliation of segment liabilities to group liabilities Inter-segment eliminations Total group liabilities 30 June 2015 ASSETS Segment assets 21,661,180 846,210 15,217,723 26,722,341 Reconciliation of segment assets to group assets Inter-segment eliminations Total group assets Segment asset increases for the period Capital expenditure 581,338 135,669 389,361 - 581,338 135,669 389,361 - LIABILITIES Segment liabilities 24,903,777 20,355,449 6,510,467 8,964,621 Reconciliation of segment liabilities to group liabilities Inter-segment eliminations Total group liabilities	Total $ 64,544,802 (27,413,713)
30 June 2016 ASSETS Segment assets Reconciliation of segment assets to group assets Inter-segment eliminations Total group assets Segment asset increases for the period Capital expenditure LIABILITIES Segment liabilities Reconciliation of segment liabilities to group liabilities Inter-segment eliminations Total group liabilities 30 June 2015 ASSETS Segment assets Reconciliation of segment assets to group assets Inter-segment eliminations Total group assets Segment asset increases for the period Capital expenditure LIABILITIES Segment liabilities Reconciliation of segment liabilities to group liabilities Inter-segment eliminations Total group liabilities
	445,453 9,320 136,846 -
		37,131,089
		591,619
	445,453 9,320 136,846 -	591,619
	25,213,774 18,349,465 5,383,579 13,941,012	62,887,830 (31,541,719)
	21,661,180 846,210 15,217,723 26,722,341
		31,346,111
		64,447,454 (24,316,027)
	581,338 135,669 389,361 -
		40,131,427
		1,106,368
	581,338 135,669 389,361 -	1,106,368
	24,903,777 20,355,449 6,510,467 8,964,621	60,734,314 (28,866,546)
		31,867,768

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2016

REVENUE BY GEOGRAPHICAL REGION

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

Australia Asia Total revenue	Economic Entity 2016 $ 2015 $ 56,438,135 64,973,643 7,548,654 5,338,099
	63,986,789 70,311,742

ASSETS BY GEOGRAPHICAL REGION

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

Australia Asia Total assets	2016 $ 2015 $ 29,572,486 34,185,782 7,558,603 5,945,645
	37,131,089 40,131,427

SUBSEQUENT EVENTS

Existing bank facilities were due to mature on 31 March 2017. The Group has agreed a refinancing package with its financier, the Commonwealth Bank of Australia which will incorporate a significant reduction in the cost of funding, a moratorium on loan repayments until 31 December 2017 and an extension of the banking facilities to the same date. This agreement was executed on 30 August 2016.

In addition, subsequent to balance date, the Group has been able to arrange a term loan from the Directors and management for $1 million to assist with the Group’s working capital position.

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

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EVZ Limited Appendix 4E Preliminary final report Year ended 30 June 2016

ADDITIONAL INFORMATION

Reporting period

Reporting period
The applicable reporting period is 1 July 2015 to 30 June 2016.
The previous corresponding reporting period was 1 July 2014 to 30 June	2015.
		2016	2015
Net tangible assets
Net tangible assets per ordinary share	(3) cents		(1.8) cents
Details of entities over which control has been gained or lost
during the period
Name of entity
Control gained/lost
Contribution of entity to reporting entity’s from ordinary activities during
the period
Loss of entity during the whole of the previous corresponding year	Not applicable
Dividends and Distributions
Date on which each dividend or distribution is payable
Amount per security of foreign sourced dividend or distribution	Not applicable
Details of dividend or distribution reinvestment plans	Not applicable
Material interests in entities which are not controlled entities	Not applicable

Compliance Statement – The accounts are in the process of being audited.

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