Acrow Group Annual Report 2022

Plain-text annual report

ASX Announcement 27 September 2022 FY22 ANNUAL REPORT RELEASE Acrow Formwork and Construction Services Limited (ASX: ACF) (“Acrow” or “the Company”) is pleased to release the Annual Report for Financial Year 2022. As noted at the time of the FY22 results release (23/08/22), the new financial year has commenced very strongly both in terms of actual trading results and secured new hire contracts, with the result in this important lead indicator up 97% on the same time last year. We look forward to providing an update at the Annual General Meeting, to be held on the 15th of November 2022. About Acrow -ENDS- Acrow Formwork and Construction Services Limited (ASX: ACF) provides engineered formwork, scaffolding and screen systems solutions as well as in-house engineering and industrial labour supply services to its construction sector clients. Acrow is made up of three distinct business divisions: Acrow Formwork and Scaffolding Pty Ltd, which hires high-quality scaffolding and provides bespoke engineered formwork for major building construction and infrastructure projects in Australia; Natform Pty Ltd, a specialist screen systems provider which designs and hires screen systems for the construction industry; and Uni- span Australia Pty Ltd, a provider of formwork and scaffolding solutions, equipment and services, which is complemented by in-house engineering and industrial labour supply. Acrow currently operates in 10 locations across Australia and owns over 60,000 tonnes of formwork and scaffolding products. The Company has identified a number of near-term growth opportunities and is focused on growing its footprint in the civil infrastructure market of Australia’s east coast, with a particular focus on New South Wales and Victoria. To learn more, please visit: www.acrow.com.au For further information, please contact: Steven Boland Managing Director Ph: +61 (02) 9780 6500 Andrew Crowther Chief Financial Officer Ph: +61 (02) 9780 6500 Acrow Formwork and Construction Services Limited. C/- Level 5, 126 Phillip Street, Sydney NSW 2000 Page 1 2022 ANNUAL REPORT Captions: Cover (main image) – Cross River Rail, Roma St, Brisbane QLD Cover (bottom left) – Crown Casino, Barangaroo NSW Cover (bottom middle) – Origin APLNG, QLD Cover (bottom right) – Granville Place, Granville, NSW Inside cover – Metro Tunnel CBD North, Melbourne, VIC At the start of every great project since 1936. 1 Acrow is a leading provider of smart integrated construction systems in Australia. This was Acrow’s ninth consecutive year of growth and we maintain a robust pipeline of opportunities for the future. 2022 Highlights Total Revenue $m EBITDA* $m Earnings per Share* cents 40% TO $148.3m 49% TO $36.3m 18 19 20 21 22 65.3 71.0 87.0 105.7 148.3 13.2* 14.8* 19.5 24.3 18 19 20 21 22 36.3 57% CAGR TO 7.2c 1.2 18 19 20 21 22 4.4 4.0 4.0 7.2 Revenue by Business Unit# Revenue by Geography# ● Formwork53% ● Industrialservices 31% ● Commercial scaffold 16% ● QLD56.1% ● NSW 15.7% ● VIC13.2% ● SA 4.8% ● WA5.9% ● TAS 4.3% $148.3 REVENUE *Underlying #Revenue includes sale of ex hire equipment Contents 1 2022 Highlights 2 Chairman’sAddress 4 ManagingDirector’sReport 8 BusinessOverview 11 Safety 12 BoardofDirectors 14 Key Management Team 15 FinancialReport 89 Directors’Declaration 90 IndependentAuditor’sReport 94 ShareholderInformation 2 Chairman’s Address FY22 was a remarkable year which demonstrated the momentum that we have gained through the successful transformation of our business. Wehaveakeyroleasparticipantsinthebooming Australian infrastructure sector through a unique productandserviceofferingthathasenabledusto securelargepackagesofworkonmajorinfrastructure projects nationally. Acrowistodayaleadingproviderofsmartintegrated construction systems for the civil infrastructure, industrialandcommercialsectors. The outstanding performance of the company over the past twelve months confirms that our prudent decisions to invest in the platforms of our business – people, products and systems – are bearing fruit. Itisourexpertiseinprovidingsophisticatedengineered solutionsthatsetsusapart.Wehaveimprovedand grownourcorebusinessesbycarefullyinvestinggrowth capital and targeting east coast civil infrastructure projects.Thisclearlydefinedgrowthstrategyisbacked byengineeringskills,high-qualitypeoplewithacreative focusonfindingtherightsolutionsforcustomers,a strongproductsetandanationalnetwork. Thesecompetitiveadvantages,togetherwithstrong performance,haveenabledustosecurehighmargin workonAustralia’smarqueeinfrastructureprojectsand industrialservicesworkthatshowcaseourskills.We arecontinuingtoexploitthegrowthopportunitiesinthe civilinfrastructuremarketandexpandourshareofthe nationalindustrialservicesmarket. Organic growth drives strong results Thecompany’sstrongresultsreflectthatwehavebeen strongstewardsofourassets,particularlyasthey represententirelyorganicgrowth.Statutorynetprofit increasedtoarecord$15.7million,anincreaseof296% onthepreviousyear.Onanunderlyingbasis,which excludessignificantitemsandshare-basedpayments, netprofitwas$17.8million,up104%.Operatingcash profitwas$23.0million,up97%. Animportantfactorinourgrowthhasbeentheeffective management of our supply chain despite the disruptions ofCOVID-19.Wehavedrivengrowthbytakingproducts availableonlyinoneortwostatemarketsandselling themnationallythroughourexpandedoperatingnetwork. Underlyingearningspersharewere7.2cents,up79%on thepreviousyear.Thisrepresentsacumulativeaverage growthrateof57%overthefouryearssincelistingin 2018,showingthecompany’sconsistenttrackrecordof profitgrowth. Wehavearobustfinancialposition,withastrongbalance sheetandcashflows.InFY22,cashflowfromoperations was$18.9million,whichincludedaone-offincreasein workingcapitalof$20milliontofacilitateproductsales andfundindustrialservicesgrowth.Capitalexpenditure fortheyearwas$21.1millionofwhichtwo-thirds wereinvestedingrowth.Withsignificantexpansion opportunitiesaheadweareinvestingaggressivelyin our platform. Theseopportunitiesincludemajorcivilinfrastructure projectsacrossAustralianroad,rail,airportandmaritime industriesaswellasindustrialsolutionsforcommercial sectorssuchasenergyandmining.Asinfrastructure developmentsaremulti-billiondollarprojectsbuiltover manyyears,wecantenderforanincreasingsizeand scopeofpackagesovertime,basedonourgrowing engineeringskills,equipmentpoolandcapabilities. Duringtheyearweraised$10.5millionthrougha placementwhichhelpedfundgrowthinourindustrial servicesandcivilformworkbusinesses.Wewere delightedwiththestrongsupportforthecapitalraising andthankourshareholdersfortheircontributions. Wecontinuetotargetacquisitionswherebusinesses shareanentrepreneurialcultureandcanbroadenour platformandexpandourservices.Thiscomplements organicgrowthand,afterbalancedate,weentered anewmarketthroughaten-yearexclusivelicensing arrangementwithNewZealandcompanyJacking Systemsfortheirjumpformsystem.Wearebuildingthe infrastructurethatwillsupporttheproductourselves, whichbringstoourplatformoneofthemosttechnically advancedandadaptablejumpformsystems.Theseare usedtoconstructtheliftshaftcoreofabuilding,whichis aleadingactivityonmulti-flooredconstruction. 104% NPAT INCREASE TO $17.8m Acrow Annual Report 20223 Morrison Lane Yard, Beenleigh ,QLD Dividend Ourgoalistoincreasevalueforshareholderswhile deliveringearningssufficientforfundinginvesting activities and capital expenditure that support ongoing growth.TheBoard’sdividendpolicyistopaybetween 30%and50%ofoperatingcashprofit.Thestrength ofourbusinessmodelandearningshaveenabledthe Boardtodeclareanincreasedfinaldividendof1.5cents pershare,60%franked.Thisbringstotaldividendsfor theyearto2.7centspershare,42%franked,upfrom 1.9 centspershare,anincreaseof42%onlastyearand representingapayoutof30%ofoperatingcashprofit. Board changes Duringtheyear,therewerechangestotheBoard. Gregg Taylorsteppeddownatlastyear’sAnnualGeneral MeetingandMargaretProkopretiredinDecember 2021.I wouldliketothankthemfortheirservicesto the company. WehavecontinuedourprocessofBoardrenewaladding newdirectorswithrelevantskillsandexperienceto guidetheevolvingneedsofourbusiness.Twonew non-executivedirectorsjoinedusin2021,Melanie AllibonandLaurieLefcourt.Botharewellsettledinand contributingtotheBoardandcommittees. Melanieisanexperiencedcompanydirectorwithan extensivebackgroundinhumanresourcesandoperating risk.ShehasheldseniorexecutiveroleswithNewcrest Mining,SevenGroupHoldings,Amcor,PacificBrandsand Foster’sGroupwithresponsibilityspanningAustralia, USA,AsiaandtheUK.SheischairofASX-listedBoom LogisticsLimited. Lauriehasanextensivebackgroundinfinancial,strategic andriskmanagement,particularlyintheresources, construction,andinfrastructuresectors.Shehasheld senior management and executive roles across Rio Tinto, QueenslandRail,SinopecOilandGas,andWigginsIsland CoalTerminal.Sheisanexperiencednon-executive directorandiscurrentlyontheboardsofAdvance NanoTekLtdandSenterpriSYSLtd. In closing OnbehalfoftheBoard,IwouldliketothankSteven BolandandhisleadershipteamaswellasallAcrow employeesfortheirongoingachievement. Significantprogresshasbeenmadetoprovideastrong platformforthefuture.Wearebuildingthebusinessin astructuredway,nurturingourgrowthengineswhile investinginourpeople,equipment,ITsystemsand technologytoensurethatastrongbackbonesupports ourexpansion.Weareconfidentofcontinuingour marketpenetrationmomentumand,withtailwinds behindus,arefocusedonexploitingthegrowth trajectoryahead. Peter Lancken AM Chairman 2.7c DIVIDEND PER SHARE UP 42% ON 2021 4 Managing Director’s Report Since listing on the ASX nearly five years ago, Acrow has transformed into an engineering led business that provides exceptional solutions for the civil infrastructure and industrial markets. Cleardirectionandexecutiononstrategicpriorities has achievedanoutstandingresultinFY22,with strong growthinmainbusinesslinesacrossallstates of Australia. Wearefocusedondeliveringvalueforallkey stakeholders,includingemployees,customersand shareholders.IampleasedtoreportthatinFY22 AcrowachievedEBITDAof$36.3million,up49%from $24.3 millioninthepreviousyear.Thisrepresentsa compoundannualgrowthrateof29%overthefouryears sinceFY18. Importantly,overthatperiodwehaveachievedgrowth whilealsoincreasingmargins.EBITDAmarginroseto 24.5%inFY22,upfrom20.2%inFY18demonstrating improvingefficiency.Wearecommittedtoachieving ourcustomers’priorities.Thesearetheprovisionof robustengineeringsolutions,productquality,apositive reputationfordelivery,andmostimportantlysafety.Our abilitytomeetthesecriteriahasenabledustoachieve strongrevenuegrowthwithimprovedmargins. Ourbusinessisdifferentiatedbyhighqualityengineering skillsandeffectivebespokesolutions.Engineeredsales fromourformworkandindustrialservicesbusinesses was87.8%oftotalgroupcontributioninFY22,up 38.2 percentagepointsfrom49.6%inFY18. Revenueincreased40%to$148.3million,upfrom $105.7 millioninthepreviousyearandmorethandouble FY18revenue.Sincethen,theacquisitionsofNatform andUni-spanhavebeenfullyintegrated.FY22showed strongorganicgrowthreflectingarecordpipelineofwork andthesecuringofnew,highrevenuecontracts. Totalsalescontributionincreased32%to$81.4million. Whileexpensesincreasedwithhigheractivity,we exercisedstrongcostdisciplineandachievedbenefits ofscale,with60%ofsalescontributiongrowthbeing passedthroughtooperatingprofit. Strong new hire contract growth Aswetakeadvantageofthetailwindsofthecurrent nationbuildinginfrastructureboom,itisourengineering team’scapabilitytodevelopinnovativeformworkand industrialservicessolutionsthathasenabledusto wintenderpackagesontransportinfrastructureand industrialservicescontracts. A key achievement in FY22 was securing record hire contracts of $50.4 million, up 28% on $39.3 million in the previous year. Newhirecontractsarethekeyshorttomediumterm leadindicatorforourbusiness.Weareencouragedbya strongsuccessrateofcirca50%onquotessubmitted throughoutourFormworkbusinessandespeciallyon marqueeinfrastructureprojects. Acrow’sreputationforquality,safetyandservice supportsusaswebidfornewworkpackages,which coverworktobecompletedoverashorttomedium termperiod.Theirsatisfactorycompletionpositionsus welltosecuresucceedingpackagesandourpipelineis extremelystrong. Wecontinuetobenefitfromauniquerangeofproducts andserviceswhicharenowbeinghiredandsold acrossthecountry.Ourformworkdivisionhasgrown significantlyacrossallstatessinceour2018listing. This,togetherwiththecreativityofourengineering solutions,hashelpedussecureformworkpackages onmostofthemajortransportinfrastructureprojects inAustralia.TheseincludeSydneyMetroandSydney GatewayinNewSouthWales,theMelbourneMetro TunnelandWestgatetunnelinVictoria,theBruce HighwayupgradeandCrossRiverRailproject in Queensland. Investmentinourindustrialservicesdivision,which providesarecurringearningsprofileforAcrow,has alsobeenrewarded.Amongourkeyprojectswere VisyAustralia’sTumutKraftpapermillshutdown,new packagesonSnowyHydro2.0,theMountPiperpower stationshutdown,maintenanceforOrigin’sSurat Basin oilandgasfacilityandIncitecPivot’sPhosphate Hillshutdown. Formwork Nationalformworkrevenuerose30%to$78.7 million withsignificantgrowthinallstatemarkets.In Queensland,ourlargestmarket,revenuegrew50%to 87.8% OF TOTAL SALES WERE ENGINEERED SALES FROM FORMWORK AND INDUSTRIAL SOLUTIONS BUSINESSES Acrow Annual Report 20225 UTAS Library, TAS $29.3millionasweincreasedmarketshare.Operations inWesternAustraliaalsogrewsignificantlyasweopened newrevenuechannels,launchingproductspreviously availableonlyontheeastcoast. WeconsolidatedourmarketpositioninVictoria,where wehavegoodprospectsforfurthergrowth,andinNew SouthWaleswhichisAustralia’slargeststatemarket. Havingbreachedthebarrierstoentryinthismarketwith highprofilecontracts,weareconfidentoffurthergrowth. ProgressinSouthAustraliaandTasmaniahascontinued. Commercial scaffold Commercialscaffoldrevenuesweresteadyaswe increasedfocusondryhireandsmaller-scalework withascalingdownoflabourandcartage.Thisdivision providessustainable,strongfreecashflow.Ourbusiness experiencedimprovementinNewSouthWalesand Victoriaduringtheyear.Whilewecontinuetoexitlow profitabilitycontracts,weremaincommittedtothis cyclicalbusinessandanticipatesomeupwardsrate improvementinthecomingyear. Industrial services Industrialservicesrevenuegrew110%to$45.6million withstronggrowthfromexpansionintonewstates andmarkets,includingtherenewableenergy,power utilitiesandminingsectors.Productsaleswereboosted byparticipationinlargeprojectsandlabourhiresales alsoincreasedsignificantlywithagreaternumberof key projects. Havinginvested$4millioninspecialisedformwork equipment,includingringlockandfurnacescaffold kitstoservethehighlyengineeredMountPiper shutdown,itwaspleasingthiscapitalinvestmenthas providedastrongreturnenablingasignificantboostin market share. Balance sheet and cash flow WehaveastrongbalancesheetandendedFY22withan $11.2millionimprovementinnetcurrentassetssurplus. Whilenetdebtincreasedby$10.4million,thisreflected capitalinvestmenttofundgrowthandexpansionofour business,andcompletionofthelastdeferredpayment fortheUni-spanacquisition.Wearecontinuingto invest to serve infrastructure and industrial services markets.Thishasbeenrewardedbystronggrowththat hassignificantlyexceededourinternalgrowthcapital expenditurehurdleof40%.Netgearing increased1.5 percentagepointsto28.3%. Inanunprecedentedyearinwhichsteps weretakentominimisetheimpactof supply chain and logistics challenges, inventoriesweremanagedtoreduce 49% EBITDA INCREASE TO $36.3m 6 Managing Director’s Report (continued) supplyrisks.Thishadasignificantone-offworking capitalimpactof$20million.Ourworkingcapitaltosales ratioisexpectedtostabiliseintherangeof18%to20%. Duringtheyear,ourtimbersalesbusinesswas transformedbyalackofsupplyintheAustralianmarket, growingdemandandthewithdrawalofalternative suppliers.Wehaveaveryreliablesupplychainwhichwas abletooperateathighmargins,althoughworkingcapital increasedduetoasignificantlagbetweeninitialpayment andreceivingfundsonsales. Acrow’sexpandedfinancefacilitiesallowsignificant headroomtosupportfurthergrowth.Oureffectivetax ratewas10%astaxpaidbybusinesseswasoffsetby Acrow’scarryforwardtaxlosses.Frankingofdividends willincreaseastaxlossesareconsumed. An employer of choice Peopleareourmostvaluableassetaswearebuilding allaspectsofourbusinesstosupportgrowth.Thishas included a heavy focus on succession planning and thecreationofnewrolestobroadenourcapability.Our reputationasanindustry-leadingemployerofchoiceis apowerfulassetasourhigh-qualitybrandhasenabled ustoattracthigh-calibrepeople,allowingdepthinsenior andmiddlemanagement. We have developed an entrepreneurial and solutions-focusedculturethatbelievesinexceedingthe relevantindustrialstandardsandsettingnewstandards of excellence. Akeypointofdifferenceisthestrengthofour engineering,whichistechnicallyverystrongand includessomeofAustralia’stoptemporaryformwork engineeringtalent.Wehavetransformedthecompany throughthecontinualbuildingofourengineeringteam, whichhasmorethandoubledfrom15engineersin April2018to32engineersattheendofFY22.Ourteam isfocusedonachievingcommercialresultswithout compromiseonproductqualityandsafety.Whilewe haveindustry-leadingbestofbreedproducts,our ‘secretsauce’isthesmartwayourengineersworkfor our customers. Safetyisapriorityandweachieveda49%improvement inthelosttimeinjuryfrequencyrate.Losttimeinjuries improved33%inFY22. Iwouldliketosincerelythankallofthemembersof theAcrowfamilyfortheirabsolutecommitmentto excellenceinourBusiness. Expansion into jump form market Afterbalancedate,wesecuredcontractsvaluedatcirca $4milliontoprovidejumpformsontheCrossRiver RailAlbertStreetundergroundstationandTheMonaco apartmentsontheGoldCoast.Theseprojects,whichwill becompletedinFY23,fasttrackourentryintoalucrative andstrategicallyimportantmarket.Jumpformsystems complementourformworkandscreensystemsproducts, enhancingouropportunitiestobidforarangeofworks onsuitablecommercialbuildings. Weanticipatethatwewillgeneratefromthecapital requiredtoservicetheprojectsareturnoninvestment intheregionof70%,whichreflectsthecriticalnatureof theengineeringwork.TheAustralianjumpformmarket isestimatedtobeamulti-hundred-million-dollarindustry, andweareconfidentofdevelopingthisnewrevenue channelintoasustainable$20millionperyearbusiness linewithinthreeyears. Outlook Wearedeliveringonourfuturegrowthtrajectory.The positivemomentumofFY22hascontinuedinthefirst twomonthsofFY23withthesecuringofhirecontracts totalling$12million,up97%onthesameperiodlastyear. Thisincludesexpectedincomefromnewlysecuredjump formcontracts. Government spending continues to provide a good range of opportunities, particularly in transport infrastructure, andourgrowingindustrialservicescapabilityhas increasedthesizeofAcrow’saddressablemarkets. Weanticipatefurtherpackagesofworkfromongoing projectsincludingSnowyHydro2,MelbourneMetro Rail,MelbourneWestgate,QldBruceHwyUpgradeand BrisbaneCrossRiverRailamongstmanyothers. Ourshorttomediumgrowthopportunitiesinclude expansionofourindustrialservicesbusinessonthe east coast into South Australian and Western Australian markets,wherewearetargetingnewcontracts.Weare capitalisingonourmajorprojectexperiencetofurther increasemarketshareintheNewSouthWalesand Queenslandformworkcivilinfrastructuremarkets.Also, weareleveragingouruniqueproductrangetoopen newrevenuechannelsinstatemarkets.Ourinvestment informworkandindustrialservicescapabilities continuesasweexpandrevenuestreamsandimprove opportunitiestocross-sellproductsandservices. Weareconfidentoffuturegrowthandhaveprovided guidanceforFY23: ■ Revenueintherange$165million–$175million,an increaseof15%onFY22; ■ EBITDA(underlying)intherange$43million– $44 million,a20%improvement; ■ NPAT(underlying)intherange$21.5millionto $22.5 million,anincreaseof23%. Steven Boland CEO Acrow Annual Report 20227 Case Study: Cross River Rail PROJECT CrossRiverRail TECHNOLOGY FormworkMKsystem and SMK frames LOCATION Brisbane CrossRiverRailisacriticalpublicinfrastructureproject comprisinga10.2kilometreraillinewithfournewunderground stations.Itincludes5.9kilometresoftwintunnelsunderthe BrisbaneRiverandcentralbusinessdistrictwhichwillunlocka bottleneckinBrisbane’stransportnetworkandimproveacross southeastQueensland. Acrow’ssolutionusedourMKSystemandSMKframesproducts tocreatethewallsforthestationstructures.TheMKsystem offers a highly versatile system for civil engineering applications thatneedhighload-bearingcapacity,whileourSMKframes provideasingle-sidedformworksolutionwithatrussstructure thatisflexible,allowingaccessontunnelprojects.Weusedsets of10.875metrepre-assembledSMKframeswhichallowedthe pourforthestationstructures’singlesidedwallsincluding,on oneoccasion,enablingasingle10.3metrepourfrombasement level4toabovebasementlevel2. AsArrowassembledthefullheightframesoff-site,theworkand spaceneededforon-siteconstructionwasgreatlyreduced. Photo: Cross River Rail, Roma St, Brisbane, QLD Acrow Annual Report 20228 Business Overview FORMWORK Overview ■ Providesarangeofwallformingpanel, pricepertonneperweek,orpricepercubic metreperweek soffitformingandconventionalsystemsfor large and small construction equipment ■ Bespokespecialformworkandclimbing systemsprovidedforlarge projects ■ Dryhiresformworkequipmentandprovides the product that forms the temporary mould to support concrete structures during construction ■ Dryhiresfalseworkequipmentusedto supportsuspendedhorizontalstructures during construction ■ Products are generally manufactured overseas and imported ■ Generates revenue through dry hire agreementsthataretypicallybasedona FY22 Commentary ■ Exceptionalgrowthwithexpandedproduct andserviceofferingandcontribution increases across all states and most businessunitsparticularlyQld(50%)and WA(69%) ■ Revenueup30% ■ Continuedfocusonproductsaleswith growthof26%whichcontributed48%of formworkrevenue Overview ■ Highly experienced team and customer service ethic ■ Generatesrevenuefromwethire agreementsincludinghire,transport,labour andconsumables ■ At the forefront of scaffold service providers inQueenslandtotheindustrialsectorand expanding interstate ■ Fullturnkeysolutionfromdesigntosupply and install ■ Strong focus on the energy, pulp, paper, mining and industrial sectors FY22 Commentary ■ LargegrowthRebasedthisbusinessinto the future ■ Revenueup110%andcontributionup53% ■ Focusonindustriallabourthatincreased 156%withmarginremainingrelatively stable(19.4%downfrom21.6%) ■ ContinuedexpansionoutsideofQueensland marketintoNSW,SAandTasmania Overview ■ Leadingdesignerandhirerofscreen systems for the construction industry ■ Providesscreen-basedformworksystems whichsupporttheconstructionof commercialhigh-risebuildingsandcivil infrastructure,includingbridges,roadworks and train stations ■ Dry-hiremodelofferinghighlyengineered solutionsforawiderangeofcustomers ■ Engineeringcapabilitiesprovideakey competitive advantage INDUSTRIAL SERVICES SCREENS COMMERCIAL SCAFFOLD Overview ■ Providesaccesssolutionstobuilders andbuildingcontractorswhenworkingat heights ■ Generatesrevenuethroughbothdryhire andwethireagreements ■ Dryhireagreementsaretypicallybasedon apricepertonneperweek,overaminimum of4weeks ■ Wethireagreementsaretypicallybasedon a contract sum encompassing equipment hire,transport,labourprovisionsandsupply ofconsumables ■ Solutionsofferedonbothawetanddry basis ■ Supportscommercialbuildingincluding officeandhighrisedevelopments, universities and schools, industrial buildings,hospitalsandretailcentre developments Acrow is a leading provider of engineered formwork solutions and scaffold hire in Australia. 9 ■ Expandedtimbersaleswith contributiongrowthof208% ■ Keycontributingprojectsincluded packagesonMelbourneMetroRail, MelbourneWesternDistributor, SydneyMetroRailincludingCrows NestStation,BruceHighway Highwayupgrade,CrossRiver Rail, QLD FY23 Strategy ■ Transformational investment into JumpForms.10yearlicensing agreementwithtwoinitialprojects ■ GainmarketshareinNSWand benefitfromcivilinfrastructure developmentwithspecificfocuson majorprojects.Snowy2.0,Sydney GatewayandSydneyMetroWest ■ Continuetobenefitfromupliftin Queenslandinfrastructureactivityas projectscontinuetorampup.Major projectssuchasBruceHighway upgrade,CrossRiverRailand Inland Rail ■ Continuetogrowinotherstates throughexpansionofAcrow product range ■ Ongoing capital investment to support growth ■ Capitalinvestmentof$4mduring the year ■ KeyprojectwinsincludeVisy,Snowy Hydro, Mt Piper, Origin Surat Basin andIncitecPivot–PhosphateHill ■ Expansionfurtherintonewmarkets includingcoalfiredpowerstations, hydropowerandmining ■ Furthercapitalinvestmentto supportgrowth FY23 Strategy ■ Continueexpansiononthe east coast ■ PushhardintoSAandWAmarkets viatargetednewcontractwinsand potential M&A FY22 Commentary FY23 Strategy ■ Continuedsuccessacrosseast coastmarkets,particularlyin Queensland ■ Totalrevenueandcontribution relativelyflatduetoprojects delayedduetoCovid19andfloods, particularly in NSW ■ Focusoncontinuedmarketshare growthviainnovationandservice capabilityespeciallyinQLD and Victoria ■ Capitaliseonprojectsdelayedin NSW from 2022 FY22 Commentary ■ Revenueandsalescontribution stabilisedduringyear ■ Increasedfocusondryhireand smallerscalework.Thishas included reduced contract and labourwork ■ Marginshaveshowsignsof improvementtowardstheendof the year ■ Thisisnowastrongfreecashflow businesswithlittleinvestmentof gear required FY23 Strategy ■ Continuingparticipationin commercialprojects ■ Hireratesincreasesandutilisationwill becapitalisedoninthedryhiremarket ■ Exitingthelabour/contractmarket in commercial 10 Case Study: Rozelle Interchange PROJECT RozelleInterchange TECHNOLOGY FormworkRKSSystem andFabrication LOCATION Sydney Partneringwithcivilengineeringspecialiststocompletethree ventshaftsontheRozelleInterchangewhichispartofthe WestConnexSydneydevelopment,weusedAcrow’sRKSrail climbingformworksystemtoconstructventilationshaftswith differentradiuses,assistedbycranes. Thedesigntofitthecircularshapeoftheshaftswasmanaged byintroducingafabricatedsquarehollowsection(SHS)steelto achievethecurvedshape.Thiswasconnectedtotheformwork systemwithourproprietarySHSclamps.Bespoketailoringof thecurvedsectionsmaintainedthefullrollbackpropertiesof thesystem. Ourformworksystemsarerobustandhighlyadaptable,which allowedustoincreasethepourheightsfrom3metresto 3.6 metres,reducingthecyclesneededwhilststilljumping theplatformswiththewallformsattachedandinrolledback position.Thissimplebuteffectivesystemreducedthenumber of‘specialitems’neededtocompletethetask,reducingcostand allowingaqualitysurfacefinish. Photo: Rozelle Vent Shafts, Rozelle, NSW Acrow Annual Report 2022Safety 11 The health and safety of our people, customers and subcontractors is paramount. Acrow’ssafetycultureisbasedoncollaborationanda sharedsenseofresponsibility.Wehaveamulti-tiered processthatensuresouremployeesandsubcontractors aretrainedandfollowindustryleadingsafework practices.Employeeshaveaccesstohealthandsafety informationfromAcrow’sSafetyManager,Headof People&CultureandthroughtheAcrowintranet.Our losttimeinjuryfrequencyratewaslowerwhileworking anadditional152,000hourscomparedtoFY21.Other safetykeyperformanceindicatorsremainedinlinewith thepreviousyear. Specificinitiativesandprogramsconductedin FY22 included: ■ Placementofadedicated,newSafetyManager position ■ Briefingonrecentdevelopmentsinhealthandsafety fortheCEO,andtheExecutiveLeadershipteam ■ Continuedgrowthofonlineinformationresourcesto helpemployeesunderstandtheirresponsibilities ■ Continuedevaluationandupdatingofallhealthand safety related materials including procedures, policies andmanuals,acrossallAcrowlocations. ■ FreeaccesstoRATtestsforCOVID-19,andvoluntary influenzavaccinationsforemployees. LOST TIME INJURY FREQUENCY RATE 18 19 20 21 22 2.4 6.0 5.9 11.6 19.7 Cross River Rail, Brisbane, QLD Acrow Annual Report 202212 Board of Directors Mr Peter Lancken AM Non-Executive Chairman Peterhasacareerspanningover30yearsinarangeofexecutiveanddirectorrolesin equipmenthire,industrial,andrealestatecompanies. HewasformerlytheManagingDirectorandNon-ExecutiveChairmanofKennardsHire PtyLimited. PetermanagedaneraofgrowthspanningtwodecadesatKennards,withsalesnow exceeding$550millionfromanetworkofover200locations,andremainsonthe BoardasaNon-ExecutiveDirector. PeterisalsoaNon-ExecutiveDirectorofCrimestoppersNSWandwasNon-Executive ChairmanofPropertylinkGroup(ASX:PLG)priortoitsacquisitioninApril2019. PeterholdsaBachelorofEngineering(Civil)degreefromtheUniversityofNewSouthWales,isaFellowoftheInstitute ofEngineersAustraliaandisafellowoftheAustralianInstituteofCompanyDirectors. Mr Steven Boland Executive Director Steve’s30yearexecutivecareerincludesextensiveexperienceinoperational managementandleadershipspanningwaste,sportsmanagementandhireinboth Australia and the United Kingdom StevenjoinedAcrowin2013andsincethenhasservedasitsChiefExecutive Officer.StevenwaspreviouslytheCEOoftheMelbourneRebelsRugbyCluband wasresponsibleforthestart-upphaseofaSuperRugbyprofessionalsporting team.Previously,from2004to2010,StevenservedastheGlobalExecutiveDirector (Recycling)ofVisyIndustries,andfrom2002to2004,StevenwastheExecutive Director(CommercialWaste)ofVeoliaEnvironmentUK. Mrs Melanie Allibon Non-Executive Director (Chair of the Remuneration & Nomination Committee) Melaniehasanextensivebackgroundinhumanresourcesandoperatingriskprimarily intheindustrialservices,mining,manufacturingandFMCGsectors. ShehasheldseniorexecutiveroleswithNewcrestMining,SevenGroupHoldings, Amcor,PacificBrandsandFoster’sGroupwithresponsibilityspanningAustralia,USA, AsiaandtheUK. Melaniehasbeenanonexecutivedirectorforthelast9yearsincludingBoom LogisticsPtyLimitedforoverthreeyearsandChairsinceNovember2021.Melanieis amemberofChiefExecutiveWomen,InternationalWomen’sForumandAICD. Acrow Annual Report 202213 Mr David Moffat Non-Executive Director Appointed19September2019 Davidhasacareerspanningover35yearsintheconstructionindustry,mostrecently withLipmanfor29years,priortohisresignationinDecember2018.From2013-2018, DavidwastheManagingDirectoroftheLipmanGroupofCompanies. In2019DavidfoundedCornerstone(NSW)PtyLtd,whereasManagingDirector,he providesstrategicbusinessplanningandadvisoryservicestoSubcontractors,Head ContractorsandClientswithintheconstructionindustry. DavidbringswithhimkeycompetenciesinLeadership,ConstructionManagement, InnovationandSafety.HeholdsaBachelorofEngineeringDegree(Civil)fromThe UniversityofTechnology,Sydney(“UTS”). Ms Laurie Lefcourt Non-ExecutiveDirector(ChairoftheAuditandRiskCommittee) Lauriehasanextensivebackgroundinfinancial,strategicandriskmanagement, particularlyintheresources,construction,andinfrastructuresectors. ShehasheldseniormanagementandexecutiverolesacrossRioTinto,Queensland Rail,SinopecOilandGas,andWigginsIslandCoalTerminal. Lauriehasbeenanon-executivedirectorforthepast4yearsandiscurrentlyonthe boardsof–AdvanceNanoTekLtd(ASX:ANO),andSenterpriSYSLtd(NSX:SPS). LaurieisapastmemberontheboardofTamawoodLtd(ASX:TWD),theJabiruTown DevelopmentAuthorityandCentralQueenslandUniversityCouncil. Laurieholdsabachelor’sdegreeinfinanceandadministration,isafellowofthe InstituteofCharteredAccountantsofAustraliaandNewZealandaswellasagraduate oftheAustralianInstituteofCompanyDirectors. Acrow Annual Report 202214 Key Management Team Steven Boland Chief Executive Officer Asabove. Andrew Crowther Chief Financial Officer AndrewjoinedAcrowinJuly2019.Hehasmorethan 20years’experiencehavingheldseniorfinancialand chieffinancialofficerrolesatThornGroup,SFGLtd,BT FinancialGroupandColonialFirstState.Hebringsa breadthofindustryandpropertyinfrastructurefinance expertisetoAcrow,includingworkinthepropertyfunds andassetmanagement,superannuationandfinancial advice,consumerfinanceandleasingandbusiness financeindustries. Jeffery Stewart National Sales & Marketing Manager JefferyjoinedAcrowin2011.Hispriorrolesinclude RegionalManageranddirectorforAtlasSteelsinNew Zealand,NationalMarketDevelopmentManageratAtlas SpecialtyMetals,andMarketDevelopmentManagerfor SmorgonSteelsMetalsDistribution. Robert Parovel Head of People & Culture RobertjoinedAcrowinNovember2021,having previouslyheldseniorHumanResourcepositionswith HarscoCorporation,GCCServices,andWebuildGroup. Havinglivedandworkedabroad,hehasextensive experienceintheAsiaPacificandMiddleEastregions. Matthew Caporella Chief Operating Officer Colin Fisher General Manager (TAS) MatthewjoinedAcrowin2012andrecentlypromoted toChiefOperatingOfficerfromNationalManager– EngineeringOperations. ColinpreviouslyworkedatHoneywellBusinessSolutionsas aGeneralManager.PriortoHoneywellBusinessSolutions heworkedatVisyIndustriesastheGeneralManager,and astheNationalOperationsManageratOnyxUKLimited. Jan Pienaar General Manager (QLD) JanjoinedAcrowinDecember2018asGeneralManager, Queensland.Hehasmorethan10years’management experienceandwaspreviouslyNationalSalesmanager atDokaFormworkAustralia,andbeforethatasGeneral Manager(Formwork)atWacoKwikform. Jurie Roetger National General Manager – Industrial Services JuriejoinedtheAcrowGroupaspartoftheUni-span acquisitioninOctober2019.Hehasmorethan18years industryexperience.HispreviousroleswiththeUni-span GroupincludesScaffoldDesigner,ProjectManager, North QueenslandManagerandNationalIndustrial ServicesManager. Peter Fehrenbach General Manager (NSW) PeterjoinedAcrowinSeptember2021.Hehasover15 years management experience, previously holding positions at BullivantsthatincludeNationalOperationsandSupplyChain ManageraswellasRegionalBusinessManager(NSW,Vic andSA).HealsoheldvariousSupplyChainleadershiproles intheAustraliaPacificregionatOrica. Jason Merjane Natform Manager (NSW) JasonjoinedNatformin2015andisresponsibleforthe screensbusinessacrossthecountry. Bill Goodall General Manager (SA) BilljoinedAcrowin2016.Billhasspentthelast16years inmanagementrolesintheFormworkandScaffold industryoperatinginNSW,SA,NT&WA. Conan Godrich General Manager (WA) ConanbringsoveradecadeofexperiencewithAcrow. HispriorrolesincludeAccountManager(Gnangara Operations)atRinkerAustralia,andSalesandCustomer ServiceatOneSteelReinforcing. Carl Roetger National Head of Procurement CarljoinedAcrowinOctober2019astheNational ProcurementManagerpreviouslybeingaCofounderand DirectorofUni-spanGroupsince2001.PriortothisCarl wastheCo-founderandJointMDofNu-formFormwork andScaffoldinginSouthAfrica. Eddie McInulty National Business Development Manager EddiejoinedAcrowin2019andbrings20yearsof experiencefrombothintheUKandAustralia,specialising intheCivilEngineering&Infrastructureindustry.Previous rolesincludeManagingDirectorforGHIFormworkAustralia, NationalSalesManagerforUni-spanandpriorSales ManagementroleswithPeriAustraliaandPeriUKLtd. Acrow Annual Report 2022Financial Report 15 White Residences, Main Beach, QLD Contents 16 Directors’Report 22 Auditor’sIndependence Declaration 23 RemunerationReport–Audited 49 FinancialStatements 53 NotestotheConsolidated FinancialStatements 89 Directors’Declaration 90 IndependentAuditor’sReport 94 ShareholderInformation 97 CorporateDirectory Acrow Annual Report 202216 TheDirectorspresenttheirreport,togetherwiththeAnnualFinancialReportforAcrowFormworkandConstruction ServicesLimited(AcrowortheCompany)anditscontrolledentities,fortheyearended30June2022,andtheAuditor’s Reportthereon. ThisreporthasbeenpreparedinaccordancewiththerequirementsoftheCorporationsAct2001andtheinformation belowformspartofthisDirectors’Report: DIRECTORS TheDirectorsoftheCompanyatanytimeduringorsincetheendofthefinancialyearare: PeterLancken(Chairman) StevenBoland(ChiefExecutiveOfficer) DavidMoffat MelanieAllibon(appointed1September2021) LaurieLefcourt(appointed1October2021) GreggTaylor(resigned22November2021) MargaretProkop(resigned31December2021) InformationonthecurrentdirectorsandshareholdingsarepresentedintheAnnualReportonpages12to13and pages38to44respectively.Thisinformationincludesthequalifications,experience,andspecialresponsibilitiesof each director. DIRECTORS’ MEETINGS Thenumberofdirectors’meetingsandnumberofmeetingsattendedbyeachofthedirectorsoftheCompanyduring thefinancialyearending30June2022are: Board of Directors Remuneration Nomination Committee Audit and Risk Committee No. held No. attended No. held No. attended No. held No. attended 16 16 16 9 9 9 10 16 16 14 9 9 8 10 4 – 4 3 – 2 – 4 – 4 3 – 2 – 5 – 5 – 2 3 – 5 – 5 – 2 3 – PeterLancken(Chairman) StevenBoland(ChiefExecutiveOfficer) DavidMoffat MelanieAllibon LaurieLefcourt Gregg Taylor MargaretProkop MrDavidMoffatwasChairoftheRemunerationandNominationCommitteeupto16February2022andreplacedon thatdatebyMsMelanieAllibon. MrGreggTaylorwasChairoftheAuditandRiskCommitteeuptohisdateofresignationof22November2021and replacedonthatdatebyMsLaurieLefcourt. COMPANY SECRETARY MrLeeTamplinofAutomicGroupistheCompanySecretaryandhasover20years’experienceinthefinancialservices industryinbothAustraliaandtheUK.HeisCompanySecretaryforseveralASXlisted,NSXlistedandProprietary companiesacrossarangeofindustries.MrTamplinholdsaBA(Hons)FinancialServices(BournemouthUniversity UnitedKingdom),aDiplomaofFinancialPlanning,isaGraduateoftheAustralianInstituteofCompanyDirectors,a MemberoftheGovernanceInstituteofAustralia,andaMemberoftheAustralianInstituteofCompanyDirectors. Directors’ Report for the year ending 30 June 2022Acrow Annual Report 202217 PRINCIPAL ACTIVITIES AcrowoperatesintheAustralianconstructionservices industry,hiringformwork,falsework,scaffoldingand screenequipmentandundertakessalesofformwork andscaffoldingrelatedconsumables.Italsooperatesan industrialservicesbusiness. Theformworkoperationinvolvesthesupplyofthe temporary mould that supports concrete structures in theirconstruction,whilstfalseworkequipmentisused tosupportsuspendedhorizontalstructuresduring construction. Screen-basedformworksystemssupportthe construction of civil infrastructure, commercial and residentialbuildings. The industrial services operation supplies an industrial labourservicetocomplimentthescaffoldinghiretothe energy,industrialandminingsectors. The scaffolding operation supplies scaffolding equipment andaccesssolutionstobuildersandbuildingcontractors whenworkingatheights. OPERATING AND FINANCIAL REVIEW TheAcrowbusinessperformedverystronglyforthe 12 monthsto30June2022. Thebusinessstrategyre-basetowardsthevalueadded, highlyengineeredcivilformworksolutionsmarketaswell as an increased focus on equipment sales and expanding itsnewIndustrialServicesdivisiontranslatedtoalarge increaseinprofitduringtheyear. Financial performance: Thecompanyachievedanetprofitaftertaxof$15.69m up296%from2021profitof$3.96m. Onanunderlyingbasis(refertotablebelow),thenet profitaftertaxincreased104%from$8.71mto$17.81m. Thekeyhighlightsfortheyearincluded: ■ Grouprevenueincreased40%onpriorcomparative period(“pcp”)to$148.3m(includingsalesof ex-hiregear),attributabletoastrongtrading performanceacrossalldivisionsandstates,ledby IndustrialServices,up110%.Performancewasall organically generated. ■ Salescontributionincreased32%to$81.4m,driven primarilybygrowthintheFormworkhirebusiness ■ UnderlyingEBITDAincreased49%to$36.3mand EBITDAmarginof24.5%increasedby1.5pptsfrom pcp.Significantscalebenefitsarenowbeingachieved wherebyexpensesareincreasingatamuchlower ratethantheincreaseinsalescontribution.The $19.9mincreaseinsalescontributionfrompcp flowedthroughtoa$12.0mincreaseinEBITDAto pcp.Thatis60%oftheincreaseinsalescontribution flowedthroughtoEBITDA. ■ UnderlyingNPATincreased104%from$8.7mpcp to$17.8m.Effectivetaxratedeclinedfrom15%pcp to10%assistedbycarryforwardtaxlosseswhich havenotbeentakenupasanassetintheaccountsof the company. ■ StatutoryNPATincreased296%from$3.96m to$15.69m,assistedbyasubstantialdeclinein significantitemsandshare-basedpayments,down 55%to$2.1m. Acrow Annual Report 202218 Financial performance table Statutory net profit after tax Addbackshare-basedpayments Addbackacquisition,integrationandrestructuringcosts Addbackpre-acquisitiontaxexpense Addbackpreacquisitionaccelerateddepreciation Addbacknon-operatingnetinterest Underlying net profit after tax Addbackdepreciation Addbackinterest Addbacktaxexpense EBITDA Financial position: Therewasanimprovementinnetcurrentassets of$11.2mfromadeficitof$8.2mpcptoasurplus of $3.0m. Netdebtincreasedfrom$22.5min2021to$32.8m, beingcash$3.0m(2021:$1.8m)lessdebtof$35.9m (2021:$24.2m).Thiswaspredominantlydueto: ■ ■ significantinvestmentexpenditureduringtheyear includinggrowthcapitalexpenditureof$14.2mand paymentofdeferredconsiderationofUni-span$3.5m. expansionofoursalesandindustrialserviceslabour businessesthatrequiredincreasesinourworking capitalfacilities. Netgearing(netdebt/(netdebt+equity))increased from26.7%to28.3%. Property,plantandequipmentincreasedfrom$83.0m to$95.5mduetototalcapitalexpenditure(Growthand Stay-in-Business)of$22.4m(2021:$17.4m)offsetby depreciationandsaleswithawrittendownvalueof $2.6m(2021:$4.6m). Totalworkingcapitalincreasedby$20.7mto$32.8m from$12.1mpcp.Thisincreasewastheresultof: ■ anincreaseinoverallrevenueflowingthroughto debtors’balancesof$34.4mfrom$24.6mpcp. ■ strategicdecisiontakentoincreaseinventory holdingstosecuresupplyandde-riskthedisruptions tothesupplychainswhichalsoresultedin increased prepayments. 2022 $’000 15,694 1,165 954 – – – 17,813 13,070 3,467 1,962 2021 $’000 3,963 2,246 1,150 670 384 300 8,713 11,179 2,948 1,509 36,312 24,349 Tradereceivablesdebtor’sdaysreducedfrom65days to63daysduringtheyearhoweveriftheimpactof negotiatedextendedsalesaretakenout,debtorsdays increasedfrom56to60.Totalbaddebtswrittenoff,or debtsindefaultandfullyprovidedfortotalled$0.8m(or 0.6%ofrevenue).Thepercentageofwriteoffstosales isrelativelyconsistentwithpreviousyears.Thetotal provisionforbaddebtswasincreasedduringtheyear from$1.2mto$1.5m. Furtherinformationontheoperatingandfinancialreview iscontainedintheChairman’sandManagingDirector’s Reviewonpages4to6ofthisAnnualReport. Operating results: RefertotheManagingDirector’sReportonpages4to6 ofthisAnnualReport. DIVIDENDS TheCompanypaida1.15centfrankeddividendpershare beingatotalof$2.88mforthefinancialyearending 30June2021on25November2021.Sharestotalling 1,432,611wereissuedundertheDividendReinvestment Planat$0.4437centspershareincludinga5%discount. TheCompanypaidaninterim1.20cents20%franked dividendpersharebeingatotalof$3.0mforthe financialyearending30June2022on27May2022. Sharestotalling706,181wereissuedundertheDividend ReinvestmentPlanat$0.4575centspershareincluding a2.5%discount. Subsequenttoyearend,Directorsdeclaredafinal60% frankeddividendof1.50cpson23August2022tobe Directors’ Report for the year ending 30 June 2022Acrow Annual Report 2022 19 Duringtheyear,743,400performancerightsthathad previouslybeenissuedtoKMP’sundertheCompany’s RightsPlanvestedwhenthevestingconditionswere achieved.Atotalof908,600performancerightsrelating to the same tranches did not meet vesting conditions andwereforfeited. Otherthanabove,nonewsharerightsoroptionswere issuedtoKeyManagementPersonnelorNon-executive directorsduringtheyear. SHARE RIGHTS Atthedateofthisreport,Acrowhad6,860,000share options outstanding relating to grants of deferred equitytoDirectorsandemployeesundertheprevious Long-TermIncentivePlan.Thesehavearangeofvesting datesthroughtoJuly2024.Duringtheyear50,000share optionswerecancelledafterfailingtomeetvesting criteriaandnonewereexercised. 7,901,708PerformanceRightswereissuedduringthe yearwithvestingperiodsattheendofthefinancial years2023and2024.Ifthevestingconditionsaremet eachPerformanceRightcanbeexercisedintooneFully PaidOrdinaryShareattheholder’sdiscretionuntilthe expirydateof6June2037.ThePerformanceRights wereissuedtoemployeesoftheCompanyunderthe Company’sRightsPlanandformpartofthenewLong TermVariableRemuneration(LTVR)oftheemployees. PerformanceRightsissuedtoKMP’sareincludedin this balance. Afurther1,175,618PerformanceRightsweregranted duringtheyearrelatingtothe30June2022vesting periodand364,000werecancelledonterminated employees. 359,000PerformanceRightswereissuedandvested immediatelyfromtheplanrelatingtoashort-term incentive.Thesewereexercisedduringtheyearinto ordinaryshares. 3,526,620PerformanceRightsvestedduringtheyear after meeting vesting criteria for the measurement period to30June2021and3,165,120wereexercisedinto ordinaryshares.4,310,330PerformanceRightsrelating tomeasurementperiodto30June2021wereforfeited afternotachievingvestingcriteria.ThisincludesKMP PerformanceRightsdetailedabove. paidon30November2022.Thisdividendhasnotbeen providedforinthisfinancialreport. ENVIRONMENTAL REGULATIONS Acrow’soperationsarenotsubjecttosignificant environmentalregulationsundertheCommonwealth ofAustraliaandState/Territorylegislation.TheBoard believesthatAcrowhasadequatesystemsinplaceto manageitsenvironmentalresponsibilitiesandisnot awareofanybreachofregulations. TheGroupisalsosubjecttoenvironmentalregulation inrespectofitsexplorationactivitiesinGhanabutnot awareofanybreachofthoseregulations. NO OFFICERS ARE FORMER AUDITORS NoofficeroftheCompanyhasbeenapartnerinanaudit firm,oradirectorofanauditcompany,thatisanauditor oftheCompanyduringtheyearorwassuchapartner orDirectoratatimewhentheauditfirmortheaudit companyundertookanauditoftheCompany. NON-AUDIT SERVICES Allnon-auditservicesweresubjecttothecorporate governanceproceduresadoptedbytheGroupand havebeenreviewedbytheAuditandRiskCommittee to ensure that they do not impact the integrity and objectivityoftheauditor. Allthenon-auditservicesprovideddonotundermine the general principles relating to auditor independence assetoutinAPES110CodeofEthicsforProfessional Accountants,astheydidnotinvolvereviewingor auditingtheauditor’sownwork,actinginamanagement ordecision-makingcapacityfortheGroup,acting asanadvocatefortheGrouporjointlysharingrisks and rewards. Detailsoftheamountspaidorpayabletotheauditorof the Group, Grant Thornton and their related practices for auditandnon-auditservicesduringtheyeararesetin note27. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS TherewerenosignificantchangesintheGroup’sstate of affairs. REMUNERATION REPORT InformationonAcrow’sremunerationframeworkandthe outcomes for the Group are included in the Remuneration ReportsectionofthisAnnualReport. Duringtheyear,845,090performancerightswereissued toKMP’sundertheCompany’sRightsPlan. Acrow Annual Report 202220 Balanceofoutstandingrightsandoptionsasatyearend: Performance rights Options Quantity outstanding Weighted average exercise price Expiry date 17,184,826 6,860,000 Nil 31July2035to 6 June2037 $0.47 13December2022 to16July2024 Loanfundedoptions 2,194,500 $0.20 26March2023 Forfurtherdetails,refertonote29ofthisAnnualReport. LIKELY DEVELOPMENTS AND EXPECTED RESULTS Forinformationaboutlikelydevelopmentsandexpected resultsintheoperationsoftheCompany,refertothe Chairman’sandManagingDirector’sReportsonpages2 to6ofthisAnnualReport. INDEMNIFICATION OF DIRECTORS AND OFFICERS UnderthetermsofArticle35oftheCompany’s Constitution,andtotheextentpermittedbylaw,the CompanyhasindemnifiedthedirectorsoftheCompany namedinthisDirectors’report,theCompanySecretaries, andotherpersonsconcernedinortakingpartinthe managementofAcrow.Theindemnityapplieswhen personsareactingintheircapacityasofficersofthe Companyinrespectof: ■ Liabilitytothirdparties(otherthantheCompanyor relatedbodiescorporate),iftherelevantofficerhas actedingoodfaith;and ■ Costsandexpensesofsuccessfullydefendinglegal proceedingsinwhichreliefundertheCorporations Act 2001isgrantedtotherelevantofficer. The Group has not made any indemnity payment during theyear. INSURANCE PREMIUMS Duringthefinancialyear,theCompanypaidapremium of$229,896excludingGSTforDirectors’andOfficers’ LiabilityInsurancepolicy.Theinsuranceprovidescover fortheDirectorsnamedinthisDirectors’Report,the CompanySecretary,andofficersandformerDirectors andofficersoftheCompany.Theinsurancealsoprovides coverforpresentandformerDirectorsandofficersof othercompaniesintheGroup. CORPORATE GOVERNANCE STATEMENT This statement outlines the main corporate governance practicesinplacethroughoutthefinancialyearandcan bereferredtoontheAcrowGroupwebsite:https://www. acrow.com.au/investors/ EVENTS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR EquipmentfinanceandTradefinancefacilitylimits toreverton30September2022from$20,000,000 to$22,000,000andfrom$8,000,000to$6,000,000 respectively,peragreementmadeon10June2022. Anewloanagreementforcapitalpurchaseswasdrawn downinJuly2022.Theloanamountis$4,125,000, maturesin3yearsfromcommencementdateand repayableinfullbyJune2025. Bankguaranteefacilityincreasedfrom$1,400,000 to$1,700,000byreducingtheoverdraftfacilityfrom $6,600,000to$6,300,000. FurtherEquipmentfinanceloansof$3,832,596were drawn,repayableinfullatendofthreeyearsandTrade financeloansof$1,688,639weredrawninandrepayable infullwithin180days. Aninsurancepremiumfinanceloanof$1,201,539.53 wasdrawnon22August2022repayableinfullby 22July2023. On23August2022theDirectorsdeclareda60% frankeddividendof1.5centspersharetobepaidon 30 November2022.DividendReinvestmentPlanis availableforelection.Thedividendhasnotbeenprovided forinthisfinancialreportasitwasnotdeclareduntil after30June2022. Directors’ Report for the year ending 30 June 2022Acrow Annual Report 202221 Otherthanthemattersnotedabove,therehasnotarisen intheintervalbetweentheendofthefinancialyearand thedateofthisDirectors’report,anyitem,transaction, oreventofamaterialandunusualnaturelikely,inthe opinionofthedirectorsoftheCompany,tosignificantly affecttheoperationsofAcrow,theresultsofthose operations,orthestateofaffairsofAcrowinfuture financialyears. ROUNDING OF AMOUNTS AcrowFormworkandConstructionServicesLimited isacompanyofthekindreferredtointheAustralian SecuritiesandInvestmentsCommission(ASIC) Corporations(RoundinginFinancial/Directors’Reports) Instrument2016/191,dated24March2016andin accordancewiththatLegislativeInstrument,amountsin theConsolidatedFinancialStatementsandthisDirectors’ Reporthavebeenroundedofftothenearestdollar, unlessstatedotherwise. LEAD AUDITOR’S INDEPENDENCE DECLARATION Theleadauditor’sindependencedeclarationmade undersection307CoftheCorporationsAct2001isset out on page 22 of the Annual Report and forms part oftheDirectors’Reportforthefinancialyearended 30June2022. SignedinaccordancewitharesolutionoftheDirectors: Peter Lancken Chairman Sydney,27September2022 Steven Boland Director,ChiefExecutiveOfficer Sydney,27September2022 Acrow Annual Report 202222 Grant Thornton Audit Pty Ltd Level 17 383 Kent Street Sydney NSW 2000 Locked Bag Q800 Queen Victoria Building NSW 1230 T +61 2 8297 2400 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 2022, I declare that, to the best of my knowledge and belief, there have been: a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b 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, 27 September 2022 www.grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. ‘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 Limited is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are 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 another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. #7491071v4w Auditor’s Independence Declaration for the year ending 30 June 2022Acrow Annual Report 2022 Remuneration Report – Audited fortheyearending30June2022 23 Letter from the Chair of the 1 Remuneration Committee IamdelightedtobringyouthisRemunerationReport oftheAcrowGroupwhichoutlineskeyaspectsof theremunerationpolicyandframeworkandthe remunerationawardedthisyear. Theinformationprovidedinthisreporthasbeenprepared basedontherequirementsoftheCorporationsAct 2001andtheapplicableaccountingstandardsandhas been audited. The Board provides guidance and oversight to theremunerationstrategyandhasestablisheda Remuneration&NominationCommitteetoensure the remuneration strategy attracts and retains quality directorsandexecutives,fairlyandresponsibly rewardsthem,isequitableandalignedtoshareholders’ interests, andcomplieswiththelawandhighstandards ofgovernance. TheRemunerationCommitteereviewsexecutive remunerationtoensurethatitcontinuestoalignwith Acrow’sstrategy,motivatesmanagement,reflectsmarket bestpracticeandsupportthedeliveryofsustainable long-termreturnstoshareholders.Aspartofthereview process,wewillcontinuetoengagewithspecialised advisorsandmajorshareholders. Theremunerationreportreceivedoverwhelmingsupport fromshareholdersatthe2021AGMwith99.36%ofvotes infavourincludingproxy’sdiscretionof1.56%. DuringtheFY2022reportingperiod,theRemuneration Committeehasfocussedontheperformanceof executivesindeliveringexpectedoutcomes.Wehave also engaged external advisors to support the committee to identify those areas of remuneration policies, proceduresandpracticesthatwillrequireongoing changeandimprovement. Melanie Allibon IndependentNon-ExecutiveDirector ChairoftheRemunerationCommittee 2 Scope of the Remuneration Report and Individuals Classed as KMP TheRemunerationReportsetsouttheprescribedkey managementpersonnel(KMP)remunerationinformation anddetailsinaccordancewithsection300Aofthe CorporationsActandassociatedregulations,including policies, procedures, governance, and factual practices asrequired. Inaddition,AcrowFormworkandConstructionServices Limited(Acrow,theCompany)hasdecidedtosetout such further information as shareholders may require for themtoobtainanaccurateandcompleteunderstanding oftheCompany’sapproachtotheremunerationofKMP. KMParethenon-executivedirectors,theexecutive directorsandemployeeswhohaveauthorityand responsibilityforplanning,directingandcontrollingthe activities of the consolidated entity, directly or indirectly duringanypartofthefinancialyear.Onthatbasis,the followingroles/individualsareaddressedinthisreport: Non-executive Directors (NEDs) ■ MrPeterLancken,independentnon-executive Chairmansince27March2018. ■ MrDavidMoffat,independentnon-executivedirector since19September2019,ChairofRemuneration Committeefrom6October2020to16February2022. ■ MsMelanieAllibon,independentnon-executive directorfrom1September2021,Chairof RemunerationCommitteefrom17February2022. ■ MsLaurieLefcourt,independentnon-executive directorsince1October2021,ChairofAudit&Risk Committeefrom23November2021. ■ MrGreggTaylor,independentnon-executivedirector since11August2017,ChairoftheAudit&Risk Committeesince6thOctober2020,resignedon 22 November2021. Senior Executives Classified as KMP During the Reporting Period ■ MrStevenBoland,ChiefExecutiveOfficer(CEO)& ExecutiveDirectorsince27March2018. ■ MrAndrewCrowtherChiefFinancialOfficer(CFO) since8July2019. ■ MsMargaretProkop,ExecutiveDirectorsince 31 August2018,retiredon31December2021. 3 Context of KMP Remuneration for FY2022 and into FY2023 – unaudited 3.1 Context for Remuneration Governance during FY2022 The KMP remuneration structures that appear in this reportarelargelythosethatprevailedoverFY2022,asis requiredbyregulation,butalsoaddressexpectationsfor FY2023,tosomeextent. The Board has further developed remuneration governance, policies and practices applied to KMP oftheCompany,aswellasotheremployeesasthe businesshasandcontinuestomature.Thefollowing outlinesimportantcontextforthedecisionsthatwere madeinrelationtoremunerationfor/duringFY2022,the outcomesofwhicharepresentedinthisreport. Acrow Annual Report 202224 ■ Atotalof7,901,708performancerightswereissued to executives and senior managers in the 12 months to30June2022forthe2023and2024years.The issueshavethree-yearmeasurementperiods. ■ Atotalof1,175,618performancerightswereissued toexecutivesandseniormanagersand364,000 cancelledinthe12monthsto30June2022 forthe2022year.Thisissuehadathree-year measurement period. ■ Atotalof359,000performancerightswereissued outoftheLTVRplantoseniorexecutivesandsenior managersrelatingtoshorttermincentive.These rightswerevestedimmediatelyandallexercisedby 30June2022. ■ TheCompanyisfocussedondeliveringvaluefor shareholdersbyexecutingonstrategyincluding: – Becomingtheleadingengineeredformworksales and hire equipment solutions provider in Australia 4.2 Remuneration Committee Charter TheRemunerationCommitteeCharter(theCharter) governstheoperationoftheRemunerationCommittee (theCommittee).ItsetsouttheCommittee’sroleand responsibilities,composition,structureandmembership requirements.ThepurposeoftheCommitteeistoassist theBoardby: ■ Establishingappropriateprocessesregardingthe reviewoftheperformanceofdirectors,committees and the Board, and implementing them, ■ Reviewingandmakingrecommendationstothe Boardinrelationtotheremunerationpackages ofSeniorExecutivesandnon-executivedirectors, equity-basedincentiveplansandotheremployee benefitprograms, ■ Developingpolicies,proceduresandpracticesthat willallowtheCompanytoattract,retainandmotivate highcalibreexecutives,and – Becometheleadingengineeredsolutionsprovider ■ Ensuringaframeworkforaclearrelationshipbetween totheAustralianIndustrialServicesmarket keyexecutiveperformanceandremuneration. – Concentratingonprofitableorganicgrowth – Activelypursuingstrategicallysensible acquisitionstoaccelerateprofitablegrowth – TargethighROIorganicgrowthopportunities across all states 4 Overview of Acrow’s Remuneration Governance Framework & Strategy 4.1 Transparency and Engagement TheCompanyseeksinputregardingthegovernance ofKMPremunerationfromawiderangeof sources, including: ■ Shareholdersandotherstakeholders, ■ RemunerationCommitteeMembers, ■ Externalremunerationconsultants(ERCs), ■ Other experts and professionals such as tax advisors andlawyers,and ■ Companymanagementtounderstandrolesand issuesfacingtheCompany. ThefollowingoutlinesasummaryofAcrow’s RemunerationFramework,includingpoliciesand practicestotheextentdeveloped.Shareholderscan accessanumberoftherelateddocumentsbyvisitingthe investorsportalontheCompanywebsitewww.acrow. com.au.Itisrecommendedthatshareholders,proxy advisors and other interested parties consider all the availableinformation. TheCommitteehastheauthoritytoobtainoutsidelegal or other professional advice or assistance on any matters withinitstermsofreference. Acrowrecognisestheimportanceofensuringthatany recommendationsgiventotheCommitteeprovidedby remuneration consultants are provided independently ofthosetowhomtherecommendationsrelate.Further informationabouttheparametersunderwhichexternal remunerationconsultantsareengagedisprovidedbelow. 4.3 Senior Executive Remuneration Policy TheCompany’sseniorexecutiveremunerationpolicy maybesummarisedasfollows: ■ Remunerationforseniorexecutivesshouldbe composedof: – FixedPackageinclusiveofsuperannuation, allowances,benefitsandanyapplicablefringe benefitstax(FBT), – Variableremunerationwhichisat-risk,creating opportunityfortheCompanytopaylessthan thepotentialvariableremunerationwhen performanceexpectationshavenotbeenmet,and whichispartlyanincentivetorewardexecutives formeetingorexceedingexpectations,including: • ShortTermIncentive(STI)orBonus opportunitywhichprovidesarewardfor performanceagainstannualobjectives,and • LongTermVariableRemuneration(LTVR) whichprovidesanequity-basedrewardfor performance against indicators of shareholder Remuneration Report – Audited for the year ending 30 June 2022Acrow Annual Report 202225 benefitorvaluecreation,overamulti-year period, and – Intotalthesumoftheelementswillconstitutea totalremunerationpackage(TRP). ■ Bothinternalrelativitiesandexternalmarketfactors shouldbeconsidered, ■ Totalremunerationpackages(TRPs,whichinclude FixedPackageandincentives)shouldbestructured withreferencetomarketpractices,thepracticesof competitors for talent, and the circumstances of the Companyatthetime, ■ Remunerationwillbemanagedwithinarangeto allowfortherecognitionofindividualdifferencessuch asthecalibreoftheincumbentandthecompetency withwhichtheyfulfilarole(arangeof+/-20%is specifiedinlinewithcommonmarketpractices),and ■ Terminationbenefitswillgenerallybelimitedtothe defaultamountallowedforundertheCorporations Act(withoutshareholderapproval). Changestoremunerationresultingfromannualreviews aregenerallytobedeterminedinrelationto: ■ externalbenchmarking,and/ormarketmovements, ■ whethercurrentremunerationfortheincumbent isaboveorbelowthepolicymidpoint/benchmark –thosebelowthemidpointwilltendtoreceive higher increases, ■ thecompetenceoftheincumbentinfulfillingtheirrole whichdeterminestheirpositioningwithinthepolicy range–highercalibreincumbentsareintendedtobe positioned higher in the range, and ■ anychangestointernalrelativitiesrelatedtorole/ organisation design that have occurred since the previouslyreview. 4.4 Non-executive Director Remuneration Policy TheNon-executiveDirectorremunerationpolicyapplies tonon-executivedirectors(NEDs)oftheCompanyintheir capacityasdirectorsandasmembersofcommittees, andmaybesummarisedasfollows: ■ Remunerationmaybecomposedof: – Boardfees, – Committeefees, – Superannuation, – Otherbenefits,and – Equity(ifappropriateatthetime) ■ Remunerationwillbemanagedwithintheaggregate feelimit(AFL)orfeepoolapprovedbyshareholders oftheCompany,notingthatequitydoesnotcount towardstheAFLunlesscashremunerationis sacrificedforagrantofequity,refersection9.The companyhasoperatedundertheAFLthroughout the year, ■ TheBoardmayseekadjustmenttotheAFLinthe caseoftheappointmentofadditionalNEDs,orshould theAFLbecomeinsufficienttoattractorretainthe appropriatecalibreofNEDs, ■ Remunerationshouldbereviewedannually, ■ Committeefeesmaybeusedtorecogniseadditional contributionstotheworkoftheBoardbymembers ofcommitteesincircumstancesthattheworkloadof the Board is not equally shared, and ■ TheBoardChairfeewillbesetasamultipleofthe feespayabletootherNEDs,inrecognitionofthe additionalworkloadassociatedwiththisrole. 4.5 Short-Term Incentive Policy Theshort-termincentivepolicyoftheCompanyis that an annual component of executive remuneration shouldbeat-riskandallowtheCompanytomodulate thecostofemploymenttoalignwithindividualand Companyperformancewhilemotivatingvaluecreation for shareholders: ■ TheSTIshouldbepaidincashanddeferralshould not apply since there is a separate component of remuneration(theLTVR)whichisintendedtoaddress long term outcomes, ■ Non-executivedirectorsareexcluded from participation, ■ Aterminationofemploymentwilltriggeraforfeiture ofsomeorallofunearnedSTIentitlements depending upon the circumstances of the termination.TheBoardretainsdiscretiontotriggeror accelerate payment or vesting of incentives provided thelimitationonterminationbenefitsasoutlinedin theCorporationsActarenotbreached,and ■ Shorttermawardsarelinkedtothemaindriversof valuecreationatthegroup,businessunitorindividual level,asmaybeappropriatetotheroleandsubjectto Boarddecision. Acrow Annual Report 202226 4.6 Long-Term Incentive Policy Thelong-termincentivepolicyoftheCompanyisthatacomponentofremunerationofexecutivesshouldbeat-risk andlinkedtoequityintheCompanytoensurethattheinterestsofexecutivesarealignedwiththoseofshareholders, andshareriskwithshareholders: Long Term Variable Remuneration Plan (LTVR) Aspect Purpose FormofEquity Plan Rules, Offers and Comments TheLTVRPlan’spurposeistoprovideanelementofat-riskremunerationthat constitutespartofamarketcompetitivetotalremunerationpackageandaimsto ensurethatSeniorExecutiveshavecommonlysharedgoalsrelatedtoproducing relativelyhighreturnsforShareholders.OtherpurposesoftheLTVRPlanare toassistSeniorExecutivestobecomeShareholders,provideacomponentof remunerationtoenabletheCompanytocompeteeffectivelyforthecalibreoftalent requiredforittobesuccessfulandtohelpretainemployees,therebyminimising turnoverandstabilisingtheworkforcesuchthatinperiodsofpoorperformancethe costislesser(appliestonon-marketmeasuresunderAASB2). Asatbalancedate,theCompanyhadOptionsandLoanfundedsharesforthe purposesoftheLTVRoutstandingalthoughnonewereissuedintheyear. Thecurrentplaninoperationatbalancedateincludestheabilitytograntthe followingRightstoEligibleEmployeeswhichincludesDirectorsandemployeesas nominatedbytheBoard: ■ ShareAwards, ■ PerformanceRights,whicharesubjecttoperformancerelatedvesting conditions,andwhichmaybesettleduponexercisebynewissuesoronmarket purchase of ordinary fully paid Shares, ■ Options,whicharesubjecttoanexerciseprice,andwhichtypicallyhaveno intrinsicvaluewhengranted(exercisepriceisaroundtheShareprice),creating anincentivetoincreaseSharepriceandgrowshareholdervalue.TheOptions maybesettledas“CashlessExercise”inwhichcaseonexerciseoftheOptions theCompanywillonlyallotandissueortransferthatnumberofPlanShares totheParticipantthatareequalinvaluetothedifferencebetweentheExercise PriceotherwisepayableinrelationtotheOptionsandthethenmarketvalueof thePlanSharesasatthetimeoftheexercise.Optionsmayalsobesubjectto performance related vesting conditions, and ■ LoanfundedsharesandsharepurchaseLoans,wherebytheCompanyprovides anon-recourse,interestfreeloantoexecutivestoacquirefullypaidordinary shares,withanassociatedobligationtorepaythelesseroftheloanamount andthevalueoftheSharesattheendofthetermoftheloan.Thisfunctions effectivelythesameasanOption,withnointrinsicvalueatthetimethe arrangementismade,howeverparticipantsholdSharesatanearlierstage.The proceedsoftheloanmustbeusedtobuyshares.Astheonlyrecourseonthe loansisthesharesandtherearevestingconditions,thearrangementhasbeen accountedforasshareoptions,asrequiredunderaccountingstandards. No dividends accrue to unvested Rights or Options, and no voting rights are attached,howeverdividendsdoaccruetovestedLoanFundedShares(alongwith votingentitlements)whichmustbeputtowardsrepaymentoftheLoanifany amountisoutstanding. Remuneration Report – Audited for the year ending 30 June 2022Acrow Annual Report 202227 Long Term Variable Remuneration Plan (LTVR) Aspect PlanLimit LTIValue Measurement Period Plan Rules, Offers and Comments UnlesspriorShareholderApprovalisobtained,thenumberofAwardswhichmay begrantedunderthisPlan(assumingallOptionsandPerformanceRightswere exercised)mustnotatanytimeexceedinaggregate10%ofthetotalIssuedCapital oftheCompanyatthedateofanyproposednewAwards. TheBoardretainsdiscretiontodeterminetheLTVRtobeofferedeachyear,subject toshareholderapprovalinrelationtoDirectors,whentheRightsaretobesettledin theformofanewissueofCompanyshares.TheBoardmayalsoseekshareholder approvalforgrantstoDirectorsinothercircumstances,atitsdiscretion. FY2022 Invitations Eligibleemployeesweregranted7,901,708performancerightsoverfourtranches withatotalfairvalueof$3,325,303.Thesehavepotentialvestingsin2023 and 2024. Eligibleemployeesweregranted1,175,618performancerightsovertwotranches withatotalfairvalueof$436,229.Thesehavepotentialvestingsin2022. Selectedseniorexecutivesandmanagerswereissued359,000performancerights relatingtoshorttermincentiveswithatotalfairvalueof$150,780. Three-yearMeasurementPeriodscombinedwithannualgrantswillproduce overlappingcyclesthatwillpromoteafocusonproducinglongtermsustainable performance/valueimprovementandmitigatestheriskofmanipulationand short-termism(continuousimprovement).Becauseofthetimingofgrants,thelife oftheRightmaybelessthan3yearsattimes,howeverthisdoesnotimpactthe MeasurementPeriodoverwhichperformanceismeasured. Performance,Vestingand ForfeitureConditions TheBoardhasdiscretiontosetVesting,PerformanceandForfeitureConditionsand foreachInvitation.Whensuchconditionsarenotmet,theentitlementlapses. FY2022 Invitations Exceptasindicatedbelow,aparticipantmustremainemployedbytheCompany duringtheMeasurementPeriodandtheperformanceconditionsmustbesatisfied forLTVRtovest. Retesting RetestingisnotcontemplatedunderthePlanRules. AmountPayableforGrants ThetargetvalueofLTVRisincludedinassessmentsofremunerationbenchmarking andpolicypositioning.Noamountispayablebyparticipantsforgrantsof PerformanceRights.AnAcquisitionPricewillapplyinrespectofgrantsofLoan FundedShares(withanaccompanyingloan)andmayalsoapplytograntsofShare Awards,whichmayormaynothaveVestingConditions.Anyloanmustberepaid priortotheendoftheLoanTerm,uptotheMarketValueoftheLoanFundedShares (non-recourse). FortheFY2018grant,LoanFundedShareswereofferedatapriceof20ceach, beingthesharepriceatthetimeofthegrantcalculation,andaloanforthisamount wasprovidedtotheParticipantforthisamountinrespectofeachLoanFunded Sharesacquired.ThesesharesvestedinMarch2020withonly280,500exercisedto balancedate. NonewLoanFundedShareshavebeengrantedsinceFY2019. Acrow Annual Report 202228 Long Term Variable Remuneration Plan (LTVR) Aspect Plan Rules, Offers and Comments ExerciseofGrants DisposalRestrictionsetc. CessationofEmployment ParticipantswillberequiredtosubmitanExerciseNoticeinrespectofPerformance RightsandOptions,inordertoconvertthemtoShares,aswellasthepaymentof theExercisePriceinrespectofeachOptionexercised.Noamountispayableby KMPontheexerciseofPerformanceRights. Optionsand/orPerformanceRightsgrantedunderthisPlanmaynotbeassigned, transferred,encumberedwithaSecurityInterestinoroverthem,orotherwise disposedofbyaParticipant,unlesstheconsentoftheBoardisobtained,ordueto theforceoflawinthecaseofthedeathofaParticipant.TheBoardhasdiscretion todeterminethedisposalrestrictionsattachingtoShareAwards,LoanFunded SharesorPlanShares(resultingfromvestingandexerciseofgrants)aspartofthe Invitationterms. Intheeventofcessationofemploymentinthecircumstancesofa“BadLeaver” (resignationorterminationforcause),allunvestedentitlementswillbeforfeited. Inothercircumstances,thetreatmentofunvestedawardswillbedealtwithas determinedbytheBoard. InthecaseofoutstandingloansrelatedtoLoanFundedShares,aBadLeaver mustrepaytheloanbythedateofthecessationofemployment.Inothercasesof termination,theParticipantwillhavesixmonthsfromthedateofthetermination, torepaytheloan.IftheserequirementsarenotsatisfiedtheLoanShares are surrendered. ChangeofControlofthe Company(CoC) IfintheopinionoftheBoardachangeofcontroleventhasoccurred,orislikely to occur; a) PerformanceRightsgrantedwillvesttotheextentthattheperformanceperiod haselapsed,andtotheextentperformanceconditionshavebeenmet(may involveapro-ratacalculation),withtheremainderlapsing, b) Optionsmaybesubjecttoacceleratedvestinginthesolediscretionofthe Board, and c) ShareAwardsorLoanFundedShareswhichdonotvestwillautomaticallybe surrenderedbytheParticipant,andanythatdonotlapse,andwhicharesubject toanoutstandingloanwillbesubjecttotherequirementoftheloanbeingrepaid bythedateoftheCoC. FraudulentorDishonest Actions IftheBoardtakestheviewthataParticipanthasactedfraudulently,dishonestly, orwilfullybreachestheirdutiestothegroup,theBoardhasdiscretiontodetermine thatunvestedorunexercisedawardsareforfeited. ■ TheLTVRshouldbebasedonPerformanceRights orOptions(whichmayincludeLoanFundedShares arrangements)thatproduceabenefitforParticipants whenperformanceobjectivesaremet(whichmay includeincreasingShareprice), ■ The measurement period for long term incentives shouldbeatleasttwoyears, ■ Aterminationofemploymentwilltriggeraforfeiture ofsome,orallofthelong-termincentivesheldbyan executiveinrespectofwhichperformanceconditions andhurdleshavenotyetbeenmet,dependingupon thecircumstancesofthetermination.TheBoard retains discretion to trigger or accelerate payment or vesting of incentives provided the limitation on terminationbenefitsasoutlinedintheCorporations Actarenotbreached. 4.7 Securities Trading Policy TheCompany’sSecuritiesTradingPolicyappliesto DirectorsandexecutivesclassifiedasKMP(including theirrelativesandassociates),thoseemployeesworking closelywithKMP,employeesnominatedbytheBoard, oranyotheremployeeholdinginsideinformation.Itsets outtheguidelinesfordealinginanytypeofCompany Remuneration Report – Audited for the year ending 30 June 2022Acrow Annual Report 202229 Securitiesbypersonscoveredbythepolicy,andthe requirementfortheCompanytobenotifiedwithin 2 businessdaysofanydealing.Italsosummarisesthe lawrelatingtoinsidertradingwhichappliestoeveryone atalltimes.Underthecurrentpolicy,thosecoveredby thepolicymaynottradeduringa“blackoutperiod”or whentheyholdinsideinformation(subjecttoexceptional circumstances arrangements, see the policy on the Companywebsite).Thefollowingperiodsinayearare “blackoutperiods”asdefinedinthepolicy: ■ 2weekspriortothereleaseoftheCompany’shalf year results, ■ Fromthefinancialyearbalancedateuntil24hours followingthereleaseoftheCompany’spreliminary fullyearresults(Appendix4E), ■ Within24hoursofreleaseofpricesensitive informationtothemarket,and ■ anotherdateasdeclaredbytheBoard(“ad-hoc”). 4.8 Executive Remuneration Engagement Policy and Procedure TheCompanyhasadoptedanexecutiveremuneration engagement policy and procedure to manage the interactionsbetweentheCompanyandexternal remuneration consultants, to ensure their independence andthattheRemunerationCommitteewillhaveclarity regardingtheextentofanyinteractionsbetween managementandtheexternalremunerationconsultants. ThispolicyenablestheBoardtostatewithconfidence whethertheadvicereceivedhasbeenindependent,and whythatviewisheld.ThePolicystatesthatexternal remunerationconsultantsaretobeapprovedand engagedbytheBoardbeforeanyadviceisreceived,and thatsuchadvicemayonlybeprovidedtoanon-executive director.Interactionsbetweenmanagementandthe externalremunerationconsultantsmustbeapprovedand willbeoverseenbytheRemunerationCommitteewhen appropriate.Refertosection13. 4.9 Variable Executive Remuneration – The Short-Term Incentive Bonus Plan Short Term Incentive Plan (STIP) Aspect Purpose Measurement Period AwardOpportunities Performance Assessments andAwardOutcomes AwardPayment Plan Rules, Offers and Comments Theshort-termincentivebonusplan’spurposeistogiveeffecttoanelementof remuneration.Thiselementofremunerationreinforcesaperformancefocussed culture,encouragesteamworkandco-operationamongexecutiveteammembers andmaintainsastableexecutiveteambyhelpingretainkeytalent.Theseobjectives aimtobeachievedbyasimpleplanthatrewardsparticipantsfortheirperformance duringa12-monthperiod. TheCompany’sfinancialyear(12months).Fortheyearended30June2022,the measurementperiodwasfrom1July2021to30June2022. TheCEOwasofferedanopportunityofupto50%ofFixedPackagewhichis basedonachievingarangeofmeasurableKPI’swhicharepredominatelybased onachievingProfitbeforeTaxtargetsandstrategicgoalsandmeetingsafety standards.ForotherKMPExecutives,theirindividualKPI’saredeterminedbythe CEOincollaborationwiththeBoard. PerformanceassessmentsareundertakenbytheCEOinrelationtootherSenior ExecutiveswhothenmakerecommendationstotheBoard,andbytheBoardin relationtotheCEO.TheBoardhasdiscretiontovarytherecommendationsofthe CEOindeterminingfinalawardoutcomes. Assessmentsandawarddeterminationsareperformedfollowingtheendofthe MeasurementPeriodandtheauditingofCompanyaccounts.Awardswillgenerally bepaidincashintheSeptemberfollowingtheendoftheMeasurementPeriod. TheyaretobepaidthroughpayrollwithPAYGtaxdeductedasappropriate.There arelimitedsituationswhereawardsmaybesatisfiedthroughtheissueofequity. Deferralhasnotbeenintroducedduetothemixofshorttermandlong-term incentivesbeingappropriatelyweighted. Acrow Annual Report 202230 Short Term Incentive Plan (STIP) Aspect Plan Rules, Offers and Comments CessationofEmployment DuringaMeasurement Period Intheeventofcessationofemploymentduetodismissalforcause,allentitlements inrelationtotheMeasurementPeriodareforfeited. Intheeventofcessationofemploymentduetoresignation,allentitlementsin relationtotheMeasurementPeriodareforfeited,unlesstheterminationisclassified as“goodleaver”inthediscretionoftheBoard,inwhichcasetheBoardmaymake anawardatthetimeofthetermination,orassessoutcomesatthenormaltime, followingthetermination. ChangeofControl IntheeventofaChangeofControlincludingatakeover,theBoardhasdiscretion regardingthetreatmentofshort-termincentivebonusopportunities. Fraud,GrossMisconduct etc. IftheBoardformstheviewthataParticipanthascommittedfraud,defalcationor grossmisconductinrelationtotheCompanythenallentitlementsinrelationtothe MeasurementPeriodwillbeforfeitedbythatparticipant. 4.10 Variable Executive Remuneration – Long Term Variable Remuneration Plan (LTVR) – Performance Rights TheLTVRplanisanannualperformancerightsplantowhichselectedexecutivesandKMPareinvitedtoparticipate attheBoard’sdiscretion.TheCompanycurrentlyhastwoLTVRplansrunningwhichsharethesamemethodbutdiffer slightlyintheirhurdlesandvestingcriteriadetailedinthetablebelow.Allofthe2023and2024plansweregrantedin theformofperformancerightsdirectlylinkedtotheperformanceoftheCompany,thereturnsgenerated,andrelative increasesinshareholderwealth.Thisstructurewasusedtoensureappropriatealignmenttoshareholdervalueovera specifiedtimeframe. Long Term Variable Remuneration Plan (LTVR) Aspect Instrument Purpose Plan limit Plan Rules, Offers and Comments Performancerightsbeingarighttoreceiveasharesubjecttoperformanceand vestingconditions. Tomotivateexecutivestoachievethelong-termperformancetargets. Performancerightsissuedfor2023and2024relyonCorporationsActSection708 relief–“SeniorManagers”. Performancerightsissuedoutstandingfor2022wereissuedunderClassOrder exemption14/1000. Remuneration Report – Audited for the year ending 30 June 2022Acrow Annual Report 202231 Long Term Variable Remuneration Plan (LTVR) Aspect LTVRValue Plan Rules, Offers and Comments TheBoardretainsdiscretiontodeterminetheLTVRtobeofferedeachyear 2021 plan vested Themeasurementperiodofthe2021planfinishedon30June2021.The performanceoutcomeresultedin45%ofrightsonissuevesting.60%oftheEPS rightsvestedand40%lapsed,TSRrightsdidnotmeetthresholdperformanceand lapsed.Atotalof3,526,620werevestedduringtheyearwithallbut361,500being exercisedintoordinarysharesasatthedateofthisreport. KMPSteveBolandvested495,900rightsandsubsequentlyexercisedintoshares. 606,100rightsdidnotmeetperformancehurdlesandlapsed. KMPAndrewCrowthervested247,500rightsandsubsequentlyexercisedinto shares.302,500rightsdidnotmeetperformancehurdlesandlapsed. 2022 plan outstanding Duringtheyearanadditional1,175,618performancerightswereissuedtosenior executivesandmanagersatavalueof$436,229.Therewere364,000performance rightscancelledduetoterminationofemployment. Valuationofadditional2022performancerightsusedMonteCarlosimulationwith inputsincluded: ■ Exerciseprice:nil ■ Sharepriceatgrantdateofbetween$0.42and$0.52 ■ Expectedpricevolatilitybetween30%and36%basedoncomparablecompanies ■ Expecteddividendyieldbetween4.7%and5.8% ■ Risk-freeinterestratebetween0.05%and0.08% Thereare8,921,618performancerightsavailableforvestingatthedateof this report. KMPSteveBolandhas1,102,000rightsavailableforvesting. KMPAndrewCrowtherhas550,000rightsavailableforvesting. Short term incentive Therewere359,000performancerightsissuedduringtheyearrelatingtoshortterm incentivesforcertainseniorexecutivesandmanagersatavalueof$150,780.These rightsvestedimmediatelywithnoperformanceconditionsandhavesubsequently beenexercisedintoshares. 2023 plan Invitations Atotalof3,584,434performancerightshavebeengrantedinthe2023planwithnil cancelledatthedateofthisreport. KMPAndrewCrowtherhasbeenissued418,664performancerightsinthisplan withatotalfairvalueof$184,322. Acrow Annual Report 202232 Long Term Variable Remuneration Plan (LTVR) Aspect Plan Rules, Offers and Comments LTVRValue(continued) 2024 plan Invitations Dividends Tranches Atotalof4,317,274performancerightshavebeengrantedinthe2024planwithnil cancelledatthedateofthisreport. KMPAndrewCrowtherhasbeenissued426,426performancerightsinthisplan withatotalfairvalueof$172,576. Valuationof2023and2024performancerightsusedMonteCarlosimulationwith inputsincluded: ■ Exerciseprice:nil ■ Sharepriceatgrantdateof1June2022was$0.48 ■ Expectedpricevolatilitybetween14%and33%–basedon comparable companies ■ Expecteddividendyield5.1% ■ Risk-freeinterestratebetween2.25%and3.6% Nodividendsarepaidoraccruedonunvestedawards 2023 plan: ■ 50%issuemeasuredonEarningspershare(EPS)criteriaspecifically“NPAT/ Weightedaveragenumberofsharesonissue” ■ 50%issuemeasuredonTotalShareholderreturn(TSR)criteria.Thiscompares thesharepriceanddividendsthroughthemeasurementperiodtotheASXsmall industrialsindex. 2024 Plan: ■ 50%issuemeasuredonEarningspershare(EPS)criteriaspecifically“NPAT/ Weightedaveragenumberofsharesonissue” ■ 50%issuemeasuredonTotalShareholderreturn(TSR)criteria.Thiscompares thesharepriceanddividendsthroughthemeasurementperiodtotheASXsmall industrialsindex. Remuneration Report – Audited for the year ending 30 June 2022Acrow Annual Report 202233 Long Term Variable Remuneration Plan (LTVR) Aspect Plan Rules, Offers and Comments Performance hurdles ThevestingoftheTSRPerformanceRightswillbedeterminedbyreferencetothe followingscale,inrelationtotheMeasurementPeriod: Performance Level Company’s Annulised TSR Compared to the Annualised TSR of the ASX Small Industrials total Return Index % of Tranche Vesting StretchandAbove IndexTSR+160%TSRCAGR BetweenTarget and Stretch Target BetweenThreshold and Target Threshold BelowThreshold >130%IndexTSR, <160%TSRCAGR 100% Pro-rata 130%IndexTSR 50% >IndexTSR,<130%TSRCAGR Pro-rata IndexTSR <IndexTSR 0% 0% TSRisthesumofSharepriceappreciationanddividends(assumedtobereinvested inShares)duringtheMeasurementPeriod.Itisannualisedforthepurposesof theabovevestingscale.CAGRisCompoundAnnualGrowthRate.TheCompany’s annualisedTSRwillbecomparedwiththeannualisedTSRoftheIndex. ThevestingofEPSPerformanceRightswillbedeterminedbyreferencetothe followingscale,inrelationtotheMeasurementPeriod: Performance Level Earnings Per Share (EPS) CAGR StretchandAbove BetweenTarget and Stretch Target BetweenThreshold and Target Threshold BelowThreshold 20% >10%,<20% 10% >8%,<10% 8% <8% % of Tranche Vesting 100% Pro-rata 50% Pro-rata 0% 0% EPSgrowthwillbecalculatedastheCAGRrequiredfortheEPSintheyear immediately prior to the commencement of the Measurement Period to equal theEPSachievedinthefinalyearoftheMeasurementPeriod.TheEPSwillbe calculatedasfollowsforeachyearofthecalculation: Acrow Annual Report 202234 Long Term Variable Remuneration Plan (LTVR) Aspect Plan Rules, Offers and Comments Performance hurdles (continued) NPAT EPS ÷ Time Weighted Average Issued Shares ■ NPATinanyperiodrelatingtotheplanwillbesignedoffbytheBoard.Thiswill alsoinclude“base”capexbudgetedtoachievethebudgetedNPAT. ■ AnycapexacquiredabovebudgetwillrequirethetargetNPATadjustedfor therelevantmeasurementyearsatarequiredreturnof40%weightedpost taxforthetimeavailable(i.e.abovebudgetcapex40%returntimeavailable during year). ■ IfanyM&Aactivityoccurs,theNPATwillbeadjustedinconsultationwith the Board. ■ TheBoardhasdiscretionregardingwhetherornottoapproveadjustments relatingtoNPATateachmeasurementperiod. Options and Loan funded shares granted before FY2021 ConditionsofissueshavebeenincludedinpreviousRemunerationreports.For KMP’sthevestingconditionsincludeminimumserviceperiodofoneyeartofour yearsandvarioussharepricetargetswithexercisepriceof20centsto50cents. AndrewCrowtherhas600,000outof1,200,000unitsofoptions(allwithexercise priceof40centsperunit)vestedbutremainunexercisedaftertwoyearsofservice periodbeforereportingdate.Theremaining600,000unitsconsistoftwofurther tranchesfurtherequaltranchesvestingoverthreeandfouryearsofserviceperiods. Gateway TSRandEPSPerformanceRightsarenotsubjecttoagate,however,vestingabove TargetinanyyearswillbesubjecttotheBoardsdiscretionaryapproval. Measurement Period and vesting dates 2023 Plan:1July2020to30June2023(3years) 2024 plan:1July2021to30June2024(3years) Eachgrantistestedonthegrantperformancehurdlescriteriaattheendofthe measurementperiod. Vestingforeachsuccessfultrancheoccursonlyafterthesignedauditedfinancial statementsarelodgedwiththeAustralianStockExchangerelevanttoeachplan. Retesting RetestingisnotcontemplatedunderthePlanRules. Amountpayableforgrants NoamountispayablebyparticipantsforgrantsofPerformanceRights ExerciseofGrants Performance Assessments andAwardOutcomes AwardPayment ParticipantswillberequiredtosubmitanExerciseNoticeinrespectofvested performancerightsinordertoconvertthemtoShares.EachRighthasaTerm of15 yearsfromtheGrantDateandifnotexercisedwithinthatTermtheRights will lapse. At the end of each performance period, the Remuneration and Nomination Committeeassessestherelevantperformancemeasuresanddeterminesthe extenttowhichtheawardsshouldvest.Paymentismadebytheissuingortransfer of shares. Assessmentsandawarddeterminationsareperformedfollowingtheendofthe MeasurementPeriodandtheauditingofCompanyaccounts.Awardswillgenerally bepaidincashintheSeptemberfollowingtheendoftheMeasurementPeriod. TheyaretobepaidthroughpayrollwithPAYGtaxdeductedasappropriate.There arelimitedsituationswhereawardsmaybesatisfiedthroughtheissueofequity. Deferralhasnotbeenintroducedduetothemixofshorttermandlong-term incentivesbeingappropriatelyweighted. Remuneration Report – Audited for the year ending 30 June 2022Acrow Annual Report 202235 Long Term Variable Remuneration Plan (LTVR) Aspect Plan Rules, Offers and Comments CessationofEmployment DuringaMeasurement Period ChangeofControl Intheeventofcessationofemploymentduetodismissalforcause,allentitlements inrelationtotheMeasurementPeriodareforfeited. Intheeventofcessationofemploymentduetoresignation,allentitlementsin relationtotheMeasurementPeriodareforfeited,unlesstheterminationisclassified as“goodleaver”inthediscretionoftheBoard,inwhichcasetheBoardmaymake anawardatthetimeofthetermination,orassessoutcomesatthenormaltime, followingthetermination. Ifachangeofcontroloccurspriortothevestingofanaward,thentheBoardmay determineinitsabsolutediscretionwhetherallorsomeofaparticipant’sunvested awardvest,lapse,isforfeited,orcontinues. 5 Proforma Executive Remuneration for FY2022 (non-statutory disclosure) – unaudited ThedisclosuresrequiredundertheCorporationsAct(includingregulations)andpreparedinaccordancewith applicableaccountingstandards,donotprovideshareholderswithanunderstandingoftheintendedremuneration inagivenyear.Forexample,theLTVRdisclosedisnotreflectiveoftheremunerationopportunityfortheyearbeing reportedon,duetotherequirementsofAASB2.Therefore,thefollowingtableisprovidedtoensurethatshareholders haveanaccurateunderstandingoftheBoard’sintentionregardingtheremunerationofferedtoexecutivesduring FY2022.Thevaluespresentedreflecttheremunerationforafullyeari.e.ignoringanypart-yearreportingimpact. Position Incumbent Fixed Package including super1 Target STI2 LTVR Opportunity Total Value of Package ExecutiveDirectorand ChiefExecutiveOfficer Steven Boland $553,519 $276,760 $247,922 $1,078,201 ChiefFinancialOfficer AndrewCrowther $327,818 $98,346 $93,706 $519,870 ExecutiveDirector MargaretProkop(resigned 31December2021) $83,345 – – $83,345 1 Packageincludescarallowanceandsuperannuation. 2 WithStevenBoland(CEO),STIiscappedat50%ofhispackage;withAndrewCrowther(CFO)STIiscappedat30%ofhispackagesubject toachievingindividualKPIsandperformancetargets. Acrow Annual Report 202236 d o i r e P 2 2 0 2 Y F l d e t e p m o C e h t f o t c e p s e R n i s e m o c t u O n o i t a r e n u m e R d n a s e v i t n e c n I d e d r a w A / d e t s e V 6 d e t i d u a n U – ) e r u s o c s d l i y r o t u t a t s n o n ( - n o i t a r e n u m e r l a u t c a e h t t a h w i l i f o g n d n a t s r e d n u r a e c a n a t b o o t s r e d o h e r a h s r o f t l u c fi f i d t i l e k a m s d r a d n a t s g n i t n u o c c a d n a s t n e m e r i u q e r e r u s o c s d y r o t u t a t s e h T l i i h c h w o t e m o c t u o e c n a m r o f r e p f o r a e y e h t o t k c a b s e m o c t u o e s e h t s g n i r b e b a t g n w o i l l l o f e h T . d o i r e p g n i t r o p e r n e v g a o t n o i t a e r n i l i e r e w s e v i t u c e x e r o f s e m o c t u o g n i t s e V 5 d o i r e P 1 2 6 8 9 $ , m o r f I T L d e t s e V n o n i e g n a h C g n i r u D e u a V l s e s s o L / s n a G i l e u a V l a t o T R V T L e g a k c a P f o 4 e u a V l % % 3 I T S d e t i e f r o f d e t s e v I T S l a u t c A y r a r o p m e T 2 n o i t a c o l e r 1 r e p u s i g n d u l c n i I T S e g a k c a P d e x i F t n e b m u c n I n o i t i s o P s e m o c t u O I T L d n a I T S . l d e t e p m o c s a w , 7 0 5 5 3 0 1 $ , , 6 5 1 8 0 1 $ % 0 % 0 0 1 , 0 6 7 6 7 2 $ 2 7 0 7 9 $ , , 9 1 5 3 5 5 $ l d n a o B n e v e t S d n a r o t c e r i D e v i t u c e x E r e c fi f O e v i t u c e x E f e h C i – 5 4 3 3 8 $ , – 7 1 9 1 6 $ , , 7 2 0 3 6 4 $ 3 8 2 1 4 $ , % 4 – – % 6 9 – , 6 2 9 3 9 $ – – . 2 2 0 2 Y F e h t f o d n e e h t g n w o i l l l o f e b a y a p d n a d e t a u c a c d r a w a I l l T S l a t o t e h t f o e u a v e h t s l i i s h T 3 , 8 1 8 7 2 3 $ r e h t w o r C w e r d n A r e c fi f O l i i a c n a n F f e h C i ) 1 2 0 2 r e b m e c e D 1 3 5 4 3 3 8 $ , i d e n g s e r ( p o k o r P t e r a g r a M r o t c e r i D e v i t u c e x E . 1 2 0 2 r e b m e v o N n i d e s a e c t a h t n o i t a d o m m o c c a y r a r o p m e t s e d u c n l I 2 . n o i t a u n n a r e p u s d n a e c n a w o l l a r a c s e d u c n l i i d a p e g a k c a P 1 r o f d n a ; i s e r a h s s a d e s c r e x e d n a d e t s e v e r e w s t h g i r e c n a m r o f r e p f o s t i n u 0 0 9 5 9 4 , , l d n a o B n e v e t S r o F . e v o b a e h t n i i l d e s o c s d n e e b e v a h 2 2 0 2 Y F n i i d e s c r e x e d n a d e t s e v t a h t s I T L y n O l 4 . l e u a v t n a r g e h t s s e l g n i t s e v f o e t a d e h t n o e c i r p e r a h s P A W V y a d - 5 e h t y b d e i l , p i t l u m 2 2 0 2 Y F n i d e t s e v t a h t s t h g i r I T L f o r e b m u n e h t s i i s h T 5 . i s e r a h s s a d e s c r e x e d n a d e t s e v e r e w s t h g i r e c n a m r o f r e p s t i n u 0 0 5 7 4 2 , , r e h t w o r C w e r d n A . i l w o e b n e v g e r a 2 2 0 2 Y F r o f s e m o c t u o s u n o b e v i t n e c n i m r e t - t r o h s e h t o t e s i r e v a g t a h t e c n a m r o f r e p f o s t n e m s s e s s a e h t g n d r a g e r s i l i a t e D i g n i t s e t e c n a m r o f r e p h c h w g n i r u d r a e y e h t r o f n o i t a r e n u m e r e h t f o t r a p g n e b s a d e t n e s e r p s i i I T L . e . i , d o i r e p g n i t r o p e r e h t s i i h c h w d n a , l s e t a e r e m o c t u o d r a w a e h t Remuneration Report – Audited for the year ending 30 June 2022Acrow Annual Report 2022 37 7 Performance Outcomes for FY2022 7.1 Company Performance ThefollowingoutlinestheperformanceoftheCompanyovertheFY2016andFY2022periodinaccordancewiththe requirementsoftheCorporationsAct: Corporate Performance Measures FY End Date Revenue Tax Share Price Profit/ (loss) after Change in Share Price Total Dividend per Share3 30June2022 $148,345,521 $15,694,168 30June2021 $105,743,623 $3,962,998 30June2020 $81,681,600 $3,013,023 30June2019 $68,858,910 $4,948,715 30June20181 $15,478,995 $10,510,658 $0.505 $0.375 $0.315 $0.300 $0.290 $0.130 $0.060 $0.015 $0.010 $0.170 30June2017 30June20162 $0 $0 $(613,395) $0.120 $(0.06) $8,468,607 $0.180 n/a $0.024 $0.018 $0.010 $0.015 Nil Nil Nil ST change in Shareholder Value over 1-year value (SP increase + Dividends) Amount $0.154 $0.078 $0.025 $0.025 $0.170 $(0.06) n/a % 41% 25% 8% 9% 142% (33%) n/a 1 Theabove30June2018representsthree-monthsconsolidatedresultsinceAcrow’sacquisitionoftheAcrowHoldingsGroupfromApril18 toJune2018. 2 TheCompanywasnotlistedbetweenJuly2013toApril2016andhencenofurtherhistoricalresultsprovided. 3 Dividendspaidarethecashamount(postfranking). Links Between Performance and Reward 7.2 Including STI and LTVR Determinations long-termmeasurementperiodandvestingconditions thatareyettobecompleted/assessed. TheremunerationofexecutiveKMPisintendedtobe composedofthreepartsasoutlinedearlier,being: ■ FixedPackage,whichisnotintendedtovarywith performance,butwhichtendstoincreaseasthescale ofthebusinessincreases(i.e.following success), ■ STIwhichisintendedtovarywithindicatorsofannual Companyandindividualperformance,and ■ LTVRwhichisalsointendedtodeliveravariable rewardbasedonlong-termmeasuresof Company performance. IfSTIisachieved,itispaidaftertheendofthefinancial perioditrelatedto.Thislevelofpotentialawardwas consideredappropriateundertheSTIprocessasitstood atthetime,andstronglylinkedtoperformance. FollowingtheendofFY2022,reportsontheCompany’s activitiesduringtheyearwerepreparedforthe Board.TheBoardthenassessedtheextenttowhich expectationshadbeenmetorexceededinrelationto theCompanyandeachrole,tocalculatethetotalaward payable.ThisincludedassessedNPAT,underlying EBITDAandEPSgrowth. Duringthereportingperiod,grantsofequityweremade inrelationtotheLTVRschemeaspartofremuneration forFY2022butdidnotvestduetothepresenceofthe Links Between Company Strategy 7.3 and Remuneration TheCompanyintendstoattractthesuperiortalent requiredtosuccessfullyimplementtheCompany’s strategiesatareasonableandappropriatelyvariable cost by: ■ positioningFixedPackages(thefixedelement) aroundrelevantmarketdatabenchmarkswhenthey areundertaken,and ■ supplementingtheFixedPackagewithat-risk remuneration and incentives that motivate executive focuson: – shorttomid-termobjectiveslinkedtothestrategy via annual performance assessments, and – longtermvaluecreationforshareholdersby linkingamaterialcomponentofremunerationto those factors that shareholders have expressed shouldbethelong-termfocusofexecutivesand theBoard,suchassharepriceappreciation. Totheextentappropriate,theCompanylinks strategic implementation and measures of success ofthestrategy, directlytoincentivesinthewaythat performanceisassessed. Acrow Annual Report 202238 e h t d n a r a e y e h t g n i r u d s e g n a h c , r a e y e h t g n i r u d n a p ) l R V T L ( n o i t a r e n u m e r e b a i r a v m r e t - g n o l l e h t r e d n u s t h g i r e c n a m r o f r e p d e t n a r g n e e b e v a h s e e y o p m e d e t c e e s y n O l l l n o i t a r e n u m e r s a d e t n a r g s e i t i u q e f o r e b m u N 1 . 8 y t i u q E P M K 8 r e b m u N 0 3 t a d l e h 2 2 0 2 e n u J s r e h t O / e s a h c r u P ) l a s o p s i D ( d n a d e t s e V i i g n n a m e R d n a d e t s e V d e s i c r e x e n U d e s i c r e x E d e t i e f r o F 2 2 Y F d e t n a r G 1 2 0 2 y l u J 1 r e b m u N t a d l e H . s w o l l o f s a e r a e t a d g n i t r o p e r t a d e h e c n a a b l l : s e v i t u c e x E r e b m u N r e b m u N r e b m u N r e b m u N r e b m u N r e b m u N r e b m u N – – 0 0 0 0 1 5 , , 0 0 0 2 0 1 1 , , 2 6 5 4 2 5 4 , – – – – – – – – 6 5 3 7 9 , 0 8 9 9 7 3 , – – , 0 0 0 0 0 2 1 , , 0 9 0 5 9 3 1 , – – – – , 4 7 5 0 6 2 4 7 0 3 1 , – – – – , 2 5 2 7 7 8 1 1 , – – – – , 5 6 9 5 9 5 – – – – – – – – – – , 8 7 4 9 6 8 0 2 , 5 9 3 6 0 7 , 0 8 9 9 7 3 , 0 0 0 0 0 6 , – – – – – – – 0 0 0 0 0 6 , – – – 0 0 9 5 9 4 , – – – – – – – – – – ) 0 0 9 5 9 4 ( , ) 0 0 1 6 0 6 ( , – – – – – – – – – – – – – – – – – – – – – 0 0 5 7 4 2 , – – – – – – – – – – – – ) 0 0 6 8 0 9 ( , 0 9 0 5 4 8 , – – – – – – ) 0 0 5 7 4 2 ( , ) 0 0 5 2 0 3 ( , 0 9 0 5 4 8 , 2 2 - n u J - 1 0 – – – – – – – – e t a D d e t n a r G 0 0 0 0 1 5 , s e r a h S n a o L – s n o i t p O r e b m u N t n e m u r t s n I e m a N – s e r a h S d e w o r c s E l d n a o B n e v e t S , 0 0 0 4 0 2 2 , – – , 6 2 3 1 5 5 3 , , 0 0 0 0 0 2 1 , – – – – – , 0 0 0 0 0 1 1 , , 7 8 2 1 8 2 1 1 , , 3 1 6 6 4 8 9 1 , i s t h g R e c n a m r o f r e P * s e r a h S d e t c i r t s e r n U s e r a h S d e w o r c s E r e h t w o r C w e r d n A i s t h g R e c n a m r o f r e P s e r a h S d e t c i r t s e r n U s e r a h S n a o L s n o i t p O s e r a h S d e w o r c s E p o k o r P t e r a g r a M i s t h g R e c n a m r o f r e P s e r a h S d e t c i r t s e r n U s e r a h S n a o L s n o i t p O ) 1 2 0 2 r e b m e c e D 1 3 d e n g s e r ( i . s n o i t c i r t s e r l a s o p s d o n i , s e r a h s y r a n d r o p u - d a p i i : s e r a h s d e t c i r t s e r n U * S L A T O T Remuneration Report – Audited for the year ending 30 June 2022Acrow Annual Report 2022 39 – 0 0 0 0 9 , 0 0 0 0 0 2 , – , 4 6 4 3 5 7 – – – – 8 0 2 6 1 4 , – – – – 0 0 0 0 0 2 , – – – 0 0 0 5 2 5 , , 3 9 4 2 1 1 1 1 , – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 0 0 0 0 0 2 , – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – r e b m u N 0 3 t a d l e h 2 2 0 2 e n u J s r e h t O / e s a h c r u P ) l a s o p s i D ( d n a d e t s e V i i g n n a m e R d n a d e t s e V d e s i c r e x e n U d e s i c r e x E d e t i e f r o F 2 2 Y F d e t n a r G r e b m u N r e b m u N r e b m u N r e b m u N r e b m u N r e b m u N r e b m u N e t a D d e t n a r G 1 2 0 2 y l u J 1 r e b m u N t a d l e H . 2 2 0 2 Y F n i s n o i t p o d e t n a r g n e e b e v a h D E N o N ’ : s D E N 0 0 0 5 2 5 , s e r a h S n a o L r e b m u N t n e m u r t s n I e m a N – s e r a h S d e w o r c s E n e k c n a L r e t e P – – – 0 0 0 0 9 , 0 0 0 0 0 2 , , 3 9 4 2 1 1 1 1 , i s t h g R e c n a m r o f r e P s e r a h S d e t c i r t s e r n U s n o i t p O s e r a h S d e w o r c s E l r o y a T g g e r G s e r a h S n a o L s n o i t p O ) 1 2 0 2 r e b m e v o N 2 2 d e n g s e r ( i – i s t h g R e c n a m r o f r e P , 4 6 4 3 5 7 s e r a h S d e t c i r t s e r n U – – – – s e r a h S d e w o r c s E s e r a h S n a o L s n o i t p O i s t h g R e c n a m r o f r e P 8 0 2 6 1 4 , s e r a h S d e t c i r t s e r n U t a f f o M d v a D i – – – – – i s t h g R e c n a m r o f r e P s e r a h S d e t c i r t s e r n U s e r a h S n a o L s n o i t p O r e b m e t p e S 1 i d e t n o p p a ( ) 1 2 0 2 s e r a h S d e w o r c s E n o b i l l i A e n a e M l Acrow Annual Report 2022 40 r e b m u N 0 3 t a d l e h 2 2 0 2 e n u J s r e h t O / e s a h c r u P ) l a s o p s i D ( d n a d e t s e V i i g n n a m e R d n a d e t s e V d e s i c r e x e n U d e s i c r e x E d e t i e f r o F 2 2 Y F d e t n a r G 1 2 0 2 y l u J 1 r e b m u N t a d l e H r e b m u N r e b m u N r e b m u N r e b m u N r e b m u N r e b m u N r e b m u N e t a D d e t n a r G r e b m u N t n e m u r t s n I e m a N – – – – 0 0 0 0 1 , , 5 6 1 7 0 3 3 1 , – – – – – – – – – – 0 0 0 0 1 , 0 0 0 0 1 2 , – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – , 5 6 1 7 9 0 3 1 , i s t h g R e c n a m r o f r e P s e r a h S d e t c i r t s e r n U s e r a h S d e w o r c s E t r u o c f e L e i r u a L s e r a h S n a o L s n o i t p O ) 1 2 0 2 r e b o t c O 1 i d e t n o p p a ( S L A T O T n o i t a r e n u m e r s a d e t n a r g s e i t i u q e f o e u a V 2 . 8 l s e v i t u c e x E l e u a V n M i – – – – – e b o t s r a e Y d e s n e p x E e r u t u F n i – – – – – l e u a V x a M e b o t s r a e Y d e s n e p x E e r u t u F n i l e u a V n i l e u a V d e s n e p x E s t n a r G y t i u q E 2 2 0 2 ) 8 9 7 4 6 $ ( , 8 9 7 4 6 $ , 8 9 7 4 6 $ , 0 0 5 5 7 2 , 2 5 3 2 0 . 5 3 - l u J - 1 3 0 2 - v o N 0 3 - ) 4 0 1 2 7 $ ( , , 0 6 2 0 8 1 $ , 0 6 2 0 8 1 $ 0 0 5 6 2 8 , 1 8 1 2 0 . 5 3 - l u J - 1 3 0 2 - v o N 0 3 - 2 2 Y F n i s r a e Y t n a r G t a s t i n U f o t i n U r e p e t a D d e s n e p x E s u o i v e r P l e u a V l a t o T r e b m u N l e u a V r i a F y r i p x E t n a r G e t a D e p y T e l o R e m a N 0 9 3 3 3 $ , , 4 5 5 0 3 $ 4 4 9 3 6 $ , 0 0 5 5 7 2 , 1 2 3 2 0 . 5 3 - l u J - 1 3 0 2 - v o N 0 3 - e c n a m r o f r e P 9 6 0 6 9 $ , 0 1 9 7 8 $ , , 9 7 9 3 8 1 $ 0 0 5 6 2 8 , 6 2 2 2 0 . 5 3 - l u J - 1 3 0 2 - v o N 0 3 - s t h g R i e v i t u c e x E f e h C i d n a r o t c e r i D r e c fi f O – 1 2 6 4 5 $ , 1 2 6 4 5 $ , 0 0 0 0 1 5 , 1 7 0 1 0 . 3 2 - r a M - 7 2 8 1 - r a M - 7 2 s e r a h S n a o L e v i t u c e x E l d n a o B n e v e t S . l e b a t l w o e b e h t n i n w o h s s a s t s o c t a d e u a v e r e w h c h w l i r a e y e h t g n i r u d n a p ) l R V T L ( n o i t a r e n u m e r e b a i r a v m r e t - g n o l l e h t r e d n u s t h g i r e c n a m r o f r e p d e t n a r g n e e b e v a h s e e y o p m e d e t c e e s y n O l l l Remuneration Report – Audited for the year ending 30 June 2022Acrow Annual Report 2022 41 3 7 1 3 8 $ , 3 7 1 3 8 $ , 5 1 6 6 $ , – 4 8 5 7 8 $ , 0 5 9 6 $ , 2 4 9 7 7 $ , 2 4 9 7 7 $ , 2 9 0 3 $ , – 5 4 0 8 8 $ , 7 9 4 3 $ , – – – – , 9 8 8 7 6 1 $ , 8 1 5 3 4 3 $ , 3 9 7 3 2 $ , 8 1 0 9 0 6 $ , 3 3 7 4 6 1 1 $ , , 0 9 0 9 5 8 5 , 8 8 7 9 8 $ , , 2 3 3 9 0 2 9 8 2 4 0 . 7 3 - n u J - 0 3 2 2 - n u J - 1 0 e c n a m r o f r e P 4 3 5 4 9 $ , , 2 3 3 9 0 2 6 1 5 4 0 . 7 3 - n u J - 0 3 2 2 - n u J - 1 0 4 3 0 1 8 $ , 3 1 2 3 1 2 , 1 0 8 3 0 . 7 3 - n u J - 0 3 2 2 - n u J - 1 0 2 4 5 1 9 $ , 3 1 2 3 1 2 , 3 9 2 4 0 . 7 3 - n u J - 0 3 2 2 - n u J - 1 0 s t h g R i 1 1 3 $ 1 1 3 $ 4 9 0 7 $ , 6 9 8 3 1 $ , 1 0 3 1 2 $ , 0 0 0 0 0 3 , 0 1 7 0 0 . 4 2 - l u J - 6 1 9 1 - l u J - 6 1 3 6 4 6 $ , 3 6 4 6 $ , 1 9 1 6 $ , 8 2 1 2 1 $ , 2 8 7 4 2 $ , 0 0 0 0 0 3 , 6 2 8 0 0 . 4 2 - l u J - 6 1 9 1 - l u J - 6 1 – – – – – – – – ) 0 8 9 3 2 $ ( , 0 8 9 3 2 $ , 0 8 9 3 2 $ , 0 0 5 7 3 1 , 4 4 7 1 0 . 5 3 - l u J - 1 3 0 2 - l u J - 1 3 ) 2 2 5 7 2 $ ( , 5 0 8 8 6 $ , 5 0 8 8 6 $ , 0 0 5 2 1 4 , 8 6 6 1 0 . 5 3 - l u J - 1 3 0 2 - l u J - 1 3 9 9 3 2 1 $ , 7 4 3 1 1 $ , 6 4 7 3 2 $ , 0 0 5 7 3 1 , 7 2 7 1 0 . 5 3 - l u J - 1 3 0 2 - l u J - 1 3 e c n a m r o f r e P 1 3 5 6 3 $ , 9 2 4 3 3 $ , 0 6 9 9 6 $ , 0 0 5 2 1 4 , 6 9 6 1 0 . 5 3 - l u J - 1 3 0 2 - l u J - 1 3 s t h g R i – – – – – , 3 4 8 0 1 $ , 3 4 8 0 1 $ 0 0 0 0 0 3 , 1 6 3 0 0 . 4 2 - l u J - 6 1 9 1 - l u J - 6 1 s n o i t p O l i i a c n a n F f e h C i 9 6 3 $ 7 4 4 6 1 $ , 6 1 8 6 1 $ , 0 0 0 0 0 3 , 1 6 5 0 0 . 4 2 - l u J - 6 1 9 1 - l u J - 6 1 r e c fi f O r e h t w o r C w e r d n A S L A T O T l e u a V n M i e b o t s r a e Y d e s n e p x E e r u t u F n i l e u a V x a M e b o t s r a e Y d e s n e p x E e r u t u F n i l e u a V n i l e u a V d e s n e p x E s t n a r G y t i u q E 2 2 0 2 2 2 Y F n i s r a e Y t n a r G t a s t i n U f o t i n U r e p e t a D d e s n e p x E s u o i v e r P l e u a V l a t o T r e b m u N l e u a V r i a F y r i p x E t n a r G e t a D e p y T e l o R e m a N Acrow Annual Report 2022 42 l e u a V n M i e b o t s r a e Y d e s n e p x E e r u t u F n i l e u a V x a M e b o t s r a e Y d e s n e p x E e r u t u F n i l e u a V n i l e u a V d e s n e p x E s t n a r G y t i u q E 1 2 0 2 1 2 Y F n i s r a e Y t n a r G t a s t i n U f o t i n U r e p e t a D d e s n e p x E s u o i v e r P l e u a V l a t o T r e b m u N l e u a V r i a F y r i p x E t n a r G e t a D e p y T e l o R e m a N – – – 1 2 6 4 5 $ , 1 2 6 4 5 $ , 0 0 0 0 1 5 , 1 7 0 1 0 . 3 2 - r a M - 7 2 8 1 - r a M - 7 2 s e r a h S n a o L e v i t u c e x E l d n a o B n e v e t S – – – – – – – 0 9 3 3 3 $ , 0 9 3 3 3 $ , , 4 5 5 0 3 $ 9 6 0 6 9 $ , 0 1 9 7 8 $ , 8 9 7 4 6 $ , , 0 6 2 0 8 1 $ – – – – 8 9 7 4 6 $ , 0 0 5 5 7 2 , 2 5 3 2 0 . 5 3 - l u J - 1 3 0 2 - v o N 0 3 - , 0 6 2 0 8 1 $ 0 0 5 6 2 8 , 1 8 1 2 0 . 5 3 - l u J - 1 3 0 2 - v o N 0 3 - 4 4 9 3 6 $ , 0 0 5 5 7 2 , 1 2 3 2 0 . 5 3 - l u J - 1 3 0 2 - v o N 0 3 - e c n a m r o f r e P , 9 7 9 3 8 1 $ 0 0 5 6 2 8 , 6 2 2 2 0 . 5 3 - l u J - 1 3 0 2 - v o N 0 3 - s t h g R i e v i t u c e x E f e h C i d n a r o t c e r i D r e c fi f O , 7 1 2 6 6 $ , 7 1 8 8 9 1 $ , 8 3 2 3 2 5 $ , 0 8 7 5 8 $ , 5 3 8 7 0 8 $ , 0 0 0 4 1 0 5 , 9 6 3 $ 9 6 3 $ 6 9 3 8 $ , 1 5 0 8 $ , 6 1 8 6 1 $ , 0 0 0 0 0 3 , 1 6 5 0 0 . 4 2 - l u J - 6 1 9 1 - l u J - 6 1 5 0 4 7 $ , 5 0 4 7 $ , 4 9 0 7 $ , 2 0 8 6 $ , 1 0 3 1 2 $ , 0 0 0 0 0 3 , 0 1 7 0 0 . 4 2 - l u J - 6 1 9 1 - l u J - 6 1 4 5 6 2 1 $ , 4 5 6 2 1 $ , 1 9 1 6 $ , 7 3 9 5 $ , 2 8 7 4 2 $ , 0 0 0 0 0 3 , 6 2 8 0 0 . 4 2 - l u J - 6 1 9 1 - l u J - 6 1 9 9 3 2 1 $ , 9 9 3 2 1 $ , 7 4 3 1 1 $ , – – – 1 3 5 6 3 $ , 9 2 4 3 3 $ , – – 0 8 9 3 2 $ , 5 0 8 8 6 $ , – – – – 6 4 7 3 2 $ , 0 0 5 7 3 1 , 7 2 7 1 0 . 5 3 - l u J - 1 3 0 2 - l u J - 1 3 e c n a m r o f r e P 0 6 9 9 6 $ , 0 0 5 2 1 4 , 6 9 6 1 0 . 5 3 - l u J - 1 3 0 2 - l u J - 1 3 0 8 9 3 2 $ , 0 0 5 7 3 1 , 4 4 7 1 0 . 5 3 - l u J - 1 3 0 2 - l u J - 1 3 5 0 8 8 6 $ , 0 0 5 2 1 4 , 8 6 6 1 0 . 5 3 - l u J - 1 3 0 2 - l u J - 1 3 s t h g R i r e c fi f O 4 7 4 $ , 9 6 3 0 1 $ , 3 4 8 0 1 $ 0 0 0 0 0 3 , 1 6 3 0 0 . 4 2 - l u J - 6 1 9 1 - l u J - 6 1 s n o i t p O l i i a c n a n F f e h C i r e h t w o r C w e r d n A S L A T O T Remuneration Report – Audited for the year ending 30 June 2022Acrow Annual Report 2022 43 – – – – – – – – e b o t s r a e Y d e s n e p x E e r u t u F n i l e u a V n M i – – – – e b o t s r a e Y d e s n e p x E e r u t u F n i l e u a V n M i – – – – l e u a V x a M e b o t s r a e Y d e s n e p x E e r u t u F n i l e u a V x a M e b o t s r a e Y d e s n e p x E e r u t u F n i – – – – – – – – l e u a V n i l e u a V d e s n e p x E s t n a r G y t i u q E 2 2 0 2 2 2 Y F n i s r a e Y t n a r G t a s t i n U f o t i n U r e p e t a D d e s n e p x E s u o i v e r P l e u a V l a t o T r e b m u N l e u a V r i a F y r i p x E t n a r G e t a D e p y T e l o R e m a N – – – – 8 2 2 6 5 $ , 8 2 2 6 5 $ , 0 0 0 5 2 5 , 1 7 0 1 0 . 3 2 - r a M - 7 2 8 1 - r a M - 7 2 s e r a h S n a o L t n e d n e p e d n I n e k c n a L r e t e P e v i t u c e x e - n o N n a m r i a h C 9 3 6 9 $ , 9 3 6 9 $ , 0 0 0 0 9 , 1 7 0 1 0 . 3 2 - r a M - 7 2 8 1 - r a M - 7 2 s e r a h S n a o L t n e d n e p e d n I l r o y a T g g e r G , 2 5 3 3 8 $ , 2 5 3 3 8 $ , 0 0 0 5 1 8 5 8 4 7 1 $ , 5 8 4 7 1 $ , 0 0 0 0 0 2 , 4 7 8 0 0 . 2 2 - c e D - 3 1 7 1 - c e D - 3 1 s n o i t p O e v i t u c e x e - n o N d e n g s e r ( i r o t c e r i D r e b m e v o N 2 2 S L A T O T ) 1 2 0 2 l e u a V n i l e u a V d e s n e p x E s t n a r G y t i u q E 1 2 0 2 1 2 Y F n i s r a e Y t n a r G t a s t i n U f o t i n U r e p e t a D d e s n e p x E s u o i v e r P l e u a V l a t o T r e b m u N l e u a V r i a F y r i p x E t n a r G e t a D e p y T e l o R e m a N . 1 2 0 2 Y F n i s n o i t p o d e t n a r g n e e b e v a h D E N o N . 2 2 0 2 Y F n i s n o i t p o d e t n a r g n e e b e v a h D E N o N ’ s D E N – – – – – – – – , 0 0 0 5 2 5 $ , 0 0 0 5 2 5 $ , 0 0 0 5 2 6 2 , 0 0 0 2 0 . 1 2 - r a M - 7 2 8 1 - r a M - 7 2 s t h g R i e c n a m r o f r e P 5 7 1 8 2 $ , 5 7 1 8 2 $ , 0 0 0 0 5 3 , 5 0 8 0 0 . 1 2 - r a M - 7 2 8 1 - r a M - 7 2 s n o i t p O e v i t u c e x e - n o N n a m r i a h C 8 2 2 6 5 $ , 8 2 2 6 5 $ , 0 0 0 5 2 5 , 1 7 0 1 0 . 3 2 - r a M - 7 2 8 1 - r a M - 7 2 s e r a h S n a o L t n e d n e p e d n I n e k c n a L r e t e P 0 0 0 0 9 $ , 0 0 0 0 9 $ , 0 0 0 0 5 4 , 0 0 0 2 0 . 1 2 - r a M - 7 2 8 1 - r a M - 7 2 s t h g R i 9 6 1 4 1 $ , 9 6 1 4 1 $ , 0 0 0 0 0 2 , 8 0 7 0 0 . 0 2 - c e D - 3 1 7 1 - c e D - 3 1 5 8 4 7 1 $ , 5 8 4 7 1 $ , 0 0 0 0 0 2 , 4 7 8 0 0 . 2 2 - c e D - 3 1 7 1 - c e D - 3 1 0 3 8 4 $ , 0 3 8 4 $ , 7 9 9 9 5 , 5 0 8 0 0 . 1 2 - r a M - 7 2 8 1 - r a M - 7 2 e c n a m r o f r e P s n o i t p O s n o i t p O s n o i t p O e v i t u c e x e - n o N r o t c e r i D 9 3 6 9 $ , 9 3 6 9 $ , 0 0 0 0 9 , 1 7 0 1 0 . 3 2 - r a M - 7 2 8 1 - r a M - 7 2 s e r a h S n a o L t n e d n e p e d n I l r o y a T g g e r G Acrow Annual Report 2022 44 l e u a V n M i e b o t s r a e Y d e s n e p x E e r u t u F n i – – – – – – – – l e u a V x a M e b o t s r a e Y d e s n e p x E e r u t u F n i l e u a V n i l e u a V d e s n e p x E s t n a r G y t i u q E 1 2 0 2 1 2 Y F n i s r a e Y t n a r G t a s t i n U f o t i n U r e p e t a D d e s n e p x E s u o i v e r P l e u a V l a t o T r e b m u N l e u a V r i a F y r i p x E t n a r G e t a D e p y T e l o R e m a N – – – – 5 9 1 8 4 $ , 5 9 1 8 4 $ , 0 0 0 0 5 4 , 1 7 0 1 0 . 3 2 - r a M - 7 2 8 1 - r a M - 7 2 s e r a h S n a o L t n e d n e p e d n I y a M a u h s o J 0 5 1 4 2 $ , 0 5 1 4 2 $ , 0 0 0 0 0 3 , 5 0 8 0 0 . 1 2 - r a M - 7 2 8 1 - r a M - 7 2 s n o i t p O e v i t u c e x e - n o N d e n g s e r ( i r o t c e r i D ) 1 2 0 2 r e b o t c O 9 , 0 0 0 0 5 4 $ , 0 0 0 0 5 4 $ , 1 7 8 7 6 2 1 $ , , 1 7 8 7 6 2 1 $ , , 0 0 0 0 5 2 2 , , 7 9 9 9 9 4 7 , t i m L i 0 0 0 2 0 . 1 2 - r a M - 7 2 8 1 - r a M - 7 2 s t h g R i e c n a m r o f r e P S L A T O T e e F d n a , 3 2 0 2 Y F d n a 2 2 0 2 Y F r o f s e t a R y c i l o P e e F D E N 9 l f o t r a p s a s r e d o h e r a h s y b d e v o r p p a s a w h c h w 0 0 0 0 0 5 $ f o ) l o o p e e f r o L F A ( t i i , m i l s e e f l i i a u n n a e h t r e d n u s n a m e r h c h w 0 0 0 1 7 4 $ s a w 2 2 0 2 Y F r o f e e f l , a u n n a l a t o t e h T n o i t a r e n u m e R e v i t u c e x E / s e e F s r o t c e r i D 0 0 0 0 1 $ , l a n o i t i d d A 0 0 0 0 1 $ , l a n o i t i d d A , 0 0 0 6 3 1 $ 0 0 0 0 8 $ , e e t t i m m o C n o i t a r e n u m e R f o r i a h C e e t t i i m m o C k s R & t i d u A f o r i a h C n o s r e p r i a h C r o t c e r i D r e h t O . r a e y 2 2 0 2 e h t r o f e b a c l i l p p a e r e w t a h t s e t a r y c i l o p e e f D E N e h t s e n l i l t u o e b a t g n w o i l l o f e h T 8 1 0 2 l i r p A n i g n i t s i i l - e r e c n s y n a p m o C e h t f o n o i t u t i t s n o c e h t n e e b e v a h s t n e m t s u d a e s e h t d n a j , r o t i d u a e h t t o n s a w t a h t t n a t l u s n o c n o i t a r e n u m e r l a n r e t x e n a m o r f e c v d a k o o t e e t t i i i m m o C s n o i t a n m o N d n a n o i t a r e n u m e R e h T . l o o p r o t c e r i D e h t n l i i t n e a t t s e h g h e h t t c a r t t a o t e u n i t n o c e w e r u s n e o t d e t n e m e p m l i Remuneration Report – Audited for the year ending 30 June 2022Acrow Annual Report 2022 l i i d n a s t n e m e r i u q e r e r u s o c s d y r o t u t a t s o t g n d r o c c a d e r a p e r p y n a p m o C e h t f o s e v i t u c e x E r o n e S y b e b a v e c e r d n a d e v e c e r n o i t a r e n u m e r e h t s e n i i i l l i l t u o e b a t g n w o i l l o f e h T % e c n a m r o f r e p g n o l r e h t O l - y o p m e s t n e m y a p d e s a b - e r a h S t s o P m r e T - t r o h S d e s a b l a t o T s n o i t p O s t h g R i m r e t t n e m l a t o t - b u S h s a c - n o N I T S y r a a S l e l o R e m a N 2 2 0 2 Y F : s d r a d n a t s g n i t n u o c c a e b a c l i l p p a i l s e r u s o c s D y r o t u t a t S – 2 2 0 2 Y F r o f s d r o c e R n o i t a r e n u m e R 0 1 n o i t a r e n u m e R e v i t u c e x E r o n e S i 1 . 0 1 % 7 2 % 6 2 , 4 8 8 1 8 4 $ 3 5 6 3 1 $ , 2 8 5 7 1 $ , 5 0 9 8 2 $ , 8 1 8 2 2 $ , , 6 2 9 8 9 3 $ – 6 2 9 3 9 $ , , 0 0 0 5 0 3 $ r e c fi f O e v i t u c e x E r o t c e r i D l i i a c n a n F f e h C i , 2 1 3 7 8 9 $ – ) 3 4 4 7 $ ( , 4 0 4 7 6 $ , 8 6 5 3 2 $ , , 3 8 7 3 0 9 $ 2 7 0 7 9 $ , , 0 6 7 6 7 2 $ , 1 5 9 9 2 5 $ r e c fi f O e v i t u c e x E f e h C i d n a r o t c e r i D e v i t u c e x E l d n a o B n e v e t S r e h t w o r C w e r d n A t e r a g r a M p o k o r P d e n g s e r ( i r e b m e c e D 1 3 ) 1 2 0 2 – 0 3 9 4 8 $ , – – – 4 2 4 3 $ , 6 0 5 1 8 $ , 4 8 5 1 $ , – 2 2 9 9 7 $ , , 6 2 1 4 5 5 1 $ , , 3 5 6 3 1 $ , 9 3 1 0 1 $ , 9 0 3 6 9 $ , 0 1 8 9 4 $ , 5 1 2 4 8 3 1 $ , , 6 5 6 8 9 $ , 6 8 6 0 7 3 $ , 3 7 8 4 1 9 $ P M K l a t o T 45 . 3 2 0 2 Y F n i l e b a y a p , 2 2 0 2 Y F r o f s i , 6 8 6 0 7 3 $ f o I T S Acrow Annual Report 2022 46 % e c n a m r o f r e p g n o l r e h t O l - y o p m e s t n e m y a p d e s a b - e r a h S t s o P m r e T - t r o h S d e s a b l a t o T s n o i t p O s t h g R i m r e t t n e m l a t o t - b u S h s a c - n o N I T S y r a a S l e l o R e m a N 1 2 0 2 Y F % 1 4 % 8 3 – , 3 3 2 2 4 5 1 $ , – , 1 2 5 3 6 3 $ , 7 9 9 7 0 1 $ 4 9 6 1 2 $ , , 0 2 0 9 4 0 1 $ , , 7 4 2 3 4 2 $ , 2 2 8 5 7 2 $ , 1 5 9 9 2 5 $ r e c fi f O e v i t u c e x E f e h C i d n a r o t c e r i D e v i t u c e x E l d n a o B n e v e t S , 0 3 4 3 6 5 $ 6 5 1 2 2 $ , , 0 6 5 7 3 1 $ 4 1 8 7 2 $ , 4 9 6 1 2 $ , , 6 0 2 4 5 3 $ 6 5 8 $ 0 5 3 3 5 $ , , 0 0 0 0 0 3 $ r e c fi f O , 3 4 6 0 8 2 $ – – 2 5 9 7 4 $ , 5 1 5 9 1 $ , , 6 7 1 3 1 2 $ 9 4 7 7 $ , – , 7 2 4 5 0 2 $ , 5 0 3 6 8 3 2 $ , , 6 5 1 2 2 $ , 1 8 0 1 0 5 $ , 4 6 7 3 8 1 $ , 3 0 9 2 6 $ , 2 0 4 6 1 6 1 $ , , 2 5 8 1 5 2 $ , 2 7 1 9 2 3 $ , 8 7 3 5 3 0 1 $ , e v i t u c e x E r o t c e r i D P M K l a t o T l i i a c n a n F f e h C i r e h t w o r C w e r d n A t e r a g r a M p o k o r P % d e s a b e c n a m r o f r e p l a t o T s n o i t p O s t h g R i y r a a S l s t n e m y a p d e s a b - e r a h S m r e T - t r o h S – – – – – , 3 9 9 5 3 1 $ 0 0 5 7 3 $ , 3 8 5 4 8 $ , , 7 1 3 0 7 $ 3 3 8 5 6 $ , , 6 2 2 4 9 3 $ – – – – – – – – – – – – , 3 9 9 5 3 1 $ 0 0 5 7 3 $ , 3 8 5 4 8 $ , , 7 1 3 0 7 $ 3 3 8 5 6 $ , , 6 2 2 4 9 3 $ D E N t n e d n e p e d n I D E N t n e d n e p e d n I D E N t n e d n e p e d n I D E N t n e d n e p e d n I D E N l a t o T n a m r i a h C e l o R : l l i w o e b d e s o c s d e r a 1 2 0 2 Y F d n a 2 2 0 2 Y F n i s r o t c e r i d e v i t u c e x e - n o n y b d e v e c e r n o i t a r e n u m e R i n o i t a r e n u m e R D E N 2 . 0 1 n e k c n a L r e t e P e m a N 2 2 0 2 Y F . 2 2 0 2 Y F n i i d a p , 1 2 0 2 Y F r o f s a w 2 7 1 9 2 3 $ f o , I T S ) 1 2 0 2 r e b m e t p e S 1 d e t n o p p a ( n o b i i l l i A e n a e M l i ) 1 2 0 2 r e b o t c O 1 d e t n o p p a ( t r u o c f e L e i r u a L t a f f o M d v a D i ) 1 2 0 2 r e b m e v o N 2 2 d e n g s e r ( r o y a T g g e r G l i Remuneration Report – Audited for the year ending 30 June 2022Acrow Annual Report 2022 l a t o T ' s h t n o m * n o i t a r e n u m e R d e t i i i m L s e c v r e S n o i t c u r t s n o C r e c fi f O e v i t u c e x E f e h C i – – – – % d e s a b e c n a m r o f r e p l a t o T s n o i t p O s t h g R i y r a a S l s t n e m y a p d e s a b - e r a h S m r e T - t r o h S , 6 9 9 9 0 1 $ 0 0 0 0 7 $ , 1 6 5 8 1 $ , 0 0 0 0 7 $ , , 7 5 5 8 6 2 $ – – – – – – – – – – , 6 9 9 9 0 1 $ 0 0 0 0 7 $ , 1 6 5 8 1 $ , 0 0 0 0 7 $ , , 7 5 5 8 6 2 $ D E N t n e d n e p e d n I D E N t n e d n e p e d n I D E N t n e d n e p e d n I D E N l a t o T n a m r i a h C e l o R ) 0 2 0 2 t c O 6 d e n g s e r ( y a M a u h s o J i n e k c n a L r e t e P l r o y a T g g e r G e m a N 1 2 0 2 Y F t a f f o M d v a D i s t n e m y a P n o i t a n m r e T i e c i t o N f o d o i r e P m o r F l f o e s o C t a d l e H n o i t i s o P P M K m o r F y n a p m o C t c a r t n o C f o n o i t a r u D y n a p m o C g n i y o p m E l 2 2 0 2 Y F e m a N 6 o t p U s h t n o m 6 s h t n o m 6 d e d n e - n e p O d n a k r o w m r o F w o r c A d n a r o t c e r i D e v i t u c e x E l d n a o B n e v e t S l e n n o s r e P t n e m e g a n a M y e K r o f s m r e T t n e m y o p m E l 1 1 s t n e m e e r g A e c i v r e S 1 . 1 1 : l w o e b d e t n e s e r p s i P M K e v i t u c e x e o t n o i t a e r n l i s m r e t t c a r t n o c f o y r a m m u s A l a t o T ' s h t n o m * n o i t a r e n u m e R d e t i i i m L s e c v r e S n o i t c u r t s n o C 6 o t p U s h t n o m 6 s h t n o m 6 d e d n e - n e p O d n a k r o w m r o F w o r c A r e c fi f O l i i a c n a n F f e h C i r e h t w o r C w e r d n A 6 o t p U s h t n o m 6 s h t n o m 6 d e d n e - n e p O d n a k r o w m r o F w o r c A r o t c e r i D e v i t u c e x E i d e n g s e r ( p o k o r P t e r a g r a M l a t o T ' s h t n o m * n o i t a r e n u m e R s e s i r a m m u s r e t t e l e h T i . t n e m t n o p p a f o r e t t e l a f o m r o f e h t n i y n a p m o C e h t h t i w t n e m e e r g a e c v r e s a o t n i i r e t n e s r o t c e r i d e v i t u c e x e - n o n l l a , d r a o B e h t o t t n e m t n o p p a n O i . i n g s e d e v i t n e c n i f o s l i i i a t e d e v g t a h t t r o p e r s h t f o s n o i t c e s e t a r a p e s n i d e s s e r d d a s i d e t i i i m L s e c v r e S n o i t c u r t s n o C i n o i t a n m r e t f o e s a c e h t n i s e v i t n e c n i f o t n e m t a e r t e h T * ) 1 2 0 2 r e b m e c e D 1 3 47 i P. M K e v i t u c e x e - n o n f o t n e m t n o p p a e h t o t y p p a s t c a r t n o c o N l . r o t c e r i d e h t f o e c fi f o e h t o t t n a v e e r n o i t a s n e p m o c g n d u c n l i l i , s m r e t d n a s e c i i l o p d r a o B e h t Acrow Annual Report 2022 48 12 Other Remuneration Related Matters Thefollowingoutlinesotherremunerationrelatedmattersthatmaybeofinteresttostakeholders,intheinterestsof transparencyanddisclosure: ■ OtherthaninthecaseofgrantsofLoanFundedShares,therewerenoloanstoDirectorsorotherKMPatanytime during the reporting period, and ■ OthertransactionswithKMP: Aswiththepreviousyear,theCompanyleasesanumberofindustrialandcommercialpropertiesfrom MargaretProkop’spersonalcompanies(MRPProperty,MRPPropertyQLD&MRPSuperannuation)through theNatformsubsidiaries.Rentalandrelatedout-goingpaymentstothesecompaniesamountedto$1,057,924 (2021: $852,581). 13 External Remuneration Consultant Advice Duringthereportingperiod,theBoardengagedexternalremunerationconsultantstoprovideKMPremuneration recommendationsrelatingtoremunerationpostthedateofthisreportincludingthelong-termvariableremuneration referredtoinsubsequenteventsintheDirectorsReport. TheBoardreviewedtherecommendationsfromtheexternalremunerationadvisordirectlyandindependent ofexecutivemanagementandaresatisfiedtherecommendationsweremadefreeofundueinfluenceofthe relevant KMP’s. TheBoardhasadoptedapolicytogovernanysuchfutureengagements,thedetailsofwhichwillbedisclosedinfuture RemunerationReportsshouldtheyarise. EndofauditedRemunerationsReport. Remuneration Report – Audited for the year ending 30 June 2022Acrow Annual Report 2022Financial Statements fortheyearending30June2022 49 Statement of Profit or Loss and other Comprehensive Income fortheyearended30June2022 In dollars Continuing operations Revenue Other income Personnel expenses Sub-contractlabourcosts Inventorypurchased,netofchangesinfinishedgoods Depreciation ITandtelecommunicationexpenses Freightcosts Insuranceexpenses Gain on fair value of derivatives ContingentconsiderationrelatedtoUni-spanacquisition Other expenses Profit before finance costs and income tax Financecosts Profit before income tax Incometaxexpense Profit from continuing operations Other comprehensive income Items that may be reclassified to profit / (loss) Note 2022 2021 4 5 6 7 8 140,826,918 94,608,887 4,955,787 6,552,430 (51,875,934) (36,585,402) (18,039,520) (16,646,962) (31,642,371) (18,276,344) (13,070,352) (11,563,598) (1,641,245) (1,542,961) (1,975,256) (1,664,296) (1,090,449) (813,199) – – 350,000 (148,264) (5,278,112) (4,822,433) 21,169,466 9,447,858 (3,513,116) (3,305,705) 17,656,350 6,142,153 (1,962,182) (2,179,155) 15,694,168 3,962,998 Foreignoperations–foreigncurrencytranslationdifferences 1,431 (1,407) Total comprehensive income for the year 15,695,599 3,961,591 Earnings per share from continuing operations BasicEPS(centspershare) DilutedEPS(centspershare) 24 24 6.32 6.06 1.82 1.77 Theabovestatementshouldbereadinconjunctionwiththeaccompanyingnotes. Acrow Annual Report 202250 Statement of Financial Position asat30June2022 In dollars Current assets Cashandcashequivalents Tradeandotherreceivables Inventories Contractassets Prepayments and other assets Assets held for sale Total current assets Non-current assets Property, plant and equipment Right-of-useleaseassets Intangibleassets Total non-current assets Total assets Current liabilities Bankoverdraft Tradepayables Otherpayables Employeebenefits Leaseliabilities Loansandborrowings Currenttaxliabilities Liabilitiesassociatedwithassetsheldforsale Total current liabilities Non-current liabilities Employeebenefits Leaseliabilities Loansandborrowings Provisions Deferredincometaxliability Total non-current liabilities Total liabilities Net assets Equity Issuedcapital Reserves Retained earnings Total equity Note 2022 2021 9 10 11 12 12 13 14 15 16 9 17 17 18 15 19 21 13 18 15 19 20 21 3,010,433 1,754,622 34,362,867 24,611,736 14,872,186 8,958,554 111,927 775,168 5,075,832 3,618,377 72,579 66,507 57,505,824 39,784,964 95,490,436 83,008,854 24,478,720 28,808,936 7,428,704 7,428,704 127,397,860 119,246,494 184,903,684 159,031,458 3,001,005 1,865,938 21,484,027 25,122,155 – 3,486,289 6,159,454 4,639,524 4,964,215 4,645,552 17,001,678 7,898,384 1,869,031 67,063 310,331 61,453 54,546,473 48,029,626 444,988 611,541 23,285,254 27,396,387 15,848,299 14,440,464 469,274 469,274 6,990,415 6,596,723 47,038,230 49,514,389 101,584,703 97,544,015 83,318,981 61,487,443 58,310,046 46,703,384 3,059,423 3,026,437 21,949,512 11,757,622 83,318,981 61,487,443 Theabovestatementshouldbereadinconjunctionwiththeaccompanyingnotes. Financial Statements for the year ending 30 June 2022Acrow Annual Report 202251 Statement of changes in equity fortheyearended30June2022 In dollars Share- based option payments reserve Foreign currency translation reserve Share capital Retained earnings Total equity Balance at 30 June 2020 45,674,176 858,546 55,718 11,706,794 58,295,234 Total comprehensive income for the period Profitfortheyear Other comprehensive income Total comprehensive income Transactions with owners of the company Dividendspaidtoshareholders – – – – Shares issued under dividend reinvestment plan(DRP) 766,913 – – – – – Equitysettledsharebasepayments – 2,245,520 Options exercised 262,295 (131,940) – 3,962,998 3,962,998 (1,407) – (1,407) (1,407) 3,962,998 3,961,591 – – – – (3,912,170) (3,912,170) – – – 766,913 2,245,520 130,355 Total transactions with owners of the company 1,029,208 2,113,580 – (3,912,170) (769,382) Balance at 30 June 2021 46,703,384 2,972,126 54,311 11,757,622 61,487,443 Total comprehensive income for the period Profitfortheyear Other comprehensive income Total comprehensive income – – – Transactions with owners of the company Shares issued net of transaction costs 9,897,173 Options & Performance Rights forfeited, writtenbacktoP&L Options & Performance Rights failed to meetmarketcondition Dividendspaidtoshareholders – – – Shares issued under dividend reinvestment plan("DRP"),netofcosts 951,671 – – – – (409,120) (398,910) – – Equitysettledsharebasepayments 1,573,788 Transfer of option reserves to share capital 734,203 (734,203) Proceeds from exercise of options, net of costs Total transactions with owners of the company 23,615 – – 15,694,168 15,694,168 1,431 – 1,431 1,431 15,694,168 15,695,599 – – – – – – – – – – 9,897,173 (409,120) 398,910 – (5,901,188) (5,901,188) – – – – 951,671 1,573,788 – 23,615 Balance at 30 June 2022 58,310,046 3,003,681 55,742 21,949,512 83,318,981 Theabovestatementshouldbereadinconjunctionwiththeaccompanyingnotes. 11,606,662 31,555 – (5,502,278) 6,135,939 Acrow Annual Report 202252 Statement of Cash Flows fortheyearended30June2022 In dollars Note 2022 2021 Cash flows from operating activities Receipts from customers Receipts on lease revenue Payments to suppliers and employees Incometaxpaid 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 Deferredpaymentonacquisitions Net cash outflow from investing activities Cash flows from finance activities Proceeds from issue of shares Capitalraisingcosts Proceeds from exercise of options, net of costs Proceedsfromborrowings Repaymentofborrowings Repaymentofleaseliabilities DividendspaidnetofDRP Financecostspaid Net cash inflow/(outflow) from financing activities Net increase/(decrease) in cash and cash equivalents Cashandcashequivalentsasat1July2021 Effectofexchangeratefluctuationsoncashheld Cash and cash equivalents at the end of the year 21 5 14 17 88,716,570 46,116,027 54,374,672 46,429,610 (131,718,641) (79,665,777) (9,790) (556,302) 11,362,811 12,323,558 7,518,603 11,134,735 (22,378,490) (17,409,883) (3,582,656) (3,567,944) (18,442,543) (9,843,092) 10,500,000 (602,826) – – 16,525 130,355 28,528,971 6,793,284 (18,017,843) (6,272,932) 15 (5,145,257) (4,198,952) (4,942,427) (3,145,257) (3,136,668) (3,136,790) 7,200,475 (9,830,292) 120,743 (7,349,826) (111,316) 7,238,511 1 (1) 9,428 (111,316) Theabovestatementshouldbereadinconjunctionwiththeaccompanyingnotes. Financial Statements for the year ending 30 June 2022Acrow Annual Report 2022Notes to the Consolidated Financial Statements fortheyearending30June2022 53 Contents 1 2 3 4 5 6 7 8 9 Reporting entity Basis of preparation Significant accounting policies Revenue Other income Other expenses Finance costs Income tax expense 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 Intangible assets 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 commitments 26 Reconciliation of cash flows from operating activities 27 Remuneration of auditors 28 Key management personnel and related parties 29 Share-based payments 30 Financial risk management 31 Group entities 32 Operating segments 33 Parent entity disclosures 34 Deed of cross guarantee 35 Subsequent events 1. Reporting entity AcrowFormworkandConstructionServices Limited(AcrowortheGroup)isalimitedcompany incorporatedinAustraliaandwhosesharesaretraded ontheAustralianSecuritiesExchangeundertheissuer code “ACF”. TheconsolidatedfinancialstatementsofAcrowforthe yearended30June2022compriseoftheCompanyand itscontrolledentities(theGroup). TheGroupisafor-profitentityandisprimarilyinvolvedin thehireandsaleoffalsework,formwork,scaffoldingand screenequipment,andotherconstructionservices. Acrow’sAnnualReportsforpriorreportingperiodsare availableuponrequestfromtheGroup’sregisteredoffice locatedatLevel5,126PhillipStreet,SydneyNSW2000, Australiaoratwww.acrow.com.au. 2. Basis of preparation (a) Basis of accounting Theconsolidatedfinancialstatementsaregeneral purposefinancialstatementswhichhavebeenprepared inaccordancewithAustralianAccountingStandards (AASBs)adoptedbytheAustralianAccountingStandards Board(AASB)andtheCorporationsAct2001. Theconsolidatedfinancialstatementscomplywith InternationalFinancialReportingStandards(IFRS) adoptedbytheInternationalAccountingStandardsBoard (IASB)andwereauthorisedforissuebytheBoardof Directorson27September2022. DetailsoftheGroup’ssignificantaccountingpoliciesare includedinnote3. (b) Basis of measurement Theconsolidatedfinancialstatementshavebeen preparedonaccrualbasisandarebasedonhistorical costs,modifiedwhereapplicablebythemeasurementat fairvalue. (c) Functional and presentation currency Theconsolidatedfinancialstatementsare presentedinAustraliandollars,whichistheGroup’s functional currency. (d) Use of estimates and judgements Thepreparationofconsolidatedfinancialstatementsin conformitywithAASBsrequiresmanagementtomake judgements,estimatesandassumptionsthataffect the application of accounting policies and the reported amountsofassets,liabilities,incomeandexpenses. Actualresultsmaydifferfromtheseestimates. Estimatesandunderlyingassumptionsarereviewedon anongoingbasis.Revisionstoaccountingestimates 53 53 54 61 62 62 62 63 63 64 64 65 65 65 66 68 69 70 70 71 72 73 74 74 75 76 77 77 78 80 84 84 85 85 88 Acrow Annual Report 2022 54 2. Basis of preparation (continued) arerecognisedintheperiodinwhichtheestimatesare revisedandinanyfutureperiodsaffected. Allinter-entitybalancesandtransactionsareeliminated intheseconsolidatedfinancialstatements. Inparticular,informationaboutsignificantareasof estimations,uncertaintiesandcriticaljudgements in applying accounting policies that have the most significanteffectontheamountsrecognisedinthe consolidatedfinancialstatementsincludethefollowing: Accounting estimate and judgements Note Revenue Incometaxexpense Tradeandotherreceivables Inventories Property,plantandequipment Leases Intangibleassets Employeebenefits Provisions Deferredincometaxliability Share-basedpayments 4 8 10 11 14 15 16 18 20 21 29 Theaccountingpoliciesbelowhavebeenapplied consistently to all periods presented in these consolidatedfinancialstatementsandhavebeenapplied consistentlybytheGroup. (e) Comparative information Whereapplicable,comparativeinformationis reclassified tocomplywithdisclosurerequirementsand improvecomparability. (f) Rounding Acrowisacompanyofthekindreferredtointhe AustralianSecuritiesandInvestmentsCommission (ASIC)Corporations(RoundinginFinancial/Directors’ Reports)Instrument2016/191,dated24March2016and inaccordancewiththatLegislativeInstrument,amounts intheseconsolidatedfinancialstatementshavebeen roundedofftothenearestdollarandareshownassuch, unlessstatedotherwise. 3. Significant accounting policies (a) Basis of consolidation Theconsolidatedfinancialstatementshavebeen preparedbyaggregatingthefinancialstatementsof alltheentitiesthatcomprisetheGroup,beingAcrow FormworkandConstructionServicesLimitedandits controlledentities. (i) Business combinations Businesscombinationsareaccountedforusingthe acquisitionmethodasattheacquisitiondate,whichis thedateonwhichcontrolistransferredtotheGroup. Controlisthepowertogovernthefinancialandoperating policiesofanentitysoastoobtainbenefitsfromits activities.Inassessingcontrol,theGrouptakesinto consideration potential voting rights that currently are exercisable. TheGroupmeasuresgoodwillattheacquisitiondateas: ■ ■ thefairvalueoftheconsiderationtransferred;plus therecognisedamountofanynon-controlling interestsintheacquiree;plus,ifthebusiness combinationisachievedinstages,thefairvalueof theexistingequityinterestintheacquiree;less ■ thenetrecognisedamount(generallyfairvalue)ofthe identifiableassetsacquiredandliabilitiesassumed. Whentheexcessisnegative,abargainpurchasegainis recognisedimmediatelyinthestatementofprofitorloss. The consideration transferred does not include amounts relatedtothesettlementofpre-existingrelationships. Such amounts are generally recognised in the statement ofprofitorloss. Costsrelatedtotheacquisition,otherthanthose associatedwiththeissueofdebtorequitysecurities thattheGroupincursinconnectionwithabusiness combinationareexpensedasincurred. Anycontingentconsiderationpayableisrecognised atfairvalueattheacquisitiondate.Ifthecontingent considerationisclassifiedasequity,itisnotremeasured, andsettlementisaccountedforwithinequity,otherwise subsequentchangestothefairvalueofthecontingent considerationarerecognisedinthestatementofprofit or loss. (ii) Subsidiaries SubsidiariesareentitiescontrolledbytheGroup.The financialstatementsofsubsidiariesareincludedinthe consolidatedfinancialstatementsfromthedatethat controlcommencesuntilthedatethatcontrolceases. (b) Foreign currency Transactions in foreign currencies are translated to the functional currency of the Group at exchange rates at the datesofthetransactions. Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 202255 Monetaryassetsandliabilitiesdenominatedinforeign currencies at the reporting date are retranslated to the functionalcurrencyattheexchangerateatthatdate. Theforeigncurrencygainor(loss)onmonetaryitemsis thedifferencebetweenamortisedcostinthefunctional currencyatthebeginningoftheperiod,adjustedfor effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchangerateattheendoftheyear. Foreigncurrencydifferencesarisingonretranslation arerecognisedinthestatementofprofitorloss, exceptforqualifyingcashflowhedgestotheextent thehedgeiseffective,whicharerecognisedinother comprehensive income. (c) (i) Financial instruments Non-derivative financial assets TheGroupinitiallyrecognisesreceivablesonthedate thattheyareoriginated.Allotherfinancialassets (includingassetsheldatfairvaluethroughprofitorloss) arerecognisedinitiallyonthetradedateatwhichthe Groupbecomesapartytothecontractualprovisionsof theinstrument. TheGroupderecognisesafinancialassetwhenthe contractualrightstothecashflowsfromtheassetexpire, or it transfers the rights to receive the contractual cash flowsonthefinancialassetinatransactioninwhich substantiallyalltherisksandrewardsofownershipofthe financialassetaretransferred.Anyinterestintransferred financialassetsthatiscreatedorretainedbytheGroupis recognisedasaseparateassetorliability. Financialassetsandliabilitiesareoffsetandthenet amountpresentedinthestatementoffinancialposition when,andonlywhen,theGrouphasalegalrightto offset the amounts and intends to either to settle onanetbasisortorealisetheassetandsettlethe liability simultaneously. TheGrouphasthefollowingnon-derivativefinancial assets:receivablesandcashandcashequivalents. Receivables Areceivableisrecognisedwhenthegoodsare collected or delivered as this is the point in time that the considerationisunconditionalbecauseonlythepassage oftimeisrequiredbeforethepaymentisdue. Receivablesarefinancialassetswithfixedor determinablepaymentsthatarenotquotedinan activemarket.Suchassetsarerecognisedinitially atthetransactionpriceplusanydirectlyattributable transactioncosts.Subsequenttoinitialrecognition, receivablesaremeasuredatamortisedcostusingthe effectiveinterestmethod,lessanyimpairmentlosses. Cash and cash equivalents Cashandcashequivalentscomprisecashatbank,cash onhandandcashequivalents,netofbankoverdrafts. Cashequivalentsrepresenthighlyliquidinvestments whicharereadilyconvertibletocash. (ii) Non-derivative financial liabilities TheGroupinitiallyrecognisesdebtsecuritiesissued onthedatethattheyareoriginated.Allotherfinancial liabilities(includingliabilitiesheldatfairvaluethrough profitorloss)arerecognizedinitiallyonthetradedate atwhichtheGroupbecomesapartytothecontractual provisionsoftheinstrument. TheGroupderecognizesafinancialliabilitywhenits contractualobligationsaredischargedorcancelled or expire. Financialliabilitiesarerecognizedinitiallyatfairvalue plusanydirectlyattributabletransactioncosts. Subsequenttoinitialrecognition,financialliabilitiesare measured at amortised cost using the effective interest ratemethod. Financialliabilitiescompriseloansandborrowings,trade andotherpayables. Bankoverdraftsthatarerepayableondemandandform anintegralpartoftheGroup’scashmanagementare included as a component of cash and cash equivalents forthepurposeofthestatementofcashflows. (iii) Issued capital Ordinary shares Ordinarysharesareclassifiedasequity.Incremental costsdirectlyattributabletotheissueofordinaryshares and share options are recognised as a deduction from equity,netofanytaxeffects. (d) (i) Property, plant and equipment Recognition and measurement Itemsofproperty,plantandequipmentaremeasuredat cost less accumulated depreciation and accumulated impairmentlosses. Costincludesexpenditurethatisdirectlyattributableto theacquisitionoftheasset.Thecostofself-constructed assetsincludesthecostofmaterialsanddirectlabour, anyothercostsdirectlyattributabletobringingthe assetstoaworkingconditionfortheirintendeduse, the costs of dismantling and removing the items andrestoringthesiteonwhichtheyarelocated,and capitalisedborrowingcosts(seebelow). Costalsomayincludetransfersfromother comprehensiveincomeofanygainor(loss)onqualifying cashflowhedgesofforeigncurrencypurchasesof Acrow Annual Report 202256 3. Significant accounting policies (continued) property,plantandequipment.Purchasedsoftwarethat is integral to the functionality of the related equipment is capitalisedaspartofthatequipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separateitems(majorcomponents)ofproperty,plant andequipment. Thegainsand(losses)ondisposalofanitemofproperty, plantandequipmentaredeterminedbycomparingthe proceedsfromdisposalwiththecarryingamountof property, plant and equipment and are recognised net withinotherincomeorotherexpensesinthestatement ofprofitorloss. (iv) Hire equipment loss provision A hire equipment loss provision is recognised to cover theexpectedlossofequipmentonhire.Theprovisionis basedonhistoricalexperienceofunrecoverablelosses incurredonthereturnofhireequipmentfromcustomers. (e) (i) Intangible assets Goodwill Allbusinesscombinationsareaccountedforbyapplying theacquisitionmethod.Goodwillrepresentsthe differencebetweenthecostoftheacquisitionandthefair valueofthenetidentifiableassetsacquired.Goodwillis statedatcostslessanyaccumulatedimpairmentlosses. (ii) Subsequent costs (f) Inventories The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amountoftheitemifitisprobablethatthefuture economicbenefitsembodiedwithinthecomponent willflowtotheGroup,anditscostcanbemeasured reliably.Thecarryingamountofthereplacedpartis derecognised.Thecostsoftheday-to-dayservicing of property, plant and equipment are recognised in the statementofprofitorlossasincurred. (iii) Depreciation Depreciationisbasedonthecostofanassetlessits residualvalue.Significantcomponentsofindividual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that componentisdepreciatedseparately. Depreciationisrecognisedinthestatementofprofitor lossonastraight-linebasisovertheestimateduseful lives of each component of an item of property, plant and equipment. Right-of-useleaseassetsaredepreciatedoverthe shorteroftheleasetermandusefullife,onastraight-line basis,unlessitisreasonablycertainthattheGroupwill obtainownershipbytheendoftheleaseterm. The expected useful lives for depreciation purposes are asfollows: ■ Hireequipment 2–33years ■ Leaseholdimprovements overtheleaseterm ■ Plantandequipment 2–20years Depreciationmethods,usefullivesandresidualvalues arereviewedateachfinancialyearendandadjusted if appropriate. Inventoriesaremeasuredatthelowerofcostandnet realisablevalue. Thecostofinventoriesisbasedontheweightedaverage cost principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs andothercostsincurredinbringingthemtotheirexisting locationandcondition. Netrealisablevalueistheestimatedsellingpriceinthe ordinarycourseofbusiness,lesstheestimatedcostsof completionandsellingexpenses. (g) (i) Impairment Non-derivative financial assets Non-derivativefinancialassetscomprisetradeandother receivablesandcashandcashequivalents. Non-derivativefinancialinstrumentsexcludingfinancial assetsatfairvalueinprofitorlossarerecognisedinitially atfairvalueplustransactioncosts.Subsequenttoinitial recognition,non-derivativefinancialassetsaremeasured atamortisedcostlessimpairmentlosses. AfinancialassetisrecognisediftheGroupbecomesa partytothecontractualprovisionsoftheasset. FinancialassetsarederecognisediftheGroup’s contractualrightstothecashflowsfromthefinancial assetsexpireoriftheGrouptransfersthefinancialasset toanotherpartywithoutretainingcontrolorsubstantially allrisksandrewardsoftheasset. TheGrouprecognisesitsfinancialassetsat either amortised cost or fair value, depending on thecontractualcashflowcharacteristicsofthe financial assets. TheclassificationoffinancialassetsthattheGroup heldatthedateofinitialapplicationwasbasedonthe Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 202257 factsandcircumstancesofthefinancialassetsheldat that date. Financialassetsrecognisedatamortisedcostare measured using the effective interest method, net of anyimpairmentloss.Financialassetsotherthanthose classifiedasfinancialassetsrecognisedatamortised costaremeasuredatfairvaluewithanychangesinfair valuerecognisedinthestatementofprofitorloss. Forthepurposeofannualimpairmenttestingapplicable togoodwill,suchintangibleassetsthatcannotbetested individually are grouped together into the smallest group ofassetsthatgeneratescashinflowsfromcontinuing usethatarelargelyindependentofthecashinflowsof otherassetsorCGU. Impairmentlossesarerecognisedinthestatementof profitorloss. Receivables Fortradereceivables,theGroupconductsanongoing assessmentofexpectedcreditlosses(ECL)byanalysing actual loss experience of the Group, arrears, and other inputssuchasexposureortiming.Theassessmentis brokendowninto4sectorsincludingIndustrialServices, CivilInfrastructure,Commercial,andResidential.These sectors are then analysed in a set of 5 stages ranging fromcurrentlyduereceivablestoabove90-daysdue receivables.TheGroupalsoseparatelyquantifies receivablesduefromentitiesinliquidation/default. ImpairmentlossesrecognisedinrespectofCGUsare allocated to reduce the carrying amounts of assets in the CGU(orgroupofCGUs)onaproratabasis. Impairmentlossesrecognisedinpriorperiodsare assessed at each reporting date for any indications that thelosshasdecreasedornolongerexists. Animpairmentlossisreversediftherehasbeen a change in the estimates used to determine the recoverableamount.Animpairmentlossisreversedonly totheextentthattheasset’scarryingamount TheGroupprovidesforalossallowanceequivalenttothe lifetime expected credit losses from initial recognition of thosereceivables. doesnotexceedthecarryingamountthatwouldhave beendetermined,netofdepreciationoramortisation,if noimpairmentlosshadbeenrecognised. LossesarerecognisedintheStatementofProfitorLoss andOtherComprehensiveIncomeandreflectedinan allowanceaccountagainsttradereceivables. Whenasubsequenteventcausestheamountof impairment loss to decrease, the decrease is reversed throughthestatementofProfitorlossandOther ComprehensiveIncome. (ii) Non-financial assets ThecarryingamountsoftheGroup’snon-financial assets, other than inventories and deferred tax assets, arereviewedateachreportingdatetodeterminewhether there is any indication of impairment, and if any such indicationexists,thentheasset’srecoverableamount is estimated. Forintangibleassets,namelygoodwillthathave indefiniteusefullivesorthatarenotyetavailableforuse, therecoverableamountisestimatedeachyearatthe sametime. An impairment loss is recognised if the carrying amount ofanassetoritsrelatedcash-generatingunit(CGU) exceedsitsestimatedrecoverableamount. TherecoverableamountofanassetorCGUisthegreater ofitsvalueinuseanditsfairvaluelesscoststosell.In assessingvalueinuse,theestimatedfuturecashflows arediscountedtotheirpresentvalueusingapre-tax discountratethatreflectscurrentmarketassessments ofthetimevalueofmoneyandtherisksspecificto the asset. (h) (i) Employee benefits Defined contribution plans Adefinedcontributionplanisapost-employmentbenefit planunderwhichanentitypaysfixedcontributionsinto aseparateentityandwillhavenolegalorconstructive obligationtopayfurtheramounts. Obligationsforcontributionstodefinedcontribution plansarerecognisedasanemployeebenefitexpensein thestatementofprofitorlossintheperiodsduringwhich servicesarerenderedbyemployees. Prepaidcontributionsarerecognisedasanassetto the extent that a cash refund or a reduction in future paymentsisavailable. Contributionstoadefinedcontributionplanthataredue morethan12monthsaftertheendoftheperiodinwhich the employees render the service are discounted to their presentvalue. (ii) Other long-term employee benefits TheGroup’snetobligationinrespectoflong-term employeebenefitsotherthandefinedbenefitplansisthe amountoffuturebenefitthatemployeeshaveearnedin return for their service in the current and prior periods plusrelatedon-costs. Thebenefitisdiscountedtodetermineitspresentvalue, andthefairvalueofanyrelatedassetsisdeducted. Acrow Annual Report 202258 3. Significant accounting policies (continued) The discount rate is the yield at the reporting date on highqualitycorporatebondsthathavematuritydates approximatingthetermsoftheGroup’sobligations. Thecalculationisperformedusingtheprojectedunit creditmethod. (iii) Termination benefits Terminationbenefitsarerecognisedasanexpense whentheGroupisdemonstrablycommitted,without realisticpossibilityofwithdrawal,toaformaldetailed plantoeitherterminateemploymentbeforethe normal retirement date, or to provide termination benefitsasaresultofanoffermadetoencourage voluntary redundancy. Terminationbenefitsforvoluntaryredundanciesare recognised as an expense if the Group has made an offer ofvoluntaryredundancy,itisprobablethattheofferwill beaccepted,andthenumberofacceptancescanbe estimatedreliably. Ifterminationbenefitsarepayablemorethan12months afterthereportingperiod,theterminationbenefitsare discountedtotheirpresentvalue. (iv) Short-term benefits Short-termemployeebenefitobligationsaremeasured onanundiscountedbasisandareexpensedasthe relatedserviceisprovided. Aliabilityisrecognisedfortheamountexpectedtobe paidundershort-termcashbonusorprofit-sharing plans if the Group has a present legal or constructive obligationtopaythisamountasaresultofpastservice providedbytheemployeeandtheobligationcanbe estimated reliably. (v) Share-based payments TheGroupprovidesbenefitstoselectedemployeesin theformofshare-basedpaymenttransactions,whereby employeesrenderservicesinexchangeforoptionsand/ orperformancerightsoverordinaryshares. Thecostoftheshare-basedpaymentsismeasuredby referencetothefairvalueatthedateatwhichtheyare grantedandamortizedovertheexpectedvestingperiod withacorrespondingincreaseinsharecapitalreserve. Ifvestingperiodsorothervestingconditionsapply,the expenseisallocatedoverthevestingperiod,basedonthe bestavailableestimateofthenumberofshareoptions expectedtovest. Non-marketvestingconditionsareincludedin assumptionsaboutthenumberofoptionsthatare expectedtobecomeexercisable.Estimatesare subsequentlyrevisedifthereisanyindicationthatthe numberofshareoptionsexpectedtovestdiffersfrom previousestimates.Anyadjustmenttocumulative share-basedcompensationresultingfromarevisionis recognisedinthecurrentperiod.Thenumberofvested optionsultimatelyexercisedbyholdersdoesnotimpact theexpenserecordedinanyperiod.Uponexercise of share options, the proceeds received, net of any directlyattributabletransactioncosts,areallocatedto share capital. Thefairvalueofshare-basedpaymentsisappraised atgrantdateinaccordancewithAASB2Share-based Payments.Theseareindependentlydeterminedusing a pricing model that considers the exercise price, the terms of the payment, the vesting and performance criteria,theimpactofthedilution,thenon-tradeable nature of the payment, the share price at grant date, the expected price volatility of the underlying share, the comparativesharemarketindices,theexpecteddividend yieldand the risk-freeinterestrateforthetermofthe share-basedpayment. (i) Provisions A provision is recognised if, as a result of a past event, theGrouphasapresentlegalorconstructiveobligation thatcanbeestimatedreliably,anditisprobablethatan outflowofeconomicbenefitswillberequiredtosettle the obligation. Provisionsaredeterminedbydiscountingtheexpected futurecashflowsatapre-taxratethatreflectscurrent marketassessmentsofthetimevalueofmoneyandthe risksspecifictotheliability. Theunwindingofthediscountisrecognisedas finance cost. (i) Restructuring Aprovisionforrestructuringisrecognisedwhenthe Group has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has beenannouncedpublicly. Futureoperatinglossesarenotprovidedfor. (ii) Onerous contracts Aprovisionforonerouscontractsisrecognisedwhen theexpectedbenefitstobederivedbytheGroupfroma contractarelowerthantheunavoidablecostofmeeting itsobligationsunderthecontract. The provision is measured at the present value of theloweroftheexpectedcostofterminatingthe contractandtheexpectednetcostofcontinuingwith the contract. Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 202259 Beforeaprovisionisestablished,theGrouprecognises anyimpairmentlossontheassetsassociatedwith that contract. (iii) Make good Aprovisionformakegoodismeasuredatthepresent value of the cost of restoring leased properties to their originalcondition,attheconclusionofthelease. (j) Revenue Acrowispredominatelyaprovideroffalsework, formwork,scaffoldingandscreenequipmentforhireor salewithrevenueprimarilygeneratedviadryhire,project hireorsale. The company generates revenue via provision of equipmenthire,servicesandthesalesofproduct. Revenue generated from hire of equipment only is referredtoas“dryhire”revenue. Projecthireor“wethire”revenueincludes“dryhire” revenuepluslabourservices,cartageservices, consumablesalesand/orotherserviceswhichare recognisedovertimeasservicescanbestaged progressivelyastheyarerendered.Theseformsof contractsmayvaryinscope;however,allprojecthirehas onecommonperformanceobligation,beingtheprovision ofscaffoldingstructurestothecustomerwhichincludes thescaffoldingequipment,thelabouroninstallation anddismantling,cartage(transporttoandfromthe customer)andanyancillarymaterialsthatarerequiredto fulfilltheobligation. Todeterminewhethertorecogniserevenue,theGroup followsa5-stepprocess: 1) Identifyingthecontractwithacustomer 2) Identifyingtheperformanceobligations 3) Determiningthetransactionprice 4) Allocatingthetransactionpricetothe performance obligations 5) Recognisingrevenuewhen/asperformance obligation(s)aresatisfied. (i) Hire of equipment Falsework,formwork,scaffoldingandscreenequipment arerentedtocustomersunderoperatingleaseswith rentalperiodsaveragingsixmonthstolessthanoneyear. Therentalcanbearrangedasdryhirewhereonly equipment is provided to the customer and revenue is recognisedatfixedratesovertheperiodofhire;oraspart ofaprojecthirewhereAcrowsupplieslabourandcartage servicesbetweenwarehouseandbuildingsites. Revenue recognition on equipment hire commences oncefalsework,formwork,scaffoldorscreenequipment iseithercollectedbythecustomer,deliveredtothe customeroronceascaffoldingstructurehasbeen certifiedtobesafeandaccessgrantedtocustomersor controlotherwisepassestoacustomer. Revenueisrecognisedoverstraight-linebasesoverthe lifeofthehireagreementsperAASB16Leases. (ii) Labour and cartage services Revenuefromprovidingscaffoldinglabourininstallation anddismantling,andequipmentcartage,beingtransport to and from the customer, are recognised at one or more pointsintimeasservicescanbestagedprogressivelyas theyarerendered. Revenueisrecognisedbasedontheactualservice providedtotheendofthereportingperiodbecausethe customerreceivesandusesthebenefitssimultaneously. Labourandcartageservicesrevenuearerecognised overtimeunderAASB15RevenuefromContracts with Customers. (iii) Consumable sales and other services Revenue from sales are measured as the transaction pricenetofreturns,tradediscountsandvolumerebates. Revenueisrecognisedwhencontrolofthegoodsor servicesaretransferredtocustomerswhichisgenerally upondeliverytoorcollectionbythecustomerdepending onthecontractwiththecustomer. Discountsarerecognisedasareductioninrevenueuntil managementdeterminethatitishighlyprobablethatno significantreversalofrevenuewilloccur. Revenuerecognitionofconsumablesalesandother servicesareatapointintimewhencontrolpasseswhich is typically upon delivery or collection as under AASB 15 RevenuefromContractswithCustomers. (k) Finance income and finance costs Financeincomecomprisesinterestincomeonfunds deposited.Interestincomeisrecognisedasitaccrues inthestatementofprofitorloss,usingtheeffective interest method. Financecostscompriseinterestexpensesonloans andborrowings,leaseliabilitiesand,wherematerial,the unwindingofthediscountonprovisions. Borrowingcoststhatarenotdirectlyattributabletothe acquisition, construction or production of a qualifying assetarerecognisedinthestatementofprofitorloss usingtheeffectiveinterestmethod. (l) Tax Taxexpensecomprisescurrentanddeferredtax. Currentanddeferredtaxarerecognisedinthe statementofprofitorloss,excepttotheextentthatit Acrow Annual Report 202260 3. Significant accounting policies (continued) relates to items recognised directly in equity or in other comprehensive income. Currenttaxistheexpectedtaxpayableorreceivableon thetaxableincomeor(loss)fortheyear,usingtaxrates enactedorsubstantivelyenactedatthereportingdate, andanyadjustmenttotaxpayableinrespectofprevious years.Currenttaxpayablealsoincludesanytaxliability arisingfromthedeclarationofdividends. Deferredtaxisrecognisedinrespectoftemporary differencesbetweenthecarryingamountsofassets andliabilitiesforfinancialreportingpurposesandthe amountsusedfortaxationpurposes.Deferredtaxis not recognised for temporary differences on the initial recognitionofassetsorliabilitiesinatransactionthat isnotabusinesscombinationandthataffectsneither accountingnortaxableprofitor(loss). Deferredtaxismeasuredatthetaxratesthatare expectedtobeappliedtotemporarydifferenceswhen theyreverse,basedonthelawsthathavebeenenacted orsubstantivelyenactedbythereportingdate. Deferredtaxassetsandliabilitiesareoffsetifthereisa legallyenforceablerighttooffsetcurrenttaxliabilities andassets,andtheyrelatetoincometaxesleviedby thesametaxauthorityonthesametaxableentity,oron differenttaxentities,buttheyintendtosettlecurrenttax liabilitiesandassetsonanetbasisortheirtaxassets andliabilitieswillberealisedsimultaneously. A deferred tax asset is recognised for unused tax losses, taxcreditsanddeductibletemporarydifferences,tothe extentthatitisprobablethatfuturetaxableprofitswillbe availableagainstwhichtheycanbeutilised. Deferredtaxassetsarereviewedateachreportingdate andarereducedtotheextentthatitisnolongerprobable thattherelatedtaxbenefitwillberealised. (m) Exploration and evaluation assets Explorationandevaluationexpenditurerelatingtoanarea ofinterestiscapitalisedwhereexplorationrightshave beenobtained. Theexpenditureisonlycarriedforwardtotheextentthat theyareexpectedtoberecoupedthroughsuccessful developmentandexploitationorsaleoftheareaorwhere the exploration and evaluation activities have not reached astagewhichpermitsareasonableassessmentofthe existenceofeconomicallyrecoverablereservesand activeexplorationoperationsarecontinuing. (n) Goods and services tax Revenue, expenses and assets are recognised net of the amountofgoodsandservicestax(GST),exceptwhere theamountofGSTincurredisnotrecoverablefromthe taxationauthority.Inthesecircumstances,theGSTis recognised as part of the cost of acquisition of the asset oraspartoftheexpense. Cashflowsincludedinthestatementofcashflowsare onagrossbasis.TheGSTcomponentsofcashflows arisingfrominvestingandfinancingactivitieswhichare recoverablefromorpayabletotheATO,areclassifiedas operatingcashflows. (o) Lease accounting The Group as a lessee TheGroupmakestheuseofleasingarrangements principallyfortheprovisionofthewarehouse/ officespace,forkliftequipment,motorvehiclesand printers.TheGroupdoesnotenterintosaleand leaseback arrangements. Alltheleasesarenegotiatedonanindividualbasisand containawidevarietyofdifferenttermsandconditions suchaspurchaseoptionsandescalationclauses.The Groupassesseswhetheracontractisorcontainsa leaseatinceptionofthecontract.Aleaseconveysthe righttodirecttheuseandobtainsubstantiallyallofthe economicbenefitsofanidentifiedassetforaperiodof timeinexchangeforconsideration. Onlymotorvehicleleasecontractscontainboth leaseandnon-leasecomponents.Thesenon-lease componentsareusuallyassociatedwithservicingand repaircontracts. Measurement and recognition of leases as a lessee At lease commencement date, the Group recognises a right-of-useassetandaleaseliabilityinitsconsolidated statementoffinancialposition.Theright-of-useasset ismeasuredatcost,whichismadeupoftheinitial measurementoftheleaseliability,anyinitialdirect costsincurredbytheGroup,anestimateofanycoststo dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencementdate(netofanyincentivesreceived). TheGroupdepreciatestheright-of-useassetona straight-linebasisfromtheleasecommencementdateto theearlieroftheendoftheusefullifeoftheright-of-use assetortheendoftheleaseterm. Expenditureisnotsubjecttoamortisationbutis assessedforimpairmentwhenfactsandcircumstances suggest that the carrying amount may exceed its recoverableamount. TheGroupalsoassessestheright-of-useasset forimpairmentwhensuchindicatorsexist.Atthe commencement date, the Group measures the lease liabilityatthepresentvalueoftheleasepaymentsunpaid Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 202261 atthatdate,discountedusingtheGroup’sincremental borrowingratebecauseastheleasecontractsare negotiatedwiththirdpartiesitisnotpossibleto determinetheinterestratethatisimplicitinthelease. Theincrementalborrowingrateistheestimatedratethat theGroupwouldhavetopaytoborrowthesameamount overasimilarterm,andwithsimilarsecuritytoobtainan assetofequivalentvalue. Leasepaymentsincludedinthemeasurementofthe leaseliabilityaremadeupoffixedpayments(including insubstancefixed),variablepaymentsbasedonanindex orrate,amountsexpectedtobepayableunderaresidual value guarantee and payments arising from options reasonablycertaintobeexercised. Subsequenttoinitialmeasurement,theliabilitywillbe reducedbyleasepaymentsthatareallocatedbetween repaymentsofprincipalandfinancecosts.Thefinance cost is the amount that produces a constant periodic rate ofinterestontheremainingbalanceoftheleaseliability. Theleaseliabilityisreassessedwhenthereisachange intheleasepayments.Changesinleasepayments arising from a change in the lease term or a change in the assessment of an option to purchase a leased asset.Therevisedleasepaymentsarediscountedusing theGroup’sincrementalborrowingrateatthedateof reassessmentwhentherateimplicitintheleasecannot bereadily determined. Theamountoftheremeasurementoftheleaseliabilityis reflectedasanadjustmenttothecarryingamountofthe right-of-useasset.Theexceptionbeingwhenthecarrying amountoftheright-of-useassethasbeenreducedto zerothenanyexcessisrecognisedinprofitorloss. Paymentsunderleasescanalsochangewhenthereis eitherachangeintheamountsexpectedtobepaidunder residualvalueguaranteesorwhenfuturepayments change through an index or a rate used to determine thosepayments,includingchangesinmarketrentalrates followingamarketrentreview. Theremeasurementoftheleaseliabilityisdealtwithbya reductioninthecarryingamountoftheright-of-useasset to reflect the full or partial termination of the lease for leasemodificationsthatreducethescopeofthelease. Any gain or loss relating to the partial or full termination oftheleaseisrecognisedinprofitorloss. Theright-of-useassetisadjustedforallotherlease modifications.TheGrouphaselectedtoaccountforlow- valueassetsusingthepracticalexpedients.Theseleases relatetomobileITdevicessuchascomputermonitors, laptopsandmobiletelephones.Insteadofrecognising aright-of-useassetandleaseliability,thepaymentsin relationtothesearerecognisedasanexpenseinprofitor lossonastraight-linebasisovertheleaseterm. The Group as a lessor AsalessortheGroupclassifiesitsleasesaseither operatingorfinanceleases.Aleaseisclassifiedasa financeleaseifittransferssubstantiallyalltherisksand rewardsincidentaltoownershipoftheunderlyingasset andclassifiedasanoperatingleaseifitdoesnot. (p) New accounting standards and interpretations not yet adopted Therewerenonewaccountingstandards,interpretations andamendmentssignificantlyimpactingtheGroupinthe financialyearended30June2022. 4. Revenue In dollars Revenue from contracts with customers Labourservicestransferredovertime Cartageservicestransferredovertime 2022 2021 34,449,251 21,881,696 5,936,777 5,084,962 Consumablesalesandotherservicestransferredatapointintime 44,597,902 25,433,493 Revenue from operating leases Hire of equipment 84,983,930 52,400,151 55,842,988 42,208,736 140,826,918 94,608,887 Acrow Annual Report 2022 62 5. Other income In dollars Disposal of property, plant and equipment Proceeds Writtendownvalue Net gain on disposal of property, plant and equipment 6. Other expenses In dollars Restructuring and due diligence expenses Audit, tax and legal expenses Doubtfuldebtexpense Motor vehicle expenses Plant & equipment operating expenses Repair & maintenance Travelling expenses Utilities Property costs Others 7. Finance costs In dollars Finance costs Unwindinginterestondeferredconsideration Interestexpenseonfinancialliabilities Interestexpenseonleases Borrowingcosts Net finance costs from continuing operations 2022 2021 7,518,603 11,134,736 (2,562,816) (4,582,306) 4,955,787 6,552,430 2022 2021 (748,453) (950,314) (837,125) (730,548) (650,000) (150,466) (347,101) (390,391) (402,058) (340,170) (339,708) (283,715) (419,487) (267,598) (779,347) (651,873) (217,698) (155,347) (537,135) (902,011) (5,278,112) (4,822,433) 2022 2021 (33,960) (168,915) (1,833,618) (1,255,498) (1,509,802) (1,675,195) (135,736) (206,097) (3,513,116) (3,305,705) Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 2022 63 8. Income tax expense In dollars Currentincometaxexpense Deferredincometaxexpense Under provision for income tax in prior year Income tax expense attributable to profit 2022 2021 (1,584,228) 625,040 (360,775) (2,793,780) (17,179) (10,415) (1,962,182) (2,179,155) Theprimafacietaxonprofitbeforeincometaxisreconciledtotheincometaxexpenseasfollows: In dollars Profit before income tax 2022 2021 17,656,350 6,142,153 Incometax(expense)usingtheGroup’sdomestictaxrate(30%) (5,296,905) (1,842,647) Income tax effects of amounts which are not deductible / (taxable) in calculating taxable income: Non-deductiblelossesonoverseasentities Non-deductibleshare-basedpaymentexpense Non-deductibleacquisitionexpense Non-deductibleimpairmentexpense Othernon-deductibleexpenses (Under)provisionforincometaxinprioryear Utilisation of prior year tax losses not previously recognised Income tax expense attributable to profit 9. Cash and cash equivalents In dollars Cashatbank Bankoverdraft (288) 274 (349,400) (673,656) (31,644) (17,989) (17,209) (17,179) 46,729 (15,656) (60,311) (10,415) 3,768,432 376,527 (1,962,182) (2,179,155) 2022 2021 3,010,433 1,754,622 (3,001,005) (1,865,938) 9,428 (111,316) Acrow Annual Report 2022 64 10. Trade and other receivables In dollars Tradereceivables Expectedcreditlossprovision Movement in the expected credit loss provision: In dollars At 1 July Openingbalance Expectedcreditlossrecognisedduringtheyear Receivableswrittenoff/(back)duringtheyear Balance at 30 June 2022 2021 35,821,806 25,789,926 (1,458,939) (1,178,190) 34,362,867 24,611,736 2022 2021 (1,178,190) (1,196,940) (650,000) 150,000 369,251 (131,250) (1,458,939) (1,178,190) Current More than 30 days More than 60 days More than 90 days Default Total 2022 Expectedcreditlossrate 0.02% 0.30% 4.22% 15.98% 100.00% Gross carrying amount 17,237,806 11,002,000 2,161,000 4,867,517 553,483 35,821,806 Lifetimeexpectedcreditloss 3,448 33,006 91,194 777,808 553,483 1,458,939 2021 Expectedcreditlossrate 0.07% 1.40% 11.06% 16.82% Gross carrying amount 12,626,926 6,061,000 1,911,000 5,191,000 Lifetimeexpectedcreditloss 8,839 84,854 211,357 873,140 – – – 25,789,926 1,178,190 11. Inventories In dollars Finishedgoods Provisionforslowmovingstock 2022 2021 15,146,338 9,025,959 (274,152) (67,405) 14,872,186 8,958,554 Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 2022 65 12. Contract assets, prepayments and other assets In dollars Contractassets Current Otherreceivables Prepayments 13. Assets and liabilities held for sale In dollars Assetsclassifiedasheldforsale Liabilitiesassociatedwithassetsheldforsale 2022 2021 111,927 775,168 111,927 775,168 807,617 608,339 4,268,215 3,010,038 5,075,832 3,618,377 2022 72,579 67,063 2021 66,507 61,453 AcrowcontinuestoexplorethedivestmentofNobleMineralResourcesGhanaLtd,whichownstheGroup’sexploration andevaluationassetsinGhana.Thebusinessremainsnon-coretotheGroup,hasanimmaterialfinancialandlimited managementimpacts. 14. Property, plant and equipment In dollars Cost Land and buildings Plant and equipment Hire equipment Total Balanceat1July2020 475,989 11,528,314 82,765,705 94,770,008 Additions Disposals – – 1,595,706 15,814,177 17,409,883 (52,460) (5,829,158) (5,881,618) Balance at 30 June 2021 475,989 13,071,560 92,750,724 106,298,273 Cost Balanceat1July2021 475,989 13,071,560 92,750,724 106,298,273 Additions Disposals – – 1,020,433 21,358,057 22,378,490 (42,457) (2,950,875) (2,993,332) Balance at 30 June 2022 475,989 14,049,536 111,157,906 125,683,431 Depreciation and impairment losses Balanceat1July2020 Depreciationfortheyear Disposals Hireequipmentlossadjustment 354,558 10,693,801 7,683,156 18,731,515 19,206 316,956 5,552,159 5,888,321 – – (34,752) (1,264,561) (1,299,313) – (31,104) (31,104) Balance at 30 June 2021 373,764 10,976,005 11,939,650 23,289,419 Acrow Annual Report 2022 66 14. Property, plant and equipment (continued) In dollars Balanceat1July2021 Depreciationfortheyear Disposals Hireequipmentlossadjustment Land and buildings Plant and equipment Hire equipment Total 373,764 10,976,005 11,939,650 23,289,419 17,467 500,611 6,869,271 7,387,349 – – (41,319) (389,197) (430,516) – (53,257) (53,257) Balance at 30 June 2022 391,231 11,435,297 18,366,467 30,192,995 Carrying amounts At1July2020 At 30 June 2021 At1July2021 At 30 June 2022 121,431 834,513 75,082,549 76,038,493 102,225 2,095,555 80,811,074 83,008,854 102,225 2,095,555 80,811,074 83,008,854 84,758 2,614,239 92,791,439 95,490,436 Property, plant and equipment are at times sold prior to the end of its useful life either at the request of the customers orduetoloss.“LossonHire”revenuearechargedasOtherIncome(seenote5)wherethecustomersareliable.On acquisitionofpropertyplantandequipmentthereisnointentiontodisposethroughsale. 15. Leases TheAcrowgroupleasesvariousproperties,forklifts,motorvehiclesandprinters.Propertyleasetermsareupto 10 yearsandoftenincludeextensionoptions,forkliftleasetermsareupto7years,motorvehicleleasetermsarefrom 1to3years,whilstallprintersarefora5-yearleaseterm. Theprintersformonemasterleaseagreementwhileallotherleasesarenegotiatedonanindividualbasisandcontain abroadrangeoftermsandconditions. Leaseagreementsdonotimposeanycovenants,butleasedassetsmaynotbeusedassecurityfor borrowing purposes. Withtheexceptionofshort-termleasesandleasesoflow-valueunderlyingassets,eachleaseisreflectedinthe consolidatedstatementoffinancialpositionasaright-of-useassetandaleaseliability. Right-of-useassetsaremeasuredatcostandcomprise: ■ Anyinitialdirectcostsincurredbythelessee; ■ Anestimateofrestorationormakegoodcosts; ■ Theamountoftheinitialmeasurementoftheleaseliability;and ■ Anyleasepaymentsmadeatorbeforethecommencementdate,lessanyleaseincentivesreceived. Extensionoptionsareonlyincludedintheleasetermiftheleaseisreasonablycertaintobeextended.Theassessment isreviewedifasignificanteventorchangeincircumstanceoccurswhichaffectsthisassessmentandthatiswithin thecontrolofthelessee. Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 202267 Lease amounts recognised in the Statement of Financial Position: In dollars Right-of-use assets Properties Forkliftsandofficeequipment Motor vehicles Total right-of-use assets Lease liabilities Current Non-current Total lease liabilities 2022 2021 22,218,881 26,165,469 1,860,910 2,145,017 398,929 498,450 24,478,720 28,808,936 4,964,215 4,645,552 23,285,254 27,396,387 28,249,469 32,041,939 Additionstotheright-of-useassetsduringFY2022were$1,047,654(FY2021:$1,671,900). Lease amounts recognised in the Statement of Profit or loss and Other Comprehensive Income: In dollars 2022 2021 Depreciation charge for right-of-use assets: Properties Forkliftsandofficeequipment Motor vehicles Total depreciation charge for right-of-use assets Leasepaymentsinclude: 4,765,763 4,843,914 646,144 555,296 271,098 276,066 5,683,005 5,675,276 ■ Variableleasepaymentsthatarebasedonanindexorrate; ■ Amountsexpectedtobepayablebythelesseeunderresidualvalueguarantees; ■ TheexercisepriceofapurchaseoptionifAcrowisreasonablycertaintoexercisethatoption; ■ Fixedpayments(includingin-substancefixedpayments),lessanyleaseincentivesreceivable;and ■ Paymentofpenaltiesforterminatingthelease,iftheleasetermreflectsAcrowexercisingthatoption. Leasepaymentsarediscountedusingtheinterestrateimplicitinthelease,ifdeterminableorattheGroup’s incrementalborrowingrate. In dollars 2022 2021 Lease amounts included in the Statement of cashflows Leasepayments Interestexpense(includedinfinancecosts) Total amount paid Expenses relating to low value asset leases 5,145,257 4,198,952 1,509,802 1,675,195 6,655,059 5,874,147 138,788 125,249 Acrow Annual Report 202268 15. Leases (continued) Lease payments not recognised as liabilities TheGrouphaselectednottorecognisealeaseliabilityforlowvalueleases(whereanassetisvaluedatUSD5,000 orlowerperAASB16).Paymentsforthesearerecognisedonastraight-linebasisasanexpenseinthestatementof profitorloss. LowvalueassetsarepredominatelyportableITandtelecommunicationequipment.Theundiscountedcashflowson theremainingleasetermatthereportingdateareasfollow: In dollars Lessthanoneyear Betweenoneandfiveyears 16. Intangible assets In dollars Goodwill 2022 2021 114,968 194,961 129,920 162,824 309,929 292,744 2022 2021 7,428,704 7,428,704 7,428,704 7,428,704 Allbusinesscombinationsareaccountedforbyapplyingtheacquisitionmethod.Goodwillrepresentsthedifference betweenthecostoftheacquisitionandthefairvalueofthenetidentifiableassetsacquired. Goodwillisstatedatcostslessanyaccumulatedimpairmentlosses. Acrowannuallytestsgoodwillwithindefiniteusefullivesforimpairment.Anassetthatdoesnotgenerateindependent cashflowsistestedforimpairmentaspartofacashgeneratingunit(CGU). Wherethereisanimpairmentloss,itisrecognisedinthestatementofprofitorlosswhenthecarryingamountof an assetexceedsitsrecoverableamount.Theasset’srecoverableamountisestimatedbasedonthehigherofits value-in-useandfairvaluelesscoststosell. TherecoverableamountofaCGUisdeterminedbasedonavalue-in-usecalculation.Thecalculationsusecashflow projectionsbasedonaone-yearbudgetthathasbeenapprovedbytheboardofdirectorsandthenafour-yearforecast approvedbythemanagement.Cashflowsbeyondthefive-yearperiod*areextrapolatedusingthecashflowsforyear 5andtheestimatedlong-termgrowthrates. ThediscountrateusedistheGroup’sweightedaveragecostofcapital.Theterminalgrowthratereflectsthe management’soutlookongrowth.ThediscountrateusedistheGroup’sweightedaveragecostofcapital.Theterminal growthratereflectsthemanagement’soutlookongrowth. In dollars Averagegrowthrate1–5years Terminalgrowthrate Post-taxdiscountrate 2022 57.5%* 1% 10.6% 2021 5% 1% 10.7% * IncreaseinEBITfrom2022to2023is251%andbetween6.7%and12.5%forthefollowing4years.Thelargeincreaseinthe2023year isduetocatchupsondelayscausedbyCOVIDandwetweatherconditionsintheeastcoastsin2022.Manyoftheseprojectshadeither commencedlatein2022orwillcommencein2023,currentpipelinesprovetobestrongandwillcontinueinto2023. Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 2022In dollars Openinggoodwillbalance Additions Reductions Closing balance Allocation to CGU Groups In dollars Natform companies Other 69 2022 2021 7,428,704 7,428,704 – – – – 7,428,704 7,428,704 2022 2021 7,301,902 7,301,902 126,802 126,802 7,428,704 7,428,704 Impairment testing on Natform companies Goodwillof$7,301,902wasrecordedat31August2018withrespecttotheacquisitionofNatformPtyLtdand Natform(QLD)PtyLtd.TherecoverableamountofCGUwasdeterminedbasedonvalue-in-usecalculationswhich requiretheuseofassumptions.Thecalculationsusecashflowprojectionsbasedonfinancialbudgetsapprovedby managementcoveringafive-yearperiod. Sensitivity Managementhasmadejudgementsandestimatesinrespectofimpairmenttestingofgoodwill.Shouldthese judgementsandestimatesnotoccur,thecarryingvalueofgoodwillmayvary.Anyreasonablechangeinthekey assumptionsonwhichtheestimatesand/orthediscountratearebasedwouldnotcausethecarryingamountofthe CGUtoexceedtherecoverableamount. 17. Trade and other payables In dollars Current Trade payables Tradepayables Accrued expenses Other payables Natform deferred consideration Uni-spandeferredconsideration Uni-spancontingentconsideration 2022 2021 12,344,200 19,562,215 9,139,827 5,559,940 21,484,027 25,122,155 – – – – – 3,338,025 148,264 3,486,289 Afinaldeferredpaymentof$3,374,370(withpresentvalueof$3,338,025atJune2021)andacontingentconsideration of$148,264werepaidinSeptember2021totheUni-spanvendors.Thenafurtheradjustmentpaymentof$60,022 wasmadeinDecember2021asacontributiontoalegalmatterthatAcrowhastakenoversinceacquisition.Total considerationspaidamountto$3,582,656fortheyear. Acrow Annual Report 2022 70 18. Employee benefits In dollars Current Annual leave Longserviceleave Otheremployeebenefits Non-current Longserviceleave 2022 2021 2,377,838 1,891,263 1,913,103 1,639,784 1,868,513 1,108,477 6,159,454 4,639,524 444,988 611,541 444,988 611,541 Allemployeeshavedefinedcontributionplansforsuperannuationandtheexpenserecognisedduringtheyearwas $3,334,148(2021:$2,476,487). 19. Loans and borrowings In dollars Current Non-current Borrowings are represented by the following finance facilities: In dollars Securedamortisingbusinessloanof$18,168,000 Equipmentfinancefacility,revolving3-yearlimitof$22.0m,temporarilyreducedto $20.0m(30 Jun 21: $10.0m)with$2.0mtransferredtoTradefinancefacilityforthe periodbetweenJunetoSeptember22. Headroom Tradefinancefacility,revolving180-daylimitof$6.0mtemporarilyincreasedto $8.0m(30 Jun 21: $3.0m)with$2.0mtransferredfromEquipmentfinancefacility fortheperiodbetweenJunetoSeptember22. Headroom Workingcapitalfacility,$8.4m(30 Jun 21: $5.0m)including$1.4mbankguarantee (30 Jun 21: $1.4m),and$6.6mbankoverdraft(30 Jun 21: $3.6m) Headroom Borrowings utilised* Headroom Total accessible borrowing amount 2022 2021 17,001,678 7,898,384 15,848,299 14,440,464 32,849,977 22,338,848 2022 2021 11,483,000 14,423,000 13,450,245 6,381,357 6,549,755 3,618,643 7,916,732 1,534,491 83,268 1,465,509 4,336,853 3,171,866 3,663,147 1,828,134 37,186,830 25,510,714 10,296,170 6,912,286 47,483,000 32,423,000 Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 202271 In dollars Borrowings utilised and committed Less:Bankoverdraftutilisedexcludedfromloansandborrowingsdisclosed separatelyontheStatementofFinancialPosition Less:Bankguaranteeutilisednotdrawn Total Loans and Borrowings 2022 2021 37,186,830 25,510,714 (3,001,005) (1,865,938) (1,335,848) (1,305,928) 32,849,977 22,338,848 *FY21amountshavebeenrecalculatedtoadjusttheheadroomandborrowingsutilisedrelatingtotheGroup’sbankoverdraft. Allborrowingsaresecuredbyinterlockingguaranteeswhereeachcompanywithinthegroupjointlyandseverally guaranteestherepaymentofloanstothelendinginstitution.Allloansaresecuredovertheassetsandinventoryof the Group. Covenantsarereviewedhalf-yearlywiththelender.TheGrouphascompliedwithalltherespectiveborrowing covenantsthroughouttheyearended30June2022.ThecovenantmeasuresincludeDebtServiceCoverratio,Equity ratioandFinancialDebttoEBITDAratio. Interestratesonsecuredamortisedbusinessloansarevariableanddependentonprevailingmarketratesand bank margins. Allborrowingcostsincurredintheyearhavebeenexpensed. 20. Provisions In dollars Makegood 2022 2021 469,274 469,274 469,274 469,274 Aprovisionformakegoodismeasuredatthepresentvalueofthecostofrestoringleasedpropertiestotheiroriginal condition,attheconclusionofthelease.Nolongterm(greaterthan12months)newpropertyleasehadbeenentered intoduringtheyearthatrequirefurtheraddition. Acrow Annual Report 202272 21. Deferred income tax liability and current income tax liability In dollars 2022 2021 Deferred income tax liability movement during the year: Openingbalanceat1July Changestoestimatesfromprioryears Provisions Accruals Property, plant and equipment Revenue tax loss Closing balance at 30 June Income tax liabilities Openingbalanceat1July Changestoestimatesfromprioryears Tax paid Currenttaxliabilities Carried forward unpaid tax liabilities Unrecognised deferred tax assets Deferred tax assets not recognised for the following items: Revenue tax losses Capitallosses Temporary differences 6,596,723 4,727,900 32,919 – (250,978) (5,613,213) 74,124 (139,788) 537,627 7,333,145 – 288,679 6,990,415 6,596,723 310,332 556,301 (15,739) – (9,790) (556,301) 1,584,228 310,332 1,869,031 310,332 11,200,229 15,475,859 202,441 202,441 (5,921,940) (6,061,604) 5,480,730 9,616,696 While tax losses and temporary differences do not expire under current tax legislation, deferred tax assets have not beenrecognisedinrespectoftheseitemsascertainsubsidiarieshaveexperiencedanumberofyearswithouttaxable incomeandthereforerecoveryisnotconsideredprobable.Thetaxlossesdonotexpireundercurrenttaxlegislation. Thepotentialbenefitofthedeferredtaxassetinrespectoftaxlossescarriedforwardwillonlybeobtainedif: (i) Thesubsidiariescontinuetoderivefutureassessableincomeofanatureandanamountsufficienttoenablethe benefittoberealised; (ii) Thesubsidiariescontinuetocomplywiththeconditionsfordeductibilityimposedbythelaw; (iii)Nochangesintaxlegislationadverselyaffectthesubsidiariesinrealisingtheasset;and (iv)Thesubsidiariespassthecontinuityofownershiptest,orthesamebusinesstestasoutlinedbytheAustralian TaxationOffice. Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 202273 22. Issued capital In dollars Number of shares Onissueof1July IssueofDRPshares(i) Issueofsharesforcash(ii) Sharesissuedthroughconversionofperformancerights(iii) Exerciseofshareoptions(iv) Exerciseofrestrictedrights(v) 2022 2021 219,377,208 216,039,534 2,138,792 2,183,021 27,631,579 3,165,120 – – 280,500 1,154,653 359,000 – 252,952,199 219,377,208 (i) 1,432,611unitsofordinaryshareswereissuedat$0.4437persharefollowingthefinal2021dividenddeclarationon25November2021 pursuanttotheDividendReinvestmentPlan(DRP);706,181unitsofordinaryshareswereissuedat$0.4575persharefollowingthe FY2022interimdividenddeclarationon27May2022alsopursuanttotheDRP. (ii) 27,631,579unitsoffullypaidordinaryshareswereissuedat$0.38pershareviacapitalraisingon27July2021. (iii)3,165,120unitsofordinaryshareswereissuedthroughconversionofperformancerightsgrantedunderLongTermVariableRemuneration planinJuly2019. (iv)280,500unitsofLoanFundedShareswereexercisedat$0.20persharewith$42,776loanrepaidimmediatelyafterapplying accumulated dividend. (v) 359,000unitsofRestrictedRightsweregrantedtoanumberofselectedemployeesinSeptember2021whichwereexercisedon 21 December2021. The holders of these shares are entitled to receive dividends as declared from time to time and are entitled to one vote pershareatgeneralmeetingsoftheGroup. Dividends Dividenddistributionspayabletoequityshareholdersareincludedinotherliabilitieswhenthedividendshavebeen approvedpriortothereportingdate. ThefollowingdividendsweredeclaredandpaidbytheGroupduringtheyear: In dollars 2022 2021 Dividends on ordinary shares declared and paid: FY21:1.15centpershare(FY20:1.05centpershare) –Paidincash –PaidviaDRP Interim dividend for the current reporting period: FY22:0.75centpershare(FY21:0.75) –Paidincash –PaidviaDRP 2,239,483 1,875,228 635,683 399,287 2,702,944 1,270,029 323,078 367,626 5,901,188 3,912,170 Afullyfrankeddividendof$2,875,166fortheyearended30June2021waspaidon25November2021at1.15cents persharewith1,432,611newsharesissuedaspartoftheDRP. A20%frankedinterimdividendof$3,026,022forFY2021waspaidon27May2022at1.20centspersharewith 706,181newsharesissuedaspartoftheDRP. Acrow Annual Report 2022 74 22. Issued capital (continued) Subsequenttobalancedate,theDirectorsdeclaredadividendof1.50centspershare60%frankedon23August2022, tobepaidon30November2022. Frankingcreditbalancewas$2,393,015at30June2022(2021:$1,954,882). Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising on translation of the Group entitiesthatdonothavefunctionalcurrencyofAUDdollarsandhavebeentranslatedforpresentationpurpose. Share-based payments reserve Theshare-basedpaymentsreserveisusedtorecognizethegrantdatefairvalueofsharesissuedtoemployeesand directorsthathavenotyetvested. 23. Capital management ManagementmonitorsthecapitaloftheGroup,inordertomaintainagooddebttoequityratio,providethe shareholderswithadequatereturnsandensurethattheGroupcanfunditsoperationsandcontinueasa going concern. TheGroup’sdebtandcapitalincludesordinarysharecapitalandborrowings. Therearenoexternallyimposedcapitalrequirements. ManagementeffectivelymanagestheGroup’scapitalbyassessingtheGroup’sfinancialrisksandadjustingitscapital structureinresponsetochangesintheserisksandinthemarket.Theseresponsesincludethemanagementofdebt levels,distributionstoshareholdersandshareissues. 24. Earnings per share BasicEPSiscalculatedbydividingprofitfortheyearattributabletoordinaryequityholdersoftheParentbythe weightedaveragenumberofordinarysharesoutstandingduringtheyear. DilutedEPSiscalculatedbydividingthenetprofitattributabletoordinaryequityholdersoftheParentbytheweighted averagenumberofordinarysharesoutstandingduringtheyearplustheweightedaveragenumberofordinaryshares thatwouldbeissuedonconversionofallthedilutivepotentialordinarysharesintoordinaryshares. ThefollowingtablereflectstheincomeandsharedatausedinthebasicanddilutedEPScomputations: In dollars Earnings reconciliation Profitexcludingsignificantitems Netshare-basedpaymentsandsignificantitems* Net profit after tax 2022 2021 17,812,912 8,712,829 (2,118,744) (4,749,831) 15,694,168 3,962,998 *SignificantitemsarecomprisedofShare-basedpayments,restructuringandduediligenceexpensesasinnote6. Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 202275 In dollars Number of ordinary shares: 2022 2021 WeightedaveragenumberofordinarysharesusedinthecalculationofbasicEPS 248,515,534 217,558,863 WeightedaveragenumberofordinarysharesusedinthecalculationofdilutedEPS 258,794,953 224,511,742 Cents per share: BasicEPSexcludingsignificantitems(centspershare) DilutedEPSexcludingsignificantitems(centspershare) BasicEPS(centspershare) DilutedEPS(centspershare) 25. Capital commitments In dollars Capital commitments 7.17 6.88 6.32 6.06 4.00 3.88 1.82 1.77 2022 2021 Capitalexpenditurecontractedforatthereportingdatebutnotrecognisedas liabilitiesasfollows: Plant and equipment 2,382,900 1,885,383 Acrow Annual Report 202276 26. Reconciliation of cash flows from operating activities In dollars Cash flows from operating activities Profit Adjustments for: –Depreciationandimpairment –Depreciationonright-of-useassets –Hireequipmentlossprovision –(Gain)ondisposalofassets –Share-basedpayment –RemeasurementofsharesissuedonUni-spanacquisitions –ContingentconsiderationrelatedtoUni-spanacquisition –Taxexpense Net changes in working capital: –Otherfinancialassets –Tradeandotherreceivables –Inventories –Contractassets –Prepaymentsandotherassets –Assetsheldforsale –Tradeandotherpayables –Provisionsandemployeebenefits –Liabilitiesassociatedwithassetsheldforsale –Currenttaxliabilities Cash generated from operating activities Financecosts Net cash from operating activities 2022 2021 15,694,168 3,962,998 7,387,349 5,888,321 5,683,003 5,675,276 (53,257) (31,104) (4,955,787) (6,552,430) 1,164,668 2,245,520 – – (350,000) 148,264 1,962,182 2,179,155 – 99,411 (9,751,131) (7,597,076) (5,913,632) (3,380,809) 663,241 (655,701) (1,457,455) (1,382,604) (6,072) 6,347 (3,918,210) 8,800,091 1,353,377 525,767 7,041 (7,271) (9,790) (556,302) 7,849,695 9,017,853 3,513,116 3,305,705 11,362,811 12,323,558 Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 202277 27. Remuneration of auditors DuringtheyearthefollowingfeeswerepaidorpayableforservicesprovidedbyGrantThorntonAuditPtyLtd(GT)as theauditoroftheparententity. In dollars Audit and review of financial reports Group and controlled entities Total audit and review of financial reports Other assurance services Other services Tax advisory services Tax compliance services Total other non-audit services Total services provided by GT 2022 2021 335,315 318,535 335,315 318,535 12,700 31,815 – 111,180 111,180 23,650 41,850 65,500 459,195 415,850 28. Key management personnel and related parties Keymanagementpersonnelarethosepersonshavingauthorityandresponsibilityofplanning,directingandcontrolling theactivitiesoftheGroup,directlyorindirectly,includinganydirector,whetherexecutiveorotherwise,oftheGroup. In dollars ■ Shorttermemploymentbenefits ■ Longtermemploymentbenefits ■ Post-employmentbenefits ■ Share-basedpayments 2022 2021 1,778,441 1,884,959 96,309 49,810 23,792 183,764 62,903 523,237 Total compensation paid to key management personnel 1,948,352 2,654,863 Other related party transactions TheGroupleasesindustrialandcommercialpropertiesfromMargaretProkop’spersonalcompanies(MRPProperty PtyLtd&MRPSuperannuationPtyLtd)throughtheNatformsubsidiaries. MargaretProkopwaspreviouslyadirectorofNatformcompaniesanduponthesaleofNatformtoAcrow,Margaret wasappointedasadirectoroftheGroup.Rentalandrelatedpropertypaymentstohercompaniesamountedto $1,057,924(2021:$852,581).Leasetermsareupto8years.Balanceoutstandingat30June2022was$48,612(2021: $6,635).MargaretProkopretiredfromtheboardon31December2021. NatformengagedMargaretProkop’sbrother,theproprietorofNatPtyLtdtomanufactureandassemblescreensfor Natform,theamountincurredfortheyearwas$961,079(2021:$1,235,128);balanceoutstandingat30June2022was $12,496(2021:$132,394).AgreementwithNatPtyLtdterminatedon28May2022withallmanufacturingfunctions sourcedinternallyandmanagedbyNatformemployeesgoingforward. Allintercompanytransactionsbetweentheparententityandthesubsidiariesandamongstthesubsidiarieshavebeen eliminatedonconsolidation. Acrow Annual Report 202278 29. Share-based payments At30June2022theGrouphadthefollowingshare-based paymentarrangements. Loan Funded Shares TheGroupcarriesforwardonlyLoanFundedShares issuedin2018whereselectedemployeesanddirectors oftheGrouphadbeengrantedaninterest-freeloan tosubscribetosharesofAcrowFormworkand ConstructionServicesLimited. Theseloansarenon-recourseotherthantotheshares heldbythatemployee/director,andtheproceedsofthe loanmustbeusedtobuyshares.Astheonlyrecourseon the loans is the shares and there are vesting conditions, thearrangementhasbeenaccountedforasshare options,asrequiredunderaccountingstandards. These options entitle the holders to receive dividends on ordinary shares of the Group, and these dividends are requiredtobeusedtorepaytheloansdescribedabove. TheLoanFundedShareshavethefollowingterms: (i) Dateofissue:27March2018 (ii) Loanterm:5years; (iii)Interest:Nointerestispayable;and (iv)Vestinghurdles:subjecttobeingacontinuous employee or director of the Group for 2 years from thedateofissue,andthe20-day(atanypointover thevestingperiod)volumeweightedaverageshare price(“VWAP”)oftheGroup’ssharepriceexceeding 40centspershare(posttheshareconsolidation). Thefairvalueatgrantdatewasdeterminedusingan adjustedformoftheMonte-Carlomodelthatfactors inmarketconditions.Thegrantdatefairvalueof rightsgrantedintheyearwas$0.1071. Allvestinghurdleshadbeenmetat27March2020.In July2021,280,500unitsofLoanFundedOptionshad beenexercisedat$0.20persharediscountedbydividend accruedfrom$56,100to$42,776.Loanwasimmediately settledincashbytheemployee. Themodelinputsforthein-substanceoptionsgranted hadincluded: a) Exerciseprice$0.20 b) Sharepriceatgrantdate$0.20 c) Expectedpricevolatility75%–basedon comparable companies d) Expecteddividendyield0% e) Risk-freeinterestrate2.41% f) Expectedlife3years Totalnumberofoutstandingloanfundedsharesat 30June2022were2,194,500units(30June2021: 2,475,000). Reconciliation of outstanding loan funded share options: Thenumberandweightedaverageexercisepricesofloanfundedoptionswereasfollows: 2022 2021 Number 2,475,000 – 280,500 2,194,500 Weighted average exercise price $0.20 – $0.20 $0.20 Number 2,475,000 – – Weighted average exercise price $0.20 – – 2,475,000 $0.20 Outstandingat1July Granted during the year Exercisedduringtheyear Outstanding at 30 June Options Nonewoptionshavebeenissuedduringtheyear. InNovember2021,50,000unitswerecancelledduetofailuretomeetvestingcondition(being20-dayvolume weightedaveragepriceof60centspershare)beforeexpirydate. Totalnumberofoutstandingoptionsat30June2022were6,860,000units(30June2021:6,910,000).Balanceofall outstandingoptionsatbalanceddateareasfollow: Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 202279 Grant date Expiry date Exercise price options Exercise price 2022 2021 Number of 23November2016 23November2021 13December2017 13December2022 14January2019 14January2024 4March2019 4March2024 16July2019 16July2024 Balance at 30 June Reconciliation of outstanding share options: $0.20 $0.20 $0.50 $0.50 $0.40 – 200,000 5,100,000 360,000 1,200,000 6,860,000 $0.20 $0.20 $0.50 $0.50 $0.40 Number of options 50,000 200,000 5,100,000 360,000 1,200,000 6,910,000 2022 2021 Number 6,910,000 – – (50,000) 6,860,000 Weighted average exercise price Number Weighted average exercise price $0.47 9,323,000 – – $0.20 $0.47 – (1,663,000) (750,000) 6,910,000 $0.40 – $0.20 – $0.47 Outstandingat1July Granted during the year Exercisedduringtheyear Forfeitedduringtheyear Outstanding at 30 June Performance Rights Asof30June2021,therewereatotalof15,946,950PerformanceRights(LTVR1-4)outstandingwhichweregranted basedonEarningPerShare(EPS)andTotalShareholderReturn(TSR)performancehurdlesoverFY2021&FY2022. Therearefourtranchesandtheirmovementsaresummarizedasfollow: Long term variable incentives LTVR 1 LTVR 2 LTVR 3 LTVR 4 Measurement period Hurdle FY2022 FY2022 FY2021 FY2021 TSR EPS TSR EPS Vestingstatusat30June2022 Unvested Unvested Lapsed Vested Outstandingasof1July 2,027,500 6,082,500 1,959,250 5,877,700 Grants/(cancellations)ofissues 202,905 608,713 – – Unvested or forfeiture Vestedandexercisedasordinaryshares – – – – Balance outstanding 30 June 2022 2,230,405 6,691,213 (1,959,250) (2,351,080) – – (3,165,120) 361,500 WithLTVR1-2,afurther1,175,618unitshavebeengrantedtoeligibleemployeesinSeptember2021andMarch2022, and364,000unitshavebeencancelledonterminatedemployees,resultingin8,921,618rightsoutstandingatendof June2022. WithLTVR3,theGroupfailedtomeetTSRconditionsresultingincancellationofall1,959,250unitsissued. WithLTVR4,theGroupmettheEPSperformanceconditionswith60%vestingrateresultingin3,526,620unitsvested and2,351,080unitsforfeited.3,165,120unitsthatvestedhadbeenexercisedandconvertedtoordinaryshares, Acrow Annual Report 202280 29. Share-based payments (continued) leavingabalanceof361,500unitsunexercisedatendof June 2022. Ashort-termincentiveissueof359,000rightswere grantedtoeligibleemployees,vestedandexercisedas ordinarysharesduringthereportingperiod. On1June2022,TheGroupgranted7,901,708 performancerights(LTVR5-8)toeligibleemployeesover twoplans,being3,584,434forFY2023and4,317,274for FY2024,Eachyearisconsistedoftwotranches,oneon EPSandoneonTSRperformancevestingconditionsof equalnumberofunits.Ifthevestingconditionsaremet, eachPerformanceRightcanbeexercisedintooneFully PaidOrdinaryShareattheholder’sdiscretionuntilthe expirydateof30June2037.ThePerformanceRights wereissuedtoemployeesoftheCompanyunderthe Company’sRightsPlanandformpartoftheLong-Term VariableRemunerationoftheemployees. iii. Above130%ofindexreturnuptoa maximum of160%indexreturnthebalance of theperformancerightswillvestonapro ratabasis. c. Theperformancerightswillbemeasuredbetween 1July2020and30June2023forthe2023 issueand1July2021and30June2024forthe 2024 issue. The model inputs for the performance rights granted included: a) Exerciseprice:nil b) Sharepriceatgrantdateof1June2022was$0.48 c) Expectedpricevolatilitybetween14%and33%-based oncomparablecompanies d) Expecteddividendyield5.1% Theperformancerightshavethefollowingterms: e) Risk-freeinterestratebetween2.25%and3.6% (i) Exerciseprice:nil; (ii) Conversion:uponvesting,conversiontosharesona 1 for1basis; (iii)Dividends:notentitleduntilperformancerightsare exercised; (iv)Vestinghurdles: a. 50%ofeachissuemeasuredonEarningsper share(EPS)criteriaspecifically“Netprofitaftertax /Weightedaveragenumberofsharesonissue”. i. ii. Athresholdcumulativereturnof8%is requiredbelowwhichnovestingwilloccur. Atargetreturnof10%willvest50%of performancerightsandproratabetween 8% and10% iii. Above10%returnuptoamaximumof 20% returnthebalanceoftheperformance rightswillvestonaproratabasis. b. 50%ofeachissuemeasuredonTotalShareholder return(TSR)criteria.Thiscomparestheshare price and dividends through the measurement periodtotheASXSmallIndustrialsIndex. i. ii. Athresholdcumulativereturnequaltothe marketisrequiredbelowwhichnovesting will occur. Atargetreturnof130%oftheindexTSR willvest50%ofperformancerightsand proratabetweenindexreturnand130%of index return. Totalnumberofoutstandingperformancerightson 30June2022were17,184,826units(30June2021: 15,946,950). 30. Financial risk management Risk management objectives and policies TheGroup’sactivitiesexposeittoavarietyoffinancial risks:marketrisk(includingforeignexchangerisk, interestraterisk),creditriskandliquidityrisk.The Group’soverallriskmanagementprogramfocuses ontheunpredictabilityoffinancialmarketsandseeks tominimisepotentialadverseeffectsonthefinancial performanceoftheGroup. TheGroupusesderivativefinancialinstrumentssuch asforeignexchangecontractstohedgecertainrisk exposures.Derivativesareexclusivelyusedforeconomic hedging purpose and are not used as speculative or tradinginstruments. The Group uses different methods to measure different typesofrisktowhichitisexposed.Thesemethods include sensitivity analysis in the case of interest rate, foreignexchangeandotherpricerisks,andaging analysisforcreditrisk. Therewasnoopenforeignexchangecontractat 30June2022and30June2021. Fair value hierarchy Thefairvalueoffinancialassetsandfinancialliabilities mustbeestimatedforrecognitionandmeasurementor fordisclosurepurposes. Fairvalueinputsaresummarisedasfollows: Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 202281 Level 1:Thefairvalueoffinancialinstrumentstraded inactivemarkets(suchaspubliclytradedderivatives, andtradingandavailable-for-salesecurities)isbasedon quotedmarketpricesattheendofthereportingperiod. Level 2:Thefairvalueoffinancialinstrumentsthat arenottradedinanactivemarket(forexample, over-the-counterderivatives)isdeterminedusing valuationtechniqueswhichmaximisetheuseof observablemarketdataandrelyaslittleaspossibleon entityspecificestimates.Ifallsignificantinputsrequired tofairvalueaninstrumentareobservable,theinstrument isincludedinLevel2. Level 3:Ifoneormoreofthesignificantinputsisnot basedonobservablemarketdata,theinstrumentis includedinLevel3. Thefairvaluehierarchywasnotapplicablefortheyear ended30June2022,astheGroupheldnofinancial assetsorliabilitiesthatrequiredvaluation. Fairvaluehierarchyisre-assessedannuallyforany change in circumstance that may suggest a revised level beassignedtoatypeofbalancemeasuredatfairvalue. TheGroup’sriskmanagementiscoordinatedby management,inclosecooperationwiththeBoardof Directors,andfocusesonactivelysecuringtheGroup’s shorttomedium-termcashflowsbyminimisingthe exposuretofinancialmarkets. The Group does not actively engage in the trading of financialassetsforspeculativepurposes.Themost significantfinancialriskstowhichtheGroupisexposed aredescribedbelow. Market risk analysis TheGroupisexposedtomarketriskthroughitsuseof financialinstrumentsandspecificallytointerestrate riskandcertainotherpricerisks,whichresultfromits operatingactivities. Exposure to currency risk Asat30June2022theGroupheldthebelowAUDequivalentofforeigncurrencyrisksinUSD,EURandHKD: Tradepayables 2,728,137 768,196 191,557 1,059,549 780,755 30 June 2022 30 June 2021 USD EUR HKD* USD EUR Purchaseordersat30June 3,479,939 1,695,780 232,824 1,885,383 CashatBank Net exposure (59,369) – – – 6,148,707 2,463,976 424,381 2,944,932 780,755 – – *TheGrouphadnoexposuretoHKDat30June2021. Foreign currency sensitivity Apossiblestrengthening/(weakening)oftheUSD,EURortheHKDat30Junewouldhaveaffectedprofitorlossbythe amounts(inAUD)shownbelow.Thisanalysisassumesthatallothervariablesremainconstantandignorestheimpact offorecastpurchases. In dollars USD(10%movement) EUR(10%movement) HKD(10%movement) Profit or loss Strengthening Weakening 558,973 223,998 38,580 (683,190) (273,775) (47,153) Acrow Annual Report 202282 30. Financial risk management (continued) Interest rate risk InterestrateriskistheriskthatchangesininterestratesimpacttheGroup’sfinancialperformanceorthevalueofits financialinstruments. TheGroup’sinterestrateriskarisesfromitsoverdrafts,termloansandwhennewequipmentortradefinancesare drawn.Drawdownandincreaseinoverdraftunderthecurrentdebtfacilityarepricedusingafloatinginterestrateplus afixedmargin. TheGroupdoesnotcurrentlyuseinterestratehedges.However,managementregularlyreviewsitsfunding arrangements to ensure loans are competitively priced and access are maintained to necessary liquidity levels to servicetheGroup’soperationalactivities. At30June2022theGrouphasthefollowingexposuretointerestratesonborrowings: Fixed rate instruments Loansandborrowings Variable rate instruments Loansandborrowings Overdraft* 2022 2021 21,366,977 7,915,848 11,483,000 14,423,000 3,001,005 1,865,938 *FY2021valueshavebeenadjustedtoincludeoverdraftbalanceof$1,865,938at30June2021forconsistencyandcomparability. Interest Rate Sensitivity At30June2022,theGroupheldinterestbearingloansof $32,849,977(2021:$22,338,848)andabankoverdraftof $3,001,005(2021:$1,865,938). Anincreaseof100basispointsininterestrateson variableinstrumentsatthereportingdatewouldhave anegativeimpactof$155,723(2021:$167,644)onthe netprofit,whereasadecreaseof100basispointswould haveapositiveimpactof$143,611(2021:$155,373)on thenetprofit. Credit risk analysis Creditriskistheriskthatacounterpartyfailsto dischargeanobligationtotheGroup.TheGroupis exposedtothisriskprincipallythroughreceivables fromcustomers.TheGroupleaseshireequipmentand provides services to consumers pursuant to policies and procedures that are intended to ensure that there is no concentrationofcreditriskwithanyparticularindividual, companyorotherentity. TheGroup’sexposuretocreditriskisinfluencedmainly bytheindividualcharacteristicsofeachcustomer. However,managementalsoconsidersthefactorssuch asmarketsegment,financialprofile,defaultriskofthe industrysectorandcredithistoryofthecustomers.To managethisrisk,theGrouphasapolicyforestablishing creditapprovalsandlimitsunderwhicheachnew customerisanalysedindividuallyforcreditworthiness beforestandardpaymenttermsandlimitsaregranted. Whereavailableatreasonablecost,externalcreditratings and/orreportsoncustomersandothercounterparties areobtainedandused.TheGroup’spolicyistodealonly withcreditworthycounterparties.Thesummaryofthe Group’stradereceivablesisavailableinnote10. The Group conducts an ongoing assessment of expected creditlosses(ECL)byanalysingactuallossexperience of the Group, arrears, and other inputs such as exposure ortiming.Theassessmentisbrokendowninto4 sectors includingIndustrialServices,CivilInfrastructure, Commercial,andResidential.Thesesectorsarethen analysed in a set of 5 stages ranging from currently due receivablestoreceivablesdueinover90days.TheGroup alsoseparatelyquantifiesreceivablesduefromentitiesin liquidation/default. Macroeconomic Scenarios Expectedcreditlosses(“ECL”)areaprobability-weighted estimate of credit losses over the expected life of the financialinstrument.TheGrouphasaprocessfor incorporatingforwardlookingeconomicscenariosand determiningtheprobabilityweightingsassignedtoeach scenarioindeterminingtheoverallECL.TheGroup preparesabase,bestandworst-casescenariosbasedon economicvariables. TheGrouphasincorporatedthisbyuseofa managementoverlayoreconomicriskreserve. Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 202283 Write-off policy TheGroupwritesofffinancialassetsinwholeorinpart,whenithasexhaustedallpracticalrecoveryeffortsand hasconcludedthereisnoreasonableexpectationofrecovery.Indicatorsthatthereisnoreasonableexpectationof recoveryinclude(i)ceasingenforcementactivityand(ii)wheretheGroup’srecoverymethodisforeclosingoncollateral andthevalueofthecollateralsuchthatthereisnoreasonableexpectationoffullrecovery. Liquidity risk analysis LiquidityriskistheriskthattheGroupmightbeunabletomeetitsobligations. TheGroupmanagesitsliquidityneedsbymonitoringscheduleddebtservicingpaymentsforlong-termfinancial liabilitiesaswellasforecastcashinflowsandoutflowsdueinday-to-daybusiness.Thedatausedforanalysingthese cashflowsisconsistentwiththatusedinthecontractualmaturityanalysisbelow. Liquidityneedsaremonitoredinvarioustimebands,onaday-to-dayandweek-to-weekbasis,aswellasonarolling 30-dayprojection.Long-termliquidityneedsfora180-dayanda360-daylookoutperiodareidentifiedmonthly. Netcashrequirementsarecomparedtoavailableborrowingfacilitiestodetermineheadroomoranyshortfalls.This analysisshowsthatavailableborrowingfacilitiesareexpectedtobesufficientoverthelookoutperiod.Refertonote19 forundrawnborrowingfacilities. TheGroup’sobjectiveistomaintaincashtomeetitsliquidityrequirementsfor30-dayperiodsataminimum.Funding forlong-termliquidityneedsisadditionallysecuredbyanadequateamountofcommittedcreditfacilities. TheGroupconsidersexpectedcashflowsfromfinancialassetsinassessingandmanagingliquidityrisk,notablyits cashresourcesandtradereceivables. Thefollowingliquidityriskdisclosuresreflectallcontractuallyfixedrepaymentsandinterestresultingfromrecognised financialliabilitiesandderivativesasof30June2022.Thetimingofcashflowsforliabilitiesisbasedonthe contractualtermsoftheunderlyingcontract. Contractual cash flow Carrying Amount Total 1 year or less 1 to 5 years Over 5 years 2022 Non-derivative financial liabilities Tradepayablesandaccrued expenses 21,484,027 (21,484,027) (21,484,027) – Loansandborrowings 32,849,977 (35,302,897) (18,039,906) (17,262,991) – – Leaseliabilities 28,249,469 (33,556,109) (6,392,739) (19,481,318) (7,682,052) 82,583,473 (90,343,033) (45,916,672) (36,744,309) (7,682,052) 2021 Non-derivative financial liabilities Deferredconsideration 3,486,289 (3,520,248) (3,520,248) – Tradepayablesand accrued expenses 25,122,155 (25,122,155) (20,694,234) (4,427,921) Loansandborrowings 22,338,848 (24,289,195) (8,626,267) (15,662,928) – – – Leaseliabilities 32,041,939 (38,014,095) (6,125,388) (20,899,218) (10,989,489) 82,989,231 (90,945,693) (38,966,137) (40,990,067) (10,989,489) Acrow Annual Report 202284 31. Group entities Theconsolidatedfinancialstatementsincludethefinancialstatementsofthefollowingwholly-ownedsubsidiaries: AcrowHoldingsPtyLimited(a),(b) AcrowFormworkandScaffoldingPtyLtd(a),(b) NatformPtyLtd(a),(b) Natform(QLD)PtyLtd(a),(b) Uni-spanGroupPtyLtd(a),(b) Uni-spanHeightSafetyPtyLtd(a),(b) UnispanAustraliaPtyLtd(a),(b) Uni-spanFormworkSolutionsPtyLtd(a),(b) AcrowGroupInvestmentsPtyLtd(a),(b) NobleMineralResourcesGhanaLimited 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)ThesesubsidiarieshavebeengrantedrelieffromthenecessitytopreparefinancialreportsundertheoptionavailabletotheGroupunder ASICCorporations(WhollyOwnedCompanies)Instrument2016/785. (b)Thesesubsidiaries,alongwithAcrowFormworkandConstructionServicesLimited(theparententityoftheGroup),formtheDeedofCross GuaranteeGroupdescribedfurtherfromnote34. 32. Operating segments TheGroup’soperatingsegmentisbasedontheinternalreportsthatarereviewedandusedbytheBoardofDirectors andtheexecutivemanagementteam(beingtheChiefOperatingDecisionMakers(“CODM”))inassessingthefinancial performanceandindeterminingtheallocationofresources.TheGroupoperatesinthebuildingconstructionmarket, providingfalsework,formwork,scaffolding,screensandrelatedmaterialforhireandsales.Therearenooperating segmentsforwhichdiscretefinancialinformationexists.Theprioryearsegmentdisclosureincludedanadditional segmentbeingminingexploration.ThissegmentwasalegacyoftheCompanypriortoitscurrentoperations, immaterialanddoesnotgetreportedseparatelytotheCODMthereforewasexcluded. TheinformationreportedtotheCODM,onatleastmonthlybasis,istheconsolidatedresultsasshowninthe statementofprofitorlossandothercomprehensiveincomeandstatementoffinancialposition. Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 202233. Parent entity disclosures In dollars Results of the parent entity Profitfortheperiod Total comprehensive income for the period Financial position of the parent entity at year end Currentassets Non-currentassets Total assets Currentliabilities Total liabilities Net assets Total equity of parent entity comprising: Issuedcapital Share-basedpaymentsreserve Accumulated losses Total equity Movement to accumulated profits/(losses): Opening balance at 1 July DividendpaidandreinvestedthroughDRP Writebackofcancelledperformancerights Profitfortheperiod Closing balance at 30 June 85 2022 2021 1,139,571 3,063,463 1,139,571 3,063,463 18,455 5,405 54,554,925 50,707,007 54,573,380 50,712,412 201,184 3,615,726 201,184 3,615,726 54,372,196 47,096,686 58,310,046 46,703,384 3,003,682 2,972,126 (6,941,532) (2,578,824) 54,372,196 47,096,686 (2,578,824) (1,730,117) (5,901,188) (3,912,170) 398,909 – 1,139,571 3,063,463 (6,941,532) (2,578,824) AccountingpoliciesoftheparentcompanyAcrowFormworkandConstructionServicesLimitedareconsistentwith thegroupandsubsidiaries. Investmentsinsubsidiariesareaccountedforatcostinthefinancialstatementsoftheparententity,theseare reviewedannuallyforrecoverabilityatthereportingdate. 34. Deed of cross guarantee UnderthetermsofASICCorporations(WhollyownedCompanies)Instrument2016/785,certainwhollyowned controlledentitieshavebeengrantedrelieffromtherequirementtoprepareauditedfinancialreports. AcrowenteredintoanapprovedDeedofIndemnityon26June2018forthecross-guaranteeofliabilitieswithAcrow FormworkandScaffoldingPtyLtdandAcrowHoldingsPtyLtd,thenon19December2018,anAssumptionDeedwas executedtoincludenewlyformedentityAcrowGroupInvestmentsPtyLtdandacquiredcompanies,NatformPtyLtd andNatform(QLD)PtyLtd. Afurtherassumptiondeedwasexecutedon3May2020toincludethenewacquiredUni-spangroupofcompanies. ThefollowingstatementofprofitorlossandstatementoffinancialpositioncomprisesAcrowanditscontrolled entitieswhicharepartytotheDeedofCrossGuarantee,aftereliminatingalltransactionsbetweenpartiestotheDeed. Acrow Annual Report 202286 34. Deed of cross guarantee (continued) Statement of Profit or Loss For the year ended 30 June 2022 In dollars Continuing operations Revenue Other income Personnel expenses Sub-contractlabourcosts Inventorypurchased,netofchangesinfinishedgoods Depreciation ITandtelecommunicationexpenses Freightcosts Insuranceexpenses Gain on fair value of derivatives ContingentconsiderationrelatedtoUni-spanacquisition Other expenses Profit before net finance costs and income tax Financecosts Profit before income tax Incometaxexpense Profit from continuing operations Statement of Financial Position As at 30 June 2022 In dollars Current assets Cashandcashequivalents Tradeandotherreceivables Inventories Contractassets Prepayments and other assets Total current assets 2022 2021 140,826,918 94,608,887 4,955,787 6,552,430 (51,815,012) (36,534,129) (18,039,520) (16,646,962) (31,642,371) (18,276,344) (13,070,352) (11,563,598) (1,641,245) (1,542,961) (1,975,256) (1,664,296) (1,090,449) (813,198) – – 350,000 (148,264) (5,338,074) (4,874,621) 21,170,426 9,446,944 (3,513,116) (3,305,705) 17,657,310 6,141,239 (1,962,182) (2,179,155) 15,695,128 3,962,085 2022 2021 3,010,318 1,754,516 34,362,867 24,611,736 14,872,186 8,958,554 111,927 775,168 5,075,832 3,618,377 57,433,130 39,718,351 Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 2022 In dollars Non-current assets Property, plant and equipment Right-of-useleaseassets Intangibleassets Total non-current assets Total assets Current liabilities Bankoverdraft Tradepayables Otherpayables Employeebenefits Leaseliabilities Loansandborrowings Currenttaxliabilities Total current liabilities Non-current liabilities Employeebenefits Leaseliabilities Loansandborrowings Provisions Deferredincometaxliability Total non-current liabilities Total liabilities Net assets Equity Issuedcapital Share-basedpaymentsreserve Retained earnings Total equity 87 2022 2021 95,490,436 83,008,854 24,478,720 28,808,936 7,428,694 7,428,694 127,397,850 119,246,484 184,830,980 158,964,835 3,001,005 1,865,938 21,484,027 25,122,155 – 3,486,289 6,159,454 4,639,524 4,964,215 4,645,552 17,001,678 7,898,384 1,869,031 310,331 54,479,410 47,968,173 444,988 611,541 23,285,254 27,396,387 15,848,299 14,440,464 469,274 469,274 6,990,415 6,596,723 47,038,230 49,514,389 101,517,640 97,482,562 83,313,340 61,482,273 58,310,046 46,703,384 3,003,681 2,972,126 21,999,613 11,806,763 83,313,340 61,482,273 Acrow Annual Report 202288 35. Subsequent events Changesonloanfacilitieseithereffectedoragreedafterbalancedate: ■ EquipmentfinanceandTradefinancefacilitylimitstoreverton30September2022from$20,000,000to $22,000,000andfrom$8,000,000to$6,000,000respectively,peragreementmadeon10June2022. ■ Anewloanagreementforcapitalpurchases.Theloanamountis$4,125,000,maturesin3yearsfrom commencementdateandrepayableinfullbyJune2025. ■ Bankguaranteefacilityincreasedfrom$1,400,000to$1,700,000byreducingtheoverdraftfacilityfrom$6,600,000 to $6,300,000. ■ FurtherEquipmentfinanceloansof$3,832,596weredrawn,repayableinfullatendofthreeyearsandTrade financeloansof$1,688,639weredrawnandrepayableinfullwithin180days. ■ Aninsurancepremiumfinanceloanof$1,201,540wasdrawnon22August2022repayableinfullby22July2023. On23August2022theDirectorsdeclareda60%frankeddividendof1.5centspersharetobepaidon 30November2022.DividendReinvestmentPlanisavailableforelection.Thedividendhasnotbeenprovidedforinthis financialreportasitwasnotdeclareduntilafter30June2022. Otherthantheaboveevents,therehasnototherwisearisenbetween30June2022andthedateofthisreportany item,transactionoreventofamaterialandunusualnaturelikely,intheopinionofthedirectorsoftheGroup,toaffect significantlytheoperationsoftheGroup,theresultsofthoseoperations,orthestateoftheaffairsoftheGroupin futurefinancialyears. Notes to the Consolidated Financial Statements for the year ending 30 June 2022Acrow Annual Report 202289 IntheopinionoftheDirectorsofAcrowFormworkandConstructionServicesLtd(theGroup): (a) theconsolidatedfinancialstatementsandnotessetoutonpages49to88andtheRemunerationReportinthe Directors’Report,setoutonpages23to48areinaccordancewiththeCorporationsAct2001,including: (i) givingatrueandfairviewoftheGroup’sfinancialpositionasat30June2022andofitsperformance,forthe financialyearendedonthatdate;and (ii) complyingwithAustralianAccountingStandards,InternationalFinancialReportStandardsandthe CorporationsRegulations2001; (b) therearereasonablegroundstobelievethatthecompanywillbeabletopayitsdebtsasandwhentheybecome dueandpayable. (c) TherearereasonablegroundstobelievethatAcrowFormworkandConstructionServicesLimitedanditscontrolled entitiesidentifiedinnote31willbeabletomeetanyobligationsorliabilitiestowhichtheyareormaybecome subjectbyvirtueoftheDeedofCrossGuaranteebetweenAcrowFormworkandConstructionServicesLimitedand itscontrolledentitiespursuanttoASICCorporations(Wholly-ownedCompanies)Instrument2016/785. (d) TheDirectorshavebeengiventhedeclarationsrequiredbysection295AoftheCorporationsAct2001fromthe ChiefExecutiveOfficerandtheChiefFinancialOfficerforthefinancialyearended30June2022. SignedinaccordancewitharesolutionoftheDirectors: Peter Lancken Chairman Sydney,27September2022 Steven Boland Director,ChiefExecutiveOfficer Sydney,27September2022 Directors’ Declaration for the year ending 30 June 2022Acrow Annual Report 202290 Grant Thornton Audit Pty Ltd Level 17 383 Kent Street Sydney NSW 2000 Locked Bag Q800 Queen Victoria Building NSW 1230 T +61 2 8297 2400 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 2022, the consolidated statement of profit or loss and other 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 2022 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 (including Independence Standards) (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. www.grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. ‘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 Limited is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are 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 another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. w Independent Auditor’s Report for the year ending 30 June 2022Acrow Annual Report 2022 91 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, intangible assets comprise goodwill relating to the acquisition of Natform Pty Ltd and Natform (QLD) Pty Ltd which amounts to $7.3 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. Expected credit loss (Note 10) As disclosed in Note 10, the Group’s expected credit loss provision amounts to $1.5 million. In accordance with AASB 9 Financial Instruments, the Group is required to prepare an estimation of expected credit losses as at 30 June 2022. We have determined this is a key audit matter due to the inherent subjectivity involved in the Group making forward looking judgements in relation to the recovery of credit risk exposures. We further note there is an increased risk in relation to the recoverability of trade receivables in the current year due to the unstable environment in the construction industry resulting from the impact of the COVID-19 pandemic amongst other factors and the insolvency risk that may impact the Group’s customers. Our procedures included, amongst others: • 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; • Obtaining management’s value-in-use calculations to: − 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; • Evaluating the value in use model against the requirements of AASB 136, including consultation with our internal valuation experts; • Performing sensitivity analysis on the significant inputs and assumptions made by management in preparing the calculation; and • Assessing the adequacy of financial report and accounting policy disclosures. Our procedures included, amongst others: • Assessing the Group’s expected credit loss model at year end with respect to the requirements of the accounting standard AASB 9; • Reviewing management’s memorandum and assessing the reasonableness of key assumptions used in their expected credit loss model; • Testing the trade receivables ageing profile prepared by the Group for the purpose of placing reliance on the trade receivables ageing profile for our analysis; • Assessing the Group’s identification of credit impaired trade receivables including the basis adopted by the Group in the identification; • Challenging the identified trade receivables by taking into account past payment trends, industry Grant Thornton Australia Limited 2 (cid:3) Acrow Annual Report 2022 92 data and observable data specific to the relevant customers and to customers that are more than 90 days past due; • Assessing the Group’s disclosures in relation to trade receivables’ credit risk, by comparing these disclosures to the requirements of the accounting standards. 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 2022 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. 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: http://www.auasb.gov.au/auditors_responsibilities/ar1_2020.pdf.This description forms part of our auditor’s report. (cid:3) Grant Thornton Australia Limited 3 (cid:3) Independent Auditor’s Report for the year ending 30 June 2022Acrow Annual Report 2022 93 Report on the remuneration report Opinion on the remuneration report We have audited the Remuneration Report included in pages 23 to 48 of the Directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Acrow Formwork and Construction Services Limited, for the year ended 30 June 2022 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, 27 September 2022 Grant Thornton Australia Limited 4 (cid:3) Acrow Annual Report 2022 94 Additional Information for Listed Entities (Shareholder Information) Theshareholderinformationsetoutbelowwasapplicableasat16September2022(Reporting Date). Substantial Holders Top Holders PERENNIALVALUEMANAGEMENTLIMITED KENECOPROPERTYPTYLTD Holding Distribution Analysisofnumbersofequityholdersbysizeofholding: Ordinary Shares Holding Ranges above0uptoandincluding1,000 above1,000uptoandincluding5,000 above5,000uptoandincluding10,000 above10,000uptoandincluding100,000 above100,000 Totals Unlisted Options Holding Ranges above0uptoandincluding1,000 above1,000uptoandincluding5,000 above5,000uptoandincluding10,000 above10,000uptoandincluding100,000 above100,000 Totals Securities 25,172,301 13,086,667 % 9.90% 5.25% Holders Total Units % Issued Share Capital 1,519 10,6554 488 276 1,325,170 228,1436 1,109 43,451,198 303 208,238,841 0.04% 0.52% 0.89% 17.01% 81.53% 3,695 255,403,199 100.00% Holders Total Units % Issued Share Capital – – – – 9 – – – – – – – – 6,860,000 100% 10 6,860,000 100.00% Shareholder Information for the year ending 30 June 2022Acrow Annual Report 202295 Performance Rights Holding Ranges above0uptoandincluding1,000 above1,000uptoandincluding5,000 above5,000uptoandincluding10,000 above10,000uptoandincluding100,000 above100,000 Totals Holders Total Units % Issued Share Capital – – – 11 33 44 – – – – – – 754,012 16,747,688 4.31% 95.69% 17,501,700 100.00% Basedonaclosingpricepersecurityof$0.515,thereare1,505holderswithanunmarketableholdingrepresentinga total92,583shares,amountingto0.04%ofIssuedCapital. Voting Rights FullyPaidOrdinaryShares–onashowofhandseverymemberpresentatameetinginpersonorbyproxyshallhave onevoteanduponapolleachsharehaveonevote. OptionsandPerformanceRights–donothavevotingrights. Securities subject to Voluntary Escrow Therearenosecuritiesvoluntarilyescrowed. Unlisted Securities UnlistedSecuritiesinclude:6,860,000unlistedoptionsand17,501,700performancerights. Therearenoholdersofmorethan20%ineithertheoptionsorperformancerightclasses. On-Market Buy-Back TheCompanyisnotcurrentlyconductinganon-marketbuy-back. Acrow Annual Report 202296 Top Holders Twenty Largest Quoted Equity Security Holders Thenamesofthetwentylargestholdersofquotedequitysecuritiesarelistedbelow: Position Holder Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 NATIONALNOMINEESLIMITED HSBCCUSTODYNOMINEES(AUSTRALIA)LIMITED KENECOPROPERTYPTYLTD JPMORGANNOMINEESAUSTRALIAPTYLIMITED EVERGREENPARTNERSNO4LP CITICORPNOMINEESPTYLIMITED BONDSTREETCUSTODIANSLIMITED MARGARETANNAPROKOP NETWEALTHINVESTMENTSLIMITED MRPPROPERTYPTYLTD MRANDREWHAROLDKENNARD&MRSPRUDENCEALICEKENNARD JOSAMBAPTYLTD BONDSTREETCUSTODIANSLIMITED MARYVILLEPTYLTD WHOOSHKANOMINEESPTYLTD DRACKAPTYLTD MALCOLM&JUNEROSSINVESTMENTSPTYLTD 11BELGRAVIAPTYLTD MRTIMOTHYJOHNEAKIN BRUNDEEINVESTMENTSPTYLTD Holding 17,775,955 15,381,933 13,086,667 12,610,535 12,351,252 11,049,866 9,000,000 7,126,209 6,148,691 4,751,043 3,039,474 2,500,000 2,206,192 2,204,326 2,184,976 2,148,554 2,091,132 2,085,256 1,469,692 1,437,065 % IC 6.96% 6.02% 5.12% 4.94% 4.84% 4.33% 3.52% 2.79% 2.41% 1.86% 1.19% 0.98% 0.86% 0.86% 0.86% 0.84% 0.82% 0.82% 0.58% 0.56% Total Total issued capital Other Information: 130,648,818 51.15% 255,403,199 100.00% Therearenoissuesofsecuritiesapprovedforthepurposesofitem7ofsection611oftheCorporationsAct2001(Cth) thathavenotyetbeencompleted. Nosecuritieswerepurchasedon-marketduringthereportingperiodunderorforthepurposesofanemployee incentive scheme or to satisfy the entitlements of the holders of options or other rights to acquire securities granted underanemployeeincentivescheme. Shareholder Information for the year ending 30 June 2022Acrow Annual Report 2022 97 SHARE REGISTRY Automic Group Level5,126PhillipStreet Sydney NSW 2000 AUDITOR GrantThorntonAuditPtyLtd Level17,383KentStreet Sydney NSW Australia 2000 ASX CODE ACF ACN 124893465 COMPANY AcrowFormworkandConstructionServicesLimited BOARD OF DIRECTORS Mr Peter Lancken AM|Non-ExecutiveChairman Mr Steven Boland|ExecutiveDirector Ms Laurie Lefcourt|Non-ExecutiveDirector(Chairofthe AuditandRiskCommittee) Mrs Melanie Allibon|Non-ExecutiveDirector(Chairof theRemunerationandNominationCommittee) Mr David Moffat|Non-ExecutiveDirector CHIEF FINANCIAL OFFICER MrAndrewCrowther COMPANY SECRETARY MrLeeTamplin REGISTERED OFFICE c/-AutomicGroup Level5,126PhillipStreet Sydney NSW 2000 Corporate Directory for the year ending 30 June 2022Acrow Annual Report 2022www.acrow.com.au Sydney | Brisbane | Gold Coast | Adelaide | Hobart | Launceston | Melbourne | Perth Nelligen Bridge Replacement, NSW

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