ANNUAL
REPORT
2015
Ashley Services Group Annual Report 2015
CHAIRMAN'S REVIEW-------------------------------------------------------------------------------------------------- 3
MANAGING DIRECTOR'S REVIEW----------------------------------------------------------------------------------- 5
DIRECTORS’ REPORT--------------------------------------------------------------------------------------------------- 12
AUDITOR’S INDEPENDENCE DECLARATION---------------------------------------- ------------------------------ 30
CORPORATE GOVERNANCE STATEMENT ------------------------------------------------------------------------- 31
DIRECTORS’ DECLARATION------------------------------------------------------------------------------------------- 40
INDEPENDENT AUDITOR’S REPORT-------------------------------------------------------------------------------- 41
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME -------- 44
CONSOLIDATED STATEMENT OF FINANCIAL POSITION------------------------------------------------------- 45
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY------------------------------------------------------- 46
CONSOLIDATED STATEMENT OF CASH FLOWS----------------------------------------------------------------- 47
NOTES TO THE FINANCIAL STATEMENTS ------------------------------------------------------------------------ 48
ASX ADDITIONAL INFORMATION----------------------------------------------------------------------------------- 87
CORPORATE DIRECTORY---------------------------------------------------------------------------------------------- 89
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
2
Chairman’s Review
MR PETER TURNER
THE YEAR IN REVIEW
25 September 2015
The 2015 financial year was a transformational one for our business. It was our first as
a listed company, we completed three acquisitions aimed at expanding our foothold
in the training sector, invested in new systems to ensure efficient processes and
attracted new talent to help drive business growth.
Statutory net profit after tax and before amortisation of acquired Intangibles (NPATA)
was $14.8 million, 61 per cent above the prior year. Proforma revenues were 6.5 per cent above the prior year
at $305.8 million and Earnings before Interest Taxes depreciation and amortisation (EBITDA) was $20.7 million,
which was just below the low end of the market guidance announced in April 2015. The failure to achieve the
Proforma EBITDA as set out in the Prospectus was most disappointing to both our shareholders and the
market. Your Board is conscious of this and are actively engaged in ensuring that the Company quickly returns
back to such profitability levels.
Trading conditions across the training division were mixed. Revenues from ASG’s training division (excluding
the ASG Integracom business) grew strongly despite the negative impact of the unfavourable state funding
models on the second half in New South Wales and last quarter in South Australia. These were offset by
growth in Victoria and Queensland. ASG Integracom (telecommunications) revenues declined due to
integration issues, changes in the market and the impact of student funding changes. However, a restructure
of the sales team saw telecommunications enrolments recover strongly in the last quarter. Total student
enrolments were 21,621, up 9 per cent from the prior year but 6.5 per cent below Prospectus, due mainly to
the shortfall in ASG Integracom enrolments to March 2015 and the shortfall in New South Wales enrolments.
Strong results were achieved by the labour hire division recording a rise of 6.4 per cent or $15.6 million in
proforma revenue, to reach $261 million for the full year, representing 6.4 million labour hours charged.
EBITDA for this division was 3 per cent above prospectus or 23 per cent above the prior year, driven by major
national contracts with three logistics providers and margin improvements due mainly to cost controls and
continued good safety performance leading to lowered workers compensation costs.
In line with Prospectus forecasts, the Board of Directors announced a final fully franked dividend of 4.1 cents
per share, taking the full year post IPO dividend to 6.4 cents which represents a pay-out ratio of 65 per cent of
Statutory NPATA.
The Board and Nomination Committee regularly review the blend of the skills and balance of Board and
Committee members and resolved in the 2015 financial year a desire for a further Director who was
independent, had international education (including experience in growing international student numbers)
and who would work well with and complement existing directors. A process has been undertaken to source
the abovementioned person and an announcement concerning this matter is expected shortly.
With a national footprint, the Group is well placed to counteract negative impacts stemming from the volatility
in government funding; however, it is also of strategic importance that the business continues to diversify its
revenue streams. These include expansion of VET FEE-HELP products, targeting the international student
market and focusing on three key corporate market sectors – telecommunications, hospitality and children’s
services.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
3
Chairman’s Review
On behalf of my Director colleagues I would like to extend a sincere thank you to the executive team, senior
management and staff for their efforts in managing through a transformational period during the 2015
financial year. We are confident these initiatives will put the Group in a strong position to capitalise on market
opportunities.
Peter Turner
Non-executive Chairman
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
4
Managing Director’s Review
MR ROSS SHRIMPTON
2015 IN RETROSPECT
The 2015 financial year has been a challenging year for Ashley Services Group
Limited (“ASG”). We completed three acquisitions, acquiring 100 per cent of the
issued share capital and voting rights of Integracom, Cantillon and SILK. These
Australian-based entities were acquired with the objective of increasing the
Group’s market share in the telecommunications, international students and
hospitality training sectors respectively. Student numbers and initial enrolments in
both Integracom and Cantillon were lower than expected, and actions to integrate and grow the businesses
have taken longer to implement than anticipated.
The year highlighted the risk of having a significant portion of training revenues associated with the
government funded public (unemployed) market. Three significant macro environment changes have
negatively impacted short term results:
i)
ii)
the implementation of NSW Smart and Skilled funding contract (the Demand Driven Model), which came
into effect 1 January 2015, and its impact on funding allocation across ASG’s Registered Training
Organisations (RTOs). ASG understands that funding was largely given to TAFEs rather than private
providers, which is in contrast to the precedent set by other states where students can choose their
education provider;
later in the financial year, a similar decision to direct greater funding towards TAFE was made by the South
Australian government, which substantially decreased job seeker enrolments in the state during the final
quarter. This means the Group is delivering minimal unemployed public sector training in this state from 1
July 2015;
iii) changes were made to the Job Service Provider (JSP) network that has historically been the primary source
of unemployed students to ASG. Nationally, JSPs were required to tender to secure new contracts for five
years from 1 July 2015. From May 2015 through to August 2015, while the successful JSPs established
their operations, ASG’s job seeker enrolments in its two primary markets of Victoria and Queensland were
significantly disrupted.
These challenges have accelerated management’s focus and plans to transform the training business through
both diversification of funding streams and market sectors. During the financial year, the Group has:
i) maintained its training registrations and contracts in all geographies;
ii) expanded its training capability in the Corporate (existing worker) market by restructuring its sales and
marketing approach under a national framework including setting up its own call centre based in Sydney
NSW. A significant turnaround has been observed, particularly in the ASG Integracom business where
enrolments in the June quarter came in at 1,670 students, 23 per cent ahead of prospectus targets for that
period;
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
5
Managing Director’s Review
iii) attained VET FEE-HELP provider status (government assistance to eligible students studying higher level
VET qualifications to pay their tuition fees) and developed its initial Diploma and Advanced Diploma
offerings and online training delivery capabilities to capture and better serve students in this market;
iv) obtained two Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) licences
through the acquisitions of Cantillon and SILK, allowing the Group to deliver training to international
students. Strategic partnerships have also been established with Higher Education providers to facilitate a
pathway for students completing VET training into higher education. Post 30 June 2015, Cantillon also
received its English Language Intensive Courses for Overseas Students (ELICOS) licence to deliver programs
for students who require English language training before commencing formal studies in Australia.
Total student enrolments were 21,621, up 9 per cent from the prior year but were 6.5 per cent below
prospectus, due mainly to the shortfall in enrolments in New South Wales and ASG Integracom.
The labour hire business preformed strongly, benefiting from major national contracts with three large
logistics providers secured in calendar 2014. Key customer contracts were also retained. Whilst contract rates
came under pressure, the business was able to deliver margin improvement off the back of tight cost controls
and continued good safety performance leading to lower workers compensation costs. Labour hours charged
were up 6.7 per cent to reach 6.4 million labour hours, employing circa 4,000 weekly labour hire workers.
DISCUSSION ON RESULTS
It is noted that a number of entities, which were formerly owned by Ross Shrimpton and his related family
entities were acquired by the Company on 1 July 2014, have been regarded as “entities under common
control”. As a result, the comparatives in this annual report have been restated to reflect all of these entities
as if they had been owned by the company at the beginning of the earliest comparative period, being 1 July
2013, and treated as a single consolidated entity.
Statutory Results
Total comprehensive income for the year ended 30 June 2015 was $13.7 million, up 49 per cent from the prior
year.
Revenue increased $53.8 million (21%) to $304.7 million due mainly to:
acquisitions (+$27.7 million);
i)
ii) organic growth in the labour hire business (+$21 million), reflecting the full year impact from three major
national logistics contracts, secured in 2014;
iii) organic growth in the training business (+$5 million), mainly in Victoria (which experienced growth
through the public market following the introduction of additional courses) and Queensland (where the
Group opened five new branches and expanded available qualifications in line with the full introduction of
the demand driven model in the state).
Profit before tax increased $6.5 million (50%) to $19.6 million due to:
i)
ii)
acquisitions (+$3 million);
re-assessment, and as a result, a reduction in the fair value of deferred consideration liabilities and re-
assessment of intangible and other asset valuations (net +$5.8 million); and
iii) net incremental margin arising from organic growth (+$3.5 million).
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
6
Managing Director’s Review
Partially offset by:
i) one off IPO costs and acquisition related costs taken to the Statement of Profit or Loss and other
comprehensive income (-$4.4 million); and
increased corporate costs associated with operating as a publically listed entity (-$1.4 million).
ii)
The effective tax expense rate for the year ended 30 June 2015 was 30 per cent, in line with the statutory rate
and the prior period.
Balance Sheet and Net Debt
The Consolidated Statement of Financial Position as at 30 June 2015 is set out on Page 45. Net assets
increased $71.8 million to $102.9 million primarily as a result of the proceeds raised during the IPO in August
2014 which funded three acquisitions and allowed the repayment of prior period borrowings and an increase
in net cash of $15.9 million.
Net cash at 30 June 2015 was $12.4 million. All the Group’s banking facilities of $23 million were undrawn at
30 June 2015.
Operating Cash Flow
The Consolidated Statement of Cash Flows for the Financial Year Ended 30 June 2015 is set out on Page 47. The
net cash inflow from operating activities of $4.5 million includes $3.6 million of one-off payments in relation to
the IPO and acquisition related costs and $0.9 million of operational outflows to fund the expansion of the
International business, which commenced following the acquisition of Cantillon.
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”).
Set out below is an overview of the comparison of the pro forma actual versus pro forma prospectus results
for FY15 and FY14, as set out in the Prospectus:
Table 1: Pro forma FY15 Results Compared to the Prospectus and FY14 Results
Pro forma Actual
FY15 (audited)
$m
Pro forma
Prospectus FY15
(reviewed)
$m
Variance to
Prospectus
%
Pro forma Actual
FY141 (reviewed)
$m
Variance to Actual
FY14
%
305.8
19.2
20.7
13.7
319.5
29.7
31.0
20.5
(4.3%)
(35.4%)
(33.2%)
(33.2%)
287.1
21.9
22.9
15.0
+6.5%
(12.3%)
(9.6%)
(8.7%)
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.
“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 of acquired intangibles (and related tax impacts).
5. The FY15 Pro forma audited financial results incorporate Integracom as if it was owned by ASG for the whole year, but exclude the
results of Cantillon and SILK, because these acquisitions were not included in the prospectus forecasts.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
7
Managing Director’s Review
Pro forma versus prior year
Labour hire revenue at $261 million was $15.6 million or 6.4 per cent above FY14, driven by major national
contracts with three large logistics providers secured in calendar 2014.
Labour hire EBITDA at $9.0 million was $1.7 million above the prior year. Market conditions remain highly
competitive, but margin improved 0.45 percentage points to 3.45 per cent, due mainly to cost controls and
continued good safety performance, which lowered workers compensation costs.
Training revenue at $44.8 million was $3 million or 7 per cent above FY14. ASG training grew strongly (+22%),
but ASG Integracom revenue declined due to integration issues, changes in the marketplace and the impact of
student funding changes. A restructuring of the sales and marketing approach and team was designed to
increase enrolments. These changes took some time to implement, but the actions taken had a positive
impact during the second half of the year, with enrolments in quarter four totalling 1,670 students, 23 per cent
ahead of Prospectus targets for that period.
ASG training revenues declined in the three states where state funding models for the public market are not
currently favourable, namely New South Wales, South Australia and Tasmania.
Training revenues increased strongly in Victoria (which experienced growth in the public market due to the
introduction of additional qualifications), Western Australia (where the Demand Driven Model was in place for
the full year in FY15, versus six months in FY14) and Queensland (due to the opening of five new offices and
addition of qualifications to scope).
Training EBITDA at $14.3 million decreased $2.5 million or 15 per cent from the prior year. ASG training EBITDA
increased 22 per cent, with margin percentage in line with the prior year, but Integracom profits declined.
Corporate costs increased from FY14 due to the additional costs associated with being a listed company.
Pro forma versus prospectus forecast for the financial year ended 30 June 2015
Labour hire revenue was 1 per cent below Prospectus, with slightly lower revenues from the Concept
acquisition, due to reduced project work with a major customer and lower project wins, affected by a
downturn in the mining sector.
Labour hire EBITDA was 3 per cent above Prospectus forecasts. Margin at 3.45 per cent exceeded Prospectus
by 0.15 percentage points, due mainly to cost controls and continued good safety performance, which lowered
workers compensation costs.
Training revenue was $10.3 million or 19 per cent below prospectus, due to an $11 million shortfall in
revenues from ASG Integracom. Initial student numbers and enrolments within ASG Integracom were lower
than expected and synergistic actions to expand the business nationally and take advantage of government
funding in all states took longer than anticipated. Also, expansion into New South Wales, utilising government
funding, was not possible, given the adverse unexpected outcome of the Demand Driven Smart and Skilled
model from 1 January 2015.
Training EBITDA was $10.2 million or 42 per cent below prospectus forecasts, due largely to a $9.9 million
shortfall in earnings from the ASG Integracom business. ASG Integracom margin at 29 per cent was negatively
impacted by the revenue shortfall, but also by additional costs including alignment of internal systems,
investments in larger sales and marketing teams, and an increased number of qualifications on scope.
ASG training revenues and EBITDA were largely in line with Prospectus, despite the negative impact of the New
South Wales Smart and Skilled outcome on the second half results. This negative impact was mostly offset by
stronger revenues and profits from Victoria and South Australia.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
8
Managing Director’s Review
2016 and Beyond
In training, short term synergies will be derived from the SILK acquisition, which will accelerate growth in the
corporate hospitality market, one of the key sectors in focus nationally, along with telecommunications and
children services. These sectors will benefit from the newly established national sales and marketing structure
as well as gains from the full support of the New South Wales call centre team.
As an nbn training partner, the recent announcement from nbn to invest $40 million on training and
awareness campaigns to help it attract an extra 4,500 workers into the industry is viewed positively for ASG
Integracom.
On 26 August 2015, ASG received a significant increase in the financial cap allocated to the New South Wales
training division through its existing 2015 Smart and Skilled funding contracts. The increase in financial cap
means that ASG now has access to over $35 million in subsidies to support delivery of training and assessment
services in New South Wales up to 31 December 2015 for approved courses to eligible participants enrolled in
new entrant traineeships and apprenticeships. Actual training will be delivered over the relevant period of
each course, which will extend past 31 December 2015. However, it is important to note that the extent of
how much of the $35 million subsidies ASG is able to access is dependent upon a number of factors, including
the availability of those students with eligible criteria.
As a national business, the Group is capable of counteracting negative impacts stemmed from the volatility in
government funding, and will continue to protect and adapt its operations to take full advantage of available
funding in an agile manner. However, it is also of strategic importance that the business diversifies its revenue
streams. This will be partly achieved by targeting the end-user directly with a range of VET FEE-HELP products.
The Group expects to see enrolments in VET FEE-HELP gain momentum in the second half of FY16 as more
products come online and the results of sales and marketing efforts flow through.
Another growth area for the training division is the international students market. Australia continues to be
recognised as one of the most popular study destinations for international students of recent times,
complemented by the lower Australian dollar. ASG will be positioned to benefit from these trends following
the expansion of Cantillon’s Perth campus and the opening of a Melbourne CBD campus in October 2015.
Competitive pressure continues in the labour hire division but the ongoing focus on quality is yielding
dividends in the form of expansion of existing contracts and referrals. The pipeline of near term opportunities
for the labour hire business is also significantly greater than this time last year.
Our vision is to be recognised in each of our sectors as a high quality provider and using that as a sustainable
competitive advantage. Although we will continue to consider acquisition opportunities that complement our
service offerings and geographical segments, our ability to grow organically through diversification and
strengthening our existing capability is strong. Our focus will continue to be on protecting and building our
integrated training and labour hire business model, capitalising on cross-selling opportunities and realising cost
synergies where applicable.
Investment in the infrastructure of the business is critical and 2016 will see significant improvements to our
systems and technology. These investments will provide longer term improvements to our productivity and
efficiency as well as scalability as the business expands.
We have and will continue to invest in our people. As the business transforms and grows, the need for
development of existing skills and the attainment of new skills is paramount to the sustainability and success
of the business.
Moving forward, we will continue to capitalise on the opportunities afforded to us in our traditional markets
while diversifying and growing new revenue streams. A significant amount of work done in 2015 on our
transformation will reap rewards well into the future. We will continue to refine our business model and
ensure we remain competitive and relevant in the markets in which we operate.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
9
Managing Director’s Review
Set out below are key statistics relevant to the Group for the years ended 30 June 2013 to 30 June 2015:
Table 2: Summary of Earnings for FY 2013 to FY 2015
30 June 2015
Pro forma
Actual1,2,3
(audited)
30 June 2013
Pro forma1,2,3
30 June 2014
Pro forma1,2,3
261.0
44.8
305.8
245.4
41.7
287.1
151.4
24.6
176.0
9.0
14.3
(2.6)
20.7
19.2
18.6
18.7
13.1
13.7
5.0
8.9
(0.9)
13.0
12.4
12.4
12.0
8.4
8.4
7.3
16.8
(1.2)
22.9
21.9
21.8
21.3
14.9
15.0
$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
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 (‘m)
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. Related companies who were acquired by Ashley Services on 1 July 2014 referred to as the “ASH Consolidation”
63.1%
8.0%
76.2%
7.6%
76.6%
7.6%
75.8%
5.2%
77.4%
8.4%
7.4%
4.8%
7.0%
3.3%
7.0%
3.3%
4.8%
1.2%
7.3%
3.3%
(15.3%)
3.6
$42
15.5%
36.2%
15.6%
12,103
2,033
69.5%
40.3%
88.8%
19,802
2,106
6.5%
6.8%
(9.6%)
6.3%
(12.3%)
6.1%
(14.7%)
4.3%
(11.8%)
4.7%
31.9%
(14.8%)
21,621
2,107
6.4%
3.5%
23.3%
6.4
$40
62.1%
3.0%
46.0%
6.0
$41
0.9
(25.0%)
2.6
120.1%
1.2
33.3%
30 June 2015
Prospectus1.2.3
264.4
55.1
319.5
8.7
24.5
(2.2)
31.0
29.7
29.0
28.3
19.8
20.5
11.3%
9.7%
35.4%
9.3%
35.6%
9.1%
33.0%
6.2%
32.8%
7.7%
3.3%
19.2%
6.6
$40
32.1%
44.5%
16.7%
23,115
2,385
2.2
83.3%
ADV Services Pty Limited;
Ashley Institute Holdings Pty Limited;
TBRC Holdings Pty Limited;
Tracmin Pty Limited; and
Australian Institute of Vocational Development
Pty Limited.
2. Full year results for Concept even though it was acquired part way through the 2014 year;
3. Full year results for Integracom even though it was acquired part way through the 2015 year;
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
10
Managing Director’s Review
Set out below is a reconciliation from the statutory EBITDA to pro forma EBITDA:
Table 3: Reconciliation from statutory EBITDA to Pro forma EBITDA
$m
Pro forma EBITDA
Pre-acquisition EBITDA for Integracom
One off IPO Employee Bonuses
One off IPO and acquisition related costs taken to income statements
Re-assessment of fair value of deferred consideration
Other asset impairment
EBITDA impact of Cantillon acquisition
EBITDA impact of SILK acquisition
Statutory EBITDA
Note
Pro forma
Actual FY15
Pro forma
Prospectus FY15
20.7
(0.2)
(1.9)
(2.5)
7.8
(0.9)
(0.8)
0.4
1
2
3
31.0
(1.8)
(1.9)
(2.0)
-
-
-
-
22.6
25.4
Notes:
1. The variance to prospectus represents GST on float costs and increased acquisition costs for Integracom and for SILK.
2. Concept earn outs for FY15 and FY16 re-assessed from $0.4m to zero. Integracom earn outs for FY16 and FY17 re-assessed from
$9.1m discounted to $1.75m discounted.
3. Other asset impairment relates to the re-assessment of the carrying value of work in progress in one state’s training division, which is
considered to be impaired due to contractual requirements in terms of the timing for invoicing.
Also included in Statutory result only:
As interest expense – notional accretion on deferred earn outs, $0.6m
As amortisation – impairment of key customer relationship within Concept, $0.5m
Ross Shrimpton
Managing Director
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
11
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 an unlisted public company on 11 April
2014, prior to the public listing on 21 August 2014) and its controlled entities (“Group”) for the financial year
ended 30 June 2015.
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 31 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 | BCom (UNSW), CA
Experience | Ross is the founder and Managing Director of ASG. Ross has been a Director of the
Company since incorporation and has been instrumental in the overall growth and strategic
direction of ASG.
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 19 years of relevant experience in the
labour hire and training industries.
His prime responsibility
ASG, as well as strategic direction, liaison with key executives, finance and administration.
Ross is a member of the Nominations Committee.
is centred on the overall performance and management of
Mr Peter Turner | Non-executive Chairman
Qualifications | BSc (Melbourne), MBA (RMIT)
Experience | Before joining ASG, 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 and a member of the Audit and Risk
Management and Nomination Committees.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
12
Directors’ Report
Mr Simon Crean | Non-Executive Director
Qualifications | BEc (Monash), LLB (Monash)
Experience | Prior to joining ASG, 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 (Vince) Fayad | Non-Executive Director since 1 December 2014.
Interim Chief Financial Officer & Executive Director to 30 November 2014.
Qualifications | BBus (UTS), CA
Experience | Vince is a director of PKF Corporate Finance (NSW) 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 ASG since its incorporation. Vince was also acting Chief Financial
Officer of ASG from the date of the IPO to 30 November 2014.
Vince has a strong background in accounting and finance as well as strategic and corporate issues.
He is currently the Non-executive Chairman of Greenvale Mining Limited and was formerly the
Chairman of Medibio Limited as well as a former Non-executive Director of Esperance Minerals
Limited. He is also the company secretary of Astro Resources NL.
Vince is chairman of the Audit and Risk Management Committee and a member of the
Remuneration committee.
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 is General Manager Recruitment. 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 15 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 2015
13
Directors’ Report
Mr Andrew Shrimpton | Director (resigned as a Director, 31 July 2014)
Qualifications | Diploma of Management
Experience | Andrew joined ASG in 2003. Andrew has held several key roles in the group through
Recruitment, Labour Hire and Training divisions.
Andrews’s current role includes identification and attainment of new customers, new business
segments and funding streams. Andrew’s multi divisional experience within Ashley Services is
imperative in order to capitalise on the groups multiple service offerings.
Andrew has over 13 years of relevant industry experience.
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 4: Shares Held by Directors
Names
Mr Peter Turner
Mr Ross Shrimpton2
Mr Simon Crean
Mr Vincent Fayad
Mr Marc Shrimpton
Mr Andrew Shrimpton1
Number
of Shares Held
Shareholding
%
321,747
85,498,940
52,710
78,221
1,688,000
1,500,000
0.21
57.00
0.04
0.05
1.13
1.00
Note:
1. Resigned as a Director, 31 July 2014.
2. This includes shares owned by Catherine Shrimpton (wife of Ross Shrimpton, 60,858,282), their family company (21,631,861) and
shares purchased on behalf of Dean and Andrew Shrimpton (1,500,000 and 1,498,940 respectively). It excludes shares held non-
beneficially in trust on behalf of Holmes Management Group Pty Limited (6,024,096).
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
14
Directors’ Report
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 5: 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
-
-
-
-
Greenvale Energy NL (ASX: GRV)
Metal Bank Limited (ASX: MBK)
Medibio Limited (ASX: MEB)
Esperance Minerals Limited (ASX: ESM)
31 October 2014
20 May 2011
7 April 2015
12 August 2015
Current
30 October 2012
Current
Current
Mr Marc Shrimpton
Mr Andrew Shrimpton1
Nil
Nil
Note:
1. Resigned as a Director, 31 July 2014.
-
-
-
-
a. Principal activities
The principal activities of the Group during the
financial year were the provision of labour hire
(including recruitment) 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, who has held this
position since.
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 2015
15
Directors’ Report
c.
Directors’ meetings
Details of meetings of directors (including committees of directors) held in the financial year and attendances
by each director are shown in the following table:
Table 6: Meeting Attendance
Audit & Risk
Management
Committee
Meetings
Remuneration
Committee
Meetings
Nomination
Committee
Meetings
Held
Attended
Held
Attended
Held
Attended
Board Meetings
Held3 Attended
Mr Peter Turner
Mr Simon Crean
Mr Vince Fayad
Mr Ross Shrimpton
Mr Andrew Shrimpton
Mr Marc Shrimpton
16
16
16
17
1
1
15
16
16
17
1
1
7
7
7
N/A
N/A
N/A
7
7
7
N/A
N/A
N/A
2
2
2
N/A
N/A
N/A
2
2
2
N/A
N/A
N/A
3
3
N/A
3
N/A
N/A
3
3
N/A
3
N/A
N/A
Note:
1. Marc and Andrew Shrimpton were Directors until 31 July 2014. 1 Board Meeting was held in the period 1 July 2014 to 31 July 2014.
Marc Shrimpton is alternate director for Ross Shrimpton effective 31 July 2014.
2. 16 Board Meetings have been held since Messrs Turner, Crean and Fayad were appointed.
3. Meetings held during the period the individual held office.
3. BUSINESS REVIEW
a.
Operating results
The consolidated profit of the Group attributable to equity holders after providing for income tax amounted to
$13,676,000 (2014: $9,148,000).
The Group declared and paid dividends to shareholders as follows:
Final Dividend – 2014*
Dividend to distribute profits
from 1 July 2014 to 20 August
2014*
Interim Dividend – 2015
Record Date
n/a
Payment Date
1 July 2014*
Cents Per
Share
102.3
Franked Amount
Per Share (Cents)
102.3
n/a
20 August 2014*
6 March 2015
27 March 2015
6.1
2.3
6.1
2.3
*These dividends were paid to owners prior to the IPO.
On 17 August 2015, the Group declared a final fully franked dividend of 4.1 cents per share ($6,150,000) (2014:
$2,500,000) payable to shareholders on 25 September 2015 based on a record date at 4 September 2015.
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
There have been a number of significant events
which occurred during the year ended 30 June
2015 on the following dates:
1 July 2014, the Group acquired the following
related entities (owned by Ross Shrimpton and
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
16
Directors’ Report
Marc Shrimpton and their related family
entities):
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.
control.” As
These have been regarded as “entities under
the
common
comparatives in this annual report have been
restated to reflect all of these entities as if
they had been owned by the company and
treated as a single consolidated entity.
result,
a
31 July 2014, the Group established a $25
million
Limited,
facility with Bankwest
comprising a $15 million working capital
facility, an $8 million term debt facility to
finance potential acquisition opportunities and
$2 million in bank guarantee and credit card
facilities.
21 August 2014, the Group completed the
acquisition of the
Integracom Unit Trust
(“Integracom”). The consideration payable in
relation to this acquisition comprised of:
o
o
o
o
cash of $30 million;
shares in the Company valued at $10
million (representing 6.024 million new
shares in Ashley Services at $1.66 per
share);
profits for the period from 1 July 2014
up to the date of completion of $0.1
million which were paid to the former
owners of Integracom;
deferred consideration of $15 million,
payable over three years based on
certain performance criteria being met.
The performance criteria for the year
ended 30 June 2015 were not met and
management
the
have
potential earn out payment for year
ended 30 June 2016 will also not be
payable. Management have probability
weighted the potential FY17 earn out to
obtain a
fair value of $2 million
(discounted $1.75 million).
assessed
21 August 2014, the Company completed its
The effect of the
initial public offering.
offering was that the Company issued 59.5
million shares at a price of $1.66 per share (of
which 7.2 million shares represented a sell
down to the Shrimpton family).
25 September 2014, the Group acquired 100%
of the shares of College of Innovation and
Industry Skills Pty Limited – otherwise, known
as “Cantillon”. The consideration payable in
relation to this acquisition comprised of:
o
o
cash of $1,545,850;
deferred consideration for a maximum
of $745,851 payable based on revenues
achieved over a period from the date of
acquisition
2016.
Management have probability weighted
the potential earn out to obtain a fair
value of $76,000.
July
31
to
30 April 2015, the Group acquired 100 per
cent of the shares of Global Education and
Training Pty Limited – otherwise, known as
“SILK”. The consideration payable in relation
to this acquisition comprised of:
o
o
cash of $1,500,000;
deferred consideration for a maximum
of $3,000,000 payable based on
revenues and profits achieved for the
year ended 30 June 2016;
this has been accounted for on a
provisional basis and the fair value
assessment of assets and
liabilities
acquired will be completed in the six
months to 31 December 2015. The
assessment of fair value has not yet
been
financial
in
statements.
finalised
these
o
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.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
17
Directors’ Report
e.
Events subsequent to reporting date
There have been no matters or circumstances that
have arisen since the end of the year that would
have significantly affected the groups operations in
financial year 2015, except for the following;
The Group has become aware that IMF Bentham
Limited (“IMF”) has made a release to the ASX
dated 17 August 2015 in which it announces that
IMF proposes to fund claims of certain ASH
shareholders against ASG with respect to alleged
misstatements
from, AGS’s
in, or omissions
prospectus dated 7 August 2014 in connection with
ASG’s acquisition of
training
organisation Integracom.
registered
the
ASG notes that IMF has advised that no decision
has yet been taken by
IMF to commence
proceedings and, as such, no legal proceedings
have been served, and may not ever be.
ASG denies all liability in respect of claims of the
nature described
in IMF’s announcement and
management considers any potential claim, should
any claim be commenced, as unjustified.
4. 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.
During the year, the Group
issued 380,787
Performance Rights to senior executives under the
terms of the FY15 Long term
incentive (LTI)
plan. The terms of this plan were outlined in the
Company’s policy statement lodged on the ASX on
21 August 2014. A summary of these terms can
also be found in section 3 of this Directors’ report.
b. Non-audit services
The Group may decide to employ the auditor on
assignments additional to their statutory audit
the auditor’s expertise and
duties where
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.
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
auditor
the
Corporations Act 2001 for the following reasons:
requirements of
independence
imposed by
the services provided during the year ended
30 June 2015 primarily related to the initial
public offering of the Company and due
diligence services related to acquisitions;
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
‘Code of Ethics for
set out
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 30 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
such
by
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
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
18
Directors’ Report
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.
5. REMUNERATION REPORT – AUDITED
The directors of Ashley Services Group Limited
present the remuneration report for Non-Executive
Directors, Executive Directors and other key
management personnel, prepared in accordance
with
the
the Corporations Act 2001 and
Corporations Regulations 2001.
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 2015
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 (Interim CFO to 30 November
2014);
Marc Shrimpton (Director to 31 July 2014,
current alternate Director); and
Andrew Shrimpton (resigned as Director 31
July 2014).
Non-Executive Directors:
Peter Turner;
Simon Crean; and
Vince Fayad (from 1 December 2014).
Other key management personnel:
John Knights (General Manager, Strategy and
Business Development, resigned 31 August
2014);
Paul Brittain (Chief Financial Officer,
appointed 1 December 2014);
Brett O’Connor (General Manager, Training);
and
Paul Rixon (General Manager, Labour Hire).
include both the
Key management personnel
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
19
Directors’ Report
The Board seeks to ensure that executive reward
satisfies the following key criteria for good reward
governance practices:
competitiveness and reasonableness;
acceptability to shareholders;
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
rewards; and
provides recognition for contribution to the
business.
for earning
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 pay and benefits, including
superannuation;
short-term performance incentives, provided
in cash; and
long-term
through
incentives provided
participation in the Ashley Services Group
Performance Rights Share Plan.
The
these
combination of
executive’s total remuneration.
comprises
the
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
20
Directors’ Report
Table 7:. Key components of senior executive remuneration framework in place during the year ended 30 June 2015.
Fixed Remuneration/Base Pay
Short Term Incentive (STI)
Long Term Incentive (LTI)
Remuneration Elements
Base pay is determined by
reference to appropriate
benchmark information, taking
into account an individual’s
responsibilities, performance,
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.
‘At risk’ award opportunity for the
achievement of six monthly performance
objectives linked to six monthly financial
targets and non financial goals set by
individual.
‘At risk’ award opportunity for
the achievement of
performance hurdle over a
three year measurement
period.
Financial targets were in line with
Performance hurdle is 10%
prospectus forecasts.
There are no guaranteed base
Paid in cash within 30 days of finalisation
pay increases in any executives’
employment contracts.
of six monthly result.
compound annual growth rate
in Earning Per Share (EPS) with
forecast prospectus EPS for the
year ended 30 June 2015 as
the base for year 1 of the three
year period.
No value is derived unless the
Group exceeds the EPS growth
measure.
Vesting is 50% at the end of
year 3 and 50% at the end of
year 4, provided the 3 year
performance hurdle was met
and the executive is still
employed at the date of
vesting.
Grant of equity awards aligns
shareholder and executive
interests, enhances retention
of key talent and focuses
executives on long term
sustainable business
performance.
The remuneration committee has approved amended Short Term Incentive (STI) and Long Term Incentive (LTI)
plans for the year ended 30 June 2016.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
21
Directors’ Report
An overview of the senior executive STI plan for FY16 is set out below.
Table 8: Key features of the senior executive STI plan for FY16
Overview of the senior executive STI plan
Who participates in
the Senior Executive
STI plan?
Senior executives, excluding the CEO, participate in the senior executive STI plan. The CEO does not
participate in the STI plan.
How much can
executives earn?
STI opportunity for senior executives ranges from zero to 100% of target STI for significant out-
performance
Thresholds and performance conditions
Is there a threshold
level of performance
required?
Yes. There are threshold levels for EBITDA that must be met to receive an STI payment.
Achievement of the thresholds does not automatically entitle executives to an STI award. Financial
and non-financial performance measures must also be met to earn an STI payment.
What are the
performance
conditions?
Measures
Financial measures
(80% of STI opportunity)
Non-financial measures
(20% of STI opportunity)
Senior Executives
Assessed against:
budget EBITDA for the individual’s area of
influence for the financial year.
50% payable for achievement of budget.
Remaining 50% payable on a straight line
pro rata basis for financial performance
from 100% to 120% of budget.
Assessed against:
Achievement of individual’s performance
objectives.
Only eligible for this potential allocation
once a financial threshold of 90% of budget
EBITDA for the individual’s area of influence
is met or exceeded.
Setting and assessing performance
Who sets and
assesses
performance?
How is the STI
delivered?
The CEO sets and assesses performance and short term incentive outcomes for senior executives
with guidance from the Remuneration Committee
100% of any STI award is paid in cash within 30 days of finalisation of the audited Annual Report.
c. Non-executive Director remuneration
Non-executive Directors’ remuneration are reviewed annually and are determined by the Board based on
recommendations from the Remuneration Committee. In making its recommendations, the Remuneration
Committee takes into account 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, fees are not linked to performance.
The company does not operate equity plans for non-executive Directors.
Non-executive Directors are entitled to statutory superannuation included as part of the Directors’ fees. There
are no other schemes for retirement benefits for non-executive Directors.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
22
Directors’ Report
d. Details of remuneration
Details of remuneration of the Directors and other key management personnel of Ashley Services Group are set
out in the tables on pages 23 to 24.
The key management personnel of Ashley Services Group are listed on page 19. 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 9: Executive and Key Management Personnel Service Agreements2
30
-
50
50
50
PE2 benefits
Super-
annuation
$
Target STI %3
-
Target LTI %3
-
Name
Base Salary $1
Ross Shrimpton
Marc Shrimpton
Andrew Shrimpton
Brett O’Connor
Paul Rixon
300,000
275,000
275,000
450,000
275,000
50
40
50
50
450,000
Paul Brittain
Note:
1. Base salary includes superannuation guarantee contributions.
2. As at the date of this report.
3. Maximum annual award as a percentage of annual salary.
50
Table 10: 2015 – Remuneration of Key Management Personnel
2015
ST1 employee benefits
Name
Non-executive Directors
Peter Turner
Simon Crean
Vincent Fayad5
Executive Director
Ross Shrimpton
Marc Shrimpton
Andrew Shrimpton
Other key management
personnel
Brett O’Connor
Paul Rixon
Paul Brittain7
John Knights8
Total
Cash salary
& fees
$
Salary non-
cash
$
ST1 employee
bonus
S
IPO
Bonus9
$
132,751
93,116
74,655
263,165
243,789
231,547
384,994
241,254
245,709
54,001
-
-
-
-
-
-
-
-
-
-
120,001
74,998
-
-
-
10,753
67,824
2,707
-
100,000
137,501
17,474
71,924
137,501
-
-
-
-
-
400,000
12,414
8,846
7,092
17,725
18,058
19,506
17,958
19,242
10,957
4,652
1,964,982
28,227
239,748
872,708
136,450
Term of
agreement
Unspecified
Unspecified
Unspecified
Unspecified
Unspecified
Unspecified
Notice Period
6 months
6 months
3 months
6 months
6 months
6 months
LT3 employee
benefit
Performance
based
Remuneration
Total4
$
$
-
-
-
-
-
-
-
-
-
-
-
265,166
176,960
81,747
280,890
261,847
332,336
640,454
487,396
256,666
458,653
3,242,115
%
-
-
-
-
-
20
16
15
-
-
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
23
Directors’ Report
Table 11: 2014 – Remuneration of Key Management Personnel
2014
ST1 employee benefits
PE2
benefits
LT3
employee
benefit
Share-based
payment
Total4
Performance
based
Remuneration
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
Cash salary
& fees
$
Salary non-
cash
$
ST1
employee
bonus
S
Super-
annuation
$
-
-
52,432
-
78,611
125,238
309,995
215,126
-
-
-
-
-
-
-
14,705
-
-
-
-
-
-
-
-
-
-
4,624
-
7,111
11,584
5,525
19,900
Shares &
options
$
-
-
-
-
-
-
-
-
$
-
-
57,056
-
85,722
136,822
335,520
249,731
$
-
-
-
-
-
-
-
-
-
93,867
154,617
Greg Jenkins
John Knights8
Total
Note:
1. ST – Short-term.
2. PE – Post-employment.
3. LT – Long-term. Details of the long term incentive plan are included in the Directors’ report, pages 26 to 28. Management have
- 1,137,658
1,029,886
102,530
170,277
93,067
15,660
14,705
8,663
-
-
-
-
-
-
-
-
-
%
-
-
-
-
-
-
-
-
-
-
-
assessed the probability of the performance hurdle for the 2015 plan being met as nil and no expense has been recognised in the
profit and loss account for the year ended 30 June 2015.
4. Amounts included in the above table include amounts paid to key management from all entities.
5. During the year financial advisory fees have also been paid to PKF Lawler Corporate Finance (Company in which Vincent Fayad is a
Director). These include payments for the period to 30 November 2014, during which Vince was both a Director and the Interim Chief
Financial Officer.
6. There were no termination payments made to any non-executive directors, executive directors or other key management personnel
in either 2014 or 2015.
7. Commenced employment and included as KMP from 1 December 2014.
8. Resigned 31 August 2014.
9. Mr Turner and Mr Crean received payments of $120,000 and $75,000 respectively for services rendered as part of the IPO process.
John Knights, Andrew Shrimpton, Brett O’Connor and Paul Rixon received bonuses at the time of the IPO for past services rendered.
Other transactions with key management personnel
Information on share-based payments and other transactions with key management personnel is set out
above.
Shares held by key management personnel
e.
The number of ordinary shares in the companies during the 2015 reporting period held by each of the groups’
key management personnel, including their related parties are set out below:
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
24
Directors’ Report
Table 12: Shares held by Key Management Personnel
Shares
issued at
Balance at
start of the
year2
-
-
28,290,430
-
-
-
-
-
-
-
Name
Peter Turner
Simon Crean
Ross Shrimpton1
Vincent Fayad
Marc Shrimpton
Andrew Shrimpton
Brett O’Connor
Paul Rixon
Paul Brittain
John Knights
Note:
1. This includes shares owned by Catherine Shrimpton (wife of Ross Shrimpton, 60,858,282), their family company
IPO Shares Purchased
285,602
30,120
2,748,940
60,240
188,000
1,248,940
-
-
18,000
-
36,145
22,590
-
-
-
1,060
41,416
41,416
-
-
Shares
disposed3
-
-
(4,776,471)
-
(2,393,630)
-
-
-
-
-
Balance at
end of
the year
321,747
52,710
85,248,940
60,240
1,688,000
1,250,000
41,416
41,416
18,000
-
Shares issued
through
common
control
transaction
-
-
58,986,041
-
3,893,630
-
-
-
-
-
(21,631,861) and shares purchased on behalf of Dean and Andrew Shrimpton (1,500,000 and 1,248,940 respectively). It
excludes shares held non-beneficially in trust on behalf of Holmes Management Group Pty Limited (6,024,096).
2. Number of shares at the start of the year has been adjusted to reflect the share split of 9,857 new shares for every one
share on issue prior to common control transaction.
3. 7,170,101 ordinary shares related to a sell down by Ross Shrimpton and his related entities as well as Marc Shrimpton
at the date of the IPO
f.
Executive service agreements
On appointment to the Board, all non-executive Directors sign a letter of appointment with the Company. The
letter summarises the terms including compensation, relevant to the office of Director.
All contracts with executives may be terminated by either party with a notice period as outlined in Table 9
above. Executives are typically restricted for six months after termination from conducting or engaging in
competing businesses and from solicitation of customers and employees of the Company.
g.
Share-based compensation
Senior Executive Share Plan
ASG 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 present and potential
contributions are important to the success of the Group by offering them an opportunity to share in the
ownership of ASG. The Performance Rights Share Plan is administered by the Board in its discretion. The terms
and conditions of the Performance Rights Share Plan are summarised below.
During the financial year the Board issued 380,787 performance rights.
The number of Performance Rights awarded to executive directors and Key Management Personnel is set out
below:
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
25
Directors’ Report
Table 13: Performance Rights held by Executive Directors and Key Management Personnel
Names
Mr Ross Shrimpton
Mr Brett O’Connor
Mr Paul Rixon
Mr Marc Shrimpton
Mr Paul Brittain
Number of Performance
Rights Held
-
120,482
82,831
49,699
73,755
The offer of rights to Shares under the Employee Performance Rights Plan did not exceed 5% of the total
number of issued shares in that class.
Consideration for the Shares is provided in the form of services to or for the benefit of the Company and as
such performance conditions may be attached to any rights under the Employee Performance Rights Plan. An
eligible employee, who has contracted with Ashley Services (under the Employee Performance Rights Plan) for
the right to Shares in the Company (Participant), holds those rights on the following terms:
disposal of rights is not permitted without the permission of the Board;
any new issue of shares to existing shareholders will only apply to the Participant if the rights to shares
have vested in the Participant and the Participant has become a shareholder in the Company at the
relevant record date (as defined in the ASX Listing Rules);
in the event there is a bonus issue to Ashley Services shareholders, the number of shares a Participant is
entitled to under the Employee Performance Rights Plan will be increased by the number of Shares the
Participant would have received had they been a shareholder before the record date (as defined in the
ASX Listing Rules) for the bonus issue; and
in the event of a reconstruction of the issued capital of the Company prior to a Participant’s rights under
the Employee Performance Rights Plan vesting in the Participant, the rights and Shares to which the
Participant is entitled will be reconstructed in accordance with ASX Listing Rules.
Rights under the Employee Performance Rights Plan will vest in a Participant at a determined date subject to
the Participant’s continued employment with ASG and the satisfaction of any performance conditions and
other terms and conditions imposed by the Board. Shares allotted under the plan are held under the following
conditions:
shares issued under the plan will rank equally to shares issued in ASG; and
compliance with ASG’s Share Trading Policy is required.
Table 14: Key features of the senior executive FY15 LTI plan
Overview of the LTI
Who participates in
the Senior Executive
LTI?
What was awarded
under the LTI plan in
FY15?
Senior executives, but excluding the CEO, participate in the senior executive LTI plan.
On 25 September 2014 senior executives received an LTI award of 380,787 performance rights, the
vesting of which is subject to the performance condition outlined below. The number of rights
awarded was calculated by dividing the remuneration value of the award by the IPO price for ASH
shares ($1.66/share) or for those employees commencing employment following the IPO, by the
volume weighted average price of ASH shares for the 5 day trading period prior to the approval to
grant their award.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
26
Directors’ Report
Overview of the LTI
Performance conditions
What are the
performance
conditions?
Senior executive LTI awards are earned only upon achievement of the following performance
hurdle:
Earnings Per Share growth (EPS): 100% of the LTI grant
The Board has determined that the LTI plan will be subject to the performance condition over a
three year period, commencing 1 July 2014.
Absolute EPS performance condition - measured as the compound annual underlying EPS growth
over the 3 year performance period.
The EPS target is:
EPS
Expected EPS for the financial year ended 30
June 2015
EPS Target
13.7 cents per Proforma prospectus forecast
10% growth FY16
10% growth FY17
15.0 cents per share
16.5 cents per share
If actual EPS for the year ended 30 June 2017 exceeds 16.5 cents per share, 100% of the
performance rights granted to each employee will vest as follows;
50% of performance rights granted to each employee vest at the end of the third year (25
September 2017)
The remaining 50% vest at the end of the fourth year (25 September 2018), provided the executive
is still employee at this vesting date.
Annual compound EPS growth was selected as the LTI performance measure because it provides a
direct link between generation of economic returns for shareholders, ASH’s business strategy and
executive reward.
No, retesting of performance is not permitted.
The Remuneration Committee based on financial information (EPS measure).
No, there are no voting rights or entitlements to dividends on unvested awards under the LTI plan.
Over what period is
performance
measured?
How are the
performance
conditions
assessed?
Why were the
performance
measures
chosen?
Is performance
subject to retesting?
Who assesses
performance against
targets?
Does the executive
receive dividends
and voting rights on
unvested awards?
Cessation of employment and change of controls
What happens in the
event of a change of
control?
Upon a change of control event, the Board may determine to vest some or all of the LTI awards. In
making this determination, the Board will consider all relevant circumstances, including the
performance against the EPS measure up to the date of the change of control event and the portion
of the performance period that has expired.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
27
Directors’ Report
Overview of the LTI
Cessation of employment and change of controls
What happens in the
event of cessation of
employment?
In general, unvested LTI awards are forfeited.
In limited circumstances, such as upon a senior executive’s death, serious injury or incapacity during
the performance period or other reason approved by the Board, any unvested performance shares
will vest at the end of the performance period if the relevant performance conditions have been
satisfied.
The Board and the Remuneration Committee have approved the FY16 LTI Plan on 25 September 2015. The
FY16 is in line with the FY15 plan except that a second performance hurdle, being Total Shareholder Return
(TSR) will be added.
The TSR performance condition is a measure of ASH’s TSR compared to the TSR of a comparator group of
twenty competing and industry related companies at the beginning of the respective performance periods.
TSR is measured by the change in value of the ASH’s cumulative TSR over the performance period compared to
the TSR performance of the comparator group over the same period.
The Board has the discretion to adjust the comparator group to take into account events including but not
limited to takeovers, mergers or demergers that might occur during the performance period.
The Board considers two performance conditions to be appropriate because they ensure that a proportion of
each executive’s remuneration is linked to the generation of profits (expressed on a per share basis) and
shareholder value through the combined application of both and absolute and relative performance criteria.
In particular, the use of a relative TSR based hurdle:
ensures alignment between comparative shareholder return and reward for the executive; and
provides a relative, external market performance measure, having regard to those companies with
which the Group competes for capital, customers and talent.
An absolute underlying EPS growth based hurdle links:
executive reward to a fundamental indicator of financial performance that is directly connected to
shareholders; and
directly to ASG’s long term objectives of maintaining and improving earnings performance.
The use of dual performance measures combines a strong external market based focus through share price
growth and dividends (TSR), and a non-market based internal measure aimed at driving improved Company
earnings results (EPS).
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.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
28
Directors’ Report
Signed in accordance with a resolution of the Board of Directors made pursuant to section 298(2) of the
Corporations Act 2001
Peter Turner
Non-executive Chairman
Ross Shrimpton
Managing Director
Sydney, 29th September 2015
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
29
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
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Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
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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 2015, 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, 29 September 2015
Grant Thornton Audit Pty Ltd ACN 130 913 594
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30
Corporate Governance Statement
A Corporate Governance Statement has been
adopted by the Board on 25 September 2015.
more effectively. This creates a system of checks
and balances to provide a balance of authority
investor
confidence
The practice of good corporate governance is vital in
enhancing
corporate
accountability by demonstrating a commitment to
Ashley Services Group Limited
transparency.
(Company)
is committed to the principles of
corporate governance.
in
The ASX Corporate Governance Council (Council)
released a 3rd edition of Corporate Governance
Principles
(‘ASX
Recommendations’) with an application for entities
whose first full financial year started on or after 1
July 2014 i.e. the year ended 30 June 2015.
Recommendations
and
The ASX Recommendations are intended to be a
reference point for companies about their corporate
governance structures and practices. A company
may choose not
implement certain ASX
Recommendations, provided that the company
explains why it has not done so and what alternate
approaches have been adopted.
to
The Board has adopted a suite of governance
materials which are available
in the Corporate
Governance section of the Company’s website
(www.ashleyservicesgroup.com.au), under “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.
This statement sets out the material governance
principles and processes adopted by the Board.
Principle 1: Lay solid foundations for management
and oversight
The Board is responsible for a broad range of
matters and will act in the best interests of the
Company to ensure that the business of the
Company is properly managed.
The role of the board (Board) is to oversee the
management of the Company as well as provide
strategic guidance. We have adopted a Board
Charter (Charter) which formally sets out the
functions and responsibilities of the Board, with the
objective of the Board being able to perform its role
Prior to the appointment of a director, a process
including numerous reference checks, a bankruptcy
check and criminal record (all states and territories
of Australia and the AFP) is undertaken.
Further, prior to a resolution being put to members
concerning the election/re-election of a director,
members are provided with detailed information of
the respective parties education, age and relevant
experience for consideration.
All directors (and senior management roles) have
written agreements that set out, inter alia, the terms
of their respective employment.
The Company Secretary has a direct reporting line to
each Director concerning all matters to do with the
the
proper
Committees. He is an experienced public company
secretary and is well versed in all aspects of the role
in an ASX listed public company environment.
the Board and
functioning of
Diversity
The Company has a Diversity Policy a summary of
which is detailed below.
Summary
The purpose of the Diversity Policy is to assist
the Company to achieve its objectives and
its stakeholders, by
deliver outcomes for
enabling it to attract and retain the most
qualified and experienced individuals to its
workforce.
to ensure
its
The Company aims
workforce, including our board of directors, is
made up of individuals with diverse skills,
values, backgrounds and experience to the
benefit of the Company.
that
The Policy applies to all Directors, Senior
Executives, employees, whether full-time, part-
time, causal or temporary, as well as to
contractors and consultants.
The Policy sets out the guidelines by which the
Company endeavours to
increase diversity
throughout the Company, including at Board
level.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
31
Corporate Governance Statement
Statement of principles
The Company is committed to:
throughout
equality of opportunity
organisation;
recruiting and retaining the best candidates for
positions; and
treating individuals with respect.
the
Board responsibilities
The Board is charged with establishing measurable
objectives for achieving diversity, particularly gender
diversity, within the Company and at the Board. The
Board is to assess the performance of the Company
annually in achieving the objectives, and review the
objectives themselves annually.
The Board will consider diversity in the selection of
board members and will consider the issue of
diversity in developing its selection criteria and
process for candidates for membership of the board.
The Company provides the following information on
the proportion of women employees in the whole
organisation, women in Senior Executive positions
and women on the Board of the Company.
Directors & other KMP
Corporate & Administration
Labour Hire
Recruitment
Training
Total
Female Male
100%
27%
25%
11%
41%
37%
0%
73%
75%
89%
59%
63%
The performance of the Board and Senior Executives
in the 2015 financial year has been reviewed against
both quantitative and qualitative measures and
Directors and Senior Executives provided feedback
on the discharge of their responsibilities.
Performance review occurred via both interview and
documented appraisal forms. Further details are
included in the Directors’ report.
Management responsibilities
Principle 2: Structure the board to add value
Management is charged with achieving the diversity
objectives by the Board and is responsible for
reporting to the Board on the progress towards and
the achievement of the diversity objectives.
Reporting
To date, the board or a committee have not set
measurable objectives for achieving gender diversity
and to assess annually both the objectives and the
company’s progress
in achieving them. These
objectives will be established in the 2016 financial
year and reported upon in the 2016 annual report.
Nomination Committee
The company has a nomination committee
comprising Simon Crean (Chair), Peter Turner and
Ross Shrimpton. Messrs Crean and Turner are
independent directors.
The Nomination Committee Charter is available for
viewing on the company’s website.
The number of Nomination Committee meetings
held in the financial year and the attendance by
each director is disclosed in the directors’ report.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
32
Corporate Governance Statement
Board skills matrix
Name of
Director
Independent?
Y/N
Any relationship
affecting
independence?
Ross Shrimpton
N
Managing Director
N
Executive Role
Marc Shrimpton
(alternate
director to Ross
Shrimpton)
Vince Fayad
N
Executive role with
Company in past 3
years/Material
professional service
provider.
Skills and experience relevant to the
position
Term of office
Strategy, management, training and
labour hire industry expertise.
12 October
2000 – current.
Recruitment and management
expertise.
31 July 2014 -
current.
Corporate governance, accounting and
finance expertise.
31 July 2014 –
current.
Simon Crean
Peter Turner
Y
Y
No
No
Government (in particular education),
strategy, management expertise.
31 July 2014 –
current.
Strategy, management, corporate
governance expertise.
31 July 2014 –
current.
The Board and Nomination Committee regularly
review the blend of the skills and balance of board
and Committee members and resolved in the 2015
financial year a desire for a further director who was
independent, had international education (including
experience
student
numbers and who would work well with and
complement
The most
appropriate person for the role was the paramount
requirement, regardless of gender.
international
directors.)
growing
existing
in
to
source
A process was undertaken
the
abovementioned person and an announcement
concerning this matter is expected shortly. This
process has included numerous reference checks, a
bankruptcy check and criminal record (all states and
territories of Australia and the AFP) check of any
candidates offered roles and to be put forward to
shareholders for election as a director.
At a general meeting of the company, annually,
directors appointed by the company’s directors, are
put to members for election. Similarly, existing
directors,
Company’s
Constitution, are put to members for re-election.
required
the
by
as
In each of the above instances, detailed and relevant
information, concerning the respective director is
provided to members.
Majority of independent directors
Per the above table, Messrs Turner and Crean are
independent directors having no prior association
with the company/related parties.
Vince Fayad was the Interim Chief Financial Officer
until the appointment of a full time Chief Financial
Officer on 1 December 2014. Vince Fayad is also a
director of PKF Corporate Finance (NSW) Pty Limited
(and its predecessors) who has been a provider of
professional services to ASG in the past 3 years.
Accordingly, Mr Fayad is not considered to be an
independent director at the date of this report.
The current Board is 50% independent/75% non-
executive, although noting that the Board Chair has
the casting vote thereby maintaining a majority
independence.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
33
Corporate Governance Statement
Chairman and independence
The Chair of the Board and Managing Director are
separate roles assumed by Peter Turner and Ross
Shrimpton respectively. Peter Turner
is a non-
executive and independent director.
confidential information – complying with the
the use of non-public
restrictions on
information except where disclosure is either
authorised or mandated by law;
Fair trading and dealing
Director induction and professional development
All new directors undertake a detailed induction
programme that covers inter alia, company history
and information, policies and procedures and ASX
requirements.
the Nomination
addition,
Committee considers training and professional
development requirements of directors.
In
Principle 3: Act ethically and responsibly
Code of Conduct and Conflicts of Interest
Summary of Code of Conduct (Code)
The Company seeks to be recognised as an
organisation committed to the highest ethical
standards in business. The Code provides an outline
of the standards of ethical behaviour expected of
Company directors and key executives and provides
for the accountability of unethical practices.
The conduct of the Directors and Senior Executives is
governed by the following principles:
the
relevant
integrity
is made
shareholders and
to
responsibilities
financial community
the Company values communication with its
shareholders, other stakeholders, and the
public at large. Full, fair and timely disclosure
of
to
information
shareholders and the ASX;
employment
and
practices
professionalism – to act honestly and with
integrity in all dealings of the Company;
active compliance with the law;
achieving gender diversity set by the Board in
accordance with the diversity policy (including
the proportion of women employees in the
whole organisation, women in senior executive
positions and on the Board) – to disclose
progress towards achieving them;
conflicts of interest – to fully disclose any
matters which may lead to conflicts of interest;
and
Company will
the
anticompetitive practices
restrict the free market economy.
not
engage
in
that unlawfully
As part of the active promotion of ethical behaviour
any behaviour that does not comply with this Code
must be duly reported. Protection will be provided
for those who report violations in good faith.
A copy of the Code is available on the company’s
website.
Principle 4: Safeguard
reporting
integrity
in corporate
Audit and Risk Management Committee
The company has an Audit and Risk Management
Committee comprising Vince Fayad (Chair), Peter
Turner and Simon Crean.
Messrs Turner and Crean are independent directors
having
the
no
company/related parties.
association with
prior
Vince Fayad was the Interim Chief Financial Officer
until the appointment of a full time Chief Financial
Officer on 1 December 2014. Vince Fayad is also a
director of PKF Corporate Finance (NSW) Pty Limited
(and its predecessors) who has been a provider of
professional
the past 3 years.
in
Accordingly, Mr Fayad is not considered to be an
independent director at the date of this report.
services
The Audit and Risk Management Committee Charter
is available for viewing on the company’s website.
The number of Audit and Risk Management
Committee meetings held in the financial year and
the attendance by each director is disclosed in the
directors’ report.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
34
Corporate Governance Statement
Assurance
section 295A of
the purposes of
the
For
Corporations Act and ASX Recommendation 4.2, the
Managing Director and Chief Financial Officer
provide the required assurances and declarations
each half-year.
The Board have received assurance from the
Managing Director and Chief Financial Officer that,
in their opinion:
the financial records of the Company have
been properly maintained;
the financial statements comply with the
appropriate accounting standards and give a
true and fair view of the financial position and
performance of the Company; and
the opinion has been formed on the basis of a
sound system of risk management and internal
control which is operating effectively.
External Auditor
is
The Audit and Risk Management Committee
responsible for making recommendations to the
Board concerning the appointment of external
auditors and the terms of their engagement. The
Audit and Risk Management Committee annually
reviews the performance of the external auditors
and the Company’s policy on maintaining the
independence of
The
independent external auditor reports directly to the
Audit and Risk Management Committee and Board.
the external auditor.
The Audit and Risk Committee Charter includes
information on the procedures for selection and
appointment of the external auditor and for the
rotation of the external audit engagement partner.
In 2014, shareholders appointed Grant Thornton as
the company’s auditor and this marks Year 1 under
the rotation policy.
The
invited to
attend all Annual General Meetings and is available
to answer questions from shareholders concerning
their annual audit.
independent external auditor
is
Principle 5: Make timely and balanced disclosure
The company has adopted a Continuous Disclosure
Policy which has procedures designed to ensure
compliance with ASX Listing Rule and Corporations
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
Act disclosure
to ensure
accountability of Directors and Senior management.
requirements and
The policy, which is available on the Company’s
website, has procedures designed to ensure that
material information is communicated to directors
and the Company Secretary and for the assessment
of
for the disclosure of material
information to the market.
information
the
importance of
The Board acknowledges
promoting timely and balanced disclosure of all
material matters concerning the company and
believes it is fully compliant with Principle 5 and its
recommendations
Summary of the Continuous Disclosure Policy
The purpose of the Continuous Disclosure Policy is to
ensure that there are mechanisms in place to
provide all investors with equal and timely access to
material information concerning the Company. Such
information must be presented
in a clear and
balanced way so as to not omit any material
information.
These policies are designed to ensure that the
disclosure
continuous
Company meets
obligations under the ASX Listing Rules.
its
Type of information that needs to be disclosed
Listing Rule 3.1 states that any information that a
reasonable person would consider to have a
material effect on the value of the Company’s
securities must be disclosed. Examples of such
information include a change in revenue, asset
values or significant transactions.
Disclosure Officer
(Disclosure Officer)
The Board has appointed the Secretary to act as the
disclosure officer
to be
responsible for communications with the ASX and to
decide what information must be disclosed. The
Disclosure Officer holds the primary responsibility
for ensuring that the Company complies with its
disclosure obligations.
In addition, the Directors, employees or consultants
are all responsible for reporting price sensitive
information that is not generally available to the
Disclosure Officer.
35
Corporate Governance Statement
Accountability
the
continuous disclosure
Contravention of
obligations can result in a series of penalties under
the Act ranging from civil penalties to criminal
liability.
Principle 6: Respect the rights of shareholders
to
promote
The company has a Shareholder Communication
effective
Policy which
seeks
The
communication with our shareholders.
Company communicates in several ways including
via its Annual Report and Half-yearly accounts and
other ASX announcements
regarding material
developments.
Summary of Shareholder Communication Policy
ASG’s communications strategy (contained in the
Shareholder Communication Policy) is designed to
empower shareholders by giving them access to
balanced and understandable information on the
Company. The Company is required under the Act
and the ASX Listing Rules to keep the market fully
informed of all information that could materially
effect the value of its securities.
Regular shareholder communication
ASG is committed to maintaining direct, open and
timely communications with all shareholders. The
use of electronic communication provides broader
access to Company information by investors and
stakeholders and a greater opportunity for more
effective communication. It also provides improved
access for shareholders who are unable to attend
meetings.
At a minimum the shareholder will receive the
following;
in
results
(ordinarily released
(ordinarily announced
annual
August);
the annual report
September)
an invitation to the annual general meeting
(AGM) and all accompanying papers (ordinarily
scheduled to occur in October);
any reports/other information disclosed at the
the
(ordinarily within a week of
AGM
occurrence of the AGM); and
in
interim and half-yearly
released in February).
results
(ordinarily
All of the above information and all governance
information is available on the company’s website.
The company’s website is user friendly and easy to
operate and encourages shareholders with any
questions or concerns to ask and they will be
assured of a prompt, detailed response.
LINK Market Services (company’s share registry)
provides electronic transmission of all company
communications.
Meetings
Part of ASG’s communication strategy
involves
making it easier for shareholders to participate in
general meetings. All shareholders will be invited to
attend the AGM and the Chair’s report will be
forwarded to all shareholders.
ASG will also request that the external auditor
attend the AGM and be available to answer
shareholder questions about the audit as well as the
preparation and content of the audit reports.
The Chair will encourage and seek concerns or
questions from shareholders at the AGM.
company maintains
The
www.ashleyservicesgroup.com.au.
a website
at:
Annual General Meeting (AGM)
The 2015 AGM will be held on Friday 30 October
2015 at 10:00 am (Sydney time) in the offices of
Norton Rose Fulbright on Level 18, 225 George
Street Sydney NSW 2000.
The Chairman of the meeting will ensure that
shareholders are given
to
participate at the AGM. Further, representatives of
our auditors, Grant Thornton, will be in attendance
to answer questions pertaining to their audit work.
the opportunity
ASG encourages shareholders to contact the Link
Market Services (company’s Share Registry) should
they wish to receive and send all communications to
and from the ASG electronically.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
36
Corporate Governance Statement
Principle 7: Recognise and manage risk
Financial reporting
The company has an Audit and Risk Management
Committee Charter can be viewed on the company’s
website.
An Audit and Risk Management Committee has been
established by the Board to protect the integrity of
financial reports. The importance of an Audit and
is universally
Risk Management Committee
recognised
in the practice of good corporate
governance and plays a key role in focussing the
Board on matters relevant to the
integrity of
financial reporting.
In order to give the Audit and Risk Management
Committee the ability to exercise
independent
judgment,
the Audit and Risk Management
Committee is structured so that it consists of:
only non-executive Directors;
a majority of independent Directors;
a chairperson, who is not the Chair of the
Board; and
at least 3 members.
Composition of the Audit and Risk Management
Committee
Vince Fayad – non- executive chair
Simon Crean – non-executive director
Peter Turner – non-executive director
The Audit and Risk Management Committee Chair
(Vince Fayad) is not considered an independent
Director as detailed above.
Notwithstanding the above, Mr Vince Fayad is the
most appropriate of all directors however to chair
this Committee given his 30+ years’ experience as a
Chartered Accountant and his expertise with ASX
listed public companies.
The qualifications and experience of all Committee
members and the number of Audit and Risk
management Committees held and attendance by
members are disclosed in the Annual Report.
Charter of the Audit and Risk Management
Committee
The charter of the Audit and Risk Management
Committee sets out its role and responsibilities,
structure and membership requirements.
Responsibilities
The
responsibilities of
Management Committee includes:
the Audit and Risk
reviewing the integrity and the effectiveness of
the internal audit;
overseeing the independence of the external
auditors; and
the management of operational risk.
Meetings
The Audit and Risk Management Committee will
meet as frequently as required and at least twice a
year.
Any member of the Audit and Risk
Management Committee may call a meeting. A
least
quorum at such meetings consists of at
2 members, 1 of which must be independent.
Expertise
Every member of the Audit and Risk Management
Committee is able to read and understand financial
statements and at least 1 member is a qualified
accountant or other financial professional with
experience in financial and accounting matters.
Reporting
The Audit and Risk Management Committee reports
to the Board at the first Board meeting subsequent
to each Audit and Risk Management Committee
meeting. Each report contains all matters relevant
to the Audit and Risk Management Committee’s role
and responsibilities.
External auditing and Internal Audit
The Audit and Risk Management Committee
is
responsible for making recommendations to the
Board concerning the appointment of external
auditors and the terms of their engagement. The
Audit and Risk Management Committee annually
reviews the performance of the external auditors
and the Company’s policy on maintaining the
The
independence of
the external auditor.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
37
Corporate Governance Statement
independent external auditor reports directly to the
Audit and Risk Management Committee and Board.
Risk management
MD and CFO assurances
independent external auditor
The
invited to
attend all Annual General Meetings and is available
to answer questions from shareholders concerning
their annual audit.
is
The Audit and Risk Management Committee
resolved to establish an Internal Audit function in
the year ended 30 June 2015. Following a tendering
process, it was agreed to appoint PriceWaterhouse
Coopers (PWC) for a 3 year period as the company’s
internal auditor. The internal auditor reports to
management and to the board.
PWC have worked with management to identify key
risks and will conduct testing in these areas and
report on the completion of their work. Risks will be
periodically assessed and work performed adjusted
if deemed appropriate.
Risk management policy
In order to recognise and manage risk, we have
established an internal compliance system under
which risk is identified, assessed, monitored and
managed.
is designed and
structure
implemented by the Audit and Risk Management
Committee as one of its key responsibilities is to
oversee the establishment and implementation of
the risk management system.
This
Risk management
All material risks affecting the Company, including
both
financial and non-financial matters, are
considered and reviewed regularly by the Risk
Management Committee.
Assessment of effectiveness
The effectiveness of the risk management system is
reviewed by the Audit and Risk Management
Committee at least annually.
A part of this system of assessment
is the
establishment of an internal audit function whose
purpose is to analyse the effectiveness of the
Company’s
internal
compliance and control system. The internal audit
function is independent of the external auditors and
reports to management.
risk management
and
In order to create an environment for identifying
and capitalising on opportunities, the Board has
established a sound system of risk oversight and
management.
encourage management
accountability in this area, the Senior Executives are
required
risk
management and internal control system to manage
the Company’s material business risks and report on
whether those risks are being managed effectively.
to design and
implement
the
To
The Audit and Risk Management Committee reviews
the company’s risk management framework at least
annually to satisfy itself that it continues to be sound
and will disclose in the annual report whether such
review occurred.
Further, both the MD and Chief Financial Officer
(CFO) are required to provide written assurances to
the Board that the financial reports submitted to the
Board present a true and fair view of the Company’s
financial position and operational results and that
internal
the Company’s risk management and
compliance and control system
is operating
efficiently and effectively.
In the annual report, the company will disclose, if
applicable and appropriate whether
it has any
material exposure to economic, environmental and
social sustainability risks and, if it does, how it
manages/intends to manages those risks.
Principle 8: Remunerate fairly and responsibly
The company has a Remuneration Committee
Charter that can be viewed on the company’s
website. The company also has a Remuneration
Committee.
Remuneration Committee
The role of the Remuneration Committee is to
review the remuneration policies and practices of
the Company
the Company
remunerates fairly and responsibly. Such policies
are designed to attract and retain talented and
motivated directors.
to ensure
that
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
38
Corporate Governance Statement
Composition
Remuneration
of
The
3 members, of which 2 are independent, as follows:
Committee
consists
or otherwise) which limit the economic risk of
participating in the scheme.
Remuneration and performance
Peter Turner – non-executive chair, independent
Summary of performance evaluation
Simon Crean – non-executive director, independent
Vince Fayad – non- executive director
The members of the Remuneration Committee have
an appropriate understanding of the principles of
corporate governance, the disclosure requirements
under the Corporations Act 2001 (Cth) (Act) and the
complexities
and
determining executive remuneration packages.
negotiating
involved
in
Responsibilities
The Remuneration Committee’s
responsibilities
include providing the Board with advice and
recommendations relating to:
the executive remuneration policy;
the non-executive remuneration policy;
remuneration packages for executive Directors
and Senior Executives;
merit recognition arrangements; and
termination arrangements.
Meetings
The Remuneration Committee will meet as
frequently as required and no less than twice a year.
Any member of the Remuneration Committee may
call a meeting. A quorum for a Remuneration
Committee meeting consists of at least 2 members,
1 of whom must be an independent person.
The qualifications and experience of all Committee
members and
the number of Remuneration
Committees meetings held and attendance by
members are disclosed in the Annual Report.
Charter and remuneration policies and practices
The Remuneration Committee Charter is available
for viewing on the company’s website.
concerning
non-executive
ASG discloses in its annual report its policies and
practices
director
remuneration and
remuneration of executive
directors and other senior management. This
includes any equity based remuneration scheme and
that participants are not permitted to enter into
transactions (whether through the use of derivatives
The performance of the Board and Senior Executives
is reviewed regularly against both quantitative and
qualitative measures to ensure that the Directors
and Senior Executives obtain adequate feedback on
the discharge of their responsibilities.
The company advises that a performance evaluation
of the board was not undertaken in the 2015
reporting period. The intention is for a performance
evaluation to occur of the Board and all Committees
to occur in the 2016 reporting period.
Further, the annual report discloses the process
used for evaluating the performance of senior
executives which was undertaken
in the 2015
reporting period.
Remuneration policy
Remuneration
to performance and
The remuneration policy is designed to ensure that
the level and composition of remuneration is both
is
competitive and reasonable.
is
intimately connected
intended to be appropriate for the results delivered.
The Company’s policies are designed to attract and
maintain talented and motivated Directors and
employees as well as
level of
performance of the Company.
raising
the
The Board has the discretion to reward eligible
employees with the payment of bonuses, share
These
options and other
incentive payments are designed to link rewards to
performance and are determined by both financial
and non-financial imperatives.
incentive payments.
Remuneration packages of non-executive Directors
are fee based. Non-executive Directors do not
participate
for the
in the schemes designed
remuneration of executives, nor do they receive
options, bonus payments or any retirement benefits
other than statutory superannuation.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
39
Directors’ Declaration
The directors of the Group declare that:
1.
the consolidated financial statements and notes for the year ended 30 June 2015 are in accordance
with the Corporations Act 2001 and:
a.
b.
the Australian Accounting
comply with Australian Accounting Standards
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 2015 and for the year then ended;
2.
the Managing Director and 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
Non-executive Chairman
Sydney, 29th September 2015
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
40
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
Independent Auditor’s Report
To the Members of Ashley Services Group Limited
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
2015, 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.
41
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 2015 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.
42
Report on the remuneration report
We have audited the remuneration report included in pages 19 to 28 of the directors’ report
for the year ended 30 June 2015. 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 2015, complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
C F Farley
Partner - Audit & Assurance
Sydney, 29 September 2015
43
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the financial year ended 30 June 2015
Revenue
Other income
On hire 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
IPO and acquisition related costs
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Total comprehensive income for the period
Basic earnings per share (cents)
Diluted earnings per share (cents)
Note
2
2
3
3
5
20
20
30-Jun-2015
$000
304,700
8,478
(251,716)
(22,879)
(3,676)
30-Jun-2014
Restated
$000
250,943
299
(214,778)
(15,171)
(2,042)
(627)
(419)
-
(612)
(673)
(2,583)
(945)
(899)
(4,178)
(4,387)
19,584
(5,908)
13,676
-
13,676
9.66
9.65
(373)
(415)
(110)
(244)
(282)
(974)
(572)
(1,410)
(1,779)
-
13,092
(3,944)
9,148
-
9,148
32.38
32.38
The accompanying notes form part of these financial statements.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
44
Consolidated Statement of Financial Position
As at 30 June 2015
Note
30-Jun-2015
$000
30-Jun-2014
Restated
$000
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Current tax receivable
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Deferred tax assets
Intangible 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
Other liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Common control reserve
Retained earnings
Total Equity
7
8
9
13
10
11
13
12
14
15
16
13
17
16
13
17
18
19
The accompanying notes form part of these financial statements.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
12,580
37,737
-
1,974
767
53,058
5,222
3,873
76,216
85,311
138,369
22,300
226
-
-
2,485
25,011
4,660
5,551
271
10,482
35,493
102,876
149,929
(57,687)
10,634
102,876
1,215
30,051
4,785
-
552
36,603
2,880
4,720
21,515
29,115
65,718
18,667
9,043
212
2,557
1,539
32,018
180
2,159
290
2,629
34,647
31,071
3
-
31,068
31,071
45
Consolidated Statement of Changes in Equity
For the financial year ended 30 June 2015
Share Capital
$000
Common
Control Reserve
$000
Retained
Earnings
$000
For the year ended 30 June 2015
Balance at 1 July 2014 (restated)
Profit for the period
Other comprehensive income for the period
Total comprehensive income for the period
Transactions with owners in their capacity as
owners:
Dividends paid
Common control business combination
Shares issued to acquire Integracom
Shares issued through initial public offering,
net of IPO costs
Balance at 30 June 2015
For the year ended 30 June 2014 (restated)
Balance at 1 July 2013
Profit for the financial period
Other comprehensive income for the period
Total comprehensive income for the period
Transactions with owners in their capacity as
owners:
Dividends paid
Repayment of capital
Balance at 30 June 2014
3
-
-
-
-
-
-
-
-
-
57,687
10,000
82,239
(57,687)
-
-
Total
$000
31,071
13,676
-
13,676
31,068
13,676
-
13,676
(34,110)
(34,110)
-
-
-
-
10,000
82,239
149,929
(57,687)
10,634
102,876
1,450
-
-
-
-
(1,447)
3
-
-
-
-
-
-
-
26,081
9,148
-
9,148
(4,160)
-
31,068
27,531
9,148
-
9,148
(4,160)
(1,447)
31,071
The accompanying notes form part of these financial statements.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
46
Consolidated Statement of Cash Flows
For the financial year ended 30 June 2015
Note
30-Jun-2015
$000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Payments in relation to IPO and acquisition related costs
Interest received
Finance costs paid
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property plant and equipment
Payments for intellectual property
Payments for businesses acquired net of cash
Net cash outflow from investing activities
Cash flows from financing activities
Net (repayment of)/proceeds from external borrowings
Net proceeds of related party borrowings
Dividend paid
Net proceeds from issue of shares / (repayment of capital)
Net cash inflow from financing activities
Net cash increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
The accompanying notes form part of these financial statements.
22
23
337,647
(322,277)
(3,576)
383
(266)
(7,398)
4,513
(1,554)
165
(1,768)
(32,788)
(35,945)
(5,819)
487
(34,110)
82,239
42,797
11,365
1,215
12,580
30-Jun-2014
Restated
$000
268,062
(258,803)
-
195
(572)
(4,350)
4,532
(1,728)
41
(311)
(4,009)
(6,007)
2,957
4,464
(4,160)
(1,447)
1,814
339
876
1,215
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
47
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.
31.
32.
ACCOUNTING POLICIES -------------------------------------------------------------------------------------------------------- 49
REVENUE AND OTHER INCOME --------------------------------------------------------------------------------------------- 58
EXPENSES-------------------------------------------------------------------------------------------------------------------------- 58
AUDITOR’S REMUNERATION ------------------------------------------------------------------------------------------------- 59
INCOME TAX EXPENSE --------------------------------------------------------------------------------------------------------- 59
KEY MANAGEMENT PERSONNEL DISCLOSURES ------------------------------------------------------------------------ 60
CASH AND CASH EQUIVALENTS --------------------------------------------------------------------------------------------- 60
TRADE AND OTHER RECEIVABLES ------------------------------------------------------------------------------------------ 60
FINANCIAL ASSETS -------------------------------------------------------------------------------------------------------------- 61
OTHER ASSETS ------------------------------------------------------------------------------------------------------------------- 61
PROPERTY PLANT AND EQUIPMENT --------------------------------------------------------------------------------------- 62
INTANGIBLE ASSETS ------------------------------------------------------------------------------------------------------------ 63
TAX BALANCES ------------------------------------------------------------------------------------------------------------------- 66
TRADE AND OTHER PAYABLES ----------------------------------------------------------------------------------------------- 67
BORROWINGS -------------------------------------------------------------------------------------------------------------------- 67
OTHER LIABILITIES -------------------------------------------------------------------------------------------------------------- 69
PROVISIONS ---------------------------------------------------------------------------------------------------------------------- 69
SHARE CAPITAL ------------------------------------------------------------------------------------------------------------------ 70
RESERVES -------------------------------------------------------------------------------------------------------------------------- 71
EARNINGS PER SHARE --------------------------------------------------------------------------------------------------------- 71
SEGMENT INFORMATION ----------------------------------------------------------------------------------------------------- 72
CASH FLOW INFORMATION -------------------------------------------------------------------------------------------------- 74
BUSINESS COMBINATIONS --------------------------------------------------------------------------------------------------- 75
CONTROLLED ENTITIES -------------------------------------------------------------------------------------------------------- 77
PARENT ENTITY DISCLOSURES ----------------------------------------------------------------------------------------------- 79
RELATED PARTY TRANSACTIONS -------------------------------------------------------------------------------------------- 80
SECURED AND CONTINGENT LIABILITIES --------------------------------------------------------------------------------- 81
FINANCIAL INSTRUMENTS ---------------------------------------------------------------------------------------------------- 81
OPERATING LEASE COMMITMENTS---------------------------------------------------------------------------------------- 84
EVENTS AFTER THE REPORTING DATE ------------------------------------------------------------------------------------- 85
EMPLOYEE SHARE RIGHTS PLAN -------------------------------------------------------------------------------------------- 85
DIVIDENDS ------------------------------------------------------------------------------------------------------------------------ 85
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
48
Notes to the Financial Statements
1. ACCOUNTING POLICIES
a. General information
The financial statements for the financial year ended
30 June 2015 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 2015.
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.
As detailed in Business Combinations note (g) of this
Accounting Policy note, a number of entities, which
were formerly owned by Ross Shrimpton and his
related
family entities were acquired by the
Company on 1 July 2014, have been regarded as
“entities under common control”. The comparatives
have been restated to reflect all of these entities as
if they were owned by the Company at the
beginning of the earliest comparative period, being 1
July 2013, and treated as a single consolidated
entity.
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
The consolidated financial statements have been
prepared on a going concern basis.
e. Adoption of new and revised Accounting
Standards
following Australian
the
The Group adopted
Accounting Standards, together with the relevant
consequential amendments arising from related
Amending
the mandatory
from
application date of 1 July 2014:
Standards,
AASB 2012-3 Amendments to Australian
Accounting Standards – Offsetting Financial Assets
and Financial Liabilities
AASB 2012-3 adds application guidance to
AASB 132 to address inconsistencies identified
in applying some of the offsetting criteria of
AASB 132, including clarifying the meaning of
“currently has a legally enforceable right of set-
off” and that some gross settlement systems
may be
to net
considered equivalent
settlement.
AASB 2012-3 is applicable to annual reporting
periods beginning on or after 1 January 2014.
The adoption of these amendments has not
had a material impact on the Group as the
amendments merely clarify
the existing
requirements in AASB 132.
AASB 2013-3 Amendments to AASB 136 –
Recoverable Amount Disclosures for Non-Financial
Assets
Contains narrow-scope amendments which
address disclosure of information about the
recoverable amount of impaired assets if that
amount is based on fair value less costs of
disposal.
When developing
Fair Value
Measurement, the IASB decided to amend IAS
36 Impairment of Assets to require disclosures
IFRS 13
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
49
Notes to the Financial Statements
intended.
amendments
about the recoverable amount of impaired
assets. The IASB noticed however that some of
the amendments made in introducing those
requirements resulted
in the requirement
being more broadly applicable than the IASB
had
to
These
IAS 36 therefore clarify the IASB’s original
intention that the scope of those disclosures is
limited to the recoverable amount of impaired
assets that is based on fair value less costs of
disposal.
equivalent
AASB
amendments to AASB 136
Impairment of
Assets and is applicable to annual reporting
periods beginning on or after 1 January 2014.
The adoption of these amendments has not
had a material impact on the Group as they are
largely of the nature of clarification of existing
requirements.
2013-3 makes
the
2013-5
AASB
Accounting Standards – Investment Entities
Amendments
to
Australian
to
them
subsidiaries at
to consolidation
require
The amendments in AASB 2013-5 provide an
investment
exception
to measure
entities and
unconsolidated
fair value
through profit or loss in accordance with AASB
9 Financial Instruments (or AASB 139 Financial
Instruments: Recognition and Measurement
where AASB 9 has not yet been adopted). The
amendments also introduce new disclosure
requirements for investment entities that have
subsidiaries.
These amendments apply
investment
entities, whose business purpose is to invest
capital
for
funds
solely
appreciation,
or
investment
both. Examples of entities which might qualify
as investment entities would include Australian
superannuation entities,
investment
companies, pooled
investment trusts and
Federal, State and Territory fund management
authorities.
This Standard has not had any impact on the
Group as it does not meet the definition of an
‘investment entity’
in order to apply this
consolidation exception.
from
income
returns
listed
to
2014-1
AASB
Accounting
Improvements 2010-2012 and 2011-2013 Cycles)
to Australian
Annual
Amendments
Standards
(Part
A:
Reporting
Standards
Improvements to
Part A of AASB 2014-1 makes amendments to
various Australian Accounting Standards arising
from the issuance by the IASB of International
Financial
Annual
Improvements to IFRSs 2010-2012 Cycle and
Annual
IFRSs 2011-2013
Cycle.
Among other improvements, the amendments
arising from Annual Improvements to IFRSs
2010-2012 Cycle:
clarify that the definition of a ‘related party’
includes a management entity that provides
key management personnel services to the
reporting entity (either directly or through a
group entity);
amend AASB 8 Operating Segments to explicitly
require the disclosure of judgements made by
management
the aggregation
criteria;
Among other improvements, the amendments
arising from Annual Improvements to IFRSs
2011-2013 Cycle clarify that an entity should
assess whether an acquired property is an
investment
140
Investment Property and perform a separate
Business
assessment
Combinations
the
investment property
acquisition of
constitutes a business combination;
Part A of AASB 2014-1 is applicable to annual
reporting periods beginning on or after 1 July
2014;
The adoption of these amendments has not
had a material impact on the Group as they are
largely of the nature of clarification of existing
requirements.
under
to determine whether
under AASB
in applying
property
AASB
the
3
f. New Accounting Standard and Interpretations
not yet adopted
new
standards
Certain
and
accounting
interpretations have been published that are not
mandatory for 30 June 2015 reporting periods and
have not been early adopted by the Group. The
Group’s assessment of the impact of these new
standards and interpretations is set out below.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
50
Notes to the Financial Statements
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.
AASB 9: Financial Instruments (December 2010)
and AASB 2010–7: Amendments to Australian
Accounting Standards arising
from AASB 9
(December 2014).
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 de-recognition 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.
AASB 15: Revenue from Contracts with Customers
The standard provides a single standard for revenue
recognition and replaces AASB118 Revenue, AASB11
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 separate
performance obligations within the 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 service, or estimation approach if no
distinct observable prices exists; and
of
revenue when
recognition
each
performance obligation is satisfied when the
for
typically
service has been provided,
promises to transfer services to customers.
is
required
Additional disclosure, both quantitative and
to
qualitative,
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. Management has not formally fully considered
the implications of adopting this standard. There is
expected
the
transaction and balances recognised in the financial
statements. It is expected that the AASB will defer
the effective date to reporting periods beginning on
or after 1 January 2018.
to be no material
impact on
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
equity
its subsequent
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
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
51
Notes to the Financial Statements
the statement of profit or
comprehensive income when incurred.
loss and other
subsidiary. All subsidiaries have a reporting date of
30 June.
The acquisition of a business may result in the
recognition of goodwill or a gain from a bargain
purchase.
On 1 July 2014, the group acquired a number of
related entities. 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.
As a result of the above, this business combination is
scoped out under AASB 3 paragraph 2, and therefore
a suitable accounting policy needs to be determined
in accordance with the hierarchy in AASB 108:
in Accounting
Accounting Policies, Changes
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
liabilities rather than reassessing these to more
subjective and uncertain fair values.
In this Annual Report the comparatives have been
restated to reflect all of these entities as if they were
owned by the Company at the beginning of the
earliest comparative period, being 1 July 2013, and
treated as a single consolidated entity.
h. Basis of consolidation
The Group financial statements consolidate those of
Ashley Services Group Limited and all of
its
subsidiaries as of 30 June 2015. Ashley Services
Group Limited controls a subsidiary if it is exposed,
its
or has
involvement with the subsidiary and has the ability
to affect those returns through its power over the
to variable
returns
rights,
from
All transactions and balances between Group
companies are eliminated on
consolidation,
including unrealised gains and losses on transactions
Where unrealised
between Group companies.
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.
Where work has been undertaken, and has not yet
been billed or claimed from the relevant sponsoring
is
authority, a “Work
recognised within
after
“Other
adjusting for an estimate of potentially unsuccessful
claims.
in Progress” balance
receivables”
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.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
52
Notes to the Financial Statements
Interest revenue
Estimated useful life of intangibles is as follows:
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
the
using valuation
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.
Changes in the ownership interest in a subsidiary are
accounted for as equity transactions and do not
affect the carrying amounts of goodwill.
Other intangibles
less
accumulated
Intangibles acquired by the group are stated at fair
value
and
impairment losses. Amortisation is charged to the
profit or loss on a straight line basis over the
estimated useful life.
amortisation
Customer relationships
Licenses
Intellectual property
- Course material
7 years
5 years
7 years
Intangible assets, such as Brands, which are deemed
to have an indefinite useful life are not amortised,
but are assessed for impairment annually, within the
they are attributed. Where
CGU
impairment is recognised, it is recorded in the profit
or loss in the period the impairment is identified.
to which
Income tax
k.
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.
relating
tax assets
Deferred
temporary
differences and unused tax losses are recognised
only to the extent that it is probable that future
taxable profit will be available against which the
benefits of the deferred tax asset can be utilised.
to
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
53
Notes to the Financial Statements
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
Tax consolidation
tax
group under
Ashley Services Group Limited and its wholly owned
Australian subsidiaries have formed an income tax
consolidation
consolidated
legislation. Each entity in the group recognises its
own current and deferred tax assets and liabilities.
Such taxes are measured using the ‘standalone
Current tax
taxpayer’ approach to allocation.
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
Office
tax
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 de-recognised and the net amounts
recognised pursuant to the funding arrangement are
recognised as either a contribution by, or
distribution, to the head entity.
Cash and cash equivalents
l.
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
in the
from customers for services performed
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
fair value and subsequently measured at
at
amortised cost using the effective interest method,
less any provision for impairment.
The recoverability of trade receivables is reviewed
Amounts which are
on an ongoing basis.
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.
Financial assets
n.
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.
Interest is charged on loans to directors at arm’s
length.
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
period.
loans and receivables are
(All other
classified as non-current assets).
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
54
Notes to the Financial Statements
Plant and equipment
o.
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.
The depreciable amount of
is
depreciated on a straight line basis, over the useful
asset’s life to the Group commencing from the time
the assets are 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
Leasehold improvements
Depreciation rate
37.50% – 40.00%
20.00%
20.00%
18.75% – 30.00%
18.75%
20.00% - 40.00%
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
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
gains or losses are recognised immediately in profit
or loss.
Trade and other payables
p.
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.
Employee benefits
q.
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
vesting requirements.
flows are
discounted using market yields on high quality
corporate 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
interest
at amortised cost using the effective
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.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
55
Notes to the Financial Statements
Impairment of assets
t.
At the end of each reporting period, the Group
assesses whether there is any indication that an
asset may be impaired.
including dividends
The assessment will include considering external
internal sources of
sources of information and
information
from
received
subsidiaries, 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
its recoverable
the asset’s carrying value over
amount is recognised immediately in profit or loss,
unless the asset is carried at a revalued amount.
Any 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
in receipts from customers or
included
flows
payments to suppliers.
w. Significant management judgement in applying
accounting policies
the
financial
preparing
When
statements,
management undertakes a number of judgements,
estimates and assumptions about the recognition
and measurement of assets, liabilities, income and
expenses.
Significant management judgement
are
following
The
significant management
judgements in applying the accounting policies of
the Group that have the most significant effect on
the financial statements.
Determination of Cash Generating Units
purpose of impairment reviews
for
Determination of
the Cash Generating Units
(“CGUs”) for purpose of impairment reviews is a key
judgement made by management. Management
has undertaken a formal assessment of what
constitutes the CGUs, by reference to the level of
information routinely distributed to the Chief
Operating Decision Makers, as being consistent with
the two operating segments of the Group, being
Training and Labour Hire.
Assessment of the potential IMF claim against ASG
which IMF proposes to fund
Management has formally considered the potential
class action claim that may be brought against ASG.
Management’s view is that the potential claim
would be without substance, and the likelihood of
any unfavourable material outcome resulting from
this claim
Based on this
assessment, neither a provision, nor disclosure as a
contingent liability are considered necessary. (Refer
Note 30).
is considered
low.
Recognition of deferred tax assets
The extent to which deferred tax assets can be
is based on an assessment of the
recognised
probability of the Group’s future taxable income
against which the deferred tax assets can be utilised.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
56
Notes to the Financial Statements
Estimation uncertainty
Long term incentive plan
Information about estimates and assumptions that
have the most significant effect on recognition and
measurement of assets,
income and
expenses is provided below. Actual results may be
substantially different.
liabilities,
the
determining
provision
term
senior
In
management’s
plan,
consideration is given to the probability the required
“earnings per share” performance requirement will
be achieved.
for
incentive
long
Impairment
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.
In assessing impairment, management estimates the
recoverable amount of each asset or cash-
generating unit based on expected future cash flows
and uses an
interest rate to discount them.
Estimation uncertainty relates to assumptions about
future operating results and the determination of a
suitable discount rate. Both future operating results
and discount rates are discussed in Note 12. In
2015, the Group recognised an impairment loss on
Customer Relationships (see Note 12c).
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. Uncertainties
in these estimates relate to technical obsolescence
that may change the utility of certain software and
IT equipment.
Business combinations
uses
valuation
techniques
Management
in
determining the fair values of the various elements
of a business combination (see Note 23). The fair
value of contingent consideration is dependent on
the outcome of many variables that affect future
profitability (see Note 28). The fair value of acquired
intangibles
to a number of
assumptions. This involves developing estimates
and assumptions consistent with how market
participants would price
identified asset.
Management bases its assumptions on observable
or benchmark data as far as possible but this is not
always available. In that case management uses the
best information available.
is also subject
the
Long service leave provisions
is given
leave, consideration
In determining the provision for employees’ long
service
the
probability an employee may not satisfy vesting
requirements. In doing this, management considers
the likelihood of employees reaching a qualifying
period of service and adjust the valuation for these
estimated probabilities.
to
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
57
Notes to the Financial Statements
2. REVENUE AND OTHER INCOME
Operating activities:
Training revenue
Labour hire revenue
Other income:
Interest received
Sundry income1
Note:
2015
$000
2014
$000
43,662
261,038
304,700
383
8,095
8,478
27,114
223,829
250,943
195
104
299
1. Sundry income includes $7,790,271 from the write back of fair value of deferred consideration, payable for the Integracom and
Concept acquisitions
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
Customer contracts and relationships – amortisation
Customer contracts and relationships – impairment
Intellectual property
Course material
Licences
2015
$000
639
306
945
131
680
261
1,072
2014
$000
349
223
572
177
439
204
820
286
47
476
220
471
58
1,511
-
-
107
-
154
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
58
Notes to the Financial Statements
4. AUDITOR’S REMUNERATION
Auditor of the parent entity – Grant Thornton
Audit or review of financial reports under the Corporations Act 2001
Tax advisory
Financial due diligence services relating to IPO1
Financial due diligence services related to acquisitions
2015
$000
206
-
-
30
2014
$000
119
3
205
-
Total Remuneration
236
327
Other entities
In addition to the above, the related entities detailed in Note 24 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
95
95
38
38
Note:
1. Fees in relation to Investigating Accountant services for the initial public offering. These fees were recognised as a prepayment in June
2014 and have been expensed in FY15.
5.
a.
INCOME TAX EXPENSE
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
2015
$000
2,860
3,029
19
5,908
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% (2014: 30%)
Add / (less):
Tax effect of:
– Entertainment - Client
– Entertainment – Other
– Over/(under) provision of tax in prior year
Income tax expense
The tax rate used in the above reconciliation is the corporate tax rate of 30 per cent 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.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
59
2014
$000
2,069
1,884
(9)
3,944
2014
$000
13,092
2015
$000
19,584
5,875
3,928
12
2
19
24
2
(9)
5,908
3,944
Notes to the Financial Statements
6. KEY MANAGEMENT PERSONNEL DISCLOSURES
a.
Key management personnel compensation for the year was as follows
Short-term employee benefits
Post-employment benefits
IPO related share based payments
Long-term employee benefits
Total
2015
$000
2,633
136
473
-
3,242
2014
$000
1,045
93
-
-
1,138
Individual director and key management personnel disclosures
Detailed remuneration disclosures are included in the Director’s Report. The relevant information can be
found in the Remuneration section of the report on page 23, Tables 10 and 11.
7.
CASH AND CASH EQUIVALENTS
Cash on hand
Cash at bank
8.
TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Allowance for impairment of trade receivables
Other receivables
2015
$000
10
12,570
12,580
2015
$000
24,330
(803)
14,210
37,737
2014
$000
7
1,208
1,215
2014
$000
25,125
(868)
5,794
30,051
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
60
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))
2015
$000
16,199
4,859
1,247
1,222
803
24,330
2014
$000
16,797
6,825
223
412
868
25,125
b.
The movement in the impairment for doubtful accounts in respect of trade receivables is detailed below.
Balance at beginning of year
Increase through business combinations
Increase/(decrease) in allowance recognised in profit or loss
Amounts written-off
Balance at end of year
9.
FINANCIAL ASSETS
Current
Director related loans (a)
a. Director loans
2015
$000
868
257
(128)
(194)
803
2015
$000
-
-
2014
$000
741
-
127
-
868
2014
$000
4,785
4,785
Loans to directors were unsecured. Interest was charged on the loan at market rates. The loans were repaid
during the year ended 30 June 2015.
10. OTHER ASSETS
Current
Prepayments
Deposits
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
2015
$000
492
275
767
2014
$000
436
116
552
61
Notes to the Financial Statements
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
2015
$000
663
(300)
363
4,922
(2,720)
2,202
2,193
(303)
1,890
767
-
767
5,222
2014
$000
526
(161)
365
3,213
(1,899)
1,314
1,732
(703)
1,029
172
-
172
2,880
2015
Balance at 1 July 2014
Additions
Acquisition through business combination
Disposals
Depreciation expense
Balance at 30 June 2015
Motor
vehicles
$000
365
Office
equipment
$000
1,314
Leasehold
improvements
$000
1,029
-
265
(136)
(131)
363
688
904
(24)
(680)
2,202
271
851
-
(261)
1,890
Capital
Work In
Progress
$000
172
595
-
-
-
767
Total
$000
2,880
1,554
2,020
(160)
(1,072)
5,222
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
62
Notes to the Financial Statements
2014
Balance at 1 July 2013
Additions
Acquisition through business combinations
Transfers
Disposals
Depreciation expense
Balance at 30 June 2014
Motor
vehicles
$000
425
Office
equipment
$000
956
Leasehold
improvements
$000
408
154
23
-
(60)
(177)
365
756
41
-
-
(439)
1,314
765
-
60
-
(204)
1,029
Capital
Work In
Progress
$000
179
53
-
(60)
-
-
172
Total
$000
1,968
1,728
64
-
(60)
(820)
2,880
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
Intellectual property / brand names
Cost
Accumulated amortisation
Net carrying value
Licences
Cost
Accumulated amortisation
Net carrying value
Total intangible assets
2015
$000
66,174
-
66,174
1,562
(476)
(333)
753
9,968
(1,121)
8,847
500
(58)
442
2014
$000
19,743
-
19,743
1,562
-
(47)
1,515
764
(507)
257
-
-
-
76,216
21,515
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
63
Notes to the Financial Statements
Impairment tests for goodwill
a.
The movements in the net carrying amount of goodwill are as follows:
Training
Labour Hire
Goodwill allocation at 30 June 2015
2015
$000
53,279
12,895
66,174
2014
$000
6,848
12,895
19,743
The recoverable amounts of the cash-generating units were determined based on value-in-use calculations,
covering a detailed forecast for the next three years, followed by an extrapolation of expected cash flows for
the units’ remaining useful lives using the growth rates determined by management. The present value of the
expected cash flows of each segment is determined by applying a suitable discount rate.
Training
Labour Hire
Growth Rates
Discount Rates
2015
2%
2%
2014
2%
2%
2015
16.9%
18.7%
2014
9.5%
18.2%
The growth rates conservatively reflect the long-term average growth rates for the respective sectors. The
discount rates reflect appropriate adjustments relating to market risk and specific risk factors of each unit.
Cash flow assumptions for the detailed forecast
b.
Training division
The recoverable amount of the Training division has been determined based on a value in use calculation. That
calculation uses cash flow projections based on financial budgets and forecasts approved by management
covering a three-year period, and a pre-tax discount rate of 16.9 per cent. Cash flows beyond that three-year
period have been extrapolated using a steady 2 per cent growth rate. This growth rate does not exceed the
long-term average growth rate for Australia.
Management’s key assumption is that revenues for the Training division will grow significantly over the first
three years, as a result of an increase in student numbers combined with a diversification of revenue
streams. This anticipated future growth is in part attributable to market opportunities with the newly acquired
subsidiaries.
Management confirms that the discounted cash flow analysis conducted provide cash flow projections well
above the carrying amount of the Training division goodwill and has determined no impairment is required.
Management has also run various sensitivity scenarios, and other than the Earnings Before Interest, Tax,
Depreciation and Amortisation (EBITDA) assumption, there are no reasonably possible changes in any of the
key assumptions that would cause the carrying value to materially exceed its recoverable amount. With the
EBITDA assumptions, under the various sensitivity scenarios, a recoverable amount in excess of carrying value
is contingent upon achieving a sustainable EBITDA in the training division of $14.8 million at the end of the
three year forecast period. For every ongoing 1 per cent drop in earnings below those forecasts, ASG would
have to recognise an impairment against goodwill of $1 million.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
64
Notes to the Financial Statements
Labour hire
The recoverable amount of the Labour Hire division has been determined based on a value in use calculation.
That calculation uses cash flow projections based on financial budgets and forecasts approved by management
covering a three year period, and a pre-tax discount rate of 18.7 per cent. Cash flows beyond that three-year
period have been extrapolated using a steady 2 per cent growth rate. This growth rate does not exceed the
long-term average growth rate for Australia.
Management’s key assumption is that revenues for the Labour Hire division will grow steadily over the three
year cash flow projection period, but that EBITDA margin will decline to a sustainable 3 per cent (before
Corporate overhead allocations).
Management confirms that the discounted cash flow analysis conducted provide cash flow projections well
above the carrying amount of the Labour Hire division goodwill and has determined no impairment is required.
Management also believes that no reasonably possible change in any of the key assumptions would cause the
carrying value to materially exceed its recoverable amount.
c. Intangible assets – detailed reconciliation
2015
Balance at 1 July 2014
Purchased
Acquired through business combinations
Goodwill
$000
19,743
-
46,431
Customer
relationships
$000
1,515
-
-
Licences
$000
-
500
-
Amortisation
Impairment charge1
Balance at 30 June 2015
Note:
1. Relates to impairment of relationship with a major customer acquired through the Concept acquisition.
66,174
(476)
(286)
753
442
-
-
-
(58)
Intellectual
Property/Brand
Names
$000
257
1,268
8,013
(691)
-
8,847
2014
Balance at 1 July 2013
Purchased
Acquired through business combinations
Amortisation
Balance at 30 June 2014
Customer
relationships
$000
-
-
1,562
(47)
1,515
Intellectual
Property/Brand
Names
$000
53
311
-
(107)
257
Goodwill
$000
16,455
-
3,288
-
19,743
Total
$000
21,515
1,768
54,444
(1,035)
(476)
76,216
Total
$000
16,508
311
4,850
(154)
21,515
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
65
Notes to the Financial Statements
13. TAX BALANCES
Current assets
Income tax receivable
Non-current assets
Deferred tax assets (a)
Current tax liabilities
Income tax payable
Non-current liabilities
Deferred tax liabilities (a)
2015
$000
1,974
3,873
-
5,551
2014
$000
-
4,720
2,557
2,159
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
2015
Current assets
Trade and other receivables
(1,264)
Non-current assets
Intangible assets
Property, plant and equipment
Current liabilities
Trade and other payables
Provision
Total
(461)
11
3,733
542
2,561
-
-
-
-
-
-
-
(2,695)
(3,959)
(1,264)
-
-
54
363
-
(928)
231
(1,362)
11
2,805
827
(1,210)
(3,029)
(1,678)
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
66
Notes to the Financial Statements
2014
Current assets
Trade and other receivables
Non-current assets
Intangible assets
Property, plant and equipment
Current liabilities
Trade and other payables
Provision
Total
14. TRADE AND OTHER PAYABLES
Current
Trade payables
Accrued expenses
GST payable
Sundry creditors
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
(507)
-
(404)
5,083
734
4,906
-
-
-
-
-
-
-
(757)
(1,264)
(461)
-
-
-
(461)
-
415
(1,350)
(192)
(1,884)
2015
$000
3,133
2,836
3,988
12,343
(461)
11
3,733
542
2,561
2014
$000
1,914
5,154
3,044
8,555
18,667
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.
22,300
15. BORROWINGS
Current
Unsecured liabilities
Loans from related parties (d)
Secured liabilities
Bank overdraft (a)
Subordinated facility (b)
Term facility (c)
Finance Leases (e)
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
2015
$000
-
-
-
-
226
226
2014
$000
4,298
3,039
1,706
-
-
9,043
67
Notes to the Financial Statements
Bank overdraft facility
a.
The overdraft facility previously held with Macquarie Bank was discharged and replaced with a new facility with
Bankwest Limited, comprising a $15 million working capital facility. Bankwest Limited has fixed and floating
charges over the Group’s assets.
Subordinated facility
b.
The subordinated facility previously held with Macquarie Bank was discharged during the financial year.
c.
Term facility
The Group established a $8 million term debt facility with Bankwest Limited to finance potential acquisition
opportunities. Bankwest Limited has fixed and floating charges over the Group’s assets.
d.
Loans from related parties
These loans were unsecured and non-interest bearing. The loans were repaid during the financial year ended
30 June 2015.
e.
Finance Leases
The Group has a number of finance leases on motor vehicles.
Total facilities at reporting date
Bank overdraft
Subordinated facility
Term facility
Used at reporting date
Bank overdraft
Subordinated facility
Term facility
Unused at reporting date
Bank overdraft
Subordinated facility
Term facility
2015
$000
15,000
-
8,000
23,000
-
-
-
-
15,000
-
8,000
23,000
2014
$000
4,330
4,535
-
8,865
3,039
1,706
-
4,745
1,291
2,829
-
4,120
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
68
Notes to the Financial Statements
16. OTHER LIABILITIES
Current
Vendor earn-out liability (a)
Non-Current
Vendor earn-out liability (a)
a. Vendor earn-out liability
2015
$000
-
4,660
2014
$000
212
180
The Vendor earn-out liability comprises the fair value of estimated consideration payments which are payable
to vendors in relation to the business acquisitions of Integracom on 21 August 2014, Cantillon on 25 September
2014 and SILK on 30 April 2015. These are payable over periods of one to three years post-acquisition.
During the year ended 30 June 2015, the fair value of the Vendor earn-out liabilities in relation to the
Integracom and Concept acquisitions were re-assessed. This resulted in a $7.8 million reduction in the total
Vendor earn-out liability to $4.7 million.
17. PROVISIONS
Current
Employee benefits
Non-current
Employee benefits
a. Reconciliation of employee provisions
Opening balance
Add: acquired through business combination
Less: leave taken during the year
Add: leave provided for during the year
Closing balance
2015
$000
2014
$000
2,485
1,539
271
290
2015
$000
1,829
178
(788)
1,537
2,756
2014
$000
734
305
(767)
1,557
1,829
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
69
Notes to the Financial Statements
18. SHARE CAPITAL
The Group does not have any share options on issue as at the date of this report. Details of share capital of the
group are as follows:
150,000,000 (Jun-14: 2,870) fully paid ordinary shares
2015
$000
149,929
2014
$000
3
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.
a.
Reconciliation of ordinary shares
As at 30 June 2013
"Z" ordinary shares converted
Repayment of capital
As at 30 June 2014
Share split (approximately 9,857 new shares for every one share on issue - see
note (a)) prior to common control transaction
28,287,560
Shares issued as a result of common control business combination:
Ashley Institute Holdings Pty Limited
ADV Services Pty Limited
Tracmin Pty Limited
TBRC Holdings Pty Limited
AIVD Holdings Pty Limited
Shares subscribed by senior management and staff prior to Initial Public
Offering
Shares issued by way of consideration to fund the purchase of Integracom
Shares issued through Initial Public Offering (see note (b))
Costs associated with Initial Public Offering
As at 30 June 2015
55,437,415
3,193,763
354,863
3,854,201
39,429
488,328
6,024,096
52,317,475
n/a
150,000,000
Share Capital
(Shares)
Share Capital
$000
2,866
4
n/a
2,870
1,450
0
(1,447)
3
0
50,866
2,933
323
3,533
32
811
10,000
86,847
(5,419)
149,929
Performance Rights (see note (c))
380,787
Note (a)
As at 30 June 2014, the Company had 2,870 ordinary shares on issue. The share split occurred on 1 July 2014,
which is the same time as the acquisition of the entities under common control.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
70
Notes to the Financial Statements
Note (b)
The IPO was for the subscription by the public of 59,487,576 ordinary shares at an issue price of $1.66.
However, 7,170,101 ordinary shares related to a sell down by Ross Shrimpton and his related entities as well as
Marc Shrimpton. Accordingly, the net amount raised by the Group was 52,317,475 ordinary shares at an issue
price of $1.66 per ordinary share.
Note (c)
During the year, the Group issued 380,787 Performance Rights. The terms of the Performance Plan has been
outlined in the Company’s policy statement lodged on the ASX on 21 August 2014. A summary of these terms
can also be found in the Directors’ report.
19. RESERVES
The common control reserve has arisen following the adoption of the pooling of interest method used to
account for the 1 July 2014 acquisition of the following entities:
ADV Services Pty Limited;
Ashley Institute Holdings Pty Limited;
TBRC Holdings Pty Limited;
Tracmin Pty Limited; and
Australian Institute of Vocational Development Pty Limited.
20. EARNINGS PER SHARE
Net profit after tax
Weighted number of ordinary shares outstanding during the year used in
calculating basic earnings per share (EPS)
Weighted number of ordinary shares outstanding during the year used in
calculating diluted earnings per share (EPS)
Basic earnings per share (cents)
Diluted earnings per share (cents)
2015
$000
13,676
2014
$000
9,148
141,618,754
28,250,162
141,747,074
9.66
9.65
28,250,162
32.38
32.38
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
71
Notes to the Financial Statements
21. 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.
2015
Revenue
From external customers
Segment revenue
Other income
On hired labour and training costs
Employee benefits expense
Occupancy expense
Travel expense
Advertising and marketing expense
Audit, legal and professional fees
Insurance expense
Depreciation and amortisation expense
Consulting fees
Other expense
Segment Profit
IPO and acquisition related costs
Other unallocated items
Profit before tax
Income tax expense
Profit after tax
Labour Hire
$000
261,038
261,038
446
(238,591)
(9,336)
(945)
(122)
(196)
(137)
(377)
(559)
(264)
(2,070)
8,887
Training
$000
43,662
43,662
7,623
(13,124)
(12,108)
(2,696)
(465)
(243)
(68)
(150)
(1,947)
(456)
(2,366)
17,662
Total
$000
304,700
304,700
8,069
(251,716)
(21,444)
(3,641)
(587)
(439)
(204)
(527)
(2,506)
(720)
(4,436)
26,549
(4,387)
(2,578)
19,584
(5,908)
13,676
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
72
Notes to the Financial Statements
2014
Revenue
From external customers
Segment revenue
Other income
On hired labour and training costs
Employee benefits expense
Occupancy expense
Travel expense
Advertising and marketing expense
Audit, legal and professional fees
Insurance expense
Depreciation and amortisation expense
Consulting fees
Other expense
Segment Profit
Other unallocated items
Profit before tax
Income tax expense
Profit after tax
Labour Hire
$000
Training
$000
Total
$000
223,829
223,829
261
(205,850)
(8,385)
(880)
(125)
(260)
(138)
(241)
(264)
(403)
(1,298)
6,246
27,114
27,114
9
(8,928)
(6,181)
(1,093)
(230)
(144)
(65)
(40)
(461)
(804)
(806)
8,371
250,943
250,943
270
(214,778)
(14,566)
(1,972)
(355)
(404)
(203)
(281)
(725)
(1,208)
(2,104)
14,616
(1,525)
13,092
(3,944)
9,148
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 $117.4 million (2014: $97.7 million) which arose
from sales to 3 (2014: 3) of the Group’s customers whose individual revenue exceeds 10 per cent of total
revenue in the Labour Hire segment.
There are no customers whose individual revenue exceeded 10 per cent of total revenue in the Training
segment in either financial year.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
73
Notes to the Financial Statements
22. CASH FLOW INFORMATION
Reconciliation of cash flow from operations to profit after income tax
Note
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
- Loss on disposal of fixed assets
- Gain on reassessment of deferred consideration liabilities
- IPO bonuses reinvested as shares
Changes in assets and liabilities
- (Increase) in trade and other receivables
- (Increase) in other assets
- Decrease/(increase) in deferred tax asset
- Increase/ (decrease) in trade and other payables
- Increase / (decrease) in employee provisions
- Increase / (decrease) in current tax liabilities
- Increase /(decrease) in deferred tax liabilities
Cash inflow from operations
2015
$000
13,676
2,583
(128)
19
(7,790)
811
(6,226)
(215)
847
2,525
748
(4,465)
2,128
4,513
2014
$000
9,148
974
120
19
-
-
(12,844)
(65)
(2,600)
6,491
1,095
1,554
640
4,532
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
74
Notes to the Financial Statements
23. BUSINESS COMBINATIONS
a.
Current year acquisitions
The Group acquired 100 per cent of the issued share capital and voting rights of Integracom, Cantillon and SILK
during the financial year. All these companies are Australian-based entities that operate within the training
sector. The objective of each acquisition was to:
Integracom (acquired 21 August 2014) - increase the Group’s market share in providing training in the
telecommunications industry;
Cantillon (acquired 25 September 2014) - establish a foot print in the overseas students sector; and
SILK (acquired 30 April 2014) - increase the Group’s market share in providing training in the hospitality
industry.
Details of the business combination are as follows:
2015
Cash
Equity instruments
Fair value of contingent consideration
Total purchase consideration
Cash consideration
Cash acquired
Net cash outflow on purchase of subsidiaries
Assets & liabilities acquired
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Trade and other payables
Provisions
Borrowings
Deferred tax liability
Brand names
Intellectual property
Net identifiable assets
Integracom
$000
Cantillon
$000
30,108
10,000
8,648
48,756
(30,108)
90
(30,018)
90
1,222
1,533
(535)
(108)
(748)
(900)
3,700
3,000
7,254
1,546
-
76
1,622
(1,546)
26
(1,520)
26
307
300
(289)
-
(553)
(364)
98
1,215
740
SILK*
$000
1,500
-
2,775
4,275
(1,500)
250
(1,250)
250
122
187
(261)
(70)
-
-
-
-
228
Total
$000
33,154
10,000
11,499
54,653
(33,154)
366
(32,788)
366
1,651
2,020
(1,085)
(178)
(1,301)
(1,264)
3,798
4,215
8,222
Goodwill on consolidation
46,431
*The Group has not yet finalised the purchase price allocation. This will be finalised in the 31 December 2015
interim financial report.
41,502
4,047
882
Consideration transferred
Acquisition-related costs amounting to $0.75 million are not included as part of consideration transferred and
have been recognised as an expense in the consolidated statement of profit or loss and other comprehensive
income. For further information about the deferred consideration, refer to note 16.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
75
Notes to the Financial Statements
Identifiable net assets
The fair value of the identifiable intangible assets in relation to SILK has been determined provisionally at 30
June 2015. The Group is currently obtaining the information necessary to finalise its valuation. The fair value
accounting for the Integracom and Cantillon acquisitions were finalised in the year ended 30 June 2015.
The fair value of intangible assets acquired as part of the business combinations amounted to:
Integracom - $6.7 million; and
Cantillon - $1.3 million.
Goodwill
Goodwill on all three acquisitions has been allocated to the training cash-generating unit at 30 June 2015.
Contribution of acquisitions to the Group’s result
The contribution to Group revenues and net profits (after tax) for each of the above business combinations is
as follows:
2015
Integracom
Cantillon
SILK
Revenue
$000
10,153
617
766
Profits
$000
2,125
(568)
257
Prior year acquisitions
b.
On 1 May 2014, the Group acquired 100 per cent of Concept Engineering Pty Limited. Details of this
transaction are:
Cash
Fair value of contingent consideration (Note 28)
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 2015
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
76
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.
24. CONTROLLED ENTITIES
Set out below are the controlled entities of Ashley Services Group Limited:
Country of
incorporation
2015 percentage
owned
%
2014 percentage
owned
%
Action Arndell Park Pty Limited
Action Workforce NSW 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
Integracom Holdings Pty Limited (formerly 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
Silk Group Holdings Pty Limited (formerly National Institute
of Training (NSW) Pty Limited)
Vocational Training Australia Pty Limited
Ashley Apprenticeship Network Pty Limited (formerly Precast
Concrete Labour Pty Limited)
Action Workforce AC Pty Limited
Action Workforce ACT Pty Limited
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
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
77
Notes to the Financial Statements
Action Workforce BAX1 Pty Limited
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
Tracmin Holdings Pty Limited (formerly 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
ASG Integracom (AUST) Holdings Pty Limited (formerly
Advance WMAM Pty Limited)
ASG Integracom (AUST) Pty Limited (formerly Advance
WMLF Pty Limited)
Advance WMPM Pty Limited
Advance Exchange Pty Limited
Concept Engineering (Aust) Pty Limited
Concept Employment (Aust) Pty Limited
AIVD Holdings Pty Limited1
Australian Institute of Vocational Development Pty Limited1
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
Country of
incorporation
2015 percentage
owned
%
2014 percentage
owned
%
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
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
100
100
100
100
100
100
100
100
0
0
78
Notes to the Financial Statements
Country of
incorporation
Australia
Australia
Australia
2015 percentage
owned
%
100
100
100
2014 percentage
owned
%
0
0
0
Australia
Australia
TBRC Holdings Pty Limited1
The Blackadder Recruitment Company Pty Limited1
ADV Services Pty Limited1
Training Support Group Pty Limited1
Advance Recruitments Pty Limited1
Ashley Institute Holdings Pty Limited1
Ash Pty Limited1
Capra Ryan Online Learning Pty Limited1
Tracmin Pty Limited1
Integracom Unit Trust2
Cantillon Holdings Pty Limited3
College of Innovation and Industry Skills Pty Limited 4
Global Education and Training Group Pty Limited5
Notes:
1. Whilst 0% ownership, these entities were under common control and have therefore been included in the restated comparative
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
0
0
0
0
0
0
0
0
0
0
information.
Integracom Unit Trust was acquired on 21 August 2014.
2.
3. Cantillon Holdings Pty Limited was a company incorporated on 19 September 2014.
4. College of Innovation and Industry Skills Pty Limited was a company acquired on 25 September 2014.
5. Global Education and Training Group Pty Limited was a company acquired on 30 April 2015.
25. 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
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
2015
$000
92
88,479
88,571
-
-
-
88,571
92,242
(3,671)
88,571
2014
$000
92
283
375
369
-
369
6
3
3
6
79
Notes to the Financial Statements
b.
Statement of profit or loss and other comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
2015
$000
(3,674)
-
34,110
2014
$000
2,500
-
2,500
c.
Contingent liabilities of the Parent Entity
The Parent entity had no contingent liabilities as at 30 June 2015.
During the year ended 30 June 2015, the Group has refinanced its borrowing facilities with Bankwest. The bank
has fixed and floating charges over the Group’s assets.
The Group has become aware that IMF Bentham Limited (“IMF”) has made a release to the ASX dated 17
August 2015 in which it announces that IMF proposes to fund claims of certain ASG shareholders against ASH
with respect to alleged misstatements in, or omissions from, ASG’s prospectus dated 7 August 2014 in
connection with ASH’s acquisition of the registered training organisation Integracom.
ASH notes that IMF has advised that no decision has yet been taken by IMF to commence proceedings and, as
such, no legal proceedings have been served, and may not ever be.
ASH denies all liability in respect of claims of the nature described in IMF’s announcement and management
considers any potential claim, should any claim be commenced, as unjustified.
Commitments for expenditure for the Parent entity
d.
The Parent had nil committed expenditure as at 30 June 2015 (30 June 2014: nil).
26. RELATED PARTY TRANSACTIONS
Parent company
a.
There is no ultimate parent company for Ashley Services Group 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 2015
80
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 were largely extinguished as a result of the
restructure which occurred since reporting date.
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.
Fees payable to PKF Lawler Corporate Finance (NSW) Pty Limited (of which Vince Fayad is a
Director) for services related to IPO, Interim Chief Financial Officer and sundry financial
services. Fees were based on discounted hourly rates.
27. SECURED AND CONTINGENT LIABILITIES
The Group had no contingent liabilities at 30 June 2015.
For assets pledged as security for borrowing facilities see Note 15.
2015
$000
2014
$000
197
89
-
-
4,785
181
210
4,298
-
-
302
546
309
56
The Group has become aware that IMF Bentham Limited (“IMF”) has made a release to the ASX dated 17
August 2015 in which it announces that IMF proposes to fund claims of certain ASG shareholders against ASH
with respect to alleged misstatements in, or omissions from, ASG’s prospectus dated 7 August 2014 in
connection with ASH’s acquisition of the registered training organisation Integracom.
ASG notes that IMF has advised that no decision has yet been taken by IMF to commence proceedings and, as
such, no legal proceedings have been served, and may not ever be.
ASG denies all liability in respect of claims of the nature described in IMF’s announcement and management
considers any potential claim, should any claim be commenced, as unjustified.
28. FINANCIAL INSTRUMENTS
a.
Significant accounting policies
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.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
81
Notes to the Financial Statements
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.
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
2015
$000
124
(124)
124
(124)
2014
$000
(47)
47
(47)
47
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.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
82
Notes to the Financial Statements
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 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.
Liquidity risk management
d.
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.
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
2015
Trade and other payables
Borrowings – bank
Finance leases
Other liabilities – Vendor earn-
out
Total
2014
Weighted average
effective interest
rate %
Within 1 year
$000
1 to 5 years
$000
Over 5 years
$000
n/a
4.4%
n/a
n/a
22,300
-
226
-
22,526
-
-
-
4,660
4,660
-
-
-
-
-
Weighted average
effective interest
rate %
Within 1 year
$000
1 to 5 years
$000
Over 5 years
$000
Trade and other payables
Borrowings – bank
Borrowings – related party loans
Other liabilities – Vendor earn-
out
Total
n/a
6.87%
n/a
n/a
18,667
4,745
4,298
212
27,922
-
-
-
180
180
-
-
-
-
-
Total
$000
22,300
-
226
4,660
27,186
Total
$000
18,667
4,745
4,298
392
28,102
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
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
83
Notes to the Financial Statements
level 3 – where quoted 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.
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, Integracom, Cantillon and SILK there were
various earn out payments, which are subject to revenue and profit targets depending upon the individual
acquisition.
The fair value of contingent consideration is estimated using the present value technique. The 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 have been assessed as follows:
in relation to the acquisition of Concept, nil (out of an original maximum of $450,000)
in relation to the acquisition of Integracom, $2 million payable in July 2017 (out of an original
maximum of $15 million)
in relation to the acquisition of Cantillon, $76,000 payable in August 2017 (out of a potential
maximum of $745,000
in the relation to the acquisition of SILK, $3 million, payable no later than August 2016, which
represents the maximum potential payment under the Sale and Purchase Agreement.
The discount rate used of 6 per cent, 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.
29. 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
2015
$000
2,461
5,423
7,884
2014
$000
826
539
1,365
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.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
84
Notes to the Financial Statements
30. EVENTS AFTER THE REPORTING 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:
The Group has become aware that IMF Bentham Limited (“IMF”) has made a release to the ASX dated 17
August 2015 in which it announces that IMF proposes to fund claims of certain ASH shareholders against ASH
with respect to alleged misstatements in, or omissions from, ASG’s prospectus dated 7 August 2014 in
connection with ASH’s acquisition of the registered training organisation Integracom.
ASG notes that IMF has advised that no decision has yet been taken by IMF to commence proceedings and, as
such, no legal proceedings have been served, and may not ever be.
ASG denies all liability in respect of claims of the nature described in IMF’s announcement and management
considers any potential claim, should any claim be commenced, as unjustified.
31. EMPLOYEE SHARE RIGHTS PLAN
No employee Share Performance Plan existed as at 30 June 2014.
As part of the IPO, ASG implemented a performance rights share plan for its executives in financial year 2015,
the details of which are outlined in the Directors’ report.
32. DIVIDENDS
a. Ordinary shares
Final Dividend – 2014*
Dividend to distribute profits
from 1 July 2014 to 20 August
2014*
Interim Dividend – 2015
Record Date
Payment Date
Cents Per
Share
Franked Amount
Per Share (Cents)
n/a
n/a
20 August 2014*
1 July 2014*
102.3
102.3
6.1
2.3
4.1
6.1
2.3
4.1
Final Dividend – 2015
4 September 2015
25 September 2015
*These dividends were paid to owners prior to the IPO.
6 March 2015
27 March 2015
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
85
Notes to the Financial Statements
b.
Franking credits
Franking credits available for subsequent financial years based on a tax rate of
30% (2014: 30%)
The balance of the franking accounts includes:
2015
$000
2014
$000
6,562
7,150
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 2015
86
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 21 September 2015.
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 665 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
146
152
Number of shares
129,331
356,731
86
236
45
665
699,783
8,461,925
140,352,230
150,000,000
%
0.09
0.24
0.47
5.64
93.57
100.00
The number of shareholders holding less than a marketable parcel of Fully Paid Ordinary shares is 26 with a
total number of shares held is 9,331.
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.1
National Nominees Limited
Challenger Limited
Greencape Capital Limited
1. Includes shares held non-beneficially in trust on behalf of Holmes Management Group Pty Limited (6,024,096).
10,372,097
7,515,833
7,515,833
Number
91,523,036
%
61.02%
6.92%
5.01%
5.01%
Unquoted equity securities
There are no unquoted shares.
On-market buy-back
There is no current on-market buy-back.
ASHLEY SERVICES GROUP ANNUAL REPORT 2015
87
ASX Additional Information
Twenty largest shareholders
Fully paid ordinary shares
Details of the 20 largest shareholders of quoted securities (grouped) by registered shareholding are:
Name
Mrs Catherine Shrimpton
Action James Holdings Pty Limited
National Nominees Limited
Holmes Management Group Pty Ltd
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Bns-pot Nominees Pty Limited
J P Morgan Nominees Australia Limited
RBC Investor Services Australia Nominees Pty Limited
Aust Executor Trustees Ltd
Mr Craig Graeme Chapman
Mr Marc Shrimpton
Mr Dean Michael Shrimpton
Mr Andrew Douglas Shrimpton
Aust Executor Trustees Ltd
CVC Limited
Kingston Properties Pty Limited
Mr David Keith Green
Ginga Pty Ltd
Peter John Turner
Camitosa Pty Limited
Total
Annual General Meeting
Number of shares
60,858,282
21,631,861
20,866,674
6,024,096
4,855,344
2,998,030
2,935,324
2,657,735
2,087,765
1,946,571
1,700,000
1,500,000
1,500,000
1,500,000
1,187,867
660,000
581,556
453,072
363,000
321,747
315,636
%
40.57%
14.42%
13.91%
4.02%
3.24%
2.00%
1.96%
1.77%
1.39%
1.30%
1.13%
1.00%
1.00%
1.03%
0.79%
0.44%
0.39%
0.30%
0.24%
0.21%
0.21%
136,946,610
91.30%
The annual general meeting of the Company will be held at the offices of Norton Rose Fulbright, Level 18,
225 George Street Sydney at 10.00am on Friday 30 October 2015. 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 2015
88
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 (Non-executive Chairman)
Simon Crean
Mr Vince Fayad
Managing Director
Mr Ross Shrimpton (Managing Director)
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 2015
89