APPENDIX 4E
Preliminary Final Report
AUSTAL LIMITED
FOR THE YEAR ENDED 30 JUNE 2012
The reporting period is from 1 July 2011 to 30 June 2012. The previous corresponding period is 1 July 2010 to 30 June 2011.
Results for announcement to the market.
1.
2.
3.
4.
5.
6.
7.
8.
9.
2.1
2.2
2.3
2.4
2.5
2.6
Revenue
Profit from continuing operations after tax
Net profit for the period
Dividend distributions
No dividend is payable with respect to the year ended 30 June 2012.
Record date for determining entitlements to the dividends
Explanation of figures in 2.1 to 2.4 that may be required
Statement of comprehensive income with notes
Statement of financial position with notes
Statement of cash flows and notes
Details of dividends or distributions
Details of dividend or distribution reinvestment plans
Statement of changes in equity
Net tangible assets per ordinary security
Current period (cents/share)
Previous corresponding period (cents/share)
10. Control gained or lost over entities during the period
11. Details of associates and joint venture entities
up 30%
down 49.6%
down 49.6%
to
to
to
$A’000
652,996
11,043
11,043
N/A
Refer to attached Annual Report pages 3 - 5.
Refer to attached Annual Report pages 14 and 18 – 63.
Refer to attached Annual Report pages 15 and 18 – 63.
Refer to attached Annual Report pages 16 and 18 – 63.
See above
N/A
Refer to attached Annual Report page 17 and 18 - 63.
144.5
143.1
Refer to attached Annual Report page 55.
N/A
12. Other significant information
Refer to Operating and Financial Overview pages 3 - 5 of attached Annual Report.
13. Accounting standards used by foreign entities
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. The
foreign entity, Austal USA, prepares its accounts under International Financial Reporting Standards.
14. Commentary on the result
14.1 Earnings per share (basic)
Current period
Previous corresponding period
6.01 cents
11.9 Cents
14.2 Returns to shareholders including distributions and buy backs
No dividends were declared with respect to the year ended 30 June 2012.
14.3
Significant features of operating performance
Refer to Operating and Financial Overview pages 3 - 5 of attached Annual Report.
14.4
Segment results
14.5
Trends in performance
Refer to Operating and Financial Overview pages 3 - 5 of attached Annual Report
Refer to attached Annual Report pages 28 – 30
14.6 Other factors affecting the results in period or future
Refer to Operating and Financial Overview pages 3 - 5 of attached Annual Report
15. Audit/review of accounts upon which this is based
This report has been based on audited accounts.
16. Accounts not audited or subject to review
17. Qualifications of audit/review
N/A
No qualifications
AUSTAL LIMITED
2012
ANNUAL REPORT
CONTENTS
02 Chairman’s Report
03 Operating and Financial Overview
06 Directors’ Report
14 Consolidated Statement of Comprehensive Income
15 Consolidated Statement of Financial Position
16 Consolidated Statement of Cash Flows
17 Consolidated Statement of Changes in Equity
18 Notes to the Consolidated Financial Statements
Inventories
Intangible Assets
01. Corporate Information
02. Summary of Significant Accounting Policies
03. Revenue and Expenses
04. Operating Segments
05.
Income Tax
06. Earnings Per Share
07. Dividends Paid and Proposed
08. Cash and Cash Equivalents
09. Trade and Other Receivables
10.
11. Prepayments
12. Property, Plant and Equipment
13.
14. Derivatives
15. Trade and Other Payables
16.
17. Government Grants
18. Provisions
19. Other Liabilities (Current)
20. Contributed Equity and Reserves
21. Financial Risk Management Objective and Policies
22. Financial Instruments
23. Commitments and Contingencies
24. Related Party Disclosure
25. Events after the Balance Date
26. Auditors’ Remuneration
27. Director and Executive Disclosures
28. Share Based Payment Plans
29. Parent Entity
Interest Bearing Loans and Borrowings
64 Directors’ Declaration
65 Corporate Governance Statement
68
70 Shareholder Information
71 Corporate Directory
Independent Audit Report to the members of Austal Limited
AUSTAL LIMITED
2012
ANNUAL REPORT
1
CHAIRMAN’S REPORT
This year’s results reflect some of the challenges Austal faces. Rapid growth and
the difficulties of producing a new ship type undermined efficient program delivery
at Austal’s busy US shipyard. In contrast, the Australian shipbuilding operation
was unprofitable due to low activity levels. This stemmed from sustained
economic downturn in key markets and a strong local currency. Importantly,
Austal has made good progress towards implementing strategies to position it
better for the future.
Austal’s success in securing two major US Navy prime contracts brings with it the
dual challenges of expanding operations to deliver on those commitments while
overcoming the issues producing revolutionary, first in class ships inevitably bring.
While the US operation was profitable, those factors certainly influenced the
results. Improvements will come as workforce experience grows, as new facilities
come online, and as the programs move into the series production of follow on
ships. There are clear signs of this recovery in the second half performance.
The strength of the Australian dollar, and weakness in core markets such as
Europe, continued to adversely impact the Australian operation’s ability to profit
from the commercial vessel markets it has traditionally served. This absolutely
necessitated a change in strategy, and Austal implemented the core aspects of
that change during the year.
The company improved its competitive position by acquiring a shipyard in the
Philippines. Combining this with the Austal’s world-leading technology has already
proved instrumental in securing commercial vessel contracts that the company
could not otherwise have executed profitably. The progress made at the shipyard
is very pleasing, thanks in great part to the skilled local staff. Austal is pleased to
have welcomed them into its global family, just as Austal has felt welcomed into
their community.
Success in the United States has seen Austal emerge as an international prime
contractor for defence programs, and the company leveraged off that to help
secure an important Australian Government contract for the supply and in-service
support of eight new Cape Class patrol boats. The Australian operation is using
the project to help restructure itself to concentrate on defence contracting.
Importantly Austal signed new shipbuilding contracts worth approximately $1.3
billion during the year. This new work helps to underpin a predictable revenue
stream for a number of years to come.
In line with expectations, the US Navy confirmed additional contracts for two
Littoral Combat Ships (LCSs) and two Joint High Speed Vessels (JHSVs) as part
of existing awards for 10 ships in each class. Austal anticipates the already
substantial volume of work these programs provide will be bolstered and extended
through award of two additional LCSs and one additional JHSV during the coming
year.
Including the eight Cape Class patrol boats, Austal’s non-US operations signed
contracts for 13 vessels worth approximately $340 million. This represented a vast
improvement on the $22 million in the previous financial year.
The Cape Class program’s $50 million in-service support component provides
work through to at least 2019. This, and the prospect of supporting Austal-built US
Navy ships as they enter the fleet, provides a clear means to further grow Austal’s
vessel support business. That business performed well during the year.
As with the support business, the systems division will enable Austal to be a more
effective prime contractor. The company is starting to see the benefits of this
relatively recently acquired and still evolving division. New strategic agreements
have been secured, and Austal’s culture of innovation has helped foster the
development and sale of a new command and control system.
Reshaping and improving the business has not always been easy, and challenges
and change still lie ahead. However, recovery within the US operation, the US
Navy’s ongoing commitment to the LCS program, successful sales of new vessel
types built at our new regional shipyard, a significant defence contract for our
Australian operation, and growth in our service and systems business, point the
way to a brighter long-term future for our staff and shareholders.
JOHN ROTHWELL AO
CHAIRMAN
AUSTAL LIMITED
2012
ANNUAL REPORT
2
OPERATING AND FINANCIAL OVERVIEW
The Group operating profit after tax for the year was $11.043 million compared
with the previous year of $21.890 million. Revenue has increased by $149.140
million over the previous year while operating profit before tax has decreased by
$7.235 million.
Compared to 2011, revenue from Austal’s United States operations increased by
almost 65.9% to $570.300 million. EBIT fell from $26.053 million to $15.795
million. Operating results continued to be impacted by the start up challenges of
producing the first Joint High Speed Vessel (JHSV 1) while also undertaking
significant workforce and facilities development. The first-in-class issues with
and
JHSV 1 derive from the need for unforeseen engineering
additional structure to meet ship classification standards; issues affecting the
supply of suitable materials increasing labour requirements; and higher than
anticipated effort relating to tests and trials planning and execution.
effort
Austal has successfully implemented a transformational strategy to enhance its
long-term competitiveness and profitability in the commercial vessel shipbuilding
market. Manufacturing of those vessels has transferred to a shipyard in the
Philippines that Austal acquired in November 2011. Operations commenced in
February, with an aggressive ramp up enabling two vessels to be in production by
year end. These projects generated revenue of $1.942 million. EBIT of negative
$0.798 million reflects the non-recurring set-up costs of commencing operations at
the previously dormant facility.
The Service and Systems business performed well, with revenue of $19.361
million compared to $16.308 million in 2011 with an EBIT of $1.628 million from
core operations, which excludes the legacy “WestPac Express” charter contract,
compared to the previous year’s negative $0.914 million result. Improved revenue
and profitability in the core vessel support business was particularly pleasing.
There were strong signs of recovery in the second half, with revenue and EBIT
increasing by 49% and 136% respectively compared to the first half. This reflects
the efficiency benefits of increased throughput and the successful application of
lessons learned on the first JHSV to subsequent ships. As production of the
second and third JHSVs has been concurrent with JHSV 1, some of the first-in-
class issues will also affect Austal’s perfrormance on those ships, albeit to a lesser
extent.
The US operation’s importance is underlined by it generating 87.3% of Austal’s
total revenue, a share that continues to grow as its United States Navy (USN)
programs approach steady state production. Austal currently has confirmed orders
to build nine JHSVs under a 10-ship, USD$1.6 billion prime contract and five
Independence-variant Littoral Combat Ships (LCSs), four of which are a part of a
10-ship, USD$3.5 billion prime contract awarded in December 2010. These orders
provide work through to 2016.
The company has continued to invest in the development of its US facilities and
workforce to enable this substantial pipeline of work to be delivered efficiently. As
a result of work during the year, construction of all the necessary facilities is now
complete. Significant recruitment and training programs resulted in the workforce
expanding to 2,764 employees by year end, a 22.8% increase in 12 months.
Revenue from Austal’s Australian operation decreased by 63.4% to $48.993
million as it transitioned away from manufacturing commercial vessels to focus on
defence contracting. The Cape Class Patrol Boat (CCPB) program’s scheduled
low rate initial production, and the completion of legacy commercial vessels,
meant activity levels were insufficient to fully recover overheads. EBIT was
negative $13.653 million compared to negative $10.134 million in 2011. The
Australian operation’s results were also affected by its key role in supporting group
activities such as design and marketing. A restructure into strategic business units
undertaken late in the year will improve the transparency of future results.
FINANCIAL SUMMARY
Year ended 30 June
Revenue*
Depreciation ,Amortisation & Impairment
EBIT
Net Interest (Paid)/Received
Operating Profit Before Tax
Tax (Expense)/Benefit
Operating Profit After Tax
% EBIT/Revenue
Basic Earnings Per Share (cps)
Net Assets
Return on Equity (%)
*Excludes interest and other income
USA OPERATIONS
2012
$’000
652,996
(18,869)
16,577
(4,020)
12,557
1,514
11,043
2.5
6.01
2011
$’000
503,856
(15,505)
22,102
(2,310)
19,792
2,098
21,890
4.4
11.9
277,047
3.9
274,169
8.0
Austal’s focus in the US is on delivering its existing prime contracts with the USN
for the delivery of LCSs and JHSVs.
In line with expectations, the USN exercised contract options worth in excess of
US$1 billion during the year. These included options for the construction of two
further ships in each class, taking the order book to nine JHSVs and five LCSs.
AUSTAL LIMITED
2012
ANNUAL REPORT
3
OPERATING AND FINANCIAL OVERVIEW
Continued
Austal’s second LCS (LCS 4) was launched and christened, as USS “Coronado”,
during the year. Austal expects to deliver it by the second quarter of 2013. Austal
also commenced construction of the third and fourth ships (LCS 6 and LCS 8)
during the year. This followed the completion of USN Detail Design and
Production Readiness Reviews. LCS 10 and LCS 12 are under contract.
The first JHSV, USNS “Spearhead”, was substantially completed and underwent
successful builder’s sea trials in April 2012 in preparation for final inspection by
the Navy before delivery. Austal anticipates this will be completed by the second
quarter of the 2012-13 financial year.
Construction of the second, third and fourth JHSVs began during the year.
Following construction of
in Austal’s Module
Manufacturing Facility (MMF), JHSV 2 transitioned to the final assembly stage.
This was commemorated with a keel laying ceremony in November 2011 at which
point the ship was over 50 per cent complete. The ship’s main propulsion engines
were landed in December 2011.
individual ship modules
JHSV 3 commenced construction September 2011 and final assembly in April
2012. A keel laying ceremony was held in May 2012. At year end JHSV 2 was
more than three-quarters complete, and JHSV 3 over half complete.
Austal has now completed construction of the majority of its US facilities
development program, creating one of the world’s most advanced shipyards.
Phase 2 of the MMF, Assembly Bay 5 and the Office Complex were completed
under budget and ahead of schedule. Modules for JHSV 2, 3 and 4 and LCS 6
and 8 were all being manufactured in the MMF at year end
The US shipyard can now undertake full production of both ship classes with
assembly line efficiency that results in significant cost savings. Austal continued to
develop and expand its US workforce towards a goal of 4,000 employees by the
end of 2013.
Australian Shipyard Operations
Key to the repositioning of the Australian operations towards defence needs was
the securing, in August 2011, of a $330 million contract to design, manufacture
and support eight new CCPBs for the Australian Customs and Border Protection
Service. The project progressed on schedule and on budget during the year, with
an extensive design phase preceding the first boat’s keel laying in June 2012.
Development and marketing of new offshore wind farm support vessel designs
resulted in Austal entering the market with a three boat contract in July 2011.
These vessels, and four fast ferries ordered in the previous year, were completed
during the year as commercial vessel construction was moved to the Philippines.
Philippines Shipyard Operations
The Philippines shipyard acquisition was followed by a facilities improvement
program and workforce recruitment to enable production to commence.
Austal secured shipbuilding contracts for two new designs following the shipyard’s
acquisition. Construction of a 27 metre wind farm vessel began in February 2012,
with an 80 metre vehicle-passenger ferry commencing near year end. These
projects demonstrate the value of combining Austal’s intellectual property with
regionalised manufacturing. The shipyard, which is now operating at capacity,
presently employees 200 people and expects to add a further 170 personnel in
coming months to deliver its orders.
NON-US OPERATIONS
A core focus for the year was implementing strategies to address the findings of
an operational review completed in July 2011. The review considered how Austal
could refocus the significant capabilities of its operations in Henderson, Western
Australia towards the manufacture and support of defence vessels. The review’s
principal findings were:
Demand in specific segments of the international commercial vessel market
(such as fast crew transfer boats, work boats and medium sized ferries)
remains strong and new markets are emerging.
To be successful in these markets, Austal would need to apply its market
leading intellectual property to develop products for these markets and
regionalise its manufacturing base to enhance competitiveness.
The market for defence systems opportunities is attractive and has the
potential to deliver significant recurrent income. Austal would leverage its
existing systems integration capabilities to pursue new opportunities.
The outlook for commercial and defence vessel service and maintenance is
strong and Austal would continue to pursue contracts in this space.
Service and Systems
The award of the CCPB program was significant for the service and systems
business. The contract’s in-service support component is worth approximately $50
million, runs through to 2019, and provides a basis for further growth. The
program also provided the catalyst for the development of what will be the world’s
first operational minor warfare combatant command and control system when it
enters service on the first CCPB.
All regional service centres expanded during the year, and one of the Western
Australian shipbuilding
first
to become Austal’s
dedicated Marine Support Base. In line with its strategy to leverage its USN
facilities was
transitioned
AUSTAL LIMITED
2012
ANNUAL REPORT
4
OPERATING AND FINANCIAL OVERVIEW
Continued
programs, Austal provided support to ships owned by the US Office of Naval
Research in both Australia and the United States.
work primarily involves serial production of stable vessel designs, which enables
the operations to focus on increasingly efficient and profitable project delivery.
The United States Navy’s Military Sealift Command extended the charter of the
Austal designed, built and supported high speed vessel “WestPac Express” into its
eleventh year. The contract will last up to 24 months.
Austal also diversified into the Australian resources sector, building modular
accommodation units for use in the mining industry.
During the year Austal demonstrated its ability to leverage the company’s in-house
systems capabilities and market position by signing new systems-related strategic
agreements with mission systems integrator General Dynamics Advanced
Information Systems and leading electronics provider Kelvin Hughes.
ENVIRONMENTAL PERFORMANCE
Austal’s operations continue to assess and implement methods to improve
sustainability and reduce waste. Rates of aluminium utilisation and waste
recycling continue at historically high levels. Energy use continued to reduce and
water usage is also declining. No environmental incidents of any note were
reported.
Austal continued to devote significant resources to the development of more
efficient vessels with a smaller environmental footprint.
SAFETY PERFORMANCE
For the third year Austal has achieved both Lost Time Injury Frequency Rates
(LTIFR) and Medical Treatment Injury Frequency Rates (MTIFR) at low levels
compared to previous years. While the MTIFR was not as good as last year the
safety performance continues to be very encouraging. This is especially true given
the rapid growth of the US workforce, which brings with it the challenges of new
people who are inexperienced in Austal’s systems and processes; and the
hazards of the shipbuilding environment.
Occupational Health and Safety Policy
Austal’s Occupational Safety and Health (OSH) Policy was reviewed and our
focus remains on safe people, safe practices and safe work environments and
promotes a workplace culture that raises awareness of individual responsibility for
safety and health. Austal’s safety culture is achieved as these components
become accepted workplace practice and are supported by strong leadership.
Safe People
The US Operations received two significant safety awards during the year: the
American Longshore Mutual Association’s Safest Large Shipyard Award and the
Shipbuilders Council of America Award for Excellence in Safety. The latter is
awarded to member shipyards with the lowest rate of recordable workplace
injuries. This is the third year in a row that Austal USA has received both awards.
Austal’s Australian manufacturing facility earned a Gold Certificate of Achievement
under the Western Australian Government’s WorkSafe assessment scheme.
At Austal the safety of our people is at the forefront of everything we do. Our goal
is Zero Harm and we work hard in an effort to achieve this every day.
OUTLOOK
With confirmed orders for 14 USN ships in place, Austal’s US operation accounts
for the vast majority of the backlog. Its orders provide work through to 2016.
The improvements seen in the second half of the year are expected to continue as
the US operation transitions from developing the necessary people, plant and
processes to applying and optimising them to enable efficient series production of
both ship classes. This includes applying the significant lessons learned from
projects undertaken to date. Although there will still be challenges associated with
continuing workforce expansion, the operation will increasingly benefit from higher
levels of workforce experience.
Austal anticipates contracts to build two LCSs and the tenth JHSV in US Fiscal
Year (FY) 2013 (commencing October 1, 2012). This will complete Austal’s
existing JHSV award in line with expectations.
The upcoming US Presidential elections and the potential implications of
sequestration under the Budget Control Act of 2011, create uncertainty about
further contracts in the medium term, however the USN’s current long range ship
construction plan shows the ongoing importance of the LCS program, for which
Austal is one of two prime contractors.
Submitted to Congress in March 2012, the plan includes acquisition of a further 43
LCSs between FY2013 and FY2026 resulting in continuous production of each
contractor’s LCS variant through to FY2029. This includes contracting a total of
four LCSs per year between FY2013 and FY2015 (in line with awards already
made to Austal and the other prime contractor); two ships per year in FY2016 and
FY2017; and three ships per year from FY2018 to FY2026 inclusive.
The CCPB project underwrites activity for the Australian shipyard through to
September 2015, with the support contract extending until at least August 2019.
Customs and Border Protection has options to extend that support contract for the
fleet’s anticipated 20 year service life.
Although the program schedule means levels of activity will remain relatively low
in the coming year, Austal anticipates improved financial results for the Australian
operation in 2012/13. This improvement will continue in the following year as
manufacturing activity ramps up significantly.
Other defence shipbuilding projects of various sizes and durations are being
actively pursued to build on this base level of activity.
With its two current contracts ensuring a high level of utilisation throughout 2012-
13, Austal expects the Philippines shipyard to be profitable in its first full year of
operation. Austal anticipates that demand for large fast ferries will remain subdued
and is therefore placing additional emphasis on other commercial vessel types
where higher levels of activity are anticipated. Planning is well progressed for
further development of the Philippines manufacturing capability to capitalise on
potential additional contracts.
The investment in the Henderson Marine Support Base, and plans to expand
Austal vessel support presence in other areas including Europe and South East
Asia, reflect Austal’s belief that there are further opportunities for growth in the
vessel support business across a broad range of clients. Part of that strategy is to
expand regional capabilities to support deployed LCS, JHSV and CCPB fleets.
The company’s role as prime contractor for these programs, and its existing
support capabilities in the anticipated theatres of operation, positions Austal well
to secure meaningful ongoing revenue streams as the ships deploy.
Austal expects the command and control system developed for the CCPB will be
of interest to maritime law enforcement agencies worldwide. That and the Kelvin
Hughes agreement provide immediate new potential revenue streams within the
systems arena. The agreement with General Dynamics Advanced Information
Systems is an important strategic step for large defence projects.
As at 30 June 2012, the order book backlog totalled $2.572 billion and extends
through to calendar 2016 for shipbuilding and 2019 for support contracts. The
ANDREW BELLAMY
EXECUTIVE DIRECTOR AND CHIEF EXECUTIVE OFFICER
AUSTAL LIMITED
2012
ANNUAL REPORT
5
6.355.386.055.902.202.302.30FY06FY07FY08FY09FY10FY11FY12107.060.165.838.917.814.316.0FY06FY07FY08FY09FY10FY11FY12Lost Time Injury Frequency (per million hours worked)Medical Treatment Injury Frequency (per million hours worked)
DIRECTORS’ REPORT
The Board of Directors of Austal Limited submit their report for the year ended 30 June 2012.
DIRECTORS
The names and details of the Company’s Directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire
period unless otherwise stated.
NAMES, QUALIFICATIONS, EXPERIENCE AND SPECIAL RESPONSIBILITIES
JOHN ROTHWELL AO – Non-Executive Chairman
With 40 years’ experience in boat and shipbuilding, John has played a major role in the development of the Australian aluminium shipbuilding
industry and is a Founding Director of Austal.
In June 2004, John was appointed a Council member of the Australian National Maritime Museum and became Chairman of the Capital
Works Committee of that organisation in November 2005. In January 2004, John was appointed an Officer of the Order of Australia for
services to the Australian shipbuilding industry through the development of trade links and for significant contributions to vocational education
and training. In October 2002, John was named the Ernst & Young “Australian Entrepreneur of the Year”.
John stepped down as Executive Chairman and Chief Executive Officer on 22 August 2008 to continue as Non Executive Chairman.
MICHAEL ATKINSON CA (ZIM), CA (SA) – Executive Director
Michael joined Austal in 1990 as Financial Controller and was appointed to the Board in 1994. He is a qualified Chartered Accountant with
10 years’ experience in the accounting profession. On leaving the profession, he entered the railway and construction industry where he
served in a senior financial capacity and as a Board member.
CHRISTOPHER NORMAN B.Eng. (Hons) – Non-Executive Director
Chris is one of the Founding Directors of Austal. He graduated from the University of New South Wales in 1986 with first class honours in
Naval Architecture and has previously been Austal’s Technical Director. He has been a driving force in the technical and marketing success
of the company and, with extensive experience in international marketing and sales, held the position of Sales Director between 1993 and
2002.
In May 2000, Chris was awarded the prestigious A.G.M. Michell Award in recognition of outstanding service in the profession of Mechanical
Engineering.
Chris resigned from the Board of Directors of Austal Limited on 16 December 2011.
JOHN POYNTON B.Com, FS Fin, FIAM, FAICD, AM, CitWA – Independent Director
John is a Co-Founder and Executive Chairman of Azure Capital. John is the deputy Chairman of Austal Limited and is a Non-Executive
Director of Burswood Ltd. In the not-for-profit arena, he chairs Giving West and the Board of Celebrate WA. John is a member of Social
Ventures Australia and the Curtin Foundation.
Previously, John was a Chairman of ASX Perth, Fleetwood, Alinta and the West Australian Museum Foundation – Director of Multiplex;
Member of the Higher Education Endowment Fund Advisory Board, Payments System Board of the Reserve Bank of Australia, EFIC and of
the Business School at the University of Western Australia.
John is a Life Member and Senior Fellow of the Financial Services Institute of Australasia (FINSIA), a Fellow of the Australian Institute of
Company Directors (AICD) and of the Australian Institute of Management (AIM).
John is a Member in the General Division of the Order of Australia and is a past recipient of a WA Citizen of the Year award in the industry
and commerce category.
John holds a Bachelor of Commerce and an honorary Doctor of Commerce from the University of Western Australia.
DARIO AMARA B.Eng. (Distn), FIEAust, CPEng – Independent Director
Dario is an engineer and experienced Chief Executive with business experience and networks gained over 30 plus years in the Australian
and International Markets; spanning the engineering and construction sectors.
He has a record of achievement in establishing, growing and rejuvenating businesses and strategic leadership. Dario is a graduate from the
Curtin University of Technology.
Dario is currently Non-Executive Chairman of Mission New Energy Limited, and a Non-Executive Director of OTOC Limited. He has also
served as Chairman of the West Australian Opera Company, the Art Gallery of Western Australia and of Heritage Perth and as a board
member of the Perth International Arts Festival.
AUSTAL LIMITED
2012
ANNUAL REPORT
6
DIRECTORS’ REPORT
Continued
DIRECTORS (Continued)
IAN CAMPBELL – Independent Director
Ian has had a distinguished 17 year career as a Senator for Western Australia in the Australian Federal Parliament.
As Parliamentary Secretary to the Treasurer for 4 years, Ian initiated the Corporate Law Economic Reform Program including legislating to
move Australia to International Financial Reporting Standards, reform of Accounting and Audit oversight institutional arrangements, takeovers
and fundraising provisions.
Ian is a former Member of Federal Cabinet where he held the portfolios of Environment and Heritage and Human Services. He also served as
Minister for Local Government, Territories and Roads.
He is a Non-Executive Chairman of Enerji Limited and a Director of Solco Ltd, ASG Group Ltd and Proto Resources and Investments Ltd.
Ian is also Chairman of Princess Margaret Hospital Foundation and WA 2011 Pty Ltd, the organiser of the ISAF World Sailing Championships
in Fremantle in 2011.
Ian resigned from the Board of Directors of Austal Limited effective 30 June 2012.
DAVID SINGLETON – Independent Director
David brings to Austal a wealth of highly relevant business expertise and experience in both the defence and resources sector.
David has held numerous senior roles with BAE Systems (formerly British Aerospace), which is one of the world’s largest defence companies.
He served as Group Head of Strategy and Mergers & Acquisitions in London from 1997 to 1998 and again in 2003. In the intervening years,
David was BAE’s Managing Director of Asset Management before spending three years in Rome as the Chief Executive Officer of Alenia
Marconi Systems (AMS). AMS was a European leader of naval warfare and air defence systems, C4I, ground and naval radars, command and
control training systems and naval support.
David started his career with the UK Ministry of Defence and worked in research, development and manufacturing as well as senior
management roles in Royal Ordnance which by then was part of BAE. He has also served as a member of the National Defence Industries
Council in the UK, and as a board member and Vice President (Defence) of Intellect, a leading trade association for the UK technology
industry.
David is the CEO and Managing Director of Perth-based mineral exploration company Poseidon Nickel Limited. Prior to this role, he served as CEO and Managing
Director of Clough Limited between 2003 and 2007.
He is the Managing Director of Poseidon Nickel Limited and a Non-Executive Director of Quickstep Holdings, both ASX listed entities.
David was appointed to the Board of Directors of Austal Limited on 21 December 2011.
ANDREW BELLAMY BSc (Hons) Material Science, MA (Marketing) – Chief Executive Officer
Andrew Bellamy joined Austal Limited in September 2008, bringing with him proven experience in establishing sales excellence and business
simplification programs. In 2010, Mr Bellamy was appointed Chief Operating Officer of Austal’s Australian businesses and has overseen the
growth and expansion of Austal’s international network of locations at a time of significant turbulence in global markets. Mr Bellamy was
appointed Chief Executive Officer of Austal in February 2011.
Prior to assuming his role at Austal Limited, Mr Bellamy held senior positions within the Refining and Petrochemical industry with Honeywell
and ICI. He is also the former Sales and Marketing Director of Henkel ANZ.
INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE
As at the date of this report, the interests of the directors in the shares of Austal Limited were:
Number of Ordinary Shares
Number of Shares held in AGMSP *
John Rothwell
Michael Atkinson
Christopher Norman
John Poynton
Dario Amara
Ian Campbell
David Singleton
Andrew Bellamy
Direct
32,200,745
1,415,737
26,595,621
10,000
50,000
-
-
123,369
Indirect
-
-
6,600
-
-
-
-
-
-
285,062
-
-
-
-
-
-
*This represents the number of shares (in substance options) held in the Austal Group Management Share Plan (AGMSP) (refer to note 28 of the financial statements). The terms and
conditions of the AGMSP are set out in note 28 of the financial statements. There were no additional ordinary shares issued or options granted and exercised between the balance date and
the date of this report.
AUSTAL LIMITED
2012
ANNUAL REPORT
7
DIRECTORS’ REPORT
Continued
PRINCIPAL ACTIVITIES
REMUNERATION REPORT (Audited)
The principal activities during the year of entities within the consolidated entity
were the design, manufacture and support of high performance aluminium
vessels. These activities are unchanged from the previous year.
RESULTS
The profit of the consolidated entity for the financial year was $11,043 million after
income tax (2011: $21.890 million).
OPERATING AND FINANCIAL REVIEW
This Remuneration report outlines the remuneration arrangements in place for
Directors and Executives of Austal Limited (the Company) and the Group in
accordance with the requirements of the Corporations Act 2001 and its
Regulations. For the purposes of this report, Key Management Personnel (KMP)
of the Group are defined as those persons having authority and responsibility for
planning, directing and controlling the major activities of the Group, directly or
indirectly, including any director (whether executive or otherwise) of the Company.
For the purposes of this report, the term ‘executive’ encompasses the Chief
Executive, senior executives and general managers of the Parent and the Group.
NOMINATION AND REMUNERATION COMMITTEE
A review of the operations and financial position of the consolidated entity is
outlined in the Operating and Financial Overview on page 3.
The Nomination and Remuneration Committee of the Board of Directors reviews
the remuneration of all Directors and makes recommendations to the Board.
DIVIDENDS
No dividend has been declared for the year ended 30 June 2012 (2011: $11.284
million being 6 cents per share).
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
There were no significant events occurring after year end requiring disclosure.
LIKELY DEVELOPMENTS AND FUTURE RESULTS
A general discussion of the group outlook is included in the Chairman’s Report on
page 2 and the Operating and Financial Overview on page 3.
SIGNIFICANT CHANGES IN THE STATE OF THE AFFAIRS
A review of the significant changes in the state of affairs of the consolidated entity
is outlined in the Operating and Financial Overview on page 3.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The consolidated entity has a policy of at least complying with, but in most cases
exceeding, environmental performance requirements. No environmental breaches
have been notified by any Government Agency during the year ended 30 June
2012.
SHARE OPTIONS
As at the date of this report, there were 8,273,611 un-issued ordinary shares
under options. Refer to Note 28 for further details of the options outstanding.
There were no options exercised during the year.
TOTAL NUMBER OF EMPLOYEES
As at 30 June 2012, the consolidated entity employed a total of 3,237 full-time
equivalents (2011: 2,404 full-time equivalents).
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
An indemnity agreement has been entered into between the parent entity and
each of the directors named in this report. Under the agreement, the company
has agreed to indemnify those directors against any claim to the extent allowed by
the law, for any expenses or costs which may arise as a result of work performed
in their respective capacities.
During the financial year, the parent entity has paid premiums in respect of a
contract insuring the directors and officers of the consolidated entity in respect of
liability resulting from these indemnities. The terms of the insurance arrangements
and premiums payable are subject to a confidentiality clause.
REMUNERATION POLICY
It is the Company’s objective to provide maximum stakeholder benefit from the
retention of a high quality Board and executive team by remunerating Directors
and Key Executives fairly and appropriately with reference to relevant employment
market conditions. Other than the variable component and the share option plan,
the remuneration policy is not linked to company performance.
The Company aims to reward executives and senior managers with a level and
mix of remuneration commensurate with their position and responsibilities within
the Company so as to:
attract and retain exceptional employees (‘key employees’) that have the
capacity to significantly impact the growth and profitability of the Company;
and
align key employees’ behaviour towards the growth and profitability objectives
of the Company; and reward key employees for sustained contributions to
business success.
Structure
The non-executive directors receive fixed remuneration, in the form of salary and
fees. However, they do not receive retirement benefits, nor do they participate in
any incentive programs.
The remuneration for the executives consists of fixed remuneration, being base
salary, superannuation and non-monetary benefits and variable remuneration as
listed below. No element of fixed remuneration is linked to performance
conditions.
To encourage the retention of employees, KMP who are not directors of the
Australian companies participate in an annual bonus scheme which takes into
account length of service and profits earned by the Australian enterprises. The
bonus vests and is paid dependent on the employees being employed at the end
of December of each year. The bonus is paid at the discretion of the Nomination
and Remuneration Committee. $263,373 (2011: $298,414) of cash bonuses
vested with the executives, based on the prior period’s performance, and was paid
during this financial year.
Similarly, Austal KMP who are not directors of Austal USA participate in an annual
bonus programme which takes into account length of service and profits earned
by Austal USA. Australian employees are not part of this scheme. Two forms of
bonus opportunities exist; one form for the production workforce and one form for
administration and management. Bonuses to the production workforce are tied to
achievement of the performance objectives of Austal USA, reduction of waste, and
safety and attendance measures. Bonuses to administration and management are
tied to achievement of the financial objectives of Austal USA, specific growth
initiatives, productivity improvement initiatives, customer satisfaction measures
and employee satisfaction measures. These measures were chosen as they
represent the key drivers for the short term success of the business and provide a
framework for delivering long term value.
AUSTAL LIMITED
2012
ANNUAL REPORT
8
DIRECTORS’ REPORT
Continued
REMUNERATION REPORT (Audited) (Continued)
Structure
Goals for each of the preceding categories are established at the beginning of
each financial year for each participant and bonuses are paid at the conclusion of
that year dependent upon the level of achievement of these goals. Such bonuses
the Nomination and Remuneration
are
Committee. 100% of the cash bonuses vested with the executives and was paid
during the financial year.
reviewed and approved by
Ex gratia bonuses are paid to executives in certain circumstances for exceptional
performance as determined by the CEO. These bonuses vest immediately.
SHARE OPTION PLAN
The Share Option Plan aims to reward executives and senior managers with the
issue of share options commensurate with their position and responsibilities within
the Company so as to:
attract and retain exceptional employees (‘key employees’) that have the
capacity to significantly impact the growth and profitability of the Company;
align key employees’ behaviour towards the growth and profitability objectives
of the Company; and reward key employees for sustained contributions to
business success.
Group performance
The graph below shows the performance of the Company as compared to the
movement in the Company’s earnings per share over time.
The share options are granted to executives and senior managers based on the
eligibility criteria set by the Remuneration Committee. Eligibility for the plan will be
linked to employee performance. The exercise of the options will vest after 3
years subject to meeting the company performance criteria.
Performance hurdle
The Company uses a relative Total Shareholder Return (TSR) as the performance
hurdle for the share option plan. Relative TSR was selected as the share option
plan performance hurdle as it ensures an alignment between comparative
shareholder return and reward for executives.
The Company’s performance against the hurdle is determined by comparing the
TSR against the return of the Small Industrials Accumulation Index (or another
appropriate index) for the three year period commencing on 1 July prior to the
grant date. If the TSR does not exceed the return of the Small Industrials
Accumulation Index for a particular three year period, the series of options issued
at that grant date would lapse.
In relation to the options issued after 3 November 2009, the options vest if the
TSR of Austal Limited exceeds 25% for each three year period after issuance. The
percentage vesting reduces on a sliding scale if the TSR is below 25%, until no
options vest if the TSR is below 5%.
DETAILS OF KEY MANAGEMENT PERSONNEL FOR THE YEARS ENDED 30 JUNE 2012 AND 2011
(i) DIRECTORS
(ii) EXECUTIVES
Mr John Rothwell
Non-Executive Chairman
Mr Joseph Rella
Chief Operating Officer Austal USA
Mr Michael Atkinson
Executive Director
- Resigned: 22 June 2012
Mr Christopher Norman
Non-Executive Director
Mr Richard Simons
Chief Financial Officer & Company Secretary
- Resigned 16 December 2011
Mr Charles McGill
Chief Operating Officer Austal Service & Systems
Mr John Poynton
Independent Director
Mr Dario Amara
Independent Director
Mr Greg Jason
- Appointed: 24 February 2012
Chief Operating Officer Austal Asia
- Appointed: 1 September 2012
Mr Ian Campbell
Independent Director
- Resigned 30 June 2012
Mr David Singleton
Independent Director
-
Appointed: 21 December 2011
Mr Andrew Bellamy
Chief Executive Officer
Mr Brian Leathers
Interim Chief Operating Officer Austal USA.
- Appointed: 25 June 2012
AUSTAL LIMITED
2012
ANNUAL REPORT
9
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2012
REMUNERATION REPORT (Audited) (Continued)
REMUNERATION OF KEY MANAGEMENT PERSONNEL FOR THE YEAR ENDED 30 JUNE 2012.
TABLE 1: REMUNERATION FOR THE YEAR ENDED 30 JUNE 2012
Short-Term
Cash
Bonus
$
Other-
Monetary
Benefits
$
Non-
Monetary
Benefits
$
Post-Employment
Superannuation
$
Termination
Payments
-
-
-
-
-
-
-
-
-
Salary &
Fees
$
366,667
42,500
90,000
93,000
45,076
90,000
727,243
-
-
-
-
-
-
-
392,192
755,217
37,962
92,656
407,216
438,221
178,446
49,051
2,933
2,223,276
2,950,519
59,983
56,025
16,166
-
581
263,373
263,373
-
-
2,044
18,911
-
20,955
20,955
Non-executive directors
John Rothwell
Christopher Norman*
John Poynton
Dario Amara
David Singleton*
Ian Campbell
Sub-total non-executive
directors
Executive directors
Michael Atkinson
Andrew Bellamy
Other key management
personnel
Joseph Rella*
Richard Simons
Greg Jason*
Charles McGill*
Brian Leathers*
Sub-total executive KMP
Total
Share-
based
Payment
Options
$
-
-
-
-
-
-
-
Total
$
366,667
42,500
90,000
93,000
45,076
90,000
727,243
44,524
345,165
474,678
1,218,038
(144,830)
66,809
52,053
2,672
428
366,821
366,821
322,369
586,744
261,855
76,855
3,942
2,944,481
3,671,724
%
performance
related
Contract
Terms
Note
-
-
-
-
-
-
17.4
35.9
(26.3)
11.4
21.0
3.5
25.6
2
1
1
1
1
1
2
4
5
4
6
6
5
-
-
-
-
-
-
-
-
25,000
-
25,689
13,146
6,221
-
70,056
70,056
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* Key management personnel for part of year of 2012.
TABLE 2: REMUNERATION FOR THE YEAR ENDED 30 JUNE 2011
Short-Term
Salary &
Fees
$
Cash
Bonus
$
Non-
Monetary
Benefits
$
Post-Employment
Superannuation
$
Termination
Payments
Share-
based
Payment
Options
$
%
performance
related
Contract
Terms
Note
Total
$
440,000
85,000
90,000
93,000
90,000
798,000
Non-executive directors
John Rothwell
Christopher Norman
John Poynton
Dario Amara
Ian Campbell
Sub-total non-executive directors
Executive directors
Robert Browning*
Michael Atkinson
Andrew Bellamy
Other key management personnel
338,237
Joseph Rella
369,708
Richard Simons
48,987
William Rotteveel*
316,333
Mark Dummett**
2,241,101
Sub-total executive KMP
Total
3,039,101
* Key management personnel for part of year of 2011.
** No longer a Key management personnel for 2012.
301,077
380,000
486,759
-
-
-
-
-
-
104,452
-
45,555
102,314
17,202
-
28,891
298,414
298,414
-
-
-
-
-
-
6,760
-
-
-
-
-
-
6,760
6,760
-
-
-
-
-
-
-
-
26,241
-
34,404
-
15,188
75,833
75,833
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
440,000
85,000
90,000
93,000
90,000
798,000
(1,322,171)
33,519
44,660
(909,882)
413,519
603,215
-
-
130,700
-
130,700
130,700
54,147
48,703
(36,520)
33,599
(1,144,063)
(1,144,063)
494,698
470,017
143,167
394,011
1,608,745
2,406,745
-
-
-
-
-
133.8
8.1
15.0
31.6
14.0
(25.5)
15.9
2
1
1
1
1
5
2
4
5
4
3
3
AUSTAL LIMITED
2012
ANNUAL REPORT
10
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2012
REMUNERATION REPORT (Audited) (Continued)
CONTRACT TERMS NOTES
1. Directors fees only.
2. Subcontract – no fixed notice period or duration. No termination entitlements.
3. Employment contract – one week notice period or duration. No non-statutory termination entitlements.
4. Employment contract – nine months’ notice period. No non-statutory termination entitlements.
5. Employment contract – upon involuntary termination of employment without cause, a severance of six months’ salary will be paid.
6. Employment contract – three months’ notice period. No non-statutory termination entitlements.
TABLE 3: COMPENSATION OPTIONS: GRANTED AND VESTED DURING THE YEAR ^
Granted
No.
140,000
140,000
140,000
140,000
70,000
70,000
700,000
30 June 2012
Michael Atkinson
Joseph Rella**
Richard Simons
Greg Jason*
Charles McGill*
Brian Leathers*
Total
Terms & Conditions for each Grant
Fair Value per
option at grant
date
($)
Exercise price
per option
($)
Grant Date
Expiry Date
First Exercise
Date
Last Exercise
Date
21 Oct 2011
20 Dec 2011
20 Dec 2011
20 Dec 2011
20 Dec 2011
20 Dec 2011
0.667
0.618
0.618
0.618
0.618
0.618
2.15
2.15
2.15
2.15
2.15
2.15
20 Dec 2018
**
20 Dec 2018
20 Dec 2018
20 Dec 2018
20 Dec 2018
20 Dec 2014
**
20 Dec 2014
20 Dec 2014
20 Dec 2014
20 Dec 2014
20 Dec 2018
**
20 Dec 2018
20 Dec 2018
20 Dec 2018
20 Dec 2018
30 June 2011
Michael Atkinson
Joseph Rella
Richard Simons
Mark Dummett***
Andrew Bellamy
Total
* Key management personnel for part of year of 2012
** 140,000 options were forfeited on cessation of employment.
*** No longer a Key Management Personnel.
Of existing option holdings only 140,000 of Michael Atkinson options had vested during the year and no options we exercised (2011: 140,000 of Michael Atkinson and 67,500 of Mark
Dummett’s options had vested during the prior year and no options we exercised).
29 Sep 2017
29 Sep 2017
29 Sep 2017
29 Sep 2017
29 Sep 2017
28 Sep 2010
28 Sep 2010
28 Sep 2010
28 Sep 2010
28 Sep 2010
29 Sep 2013
29 Sep 2013
29 Sep 2013
29 Sep 2013
29 Sep 2013
29 Sep 2017
29 Sep 2017
29 Sep 2017
29 Sep 2017
29 Sep 2017
140,000
140,000
140,000
70,000
140,000
0.840
0.840
0.840
0.840
0.840
2.34
2.34
2.34
2.34
2.34
630,000
TABLE 4: OPTIONS GRANTED AS PART OF REMUNERATION ^
Value of options granted
during the year
$
Value of options
exercised during the
year
$
Value of options
forfeited during the
year
$
Value of options
lapsed during the
year
$
Remuneration
consisting of options
for the year
%
30 June 2012
Michael Atkinson
Joseph Rella**
Richard Simons
Greg Jason*
Charles McGill*
Brian Leathers*
30 June 2011
Michael Atkinson
Joseph Rella
Richard Simons
Mark Dummett
Andrew Bellamy
* Key management personnel for part of year of 2012.
93,380
86,520
86,520
86,520
43,260
43,260
117,600
117,600
117,600
58,800
117,600
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9.4
-
11.4
20.0
3.5
10.8
8.1
10.9
10.4
8.5
7.4
AUSTAL LIMITED
2012
ANNUAL REPORT
11
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2012
REMUNERATION REPORT (Audited) (Continued)
TABLE 5: SHARES HELD IN AGMSP (IN SUBSTANCE OPTIONS) GRANTED AS PART OF REMUNERATION ^
Value of shares held in
AGMSP (in substance options)
granted during the year
$
-
Value of shares held in
AGMSP (in substance
options) exercised during the
year
$
-
Total value of options
granted, and exercised
during the year
Remuneration consisting of
in substance options for the
year
$
-
%
-
30 June 2012
None
30 June 2011
Robert Browning*
^ For details on the valuation of the options, including models and assumptions used, please refer to Note 28 to the financial statements.
* Robert Browning was granted 3,000,000 in substance options on 22 October 2007 at an average fair value and exercise price of $0.96 and $3.51 respectively. The first exercise date for
these in substance options was 22 October 2008. These shares were forfeited in 2011.
There were no alterations to the terms and conditions of options granted as remuneration since their grant date. The maximum cost assuming that all service and
performance conditions are met, is equal to the number of options or rights granted multiplied by the fair value at the grant date. The minimum cost assuming that
service and performance criteria are not met is zero. During the year Nil (2011: Nil) in substance options vested and Nil (2011: Nil) were exercised by KMP. See note
28(b).
END OF REMUNERATION REPORT (Audited)
DIRECTORS’ MEETINGS
The number of meetings of directors (including meetings of committees of Directors) held during the year and the number of meetings attended by each Director was as
follows:
Number of meetings held
Number of meetings attended:
John Rothwell
Michael Atkinson
Christopher Norman*
John Poynton
David Singleton*
Dario Amara
Ian Campbell
Andrew Bellamy
* Director for part of year of 2012.
COMMITTEE MEMBERSHIP
Directors’ Meetings
7
Meetings of Audit
Committee
4
Meetings of Nomination and
Remuneration Committee
2
7
5
3
7
4
7
6
7
-
-
-
-
2
4
3
-
2
-
-
2
1
-
2
2
As at the date of this report, the Company had an Audit Committee and a Nomination and Remuneration Committee of the Board of Directors.
Members acting on the committees of the Board during the year were:
AUDIT
D Amara *
C Norman^
I Campbell
D Singleton^
NOMINATION AND REMUNERATION
I Campbell
J Rothwell
J Poynton
A Bellamy
D Singleton^*
* Designates the Chairman of the committee
^ Members for part of year 2012.
ROUNDING
The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the
Company under ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies.
AUSTAL LIMITED
2012
ANNUAL REPORT
12
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2012
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
The directors received the following declaration from the auditor of Austal Limited.
Auditor’s Independence Declaration to the Directors of Austal Limited
In relation to our audit of the financial report of Austal Limited for the financial year ended 30 June 2012, to the best
of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the
Corporations Act 2001 or any applicable code of professional conduct.
Ernst & Young
Gavin A Buckingham
Partner
Perth
28 August 2012
Liability limited by a scheme approved under
Professional Standards Legislation
NON-AUDIT SERVICES
There were no non-audit services provided by the entity’s auditor, Ernst & Young, during the year.
Signed in accordance with a resolution of directors.
___________________________________
J ROTHWELL AO
Chairman
________________________________
A BELLAMY
Executive Director and Chief Executive Officer
Dated at Henderson this 28th day of August 2012
AUSTAL LIMITED
2012
ANNUAL REPORT
13
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2012
Notes
3(a)
3(b)
3(c)
3(d)
3(e)
3(f)
5
Continuing operations
Revenue
Other income
Expenses (excluding finance costs)
Impairment of assets
Unrealised gain on deferred premium options
Finance costs
Profit before income tax
Income tax benefit/(expense)
Profit after tax from continuing operations
Attributable to Members of the Parent
Other comprehensive income
Cash flow hedges:
(Gain)/loss taken to equity
Transferred to the statement of comprehensive income
Revaluation of land and buildings
Foreign currency translations
Income tax expense on items of other comprehensive income
Other comprehensive income for the period, net of tax
Total comprehensive income for the year
Attributable to members of the parent
Earnings per share (cents per share)
- basic for profit for the year attributable to ordinary equity holders of the parent
- diluted for profit for the year attributable to ordinary equity holders of the parent
6
6
2012
$’000
652,996
27,818
(666,161)
(2,545)
5,114
(4,665)
12,557
(1,514)
11,043
11,043
(28,207)
(7,326)
42,152
(1,703)
(3,987)
929
11,972
11,972
6.01
5.99
2011
$’000
503,856
10,401
(492,403)
-
677
(2,739)
19,792
2,098
21,890
21,890
52,483
(51,076)
-
(7,180)
(422)
(6,195)
15,695
15,695
11.9
11.9
AUSTAL LIMITED
2012
ANNUAL REPORT
14
ASSETS
Current Assets
Cash and cash equivalents
Restricted cash
Trade and other receivables
Inventories
Prepayments
Derivatives
Assets classified as held for sale
Total Current Assets
Non-current Assets
Other financial assets
Trade and other receivables
Derivatives
Property, plant and equipment
Intangible assets
Deferred tax assets
Total Non-current Assets
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
Derivatives
Interest-bearing loans and borrowings
Provisions
Government grants
Income tax payable
Other
Total Current Liabilities
Non-current Liabilities
Derivatives
Interest-bearing loans and borrowings
Provisions
Government grants
Deferred tax liabilities
Total Non-current Liabilities
Total Liabilities
Net Assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total Equity
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2012
Notes
8
8
9
10
11
14
12
8
9
14
12
13
5
15
14
16
18
17
19
14
16
18
17
5
20
20
20
2012
$’000
51,811
52,940
96,172
193,529
6,538
36,041
437,031
1,561
438,592
944
18
10,625
370,383
5,045
380
387,395
825,987
128,626
2,186
18,973
18,250
3,561
27,394
27,288
226,278
5,757
246,444
2,060
48,753
19,648
322,662
548,940
277,047
31,762
22,595
222,690
277,047
2011
$’000
42,265
128,837
21,986
177,922
5,792
37,805
414,607
-
414,607
903
15
37,233
208,275
5,063
8,524
260,013
674,620
52,837
153
8,554
26,409
3,567
20,724
2,679
114,923
274
217,985
2,138
41,896
23,235
285,528
400,451
274,169
31,175
20,063
222,931
274,169
AUSTAL LIMITED
2012
ANNUAL REPORT
15
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2012
Notes
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income tax received/( paid)
GST refunds
Net cash inflow/(outflow) from operating activities
8
Cash flows from investing activities
Receipts/(repayment) of government grants
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Purchase of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Repayment of loan – in substance options
Repayment of borrowings
Loans received
Equity dividends paid
Net cash from/(used) in financing activities
2012
$’000
555,639
(521,472)
644
(4,665)
4,860
(1,870)
33,136
8,698
-
(131,459)
(1,849)
(124,610)
289
(40,557)
69,743
(11,284)
18,191
2011
$’000
573,626
(506,755)
429
(2,739)
(8,200)
5,638
61,999
2,284
3,607
(44,755)
(1,442)
(40,306)
305
(253,115)
383,496
(11,284)
119,402
Net increase/(decrease) in cash and cash equivalents
(73,283)
141,095
Net foreign exchange differences
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
6,932
171,102
104,751
977
29,030
171,102
8
AUSTAL LIMITED
2012
ANNUAL REPORT
16
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2012
Attributable to equity holders of the parent
Issued
capital
$’000
Reserved
shares*
$’000
Retained
earnings
$’000
41,075
(10,205)
212,325
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
305
-
-
41,075
(9,900)
-
-
-
-
21,890
21,890
-
-
(11,284)
222,931
41,075
(9,900)
222,931
-
-
-
-
-
-
-
298
-
-
-
-
-
-
-
-
-
-
-
289
-
-
41,373
(9,611)
-
-
-
-
-
11,043
11,043
-
-
-
(11,284)
222,690
Foreign
currency
translation
reserve
$’000
(1,685)
(7,180)
-
Cash flow
hedge
reserve
$’000
40,523
-
36,739
-
(35,754)
(7,180)
-
(7,180)
-
-
985
-
985
-
-
Other
Reserves**
$’000
(12,665)
-
-
-
-
-
-
-
85
-
(8,865)
41,508
(12,580)
(8,865)
(1,703)
-
-
-
(1,703)
-
41,508
(12,580)
-
-
(19,745)
(5,114)
(24,859)
-
-
27,491
-
-
27,491
-
(1,703)
(24,859)
27,491
-
-
-
-
-
-
-
-
(10,568)
16,649
-
-
1,603
-
16,514
Total Equity
$’000
269,368
(7,180)
36,739
(35,754)
(6,195)
21,890
15,695
305
85
(11,284)
274,169
274,169
(1,703)
27,491
(19,745)
(5,114)
929
11,043
11,972
298
289
1,603
(11,284)
277,047
As at 1 July 2010
Currency translation differences
Net gains on cash flow hedges
Transfer from cash flow hedge reserve
Total other comprehensive income for the year
Profit for the year
Total comprehensive income for the year
Equity Transactions:
Options exercised
Cost of share-based payments
Equity dividends
As at 30 June 2011
As at 1 July 2011
Currency translation differences
Asset revaluation net of tax
Net gains on cash flow hedges
Transfer from cash flow hedge reserve
Total other comprehensive income for the year
Profit for the year
Total comprehensive income for the year
Equity Transactions:
Shares issued
Options exercised
Cost of share-based payments
Equity dividends
As at 30 June 2012
*Reserved shares are in relation to the Austal Group Management Share Plan.
** Refer to note 20 for details of movements in other reserves
.
AUSTAL LIMITED
2012
ANNUAL REPORT
17
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2012
NOTE1. CORPORATE INFORMATION
The financial report of the Austal Limited Group of Companies (the Group) for the
year ended 30 June 2012 was authorised for issue in accordance with a resolution
of the directors on 28 August 2012.
Austal Limited is a company limited by shares incorporated and domiciled in
Australia whose shares are publicly traded on the Australian stock exchange.
The nature of the operations and principal activities of the Group are described in
note 4.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
The financial report is a general-purpose financial report, which has been
prepared in accordance with the requirements of the Corporations Act 2001 and
Australian Accounting Standards. The financial report has also been prepared on
a historical cost basis, except for derivative financial instruments and land and
buildings that have been measured at fair value.
The financial report is presented in Australian dollars and all values are rounded to
the nearest thousand dollars ($’000) unless otherwise stated under the option
available to the Company under ASIC Class Order 98/0100. The Company is an
entity to which the class order applies.
The financial report also presents the figures of the consolidated entity only,
unless otherwise stated. Austal Limited is a for profit entity.
(b) Statement of compliance
The
financial report complies with Australian Accounting Standards and
International Financial Reporting Standard (IFRS), as issued by the International
Accounting Standards Board.
From 1 July 2011 the Group has adopted all the Standards and Interpretations
mandatory for annual periods beginning on or after 1 July 2011, including the
following pronouncements:
AASB 124: Related Party Disclosures (amendment) effective 1 January 2011
AASB 2009 – 12: Amendments to Australian Accounting Standards
AASB 2010-4: Amendments to Australian Accounting Standards arising from
the Annual Improvements Project
AASB 2010-5: Amendments to Australian Accounting Standards
AASB 1054: Australian Additional Disclosures
AASB 2010-6: Amendments to Australian Accounting Standards –
Disclosures on Transfers of Financial Assets [AASB 1 & AASB 7]
Improvements to AASBs (May 2010)
Adoption of these Standards and Interpretations did not have any effect on the
financial position or performance of the Group.
A number of Australian Accounting Standards and Interpretations have been
issued or amended but are not yet effective. The relevant pronouncements which
have not been adopted by the Group are as follows:
AASB 1048: Interpretation of Standards. AASB 1048 identifies the Australian
Interpretations and classifies them into two groups: those that correspond to an
IASB Interpretation and those that do not. Entities are required to apply each
relevant Australian Interpretation in preparing financial statements that are within
the scope of the Standard. The revised version of AASB 1048 updates the lists of
Interpretations for new and amended Interpretations issued since the June 2010
version of AASB 1048.
AASB 2010-8: Amendments to Australian Accounting Standards – Deferred Tax:
Recovery of Underlying Assets. These amendments address the determination of
deferred tax on investment property measured at fair value and introduce a
rebuttable presumption that deferred tax on investment property measured at fair
value should be determined on the basis that the carrying amount will be
recoverable through sale. The amendments also incorporate SIC-21 Income
Taxes – Recovery of Re-valued Non-Depreciable Assets into AASB 112.
AASB 2011-9: Amendments to Australian Accounting Standards – Presentation of
Other Comprehensive Income. This Standard requires entities to group items
presented in other comprehensive income on the basis of whether they might be
reclassified subsequently to profit or loss and those that will not.
AASB 10: Consolidated Financial Statements. AASB 10 establishes a new control
model that applies to all entities. It replaces parts of AASB 127 Consolidated and
Separate Financial Statements dealing with the accounting for consolidated
financial statements and UIG-112 Consolidation – Special Purpose Entities. The
new control model broadens the situations when an entity is considered to be
controlled by another entity and includes new guidance for applying the model to
specific situations, including when acting as a manager may give control, the
impact of potential voting rights and when holding less than a majority voting rights
may give control.
Consequential amendments were also made to other standards via AASB 2011-7.
AASB 11: Joint Arrangements. AASB 11 replaces AASB 131 Interests in Joint
Ventures and UIG-113 Jointly- controlled Entities – Non-monetary Contributions
by Ventures. AASB 11 uses the principle of control in AASB 10 to define joint
control, and therefore the determination of whether joint control exists may
change. In addition it removes the option to account for jointly controlled entities
(JCEs) using proportionate consolidation.
joint
arrangement is dependent on the nature of the rights and obligations arising from
the arrangement. Joint operations that give the venturers a right to the underlying
assets and obligations themselves is accounted for by recognising the share of
those assets and obligations. Joint ventures that give the venturers a right to the
net assets is accounted for using the equity method.
Instead, accounting
for a
Consequential amendments were also made to other standards via AASB 2011-7
and amendments to AASB 128.
AASB 12: Disclosure of Interests in Other Entities. AASB 12 includes all
disclosures relating to an entity’s interests in subsidiaries, joint arrangements,
associates and structures entities. New disclosures have been introduced about
the judgments made by management to determine whether control exists, and to
require summarised information about joint arrangements, associates and
structured entities and subsidiaries with non-controlling interests.
AASB 13: Fair Value Measurement. AASB 13 establishes a single source of
guidance for determining the fair value of assets and liabilities. AASB 13 does not
change when an entity is required to use fair value, but rather, provides guidance
on how to determine fair value when fair value is required or permitted. Application
of this definition may result in different fair values being determined for the
relevant assets. AASB 13 also expands the disclosure requirements for all assets
or liabilities carried at fair value. This includes information about the assumptions
made and the qualitative impact of those assumptions on the fair value
determined.
Consequential amendments were also made to other standards via AASB 2011-8.
AASB 119: Employee Benefits. The main change introduced by this standard is to
revise the accounting for defined benefit plans. The amendment removes the
options for accounting for the liability, and requires that the liabilities arising from
such plans is recognized in full with actuarial gains and losses being recognized in
other comprehensive income. It also revised the method of calculating the return
on plan assets. The revised standard changes the definition of short-term
employee benefits. The distinction between short-term and other long-term
employee benefits is now based on whether the benefits are expected to be
settled wholly within 12 months after the reporting date.
Consequential amendments were also made to other standards via AASB 2011-
10.
AUSTAL LIMITED
2012
ANNUAL REPORT
18
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Statement of compliance (continued)
AASB 2011-4: Amendments to Australian Accounting Standards to Remove
Individual Key Management Personnel Disclosure Requirements. This
Amendment deletes from AASB 124 individual key management personnel
disclosure requirements for disclosing entities that are not companies.
reporting
requirements
for preparing general purpose
AASB 1053: Application of Tiers of Australian Accounting Standards. This
Standard establishes a differential financial reporting framework consisting of two
Tiers of
financial
statements:
(a) Tier 1: Australian Accounting Standards
(b) Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements
Tier 2 comprises the recognition, measurement and presentation requirements of
Tier 1 and substantially reduced disclosures corresponding to those requirements.
The following entities apply Tier 1 requirements in preparing general purpose
financial statements:
(a) For-profit entities in the private sector that have public accountability (as
defined in this Standard)
(b) The Australian Government and State, Territory and Local Governments
The following entities apply either Tier 2 or Tier 1 requirements in preparing
general purpose financial statements:
(a) For-profit private sector entities that do not have public accountability
(b) All not-for-profit private sector entities
(c) Public sector entities other than the Australian Government and State,
Territory and Local Governments.
Consequential amendments to other standards to implement the regime were
introduced by AASB 2010-2, 2011-2, 2011-6, 2011-11 and 2012-1.
AASB 2012-2: AASB 2012-2 principally amends AASB 7 Financial Instruments:
Disclosures to require disclosure of information that will enable users of an entity’s
financial statements
the effect or potential effect of netting
arrangements, including rights of set-off associated with the entity’s recognised
financial assets and recognised financial liabilities, on the entity’s financial
position.
to evaluate
AASB 2012-4: Amendments to Australian Accounting Standards Government
Loans. AASB 2012-4 adds an exception to the retrospective application of
Australian Accounting Standards under AASB 1 First-time Adoption of Australian
Accounting Standards to require that first-time adopters apply the requirements in
AASB 139 Financial Instruments: Recognition and Measurement (or AASB 9
Financial Instruments) and AASB 120 Accounting for Government Grants and
Disclosure of Government Assistance prospectively
loans
(including those at a below-market rate of interest) existing at the date of transition
to Australian Accounting Standards.
to government
AASB 2012-5: Amendments to Australian Accounting Standards arising from
Annual Improvements 2009-2011 Cycle– AASB 2012-5 makes amendments
resulting from the 2009-2011 Annual Improvements Cycle. The Standard
addresses a range of improvements, including the following:
repeat application of AASB 1 is permitted (AASB 1); and
clarification of the comparative information requirements when an entity
third balance sheet (AASB 101 Presentation of Financial
provides a
Statements).
AASB 2012-3: Amendments to Australian Accounting Standards – Offsetting
Financial Assets and Financial Liabilities: AASB 2012-3 adds application guidance
to AASB 132 Financial Instruments: Presentation to address inconsistencies
identified in applying some of the offsetting criteria of AASB 132, including
clarifying the meaning of “currently has a legally enforceable right of set-off” and
that some gross settlement systems may be considered equivalent to net
settlement.
includes requirements
Instruments: AASB 9
AASB 9: Financial
the
classification and measurement of financial assets. It was further amended by
AASB 2010-7 to reflect amendments to the accounting for financial liabilities.
These requirements improve and simplify the approach for classification and
measurement of financial assets compared with the requirements of AASB 139.
The main changes are described below.
(a)
for
Financial assets that are debt instruments will be classified based on (1)
the objective of the entity’s business model for managing the financial
assets; (2) the characteristics of the contractual cash flows.
Allows an irrevocable election on initial recognition to present gains and
losses on investments in equity instruments that are not held for trading in
other comprehensive income. Dividends in respect of these investments
that are a return on investment can be recognised in profit or loss and there
is no impairment or recycling on disposal of the instrument.
Financial assets can be designated and measured at fair value through
profit or loss at initial recognition if doing so eliminates or significantly
reduces a measurement or recognition inconsistency that would arise from
measuring assets or liabilities, or recognising the gains and losses on
them, on different bases.
(b)
(c)
(d) Where the fair value option is used for financial liabilities the change in fair
value is to be accounted for as follows:
The change attributable to changes in credit risk are presented in other
comprehensive income (OCI)
The remaining change is presented in profit or loss
If this approach creates or enlarges an accounting mismatch in the profit or loss,
the effect of the changes in credit risk are also presented in profit or loss.
Consequential amendments were also made to other standards as a result of
AASB 9, introduced by AASB 2009-11 and superseded by AASB 2010-7 and
2010-10.
A full assessment has not yet been completed of the impact of all the new or
amended Accounting Standards and interpretations issued but not effective.
(c) Basis of consolidation
The consolidated financial statements comprise the financial statements of Austal
Limited and its subsidiaries as at and for the year ended 30 June each year (the
Group).
Subsidiaries are all those entities over which the Group has the power to govern
the financial and operating policies so as to obtain benefits from their activities.
The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether a group controls another
entity.
Financial statements of foreign controlled entities presented in accordance with
overseas accounting principles are, for consolidation purposes, adjusted to
comply with group policy and generally accepted accounting principles in
Australia. In preparing the consolidated financial statements, all intercompany
balances, transactions, unrealised gains and losses resulting from intra-group
transactions and dividends have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by
the Group and cease to be consolidated from the date on which control is
transferred out of the Group.
Investments in subsidiaries held by Austal Limited are accounted for at cost in the
separate financial statements of the parent entity less any impairment charges.
Dividends received from subsidiaries are recorded as a component of other
revenues in the statement of comprehensive income of the parent entity, and do
not impact the recorded cost of the investment. Upon receipt of dividend payments
from subsidiaries, the parent will assess whether any indicators of impairment of
the carrying value of the investment in the subsidiary exist. Where such indicators
exist, to the extent that the carrying value of the investment exceeds its
recoverable amount, an impairment loss is recognised.
AUSTAL LIMITED
2012
ANNUAL REPORT
19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment of non-financial assets other than goodwill
(d) Business combinations
Business combinations are accounted for using the acquisition method. The
consideration transferred in a business combination shall be measured at fair
value, which shall be calculated as the sum of the acquisition date fair values of
the assets transferred by the acquirer, the liabilities incurred by the acquirer to
former owners of the acquiree and the equity issued by the acquirer, and the
amount of any non-controlling interest in the acquiree. For each business
combination, the acquirer measures the non-controlling interest in the acquiree
either at fair value or at the proportionate share of the acquiree's identifiable net
assets.
Acquisition-related costs are expensed as incurred, and included in administrative
expenses.
When the Group acquires a business, it assesses the financial assets and
liabilities assumed for appropriate classification and designation in accordance
with the contractual terms, economic conditions, the Group’s operating or
accounting policies and other pertinent conditions as at the acquisition date. This
includes the separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of
the acquirer's previously held equity interest in the acquiree is remeasured to fair
value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised
at fair value at the acquisition date. Subsequent changes to the fair value of the
contingent consideration which is deemed to be an asset or liability will be
recognised in accordance with AASB 139 either in profit or loss or as a change to
other comprehensive income. If the contingent consideration is classified as
equity, it should not be remeasured until it is finally settled within equity.
Acquisitions prior to July 2009 were accounted for using the purchase method of
accounting.
(e) Significant accounting judgements, estimates and assumptions
The Group assesses impairment of all assets at each reporting date by evaluating
conditions specific to the Group and to the particular asset that may lead to
impairment. These include product and manufacturing performance, technology,
economic and political environments and future product expectations. If an
impairment trigger exists, the recoverable amount of the asset is determined.
The recoverable amount of the asset is the higher of fair value less costs to sell
and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, the
recoverable amount is determined for the cash-generating unit to which the asset
belongs, unless the asset’s value in use can be estimated to be close to its fair
value.
Impairment exists when the carrying value of an asset or a cash-general unit
exceeds its estimated recoverable amount. The asset or cash-generating unit is
then written down to its recoverable amount.
(ii) Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based
on estimates and assumptions of future events. The key estimates and
assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of certain assets and liabilities within the next annual reporting
period are:
Workers compensation
The Group has carried out an estimation of workers compensation claims that
have been incurred but not yet reported.
Warranty
The Group has carried out an estimation of warranty costs that have been
incurred but not yet reported.
(i) Significant accounting judgements
Long service leave
In the process of applying the Group’s accounting policies, management has
made the following judgements, apart from those involving estimations, which
have the most significant effect on the amounts recognised in the financial
statements:
Construction contract revenue
The assessment of construction contract revenue in accordance with the Group’s
accounting policies requires certain estimates to be made of total contract
revenues, total contract costs and the current stage of completion. Management
have made estimates in this area, which if ultimately inaccurate will impact the
level of revenue recognised in the Consolidated Statement of Comprehensive
Income of 2012 and beyond.
Expected construction profits at completion
In determining the gross profit on construction projects the Group has made
estimates in relation to the assessment of projects on a percentage of completion
basis, in particular with regard to accounting for variations, the timing of profit
recognition and the amount of profit recognised. The percentage of complete is
calculated on actual costs over the sum of actual costs plus projected costs to
complete the contract and profit is recognised from commencement of the project.
Assumptions are formulated when determining the Group’s long service leave
obligations. This requires estimation of the probability of current employees
attaining the service period required to qualify for long service leave benefits.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which they are
granted. The fair value is determined by an external valuer using a Monte Carlo
model, with the assumptions detailed in note 28.
Estimation of useful lives of assets
The estimation of the useful lives of assets has been based on historical
experience. In addition, the condition of the assets is assessed at least once per
year and considered against the remaining useful life. Adjustments to useful life
are made when considered necessary. Depreciation charges are included in note
12.
Derivative financial instruments and hedging
When applying hedge accounting the Group has considered all relevant factors in
determining that the future anticipated transaction is highly probable.
Tax losses
Revaluation of land and buildings
The Group has estimated that there will be adequate future profits available to
absorb all the tax losses incurred to date.
The Group measures land and buildings at revalued amounts with changes to fair
value being recognised in other comprehensive income. The Group engaged
independent valuation specialists to determine the fair value as at balance date.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences as
management considers that it is probable that future taxable profits will be
available to utilise those temporary differences.
AUSTAL LIMITED
2012
ANNUAL REPORT
20
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(i) Leases
(f) Revenue recognition
Revenue is recognised and measured at fair value of the consideration received
or receivable to the extent that it is probable that the economic benefits will flow to
the Group and the revenue can be reliably measured. The following specific
recognition criteria must also be met before revenue is recognised:
(i) Construction Contract Revenue
Construction contract revenue is brought to account on a percentage of
completion basis, based on actual costs incurred as a proportion of estimated total
contract costs.
Where the contract outcome cannot be measured reliably, contract costs are
recognised as an expense as incurred and where it is probable that the costs will
be recovered, revenue is recognised only to the extent of the costs incurred.
(ii) Sale of Goods and Scrap
Revenue is recognised when the significant risks and rewards of ownership of the
goods have passed to the buyer. Risk and rewards of ownership are considered
passed to the buyer at the time of delivery of the goods to the customer.
(iii) Charter Revenue
Charter revenue is operating rentals received on charter of vessels and is
recognised when the control over the right to revenue is achieved.
The determination of whether an arrangement is or contains a lease is based on
the substance of the arrangement and requires an assessment of whether the
fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
Operating lease payments are recognised as an expense in the statement of
comprehensive income on a straight-line basis over the lease term.
(j) Cash and cash equivalents
Cash and short-term deposits in the statement of financial position comprise cash
at bank and in hand and short-term deposits with an original maturity of three
months or less.
For the purposes of the Cash Flow Statement, cash and cash equivalents consist
of cash and cash equivalents as defined above, net of cash held as a guarantee.
(k) Trade and other receivables
Trade receivables, which are within the normal credit terms, are recognised and
carried at original invoice amount less an allowance for any uncollectible amounts.
An allowance for doubtful debts is made when there is objective evidence that the
Group will not be able to collect the debts. Bad debts are written off when
identified.
(iv) Service Revenue
(l) Reserved shares
Service revenue is brought into account on a percentage of completion basis,
based on actual costs incurred as a proportion of estimated total contract costs.
Where the contract outcome cannot be measured reliably, contract costs are
recognised as an expense as incurred and where it is probable that the cost will
be recovered, revenue is recognised only to the extent of the costs incurred.
Own equity instruments which are issued and held by a trustee under Austal
Group Management Share Plan are classified as reserved shares and are
deducted from equity. No gain or loss is recognised in the statement of
comprehensive income on the purchase, sale, issue or cancellation of the Group’s
own equity instruments.
(v) Interest income
(m) Inventories
Revenue is recognised as interest accrues using the effective interest method.
This is a method of calculating the amortised cost of a financial asset and
allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to the net carrying amount of the
financial asset.
Construction work in progress is valued at contract cost incurred to date, plus
profit recognised to date, less any provision for anticipated future losses and
progress billings. Costs include production overheads. Construction profits are
recognised on the percentage of completion basis. Percentage of completion is
determined by reference to actual costs to date as a proportion of estimated total
contract costs.
(vi) Dividends
Revenue is recognised when the Group’s right to receive the payment is
established.
(g) Government grants
Stock and finished goods are valued at the lower of cost and net realisable value,
where costs include production overheads. Cost of stock is determined on the
weighted average cost basis.
(n) Derivative financial instruments and hedging
Government grants are recognised when there is reasonable assurance that the
grant will be received and all attaching conditions will be complied with.
When the grant relates to an expense item, it is recognised as income over the
periods necessary to match the grant on a systematic basis to the costs that it is
intended to compensate.
The Group uses derivative financial instruments such as forward exchange
contracts and forward currency options to hedge its risks associated with foreign
currency fluctuations. Such derivative financial instruments are stated at fair value
on the date on which a derivative contract is entered into and are subsequently
remeasured at fair value. Derivatives are carried as assets when the fair value is
positive and as liabilities when the fair value is negative.
When the grant relates to an asset, the fair value is credited to a deferred income
account and is released to the statement of comprehensive income over the
expected useful life of the relevant asset by equal annual instalments.
Any gains or losses arising from changes in the fair value of derivatives, except for
those that qualify as cash flow hedges, are taken to the statement of
comprehensive income.
(h) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production
of a qualifying asset (i.e. an asset that necessarily takes a substantial period of
time to get ready for its intended use or sale) are capitalised as part of the cost of
that asset. All other borrowing costs are expensed in the period they occur.
Borrowing costs consist of interest and other costs that an entity incurs in
connection with the borrowing of funds.
The fair value of forward currency contracts is calculated by reference to current
forward exchange rates for contracts with similar maturity profiles.
For the purposes of hedge accounting, hedges are classified as:
fair value hedges when they hedge the exposure to changes in the fair value
of a recognised asset or liability or an unrecognised firm commitment other
than foreign currency risk; or
cash flow hedges when they hedge exposure to variability in cash flows that is
attributable either to a particular risk associated with a recognised asset or
liability or foreign exchange risks on firm commitments.
AUSTAL LIMITED
2012
ANNUAL REPORT
21
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(n) Derivative financial instruments and hedging (contined)
At the inception of a hedge relationship, the Group formally designates and
documents the hedge relationship to which the Group wishes to apply hedge
accounting and the risk management objective and strategy for undertaking the
hedge. The documentation includes identification of the hedging instrument, the
hedged item or transaction, the nature of the risk being hedged and how the entity
will assess the hedging instrument’s effectiveness in offsetting the exposure to
changes in the hedged item’s fair value or cash flows attributable to the hedged
risk. Such hedges are expected to be highly effective in achieving offsetting
changes in fair value or cash flows and are assessed on an ongoing basis to
determine that they actually have been highly effective throughout the financial
reporting periods for which they were designated.
Hedges that meet the strict criteria for hedge accounting are accounted for as
follows:
(i) Fair value hedges
Fair value hedges are hedges of the Group’s exposure to changes in the fair value
of a recognised asset or liability or an unrecognised firm commitment other than
foreign exchange rate risk, or an identified portion of such an asset, liability or firm
commitment that is attributable to a particular risk and could affect profit or loss.
For fair value hedges, the carrying amount of the hedged item is adjusted for
gains and losses attributable to the risk being hedged, the derivative is
remeasured to fair value and gains and losses from both are taken to the
statement of comprehensive income.
The Group discontinues fair value hedge accounting if the hedging instrument
expires or is sold, terminated or exercised, the hedge no longer meets the criteria
for hedge accounting or the Group revokes the designation. Any adjustment to
the carrying amount of a hedged financial instrument for which the effective
interest method is used is amortised to the statement of comprehensive income.
Amortisation may begin as soon as an adjustment exists and shall begin no later
than when the hedged item ceases to be adjusted for changes in its fair value
attributable to the risk being hedged.
(ii) Cash flow hedges
Cash flow hedges are hedges of the Group’s exposure to variability in cash flows
that is attributable to a particular risk associated with a recognised asset or liability
or a highly probable forecast transaction and the foreign exchange risks on firm
commitments and that could affect profit or loss. The effective portion of the gain
or loss on the hedging instrument is recognised directly in equity, while the
ineffective portion is recognised in the statement of comprehensive income.
Amounts taken to equity are transferred to the statement of comprehensive
income when the hedged transaction affects profit or loss, such as when hedged
income or expenses are recognised or when a committed and future sale or the
asset is consumed. When the hedged item is the cost of a non-financial asset or
liability, the amounts taken to equity are transferred to the initial carrying amount
of the non-financial asset or liability.
If the forecast transaction is no longer expected to occur, amounts previously
recognised in equity are transferred to the statement of comprehensive income. If
the hedging instrument expires or is sold, terminated or exercised without
replacement or rollover, or if its designation as a hedge is revoked, amounts
previously recognised in equity remain in equity until the forecast transaction
occurs. If the related transaction is not expected to occur, the amount is taken to
statement of comprehensive income for the period
(o) Foreign currency translation
Both the functional and presentation currency of Austal Limited and its Australian
subsidiaries is Australian dollars (A$). Each entity in the Group determines its
own functional currency and items included in the financial statements of each
entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency
by applying the exchange rates ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are retranslated at the rate
of exchange ruling at the balance date. All exchange differences arising from the
above procedures are taken to the statement of comprehensive income.
The functional currency of Austal USA is United States dollars (US$).
As at the reporting date, the assets and liabilities of the overseas subsidiaries are
translated into the presentation currency of Austal Limited at the rate of exchange
ruling at the balance date and the statement of comprehensive income is
translated at the average exchange rates for the period. The exchange
differences arising on the translation are taken directly to a separate component of
equity. On disposal of a foreign entity, the deferred cumulative amount
recognised in equity relating to that particular foreign operation is recognised in
the statement of comprehensive income.
(p) Income tax
Current tax assets and liabilities for the current and prior periods are measured at
the amount expected to be recovered from or paid to the taxation authorities. The
tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the balance date.
Deferred income tax is provided on all temporary differences at the balance date
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences
except:
when the deferred income tax liability arises from the initial recognition of
goodwill or of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; or
when the taxable temporary differences associated with investments in
subsidiaries, associates or interests in joint ventures, and the timing of the
reversal of the temporary differences can be controlled and it is probable that
the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary
differences, carry-forward of unused tax assets and unused tax losses, to the
extent that it is probable that taxable profit will be available against which the
deductible temporary differences, and the carry-forward of unused tax assets
and unused tax losses can be utilised except:
when the deferred income tax asset relating to the deductible temporary
difference arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; or
when the deductible temporary differences is associated with investments in
subsidiaries, associates and interests in joint ventures in which case a
deferred tax asset is only recognised to the extent that it is probable that the
temporary differences will reverse in the foreseeable future and taxable profit
will be available against which the temporary
The carrying amount of deferred income tax assets is reviewed at each balance
date and reduced to the extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred income tax asset to be
utilised.
Unrecognised deferred income tax assets are reassessed at each balance date
and are recognised to the extent that it has become probable that future taxable
profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are
expected to apply to the year when the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have been enacted or substantively
enacted at the balance date.
AUSTAL LIMITED
2012
ANNUAL REPORT
22
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(p) Income tax (continued)
Income taxes relating to items recognised directly in equity are recognised in
equity and not in the statement of comprehensive income.
Deferred tax assets and deferred tax liabilities are offset only if a legally
enforceable right exists to set off current tax assets against current tax liabilities
and the deferred tax assets and liabilities relate to the same taxable entity and the
same taxation authority.
(q) Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
when the GST incurred on a purchase of goods and services is not
recoverable from the taxation authority, in which case the GST is recognised
as part of the cost of acquisition of the asset or as part of the expense item as
applicable; and
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is
included as part of receivables or payables in the statement of financial position.
Cash flows are included in the Cash Flow Statement on a gross profit basis and
the GST component of cash flows arising from investing and financing activities,
which is recoverable from, or payable to, the taxation authority, are classified as
operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST
recoverable from, or payable to, the taxation authority.
(r) Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any
accumulated impairment losses.
During the year ended 30 June 2012, the Group changed its accounting policy
from the cost model to the revaluation model for land and buildings.
Land and buildings are measured at fair value on buildings and less any
impairment losses recognised after the date of revaluation. Valuations are
performed frequently to ensure that the fair value of a revalued asset does not
differ materially from its carrying value.
Any revaluation surplus is recorded in other comprehensive income and hence,
credited to the asset revaluation reserve in equity, except to the extent that it
reverses a revaluation decrease of the same asset previously recognised in the
statement of comprehensive income, in which case, the increase is recognised in
the profit and loss. A revaluation deficit is recognised in the statement of
comprehensive income except to the extent that it offsets an existing surplus on
the same asset recognised in the asset revaluation reserve. Accumulated
depreciation as at the revaluation date is eliminated against the gross carrying
amount of the asset and the net amount is restated to the revalued amount of the
asset. Upon disposal, any revaluation reserve relating to the particular asset being
sold is transferred to retained earnings.
Depreciation is calculated on a straight-line and diminishing value basis over the
estimated useful life of the asset as follows:
Buildings – over 40 years straight-line
Plant and equipment – over 2 to 10 years
The assets’ residual values, useful lives and amortisation methods are reviewed,
and adjusted if appropriate, at each financial year end.
(i)
Impairment
The carrying values of plant and equipment are reviewed for impairment at each
reporting date, with recoverable amount being estimated when events or changes
in circumstances indicate the carrying value of the asset may be impaired.
The recoverable amount of plant and equipment is the higher of fair value less
costs to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks
specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable
amount is determined for the cash-generating unit to which the asset belongs,
unless the asset’s value in use can be estimated to be close to its fair value.
An impairment exists when the carrying value of an asset or a cash-general unit
exceeds its estimated recoverable amount. The asset or cash-generating unit is
then written down to its recoverable amount.
Impairment losses on plant and equipment are recognised in the statement of
comprehensive income.
The asset or cash-generating unit that suffered an impairment is tested for
possible reversal of the impairment whenever events or changes in circumstances
indicate that the impairment may have reversed.
(ii) De-recognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when
no further future economic benefits are expected from its use or disposal.
Any gain or loss arising on de-recognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the
asset) is included in the statement of comprehensive income in the year the asset
is derecognised.
(s) Non-current assets held for sale
Non-current assets classified as held for sale are measured at the lower of their
carrying amount and fair value less costs to sell. Non-current assets are classified
as held for sale if their carrying amounts will be recovered principally through a
sale transaction rather than through continuing use. This condition is regarded as
met only when the sale is highly probable and the asset or disposal group is
available for immediate sale in its present condition. Management must be
committed to the sale, which should be expected to qualify for recognition as a
completed sale within one year from the date of classification.
Property, plant and equipment and intangible assets once classified as held for
sale are not depreciated or amortised.
(t)
Investments and other financial assets
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and
Measurement are classified as either financial assets at fair value through profit or
loss, loans and receivables, held-to-maturity investments, or available-for-sale
investments, as appropriate. When financial assets are recognised initially, they
are measured at fair value, plus, in the case of investments not at fair value
through profit or loss, directly attributable transactions costs. The Group
determines the classification of its financial assets on initial recognition.
All regular way purchases and sales of financial assets are recognised on the
trade date i.e. the date that the Group commits to purchase the asset. Regular
way purchases or sales are purchases or sales of financial assets under contracts
that require delivery of the assets within the period established generally by
regulation or convention in the marketplace.
Loans and receivables
Loans and receivables are non-derivative
fixed or
determinable payments that are not quoted in an active market. Such assets are
carried at amortised cost using the effective interest method. Gains and losses
are recognised in profit or loss when the loans and receivables are derecognised
or impaired as well as through the amortisation process.
financial assets with
AUSTAL LIMITED
2012
ANNUAL REPORT
23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(u) Impairment – Financial assets
A financial asset is assessed at each reporting date to determine whether there is
any objective evidence that it is impaired. A financial asset is considered to be
impaired if objective evidence indicates that one or more events have had a
negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset which is measured at amortised
cost is calculated as the difference between its carrying amount, and the present
value of the estimated future cash flows, discounted at the original effective
interest rate.
Individually significant financial assets are tested for impairment on an individual
basis. The remaining financial assets are assessed collectively in groups that
share similar credit risk characteristics.
All impairment losses are recognised in profit or loss. An impairment loss is
reversed if the reversal can be related objectively to an event occurring after the
impairment loss was recognised. For financial assets measured at amortised
cost, the reversal is recognised in profit or loss.
Useful lives
Finite
Computer Software
Method used
2.5 years – Straight line
Amortisation method reviewed at each financial
year-end
Internally generated
or acquired
Acquired
Impairment testing
Reviewed annually for indicator of impairment
Useful lives
Finite
Development costs
Method used
5 years – Straight line
Amortisation method reviewed at each financial
year-end
Internally generated
or acquired
Internally generated
(v) Intangible assets
Impairment testing
Reviewed annually for indicator of impairment
Intangible assets acquired separately are initially measured at cost. Following
initial recognition, intangible assets are carried at cost less any accumulated
amortisation and any accumulated impairment losses. Internally generated
intangible assets, excluding capitalised development costs, are not capitalised and
expenditure is charged against profits in the year in which the expenditure is
incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite.
Intangible assets with finite lives are amortised over the useful life and assessed
for impairment whenever there is an indication that the intangible asset may be
impaired. The amortisation period and the amortisation method for an intangible
asset with a finite useful life are reviewed at least at each financial year-end.
Changes in the expected useful life or the expected pattern of consumption of
future economic benefits embodied in the asset are accounted for by changing the
amortisation period or method, as appropriate, which is a change in accounting
estimate. The amortisation expense on intangible assets with finite lives is
recognised in the statement of comprehensive income in the expense category
consistent with the function of the intangible asset.
Research and Development costs
Research costs are expensed as incurred. Development expenditure on an
individual project are recognised as an intangible asset when the Group can
demonstrate:
the technical feasibility of completing the intangible asset so that it will
be available for use or sale
its intention to complete and its ability to use or sell the asset
how the asset will generate future economic benefits
the availability of resources to complete the asset
the ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the asset
is carried at cost less any accumulated amortisation and accumulated impairment
losses. Amortisation of the asset begins when development is complete and the
asset is available for use. It is amortised over the period of expected future
benefit. Amortisation is recorded in costs of sales. During the period of
development, the asset is tested for impairment annually.
A summary of the policies applied to the Group’s intangible assets is as follows:
(w) Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an
asset may be impaired. If any such indication exists, or when annual impairment
testing for an asset is required, the Group makes an estimate of the asset’s
recoverable amount. An asset’s recoverable amount is the higher of its fair value
less costs to sell and its value in use and is determined for an individual asset,
unless the asset does not generate cash inflows that are largely independent of
those from other assets or groups of assets and the asset’s value in use cannot
be estimated to be close to its fair value. In such cases the asset is tested for
impairment as part of the cash-generating unit to which it belongs. When the
carrying amount of an asset or cash-generating unit exceeds its recoverable
amount, the asset or cash-generating unit is considered impaired and is written
down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
An assessment is also made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer exist or
may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has
been a change in the estimates used to determine the asset’s recoverable amount
since the last impairment loss was recognised. If that is the case, the carrying
amount of the asset is increased to its recoverable amount. That increased
amount cannot exceed the carrying amount that would have been determined, net
of depreciation, had no impairment loss been recognised for the asset in prior
years. Such reversal is recognised in the statement of comprehensive income.
After such a reversal, the depreciation charge is adjusted in future periods to
allocate the asset’s revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
(x) Trade and other payables
Trade payables and other payables are carried at amortised costs and represent
liabilities for goods and services provided to the Group prior to the end of the
financial year that are unpaid and arise when the Group becomes obliged to make
future payments in respect of the purchase of these goods and services.
AUSTAL LIMITED
2012
ANNUAL REPORT
24
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Austal Group Management Share Plan (AGMSP); and
(y) Interest-bearing loans and borrowings
The Employee Share Option Plan (ESOP).
All loans and borrowings are initially recognised at the fair value of the
consideration received less directly attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost using the effective interest method.
Gains and losses are recognised in the statement of comprehensive income when
the liabilities are derecognised.
The cost of these equity-settled transactions with employees is measured by
reference to the fair value at the date at which they are granted. The fair value is
determined by an external valuer using a Monte Carlo model.
In valuing equity-settled transactions, no account is taken of any performance
conditions, other than conditions linked to the price of the shares of Austal Limited
(market conditions) if applicable.
(z) Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
A provision for dividends is not recognised as a liability unless the dividends are
declared, determined or publicly recommended on or before the reporting date.
If the effect of the time value of money is material, provisions are discounted using
a current pre-tax rate that reflects the risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time
is recognised as a finance cost.
(i) Warranties
Provision for warranty is made upon delivery of the vessels based on the
estimated future costs of warranty repairs on vessels.
(ii) Workers’ compensation insurance
A provision for workers’ compensation insurance is recognised for the expected
costs of current claims and claims incurred but not reported at the balance date.
(iii) Provision for onerous contracts
Provision is made for unrecognised present obligations of contracts to the extent
that it exceeds the economic benefits expected to be received under the contracts.
(aa) Employee leave benefits
(i) Wages, salaries, annual leave, vested sick leave and work safe bonus
Liabilities for wages and salaries, including non-monetary benefits, annual leave
and accumulating sick leave due to be settled within 12 months of the reporting
date are recognised in other payables in respect of employees’ services up to the
reporting date. They are measured at the amounts expected to be paid when the
liabilities are settled.
(ii) Long service leave
The liability for long service leave is recognised in the provision for employee
benefits and measured as the present value of expected future payments to be
made in respect of services provided by employees up to the reporting date.
Consideration is given to expected future wage and salary levels, experience of
employee departures, and periods of service. Expected future payments are
discounting using market yields at the reporting date on national government
bonds with terms to maturity and currencies that match, as closely as possible, the
estimated future cash outflows.
(ab) Share-based payment transactions
Equity settled transactions
The Group provides benefits to employees (including executive directors and key
management personnel) of the Group in the form of share-based payments,
whereby employees render services in exchange for shares or rights over shares
(equity-settled transactions).
The cost of equity-settled
together with a
corresponding increase in equity, over the period in which the performance
conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (the vesting period).
transactions
recognised,
is
Equity settled transactions
The cumulative expense recognised for equity-settled transactions at each
reporting date until vesting date reflects (i) the extent to which the vesting period
has expired and (ii) the number of awards that, in the opinion of the directors of
the Group, will ultimately vest. This opinion is formed based on the best available
information at balance date. No adjustment is made for the likelihood of market
performance conditions being met as the effect of these conditions is included in
the determination of fair value at grant date. The statement of comprehensive
income charge or credit for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for
awards where vesting is conditional upon a market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is
recognised as if the terms had not been modified. In addition, an expense is
recognised for any modification that increases the total fair value of the share-
based payment arrangement, or is otherwise beneficial to the employee, as
measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date
of cancellation, and any expense not yet recognised for the award is recognised
immediately. However, if a new award is substituted for the cancelled award and
designated as a replacement award on the date that it is granted, the cancelled
and new award are treated as if they were a modification of the original award, as
described in the previous paragraph.
Shares in the Group held by the AGMSP are classified and disclosed as reserved
shares and deducted from equity. Refer to note 2(l) for the accounting policy
applied to these shares.
(ac) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to
the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds of the new shares or options.
(ad) Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the
parent, adjusted to exclude costs of servicing equity (other than dividends) and
preference share dividends, divided by the weighted average number of ordinary
shares, adjusted for any bonus element.
Diluted earnings per share are calculated as net profit attributable to members of
the parent, adjusted for:
costs of servicing equity (other than dividends) and preference share
dividends;
the after tax effect of dividends and interest associated with dilutive potential
ordinary shares that have been recognised as expenses;
other non-discretionary changes in revenues or expenses during the period
that would result from the dilution of potential ordinary shares; and
There are currently two plans in place to provide these benefits, which extend to
senior management and directors:
divided by the weighted average number of ordinary shares and dilutive
potential ordinary shares, adjusted for any bonus element.
AUSTAL LIMITED
2012
ANNUAL REPORT
25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(ae) Operating Segments
An operating segment is a component of an entity that engages in business
activities from which it may earn revenues and incur expenses (including revenues
and expenses relating to transactions with other components of the same entity),
whose operating results are regularly reviewed by the entity's chief operating
decision maker to make decisions about resources to be allocated to the segment
and assess its performance and for which discrete financial information is
available. This includes start-up operations which are yet to earn revenues.
Management will also consider other factors in determining operating segments
such as the existence of a line manager and the level of segment information
presented to the board of directors.
Operating segments have been identified based on the information provided to the
chief operating decision makers — being the executive management team.
The group aggregates two or more operating segments when they have similar
economic characteristics, and the segments are similar in each of the following
respects:
Nature of the products and services
Nature of the production processes
Type or class of customer for the products and services
Methods used to distribute the products or provide the services, and if
applicable
Nature of the regulatory environment
Operating segments that meet the quantitative criteria as prescribed by AASB 8
are reported separately.
However, an operating segment that does not meet the quantitative criteria is still
reported separately where information about the segment would be useful to users
of the financial statements.
Information about other business activities and operating segments that are below
the quantitative criteria are combined and disclosed in a separate category for “all
other segments”. Refer to Note 4.
AUSTAL LIMITED
2012
ANNUAL REPORT
26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 3. REVENUE AND EXPENSES
Revenue and Expenses from Continuing Operations
(a) Revenue
Construction contract revenue
Charter revenue
Service revenue
Rental revenue
Sale of scrap
Interest from other unrelated parties
(b) Other income
Government grants
Training reimbursement
Gain on disposal of property, plant and equipment
Net foreign exchange gain
Other income
(c) Expenses
Cost of sales – construction contracts
Cost of sales – service
Marketing expenses
Administration expenses
Chartering expenses
(d) Impairment
Impairment of assets
(e) Gain on deferred premium options
Foreign exchange gain on forward currency options less deferred premiums
(f) Finance costs
Interest paid to unrelated parties
(g) Depreciation, amortisation and foreign exchange differences included in the statement of
comprehensive income
Depreciation excluding impairment
Amortisation
Net realised foreign exchange gain
2012
$’000
617,847
11,298
20,007
680
2,519
645
652,996
4,550
8,822
4,269
9,037
1,140
27,818
589,391
12,203
12,299
44,356
7,912
666,161
2,545
5,114
2011
$’000
469,161
9,968
21,591
543
2,164
429
503,856
6,056
4,167
39
-
139
10,401
422,268
11,277
15,071
36,175
7,612
492,403
-
677
4,665
2,739
14,457
1,867
-
14,378
1,127
(4,129)
(h) Lease payments included in statement of comprehensive income (Included in administration
expenses)
Rental expenses on operating leases
1,877
1,431
AUSTAL LIMITED
2012
ANNUAL REPORT
27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 3. REVENUE AND EXPENSES (continued)
(i) Employee benefits expense
Wages and salaries
Superannuation
Share based payments
Workers’ compensation costs
Annual leave (reversal)/expense
Long service leave expense
NOTE 4. OPERATING SEGMENTS
Identification of reportable segments:
2012
$’000
2011
$’000
163,054
157,455
3,592
1,603
2,927
2,526
1,002
6,066
85
2,180
458
(675)
174,704
165,569
For management purposes the group is organised into four business segments based on the location of the production facilities, related sales regions and types of
activity.
The Chief Executive Officer monitors the performance of the business segments separately for the purpose of making decisions about resources to be allocated and of
assessing performance. Segment performance is evaluated based on operating profit or loss. Finance costs, finance income and income tax are managed on a group
basis.
The Group’s reportable segments are as follows:
Henderson Shipyard Operations (“HSO”)
The HSO business manufactures high performance aluminium defence vessels for navys and border protection agencies for markets worldwide, excluding the USA.
USA
The USA manufactures high performance aluminium defence vessels for the U.S. Navy.
Service & Systems
The Service business provides training and on-going support and maintenance for high performance vessels and includes the chartering of a vessel to the U.S.
Navy’s Military Sealift Command.
Philippines Shipyard Operations (“PSO”)
The PSO business manufactures high performance aluminium commercial vessels for markets worldwide, excluding the USA.
Other/Unallocated
The following items and associated assets and liabilities are not allocated to operating segments as they are not considered part of the core operations of any
segment:
Cost of group services
Corporate overheads
Revenue from property leased to other group segments
Finance revenue and costs
Taxation
Assets held for sale
Derivatives
Commercial vessel charter contracts
Accounting policies and inter-segment transactions
The accounting policies used by the Group in reporting segments internally are the same as those contained in note 2 to the accounts.
Inter-entity sales are recognised based on an arm’s length pricing structure.
AUSTAL LIMITED
2012
ANNUAL REPORT
28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 4. OPERATING SEGMENTS (continued)
Year Ended 30 June 2012
Revenues
External customers
Inter-segment
Total revenues (i)
HSO
$’000
USA
$’000
PSO
$’000
Service &
Systems
$’000
Other/
Unallocated
$’000
Eliminations/
Adjustments
$’000
Total
$’000
48,993
14,740
63,733
570,300
1,942
30,238
-
-
2,600
570,300
1,942
32,838
878
2,010
2,888
-
652,351
(19,350)
-
(19,350)
652,351
Segment result (ii)
(13,653)
15,796
(798)
405
31,064
(16,237)
16,577
Depreciation and amortisation
Gain on deferred premium
(1,597)
(12,256)
(142)
(841)
(1,488)
5,114
-
-
-
-
-
(16,324)
-
5,114
Segment assets
Additions to non-current assets
130,294
480,586
(1,036)^
10,010
107,952
569
331
427
328,582
12,501
(112,770)
825,987
-
131,459
Year Ended 30 June 2011
Revenues
External customers
Inter-segment
Total revenues (i)
133,915
343,915
14,970
-
148,885
343,915
Segment result (ii)
(10,134)
26,053
Depreciation and amortisation
Gain on deferred premium
Segment assets
Additions to non-current assets
(2,367)
(9,246)
677
-
146,061
346,338
2,653
41,683
-
-
-
-
-
-
-
-
28,834
1,076
29,910
(3,237)
436
(2,801)
-
503,427
(16,482)
-
(16,482)
503,427
(1,765)
(5,994)
13,942
22,102
(1,370)
(2,522)
-
-
-
(15,505)
-
677
8,531
333
235,782
(62,092)
674,620
-
-
44,669
^ Due to funding from related entities liabilities exceed assets in these segments.
i) Segment revenue does not include finance revenue of $0.645 million (30 June 2011: $0.429 million).
ii) Segment result does not include finance revenue of $0.645 million (30 June 2011: $0.429 million) and finance costs of $4.665 million (30 June 2011: $2.739 million).
Reconciliation of segment result
Segment profit
Finance income
Finance expenses
Consolidated profit before income tax
Reconciliation of segment revenue
Segment revenue
Finance income
Consolidated revenue
2012
$’000
16,577
645
(4,665)
12,557
2012
$’000
652,351
645
652,996
2011
$’000
22,102
429
(2,739)
19,792
2011
$’000
503,427
429
503,856
AUSTAL LIMITED
2012
ANNUAL REPORT
29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 4. OPERATING SEGMENTS (continued)
During the current and prior year one customer in the USA segment generated revenue of $570.300 million (2011: $343.915 million). In the current year two customers in
the Australian segment generated revenue of $20.281 million (2011: $nil) and $14.152 million (2011: $nil) respectively. During the prior financial year two customers in
the Australian segment generated revenue of $78.734 million and $31.044 million respectively.
Revenue from external customers by geographical location of customers:*
North America
South America
Europe
Asia
Australia
Other
Total
Non-current assets, other than financial instruments and deferred tax assets by geographical
location:
USA
Philippines
Cyprus
Australia
Total
Non-current assets, by geographical location comprise:
Property, plant and equipment
Intangible assets
Total
Notes
12
13
2012
$’000
570,300
-
23,594
12,237
31,218
15,647
652,996
2012
$’000
288,314
10,174
12,448
59,447
370,383
370,383
5,045
375,428
2011
$’000
343,915
21,091
91,577
8,045
24,067
14,732
503,427
2011
$’000
167,177
-
-
46,161
213,338
208,275
5,063
213,338
AUSTAL LIMITED
2012
ANNUAL REPORT
30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 5. INCOME TAX
The major components of income tax expense are:
Statement of comprehensive income
Current income tax
Current income tax charge
Adjustments in respect of current income tax of the previous year
Deferred income tax
Relating to origination and reversal of temporary differences
Income tax expense/(benefit) reported in the statement of comprehensive income
Statement of changes in equity
Deferred income tax related to items charged or credited directly to equity
Deferred gains and losses on foreign currency contracts
Deferred gains on revaluation of property, plant and equipment
2012
$’000
(6,826)
636
7,704
1,514
(10,675)
14,662
A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the Group’s applicable income tax rate is as follows:
Accounting profit/(loss) before income tax from continuing operations
At the Group’s statutory income tax rate of 30% (2011: 30%)
Adjustment for Austal USA statutory income tax rate of 36.9% (2011: 36.9%)
International rate differential
Current year research & development allowances
Prior year research & development allowances
Share based payments (equity settled)
Franking deficit tax rebate
Recognition of Austal USA employment tax credits
Recognition of Austal USA R&D Tax credits
Other
Income tax expense/(benefit) reported in the statement of comprehensive income
12,557
3,767
2,144
(292)
-
-
-
-
(390)
(3,949)
234
1,514
2011
$’000
12,117
(5,264)
(8,951)
(2,098)
2,777
-
19,792
5,938
(73)
-
(3,520)
(3,796)
(240)
(798)
-
-
391
(2,098)
AUSTAL LIMITED
2012
ANNUAL REPORT
31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 5. INCOME TAX (continued)
Statement of Financial Position
Statement of Comprehensive Income
Deferred income tax
Deferred income tax at 30 June relates to the following:
Deferred tax assets - Australia
Unrealised foreign exchange loss
Undeducted borrowing costs
Provisions
Inventories
Payables
Losses available for offset against future taxable income
Deferred tax liabilities - Australia
Unrealised foreign exchange gain
Property, Plant and Equipment
Inventories
Deferred gains and losses on foreign currency contracts
Research & Development
Net deferred tax liabilities - Australia
Deferred income tax
Deferred income tax at 30 June relates to the following:
Deferred tax assets - USA
Provisions
Payables
Unrealised foreign exchange gain
Losses available for offset against future taxable income
USA employment tax credits
USA R&D tax credits
Charitable donations
Deferred tax liabilities - USA
Property, Plant and Equipment
Net deferred tax liabilities - USA
Deferred tax expense/(income)
2012
$’000
8,243
62
4,261
849
186
1,053
14,654
2,045
6,055
-
11,617
14,585
34,302
19,648
2011
$’000
8,072
63
5,884
-
764
1,741
16,524
1,845
-
946
22,383
14,585
39,759
23,235
2012
$’000
(171)
-
1,623
(849)
578
688
1,869
200
(13)
(946)
512
-
(247)
2011
$’000
(7,741)
9
1,358
-
(240)
1,926
(4,688)
1,530
-
(10,416)
5,096
(2,849)
(6,639)
1,622
(11,327)
Statement of Financial Position
Statement of Comprehensive Income
2012
$’000
2,013
6,252
204
6,315
390
3,949
32
19,155
18,775
18,775
(380)
2011
$’000
1,535
-
413
6,576
-
-
-
8,524
-
-
8,524
2012
$’000
(478)
(6,252)
205
261
(390)
(3,949)
(32)
10,635
16,717
16,717
6,082
7,704
2011
$’000
(996)
500
(413)
3,285
-
-
-
2,376
-
-
2,376
(8,951)
AUSTAL LIMITED
2012
ANNUAL REPORT
32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 5. INCOME TAX (continued)
Tax consolidation
Austal Limited (‘the Company’) is the head entity in a tax-consolidated group comprising the Company and its 100% owned Australian resident subsidiaries. The
implementation date of the tax consolidated system for the tax-consolidated group was 1 July 2002. Members of the group have entered into a tax sharing arrangement
in order to allocate income tax expense to the wholly owned subsidiaries on a pro-rata basis. The agreement provides for the allocation of income tax liabilities between
the entities should the head entity default on its tax payment obligations. At the balance date, the possibility of default was remote.
Tax effect by members of the tax consolidated group
The current and deferred tax amounts for the tax-consolidated group are allocated among the entities in the group using a stand-alone taxpayer approach whereby each
entity in the tax-consolidated group measures its current and deferred taxes as if it continued to be a separately taxable entity in its own right. Deferred tax assets and
deferred tax liabilities are measured by reference to the carrying amounts of the assets and liabilities in each entity’s statement of financial position and their tax values
applying under tax consolidation.
Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses assumed by the head entity from the subsidiaries in the tax consolidated
group are recognised in conjunction with any tax funding arrangement amounts (refer below).
The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent that it is probable that future taxable profits of the
tax-consolidated group will be available against which the asset can be utilised.
Any subsequent period adjustments to deferred tax assets arising from unused tax losses assumed from subsidiaries are recognised by the head entity only.
The members of the tax-consolidated group have entered into a tax funding arrangement which sets out the funding obligations of members of the tax-consolidated
group in respect of tax amounts. The tax funding arrangements require payments to/from the head entity equal to the current tax liability (asset) assumed by the head
entity and any tax-loss deferred tax asset assumed by the head entity.
In preparing the accounts for the parent company for the current year, no amounts have been recognised as tax consolidation contribution/distribution adjustments.
AUSTAL LIMITED
2012
ANNUAL REPORT
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 6. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of
ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of
ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential
ordinary shares into ordinary shares.
The following reflects the income share data used in the basic and diluted earnings per share computations:
Net profit attributable to ordinary equity holders of the parent from continuing operations
Weighted average number of ordinary shares (excluding reserved shares) for basic earnings per
share
Effect of dilution – share options
Weighted average number of ordinary shares (excluding reserved shares) adjusted for the effect
of dilution
2012
$’000
11,043
2011
$’000
21,890
2012
Number
2011
Number
183,766,205
183,559,322
462,579
767,611
184,228,784
184,326,933
Earnings per share (cents per share)
Diluted earnings per share (cents per share)
6.01
5.99
11.9
11.9
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial
statements. 11,273,611 (2011: 9,664,402) potential ordinary shares have been excluded from the earnings per share calculation as they were not considered dilutive.
AUSTAL LIMITED
2012
ANNUAL REPORT
34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 7. DIVIDENDS PAID AND PROPOSED
Paid during the year
Dividends on ordinary shares:
Final franked dividend for year ended 30 June 2011 paid during
Year ended 30 June 2012: 6 cents (2011: 6 cents)
Approved by Directors on 18 August 2011
Dividends on ordinary shares:
Final franked dividend for 2011: 6 cents (2010: 6 cents)
2012
$’000
2011
$’000
11,284
11,284
-
11,284
The tax rate at which paid dividends have been franked is 30% (2011: 30%). Dividends proposed will be franked at the rate of 30% (2011: 30%). No dividend was
proposed at 30 June 2012.
As at 30 June 2012, franking credits available to the parent company were $nil million (2011: $0.417 million).
NOTE 8. CASH AND CASH EQUIVALENTS
Current
Cash at bank and in hand
Restricted cash (i)
Non-current
Other financial assets
Restricted cash (ii)
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Reconciliation to cash flow statement
For the purposes of the Cash Flow Statement, cash and cash equivalents comprise the following at 30 June:
Cash at bank and in hand
Less restricted cash held as a guarantee - non current
2012
$’000
51,811
52,940
2011
$’000
42,265
128,837
944
903
105,695
(944)
104,751
172,005
(903)
171,102
(i) Current restricted cash represents the unspent proceeds of the Go Zone Bond issuance which occurred in May 2011. The funds may only be spent on those capital
works projects that were specifically identified in the documentation issued to investors. It is expected that the restricted cash will be fully utilised in the course of the
next year in funding the approved capital works. At 30 June 2012, $75.856 million of the restricted cash was spent (2011: nil).
The restricted cash is invested in capital protected interest bearing US government securities.
(ii) Non-current restricted cash represents a security deposit held for worker’s compensation insurance.
AUSTAL LIMITED
2012
ANNUAL REPORT
35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 8. CASH AND CASH EQUIVALENTS (continued)
Reconciliation of net profit after tax to net cash flows from operations
Net profit
Adjustments for:
Depreciation
Amortisation
Impairment of non-current assets
Net gain on disposal of property, plant and equipment
Share based payments
Unrealised (gain)/loss on deferred premium options and other derivative financial instruments
Changes in assets and liabilities:
(Decrease)/increase in provisions for:
Income tax (current and deferred)
Workers’ compensation insurance
Warranty
Employee benefits
Other provisions
(Increase)/decrease in debtors
(Increase)/decrease in work in progress
(Increase)/decrease in other inventories
(Increase)/decrease in other assets
(Increase)/decrease in other financial assets
(Decrease)/increase in trade creditors
(Decrease)/increase in progress payments in advance
(Decrease)/increase in government grants
Net cash inflow/(outflow) from operating activities
NOTE 9. TRADE AND OTHER RECEIVABLES
Current
Trade amounts owing by unrelated entities – construction contracts (i)
Allowance account for doubtful debts (ii)
2012
$’000
11,043
14,457
1,867
45
(4,269)
1,603
(5,114)
11,227
262
(7,333)
(1,148)
(17)
(74,189)
(15,606)
-
(788)
(6,156)
75,793
24,611
6,848
33,136
2012
$’000
96,586
(414)
96,172
2011
$’000
21,890
14,378
1,127
-
(39)
85
(677)
(10,298)
(272)
1,598
(1,835)
196
9,060
97,515
(150)
(5,027)
(5,056)
(32,371)
(9,138)
(14,419)
61,999
2011
$’000
23,849
(1,863)
21,986
Non-current
Trade amounts owing by unrelated entities
(i) Current trade amounts owing by unrelated entities are generally on 30 day terms.
18
15
(ii) During the year the group provided for $0.414 million (2011: $1.863 million) as an allowance account for doubtful debts. These provisions have been created in
relation to specific debtors whose debts were past due. The Group is currently negotiating payment arrangements with these debtors, however does not believe
there is objective evidence that these debts are not impaired.
AUSTAL LIMITED
2012
ANNUAL REPORT
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 9. TRADE AND OTHER RECEIVABLES (continued)
As at 30 June 2012, trade receivables of an initial value of $0.414 million (2011: $1.863m) were impaired and fully provided for. See below for the movements in the
provision for impairment of receivables:
At 1 July 2010
Charge for the year
Utilised
Unused amounts reversed
At 30 June 2011
Charge for the year
Utilised
Unused amounts reversed
At 30 June 2012
For ageing of debtors refer to note 21.
NOTE 10. INVENTORIES
Construction work in progress – total amounts due from customers on construction contracts
and stock vessels at cost
Less: progress payments received and receivable from construction contracts
Materials
Total inventories
NOTE 11. PREPAYMENTS
Current
Prepayments
Individually impaired
$’000
-
1,863
-
-
1,863
414
(1,863)
-
414
2012
$’000
1,557,303
(1,363,830)
193,473
56
193,529
2012
$’000
6,538
Total
$’000
-
1,863
-
-
1,863
414
(1,863)
-
414
2011
$’000
1,307,390
(1,129,687)
177,703
219
177,922
2011
$’000
5,792
AUSTAL LIMITED
2012
ANNUAL REPORT
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 12. PROPERTY, PLANT AND EQUIPMENT
Freehold land &
buildings
$’000
Plant &
equipment
$’000
Capital WIP
$’000
Total
$’000
Year ended 30 June 2012
At 1 July 2011 – cost or valuation
Carrying amount net of accumulated depreciation and impairment
143,177
Additions
Transfer in/(out)
Transfer to Held for sale assets ^
Disposals
Depreciation charge for the year
Impairment
Revaluation
Exchange adjustment
83,684
14,484
(1,561)
(2,787)
(5,957)
(45)
42,152
553
42,378
39,892
(6,732)
-
(6)
(8,500)
-
-
598
22,720
7,883
(7,752)
-
-
-
-
-
6,202
208,275
131,459
-
(1,561)
(2,793)
(14,457)
(45)
42,152
7,353
At 30 June 2012, carrying amount net of accumulated depreciation and
impairment
273,700
67,630
29,053
370,383
At 1 July 2011
Cost
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2012
Fair value
Cost
Accumulated depreciation and impairment
Net carrying amount
Interest capitalised to capital work in progress during the year was $0.975 million (2011: nil).
171,855
(28,678)
143,177
273,700
-
-
273,700
77,478
(35,100)
42,378
-
110,946
(43,316)
67,630
22,720
-
22,720
-
29,053
-
29,053
272,053
(63,778)
208,275
273,700
139,999
(43,316)
370,383
AUSTAL LIMITED
2012
ANNUAL REPORT
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 12. PROPERTY, PLANT AND EQUIPMENT (continued)
Year ended 30 June 2011
At 1 July 2010
Carrying amount net of accumulated depreciation and impairment
Additions
Transfer in/(out)
Disposals
Depreciation charge for the year
Exchange adjustment
Freehold land &
buildings
$’000
Plant &
equipment
$’000
Capital WIP
$’000
Total
$’000
157,909
5,441
16,537
(3,029)
(7,089)
(26,592)
43,050
12,649
319
(542)
(7,289)
(5,809)
16,775
26,579
(16,769)
-
-
(3,865)
217,734
44,669
87
(3,571)
(14,378)
(36,266)
At 30 June 2011, carrying amount net of accumulated depreciation and
impairment
143,177
42,378
22,720
208,275
At 1 July 2010
Cost
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2011
Cost
Accumulated depreciation and impairment
Net carrying amount
(i) The useful life of the assets was estimated as follows both for 2012 and 2011:
Building 40 years
Plant and equipment 2 to 10 years
(ii) Assets are encumbered to the extent noted in note 17.
^ The property classified as Held for Sale was subsequently sold in July 2012.
181,117
(23,208)
157,909
171,855
(28,678)
143,177
75,194
(32,144)
43,050
77,478
(35,100)
42,378
16,775
-
16,775
273,086
(55,352)
217,734
22,720
-
22,720
272,053
(63,778)
208,275
Revaluation of Land & Buildings
From 29 June 2012, the Group has changed its accounting policy for the measurement of land and buildings to the revaluation model. The Group engaged CB Richard
Ellis and Knight Frank to determine the fair value of its land and buildings for USA and Australia respectively. Both firms are accredited independent valuers.
Fair value is determined by use of the depreciation replacement cost method. The date of the revaluations were 29 June 2012.
If land and buildings were measured using the cost model, the carrying amount would be as follows:
Cost
Accumulated Depreciation and impairment
Net Carrying Amount
2012
$’000
254,599
(29,700)
224,899
2011
$’000
171,855
(28,678)
143,177
AUSTAL LIMITED
2012
ANNUAL REPORT
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 13. INTANGIBLE ASSETS
Year ended 30 June 2012
At 1 July 2011
Carrying amount net of accumulated amortisation
Additions
Amortisation for the year
Exchange adjustment
At 30 June 2012, carrying amount net of accumulated amortisation and
impairment
At 1 July 2011
Cost
Accumulated amortisation and impairment
Net carrying amount
At 30 June 2012
Cost
Accumulated amortisation and impairment
Net carrying amount
Computer
Software
$’000
Development
costs ^
$’000
5,063
1,038
(1,867)
147
4,381
9,402
(4,339)
5,063
10,673
(6,292)
4,381
-
664
-
-
664
-
-
-
664
-
664
Total
$’000
5,063
1,702
(1,867)
147
5,045
9,402
(4,339)
5,063
11,337
(6,292)
5,045
^ The Group during the year commenced the development of a minor warfare combatant command and control system used in military applications. The development of
this software meets the criteria of an internally generated asset.
AUSTAL LIMITED
2012
ANNUAL REPORT
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 14. DERIVATIVES
Financial assets
Current
Forward exchange contracts
Forward currency options
Non-current
Forward exchange contracts
Forward currency options
Financial liabilities
Current
Forward exchange contracts
Non-current
Forward exchange contracts
For terms and conditions attached to the forward exchange contracts and forward currency options, refer to note 22.
2012
$’000
31,830
4,211
36,041
10,625
-
10,625
2,186
5,757
2011
$’000
26,219
11,586
37,805
31,542
5,691
37,233
153
274
AUSTAL LIMITED
2012
ANNUAL REPORT
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 15. TRADE AND OTHER PAYABLES
Current
Trade & other payables owed to unrelated entities (i)
(i) Trade payables are unsecured, non-interest bearing and are normally settled on 45 day terms.
NOTE 16. INTEREST BEARING LOANS AND BORROWINGS
Notes
Current
Bank loan (unsecured) (i)
Equipment line (secured) (vi)
Deferred option premium (unsecured) (ii)
Cash advance multi option facility (secured) (iii)
Business term multi option lending facility (secured) (iv)
Non-current
Bank loan (unsecured) (i)
Equipment line (secured) (vi)
Deferred option premium (unsecured) (ii)
Go Zone Bonds (secured) (v)
2012
$’000
128,626
2012
$’000
13,553
2,438
2,982
-
-
18,973
9,470
17,557
-
219,417
246,444
2011
$’000
52,837
2011
$’000
3,605
-
4,949
-
-
8,554
5,508
-
2,737
209,740
217,985
Terms and conditions in relation to the above interest bearing liabilities:
(i) The unsecured bank loan is payable by instalments until October 2014, with an average interest rate of 7%.
(ii) The deferred option premium is payable in US dollars upon exercise of the options.
(iii) The cash advance facility expires on 30 June 2013.
(iv) The Business term multi option lending facilities expire on 30 June 2013 and 31 October 2013, respectively.
(v) The Go Zone Bonds are variable rate demand bonds and mature on 1 May 2041, payable in US dollars with an average interest rate of approximately 4%. The
bonds are supported by letters of credit which expire in October 2013 (refer to Note 23).
(vi) The Term equipment purchase facility expires in October 2015.
The loans and facilities incur interest at various average rates between 4% and 7%
AUSTAL LIMITED
2012
ANNUAL REPORT
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 16. INTEREST BEARING LOANS AND BORROWINGS (continued)
Financing facilities available
At reporting date, the following financing facilities had been negotiated and were available:
Total facilities:
- bank facilities (a)
- Go Zone Bonds
- bank loan (unsecured) (b)
- deferred option premium (unsecured)
Total
Facilities used at reporting date
- bank facilities (a)
- Go Zone Bonds
- bank loan (unsecured) (b)
- deferred option premium (unsecured)
Total
Facilities unused at reporting date:
- bank facilities (a)
- Go Zone Bonds
- bank loan (unsecured) (b)
- deferred option premium (unsecured)
Total
2012
$’000
222,351
221,529
42,977
2,982
489,839
58,032
219,417
23,023
2,982
303,454
2012
$’000
164,319
2,112
19,954
-
186,385
2011
$’000
222,814
209,740
46,605
7,686
486,845
31,832
209,740
9,113
7,686
258,371
2011
$’000
190,982
-
37,492
-
228,474
All the Group’s facilities are subject to review and are subject to cancellation at either party’s election in the event of an occurrence of a reviewable event or upon expiry
of each arrangement.
(a) Bank facilities consist of bank and performance guarantees, letters of credit, cash advances and equipment loans.
(b) Bank loan is guaranteed by a third party.
The bank facilities have various expiry dates up to October 2015.
AUSTAL LIMITED
2012
ANNUAL REPORT
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 17. GOVERNMENT GRANTS
Current
Infrastructure development (i)
Non-current
Infrastructure development (i)
2012
$’000
3,561
2011
$’000
3,567
48,753
41,896
The grants were received from various government bodies in Alabama to fund the expansion of the company’s Mobile, USA operations.
(i) The grants are amortised, on a straight line basis, based on the effective life of the funded assets.
NOTE 18. PROVISIONS
At 1 July 2011
Arising during the year
Utilised
Unused amounts reversed
Effects of foreign exchange
At 30 June 2012
Current 2012
Non-current 2012
At 30 June 2012
Current 2011
Non-current 2011
At 30 June 2011
Employee
benefits
Workers’
compensation
$’000
12,310
8,895
(10,566)
392
130
11,161
9,806
1,355
11,161
10,894
1,416
12,310
$’000
5,661
638
(438)
-
62
5,923
5,923
-
5,923
5,661
-
5,661
Warranty
$’000
9,854
652
(9,785)
1,800
-
2,521
2,521
-
2,521
9,854
-
9,854
Other
$’000
722
639
(656)
-
-
705
-
705
705
-
722
722
Total
$’000
28,547
10,824
(21,445)
2,192
192
20,310
18,250
2,060
20,310
26,409
2,138
28,547
Workers’ compensation insurance
A provision for workers’ compensation insurance is recognised for the expected costs of current claims and claims incurred but not reported.
Warranties
Provision is made for warranty based on the estimated future costs of warranty repairs on vessels.
Other
Other includes a provision for refitting a military vessel to return it to a passenger ferry specification (2011: provision included redundancy costs).
NOTE 19. OTHER LIABILITIES (CURRENT)
Progress payments received and receivable
Less: construction work in progress
Progress payments received in advance
2012
$’000
73,549
(46,261)
27,288
2011
$’000
4,393
(1,714)
2,679
AUSTAL LIMITED
2012
ANNUAL REPORT
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 20. CONTRIBUTED EQUITY AND RESERVES
Ordinary shares (i)
Reserved shares (ii)
(i) Ordinary shares
Issued and fully paid
2012
$’000
41,373
(9,611)
31,762
2011
$’000
41,075
(9,900)
31,175
41,373
41,075
Effective 1 July 1998, the Corporations legislation in place abolished the concepts of authorised capital and par value shares. Accordingly, the Parent does not have
authorised capital or par value in respect of its issued shares.
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Movement in ordinary shares on issue
At 30 June
(ii) Reserved shares
At 1 July
Options exercised
At 30 June
2012
2011
Number of shares
$’000 Number of shares
$’000
188,193,007
41,373
188,069,638
41,075
(4,390,601)
40,000
(4,350,601)
(9,900)
289
(9,611)
(4,566,763)
176,162
(4,390,601)
(10,205)
305
(9,900)
Reserved shares are in relation to shares held in the Austal Group Management Share Plan (refer to note 28).
Retained earnings
Movement in retained earnings were as follows:
Balance 1 July
Net profit for the year
Dividends
2012
$’000
222,931
11,043
(11,284)
222,690
2011
$’000
212,325
21,890
(11,284)
222,931
AUSTAL LIMITED
2012
ANNUAL REPORT
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 20. CONTRIBUTED EQUITY AND RESERVES (continued)
Reserves
At 1 July 2010
Currency translation differences
Share based payment
Net gains on cash flow hedges, net of tax
Transfer to Statements of Financial Position/
Comprehensive income
Foreign currency
translation
reserve
$’000
(1,685)
(7,180)
-
-
-
At 30 June 2011
(8,865)
3,345
Currency translation differences
Share based payment
Net gains on cash flow hedges, net of tax
Revaluation of land & buildings, net of tax
Transfer to Statements of Financial Position/
Comprehensive income
(1,703)
-
-
-
-
-
1,603
-
-
-
At 30 June 2012
(10,568)
4,948
The nature and purpose of reserves are:
Foreign currency translation reserve
Employee
benefit
reserve
$’000
3,260
Cash flow
hedge
reserve
$’000
40,523
-
85
-
-
-
-
36,739
(35,754)
41,508
-
-
(19,745)
-
(5,114)
16,649
Equity
Reserve
$’000
(15,925)
-
-
-
-
(15,925)
-
-
-
-
-
(15,925)
Asset
revaluation
Reserve
$’000
-
-
-
-
-
-
-
-
-
27,491
-
27,491
Total
$’000
26,173
(7,180)
85
36,739
(35,754)
20,063
(1,703)
1,603
(19,745)
27,491
(5,114)
22,595
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.
Employee equity benefits reserve
This reserve is used to record the value of equity benefits provided to employees and directors as part of their remuneration. Refer to note 28 for further details of
these plans.
Cash flow hedge reserve
This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge.
Equity reserve
This reserve represents the premium paid on the acquisition of the minority interest in a controlled entity.
Asset Revaluation reserve
This reserve is used to record increases in the fair value of land and buildings. This reserve can only be used to pay dividends in limited circumstances.
AUSTAL LIMITED
2012
ANNUAL REPORT
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 21. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise receivables, bank loans, derivatives, cash and short-term deposits.
The main purpose of these financial instruments is to provide finance for the Group’s operations. The Group has various other financial assets and liabilities such as
trade receivables and trade payables, which arise directly from its operations.
The Group manages its exposure to key financial risks, including currency risks in accordance with the Group’s financial risk management policy. The objective of the
policy is to build vessels in order to maximise profit whilst maintaining acceptable financial risk levels.
The Group has entered into derivative transactions, including principally, forward exchange contracts and forward currency options. The purpose is to manage the
currency risks arising from the Group’s operations. It is, and has been throughout the current financial year, the Group’s policy that no trading in financial instruments
shall be undertaken. The main risks arising from the Group’s financial instruments are foreign currency risk, interest rate risk, credit risk and liquidity risk. The Group
uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to interest rate and foreign
exchange risk and assessments of market forecasts for interest and foreign exchange rates. Ageing analyses and monitoring of specific credit allowances are undertaken
to manage credit risk. Liquidity risk is monitored through the development of future rolling cash flow forecasts.
Ultimate responsibility for identification and control of financial risks rests with the Audit & Risk Management Committee under the authority of the Board. The Board
reviews and agrees policies for managing each of the risks identified below, including hedging cover of foreign currency, credit allowances, and future cash flow forecast
projections.
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, financial liabilities and equity instrument are disclosed in note 2 to the financial statements.
Capital Management
The Group’s policy is to maintain a strong and flexible capital base to provide investor, creditor and market confidence to sustain future development of the business.
The Group monitors the return on capital, which the Group defines as total shareholders’ equity attributable to members of Austal Limited. The Board determines the
level of dividends to shareholders.
The Group monitors statement of financial position strength and flexibility using cash flow forecast analysis and detailed budgeting processes. The gross gearing ratio is
monitored and maintained at a level that does not limit the Company’s growth opportunities and is in line with peers and industry norms.
There were no changes in the Group’s approach to capital management during the year. Risk management policies and procedures are established with regular
monitoring and reporting.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements, other than normal banking requirements.
Risk Exposures and Responses
Interest rate risk
The Group’s exposure to market interest rates relates primarily to the Group’s long-term debt obligations and investment in cash funds.
At balance date, the Group had the following mix of financial assets and liabilities exposed to both Australian and US variable interest rate risks that were not designated
as cash flow hedges:
Financial assets
Australian variable interest rate
Cash and cash equivalents
US variable interest rate
Cash and cash equivalents
Financial liabilities
Australian variable interest rate
Interest-bearing loans and borrowings
US variable interest rate
Interest-bearing loans and borrowings
Net exposure
2012
$’000
22,349
29,462
51,811
2011
$’000
18,628
23,637
42,265
(26,005)
(16,824)
(239,412)
(265,417)
(209,740)
(226,564)
(213,606)
(184,299)
AUSTAL LIMITED
2012
ANNUAL REPORT
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 21. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
The Group constantly analyses its interest rate exposure. Consideration is given to potential renewals of existing positions and alternative financing.
The following sensitivity analysis is based on the variable interest rate risk exposures in existence at the balance date. At 30 June 2012, if interest rates had moved, as
illustrated in the table below, with all other variables held constant, post tax profit and equity would have been affected as follows:
Judgement of reasonable possible movements:
Post-tax gain/(loss)
+ 1% (100 Basis points)
– 1% (100 Basis points)
Foreign currency risk
At balance date, the Group had the following exposure to US Dollar and Euro currency:
Financial liabilities
US Dollar exchange rate
Interest-bearing loans and borrowings
Refer to Note 14 for Derivatives.
Impact on profit/Equity
2012
$’000
(1,495)
1,495
2012
$’000
2011
$’000
(1,290)
1,290
2011
$’000
2,982
7,686
The Group is exposed to currency risk on sales, purchases or components for construction that are denominated in a currency other than the respective functional
currencies of the Group entities, primarily the Australian Dollars (AUD) for the Australian operation and US Dollars (USD) for the US operation. The currencies in which
these transactions primarily are denominated are AUD, USD, and Euro.
The Group’s objective in relation to foreign currency risk is to minimise the risk of a variation in the rate of exchange used to convert foreign currency revenues and
expenses and assets or liabilities to AUD.
The Group attempts to limit the exposure to adverse movement in exchange rates in the following ways:
(i) negotiation of contracts to adjust for adverse exchange rate movements;
(ii) use of natural hedging techniques; and
(iii) using financial instruments (refer Note 16).
Sales contracts are negotiated based at the current market rate on the contract signing date. Where there is a tender involving significant foreign currency exposure, the
exposure is covered by a rise and fall clause for exchange rate movements between the date of price calculation to the date the contract becomes effective.
Known foreign exchange transaction exposure, which result from normal operational business activities are hedged.
At balance date, had the Australian Dollar moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity would have been
affected as follows:
Judgement of reasonable possible movements:
AUD/USD +5%
AUD/USD –5%
AUD/EUR +5%
AUD/EUR –5%
USD/EUR +5%
USD/EUR –5%
Post tax profit higher/(lower)
Equity higher/(lower)
2012
1,197
(2,787)
125
(125)
-
-
2011
806
(920)
-
-
-
-
2012
2011
5,279
(5,705)
(1,142)
1,260
(1,243)
(2,052)
7,855
(8,524)
271
(271)
(3,947)
4,121
AUSTAL LIMITED
2012
ANNUAL REPORT
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 21. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Foreign currency risk (continued)
Derivative financial instruments such as forward currency contracts and currency options are purchased to eliminate the currency exposures so as to maintain a properly
hedged position. Timing gaps are mitigated using foreign currency accounts or financial instruments such as swaps.
It is the Group’s policy to negotiate the terms of the hedge derivatives to match the terms of the hedged item to maximise hedge effectiveness.
Trading is specifically prohibited. The financial impact of the derivative instrument is incorporated into the cost of goods acquired or the sales proceeds. General hedges
are not undertaken.
Foreign currency contracts designated as cash flow hedges to mitigate the movements in foreign exchange rates are outlined in note 22.
Credit risk
The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit
verification procedures, which are conducted internally. The Group, while exposed to credit related losses in the event of non-performance by counterparties to financial
instruments, does not expect counterparties to fail to meet their obligations given their credit ratings.
The Group minimises concentrations of credit risk and the risk of default of counterparties in relation to cash and cash equivalents and financial instruments by spreading
them amongst a number of financial institutions.
It is the Group’s policy to minimise the risk that the principle amount will not be recovered and the risk that funds will not be available when required whilst at the same
time obtaining the maximum return relative to the risk. To manage this, it is the Group’s policy to restrict its investment of surplus cash funds to financial institutions with
a Standard and Poor credit rating of at least A-2, and for a period not exceeding 180 days. In order to achieve this objective the Group undertakes investments in
11am/24 hour call deposits, term deposits or negotiable certificates of deposit.
In addition, vessel sales contracts are structured to ensure that the company will be paid on delivery of the vessel through the following measures:
(i) obtaining progress payments from the client to cover the cost of the construction; or
(ii) obtaining a letter of credit from a credible bank to cover payment of the contract; or
(iii) obtaining a minimum payment of 20% of the contract price and a letter from the bank or financial institution providing finance to the customer that funding has been
arranged for the balance of the purchase price.
With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents and certain derivative instruments, the Group’s
exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. The maximum exposure to
credit risk at the reporting date is disclosed in note 22.
Cash and term deposits are predominantly held with three Australian financial institutions, which are considered to be low concentrations of credit risk.
At 30 June, the ageing analysis of current trade & other receivables is as follows:
2012
2011
Total
$’000
96,172
21,986
Impaired
$’000
(414)
(1,863)
0-30 days
31-60 days
61-90 days
90+days
$’000
92,216
19,853
$’000
1,917
230
$’000
470
261
$’000
1,983
3,505
Past Due But Not Impaired
Receivable balances are monitored on an ongoing basis.
AUSTAL LIMITED
2012
ANNUAL REPORT
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 21. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Liquidity risk
The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet our financial commitments in a timely and cost-effective manner.
It is the Group’s policy to continually review the Group’s liquidity position including cash flow forecasts to determine the forecast liquidity position and maintain
appropriate liquidity levels.
The following are the contractual maturities of financial liabilities, including interest payments:
Carrying
amount
$’000
Contractual
cash flows
$’000
0-1 year
$’000
1-2 years
2-5 years
Greater than
5 years
$’000
$’000
$’000
Year ended 30 June 2012
Derivative financial liabilities
Forward exchange contracts used for hedging:
Outflow
Inflow
-
-
Net derivative financial (assets)/liabilities
(38,722)
(107,599)
171,721
64,122
Non-derivative financial liabilities
Trade & other payables
Income tax payable
Bank loan (unsecured)
Equipment Line (secured)
Go Zone bond facility
Deferred option premium (unsecured)
Total
Year ended 30 June 2011
Derivative financial liabilities
Forward exchange contracts used for hedging:
Outflow
Inflow
128,626
(128,626)
(27,394)
(37,449)
(20,793)
(412,505)
(2,982)
(629,749)
27,394
23,023
19,995
219,417
2,982
421,437
Carrying
amount
$’000
-
-
(72,065)
105,932
33,867
(128,626)
(27,394)
(9,845)
(6,931)
(8,777)
(2,982)
(18,088)
30,586
12,498
-
-
(15,438)
(6,931)
(6,583)
-
(17,446)
35,203
17,757
-
-
(12,166)
(6,931)
(19,748)
-
-
-
-
-
-
-
-
(377,397)
-
(184,555)
(28,952)
(38,845)
(377,397)
Contractual
cash flows
$’000
0-1 year
$’000
1-2 years
2-5 years
Greater than
5 years
$’000
$’000
$’000
Net derivative financial (assets)/liabilities
(74,611)
(233,010)
348,223
115,213
(127,592)
182,377
54,785
(75,487)
110,510
35,023
(29,931)
55,336
25,405
Non-derivative financial liabilities
Trade & other payables
Bank loan (unsecured)
Go Zone bond facility
Deferred option premium (unsecured)
Total
52,837
9,138
209,740
7,686
204,790
(52,837)
(10,084)
(316,709)
(8,012)
(272,429)
(52,837)
(4,298)
(3,566)
(5,275)
(11,191)
-
(3,920)
(3,566)
(2,737)
24,800
-
-
-
-
-
(306,011)
-
-
(1,866)
(3,566)
-
19,973
(306,011)
At balance date, the Group has approximately $186.385 million (2011: $228.474 million) of unused credit facilities available for its immediate use. (please refer to note
16). The Group also has a total of $51.811 million (2011: $42.265 million) in cash and cash equivalents, which it is able to use to meet its liquidity needs.
AUSTAL LIMITED
2012
ANNUAL REPORT
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 22. FINANCIAL INSTRUMENTS
Fair values
Set out below is a comparison by category of the carrying amounts and fair values of all of the Group’s financial instruments recognised in the financial statements.
The fair values of borrowings have been calculated by discounting the expected future cash flows at prevailing market interest rates. The fair values of loan notes and
other financial assets have been calculated using discounted cash flows using market interest rates.
Financial assets
Cash
Trade receivables & other receivables
Derivatives
Other financial assets
Financial liabilities
Trade payables & other payables
Income tax payable
Derivatives
Bank loan (unsecured)
Deferred option premium (unsecured)
Equipment line (secured)
Cash advance facility
Go Zone bonds
Carrying amount
Fair value
2012
$’000
104,751
96,172
46,666
944
(128,626)
(27,394)
(7,943)
(23,023)
(2,982)
(19,995)
-
2011
$’000
172,005
22,001
75,038
903
(52,837)
(20,724)
(427)
(9,113)
(7,686)
-
-
2012
$’000
104,751
96,172
46,666
944
(128,626)
(27,394)
(7,943)
(23,023)
(2,982)
(19,995)
-
2011
$’000
172,005
22,001
75,038
903
(52,837)
(20,724)
(427)
(9,113)
(7,868)
-
-
(219,417)
(209,740)
(219,417)
(209,740)
The Group’s derivatives are categorised in level 2 of the valuation hierarchy, as their fair value has been calculated using valuation techniques where the inputs that have
a significant effect on the valuation are directly or indirectly based on market observable data.
Contingencies
The Group entities may have potential financial liabilities that could arise from certain contingencies as disclosed in note 23. As explained in that note, no material losses
are anticipated in respect of any of those contingencies. The fair value disclosed (if any) is the directors’ best estimate of amounts that would be payable by the Group to
settle those financial liabilities.
Hedging and derivatives
Instruments used by the Group
The Group enters into cash flow and fair value hedges to eliminate its exposure to the variability in cash inflows and outflows due to foreign exchange rate fluctuation of
the contractual future receipts and payments.
Forward currency contracts – cash flow hedges
The Group is primarily exposed to the risk of adverse movements in the Australian dollar relative to certain foreign currencies, including the US dollar, and Euro arising
from receipts from export sales and the purchase of components for construction. Derivative financial instruments such as forward exchange contracts and forward
currency options are purchased to eliminate the currency exposures so as to maintain a properly hedged position. These contracts are hedging committed and highly
probable receipts and payments and they are timed to mature when the receipts and payments are scheduled to be received and made.
The forward currency contracts are considered to be effective hedges as they are matched against forecast sales receipts and material purchases and any gain or loss
on the contracts attributable to the hedged risk, to the extent considered effective, is taken directly to equity. When the forward currency contracts are delivered, the
amount recognised in equity is adjusted either to the inventories account in the statement of financial position for vessels in progress or to the sales and cost of sales
account in the statement of comprehensive income for completed vessels.
The following table summarises by currency the Australian dollar value of forward foreign exchange agreements and forward currency options. Foreign currency
amounts are translated at rates current at the reporting date. The ‘buy’ amounts represent the Australian dollar equivalent of commitments to purchase foreign
currencies, and the ‘sell’ amount represents the Australian dollar equivalent of commitments to sell foreign currencies. Contracts to buy and sell foreign currency are
entered into from time to time to offset purchase and sale obligations so as to maintain a properly hedged position.
AUSTAL LIMITED
2012
ANNUAL REPORT
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 22. FINANCIAL INSTRUMENTS (continued)
Forward currency contracts – cash flow hedges (continued)
United States Dollars
Forward exchange contracts
less than 3 months
3 - 12 months
13 months or greater
Forward currency options
3 - 12 months
13 months or greater
Euro
Forward exchange contracts
less than 3 months
3 - 12 months
13 months or greater
US/Euro
Forward exchange contracts
less than 3 months
3 - 12 months
13 months or greater
Forward currency options
3 - 12 months
13 months or greater
2012
Buy
$000
-
-
698
698
-
-
-
293
449
939
1,681
Average
Forward/
Strike
Rate
-
0.7118
0.9060
-
0.6600
-
-
0.8079
Sell
Average
Buy
Average
Sell
2011
$000
Forward
Rate
$000
Forward
Rate
$000
-
98,471
53,894
152,365
-
10,831
10,831
1.0321
1.0090
-
-
-
144
8
-
152
-
-
-
0.8883
0.7629
0.7744
0.6600
0.6600
6,824
69,262
91,428
167,514
20,920
10,831
31,751
0.6880
0.6203
0.5493
-
-
619
619
639
878
1,535
3,052
0.6899
14,918
-
-
-
-
14,918
Average
Forward/
Strike
Rate
-
-
0.6303
-
-
0.5754
0.5625
0.5385
1.064
1.065
1.067
4,943
4,943
-
1.0544
30,586
1.1535
40,472
-
22,973
46,905
69,878
1.031
16,682
-
-
16,682
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.0766
1.0239
1.0251
0.9440
0.9440
1,088
36,548
40,227
77,863
35,216
18,233
53,449
AUSTAL LIMITED
2012
ANNUAL REPORT
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 22. FINANCIAL INSTRUMENTS (continued)
Forward currency contracts – cash flow hedges (continued)
2012
Buy
$000
Average
Forward/
Strike
Rate
Sell
Average
Buy
Average
Sell
2011
$000
Forward
Rate
$000
Forward
Rate
$000
-
80
-
80
306
383
2,786
3,475
-
-
-
-
-
-
0.6129
0.6003
0.5580
251
1,537
6,193
7,981
-
-
-
0.6756
0.6767
-
-
-
-
-
-
231
177
-
408
-
-
0.6657
-
-
-
-
-
-
-
-
0.8753
GBP
Forward exchange contracts
less than 3 months
3-12 months
13 months or greater
US/GBP
Forward exchange contracts
less than 3 months
3-12 months
13 months or greater
EUR/GBP
Forward exchange contracts
less than 3 months
3-12 months
13 months or greater
Swiss Francs*
less than 3 months
Average
Forward/
Strike
Rate
-
0.6272
-
0.9975
0.9956
0.9968
-
-
-
-
* Relates to forward exchange contracts.
Movement in forward currency contract cash flow hedge reserve
Opening balance
Transferred to sales
Transferred to cost of sales
Transferred to other income
Charged to equity
Closing balance
23
-
-
23
-
-
-
-
-
-
-
-
5
5
2012
$’000
41,508
(84)
(5,030)
-
(19,745)
16,649
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2011
$’000
40,523
(38,080)
2,326
-
36,739
41,508
AUSTAL LIMITED
2012
ANNUAL REPORT
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 23. COMMITMENTS & CONTINGENCIES
Operating lease commitments
Future minimum rentals payable under non-cancellable leases as at 30 June are as follows:
Within one year
After one year but not more than five years
Capital commitments
Buildings – USA
Contingent liabilities
Bank performance guarantees (i)
Go Zone Bonds(i)
2012
$’000
1,771
2,619
4,390
2012
$’000
6,189
2012
$’000
38,037
219,417
257,454
2011
$’000
916
188
1,104
2011
$’000
130,100
2011
$’000
31,832
209,740
241,572
(i) The bank performance guarantees and Go Zone Bonds are secured by a mortgage over the land and buildings and floating charges over cash, receivables, work in
progress and plant and equipment (refer Note 16).
Other contingent liabilities excluded from the above include:
The parent company has guaranteed the performance of certain contract obligations of a subsidiary.
AUSTAL LIMITED
2012
ANNUAL REPORT
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 24. RELATED PARTY DISCLOSURE
The consolidated financial statements include the financial statements of Austal Limited and the subsidiaries listed in the following table.
Country of incorporation
2012
2011
% Equity Interest
Austal Ships Pty Ltd
Oceanfast Pty Ltd
Image Marine Pty Ltd
Seastate Pty Ltd
Oceanfast Luxury Yachts Pty Ltd (formerly Oceanfast Properties Pty Ltd)
Austal Service Pty Ltd (formerly Oceanfast Motor Yachts Pty Ltd )
Austal Philippines Pty Ltd (formerly Austal Ships Sales Pty Ltd)
Austal Holdings Inc.
Austal USA LLC
Austal Hull 130 Chartering LLC
Austal Muscat LLC
Austal Systems Pty Ltd (formerly Australian Technology Information Pty Ltd)
Austal Cyprus Pty Ltd
Austal UK Limited
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
USA
Oman
Australia
Cyprus
United Kingdom
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
-
-
Austal Limited is the ultimate parent of the Group and is incorporated in Perth, Western Australia.
Transactions with related parties
There were no transactions with related parties during the year. The Group has a policy that all transactions with related parties are conducted on commercial terms and
conditions.
NOTE 25. EVENTS AFTER THE BALANCE DATE
There were no material events occurring after year end requiring disclosure.
NOTE 26. AUDITORS’ REMUNERATION
The auditor of the Austal Limited Group is Ernst & Young.
Amounts received or due and receivable by Ernst & Young for:
- an audit or review of the financial report of the entity and any other entity in the Group
- other services in relation to the entity and any other entity in the Group:
- Tax compliance
Total
NOTE 27. DIRECTOR AND EXECUTIVE DISCLOSURES
(a) Compensation of Key Management Personnel
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payment
Total compensation
2012
$’000
493
35
528
2012
$’000
3,234,847
70,056
-
366,821
3,671,724
2011
$’000
379
-
379
2011
$’000
3,344,275
75,833
130,700
(1,144,063)
2,406,745
AUSTAL LIMITED
2012
ANNUAL REPORT
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 27. DIRECTOR AND EXECUTIVE DISCLOSURES (continued)
(b) Option holdings of Key Management Personnel
Balance at
beginning of
year
Granted as
Remuneration
Options
Exercised
Net Change
Other **
Balance at
end of year
Total
Exercisable
Not
Exercisable
Vested
280,000
280,000
140,000
-
375,000
280,000
-
297,500
169,000
1,681,500
140,000
140,000
70,000
140,000
70,000
700,000
-
-
-
-
-
-
-
-
-
-
420,000
280,000
(515,000)
-
-
-
-
-
420,000
70,000
437,500
239,000
140,000
140,000
-
-
-
-
-
-
-
-
-
-
-
-
(515,000)
1,866,500
140,000
140,000
-
-
-
-
-
-
-
-
30 June 2012
Directors
M Atkinson
A Bellamy
Executives
J Rella*
R Simons
C McGill*
G Jason*
B Leathers*
Total
* Key management personnel for part of the year of 2012.
** Includes forfeitures.
Balance at
beginning of
year
140,000
140,000
235,000
140,000
155,416
206,500
1,016,916
30 June 2011
Directors
M Atkinson
A Bellamy
Executives
J Rella
R Simons
W Rotteveel*
M Dummett ***
Total
Granted as
Remuneration
Options
Exercised
Net Change
Other **
Balance at
end of year
Total
Exercisable
Not
Exercisable
Vested
140,000
140,000
140,000
140,000
-
70,000
630,000
-
-
-
-
-
-
-
-
-
-
-
(155,416)
280,000
280,000
375,000
280,000
-
140,000
140,000
-
-
-
-
-
-
-
-
-
276,500
(155,416)
1,491,500
67,500
207,500
67,500
207,500
-
-
-
-
-
-
-
* Key management personnel for part of the year of 2011.
** Includes forfeitures.
*** Not a KMP at 30 June 2012
AUSTAL LIMITED
2012
ANNUAL REPORT
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 27. DIRECTOR AND EXECUTIVE DISCLOSURES (continued)
(c) Shareholdings of Key Management Personnel
30 June 2012
Directors
J Rothwell
M Atkinson
C Norman*
J Poynton
D Amara
A Bellamy
D Singleton*
I Campbell
Executives
J Rella*
R Simons
C McGill*
G Jason*
B Leathers*
Total
* Key management personnel for part of the year of 2012.
30 June 2011
Directors
J Rothwell
M Atkinson
C Norman
J Poynton
D Amara
R Browning*
A Bellamy
I Campbell
Executives
W Rotteveel*
M Dummett
J Rella
R Simons
Total
Balance
1 July 2011
Net change other
Balance
30 June 2012
33,974,685
1,415,737
26,602,221
10,000
50,000
-
-
-
-
-
-
-
-
(1,773,940)
-
-
-
-
123,369
-
-
-
-
-
-
-
32,200,745
1,415,737
26,602,221
10,000
50,000
123,369
-
-
-
-
-
-
-
62,052,643
(1,650,571)
60,402,072
Balance
1 July 2010
Net change other
Balance
30 June 2011
33,974,685
1,415,737
26,602,221
10,000
50,000
20,000
30,000
-
22,806
3,431
-
-
-
-
-
-
-
(20,000)
(30,000)
-
(22,806)
(3,431)
-
-
33,974,685
1,415,737
26,602,221
10,000
50,000
-
-
-
-
-
-
-
62,128,880
(76,237)
62,052,643
* Key management personnel for part of the year of 2011.
All equity transactions with key management personnel have been entered into under terms and conditions no more favourable than those the Group would have
adopted if dealing at arm’s length.
AUSTAL LIMITED
2012
ANNUAL REPORT
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 27. DIRECTOR AND EXECUTIVE DISCLOSURES (continued)
(d) Participation by specified Directors and Key Management Personnel in the Austal Group Management Share Plan (in substance options)
Balance at
beginning of
year
285,062
285,062
285,062
3,000,000
80,934
3,365,996
30 June 2012
Directors
M Atkinson
Total
30 June 2011
Directors
M Atkinson
R Browning*
Executives
W Rotteveel*
Total
Granted as
Remuneration
Options
Exercised
Net Change
Other ***
Balance at
end of year
Total
Exercisable
Not
Exercisable
Vested
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,000,000)
(80,934)
285,062
285,062
285,062
285,062
285,062
285,062
285,062
285,062
285,062
-
-
-
-
-
-
(3,080,934)
285,062
285,062
285,062
-
-
-
-
-
-
* Key management personnel for part of the year of 2011.
*** Includes forfeitures
(e) Other transactions and balances with Key Management Personnel
Directors of the consolidated entity conduct transactions with entities within the consolidated entity on terms no more favourable than those the entity would have
adopted if it transacted on an arm’s length basis. Other than directors’ remuneration and the matters disclosed in note 24 of this report, no related party transactions
occurred with the consolidated entity.
AUSTAL LIMITED
2012
ANNUAL REPORT
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 28. SHARE BASED PAYMENT PLANS
(a) Recognised share-based payment expenses
The expense recognised for employee services received during the year is shown in the table below:
Expense arising from equity-settled share-based payment transactions
2012
$’000
1,603
2011
$’000
85
The share-based payment plans are described below. There have been no cancellations or modifications to any of the plans during 2012 and 2011. Any options granted
in the period have no rights to dividends and no voting rights.
(b) Types of share-based payment plans
Employee Share Option Plan, ‘ESOP’
Objective
The Share Option Plan aims to reward executives and senior managers with the issue of share options commensurate with their position and responsibilities within the
Company so as to:
attract and retain exceptional employees (‘key employees’) that have the capacity to significantly impact the growth and profitability of the Company; and
align key employees’ behaviour toward the growth and profitability objectives of the Company; and reward key employees for sustained contributions to business
success.
Structure
The share options are granted to executives and senior managers based on the eligibility criteria set by the Remuneration Committee. Eligibility for the plan will be linked
to employee performance. The exercise of the options will vest after 3 years subject to meeting the company performance criteria.
Performance hurdle
The Company uses a relative Total Shareholder Return (TSR) as the performance hurdle for the share option plan. Relative TSR was selected as the share option plan
performance hurdle as it ensures an alignment between comparative shareholder return and reward for executives.
The Company’s performance against the hurdle is determined by comparing the TSR against the return of the Small Industrials Accumulation Index (or another
appropriate index) for the three year period commencing on the 1 July prior to the grant date. If the TSR does not exceed the return of the Small Industrials
Accumulation Index for a particular three year period, the series of options issued at that grant date would lapse.
Summaries of options granted under ESOP
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in share options issued during the year:
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Outstanding at the end of the year
Exercisable at the end of the year
2012
No.
6,664,402
3,430,000
(1,820,791)
8,273,611
420,611
WAEP
2.63
2.15
2.55
2.46
2011
No.
3,874,402
3,010,000
(220,000)
6,664,402
486,652
WAEP
2.87
2.34
2.99
2.63
AUSTAL LIMITED
2012
ANNUAL REPORT
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 28. SHARE BASED PAYMENT PLANS (continued)
(b) Types of share-based payment plans (continued)
Option pricing model: ESOP
Equity-settled transactions
The following table lists the inputs to the models used, applicable for both the years ended 30 June 2012 and 30 June 2011:
Grant date
Spot price ($)*
Option exercise price ($)
Fair value of option $/option
Expected volatility (%)
Annual risk free interest rate
(%)
Dividend yield (%)
Expected life of option (years)
*
closing share price at valuation date
Tranche 3
Tranche 4
Tranche 5
Tranche 6
Tranche 7
Tranche 8
Tranche 9
Tranche 10
2008
2009
2010
2010
2010
2011
2012
2012
24 Oct 2007
10 Sept 2008
3 Nov 2009
16 Feb 2010
25 Feb 2010
27 Sept 2010
21 Oct 2011
20 Dec 2011
3.16
3.60
0.43
35.0
6.51
5.70
4.9
2.35
2.40
0.36
40.0
5.54
5.67
5.00
2.41
2.95
0.52
44.0
5.35
4.5
5.00
2.44
1.81
0.69
44.0
5.28
4.5
4.00
2.43
2.45
0.561
44.0
5.37
4.5
4.00
2.38
2.34
0.840
44.0
5.00
2.0
4.00
2.25
2.15
0.667
43.0
4.10
2.0
4.00
2.24
2.15
0.618
43.0
3.20
2.0
4.00
The Group uses the Monte Carlo model to value the share options. The effects of early exercise have been incorporated into the calculations by using an expected life
for the option that is shorter than the contractual life based on certain factors including the period of time between the valuation date and the expiry date, the vesting
period, the expected volatility of the underlying shares and the dividend yield. The expected volatility was determined based on the Company’s annual historical share
price volatility over the five year period prior to the valuation dates. The resulting expected volatility therefore reflects the assumption that the historical volatility is
indicative of future trends, which may also not necessarily be the actual outcome.
Austal Group Management Share Plan
The Company established the first Austal Group Management Share Plan by which directors and certain managers can participate in owning shares in the Company.
The key features of the Plan are:
(a) The initial 7.700 million shares under the plan were acquired at market value from a former director prior to the listing of the Company on 10 November 1998. An
independent valuation was undertaken by Messrs Gorey Sinclair to determine this price.
(b) Austal offers to loan participants up to 100% of the purchase consideration for their shares on a limited recourse basis. However, this amount may be varied at the
discretion of the Board.
(c) The shares are made available to the participants at market value.
(d) The Board at its discretion determines the number of shares that will be made available to each participant.
(e) The shares are required to be held by a trustee on behalf of the participant. Shares may not be transferred to a participant for at least 12 months. After this period,
20% of a participant’s shares will become eligible to be transferred provided any loan in respect of these shares has been repaid. An additional 20% will become
eligible to be transferred to the participant at the end of each 12-month period thereafter on the same terms, so that a participant may hold 100% of his shares at the
end of 5 years.
(f) Dividends on shares held under the Plan must be applied to pay interest on the loans. Participants with an interest in shares under the Plan have full voting rights.
(g) Interest on the loans will be charged at a fixed rate of 6%, or such other rate as determined by the Board.
(h) Upon termination of employment or contract arrangements the shares must be sold and the loan (if any) repaid.
AUSTAL LIMITED
2012
ANNUAL REPORT
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 28. SHARE BASED PAYMENT PLANS (continued)
(b) Types of share-based payment plans (continued)
The Company established the second Austal Group Management Share Plan by which managers can participate in owning shares in the Company. The key features of
the Plan are:
(a) The initial 5.675 million shares under the plan were acquired at market value on the Australian Stock Exchange as follows:
Date
25 September 2000
28 September 2000
29 September 2000
9 October 2000
13 October 2000
11 December 2000
9 March 2001
4 July 2001
20 June 2002
25 July 2002
12 July 2002
Total
Number of shares
1,710,000
570,000
285,000
285,000
830,000
285,000
285,000
285,000
570,000
285,000
285,000
5,675,000
(b) Austal will offer to loan eligible managers up to 90% of the purchase consideration for their shares on a limited recourse basis. However, this amount may be varied
at the discretion of the Board.
(c) The shares are made available to the managers at market value.
(d) The Board at its discretion will determine the number of shares that will be made available to each eligible manager.
(e) The shares are required to be held by a trustee on behalf of the manager. Shares may not be transferred to a manager for at least 12 months. After this period,
20% of a manager’s shares will become eligible to be transferred provided any loan in respect of these shares has been repaid. An additional 20% will become
eligible to be transferred to the manager at the end of each 12-month period thereafter on the same terms, so that a manager may hold 100% of his shares at the
end of 5 years.
(f) Dividends on shares held under the Plan must be applied to pay interest on the loans. Managers with an interest in shares under the Plan have full voting rights.
(g) Interest on the loans will be charged at a fixed rate of 60% of any dividends paid, or such other rate as determined by the Board.
(h) Upon termination of employment or contract arrangements the shares must be sold and the loan (if any) repaid. The trustee may arrange a sale of shares to eligible
managers.
The Company established the third Austal Group Management Share Plan by which executives can participate in owning shares in the Company. The key features of
the Plan are:
(a) The initial 3 million shares under the plan were acquired at market value on the Australian Stock Exchange on 22 October 2007. These were issued to Mr Robert
Browning and forfeited in 2011.
(b) Austal will offer to loan eligible executives up to 100% of the purchase consideration for their shares on a limited recourse basis. However, this amount may be
varied at the discretion of the Board.
(c) The shares are made available to the executives at market value.
(d) The Board at its discretion will determine the number of shares that will be made available to each eligible executive.
(e) The shares are required to be held by a trustee on behalf of the executives. Shares may not be transferred to a manager for at least 12 months. After this period,
20% of the executive’s shares will become eligible to be transferred provided any loan in respect of these shares has been repaid. An additional 20% will become
eligible to be transferred to the executive at the end of each 12-month period thereafter on the same terms, so that the executive may hold 100% of his shares at the
end of 5 years.
(f) Dividends on shares held under the Plan are paid to the eligible executive. Eligible executives with an interest in shares under the Plan have full voting rights.
(g) No interest will be charged on the loans.
(h) Upon termination of employment or contract arrangements the shares must be sold and the loan (if any) repaid.
AUSTAL LIMITED
2012
ANNUAL REPORT
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 28. SHARE BASED PAYMENT PLANS (continued)
(b) Types of share-based payment plans (continued)
The fair value of the benefit provided that is applicable to these 3 million shares (in substance options) granted is estimated using the Binomial option pricing model as
follows:
Grant date
Share price at grant date $
Exercise price
Fair value of option $/option
Expected volatility %
Risk free interest rate %
Expected life (years)
At balance date the trustee on behalf of the plans holds a total of 1,350,601 shares.
Details of the Austal Group Management Share Plan are shown below:
Total shares (in substance options) held by trustee on behalf of plan at balance date (000’s)
Total shares (in substance options) forfeited during the year (000’s)
Total shares (in substance options) sold during the year (000’s)
Total shares (in substance options) granted to employees during the year (000’s)
Total shares (in substance options) exercised during the year (000’s)
Total shares (in substance options) granted to employees at balance date (000’s)
Total shares (in substance options) held by trustee on behalf of plan at balance date (000’s)
Total fair value of shares (in substance options) exercised during the year ($’000)
Total number of employees eligible to participate in the plan
22 Oct 2007
3.12
3.51
0.96
38.79
6.25
7.0
2011
4,596
(3,000)
(205)
-
-
-
1,391
-
10
2012
1,391
-
(40)
-
-
-
1,351
-
10
The balance of shares (in substance options) as at 30 June 2012 is represented by:
1,350,601 shares (in substance options) under Plan #1 and Plan #2 with a weighted average exercise price of $1.28 each, with no contractual life.
AUSTAL LIMITED
2012
ANNUAL REPORT
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
For the year ended 30 June 2012
NOTE 29. PARENT ENTITY
Information relating to the Parent entity Austal Limited is detailed below:
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Equity
Contributed equity
Employee benefit reserve
Asset revaluation reserve
Retained earnings
Total equity
Profit after tax
Total comprehensive income
2012
$’000
208,754
311,584
42,469
71,587
31,087
2,623
14,161
192,126
239,997
11,063
11,063
2011
$’000
267,455
318,819
64,262
93,679
30,500
1,019
-
193,621
225,140
6,647
6,647
For details of guarantees and contingent liabilities relating to Austal Limited refer to note 23.
AUSTAL LIMITED
2012
ANNUAL REPORT
63
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Austal Limited, I state that:
1.
In the opinion of the directors:
(a) The financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
(i) Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its performance for the year ended on that date; and
(ii) Complying with Accounting Standards (including the Australian Accounting Interpretations) and Corporations Regulations 2001.
2. The financial Statements and notes also comply with International Financial Reporting Standards as disclosed in note 2
3. In the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as
and when they become due and payable.
4. This declaration has been made after receiving the declarations required to be made to the directors in accordance with sections 295A of the Corporations Act 2001
for the financial period ending 30 June 2012.
On behalf of the Board.
J ROTHWELL AO
Chairman
Dated at Henderson this 28th day of August 2012
AUSTAL LIMITED
2012
ANNUAL REPORT
64
CORPORATE GOVERNANCE STATEMENT
Austal Limited, its Board of Directors and senior management are committed to
the best practices of corporate governance, ethical standards and risk
management and have adopted the following corporate governance policy. The
Corporate Governance Statement should be read in conjunction with the
Directors’ Report on page 5-12.
The Board of Directors of Austal Limited is responsible for guiding and monitoring
of the consolidated entity on behalf of shareholders.
The Austal Limited Corporate Governance Statement is now structured with
reference
and
Recommendations, which are as follows:
the Corporate Governance Council’s Principles
to
Principle 1.
Principle 2.
Principle 3.
Principle 4.
Principle 5.
Principle 6.
Principle 7.
Principle 8.
Lay solid foundations for management and oversight
Structure the board to add value
Promote ethical and responsible decision making
Safeguard integrity in financial reporting
Make timely and balanced disclosure
Respect the rights of shareholders
Recognise and manage risk
Remunerate fairly and responsibly
Management and Oversight
financial and non-financial objectives of Austal Limited. The performance of
senior executives was assessed during the year and was in accordance with the
above process.
Structure the Board to Add Value
The Board shall comprise of Directors with a range of qualifications, expertise and
experience. The selection of the Board members shall always be for the purpose
of their ability to add value to the Company.
For the purpose of efficient working, the preferred number of Directors in office at
any one time is between 3 and 10.
To ensure that the board is well equipped to discharge its responsibilities it has
established guidelines for the nomination and selection of directors and for the
operation of the Board. Any proposed new Director is nominated by the
Nomination and Remuneration Committee and approved by the Board prior to
being appointed. The appointment is until the next General Meeting of
shareholders at which time the shareholders are required to approve the
appointment.
The Council’s Recommendation 2.1 requires a majority of the Board to be
independent Directors. In addition, Recommendation 2.2 requires the Chair to be
independent.
The Board consists of a Non-Executive Chair, two Executive Directors, a Non-
Executive Director (who
is a retired Executive Director and substantial
shareholder) and three Independent Non-Executive Directors.
The Board gives direction and exercises judgment in setting the Company’s
objectives and overseeing their implementation. The responsibility for the
operation and administration of the Company is delegated by the Board to the
CEO and the executive management team. The Board ensures that this team is
appropriately qualified and experienced to discharge their responsibilities and has
in place procedures to assess the performance of the CEO and the executive
management team.
The Board believes that its main role is to add value for all shareholders and that
this is best served by having a balanced Board. The Executive Directors are
dedicated to the Company, and have expertise in the Company's business. The
Non-Executive Directors provide an external perspective to review and challenge
the performance of management. The integrity and nature of the Board members
is considered more important than having a majority of Independent Directors to
ensure that management act in the best interests of the Company.
The Board’s functions include:
The Board prefers to have Mr. Rothwell as Non-Executive Chairman because:
he has been Chairman since he founded the company in 1988;
he is the largest shareholder, has a thorough knowledge of the Company's
operations and has demonstrated leadership and entrepreneurial skills; and
he continues to exhibit dedication and drive for improving the company
Recognising that there might be situations where there might be a conflict of
interest, an independent deputy Chair had been appointed to chair meetings
involving any potential conflicts of interest and as an alternate point of contact for
shareholders.
The performance of the Board is reviewed regularly against both measurable and
qualitative indicators. Each year the Nomination and Remuneration Committee
conducts a performance assessment for each Board member. The performance
criteria against which Directors are assessed are aligned with the financial and
non-financial objectives of Austal Limited. Directors whose performance is
consistently unsatisfactory may be asked to retire. The performance of the
Directors was assessed during the year and was in accordance with the above
process.
a. adopting a Strategic Plan for the Company, including general and specific
goals and comparing actual results with the Plan, designed to meet
stakeholders’ needs and manage business risk;
b. appointing, performance assessment and, if necessary, removal of members
of the executive management team;
c. adopting clearly defined delegations of authority from the Board to the
management;
d. agreeing key performance indicators (both financial and non-financial) with
management and monitoring progress against these indicators;
e.
taking steps designed to protect the Company’s financial position and its
ability to meet its debts and other obligations as they fall due;
f. establishing and monitoring policies directed to ensuring that the Company
complies with the law and conforms to the highest standards of financial and
ethical behaviour;
g. determining that the Company has instituted adequate reporting systems and
internal controls (both operational and financial) together with appropriate
monitoring of compliance activities;
h. determining that the Company accounts are true and fair and are in
conformity with reporting requirements;
i.
ensuring that any significant risks that arise are identified, assessed,
appropriately managed and monitored; and
j.
reporting to shareholders
The performance of key executives is reviewed regularly against both measurable
and qualitative indicators. Each year the Nomination and Remuneration
Committee conducts a performance assessment for each key executive. The
performance criteria against which they are assessed are aligned with the
AUSTAL LIMITED
2012
ANNUAL REPORT
65
CORPORATE GOVERNANCE STATEMENT
Continued
Independence
Directors of Austal Limited are considered to be independent when they are
independent of management and free from any business or other relationship that
could materially interfere with – or could reasonably be perceived to materially
interfere with – the exercise of their unfettered and independent judgement.
In the context of director independence, ‘materiality’ is considered from both the
Company’s and individual Director’s perspective. The determination of materiality
requires consideration of both quantitative and qualitative elements. An item or
factor is presumed to be material (unless there is qualitative evidence to the
contrary) if its value is equal to, or greater than, $250,000 in aggregate in any one
year. Qualitative factors considered include whether a relationship is strategically
important, the competitive landscape, the nature of the relationship and the
contractual or other arrangements governing it and other factors which point to the
actual ability of the Director to have an influence in shaping the direction of loyalty
to the Company.
In accordance with the definition of independence, and the materiality thresholds
set, the following Directors are considered to be independent:
Name
J. Poynton
D. Amara
I. Campbell
D.Singleton
Position
Non-Executive Director and Deputy Chair
Non-Executive Director
Non-Executive Director (resigned)
Diversity at Austal
Non-Executive Director
There are procedures in place, agreed by the Board, to enable Directors in
furtherance of their duties, to seek independent professional advice at the
Company’s expense.
Outside Directorships
Specific guidelines apply for acceptance of outside directorships by Executive and
Non-Executive Directors.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee must comprise at least two
independent Directors. The Committee ensures that the Board operates within its
guidelines, reviews the remuneration of all Directors and makes recommendations
to the Board, and selects candidates for the position of Director, when necessary.
PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING
Ethical Standards and Performance
The Board acknowledges the need for continued maintenance of the highest
standards of Corporate Governance Practice and ethical conduct by all Directors
and employees of the Austal Group. A Code of Conduct has been adopted under
which the Directors and senior management employees are expected to:
act honestly and in good faith;
exercise due care and diligence in fulfilling the functions of office;
use their powers to act in the best interests of the Company as a whole;
avoid conflicts and make full disclosure of any possible conflict of interest;
comply with the law;
directors are obliged to be independent in judgement and ensure all
reasonable steps are taken to be satisfied as to the soundness of Board
decisions;
encourage
the reporting and
investigating of unlawful and unethical
behaviour; and
comply with the share trading rules outlined in their respective Codes of
Conduct.
A Director shall comply with the Company’s share trading rules and like rules,
which may from time to time be added thereto or substituted therefore by the
Directors. The current rules are:
a. notwithstanding the requirements of the legislation concerning insider trading,
Directors were obliged to restrict their trading in securities of Austal Limited
shares to a period of four months following the release by Austal Limited of
half yearly and preliminary final reports. Directors are also restricted from
trading in Austal Limited shares for 24 hours following any announcement by
the Company to the Australian Stock Exchange;
b. any Director intending to buy or sell shares in the Company or any company
in which the Company has an interest, is required to notify the Chairman or
the Company Secretary of his/her intentions before proceeding with the
transaction; and
c. directors, managers and staff are not permitted to deal in the Company's
securities if they are in possession of material information which is not
available to the share market, but if it were, may impact the value at which the
securities are traded. In April 2004 procedures were put in place to monitor
trading of the Company's securities by Directors, managers and staff.
The Company recognises that developing a diverse workforce is critical in building
its organisational capability and maintaining a high level of performance, and
values the distinctive skills, experiences and perspectives each individual brings to
the workplace. The Company is committed to ensuring all employees are treated
with respect and given equal opportunities for employment and development, and
has a diversity policy which can be found on its website. Among other things, the
Company’s diversity policy:
articulates how the Company considers diversity within the workforce will
the Company’s continuous
make a valuable contribution
improvement and the achievement of goals; and
towards
sets out the Board’s commitment to promoting a corporate culture which
embraces diversity.
The Company is in the process of developing measurable objectives for
increasing diversity within the workplace, and the Board will review the Company’s
performance against these objectives on an annual basis. The Board has deferred
the exercise of defining measurable targets for meeting diversity requirements as
the Company is currently in the process of overhauling its management of human
resources, and the development of those objectives will form part of that process.
The Board continues to assess how to set meaningful and achievable targets in
the context of employment in a manufacturing-based workforce and this task will
be completed in the near future, within the 2012-13 financial year.
The Company emphasises equal opportunity for employment. While there are
currently no female Board members, women are well represented in other roles
within the organisation. Women currently hold:
14% of Senior Management positions;
13% of Management positions; and
42% of professional roles,
within the Company.
The Board aims to continue to embrace diversity within the Company’s workforce
as the Company and its activities grow and appropriately skilled candidates are
available.
AUSTAL LIMITED
2012
ANNUAL REPORT
66
CORPORATE GOVERNANCE STATEMENT
Continued
SAFEGUARD INTEGRITY OF FINANCIAL REPORTING
the Interim Report;
Audit and Risk Management Committee
disclosures made to the Australian Stock Exchange;
The Audit and Risk Management Committee must comprise at least three Non-
Executive Members, of which two must be Independent Directors. The Board
shall elect the Members and the Chair of the Audit and Risk Management
Committee.
The Council’s Recommendation 4.2 requires an audit committee to consist only of
Non-Executive Directors.
The function of the Audit and Risk Management Committee is to:
a. ensure compliance with statutory reporting responsibilities;
notices and explanatory memoranda of the Annual General Meeting (AGM)
the AGM; and
regular newsletters to inform shareholders of key matters of interest.
It is Company policy for the auditor’s lead engagement partner to be present at the
AGM and to answer questions about the conduct of the audit, the preparation and
content of the auditors’ report, accounting policies adopted by the company, and
auditor independence.
b.
liaise with, assess the quality and review the scope of work of the external
auditors;
RECOGNISE AND MANAGE RISK
c. enable the auditors to communicate any concerns to the Board;
d. advise the Board on the appointment of the external auditors and the results
of their work;
e. assess the adequacy of accounting, financial and operating controls; and
f. assess the effectiveness of the management of business risk and reliability of
management reporting.
g.
report to the Board any significant deficiencies identified above.
The Board, through the Audit and Risk Management Committee (in accordance
with its Charter) annually reviews the performance of the external auditor
focussing particularly on:
quality of the audit;
quality of the service provided; and
independence.
Should a change in auditor be considered necessary, the Board will recommend a
change in auditor to be approved by shareholders in a General Meeting.
MAKE TIMELY AND BALANCED DISCLOSURE
Continuous Disclosure
Austal Limited has established written policies and procedures on information
disclosure. The focus of these procedures is on continuous disclosure and
improving access to information for all investors.
The Chief Executive Officer has responsibility for:
making sure
requirements;
that
the company complies with Continuous Disclosure
overseeing and co-ordinating disclosure of information to the stock exchange,
analysts, brokers, shareholders, the media and the public; and
educating Directors and staff on the Company’s disclosure policies and
procedures and raising awareness of the principles underlying continuous
disclosure.
Price sensitive information is publicly released through the stock exchange from
disclosing it to analysts or others outside the company. Further dissemination to
investors is also managed through the Australian Stock Exchange.
RESPECT THE RIGHTS OF SHAREHOLDERS
Shareholder Communication Policy
The Board of Directors aims to ensure that the shareholders are informed of all
major developments affecting the company’s state of affairs.
Information is communicated to shareholders through:
the Concise Annual Report;
Risk Management and Internal Compliance and Control
The Board determines the Company’s ‘risk profile’ and is responsible for
overseeing and approving risk management strategy and policies, internal
compliance and internal control. The Company’s process of risk management and
internal compliance and control includes:
continuously identifying and measuring risks that might impact upon the
achievement of the Company’s goals and objectives, and monitoring the
environment for emerging factors and trends that affect these risks;
formulating risk management strategies to manage identified risks, and
designing and implementing appropriate risk management policies and
internal controls; and
monitoring the performance, and continuously improving the effectiveness, or
risk management systems and internal compliance and controls.
The risk management programme addresses risks under the following categories:
business risks inherent to the shipbuilding industry
operating risks associated with sales, design and production
financial risks
specific vessel risks
The Board oversees an annual assessment of the effectiveness of risk
management and internal compliance and control.
The responsibility for undertaking and assessing risk management and internal
control effectiveness is delegated to management. Management is required by
the Board to assess risk management and associated internal compliance and
control procedures and report back on the efficiency and effectiveness of risk
management.
REMUNERATE FAIRLY AND RESPONSIBLY
It is the Company’s objective to provide maximum stakeholder benefit from the
retention of a high quality Board and executive team by remunerating Directors
and key executives fairly and appropriately with reference to relevant employment
market conditions. The expected outcomes of the remuneration structure are:
retention and motivation of key executives
attraction of quality management to the company
Participation in the Austal Group Management Share Plan provides an incentive to
the Directors and executives which are aligned with increased returns to
shareholders.
There is no scheme to provide retirement benefits to any director, other than
statutory superannuation contributions.
The company’s website www.austal.com has a dedicated investor relations
section for the purpose of publishing all important company information and
relevant announcements made to the market.
AUSTAL LIMITED
2012
ANNUAL REPORT
67
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF AUSTAL LIMITED
Independent audit report to the members of Austal Limited
Report on the financial report
We have audited the accompanying financial report of Austal Limited, which comprises the consolidated statement of
financial position as at 30 June 2012, the consolidated statement of comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a
summary of significant accounting policies and other explanatory information, and the directors' declaration of the
consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during
the financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as
the directors determine are necessary to enable the preparation of the financial report that is free from material
misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting
Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about
whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal controls relevant to the entity's preparation and fair presentation of the financial report in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act 2001. We
have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included
in the directors’ report.
AUSTAL LIMITED
2012
ANNUAL REPORT
68
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF AUSTAL LIMITED
Opinion
In our opinion:
a.
the financial report of Austal Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity's financial position as at 30 June 2012 and of its
performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b.
the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.
Report on the remuneration report
We have audited the Remuneration Report included in pages 8 to 12 of the directors' report for the year ended 30
June 2012. 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.
Opinion
In our opinion, the Remuneration Report of Austal Limited for the year ended 30 June 2012, complies with section
300A of the Corporations Act 2001.
Ernst & Young
Gavin A Buckingham
Partner
Perth
28 August 2012
AUSTAL LIMITED
2012
ANNUAL REPORT
69
SHAREHOLDER INFORMATION
The following information was extracted from the Company’s register as at 27 August 2012.
DISTRIBUTION OF SHARES
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
TOTAL
TWENTY LARGEST SHAREHOLDERS
Rank
Shareholder
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Austro Pty Ltd
Longreach (WA) Pty Ltd
J P Morgan Nominees Australia Limited
HSBC Custody Nominees
National Nominees Limited
Citicorp Nominees Pty Ltd
Onyx (WA) Pty Ltd (G Heys
Mr Vincent Michael O’Sullivan
Austal Group Management Share Plan Pty Ltd
Garry Heys & Dorothy Heys
Lavinia Shipping Ltd
Zilon Pty Ltd
Mossisberg Pty Ltd
Pepperwood Holdings Pty Ltd
BNP Paribas Noms Pty Ltd
Mr James Nicholas Andrew
BNP Paribas Noms Pty Ltd
Peninsula Audiological Services Pty Ltd
UBS Wealth Management Australia Nominees
Navigator Australia Ltd
SUBSTANTIAL SHAREHOLDERS
Rank
Shareholder
1
2
3
4
5
6
Austro Pty Ltd (J Rothwell)
Longreach (WA) Pty Ltd (C Norman)
J P Morgan Nominees Australia Limited
HSBC Custody Nominees
National Nominees Limited
Citicorp Nominees Pty Ltd
Number of Holders
Number of Units
% of Total Issued
Capital
1,607
2,195
651
459
35
4,947
847,910
6,148,979
5,006,869
10,681,873
165,507,376
0.45
3.27
2.66
5.67
87.95
188,193,007
100.00
Total Units
32,200,745
26,595,621
23,515,840
22,133,235
13,349,565
10,247,793
9,916,628
9,582,000
4,350,811
2,844,670
2,302,625
1,773,940
1,556,945
1,415,737
1,265,277
417,569
272,415
235,000
222,450
215,718
% Issued Capital
17.11
14.13
12.50
11.76
7.09
5.45
5.27
5.09
2.31
1.51
1.22
0.94
0.83
0.75
0.67
0.22
0.14
0.12
0.12
0.11
164,414,584
87.36
No. of Ordinary Shares
32,200,745
26,595,621
23,515,840
22,133,235
13,349,565
10,247,793
Voting Rights
All ordinary shares issued by Austal Limited carry one vote per share without restriction
AUSTAL LIMITED
2012
ANNUAL REPORT
70
CORPORATE DIRECTORY
DIRECTORS
Executive Directors
Andrew Bellamy
Michael Atkinson
Non-Executive Directors
John Rothwell
John Poynton
Dario Amara
David Singleton
AUDITORS
Ernst & Young
The Ernst & Young Building
11 Mounts Bay Road
Perth 6000
Western Australia
COMPANY SECRETARY
Richard Simons
REGISTERED OFFICE
100 Clarence Beach Rd
Henderson 6166
Western Australia
Telephone: +61 8 9410 1111
Facsimile: +61 8 9410 2564
SHARE REGISTRY
Advanced Share Registry Services
110 Stirling Highway
Nedlands 6009
Western Australia
Telephone: +61 8 9389 8033
Facsimile: +61 8 9389 7871
AUSTAL LIMITED
2012
ANNUAL REPORT
71