SML Corporation Limited ARBN 161 803 032

10 March, 2017

9A/ 23-25 Bunney Road, Oakleigh South, VIC 3167 PO Box 2163, Mount Waverley, VIC 3149 Telephone (03) 8555 3708 Facsimile (03) 8555 3706 [email protected] www.smlcorporation.com ASX code: SOP

The Manager Market Announcements Office Australian Securities Exchange Melbourne

SML Corporation Limited enters into Share Sale Agreement to acquire Synertec Pty Ltd ("Synertec") and proposed capital raising.

HIGHLIGHTS:

SML Corporation Limited has entered into a share sale agreement pursuant to which it has conditionally agreed to acquire 100% of the issued shares of Synertec Pty Ltd.
Synertec Pty Ltd is an Australian multi-disciplined engineering consulting firm, delivering specialist engineering and compliance services across complex and highly regulated industries.
SML Corporation Limited to change its name to Synertec Corporation Limited upon completion of the Share Sale Agreement.

The Board of SML Corporation Limited (ARBN 161 803 032) (ASX:SOP) (the "Company") is pleased to announce it has entered into a share sale agreement ("Sale Agreement") pursuant to which it has agreed, subject to the satisfaction of certain conditions precedent, including, compliance by the Company with Listing Rule 11.1 and Chapters 1 and 2 of the Listing Rules, to acquire 100% of the issued shares in Synertec Pty Ltd (ACN 114 707 050) ("Synertec") (the "Acquisition").

1

INFORMATION ON SYNERTEC AND ITS OWNERSHIP

Synertec is a multi-disciplined engineering consulting firm, delivering specialist engineering and compliance services across complex and highly regulated oil and gas, biotechnology, food and dairy, hospitals, industrial automation, mining, petrochemical and fine chemicals, pharmaceuticals and water industries.

With the business of Synertec having been first established in 1996 in Australia, Synertec is active in Australia and is based in Victoria. Synertec is accredited to ISO9001 to deliver quality-assured results for its clients. Synertec personnel have a wide range of technical skills and expertise that encompass engineering, quality assurance, construction, and manufacturing to offer the broadest possible perspective on any industrial problem. Synertec has specific experience and expertise in:

project and construction management
process, mechanical & electrical engineering
safety system design
process and industrial automation systems
process optimisation and scale-up
hazardous area design
compliance to Australian & international safety/environmental regulations
project planning studies

In addition, Synertec has established leading design and build capabilities in analyser systems for liquefied natural gas custody transfer operations. These analyser systems have been implemented for Australia's largest liquefied natural gas production facilities (Gorgon and Wheatstone).

As at the date of this announcement, Synertec has two directors, namely Mr Michael Carroll as its Managing Director and Mr Gassan Abdallah. The shareholders of Synertec are:

(a) New Concept Corporation Limited (NCCL) (incorporated in Hong Kong) 92.2%; and
(b) E.D.P Family Trust 7.8%.

None of these parties are presently shareholders of the Company.

All the issued share capital in NCCL is held by TMF Trustees Singapore Limited as trustee of the Pinnacle (MCGA) Retirement Fund - a unit trust (MCGA Trust), in respect of which the beneficial owners are as follows:

Beneficial Owner of MCGA Trust	Percentage Beneficial Ownership in MCGA Trust
Mr Michael Carroll	41.87%
Mrs Samantha Carroll (spouse of Michael Carroll)	8.13%
Mr Gassan Abdallah	41.87%
Mrs Kerry Abdallah (spouse of Gassan Abdallah)	8.13%
Total	100.00%

None of these parties are presently shareholders of the Company.

In addition to the Company and Synertec, the two directors and shareholders of Synertec, and the beneficial owners of the MCGA Trust are parties to the Sale Agreement.

CONTROL ISSUES

Upon completion of the Acquisition, the two shareholders of Synertec will collectively hold approximately 48.6% of the issued shares of the Company.

Accordingly, NCCL's control of, and voting power in, the Company will increase from nil to 44.8%. Michael and Samantha Carroll's control of, and voting power in, the Company will, collectively, increase from nil to 22.4%. Similarly, Gassan and Kerry Abdallah's control of, and voting power in, the Company will, collectively, increase from nil to 22.4%.

Given that the Company was incorporated in Bermuda, it is not subject to the takeover provisions of the Corporations Act 2001 (Cth) (Corporations Act). The Companies Act 1981 of Bermuda (Bermuda Companies Act) does not have equivalent takeover provisions.

Accordingly, the approval of Company's shareholders will not be required under section 611 item 7 of the Corporations Act. However, the approval of the Company's shareholders' will be required under various ASX Listing Rules (Listing Rules). Further details are stated below.

Effective from completion of the Acquisition, the composition of the Board of the Company will be as follows:

(a) Mr Michael Carroll will be appointed as a director of the Company and will also be the Managing Director of the Company;
(b) A new Independent Chairman, to be nominated by the shareholders of Synertec and approved by the Company, will be appointed as a director of the Company;
(c) Mr Poh Kiat and Mr Freddie Heng will remain as directors of the Company, while Captain Sze Shaw Pao and Mr Furang Li will resign as directors effective from completion of the Acquisition.

CHANGE OF ACTIVITIES 3

The Acquisition will constitute a change in the nature and scale of the Company's activities from a gold and base metal exploration company to a multi-disciplined engineering consulting business. In this circumstance, the Company will be required, pursuant to Listing Rule 11.1.2 to obtain shareholder approval at a special general meeting. The Company will also be required, pursuant to Listing Rule 11.1.3, to re-comply with Chapters 1 and 2 of the Listing Rules.

ACQUISITION TERMS

Pursuant to the Sale Agreement, the Company has agreed to acquire 100% of the issued shares in the capital of Synertec for a total consideration of AUD$10.0 million, subject to the satisfaction or waiver of various conditions precedent. A summary of the key terms of the Sale Agreement are set out below:

4.1 Consideration

Subject to the satisfaction of various conditions precedent to the Acquisition (summarised below), the Company has agreed to acquire 100% of Synertec's shares free from all encumbrances for $10.0 million payable to the shareholders of Synertec as follows:

$5.0 million by the issue of 107,142,857 new fully paid ordinary shares in the Company at an issue price of 4.667 cents per share post consolidation on the basis of every four (4) fully paid ordinary shares being consolidated into three (3) fully paid ordinary shares ("consolidation") ("Consideration Shares") - the Company is required to consolidate its capital in order to re-comply with Chapters 1 and 2 of the ASX Listing Rules; and
- $5.0 million in cash ("Cash Consideration").

4.2 Conditions Precedent

Completion of the Acquisition is subject to a number of conditions precedent including but not limited to:

(a) Due Diligence: Both the Company and Synertec undertaking due diligence in respect of each other and being satisfied with the results of their respective due diligence.
(b) Shareholder and regulatory approvals: The Company obtaining all necessary shareholder and regulatory approvals required in relation to the Acquisition, including:
(i) resolutions of the Company's shareholders in relation to certain matters, including:
(A) for the purposes of Listing Rule 11.1.2 and for all other purposes, approval is given for the proposed significant change to the nature or scale of the Company's activities resulting from the Acquisition;
(B) for the purposes of Companies Act 1981 of Bermuda and for all other purposes, approval is given for the issued capital of the Company to be consolidated on the basis that every four (4) fully paid ordinary shares in the Company be consolidated into three (3) fully paid ordinary shares in the Company (and where the consolidation results in a fraction of a share, that fraction will be rounded down to the whole nearest share);
(C) for the purposes of Listing Rule 7.1 and for all other purposes, approval is given for the issue of the Consideration Shares to Synertec's shareholders by the Company;
(D) for the purposes of Listing Rule 7.1 and for all other purposes, approval is given for the allotment and issue of the new shares in the Company pursuant to the public offer (referred to below);
(E) for the purposes of Listing Rule 7.1 (and, if applicable, Listing Rule 10.11) and for all other purposes, approval is given for the allotment and issue of certain new adviser shares in the Company (referred to below);
(F) if necessary or reasonably desirable for the purposes of Listing Rule 7.1 (and, if applicable, Listing Rule 10.11) and for all other purposes, approval is given for the allotment and issue of certain redemption notes by the Company (referred to below);
(G) approval is given for the appointment of Mr Michael Carroll and an Independent Chairman as additional directors of the Company effective from completion of the Acquisition;
(H) that approval is given to the change of the name of the Company to Synertec Corporation Limited;
(I) for the purposes of Listing Rule 10.11 and for all other purposes, approval is given for the allotment and issue of new shares in the Company pursuant to the Public Offer to any of the Company's directors, the directors or shareholders of Synertec or any of their related entities to the extent that they or any of them apply for any new shares pursuant to the Public Offer.
- (ii) the ASX approving the reinstatement of the Company's shares to official quotation following compliance by the Company with Listing Rule 11.1 and Chapters 1 and 2 of the Listing Rules, subject to customary conditions, including completion of the Acquisition and certain other matters contemplated by the Sale Agreement.
- (iii) ASIC, the relevant Bermuda Government Authorities and ASX having issued or provided such consents, confirmations or approvals and have done such other acts which are necessary or reasonably desirable to implement the Acquisition and certain other matters contemplated by the Sale Agreement.
- (iv) the ASX granting waivers in respect of certain Listing Rules which are necessary or reasonably desirable in relation to or in connection with the implementation of the Acquisition and certain other matters contemplated by the Sale Agreement (refer below).
(c) Compliance capital raising: The Company lodging a prospectus with the ASIC for the purpose of raising at least $750,000 pursuant to an offer of 18,750,000 new fully paid ordinary shares at an issue price of $0.040 per share (post consolidation)("Public Offer").

Proceeds from the Public Offer will be utilised to meet the Company's costs and expenses in undertaking the Acquisition and associated transactions. Surplus funds, if any, will be applied towards the Cash Consideration of the Acquisition. The Public Offer will not be underwritten.

(d) Cash balance at Completion: Immediately prior to completion the Company must have a cash balance of not less than $4.1 million (excluding any amount to be raised under the Public Offer and before deducting all costs and expenses incurred by the Company in carrying out the Acquisition and associated transactions).
(e) Executive employment: Mr Michael Carroll entering into an executive employment agreement with the Company in a form and on terms attached to the Sale Agreement - certain of the key terms of this agreement are set out below.
(f) FIRB approval: If necessary or reasonably desirable, in relation to the Foreign Acquisitions and Takeovers Act 1975 Act (Cth), the Treasurer (or his delegate) has provided a written no objection notification to the Acquisition either without conditions or with conditions acceptable to the Company and the shareholders of Synertec.
(g) Material Adverse Change and Prescribed Occurrences: No prescribed occurrences and no material adverse change occurring in respect of the Company or Synertec.
(h) Releases: The Company receiving Acceptable Releases in respect of all Encumbrances over the shares in Synertec.
(i) Financial Assistance: For the purposes of section 260B of the Corporations Act and all other applicable laws, the shareholders of Synertec approving the giving to the Company of financial assistance by way of sufficient cash in the event of the Company has insufficient cash to pay the Cash Consideration to the shareholders of Synertec.
(j) Warranties and representations: The warranties and representations given by the shareholders of Synertec and the beneficial owners of the MCGA Trust being true and correct in all material respects. The conditions precedent need to be satisfied or waived by 30 June 2017 or such later date agreed in writing by the shareholders of Synertec and the Company (End Date).

4.3 Other key terms

(a) The parties have agreed to co-operate and assist each other in relation to the preparation and finalisation of the required notice of the Company's special general meeting for seeking the approval of the Acquisition and related matters and the prospectus for the Public Offer.

(b) The shareholders and the two directors of Synertec and the beneficial owners of the MCGA Trust have agreed to certain non-compete obligations and undertakings in relation to them and their related entities in favour of the Company.
(c) The shareholders and the two directors of Synertec and the beneficial owners of the MCGA Trust have provided numerous warranties and representations in relation to Synertec and its assets and financial position and taxation and related matters in favour of the Company and related indemnities.
(d) The Company has provided numerous warranties and representations in relation to Company and related matters in favour of the shareholders and a related indemnity.
(e) The parties are subject to the usual confidentiality obligations and usual exceptions.
(f) The parties have agreed to mutually exclusivity obligations until the End Date with certain exceptions for the Company in certain circumstances including the occurrence of a Superior Transaction for the Company.
(g) The Sale Agreement can be terminated if a condition precedent is not satisfied or waived by the End Date or a party is in material breach and such breach is not remedied.
(h) The parties have each agreed to pay a break fee of $250,000 in certain circumstances, including if certain conditions precedent are not satisfied or waived, or the other party breaches the Sale Agreement and the Sale Agreement is terminated.

4.4 Issue of Bonus Options to existing shareholders of the Company

Subject to the Completion of the Acquisition, but immediately prior to the issue of the Consideration Shares and the new Adviser Shares in the Company (referred to below), the Company will issue to its existing shareholders (ie. excluding the shareholders of Synertec, the holder of the Adviser Shares and the new holders of shares issued under the Public Offer), at no issue price, new bonus options to subscribe for new shares in the Company on the basis of one option for every 5 shares held. This will result in 16,175,970 new Bonus Options (post consolidation) being issued to the existing shareholders of the Company.

Each option will be exercisable at $0.053 and when exercised, will entitle the option holder to receive one new fully paid ordinary share in the Company. The options will have an exercise period of 3 years from the date of issue. The Company will seek to have these options quoted on the ASX. At present, the Company has no options on issue.

In addition to these terms, the bonus options will be issued on such other terms which are customary for ordinary options and necessary to comply with the Listing Rules.

4.5 Proposed divestment of the Company's existing mining and related assets

Subject to the successful completion of the Acquisition, the Company will seek to divest all of its existing mining related assets, (the "Divestment") which consist of:

(a) the Glen Wills-Sunnyside mining tenement (GWS Tenement) with a net book value $6.5 million (as at 31 December 2016); and
(b) plant and equipment with a book value of $0.4 million (as at 31 December 2016) ("Divestment").

Completion of the Divestment is envisaged to take place within the 6 month period following the completion of the Acquisition. Notwithstanding these book values, the Directors caution that the market realisable value of these assets which are the subject of the Divestment may be lower than these book values given the nature of these assets and current market conditions for exploration mining assets generally.

If, within 6 months from completion of the Acquisition, completion of the Divestment has not occurred, then the GWS Tenement will be relinquished.

4.6 Issue of Redemption Notes to existing shareholders of the Company on a pro-rata basis

In the event that the Divestment is successfully completed within 6 months from completion of the Acquisition, the net sale proceeds (after deducting all direct costs, expenses, fees and tax payable by the Company in relation to or in connection with the maintenance or operation of the Company's mining assets including, tenement rent, exploration expenditure and other holding costs) (Net Proceeds) will be distributed to the existing shareholders of the Company (Existing Shareholders) (ie. excluding the shareholders of Synertec, the holder of the Adviser Shares and the new holders of shares issued under the Public Offer).

In order to achieve this, prior to completion of the Acquisition and subject to shareholder approval of the Acquisition, the Company will issue Redemption Notes whereupon one Redemption Note will be issued to the Existing Shareholders for each fully paid ordinary share held by that Shareholder in the Company as at 5.00pm (Melbourne Time) on the Record Date (to be determined in accordance with the requirements of the ASX Listing Rules and ASX) and with each Note being on essentially the following key terms:

(a) the redemption of or payment under a Note is subject to completion of both the Acquisition and the Divestment (the latter needs to occur within 6 months from the date of completion of the Acquisition);
(b) a Note is unsecured;
(c) a Note has no voting rights nor any entitlement to receive any notice of meeting;
(d) a Note has no rights to any dividends or other distributions nor any right to participate in any bonus issues or other equity issues;
(e) a Note provides a holder an entitlement to the Net Proceeds proportional to one fully paid ordinary share held by a holder over the number of all the issued fully paid ordinary shares in the Company as at the Record Date;
(f) if completion of the Divestment does not occur within 6 months from completion of the Acquisition, then the Note will lapse and be invalid and of no effect;
(g) a Note is personal to each Existing Shareholder and is not transferable, except in limited circumstances, such as a deceased holder's estate, etc;
(h) a Note will not be quoted on the ASX; and
(i) a Note will not be conditional upon its holder remaining a shareholder of the Company.

4.7 Issue of new Adviser Shares to Inaya Limited

Subject to completion of the Acquisition, the Company will issue 13,928,571 new fully paid shares in the Company (post consolidation) to Inaya Limited in consideration for its advisory and facilitation services to the Company in relation to the Acquisition (Adviser Shares).

4.8 Executive Employment Agreement with Michael Carroll

As referred to earlier, the Acquisition is subject to Mr Michael Carroll entering into an executive employment agreement with the Company, which key terms include:

(a) Michael will be employed in the position of Managing Director of the Company;
(b) Michael's annual fixed remuneration will be AUD$355,000 inclusive of superannuation;
(c) Upon the Independent Chairman being appointed as a director of the Company and a member of the Remuneration Committee, a bonus incentive scheme for Michael will be established based on appropriate key performance indicators;
(d) Following a period of 2 years from completion of the Acquisition, Michael or the Company will be entitled to terminate his employment by giving 3 months' notice.

After termination of employment, and in addition to his non-compete obligations as a beneficial owner of the MCGA Trust, Michael will be subject to non-compete within China and Australia for a period of 24 months and non-solicitation of employees and customers for a period of 24 months.

EFFECT OF THE ACQUISITION ON THE COMPANY'S CONSOLIDATED TOTAL ASSETS AND TOTAL EQUITY INTERESTS 5

Had the Acquisition been completed on 31 December 2016, and based on the reviewed financial statements of Synertec and the Company as at 31 December 2016, the likely principal effects of the Acquisition on the Company's consolidated statement of financial position will be:

5.1 total current assets will:
- increase by approximately $9.63 million comprised of the current assets of Synertec;
a decrease by approximately $5.0 million being the Cash Consideration payable to the shareholders of Synertec at completion of the Acquisition,

and likely to result in an overall increase in the total current assets of approximately $4.63 million;

5.2 total non-current assets will increase by approximately $1.39 million comprised of Synertec's total non-current assets and therefore, likely to result in an overall increase in the total non-current assets of approximately $1.39 million; and
5.3 total equity interests will change correspondingly.

EFFECT OF THE ACQUISITION ON THE COMPANY'S REVENUE, EXPENDITURE AND PROFIT BEFORE TAX 6

Had the Acquisition been completed during the 6 months ended on 31 December 2016, and based on reviewed financial statements of Synertec and the Company for the 6 months ended on the 31 December 2016, the likely principal effects of the Acquisition and related transactions on the Company's consolidated statement of financial performance will be:

6.1 revenue and other incomes will increase by approximately $9.06 million, following the consolidation of Synertec's revenue;
6.2 expenditure will likely increase by approximately $7.72 million, following the consolidation of Synertec's expenditures; and
6.3 net profit (loss) before tax is expected to increase by approximately $1.34 million.

7

PROPOSED CHANGE IN THE COMPANY'S BOARD AND MANAGEMENT AND CHANGE OF NAME

It is proposed that Mr Furang Li and Captain Sze Shaw Pao will both resign effective from Completion, while Messrs Poh Kiat and Freddie Heng will remain as directors of the Company following completion of the Acquisition.

Synertec will nominate its founder and managing director Michael Carroll to be appointed as the Company's Managing Director upon completion of the Acquisition. Synertec will also nominate a new Independent Chairman to the board that is acceptable to the Company, to be appointed effective from completion of the Acquisition.

MICHAEL CARROLL

Michael Carroll is a founding principal and managing director of Synertec. He has successfully grown the business of Synertec since the business was first established in 1996. His leadership style is "hands on" ensuring efficient and robust internal processes that directly support the strategic direction of Synertec.

As managing director of Synertec, Michael has negotiated complex agreements with a range of parties, such as large multinational energy conglomerates, water utilities, defence and pharmaceutical companies. Michael has direct experience within the Asian market having established and sold successful companies in both Singapore and Malaysia.

Michael is a member of the Institute of Company Directors and holds a Degree in Applied Science (Applied Chemistry) and post graduate qualifications in Chemical Engineering.

CHANGE OF COMPANY NAME

If the Acquisition proceeds to the stage of convening the special general meeting, the Company also proposes to seek shareholders' approval at the special general meeting to change its name to "Synertec Corporation Limited" with effect from completion of the Acquisition.

PRO FORMA SHARE CAPITAL STRUCTURE

The Company presently has 107,839,799 fully paid ordinary shares on issue pre-consolidation and will have approximately (subject to rounding) 80,879,849 fully paid ordinary shares on issue post consolidation. The Company is required to consolidate its capital on a three (3) for four (4) basis in order to re-comply with Chapters 1 and 2 of the ASX Listing Rules.

Set out below is the indicative share capital structure of the Company post consolidation and following completion of the Acquisition and the associated transactions:

Issue of Shares*	Number of Shares(Post Consolidation)	% interest in issued capital
Currently issued shares (Post Consolidation)	80,879,849	36.65%
New shares to be issued to shareholders of Synertec	107,142,857	48.55%
New shares to be issued under the Public Offer	18,750,000	8.50%
New Adviser Shares to be issued to the Company's corporate adviser	13,928,571	6.31%
Total shares on issue	220,701,278	100.00%

* Excludes the 16,175,970 new Bonus Options to be issued to existing shareholders of the Company The percentages in the table may not add to exactly 100.00% due to rounding

SYNERTEC'S AUDITED FINANCIAL STATEMENTS

A copy of Synertec's audited financial statements for the financial years ended 30 June 2015 and 30 June 2016 and a review for the half-year financial period ended 31 December 2016 are set out in Schedule 1.

ACTIVITIES AND BUSINESS MODEL OF SYNERTEC 11

Synertec is an Australian-based Engineering & Consulting, Engineering Procurement Construction firm delivering specialist engineering and compliance services across complex and highly regulated industries. Currently, Synertec mainly operates in Australia, it may derive an increasing proportion of its revenue from operations in foreign countries.

Unique Technology Offering: Synertec has established leading capability in analyser systems ('Analyser Systems'), which is an increasingly important field as customers drive to increase the quality of goods, reduce costs and meet regulatory requirements. An example is Synertec's LNG Custody Transfer Technology, which is world leading and can demonstrate considerable savings in LNG Custody Transfer operations. Systems have been developed for Australia's largest LNG production facilities, Gorgon and Wheatstone.

Synertec believes the accuracy and speed of the LNG Custody Transfer Technology makes it particularly applicable for the evolving LNG spot market. The potential market includes the more than 250 LNG Liquefaction & Regasification Terminals around the World that are either on-stream, under construction, planned, or proposed/ under-study.

DIVERSIFIED ENGAGEMENTS:

Synertec has positioned itself to take advantage of three broad engagement methods, which have delivered strong revenue growth:

Consulting and Design;
Engineer, Procure, Construct (EPC); and
Long term Service Level Agreements (SLAs)

The benefit of the diversified engagement model is that it allows Synertec to participate in client projects from concept development through to long-term maintenance activities.

GROWTH STRATEGY:

Synertec's ongoing growth strategy involves targeting industry segments in Australia and internationally that have:

a requirement for complex engineering services;
large companies with complex manufacturing or production facilities;
significant revenue opportunities in Australia, and in which the Australian market experience is equally applicable internationally;
high barriers to entry; and
participants who seek long-term relationships with engineering firms.

In addition, Synertec believes that there is a strong opportunity to leverage the Gorgon and Wheatstone sales of the LNG Custody Transfer Technology to market into the significant and expanding LNG sector worldwide.

MARKETS & CUSTOMERS:

Synertec's customers are typically major Australian companies and/or global service providers. A selection of markets that Synertec operates in and customers it can disclose are shown below.

Bechtel Caltex
Chevron Australia Nyrstar
Conoco Phillips Shell
Yokogawa
Linde/BOC
QGC
Kellogg Joint Venture

Defence & Defence Prime Contractors Terminals

Defence Science Technology Organisation (DSTO) Stolthaven Australia
Kane Constructions United Group
Thales / Australian Munitions
Transfield Services
Department of Defence

Pharmaceutical Water

Hospira (Mayne Pharma) Central Highlands Water
Sigma Pharmaceuticals GHD
Medical Developments International
Australian Nuclear Scientific Technology Organisation
Sanofi-Aventis Healthcare

Food, Beverage and Dairy

SAB Miller/Carlton United Breweries
Murray Goulburn Cooperative
Cargill
Fonterra
Colonial Farms

CONTRACT TERMS AND PRICING

Synertec sell on a combination of fixed price/milestone and time & material basis.

Oil and Gas Petrochemical

Emerson Queensland Nitrates
Jacobs Terminals Pty Ltd
CSIRO East Gippsland Water
CSL & BioCSL Melbourne Water
Ego Pharmaceuticals Victorian Desalination Plant
Orion Laboratories Eastern Tertiary Alliance

ENABLED GROWTH:

Synertec has taken steps to implement systems and processes within the company enabling continued growth, including:

the development of repeatable and documented processes and procedures;
a project management office that offers clients a systematic approach to project management; and
high quality accounting and management control systems.

SYNERTEC KEY RISKS AND DEPENDENCIES

The key risks and dependencies of Synertec's business can be summarised as follows:

RELIANCE ON KEY MANAGEMENT

The responsibility of overseeing the company's day-to-day operations and the strategic management of the company rests substantially with its senior management and its key personnel. The company's success is and will depend on the core competencies of its key management team to operate in the LNG, oil and gas, defence, industrial and pharmaceutical and biotechnology industries. The loss of one or more of these persons could adversely affect the company's growth prospects, operating results and financial performance.

There can be no assurance that the company will be able to attract or retain sufficiently qualified personnel on a timely basis or retain its key management personnel.

RELIANCE ON KEY CLIENT RELATIONSHIPS

Synertec has established and will continue to establish important client relationships within the LNG, oil and gas, defence, industrial and pharmaceutical and biotechnology industries. The loss of one or more key clients could adversely affect the growth prospects, operating results and financial performance of Synertec.

Further, any reduction in operations or contractual default by a key client could adversely affect the operating results and the financial performance of Synertec.

FAILURE TO WIN NEW PROJECTS

Synertec's performance will be influenced by its ability to win new projects and complete these projects in a timely and profitable manner. The failure to win or complete new projects may adversely impact Synertec's financial performance.

Further, where existing or new projects are delayed, the recognition of revenue for those contracts may be deferred to later periods. This deferral may impact Synertec's financial performance in particular financial periods.

LENGTHY SALES CYCLE

The lengthy sales cycle required to close larger projects makes it difficult to predict quarterly revenue levels and operating results. The sales process for larger projects and solutions can be lengthy and can exceed one year.

The sales cycle may lengthen, which could increase the likelihood of delays and the cause and effect of a delay to become more pronounced. Delays in sales could cause shortfalls in Synertec's revenues and operating results for any particular period.

COMPETITION

There is no certainty that Synertec will remain competitive. Increased competition could result in price reductions, under-utilisation of equipment and personnel, reduced operating margins and loss of market share. Despite Synertec's ability to compete effectively in the markets in which it operates, any of these occurrences may adversely affect Synertec's financial performance and/or financial position.

An increase in competition may also result in Synertec being unable to increase its prices which, combined with rising labour costs, may adversely affect Synertec's financial performance and/or financial position.

SAFETY AND INDUSTRIAL ACCIDENTS

The provision of Synertec's solutions and services will often involve some time working and commissioning systems on operational plants. This carries with it an increased safety related risk and may on occasions be considered risky activities. Synertec has policies and procedures in relation to safe work practices. Despite the relevant safeguards there is no guarantee a serious accident will not occur in the future. A serious accident may negatively impact the financial performance and/or financial position of Synertec.

SKILLED LABOUR CONSTRAINTS

The provision of engineering, construction and maintenance related services is dependent on the availability and cost of skilled and unskilled labour. There may be shortages in the availability of a robust labour pool. In addition, the labour demand may create increases for the supply of labour and management services. Shortage of labour may adversely affect Synertec's ability to adequately service or expand its operations and may limit earnings and profitability. Historically, Synertec has had a strong track record of being able to attract an adequate supply of suitably qualified personnel, thereby largely avoiding previous periods of labour shortages.

PAYMENT DELAYS AND FAILURE TO RECEIVE PAYMENT

Whilst Synertec undertakes financial reviews of contracting parties, there are risks, including credit and insolvency risks of a contracting party that can impact on Synertec's financial operations.

CONTRACTUAL ARRANGEMENTS

Synertec is party to various contracts for the provision of engineering and contracting services to parties within the LNG, oil and gas, defence, industrial and pharmaceutical and biotechnology industries in Australia, many of which contracts are vital for Synertec's ongoing corporate performance and growth.

These contracts contain provisions providing for early termination of the contracts upon giving varying notice periods and paying varying termination amounts. The early termination of certain of these contracts, for any reason, may mean that Synertec will not realise the full value of the contract, which could adversely affect Synertec's growth prospects, operating results and financial performance.

CONTRACTUAL DISPUTES AND LITIGATION

As Synertec contracts with, and for, third parties there is a risk that Synertec or its subsidiaries may from time to time have disputes with relevant third parties (including payment disputes) or become a party to litigation.

Whilst Synertec will seek to recover the full amount of any payment disputes, by way of alternative dispute resolution or through litigation (and with the assistance of claims consultants where deemed necessary), there can be no guarantee that Synertec will be able to recover any or all amounts disputed. The adverse outcome of a dispute in respect of a material contract or claim may have an adverse impact on Synertec's financial performance or position.

MANAGEMENT OF GROWTH

Synertec expects to continue to experience growth in the scope and scale of its operating activities and employee and/or contractor numbers. To effectively manage its growth, Synertec will need to continue to develop and maintain its operational and financial systems and continue to train, expand and manage its employee base.

PERFORMANCE OF SUBCONTRACTORS

Synertec contract alongside and/or subcontract to third parties in limited cases requiring specialist services that Synertec cannot perform in-house. Synertec may be exposed to liability where those third parties do not perform their obligations under those contracts, in which case Synertec may also have liability for that non-performance or be required to source resources from additional providers. To mitigate these risks, Synertec may seek to include provisions limiting its liability under the relevant contracts and to ensure that the third party contractors are competent, creditworthy and of sound reputation.

DISRUPTION OF BUSINESS OPERATIONS

Synertec and its clients are exposed to a range of operational risks relating to both current and future operations. Such operational risks include loss or damage to operating assets and equipment, equipment failures or breakdowns, human error, accidents, information system failures, external services failure, industrial action or disputes, inclement weather (including cyclones) and natural disasters. While Synertec endeavours to take appropriate action to mitigate these operational risks and insure against many of them, it cannot completely remove all possible risks that may have on adverse impact on the financial performance and/or financial position of Synertec.

ADDITIONAL REQUIREMENTS FOR CAPITAL

Synertec may require further financial resources in the future in addition to the amounts proposed to be raised under the Public Offer. Any additional equity financing will dilute shareholdings and debt financing, if available, may involve restrictions on financing and operating activities. If Synertec is unable to obtain additional financing as needed, it may be required to reduce the growth, scale or scope of its operations.

PRICING AND CONTRACTING RISK

In relation to the business of Synertec, some contracts are priced on a lump sum basis. To the extent that there is a mispricing, for example, due to unexpected site conditions or circumstances, Synertec may be subject to material losses on individual contracts.

FOREIGN OPERATIONS

Synertec may derive an increasing proportion of its revenue from operations in foreign countries.

There are certain risks inherent in doing business on an international level, such as unexpected changes in regulatory requirements, tariffs, customs, duties and other trade barriers, difficulties in staffing and managing foreign operations, longer payment cycles, problems in collecting accounts receivable, political instability, expropriation, nationalisation and war. There may also be fluctuations in currency exchange rates. Foreign exchange controls which restrict or prohibit repatriation of funds, technology export and import restrictions or prohibitions and delays from customers, brokers or government agencies could have an adverse impact. Synertec could also be adversely affected by seasonal reductions in business activity and potentially adverse tax consequences, any of which could adversely impact the success of Synertec's international operations.

There is also a risk that Australian government policies in relation to particular regions may change, affecting trade and investment opportunities in that region.

REMOTE LOCATIONS

Synertec frequently undertakes projects in remote locations. This may involve logistical difficulties for plant, equipment and materials, as well as skilled personnel and general labour. Some locations may involve inherent risk to personnel.

FOREIGN EXCHANGE RATES

Synertec may incur some revenue and expenditure in US dollars or other local currencies. Where Synertec is materially exposed to fluctuations in foreign exchange rates, it will attempt to offset this exposure through the use of appropriate financial products, such as hedging or forward rate contracts.

There may be circumstances where Synertec is unable to sufficiently minimise its exposure to foreign exchange rate movements where the cost of financial products is not commercially viable.

CONCENTRATED SHARE OWNERSHIP

Following the completion of the Sale Agreement, the shareholders of Synertec will together hold an interest in approximately 48.6% of the Company. Following the completion of the Acquisition, Synertec's shareholders will not be subject to escrow. Michael Carroll, following the completion of completion of the Acquisition, will together with his wife Samantha Carroll hold a beneficial interest in approximately 22.4% of the Company and have indicated that they do not intend to sell any Shares prior to the Company releasing its audited financial statements for the year ending 30 June 2017.

Any future sales of Shares by any of Synertec's shareholders may have a negative impact on the Share price of the Company as traded on ASX.

PROFESSIONAL NEGLIGENCE AND INSURANCE

Claims of professional negligence or a breach of contract may be made against Synertec. Synertec maintains significant professional indemnity insurance to cover liabilities in the event of a claim of negligence or a breach of contract.

In the event of a successful claim for professional negligence or a breach of contract being made against Synertec or its subsidiaries, this may impact upon Synertec by:

adversely affecting the reputation of Synertec;
the payment of excesses incurred in defending claims;
the payment of any amount of liability that exceeds available insurance coverage and increasing future insurance premiums.

Synertec may be unable to obtain appropriate professional indemnity cover for all work, particularly given the state of the international insurance industry and the fact that Synertec's work in overseas countries may be considered by insurers to present additional risk, depending upon political and litigious circumstances in the country in question.

CYCLICAL NATURE OF THE BUSINESS

The clients of Synertec are involved in the LNG, oil and gas, defence, industrial and pharmaceutical and biotechnology industries. The demand for and the prices of products in these industries can be both cyclical and very volatile and can influence the demand for the services offered by Synertec to its clients. Although Synertec has a diverse client base, the LNG industry cycles in Australia and overseas may adversely impact on Synertec's financial performance.

The loss of major clients through industry downturns for any other reason could also impact the earnings of Synertec.

Key risks and dependencies to the Company in relation to Acquisition

COMPLETION RISK

Pursuant to the Sale Agreement, the Company has agreed to acquire 100% of the issued share capital of Synertec, completion of which is subject to the fulfilment of certain conditions. There is a risk that the conditions for completion of the Acquisition will not be fulfilled and, in turn, that completion of the Acquisition does not occur. If the Acquisition is not completed, the Company will incur costs relating to advisors and other costs without any benefit being achieved.

QUOTATION OF SHARES ON ASX

As part of the Company's change in nature and scale of activities, ASX will require the Company to re-comply with Chapters 1 and 2 of the Listing Rules. It is expected that the Company's securities will be suspended from the date of the Company's special general meeting to be convened to seek shareholder approval of the Acquisition and related matters and remain suspended until the Company re-complies with Chapters 1 and 2 of the Listing Rules and compliance with any further conditions ASX may impose on such reinstatement.

There is a risk that the Company will not be able to satisfy one or more of those requirements and that its securities may consequently remain suspended from official quotation on ASX.

LIQUIDITY RISK

On completion of the Acquisition, the Company's issued shares will increase following the issue of the Consideration Shares, the Adviser Shares and the shares pursuant to the Public Offer. However there is no assurance that the liquidity of the shares of the Company will improve.

INDICATIVE TIMETABLE

An indicative timetable for completion of the Acquisition and associated transactions is set out below:

Event	Date (week ending)

Despatch notice of special general meeting of the Company's shareholders	14 April 2017
Date of special general meeting	12 May 2017
Lodge prospectus with ASIC and ASX	12 May 2017
Opening date of Public Offer	19 May 2017
Closing date of Public Offer	9 June 2017
Completion date of Acquisition and issue of new securities	16 June 2017
Date of re-quotation of the Company's shares and quotation of new securities	23 June 2017

Please note that this timetable is indicative only and the Directors reserve the right to amend the timetable as required.

ASX WAIVERS REQUIRED

Waivers will be required and sought from the ASX in respect of certain Listing Rules which are necessary or reasonably desirable in relation to or in connection with the implementation of the Acquisition and certain other matters contemplated by the Sale Agreement, including:

(a) Listing Rule 2.1 Condition 2 (which requires the issue or sale price to be at least 20 cents per share) in respect of the issue price per share, post consolidation, for the new shares in the Company to be issued under the Public Offer to be issued at 4 cents per share; the new Consideration Shares in the Company to be issued to the shareholders of Synertec under the Sale Agreement to be issued at 4.667 cents per share; and the existing Company's shares on issue, which are currently trading below 20 cents per share;
(b) Listing Rule 1.1 Condition 12 (which requires the exercise price for options to be at least 20 cents per share) in respect of the bonus options (referred to below) being issued with an exercise price of 5.3 cents per share;
(c) Listing Rule 10.11 to the extent necessary to allow all shareholders and directors (and their associates) who are related parties of the Company, who will participate in and apply for new shares in the Public Offer, to be issued such new shares within 3 months from the date of the special general meeting of the Company rather than within one month from such date.

REGULATORY REQUIREMENTS GENERALLY

The Company notes that:

(a) the Acquisition requires shareholder approval under the Listing Rules and therefore may not proceed if that approval is not forthcoming;
(b) the Company is required to re-comply with ASX's requirements for admission and quotation and therefore the Acquisition may not proceed if those requirements are not met;
(c) ASX has an absolute discretion in deciding whether or not to re-admit the Company to the Official List and to quote its securities and therefore the Acquisition may not proceed if ASX exercises that discretion; and
(d) investors should take account of these uncertainties in deciding whether or not to buy or sell the Company's securities.

Furthermore, the Company:

(i) notes that ASX takes no responsibility for the contents of this announcement; and
(ii) confirms that it is in compliance with its continuous disclosure obligations under Listing Rule 3.1.

For further information, please contact:

Poh Kiat Non-Executive Chairman SML Corporation Ltd Phone: (03) 8555 3708

SCHEDULE 1

SYNERTEC'S FINANCIAL STATEMENTS FOR:

HALF-YEAR ENDED 31 DECEMBER 2016;
30 JUNE 2016; AND
30 JUNE 2015.

Half-Year Report Synertec Pty Ltd 31-December-2016 ABN 91 114 707 050

Synertec Pty Ltd Table of Contents For the six months ended 31 December 2016

Directors' Report	3
Audit independence Declaration	5
Statement of Financial Position	6
Statement of Profit or Loss and Other Comprehensive Income	7
Statement of Changes in Equity	8
Statement of Cash Flows	9
Notes to the Financial Statements	10
Directors' Declaration	18
Independent Auditor's report	19

Synertec Pty Ltd Directors' Report For the six months ended 31 December 2016

The Directors present their report together with the financial report of Synertec Pty Ltd ("the Company") for the half year ended 31 December 2016 and the auditor's report thereon.

1. Directors

The Directors were in office for this entire period unless otherwise stated. Michael Carroll (Managing Director) Gussan Abdallah (Director)

2. Principal activities

The principal activities of the Company during the course of the half year period were: The engineering consultancy, design and construction of complex automated and highly instrumented systems including LNG online analyser systems, custody transfer systems and associated equipment and the provision, operation, commissioning and maintenance support activities to Melbourne Water and several LNG facilities.

3. Review of operations and results of those operations

Commentary on operating results

The Revenue of the Company for the FY17 half year period was $9,056,455 (FY16: $6,620,982).

The Net Profit of the Company (after tax) for the FY17 half year period was $930,980 (FY16: Net Loss $99,649).

4. Significant changes in the state of affairs

In the opinion of the Directors there were no significant changes in the state of affairs of the Company that occurred during the financial period under review.

5. Litigation

There has been no litigation in the FY17 half year period and to the best of the Directors' knowledge there are no circumstances that would give rise to any potential litigation relating to this same period.

6. Dividends

No dividends were declared or paid by the Company to the shareholders.

Synertec Pty Ltd Directors' Report For the six months ended 31 December 2016

7. Directors' Interests and share options

Michael Carroll (Managing Director) 438 shares

Gussan Abdallah (Director) 438 shares

There are a total of 950 shares on issue.

There are no share options on offer.

8. Indemnification and insurance offices and auditors

Since the end of the previous financial year, the Company has not indemnified or made a relevant agreement for indemnifying against a liability any person who is or has been made an officer or auditor of the Company.

Insurance premiums

During the half year period, the Company has not paid insurance premiums in respect of liabilities of directors and ofiicers of the Company.

9. Subsequent events

There has not arisen in the interval between the end of the financial period and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company, in future financial years.

10. Environmental regulation

The Company's operations are not subject to significant environmental regulations under both Commonwealth and State legislation.

11. Lead auditor's independence declaration

The Lead auditor's independence declaration is set out on page 5 and forms part of the Directors' report for the half year ended 31 December 2016.

Michael Carroll Managing Director

Melbourne 10 February 2017

Synertec Pty Ltd Statement of financial position For the six months ended 31 December 2016

In Australian dollars	Note	31 December2016	30 June2016
Assets
Cash and cash equivalents	9	5,737,845	5,028,289
Trade and other receivables	10	1,425,922	1,689,804
Other assets	11	1,462,902	756,326
Work in progress	12	999,595	2,504,559
Total current assets		9,626,264	9,978,978
Non-current assets
Deferred tax assets		193,943	157,781
Other assets	11	831,477	781,477
Property, plant and equipment	14	364,560	352,572
Total non-current assets		1,389,980	1,291,830
Total assets		11,016,244	11,270,808

Liabilities
Trade and other payables	15	1,890,681	3,173,819
Current tax liability	8	1,744,670	1,300,386
Loans and borrowings	16	38,028	30,014
Employee benefits	13	442,779	377,185
Deferred income	18	51,223	474,021
Total current liabilities		4,167,381	5,355,425
Non-current liabilities
Loans and borrowings	16	-	17,515
Employee benefits	13	74,015	54,000
Total non-current liabilities		74,015	71,515
Total liabilities		4,241,396	5,426,940

Net assets		6,774,848	5,843,868
Equity
Share capital	18	950	950
Other equity contribution	18	132,904	132,904
Retained earnings		6,640,994	5,710,014
Total equity attributable to equity holders of the Company		6,774,848	5,843,868
Total equity		6,774,848	5,843,868

Synertec Pty Ltd For the six months ended 31 December 2016 Statement of profit or loss and other comprehensive income

In Australian dollars	Note	31 December2016	31 December2015
Revenue
Revenue	5	9,056,455	6,620,982
Other income	6	-	997,558
Profit on disposal of motor vehicles		4,713	-
Expenses
Materials and service expense		(4,216,045)	(3,846,477)
Employee benefits expense		(2,561,475)	(1,793,587)
Superannuation expense		(203,021)	(156,273)
Depreciation and amortisation expense		(46,116)	(28,853)
Occupancy expenses		(80,952)	(92,808)
Car and travelling expenses		(115,309)	(55,794)
Telecommunication costs		(70,731)	(46,083)
Legal and professional fees		(292,293)	(14,380)
Other expenses		(99,354)	(92,717)
Results from operating activites		1,375,872	1,491,568
Finance income	7	16,178	58,807
Finance costs	7	(52,949)	(31,648)
Net finance income/costs		(36,771)	27,159
Profit before tax		1,339,101	1,518,727
Income tax expense	8	(408,121)	(1,618,376)
Profit/(loss) from operations		930,980	(99,649)
Other comprehensive income for the year, net of tax		-	-
Total comprehensive income/(loss) for the year		930,980	(99,649)

Synertec Pty Ltd Statement of changes in equity For the six months ended 31 December 2016

In Australian dollars	Share capital$	Other contributedequity	Retained earnings$	Total$
Balance at 1 Jul 2015	950	132,904	4,875,791	5,009,645
Other comprehensive income	-	-	-	-
Loss for the year	-	-	(99,649)	(99,649)
Total comprehensive income	-	-	(99,649)	(99,649)
Total transactions with owners of theCompany	-	-	-	-
Balance at 31 Dec 2015	950	132,904	4,776,142	4,909,996

Balance at 1 Jul 2016	950	132,904	5,710,014	5,843,868
Other comprehensive income	-	-	-	-
Profit for the year	-	-	930,980	930,980
Total comprehensive income	-	-	930,980	930,980
Total transactions with owners of theCompany	-	-	-	-
Balance at 31 Dec 2016	950	132,904	6,640,994	6,774,848

Synertec Pty Ltd For the six months ended 31 December 2016 Statement of cash flows

In Australian dollarsNote	31 December2016	31 December2015
Cash flows from operating activities
Cash receipts from customers	11,320,239	7,769,104
Cash paid to suppliers and employees	(9,797,564)	(7,550,104)
Cash generated from operations	1,522,675	219,000
Interest paid	(31,190)	(31,648)
Interest received	4,500	-
Net cash from operating activities	1,495,985	187,352
Cash flows from investing activities
Proceeds from sale of property, plant and equipment	23,635	-
Purchase of financial assets	-	431,476
Proceeds from entering/exiting term deposit	(50,000)	14,882
Proceeds from disposal of investment	-	485,979
Acquisition of property, plant and equipment	(77,026)	(30,434)
Net cash from investing activities	(103,391)	901,903
Cash flows (used in)/from financing activities
Loans provided to directors/related parties	(673,537)	(66,500)
Repayment of loan from a related party	-	(200,000)
Payment of finance lease liabilities	(9,501)	(7,986)
Net cash used in financing activities	(683,038)	(274,486)
Net increase in cash and cash equivalents	709,556	814,769
Cash and cash equivalent at beginning of the half-year	5,028,289	118,375
Cash and cash equivalents at end of the half-year	5,737,845	933,144

1. Reporting Entity

Synertec Pty Ltd (the 'Company') is a Company domiciled in Australia. The Company's registered office is at Level 1, 57 Stewart Street Richmond VIC 3121.

The Company is a for-profit entity that specialises in engineering consulting and technology for industries with high technical complexity and regulation such as pharmaceutical and oil and gas. The Company is not publicly accountable.

2. Summary of Significant Accounting policies

Basis of preparation

The half-year financial report is a financial report prepared in accordance with AASB 134 'Interim Financial Reporting'.

They were authorised for issue by the Directors on 10 February 2017.

This half-year report does not include all of the notes of the type normally included in an annual financial report, however selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company's financial position and performance since 30 June 2016. Accordingly, it should be read in conjunction with the Annual Report for the year ended 30 June 2016.

This half-year financial report has been prepared on the basis of historical cost. Cost is based on the fair values of the consideration given in exchange for the assets. All amounts are presented in Australian dollars, unless otherwise noted. All values are rounded to the nearest dollar.

Significant accounting policies

The accounting policies applied in this half-year financial report are the same as those applied in Synertec's financial report as at and for the financial year ended 30 June 2016.

3. Use of judgements and estimates

In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of the Company's accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

3. Use of judgements and estimates (continued)

Measurement of fair values

A number of the Company's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

When measuring the fair value of an asset or a liability, the Company uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

4. Operating segments

The Company operates through one segment to provide engineering consulting services.

The financial results from this segment are consistent with the financial statements for the Company as a whole. The Company operates in one geographic region and accordingly no further analysis is provided.

5. Revenue

In Australian dollars	31 December2016	31 December2015
Rendering of services	1,129,343	1,602,207
Fixed price projects	7,927,112	5,018,775
	9,056,455	6,620,982

6. Other income

In Australian dollarsNote	31 December2016	31 December2015
Government benefits - research and development tax credits	-	997,558
	-	997,558

7. Finance income and finance costs

Recognised in profit or loss

In Australian dollarsNote	31 December2016	31 December2015

Interest income	4,500	16,520
Unrealised foreign currency gains and losses	-	35,776
Realised foreign currency gains and losses	11,678	6,511
Finance income	16,178	58,807

Facility interest	28,904	18,730
Unrealised foreign currency gains and losses	21,759	-
Hire purchase charges	1,622	1,857
Interest expense	664	11,061
Finance costs	52,949	31,648
Net finance (costs)/income recognised in profit or loss	(36,771)	27,159

8. Taxes

Tax recognised in profit or loss

In Australian dollarsNote	31 December2016	31 December2015
Current tax expense
Current year	(371,960)	(1,396,323)
	(371,960)	(1,396,323)
Deferred tax benefit
Origination and reversal of temporary differences	(36,161)	(222,053)
	(36,161)	(222,053)
Tax expense from continuing operations	(408,121)	(1,618,376)

The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. The current tax asset is $Nil (30 June 2016: $Nil). The current tax liability is $1,744,670 (30 June 2016: $1,300,386).

9. Cash and cash equivalents

In Australian dollars	Note	31 December2016	30 June2016
Bank balancesCash on hand		5,736,4951,350	5,026,3581,931
Cash and cash equivalents		5,737,845	5,028,289

10. Trade and other receivables

In Australian dollars	31 December2016	30 June2016

Sundry debtors	5,382	1,176
Trade receivables	1,420,540	1,688,628
	1,425,922	1,689,804

Current	1,425,922	1,689,804
Total	1,425,922	1,689,804

11. Other assets

Current
In Australian dollarsNote	31 December2016	30 June2016
Amounts due from related parties	290,341	272,144
Loans to directors	998,761	343,421
Prepayments	104,296	59,167
Deposits	57,242	57,242
Stock on hand	12,262	12,262
Other receivables	-	12,090
Current	1,462,902	756,326

Non-Current

In Australian dollarsNote	31 December2016	30 June2016
ANZ term deposits	400,000	350,000
EFIC deposits	431,477	431,477
Non-current	831,477	781,477

The Company has a $96,688 non-interest bearing loan receivable from Synertec Malaysia and a $166,509 noninterest bearing loan receivable from Synertec Asia. The Company has $431,477 in deposits with the Australian Export and Finance Insurance Commission (EFIC) as per note [20].

12. Work in progress

In Australian dollars	Note	31 December2016	30 June2016
Work in progress		999,595	2,504,559
		999,595	2,504,559

At 31 December 2016 aggregate costs incurred under open contracts and recognised profits earned, net of recognised losses, amounted to $999,595 (30 June 2016: $2,504,559).

13. Employee benefits

In Australian dollarsNote	31 December2016	30 June2016
Annual leave	202,240	153,978
Long service leave	240,539	223,207
Current	442,779	377,185

Long service leave	74,015	54,000
Non-Current	74,015	54,000

14. Property, plant and equipment

In Australian dollars	Computers	Furniture andequipment	Leasholdimprovements	Motor vehicles	TOTAL
Cost
Balance at 1 July 2015	319,597	103,113	21,157	236,160	680,027
Additons	24,546	5,888	-	-	30,434
Disposals	-	-	-	-	-
Balance at 31 Dec 2015	344,143	109,001	21,157	236,160	710,461
Balance at 1 July 2016	397,750	116,247	21,157	333,009	868,163
Additons	21,205	-	-	55,821	77,026
Disposals	-	-	-	(42,731)	(42,731)
Balance at 31 Dec 2016	418,955	116,247	21,157	346,099	902,458

	Computers	Furniture andequipment	Leasholdimprovements	Motor vehicles	TOTAL
Accumulated depreciation
Balance at 1 July 2015	282,029	72,753	17,194	97,457	469,433
Additons	11,595	2,399	398	14,462	28,854
Disposals	-	-	-	-	-
Balance at 31 Dec 2015	293,624	75,152	17,592	111,919	498,287
Balance at 1 July 2016	315,960	78,317	17,987	103,327	515,591
Additons	20,568	3,434	320	21,794	46,116
Disposals	-	-	-	(23,809)	(23,809)
Balance at 31 Dec 2016	336,528	81,751	18,307	101,312	537,898
Carrying amounts
at 01 Jul 2015	37,568	30,360	3,963	138,703	210,594
at 31 Dec 2015	50,519	33,849	3,565	124,241	212,174
at 01 Jul 2016	81,790	37,930	3,170	229,682	352,572
at 31 Dec 2016	82,427	34,496	2,850	244,787	364,560

Leased plant and machinery

The Company leases motor vehicles under a number of finance lease agreements. The leased equipment secures lease obligations (see Note [16]). Some leases provide the Company with the option to purchase the vehicles at an agreed price. At 31 December 2016 the net carrying amount of leased motor vehicles was $47,338 (30 June 2016: $51,863). Non cash acquisitions of motor vehicles amount to $Nil (30 June 2016: $Nil).

Notes to the financial statements For the six months ended 31 December 2016 Synertec Pty Ltd

15. Trade and other payables

In Australian dollarsNote	31 December2016	30 June2016

Trade payables	403,337	763,468
Other payables	852,804	345,185
Fixed price project accruals	634,540	2,065,166
Current	1,890,681	3,173,819

16. Loans and borrowings

Finance lease liabilities

Finance lease liabilities are payable as follows:

In Australian dollars	Future minimum lease paymentsInterest		Present value of minimum leasepayments
	31 December2016	30 June2016	31 December2016	30 June2016	31 December2016	30 June2016
Less than one year	38,028	30,014	1,205	2,605	39,233	32,619
Between one and five years	-	17,515		102	-	17,617
	38,028	47,529	1,205	2,707	39,233	50,236

The items currently under finance leases are all motor vehicles.

17. Deferred income

In Australian dollarsNote	31 December	30 June
	2016	2016
Billing in advance of work completed	51,223	474,021
	51,223	474,021

Where progress billings and recognised losses exceed costs incurred plus recognised profits earned, the Company recognises these amounts as billing in advance of work completed.

18. Capital and reserves

(a) Share Capital

	Ordinary Shares
	Note	31 December2016	30 June2016
In issue at 1 January		950	950
Movement		-	-
In issue at 31 December		950	950

Ordinary shares

The Company's share capital is $950.

The Company does not have authorised capital or par value in respect of its issued shares. All issued shares are fully paid. All shares rank equally with regard to the Company's residual assets.

The holders of ordinary shares are entitled to receive dividends as declared from time to time.

(b) Other equity contribution

Note	31 December2016	30 June2016
Other contributed equity	132,904	132,904
	132,904	132,904

Other contributed equity represents additional capital contributed by the shareholders on rollover from a Unit Trust to a Company.

(c) Dividends

There was no dividend paid for the half year ended 31 December 2016 (30 June 2016: Nil).

After 31 December 2016 no dividends were proposed by the Directors.

Due to the use of the Reseach and Development tax incentive the company has a negative franking account balance. The nature of the debits to the franking account do not attract Franking Deficit Tax.

Note	31 December	30 June
	2016	2016

Dividend franking account	(2,208,351)	(2,208,351)
Amount of franking credits available to shareholders of Synertec Pty Ltd for subsequent financialyears	(2,208,351)	(2,208,351)

19. Subsequent events

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company, in future financial years.

20. Contingencies and capital commitments

The Company has contingent liabilities to Bechtel which is covered by two bonds provided by the Australian Export and Finance Insurance Commission (EFIC). The Company as part of the terms for two separate contracts were required to provide bonds to Bechtel, initially as performance guarantees, and on delivery of the equipment the bonds converted to warranty bonds, for the warranty period of the contracts. Should there be defects in the work or the contracts not completed Bechtel had recourse to;

• the APLNG bond on issue is for $1,125,906 expiring at 31/7/2017; and

• the QCLNG bond on issue is for $600,000 expiring at 31/3/2017.

The bonds secured by EFIC have cash deposits of $431,477. Refer to note [11]

Synertec Pty Ltd Directors' declaration For the six months ended 31 December 2016

Directors' declaration

1. In the opinion of the Directors of Synertec Pty Ltd ("the Company"):
(a) the Company is not publicly accountable;
(b) the financial statements and notes, set out on pages 6 to 17:
(i) present fairly the financial position of the Company as at 31 December 2016 and its performance, as represented by the results of its operations and its cash flows, for the half-year ended on that date in accordance with the statement of compliance and basis of preparation described in Notes [1] to [4]; and
(ii) comply with Australian Accounting Standards (including the Australian Accounting Interpretations);
(iii) as described in Note 2 the financial report also complies with the AASB 134 'Interim Financial Reporting';
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
1. In respect of the period ended 2016 the Company has:
(a) kept such accounting records as correctly record and explain its transactions and financial position;
(b) kept its accounting records that financial statements of the Company that are presented fairly can be prepared from time to time; and
(c) kept its accounting records in accordance with the Corporations Act 2001 so that the financial statements of the Company can be conveniently and properly audited and/or reviewed.

Signed in accordance with a resolution of the Directors:

Dated at 10 February 2017

Michael Carroll Director

Annual Report Synertec Pty Ltd 30 June 2016 ABN 91 114 707 050

Synertec Pty Ltd Table of contents For the year ended 30 June 2016

Directors' Report	3-4
Audit independence Declaration	5
Statement of Financial Position	6
Statement of Profit or Loss and Other Comprehensive Income	7
Statement of Changes in Equity	8
Statement of Cash Flows	9
Notes to the Financial Statements	10 - 32
Directors' Declaration	33
Independent Auditor's report	34

Synertec Pty Ltd Directors' report For the year ended 30 June 2016

The Directors present their report together with the financial report of Synertec Pty Ltd ("the Company") for the year ended 30 June 2016 and the auditor's report thereon.