Annual Report 2020
LABOUR HIRE | RECRUITMENT
TRAINING
Ashley Services Group Limited Annual Report 2020
CHAIRMAN AND MANAGING DIRECTOR’S REVIEW ------------------------------------------------------------------ 5
DIRECTORS’ REPORT ------------------------------------------------------------------------------------------------------- 10
AUDITOR’S INDEPENDENCE DECLARATION -------------------------------------------------------------------------- 19
CORPORATE GOVERNANCE STATEMENT ----------------------------------------------------------------------------- 20
DIRECTORS’ DECLARATION----------------------------------------------------------------------------------------------- 21
INDEPENDENT AUDITOR’S REPORT ------------------------------------------------------------------------------------ 22
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ------------- 27
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ----------------------------------------------------------- 28
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ------------------------------------------------------------ 29
CONSOLIDATED STATEMENT OF CASH FLOWS --------------------------------------------------------------------- 30
NOTES TO THE FINANCIAL STATEMENTS ----------------------------------------------------------------------------- 31
ASX ADDITIONAL INFORMATION --------------------------------------------------------------------------------------- 73
CORPORATE DIRECTORY -------------------------------------------------------------------------------------------------- 75
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
4
Chairman and Managing Director’s Review
MR IAN PRATT AND MR ROSS SHRIMPTON
2020 has been a challenging year as we have all faced the difficulties presented by living and working in a COVID
impacted environment. Our staff throughout the entire company adapted and adjusted systems and operations,
with this hard work having a major effect in limiting the COVID impact on our business. This has enabled us to
achieve a profit after tax, normalised for the adoption of the new accounting standard (AASB 16 – Leases), which
was up 1.6% on the previous year.
Our business has shown an impressive resilience to provide a hard-earned continuation of our quality results
along with strong cash generation. To a large extent our organisation has been shielded from the worst impacts
of COVID due to the major drivers underlying our business. Action Workforce has benefited from a high exposure
to the supermarket and related supply chain sector. Both the CCL Group and Concept Engineering were
supported by their presence in major Victorian government infrastructure projects that have continued
throughout the COVID period.
The impressive safety performance of our company continues to represent world’s best practice which is
something we are extremely proud of.
Our cash flow performance, reflected in a $14.1 million operating cash inflow for the year, was an outstanding
result. This has allowed us to again close the year with zero borrowings in a year where we made both our initial
acquisition payment and a special dividend for the CCL Group, as well as the payment of our 2019 dividend. This
cash position together with the resilience exhibited in our results places us as one of a select few companies
maintaining a dividend at last year’s level (2.7 cents per share).
As a result of our cash generation and our stable operating results, the Board is pleased to announce the move
to twice yearly dividend payments.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
5
Chairman and Managing Director’s Review
LABOUR HIRE DIVISION (including the CCL Group)
Our Labour Hire division delivered an impressive revenue growth of $50 million or 17.9%. EBITDA at $12.5m
represented a $1 million or 9.1% lift on prior year.
Year one of our ownership of the CCL Group, with the acquisition completed on 20 December 2019 and having
financial effective date of 1 July 2019, delivered on our expectations which underlined the business case at the
time of the acquisition. The CCL Group was able to deliver revenue growth of 23% on the pre-acquisition year,
driven predominantly by growth in the Victorian government infrastructure sector.
Action Workforce delivered revenue growth of 3.0% on the prior year.
Concept Engineering, which is strongly Victorian centric, experienced a revenue reduction of 8.7% on the
previous year.
Concept Recruitment Specialists, which has now absorbed the former Blackadder operations, experienced a
revenue reduction of 13.9% on the previous year, largely the result of the COVID effect on the permanent white-
collar recruitment sector.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
6
Chairman and Managing Director’s Review
TRAINING DIVISION
Our Training division experienced restrictions on face to face training and a relaxing of the need to attend
training classes to qualify for unemployment benefits, both of which impacted class numbers and completions.
The first half of the financial year had Training at an EBITDA of $0.8 million, well up on prior year and well poised
for a similar second half. It was pleasing to breakeven across the second half and hold onto a full year EBITDA
for the Training division of $0.8 million.
Results so far in the 2021 financial year are encouraging with Queensland and Western Australia returning to
pre-COVID student activity and Victoria is holding the line with a move to a greater mix of distance learning.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
7
Chairman and Managing Director’s Review
DISCUSSION ON RESULTS
Earnings and result
Earnings
Net profit after tax (“NPAT”) for the financial year ended 5 July 2020, including the full year contribution from
the recently acquired CCL Group, was a total group profit of $5.1 million (FY19: profit $5.4 million)
Key elements within the result include:
Revenues
Group Revenue at $336.8 million increased by $49.3 million (17.1%) from the comparative period.
Labour Hire revenues were up $50 million (17.9%), largely due to the first year of CCL Group revenues.
Training revenues were down by $0.7 million (-8.6%).
Earnings before interest taxes depreciation and amortisation (“EBITDA”)
Group EBITDA for the financial year was a profit of $9.7 million, up by $0.6 million (6.6%) on the prior
corresponding period (FY19: EBITDA of $9.1 million).
Labour Hire division EBITDA of $12.5 million, was up $1.0 million (9.1%) on the prior corresponding period
(FY19: $11.5 million), largely due to the CCL contribution, with Action Workforce also showing a modest lift.
These were somewhat reduced by declines in Concept Engineering and declines and start-up costs for our
Concept Recruitment Specialists division which absorbed the Blackadder brand in FY20.
Training division EBITDA of $0.8 million was down $0.2 million or -21% on the prior corresponding period
(FY19: $1.0 million) after a breakeven second half, which was pleasing for a severely COVID impacted sector.
Corporate overheads, at $3.6 million were up $0.2 million on prior corresponding period (FY19: $3.4 million),
primarily due to additional costs incurred in relation to the acquisition of the CCL Group.
Statement of financial position
The acquisition of the CCL group has seen a significant change to our statement of financial position.
Net assets at $25.8 million were down by $0.8 million on the prior year (2019: $26.6 million), partly due to the
creation of a non-current redemption liability ($2.0 million) for the 20% Put option for the CCL Group acquisition.
Noteworthy balance sheet movements include:
Trade and Other Receivables up $0.9m - CCL $6.8m, so reflects significant reduction in traditional business
Right-of-use Asset $2.3m - AASB16 adoption
Intangible Assets up $6.1m - CCL Goodwill
Trade and Other Payables up $4.6m - CCL $3.6m
Dividends Payable up $0.4m - CCL minorities FY20 dividend payable in Jul-20
Borrowings remain at ZERO – CCL acquisition initial payment $5.7m debt drawing in H1 repaid in H2
Lease Liabilities (Current) up $0.7m - AASB16 adoption
Other Liabilities (Current) up $1.4m - CCL Contingent Consideration $1.4m
Lease Liabilities (Non-current) up $1.7m - AASB16 adoption
Other Liabilities (Non-current) up $2.8m - CCL Contingent Consideration $0.8m, CCL Redemption Liability $2.0m
Common Control Reserve up $1.6m – CCL Redemption Liability less Non-controlling interests.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
8
Chairman and Managing Director’s Review
Cash Flow
Operating cash flow was strong in the second half, building on an inflow of $2.2 million at the half, to end at our
best ever level of $14.1 million inflow for the year (FY19: $4.8 million) allowing us to again close the year with
zero borrowings.
The overall outflow from investing activities of $5.4 million was primarily due to the initial payment of $4.8
million for the CCL acquisition (less cash acquired) and also capital expenditure of $0.5 million which was in line
with the prior year.
The overall outflow from financing activities of $7.5 million was primarily due to the $3.9 million dividend
payment of 2.7 cent per share made during the year as well as a $2.6m special dividend paid to the former CCL
Group shareholders.
Overall this delivered a net cash inflow for FY20 of $1.3 million.
DIVIDEND
On 27 July 2020 the Group declared a fully franked final dividend of 2.7 cents in relation to the financial year
ended 5 July 2020, in line with the rate of the prior financial year (FY19: 2.7 cents).
EVENTS SUBSEQUENT TO BALANCE DATE
Other than the dividend announcement outlined above, 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.
Ian Pratt
Chairman
Ross Shrimpton
Managing Director
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
9
Directors’ Report
The Directors present their annual financial report on the consolidated entity, being Ashley Services Group
Limited and its controlled entities (“Group”) for the financial year ended 5 July 2020.
1. GENERAL INFORMATION
a. Directors
The names of the Directors in office at any time during, or since the end of the year are:
Table 1: Director Details
Names
Mr Ian Pratt
Chairman
Mr Ross Shrimpton Managing
Director
Executive Director Appointed 6 April 2017 and Company Secretary from 26 August 2020
Appointed / Resigned
Appointed 1 October 2015
Appointed 12 Oct 2000; Managing Director to 15 Feb 2016, Non-Executive
Director 15 Feb 2016 to 23 Jan 2017 and Managing Director from 23 Jan 2017
Mr Chris McFadden
Directors’ Information
•
•
•
Mr Ian Pratt | Non-Executive Chairman (since 1 October 2015)
Qualifications | CA
Experience | Ian has over 40 years’ experience in the accounting profession and is a Director of
a number of Public and Private companies. During this time, he has been involved in the
recruitment, finance and property industries, and advises on income tax and related matters.
Currently Ian is a Partner at Trood Pratt & Co Chartered Accountants and was previously a
Director of Charter Hall Direct Property Management Limited (formerly Macquarie Direct
Property Management Limited).
Mr Pratt is a Member of Chartered Accountants Australia and New Zealand.
Ian is Chairman of the Nominations, Audit & Risk Management and Remuneration Committees.
Mr Ross Shrimpton | Managing Director (since 23 January 2017) (previously Non-Executive
Director from 15 February 2016 and Managing Director to 15 February 2016)
Qualifications | BComm (UNSW), CA, MAICD
Experience | Ross is the founder and Managing Director of Ashley Services Group and has been
instrumental in the overall growth and strategic direction of Ashley Services. Ross has over 40
years’ experience in finance and management across a number of large international
organisations such as CSR/Humes and David Brown, originally commencing his professional
career with Deloitte Touche Tohmatsu. Overall, Ross has over 20 years of relevant experience in
the labour hire and training industries.
Ross is a Member of Chartered Accountants Australia and New Zealand and a member of the
Australian Institute of Company Directors.
Ross is a member of the Nominations, Audit & Risk Management and Remuneration Committees.
Mr Chris McFadden | Executive Director (from 6 April 2017) & Company Secretary (from 26
August 2020)
Qualifications | BBus (UTS), FCPA, GAICD
Experience | Chris was appointed Chief Financial Officer of Ashley Services Group in January 2017
and was appointed Executive Director in April 2017. Chris was formerly CFO at Ross Human
Directions Limited (ASX: RHD), a company principally involved in the provision of temporary
labour and recruitment services. Chris’s previous roles include: CFO of sass & bide, a division of
Myer, CFO of Staples Australia, Senior Commercial Manager at Woolworths Limited and Asia
Pacific CFO of The Nuance Group.
Chris is a Fellow of CPA Australia and a Graduate of the Australian Institute of Company Directors.
Chris is a member of the Nominations, Audit & Risk Management and Remuneration Committees.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
10
Directors’ Report
Interests in shares and options
As at the date of this report, the interests of the directors in the shares of Ashley Services Group Limited were:
Table 2: Shares Held by Directors
Names
Mr Ian Pratt
Mr Ross Shrimpton
Mr Chris McFadden1
Directorships of other listed companies
•
Number
of Shares Held
Shareholding
%
•
15,060
80,279,030
630,630
0.01
55.76
0.44
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 3: Other Directorships of listed entities
Name
Mr Ian Pratt
Mr Ross Shrimpton
Mr Chris McFadden
Principal activities
Company
Date from
Date to
Nil
Nil
Nil
-
-
-
-
-
-
The principal activities of the Group during the financial year were the provision of labour hire (including
recruitment) and training services.
Company secretary
Mr Ron Hollands held the position of Company Secretary for the entire financial year. Ron is a 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.
Mr Chris McFadden, Executive Director and Chief Financial Officer of the Ashley Services Group Limited was
appointed as joint Company Secretary on 26 August 2020.
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 4: Meeting Attendance
Board Meetings
Audit & Risk
Management
Committee
Meetings
Remuneration
Committee
Meetings
Nomination
Committee
Meetings
Held Attended
Held
Attended
Held
Attended
Held
Attended
Mr Ian Pratt
Mr Ross Shrimpton
Mr Chris McFadden
10
10
10
10
10
10
2
2
2
2
2
2
1
1
1
1
1
1
0
0
0
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
0
0
0
11
Directors’ Report
1. BUSINESS REVIEW
Operating results
The consolidated profit of the Group attributable to
equity holders after providing for
income tax
amounted to $4,667,000 (2019: profit $5,424,000).
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 and Managing
Director’s Review.
Future developments
in the operations of the
Likely developments
consolidated entity in future years and the expected
results of those operations are referred to generally
in the Chairman and Managing Director’s Review.
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 group’s operations in
financial year 2020 except as follows:
On 27 July 2020 the Group declared a fully franked
final dividend of 2.7 cents in relation to the financial
year ended 5 July 2020, with a payment date of 11
September 2020.
Ongoing Litigation
Ashley Services Group Limited (ASH) has no current
ongoing litigation.
2. OTHER INFORMATION
Options
There are no unissued ordinary shares that are
either under option at the date of this report or
have been exercised during the year.
b. Non-audit services
The Group may decide to employ the auditor on
assignments additional to their statutory audit
duties where the auditor’s expertise and experience
with the Group are important.
The current auditor, HLB Mann Judd Assurance
(NSW) Pty Ltd, did not provide any non-audit
services during the year ended 5 July 2020.
Details of the amounts paid to HLB Mann Judd for
audit services provided during the year are outlined
in Note 4 to the financial statements.
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 19 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,
secretaries and officers of the Group and its
Australian entities.
The insurance policies prohibit disclosure of the
premiums payable under the policies and details of
the insured liabilities.
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
In accordance with ASIC Corporations (Rounding in
Instrument
/ Directors’ Reports)
Financial
2016/191, amounts in the financial report are
rounded off to the nearest thousand dollars unless
otherwise indicated.
3. 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.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
12
Directors’ Report
The remuneration report is set out in the following
main headings:
•
•
•
•
•
•
•
key management personnel;
principles used to determine the nature and
amount of remuneration;
Non-Executive Director remuneration;
details of remuneration;
executive service agreements;
share-based compensation; and
additional information.
Key management personnel
a.
The following persons acted as Directors of the
Group or as key management personnel during the
financial year:
Executive Directors:
•
Ross Shrimpton
•
Chris McFadden
Non-Executive Directors:
•
Ian Pratt
Other key management personnel:
•
Paul Rixon (General Manager, Labour Hire)
Key management personnel
include both the
Directors and other key management personnel
named above.
b.
Principles used to determine the nature and
amount of remuneration
is
that
to ensure
The objective of the Group’s executive reward
framework
for
performance is competitive and appropriate for the
results delivered. The framework seeks to align
executive reward with achievement of strategic
objectives and
for
shareholders.
the creation of value
reward
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 a return on assets
as well as focusing the executive on key non-
financial drivers of value; and
attracts and retains high-calibre executives.
Alignment to program participants’ interests
•
•
•
rewards capability and experience;
provides a clear structure for earning rewards;
and
provides recognition for contribution to the
business.
The framework provides a mix of fixed and variable
pay, including short 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; and
short-term performance incentives, provided
in cash.
•
The combination of these comprises the executive’s
total remuneration.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
13
Directors’ Report
Table 5: Key components of senior executive remuneration framework in place during the year ended 5 July 2020.
Fixed Remuneration/Base Pay
Short Term Incentive (STI)
• 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.
•
‘At risk’ award opportunity for the
achievement of annual performance
objectives linked to annual financial targets
and non-financial goals set by individual.
• 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.
• Financial targets in line with budgets set for
the individual’s area of influence for the
financial year, coupled with non-financial key
performance measures.
• There are no guaranteed base pay increases in any executives’
• Paid in cash within 30 days of finalisation of
employment contracts.
Audited Annual Report.
Table 6: Key features of the senior executive STI plan for FY20
Overview of the senior executive STI plan
Who participates in the
Senior Executive STI plan?
Senior executives participate in the senior executive 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 performance measures must also be met to earn an STI payment.
What
are
performance
conditions?
the
Measures
Senior Executives
Financial measures
(80% of STI opportunity)
Assessed against:
• Budget EBITDA for the individual’s area of influence for the
financial year.
• 20% payable for achievement of 80% of budget. Remaining 80%
payable on a straight-line pro rata basis for performance from
80% to 130% of budget.
Non-Financial measures
(20% of STI opportunity)
•
Individually set Key Performance Indicators.
Setting and assessing performance
Who sets and
assesses
performance?
How is the STI
delivered?
The MD sets and assesses performance and short term incentive outcomes for senior executives
with guidance from the Remuneration Committee. The Remuneration Committee sets the targets
for MD and assesses performance against those targets.
100% of any STI award is paid in cash within 30 days of finalisation of the audited Annual Report.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
14
Directors’ Report
STI plan for the financial year ended 5 July 2020
The remuneration committee has approved a similar Short Term Incentive (STI) plan for the year ended 5 July
2020, based upon budget targets for that annual period.
c. Non-executive Director remuneration and Board performance review
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 comparable 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 their Directors’ fees. There
are no other schemes for retirement benefits for non-executive Directors.
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 15 to 17.
The key management personnel of Ashley Services Group are listed in the table below. 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 major provisions of the agreements relating to remuneration are set
out below:
Table 8: Executive and Key Management Personnel Service Agreements
Name
Ross Shrimpton
Chris McFadden
Paul Rixon
Base Salary $1
Target STI %2
Target LTI %2, 3
450,000
450,000
291,748
-
50
50
-
50
50
Term of
agreement
Ongoing
Ongoing
Ongoing
Notice Period
6 months
6 months
6 months
Base salary is on an annual basis and includes superannuation contributions.
Note:
1.
2. Maximum annual award as a percentage of annual salary.
3.
This plan has been suspended since the financial year ended 30 June 2017.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
15
Directors’ Report
Table 9: Statutory key performance indicators of the group over the last five years
2020
2019
2018
2017
2016
Profit / (Loss) for the year attributable to members ($000)
Basic earnings per share (cents)
Dividend payments ($000)1
4,667
3.24
3,887
5,424
3.77
3,887
4,789
3.33
3,600
Dividend payout ratio (%)
Increase / (decrease) in share price (%)2
Total KMP incentives as percentage of profit/(loss) for the year (%)
Note:
1. 2020 Dividend declared 27 July 2020 in relation to the 2020 financial year, with payment date of 11 September 2020.
2019 Dividend declared 9 August 2019 in relation to the 2019 financial year, with payment date of 6 September 2019.
2018 Dividend declared 26 July 2018 in relation to the 2018 financial year, with payment date of 17 August 2018.
Increase/(decrease) in share price (%) is year-end share price relative to prior year-end.
204.7
75.1
83.3
71.7
33.3
3.1
0.0
4.1
6.1
2.
(70.9)
(5,969)
(69,626)
(4.08)
(46.42)
-
-
-
-
-
(63.0)
-
Table 10: 2020 – Remuneration of Key Management Personnel
2020
Name
Non-executive Directors
Ian Pratt5
Executive Director
Ross Shrimpton
Chris McFadden
Other key management personnel
Paul Rixon6
ST1 employee benefits
Cash salary
& fees
$
Salary non-
cash
$
ST1 employee
bonus
S
-
-
118,293
205,480
428,997
428,997
273,336
-
-
-
-
PE2
benefits
Super-
annuation
$
19,520
21,003
21,003
LT3
employee
benefit
Performance
based
Remuneration
Total4
$
-
-
-
$
225,000
450,000
568,293
%
-
-
20.8
71,760
21,003
-
366,099
19.6
Total
Note:
1. ST – Short-term.
2. PE – Post-employment.
3. LT – Long-term. As all previous LTI performance hurdles have now lapsed no expense has been recognised in the profit and loss
- 1,609,392
1,336,810
190,053
82,529
-
11.8
account for the year ended 5 July 2020.
4. Amounts included in the above table include amounts paid to key management from all entities.
5. During the year tax advisory fees have also been paid to Trood Pratt & Co (Company in which Ian Pratt is a Partner).
6. Novated car lease refund of $4,715 included in these figures.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
16
Directors’ Report
Table 11: 2019 – Remuneration of Key Management Personnel
2019
Name
Non-executive Directors
Ian Pratt5
Executive Director
Ross Shrimpton
Chris McFadden
Other key management personnel
Paul Rixon
ST1 employee benefits
Cash salary
& fees
$
Salary non-
cash
$
ST1 employee
bonus
S
-
-
191,975
206,347
404,469
429,469
262,719
-
-
-
-
PE2
benefits
Super-
annuation
$
19,603
20,531
20,531
LT3
employee
benefit
Performance
based
Remuneration
Total4
$
-
-
-
$
225,950
425,000
641,975
%
-
-
29.9
136,400
20,531
419,650
32.5
Total
Note:
1. ST – Short-term.
2. PE – Post-employment.
3. LT – Long-term. As none of the performance hurdles for any of the relevant years has been met no expense has been recognised in
1,712,575
1,303,004
328,375
81,196
-
19.2
the profit and loss account for the year ended 30 June 2019.
4. Amounts included in the above table include amounts paid to key management from all entities.
5. During the year tax advisory fees have also been paid to Trood Pratt & Co (Company in which Ian Pratt is a Partner).
Other transactions with key management personnel
Information on share-based payments and other transactions with key management personnel is set out on the
previous pages.
e.
Shares held by key management personnel
The number of ordinary shares in the Company during the 2020 reporting period held by each of the Group’s key
management personnel, including their related parties are set out below:
Table 12: Shares held by Key Management Personnel
Name
Ian Pratt
Ross Shrimpton
Chris McFadden
Paul Rixon
Total
Balance at start of
the year
15,060
80,279,030
630,630
41,416
80,966,136
Shares Disposed
-
Change from KMP
-
Balance at end of the year
15,060
-
-
-
-
-
-
-
-
80,279,030
630,630
41,416
80,966,136
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 8.
Executives are typically restricted for twelve months after termination from conducting or engaging in competing
businesses and from solicitation of customers and employees of the Company.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
17
Directors’ Report
End of audited Remuneration Report.
Signed in accordance with a resolution of the Board of Directors made pursuant to section 298(2) of the
Corporations Act 2001.
Ian Pratt
Chairman
Sydney, 28 August 2020
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
18
Auditor’s Independence Declaration
As lead auditor for the audit of the consolidated financial report of Ashley Services Group Limited for the
year ended 5 July 2020, I declare that, to the best of my knowledge and belief, there have been no
contraventions of:
(a)
the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit;
and
(b)
any applicable code of professional conduct in relation to the audit.
This declaration is in relation to Ashley Services Group Limited and the entities it controlled during the period.
Sydney, NSW
28 August 2020
S P James
Director
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
19
Corporate Governance Statement
A Corporate Governance Statement has been
adopted by the Board on 30 August 2016 and can be
found at
http://www.ashleyservicesgroup.com.au/investor-
centre/corporate-governance/
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.
Diversity
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.
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 & Senior Management
Corporate & Administration
Labour Hire
Recruitment
Training
Total
Female
Male
25%
86%
62%
86%
58%
66%
75%
14%
38%
14%
42%
34%
During the financial year ending 5 July 2020 the
its annual report to the
Company submitted
Workplace Gender Equality Agency and is again
compliant with the Workplace Gender Equality Act
2012 (Act).
The performance of the Board and Senior Executives
in the 2020 financial year has been reviewed against
both quantitative and qualitative measures and
Directors and Senior Executives provided feedback on
the discharge of their responsibilities.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
20
Directors’ Declaration
1.
In the opinion of the Directors of Ashley Services Group Limited:
a. The consolidated financial statements and notes of Ashley Services Group Limited are in
accordance with the Corporations Act 2001, including:
i. Giving a true and fair view of its financial position as at 5 July 2020 and of its performance
for the financial year ended on that date; and
ii. Complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001;
b. There are reasonable grounds to believe that Ashley Services Group Limited will be able to pay
its debts as and when they become due and payable; and
c. At the date of this declaration, there are reasonable grounds to believe that the members of
the Extended Closed Group will be able to meet any obligations or liabilities to which they are,
or may become, subject by virtue of the deed of cross guarantee described in note 28 to the
financial statements.
2. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001
from the Managing Director and Chief Financial Officer for the financial year ended 5 July 2020.
3. Note 1 confirms that the consolidated financial statements also comply with International Financial
Reporting Standards.
Signed in accordance with a resolution of the Directors.
Ian Pratt
Chairman
Sydney, 28 August 2020
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
21
Independent Auditor’s Report to the Members of Ashley Services Group Limited
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the financial report of Ashley Services Group Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 5 July 2020,
the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies, and the directors’ declaration
for the Group.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
(a)
giving a true and fair view of the Group’s financial position as at 5 July 2020 and of their financial
performance for the year then ended; and
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to
our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
22
Key Audit Matter
How our audit addressed the key audit matter
Revenue Recognition
Refer to Note 1 (Summary of significant accounting policies) and Note 2 (Revenue and other income)
Labour hire revenue is the most significant
account balance in the Consolidated Statement of
Profit or Loss and Other Comprehensive Income.
Total revenue and other income of $338.9 million
comprises a number of streams including:
•
•
•
labour hire revenue ($329.5 million);
training revenue ($7.3 million); and
other income ($2.1 million).
We focussed on this matter due to the size and
magnitude of labour hire revenue, as well as the
higher level of inherent risk due to the manual
processes for inputting, calculating, reviewing, and
recording of the labour hire revenue.
Employment Costs
Refer to Note 1 (Accounting policies)
Employment costs, both internal and allocated
externally, is one of the most significant account
balances in the Consolidated Statement of Profit
or Loss and Other Comprehensive Income.
Total employment costs amount to $321.7 million.
We focussed on this matter due to the size and
magnitude of employment costs, as well as the
higher level of inherent risk due to the manual
processes for the volume of inputting, calculating,
reviewing, and recording of the employment
costs.
We assessed whether the Group’s accounting
policies were in compliance with Australian
Accounting Standards and specifcally whether
revenue had been recognised in accordance with
accounting standard AASB 15 Revenue from
Contracts with Customers.
We tested the Group’s process for recognising
labour hire revenue.
We tested labour hire revenue recognised in the
period by agreeing to timesheets, payroll reports,
amounts billed and subsequently received.
We tested the process for raising and authorising
credit notes throughout the financial year and
immediately subsequent to year end.
We compared the accuracy of hours on-billed as
labour hire revenue to amounts paid to employees,
refer to employment costs below.
We tested the correct cut-off and accrual of labour
hire revenue at year end.
We tested the Group’s process for recognising
employment costs.
We tested the controls surrounding the
authorisation of changes in employee details, such
as pay rates.
We tested employment costs recognised in the
period by agreeing to timesheets, payroll reports,
and amounts subsequently paid.
We analytically reviewed the labour hire margins
from the current and prior year.
We tested the cut-off and accrual of employment
costs at year end.
We tested whether PAYG amounts were deducted
and subsequently paid to the Australian Taxation
Office.
We tested superannuation amounts paid by
recalculation and comparison to gross wages. We
tested the subsequent payment to the
superannuation clearing house.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
23
Key Audit Matter
How our audit addressed the key audit matter
Accounting for Asset Acquisition
Refer to Note 24 (Business combination)
As disclosed in Note 24 to the financial
statements, during the year the Group completed
the acquisition of 80% of the issued capital of
CCL Group.
The accounting for this business combination
resulted in the recognition of goodwill of $6.3m.
The estimated acquisition price for the 80%
purchase of the CCL Group was $7.89 million but
will be adjusted for subsequent earn-outs for
FY20 and FY21 (currently estimated at FY20
EBITDA levels).
The acquisition of the remaining 20%
shareholding is subject to both Call and Put
Options.
Accounting for this acquisition is a complex and
judgemental exercise, requiring management to
determine the existence and fair value of acquired
assets and liabilities, in particular determining the
allocation of purchase consideration.
We focussed on this area as a key audit matter
given the size of the acquisition and its impact on
the financial statements of the Group.
We examined the asset sale and purchase
agreements to understand key terms and
conditions.
We reviewed the accounting treatment, and
considered whether it complied with the
requirements of Australian Accounting Standards.
We reviewed management’s assessment of the
identified assets and liabilities acquired including
the fair value attributable to these assets and
liabilities.
We reviewed the calculation of goodwill on
acquisition.
We reviewed the calculations and underlying
assumptions used to determine the contingent
liabilities for retention and earnouts.
We reviewed the calculations and underlying
assumptions used to determine the redemption
liability for the Put Option.
We considered the adequacy of the financial report
discslosures in Note 24.
Carrying Value of Goodwill
Refer to Note 12 (Intangible assets) and Note 13 (Impairment)
The Group recognised Goodwill of $9.1m as at
5 July 2020 in relation to the Labour Hire
division. This Goodwill arose on acquisition of
subsidary companies during the current year
(Note 24) and prior years.
As required by Australian Accounting Standards
the Group tested this Goodwill for impairment,
at 5 July 2020.
The Group determined the recoverable amount
using value in use calculations for the relevant
cash generating units (“CGU”), which involved a
significant level of judgement in respect of
factors such as:
•
•
•
Estimated future revenues and costs;
Discount rates; and
Terminal values.
We considered this to be a key audit matter due to
the significant judgement involved in estimating
the recoverable amount of the Goodwill and the
potentially material impact on the financial report.
We evaluated the Group’s goodwill impairment
assessment process;
We obtained the Group’s value in use models and
considered the assumptions applied by
management;
We assessed the accuracy of previous Group
forecasting to inform our evaluation of forecasts
included in the value in use model. We applied
increased scepticism to current period forecasts in
areas where previous forecasts were not achieved
and /or where future uncertainty is greater or
volatility is expected;
We challenged discount and terminal value
multiples by comparing these with rates used by
comparable companies.
We compared forecast revenues and costs to
historical results;
We tested the mathematical accuracy of the
impairment models used by management;
We performed sensitivity analysis on the Labour
Hire CGU in relation to the discount rate and
terminal value multiple assumptions, and profit
forecasts;
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
24
Key Audit Matter
How our audit addressed the key audit matter
We assessed the Group’s disclosures of the
quantitative and qualitative considerations in relation
to the valuation of goodwill, by comparing these
disclosures to our understanding of the assets.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Group’s Annual Report for the year ended 5 July 2020, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations,
or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
25
•
•
•
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 12 to 18 of the directors’ report for the year
ended 5 July 2020.
In our opinion, the Remuneration Report of Ashley Services Group Limited for the year ended 5 July 2020
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
HLB Mann Judd Assurance (NSW) Pty Ltd
Chartered Accountants
S P James
Director
Sydney, NSW
28 August 2020
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
26
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the financial year ended 5 July 2020
Note
2
2
3
3
5
Revenue
Other income
Employment costs
Depreciation and amortisation expense
Finance costs
Other expenses
Profit before income tax from continuing operations
Income tax expense
Profit for the year from continuing operations
Profit / (Loss) for the year from discontinued operations
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Owners of Ashley Services Group Limited
Non-controlling interests
Basic earnings per share (cents) from continuing operations
Diluted earnings per share (cents) from continuing operations
Basic earnings per share (cents) from discontinued operations
Diluted earnings per share (cents) from discontinued operations
Basic earnings per share (cents) Total
Diluted earnings per share (cents) Total
21
21
21
21
21
21
The accompanying notes form part of these financial statements.
5 Jul 2020
$000
336,841
2,040
(321,668)
(2,068)
(713)
(7,387)
30 Jun 2019
$000
287,570
1,184
(273,995)
(1,007)
(647)
(5,570)
7,045
1,976
5,069
-
5,069
-
5,069
4,667
402
5,069
3.24
3.24
0.00
0.00
3.24
3.24
7,535
2,111
5,424
-
5,424
-
5,424
5,424
-
5,424
3.77
3.77
0.00
0.00
3.77
3.77
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
27
Consolidated Statement of Financial Position
As at 5 July 2020
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Intangible assets
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Current tax payable
Dividends payable
Lease liabilities
Other liabilities
Provisions
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Lease liabilities
Other liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Common control reserve
Accumulated losses
Total equity
Note
7
8
9
10
11
1(e)
14
12, 13
15
14
1(e)
16
18
14
1(e)
16
18
19
20
The accompanying notes form part of these financial statements.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
5 Jul 2020
$000
30 Jun 2019
$000
8,063
29,418
154
1,745
39,380
1,060
2,345
4,694
9,322
92
17,513
56,893
18,517
1,634
400
723
1,412
2,453
25,139
764
1,716
2,762
682
5,924
31,063
25,830
148,815
(59,261)
(63,724)
25,830
6,784
28,524
571
1,444
37,323
1,140
-
3,602
3,200
-
7,942
45,265
13,900
307
-
-
-
2,295
16,502
964
-
-
1,175
2,139
18,641
26,624
148,815
(57,687)
(64,504)
26,624
28
Consolidated Statement of Changes in Equity
For the financial year ended 5 July 2020
For the year ended 5 July 2020
Balance at 1 July 2019
Profit for the period
Other comprehensive income for the year
Total comprehensive income for the year
Recognition of non-controlling interest of CCL
Group
Derecognition of non-controlling interest of CCL
Group
Other equity
Dividends paid
Balance at 5 Jul 2020
For the year ended 30 June 2019
Balance at 2 July 2018
Profit for the period
Other comprehensive income for the year
Total comprehensive income for the year
Dividends paid
Balance at 30 June 2019
Share
Capital
$000
Common
Control
Reserve
$000
Retained
Earnings
$000
Non-
controlling
Interest
$000
148,815
(57,687)
(64,504)
-
-
-
-
-
-
-
-
-
-
-
399
(1,973)
4,667
-
4,667
-
-
-
-
(3,887)
148,815
(59,261)
(63,724)
148,815
(57,687)
(66,329)
-
-
-
-
-
-
-
-
5,424
-
5,424
(3,599)
148,815
(57,687)
(64,504)
-
402
-
402
397
(399)
-
(400)
-
-
-
-
-
-
-
Total
$000
26,624
5,069
-
5,069
397
-
(1,973)
(4,287)
25,830
24,799
5,424
-
5,424
(3,599)
26,624
The accompanying notes form part of these financial statements.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
29
Consolidated Statement of Cash Flows
For the financial year ended 5 July 2020
Operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income taxes paid
Net cash from continuing operations
Net cash used in discontinued operations
Net cash from operating activities
Investing activities
Note
5 Jul 2020
$000
30 Jun 2019
$000
371,567
318,707
(354,693)
(312,564)
22
(620)
(2,151)
14,125
-
66
(632)
(825)
4,752
-
23
14,125
4,752
Payments for property, plant and equipment in continuing operations
Payments for intangibles
Proceeds from sale of property, plant and equipment
Payments for businesses, net of cash acquired
24
Net cash used in investing activities
Financing activities
Net proceed/(repayment) from/(of) external borrowings in continuing
operations
Repayment of leasing liabilities
Dividends paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the financial year
Cash and cash equivalents at end of the financial year
7
The accompanying notes form part of these financial statements.
(502)
(198)
139
(4,812)
(5,373)
-
(966)
(6,507)
(7,473)
1,279
6,784
8,063
(899)
-
166
-
(733)
-
-
(3,599)
(3,599)
420
6,364
6,784
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
30
Notes to the Financial Statements
Table of Contents
ACCOUNTING POLICIES ----------------------------------------------------------------------------------------- 33
REVENUE AND OTHER INCOME ------------------------------------------------------------------------------- 43
EXPENSES ----------------------------------------------------------------------------------------------------------- 44
AUDITOR’S REMUNERATION ---------------------------------------------------------------------------------- 44
INCOME TAX EXPENSE ------------------------------------------------------------------------------------------ 45
KEY MANAGEMENT PERSONNEL DISCLOSURES ---------------------------------------------------------- 45
CASH AND CASH EQUIVALENTS ------------------------------------------------------------------------------- 45
TRADE AND OTHER RECEIVABLES ---------------------------------------------------------------------------- 46
CONTRACT ASSETS ----------------------------------------------------------------------------------------------- 46
OTHER ASSETS ---------------------------------------------------------------------------------------------------- 46
PROPERTY, PLANT AND EQUIPMENT ------------------------------------------------------------------------ 47
INTANGIBLE ASSETS --------------------------------------------------------------------------------------------- 48
IMPAIRMENT ------------------------------------------------------------------------------------------------------ 49
TAX BALANCES ---------------------------------------------------------------------------------------------------- 50
TRADE AND OTHER PAYABLES -------------------------------------------------------------------------------- 52
OTHER LIABILITIES------------------------------------------------------------------------------------------------ 52
BORROWINGS ----------------------------------------------------------------------------------------------------- 53
PROVISIONS ------------------------------------------------------------------------------------------------------- 54
SHARE CAPITAL --------------------------------------------------------------------------------------------------- 54
COMMON CONTROL RESERVE -------------------------------------------------------------------------------- 55
EARNINGS PER SHARE ------------------------------------------------------------------------------------------- 55
SEGMENT INFORMATION -------------------------------------------------------------------------------------- 56
CASH FLOW INFORMATION ----------------------------------------------------------------------------------- 57
BUSINESS COMBINATION -------------------------------------------------------------------------------------- 58
FAIR VALUE MEASUREMENT ---------------------------------------------------------------------------------- 60
CONTROLLED ENTITIES ------------------------------------------------------------------------------------------ 63
PARENT ENTITY DISCLOSURES -------------------------------------------------------------------------------- 65
DEED OF CROSS GUARANTEE --------------------------------------------------------------------------------- 66
RELATED PARTY TRANSACTIONS ----------------------------------------------------------------------------- 69
SECURED AND CONTINGENT LIABILITIES ------------------------------------------------------------------- 69
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.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
31
Notes to the Financial Statements
31.
32.
33.
34.
FINANCIAL INSTRUMENTS ------------------------------------------------------------------------------------- 69
OPERATING LEASE COMMITMENTS ------------------------------------------------------------------------- 72
EVENTS AFTER THE REPORTING DATE ---------------------------------------------------------------------- 72
DIVIDENDS --------------------------------------------------------------------------------------------------------- 72
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
32
Notes to the Financial Statements
1. ACCOUNTING POLICIES
a. General information
The financial statements for the financial year
ended 5 July 2020 cover Ashley Services Group
Limited and its controlled entities (“Ashley
Services” or the “Group”). Ashley Services
Group is a public Company listed on the
Australian Securities Exchange (trading under
the symbol “ASH”), incorporated and domiciled
in Australia.
The following is a summary of the material
accounting policies adopted by the Group in the
preparation of the consolidated
financial
statements. The accounting policies have been
consistently applied unless otherwise stated.
Statement of compliance
b.
The consolidated financial statements are
general purpose financial statements which
have been prepared in accordance with the
and Australian
Corporations Act 2001
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.
The consolidated financial statements were
authorised for issue by the Board of Directors
on 28 August 2020.
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.
accordance with ASIC Corporations
In
(Rounding in Financial / Directors’ Reports)
Instrument 2016/191, 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 and Interpretations
Accounting
The Group adopted all of the new, revised or
amended
and
Interpretations
the Australian
issued by
Accounting Standards Board (“AASB”) that are
mandatory for the current reporting period.
Standards
As stated below, the nature and effects of
changes arising from adoption of new, revised
or amending Accounting Standards and
Interpretations did not have a significant
impact on the Group.
The main new Accounting Standard that
became effective during the current reporting
period is as follows:
AASB 16: Leases
The Group has adopted AASB 16: Leases from 1
July 2019 but has not restated comparatives for
the 2019 reporting period, as permitted under
the
the specific
standard. The
the
adjustments arising from the new leasing rules
are therefore recognised
in the opening
statement of financial position on 1 July 2019.
in
reclassifications and
transition provisions
The Group’s leasing activities and how these
are accounted for
The Group
leases various offices and
equipment. Rental contracts are typically made
for fixed periods of 2 to 5 years, both with and
without extension options.
Contracts may contain both lease and non-
lease components. The Group allocates the
consideration in the contract to the lease and
non-lease components based on their relative
stand-alone prices.
Lease terms are negotiated on an individual
basis and contain a wide range of different
terms and conditions. The lease agreements do
not impose any covenants other than the
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
33
Notes to the Financial Statements
security interests in the leased assets that are
held by the lessor. Leased assets may not be
used as security for borrowing purposes.
Until the 2019 financial year, leases of property,
plant and equipment were classified as either
finance leases or operating leases. From 1 July
2019, leases are recognised as a right-of-use
asset and a corresponding liability at the date
at which the leased asset is available for use by
the Group.
Assets and liabilities arising from a lease are
initially measured on a present value basis.
Lease liabilities include the net present value of
the following lease payments:
-
fixed payments
in-substance
fixed payments), less any lease incentives
receivable
(including
- variable lease payment that are based on an
index or a rate, initially measured using the
index or rate as at the commencement date
- amounts expected to be payable by the
Group under residual value guarantees
the exercise price of a purchase option if the
Group is reasonably certain to exercise that
option, and
-
- payments of penalties for terminating the
lease, if the lease term reflects the Group
exercising that option.
Lease payments to be made under reasonably
certain extension options are also included in
the measurement of the liability.
The lease payments are discounted using the
interest rate implicit in the lease. If that rate
cannot be readily determined, which
is
generally the case for leases in the Group, the
lessee’s incremental borrowing rate is used,
being the rate that the individual lessee would
have to pay to borrow the funds necessary to
obtain an asset of similar value to the right-of-
use asset in a similar economic environment
with similar terms, security and conditions.
To determine the incremental borrowing rate,
the Group uses recent third-party financing
received as a starting point, adjusted to reflect
changes in financing conditions since third
party financing was received.
Lease payments are allocated between
principal and finance cost. The finance cost is
charged to statement of financial performance
over the lease period so as to produce a
constant periodic rate of
interest on the
remaining balance of the liability for each
period.
Right-of-use assets are measured at cost
comprising the following:
-
the amount of the initial measurement of
lease liability
- any lease payments made at or before the
lease
less any
commencement date
incentives received
restoration costs.
- any initial direct costs, and
-
Right-of-use assets are generally depreciated
over the shorter of the asset's useful life and
the lease term on a straight-line basis.
Payments associated with short-term leases of
office are recognised on a straight-line basis as
an expense
financial
performance. Short-term leases are leases with
a lease term of 12 months or less.
statement of
in
Impact of adoption
On adoption of AASB 16, the Group recognised
lease
liabilities and associated right-of-use
assets in relation to leases which had previously
been classified as ‘operating leases’ under the
principles of AASB 117 Leases. These liabilities
were measured at the present value of the
remaining lease payments, discounted using
the lessee’s incremental borrowing rate as of 1
July 2019. The weighted average
lessee’s
incremental borrowing rate applied to the lease
liabilities on 1 July 2019 was 3%.
Practical expedients applied
In applying AASB 16 for the first time, the Group
has used the following practical expedients
permitted by the standard:
- applying a single discount rate to a portfolio
similar
of
characteristics.
relying on previous assessments on
whether
leases are onerous as an
alternative to performing an impairment
leases with
reasonably
-
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
34
Notes to the Financial Statements
review. There were no onerous contracts as
at 1 July 2019.
Amounts recognised in the consolidated
statement of financial position
- accounting for operating leases with a
remaining lease term of less than 12 months
as at 1 July 2019 as short-term leases.
for
the
initial direct costs
measurement of the right-of-use asset at
the date of initial application, and
- excluding
- using hindsight in determining the lease
term where the contract contains options to
extend or terminate the lease.
Measurement of lease liabilities
Below is a reconciliation between the operating
lease commitments reported as at 30 June
2019 and lease liabilities recognised under
AASB16 Leases on 1 July 2019.
•
Operating
disclosed as at 30 June 2019
lease commitments
Less: Discount based on the
weighted average
incremental
borrowing rate of 3%
Less: Low value and short-term
lease commitments
Lease liability recognised as at
1 July 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
2019
$000
3,140
(233)
(96)
2,811
871
1,940
2,811
Adjustments recognised in the consolidated
statement of financial position on 1 July 2019
The change in accounting policy affected the
following items in the consolidated statement
of financial position on 1 July 2019:
-
right-of-use assets – increase by
$2,810,721
lease liabilities – increase by $2,810,721
-
There was no impact on accumulated losses on
1 July 2019 as the Group has used the practical
expedients permitted by the standard. Refer to
above.
•
Right-of-use assets
Property
Lease liabilities
Current
Non-current
2020
$000
2,345
2,345
723
1,716
2,439
2019
$000
2,811
2,811
871
1,940
2,811
Additions to the right-of-use assets during the
financial year ended 5 July 2020 were
$520,000 and the total cash outflow for leases
was $966,000.
Amounts recognised in the consolidated
statement of financial performance
•
Depreciation charge of
right-of-use assets
Property
Interest expense (incl in
finance costs)
relating
Expense
to
short-term leases (incl
in other expenses)
Lessor accounting
2020
$000
2019
$000
986
986
75
454
-
-
-
-
The Group did not need to make any
adjustments to the accounting for assets held
as lessor under operating leases as a result of
the adoption of AASB 16.
Other amending Accounting Standards and
Interpretations
Several other amending Accounting Standards
and Interpretations apply for the first time for
the current reporting period commencing 1 July
2019.
These other amending Accounting
Standards and Interpretations did not result in
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
35
Notes to the Financial Statements
any adjustments to the amounts recognised or
disclosures in the financial report.
f. New
Accounting
and
Interpretations not yet adopted and
interpretations
Standard
Certain new accounting
standards and
interpretations have been published that are
not mandatory for 5 July 2020 reporting
periods and have not been early adopted by the
Group. The Group’s assessment is that there
would be no material impact from these new
standards and interpretations on the Group’s
results.
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
liabilities
liabilities)
assumed are recognised (subject to certain
limited exceptions).
contingent
(including
a
from
resulting
When measuring the consideration transferred
in the business combination, any asset or
liability
contingent
consideration arrangement is also included.
Subsequent to initial recognition, contingent
consideration classified as equity
is not
remeasured and its subsequent settlement is
Contingent
accounted for within equity.
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.
All transaction costs incurred in relation to the
business combination are
recognised as
expenses in the statement of profit or loss and
other comprehensive income when incurred.
The acquisition of a business may result in the
recognition of goodwill or a gain from a bargain
purchase.
h. Basis of consolidation
The Group financial statements consolidate
those of Ashley Services Group Limited and all
of its subsidiaries as of 5 July 2020. Ashley
Services Group Limited controls a subsidiary if
it is exposed, or has rights, to variable returns
from its involvement with the subsidiary and
has the ability to affect those returns through
its power over the subsidiary. All subsidiaries
have a reporting date of 5 July 2020.
All transactions and balances between Group
companies are eliminated on consolidation,
including unrealised gains or
losses on
companies.
transactions between Group
Where unrealised losses on intra-group asset
sales are reversed on consolidation, the
underlying asset is also tested for impairment
from a group perspective. Amounts reported in
the financial statements of subsidiaries have
been adjusted where necessary to ensure
consistency with
the accounting policies
adopted by the Group.
Profit or loss and other comprehensive income
of subsidiaries acquired or disposed of during
the year are recognised from the effective date
of acquisition, or up to the effective date of
disposal, as applicable.
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 for both labour hire and training
services
is recognised at an amount that
reflects the consideration to which the Group is
expected to be entitled
in exchange for
transferring services to a customer. For each
contract with a
the Group
undertakes the following:
customer,
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
36
Notes to the Financial Statements
i.
ii.
Identifies the contract with a customer
Identifies the performance obligations
in the contract
of
iii. Determines the transaction price which
considers
variable
estimates
consideration and time value of money
iv. Allocates the transaction price to the
separate performance obligations based
on the relative stand-alone selling price
of each distinct service to be delivered
Recognises revenue when, or as, each
performance obligation is satisfied in a
manner that depicts the transfer to the
customer of the services promised.
v.
All revenue is stated net of the amount of GST.
Labour hire
is recognised upon
Labour hire revenue
delivery of the service to the customers or in
the instance of placement fees at the time the
employee has been placed. Revenue from a
contract to provide labour hire services is
recognised over time as services are rendered
based predominantly on an hourly rate.
Training revenue
Revenue from a contract to provide training
services is recognised over time as the services
are
the percentage of
completion method that depicts the transfer to
the customer of the services rendered.
rendered using
Interest revenue
Interest revenue
is recognised using the
effective interest method, which for floating
rate financial assets is the rate inherent in the
instrument.
Dividend revenue
Dividend revenue is recognised when the right
to receive a dividend has been established,
usually on declaration of the dividend /
distribution.
Other income
Other income primarily includes State funding
employer rebates earned in relation to
specified categories of individuals.
Intangible assets
j.
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
acquisition of the business.
is recognised on
The Group adopts the full goodwill method.
The fair value of the interests in the business is
determined using valuation techniques which
make the maximum use of market information
where available. Under this method, goodwill
attributable to the interests of the business is
recognised in the financial statements.
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 or losses on
the disposal of equity include the carrying
amount of goodwill related to the entity sold.
in the ownership
in a
Changes
subsidiary are accounted
for as equity
transactions and do not affect the carrying
amounts of goodwill.
interest
Other intangibles
Intangibles acquired by the group are stated at
cost
less accumulated amortisation and
impairment losses. Amortisation is charged to
the profit or loss on a straight line basis over the
estimated useful life.
Estimated useful life of intangibles is as follows:
Customer relationships
Licenses
Intellectual property
-
Course material
7 years
5 years
5-7 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 CGU to which they are
attributed. Where impairment is recognised, it
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
37
Notes to the Financial Statements
is recorded in the profit or loss in the period the
impairment is identified.
probable that the reversal will occur in the
foreseeable future.
k.
Income tax
The income tax expense (income) for the year
tax expense
comprises
(income) and deferred tax expense (income).
income
current
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.
income
tax expense
Deferred
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.
is recognised from the
Except for business combinations, no deferred
initial
income tax
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.
Deferred tax assets relating to temporary
losses are
differences and unused
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.
tax
investments
Where temporary differences exist in relation
to
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
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 it is intended that net settlement or
simultaneous realisation and settlement of the
respective asset and liability will occur in future
in which significant amounts of
periods
deferred tax assets or liabilities are expected to
be recovered or settled.
Tax consolidation
legislation.
Ashley Services Group Limited and its wholly
owned Australian subsidiaries have formed an
income tax consolidated group under tax
consolidation
The CCL Group
companies being 80% owned are not part of
this income tax consolidated group. Each entity
in the group recognises its own current and
deferred tax assets and liabilities. Such taxes
are measured using the ‘standalone taxpayer’
approach to allocation. Current tax liabilities
(assets) and deferred tax assets arising from
unused tax
in the
subsidiaries are immediately transferred to
head entity. The group notified the Australian
Taxation Office that it has formed an income
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.
losses and tax credits
Differences between the amounts of net tax
assets and liabilities derecognised and the net
amounts recognised pursuant to the funding
arrangement are recognised as either a
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
38
Notes to the Financial Statements
contribution by, or distribution, to the head
entity.
consideration. Contract assets are treated as
financial assets for impairment purposes.
l.
Cash and cash equivalents
o.
Property, plant and equipment
Cash and cash equivalents include cash on
hand, deposits held at call with banks, other
short term highly
investments with
liquid
original maturities of three months or less, and
bank overdrafts. Bank overdrafts are shown
with short term borrowings in current liabilities
on the consolidated statement of financial
position.
m. Trade and other receivables
Trade and other receivables include amounts
due from customers for services performed in
the ordinary course of business. Receivables
expected to be collected within 12 months of
the end of the reporting period are classified as
current assets.
All other receivables are
classified as non-current assets.
initially
Trade and other receivables are
recognised at fair value and subsequently
measured at amortised cost using the effective
interest method,
for
impairment.
less any provision
The recoverability of trade receivables
is
reviewed on an ongoing basis. Amounts which
are determined not to be recoverable are
written off by reducing the carrying amount to
its recoverable amount, the difference
is
charged to the statement of profit or loss and
other comprehensive income in that period.
Expected credit losses, described in previous
years’ financial statements of the Group as an
allowance for impairment, are measured by the
Group by applying a simplified approach which
uses a lifetime expected loss allowance. To
measure the expected credit losses, trade
receivables have been grouped based on days
overdue.
Contract assets
n.
Contract assets are recognised when the Group
has transferred goods or services to the
customer but where the Group is yet to
to
establish
unconditional
right
an
Each class of property, plant and equipment is
carried at cost, less where applicable, any
accumulated depreciation and
impairment
losses.
Property, plant and equipment is stated at
historical cost less accumulated depreciation
and any accumulated impairment losses.
The depreciable amount of fixed assets 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.
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 equipment
Leasehold improvements
Depreciation
rate
20 - 33%
20 - 33%
10%
18.75 - 25%
33%
20 - 50%
In the case of
leasehold
improvements,
lives are determined by
expected useful
reference to comparable owned assets or over
the term of the lease, if shorter.
The carrying amount of property, 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 is greater than its
estimated recoverable amount.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
39
Notes to the Financial Statements
Gains or losses on disposals are determined by
comparing proceeds with carrying amount.
These gains or
recognised
immediately in profit or loss.
losses are
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.
liability,
In determining
is given to employee wage
consideration
the
increases and
employee may
vesting
not
requirements. Those cash flows are discounted
using market yields on HQ corporate bonds
with terms to maturity that match the expected
timing of cash flows.
the probability
satisfy
that
the
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.
Borrowings
s.
Loans and borrowings are initially recognised at
the fair value of the consideration received, net
of transaction costs. They are subsequently
measured at amortised cost using the effective
interest method.
Fees paid on the establishment of loan facilities
are recognised as transaction costs of the loan
to the extent that it is probable that some or all
of the facility will be drawn down.
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.
information
include considering
The assessment will
external sources of information and internal
sources of
including dividends
received from 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 the
asset’s carrying value over its recoverable
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
least
annually for goodwill and intangible assets with
indefinite lives.
is performed at
u. Comparative figures
When required by Accounting Standards,
comparative figures have been adjusted to
conform to changes in presentation for the
current financial year.
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
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
40
Notes to the Financial Statements
payable to, the ATO is included with other
receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The
GST components of cash flows arising from
investing or financing activities which are
recoverable from, or payable to, the ATO are
presented as operating cash flows included in
receipts from customers or payments to
suppliers.
w. Significant management
judgement
in
applying accounting policies
When preparing the financial statements,
management undertakes a number of
judgements, estimates and assumptions about
the recognition and measurement of assets,
liabilities, income and expenses.
Significant management judgement
The following are 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 for
purpose of impairment reviews
Determination of the Cash Generating Units
(“CGUs”) for purpose of impairment reviews is
judgement made by management.
a key
Management has undertaken a
formal
assessment of what constitutes the CGUs, by
identifying the smallest identifiable group of
assets that generates cash inflows that are
largely independent of the cash inflows from
other assets or group of assets, being Training
and Labour Hire.
Recognition of deferred tax assets
The extent to which deferred tax assets can be
recognised is based on an assessment of the
probability of the Group’s future taxable
income against which the deferred tax assets
can be utilised.
Estimation uncertainty
Information about estimates and assumptions
that have the most significant effect on
recognition and measurement of assets,
liabilities, income and expenses is provided
below. Actual results may be substantially
different.
Impairment
assessing
In
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 13. In
2020, the Group recognised no impairment
losses on goodwill and/or other intangible
assets (see Note 13).
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.
Allowance for expected credit losses
The allowance for expected credit
losses
assessment requires a degree of estimation and
judgement. It is based on the lifetime expected
credit loss, grouped based on days overdue,
and makes assumptions to allocate an overall
expected credit loss rate for each group. These
assumptions include recent sales experience
and historical collection rates.
Long service leave provisions
In determining the provision for employees’
long service leave, consideration is given to 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.
Long term incentive plan
long
the provision
term
for senior
In determining
incentive plan,
management’s
consideration is given to the probability the
required “earnings per share” performance
requirement being achieved to be remote, and
therefore a provision has not been recognised
in relation to this.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
41
Notes to the Financial Statements
x. Dividends
A liability is recognised for the amount of any
dividend
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.
declared,
being
y.
Earnings per share
Basic earnings per share
is calculated by
Basic earnings per share
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
the
financial year, adjusted for bonus elements in
ordinary shares issued during the year.
shares outstanding during
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.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
42
Notes to the Financial Statements
2. REVENUE AND OTHER INCOME
Operating activities:
Labour hire revenue
Training revenue
Other income:
Interest received
Sundry income
2020
$000
329,517
7,324
336,841
22
2,018
2,040
2019
$000
279,556
8,014
287,570
66
1,118
1,184
a. Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
2020
Revenue
Labour Hire
$000
Training
$000
Total
$000
From external customers
329,517
7,324
336,841
Timing of revenue recognition
Services transferred over time
Services transferred at a point in time
2019
Revenue
319,820
9,697
329,517
7,324
-
7,324
327,144
9,697
336,841
Labour Hire
$000
Training
$000
Total
$000
From external customers
279,556
8,014
287,570
Timing of revenue recognition
Services transferred over time
Services transferred at a point in time
268,294
11,262
279,556
8,014
-
8,014
276,308
11,262
287,570
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
43
Notes to the Financial Statements
3.
EXPENSES
Profit before income tax from continuing operations includes the following specific expenses:
Finance costs
Interest and finance charges paid/payable on borrowings
Interest and finance charges paid/payable on lease liabilities
Bank fees
Depreciation
Motor vehicles
Office equipment
Leasehold improvements
Property right-of-use assets
Amortisation
Customer contracts and relationships – amortisation
Course material
4. AUDITOR’S REMUNERATION
Auditor of the parent entity
Audit and review of financial reports under the Corporations Act 2001
- HLB Mann Judd Assurance (NSW) Pty Ltd
Total Remuneration
Other entities
In addition to the above, the related entities detailed in Note 26 have also
paid fees to the auditor(s) as follows:
Audit of financial reports
- HLB Mann Judd Assurance (NSW) Pty Ltd
2020
$000
544
75
94
713
57
503
144
986
1,690
129
249
378
2019
$000
633
-
14
647
2
511
247
-
760
129
118
247
2020
$
151,000
151,000
2019
$
150,000
150,000
55,500
55,500
26,000
26,000
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
44
Notes to the Financial Statements
INCOME TAX EXPENSE
5.
a. Components of tax expense for continuing operations
Current tax expense
Deferred tax – origination and reversal of temporary differences
Under / (over) provision of tax in prior year
– Change in tax rate – CCL Group
Income tax expense
2020
$000
3,221
(1,291)
84
(38)
1,976
b. Reconciliation of prima facie tax on profit from ordinary activities to income tax expense
Net profit before tax from continuing operations
Prima facie tax expense on net profit from ordinary activities before income
tax at 30% (FY19: 30%)
Add / (less) Tax effect of:
– Entertainment
– Other
– Change in tax rate – CCL Group
– Intangible assets
– Under / (over) provision of tax in prior year
Income tax expense
2020
$000
7,045
2,113
22
1
(38)
(206)
84
1,976
2019
$000
1,295
978
(162)
-
2,111
2019
$000
7,535
2,261
3
9
-
-
(162)
2,111
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate
entities on taxable profits under Australian tax law. There has been no change in the corporate tax rate when
compared with the previous reporting period.
6. KEY MANAGEMENT PERSONNEL DISCLOSURES
a.
Key management personnel compensation for the year was as follows
Short-term employee benefits
Post-employment benefits
Total
2020
$
1,526,863
82,529
1,609,392
2019
$
1,631,379
81,196
1,712,575
Individual director and key management personnel disclosures
b.
Detailed remuneration disclosures are included in the Directors’ Report. The relevant information can be found
in the Remuneration section of the Directors’ Report on page 15 to 17, Tables 8 to 11.
7.
CASH AND CASH EQUIVALENTS
Cash on hand
Cash at bank
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
2020
$000
4
8,059
8,063
2019
$000
4
6,780
6,784
45
Notes to the Financial Statements
8.
TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Allowance for expected credit losses
Other receivables
2020
$000
27,742
(406)
2,082
29,418
2019
$000
26,086
(10)
2,448
28,524
a. Ageing 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))
2020
$000
23,586
1,407
582
1,761
406
27,742
2019
$000
19,147
4,582
1,001
1,346
10
26,086
b.
The movement in the allowance for expected credit losses in respect of trade receivables is detailed below
Balance at beginning of year
CCL Group
Increase/(decrease) in allowance recognised in profit or loss
Amounts written-off
Balance at end of year
9.
CONTRACT ASSETS
Current
Contract assets
10. OTHER ASSETS
Current
Prepayments
Bank guarantee1
2020
$000
10
361
52
(17)
406
2020
$000
154
154
2020
$000
1,240
505
1,745
2019
$000
555
-
(92)
(453)
10
2019
$000
571
571
2019
$000
939
505
1,444
Note:
1. As at balance date the Group had bank guarantees of $315,610 relating to property leases. The $504,635 represents a restricted bank
account to cover the Group’s total available guarantee facility of $504,635.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
46
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
Total property, plant and equipment
a. Movement in carrying amounts of property, plant and equipment
2020
$000
576
(387)
189
4,649
(4,006)
643
1,782
(1,712)
70
158
158
1,060
2020
Balance at 1 July 2019
CCL Group at 1 July 2019
Additions/(transfers)
Disposals
Depreciation expense – continuing operations
Balance at 5 July 2020
2019
Balance at 2 July 2018
Additions/(transfers)
Disposals
Depreciation expense – continuing operations
Balance at 30 June 2019
Motor
vehicles
$000
32
Office
equipment
$000
941
Leasehold
improvements
$000
150
Capital work
in progress
$000
17
228
85
(99)
(57)
189
37
199
(31)
(503)
643
5
60
(1)
(144)
70
-
158
(17)
-
158
Motor
vehicles
$000
-
Office
equipment
$000
1,032
Leasehold
improvements
$000
240
Capital work
in progress
$000
75
34
-
(2)
32
466
(46)
(511)
941
157
-
(247)
150
-
(58)
-
17
2019
$000
148
(116)
32
4,725
(3,784)
941
1,968
(1,818)
150
17
17
1,140
Total
$000
1,140
270
502
(148)
(704)
1,060
Total
$000
1,347
657
(104)
(760)
1,140
The Group’s property, plant and equipment are encumbered by a fixed and floating charge as security for the
group’s working capital facility (Refer Note 17).
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
47
Notes to the Financial Statements
12.
INTANGIBLE ASSETS
Goodwill
Cost
Acquisition CCL Group
Impairment (note 13)
Net carrying value
Customer relationships/Licences
Cost
Impairment (note 13)
Accumulated amortisation
Net carrying value
Brand names
Cost
Impairment (note 13)
Net carrying value
Intellectual property
Cost
Impairment (note 13)
Accumulated amortisation
Net carrying value
Total intangible assets
2020
$000
65,256
6,302
(62,474)
9,084
2,062
(918)
(1,036)
108
4,640
(4,640)
-
8,330
(3,896)
(4,304)
130
9,322
a. Intangible assets – detailed reconciliation
2020
Balance at 1 July 2019
Acquisition CCL Group
Additions
Amortisation – continuing operations
Balance at 5 July 2020
2019
Balance at 2 July 2018
Capitalised course materials
Amortisation – continuing operations
Balance at 30 June 2019
Customer
Relationships
and Licences
$000
237
-
-
(129)
108
Customer
Relationships
and Licences
$000
366
-
(129)
237
Goodwill
$000
2,782
6,302
-
-
9,084
Goodwill
$000
2,782
-
-
2,782
Brand
Names
$000
-
Intellectual
Property
$000
181
-
-
-
-
-
198
(249)
130
Brand
Names
$000
-
Intellectual
Property
$000
-
-
-
-
299
(118)
181
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
2019
$000
65,256
-
(62,474)
2,782
2,062
(918)
(907)
237
4,640
(4,640)
-
8,132
(3,896)
(4,055)
181
3,200
Total
$000
3,200
6,302
198
(378)
9,322
Total
$000
3,148
299
(247)
3,200
48
Notes to the Financial Statements
13.
IMPAIRMENT
a.
Impairment
The consolidated entity tests whether goodwill and other intangible assets have suffered any impairment on an
annual basis, or more frequently, if required.
All remaining goodwill and other intangibles are confined to the Labour Hire division, with all earlier amounts
previously attributed to the Training division being fully impaired across both the FY16 and FY17 financial years.
There were no indicators of impairment in relation to the Labour Hire division at 5 July 2020.
Labour Hire division
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 forecasts approved by management for FY21 and
a pre-tax discount rate of 18.7 per cent. Cash flows beyond that period have been held constant, reflecting the
competitive nature of the industry.
Management’s key assumption is that revenues for the Labour Hire division will increase by 9% in FY21. EBITDA
margin is forecast at 3.8% (before corporate overhead allocations).
The recoverable amounts of the CGUs were determined based on value-in-use calculations, covering detailed
forecasts for five 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.
Long term growth rates after the forecast period and discount rates used were as follows:
Labour Hire
Terminal Growth rates
5 July 2020
0%
30 June 2019
0%
Pre-tax discount rates
5 July 2020
18.7%
30 June 2019
18.7%
The growth rate reflects management’s view of longer-term average growth rates for the respective sectors. The
discount rate reflects appropriate adjustments relating to market risk and specific risk factors of each unit.
b.
Impairment charges
As a result of the analysis, there is no need for any impairment charges in the FY20 results. The same analysis in
the prior year resulted in no impairment charge being recorded in the FY19 results.
Movements in the net carrying amount of goodwill and other intangibles are presented in note 12a.
The amount of goodwill, brand names and other intangibles remaining by CGU and subject to future
impairment testing is as follows:
2020
Training
Labour Hire
Total
Goodwill
$’000
-
9,084
9,084
Customer
Relationships/
Licences
$’000
-
108
108
Brand Names
$’000
Intellectual
Property
$’000
-
-
-
130
-
130
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
Total
$’000
130
9,192
9,322
49
Notes to the Financial Statements
2019
Training
Labour Hire
Total
c. Sensitivity analysis
Goodwill
$’000
-
2,782
2,782
Customer
Relationships/
Licences
$’000
-
237
237
Brand Names
$’000
Intellectual
Property
$’000
-
-
-
181
-
181
Total
$’000
181
3,019
3,200
Management has also run various sensitivity scenarios, primarily reviewing sensitivity of outcomes to FY21
EBITDA forecasts, long term growth rates and discount rates. In respect of reasonably possible changes in the
key assumptions, major sensitivities are summarised as follows:
Change in VIU
Sustainable EBITDA margin; +/- $0.5 million each CGU
1% increase or decrease in long term growth rate
1% increase or decrease in pre-tax discount rate
Labour hire CGU
$’M
+/-3.0
+/-1.0
+/-2.0
14. 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)
2020
$000
-
2019
$000
-
4,694
3,602
1,634
764
307
964
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
50
Notes to the Financial Statements
a. Deferred tax assets and liabilities
Deferred taxes arising from temporary differences and unused tax losses can be summarised as follows:
Balance at
Beginning
of the Year
$000
Recognised in
Other
Comprehensive
Income
$000
Recognised
in Business
Combination
$000
Recognised
in Profit &
Loss
$000
Balance
at End of
the Year
$000
(720)
(171)
(71)
319
-
2,037
1,244
-
2,638
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
210
125
39
(23)
28
(510)
(46)
(32)
296
28
1,161
(301)
3,198
943
52
52
1,291
3,929
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
2020
Current assets
Trade, other receivables and other assets
Contract assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets1
Current liabilities
Trade and other payables
Provisions
2019 Tax loss carried forward
Deferred tax asset
Total
Note:
1. This amount is net of lease liabilities.
2019
Current assets
Trade, other receivables and other assets
(1,505)
Contract assets
Non-current assets
Intangible assets
Property, plant and equipment
Current liabilities
Trade and other payables
Provisions
2018 Tax loss carried forward
Deferred tax asset
Total
-
26
315
2,842
1,398
540
3,616
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
785
(171)
(97)
4
(805)
(154)
(540)
(978)
(720)
(171)
(71)
319
2,037
1,244
-
2,638
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
51
Notes to the Financial Statements
15. TRADE AND OTHER PAYABLES
Current
Trade payables
Accrued expenses
GST payable
Sundry creditors
2020
$000
1,442
5,354
4,281
7,440
18,517
2019
$000
833
4,359
2,641
6,067
13,900
Average credit period on purchases of products and services is 30 days. No interest is charged on trade payables.
The Group has financial risk management policies in place to ensure payables are paid within credit time frame.
16. OTHER LIABILITIES
Current
CCL Contingent Consideration - Retention
CCL Contingent Consideration – Earn Out Year 1
Other
Other liabilities (Current)
Non-current
CCL Contingent Consideration – Earn Out Year 2
Redemption Liability
Other liabilities (Non-current)
Redemption Liability
2020
$000
600
789
23
1,412
789
1,973
2,762
2019
$000
-
-
-
-
-
-
-
The Put Option represents a contractual obligation to purchase a non-controlling interest, which gives rise to a
financial liability. This liability referred to as ‘redemption liability’ has been measured at the present value of the
redemption amount or the put option consideration amount in accordance with the underlying Share Sale and
Purchase Agreement.
The Put Option can be exercised by any of the Remaining Shareholders (acting independently of the others):
at any time upon the occurrence of a Control Event in respect of Ashley Services Group Limited;
if the Extended EBAs in respect of both CTS and CCL are entered into on or before 20 June 2022 – at any
time after 20 December 2022;
if either or both of the Extended EBAs in respect of CTS and CCL is entered into after 20 June 2022 – six
months after they have both been entered into;
at any time after 20 December 2025, regardless of whether the Extended EBAs in respect of both CTS and
CCL have been entered into.
The Put Option expires 20 years after Completion but the Purchaser has the right to reduce this to 10 years.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
52
Notes to the Financial Statements
17. BORROWINGS
2020
Invoice Financing
Bank Bill Business Loan
Balance at 5 July 2020
2019
Shrimpton Holdings Facility
Balance at 30 June 2019
Working capital facility
Available facility
$000
13,000
6,125
19,125
Available facility
$000
5,000
5,000
Facility used
$000
-
Remaining facility
$000
13,000
-
-
6,125
19,125
Facility used
$000
-
Remaining facility
$000
5,000
-
5,000
During the financial year ended 5 July 2020, Ashley Services Group Limited entered into a new banking
partnership facility with the Westpac Banking Corporation which included all transactional banking requirements
as well as a $20 million financing facility, comprised of a $13 million Invoice Financing facility and a $7 million
Bank Bill Business Loan (Reduces progressively over a term of 3 years).
The Westpac facility is subject to a Security which includes, but is not limited to the following:
1st ranking General Security Agreement over the assets and undertakings of the Borrower and its
Guarantors;
Contractual Subordination of Shrimpton Holdings Pty Ltd facility of $5 million; and
Flawed Asset Arrangement – Deposit of Action Workforce Pty Ltd and Concept Engineering (AUST) Pty Ltd
for Invoice Finance Facility collections.
As at 5 July 2020, both the current $6.125 million Bank Bill Business Loan and the $13 million Invoice Financing
facility and the $5 million Shrimpton Holdings Facility were undrawn (30 June 2019, nil).
The $5 million working capital facility through Shrimpton Holdings Pty Limited, a company associated with Ross
Shrimpton, Managing Director, major shareholder of the Group, was re-evaluated by the Board in line with its
expiry date. The facility was determined to be in excess of the Group’s funding requirements following the
establishment of the new Westpac facilities. Accordingly, this facility was not been renewed and expired on 31
January 2020.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
53
Notes to the Financial Statements
18. PROVISIONS
Current
Employee benefits (a)
Provision for discontinued operation (b)
Total
Non-current
Employee benefits (a)
Provision for discontinued operation (b)
Total
a. Reconciliation of employee provisions
Opening balance
CCL Group at 1 July 2019
Less: leave taken during the year
Add: leave provided for during the year
Closing balance
2020
$000
2,404
49
2,453
365
317
682
2020
$000
2,484
245
(1,615)
1,655
2,769
2019
$000
1,993
302
2,295
491
684
1,175
2019
$000
2,891
-
(1,657)
1,250
2,484
b. Provision for discontinued operation
During the second half of financial year ended 30 June 2017, the Board approved an orderly exit from the
international and domestic hospitality student business originally acquired through the SILK acquisition in April
2015. The Group has fulfilled its obligations for the remaining students and the Registered Training Organisation
(“RTO”) has been deregistered through the Australian Skills Quality Authority (“ASQA”).
The $0.37 million provision at 5 July 2020 (FY19: $0.99 million) represents the discounted cost of future surplus
lease obligations.
19. SHARE CAPITAL
The Company 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:
143,975,904 (FY19: 143,975,904) fully paid ordinary shares
Share issue costs
Share capital
a. Ordinary shares
2020
$000
154,234
(5,419)
148,815
2019
$000
154,234
(5,419)
148,815
The reduction in Share Capital from 150,000,000 shares ($149.9m) at 30 Jun 16 to 143,975,904 shares ($148.8m)
net of share issue costs at 5 July 2020 was the result of the cancellation of 6,024,096 shares issued by way of
consideration to fund the purchase of Integracom as approved by shareholders at the AGM of 9 November 2016.
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.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
54
Notes to the Financial Statements
20. COMMON CONTROL RESERVE
The common control reserve has arisen following the adoption of the pooling of interests method used to
account for the acquisition of the following entities since 1 July 2014:
•
•
•
•
•
•
ADV Services Pty Limited;
Ashley Institute Holdings Pty Limited;
TBRC Holdings Pty Limited;
Tracmin Pty Limited; and
Australian Institute of Vocational Development Pty Limited; and
CCL Group (Construction Contract Labour (VIC) Pty Ltd, Complete Traffic Services (VIC) Pty Ltd and VIC
Traffic and Labour Solutions Pty Ltd)
21. 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) from continuing operations
Diluted earnings per share (cents) from continuing operations
Basic earnings per share (cents) from discontinued operations
Diluted earnings per share (cents) from discontinued operations
Basic earnings per share (cents) Total
Diluted earnings per share (cents) Total
2020
$000
4,667
2019
$000
5,424
143,975,904
143,975,904
143,975,904
143,975,904
3.24
3.24
-
-
3.24
3.24
3.77
3.77
-
-
3.77
3.77
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
55
Notes to the Financial Statements
22. SEGMENT INFORMATION
The Group’s management identifies two operating segments, Labour Hire and Training, representing the main
products and services provided by the Group. During the financial year ended 5 July 2020, there have been no
changes from prior periods in the measurement methods used to determine operating segments and reported
segment profit or loss. The revenues and profit generated by each of the Group’s operating segments are
summarised as follows:
2020
Revenue
From external customers
Segment revenue
Other income
Employment costs
Depreciation and amortisation expense
Finance costs
Other expenses
Segment Profit
Unallocated items
Profit before income tax
Income tax expense
Profit after income tax
Other comprehensive income
Total comprehensive income for the year from continuing
operations
2019
Revenue
From external customers
Segment revenue
Other income
Employment costs
Depreciation and amortisation expense
Finance costs
Other expenses
Segment Profit
Unallocated items
Profit before income tax
Income tax expense
Profit after income tax
Other comprehensive income
Total comprehensive income for the year from continuing
operations
Labour Hire
$000
Training
$000
Total
$000
329,517
329,517
1,510
(313,646)
(803)
(170)
(4,851)
11,557
7,324
7,324
502
(5,933)
(643)
(9)
(1,071)
170
336,841
336,841
2,012
(319,579)
(1,446)
(179)
(5,922)
11,727
(4,682)
7,045
(1,976)
5,069
-
5,069
Labour Hire
$000
Training
$000
Total
$000
279,556
279,556
995
(266,157)
(460)
(134)
(2,926)
10,874
8,014
8,014
123
(5,778)
(222)
(3)
(1,314)
820
287,570
287,570
1,118
(271,935)
(682)
(137)
(4,240)
11,694
(4,159)
7,535
(2,111)
5,424
-
5,424
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.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
56
Notes to the Financial Statements
a. Information about major customers
Included in revenues from external customers are revenues of $94.5 million (2019: $90.5 million) which arose
from sales to 2 (2019: 2) of the Group’s customers whose individual revenue exceeds 10% of total revenue in the
Labour Hire segment. Sales to these 2 customers were $60.2 million and $34.3 million respectively (2019: $59.7
million and $30.8 million respectively).
There are no customers whose individual revenue exceeded 10% of total revenue in the Training segment in
either financial year.
23. CASH FLOW INFORMATION
Reconciliation of cash flow from operations to profit after income tax
Profit for the year
Cash flows excluded from profit attributable to operating
activities
Adjustments for non-cash items:
- Depreciation and amortisation expense
- Bad and doubtful debts
- Profit on disposal of fixed assets
- Lease liability non-cash expense
- Changes in assets and liabilities
- Decrease/(increase) in trade and other receivables
- Decrease/(increase) in contract assets
- Decrease/(increase) in other assets
- Decrease/(increase) in deferred tax assets
- (Decrease)/increase in trade and other payables
- (Decrease)/increase in dividends payable
- (Decrease)/increase in provisions
- (Decrease)/increase in other liabilities
- (Decrease)/increase in current tax liabilities
- (Decrease)/increase in deferred tax liabilities
Net cash from operating activities
2020
$000
5,069
2,068
52
11
75
(894)
417
(393)
(1,092)
3,447
400
(335)
4,173
1,327
(200)
14,125
2019
$000
5,424
1,007
(92)
16
-
1,200
(571)
(517)
1,796
(1,813)
-
(1,187)
-
307
(818)
4,752
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
57
Notes to the Financial Statements
24. BUSINESS COMBINATION
During the year ended 5 July 2020, Ashley Services Group Limited acquired a major shareholding in the CCL
Group. The acquisition was completed on 20 December 2019 with an effective date for the transaction of 1 July
2019. The estimated acquisition price for the 80% purchase of the CCL Group was $7.89 million but will be
adjusted for subsequent earn-outs for FY20 and FY21 (currently estimated at FY20 EBITDA levels). The initial
payment comprises 80% of the total purchase price based on the audited FY19 results (being for 80% (of the
80%)), with subsequent earn-outs based on FY20 (10%) and FY21 (10%) audited results.
The CCL Group is one of the primary suppliers of contract labour in Victoria with a focus on the infrastructure,
building and civil construction sectors. The CCL Group is also a key supplier of traffic management services for a
range of construction based organisations.
The CCL Group is comprised of the following companies:
Construction Contract Labour (VIC) Pty Ltd
Complete Traffic Services (VIC) Pty Ltd
VIC Traffic and Labour Solutions Pty Ltd (formerly CCL Filcon Pty Ltd– change of name date 22 May 2020)
In addition, the Share Sale and Purchase Agreement provides for both Call and Put Options relating to the
remaining 20% shareholding which was retained by both the founder and key management. As at the effective
date of the transaction Ashley Services Group Limited did not have a present ownership interest in the remaining
20% shareholding.
The Call Option can be exercised by the Purchaser at any time within 20 years after 20 December 2019 but the
Purchaser has the right to reduce this period to 10 years.
The Put Option can be exercised by any of the Remaining Shareholders (acting independently of the others):
at any time upon the occurrence of a Control Event in respect of Ashley Services Group Limited;
if the Extended EBAs in respect of both CTS and CCL are entered into on or before 20 June 2022 – at any
time after 20 December 2022;
if either or both of the Extended EBAs in respect of CTS and CCL is entered into after 20 June 2022 – six
months after they have both been entered into;
at any time after 20 December 2025, regardless of whether the Extended EBAs in respect of both CTS and
CCL have been entered into.
The Put Option expires 20 years after Completion but the Purchaser has the right to reduce this period to 10
years.
The business combination has been accounted for on the basis that the underlying shares subject to the Put
Option have not been acquired. The Put Option has been recognised as a financial liability per Note 16.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
58
Note
16
Notes to the Financial Statements
Purchase consideration
Cash consideration
Contingent consideration
Total consideration
Assets and liabilities acquired:
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Deferred tax assets
Trade and other payables
Dividends payable
Current tax payable
Non-current liabilities
Fair value of assets acquired
Less: Assets and liabilities attributable to non-controlling
interest
Non-controlling interest at 20%
Fair value of assets acquired attributed to controlling
interest of parent entity
Goodwill on acquisition
Cashflows on acquisition
Cash consideration
Cash acquired
Total cashflow outflows on acquisition to 5 July 2020
Note:
1 July 20191
$000
5,712
2,178
7,890
900
9,081
270
405
(5,050)
(2,620)
(614)
(387)
1,9852
(397)3
1,588
6,302
5,712
(900)
4,812
1. Effective date of CCL Group acquisition.
2. As at the date of this report the provisional accounting for the business combination had been completed. The fair value of assets
acquired and goodwill on acquisition has not changed from what has been previously reported.
As at balance date 5 July 2020 the non-controlling interest has been derecognised as if it was acquired at that date, allowing for recognition
of the redemption liability as detailed in Note 16.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
59
Notes to the Financial Statements
25. FAIR VALUE MEASUREMENT
Fair value hierarchy
The following tables detail the Group’s assets and liabilities, measured or disclosed at fair value, using a three-
level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access
at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
Consolidated – 5 July 2020
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
Assets
Total assets
Liabilities
CCL Contingent Consideration –
Retention
CCL Contingent Consideration – Earn
Out Year 1
CCL Contingent Consideration – Earn
Out Year 2
Redemption liability
Total liabilities
Consolidated - 30 Jun 2019
Level 1
$000
Assets
Total assets
Liabilities
Total liabilities
-
-
-
-
-
-
-
-
-
-
-
600
-
600
-
-
-
789
789
789
789
1,973
1,973
600
3,551
4,151
Level 2
$000
Level 3
$000
Total
$000
-
-
-
-
-
-
There were no transfers between levels during the year.
The Fair values of the Group’s remaining assets and liabilities are approximately equal to their carrying values.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
60
Notes to the Financial Statements
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the
current market interest rate that is available for similar financial liabilities.
Valuation techniques for fair value measurements categorised within level 2 and level 3
The contingent consideration – retention has arisen as a result of the business combination detailed in Note 24.
The liability is contingent on the CCL Group continuing to operate specific enterprise bargaining terms and
conditions over a three-year period from completion date of the acquisition. In accordance with the CCL Group
Share Sale and Purchase Agreement, the agreed retention amount is $600,000.
The contingent consideration – earn out year 1 and year 2 have arisen as a result of the business combination
detailed in Note 24. The liabilities will be adjusted for subsequent earn-outs for FY20 and FY21 and have
currently been valued using estimated FY19 EBITDA levels.
The redemption liability has arisen as a result of the business combination detailed in Note 24. The liability has
been valued at the present value of the redemption amount or the put option consideration amount in
accordance with the underlying CCL Group Share Sale and Purchase Agreement.
Level 3 assets and liabilities
Movements in level 3 assets and liabilities during the current year are set out below:
CCL
Contingent
Consideration
– Earn Out
Year 1
CCL
Contingent
Consideration
– Earn Out
Year 2
Redemption
Liability
Consolidated
$000
$000
$000
Balance at 1 July 2019
Gains / (losses) recognised in
other comprehensive
income
Additions
Settlements during the year
Balance at 5 July 2020
-
-
789
-
789
Total
$000
-
-
-
-
-
-
789
1,973
3,551
-
-
-
789
1,973
3,551
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
61
Notes to the Financial Statements
The level 3 assets and liabilities unobservable inputs and sensitivity are as follows:
Description
Unobservable inputs
Range
(weighted
average)
Sensitivity
CCL Contingent
Consideration – Earn Out 1
CCL Contingent
Consideration – Earn Out 2
Redemption liability
EBITDA FY20
2,887,786 10% change would increase/decrease fair
value by $88,914.
EBITDA FY21
2,887,786 10% change would increase/decrease fair
value by $88,914.
2,887,786 10% change would increase/decrease fair
value by $175,030.
EBITDA FY during which Put
Option exercised & EBITDA
FY immediately following FY
during which Put Option
exercised
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
62
Notes to the Financial Statements
26. CONTROLLED ENTITIES
Set out below are the controlled entities of Ashley Services Group Limited:
Action Arndell Park Pty Limited
Action Botany Pty Limited
Action James (Qld) Pty Limited
Action James NSW Pty Limited
Action James Parramatta Pty Limited
Action James WA Pty Limited (formerly Action Workforce AC
Pty Limited)
Action James WCF Pty Limited
Action James Western Suburbs Pty Limited
Action Job Support Pty Limited
Action Merchandising Pty Ltd
Action MMX Pty Limited
Action Workforce ACT Pty Limited
Action Workforce CAT Pty Limited
Action Workforce COL1 Pty Limited
Action Workforce COS1 Pty Limited
Action Workforce COT Pty Limited
Action Workforce IMT Pty Limited
Action Workforce NSW Pty Limited
Action Workforce OS Pty Limited
Action Workforce OST Pty Limited
Action Workforce Pty Limited
Action Workforce T1 Pty Limited
Action Workforce T2 Pty Limited
Action Workforce VER1 Pty Limited
Action Workforce Victoria Pty Limited
Action Workforce VM Pty Limited
Action Workforce VPS Pty Limited
ADV Services Pty Limited
ADV1 Pty Limited
ADV2 Pty Limited
ADV3 Pty Limited
ADV6 Pty Limited
Advance Exchange Pty Limited
Advance GW Pty Limited
Advance MIX Pty Limited
Advance Recruitments Pty Limited
AIVD Holdings Pty Limited
ASG Electrical Contracting Pty Ltd (formerly ADV7 Pty
Limited)
Ash Pty Limited
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
Country of
incorporation
Australia
Australia
2020 percentage
owned
%
100
100
2019 percentage
owned
%
100
100
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
63
Notes to the Financial Statements
Ashley Institute Holdings Pty Limited
Australian Institute of Vocational Development Pty Limited
AWF Training 3 Pty Limited
AWF Training 4 Pty Limited
Cantillon Holdings Pty Limited
CCL Group Holdings Pty Ltd (formerly Advance GX Pty Ltd)
College of Innovation and Industry Skills Pty Limited
Complete Traffic Services (VIC) Pty Ltd
Concept AWF Pty Limited
Concept Electrical Resources Pty Ltd (formerly Action James
Mascot Pty Limited)
Concept Employment (Aust) Pty Limited
Concept Engineering (Aust) Pty Limited
Concept Engineering Contracting Holdings Pty Ltd (ASG
Integracom (Aust) Holdings Pty Ltd
Concept Engineering Contracting Pty Ltd (formerly ASG
Integracom (Aust) Pty Ltd)
Concept Project Resources Pty Limited
Concept Recruitment Specialists Pty Ltd
Construction Contract Labour (VIC) Pty Ltd
CP Action Workforce Pty Limited
Executive Careers Australia Pty Limited
Global Education and Training Group Pty Limited
Integracom Holdings Pty Limited
Integracom Unit Trust1
James Personnel Pty Limited
James Warehousing Pty Limited
Logistics People Pty Limited
Qualitas Education Pty Limited
Silk Group Holdings Pty Limited
TBRC Holdings Pty Limited
The Blackadder Recruitment Company Pty Limited
The Instruction Company Holdings Pty Ltd (formerly AWF
Training 2 Pty Ltd)
Track Safety Australia Pty Ltd (formerly AWF Training 1 Pty
Ltd)
Tracmin Holdings Pty Limited
Tracmin Pty Limited
VIC Traffic and Labour Solutions Pty Ltd
Vocational Training Australia Pty Limited
Country of
incorporation
Australia
2020 percentage
owned
%
100
2019 percentage
owned
%
100
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
80
100
100
100
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
During the financial year ended 5 July 2020 the Group undertook a Corporate structure simplification review and rationalised its structure
by deregistering a number of companies which were considered additional to the Group’s requirements.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
64
Notes to the Financial Statements
27. 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
Common control reserve
Accumulated losses
Total equity
Note:
1. Accumulated losses includes dividends paid of $3.9 million.
b.
Statement of profit or loss and other comprehensive income
Profit/(Loss) for the year
Other comprehensive income
Total comprehensive income/(loss)
2020
$000
92
19,605
19,697
(1,389)
(10,248)
(11,637)
8,060
148,815
(59,261)
(81,494)
8,060
2019
$000
92
17,028
17,120
-
(3,599)
(3,599)
13,521
148,815
(57,687)
(77,607)
13,521
2020
$000
-
-
-
2019
$000
-
-
-
c. Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The Parent entity and some of its subsidiaries are party to a deed of cross guarantee under which each company
guarantees the debts of the others. No deficiencies of assets exist in any of these subsidiaries.
d.
Contingent liabilities of the Parent Entity
The Parent entity had no other known material contingent liabilities as at 5 July 2020.
Commitments for expenditure for the Parent entity
e.
The Parent entity had Nil committed expenditure as at 5 July 2020 (30 June 2019: Nil).
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
65
Notes to the Financial Statements
28. DEED OF CROSS GUARANTEE
The following entities have entered into a deed of cross guarantee dated 22 February 2018 under which each
company guarantees the debts of the others:
Ashley Services Group Limited
Action Workforce Pty Limited
ADV6 Pty Limited
Ashley Institute Holdings Pty Ltd
Concept Engineering (Aust) Pty Ltd
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare
financial statements and directors' report under Corporations Instrument 2016/785 issued by the Australian
Securities and Investments Commission.
The above companies represent a 'Closed Group' for the purposes of the Corporations Instrument, and as there
are no other parties to the deed of cross guarantee that are controlled by Ashley Services Group Limited, they
also represent the 'Extended Closed Group'.
a.
Statement of profit or loss and other comprehensive income
Extended Closed Group
Revenue
Other Income
Employment costs
Depreciation and amortisation expense
Finance costs
Other expenses
Profit before income tax
Income tax expense
Profit after income tax
Other comprehensive Income
Total comprehensive income for the year
2020
$000
261,371
913
(250,347)
(509)
(151)
(2,903)
8,374
(2,512)
5,862
-
5,862
2019
$000
268,294
995
(255,750)
(413)
(134)
(2,737)
10,255
(3,076)
7,179
-
7,179
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
66
Notes to the Financial Statements
b.
Statement of Financial position
Extended Closed Group
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Deferred tax assets
Right-of-use assets
Other
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Dividends payable
Current tax payable
Lease liabilities
Other liabilities
Provisions
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Lease liabilities
Other liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Common control reserve
Retained earnings
Total Equity
2020
$000
2019
$000
2,302
19,952
677
22,931
100,820
459
3,485
783
19,605
125,152
148,083
28,149
7,487
11,603
241
1,389
1,634
50,503
(114)
566
2,761
208
3,421
53,924
94,159
148,815
(59,261)
4,605
94,159
2,297
27,681
883
30,861
83,616
550
3,485
-
17,028
104,679
135,540
27,151
3,599
9,575
-
-
1,480
41,805
(114)
-
-
372
258
42,063
93,477
148,815
(57,687)
2,349
93,477
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
67
Notes to the Financial Statements
c.
Equity – retained profits
Extended Closed Group
Retained profits at the beginning of the financial year
Adjustment to opening retained profits
Profit after income tax expense
Dividends paid
Retained profits at the end of the financial year
2020
$000
2,349
281
5,862
(3,887)
4,605
2019
$000
(1,038)
(193)
7,179
(3,599)
2,349
d.
Contingent liabilities of the Extended Closed Group
The Extended Closed Group had no other known material contingent liabilities as at 5 July 2020.
e.
Commitments for expenditure for the Extended Closed Group
The Extended Closed Group had Nil committed expenditure as at 5 July 2020 (30 June 2019: Nil).
f.
Going Concern and Financial Support
The financial statements of the Extended Closed Group have been prepared on a going concern basis. The
directors have provided a letter of financial support confirming that each of the below listed companies within
the Ashley Services group Limited and controlled entities agrees to provide whatever financial support is
necessary to ensure each entity will be able to continue as a going concern and pays its debts as and when they
fall due and payable.
The financial support covers the following entities:
• Ashley Services Group Limited;
• Action Workforce Pty Limited;
• Concept Engineering (Aust.) Pty Ltd;
• ASH Pty Ltd;
• Vocational Training Australia Pty Ltd;
• Australian Institute of Vocational Development Pty Ltd; and
•
Tracmin Pty Ltd.
The financial support includes but is not limited to the actions as noted below:
• not calling on related party loans;
•
•
agreeing to any cost re-allocations or management fee re-charges; and
agreeing to debt forgiveness with any related entity.
The undertaking remains current until the date on which the directors approve the financial statements of the
Group for the financial year ending 5 July 2020. The directors are satisfied that collectively the Group has the
financial ability to provide this support.
g.
Security Offered
The Westpac facility (see Note 17) is subject to a Security which includes, but is not limited to the following:
1st ranking General Security Agreement over the assets and undertakings of the Borrower and its
Guarantors;
Contractual Subordination of Shrimpton Holdings Pty Ltd facility of $5 million; and
Flawed Asset Arrangement – Deposit of Action Workforce Pty Ltd and Concept Engineering (AUST) Pty Ltd
for Invoice Finance Facility collections.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
68
Notes to the Financial Statements
29. RELATED PARTY TRANSACTIONS
a.
Parent company
There is no ultimate parent company for Ashley Services Group Limited.
Transactions with related entities
b.
Transactions between related parties are on normal commercial terms and conditions no more favourable than
those available to other parties unless otherwise stated.
Transactions with related parties are as follows:
20201
$
20191
$
130,967
116,454
-
-
46,267
46,176
175,169
37,484
Rent and outgoings paid or payable to Shrimpton 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 Wales1
Loan balances from entities associated with Mr Ross Shrimpton.
Interest and line fee paid to Shrimpton Holdings Pty Limited, an entity which is controlled by
Mr Ross Shrimpton
Fees payable to Trood Pratt & Co (of which Ian Pratt is a Partner) for taxation services
Note:
2. All amounts as shown are exclusive of GST.
30. SECURED AND CONTINGENT LIABILITIES
For assets pledged as security for borrowing facilities see Note 17.
The Group had no other known contingent liabilities at 5 July 2020.
31. 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.
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 Audit and Risk Management Committee oversees how management monitors compliance with risk
management policies and procedures and review the adequacy of the risk management framework in relation
to the risks. The Group does not enter into or trade financial instruments, including derivative financial
instruments, for speculative purpose.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
69
Notes to the Financial Statements
c. Market risk
Interest rate risk
The Group is exposed to interest rate risk associated with borrowed funds at floating interest rates. During the
financial year, risks associated with interest rate movements were monitored by the Board; however, no hedging
instruments were considered necessary to manage the risk.
The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk
management section of this note.
Interest rate sensitivity
The sensitivity analyses below have been determined based on the exposure to interest rates at the reporting
date and the stipulated change taking place at the beginning of the financial year and held constant throughout
the reporting period. A 100 basis point increase or decrease is used when reporting interest rate risk internally
to key management personnel and represents management’s assessment of the possible change in interest
rates.
At the reporting date, if interest rates had been 100 basis points higher or lower and all other variables were held
constant, the effect on the Group would be as follows:
Change in profit
Increase in interest rates of 1%
Decrease in interest rates of 1%
Change in equity
Increase in interest rates of 1%
Decrease in interest rates of 1%
Credit risk
2020
$000
142
(142)
142
(142)
2019
$000
91
(91)
91
(91)
Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial
loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining
sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults.
Trade receivables consist of a large number of customers. Ongoing credit evaluation is performed on the
financial condition of accounts receivable.
The carrying value of trade receivables recorded in the financial statements, net of any impairment allowances,
represents the Group’s maximum exposure to credit risks.
The Group does not have any significant credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics. The credit risk on liquid funds is limited because the counter parties
are a reputable bank 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 reserve borrowing
facilities by continuously comparing actual cash flows with forecasts and matching the maturity profiles of
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
70
Notes to the Financial Statements
financial assets and liabilities. Included in Note 17 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 assets
2020
Cash and cash equivalents
Trade and other receivables
Contract assets
Total
2019
Cash and cash equivalents
Trade and other receivables
Contract assets
Total
Financial liabilities
2020
Trade and other payables
Borrowings
Lease liabilities
Other liabilities
Total
2019
Trade and other payables
Borrowings
Total
Weighted average
effective interest
rate %
n/a
n/a
n/a
Weighted average
effective interest
rate %
n/a
Within 1 year
$000
8,063
29,418
154
37,635
1 to 5 years
$000
-
-
Over 5 years
$000
-
-
-
-
-
-
Within 1 year
$000
6,784
1 to 5 years
$000
-
Over 5 years
$000
-
n/a
n/a
28,524
571
35,879
-
-
-
-
-
-
Total
$000
8,063
29,418
154
37,635
Total
$000
6,784
28,524
571
35,879
Weighted average
effective interest
rate %
n/a
4.35%
3.00%
n/a
Weighted average
effective interest
rate %
n/a
5.85%
Within 1 year
$000
18,517
-
723
1,389
20,629
Within 1 year
$000
13,900
-
13,900
1 to 5 years
$000
-
-
1,716
789
2,505
Over 5 years
$000
-
-
-
1,973
Total
$000
18,517
-
2,439
4,151
1,973
25,107
1 to 5 years
$000
-
-
Over 5 years
$000
-
-
Total
$000
13,900
-
-
-
13,900
Fair value of financial instruments
Refer to Note 25 for details on the fair value of financial instruments.
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
71
Notes to the Financial Statements
32. 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
Note:
1. All amounts as shown are exclusive of GST.
2020
$000
-
-
-
20191
$000
1,384
1,756
3,140
The Group has adopted AASB 16 Leases from 1 July 2019 but has not restated comparatives for the 2019
reporting period, as permitted under the specific transition provisions in the standard. Refer to note 1(e) for
further details on the adoption of AASB 16.
33. 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:
On 27 July 2020 the Group declared a fully franked final dividend of 2.7 cents in relation to the financial year
ended 5 July 2020, with a payment date of 11 September 2020.
34. DIVIDENDS
a. Ordinary shares
On 9 August 2019 the Group declared a fully franked final dividend of 2.7 cents in relation to the financial year
ended 30 June 2019, with a payment date of 6 September 2019 (FY19: 2.5 cents).
b.
Franking credits
Franking credits available for subsequent financial years based on a tax rate of 30%
(2019: 30%)
2020
$000
1,670
2019
$000
332
The balance of the franking accounts includes:
•
•
•
•
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 2020
72
ASX Additional Information
Set out below is additional information as required by the ASX Limited Listing Rules and not disclosed elsewhere
in this report. This information is effective as at 17 August 2020.
Number of security holders and securities on issue
Quoted equity securities
Ashley Services has on issue 143,975,904 fully paid ordinary shares which are held by 690 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
Number of shares
166
179
71
212
62
690
120,800
421,139
578,859
7,646,981
135,208,125
143,975,904
%
0.09
0.29
0.40
5.31
93.91
100.00
The number of shareholders holding less than a marketable parcel of Fully Paid Ordinary shares is 224 with a
total number of shares held is 186,685.
Substantial Shareholders
The number of securities held by substantial shareholders and their associates are set out below:
Fully Paid Ordinary Shares
Name
Ross Shrimpton
JP Morgan Nominees Australia Limited ATF Viburnum Funds Pty Ltd
Number
80,279,030
13,928,460
%
55.76%
9.67%
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 2020
73
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
Mr Ross Shrimpton
JP Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
Hishenk Pty Ltd
BNP Paribas Nominees Pty Ltd
Aust Executor Trustees Ltd
Mr Marc Shrimpton
Action James Holdings Pty Limited
Moat Investments Pty Ltd
Mr Andrew Douglas Shrimpton
Super Wide Pty Ltd
Gailforce Marketing & PR Pty Limited
Shann Superannuation Nominees Pty Ltd
Mrs Kerry Elizabeth Draffin
Mr Dean Michael Shrimpton
Mr Christopher John McFadden & Mrs Toula McFadden
Velkov Funds Management Pty Ltd
Mr Mark Christopher Garrick
Aust Executor Trustees Ltd
Mr Brenton Fletcher
Total
Annual General Meeting
Number of shares
80,279,030
18,526,728
5,481,443
3,725,000
2,229,371
1,582,009
1,500,000
1,486,615
1,424,000
1,275,000
1,140,326
900,000
700,000
649,445
632,388
630,630
600,000
596,618
589,575
500,391
%
55.76%
12.87%
3.81%
2.59%
1.55%
1.10%
1.04%
1.03%
0.99%
0.89%
0.79%
0.63%
0.49%
0.45%
0.44%
0.44%
0.42%
0.41%
0.41%
0.35%
124,448,569
86.46%
The annual general meeting of the Company will be held at the company’s offices at Level 10, 92 Pitt Street
Sydney NSW 2000 at 10.00am on Thursday 22 October 2020. 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 2020
74
Bankers
Westpac
Level 18
275 Kent Street
Sydney NSW 2000
Telephone: + 61 2 9155 7700
Facsimile: + 61 2 8253 4128
Website: www.westpac.com.au
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 Ian Pratt (Chairman)
Executive Directors
Mr Ross Shrimpton – Managing Director
Mr Chris McFadden
Company Secretary
Mr Ron Hollands
Registered Office
Level 10
92 Pitt Street
Sydney NSW 2000
Australian Company Number
094 747 510
Australian Business Number
92 094 747 510
Auditors
HLB Mann Judd
Level 19
207 Kent Street
Sydney NSW 2000
Telephone: + 61 2 9020 4000
Facsimile: + 61 2 9020 4190
Legal Adviser
Addisons Lawyers
Level 12
60 Carrington Street
Sydney NSW 2000
Telephone: + 61 2 8915 1000
Facsimile: + 61 2 8916 2000
ASHLEY SERVICES GROUP ANNUAL REPORT 2020
75