E&A LimitEd 2009 AnnuAL REpoRt E&A Limit d 2009 Annu AL · services » Flexible geomembrane liners...

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E&A Limited2009 AnnuAl RepoRt

E&A LimitEd 2009 AnnuAL REpoRt

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1 Chairman’s Report

4 Company overview

8 Review of operations

10 Investment & Corporate Advisory

12 Procurement Services

14 Fabtech

16 Heavy Mechanical & Electrical Engineering

18 Maintenance Engineering & Plant Construction

20 Directors’ Biographies

22 Annual Financial Report

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Chairman’s Report

Dear ShareholDer,

On behalf of the E&A Limited Board of Directors, I report the Company’s operating results for the 12 month period ended 30 June 2009.

E&A Limited achieved consolidated revenue of $110 million which represented a significant growth on last year’s turnover by 23%.

The Net Profit after Tax (NPAT) result for the full twelve months of $0.558 million was lower than the prior year NPAT result of $4.227 million and was a direct consequence of the impact of the global financial crisis, including contract delays, project cancellations, reduced levels of activity in the mining and industrial sectors and highly competitive market pressures causing margin erosion.

In addition, the E&A Limited Group result had been adversely impacted by significant unrecoverable contract cost overruns incurred by E&A Limited subsidiary Fabtech as a consequence of extraordinary Queensland floods during the months of May and June.

“The outlook for E&A

Limited is continuing

to strengthen as the

mining and resources

sector regain momentum

in line with improving

economic conditions.”

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E&A Limited generated cashflow from operations of $8.378 million before payment of interest and tax and $4.828 million after interest and tax. The strong cash flow generated from operations was particularly pleasing given the working capital requirements associated with the 23% growth in turnover.

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STroNG CaShFloW

E&A Limited generated cashflow from operations of $8.378 million before payment of interest and tax and $4.828 million after interest and tax. The strong cash flow generated from operations was particularly pleasing given the working capital requirements associated with the 23% growth in turnover.

E&A Limited continues to secure ongoing funding for both working capital expansion and acquisitions such as the recent ICE Engineering and Construction acquisition on competitive terms.

The Company has successfully renewed its finance facilities, albeit on tighter and more expensive terms which are reflective of current banking conditions.

Given ongoing growth of the subsidiaries, cashflow management will continue to be a key focus for management during FY10.

e&a limiTeD 2009 aNNual reporT ChAirmAn’s rEporT

improVeD ouTlooK For 2010

The outlook for the next financial year is more positive as delayed contracts in FY09 re-commence, restructure savings are achieved and growth opportunities are realised from the increased business development efforts undertaken by all E&A Limited operating subsidiaries.

Furthermore, the outlook for E&A Limited is continuing to strengthen as the mining and resources sector regain momentum in line with improving economic conditions.

EAL subsidiaries have recently won a number of significant contracts, including:

a $17.4 million fabrication and construction project for »Uranium One at the Honeymoon mine;a significant pipe fabrication contract for ASC »Shipbuilding for the Air Warfare Destroyer program;a pilot procurement contract for Lihir Gold which is »expected to lead to a forecast $6 million per annum contract for the purchase of spares and rotables for the Lihir Gold processing plant; andnew large projects in Queensland as part of the »expanding Coal Seam Gas developments in that state. These contracts which exceed $4 million in value require Fabtech to install geomembrane liners for leading LNG developers including Santos, Origin and AGL.

This growth will require additional working capital and directors are presently evaluating debt and equity alternatives to fund any additional working capital requirements.

The E&A Limited directors have resolved to defer consideration of any final dividend until such time as the first quarter’s results for FY10 are known and will provide a further update to Shareholders at the Company’s Annual General Meeting.

In view of the improved outlook it appears E&A Limited’s strategy of reducing margins in order to maintain cash flow, retain valuable executive and employee skills and support major clients, has benefited all E&A Limited stakeholders.

The Directors continue to evaluate a number of further strategic acquisition opportunities and remain committed to building shareholder value through delivering a blend of organic and acquisition growth.

stephen Young | Executive Chairman

IN vIEW OF THE IMPrOvED OUTLOOk IT

APPEArS E&A LIMITED’S STrATEGY OF

rEDUCING MArGINS IN OrDEr TO MAINTAIN

CASH FLOW, rETAIN vALUABLE ExECUTIvE

AND EMPLOYEE SkILLS AND SUPPOrT

MAJOr CLIENTS, HAS BENEFITED ALL E&A

LIMITED STAkEHOLDErS.

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Company Overviewe&a limited is a diversified South australian based investment and engineering services group comprising the following wholly owned operating businesses over five segments:

iNVeSTmeNT & CorporaTe aDViSory

e&a limiTeD

equiTy & aDViSory

proCuremeNT SerViCeS

loumiNCo

BluCher auSTralia

FaBTeCh

FaBTeCh Sa

heaVy meChaNiCal & eleCTriCal eNGiNeeriNG

Whyalla FaBriCaTioNS

oTToWay eNGiNeeriNG

iCe eNGiNeeriNG

maiNTeNaNCe eNGiNeeriNG & plaNT CoNSTruCTioN

heaVymeCh

qmm

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invEsTmEnT & CorporATE AdvisorYoperating CompaniesE&A Limited | Equity & Advisory

servicesComprehensive range of corporate advisory services relating to the analysing, »negotiating, financing and completing of business transactions for external and internal clientsInvestment and Corporate Advisory also provides a range of corporate »advisory services to E&A Limited subsidiaries as they continue to expand both organically and through acquisition

industry ExposurePublic »Private »Government organisations »E&A Limited subsidiaries »

Employees13

proCurEmEnT sErviCEsoperating CompaniesLouminco | Blucher Australia

servicesProcurement »Maintenance »Engineering support »Project management services »

industry ExposureIndustrial »Mining »Base metals »Defence »Power generation »Waste Water »Ship Building »Food & Beverage processing »

Employees60

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FAbTEChoperating CompanyFabtech SA

servicesFlexible geomembrane liners and floating covers for dams, »reservoirs, tunnels, channels and land fills

industry ExposureMining »Potable and waste water containment »Waste management »Agriculture »

Employees78

hEAvY mEChAniCAL & ELECTriCAL EnginEEringoperating CompaniesWhyalla Fabrications | Ottoway Engineering | ICE Engineering & Construction

servicesPipe fabrication and installation involving all aspects of turn-key project »management including design, engineering, procurement, manufacture, fabrication, machining, installation and maintenanceSteel fabrication and structural engineering services, including project »management, design, structural steel fabrication and erection, pipe welding and pipework installation, pneumatic and hydraulic installations, and light machiningElectrical engineering consultancy and project management including the »design of electrical control systems for heavy industry, manufacturing and commercial installations

industry ExposureIndustrial »Petro-chemical »Oil & gas »Mining »Water »Defence »Power generation »Infrastructure »Wine »

Employees306

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mAinTEnAnCE EnginEEring & pLAnT ConsTruCTionoperating CompaniesHeavymech | QMM

servicesBreakdown and repair services to the heavy industrial, mining and power »generation industriesEquipment, spare parts, plant construction and repair, and onsite maintenance to »the quarry, recycling and mining sectors

industry ExposureMining »Power »Quarry »recycling »Heavy industrial »

Employees57

Revenue contRibution by segment$110.5m

ebit contRibution by segment$2.9m

iNVeSTmeNT & CorporaTe aDViSory: 3.69% proCuremeNT: 28.15% FaBTeCh: 16.81% heaVy meChaNiCal & eleCTriCal eNGiNeeriNG: 41.35% maiNTeNaNCe eNGiNeeriNG aND plaNT CoNSTruCTioN: 10.00%

iNVeSTmeNT & aDViSory: 10.53% proCuremeNT: 36.68% FaBTeCh: 00.00% heaVy meChaNiCal & eleCTriCal eNGiNeeriNG: 48.55% maiNTeNaNCe eNGiNeeriNG aND plaNT CoNSTruCTioN: 4.25%

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Review of Operations

E&A Limited (EAL) achieved consolidated revenue of $110 million which represented a growth on last year’s turnover of 23% resulting in earnings before interest and tax (EBIT) of $2.879 million.

EAL generated cashflow from operations of $8.378 million before payment of interest and tax and $4.828 million after interest and tax. The strong cash flow was particularly pleasing given the working capital requirements associated with the 23% growth in turnover.

The Net Profit after Tax (NPAT) result for the full twelve months of $0.558 million was lower than the prior year NPAT result of $4.227 million and was a direct consequence of the impact of the global financial crisis, including contract delays, project cancellations, reduced levels of activity in the mining and industrial sectors and highly competitive market pressures causing margin erosion. In addition, the EAL Group result had been adversely impacted by significant unrecoverable contract cost overruns incurred by EAL subsidiary Fabtech as a consequence of extraordinary Queensland floods during the months of May and June.

The outlook for the next financial year is more positive as delayed contracts re-commence, restructure savings are achieved and opportunities are realised from the increased business development efforts undertaken by all EAL operating subsidiaries.

A review of operations by each segment is presented on the following pages:

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Key Financial Results12 moNThS To 30 JuNe 2009 – iN ThouSaNDS ($)

FY09 FY08

sEgmEnT rEvEnuE 110,491 89,776

undErLYing EbiTdA 4,238 9,336

dEprECiATion & AmorTisATion (1,359) (972)

ToTAL undErLYing EbiT 2,879 8,364

non-rECurring iTEms – (675)

EbiT rEporTEd 2,879 7,689

$89.8 miLLion

$110.5 miLLion

FY08 FY09

Revenue analysis in Fy09e&a limiTeD

ebit analysis in Fy09e&a limiTeD

FY08 FY09

$7.7 miLLion

$2.9 miLLion

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Investment & Corporate Advisory

This segment comprises the Equity & Advisory business and corporate head office cost associated with E&A Limited.

The Investment and Corporate Advisory segment provides a comprehensive range of corporate advisory services relating to the analysing, negotiating, financing and completing of business transactions for external clients and E&A Limited’s own operating subsidiaries as they continue to expand both organically and through acquisition.

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The Investment & Corporate Advisory segment revenue increased compared to the prior year by 12.6% due primarily to increased restructuring mandates for Corporate Advisory services and also the additional involvement in corporate advisory services and management services provided to EAL subsidiaries.

Equity & Advisory performed in line with expectations for the second half notwithstanding the depressed market for mergers, acquisitions and divestment transaction mandates during the period.

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$3.8 miLLion

$4.3 miLLion

FY08 FY09

Revenue analysis in Fy09iNVeSTmeNT & CorporaTe aDViSory

ebit analysis in Fy09iNVeSTmeNT & CorporaTe aDViSory

FY08 FY09

$0.18 miLLion

$0.36 miLLion


FY09 FY08


undErLYing EbiTdA 399 901

dEprECiATion & AmorTisATion (39) (42)

ToTAL undErLYing EbiT 360 859

non-rECurring iTEms – (675)

EbiT rEporTEd 360 184

The Investment and Corporate Advisory segment provides a comprehensive range of corporate advisory services relating to the analysing, negotiating, financing and completing of business transactions.

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Procurement Services

This segment comprises the Louminco and Blucher businesses.

Louminco provides procurement, maintenance, engineering support and project management services to the industrial, mining, base metals, defence and power generation industries. Louminco is focused on sourcing fabricated and manufactured components and spare parts.

Blucher Australia supplies high quality stainless steel fluid solutions for both drainage and supply systems for industrial, commercial and residential applications.

The Procurement segment achieved small revenue growth of 2.9%, however operating earnings declined 27.8% compared to the prior year.

The decline in operating earnings has been primarily impacted by the decision of Louminco’s two major customers (One-Steel at Whyalla & rio Tinto at Gove) to in-source the procurement work previously contracted to Louminco.

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Louminco will continue to support both OneSteel and rio Tinto from its Adelaide Service Centre, however, the volume of work undertaken for these companies is expected to reduce in FY10.

It is intended to restructure Louminco’s operations by merging this business with Whyalla Fabrications. Whilst this initiative has board support the necessary legal, statutory and commercial approvals are being sought in order to minimise transaction costs. Particulars of this initiative will be provided once the merger plans have been finalised. The merged business will be able to offer to its clients fully integrated solutions including design, drafting, engineering, fabrication and onsite construction.

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$32.0 miLLion$32.9 miLLion

Revenue analysis in Fy09proCuremeNT SerViCeS

ebit analysis in Fy09proCuremeNT SerViCeS

$1.6 miLLion

$1.1 miLLion


FY09 FY08




ToTAL undErLYing EbiT 1,129 1,565

non rECurring iTEms – –

EbiT rEporTEd 1,129 1,565

The Procurement segment achieved small revenue growth of 2.9%, however operating earnings declined 27.8% compared to the prior year.

FY08 FY09 FY08 FY09

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Fabtech

Fabtech SA is a national leader in the provision of flexible geomembrane liners and floating covers for dams, reservoirs, channels & tunnels in such industries as mining, resources, potable and waste water containment, waste management and agriculture.

The Fabtech segment achieved small revenue growth of 4.7% and a significant decline in operating earnings of 115% compared to the prior year.

Fabtech’s full year performance was unsatisfactory. The contributing factors to Fabtech’s performance were:

Losses incurred completing contracts in victoria during »the first half of FY09 where wet and windy weather was experienced resulting in low productivity;Losses incurred in Queensland where unprecedented »floods were experienced in the months of May and June. Due to abnormal weather conditions management’s strategy to mitigate construction risk associated with weather by contracting in Queensland during the winter months rather than victoria failed;The significant costs incurred in recruiting and training »additional personnel and developing contracting systems to handle the increased expectations of Fabtech’s larger clients in respect of safety, quality and contract administration;Unrecovered contract costs due to clients rescheduling »commencement dates which could not be recovered; andForeign exchange losses due to the volatility of the »AUD in circumstances where these losses could not be passed onto customers.

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Management’s expectation for the future outlook of the geomembrane industry remains positive. This view is supported by the current high level of project enquiries and outstanding tenders. However, margins in the geomembrane industry have become more competitive and clients are demanding contractual and construction risk to be assumed by the contractor.

Fabtech has recently received accreditation from Santos and Origin Energy for its safety procedures and expects to receive additional coal seam methane gas geomembrane lining opportunities as a consequence of this accreditation.

Equity & Advisory has committed increased resources to assist Fabtech. Both EAL and Fabtech management expect a return to an acceptable level of profitability during FY10.

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$18.8 miLLion

$19.6 miLLion

Revenue analysis in Fy09FaBTeCh

ebit analysis in Fy09FaBTeCh

$3.6 miLLion

-$0.5 miLLion


FY09 FY08


undErLYing EbiTdA (281) 3,740


ToTAL undErLYing EbiT (541) 3,561

non-rECurring iTEms – –

EbiT rEporTEd (541) 3,561

Fabtech has recently received accreditation from Santos and Origin Energy for its safety procedures and expects to receive additional coal seam methane gas geomembrane lining opportunities as a consequence.

FY08 FY09

FY08

FY09

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Heavy Mechanical & Electrical Engineering

This segment comprises the Ottoway Engineering, Whyalla, and the newly acquired ICE Engineering business.

Ottoway provides a range of piping and fabrication engineering services in the petro-chemical, oil and gas, mining, water, defence, power, infrastructure and wine industries.

Whyalla Fabrications provides a range of steel fabrication and structural steel engineering services, including project management, heavy engineering design, fabrication and erection, pipe welding and installation, pneumatic and hydraulic installation, sheet metal work, and light machining.

ICE Engineering provides services and contract labour to the electrical and instrumentation sector of the industrial, water and mining sectors.

The Heavy Mechanical and Electrical Engineering segment achieved revenue growth of 73.2% and operating earnings growth of 145.3% compared to the prior year.

Ottoway Engineering has enjoyed significant growth over the past 12 months. However, a large portion of this growth has been in respect of low margin work undertaken for its largest client, Austrian Environment & Energy (AE&E). During the second half a number of its larger mining and industrial clients deferred maintenance work and upgrade or expansion projects.

Whyalla Fabrications’ turnover and margin have directly suffered as a consequence of Whyalla Fabrication’s major customers located in the Iron Triangle deferring both maintenance works and the commencement of previously anticipated upgrade or expansion initiatives. This fall in turnover has caused Whyalla Fabrications to operate at a loss over the second six months of the financial year.

Whyalla Fabrications has recently completed its relocation to the 6,000 square metre building located at Port Augusta road Whyalla which was recently renamed the E&A Building. It is anticipated that the relocation to the renamed E&A Building and merger with Louminco will bring with it major works that will result in improved turnover and margin levels that were previously realised at Whyalla Fabrications.

As mentioned previously, ICE was acquired with effect from 1 May 2009. ICE made a positive contribution to the earnings of the Heavy Mechanical and Electrical Engineering segment and is expected to make a strong contribution to FY10 earnings.

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$27.9 miLLion

$48.3 miLLion

Revenue analysis in Fy09heaVy meChaNiCal & eleCTriCal eNGiNeeriNG

ebit analysis in Fy09heaVy meChaNiCal & eleCTriCal eNGiNeeriNG

$0.7 miLLion

$1.8 miLLion


FY09 FY08




ToTAL undErLYing EbiT 1,786 728


EbiT rEporTEd 1,786 728

The Heavy Mechanical and Electrical Engineering segment achieved revenue growth of 73.2% and operating earnings growth of 145.3% compared to the prior year.

FY08 FY09 FY08 FY09

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Maintenance Engineering & Plant Construction

This segment comprises the Heavymech and Quarry & Mining Manufacture (QMM) businesses.

Heavymech provides emergency breakdown, maintenance and machining services to a wide variety of industries including mining, earthmoving, foundry, water hydraulic, marine, defence and power generation.

QMM has an established reputation as a provider of superior technical and customer focused services in the supply and construction of processing plants, spare parts, repair, and onsite maintenance to the quarry, recycling and mining sectors.

The Maintenance Engineering and Plant Construction segment achieved revenue growth of 8.6% and a reduction in operating earnings of 90.9% compared to the prior year.

The fall in earnings seen in QMM’s South Australian operations was a direct consequence of a material drop in expected revenue due to the impact of the global financial crisis. Furthermore, the margin generated on the lower volume of work won was low as a result of the combined impact of competitive tendering and insufficient work to maintain productivity.

The QMM business in South Australia was restructured and experienced personnel have been recruited in order to strengthen its capacity to both win work and to deliver quality manufactured solutions.

QMM has moved to larger premises in Queensland. However, the project which created the need for this relocation was deferred from August last year on a monthly basis until May this year. QMM Queensland finally completed construction on this project during

August 2009. Unfortunately for most of the last financial year, QMM Queensland were required to secure work at low margins in order to maintain their skill base pending the recommencement of the aforementioned deferred fabrication contract. The costs associated with the deferral have not been recovered, although the relationship with QMM’s largest client has been maintained.

QMM Queensland offers a mine shutdown support service and is retained throughout Australia for this service. It is expected that this activity will make an important contribution in FY10.

recently QMM Queensland has secured a further large fabrication contract and is the preferred contractor for another large project. As a consequence, QMM’s Queensland workshop is expected to be fully loaded for the greater part of FY10.

Heavymech was also impacted by the adverse market conditions and resolved to maintain its skilled workforce by discounting margins so as to secure work. Heavymech was able to maintain its turnover however its profitability declined significantly. Demand for Heavymech’s services has improved over the last two months and management expect a return to its former profitability.

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$10.8 miLLion

$11.7 miLLion

Revenue analysis in Fy09maiNTeNaNCe eNGiNeeriNG & plaNT CoNSTruCTioN

ebit analysis in Fy09maiNTeNaNCe eNGiNeeriNG & plaNT CoNSTruCTioN

$1.6 miLLion

$0.1 miLLion


FY09 FY08


undErLYing EbiTdA 449 1,814


ToTAL undErLYing EbiT 145 1,603


EbiT rEporTEd 145 1,603

Recently QMM Queensland has secured a further large fabrication contract and is the preferred contractor for another large project.

FY08 FY09 FY08 FY09

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Directors’ BiographiesThe FolloWiNG perSoNS aCTeD aS DireCTorS oF The CompaNy DuriNG The year aND up To The DaTe oF ThiS reporT.

mr STepheN youNG Executive Chairman B. Ec, FCA, FAICD

Stephen Young is the Executive Chairman of E&A Limited and its subsidiaries. Stephen has a Bachelor of Economics, is a Chartered Accountant and a Fellow of the Institute of Company Directors. Stephen has more than 30 years experience involving large corporate advisory, corporate recovery, business turnaround, listed public and private advisory and board engagements.

Stephen was a senior employee and partner of Allert Heard & Co, a specialist corporate recovery firm and a member of the Ferrier Hodgson Group from 1979 to 1989. Stephen was Managing Partner of Arthur Andersen’s Adelaide office following their merger with Allert Heard & Co from 1989 to 1997. Stephen was a member of the Arthur Andersen Worldwide Advisory Council for a two year term from 1991 and held a number of national and international leadership positions within the firm.

Stephen holds positions and has been retained on a number of listed public company boards often in a “turnaround” capacity, Government business enterprises, sporting and charitable boards including Adelaide Football Club, A raptis & Sons Pty Ltd (current), ASC Pty Ltd (formerly Australian Submarine Corporation), Adelaide University Council (current), aiLimited, Common Ground (current), ETSA Corporation, Land Management Corporation, Major Projects Task Force (Olsen Government), Michell Australia Group, Shaw and Smith (current) and the Premier’s roundtable (SA).

mr marK VarTuli Executive director M. Comm, B.Com, ACA

Mark vartuli is the Managing Director of Equity & Advisory and specialises in providing commercial advice in relation to capital raisings, mergers and acquisitions, divestments, infrastructure projects and corporate restructures. Mark is also experienced in performing valuations for both public and private companies for purposes of purchase, sale, equity raising and independent expert reports to shareholders. Prior to joining Equity & Advisory in April 1998, Mark worked for Arthur Andersen in their Assurance and Business Advisory Division and is a qualified Chartered Accountant who holds a Masters in Commerce Degree.

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mr miChael aBBoTT non Executive director LLB

Michael Abbott is a Barrister resident in South Australia. He graduated with a law degree from The University of Adelaide in 1965 and commenced in private practice in 1966. He is a past President of the South Australian Bar Association and has appeared as Counsel in a number of significant cases and royal Commissions in Australia. In 2006 he represented six of the officers of AWB at the Cole Commission into Iraqi wheat payments in Sydney. Michael also acted for the Non-Executive Directors of the State Bank of South Australia and Beneficial Finance Pty Ltd during the royal Commission into the State Bank of South Australia and in the subsequent litigation against the bank’s Directors. He has lectured on corporate responsibility, the fiduciary duties of Directors and other topics relating to the role of Directors.

mr miChael TerleT non Executive director AO, MBA FAIM, FAICD JP

Michael Terlet is Chairman of Australia’s largest privately owned water company, United Water International Pty Ltd, Water Industry Alliance, Land Management Corporation, International Wine Investment Fund, Tidswell Financial Services Ltd and a Director of ASC Pty Ltd (formerly Australian Submarine Corporation Pty Ltd).

Mr Terlet was responsible for the formation and growth of Australia’s largest private sector defence and aerospace company, AWA Defence Industries, from 1978 to 1992. In 1991, he was recognised and made an officer of the General Order of Australia for contributions to industry and export.

He has undertaken a number of directorships in both private and public companies and has served as Chairman of SA Centre for Manufacturing, Defence Manufacturing Council SA (MTIA) and South Australian Small Business Advisory council, SDS Corporation Ltd and as President of the South Australian Employers Chamber of Commerce and Industry and the Engineering Employers Association.

mr DaViD KliNGBerG non Executive director AO, FTSE, D. UniSA, B.Tech (Civil), FIEAust, FAusIMM, FAICD, kSJ

David klingberg is an Engineer with over 40 years experience in project development and business management and governance. David holds a number of non executive board appointments with both private and public bodies. He is a director of Codan Limited, Centrex Metals Limited, Snowy Hydro Limited and Chair of Barossa Infrastructure Limited.

Formerly Managing Director of kinhill Limited, one of Australia’s largest professional engineering firms operating as consultants and contractors in the resources and public infrastructure sectors, David developed substantial professional expertise in project evaluation, management and systems and in the structuring of major infrastructure projects.

David is also the inaugural Chair of the South Australian Premier’s Climate Change Council, Chair of the Leaders Institute of SA and a Board Member of renewables SA.

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Annual Financial ReportFo

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24 Corporate Governance Statement

31 Directors’ report

43 income Statements

44 Statements of Changes in equity

46 Balance Sheets

47 Cash Flow Statements

48 Notes to The Financial Statements

90 Directors’ Declaration

91 independent audit report

93 aSX additional information

95 e&a limited Corporate Directory

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The Board of Directors is committed to ensuring the Group is properly directed and accordingly the Directors have adopted corporate governance policies and practices designed to continue to promote the responsible management and conduct of E&A Limited’s business. The main policies and practices currently in place are summarised below. In addition, many governance elements are set out in the Constitution.

The overriding objective of the corporate governance practices adopted by the Company is to maintain and increase shareholder value in the Company within an appropriate framework that protects the rights and interests of shareholders and ensures the Company and its controlled entities are properly managed. The objective is supported by an organisation-wide commitment to the highest standards of legislative compliance and financial and ethical behaviour.

A summary of how the Company complies with the ASx Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice recommendations is included below. In summary, E&A Limited departs from the Guidelines in one key area as the Chairman is not an independent director because he holds the position equivalent to a Chief Executive Officer. The Board has resolved that in view of the size of E&A Limited, the nature of the business and the equity position held that Mr Young’s role as Executive Chairman is in the best interests of all shareholders.

The various charters and policies are available on the E&A Limited website: www.ealimited.com.au

The Company’s corporate governance statement is structured with reference to the principles and recommendations, which are as follows:

priNCiple 1: lay SoliD FouNDaTioNS For maNaGemeNT aND oVerSiGhT

1.1 Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions.

sTATus: Complying

reference / CommentThe Board has adopted a Corporate Governance Board Charter which establishes the role of the Board and its relationship with management.

The role of the Board of Directors of the Company, as defined by the Board Charter, is to use its expertise to develop, review and implement the strategic direction of the Company while at all times representing the shareholders, protecting the interests of the Company and fulfilling the Board’s duties and obligations under the Company’s constitution, and the Corporations Act 2001 (Cth).

The Board Charter sets out the following key responsibilities and functions of the Board:

regularly considering and monitoring the implementation of corporate strategies and objectives, including E&A »Limited’s control and accountability systems;appointing and removing the Managing Director/Chief Executive Officer and where appropriate ratifying the »appointment and removal of senior executives;monitoring and evaluating the performance of all Group management teams and the implementation of »corporate strategies and performance objectives;approving and monitoring compliance with systems of financial reporting, continuous disclosure, corporate »governance, legal requirements and ethical standards;approving and monitoring major capital expenditure, capital management and acquisitions and divestitures; »reviewing, ratifying and monitoring systems of risk management and internal control, codes of conduct and legal »compliance;ensuring appropriate resources are available to senior executives; »issuing securities in E&A Limited and establishing any incentive plans for directors and/or staff; »confirming that audit arrangements (including internal and external) are in compliance with all legal requirements »and reviewing E&A Limited’s policies on such issues; anddelegating an appropriate level of authority to management. »

Corporate Governance StatementFor the Financial Year Ended 30 June 2009

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1.2 The performance of senior executives should be reviewed regularly against appropriate measures.

sTATus: Complying

reference / CommentThe Board retains ultimate authority over management, however, as is customary, the Board has delegated authority over the day-to-day management of E&A Limited to the executive Directors and in turn to management.

To assist in the execution of its responsibilities, the Board has established a Nomination and remuneration Committee and an Audit and risk Management Committee. These committees have written charters.

director’s appointment letter: Each new non-executive Director is required to sign and return a letter of appointment which sets out the key terms of the Director’s appointment. The content of the letters of appointment for new non-executive Directors is consistent with the ASx principles.

E&A Limited also has formal employment contracts in place with the executive Directors which describe amongst other things, their term of office, duties, rights, responsibilities and entitlements. E&A Limited conducts annual performance reviews of all senior management. E&A Limited will conduct a review of Directors’ performance before the end of the calendar year.

priNCiple 2: STruCTure The BoarD To aDD Value

2.1 A majority of the board should be independent directors.

sTATus: Complying

reference / CommentThe composition of the E&A Limited Board complies with practices recommended as a majority of the Directors are non-executives, and independent as defined by ASx guidance notes. The Board has adopted a Policy on Independence of Directors on which the board will assess the independence of the Directors of the Company.

Directors are appointed on the specific skills required by the Company and on the independence of their decision-making and judgement.

The experience and skills of the Directors is set out in the Directors’ Biographies section of this annual report.

The current Board comprising three non-executive Directors and two executive Directors is appropriate for the size of the Company.

2.2 The chair should be an independent director.

sTATus: Non Complying

reference / CommentE&A Limited does not comply with ASx Best Practice recommendation 2.2 as the Chairman, Mr Stephen Young, is not an independent Director. As Executive Chairman, he holds the position equivalent to a Chief Executive Officer. Mr Young is also a substantial shareholder in E&A Limited as at 30 June 2009. In this regard, Mr Young is not considered to be an independent Director. Full details of the capacity of Mr Young’s relationship with E&A Limited is disclosed within this Annual report, including remuneration, related party transactions, shareholder interest and employee position.

The Board has resolved that in view of the size of E&A Limited, the nature of the business and the equity position held, that Mr Young’s role as Executive Chairman is in the best interests of all shareholders.

e&a limiTeD 2009 aNNual reporT CorporATE govErnAnCE sTATEmEnT

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2.3 The roles of chair and chief executive officer should not be exercised by the same individual.

sTATus: Non Complying

reference / CommentE&A Limited does not comply with ASx Best Practice recommendation 2.3. As described above in 2.2, Mr Stephen Young operates as the Executive Chairman of E&A Limited, which encompasses both roles as Chairman and Chief Executive Officer.

The Board has resolved that in view of the size of E&A Limited, the nature of the business and the equity position held that Mr Young’s role as Executive Chairman is in the best interests of all shareholders.

2.4 The board should establish a nomination committee.

sTATus: Complying

reference / CommentThe Board has established a Nomination and remuneration Committee and an associated Nomination and remuneration Committee Charter.

The Nomination and remuneration Committee is responsible for:

examining and implementing adequate selection and appointment practices to ensure the composition of the »Board is appropriate to meet the needs of the Company; andensuring the remuneration within the Company, is appropriately designed to enhance corporate and individual »performance whilst also meeting the needs of the Company as a whole.

The Nomination and remuneration Committee consists of the independent non-executive Directors. Mr Terlet chairs the Nomination and remuneration Committee.

2.5 Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.

sTATus: Complying

reference / CommentThe Board has adopted an Induction, Continuing Education and Evaluation of Directors Policy which reflects the Company’s emphasis on the importance of a Board of Directors with knowledge regarding the business of the Company and the principles of good corporate governance.

The policy prescribes the process of evaluating the performance of the Board.

priNCiple 3: promoTe eThiCal aND reSpoNSiBle DeCiSioN-maKiNG

3.1 Companies should establish a code of conduct and disclose the code or a summary of the code as to:the practices necessary to maintain confidence in the company’s integrity »the practices necessary to take into account their legal obligations and the reasonable expectations of their »stakeholdersthe responsibility and accountability of individuals for reporting and investigating reports of unethical practices. »

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sTATus: Complying

reference / CommentThe Company has established a Code of Conduct which provides guidance to all levels of the Company on how to maintain the standards and meet the expectations placed on all employees by both the Company and the community.

As the conduct differs between the levels of the Company, the Code separately addresses the conduct of:a) all employees and agents of the Company;b) senior management and executives;c) Directors; andd) the Company as a whole, with particular attention to its social responsibility.

3.2 Companies should establish a policy concerning trading in company securities by directors, senior executives and employees, and disclose the policy or a summary of that policy.

sTATus: Complying

reference / CommentThe Company has adopted a Share Trading Policy governing trading in the Company’s financial products by all relevant persons as defined in the Policy.

The purpose of this Policy is to raise awareness of insider trading rules, and of the fact that trading must not proceed without prior notification and clearance.

priNCiple 4: SaFeGuarD iNTeGriTy iN FiNaNCial reporTiNG

4.1 The board should establish an audit committee.

sTATus: Complying

reference / CommentThe Company has an Audit and risk Management Committee. The Audit and risk Management Committee is a committee established by the Board of Directors of the Company.

The objective of the Audit and risk Management Committee is to assist the Board in discharging its corporate governance duties in relation to:

implementing and maintaining appropriate policies and procedures in relation to risk management and auditing; »financial reporting, internal control structure and internal and external audit functions; and »establishing a sound system of risk oversight and management and internal controls. »

The Audit and risk Management Committee consists of three non-executive Directors and one executive Director. Mr Abbott chairs the Audit and risk Management Committee.

4.2 The audit committee should be structured so that it:consists only of non-executive directors »consists of a majority of independent directors »is chaired by an independent chair, who is not chair of the board »has at least three members »

sTATus: Complying

reference / CommentThe Audit and risk Management Committee consists of three non-executive Directors. Mr Abbott chairs the Audit and risk Management Committee.


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4.3 The audit committee should have a formal charter.

sTATus: Complying

reference / CommentThe Audit and risk Management Committee has a formal charter which sets out the Committee’s role and responsibilities, composition, structure and membership requirements. The Audit and risk Management Committee is given the necessary powers and resources to meet its charter.

priNCiple 5: maKe Timely aND BalaNCeD DiSCloSure

5.1 Companies should establish written policies designed to ensure compliance with AsX Listing rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.

sTATus: Complying

reference / CommentThe Company recognises and understands that it has an obligation to disclose information to its Shareholders, the Australian Securities and Investment Commission and the Australian Stock Exchange. The Company respects the importance and value in maintaining an accurate, efficient and informed market place through the continuous disclosure of information to its Shareholders and the market.

The Company has adopted a Continuous Disclosure Policy which outlines the procedure, content and responsibility of compliance with the Continuous Disclosure Obligations.

priNCiple 6: reSpeCT The riGhTS oF ShareholDerS

6.1 Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy.

sTATus: Complying

reference / CommentThe Board has adopted a Shareholder Communication Policy which aims to ensure that all Shareholders are informed about all material developments in the management and operation of the Company and its business, in a manner which is timely and readily accessible to all Shareholders.

To ensure flexibility for Shareholders, relevant information will be communicated to Shareholders via a number of methods, as follows:

The Annual report will communicate to Shareholders annual information about the Company’s general and 1. financial performance together with information on the future prospects for the Company;At the Annual General Meeting Shareholders will receive information about the activities of the Company in 2. the past year, the proposed activities for the Company in the forthcoming year, notification of any significant issues for the Company, and have an opportunity to ask questions of the Board of Directors;The Company will publish its half-year and full year-results on its website as soon as reasonably possible after 3. they have been disclosed to the ASx;All major announcements to the Australian Stock Exchange are posted on the Company’s website;4. The Company will provide the following shareholder information on its website:5.

contact details of the Company’s share registry; »current share price; »instructions regarding change of Shareholders details; »shareholder forms; and »corporate profile. »


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priNCiple 7: reCoGNiSe aND maNaGe riSK

7.1 Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.

sTATus: Complying

reference / CommentThe Company recognises that a strong system of risk management and oversight is essential to the success of its business operations. The Board has adopted a risk Management Policy which formalises the Company’s response to risk management and oversight, and allocates various aspects of the risk management system to different levels of the Company including reporting, monitoring and review.

The Board is responsible for the oversight and establishment of effective and consistent systems to address the risks relevant to the business. In addition, the Audit and risk Management Committee also monitors compliance with risk management strategies throughout the Company.

7.2 The board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risk.

sTATus: Complying

reference / CommentThe Company as a whole is responsible for the day to day identification, assessment and management of risks. risk assessment and risk management systems will be integrated throughout all levels of the business. All employees, officers and agents of the Company are made aware of this policy and the importance of reporting any risks they identify in their day to day duties, including any suggested mechanisms for managing such risks.

The Board investigates ways of enhancing existing risk management strategies, including appropriate segregation of duties and the employment and training of suitably qualified and experienced personnel.

7.3 The board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer [or equivalent] that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

sTATus: Complying

reference / CommentThe Chief Executive Officer and Company Secretary are required to state to the Board in writing that the integrity of the financial statements is founded on a sound system of risk management and internal compliance and control and that the Company’s risk management and internal compliance and control system is operating efficiently and effectively, in all material respects.


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priNCiple 8: remuNeraTe Fairly aND reSpoNSiBly

8.1 The board should establish a remuneration committee

sTATus: Complying

reference / CommentThe Board has in place a Nomination and remuneration Committee.

The Nomination and remuneration Committee is responsible for advising the Board on the composition of the Board and its Committees, reviewing the performance of the Board and individual Directors, and developing succession plans.

The Nomination and remuneration Committee is also responsible for ensuring that the remuneration within the E&A Group is appropriately designed to enhance corporate and individual performance whilst also meeting the needs of E&A Limited as a whole.

This Committee is responsible for setting the terms and conditions of employment for the Chief Executive Officer, executive Directors and other senior executives. The Company recognises that a transparent, fair and reasonable process for determining the appropriate remuneration at all levels of the Company is required to ensure that Shareholders remain informed and confident in the management of the Company. The Company also understands the importance of attracting and maintaining high quality individuals from directors right through to support staff.

8.2 Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives.

sTATus: Complying

reference / CommentDetails of the Directors and key senior executives remuneration are set out in the remuneration report of the Annual report.

The Directors of E&A Limited submit herewith the annual financial report of the consolidated entity (referred to hereafter as the Group or E&A Limited) consisting of E&A Limited and the entities it controlled at the end of, or during, the year ended 30 June 2009 and the auditor’s report thereon.


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DireCTorS

The following persons were Directors of E&A Limited during the financial year ended 30 June 2009.

name particulars Appointed / resigned

Stephen Young Executive Chairman Appointed 12 July 1999

Mark vartuli Executive Director Appointed 26 July 2007

Michael Abbott Non Executive Director Appointed 16 October 2007

Michael Terlet Non Executive Director Appointed 16 October 2007

David klingberg Non Executive Director Appointed 16 October 2007

CompaNy SeCreTary

name particulars

Mark Seatree Qualified Chartered Accountant

Graduate Diploma in Applied Finance and Investment

Bachelor of Commerce

DireCTorShipS oF oTher liSTeD CompaNieS

Directorships of other listed companies held by directors in the 3 years immediately before the end of the financial year are as follows:

name Company period of directorship

Stephen Young Harvestroad Limited Appointed March 2005

resigned March 2007

Mark vartuli Nil –

Michael Abbott Nil –

Michael Terlet The International Wine Investment Fund Appointed May 2000

David klingberg Codan Limited Appointed December 2004

Centrex Metals Limited Appointed April 2005

Directors’ ReportFor the Financial Year Ended 30 June 2009

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DireCTorS’ iNTereSTS iN The ShareS aND opTioNS oF The CompaNy aND relaTeD BoDieS CorporaTe

As at the date of this report, the interests of the Directors in the shares and options of E&A Limited and its related bodies corporate were:

directornumber of

ordinary sharesnumber of options

over ordinary sharespercentage ownership interest

in E&A Limited (diluted)

Stephen Young 31,297,450 Nil 47.34%

Mark vartuli 10,965,815 Nil 16.59%

Michael Abbott 792,722 Nil 1.20%

Michael Terlet 501,410 Nil 0.76%

David klingberg 100,000 Nil 0.15%

iNFormaTioN oN CompaNy SeCreTary

Mark Seatree was appointed Company Secretary of E&A Limited on 16 October 2007. Mark is a qualified Chartered Accountant and holds a Graduate Diploma in Applied Finance and Investment from FINSIA. Mark is an Associate Director within Equity & Advisory’s financial advisory business and previously held the roles of Audit Manager and Transaction Advisory Services Manager within a Big 4 Accounting Professional Services Firm.

DireCTorS’ meeTiNGS

The following table sets out the number of Directors’ meetings (including meetings of committees of directors) held during the financial year and the number of meetings attended by each Director (while they were a Director or Committee member).

boArd oF dirECTors AudiT CommiTTEE rEmunErATion CommiTTEE

Attendedmaximum possible Attended

maximum possible Attended

maximum possible

Stephen Young 10 10 4 4 1 1

Mark vartuli 10 10 4 4 1 1

Michael Abbott 9 10 4 4 1 1

Michael Terlet 9 10 4 4 1 1

David klingberg 10 10 4 4 1 1

priNCipal aCTiViTieS

During the year the principal continuing activities of the Group consisted of the provision of:

engineering services to the mining and resources industry; »engineering services to the water industry; »engineering services to the defence industry; and »financial advisory services to the corporate sector. »

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reSulTS

The net profit after income tax of the Group for the financial year was $558,000 (2008: $4,227,000). During the year the Group undertook one acquisition. See Note 28 in the Annual Financial report for further details.

DiViDeNDS

The Directors have resolved to defer consideration of any final dividend until such time as the first quarter’s results for FY10 are known. E&A Limited intends to provide an update of the first quarter’s performance at the annual general meeting. Complete details regarding dividends can be found in Note 22 to the Annual Financial report.

date Total Amount

interim dividend (1.5 cents per share) $903,000

record Date for determining entitlements to the dividend 24 April 2009

Date of Dividend Payment 15 May 2009

reVieW oF operaTioNS

The review of operations and activities which form part of this report is included in the review of operations section within this report.

SiGNiFiCaNT ChaNGeS iN STaTe oF aFFairS

The following significant changes in the scope of the activities of the consolidated entity occurred during the year:

On 1 May 2009, E&A limited acquired a 100% shareholding in ICE Engineering & Construction Pty Ltd for a combined cash, equity & deferred earn-out consideration totalling $7.228 million.

Further description relating to the principal activities of these businesses can be found in the Company Overview section of this report. In addition, information on business acquisitions completed throughout the year can be found in Note 28 to the financial statements.

SuBSequeNT eVeNTS aFTer The BalaNCe DaTe

Board approval to merge the operations of Louminco & Whyalla Fabrications was obtained on 9 July 2009 to enable both businesses to offer a competitive price and integrated design, engineering, drafting, fabrication capacity to their clients and ensures both businesses are able to respond quickly to the changing market environment.

FuTure DeVelopmeNTS aND eXpeCTeD reSulTS

Other than as referred to in this report, further information as to likely developments in the operations of the consolidated entity would, in the opinion of the directors, be likely to result in unreasonable prejudice to the consolidated entity.

eNViroNmeNTal reGulaTioN aND perFormaNCe

The consolidated entity’s operations are subject to environmental regulations under Commonwealth and State legislation. The Board believes that the consolidated entity has adequate systems in place for the management of its environmental requirements and is not aware of any breach of those environmental requirements as they apply to the consolidated entity.

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This remuneration report outlines the director and executive remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 and its regulations. It also provides the remuneration disclosures required by paragraphs Aus 25.4 to Aus 25.7.2 of AASB 124 related Party Disclosures, which have been transferred to the remuneration report in accordance with Corporations regulation 2M.6.04.

For the purposes of this report key Management Personnel (kMP) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the five executives in the Parent and the Group receiving the highest remuneration.

The remuNeraTioN reporT iS SeT ouT uNDer The FolloWiNG maiN heaDiNGS:

principles used to determine the nature and amount of remunerationA.

details of remunerationb.

service AgreementsC.

share based compensationd.

a. priNCipleS uSeD To DeTermiNe The NaTure aND amouNT oF remuNeraTioN

A transparent, fair and reasonable process for determining the appropriate remuneration at all levels of the Company is required to ensure that Shareholders remain informed and confident in the management of the Company. The Company also understands the importance of attracting and maintaining high quality individuals from directors right through to support staff.

The Company’s remuneration policy details the types of remuneration to be offered by the Company and factors to be considered by the Board, remuneration Committee and management in determining the appropriate remuneration strategy. The key objectives of the remuneration policy include:

to create a transparent system of determining the appropriate level of remuneration throughout all levels of the »Company;to encourage people to perform to their highest level; »to allow the Company to compete in each relevant employment market; »to provide consistency in remuneration throughout the Company; and »to align the performance of the business with the performance of key individuals and teams within the Company. »

non-executive directorsThe Constitution of the Company provides that subject to the Corporations Act and the Listing rules, non-executive Directors may be paid, as remuneration for their services, a fixed sum not exceeding the aggregate maximum sum determined from time to time by Shareholders in general meeting. The aggregate maximum sum may be divided amongst the non-executive Directors in such manner and proportion as the Directors agree. Currently, a maximum aggregate amount of $300,000 per annum is approved to be paid to non-executive Directors of E&A Limited.

The Company will remunerate non-executive directors in a manner designed to attract and maintain high quality board members. Non-executive directors will receive a set fee (including superannuation) for their service and shall not be entitled to any options, bonus payments or retirement benefits. Non-executive Directors may not be paid a commission on or a percentage of profits or operating revenue. The remuneration of non-executive Directors must be consistent with and supportive of maintaining the non-executive Director’s independence.

Where a non-executive Director provides services outside the scope of ordinary duties of a Director, E&A Limited may pay a fixed sum determined by the directors, in addition to or instead of the director’s remuneration. No payment may be made if the effect of the payment would be to exceed the aggregate maximum amount of director’s remuneration determined by the Shareholders at general meeting.

Remuneration Report (Audited)For the Financial Year Ended 30 June 2009

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All directors are also entitled to be paid reasonable accommodation and travelling expenses incurred as a consequence of their attendance at meetings of directors and otherwise in the execution of their duties as directors.

Subject to the Corporations Act and ASx Listing rules, E&A Limited may provide termination benefits to a director or his widows/dependants on retirement or loss of office, including payment of a gratuity, pension or allowance.

directors’ FeesThe fees paid by E&A Limited to the non-executive Directors are as follows:

non Executive director Fee per Annum

Michael Abbott $65,400

Michael Terlet $65,400

David klingberg $65,400

Total $196,200

Executive payWith the assistance of the remuneration Committee, the Board will approve the forms of remuneration to be offered to group executives.

Executive remuneration comprises five components:

Fixed remuneration; »Performance Based remuneration (short-term incentives); »Equity Based remuneration (long-term incentives); »Termination Payments; and »Employee Entitlements. »

The combination of these components comprises the executive’s total remuneration.

Fixed remunerationThe Board, in consultation with the remuneration Committee and the Human resources Manager, will from time to time determine the fixed remuneration level for each senior executive within the Company. Such remuneration levels will be determined according to industry standards, relevant laws and regulations, labour market conditions and scale of the Company’s business relating to the position. The fixed remuneration will reflect the core performance requirements and expectations of the Company. Employees may be offered the opportunity to receive part of their fixed remuneration in the form of direct benefits such as company cars.

short-term incentivesIn addition to fixed remuneration the Company has implemented a system of bonuses and incentives designed to create a strong relationship between performance and remuneration. Performance based remuneration will be linked to specific performance targets which will be disclosed to relevant employees regularly.

Long-term incentivesTo motivate executives and management to pursue the long term growth and success of the Company the Company may include various plans and initiatives to deliver parts of the performance based remuneration as equity in the Company. The terms and conditions of any employee share plans will be approved by the remuneration Committee and the Board and disclosed to the shareholders and market in accordance with the continuous disclosure policy.

Termination paymentsEach contract will set out in advance the entitlement to payment upon termination of employment for each employee. The remuneration Committee and the Board must approve all termination payments provided to all employees at the level of director, executive or senior management to ensure such payments reflect the Company’s remuneration policy.

rEmunErATion rEporT (AudiTEd)

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Employee EntitlementsThe Company will comply with all legal and industrial obligations in determining the appropriate entitlement to long service, annual, sick, parental and maternity leave.

Company performance and shareholder wealthThe remuneration Committee is a committee established by the Board of Directors of the Company to ensure the remuneration within the Company is appropriately designed to enhance corporate and individual performance whilst also meeting the needs of the Company as a whole. The Company’s remuneration policy aims to achieve a link between the remuneration received by executives, increase Company earnings and the creation of shareholder wealth.

B. DeTailS oF remuNeraTioN (auDiTeD)

Amounts of remunerationDetails of the remuneration of the directors and the key management personnel (as defined in AASB 124 related Party Disclosures) of the consolidated group, along with the five group executives who received the highest remuneration for the year ended 30 June 2009, are set out in the following tables.

The key management personnel of the Group are the directors of E&A Limited and those executives who have significant authority and responsibility for planning, directing and controlling the activities of the group. In addition to this, the five executives (inclusive of any key management personnel) who received the highest remuneration for the year ended 30 June 2009 are disclosed.

The personnel disclosed within this remuneration report thus include:

Executive directors

stephen YoungE&A Limited Executive Chairman / Chief Executive OfficerEquity & Advisory Ltd Executive ChairmanHeavymech Pty Ltd Executive ChairmanOttoway Engineering Pty Ltd Executive ChairmanOttoway Engineering (WA) Pty Ltd Executive ChairmanWhyalla Fabrications Pty Ltd Executive ChairmanPanado Pty Ltd Executive ChairmanLouminco Pty Ltd Executive ChairmanILS Limited Executive ChairmanFabtech Holdings Pty Ltd Executive ChairmanFabtech SA Pty Ltd Executive ChairmanQuarry Mining & Manufacture Pty Ltd Executive ChairmanQuarry Mining & Manufacture (QLD) Pty Ltd Executive ChairmanBlucher (Australia) Pty Ltd Executive ChairmanIronhorse BB Pty Ltd Executive ChairmanStarboard Tack Pty Ltd Executive ChairmanICE Engineering & Construction Pty Ltd Executive ChairmanICE Engineering & Construction Holdings Pty Ltd Executive ChairmanE&A Contractors Pty Ltd Executive Chairman


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Executive directors (continued)

mark vartuliE&A Limited Executive Director Equity & Advisory Ltd Managing DirectorOttoway Engineering Pty Ltd DirectorOttoway Engineering (WA) Pty Ltd Director Panado Pty Ltd DirectorFabtech Holdings Pty Ltd DirectorFabtech SA Pty Ltd DirectorBlucher (Australia) Pty Ltd DirectorIronhorse BB Pty Ltd DirectorICE Engineering & Construction Pty Ltd DirectorICE Engineering & Construction Holdings Pty Ltd DirectorE&A Contractors Pty Ltd Director

non-Executive directors

michael AbbottE&A Limited Non-executive Director

michael TerletE&A Limited Non-executive Director

david KlingbergE&A Limited Non-executive Director

other Key management personnel

Eduardo donosoPanado Pty Ltd Managing DirectorLouminco Pty Ltd Managing DirectorILS Limited Managing DirectorHeavymech Pty Ltd Managing DirectorStarboard Tack Pty Ltd DirectorWhyalla Fabrications Pty Ltd Managing DirectorE&A Contractors Pty Ltd Managing Director

graham FairheadFabtech SA Pty Ltd Managing Director

brian TidswellOttoway Engineering Pty Ltd Managing DirectorOttoway Engineering (WA) Pty Ltd Managing Director


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Directors’ report E&A LimitEd 2009 AnnuAL REpoRt

remuneration of Key Management personnelDetails of the nature and amount of each element of the remuneration of each non-executive director, executive director and key management personnel of the Company and consolidated entity receiving the highest remuneration for the year ended 30 June 2009 are set out in the following table.

“As a cost leadership initiative, e&A Limited’s executive and non executive directors resolved to take a 10% reduction in their salary entitlements for FY10.”

30 JUNe 2009 sHort terMpost

eMpLoYMeNt

sHAre BAseD

pAYMeNt

Base salary and Fees

cash Bonus

Non Monetary Benefits

super contributions

Value of shares total

performance related

$ $ $ $ $ $ %

NoN eXecUtiVe Directors

Michael Abbott* 60,000 – – 5,400 Nil 65,400 –

Michael Terlet* 60,000 – – 5,400 Nil 65,400 –

David Klingberg* 60,000 – – 5,400 Nil 65,400 –

eXecUtiVe Directors

Stephen Young* 609,855 – 14,025 54,887 Nil 678,767 –

Mark Vartuli* 428,816 – 5,009 38,593 Nil 472,418 –

otHer KeY MANAGeMeNt persoNNeL

Eduardo Donoso 279,895 – 35,311 25,190 Nil 340,396 –

Graham Fairhead 213,344 20,000 20,000 21,001 27,562 301,907 6.6%

Brian Tidswell 203,845 – 20,000 18,346 Nil 242,191 –

Note – All persons defined as key management personnel are included in this table.

*As a cost leadership initiative, E&A Limited’s executive and non executive directors resolved to take a 10% reduction in their salary entitlements for FY10.

reMUNerAtioN report (AUDiteD)

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E&A LimitEd 2009 AnnuAL REpoRt Directors’ report

C. SERViCE AGREEmEntS

Each executive and senior management employee has entered into employment contracts with the Company which clearly set out the terms and conditions of the remuneration package for that person. The contract sets out the expectations for the performance of the role and the key performance indicators, measures and criteria for assessment. The Remuneration Committee and the Board approves all contracts for Key Management Personnel, Executive Directors and Senior Executives.

The various E&A Limited businesses employ senior executives and managers under employment contracts which contain standard terms and conditions for agreements of this nature. All employment agreements contain standard terms and conditions of engagement which include confidentiality, restraint on competition and intellectual property provisions. The Executive Service Agreements for E&A Limited’s Executive Directors are summarised in the table below:

Key executive Director service Agreements

Name stephen Young Mark Vartuli

position / title Executive Chairman Managing Director

contract term 5 years 5 years

remuneration $850,000 (excluding car allowance, car park and FBT)*

$500,000 (excluding car park and FBT)*

termination by company 12 months notice or breach 6 months notice or breach

termination by employee After 5 year term, with 12 months notice After 5 year term, with 6 months notice

restraint 12 month non-solicitation and non-competition if resigns, terminated for cause or payment in lieu of notice. 12 months non-solicitation if 5 year term expires or termination on notice

6 month non-solicitation and non-competition if resigns, terminated for cause or payment in lieu of notice. 6 months non-solicitation if 5 year term expires or termination on notice

review Annual Performance Review Annual Performance Review

*As a cost leadership initiative, E&A Limited’s executive and non executive directors resolved to take a 10% reduction in their salary entitlements for FY10.

All other key management personnel and executives have twelve month rolling contracts which are subject to an annual performance review. The Company may terminate the executive’s employment agreement by providing 3–6 months written notice or providing payment in lieu of the notice period (based on the fixed component of the executive’s remuneration). The Company may terminate the contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs the executive is only entitled to that portion of remuneration that is fixed, and only up to the date of termination.

reMuNerAtioN report (AuDiteD)

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D. Share BaSeD CompeNSaTioN

Options are granted to executives at the discretion of the Board. Entitlements to the options are vested as soon as they become exercisable. Other than the Board’s discretion to issue options and the achievement of the relevant exercise price there is no specific performance criteria related to the issue of options.

Loans to directors and ExecutivesInformation on loans to directors and executives, including amounts, interest rates and repayment terms are set out in Note 29 to the financial statements.

share options granted to directors and the most highly remunerated officersThere were no options issued to directors or other key management personnel in the year.

shares under optionAs Managing Director of Fabtech SA Pty Ltd, Mr Graham Fairhead’s employment agreement has been structured to include a long term incentive option plan, in order to align the interests of both E&A Limited and Mr Fairhead.

Mr Fairhead was granted an option to acquire 559,911 shares in the issued capital of E&A Limited with an exercise price equal to $1.00. The share options only vest with Mr Fairhead in the event Mr Fairhead makes a further ongoing commitment to E&A Limited by entering into a new employment contract with E&A Limited upon the expiry of his existing employment contract which expires on 1 July 2010. The option entitlement must be exercised within 90 days of the vesting date.

Unissued ordinary shares of E&A Limited under option at 30 June 2009 are as follows:

date options granted 17 December 2007

vesting date 1 July 2010 (conditional)

Expiry date 29 September 2010

issue price of shares $1.00

number under option 559,911

The fair value of the option at grant date was $87,293.

shares issued on the Exercise of optionsThere were no shares issued on the exercise of options during the year.



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indemnification and insurance of directors and officersDuring the financial year, E&A Limited paid premiums in respect of Directors’ and Officers’ liability. The Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of Directors’ and Officers’ liability.

The liabilities insured are costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the Directors and Officers in their capacity as Directors and Officers of entities in the consolidated entity.

non-Audit servicesThe Company may decide to employ the auditor on assignments in addition to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the consolidated entity are important.

Details of the amounts paid or payable to the auditor (kPMG) for audit and non-audit services provided during the year are set out below.

The Board of Directors has considered the position and is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 because none of the services undermine the general principles relating to auditor independence as set out in Professional Statement F1, including reviewing or auditing the auditor’s own work, acting in a management or a decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risk and reward.

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 42.

Details of the amount paid or payable to the auditor of E&A Limited in relation to the provision for audit and non audit services are set out below:

remuneration payable to Kpmg $

Audit services and review of financial reports and other work under the Corporations Act 2001

197,000

Total remuneration for audit services 197,000

Total remuneration for other services –

Total remuneration for all services 197,000

rounding of amountsThe amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the class order applies.

Auditor’s independence declarationThe auditor’s independence declaration is set out on page 42 and forms part of the director’s report for the financial year ended 30 June 2009.

This report is made in accordance with a resolution of the directors:

Dated at Adelaide this 24th day of September 2009



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Auditors Independence DeclarationFor the Financial Year Ended 30 June 2009

KPMG , an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001,

To: the directors of E&A Limited

I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2009 there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

(ii) no contraventions of any applicable code of professional conduct in relation to the audit.

KPMG

Derek Meates Partner

Adelaide

24 September 2009







KPMG


Adelaide

24 September 2009

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In thousands of $AUD

ConsoLidATEd CompAnY

note 2009 2008 2009 2008

ConTinuing opErATions

revenue 4 109,961 89,068 – –

Cost of sales (85,028) (63,933) – –

gross profit 24,933 25,135 – –

Other income 5 530 708 4,640 2,546

Operations expenses (7,216) (7,227) – –

Administrative expenses (12,982) (8,489) (994) (391)

Marketing expenses (349) (297) (56) –

Occupancy expenses (2,027) (1,304) – –

Other expenses (10) (837) – (1,082)

results from operating activities 2,879 7,689 3,590 1,073

Finance income 6 43 136 5 60

Finance expenses 6 (2,099) (1,736) (1) (67)

net finance income / (costs) (2,056) (1,600) 4 (7)

profit before income tax 823 6,089 3,594 1,066

Income tax (expense) / benefit 8 (265) (1,862) (11) 420

profit from continuing operations 558 4,227 3,583 1,486

ATTribuTAbLE To:

Equity holders of the Company 558 4,227 3,583 1,486

Minority interest – – – –

profit for the period 558 4,227 3,583 1,486

EArnings pEr shArE

Basic earnings per share (AUD) 21 0.94 cents 7.88 cents n/a n/a

Diluted earnings per share (AUD) 21 0.93 cents 7.80 cents n/a n/a

The notes on pages 48 to 89 are an integral part of these consolidated financial statements.

Income StatementsFor the Financial Year Ended 30 June 2009

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Statements of Changes in EquityFor the Financial Year Ended 30 June 2009


Consolidated noteshare

Capitalretained Earnings

options reserve Total

minority interest

Total Equity

balance at 1 July 2007 560 (457) – 103 299 402

Costs of Initial Public Offering (IPO) recognised in equity (407) – – (407) – (407)

Income tax on income and expenses recognised directly in equity

122 – – 122 – 122

income and expense recognised directly in equity (285) – – (285) – (285)

profit for the year – 4,227 – 4,227 – 4,227

Total recognised income and expense for the year (285) 4,227 – 3,942 – 3,942

Shares issued under initial public offering 20 5,530 – – 5,530 – 5,530

Shares issued as consideration for business acquisitions 28 33,099 – – 33,099 – 33,099

Acquisition of minority interests – – – – (299) (299)

Dividends paid 22 – (1,699) – (1,699) – (1,699)

balance at 30 June 2008 38,904 2,071 32 41,007 – 41,007

balance at 1 July 2008 38,904 2,071 32 41,007 – 41,007

profit for the year – 558 – 558 – 558

Total recognised income and expense for the year – 558 – 558 – 558

Shares issued as consideration for business acquisitions 28 709 – – 709 – 709

Shares issued under dividend reinvestment plan 1,841 – – 1,841 – 1,841

Dividends paid 22 – (3,508) – (3,508) (3,508)

Equity settled transactions, net of tax 23 – – 28 28 – 28

balance at 30 June 2009 41,454 (879) 60 40,635 – 40,635


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Company noteshare

Capitalretained Earnings

options reserve Total

minority interest

Total Equity

balance at 1 July 2007 560 232 – 792 – 792

Costs of Initial Public Offering (IPO) recognised in equity (407) – – (407) – (407)

Income tax on income and expenses recognised directly in equity

122 – – 122 – 122

income and expense recognised directly in equity (285) – – (285) – (285)


Total recognised income and expense for the year (285) 1,486 – 1,201 – 1,201

Shares issued under initial public offering 20 5,530 – – 5,530 – 5,530

Shares issued as consideration for business acquisitions 28 33,099 – – 33,099 – 33,099

Dividends paid 22 – (1,699) – (1,699) – (1,699)


balance at 30 June 2008 38,904 19 32 38,955 – 38,955

balance at 1 July 2008 38,904 19 32 38,955 – 38,955


Total recognised income and expense for the year – 3,583 – 3,583 – 3,583

Shares issued as consideration for business acquisitions 28 709 – – 709 – 709

Shares issued under dividend reinvestment plan 1,841 – – 1,841 – 1,841

Dividends paid 22 – (3,508) – (3,508) – (3,508)


balance at 30 June 2009 41,454 94 60 41,608 – 41,608


sTATEmEnTs oF ChAngEs in EquiTY e&a limiTeD 2009 aNNual reporT

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Balance SheetsAs at 30 June 2009



note 2009 2008 2009 2008

CurrEnT AssETs

Cash and cash equivalents 9 759 1,433 18 44

Trade and other receivables 10 25,331 24,400 10,273 4,367

Inventories 11 13,484 10,534 – –

Other current assets 12 13 – – –

Total current assets 39,587 36,367 10,291 4,411

non-CurrEnT AssETs

receivables 10 – – – 2,652

Other financial assets 13 3 3 36,199 36,199

Property, plant and equipment 14 9,935 9,192 – –

Intangible assets 15 54,604 51,331 – –

Deferred tax assets 16 2,233 1,460 549 571

Total non-current assets 66,775 61,986 36,748 39,422

Total assets 106,362 98,353 47,039 43,833

CurrEnT LiAbiLiTiEs

Trade and other payables 17 25,753 19,613 1,595 1,090

Loans and borrowings 18 11,951 14,003 – 2,015

Provisions 19 2,597 2,164 – –

Current tax liability 1,519 1,738 – 3

Total current liabilities 41,820 37,518 1,595 3,108

non-CurrEnT LiAbiLiTiEs

Trade and other payables 17 2,989 2,954 – –

Loans and borrowings 18 19,202 15,862 3,762 1,696

Provisions 19 263 161 – –

Deferred tax liability 16 1,453 851 74 74

Total non-current liabilities 23,907 19,828 3,836 1,770

Total liabilities 65,727 57,346 5,431 4,878

net assets 40,635 41,007 41,608 38,955

EquiTY

Issued share capital 41,454 38,904 41,454 38,904

reserves 60 32 60 32

retained profits (879) 2,071 94 19

Total equity attributable to equity holders of the Company

40,635 41,007 41,608 38,955

minority interest – – – –

Total equity 40,635 41,007 41,608 38,955


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Cash Flow StatementsFor the Financial Year Ended 30 June 2009



note 2009 2008 2009 2008

CAsh FLows From opErATing ACTiviTiEs

Cash receipts from customers 121,236 89,183 785 38

Cash paid to suppliers and employees (112,858) (90,242) (540) (484)

Cash generated /(used) from operations 8,378 (1,059) 245 (446)

Interest paid (2,099) (1,670) (1) (1)

Interest received 43 136 5 60

Income taxes paid (1,494) (1,803) – (4)

Dividends received – – 3,550 2,768

net cash from (used in) operating activities 30 4,828 (4,396) 3,799 2,377

CAsh FLows From invEsTing ACTiviTiEs

Payments for acquisition of subsidiaries, net of cash acquired

28 (3,038) (8,995) 709 (1,520)

Payment of vendor earn-out/settlement liability (288) (4,576) – –

Payments for acquisition of property, plant and equipment

(1,991) (1,180) – (2)

Proceeds from disposal of property, plant and equipment

323 1,375 – –

net cash from (used in) investing activities (4,994) (13,376) 709 (1,522)

CAsh FLows From FinAnCing ACTiviTiEs

Proceeds from the issue of share capital 1,841 5,530 1,841 5,530

Proceeds from borrowings 18 7,812 16,477 – –

repayment of borrowings 18 (6,137) (5,178) – –

Payment of finance lease liabilities (14) (356) – –

Payment of IPO transaction costs – (1,082) – (1,485)

related party loans (to)/from 83 3,995 (2,867) (2,754)

Dividends paid (3,508) (2,249) (3,508) (2,106)

net cash from (used in) financing activities 77 17,137 (4,534) (815)

net increase (decrease) in cash and cash equivalents

(89) (635) (26) 40

Cash and cash equivalents at 1 July (138) 497 44 4

Cash and cash equivalents at 30 June 9 (227) (138) 18 44


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1. reporTiNG eNTiTy

E&A Limited (the “Company”) is a company domiciled in Australia. The address of the Company’s registered office is Level 27, 91 king William Street Adelaide SA 5000. The consolidated financial statements of the Company as at and for the year ended 30 June 2009 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”). The Group is primarily involved in providing engineering services to the mining and resources, water and defence industries and financial advisory services to the corporate sector (refer Note 26).

2. BaSiS oF preparaTioN oF The FiNaNCial reporT

statement of ComplianceThe financial report is a general purpose financial report which has 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. Australian Accounting Standards include Australian equivalents to International Financial reporting Standards (AIFrS).

The financial statements were approved by the Board of Directors on 24 September 2009.

basis of presentationThese consolidated financial statements are presented in Australian dollars, which is the Company’s and the Group’s functional currency.

The Company is of a kind referred to in ASIC Class Order 98/0100 dated 10 July 1998 and in accordance with that Class Order, amounts in the financial report and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.

basis of measurementThe consolidated financial statements have been prepared under the historical cost convention.

EstimatesThe 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 and liabilities, income and expense. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

In preparing these consolidated financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty related to goodwill and the key assumptions underlying the discounted cash flows that surround its carrying value.

3. SiGNiFiCaNT aCCouNTiNG poliCieS

The principal accounting policies adopted in the presentation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) principles of ConsolidationThe consolidated financial statements incorporate the assets and liabilities of all entities controlled by E&A Limited as at 30 June 2009 and the results of all controlled entities for the year then ended. The consolidated financial statements are prepared by combining the financial statements of all entities, being the Company and its subsidiaries as defined in Accounting Standard AASB 127 Consolidated and Separate Financial Statements. A list of all subsidiaries appears in Note 27. The consolidated financial statements include the information and results of each subsidiary from the date on which the Company obtains control and until such time as the Company ceases to control such entity. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account. In preparing the consolidated financial statements, all intercompany balances and transactions, and unrealised profits arising within the consolidated entity are eliminated in full.

Notes to the Financial StatementsFinancial Year Ended 30 June 2009

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e&a limiTeD 2009 aNNual reporT noTEs To ThE FinAnCiAL sTATEmEnTs

(b) revenue recognitionrevenue is measured at the fair value of the consideration received or receivable to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. Amounts disclosed as revenue are net of returns, allowances and duties and taxes paid. revenue is recognised when goods have been despatched to a customer, or a service has been provided to a customer pursuant to a sales order.

Contract revenue and expenses are recognised in accordance with the percentage of completion method unless the outcome of the contract cannot be reliably estimated. For fixed price contracts, the stage of completion is measured by reference to costs incurred to date as a percentage of estimated total costs for each contract.

Fees from financing transactions are recognised as revenue when the Group has provided all services necessary for a final closing of the transaction, the transaction has closed, the fee is payable and the likelihood of any contingency occurring that could result in a reduction of the fee is remote.

(c) income TaxIncome tax expense comprises current and deferred tax. Income tax expense 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.

Current tax is the expected tax payable 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.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

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

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 taxable 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.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised.

(d) goods and services Tax (gsT)revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority, in this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Balance Sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the Australian Taxation Office (ATO), are presented as operating cash flows.

(e) Foreign Currency Transactions and balancesForeign currency transactions are initially translated into Australian dollars at the rate of exchange at the date of the transaction. At balance date amounts receivable and payable in foreign currencies are translated into Australian dollars at the rates of exchange current at that date. resulting exchange variances are brought to account in determining the profit or loss for the year.

3. signiFiCAnT ACCounTing poLiCiEs

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(f) business CombinationsThe purchase method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control. Cost is measured as the fair value of the assets given, or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition the fair value of the instruments is their published market price at the date of exchange. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the company’s share of the identifiable net assets acquired is recorded as goodwill (refer to Note 3(g)). If the cost of acquisition is less than the company’s share of the fair value of the identifiable net assets of the subsidiary acquired, the difference is recognised directly in the Income Statement, but only after a reassessment of the identification and measurement of the net assets acquired.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange and included in the cost of acquisition.

(g) goodwill and intangibles

(i) goodwillGoodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets of the acquired subsidiary/business unit at the date of acquisition. Goodwill on acquisition of business units is included in intangible assets. Goodwill is not amortised. Instead, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses.

(ii) other intangible AssetsOther intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses.

Other intangible assets that are acquired by the Group, which have indefinite useful lives, are tested for impairment annually either individually or at the cash–generating unit level consistent with the methodology outlined for goodwill. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed each reporting period to determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted for on a prospective basis.

(h) impairment of AssetsGoodwill and Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash–generating units). Non–financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(i) property, plant and EquipmentProperty, plant and equipment has been recorded at cost. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within other income in profit or loss.


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(i) property, plant and Equipment (continued)Depreciation is calculated on a diminishing value and straight–line basis to write off the net cost of each item of property, plant and equipment over their expected useful lives, as follows:

Land Not depreciated

buildings 20 years

plant and Equipment 5–20 years

office Furniture, Fittings and Equipment 5–20 years

motor vehicles 4–10 years

(j) LeasesA distinction is made between finance leases which effectively transfer, from the lessor to the lessee, substantially all the risks and benefits incidental to ownership of leased non current assets, and operating leases under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A leased asset and liability are established at the lower of its fair value and present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the interest expense.

The leased asset is amortised on a straight–line basis over the term of the lease, or where it is likely that the entity will obtain ownership of the asset, the life of the asset. Lease assets held at reporting date are being amortised over three to five years.

Operating lease payments are charged to the income statement in the periods in which they are incurred, as this represents the pattern of benefits derived from the leased assets.

(k) Cash and Cash EquivalentsFor cash flow statement presentation purposes, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

(l) inventoriesraw materials, work in progress and finished goods are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

In the case of manufactured items, cost comprises materials, labour and an appropriate proportion of fixed and variable factory overhead expenses.

(m) Construction work in progressWork 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.

Work in progress is presented as part of inventory in the balance sheet. If payments received from customers exceed the income recognised, then the difference is presented as deferred income in the balance sheet.

(n) Trade receivablesTrade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debts.

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables.


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(o) investments and other Financial Assets

ClassificationThe Group classifies its investments and other financial assets in the following categories: financial assets at fair value through profit or loss, held to maturity investments and available for sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investment at initial recognition and, in the case of assets classified as held–to–maturity, re–evaluates this design at each reporting date.

(i) held–to–maturity investmentsIf the Group has the positive intent and ability to hold debt securities to maturity, then they are classified as held–to–maturity investments and are measured at amortised cost using the effective interest method, less any impairment loss.

(ii) Available for sale Financial AssetsAvailable for sale financial assets, comprising principally marketable equity securites, are non derivatives that are either designated in this category or not classified in any of the other categories. They are included in non current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

regular purchases and sales of financial assets are recognised on trade date, the date on which the Group commits to purchase or sell that asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss.

(iii) Financial Assets at Fair value Through profit or LossFinancial assets carried at fair value through profit or loss are initially recognised at fair value and transactions costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

(p) Fair value Estimation The net fair value of cash equivalents and non interest bearing monetary financial assets and financial liabilities approximate their carrying amount.

(q) Trade and other payablesTrade and other payables are carried at amortised cost. These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid.

(r) Loans and borrowingsBorrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Interest is accrued over the period it becomes due and is recorded as part of other payables. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

(s) Employee Entitlements

(i) wages and salaries and Annual LeaveLiabilities for wages and salaries and annual leave expected to be paid within twelve months of the reporting date are recognised and are measured at the amounts expected to be paid when the liabilities are settled in respect of employees’ services up to that date.

(ii) Long service LeaveA liability for long service leave is recognised and is measured as the present value of expected future payments to be made in respect of employees’ services up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

(iii) superannuationContributions are made by the Group to employee superannuation funds and are charged as expenses when incurred.


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(s) Employee Entitlements (continued)

(iv) share–based payment transactionsThe grant date fair value of options granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest, except for those that fail to vest due to market conditions not being met.

When the Company grants options over its shares to employees of subsidiaries, the fair value at grant date is recognised as an increase in the investments in subsidiaries, with a corresponding increase in equity over the vesting period of the grant.

(t) provisionsA 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.

(u) Finance income and ExpensesFinance income comprises interest income on funds invested, dividend income, gains on the disposal of available–for–sale financial assets, changes in the fair value of financial assets at fair value through profit or loss, and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Finance expenses are recognised as an expense in the period in which they are incurred. Borrowing costs include:

interest on bank overdrafts and short–term and long–term borrowings; »amortisation of line fees, discounts or premiums relating to borrowings; »amortisation of ancillary costs incurred in connection with the arrangement of borrowings; »finance lease interest; and »bank charges. »

(v) Contributed EquityOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(w) dividendsProvision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at balance date.

(x) Earnings per shareThe Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees.

(y) segment reportingA segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of other segments. The Group’s primary format for segment reporting is based on business segments. The business segments are determined based on the Group’s management and internal reporting structure.

Inter–segment pricing is determined on an arm’s length basis.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly investments and related revenue, loans and borrowings and related expenses, corporate assets and income tax assets and liabilities.

Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill.


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(z) new standards and interpretations not Yet AdoptedThe following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are available for early adoption at 30 June 2009, but have not been applied in preparing this financial report:

revised AASB 3 Business Combinations changes the application of acquisition accounting for business combinations »and the accounting for non controlling (minority) interests. key changes include: the immediate expensing of all transaction costs, measurement of contingent consideration at acquisition date with subsequent changes through the income statement, measurement of non controlling (minority) interest at full fair value or the proportionate share of the fair value of the underlying net assets, guidance on issues such as reacquired rights and vendor indemnities, and the inclusion of combinations by contract alone. The revised standard becomes mandatory for the Group’s 30 June 2010 financial statements. The Group has not yet determined the potential effect of the revised standard on the Group’s financial report.revised AASB 101 Presentation of Financial Statements introduces as a financial statement (formerly “primary” »statement) the “statement of comprehensive income”. The revised standard does not change the recognition, measurement or disclosure of transactions and events that are required by other AASBs. The revised AASB 101 will become mandatory for the Group’s 30 June 2010 financial statements. The Group has not yet determined the potential effect of the revised standard on the Group’s disclosures.revised AASB 127 Consolidated and Separate Financial Statements changes the accounting for investments in »subsidiaries. key changes include: the re–measurement to fair value of any previous/retained investment when control is obtained/lost, with any resulting gain or loss being recognised in profit or loss, and the treatment of increases in ownership interest after control is obtained as transactions with equity holders in their capacity as equity holders. The revised standard will become mandatory for the Group’s 30 June 2010 financial statements. The Group has not yet determined the potential effect of the revised standard on the Group’s financial report.AASB 2008–1 Amendments to Australian Accounting Standard – Share–based Payment: vesting Conditions and »Cancellations changes the measurement of share–based payments that contain non vesting conditions. AASB2008–1 becomes mandatory for the Group’s 30 June 2010 financial statements. The Group has not yet determined the potential effect of the amending standard on the Group’s financial report.


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4. reVeNue



Continuing operations 2009 2008 2009 2008

Sales revenue 109,961 89,068 – –

5. oTher iNCome



2009 2008 2009 2008

Dividend income (subsidiaries) – – 3,550 2,500

Gain on disposal of property, plant & equipment – 107 – –

Intercompany management fees – – 1,070 –

Net foreign exchange gains (62) 265 – –

Other income 592 336 20 46

Total 530 708 4,640 2,546

6. FiNaNCe iNCome aND eXpeNSeS

recognised in profit or loss



2009 2008 2009 2008

FinAnCE inComE

Interest income on bank deposits 43 136 5 60

Total finance income 43 136 5 60

FinAnCE EXpEnsEs

Interest on bank overdrafts and loans 2,045 1,498 – –

Other interest expense 54 238 1 67

Total finance expense 2,099 1,736 1 67

net finance income and expense (2,056) (1,600) 4 (7)

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7. eXpeNSeS

Profit before income tax includes the following specific expenses:



2009 2008 2009 2008

Loss on disposal of property, plant and equipment 3 40 – –

dEprECiATion

Buildings – 5 – –

Plant and equipment 535 411 – –

Office equipment, furniture and fittings 166 124 – –

Leasehold improvements 62 47 – –

Motor vehicles 156 224 – –

Assets under finance leases 440 161 – –

Total depreciation 1,359 972 – –

rEnTAL EXpEnsE rELATing To opErATing LEAsEs

Premises 1,667 909 – –

Motor vehicles 38 – – –

Office equipment 71 53 – –

Total rental expense relating to operating leases 1,776 962 – –

Costs of initial public offering (i) – 675 – 1,082

Employee benefits expense 44,428 25,610 207 178

impAirmEnT oF FinAnCiAL AssETs

Trade receivables – 5 – –

impAirmEnT oF oThEr AssETs

Inventories 35 – – –

(i) During the year ended 30 June 2008 total costs of $1,484,000 were incurred in connection with the initial public offering of E&A Limited. Of this amount, $675,000 was expensed in the income statement, whilst $407,000 ($285,000 net of deferred tax) has been recorded against equity. $402,000 of the IPO costs incurred related to internal changes from Equity & Advisory acting as lead advisor on the transaction, and has been eliminated on consolidation accordingly.

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8. iNCome TaX eXpeNSe

(a) income Tax Expense



2009 2008 2009 2008

CurrEnT TAX EXpEnsE

Current period 1,111 2,295 – –

Adjustment for prior periods (6) 18 (11) 9

1,105 2,313 (11) 9

dEFErrEd TAX EXpEnsE

Decrease / (increase) in deferred tax assets (Note 16) (655) (504) (7) (429)

(Decrease) / increase in deferred tax liabilities (Note 16) (185) 53 29 –

(840) (451) 22 (429)

Total income tax expense / (benefit) 265 1,862 11 (420)

(b) numerical reconciliation of income Tax Expense to prima Facie Tax payable



2009 2008 2009 2008

Profit for the period before tax 823 6,089 3,594 1,066

Tax at the domestic tax rate of 30% (2008: 30%) 247 1,827 1,078 320

Entertainment (5) 15 – –

Other non deductable expenses 29 2 9 1

Tax offset for franked dividends – – (1,065) (750)

Under / (over) provided in prior periods (6) 18 (11) 9

income tax expense / (benefit) 265 1,862 11 (420)

(c) income Tax recognised directly in Equity



2009 2008 2009 2008

Income tax on IPO transaction costs – (122) – (122)

Total income tax recognised directly in equity – (122) – (122)

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9. CaSh aND CaSh equiValeNTS



2009 2008 2009 2008

Cash at bank and in hand 759 1,397 18 10

Deposits at call – 36 – 34

Total cash and cash equivalents 759 1,433 18 44

Bank overdrafts (Note 18) (986) (1,571) – –

balances per statement of cash flows (227) (138) 18 44

(a) interest rate risk ExposureThe Group’s and the Company’s exposure to interest rate risk is discussed in Note 31.

10. TraDe aND oTher reCeiVaBleS



2009 2008 2009 2008

CurrEnT

Trade receivables 24,485 23,935 358 51

Provision for impairment of receivables (Note 31) (28) (355) – –

24,457 23,580 358 51

Loans to related parties 93 – 51 –

Loans to subsidiaries – – 9,864 4,243

Other receivables and prepayments 781 820 – 73

Total current trade and other receivables 25,331 24,400 10,273 4,367

non CurrEnT

Loans to subsidiaries – – – 2,652

Total non current trade and other receivables – – – 2,652

The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables are disclosed in Note 31.

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11. iNVeNTorieS



2009 2008 2009 2008

raw materials 2,507 3,460 – –

Work in progress 8,014 5,244 – –

Finished goods 2,963 1,830 – –

Total inventories 13,484 10,534 – –

During the year ended 30 June 2009 the write down of inventories to net realisable value amounted to $34,971 (2008: $nil). The write down is included in cost of sales.

12. oTher CurreNT aSSeTS



2009 2008 2009 2008

Other 13 – – –

Total other current assets 13 – – –

13. oTher FiNaNCial aSSeTS



2009 2008 2009 2008

Listed securities – equity securities 3 3 – –

Investments in subsidiaries (Note 27) – – 36,199 36,199

Total other financial assets 3 3 36,199 36,199

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14. properTy plaNT aND equipmeNT

(a) Carrying amounts of property, plant and Equipment


ConsoLidATEd

Land & buildings

plant & Equipment

office Furniture & Equipment

motor vehicles

Leasehold improve–

mentsLeased Assets Total

AT 30 JunE 2009

Cost 15 6,680 1,600 2,258 883 3,187 14,623

Accumulated depreciation (2) (1,983) (902) (856) (150) (795) (4,688)

net carrying amount 13 4,697 698 1,402 733 2,392 9,935

AT 30 JunE 2008

Cost – 6,052 1,337 2,132 609 2,404 12,534

Accumulated depreciation – (1,420) (740) (739) (88) (355) (3,342)

net carrying amount – 4,632 597 1,393 521 2,049 9,192

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(b) reconciliation of carrying amounts at the beginning and end of the period


ConsoLidATEd

Land & buildings

plant & Equipment

office Furniture & Equipment

motor vehicles

Leasehold improve–

mentsLeased Assets Total

CosT or dEEmEd CosT

Balance at 1 July 2007 – 294 779 170 125 191 1,559

Additions – 548 276 155 200 632 1,811

Transfers – (644) – (748) – 1,392 –

Disposals (1,121) (50) (16) (167) (16) (80) (1,450)

Acquisition through business combinations

1,121 5,904 298 2,722 300 269 10,614

balance at 30 June 2008 – 6,052 1,337 2,132 609 2,404 12,534

Balance at 1 July 2008 – 6,052 1,337 2,132 609 2,404 12,534

Additions 522 216 70 252 931 1,991

Transfers – – – – – – –

Disposals – (70) (4) (158) – (266) (498)


15 176 51 214 22 118 596

balance at 30 June 2009 15 6,680 1,600 2,258 883 3,187 14,623

ACCumuLATEd dEprECiATion, AmorTisATion And impAirmEnT

Balance at 1 July 2007 – 173 528 136 52 52 941

Disposals (33) (3) (13) (37) (13) (43) (142)

Transfers – (18) – (39) – 57 –

Depreciation expense 5 411 124 224 47 161 972


28 857 101 455 2 128 1,571

balance at 30 June 2008 – 1,420 740 739 88 355 3,342

Balance at 1 July 2008 – 1,420 740 739 88 355 3,342

Disposals – (23) (4) (53) – (91) (171)

Transfers – – – – – – –

Depreciation expense – 535 166 156 62 440 1,359


2 51 – 14 – 91 158

balance at 30 June 2009 2 1,983 902 856 150 795 4,688

CArrYing AmounTs

As at 1 July 2007 – 121 251 34 73 139 618

As at 30 June 2008 – 4,632 597 1,393 521 2,049 9,192

As at 1 July 2008 – 4,632 597 1,393 521 2,049 9,192

As at 30 June 2009 13 4,697 698 1,402 733 2,392 9,935

14. propErTY pLAnT And EquipmEnT

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15. iNTaNGiBle aSSeTS


ConsoLidATEd

goodwill intangibles Total

2009 2008 2009 2008 2009 2008

CosT

Balance at 1 July 50,246 242 1,085 – 51,331 242

Additional amounts recognised from business combinations occurring during the period (Note 28)

4,827 50,004 – 1,085 4,827 51,089

Adjustments during the period to amounts initially recognised from business combinations

(669) – (885) – (1,554) –

balance at 30 June 54,404 50,246 200 1,085 54,604 51,331

AmorTisATion And impAirmEnT LossEs

Balance at 1 July – – – – – –

Amortisation for the year – – – – – –

Impairment loss – – – – – –

balance at 30 June – – – – – –

Carrying amounts 54,404 50,246 200 1,085 54,604 51,331

Goodwill and other intangibles are allocated for impairment testing purposes to cash generating units as follows:


ConsoLidATEd

2009 2008

Equity & Advisory 1,058 1,058

Heavymech 4,033 4,033

Fabtech 17,420 17,420

Ottoway 12,131 13,512

Panado 2,027 2,027

Whyalla Fabrications 4,057 4,057

QMM 3,691 3,944

Blucher 5,360 5,280

ICE Engineering 4,827 –

Total goodwill and other intangibles 54,604 51,331

Each cash generating unit represents one or more operational divisions within the consolidated entity. The recoverable amount of each cash–generating unit was based on value in use calculations. Those calculations use 5 year cash flow projections based on actual and forecast operating results which forecast a return to historical earnings performance. These earnings were extrapolated using a growth rate of 2% to 4.2%, consistent with the growth prospects of each cash generating unit, and a 3% terminal value growth rate, which is less that the historical 20 year growth rate of 5.1% for industries in which the cash generating units operate.

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A discount rate of between 14% and 15% has been applied to each cash generating unit in determining the value in use and is based on the target gearing level for E&A Limited (pre–tax nominal WACC).

The Heavymech cash generating unit’s recoverable amount (which exceeds its carrying value by approximately $2.79 million at 30 June 2009) is sensitive to the discount rate used, as a discount rate in excess of 23.7% could result in an impairment.

The Fabtech cash generating unit’s recoverable amount (which exceeds its carrying value by approximately $12.8 million) is sensitive to the return to historical maintainable levels of profitability as achieved in prior years.

16. DeFerreD TaX aSSeTS aND liaBiliTieS

(a) deferred tax assets and liabilities are attributable to the following:


ConsoLidATEd

Assets Liabilities net

2009 2008 2009 2008 2009 2008

Property, plant and equipment 8 4 (340) (315) (332) (311)

receivables – – – (105) – (105)

Inventories – – (916) (185) (916) (185)

Loans & Borrowings – – (19) – (19) –

Employee provisions 896 700 – – 896 700

Other provisions and accrued expenses 172 198 (109) (74) 63 124

retentions – – (69) (172) (69) (172)

Borrowing Costs 3 – – – 3 –

IPO costs 269 358 – – 269 358

Tax losses and excess franking credits 885 200 – – 885 200

Tax assets (liabilities) 2,233 1,460 (1,453) (851) 780 609


CompAnY

Assets Liabilities net

2009 2008 2009 2008 2009 2008

Other provisions and accrued expenses 17 46 (74) (74) (57) (28)

IPO costs 269 358 – – 269 358

Tax losses and excess franking credits 263 167 – – 263 167

Tax assets (liabilities) 549 571 (74) (74) 475 497

15. inTAngibLE AssETs

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(b) movement in temporary differences during the year:


ConsoLidATEd

balance 1 July 2007

recognised in profit or

Lossrecognised

in Equity

Acquired in business

Combinationsbalance 30 June 2008

Property, plant and equipment (35) 219 – (494) (311)

receivables – (105) – – (105)

Inventories – (95) – (90) (185)

Employee provisions 147 69 – 484 700

Other provisions and accrued expenses (43) 37 – 130 124

retentions – (105) – (67) (172)

IPO costs 2 234 122 – 358

Tax losses and excess franking credits (4) 197 – 7 200

Tax assets (liabilities) 67 451 122 (31) 609


ConsoLidATEd

balance 1 July 2008

recognised in profit or

Lossrecognised

in Equity



Property, plant and equipment (311) (21) – – (332)

receivables (105) 105 – – –

Inventories (185) (2) – (729) (916)

Loans & Borrowings – (19) – – (19)

Employee provisions 700 136 – 60 896

Other provisions and accrued expenses 124 (61) – – 63

retentions (172) 103 – – (69)

Borrowing Costs – 3 – – 3

IPO costs 358 (89) – – 269

Tax losses and excess franking credits 200 685 – – 885

Tax assets (liabilities) 609 840 – (669) 780


CompAnY

balance 1 July 2007

recognised in profit or Loss

recognised in Equity



Other provisions and accrued expenses (52) 24 – – (28)

IPO costs 2 234 122 – 358

Tax losses and excess franking credits (4) 171 – – 167

Tax assets (liabilities) (54) 429 122 – 497

16. dEFErrEd TAX AssETs And LiAbiLiTiEs

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CompAnY

balance 1 July 2008

recognised in profit or Loss

recognised in Equity



Other provisions and accrued expenses (28) (29) – – (57)

IPO costs 358 (89) – – 269

Tax losses and excess franking credits 167 96 – – 263

Tax assets (liabilities) 497 (22) – – 475

17. TraDe aND oTher payaBleS



2009 2008 2009 2008

CurrEnT

Trade payables 12,718 9,778 74 57

Other payables and accrued expenses 12,735 9,667 1,069 683

Loans from subsidiaries – – 452 350

Deferred revenue 175 168 – –

Loans from related parties (Note 29) 125 – – –

Total current trade and other payables 25,753 19,613 1,595 1,090

non CurrEnT

Other payables and accrued expenses 2,989 2,954 – –

Total non current trade and other payables 2,989 2,954 – –

Current other payables and accrued expenses includes $5.638 million of vendor settlement liabilities relating to the acquisition of ICE Engineering & Construction Pty Ltd. Settlement of this transaction occurred on 25 August 2009, upon which date $1 million of the settlement liability was settled through the issue of shares in E&A Limited, with the remainder being replaced through a combination of long term and short term debt.

Non–current other payables and accrued expenses comprises deferred vendor settlement liabilities of $1.59 million in relation to the ICE Engineering acquisition and deferred vendor settlement liabilities of $1.4 million in relation to the Blucher Australia Pty Ltd acquisition. These vendor settlement liabilities have been discounted to net present value and are payable upon the achievement of agreed earn–out targets.

The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 31.

16. dEFErrEd TAX AssETs And LiAbiLiTiEs

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Notes to the fiNaNcial statemeNts E&A LimitEd 2009 AnnuAL REpoRt

18. LoAns And BoRRowings

The following loans and borrowings at their carrying amounts are disclosed below:


coNsoliDateD as at 30 JUNe 2009 coNsoliDateD as at 30 JUNe 2008

total facility

Drawn facilities

Undrawn amount

total facility

Drawn facilities

Undrawn amount

cUrreNt

Bank overdraft (Note 9) 1,500 986 514 2,289 1,571 718

Working capital facilities 14,450 6,750 7,700 11,000 7,096 3,904

Commercial bills 3,350 3,350 – 2,700 2,700 –

Finance leases (Note 25) 1,693 712 981 1,037 506 531

Credit cards / other finances 360 153 207 244 115 129

Related party facility (Note 29) – – – 2,304 2,015 289

total current borrowings 21,353 11,951 9,402 19,574 14,003 5,571

NoN cUrreNt

Commercial bills 13,850 13,850 – 12,375 12,375 –

Finance leases (Note 25) 1,590 1,590 – 1,780 1,601 179

Other finance – – – 195 190 5

Related party facility (Note 29) 4,000 3,762 238 1,696 1,696 –

total non–current borrowings 19,440 19,202 238 16,046 15,862 184

total borrowings 40,793 31,153 9,640 35,620 29,865 5,755


comPaNY as at 30 JUNe 2009 comPaNY as at 30 JUNe 2008

total facility

Drawn facilities

Undrawn amount

total facility

Drawn facilities

Undrawn amount

cUrreNt

Related party facility (Note 29) – – – 2,304 2,015 289

total current borrowings – – – 2,304 2,015 289

NoN cUrreNt

Related party facility (Note 29) 4,000 3,762 238 1,696 1,696 –

Total non current borrowings 4,000 3,762 238 1,696 1,696 –

total borrowings 4,000 3,762 238 4,000 3,711 289

E&A Limited has extended the term of its banking facilities with its principal financier. The provision of these facilities requires a number of standard representations, warranties and undertakings (including financial and reporting obligations) from E&A Limited and E&A Limited Group companies in favour of the respective lenders. The facilities also include a cross guarantee between the parent and all group companies with staged security enforcement rights and obligations. The staged enforcement rights require the lender to enforce its security against a defaulting borrower prior to making any claims under the cross guarantee. Further detail of security arrangements are outlined in Note 31.

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The following loans and borrowings (non–current and current) were issued and repaid during the year ended 30 June 2009 (30 June 2008):



2009 2008 2009 2008

balance as at 1 July 29,865 1,673 3,711 –

Acquisition of interest bearing liabilities through business combinations

164 12,531 – –

nEw issuEs

Bank overdraft 292 1,104 – –

Working capital facilities 2,144 6,647 – –

Commercial bills 5,500 9,750 – –

Leasing facilities 846 1,553 – –

Credit cards / other finances 168 80 – –

related Party Facility 52 3,711 51 3,711

rEpAYmEnTs

Bank overdraft (881) (1,650) – –

Working capital facilities (2,489) (231) – –

Commercial bills (3,375) (4,911) – –

Leasing facilities (860) (356) – –

Credit cards / other finances (273) (36) – –

balance as at 30 June 31,153 29,865 3,762 3,711

18. LoAns And borrowings

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19. proViSioNS



2009 2008 2009 2008

CurrEnT

Employee benefits 2,593 2,164 – –

Dividends – – – –

Other provisions 4 – – –

Total current provisions 2,597 2,164 – –

non CurrEnT

Employee benefits 263 161 – –

Total non current provisions 263 161 – –

20. Share CapiTal

Movements in shares of the Company were as follows:

In thousands of shares

ordinArY shArEs

2009 2008

shares on issue at 1 July 56,658 560

Issued as a result of a share split – 9,528

Issued under initial public offering – 5,530

Issued as consideration for business acquisitions (refer Note 28) 1,189 38,533

Issued as consideration for minority interests – 2,507

Issued as part of dividend reinvestment plan 4,190 –

shares on issue at 30 June 62,037 56,658

All shares on issue are fully paid. The Company does not have authorised capital or par value in respect of its issued shares.

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21. earNiNGS per Share

Cents per share

ConsoLidATEd

2009 2008

Basic earnings per share 0.94 7.88

Diluted earnings per share 0.93 7.80

basic Earnings per shareThe earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

In thousands of $AUD and shares

ConsoLidATEd

2009 2008

Earnings used in the calculation of basic EPS (i) 558 4,227

Weighted average number of ordinary shares for the purpose of basic earnings per share (ii)

59,509 53,640

(i) Earnings used in the calculation of total basic earnings per share is equal to the net profit after tax in the income statement.

(ii) The options (Note 23) are considered to be potential ordinary shares and are therefore excluded from the weighted average number of ordinary shares used in the calculation of basic earnings per share. Where dilutive, potential ordinary shares are included in the calculation of dilutive earnings per share.

diluted Earnings per shareThe earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows:

ConsoLidATEd

2009 2008

Earnings used in the calculation of basic EPS (i) 558 4,227

Weighted average number of ordinary shares for the purpose of basic earnings per share (ii)

60,069 54,200

(i) Earnings used in the calculation of total basic earnings per share is equal to the net profit after tax in the income statement.

(ii) The weighted average number of ordinary shares for the purpose 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:

In thousands of shares

ConsoLidATEd

2009 2008

Weighted average number of ordinary shares used in the calculation of basic EPS

59,509 53,640

Options (Note 23) 560 560

weighted average number of ordinary shares used in the calculation of diluted Eps

60,069 54,200

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22. DiViDeNDS

ConsoLidATEd

2009 2008

Centsper share

Total$’000

Centsper share

Total$’000

rECognisEd AmounTs

Interim dividend 4.5 2,605 3 1,699

Final dividend 1.5 903 – –

Total dividends recognised 6.0 3,508 3 1,699

Both fully franked at a 30% tax rate

unrECognisEd AmounTs

Final dividend – – 4.5 2,605

Total dividends unrecognised – – 4.5 2,605

Fully franked at a 30% tax rate

Franking Account balance



2009 2008 2009 2008

Franking credits available for subsequent financial years based on a tax rate of 30% (2008: 30%)

4,738 4,489 1,257 948

The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for franking credits that will arise from the payment of current tax liabilities.

The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of subsidiaries were paid as dividends.

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23. Share–BaSeD paymeNTS

Mr Graham Fairhead, Managing Director of Fabtech, as a long term employment incentive is entitled to non transferable share options which entitle Mr Fairhead to acquire 559,911 Shares in the issued capital of E&A Limited with an exercise price equal to $1.00. The share options only vest with Mr Fairhead in the event Mr Fairhead makes a further ongoing commitment to E&A Limited by entering into a new employment contract with E&A Limited upon the expiry of his existing employment contract which expires on 1 July 2010.

Unissued ordinary shares of E&A Limited under option at 30 June 2009 are as follows:

date options granted 17 December 2007

vesting date 1 July 2010 (conditional)

Expiry date 29 September 2010

issue price of shares $1.00

number under option 559,911

The share based compensation expense recognised in the current year was $27,562 (2008: $32,168).

shares issued on the Exercise of optionsThere were no shares issued on the exercise of options during the year.

24. CoNTiNGeNT aSSeTS aND liaBiliTieS

The Group and Company had contingent liabilities in respect of:



2009 2008 2009 2008

bAnK guArAnTEE FACiLiTiEs

Amount used 1,242 935 – –

Amount available (unused) 793 753 – –

In the normal course of business certain E & A Limited companies are required to enter into contracts that include performance obligations. These commitments only give rise to a liability where the respective entity fails to perform its contractual obligations. Claims of this nature arise in the ordinary course of construction contracting. Where appropriate a provision is made for these issues. The Directors are not aware of any material claims that have not been appropriately provided for in the financial statements at 30 June 2009.

E&A Limited has commenced legal proceedings in The Federal Court of Australia against Mr Mogens Harloff Jensen (former 50% proprietor of Blucher Australia) for breaches of the Blucher Australia Share Purchase Agreement, his Executive Employee Agreement and breaches of The Corporations Act; Fair Trading Act; and Misrepresentation Act.

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25. CommiTmeNTS

(a) Capital CommitmentsCapital expenditure contracted for at balance date but not recognised as liabilities is as follows:



2009 2008 2009 2008

propErTY, pLAnT And EquipmEnT

payable:

Within one year – 150 – –

Between one and five years – – – –

More than five years – – – –

– 150 – –

(b) Lease Commitments

(i) non–Cancellable operating LeasesThe Group leases various properties and office equipment under non–cancellable operating leases expiring within one to nineteen years. The leases have varying terms and renewal rights. On renewal, the terms of the leases are renegotiated. Commitments for minimum lease payments in relation to non–cancellable operating leases are payable as follows:


2009 2008 2009 2008

Within one year 1,928 1,153 – –

Between one and five years 4,021 2,991 – –

More than five years 474 2,020 – –

6,423 6,164 – –

(ii) Cancellable operating LeasesThe Group leases various plant and office equipment under cancellable operating leases. The Group is required to give one to two months notice for termination of these leases.

Commitments in relation to cancellable operating leases contracted for at the balance date but not recognised as liabilities are payable as follows:



2009 2008 2009 2008

Within one year 16 2 – –

Between one and five years 48 9 – –

More than five years – – – –

64 11 – –

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(b) Lease Commitments

(iii) Finance LeasesThe Group leases various plant and motor vehicles with a carrying amount of $2,392,000 (2008: $2,049,000) under finance leases expiring within one to five years. Under the terms of the leases the Group acquires the assets following the final payment.



2009 2008 2009 2008

CommiTmEnTs in rELATion To FinAnCE LEAsEs ArE pAYAbLE As FoLLows:

Within one year 876 669 – –

Between one and five years 1,792 1,846 – –

More than five years 35 – – –

Minimum lease payments 2,703 2,515 – –

Future finance charges (401) (408) – –

recognised as a liability 2,302 2,107 – –

rEprEsEnTing LEAsE LiAbiLiTiEs:

Current (Note 18) 712 506 – –

Non–current (Note 18) 1,590 1,601 – –

2,302 2,107 – –

25. CommiTmEnTs

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The Group comprises the following main business segments:

investment & Corporate Advisoryservices: Investment and Corporate Advisory segment provides a comprehensive range of corporate advisory services relating to the analysing, negotiating, financing and completing of business transactions for external and internal clients.

industry Exposure: Investment and Corporate Advisory provides corporate advisory services to public, private and government organisations. In addition, Investment and Corporate Advisory provides a range of corporate advisory services to E&A Limited subsidiaries as they continue to expand both organically and through acquisition.

procurementservices: This segment comprises the services provided by Louminco and Blucher. Procurement segment provides procurement, maintenance, engineering support and project management services.

industry Exposure: Procurement segment services the industrial, mining, base metals, defence and power generation industries.

Fabtechservices: Fabtech provides flexible geomembrane liners and floating covers for dams, reservoirs and tunnels.

industry Exposure: Fabtech services the mining, potable and waste water containment, waste management and agriculture industries.

heavy mechanical and Electrical Engineeringservices: This segment comprises the services provided by Ottoway Engineering, Whyalla Fabrications and ICE Engineering & Construction. Ottoway operates as a pipe fabrication and installation business involving all aspects of turn–key project management including design, engineering, procurement, manufacture, fabrication, machining, installation and maintenance. Whyalla Fabrications provides a range of steel fabrication and structural engineering services, including project management, design, structural steel fabrication and erection, pipe welding and pipework installation, pneumatic and hydraulic installations, and light machining. ICE Engineering provides electrical engineering consultancy and project management services including the design of electrical control systems for heavy industry, manufacturing and commercial installations, as well as drafting and other maintenance services.

industry Exposure: Offers services across a range of industries including industrial, petro–chemical, oil and gas, mining, exploration, water, defence, power generation, infrastructure and wine.

maintenance Engineering & plant Constructionservices: This segment comprises the services provided by Heavymech and QMM. Heavymech supplies breakdown and repair services to the heavy industrial, mining and power generation industries. QMM supplies equipment, spare parts, plant construction and repair, and onsite maintenance to the quarry, recycling and mining sectors.

industry Exposure: Offers services across a range of industries including mining, power, quarry, recycling and heavy industrial industries.Since our half year reporting to 31 December 2008 we have included the acquisition of ICE Engineering with Whyalla Fabrications and Ottoway Engineering to form the Heavy Mechanical & Electrical Engineering segment. As our business continues to grow we will update our segment disclosures accordingly.

26. sEgmEnT rEporTing

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27. SuBSiDiarieS

ownErship inTErEsT

name of Entity Country of incorporation 2009 2008

pArEnT EnTiTY

E&A Limited Australia 100 100

subsidiAriEs

Panado Pty Ltd Australia 100 100

Louminco Pty Ltd Australia 100 100

ILS Limited Hong kong 100 100

Starboard Tack Pty Ltd Australia 100 100

Heavymech Pty Ltd Australia 100 100

Fabtech Holdings Pty Limited Australia 100 100

Fabtech S.A. Pty Ltd Australia 100 100

Ottoway Engineering Pty Ltd Australia 100 100

Ottoway Engineering (WA) Pty Ltd Australia 100 –

Equity & Advisory Ltd Australia 100 100

Whyalla Fabrications Pty Ltd Australia 100 100

Quarry & Mining Manufacture Pty Ltd Australia 100 100

Quarry & Mining Manufacture (QLD) Pty Ltd Australia 100 100

Blucher (Australia) Pty Ltd Australia 100 100

E&A Contractors Pty Ltd Australia 100 –

Ironhorse BB Pty Ltd Australia 100 –

ICE Engineering & Construction Holdings Pty Ltd Australia 100 –

ICE Engineering & Construction Pty Ltd Australia 100 –

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28. aCquiSiTioN oF BuSiNeSSeS


name of business AcquiredAcquisition

dateproportion of

shares ControlledEquity & Cash Consideration

paid / payable

2009 2008

2009

ICE Engineering & Construction Pty Ltd 1 May 2009 100% 7,228 –

2008

Blucher (Australia) Pty Ltd 1 May 2008 100% – 7,064

Quarry & Mining Manufacture Pty Ltd and Quarry & Mining Manufacture (QLD) Pty Ltd

1 January 2008 100% – 5,003

Fabtech Holdings Pty Ltd 16 July 2007 100% – 15,050

Equity & Advisory Ltd 1 July 2007 100% – 647

Starboard Tack Pty Ltd 1 July 2007 100% – 4,082

Ottoway Engineering Pty Ltd 1 July 2007 100% – 10,727

Panado Pty Ltd (i)30 November

2006100% – 2,064

Whyalla Fabrications Pty Ltd 2 October 2007 100% – 6,447

Total Consideration 7,228 51,084

(i) Acquired remaining 25% on 1 July 2007

The acquisitions had the following effect on the group’s assets and liabilities:


Total Fair value on Acquisition

2009 2008

CosT oF ThE CombinATions

Shares issued, at fair value – 33,099

Cash paid – 10,674

Equity consideration payable 1,000 709

Cash consideration payable (deferred consideration) 6,154 6,136

Directly attributable costs in relation to the acquisitions 74 466

Total cost of the combinations 7,228 51,084

ThE CAsh ouTFLow on ACquisiTion is As FoLLows:

Net cash acquired with the subsidiaries 1,566 2,016

Cash paid, including acquisition costs (4,604) (11,011)

net cash outflow (3,038) (8,995)

Book value was the same as fair value for the ICE Engineering acquisition.

If this acquisition had occurred on 1 July 2008, management estimates that consolidated revenue would have been approximately $118.4 million and consolidated profit for the period would have been approximately $2.1 million after tax. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition occurred on 1 July 2008.

As ICE Engineering was acquired on 1 May 2009, the purchase price allocation is still being finalised. Settlement for the ICE Engineering acquisition occurred on 25 August 2009. Equity & Advisory earned $0.1 million consultancy fees from ICE Engineering.

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29. relaTeD parTieS

(a) parent and ultimate Controlling partyThe ultimate controlling entity of the Group is E&A Limited.

(b) subsidiariesInterests in subsidiaries are set out in Note 27.

(c) Key management personnelDisclosures relating to key management personnel are set out in the remuneration report in the Directors report.

Key management personnel CompensationThe key management personnel compensation included in employee benefits expense (see Note 7) are as follows:



2009 2008 2009 2008

Short–term employee benefits 2,030 1,550 180 127

Other long term benefits – – – –

Post employment benefits 174 137 16 11

Termination benefits – – – –

Share based payments 28 32 – –

Total 2,232 1,719 196 138

Loans to directors and Key management personnelAs at 30 June 2009 the balance of unsecured loans outstanding to directors and key management personnel was $92,821. Net repayments made throughout the period were $nil.

Interest was payable on amounts owing on normal commercial terms and conditions and at market rates.


balance at beginning of period

proceeds from Loans balance outstanding

1 July 2008 30 June 2009

Stephen Young and controlled entities – 93 93

Eduardo Donoso and controlled entities – – –

Total – – –

(d) other related party TransactionsPort Tack, regent Street and Brendale Property Holdings are related entities of Stephen Young, the Chairman of E&A Limited. The following related party transactions have been entered into as at 30 June 2009.

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E&A LimitEd 2009 AnnuAL REpoRt Notes to the fiNaNcial statemeNts

(a) Regent street lease of heavymech premisesRegent Street entered into a lease agreement dated 2 November 2007 with Heavymech to lease the Heavymech Premises for $100,000 per annum (exclusive of GST). The lease commenced on 31 January 2008 and will continue for a period of 2 years together with two rights of renewal for further periods of 5 years each. The related party benefits resulting from execution of the Heavymech Premises were approved by the shareholders of E&A Limited on 5 November 2007 in accordance with section 208 of the Corporations Act.

(b) Regent street lease of mt isa premisesRegent Street has entered into a lease agreement in relation to the Louminco Mt Isa Premises for $48,273 per annum (exclusive of GST). The lease was effective from 1 August 2007 and will expire 31 July 2012. There is an option to extend the lease for a further period of 5 years. The related party benefits resulting from the execution of the Mt Isa agreement to lease were approved by the shareholders of E&A Limited on 5 November 2007 in accordance with section 208 of the Corporations Act.

(c) Regent street lease of ottoway premisesPort Tack entered into a put & call option with the owners of the Ottoway Premises which was exercised on 5 December 2007 (“Ottoway Option”). Ottoway Engineering, a wholly owned subsidiary of E&A Limited has entered into a lease with the owners of the Ottoway Premises, the benefit of which has been assigned to Port Tack as a result of the exercise of the Ottoway Option. The rental for the Ottoway Premises is initially $240,000 per annum. The Ottoway Lease commenced on 1 June 2007 and will continue for a period of 5 years and 6 months together with three rights of renewal for further periods of 5 years each. In contemplation of the exercise of the Ottoway Option, in accordance with section 208 of the Corporations Act, on 5 November 2007 the shareholders of E&A Limited approved any financial benefit which may flow from the exercise of the option.

(d) Whyalla premises call optionPort Tack has entered into a call option with the owners of the Whyalla Premises which may be exercised in the three year period commencing between 2 October 2009 and 2 October 2012. (“Whyalla Option”). Whyalla Fabrications has obtained an assignment of the benefit of a lease with the owners of the Whyalla Premises. The benefit of the Whyalla Lease will be assigned to Port Tack as a result of the exercise of the Whyalla Option. The rental for the Whyalla Premises is initially $150,000 per annum. The Whyalla Lease commenced on 1 September 2007 and will continue for a period of 5 years and 1 month together with three rights of renewal for further periods of 5 years each. The Directors consider the ongoing obligations of Whyalla Fabrications to Port Tack under the Whyalla Lease (which will exist after the exercise of the Whyalla Option) are on commercial arms length terms and conditions, and therefore the financial benefit (ie. lease payments) which may accrue to Port Tack Pty Ltd as a related party of the Company does not require Shareholder approval under Chapter 2E of the Corporations Act.

(e) Related Party Put optionStephen Young and Mark Vartuli in their own individual capacity have entered into personal agreements with Mogens Jensen (“Jensen”) and I&K Johnson Plumbing Pty Ltd (“Johnson”), directors of Blucher (Australia) Pty Ltd, granting an off-market put option over 595,282 E&A limited shares each provided to Jensen and Johnson as part-consideration for the sale of Blucher (Australia) Pty Ltd. The exercise period for the shares is between 1 September 2010 and 15 September 2010 after which time the options will automatically lapse. The purchase price for the shares is $1.20 per share.

(f) Brendale Property holdings lease of Qmm premisesBrendale Property Holdings (BPH) has entered into a lease agreement dated 19 December 2008 with QMM Qld to lease the QMM Qld premises for $180,000 (exclusive of GST). The lease was effective from 19 December 2008 and will continue for a period of 3 years with three rights of renewal for a further period of 3 years. The Directors consider the ongoing obligations of QMM Qld to BPH under the Brendale Lease are on commercial arms length terms and conditions, and therefore the financial benefit (i.e. lease payments) which may accrue to BPH as a related party of the Company does not require Shareholder Approval under Chapter 2E of the Corporations Act.

(g) Port tack “come & Go” loan facilityPort Tack has entered into a “Come and Go” unsecured loan facility to provide finance to E&A Limited and subsidiary companies for the purpose of funding working capital needs and short term acquisition funding requirements on an as required basis. The facility is for a limit of $4,000,000 and has been subordinated to the bank debt and cannot be repaid in cash within 12 months. The facility is interest only. Interest is charged on normal commercial terms and conditions. The balance outstanding at 30 June 2009 was $3,761,728. The Directors consider the Loan Facility is on arms length terms and conditions, and therefore the financial benefit (i.e. interest payments) which may accrue to Port Tack Pty Ltd as a related party of the Company does not require Shareholder approval under Chapter 2E of the Corporations Act.

29. Related PaRties

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The following transactions occurred with related parties:



2009 2008 2009 2008

Sale of goods and services – – – –

Fees charged to subsidiaries – – – 43

Purchases of goods – – – –

Dividend revenue from subsidiaries – – 3,550 2,500

rental paid to other related parties 540 218 – –

(e) outstanding balances Arising from sales / purchases of goods and servicesThe following balances are outstanding at the reporting date in relation to transactions with related parties:



2009 2008 2009 2008

CurrEnT rECEivAbLEs

Subsidiaries – – – 4,243

Other related parties – – 51 –

non CurrEnT rECEivAbLEs

Subsidiaries – – 9,864 2,650

CurrEnT pAYAbLEs

Subsidiaries – – 453 350

Other related parties 125 – – –

CurrEnT LoAns And borrowings

Other related parties – 2,015 – 2,015

non CurrEnT LoAns And borrowings

Other related parties 3,762 1,696 3,762 1,696

29. rELATEd pArTiEs

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(f) Loans to / from related parties



2009 2008 2009 2008

LoAns To subsidiAriEs

Beginning of the year – – 6,893 –

Loans advanced – – 2,971 6,893

Loan repayments received – – – –

End of year – – 9,864 6,893

LoAns From subsidiAriEs

Beginning of the year – – 350 –

Loans advanced – – 453 350

Loan repayments made – – (350) –

End of year – – 453 350

LoAns To oThEr rELATEd pArTiEs

Beginning of the year – 350 – 66

Loans advanced 93 – 51 –

Loan repayments received – (346) – (66)

Interest charged – 15 – –

Interest received – (19) – –

End of year 93 – 51 –

LoAns From oThEr rELATEd pArTiEs

Beginning of the year 3,711 – 3,711 –

Loans advanced 176 3,645 51 3,645

Loan repayments made – – – –

Interest charged – 66 – 66

Interest received – – – –

End of year 3,887 3,711 3,762 3,711

29. rELATEd pArTiEs

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30. NoTeS To The CaSh FloW STaTemeNT

(a) businesses AcquiredDuring the financial year, the consolidated entity acquired ICE Engineering & Construction Pty Ltd.

The total net cash outflow on acquisition for the 12 months ended 30 June 2009 of $3,038,000 principally relates to settlement of the Blucher Australia acquisition, which was acquired on 1 May 2008. Settlement of the ICE acquisition occurred on 25 August 2009 as outlined in further detail in Note 28.

refer to Note 28 for further details of these acquisitions.

(b) reconciliation of profit for the period to net Cash Flows From operating Activities



2009 2008 2009 2008

Profit for the year 558 4,227 3,583 1,486

Net (gain) / loss on disposal of non–current assts 3 (67) – –

Depreciation and amortisation 1,359 972 – –

Equity settled share–based payment 28 32 28 32

IPO Costs – 675 – 1,082

ChAngEs in opErATing AssETs And LiAbiLiTiEs, nET oF EFFECTs From ACquisiTion oF businEssEs:

(increase)/decrease in assets:

receivables (144) (9,196) (234) 146

Inventories (419) (1,483) – –

Deferred tax assets (713) (381) 22 (429)

increase/(decrease) in liabilities:

Trade and other creditors 4,334 1,401 403 57

Provision for income taxes payable (387) 510 (3) 3

Other provisions 336 (1,138) – –

Deferred tax liabilities (127) 52 – –

net cash (used in) / provided by operating activities 4,828 (4,396) 3,799 2,377

31. FiNaNCial iNSTrumeNTS

The Company and Group is exposed to the following risks throughout the normal course of business:

Credit risk; »Liquidity risk; »Currency risk; and »Interest rate risk. »

The Board reviews and agrees policies for managing each of these risks and the Audit and risk Management Committee is responsible for monitoring compliance with risk management strategies throughout the Group.

The Company and Group use basic financial instruments to manage financial risk. The Group does not use or issue derivative or financial instruments for speculative or trading purposes. The Group uses different methods to measure different types of risk to which it is exposed.

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Credit riskCredit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers. For the Company it arises from receivables due from subsidiaries.

The credit policy under which each new and existing customer is assessed for creditworthiness is determined separately by each operating subsidiary of the Group and accordingly reflects the different nature of each businesses’ industry, customers and associated risks. Generally, however, customer credit reviews include external ratings, when available, and in some cases bank references. Customers that fail to meet the relevant benchmark creditworthiness may transact with the Group only on a prepayment basis.

Goods are, where possible, sold subject to retention of title clauses, so that in the event of non-payment the Group may have a secured claim. The Group does not require collateral in respect of trade and other receivables.

The Company and Group have established an allowance for impairment that represents their estimate of incurred losses in respect of trade and other receivables and investments. This allowance represents a specific loss component that relates to individually significant exposures identified.

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



note 2009 2008 2009 2008

receivables 10 25,331 24,400 10,273 7,019

Cash and cash equivalents 9 759 1,433 18 44

Total at Carrying Amount 26,090 25,833 10,291 7,063

The Group manages its credit risk by maintaining strong relationships with a broad range of quality clients. There are no significant concentrations of credit risk within the Group, except that the Group’s most significant customer, a listed heavy industrial company, accounts for $2,799,583 of the trade receivables carrying amount at 30 June 2009 (2008: $6,701,253).

The Company and Group’s maximum exposure to credit risk for trade receivables at the reporting date by type of customer was:



2009 2008 2009 2008

Industrial (mining, defence, water) 24,003 23,016 355 51

Corporate (advisory clients) 482 919 – –

24,485 23,935 355 51

31. FinAnCiAL insTrumEnTs

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impairment lossesThe Company’s receivables are all with subsidiaries. The ageing of the Group’s trade receivables at the reporting date was:


ConsoLidATEd ConsoLidATEd

gross impAirmEnT gross impAirmEnT

2009 2009 2008 2008

Not past due 12,663 – 12,609 –

Past due 0 – 30 days 6,536 – 5,866 –

Past due 31 – 121 days 2,974 – 4,178 –

Past due 121 days to one year 1,962 – 1,282 (355)

Past due more than one year 350 (28) – –

24,485 (28) 23,935 (355)

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



2009 2008 2009 2008

Balance at 1 July 355 – – –

Impairment loss recognised – 5 – –

Impairment loss acquired in business combination – 350 – –

Impairment loss recovered (327) – – –

balance at 30 June 28 355 – –

Liquidity riskLiquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Furthermore, the Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and financial liabilities.

The Group’s credit facilities are outlined in Note 18 to this financial report.

guaranteesE&A Limited has extended the term of its banking facilities with its principal financier. The provision of these facilities requires a number of standard representations, warranties and undertakings (including financial and reporting obligations) from E&A Limited and E&A Limited Group companies in favour of the respective lenders. The facilities also include a cross guarantee between the parent and all group companies with staged security enforcement rights and obligations.


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Exposure to liquidity riskThe following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting arrangements:


ConsoLidATEd AT 30 JunE 2009

Carrying Amount

Contractual Cash Flows

Less than 1 Year 1 – 2 years 2 – 5 years

more Than 5 Years

non dErivATivE FinAnCiAL LiAbiLiTiEs

Secured bank loans 17,200 20,822 4,468 4,250 9,995 2,109

Finance lease liabilities 2,302 2,703 876 685 1,107 35

related party facility 3,762 4,070 – 1,000 3,070 –

Trade and other payables 28,742 29,077 26,543 1,013 1,521 –

Working capital facilities 6,903 6,903 6,903 – – –

Bank overdraft 986 986 986 – – –

59,895 64,561 39,776 6,948 15,693 2,144

CompAnY AT 30 JunE 2009

Carrying Amount



more Than 5 Years


related party facility 3,762 4,070 – 1,000 3,070 –

Trade and other payables 1,595 1,595 1,595 – – –

5,357 5,665 1,595 1,000 3,070 –


Carrying Amount



more Than 5 Years


Secured bank loans 15,299 19,194 3,804 3,362 8,592 3,436

Finance lease liabilities 2,107 2,513 669 709 1,135 –

related party facility 3,711 4,182 2,053 2,129 – –

Trade and other payables 22,648 22,648 19,694 2,697 257 –

Working capital facilities 7,096 7,096 7,096 – – –

Bank overdraft 1,571 1,571 1,571 – – –

52,432 57,204 34,887 8,897 9,984 3,436


Carrying Amount



more Than 5 Years


related party facility 3,711 4,182 2,053 2,129 – –

Trade and other payables 1,090 1,090 1,090 – – –

4,801 5,272 3,143 2,129 – –


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Currency riskThe Group, through its subsidiaries Fabtech, Blucher and ILS, is exposed to currency risk on purchases that are denominated in a currency other than the Australian dollar (AUD), primarily the US dollar (USD), euro (EUr), Sterling (GBP) and Canadian dollars (CAN).

Fabtech and Blucher use forward exchange contracts with its foreign suppliers to hedge its currency risk, all with a maturity of less than one year from the reporting date. When necessary, forward exchange contracts are rolled over at maturity. ILS meets its purchase commitments at the spot rate on the date of payment.

Total purchase transactions denominated in foreign currency account for less than 15% of total Group purchases.

As at 30 June 2009, the Group did have a small position in forward exchange contracts as summarised below.

Exposure to currency riskThe Company was not exposed to significant currency risk as at balance date or for the years ended 30 June 2009 and 2008. The Group’s exposure to foreign currency risk at balance date was as follows, based on notional amounts:


Aud usd gbp Euro CAn Aud usd gbp Euro CAn

30 June 2009 30 June 2008

Trade receivables – – – – – – – – – –

Trade payables (103) (7) – (52) (3) (1,149) (812) (13) (97) (115)

net exposure (103) (7) – (52) (3) (1,149) (812) (13) (97) (115)

The following significant exchange rates applied during the year:

AvErAgE rATE rEporTing dATE spoT rATE

2009 2008 2009 2008

USD 0.7480 0.8931 0.8048 0.9615

GBP 0.4630 0.4389 0.4873 0.4821

Euro 0.5423 0.5969 0.5729 0.6091

CAN 0.8633 0.8844 0.9303 0.9702


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Currency risk sensitivity analysisA 10% strengthening of the Australian dollar against the following currencies at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant. The analysis is performed on the same basis for 2008.

A 10% weakening of the Australian dollar against the above currencies at reporting date would have had an equal but opposite effect on the following currencies to the amounts shown below, on the basis that all other variables remain constant.


Consolidated 30 June 2009 Consolidated 30 June 2008

Equity profit or loss Equity profit or loss

USD – 1 – 77

GBP – – – 3

Euro – 8 – 14

CAN – – – 11

interest rate riskThe Group has exposure to interest rate risk in each of its subsidiaries through their various financing facilities.

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



2009 2008 2009 2008

vAriAbLE rATE insTrumEnTs

Financial liabilities 31,153 29,865 3,762 3,711

Cash flow sensitivity analysis for variable rate instrumentsA change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant. The analysis is performed on the same basis for 2008.



proFiT or Loss EquiTY

100bp increase

100bp decrease

100bp increase

100bp decrease

variable rate instruments (312) 312 – –




100bp increase

100bp decrease

100bp increase

100bp decrease



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100bp increase

100bp decrease

100bp increase

100bp decrease





100bp increase

100bp decrease

100bp increase

100bp decrease


Fair values

Fair values versus carrying amountsThe fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet are as follows:


ConsoLidATEd 30 JunE 2009 ConsoLidATEd 30 JunE 2008

Carrying Amount Fair value Carrying Amount Fair value

Loans and receivables 25,331 25,331 24,400 24,400

Cash and cash equivalents 759 759 1,433 1,433

Secured bank loans (17,200) (17,200) (15,299) (15,299)

Finance lease liabilities (2,302) (2,302) (2,107) (2,107)

Other loans – – – –

related party facility (3,762) (3,762) (3,711) (3,711)

Trade and other payables (28,742) (28,742) (22,648) (22,648)

Working capital facilities (6,903) (6,903) (7,096) (7,096)

Bank overdraft (986) (986) (1,571) (1,571)

(33,805) (33,805) (26,599) (26,599)


CompAnY AT 30 JunE 2009 CompAnY AT 30 JunE 2008

Carrying Amount Fair value Carrying Amount Fair value

Loans and receivables 10,273 10,273 7,017 7,017

Cash and cash equivalents 18 18 44 44

related party facility (3,762) (3,762) (3,711) (3,711)

Trade and other payables (1,595) (1,595) (1,090) (1,090)

4,934 4,934 2,260 2,260


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Capital managementThe 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 before interest divided by total shareholder equity, excluding minority earnings and outstanding executive options. The Board of Directors also monitors the level of dividends to ordinary shareholders.

The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.

32. remuNeraTioN oF auDiTorS

During the year the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-related audit firms:


2009 2008 2009 2008

AudiT sErviCEs

Kpmg Australia:

Audit and review of financial reports 197,000 190,000 32,000 88,000

Other regulatory audit services – – – –

197,000 190,000 32,000 88,000

oThEr AudiTors

Audit and review of financial reports – – – –

197,000 190,000 32,000 88,000

oThEr sErviCEs

Kpmg Australia:

Investigating Accountant Services – 175,000 – 175,000

Taxation services – 55,000 – 55,000

– 230,000 – 230,000

33. WorKiNG CapiTal

The working capital deficiency in FY09 resulted from the recording of the acquisition of ICE Engineering & Construction with a settlement liability of $5,638,364 recorded within current trade and other payables. The working capital deficiency was rectified when settlement occurred on 25 August 2009 and this amount was settled via bank debt and the issue of share capital. The bank debt is long term in nature and subject to the normal covenants expected of borrowings of this nature.

34. SuBSequeNT eVeNTS

Board approval to merge the operations of Louminco & Whyalla Fabrications was obtained on 9 July 2009 to enable both businesses to offer a competitive price and integrated design, engineering, drafting, fabrication capacity to their clients and ensures both businesses are able to respond quickly to the changing market environment.


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1. in the opinion of the directors of E&A Limited (“the Company”):

(a) The financial statements and notes and the remuneration disclosures that are contained in the remuneration report in the Directors’ report, set out on pages 31 to 89 are in accordance with the Corporations Act 2001, including:(i) Giving a true and fair view of the Company’s and the Group’s financial position as at 30 June 2009 and of their

performance for the financial year ended on that date; and(ii) Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the

Corporations regulations 2001;

(b) The remuneration disclosures that are contained in the remuneration report in the Directors’ report comply with Australian Accounting Standard AASB 124 related Party Disclosures, the Corporations Act 2001 and the Corporations regulations 2001; and

(c) There are reasonable grounds to believe the Company will be able to pay its debts as and when they become due and payable.

2. The directors have been given the declarations required by section 295A of the Corporations Act 2001 from the chief executive officer and company secretary for the financial year ended 30 June 2009.

Signed in accordance with a resolution of the directors:

Dated at Adelaide this 24th day of September 2009


Directors’ Declaration

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Independent Audit Report


Independent auditor’s report to the members of E&A Limited

Report on the financial report We have audited the accompanying financial report of E&A Limited (the Company), which comprises the balance sheets as at 30 June 2009, and the income statements, statements of changes in equity and cash flow statements for the year ended on that date, a summary of significant accounting policies and other explanatory notes 1 to 34 and the directors’ declaration of the Group comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards (including the Australian Accounting Interpretations), a view which is consistent with our understanding of the Company’s and the Group’s financial position and of their performance.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.







KPMG


Adelaide

24 September 2009

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indEpEndEnT AudiT rEporT e&a limiTeD 2009 aNNual reporT

Independence

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

Auditor’s opinion

In our opinion, the financial report of E&A Limited is in accordance with the Corporations Act 2001,including:

(i) giving a true and fair view of the Company’s and the Group’s financial position as at 30 June 2009 and of their performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

Report on the remuneration report We have audited the Remuneration Report included on pages 34 to 40 of the directors’ report for the year ended 30 June 2009. The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with Section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with auditing standards.

Auditor’s opinion

In our opinion, the remuneration report of E&A Limited for the year ended 30 June 2009, complies with Section 300A of the Corporations Act 2001.

KPMG


Adelaide

24 September 2009

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TWeNTy larGeST ShareholDerS

The names of the twenty largest shareholders of ordinary shares of the Company as at 24 September 2009 are:

nAmE numbEr oF ordinArY FuLLY pAid shArEs

Port Tack Pty Ltd 19,642,589

vars Enterprises Pty Ltd <vars Trust A/C> 7,344,420

Maresa Pty Ltd 5,229,028

Stephen Young 5,114,225

vars Enterprises Pty Ltd <Mv2 Superannuation Fund A/C> 3,557,181

E.D. Consulting & Engineering Services Pty Ltd 2,283,220

Mr Nicholas John Bindi & Mrs Carolyn Jane Bindi 2,037,490

Mr Andrew Paul Hitchcock & Mrs karen Joanne Hitchcock 2,037,490

Port Tack Pty Ltd <Aquarius Investments A/C> 1,299,122

Segundo Eduardo Donoso 725,240

Obenox Pty Ltd <Michael Abbott Super Fund A/C> 715,508

Quality Wine Merchants Pty Ltd 600,000

I&k Johns Plumbing Pty Ltd 594,282

Mogens Harloff Jensen 594,282

Leoton Investments Pty Ltd 534,191

Terlet Super Pty Ltd <Terlet Super Fund A/C> 501,410

Bond Street Custodians Limited 333,333

Mr Trevor Edward Eccles & Mrs Cheryl Lorraine Eccles 333,333

Mr Matthew Peter McMahon 301,499

Mr Stephen Mark Gilbert 250,000

ToTAL 54,027,843

Total held by twenty largest ordinary shareholders as a percentage of this class is 81.72%.

ASX Additional Information

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SuBSTaNTial ShareholDerS

The names of substantial shareholders listed in the Company’s register as at 24 September 2009 are:

shArEhoLdEr shArEs %

Stephen Young and controlled entities 31,297,450 47.34%

Mark vartuli and controlled entities 10,965,815 16.59%

DiSTriBuTioN oF ShareholDerS

Analysis of numbers of shareholders by size of holding as listed in the Company’s register as at 24 September 2009 are:

rAngE oF hoLding numbEr oF shArEhoLdErs numbEr oF ordinArY shArEs %

1–1,000 59 17,237 0.03

1,001–5,000 386 1,300,219 1.97

5,001–10,000 245 2,074,203 3.14

10,001–100,000 260 7,709,285 11.66

100,001 and Over 27 55,010,558 83.21

Total 977 66,111,502 100%

All issued ordinary shares carry one vote per share and carry the rights to dividends.

559,911 options are held by one individual option holder. Options do not carry a right to vote.

The number of shareholders with less than a marketable parcel is 65.

voting rightsAll ordinary shares issued by E&A Limited carry one vote per share without restriction.

AsX AddiTionAL inFormATion e&a limiTeD 2009 aNNual reporT

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E&A Limited Corporate Directory

DireCTorS

mr stephen Young Executive Chairman

mr mark vartuli Executive Director

mr michael Abbott Non-Executive Director

mr michael Terlet Non-Executive Director

mr david Klingberg Non-Executive Director

SeCreTary

Mr Mark Seatree

reGiSTereD aND priNCipal oFFiCe

Level 27, 91 king William Street Adelaide South Australia 5000

Telephone: (08) 8212 2929 Facsimile: (08) 8231 1647 Website: www.ealimited.com.au

poSTal aDDreSS

GPO Box 1273, Adelaide South Australia 5001

SoliCiTorS

Thomson Playford Cutlers Lawyers 101 Pirie Street, Adelaide, South Australia 5000

auDiTorS

kPMG 151 Pirie Street, Adelaide, South Australia 5000

Share reGiSTer

Link Market Services Limited Level 9, 333 Collins Street Melbourne, victoria 3000

Telephone: 1300 554 474 Website: www.linkmarketservices.com.au

aSX CoDe

EAL

aCN

088 588 425

aBN

22 088 588 425

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E&A LimitEd 2009 AnnuAL REpoRt

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