Ashley Services Group Limited
ABN: 92 094 747 510
Annual Report
For the Year Ended 30 June 2014
Ashley Services Group Annual Report 2014
CHAIRMAN'S REVIEW ----------------------------------------------------------------------------------------------------------------------- 3
MANAGING DIRECTOR'S REVIEW-------------------------------------------------------------------------------------------------------- 5
DIRECTORS’ REPORT ----------------------------------------------------------------------------------------------------------------------- 15
AUDITOR'S INDEPENDENCE DECLARATION ------------------------------------------------------------------------------------------ 24
CORPORATE GOVERNANCE STATEMENT --------------------------------------------------------------------------------------------- 25
DIRECTORS’ DECLARATION --------------------------------------------------------------------------------------------------------------- 33
INDEPENDENT AUDITOR’S REPORT ---------------------------------------------------------------------------------------------------- 34
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME --------------------------- 37
CONSOLIDATED STATEMENT OF FINANCIAL POSITION -------------------------------------------------------------------------- 38
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY --------------------------------------------------------------------------- 39
CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------------------------------------------------------- 40
NOTES TO THE FINANCIAL STATEMENTS --------------------------------------------------------------------------------------------- 41
ASX ADDITIONAL INFORMATION ------------------------------------------------------------------------------------------------------- 73
CORPORATE DIRECTORY ------------------------------------------------------------------------------------------------------------------ 75
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
2
Chairman’s Review
MR PETER TURNER
THE YEAR IN REVIEW
25 September 2014
I am pleased to present to you my first report as Chairman of Ashley Services Group
Limited (“Ashley Services” or “ASG”), since listing on the Australian Securities
Exchange on the 21 August 2014.
Ashley Services is a diversified company operating in the training and labour hire
industries within Australia. Its training business is one of Australia’s largest non-
government Vocational Education and Training (“VET”) providers and its labour hire business is a leading
provider to the warehouse and logistics industries.
First I would like to welcome all our new shareholders who became investors as part of the listing. I have tried
to make this first report as informative as possible.
Notwithstanding this, there is some level of duplication of information to that included in the prospectus,
lodged with the Australian Securities and Investment Commission on 7 August 2014 (“Prospectus”).
Second, I would like to acknowledge the hard work of those involved in the listing process, including our Joint
Lead Managers, Canaccord Genuity and Evans & Partners, financial advisers, reporting accountants,
Grant Thornton and our corporate lawyers, Norton Rose Fulbright. However, I would like to particularly thank
Ross Shrimpton and his hard working executive team for their diligence during the listing process, and at the
same time coping with the daily management of the business.
I am pleased to advise that our first reported results for the year ended 30 June 2014 were in-line with that of
our pro forma forecasts, which were published in the Prospectus. Full details of the audited pro forma results
are included in the Managing Director’s Review.
The Board is extremely pleased with the development Ashley Services business has made, including:
the continued development and extension of new qualifications, including automotive and general trades;
completing the acquisition of the Integracom business;
development of facilities in Queensland to cope with the new demand driven model;
establishment of the new facilities in Melbourne for various courses;
growth in the labour division, in particular, the number of major customers; and
the continued reduction in the level of injury hours for the labour hire division.
Ashley Services will continue with its focus on:
building its existing relationships with customers;
increasing the level of cross selling between the labour hire and training divisions; and
focusing on acquisitions that meet the key criteria of the Board.
This, combined with our strong national presence and increasing customer base, places Ashley Services in a
strong position to capitalise and develop its core business. Additionally, the Company‘s conservative statement
of financial position allows it to capitalise upon strategic acquisition opportunities.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
3
Chairman’s Review
I look forward to the year ahead and the continued success of Ashley Services arising from the momentum
created by Ross Shrimpton and his management team prior to the initial public offering. Your Board is excited
about the many opportunities that are available to Ashley Services both organically and through acquisition.
Peter Turner
Chairman
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
4
‘‘
‘‘
The key to our ongoing success is our integrated
business model and national footprint ‘‘
Managing Director’s Review
MR ROSS SHRIMPTON
MARKET AND RESULTS OVERVIEW
The 2014 financial year has been a rewarding year with many notable
achievements. The significant efforts of our management team during the year
were realised with a successful initial public offering (“IPO”) which was completed
on the 21 August 2014.
I am pleased to report that the Ashley Services and the various entities acquired
after 30 June 2014 (referred to as the “Pro Forma Group”) achieved the forecast
results set out in the Prospectus.
Management of the Group believe the pro forma results are relevant to our stakeholders as it includes the full
year performance of entities acquired during the financial year and subsequent to year end. Providing Pro
forma results illustrates the performance of the newly established Group.
DISCUSSION ON RESULTS
Statutory result
The year ended 30 June 2014 has seen significant expansion in the Ashley Services labour hire business,
contributing to the overall growth in revenues from $106.3 million to $196.7 million or 85%. The key drivers
for this growth have been set out in the pro forma discussion below. However, in short, the key areas for
growth include the securing of a major logistics customer and general increase in volumes across the board.
The platform for these increases was laid some time ago with Ashley Services’ deliberate strategy of seeking
out large corporate accounts that can deliver high volumes at a reasonable rate.
Despite the growth in revenues, gross margins have declined from 8.3% to 5.9%, reflecting the tight market
conditions.
Ashley Services experienced a decline in training revenues by approximately 68%. This decline reflects the
movement of training activities to a related company (ASH Pty Limited), which is covered by the discussion in
the pro forma section below.
Pro Forma results
The following section is a discussion of the pro forma financial information being that information disclosed in
the Prospectus dated 7 August 2014 (“Prospectus”). Full details of the pro forma financial information have
been set out in the section below titled “Pro forma Financial Information”.
Set out below is an overview of the comparison of the pro forma actual versus pro forma prospectus results
for FY 2014 and 2013, as set out in the Prospectus:
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
5
Managing Director’s Review
Table 1: Pro forma FY14 Results Compared to the Prospectus and FY13 Results
Pro forma Actual
FY141 (audited)
$m
Pro forma
Prospectus FY14
(reviewed)
$m
Variance to
Prospectus
%
Pro forma
Prospectus FY13
(reviewed)
$m
Variance to FY13
%
287.1
21.9
22.9
15.0
285.1
21.9
22.8
15.0
+0.7
-
+0.4
-
176.0
12.5
13.0
8.5
+63.1
+75.2
+76.5
+76.5
Revenue
EBITA2
EBITDA3
NPATA4
Notes:
1. The FY14 Pro forma audited financial results incorporate Ashley Services Group, including Concept Engineering Pty Limited (“Concept”)
and Integracom Unit Trust (“Integracom”), as if they were owned by ASG for the whole year. A reconciliation of the statutory financial
results to the pro forma results is set out in the section below titled “Pro forma Financial Information”.
“EBITA” is defined to mean earnings before interest, taxes and amortisation.
2.
3. “EBITDA” is defined to mean earnings before interest taxes depreciation and amortisation.
4. “NPATA” is defined to mean net profit after tax but before amortisation (and related tax impacts).
Despite the demands and time devoted to the IPO, the Pro Forma Group achieved an outstanding result. The
key highlights for the Pro Forma Group’s results on a Pro forma basis were:
revenues 63.1% higher than for the 2013 financial year;
EBITDA was 76.2% higher than for the 2013 financial year; and
NPATA was also 76.5% higher than for financial year 2013.
Further discussion of the above is as follows:
Labour hire
labour hire revenues up 62.1% on FY 2013. This increase reflects a number of factors, including:
o securing of a major new logistics customer which has significantly contributed to the additional hours;
o general increase in volumes with most key customers;
o the full year impact of the OneForce acquisition; and
market conditions remain highly competitive and as a result, we have seen the continued decline in our
margin, with EBITDA margin down from 3.3% in FY 2013 to 3.0% in FY 2014.
Training
The training division has shown several positive aspects during the FY 2014, including:
overall increase in student numbers from approximately 12,000 to approximately 20,000;
continued growth in the average fee per student from $2,032.50 per student to $2,185.31, reflecting the
benefits of the Pro Forma Group’s willingness to invest in higher value qualifications and the increased
contribution of the telecommunications sector;
the implementation of the demand driven model (that is, where the student chooses the service training
provider) in Queensland, South Australia and Victoria. This model underpins the public sector of the
training business; and
increased enrolment levels arising from the demand driven model, particularly in South Australia and
Queensland.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
6
Managing Director’s Review
FY 2014 was a period where we have seen an increased level of confidence across our businesses. However,
market conditions generally remain highly competitive and the demands for extra value are growing. This is
particularly relevant to our labour hire business where conditions have become extremely tight and are
decreasing our margins.
In relation to the training division, we have seen an increase in compliance and government activity. Despite
this increase in regulation, sufficient funding for training programs across the whole of the business remains in
place. It is also interesting to note that despite the “tough” Federal Budget delivered earlier this year, we have
not seen any major adverse impacts on funding for training programs. I believe that this reflects the
Government’s desire to ensure that Australia has a sufficiently well trained workforce.
A key focus of the Pro Forma Group is the integration between our labour hire and training businesses,
overlayed with the strong support on quality personnel which is provided by The Blackadder Recruitment
business. An overview of this model is set out below:
The Group has also had a focus on ensuring that it has a national footprint and as a result, it expanded to
33 strategically located offices and 63 additional training locations around Australia. I believe that our
integrated business model and national presence will allow the Group to cater for larger national customers,
placing the Group in a unique position to differentiate ourselves from other industry competitors.
As noted in the Prospectus, recruitment forms part of the Labour Hire segment and they are collectively
treated as a single operating segment.
PRO FORMA FINANCIAL INFORMATION
The pro forma financial information has been prepared on the same basis as the pro forma consolidated
statement of profit or loss and other comprehensive income for the year ended 30 June 2014 published in the
Prospectus and has been adjusted for the matters detailed in this section.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
7
Corporate relationshipsSkills, qualifications, enhanced service offering and marginsTrainingRecruitmentLabour HireWork experience / Jobs for candidatesCaptive workforceCorporate relationshipsTrainers / Competitive advantageQuality control/Cost savingsCorporate relationshipsCross Selling Opportunities
Managing Director’s Review
Results
A discussion on the actual pro forma results versus the pro forma forecasts results as set out in the Prospectus
has been set out in the in the proceeding section “Discussion on results”. This section is to provide further
details of the pro forma and actual results of operating and financial results, statement of financial position and
statement of cash flows for the Group.
Below is a comparison of the Pro forma actual results to the pro forma forecasts results in the Prospectus:
Table 2: FY 2014 Actual v Prospectus forecast for FY 2014
$m
Revenue
Labour Hire
Training
Total Revenue
EBITDA
Labour Hire
Training
Corporate costs
Total EBITDA
Depreciation
EBITA
Amortisation
EBIT
Net Interest Expense
Net Profit Before Tax (NPBT)
Income Tax Expense
Net Profit After Tax (NPAT)
NPATA
30 June 20141
Pro forma actual
(audited)
30 June 20142
Pro forma forecast
Variance
245.4
41.7
287.1
7.3
16.8
(1.2)
22.9
243.6
41.5
285.1
7.3
16.8
(1.3)
22.8
(1.0) (0.9)
21.9
(0.1)
21.8
(0.5)
21.3
(6.4)
14.9
15.0
21.9
(0.1)
21.8
(0.5)
21.3
(6.4)
14.9
15.0
1.8
0.2
2.0
-
-
0.1
0.1
(0.1)
-
-
-
-
-
-
-
-
Notes:
1. For details in relation to the pro forma results, please refer to Table 3: Summary of Earnings for FY 2012 to FY 2014
2. As per the Prospectus
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
8
Managing Director’s Review
Set out below are key statistics relevant to the Group for the years ended 30 June 2012 to 30 June 2014:
Table 3: Summary of Earnings for FY 2012 to FY 2014
$m
Revenue by Business Channel
Labour Hire
Training
Total Operating Revenue
EBITDA by Business Channel
Labour Hire
Training
Corporate
Total EBITDA
EBITA
EBIT
NPBT
NPAT
NPATA
Group Statistics
Revenue Growth
Gross Profit Margin
EBITDA Margin
EBITDA Growth
EBITA Margin
EBITA Growth
EBIT Margin
EBIT Growth
NPAT Margin
NPAT Growth
Labour Hire Statistics
Revenue Growth
EBITDA Margin
EBITDA Growth
Total Hours Charged ('000)
Average Hourly Rate
Training Statistics
Revenue Growth
EBITDA Margin
EBITDA Growth
Total Enrolments
Average Fee Income per student
Corporate Statistics
Corporate Expenses
Growth in Corporate Expenses
Notes:
Pro forma financial information is inclusive of the following:
1.
30 June 2012
Pro forma1
30 June 2013
Pro forma1
30 June 2014
Pro forma1
(audited)
141.1
21.3
162.4
5.9
7.7
(1.2)
12.4
12.0
12.0
11.0
8.3
8.3
18.50%
19.30%
7.60%
(0.30%)
7.40%
(0.40%)
7.40%
(0.40%)
5.10%
0.30%
16.80%
4.20%
(21.70%)
3,368
$41.89
31.80%
36.20%
29.60%
9,276
2,296.25
1.20
15.40%
151.4
24.6
176.0
5.0
8.9
(0.9)
13.0
12.4
12.4
12.0
8.4
8.4
8.40%
19.10%
7.40%
4.80%
7.00%
3.30%
7.00%
3.30%
4.80%
1.20%
7.30%
3.30%
(15.30%)
3,569
$42.42
15.50%
36.20%
15.60%
12,103
2,032.55
0.90
(25.00%)
245.4
41.7
287.1
7.3
16.8
(1.2)
22.9
21.9
21.8
21.3
14.9
15.0
63.10%
18.10%
8.00%
76.20%
7.60%
76.60%
7.60%
75.80%
5.20%
77.40%
62.10%
3.00%
46.00%
6,048
$40.58
69.50%
40.30%
88.80%
19,802
2,105.85
1.20
33.30%
related companies who were acquired by Ashley Services on 1 July 2014 referred to as the “ASH Consolidation”
ADV Services Pty Limited;
Ashley Institute Holdings Pty Limited;
full year results for Concept even though it was acquired part way through the year;
TBRC Holdings Pty Limited;
Tracmin Pty Limited; and
Australian Institute of Vocational Development Pty Limited.
2.
3. On 24 June 2014 the Group also entered into a contract with the owners of Integracom (which was completed on 20 August 2014) and
as such, the historical financial performance of the company is included in the above pro forma results.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
9
Managing Director’s Review
Set out below is a reconciliation from the statutory revenues to pro forma revenues:
Table 4: Reconciliation from Statutory to Pro forma Revenue
$m
Statutory Revenue
Impact of the ASH Consolidation
Impact of acquisitions
Pro forma Revenue
Note
1
2
FY14
196.7
54.2
36.2
287.1
Notes:
1. Revenues from those companies under the ASH Consolidation.
2. On 1 May 2014, ASG acquired 100% of Concept. The Pro forma adjustment in the table represents revenue derived by Concept for the
10 months to 30 April 2014. In addition, it reflects the 12 months revenue from Integracom which was acquired on 20 August 2014.
Set out below is a reconciliation from the statutory EBITDA to pro forma EBITDA:
Table 5: Reconciliation from statutory EBITDA to Pro forma EBITDA
$m
Statutory EBITDA
Impact of ASH Consolidation
Impact of acquisitions
Pro forma EBITDA
Note
1
2
FY14
4.3
9.8
8.8
22.9
Notes:
1. The Pro forma EBITDA includes the effects of the ASH Consolidation.
2. The Pro forma EBITDA includes the EBITDA from Integracom and Concept, on the same basis as that outlined in Pro forma revenue set
out above.
A reconciliation from the statutory NPAT to pro forma NPAT is also detailed below:
Table 6: Reconciliation from statutory NPAT to pro forma NPAT
$m
Statutory NPAT
Impact of the ASH Consolidation
Impact of acquisitions
Pro forma NPAT
Note
1
2
FY14
3.0
6.1
5.8
14.9
Notes:
1. The Pro forma NPAT includes the effects of the ASH Consolidation.
2. The Pro forma NPAT includes the EBITDA from Integracom and Concept, on the same basis as that outlined in Pro forma revenue set
out above.
Set out below is the pro forma statement of financial position as at 31 December 2013 in the prospectus
compared to the actual pro forms statement of financial position as at 30 June 2014:
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
10
Managing Director’s Review
Table 7: FY14 Pro forma statement of financial position
$m
Cash and Cash Equivalents
Trade & Other Receivables
Property, Plant & Equipment
Deferred Tax Assets
Intangible Assets
Other Assets
Total Assets
Trade & Other Payables
Borrowings
Current Tax Liabilities
Deferred Tax Liabilities
Provisions
Total Liabilities
Net Assets
Pro forma
Prospectus
as at 31 Dec 13
(unaudited)
18.6
39.4
3.2
5.8
74.1
0.6
141.7
25.5
22.8
2.8
0.7
1.7
53.5
88.2
Pro forma
Actual
as at 30 Jun 14
(audited)
19.1
30.5
4.7
6.8
73.9
0.6
135.6
22.0
18.8
2.6
2.2
1.8
47.4
88.2
Key assumptions in the preparation of pro forma balances:
identified under the ASH Consolidation for financial reporting purposes as at
those companies
30 June 2014;
Integracom which was only acquired subsequent to year end (the acquisition has been provisionally
accounted for the purposes of the pro forma balances);
issue of 59.5 million shares at $1.66 per share through the initial public offering which was completed on 21
August 2014;
payment of costs of for the initial public offering of $6.3 million; and
payment of dividends of $33.2 million to the former sole shareholder of the Company.
Key points to note in relation to the above:
Working capital and capital expenditure
Decline in trade receivables and payables between 31 December 2013 and 30 June 2014 is seasonal –
particularly in relation to the Labour Hire business.
Net Debt
Net debt has improved since 31 December 2013 from $4.2 million to a net cash position of $0.3 million. This
improvement represents improved cash collections over the last six months. The net debt does not reflect
certain professional fees associated with the listing of ASG and these have been paid since balance date. The
Pro forma assumed that all professional costs would be paid.
Ashley Services has also entered into a $24 million banking facility with BankWest, which provides for
additional liquidity for the Company.
Net Assets
There is no difference in net assets due to the payment of dividends to the vendors, as disclosed in the
Prospectus.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
11
Managing Director’s Review
Cash flows
Table 8: FY14 Pro forma cash flows
$m
EBITDA
Changes in Working Capital
Operating Cash Flows before CAPEX
Capitalised Course Material Costs and other Payments for Property, Plant &
Equipment
Operating Cash Flows after CAPEX
Net Interest Paid
Income Tax Paid
Operating Cash Flows Before Dividends
Cash Conversion Ratio1
Note:
1. Operating cash flow after capital expenditure as a percentage of EBITDA.
Pro forma
Prospectus Forecast
FY14 (unaudited)
Pro forma Actual
FY14 (audited)
22.8
(6.5)
16.3
(1.6)
14.7
(0.4)
(6.1)
8.2
22.9
(1.2)
21.7
(2.2)
19.5
(0.5)
(8.9)
10.1
64.5%
85.2%
Key points:
Operating cash flow exceeded Prospectus. Factors causing the increase include:
o improved debtor collections; and
o focus on cash flow management, including timing of payments to suppliers.
Greater level of capital expenditure than that included in the Prospectus. Factors causing the increase
include:
o greater than forecasted level of expenditure on course developments to support the organic growth
strategy;
o greater level of equipment purchases for the telecommunication business to support national
expansion; and
o minor over-runs for the head office fit-out.
Income tax instalments are calculated based on a fixed percentage, as set by the Australian Taxation Office.
The actual amount of income tax paid in FY14 is higher than that of the Prospectus, due to the increased
revenue from the Labour Hire division where tax has been based on the fixed instalment rate. As a
consequence, this has result in an increased amount in tax instalments paid, which was not included in the
Prospectus. The additional amount of tax paid is a timing difference.
CAPITAL MANAGEMENT
With the completion of the IPO, Ashley Services has at its disposal substantial cash reserves. These reserves,
together with the strong cash flows from the ongoing operations of the Group and the banking facilities with
BankWest Limited, places it in a strong position with which to capitalise upon new opportunities.
The Group will continue its focus on working capital management particularly in relation to the labour hire
business which is capital intensive. I am pleased to note that despite the substantial increase in the value of
labour hire revenues, the Group was able to achieve a cash conversion rate of 85.2% on a Pro forma basis. This
was an improvement on the forecast rate of 64.5% that was referenced in the Prospectus.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
12
Managing Director’s Review
STRATEGIC FOCUS
Ashley Services has, and will continue to have, a
strategic focus on the following:
37
added
qualifications
developing the number of qualifications with a
In
focus on higher value qualifications.
particular, as noted in the Prospectus, the Group
has
and
new
31 existing qualifications were upgraded in the
last two years. The Group remains committed to
assessing and developing those qualifications
which meet the demand and needs nationally.
These qualifications continue to attract ongoing
targeted and better resourced funding so as to
ensure long term sustainability;
supporting the demand driven model in the
various states that have provided this support
historically, as well as, New South Wales which
implements this model in FY 2015;
using its integrated model to cross sell between
the labour hire and training divisions;
in trade
level of upskilling
increasing the
qualifications, for example, moving students
from Certificate III to Certificate IV;
continuing focus on developing suitable trainers
to ensure the delivery of high quality training;
cultivating our focus on the apprentice and
trades industry personnel;
focussing on labour hire clients which fit the skill
set of the existing business;
looking to establish new government funding
such as VET FEE-HELP; and
continuing our acquisition strategy for labour
hire and training businesses. Target acquisitions
complement the existing business model and
provide potential operating synergies.
IMPROVED PRODUCTIVITY
The Group is focused on the continued improvement
of business processes and is currently looking into
automated systems to improve efficiency within the
business. Currently, management believe that there
is significant reliance on manual processes, which is
impacting upon the Group’s cost structure.
GROUP TECHNOLOGY STRATEGY
As noted above, the Group is looking to improve its
systems. As a result, the Group is looking to
undertake a change in its student management
systems so as to achieve greater efficiencies in the
operation as well as a reduction in the cost base of
the Group’s business.
KEY BUSINESS RISKS
A detailed listing of the business risks that pertain to
the Group is set out in the Prospectus. However, a
summary of the key risk areas and the Group’s
strategy in dealing with these risks are as follows:
Training
strong focus on quality assurance to ensure that
is compliance with registered training
there
organisation (“RTO”) audit requirements;
contracts
a significant proportion of the Group’s training
revenues are government funded. There is a risk
that the Group could lose one or more of those
funding
for breaches of non-
compliance. Additionally, a loss of a funding
contract, unsuccessful renewal of an existing
contract or a reduction in VET funding by any
government agency generally or to sectors which
the Group operates in, could have a material
adverse effect on the Group’s earnings and
Accordingly, ensuring
financial position.
diversification of contracts with various state and
federal authorities assists with the mitigation of
such risks. The Group currently has over 15
funding contracts with various state and federal
authorities;
a number of
in
state
governments have
implemented or are
the process of
implementing a demand driven funding model
which allows the student in these states to
determine which provider (public or private) will
provide training services. This results in the
training services provider being subsidised for
the delivery of training services. The Group’s
financial performance could be adversely
affected by any reversal or delay
in the
implementation of the demand driven funding
model. The Group constantly monitors the
performance and relevance of its content so as
to ensure that it remains relevant in the market
place. Additionally, the Group uses its integrated
model to effect; that is, it offers employment
opportunities as part of its trainings services;
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
13
Managing Director’s Review
continued focus on ensuring that sufficient
attention is given to non-government funded
training programs; and
there a number competitive factors faced by the
Group including, quality of qualifications, pricing,
reputation and employability of
perceived
graduates from training programmes.
New
competitors, consolidation of existing market
participants and changes in government policy
may all affect the current competitive landscape.
The Group monitors the competitive landscape
for the above risks and more
importantly
attempts to be proactive in its market place.
Labour hire
The Group constantly reviews
there are a number of industrial agreements for
its contract labour force and failure to renew
such agreements could have a material adverse
impact on the Group.
Where appropriate,
suitable enterprise bargaining agreements are
entered into with employees and trade unions
and these are reviewed and monitored prior to
their renewal;
the market place is highly competitive and price
sensitive.
it
pricing strategy, coupled with synergistic benefits
to remain competitive;
the Group has contracts that have short term
notice periods for termination.
The Group
attempts to manage existing relationships as well
as build new relationships to mitigate any loss of
contracts
there is a risk that customers may not renew
contracts during the course of the financial year.
The Group is focused on ensuring that there is a
strong pipeline of new work to both deal with
any lost customer and to continue to grow its
business; and
the Group has inherent risks associated with
workers compensation and insurance premium.
Achieving high safety standards is a focus of the
Group. The Group’s efforts can be seen by the
reduced number of lost work hours over the last
three years.
economic downturn which may affect both the
activity from training and labour hire businesses.
The Group attempts to position
itself with
counter cyclical product and;
the Group has a number of brands and enjoys
strong brand recognition in the market. A failure
to maintain these brands could affect the ability
to recruit future students and customers. The
Group constantly invests in its brands.
STATE FUNDING CONTRACTS
As outlined in the Company’s announcement of
18 September 2014, it has been able to successfully
remedy a default on one of its minor state funding
contracts. As a result the Group is now able to
accept enrolments under that funding contract. It is
also noted that the Company has no outstanding
contractual matters for any other funding contracts
held by it. It is not expected that any additional
revenue from this contract will be material to the
Group’s forecast earnings.
OUTLOOK
The Group is looking to build on the work done to
date and has published its forecasts for FY 2015 in
the Prospectus, a summary of these results is set out
below:
Table 9: FY 2015 Results
30 June 2015
Pro forma (forecast)
$
30 June 2015 Pro
forma (Statutory
forecast)
319.5
31.0
29.0
29.7
19.8
20.5
316.5
25.4
23.5
24.1
15.8
16.4
$m
Revenue
EBITDA
EBIT
EBITA
NPAT
NPATA
As at the date of this report, the directors confirm
these forecasts.
General
acquisition risks – that is, the risk of acquisitions
integrating with the
not being successfully
current business model;
Ross Shrimpton
Managing Director
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
14
Directors’ Report
Your Directors present their annual financial report on the consolidated entity, being Ashley Services Group
Limited (formerly Ashley Services Group Pty Limited, which became a listed company on 11 April 2014) and its
controlled entities (“Group”) for the financial year ended 30 June 2014.
GENERAL INFORMATION
a. Directors
The names of the Directors in office at any time during, or since the end of the year are:
Names
Mr Peter Turner
Mr Ross Shrimpton
Mr Simon Crean
Mr Vincent Fayad
Mr Marc Shrimpton
Mr Andrew Shrimpton
Appointed / Resigned
Appointed 21 July 2014
Appointed 12 October 2000
Appointed 31 July 2014
Appointed 31 July 2014
Appointed 1 June 2014, resigned as a Director on 31 July 2014
and appointed as an Alternative Director on 31 July 2014
Appointed 1 June 2014 and resigned 31 July 2014
The above named Directors held office since the start of the financial year to the date of this report unless
otherwise stated.
Directors’ Information
Mr Ross Shrimpton | Managing Director
Qualifications | BComm (UNSW), CA
Experience | Ross is the founder and Managing Director of Ashley Services. Ross has been a
Director of the Company since incorporation and has been instrumental in the overall growth and
strategic direction of Ashley Services.
He is a Chartered Accountant with over 40 years’ experience in finance and management across a
number of large international organisations such as CSR / Humes and David Brown. Ross
commenced his professional career with Deloitte Touche Tohmatsu, where he worked with a
number of major listed companies. Overall, Ross has had 18 years of relevant experience in the
labour hire and training industries.
His prime responsibility
is centred on the overall performance and management of
Ashley Services, as well as strategic direction, liaison with key executives, finance and
administration.
Ross is a member of the Remuneration Committee and Audit and Risk Management Committee.
Mr Peter Turner | Non-executive Chairman
Qualifications | BSc (Melbourne), MBA (RMIT)
Experience | Before joining Ashley Services, Peter worked in the biopharmaceutical industry for
over 40 years. Peter has held a number of senior positions within CSL Limited, including serving as
Chief Operating Officer and Executive Director. Peter was the founding President of CSL Behring,
purchased from Aventis in 2004. Between 2000 and 2011, Peter was based in Europe and the
United States and was responsible for the integration and performance of several international
businesses acquired by CSL. During his tenure, overseas sales grew from $140 million in 2000 to
$3.4 billion in 2011. Peter currently sits on the boards of Virtus Health Limited and
NPS MedicineWise as a Non-Executive Director. Peter is a graduate member of the Australian
Institute of Company Directors.
Peter is chairman of the Remuneration Committee, Audit and Risk Management Committee and a
member of the Nomination Committee.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
15
Directors’ Report
Mr Simon Crean | Non-executive Director
Qualifications | BEc (Monash), LLB (Monash)
Experience | Prior to joining Ashley Services, Simon was most recently a Member of Federal
Parliament and is a former leader of the Australian Labor Party. Simon has held various
ministerial portfolios, including Education, Trade, Training, and Workplace Relations.
Simon has served on the boards of Qantas and the Australian Industry Development Corporation.
Between 1985 and 1990, Simon was President of the Australian Council of Trade Unions and has
also served as General Secretary of the Federated Storemen and Packers Union of Australia.
Simon is a life member of the Australian Labor Party and the National Union of Workers, and an
Adjunct Professor of Deakin University.
Simon is currently a member of the Monash University Council and a non-executive director of
Linfox International Group. Simon has been awarded a Doctor of Letters by Deakin University.
Simon is chairman of the Nomination Committee and a member of the Remuneration Committee
and the Audit and Risk Management Committee.
Mr Vincent Fayad | Executive Director & Interim Chief Financial Officer
Qualifications | BBus (UTS), CA
Experience | Vince is a director of PKF Lawler Corporate Finance Pty Limited and has over
30 years’ experience in Chartered Accountancy. Vince holds a Bachelor of Business and is a
registered company auditor and tax agent. Vince has advised a broad range of listed and private
companies on a number of mergers and acquisitions and undertaken a number of transactions for
companies in the recruitment sector, including Initial Public Offers, independent expert reports,
valuations and purchase price allocations.
Vince has been an adviser to Ashley Services since incorporation. Vince is currently the acting
Chief Financial Officer of Ashley Services.
Vince has a strong background in accounting and finance as well as strategic and corporate issues.
He is currently the Non-executive Chairman of BioProspect Limited and a Non-executive Director
of Esperance Minerals Limited. He is also the company secretary of Astro Resources NL.
Mr Marc Shrimpton | Alternate Director to Ross Shrimpton (also a Director during the year)
Qualifications | Marc is currently a member of the Australian Institute of Company Directors.
Marc also holds a Diploma of Management and Leadership and Certificate IV in Workplace
Training and Assessment. He is currently undertaking the Owner / President Management
program at Harvard Business School, Boston.
Experience | Marc joined Ashley Services in 2000. Marc has been the key driver of Blackadder, a
professional labour hire and recruitment services business since acquiring the business in 2007.
Marc’s role with Blackadder has been as the Managing Director. As the business has developed,
Marc’s role has become more strategic and he has been actively involved in growing the national
footprint of the business.
Prior to the acquisition of Blackadder, Marc held a number of positions within Ashley Services,
including state manager roles in the Labour Hire and Training business and has over 14 years
relevant industry experience.
Marc is actively involved in the recruitment of senior people across Ashley Services and is a key
member of the management team.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
16
Directors’ Report
Interests in shares and options
As at the date of this report, the interests of the directors in the shares of Ashley Services Group Limited were:
Table 10: Shares Held by Directors
Names
Mr Peter Turner
Mr Ross Shrimpton
Mr Simon Crean
Mr Vincent Fayad
Mr Marc Shrimpton
Number of Shares
Held
Shareholding
%
186,747
82,500,000
52,710
60,240
1,500,000
0.12
55.00
0.04
0.04
1.00
Directorships of other listed companies
Directorships held in other listed companies by the Directors in the three years immediately before the end of
the financial year are as follows:
Table 11: Other Directorships
Name
Company
Date from
Date to
Mr Peter Turner
Mr Ross Shrimpton
Mr Simon Crean
Mr Vincent Fayad
Virtus Health Limited (ASX: VRT)
CSL Limited (ASX: CSL)
17 May 2013
1 January 2010
Current
17 October 2012
Nil
Nil
-
-
-
-
Global Strategic Metals NL (ASX: GSZ)
Metal Bank Limited (ASX: MBK)
BioProspect Limited (ASX: BPO)
Esperance Minerals Limited (ASX: ESM)
Triple Point Technologies Pty Limited –
formerly Qmastor Limited (ASX: QML)
22 March 2012
20 May 2011
29 April 2014
1 February 2013
30 October 2011
29 June 2012
30 October 2012
Current
Current
Delisted 13 January
2012 & still holds Office
Mr Marc Shrimpton
Mr Andrew Shrimpton
Nil
Nil
a. Principal activities
The principal activities of the Group during the
financial year were the provision of recruitment,
labour hire and training services.
There have been no significant changes in the nature
of the Group’s principal activities during the financial
year.
b.
Company secretary
Mr Ross Shrimpton held the position of a company
secretary from the beginning of the financial year to
21 July 2014.
-
-
-
-
The position of company secretary was immediately
filled by Mr Ronald Hollands up to the date of this
report.
Ron is a qualified Chartered Accountant and holds a
Bachelor of Business from University of Technology,
Sydney, an MBA from MGSM and a Graduate
Diploma of Applied Corporate Governance from the
Governance Institute of Australia.
Ron has over 25 years’ experience in a range of
industries including professional practice, financial
services and real estate.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
17
Directors’ Report
d.
Directors’ meetings
During the financial year, three meetings of directors (including committees of directors) were held.
Attendances by each director during the year were as follows:
Table 12: Meeting Attendance
Board
Audit & Risk
Management
Committee
Remuneration
Committee
Nomination
Committee
Held Attended
Held Attended
Held Attended
Held Attended
Mr Ross Shrimpton1
Mr Andrew Shrimpton
Mr Marc Shrimpton
3
-
-
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Note:
1. While Marc and Andrew Shrimpton were Directors for a portion of the year, all meetings during the year were held at the time that
Ross Shrimpton was the sole Director of the Company.
1.
BUSINESS REVIEW
a.
Operating results
The consolidated profit of the Group attributable
to equity holders after providing for income tax
amounted to $2,989,000 (2013: $2,918,000).
On 6 January 2014 the Group declared and paid a
final dividend of $2,500,000 to shareholders (2013:
$4,500,000).
b.
Review of operations
Information on the operations and
financial
position of the Group and its business strategies
and prospects is set out in the Chairman’s Review
and the Managing Director’s Review.
c.
Significant changes in state of affairs
On 1 May 2014 the Group acquired Concept
Engineering Pty Limited (refer to note 21(b) for
further details). During the financial year there
were no other material changes to the Group.
However, a number of significant events have
arisen since balance date and these include:
acquisition of a number of related entities
which form the “Ashley Services Group”;
initial public offering;
acquisition of Integracom, a significant provider
to the telecommunications industry; and
securing a funding facility with BankWest.
Note 28 set outs further details of these matters.
d.
Future developments
Likely developments
in the operations of the
consolidated entity in future financial years and
the expected results of those operations are
referred to generally in the Chairman’s Review and
the Managing Director’s Review.
e.
Events subsequent to balance date
Apart from the events which have been detailed in
Note 28 of the financial statements, there are no
other matters or circumstances that have arisen
since the end of the year that have significantly
affected either:
the groups operations in financial year 2015;
the forecast results of those operations in
financial year 2015.
2.
OTHER INFORMATION
a.
Options
There are no unissued ordinary shares that are
either under option at the date of this report or
have been exercised during the year.
b.
Non-audit services
The Group may decide to employ the auditor on
assignments additional to their statutory audit
duties where
the auditor’s expertise and
experience with the Group are important.
Details of the amounts paid to the auditor (Grant
Thornton)
for audit and non-audit services
provided during the year are outlined in Note 4 to
the financial statements.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
18
Directors’ Report
The Board of Directors has considered the position
and, in accordance with the advice received from
the Audit and Risk Management Committee, is
satisfied that the provision of the non-audit
services is compatible with the general standard of
the
independence of auditors
Corporations Act 2001. The Directors are satisfied
that the provision of the non-audit services by the
auditor, as set out below, did not compromise the
the
auditor
Corporations Act 2001 for the following reasons:
the services provided during the year ended
30 June 2014 primarily related to the initial
public offering of the Company;
requirements of
independence
imposed by
all non-audit services have been reviewed by
the Audit and Risk Management Committee to
ensure they do not impact the impartiality and
objectivity of the auditor; and
none of the services undermine the general
principles relating to auditor independence as
set out
‘Code of Ethics for
Professional Accountants’.
in APES 110
c.
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 24 and forms part of
this report.
d.
Environmental issues
The Group’s operations are not regulated by any
significant environmental regulation under a law of
the Commonwealth or of a state or territory.
e.
Indemnifying officers or auditors
Insurance of officers
During the financial year, Ashley Services Group
Limited paid a premium to insure the directors and
secretaries of the Group and its Australian entities.
The liabilities insured are legal costs that may be
incurred in defending civil or criminal proceedings
that may be brought against the officers in their
capacity as officers of entities in the Group, and
any other payments arising from liabilities incurred
by
such
proceedings. This does not include such liabilities
that arise from conduct involving a wilful breach of
duty by the officers or the improper use by the
connection with
the officers
in
officers of their position or of information to gain
advantage for themselves or someone else or to
cause detriment to the Group. It is not possible to
apportion the premium between amounts relating
to the insurance against legal costs and those
relating to other liabilities.
The Group has not otherwise, during or since the
end of the financial year, except to the extent
permitted by
indemnified or agreed to
indemnify an officer or auditor of the Group or of
any related body corporate against a
liability
incurred as such an officer or auditor.
law,
Details of the premium paid in respect of insurance
policies are not disclosed as such disclosure is
prohibited under the terms of the contract.
f.
Proceedings on behalf of the Company
No person has applied to the Court under section
237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Group, or to
intervene in any proceedings to which the Group is
a party, for the purpose of taking responsibility on
behalf of the Group for all or part of those
proceedings.
g.
Rounding off of amounts
The Group is a Company of the kind referred to in
ASIC Class Order 98/0100, dated 10 July 1998, and
in accordance with that Class Order amounts in the
Directors’ Report and the consolidated financial
statements are rounded off to the nearest
thousand dollars, unless otherwise indicated.
3.
REMUNERATION REPORT – AUDITED
the
remuneration
The directors of Ashley Services Group Limited
present
for Non-
executive directors, executive directors and other
in
key management
accordance with the Corporations Act 2001 and the
Corporations Regulations 2001.
personnel,
prepared
report
The remuneration report is set out in the following
main headings:
key management personnel;
principles used to determine the nature and
amount of remuneration;
non-executive Director remuneration;
details of remuneration;
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
19
Directors’ Report
executive service agreements;
share-based compensation; and
additional information.
a.
Key management personnel
The following persons acted as Directors of the
Group or as key management personnel during or
since the end of the financial year:
Executive directors:
Ross Shrimpton;
Vince Fayad;
Marc Shrimpton; and
Andrew Shrimpton.
Non-executive directors:
Peter Turner; and
Simon Crean.
Other key management personnel:
Brett O’Connor (General Manager, Training);
Paul Rixon (General Manager, Labour Hire);
Greg Jenkins (General Manager, Finance);
Ron Hollands (Company Secretary); and
John Knights (General Manager, Strategy and
Business Development, resigned 31 August
2014).
Key management personnel
include both the
Directors and other key management personnel
named above.
b.
Principles used to determine the nature and
amount of remuneration
is
that
to ensure
The objective of the Group’s executive reward
framework
for
performance is competitive and appropriate for
the results delivered. The framework seeks to
align executive reward with achievement of
strategic objectives and the creation of value for
shareholders.
reward
performance linkage / alignment of executive
compensation;
transparency; and
capital management.
Alignment of shareholders’ interest
focuses on sustained growth in shareholder
wealth, consisting of dividends and growth in
share price, and delivering constant return on
assets as well as focusing the executive on key
non-financial drivers of value; and
attracts and retains high-calibre executives.
Alignment to program participants’ interests
rewards capability and experience;
provides a clear structure for earning rewards;
and
provides recognition for contribution to the
business.
The framework provides a mix of fixed and variable
pay, and a blend of short and long-term incentives.
The Board has established a Remuneration
Committee which provides advice on remuneration
and incentive policies and practices and specific
recommendations on remuneration packages and
other terms of employment for executives and
Directors. The Corporate Governance Statement
provides further information on the role of this
committee.
Executive pay
The executive pay and reward framework has
three components:
base
including
benefits,
and
pay
superannuation;
short-term performance incentives; and
incentives provided
long-term
in cash and
through participation in the Ashley Services
Group Performance Rights Share Plan.
The Board seeks to ensure that executive reward
satisfies the following key criteria for good reward
governance practices:
competitiveness and reasonableness;
acceptability to shareholders;
The
these
combination of
executive’s total remuneration.
comprises
the
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
20
Directors’ Report
Base pay
Base pay is determined by reference to appropriate
into account an
information, taking
benchmark
individual’s
performance,
responsibilities,
qualifications and experience, the broad objective
being to pitch fixed remuneration at median market
levels.
Base pay is structured as a package, which may be
delivered as a mix of cash and other benefits, such
as the provision of a motor vehicle, at the
executive’s discretion. There are no guaranteed
base pay increases in any executives’ employment
contracts.
Short-term incentives
The Board determined there was no short-term
incentive plan for the year ended 30 June 2014.
remuneration paid to other non-executive Directors
of companies and where necessary will seek external
advice. No remuneration consultants were used
during the financial year.
In accordance with the Company’s Constitution, the
Directors are entitled to receive an annual fee and
for participation in board sub-committees. For non-
executive Directors
to
performance.
fees are not
linked
The company does not operate equity plans for non-
executive Directors.
Non-executive Directors are entitled to statutory
for statutory
Amounts paid
superannuation.
superannuation are
the
Directors’ fees. There are no other schemes for
retirement benefits for non-executive Directors.
included as part of
c.
Long-term incentive
e.
Details of remuneration
There were no long term incentive payments made
during the year ended 30 June 2014.
d.
Non-executive Director remuneration
Non-executive Directors’ remuneration are reviewed
annually and are determined by the Board based on
Remuneration
recommendations
Committee. In making its recommendations, the
into account
Remuneration Committee
takes
from
the
Details of remuneration of the Directors and other
key management personnel of Ashley Services
Group are set out in the tables on pages 21 to 22.
The key management personnel of Ashley Services
Group are as per page 20. The key management
personnel have authority and responsibility for
planning, directing and controlling activities of the
Group.
Remuneration and other terms of employment for the Executive Directors and other Key Management
Personnel are formalised in a service agreement. The majority provisions of the agreement relating to
remuneration are set out below:
Table 13: Executive and Key Management Personnel Service Agreements
Name
Ross Shrimpton
Vincent Fayad
Marc Shrimpton
Andrew Shrimpton
Brett O’Connor
Paul Rixon
Greg Jenkins
John Knights
Ron Hollands
Base Salary $
50,000
Term of agreement
Notice Period
Unspecified
6 months
Hourly rate for services provided
Unspecified
Not applicable – contractor
80,000
125,258
219,600
170,000
170,000
104,016
Unspecified
Unspecified
Unspecified
Unspecified
Unspecified
Unspecified
6 months
1 month
6 months
6 months
6 months
6 months
Hourly rate for services provided
Unspecified
Not applicable – contractor
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
21
Directors’ Report
Table 14: 2014 – Remuneration of Key Management Personnel
2014
Name
Non-executive Directors
Peter Turner
Simon Crean
Executive Director
Ross Shrimpton
Vincent Fayad5
Marc Shrimpton
Andrew Shrimpton
Other key management
personnel
Brett O’Connor
Paul Rixon
Greg Jenkins
John Knights
Ron Hollands
Total
ST1 employee benefits
Salary non-
Cash salary
cash
& fees
$
$
PE2
benefits
Super-
annuation
$
-
-
52,432
-
78,611
125,238
309,995
215,126
154,617
93,867
-
-
-
-
-
-
-
-
14,705
-
-
-
-
-
4,624
-
7,111
11,584
25,525
19,900
15,660
8,663
-
1,029,886
14,705
93,067
Termination
payments
LT3
employee
benefit
Share-based
payment
Performance
based
Remuneration
Total4
Shares &
options
$
-
-
-
-
-
-
-
-
-
-
-
$
-
-
57,056
-
85,722
136,822
335,520
249,731
170,277
102,530
-
- 1,137,658
$
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
%
-
-
12
-
7
8
35
32
-
-
-
-
Table 15: 2013 – Remuneration of Key Management Personnel
PE2
benefits
Termination
payments
LT3
employee
benefit
Share-based
payment
Total4
Performance
based
Remuneration
2013
Name
Non-executive Directors
Peter Turner
Simon Crean
Executive Director
Ross Shrimpton
Vincent Fayad5
Marc Shrimpton
Andrew Shrimpton
Other key management
personnel
Brett O’Connor
Paul Rixon
Greg Jenkins
John Knights
Ron Hollands
ST1 employee benefits
Salary non-
Cash salary
cash
& fees
$
$
-
-
55,000
n/a
81,157
125,238
191,667
183,915
-
-
-
-
-
-
-
14,302
Super-
annuation
$
-
-
-
-
6,921
11,271
18,538
16,547
Shares &
options
$
-
-
-
-
-
-
-
-
$
-
-
55,000
-
88,078
136,509
210,205
214,764
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
132,478
-
-
769,455
-
-
-
14,302
10,123
-
-
63,400
-
-
-
-
-
-
-
-
-
-
-
-
142,601
-
-
847,157
Total
Note:
1. ST – Short-term. 2. PE – Post-employment. 3. LT – Long-term.
4. Amounts included in the above table include amounts paid to key management from all entities. This includes entities which were
acquired by the Group subsequent to year end – refer to note 28.
5. During the year financial advisory fees have been paid to PKF Lawler Corporate Finance (Company in which Vincent Fayad is a
Director). These amounts were incurred prior to Vince’s appointment as Director and Interim CFO.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
%
-
-
-
-
8
8
19
21
7
-
-
-
22
Directors’ Report
Other
personnel
transactions with
key management
Information on share-based payments and other
transactions with key management personnel is set
out above.
f.
Shares held by key management personnel
The number of ordinary shares in the companies
during the 2014 reporting period held by each of the
groups’ key management personnel, including their
related parties are set out below:
Table 16: Shares held by Key Management Personnel
2014
Balance at
start of
the year
-
-
2,866
-
-
-
-
-
-
-
-
Name
Peter Turner
Simon Crean
Ross Shrimpton1
Vincent Fayad
Marc Shrimpton
Andrew Shrimpton
Brett O’Connor
Paul Rixon
Greg Jenkins
John Knights
Ron Hollands
Note:
1. This includes shares owned by Catherine Shrimpton (wife of
Shares
Purchased
-
-
4
-
-
-
-
-
-
-
-
Shares
Granted
-
-
-
-
-
-
-
-
-
-
-
Balance at
end of
the year
-
-
2,870
-
-
-
-
-
-
-
-
present and potential contributions are important to
the success of the Company and its subsidiaries by
offering them an opportunity to share
in the
ownership of the Company. The Performance Rights
Share Plan is administered by the Board in its
The terms and conditions of the
discretion.
Preference Rights Share Plan are summarised below.
No Performance Rights shares have been issued
during the year.
Should the Directors
issue shares under the
Performance Rights Share Plan, as required by
AASB2, the fair value of the shares
is
determined as the market price at grant date.
issued
Options
There are no options on issue as at the date of this
report.
Senior Executive options
No options were issued during the year to the senior
executives.
End of audited Remuneration Report.
Signed in accordance with a resolution of the Board
of Directors made pursuant to section 298(2) of the
Corporations Act 2001:
Ross Shrimpton) and their family company
g.
Executive service agreements
On appointment to the Board, all non-executive
Directors sign a letter of appointment with the
Company.
letter summarises the terms
including compensation, relevant to the office of
Director.
The
All contracts with executives may be terminated by
either party with a notice period as outlined in
Table 13 above. Executives are typically restricted
for six months after termination from conducting or
engaging
from
solicitation of customers and employees of the
Company.
in competing businesses and
h.
Share-based compensation
Senior Executive Share Plan
The Company established the Performance Rights
Share Plan on the 31 July 2014. The Performance
Rights Share Plan is intended to provide incentives
to attract retain and motivate key executives whose
Peter Turner
Chairman
Ross Shrimpton
Managing Director
Sydney, 25th September 2014
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
23
Level 17, 383 Kent Street
Sydney NSW 2000
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Auditor’s Independence Declaration
To the Directors of Ashley Services Group Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of Ashley Services Group Limited for the year ended 30 June 2014, I
declare that, to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
C F Farley
Partner - Audit & Assurance
Sydney, 25 September 2014
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.
24
Corporate Governance Statement
This Corporate Governance Statement is effective
from 31 July 2014 and was not in effect during the
financial year under review.
The Board of Directors (Board) is responsible for the
overall corporate governance of the Company and
has adopted as a guiding principle that it act
honestly, conscientiously and fairly in accordance
with the law and in the interests of the shareholders
with a view to building sustainable value for them,
the Company’s employees and other stakeholders in
the Company.
The Board has adopted a suite of governance
in the Corporate
materials which are available
Governance section of the Company’s website
(www.ashleygroup.com.au),
“Investor
Centre”.
The governance materials have been
prepared and adopted on the basis that corporate
governance procedures can add to the performance
of the Company and the creation of shareholder
value, and help to engender the confidence of the
investment market.
under
This statement sets out the material governance
principles and processes adopted by the Board. The
Board supports the Corporate Governance Principles
and Recommendations, 2nd edition as released by
the ASX Corporate Governance Council
(ASX
Principles). The Board considers and applies these
recommendations to the extent there is sound
reason to do so given the circumstances of the
Company.
The Board is responsible for the management of the
affairs of the Company and its subsidiaries including:
strategic and financial performance;
executive management;
audit and risk management;
strategic planning;
corporate governance; and
performance evaluation.
Directors’ attendance at Board and committee
meetings this year is set out on page 18. It is noted
that Ashley Services was a private company up to
11 April 2014 with a sole director and as such, the
quorum for a meeting was one person.
The role of senior management is to manage the
Company in accordance with the direction and
delegations of the Board and the responsibility of
the Board is to oversee the activities of management
in carrying out these delegated duties. The Board
approves all delegations of authority to Board
committees and management.
Senior management
invited to attend Board
meetings; however the initial part of each meeting is
conducted in the absence of senior management.
is
for
reserved
Responsibilities
the Board are
contained in the Board Charter which is available on
the Corporate Governance section of the Company’s
website. Management is responsible for the day to
day operation of the Company in line with Board
approved delegations of authority.
Board composition
The number of the Directors (excluding alternate
Directors) must be not less than three or more than
nine. Since listing on the 21 August 2014, the Board
comprised of two non-executive directors and two
executive directors. This is not in accordance with
the current Board Charter. This is considered to be a
temporary situation and will be resolved once a
Chief Financial Officer is appointed and Mr Fayad,
currently an executive director will become a non-
executive director and fulfil the third non-executive
director role. As an interim measure, the Chairman
has been given a casting vote to ensure that
decisions are made based on the non-executive
majority.
Independent Directors are those who have the
ability to exercise their duties unfettered by any
business or other relationship. It is the approach
and attitude of each non-executive Director which is
critical to determining independence and this must
be considered in relation to each Director. Other
relevant factors to be taken into account are set out
in the Board Charter which is available on the
Corporate Governance section of the Company’s
website.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
25
Corporate Governance Statement
The board review annually the independence of
each member of the board, in accordance with the
criteria for an “independent” Director, as set out in
the Company’s Board Charter. It is the attitude and
approach of each Director and the ability to bring an
independent judgement in Board deliberations that
is critical in determining independence of each such
member.
The Chairman
A Director may not simultaneously hold the
positions of Managing Director and Chairman of the
Board.
is a non-executive
independent Director and there is a clear division of
responsibility between the Chairman and the
Managing Director. The Chairman’s role is clearly
defined in the Board Charter.
With the exception of the Managing Director, no
Director is entitled to hold office for a period beyond
three years from re-election, but is eligible for re-
election by shareholders. The size and composition
of the Board are determined in accordance with the
in
Constitution of the Company.
accordance with the Board Charter, the Board will
comprise Directors with a broad range of skills,
expertise and experience from a diverse range of
backgrounds.
In addition,
The Board considers that, collectively the Directors
have the range of skills, experience and expertise
necessary to govern the Company. Details of each
Director’s skills, experience and expertise relevant to
their position and their term in office and details of
their attendance at Board and/or Committee
meetings are set out
in the Directors’ Report
included in this Annual Report.
The Board Charter also provides that a Director is
entitled to seek independent professional advice
(including, but not limited to, legal, accounting and
financial advice) at the Company’s expense, on any
matter connected with the discharge of his or her
responsibilities. A Director must obtain the approval
of the Chairman prior to seeking such advice.
The Board has established a Nomination Committee
which is primarily responsible for:
establishing a criteria for Board memberships,
having regard to the desired mix of skills and
diversity for the Board;
periodically assessing the skills required to
discharge the Board’s duties, having regard to
the strategic director of the Company;
proposing candidates
for directorships
for
consideration by the Board by using a structured
approach to identify a pool of candidates and
using external experts where necessary, while
having regard to the desired composition as
stated in the Board Charter; and
reviewing any retiring Director’s performance
and recommending to the board whether that
Director should be re-appointed.
The committee will consider whether it is necessary
and desirable to recruit additional Directors, bearing
in mind:
the mix of skills, experience, expertise and
diversity of existing Directors;
the business and strategic needs of
Company;
the need to replace Directors before scheduled
retirements; and
the opportunity to obtain the services of
particular persons with desirable skills when they
are available.
the
The committee is also responsible for implementing
the Selection and Appointment of Directors which
can be found on the company’s website (“Board
Selection Policy”).
of
are
their
provided with
New Directors
formal
appointment letters setting out the key terms and
including
conditions
remuneration. In addition, all senior executives are
provided with executive services contracts, which
include expectations of
term of
appointment, termination entitlements and rights
and responsibilities.
appointment,
their
role,
Details of the Directors, their qualifications, period
in office, skills and experiences are detailed in the
directors’ report.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
26
Corporate Governance Statement
Conflicts of interests
Audit and Risk Management Committee
Directors of the Company are required to act in a
manner which is consistent with the best interests of
the Company as a whole, free of any actual or
possible conflicts of interest. If a Director considers
there may be a conflict, the Director is required to:
immediately inform the Board of the potential
conflict; and
abstain from voting on any motion relating to the
matter and be absent during all Board
deliberations relating to the matter.
The Board Charter, available on the Company’s
website, provides
further detail on managing
conflicts of interest.
Board committees
In order to effectively fulfil its duties, the Board has
established the following committees:
the Company’s audit,
the Audit and Risk Management Committee,
which is responsible for monitoring and advising
the Board on
risk
management and regulatory compliance policies
and procedures;
is
the Remuneration Committee, which
responsible for overseeing the remuneration of
the Company; and
the Nomination Committee, which is responsible
for advising the Board on the composition of the
Board and
the
performance of the Board, its committees and
the individual Directors and advising the Board
on its corporate governance policies.
its committees,
reviewing
Each committee has a formal charter approved by
the Board, outlining
its composition, role and
responsibilities. These charters are available on the
Corporate Governance section of the Company’s
website.
The Audit and Risk Management Committee’s
functions include:
financial
assisting the Board
for
in fulfilling its oversight
reporting
the
responsibilities
process, the system of internal control relating to
all matters affecting the Company’s financial
performance,
the
Company’s process for monitoring compliance
with laws and regulations and the Company’s
Code of Conduct;
the audit process, and
determining the scope of the internal audit
function and ensuring its resources are sufficient
and used appropriately;
reviewing of internal audit performance and
independence;
assisting the Board with the adoption and
application of appropriate ethical standards and
management of the Company and the conduct of
the Company’s business;
assisting the Board in supervising the Company’s
risk management framework (such framework is
described under a separate heading “Risk
management” later in this Statement); and
reviewing the adequacy of the Company’s
insurance policies.
The Audit and Risk Management Committee also
independence of the Company’s
monitors the
external auditor. The committee must approve in
advance the terms of engagement of the external
auditor to perform audit and related work. Any non-
audit work to be performed by the external auditor
must be approved by the committee and, in doing
so, the committee ensures the external auditor’s
independence and integrity is maintained. The lead
engagement audit partners of the Company’s
external auditor will be
the
engagement after five years.
rotated
from
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
27
Corporate Governance Statement
auditors,
The Audit and Risk Management Committee is
responsible for reviewing the performance of the
and
external
and
appointment of
The
committee will recommend to the Board the re-
appointment of the current external auditor or a
tender process to select a new external auditor.
the
the external auditor.
selection
The committee ensures that it meets with the
external auditors, independent of management, and
independent of the external
with management
auditors. The Board has requested that the external
auditor attend the 2014 AGM and be available to
answer shareholder questions about the conduct of
the audit and the preparation and content of the
auditor’s report.
The companies Audit and Risk Management
Committee Charter require the committee to consist
only of non-executive Directors. The Committee
must have a minimum of three members, with the
majority of members being independent directors.
This
Currently the committee includes executive director,
Ross Shrimpton.
is considered to be a
temporary situation, pending Mr Fayad becoming a
non-executive director upon the appointment of the
Chief Financial Officer and Mr Ross Shrimpton will at
that time cease to be a member. Subsequent to
Mr Fayad joining the Audit and Risk Management
Committee and any matter that pertains to issues
arising during the period of time that Mr Fayad was
an executive director, Mr Fayad will abstain from
dealing with such matters.
The Audit and Risk Management Committee charter
independent
requires the Board to appoint an
chairperson to the Committee and the Chair is also
not to be the Chairperson of the Board. Currently
Audit and Risk Management Committee meetings
are being chaired by Peter Turner who also chairs
the Board. For the reasons noted above, this is
considered to be a temporary arrangement and will
be rectified in FY 2015.
Remuneration Committee
The Remuneration Committee’s functions are to
endeavour to ensure:
that the Board is provided with advice and
recommendations regarding an executive and
senior executive remuneration policy;
they review and provide recommendations to
the Board with respect to the remuneration
packages of senior executives and Executive
Directors;
review and provide recommendations to the
Board with respect to incentive schemes;
provide advice to the Board with respect to Non-
executive Directors’ remuneration; and
review and provide recommendations to the
remuneration,
the Company’s
Board on
recruitment, retention and termination policies.
also
reviews
committee
The
and make
recommendations to the Board regarding executive
and senior management remuneration including,
but not limited to, base pay, incentive payments,
equity awards and service contracts and identifying
any gender based disparities between comparable
positions.
The committee may seek such advice from any
external parties or professional advice as it may
consider necessary or desirable to ensure informed
decision making.
The committee will comprise a minimum of three
members, with a majority of members being
independent directors. The Board of the Company
will nominate the Chairman of the committee, who
must be an independent Director.
The committee will meet at least three times each
year.
A copy of the Remuneration Committee Charter is
available on the Corporate Governance section of
the Company’s website.
Nomination Committee
The Nomination Committee’s functions are to;
provide advice and recommendations to the
Board with respect to the appointment and
removal of Directors and senior executives;
develop and maintain a succession plan designed
to ensure that an appropriate balance of skills,
experience and expertise is maintained on the
Board;
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
28
Corporate Governance Statement
ensuring that the Board
is of a size and
composition that ensures a range of different
skills and perspectives and allows for decisions to
be made effectively and expediently;
facilitating and supervising the election of
Directors; and
evaluate and review of the performance of the
Board.
The committee will comprise a minimum of three
members, with a majority of members being
independent directors. The Board of the Company
will nominate the Chairman of the committee, who
must be an independent Director.
The committee will meet at least twice times each
year.
A copy of the Nomination Committee Charter is
available on the Corporate Governance section of
the Company’s website.
Performance review / evaluation
The Board and Nomination Committee Charters
outline the responsibility for the performance
review of the Board, the Chairman of the Board and
the individual performance of all Directors and
senior management.
During the year, the Chairman meets with each
Director and assesses the performance of the Board,
committees and individual Directors as well as the
members of the senior management team. The
Chairman of the Audit and Risk Management
Committee interviews the Chairman of the Board.
The observations from these interviews are to be
communicated to and discussed amongst the Board
and any actions to improve performance agreed.
Due to the short lapse in time since the board has
been established, these reviews will be undertaken
during the current financial year.
Education and induction
New Directors will undergo an induction process in
which they will be given a full briefing on the
Company.
include
meetings with Directors, key executives, tours of the
premises, a Board manual and presentations from
management.
Where possible, this will
In order to achieve continuing improvement in
Board performance, all Directors are encouraged to
undergo continual professional development. This
includes education concerning key developments in
the Company and in the industry and environment in
which the Company operates.
Independent professional advice and access to the
Company’s information
Each Director has the right of access to the
Company’s
information and to the Company’s
executives. Further, the Board collectively and each
Director, subject to informing the Chairman, has the
right to seek independent professional advice from a
suitably qualified advisor, at
the Company’s
expense, with the approval of the Chairman, to
assist them to carry out their responsibilities. Where
appropriate, a copy of this advice is to be made
available to all other members of the Board.
Each Director also has access to the General Counsel
and Company Secretary.
Risk management
The Company has a risk management framework to
allow it to achieve its business objectives whilst
assisting management and ideally, providing early
warnings of risks. The Risk Management Policy,
covering both
risks,
documents this framework. The objective of this
Risk Management Policy is to:
encourage appropriate tolerance of risks across
financial and operating
all the Company Businesses;
establish procedures to analyse risks within
agreed parameters across all the Company
businesses;
establish appropriate
risk delegations and
corresponding frameworks across the Company;
and
ensure the Company has
in place a risk
framework which can measurably react should
the risk profile change.
Key components of the Risk Management Policy
which bring together a number of procedures and
controls within the Company are as follows:
identification and assessment of all risks;
monitoring and wherever possible, mitigation of
identified risks;
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
29
Corporate Governance Statement
periodic reporting; and
assessment of effectiveness of
the
risk
management framework.
The Risk Management Policy outlines guidance on
identified risks
identification of commonly
the
relevant to Ashley Services Group, such as:
financial risks;
operational risks; and
combined risks.
will not generally respond to market rumours
and speculation except where:
o the speculation or rumours indicate that the
subject matter is no longer confidential and
therefore the exception to disclosure set out
in the Listing Rules no longer applies;
o the ASX formally requests disclosure by the
Company on the matter; or
o the Board considers that it is appropriate to
make a disclosure in the circumstances; and
The Audit and Risk Management Committee
regularly reports to the Board about committee
activities, issues, and related recommendations. As
suggested by Recommendation 7.2 of the ASX
Principles, management provides ongoing reporting
the Audit and Risk
to
Management Committee that
indicate that the
Company’s management of its material business
risks is operating satisfactorily.
the Board
through
Attestations by Managing Director and Interim
Chief Financial Officer
The Managing Director and the
Interim Chief
Financial Officer has made the declarations required
by section 295A of the Corporations Act and
recommended under Recommendation 7.3 of the
ASX Principles. In order for the Managing Director
and Interim Chief Financial Officer to make the
declarations, appropriate attestations were made by
management to the Managing Director and Interim
Chief Financial Officer.
Continuous disclosure
takes
The Company
its disclosure obligations
seriously and seeks to comply with the spirit as well
as the content of the ASX requirements. The
Company has adopted a Continuous Disclosure
Policy in relation to information disclosures and
relevant procedures.
The Policy sets out principles that the Company will
in relation to the disclosure of material
apply
information, including that the Company:
will not give analysts or other select groups of
market participants any material price sensitive
non-public information at any time;
will
only
allow
company
spokespersons to make any public statement on
behalf of the Company.
authorised
A copy of the Continuous Disclosure Policy
is
available on the Corporate Governance section of
the Company’s website.
In accordance with ASX Listing Rule 4.10.17, this
Annual Report contains a review of the operations
and activities of the Company which are set out on
managing director’s review and directors’ report.
Share Trading Policy
to
regulate dealings by
The Company has adopted a Share Trading Policy in
line with the updated ASX Listing Rules and
Guidance Note issued by the ASX in respect of
trading policies
the
Company’s executives and non-executive Directors,
officers, employees, contractors and consultants
(employees). All employees are required to conduct
their personal investment activity in a manner that is
lawful and avoids conflicts of interest between the
employee’s personal interests and those of the
company and its clients.
The Company is keen to promote shareholder and
general market confidence in the integrity of the
Company’s internal controls and procedures, and to
provide guidance on avoiding any breach of the
insider trading laws.
A copy of the Securities Dealing Policy is available on
the Corporate Governance section of the Company’s
website and has also been lodged with the ASX on
21 August 2014 as required by the ASX Listing Rules.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
30
Corporate Governance Statement
Code of Conduct
The Company has adopted a written Code of
Conduct, which applies to all of the Company’s
executives and non-executive Directors, officers,
contractors and consultants.
The purpose of the Code of Conduct is to ensure
that:
The Company will, where practicable, arrange for
advance notification of significant group briefings
and will also keep a summary record of the issues
discussed at briefings with investors and analysts.
The Shareholders Communications Policy is available
on the Corporate Governance section of the
Company’s website.
high standards of corporate and
individual
behaviour are observed by all employees in the
context of their employment with the Company;
employees are aware of their responsibilities to
the Company
contract of
under
employment and always act in an ethical and
professional manner;
legal, ethical and other obligations to legitimate
stakeholders are complied with; and
their
all persons dealing with the Company, whether it
be employees, shareholders, suppliers, clients or
competitors, can be guided by the stated values
and practices of the Company.
Employees are encouraged to report any potential
breaches of the Code and the Company ensures
employees are not disadvantaged for any reports
made in good faith. The Company will deal with any
reports promptly and fairly.
A copy of the Code of Conduct is available on the
Corporate Governance section of the Company’s
website.
Diversity Policy
improving
focus on
The Company is committed to workplace diversity,
with a particular
the
representation of women at the senior level of the
Company and the Board, and has adopted a
The Company recognises the
Diversity Policy.
benefits arising from employee and board diversity,
including a broader pool of high quality employees,
improving employee retention, accessing different
ideas and benefiting from all
perspectives and
available talent. With this Policy, the Board also
establishes measurable objectives for achieving
gender diversity and assesses annually
the
objectives and progress in achieving them.
The following table reflects the percentage of
women employees in the whole organisation, head
of business, senior management and the Board:
Whole organisation
Heads of Business
Senior Management
%
61%
Nil
Nil
Nil
Shareholder communication
Ashley Services Group Board
The Company respects the rights of its shareholders.
To facilitate the effective exercise of those rights,
the Company has established a Shareholder
Communications Policy to:
promote
effective
communications with
shareholders of the Company;
ensure all
information
their
shareholding is disseminated to shareholders;
and
relevant
to
encourage
by
shareholders at the Company General Meetings.
participation
effective
Diversity includes, but is not limited to, gender, age,
ethnicity and cultural background. The Diversity
Policy, which
the
recommendations and guidance provided by the ASX
Principles to the extent practicable, provides a
framework for the Company to achieve:
account
takes
into
a diverse and skilled workforce,
leading to
continuous improvement in service delivery and
achievement of corporate goals;
a workplace culture characterised by inclusive
practices and behaviours for the benefit of all
staff;
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
31
Corporate Governance Statement
improved employment and career development
opportunities for women;
a work environment that values and utilises the
contributions of employees with diverse
backgrounds, experiences and perspectives
through improved awareness of the benefits of
workforce diversity and successful management
of diversity; and
awareness
in all staff of their rights and
responsibilities with regards to fairness, equity
and respect for aspects of diversity.
embedding of diversity awareness and objectives
into
the
the day-to-day operations of
organisation to become part of the way we do
business, through newsletters, conferences and
other communication forums with staff;
retain top talent by ensuring a workplace
through
supportive
female
endorsement and delivery of a range of
programs, events and policies; and
success,
of
ongoing improvement of core talent processes
to
(performance, development and career)
ensure gender-based equity and transparency.
The Diversity Policy is available in the Corporate
Governance section of the Company’s website.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
32
Directors’ Declaration
The directors of the Group declare that:
1.
the consolidated financial statements and notes for the year ended 30 June 2014 are in accordance with
the Corporations Act 2001 and:
a.
b.
comply with Australian Accounting Standards
the Australian Accounting
Interpretations) as disclosed in Note 1 to the financial statements, constitutes explicit and
unreserved compliance with International Financial Reporting Standards (IFRS); and
(including
give a true and fair view of the financial position and performance of the Group as at
30 June 2014 and for the year then ended;
2.
the Managing Director and Interim Chief Financial Officer have given the declarations required by
Section 295A that:
a.
b.
c.
the financial records of the Group for the financial year have been properly maintained in
accordance with section 286 of the Corporations Act 2001;
the financial statements and notes for the financial year comply with the Accounting Standards;
and
the financial statements and notes for the financial year give a true and fair view; and
3.
in the directors' opinion, there are reasonable grounds to believe that the Group will be able to pay its
debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
..................................................................
Peter Turner
Chairman
Sydney, 25th September 2014
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
33
Independent Auditor’s Report
To the Members of Ashley Services Group Limited
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Report on the financial report
We have audited the accompanying financial report of Ashley Services Group Limited (the
“Company”), which comprises the consolidated statement of financial position as at 30 June
2014, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for
the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information and the directors’ declaration of the consolidated entity
comprising the Company and the entities it controlled at the year’s end or from time to time
during the financial year.
Directors’ responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001. The Directors’ responsibility also includes such internal control as
the Directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error. The Directors also state, in the notes to the financial report, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, the financial
statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. Those standards
require us to comply with relevant ethical requirements relating to audit engagements and
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.
34
plan and perform the audit to obtain reasonable assurance whether the financial report is
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the
Company’s preparation of the financial report that gives a true and fair view 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 Company’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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
a
the financial report of Ashley Services Group Limited is in accordance with the
Corporations Act 2001, including:
i
ii
giving a true and fair view of the consolidated entity’s financial position as at 30
June 2014 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
b
the financial report also complies with International Financial Reporting Standards as
disclosed in the notes to the financial statements.
Other matter
We have audited the Pro Forma Financial Information section included on pages 7 to 12 of
the Managing Director’s Review, which comprises the Pro Forma Group’s financial position
as at 30 June 2014, and of its performance for the year ended on that date. This
information has been prepared in accordance with the pro forma assumptions included on
pages 9 to 11 of the Managing Director’s Review.
35
Report on the remuneration report
We have audited the remuneration report included in pages 19 to 23 of the directors’ report
for the year ended 30 June 2014. The Directors of the Company are responsible for the
preparation and presentation of the remuneration report in accordance with section 300A of
the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration
report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion on the remuneration report
In our opinion, the remuneration report of Ashley Services Group Limited for the year
ended 30 June 2014, complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
C F Farley
Partner - Audit & Assurance
Sydney, 25 September 2014
36
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the financial year ended 30 June 2014
Revenue
Other income
On hired labour and training costs
Employee benefits expense
Occupancy expense
Travel expense
Advertising and marketing expense
Management fees
Audit, legal and professional fees
Insurance expense
Depreciation and amortisation expense
Finance costs
Consulting fees
Other expenses
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Basic earnings per share (cents)
Diluted earnings per share (cents)
Note
2
2
4
3
3
5
0
0
2014
$000
196,719
565
(181,268)
(7,595)
(871)
(111)
(221)
(557)
(345)
(235)
(349)
(253)
(184)
(1,002)
4,293
(1,304)
2,989
-
2,989
2013
$000
106,311
798
(93,699)
(5,403)
(756)
(187)
(225)
(493)
(105)
(184)
(139)
(203)
(282)
(1,019)
4,414
(1,496)
2,918
-
2,918
104,146.34
104,146.34
101,814.38
101,814.38
The accompanying notes form part of these financial statements.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
37
Consolidated Statement of Financial Position
As at 30 June 2014
Note
2014
$000
2013
$000
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Financial assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Other liabilities
Current tax payable
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Other liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Retained Earnings
Total Equity
7
8
9
10
11
13
12
9
14
15
16
13
17
15
16
13
17
18
61
20,655
32,177
473
53,366
1,246
3,634
11,499
-
16,379
69,745
14,581
41,359
212
2,478
1,109
59,739
-
180
803
148
1,131
60,870
8,875
3
8,872
8,875
367
9,365
-
406
10,138
716
1,543
6,697
29,679
38,635
48,773
8,304
-
-
358
243
8,905
28,965
-
917
153
30,035
38,940
9,833
1,450
8,383
9,833
The accompanying notes form part of these financial statements.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
38
Consolidated Statement of Changes in Equity
For the financial year ended 30 June 2014
2014
Balance at 1 July 2013
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Dividends paid
Repayment of capital
Balance at 30 June 2014
2013
Balance at 1 July 2012
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Dividends paid
Balance at 30 June 2013
The accompanying notes form part of these financial statements.
Share capital
$000
1,450
-
-
-
-
(1,447)
3
1,450
-
-
-
-
1,450
Retained
Earnings
$000
8,383
2,989
-
Total
$000
9,833
2,989
-
2,989
2,989
(2,500)
-
8,872
9,965
2,918
-
(2,500)
(1,447)
8,875
11,415
2,918
-
2,918
2,918
(4,500)
8,383
(4,500)
9,833
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
39
Consolidated Statement of Cash Flows
For the financial year ended 30 June 2014
Cash from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs paid
Income taxes paid
Note
2014
$000
2013
$000
208,431
104,194
(206,226)
(97,993)
188
(133)
495
(93)
(2,154)
(2,604)
Total cash inflow from operating activities
21(a)
106
3,999
Cash flows from investing activities
Payment for property, plant and equipment
Proceeds from sale of property plant and equipment
Consideration paid for business combination net of cash
21(b)
Payment for intangible assets
Net cash outflow from investing activities
Cash flows from financing activities
Net proceeds from external borrowings
Net proceeds of related party borrowings
Dividend paid
Repayment of capital
Net cash inflow / (outflow) from financing activities
Net cash (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at the end of the year
7
The accompanying notes form part of these financial statements.
(825)
45
(3,792)
-
(4,572)
1,457
6,650
(2,500)
(1,447)
4,160
(306)
367
61
(444)
71
-
(533)
(906)
-
3,497
(4,500)
-
(1,003)
2,090
(1,723)
367
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
40
Table of Contents for the Notes to the Financial Statements
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
ACCOUNTING POLICIES -------------------------------------------------------------------------------------------------------- 42
REVENUE AND OTHER INCOME --------------------------------------------------------------------------------------------- 51
EXPENSES-------------------------------------------------------------------------------------------------------------------------- 51
AUDITOR’S REMUNERATION ------------------------------------------------------------------------------------------------- 52
INCOME TAX EXPENSE --------------------------------------------------------------------------------------------------------- 52
KEY MANAGEMENT PERSONNEL DISCLOSURES ------------------------------------------------------------------------ 53
CASH AND CASH EQUIVALENTS --------------------------------------------------------------------------------------------- 53
TRADE AND OTHER RECEIVABLES ------------------------------------------------------------------------------------------ 53
FINANCIAL ASSETS -------------------------------------------------------------------------------------------------------------- 54
OTHER ASSETS ------------------------------------------------------------------------------------------------------------------- 55
PROPERTY PLANT AND EQUIPMENT --------------------------------------------------------------------------------------- 55
INTANGIBLE ASSETS ------------------------------------------------------------------------------------------------------------ 56
TAX BALANCES ------------------------------------------------------------------------------------------------------------------- 57
TRADE AND OTHER PAYABLES ----------------------------------------------------------------------------------------------- 58
BORROWINGS -------------------------------------------------------------------------------------------------------------------- 59
OTHER LIABILITIES -------------------------------------------------------------------------------------------------------------- 60
PROVISIONS ---------------------------------------------------------------------------------------------------------------------- 60
SHARE CAPITAL ------------------------------------------------------------------------------------------------------------------ 60
EARNINGS PER SHARE --------------------------------------------------------------------------------------------------------- 61
SEGMENT INFORMATION ----------------------------------------------------------------------------------------------------- 62
CASH FLOW INFORMATION -------------------------------------------------------------------------------------------------- 64
CONTROLLED ENTITIES -------------------------------------------------------------------------------------------------------- 65
PARENT ENTITY DISCLOSURES ----------------------------------------------------------------------------------------------- 67
RELATED PARTY TRANSACTIONS -------------------------------------------------------------------------------------------- 67
SECURED AND CONTINGENT LIABILITIES --------------------------------------------------------------------------------- 68
FINANCIAL INSTRUMENTS ---------------------------------------------------------------------------------------------------- 68
OPERATING LEASE COMMITMENTS---------------------------------------------------------------------------------------- 71
EVENTS AFTER THE BALANCE DATE ---------------------------------------------------------------------------------------- 71
EMPLOYEE SHARE RIGHTS PLAN -------------------------------------------------------------------------------------------- 72
DIVIDENDS ------------------------------------------------------------------------------------------------------------------------ 72
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
41
Notes to the Financial Statements
1.
ACCOUNTING POLICIES
a.
General information
The financial statements for the financial year ended
30 June 2014 cover Ashley Services Group Limited
and its controlled entities (the “Ashley Services” or
the “Group”). Ashley Services Group is a public
the Australian Securities
listed on
Company
Exchange
the symbol “ASH”),
(trading under
incorporated and domiciled in Australia.
The following
is a summary of the material
accounting policies adopted by the Group in the
preparation
financial
statements. The accounting policies have been
consistently applied unless otherwise stated.
consolidated
the
of
b.
Statement of compliance
The consolidated financial statements are general
purpose financial statements which have been
prepared in accordance with the Corporations Act
2001 and Australian Accounting Standards (including
Australian Accounting Interpretations) adopted by
the Australian Accounting Standards Board. The
consolidated financial statements of the Group also
comply with
International Financial Reporting
Standards (‘IFRS’) adopted by the International
Accounting Standards Board. The Group is a for-
profit entity for the purposes of preparing the
financial statements.
consolidated
statements were
financial
The
authorised for issue by the Board of Directors on
25 September 2014.
c.
Basis of preparation
The consolidated financial statements have been
prepared on an accruals basis and are based on
historical costs, except for the measurement at fair
value of selected non-current assets, financial assets
and financial liabilities as disclosed in this note. Cost
is based on the fair values of the consideration given
in exchange for assets. All amounts are presented in
Australian dollars, unless otherwise noted.
In accordance with Class Order 98/100, amounts in
the financial report are rounded off to the nearest
thousand dollars unless otherwise indicated.
d.
Going concern
Despite the Groups net current liability position as at
30 June 2014 the consolidated financial statements
have been prepared on a going concern basis. The
basis for this assessment is as follows:
on 1 July 2014, the Group acquired a number of
related entities (owned by Mr Ross Shrimpton
and Marc Shrimpton and their related family
entities) in exchange for scrip. As a consequence
of these acquisitions, a number of loans payable
eliminate and secondly, these companies are
profitable in their own right;
the Company completed its initial public offering
and
net
$19.0 million comprising of gross proceeds of
$98.7 million, less $41.6 million which was paid
to the existing shareholders, $31.8 million paid
for the acquisition of Integracom and the costs
of the IPO of $6.3 million; and
raised
result
as
a
a
on the 20 August 2014, the Group acquired the
Integracom Unit Trust in exchange for cash,
deferred consideration and shares.
The above events have significantly improved the
Groups financial position subsequent to the year
end. Further details detailing the above and the
impact to the financial position of the Group can be
found in Note 28 Events after Balance Date.
e.
Adoption of new and
revised Accounting
Standards
In the current year, the Group has adopted all of the
new and revised Standards and Interpretations
issued by the Australian Accounting Standards Board
(AASB) that are relevant to their operations which
became mandatory.
The adoption of these Standards has impacted the
recognition and effective for the current annual
reporting period. The adoption of these new and
revised Standards and Interpretations has resulted
in no changes to the Group’s accounting policies, but
has resulted in changes in disclosure.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
42
Notes to the Financial Statements
The Group adopted
following Australian
the
Accounting Standards, together with the relevant
consequential amendments arising from related
Amending
the mandatory
from
application date of 1 July 2013:
Standards,
AASB 10: Consolidated Financial Statements;
AASB 11: Joint Arrangements;
AASB 12: Disclosure of Interests in Other Entities;
AASB 13: Fair Value Measurement;
Amendments to AASB 119: Employee Benefits;
AASB 127: Separate Financial Statements;
AASB 2011–7: Amendments
to Australian
the
Accounting
Consolidation and Joint Arrangements Standards;
and
Standards
arising
from
AASB 2012–10: Amendments
to Australian
Accounting Standards – Transition Guidance and
Other Amendments.
These Standards became mandatorily applicable to
the Group from 1 July 2013.
127)
and AASB
AASB 10 introduces a new definition of control in
determining whether an entity should be included
within the consolidated financial statements of the
parent company. AASB 10 supersedes AASB 127
Consolidated and Separate Financial Statements
(AASB
112
Consolidation – Special Purpose Entities. These new
requirements have the potential to affect which of
the Groups
to be
subsidiaries and therefore to change the scope of
consolidation. The requirements on consolidation
in non-
procedures, accounting
controlling interests and accounting for
loss of
control of a subsidiary unchanged.
investees are considered
Interpretation
for changes
Although the first time application of AASB 10
(together with the associated Standards) caused
certain changes to the Group’s accounting policy for
consolidation and determining control, it did not
result in any changes to the amounts reported in the
Group’s financial statements as the “controlled”
status of the existing subsidiaries did not change,
nor did it result in any new subsidiaries being
included in the Group as a consequence of the
revised definition.
AASB 11 requires joint arrangements to be classified
as either “joint operations” (where the parties that
have joint control of the arrangement have rights to
the assets and obligations for the liabilities) or “joint
ventures” (where the parties that have joint control
of the arrangement have rights to the net assets of
the arrangement). Revised AASB 128 facilitates the
application of AASB 11 and incorporates guidance
relating to the equity method of accounting. Joint
ventures will be required to be accounted for using
the equity method under AASB 11.
The
proportionate consolidation method is no longer
permitted.
However, this has not impacted on the Group’s
financial statements as the Group currently has no
joint arrangement.
AASB 12 relates to disclosure requirements for all
forms of
including
subsidiaries,
joint arrangements, associates and
unconsolidated structured entities.
in other entities,
interests
As a result of adopting the new standard, new
disclosures have been
the
judgements made to determine whether control
exists and summarised financial information about
certain material joint arrangements and associates.
The Group has no equity accounted investments.
introduced about
The Group has adopted AASB 13: Fair Value
Measurement and AASB 2011–8: Amendments to
Australian Accounting Standards arising from AASB
13 from 1 July 2013 together with consequential
amendments to other Standards. These Standards
became mandatorily applicable to the Group from
1 July 2013. AASB 13 sets out a comprehensive
framework for measuring the fair value of assets and
liabilities and prescribes enhanced disclosures
regarding all assets and liabilities measured at fair
value.
New disclosures prescribed by AASB 13 that are
material to this financial report have been provided
in the notes to this financial report. Although these
Standards do not significantly impact the fair value
amounts
financial
statements, the directors have determined that
additional accounting policies providing a general
description of fair value measurement and each
level of the fair value hierarchy, as set out in
the Group’s
reported
in
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
43
Notes to the Financial Statements
Note 26, should be incorporated in these financial
statements.
Group’s assessment of the impact of these new
standards and interpretations is set out below.
AASB 2011-4 Amendments to Australian Accounting
Standards to Remove Individual Key Management
Personnel Disclosure Requirements removes the
individual key management personnel
(KMP)
disclosures contained in Aus paragraphs 29.1 to
29.9.3.
The individual disclosures are not required by either
AASB 124’s international equivalent IAS 24 Related
Party Disclosures (which requires only aggregate,
rather
KMP
compensation). In addition, the AASB believes that
these disclosures are more
in the nature of
governance and so are better dealt with as part of
the Corporations Act 2001.
individual,
amounts
than
of
As a
remuneration has been removed from Note 6.
the detailed
result,
individual KMP
to
2012–2:
AASB
Australian
Amendments
Accounting Standards – Disclosures – Offsetting
Financial Assets and Financial Liabilities and AASB
2012–5: Amendments to Australian Accounting
Standards arising from Annual Improvements 2009–
2011 Cycle.
These Standards make changes to presentation and
disclosure requirements, but did not affect the
Group’s accounting policies or the amounts reported
in the financial statements.
2011–10: Amendments
AASB 119: Employee Benefits (September 2011) and
to Australian
AASB
Accounting Standards arising
from AASB 119
(September 2011).
These Standards did not affect
the Group’s
accounting policies or the amounts reported in the
financial statements, mainly because the Group does
not have defined benefit plan assets or obligations
and the materiality of the Group's employee leave
entitlements balance does not warrant additional
disclosure.
f.
New Accounting Standard and Interpretations
not yet adopted
new
Certain
and
accounting
interpretations have been published that are not
mandatory for 30 June 2014 reporting periods and
have not been early adopted by the Group. The
standards
There are no other standards that are not yet
effective and that are expected to have a material
in the current or future
impact on the entity
reporting periods and on
future
foreseeable
transactions.
2010–7:
AASB 9: Financial Instruments (December 2010) and
Australian
Amendments
AASB
Accounting Standards arising
from AASB 9
(December 2010).
to
Applicable for the financial year ended 30 June 2018.
These standards are applicable retrospectively and
include revised requirements for the classification
and measurement of financial instruments, as well
as recognition and derecognition requirements for
financial instruments.
Once adopted, this standard will affect the Groups’
accounting for its available for sale financial assets
resulting in fair value gains and losses associated
with the instruments being recognised directly in
profit or loss.
The new hedging rules align hedge accounting more
closely with the Group’s risk management practices.
As a general rule it will be easier to apply hedge
accounting going forward. The new standard also
introduces expanded disclosure requirements and
changes in presentation.
IFRS 15: Revenue from Contracts with Customers
The standard provides a single standard for revenue
recognition and replaces IAS 18 Revenue, IAS 11
Construction Contracts and some revenue related
interpretations. The standard establishes a new
control based revenue recognition model and
changes the basis for deciding whether revenue is to
be recognised over time or at a point in time. The
standard will require: contracts (either written,
verbal or implied) to be identified, together with the
the
separate performance obligations within
contact; determine the transaction price, adjusted
for the time value of money excluding credit risk;
allocation of the transaction price to the separate
performance obligations on a basis of relative
standalone selling price of each distinct good or
if no distinct
service, or estimation approach
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
44
Notes to the Financial Statements
observable prices exists; and recognition of revenue
when each performance obligation is satisfied when
the service has been provided, typically for promises
to transfer services to customers.
is
required
Additional disclosure, both quantitative and
qualitative,
to
understand the contracts with customers and the
significant
the
guidance to those contracts.
judgements made
to enable users
in applying
The effective date for this standard is for annual
reporting periods beginning on or after 1 January
2017. The Group will adopt this standard and the
amendments from the financial year beginning 1 July
2017. There is expected to be no material impact on
the transaction and balances recognised in the
financial statements.
to AASB 136 –
AASB 2013–3: Amendments
Recoverable Amount Disclosures for Non-Financial
Assets.
Applicable for the financial year ended 30 June 2015
This standard amends the disclosure requirements in
AASB 136: Impairment of Assets pertaining to the
use of fair value in impairment assessment. These
information
amendments address disclosure of
about the recoverable amount of impaired assets if
that amount is based on fair value less costs of
disposal.
Additional disclosures may be necessary if the Group
has impaired assets going forward.
There are no other new and revised accounting
standards which are expected to have a material
impact on the group.
g.
Business combinations
Business combinations occur where an acquirer
obtains control over one or more businesses and
result in the consolidation of its assets and liabilities.
A business combination is accounted for by applying
the acquisition method, unless it is a combination
involving entities or businesses under common
control.
The business combination will be
accounted for from the date that control is attained,
whereby the fair value of the identifiable assets
acquired and
contingent
liabilities) assumed are recognised (subject to
certain limited exceptions).
(including
liabilities
a
from
contingent
When measuring the consideration transferred in
the business combination, any asset or liability
resulting
consideration
arrangement is also included. Subsequent to initial
recognition, contingent consideration classified as
its subsequent
equity
settlement
for within equity.
Contingent consideration classified as an asset or
liability is remeasured in each reporting period to
fair value, recognising any change to fair value in
profit or loss, unless the change in value can be
identified as existing at acquisition date.
is not remeasured and
is accounted
All transaction costs incurred in relation to the
business combination are recognised as expenses in
the statement of profit or
loss and other
comprehensive income when incurred.
The acquisition of a business may result in the
recognition of goodwill or a gain from a bargain
purchase.
Subsequent to the year end, on 1 July 2014, the
group acquired a number of related entities (see
Note 28). This business combination is a common
control transaction, as the conditions in AASB 3:
Business Combinations (Appendix B) apply, in that all
businesses were controlled by the same party before
and after the transaction, and the control was not
considered transitory.
Therefore, this business combination is scoped out
under AASB 3 paragraph 2, and therefore a suitable
accounting policy needs to be determined
in
in AASB 108:
accordance with the hierarchy
Accounting Policies, Changes
in Accounting
Estimates and Errors (paragraph 10). This hierarchy
looks for a policy that provides users of the financial
statements with relevant and reliable information
about the financial position and performance of the
reporting entity. Therefore an accounting choice is
available
for the accounting of this business
combination. The choice is to either apply the
purchase method (applying a fair value approach to
the acquisition value) or to apply the pooling of
interest method where the combination is recorded
at historical book values. Given the continuing
control of the businesses, the Directors consider that
it is appropriate to use the pooling of interest
method to account for the transaction using the
historical book values of the acquired assets and
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
45
Notes to the Financial Statements
liabilities rather than reassessing these to more
subjective and uncertain fair values.
In the 30 June 2015 Annual Report the comparative
period for 30 June 2014 will be restated, as if the
transaction took place at the beginning of the
earliest comparative period being 1 July 2013.
h.
Basis of consolidation
The Group financial statements consolidate those of
its
Ashley Services Group Limited and all of
subsidiaries as of 30 June 2014. Ashley Services
Group Limited controls a subsidiary if it is exposed,
or has
its
involvement with the subsidiary and has the ability
to affect those returns through its power over the
subsidiary. All subsidiaries have a reporting date of
30 June.
to variable
returns
rights,
from
All transactions and balances between Group
companies are eliminated on
consolidation,
including unrealised gains and losses on transactions
between Group companies.
Where unrealised
losses on intra-group asset sales are reversed on
consolidation, the underlying asset is also tested for
impairment from a group perspective. Amounts
reported in the financial statements of subsidiaries
have been adjusted where necessary to ensure
consistency with the accounting policies adopted by
the Group.
Profit or loss and other comprehensive income of
subsidiaries acquired or disposed of during the year
are
the effective date of
acquisition, or up to the effective date of disposal, as
applicable.
recognised
from
Non-controlling
interests, presented as part of
equity, represent the portion of a subsidiary’s profit
or loss and net assets that is not held by the Group.
The Group attributes total comprehensive income or
loss of subsidiaries between the owners of the
parent and the non-controlling interests based on
their respective ownership interests.
i.
Revenue and other income
Revenue is measured at the fair value of the
consideration received or receivable after taking into
account any discounts allowed. All revenue is stated
net of the amount of GST. Below are the specific
accounting policies adopted by the Group:
Training revenue
Revenue from training courses is recognised in
proportion to the stage of completion of the training
course.
Labour hire
Labour hire revenue is recognised upon delivery of
the service to the customers or in the instance of
placement fees at the time the employee has been
placed.
Interest revenue
Interest revenue is recognised using the effective
interest method, which for floating rate financial
assets is the rate inherent in the instrument.
Dividend revenue
Dividend revenue is recognised when the right to
receive a dividend has been established, usually on
declaration of the dividend / distribution.
Other income
Other income primarily includes administration costs
recovered. Revenue is recognised in line with the
costs incurred.
j.
Intangible assets
Goodwill
Goodwill is initially recognised as the difference
between the fair value of consideration, and the fair
value of net assets acquired less any accumulated
impairment losses.
The value of goodwill is recognised on acquisition of
the business.
The Group adopts the full goodwill method. The fair
value of the interests in the business is determined
using valuation
the
maximum use of market
information where
available. Under this method, goodwill attributable
to the interests of the business is recognised in the
financial statements.
techniques which make
Goodwill is tested for impairment annually and is
allocated to the Group’s cash-generating units or
group of cash-generating units, which represent the
lowest level at which goodwill is monitored but
where such level is not larger than an operating
segment. Gains and losses on the disposal of equity
include the carrying amount of goodwill related to
the entity sold.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
46
Notes to the Financial Statements
Changes in the ownership interest in a subsidiary are
accounted for as equity transactions and do not
affect the carrying amounts of goodwill.
Customer Relationships
Customer relationships acquired by the group are
stated at fair value less accumulated amortisation
and impairment losses. Amortisation is charged to
the consolidated statement of profit and loss and
other comprehensive income on a straight line basis
over the estimated useful life.
Useful life of customer relationships recognised is
determined to be three to ten years. At year end
the groups customer relationships have a remaining
useful life of two years and ten months.
Income tax
The income tax expense (income) for the year
comprises current income tax expense (income) and
deferred tax expense (income).
Current income tax expense charged to profit or loss
is the tax payable on taxable income. Current tax
liabilities (assets) are therefore measured at the
amounts expected to be paid to (recovered from)
the relevant taxation authority.
Deferred income tax expense reflects movements in
deferred tax asset and deferred tax liability balances
during the year as well as unused tax losses.
Current and deferred income tax expense (income)
is charged or credited directly to equity instead of
profit or loss when the tax relates to items that are
credited or charged directly to equity.
Except for business combinations, no deferred
income tax is recognised from the initial recognition
of an asset or liability where there is no effect on
accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at
the tax rates that are expected to apply to the
period when the asset is realised or the liability is
settled and their measurement also reflects the
manner in which management expects to recover or
settle the carrying amount of the related asset or
liability.
tax assets
temporary
Deferred
differences and unused tax losses are recognised
only to the extent that it is probable that future
relating
to
taxable profit will be available against which the
benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to
investments in subsidiaries, branches, associates,
and joint ventures, deferred tax assets and liabilities
are not recognised where the timing of the reversal
of the temporary differences can be controlled and
it is not probable that the reversal will occur in the
foreseeable future.
Current tax assets and liabilities are offset where a
legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous
realisation and settlement of the respective asset
and liability will occur. Deferred tax assets and
liabilities are offset where: (a) a legally enforceable
right of set-off exists; and (b) the deferred tax assets
and liabilities relate to income taxes levied by the
same taxation authority on either the same taxable
entity or different taxable entities where
is
intended that net settlement or simultaneous
realisation and settlement of the respective asset
and liability will occur in future periods in which
significant amounts of deferred tax assets or
liabilities are expected to be recovered or settled.
it
k.
Tax consolidation
tax
group under
Ashley Services Group Limited and its wholly owned
Australian subsidiaries have formed an income tax
consolidated
consolidation
legislation. Each entity in the group recognises its
own current and deferred tax assets and liabilities.
Such taxes are measured using the ‘standalone
taxpayer’ approach to allocation.
Current tax
liabilities (assets) and deferred tax assets arising
from unused tax losses and tax credits in the
subsidiaries are immediately transferred to head
entity. The group notified the Australian Taxation
tax
Office
consolidation group to apply from 1 July 2003. The
income tax consolidated group has entered a tax
funding arrangement whereby each company in the
Group contributes to the income tax payable by the
Group in proportion to their contributions to the
Group’s taxable income.
formed an
it has
income
that
Differences between the amounts of net tax assets
and liabilities derecognised and the net amounts
recognised pursuant to the funding arrangement are
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
47
Notes to the Financial Statements
recognised as either a contribution by, or
distribution, to the head entity.
period.
(All other
classified as non-current assets).
loans and receivables are
l.
Cash and cash equivalents
Cash and cash equivalents include cash on hand,
deposits held at call with banks, other short term
highly liquid investments with original maturities of
three months or less, and bank overdrafts. Bank
overdrafts are shown with short term borrowings in
current liabilities on the balance sheet.
m.
Trade and other receivables
Trade and other receivables include amounts due
from customers for services performed
in the
ordinary course of business. Receivables expected
to be collected within 12 months of the end of the
reporting period are classified as current assets. All
other receivables are classified as non-current
assets.
Trade and other receivables are initially recognised
at
fair value and subsequently measured at
amortised cost using the effective interest method,
less any provision for impairment.
The recoverability of trade receivables is reviewed
on an ongoing basis.
Amounts which are
determined not to be recoverable are written off by
reducing the carrying amount to its recoverable
amount, the difference is charged to the statement
of profit or loss and other comprehensive income in
that period.
A provision for impairment of trade recoverable is
recognised when there is objective evidence that the
group is unable to collect part or all of the amounts
due. Factors such as previous trading relationship,
financial position, and probability of recoverability
are considered when determining the extent the
debtor is impaired.
n.
Financial assets
Financial assets mainly consist of loans to directors
and are considered non-derivative financial assets
with fixed or determinable payments that are not
quoted in an active market and are subsequently
measured at amortised costs.
Loans and receivables are included in current assets,
except for those which are not expected to mature
within 12 months after the end of the reporting
Interest is charged on loans to directors at arm’s
length.
o.
Plant and equipment
Each class of plant and equipment is carried at cost,
less where applicable, any accumulated depreciation
and impairment losses.
Plant and equipment is stated at historical cost less
accumulated depreciation and any accumulated
impairment losses.
is
The depreciable amount of
depreciated on a straight line basis, over the asset’s
useful life to the Group commencing from the time
the asset is held ready for use.
fixed assets
The annual depreciation rates used for each class of
depreciable assets are:
Class of fixed assets
Computer equipment
Office equipment
Furniture and fittings
Motor vehicles
Training materials
Depreciation rate
37.50% – 40.00%
20.00%
20.00%
18.75 – 30.00%
18.75%
lives are determined by reference
In the case of leasehold improvements, expected
useful
to
comparable owned assets or over the term of the
lease, if shorter.
The carrying amount of plant and equipment is
reviewed annually at the end of the reporting period
by the Directors to ensure it is not in excess of the
recoverable amount of these assets.
The recoverable amount is assessed on the basis of
the expected net cash flows that will be received
from the asset’s employment and subsequent
disposal. The expected net cash flows have been
discounted to their present values in determining
recoverable amounts.
An asset’s carrying amount
is written down
immediately to its recoverable amount if the asset’s
carrying amount
its estimated
recoverable amount.
is greater than
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
48
Notes to the Financial Statements
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
gains or losses are recognised immediately in profit
or loss.
p.
Trade and other payables
Trade and other payables represent the liabilities for
goods and services received by the Group that
remain unpaid at the end of the reporting period.
The balance is recognised as a current liability with
the amounts normally paid within 30 days of
recognition of the liability.
q.
Employee benefits
Provision is made for the Group’s liability for the
employee benefits arising from services rendered by
employees to the end of the reporting period.
Employee benefits that are expected to be settled
within one year have been measured at the amounts
expected to be paid when the liability is settled.
Employee benefits payable later than one year have
been measured at the present value of the
estimated future cash outflows to be made for those
benefits. In determining the liability, consideration
is given to employee wage
increases and the
probability that the employee may not satisfy
flows are
vesting requirements.
discounted using market yields on national
government bonds with terms to maturity that
match the expected timing of cash flows.
Those cash
r.
Provisions
Provisions are recognised when the Group has a
legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of
economic benefits will result and that outflow can
be reliably measured. Provisions are measured at
the best estimate of the amounts required to settle
the obligation at the end of the reporting period.
s.
Borrowings
Loans and borrowings are initially recognised at the
fair value of the consideration received, net of
transaction costs. They are subsequently measured
at amortised cost using the effective
interest
method.
Fees paid on the establishment of loan facilities are
recognised as transaction costs of the loan to the
extent that it is probable that some or all of the
facility will be drawn down.
t.
Impairment of assets
At the end of each reporting period, the Group
assesses whether there is any indication that an
asset may be impaired.
received
The assessment will include considering external
information and internal sources of
sources of
information
from
including dividends
subsidiaries, associates or jointly controlled entities,
deemed to be out of pre-acquisition profits. If such
an indication exists, an impairment test is carried
out on the asset by comparing the recoverable
amount of the asset, being the higher of the asset’s
fair value less costs to sell, and its value in use, to
the asset’s carrying amount. Any excess of the
asset’s carrying value over its recoverable amount is
recognised immediately in profit or loss, unless the
Any
is carried at a revalued amount.
asset
impairment loss of a revalued asset is treated as a
revaluation decrease.
Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates
the recoverable amount of the cash-generating unit
to which the asset belongs.
Impairment testing
goodwill and intangible assets with indefinite lives.
is performed annually
for
u.
Comparative figures
by
required
When
Standards,
comparative figures have been adjusted to conform
to changes in presentation for the current financial
year.
Accounting
v.
GST
Revenues, expenses and assets are recognised net of
the amount of GST, except where the amount of GST
incurred is not recoverable from the ATO.
Receivables and payables are stated inclusive of the
amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the
ATO is included with other receivables or payables in
the balance sheet.
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 ATO are presented as operating cash
flows
in receipts from customers or
included
payments to suppliers.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
49
Notes to the Financial Statements
w.
Critical accounting estimates and judgements
Long service leave provisions
leave, consideration
In determining the provision for employees long
service
the
probability an employee may not satisfy vesting
requirements.
the provision
management assume that employees with a service
period of less than five years will not qualify.
calculating
is given
to
In
Useful lives of depreciable assets
Management reviews its estimate of the useful lives
of depreciable assets at each reporting date, based
on the expected utility of the assets.
x.
Dividends
A liability is recognised 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 financial year but not
distributed at balance date.
y.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the
profit attributable to equity holders of the Company,
after deducting any costs of servicing equity other
than ordinary shares, by the weighted average
number of ordinary shares outstanding during the
financial year, adjusted for bonus elements
in
ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used
in determination of basic earnings per share to take
into account the after income tax effect of interest
and other financing costs associated with dilutive
potential ordinary shares and the weighted average
number of shares assumed to have been issued for
no consideration in relation to dilutive potential
ordinary shares.
The directors evaluate estimates and judgements
incorporated into the financial statements based on
historical knowledge and best available current
information.
Estimates assume a reasonable
expectation of future events and are based on
current trends and economic data, obtained both
externally and within the Group.
Impairment – general
The Group assesses impairment at the end of each
reporting period by evaluating the conditions and
events specific to the Group that may be indicative
of impairment triggers. Recoverable amounts of
relevant assets are reassessed using value-in-use
calculations which
key
assumptions.
incorporate
various
Business combinations
uses
valuation
techniques
Management
in
determining the fair value of various element of a
business combination. Particularly, the fair value of
is dependent on the
contingent consideration
outcome of many variables that affect future
profitability.
Realisation of deferred tax assets
Deferred tax assets are recognised to the extent that
it is probable that they will be able to be utilised
against future taxable income, based on the Group’s
forecast of future operating results which is adjusted
for significant non-taxable income and expenses and
specific limits to the use of any unused tax losses or
credit. Deferred tax liabilities are always provided
for in full.
Customer relationships
Customer relationships acquired by the group are
initially stated at fair value. Fair value is calculated
using the present value technique. Present value is
estimated by estimating future cash inflows and
discounting at a post-tax rate of 15.6%.
The Group amortises customer relationships over
the customer
the estimated useful
relationships
have
considered the useful life of the customer contracts
to be seven years.
The Group
recognised.
life of
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
50
Notes to the Financial Statements
2.
REVENUE AND OTHER INCOME
Operating activities
Training revenue
Labour hire revenue
Other income
Interest received
Sundry income
Administration charges recovered
3.
EXPENSES
Profit before income tax includes the following specific expenses:
Finance costs
Interest expense
Bank fees
Depreciation
Motor vehicles
Office equipment
Leasehold improvements
Amortisation
2014
$000
3,033
193,686
196,719
188
75
302
565
2014
$000
133
120
253
96
138
67
301
2013
$000
5,093
101,218
106,311
495
73
230
798
2013
$000
109
94
203
31
88
20
139
Amortisation of customer contracts and relationships
48
-
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
51
Notes to the Financial Statements
4.
AUDITOR’S REMUNERATION
Auditor of the parent entity – Grant Thornton1
Audit or review of financial reports under the Corporations Act 2001
Tax advisory1
Other assurance services2
Other entities
In addition to the above, the related entities detailed in Note 22 have also paid
fees to the auditor, Grant Thornton and these are as follows:
Audit or review of financial reports under the Corporations Act 2001
Tax advisory
2014
$000
2013
$000
30
3
205
238
60
16
-
76
58
30
88
52
18
70
Note:
1. Trood Pratt was the tax agent and auditor of the parent entity in 2013.
2. Fees in relation to Investigating Accountant services for the initial public offering. These fees have been recognised as a prepayment
at 30 June 2014 and will be expensed in FY 2015.
5.
INCOME TAX EXPENSE
a.
Components of tax expense
Current tax expense
Deferred tax – origination and reversal of temporary differences
(Over) / Under provision of tax in prior year
Income tax expense
2014
$000
1,288
22
(6)
1,304
b.
Reconciliation of prima facie tax on profit from ordinary activities to income tax expense
Net profit before tax
Prima facie tax expense on net profit from ordinary activities before income tax
at 30% (2013: 30%)
Add / (less):
Tax effect of:
– Amortisation expense on client relationships not deductible
– Entertainment - Client
– Entertainment – Other
– Other (non-allowable) / allowable items
– Over/(under) provision of tax in prior year
Income tax expense
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
2014
$000
4,293
1,288
14
15
1
(8)
(6)
1,304
2013
$000
1,324
18
154
1,496
2013
$000
4,414
1,324
-
-
-
18
154
1,496
52
Notes to the Financial Statements
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate
entities on taxable profits under Australian tax law. There has been no change in the corporate tax rate when
compared with the previous reporting period.
6.
KEY MANAGEMENT PERSONNEL DISCLOSURES
a.
Key management personnel compensation for the year was as follows
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Total (*)
2014
$000
1,045
93
-
1,138
2013
$000
784
63
-
847
* Amounts included in the above table include amounts paid to key management from all entities. This
includes entities which were acquired by the Group subsequent to year end – refer to Note 28.
b.
Individual director and key management personnel disclosures
Detailed remuneration disclosures are included in the Director’s Report. The relevant information can be
found in Table 14 of the Remuneration Report on pages 22. The remuneration is also inclusive of all entities
which were acquired by the Group subsequent to year end – refer to Note 28.
7.
CASH AND CASH EQUIVALENTS
Cash on hand
Cash at bank
8.
TRADE AND OTHER RECEIVABLES
Current
Trade receivables (a)
Allowance for impairment of trade receivables (b)
Other receivables
2014
$000
6
55
61
2014
$000
20,384
(564)
835
20,655
2013
$000
4
363
367
2013
$000
6,936
(504)
2,933
9,365
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
53
Notes to the Financial Statements
a.
The aging of trade receivables (before allowing for impairment of receivables) at year end is detailed below.
Current
Past due 0 – 30 days (not considered impaired)
Past due 31 – 60 days (not considered impaired)
Past due 60+ days (not considered impaired)
Past due 60+ days (considered impaired (b))
2014
$000
13,712
5,835
97
176
564
20,384
2013
$000
4,949
1,198
228
57
504
6,936
b.
The movement in the allowance for doubtful accounts in respect of trade receivables is detailed below.
Balance at beginning of year
Increase in allowance recognised in profit or loss
Balance at end of year
9.
FINANCIAL ASSETS
Current
Director related loans (a)
Loans to related entities (b)
Non-current
Director related loans (a)
Loans to related entities (b)
a.
Director loans
2014
$000
(504)
(60)
(564)
2014
$000
3,967
28,210
32,177
-
-
2013
$000
(272)
(232)
(504)
2013
$000
-
-
-
5,951
23,728
29,679
Loans to directors are unsecured. Interest is charged on the loan at market rates. The loans have been repaid
since balance date.
b.
Loans to related entities
All loans are unsecured and non-interest bearing.
Since balance date, with the acquisition by the Group (as set out in note 28) of the various related entities, the
loans will no longer be considered an external asset or liability to the consolidated group which makes-up the
Group and will be eliminated on consolidation. As a result of the acquisition by the Group, the loans receivable
and payable have been re-classified from non-current to current.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
54
Notes to the Financial Statements
10.
OTHER ASSETS
Current
Prepayments
Deposits
11.
PROPERTY PLANT AND EQUIPMENT
Motor vehicles
Cost
Accumulated depreciation
Office equipment
Cost
Accumulated depreciation
Leasehold improvements
Cost
Accumulated depreciation
Capital works in progress
Cost
Accumulated depreciation
Total property, plant and equipment
a.
Movement in carrying amounts of property, plant and equipment
2014
$000
413
60
473
2014
$000
341
(105)
236
1,671
(1,108)
563
856
(441)
415
32
-
32
1,246
2014
Balance at 1 July 2013
Additions
Acquisition through business combination
Disposals
Depreciation expense
Balance at 30 June 2014
Motor
vehicles
$000
263
Office
equipment
$000
382
Leasehold
improvements
$000
71
Capital Work
In Progress
$000
-
106
21
(58)
(96)
236
276
43
-
(138)
563
411
-
-
(67)
415
32
-
-
-
32
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
2013
$000
345
61
406
2013
$000
329
(66)
263
1,185
(803)
382
445
(374)
71
-
-
-
716
Total
$000
716
825
64
(58)
(301)
1,246
55
Notes to the Financial Statements
2013
Balance at 1 July 2012
Additions
Disposals
Depreciation expense
Balance at 30 June 2013
Motor
vehicles
$000
Office
equipment
$000
Leasehold
improvements
$000
Capital Work
In Progress
$000
172
225
(103)
(31)
263
253
217
-
(88)
382
89
2
-
(20)
71
-
-
-
-
-
Total
$000
514
444
(103)
(139)
716
The Group’s property, plant and equipment are encumbered by a fixed and floating charge as security for the
group’s overdraft facility.
12.
INTANGIBLE ASSETS
Goodwill
Cost
Accumulated impairment (a)
Net carrying value
Customer relationships
Cost
Accumulated impairment
Accumulated amortisation
Net carrying value
Total intangible assets
2014
$000
9,985
-
9,985
1,562
-
(48)
1,514
11,499
2013
$000
6,697
-
6,697
-
-
-
-
6,697
a.
Impairment tests for goodwill
Goodwill is allocated to training and labour hire cash-generating units (CGUs), being the autonomously
operated businesses acquired by the Group. The recoverable amount of the CGUs is determined based on
value-in-use calculations.
Management has based the value-in-use calculations on the most recently completed management approved
forecast performance for the forthcoming one-year period. Future cash-flows are projected using forecast
growth rates for both labour hire and training of 2.0% (30 June 2013: 2.0%) into perpetuity. A pre-tax discount
rate of 9.5% for goodwill relating to training and 18.2% for goodwill relating to labour hire (30 June 2013: 9.5%
and 18.2% respectively), reflecting the assessed risks associated with the CGU segments, has been applied to
determine the present value of the future cash flow projections.
As at 30 June 2014, the Group assessed the recoverable amount of goodwill, and determined that goodwill
associated with the Group’s CGUs are not impaired. No impairment expense has been recorded.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
56
Notes to the Financial Statements
b.
Allocation of goodwill by CGU
2014
Goodwill
2013
Goodwill
c.
Intangible assets – detailed reconciliation
2014
Balance at 1 July 2013
Acquired through business combinations
Amortisation
Balance at 30 June 2014
2013
Balance at 1 July 2012
Acquired through business combinations
Amortisation
Balance at 30 June 2013
13.
TAX BALANCES
Non-current assets
Deferred tax assets (a)
Current tax liabilities
Income tax payable
Non-current liabilities
Deferred tax liabilities (a)
Training
$000
1,258
Labour Hire
$000
8,727
Training
$000
1,258
Labour Hire
$000
5,439
Goodwill
$000
6,697
3,288
-
9,985
Goodwill
$000
6,164
533
-
6,697
Customer
relationships
$000
-
1,562
(48)
1,514
Customer
relationships
$000
-
-
-
-
2014
$000
3,634
2,478
803
Total
$000
9,985
Total
$000
6,697
Total
$000
6,697
4,850
(48)
11,499
Total
$000
6,164
533
-
6,697
2013
$000
1,543
358
917
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
57
Notes to the Financial Statements
a.
Deferred tax assets and liabilities
Deferred taxes arising from temporary differences and unused tax losses can be summarised as follows:
Balance at
Beginning of
the Year
$000
Recognised in
Other
comprehensive
income
$000
Recognised in
Business
Combination
$000
Recognised in
Profit & Loss
$000
Balance at
End of the
Year
$000
2014
Current assets
Trade and other receivables
(765)
Non-current assets
Intangible assets
Unused tax losses
Current liabilities
Trade and other payables
Provision
Total
2013
Current assets
-
-
-
-
-
-
-
585
(181)
(469)
91
-
-
(378)
14
-
1,726
258
2,583
(454)
91
2,998
377
2,831
-
-
1,272
119
626
Balance at
Beginning of
the Year
$000
Recognised in
Other
comprehensive
income
$000
Recognised in
Business
Combination
$000
Recognised in
Profit & Loss
$000
Balance at
End of the
Year
$000
Trade and other receivables
(389)
Non-current assets
Property, plant and equipment
Current liabilities
Trade and other payables
Provision
Total
14.
TRADE AND OTHER PAYABLES
(5)
576
148
330
-
-
-
-
-
-
-
-
-
-
Current
Trade payables
Accrued expenses
GST payable
Sundry creditors
(376)
(765)
5
696
(29)
296
2014
$000
732
4,066
2,626
7,157
14,581
-
1,272
119
626
2013
$000
366
2,541
2,378
3,019
8,304
The average credit period on purchases of certain products is 30 days. No interest is charged on trade
payables. The group has financial risk management policies in place to ensure that all payables are paid within
the credit time frame.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
58
Notes to the Financial Statements
15.
BORROWINGS
Current
Unsecured liabilities
Loans from related parties (d)
Secured liabilities
Bank overdraft (a)
Subordinated facility (b)
Non-current
Unsecured liabilities
Loans from related parties (d)
a.
Bank overdraft facility
2014
$000
2013
$000
38,113
-
1,540
1,706
41,359
-
-
-
-
28,965
The Group entered into the overdraft facility with the bank on 8 August 2002 and is due to expire on
3 December 2015. The bank has fixed and floating charges over the Group’s assets and the property of the
ultimate shareholders – refer to Note 24 for details of those shareholders.
b.
Subordinated facility
The Group entered into the subordinated facility with the bank on 8 August 2002 and is due to expire on
3 December 2015. The bank has fixed and floating charges over the Group’s assets. As set out in note 28, the
Group has refinanced its facilities with BankWest and this will result in a change in the use of those facilities.
c.
Groups credit facility
Total facilities at reporting date
Bank overdraft
Subordinated facility
Used at balance date
Bank overdraft
Subordinated facility
Unused at balance date
Bank overdraft
Subordinated facility
2014
$000
4,330
4,535
8,865
1,540
1,706
3,246
2,790
2,829
5,619
2013
$000
4,330
4,535
8,865
-
-
-
4,330
4,535
8,865
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
59
Notes to the Financial Statements
d.
Loans from related parties
All loans are unsecured and non-interest bearing.
Since balance date, with the acquisition by the Group of the various related entities, the loans will no longer be
considered an external asset or liability to the consolidated group which makes-up Ashley Services Group
Limited and its controlled entities and will be eliminated on consolidation. As a result of the acquisition by the
Group, the loans receivable and payable have been re-classified from non-current to current.
16.
OTHER LIABILITIES
Current
Vendor earn-out liability (a)
Non-Current
Vendor earn-out liability (a)
a.
Vendor earn-out liability
2014
$000
212
180
2013
$000
-
-
The Vendor earn-out liability comprises the fair value of estimated initial consideration payments which are
payable to vendors in relation to the business acquisition of Concept Engineering Pty Limited (“Concept”) on
1 May 2014. These are payable over a period of one to three years post-acquisition.
17.
PROVISIONS
Current
Employee benefits
Non-current
Employee benefits
a.
Reconciliation of employee provisions
Opening balance
Less: leave taken during the year
Add: leave provided for during the year
Closing balance
18.
SHARE CAPITAL
2,870 (2013: 2,866) fully paid ordinary shares
Nil (2013: 4) fully paid "Z" ordinary shares
2014
$000
1,109
148
2014
$000
396
(29)
890
1,257
2014
$
2,877
-
2,877
2013
$000
243
153
2013
$000
494
(275)
177
396
2013
$
1,450,002
4
1,450,006
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
60
Notes to the Financial Statements
a.
Reconciliation of ordinary shares
Ordinary shares
Balance at 1 July 2013
Return of Capital
"Z" ordinary shares converted
Balance at 30 June 2013 and 2014
Number of shares
2,866
-
4
2,870
$
1,450,006
(1,447,129)
-
2,877
Ordinary shares confer on their holders the right to participate in dividends declared by the Board. Ordinary
shares confer on their holders an entitlement to vote at any general meeting of the Company.
“Z” ordinary shares during the year were refinanced by way of the issue of new ordinary shares.
On 3 July 2013, the Group performed a return of capital to its shareholders at $504.93 per share. A total of
$1,447,129 was paid to shareholder in this regard.
Management controls the capital of the Group in order to maintain a debt to equity ratio within pre-
determined benchmarks, provide the shareholders with adequate returns and ensure that the Group can fund
its operations and continue as a going concern.
The Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial
assets. Management effectively manages the Group’s capital by assessing the Group’s financial risks and
adjusting its capital structure in response to changes in these risks and in the market. These responses include
the management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since
the prior year.
The Group’s financial liabilities and share capital for the year ended 30 June 2014 and 30 June 2013 are as
follows:
Financial liabilities – Note 26 (d)
Ordinary shares
19.
EARNINGS PER SHARE
Net profit after tax
Weighted number of ordinary shares outstanding during the year used in calculating
basic earnings per share (EPS)
2014
$000
56,332
3
2014
$000
2,989
2,870
Basic earnings per share (cents)
Diluted earnings per share (cents)1
Notes:
1. There were no material share issues during the year and no issue of options that would affect the EPS.
104,146.34
104,146.34
2013
$000
37,269
1,450
2013
$000
2,918
2,866
101,814.38
101,814.38
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
61
Notes to the Financial Statements
20.
SEGMENT INFORMATION
Management currently identifies the following segments:
Labour hire; and
Training.
These segments are monitored by the Group’s management and by the board and strategic decisions are made
based on these segment results.
2014
Revenue
From external customers
From other segments
Segments revenue
Other income
On hired labour and training costs
Employee benefits expense
Occupancy expense
Travel expense
Advertising and marketing expense
Management fees
Audit, legal and professional fees
Insurance expense
Depreciation and amortisation expense
Finance costs
Consulting fees
Other expense
Profit before tax
Unallocated income tax
Profit after tax
Labour Hire
$000
193,686
-
193,686
563
(180,267)
(6,477)
(701)
(91)
(183)
(557)
(104)
(235)
(283)
(250)
(387)
(870)
3,844
-
-
Training
$000
3,033
-
3,033
2
(1,001)
(1,118)
(170)
(20)
(38)
-
(3)
-
(66)
(3)
(35)
(132)
449
-
-
Total
$000
196,719
-
196,719
565
(181,268)
(7,595)
(871)
(111)
(221)
(557)
(107)
(235)
(349)
(253)
(422)
(1,002)
4,293
(1,304)
2,989
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
62
Notes to the Financial Statements
2013
Revenue
From external customers (a)
From other segments
Segments revenue
Other income
On hired labour and training costs
Employee benefits expense
Occupancy expense
Travel expense
Advertising and marketing expense
Management fees
Audit, legal and professional fees
Insurance expense
Depreciation and amortisation expense
Finance costs
Consulting fees
Other expense
Profit before tax
Labour Hire
$000
Training
$000
101,218
-
101,218
779
(92,820)
(4,167)
(583)
(93)
(183)
(493)
(105)
(184)
(99)
(201)
(197)
(848)
2,024
5,093
-
5,093
19
(879)
(1,236)
(173)
(94)
(42)
-
-
-
(40)
(2)
(85)
(171)
2,390
Total
$000
106,311
-
106,311
798
(93,699)
(5,403)
(756)
(187)
(225)
(493)
(105)
(184)
(139)
(203)
(282)
(1,019)
4,414
No segments assets or liabilities are disclosed because there is no measure of segments assets or liabilities
regularly reported to Management and to the Board.
a.
Information about major customers
Included in revenues from external customers are revenues of $97.7 million (2013: $33.9 million) which arose
from sales to 3 (2013: 2) of the Group’s customers whose individual revenue exceeds 10% of total revenue in
the Labour Hire segment.
There are no customers whose individual revenue exceeded 10% of total revenue in the Training segment in
either financial year.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
63
Notes to the Financial Statements
21.
CASH FLOW INFORMATION
a.
Reconciliation of cash flow from operations to profit after income tax
Profit for the year
Cash flows excluded from profit attributable to operating
activities
Non-cash flows in profit
- depreciation and amortisation expense
- bad and doubtful debts
- (gain) / loss on disposal of fixed assets
Changes in assets and liabilities
- increase in trade and other receivables
- increase in other assets
- increase in deferred tax asset
- increase in trade and other payables
- increase / (decrease) in employee provisions
- increase / (decrease) in current tax liabilities
- (decrease) / increase in deferred tax liabilities
Cash flow from operations.
b.
Acquisition of Concept
Note
(b)
(b)
(b)
(b)
(b)
2014
$000
2,989
349
-
13
(7,673)
(67)
(2,091)
4,425
861
1,823
(583)
106
2013
$000
2,918
139
232
32
(1,010)
(1,524)
(736)
4,418
(98)
(813)
441
3,999
On 1 May 2014, the Group acquired 100% of Concept Engineering Pty Limited. Details of this transaction are:
Cash
Fair value of contingent consideration (Note 26)
Total purchase consideration
Cash consideration
Amount due under the contract for sale
Cash acquired
Cash outflow
Assets & liabilities held at acquisition date
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Trade and other payables
Provisions
Borrowings
Deferred tax liability
Customer relationships
Net identifiable assets
Goodwill on consolidation
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
2014
$000
4,009
392
4,401
(4,009)
-
217
(3,792)
217
3,675
64
(1,851)
(297)
(1,788)
(469)
1,562
1,113
3,288
4,401
2013
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
64
Notes to the Financial Statements
Concept contributed $4,842,000 to revenue, $230,000 to net profit before tax and $161,000 to net profit after
tax to the Group’s performance. The costs associated with the acquisition of Concept which have been
expensed were $58,000.
22.
CONTROLLED ENTITIES
Set out below are the controlled entities of Ashley Services:
Country of
incorporation
2014 percentage
owned
%
2013 percentage
owned
%
Subsidiaries of Ashley Services Group Limited
Action Arndell Park Pty Limited
Action Workforce NSW Pty Limited (formerly Action
Blacktown Pty Limited)
Action Botany Pty Limited
Action James NSW Pty Limited
Action James (Qld) Pty Limited
Action James WCF Pty Limited
Action James Mascot Pty Limited
ADV1 Pty Limited
Action James Parramatta Pty Limited
Action James Western Suburbs Pty Limited
Action Job Support Pty Limited
Action Workforce Pty Limited
ADV2 Pty Limited
Action Workforce Victoria Pty Limited
ADV3 Pty Limited
CP Action Electronics Pty Limited
CP Action Workforce Pty Limited
CP Med-WH Pty Limited
ADV4 Pty Limited
ECA Chullora Pty Limited
ADV5 Pty Limited
ADV6 Pty Limited
ECA Plastics Pty Limited
Executive Careers Australia Pty Limited
ADV8 Pty Limited
James Personnel Pty Limited
ADV7 Pty Limited
James Warehousing Pty Limited
National Institute of Training (NSW) Pty Limited
Vocational Training Australia Pty Limited
Precast Concrete Labour Pty Limited
Action Workforce AC Pty Limited
Action Workforce ACT Pty Limited
Action Workforce BAX1 Pty Limited
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
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
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
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
65
Notes to the Financial Statements
Country of
incorporation
2014 percentage
owned
%
2013 percentage
owned
%
Action Workforce CAT Pty Limited
Action Workforce COLI Pty Limited
Action Workforce COS1 Pty Limited
Action Workforce COT Pty Limited
Action Workforce IMT Pty Limited
Action Workforce LIN1 Pty Limited
Action Workforce OS Pty Limited
Action Workforce OSI 1 Pty Limited
Action Workforce OST Pty Limited
Action Workforce T1 Pty Limited
Action Workforce T2 Pty Limited
Action Workforce VAPS Pty Limited
Action Workforce VER1 Pty Limited
Action Workforce VM Pty Limited
Action Workforce VPN Pty Limited
Action Workforce VPS Pty Limited
ADV9 Pty Limited
Advance BGT Pty Limited
Action MMX Pty Limited
Action WA Pty Limited
Advance BW Pty Limited
Advance GW Pty Limited
Advance KM Pty Limited
Advance LLA Pty Limited
Advance LSA Pty Limited
Advance Man Pty Limited
Advance MIX Pty Limited
Advance TR Pty Limited
Advance WL Pty Limited
Advance WLE Pty Limited
Advance WLT Pty Limited
Advance WMAM Pty Limited
Advance WMLF Pty Limited
Advance WMPM Pty Limited
Advance Exchange Pty Limited*
Concept Engineering (Aust) Pty Limited**
Concept Employment (Aust) Pty Limited**
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
* Advance Exchange Pty Limited was a company incorporated on 25 July 2013.
** Concept entities were acquired on 1 May 2014.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
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
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
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
0
0
0
66
Notes to the Financial Statements
23.
PARENT ENTITY DISCLOSURES
a.
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Retained earnings
Total equity
b.
Statement of profit or loss and other comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
c.
Contingent liabilities of the Parent Entity
The Parent entity had no contingent liabilities as at 30 June 2014.
d.
Commitments for expenditure for the Parent entity
The Parent had nil committed expenditure as at 30 June 2014 (30 June 2013: nil).
24.
RELATED PARTY TRANSACTIONS
a.
Parent company
2014
$000
92
283
375
369
-
369
6
3
3
6
2014
$000
2,500
-
2,500
2013
$000
92
1,730
1,822
369
-
369
1,453
1,450
3
1,453
2013
$000
4,500
-
4,500
There is no ultimate parent company for Ashley Services Group Limited. However, Ashley Services is a
company that is ultimately controlled by Mr and Mrs Ross and Catherine Shrimpton and their company –
Action James Holdings Pty Limited.
b.
Transactions with related entities
Transactions between related parties are on normal commercial terms and conditions no more favourable than
those available to other parties unless otherwise stated.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
67
Notes to the Financial Statements
Transactions with related parties are as follows:
Rent paid or payable to Shrimpton Family Holdings Pty Limited as trustee for the Shrimpton
Family Trust, an entity which is controlled by Mr Ross Shrimpton for the head office at Arndell
Park, New South Wales
Loan balances to entities associated with Mr Ross Shrimpton. The loans are unsecured and
subject to interest. The loans were repaid on 1 July 2014, via the payment of a dividend
Interest on the loans to Mr Ross Shrimpton
Loan balances from entities associated with Mr Ross Shrimpton. These are unsecured and
non-interest bearing loans. These loans have effectively been extinguished as a result of the
restructure which occurred since balance date – refer to note 28 for further details.
Administration charge from entities associated with Mr Ross Shrimpton. These amounts are
charged to the group on a cost recovery basis.
Administration charge to entities associated with Mr Ross Shrimpton. These amounts are
charged to these entities on a cost recovery basis.
25.
SECURED AND CONTINGENT LIABILITIES
The Group had no contingent liabilities at 30 June 2014
For assets pledged as security for borrowing facilities see Note 15.
26.
FINANCIAL INSTRUMENTS
a.
Significant accounting policies
2014
$000
2013
$000
89
86
1,317
181
4,882
487
36,613
28,965
302
546
230
493
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognised, in respect of each class of
financial asset and financial liability are disclosed in Note 1 to the financial statement.
b.
Financial risk management objectives
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s financial
management framework. The Board has an established Audit and Risk Management Committee which is
responsible for developing and monitoring the Group’s financial management policies. The committee
provides regular reports to the Board of Directors on its activities.
The Audit and Risk Management Committee oversees how management monitors compliance with risk
management policies and procedures and reviews the adequacy of the risk management framework in relation
to the risks.
The main risks arising from the Group’s financial instruments are market risk (including fair value interest rate
risk), credit risk and liquidity risk. The Board reviews and approves policies for managing each of these risks.
The Board has yet to approve the principles on interest risk, credit risk, the use of financial derivatives and non-
derivate financial instruments, and the investment of excess liquidity and this will be done after year end. The
Audit and Risk Management Committee oversees how management monitors compliance with risk
management policies and procedures and review the adequacy of the risk management framework in relation
to the risks. The Group does not enter into or trade financial instruments, including derivative financial
instruments, for speculative purpose.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
68
Notes to the Financial Statements
c.
Market risk
Interest rate risk
The Group is exposed to interest rate risk associated with borrowed funds at floating interest rates. During the
financial year, risks associated with interest rate movements were monitored by the Board; however, no
hedging instruments were considered necessary to manage the risk.
The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity
risk management section of this note.
Interest rate sensitivity
The sensitivity analyses below have been determined based on the exposure to interest rates at the reporting
date and the stipulated change taking place at the beginning of the financial year and held constant throughout
the reporting period. A 100 basis point increase or decrease is used when reporting interest rate risk internally
to key management personnel and represents management’s assessment of the possible change in interest
rates.
At the reporting date, if interest rates had been 100 basis points higher or lower and all other variables were
held constant, the effect on the Group would be as follows:
Change in profit
Increase in interest rates of 1%
Decrease in interest rates of 1%
Change in equity
Increase in interest rates of 1%
Decrease in interest rates of 1%
Credit risk
2014
$000
(32)
32
32
(32)
2013
$000
4
(4)
(4)
4
Credit risk refers to the risk that counterparty will default on its contractual obligations, resulting in financial
loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and
obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from
defaults.
Trade receivables consist of a large number of customers. Ongoing credit evaluation is performed on the
financial condition of accounts receivable.
The carrying value of trade receivables recorded in the financial statements, net of any impairment allowances,
represents the Group’s maximum exposure to credit risks.
The Group does not have any significant credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics. The credit risk on liquid funds and derivative financial
instruments is limited because the counter parties are reputable banks with high quality external credit ratings.
The maximum credit risk exposure of financial assets is their carrying amount in the financial statements.
d.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Managing Director and Board of Directors,
who have built an appropriate liquidity risk management framework for the management of the Group’s short,
medium and long-term funding and liquidity management requirements.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
69
Notes to the Financial Statements
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and the reserve
borrowing facilities by continuously forecasting the comparing actual cash flows and matching the maturity
profiles of financial assets and liabilities. Included in Note 15 is a listing of additional undrawn facilities that the
Group has at its disposal to further reduce liquidity risk.
Liquidity and interest risk tables
The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities.
The table has been presented based on the undiscounted cash flows of financial liabilities based on the earliest
date on which the Group may be required to pay. The table includes both interest and principal cash flows.
Financial liabilities
2014
Trade and other payables
Borrowings – bank
Borrowings – related party loans
Other liabilities – Vendor earn-out
Total
2013
Trade and other payables
Borrowings – bank
Borrowings – related party loans
Other liabilities – Vendor earn-out
Total
Weighted average
effective interest
rate
%
n/a
6.87%
n/a
Weighted average
effective interest
rate
%
n/a
n/a
n/a
n/a
Within 1 year
$000
1 to 5 years
$000
Over 5 years
$000
14,581
3,246
38,113
212
56,152
Within 1 year
$000
8,304
-
-
-
8,304
-
-
180
180
-
-
-
-
1 to 5 years
$000
Over 5 years
$000
-
-
28,965
-
28,965
-
-
-
-
-
Total
$000
52,694
3,245
392
56,332
Total
$000
8,304
-
28,965
-
37,269
Fair value of financial instruments
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped
into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant
inputs to the measurement, as follows:
level 1 – the fair value of financial assets and financial liabilities with standard terms and conditions and
traded on active liquid markets is determined with reference to quoted market prices;
level 2 – the fair value of other financial assets and liabilities is determined in accordance with generally
accepted pricing models based on discounted cash flow analysis using prices from observable current
market transactions; and
level 3 – the fair value of derivative instruments is calculated using quoted prices. Where such prices are
not available, use is made of discounted cash flow analysis using the applicable yield curve for the duration
of the instruments for non-optional derivatives, and option pricing models for optional derivatives.
The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at
amortised cost in the financial statements approximate their fair values.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
70
Notes to the Financial Statements
The valuation used for instruments categorised as Level 2 and 3 are described below:
Contingent consideration (level 3).
Under the terms of the transaction with the vendors of Concept, there were two earn out payments, which are
subject to revenue targets and client retention.
The fair value of contingent consideration related to the acquisition of Concept (see Note 21(b)) is estimated
using the present value technique. The $392,488 fair value is estimated by probability-weighting the estimated
future cash outflows, adjusting for risk and discounting at 6%. The probability-weighted cash outflows before
discounting are $450,000 and these cash flows have been subject to the following probabilities:
100% probability for the first tranche of the contingent consideration will be achieved; and
90% probability for the second tranche of the contingent consideration will be achieved.
The discount rate used of 6%, based on the Group’s estimated incremental borrowing rate for unsecured
liabilities at the reporting date, and therefore reflects the Group’s credit position. The effects on the fair value
of risk and uncertainty in the future cash flows are dealt with by adjusting the estimated cash flows rather than
adjusting the discount rate.
27.
OPERATING LEASE COMMITMENTS
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
Leases as lessee
Less than one year
Between one and five years
Total
2014
$000
482
239
721
2013
$000
342
148
490
The Group leases a number of offices under operating leases. The leases run over varying periods, some with
option periods. Some of the leases have fixed rate rental periods, and some have market rate rental
adjustments.
28.
EVENTS AFTER THE BALANCE DATE
No matters or circumstances have arisen since the end of the financial year which significantly affected or
could significantly affect the operations of the Group, the results of those operations, or the state of affairs of
the Group in future financial years, except for the following:
1.
the Group acquired the following related entities (owned by Ross Shrimpton and Marc Shrimpton and
their related family entities – referred to as the “ASH Consolidation”):
o ADV Services Pty Limited;
o Ashley Institute Holdings Pty Limited;
o TBRC Holdings Pty Limited;
o Tracmin Pty Limited; and
o Australian Institute of Vocational Development Pty Limited;
on the 20 August 2014, the Group completed the acquisition of the Integracom Unit Trust. The
consideration payable in relation to this acquisition comprised of:
2.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
71
Notes to the Financial Statements
o $30.0 million of cash;
o
shares in the Company valued at $10.0 million (representing 6.024 million new shares in Ashley
Services at $1.66 per share);
o plus profits for the period from 1 July 2014 up to the date of completion estimated to be $1.8 million;
and
o a deferred consideration component amounting to $15 million which is payable over three years
based on certain performance criteria being met. The fair value of the deferred consideration has
been assessed to have present value of $13.4 million;
on the 21 August 2014, the Company completed its initial public offering. The effect of the offering was
that the Company issued 59.5 million new shares at a price of $1.66 per share; and
established a $24.0 million facility with BankWest Limited.
3.
4.
These significant events post balance date, combined with the acquisition of Concept which occurred
1 May 2014 has significantly altered the financial position of the Group.
29.
EMPLOYEE SHARE RIGHTS PLAN
No employee Share Performance Plan existed as at 30 June 2014. The Company intends to implement a
performance rights share plan for its executives in financial year 2015.
30.
DIVIDENDS
a.
Ordinary shares
Ordinary shares
Final Dividend (fully franked)
b.
Franking credits
2014
Cents per
share
Total
$000
2013
Cents per
share
Total
$000
87,229.59
2,500
157,013.26
4,500
Franking credits available for subsequent financial years based on a tax rate of
30% (2013: 30%)
The balance of the franking accounts includes:
2014
$000
2013
$000
6,675
5,939
franking credits that arose from the payment of the amount of the provision for income tax;
franking debits that arise from the refund of the amount of the provision for income tax;
franking debits that arise from the payment of dividends recognised as a liability at the reporting date; and
franking credits that arise from the receipt of dividends recognised as receivables at the reporting date.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
72
ASX Additional Information
Set out below is additional information as required by the ASX Limited Listing Rules and not disclosed
elsewhere in this report. This information is effective as at 19 September 2014.
Number of security holders and securities on issue
Quoted equity securities
Ashley Services has on issue 150,000,000 fully paid ordinary shares which are held by 585 shareholders.
Voting rights
Quoted equity securities
The voting rights attached to fully paid ordinary shares are that on a show of hands, every member present, in
person or proxy, has one vote and upon a poll, each share shall have one vote.
Distribution of security holders
Quoted equity securities
Ordinary fully paid ordinary shares
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Unmarketable parcel of shares
Number of shareholders
143
Number of shares
135,777
126
81
195
40
585
272,667
607,708
5,726,013
143,257,835
150,000,000
%
0.09
0.18
0.41
3.82
95.50
100.00
The number of shareholders holding less than a marketable parcel of Fully Paid Ordinary shares is 5 with a total
number of shares held is 512.
Substantial Shareholders
The number of securities held by substantial shareholders and their associates are set out below:
Fully Paid Ordinary Shares
Name
Ross Shrimpton and his related entities. Note all shares are subject to a two year
voluntary escrow period commencing 20 August 2014.
Number
88,524,096
%
59.0
Unquoted equity securities
There are no unquoted shares.
On-market buy-back
There is no current on-market buy-back.
Twenty largest shareholders
Fully paid ordinary shares
Details of the 20 largest shareholders of quoted securities (grouped) by registered shareholding are:
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
73
ASX Additional Information
Name
Mrs Catherine Shrimpton
Action James Holdings Pty Limited
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
Holmes Management Group Pty Ltd
Australian Foundation Investment Company Limited
BNP Paribas Noms Pty Ltd
J P Morgan Nominees Australia Limited
UBS Nominees Pty Ltd
AMP Life Limited
Mr Marc Shrimpton
Mirrabooka Investments Limited
Citicorp Nominees Pty Limited
Brispot Nominees Pty Ltd
Citicorp Nominees Pty Limited
Amcil Limited
RBC Investor Services Australia Nominees Pty Limited
UBS Nominees Pty Ltd
Netwealth Investments Limited
Aust Executor Trustees Ltd
Total
Number of shares
60,858,282
21,631,861
13,019,837
11,918,277
6,024,096
4,819,277
3,223,788
3,195,300
2,575,577
2,219,428
1,500,000
1,445,783
1,435,967
1,418,796
999,160
963,856
755,074
710,000
637,842
520,577
%
40.57%
14.42%
8.68%
7.95%
4.02%
3.21%
2.15%
2.13%
1.72%
1.48%
1.00%
0.96%
0.96%
0.95%
0.67%
0.64%
0.50%
0.47%
0.43%
0.35%
139,872,778
93.26%
Annual General Meeting
The annual general meeting of the Company will be held at the offices of Norton Rose Fulbright, Level 18,
225 George Street Sydney at 11.00am on Friday 14 November 2014. Shareholders who are unable to attend
the meeting are encouraged to complete and return their proxy form that will accompany the notice of
meeting.
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
74
Bankers
BankWest
Level 16
45 Clarence Street
Sydney NSW 2000
Telephone: + 61 2 9276 8000
Facsimile: 1300 453 796
Share Registry
Link Market Services Limited
Central Park, Level 4
152 St Georges Terrace
Perth WA 6000
Telephone: +61 1300 554 474
Facsimile: +61 2 9287 0303
Website: www.linkmarketservices.com.au
Website
www.ashleyservicesgroup.com.au
ASX Code
ASH
Corporate Directory
Non-Executive Directors
Mr Peter Turner (Chairman)
Simon Crean
Managing Director
Mr Ross Shrimpton (Managing Director)
Executive Director
Mr Vince Fayad (Interim Chief Financial Officer)
Alternative Director
Marc Shrimpton
Company Secretary
Mr Ron Hollands
Registered Office
Unit 2, 11 Holbeche Road
Arndell Park NSW 2148
Australian Company Number
ACN: 094 747 510
Australian Business Number
ABN: 92 094 747 510
Auditors
Grant Thornton Audit Pty Ltd
Level 17
383 Kent Street
Sydney NSW 2000
Telephone: + 61 2 8297 2400
Facsimile: + 61 2 9299 4445
Legal Adviser
Norton Rose Fulbright Australia
Level 18
225 George Street
Sydney NSW 2000
Telephone: + 61 2 9330 8000
Facsimile: + 61 2 9330 8111
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
75
Ashley Services Group Annual Report 2014
ASHLEY SERVICES GROUP ANNUAL REPORT 2014
76