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7. Financial assets and financial liabilities

(a) Cash and cash equivalents

June 2019

June 2018

$’000

$’000

Current assets

Cash and cash equivalents

96,326

30,855

Cash and cash equivalents include cash at bank and on hand as well as deposits held at call with financial institutions. The Company's exposure to interest rate risk is discussed in Note 9(d) (9. Financial and capital risk management).

Reconciliation of (loss)/profit after income tax to net cash inflow from operating activities

June 2019

June 2018

$'000

$'000

(Loss) / profit for the year

(8,237)

(3,796)

Adjustment for:

Depreciation and amortisation

20,972

15,467

Net finance income / (expense)

(331)

187

Interest received

(1,696)

(516)

Income tax (benefit) / expense

(3,427)

(1,627)

(Gain) / loss on disposal of non-current assets

(4)

-

Change in operating assets and liabilities

(Increase) / decrease in trade and other debtors

(1,504)

(2,294)

Increase / (decrease) in trade creditors and other liabilities

3,333

2,718

(Increase) / decrease in prepayments

(126)

(165)

Movement in current and deferred taxes

495

(1,701)

Net cash inflow from operating activities

9,475

8,273

Reconciliation of movements of liabilities and equity to cash flows arising from financing activities

June 2019

June 2018

$’000

$’000

Proceeds from issue of share capital

301,450

279,500

Net cash inflow from financing activities

301,450

279,500

(b) Trade and other receivables

June 2019

June 2018

$’000

$’000

Current assets

Trade receivables

3,869

3,106

Other receivables

2,467

1,728

6,336

4,834

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less expected credit loss provision raised for doubtful debts. Trade receivables are generally due for settlement within 30 days. The expected credit loss provision was nil at 30 June 2019.

(c) Prepayments

June 2019

June 2018

$’000

$’000

Prepayments

Advance on land acquisition

10,000

-

Other prepayments

390

264

10,390

264

(d) Trade and other payables

June 2019

June 2018

$’000

$’000

Current liabilities

Trade payables

30,837

11,543

Other payables

266

-

31,103

11,543

Trade and other payables represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid and are measured at amortised cost. The amounts are unsecured and are usually paid within 30 days of recognition.

(e) Borrowings

Non-interest-bearing liabilities

June 2019

June 2018

$’000

$’000

Current

Deferred purchase obligation

15,413

-

15,413

-

Non-current

Term loan

4

3

Deferred purchase obligation

-

15,744

4

15,747

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

(i) Deferred purchase obligation

As part of the AWD Program, AWD and ASC Engineering Pty Limited, subsidiaries of ASC Pty Ltd at the time, entered into an agreement with the Commonwealth of Australia where the Commonwealth of Australia made a contribution to build a production facility required for the construction of the AWDs.

Under this arrangement, AWD had an obligation to purchase the facility within three months of the completion of construction of the last AWD at an amount equal to the lesser of the written down value of the facility at an agreed depreciation rate, and the fair market value determined by a licensed valuer. No loss is expected to be incurred in relation to this deferred purchase obligation. As of 26 March 2017, this obligation transferred to the Company as owner of the critical infrastructure of the AWD shipyard.

The deferred purchase obligation is measured at fair value of $15.4 million at 30 June 2019 in accordance with AASB 9 Financial Instruments. The likely discharge date for the liability is within 12 months of this financial year end and the loan has been reclassified from non-current to current as a result.

(ii) Term loan

The term loan consists of an interest free 99-year loan to the Company from the Department of Manufacturing Industry, Small Business and Regional Development (SA), for expenditure on capital items and to assist with site development costs. The $0.2 million term loan is repayable in 2094 or at the option of the Company at any time prior to 2094. The term loan has been discounted to its present value of $0.004 million at 30 June 2019 (2018: $0.003 million) in accordance with AASB 9 Financial Instruments.