VERBREC LIMITED — Annual Report 2016

Aug 25, 2016

Preliminary Final Report of LogiCamms Limited For the Financial Year Ended 30 June 2016

(ABN 90 127 897 689)

This Preliminary Final Report is provided to the Australian Stock Exchange (ASX) under ASX Listing Rule 4.3A

Current Reporting Period: Financial Year ending 30 June 2016 Previous Corresponding Period: Financial Year ending 30 June 2015

1

Results for announcement to the market

sults for announcement to the market
	30 June 2016 $’000	30 June 2015 $’000	Change
Revenue from ordinaryactivities	108,187	133,838	(19.3)%
Profit from ordinaryactivities after tax attributable to members	(38,139)	8,328	(558)%
Netprofit for theperiod attributable to members	(38,139)	8,328	(558)%
Earnings per share:
Basic earningsper share(AUD centsper share)	(55.5)	12.0
Diluted earningsper share(AUD centsper share)	(55.5)	12.0

Dividends

No dividend for the year ended 30 June 2016 has been declared:

Total dividend per security Currentyear Interim dividend – ordinary securities - Final dividend - ordinary securities - Total dividends paid or payable on all securities with respect to the financial year 30 June 2016 $’000 Ordinary securities - Total - Net tangible assets per security 30 June 2016 Net tangible assets per security 14.1 cents
	Currentyear	Previousyear
	-	3.50 cents
	-	3.50 cents
	30 June 2016 $’000	30 June 2015 $’000
	-	4,855
	-	4,855
	30 June 2016	30 June 2015
	14.1 cents	38.5 cents

Entities over which control has been gained or lost during the period

On 8 July 2015 the Group acquired 100% of Petromod Pty Ltd. Refer to Note 9(iii) for further information.

2

Details of investment in joint venture

Details of investment in joint venture
Name of Entity	Ownership interest		Contribution to net profit
	2016 %	2015 %	2016 $’000	2015 $’000
LogiCamms – Electro80 joint venture	50%	50%	(33)	264

Audit

This preliminary final report is based on the Annual Financial Report which is in the process of being audited.

26 August 2016

3

PRELIMINARY FINAL REPORT OF LOGICAMMS LIMITED

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016

(ABN 90 127 897 689)

This Preliminary Final Report is provided to the Australian Stock Exchange (ASX) under ASX Listing Rule 4.3A

Current Reporting Period: Financial Year ending 30 June 2016

Previous Corresponding Period: Financial Year ending 30 June 2015

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PRELIMINARY FINAL REPORT

For the year ended 30 June 2016

Results for announcement to the market

Results for announcement to the market
	30 June 2016	30 June 2015
	$’000	$’000	Change
Revenue from ordinary activities	108,187	133,838	(19.3)%
Proft from ordinary activities after tax attributable to members	(38,139)	8,328	(558)%
Net proft for the period attributable to members	(38,139)	8,328	(558)%
Earnings per share:
Basic earnings per share (AUD cents per share)	(55.5)	12.0
Diluted earnings per share (AUD cents per share)	(55.5)	12.0

Dividends

No dividend for the year ended 30 June 2016 has been declared:

Total dividend per security

	Current year	Previous year
Interim dividend – ordinary securities	–	3.50 cents
Final dividend – ordinary securities	–	3.50 cents

Total dividends paid or payable on all securities with respect to the financial year

	30	June 2016	30 June 2015
		$’000	$’000
Ordinary securities		–	4,855
Total		–	4,855

Net tangible assets per security

Net tangible assets per security
	30	June	2016	30	June	2015
Net tangible assets per security		14.1	cents		38.5	cents

Entities over which control has been gained or lost during the period

On 8 July 2015 the Group acquired 100% of Petromod Pty Ltd. Refer to Note 9(iii) for further information.

Details of investment in joint venture

Name of Entity	Ownership interest Contribution to net proft
	2016 % 2015 % 2016 $’000 2015 $’000
LogiCamms – Electro80 joint venture	50% 50% (33) 264

1

LogiCamms Preliminary Final Report

PRELIMINARY FINAL REPORT

For the year ended 30 June 2016

Other information

Except for the matters noted above, all the disclosure requirements pursuant to ASX Listing Rule 4.3A are contained within LogiCamms Limited’s consolidated Financial Report for the year ended 30 June 2016 which accompanies this Preliminary Final Report.

This preliminary final report is based on the Annual Financial Report which is in the process of being audited.

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Peter Watson Chairman

Dated at Brisbane, Queensland this 26th day of August 2016

LogiCamms Preliminary Final Report 2

LogiCamms Preliminary Final Report for the year ended 30 June 2016

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 30 June 2016

Note	2016 $’000 2015 $’000
Revenue 4(i) Cost of sales Gross proft Other income 4(ii) Business development expenses Other expenses Onerous lease expense Results from operating activities Finance income 4(iii) Finance expenses 4(iv) Net fnance income Share of (loss) / proft of equity accounted investees 9(ii) Impairment charge (Loss) / proft before income tax Income tax beneft / (expense) 4(v) (Loss) / proft for the year attributable to owners of the Company Other comprehensive income for the year, net of income tax Items that may be reclassifed subsequently to proft and loss: Foreign currency translation diferences Other comprehensive income for the period, net of tax Total comprehensive income for the year attributable to owners of the Company Earnings per share: Basic earnings per share (cents per share AUD) 4(vi) Diluted earnings per share (cents per share AUD) 4(vi)	108,187 133,838 (73,520) (82,468)
	34,667 51,370 2,001 1,346 (7,370) (4,512) (37,476) (37,227)
	(8,178) 10,977 (4,200) (1,300)
	(12,378) 9,677 81 287 (151) (1)
	(70) 286 (33) 264 (28,100)
	(40,581) 10,227 2,442 (1,899)
	(38,139) 8,328
	1,434 (932) 1,434 (932) (36,705) 7,396 (55.5) 12.0 (55.5) 12.0

The above Consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

3 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2016

Note	2016 $’000 2015 $’000
Assets Cash and cash equivalents 5(i) Trade and other receivables 5(ii) Current tax asset 4(v) Total current assets Investments in equity accounted investees 9(ii) Property, plant and equipment 6(i) Deferred tax assets 4(v) Intangible assets 6(ii) Other non-current assets Total non-current assets Total assets Liabilities Trade and other payables 5(iii) Employee benefts 5(v) Provisions 5(vi) Deferred income 5(iv) Total current liabilities Trade and other payables 5(iii) Employee benefts 5(v) Provisions 5(vi) Total non-current liabilities Total liabilities Net assets Equity Share capital Reserves Retained earnings Total equity attributable to owners of the Company	6,637 21,851 20,832 22,976 508 377
	27,977 45,204
	15 243 1,851 4,153 4,713 2,370 33,801 56,305 125 125
	40,505 63,196
	68,482 108,400
	10,312 12,642 4,499 5,356 3,966 312 681 1,494
	19,458 19,804
	961 955 878 1,137 3,560 3,590
	5,399 5,682
	24,857 25,486
	43,625 82,914
	53,163 53,416 2,435 1,001 (11,973) 28,497
	43,625 82,914

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

LogiCamms Preliminary Final Report 4

LogiCamms Preliminary Final Report for the year ended 30 June 2016

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2016

Note	Share capital $’000 Reserves $’000 Retained earnings $’000 Total $’000
Balance at 1 July 2015 Proft for the year Other comprehensive income for the year, net of income tax Total comprehensive income Buy-back of shares 7(i) Treasury shares Issuance of shares Dividends paid 7(i) Share-based payments 9(v) Balance at 30 June 2016 For the year ended 30 June 2015 Note	53,416 1,001 28,497 82,914
	– – (38,139) (38,139)
	– 1,434 – 1,434
	– 1,434 (38,139) (36,705)
	– – –
	(253) – (253)
	– – –
	– – (2,410) (2,410)
	– – 79 79
	53,163 2,435 (11,973) 43,625
	Share capital $’000 Reserves $’000 Retained earnings $’000 Total $’000
Balance at 1 July 2014 Proft for the year Other comprehensive income for the year, net of income tax Total comprehensive income Buy-back of shares 7(i) Issuance of shares Dividends paid 7(i) Share-based payments 9(v) Balance at 30 June 2015	54,901 1,933 24,009 80,843
	– – 8,328 8,328 – (932) – (932)
	– (932) 8,328 7,396
	(1,975) – – (1,975) 490 – – 490 – – (4,884) (4,884) – – 1,044 1,044
	53,416 1,001 28,497 82,914

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

5 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2016

Note	2016 $’000 2015 $’000
Cash fows from operating activities Receipts from customers Payments to suppliers and employees Interest paid Income tax paid Net cash infow from operating activities 5(i) Cash fows from investing activities Interest received Proceeds from sale of property, plant and equipment Dividends and return of capital from equity accounted investee Acquisition of a business 9(iii) Payment of earn out Acquisition of property, plant and equipment 6(i) Acquisition of intangible assets 6(ii) Net cash outfow from investing activities Cash fows from fnancing activities Proceeds from issue of share capital Repayment of borrowings Acquisition of shares bought back Dividends paid to the shareholders of the Company 7(i) Net cash outfow from fnancing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of fnancial year Cash and cash equivalents at end of fnancial year 5(i)	110,568 137,958 (118,784) (118,583)
	(8,216) 19,375 (22) (1) (82) (750)
	(8,320) 18,624
	81 287 – 34 228 600 (1,835) (1,808) (500) – (295) (212) (1,910) (965)
	(4,231) (2,064)
	– – – – (253) (1,975) (2,410) (4,884)
	(2,663) (6,859)
	(15,214) 9,701 21,851 12,150
	6,637 21,851

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

LogiCamms Preliminary Final Report 6

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

1. General information

LogiCamms Limited (the “Company”) is a company domiciled in Australia. The address of the Company’s registered office is 433 Boundary Street, Brisbane, Australia. The Consolidated financial statements of the Company as at and for the year ended 30 June 2016 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) and the Group’s interest in associates and jointly controlled entities.

The Group is primarily involved with the energy, resources and infrastructure sectors providing engineering project delivery and asset performance services primarily in Australia and New Zealand. Comparative information has been reclassified where appropriate to enhance comparability.

2. Basis of preparation

The financial statements have been prepared on a going concern basis, which contemplates that the Group will continue to meet its commitments, realise its assets and settle its liabilities in the normal course of business.

statements which have been prepared in accordance with Australian Accounting Standards (“AASBs”) (including Australian Interpretations adopted by the Australian Accounting Standards Board (“AASB”)) and the Corporations Act 2001 . The consolidated financial statements comply with International Financial Reporting Standards (“IFRSs”) and interpretations adopted by the International Accounting Standards Board.

(ii) Basis of measurement and

presentation currency

The Consolidated financial statements have been prepared on the historical cost basis, except for specific assets and liabilities to be measured at fair values.

The Consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency.

The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, all financial information presented in Australian dollars has been rounded to the nearest thousand unless otherwise stated.

As at 30 June 2016, the net cash position was $6.6m. The Company operates its business through management of its cash reserves and operating cash flows. The Company continues to have a strong cash collection and billing cycle over its debtor and work in progress (WIP) profile with minimal debts being written off during the course of FY16.

The Company expects to continue to fund its business out of cash reserves and operating cashflow. Based on the current cash flow forecast, which takes into account the profile of work in hand and proposals, the Company expects to continue to be able to operate its business without the requirement for debt facilities to be put in place. However, in order to provide additional support to its current cash position, the Company is in the process of finalising a Corporate Credit Line Facility of up to $10m. The facility agreement allows the Company to obtain funding against debtor invoices as they are issued and, subject to terms being acceptable to the Company, is expected to be finalised by 30 September 2016.

The nature of the Company’s work requires that bank guarantees or bonds are issued in relation to certain projects. At 30 June, the Company had on issue $7.4m in bank guarantees and bonding. These requirements are met out of an existing $7m bank guarantee facility with NAB and a $10m bonding facility with SwissRe. The Facility Agreement in place with NAB is currently being renegotiated to put in place a more flexible approach to covenant requirements. The Company has received a waiver from NAB in relation to covenant compliance for the period to 30 June 2016 while these negotiations take place. The Company believes that the $9.6m headroom in these facilities is sufficient to meet the requirements of any currently identified projects or proposals.

Based on the current cash position, facilities in place and under negotiation, as well as the Company’s work in hand and proposal pipeline, the Directors believe that the Group will continue to meet its debts as and when they fall due, and accordingly, have prepared the financial report on a going concern basis.

(iii) Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of 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 on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on amounts recognised in the financial statements are included in the following notes:

• Notes 4(i) and 5(ii) – revenue recognition and project work in progress

• Note 4(v) – tax loss recognition

• Note 6(ii) – measurement of the recoverable amounts of cash-generating units containing goodwill

• Note 5(iv) – measurement of deferred consideration

• Note 5(vi) – onerous leases and warranty provisions

• Note 9(v) – measurement of share-based payments

3. Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by the Group.

(i) Goods and services tax

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

(i) Statement of compliance

The consolidated financial statements are general purpose financial

7 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

3. Significant accounting policies (continued)

(ii) Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.

Non-monetary assets and liabilities that are measured at fair value in a foreign currency are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Foreign currency differences arising on retranslation are generally recognised in profit or loss.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the presentation currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Australian dollars at exchange rates at the dates of the transactions. Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such items are considered to form part of the net investment in the foreign operation and are recognised in other comprehensive income, and presented in the translation reserve in equity.

(iii) New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2015. None of these have had a significant effect on the consolidated financial statements of the Group.

The Group has not elected to adopt early any accounting standards and/or amendments.

At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet effective:

	Efective for	Expected to be
	annual reporting	initially applied
	periods beginning	in the fnancial
Standard/Interpretation	on or after	year ending
AASB 9 ‘Financial Instruments’, and the relevant amending standards	1 January 2018	30 June 2019
AASB 15 ‘Revenue from Contracts with Customers’ and	1 January 2018	30 June 2019
AASB 2014-5 ‘Amendments to Australian Accounting Standards arising from AASB 15’1
AASB 16 ‘Leases’2	1 January 2019	30 June 2020
AASB 2014-4 ‘Amendments to Australian Accounting Standards –	1 January 2016	30 June 2017
Clarifcation of Acceptable Methods of Depreciation and Amortisation’
AASB 2014-10 ‘Amendments to Australian Accounting Standards –	1 January 2016	30 June 2017
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture’
AASB 2015 – 1 ‘Amendments to Australian Accounting Standards –	1 January 2016	30 June 2017
Annual Improvements to Australian Accounting Standards 2012–2014 Cycle’
AASB 2015 – 2 ‘Amendments to Australian Accounting Standards –	1 January 2016	30 June 2017
Disclosure Initiative: Amendments to AASB 101’

• 1 The AASB has issued a new standard for the recognition of revenue (AASB 15). The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The Group has not yet considered the impact of the new rules on its revenue recognition policies and will undertake a detailed assessment in the near future. The Group expects to adopt the new standard from 1 July 2018.

• 2 The AASB has issued a new standard for accounting for leases (AASB 16). The new standard introduces a single basis for accounting for leases and entities will be required to recognise all assets and liabilities for all leases longer than 12 months. The Group has not yet considered the impact of the new rules and will undertake a detailed assessment in the near future. The Group expects to adopt the new standard from 1 July 2019.

LogiCamms Preliminary Final Report 8

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

3. Significant accounting policies (continued)

(iv) Other accounting policies

Significant and other accounting policies that summarise the measurement basis used and are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements.

4. Operations – results for the year

4. Operations – results for the year
(i) Revenue	2016 $’000 2015 $’000
Project and services revenue Training courses	101,086 125,123 7,101 8,715
	108,187 133,838

Revenue from projects and services

With respect of fixed price contracts, revenue is recognised depending on the stage of completion of those services. The Group estimate the percentage of costs based on the portion that contract costs incurred for work performed to date bear to the estimated total contract costs.

Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and can be measured reliably.

When the outcome of a contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in profit or loss.

Revenue from training courses

Revenue from training courses is recognised when the course is completed.

(ii) Other Income	2016 $’000 2015 $’000
Reduction in earn out payable 5(iii) Other (iii) Finance income	2,000 1,328 1 18
	2,001 1,346
	2016 $’000 2015 $’000
Interest income on bank deposits	81 287
	81 287

9 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

4. Operations – results for the year (continued)

(iv) Expenses

(iv) Expenses 4. Operations – results for the year (continued)
The statement of comprehensive income includes the following specifc expenses:	2016	2015
	$’000	$’000
Personnel expenses	68,416	68,482
Contractor expenses	17,183	12,898
Contributions to defned contribution superannuation funds	4,511	4,577
Operating leases	3,223	4,648
Depreciation	2,543	1,072
Amortisation	1,459	1,044
Interest expense on fnancial liabilities	151	1

Personnel expenses and Contributions to defined contribution superannuation funds

The Group’s accounting policy for liabilities associated with employee benefits is set out in Note 5(v). The majority of employees in Australia and New Zealand are party to a defined contribution scheme and receive fixed contributions from the Group and the Group’s legal or constructive obligation is limited to these contributions. Contributions to defined contribution funds are recognised as an expense as they become payable.

Operating leases

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Depreciation and Amortisation

The Group’s accounting policy for depreciation and amortisation is set out in Notes 6(i) and 6(ii).

LogiCamms Preliminary Final Report 10

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

4. Operations – results for the year (continued)

(v) Taxation

Income tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity or in other comprehensive income.

Income Tax Expense	2016 $’000 2015 $’000
Current tax expense Current year Withholdings tax paid Adjustments for prior year (tax incentives) Deferred tax expense Origination and reversal of temporary diferences Total income tax (beneft) / expense Numerical reconciliation between tax expense and pre-tax accounting proft	(473) 819 78 150 (240) 67
	(635) 1,036
	(1,807) 863
	(2,442) 1,899
	2,016 $’000 2,015 $’000
(Loss) / proft for the year Total income tax (beneft) / expense Proft before income tax Income tax using the Company’s domestic tax rate of 30% Efect of tax rates in foreign jurisdictions Tax incentives – current fnancial year Previous fnancial year adjustment Non-deductible expenses Non-assessable income Franking credit ofset Tax losses and incentive not recognised Witholding taxes paid Other Total income tax (beneft) / expense	(38,139) 8,328 (2,442) 1,899
	(40,581) 10,227
	(12,174) 3,068 15 (17) (310) (900) (240) 67 8,211 59 (600) (398) (58) (17) 2,641 – 73 – – 37
	(2,442) 1,899

The difference between the actual income tax expense and the income tax expense using the Company’s domestic rate of 30% is mainly attributable to tax losses and incentives not recognised combined with goodwill impairment.

Current tax assets and liabilities

Current tax is the expected tax payable or receivable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

	2016 $’000 2015 $’000
Current assets Current fnancial year tax refundable	508 377

11 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

4. Operations – results for the year (continued)

(v) Taxation (continued)

Tax assets and liabilities – recognised deferred tax assets and liabilities

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax is based upon the expected manner of realisation or settlement of the carrying amount of assets and liabilities using the applicable tax rates. Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets; and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

	Assets Liabilities Net
	2016 $’000 2015 $’000 2016 $’000 2015 $’000 2016 $’000 2015 $’000
Trade receivables Work in progress Equity accounted investee Fixed assets Employee benefts Other payables Revenue received in advance Provisions Share based payments Transaction costs Income tax loss Tax assets / (liabilities)	51 185 – – 51 185 – (477) (1,249) (477) (1,249) – (24) (93) (24) (93) 258 9 – – 258 9 1,606 1,938 – – 1,606 1,938 1,170 623 – – 1,170 623 8 22 – – 8 22 2,080 879 – – 2,080 1,101 41 56 – – 41 56 – – – – – – – – – – – –
	5,214 3,712 (501) (1,342) 4,713 2,370

Tax assets and liabilities – movement in temporary differences during the year

	Balance 1 Jul 14 $’000 Recognised in proft or loss $’000 Balance 30 Jun 15 $’000 Balance 1 Jul 15 $’000 Recognised in proft or loss $’000 Balance 30 June 2016 $’000
Trade receivables Work in progress Equity accounted investee Fixed assets Employee benefts Other payables Revenue received in advance Provisions Share based payments Transaction costs Income tax loss	441 (256) 185 185 (134) 51 (881) (368) (1,249) (1,249) 772 (477) (197) 104 (93) (93) 69 (24) 18 (9) 9 9 249 258 1,888 50 1,938 1,938 (332) 1,606 372 251 623 623 547 1,170 39 (17) 22 22 (14) 8 792 87 879 879 1,201 2,080 (257) 313 56 56 (15) 41 28 (28) – – – – 990 (990) – – – –
	3,233 (863) 2,370 2,370 2,343 4,713

LogiCamms Preliminary Final Report 12

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

4. Operations – results for the year (continued)

(v) Taxation (continued)

Deferred tax is not recognised for the following temporary differences:

• Initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit;

• Differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future; and

• Initial recognition of goodwill.

Tax Consolidation

The company and its wholly-owned Australian resident entities are part of a Tax Consolidated Group (TCG). As a consequence, all members of the tax-consolidated Group are taxed as a single entity. The head entity within the tax-consolidated Group is LogiCamms Limited.

(vi) Earnings per share (EPS)

(vi) Earnings per share (EPS)
	2016 $’000 2015 $’000
Proft for the year WANOS1 used to calculate basic EPS (shares) WANOS1 used to calculate diluted EPS (shares) Basic EPS (cents per share) Diluted EPS (cents per share)	(38,139) 8,328
	68,741 69,422 69,193 69,571 (55.5) 12.0 (55.5) 12.0

1 Weighted average number of ordinary shares

	2016 2015
WANOS used to calculate basic EPS (shares) Efect of performance rights on issue Efect of share appreciation rights on issue WANOS used to calculate diluted EPS (shares)	68,741 69,422 452 149 – –
	69,193 69,571

There have been no transactions involving ordinary shares between the reporting date and the date of completion of these financial statements which would impact on the above EPS calculations

Calculation of earnings per share

Basic earnings per share

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus elements.

Diluted earnings per share

Diluted earnings per share are calculated as net profit attributable to members of the parent, adjusted for:

• Cost of servicing equity (other than dividends)

• the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

• other non-discretionary changes in revenue or expenses during the year that would result from the dilution of potential ordinary shares

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

13 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

4. Operations – results for the year (continued)

(vii) Segment reporting

The Group has a single reportable segment in which it operates, being engineering services, this is based on information that is internally provided to the Managing Director for assessing performance and making operating decisions. Therefore no additional disclosures in relation to the revenues, profit or loss, assets and liabilities and other material items have been made.

The Company is domiciled in Australia, with operations located across Australia and in New Zealand. Revenue and non-current assets are attributed to the above regions based on the revenue earned and non-current assets owned by the subsidiaries domiciled in each region and are as follows:

	2016 $’000 2015 $’000
Revenue Australia New Zealand Non-current assets excluding deferred tax assets Australia New Zealand	93,230 110,121 14,957 23,717
	108,187 133,838
	35,341 60,195 451 631
	35,792 60,826

Revenue from one customer of the Group amounts to greater than 10% of the Group’s total revenues for the year ended 30 June 2016. One customer in the Minerals and Metals sector amounts to $19.4m (2015: one customer in the Hydrocarbons sector $19.7m and one customer in the Minerals and Metals sector $13.5m).

(viii) Auditor's remuneration

(viii) Auditor's remuneration
	2016 $ 2015 $
Audit services PricewaterhouseCoopers in respect of Audit of the Company’s Financial Report Non-audit services PricewaterhouseCoopers in respect of Taxation advice Other services Total auditors’ remuneration	185,000 185,000
	185,000 185,000
	– – 14,280 5,000
	14,280 5,000
	199,280 190,000

LogiCamms Preliminary Final Report 14

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

5. Operations – Operating assets and liabilities

(i) Cash and cash equivalents

Cash balances reconcile to the amount of cash shown in the statement of cash flows at the end of the financial year.

The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities is disclosed in Note 8(ii).

Reconciliation of cash flows from operating activities

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

Note	2016 $’000 2015 $’000
Cash fow from operating activities Proft for the year Adjustments for: Depreciation 6(i) Amortisation of intangible assets 6(ii) Impairment 6(ii) Net fnance beneft Share of (proft) / loss of equity accounted investees 9(ii) Loss on sale of property, plant and equipment Equity-settled share-based payment transactions 9(v) Income tax (beneft) / expense 4(v) Interest paid Income taxes paid Operating proft before changes in working capital and provisions Change in trade and other receivables Change in trade and other payables Change in deferred income Change in provisions and employee benefts Net cash from operating activities	(38,139) 8,328 2,543 1,072 1,459 1,044 28,100 – 70 (286) 33 (264) 23 12 31 1,044 (2,442) 1,899 (22) (1) (83) (750)
	(8,427) 12,098 2,557 6,246 (1,567) 2,716 (813) (2,648) (70) 212
	(8,320) 18,624

(ii) Trade and other receivables

	2016 $’000 2015 $’000
Current Trade receivables Provision for impairment of trade receivables Project work in progress Prepayments and sundry debtors	10,970 14,905 (170) (487) 9,369 7,899 663 659
	20,832 22,976

15 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

5. Operations – Operating assets and liabilities (continued)

(ii) Trade and other receivables (continued)

Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently at amortised cost using the effective interest method, less any impairment losses. At 30 June 2016 trade receivables include retentions of $161,000 relating to contracts in progress (2015: $216,000). The Group’s exposure to credit risk and impairment losses related to Trade and other receivables (excluding project work in progress) are disclosed in Note 8(ii).

Project work in progress

Project work in progress represents the gross unbilled amount expected to be collected from customers for contract work performed to date. It is measured at cost plus profit recognised to date less progress billings and recognised losses. Cost includes all expenditure related directly to specific projects and an allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity. If payments received from customers exceed the income recognised, then the difference is presented as deferred income in the balance sheet.

(iii) Trade and other payables

(iii) Trade and other payables
Note	2016 $’000 2015 $’000
Current Trade payables GST payable Deferred consideration – earn out payable 4(ii) Accrued expenses Non–Current Lease incentives Deferred consideration – earn out payable 4(ii)	4,706 4,136 464 544 – 1031 5,142 6,931
	10,312 12,642
	661 955 300 –
	961 955

Trade and other payables are recognised initially at fair value less transaction costs and subsequently at amortised cost using the effective interest method.

The Group’s exposure to currency and liquidity risk related to Trade and other payables is disclosed in Note 8(ii). The deferred consideration is level 3 on the fair value hierarchy and it is valued based on likelihood Petromod achieving certain EBIT performance hurdles. The Group has considered reasonable sensitivities in relation to the achievement of these targets. $300,000 was added being the deferred consideration related to the Petromod acquisition. Refer to Note 9 (iii) for further information.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position.

(iv) Deferred income

(iv) Deferred income
	2016 $’000 2015 $’000
Billings in advance Prepaid revenue	– 1,421 681 73
	681 1,494

LogiCamms Preliminary Final Report 16

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

5. Operations – Operating assets and liabilities (continued)

(v) Employee benefits

	2016 $’000 2015 $’000
Current Liability for annual leave Liability for long service leave Liability for time of in lieu Non-Current Liability for long service leave	2,801 3,611 1,437 1,288 261 457
	4,499 5,356
	878 1,137

Annual leave, long service leave and time off in lieu

The liability for annual leave, long service leave and time off in lieu is measured as the present value of expected future payments (including oncosts) for the service provided by employees up to the reporting date. Expected future payments are discounted using the yield on high quality corporate bonds that have maturity dates approximating the terms of the Group’s obligations.

(vi) Provisions

	2016 $’000 2015 $’000
Current Onerous lease Lease make good Warranty Non-Current Lease make good Onerous lease	1,983 – 625 – 1,358 312
	3,966 312 491 1190 3,069 2,400
	3,560 3,590

The movement in the onerous lease provision for the period is shown below:

	2016 $’000
Carrying amount at 1 July 2015 New provisions raised Unwind of provision to proft and loss statement Carrying amount at 30 June 2016	2,400
	4,200
	(1,548)
	5,052

A provision is recognised if as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Warranty

A provision for warranty is usually recognised per project at its conclusion. At each reporting date, the overall provision is set based on average historical warranty related expenses and the usual contractual terms for warranties made.

Onerous leases

A provision for onerous leases is recognised when the expected benefits (expected lease inflows) to be derived by the Group from a lease are lower than the unavoidable cost of meeting its obligations under the lease. The provision is measured at the present value of the lower of the expected cost of terminating the lease and the expected net cost of continuing the lease. Before a provision is established, the Group recognises any impairment loss on the assets associated with the lease.

17 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

6. Non-operating assets

(i) Property, plant and equipment

6. Non-operating assets (i) Property, plant and equipment
	Plant and equipment $’000 Building ft outs $’000 Motor Vehicles $’000 Total $’000
Cost Balance at 1 July 2014 Additions Disposals Acquisitions through business combinations Efect of exchange rate movements Balance at 30 June 2015 Balance at 1 July 2015 Additions Disposals Acquisitions through business combinations Transfers Efect of exchange rate movements Balance at 30 June 2016 Depreciation Balance at 1 July 2014 Depreciation for the year Disposals Efect of exchange rate movements Balance at 30 June 2015 Balance at 1 July 2015 Depreciation for the year Disposals Transfers Efect of exchange rate movements Balance at 30 June 2016 Carrying amounts At 1 July 2014 At 30 June 2015 At 1 July 2015 At 30 June 2016	3,977 3,362 347 7,686 212 – – 212 (855) – (143) (998) 166 114 – 280 (56) – (5) (61)
	3,444 3,476 199 7,119
	3,444 3,476 199 7,119
	120 175 – 295
	(861) (470) – (1,331)
	9 – – 9
	(271) 271 – –
	96 (23) 17 90
	2,537 3,429 216 6,182
	2,178 552 182 2,912 706 321 45 1,072 (854) – (110) (964) (51) – (3) (54)
	1,979 873 114 2,966
	1,979 873 114 2,966
	477 2,020 46 2,543
	(836) (470) – (1,306)
	(79) 79 –
	107 9 12 128
	1,648 2,511 172 4,331
	1,799 2,810 165 4,774
	1,465 2,603 85 4,153
	1,465 2,603 85 4,153
	889 918 44 1,851

LogiCamms Preliminary Final Report 18

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

6. Non-operating assets (continued)

(i) Property, plant and equipment (continued)

Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation. Cost includes expenditure that is directly attributable to the acquisition of the asset. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss from derecognising the assets (the difference between the proceeds of disposal and the carrying amount of the asset) is included in “Other income” in the period the asset is derecognised.

Depreciation

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated. Depreciation methods, useful lives and residual values are reviewed at each reporting date.

The estimated useful lives for the current and comparative periods are as follows:

• Plant and equipment 3 – 10 years

• • Building fit out costs 4 – 7 years • Motor vehicles 4 – 5 years

Leased assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and the leased assets are not recognised on the Group’s consolidated statement of financial position.

19 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

6. Non-operating assets (continued)

(ii) Intangible assets

(ii) Intangible assets 6. Non-operating assets (continued)
Note	Goodwill $’000 Software & Systems $’000 Total $’000
Cost Balance at 1 July 2014 Additions Efect of exchange rate movements Disposals Balance at 30 June 2015 Balance at 1 July 2015 Additions Efect of exchange rate movements Disposals Balance at 30 June 2016 Amortisation and impairment losses Balance at 1 July 2014 Amortisation Disposals Impairment 8 (ii) Balance at 30 June 2015 Balance at 1 July 2015 Amortisation Disposals Impairment 8 (ii) Balance at 30 June 2016 Carrying amounts Balance at 1 July 2014 Balance at 30 June 2015 Balance at 1 July 2015 At 30 June 2016	51,913 3,750 55,963 2,490 965 3,455 (757) – (757) – (66) (66)
	53,646 4,649 58,595
	53,646 4,649 58,595
	3,681 2,077 5,758
	1,221 101 1,322
	– (218) (218)
	58,548 6,609 65,457
	– 1,007 1,307 – 1,044 1,044 – (60) (60)
	– 1,991 2,291
	– 1,991 2,291
	– 1,459 1,459
	– (218) (218)
	28,100 24 28,124
	28,100 3,256 31,656
	51,913 2,743 54,656
	53,646 2,658 56,304
	53,646 2,658 56,304
	30,448 3,353 33,801

Goodwill

Goodwill acquired in a business combination is initially measured at cost. Goodwill is measured at cost of the acquisition less the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment.

Software and Systems

Capitalised software expenditure is measured on initial recognition at cost. The expenditure capitalised includes the direct labour and overhead costs that are directly attributable to preparing the asset for its intended use. Following initial recognition, software and systems are carried at cost less amortisation and any impairment losses. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The estimated useful life applied is usually 4 years.

LogiCamms Preliminary Final Report 20

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

7. Capital and reserves

(i) Share capital and reserves

Share capital

Share capital
	Number of Ordinary Shares 2016 ‘000 Number of Ordinary Shares 2015 ‘000
On issue at 1 July Issued in business combinations Bought back Exercise of performance rights On issue at 30 June – fully paid	69,117 71,214 – 671 – (2,768) 313 –
	69,430 69,117

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

The Company does not have authorised capital or par value in respect of its issued shares. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

Where share capital recognised as equity is repurchased, the amount of consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity.

As at 30 June 2016, 598,282 (2015: 693,435) treasury shares were included in the consolidated statements of financial position and changes in equity relate to shares acquired on-market by the Employee Share Trust (EST). These shares will be held by the EST to meet future obligations to employees under the incentive plans upon vesting of granted Performance and Share Appreciation Rights (refer Note 9(v)).

The Group has also issued Performance Rights and Share Appreciation Rights (refer Note 9(v)).

21 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

7. Capital and reserves (continued)

(i) Share capital and reserves (continued)

Dividends

Dividends are recognised as a liability in the period in which they are declared.

Declared and paid during the period

Declared and paid during the period
	2016 $’000 2015 $’000
Final dividend for 2015: $0.035 50% franked (2015: $0.035, 100% franked) Interim dividend for 2016: $0.00 (2015: $0.035, 50% franked) Less dividends received on LogiCamms shares held by Employee Share Trust Proposed and unrecognised as a liability	2,410 2,492 – 2,445 – (53)
	2,410 4,884
	2016 $’000 2015 $’000
Final dividend for 2016: $0.000, 50% franked (2015: $0.035, 50% franked) Franking credit balance	– 2,419
	– 2,419
	2016 $’000 2015 $’000
30% franking credits available to shareholders of the Company for subsequent fnancial years	(189) (508)

All dividends were franked at 30%. The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. Income tax instalments expected to be paid during the financial year ending 30 June 2017 will return the franking account to a credit balance by 30 June 2017.

LogiCamms Preliminary Final Report 22

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

8. Risk

(i) Financial instruments

Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity securities, trade and other receivables, cash and cash equivalents, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below.

A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.

Cash and cash equivalents comprise cash balances and term deposits.

Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

(ii) Financial risk management

Overview

The Group has exposure to the following risks from its use of financial instruments:

• Credit risk

• Liquidity risk

• Market risk

This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital.

Risk management framework

To discharge their obligation to establish and exercise oversight of the Group’s risk management framework the board of directors have delegated to the Audit and Risk Committee the responsibility to exercise oversight of how management monitor and reviews the adequacy of the risk management framework.

The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

Credit risk

Credit risk is the risk of financial loss to the Group if a contracting entity fails to meet its obligations under a financial instrument or customer contract that will result in a financial loss to the Group. The Group is exposed to credit risk from its operating activities (principally from customer receivables and financial guarantees granted to customers) and financing activities including deposits with financial institutions.

23 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

8. Risk (continued)

(ii) Financial risk management (continued)

Exposure to credit risk

The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at the end of the reporting period was:

	2016 $’000
Trade receivables (net of provision for impairment) Sundry debtors and prepayments Project work in progress Cash and cash equivalents	10,800
	663
	9,369
	20,832
	6,637
	27,469

Credit risks related to trade receivables

The Group trades with recognised, creditworthy third parties such as government bodies, large contracting companies or customers whom the Group has established trading history with. Customer credit risk is managed based on established policies, procedures and controls relating to customer credit risk management. This includes:

• for new customers – performing a creditworthiness assessment before credit terms are allowed and including the performance of a credit checks if required

• prior to signing a large contract – credit worthiness is assessed as part of the process of submitting the bid and negotiating terms and conditions

• purchase limits – outside special terms required for large contracts, credit limits are established for each customer

Customers that fail to meet the Group’s benchmark creditworthiness may transact only on a prepayment basis.

In addition, the recoverability of receivable balances are regularly monitored as part of the monthly commercial and performance reviews of each major project by senior management to ensure that the trade receivables and the carrying value of each project’s work in progress is recoverable. In extreme cases, the Group may consider ceasing work until any aged outstanding receivables or disputed amounts are paid / resolved.

The Group has established an allowance for impairment that represents their estimate of incurred losses in respect of trade and other receivables.

The maximum exposure to credit risk for Trade and other receivables (excluding provision for doubtful debts) by geographic region is as follows.

	2016 $’000
Australia New Zealand Other regions	8,519
	1,594
	857
	10,970

Details of the Group’s most significant customer receivable balances at 30 June 2016 are shown in the following table. The most significant single customer at 30 June 2016 is a large, Australian based company in the energy sector.

	Carrying		Carrying
	amount	% of trade	amount	% of trade
	2016	receivables	2015	receivables
	$’000	2016	$’000	2015
Most signifcant single customer	1,291	13%	1,183	8%
Top ten most signifcant customers	6,058	60%	6,614	46%

LogiCamms Preliminary Final Report 24

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

8. Risk (continued)

(ii) Financial risk management (continued)

Impairment losses

The aging of the Group’s Trade receivables at the reporting date was:

	Gross 2016 $’000 Impairment 2016 $’000 Gross 2015 $’000 Impairment 2015 $’000
Not past due Past due 0-30 days Past due 31-120 days Past due 121 days to one year More than one year Retentions (not past due)	5,140 – 9,484 – 3,623 – 2,041 – 1,886 (72) 860 – 158 (96) 406 – 2 (2) 1,021 (487) 161 – 216 –
	10,970 (170) 14,028 (487)

The movement in the allowance for impairment in respect of Trade receivables during the year was as follows:

The movement in the allowance for impairment in respect of Trade receivables during the year was as follows:
	2016 $’000 2015 $’000
Balance at start of year Recoveries of previous year impairments Impairment losses recognised Amounts written of as non-recoverable Balance at 30 June	487 1,517 (75) (183) 130 636 (372) (1,483)
	170 487

The impairment loss at 30 June 2016 relates to specific invoices that the Group considers are at risk of being recovered. The allowance account in respect of trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible; at that point the amount is considered irrecoverable and is written off against the financial asset directly.

The impairment provision related to debts that are not past due is based on current uncertainties and related risks within the industries in which the Group trades. The Group will continue to strongly pursue all debts provided for.

Credit risks related to financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Group’s Finance team. Investments of surplus funds are made with the Group’s bankers who have a credit rating by Standard & Poor’s rating agency of AA- or higher.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.

The Group manages this risk by ensuring, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions. The Group ensures that it has sufficient cash on demand to meet expected operational commitments in the short term including the servicing of financial obligations. The Group regularly forecasts cash flows to assess future liquidity requirements with sufficient time to hold discussions with the Group’s bankers, if such discussions are required.

25 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

8. Risk (continued)

(ii) Financial risk management (continued)

The following are the contractual maturities of the Group’s liabilities, including estimated interest payments and excluding the impact of netting agreements:

	Carrying amount $’000 Contractual cash fows $’000 Less than 1 year $’000 1-2 years $’000 2-5 years $’000
Balance at 30 June 2015 Financial liabilities Trade and other payables Balance at 30 June 2016 Financial liabilities Trade and other payables	13,597 12,642 12,642 955 –
	13,597 12,642 12,642 955 –
	11,273 12,416 10,855 1,561 –
	11,273 12,416 10,855 1,561 –

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Currency risk

The Group has no significant exposure with currency risk.

Interest rate risk

The Group’s borrowings are on fixed interest rates (finance leases). Interest rate risk is managed by ensuring that total interest rate cover is well in excess of minimum bank covenant requirements, to ensure the Group retains a high level of flexibility to absorb any adverse movements in interest rates.

Profile

At reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

	Carrying amount	Carrying amount
	2016	2015
	$’000	$’000
Variable rate instruments
Financial assets	6,600	21,851
Financial liabilities	–	–
	6,600	21,851

Cash flow sensitivity analysis for variable rate instruments

A change of 200 basis points in interest rates would have increased (decreased) equity and profit by the amounts shown below. A sensitivity of 2% (2015: 2%) has been selected as this is considered reasonably possible. The Directors cannot nor do not seek to predict movements in interest rates. These sensitivities are shown for illustrative purposes only.

LogiCamms Preliminary Final Report 26

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

8. Risk (continued)

(ii) Financial risk management (continued)

	2016 $’000 2015 $’000
Efect on proft increase/(decrease) If interest rates were 2% higher (2015: 2%) If interest rates were 2% lower (2015: 2%) Efect on proft after tax increase/(decrease) If interest rates were 2% higher (2015: 2%) If interest rates were 2% lower (2015: 2%) Efect on shareholders’ equity increase/(decrease) If interest rates were 2% higher (2015: 2%) If interest rates were 2% lower (2015: 2%)	243 437 (243) (437)
	170 306 (170) (306)
	170 306 (170) (306)

Fair values versus carrying amounts

The fair values and carrying amounts of financial assets and liabilities shown in the balance sheet were not materially different at 30 June 2016 due to the short term nature of these financial assets and liabilities.

The Group has no financial instruments carried at fair value and therefore has not disclosed the fair value hierarchy.

Capital management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by total shareholders’ equity. The Board of Directors also monitors the level of dividends to ordinary shareholders.

The Company will aim to distribute 40% – 60% of net profit after tax in the form of dividends. The ultimate dividend paid will be determined by the board after consideration of general business and financial conditions, working capital requirements, taxation position, and future capital expenditure requirements.

As at the balance date the Group had no drawn debt facilities and had a bank guarantee facility of $7,000,000 (utilised $6,057,409) (2015: $7,000,000 (utilised $3,569,336)). This facility was secured by a fixed and floating charge over all the Company, its subsidiaries and all assets of the Group. The bank’s financial covenants imposed on the Group were as follows and were not met having been impacted by increases to onerous lease provisions and earnings:

1. Operating leverage: total liabilities to be less than 2.0 times the previous twelve months’ EBITDA;

2. Capital adequacy ratio: tangible net assets divided by total tangible assets to exceed 40 percent; and

3. Current ratio: current assets divided by current liabilities to be greater than 2.0 times.

The bank have provided a covenant waiver for FY16 and the Company is currently in negotiations for a new covenant arrangement.

The Group also had in place a bonding facility outside the bank facility of $10,000,000 (utilised $1,361,000) (2015: $15,000,000 (utilised $1,361,000)).

(iii) Impairment

Financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in Groups that share similar credit risk characteristics.

All impairment losses are recognised in profit or loss.

27 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

8. Risk (continued)

(iii) Impairment (continued)

Non-financial assets

Testing for impairment

The Group tests non-financial assets for impairment:

• At least annually for indefinite life intangible assets and goodwill; and

• Where there is an indication that the asset may be impaired (which is assessed at least each reporting period); or

• Where there is an indication that previously recognised impairment (on assets other than goodwill) may have changed.

If any such indication exists then the asset’s recoverable amount is estimated, being the greater of its value in use and its fair value less costs to sell.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The Group considers that it has one cash generating unit for the purpose of impairment testing of goodwill.

Inputs to impairment calculations

The Value In Use calculation uses cash flow projections based on the Group’s corporate plans and business forecasts prepared by management and approved by the Board. The corporate plans are developed annually and on the understanding that actual outcomes may differ from the assumptions used. For these calculations, adjustments are incorporated for the relevant industry metrics. In the circumstances that the Cash Generating Unit (“CGU”) is unable to achieve the forecast growth in earnings, there is a risk that the carrying value of the CGU would exceed its recoverable amount.

Cash flow projections over the five year period, which are based on Group estimates, take into consideration historical performance as well as expected long term operating conditions. Growth rates do not materially exceed the consensus forecasts of the long term average growth rate for the market sector in which the CGU operates.

The pre-tax discount rates are based on the weighted average cost of capital determined by prevailing or benchmarked market inputs, risk adjusted where necessary, and other assumptions are determined with reference to external sources of information and use consistent, conservative estimates for variables such as terminal cash flow multiples. Increases in discount rates or changes in other key assumptions, such as operating conditions or financial performance, may cause the recoverable amounts to fall below carrying values.

EBITDA and projected margins are based on actual performance in prior years adjusted for expected efficiency improvements and cost reductions as a result of the recent business restructure.

Impairment Charge

The Group has conducted an assessment of the carrying value of its net assets and has determined that it is appropriate to recognise an impairment to goodwill of $6,000,000, reducing the goodwill balance to $30,448,000 (2015: $53,646,000). This amount is in addition to the impairment charge recognised as at 31 December 2015 of $22,100,000.

There were a number of factors that indicated an impairment of goodwill as at 30 June 2016, including:

• Financial performance across the business in the six months to 30 June 2016 was lower than expected

• Slow recovery of key commodities markets in the six months to 30 June 2016 have continued to impact on client capital and operating expenditure

• The requirement for the Group to implement a program of restructure to reduce overhead and operational costs during March 2016

Impairment calculations

Assets are impaired if their carrying value exceeds their recoverable amount. The recoverable amount of an asset or CGU is determined as the higher of its fair value less costs of disposal or Value In Use.

The recoverable amount of the goodwill is based on a Value In Use calculation with respect to the CGU and was determined by applying a five year net present value calculation of projected cash flows and a terminal value at the end of the fifth year. The calculation of Value In Use was determined having regard to the following key assumptions:

• A pre-tax discount rate applied to cash flows of 19.29% (2015: 17.94%) and reflect a change to the risk premium from the prior period

• Expected future profits for the first year based on internal financial forecasts and reflect management’s expectations of nominal growth

• Cost savings from the recent business restructure

• Future nominal revenue growth of 4% per year for years three to four and 8% for year five (2015: 5.0% for years two to five)

• After the fifth year a terminal value was applied using a growth rate of 2.5% (2015: 2.5%)

The recoverable value of the CGU is particularly sensitive to the changes in discount rate, the level of EBITDA over the 5 year forecast period, and the forecast long-term EBITDA that drives terminal value. As the goodwill for the LogiCamms CGU is carried at its Value In Use assessment, any variation to the key assumptions used to determine Value In Use, may result in an impairment of goodwill.

Sensitivity to changes in assumptions

Management recognises that there are various reasons the estimates used in these assumptions may vary. For cash generating units, there are possible changes in key assumptions that could cause the carrying value of the CGU to exceed its recoverable amount.

LogiCamms Preliminary Final Report 28

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

9. Corporate and Group

(i) Group entities

Parent and ultimate controlling party

As at, and throughout, the financial year ended 30 June 2016 the parent company of the Group and ultimate controlling party in the Group was LogiCamms Ltd. The subsidiary companies are listed below:

	Country of incorporation Ownership interest
	2016 2015
LogiCamms Holding Pty Ltd LogiCamms (WA) Pty Ltd LogiCamms Consultants Trust LogiCamms (PNG) Pty Ltd Competency Training Pty Ltd LogiCamms Australia Pty Ltd (formerly LogiCamms Northern Pty Ltd) LogiCamms (CGH) Pty Ltd LogiCamms (Central) Pty Ltd LogiCamms Shared Services Pty Ltd LogiCamms Consulting Pty Ltd Petromod Pty Ltd Independent Technology Limited Independent Technology Holdings Limited ITL Engineering New Zealand Limited ITL Limited	Australia 100% 100% Australia 100% 100% Australia 100% 100% Australia 100% 100% Australia 100% 100% Australia 100% 100% Australia 100% 100% Australia 100% 100% Australia 100% 100% Australia 100% 100% Australia 100% - New Zealand 100% 100% New Zealand 100% 100% New Zealand 100% 100% New Zealand 100% 100%

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and are deconsolidated from the date that control ceases.

29 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

9. Corporate and Group (continued)

(i) Group entities (continued)

Parent entity disclosures

Parent entity disclosures
	2016 $’000 2015 $’000
Result of the parent entity (Loss)/Proft and comprehensive income for the year Financial position of parent entity at year end Current assets Total assets Current liabilities Total liabilities Net assets Total equity of the parent entity comprising of Share capital Reserves Retained earnings Parent entity contingencies GST liabilities of other entities within the GST Group Tax (assets) / liabilities of other entities within the Tax Consolidated Group	(30,245) 4,632 8,746 18,998 63,768 96,530 5,426 4,767 6,808 7,204
	56,960 89,325
	64,462 65,442 2,092 886 (9,593) 22,997
	56,960 89,325 475 467 (809) (271)

(ii) Equity accounted investees (joint venture)

The Group’s share of profits in its equity accounted investee, the LogiCamms-Electro 80 joint venture, for the year is set out below in the summary financial information:

	2016 $’000 2015 $’000
Ownership % Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Group’s share of net assets Revenues Expenses Proft / (loss) Group share of (loss) / proft at 50%	50% 50% 31 633 – –
	31 633
	2 147 – –
	2 147
	29 486
	15 243
	64 1,985 (130) (1,456)
	(66) 529
	(33) 264

LogiCamms Preliminary Final Report 30

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

9. Corporate and Group (continued)

(ii) Equity accounted investees (joint venture) (continued)

During the year the Group received $200,000 (2015: $600,000) in dividends and returns of capital from its equity accounted investee. Interests in joint ventures are accounted for using the equity method. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.

When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.

Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group.

(iii) Acquisitions

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.

Petromod Pty Ltd

On 8 July 2015, the Group acquired 100% of a business called Petromod Pty Ltd (“Petromod”) for $3,998,000. The consideration paid was comprised of $2,198,000 cash and the accrual of a profit earn out of $1,800,000. Cash acquired was $363,000 leaving a net cash outflow for the acquisition of $1,835,000. The fair value of identifiable net assets acquired totalled $417,000 and acquired goodwill totalled $3,581,000. The earn out is contingent upon achievement of earnings above historical levels to drive out-performance. The acquisition is expected to provide the Group with expertise in maintenance services in the Hydrocarbons industry.

The Group has subsequently considered reasonable sensitivities in relation to the achievement of the performance targets and, based on those sensitivities, a reduction of $1,500,000 was made to deferred consideration payable to Petromod. The deferred consideration payable at period end was $300,000, which is included in non-current trade and other payables. The deferred consideration is level 3 on the fair value hierarchy. There have been no changes to the preliminary fair values in the current period.

Monarc Environmental

Monarc Environmental was acquired by the Group in the previous financial year. There have been no changes to the preliminary fair values during the current period.

The Group has subsequently considered reasonable sensitivities in relation to the achievement of the performance targets related to the performance earn out accrued in the prior period, and, based on those sensitivities, the accrual was released.

For acquisitions, the Group measures goodwill at the acquisition date as: the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incur in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.

31 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

9. Corporate and Group (continued)

(iv) Related parties

Key Management Personnel compensation

The Key Management Personnel compensation included in ‘Personnel expenses’ (see Note 4(iv)) is as follows

	2016 $ 2015 $
Short-term employee benefts Other long term benefts Post-employment benefts Share-based payments Termination benefts	2,143,445 2,140,287 – 29,573 135,170 131,418 136,840 154,635 166,460 406,475
	2,581,915 2,862,388

Key Management Personnel and their related parties

No loans were made to Key Management Personnel and their related parties during the year. The Group has not advanced loans to key management persons or their related parties.

396,464 of ordinary shares were granted to Key Management Personnel during the reporting period upon exercise of rights granted as compensation in prior periods (2015: 437,147).

The movement during the reporting year in the number of ordinary shares in the Company held, directly, indirectly or beneficially, by Key Management Personnel is detailed in the Remuneration Report.

The terms and conditions of these transactions with management persons and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-director related entities on an arm’s length basis.

Non-Key Management Personnel disclosures

There were no transactions with non-Key Management Personnel during the year that require disclosure.

Acquisition of shares from related parties

There were no acquisitions of shares from related parties in the 2016 financial year.

Subsidiaries

There is a related party relationship between the parent, LogiCamms Limited, and each of its subsidiaries listed in Note 9(i).

LogiCamms Preliminary Final Report 32

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

9. Corporate and Group (continued)

(v) Share-based payments

Long Term Incentive Plan

During the year ended 30 June 2011 the Group established a Long Term Incentive Plan under which the Board at its discretion can offer Performance Rights and Share Appreciation Rights to Key Management Personnel.

In addition, there remains a tranche of Performance Rights issued on 10 November 2011 which did not form part of the Long Term Incentive Plan. The terms and conditions of the Rights are as follows:

Grant date / employees entitled	Remaining number of instruments Vesting conditions Contractual life of rights
Performance Rights issued on 10 November 2011 Total Performance Rights Total Rights at 30 June 2016	66,666 66,666 on or after 2 June 2016 4.5 years 66,666 66,666

The terms of the Performance Rights issued on 10 November 2011 require that the recipient must remain in the continuous employment of the Company until the vesting date. These Rights have no exercise price and are to be settled by physical delivery of shares at a conversion ratio of 1:1.

In addition to the tenure condition noted above, the terms of the other Performance and Share Appreciation Rights have two performance conditions:

• A relative total shareholder return measure over the performance period

• An absolute earnings per share growth target over the performance period

The performance measures are mutually exclusive. Performance will be assessed over a period of three years. The exercise price for these Performance Rights is nil, while the effective exercise price of the Share Appreciation Rights is equal to the share price at grant, and the payoff is equivalent to the difference between the price at the end of the performance period, and the allocation share price, with the value settled in shares at the end of the performance period. No dividends are received on shares during the performance period.

The movement in the share rights for the year is as follows:

	Outstanding at 1 July 2015 Granted Forfeited or Cancelled (A) Exercised Outstanding at 30 June 2016 Exercisable at 30 June 2016
Performance Rights Issued on 10 November 2011	66,666 – – – 66,666 –
	66,666 – – – 66,666 –

(A) The forfeitures and cancellations relate to:

(1) the cancellation of the FY2014 long term incentive scheme and

(2) the forfeiture of rights relating to FY2012, FY2013 and FY2014 for two scheme participants who left the employ of the Group and received a cash settlement in lieu of their rights entitlements. No incremental fair value was granted. The net effect of these transactions was to reduce administration expenses in 2014 by $244,000).

33 LogiCamms Preliminary Final Report

LogiCamms Preliminary Final Report for the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

9. Corporate and Group (continued)

(v) Share-based payments (continued)

Employee expenses relating to equity settled share based payments

Employee expenses relating to equity settled share based payments
	2016 $’000 2015 $’000
Shares granted to employees Performance Rights Share Appreciation Rights Total expense recognised as employee costs	– 563 137 638 – (157)
	137 1,044

Share-based payment transactions

The grant-date fair value of options, Performance Rights or Share Appreciation Rights granted to employees is recognised as an employee expense over the contractual life of the option or right that the employees become unconditionally entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

10. Unrecognised Items

(i) Subsequent events

There are no material events subsequent to balance date that management is aware of that require disclosure.

(ii) Operating leases

(ii) Operating leases
Leases as lessee	2016 $’000 2015 $’000
Non-cancellable operating lease rentals are payable as follows: Less than one year Between one and fve years More than fve years	3,942 4,556 7,459 7,476 235 –
	11,636 12,032

The Group leases properties in Brisbane, Perth, Melbourne and Adelaide as well as in several regional locations and one in New Zealand. The leases typically run for a period of 2 to 10 years, with options to renew. Most leases increase annually to reflect market rentals or movement in the consumer price index. During the year ended 30 June 2016 $7,322,000 (2015 $5,148,000), inclusive of the increase in the provision for onerous lease of $4,200,000 (2015: $1,300,000), was recognised as an expense in the income statement in respect of operating leases.

LogiCamms Preliminary Final Report 34