Adelaide Brighton Ltd 2014 Annual Report
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Performance summary
Chairman’s Report
Chief Executive Officer’s Report
Finance Report
Map of operations
Review of operations
Cement and Lime
Concrete and Aggregates
Concrete Products
Joint ventures
Sustainability
Sustainability Report
People, health and safety
Corporate governance statement
Diversity report
Directors
Financial statements index
Directors’ report
Remuneration report introductory letter
Remuneration report contents
Remuneration report
Income statement
Statement of comprehensive income
Balance sheet
Statement of changes in equity
Statement of cash flows
Notes to the consolidated financial statements
107
107
108
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110
Directors’ declaration
Auditor’s independence declaration
Independent audit report
Financial history
Information for shareholders
Company profile
Adelaide Brighton is a leading integrated construction materials and lime producer
which supplies a range of products into building, construction, infrastructure and
mineral processing markets throughout Australia. The Company’s principal activities
include the production, importation, distribution and marketing of clinker, cement,
industrial lime, premixed concrete, construction aggregates and concrete products.
Adelaide Brighton originated in 1882 and is now an S&P/ASX100 company with
1,400 employees and operations in all Australian states and territories.
Cement
Adelaide Brighton is the second largest supplier of cement and clinker products in
Australia with major production facilities and market leading positions in the resource
rich states of South Australia and Western Australia. It is also market leader in the
Northern Territory. In addition to domestic production, the Company is the largest
importer of cement, clinker and slag into Australia with an unmatched supply network
that enables efficient access to every mainland capital city market. This network
includes significant distribution joint ventures in Victoria and Queensland.
Lime
Adelaide Brighton is the largest producer of lime in Australia, with production assets
in Western Australia, South Australia and Northern Territory. Lime is an important
product for the mineral processing industry in resource rich markets, particularly for
the production of alumina and gold, of which Australia is a leading producer.
Concrete and Aggregates
Adelaide Brighton has a growing presence in the premixed concrete and aggregates
industry extending from South Australia, through Victoria and New South Wales to
south east and northern Queensland. It has strategic aggregates reserves west
of Sydney in regional New South Wales, south east Queensland, South Australia
and regional Victoria through its wholly owned and joint venture operations.
Concrete Products
Adelaide Brighton holds the leading position in the Australian concrete products
market, with operations in Queensland, New South Wales, Victoria, Tasmania
and South Australia.
Joint ventures and associates
Adelaide Brighton has a number of significant investments in joint ventures and
associates in construction materials production and distribution. These include
major cement distribution joint ventures in Queensland (Sunstate Cement),
Victoria (Independent Cement and Lime) and New South Wales; regional concrete
and aggregates positions in Victoria, Queensland and New South Wales; and
a 30% investment in a Malaysian white cement and clinker producer (Aalborg
Portland Malaysia), which supplies the Australian market.
Sustainability
Adelaide Brighton’s commitment to sustainable development is demonstrated
through a range of actions implemented across a balanced program of initiatives.
Adelaide Brighton believes that setting and achieving sustainability objectives
throughout the organisation assists long term competitive business performance.
FRONT COVER : SOUTHERN
QUAR RIES NORTHERN PIT A ND
SE CONDARY CRUS HING PLA NT
AT SEL LI CKS HILL QUARRY
Performance summary
Revenue
Underlying EBIT1
$1,337.8m
$245.2m
2013: $1,228.0
8.9%
2013: $226.0m
8.5%
Underlying NPAT1
Attributable to members
$166.5m
Underlying ROFE2
17.5%
2013: $153.4
8.5%
2013: 17.2%
0.3ppts
Basic EPS
Final ordinary dividend
26.9c
9.5c
2013: 23.7c
13.5%
2013: 9.0c
5.6%
1
Underlying results have been adjusted for significant
items. An explanation of the adjustments and NPAT
reconciliation to statutory results is provided on page 42.
2
Return on funds emplyed = underlying EBIT/average
monthly funds employed.
C/SHARE
DIVIDENDS
25
20
15
10
5
0
RETURN
ON FU NDS
EMPLOYED
%
25
20
15
10
5
0
GE AR ING:
NET DE BT
TO EQUIT Y
%
50
40
30
20
10
0
$M
250
200
150
100
50
0
CASH F LOW
FR OM
INT EREST COVER
OPER AT IONS
TIMES
EB IT DA BASIS
25
20
15
10
5
0
10
11
12
13
14
10
11
12
*
13
14
10
11
12
*
13
14
10
11
12
*
13
14
10
11
12*
13
14
INTERIM
FINAL
SPECIAL
* In line with changes to accounting policies
effective 1 January 2013, comparative numbers
for 2012 have been restated
A DEL A ID E BRIGH TON LTD ANNUAL R EPOR T 2 014
1
Chairman’s Report
In 2014 Adelaide Brighton recorded strong growth in sales and earnings and
continued to reward shareholders through higher dividends. The Company increased
net profit after tax (NPAT) by 14.3% over 2013, to a record $172.7 million.
We also reported record revenue of $1,337.8 million, 8.9% higher than the previous
corresponding period (pcp).
LES HOSKIN G
CHAIR MAN
NET PROFIT
AFTER TAX
$M
200
160
120
80
40
0
10
11
12
*
13
14
* In line with changes to
accounting policies
effective 1 January 2013,
comparative numbers
for 2012 have been
restated
Year in review
This very pleasing result was based on
increased volumes in most divisions and
markets, price increases and savings from
operational efficiencies. Volumes and revenue
increased in our cement division on the
back of healthy demand from residential and
Our operational improvement program has
vastly enhanced our competitive position in
the last decade, substantially reducing costs
and streamlining the business, and enabling
us to compete more effectively in our key
markets. In the past three years alone we
have saved $50 million through this program.
resources projects in Western Australia, the
Our acquisition strategy continues to
Northern Territory, New South Wales and
strengthen our vertically integrated business
Queensland. South Australian demand was
model, enabling us to participate throughout
subdued while Victorian demand eased.
the entire value chain, from the raw material
Lime volumes reduced in the first half of
stage through to finished products in buildings
2014 due to a decline in demand from gold
and infrastructure projects. We spent
miners and the suspension of operations at
$172 million in 2014 securing highly
a major customer in the Northern Territory,
valuable and strategic aggregate and
which resumed production in the second half
concrete businesses in South Australia and
of the year. The Concrete Products Division
Queensland which will deliver synergies and
achieved very strong earnings growth after
enhance future earnings. Organic growth
much hard work to optimise this business.
and growth through profitable acquisitions
Adelaide Brighton declared a fully franked
final dividend of 9.5 cents per share,
0.5 cents higher than the pcp, which made
for a full year dividend of 17 cents a share,
also fully franked.
The Group’s balance sheet remains strong,
aided by healthy cash flows in 2014, which
enabled us to keep gearing at a lower
than expected ratio of 31.7%.
Strategy
remain important strategies for increasing
shareholder value and we will continue to
seek out opportunities in a measured
and low risk manner.
Adelaide Brighton also continues to be a
leading, low cost supplier of lime to the
resources sector. We have very strong, long
term supply relationships in the alumina
sector and are well positioned to take
advantage of the next upswing in the non
alumina sector. We have made a significant
investment in the past two years to improve
In 2014 Adelaide Brighton made important
production capacity and environmental
strides in furthering its long term growth
performance in our lime business. The
strategy, which is reflected in the strength of
upgrade of our lime kilns in Munster, Western
our financial results and shareholder returns.
Australia, has led to an increase in our
This strategy has three complementary
production capacity by 250,000 tonnes
elements: operational improvement,
per annum in 2014.
increasing vertical integration through value
accretive acquisitions and development of
the highly efficient lime business.
2
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 ($ million)
Revenue
2014
2013
1,337.8 1,228.0
1
2
Includes impairment charge of $2.0 million.
Net finance cost is the net of finance costs
shown gross in the Income Statement with
Depreciation, amortisation and impairments
(75.0)1
(70.6)
interest income included in revenue.
3
Return on funds employed = EBIT/average
monthly funds employed.
4
Includes special dividend of 3.0 cents
per share in 2013.
5
Net debt is calculated as total borrowings
less cash and cash equivalents.
Earnings before interest and tax
Net finance cost2
Profit before tax
Tax expense
Net profit after tax
Non-controlling interests
Net profit attributable to members
Return on funds employed3 (%)
Basic earnings per share (‘EPS’) (cents)
Dividends per share - fully franked (cents)
Net debt5 ($ million)
Net debt/equity (%)
247.5
(15.0)
232.5
(59.9)
172.6
0.1
172.7
17.7
26.9
17.0
359.8
31.7
222.7
(14.1)
208.6
(57.5)
151.1
-
151.1
17.0
23.7
19.54
248.0
23.4
Leadership
Board and governance
In addition to the benefits from this
In May 2014 Martin Brydon, a long term
The Board is committed to conducting
serving executive of the Company, was
business ethically and in accordance with high
promoted to the position of Chief Executive
standards of corporate governance. Adelaide
Officer (CEO) following the retirement of
Brighton believes its policies and practices
Managing Director, Mark Chellew. Martin
are consistent in all substantial respects
investment, further work on the site has
been undertaken in the areas of odour and
noise. Similar initiatives are underway at
other sites and further details are contained
in our Sustainability Report.
has brought more than 30 years industry
with good corporate governance practice in
The Company believes that a proactive
experience to the role, including nine years
Australia appropriate for the circumstances of
approach to sustainability, working with our
as Executive General Manager of the
the Company, including the ASX Corporate
local communities, government and regulatory
Group’s Cement and Lime business.
Governance Council’s Principles and
bodies optimises outcomes for both our
The transition of leadership responsibilities
has been smooth. Martin has taken the
The Company has reviewed and refreshed
reins of the business firmly while continuing
its Code of Conduct, Board Charter
to implement our proven strategy. He is
and Relationship with Management,
in mind, the Company continually challenges
its performance in order to achieve improved
results.
Recommendations (2nd Edition).
stakeholders and Adelaide Brighton. With this
supported in this by an experienced and
Independence of Directors, Group Delegated
talented senior management team.
Authorities and the Health, Safety and
Risk management
Safety performance
corporate governance practices, including
framework is a key factor in sustaining the
Environment Policy. It continues to review its
Adelaide Brighton’s risk management
We put the safety and health of our
employees and contractors at the forefront of
everything we do. The Company is committed
to achieving a safe, productive and healthy
work environment through the continued
to take into account the ASX Corporate
Group’s ongoing performance. The Board’s
Governance Council’s Principles and
Audit, Risk and Compliance Committee
Recommendations (3rd Edition).
oversees the Company’s risk management
Sustainability and the environment
regulatory and environmental risks. These
framework, encapsulating financial, operating,
enhancement of our safety standards and
Adelaide Brighton understands the
systems and through cultural change. In 2014
importance of operating its business
we recorded a lost time injury frequency rate
sustainably, working with its employees,
(LTIFR) of 1.8, reflective of a sound safety
supply chain, customers and local
culture across the business.
communities in a manner that is consistent
risks are reviewed and mitigation strategies
modified on a regular basis to ensure that
changes in risk are managed appropriately.
In conclusion
We are also ensuring this safety culture
is embedded in our recently acquired
businesses.
with this objective. During 2014, Adelaide
On behalf of your Directors, I acknowledge
Brighton worked on consolidating the
the hard work and commitment of the
benefits from our sustainability efforts.
executive management team and all
Following the completion of the investment
in dust filters at the Munster site, 2014
represents the first full year that the
environmental benefits have been achieved.
employees over the last year during what
has been challenging market conditions.
I also thank our customers, shareholders
and joint venture partners for their
continuing loyalty and support.
ADELAID E BRIGH T ON LTD AN N UA L R EP OR T 2 014
3
Chief Executive Officer’s Report
Record earnings before interest and tax (EBIT) and net profit after tax
(NPAT) assisted by earnings growth in cement, concrete and aggregates,
and concrete products.
MARTIN BRYDON
CHIE F EXECUTIVE OF FI CER
Performance
It is a pleasure to be able to tell you in my
first Annual Report as Chief Executive Officer
that Adelaide Brighton has delivered record
earnings for shareholders and made important
strategic achievements that enhance our
Due to strong second half cash flow our net
debt increased by less than was expected at
the time of the major acquisitions announced
in August 2014. Net debt to equity gearing of
31.7% ended the year well within the target
range of 25% to 45%.
ability to grow earnings into the future.
Cement and clinker sales volume increased
Demand conditions across our businesses
were generally favourable in 2014 and these
combined with a significant contribution from
operational improvement to grow earnings.
We saw a recovery in residential demand for
our products, particularly in New South Wales
and Queensland, and ongoing strength in
resource sector demand in Western Australia
and the Northern Territory.
Revenue increased 8.9% to a record
$1,337.8 million and NPAT increased 14.3%
to $172.7 million, also a record result.
Underlying NPAT of $166.5 million was 8.5%
higher than the underlying figure in 2013.
3% supported by continued demand from
projects in the resources sector in Western
Australia and the Northern Territory, and a
residential recovery in New South Wales and
Queensland. Activity in the non-residential
building sector remained subdued. Cement
volume declined slightly in South Australia
and Victoria.
Higher volume, lower costs and improved
prices led to increased earnings in cement
and clinker, concrete and aggregates,
and concrete products. The recovery in
earnings in concrete products is particularly
encouraging given the significant effort that
has been put into improving this business
Reported earnings before interest
in the last few years.
and tax increased 11.1% to a record
$247.5 million on an EBIT margin of 18.5%.
Earnings before tax were aided by net
significant items of $2.3 million. Excluding
these items underlying EBIT increased 8.5%
to $245.2 million. Our underlying EBIT margin
was stable overall at 18.3% on the expanded
The recent concrete and aggregates
acquisitions in South Australia and
Queensland contributed to revenue in line with
expectations. Excluding these acquisitions,
concrete and aggregates volumes were up,
led by the stronger residential market.
revenue base. Return on funds employed
Lime sales volume declined approximately
increased slightly to 17.5%.
One-off items and the acceleration of income
tax payments caused operating cash flow to
decline to $194.0 million in 2014. However,
despite these items, cash flow was ahead of
expectations in the second half.
7% affected by the downturn in the gold
sector and a production suspension by a
major customer in the first half, impacting
revenue and EBIT, although the business
improved in the second half of the year.
4
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 HY-TEC ME LBOURNE SUPPLIED
APP R OXIMATELY 25,000M 3
OF S PE CIAL CON CRETE MI X
FO R ‘PRIMA TOWE R’ - A 72
LEVE L APARTMENT TOWER IN
SOUTHBA NK , MELBOURNE
ADELAID E BRIGHT ON LT D AN NU A L R EP OR T 2 014
5
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 Corporate restructure
$4.0m
Energy efficiency
programs
$4.9m
2015: $2.0m further benefits
2015: continued focus
Operational improvement remained a key
The capacity rationalisation delivered EBIT
Efficiency gains partially offset the impact
focus of management in 2014 with corporate
improvements of $5.0 million in 2014 and a
of lower volumes and increased energy
restructuring, rationalisation of operations,
further $5.0 million is expected in 2015.
costs during 2014. Despite a decline in lime
energy efficiency and other initiatives adding
$19.7 million to EBIT.
Adelaide Brighton has an ongoing focus on
the management of its power and fuel costs.
The contribution from our joint ventures
Benefits of $4.9 million were delivered in
volumes in 2014 following the 2013 closure
of some gold mines, the long term prospects
for lime demand remain strong.
was lower overall with improvement in the
2014 through the increased use of alternative
While the threat of imports remained, the
Queensland operations offset by a lower
fuels, electricity demand management, fuel
falling Australian dollar increases the cost
contribution from the Victorian business.
switching and plant efficiency.
of imported product.
Strategy
Further benefits of $5.8 million were delivered
through a variety of other measures, including
Adelaide Brighton continues its successful
transport efficiencies, raw materials sourcing
Concrete and Aggregates acquisitions
in South Australia and Queensland
long term strategy of growing shareholder
and a range of procurement initiatives.
Adelaide Brighton continues to make
value through three key areas:
>
Cost reduction and continuous
Import strategy underpins
The Group now produces more than
progress on its downstream strategic plan.
improvement across the Company;
competitive supply into key markets
1.5 million cubic metres per annum of premix
>
Growth in the lime business to supply the
resources sector in Western Australia, South
Australia and Northern Territory; and
>
Focused and relevant vertical integration
into downstream concrete, aggregates
and concrete products businesses.
Following the rationalisation of clinker
manufacture at Munster, Adelaide Brighton’s
imports of cementitious products, including
clinker, cement and blast furnace slag,
increased to more than two million tonnes
concrete and more than 6 million tonnes per
annum of aggregates. The footprint of this
business now reaches from South Australia
through Victoria and New South Wales, to
south east and northern Queensland.
in 2014, which represents approximately
In 2014, Adelaide Brighton acquired
During 2014, the Group delivered on a
20% of Australian industry demand.
BM Webb Construction Materials in
significant number of initiatives in line
with its long term strategy.
Operational improvement
Since the mid 1990s, the growth of import
capacity to replace ageing, less efficient
domestic manufacturing has been a key
element of Adelaide Brighton’s strategy to
During the first half, a group wide review of
secure its long term position in the Australian
operational, human resources, information
market and grow value for shareholders.
Queensland, and Penrice Quarry & Minerals
and Direct Mix/Southern Quarries in South
Australia at an overall enterprise value of
$172 million. These acquisitions are
consistent with the strategy of focused
and relevant vertical integration.
technology and administration functions was
The use of imported materials allows
The assets acquired include strategic
undertaken. This resulted in restructuring
Adelaide Brighton to supply customers with
quarrying operations producing approximately
costs of $5.4 million for the year. Pre-tax
competitively priced product into a range
2 million tonnes per annum of aggregates.
benefits from the corporate restructure were
of markets where demand exceeds the
The acquired businesses also produce more
$4.0 million in 2014 and are anticipated to
Company’s manufacturing capacity.
than 250,000 cubic metres of concrete
be $2.0 million in 2015.
In line with the strategy to grow shareholder
returns through improving efficiency and
Efficient lime operations with
the Company’s cement sales in the South
strong competitive position
Australian market.
annually, securing a significant volume of
leveraging an industry leading import
capability, Adelaide Brighton largely ceased
Following the completion of major upgrades
to both Munster (Western Australia) lime kilns
Integration of the acquisitions, including the
information systems, has been completed
the production of clinker at Munster, Western
in 2013, improvements in production capacity,
on an accelerated time frame delivering
Australia, in December 2014.
efficiency and environmental performance
synergy benefits in logistics operations,
of the kilns have been realised.
procurement and back office functions.
The estimated $4.4 million synergies per
annum are expected to be realised in 2015.
ADELAIDE BRIGHTON LT D AN NU A L R EP OR T 2 014
6
Munster rationalisation
EBIT benefit
$5.0m
Other initiatives
$5.8m
2015: $5.0m additional
2015: ongoing focus
Earnings from the acquisitions were in
>
Sales of other cementitious products
There are a number of benefits which
line with expectations for the period to
to that customer;
will flow through to 2015:
31 December 2014.
Strategic attractions of
Sydney aggregates
>
>
Increased sales in Western Australia; and
>
The unwinding of the carbon tax to benefit
Improved demand in Victoria, New South
circa $3 million compared to 2014;
Wales and Queensland.
>
Potential transport cost savings of
Lime sales volume in 2015 is anticipated to
Adelaide Brighton has a significant investment
be similar to, or slightly higher than 2014 and
in aggregates in the Sydney market through
average realised prices are likely to increase.
its Austen Quarry at Hartley, New South
The threat of small scale lime imports in
Wales. Aggregates earnings increased in
Western Australia and the Northern Territory
2014 in New South Wales supported by a
remains, however the weaker Australian
$4 million from lower fuel costs assuming
current oil prices and exchange rate;
>
Further Munster rationalisation benefits
of $5 million; and
>
Full year benefits from the 2014 corporate
rationalisation of $2 million.
recovery in the Sydney construction materials
dollar is likely to reduce the competitiveness
market.The Sydney market is transitioning to
of imports relative to Adelaide Brighton’s
Our people
aggregate sources supplied from outside the
low cost operations.
metropolitan area, following the exhaustion of
reserves at existing competitor quarries. Due
to this structural change it is expected that
Sydney aggregate prices will increase above
This past year has been a challenging
and rewarding one for our Company.
Price increases have already been announced
for March and April 2015 in cement, clinker,
We have performed well and strengthened
concrete, aggregates, and concrete products.
the foundations for future growth in earnings
and rewards for shareholders.
the CPI rate in the short to medium term.
Price increases achieved in 2015 are
Land sales releasing capital
year. A number of factors are supportive of
team and all employees of Adelaide Brighton
expected to exceed those achieved last
I would like to thank the senior management
Adelaide Brighton has a land portfolio that
is expected to release a total of $130 million
in cash in the medium to long term. The
Group is actively engaged in preparing
these properties for sale to maximise value.
The program has delivered approximately
$16 million in revenue since the beginning
of 2013, including a sale that contributed
$9 million in cash and $1 million profit
before tax in 2014.
Outlook
The outlook for Adelaide Brighton
remains positive.
Sales volume of cement and clinker in
2015 is expected to be similar to or greater
than 2014. Demonstrating the benefits of
a vertically integrated business, reduced
cement sales from January 2015 to a major
customer in South Australia are expected
to be offset by:
higher prices including strengthening demand
for their dedication and skill. Our success is
and capacity utilisation and the weakening
built on years of hard work and incremental
Australian dollar, which increases the cost
improvement.
of import substitutes.
I am particularly grateful for the support I have
Aggregate prices are anticipated to increase
received from the Board since commencing
significantly above CPI, particularly in Sydney
as Chief Executive Officer in May 2014.
I am proud to be leading this 132 year old
Company and its people and believe we
have a positive future ahead of us.
where average delivered costs have increased
significantly as the industry moves to supply
from further afield as traditional sources
have depleted.
First half 2015 imports have been fully
hedged, however, the deterioration in the
Australian dollar will increase the direct cost
of imported materials for Adelaide Brighton.
Assuming the Australian dollar remains at
around Yen90 and USD0.75, costs are
expected to increase by approximately
$7 million in a full year, prior to their mitigation
through price increases. Gas related fuel
costs in South Australia are now expected
to increase by $2 million pre-tax in 2015.
ADELAID E BRIGH T ON LTD AN N UA L R EP OR T 2 014
77
Finance Report
In 2014 Adelaide Brighton enjoyed healthy growth in revenue, earnings before
interest and tax (EBIT) and net profit after tax attributable to members (NPAT).
Revenue increased 8.9% to $1,337.8 million. N PAT increased 14.3% to a record
$172.7 million. EBIT grew by 11.1% to $247.5 million.
M IC HA EL K ELLY
CHIE F FINANCIAL OFFIC ER
Sales and profits
Sales growth was achieved on rising volumes
and prices in cement, clinker, concrete,
aggregates and concrete products. Earnings
Net profit was assisted by a lower effective
tax rate due to the non-taxable accounting
gain. Excluding this item, the effective tax
rate was 27.9%.
declined in lime due to lower sales volumes.
Adelaide Brighton’s underlying average tax
Input costs continued to increase but this
rate approximates the Australian corporate
was largely offset by excellent outcomes from
rate of 30%. Equity accounted after tax
operational improvement programs.
earnings from joint ventures and associate
Contribution from joint ventures and associate
entities declined due to difficult markets
affecting Independent Cement and Lime (ICL)
in Victoria, offset by a better contribution from
Sunstate Cement in Queensland. Competitive
entities reported in the Group results reduces
the reported tax rate to the range of 27%
to 28% in most years.
EBIT margin
pressures in Victoria inhibited price increases
Group underlying EBIT margin was stable
by ICL to recover rising costs.
at 18.3% compared with 18.4% in 2013.
Underlying NPAT increased 8.5% to
$166.5 million and underlying EBIT also
rose by 8.5% to $245.2 million.
‘Underlying’ measures of profit exclude
significant items of revenue and expenses
in order to highlight the underlying financial
performance across reporting periods. The
items excluded from underlying measures in
EBIT margins remained healthy on a revenue
base in 2014 that was significantly larger
than the prior year.
In the wholly owned operations, EBIT margins
improved in cement and clinker, concrete
and aggregates and concrete products,
supported by volume and price growth in
these businesses.
2014 contributed a net gain of $6.2 million
Margins in lime declined due to a 7%
after tax and $2.3 million before tax:
reduction in volume and a lower average price
>
Rationalisation of clinker production
as the mix shifted away from higher priced
at the Munster site
non-alumina sector volume, although margins
>
>
>
>
Corporate restructuring costs
stabilised in the second half of the year.
Acquisition costs
Gain on acquisition from fair value accounting
Successful litigation outcome.
The contribution from the equity accounted
joint ventures declined $2.5 million due largely
to weakness in our joint venture, Independent
Interest costs increased only marginally on
Cement and Lime Pty Ltd, in the challenging
higher debt related to acquisitions. This was
Victorian market.
due to the combination of lower borrowing
margins and underlying interest rates.
The devaluation of the Australian Dollar
against Adelaide Brighton’s major trading
currencies of the US Dollar and the
Japanese Yen reduced import profitability
by approximately $5 million in 2014
compared to 2013.
8
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 REVENUE AN D
NET PRO FIT
AFTER TAX
$BN
1500
1200
900
600
300
0
$M
180
170
160
150
140
130
EARNINGS
C/SHARE
PE R SHAR E
30
24
18
12
6
0
%
100
90
80
70
60
50
PAY OUT RATIO
*In line with changes
to accounting policies
effective 1 January 2013,
comparative numbers for
2012 have been restated
10
11
12
*
13
14
10
11
12
*
13
14
10
11
12
*
13
14
NPAT
REVENUE
OR DIN ARY DIVIDEN D
SP EC IA L DIV IDE ND
Operational improvement programs
Cash flow and debt
delivered benefits of $19.7 million in 2014.
Key initiatives were a corporate restructure,
the Munster clinker rationalisation and
energy efficiency programs.
Cash flow was ahead of expectations in the
second half and, as such, gearing finished
the year lower than anticipated.
The Group is actively engaged in preparing
these properties for sale to maximise value.
The program has delivered approximately
$16 million in revenue since the beginning
of 2013, including a sale that contributed
While operating cash flow declined by
$9 million in cash and $1 million profit
Shareholder returns
$33.3 million to $194.0 million in 2014, this
before tax in 2014.
A final ordinary dividend of 9.5 cents per share
(fully franked) was declared, an increase of
0.5 cents per share on the 2013 final ordinary
was largely due to non-recurring items from
an acceleration of the income tax payments
system and carbon tax related payments.
Due to strong second half cash flow, net
debt increased by a lower than expected
$111.8 million to $359.8 million. Net debt to
dividend. Fully franked dividends totalled
Development capital expenditure of
equity gearing of 31.7% at year end was well
17.0 cents per share in 2014 compared to
$174.4 million in 2014 included $155.6 million
within the targeted range of 25% to 45%.
19.5 cents in 2013, which included a special
in acquisitions in concrete and aggregates in
dividend of 3.0 cents per share.
north Queensland and South Australia.
The Company refinanced debt facilities
during 2014, increasing the term and
Underlying return on funds employed
Excluding acquisitions, capital expenditure
lowering borrowing margins. Total facilities
improved from 17.2% to 17.5% in 2014.
totalled $60.4 million in 2014, a decline
were increased by $40 million to $540 million
Adelaide Brighton’s returns continue to
of $6.5 million from 2013 following the
with the following maturity profile:
exceed the cost of capital.
completion of organic growth projects.
Adelaide Brighton has maintained strong total
One of the benefits of the rationalisation and
shareholder return (capital appreciation plus
improvement program is the release of surplus
dividends) over the last decade compared
land assets. Adelaide Brighton has a land
to its peer group, which has supported
portfolio that is expected to release a total
S&P/ASX 100 Index inclusion since 2012.
of $130 million in cash in the medium to
The Dividend Reinvestment Plan has been
suspended given better than expected cash
flow and gearing outcomes since the major
acquisitions were completed in 2014.
long term.
January 2018
January 2019
$330 million
$210 million
To maximise shareholder returns, Adelaide
Brighton seeks to ensure the balance sheet is
efficiently utilised while retaining the flexibility
to fund the long term growth strategy as
opportunities are identified.
REVENUE BY
STATE
RE VE NUE BY
SE GME NT
RE VE NUE BY
PR ODUCT GR OUP
WESTERN AUSTRALIA
NO N-RES IDE NTIAL
VICTORIA
NEW SOUTH WALES
SOUTH AUSTRALIA
QUEENSLAND
OTHER
RE SIDENT IAL
EN GINE ERING
MIN ING
9
CE ME NT
LIME
CO NCR ETE PR ODUCT S
CO NCR ETE AN D
AG GRE GAT ES
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 Map of operations
Cement
Lime
Concrete and aggregates
Concrete products
ADELAIDE BRIGHTON LT D AN NU A L R EP OR T 2 014
10
Review of operations
Market position
Market position
#1
Lime producer in the
minerals processing
industry
#1
Cement and clinker
importer with unmatched
channels to market
Market position
Market position
#1
Market share in
concrete products
#2
Cement and clinker
supplier to the Australian
construction industry
Market position
#4
Market share in concrete
and aggregates
ADELAI DE BR IGHT ON LTD AN N UAL R EPOR T 2014
11
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 Cement and Lime
Cement and clinker sales, which represent more than half of Adelaide Brighton’s
annual revenue, were 3% higher in 2014 than in the prior year. Supported by
higher volumes and margins, the cement and clinker business delivered solid
earnings growth, despite increases in energy costs and the impact of production
issues in the first half.
MICHAE L MILLER
REGIONA L EXEC UTIVE
GENE RAL MANAGER
CEME NT AND LIME SA/N SW
BRAD LEMMON
REGIONA L EXEC UTIVE
GENE RAL MANAGER
CEME NT AND LIME WA/N T
Sales volumes of lime declined in the Western
The $60 million investment to upgrade and
Australia gold market, impacting revenue
expand cement milling capacity at Birkenhead
and margin. However, margins and volumes
(South Australia) delivered incremental
stabilised in the second half.
benefits of $1.1 million in 2014 in addition to
Cement and clinker
Sales revenue rose in all mainland states
and territories except in Victoria, where
construction demand weakened, and in
South Australia, where cement sales declined
the $8.0 million received in 2013. Total returns
on the project in 2014 at $9.1 million (pre-tax)
represent a return on funds employed of
15.3%, which exceeds the cost of capital.
Cement supply contracts
slightly because of lower sales of back fill
In March 2014, Adelaide Brighton announced
binder to the mining sector. The construction
the expected loss of supply of approximately
market was stable, with an increase in
120,000 tonnes of cement per annum to a
residential activity offsetting lower sales to
major South Australian customer. In line with
major projects.
guidance, this did not impact 2014 volumes.
While average cement and clinker selling
As a result of Adelaide Brighton’s capability
prices increased by more than CPI, energy
to supply innovative alternative cementitious
costs also increased and production issues
products, an agreement has now been
at the Birkenhead (South Australia) plant
reached with that customer to supply up
adversely affected first half earnings. However,
to approximately 25% of their ongoing
production rationalisation and operational
requirements for cementitious materials
improvements made a significant contribution
in South Australia. This new agreement is
to margins and earnings in the year and
effective from 1 January 2015.
the repeal of the carbon tax from July 2014
augmented second half earnings and will
deliver further benefits in 2015.
Production
Leveraging off our leading import capability,
rationalisation of clinker production at
Munster (Western Australia) began in early
2014 and largely ceased at the end of 2014.
This rationalisation yielded cost savings of
$5 million in 2014 with further savings
expected in 2015.
In Western Australia, a new contract was
secured with the same major customer to
supply at least 50% of their required volume
in that State until the end of 2017, with a
12 month notice period.
In July 2014, Adelaide Brighton secured a
contract with a major independent customer
in South Australia and, in December, agreed
a one year supply contract with another
major customer in the same market. These
agreements and the integrated operations
underpin the utilisation at the efficient
Birkenhead cement works.
12
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 CEMENT MI LL ED
‘000
(INC. IM POR TED
‘000
LIME
TONNES
CLINKER)
TONNES
PR ODUCTION
3500
2800
2100
1400
700
0
1500
1200
900
600
300
0
10
11
12
13
14
10
11
12
13
14
Imports and currency issues
Lime
Adelaide Brighton is Australia’s largest
While demand for lime in the alumina sector
importer of cement and clinker, and supplies
was consistent in 2014, national sales of
competitively priced product into all major
lime declined approximately 7% compared
Australian markets. Imported cementitious
with the prior year. This was due primarily to
products, which include clinker, cement
a significant reduction in demand from the
Contract prices to a major alumina customer
in Western Australia increased in June 2014.
This major contract price reset, combined
with stabilisation of demand, led to an
improvement in margins in the second half
of 2014 versus the second half of 2013.
and blast furnace slag, increased to circa
non-alumina sector in Western Australia,
With expanded production capacity and
two million tonnes in 2014, representing
where a number of gold mines closed in
better environmental performance following
approximately 20% of the Australian market.
2013. Disruption to a customer’s operations
recent upgrades, the lime production assets
However, the devaluation of the Australian
in the Northern Territory in the first half also
are very well positioned to capitalise on
dollar against Adelaide Brighton’s major
adversely affected lime sales. However,
ongoing strength in alumina sector demand
trading currencies of the US Dollar and the
average lime selling prices increased last
and any recovery in the non-alumina
Japanese Yen reduced import profitability
year, albeit at slightly less than CPI, despite
resources sector.
by approximately $5 million in 2014
the reduction in sales to the higher
compared to the prior year.
priced gold sector.
Impact of acquisitions
Lower sales of lime overall impeded fixed
cost recovery, compressing full year
The acquisition of the BM Webb Construction
margins and earnings.
Materials business, including its cement
import operations, has expanded the
Group’s cement distribution footprint into
north Queensland. Cement supply has been
switched to a major domestic supplier.
THE AD ELAIDE B RIG HTON
CEM ENT BIR KE NH EAD PLAN T
SUPP LIED 3,500 TONNE S
OF GENERAL P URPOS E
CEM ENT FOR THE R IV ER BAN K
BR IDG E ACROS S TH E RIV ER
TORR EN S IN ADELAIDE
13
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 Concrete and Aggregates
Sales volumes of concrete and aggregates continued to grow in 2014, underpinned
by stronger residential demand in New South Wales and Queensland and volumes
from acquisitions.The Pacific Highway upgrade, pull-through demand from concrete
operations and the benefits of successful acquisitions combined to improve aggregate
sales and margins.
GEORGE AG RIOGIANN IS
EXE CUT IVE GENERAL
MANAGER CONCRETE
AND AGG RE GATES
Just two years ago the Concrete and
The acquisitions were consistent with
Aggregates Division was classed as an
Adelaide Brighton’s vertical integration
emerging force in the industry but today,
strategy and, following full and rapid
following significant growth by acquisition,
integration of logistics, procurement,
it is the fourth largest Australian producer
accounting, IT and administration functions,
in its sector. In 2014 the division contributed
it is expected that synergistic benefits of
almost 25% of total Adelaide Brighton
$4.4 million will be realised during 2015.
Group revenue.
Higher sales volumes, price increases
The total cost of the acquisitions was
$172 million (on an enterprise value basis).
(particularly in New South Wales) and cost
Adelaide Brighton maintains a significant
reductions from operational improvements
investment in aggregates in the Sydney
combined to enhance the profitability
market through the Austen Quarry at Hartley,
of the division in 2014.
Following the acquisition last year of
downstream businesses in Queensland
(BM Webb Construction Materials) and in
New South Wales. Aggregates earnings
increased in that State in 2014, supported
by a recovery in the Sydney construction
materials market.
South Australia (Penrice Quarry & Mineral and
The New South Wales aggregates market is
Direct Mix/Southern Quarries), the Division
transitioning to sources supplied from outside
now produces more than 1.5 million cubic
the Sydney metropolitan area, following the
metres of premix concrete and more than
depletion of reserves at competitor quarries.
6 million tonnes of aggregates annually. The
This structural change, leading to higher
assets acquired include strategic quarrying
average delivered costs, will facilitate price
operations producing approximately 2 million
increases significantly above CPI in the
tonnes of aggregates and 250,000 cubic
short to medium term.
metres of concrete each year, thus securing
a significant volume of the Group’s cement
sales in the South Australian market.
Adelaide Brighton expects price rises in
concrete and aggregates in 2015 to be
greater than in previous years and earnings
As a result of the acquisitions, the
are expected to exceed the results
operational footprint of the Division now
achieved last year.
extends from South Australia, through
Victoria and New South Wales to south
east and northern Queensland.
14
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 DIR ECT MIX PREM IX
CONC RE TE BATCH PLANT
AT SE LLICKS HILL IN
SOUTH A US TRALIA
ADELAID E BRIGHT ON LT D AN NU A L R EP OR T 2 014
15
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 Concrete Products
The Concrete Products division saw a very strong lift in earnings in 2014 as it enjoyed
the fruits of years of hard work to make this business more efficient and responsive
to the needs of the market.
STE VE ROG ER S
EXE CUT IVE GENERAL
MANAGER CONCRETE
PRODUCTS
Adbri Masonry is Australia’s largest
Production tolling on behalf of other
manufacturer of concrete masonry products,
distributors has also been an important factor
servicing key eastern seaboard residential
in improving earnings, enabling us to offer our
and commercial markets.
Operational improvements combined with
a strong increase in revenue lifted Concrete
Products EBIT 190% to $6.1 million in 2014.
Sales revenue increased by 10.5% on higher
demand across most regions and prices
increased slightly above the rate of CPI.
innovative products cost effectively in new
markets. We have also licensed a range of
our products overseas, in New Zealand
and South Africa.
New products and new methods of
installation, such as our Versaloc technology,
have opened up valuable new markets.
Versaloc, a dry-stack walling system, opened
Demand from the residential sector was
opportunities in the residential and multi-
strong and activity in the commercial sector
storey dwelling market, for example, and
also improved.
In 2014, restructuring and operational
improvements delivered cost savings while
our automated process for laying pavers
has made their use viable in large scale
applications such as ports and truck yards.
maintaining our ability to participate in the
The trend of growth in higher end masonry
market recovery. This included the mothballing
products continues, with the business
of excess capacity and a simplified
focused on development of value added
organisational structure.
products that match consumer demand for
quality products of distinction. Integrated
into this product development is the use
of alternative raw materials to improve the
sustainability outcomes of our operations.
These changes are part of a strategic program
that began several years ago and that we
expect will continue to realise further benefits
in 2015 and beyond.
In 2014 we completed the upgrade of our
production plant at Stapylton in Queensland.
The installation of a latest generation HESS
masonry machine has lowered production
costs and, with its fast product change over
times, improves production flexibility to meet
customer demand.
16
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 ADELAID E BRIGHT ON LT D AN NU A L R EP OR T 2 014
17
A S EL ECTI ON OF
ADBR I MASONRY
CONCRETE PROD UCTS
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 Joint Ventures
Adelaide Brighton’s Joint Ventures in conjunction with our own operations,
provide an unmatched network for the effi cient supply and distribution
of products across Australia.
Sunstate Cement Limited (50%)
Mawson Group (50%)
Burrell Mining Services (50%)
Sunstate Cement Limited (Sunstate) is a
Mawson Group (Mawsons) is a joint venture
Burrell Mining Services is an unincorporated
joint venture between Adelaide Brighton and
between Adelaide Brighton and BA Mawson
joint venture between Adelaide Brighton and
Boral. A leading supplier to Queensland’s
Pty Ltd. Mawsons is the largest premixed
Burrell Mining Products. With operations in
construction industry, Sunstate has a cement
concrete and quarry operator in northern
New South Wales and Queensland, Burrell
milling, storage and distribution facility at
regional Victoria. Mawsons also operates in
Mining Services manufactures a range of
Fisherman Islands, Port of Brisbane. Clinker is
southern regional New South Wales where
concrete products exclusively for the
supplied to Sunstate via seaborne shipments
it holds leading market positions.
coal mining industry.
from the Adelaide Brighton Angaston plant
and imports from Asia.
Earnings from Mawsons have more than
Earnings from Burrell declined as a result
doubled since the 2007 acquisition of
of the moderation in coal mining activity in
Sunstate’s contribution to Group EBIT
the 50% interest. Following a stronger
New South Wales and Queensland during
increased from $6.7 million in 2013 to
second half, the 2014 EBIT contribution
the year which led to lower demand for
$8.1 million in 2014. Although the south east
of $3.0 million was in line with 2013.
Burrell’s products.
Queensland market remains competitive,
improved demand in the region led to higher
Batesford Quarry (50%)
sales volume, margins and earnings in 2014.
Batesford Quarry is an unincorporated joint
Aalborg Portland Malaysia Sdn. Bhd.
(30%)
Independent Cement and
Lime Pty Ltd (50%)
venture between Adelaide Brighton, E&P
Aalborg Portland Malaysia Sdn. Bhd. (APM)
Partners and Geelong Lime Pty Ltd. Batesford
is a joint venture between Cementir (70%)
Quarry, situated at Fyansford Quarry near
and Adelaide Brighton. APM manufactures
Independent Cement and Lime Pty Ltd (ICL),
Geelong in Victoria, undertakes quarrying and
and sells white cement and clinker. It sells
a joint venture between Adelaide Brighton
manufacturing, marketing and distribution of
products to the domestic Malaysian market
and Barro Group Pty Ltd, is a specialist
various limestone and quarry products.
and exports to markets throughout
supplier of cement and cement blended
products throughout Victoria and New South
Wales and is the exclusive distributor of
cement for Adelaide Brighton and any related
body corporate in these states.
ICL’s earnings declined in 2014 due to
lower volume, rising input costs, and limited
opportunity to recover those cost increases.
Volume increased in New South Wales
through the year, demand for slag-based
products remained resilient and Victorian
demand strengthened late in the second half.
Despite this, contribution to EBIT was down
from $13.1 million in 2013 to $9.2 million
in 2014.
Batesford Quarry experienced a modest
southeast Asia and Australia.
decline in sales volumes from 2013, which
Equity accounted earnings from APM were
was offset by improved pricing and operations
similar to the prior year and in line with
performance, resulting in stable earnings.
expectations. The US$18.6 million capacity
expansion was completed on budget in
the second half of 2014. While demand for
product was strong, the benefi t from the
capacity expansion was not available until
late in the year. Shipment of white clinker to
Adelaide Brighton’s operations in Western
Australia commenced late in 2014.
ADELAIDE BRIGHTON LT D AN NU A L R EP OR T 2 014
18
Sustainability
Sustainability is about
managing our business to
ensure success for the long
term.Our commitment to
sustainability is built on
sound business strategy
that supports continuous
improvement in the
social, environmental and
economic performance of
the Company.We do this by
continually analysing our
activities and considering
the needs of all stakeholders
to identify key opportunities
for improvement and
sustainable development.
ADELAI DE BR IGHT ON LTD AN N UAL R EPOR T 2014
19
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 Sustainability Report
This Sustainability Report should be read in conjunction with other sections
of this Annual Report and its financial statements. The Directors’ Report, Corporate
Governance Statement and reports on Remuneration and People, Health and Safety
all contain information relevant to the sustainability performance of the Group.
The Adelaide Brighton Group includes
Key performance indicator
Discussion in Annual Report
Adelaide Brighton Limited and the entities
it controls (the Group). This report excludes
Alternative fuels and energy consumption
information about the Group’s joint ventures
Alternative raw materials
as their operations are not material to our
sustainability reporting.
While the Group’s financial year ends
Carbon emissions
Energy by source
Page 21
Page 21
Page 22
Page 21
on 31 December, most government
Participation of women in the Company
Page 35 - Diversity Report
sustainability-related reporting requires
information to be provided for the year to
Restricted duties injury frequency rate
30 June. So that statistical and graphical
Lost time injury frequency rate
data provided in this Sustainability Report
can be compared with other publicly
Employment by geography
available information, the information in the
Employment by employment status
report relates to the year ended 30 June
2014, unless otherwise indicated.
In developing this report, the following
Employment by contract type
Employee turnover by age group
have been taken into account:
Employee turnover by gender
>
The Global Reporting Initiative G4
Sustainability Reporting Guidelines.
Employee turnover by geography
>
ESG Reporting Guide for Australian
% of employees on EBAs vs staff
Companies prepared by the Australian
Council of Superannuation Investors
Page 24
Page 24
Page 26
Page 26
Page 26
Page 24
Page 24
Page 26
Page 26
and the Financial Services Council.
Other reports
Discussion in Annual Report
>
The Cement Sustainability Initiative of the
World Business Council for Sustainable
Coverage of organisation’s defined benefit plan obligations
Page 86 - 88 - Note 20
>
>
Development.
Direct economic value added (sales, costs, employee
Page 62 - Income Statement
Relevant industry practice.
compensation, retained earnings)
Page 76 - Note 3 and 4
The definitions and boundaries in the
National Greenhouse and Energy Reporting
Act, in relation to the reporting of energy
use and greenhouse gas emissions.
Monetary value of fines and total number of non-monetary
Page 43 - Directors’ Report
sanctions for non-compliance with laws and regulations
Environmental Performance
For further information about the sustainability report
The Chief Executive Officer, under direction
email adelaidebrighton@adbri.com.au
from the Board, implements the Company’s
or telephone 08 8223 8005.
sustainability framework and approves the
Group’s key performance indicators and the
scope of this report. The key performance
indicators listed below have been assessed
to be material to the Group’s sustainability
performance.
20
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 ENE RGY BY SOURC E
ALTERNAT IVE
FUELS ENERG Y
TERAJOULES
CO NSUMPTION
1200
900
600
300
0
LIQUID FUELS
COAL
NATUR AL GAS
DEMO LITI ON MATERIAL
IND USTRI AL WASTE
WASTE OIL
ELEC TRICITY
%
10
8
6
4
2
%
ALT ERNAT IVE
‘000t
GHG
SUBSTITUTION
RAW MAT ERIAL S
SAVING
18
16
14
12
10
600
500
400
300
200
09
10
11
12
13
14
09
10
11
12
13
14
DEMOLITION MATE RIA L
INDUST RIAL WAST E
WAST E OIL
% ALTE RNAT IVE FUELS
OF TOTAL E NERG Y
% S CM 1 S UB ST ITUTION
GH G S AVIN G
1 By-products of industrial processes - slag
from the steel manufacturing industry and
fly ash from coal fired power stations
Sustainable principles and practises,
Throughout the year Adelaide Brighton
Benefits include increased resources
innovation and continuous improvement in
worked towards reducing its total greenhouse
efficiency, minimisation of the use of non-
environmental performance are a natural
gas emissions from all business units.
renewable natural resources, reduction in
part of business at Adelaide Brighton and
As shown by the graph on page 22 the
waste being sent to landfill and reduction of
help to ensure the Company’s long term
Company reduced overall emissions by
our emissions footprint. We use a variety of
success in a changing world. We are aware
10%. This reduction was attributed to the
alternative fuels in our processes, primarily
that our operations are fuelled by natural
rationalisation of clinker production at the
recycled demolition and construction timber,
resources from the environment in which we
Munster site, greater energy efficiency, use
waste oil and carbon powder. In addition,
live and we are always respectful of the local
of lower emission fuels and use of alternative
we utilise slag and fly ash as alternative
communities we operate in close proximity to.
raw materials. Initiatives in fuel and raw
raw materials in our production processes.
The business adheres to strict licensing and
material use remain central to our continued
The following specific projects were
mandatory reporting conditions but, just as
efforts to reduce greenhouse gas emissions.
undertaken during the year.
importantly, continually undertakes voluntary
measures to ensure the natural environment
Co-processing
and local communities we operate within
are not adversely affected by our activities.
Carbon emissions
Construction and demolition timber
used as an alternative fuel at Birkenhead
Co-processing is a term used to describe
the use of alternative fuels and alternative
The use of construction and demolition timber
raw materials in the production process.
displaces the use of natural gas in the kiln
This continues to be a focus for the
and reduces our emissions footprint. As a
The Australian Government’s mechanism
Company and provides significant benefits
result of major improvements made to the fuel
for carbon pricing, known as the carbon tax,
not only for our business, but for the industry
firing process at the Birkenhead plant in the
was introduced on 1 July 2012 and repealed
and the natural environment.
previous year, the volume of construction and
demolition fuel used increased during 2014.
A second firing facility at the site is planned
to facilitate a further increase in the use of
this alternative fuel in future years.
Slag dryer installed at Port Kembla
Commissioning and installation of a slag
dryer during the year at the Port Kembla site
in New South Wales will increase the use of
alternative raw materials. The increased use of
slag will reduce the site’s clinker usage, which
will reduce its overall emissions footprint.
effective 1 July 2014. To satisfy our final
liability under the carbon tax scheme, the
Group chose to meet its obligations through
the purchase of Australian Carbon Credit
Units. Units amounting to five per cent of our
emissions, the maximum allowable under
the scheme, were sourced from native forest
protection projects in two areas of NSW.
The balance of the units were acquired
from the Clean Energy Regulator.
The carbon tax has been replaced by the
Direct Action Plan Emissions Reduction
Fund. The aim of this fund is to provide
incentives for businesses to adopt new
practices and technologies that reduce
emissions. The Government will then
purchase those reductions at the least cost.
Adelaide Brighton intends to thoroughly
investigate all the Group’s activities to
find ways to participate in this new scheme.
SOURCE OF G REE NHOUSE
GAS EMISSION IN A
CEMENT PLANT
50% OF GRE EN HOUSE GA S E MIS S ION OC CUR A S TH E
RAW MEAL IS H EAT ED A ND C AR BON DIO XIDE IS DR IVEN
OFF IN ORDE R T O FOR M THE NE CE SS A RY C HE MIC A L
CONVERSION OF LIMEST ONE T O C A LC IUM O XIDE:
CaCO3 > CaO + CO2. AS LON G AS CE ME NT MA KING R E LIE S
ON THE CALCINATION OF LIME ST ON E ,TH ES E E MISS ION S
WILL BE IMPO SSIB LE TO AVO ID.
35% OF GREE NHOUS E GA S EMIS SION S O CCU R A S A
RESULT OF BURN IN G FUE LS (C OA L,G AS A N D D IES EL)
TO CREATE T HE RMA L E NE RGY
15% IS PRODUC ED AS A RES ULT O F TH E INDIREC T
EMISSIONS R ES ULTING FROM T HE USE OF ELE CT RIC IT Y.
CEMENT GR IN DING IS TH E L AR GE ST SIN GL E E LE CTR ICIT Y
USER IN THE CE ME NT PLA NT. R AW ME AL GRIN DING
AND MOVING MAT ER IA L A ROUN D T H E PLA NT AR E OT H ER
SIGNIFICANT SO UR CES OF E LEC T R ICITY USE .
Source: Cement Industry Federation
21
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014
‘000
CARBON
TONNES
EMISSIONS
4000
3600
3200
2800
2400
09
10
11
12
13
14
BIRKENHEAD PLANT
WETL AND EXPANSION -
NEW PL ANTINGS HAVE
DO UB LED THE SIZE
OF THE W ETLANDS TO
OVER 1.6 HECTARES
22
MAINS WATER
‘000
PRO CESS WASTE
MEGALITRES
USAGE
TONNES
TO LAND FIL L
800
600
400
200
0
160
120
80
40
0
09
10
11
12
13
14
09
10
11
12
13
14
CEMENT AND LIM E
CEME NT AND LIME
CON CRETE AND AGGREGATES
CONCR ETE AN D AG GRE GATE S
CON CRETE PRODUCTS
CONCR ETE PR ODUCT S
Angaston waste oil
Installation of solar power
Annual mandatory reporting
Waste oil became a major source of energy
In a trial to reduce power consumption, a
In addition to site based reporting under
for the Angaston plant in South Australia
solar power plant was installed at our Penrose
operating licences, the Group has reported
following successful trials during 2013. In
Quarry in New South Wales. The outcome
under three national environmental schemes:
excess of 1.9 million litres of this alternative
of this project is being monitored to evaluate
>
In October 2014, Adelaide Brighton reported
fuel was consumed during 2014. The
the suitability of expanding the use of solar
under the National Greenhouse and Energy
increased use of this waste product reduced
power to other quarries as a replacement for
Reporting (NGER) scheme for the sixth
the amount of natural gas the plant required.
generators and for use in concrete plants.
year. This includes reporting of greenhouse
The ongoing use of this alternative fuel is
dependent on continued access to a
Dust reduction initiatives
reliable supply.
Improvement initiatives
Fugitive dust at sites across the business is
monitored and reduction initiatives actioned
where appropriate. During the year, a
As well as using alternative fuels and
foam suppression system was installed at
raw materials to improve our production
Birkenhead in South Australia. This system
processes, there are many other projects
has reduced fugitive dust loads generated
occurring at our sites which help our
during tipping and unloading (by front end
overall sustainability performance, on
loaders and trucks) of materials into the raw
both a large and small scale.
Reduction of the Munster
plant carbon footprint
The rationalisation of the plant’s operations
was announced during the year and involved
moving to an import model to replace
domestic production of clinker used in the
materials feed system. The patented dust
suppression solution is used to essentially
‘weigh down’ dust particles, preventing them
from becoming airborne. Any dust captured
in the foam will fall back into the hopper and
into the materials delivery system.
Recognition of improvement initiatives
gas emissions, energy consumption and
energy production data from all business
units, as well as data required for the carbon
tax scheme. Due to the size of the Group,
independent certifi cation of the reported
carbon tax data was required and the
Company again received an unqualifi ed audit
opinion on this data. Reporting of NGER
information has not been impacted by the
repeal of the carbon tax.
>
The National Pollutant Inventory reports
emissions at a site level where certain
thresholds are reached at the site. This is
made publically available, which improves
transparency regarding the impact of site
operations on communities. Reports for the
12 months to June 2014 were submitted
to the regulators, with public release of
the data expected in early 2015.
manufacture of cement. The Munster clinker
The $46 million investment in bag house
>
The Energy Effi ciency Opportunities
kilns used ineffi cient wet process technology
fi lter systems for Kilns 5 and 6 at Munster
program encouraged large energy users
with a large carbon footprint. The replacement
was recognised with the Environmental
to identify, evaluate and implement energy
imported product is manufactured by
Innovation Award from the Cement,
saving opportunities. The program was
producers with more advanced, effi cient
Concrete and Aggregate Association. This
repealed effective June 2014 and there are
equipment.
award recognises excellence in developing
no further reporting requirements. Despite
and implementing an innovative solution to
the repeal of the program, Adelaide Brighton
an identifi ed environmental issue or process
continues to investigate potential energy
that has positive environmental outcomes.
effi ciency opportunities as part of day-to-day
The installation of the two state-of-the-art
business operations.
systems has resulted in a dramatic
reduction in particulate emissions.
ADELAID E BRIGH T ON LTD AN N UA L R EP OR T 2 014
23
Re-use of cement and lime kiln dust
Munster rehabilitation
Cement kiln dust (CKD) and lime kiln dust
Over two hectares of new rehabilitation
(LKD) both waste products of cement and
works occurred within the quarry at Munster
lime production, have traditionally been
during 2014, with more than five hectares
%
EMPL OY EE TURNOVER
disposed of in our quarries. Efforts to re-use
now rehabilitated. In total, over 17,000 trees,
TURNOVER
BY AGE GR OUP
these products have been under investigation
with all species planted being native to the
for a number of years, either by incorporating
local area. The site is on track to being a
them into our processes or finding other
seed collection point for other rehabilitation
industries which have a use for them.
activities that are being undertaken in
Birkenhead CKD re-use project
The Birkenhead site began a project in 2013
the local community.
Community support
to implement the use of CKD into all cement
Adelaide Brighton is committed to positive
mills, diverting it from landfill. The project
engagement, consultation and openness
commenced by converting cement mill 1 to
with local communities.
accept CKD and continued into 2014 with
conversion of cement mill 6. Following these
successful projects, work is underway in
2015 to expand the use of CKD to cement
mill 7. The re-use of CKD in cement products
not only reduces the amount going to landfill
but directly displaces the volume of clinker
In addition to our corporate partnerships we
directly assist a broad range of organisations
and community groups with selective and
considered support, including education
groups, health facilities and organisations
which provide assistance to those in need.
required for production of cement, saving on
In 2014 our support included assistance
non-renewable resources and reducing the
to the following:
carbon footprint of the site.
>
Ear Science Institute Australia - researching
Munster LKD Project
In a joint effort with the Curtin University
PhD program, the Company is investigating
the use of LKD in the road and construction
industry. Successful identification of uses
for the material would reduce the quantity
of material being disposed of in landfill
each year.
Landcare and rehabilitation
>
>
causes of and treatments for ear, hearing
and balance disorders
Camp Quality
South Australian Indigenous Law Student
Mentoring Program to support indigenous
law students during study and to facilitate
transition as graduates to legal practice
>
Sydney Children’s Hospital Foundation -
children’s therapist in the Outpatients and
Emergency Departments
>
Variety, the Children’s Charity - benefitting
sick, disabled and disadvantaged children
Looking after the land on which our
(also supported through Adelaide Brighton’s
businesses operate and on which they are
workplace giving program)
dependant is an area of constant focus
>
Undergraduate Scholarship in the School of
for Adelaide Brighton. Rehabilitation and
Engineering at the University of Wollongong
revegetation of areas used for quarrying
- targeted towards a female as part of our
activities is ongoing.
long term strategy to encourage a higher
proportion of women into engineering in
Birkenhead Wetlands
industry
The expansion of the wetlands at the
Birkenhead plant was completed during
2014. Thousands of native plants were
planted and previously planted reeds have
now established themselves in the ponds.
The expansion project has doubled the
size of the wetlands to over 1.6 hectares.
>
University of Adelaide Engineering
Scholarship
>
Barossa Council - support for Barossa
Aquatic Centre
>
City of Port Adelaide Enfield Community
Christmas parade
>
Indigenous scholarship for secondary
schooling program.
100
75
50
25
0
0
2
<
5
2
-
1
2
0
3
-
6
2
5
3
-
1
3
0
4
-
6
3
5
4
-
1
4
0
5
-
6
4
5
5
-
1
5
0
6
-
6
5
5
6
-
1
6
0
7
-
6
6
+
0
7
LOST TIME INJURY
FREQUENCY
FR EQUE NCY RATE
8
6
4
2
0
09
10
11
12
13
14
CE ME NT AN D LIME
CO NCR ET E A ND AGG REG AT ES
CO NCR ET E P RODUCTS
TO TAL ABL
RE STR ICTE D
DUTIES INJURY
FREQUENCY
FR EQUE NCY RATE
40
30
20
10
0
%
100
80
60
40
20
0
09
10
11
12
13
14
CE ME NT AN D LIME
CO NCR ET E A ND AGG REG AT ES
CO NCR ET E P RODUCTS
TO TAL ABL
EMPL OYE E
TURNOVER
BY G ENDER
MALE FEMALE
CO NTIN UE RS
TUR NOV ER
24
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014
People, health and safety
Adelaide Brighton employs a diverse workforce of around 1400 people across about
90 locations throughout Australia. At Adelaide Brighton our commitment to health
and safety is an essential and integral part of the way we do business.
Our employee Code of Conduct is based
>
A Safety Leadership Workshop Program,
In addition, we have also provided a four
on the key values that guide and define how
aimed at helping employees understand
year scholarship to enable an indigenous
business is conducted and provides a set
their role in shaping safety culture, was
student to successfully complete high school,
of guiding principles to help us make the
completed with the delivery of the program
providing them with more choices for their
right decision every time. They key values
to approximately 300 employees within
future career.
underpinning the Code of Conduct are:
our Concrete Products Division.
>
>
We act with fairness, honest and integrity;
>
Implementation of Adelaide Brighton’s safety
We provide a safe and healthy work
practices within the concrete and aggregate
environment for all employees;
business acquisitions in South Australia
>
We are aware of and abide by laws
and Queensland.
and regulations;
>
We maintain the highest standards of
professional behaviour;
>
We identify and manage conflicts of
interest responsibly; and
In 2014 we recoded a lost time injury
frequency rate of 1.8 (1.7 in 2013) and
restricted duty injury frequency rate of 17.8,
an increase from 11.7 in the previous year.
Our focus on indigenous diversity has
included active participation in the South
Australian Indigenous Law Student
Mentoring program.
Our workforce profile shows that the
average age of our workforce is 46 with an
average tenure of nine years. With such a
stable and experienced workforce, we have
introduced a strong focus on mentoring and
>
We strive to be a good corporate citizen,
The increase in the restricted duty injury
succession planning to support knowledge
and to achieve community respect
frequency rate is attributable to our strong
transfer and development of skills. Mentoring
(by individually and collectively contributing
focus on early intervention injury management
and coaching supplement our core training
to the well being of shareholders, customers,
approach. This practice ensures that even
regime, which ensures job appropriate skills
the economy and the community).
minor injuries are treated by a doctor as soon
are developed, as well as overall leadership
as is possible. While the negative outcome
capability.
Safety and health
During 2014 our Health, Safety and
Environment Policy was revised to align with
our current vision and safety culture. Our goal
of “Safe, Sustainable Production” is core to
how we work and conduct our business.
We continually work on improving our safety
of this can be an increase in short duration
restricted duty injuries, the positive outcomes
are a reduction in injury severity, duration
and most importantly a demonstrated
“we care for our people” attitude.
Developing a diverse workforce
Our student vacation program employs
undergraduate student engineers typically for
a period of two to three months. During this
time students are assigned a business related
project that is operationally important as well
as meeting the requirements of their degree.
The students are supervised and mentored
systems and safety culture.
Adelaide Brighton recognises the need
during their placement. Our overall aim is
Focus areas in 2014 included:
>
Safety strategy workshops led by
the Chief Executive Office and senior
management team to review safety
performance and protocols and develop
a safety vision for 2015 -2018 with actions
and leadership behaviours to achieve a
mature safety system and culture.
to continually build a diverse and capable
to make working with the team at Adelaide
workforce to meet the needs of our business.
Brighton their preference when they
We are committed to the promotion of
complete their studies.
Adelaide Brighton is an active participant in
the Australia Brick and Blocklaying Training
Foundation, which supports the skills
development of apprentices in the industry
ensuring future skilled labour supply.
diversity within our organisation, and
recognise that removing barriers to diversity
enables us to attract and retain the best
people with the appropriate skills to contribute
to the continuing success of our business.
We have continued our focus on expanding
gender diversity in our business and
the industry through the sponsorship of
the Women in Engineering program at
Wollongong University and an Undergraduate
Engineering Scholarship for female engineers.
25
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 EM PLOYMENT BY
EM PLOYMENT STATUS
EMPLOYMENT BY
CO NTRAC T TYPE
% E MPL OY EES
ON EB A v s STAFF
PAR T TIME
FULL TIME
CA SU AL
PERM ANENT
FIXED TERM
EMPL OYEE TURN OVER
BY GE OGRA PHY
EMPLOYMEN T
BY GEOG RAPHY
EB A
STAFF
WESTERN AUSTRALIA
QU EENSLAN D
NEW SOUTH WALES
S O U T H AUSTR ALIA
VIC TO RIA
SOUTH AUSTRA LIA
NEW SOUTH WALES
WESTERN AUSTRALIA
QUEENSLAND
VICTORIA
NOR THERN TER RITORY
NOR THERN TERRITORY
TAS MA NIA
TASMANIA
ROBE RT CHANGWO,
LIME PROCESS
ENGINEER AT THE
MUNS TER PLANT
26
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 Corporate Governance Statement
The Board is committed to conducting the Company’s business ethically and in
accordance with high standards of corporate governance. To this end, the Board
(together with the Company’s management) regularly reviews the Company’s
policies, practices and other arrangements governing and guiding the conduct
of the Company and those acting on its behalf.
MARCUS CLAYTON
GENER AL CO UN SEL AN D
COMPAN Y SECRETARY
This statement provides an outline of the main corporate governance practices that the Company had in place during the past financial year. The
Board believes that the Company’s policies and practices are consistent in all substantial respects with good corporate governance practice in Australia
appropriate for the circumstances of the Company, including the ASX Corporate Governance Council Principles and Recommendations (2nd edition).
ASX Corporate Governance Council Principles and Recommendations (ASX Principles)
The following table summarises how the Company complies with the ASX Principles (as applicable to the Company for the 2014 financial year),
and provides reference to where the specific recommendations are dealt with in this statement:
ASX Principle/Recommendation
Compliance
Reference
Principle 1
Lay solid foundations for management and oversight
1.1
1.2
1.3
Establish the functions reserved to the Board and those reserved to management
Disclose the process for evaluating the performance of senior executives
Provide the information indicated in the Guide to reporting on Principle 1
Principle 2
Structure the Board to add value
2.1
2.2
2.3
2.4
2.5
2.6
A majority of the Board should be independent Directors
The chair should be an independent Director
The roles of chair and chief executive officer should not be exercised by the same individual
The Board should establish a nomination committee
Disclose the process for evaluating the performance of the Board, its committees and individual Directors
Provide the information indicated in the Guide to reporting on Principle 2
Section 1.1
Section 1.2.3
Section 1.2.1
Section 1.2
Section 1.2
Section 2.1
Section 1.2.3
3
3
3
3
3
3
3
3
3
Principle 3
Promote ethical and responsible decision-making
3.1
3.2
3.3
3.4
3.5
Establish a code of conduct and disclose the code or a summary of the code
3
Section 4.1
Establish a diversity policy and disclose the policy or a summary of that policy. The policy should include requirements
for the Board to establish measurable objectives for achieving gender diversity and for the Board to assess annually both
the objectives and progress in achieving them.
Disclose the measurable objectives for achieving gender diversity set by the Board in accordance with the diversity
policy and progress towards them.
Disclose the proportion of women employees in the whole organisation, women in senior executive positions
and women on the Board.
Provide the information indicated in the Guide to reporting on Principle 3
Section 1.2.6
and pages
34, 35
Pages 34, 35
Page 35
3
3
3
3
ADELAID E BRIGH T ON LTD AN N UA L R EP OR T 2 014
27
ASX Principle/Recommendation
Compliance
Reference
Principle 4
Safeguard integrity in financial reporting
4.1
4.2
4.3
4.4
The Board should establish an audit committee
The audit committee should be structured so that it:
> consists only of non-executive Directors
> consists of a majority of independent Directors
> is chaired by an independent chair, who is not chair of the Board, and
> has at least three members
The audit committee should have a formal charter
Provide the information indicated in the Guide to reporting on Principle 4
Principle 5 Make timely and balanced disclosure
5.1
Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies
or a summary of those policies
5.2
Provide the information indicated in the Guide to reporting on Principle 5
Principle 6 Respect the rights of shareholders
6.1
6.2
Design a communications policy for promoting effective communication with shareholders and encouraging their
participation at general meetings and disclose their policy or a summary of that policy
Provide the information indicated in the Guide to reporting on Principle 6
Principle 7 Recognise and manage risk
Section 2.1
Section 2.1
Section 2
Section 5.1
Section 5.2
3
3
3
3
3
3
3
3
Establish policies for the oversight and management of material business risks and disclose a summary of those policies
3
Section 3.1
The Board should require management to design and implement the risk management and internal control system to
manage the Company’s material business risks and report to it on whether those risks are being managed effectively.
The Board should disclose that management has reported to it as to the effectiveness of the Company’s management
of its material business risks
The Board should disclose whether it has received assurance from the chief executive officer and the chief financial
officer that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound
system of risk management and internal control and that the system is operating effectively in all material respects
in relation to financial reporting risks
7.4
Provide the information indicated in the Guide to reporting on Principle 7
Principle 8 Remunerate fairly and responsibly
The Board should establish a remuneration committee
The remuneration committee should be structured so that it:
> consists of a majority of independent Directors
> is chaired by an independent chair, and
> has at least three members
3
Section 3.1
Section 3.1
3
3
3
Section 2.1
3
Section 2.1
7.1
7.2
7.3
8.1
8.2
8.3
8.4
Clearly distinguish the structure of non-executive Directors’ remuneration from that of executive Directors and senior executives 3
Section 2.1
Provide the information indicated in the Guide to reporting on Principle 8
3
1
The Board lays solid foundations
The Board operates in accordance with
The Board and CEO are supported by
for management and oversight
the general principles set out in its charter,
senior management who report to the CEO.
1.1
Role of the Board
The role of the Board of Directors is to
protect and optimise the performance of
which is available from the corporate
The respective roles and responsibilities of
governance section of the Company’s
the Board and management are outlined
website at www.adbri.com.au.
further in the Board charter.
the Group and, accordingly, the Board
In accordance with the provisions of the
takes accountability for reviewing and
Company’s constitution, the Board has
approving strategic direction, establishing
delegated a number of powers to Board
policy, overseeing the financial position and
committees (see section 2), and responsibility
monitoring the business and affairs of the
for the day-to-day management of the
Group on behalf of shareholders.
Company’s business affairs and development
and implementation of the Company’s
strategy to the Chief Executive Officer (CEO).
28
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014
The Board has also reserved for itself the following specifi c responsibilities:
Strategy and monitoring
Monitoring the business and
Risk management, compliance
affairs/relations with management
and internal controls
Input into and approval of management’s
Selecting, appointing and evaluating from
Reviewing, guiding and monitoring systems
development of corporate strategy, including
time to time the performance of, determining
of risk management and internal control
setting performance objectives and approving
the remuneration of, and planning for the
and ethical and legal compliance.
operating budgets.
successor of, the CEO.
Monitoring and reviewing processes aimed
Monitoring and reviewing corporate
Reviewing procedures for appointment of
at ensuring integrity of fi nancial and other
performance and implementation of
senior management, monitoring performance
reporting, and providing assurance to
strategy and policy.
and reviewing executive development
approve the Group’s fi nancial reports.
1.2
The Board is structured to add value
The Board ensures that its members
have the time and commitment to
devote to the role
Prior to appointment, Directors provide
details of other commitments and
acknowledge that they will have adequate
time to meet expectations.
Directors to consult with the Chairman
before accepting outside appointments.
Letter of appointment sets out Director’s term
of appointment, powers, expectations
and rights and obligations.
The Board is committed to a majority
of independent views being brought
to bear in decision-making (see 1.2.1)
Directors expected to bring independent
views and judgment to discussions.
Majority of Board members are independent.
Board has adopted Financial Services
Council Blue Book defi nition of
director independence.
>
>
>
>
>
>
activities. This includes ratifying the
appointment and the removal of the Chief
Financial Offi cer, the Company Secretary
and all the Company’s senior executives
who report to the CEO.
Approval of the Company’s capital
structure and gearing targets.
Monitoring and reviewing policies and
processes in place relating to occupational
health and safety, compliance with laws, and
the maintenance of high ethical standards.
Input into and approval of the Company’s
policy in relation to, and monitoring
implementation of, sustainable resource use
Approval of specifi ed matters exceeding
and the impact of the Company’s operations
delegated authority levels, including major
on the environment, community and
capital expenditure and major acquisitions
stakeholders.
and divestitures.
>
>
>
>
>
>
>
Board keeps informed of regulatory
and industry developments to
challenge status quo and strengthen
knowledge base (see 1.2.4)
Directors expected to participate in
ongoing education/development.
Directors keep themselves informed and up
to date, of their own initiative, with general
developments relevant to the role of a
non-executive Director in an S&P/ASX100
company.
Board and Director performance
is regularly evaluated to facilitate
continuous improvement (see 1.2.3)
Board, Committee and individual Director
performance reviewed annually.
Directors to undergo a performance
appraisal before standing for re-election.
One third of the non-executive Directors
retire (and are eligible for re-election)
at each AGM.
>
>
>
The Board is structured to add
value and Board decision-making
is enhanced through education
and support
Broad mix of skills, diversity and
experience refl ecting the character of the
Group’s business to best guide, review
and challenge management.
Independent Chairman leads the Board,
facilitates constructive decision-making, and
manages Board/management relationship.
To maintain independent oversight, roles
of Chairman and CEO are undertaken by
different individuals.
Comprehensive induction processes
equip Directors to perform in their role
Comprehensive induction process
upon appointment.
Obligation on new Directors to familiarise
themselves with Company’s practices through
induction process or by making enquiries of
the Chairman, the Company Secretary or
management.
Board members have access to
management and independent advice
to assist in discharge of their duties
Access to senior executives and to
any further information required to make
informed decisions.
Right to seek independent professional
advice at the Company’s expense to assist
in effective discharge of duties.
>
>
>
>
Confl icts are managed (see 1.2.2)
Actual and perceived confl icts considered
and managed on an ongoing basis.
Protocols around disclosure, and
procedures around management of
potential confl icts have been adopted.
ADELAID E BRIGH T ON LTD AN N UA L R EP OR T 2 014
29
1.2.1
Directors’ independence
the relevant Director to participate in Board
1.2.4
Director induction, training and ongoing
discussion and decision-making in relation to
education
The Board reviews, at least annually, the
independence of Directors. In general,
Directors are considered independent where
they are free of any interest and any business
or other relationship which could, or could
reasonably be perceived, to interfere materially
with the Director’s ability to act in the best
interests of the Company. An assessment will
be made on a case-by-case basis of whether
the issue. Where there was a real potential
for a conflict of interest, information was not
provided to the Director, and, in accordance
with the Corporations Act 2001, the Director
did not participate in, or vote at, the meeting
where the matter was considered.
1.2.3
Performance evaluation
All newly appointed Directors are provided
with an induction, which includes information
relevant to their new role, attendances at key
sites and introductions to key staff, which
is provided or coordinated by the CEO, the
Chief Financial Officer and the Company
Secretary. This induction includes briefings on
the Company’s business, strategy, financial,
the Director’s ability to act in the best interests
The Board reviews its performance annually,
operational and risk management matters
of the Company has been materially impaired.
as well as the performance of individual
and factors relevant to the sectors and
In ensuring that the Board comprises Directors
with a broad range of skills and experience
reflecting the character of the Group’s
Committees and individual Directors
environments in which the Company operates.
(including the performance of the Chairman
as Chairman of the Board).
Ongoing Director education is provided
throughout the year. The Board and its
business, the Board may from time to time
For the 2014 financial year, a performance
Committees are provided with updates and
appoint Directors who are not considered to
evaluation was led internally by the Chairman
information from both management and
be independent. It is, however, the Board’s
to assess the performance of individual
external experts on various topics relevant
policy that it should comprise a majority
Directors, the Board as a whole, various
to the Company’s circumstances. The Board
of independent Directors to ensure that
aspects of the Board committees such as
is informed by expertise from within the
independent oversight is maintained.
their performance, membership, roles and
Company on matters such as energy supply
Having regard to the guidelines of
independence adopted by the Board, the
charters, and the Board’s and Directors’
arrangements and business and product
interaction with management.
development.
Directors are of the view that Mr R D Barro
As part of this comprehensive review of
1.2.5
Board and CEO succession planning
is the only non-executive Director who is
the Board’s performance, processes and
not considered “independent”, by virtue of
operations, the Chairman facilitates individual
his position as the Managing Director and a
discussions with each Director which also
shareholder of Barro Group Pty Ltd (which
reviews their individual performance. The
has a 50% interest in the joint venture,
discussions also included a peer review of
The Board regularly reviews the size and
composition of the Board to ensure the
appropriate skills, perspective and expertise
are represented.
Independent Cement & Lime Pty Ltd (ICL), and
the Board Chairman’s performance by
During 2014, the Board led by the Chairman
is a substantial shareholder in the Company).
the other Directors.
and the Chairman of the Nomination,
1.2.2
Conflicts of interest
Executives and managers are also subject
and reviewed during 2015.
ICL has an ongoing trading relationship with
the Barro Group of companies.
The Chairman reports to the Board
concerning the performance evaluation
The Board has also considered the length
process and the findings of these reviews.
of service of each Director on the Board
As a result of recommendations arising
and concluded that no Director has been a
from the internal Board review, initiatives
Director of the Company for such a period that
are introduced to ensure the continued
their independence may be compromised.
effectiveness of the Board’s performance and
Details of each Director’s period of office is
to enable its sustained focus on key issues
set out on page 36 of this report.
for the Company. The implementation of
these initiatives is overseen by the Chairman.
Determinations regarding independence
to an annual performance review in which
do not change any Director’s obligations in
performance is measured against agreed
managing any conflict of interest. Directors
business objectives. The performance of
have a continuing obligation to avoid any
the CEO is assessed by the Board against
action, position or interest which conflicts
objectives related to the Company’s strategy,
(or may be perceived to conflict) with their
business plans and the financial and other
position as a Director of the Company.
performance of the business.
During the year, in order to avoid actual and/
the agreed objectives was reviewed by the
or perceived conflicts of interest in Board
Chairman, the Nomination, Remuneration
decision-making, Board procedures were
followed such that where the possibility of a
and Governance Committee and the Board.
The performance of the Company’s senior
material conflict arose, the Board considered
executives during 2014 was reviewed by the
the nature and extent of the potential conflict
CEO, the Nomination, Remuneration and
and whether it would be appropriate for
Governance Committee and the Board.
30
Remuneration and Governance Committee,
reviewed the Board’s composition, and utilised
a Board skills matrix in doing this (details of
the Board skills matrix will be disclosed when
the Company adopts the 3rd edition of the
ASX Principles). The Board is satisfied that
its present composition is appropriate for the
circumstances of the Company. It recognises
that consideration of Board renewal is an
ongoing process, and accordingly the Board’s
composition will continue to be monitored
The Board’s long term management
succession plan for the CEO was
implemented during 2014, leading to Martin
Brydon assuming the Chief Executive Officer
role upon Mark Chellew’s retirement following
the Annual General Meeting in May 2014,
ensuring a smooth transition of leadership
The Nomination, Remuneration and
Governance Committee and the Board also
reviewed the succession plans for the senior
management team during the year, to
ensure that appropriate plans have been
implemented for the mid to long term.
In particular, the Board is cognisant of
Mr Barro’s interest in Barro Group Pty Ltd.
For the 2014 financial year, the performance
responsibilities within the Company.
of the CEO and the CEO’s achievement of
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 1.2.6
Diversity
Audit, Risk and
Compliance Committee
Nomination, Remuneration and
Governance Committee
Roles and
responsibilities
The Board, having adopted a Diversity
Policy for the Group in 2011, established
measurable diversity objectives (which are
reviewed and assessed annually) to enhance
gender and other diversity across the
organisation. Further information about the
Group’s diversity objectives and progress
achieved (in accordance with the ASX
Corporate Governance Council Principles
and Recommendations) is set out on pages
34 to 35. The Group’s overarching Diversity
Policy will be reviewed during 2015.
2
Composition and responsibilities
of Board Committees
To assist the Board in fulfilling its
responsibilities, the Board has established
a number of committees with responsibility
for particular areas:
>
>
Audit, Risk and Compliance Committee;
Nomination, Remuneration and
Governance Committee;
>
Safety, Health and Environment
Committee; and
>
Independent Directors’ Committee.
Each committee has a specific charter or
Composition
constitution. The charters for the Audit,
Risk and Compliance Committee and the
Nomination, Remuneration and Governance
Committee are available on the corporate
governance section of the Company’s
website at www.adbri.com.au. The Board
periodically reviews each Board committee’s
charter, role and responsibilities.
Details on the number of meetings held by
the Board and its Committees during 2014,
and attendance by Board members, can be
found on page 43 of this report. Information
on the relevant skills, experience and
expertise of each Director can also be
found on page 36 of this report.
2.1
Key standing committees - Audit, Risk
and Compliance and Nomination,
Remuneration and Governance
The composition and responsibilities of the
Audit, Risk and Compliance and Nomination,
Remuneration and Governance Committees
are set out in the following table.
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>
>
>
>
>
>
>
The Audit, Risk and
Compliance Committee:
assists the Board in relation to the
reporting of financial information,
the appropriate application and
amendment of accounting policies,
the appointment, independence and
remuneration of the external auditor,
and performance of the internal audit
function (including independence,
effectiveness and appropriate
coordination with external auditors).
provides a forum for communication
between the Board, management and
both the internal and external auditors.
reviews and reports to the Board on
the effectiveness of the Company’s
ongoing risk management program
and policies and procedures.
reviews and reports to the Board
regarding the appropriateness of the
Company’s compliance procedures.
provides a conduit to the Board
for external advice on audit, risk
management and compliance
matters.
Composition requirements include:
there must be a minimum of three
independent non-executive Directors
on the Committee.
the Chair must be an independent
non-executive Director who is not
Chairman of the Board.
Committee members shall, between
them, have sufficient accounting and
financial knowledge to allow them to
discharge their duties and actively
challenge information presented by
management, internal and external
auditors.
Membership as at
31 December 2014
GF Pettigrew (Chairman)
LV Hosking
AM Tansey
Consultation
Members of management may
attend meetings of the Committee
at the invitation of the Committee
Chairman. It is practice of the
Committee that the CEO, the Chief
Financial Officer and the Company
Secretary attend all Committee
meetings. The Group Risk Manager
generally attends meetings of the
Committee when non-financial
risk management matters are
considered.
In fulfilling its responsibilities, the
Committee has rights of access
to management and to internal
and external auditors in the
absence of management and may
seek explanations and additional
information.
It is the practice of the Committee
to meet with the Company’s
external auditors, without any
member of management present.
A DEL A ID E BRIGH T ON LTD AN N UAL R EPOR T 2 014
31
>
>
>
>
>
>
The Nomination, Remuneration and
Governance Committee:
assists and advises the Board on
matters relating to the appointment,
remuneration and processes for
review of the performance of the non-
executive Directors, the CEO and other
senior executives, and best practice
corporate governance appropriate to
the circumstances of the Company.
oversees the implementation of the
Company’s short term and long term
incentive arrangements, including
reviewing performance targets
for senior executives, reviewing
recommendations from the CEO on
senior executives’ participation in short
and long term incentive schemes,
making relevant awards and assessing
the extent to which performance
conditions are satisfied.
reviews management and Board
succession planning and assesses the
appropriate mix of skills, experience
and expertise required on the Board.
oversees the implementation of
diversity measures to facilitate the
achievement of the Company’s
diversity objectives.
Composition requirements include:
there must be a minimum of three
independent non-executive Directors
on the Committee.
each Committee member is expected
to be familiar with the legal and
regulatory disclosure requirements
in relation to remuneration and have
adequate knowledge of executive
remuneration issues, including
executive retention and termination
policies, and short term and long
term incentive arrangements.
AM Tansey (Chairman)
LV Hosking
GF Pettigrew
KB Scott-Mackenzie
It is practice of the Committee, on
occasions when relevant, to invite
other Directors to attend Committee
meetings. Additionally, two Committee
meetings in 2014 were held
concurrently with Board meetings.
Members of management, particularly
the CEO, the General Manager HR, the
Chief Financial Officer or the Company
Secretary, may also attend meetings
of the Committee at the invitation of
the Committee Chairman, whenever
particular matters arise that require
management participation, such as
reviewing senior executive performance,
succession planning or the CEO’s
recommendations to the Committee.
The Committee obtains external
advice from independent remuneration
consultants in determining the
Company’s remuneration practices and
executive service agreements where
considered appropriate.
2.2
Other Board committees
Committee meetings are also attended
The members of the Committee during
2.2.1
Safety Health and Environment Committee
by the CEO and the Company’s General
2014 were LV Hosking (Chairman), GF
Manager-HSE, Chief Financial
Pettigrew and KB Scott-Mackenzie. There
The members of the Safety, Health and
Offi cer and its General Counsel.
was no requirement for this Committee to
Environment Committee (SH&E Committee)
meeting during 2014.
during 2014 were KB Scott-Mackenzie
2.2.3
Independent Directors’ Committee
(Chairman), GF Pettigrew, and RD Barro.
The role of the Independent Directors’
The Committee has a broad role in reviewing
Committee is to investigate and consider
general and specifi c occupational health
corporate proposals made to the
and safety and environmental matters
Company. The Committee comprises
across the Group.
Directors who do not have any confl ict
of interest concerning the matters
considered by the Committee.
3
The Board recognises and
manages risk and safeguards the
integrity of fi nancial reporting
3.1
Framework
The Board has approved the following
framework within which the Company
discharges its risk management function:
Leading culture of compliance and ensuring that risk management practices are appropriate
and effective in the context of the Company’s business objectives
Oversight: The Board, through the Audit, Risk and Compliance Committee, is responsible for reviewing and guiding the Company’s risk
management policies and compliance and control systems. These policies and systems provide for management to identify and manage both
fi nancial and non-fi nancial risks to the Company’s businesses. The Board, through the Committee, regularly reviews the effectiveness of the
Company’s risk management system and management of identifi ed business risks.
Purpose: The Company’s risk management framework is designed to ensure strategic, operational, legal, reputation and fi nancial risks are
identifi eid, assessed, effectively and effi ciently managed and monitored to enable achievement of the Company’s business objectives.
>
>
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Internal controls framework
A robust control environment is fundamental to the effectiveness of
the Company’s risk management framework. Delegations of authority
and Board and management accountability is clearly demarcated.
All Directors, executives and employees are required to adhere to
the Code of Conduct (described below) and the Board actively
promotes a culture of quality and integrity.
Accounting, fi nancial reporting and internal control policies and
procedures designed to manage business risks (both fi nancial and
non-fi nancial) have been established at the Board and executive
management levels. These are designed to safeguard the assets and
interest of the Company, and ensure the integrity of fi nancial reporting.
The Board nonetheless acknowledges that it has ultimate responsibility
for the accuracy and approval of the Group’s fi nancial reports. The
Board acknowledges that it is also responsible for the overall internal
control framework, and to assist in discharging this responsibility,
the Board has instigated an internal control framework that can
be described as follows:
Financial risk
The CEO and Chief Financial Offi cer have made the
following certifi cations to the Board:
That the Company’s fi nancial reports present a true and fair view,
in all material respects, of the fi nancial position and performance
of the Company and the consolidated entity and are in accordance
with accounting standards in all material respects;
That the Company has a sound system of risk management and
internal control which implements the policies adopted by the Board
and forms the basis for the statement given above; and
That the Company’s risk management and internal control system
to the extent it relates to fi nancial reporting, is operating effi ciently
in all material respects.
>
>
>
Non-fi nancial risk
Management regularly reports to the Board, including through reports
to the Audit, Risk and Compliance Committee, on strategic and
operational issues, including an assessment of the material business
risks facing the Company and the effectiveness of the system
and policies in place to manage those risks.
>
>
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Financial reporting
Comprehensive budgeting system with
an annual budget reviewed and approved
by the Board.
Monthly actual results are reported against
budget and revised forecasts for the year
are prepared regularly.
Procedures to ensure that price sensitive
information is reported to the ASX in a
timely manner (see section 5 below).
Investment appraisal
Clearly defi ned guidelines for capital
expenditure e.g. annual budgets, detailed
appraisal and review procedures, and
levels of delegated authority where
businesses are being acquired or divested.
>
>
>
>
>
>
Operating unit controls
Financial controls and procedures
including information systems controls
are in operation throughout the
consolidated entity.
Operating units confi rm compliance with
these procedures to the Board annually.
Functional
specialty reporting
The Group has identifi ed a number of
key areas which are subject to regular
reporting to the Board, such as safety and
environment, risk management, taxation,
fi nance and administration.
Delegated authorities
and restrictions
Comprehensive procedure which provides
a framework that enables employees to
operate and act within clearly defi ned and
communicated parameters.
Internal audit
Assists the Board in ensuring
compliance with internal controls.
The Audit, Risk and Compliance Committee
reviews and approves the selection and
engagement of internal auditors, the internal
audit program to be conducted, and the
scope of the work to be performed.
Internal auditors provide the Committee
with comments and recommendations
about the identifi cation of areas perceived
to be of a greater level of risk than others,
and any areas requiring particular scrutiny.
The Committee receives and reviews the
reports of the internal auditors.
ADELAIDE BRIGHT ON LT D AN NU A L R EP OR T 2 014
32
3.2
Audit Services
The Company has also adopted policies
The Company’s Continuous Disclosure Policy
The Company and Audit, Risk and
Compliance Committee policy is to appoint
external auditors who clearly demonstrate
quality and independence. The performance
of the external auditor is considered annually.
PricewaterhouseCoopers remains the
requiring compliance with (among others)
is available on the Company’s website at
occupational health and safety, environmental,
www.adbri.com.au and sets out guidelines
privacy, diversity, equal employment
and processes to be followed in order to
opportunity, harassment, fair treatment, and
ensure that the Company’s continuous
competition and consumer law. The Company
disclosure obligations are met. Material
monitors the effectiveness of these policies.
information must not be selectively disclosed
external auditor of the Company for the
Employees are encouraged to attend training
Group’s financial report for the year ended
or seminars presented by the Company, or
31 December 2014.
The Board has adopted a policy in relation
to the provision of non-audit services by
external service providers, to ensure that they
remain up-to-date with relevant industry and
regulatory developments.
prior to being announced to the ASX. These
policies and procedures are supplemented
by the Shareholder Communications Policy
(also published on the Company’s website)
which includes arrangements the Company
has in place to promote communication
the Company’s external auditor. It is based
The Code requires all officers, employees,
with shareholders and encourage effective
on the principle that work that may detract
contractors, agents or people associated
participation at general meetings.
from the external auditor’s independence
with the Company to report any potential
and impartiality (or that may be perceived as
breaches to the Company Secretary under
doing so) should not be carried out by the
the whistleblower program. This may be
external auditor. Details and the break down
done anonymously.
of fees for non-audit services and an analysis
of fees paid or payable to external auditors
4.2
Shareholdings of Directors
are provided in Note 29 to the Financial
and employees
The Company Secretary has been nominated
as the person responsible for communicating
with the ASX. This role includes responsibility
for ensuring compliance with the continuous
disclosure requirements and overseeing and
coordinating (with the Group Corporate
Affairs Adviser) information disclosure to the
Statements.
4
The Board is committed to
promoting ethical and responsible
decision-making
4.1
Code of conduct and whistleblower
program
The Board has a policy that in general,
ASX, analysts, brokers, shareholders, the
Directors and Officers may not buy or sell
media and the public.
Adelaide Brighton Ltd shares except during
periods (known as ‘Trading Windows’)
5.2
Communication with shareholders
provided that prior approval is obtained.
The Trading Windows cover the period of
one month following the annual and half year
results announcements in addition to the
The Company is committed to upholding
period from the release of the Company’s
the highest ethical standards of corporate
annual report until one month after the annual
behaviour. A Code of Conduct has been
general meeting. The policy also defines
adopted, which requires that all Directors,
certain periods where trading is not permitted
senior management and employees act with
under any circumstances (known as ‘Blackout
the utmost integrity and honesty. It aims to
Periods’), which cover the two months
further strengthen the Company’s ethical
preceding lodgement of half year and annual
climate by promoting practices that foster
results announcements, in addition to any
The Company’s website contains copies
of annual reports, financial accounts,
presentations, media releases and other
investor relations publications. All relevant
announcements made to the market, and
any related information, are also posted on
the Company’s website. Shareholders can
elect to receive communications from the
Company by electronic means. Shareholders
can communicate with the share registry
and the Company by electronic means.
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the Company’s key values of:
instance when a Director is trading for short-
The Board encourages full participation of
Acting with fairness, honesty and integrity;
term gain. In all cases, Directors and Officers
shareholders at the Annual General Meeting
Providing a safe and healthy work
are prohibited from trading in securities when
in order to promote a high level of
environment for all employees;
they are in possession of “inside information”.
accountability and discussion of the
>
Being aware of and abiding by laws and
regulations;
>
Individually and collectively contributing
to the wellbeing of shareholders, customers,
the economy and the community;
The Board also has a policy that prohibits
Group’s strategy and goals.
executives from hedging (or otherwise locking
The external auditor will attend the Annual
in a profit over) unvested securities issued
General Meeting and be available to answer
under the Company’s Share Plans.
shareholder questions about the conduct
of the audit and the preparation and
content of the auditors’ report.
>
Maintaining the highest standards of
The Company’s Share Trading Policy and the
professional behaviour;
Award/Share Hedging Policy are available on
>
Avoiding or managing conflicts of interest;
the Company’s website at www.adbri.com.au.
and
>
Striving to be a good corporate citizen,
5
The Board is committed to timely
and to achieve community respect.
and balanced disclosure and
The Code of Conduct is publicly available on
the Company’s website at www.adbri.com.au.
The Code of Conduct was reviewed during
the year to ensure that it remains relevant to
the Company’s values and practices. The
outcomes from this review are currently
being considered by the Company.
respects the rights of shareholders
5.1
Continuous disclosure
The Company is committed to providing
relevant and timely information to its
shareholders and to the broader market,
in accordance with its obligations under
the Corporations Act 2001 and the ASX
continuous disclosure regime.
ADELAID E BRIGH T ON LTD AN N UA L R EP OR T 2 014
33
Diversity Report
Adelaide Brighton is committed to the promotion of diversity within our organisation,
and recognises that removing barriers to diversity enables us to attract and retain the
best people with the appropriate skills to contribute to the continuing success of our
business. Our Diversity Policy outlines five core objectives which form the foundations
of our approach to diversity and upon which we measure our performance in this area.
An overview of these objectives, and our progress towards achieving these objectives
for the 2014 financial year, are set out below.
Objectives
Diversity measures to facilitate
achievement of objectives
Progress
To promote a culture of diversity
(which includes gender, skills,
experience, and cultural background)
Leadership programs targeted at our female management
and frontline employees focusing on their strengths and
contribution to the broader workplace to be rolled out
across the organisation.
Leadership programs and coaching continue to be
available for female employees. In 2014, we implemented
a broader program aimed at our managers and
supervisors.
Company-wide training in workplace policies
(including diversity, bullying and harassment,
Equal Employment Opportunity).
Employee inductions include information on
Company policies such as equal employment
opportunity and bullying.
Introduced assessable compliance training
for management.
The Board and Nomination, Remuneration and
Governance Committee review Adelaide Brighton’s
diversity achievements relative to the industry structure
in which the Company operates.
In 2014, the Board and then Nomination and
Remuneration Committee discussed the Company’s
diversity measures and the need to develop a
positive workplace culture.
To ensure that recruitment and selection
processes are based on merit
Internal review of Adelaide Brighton’s recruitment practices
and systems to ensure that employment decisions are
made without regard to factors that are not applicable to the
inherent requirements of a position and that unconscious
gender bias does not influence outcomes.
To provide talent management and
development opportunities for all
employees
Ongoing talent recognition and in-house
leadership programs for employees.
Recruitment mentoring training continues across the
business with a view to eliminate any unconscious bias
that may occur. 16% of all new hires in 2014 were female.
Selection of recruitment agencies employed by
Adelaide Brighton is based on their commitment to
providing diverse candidate pools.
Various development programs provided for recognised
employees and tailored to individual needs ranging from
external training and education, mentoring and/or
specific on the job training.
Sponsor or encourage professional networking, coaching
and mentoring programs to give female employees the
opportunity to connect with other professionals.
Where identified, these programs continue to
be supported across the organisation.
Sponsor MBA or post-graduate studies for
high potential female employees.
Adelaide Brighton supports external study and
development for high potential employees.
In recognition of the low numbers of females entering
into engineering and manufacturing vocations:
implement programs designed to engage female
graduate engineers;
offer undergraduate scholarship opportunities and
sponsor vacation work programs to engage female
students who are entering tertiary education to consider
engineering as a career option; and
strive for gender balance in the recruitment of
graduates each year.
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Continued sponsorship of the Women in Engineering
program at the University of Wollongong in 2014 that
provides both a financial benefit and work placement
opportunity.
The Company has attended career expos at the
University of Adelaide and sponsored Engineering
awards at University of Wollongong.
Support the creation of employment opportunities
for Indigenous and Torres Strait Islanders.
Support and participation in the South Australian
Indigenous Law Student Mentoring Program.
Support for a scholarship for aboriginal students to
complete Year 12 High School at Prince Alfred College.
34
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 Objectives
Diversity measures to facilitate
achievement of objectives
Progress
To reward and remunerate fairly
Adelaide Brighton has a policy to provide equal pay
for equal work.
The gender pay parity review was completed in 2014
as part of Adelaide Brighton’s annual remuneration
review processes.
As part of the annual salary review process,
Adelaide Brighton undertakes a review of pay parity.
Pay parity is also considered at the time of hiring new
employees, to eliminate potential gaps in pay arising
from hiring decisions.
To provide flexible work practices
Adelaide Brighton seeks to provide suitable working
arrangements for employees returning from
maternity leave.
As per previous years, 100% of the women who
commenced and finished maternity leave in 2014 have
returned to work in either a full or part time capacity.
Flexible working arrangements are available to all employees
under our flexible work policy, to recognise that employees
may have different domestic responsibilities throughout their
career. This includes opportunities to work part time
and from home or a remote location.
We also offer 12 weeks’ paid parental leave for
the primary carer.
Formal review of all part time work arrangements to ensure
roles are appropriate to maintain career development.
Adelaide Brighton is committed to the regular
We believe that, over time, our diversity
In 2014, following the retirement of the
review of its objectives to ensure that these
objectives and measures will achieve
Managing Director and appointment of a
continue to be appropriate and relevant.
an improvement in the level of female
new CEO position, a management restructure
This commitment includes the completion
representation across the organisation.
occurred which resulted in there no longer
of the workplace profile report as required by
being female representation among the
the Workplace Gender Equality Act 2012.
Going forward increasing focus on expanding
senior executives. This is expected to be
A copy of the workplace profile report is
opportunities for indigenous Australian
addressed in 2015.
available in the investor relations section
will form part of the Company’s diversity
of our website at www.adbri.com.au/
objectives.
investorinformation.html. The Board is
A copy of Adelaide Brighton’s Diversity Policy
is available in the corporate governance
committed to build upon the achievements
The following table shows the proportional
section of Adelaide Brighton’s website.
to date and reinforce the continued efforts
representation of women employees at
in promoting and cultivating a culture of
various levels within the Adelaide Brighton
diversity and inclusiveness.
Group (as at 31 December 2014):
The proportion of women across Adelaide
Male
Female
Brighton’s workforce is reflective of the
Board
20%
generally low level of female representation in
the building, manufacturing and construction
Senior executives
0%
4
6
materials industries in which we operate.
Senior managers
16%
31
1
0
6
We recognise that the available pool of female
(direct reports to
candidates in engineering roles relevant to
senior executives)
Total workforce
12%
1245
164
our business operations is limited, and this
impacts our ability to increase the number of
female new hires in the short term. In an effort
to make our Company (and industry) more
attractive to women, we have focused on
measures designed to increase the proportion
of female graduates and to support the
leadership development of female employees
who are recognised as having future potential.
35
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 Directors
Les Hosking
Age 70
Raymond Barro
BBus, CPA, FGIA, FCIS
Age 53
Graeme Pettigrew
FIPA, FAIM, FAICD
Age 66
Ken Scott-Mackenzie
BE(Mining), Dip Law
Age 64
Arlene Tansey
FAICD, MBA, JD, BBA
Age 57
Experience
Non-executive Director
since August 2008.
Over 24 years experience in
the premixed concrete and
construction materials industry.
Managing Director of Barro
Group Pty Ltd.
Special responsibilities
Member, Safety, Health and
Environment Committee.
Experience
Independent non-executive
Director since June 2003.
Extensive experience in
commercial and financial
matters with 16 years
experience as Chief Executive
of the Sydney Futures Exchange
and former Chief Executive
Officer of Axiss Australia, and
Managing Director of National
Electricity Market Management
Company (NEMMCO).
Director, AGL Energy Limited
(appointed November 2008)
and Australian Energy Market
Operator Limited (appointed
July 2009 and retired
6 November 2014) and
Chairman, Carbon Market
Institute Limited (appointed
October 2010 and retired
27 November 2014).
Special responsibilities
Appointed Chairman
17 May 2012.
Member, Audit, Risk and
Compliance Committee;
Nomination, Remuneration
and Governance
Committee; and Independent
Directors’ Committee.
Experience
Independent non-executive
Director since August 2004.
Extensive experience in the
building materials industry and
former Chief Executive Officer
of CSR Building Products and
broad management experience
gained in South East Asia and
the United Kingdom through
former positions as Managing
Director of Chubb Australia
Limited and Wormald Security
Australia Pty Ltd.
Director, Capral Ltd (appointed
June 2010) and Holocentric
Pty Ltd (appointed 18
September 2012 and retired
19 August 2014). Former
Director, Bisalloy Steel Group
Ltd (formerly Atlas Group
Holdings Ltd) (appointed
April 2006 and resigned
30 September 2013), Knauf
Plasterboard Pty Limited
(formerly Lafarge Plasterboard
Pty Ltd) (appointed June 2005
and resigned November 2012).
Special responsibilities
Chairman, Audit, Risk and
Compliance Committee.
Member, Nomination,
Remuneration and
Governance Committee;
Safety, Health and
Environment Committee;
and Independent
Directors’ Committee.
Experience
Independent non-executive
Director since July 2010.
Mining Engineer with over
40 years experience in
infrastructure, construction
and mining services gained
in Australia and Africa, as well
as extensive experience in
financial, legal and commercial
aspects of projects.
Chairman, Linking Melbourne
Authority (appointed May 2013).
Former Chairman, Macmahon
Holdings Limited (appointed
Chairman in November 2009
and a Director in May 2009
and retired 21 March 2014)
and former Chairman,
Murchison Metals Ltd
(appointed Director in
May 2011 and Chairman
in July 2011. Resigned
November 2012).
Special responsibilities
Chairman, Safety, Health
and Environment Committee;
Member, Nomination,
Remuneration and
Governance Committee;
and Independent Directors’
Committee.
Experience
Independent non-executive
Director since April 2011.
Extensive experience as a senior
executive in business and the
financial services industry gained
in Australia and the United States
with a background in investment
banking and securities law.
Director, Primary Health Care
(appointed August 2012), Lend
Lease Funds Management
Limited (appointed October
2010), Lend Lease Real Estate
Investments Limited (appointed
October 2010), Hunter Phillip
Japan Limited (appointed March
2013), Urbanise.com Limited
(appointed 27 June 2014) and
Australian Research Alliance
for Children and Youth Limited
(appointed September 2013).
External member of Infrastructure
New South Wales (appointed
June 2014). Former Director,
Pacific Brands Limited (appointed
March 2010 and retired October
2013) and Police Citizens Youth
Clubs NSW Ltd (appointed
June 2004 and retired in
July 2012). External Member,
Serco Asia Pacific Advisory
Board.
Special responsibilities
Chairman, Nomination,
Remuneration and Governance
Committee; and Member, Audit,
Risk and Compliance Committee.
36
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014 Financial statements
Directors’ report .......................................................................................................... 38
Remuneration report introductory letter ................................................................ 45
Remuneration report contents ................................................................................. 46
Remuneration report .................................................................................................. 47
Income statement ....................................................................................................... 62
Statement of comprehensive income ..................................................................... 63
Balance sheet .............................................................................................................. 64
Statement of changes in equity ............................................................................... 65
Statement of cash flows ............................................................................................ 66
Notes
1 Summary of significant accounting policies ............................................................. 67
2 Critical accounting estimates and assumptions....................................................... 75
3 Revenue and other income ...................................................................................... 76
4 Expenses .................................................................................................................. 76
5
Income tax expense ................................................................................................. 77
6 Cash and cash equivalents ...................................................................................... 78
7 Trade and other receivables ..................................................................................... 78
8
Inventories ................................................................................................................ 79
9 Assets classified as held for sale.............................................................................. 79
10 Joint arrangements and associate ........................................................................... 80
11 Property, plant and equipment ................................................................................. 81
12 Deferred tax assets................................................................................................... 82
13 Intangible assets ....................................................................................................... 82
14 Carbon asset and liability ..........................................................................................83
15 Trade and other payables ......................................................................................... 84
16 Borrowings ............................................................................................................... 84
17 Provisions ................................................................................................................. 85
18 Other liabilites ........................................................................................................... 85
19 Deferred tax liabilities ............................................................................................... 85
20 Retirement benefit obligations .................................................................................. 86
21 Contributed equity .................................................................................................... 89
22 Reserves and retained earnings ............................................................................... 90
23 Dividends .................................................................................................................. 91
24 Financial risk management ....................................................................................... 91
25 Fair value measurements.......................................................................................... 94
26 Contingencies ........................................................................................................... 94
27 Commitments for expenditure .................................................................................. 94
28 Share-based payment plans .................................................................................... 95
29 Remuneration of auditors ......................................................................................... 96
30 Related parties ......................................................................................................... 97
31 Subsidiaries and transactions with non-controlling interests ................................... 99
32 Deed of cross guarantee ........................................................................................ 100
33 Reconciliation of profit after income tax to net cash inflow from operating activities 102
34 Earnings per share .................................................................................................. 102
35 Events occurring after the balance sheet date ....................................................... 103
36 Segment reporting .................................................................................................. 103
37 Parent entity financial information .......................................................................... 105
38 Business combinations .......................................................................................... 105
Directors’ declaration .............................................................................................. 107
Auditor’s independence declaration ..................................................................... 107
Independent audit report ........................................................................................ 108
Financial history ........................................................................................................ 109
Information for shareholders ...................................................................................110
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014
37
Directors’ report
Directors’ report
Statutory Results
The Directors present their report on the
($ Million)
consolidated entity (the Group) consisting of
Adelaide Brighton Ltd (the Company) and the
Revenue
entities it controlled at the end of, or during,
Depreciation, amortisation and impairments
the year ended 31 December 2014.
Directors
The Directors of the Company, at any time
during or since the end of the financial year
and up to the date of this report, are:
LV Hosking
RD Barro
GF Pettigrew
KB Scott-Mackenzie
AM Tansey
Earnings before interest and tax (“EBIT”)
Net finance cost
Profit before tax
Income tax expense
Net profit after tax
Attributable to:
Members of Adelaide Brighton Ltd (“NPAT”)
Non-controlling interests
Basic earnings per share (cents)
Ordinary dividends per share (cents)
MP Chellew (retired 21 May 2014)
Special dividend per share (cents)
Principal activities
During the year the principal activities of the
Franking (%)
Net debt ($ million)
Net debt/equity (%)
2014
2013
1,337.8
1,228.0
(75.0 )
247.5
(15.0 )
232.5
(59.9 )
(70.6 )
222.7
(14.1 )
208.6
(57.5 )
172.6
151.1
172.7
(0.1 )
26.9
17.0
-
100%
359.8
31.7
151.1
-
23.7
16.5
3.0
100%
248.0
23.4
Group consisted of the manufacture and
2014 net profit after tax attributable to members of the Company increased 14.3% compared to
distribution of cement and cementitious
the prior year to $172.7 million. The results were impacted by a number of significant items. The
products, lime, premixed concrete,
table below sets out the underlying financial results for the year ended 31 December 2014 which
aggregates, sand and concrete products.
have adjusted for the significant items. An explanation of the significant items and reconciliation to
statutory results is provided on page 42.
Review of operations
A summary of the financial results for the year
Underlying Results
ended 31 December 2014 is set out below:
($ Million)
Revenue
Underlying depreciation and amortisation
Underlying earnings before interest and tax (“Underlying EBIT”)
Net finance cost
Underlying profit before tax
Underlying income tax expense
Underlying net profit after tax
Attributable to:
Members of Adelaide Brighton Ltd (“Underlying NPAT”)
Non-controlling interests
Underlying basic earnings per share (cents)
2014
2013
1,337.8
1,228.0
(73.0 )
245.2
(15.0 )
230.2
(63.8 )
(70.6 )
226.0
(14.1 )
211.9
(58.5 )
166.4
153.4
166.5
(0.1 )
26.0
153.4
-
24.0
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
38
Underlying net profit after tax attributable to
EBIT margins increased as improved volumes
Contracted prices to a major alumina
members of the Company (Underlying NPAT)
and higher than inflation increases to selling
customer in Western Australia increased
of $166.5 million was $13.1 million (8.5%)
prices offset higher energy costs and the
in June 2014. Average lime selling prices
higher than 2013. Revenue of $1,337.8 million
impact of production issues in the first half at
increased at slightly less than inflation despite
increased by 8.9% due to the contribution
the Birkenhead (South Australia) plant. The
the sharp decline in sales to the higher priced
from recent acquisitions, continued demand
repeal of the carbon tax from 1 July 2014,
gold sector. Nonetheless, lower volumes
from the resources sector in Western Australia
rationalisation of clinker production and
impeded fixed cost recovery, compressing
and the Northern Territory, a recovery in
operational improvements assisted
full year margins and earnings for lime.
residential construction in the eastern states
earnings in the period.
and higher pricing, particularly for cement and
lime. Revenue growth was partially offset by
weaker demand for cement in South Australia
and Victoria, and a slight decline in lime
volumes.
Rationalisation of clinker production at
Concrete and Aggregates
Recent acquisitions and stronger residential
the Munster facility began in early 2014.
demand in New South Wales and Queensland
Production of clinker largely ceased in the first
lifted concrete and aggregate volumes
quarter of 2014, with manufacture of specialty
in 2014. Excluding acquisitions, volumes
products continuing until December 2014.
increased which were led by the stronger
Underlying earnings before interest and
The rationalisation delivered cost savings
residential market.
tax (Underlying EBIT) increased by 8.5% to
of $5 million in 2014, with further savings
$245.2 million, resulting in an Underlying
anticipated in 2015.
Demand for aggregate was assisted by the
Pacific Highway upgrade and pull through
EBIT margin (Underlying EBIT divided by
revenue) of 18.3% compared to 18.4%
in 2013. The decline in Underlying EBIT
margin was the result of contributions from
lower margin businesses acquired in 2014
as part of the strategy to focus on vertical
integration. On a heritage basis, where the
impact of acquisitions is removed, Underlying
EBIT margins were stable. Higher cement,
concrete, aggregates and concrete products
volumes, combined with improved pricing
across most markets and products, offset the
The rationalisation of clinker manufacture
demand from concrete operations.
at Munster led to an increase in Adelaide
Brighton’s importation of cementitious
material to over two million tonnes in 2014,
representing approximately 20% of the
Australian market. Adelaide Brighton is
Australia’s largest importer of cement and
Prices remained under pressure in some
markets, particularly Victoria and south east
Queensland. However meaningful price
increases were realised in New South Wales
for both concrete and aggregates.
clinker and has an unmatched network of
Full integration of the Webb, Penrice Quarry
import terminals that provide cost competitive
& Mineral and Direct Mix / Southern Quarries
access to all mainland capital city markets
acquisitions was completed during 2014.
and regional north west Western Australia.
The integration encompassed governance,
impact of input cost pressures, particularly
The devaluation of the Australian Dollar
energy, and a reduction in contribution from
against Adelaide Brighton’s major trading
joint ventures. Operational improvement
currencies of the US Dollar and Japanese
initiatives delivered $19.7 million in benefits
Yen reduced profitability of imports by
in the year, including $5.0 million from the
approximately $5 million in 2014 compared
rationalisation of clinker manufacture at the
to 2013.
Munster, Western Australia, site.
The $60 million investment to upgrade the
Underlying profit before tax increased 8.6%
Birkenhead plant delivered further incremental
to $230.2 million. Net finance cost increased
benefits of $1.1 million in 2014 over and
by 6.4% to $15.0 million due to higher
above the $8.0 million of benefits delivered
borrowing levels.
Cement
Cement and clinker sales volumes increased
by 3% in 2014. Demand from the residential
in 2013. Total returns on the project in 2014
of $9.1 million represent a return on funds
employed of 15.3%, which exceeds the
cost of capital.
management, back office functions,
accounting, information systems, and
health, safety and environment processes.
Realisation of synergies from the acquisitions
is well progressed. Overall the financial
benefit from these acquisitions was in line with
initial expectations.
Concrete Products
Higher volumes and prices lifted Concrete
Products sales revenue by 10.5% in
2014. Price growth was slightly ahead of
inflation. Sales volumes increased due to an
improvement in demand across the majority
of regions and an increase in toll production
on behalf of other distributors. Demand from
sector in New South Wales and Queensland,
In July 2014, Adelaide Brighton secured a
the residential sector was strong and activity
and resource projects in the Northern Territory
contract with a major independent customer
in the commercial sector also improved.
and Western Australia offset a decline in
in South Australia and, in December 2014,
general construction in Victoria and softer
a contract with another major customer
demand for back fill binder in the South
in the same market for 12 months. These
Australian mining sector. A reduction in
agreements and the integrated operations
demand from projects in the South Australian
underpin the utilisation of the efficient
market was offset by an improvement in the
Birkenhead cement works.
residential sector. In March 2014 Adelaide
Brighton announced the expected loss of
supply of approximately 120,000 tonnes
of cement per annum to a major South
Australian customer. In line with guidance,
this did not impact 2014 volumes.
Lime
Lime sales volumes declined by approximately
7% in 2014. Demand from the non-alumina
sector was lower due to gold mine closures in
2013 and a disruption at a Northern Territory
customer in the first half of the year.
Mothballing of excess capacity and simplifying
the organisation structure delivered significant
cost savings while maintaining flexibility to
participate in the market recovery. Operational
improvements, together with stronger
revenue, combined to lift Concrete Products
EBIT 190% to $6.1m in 2014.
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R EN DED 31 D EC E M BER 2 0 1 4
39
Joint Arrangements and Associate
Independent Cement and Lime’s (ICL)
earnings declined in 2014 due to lower
volume, rising input costs and limited
opportunity to recover those cost increases.
Volumes increased in New South Wales
through the year, demand for slag-based
products remained resilient and Victorian
1. Cost reduction and continuous improvement
Import strategy underpins competitive supply
Operational improvement
Operational improvement programs
delivered benefits of $19.7 million in 2014.
Key initiatives were a corporate restructure,
Munster clinker rationalisation and energy
efficiency programs.
into key markets
Following the rationalisation of clinker
manufacture at Munster, Adelaide Brighton’s
imports of cementitious products, including
clinker, cement and blast furnace slag,
increased to more than two million tonnes in
2014, which represents approximately 20%
demand strengthened in the second half.
> Corporate restructure delivers savings of
of Australian industry demand.
Despite this, contribution to EBIT was down
$4.0 million
from $13.1 million in 2013 to $9.1 million
in 2014.
During the first half, a group wide review of
capacity to replace ageing, less efficient
operational, human resources, information
domestic manufacturing has been a key
Since the mid-1990s, the growth of import
Sunstate Cement’s contribution to EBIT
technology and administration functions was
element of Adelaide Brighton’s strategy to
increased from $6.7 million in 2013 to
undertaken. This resulted in restructuring
secure its long term position in the Australian
$8.1 million in 2014. Although the south east
costs of $5.4 million for the year. Pre-tax
market and grow value for shareholders.
Queensland market remains competitive,
benefits from the corporate restructure were
The use of imported materials allows
improved demand in the region led to higher
$4.0 million in 2014.
Adelaide Brighton to supply customers with
sales volume, margins and earnings in 2014.
> Munster clinker rationalisation delivers
Earnings from the Mawsons Group have more
savings of $5.0 million
than doubled since the acquisition of a 50%
interest in 2007. Following a stronger second
half, the 2014 EBIT contribution of $3.0 million
was in line with 2013.
In line with the strategy to grow shareholder
returns through improving efficiency and
leveraging an industry leading import
capability, Adelaide Brighton ceased the
Equity accounted earnings from Aalborg
production of all clinker at Munster, Western
Portland Malaysia Sdn. Bhd. (APM) were
Australia, in December 2014.
competitively priced product into a range
of markets where demand exceeds the
Company’s manufacturing capacity.
Today the Company is Australia’s largest
importer of cementitious materials (cement,
clinker and blast furnace slag) and has an
unmatched network of import terminals
that provide highly competitive access to
all mainland capital city markets as well as
similar to the prior year and in line with
expectations. The US$18.6 million capacity
expansion was completed on budget in
the second half of 2014. While demand for
product was strong, the benefit from the
capacity expansion was not available until
late in the year. Shipment of white clinker to
Adelaide Brighton’s operations in Western
Australia commenced in late 2014.
Strategic Developments
Adelaide Brighton continues its successful
The capacity rationalisation delivered EBIT
regional north Western Australia and north
improvements of $5.0 million in 2014. Results
Queensland.
for 2014 include redundancy costs of
$5.6 million, related to the reduction of 42 full
time equivalent positions at Munster, and an
impairment charge of $2.0 million relating to
plant and equipment associated with clinker
production at the site.
Adelaide Brighton’s industry leading import
scale delivers supply chain efficiencies
in procurement, transport, storage and
distribution. The strategy is supported by
unique long term agreements with two
Japanese suppliers for grey clinker; Aalborg
> Energy efficiency programs benefit of
Portland Malaysia (30% owned by Adelaide
$4.9 million
Brighton) for white clinker; and a major
Japanese trading house for the supply of
granulated blast furnace slag.
long term strategy of growing shareholder
Adelaide Brighton has an ongoing focus on
value through three key areas:
the management of its power and fuel costs.
1. Cost reduction and continuous improvement
across the Company;
Benefits of $4.9 million were delivered in
Given limited clinker capacity expansion
2014 through the increased use of alternative
by the Australian industry in the last two
fuels, electricity demand management, fuel
decades, cement and clinker demand growth
2. Growth in the lime business to supply the
switching and plant efficiency.
has been largely met by increased imports.
resources sector in WA, SA and NT; and
> Other initiatives $5.8 million
Imports are now estimated to represent more
than 50% of the Australian market for cement
3. Focused and relevant vertical integration
into downstream aggregates, concrete and
concrete products businesses.
Further benefits of $5.8 million were delivered
and clinker and as such domestic prices can
through a variety of other initiatives, including
be influenced by import costs.
transport efficiencies, raw materials sourcing
During 2014, the Group delivered on a
and a range of procurement initiatives.
significant number of initiatives in line with its
long term strategy.
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
40
Land sales releasing capital
One of the benefits of the rationalisation
and improvement program is the release of
surplus land assets. The Group is actively
engaged in preparing these properties for sale
to maximise value. The program has delivered
approximately $16 million in revenue since
the beginning of 2013, including a sale that
contributed $9 million in cash and $1 million
profit before tax in 2014.
2. Lime growth
Operational results
Following the completion of major upgrades
Cash flow
to both Munster (Western Australia) kilns in
Operating cash flow declined by $33.3 million
2013, improvements in production capacity,
to $194.0 million in 2014. The decline was
efficiency and environmental performance of
largely due to non-recurring items from an
To maximise shareholder returns, Adelaide
Brighton seeks to ensure the balance sheet is
efficiently utilised while retaining the flexibility
to fund the long term growth strategy as
opportunities are identified.
the kilns have been realised.
acceleration of the income tax payments
The Company refinanced debt facilities during
Efficiency gains partially offset the impact
of lower volumes and increased energy
costs during 2014. Despite a decline in lime
system and carbon tax related payments.
2014, increasing the term and lowering
Excluding these items, cash flow was
borrowing margins. Total facilities were
ahead of expectations in the second half.
increased by $40 million to $540 million with
volumes in 2014, following the 2013 closure
Income tax paid increased $23.2 million
the following maturity profile:
of some gold mines, the long term prospects
primarily due to:
Facility expiry date Jan 2018
Jan 2019
for lime demand remain strong.
> The Federal Government’s introduction of
Facility value
$330 million $210 million
3. Downstream integration - Concrete and
monthly tax instalments (previously quarterly),
Aggregates
added $11 million to payments in 2014.
Income statement
Payments will revert to normal levels in 2015;
Other income increased by $21.4 million
Acquisitions in South Australia and
Queensland
> The timing of payments related to the carbon
In 2014, Adelaide Brighton acquired BM
tax which increased income tax payments in
Webb Construction Materials in Queensland,
2014 by $6 million. This will reverse in 2015
and Penrice Quarry & Minerals and Direct Mix
following the repeal of the carbon tax;
to $26.1 million in 2014 primarily due to
the recognition of a gain of $17.8 million as
a result of the fair value accounting of an
acquisition and the receipt of $4.7 million
relating to the settlement of a legal claim with
/ Southern Quarries in South Australia at an
overall enterprise value of $172 million. These
acquisitions are consistent with the strategy of
> Tax instalments related to revenue from the
an equipment supplier.
2014 acquisitions of $1.5 million; and
Despite higher borrowings following the major
focused and relevant vertical integration. The
> Increased tax instalments due to higher
acquisitions, net finance costs increased only
overall year one acquisition multiple is
2014 earnings.
7.8 times EBITDA after synergies.
Excluding acquisitions, capital expenditure
The assets acquired include strategic
totalled $60.4 million in 2014, a decline
quarrying operations producing approximately
of $6.5 million from 2013 following the
2 million tonnes per annum of aggregates.
completion of organic growth projects. Cash
The acquired businesses also produce more
proceeds from asset sales of $13.6 million
modestly to $15.0 million in 2014. Interest
costs benefited from lower borrowing margins
on the new facilities and lower underlying
interest rates. Capitalised interest was lower
due to the completion of major capital
expenditure projects.
than 250,000 cubic metres of concrete
primarily related to the sale of land in north
Tax expense of $59.9 million, an increase of
annually, securing a significant volume of
Queensland. The profit impact of these
$2.4 million in 2014, represents an effective
the Company’s cement sales in the South
sales was circa $1 million.
tax rate of 25.8% (2013 - 27.6%). The lower
Australian market.
Balance sheet
Integration of the acquisitions, including the
The balance sheet was impacted by
information systems, has been completed on
acquisitions in 2014, increasing asset and
an accelerated time frame delivering synergy
liability balances compared to 2013.
benefits in logistics operations, procurement
and back office functions. Earnings from the
acquisitions were in line with expectations for
the period to December 2014.
Excluding acquisitions, working capital
increased by $12.8 million or 6.0% which was
less than revenue growth in 2014. Inventory
and trade debtors increased $13.9 million and
Strategic attractions of Sydney aggregates
$9.5 million respectively, while trade and other
Adelaide Brighton has a significant investment
payables increased $4.7 million. Outstanding
in aggregates in the Sydney market through
debtor days averaged 44.3 days compared
its Austen Quarry at Hartley, New South
to 47.6 days in 2013. Payments for the now
Wales. Aggregates earnings increased in
repealed carbon tax increased $14.3 million
2014 in New South Wales supported by
in 2014.
a recovery in the Sydney construction
materials market.
Due to strong second half cash flow net
debt increased a lower than expected
Emerging Concrete and Aggregates position
$111.8 million to $359.8 million. Net debt to
Adelaide Brighton continues to make
equity gearing of 31.7% at year end was well
progress on its downstream strategic plan.
within the targeted range of 25% to 45%.
The Group now produces more than
1.5 million cubic metres per annum of premix
concrete and more than 6 million tonnes per
annum of aggregates. The footprint of this
business now reaches from South Australia
through Victoria and New South Wales, to
south east and northern Queensland.
tax rate was largely due to a $17.8 million
non-taxable gain on fair value accounting.
Adjusting for the impact of this item, the
effective tax rate of 27.9% was within the
expected range of 27% to 28%.
An actuarial loss of $1.2 million related to
the defined benefit liability was recognised
through other comprehensive income
compared to an actuarial gain of $7.6 million
in 2013. The current year loss was primarily
due to the reduction in discount rate used to
calculate the defined superannuation benefit
liability, which partially reversed the position
from 2013 where the discount rate increased.
Reconciliation of Underlying Profit
“Underlying” measures of profit exclude
significant items of revenue and expenses,
such as the costs related to restructuring,
rationalisation and acquisitions, in order to
highlight the underlying financial performance
of the business across reporting periods.
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R EN DED 31 D EC E M BER 2 0 1 4
41
The following table reconciles underlying earnings’ measures to statutory results.
> Sales of other cementitious products
Year ended 31 December
($ Million)
2014
2013
> Increased sales in Western Australia; and
to that customer;
Profit
before
Income
Statutory profit
Rationalisation of clinker production
Corporate restructuring costs
Acquisition expenses
Gain on bargain purchase
Claim settlement
tax
232.5
7.6
5.4
6.2
(17.8)
(3.7)
tax
(59.9)
(2.3)
(1.6)
(1.1)
-
1.1
Profit
after
tax
172.6
5.3
3.8
5.1
(17.8)
(2.6)
Profit
Profit
> Improved demand in Victoria, New South
before
Income
tax
tax
after
tax
208.6
(57.5 )
151.1
-
3.3
-
-
-
-
(1.0 )
-
-
-
-
2.3
-
-
-
Wales and Queensland.
Lime sales volume is anticipated to be similar
to or slightly higher than 2014 and average
realised prices are likely to increase. The
threat of small scale lime imports in Western
Australia and the Northern Territory remains,
however the weaker Australian dollar is likely
to reduce the competitiveness of imports
Underlying profit
230.2
(63.8)
166.4
211.9
(58.5 )
153.4
relative to Adelaide Brighton’s low cost
operations.
Price increases have been announced for
March and April 2015 in cement, clinker,
> Rationalisation of clinker production
Dividends paid or declared by the
The Group announced the rationalisation
Company
of clinker production at the Munster site in
February 2014. As part of the rationalisation, a
number of employees were made redundant
During the 2014 financial year, the following
aggregates, concrete and concrete products.
dividends were paid:
Price increases achieved in 2015 are
at a cost of $5.6 million. In addition, assets
> A final dividend in respect of the year ended
expected to exceed those achieved last
not required following the cessation of clinker
31 December 2013 of 12.0 cents per share
year. A number of factors are supportive of
manufacture at the site were considered
(fully franked) was paid on 15 April 2014.
higher prices including strengthening demand
impaired and an impairment charge of
This dividend totalled $76,614,803; and
and capacity utilisation and the weakening
$2.0 million was recognised.
> An interim dividend in respect of the year
> Corporate restructuring costs
ended 31 December 2014 of 7.5 cents per
Australian dollar, which increases the cost of
import substitutes.
Redundancies and one-off employment
share (fully franked) was paid on 20 October
First half 2015 imports have been fully
costs were $5.4 million for the year which
2014. This dividend totalled $48,040,159.
hedged, however, the deterioration in the
included the retirement of the previous
Managing Director and restructuring across
the Company. Savings, in the form of reduced
costs, were realised during the year.
Since the end of the financial year the
Directors have approved the payment of a
final ordinary dividend of 9.5 cents per share
(fully franked). The final dividend is to be paid
> Acquisition expenses
on 16 April 2015.
The costs associated with acquisitions,
including stamp duty, legal and other
State of affairs
Australian dollar will increase the direct cost
of imported materials for Adelaide Brighton.
Assuming the Australian dollar remains at
around Yen90 and USD0.75, costs are
expected to increase by approximately
$7 million in a full year, prior to any off-set
through price increases. Gas costs in South
Australia are now expected to increase by
consulting costs, fluctuate with transaction
activity. External costs relating to acquisitions
and potential acquisitions recognised as an
expense in the income statement totalled
$6.2 million during the year.
Other than set out in the Review of
$2 million pre-tax in 2015.
Operations, no significant changes occurred
in the state of affairs of the Group during the
financial year.
There are a number of items which are
anticipated to support EBIT:
> The repeal of the carbon tax to benefit circa
> Acquisition fair value gain
Events subsequent to the end of the
$3 million compared to 2014;
A gain of $17.8 million relating to acquisition
financial year
fair value accounting has been recognised as
other income in the income statement.
> Claim settlement
As at the date of this report, no matter or
$4 million from lower fuel costs;
circumstance has arisen since 31 December
2014 that has significantly affected, or may
> Further Munster rationalisation benefits of
$5 million; and
> Potential transport costs savings of
Adelaide Brighton settled a long standing
significantly affect the Group’s operations, the
litigation claim and received a payment of
results of those operations, or the Group’s
> Full year benefits from the 2014 corporate
$4.7 million in the year, which has been
state of affairs in future financial years.
rationalisation of $2 million.
recognised as other income. The settlement
amount, less legal costs of $1.0 million, is
Likely developments and expected
included in the significant items.
results of operations
Adelaide Brighton has a land portfolio that
is expected to release a total of $130 million
in cash in the medium to long term. The
In 2015, Adelaide Brighton anticipates sales
Group is actively engaged in preparing these
volumes of cement and clinker to be similar to
properties for sale to maximise value.
or greater than 2014. Reduced cement sales
from January 2015 to a major customer in
South Australia are expected to be offset by:
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
42
The Sydney market is transitioning to
Directors’ meetings
aggregate sources supplied from outside the
metropolitan area, following the reserves at
existing competitor quarries being exhausted.
Due to the structural change it is expected
that Sydney aggregate prices will increase
well above CPI in the short to medium
The number of Directors’ meetings and meetings of committees of Directors held during the
financial year and the number of meetings attended by each Director is as follows:
Audit, Risk
Nomination,
and
Remuneration
Independent
Board
Compliance and Governance Directors’
SH&E
term. Adelaide Brighton’s Austen Quarry is
Director
Meetings
Committee
Committee
Committee
Committee
expected to benefit from growth in prices and
demand, which could increase annual EBIT
by $8 million to $10 million over the next
three to five years.
LV Hosking
RD Barro
GF Pettigrew
Environmental performance
KB Scott-Mackenzie
AM Tansey
MP Chellew2
A
H
10
10
10
1191
10
4
10
10
10
10
10
4
A
4
4
4
H
4
4
4
A
5
5
141
5
H
5
5
5
5
A
H
2
2
2
2
2
2
A
0
0
0
0
H
0
0
0
0
A Number of meetings attended.
H Number of meetings held during period of office.
1 Apology - on leave overseas.
2 MP Chellew retirement effective from the conclusion of the Company’s AGM on 21 May 2014.
Particulars of the Company’s corporate governance practices, including the roles of each Board
Committee are set out on pages 27 to 33 of this report.
Director profiles
Director and executive remuneration
Information relating to Directors’qualifications,
Details of the Company’s remuneration
experience and special responsibilities are set
policies and the nature and amount of
out on page 36 of the Annual Report.
the remuneration of the Directors and
Directors’ interests
The relevant interest of each Director in the
share capital of the Company at the date of
this report is as follows:
certain senior executives are set out in the
Remuneration Report on pages 47 to 61 of
this report.
Company Secretaries
LV Hosking
RD Barro
GF Pettigrew
KB Scott-Mackenzie
AM Tansey
Ordinary shares
The Company’s principal Company Secretary
is Marcus Clayton, who has been employed
4,851
by the Company in the two separate offices
217,869,876
of General Counsel and Company Secretary
7,739
5,000
since 24 February 2003. He is a legal
practitioner admitted in South Australia with
10,000
27 years experience.
Full details of the interests in share capital of
Two other employees of the Company also
Directors of the Company are set out in the
hold the office of Company Secretary to
Remuneration Report on pages 47 to 61 of
assist with secretarial duties should the
this report.
principal Company Secretary be absent: the
Company’s Chief Financial Officer, Michael
Kelly, a Certified Practising Accountant who
has been a Company Secretary since 23
November 2010 and the Group’s Corporate
Affairs Adviser, Luba Alexander, who has been
a Company Secretary since 22 March 2001.
The Group is subject to various
Commonwealth, State and Territory laws
concerning the environmental performance of
Adelaide Brighton’s operations.
Environmental performance is monitored by
site and business division, and information
about the Group’s performance is reported
to and reviewed by the Group’s senior
management, the Board’s Safety, Health &
Environment Committee, and the Board.
The Group’s major operations have ongoing
dialogue with the relevant authorities
responsible for monitoring or regulating the
environmental impact of Group operations.
As part of this, Group entities respond as
required to requests, including requests for
information and site inspections.
During 2014, seven minor matters concerning
environmental performance were raised
with regulatory authorities. Four of these
concerned the minor escape or spillage
of materials, two related to blasting, and
one related to noise. All of these minor
incidents were quickly addressed and, where
applicable, reviews were undertaken to
minimise the risk of recurrence.
No fines or penalties were incurred
arising from the Group’s environmental
performance, and no prosecutions for
breach of environmental requirements were
commenced against any Group entity in
2014.
In 2011, the WA Department of Environment
Regulation commenced a prosecution
against Cockburn Cement Ltd (“Cockburn”)
alleging non-compliance with Cockburn’s
environmental licence and alleging breaches
of the Environment Protection Act 1986 (WA),
arising from the conduct of a contractor
at Munster in 2010. The prosecution
discontinued one of the two charges in
December 2013. During May 2014 a trial
was held at the Magistrates Court in Perth,
and all the charges brought were dismissed
and Cockburn was fully acquitted.
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R EN DED 31 D EC E M BER 2 0 1 4
43
Indemnification and insurance of officers
Proceedings on behalf of the Company
Rounding off
Rule 9 of the Company’s constitution provides
No person has applied for leave of the
The Company is of a kind referred to in ASIC
that the Company indemnifies each person
Court to bring proceedings on behalf of the
Class Order 98/100 relating to the “rounding
who is or who has been an “officer” of the
Company or to intervene in any proceedings
off” of amounts in the Directors’ report. In
Company on a full indemnity basis and to the
to which the Company is a party for the
accordance with that Class Order, amounts in
full extent permitted by law, against liabilities
purpose of taking responsibility on behalf
the financial report and Directors’ report have
incurred by that person in their capacity as an
of the Company for all or any part of those
been rounded off to the nearest one hundred
officer of the Company or of a related body
proceedings. The Company was not a party
thousand dollars, unless otherwise stated.
corporate.
to any such proceedings during the year.
Rule 9.1 of the constitution defines “officers”
to mean:
Non-audit services
Shares under option
The details of shares under option at the
> Each person who is or has been a Director,
alternate Director or executive officer of the
Company or of a related body corporate of
the Company who in that capacity is or was a
nominee of the Company; and
> Such other officers or former officers of the
Company or of its related bodies corporate as
the Directors in each case determine.
The Company may decide to employ the
date of this report are set out in Note 28.
auditor on assignments additional to their
statutory audit duties where the auditor’s
Registered Office
experience and expertise with the Company
and the Group are important.
The registered office of the Company is
Level 1, 157 Grenfell Street, Adelaide,
Details of the amounts paid or payable to
South Australia 5000.
PricewaterhouseCoopers for audit and non-
audit services provided during the year are set
Dated 12 March 2015
out in Note 29 to the Financial Statements on
Signed in accordance with a resolution
Additionally the Company has entered into
page 96 of this report.
of the Directors
Deeds of Access, Indemnity and Insurance
with all Directors of the Company and its
wholly owned subsidiaries. These deeds
provide for indemnification on a full indemnity
basis and to the full extent permitted by law
against all losses or liabilities incurred by the
person as an officer of the relevant company.
The indemnity is a continuing obligation and
is enforceable by an officer even if he or she
has ceased to be an officer of the relevant
company or its related bodies corporate.
The Board of Directors has considered the
position and, in accordance with the advice
received from the Audit, Risk and Compliance
Committee, is satisfied that the provision of
LV Hosking
the non-audit services is compatible with
Chairman
the general standard of independence for
auditors imposed by the Corporations Act
2001. The Directors are satisfied that the
provision of non-audit services by the auditor,
as set in Note 29, did not compromise the
auditor’s independence requirements of
The Company was not liable during 2014
the Corporations Act 2001 for the following
under such indemnities.
reasons:
Rule 9.5 of the constitution provides that
> All non-audit services have been reviewed by
the Company may purchase and maintain
the Audit, Risk and Compliance Committee to
insurance or pay or agree to pay a premium
ensure they do not impact the impartiality and
for insurance for “officers” (as defined in
objectivity of the auditor; and
> None of the services undermine the general
principles relating to auditor independence
as set out in APES 110 Code of Ethics for
Professional Accountants.
Auditor’s independence declaration
A copy of the auditor’s independence
declaration as required under section 307C
of the Corporations Act 2001 is set out on
page 107.
the constitution) against liabilities incurred
by the officer in his or her capacity as an
officer of the Company or of a related body
corporate, including liability for negligence or
for reasonable costs and expenses incurred
in defending proceedings, whether civil or
criminal.
During the year the Company paid the
premiums in respect of Directors’ and
Officers’ Liability Insurance to cover the
Directors and Secretaries of the Company
and its subsidiaries, and the General
Managers of each of the divisions of the
Group, for the period 1 May 2014 to 30 April
2015. Due to confidentiality obligations under
that policy, the premium payable and further
details in respect of the nature of the liabilities
insured against cannot be disclosed.
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
44
Level 1
157 Grenfell Street
Adelaide SA 5000
GPO Box 2155
Adelaide SA 5001
Level 1
157 Grenfell Street
Adelaide SA 5000
GPO Box 2155
Adelaide SA 5001
Telephone (08) 8223 8000
Telephone (08) 8223 8000
International +618 8223 8000
International +618 8223 8000
Facsimile (08) 8215 0030
www.adbri.com.au
Facsimile (08) 8215 0030
www.adbri.com.au
Ad e laid e B rig h to n Ltd
ACN 007 596 018
Adelaide Brighton Ltd
ACN 007 596 018
Ad e laid e B rig h to n Ltd
ACN 007 596 018
Dear Shareholder
Dear Shareholder
On behalf of the Board, I am pleased to introduce by way of this letter the 2014 Remuneration Report of Adelaide Brighton.
The remuneration policies of Adelaide Brighton continue to focus on retaining a strong management team and rewarding that team in
a way that is consistent with creating shareholder value. In that regard I am pleased to present the results for 2014 which are
relevant to, and consistent with those remuneration policies.
On behalf of the Board, I am pleased to introduce by way of this letter the 2014 Remuneration Report of Adelaide Brighton.
Dear Shareholder
The remuneration policies of Adelaide Brighton continue to focus on retaining a strong management team and rewarding that team in
On behalf of the Board, I am pleased to introduce by way of this letter the 2014 Remuneration Report of Adelaide Brighton.
a way that is consistent with creating shareholder value. In that regard I am pleased to present the results for 2014 which are
relevant to, and consistent with those remuneration policies.
The remuneration policies of Adelaide Brighton continue to focus on retaining a strong management team and rewarding that team in a way that is
consistent with creating shareholder value. In that regard I am pleased to present the results for 2014 which are relevant to, and consistent with those
In 2014, Adelaide Brighton continued to perform well with the Company posting record revenue of $1,337.8 million. At the same time
In 2014, Adelaide Brighton continued to perform well with the Company posting record revenue of $1,337.8 million. At the same time
reported earnings before interest and tax (EBIT) rose 11.1% to $247.5 million, and reported net profit after tax (NPAT) increased
reported earnings before interest and tax (EBIT) rose 11.1% to $247.5 million, and reported net profit after tax (NPAT) increased
remuneration policies.
14.3% to $172.7 million, both records for the Company.
14.3% to $172.7 million, both records for the Company.
In 2014, Adelaide Brighton continued to perform well with the Company posting record revenue of $1,337.8 million. At the same time reported
Over the four year measurement period of the long term incentive (January 2010 to December 2013) Adelaide Brighton delivered
Over the four year measurement period of the long term incentive (January 2010 to December 2013) Adelaide Brighton delivered
earnings before interest and tax (EBIT) rose 11.1% to $247.5 million, and reported net profit after tax (NPAT) increased 14.3% to $172.7 million,
Total Shareholder Return (TSR) of 75.2%, including share price growth of 40.8%. This strong performance in shareholder returns
Total Shareholder Return (TSR) of 75.2%, including share price growth of 40.8%. This strong performance in shareholder returns
resulted in half of the long term incentive Award vesting associated with the TSR. However, notwithstanding continued improvement
resulted in half of the long term incentive Award vesting associated with the TSR. However, notwithstanding continued improvement
both records for the Company.
in earnings per share (EPS) over this period, the rate of growth achieved was just below the threshold level required for vesting of
in earnings per share (EPS) over this period, the rate of growth achieved was just below the threshold level required for vesting of
Over the four year measurement period of the long term incentive (January 2010 to December 2013) Adelaide Brighton delivered Total Shareholder
any part of the Award under the EPS performance condition and therefore half of the long term incentive Award tested in 2014
any part of the Award under the EPS performance condition and therefore half of the long term incentive Award tested in 2014
subject to the EPS performance condition lapsed (and cannot be re-tested).
subject to the EPS performance condition lapsed (and cannot be re-tested).
Return (TSR) of 75.2%, including share price growth of 40.8%. This strong performance in shareholder returns resulted in half of the long term
Adelaide Brighton’s financial performance resulted in profit before tax (PBT) growth of more than 10%. This met Group and
Adelaide Brighton’s financial performance resulted in profit before tax (PBT) growth of more than 10%. This met Group and
incentive Award vesting associated with the TSR. However, notwithstanding continued improvement in earnings per share (EPS) over this period, the
Divisional STI financial targets. In its annual assessment of STI’s the Board may adjust for exceptional, abnormal or extraordinary
Divisional STI financial targets. In its annual assessment of STI’s the Board may adjust for exceptional, abnormal or extraordinary
rate of growth achieved was just below the threshold level required for vesting of any part of the Award under the EPS performance condition and
items which affected results for the year. In 2014 this process resulted in downward adjustments to the PBT for STI purposes for the
items which affected results for the year. In 2014 this process resulted in downward adjustments to the PBT for STI purposes for the
therefore half of the long term incentive Award tested in 2014 subject to the EPS performance condition lapsed (and cannot be re-tested).
Group and one Division. The Board set relevant and challenging non-financial targets for the individual KMP in 2014. Performance
Group and one Division. The Board set relevant and challenging non-financial targets for the individual KMP in 2014. Performance
against these non-financial targets was assessed impacting individual KMP outcomes. The overall result was short term incentives
against these non-financial targets was assessed impacting individual KMP outcomes. The overall result was short term incentives
Adelaide Brighton’s financial performance resulted in profit before tax (PBT) growth of more than 10%. This met Group and Divisional Short Term
for KMP vested in the range of 86.9% to 89.8% of their potential maximum, down from the previous year. I would also point out that
for KMP vested in the range of 86.9% to 89.8% of their potential maximum, down from the previous year. I would also point out that
Incentive (STI) financial targets. In its annual assessment of STIs the Board may adjust for exceptional, abnormal or extraordinary items which affected
no short term incentive payment was made to the former Managing Director, Mark Chellew, for the 2014 year.
no short term incentive payment was made to the former Managing Director, Mark Chellew, for the 2014 year.
results for the year. In 2014 this process resulted in downward adjustments to the PBT for STI purposes for the Group and one Division. The Board set
The Board recognises its responsibility to maintain shareholder confidence in Adelaide Brighton’s leadership and remuneration
The Board recognises its responsibility to maintain shareholder confidence in Adelaide Brighton’s leadership and remuneration
practices, and to implement new practices as appropriate for the Group’s circumstances, strategy and direction. The Board remains
practices, and to implement new practices as appropriate for the Group’s circumstances, strategy and direction. The Board remains
relevant and challenging non-financial targets for the individual Key Management Personnel (KMP) in 2014. Performance against these non-financial
focused on delivering sustainable value for our shareholders and aligning the Group’s executive remuneration framework to this
focused on delivering sustainable value for our shareholders and aligning the Group’s executive remuneration framework to this
targets was assessed impacting individual KMP outcomes. The overall result was short term incentives for KMP vested in the range of 86.9% to
objective.
objective.
89.8% of their potential maximum, down from the previous year. I would also point out that no short term incentive payment was made to the former
As part of that process in 2014 the Board revised some KMP service agreements (where required) to provide for a new form of
Managing Director, Mark Chellew, for the 2014 year.
executive contract. The key goal of this was to align executives and shareholders. It provides for:
The Board recognises its responsibility to maintain shareholder confidence in Adelaide Brighton’s leadership and remuneration practices, and to
Board discretion for short term and long term incentive arrangements;
•
•
Termination on six months’ notice by either party (or payment in lieu by the Company);
•
•
implement new practices as appropriate for the Group’s circumstances, strategy and direction. The Board remains focused on delivering sustainable
Immediate termination by the Company for cause;
•
•
value for our shareholders and aligning the Group’s executive remuneration framework to this objective.
Post employment restraint of up to six months;
•
•
As part of that process in 2014 the Board revised some KMP service agreements (where required) to provide for a new form of executive contract.
Clawback of incentives paid due to the executive’s material non-compliance with any financial reporting requirement,
•
•
or misconduct, including fraud, dishonesty, or breach of duty; and
The key goal of this was to align executives and shareholders. It provides for:
Other provisions commonly found in contemporary executive service agreements.
•
•
Board discretion for short term and long term incentive arrangements;
Termination on six months’ notice by either party (or payment in lieu by the Company);
Immediate termination by the Company for cause;
Post employment restraint of up to six months;
Clawback of incentives paid due to the executive’s material non-compliance with any financial reporting requirement,
or misconduct, including fraud, dishonesty, or breach of duty; and
Other provisions commonly found in contemporary executive service agreements.
As part of that process in 2014 the Board revised some KMP service agreements (where required) to provide for a new form of
executive contract. The key goal of this was to align executives and shareholders. It provides for:
> Board discretion for short term and long term incentive arrangements;
> Termination on six months’ notice by either party (or payment in lieu by the Company);
The Board is currently conducting a holistic review of the Group’s remuneration structure over the next 12 months. In 2016, we will
consider implementing the deferral of a portion of the STI consistent with claw back provisions, and assess any further changes
resulting from that review.
The Board is currently conducting a holistic review of the Group’s remuneration structure over the next 12 months. In 2016, we will
consider implementing the deferral of a portion of the STI consistent with claw back provisions, and assess any further changes
resulting from that review.
> Immediate termination by the Company for cause;
> Post employment restraint of up to six months;
Succession planning continues to be a key priority for the Board, including developing internal candidates as well as reviewing and
Succession planning continues to be a key priority for the Board, including developing internal candidates as well as reviewing and
assessing appropriate external candidates. This process led to the promotion of Martin Brydon (a long term serving executive of the
assessing appropriate external candidates. This process led to the promotion of Martin Brydon (a long term serving executive of the
Company) to the position of CEO from 21 May 2014. The transition of leadership responsibilities has been smooth and the Company
Company) to the position of CEO from 21 May 2014. The transition of leadership responsibilities has been smooth and the Company
> Clawback of incentives paid due to the executive’s material non-compliance with any financial reporting requirement, or misconduct, including fraud,
has continued to deliver shareholder value.
has continued to deliver shareholder value.
dishonesty, or breach of duty; and
The Directors recognise that Board renewal is an ongoing process. During 2014, Directors reviewed the Board’s composition utilising
a Board skills matrix. The Board’s composition will continue to be monitored and reviewed during 2015.
The Directors recognise that Board renewal is an ongoing process. During 2014, Directors reviewed the Board’s composition utilising
a Board skills matrix. The Board’s composition will continue to be monitored and reviewed during 2015.
> Other provisions commonly found in contemporary executive service agreements.
During 2014, the Board has been focused on driving alignment of KMP with long term shareholder value, resulting in change to
remuneration practices as outlined above.
During 2014, the Board has been focused on driving alignment of KMP with long term shareholder value, resulting in change to
The Board is currently conducting a holistic review of the Group’s remuneration structure over the next 12 months. In 2016, we will consider
remuneration practices as outlined above.
implementing the deferral of a portion of the STI consistent with claw back provisions, and assess any further changes resulting from that review.
The Board is pleased to present the 2014 Remuneration Report to shareholders.
The Board is pleased to present the 2014 Remuneration Report to shareholders.
Succession planning continues to be a key priority for the Board, including developing internal candidates as well as reviewing and assessing
appropriate external candidates. This process led to the promotion of Martin Brydon (a long term serving executive of the Company) to the position of
CEO from 21 May 2014. The transition of leadership responsibilities has been smooth and the Company has continued to deliver shareholder value.
The Directors recognise that Board renewal is an ongoing process. During 2014, Directors reviewed the Board’s composition utilising a Board skills
Arlene Tansey
Arlene Tansey
Chairman of Nomination, Remuneration and Governance Committee
Chairman of Nomination, Remuneration and Governance Committee
matrix. The Board’s composition will continue to be monitored and reviewed during 2015.
During 2014, the Board has been focused on driving alignment of KMP with long term shareholder value, resulting in change to remuneration practices
as outlined above.
The Board is pleased to present the 2014 Remuneration Report to shareholders.
Arlene Tansey
Chairman of Nomination, Remuneration and Governance Committee
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R EN DED 31 D EC E M BER 2 0 1 4
45
Remuneration report contents
.................................................................................................................................. Page
Remuneration summary ............................................................................................. 47
Financial highlights for the 2014 financial year ................................................................ 47
Long term financial highlights ......................................................................................... 47
Strategy highlights ......................................................................................................... 48
Remuneration highlights for 2014 .................................................................................. 48
Changes during the 2014 financial year ......................................................................... 49
Looking forward ............................................................................................................. 50
Executive remuneration framework .......................................................................... 50
Key management personnel .......................................................................................... 50
Remuneration framework ............................................................................................... 50
Company performance and remuneration outcomes for 2014 .............................. 52
Overview of Company performance ............................................................................... 52
Linking remuneration to Company performance ............................................................. 53
1
1.1
1.2
1.3
1.4
1.5
1.6
2
2.1
2.2
3
3.1
3.2
3.2.1 Short Term Incentive - key performance outcomes ........................................................ 53
3.2.2 Short Term Incentive - actual outcomes ......................................................................... 54
3.2.3 Long Term Incentive - key performance outcomes ......................................................... 54
3.2.4 Long Term Incentive - actual outcomes .......................................................................... 55
4
4.1
4.2
5
5.1
5.2
5.3
6
7
Remuneration governance ........................................................................................ 55
Responsibility for setting remuneration ........................................................................... 55
Remuneration policy ...................................................................................................... 56
Executive remuneration ............................................................................................. 56
Fixed annual remuneration ............................................................................................. 56
At-risk remuneration - Short Term Incentive.................................................................... 56
At-risk remuneration - Long Term Incentive .................................................................... 57
Executive Service Agreements .................................................................................. 59
Non-executive Directors’ fees ................................................................................... 59
7.1
Policy and approach to setting fees ............................................................................... 59
8
8.1
8.2
8.3
Key Management Personnel disclosure tables ....................................................... 60
Non-executive Directors’ statutory remuneration ............................................................ 60
Executive statutory remuneration ................................................................................... 61
Equity holdings of Key Management Personnel .............................................................. 61
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
46
Remuneration report
The Directors of Adelaide Brighton Limited
2014 reported Group PBT was 112% of
As can be seen in the graph below Adelaide
(the Company) present the Remuneration
budget, while underlying Group PBT was
Brighton‘s EBIT performance compares
Report (Report) for the Company and the
111% of budget. Taking into account a
favourably to its listed peers.
Group for the financial year ended
range of considerations, including budget
31 December 2014. The Report outlines the
assumptions and management initiatives, the
remuneration arrangements in place for the
Board adjusted Group PBT and one Division’s
Key Management Personnel (KMP) of the
financial outcomes used for STI purposes
Company and is prepared in accordance
downwards to $223.5 million, which was
with section 300A of the Corporations Act
108% of budget.
2001. This Report, which forms part of the
Directors’ Report, has been audited by
1.2 Long term financial highlights
PricewaterhouseCoopers.
Adelaide Brighton has delivered 7.0%
Section 1 - Remuneration Summary
over the last five years. Through our strategy
compound annual growth in reported NPAT
1.1 Financial highlights for the 2014 financial
year
of operational improvement, downstream
investment and growth in the lime business,
Adelaide Brighton has managed to increase
The Directors are pleased to present Adelaide
profitability over this period delivering value
150
140
130
120
110
100
90
80
70
60
50
40
30
COMPAR ABL ES EARNINGS
EB IT ( UNDE RLY ING)
IND EX (2 00 9 = 1 00)
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
Brighton Ltd’s strong financial performance
to shareholders in what has been challenging
ABC
for 2014, with the Company posting record
market conditions.
s
t
r
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NE T PROFIT AFTE R TAX
(REP ORT ED VS UNDE RLYING )
n
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i
B
e
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e
d
A
l
CSR (BUILDING PRODUCTS DIVISION)
BORAL (CONSTRUCTION MATERIALS AUSTRALIA)
The Company has also maintained its leading
EBIT margin %.
COMPARAB LES EARNINGS
EB IT MARGIN (UNDERLY ING)
%
25
20
15
10
5
0
2009
2010
2011
2012
2013
2014
REPORTED
UNDERLYING
:
e
c
r
u
o
S
2009
2010
2011
2012
2013
2014
ABC
CSR (BUILDING PRODUCTS DIVISION)
BORAL (CONSTRUCTION MATERIALS AUSTRALIA)
$m
180
170
160
150
140
130
120
110
100
revenue, earnings before interest and
tax (EBIT) and profit before tax (PBT). In
summary:
> Net profit after tax (NPAT) increased by
$21.6 million or 14.3% on 2013.
> Revenue increased by $110 million, up 8.9%
on 2013.
> Earnings before interest and tax (EBIT) was up
$24.8 million, or 11.1% on 2013.
These results have been driven by the
implementation of a clear strategic plan
delivering:
> Improved construction materials volumes.
> Increased pricing for construction materials
and lime.
> Tight control of costs, with:
- Operational improvement programs delivering
a benefit of $19.7 million in 2014.
- Major initiatives including rationalisation of the
Western Australian cement operations and a
corporate restructuring program.
> Successful completion of a major acquisition
program in South Australia and north
Queensland.
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R EN DED 31 D EC E M BER 2 0 1 4
47
Over this period, Adelaide Brighton’s total return to shareholders has outperformed the
Comparator Group1 and as can be seen in the graph below, outperformed the ASX200
Accumulation Index.
1 Comparator Group is the companies in the S&P/ASX200 Accumulation Index, excluding all GICS financial companies and selected resources companies
TOTAL SHAREH OLDE R RETUR NS
(SHARE PRIC E + DIVIDEND REIN VESTED) & S& P/AS X2 0 0 AC C U M U LATION IND EX RET URNS
%
100
80
60
40
20
0
-20
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ABC S&P/ASX200 ACCUM
1.3 Strategy highlights
Adelaide Brighton is focused on delivering
long term shareholder value. During 2014,
management undertook a range of initiatives
that delivered cost savings of $19.7 million.
These initiatives included a restructure of its
Western Australian cement operations and
its corporate functions. These two initiatives
delivered benefits of $9.0 million in 2014, and
are expected to deliver further incremental
savings of $7.0 million in 2015 (total benefits
of $16.0 million). Management also secured
and acquisitive growth. The acquisitions
have strengthened our position in the
South Australian market and have given the
Company an important position for cement
distribution in north Queensland. During
the year, management has been focused
on the integration of these acquisitions.
The Company is now realising synergy
benefits ahead of initial expectations through
successful back office integration including
governance, safety, health and environment,
procurement and information systems.
long term contracts for the supply of essential
1.4 Remuneration highlights for 2014
business inputs of raw materials and energy;
successfully delivered capital expenditure
projects within budget and renewed supply
contracts with major customers on
favourable terms.
The Company’s success growing profit over
an extended period has been achieved by
a long term stable management team. This
was exemplified by the internal promotion
of Martin Brydon to the position of Chief
Adelaide Brighton has a consistent approach
Executive Officer (CEO), succeeding long term
of investing for operational improvement
Managing Director and CEO Mark Chellew,
and growth while returning surplus capital,
and various internal promotions made as a
a strategy which has supported strong
consequence of Martin Brydon’s promotion.
total shareholder returns for more than a
Our Company has continued to perform well
decade. The acquisition of three construction
in challenging market conditions, with our
materials businesses during 2014 in South
NPAT growing strongly in 2014.
Australia and Queensland for $172 million
(on an enterprise value basis) is consistent
with our strategy of downstream investment
and strengthens our capacity for organic
Our remuneration policies focus on rewarding
achievement and stabilising our management
team through long term incentives which are
consistent with shareholders’ returns.
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
48
An overview of the key 2014 remuneration related matters is set out below:
1.5 Changes during the 2014 financial year
Executive remuneration
The CEO’s fixed remuneration was set at $1.3 million per annum
The overall structure and philosophy of
upon his appointment to that role during the 2014 financial year.
Adelaide Brighton’s approach to remuneration
This was materially lower than for the previous long serving CEO.
remained consistent throughout 2014.
Following annual remuneration reviews concluded in late 2013,
Martin Brydon replaced the Company’s long
some senior executives received a 2% increase over 2013 fixed
serving Managing Director and CEO Mark
remuneration, to address internal relativities and reflecting the fact
Chellew at the Company’s Annual General
that fixed remuneration for these executives was originally set a
Meeting on 21 May 2014. As disclosed in
little below market while the executives gained experience in their
last year’s Remuneration Report, the Board
current roles. Fixed remuneration for other senior executives for the
reviewed the terms of employment for the
2014 financial year were held at the same level as 2013.
CEO at the time of his appointment and
Short term incentive
The annual short term incentive for the CEO and Chief Financial
outcomes
Officer (CFO) is split 80% Group financial target and 20% non-
financial targets.
Martin Brydon has been employed as the
Company’s CEO on terms embodying best
practice, which superseded and replaced
his previous executive service agreement (as
For executives other than the CEO and CFO the split is 60% Group
Executive General Manager, Cement and
financial target, 20% Divisional financial target and 20% non-
Lime).
financial targets.
Martin Brydon’s smooth succession to CEO
2014 Reported Group PBT was 112% of budget, while Underlying
is indicative of the inherent value of a long
Group PBT was 111% of budget. The Board adjusted the PBT
standing senior executive team at Adelaide
used for STI purposes downwards to $223.5 million, which was
Brighton.
108% of budget.
The Company has also taken the opportunity
The Board considered items individually taking account of a range
to ensure that all KMP have now transitioned
of matters, including budget assumptions and management
to a new form of executive service agreement,
initiatives, making the following adjustments:
> the impact of acquisitions which were unbudgeted were excluded
(fair value gain and acquisition earnings less transaction costs); and
removing older style termination benefit
arrangements and replacing them with
provisions that provide alignment between
executives and shareholders by more
> restructuring charges, net of benefits derived during the year were
closely linking the rewards which accrue to
excluded.
The same approach was taken to the Divisional Financial targets.
Overall this resulted in the Divisional financial target being met at
100%.
Non-financial targets for the CEO and Executives were met at
between 73% and 83%.
Long term incentive
During 2014, Tranche 3 of the 2010 Awards was tested for earliest
outcomes - Total
exercise in May 2014. These Awards vested at 50%:
senior executives to the creation of value for
shareholders. A new form of executive service
agreement will be used for all new senior
executive appointments. It provides for:
> Board discretion for short term and long
term incentive arrangements;
> Termination on six months’ notice by either
party (or payment in lieu by the Company);
> Immediate termination by the Company
for cause;
> While operating conditions remained challenging, the senior
executive team was effective in delivering Total Shareholder Return
of 75.2% over the measurement period.
> Post employment restraint of up to six
> The Total Shareholder Return component (representing 50% of the
months (paid);
long term incentive) fully vested with the Total Shareholder Return
> Clawback of incentives paid due to the
of 75.2% which was at the 81st percentile of the Comparator
executive’s material non-compliance with
Group.
> The Earnings Per Share (EPS) component (representing 50% of
the long term incentive) did not vest as the EPS target was not
any financial reporting requirement, or
misconduct, including fraud, dishonesty, or
breach of duty; and
met. This is despite continued growth in EPS over the performance
> Other provisions commonly found in
period and notwithstanding challenging trading conditions that
contemporary executive service agreements.
resulted in some competitors suffering declines in earnings.
Shareholder Return
of 75.2% over the
measurement period
(2010 - 2013)
Non-executive Director
There were no increases in Board or Committee fees in financial
remuneration
year 2014.
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R EN DED 31 D EC E M BER 2 0 1 4
49
Our senior executives’ remuneration levels
Section 2 - Executive remuneration framework
were benchmarked during the year, and
generally sit around the median percentile of
2.1 Key Management Personnel (KMP)
similar roles within comparable companies
The KMP of Adelaide Brighton comprises all Directors and those Executives who have authority
in the ASX 51-150. Actual salaries at any
and responsibility for the planning, directing and controlling of the activities of the Group. In this
time may reflect individual experience and
Report, ‘Executives’ refers to members of the Group executive team identified as KMP.
knowledge and so may deviate from the
median percentile.
The KMP detailed in this report are:
The Board again considered the Company’s
Table 1
LTI arrangements in 2014. While the four year
Name
Role
performance period and Total Shareholder
Return (TSR) and EPS targets continued as
the current structure of the LTI for the 2014
financial year, the level of participation in the
LTI was reduced for all senior executives.
Executives
M Brydon(1)
M Kelly
G Agriogiannis
SB Rogers
Chief Executive Officer (CEO)
Chief Financial Officer (CFO)
Executive General Manager, Concrete and Aggregates
Executive General Manager, Concrete Products
1.6 Looking forward
The Board is alert to the need to keep up with
shareholder and community expectations
concerning executive remuneration, and to
implement new practices as appropriate for
the Group’s circumstances, strategy and
direction. In the interests of ensuring that our
senior executive remuneration and incentive
arrangements are fit for purpose and reflect
the Company’s future plans and strategies,
rather than implementing change on an ad
Former Managing Director (MD) and CEO
MP Chellew(2)
Former MD and CEO
Directors
LV Hosking
GF Pettigrew
KB Scott-Mackenzie
AM Tansey
RD Barro
Non-executive Chairman
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
(1) Deputy CEO until 21 May 2014, Executive General Manager, Cement and Lime until 1 February 2014
(2) MD and CEO until 21 May 2014
hoc basis, the Board has resolved to conduct
2.2 Remuneration framework
a holistic review of our senior executive pay
levels, pay mix, short term incentives and
Our executive remuneration framework consists of the following components:
long term incentives over the next 12 months.
> Fixed annual remuneration
Any changes that are determined appropriate
as a result of this review will be introduced
in the 2016 financial year, including, as we
have previously foreshadowed to the market,
deferring a component of the Group’s short
term incentive.
The governance of remuneration outcomes
remains a key focus of the Board and the
Nomination, Remuneration and Governance
(NRG) Committee, and we regularly review
our policies to ensure that remuneration
for our executives continues to be aligned
with Company performance and that it
appropriately motivates, rewards and retains
our senior executive team in the context of
the broader community sentiment regarding
executive pay.
> An annual short term incentive
> A long term incentive
Adelaide Brighton’s mix of fixed and at risk components for the Executives disclosed in this
Report, as a percentage of potential maximum total annual remuneration for the 2014 financial
year, is as follows:
CH IEF EXEC U TIVE OFF ICER
KMP
39% - FIXED REMUNERATION
41% - FIXED REMUNERATION
39% - AT RISK PAY - ANNUAL INCENTIVE (STI)
33% - AT RISK PAY - ANNUAL INCENTIVE (STI)
22% - AT RISK PAY - LONG TERM INCENTIVE (LTI)
26% - AT RISK PAY - LONG TERM INCENTIVE (LTI)
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
50
The diagram below provides a summary of our remuneration framework, and illustrates the way in which each element of remuneration has been
structured to support our Group business objectives and to align with the generation of shareholder wealth.
Component
Performance measure
Strategic objective/performance link
FIXED ANNUAL
REMUNERATION (FAR)
Salary and other benefi ts
Considerations:
> Long term individual performance
(including statutory superannuation)
> Role, responsibility and potential
> Remuneration set at competitive levels in
the market to attract, retain and engage
key talent
> Motivate to achieve outstanding
+
ANNUAL
SHORT TERM
INCENTIVE (STI)
Cash for target performance
+
> Benchmarked to competitive market rate
performance
Financial targets - using Profi t Before
> Alignment to Group budget through PBT
Tax (PBT) as fi nancial measure
CEO and CFO - 80% relating to Group
performance against budget
Division Executive General Managers -
60% relating to Group performance and
20% relating to Divisional performance
against budget
Non-fi nancial targets (20%)
relating to personal performance
> Non-fi nancial targets drive leadership
performance and behaviours consistent
with achieving the Group’s short and long
term objectives and commitments including
safety, strategic plans, individual business
profi t targets and other specifi c personal or
non-fi nancial performance objectives which
align the interest of Company executives
and shareholders
LONG TERM INCENTIVE (LTI)
Rights to receive fully paid
ordinary shares
Earnings Per Share (EPS) (50%)
> Ensure strong link with the creation of long
and
term shareholder value to encourage the
achievement of growth of the Company’s
Total Shareholder Return (TSR) (50%)
business
Measured over a four year performance
> EPS was chosen as a performance
period
hurdle as it:
- Links executive reward to a fundamental
indicator of fi nancial performance; and
- Links directly to the Group’s long term
objectives of maintaining and
improving earnings
> TSR was chosen because it:
- Ensures alignment between comparative
shareholder return and reward for the
executive; and
- Provides a relative, external market
performance measure having regard to
a peer group of companies (ASX200
with exclusions) with which the Group
competes for capital, customers and talent
=
TOTAL REMUNERATION
The total remuneration mix is designed to attract, retain and motivate a highly capable executive
team, encourage and drive leadership performance that reinforces the Group’s short and long
term strategic objectives and provides a common interest between executives and shareholders
by linking the rewards that accrue to executives to the creation of value for shareholders
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R END ED 31 D ECE M BER 2 01 4
51
Section 3 - Company performance and remuneration outcomes for 2014
3.1 Overview of Company performance
As can be seen from the table below, the key profit measures for 2014 versus 2013 show an
improvement of between 7% and 14% (depending on the metric), on revenue growth of 9%.
This represents a record year for Adelaide Brighton in respect to all metrics including revenue,
EBIT, PBT and NPAT, both on a reported and underlying profit basis.
Table 2
2013
2013
2014
2014
Reported Underlying
Reported Underlying
Reported Underlying
$m
$m
$m
$m
Revenue
1,228.0
1,228.0
1,337.8
1,337.8
EBITDA
293.3
296.6
322.5
318.2
EBIT
PBT
NPAT
222.7
226.0
247.5
245.2
208.6
211.9
232.5
230.2
151.1
153.4
172.6
166.4
vs LY
%
9%
10%
11%
11%
14%
vs LY
%
9%
7%
8%
9%
8%
Adelaide Brighton has performed well against the S&P/ASX200 Accumulation Index delivering
total shareholder return of 75.2% against the Comparator Group over the measurement period of
the long term incentive tested in 2014 (Tranche 3 of the 2010 Award).
As per the graph below this shareholder value has been delivered through a combination of share
price growth and dividends.
ABC SHAREHOLDE R RE TURN S - SHAR E PRI CE GRO WT H AN D T S R
(JAN 2010 to DEC 2014)
Index = 100
190
180
170
160
150
140
130
120
110
100
90
80
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ABC SHARE PRICE GROWTH
ABC TSR (SHARE PRICE GROWTH + DIVS REINVESTED)
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
52
The table below provides an overall view of the Company’s financial performance and operating cash flow over the past six financial years to
31 December 2014.
Table 3 - Shareholders’ wealth improvement from year 2009 to year 2014
Financial year ended 31 December
Closing share price ($) as at 31 December
Total dividends per share (cash)
2009*
2.75
13.55
2010*
3.30
21.5(2)
2011*
2.89
16.55
2012
3.12
2013
3.67
16.55
19.5(1)
2014
3.57
17.05
Franked dividends
Operating cash flow
Earnings per share (cents)
(1) Includes 3.0 cent special dividend
(2) Includes 5.0 cent special dividend
100%5
100%5
100%5
100%5
100%5
100%5
$188.1m
$188.5m
$151.3m
$186.9m
$227.3m
$194.0m
20.45
23.95
23.35
24.05
23.75
26.95
*Comparative information for these years has not been restated to reflect changes to accounting policies. Refer Note 42 to the 2013 Financial Statements.
3.2 Linking remuneration to Company performance
This section explains how the Group’s performance has driven Short Term Incentive and Long Term Incentive outcomes for our Executives during
2014. Strong Company performance across key indicators is reflected in the remuneration outcomes during the year.
3.2.1 Short Term Incentive - key performance outcomes
Performance measure
Outcome
Financial
The annual short term incentive for the CEO and Chief Financial Officer (CFO) is split 80% Group financial target
and 20% non-financial targets.
For executives other than the CEO and CFO the split is 60% Group financial target, 20% Divisional financial
target and 20% non-financial targets.
The adjusted Group PBT for STI purposes was approximately 108% of budget, while divisional PBTs exceeded
110% of budget. This resulted in the financial target being met at 100.0%.
Non-financial
Non-financial targets (being the remaining 20% of the potential STI opportunity) for the Executives were met at
between 73% and 83% during 2014.
Examples of personal non-financial target objectives achieved by the CEO and Executives during 2014
included:
> Development and execution of Adelaide Brighton’s strategic plan.
> Acquiring targeted concrete and aggregates businesses within value parameters. Successful integration of
these businesses into ABL systems and delivery of synergies.
> Successful restructure of the Munster cement operations: incorporating workforce downsizing without
disruption; obtaining relevant Government approvals; securing long term port access for imports.
> Successful completion of Malaysian joint venture kiln upgrade and transition of Western Australian operations to
import of specialty off-white clinker from Malaysia.
> Successful commissioning of capacity expansion projects within budget.
> Renegotiation of long term business critical and strategic supply contracts on favourable terms.
> Securing strategic supply contracts with major customers on favourable terms.
A number of these objectives and projects contributed to the Group’s performance in 2014 and will reinforce
future performance.
Overall STI outcomes
Overall, the achievement of the Financial and Non-financial Targets resulted in the STI opportunity being
awarded at 86.9% to 89.8% of the potential STI.
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R EN DED 31 D EC E M BER 2 0 1 4
53
3.2.2 Short Term Incentive - actual outcomes
3.2.3 Long Term Incentive - key performance
The short term incentive payments shown in the table below reflect the performance achieved
and amounts payable for Executives for the 2014 financial year.
Table 4
outcomes
During 2014, Tranche 3 of the 2010 Awards
was tested for earliest exercise in May 2014
and vested at 50%:
Maximum
% of the % of the STI
Maximum
> The Total Shareholder Return component fully
For the financial
potential STI maximum STI
maximum potential STI
Actual STI
vested with the Company achieving a Total
year ended
opportunity
31 December 2014
as % of FAR
opportunity
opportunity
achieved not achieved(1)
opportunity
$(1)
payment
$(2)
Shareholder Return of 75.2% being the 81st
percentile of the Comparator Group.
Executives
M Brydon
M Kelly
G Agriogiannis
SB Rogers
Former MD & CEO
100
80
80
80
86.9
87.5
87.8
89.8
13.1
12.5
12.2
10.2
1,255,147
1,091,041
553,186
386,808
383,853
484,178
339,594
344,677
MP Chellew(3)
100
-
100
671,701
-
(1) Where the actual STI payment is less than the maximum potential, the difference is forfeited and does not become payable in subsequent years.
(2) The 2014 STI was determined in conjunction with the finalisation of 2014 results and paid in February 2015.
(3) No short term incentive payment was made to Mr Chellew for the 2014 year.
> The average EPS growth over the 2009 to
2013 financial period was 4.2% which was
less than the minimum EPS target of 5.2%
(2.5% + CPI). Therefore, the EPS component
did not vest. This is despite continued
growth in EPS over the performance period
and notwithstanding challenging trading
conditions that resulted in some competitors
suffering declines in earnings.
The chart below illustrates Adelaide
Brighton’s Total Shareholder Return over the
measurement period for Tranche 3 of the 2010
Award. The Total Shareholder Return of 75.2%
resulted from share price growth and payment
of ordinary and special dividends totalling
70.0 cents fully franked over the period.
ABC SHAREHOLDE R RETURN S - SHAR E PRI CE GRO WT H AN D T S R
(JAN 2010 to DEC 2013)
Index = 100
Dividends
= 34.4%
Share price
growth
= 40.8%
ABC
TSR
= 75.2%
180
170
160
150
140
130
120
110
100
90
80
0
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D
ABC SHARE PRICE GROWTH
ABC TSR (SHARE PRICE GROWTH + DIVIDENDS REINVESTED)
Source: ASX/First Advisers Pty Ltd
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
54
3.2.4 Long Term Incentive - actual outcomes
Details of the movement in Awards held by Executives during the 2014 fi nancial year are set out below.
Table 5
For the fi nancial
year ended
31 Dec 2014
Number
held at
1 Jan 2014
Number
granted
during
the year(1)
Number
exercised/
vested
during the
year
Number
lapsed/
forfeited
during
the year(3)
Number
held at
31 Dec 2014
Value of
Awards at
grant date(4)
$
Value per
share at
the date of
exercise(5)
$
Value at
lapse date(6)
$
Executives
M Brydon
M Kelly
G Agriogiannis
SB Rogers
Former MD & CEO
1,032,040
763,897
427,628
425,355
354,223
131,890
65,873
65,370
120,000(2)
100,000(2)
65,000(2)
65,000(2)
120,000
100,000
65,000
65,000
1,146,263
695,787
363,501
360,725
665,941
247,953
123,843
125,184
3.55
3.89
3.89
3.34
3.90
3.90
3.90
3.90
MP Chellew
2,847,568
-
1,498,466(7)
1,349,102
N/A
-
3.80
3.80
(1) This represents the maximum number of Awards granted in 2014 that may vest to each Executive. As the Awards granted in 2014 only vest on satisfaction of performance conditions which are to be tested in future fi nancial periods, none
of the Awards as set out above vested or were forfeited during the year. At the end of the applicable performance period, any Awards that have not vested will expire.
(2) These Awards which were exercisable during 2014 were in fact exercised, being Tranche 3 of the 2010 Awards. The number of Awards that vested during the period and exercisable at 31 December 2014 is nil. The number of Awards that
vested but not yet exercisable at 31 December 2014 is nil.
(3) This includes the portion of Tranche 3 of the 2010 Awards that reached the end of its performance period on 31 December 2013 that did not meet the performance conditions and was forfeited.
(4) Fair value of Awards granted during 2014 as at grant date.
(5) The value per share at the date of exercise is the Volume Weighted Closing Price which is the average of the closing price and number of Adelaide Brighton Limited shares traded on the Australian Securities Exchange for the fi ve trading
days before the exercise date, but not including the day of exercise. The aggregate value of Awards that vested during the year is $6,968,355 based on the Volume Weighted Closing Price.
(6) The value at lapse date of Awards that were granted as part of remuneration and that lapse during the year because a vesting condition was not satisfi ed. The value is determined at the time of lapsing, but assuming the condition was
satisfi ed.
(7) All Awards that remained outstanding under the Plan as at Mr Chellew’s retirement date of 21 May 2014 vested on a pro-rated basis. This included 728,324 Awards comprising Tranche 1 of the 2012 grant, 728,324 Awards comprising
Tranche 2 of the 2012 grant and 670,920 Awards comprising the 2013 grant. The total number of Awards that vested during the year and which were exercisable by Mr Chellew also included Tranche 3 of the 2010 grant.
Section 4 - Remuneration governance
4.1 Responsibility for setting remuneration
Our governance framework for determining executive remuneration is outlined below:
BOARD
The Board approves:
> The overall remuneration policy
> Non-executive Director remuneration and senior executive remuneration; and
> The remuneration of the CEO, including his participation in the short term and long term
incentive schemes
NOMINATION, REMUNERATION AND GOVERNANCE (NRG) COMMITTEE
The NRG Committee is delegated responsibility by the Board to review and make
recommendations on:
> The remuneration policies and framework for the Group
> Non-executive Director remuneration
> Remuneration for senior executives and
> Executive incentive arrangements
MANAGEMENT
Provides information relevant to remuneration decisions and makes recommendations to the NRG
Committee
Obtains remuneration information from external advisors to assist the NRG Committee
(i.e. factual information, legal advice, accounting advice, tax advice)
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R END ED 31 D ECE M BER 2 01 4
55
CONSULTATION WITH
SHAREHOLDERS AND OTHER
STAKEHOLDERS
REMUNERATION CONSULTANTS
AND OTHER EXTERNAL
ADVISORS
> Provide independent advice,
information and recommendations
relevant to remuneration decisions
> In performing its duties and
making recommendations to the
Board, the Chairman of the NRG
Committee seeks independent
advice from external advisers
on various remuneration related
matters
> Any advice or recommendations
provided by external advisers are
used to assist the Board - they do
not substitute for the Board and
NRG Committee process
Details on the composition of the NRG
motivate and retain a highly capable executive
individual, his or her future potential within the
Committee are set out on page 31 of this
team and each individual’s remuneration is
Group and market practice. The Company’s
Annual Report. The NRG Committee’s Charter
set with reference to the degree of individual
stated approach is also to set fixed
is available on the Corporate Governance
performance, role, responsibility and future
remuneration levels at relatively modest levels
section of the Company’s website at
potential within the Group and in the context
compared to peers for executives who are
www.adbri.com.au.
of the broader community sentiment
new to their roles and to then progressively
From time to time during the financial year
ended 31 December 2014, the Company
> Drive leadership performance and behaviours
performance in that role.
regarding executive pay.
increase remuneration based on individual
engaged external consultants to provide
that reinforce the Group’s short and long term
Fixed remuneration is reviewed annually
insights on remuneration trends, regulatory
strategic and operational objectives
having regard to relevant factors including
and governance updates and market data in
relation to the remuneration of non-executive
Directors, the CEO and other executives. No
remuneration recommendations as defined in
section 9B of the Corporations Act 2001 were
> Provide a common interest between
executives and shareholders by linking the
rewards that accrue to executives to the
creation of long term value for shareholders
performance, market conditions (both
generally and in the markets in which the
Group operates), growth and comparable
roles within peer companies and similar roles
across a Comparator Group comprising those
obtained during the financial year ended
> Have regard to market practice and market
companies in the ASX 51-150. Section 1.4
31 December 2014.
conditions; and
4.2 Remuneration policy
> Provide transparency and clarity on what
The Company’s remuneration strategy and
policy are set by the Board and overseen
by the NRG Committee. The Board ensures
remuneration policies are clearly aligned
is paid, to whom and on what basis
remuneration has been paid.
Section 5 - Executive remuneration
with the Group strategy, which is focused
5.1 Fixed annual remuneration
on maintaining and growing long term
shareholder value.
The amount of fixed remuneration for an
individual executive (expressed as a total
details the changes for Executives arising
from the review of fixed remuneration by the
Board and NRG Committee for the 2014
financial year.
5.2 At-risk remuneration - Short Term Incentive
Adelaide Brighton’s STI is the Company’s
at risk short term incentive component of
the remuneration mix for senior executives,
including Executives.
In determining executive remuneration, the
amount of salary and other benefits, including
A summary of the key features of the 2014
Board has adopted a policy that aims to:
superannuation contributions) is set with
STI is as follows:
> Be competitive in the markets in which the
Group operates in order to attract, reward,
Form and purpose of the STI
regard to the size and nature of an executive’s
role, the long term performance of an
Who participates in the STI?
Participation in the STI is generally offered to the CEO and senior executives who are able to have
a direct impact on the Group’s performance against the relevant performance hurdles.
Why does the Board consider the STI an
The STI is designed to put a meaningful proportion of senior executives’ remuneration at risk, to
appropriate incentive?
be delivered on the achievement of performance targets linked to the Group’s annual business
objectives, ensuring senior executives create sustainable value for shareholders.
Does the STI comprise a deferred component?
The Board has determined that it would be appropriate to introduce a deferred component to the
STI for the 2016 STI (see section 1.6).
The NRG Committee has considered this in the context of Adelaide Brighton’s current
remuneration framework, including the long term incentive which is subject to a four year
performance period. On the basis that, at any time, senior executives have at least four years’
worth of LTI opportunity subject to share price fluctuations, the Committee considers that senior
executives’ interests are sufficiently aligned to those of our shareholders.
Performance conditions
When and how are the STI performance
The performance criteria are set by the Board and agreed with the executive, in general, by the
conditions set?
end of February in each year.
In approving Financial Targets under the STI, the Board considers a number of factors, including
the industry in which we operate and the extraneous factors including market conditions that
impact our financial performance and those of our competitors. These include the dynamics of the
construction and resources industries, exchange rates and energy considerations.
Our management team has responded well to external pressures over recent years, and has
generated positive return for longer term shareholders in a challenging environment with the
Company outperforming our industry competitors. Accordingly, the Board strongly believes
that our STI targets need to be set in this context in order to continue to attract and motivate a
highly capable senior executive team who can drive the continued delivery of strong results for
shareholders over the longer term.
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
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Reward opportunity
What level of reward can be earned under
The maximum STI opportunities able to be earned are expressed as a percentage of fixed
the STI?
remuneration:
Potential - % of fixed remuneration
Financial
Non-financial
Total
% of PBT achieved
CEO
Executives CEO Executives
CEO
Executives
Other
Other
Other
Below 95%
0%
0%
20%
16%
20%
16%
95% - 100%
40% - 48% 32% - 38% 20%
16%
60% - 68% 48% - 54%
100% - 105%
48% - 60% 38% - 48% 20%
16%
68% - 80% 54% - 64%
105% - 110 %
60% - 80% 48% - 64% 20%
16%
80% - 100% 64% - 80%
Governance
How is performance against the performance
All performance conditions under the STI are clearly defined and measurable.
conditions assessed?
In respect of the Financial Targets, the Board compares the actual PBT earned against the
budgeted PBT for the year, and assesses the degree to which the Group met these targets. The
Board may adjust for exceptional, abnormal or extraordinary factors which may have affected the
Group’s performance during the year.
In assessing the 2014 STI, the Board adjusted the PBT used for STI purposes to a level that was
lower than both reported and underlying PBT. The Board considered items individually taking
account of a range of matters, including budget assumptions and management initiatives.
The Board also considers the NRG Committee’s assessment of the CEO’s performance against
the agreed non-financial targets, and that of the senior executives (based on the recommendation
of the CEO).
When is performance against the performance
Assessment of performance against the performance hurdles for the relevant year is determined at
conditions determined and the cash award paid?
the February meeting of the NRG Committee and the Board, in conjunction with finalisation of the
Group’s full year results, and is normally paid to the executive following release of the Company’s
full year results in February.
5.3 At-risk remuneration - Long Term Incentive
The Company makes annual grants of Awards under the Executive Performance Share Plan (Plan) to all senior executives who are eligible to
participate.
A summary of the key features of the Plan as it applies to the 2014 LTI Award is as follows:
Driving performance
Who participates and how does the Plan drive
The LTI is offered to senior executives whose behaviour and performance have a direct impact on
performance and align participants’ interests
the Group’s long term performance. Its purpose is to focus executives on the Group’s long term
with shareholders?
business strategy to create and protect shareholder value over a four year performance period,
thus aligning executives’ interests more closely with shareholders.
Vesting, performance conditions and reward opportunity
What is the vesting / performance period?
The 2014 Awards will be tested and become exercisable to the extent of any vesting from
1 May 2018.
What happens on the exercise of Awards?
Shares are delivered to the executive on the exercise of the Awards. Awards are granted at no
cost to the executive and no amount is payable by the executive on the exercise of the Awards.
Any unexercised 2014 Awards will expire on 30 September 2018.
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
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How is the TSR performance condition
The Company’s TSR performance must equal or exceed the growth in the returns of the median
measured and what amount can be earned?
companies of the S&P / ASX 200 Accumulation Index (XJO Al), excluding all GICS Financial
companies and selected resources companies over the period from 31 December 2013 to
31 December 2017.
The 2014 Awards vest progressively in accordance with the following scale:
TSR growth relative percentile ranking
% of Awards subject to TSR hurdle to vest
Below 50%
50%
Between 50% and 75%
75% or above
Nil
50%
Pro rata
100%
How is the EPS performance condition
The EPS performance hurdle requires the compound annual growth in EPS of the Company over
calculated and what amount can be earned?
the relevant performance period to equal or exceed 5% per annum before any Awards will vest.
Awards under the 2014 Award are to vest progressively in accordance with the following scale:
Compound annual growth in EPS
% of Awards subject to EPS hurdle to vest
Below 5% per annum
5% per annum
Between 5% and 10% per annum
10% per annum or above
Nil
50%
Pro rata
100%
Is re-testing permitted?
No. Re-testing of either of the performance conditions applicable to a tranche of Awards
Structure of Awards
is not permitted.
What are the participation levels in the 2014
The Executives participated in the 2014 Awards at the following levels:
Awards for Executives?
Governance
Target
Maximum
(% of fixed remuneration)
(% of fixed remuneration)
M Brydon
M Kelly
G Agriogiannis and SB Rogers
50%
35%
25%
100%
70%
50%
Participation levels were reviewed during 2013 and have been reduced for all senior
executives for the 2014 Award.
Is there ability to ‘claw back’ in appropriate
Yes. The rules of the Plan have, for some time, provided the Board with a broad ability to claw
circumstances?
back Awards on offer to an executive and to make adjustments to any unvested Awards, if
considered appropriate.
The Board continues to review these arrangements in light of contemporary practice and is
considering the need for an additional formal Clawback Policy (in addition to the provisions
of the Plan Rules).
What other conditions apply to the Awards?
An executive’s entitlement to shares under an Award may also be adjusted to take account of
capital reconstructions and bonus issues.
The rules of the Plan contain a restriction on removing the ‘at-risk’ aspect of the instruments
granted to executives. Plan participants may not enter into any transaction designed to remove
the ‘at-risk’ aspect of an instrument before it becomes exercisable (eg. hedging the Awards).
Until the Awards vest, executives have no legal or beneficial interest in Adelaide Brighton Ltd
shares, no entitlement to receive dividends and no voting rights in relation to any securities
granted under the 2014 Award, or any of the other Awards.
Any shares allocated to the executive following exercise of an Award may only be dealt with in
accordance with the Company’s Share Trading Policy and subject to the generally applicable
insider trading prohibitions.
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
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Cessation of employment or a change of control
What happens to Awards that are not yet
If an Executive resigns or is terminated for cause, the Awards in respect of any tranche that is not
exercisable on cessation of employment?
exercisable will generally be forfeited.
The rules of the Plan provide that in other circumstances, and at the discretion of the Board, a pro
rata number of Awards, reflecting the part of the LTI earned or accrued up to termination, may
become exercisable either at the time of termination of employment or at the end of the original
performance period applicable to a tranche.
How would a change of control of the Group
In the event of a takeover bid (or other transaction likely to result in a change in control of
impact on LTI entitlements?
the Company), an executive will only be allowed to exercise his or her Awards to the extent
determined by the Board as provided under the rules of the Plan.
Section 6 - Executive Service Agreements
The remuneration and other terms of employment for Executives are set out in formal employment contracts referred to as Service Agreements. All
Service Agreements are for an unlimited duration and details of Executives’ entitlements on termination are set out below. All Service Agreements may
be terminated immediately for serious misconduct, in which case Executives are not entitled to any payment on termination other than remuneration
and leave entitlements up to the date of termination.
As discussed in section 1.5 above, all Executives have now been transitioned to the new general form of Service Agreement
embodying best current practice.
Table 6
Name
Notice periods
Separation payments(1)
M Brydon
6 months’ notice by either party
6 months fixed annual remuneration where the Company
(or payment in lieu)
terminates on notice.
M Kelly
3 months’ notice by either party
(or payment in lieu)
12 months fixed annual remuneration where the Company
terminates on notice.(2)
G Agriogiannis
3 months’ notice by either party
9 months fixed annual remuneration where the Company
(or payment in lieu)
terminates on notice.
SB Rogers
6 months’ notice by either party
6 months fixed annual remuneration where the Company
(or payment in lieu)
terminates on notice.
(1) In the case of resignation, no separate payment is made to the Executive (only amounts due and payable up to the date of ceasing employment including accrued leave entitlements and unpaid salary).
(2) No separation payment will exceed the limit under the Corporations Act 2001.
On termination of employment for any reason, the CEO and other Executives are prohibited from engaging in any activity that would compete with
the Group for a period of six months in order to protect the Group’s business interests. In the event of resignation, at the option of the Company,
Mr Brydon, Mr Kelly and Mr Rogers may be paid a monthly amount equivalent to the Executive’s monthly fixed remuneration at the time of termination
during the period of restraint to support the enforceability of the restraint.
Section 7 - Non-executive Directors’ fees
7.1 Policy and approach to setting fees
Overview of policy
Non-executive Directors receive a base fee in relation to their service as a Director of the Board,
and an additional fee for membership of, or for chairing a committee.
The Chairman, taking into account the greater time commitment required, receives a higher fee
but does not receive any additional payment for service on the respective committees.
The total amount of fees paid to non-executive Directors is determined by the Board on the
recommendation of its NRG Committee within the maximum aggregate amount approved by
shareholders. The remuneration of the non-executive Directors consists of Directors’ fees,
committee fees and superannuation contributions. These fees are not linked to the performance of
the Group in order to maintain the independence and impartiality of the non-executive Directors.
In setting fee levels, the NRG Committee takes into account:
> Independent professional advice;
> Fees paid by comparable companies;
> The general time commitment and responsibilities involved; and
> The level of remuneration necessary to attract and retain Directors of a suitable calibre.
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R EN DED 31 D EC E M BER 2 0 1 4
59
Aggregate fees approved by shareholders
Total fees, including committee fees, were set within the maximum aggregate amount of
$1,300,000 per annum approved at the 2013 Annual General Meeting.
Base fees for 2014
As set out in the 2013 Remuneration Report, following a review of the fees paid to non-executive
Directors, the Chairman’s annual fee (at his request) has been reduced by 12.5% in the 2014 year
(previously $354,756). The base fee for non-executive Directors remains at the same level as for
2013.
Base fees (Board)
Non-executive Chairman(1)
Non-executive Director
$
310,500
103,500
$
Committee fees
Committee chair Committee member
Audit, Risk and Compliance Committee
Nomination, Remuneration and Governance Committee
Safety, Health and Environment Committee
24,840
24,840
15,525
13,973
13,973
10,350
(1) The Chairman of the Board receives no additional fee for Committee work.
In accordance with the Company’s constitution, Directors are also permitted to be paid additional
fees for special duties or exertions. Such fees may or may not be included in the aggregate
amount approved by shareholders, as determined by the Directors. No such fees were paid
during the year.
Directors are also entitled to be reimbursed for all business related expenses, including travel, as
may be incurred in the discharge of their duties.
Section 8 - Key Management Personnel disclosure tables
8.1 Non-executive Directors’ statutory remuneration
Details of non-executive Directors’ remuneration are set out in the following table:
Table 7
Non-executive
Director
LV Hosking(2)
(Chairman)
RD Barro
GF Pettigrew
KB Scott-Mackenzie
AM Tansey(3)
Fees and allowances
Post-employment
benefits
Directors’ Committee fees
base fees (incl.
(incl.
Year
superannuation) superannuation)
Superannuation
Total contributions(1)
$
$
$
$
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
310,500
354,746
103,500
103,500
103,500
103,500
103,500
103,500
103,500
103,500
724,500
768,746
- 310,500
- 354,746
10,350 113,850
10,350 113,850
49,163 152,663
49,163 152,663
29,498 132,998
29,498 132,998
38,813 142,313
45,506 149,006
127,824 852,324
134,517 903,263
23,449
23,449
9,758
9,520
13,878
13,878
11,400
11,121
12,198
12,463
70,683
70,431
Total non-executive
2014
Directors’ remuneration 2013
(1) Superannuation contributions are made on behalf of non-executive Directors which satisfy the Group’s obligations under applicable Superannuation
Guarantee Charge legislation.
(2) Following a review of the fees paid to non-executive Directors, the Chairman’s annual fee (at his request) was reduced by 12.5% in 2014.
(3) Ms Tansey’s fees have reduced for 2014 as the Corporate Governance Committee (of which she was Chairman) has been dissolved.
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
60
8.2 Executive statutory remuneration
Table 8
Short term employee benefits
Post employment benefits
Share based
payment
expense(3)
STI
payment(1)
Other
benefits
Super-
annuation
benefits(2)
Termination
Long term
benefits
incentive
FAR
$
$
$
$
Year
2014
2013
2014
2013
2014
2013
2014
2013
Executives
M Brydon
M Kelly
G Agriogiannis
SB Rogers
Former
MD & CEO
MP Chellew
1,243,194
935,078
1,091,041
752,619
166,667(5)
-
663,566
652,925
463,510
454,030
454,816
445,408
484,178
532,036
339,594
371,640
344,677
368,800
-
-
-
-
100,000(6)
-
27,823
17,122
27,917
25,000
20,000
20,000
25,000
25,000
$
-
-
-
-
-
-
-
-
$
270,053
217,527
179,279
170,157
99,828
155,049
94,276
102,107
Total
$
2,798,778
1,922,346
1,354,940
1,380,118
922,932
1,000,719
1,018,769
941,315
% of
remuneration
consisting
of Awards(4)
%
10
11
13
12
11
15
9
11
38
18
2014
2013
665,560
1,713,800
-
1,697,069
869,000(7)
-
Total executive 2014
2013
remuneration
3,490,646
4,201,241
2,259,490
3,722,164
1,135,667
-
6,250
25,000
106,990
112,122
291,877
-
291,877
-
1,126,198
752,820
2,958,885
4,188,689
1,769,634
1,397,660
9,054,304
9,433,187
(1) STI payment includes payments relating to 2014 performance accrued but not paid as at 31 December 2014.
(2) Includes Company contributions to superannuation and allocations by employees made by way of salary sacrifice of fixed remuneration.
(3) In accordance with the requirements of the Accounting Standards, remuneration includes a proportion of the notional value of equity compensation granted or outstanding during the year. The notional value of equity instruments is
determined as at the grant date and is progressively allocated over the vesting period. The amount included as remuneration is not related to or indicative of the benefit (if any) that the individual Executives may ultimately realise should the
equity instruments vest. The notional value of Awards as at the date of their grant has been determined in accordance with the accounting policy Note 1(v)(iv).
(4) % of remuneration for the financial year which consists of the amortised annual value of Awards issued under the Adelaide Brighton Limited Executive Performance Share Plan.
(5) Living Away from Home Allowance payment made pursuant to Mr Brydon’s Service Agreement to assist him in discharging his duties from the Company’s Sydney office.
(6) Payment made to Mr Rogers to cash out certain entitlements as part of Mr Roger’s transition to a new fully compliant Service Agreement.
(7) Payment made pursuant to Mr Chellew’s Service Agreement to support enforceability of the restraint of trade for the period 22 May 2014 to 22 November 2014.
8.3 Equity holdings of Key Management
Table 9
Personnel
A summary of Executives’ and non-executive
Directors’ current shareholdings in the
Company as at 31 December 2014 is
Executives
set out below.
While the Board has considered minimum
M Brydon
M Kelly
shareholding guidelines for non-executive
G Agriogiannis
Directors, it has determined that it does not
SB Rogers
currently consider it to be appropriate to
require a particular holding, given that this
Former MD & CEO
Granted as Net movement
Balance at
remuneration
beginning of year(1) during the year
due to Balance at end
other changes
of year
8,400
-
-
-
120,000
100,000
65,000
65,000
(120,000 )
(100,000 )
(65,000 )
(65,000 )
8,400
-
-
-
-
is a matter for individual preference.
MP Chellew(2)
448,366
1,498,466
(1,946,832 )
On the basis that Executives have four years’
Non-executive Directors
worth of LTI opportunity (as set out in section
5.3 of this Remuneration Report), the Board
has decided not to introduce minimum
shareholding guidelines for Executives. The
Board considers that Executives’ interests are
sufficiently aligned (through the LTI as the LTI
is subject to share price fluctuation) to those
of our shareholders.
LV Hosking
RD Barro(3)
GF Pettigrew
KB Scott-Mackenzie
AM Tansey
4,739
209,875,800
7,739
5,000
10,000
-
-
-
-
-
112
4,851
7,994,076
217,869,876
-
-
-
7,739
5,000
10,000
(1) The balances reported in this Table 9 include shares held directly, indirectly or beneficially by each KMP or close members of their family or an entity over
which the person or the family member has either direct or indirect control, joint control or significant influence as at 31 December 2014.
(2) MP Chellew retired 21 May 2014, therefore his equity holding has been reduced to nil at 31 December 2014 through “Net movement due to other
changes”.
(3) The balances relating to Raymond Barro include shares owned by entities over which Raymond Barro has a significant influence, or which he jointly
controls, but he does not control these entities himself.
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R EN DED 31 D EC E M BER 2 0 1 4
61
Income statement
For the year ended 31 December 2014
($ Million)
Revenue from continuing operations
Cost of sales
Freight and distribution costs
Gross profit
Other income
Marketing costs
Administration costs
Finance costs
Share of net profits of joint ventures and associate accounted for using the equity method
Profit before income tax
Income tax expense
Profit for the year
Profit attributable to:
Owners of the Company
Non-controlling interests
Earnings per share for profit from continuing operations attributable to the
ordinary equity holders of the Company:
Basic earnings per share
Diluted earnings per share
Consolidated
Notes
2014
2013
3
3
4
10(a)
5(a)
1,337.8
(823.5 )
(217.0 )
1,228.0
(745.6 )
(196.1 )
297.3
26.1
(20.2 )
(75.6 )
(16.8 )
21.7
232.5
(59.9 )
286.3
4.7
(21.3 )
(69.4 )
(15.9 )
24.2
208.6
(57.5 )
172.6
151.1
172.7
(0.1 )
172.6
Cents
34
34
26.9
26.8
151.1
-
151.1
Cents
23.7
23.4
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
THE ABOVE INCOM E S TATEM EN T S H OU L D B E RE AD I N C O NJ UN CT I ON W I TH
THE NOTES TO THE FIN A NCI AL STAT EM EN T S
62
Statement of comprehensive income
For the year ended 31 December 2014
Consolidated
($ Million)
Profit for the year
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Income tax relating to these items
Items that will not be reclassified to profit or loss
Actuarial (losses)/gains on retirement benefit obligation
Income tax relating to these items
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive income for the year
Notes
2014
172.6
0.5
-
(1.2 )
0.4
(0.3 )
5(c)
20(b)
5(c)
2013
151.1
1.0
-
7.6
(2.3 )
6.3
172.3
157.4
172.4
(0.1 )
157.4
-
172.3
157.4
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R EN DED 31 D EC E M BER 2 0 1 4
THE ABOVE STATEM EN T OF C OM PR E H EN SI VE I NC OME SH O ULD B E R E AD
IN CONJU NC TION W ITH T HE NO T ES T O T HE FI NAN C I AL STATEME NTS
63
Balance sheet
As at 31 December 2014
($ Million)
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Carbon units
Assets classified as held for sale
Total current assets
Non-current assets
Receivables
Joint arrangements and associate
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Provision for carbon emissions
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Retirement benefit obligations
Provision for carbon emissions
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Capital and reserves attributable to owners of the Company
Non-controlling interests
Total equity
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
THE ABOVE BALAN CE SH EET S HO U L D B E RE AD I N CON JUNC TI ON W I TH
THE NOTES TO TH E F IN AN C IA L S TAT EM EN T S
64
Consolidated
Notes
2014
2013
6
7
8
14(b)
9
7
10
11
13
15
16
17
14(b)
18
16
19
17
20(b)
14(b)
21
22(a)
22(b)
31.7
199.3
154.7
-
385.7
1.5
387.2
32.7
139.9
989.6
263.9
11.1
182.4
136.3
52.5
382.3
7.9
390.2
31.4
138.5
889.7
183.9
1,426.1
1,243.5
1,813.3
1,633.7
120.4
1.4
1.3
24.7
14.0
4.2
166.0
390.1
76.8
41.4
2.2
-
0.1
510.6
676.6
105.4
-
19.0
26.7
39.7
20.4
211.2
259.1
64.3
28.5
0.5
8.2
0.1
360.7
571.9
1,136.7
1,061.8
727.9
3.3
402.8
1,134.0
2.7
699.1
4.3
355.6
1,059.0
2.8
1,136.7
1,061.8
Statement of changes in equity
For the year ended 31 December 2014
Attributable to owners of Adelaide Brighton Ltd
Contributed
Notes
equity
Reserves
Retained
earnings
Non-controlling
Total
interests
Consolidated
($ Million)
Balance at 1 January 2014
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their
capacity as owners:
Dividend reinvestment plan share issues
Dividends provided for or paid
23
Executive performance share plan
21(b)/22(a)
Balance at 31 December 2014
Balance at 1 January 2013
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their
capacity as owners:
Dividends provided for or paid
23
Executive performance share plan
21(b)/22(a)
Balance at 31 December 2013
699.1
-
-
-
24.6
-
4.2
28.8
727.9
696.6
-
-
-
-
2.5
2.5
699.1
4.3
-
0.5
0.5
-
-
(1.5 )
(1.5 )
3.3
2.1
-
1.0
1.0
-
1.2
1.2
4.3
355.6
172.7
(0.8 )
171.9
1,059.0
172.7
(0.3 )
172.4
-
(124.7 )
-
24.6
(124.7 )
2.7
(124.7 )
(97.4 )
402.8
1,134.0
304.4
151.1
5.3
156.4
1,003.1
151.1
6.3
157.4
(105.2 )
-
(105.2 )
3.7
(105.2 )
(101.5 )
2.8
(0.1 )
-
(0.1 )
-
-
-
-
2.7
2.8
-
-
-
-
-
-
355.6
1,059.0
2.8
1,061.8
Total
equity
1,061.8
172.6
(0.3 )
172.3
24.6
(124.7 )
2.7
(97.4 )
1,136.7
1,005.9
151.1
6.3
157.4
(105.2 )
3.7
(101.5 )
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R EN DED 31 D EC E M BER 2 0 1 4
THE ABOVE STATEM EN T OF C H AN G ES I N EQUI T Y SHO ULD BE R E AD
IN CONJU NC TION W ITH T HE NO T ES T O T HE FI N ANCI AL STATE MEN TS
65
Statement of cash flows
For the year ended 31 December 2014
Consolidated
($ Million)
Notes
2014
2013
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Joint venture distributions received
Interest received
Interest paid
Receipts from sale of carbon units
Other income
Income taxes paid
Income taxes refunded
1,460.1
(1,227.1 )
21.0
1.8
(16.0 )
20.0
7.1
(72.9 )
-
1,334.0
(1,084.6 )
16.4
1.8
(16.0 )
20.0
5.0
(49.7 )
0.4
Net cash inflow from operating activities
33
194.0
227.3
Cash flows from investing activities
Payments for property, plant, equipment and intangibles
Payments for acquisition of businesses, net of cash acquired
Payments for acquisition of interest in associate
Proceeds from sale of property, plant and equipment
Loans to joint venture entities
Repayment of loans from other parties
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from borrowings
Repayment of borrowings
Dividends paid to Company’s shareholders
Net cash inflow/(outflow) from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
(60.4 )
(155.6 )
-
13.6
(1.9 )
0.6
(203.7 )
8.1
122.2
-
(100.1 )
30.2
20.5
11.1
0.1
31.7
(66.9 )
(0.6 )
(0.4 )
6.5
(1.9 )
0.1
(63.2 )
3.7
-
(60.2 )
(105.2 )
(161.7 )
2.4
8.8
(0.1 )
11.1
23
6
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
THE ABOVE STATEM EN T OF C A SH FLOW S S H OU L D B E R EAD
IN CONJUNCTION W ITH T H E N OT ES T O T H E F I N A N CI AL STATEM EN TS
66
Notes to the consolidated financial statements
1 Summary of significant
Company and its subsidiaries together are
(iv) Joint arrangements
accounting policies
referred to in this financial report as
Investments in joint arrangements are
Adelaide Brighton Ltd (the Company) is a
“the Group”.
company limited by shares, incorporated
Subsidiaries are all those entities over which
and domiciled in Australia whose shares are
the Group has control. The Group controls an
publicly traded on the Australian Securities
entity when the Group is exposed to, or has
classified as either joint operations or joint
ventures depending on the contractual rights
and obligations of the Group to the joint
arrangement.
Exchange (ASX).
rights to, variable returns from its involvement
Joint operations
The financial report was authorised for issue
by the Directors on 12 March 2015. The
Directors have the power to amend and
activities of the entity.
reissue the financial statements.
Subsidiaries are fully consolidated from the
with the entity and has the ability to affect
Interests in joint operations are accounted for
those returns through its power to direct the
using the proportionate consolidation method.
Under this method, the Group has recognised
its share of assets, liabilities, revenues and
expenses. Details of the joint operations are
set out in Note 10.
date on which control is transferred to the
Group. They are deconsolidated from the date
The principal accounting policies adopted in
the preparation of these consolidated financial
statements are set out below. These policies
have been consistently applied to all the years
presented. The financial statements are for
the consolidated entity consisting of Adelaide
Note 1(h)).
Brighton Ltd and its subsidiaries.
Intercompany transactions, balances
that control ceases. The acquisition method
Joint ventures
of accounting is used to account for business
Interests in joint ventures are accounted for
combinations by the Group (refer to
using the equity method. Under this method,
(a) Basis of preparation
These general purpose financial statements
have been prepared in accordance with
Australian Accounting Standards and
Interpretations issued by the Australian
Accounting Standards Board and the
Corporations Act 2001. The Company is a
for-profit entity for the purpose of preparing
and unrealised gains on transactions
between Group companies are eliminated.
Unrealised losses are also eliminated
unless the transaction provides evidence
of the impairment of the asset transferred.
Accounting policies of subsidiaries have
When the Group’s share of losses in a joint
been changed where necessary to ensure
venture equals or exceeds its interests in the
consistency with the policies adopted
joint venture (which includes any long term
by the Group.
the interests are initially recognised in the
consolidated balance sheet at cost and
adjusted thereafter to recognise the Group’s
share of the post-acquisition profits or losses
and movements in other comprehensive
income in the income statement and other
comprehensive income respectively.
interests that, in substance, form part of the
Group’s net investment in the joint venture),
the Group does not recognise further losses
unless it has incurred obligations or made
payments on behalf of the joint venture.
the financial statements.
(ii) Employee Share Trust
Comparative information has been re-stated
where appropriate to enhance comparability.
The Group has formed a trust to administer
the Group’s employee share scheme.
The company that acts as the Trustee is
Historical cost convention
consolidated as the company is controlled by
Unrealised gains on transactions between the
These financial statements have been
the Group. The Adelaide Brighton employee
Group and its joint ventures are eliminated
prepared under the historical cost convention,
share plan trust is not consolidated as it is not
to the extent of the Group’s interest in the
except for the circumstances when fair value
controlled by the Group.
method has been applied as detailed in the
accounting policies below.
Compliance with IFRS
(iii) Associate entity
The interest in associate is accounted
for using the equity method, after initially
The consolidated financial statements of
being recorded at cost. Under the equity
Adelaide Brighton Limited also comply with
method, the share of the profits or losses of
International Financial Reporting Standards
the associate is recognised in the income
joint ventures. Unrealised losses are also
eliminated unless the transaction provides
evidence of an impairment of the asset
transferred. Accounting policies of the
joint ventures have been changed where
necessary to ensure consistency with the
policies adopted by the Group.
(IFRS) as issued by the International
statement, and the share of post-acquisition
(v) Non-controlling interests
Accounting Standards Board (IASB).
movements in reserves is recognised in other
Non-controlling interests in the results and
comprehensive income. Profits or losses on
equity of subsidiaries are shown separately
(b) Principles of consolidation
transactions establishing the associate and
in the consolidated income statement and
(i) Subsidiaries
The consolidated financial statements
incorporate the assets and liabilities of all
subsidiaries controlled by Adelaide Brighton
Ltd as at 31 December 2014 and the results
of all subsidiaries for the year then ended. The
transactions with the associate are eliminated
balance sheet respectively. The Group treats
to the extent of the Group’s ownership
transactions with non-controlling interests
interest until such time as they are realised by
that do not result in a loss of control as
the associate on consumption or sale, unless
they relate to an unrealised loss that provides
transactions with equity owners of the
Group. For purchases from or sales to non-
evidence of the impairment of an asset
controlling interests, the difference between
transferred.
any consideration paid and the relevant share
acquired of the carrying value of net assets of
the subsidiary is deducted from equity.
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R EN DED 31 D EC E M BER 2 0 1 4
NOTES T O AND FORM I NG PA R T O F T H E FI N ANCI AL STATEM EN TS
67
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1 Summary of significant accounting
On consolidation, exchange differences
(f) Income tax
policies (continued)
(c) Segment reporting
Operating segments are reported in a
manner consistent with the internal reporting
provided to the chief operating decision
arising from the translation of any net
investment in foreign entities, and of
borrowings and other financial instruments
designated as hedges of such investments,
are recognised in other comprehensive
income.
The income tax expense or revenue
for the period is the tax payable on the
current period’s taxable income based on
the applicable income tax rate for each
jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to
maker. The chief operating decision maker,
When a foreign operation is sold or any
temporary differences between the tax bases
who is responsible for allocating resources
borrowings forming part of the net investment
of assets and liabilities and their carrying
and assessing performance of the operating
are repaid, a proportionate share of such
amounts in the financial statements, and to
segments, has been identified as the Chief
exchange differences is reclassified to profit
unused tax losses.
Executive Officer.
or loss, as part of the gain or loss on sale
(d) Foreign currency translation
(i) Functional and presentation currency
where applicable.
(e) Revenue recognition
Deferred tax assets and liabilities are
recognised for temporary differences at the
tax rates expected to apply when the assets
are recovered or liabilities are settled, based
Items included in the financial statements of
Revenue is measured at the fair value of
on those tax rates which are enacted or
each of the Group’s entities are measured
consideration received or receivable. Amounts
substantively enacted for each jurisdiction.
using the currency of the primary economic
disclosed as revenue are net of returns,
The relevant tax rates are applied to the
environment in which the entity operates
trade allowances and duties and taxes paid.
cumulative amounts of deductible and
(‘the functional currency’). The consolidated
Revenue is recognised for the major business
taxable temporary differences to measure the
financial statements are presented in
activities as follows:
Australian dollars, which is Adelaide Brighton
Ltd’s functional and presentation currency.
(ii) Transactions and balances
(i) Sales revenue
Revenue from the sale of goods is measured
at the fair value of the consideration received
Foreign currency transactions are translated
or receivable, net of returns, trade discounts
into the functional currency using the
and volume rebates. Revenue is recognised
exchange rates prevailing at the dates of the
when the significant risks and rewards of
transactions. Foreign exchange gains and
ownership have been transferred to the buyer,
losses resulting from the settlement of such
recovery of the consideration is considered
deferred tax asset or liability. An exception
is made for certain temporary differences
arising from the initial recognition of an asset
or a liability. No deferred tax asset or liability
is recognised in relation to these temporary
differences if they arose in a transaction, other
than a business combination, that at the
time of the transaction did not affect either
accounting or taxable profit or loss.
transactions and from the translation at year
probable, the associated costs and
Deferred tax assets are recognised for
end exchange rates of monetary assets and
possible return of goods can be estimated
deductible temporary differences and
liabilities denominated in foreign currencies
reliably, there is no continuing management
unused tax losses only if it is probable that
are recognised in the income statement.
involvement with the goods and the amount
future taxable amounts will be available
(iii) Foreign operations
The results and financial position of all the
foreign operations that have a functional
of revenue can be measured reliably. Sales
to utilise those temporary differences and
of services are recognised in the accounting
losses. Deferred tax liabilities and assets are
period in which the services are rendered.
not recognised for temporary differences
currency different from the presentation
(ii) Deferred income
currency are translated into the presentation
Income received in advance in relation to
currency as follows:
> Assets and liabilities for each balance sheet
presented are translated at the closing rate at
contracts is deferred in the balance sheet and
recognised as income on a straight-line basis
over the period of the contract.
the date of that balance sheet;
(iii) Interest income
> Income and expenses for each income
statement and statement of comprehensive
Interest income is recognised using the
effective interest rate method.
income are translated at average exchange
(iv) Dividends
between the carrying amount and tax bases
of investments in controlled entities where
the parent entity is able to control the timing
of the reversal of the temporary differences
and it is probable that the differences will not
reverse in the foreseeable future.
Deferred tax assets and liabilities are offset
when there is a legally enforceable right to
offset current tax assets and liabilities and
when the deferred tax balances relate to the
rates (unless this is not a reasonable
Dividends are recognised as revenue when
same taxation authority. Current tax assets
approximation of the cumulative effect of
the right to receive payment is established.
and tax liabilities are offset where the entity
the rates prevailing on the transaction dates,
in which case income and expenses are
translated at the dates of the transactions);
and
> All resulting exchange differences are
recognised in other comprehensive income.
has a legally enforceable right to offset and
intends either to settle on a net basis, or
to realise the asset and settle the liability
simultaneously.
68
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1 Summary of significant accounting
Deferred tax balances relating to assets that
(h) Business combinations
policies (continued)
(f) Income tax (continued)
Current and deferred tax is recognised in
profit and loss, except to the extent it relates
to items recognised in other comprehensive
income or directly in equity. In this case, the
tax is also recognised in other comprehensive
income or directly in equity, respectively.
Tax consolidation
Adelaide Brighton Ltd and its wholly owned
Australian subsidiaries implemented the tax
consolidation legislation as of 1 January 2004.
Adelaide Brighton Ltd, as the head entity
in the tax consolidated Group, recognises
current tax liabilities and tax losses (subject
to meeting the “probable test”) relating to all
transactions, events and balances of the tax
consolidated Group as if those transactions,
events and balances were its own.
had their tax values reset on joining the tax
consolidated Group have been remeasured
based on the carrying amount of those assets
in the tax consolidated Group and their reset
tax values. The adjustment to these deferred
tax balances is recognised in the consolidated
financial statements against income tax
expense.
(g) Leases
The acquisition method of accounting is used
to account for all business combinations,
including business combinations involving
equities or businesses under common
control, regardless of whether equity
instruments or other assets are acquired. The
consideration transferred for the acquisition
of a subsidiary comprises the fair values of
the assets transferred, the liabilities incurred
and the equity interests issued by the Group.
Leases of property, plant and equipment
The consideration transferred also includes
where the Group, as lessee, has substantially
the fair value of any contingent consideration
all the risks and rewards of ownership are
arrangement and the fair value of any pre-
classified as finance leases. Finance leases
existing equity interest in the subsidiary.
are capitalised at the lease’s inception at the
Acquisition-related costs are expensed as
lower of the fair value of the leased property
incurred. Identifiable assets acquired and
and the present value of the minimum
liabilities and contingent liabilities assumed
lease payments. The corresponding rental
in a business combination are, with limited
obligations, net of finance charges, are
exceptions, measured initially at their
included in borrowings. Each lease payment
fair values at the acquisition date. On an
is allocated between the liability and finance
acquisition-by-acquisition basis, the Group
The entities in the tax consolidated Group are
charges so as to achieve a constant rate
recognises any non-controlling interest in the
part of a tax sharing agreement which, in the
on the finance balance outstanding. The
acquiree either at fair value or at the non-
opinion of the Directors, limits the joint and
property, plant and equipment acquired under
controlling interest’s proportionate share of
several liability of the wholly-owned entities
finance leases is depreciated over the asset’s
the acquiree’s net identifiable assets.
in the case of default by the head entity,
useful life or over the shorter of the asset’s
Adelaide Brighton Ltd.
Amounts receivable or payable under an
accounting tax sharing agreement with the
useful life and the lease term if there is no
reasonable certainty that the Group will obtain
ownership at the end of the lease term.
The excess of the consideration transferred,
the amount of any non-controlling interest
in the acquiree and the acquisition-date fair
value of any previous equity interest in the
tax consolidated entities are recognised
The interest element of the finance cost is
acquiree over the fair value of the Group’s
separately as tax-related amounts receivable
charged to the income statement over the
share of the net identifiable assets acquired
or payable. Expenses and revenues arising
lease period so as to produce a constant
is recorded as goodwill. If those amounts are
under the tax sharing agreement are
periodic rate of interest on the remaining
less than the fair value of the net identifiable
recognised as a component of income tax
balance of the liability for each period.
assets of the subsidiary acquired and the
expense.
Leases in which a significant portion of the
The wholly-owned entities fully compensate
risks and rewards of ownership are retained
Adelaide Brighton Ltd for any current tax
by the lessor are classified as operating
measurement of all amounts has been
reviewed, the difference is recognised directly
in profit or loss as a bargain purchase.
payable assumed and are compensated by
leases. Payments made under operating
Where settlement of any part of cash
Adelaide Brighton Ltd for any current tax
leases (net of any incentives received from the
consideration is deferred, the amounts
receivable and deferred tax assets relating to
lessor) are charged to the income statement
payable in the future are discounted to their
unused tax losses or unused tax credits that
on a straight line basis over the period of the
present value as at the date of exchange. The
are transferred to Adelaide Brighton Ltd under
lease.
the tax consolidation legislation. The funding
amounts are determined by reference to the
amounts recognised in the wholly-owned
entities’ financial statements.
Individual tax consolidated entities recognise
tax expenses and revenues and current and
deferred tax balances in relation to their own
taxable income, temporary differences and
tax losses using the separate taxpayer within
the group method. Entities calculate their
current and deferred tax balances on the
basis that they are subject to tax as part of
the tax consolidated Group.
discount rate used is the entity’s incremental
borrowing rate, being the rate at which a
similar borrowing could be obtained from
an independent financier under comparable
terms and conditions.
Contingent consideration is classified either as
equity or a financial liability. Amounts classified
as a financial liability are subsequently
remeasured to fair value with changes in fair
value recognised in the income statement.
69
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1 Summary of significant accounting
The collectability of trade receivables is
(i) Loans and receivables
policies (continued)
reviewed regularly. Debts which are known
Loans and receivables are non-derivative
(i) Impairment of assets
the carrying amount directly. A provision
payments that are not quoted in an active
to be uncollectible are written off by reducing
financial assets with fixed or determinable
for doubtful receivables is established
market. They are included in current assets,
when there is objective evidence that the
except for those with maturities greater than
Group will not be able to collect all amounts
12 months after the balance sheet date.
Goodwill and intangible assets that have
an indefinite useful life are not subject to
amortisation and are tested annually for
impairment or more frequently if events or
changes in circumstances indicate that they
might be impaired. Other assets are tested
for impairment whenever events or changes
in circumstances indicate that the carrying
amount may not be recoverable.
due according to the original terms of
receivables. Significant financial difficulties
of the debtor, probability that the debtor will
enter bankruptcy or financial reorganisation,
and default or delinquency in payments are
considered indicators that the trade receivable
is impaired. The amount of the provision is
An impairment loss is recognised for the
the difference between the asset’s carrying
amount by which the asset’s carrying
amount and the estimated cash flows. Cash
amount exceeds its recoverable amount. The
flows relating to short term receivables are
recoverable amount is the higher of an asset’s
not discounted if the effect of discounting is
fair value less costs to sell and value in use.
immaterial.
For the purposes of assessing impairment,
assets are grouped at the lowest levels for
which there are separately identifiable cash
flows which are largely independent of the
cash flows from other assets or groups of
assets (cash generating units). Non-financial
assets other than goodwill that suffered an
impairment are reviewed for possible reversal
of the impairment at each reporting date.
The amount of the provision is recognised
in the income statement. When a trade
(n) Derivatives
receivable for which a provision for doubtful
receivables has been recognised becomes
uncollectible in a subsequent period, it is
written off against the provision account.
Subsequent recoveries of amounts previously
written off are credited against expenses in
the income statement.
(ii) Financial assets at fair value through
profit or loss
Financial assets at fair value through profit or
loss are financial assets held for trading. A
financial asset is classified in this category if
acquired principally for the purpose of selling
in the short term. Derivatives are classified as
held for trading unless they are designated as
hedges. Assets in this category are classified
as current assets where they are expected to
be realised within 12 months of balance sheet
date.
Derivatives are initially recognised at fair value
on the date a derivative contract is entered
into and are subsequently remeasured to their
fair value at each reporting date. Derivative
instruments entered into by the Group do
not qualify for hedge accounting. Changes
in the fair value of any derivative instrument
that does not qualify for hedge accounting
are recognised immediately in the income
(j) Cash and cash equivalents
(l) Inventories
For the purpose of presentation in the
statement of cash flows, cash and cash
equivalents includes cash on hand, term
deposits and deposits held at call with
financial institutions, other short term, highly
liquid investments with original maturities
of three months or less that are readily
convertible to known amounts of cash and
which are subject to an insignificant risk of
changes in value and bank overdrafts. Bank
overdrafts are shown within borrowings in
Raw materials and stores, work in progress
statement and are included in finance costs.
and finished goods are stated at the lower
of cost and net realisable value. Cost
(o) Non-current assets (or disposal groups)
comprises direct materials, direct labour and
held for sale
an appropriate proportion of variable and
fixed overhead expenditure, the latter being
allocated on the basis of normal operating
capacity. Costs are assigned to individual
items of inventory on the basis of weighted
average costs.
Non current assets (or disposal groups) are
classified as held for sale and stated at the
lower of their carrying amount and fair value
less costs to sell if their carrying amount
will be recovered principally through a sale
transaction rather than through continuing use
current liabilities on the balance sheet.
Net realisable value is the estimated selling
and a sale is considered highly probable.
(k) Trade receivables
Trade receivables are recognised initially at
fair value and subsequently measured at
amortised cost, less provision for doubtful
price in the ordinary course of business less
the estimated costs of completion and the
estimated costs necessary to make the sale.
(m) Financial assets
An impairment loss is recognised for any
initial or subsequent write down of the asset
(or disposal group) to fair value less costs to
sell. A gain is recognised for any subsequent
increases in fair value less costs to sell an
receivables. Trade receivables are typically
The Group classifies its financial assets in the
asset (or disposal group), but not in excess
due for settlement no more than 30 to 45
following categories: loans and receivables,
of any cumulative impairment loss previously
days from the end of the month of invoice.
and financial assets at fair value through
recognised. A gain or loss not previously
profit or loss. The classification depends on
recognised by the date of the sale of the non-
the purpose for which the financial assets
current asset (or disposal group) is recognised
were acquired. Management determines the
at the date of de-recognition.
classification of its financial assets at initial
recognition.
70
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1 Summary of significant accounting
(iii) Leasehold property
(iii) IT development and software
policies (continued)
The cost of improvements to or on leasehold
Costs incurred in developing products or
properties is amortised over the unexpired
systems and costs incurred in acquiring
(o) Non-current assets (or disposal groups)
period of the lease or the estimated useful life,
software and licences that will contribute
held for sale (continued)
whichever is the shorter. Amortisation is over
to future period financial benefits through
Non-current assets (including those that are
5 - 30 years.
part of a disposal group) are not depreciated
(iv) Other fixed assets
or amortised while they are classified as
Freehold land is not depreciated. Depreciation
held for sale. Interest and other expenses
on other assets is calculated using the
attributable to the liabilities of a disposal
straight line method to allocate their cost or
group classified as held for sale continue to
deemed cost amounts, over their estimated
be recognised.
useful lives, as follows:
> Buildings
20 - 40 years
revenue generation and/or cost reduction are
capitalised to software and systems. Costs
capitalised include external direct costs of
materials and service and direct payroll and
payroll related costs of employees’ time spent
on the project. Amortisation is calculated on
a straight-line basis over periods generally
ranging from 5 to 10 years.
Non-current assets classified as held for sale
and the assets of a disposal group classified
> Plant and equipment
3 - 40 years
IT development costs include only those costs
as held for sale are presented separately from
The assets’ residual values and useful lives
the other assets in the balance sheet. The
are reviewed, and adjusted if appropriate,
liabilities of a disposal group classified as held
at each balance sheet date. An asset’s
for sale are presented separately from other
carrying amount is written down immediately
liabilities in the balance sheet.
to its recoverable amount if the asset’s
carrying amount is greater than its estimated
directly attributable to the development phase
and are only recognised following completion
of technical feasibility and where the Group
has an intention and ability to use the asset.
(r) Borrowings
(p) Property, plant and equipment
recoverable amount (Note 1(i)). Gains and
Borrowings are initially recognised at fair
Property, plant and equipment are shown at
historical cost less accumulated depreciation
and accumulated impairment losses.
Cost includes expenditure that is directly
attributable to the acquisition of the assets.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated
with the item will flow to the Group and the
cost of the item can be measured reliably.
losses on disposals are determined by
value, net of transaction costs incurred.
comparing proceeds with carrying amount.
Borrowings are subsequently measured
These are included in the income statement.
at amortised cost. Any difference between
(q) Intangible assets
(i) Goodwill
Goodwill is measured as described in Note
1(h). Goodwill on acquisitions of subsidiaries
is included in intangible assets. Goodwill on
acquisition of joint ventures is included in
investments in joint ventures.
the proceeds (net of transaction costs) and
the redemption amount is recognised in
the income statement over the period of
the borrowings using the effective interest
method. Borrowings are classified as
current liabilities unless the Group has an
unconditional right to defer settlement of
the liability for at least 12 months after the
reporting date.
The carrying amount of any component
Goodwill is not amortised. Instead,
accounted for as a separate asset is
goodwill is tested for impairment annually
(s) Borrowing costs
derecognised when replaced. All other
or more frequently if events or changes
repairs and maintenance are charged to
in circumstances indicate that it might
profit or loss during the reporting period in
be impaired, and is carried at cost less
which they are incurred.
(i) Mineral reserves
Mineral reserves are amortised based on
annual extraction rates over the estimated
life of the reserves. The remaining useful
life of each asset is reassessed at regular
intervals. Where there is a change during the
period to the useful life of the mineral reserve,
amortisation rates are adjusted prospectively
from the beginning of the reporting period.
(ii) Complex assets
The costs of replacing major components
of complex assets are depreciated over the
estimated useful life, generally being the
period until next scheduled replacement.
accumulated impairment losses. Gains and
losses on the disposal of an entity include
the carrying amount of goodwill relating to
the entity sold. Goodwill is allocated to cash
generating units which are expected to benefit
Borrowing costs incurred for the construction
of any qualifying asset are capitalised during
the period of time that is required to complete
and prepare the asset for its intended use or
sale. Other borrowing costs are expensed.
(t) Trade and other payables
from the business combination in which the
These amounts represent liabilities for goods
goodwill arose, for the purpose of impairment
and services provided to the Group prior to
testing. Each of those cash generating units
the end of financial year which are unpaid.
are consistent with the Group’s reporting
The amounts are unsecured and are usually
paid within 30 - 60 days of recognition.
segments.
(ii) Lease rights
Lease rights acquired have a finite useful life.
Amortisation is calculated using the straight-
line method to allocate the cost over their
estimated useful lives, which varies from
2 to 20 years.
71
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1 Summary of significant accounting
(iv) Provisions for close down and restoration
Expected future payments are discounted
policies (continued)
costs
using market yields at the end of the reporting
(u) Provisions
dismantling and demolition of infrastructure
terms to maturity and currency that match,
Close down and restoration costs include the
period on national government bonds with
and the removal of residual materials and
as closely as possible, the estimated future
remediation of disturbed areas. Provisions
cash outflows.
Provisions are recognised if, as a result of a
past event, the Group has a present legal or
constructive obligation that can be estimated
reliably, and it is probable that an outflow of
economic benefits will be required to settle
the obligation.
for close down and restoration costs do not
include any additional obligations which are
expected to arise from future disturbance.
The costs are estimated on the basis of a
closure plan. The cost estimates are
Where there are a number of similar
reviewed annually during the life of the
obligations, the likelihood that an outflow
operation, based on the net present value of
will be required in settlement is determined
estimated future costs.
(iii) Retirement benefit obligations
Except those employees that opt out of the
Group’s superannuation plan, all employees
of the Group are entitled to benefits from the
Group’s superannuation plan on retirement,
disability or death. The Group has a defined
benefit section and defined contribution
section within its plan. The defined benefit
by considering the class of obligations as
a whole. A provision is recognised even if
the likelihood of an outflow with respect to
any one item included in the same class of
obligations may be small.
Estimate changes resulting from new
section provides defined lump sum benefits
disturbance, updated cost estimates,
on retirement, death, disablement and
changes to the lives of operations and
withdrawal, based on years of service and
revisions to discount rates are capitalised
final average salary. The defined benefit plan
within property, plant and equipment. These
section is closed to new members. The
Provisions are measured at the present
costs are then depreciated over the lives of
defined contribution section receives fixed
value of management’s best estimate of the
the assets to which they relate.
contributions from Group companies and
expenditure required to settle the present
obligation at the reporting date. Provisions
are determined by discounting the expected
future cash flows at a pre-tax rate that reflects
current market assessments of the time value
of money and the risks specific to the liability.
The increase in the provision due to the
passage of time is recognised as
interest expense.
(i) Dividends
Provision is made for the amount of any
dividend declared, being appropriately
authorised and no longer at the discretion of
the entity, on or before the end of the period
but not distributed at balance date.
The amortisation or ‘unwinding’ of the
discount applied in establishing the net
the Group’s legal or constructive obligation is
limited to these contributions.
present value of provisions is charged to the
A liability or asset in respect of defined
income statement in each accounting period.
benefit superannuation plans is recognised
The amortisation of the discount is shown in
in the balance sheet, and is measured as the
finance costs.
(v) Employee benefits
present value of the defined benefit obligation
at the reporting date less the fair value of the
superannuation fund’s assets at that date.
(i) Short-term obligations
The present value of the defined benefit
Liabilities for wages and salaries, including
obligation is based on expected future
non-monetary benefits, annual leave and
payments, which arise from membership of
accumulating sick leave expected to be
the fund to the reporting date, calculated
settled within 12 months after the end of
annually by independent actuaries using the
the period in which the employees render
projected unit credit method. Consideration
the related service are recognised in respect
is given to expected future wage and salary
(ii) Workers’ compensation
of employees’ services up to the end of
levels, experience of employee departures
Certain entities within the Group are self
the reporting period and are measured at
and periods of service.
insured for workers’ compensation purposes.
the amounts expected to be paid when
For self-insured entities, provision is made
the liabilities are settled. The liability for
that covers accidents that have occurred
annual leave and accumulating sick leave
and have been reported together with an
is recognised in the provision for employee
allowance for incurred but not reported
benefits. All other short-term employee benefit
claims. The provision is based on an
obligations are presented as payables.
actuarial assessment.
(iii) Restructuring costs
(ii) Other long term employee benefit obligations
The liability for long service leave and annual
Liabilities arising directly from undertaking a
leave which is not expected to be settled
restructuring program, not in connection with
within 12 months after the end of the period
the acquisition of an entity, are recognised
in which the employees render the related
when a detailed plan has been developed,
service is recognised in the provision for
implementation has commenced, by entering
employee benefits and measured as the
into a binding sales agreement or making
present value of expected future payments
detailed public announcements such that
to be made in respect of services provided
Expected future payments are discounted
using market yields at the reporting date on
national government bonds with terms to
maturity and currency that match, as closely
as possible, the estimated
future cash outflows.
Actuarial gains and losses arising from
experience adjustments and changes in
actuarial assumptions are recognised in
the period in which they occur, outside
profit or loss directly in the statement of
comprehensive income. They are included
in retained earnings in the statement of
changes in equity and in the balance sheet.
the affected parties are in no doubt that
by employees up to the end of the reporting
Past service costs are recognised immediately
the restructuring program will proceed. The
cost of a restructuring program provided
period using the projected unit credit
method. Consideration is given to expected
in profit or loss.
for is the estimated future cash flows from
future wage and salary levels, experience of
implementation of the plan.
employee departures and periods of service.
72
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1 Summary of significant accounting
(vi) Termination benefits
(z) Goods and Services Tax (GST)
policies (continued)
Termination benefits are payable when
employment is terminated before the normal
(v) Employee benefits (continued)
retirement date, or when an employee
Contributions to the defined contribution
fund are recognised as an expense as they
become payable. Prepaid contributions are
recognised as an asset to the extent that
a cash refund or a reduction in the future
payments is available.
accepts voluntary redundancy in exchange
for these benefits. The Group recognises
termination benefits at the earlier of the
following dates: (a) when the Group can no
longer withdraw the offer of those benefits;
Revenues, expenses and assets are
recognised net of the amount of associated
GST, unless the GST incurred is not
recoverable from the taxation authority. In
this case it is recognised as part of the cost
of acquisition of the asset or as part of the
expense.
and (b) when the entity recognises costs for
Receivables and payables are stated inclusive
a restructuring that is within the scope of
of the amount of GST receivable or payable.
(iv) Share-based payments
AASB 137 Provisions, Contingent Liabilities
The net amount of GST recoverable from, or
Share-based compensation benefits are
and Contingent Assets and involves the
payable to, the taxation authority is included
provided to executives via the Adelaide
payment of terminations benefits. In the case
with other receivables or payables in the
Brighton Ltd Executive Performance Share
of an offer made to encourage voluntary
balance sheet.
Plan (“the Plan”).
The fair value of Awards granted under the
Plan is recognised as an employee benefit
expense with a corresponding increase in
equity. The fair value is measured at grant
redundancy, the termination benefits are
measured based on the number of employees
expected to accept the offer. Benefits falling
due more than 12 months after balance sheet
date are discounted to present value.
date and recognised over the period during
which the employees become unconditionally
(w) Contributed equity
Cash flows are presented on a gross basis.
The GST components of cash flows arising
from investing or financing activities which are
recoverable from, or payable to the taxation
authority, are presented as operating
cash flows.
entitled to the Awards.
Ordinary shares are classified as equity.
(aa) Financial guarantee contracts
The fair value at grant date is independently
determined using a pricing model that takes
into account the exercise price, the term
of the Award, the vesting and performance
criteria, the impact of dilution, the non-
tradeable nature of the Award, the share price
at grant date, the expected dividend yield and
the risk-free interest rate for the term of the
Award.
Incremental costs directly attributable to the
issue of new shares or options are shown
in equity as a deduction, net of tax, from
the proceeds. Incremental costs directly
attributable to the issue of new shares or
options, for the purpose of acquisition of
a business, are not included in the cost
of the acquisition as part of the purchase
consideration.
Financial guarantee contracts are recognised
as a financial liability at the time the guarantee
is issued. The liability is initially measured
at fair value and subsequently at the higher
of the amount determined in accordance
with AASB 137 Provisions, Contingent
Liabilities and Contingent Assets and the
amount initially recognised less cumulative
amortisation, where appropriate.
The fair value of the Awards granted excludes
(x) Earnings per share
the impact of any non-market vesting
conditions (e.g. earnings per share). Non-
market vesting conditions are included in
assumptions about the number of Awards
that are expected to become exercisable. At
each balance sheet date, the entity revises
its estimate of the number of Awards that
are expected to become exercisable. The
(i) Basic earnings per share
Basic earnings per share is calculated by
dividing the profit attributable to equity holders
of the Company, excluding any costs of
servicing equity other than ordinary shares,
by the weighted average number of ordinary
shares outstanding during the year.
employee benefit expense recognised each
(ii) Diluted earnings per share
(ab) Carbon Accounting
An entity within the Group was a Liable Entity
under the Clean Energy Legislation (the
Scheme) and also qualified for assistance
under the Jobs and Competitiveness Program
(JCP). The Scheme was repealed effective
1 July 2014 however obligations incurred up
to 30 June 2014 were required to be settled.
The Group was required to surrender eligible
period takes into account the most recent
Diluted earnings per share adjusts the
emission units to the Clean Energy Regulator
estimate. The impact of the revision to original
figures used in the determination of basic
(the Regulator) for covered emissions, while
estimates, if any, is recognised in the income
earnings per share to take into account the
units were available based upon production
statement with a corresponding entry to
after income tax effect of interest and other
volumes of eligible products.
equity.
The Plan is administered by the Adelaide
Brighton employee share plan trust; see
Note 1(b)(ii).
(v) Short-term incentives
financing costs associated with dilutive
potential ordinary shares and the weighted
average number of shares assuming
conversion of all dilutive potential
ordinary shares.
The Group recognises a liability and an
(y) Rounding of amounts
(i) Provision for Carbon Emissions
Where a facility is anticipated to produce
covered emissions in excess of the threshold
in an assessment year, a provision is
recognised for the cost of eligible emission
units as covered emissions are emitted.
A provision for unit shortfall charges is
expense for short-term incentives available to
certain employees on a formula that takes into
consideration agreed performance targets.
The Group recognises a provision where
contractually obliged or where there is a
past practice that has created a constructive
obligation.
The Company is of a kind referred to in
recognised at the time a shortfall in units
Class Order 98/100, issued by the Australian
Securities and Investments Commission,
surrendered to the Regulator occurs or
at the time a shortfall has been identified.
relating to the ‘‘rounding off’’ of amounts in
The provision is recognised in the income
the financial report. Amounts in the financial
statement as incurred unless qualifying
report have been rounded off in accordance
for an alternative treatment under another
with that Class Order to the nearest one
accounting standard or policy.
hundred thousand dollars, unless
otherwise stated.
73
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1 Summary of significant accounting
(ii) Tax consolidation legislation
(iii) Financial guarantees
policies (continued)
The Company and its wholly-owned
Where the Company has provided financial
(ab) Carbon Accounting (continued)
implemented the tax consolidation legislation.
of subsidiaries for no compensation, the fair
Australian controlled entities have
guarantees in relation to loans and payables
The measurement of the provision for carbon
The Company and the controlled entities in
emissions is in accordance with the Group’s
the tax consolidated Group account for their
accounting policy for provisions, see
own current and deferred tax amounts. These
values of these guarantees are accounted for
as contributions and recognised as part of the
cost of the investment.
Note 1(u).
(ii) Carbon Unit Asset
An asset is recognised at fair value for
tax amounts are measured as if each entity in
(iv) Share based payments
the tax consolidated Group continues to be a
The grant by the Company of options over its
stand alone taxpayer in its own right.
equity instruments to employees of subsidiary
JCP units as they are received or become
In addition to its own current and deferred
receivable. Units received in advance are
tax amounts, the Company also recognises
recognised as deferred income and released
the current tax liabilities (or assets) and the
to the income statement as eligible
deferred assets arising from unused tax
production activity is undertaken.
losses and unused tax credits assumed
undertakings in the Group is treated as a
receivable from that subsidiary undertaking.
(ad) New accounting standards and
interpretations
from controlled entities in the tax
Certain new accounting standards and
During the initial fixed price period of the
Clean Energy Legislation, units purchased
consolidated Group.
from the Regulator are automatically
The entities have also entered into a tax
surrendered to the Regulator as a remission
funding agreement under which the wholly-
of liability under the Scheme and are
owned entities fully compensate the Company
recognised as a reduction of the provision
for any current tax payable assumed and are
interpretations have been published that are
not mandatory for the 31 December 2014
reporting period. The Group’s assessment
of the impact of these new standards and
interpretations is set out below.
for carbon emissions.
compensated by Adelaide Brighton Limited
AASB 9 Financial Instruments
Carbon units are classified into current and
non-current based upon the anticipated
timing of disposal of the unit, either through
remission of liability under the Scheme or sale.
(ac) Parent entity financial information
for any current tax receivable and deferred
tax assets relating to unused tax losses or
unused tax credits that are transferred to
Adelaide Brighton Limited under the tax
consolidation legislation. The funding
amounts are determined by reference to
the amounts recognised in the wholly-
The financial information for the parent entity,
owned entities’ financial statements.
AASB 9 Financial Instruments addresses
the classification, measurement and
derecognition of financial assets and financial
liabilities and introduces new rules for hedge
accounting. In December 2014, the AASB
made further changes to the classification and
measurement rules and also introduced a new
impairment model. These latest amendments
Adelaide Brighton Limited (“the Company”),
disclosed in Note 37 has been prepared on
the same basis as the consolidated financial
statements, except as set out below.
The amounts receivable/payable under the
now complete the new financial instruments
tax funding agreement are due upon receipt
standard. When adopted, the standard will
of the funding advice from the head entity,
not have a material impact on the financial
which is issued as soon as practicable after
statements. The standard is mandatory for
(i) Investments in subsidiaries, associate and
the end of each financial year. The head entity
financial years commencing on or after
joint arrangements
may also require payment of interim funding
1 January 2018.
Investments in subsidiaries, associate and
amounts to assist with its obligations to pay
joint arrangements are accounted for at cost
tax instalments.
in the financial statements of the Company.
Such investments include both investments
in shares issued by the subsidiary and other
parent entity interests that in substance
form part of the parent entity’s investment
Assets or liabilities arising under tax funding
agreements with the tax consolidated entities
are recognised as current amounts receivable
from or payable to other entities in the Group.
AASB 15 Revenue From Contracts With
Customers
AASB 15 Revenue From Contracts With
Customers will replace AASB 118 which
covers contracts for goods and services
and AASB 111 which covers construction
in the subsidiary. These include investments
Any difference between the amounts
contracts. The new standard replaces the
in the form of interest-free loans which
assumed and amounts receivable or payable
existing notion of risk and rewards with the
have no fixed repayment terms and which
under the tax funding agreement are
notion of control to recognise when a good
have been provided to subsidiaries as an
recognised as a contribution to (or distribution
or service transfers to a customer. When
additional source of long term capital. Trade
from) wholly-owned tax consolidated entities.
adopted, the standard will not have a material
amounts receivable from subsidiaries in
the normal course of business and other
amounts advanced on commercial terms
and conditions are included in receivables.
Any dividends received from associates are
recognised in the parent entity’s profit or loss,
rather than being deducted from the carrying
amount of these investments.
impact on the financial statements. The
standard is mandatory for financial years
commencing on or after 1 January 2017.
74
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1 Summary of significant accounting
The AASB has made limited scope
(a) Provisions for close down and restoration
policies (continued)
(ad) New accounting standards and
interpretations (continued)
AASB 11 Joint Arrangements and AASB
2014-3 Amendments to Australian
Accounting Standards - Accounting for
Acquisitions of Interests in Joint Operations
amendments to resolve a current
inconsistency between AASB 10
Consolidated Financial Statements and AASB
128 Investment in Associates and Joint
Ventures. The amendments confirm that the
accounting treatment depends on whether
the non-monetary assets sold or contributed
to an associate or joint venture constitute a
‘business’ (as defined in AASB 3 Business
The AASB has made limited scope
Combinations). Where the non-monetary
amendments to AASB 11 Joint Arrangements
assets constitute a business, the Group
to explicitly address the accounting for the
recognises the full gain or loss on the sale
acquisition of an interest in a joint operation.
or contribution. If the assets do not meet
The amendments require an investor to
the definition of a business, the gain or loss
costs
Restoration provisions are based on estimates
of the cost to rehabilitate currently disturbed
areas based on current costs and legislative
requirements. The Group progressively
rehabilitates as part of the mining process.
Cost estimates are continually evaluated
and are based on historical experience and
other factors, including expectations of future
events that are believed to be reasonable
under the circumstances. The detailed
accounting treatment is set out in
Note 1(u)(iv).
apply the principles of business combination
is recognised only to the extent of the other
Provisions for close down and restoration
accounting when it acquires an interest in a
investors’ interests in the associate or joint
costs at the end of the year was
joint operation that constitutes a business in
venture. As this amendment merely clarifies
$36.6m (2013: $27.6m).
AASB 3 (refer Note 1(h)). As this amendment
the existing requirements, they do not affect
merely clarifies the existing requirements, they
the Group’s accounting policies or any of the
(b) Impairment of assets
do not affect the Group’s accounting policies
disclosures. The Group intends to apply the
or any of the disclosures. The Group intends
amendment from 1 January 2016.
to apply the amendment from
1 January 2016.
AASB 116 Property, Plant and Equipment,
AASB 138 Intangible Assets and AASB 2014-
4 Amendments to Australian Accounting
Standards - Clarification of Acceptable
Methods of Depreciation and Amortisation
Annual Improvements to
IFRSs 2012-2014 cycle
In January 2015, the AASB approved
a number of amendments to Australian
Accounting Standards as a result of the
annual improvements project. Management
does not believe that the application of the
The AASB has made limited scope
standard will have a material impact on the
The Group tests annually whether goodwill,
other intangible assets with an indefinite life
and other non-current assets have suffered
any impairment, in accordance with the
accounting policies stated in Notes 1(i)
and 1(q). The recoverable amounts of cash
generating units have been determined
based on value-in-use calculations. These
calculations require the use of assumptions.
For detailed assumptions refer to Note 13(b).
amendments to AASB 116 Property, Plant
financial statements. The Group will apply
Estimates and judgements are continually
and Equipment to clarify that a revenue-based
the amendments from 1 January 2016.
evaluated and are based on historical
method should not be used to calculate the
experience and other factors, including
depreciation of items of property, plant and
2 Critical accounting estimates and
expectations of future events that may have
equipment, and to AASB 138 Intangible
assumptions
Assets to introduce a rebuttable presumption
that the amortisation of intangible assets
based on revenue is inappropriate. As this
amendment merely clarifies the existing
requirements, they do not affect the Group’s
accounting policies or any of the disclosures.
The Group intends to apply the amendment
from 1 January 2016.
AASB 10 Consolidated Financial Statements,
AASB 128 Investment in Associates and Joint
Ventures and AASB 2014-10 Amendments
to Australian Accounting Standards - Sale or
Contribution of Assets between an Investor
and its Associate or Joint Venture
The Group makes estimates and
assumptions concerning the future. The
resulting accounting estimates will, by
definition, seldom equal the related actual
a financial impact on the Group and that
are believed to be reasonable under the
circumstances.
(c) Defined benefit superannuation plan
results. The estimates and assumptions that
The present value of defined benefit
are significant to the carrying amounts of
superannuation plan obligations depends
assets and liabilities in the next financial year
on a number of factors that are determined
are discussed below.
on an actuarial basis using a number of
assumptions. These include selection of a
discount rate, future salary increases and
expected rates of return. The assumptions
used to determine the obligations and the
sensitivity of balances to changes in these
assumptions are detailed in Note 20.
75
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
3 Revenue and other income
Revenue from continuing operations
Sale of goods
Interest from joint ventures
Interest from other parties
Royalties
Other income
Net gain on disposal of property, plant and equipment
Fair value accounting gain on business acquisition
Claim settlement
Rental income
Other income
Revenue and other income (excluding share of net profits of joint ventures and
associate accounted for using the equity method)
4 Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Buildings
Plant and equipment
Mineral reserves
Total depreciation
Amortisation of intangibles
Impairment of plant and equipment1
Other charges
Employee benefits expense
Defined contribution superannuation expense
Operating lease rental charge
Bad and doubtful debts - trade debtors
Provision for inventory
Finance costs
Interest and finance charges paid / payable
Unwinding of the discount on restoration provisions and retirement benefit obligation
Exchange (gains) on foreign currency contracts
Total finance costs
Amount capitalised2
Finance costs expensed
Consolidated
2014
2013
1,335.6
0.8
1.0
0.4
1,225.5
0.8
1.0
0.7
1,337.8
1,228.0
1.2
17.8
4.7
2.0
0.4
26.1
0.4
-
-
2.9
1.4
4.7
1,363.9
1,232.7
4.3
62.7
4.5
71.5
1.5
2.0
154.8
10.1
2.1
2.3
0.5
16.2
1.2
-
17.4
(0.6 )
16.8
3.8
61.7
3.6
69.1
1.5
-
148.2
9.4
3.3
1.5
0.7
16.0
1.2
(0.1 )
17.1
(1.2 )
15.9
1 As a result of the rationalisation of clinker production at the Munster site, an impairment charge of $2.0 million (2013: nil) was recognised for the excess of the written down value compared to the recoverable amount of the assets impacted
by the rationalisation.
2 The rate used to determine the amount of borrowing costs to be capitalised is the average interest rate applicable to the Group’s outstanding borrowings during the year, in this case 3.9% p.a. (2013: 4.2% p.a.).
76
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
5 Income tax expense
(a) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
Tax at the Australian tax rate of 30% (2013: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non allowable expenses
Non assessable capital profits
Rebateable dividends
Fair value adjustment
Previously unrecognised tax losses used to reduce deferred tax liability
(Over) under provided in prior years
Aggregate income tax expense
Aggregate income tax expense comprises:
Current taxation expense
Net deferred tax (Note 12 & 19)
(Over) provided in prior year
(b) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not recognised
in net profit or loss but directly (credited) debited to equity
Current tax
Net deferred tax
Consolidated
2014
2013
232.5
69.8
208.6
62.6
1.6
(1.8 )
(4.1 )
(5.4 )
-
(0.2 )
0.3
(0.7 )
(4.4 )
-
(0.5 )
0.2
59.9
57.5
54.5
5.5
(0.1 )
59.9
(1.8 )
0.6
(1.2 )
61.0
(3.2 )
(0.3 )
57.5
(0.8 )
(0.8 )
(1.6 )
(c) Tax expense relating to items of other comprehensive income
Actuarial (losses) / gains on retirement benefit obligation (Note 12)
(0.4 )
2.3
(d) Tax losses
Unused tax losses for which no deferred tax asset has been recognised:
Capital losses
16.8
16.3
This benefit for tax losses will only be obtained if:
(i) the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be
realised,
(ii) the Group continues to comply with the conditions for deductibility imposed by tax legislation, and
(iii) no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the losses.
The accounting policy in relation to tax consolidation legislation is set out in Note 1(f).
77
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
6 Cash and cash equivalents
Current
Cash at bank and in hand
Term deposits
Cash and cash equivalents
(a) Offsetting
The Group has an offsetting agreement with its bank for cash facilities. The agreement allows
the Group to manage cash balances on a total basis, offsetting individual cash balances
against overdrafts. The gross value of the balance is as follows:
Cash balances
Cash overdrafts
Net cash balance
(b) Risk exposure
The Group’s exposure to interest rate risk is discussed in Note 24. The maximum exposure to credit risk
at the end of the reporting period is the carrying amount of each class of cash and cash equivalents
mentioned above.
7 Trade and other receivables
Current
Trade receivables
Provision for doubtful receivables
Amounts receivable from joint ventures
Prepayments
Other receivables
(a) Past due but not impaired
Consolidated
2014
2013
29.7
2.0
31.7
31.7
-
31.7
9.1
2.0
11.1
11.1
-
11.1
164.9
(1.7 )
163.2
27.6
4.7
3.8
150.7
(1.6 )
149.1
24.1
5.5
3.7
199.3
182.4
Included in the Group’s trade receivables balance are debtors with a carrying value of $9.2 million (2013: $8.4 million) which are past due but not
impaired. The Group has not provided for these amounts as there has not been a significant change in credit quality or the amounts relate to debtors
for which there is no recent history of default. The Group believes these amounts are still recoverable. The ageing analysis is as follows: 60 days $8.1
million, over 90 days $1.1 million (2013: 60 days $6.8 million, over 90 days $1.6 million).
(b) Impaired trade receivables
As at 31 December 2014 current trade receivables of the Group with a nominal value of $2.2 million (2013: $2.7 million) were impaired. The amount of
the provision was $1.7 million (2013: $1.6 million). The individually impaired receivables mainly relate to customers which are in unexpectedly difficult
economic situations. It was assessed that a portion of the receivables is expected to be recovered.
78
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Consolidated
2014
2013
-
0.3
1.9
2.2
1.6
(2.4 )
2.5
1.7
-
2.0
0.7
2.7
0.7
(0.6 )
1.5
1.6
29.7
3.0
32.7
27.8
3.6
31.4
71.8
55.6
27.3
58.4
43.0
34.9
154.7
136.3
-
1.5
1.5
0.6
7.3
7.9
($ Million)
7 Trade and other receivables (continued)
(b) Impaired trade receivables (continued)
The ageing of these receivables is as follows:
1 to 3 months
3 to 6 months
Over 6 months
Movement in provision for doubtful receivables
Opening balance at 1 January
Amounts written off during the year
Provision for doubtful receivables recognised during the year
Closing balance at 31 December
(c) Fair value and credit, interest and foreign exchange risk
Due to the short-term nature of these receivables, their carrying value is assumed to approximate
their fair value. All receivables are denominated in Australian dollars. Information concerning the
fair value and risk management of both current and non-current receivables is set out in Note 24.
Non-current
Loans to joint ventures
Other non-current receivables
Details of the fair values, effective interest rate and credit risk are set out in Note 24. The maximum
exposure to credit risk at the end of the reporting period is the carrying amount of each class of
receivables mentioned above.
(a) Impaired receivables and receivables past due
None of the non-current receivables are impaired or past due but not impaired.
8 Inventories
Current
Finished goods
Raw materials and work in progress
Engineering spare parts stores
Inventory expense
Inventories recognised as expense during the year ended 31 December 2014 and included in cost
of sales amounted to $770.2 million (2013: $686.5 million).
9 Assets classified as held for sale
Current
Plant and equipment
Land and buildings
79
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
10 Joint arrangements and associate
Non-current
(a) Summarised financial information for joint ventures and associate
The following tables provide summarised financial information for the joint ventures and associate which are individually immaterial and accounted for
using the equity method.
($ Million)
Investment in joint ventures and associate
Profit from continuing operations
Other comprehensive income
Total comprehensive income
(b) Interests in joint arrangements and associate
Total non-material
Consolidated
Joint ventures
Associate
2014
104.5
20.3
-
20.3
2013
104.8
22.6
-
22.6
2014
35.5
1.4
-
1.4
2013
2014
33.7
139.9
1.6
-
1.6
21.7
-
21.7
2013
138.5
24.2
-
24.2
Name
Principal place of business
Burrell Mining Services JV
New South Wales and Queensland
Batesford Quarry
Sunstate Cement Ltd
Victoria
Queensland
Independent Cement and Lime Pty Ltd New South Wales and Victoria
E.B. Mawson & Sons Pty Ltd and Lake
Boga Quarries Pty Ltd
New South Wales and Victoria
Aalborg Portland Malaysia Sdn. Bhd. Malaysia
Peninsula Concrete Pty Ltd
South Australia
Ownership interest
2014
%
50
50
50
50
50
30
50
2013
%
50
50
50
50
50
30
-
Activities
Concrete products for the coal mining industry
Limestone products
Cement milling and distribution
Cementitious product distribution
Premixed concrete and quarry products
White clinker and cement manufacture
Premixed concrete
All joint arrangements and associates are equity accounted in accordance with Note 1(b)(iv) except Burrell Mining and Batesford, which are considered
joint operations and are proportionately consolidated.
Each of the above joint arrangements has a balance sheet date of 30 June which is different to the Group’s balance sheet date of 31 December.
Financial reports as at 31 December for the joint arrangements are used in the preparation of the Group financial statements. Aalborg has a 31
December balance date.
(c) Contingent liabilities in respect of joint ventures
The Group has an unrecognised contingent liability to acquire the interest it does not own in certain of its joint ventures. Acquisition of the interest
is subject to the occurrence of certain future events which affect both the probability and value of the interest. The minimum value of the contingent
liability is $25 million (2013: $25 million).
80
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
11 Property, plant and equipment
Non-current
Consolidated as at 31 December 2014
($ Million)
At cost
Accumulated depreciation
Net book amount
Reconciliations
Carrying amount at
1 January 2014
Additions
Disposals
Business combinations
Held for sale
Reclassification
Impairment
Depreciation/amortisation
Other
Carrying amount at
31 December 2014
Freehold
Leasehold
Plant &
Mineral
retirement
In course of
land
Buildings
property
equipment
reserves
cost
construction
Total
Asset
156.4
-
156.4
130.5
6.9
(0.3 )
13.4
(1.5 )
7.4
-
-
-
142.1
(54.4 )
87.7
87.9
0.2
(0.3 )
2.8
-
1.4
-
(4.3 )
-
9.0
(2.6 )
6.4
6.8
0.1
-
-
-
-
-
(0.5 )
-
1,284.9
(757.4 )
201.4
(28.3 )
527.5
173.1
498.8
28.7
(3.9 )
46.7
-
21.4
(2.0 )
(62.2 )
-
131.4
0.5
-
45.1
-
-
-
(4.2 )
0.3
20.8
(4.4 )
16.4
4.7
-
-
4.7
-
-
-
(0.3 )
7.3
22.1
-
22.1
1,836.7
(847.1 )
989.6
29.6
24.5
-
-
-
(32.0 )
-
-
-
889.7
60.9
(4.5 )
112.7
(1.5 )
(1.8 )
(2.0 )
(71.5 )
7.6
156.4
87.7
6.4
527.5
173.1
16.4
22.1
989.6
Consolidated as at 31 December 2013
Freehold
Leasehold
Plant &
Mineral
retirement
In course of
land
Buildings
property
equipment
reserves
cost
construction
Total
Asset
130.5
-
130.5
130.3
5.5
(0.7 )
(6.4 )
1.8
-
-
138.8
(50.9 )
87.9
68.3
1.3
(0.1 )
(0.9 )
23.1
(3.8 )
-
9.0
(2.2 )
6.8
6.8
0.2
-
-
0.2
(0.4 )
-
1,225.4
(726.6 )
155.8
(24.4 )
498.8
131.4
471.3
134.8
39.0
(3.4 )
(0.6 )
53.8
(61.3 )
-
-
-
-
-
(3.4 )
-
8.8
(4.1 )
4.7
4.7
0.2
-
-
-
(0.2 )
-
29.6
-
29.6
86.3
22.9
-
-
(79.6 )
-
-
1,697.9
(808.2 )
889.7
902.5
69.1
(4.2 )
(7.9 )
(0.7 )
(69.1 )
-
130.5
87.9
6.8
498.8
131.4
4.7
29.6
889.7
($ Million)
At cost
Accumulated depreciation
Net book amount
Reconciliations
Carrying amount at
1 January 2013
Additions
Disposals
Held for sale
Reclassification
Depreciation/amortisation
Other
Carrying amount at
31 December 2013
($ Million)
Consolidated
2014
2013
3.5
(0.2 )
3.3
-
-
-
Leased assets
Plant and equipment includes the following amounts where the Group is a lessee under a finance lease:
Cost
Accumulated depreciation
Net book amount
81
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Consolidated
2014
2013
1.2
0.7
27.3
2.1
0.3
31.6
2.1
0.1
41.9
1.2
1.2
46.5
(31.6 )
(46.5 )
-
-
46.5
(19.5 )
0.4
(0.6 )
4.8
31.6
44.3
2.9
(2.3)
1.6
-
46.5
Consolidated
Goodwill
Software
Other intangibles
Total
246.2
-
246.2
170.6
-
-
75.6
-
246.2
170.6
-
170.6
170.6
-
-
170.6
16.4
(5.2 )
11.2
10.6
1.8
0.2
-
(1.4 )
11.2
14.5
(3.9 )
10.6
11.5
0.5
(1.4 )
10.6
7.1
(0.6 )
6.5
2.7
-
-
3.9
(0.1 )
6.5
3.2
(0.5 )
2.7
2.7
0.1
(0.1 )
2.7
269.7
(5.8 )
263.9
183.9
1.8
0.2
79.5
(1.5 )
263.9
188.3
(4.4 )
183.9
184.8
0.6
(1.5 )
183.9
($ Million)
12 Deferred tax assets
Non-current
The balance comprises temporary differences attributable to:
Share based payment reserve
Defined benefit obligations
Provisions
Other assets
Tax losses
Deferred tax assets - before offset
Offset deferred tax liability (Note 19)
Net deferred tax assets - after offset
Movements:
Opening balance at 1 January - before offset
Recognised in the income statement
Recognised in other comprehensive income
Recognised in equity
Acquired in business combinations
Closing balance at 31 December - before offset
($ Million)
13 Intangible assets
Non-current
31 December 2014
Cost
Accumulated amortisation
Carrying amount at 31 December 2014
Opening balance at 1 January 2014
Reclassification
Additions in current year
Business combinations
Amortisation charge
Closing balance at 31 December 2014
31 December 2013
Cost
Accumulated amortisation
Carrying amount at 31 December 2013
Opening balance at 1 January 2013
Additions in current year
Amortisation change
Closing balance at 31 December 2013
82
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
13 Intangible assets (continued)
(a) Impairment tests for goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to business
segments. A segment level summary of the goodwill allocation on a non-aggregation basis is
presented below.
Cement and Lime
Concrete and Aggregates
Cement, Lime, Concrete and Aggregates CGU
Concrete Products CGU
Consolidated
2014
2013
134.0
103.4
237.4
8.8
246.2
131.0
30.8
161.8
8.8
170.6
The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on 2014
actual results and 2015 financial budgets approved by management. The growth rate does not exceed the long term average growth rate for the
business in which the CGU operates.
(b) Key assumptions used for value-in-use calculations
Cement, Lime, Concrete and Aggregates
Concrete Products
Gross margin1
Growth rate2
Discount rate3
2014
%
36.0
26.6
2013
%
36.3
25.1
2014
2013
2014
%
1.9
2.0
%
1.7
2.0
%
7.8
8.5
2013
%
10.0
10.0
1 Budgeted gross margin (excluding fixed production costs)
2 Weighted average growth rate used to extrapolate cash flows beyond the specific market forecast period of up to 8 years
3 Pre-tax discount rate applied to cash flow projections
The assumptions have been used for the analysis of each CGU within the business segment. Management determined budgeted gross margin based
on past performance and its expectations for the future. The discount rates used are pre-tax and reflect specific risks relevant to the segments.
14 Carbon asset and liability
(a) Background
The Federal Government introduced a price on carbon emissions from 1 July 2012 through the introduction of the Clean Energy Legislation (the
Scheme). An entity within the Group was a Liable Entity under the Scheme and is required to surrender eligible emission units to the Clean Energy
Regulator (the Regulator) in order to satisfy its liability for carbon emissions. The Group is also eligible to receive assistance under the Jobs and
Competitiveness Program (JCP), where the Scheme provides units to industries that qualify as Emissions Intensive Trade Exposed.
During 2014, the Scheme was repealed effective 1 July 2014. Obligations and benefits accrued before that date are not impacted by the repeal.
The Scheme requires entities with operational control of a facility where certain emissions exceed 25,000 tonnes of carbon dioxide equivalence
(tCO2 -e) to remit to the Regulator an equivalent number of eligible emission units to pay for their emissions. During the initial years of the Scheme,
restrictions are placed on utilising eligible emission units that are not issued by the Regulator.
The Group has operational control of a large number of facilities across Australia, however as a result of the threshold, only a limited number of sites
related to the production of cement clinker and lime are directly liable under the Scheme. The production of cement clinker and lime require energy use
to heat raw materials to produce chemical reactions necessary for the manufacturing process. Both the energy use for heat and the chemical reaction
produce emissions that are covered by the Scheme.
The accounting policy for carbon is set out in Note 1(ab).
The Group is directly liable for certain emissions associated with sites that exceed the threshold. In addition to this, the Group incurs non-direct costs
associated with the Scheme as a result of suppliers passing on the cost through higher charges. These costs form part of operating costs such as
electricity charges.
83
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Consolidated
2014
2013
-
-
-
-
52.5
52.5
-
52.5
14.0
47.9
14.0
-
14.0
47.9
31.7
(65.6 )
14.0
39.7
8.2
47.9
33.6
61.6
(47.3 )
47.9
108.0
12.4
120.4
98.9
6.5
105.4
1.4
-
388.3
1.8
390.1
259.1
-
259.1
($ Million)
14 Carbon asset and liability (continued)
(b) Carbon balances recognised
(i) Carbon unit asset
Carbon units on hand
Classified as:
Current
Non-current
(ii) Provision for carbon emissions
Provision for carbon emissions
Classified as:
Current
Non-current
The movement in provision for carbon emissions is set out below:
Opening balance
Liability for covered emissions
Carbon units remitted to Regulator
Closing balance
15 Trade and other payables
Current
Trade payables and accruals
Trade payables - joint ventures
Information about the Group’s exposure to foreign exchange risk is provided in Note 24.
16 Borrowings
Current
Finance lease
Non-current
Bank loans - unsecured
Finance lease
Details of the Group’s exposure to interest rate changes and fair value of borrowings are set out in Note 24.
84
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
17 Provisions
Current
Employee benefits
Restoration provisions
Workers’ compensation
Other provisions
Non-current
Employee benefits
Restoration provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below.
Consolidated
2014
2013
19.6
3.4
1.4
0.3
24.7
8.2
33.2
41.4
18.9
5.3
1.3
1.2
26.7
6.2
22.3
28.5
($ Million)
Opening balance at 1 January 2014
Assumed in business combinations
Additional provision recognised - charged to income statement
Additional provision recognised - charged to asset retirement cost
Charged to income statement - unwind of discount
Credited to income statement - reversal of amounts unused
Payments
Closing balance at 31 December 2014
($ Million)
18 Other liabilities
Current
GST liability
Deferred income - JCP assistance
Other liabilities
19 Deferred tax liabilities
Non-current
The balance comprises temporary differences attributable to:
Property, plant and equipment
Inventories
Other
Deferred tax liabilities - before offset
Offset deferred tax assets (Note 12)
Net deferred tax liabilities - after offset
Net deferred tax liabilities to be settled after more than 12 months
Net deferred tax liabilities to be settled within 12 months
85
Workers’
Restoration
Other
compensation
provisions
provisions
1.3
-
0.1
-
-
-
-
1.4
27.6
4.7
-
7.3
1.2
-
(4.2 )
36.6
1.2
-
-
-
-
(0.1 )
(0.8 )
0.3
Consolidated
2014
2013
4.2
-
-
4.2
3.2
17.1
0.1
20.4
95.8
9.3
3.3
108.4
(31.6 )
76.8
76.4
0.4
76.8
84.2
8.3
18.3
110.8
(46.5 )
64.3
63.8
0.5
64.3
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
19 Deferred tax liabilities (continued)
Movements:
Opening balance at 1 January - before offset
Recognised in the income statement
Acquired in business combinations
(Over) provision in prior year
Closing balance at 31 December - before offset
Consolidated
2014
2013
110.8
(15.4 )
13.3
(0.3 )
108.4
111.0
(0.1 )
-
(0.1 )
110.8
20 Retirement benefit obligations
> Administration of the Plan and payment to the
There are a number of risks to which the Plan
Non-current
(a) Superannuation plan
beneficiaries from Plan assets when required
exposes the Company. The more significant
in accordance with the Plan rules;
risks relating to the defined benefits are:
> Management and investment of the Plan
> Investment risk - the risk that investment
Other than those employees that have
assets; and
opted out, employees are members of the
consolidated superannuation entity being the
Adelaide Brighton Group Superannuation Plan
> Compliance with superannuation law and
other applicable regulations.
(“the Plan”), a sub-plan of the Mercer Super
The prudential regulator, the Australian
Trust (“MST”). The MST is a superannuation
Prudential Regulation Authority (APRA),
master trust arrangement governed by an
licenses and supervises regulated
independent trustee, Mercer Investment
superannuation plans.
returns will be lower than assumed and the
Company will need to increase contributions
to offset this shortfall.
> Salary growth risk - the risk that wages and
salaries (on which future benefit amounts
will be based) will rise more rapidly than
assumed, increasing defined benefit amounts
and thereby requiring additional employer
Nominees Ltd. The Plan commenced in the
MST on 1 August 2001. The Superannuation
Industry (Supervision) legislation (SIS) governs
the superannuation industry and provides
a framework within which superannuation
plans operate. The SIS Regulations require an
actuarial valuation to be performed for each
defined benefit superannuation plan every
three years, or every year if the plan pays
defined benefit pensions.
Plan assets are held in trusts which are
subject to supervision by the prudential
regulator. Funding levels are reviewed
regularly. Where assets are less than vested
benefits, being those payable upon exit, a
management plan must be formed to restore
the coverage to at least 100%.
Membership is in either the Defined Benefit
contributions.
or Accumulation sections of the Plan.
The accumulation section receives fixed
contributions from Group companies and
the Group’s legal or constructive obligation is
> Legislative risk - the risk that legislative
changes could be made which increase the
cost of providing the defined benefits.
limited to these contributions. The following
> Timing of members leaving service - a
sets out details in respect of the defined
significant amount of benefits paid to
benefit section only.
Defined benefit members receive lump sum
benefits on retirement, death, disablement
and withdrawal, and are guaranteed benefits
to the equivalent of the notional balance
they would have received as accumulation
members leaving may have an impact on the
financial position of the Plan, depending on
the financial position of the Plan at the time
they leave. The impact may be positive or
negative, depending upon the circumstances
and timing of the withdrawal.
members through additional contributions
The defined benefit assets are invested in the
from the Group. The defined benefit section of
Mercer Growth investment option. The assets
the Plan is closed to new members. All new
are diversified within this investment option
members receive accumulation only benefits.
and therefore the Plan has no significant
The Plan’s Trustee is responsible for the
During the 12 months to 31 December
concentration of investment risk.
governance of the Plan. The Trustee has
2014, all new employees, who are members
a legal obligation to act solely in the best
of this fund, have become members of the
interests of Plan beneficiaries. The Trustee
accumulation category of the Plan.
has the following roles:
86
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
20 Retirement benefit obligations (continued)
(b) Balance sheet amounts
The amounts recognised in the balance sheet and the movements in the net defined benefit obligation over the year are as follows:
($ Million)
At 1 January 2014
Current service cost
Interest expense/(income)
Transfers in
Remeasurements
Return on plan assets, excluding amounts included in interest expense/(income)
Loss from change in financial assumptions
Experience losses
Contributions:
Employers
Plan participants
Payments from Plan:
Benefit payments
At 31 December 2014
At 1 January 2013
Current service cost
Interest expense/(income)
Transfers in
Remeasurements
Return on plan assets, excluding amounts included in interest expense/(income)
Gain from change in financial assumptions
Experience losses
Contributions:
Employers
Plan participants
Payments from Plan:
Benefit payments
At 31 December 2013
Present value
Fair value of
of obligation
plan assets
Total
55.4
(54.9 )
2.1
2.0
-
4.1
-
2.9
1.0
3.9
-
1.0
-
(2.0 )
-
(2.0 )
(2.7 )
-
-
(2.7 )
(1.6 )
(1.0 )
(5.5 )
58.9
5.5
(56.7 )
59.0
(51.0 )
2.2
1.7
0.2
4.1
-
(2.0 )
1.5
(0.5 )
-
1.0
(8.2 )
55.4
-
(1.5 )
(0.2 )
(1.7 )
(7.1 )
-
-
(7.1 )
(2.3 )
(1.0 )
8.2
(54.9 )
0.5
2.1
-
-
2.1
(2.7 )
2.9
1.0
1.2
(1.6 )
-
-
2.2
8.0
2.2
0.2
-
2.4
(7.1 )
(2.0 )
1.5
(7.6 )
(2.3 )
-
-
0.5
87
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
20 Retirement benefit obligations (continued)
(c) Categories of plan assets
The major categories of plan assets are as follows:
Australian equity
International equity
Fixed income
Property
Cash
Other
Total
31 December 2014
in %
Un-quoted
$ million
15.9
18.1
9.1
5.7
3.4
4.5
28%
32%
16%
10%
6%
8%
31 December 2013
Un-quoted
$ million
14.8
17.0
9.9
7.1
4.4
1.7
in %
27%
31%
18%
13%
8%
3%
56.7
100%
54.9
100%
The assets set out in the above table are held in the Mercer Growth investment fund which does not have a quoted price in an active market.
There are no amounts relating to the Company’s own financial instruments, and property occupied by, or other assets used by, the Company.
(d) Actuarial assumptions and sensitivity
The significant actuarial assumptions used were as follows:
%
Discount rate - % p.a.
Future salary increases - % p.a.
The sensitivity of the defined benefit obligation to changes in the significant assumptions is:
Consolidated
2014
2.7
4.0
2013
3.9
2.0 in first year
then 4.0 thereafter
31 December 2014
Discount rate
Future salary increases
31 December 2013
Discount rate
Future salary increases
Change in assumption
Increase in assumption
Decrease in assumption
Impact on defined benefit obligation
0.50 ppts
0.50 ppts
0.50 ppts
0.50 ppts
Decrease by 2.0%
Increase by 1.7%
Increase by 2.2%
Decrease by 1.6%
Decrease by 2.1%
Increase by 1.7%
Increase by 2.2%
Decrease by 1.6%
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur,
and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial
assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the
reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
(e) Defined benefit liability and employer contributions
From 1 July 2014, the Group made contributions to the Plan at rates of between 6% and 9% of member salaries. For the period from 1 January 2013
to 30 June 2014, the Group made contributions to the Plan at rates of between 10% and 13% of member salaries. In addition, the Group made
quarterly contributions of $150,000 during 2013.
Expected contributions to the defined benefit plan for the year ending 31 December 2015 are $1.0 million.
The weighted average duration of the defined benefit obligation is 7 years (2013: 6 years).
88
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
21 Contributed equity
(a) Share capital
Issued and paid up capital
Consolidated
2014
2013
648,267,667 (2013: 638,456,688) ordinary shares, fully paid
727.9
699.1
(b) Movements in ordinary share capital
Opening balance at 1 January
2,078,332 shares issued under Executive Performance Share Plan (2013: 1,069,200) (i)
7,732,647 Dividend Reinvestment Plan share issues (2013: nil) (Note 21(d))
Closing balance at 31 December
699.1
4.2
24.6
727.9
696.6
2.5
-
699.1
(i) Ordinary shares issued under the Adelaide Brighton Ltd Executive Performance Share Plan (refer Note 28).
(c) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up the Company in proportion to the number of and
amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one
vote and, on a poll, each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
(d) Dividend Reinvestment Plan
In August 2014 the Company reactivated the Dividend Reinvestment Plan (DRP), effective for the 2014 interim dividend. Under the DRP, holders
of ordinary shares may elect to have all or part of their dividend entitlements satisfied by the issue of new ordinary shares rather than by being paid
in cash. Shares are issued under the DRP at a price determined by the Board. The operation of the DRP for any dividend is at the discretion of the
Board, which suspended the DRP in February 2015 with immediate effect until further notice.
(e) Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide
returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue shares as well as issue
new debt or redeem existing debt. The Group monitors capital on the basis of the gearing ratio.
The gearing ratio at 31 December 2014 and 31 December 2013 was as follows:
($ Million)
Total borrowings
Less: cash and cash equivalents
Net debt
Total equity
Gearing ratio
(f) Employee share scheme and options
Consolidated
2014
391.5
(31.7 )
2013
259.1
(11.1)
359.8
1,136.7
248.0
1,061.8
31.7 %
23.4 %
Information relating to the employee share schemes, including details of shares issued under the schemes is set out in Note 28.
89
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
22 Reserves and retained earnings
(a) Reserves
Foreign currency translation reserve
Share-based payment reserve
Foreign currency translation reserve
Opening balance at 1 January
Currency translation differences arising during the year
Closing balance at 31 December
Share-based payment reserve
Opening balance at 1 January
Awards expense
Deferred tax
Over provision of tax in prior periods
Issue of shares to employees
Closing balance at 31 December
Nature and purpose of reserves
Foreign currency translation
Exchange differences arising on translation of foreign controlled entities and the foreign associate
are recognised in other comprehensive income as described in Note 1(d) and accumulated in a
separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net
investment is disposed of.
Share-based payment
The share-based payment reserve is used to recognise the fair value of Awards issued but not exercised.
(b) Retained earnings
Opening balance at 1 January
Net profit for the year
Actuarial (loss) / gain on defined benefit obligation (net of tax)
Dividends
Closing balance at 31 December
Consolidated
2014
2013
1.5
1.8
3.3
1.0
0.5
1.5
3.3
1.5
(0.6 )
-
(2.4 )
1.8
1.0
3.3
4.3
-
1.0
1.0
2.1
2.1
0.3
0.5
(1.7 )
3.3
355.6
172.7
(0.8 )
(124.7 )
304.4
151.1
5.3
(105.2 )
402.8
355.6
90
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
23 Dividends
Dividends paid during the year
2013 final ordinary dividend of 9.0 cents (2012 - 9.0 cents) per fully paid ordinary share, franked at 100%
(2012 - 100%) paid on 15 April 2014
2013 final special dividend of 3.0 cents (2012 - nil cents) per fully paid ordinary share, franked at 100%
(2012 - n/a) paid on 15 April 2014
2014 interim dividend of 7.5 cents (2013 - 7.5 cents) per fully paid ordinary share, franked at 100%
(2013 - 100%) paid on 20 October 2014
Total dividends
Dividends paid:
In cash
Issue of shares through dividend reinvestment plan
Total dividends
Consolidated
2014
2013
57.5
57.4
19.1
-
48.1
124.7
100.1
24.6
124.7
47.8
105.2
105.2
-
105.2
Dividend not recognised at year end
Since the end of the year the Directors have recommended the payment of a final dividend of 9.5 cents
(2013: 12.0 cents) per fully paid share, franked at 100% (2013: 100%).The aggregate amount of the proposed
final dividend to be paid on 16 April 2015, not recognised as a liability at the end of the reporting period, is
61.6
76.6
Franked dividend
The franked portion of the dividend proposed as at 31 December 2014 will be franked out of existing franking
credits or out of franking credits arising from the payment of income tax in the year ending 31 December 2015.
Franking credits available for subsequent financial years based on a tax rate of 30% (2013: 30%)
116.8
107.3
The above amounts represent the balance
The Board approves written principles for
The Group’s Corporate Treasury Function
of the franking account as at the end of the
overall risk management, as well as policies
provides services to the business, co-
financial year, adjusted for:
covering specific areas, such as foreign
ordinates access to domestic financial
(a) franking credits that will arise from the
payment of any current tax liability
exchange risk, interest rate risk, credit
markets and monitors and manages the
risk, use of derivative and non-derivative
financial risks relating to the operations of
financial instruments and investment of
the Group. The Group Corporate Treasury
(b) franking debits that will arise from the
excess liquidity. The Group does not enter
Function reports, on a monthly basis, an
payment of dividends recognised as a liability
into or trade financial instruments, including
analysis of key market exposures.
at the reporting date
derivative financial instruments, for
(c) franking credits that will arise from the receipt
speculative purposes.
(a) Market risk
of dividends recognised as receivables at the
The Group uses different methods to measure
(i) Foreign exchange risk
reporting date.
different types of risk to which it is exposed.
The Group’s activities through its importation
The impact on the franking account of the
dividend recommended by the Directors since
year end, but not recognised as a liability at
year end, will be a reduction in the franking
account of $26.4 million (2013: $32.8 million).
24 Financial risk management
The Group’s activities expose it to a variety
of financial risks: market risk (including
currency risk and interest rate risk), credit
risk and liquidity risk. The Group’s overall
risk management program focuses on the
unpredictability of financial markets and seeks
to minimise potential adverse effects on the
financial performance of the Group.
These methods include sensitivity analysis
of cement, clinker, slag and equipment
in the case of interest rate, foreign exchange
expose it to foreign exchange risk arising
and other price risks, and ageing analysis for
from various currency exposures, primarily
credit risk. The Group uses derivative financial
with respect to the US Dollar and the
instruments in the form of foreign exchange
Japanese Yen.
forward contracts to hedge certain currency
risk exposures.
Foreign exchange risk arises from commercial
transactions and recognised assets and
Derivatives are initially recognised at fair value
liabilities that are denominated in a currency
at the date a derivative contract is entered
that is not the entity’s functional currency. The
into and are subsequently remeasured at
risk is measured using sensitivity analysis and
their fair value at each reporting date. The
cash flow forecasting.
Company does not utilise hedge accounting
as permitted under Australian Accounting
Standards.
The Group enters into foreign exchange
forward contracts to hedge its foreign
exchange risk on these overseas trading
activities against movements in the
Australian dollar.
91
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
24 Financial risk management (continued)
debt facilities on a one to five year term with
Group calculates the impact on forecast
fixed bank lending margins associated with
profit and loss of a defined interest rate
(a) Market risk (continued)
each term. Cash advances to meet short
shift. The scenarios are run only for liabilities
(i) Foreign exchange risk (continued)
The Group Treasury’s risk management policy
is to hedge commitments for purchases for
up to six months forward. Longer hedge
positions are deemed too expensive versus
the value at risk due to the respective
currencies’ interest rate spread. Derivative
instruments entered into by the Group do not
qualify for hedge accounting.
(ii) Interest rate risk
and medium term borrowing requirements
that represent the major interest-bearing
are drawn down against the senior debt
positions. Based on the latest calculations
lending facilities on a 30, 60 or 90 day basis,
performed, the impact on profit and equity
at a variable lending rate comprising the
of a 100 basis-point movement would
fixed bank margin applied to the daily bank
be a maximum increase/decrease of
bill swap rate effective at the date of each
$3.3 million (2013: $2.2 million). A 100
cash advance. During both 2014 and 2013,
basis-point sensitivity has been selected
the Group’s borrowings at variable rates
as this is considered reasonable given the
were denominated in Australian Dollars.
current level of both short term and long
The Group analyses its interest rate
term Australian dollar interest rates.
The Group’s main interest rate risk arises
exposure on a dynamic basis. Periodically,
(iii) Summarised sensitivity analysis
from bank borrowings. Borrowings issued at
various scenarios are simulated taking
The following table summarises the
variable rates expose the Group to interest
into consideration refinancing, renewal of
sensitivity, on a pre-tax basis, of the Group’s
rate risk. Due to the historically low levels of
existing positions, alternative financing and
financial assets and financial liabilities to
gearing, Group policy is to take on senior
hedging. Based on these scenarios, the
interest rate risk.
($ Million - consolidated)
Notes
Carrying
value
Sensitivity
-1.0%
+1.0%
Carrying
value
Sensitivity
-1.0%
+1.0%
2014
2013
Financial assets
Cash
Receivables
Financial liabilities
Borrowings
Payables
Total increase/(decrease)
6
7
16
15
31.7
232.0
263.7
391.5
120.4
511.9
(0.3 )
(0.3 )
(0.6 )
3.9
-
3.9
3.3
11.1
213.8
224.9
259.1
105.4
364.5
0.3
0.3
0.6
(3.9 )
-
(3.9 )
(3.3 )
(0.1 )
(0.3 )
(0.4 )
2.6
-
2.6
2.2
0.1
0.3
0.4
(2.6 )
-
(2.6 )
(2.2 )
Foreign currency risk is immaterial as the
Individual risk limits are set based on internal
Consequently, the maximum exposure to
majority of sales and assets are denominated
or external ratings in accordance with
credit risk represents the carrying value
in Australian Dollars, while the Group’s
delegated authority limits set by the Board.
of receivables and derivatives. Derivative
purchases that are in foreign currency
The compliance with credit limits by credit
counterparties and cash transactions are
are settled at the time of the transaction,
approved customers is regularly monitored by
limited to high credit quality institutions.
consequently payables are generally in
line credit management. Sales to non-account
Australian Dollars. All borrowings are
customers are settled either in cash, major
(c) Liquidity risk
denominated in Australian Dollars.
credit cards or electronic funds transfer,
(b) Credit risk
mitigating credit risk.
The ultimate responsibility for liquidity risk
management rests with the Board which has
Credit risk is managed on a Group basis
using delegated authority limits. Credit risk
arises from cash and cash equivalents,
derivative financial instruments and deposits
with banks and financial institutions, as well
approval.
Credit risk further arises in relation to financial
established an appropriate risk management
guarantees given to certain parties. Such
framework for the management of the
guarantees are only provided in exceptional
Group’s short, medium and long term funding
circumstances and are subject to appropriate
and liquidity management requirements.
as credit exposures to customers, including
The Group has no significant concentration
outstanding receivables and committed
of credit risk. The Group has policies and
transactions.
For banks and financial institutions, only
independently rated parties with a minimum
rating of ‘A’ are accepted. For trading credit
risk, Credit Control assesses the credit quality
of the customer, taking into account its
financial position, past experience, external
credit agency reports and credit references.
procedures in place to ensure that sales
are made to customers with an appropriate
credit history. In relation to a small number of
customers with uncertain credit history, the
Group has taken out personal guarantees
in order to cover credit exposures. As at
31 December 2014, the Group held
no collateral over outstanding debts.
92
The Group’s Corporate Treasury Function
manages liquidity risk by maintaining
adequate reserves, banking facilities and
reserve borrowing facilities by continuously
monitoring forecast and actual cash flows
and matching the maturity profiles of financial
assets and liabilities. Included below is a
statement of undrawn facilities that the Group
and Company has at its disposal to further
reduce liquidity risk.
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
24 Financial risk management (continued)
(c) Liquidity risk (continued)
Financing arrangements
Unrestricted access was available at balance date to the following lines of credit:
Credit standby arrangements
Total facilities
Bank overdrafts
Bank facilities - external parties
Used at balance date
Bank overdrafts
Bank facilities - external parties
Unused at balance date
Bank overdrafts
Bank facilities - external parties
Maturity profile of bank facilities. Maturing on:
1 July 2015
1 July 2016
5 January 2018
4 January 2019
Consolidated
2014
2013
4.0
540.0
544.0
-
390.0
390.0
4.0
150.0
154.0
-
-
330.0
210.0
540.0
4.0
500.0
504.0
-
260.0
260.0
4.0
240.0
244.0
300.0
200.0
-
-
500.0
The table below analyses the Group’s financial liabilities that will be settled on a gross basis. The amounts disclosed are the contractual undiscounted
cash flows. For bank facilities the cash flows have been estimated using interest rates applicable at the end of the reporting period.
($ Million)
< 6 months
6-12 months
1-2 years
> 2 years
Total
Contractual maturities of financial liabilities
31 December 2014
Trade payables
Bank facilities
Finance leases
31 December 2013
Trade payables
Bank facilities
120.4
7.3
0.9
128.6
105.4
5.0
110.4
-
7.3
0.8
8.1
-
5.0
5.0
-
29.3
1.6
30.9
-
265.0
265.0
-
392.3
0.3
392.6
-
-
-
120.4
436.2
3.6
560.2
105.4
275.0
380.4
93
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
25 Fair value measurements
Fair value hierarchy
(i) Recognised fair value measurements
The Group measures and recognises financial assets at fair value through profit or loss (FVTPL) on a recurring basis. Derivative instruments entered
into by the Group do not qualify for hedge accounting and are classified in this category. The only assets or liabilities measured and recognised at fair
value are the asset in relation to the Carbon Tax which is measured in accordance with the price of units in the market (level 1) and the asset or liability
in relation to forward exchange contracts determined using forward exchange market rates at the balance sheet date (level 1). The Group held no
assets associated with the Carbon Tax (2013: $52.5 million) or assets or liabilities in relation to forward exchange contracts (2013: $0.1 million) at the
balance sheet date.
(ii) Disclosed fair values
The Group also has a number of assets and liabilities which are not measured at fair value, but for which fair values are disclosed in the notes.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term
nature. The fair value of non-current receivables for disclosure purposes is based predominantly on the recoverable loan amount to joint ventures and
external parties (level 3).
The interest rate for current and non-current borrowings is reset on a short term basis, generally 30 to 90 days, and therefore the carrying value of
current and non-current borrowings equal their fair values (level 2).
Consolidated
2014
2013
19.8
-
15.6
30.6
($ Million)
26 Contingencies
Details and estimates of maximum amounts of contingent liabilities are as follows:
(a) Guarantees
Bank guarantees
Guarantees of joint venture borrowings
(b) Litigation
At the time of preparing this financial report some companies included in the Group are parties to pending
legal proceedings, the outcome of which is not known. The entities are defending, or prosecuting, these
proceedings. The Directors have assessed the impact on the Group from the individual actions.
No material losses are anticipated in respect of any of the above contingent liabilities.
27 Commitments for expenditure
(a) Capital commitments - property, plant & equipment
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Within one year
5.0
8.3
(b) Lease commitments - operating leases
Commitments in relation to operating leases contracted for at the reporting date, but not recognised as liabilities,
are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
4.9
9.8
8.8
23.5
5.3
13.0
17.1
35.4
Commitments for operating lease payments relate mainly to rental leases on property. The Group leases various properties under non-cancellable
operating leases which contain varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are either renegotiated or the
expiry date is extended under pre-negotiated terms.
94
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
27 Commitments for expenditure (continued)
(c) Lease commitments - finance leases
Commitments in relation to finance leases for various plant and equipment with a carrying amount of
$3.3m (2013: nil) contracted for at the reporting date, but not recognised as liabilities, are payable as
follows:
Within one year
Later than one year but not later than five years
Minimum lease payments
Future finance charges
Total lease liabilities (Note 16)
The present value of finance lease liabilities is as follows:
Within one year
Later than one year but not later than five years
Minimum lease payments
28 Share-based payment plans
(a) Employee Share Plan
Consolidated
2014
2013
1.7
1.9
3.6
(0.4 )
3.2
1.4
1.8
3.2
-
-
-
-
-
-
-
-
The establishment of the Adelaide Brighton Ltd Employee Share Plan was approved by special resolution at the Annual General Meeting of the
Company held on 19 November 1997. Subject to the Board approval of grants, all full time employees of the Company and its controlled entities
who have been continuously employed by the Company or a controlled entity for a period of one year are eligible to participate in the Plan. Casual
employees and contractors are not eligible to participate in the Plan.
No shares were issued under the Employee Share Plan during the year (2013 - nil). In subsequent years, the Board will decide whether, considering
the profitability of the Company and the demands of the business, further invitations to take up grants of shares should be made.
(b) Executive Performance Share Plan
The Adelaide Brighton Ltd Executive Performance Share Plan (“the Plan” or “EPSP”) provides for grants of Awards to eligible executives. This plan was
approved by shareholders at the Annual General Meeting held on 19 November 1997. In accordance with the requirements of the ASX Listing Rules,
Awards granted to the Managing Director who retired on 21 May 2014, have been approved by shareholders.
Under the Plan, eligible executives are granted Awards (each being an entitlement to a fully paid ordinary share of Adelaide Brighton Ltd, subject to the
satisfaction of performance conditions) on terms and conditions determined by the Board. On exercise of the Award following vesting, participants are
issued shares of the Company. Detailed discussion of performance conditions is set out in the Remuneration Report on pages 47 to 61.
The exercise price for each Award is $nil.
Movement in number of Awards outstanding
Outstanding at beginning of the year
Granted
Forfeited
Exercised
Expired
Outstanding at the end of the year
Exercisable at the end of the year
Consolidated
2014
2013
6,262,180
1,065,255
(1,929,500 )
(2,078,332 )
-
5,975,030
1,502,150
(145,800 )
(1,069,200 )
-
3,319,603
6,262,180
-
-
The average value per share at the earliest exercise date during the year was $3.92 (2013: $3.40). The value per share is calculated using the Volume
Weighted Closing Price which is the average of the closing price and number of Adelaide Brighton Limited shares traded on the Australian Securities
Exchange for the five trading days before the exercise date, but not including the day of exercise.
95
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
28 Share-based payment plans (continued)
(b) Executive Performance Share Plan (continued)
Fair values of Awards at the grant date are independently determined using a pricing model that takes into account the exercise price, the term of the
Awards, the lack of marketability, the impact of the TSR vesting condition (applicable to 50% of Awards), the expected future dividends and the risk
free interest rate for the term of the Award. For the purposes of pricing model inputs, the share price for calculation of the Award value is based on
the closing published share price at grant date. The impact of the Award’s performance conditions have been incorporated into the valuation through
the use of a discount for lack of marketability and TSR vesting conditions. Volatility of the Company’s share price has been considered in valuing the
Awards, however the independent valuer has reached the conclusion that the volatility is not a factor in assessing the fair value of the Awards.
The assessed fair value at grant date of Awards granted to individual participants is allocated equally over the period from grant date to vesting date.
Awards granted in 2014 - weighted average pricing model inputs
Share price at grant date
Expected annual dividends
Risk-free interest rate
Lack of marketability discount
TSR condition discount
Earliest exercise date
Awards granted in 2013 - weighted average pricing model inputs
Share price at grant date
Expected annual dividends
Risk-free interest rate
Lack of marketability discount
TSR condition discount
Earliest exercise date
2014 Awards 2013 Awards
- Tranche 2
- Tranche 1
2012 Awards 2012 Awards
$3.88
$0.17
$3.43
$0.19
$3.43
$0.19
$3.43
$0.11
3.37% p.a.
2.71% p.a.
2.71% p.a.
2.71% p.a.
2.50% p.a.
2.50% p.a.
2.50% p.a.
2.50% p.a.
50%
50%
50%
50%
1-May-18
1-May-17
1-May-16
1-May-15
2013 Awards
$3.30
$0.17
2.81% p.a.
3.00% p.a.
50%
1-May-17
The Plan does not entitle the Participants to participate in any other share issues of the Company and the unexercised Awards do not attract dividend
or voting rights. The Plan is accounted for by the Company in accordance with Note 1(v)(iv), with $1,521,941 (2013: $2,089,093) recognised as an
expense during the year.
The weighted average remaining contractual life of Awards outstanding at the end of the period was 1.8 years (2013: 1.8 years).
($)
29 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent
entity, its related practices and non-related audit firms:
(a) Audit services
PricewaterhouseCoopers Australian firm
Audit and review of financial statements
Total remuneration for audit services
(b) Non-audit services
PricewaterhouseCoopers Australian firm
Other assurance services
Total remuneration for non-audit services
Consolidated
2014
2013
651,210
692,540
651,210
692,540
104,073
92,798
104,073
92,798
96
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
30 Related parties
(a) Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
2014
2013
7.1
1.0
1.8
9.9
8.8
0.2
1.4
10.4
(b) Other transactions with key management personnel
RD Barro, a Director of Adelaide Brighton Ltd, is Managing Director of Barro Group Pty Ltd. Barro Group Pty Ltd and Adelaide Brighton Ltd, through
its 100% owned subsidiary, Adelaide Brighton Management Ltd, each control 50% of Independent Cement and Lime Pty Ltd, a distributor of cement
and lime in Victoria and New South Wales.
During the year, the Barro Group of companies purchased goods and materials from and sold goods, materials and services to Independent Cement
and Lime Pty Ltd and the Group. The Barro Group of companies also purchased goods and materials from Sunstate Cement Ltd, a company in which
the Group has a 50% share, and other entities in the Group.
MP Chellew, an executive Director of Adelaide Brighton Ltd until his retirement on 21 May 2014, M Brydon, Chief Executive Officer, and M Kelly, a
senior executive of Adelaide Brighton Ltd, have been Directors of Sunstate Cement Ltd during the reporting period. M Brydon was also a Director of
Independent Cement and Lime Pty Ltd until 6 March 2014 and of Aalborg Portland Malaysia Sdn. Bhd. until 13 November 2014. G Agriogiannis, a
senior executive of Adelaide Brighton Ltd and M Kelly are also Directors of the Mawsons Group. During the year, the Group traded significantly with
Independent Cement and Lime Pty Ltd, Sunstate Cement Ltd and the Mawsons Group, which are all joint ventures of the Group.
All transactions involving the Barro Group Pty Ltd and Adelaide Brighton Ltd and its subsidiaries, Independent Cement and Lime Pty Ltd and its
subsidiaries, Sunstate Cement Ltd and the Mawsons Group were conducted on standard commercial terms.
Transactions entered into during the year with Directors of the Company and the Group, or their related parties, are on stardard commercial terms and
conditions, and include the purchase of goods from the Group and the receipt of dividends from the Company.
($)
Aggregate amounts of the above transactions with the Directors and their related parties:
Sales to Director related parties
Purchases from Director related parties
(c) Controlled entities
Consolidated
2014
2013
54,853,108
44,361,860
45,019,728
41,908,399
Details of interests in controlled entities are set out in Note 31. The ultimate parent company is Adelaide Brighton Ltd.
(d) Joint arrangement and associate entities
Details of interests in joint arrangement and associate entities are set out in Note 10(b). The nature of transactions with joint arrangement and
associate entities is detailed below:
Adelaide Brighton Cement Ltd and Morgan Cement International Ltd supplied finished products and raw materials to Sunstate Cement Ltd,
Independent Cement and Lime Pty Ltd and Peninsula Concrete Pty Ltd. Hy-Tec Industries Pty Ltd, Hy-Tec Industries (Victoria) Pty Ltd, Hy-Tec
Industries (Queensland) Pty Ltd, Adbri Masonry Group Pty Ltd, Adelaide Brighton Cement Ltd and Cockburn Cement Ltd purchased finished
products, raw materials and transportation services from Sunstate Cement Ltd, Independent Cement and Lime Pty Ltd and Aalborg Portland Malaysia
Sdn. Bhd.
All transactions are on normal commercial terms and conditions and transactions for the supply are covered by shareholder agreements.
97
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($’000)
30 Related parties (continued)
(e) Transactions with related parties
The following transactions occurred with related parties:
Sale of goods
- Joint venture entities
Purchases of materials and goods
- Joint venture entities
Interest revenue
- Joint venture entities
Dividend and distribution income
- Joint venture entities
Superannuation contributions
- Contributions to superannuation funds on behalf of employees
- Reimbursement of superannuation contribution by joint venture entity
Loans advanced to/(from):
- Joint venture entities
(f) Outstanding balances arising from sales/purchases of goods and services
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current receivables
- Joint venture entities (interest)
- Joint venture entities (trade)
Non-current receivables
- Joint venture entities (loans)
Current payables
- Joint venture entities (trade)
Consolidated
2014
2013
199,259
188,147
76,793
64,008
761
757
20,984
16,337
11,682
-
11,666
22
1,861
2,445
393
27,242
378
23,690
29,668
27,808
12,378
6,450
Outstanding balances are unsecured and repayable in cash. No provisions for doubtful receivables have been raised in relation to any outstanding
balances.
(g) Loans to related parties
A loan to a joint venture entity, Independent Cement and Lime Pty Ltd, has interest charged at commercial rates on the outstanding balance.
Interest revenue brought to account by the Group during the reporting year on this loan was $760,758 (2013: $756,557).
98
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
31 Subsidiaries and transactions with non-controlling interests
Place of
incorporation
Class of
shares
Name of entity
Adelaide Brighton Ltd
Adelaide Brighton Cement Ltd2
Adelaide Brighton Cement Inc
Adelaide Brighton Cement Investments Pty Ltd2
Adelaide Brighton Management Ltd2
Adelaide Brighton Cement International Pty Ltd1
Adelaide Brighton Intellectual Property Pty Ltd1
Cement Resources Consolidated Pty Ltd1
Cockburn Cement Ltd2
Hy-Tec Industries (Queensland) Pty Ltd2
Northern Cement Ltd2
Premier Resources Ltd2
Adbri Masonry Group Pty Ltd2
Adelaide Brighton Cement Ltd
Exmouth Limestone Pty Ltd1
Adelaide Brighton Cement Inc
Adelaide Brighton Cement (Florida) Inc
Adelaide Brighton Cement (Hawaii) Inc
Hileah (Florida) Management Inc
Adelaide Brighton Management Ltd
Accendo Pty Ltd1
Global Cement Australia Pty Ltd1
Hurd Haulage Pty Ltd2
K.C. Mawson Pty Ltd1
Adelaide Brighton Cement International Pty Ltd
Adelaide Brighton Cement Inc
Australia
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
USA
Australia
Australia
Australia
Australia
USA
Fuel & Combustion Technology International Ltd
United Kingdom
Fuel & Combustion Technology International Ltd
Fuel & Combustion Technology International Inc
Northern Cement Ltd
Mataranka Lime Pty Ltd1
Cockburn Cement Ltd
Cockburn Waters Pty Ltd1
Hydrated Lime Pty Ltd1
Chemical Unit Trust
Kalgoorlie Lime & Chemical Company Pty Ltd1
Premier Resources Ltd
Hy-Tec Industries Pty Ltd2
Hy-Tec Industries (Victoria) Pty Ltd2
Bonfoal Pty Ltd1
Aus-10 Rhyolite Pty Ltd3
Morgan Cement International Pty Ltd2
Screenings Pty Ltd2
Lonsdale Sand & Metal Pty Ltd1
Hy-Tec Industries (Victoria) Pty Ltd
CRC2 Pty Ltd1
CRC3 Pty Ltd1
Hy-Tec Industries (Victoria) No 1 Pty Ltd1
Hy-Tec Industries (Victoria) No 2 Pty Ltd1
Sheltacrete Pty Ltd1
Adbri Masonry Group Pty Ltd
Adbri Masonry Pty Ltd2
Adbri Mining Products Pty Ltd1
C&M Masonry Products Pty Ltd2
Betta Brick Pty Ltd1
C&M Brick (Bendigo) Pty Ltd1
C&M Design/Construct Pty Ltd1
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
99
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Units
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ownership interest
held by the Group
2014
%
2013
%
100
80
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
20
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
20
100
100
100
100
100
100
100
100
100
100
100
100
-
-
100
100
100
100
100
100
100
100
100
100
100
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
31 Subsidiaries and transactions with non-controlling interests (continued)
Name of entity
Screenings Pty Ltd
Agripeta Pty Ltd1
Productivex Pty Ltd1
Southern Quarries Holdings Pty Ltd2
Southern Quarries Holdings Pty Ltd
Direct-Mix Holdings Pty Ltd2
Direct-Screens Holdings Pty Ltd1
Southern Lime Pty Ltd1
Southern Quarries Pty Ltd2
Direct-Screens Holdings Pty Ltd
Peninsula Mixed Concrete Supplies Pty Ltd1
Direct-Mix Holdings Pty Ltd
Direct-Mix Concrete Pty Ltd1
Direct-Mix Concrete (Products) Pty Ltd1
Southern Quarries Pty Ltd2
Southern Quarries Pty Ltd
Adelaide Concrete Recyclers Pty Ltd1
Place of
incorporation
Class of
shares
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ownership interest
held by the Group
2014
%
2013
%
100
100
100
100
100
100
51
100
100
100
49
100
-
-
-
-
-
-
-
-
-
-
-
-
1 Small proprietary company as defined by the Corporations Act 2001 and is not required to be audited for statutory purposes.
2 These controlled entities have been granted relief from the necessity to prepare financial reports in accordance with ASIC Class Order 98/1418 (as amended) dated 12 June 2013. For further information see Note 32.
3 Aus-10 Rhyolite Pty Ltd joined Adelaide Brighton Ltd’s Deed of Cross Guarantee under ASIC Class Order 98/1418 (as amended) dated 12 June 2013 on 3 December 2014 by Assumption Deed.
Unless otherwise stated, the subsidiaries as listed above have share capital consisting solely of ordinary shares, which are held directly by the Group,
and the proportion of ownership interests held equals the voting rights held by the Group. The country of incorporation or registration is also their
principal place of business.
32 Deed of cross guarantee
As at the date of this report, Adelaide Brighton Ltd, Adelaide Brighton Cement Ltd, Cockburn Cement Ltd, Adelaide Brighton Cement Investments
Pty Ltd, Adelaide Brighton Management Ltd, Northern Cement Ltd, Premier Resources Ltd, Hy-Tec Industries Pty Ltd, Hy-Tec Industries (Victoria) Pty
Ltd, Hy-Tec Industries (Queensland) Pty Ltd, Morgan Cement International Pty Ltd, Adbri Masonry Group Pty Ltd, C&M Masonry Products Pty Ltd,
Adbri Masonry Pty Ltd, Hurd Haulage Pty Ltd, Aus-10 Rhyolite Pty Ltd, Screenings Pty Ltd, Southern Quarries Holdings Pty Ltd, Direct-Mix Holdings
Pty Ltd and Southern Quarries Pty Ltd are parties to a Deed of Cross Guarantee (the Deed) under which each company guarantees the debts of the
others. By entering into the Deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report and Directors’ report
under Class Order 98/1418 (as amended) issued by the Australian Securities & Investments Commission. The above companies represent a “Closed
Group” for the purposes of the Class Order, and as there are no other parties to the Deed that are controlled by the Company, they also represent the
“Extended Closed Group”.
Aus-10 Rhyolite Pty Ltd, Screenings Pty Ltd, Southern Quarries Holdings Pty Ltd, Direct-Mix Holdings Pty Ltd and Southern Quarries Pty Ltd entered
into the Deed on 3 December 2014. No other changes to the Deed were made during 2014. During 2013, to take into account changes that have
been made to ASIC’s Class Order 98/1418 over recent years, the Closed Group revoked the Deed of Cross Guarantee that had been in effect in
previous years and each of the members of the Closed Group entered into a new Deed of Cross Guarantee reflective of the current requirements of
ASIC’s Class Order. The new Deed of Cross Guarantee was in effect at the end of the 2013 financial year.
($ Million)
Set out below is a consolidated balance sheet as at 31 December 2014 of the Closed Group.
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Carbon units
Assets classified as held for sale
Total current assets
100
Consolidated
2014
2013
26.8
200.0
154.2
-
381.0
1.5
382.5
7.8
185.6
127.3
52.5
373.2
7.9
381.1
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
32 Deed of cross guarantee (continued)
Non-current assets
Receivables
Joint arrangements and associate
Other financial assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Provision for carbon emissions
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Retirement benefit obligations
Provision for carbon emissions
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
Set out below is a condensed consolidated statement of comprehensive income and a summary of
movements in consolidated retained earnings for the year ended 31 December 2014 of the Closed Group.
Profit before income tax
Income tax expense
Profit for the year
Retained earnings 1 January
Retained earnings on members entering / leaving Closed Group
Profit for the year
Other comprehensive income
Dividends paid
Retained earnings 31 December
101
Consolidated
2014
2013
32.6
101.0
25.1
953.3
263.9
31.4
101.7
10.2
808.2
183.2
1,375.9
1,134.7
1,758.4
1,515.8
123.8
0.9
1.3
24.5
14.0
4.1
168.6
389.2
76.2
41.1
2.2
-
0.1
508.8
677.4
1,081.0
727.9
4.3
348.8
1,081.0
229.6
(59.8 )
169.8
271.6
32.9
169.8
(0.8 )
(124.7 )
87.3
-
17.1
26.4
39.7
20.4
190.9
259.1
53.5
28.4
0.5
8.2
0.1
349.8
540.7
975.1
699.1
4.4
271.6
975.1
200.4
(55.5 )
144.9
226.6
-
144.9
5.3
(105.2 )
348.8
271.6
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
33 Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the year
Doubtful debts
Depreciation, amortisation and impairment
Share based payments expense
Finance charges on remediation provision
(Gain) on sale of non-current assets
Share of undistributed profits of joint ventures
Non-cash retirement benefits expense
Non-cash remediation obligation
Fair value accounting gain on acquisition of business
Capitalised interest
Other
Net cash provided by operating activities before changes in assets and liabilities
Changes in operating assets and liabilities, net of effects from purchase of controlled entity:
(Increase) in inventories
Decrease in prepayments
(Increase) in receivables
Increase in trade creditors
Increase in provisions
(Decrease) / increase in taxes payable
Increase / (decrease) in deferred taxes payable
Increase/ (decrease) in other operating assets and liabilities
Net cash inflow from operating activities
(Cents)
34 Earnings per share
Basic earnings per share
Diluted earnings per share
(Number)
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
Adjustment for calculation of diluted earnings per share:
Awards
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
in calculating diluted earnings per share
($ Million)
Reconciliation of earnings used in calculating earnings per share
Basic and diluted earnings per share
Profit after tax
Loss/(profit) attributable to non-controlling interests
Profit attributable to ordinary equity holders of the Company used in calculating basic and diluted earnings per share
102
Consolidated
2014
2013
172.6
2.3
75.0
(5.5 )
1.2
(1.2 )
(0.7 )
0.9
(7.3 )
(17.8 )
(0.6 )
1.0
219.9
(13.9 )
1.4
(9.5 )
4.7
3.6
(18.6 )
4.0
2.4
151.1
0.9
70.6
(0.1 )
1.0
(0.4 )
(7.9 )
5.3
(1.4 )
-
(1.2 )
0.7
218.6
(1.5 )
-
(13.1 )
9.4
13.0
11.3
(2.8 )
(7.6 )
194.0
227.3
Consolidated
2014
2013
26.9
26.8
23.7
23.4
Consolidated
2014
2013
641,365,689 638,099,312
3,319,603
6,262,180
644,685,292 644,361,492
Consolidated
2014
2013
172.6
0.1
172.7
151.1
-
151.1
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
35 Events occurring after the balance sheet date
As at the date of this report, no matter or circumstance has arisen since 31 December 2014 that has significantly affected, or may significantly affect
the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years.
36 Segment reporting
(a) Description of segments
Management has determined the operating segments based on the reports reviewed by the Chief Executive Officer. These reports are evaluated
regularly in deciding how to allocate resources and in assessing performance.
The two reportable segments have been identified as follows;
> Cement, Lime, Concrete and Aggregates
> Concrete Products
The operating segments Cement, Lime, Concrete and Aggregates individually meet the quantitative thresholds required by AASB 8 as well as meeting
the aggregation criteria allowing them to be reported as one segment. Concrete Products meets the quantitative threshold therefore is reported as a
separate segment. Joint arrangements and associates related to the reportable segments form part of the above two reportable segments.
During 2014, the Aggregates segment met the quantitative threshold for disclosure required by AASB 8 and is now incorporated into the Cement,
Lime, Concrete and Aggregates segment. In accordance with the standard, comparative information has been restated to reflect this change.
The major end-use markets of Adelaide Brighton’s products include residential and non-residential construction, engineering construction, alumina
and steel production and mining.
(b) Segment information provided to the Chief Executive Officer
The segment information provided to the Chief Executive Officer for the reportable segments is as follows:
31 December 2014
($ Million)
Total segment operating revenue
Inter-segment revenue
Revenue from external customers
Depreciation and amortisation
Impairment
EBIT
Share of net profits of joint venture and associate entities
accounted for using the equity method
31 December 2013
($ Million)
Total segment operating revenue
Inter-segment revenue
Revenue from external customers
Depreciation and amortisation
EBIT
Share of net profits of joint venture and associate entities
accounted for using the equity method
Cement, Lime,
Concrete and
Concrete
Aggregates
Products Unallocated
Total
1,411.2
(40.8 )
1,370.4
(62.1 )
(2.0 )
271.4
137.4
-
137.4
(7.7 )
-
6.1
-
-
-
(3.2 )
-
(30.0 )
1,548.6
(40.8 )
1,507.8
(73.0 )
(2.0 )
247.5
21.7
-
-
21.7
Cement, Lime,
Concrete and
Concrete
Aggregates
Products
Unallocated
Total
1,290.6
(25.7 )
1,264.9
60.1
240.8
124.4
-
124.4
7.4
2.1
-
-
-
3.2
(20.2 )
1,415.0
(25.7 )
1,389.3
70.7
222.7
24.2
-
-
24.2
103
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
36 Segment reporting (continued)
(b) Segment information provided to the Chief Executive Officer (continued)
Sales between segments are carried out at arms length and are eliminated on consolidation.
The operating revenue assessed by the Chief Executive Officer includes revenue from external customers and a share of revenue from the joint
ventures and associates in proportion to the Group’s ownership interest, excluding freight, interest and royalty revenue. A reconciliation of segment
operating revenue to revenue from continuing operations is provided below:
($ Million)
Total segment operating revenue
Inter-segment revenue elimination
Freight revenue
Interest revenue
Royalties
Elimination of joint venture and associate revenue
Revenue from continuing operations
The Chief Executive Officer assesses the performance of the operating segments based on a measure of EBIT.
This measurement basis excludes the effect of net interest. A reconciliation of the EBIT to operating profit
before income tax is provided as follows:
EBIT
Net interest
Profit before income tax
(c) Other segment information
Consolidated
2014
2013
1,548.6
(40.8 )
139.4
1.8
0.4
(311.6 )
1,415.0
(25.7 )
128.3
1.8
0.7
(292.1 )
1,337.8
1,228.0
247.5
(15.0 )
232.5
222.7
(14.1 )
208.6
Revenues of approximately $168.7 million (2013: $157.2 million) are derived from a single customer. These revenues are attributable to the Cement,
Lime, Concrete and Aggregates segment.
104
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
($ Million)
37 Parent entity financial information
(a) Summary financial information
The individual financial statements for the Company show the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Shareholders’ equity
Issued capital
Reserves
Share-based payments
Retained earnings
Total shareholders’ equity
Profit for the year
Total comprehensive income
(b) Guarantees entered into by the parent entity
Bank guarantees
(c) Contingent liabilities of the parent entity
The Company
2014
2013
1,556.3
1,920.5
674.3
1,063.9
856.6
1,051.3
1,572.0
475.6
736.0
836.0
720.8
692.0
1.8
134.0
856.6
118.1
118.1
3.3
140.7
836.0
128.3
128.3
2.5
2.5
The parent entity did not have any contingent liabilities as at 31 December 2014 or 31 December 2013 other than the bank guarantees detailed above.
38 Business combinations
During 2014, the Company acquired the following businesses:
> Direct Mix / Southern Quarries, an integrated aggregate and premixed concrete business to the South Australian building and construction materials
market. The Company acquired the business from October 2014 through the acquisition of a 100% interest in the entities associated with the
construction materials business.
> BM Webb construction materials is an integrated concrete, quarry, sand, transport and cement import business located in and around Townsville.
The acquisition was completed in May 2014, with the Group acquiring 100% of the operating assets of the business.
> Penrice Minerals & Quarry, a quarry business located in the Barossa Valley of South Australia. The acquisition was completed in July 2014, with the
Group acquiring 100% of the owned operating assets of the business.
The acquisitions are in line with Adelaide Brighton Ltd’s business strategy of vertical integration.
105
ADELAIDE BRIGHTON LTD AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2014NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
38 Business combinations (continued)
Details of the purchase consideration, net assets acquired and goodwill are as follows:
($ Million)
Purchase consideration
Cash paid
Contingent consideration
Total purchase consideration
The initial accounting for the acquisitions is not complete at the end of the year. Due to the timing of the
acquisitions and the processes required to complete the fair value exercise, the initial accounting has not
been completed for property, plant and equipment, intangible assets, inventory, restoration liabilities and
deferred tax. Provisional information on the assets and liabilities recognised as a result of the acquisitions
is set out below.
Cash and cash equivalents
Trade and other receivables
Inventories
Joint arrangements
Freehold land
Buildings
Property, plant and equipment
Mineral reserves
Asset retirement cost
Intangibles
Deferred tax asset
Trade and other payables
Employment benefit liabilities, including superannuation
Provision - restoration liability
Current tax liability
Borrowings
Deferred tax liability
Net identifiable asset acquired
Add: goodwill
Less: gain on bargain purchase
Net assets acquired
Fair value
157.4
-
157.4
1.8
11.0
4.5
0.3
13.4
2.8
46.7
45.1
4.7
3.9
4.8
(9.0 )
(2.2 )
(4.7 )
(0.9 )
(9.3 )
(13.3 )
99.6
75.6
(17.8 )
157.4
The goodwill is attributable to two acquisitions and relates to the expected synergies expected to arise from the Company’s vertical integration
strategy and the workforce. None of the goodwill is expected to be deductible for tax purposes.
A gain relating to a bargain purchase of $17.8 million was recognised within Other Income in the Income Statement. The gain on acquisition reflects
the Group’s overall strategy of completing on acquisitions, where negotiating conditions allow, at values approximating the fair value of the tangible
assets. Transaction costs associated with the acquisitions of $6.2 million are included in administration costs in the Income Statement.
The acquired businesses contributed revenues of $35.4 million and net profit before tax, excluding the gain on acquisitions and acquisition related
expenses, of $0.3 million.
If the acquisitions had occurred on 1 January 2014, the annualised consolidated revenue and net profit before tax for the year ended 31 December
2014 would have been $1,424.4 million and $239.7 million respectively. These amounts have been calculated using the Group’s accounting policies
and by adjusting the results of the businesses to reflect additional depreciation and amortisation that would have been charged assuming the fair value
adjustments to property, plant and equipment had applied from 1 January 2014, together with the consequential tax effects.
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
NOTES TO AND FORM I NG PA R T O F T H E FI N A N C I A L STATEM EN TS
106
Directors’ declaration
Auditor’s independence declaration
In the Directors’ opinion:
Auditor’s Independence Declaration
(a) the financial statements and notes set out on
As lead auditor for the audit of Adelaide
pages 62 to 106 are in accordance with the
Brighton Ltd for the year ended 31 December
Corporations Act 2001, including:
(i) complying with Accounting Standards,
2014, I declare that to the best of my
knowledge and belief, there have been:
the Corporations Regulations 2001 and
a) no contraventions of the auditor
other mandatory professional reporting
independence requirements of the
requirements; and
Corporations Act 2001 in relation to the audit;
(ii) giving a true and fair view of the consolidated
and
entity’s financial position as at 31 December
b) no contraventions of any applicable code of
2014 and of its performance for the financial
professional conduct in relation to the audit.
year ended on that date; and
This declaration is in respect of Adelaide
(b) there are reasonable grounds to believe that
Brighton Ltd and the entities it controlled
the Company will be able to pay its debts as
during the period.
and when they become due and payable; and
(c) at the date of this declaration, there are
reasonable grounds to believe that the
members of the Extended Closed Group
identified in Note 31 will be able to meet any
obligations or liabilities to which they are, or
may become, subject by virtue of the Deed of
Cross Guarantee described in Note 32.
Note 1(a) confirms that the financial
statements also comply with International
Financial Reporting Standards as issued
by the International Accounting Standards
Board.
The Directors have been given the
declarations by the Chief Executive Officer
and Chief Financial Officer required by section
295A of the Corporations Act 2001.
KR Reid
Partner
Adelaide
12 March 2015
PricewaterhouseCoopers
Liability limited by a scheme approved under
Professional Standards Legislation.
PricewaterhouseCoopers
ABN 52 780 433 757
70 Franklin Street, Adelaide SA 5000
GPO Box 418, Adelaide SA 5001
Telephone +61 8 8218 7000
Facsimile +61 8 8218 7999
This declaration is made in accordance with a
www.pwc.com.au
resolution of the Directors.
LV Hosking
Chairman
Dated 12 March 2015
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R EN DED 31 D EC E M BER 2 0 1 4
107
Independent audit report
Report on the financial report
In making those risk assessments, the auditor
Auditor’s opinion
We have audited the accompanying financial
report of Adelaide Brighton Limited (the
company), which comprises the balance
sheet as at 31 December 2014, the income
statement, statement of comprehensive
income, statement of changes in equity
and statement of cash flows for the year
ended on that date, a summary of significant
accounting policies, other explanatory notes
and the directors’ declaration for Adelaide
Brighton Group (the consolidated entity). The
consolidated entity comprises the company
considers internal control relevant to the
consolidated entity’s preparation and fair
presentation of the financial report in order to
design audit procedures that are appropriate
in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also
includes evaluating the appropriateness
of accounting policies used and the
reasonableness of accounting estimates
made by the directors, as well as evaluating
the overall presentation of the financial report.
In our opinion, the remuneration report of
Adelaide Brighton Limited for the year ended
31 December 2014 complies with section
300A of the Corporations Act 2001.
PricewaterhouseCoopers
and the entities it controlled at year’s end or
We believe that the audit evidence we have
from time to time during the financial year.
obtained is sufficient and appropriate to
provide a basis for our audit opinion.
KR Reid
Partner
Adelaide
12 March 2015
Directors’ responsibility for the
financial report
Independence
The directors of the company are responsible
In conducting our audit, we have complied
for the preparation of the financial report
with the independence requirements of the
that gives a true and fair view in accordance
Corporations Act 2001.
with Australian Accounting Standards and
the Corporations Act 2001 and for such
Auditor’s opinion
internal control as the directors determine
is necessary to enable the preparation of
In our opinion:
Liability limited by a scheme approved under
Professional Standards Legislation.
PricewaterhouseCoopers
ABN 52 780 433 757
70 Franklin Street, Adelaide SA 5000
GPO Box 418, Adelaide SA 5001
the financial report that is free from material
(a) the financial report of Adelaide Brighton
Telephone +61 8 8218 7000
misstatement, whether due to fraud or
Limited is in accordance with the
Facsimile +61 8 8218 7999
error. In Note 1, the directors also state, in
Corporations Act 2001, including:
www.pwc.com.au
accordance with Accounting Standard AASB
101 Presentation of Financial Statements,
that the financial statements comply with
International Financial Reporting Standards.
(i) giving a true and fair view of the consolidated
entity’s financial position as at 31 December
2014 and of its performance for the year
ended on that date; and
Auditor’s responsibility
(ii) complying with Australian Accounting
Our responsibility is to express an opinion
on the financial report based on our audit.
We conducted our audit in accordance
Standards (including the Australian
Accounting Interpretations) and the
Corporations Regulations 2001.
with Australian Auditing Standards. Those
(b) the financial report and notes also comply
standards require that we comply with
with International Financial Reporting
relevant ethical requirements relating to audit
Standards as disclosed in Note 1.
engagements and plan and perform the audit
to obtain reasonable assurance whether
Report on the Remuneration Report
the financial report is free from material
misstatement.
We have audited the remuneration report
included in pages 47 to 61 of the directors’
An audit involves performing procedures to
report for the year ended 31 December 2014.
obtain audit evidence about the amounts
The directors of the company are responsible
and disclosures in the financial report. The
for the preparation and presentation of the
procedures selected depend on the auditor’s
remuneration report in accordance with
judgement, including the assessment of the
section 300A of the Corporations Act 2001.
risks of material misstatement of the financial
Our responsibility is to express an opinion on
report, whether due to fraud or error.
the remuneration report, based on our audit
conducted in accordance with Australian
Auditing Standards.
ADELAIDE BRIGHTON LT D A N D I T S C O N T RO LLED E NT I T I ES
FOR THE YEAR EN DED 31 D EC E M BER 2 0 1 4
108
Financial history
Year ended
($ Million unless stated)
Dec
2014
Dec
2013
Dec 7 Dec 9 Dec
2010
2011
2012
Dec
2009
Dec
2008
Dec
2007
Dec
2006
Dec
2005
Dec 6 Dec
2003
2004
Dec
2002
Statements of financial performance
Sales revenue
1,337.8 1,228.0 1,183.1 1,100.4 1,072.9 987.2 1,022.4 888.4 794.7 717.3 683.4 630.6 486.8
Depreciation and amortisation
(75.0)
(70.6)
(65.2)
(57.8)
(52.8)
(56.8)
(56.8)
(52.4)
(51.8)
(47.0)
(51.4)
(52.3)
(45.1)
Earnings before interest & tax
247.5 222.7 222.1 219.87 216.2 185.3 189.1 171.3 148.8 134.1 119.6
97.0
80.0
Net interest earned (paid)
(15.0)
(14.1)
(14.6)
(17.0)
(14.0)
(16.7)
(33.8)
(21.7)
(15.2)
(14.0)
(14.7)
(12.6)
(13.1)
Profit before tax, abnormal &
extraordinary items
232.5 208.6 207.5 206.4 202.2 168.6 155.3 149.6 133.6 120.1 104.9
84.4
66.9
Tax expense
(59.9)
(57.5)
(54.6)
(58.0)
(50.8)
(45.4)
(34.5)
(35.7)
(31.0)
(29.2)
(11.8)
(25.8)
(16.2)
Profit from discontinued operations
Non-controlling interests
Net profit after tax attributable
to members
Group balance sheet
-
0.1
-
-
-
0.1
-
-
-
-
0.1
(0.1)
-
-
-
-
-
(0.5)
-
-
1.3
-
(1.1)
(0.9)
-
-
172.7 151.1 153.0 148.4 151.5 123.1 120.8 113.9 102.1
90.9
93.3
57.7
50.7
Current assets
387.2 390.2 363.7 307.8 274.1 308.8 290.8 233.1 224.7 211.0 196.2 173.3 143.3
Property, plant & equipment
989.6 889.7 902.5 851.0 760.6 774.3 801.9 742.5 694.2 665.6 613.5 620.1 561.3
Receivables
Investments
Intangibles
32.7
31.4
29.6
27.2
30.4
30.4
28.4
29.5
27.5
23.3
19.1
12.2
12.5
139.9 138.5 129.0
97.2
87.7
72.5
67.6
66.9
40.8
38.1
35.6
33.6
30.8
263.9 183.9 184.8 183.0 179.1 169.0 169.4 164.4 164.6 165.0 165.5 166.4 146.6
Other non-current assets
0.0
0.0
3.5
0.0
0.0
0.0
0.0
2.7
22.9
19.0
19.7
17.1
28.5
Total assets
1,813.3 1,633.7 1,613.1 1,466.2 1,331.9 1,355.0 1,358.1 1,239.1 1,174.7 1,122.0 1,049.6 1,022.7 923.0
Current borrowings & creditors
121.8 105.4 115.0
99.2 106.4 106.5
98.4 145.5 125.8 323.5 294.6 306.3
58.3
Current provisions
44.2 105.8
78.5
34.5
52.6
55.4
44.5
49.5
54.1
58.2
48.1
42.3
54.8
Non-current borrowings
390.1 259.1 299.3 258.7 150.2 200.5 410.5 281.9 210.7
1.0
1.1
1.5 200.8
Deferred income tax & other
non-current provisions
120.5 101.6 114.4 116.7
88.4
95.6 102.8
94.3 109.1 105.3 116.8
97.0
83.3
Total liabilities
676.6 571.9 607.2 509.1 397.6 458.0 656.2 571.2 499.7 488.0 460.6 447.1 397.2
Net assets
Share capital
Reserves
1,136.7 1,061.8 1,005.9 957.1 934.3 897.0 701.9 667.9 675.0 634.0 589.0 575.6 525.8
727.9 699.1 696.6 694.6 692.7 690.4 540.4 514.0 513.3 513.3 512.8 512.8 512.1
3.3
4.3
2.1
2.3
2.6
2.9
3.5
14.5
13.3
14.0
12.8
30.4
30.6
Retained profits
402.8 355.6 304.4 257.3 236.0 200.6 155.0 136.4 139.8
98.4
54.1
22.4
-19.9
Shareholders’ equity attributable to
members of the Company
1,134.0 1,059.0 1,003.1 954.2 931.3 893.9 698.9 664.9 666.4 625.7 579.7 565.6 522.8
Non-controlling interests
2.7
2.8
2.8
2.9
3.0
3.1
3.0
3.0
8.6
8.3
9.3
10.0
3.0
Total shareholders’ funds
1,136.7 1,061.8 1,005.9 957.1 934.3 897.0 701.9 667.9 675.0 634.0 589.0 575.6 525.8
Share information
Net Tangible Asset Backing ($/share)
1.35
1.38
1.29
1.22
1.19
1.15
0.97
0.93
0.94
0.87
0.78
0.76
0.70
Return on funds employed
17.7% 17.0% 18.0% 19.4% 20.0% 17.3% 18.0% 18.1% 16.7% 15.9% 13.4% 12.7% 11.7%
Basic earnings per share (¢/share)
26.9
23.7
24.0
23.3
23.9
20.4
22.2
21.0
18.8
16.8
17.2
10.7
Diluted earnings (¢/share)
26.8
23.4
23.8
23.2
23.7
20.3
22.0
20.8
16.4
16.2
14.6
10.7
9.9
9.9
Total dividend (¢/share)
17.0 1 19.51
16.51
16.51
21.51
13.51
15.01
18.51
18.51
10.51
7.51
6.0
5.25
Interim dividend (¢/share)
Final dividend (¢/share)
Special dividend (¢/share)
7.51
9.51
-
7.51
9.01
3.01
7.51
9.01
-
7.51
9.01
-
7.51
9.01
5.01
5.51
8.01
-
6.51
8.51
-
6.01
9.01
3.51
5.01
7.51
6.01
4.251
3.51
2.752
2.54
6.251
4.01
3.251,6 2.753
-
-
-
-
Gearing
11 Fully franked
12 60% franked
13 35% franked
14 20% franked
31.7% 23.4% 30.9% 26.0% 15.9% 19.6% 55.3% 48.4% 33.6% 35.8% 31.4% 37.7% 34.6%
15 Dividend declared after year end as a
17 Restated for changes to accounting policies
result of Boral Ltd Takeover Offer of
(Note 42 to the 2013 Financial Statements)
Adelaide Brighton Ltd
16 Restated for AIFRS
ADELAIDE BRIGH TON LTD A ND I TS CO NT RO LLED E NT I TI ES
FOR THE YEA R END ED 31 D ECE M BER 2 01 4
109
Information for shareholders
Annual general meeting
Online services
Change of address
The annual general meeting of shareholders
Shareholders can access information and
Shareholders who are Issuer Sponsored
will be held at the InterContinental, North
update information about their shareholding in
should notify any change of address to
Terrace, Adelaide, South Australia on
Adelaide Brighton Limited via the internet by
the share registry, Computershare Investor
Wednesday 27 May 2015 at 10.00 am.
visiting Computershare Investor Services Pty
Services Pty Limited, by telephone or in
Ltd website: www.investorcentre.com
writing quoting your security holder reference
Securities exchange listing
Some of the services available online include:
Adelaide Brighton Ltd is quoted on the official
check current holding balances, choose
list of the Australian Securities Exchange and
your preferred annual report option, update
trades under the symbol “ABC”. Adelaide is
address details, update bank details, confirm
Adelaide Brighton Ltd’s home exchange.
whether you have lodged your TFN, ABN
number, previous address and new address.
Broker Sponsored (CHESS) holders should
advise their sponsoring broker of the change.
Investor information other than that
relating to a shareholding can be
obtained from:
Registered office
Level 1, 157 Grenfell Street
Adelaide SA 5000
Telephone: 08 8223 8000
Facsimile: 08 8215 0030
Enquiries or notifications by shareholders
regarding their shareholdings or dividends
should be directed to Adelaide Brighton’s
share registry:
or exemption, view your transaction and
dividend history or download a variety of
forms.
Group Corporate Affairs Adviser
Direct credit of dividends
Dividends can be paid directly into an
Australian bank or other financial institution.
dividend payment day and subsequently
confirmed by mailed payment advice.
Application forms are available from our
Adelaide Brighton Ltd
GPO Box 2155
Adelaide SA 5001
Telephone 08 8223 8005
Facsimile 08 8215 0030
Email adelaidebrighton@adbri.com.au
Communications
share registry, Computershare Investor
Our internet site www.adbri.com.au offers
Services Pty Ltd or visit the website at
access to our ASX announcements and news
Enquiries about your shareholding
Payments are electronically credited on the
Computershare Investor Services Pty Limited
www.computershare.com.au/easyupdate/abc
releases as well as information about our
Level 5, 115 Grenfell Street
Adelaide SA 5000
Telephone 1800 339 522
International 613 9415 4031
Facsimile 1300 534 987
International 618 8236 2305
to update your banking details.
operations.
Dividend Reinvestment Plan (DRP)
Substantial shareholders
Following payment of the interim dividend on
Barro Properties Pty Ltd, by a notice of
20 October 2014, Adelaide Brighton’s DRP
change of interests of substantial shareholder
has been suspended until further notice.
dated 20 October 2014, informed the
When communicating with the share registry,
In future, if the DRP is reactivated, it will be
Company that it or an associate had a
shareholders should quote their current
notified by way of an ASX announcement.
relevant interest in 218,401,971 ordinary
address together with their Security Reference
Number (SRN) or Holder Identification
Number (HIN) as it appears on their Issuer
Sponsored/CHESS statement.
shares or 33.7% of the Company’s issued
share capital.
On market buy back
At 1 April 2015 there is no on-market
buy back of the Company’s shares being
undertaken.
ADELAIDE BRIGHTON LT D A N N U AL R EP OR T 2 0 1 4
110
ADELAIDE BRIGHTON LTD ANNUAL REPORT 2014
Twenty largest shareholders shown in the Company’s Register of Members as at
Unquoted securities
1 April 2015
Shareholder
Number of ordinary % of issued
Executive Officer and other members of the
shares held
capital
senior executive team under the Adelaide
3,319,601 Awards issued to the Chief
Brighton Ltd Executive Performance
Share Plan as part of the Company’s long
term incentive program. The Awards are
not quoted and do not participate in the
distribution of dividends and do not have
voting rights. The total number of participants
in the Adelaide Brighton Ltd Executive
Performance Share Plan and eligible to
receive the Awards is seven.
Barro Properties Pty Ltd
172,876,906
26.67
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Barro Group Pty Ltd
Citicorp Nominees Pty Limited
National Nominees Limited
BNP Paribas Noms Pty Ltd
Argo Investments Ltd
HSBC Custody Nominees (Australia) Limited
UBS Wealth Management Australia Nominees Pty Ltd
AMP Life Limited
60,705,391
53,383,388
43,752,619
42,941,998
30,649,316
10,091,248
7,681,385
3,927,830
3,807,806
3,075,839
Citicorp Nominees Pty Limited
2,850,745
Milton Corporation Limited
Sandhurst Trustees Ltd
2,735,886
2,027,236
BNP Paribas Nominees Pty Ltd
1,640,500
The Australian National University
Questor Financial Services Limited
Geoff and Helen Handbury Foundation Pty Limited
Netwealth Investments Limited
Bond Street Custodians Limited
1,570,000
1,413,988
1,182,858
1,128,447
1,075,039
9.36
8.23
6.75
6.62
4.73
1.56
1.18
0.61
0.59
0.47
0.44
0.42
0.31
0.25
0.24
0.22
0.18
0.17
0.17
Total top 20 shareholders
Total remaining holders balance
Voting rights
448,518,425
199,749,242
69.19
30.81
All shares at 1 April 2015 were of one class with equal voting rights being one vote for each
shareholder and, on a poll, one vote for each fully paid ordinary share.
Shares held as at 1 April 2015
100,001 - 101,000
101,001 - 105,000
105,001 - 110,000
110,001 - 100,000
100,001 - over
Total shareholders
Number of % of issued
shareholders
capital
3,707
9,785
4,977
4,252
177
0.27
4.29
5.68
14.85
74.91
22,898
100.00
Less than a marketable parcel of 112 shares
740
ADELAIDE BRIGH TON LTD A NN UAL R EP OR T 20 14
111
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ADELAIDE BRIGHTON LT D A N N U AL R EP OR T 2 0 1 4
112
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reduces emissions then offsets the
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The Adelaide Brighton logo, the MCI logo, the
Cockburn Cement logo, the Swan Cement logo,
the Northern Cement logo, the Hy-Tec logo, the
Adbri Masonry logo, the Southern Quarries logo,
the Direct Mix Concrete logo and the Penrice
Quarry & Mineral logo are trade marks of Adelaide
Brighton Ltd or its related bodies corporate.
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Adelaide Brighton Ltd
ABN 15 007 596 018
Level 1
157 Grenfell Street
Adelaide
South Australia 5000
GPO Box 2155
Adelaide SA 5001
Telephone 08 8223 8000
Facsimile 08 8215 0030
Web www.adbri.com.au