Announcement PDF FOS Capital Limited ACN 637 156 275 Interim Financial Report for half-year ended 31 December 2021 Financial Report Half year ended 31 December 2021 ACN 637 156 275 1 | Page FOS Capital Limited ACN 637 156 275 Appendix 4D - Half Year Report for six months ended 31 December 2021 Results for announcement to the market Name of entity FOS CAPITAL LIMITED ACN 637 156 275 Reporting Period Half Year Ended 31 December 2021 Previous Corresponding period – half year ended 31 December 2020 Results for announcement to the market Revenue from ordinary activities Up 76.8% to 6,177,135 Profit from ordinary activities after tax attributable to members Down 30.9% to 287,446 Net profit for the period attributable to members Down 30.9% to 287,446 Amount per Security Franked amount per Security Nil Nil - Previous corresponding period Nil Nil - Current period Nil Nil - Previous corresponding period Nil Nil Interim Dividend - Current period Final Dividend No interim dividend has been declared for the half-year ended 31 December 2021. Net tangible assets per security Net tangible asset backing per ordinary security Current Period Previous Corresponding Period 12.9 cents 11.8 cents Control gained over entities during the half year ended 31 December 2021 On 1 October 2021 FOS Lighting Pty Limited acquired 100% shareholding in Ecopoint Limited, New Zealand. Ecopoint is a supplier of commercial and architectural lighting products in New Zealand. Since the acquisition date Ecopoint Limited has contributed net profit after tax of $63,422 which is included within the consolidated profit. Additional Appendix 4D disclosure requirements can be found in the enclosed interim financial report of FOS Capital Limited for the half year ended 31 December 2021. This report is also to be read in conjunction with the Annual Report of FOS Capital Limited for the year ended 30 June 2021 and any public announcements made by FOS Capital Limited during the reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules. This report is based on the consolidated financial statements for the half year ended 31 December 2021 which have been reviewed by William Buck. ` FOS Capital Limited ACN 637 156 275 Interim Financial Report for half-year ended 31 December 2021 Table of Contents Directors’ Report ................................................................................................................. 3 Condensed Consolidated Statement of Comprehensive Income ..................................... 5 Condensed Consolidated Statement of Financial Position ............................................... 6 Condensed Consolidated Statement of Changes in Equity .............................................. 7 Condensed Consolidated Statement of Cash Flows ......................................................... 8 Notes to Condensed Consolidated Half-Year Financial Statements ................................ 9 Directors’ Declaration ........................................................................................................ 13 Auditor’s Independence Declaration ................................................................................ 14 Independent Auditor’s Review Report ………………………………………………………15 2 | Page FOS Capital Limited ACN 637 156 275 Interim Financial Report for half-year ended 31 December 2021 Directors’ Report The directors present their report together with the condensed financial report of the Consolidated entity consisting of FOS Capital Limited and the entities it controlled (the Consolidated entity), for the half-year ended 31 December 2021 and independent auditor’s review report thereon. DIRECTORS The names of the company’s directors in office during the half-year and until the date of this report are set out below. Each of the directors was in office for this entire period, unless otherwise stated. Con Scrinis, Managing Director Michael Koutsakis, Director Michael Monsonego, Director Alexander (Sandy) Beard, Director PRINCIPAL ACTIVITIES The principal activities of the Consolidated entity include the manufacturing of a full range of commercial luminaries, outdoor fittings and linear extruded lighting as well as distributing a complete range of commercial and architectural lighting. RESULTS OF OPERATIONS AND SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS The Board is pleased to report that Consolidated entity’s trading improved significantly with group revenues of $6.18 million (2020: $3.49 million) for the half year ended 31 December 2021, orders in hand at December 2021 increased to $6.1 million compared to $1.4 million at December 2020 and active quotes at December 2021 was $50 million compared to $25 million at December 2020. The Directors of FOS Capital Limited take great pleasure in reporting consolidated net profit after tax $287,446 (2020: $416,083) for the half year ended 31 December 2021. This result takes into account the significant investment we have made is expanding our sales team and without the benefit of Job-Keeper from the previous year The Consolidated entity has been able to manage the period through Covid19 having endured significant disruption due to lock down. This lock down led to many projects being delayed with the constant rescheduling of production, nevertheless our outstanding team of professionals stood up to the task of always keeping our customers as our priority. We have also increased certain inventory items in order to protect ourselves from supply chain delays that are having an effect on our industry. On 1 October 2021 FOS Lighting Pty Ltd acquired a 100% shareholding in Ecopoint Limited, New Zealand. Ecopoint is a supplier of commercial and architectural lighting products in New Zealand. The business has been operating over 12 years and focus on applying solution-based lighting on the latest in luminaire design and performance. The Ecopoint acquisition will expand the Company’s geographic spread in New Zealand and also allow to distribute Ecopoint products in all states of Australia. We take this opportunity to thank all stake holders especially our dedicated staff and are looking forward to an exciting second half. MATTERS SUBSEQUENT TO REPORTING DATE There were no matters or circumstances specific to the Consolidated entity that have arisen since 31 December 2021 that have significantly affected or may significantly affect the Consolidated entity’s operations and state of affairs. 3 | Page FOS Capital Limited ACN 637 156 275 Interim Financial Report for half-year ended 31 December 2021 AUDITOR’S INDEPENDENCE DECLARATION A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 in relation to the review for the half-year attached to these financial statements. ROUNDING OF AMOUNTS In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2020/191, the amounts in the directors’ report and in the financial report have been rounded to the nearest dollar. Signed in accordance with a resolution of the directors. Con Scrinis Director Date: 18 February 2022 4 | Page FOS Capital Limited ACN 637 156 275 Interim Financial Report for half-year ended 31 December 2021 Condensed Consolidated Statement of Comprehensive Income for the half-year ended 31 December 2021 Notes 31 Dec 2021 31 Dec 2020 $ $ 6,177,135 3,494,219 Cost of sales (3,389,865) (2,211,202) Gross Profit 2,787,270 1,283,017 264,923 - 457,100 55,981 (729,191) (337,210) (1,579,154) (633,622) Depreciation of right of use assets (363,854) (194,507) Depreciation & amortisation (54,441) (22,201) Finance costs (14,370) (13,155) Profit before income tax expense 311,183 595,403 Income tax expense (23,737) (179,320) Profit after tax 287,446 416,083 (21,302) - 266,144 416,083 0.63 1.38 Revenue Revenue Other Income Share of profit from JSB Lighting 2 2 Expenses Selling and distribution expenses Administrative and corporate expenses Other comprehensive income Other comprehensive income that may subsequently reclassified to the profit or loss - foreign currency translation loss Total comprehensive income for half-year Earnings per share (cents per share) for profit attributable to the equity holders of the entity: Basic and diluted earnings per share 5 The accompanying notes forms part of these Financial Statements 5 | Page FOS Capital Limited ACN 637 156 275 Interim Financial Report for half-year ended 31 December 2021 Condensed Consolidated Statement of Financial Position as at 31 December 2021 Notes 31 Dec 2021 $ 30 Jun 2021 $ Current assets Cash and cash equivalents Trade and other receivables Inventories Other current assets Total current assets 1,988,489 1,954,383 3,629,954 690,086 8,262,912 2,965,249 2,302,275 2,451,465 112,680 7,831,669 Non-current assets Plant and equipment Right of use assets Intangible assets Deposits for leaseholds Deferred tax assets Total Non-current assets Total assets 375,087 1,645,861 1,561,397 45,000 739,241 4,366,586 12,629,498 397,464 938,863 1,025,603 45,000 745,978 3,152,908 10,984,577 Current liabilities Trade and other payables Contract Liabilities Lease liabilities Provision for employee entitlements Provision for income tax expense Provision for warranty Total current liabilities 1,563,576 622,968 752,847 486,459 216,746 29,571 3,672,167 1,603,197 630,625 440,017 366,398 42,252 3,082,489 Lease liabilities Provision for employee entitlements Deferred tax liability Total non-current liabilities Total Liabilities 1,096,035 31,711 274,840 1,402,586 5,074,753 675,746 21,419 282,041 979,206 4,061,695 Net assets 7,554,745 6,922,882 4,054,389 (21,185) 3,521,541 7,554,745 3,688,670 117 3,234,095 6,922,882 Non-current liabilities Equity Contributed capital Foreign currency translation reserve Retained earnings Total equity 4 The accompanying notes forms part of these Financial Statements 6 | Page FOS Capital Limited ACN 637 156 275 Interim Financial Report for half-year ended 31 December 2021 Condensed Consolidated Statement of Changes in Equity Contributed equity $ Common control reserve $ Foreign currency translation reserve $ Retained earnings $ Total equity $ 400,100 2,415,467 - 76,517 2,892,084 - (2,415,467) - 2,415,467 - 600,000 - - - 600,000 Profit for the half year - - - 416,083 416,083 At 31 December 2020 1,000,100 - - 2,908,067 3,908,167 Contributed equity $ Common control reserve $ Foreign currency translation reserve $ Retained earnings $ Total equity $ 3,688,670 - 117 3,234,095 6,922,882 365,719 - - - 365,719 Change in foreign currency translation reserve - - (21,302) - (21,302) Profit for the half year - - - 287,446 287,446 At 31 December 2021 4,054,389 - (21,185) 3,521,541 7,554,745 For the half year ended 31 December 2020 At 1 July 2020 Transfer of common control reserves to retained earnings Issue of shares for investment in JSB For the half year ended 31 December 2021 At 1 July 2021 Issue of shares for acquisition of Ecopoint Limited The accompanying notes forms part of these Financial Statements 7 | Page FOS Capital Limited ACN 637 156 275 Interim Financial Report for half-year ended 31 December 2021 Condensed Consolidated Statement of Cash Flows for the half-year ended 31 December 2021 31 Dec 2021 31 Dec 2020 $ $ 7,282,929 4,039,151 102,342 457,100 (6,950,558) (3,797,113) 570 - Interest paid (14,370) (13,155) Payment of income tax (173,853) - Net cash flows from operating activities 247,060 685,983 (2,806) - (754,299) - (757,105) - Payment of lease liabilities (445,413) (185,164) Net cash flows from / (used in) financing activities (445,413) (185,164) Net increase / (decrease) in cash and cash equivalents (955,458) 500,819 Impact of exchange rates on cash and cash equivalents (21,302) - Cash and cash equivalents at beginning of half year 2,965,249 648,608 Cash and cash equivalents at end of the half year 1,988,489 1,149,427 Cash flows from operating activities Receipts from customers Income from government grants - COVID Support Payments to suppliers and employees Interest received Cash flows from investing activities Payment for plant and equipment Payment for acquisition of Ecopoint Limited net of cash acquired (Note 6) Net cash flows used in investing activities Cash flows from financing activities The accompanying notes forms part of these Financial Statements 8 | Page FOS Capital Limited ACN 637 156 275 Interim Financial Report for half-year ended 31 December 2021 Notes to Condensed Consolidated Half-Year Financial Statements 1. BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT The condensed consolidated half year financial report does not include all notes of the type normally included within the annual financial report. It is recommended that this half-year financial report be read in conjunction with the annual financial report for the year ended 30 June 2021 of FOS Capital Limited. The financial report covers FOS Capital Limited and controlled entities as a Consolidated entity. FOS Capital Limited is a company limited by shares, incorporated, and domiciled in Australia. The address of FOS Capital Limited’s registered office and principal place of business is Unit 3, 41 Rose Street, Richmond, VIC 3121. FOS Capital Limited is a for-profit entity for the purpose of preparing the financial statements. The half-year financial report was authorised for issue by the directors as at the date of signing the attached Directors’ Declaration. a. Basis of accounting This condensed consolidated half-year financial report has been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting, as appropriate for for-profit entities, and the Corporations Act 2001. Compliance with AASB 134, as appropriate for for-profit entities, ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting. The condensed consolidated half-year financial report includes the consolidated results of FOS Capital Limited and its controlled entities FOS Lighting Pty Limited, Baker & McAuliffe Holdings Pty Ltd, FOSCAP Investment Pty Ltd, JSB Lighting (NZ) Limited, and Ecopoint Limited, New Zealand (acquired on 1 October 2021) for the half year ended 31 December 2021. The half-year financial report has been prepared in accordance with the historical cost convention, with the exception of fair values applied to the acquisition of assets and assumption of liabilities upon business acquisitions. The accounting policies applied in this half-year financial report are consistent with those of the annual financial report for the year ended 30 June 2021 and the corresponding half-year. (b) New or amended Accounting Standards and Interpretations adopted The Consolidated entity adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. There was no material impact upon these financial statements arising from their adoption. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted, however the directors also consider that none of these will have a material impact on the Consolidated entity’s existing accounting policies. 9 | Page FOS Capital Limited ACN 637 156 275 Interim Financial Report for half-year ended 31 December 2021 Notes to Condensed Consolidated Half-Year Financial Statements (cont’d) 2. REVENUE 31 Dec 2021 $ 31 Dec 2020 $ 6,177,135 3,494,219 102,342 457,100 Interest received 570 - Rent received 66,014 - Re-assignment or settlement of lease liability obligations 82,928 - Other revenue 13,069 - 264,923 457,100 6,442,058 3,951,319 a) Sales revenue b) Other Income Revenue from government grants – COVID support Total Revenue 3. OPERATING SEGMENTS The Consolidated entity operates in one segment being the manufacturing a full range of commercial luminaries, outdoor fittings and linear extruded lighting as well as distributing a complete range of commercial and architectural lighting in Australia and New Zealand. Geographic Segment information for the half year ended 31 December 2021 Sales revenue Government grants – COVID support Other revenue Total Revenue Net profit after tax Total assets Total liabilities Australia $ 5,561,755 102,342 162,488 5,826,585 New Zealand $ 615,380 93 615,473 Total $ 6,177,135 102,342 162,581 6,442,058 231,591 55,855 287,446 10,355,511 (4,067,018) 2,273,987 (1,007,735) 12,629,498 (5,074,753) The Consolidated entity did not include Baker & McAuliffe Holdings Pty Ltd, JSB Lighting (NZ) Limited and Ecopoint Limited (New Zealand) for the half year ended 31 December 2020 as they were acquired subsequent to that date. As the Consolidated entity did not trade in New Zealand during half year ended 31 December 2020, hence no comparative geographic segment information is provided in this report. 10 | Page FOS Capital Limited ACN 637 156 275 Interim Financial Report for half-year ended 31 December 2021 Notes to Condensed Consolidated Half-Year Financial Statements (cont’d) 4. ISSUED CAPITAL Balance as at 1 July 2021 Share issued to shareholders of Ecopoint Limited Balance as at 31 December 2021 31 Dec 2021 $ 3,688,670 365,719 4,054,389 Number of shares issued Number Balance as at 1 July 2021 45,000,000 Share issued to shareholders of Ecopoint Limited 1,306,139 Balance as at 31 December 2021 46,306,139 On 1 October 2021 the Company issued 1,306,139 fully paid ordinary shares an issue price of $0.28 per shares to shareholders of Ecopoint Limited as a part of consideration for the acquisition of Ecopoint Limited. 5. EARNINGS PER SHARE Reconciliation of earnings used in calculating earnings per share: Profit used to calculate earnings per share Weighted average number of ordinary shares used in calculating earnings and diluted earnings per share Earnings per share (in cents) 31 Dec 2021 31 Dec 2020 $287,446 $416,083 Number of shares Number of shares 45,653,070 30,668,478 0.63 1.36 6. ACQUISITION OF ECOPOINT LIMITED On 1 October 2021 FOS Lighting Pty Limited acquired 100% shareholding in Ecopoint Limited, New Zealand. Ecopoint is a supplier of commercial and architectural lighting products in New Zealand. The business has been operating over 12 years and focus on applying solution-based lighting on the latest in luminaire design and performance. The provisional fair values of the assets and liabilities of Ecopoint Limited as at 1 October 2021 were as follows; Cash and cash equivalents Trade receivables Inventory Prepayments Plant and equipment Goodwill Trade and other payables $ 689,527 221,986 457,816 37,140 3,072 561,980 (161,976) 1,809,545 11 | Page FOS Capital Limited ACN 637 156 275 Interim Financial Report for half-year ended 31 December 2021 Notes to Condensed Consolidated Half-Year Financial Statements (cont’d) 6. ACQUISITION OF ECOPOINT LIMITED (Cont’d) Details of the purchase consideration: Issue of shares to shareholders of Ecopoint Cash consideration paid 365,719 1,443,826 1,809,545 Contribution since acquisition Since the acquisition date Ecopoint Limited has contributed revenue of $591,267 and a profit after tax of $63,422 which is included within the consolidated profit. 7. CONTINGENT LIABILTIES With the exception of the deposits paid $45,000 (June 2021: $45,000) for leasehold tenancies, as report date the directors are unaware of any contingent liabilities or commitments that may materially impact the Consolidated entity. 8. SUBSEQUENT EVENTS There were no matters or circumstances specific to the Consolidated entity that have arisen since 31 December 2021 that have significantly affected or may significantly affect the Consolidated entity’s operations and state of affairs. 12 | Page FOS Capital Limited ACN 637 156 275 Interim Financial Report for half-year ended 31 December 2021 Directors’ Declaration The directors declare that: In the directors’ opinion, the financial statements and notes thereto, as set out in the accompanying financial report are in accordance with the Corporations Act 2001, including: complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and giving a true and fair view of the financial position of the Consolidated entity as at 31 December 2021 and of its performance for the half-year ended on that date. In the directors’ opinion there are reasonable grounds, at the date of this declaration, to believe that FOS Capital Limited will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the directors. Con Scrinis Director Date: 18 February 2022 13 | Page AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF FOS CAPITAL LTD I declare that, to the best of my knowledge and belief during the half-year ended 31 December 2021 there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and — no contraventions of any applicable code of professional conduct in relation to the review. William Buck Audit (Vic) Pty Ltd ABN 59 116 151 136 N. S. Benbow Director Dated this 18th day of February 2022 14 | Page FOS Capital Ltd Independent auditor’s review report Report on the Review of the Half-Year Financial Report Conclusion We have reviewed the accompanying half-year financial report of FOS Capital Ltd (the Company) and the entities it controlled at the half-year’s end or from time to time during the half year (together, the consolidated entity), which comprises the condensed consolidated statement of financial position as at 31 December 2021, the condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half-year ended on that date, a summary of significant accounting policies and other explanatory information, and the directors’ declaration. Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of FOS Capital Ltd is not in accordance with the Corporations Act 2001 including: a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2021 and of its performance for the half year ended on that date; and b) complying with Australian Accounting Standard 134 Interim Financial Reporting and the Corporations Regulations 2001. Basis for Conclusion We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report. We are independent of the Company in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. Responsibility of Management for the Financial Report The directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. 15 | Page Auditor’s Responsibilities for the Review of the Financial Report Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Company’s financial position as at 31 December 2021 and its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. William Buck Entity ABN: 59 116 151 136 N. S. Benbow Director Melbourne, 18 February 2022 16 | Page