6. Offer one explanation why Emeco has not paid any dividends to its shareholders for at least five years. (1 mark)

Table 7: Five year financial summary 2019 2018 2017 2016 2015 REVENUE Revenue from rental income Revenue from sale of machines and parts Revenue from maintenance services Total $'000 $'000 $'000 $'000 363,258 1,680 99,548 464,486 323,986 1,835 55,171 380,992 208,286 2,648 22.080 233,014 139,545 5,470 22,956 167,970 206,718 2,788 31,925 241,431 PROFIT EBITDA EBIT NPAT Statutory profit/(loss) for the year Basic EPS $'000 $'000 $'000 $'000 cents 213,966 125,352 63,126 33,961 11.3 153,004 83,193 20,068 11,376 83,504 (97,066) (90,891) (180,463) (3.7) 54,246 (14,219) (90,519) (225,389) (15.1) 43,364 (59,225) (94,813) (127,703) (15.8) BALANCE SHEET Total assets Total liabilities Shareholders' equity Total debt $'000 $'000 $'000 $'000 768,669 570,591 198,078 481,243 716,052 562,570 153,482 484,581 520,679 552,686 (32,007) 474,109 427,692 421,695 5,997 377,818 708,755 487,284 221,471 423,971 CASH FLOWS Net cash flows from operating activities Net cash flows from investing activities Net cash flows from financing activities Free cash flow after repayment/(drawdown) of net debt Free cash flow before repayment (drawdown) of net debt $'000 $'000 $'000 $'000 $'000 169,464 (251,024) (53,718) (135,278) (130,373) 125,533 (127,087) 156,730 155,174 162,856 14.223 486 (21,318) (6,609) (334) 70,644 (23,112) (49,311) (1,779) 5,561 (2,894) (13,013) (6,733) (22,640) (18,495) 323,212 3,178,859 2,436,860 599,675 599,675 DIVIDENDS Number of ordinary shares at year end Total dividends paid in respect to financial year Ordinary dividends per share declared Special dividends per share declared 0 000 $'000 cents cents 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 90.1 69.0 KEY RATIO'S Average fleet utilisation Average fleet operating utilisation Operating EBIT ROC2 Net debt to Operating EBITDA 63.9 89.6 57.4 19.6 2.62 87.3 52.9 3.3 5.47 76.5 44.0 (2.7) 6.74 21.0 - 2.0 45.7 (9.4) 10.29 Franking account The Company 2019 2018 $'000 $'000 Dividend franking account 30% franking credits available to shareholders of Emeco Holdings Limited for subsequent financial years 77,222 65,146 The above available amounts are based on the balance of the dividend franking account at year end adjusted for: (a) franking credits that will arise from the payment of current tax liabilities and recovery of current tax receivables; (b) franking debits that will arise from the payment of dividends recognised as a liability at the year end; (c) franking credits that will arise from the receipt of dividends recognised as receivables by the tax consolidated group at the year end; (d) franking credits that the entity may be prevented from distributing in subsequent years, and (e) franking credits acquired through business combinations. The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. The impact on the dividend franking account of dividends proposed after the balance sheet date but not recognised as a liability is to reduce it by $Nil (2018: $Nil). In accordance with the tax consolidation legislation, the Company as the head entity in the Australian tax consolidated group has also assumed the benefit of $77,222,000 (2018: $65, 146,000) franking credits. Table 7: Five year financial summary 2019 2018 2017 2016 2015 REVENUE Revenue from rental income Revenue from sale of machines and parts Revenue from maintenance services Total $'000 $'000 $'000 $'000 363,258 1,680 99,548 464,486 323,986 1,835 55,171 380,992 208,286 2,648 22.080 233,014 139,545 5,470 22,956 167,970 206,718 2,788 31,925 241,431 PROFIT EBITDA EBIT NPAT Statutory profit/(loss) for the year Basic EPS $'000 $'000 $'000 $'000 cents 213,966 125,352 63,126 33,961 11.3 153,004 83,193 20,068 11,376 83,504 (97,066) (90,891) (180,463) (3.7) 54,246 (14,219) (90,519) (225,389) (15.1) 43,364 (59,225) (94,813) (127,703) (15.8) BALANCE SHEET Total assets Total liabilities Shareholders' equity Total debt $'000 $'000 $'000 $'000 768,669 570,591 198,078 481,243 716,052 562,570 153,482 484,581 520,679 552,686 (32,007) 474,109 427,692 421,695 5,997 377,818 708,755 487,284 221,471 423,971 CASH FLOWS Net cash flows from operating activities Net cash flows from investing activities Net cash flows from financing activities Free cash flow after repayment/(drawdown) of net debt Free cash flow before repayment (drawdown) of net debt $'000 $'000 $'000 $'000 $'000 169,464 (251,024) (53,718) (135,278) (130,373) 125,533 (127,087) 156,730 155,174 162,856 14.223 486 (21,318) (6,609) (334) 70,644 (23,112) (49,311) (1,779) 5,561 (2,894) (13,013) (6,733) (22,640) (18,495) 323,212 3,178,859 2,436,860 599,675 599,675 DIVIDENDS Number of ordinary shares at year end Total dividends paid in respect to financial year Ordinary dividends per share declared Special dividends per share declared 0 000 $'000 cents cents 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 90.1 69.0 KEY RATIO'S Average fleet utilisation Average fleet operating utilisation Operating EBIT ROC2 Net debt to Operating EBITDA 63.9 89.6 57.4 19.6 2.62 87.3 52.9 3.3 5.47 76.5 44.0 (2.7) 6.74 21.0 - 2.0 45.7 (9.4) 10.29 Franking account The Company 2019 2018 $'000 $'000 Dividend franking account 30% franking credits available to shareholders of Emeco Holdings Limited for subsequent financial years 77,222 65,146 The above available amounts are based on the balance of the dividend franking account at year end adjusted for: (a) franking credits that will arise from the payment of current tax liabilities and recovery of current tax receivables; (b) franking debits that will arise from the payment of dividends recognised as a liability at the year end; (c) franking credits that will arise from the receipt of dividends recognised as receivables by the tax consolidated group at the year end; (d) franking credits that the entity may be prevented from distributing in subsequent years, and (e) franking credits acquired through business combinations. The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. The impact on the dividend franking account of dividends proposed after the balance sheet date but not recognised as a liability is to reduce it by $Nil (2018: $Nil). In accordance with the tax consolidation legislation, the Company as the head entity in the Australian tax consolidated group has also assumed the benefit of $77,222,000 (2018: $65, 146,000) franking credits