preliminary report

engin Limited
1
Preliminary Final Report Of engin Limited for
the Financial Year Ended 30 June 2006
(ACN 063 582 990)
This Preliminary Final Report is provided to the Australian Stock
Exchange (ASX) under ASX Listing Rule 4.3A.
Current Reporting Period: Financial Year Ended 30 June 2006
Previous Corresponding Period: Financial Year Ended 30 June 2005
engin Limited
RESULTS FOR ANNOUNCEMENT TO THE MARKET
For the year ended 30 June 2006
2
Revenue and Net Profit
Percentage
Change
%
Amount
$
Revenue Up 458.9% To 8,605,373
Loss from ordinary activities after tax
attributable to members
Up
65.0%
To (7,510,045)
Net loss attributable to members Down -% To (7,319,252)
Dividends (Distributions) Amount per
security
Franked amount per
security
No dividends were paid during the period - -
Brief Explanation of Revenue, Net Profit and Dividends
The year ended 30 June 2006 represents the first financial year that the consolidated entity has
traded solely as the broadband telephone company - engin Limited.
Cash at bank at 30 June 2006 was $3.0 million (June 2005 $2.9 million). The company raised
$9.4 million during the financial year by way of a rights issue and private placement.
Broadband telephony revenue increased by 458.9 per cent during the year, reflecting the
subscriber line base growth to 39,000 at 30 June 2006 (30 June 2005: 5,800).
The company’s net loss from continuing operations of $7.5 million represents an increase of
65.0 per cent during the year ended 30 June 2006. The prior year consolidated result included
$13.2 million of other income relating to the settlement of the Agent Service Provider
Agreement with Vodafone.
For more detail, please refer to Note 3 - Commentary On Consolidated Results.
engin Limited
Consolidated income statement
for the
financial year ended 30 June 2006
3
Consolidated
Note
2006
$
2005
$
Revenue 2(a) 8,605,373 1,540,128
Changes in inventories of finished goods and work in
progress 195,532 56,402
Employee costs (7,152,995) (2,227,284)
Consumables used (5,722,129) (1,613,469)
Marketing expense (3,608,844) (2,460,810)
Depreciation expense (900,001) (327,145)
Communications expense (536,434) (144,165)
Financial institution costs (158,508) (17,030)
Occupancy costs (251,743) (24,978)
Bad debt expense and debt collection costs (204,693) (37,088)
Computer licence fees (63,638) (226,130)
Finance costs (38,367) -
Legal expenses (28,274) (114,968)
Other expenses from ordinary activities (1,017,429) (997,810)
(Loss) Before Income Tax Benefit 2 (10,882,150) (6,594,348)
Income tax benefit 3,372,105 2,042,731
(Loss) From Continuing Operations (7,510,045) (4,551,617)
Profit From Discontinued Operations 190,793 8,589,171
(Loss)/Profit For the Period (7,319,252) 4,037,554
Profit attributable to minority interest - -
(Loss)/Profit attributable to members of the parent
entity (7,319,252) 4,037,554
engin Limited
Consolidated balance sheet
as at 30 June 2006
4
Consolidated
Note
2006
$
2005
$
Current Assets
Cash and cash equivalents 5(a) 2,976,000 588,034
Trade and other receivables 1,114,885 756,447
Inventories 267,852 72,320
Current tax assets - 12,950
Security deposits 6 15,781 2,285,000
Other 131,279 130,275
Total Current Assets 4,505,797 3,845,026
Non-Current Assets
Investments accounted for using the equity method 27,474 190,660
Property, plant and equipment 4,887,733 1,989,693
Deferred tax assets 3,533,227 250,709
Total Non-Current Assets 8,448,434 2,431,062
Total Assets 12,954,231 6,276,088
Current Liabilities
Trade and other payables 3,973,750 1,710,515
Borrowings 532,245 125,980
Provisions 394,935 245,121
Total Current Liabilities 4,900,930 2,081,616
Non-Current Liabilities
Borrowings 1,099,097 -
Provisions 91,807 71,055
Total Non-Current Liabilities 1,190,904 71,055
Total Liabilities 6,091,834 2,152,671
Net Assets 6,862,397 4,123,417
Equity
Issued capital 9,677,434 221,054
Employee equity-settled benefits reserve 750,454 148,602
(Accumulated losses)/Retained earnings 4 (3,565,491) 3,753,761
Total Equity 6,862,397 4,123,417
engin Limited
Consolidated cash flow statement
for the financial year ended 30 June 2006
5
Consolidated
Note
2006
$
2005
$
Cash Flows From Operating Activities
Receipts from customers 10,733,089 10,644,340
Receipts from Vodafone - 11,200,000
Payments to suppliers and employees (16,441,369) (16,641,509)
Dividends received 628,000 975,000
Interest received 240,494 260,140
Interest and other costs of finance paid (38,367) (21,638)
Income tax paid - (1,405,407)
R&D Income tax concession refund 102,418 -
Net cash (used in)/provided by operating activities 5(c) (4,775,735) 5,010,926
Cash Flows From Investing Activities
Payment for property, plant and equipment (2,140,681) (1,248,267)
Net cash used in investing activities (2,140,681) (1,248,267)
Cash Flows From Financing Activities
Dividends paid - (10,126,089)
Proceeds from issues of equity securities 9,456,380 -
Repayment of borrowings (151,998) (235,221)
Net provided by/(cash used) in financing activities 9,304,382 (10,361,310)
Net Increase / (Decrease) In Cash Held 2,387,966 (6,598,651)
Cash At The Beginning Of The Financial Year 588,034 7,186,685
Cash At The End Of The Financial Year 5(a) 2,976,000 588,034
engin Limited
Statement of changes in equity
for the financial year ended 30 June 2006
6
Ordinary shares
Employee
Equity Settled
Benefits
Reserve
Retained
earnings
Total
attributable to
equity holders of
the entity
$ $ $ $
Balance as at 1 July 2005 221,054 148,602 3,753,761 4,123,417
Loss for period - - (7,319,252) (7,319,252)
Total recognised in income & expense for
the period - - (7,319,252) (7,319,252)
Recognition of share-based payments - 601,852 - 601,852
Issue of shares 10,039,882 - - 10,039,882
Share issue costs (583,502) - - (583,502)
Dividends - - - -
Balance as at 30 June 2006 9,677,434 750,454 (3,565,491) 6,862,397
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
7
Note Contents
1 Basis of Preparation
2 (Loss)/Profit from Operations
3 Commentary on Consolidated Results
4 (Accumulated losses)/Retained Profits
5 Notes to cash flow statement
6 Security Deposits
7 Details relating to Dividends (Distributions)
8 Earnings Per Share
9 Net Tangible Assets per Security
10 Details of Entities Over Which Control Has Been Gained or Lost
11 Details of Associates and Joint Venture Entities
12 Segment Information
13 Subsequent Events
14 Other Significant Information
15 Impacts of Adopting Australian Equivalents to International Financial
Reporting Standards (A-IFRS)
16 Information on Audit or Review
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
8
1. Basis of Preparation
This preliminary final report has been prepared in accordance with ASX Listing Rule
4.3A and the disclosure requirements of ASX Appendix 4E.
The consolidated entity changed its accounting policies on 1 July 2005 to comply with
Australian equivalents to International Financial Standards (‘A-IFRS’). The transition to
A-IFRS is accounted for in accordance with Accounting Standard AASB 1 ‘First-time
Adoption of Australian Equivalents to International Financial Reporting Standards’,
with 1 July 2004 as the date of transition. An explanation of how the transition from
superseded policies to A-IFRS has affected the consolidated entity’s financial position,
financial performance and cash flows is discussed in note 15.
Consolidated
2006
$
2005
$
2. (Loss)/Profit from operations
(Loss)/Profit from operations includes the following
items of revenue and expense:
(a) Operating Revenue
Rendering of services 5,724,171 4,294,999
Sale of goods 2,366,708 1,598,448
Interest received 240,494 260,140
Dividends from Look Distribution Pty Limited 274,000 175,000
8,605,373 8,458,587
Equity share of joint venture’s profit 190,793 855,977
8,796,166 9,314,564
Attributable to:
Continuing Operations 8,605,373 1,540,128
Discontinued Operations 190,793 7,774,436
8,796,166 9,314,564
(b) Non-operating Revenue
Settlement revenue from Vodafone dispute - 13,200,000
8,796,166 22,514,564
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
9
2. (Loss)/Profit from operations (continued)
Consolidated
2006
$
2005
$
(c) Expenses
Cost of sales 5,660,414 1,130,568
Borrowing costs:
Finance lease finance charge 38,367 21,638
Net bad and doubtful debts expense / (recovery) 70,578 (12,476)
Depreciation and amortisation of non-current assets:
Billing system and other plant & equipment 900,001 1,837,686
Operating lease rental expenses
- Minimum lease repayments 203,922 381,078
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
10
3. Commentary on Consolidated Results – Review of Operations
Engin Limited reports a net loss after tax of $7.32 million (EBITDA loss $9.99 million), the June 2006 result
represents the first financial reporting period that the company has traded solely as Engin.
Revenue and subscriber line growth
Engin’s revenues have increased by 459 per cent to $8.6 million compared to $1.5 million for the previous
year, which continues to set Engin apart as the fastest growing broadband telephony company in Australia.
Engin’s paying subscriber numbers have grown from 5,800 at June 2005 to 39,000 as at June 2006.
Usage
In line with subscriber growth, voice traffic across the Engin network also continues to grow. In the month of
June 2006, in excess of 13,000,000 minutes of voice traffic was carried over the Engin network.
Capital raising
During the financial year the company issued new capital, in total a net $9.4 million, by way of a Rights
Issue in August 2005 raising $5.6 million and a Private Placement in January 2006 raising $3.8 million.
Subsequent events
On 25 July 2006 approval was granted at a meeting of shareholders to issue up to 50,000,000 new shares.
The purpose of the capital to be raised is to accelerate growth, expand infrastructure and diversify the
company’s product offerings.
The Company has been and is currently in discussions with third parties in relation to capital raising
opportunities. As at the time of release of this document, the Company is unable to make an announcement
about discussions it has engaged in, as they concern possible options that are confidential, incomplete and
are insufficiently definite to warrant disclosure.
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
11
Consolidated
2006
$
2005
$
4.
(Accumulated losses)/Retained
earnings
Balance at beginning of financial year (note 15) 3,753,761 9,842,296
Net profit/(loss) attributable to members of the parent
entity (7,319,252) 4,037,554
Dividends paid - (10,126,089)
Balance at end of financial year (3,565,491) 3,753,761
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
12
Consolidated
2006
$
2005
$
5. Notes to the cash flow statement
(a) Reconciliation of cash and cash equivalents
For the purposes of the cash flow statement, cash
and cash equivalents includes cash on hand and in
banks and investments in money market
instruments, net of outstanding bank overdrafts.
Cash and cash equivalents at the end of the
financial year as shown in the cash flow statement
is reconciled to the balance sheet as follows:
Cash and cash equivalents 2,976,000 588,034
2,976,000 588,034
(b) Non-cash financing and investing activities
During the financial year the consolidated entity acquired plant, property and equipment with a
value of $1,657,360 by way of finance lease. As this transaction is a non–cash financing activity
this amount is not included in the payment of plant, property and equipment figure.
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
13
Consolidated
2006
$
2005
$
5. Notes to the cash flow statement (continued)
(c) Reconciliation (loss)/profit for the period to net
cashflows from operating activities
Profit/(loss) for the period (7,319,252) 4,037,554
Share of joint venture entities profit (less dividends) 163,186 (55,977)
Depreciation and amortisation of non-current assets 900,001 1,837,686
Employee equity settled benefits 601,852 148,602
Increase/(decrease) in current tax balances 828,950 (933,161)
(Increase)/decrease in deferred tax balances (3,282,518) 940,627
Changes in net assets and liabilities, net of effects
from acquisition and disposal of businesses:
(Increase)/decrease in assets:
Current receivables (358,438) 787,745
Current inventories (195,532) (49,075)
Current security deposits 2,269,219 (2,285,000)
Other current assets (1,004) 58,638
Increase/(decrease) in liabilities:
Current trade payables 1,447,235 672,254
Other current liabilities 149,814 (95,084)
Other non-current liabilities 20,752 (53,883)
Net cashflows (used in)/provided by operating
activities (4,775,735) 5,010,926
6. Security Deposits
Security Deposits – Vodafone bond - 2,000,000
Security Deposits - Other 15,781 285,000
15,781 2,285,000
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
14
7. Details Relating to Dividends (Distributions)
Date dividend
payable
Amount per
security
¢
Amount per
security of
foreign
sourced
dividend
¢
Special dividend 2006 - - -
2005 21/12/2004 6.0 -
02/05/2005 3.0 -
Total 2006 - - -
2005 21/12/2004 6.0 -
02/05/2005 3.0 -
Total dividend (distribution) per security (interim plus final)
2006
¢
2005
¢
Ordinary securities (each class separately) - 9.0
Interim and final dividend (distribution) on all securities
2006
$
2005
$
Ordinary securities (each class separately) - 10,126,089
Total - 10,126,089
Dividend Reinvestment Plans
The dividend or distribution plans shown below are in operation.
N/A
The last date(s) for receipt of election notices for the dividend or
distribution plans
N/A
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
15
8. Earnings Per Share
Consolidated
2006
¢ per share
2005
¢ per share
Basic EPS (3.67) 3.59
Diluted EPS (3.67) 3.51
Basic Earnings per Share
The earnings and weighted average number of ordinary shares
used in the calculation of basic earnings per share are as
follows:
2006
$
2005
$
Earnings (a) (7,319,252) 4,037,554
2006
No.
2005
No.
Weighted average number of ordinary shares (b) 199,636,179 112,512,100
Diluted Earnings per Share
The earnings and weighted average number of ordinary and
potential ordinary shares used in the calculation of diluted
earnings per share are as follows:
2006
$
2005
$
Earnings (a) (7,319,252) 4,037,554
2006
No.
2005
No.
Weighted average number of ordinary shares and potential
ordinary shares (b) 199,636,179 114,863,881
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
16
8. Earnings Per Share (continued)
(a) Earnings used in the calculation of diluted earnings per share reconciles to net profit in the statement
of financial performance as follows:
2006
$
2005
$
Net profit (7,319,252) 4,037,554
(7,319,252) 4,037,554
(b) Weighted average number of ordinary shares and potential ordinary shares used in the calculation of
diluted earnings per share reconciles to the weighted average number of ordinary shares used in the
calculation of basic earnings per share as follows:
2006
No.
2005
No.
Weighted average number of ordinary shares used in the
calculation of basic EPS 199,636,179 112,512,100
Employee Options * - 2,351,781
Weighted average number of ordinary shares and potential
ordinary shares used in the calculation of diluted EPS 199,636,179 114,863,881
* The effect of employee options is anti-dilutive in 2006 and has therefore been excluded from the
calculation of the diluted weighted average number of shares
9. Net Tangible Assets Per Security
Consoliated
2006
¢
2005
¢
Net tangible assets per security 2.0 3.7
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
17
10. Details of Entities Over Which Control Has Been Gained or Lost
Control gained over entities
Name of entity (or group of entities) N/A
Date control gained N/A
2006
$
Contribution of the controlled entity (or group of entities) to profit/(loss) from
ordinary activities during the period, from the date of gaining control. NIL
2005
$
Net profit/(loss) of the controlled entity (or group of entities) for the whole of the
previous corresponding period. NIL
Loss of control of entities
Name of entity (or group of entities) N/A
Date control lost N/A
2006
$
Contribution of the controlled entity (or group of entities) to profit/(loss) from
ordinary activities during the period, to the date of losing control. NIL
2005
$
Contribution of the controlled entity (or group of entities) to profit/(loss) from
ordinary activities for the whole of the previous corresponding period. NIL
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
18
11. Details of Associates and Joint Venture Entities
Ownership Interest
Contribution to net
profit
Name of Entity
2006
%
2005
%
2006
$
2005
$
Associates - - - -
Joint Venture Entities
Look Mobile Limited 50 50 190,793 855,977
Aggregate Share of Profits N/A N/A 190,793 855,977
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
19
12. Segment Information
Information on Business Segments
Revenues from
External Customers
Results
Assets
2006
$
2005
$
2006
$
2005
$
2006
$
2005
$
Agent Service Provider (1) 190,793 20,714,843 190,793 11,684,787 - 9,590,536
Broadband Telephony (2) 8,364,879 1,539,581 (11,122,644) (6,472,871) 12,138,232 2,767,483
Total segments 8,555,672 22,254,424 (10,931,851) 5,211,916 12,138,232 12,358,019
Eliminations - - - - - (6,345,590)
Unallocated 240,494 260,140 240,494 238,511 - 263,659
(Loss)/Profit before income
tax expense
(10,691,357) 5,450,427
Income tax 3,372,105 (1,412,873)
Net (Loss)/Profit
attributable to members
(7,319,252) 4,037,554
8,796,166 22,514,564 (7,319,252) 4,037,554 12,138,232 6,276,088
(1) engin Limited operated predominately in the telecommunications industry within Australia as an Agent
Service Provider. The share of net profits of the joint venture entity Look Mobile Limited are also included as
revenues.
(2) MIBroadband Pty Limited operates as a provider of Broadband Telephony services within Australia.
Liabilities
Depreciation
Acquisition of Assets
2006
$
2005
$
2006
$
2005
$
2006
$
2005
$
Agent Service Provider - 638,745 - 1,510,541 - 19,272
Broadband Telephony 5,275,877 7,733,536 900,001 327,145 3,798,041 1,228,995
Total segments 5,275,877 8,372,281 900,001 1,837,686 3,798,041 1,248,267
Eliminations - (6,345,590) - - - -
Unallocated - 125,980 - - - -
5,275,877 2,152,671 900,001 1,837,686 3,798,041 1,248,267
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
20
12. Segment Information (continued)
Other segment information
2006
$
2005
$
Agent Service Provider -
Carrying value of investments
accounted for using the equity
method 27,473 190,660
Agent Service Provider -
Share of net profit of associates &
joint venture entities accounted for
under the equity method 190,793 855,977
13. Subsequent Events
On 25 July 2006 approval was granted at a meeting of shareholders to issue up to 50,000,000 new shares. The
purpose of the capital to be raised is to accelerate growth, expand infrastructure and diversify the company’s
product offerings.
The Company has been and is currently in discussions with third parties in relation to capital raising
opportunities. As at the time of release of this document, the Company is unable to make an announcement
about discussions it has engaged in, as they concern possible options that are confidential, incomplete and are
insufficiently definite to warrant disclosure.
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
21
14. Other Significant Information
Going Concern
In the director’s opinion, there are reasonable grounds to believe that the consolidated entity will be able to pay
its debts as and when they fall due and payable.
On 25 July 2006 approval was granted at a meeting of shareholders to issue up to 50,000,000 new shares. The
purpose of the capital to be raised is to accelerate growth, expand infrastructure and diversify the company’s
product offerings.
The Company has been and is currently in discussions with third parties in relation to capital raising
opportunities. As at the time of release of this document, the Company is unable to make an announcement
about discussions it has engaged in, as they concern possible options that are confidential, incomplete and are
insufficiently definite to warrant disclosure.
Options
Option Plan
Exercis
e Price
Per
Option Issue Date
Expiry Date
Number of
Options
Outstanding
as at 1 July
2005
Number of
Options
Exercised
Number of
Options
Lapsed
Number of
Options
Outstanding
as at 30
June 2006
Executive & Employee
Share Option Plan
$1.00
16 Aug 2000
16 Aug 2005
150,000
-
150,000
-
Executive & Employee
Share Option Plan
$1.00
1 Jan 2001
1 Jan 2006
150,000
-
150,000
-
Executive & Employee
Share Option Plan II
$0.50
16 Aug 2000
16 Aug 2005
1,500,000
-
1,500,000
-
Executive & Employee
Share Option Plan II
$0.50
1 Jan 2001
1 Jan 2006
150,000
-
150,000
-
Executive Share
Ownership Plan
$0.00
27 Jan 2005
30 Nov 2009
5,500,000
1,575,000
-
3,925,000
Executive Share
Ownership Plan
$0.00
27 Jun 2005
30 Nov 2009
3,800,000
1,132,500
17,500
2,650,000
Total
11,250,000
2,707,500
1,967,500
6,575,000
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
22
15. Impacts of the adoption of Australian equivalents to International Financial
Reporting Standards
The consolidated entity changed its accounting policies on 1 July 2004 to comply with Australian equivalents to
International Financial Reporting Standards (‘A-IFRS’). The transition to A-IFRS is accounted for in accordance with
Accounting Standard AASB 1 ‘First-time Adoption of Australian Equivalents to International Financial Reporting
Standards’, with 1 July 2004 as the date of transition.
An explanation of how the transition from superseded policies to A-IFRS has affected the consolidated entity’s
financial position, financial performance and cash flows is set out in the following tables and the notes that
accompany the tables.
Effect of A-IFRS on the balance sheet as at 1 July 2004
Consolidated
Not
e
Super-seded
policies*
$
Effect of
transition to AIFRS
$
A-IFRS
$
Current assets
Cash and cash equivalents 7,186,685 - 7,186,685
Trade and other receivables 1,544,182 - 1,544,182
Inventories 23,246 - 23,246
Other 188,914 - 188,914
Total current assets 8,943,027 - 8,943,027
Non-current assets
Investments accounted for using the equity method 134,683 - 134,683
Property, plant and equipment 2,579,112 - 2,579,112
Deferred tax assets b 1,191,336 - 1,191,336
Total non-current assets 3,905,131 - 3,905,131
Total assets 12,848,158 - 12,848,158
Current liabilities
Trade and other payables 1,038,261 - 1,038,261
Borrowings 255,256 - 255,256
Current tax payables 920,211 - 920,211
Provisions 302,667 - 302,667
Other 37,538 - 37,538
Total current liabilities 2,553,933 - 2,553,933
Non-current liabilities
Borrowings 105,946 - 105,946
Provisions 124,929 - 124,929
Total non-current liabilities 230,875 - 230,875
Total liabilities 2,784,808 - 2,784,808
Net assets 10,063,350 - 10,063,350
Equity
Issued capital 221,054 - 221,054
Retained earnings c 9,842,296 - 9,842,296
Total equity 10,063,350 - 10,063,350
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
23
15. Impacts of the adoption of Australian equivalents to International Financial
Reporting Standards (continued)
Effect of A-IFRS on the income statement for the financial year ended 30 June 2005
Financial year ended
30 Jun 2005
Note
Super-seded
policies*
$
Effect of
transition to AIFRS
$
A-IFRS
$
Revenue 8,458,587 - 8,458,587
Revenue from settlement proceeds 13,200,000 (13,200,000) -
Share of profits of associates and jointly controlled
entities accounted for using the equity method
855,977 - 855,977
Other income from settlement proceeds - 13,200,000 13,200,000
Changes in inventories of finished goods and work
in progress
49,075 - 49,075
Raw materials and consumables used (1,900,295) - (1,900,295)
Employee costs a (5,776,282) (148,602) (5,924,884)
Marketing expenses (2,460,810) - (2,460,810)
Communications expense (840,174) - (840,174)
Depreciation and amortisation expense (1,837,686) - (1,837,686)
Financial institution costs (359,659) - (359,659)
Occupancy costs (379,932) - (379,932)
Borrowing costs (21,638) - (21,638)
Bad debt expense and collection costs (92,944) - (92,944)
Retrenchment costs (854,547) - (854,547)
Legal expenses (444,550) - (444,550)
IT maintenance costs (536,957) - (536,957)
Other expenses from ordinary activities (1,459,136) - (1,459,136)
Profit before income tax expense 5,599,029 (148,602) 5,450,427
Income tax expense b (1,663,582) 250,709 (1,412,873)
Profit from continuing operations 3,935,447 102,107 4,037,554
Profit for the period 3,935,447 102,107 4,037,554
Profit attributable to members of the parent
entity
3,935,447 102,107 4,037,554
* Reported financial results under previous Australian GAAP.
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
24
15. Impacts of the adoption of Australian equivalents to International Financial
Reporting Standards (continued)
Effect of A-IFRS on the balance sheet as at 30 June 2005
30 Jun 2005
Note
Super-seded
policies*
$
Effect of
transition to
A-IFRS
$
A-IFRS
$
Current assets
Cash and cash equivalents 588,034 - 588,034
Trade & other receivables 756,447 - 756,447
Security deposits 2,285,000 - 2,285,000
Inventories 72,320 - 72,320
Current tax assets 12,950 - 12,950
Other 130,275 - 130,275
Total current assets 3,845,026 - 3,845,026
Non-current assets
Investments accounted for using the equity method 190,660 - 190,660
Deferred tax assets - 250,709 250,709
Property, plant and equipment 1,989,693 - 1,989,693
Total non-current assets 2,180,353 250,709 2,431,062
Total assets 6,025,379 250,709 6,276,088
Current liabilities
Trade & other payables 1,710,515 - 1,710,515
Borrowings 125,980 - 125,980
Provisions 245,121 - 245,121
Total current liabilities 2,081,616 - 2,081,616
Non-current liabilities
Provisions 71,055 - 71,055
Total non-current liabilities 71,055 - 71,055
Total liabilities 2,152,671 - 2,152,671
Net assets 3,872,708 250,709 4,123,417
Equity
Share capital 221,054 - 221,054
Employee equity-settled benefits reserve a - 148,602 148,602
Retained earnings c 3,651,654 102,107 3,753,761
Total equity 3,872,708 250,709 3,753,761
* Reported financial position under previous Australian GAAP.
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
25
15. Impacts of the adoption of Australian equivalents to International Financial
Reporting Standards (continued)
Effect of A-IFRS on the cash flow statement for the financial year ended 30 June 2006
There are no material differences between the cash flow statement presented under A-IFRS and the cash
flow statement presented under the superseded policies.
Notes to the reconciliations of income and equity
(a) Share-based payments
For the financial year ended 30 June 2005, share-based payments of $148,602 (included in
‘employee benefit expenses’) which was not recognised under the superseded policies were
recognised under A-IFRS, with a corresponding increase in the employee equity-settled benefits
reserve. The performance rights were granted on 27 January 2005 and 27 June 2005 therefore had
no impact on prior periods.
These adjustments had no material tax or deferred tax consequences.
(b) Income tax
Under the superseded policies, the consolidated entity adopted tax-effect accounting principles
whereby income tax expense was calculated on pre-tax accounting profits after adjustment for
permanent differences. The tax-effect of timing differences, which occur when items were included or
allowed for income tax purposes in a period different to that for accounting were recognised at
current taxation rates as deferred tax assets and deferred tax liabilities, as applicable.
Under A-IFRS, deferred tax is determined using the balance sheet liability method in respect of
temporary differences arising from differences between the carrying amount of assets and liabilities
in the financial statements and their corresponding tax bases.
The effect of the above adjustments on the deferred tax balances are as follows:
Consolidated
1 Jul 2004
$
30 June 2005
$
Deferred tax not recognised under previous GAAP - 250,709
Net increase in deferred tax balances - 250,709
The effect on consolidated profit for the financial year ended 30 June 2005 was to decrease
previously reported income tax expense by $250,709.
(c) Retained earnings
The effect of the above adjustments on retained earnings is as follows:
Consolidated
Note
1 Jul 2004
$
30 Jun 2005
$
Expensing share-based payments a - (148,602)
Adjustments to tax balances b - 250,709
Total adjustment to retained earnings - 102,107
Attributable to members of the parent entity - 102,107
engin Limited
Notes to the Financial Statements
for the year ended 30 June 2006
26
16. Information on Audit or Review
This preliminary final report is based on accounts to which one of the following applies.
! The accounts have been audited. ! The accounts have been
subject to review.
" The accounts are in the process of
being audited or subject to review.
! The accounts have not yet
been audited or reviewed.
Description of likely dispute or qualification if the accounts have not yet been audited or
subject to review or are in the process of being audited or subjected to review.
N/A
Description of dispute or qualification if the accounts have been audited or subjected to
review.
N/A