EVZ LIMITED — Interim / Quarterly Report 2018

Feb 20, 2018

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Results for announcement to the market EVZ Limited (ASX: EVZ) – 20 February 2018

EVZ Limited is pleased to report a significant improvement in trading results for the first half of FY2018.

Highlights include:

• 14% increase in revenue

• 280% improvement in EBIT

• 34% increase in contracted work in hand to $49.5M

The improved results are confirmation of the success of the business turnaround strategy including the recapitalisation completed in June 2017. An increase in contracted work and a strong pipeline of tender opportunities gives management confidence that the progress made in this period will continue during the second half and into FY19.

Pleasingly all three businesses contributed to the success in the reporting period each taking advantage of opportunities in their respective markets. Cashflow for the period was positive at $0.9M assisted by diligent cost control and reduced cost of debt finance.

Results Summary FY2018 H1 FY2017 H1 Change Change $ $ $ %	Results Summary FY2018 H1 FY2017 H1 Change Change $ $ $ %	Results Summary FY2018 H1 FY2017 H1 Change Change $ $ $ %	Results Summary FY2018 H1 FY2017 H1 Change Change $ $ $ %	Results Summary FY2018 H1 FY2017 H1 Change Change $ $ $ %
Revenue from continuing activities	31,873,148	28,080,755	3,792,393	14%
EBITDA	1,747,284	773,846	973,438	126%
EBIT	1,412,094	371,319	1,040,775	280%
Profit (loss) from continuing activities before tax	1,276,915	(427,718)	1,704,633
Profit (loss) for the period from continuning operations after tax	1,133,107	(505,287)	1,638,394
Earnings per share (cents)	0.16	(0.24)

Further information including financial analysis of the results is provided in the FY2018 Half-Year Investor Presentation released to the market today.

In addition, please also refer to the attached Appendix 4D: Half-Year 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 storm-water management through subsidiaries TSF Maintenance, 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

EVZ Limited

and controlled entities

ABN 87 010 550 357

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Half-year report

Half-year ended 31 December 2017

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Table of contents

Directors’ report.............................................................................................................................. 3
Auditor’s independence declaration............................................................................................. 4
Condensed consolidated statement of profit or loss................................................................... 5
Condensed consolidated statement of comprehensive income................................................. 6
Condensed consolidated statement of financial position........................................................... 7
Condensed consolidated statement of changes in equity........................................................... 8
Condensed consolidated statement of cash flows...................................................................... 9
Notes to the condensed consolidated financial statements...................................................... 10
1. Basis of preparation of half-year financial report............................................................ 10
2. Profit and loss.................................................................................................................... 11
3. Borrowings......................................................................................................................... 11
4. Earnings per share............................................................................................................. 12
5. Intangible assets................................................................................................................ 12
6. Segment information......................................................................................................... 13
7. Contingent liabilities.......................................................................................................... 16
8. Events subsequent to reporting date............................................................................... 16
Directors’ declaration................................................................................................................... 17
Independent auditor’s report....................................................................................................... 18

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Directors’ report

Your Directors submit the financial report of EVZ Limited and its controlled entities (the economic entity) for the half-year ended 31 December 2017.

Directors

The names of Directors who held office during or since the end of the half-year are as follows:

• Graham Burns (Chairman)

• Robert Edgley

• Ian Luck

Review of Operations

The operating profit before tax from continuing operations of the economic entity for the six months to 31 December 2017 was $1,276,915 (31 December 2016 loss: $427,718). The net profit after tax for the six months to 31 December 2017 was $1,133,107 (31 December 2016 loss: $505,287).

Changes in State of Affairs

There were no significant changes in the state of affairs during the period.

Dividends

During the half-year to 31 December 2017 there were no dividends declared or paid.

Events Subsequent to Reporting Date

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 half-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 periods.

Auditor’s Declaration

The auditor’s independence declaration under section 307C of the Corporations Act 2001 is set out on page 4 for the half-year ended 31 December 2017.

This report is signed in accordance with a resolution of the Board of Directors.

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Director Graham Burns

Dated this 20[th] day of February 2018

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Auditor Independence Declaration Under S307C of the Corporations Act 2001 to the Directors of EVZ Limited

I declare that, to the best of my knowledge and belief, during the half year ended 31 December 2017 there have been no contraventions of:

• a) The auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• b) Any applicable code of professional conduct in relation to the review.

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CROWE HORWATH MELBOURNE

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DAVID MUNDAY Partner

Melbourne, Australia 20 February 2018

Crowe Horwath Melbourne is a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omission of financial services licensees.

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Condensed consolidated statement of profit or loss

For the half-year ended 31 December 2017 Notes Continuing Operations Revenue Cost of Sales Gross Profit Other Income Administration and corporate costs Results from operating activities Net finance costs 2 Profit/(Loss) before income tax from continuing operations Income tax (expense)/benefit Profit/(Loss) for the period from continuing operations Earnings Per Share Continuing Operations: 4 Basic earnings per share Diluted earnings per share Overall Operations: 4 Basic earnings per share Diluted earnings per share	Economic Entity 31 December 2017 31 December 2016 $ $ 31,873,148 28,080,755 (25,487,572) (22,712,636)
	6,385,576 5,368,119 7,790 50,079 (4,878,792) (5,463,022)
	1,514,574 (44,824) (237,659) (382,894)
	1,276,915 (427,718) (143,808) (77,569)
	1,133,107 (505,287)
	Cents Cents 0.160 (0.240) 0.157 (0.240) 0.160 (0.240) 0.157 (0.240)

The accompanying notes form part of these condensed consolidated financial statements.

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Condensed consolidated statement of comprehensive income

For the half-year ended 31 December 2017 Profit/(Loss) for the period Other comprehensive income: Items that may be reclassified subsequently to profit or loss Exchange differences arising on translation of foreign operations Total comprehensive income/(loss) for the period attributable to owners of the company	Economic Entity 31 December 2017 31 December 2016 $ $ 1,133,107 (505,287) 66,212 (140,175)
	1,199,319 (645,462)

The accompanying notes form part of these condensed consolidated financial statements.

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Condensed consolidated statement of financial position

For the half-year ended 31 December 2017 Notes Current Assets Cash and cash equivalents Trade and other receivables Inventories Financial assets Total current assets Non-current assets Trade and other receivables-non current Plant and equipment Deferred tax assets Intangibles 5 Total non-current assets Total Assets Current liabilities Trade and other payables Tax liabilities Short-term borrowings 3 Provisions Total current liabilities Non-current liabilities Long-term borrowings 3 Deferred tax liabilities Provisions-non current Total non-current liabilities Total Liabilities Net Assets Equity Shares Issued Reserves Accumulated losses Total Equity	Economic Entity 31 December 2017 30 June 2017 $ $ 2,433,351 1,551,970 13,116,005 11,858,174 1,740,851 1,607,744 61,512 28,487
	17,351,719 15,046,375
	1,335,439 1,119,934 3,647,177 3,777,140 2,535,899 2,668,652 12,072,010 12,072,010
	19,590,525 19,637,736
	36,942,244 34,684,111
	11,714,097 10,819,022 45,846 79,970 505,126 1,085,286 3,203,278 2,666,446
	15,468,347 14,650,724
	6,000,000 6,033,330 50,889 45,198 58,443 386,834
	6,109,332 6,465,362
	21,577,679 21,116,086
	15,364,565 13,568,025
	51,032,097 50,434,876 (196,205) (262,417) (35,471,327) (36,604,434)
	15,364,565 13,568,025

The accompanying notes form part of these condensed consolidated financial statements.

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Condensed consolidated statement of changes in equity

For the half-year ended 31 December 2017		Issued	Accumulated	Foreign Currency	Total
		Capital	Losses	Translation
				Reserve
		$	$	$	$
Balance at 1 July 2017	50,434,876		(36,604,434)	(262,417)	13,568,025
Total comprehensive loss for period
Profit/(loss) for period		-	1,133,107	-	1,133,107
Foreign currency translation reserve		-	-	66,212	66,212
Total comprehensive income for period		-	1,133,107	66,212	1,199,319
Transactions with owners, recorded directly in equity
Shares issued		597,221	-	-	597,221
Dividends		-	-	-
					-
Balance at 31 December 2017	51,032,097		(35,471,327)	(196,205)	15,364,565
For the half-year ended 31 December 2016		Issued	Accumulated	Foreign Currency	Total
		Capital	Losses	Translation
				Reserve
		$	$	$	$
Balance at 1 July 2016	46,088,909		(40,214,123)	(89,808)	5,784,978
Total comprehensive loss for period
Profit/(loss) for period		-	(505,287)	-	(505,287)
Foreign currency translation reserve		-	-	(140,175)	(140,175)
Total comprehensive income for period		-	(505,287)	(140,175)	(645,462)
Transactions with owners, recorded directly in equity
Shares issued		-	-	-	-
Dividends		-	-	-	-
Balance at 31 December 2016	46,088,909		(40,719,410)	(229,983)	5,139,516

The accompanying notes form part of these condensed consolidated financial statements.

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Condensed consolidated statement of cash flows

For the half-year ended 31 December 2017 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)/refund Net cash provided by / (used in) operating activities Cash flows from investing activities Proceeds from sale of plant and equipment Purchase of plant and equipment Net cash used in investing activities Cash flows from financing activities Proceeds from Loans Repayment of finance leases Net cash provided/(used) by financing activities Net increase/(decrease) in cash held Cash at beginning of the period Cash at end of the period	Economic Entity 31 December 2017 31 December 2016 $ $ 33,325,405 31,778,449 (31,941,960) (32,182,938) 773 2,527 (238,432) (385,421) (39,488) (29,304)
	1,106,298 (816,687)
	35,809 100,090 (205,228) (121,808)
	(169,419) (21,718)
	- 1,085,000 (55,498) (65,084)
	(55,498) 1,019,916
	881,381 181,511 1,551,970 1,561,574
	2,433,351 1,743,085

The accompanying notes form part of these condensed consolidated financial statements.

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Notes to the condensed consolidated financial statements

1. Basis of preparation of half-year financial report

The half-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001 and Accounting Standard AASB 134: Interim Financial Reporting. Compliance with AASB134 ensures compliance with International Financial Reporting Standards IAS34 “Interim Financial Reporting”. The half-year report does not include full disclosures of the type normally included in an annual financial report.

Accordingly, it is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2017 and any public announcements made by EVZ Limited and its controlled entities during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001.

The Group has adopted all the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current half-year. New and revised Standards and amendments thereof and Interpretations effective for the current half-year that are relevant to the Group include:

• AASB 2016-1: Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses

• AASB 2016-2: Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107

• AASB 2017-2: Amendments to Australian Accounting Standards – Further Annual Improvements 2014-2016 Cycle

The adoption of these amending standards does not have any material impact on the disclosures or the amounts recognised in the Group's condensed consolidated financial statements.

This financial report has been prepared on an accruals basis and is based on historical costs. The accounting policies applied in this financial report are consistent with those applied in the 30 June 2017 Annual Report.

All amounts are presented in Australian dollars, unless otherwise noted.

Going concern

The financial report for the half-year ended 31 December 2017 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.

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2. Profit and loss

For the half-year ended 31 December 2017 2 Profit or loss Net finance costs: Finance costs Interest income Net finance costs from continuing operations	Economic Entity 31 December 2017 31 December 2016 $ $ (238,432) (385,421) 773 2,527
	(237,659) (382,894)

3. Borrowings

For the half-year ended 31 December 2017 3 Borrowings Current Liabilities Short term borrowings: Loans from Related Corporation-secured Leases Non-Current Liabilities Long term borrowings: Bank loans-secured Leases	Economic Entity 31 December 2017 30 June 2017 $ $ 442,008 1,000,000 63,118 85,286
	505,126 1,085,286
	6,000,000 6,000,000 - 33,330
	6,000,000 6,033,330

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1. Earnings per share

For the half-year ended 31 December 2017 4 Earnings per share Weighted average number of ordinary shares outstanding during the period used in calculation of basic earnings per share Weighted average number of ordinary shares outstanding during the period used in calculation of diluted earnings per share	Economic Entity 31 December 2017 31 December 2016 Number of Shares Number of Shares 706,492,340 210,548,789
	721,492,340 210,548,789

5. Intangible assets For the half-year ended 31 December 2017 5 Intangible Assets Goodwill at cost Net Carrying Value Goodwill on acquisition at cost Impairment – TSF Engineering Net Carrying Value	Economic Entity 31 December 2017 30 June 2017 $ $ 3,282,532 3,282,532
	3,282,532 3,282,532
	24,606,758 24,606,758 (15,817,280) (15,817,280)
	8,789,478 8,789,478
	12,072,010 12,072,010

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6. 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. Operating segments are managed primarily based on 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 Information continues the next page.

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Segment information (continued)

6a Segment information Six months ended 31 December 2017: 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 of Receivables 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	Engineering Energy Water Corporate $ $ $ $ 18,174,057 3,000,160 10,698,930 - - - - -	Total $ 31,873,148 -
	18,174,057 3,000,160 10,698,930 0	31,873,148
	- - - -	-
	18,174,057 3,000,160 10,698,930 -	31,873,148
	886,273 38,349 987,543 (397,590)	1,514,574 - (237,659)
	181,619 28,218 123,483 1,870 - - -
		1,276,915
		335,191 -
	23,651,867 (3,291,490) 18,203,161 31,454,663	70,018,201 (33,075,957)
	101,535 35,516 53,263 14,913
		36,942,244
		205,227
	101,535 35,516 53,263 -	205,227
	26,860,335 18,669,403 4,900,867 6,816,182	57,246,787 (35,669,108)
		21,577,679

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Segment information (continued)

6b Segment information Six months ended 31 December 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 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 of Receivables 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	Engineering Energy Water Corporate $ $ $ $ 13,965,494 3,478,221 10,637,040 - - - - -	Total $ 28,080,755 -
	13,965,494 3,478,221 10,637,040 -	28,080,755
	- - - -	-
	13,965,494 3,478,221 10,637,040 -	28,080,755
	(3,618) (390,613) 964,954 (615,547)	(44,824) - (382,894)
	205,294 55,256 141,047 930 - - 72,801 -
		(427,718)
		402,527 72,801
	20,240,747 (3,161,317) 16,291,038 28,829,700	62,200,168 (26,690,422)
	- 25,263 96,545 -
		35,509,746
		121,808
	- 25,263 96,545 -	121,808
	24,339,928 18,159,916 4,837,741 13,963,748	61,301,333 (30,931,103)
		30,370,230

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7. Contingent liabilities

There has been no change in contingent liabilities since the last annual reporting date.

8. Events subsequent to reporting date

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 half-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 periods.

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Directors’ declaration

The Directors of the Company declare that:

1. The financial statements and notes, as set out on pages 5 to 16:

2. a. comply with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Act 2001; and

3. b. give a true and fair view of the economic entity’s financial position as at 31 December 2017 and of its performance for the half-year ended on that date.

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.

This declaration is made in accordance with a resolution of the Board of Directors.

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Director Graham Burns

Dated this 20th day of February 2018

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Independent Auditor’s Review Report to the Members of EVZ Limited

Report on the half year financial report

We have reviewed the accompanying half-year financial report of EVZ Limited (“Company”), which comprises the condensed consolidated statement of financial position as at 31 December 2017, the condensed consolidated statement of profit or loss, the condensed consolidated statement of other comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the consolidated entity comprising both the Company and the entities it controlled at half years end or from time to time during the half year.

Directors’ responsibility for the half year financial report

The directors of EVZ Limited are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410: Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of EVZ Limited’s financial position as at 31 December 2017 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of EVZ Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Crowe Horwath Melbourne is a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omission of financial services licensees.

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Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of EVZ Limited is not in accordance with the Corporations Act 2001 , including:

• I. giving a true and fair view of the consolidated entity’s financial position as at 31 December 2017 and of its performance for the half-year ended on that date; and

• II. complying with AASB 134: Interim Financial Reporting and the Corporations Regulations 2001 .

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CROWE HORWATH MELBOURNE

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DAVID MUNDAY Partner

Melbourne, Victoria 20 February 2018

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EVZ Limited
Appendix 4D: Half-year ending 31 December 2017
Additional Information:	31-Dec-17	31-Dec-16
Net tangible assets per ordinary share:
cents per share	0.5	(3.3)
Details of entities over which control has been gained or lost during the period:
Name of the entity for which control was gained or lost	None	None
Date of gain/loss of control	-	-
Contribution of entity to the reporting entity’s profit from ordinary activities	-	-
during the period
Profit/(loss) of entity during the whole of the previous corresponding period	-	-
Dividends and Distributions:
Total amount paid per security	None Paid	None Paid
Date on which each dividend or distribution is payable	-	-
Amount per security of foreign sourced dividend or distribution	-	-
Details of dividend or distribution reinvestment plans (DRP):	Not Applicable	Not Applicable
Material interests in associates and joint venture entities which are not controlled entities:
Name of entity	Nil	Nil
Percentage holding in each entity	-	-
Contribution to net profit / (loss)	-	-

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 storm-water management through subsidiaries TSF Maintenance, 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