2020
ANNUAL REPORT
CONTENTS
1 2020 Highlights
2 Chairman’s Report
12 Board of Directors and Key Management Team
16 Financial Report
4 Managing Director’s Report
92 Directors’ Declaration
7 The Acrow Difference
8 Business Summary
10 The Acrow Difference and Safety
93 Independent Auditor’s Report
96 Shareholder Information
CORPORATE DIRECTORY
Company
Acrow Formwork and Construction Services Limited
Board of Directors
Mr Peter Lancken – Non-Executive Chairman
Mr Steven Boland – Managing Director and
Chief Executive Officer
Mrs Margaret Prokop – Executive Director
Mr Gregg Taylor – Non-Executive Director
Mr Josh May – Non-Executive Director
Mr David Moffat – Non-Executive Director (appointed
19 September 2019)
Mr Mike Hill – Non-Executive Director (resigned
19 September 2019)
Share Registry
Automic Group
Level 5, 126 Phillip Street
Sydney NSW 2000
Auditor
Grant Thornton Audit Pty Ltd
Level 17, 383 Kent Street
Sydney NSW Australia 2000
ASX Code
ACF
ACN
124 893 465
Chief Financial Officer
Mr Andrew Crowther
Company Secretary
Mr Lee Tamplin
Registered Office
c/- Automic Group
Level 5, 126 Phillip Street
Sydney NSW 2000
Annual General Meeting
The Company will hold its 2020 Annual General Meeting
(“AGM”) at Automic Group, Level 5, 126 Phillip Street,
Sydney NSW 2000 at 1:00pm on Wednesday, 25
November 2020.
Pursuant to ASX Listing Rule 3.13.1 and Clause 13.3
of the Company’s Constitution, nominations for election
of directors at the AGM must be received not less than
30 Business Days before the date of the AGM, being no
later than 14 October 2020.
www.acrow.com.au
Front cover top: Opera Residences,
Circular Quay, Sydney NSW,
Front cover bottom: Sun Metals
Expansion, Townsville QLD
2020 HIGHLIGHTS
1
AT THE START OF EVERY GREAT PROJECT SINCE 1936.
Acrow is a leading provider of engineered formwork
solutions and scaffold hire in Australia.
EBITDA
$m
Operating Cash
Profit $m
Total Revenue
$m
15.0
16
14
12
10
8
6
4
2
0
12
10
8
6
4
2
0
11.2
87
100
80
60
40
20
10
0
16
17
18
19
20
16
17
18
19
20
16
17
18
19
20
Revenue by
Business Unit*
Revenue by
Geography*
Commercial and residential scaffold 30%
Industrial scaffold 12%
Formwork 58%
Total revenue
$87m
Revenue
increase
22.5%
*Revenue includes sale of ex hire equipment
Queensland 42%
New South Wales 29%
Victoria 14%
South Australia 5%
Western Australia 4%
Tasmania 6%
Acrow Annual report 2020 2
CHAIRMAN’S REPORT
Our FY20 results reinforces the success of the strategic
pivot of our Company just over two years ago.
Through building on acquisitions and increasing our
national footprint, we are cementing Acrow’s position as
a market leader in the hire and sale of equipment in the
civil formwork and industrial scaffolding markets.
The year was successful in many ways. Underlying
net profit after tax (NPAT) was up 20% over FY19 to
$9.0 million (pre-AASB16), sales revenue was up 22%
to $87.0 million, and (pre-AASB16) underlying earnings
before interest, tax, depreciation and amortisation
(EBITDA) increased 30% to $15.0 million. While reported
NPAT was down 17% to $4.1 million, this was primarily
due to costs associated with the acquisition and
integration of Uni-span during the year.
Despite the uncertainty generated by the global
pandemic, it was a transformative year for Acrow following
the purchase and integration of Uni-span and consistent
with our strategy to transition the business towards a
greater exposure to the civil infrastructure market.
Cash flow generation was stronger due to increased
EBITDA in the second half of FY20 following the
integration of Uni-span, together with successful measures
to counter the impact of Covid-19 and improved debtors
collections. The result also benefited from increased
momentum in civil engineering projects, higher product
sales and a record performance by Natform.
Strategy
Acrow is a leading provider of engineered formwork
solutions and scaffolding hire systems, and we
serve more than 1,300 customers in the Australian
construction and civil engineering markets. Our national
network of scaffolding and formwork branches has
10 locations in six states across Australia. We provide
dry hire solutions, supplying formwork equipment and
engineering expertise to support concrete structures
during construction, and scaffolding systems through
both dry hire and wet hire models, where we supply
equipment and labour.
Our aim is to grow our higher margin civil formwork
and industrial scaffolding businesses in the east coast
markets of Australia, with a focus on tendering on
government-funded projects. This strategy underpinned
the strong result, compensating for softness in the
residential scaffolding business which we strategically
exited last year in Sydney and Melbourne.
Dividends
The Board’s dividend policy is to pay between 30% and
50% of operating cash profit. Due to the uncertainty of
Covid-19, the Board determined to withdraw the interim
dividend – a prudent step at the time to strengthen the
balance sheet. As the pandemic progressed and Acrow
continued to perform strongly, the Board reinstated
the dividend, declaring a final dividend of 1.05 cents
per share (fully franked), up from 1.0 cent unfranked
declared in FY19.
Uni-span Integration
In October 2019, we acquired Uni-span, a privately
owned Queensland-based formwork and industrial
scaffolding and labour hire company with operations in
New South Wales and Victoria.
The price was $21.25 million (pre-earnouts),
representing a multiple of 4.4x normalised FY19
EBITDA, and the purchase has grown our footprint in
Queensland’s industrial scaffold market which we plan to
expand nationally.
The acquisition was instrumental in our winning a tender
to supply formwork equipment to the Sun-metals zinc
refinery expansion project in Townsville. We also renewed
Origin Energy’s industrial scaffold contract, worth circa
$13 million over the next five years, and secured work on
the Sydney and Melbourne Metro Rail projects.
The integration was completed on schedule with
annualised cost savings of $2.2 million, in excess of
original projections of $1.5-$2.0 million. The acquisition
is part of our strategy to expand our products and
services across the country and follows the successful
purchase of Natform in FY19. The acquisition also
gave the group access to Uni-span’s exclusive
distribution arrangement with ULMA, a leading Spanish
manufacturer and supplier of formwork, shoring
and temporary scaffold systems in Australia and
New Zealand which was extended by three years in
November 2019.
Governance
Acrow’s most important assets are the integrity of its
people and its reputation as an honest, ethical and
Acrow Annual report 2020 Legacy Way, Brisbane QLD
3
15.0m EBITDA UP 30%
FROM 2019
professional Australian company. We maintain a modern,
sound governance framework with well-defined policies.
and safety of our employees, customers, suppliers and
contractors guided our response throughout the crisis.
In September 2019, we were delighted to welcome
David Moffat as a Non-executive Director. David is a
seasoned construction industry professional, with a
career spanning over 35 years, and his experience and
expertise in construction management, innovation and
safety have broadened the Board’s skill base.
Michael Hill stepped down as a Non-executive Director
at the same time. He was instrumental in transitioning
the company from private ownership to its public
listing in April 2018 and we thank him for his valuable
contribution to the Board and the company.
Covid-19 Response
Our response to the pandemic accelerated in March
after the detrimental impacts on community health and
economic activity became apparent. The Board and
management implemented risk mitigation measures to
ensure minimal disruption to operations and maintain a
solid financial footing. We focused on prudent cash flow
management, including deferral and extension of term
loans and consolidation and extension of depot leases,
contributing both temporary and permanent lease
reductions. Non-essential capital expenditure for service
provision and travel were also curtailed.
Thankfully, construction was deemed an essential
service by the Federal and State government and all
sites continued to operate. Our focus on the health
The Future
Despite the economic headwinds, Acrow has continued
to trade solidly since the onset of the pandemic. We
continue to have a record pipeline of opportunities and
are well positioned to continue our growth.
The year ahead will be a challenging one as we navigate
the social and economic impacts of the pandemic,
but our focus on long term construction projects
underpinned by federal and state government funding
should be beneficial to our business. With our national
footprint of operational depots, wide range of available
products, and talented staff, we are uniquely placed to
continue to expand and lead the sector.
In closing, I would like to acknowledge the ongoing
support of our shareholders. I thank my fellow Board
members for their commitment and guidance, and
would also like to recognise our dedicated management
and staff—led by Steven Boland—who have proven
themselves enthusiastic, dedicated and professional in
overcoming the challenges we have had to face during
the past six months.
Peter Lancken AM Chairman
Acrow Annual report 2020 4
MANAGING DIRECTOR’S REPORT
Building on our transformation over the past two years,
I believe that this outstanding result is a precursor to a
new period of growth for Acrow.
As another year as a listed company begins, I believe
there is no other company in Australia with as broad
a product range, across hire and sales of formwork,
screens and scaffolding equipment, or geographic
footprint in our sector that can service the construction
industry as well as we can.
Our performance in FY20 validates our decision just
over two years ago to pivot towards the formwork
and industrial scaffolding markets while reducing
our exposure to the residential/commercial scaffold
segments of the market.
Our shift in focus is now all but complete with over 75%
of Acrow’s earnings in FY20 originating from the civil and
industrial sectors. A complete reversal of our position in
2018. This result has been achieved via:
■
■
■
a formwork equipment focused capex program
that has resulted in minimum returns of 40%
being achieved;
the successful acquisitions of Natform in 2018 and
Uni-span in October 2019; and
improved capability of both engineering
and operational management, focussed on
delivering effective customer solutions to the civil
infrastructure markets.
Assisted by the acquisition of Uni-span and Natform, our
project pipeline of opportunities is up 63% and active
hire contracts have risen 62% year on year. We expect
that these numbers provide strong lead indicators for our
FY21 prospects.
Health & Safety
We are committed to ensuring that our employees
and customers are safe and work in a professional
environment. In FY20, our lost time injury frequency
rate reduced to 2.4 from 6.0, a very pleasing result
and favourable compared to the construction industry
average. This improvement was attributable to an
ongoing focus on developing and enhancing our
processes and systems. Our goal remains achieving a
zero-injury rate and ensuring all our workers go home
safely every night.
Financial & Business Overview
The strong performance in the second half of the year
was supported by the eight-month contribution from
the Uni-span acquisition, the successful completion of
the Sun-metals project in Townsville, greatly improved
results from Natform, especially in 4Q FY20, and a
greater focus and subsequent result from product sales.
The Uni-span purchase led to an increase in net debt
in the first half to $17.5 million from $3.6 million in the
prior year, which we reduced in the second half to
$14.6 million. Operating cash profit increased 27% to
$11.2 million.
Formwork
The Formwork division expanded with the acquisition
of Uni-span, opening up new markets and regions and
adding an equipment sales component. Product sales
now comprise 23% of revenue, up from 9%.
Amongst the many highlights of the year those that
stand out include:
■
■
■
the Sun-metals contract in Townsville that
generated circa $7 million in revenue across a range
of packages;
sale of Acrow Powershore equipment to BKH Group
for use on the Sydney Metro Barangaroo Station
development to the value of $3.2 million; and
significant penetration into the Victorian civil
infrastructure market. Acrow is now the major
supplier on both the Melbourne Metro Rail and
Melbourne Western Distributor projects.
In relation to our Natform screens business we have
had a very successful second half of FY20 that has now
carried forward into FY21.
In Sydney, Natform secured contracts to supply screens
to two major St Leonards high rise developments that
will generate circa $1.6 million in revenue. Adding to
this success, in July 20 the business secured its largest
ever contract to supply screens to the Meriton twin
tower development in Parramatta worth over $1.1 million
in revenue.
Acrow Annual report 2020 22% INCREASE IN
REVENUE
5
Toowoomba Second Range
Crossing, Toowoomba QLD
Natform is also successfully gaining market share in
the Victorian screens market and we expect to see
considerable growth from this market in coming years.
Commercial & Residential Scaffold
The strategic exit from the two-storey residential scaffold
business in New South Wales and Victoria impacted
the division’s revenue. This move was always part of
the overarching strategy of the Company to move away
from the highly commoditised segments of the market.
Excluding this business, revenue was up 6%, supported
by contributions from Uni-span. In the second half,
scaffold hire prices softened, and activity levels were put
under pressure due to Covid-19 restrictions.
Acrow remains committed to operating a commercial
scaffold division, as we believe there will be both
short-term to medium-term opportunities to grow
market share, as some competitors exit the industry
due to the difficult market conditions. Longer-term,
we would expect the division should benefit from a
cyclical recovery.
Industrial Scaffold
The acquisition of Uni-span has opened new
opportunities in the energy, mining and industrial
sectors, underpinned by the extension of our significant
contract with Origin Energy. We are aiming to expand
the business nationally from its Queensland base, and
already have won contracts in New South Wales.
The competitive dynamic in this space has strong
similarities to the civil infrastructure sector, as customers
value safety, quality, equipment suitability and overall
service provision above price in their tendering
processes. Expanding this business will be a strong
focus for the Company going forward.
Strong Balance Sheet
and Cashflow
Total assets increased $72.9 million to $148.2 million
primarily due to the adoption of AASB16, which
increased right-of-use assets by $32.4 million, and
Acrow Annual report 2020 6
MANAGING DIRECTOR’S REPORT (continued)
the acquisition of Uni-span which added $25 million in
property, plant and equipment.
The Group made use of accelerated depreciation
deductions and carried forward tax losses, resulting
in no tax being payable for the year and a $0.3 million
tax credit. Capital expenditure during the year totalled
$12.1 million, including $3.8 million for maintenance and
$8.3 million for growth initiatives.
In December 2019, we successfully undertook
a $5.2 million placement with institutional and
sophisticated investors, with the proceeds used to fund
the Sun-metals’ zinc refinery expansion contract and
Uni-span’s growth opportunities.
Our People
We aim to recruit, train and retain the best management
and engineering talent to drive the business, and
continue to invest in our people so Acrow has the
knowledge and systems to support the Company’s next
phase of growth. This includes developing engineering
expertise and providing commercial customer solutions,
and we encourage our professional staff to strengthen
skills and industry accreditations. As the company
grows, we intend to attract more experienced, qualified
and like-minded talent to build our business. I am very
proud to say that over the past two years especially,
Acrow has now developed a very talented, diverse, and
dedicated team that I believe will serve the business
extremely well for many years to come.
Covid-19 Response
Covid-19’s impact on Acrow to-date has been
negligible, with our focus on large government-funded
infrastructure projects protecting us from the general
economic slowdown to a large degree. When concerns
over the virus first appeared in March, we immediately
implemented risk mitigation measures. From a cash
management perspective the Company expects to save
circa $6 million in cash outflows over the period April to
September 2020, and I am pleased to report that no lost
days or cases of Covid-19 have been recorded within
the Company.
I am also very pleased to say that Acrow did not
apply for or receive and Covid-19 related government
assistance, nor were any of our employees impacted by
any changes to their remuneration or working conditions
as a result of Covid-19. In fact, during this period Acrow
has been fortunate to secure new talent to the business.
Outlook
With Acrow firmly focused on the civil infrastructure
and industrial scaffold markets, our potential growth
opportunities have increased significantly. We
have a strong pipeline of potential work and our
reputation for quality and reliability grows with every
completed contract.
We expect the civil infrastructure market will continue
to provide opportunities for significant growth as
government investment increases to stimulate economic
activity post Covid-19. Offsetting this, we expect that the
outlook for the privately funded commercial/residential
construction sector remains uncertain. Fortunately,
Acrow is now far less reliant on this sector.
Over the current year, major drivers of growth will include
the continued roll-out of Uni-span and Natform products
across all operating locations, as well as continued
market share gains in mainly the Eastern Seaboard civil
markets. Our focus on growing product sales across
the group, helped by the launch of a new online sales
platform, and a rebound in activity from industrial
markets are expected to provide increasing contributions
to both revenue and profit.
I would like to thank our hardworking team for their
resilience during these unpredictable times. They have
shown themselves to be adaptable and committed
to building our company and, as the impact of the
pandemic evolves, we will overcome its challenges
together. Our balance sheet is strong, our people are
resilient and our business is set for further growth.
I would also like to acknowledge the contribution of
our executive team and dedicated Board for their
major contributions in delivering on an ambitious
pivot of this business over a two year period that has
completely transformed Acrow into an engineering led,
customer solutions focussed, nimble, multi-faceted
provider of services and products to the Australian
construction industry.
We really do believe we are playing a significant role in
“Building Australia Smarter”.
Steven Boland
CEO
Acrow Annual report 2020 THE ACROW DIFFERENCE
7
Acrow supporting Sun Metals expansion
Acrow was engaged last year to provide industrial
scaffold and formwork expertise for the Townsville Sun
Metals zinc refinery expansion, a $300 million project
that will increase output 17% to 270,000 tonnes.
“Through innovative engineering and design, using both
the Acrow SuperCuplok and the Uni-span MK systems,
we were able to demonstrate a formwork solution that
was cost effective and made practical sense,” said Jan
Pienaar, General Manager, Acrow Queensland.
The acquisition of Uni-span was instrumental in winning
and successfully fulfilling the Sun Metals contract,
illustrating the effectiveness of our strategy to grow the
industrial scaffolding business.
Our Acrow and Uni-span teams worked together to
supply over 2,300 tonnes of industrial scaffolding to on-
site sub-contractors, which involved over 650 hours of
design time. The bespoke scaffold and edge protection
solutions were used on a number of key constructions,
such as the new electrolysis building, ferric oxide
facilities and leaching and purification areas.
“The use of the MK System for the trusses in relation to
the travelling gantry, which were built and assembled
on-site and craned into position, was a great example of
Acrow’s ingenuity. Adopting this methodology enabled
the structure to be built, minimising obstructions
at ground level and allowing the lower level works
to continue.”
Sun Metals Expansion, Townsville QLD
“
Acrow and Uni-span’s can-do approach led
Western Downs Contracting to award us the main
formwork contract, worth circa $2.60 million.
“
Acrow Annual report 2020 8
BUSINESS OVERVIEW
Acrow is a leading provider of engineered formwork solutions and
scaffold hire in Australia.
Gateway, Perth WA
Formwork
■ Provides a range of wall forming panel, soffit forming
■ Project pipeline has continued to grow across the
and conventional systems for large and small
construction equipment
■ Dry hires formwork equipment and provides the
product that forms the temporary mould to support
concrete structures during construction
■ Dry hires falsework equipment used to support
suspended horizontal structures during construction
■ Products are manufactured overseas and imported
■ Generates revenue through dry hire agreements that
are typically based on a price per tonne per week, or
price per cubic metre per week
entire east coast
■ Product sales of formwork increased
■ Margins have remained higher and percentage
contribution of formwork increasing
FY21 Strategy
■ Focus on east coast infrastructure activity
increased from government stimulus relating to
Covid-19 response
■ Continue to expand opportunities in NSW
and Victoria
FY20 Commentary
■ Continued focus on east coast government funded
civil infrastructure market
■ Acquisition of Uni-span enhanced products,
capabilities and customers
■ Capitalise on past two years capital expenditure and
acquisition of Uni-span
■ Product sales of formwork a strategic priority
Acrow Annual report 2020 9
9
Screens
■ Leading designer and hirer of screen systems for the
■ Last quarter of year was highest since acquisition
construction industry
■ Provides screen-based formwork systems which
support the construction of commercial and
residential high-rise buildings and civil infrastructure
■ Dry-hire model offering highly-engineered solutions
for a wide range of customers
■ Fully integrated into state formwork businesses
FY21 Strategy
■ Largest pipeline since acquisition will be
capitalised on
■ Continued focus on cross sell opportunities and
■ Engineering capabilities provide a key
expansion into new markets
competitive advantage
■ Continued growth in NSW and Victoria
FY20 Commentary
■ Continued expansion from Queensland and NSW
into Victoria and SA
Industrial Scaffold
■ The business acquired from Uni-span has a
high quality management team and customer
service ethic
■ Generates revenue from wet hire agreements
including hire, transport, labour and consumables.
■
■
It is at the forefront of scaffold service providers in
Queensland to the industrial sector
It operates solutions primarily in the energy, mining
and industrial sectors
FY20 Commentary
■ This business expanded on acquisition of Uni-span
■ Operated primarily out of Queensland however
started the expansion in NSW
FY21 Strategy
■ Expand further into NSW
■ Continue to increase market share organically and
potentially through acquisition
■ Expand the product sales market including
internationally
Commercial and Residential Scaffold
■ Provides access solutions to builders and building
contractors when working at heights
FY20 Commentary
■ Division revenue impacted by strategic exit of two
■ Generates revenue through both dry hire and wet
storey residential business in NSW and VIC
hire agreements
■ Dry hire agreements are typically based on a price
per tonne per week, over a minimum of 4 weeks
■ Wet hire agreements are typically based on
a contract sum encompassing equipment
hire, transport, labour provisions and supply
of consumables
■ NSW and Victoria-based residential operations
focused on providing scaffold equipment, labour and
cartage services to the detached housing and small
residential markets
■ Solutions offered on both a wet and dry basis
■ Scaffold hire prices continued to decline
■ Activity levels under pressure from Covid-19
restrictions
■ Provided in all states except Perth
FY21 Strategy
■ Outlook from privately funded/residential projects
difficult to predict
■ Division well placed to take advantage of the
countries recovery from Covid-19
Acrow Annual report 2020 10
THE ACROW DIFFERENCE
Moving Melbourne’s metro forward
Acrow’s formwork and industrial scaffolding solutions
proved their value and versatility last year, helping in
the construction of Melbourne’s Metro Tunnel and
underground stations.
“Built and assembled on site, the gantry will twice
travel the entire 250 metre length of the main cavern at
the CBD North station,” said Eddie McInulty, National
Business Development Manager, Acrow.
Over 3,000 hours of engineering and design work
were completed, with Acrow supplying its MK System,
a self-propelled ‘double’ dual purpose gantry, to
complete formwork on the State Library Station. Acrow’s
SuperCuplok industrial scaffolding was also used for
ground floor slab support at Town Hall Station.
The Metro Tunnel is Melbourne’s most extensive rail
project since the City Loop was built in the 1970s. The
circa $11 billion construction involves twin 9 kilometre
rail tunnels and five stations located between North
Melbourne and the Domain precinct south of the CBD.
Underground walkways will also connect Town Hall to
Flinders Street Station.
“This will enable the upper level tie beams to be formed
at a height of 14 metres. Once complete, the upper
section is removed and adapted to accommodate an
additional working platform at 8 metres, which enables
the lower level roof beams to be formed.
“The gantry’s motorised travel takes about 15 minutes to
move between pours, allowing other works to continue.
Sub-contractor CYP Design & Construction Joint
Venture purchased the gantry, recognising the benefits
of the formwork system’s versatility and ability to be
adapted for other sections of the tunnel project.”
Metro Tunnel, Melbourne VIC
“
The sub-contractor which assembled the gantry
on site, Connor Concrete & Formwork, was a
first-time user of the MK System and appreciated
how simple it was to set up.
“
Acrow Annual report 2020
SAFETY
11
A multi-tiered process ensures our employees and
subcontractors are trained and follow industry-leading
safe work practices. While last year’s acquisition and
integration of Uni-span presented challenges, our people
across business groups and at all levels remained
focused on safety.
In FY20 we consolidated past gains, while progressing
our new safety culture, resulting in a further reduction
to our Lost Time Injury Frequency Rate (LTIFR) to 2.4,
compared to FY19’s 6.0 and FY18’s 19.7. The reduction
in LTIFR coincided with an 18% increase in working
hours. We are aiming to build on this in partnership with
our people and clients.
Origin APLNG (Industrial scaffold
team), Surat Basin QLD
Lost Time Injury
Frequency Rate
20
18
16
14
12
10
8
6
4
2
0
FY17
FY18
FY19
2.4
FY20
Acrow Annual report 2020 12
BOARD OF DIRECTORS &
KEY MANAGEMENT TEAM
Mr Peter Lancken AM
Non-Executive Chairman
Peter has a career spanning over 25 years in a range of executive and director roles in
equipment hire, industrial, and real estate companies. He was formerly the Managing
Director and Non-Executive Chairman of Kennards Hire Pty Limited. Peter managed an era
of growth spanning two decades at Kennards, with sales now exceeding $390 million from
a network of over 180 locations, and remains on the Board as a Non-Executive Director.
Peter is also the Non-Executive Director of Crimestoppers NSW and was Non-Executive
Chairman of Propertylink Group (ASX:PLG) prior to its acquisition in April 2019.
Peter holds a Bachelor of Engineering (Civil) degree from the University of New South
Wales, is a Fellow of the Institute of Engineers Australia and is a fellow of the Australian
Institute of Company Directors.
Mr Steven Boland
Executive Director
Steven joined Acrow in 2013 and since then has served as its Chief Executive Officer.
Steven was previously the CEO of the Melbourne Rebels Rugby Club and was responsible
for the start-up phase of a Super Rugby professional sporting team. Previously, from 2004
to 2010, Steven served as the Global Executive Director (Recycling) of Visy Industries,
and from 2002 to 2004, Steven was the Executive Director (Commercial Waste) of Veolia
Environment UK.
Mr Gregg Taylor
Non-Executive Director
Gregg has 20 years of international business experience in financial markets, technology,
sports administration, media and retail. Gregg is an Executive Director of Bombora
Investment Management, a boutique investment house.
Gregg has founded and managed multiple global operating businesses in sports, retail and
media sectors.
Gregg has a Bachelor of Commerce Degree from University of Wollongong and was a CFA
Charter holder.
Mr Joshua May
Non-Executive Director
Josh is a Partner of Bombora Group and a portfolio manager of Bombora’s growth fund.
Josh has over 20 years’ corporate advisory experience, and has advised on a broad range
of M&A transactions through varying economic cycles.
Josh currently serves as Chairman of LVX Global, Non-executive Director of Valory
Resources Inc, and Director of Bombora Investment management. In the community,
Josh is a Director of Find Your Feet, a charitable organisation involved in mental fitness and
mental health.
Josh is a member of the Institute of Chartered Accountants, and holds a Bachelor of Arts
Degree (Accountancy) from the University of South Australia.
Acrow Annual report 2020 13
Mrs Margaret Prokop
Executive Director
Previous proprietor of Natform businesses. Margaret has a Masters in Civil Engineering and
has successfully led Natform for 30 years. Natform is now the leading designer and hirer of
screen systems for the construction industry.
Mr David Moffat
Non-Executive Director
Appointed 19 September 2019
David has a career spanning over 35 years in the construction industry, most recently with
Lipman for 29 years, prior to his resignation in December 2018. From 2013-2018, David
was the Managing Director of the Lipman Group of Companies.
In 2019 David founded Cornerstone (NSW) Pty Ltd, whereas Managing Director, he
provides strategic business planning and advisory services to Subcontractors, Head
Contractors and Clients within the construction industry.
David brings with him key competencies in Leadership, Construction Management,
Innovation and Safety. He holds a Bachelor of Engineering Degree (Civil) from The
University of Technology, Sydney (“UTS”).
Mr Michael Hill
Non-Executive Director
Resigned 19 September 2019
Mike is a former partner of Ernst & Young and Investment Director with the private equity
firm Ironbridge from 2004 to 2014. He has also served on boards across numerous
industries including technology, software services, retail, healthcare, media, waste services,
tourism, hospitality and╩manufacturing.
Mike is a founder and Managing Director of the Bombora Special Investment Growth Fund
and is currently the Non-Executive Chairman of AHAlife Holdings Limited, Rhipe Limited
and Janison Education Group Limited.
Mr Hill has a Bachelor of Arts Degree (Accountancy) from the University of South Australia
and is a member of the Australian Institute of Chartered Accountants.
Acrow Annual report 2020 14
BOARD OF DIRECTORS AND
KEY MANAGEMENT TEAM (continued)
KEY MANAGEMENT TEAM
Steven Boland
Chief Executive Officer
As above.
Andrew Crowther
Chief Financial Officer
Andrew joined Acrow in July 2019. He has more than
20 years’ experience having held senior financial and
chief financial officer roles at Thorn Group, SFG Ltd,
BT Financial Group and Colonial First State. He brings
a breadth of industry and property infrastructure finance
expertise to Acrow, including work in the property funds
and asset management, superannuation and financial
advice, consumer finance and leasing and business
finance industries.
Robert Caporella
General Manager (VIC)
Robert has been working with Acrow since 1994
and is currently the General Manager, overseeing
operations in Victoria as well as national overview of
formwork operations.
Jan Pienaar
General Manager (QLD)
Jan joined Acrow in December 2018 as General
Manager, Queensland. He has more than 10 years’
management experience and was previously National
Sales manager at Doka Formwork Australia, and before
that as General Manager (Formwork) at Waco Kwikform.
Matthew Caporella
National Manager – Engineering Operations
Matthew joined Acrow in 2012 and is currently the
National Manager – Engineering Operations.
Mr Caporella holds a Bachelor of Engineering (Civil)
and Bachelor of Business (Management) from
the Queensland University of Technology. He is a
Chartered Professional Engineer with the Institute of
Engineers Australia and a Registered Professional
Engineer Queensland.
Jeffery Stewart
National Sales & Marketing Manager
Jeffery joined Acrow in 2011 and is currently the National
Sales and Marketing Manager.
His prior roles include Regional Manager and director
for Atlas Steels in New Zealand, National Market
Development Manager at Atlas Specialty Metals, and
Market Development Manager for Smorgon Steels
Metals Distribution.
Joe Cerritelli
General Manager, Human Resources & Safety
Joe joined Acrow in 2014 and is currently the General
Manager for Health and Safety.
His prior roles include National Safety and Compliance
Manager at G4S Australia, and Team Leader in Industrial
Relations and Safety at Catholic Education Commission
of Victoria.
Jan holds a BComm Hons degree from the University of
Stellenbosch, South Africa.
Jurie Roetger
Nicholas Jacobs
General Manager (NSW)
Nicholas joined Acrow in February 2020 and serves
as NSW & ACT General Manager. Nicholas has over
30 years’ of construction industry experience, having
worked with some of Australia’s most prominent building
and engineering firms including Hansen Yuncken, UGL
and GHD.
Qld Scaffold Manager
Jurie joined the Acrow Group as part of the Uni-span
acquisition in October 2019. He has more than 17 years
industry experience and 17 years of service with the
Uni-span group of companies. Jurie is General Manager
for the Industrial Services Business and Queensland
Scaffold Manager. His previous roles with the Uni-span
Group includes Scaffold Designer, Project Manager,
North Queensland Manager and National Industrial
Services Manager.
Jurie holds a Diploma in Business Management and
Diploma in Commercial Construction.
Acrow Annual report 2020 15
Colin Fisher
Matthew Riley
General Manager (TAS)
Colin is the General Manager in Tasmania, having
previously worked at Honeywell Business Solutions as a
General Manager.
Prior to Honeywell Business Solutions he worked at Visy
Industries as the General Manager, and as the National
Operations Manager at Onyx UK Limited.
Bill Goodall
General Manager (SA)
Bill joined Acrow in 2016 and is currently our South
Australian State Manager after recently being our NSW
General Manager.
Bill has spent the last 15 years in management roles in
the Formwork and Scaffold industry operating in NSW,
SA, NT & WA.
Conan Godrich
General Manager (WA)
Conan brings a decade of experience with Acrow and is
currently the General Manager for WA operations.
His prior roles include Account Manager (Gnangara
Operations) at Rinker Australia, and Sales and Customer
Service at OneSteel Reinforcing.
Mr Godrich holds a Bachelor of Commerce from
Murdoch University and a Degree in Project
Management from Curtin University of Technology.
Jason Merjane
Natform Manager (NSW)
Jason joined Natform in 2015 and is currently the
Natform Manager in the NSW branch.
Mr Merjane holds a bachelor of Engineering (Civil) from
Western Sydney University and is a member of The
Institution of Engineers Australia.
Head of IT
Matthew joined Acrow in April 2020 and currently the
Head of IT.
His prior roles include leading IT for a ASX listed national
recruitment business and also working in television.
He has over 20 years experience in IT. His main focus
will include technology upgrades and managing key
vendor relationships
Carl Roetger
National Head of Procurement
Carl joined Acrow in October 2019 as the National
Procurement Manager.
He was previously Co founder and Director of Uni-span
Australia since 2001. Prior to this Carl was the Co-
founder and Joint MD of Nu-form Formwork and
Scaffolding in South Africa. Carl holds a Bachelor of
Commerce from the University of Pretoria, South Africa.
Eddie McInulty
National Business Development Manager
Eddie joined Acrow in 2019 and brings
20 years of experience from both in the UK and
Australia, specialising in the Civil Engineering &
Infrastructure industry.
Previous roles include Managing Director for GHI
Formwork Australia, National Sales Manager for
Uni-span and prior Sales Management roles with Peri
Australia and Peri UK Ltd. He holds a Bachelor of Town
& Country Planning Degree from The University of the
West of England, Bristol.
Acrow Annual report 2020 16
FINANCIAL REPORT
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XX Auditor’s Independence Declaration
93 Independent Auditor’s Report
XX Directors’ Declaration
24 Remuneration Report – Audited
XX Remuneration Report – Audited
96 Shareholder Information
XX Independent Auditor’s Report
45 Financial Statements
XX Financial Statements
XX Shareholder Information
49 Notes to the Consolidated Financial
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DIRECTORS’ REPORT for the year ending 30 June 2020
The Directors present their report, together with the Annual Financial Report for Acrow Formwork and Construction
Services Limited (Acrow or the Company) and its controlled entities, for the year ended 30 June 2020, and the
Auditor’s Report thereon.
This report has been prepared in accordance with the requirements of the Corporations Act 2001 and the information
below forms part of this Directors’ Report:
DIRECTORS
The Directors of the Company at any time during or since the end of the financial year are:
Peter Lancken (Chairman)
Steven Boland (Chief Executive Officer)
Gregg Taylor
Joshua May
Margaret Prokop
David Moffat (appointment effective 19 September 2019)
Michael Hill (resigned 19 September 2019)
Information on the current directors and shareholdings are presented on pages 2 to 6 in the Annual Report. This
information includes the qualifications, experience and special responsibilities of each director.
DIRECTORS’ MEETINGS
The number of directors’ meetings and number of meetings attended by each of the directors of the Company during
the financial year ending 30 June 2020 are:
Board of Directors
Remuneration and
Nomination Committee
Audit and Risk
Committee
No. held
No.
attended
No. held
No.
attended
No. held
No.
attended
Peter Lancken (Chairman)
Steven Boland (Chief Executive
Officer)
Gregg Taylor
Joshua May
Margaret Prokop
David Moffat
Michael Hill
17
17
17
17
17
14
4
16
17
15
14
15
13
3
1
1
1
1
–
1
1
1
1
1
1
–
1
1
3
3
3
3
–
2
3
3
3
3
3
–
2
3
Mr Michael Hill was the Chair of the Remuneration and Nomination Committee up to his date of resignation on
19 September 2019 and replaced on that day by Mr Gregg Taylor.
Mr Joshua May is the Chairman of the Audit and Risk Committee.
COMPANY SECRETARY
Mr Lee Tamplin of Automic Group is the Company Secretary and has over 20 years’ experience in the financial services
industry in both Australia and the UK. He is Company Secretary for a number of ASX listed, NSX listed and Proprietary
companies across a range of industries. Mr Tamplin holds a BA (Hons) Financial Services (Bournemouth University
United Kingdom), a Diploma of Financial Planning, is a Graduate of the Australian Institute of Company Directors, a
Member of the Governance Institute of Australia and a Member of the Australian Institute of Company Directors.
18
PRINCIPAL ACTIVITIES
Acrow operates in the Australian construction services
industry, hiring formwork, falsework, scaffolding and
screen equipment and undertakes sales of formwork
and scaffolding related consumables. It also operates an
industrial scaffolding business.
The formwork operation involves the supply of the
temporary mould that supports concrete structures in their
construction, whilst falsework equipment is used to support
suspended horizontal structures during construction.
The scaffolding operation supplies scaffolding
equipment and access solutions to builders and building
contractors when working at heights.
Screen-based formwork systems support the construction
of civil infrastructure, commercial and residential buildings.
The industrial scaffolding operation supplies an industrial
labour service to compliment the scaffolding hire to the
energy, industrial and mining sectors.
OPERATING AND
FINANCIAL REVIEW
The Acrow business continued to perform strongly for
the 12 months to 30 June 2020, with the inclusion of
8 months of the acquired Uni-span business.
The business continued to re-base towards the value
added, highly engineered civil formwork solutions market
as well as an increased focus on equipment sales and
expanding its new Industrial Scaffold division.
Financial performance:
The company achieved a net profit after tax of $3.0m
being lower than the 2019 profit of $4.9m. The current
Financial performance table
Statutory net profit after tax
Add back share-based payments
Add back acquisition and integration costs
Add back impact of AASB 16
Add back accelerated depreciation on acquisition
Add back refinancing and break costs
year included 8 months profit from the Uni-span
acquisition however was offset by significant one-off
acquisition and integration costs of $3.3m and the
impact of AASB 16: Leases, that was not included in the
comparative profit.
On an underlying basis (refer to table below), the net
profit after tax increased from $7.5m to $9.0m and the
key highlights for the year included:
■ Sales revenue up 22% and EBITDA up 30% on
the prior comparative period, assisted by the
contribution from the Uni-span acquisition, a strong
focus on product sales, and improved trading from
the Natform screens business.
■ Excluding the financial impact of the strategic exit
from the Sydney & Melbourne two-storey residential
scaffold markets, pro-forma sales revenue and sales
contribution increased 36% and 31% respectively.
■ Underlying Earnings Before Interest, Tax,
Depreciation and Amortisation (EBITDA) of $15.0m,
up 30%, and EBITDA margin of 17.3%, up 100 bpts.
■ Underlying net profit after tax of $8.9m after adding
back share-based payments and significant one-
off items of acquisition and integration costs, up
16%, assisted by a tax credit but offset by a higher
depreciation charge and higher funding costs.
Basic earnings per share was 1.55cps (2019: 2.88cps)
statutory or 4.62cps (2019: 4.36cps) on an underlying
net profit basis.
A final dividend of 1.05cps (fully franked) was declared.
An interim dividend of 0.7cps fully franked had been
declared but was subsequently cancelled as a response
to the Covid-19 epidemic, therefore the full 2020
dividends paid and declared was 1.05cps fully franked.
2020
$’000
3,013
1,345
3,276
1,082
266
–
2019
$’000
4,948
1,420
897
–
–
241
Underlying net profit before tax
8,982
7,506
DIRECTORS’ REPORT for the year ending 30 June 2020Acrow Annual report 2020 19
2020
$’000
4,994
1,363
(321)
2019
$’000
3,262
723
59
15,018
11,550
Further information on the operating and financial review
is contained in the Chairman’s and Managing Director’s
Review on pages 2 to 6 of this Annual Report.
Operating results:
Refer to the Managing Director’s Report on pages 2 to 6
of this Annual Report.
IMPACT OF COVID-19
The ongoing COVID-19 pandemic has increased the
estimation uncertainty in the preparation of these
consolidated financial statements. The estimation
uncertainty is associated with:
■ The extent and duration of the disruption to
businesses arising from the actions by governments,
businesses and consumers to contain the spread of
the virus;
■ The extent and duration of the expected economic
downturn. This includes the disruption to capital
markets, deteriorating availability of credit, liquidity
concerns, increasing unemployment, declines in
consumer discretionary spending, reductions in
production because of decreased demand, and
other restructuring activities; and
■ The effectiveness of government and central bank
measures that have and will be put in place to
support businesses and consumers through this
disruption and economic downturn.
The Group has developed estimates in these
consolidated financial statements based on forecasts
of economic conditions which reflect expectations
and assumptions as at 30 June 2020 about future
events that the Directors believe are reasonable in
the circumstances.
There is a considerable degree of judgement involved in
preparing forecasts.
The underlying assumptions are subject to uncertainties
which are often outside the control of the Group.
Add back depreciation*
Add back interest*
Add back tax (benefit)/expense
EBITDA
* not including AASB 16 interest and depreciation
Financial position:
Net debt increased from $3.6m in 2019 to $14.6m,
being cash $7.2m (2019: $3.3m) less debt of $21.8m
(2019: $6.9m). This was predominantly due to both the
acquisition and integration of Uni-span which included
amortising bank debt of $13.75m and significant capital
expenditure during the year. The gross cash increased
from strong cash generation in the second half year,
successful debtor management and Covid-19 mitigation
measures. These will be discussed below.
Net gearing, being cash less bank debt increased from
7.1% to 20%.
Property plant and equipment increased from $47.0m to
$76.0m due to the acquisition of Uni-span ($24.7m) and
large capital expenditure ($12.1m) offset by depreciation.
Total trade receivables increased from $13.1m to
$17.0m through both increased trading and the
acquisition of Uni-span. During the year debtor’s days
improved from 65 to 58 days.
AASB 16 resulted in an increase in both assets and
liabilities including a right of use asset of $32.4m and a
lease liability of $34.2m.
Acquisition:
On 31 October 2019 Acrow acquired 100% shares of
Uni-span Pty Limited (Uni-span).
Uni-span is a leading provider of engineered formwork
systems servicing primarily the civil infrastructure market
and scaffold hire solutions to the industrial markets.
The acquisition was financed through the issue of
10,000,000 shares in the Group, $12.6m debt and
cash acquired (additional $1.1m debt for acquisition
and integration costs). Two additional instalments of
$1.5m and $3.5m are payable on 31 October 2020
and 2021. A further amount up to $4.3m is payable on
31 October 2021 if certain performance targets are met.
This has not been accounted for due to low probability
as at 30 June 2020.
Acrow Annual report 2020 20
Accordingly, actual economic conditions are likely to be
different from those forecast since anticipated events
frequently do not occur as expected, and the effect of
those differences may significantly impact accounting
estimates included in these financial statements.
DIVIDENDS
The Company paid a 1.0 cent unfranked dividend per
share being a total of $1.75m for the financial year
ending 30 June 2019 on 15 November 2019. Shares
totalling 1,087,746 were issued under the Dividend
Reinvestment Plan at $0.3141 cents per share.
The Directors declared an interim fully franked divided of
0.7 cents per share on 27 February 2020. This dividend
was cancelled on 30 March 2020 in light of the Covid-19
pandemic to preserve cash.
Subsequent to year end, Directors declared a final
dividend of 1.05cps (fully franked) on 25 August 2020.
This dividend has not been provided for in this
financial report.
ENVIRONMENTAL
REGULATIONS
Acrow’s operations are not subject to significant
environmental regulations under the Commonwealth
of Australia and State/Territory legislation. The Board
believes that Acrow has adequate systems in place to
manage its environmental responsibilities and is not
aware of any breach of regulations.
The Group is also subject to environmental regulation
in respect of its exploration activities in Ghana but not
aware of any breach of those regulations.
NO OFFICERS ARE
FORMER AUDITORS
No officer of the Company has been a partner in an
audit firm, or a Director of an audit company, that is an
auditor of the Company during the year or was such a
partner or Director at a time when the audit firm or the
audit company undertook an audit of the Company.
NON-AUDIT SERVICES
Following an audit tender process, the Board selected
and approved Grant Thornton to replace KPMG as
the new auditor of the Group, based on their industry
expertise and competitive fee structure. This was
approved by the Australian Securities & Investments
Commission on 22 January 2020.
Prior to Grant Thornton being appointed as auditors
for the Group, it performed certain non-audit
services including due diligence and other advisory
services related to the acquisition of Uni-span. Since
appointment, Grant Thornton has performed tax
compliance and advisory services in addition to their
statutory duties for the Acrow business. The Board
considers these non-audit services are compatible with,
and did not compromise, the auditor independence
requirements of the Corporations Act 2001 for the
following reasons:
All non-audit services were subject to the corporate
governance procedures adopted by the Group and
have been reviewed by the Audit and Risk Committee
to ensure that they do not impact the integrity and
objectivity of the auditor.
All the non-audit services provided do not undermine
the general principles relating to auditor independence
as set out in APES 110 Code of Ethics for Professional
Accountants, as they did not involve reviewing or
auditing the auditor’s own work, acting in a management
or decision-making capacity for the Group, acting
as an advocate for the Group or jointly sharing risks
and rewards.
Details of the amounts paid or payable to the auditor of
the Group, Grant Thornton and their related practices for
audit and non-audit services during the year are set in
note 27.
SIGNIFICANT CHANGES IN
THE STATE OF AFFAIRS
On 31 October 2019 Acrow acquired 100% shares of
Uni-span Pty Limited (Uni-span), detailed in above.
There were no other significant changes in the Group’s
state of affairs.
REMUNERATION REPORT
Information on Acrow’s remuneration framework
and the outcomes for the Group are included in the
Remuneration Report section of this Annual Report.
During the year, 1,200,000 options have been issued
under the Employee Share Option Scheme (approved at
the Annual General Meeting in November 2019).
DIRECTORS’ REPORT for the year ending 30 June 2020Acrow Annual report 2020 21
Other than above, no new share rights or options were issued to Key Management Personnel or Non-executive
directors during the year.
SHARE RIGHTS
At the date of this report, Acrow had 9,323,001 share options and rights outstanding relating to grants of deferred
equity to Directors and employees under the previous Long-Term Incentive Plan. These have a range of vesting dates
through to March 2024. During the year, 12,375,000 performance rights vested after achievement of targets and
were exercised. In addition, 237,000 share options were exercised.
Subsequent to year end 15,108,000 Performance Rights were issued with vesting periods at the end of the financials
years 2021 and 2022. If the vesting conditions are met each Performance Right can be exercised into one Fully
Paid Ordinary Share at the holder’s discretion until the expiry date of 31 July 2035. The Performance Rights were
issued to employees of the Company under the Company’s Rights Plan and form part of the new Long Term Variable
Remuneration of the employees.
The remaining options and rights are unvested as holders are yet to complete a two-year continuous service
condition due by March 2020.
Balance of outstanding options as at year end:
Options
Loan funded options
Quantity
outstanding
Weighted average
exercise price
9,323,001
2,475,000
$0.40
$0.20
Expiry date
13 December 2020
to 16 July 2024
26 March 2023
For further details, refer to note 29 of this Annual Report.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
For information about likely developments and expected results in the operations of the Company, refer to the
Chairman’s and Managing Director’s Reports on pages 2 to 6 of this Annual Report.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the terms of Article 35 of the Company’s Constitution, and to the extent permitted by law, the Company
has indemnified the directors of the Company named in this Directors’ report, the Company Secretaries, and other
persons concerned in or taking part in the management of Acrow. The indemnity applies when persons are acting in
their capacity as officers of the Company in respect of:
■ Liability to third parties (other than the Company or related bodies corporate), if the relevant officer has acted in
good faith; and
■ Costs and expenses of successfully defending legal proceedings in which relief under the Corporations Act 2001
is granted to the relevant officer.
The Group has not made any indemnity payment during the year.
INSURANCE PREMIUMS
During the financial year, the Company paid a premium of $150,943 including GST for Directors’ and Officers’ Liability
Insurance policy. The insurance provides cover for the Directors named in this Directors’ Report, the Company
Secretary, and officers and former Directors and officers of the Company. The insurance also provides cover for
present and former Directors and officers of other companies in the Group.
Acrow Annual report 2020 22
CORPORATE GOVERNANCE STATEMENT
This statement outlines the main corporate governance practices in place throughout the financial year and can be
referred to on the Acrow Group website: https://www.acrow.com.au/investors/
EVENTS SUBSEQUENT TO THE END OF THE
FINANCIAL YEAR
As detailed above, the COVID-19 pandemic did not have any significant impact on the Group's operations during the
year. Subsequent to the end of the financial year, the pandemic and its impact has continued to evolve with further
outbreaks resulting in lockdown restrictions in Victoria, additional border closures between states, new stimulus
measures (such as JobKeeper 2.0) and many other items. It is therefore not practical to estimate the potential impact,
positive or negative, after reporting date.
Subsequent to year end, Directors declared a final dividend of 1.05cps (fully franked) on 25 August 2020. Payment is
set for 13 November 2020, DRP participation is available for election.
On 31 July 2020 15,108,000 Performance Rights were issued in four tranches each with Earnings Per Share or
Total Shareholder Return performance vesting conditions. Two tranches vest each at the end of the financials years
2021 and 2022. If the vesting conditions are met each Performance Right can be exercised into one Fully Paid
Ordinary Share at the holder’s discretion until the expiry date of 31 July 2035. The Performance Rights were issued to
employees of the Company under the Company’s Rights Plan and form part of the Long Term Variable Remuneration
of the employees. The Rights Plan under which these Performance Rights were issued will be put to Shareholder
approval at the Company’s 2020 Annual General Meeting.
Premium finance loan of $868,754 was drawn on the 7th September 2020 repayable in full by 30 August 2021.
Other than the matters noted above, there has not arisen in the interval between the end of the financial year and the
date of this Directors’ report, any item, transaction or event of a material and unusual nature likely, in the opinion of
the directors of the Company, to affect significantly the operations of Acrow, the results of those operations, or the
state of affairs of Acrow in future financial years
ROUNDING OF AMOUNTS
Acrow Formwork and Construction Services Limited is a company of the kind referred to in the Australian Securities
and Investments Commission (ASIC) Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191,
dated 24 March 2016 and in accordance with that Legislative Instrument, amounts in the Consolidated Financial
Statements and this Directors’ Report have been rounded off to the nearest dollar, unless stated otherwise.
LEAD AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration made under section 307C of the Corporations Act 2001 is set out on
page 23 of the Annual Report and forms part of the Directors’ Report for the financial year ended 30 June 2020.
Signed in accordance with a resolution of the Directors:
Peter Lancken
Chairman
Steven Boland
Director, Chief Executive Officer
Sydney, 24 September 2020
Sydney, 24 September 2020
DIRECTORS’ REPORT for the year ending 30 June 2020Acrow Annual report 2020
AUDITOR’S INDEPENDENCE DECLARATION
23
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Sydney NSW 2000
Correspondence to:
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Sydney NSW 1230
T +61 2 8297 2400
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W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Acrow Formwork and Construction Services Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Acrow
Formwork and Construction Services Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and
belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
N P Smietana
Partner – Audit & Assurance
Sydney, 24 September 2020
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
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delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
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Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
23
Acrow Annual report 2020
24
REMUNERATION REPORT – AUDITED
for the year ending 30 June 2020
1. Letter from the Chair
of the Remuneration
Committee
I am delighted to bring you this Remuneration Report
of the Acrow Group. In preparing this report we
have sought to assure shareholders that their Board
is applying a high standard of governance to both
remuneration and disclosure practices.
The development of remuneration policies and practices
that meet the needs of the Company and expectations
of stakeholders as circumstances evolve is challenging.
To that end the Remuneration Committee will continue
to review and seek feedback on remuneration practices
from a range of sources including independent advisors,
shareholders and other stakeholders. We invite our
shareholders to write to the Remuneration Committee to
provide feedback in this regard.
During the FY2020 reporting period, the Remuneration
Committee has focussed on the performance of
executives in delivering expected outcomes. We
have also engaged external advisors to support the
committee to identify those areas of remuneration
policies, procedures and practices that will require
ongoing change and improvement.
Gregg Taylor
Independent Non-Executive Director
Chair of the Remuneration Committee
2. Scope of the
Remuneration Report and
Individuals Classed as KMP
The Remuneration Report sets out the prescribed key
management personnel (KMP) remuneration information
and details in accordance with section 300A of the
Corporations Act and associated regulations, including
policies, procedures, governance, and factual practices
as required.
In addition, Acrow Formwork and Construction Services
Limited (Acrow, the Company) has decided to set out
such further information as shareholders may require for
them to obtain an accurate and complete understanding
of the Company’s approach to the remuneration of KMP.
KMP are the non-executive directors, the executive
directors and employees who have authority and
responsibility for planning, directing and controlling the
activities of the consolidated entity. On that basis, the
following roles/individuals are addressed in this report:
Non-executive Directors (NEDs)
■ Mr Peter Lancken, independent non-executive
Chairman since 27 March 2018,
■ Mr Michael Hill, independent non-executive
director and Chair of the Rem & Nom Committee,
since 27 March 2018 through to resignation on
19 September 2019,
■ Mr Josh May, independent non-executive director
since 27 March 2018, Chair of the Audit &
Risk Committee,
■ Mr Gregg Taylor, independent non-executive director
since 11 August 2017, Chair of the Rem & Nom
Committee since 19 September 2019, and
■ Mr David Moffat, independent non-executive director
since 19 September 2019.
Senior Executives Classified as
KMP During the Reporting Period,
■ Mr Steven Boland, Chief Executive Officer (CEO) &
Executive Director since 27 March 2018,
■ Ms Margaret Prokop, Executive Director since
31 August 2018,
■ Mr Andrew Crowther Chief Financial Officer (CFO)
since 8 July 2019.
3. Context of KMP
Remuneration for
FY2020 and Into FY2021 –
unaudited
3.1 Relevant Context for
Remuneration Governance
during FY2020
The KMP remuneration structures that appear in this
report are largely those that prevailed over FY2020, as is
required by regulation, but also address expectations for
FY2021, to some extent.
The Board has undertaken to further develop
remuneration governance, policies and practices applied
to KMP of the Company, as well as other employees as
Acrow Annual report 2020 25
the business matures. The following outlines important
context for the decisions that were made in relation to
remuneration for/during FY2020, the outcomes of which
are presented in this report.
■ A total of 1,200,000 options were issued to Andrew
Crowther in July 2019 as part of his remuneration.
■ The Company is focussed on delivering value for
shareholders by executing on strategy including:
4.2 Remuneration Committee
Charter
The Remuneration Committee Charter (the Charter)
governs the operation of the Remuneration Committee
(the Committee). It sets out the Committee’s role and
responsibilities, composition, structure and membership
requirements. The purpose of the Committee is to assist
the Board by:
– Becoming the leading engineered formwork sales
and hire equipment solutions provider in Australia
– After the acquisition of Uni-span, become the
leading engineered scaffold solutions provider to
the Australian Industrial Scaffold market
– Actively pursuing strategically sensible
acquisitions to accelerate profitable growth
– Target high ROI organic growth opportunities
across all states.
4. Overview of Acrow’s
Remuneration Governance
Framework & Strategy
4.1 Transparency and
Engagement
The Company seeks input regarding the governance
of KMP remuneration from a wide range of
sources, including:
■ Shareholders and other stakeholders,
■ Remuneration Committee Members,
■ External remuneration consultants (ERCs),
■ Other experts and professionals such as tax advisors
and lawyers, and
■ Company management to understand roles and
issues facing the Company.
The following outlines a summary of Acrow’s
Remuneration Framework, including policies and
practices to the extent developed. Shareholders can
access a number of the related documents by visiting
the investors portal on the Company website www.
acrow.com.au. It is recommended that shareholders,
proxy advisors and other interested parties consider all
the available information.
■ Establishing appropriate processes regarding the
review of the performance of directors, committees
and the Board, and implementing them,
■ Reviewing and making recommendations to the
Board in relation to the remuneration packages
of Senior Executives and non-executive directors,
equity-based incentive plans and other employee
benefit programs,
■ Developing policies, procedures and practices that
will allow the Company to attract, retain and motivate
high calibre executives, and
■ Ensuring a framework for a clear relationship
between key executive performance
and remuneration.
The Committee has the authority to obtain outside
legal or other professional advice or assistance on any
matters within its terms of reference.
Acrow recognises the importance of ensuring that any
recommendations given to the Committee provided by
remuneration consultants are provided independently
of those to whom the recommendations relate.
Further information about the parameters under which
external remuneration consultants are engaged is
provided below.
4.3 Senior Executive
Remuneration Policy
The Company’s senior executive remuneration policy
may be summarised as follows:
■ Remuneration for senior executives should be
composed of:
–
Fixed Package inclusive of superannuation,
allowances, benefits and any applicable fringe
benefits tax (FBT),
– Variable remuneration which is at-risk,
creating opportunity for the Company to pay
less than the potential variable remuneration
when performance expectations have not
been met, and which is partly an incentive to
Acrow Annual report 2020 26
reward executives for meeting or exceeding
expectations, including:
in their capacity as directors and as members of
committees, and may be summarised as follows:
■ Short Term Incentive (STI) or Bonus
opportunity which provides a reward for
performance against annual objectives, and
■ Long Term Variable Remuneration (LTVR)
which provides an equity-based reward for
performance against indicators of shareholder
benefit or value creation, over a multi-year
period, and
–
In total the sum of the elements will constitute a
total remuneration package (TRP).
■ Both internal relativities and external market factors
should be considered,
■ Total remuneration packages (TRPs, which include
Fixed Package and incentives) should be structured
with reference to market practices, the practices of
competitors for talent, and the circumstances of the
Company at the time,
■ Remuneration will be managed within a range so as
to allow for the recognition of individual differences
such as the calibre of the incumbent and the
competency with which they fulfil a role (a range of
+/- 20% is specified in line with common market
practices), and
■ Termination benefits will generally be limited to the
default amount allowed for under the Corporations
Act (without shareholder approval).
Changes to remuneration resulting from annual reviews
are generally to be determined in relation to:
■
external benchmarking, and/or market movements,
■ whether current remuneration for the incumbent
is above or below the policy midpoint/benchmark
– those below the midpoint will tend to receive
higher increases,
■
■
the competence of the incumbent in fulfilling their role
which determines their positioning within the policy
range – higher calibre incumbents are intended to be
positioned higher in the range, and
any changes to internal relativities related to role/
organisation design that have occurred since the
previously review.
4.4 Non-executive Director
Remuneration Policy
The Non-executive Director remuneration policy applies
to non-executive directors (NEDs) of the Company
■ Remuneration may be composed of:
– Board fees,
– Committee fees,
– Superannuation,
– Other benefits, and
– Equity (if appropriate at the time)
■ Remuneration will be managed within the aggregate
fee limit (AFL) or fee pool approved by shareholders
of the Company, noting that equity does not count
towards the AFL unless cash remuneration is
sacrificed for a grant of equity, refer section 9,
■ The Board may seek adjustment to the AFL in the
case of the appointment of additional NEDs, or
should the AFL become insufficient to attract or
retain the appropriate calibre of NEDs,
■ Remuneration should be reviewed annually,
■ Committee fees may be used to recognise additional
contributions to the work of the Board by members
of committees in circumstances that the workload of
the Board is not equally shared,
■ The Board Chair fee will be set as a multiple of the
fees payable to other NEDs, in recognition of the
additional workload associated with this role.
4.5 Short-Term Incentive Policy
The short-term incentive policy of the Company is
that an annual component of executive remuneration
should be at-risk and allow the Company to modulate
the cost of employment to align with individual and
Company performance while motivating value creation
for shareholders:
■ The STI should be paid in cash and deferral should
not apply since there is a separate component
of remuneration (the LTVR) which is intended to
address long term outcomes,
■ Non-executive directors are excluded
from participation,
■ A termination of employment will trigger a forfeiture of
some or all of unearned STI entitlements depending
upon the circumstances of the termination. The
Board retains discretion to trigger or accelerate
payment or vesting of incentives provided the
limitation on termination benefits as outlined in the
Corporations Act are not breached.
■ Short term awards are linked to the main drivers
of value creation at the group, business unit or
REMUNERATION REPORT for the year ending 30 June 2020Acrow Annual report 2020 27
individual level, as may be appropriate to the role and
subject to Board decision.
4.6 Long-Term Incentive Policy
The long-term incentive policy of the Company is that
a component of remuneration of executives should be
at-risk and linked to equity in the Company to ensure
that the interests of executives are aligned with those of
shareholders, and share risk with shareholders:
■ The LTVR should be based on Performance Rights
or Options (which may include Loan Funded Shares
arrangements) that produce a benefit for Participants
when performance objectives are met (which may
include increasing Share price),
2 business days of any dealing. It also summarises the
law relating to insider trading which applies to everyone
at all times. Under the current policy, those covered by
the policy may not trade during a “blackout period” or
when they hold inside information (subject to exceptional
circumstances arrangements, see the policy on the
Company website). The following periods in a year are
“blackout periods” as defined in the policy:
■ 2 weeks prior to the release of the Company’s half
year results,
■ From the financial year balance date until 24 hours
following the release of the Company’s preliminary
full year results (Appendix 4E),
■ Within 24 hours of release of price sensitive
■ The measurement period for long term incentives
information to the market, and
should be at least two years,
■
another date as declared by the Board (“ad-hoc”).
■ A termination of employment will trigger a forfeiture
of some, or all of the long-term incentives held by an
executive in respect of which performance conditions
and hurdles have not yet been met, depending upon
the circumstances of the termination. The Board
retains discretion to trigger or accelerate payment
or vesting of incentives provided the limitation on
termination benefits as outlined in the Corporations
Act are not breached.
4.7 Securities Trading Policy
The Company’s Securities Trading Policy applies to
Directors and executives classified as KMP (including
their relatives and associates), those employees working
closely with KMP, employees nominated by the Board,
or any other employee holding inside information. It sets
out the guidelines for dealing in any type of Company
Securities by persons covered by the policy, and the
requirement for the Company to be notified within
4.8 Executive Remuneration
Engagement Policy and Procedure
The Company intends to adopt an executive
remuneration engagement policy and procedure to
manage the interactions between the Company and
ERCs, to ensure their independence and that the
Remuneration Committee will have clarity regarding
the extent of any interactions between management
and the ERC. This policy enables the Board to state
with confidence whether the advice received has been
independent, and why that view is held. The Policy
states that ERCs are to be approved and engaged by
the Board before any advice is received, and that such
advice may only be provided to a non-executive director.
Interactions between management and the ERC must
be approved and will be overseen by the Remuneration
Committee when appropriate. Refer to section 13.
4.9 Variable Executive Remuneration – The Short-Term Incentive
Bonus Plan
Short Term Incentive Plan (STIP)
Aspect
Purpose
Plan, Offers and Comments
The short-term incentive bonus plan’s purpose is to give effect to an element of
remuneration. This element of remuneration reinforces a performance focussed culture,
encourages teamwork and co-operation among executive team members and maintains a
stable executive team by helping retain key talent. These objectives aim to be achieved by a
simple plan that rewards participants for their performance during a 12-month period.
Measurement
Period
The Company’s financial year (12 months). For the year ended 30 June 2020, the
measurement period was from 1 July 2019 to 30 June 2020.
Acrow Annual report 2020 28
Short Term Incentive Plan (STIP)
Aspect
Plan, Offers and Comments
Award
Opportunities
Performance
Assessments and
Award Outcomes
Award Payment
Cessation of
Employment During
a Measurement
Period
The CEO was offered an opportunity of up to 50% of Fixed Package which is based on
achieving a range of measurable KPI’s which are predominately based on achieving EBITDA
targets and strategic goals, shareholder return and net debt reduction, working capital
improvement and meeting safety standards. For other KMP Executives, their individual KPI’s
are determined by the CEO in collaboration with the Board.
Performance assessments are undertaken by the CEO in relation to other Senior Executives
who then make recommendations to the Board, and by the Board in relation to the CEO.
The Board has discretion to vary the recommendations of the CEO in determining final
award outcomes.
Assessments and award determinations are performed following the end of the Measurement
Period and the auditing of Company accounts. Awards will generally be paid in cash in the
September following the end of the Measurement Period. They are to be paid through payroll
with PAYG tax deducted as appropriate. Deferral has not been introduced due to the mix of
short term and long-term incentives being appropriately weighted.
In the event of cessation of employment due to dismissal for cause, all entitlements in relation
to the Measurement Period are forfeited.
In the event of cessation of employment due to resignation, all entitlements in relation to the
Measurement Period are forfeited, unless the termination is classified as “good leaver” in
the discretion of the Board, in which case the Board may make an award at the time of the
termination, or assess outcomes at the normal time, following the termination.
Change of Control
In the event of a Change of Control including a takeover, the Board has discretion regarding
the treatment of short-term incentive bonus opportunities.
Fraud, Gross
Misconduct etc.
If the Board forms the view that a Participant has committed fraud, defalcation or gross
misconduct in relation to the Company then all entitlements in relation to the Measurement
Period will be forfeited by that participant.
4.10 Variable Executive Remuneration – Long Term Variable
Remuneration Plan (LTVR) – Performance Rights, Options and Loan
Funded Shares
Long Term Variable Remuneration Plan (LTVR)
Aspect
Purpose
Plan, Offers and Comments
The LTVR Plan’s purpose is to provide an element of at-risk remuneration that constitutes
part of a market competitive total remuneration package and aims to ensure that Senior
Executives have commonly shared goals related to producing relatively high returns
for Shareholders. Other purposes of the LTVR Plan are to assist Senior Executives to
become Shareholders, provide a component of remuneration to enable the Company to
compete effectively for the calibre of talent required for it to be successful and to help retain
employees, thereby minimising turnover and stabilising the workforce such that in periods of
poor performance the cost is lesser (applies to non-market measures under AASB2).
As at balance date, the Company operates Options and Loan funded shares for the
purposes of the LTVR.
REMUNERATION REPORT for the year ending 30 June 2020Acrow Annual report 2020 29
Long Term Variable Remuneration Plan (LTVR)
Aspect
Plan, Offers and Comments
Form of Equity
The current plan in operation at balance date includes the ability to grant the following Rights
to Eligible Employees which includes Directors and employees as nominated by the Board:
■ Share Awards,
■ Performance Rights, which are subject to performance related vesting conditions, and
which may be settled upon exercise by new issues or on market purchase of ordinary
fully paid Shares,
■ Options, which are subject to an exercise price, and which typically have no intrinsic
value when granted (exercise price is around the Share price), creating an incentive
to increase Share price and grow shareholder value. The Options may be settled as
“Cashless Exercise” in which case on exercise of the Options the Company will only allot
and issue or transfer that number of Plan Shares to the Participant that are equal in value
to the difference between the Exercise Price otherwise payable in relation to the Options
and the then market value of the Plan Shares as at the time of the exercise. Options may
also be subject to performance related vesting conditions, and
■ Loan funded shares and share purchase Loans, whereby the Company provides a non-
recourse, interest free loan to executives to acquire fully paid ordinary shares, with an
associated obligation to repay the lesser of the loan amount and the value of the Shares
at the end of the term of the loan. This functions effectively the same as an Option, with
no intrinsic value at the time the arrangement is made, however participants hold Shares
at an earlier stage. The proceeds of the loan must be used to buy shares. As the only
recourse on the loans is the shares and there are vesting conditions, the arrangement has
been accounted for as share options, as required under accounting standards.
No dividends accrue to unvested Rights or Options, and no voting rights are attached,
however dividends do accrue to vested Loan Funded Shares (along with voting entitlements)
which must be put towards repayment of the Loan if any amount is outstanding.
Unless prior Shareholder Approval is obtained, the number of Awards which may be granted
under this Plan (assuming all Options and Performance Rights were exercised) must not at
any time exceed in aggregate 10% of the total Issued Capital of the Company at the date of
any proposed new Awards.
The Board retains discretion to determine the LTVR to be offered each year, subject to
shareholder approval in relation to Directors, when the Rights are to be settled in the form of
a new issue of Company shares. The Board may also seek shareholder approval for grants
to Directors in other circumstances, at its discretion.
FY2020 Invitations
Eligible employee Andrew Crowther was granted 1,200,000 share options with a total fair
value of $73,742.10
No other form of LTI are have been granted during the year.
FY2021 Invitations
Subsequent to balance date a new LTVR plan was implemented. This is described in
subsequent events notes to the financial statements.
Plan Limit
LTI Value
Acrow Annual report 2020 30
Long Term Variable Remuneration Plan (LTVR)
Aspect
Plan, Offers and Comments
Measurement
Period
The Measurement Period is determined by the Board as part of each grant. Only one
employee, Andrew Crowther (CFO) received LTVR in the form of Options in FY2020.
Performance,
Vesting and
Forfeiture
Conditions
Comments
Three-year Measurement Periods combined with annual grants will produce overlapping
cycles that will promote a focus on producing long term sustainable performance/value
improvement and mitigates the risk of manipulation and short-termism (continuous
improvement). Because of the timing of grants, the life of the Right may be less than 3 years
at times, however this does not impact the Measurement Period over which performance
is measured.
The Board has discretion to set Vesting, Performance and Forfeiture Conditions and for each
Invitation. When such conditions are not met, the entitlement lapses.
FY2020 Invitations
Except as indicated below, a participant must remain employed by the Company during the
Measurement Period and the performance conditions must be satisfied for LTVR to vest.
The following conditions apply to the grants of FY2020 made to Andrew Crowther as
noted above:
■ Options: vesting is subject to continued service over four years across four equal
tranches measured at end of each anniversary from the grant date, and a hurdle of the
20-day volume weighted average price of the Company’s shares trading on the ASX
exceeding 40 cents at any time from grant date.
Retesting
Retesting is not contemplated under the Plan Rules.
Amount Payable for
Grants
The target value of LTVR is included in assessments of remuneration benchmarking
and policy positioning. No amount is payable by participants for grants of Performance
Rights. An Acquisition Price will apply in respect of grants of Loan Funded Shares (with an
accompanying loan) and may also apply to grants of Share Awards, which may or may not
have Vesting Conditions. Any loan must be repaid prior to the end of the Loan Term, up to
the Market Value of the Loan Funded Shares (non-recourse).
For the FY2018 grant, Loan Funded Shares were offered at a price of 20c each, being the
share price at the time of the grant calculation, and a loan for this amount was provided
to the Participant for this amount in respect of each Loan Funded Shares acquired. These
shares have vested in March 2020 but remain unexercised at 30 June 2020.
No new Loan Funded Shares have been granted since FY2019.
Exercise of Grants
Participants will be required to submit an Exercise Notice in respect of Options, in order to
convert them to Shares, as well as the payment of the Exercise Price in respect of each
Option exercised. For the FY2020 grants, the exercise price is 40c.
Performance Rights were automatically exercised on the date the Vesting Notification which
will be issued if the performance conditions and hurdles are met. No amount is payable by
KMP on the exercise of Performance Rights.
REMUNERATION REPORT for the year ending 30 June 2020Acrow Annual report 2020 31
Long Term Variable Remuneration Plan (LTVR)
Aspect
Plan, Offers and Comments
Disposal
restrictions etc.
Options and/or Performance Rights granted under this Plan may not be assigned,
transferred, encumbered with a Security Interest in or over them, or otherwise disposed of
by a Participant, unless the consent of the Board is obtained, or due to the force of law in
the case of the death of a Participant. The Board has discretion to determine the disposal
restrictions attaching to Share Awards, Loan Funded Shares or Plan Shares (resulting from
vesting and exercise of grants) as part of the Invitation terms.
Cessation of
Employment
In the event of cessation of employment in the circumstances of a “Bad Leaver” (resignation
or termination for cause), all unvested entitlements will be forfeited. In other circumstances,
the treatment of unvested awards will be dealt with as determined by the Board.
Change of Control
of the Company
(CoC)
In the case of outstanding loans related to Loan Funded Shares, a Bad Leaver must repay
the loan by the date of the cessation of employment. In other cases of termination, the
Participant will have six months from the date of the termination, to repay the loan. If these
requirements are not satisfied the Loan Shares are surrendered.
If in the opinion of the Board a change of control event has occurred, or is likely to occur;
a) Performance Rights granted will vest to the extent that the performance period has
elapsed, and to the extent performance conditions have been met (may involve a pro-rata
calculation), with the remainder lapsing,
b) Options may be subject to accelerated vesting in the sole discretion of the Board, and
c) Share Awards or Loan Funded Shares which do not vest will automatically be
surrendered by the Participant, and any that do not lapse, and which are subject to an
outstanding loan will be subject to the requirement of the loan being repaid by the date of
the CoC.
Fraudulent or
Dishonest Actions
If the Board takes the view that a Participant has acted fraudulently, dishonestly, or wilfully
breaches their duties to the group, the Board has discretion to determine that unvested or
unexercised awards are forfeited.
5. Proforma Executive Remuneration for FY2020
(non-statutory disclosure) – unaudited
The disclosures required under the Corporations Act (including regulations) and prepared in accordance with
applicable accounting standards, do not provide shareholders with an understanding of the intended remuneration
in a given year. For example, the LTVR disclosed is not reflective of the remuneration opportunity for the year being
reported on, due to the requirements of AASB2. Therefore, the following table is provided to ensure that shareholders
have an accurate understanding of the Board’s intention regarding the remuneration offered to executives during
FY2020. The values presented reflect the remuneration for a full year i.e. ignoring any part-year reporting impact.
Position
Incumbent
Fixed
Package
including
Super
Target STI
LVTR
Opportunity
Total Value
of Package
Executive Director and
Chief Executive Officer
Steven Boland
$550,954
$275,000
Director
Margaret Prokop
$224,942
–
–
–
$825,954
$224,942
Chief Financial Officer (appointed
8 July 2019)
Andrew Crowther
$321,003
$90,000
$73,742
$484,745
Acrow Annual report 2020 32
6. Vested/Awarded Incentives and Remuneration
Outcomes in Respect of the Completed FY2020 Period
(non-statutory disclosure) – UNAUDITED
The statutory disclosure requirements and accounting standards make it difficult for shareholders to obtain a clear
understanding of what the actual remuneration outcomes for executives were in relation to a given reporting period.
The following table brings these outcomes back to the year of performance outcome to which the award outcome
relates, and which is the reporting period, i.e. LTI is presented as being part of the remuneration for the year during
which performance testing was completed.
Position
Incumbent
STI and LTI Outcomes
Fixed
Package
including
Super
Actual
STI**
STI
vested
%
STI
forfeited
%
LVTR
Value***
Total
Value of
Package
Executive Director and
Chief Executive Officer
Steven Boland
$611,857
50,000
18%
82% $482,195 $1,144,052
Director
Margaret Prokop
$225,117
–
0%
100%
applicable $225,117
Non-
Chief Financial Officer
(appointed 8 July 2019) Andrew Crowther* $315,187
20,000
22%
78%
No
vesting in
terms of
FY2020 $335,187
* For Andrew Crowther, the remuneration is from 8 July 2019 to 30 June 2020; full year for others.
** This is the value of the total STI award calculated and paid following the end of the FY2020.
*** LTVR vested in FY2020 includes options, loan funded shares and performance rights issued in March 2018 however only
performance rights have been exercised at 31 March 2020 and disclosed in the above.
With Steven Boland (CEO), STI is capped at 50% of his package; with Andrew Crowther (CFO) STI is capped at
30% of his package subject to achieving individual KPIs and performance targets.
Details regarding the assessments of performance that gave rise to the short-term incentive bonus outcomes for
FY2020 are given below.
REMUNERATION REPORT for the year ending 30 June 2020Acrow Annual report 2020 33
7. Performance Outcomes for FY2020
7.1 Company Performance
The following outlines the performance of the Company over the FY16 and FY2020 period in accordance with the
requirements of the Corporations Act:
Corporate Performance Measures
FY End Date
Revenue
Profit/
(loss) after
Tax
30 June 2020
$81,681,600 $3,013,023
30 June 2019
$68,858,910 $4,948,715
30 June 2018*
$15,478,995 $10,510,658
30 June 2017**
$0
$(613,395)
30 June 2016
$0 $8,468,607
Share
Price
$0.315
$0.300
$0.290
$0.120
$0.180
Change
in Share
Price
Total
Dividend
per share
$0.015
$0.010
$0.170
$(0.06)
n/a
$0.010
$0.015
Nil
Nil
Nil
ST change in
Shareholder Value
over 1-year value (SP
increase + Dividends)
Amount
$0.025
$0.025
$0.170
$(0.06)
n/a
%
8%
9%
142%
(33%)
n/a
* The above 30 June 2018 represents three-months consolidated result since Acrow’s acquisition of the Acrow Holdings Group
from April 18 to June 18.
** The Company was not listed between July 2013 to April 2016 and hence no further historical results provided.
7.2 Links Between Performance
and Reward Including STI and
LTVR Determinations
The remuneration of executive KMP is intended to be
composed of three parts as outlined earlier, being:
■ Fixed Package, which is not intended to vary
with performance, but which tends to increase
as the scale of the business increases (i.e.
following success),
■ STI which is intended to vary with indicators of
annual Company and individual performance, and
■ LTVR which is also intended to deliver a variable
reward based on long-term measures of
Company performance.
If STI is achieved, it is paid after the end of the financial
period it related to. This level of potential award was
considered appropriate under the STI process as it
stood at the time, and strongly linked to performance.
Following the end of FY2020, reports on the
Company’s activities during the year were prepared
for the Board. The Board then assessed the extent
to which expectations had been met or exceeded in
relation to the Company and each role, to calculate
the total award payable. This included assessed NPAT,
underlying EBITDA and EPS growth. This method of
performance assessment was chosen because under
the circumstances of capital raising and with the
Company’s business plans needing to be responsive to
unexpected circumstances.
During the reporting period, grants of equity were made
in relation to the LTVR scheme as part of remuneration
for FY2020 but did not vest due to the presence of the
long-term measurement period and vesting conditions
that are yet to be completed/assessed.
7.3 Links Between Company
Strategy and Remuneration
The Company intends to attract the superior talent
required to successfully implement the Company’s
strategies at a reasonable and appropriately variable
cost by:
■ positioning Fixed Packages (the fixed element)
around relevant market data benchmarks when they
are undertaken,
■
supplementing the Fixed Package with at-risk
remuneration and incentives that motivate executive
focus on:
Acrow Annual report 2020 34
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Acrow Annual report 2020
44
On appointment to the Board, all non-executive directors
enter into a service agreement with the Company in the
form of a letter of appointment. The letter summarises
the Board policies and terms, including compensation
relevant to the office of the director. No contracts apply
to the appointment of non-executive KMP.
12. Other Remuneration
Related Matters
The following outlines other remuneration related matters
that may be of interest to stakeholders, in the interests of
transparency and disclosure:
■ Other than in the case of grants of Loan Funded
Shares, there were no loans to Directors or other
KMP at any time during the reporting period, and
■ Other transactions with KMP:
As with the previous year, the Company leases a
number of industrial and commercial properties from
Margaret Prokop’s personal companies (MRP Property,
MRP Property QLD & MRP Superannuation) through
the Natform subsidiaries. Rental and related out-going
payments to these companies amounted to $740,158
(2019: $665,087).
13. External Remuneration
Consultant Advice
During the reporting period, the Board engaged
Godfrey Remuneration Group Pty Ltd as an external
remuneration consultant (ERC) to provide KMP
remuneration recommendations relating to remuneration
post the date of this report including the long term
variable remuneration referred to in subsequent events
in the directors report. The fees paid to the ERC was
$16,500 exclusive of GST.
The Board reviewed the recommendations from the ERC
directly and independent of executive management and
are satisfied the recommendations were made free of
undue influence of the relevant KMP’s.
The Board has adopted a policy to govern any such
future engagements, the details of which will be
disclosed in future Remuneration Reports should
they arise.
End of audited Remunerations Report.
REMUNERATION REPORT for the year ending 30 June 2020Acrow Annual report 2020 STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME for the year ended 30 June 2020
45
In dollars
Continuing operations
Revenue
Other income
Personnel expenses
Sub-contract labour costs
Inventory purchased, net of changes in finished goods
Depreciation
IT and telecommunication expenses
Freight costs
Property costs
Doubtful debts benefit/(expense)
Gain on fair value of derivatives
Other expenses
Profit before net finance costs and income tax
Finance income
Finance costs
Net finance costs
Profit before income tax
Income tax benefit/(expense)
Profit from continuing operations
Other comprehensive income
Items that may be reclassified to profit / (loss)
Foreign operations – foreign currency translation differences
Total comprehensive income for the year
Earnings per share from continuing operations
Basic EPS (cents per share)
Diluted EPS (cents per share)
Note
2020
2019
4
5
81,681,600
68,858,910
2,096,471
881,092
(26,611,704)
(22,589,627)
(18,498,438) (18,005,200)
(13,303,195)
(9,120,271)
(9,639,607)
(3,261,936)
(1,331,878)
(876,211)
(1,252,113)
(810,466)
(838,757)
(4,203,516)
322,690
(368,828)
100,000
–
(7,524,863)
(4,532,209)
5,200,206
37,211
5,971,738
11,261
(2,544,787)
(975,131)
(2,507,576)
(963,870)
2,692,630
320,705
5,007,868
(59,153)
3,013,335
4,948,715
10
32
6
7
7
8
(312)
(256)
3,013,023
4,948,459
24
24
1.55
1.54
2.88
2.69
The Group applied AASB 16 Leases effective 1 July 2019 using the modified retrospective approach, per note 15.
Under this approach, comparative information is not restated, and the cumulative effect is recognised in retained
earnings at the date of initial application.
The above statement should be read in conjunction with the accompanying notes.
Acrow Annual report 2020 46
STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
In dollars
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments and other assets
Assets held for sale
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use lease assets
Intangibles
Other assets
Total non-current assets
Total assets
Current liabilities
Trade payables
Other payables
Financial liability
Employee benefits
Lease liabilities
Loans and borrowings
Current tax liabilities
Liabilities held for sale
Total current liabilities
Non-current liabilities
Other payables
Employee benefits
Lease liabilities
Loans and borrowings
Provisions
Deferred income tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Note
2020
2019
9
10
11
12
13
14
15
16
12
17
17
32
18
15
19
21
13
17
18
15
19
20
21
7,238,511
3,289,617
17,014,660
13,104,919
5,577,745
3,413,361
2,355,240
1,125,992
72,854
71,296
32,259,010 21,005,185
76,038,493
46,992,624
32,393,595
–
7,428,704
7,301,902
99,411
–
115,960,203
54,294,526
148,219,213
75,299,711
16,234,858 10,201,226
3,492,952
2,230,199
350,000
–
4,129,727
2,962,801
3,420,761
–
5,981,098
2,102,006
556,301
556,301
67,317
65,878
34,233,014
18,118,411
3,331,309
2,128,080
595,571
456,609
30,729,513
–
15,837,398
4,837,086
469,274
452,474
4,727,900
1,683,999
55,690,965
9,558,248
89,923,979
27,676,659
58,295,234
47,623,052
22
45,674,176
34,814,339
914,264
2,062,063
11,706,794
10,746,650
58,295,234
47,623,052
The Group applied AASB 16 Leases effective 1 July 2019 using the modified retrospective approach, per note 15.
Under this approach, comparative information is not restated, and the cumulative effect is recognised in retained
earnings at the date of initial application.
The above statement should be read in conjunction with the accompanying notes.
Acrow Annual report 2020 STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2020
47
In dollars
Share
based
payments
reserve
Foreign
currency
translation
reserve
Issued
capital
Retained
earnings
Total
equity
Balance at 30 June 2018
29,377,927
623,011
56,286
8,403,983
38,461,207
Total comprehensive income for
the period
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners of
the Group
Shares issued net of transaction costs
Dividends paid to shareholders
Shares issued under a Dividend
Revinvestment Plan (DRP)
Equity settled share based payments
–
–
–
5,249,027
–
–
–
–
–
–
–
1,420,406
Proceeds from exercise of options
187,385
(37,384)
–
4,948,715
4,948,715
(256)
–
(256)
(256)
4,948,715
4,948,459
–
–
–
–
–
5,249,027
(2,107,019)
(2,107,019)
(499,029)
(499,029)
–
–
1,420,406
150,001
Balance at 30 June 2019 as
previously reported
Adjustment from adoption of AASB 16
net of tax, per note 15
34,814,339
2,006,033
56,030
10,746,650
47,623,052
–
–
–
(302,854)
(302,854)
Restated balance at 1 July 2019
34,814,339
2,006,033
56,030
10,443,796
47,320,198
Total comprehensive income for
the period
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners of
the Group
Shares issued net of transaction costs
Shares issued under acquisition
agreements
Performance rights converted to shares,
net of costs
Dividends paid to shareholders
Shares issued under a Dividend
Reinvestment Plan (DRP)
–
–
–
4,949,090
3,050,000
–
–
–
–
–
2,454,140
(2,475,000)
–
341,661
–
–
Equity settled share based payments
–
1,345,059
Transfer of option reserves to
issued capital
Proceeds from exercise of options
17,546
47,400
(17,546)
–
–
3,013,335
3,013,335
(312)
–
(312)
(312)
3,013,335
3,013,023
–
–
–
–
–
–
–
–
–
–
–
4,949,090
3,050,000
(20,860)
(1,750,337)
(1,750,337)
–
–
–
–
341,661
1,345,059
–
47,400
Balance at 30 June 2020
45,674,176
858,546
55,718
11,706,794
58,295,234
The above statement should be read in conjunction with the accompanying notes.
Acrow Annual report 2020 48
STATEMENT OF CASH FLOWS
for the year ended 30 June 2019
In dollars
Note
2020
2019
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Cash generated from operations
Significant costs – acquisition and integration related costs
Finance income
Income tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment
Purchase of property, plant and equipment
87,707,020
73,815,600
(71,418,334) (64,260,069)
16,288,686
9,555,531
(2,999,612)
(896,610)
37,211
11,261
–
(114,729)
13,326,285
8,555,453
6
7
26
5,302,646
2,151,417
14 (13,101,140)
(9,784,502)
Consideration paid for controlled entities, net of cash acquired
32 (12,182,477)
(6,729,487)
Deferred payment on acquisitions
17
(2,250,000)
–
Net cash outflow from investing activities
(22,230,971)
(14,362,572)
Cash flows from finance activities
Proceeds from issue of shares
Capital raising costs
Proceeds from exercise of options
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Dividends paid net of DRP
Finance costs paid
Net cash inflow from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
22
5,200,000
(271,771)
–
–
22
47,400
150,001
19,915,010
8,091,238
(5,035,606)
(1,152,147)
15
22
(3,299,167)
–
(1,408,676)
(2,107,019)
(2,293,610)
(803,174)
12,853,580
4,178,899
3,948,894
3,289,617
(1,628,220)
4,917,837
7,238,511
3,289,617
* Reconciles to Note 32 Acquisition of Uni-span Group Pty Ltd, being cash consideration paid of $12,905,035 less cash and cash
equivalents acquired of $1,174,659 plus a related company loan of $452,101.
The above statement should be read in conjunction with the accompanying notes.
Acrow Annual report 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2019
49
Contents
1. Reporting entity
2. Basis of preparation
3. Significant accounting policies
4. Revenue
5. Other income
6. Other expenses
7.
8.
Finance income and finance costs
Income tax benefit/(expense)
9. Cash and cash equivalents
10. Trade and other receivables
11.
Inventories
12. Prepayments and other assets
13. Assets and liabilities held for sale
14. Property, plant and equipment
15. Leases
16.
Intangibles
17. Trade and other payables
18. Employee benefits
19. Loans and borrowings
20. Provisions
21.
Deferred income tax liability and
tax liability
22.
Issued capital
23. Capital management
24. Earnings per share
25. Capital and leasing commitments
26.
Reconciliation of cash flows from
operating activities
27. Remuneration of auditors
28. Related parties
29. Share based payments
30. Financial risk management
31. Group entities
32.
Acquisition of Uni-span Group
Pty Ltd
33. Operating segments
34. Parent entity disclosures
35. Deed of cross guarantee
36. Subsequent events
49
49
51
58
59
59
59
60
60
61
61
62
62
62
63
66
67
68
68
69
69
70
71
72
73
73
74
75
76
78
83
83
85
88
88
91
1. Reporting entity
Acrow Formwork and Construction Services Limited
(Acrow or the Group) is a limited company incorporated
in Australia and whose shares are traded on the
Australian Securities Exchange under the issuer
code “ACF”.
The consolidated financial statements of Acrow for the
year ended 30 June 2020 comprise of the Company
and its controlled entities (the Group).
The Group is a for-profit entity and is primarily involved in
the hire and sale of falsework, formwork, scaffolding and
screen equipment, and other construction services.
Acrow’s Annual Report for prior reporting periods are
available upon request from the Group’s registered office
located at Level 5, 126 Phillip Street, Sydney NSW
2000, Australia or at www.acrow.com.au.
2. Basis of preparation
(a) Basis of accounting
The consolidated financial statements are general
purpose financial statements which have been prepared
in accordance with Australian Accounting Standards
(AASBs) adopted by the Australian Accounting
Standards Board (AASB) and the Corporations
Act 2001.
The consolidated financial statements comply with
International Financial Reporting Standards (IFRS)
adopted by the International Accounting Standards
Board (IASB) and were authorised for issue by the Board
of Directors on 24 September 2020.
Details of the Group’s significant accounting policies are
included in note 3.
The Group adopted AASB 16 Leases (formerly AASB
117 Leases) from 1 July 2019 and this is the first set of
the Group’s annual consolidated financial statements
where AASB 16 Leases has been applied.
Further details are set out in note 3(o) New
accounting standards and interpretations adopted and
Note 15 Leases.
AASB 16 Leases introduced a single, on-balance sheet
accounting model for lessees. As a result, the Group,
as a lessee, has recognised right-of-use assets for
properties, forklifts, motor vehicles and office equipment,
representing its rights to use the underlying assets,
and lease liabilities representing its obligation to meet
lease payments.
Acrow Annual report 2020 50
2. Basis of Preparation (continued)
The Group acquired the Uni-span group of companies
on 31 October 2019 and the consolidated financial
statements includes those subsidiaries financial
statements from 1 November 2019 to 30 June 2020.
(b) Basis of measurement
The consolidated financial statements have been
prepared on the historical cost basis except for
derivatives that are measured at fair value.
(c) Functional and presentation
currency
The consolidated financial statements are
presented in Australian dollars, which is the Group’s
functional currency.
(d) Use of estimates and
judgements
The preparation of consolidated financial statements in
conformity with AASBs requires management to make
judgements, estimates and assumptions that affect
the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses.
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 estimates are
revised and in any future periods affected.
In particular, information about significant areas of
estimations, uncertainties and critical judgements
in applying accounting policies that have the most
significant effect on the amounts recognised in the
consolidated financial statements include the following:
Accounting estimate and
judgements
Revenue
Income tax (benefit)/expense
Trade and other receivables
Inventories
Property, plant and equipment
Leases
Intangibles
Employee benefits
Provisions
Deferred income tax liability and
tax liability
Share based payments
Acquisition of Uni-span Group Pty Ltd
Note
4
8
10
11
14
15
16
18
20
21
29
32
The accounting policies below have been applied
consistently to all periods presented in these
consolidated financial statements and have been applied
consistently by the Group.
(e) Comparative information
Where applicable, comparative information is reclassified
to comply with disclosure requirements and improve
comparability. The impact of which is not material to the
financial report.
(f) Working capital deficiency
The Statement of Profit or Loss and Other
Comprehensive Income shows a profit for the period of
$3,013,335 (2019: $4,948,715).
The Statement of Financial Position shows that as at
30 June 2020, current liabilities exceeded current assets
by $1,974,004 (2019: net current asset position of
$2,886,774) for the Group.
The deficit arises due to a combination of different
factors being mainly:
■ The current lease liability for the next 12 months
being brought on the Statement of Financial Position
for an amount of $3,420,761; and
■ A deferred consideration payable of $3,842,952
related to the acquisition of Natform and Uni-span.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 51
The directors have concluded as to the appropriateness
of preparing the financial statements on a going concern
basis in consideration of the forecast profitable operating
results and positive cash flows from operations of
the Group.
(g) Rounding
Acrow is a company of the kind referred to in the
Australian Securities and Investments Commission
(ASIC) Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191, dated 24 March 2016
and in accordance with that Legislative Instrument,
amounts in these consolidated financial statements have
been rounded off to the nearest dollar and are shown as
such, unless stated otherwise.
(h) COVID-19 impact
The ongoing COVID-19 pandemic has increased the
estimation uncertainty in the preparation of these
consolidated financial statements. The estimation
uncertainty is associated with:
(i) The extent and duration of the disruption to
businesses arising from the actions by governments,
businesses and consumers to contain the spread of
the virus;
(ii) The extent and duration of the expected economic
downturn. This includes the disruption to capital
markets, deteriorating availability of credit, liquidity
concerns, increasing unemployment, declines in
consumer discretionary spending, reductions in
production because of decreased demand, and
other restructuring activities; and
(iii) The effectiveness of government and central bank
measures that have and will be put in place to
support businesses and consumers through this
disruption and economic downturn.
The Group has developed estimates in these
consolidated financial statements based on forecasts
of economic conditions which reflect expectations
and assumptions as at 30 June 2020 about future
events that the Directors believe are reasonable in
the circumstances.
There is a considerable degree of judgement involved in
preparing forecasts.
The underlying assumptions are subject to uncertainties
which are often outside the control of the Group.
Accordingly, actual economic conditions are likely
to be different from those forecast since anticipated
events frequently do not occur as expected, and the
effect of those differences may significantly impact
accounting estimates included in these consolidated
financial statements.
3. Significant accounting
policies
(a) Basis of consolidation
The consolidated financial statements have been
prepared by aggregating the financial statements of
all the entities that comprise the Group, being Acrow
Formwork and Construction Services Limited and its
controlled entities.
All inter-entity balances and transactions are eliminated
in these consolidated financial statements.
Business combinations
(i)
Business combinations are accounted for using the
acquisition method as at the acquisition date, which is
the date on which control is transferred to the Group.
Control is the power to govern the financial and
operating policies of an entity so as to obtain benefits
from its activities. In assessing control, the Group takes
into consideration potential voting rights that currently
are exercisable.
The Group measures goodwill at the acquisition date as:
■
■
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling
interests in the acquiree; plus, if the business
combination is achieved in stages, the fair value of
the existing equity interest in the acquiree; less
■
the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is
recognised immediately in the statement of profit or loss.
The consideration transferred does not include amounts
related to the settlement of pre-existing relationships.
Such amounts are generally recognised in the statement
of profit or loss.
Costs related to the acquisition, other than those
associated with the issue of debt or equity securities
that the Group incurs in connection with a business
combination are expensed as incurred.
Any contingent consideration payable is recognised
at fair value at the acquisition date. If the contingent
consideration is classified as equity, it is not remeasured,
and settlement is accounted for within equity, otherwise
subsequent changes to the fair value of the contingent
Acrow Annual report 2020 52
3. Significant accounting policies (continued)
consideration are recognised in the statement of profit
or loss.
Subsidiaries
(ii)
Subsidiaries are entities controlled by the Group. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date that
control commences until the date that control ceases.
(b) Foreign currency
Transactions in foreign currencies are translated to the
functional currency of the Group at exchange rates at
the dates of the transactions.
Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated to the
functional currency at the exchange rate at that date.
The foreign currency gain or (loss) on monetary items is
the difference between amortised cost in the functional
currency at the beginning of the period, adjusted for
effective interest and payments during the period, and
the amortised cost in foreign currency translated at the
exchange rate at the end of the year.
Foreign currency differences arising on retranslation
are recognised in the statement of profit or loss,
except for qualifying cash flow hedges to the extent
the hedge is effective, which are recognised in other
comprehensive income.
(c) Financial instruments
(i)
Non-derivative financial assets
The Group initially recognises receivables on the date
that they are originated. All other financial assets
(including assets held at fair value through profit or loss)
are recognised initially on the trade date at which the
Group becomes a party to the contractual provisions of
the instrument.
The Group derecognises a financial asset when the
contractual rights to the cash flows from the asset
expire, or it transfers the rights to receive the contractual
cash flows on the financial asset in a transaction
in which substantially all the risks and rewards of
ownership of the financial asset are transferred. Any
interest in transferred financial assets that is created or
retained by the Group is recognised as a separate asset
or liability.
Financial assets and liabilities are offset and the net
amount presented in the statement of financial position
when, and only when, the Group has a legal right to
offset the amounts and intends to either to settle on a
net basis or to realise the asset and settle the liability
simultaneously.
The Group has the following non-derivative financial
assets: receivables and cash and cash equivalents.
Receivables
Receivables are financial assets with fixed or
determinable payments that are not quoted in an active
market. Such assets are recognised initially at the
transaction price plus any directly attributable transaction
costs. Subsequent to initial recognition, receivables are
measured at amortised cost using the effective interest
method, less any impairment losses.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank, cash
on hand and cash equivalents, net of bank overdrafts.
Cash equivalents represent highly liquid investments
which are readily convertible to cash.
Non-derivative financial liabilities
(ii)
The Group initially recognises debt securities issued
on the date that they are originated. All other financial
liabilities (including liabilities held at fair value through
profit or loss) are recognized initially on the trade date
at which the Group becomes a party to the contractual
provisions of the instrument.
The Group derecognizes a financial liability when its
contractual obligations are discharged or cancelled
or expire.
Financial liabilities are recognized initially at fair value plus
any directly attributable transaction costs.
Subsequent to initial recognition, financial liabilities are
measured at amortized cost using the effective interest
rate method.
Financial liabilities comprise loans and borrowings, trade
and other payables.
Bank overdrafts that are repayable on demand and form
an integral part of the Group’s cash management are
included as a component of cash and cash equivalents
for the purpose of the statement of cash flows.
(iii)
Ordinary shares
Issued capital
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 53
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of ordinary shares
and share options are recognised as a deduction from
equity, net of any tax effects.
(d) Property, plant and
equipment
assets are assessed and if a component has a useful
life that is different from the remainder of that asset, that
component is depreciated separately.
Depreciation is recognised in the statement of profit or
loss on a straight-line basis over the estimated useful
lives of each component of an item of property, plant
and equipment.
Recognition and measurement
(i)
Items of property, plant and equipment are measured at
cost less accumulated depreciation and accumulated
impairment losses.
Right-of-use lease assets are depreciated over the
shorter of the lease term and useful life, on a straight-
line basis, unless it is reasonably certain that the Group
will obtain ownership by the end of the lease term.
Cost includes expenditure that is directly attributable to
the acquisition of the asset. The cost of self-constructed
assets includes the cost of materials and direct labour,
any other costs directly attributable to bringing the
assets to a working condition for their intended use,
the costs of dismantling and removing the items and
restoring the site on which they are located, and
capitalised borrowing costs (see below).
Cost also may include transfers from other
comprehensive income of any gain or (loss) on qualifying
cash flow hedges of foreign currency purchases of
property, plant and equipment. Purchased software that
is integral to the functionality of the related equipment is
capitalised as part of that equipment.
When parts of an item of property, plant and equipment
have different useful lives, they are accounted for as
separate items (major components) of property, plant
and equipment.
The 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 or other expenses in the statement
of profit or loss.
Subsequent costs
(ii)
The cost of replacing a component of an item of
property, plant and equipment is recognised in the
carrying amount of the item if it is probable that
the future economic benefits embodied within the
component will flow to the Group, and its cost can
be measured reliably. The carrying amount of the
replaced part is derecognised. The costs of the day-
to-day servicing of property, plant and equipment are
recognised in the statement of profit or loss as incurred.
Depreciation
(iii)
Depreciation is based on the cost of an asset less its
residual value. Significant components of individual
The expected useful lives for depreciation purposes are
as follows:
■ Hire equipment
13 – 33 years
■ Leasehold improvements
over the lease term
■ Plant and equipment
3 – 20 years
Depreciation methods, useful lives and residual values
are reviewed at each financial year end and adjusted
if appropriate.
Hire equipment loss provision
(iv)
A hire equipment loss provision is recognised to cover
the expected loss of equipment on hire. The provision is
based on historical experience of unrecoverable losses
incurred on the return of hire equipment from customers.
(e)
Intangible assets
Goodwill
(i)
All business combinations are accounted for by
applying the acquisition method. Goodwill represents
the difference between the cost of the acquisition and
the fair value of the net identifiable assets acquired.
Goodwill is stated at costs less any accumulated
impairment losses.
Inventories
(f)
Inventories are measured at the lower of cost and net
realisable value.
The cost of inventories is based on the first-in first-out
principle, and includes expenditure incurred in acquiring
the inventories, production or conversion costs and
other costs incurred in bringing them to their existing
location and condition. Cost may also include transfers
from other comprehensive income of any gain or (loss)
on qualifying cash flow hedges of foreign currency
purchases of inventories.
Acrow Annual report 2020 54
3. Significant accounting policies (continued)
Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of
completion and selling expenses.
Losses are recognised in the statement of profit or
loss and reflected in an allowance account against
trade receivables.
(g)
Impairment
Non-derivative financial assets
(i)
Non-derivative financial assets comprise trade and other
receivables and cash and cash equivalents.
Non-derivative financial instruments excluding financial
assets at fair value in profit or loss are recognised initially
at fair value plus transaction costs. Subsequent to initial
recognition, non-derivative financial assets are measured
at amortised cost less impairment losses.
A financial asset is recognised if the Group becomes a
party to the contractual provisions of the asset.
Financial assets are derecognised if the Group’s
contractual rights to the cash flows from the financial
assets expire or if the Group transfers the financial asset
to another party without retaining control or substantially
all risks and rewards of the asset.
The Group recognises its financial assets at
either amortised cost or fair value, depending on
the contractual cash flow characteristics of the
financial assets.
The classification of financial assets that the Group
held at the date of initial application was based on the
facts and circumstances of the financial assets held at
that date.
Financial assets recognised at amortised cost are
measured using the effective interest method, net of
any impairment loss. Financial assets other than those
classified as financial assets recognised at amortised
cost are measured at fair value with any changes in fair
value recognised in the statement of profit or loss.
Receivables
AASB 9 Financial Instruments requires an expected
credit loss model.
For trade receivables, the Group has elected to apply the
simplified lifetime expected credit loss approach, which
includes consideration of customer specific factors and
actual credit loss experience.
The Group provides for a loss allowance equivalent to
the lifetime expected credit losses from initial recognition
of those receivables.
When a subsequent event causes the amount of
impairment loss to decrease, the decrease is reversed
through the statement of profit or loss.
Non-financial assets
(ii)
The carrying amounts of the Group’s non-financial
assets, other than inventories and deferred tax assets,
are reviewed at each reporting date to determine
whether there is any indication of impairment, and if
any such indication exists, then the asset’s recoverable
amount is estimated.
For intangible assets, namely goodwill that have
indefinite useful lives or that are not yet available for use,
the recoverable amount is estimated each year at the
same time.
An impairment loss is recognised if the carrying amount
of an asset or its related cash-generating unit (CGU)
exceeds its estimated recoverable amount.
The recoverable amount of an asset or CGU is the
greater of its value in use and its fair value less costs
to sell. In assessing value in use, the estimated future
cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks
specific to the asset.
For the purpose of annual impairment testing applicable
to goodwill, such intangible assets that cannot be tested
individually are grouped together into the smallest group
of assets that generates cash inflows from continuing
use that are largely independent of the cash inflows of
other assets or CGU.
Impairment losses are recognised in the statement of
profit or loss.
Impairment losses recognised in respect of CGUs are
allocated to reduce the carrying amounts of assets in the
CGU (or group of CGUs) on a pro rata basis.
Impairment losses recognised in prior periods are
assessed at each reporting date for any indications that
the loss has decreased or no longer exists.
An impairment loss is reversed if there has been
a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed
only to the extent that the asset’s carrying amount does
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 55
not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
If termination benefits are payable more than 12 months
after the reporting period, the termination benefits are
discounted to their present value.
(h) Employee benefits
Defined contribution plans
(i)
A defined contribution plan is a post-employment benefit
plan under which an entity pays fixed contributions into
a separate entity and will have no legal or constructive
obligation to pay further amounts.
Obligations for contributions to defined contribution
plans are recognised as an employee benefit expense
in the statement of profit or loss in the periods during
which services are rendered by employees.
Prepaid contributions are recognised as an asset to
the extent that a cash refund or a reduction in future
payments is available.
Contributions to a defined contribution plan that are
due more than 12 months after the end of the period in
which the employees render the service are discounted
to their present value.
(ii)
Other long-term employee benefits
The Group’s net obligation in respect of long-term
employee benefits other than defined benefit plans is the
amount of future benefit that employees have earned in
return for their service in the current and prior periods
plus related on-costs.
The benefit is discounted to determine its present value,
and the fair value of any related assets is deducted.
The discount rate is the yield at the reporting date on
high quality corporate bonds that have maturity dates
approximating the terms of the Group’s obligations.
The calculation is performed using the projected unit
credit method.
Termination benefits
(iii)
Termination benefits are recognised as an expense
when the Group is demonstrably committed, without
realistic possibility of withdrawal, to a formal detailed
plan to either terminate employment before the
normal retirement date, or to provide termination
benefits as a result of an offer made to encourage
voluntary redundancy.
Termination benefits for voluntary redundancies are
recognised as an expense if the Group has made an
offer of voluntary redundancy, it is probable that the offer
will be accepted, and the number of acceptances can
be estimated reliably.
Short-term benefits
(iv)
Short-term employee benefit obligations are measured
on an undiscounted basis and are expensed as the
related service is provided.
A liability is recognised for the amount expected to be
paid under short-term cash bonus or profit-sharing
plans if the Group has a present legal or constructive
obligation to pay this amount as a result of past service
provided by the employee and the obligation can be
estimated reliably.
(i) Provisions
A 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.
The unwinding of the discount is recognised as
finance cost.
Restructuring
(i)
A provision for restructuring is recognised when the
Group has approved a detailed and formal restructuring
plan, and the restructuring either has commenced or has
been announced publicly.
Future operating losses are not provided for.
Onerous contracts
(ii)
A provision for onerous contracts is recognised when
the expected benefits to be derived by the Group from a
contract are lower than the unavoidable cost of meeting
its obligations under the contract.
The provision is measured at the present value of
the lower of the expected cost of terminating the
contract and the expected net cost of continuing with
the contract.
Before a provision is established, the Group recognises
any impairment loss on the assets associated with
that contract.
Acrow Annual report 2020 56
3. Significant accounting policies (continued)
Make good
(iii)
A provision for make good is measured at the present
value of the cost of restoring leased properties to their
original condition, at the conclusion of the lease.
(j) Revenue
Acrow is predominately a provider of falsework,
formwork, scaffolding and screen equipment for hire or
sale with revenue primarily generated via dry hire, project
hire or sale.
Dry hire revenue is generated from the hire of
equipment only.
Project hire involves the provision of scaffolding services
and includes dry hire plus labour services, cartage
services, consumable sales and/or other services. These
form of contracts may vary in scope however all project
hire have one common performance obligation, being
the provision of scaffolding structures to the customer
which includes the scaffolding equipment, the labour on
installation and dismantling, cartage (transport to and
from the customer) and any ancillary materials that are
required to fulfill the obligation.
Hire of equipment
(i)
Falsework, formwork, scaffolding and screen equipment
are rented to customers under operating leases with
rental periods averaging six months to less than
one year.
The rental can be arranged as dry hire where only
equipment is provided to the customer and revenue is
recognised at fixed rates over the period of hire; or as
part of a project hire where Acrow supplies labour and
cartage services between warehouse and building sites.
Revenue recognition on equipment hire commences
once falsework, formwork, scaffold and screen
equipment is either collected by the customer, delivered
to the customer or once a scaffolding structure has been
certified to be safe and access granted to customers.
Revenue is also recognised when screen equipment
has been pre-assembled at a yard location, prior to the
delivery to a customer.
Revenue is recognised over straight-line bases over the
life of the hire agreements per AASB 16 Leases.
Labour and cartage services
(ii)
Revenue from providing scaffolding labour in installation
and dismantling, and equipment cartage, being transport
to and from the customer, are recognised over time as
services are rendered.
Revenue is recognised based on the actual service
provided to the end of the reporting period because the
customer receives and uses the benefits simultaneously.
Labour and cartage services revenue are recognised
over time under AASB 15 Revenue from Contracts
with Customers.
(iii)
Consumable sales and other services
Revenue from sales are measured as the transaction
price net of returns, trade discounts and volume rebates.
Revenue is recognised when persuasive evidence exists,
either by collection by the customer or by delivery of
the goods to the customer such that the control been
transferred to the buyer.
If it is probable that discounts will be granted and the
amount can be measured reliably, then the discount
is recognised as a reduction of revenue as the sales
are recognised.
A receivable is recognised when the goods are
collected or delivered as this is the point in time that the
consideration is unconditional because only the passage
of time is required before the payment is due.
Revenue recognition of consumable sales and other
services are at a point in time under AASB 15 Revenue
from Contracts with Customers.
(k) Finance income and
finance costs
Finance income comprises interest income on funds
deposited. Interest income is recognised as it accrues
in the statement of profit or loss, using the effective
interest method.
Finance costs comprise interest expenses on loans and
borrowings, lease liabilities and, where material, the
unwinding of the discount on provisions.
Borrowing costs that are not directly attributable to the
acquisition, construction or production of a qualifying
asset are recognised in the statement of profit or loss
using the effective interest method.
Foreign currency gains and losses are reported on a net
basis as either finance income or finance cost depending
on whether foreign currency movements are in a net
gain or net (loss) position.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 57
Tax
(l)
Tax expense comprises current and deferred tax. Current and deferred tax are recognised in the statement of profit or
loss, except to the extent that it relates to items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or (loss) 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. Current tax payable also includes any tax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of 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 temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or (loss).
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse,
based on the laws that have been enacted or substantively enacted by the reporting date.
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 tax
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.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the
extent that it is probable that future taxable profits will be available against which they can be utilised.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable
that the related tax benefit will be realised.
(m) Exploration and evaluation assets
Exploration and evaluation expenditure relating to an area of interest is capitalised where exploration rights have been
obtained.
The expenditure is only carried forward to the extent that they are expected to be recouped through successful
development and exploitation or sale of the area or where the exploration and evaluation activities have not reached
a stage which permits a reasonable assessment of the existence of economically recoverable reserves and active
exploration operations are continuing.
Expenditure is not subject to amortisation but is assessed for impairment when facts and circumstances suggest that
the carrying amount may exceed its recoverable amount.
(n) Goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the
amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised
as part of the cost of acquisition of the asset or as part of the expense.
Cash flows included in the statement of cash flows are on a gross basis. The GST components of cash flows arising
from investing and financing activities which are recoverable from or payable to the ATO, are classified as operating
cash flows.
(o) New accounting standards and interpretations adopted
The Group has adopted all new and amended Accounting Standards and Interpretations issued by the AASB that are
relevant to the Group and effective for the current annual reporting period being:
Acrow Annual report 2020 58
3. Significant accounting policies (continued)
Standard
AASB 16 Leases
IFRIC 23 Uncertainty over income tax treatments
Effective for annual
reporting periods
beginning on
1 January 2019
1 January 2019
Initially applied in the
financial year ending
30 June 2020
30 June 2020
Additional information on the impact of adopting AASB 16 Leases is contained in Note 15 Leases.
IFRIC 23 Uncertainty over income tax treatments
The Group’s net profit after tax assumes that certain income tax losses from previous periods relating to its subsidiary
Acrow Formwork and Scaffold Pty Limited are available to continue offsetting assessable income. These income tax
losses are not recognised in the statement of financial position.
Losses are carried forward under the “same business test” rule which the Group assumes the Australian Taxation
Office (ATO) would accept.
The acquisition of the Uni-span group of companies on 31 October 2019 has led the Group to reassess the ability to
continue to carry forward the losses and believe the same business test will still be passed.
If the same business test is determined by the ATO not to pass, the Group will be required to back pay taxes on
relevant assessable income back to when the same business test was not passed.
While tax losses and temporary differences do not expire under current tax legislation, deferred tax assets have
not been recognised in respect of these items as certain subsidiaries have experienced a number of years without
taxable income and therefore recovery is not considered probable. The tax losses do not expire under current tax
legislation and further information is included in Note 21 Deferred income tax liability.
(p) New accounting standards and interpretations not yet adopted
Australian Accounting Standards and Australian Accounting Standards Board (AASB) interpretations not yet adopted
by the Group are not expected to have a material impact to the Group.
4. Revenue
In dollars
Revenue from contracts with customers
Provision of labour services
Provision of cartage services
Other sales of goods
Other revenue
Hire of equipment
2020
2019
16,637,186
16,836,386
5,629,679
5,239,038
22,215,220
13,642,786
44,482,085
35,718,210
37,199,515 33,140,700
81,681,600
68,858,910
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 59
5. Other income
In dollars
Disposal of property, plant and equipment
Proceeds
Written down value
2020
2019
5,302,646
2,151,417
(3,206,175)
(1,270,325)
Net gain on disposal of property, plant and equipment
2,096,471
881,092
6. Other expenses
In dollars
Significant items – acquisition and integration related expenses
Audit, tax and legal expenses
Consumables
Due diligence
Insurance expenses
Motor vehicle expenses
Plant & equipment operation expenses
Travelling expenses
Others
7. Finance income and finance costs
In dollars
Finance income
Interest income
Finance costs
Unwinding interest on deferred consideration
Interest expense on financial liabilities
Interest expense on leases
Borrowing costs
Net foreign exchange (loss)
Net finance costs from continuing operations
2020
2019
(2,999,612)
(395,868)
(896,610)
(363,633)
(328,187)
(318,622)
(306,687)
–
(810,623)
(593,153)
(613,544)
(825,575)
(298,541)
(647,904)
(494,081)
(425,852)
(1,277,720)
(460,860)
(7,524,863)
(4,532,209)
2020
2019
37,211
11,261
(251,291)
(171,957)
(777,877)
(346,373)
(1,144,161)
–
(232,607)
(427,571)
(138,851)
(29,230)
(2,544,787)
(975,131)
(2,507,576)
(963,870)
Acrow Annual report 2020
60
8.
Income tax benefit/(expense)
In dollars
Current income tax expense
Deferred income tax expense
Income tax benefit/(expense) attributable to profit
2020
2019
1,318,500
(556,301)
(997,795)
497,148
320,705
(59,153)
The prima facie tax on profit before income tax is reconciled to the income tax expense as follows:
In dollars
Profit before income tax
Income tax (expense) using the Group’s domestic tax rate (30%)
Income tax effects of amounts which are not deductible / (taxable) in
calculating taxable income:
Non-deductible losses on overseas entities
Non-deductible share-based payment expense
Non-deductible acquisition expense
Non-deductible impairment expense
Other non-deductible expenses
Over/under provision for income tax in prior year
Tax losses not brought to account
2020
2019
2,692,630
(807,789)
5,007,868
(1,502,360)
130
75
(403,518)
(426,122)
(174,305)
(151,550)
(21,165)
(23,452)
(3,318)
(110,122)
26,824
–
(57,409)
(25,452)
Utilization of prior year tax losses not previously recognised
1,761,255
2,179,830
Income tax benefit/(expense) attributable to profit
320,705
(59,153)
9. Cash and cash equivalents
In dollars
Cash and cash equivalents
2020
2019
7,238,511
3,289,617
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020
61
10. Trade and other receivables
In dollars
Trade receivables
Provision for doubtful debts
Movement in the provision of doubtful debts:
In dollars
At 1 July
Opening balance
Addition through business combination
Impairment benefit/(expense) recognised during the year
Receivables written off/(back) during the year
AASB 9 Financial Instruments adoption
Claims insured
Balance at 30 June
2020
2019
18,211,600
14,134,327
(1,196,940)
(1,029,408)
17,014,660
13,104,919
2020
2019
(1,029,408)
(831,931)
(1,100,000)
–
322,690
(345,805)
609,778
843,525
–
–
(584,408)
(110,789)
(1,196,940)
(1,029,408)
Due to the short-term nature of current receivables, their carrying amount approximates their fair value. The ageing of
trade receivables is outlined below:
In dollars
Current
31 to 60
61 to 90
90+
Impaired
11. Inventories
In dollars
Finished goods
Provision for slow moving stock
2020
2019
8,084,287
6,395,010
6,401,245
4,046,059
1,446,874
1,144,164
2,279,194
2,549,094
(1,196,940)
(1,029,408)
17,014,660
13,104,919
2020
2019
5,881,998
3,688,216
(304,253)
(274,855)
5,577,745
3,413,361
Acrow Annual report 2020
62
12. Prepayments and other assets
In dollars
Current
Contract assets
Other receivables
Prepayments
Non-current
Other assets
13. Assets and liabilities held for sale
In dollars
Assets held for sale
Liabilities held for sale
2020
2019
239,747
933,026
1,182,467
259,316
158,013
708,663
2,355,240
1,125,992
99,411
–
2020
72,854
67,317
2019
71,296
65,878
Acrow continues to explore the divestment of Noble Mineral Resources Ghana Ltd, which owns the Group’s
exploration and evaluation assets in Ghana. The business remains non-core to the Group, has an immaterial financial
and limited management impacts.
14. Property, plant and equipment
In dollars
Cost
Balance at 1 July 2018
Acquisitions through a business combination
Additions
Disposals
Balance at 30 June 2019
Cost
Balance at 1 July 2019
Acquisitions through a business combination
Additions
Disposals
Land and
buildings
Plant and
equipment
Hire
equipment
Total
388,645
10,741,359
32,149,571
43,279,575
–
–
–
118,950
9,386,173
9,505,123
247,862
9,536,640
9,784,502
(56,315)
(1,340,230)
(1,396,545)
388,645
11,051,856
49,732,154
61,172,655
388,645
11,051,856
49,732,154
61,172,655
28,580
58,764
343,535
24,119,241
24,491,356
212,976
12,829,400
13,101,140
–
(80,053)
(3,915,090)
(3,995,143)
Balance at 30 June 2020
475,989
11,528,314
82,765,705
94,770,008
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020
63
In dollars
Depreciation and impairment losses
Balance at 1 July 2018
Depreciation for the year
Disposals
Hire equipment loss adjustment
Balance at 30 June 2019
Balance at 1 July 2019
Land and
buildings
Plant and
equipment
Hire
equipment
Total
300,585
10,351,471
916,521
11,568,577
35,355
245,986
2,980,595
3,261,936
–
–
(56,315)
(69,905)
(126,220)
–
(524,262)
(524,262)
335,940
335,940
10,541,142
10,541,142
3,302,949
3,302,949
14,180,031
14,180,031
Acquisitions through a business combination
–
(89,398)
–
(89,398)
Depreciation for the year
Disposals
Hire equipment loss adjustment
18,618
320,385
4,921,121
5,260,124
–
–
(78,328)
(711,182)
(789,510)
–
170,268
170,268
Balance at 30 June 2020
354,558
10,693,801
7,683,156
18,731,515
Carrying amounts
At 1 July 2018
At 30 June 2019
At 1 July 2019
At 30 June 2020
Property, plant and equipment are at times sold prior
to the end of its useful life however this is irregular and
only under specific conditions. On acquisition of property
plant and equipment there is no intention to dispose
through sale. In the case property, plant and equipment
is sold, it is not transferred to inventory rather it is sold
directly out of property, plant and equipment.
15. Leases
AASB 16 Leases replaces AASB 117 Leases and was
adopted by the Group on 1 July 2019.
The Group leases property, forklifts, motor vehicles and
office equipment.
Property lease terms are from 1 to 10 years and often
include extension options. Forklift lease terms are for
7 years, motor vehicle lease terms from 1 to 3 years,
whilst all office equipment are for a 5-year lease term.
All leased office equipment forms one master lease
agreement while all other leases are negotiated on an
individual basis and contain a broad range of terms
and conditions.
88,060
389,888
31,233,050
31,710,998
52,705
52,705
510,714
510,714
46,429,205
46,429,205
46,992,624
46,992,624
121,431
834,513
75,082,549
76,038,493
Lease agreements do not impose any covenants,
but leased assets may not be used as security for
borrowing purposes.
AASB 16 Leases replaces the current distinction
between operating and financing leases and requires the
recognition of an asset (the right to use the underlying
asset) and a financial liability to pay rentals for all
lease contracts.
Leases are recognised as a right-of-use asset and a
corresponding lease liability at the date at which the
leased asset is available for use by the Group.
Each lease payment is allocated between the liability and
finance cost (interest). The finance cost is charged to
the statement of profit or loss over the lease period so
as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
The right-of-use asset is depreciated over the lease term
on a straight-line basis.
The right-of-use asset and lease liability are initially
measured at the net present value of the future minimum
lease payments.
Acrow Annual report 2020 64
15. Leases (continued)
Lease payments include:
■ Variable lease payments that are based on an index
or rate;
■ Amounts expected to be payable by the lessee
under residual value guarantees;
■ The exercise price of a purchase option if Acrow is
reasonably certain to exercise that option;
■ Fixed payments (including in-substance fixed
payments), less any lease incentives receivable; and
■ Payment of penalties for terminating the lease, if the
lease term reflects Acrow exercising that option.
Lease payments are discounted using the interest rate
implicit in the lease, if determinable or at the Group’s
incremental borrowing rate.
Right-of-use assets are measured at cost and comprise:
■ Any initial direct costs incurred by the lessee;
■ An estimate of restoration or make good costs;
■ The amount of the initial measurement of the lease
liability and
■ Any lease payments made at or before
the commencement date, less any lease
incentives received.
Extension options are only included in the lease term
if the lease is reasonably certain to be extended. The
assessment is reviewed if a significant event or change
in circumstance occurs which affects this assessment
and that is within the control of the lessee.
Payments associated with short term leases and leases
of low value assets are recognised on a straight-line
basis as an expense in the statement of profit or loss. A
short-term lease is defined as a lease at commencement
date with a lease term of 12 months or less. A low
value asset per AASB 16 Leases has an asset value of
USD5,000 or lower per AASB 16. BC100. Low value
assets mainly represent IT equipment.
Impact of the adoption of AASB 16 Leases on
1 July 2019
On adoption of AASB 16 Leases, the Group recognised
lease liabilities in relation to leases which had previously
been classified as ‘operating leases’ under the principles
of AASB 117 Leases. These liabilities were measured
at the present value of the remaining lease payments,
discounted using the property yields at various locations
and the Group’s incremental borrowing rate for short
term finances as at 1 July 2019.
In applying AASB 16 Leases for the first time, the Group
has used the following practical expedients permitted by
the standard:
■ Relying on previous assessments as to whether a
lease is onerous.
■ The use of a single discount rate to a portfolio of
leases with reasonably similar characteristics.
■ The exclusion of initial direct costs for the
measurement of the right-to-use asset at the date of
initial application.
■ The use of hindsight in determining the lease term
where the contract contains options to extend or
terminate the lease.
■ The accounting for operating leases with a remaining
lease term of less than 12 months as at 1 July 2019
as short-term leases.
The Group has also elected not to apply AASB
16 Leases to contracts that were not identified as
containing a lease under AASB 117 Leases and
Interpretation 4 Determining whether an Arrangement
contains a Lease.
The recognition of the lease liability can be reconciled to
the operating lease commitments disclosed at 30 June
2019 as follows:
In dollars
Operating lease commitments
disclosed at 30 June 2019
Discounted using the Group’s
incremental borrowing rates
Less: Short-term leases and low value
leases recognised on a straight-line
basis as an expense
Total
19,744,728
(1,227,960)
(79,909)
Lease liability recognised as at
1 July 2019
18,436,859
All right-of-use assets for leases were measured
using the modified retrospective method as if the
new rules had always been applied since the later of
either the commencement of the lease or the date of
business combinations.
In accordance with AASB 16 Leases, the Group has not
restated comparatives as permitted under the specific
transition provisions in the standard.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 65
Following implementation of AASB 16 Leases on 1 July 2019:
■ Property, plant and equipment increased by $17,771,714 to recognise the net right-of-use asset, after the
impairment of onerous leases.
■ Lease liabilities increased by $18,436,859
■ Retained earnings reduced by $302,854
■ Deferred tax assets increased by $21,090
■ Accrued lease incentive was reduced by $341,202
Lease amounts recognised in the Statement of Financial Position:
In dollars
Right-of-use assets
Properties
Forklifts and office equipment
Motor vehicles
Total right-of-use assets
Lease liabilities
Current
Non-current
Total lease liabilities
2020
2019
29,896,913
2,130,164
366,518
32,393,595
3,420,761
30,729,513
34,150,274
–
–
–
–
–
–
–
Lease amounts recognised in the Statement of Profit or loss and Other Comprehensive Income:
In dollars
2020
2019
Depreciation charge for right-of-use assets:
Properties
Forklifts and office equipment
Motor vehicles
Total depreciation charge for right-of-use assets
Interest expense (included in finance costs)
Net expense relating to short term and low value asset leases
Impacts to the Statement of Profit or loss and Other Comprehensive Income:
In dollars
(Increase) in depreciation expense
(Increase) in interest expense
Decrease in lease payments
Net impact to net profit before income tax
3,686,922
402,223
290,336
4,379,481
1,144,161
272,842
–
–
–
–
–
–
2020
2019
(4,379,481)
(1,144,161)
4,443,328
(1,080,314)
–
–
–
–
The Statement of Cash Flows at 30 June 2020 includes cash outflows for lease liabilities of $3,299,167 and lease
interest of $1,144,161 within cash flows from financing activities. The cash flows for the year ended 30 June 2019
have not been restated. Cash outflows associated with lease payments are included in payments to suppliers and
employees within cash flows from operating activities.
Acrow Annual report 2020 66
16. Intangibles
Goodwill
All business combinations are accounted for by applying the acquisition method. Goodwill represents the difference
between the cost of the acquisition and the fair value of the net identifiable assets acquired.
Goodwill is stated at costs less any accumulated impairment losses.
Acrow annually tests goodwill with indefinite useful lives for impairment. An asset that does not generate independent
cash flows is tested for impairment as part of a cash generating unit (CGU).
Where there is an impairment loss, it is recognised in the statement of profit or loss when the carrying amount of an
asset exceeds its recoverable amount. The asset’s recoverable amount is estimated based on the higher of its value-
in-use and fair value less costs to sell.
The recoverable amount of a CGU is determined based on a value-in-use calculation. This calculation uses
discounted cash flow projections based upon management’s projected EBITDA and financial budgets approved by
the board of directors covering a five-year period. Cash flows beyond the five-year period are extrapolated using the
cash flows for year 5 and the estimated long-term growth rates.
The discount rate used is the Group’s weighted average cost of capital. The terminal growth rate reflects the
management’s outlook on growth.
In dollars
Average growth rate 1 – 5 years*
Terminal growth rate
Post-tax discount rate
In dollars
Opening goodwill balance
Additions
Reductions
Closing balance
Allocation to CGU Groups
In dollars
Natform companies
Uni-span companies
2020
11.8%
1.5%
10.7%
2019
13.7%
2.5%
10.0%
2020
2019
7,301,902
7,301,902
126,802
–
–
–
7,428,704
7,301,902
2020
2019
7,301,902
7,301,902
126,802
–
7,428,704
7,301,902
*
Increase in EBIT from 2020 to 2021 is 20.9% and between 7.2% and 12.3% for the following 4 years. The large increase in
the 2021 year is predicated Natform strategic review now in place. The 2021 year forecast is consistent with the last quarter of
2020. It is expected that EBIT will continue to grow as a result of less CAPEX being required.
Impairment testing on Natform companies
Goodwill of $7,301,902 was recorded at 31 August 2018 with respect to the acquisition of Natform Pty Ltd and
Natform (QLD) Pty Ltd. The recoverable amount of CGU was determined based on value-in-use calculations which
require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by
management covering a five-year period.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 67
Impairment testing on Uni-span companies
Goodwill of $126,802 was recorded on 31 October 2019 on acquisition of the Uni-span Group Pty Ltd and
its subsidiaries.
Sensitivity
Management has made judgements and estimates in respect of impairment testing of goodwill. Should these
judgements and estimates not occur, the carrying value of goodwill may vary. Any reasonable change in the key
assumptions on which the estimates and/or the discount rate are based would not cause the carrying amount of the
CGU to exceed the recoverable amount.
17. Trade and other payables
In dollars
Current
Trade payables
Trade payables
Accrued expenses
Other payables
Natform deferred consideration
Uni-span deferred consideration
Non-current
Other payables
Natform deferred consideration
Uni-span deferred consideration
2020
2019
10,353,721
6,925,662
5,881,137
3,275,564
16,234,858
10,201,226
2,230,661
2,230,199
1,262,291
–
3,492,952
2,230,199
–
2,128,080
3,331,309
–
3,331,309
2,128,080
Other payables represent the present values of deferred considerations relating to the acquisitions of the Natform and
Uni-span group of companies and completion adjustments.
Two equal payments of $2,250,000 relating to Natform were payable. The first payment of $2,250,000 was paid in
September 2019 and the second payment of $2,250,000 is payable in September 2020.
Two payments relating to Uni-span totalling $5,000,000 are payable. The first payment of $1,500,000 is payable in
September 2020 and the second payment of $3,500,000 is payable in September 2021. A contingent consideration
payable in September 2021 has not been provided for as the probability is deemed low. Refer to note 32 for
further details.
All Natform and Uni-span deferred considerations are recognised at the present value of future expected cash
outflows, based on Acrow’s incremental borrowing rate.
Acrow Annual report 2020
68
18. Employee benefits
In dollars
Current
Annual leave
Long service leave
Other employee benefits
Non-current
Long service leave
2020
2019
1,690,499
1,169,722
1,357,493
1,068,654
1,081,735
724,425
4,129,727
2,962,801
595,571
456,609
All employees have defined contribution plans for superannuation and the expense recognised during the year was
$1,935,108 (2019: $1,465,313).
19. Loans and borrowings
In dollars
Current
Non-current
Borrowings are represented by the following finance facilities:
Secured amortising business loan of $13,750,000, commenced in October 2019,
maturing in 30 April 2024 (Uni-span acquisition).
2020
2019
5,981,098
2,102,006
15,837,398
4,837,086
21,818,496
6,939,092
12,602,000
–
Secured amortising business loan of $5,394,000, commenced in October 2018,
maturing in 8 May 2023 (Natform acquisition).
4,664,000
5,978,000
Equipment finance facility, revolving 3-year limit of $5,000,000
4,539,975
961,092
Headroom
Working capital facility, $3m including $1.4m bank guarantee (2019: $0.9m) and
$1.6m bank overdraft (2019: $2.1m):
460,025
–
4,038,908
–
Headroom
Insurance premium funding
Borrowings utilised
Headroom
Total borrowings
1,600,000
12,521
2,100,000
–
21,818,496
6,939,092
2,060,025
6,138,908
23,878,521
13,078,000
All borrowings are secured by interlocking guarantees across all Group companies.
Interest rates on secured amortised business loans are variable and dependent on prevailing market rates and
bank margins.
The maturity date of the two secured business loans includes an extension of 6 months agreed to by our banker as
part of our response to the COVID-19 response.
All borrowing costs incurred in the year have been expensed.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 20. Provisions
In dollars
Make good
Movements during the year were as follows:
Balance at 1 July
Addition through business combination
Amounts used during the year
Balance at 30 June
69
2020
2019
469,274
452,474
452,474
769,587
(752,787)
452,474
–
–
469,274
452,474
A provision for make good is measured at the present value of the cost of restoring leased properties to their original
condition, at the conclusion of the lease. With the acquisition of Uni-span and the integration of the business into the
greater Acrow structure, impact on the provision is negligible.
21. Deferred income tax liability and tax liability
In dollars
Deferred income tax liability movement during the year:
Opening balance at 1 July
The balance comprises temporary differences attributed to:
Recognised in business combination
Provisions
Accruals
Property, plant and equipment
Revenue tax loss
Recognised in equity
Closing balance at 30 June
Income tax liabilities
Current tax liabilities
Carried forward unpaid tax liabilities
Unrecognised deferred tax assets
Deferred tax assets not recognised for the following items:
Revenue tax losses
Capital losses
Temporary differences
2020
2019
1,683,999
–
3,385,694
2,181,147
(850,759)
(204,448)
7,538
35,494
2,053,004
(540,180)
(1,318,500)
(21,090)
–
4,727,900
1,683,999
–
556,301
556,301
–
12,877,219
13,654,771
674,802
202,441
(4,592,901)
(2,911,668)
8,959,120
10,945,544
While tax losses and temporary differences do not expire under current tax legislation, deferred tax assets have not
been recognised in respect of these items as certain subsidiaries have experienced a number of years without taxable
income and therefore recovery is not considered probable. The tax losses do not expire under current tax legislation.
The potential benefit of the deferred tax asset in respect of tax losses carried forward will only be obtained if:
Acrow Annual report 2020
70
21. Deferred income tax liability and tax liability (continued)
(i) The subsidiaries continue to derive future assessable income of a nature and an amount sufficient to enable the
benefit to be realised;
(ii) The subsidiaries continue to comply with the conditions for deductibility imposed by the law;
(iii) No changes in tax legislation adversely affect the subsidiaries in realising the asset and
(iv) The subsidiaries pass the continuity of ownership test, or the same business test as outlined by the Australian
Taxation Office.
22. Issued capital
In dollars
Number of shares
On issue at 1 July
Issue of shares (i)
Shares issued at Uni-span acquisition (ii)
Issue of shares for cash (iii)
Shares issued through conversion of performance rights (iv)
Exercise of share options (v)
On issue at 30 June
2020
2019
175,006,455 162,982,615
11,273,839
1,087,746
176,094,201 174,256,454
10,000,000
–
186,094,201 174,256,454
17,333,333
–
203,427,534 174,256,454
12,375,000
–
215,802,534 174,256,454
237,000
750,001
216,039,534 175,006,455
(i) 1,087,746 shares were issued at $0.3141 cents per share following the dividend declaration on 29 August 2019 pursuant to the
Dividend Reinvestment Plan (DRP);
(ii) 10,000,000 shares were issued on 15 November 2019 as part of the consideration for the acquisition of the Uni-span group of
companies and are escrowed until 31 October 2020;
(iii) 17,333,333 shares were issued on 4 December 2019 at $0.30 cents per share;
(iv) 12,375,000 shares were issued through the exercise of performance rights and
(v) 237,000 options were exercised at $0.20 cents per share.
The holders of these shares are entitled to receive dividends as declared from time to time and are entitled to one
vote per share at general meetings of the Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 71
Dividends
Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been
approved prior to the reporting date.
The following dividends were declared and paid by the Group during the year:
In dollars
2020
2019
Dividends on ordinary shares declared and paid:
Final dividend in respect of the previous reporting period:
FY 19: 1.0 cent per share (FY18: 0.5 cent per share)
– Paid in cash
– Paid via DRP
Interim dividend for the current reporting period:
FY 20: Nil (FY19: 1.0 cent per share)
– Paid in cash
– Paid via DRP
A final unfranked dividend of $1,750,337 for the year
ended 30 June 2019 was paid on 15 November 2019 at
1.0 cent per share, with 1,087,746 new shares issued as
part of the DRP.
An interim dividend of 0.7 cents per share fully franked
was declared on 27 February 2020. This dividend was
cancelled on 30 March 2020 in light of the COVID-19
pandemic in order to prudently preserve cash.
Subsequent to balance date, the Directors declared
a dividend of 1.05 cents per share fully franked on
25 August 2020.
Franking credit balance at 30 June 2020 was
$3,016,901 (2019: $1,958,742).
Foreign currency translation reserve
The foreign currency translation reserve is used to
record exchange differences arising on translation
of the Group entities that do not have functional
currency of AUD dollars and have been translated for
presentation purpose.
Share based payments reserve
The share based payments reserve is used to recognize
the grant date fair value of shares issued to employees
and directors that have not yet vested.
1,408,676
341,661
672,803
192,114
–
–
1,434,216
306,914
1,750,337
2,606,047
23. Capital management
Management monitors the capital of the Group, in order
to maintain a good debt to equity ratio, provide the
shareholders with adequate returns and ensure that
the Group can fund its operations and continue as a
going concern.
The Group’s debt and capital includes ordinary share
capital and borrowings.
There are no externally imposed capital requirements.
Management effectively manages the Group’s capital
by assessing the Group’s financial risks and adjusting
its capital structure in response to changes in these
risks and in the market. These responses include the
management of debt levels, distributions to shareholders
and share issues.
The Board is targeting a dividend payout ratio of
between 30% and 50% of its operating cash profit
which it defines as EBITDA less maintenance capital
expenditure and less tax paid.
Acrow Annual report 2020 72
24. Earnings per share
Basic EPS is calculated by dividing profit for the year attributable to ordinary equity holders of the Parent by the
weighted average number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the net profit attributable to ordinary equity holders of the Parent by the
weighted average number of ordinary shares outstanding during the year plus the weighted average number of
ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The following table reflects the income and share data used in the basic and diluted EPS computations:
In dollars
Earnings reconciliation
Profit excluding significant items
Net share based payments and significant items*
Net profit after tax
2020
2019
8,981,371
7,507,206
(5,968,036)
(2,558,491)
3,013,335
4,948,715
* Jun-20 includes the net impact of AASB 16 Leases adoption so that profit excluding significant items are comparable, per
note 6.
In dollars
2020
2019
Number of ordinary shares:
Weighted average number of ordinary shares used in the calculation of basic EPS
194,591,893 172,002,461
Weighted average number of ordinary shares used in the calculation of diluted EPS
195,904,881 183,997,435
Basic EPS excluding significant items (cents per share)
Diluted EPS excluding significant items (cents per share)
Basic EPS (cents per share)
Diluted EPS (cents per share)
4.62
4.58
1.55
1.54
4.36
4.08
2.88
2.69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020
73
25. Capital and leasing commitments
In dollars
2020
2019
Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as
liabilities as follows:
Plant and equipment
2,940,237
2,344,645
Leases as lessee
Non-cancellable operating lease rentals payable as follows:
Less than one year
Between one and five years
More than five years
114,526
4,420,142
65,216
13,999,409
–
1,325,177
179,742
19,744,728
At inception of an arrangement, the Group determines whether the arrangement is or contains a lease and whether
the lease is an operating or a finance lease.
Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset (but not
the legal ownership) are transferred to entities in the Group, are classified as finance leases, otherwise classified as
operating leases.
Prior to the adoption of AASB 16 Leases on the 1 July 2019, all Acrow’s leases were operating leases which were not
recognised in the statement of financial position. Lease payments were recognised as an expense on a straight-line
basis over the term of lease.
With the adoption of AASB 16 Leases, applying practical expedience allowable under the standard, only payments
associated with short term leases and leases of low value assets (less than USD 5,000) are recognised on straight-
line basis as expenses, all other leases are accounted for using AASB 16 Leases.
For the year ended 30 June 2020, $272,842 (2019: $4,424,644) was recognised as an expense in the statement of
profit or loss in respect of operating leases.
26. Reconciliation of cash flows from
operating activities
In dollars
Cash flows from operating activities
Profit
Adjustments for:
■ Depreciation and impairment
■ Depreciation on leases
■ Hire equipment loss provision
■
(Gain)/loss on disposal of assets
■ Share based payment
■ Remeasurement of shares issued on Uni-span acquisitions
2020
2019
3,013,335
4,948,715
5,260,125
3,261,936
4,379,481
–
170,268
(524,263)
(2,096,471)
(881,092)
1,345,059
1,420,406
(100,000)
–
Acrow Annual report 2020
74
26. Reconciliation of cash flows from operating activities (continued)
In dollars
Net changes in working capital:
■ Deferred tax
■ Other financial assets
■ Trade and other receivables
■
Inventories
■ Prepayments and other assets
■ Assets held for sale
■ Trade and other payables
■ Provisions and employee benefits
■ Liabilities held for sale
■ Lease incentive write-off
Cash generated from operating activities
Finance costs paid
Net cash from operating activities
2020
2019
(320,705)
–
–
803,410
853,787
(2,017,311)
(610,383)
(954,928)
(1,190,656)
(560,854)
(1,558)
–
(729,314)
2,759,932
465,888
(503,672)
1,439
341,203
–
–
10,781,498
2,544,787
7,752,279
803,174
13,326,285
8,555,453
27. Remuneration of auditors
During the year the following fees were paid or payable for services provided by Grant Thornton Audit Pty Ltd (GT) as
the auditor of the parent entity, by GT’s related network firms and by non-related audit firms:
In dollars
2020
2019
(a) Auditors of the Group – GT and related network firms
Audit and review of financial reports
Group and controlled entities
Total audit and review of financial reports
Other statutory assurance services
Other assurance services
Other services
Tax advisory services
Tax compliance services
Consulting services (provided before appointment as auditors)
Total other non-audit services
Total services provided by GT
129,143
129,143
17,004
10,869
305,996
316,865
463,012
–
–
–
–
–
–
–
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 75
In dollars
2020
2019
(b) Other auditors (KPMG) and their related network firms
Audit and review of financial reports
Group and controlled entities
Other statutory assurance services
Other assurance services
Other non-audit services
Tax advisory services
Tax compliance services
Consulting services
207,242
318,198
–
–
–
–
20,700
65,000
107,368
–
Total services provided by other auditors (excluding GT)
292,942
425,566
28. Related parties
Key management personnel are those persons having authority and responsibility of planning, directing and
controlling the activities of the Group, directly or indirectly, including any director, whether executive or otherwise, of
the Group.
In dollars
Key management personnel compensation for the period:
■ Short term employment benefits
■ Long term employment benefits
■ Post-employment benefits
■ Share based payments
2020
2019
1,498,304
1,392,312
61,931
61,077
122,347
57,006
745,985
949,467
Total compensation paid to key management personnel
2,367,297
2,521,132
Other related party transactions
Acrow also leases a number of industrial and commercial properties from Margaret Prokop’s personal companies
(MRP Property Pty Ltd & MRP Superannuation Pty Ltd) through the Natform subsidiaries.
Margaret Prokop was previously a director of Natform companies and upon the sale of Natform to Acrow, Margaret
was appointed as a director of the Group. Rental and related property payments to her companies amounted to
$740,158 (2019: $665,087). Lease terms are up to 8 years. Balance outstanding at 30 June 2020 was nil (2019: nil).
The first $2,250,000 deferred consideration was paid to Margaret Prokop for the acquisition of Natform companies
on the 7 September 2019 and a further $2,250,000 is payable on 7 September 2020.
Natform engages Margaret Prokop’s brother, the proprietor of Nat Pty Ltd to manufacture and assemble screens for
Natform, the amount incurred was $917,660 in 2020 (2019: $824,349); balance outstanding at 30 June 2020 was nil
(2019: $82,551).
During the year there were no transactions between the parent entity and the subsidiaries within the Group.
Acrow Annual report 2020 76
29. Share based payments
At 30 June 2020 the Group had the following share
based payment arrangements.
Loan Funded Shares
The Group carries forward only Loan Funded Shares
issued in 2018 where selected employees and directors
of the Group had been granted an interest-free loan
to subscribe to shares of Acrow Formwork and
Construction Services Limited.
These loans are non-recourse other than to the shares
held by that employee/director, and the proceeds
of the loan must be used to buy shares. As the only
recourse on the loans is the shares and there are vesting
conditions, the arrangement has been accounted for as
share options, as required under accounting standards.
These options entitle the holders to receive dividends on
ordinary shares of the Group, and these dividends are
required to be used to repay the loans described above.
The Loan Funded Shares have the following terms:
(i) Date of issue: 27 March 2018
(ii) Loan term: 5 years;
(iii) Interest: No interest is payable; and
(iv) Vesting hurdles: subject to being a continuous
employee or director of the Group for 2 years from
the date of issue, and the 20-day (at any point over
the vesting period) volume weighted average share
price (“VWAP”) of the Group’s share price exceeding
40 cents per share (post the share consolidation).
The fair value at grant date was determined using an
adjusted form of the Monte-Carlo model that factors
in market conditions. The grant date fair value of
rights granted in the year was $0.1071.
All vesting hurdles have been met at 27 March 2020,
none of these have been exercised at reporting date and
thus no corresponding loan have been affected.
The model inputs for the in-substance options granted
had included:
a) Exercise price $0.20
b) Share price at grant date $0.20
c) Expected price volatility 75% – based on comparable
companies
d) Expected dividend yield 0%
e) Risk-free interest rate 2.41%
f) Expected life 3 years
Reconciliation of outstanding loan funded share options:
The number and weighted average exercise prices of loan funded options were as follows:
Outstanding at 1 July
Granted during the year
Exercised during the year
2020
2019
Weighted
average
exercise price
Weighted
average
exercise price
Number
$0.20
2,475,000
$0.20
–
–
–
–
–
–
Number
2,475,000
–
–
Outstanding at 30 June
2,475,000
$0.20
2,475,000
$0.20
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 77
Options
A total of 1,200,000 options over four equal tranches of 300,000 each were granted to Andrew Crowther under the
Employee Share Options Scheme on 16 July 2019 at total fair value of $73,742.10.
These options bear the following terms:
(i) Exercise price: 40 cents per option;
(ii) Vesting hurdles: subject to being an employee of the Group continuously over one-year, two-year, three-year and
four-year periods with four equal set of tranches, no VWAP; and
(iii) Expiry date: 5 years from the date of issue, being 16 July 2024.
The fair value at grant date was determined using an adjusted form of the Monte Carlo Model that factors in market
conditions. The model inputs and fair value of options granted in the year were as follow:
Share
price at
grant
date
Units
Service
period
Expected
price
volatility
Expected
dividend
yield
Risk-free
interest
rate
Fair
value per
option
300,000
$0.3250
One year
300,000
$0.3250
Two years
300,000
$0.3250 Three years
300,000
$0.3250
Four years
50%
50%
50%
50%
3.67%
3.67%
3.67%
3.67%
1.02%
0.95%
0.96%
0.97%
$0.0361
$0.0561
$0.0710
$0.0826
Grant date
16 July 2019
16 July 2019
16 July 2019
16 July 2019
Balance of all outstanding options at balanced date are as follow:
Grant date
12 April 2016
Expiry date
12 April 2021
23 November 2016
23 November 2019 & 2021
13 December 2017
13 December 2020 & 2022
27 March 2018
27 March 2021
14 January 2019
14 January 2024
4 March 2019
4 March 2024
16 July 2019
16 July 2024
Balance at 30 June
2020
2019
Exercise
price
Number of
options
Exercise
price
Number of
options
$0.20
$0.20
$0.20
$0.20
$0.50
$0.50
$0.40
750,001
50,000
400,000
1,463,000
5,100,000
360,000
1,200,000
9,323,001
$0.20
$0.20
$0.20
$0.20
$0.50
$0.50
–
750,001
100,000
400,000
1,650,000
5,100,000
360,000
–
8,360,001
Acrow Annual report 2020 78
29. Share based payments (continued)
Reconciliation of outstanding share options:
Outstanding at 1 July
Granted during the year
Exercised during the year
Outstanding at 30 June
2020
2019
Weighted
average
exercise price
$0.40
$0.40
$0.20
$0.40
Number
8,360,001
1,200,000
(237,000)
9,323,001
Weighted
average
exercise price
$0.20
$0.50
$0.20
$0.40
Number
3,650,002
5,460,000
(750,001)
8,360,001
Performance Rights
In March 2018 the Group granted 12,375,000
performance rights to selected employees and directors,
all these were vested and exercised in the 2020 financial
year. No new performance rights have been granted
during FY2020.
The performance rights had the following terms:
(i) Exercise price: Nil;
(ii) Conversion: upon vesting, conversion to shares on a
1 for 1 basis;
(iii) Dividends: not entitled until performance rights are
exercised;
(iv) Vesting hurdles: subject to continuous service by an
employee or a director of the Group for 2 years from
the date of issue, and satisfaction of performance
hurdles being FY19 EBITDA exceeding $11m, this
has been achieved at last reporting date;
The fair value at grant date was determined to be $0.20,
equivalent to the share price on 27 March 2018.
30. Financial risk
management
Risk management objectives
and policies
The Group’s activities expose it to a variety of financial
risks: market risk (including foreign exchange risk,
interest rate risk), credit risk and liquidity risk. The
Group’s overall risk management program focuses
on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the financial
performance of the Group.
The Group uses derivative financial instruments such
as foreign exchange contracts to hedge certain
risk exposures. Derivatives are exclusively used for
economic hedging purposes and not as trading or
speculative instruments.
The Group uses different methods to measure different
types of risk to which it is exposed. These methods
include sensitivity analysis in the case of interest rate,
foreign exchange and other price risks, and aging
analysis for credit risk. There was one open foreign
exchange contract at 30 June 2020.
Fair value hierarchy
The fair value of financial assets and financial liabilities
must be estimated for recognition and measurement or
for disclosure purposes.
Fair value inputs are summarised as follows:
Level 1: The fair value of financial instruments traded
in active markets (such as publicly traded derivatives,
and trading and available-for-sale securities) is based on
quoted market prices at the end of the reporting period.
Level 2: The fair value of financial instruments that
are not traded in an active market (for example, over-
the-counter derivatives) is determined using valuation
techniques which maximise the use of observable
market data and rely as little as possible on entity
specific estimates. If all significant inputs required to fair
value an instrument are observable, the instrument is
included in Level 2.
Level 3: If one or more of the significant inputs is not
based on observable market data, the instrument is
included in Level 3.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 79
Fair value inputs are summarised as follows:
Fair Value
Hierarchy
Level 2
Derivatives – forward
exchange contracts
Level 2
Derivatives – financial
liability with equity
instrument on Uni-span
acquisition
Valuation Technique
The fair value is determined using quoted forward exchange rates
at the reporting date and present value calculations based on a
yield curve sourced from available market data quoted for the
respective currencies.
The fair value of shares issued to the sellers of Uni-span is determined
using quoted share price on the date of acquisition. Any subsequent
movement of the share price is remeasured at the reporting date until
the end of the escrow period and any further liability is settled either by
way of cash or additional issue of shares.
Fair value hierarchy is re-assessed annually for any change in circumstance that may suggest a revised level be
assigned to a type of balance measured at fair value.
The Group’s risk management is coordinated by management, in close cooperation with the Board of Directors,
and focuses on actively securing the Group’s short to medium-term cash flows by minimising the exposure to
financial markets.
The Group does not actively engage in the trading of financial assets for speculative purposes. The most significant
financial risks to which the Group is exposed are described below.
Market risk analysis
The Group is exposed to market risk through its use of financial instruments and specifically to interest rate risk and
certain other price risks, which result from its operating activities.
Exposure to currency risk
As at 30 June 2020 the Group no longer held trade payables in GBP. The Group held a USD300,000 forward
exchange contract, and its currency risks in USD and EUR at balance date are below:
Trade payables
Purchase orders at 30 June
Forward exchange contracts
30 June 2020
30 June 2019
USD
EUR
USD
747,227
200,617
1,167,631
2,194,066
15,684
164,089
(300,000)
–
–
GBP
8,993
–
–
Net exposure
2,641,293
216,301
1,331,720
8,993
Foreign currency sensitivity
A reasonable possible strengthening/(weakening) of the USD or the EUR at 30 June would have affected profit or loss
by the amounts shown below. This analysis assumes that all other variables remain constant and ignores the impact
of forecast purchases.
USD (10% movement)
EUR (10% movement)
Profit or loss
Strengthening
Weakening
352,528
18,685
(387,781)
(20,554)
Acrow Annual report 2020 80
30. Financial risk management (continued)
Interest rate risk
The Group’s policy is to minimise interest rate cash flow risk exposures on long-term financing.
At 30 June 2020 the Group has the following exposure to interest rates on borrowings:
Fixed rate instruments
Loans and borrowings
Variable rate instruments
Loans and borrowings
2020
2019
4,552,496
961,092
17,266,000
5,978,000
Interest Rate Sensitivity
At 30 June 2020, the Group held interest bearing loans of $21,818,496 (2019: $6,939,092) and held interest bearing
cash accounts of $7,238,511 (2019: $3,289,617).
A reasonable increase of 100 basis points in interest rates on variable instruments at the reporting date would have
$130,860 negative impact on the net profit, whereas a decrease of 100 basis points would have $147,260 positive
impact on the net profit.
Credit risk analysis
Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to this
risk principally through receivables from customers. The Group leases hire gear and provides services to consumers
pursuant to policies and procedures that are intended to ensure that there is no concentration of credit risk with any
particular individual, company or other entity. The Group’s maximum exposure to credit risk is limited to the carrying
amount of financial assets recognised at the reporting date, as summarised below:
Classes of financial assets
Cash and cash equivalents
Trade and other receivables
2020
2019
7,238,511
3,289,617
17,014,660
13,104,919
24,253,171
16,394,536
The Group continuously monitors defaults of customers
and other counterparties, identified either individually
or by group and incorporates this information into its
credit risk controls. Where available at reasonable cost,
external credit ratings and/or reports on customers and
other counterparties are obtained and used. The Group’s
policy is to deal only with creditworthy counterparties.
The Group maintains a provision for receivable losses
equivalent to the lifetime expected credit losses from
initial recognition of those receivables.
The process for establishing the provision for losses is
critical to the Group’s results of operations and financial
condition. Credit risk grew in-line with the growth of the
loan and lease receivables. The Group uses a simplified
lifetime expected credit loss approach, which includes
consideration of customer specific factors, current
conditions, future expected economic conditions, and
actual credit loss experience.
Macroeconomic Scenarios
Expected credit losses (“ECL”) are a probability-weighted
estimate of credit losses over the expected life of the
financial instrument. The Group has a process for
incorporating forward looking economic scenarios and
determining the probability weightings assigned to each
scenario in determining the overall ECL. The Group
prepares a base, best and worst-case scenarios based
on economic variables.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 81
The Group has incorporated this by use of a
management overlay or economic risk reserve as
explained below.
Management overlay
activity and (ii) where the Group’s recovery method is
foreclosing on collateral and the value of the collateral
such that there is no reasonable expectation of
full recovery.
An economic risk reserve through management overlay
was established in the prior year and increased on
the acquisition of Uni-span to incorporate unexpected
economic shocks. This overlay is therefore in addition
to the standard modelled provision under AASB 9
Financial Instruments.
As the full impacts of the COVID-19 pandemic were
yet to be felt at balance date, the Group has yet to see
the anticipated increase in delinquencies which would
flow through to the modelled expected loss provision.
In fact, at year end, debtor days had improved by
7 days from the previous year end. As these likely future
delinquencies are not currently captured in the modelled
outcome, the Group has specifically considered the likely
industry specific impacts and customer impacts.
The modelled performance of these receivables will
evolve as the situation unfolds and more data is
available to model or understand the credit risk and
loss implications from the COVID-19 pandemic and the
mitigating impact of government stimulus. Over time as
the impacts work their way into the reported variables
the overlay can be expected to reduce as the impact
becomes reflected in the routine modelled outcome.
Write-off policy
The Group writes off financial assets in whole or in part,
when it has exhausted all practical recovery efforts
and has concluded there is no reasonable expectation
of recovery. Indicators that there is no reasonable
expectation of recovery include (i) ceasing enforcement
Liquidity risk analysis
Liquidity risk is the risk that the Group might be unable
to meet its obligations.
The Group manages its liquidity needs by monitoring
scheduled debt servicing payments for long-term
financial liabilities as well as forecast cash inflows and
outflows due in day-to-day business. The data used for
analysing these cash flows is consistent with that used
in the contractual maturity analysis below.
Liquidity needs are monitored in various time bands,
on a day-to-day and week-to-week basis, as well
as on a rolling 30-day projection. Long-term liquidity
needs for a 180-day and a 360-day lookout period are
identified monthly.
Net cash requirements are compared to available
borrowing facilities to determine headroom or any
shortfalls. This analysis shows that available borrowing
facilities are expected to be sufficient over the lookout
period. Refer to note 19 for undrawn borrowing facilities.
The Group’s objective is to maintain cash to meet its
liquidity requirements for 30-day periods at a minimum.
Funding for long-term liquidity needs is additionally
secured by an adequate amount of committed
credit facilities.
The Group considers expected cash flows from financial
assets in assessing and managing liquidity risk, notably
its cash resources and trade receivables.
Acrow Annual report 2020 82
30. Financial risk management (continued)
The following liquidity risk disclosures reflect all contractually fixed repayments and interest resulting from recognised
financial liabilities and derivatives as of 30 June 2020. The timing of cash flows for liabilities is based on the
contractual terms of the underlying contract.
Contractual cash flow
Carrying
amount
Total
1 year
or less
1 to 5
years
Over 5
years
2020
Non-derivative financial liabilities
Deferred consideration
7,174,261
(7,250,000)
(3,750,000)
(3,500,000)
Trade payables and accrued expenses
16,234,858 (16,234,858)
(16,234,858)
–
Loans and borrowings
21,818,496 (24,057,877)
(6,918,396)
(17,139,481)
–
–
–
Lease liabilities
34,150,274 (41,667,283)
(5,036,502)
(21,808,904)
(14,821,877)
79,377,889 (89,210,018)
(31,939,756)
(42,448,385)
(14,821,877)
Derivative financial liabilities
Forward exchange contracts
(18,653)
(18,653)
(18,653)
Financial liability on Uni-span purchase
350,000
(350,000)
(350,000)
–
–
2019
Non-derivative financial liabilities
Deferred consideration
4,358,279
(4,500,000)
(2,250,000)
(2,250,000)
Trade payables and accrued expenses
10,201,225 (10,201,225)
(10,201,225)
–
Loans and borrowings
6,939,092
(7,625,175)
(2,436,935)
(5,173,221)
21,498,596 (22,326,400)
(14,888,160)
(7,423,221)
–
–
–
–
–
–
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 83
31. Group entities
The consolidated financial statements include the financial statements of the following wholly-owned subsidiaries:
Acrow Holdings Pty Limited (a), (b)
Acrow Formwork and Scaffolding Pty Ltd (a), (b)
Natform Pty Ltd (a), (b)
Natform (QLD) Pty Ltd (a), (b)
Uni-span Group Pty Ltd (a), (b)
Uni-span Height Safety Pty Ltd (a), (b)
Unispan Australia Pty Ltd (a), (b)
Uni-span Formwork Solutions Pty Ltd (a), (b)
Acrow Group Investments Pty Ltd (a), (b)
Noble Mineral Resources Ghana Limited
Place of
incorporation
% Equity
interest
NSW
NSW
NSW
QLD
QLD
QLD
QLD
QLD
NSW
Ghana
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(a) These subsidiaries have been granted relief from the necessity to prepare financial reports under the option available to the
Group under ASIC Corporations (Wholly Owned Companies) Instrument 2016/785.
(b) These subsidiaries, along with Acrow Formwork and Construction Services Limited (the parent entity of the Group), form the
Deed of Cross Guarantee Group described further from note 35.
32. Acquisition of Uni-span
Group Pty Ltd
On 31 October 2019 Acrow acquired 100% of
the issued shares of Uni-span Group Pty Ltd
ACN 131 921 116 and its subsidiaries, per below:
In addition, it supplies an industrial labour service to
complement its scaffold hire, to the energy, mining and
industrial sectors.
Details of the consideration and the fair value of
identified assets acquired, liabilities assumed, and
goodwill determined are set out below.
■ Uni-span Height Safety Pty Ltd ACN 122 411 198;
(i) $12,905,035 cash paid;
■ Unispan Australia Pty Ltd ACN 099 939 287; and
■ Uni-span Formwork Solutions Pty Ltd
ACN 158 121 361
Uni-span’s product and service offering was highly
complementary to Acrow, provided access to new
clients and markets across the energy, mining and
industrial sectors, and scale benefits across Acrow’s
national footprint. Further, it allowed Acrow to have an
exclusive supply agreement with European Formwork
manufacturer ULMA, providing a product range and
formwork engineering expertise operating globally at the
cutting edge of new developments in our industry.
Uni-span is a leading provider of engineered formwork
systems servicing primarily the civil Infrastructure market
and scaffold hire solutions, focussing on industrial
markets, in Queensland and New South Wales.
(ii) 10,000,000 Acrow shares valued at $0.305 each
issued on the 15 November 2019, escrowed for
12 months (where if the closing price at end of
escrow period is below $0.35 per share, Acrow is
liable to pay each seller the amount of the difference
multiplied by the number of shares issued within 7
days or at its discretion decide to issue additional
shares to the sellers at the then current market
value, in lieu of cash), this contingent payment is
recognised as financial liability and remeasured at
each reporting date;
(iii) Deferred considerations of $1,500,000 due on
30 September 2020 and $3,500,000 due on 30
September 2021 respectively; and
(iv) A contingent payment up to $4,250,000 cash,
provided the Acrow group’s EBITDA exceeds
$18,000,000 for the 2021 financial year. At reporting
date, the contingent payment is estimated to be nil.
Acrow Annual report 2020 84
32. Acquisition of Uni-span Group Pty Ltd (continued)
A financial liability at acquisition of $450,000 was recognised being the difference between the deemed value of the
10,000,000 shares at $0.35 and the actual value of $0.305. As at year end, the share price increased from $0.305 to
$0.315 and the financial liability reduced by a fair value gain of $100,000 to $350,000.
Remeasurement will continue until the end of the escrow period.
Uni-span Group Pty Ltd and its subsidiaries
In dollars
Fair value of consideration transferred
Amount settled in cash
Amount settled in equity
Contingent consideration
Fair value of deferred consideration
Fair value of contingent consideration
Total consideration
Assets
Cash and cash equivalents
Receivables
Inventory
Property, plant and equipment
Right-of-use lease assets
Provision for income tax
Other
Total assets
Liabilities
Trade and other payables
Lease liabilities
Provisions
Borrowings
Deferred tax liabilities
Total liabilities
Fair value of net assets acquired
Purchase consideration paid and payable
Less: Fair value of net identifiable assets acquired
Goodwill on acquisition
Consideration transferred in cash
Cash and cash equivalents acquired
Related company loan
Net cash outflow on acquisition
$
12,905,035
3,050,000
450,000
4,464,691
–
20,869,726
1,174,659
4,856,007
1,554,001
24,581,296
324,938
62,622
45,525
32,599,048
6,089,419
335,959
1,530,331
452,101
3,448,316
11,856,124
20,742,924
20,869,726
(20,742,924)
126,802
12,905,035
(1,174,659)
452,101
12,182,477
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 85
The valuation techniques used for measuring the fair value of material assets acquired were as follows:
Asset
acquired
Hire equipment
Valuation Technique
An independent valuer has been engaged to determine depreciated replacement cost of the
assets. The depreciated replacement costs reflect adjustments for physical deterioration as well
as functional and economic obsolescence.
The statement of profit or loss includes the following revenue and net profit resulting from the acquisition made since
31 October 2019:
Revenue
Net profit after tax
20,581,574
768,085
If the acquisition had taken place at the beginning of the financial year (1 July 2019), the following revenue and net
profit after tax would have been included:
Revenue
Net profit after tax
30,872,361
1,152,098
33. Operating segments
The Group manages all its construction-related operations, being all the Australian based formwork and scaffolding
subsidiaries as one segment and the mining operation in Ghana as a separate segment. The executive management
team (the chief operating decision makers) assesses the financial performance of the construction-related operations
on an integrated basis only and accordingly.
All revenue is generated by external customers in Australia on formwork and construction-related services.
The mineral exploration assets and liabilities are held for sale per note 13.
The Group has the following segments:
■ Formwork and construction services: the provision of falsework, formwork, scaffolding, screens and related
materials for hire and sales; and
■ Mineral exploration activities
Acrow Annual report 2020 86
33. Operating segments (continued)
Segment Information as at 30 June 2020
Hire of equipment
Provision of labour and contracting services
Other hardware sales
Other income
Segment revenue
Segment operating profit
Unallocated corporate overhead costs
Finance costs
Profit before income tax
Income tax benefit
Profit after income tax
Other material items:
Goodwill on acquisition
Capital expenditure
Depreciation and amortisation
Segment assets
Segment liabilities
Formwork and
construction
services
Mineral
exploration
37,199,515
22,266,865
22,215,220
2,096,471
83,778,071
7,048,045
(2,507,576)
320,705
7,428,704
13,101,140
5,260,125
–
–
–
–
–
(70,117)
–
–
–
–
–
Total
37,199,515
22,266,865
22,215,220
2,096,471
83,778,071
6,977,928
(1,777,722)
(2,507,576)
2,692,630
320,705
3,013,335
7,428,704
13,101,140
5,260,125
148,146,232
72,981
148,219,213
89,526,237
397,742
89,923,979
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 87
Segment Information as at 30 June 2019
Hire of equipment
Provision of labour and contracting services
Other hardware sales
Other income
Segment revenue
Segment operating profit
Unallocated corporate overhead costs
Finance costs
Profit before income tax
Income tax (expense)
Profit after income tax
Other material items:
Goodwill on acquisition
Capital expenditure
Depreciation and amortisation
Segment assets
Segment liabilities
Formwork and
construction
services
Mineral
exploration
33,140,700
22,075,424
13,642,786
881,092
69,740,002
7,888,356
(963,870)
(59,153)
7,301,902
9,784,502
3,261,936
–
(67,532)
–
–
–
–
–
Total
33,140,700
22,075,424
13,642,786
881,092
69,740,002
7,820,824
(1,849,086)
(963,870)
5,007,868
(59,153)
4,948,715
7,301,902
9,784,502
3,261,936
75,228,415
71,296
75,299,711
27,610,781
65,878
27,676,659
Geographical information
The Group’s formwork and construction-related services segment operates in Australia and the mineral exploration
segment operates in Ghana.
Acrow Annual report 2020
88
34. Parent entity disclosures
Results of the parent entity
Loss for the period
2020
2019
(2,405,628)
(1,781,830)
Total comprehensive income/(expense) for the period
(2,405,628)
(1,781,830)
Financial position of the parent entity at year end
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Net assets
Total equity of parent entity comprising:
Issued capital
Share based payments reserve
Accumulated profits/(losses)
Total equity
Movement to accumulated profits/(losses):
Opening balance at 1 July
Transfer from reserves for gain on bargain purchase of Acrow Holdings Pty Ltd and
Acrow Formwork and Scaffolding Pty Ltd
Dividend paid and reinvested through DRP
Loss for the period
Closing balance at 30 June
66,346
6,709
52,020,439
39,527,860
52,086,785
7,284,181
39,534,569
288,349
7,284,181
288,349
44,802,604
39,246,220
45,674,176
34,814,339
858,545
2,006,033
(1,730,117)
2,425,848
44,802,604
39,246,220
2,425,848
(4,011,375)
–
10,825,100
(1,750,337)
(2,606,047)
(2,405,628)
(1,781,830)
(1,730,117)
2,425,848
35. Deed of cross guarantee
Under the terms of ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, certain wholly owned
controlled entities have been granted relief from the requirement to prepare audited financial reports.
Acrow entered into an approved Deed of Indemnity on 26 June 2018 for the cross-guarantee of liabilities with
Acrow Formwork and Scaffolding Pty Ltd and Acrow Holdings Pty Ltd, then on 19 December 2018, an Assumption
Deed was executed to include newly formed entity Acrow Group Investments Pty Ltd and acquired companies,
Natform Pty Ltd and Natform (QLD) Pty Ltd.
A further assumption deed was executed on 3 May 2020 to include the new acquired Uni-span group of companies.
The following statement of profit or loss and statement of financial position comprises Acrow and its controlled
entities which are party to the Deed of Cross Guarantee, after eliminating all transactions between parties to
the Deed.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020
Statement of Profit or Loss
For the year ended 30 June 2020
Continuing operations
Revenue
Other income
Personnel expenses
Sub-contract labour costs
Inventory purchased, net of changes in finished goods
Depreciation
IT and telecommunication expenses
Freight costs
Property costs
Gain on fair value of derivatives
Other expenses
Profit before net finance costs and income tax
Finance income
Finance costs
Net finance costs
Profit before income tax
Income tax benefit/(expense)
Profit from continuing operations
Statement of Financial Position
As at 30 June 2020
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments and other assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use lease assets
Intangibles
Other assets
Total non-current assets
Total assets
89
2020
2019
81,681,600
68,858,910
2,096,471
881,092
(26,541,588)
(22,589,627)
18,498,438) (18,005,200)
(13,303,195)
(9,120,271)
(9,639,607)
(3,261,936)
(1,331,878)
(876,211)
(1,252,113)
(810,466)
(838,757)
(4,203,516)
100,000
–
(7,272,722)
(4,901,287)
5,199,773
37,211
5,971,488
11,261
(2,544,787)
(975,131)
(2,507,576)
(963,870)
2,692,197
320,705
5,007,618
(59,153)
3,012,902
4,948,465
2020
2019
7,238,395
3,289,503
17,014,660
13,104,919
5,577,745
3,413,361
2,355,240
1,125,992
32,186,040
20,933,775
76,038,493
46,992,624
32,393,595
–
7,428,694
7,301,892
99,411
–
115,960,193
54,294,516
148,146,233
75,228,291
Acrow Annual report 2020
90
35. Deed of cross guarantee (continued)
Current liabilities
Trade payables
Other payables
Financial liability
Employee benefits
Lease liabilities
Borrowings
Current tax liabilities
Total current liabilities
Non-current liabilities
Other payables
Employee benefits
Lease liabilities
Loans and borrowings
Provisions
Deferred income tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share based payments reserve
Retained earnings
Total equity
2020
2019
16,234,859 10,201,225
3,492,952
2,230,199
350,000
–
4,129,727
2,962,801
3,420,761
–
5,981,098
2,102,006
556,301
556,301
34,165,698
18,052,532
3,331,309
2,128,080
595,571
456,609
30,729,513
–
15,837,398
4,837,087
469,274
452,474
4,727,900
1,683,999
55,690,965
9,558,249
89,856,663 27,610,781
58,289,570
47,617,510
45,674,176
34,814,339
858,546
2,006,033
11,756,848
10,797,138
58,289,570
47,617,510
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2019Acrow Annual report 2020 91
The Group has developed estimates in these
consolidated financial statements based on forecasts
of economic conditions which reflect expectations
and assumptions as at 30 June 2020 about future
events that the Directors believe are reasonable in the
circumstances.
There is a considerable degree of judgement involved in
preparing forecasts.
The underlying assumptions are subject to uncertainties
which are often outside the control of the Group.
Accordingly, actual economic conditions are likely to be
different from those forecast since anticipated events
frequently do not occur as expected, and the effect of
those differences may significantly impact accounting
estimates included in these financial statements.
Other than the above matters there has not otherwise
arisen between the end of the year end period and
the date of this report any item, transaction or event
of a material and unusual nature likely, in the opinion
of the directors of the Group, to affect significantly the
operations of the Group, the results of those operations,
or the state of the affairs of the Group, in future
financial years.
36. Subsequent events
On 31 July 2020 15,108,000 Performance Rights
were issued in four tranches, each with Earnings Per
Share or Total Shareholder Return performance vesting
conditions. Two tranches vest each at the end of the
financials years 2021 and 2022. If the vesting conditions
are met, each Performance Right can be exercised into
one Fully Paid Ordinary Share at the holder’s discretion
until the expiry date of 31 July 2035. The Performance
Rights were issued to employees of the Company
under the Company’s Rights Plan and form part of the
Long Term Variable Remuneration of the employees.
The Rights Plan under which these Performance Rights
were issued will be put to Shareholder approval at the
Company’s 2020 Annual General Meeting.
On 25 August 2020 the Directors declared a franked
dividend of 1.05 cent per share to be paid on Friday
13 November 2020. Dividend Reinvestment Plan
is available for election. The dividend has not been
provided for in this financial report as it was not declared
until after 30 June 2020.
Premium finance loan of $868,754 was drawn
on the 7th September 2020 repayable in full by
30 August 2021.
Impact of COVID-19
The ongoing COVID-19 pandemic has increased the
estimation uncertainty in the preparation of these
consolidated financial statements. The estimation
uncertainty is associated with:
■ The extent and duration of the disruption to
businesses arising from the actions by governments,
businesses and consumers to contain the spread of
the virus;
■ The extent and duration of the expected economic
downturn. This includes the disruption to capital
markets, deteriorating availability of credit, liquidity
concerns, increasing unemployment, declines in
consumer discretionary spending, reductions in
production because of decreased demand, and
other restructuring activities; and
■ The effectiveness of government and central bank
measures that have and will be put in place to
support businesses and consumers through this
disruption and economic downturn.
Acrow Annual report 2020 92
DIRECTORS’ DECLARATION
for the year ended 30 June 2019
In the opinion of the Directors of Acrow Formwork and Construction Services Ltd (the Group):
(a) the consolidated financial statements and notes set out on pages 45 to 91 and the Remuneration Report in the
Directors’ Report, set out on pages 24 to 44 are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the company’s financial position as at 30 June 2020 and of its performance, for
the financial year ended on that date; and
(ii) complying with Australian Accounting Standards, International Financial Report Standards and the
Corporations Regulations 2001;
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable.
(c) There are reasonable grounds to believe that Acrow Formwork and Construction Services Limited and its
controlled entities identified in note 31 will be able to meet any obligations or liabilities to which they are or
may become subject by virtue of the Deed of Cross Guarantee between Acrow Formwork and Construction
Services Limited and its controlled entities pursuant to ASIC Corporations (Wholly-owned Companies) Instrument
2016/785.
(d) The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the
Chief Executive Officer and the Chief Financial Officer for the financial year ended 30 June 2020.
Signed in accordance with a resolution of the Directors:
Peter Lancken
Chairman
Steven Boland
Director, Chief Executive Officer
Sydney, 24 September 2020
Sydney, 24 September 2020
Acrow Annual report 2020
INDEPENDENT AUDITOR’S REPORT
for the year ended 30 June 2019
93
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
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Independent Auditor’s Report
To the Members of Acrow Formwork and Construction Services Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Acrow Formwork and Construction Services Limited (the Company) and its
subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2020, the
consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary
of significant accounting policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
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delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
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Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
93
Acrow Annual report 2020
94
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Carrying value of goodwill (Note 16)
As disclosed in Note 16, intangibles comprise goodwill relating
to the acquisition of Natform Pty Ltd and Natform (QLD) Pty
Ltd which amounts to $7.4 million.
In accordance with AASB 136 Impairment of Assets, the
Group is required to test the carrying value of goodwill
annually.
Management has tested goodwill for impairment by comparing
the carrying value of the assets related to this cash-generating
unit to a valuation model based on the value-in-use of these
assets.
We have determined this is a key audit matter as this
assessment requires the exercise of significant judgement
about forecasting future revenues and expenses, including
discount rates applied to cash flows.
Acquisition of Uni-span Group Pty Ltd (Note 32)
On 31 October 2019, the Group acquired 100% of the issued
shares of Uni-span Group Pty Ltd for a consideration of $20.9
million.
In accordance with AASB 3 Business Combinations,
acquisition accounting of a business involves the recognition
and measurement of identifiable assets and liabilities at their
fair value.
This process is inherently complex and requires a level of
judgement and assumptions and is therefore considered
important to the audit.
As a result, this is a key audit matter due the complexity and
judgements involved within the assessment of AASB 3 and
the estimation involved in the valuation of the acquired assets
and the valuation of the deferred and contingent
considerations.
Our procedures included, amongst others:
(cid:120) Enquiring with management to obtain and document an
understanding of the processes and controls related to the
assessment of impairment, including the calculation of the
recoverable amount;
(cid:120) Obtaining management’s value in use calculations to:
o
o
o
o
Test the mathematical accuracy;
Evaluate management’s ability to perform accurate
estimates by comparing historical forecasting to
actual results;
Test forecast cash inflows and outflows; and
Assess the discount rates applied to forecast future
cash flows;
(cid:120) Evaluating the value in use model against the requirements
of AASB 136, including consultation with our valuations
experts;
(cid:120) Performing sensitivity analysis on the significant inputs and
assumptions made by management in preparing the
calculation; and
(cid:120) Assessing the adequacy of financial report and accounting
policy disclosures.
Our procedures included, amongst others:
(cid:120) Obtaining the purchase agreement and management’s
accounting memorandum to confirm the terms of the
contract;
(cid:120) Obtaining the financial information related to Uni-span
Group Pty Ltd and agreeing material balances to
supporting documentation;
(cid:120) Assessing the appropriateness of the accounting treatment
of the acquisition in accordance with AASB 3;
(cid:120) Assessing the qualifications and experience of the
Independent Expert engaged by management and their
suitability to perform the valuation engagement;
(cid:120) Assessing the accounting treatment of contingent and
deferred considerations and the underlying calculations of
these liabilities; and
(cid:120) Assessing the adequacy of the Group’s disclosures in
respect of the business acquisitions against the
requirements of AASB 3.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
94
INDEPENDENT AUDITOR’S REPORTfor the year ended 30 June 2019Acrow Annual report 2020
95
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the 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 financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: https://www.auasb.gov.au/auditors_responsibilites/ar1_2020.pdf. This description forms part of
our auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 24 to 44 of the Directors’ report for the year ended 30 June
2020.
In our opinion, the Remuneration Report of Acrow Formwork and Construction Services Limited for the year ended 30
June 2020 complies with section 300A of the Corporations Act 2001.
Responsibilities
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 Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
N P Smietana
Partner – Audit & Assurance
Sydney, 24 September 2020
95
Acrow Annual report 2020
96
SHAREHOLDER INFORMATION
for the year ended 30 June 2019
The shareholder information set out below was applicable as at 18 September 2020.
Substantial shareholders
Top holders
Peter Lancken
Evergreen Partners Limited
Keneco Property Pty Ltd
Schroders Investment Management Australia Limited
Securities
10,952,365
10,982,830
13,086,667
14,792,872
%
5.01%
5.03%
5.99%
6.77%
Perennial Value Management Limited
24,578,995
11.25%
Holding distribution
Analysis of numbers of equity holders by size of holding:
Ordinary shares
Holding ranges
Above 0 up to and including 1,000
Above 1,000 up to and including 5,000
Above 5,000 up to and including 10,000
Above 10,000 up to and including 100,000
Above 100,000
Totals
Unlisted options
Holding ranges
Above 0 up to and including 1,000
Above 1,000 up to and including 5,000
Above 5,000 up to and including 10,000
Above 10,000 up to and including 100,000
Above 100,000
Totals
Holders
Total units
% of Issued
Share Capital
1,542
326
198
738
224
97,913
949,042
1,663,176
29,438,973
186,365,430
0.04%
0.43%
0.76%
13.47%
85.29%
3,028
218,514,534
100.00%
Holders
Total units
% of Issued
Share Capital
0
0
0
9
16
25
0
0
0
527,500
8,795.501
0.00%
0.00%
0.00%
5.66%
94.34%
9,323,001
100.00%
SHAREHOLDER INFORMATIONfor the year ended 30 June 2019Acrow Annual report 2020 97
Performance rights
Holding ranges
Above 0 up to and including 1,000
Above 1,000 up to and including 5,000
Above 5,000 up to and including 10,000
Above 10,000 up to and including 100,000
Above 100,000
Totals
Holders
Total units
% of Issued
Share Capital
0
0
0
0
38
38
0
0
0
0
0.00%
0.00%
0.00%
0.00%
15,108,000
100.00%
15,108,000
100.00%
Based on the price per security, number of holders with an unmarketable holding: 1,566, with a total 127,797,
amounting to 0.06% of Issued Capital.
Voting Rights
Fully Paid Ordinary Shares – on a show of hands every member present at a meeting in person or by proxy shall have
one vote and upon a poll each share have one vote.
Options and Performance Rights – do not have voting rights.
Shares subject to voluntary escrow
2,583,331 shares voluntarily escrowed until the Company’s FY20 results are lodged with ASX (i.e. upon the release of
this report)
10,000,000 shares voluntarily escrowed until 31 October 2020. Issued to the Uni-Span vendors as part consideration
of the Uni-Span acquisition completed 31 October 2019.
Unlisted Securities
Unlisted Securities include: 9,323,001 unlisted options and 15,108,000 performance rights.
There are no holders of more than 20% in either the options or performance rights classes.
On-market buy-back
The Company is not currently conducting an on-market buy-back.
Acrow Annual report 2020 98
Top holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Position Holder name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMS PTY LTD
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