Annual Report
2014
21 Regal Place, East Perth, WA 6004 | Tel: (08) 9323 3300 | Fax: (08) 9202 1106 | info@fleetwood.com.au
ABN 69 009 205 261
Contents
Corporate Directory .............................................. 2
Fleetwood Divisions .............................................. 3
5 Year summary ...................................................... 4
Board of Directors & executive officers .... 5
Managing Director’s Review ............................ 6
Financial Report 2014 .......................................... 8
Corporate
Directory
Directors
Michael Hardy
Greg Tate
John Bond
Peter Gunzburg
Brad Denison
company secretary
Yanya O’Hara
auDitor
Deloitte Touche Tohmatsu
Delivering the
Promise
our objective
to outperform financially by providing genuine value
our Beliefs
We:
want to do business
Banker
build strong relationships in which each party wins
Westpac Banking Corporation
expect all parties to make and honour their commitments
value the support of our shareholders, clients and suppliers
our commitment
We will:
act with honesty and integrity
provide a safe and healthy workplace
operate in an environmentally responsible manner
develop and reward our people for their creativity and dedication
deal with people in a concerned and professional way
find better ways to do things
always hold ourselves accountable for ‘Delivering the promise’
registereD office &
principaL pLace of
Business
21 Regal Place
East Perth, WA 6004
T: (08) 9323 3300
F: (08) 9202 1106
E: info@fleetwood.com.au
share registry
Computershare
Level 2, Reserve Bank Bldg
45 St. George’s Terrace
Perth, WA 6000
T: (08) 9323 2000
F: (08) 9323 2033
E: info@computershare.com.au
2 \ FLEETWOOD CORPORATION annuaL report 2014
Manufactured
Accommodation
Recreational
Vehicles
Accommodation solutions provider to the resources,
education and affordable housing sectors. Headquarters
in Perth and Melbourne with operations in WA, NT, Qld
and Vic.
Manufacturer of caravans, pop-tops and campers
distributed through a national dealer network.
Headquarters and main operations in Perth.
Distributor of canopies and
trays for commercial vehicles.
Headquartered in Melbourne
with branches and dealers
across Australia.
Distributor of ute trays and
accessories. Headquartered
in Sydney with distributors
throughout NSW.
Manufacturer and distributor of parts and accessories
to the recreational vehicles industry in Australia and NZ.
Headquartered in Melbourne with branches in NSW,
Queensland, Victoria, WA and NZ.
FLEETWOOD CORPORATION annuaL report 2014 / 3
Five Year Summary
$ million (unless stated)
2014
2013
2012
2011
2010
Revenue
366.5
333.9
382.6
466.6
291.3
Earnings before interest, tax, depreciation, amortisation and
impairment (EBITDA before impairment)
28.2
40.5
94.2
89.5
67.8
EBITDA margin
7.7%
12.1%
24.6%
19.2%
23.3%
Depreciation and amortisation
17.6
16.1
14.9
14.0
12.8
Earnings before interest, tax and goodwill impairment
(EBIT before impairment)
10.6
24.5
79.3
75.4
55.0
Earnings before interest and tax (EBIT)
5.6
24.5
79.3
75.4
55.0
EBIT margin
Finance costs
1.5%
7.3%
20.7%
16.2%
18.9%
2.2
1.3
0.8
1.8
0.5
Operating profit before income tax
3.4
23.2
78.5
73.6
54.5
Operating profit after tax
Interest cover (times)
0.6
16.6
55.2
51.3
38.7
2.5
19.3
103.8
41.6
110.9
Earnings per share (cents)
0.9
27.8
93.8
90.0
72.6
Dividends per share (cents)
4.0
30.0
76.0
73.0
68.0
Assets
Liabilities
Shareholders funds
Return on equity
Debt
321.8
312.6
289.8
307.5
210.5
107.4
98.5
58.6
101.2
53.6
214.4
214.1
231.2
206.2
156.9
0.3%
7.8%
24.0%
25.0%
25.0%
62.4
44.6
0.9
21.3
-
-
Debt / Shareholders funds %
29%
21%
0%
10%
Cash flows from operations
30.9
25.4
77.3
51.8
54.8
Number of shares on issue (million)
60.6
60.5
59.2
57.8
54.0
Excludes discontinued operations
4 \ FLEETWOOD CORPORATION ANNUAL REPORT 2014
Board of Directors &
Executive Officers
michaeL harDy
Chairman
Non-Executive Director
Barrister & Solicitor
B Juris LLB BA
Age 61 lives in Perth
Appointed to the board in 2005.
Michael was a partner of Clayton Utz
(formerly Robinson Cox) from 1983
to 2002 before establishing the firm
Hardy Bowen.
greg tate
Non-Executive Director
Chartered Accountant
Bachelor of Commerce
Age 62 lives in Perth
Greg was appointed a Non-Executive
Director during listing of the company
in 1987 and became Managing
Director in 1990. He relinquished this
role to become Executive Director of
operations in 2007. Greg retired from
his executive position in December
2010. Prior to joining Fleetwood he
founded a chartered accountancy
practice after being employed in
Australia and the USA by Deloitte.
BraD Denison
Managing Director
Fellow Certified Practising Accountant
Bachelor of Commerce
Age 42 lives in Perth
Brad was appointed Managing
Director in August 2014. Prior to
this, Brad was Chief Financial Officer
and Company Secretary for 10 years.
Before joining Fleetwood, Brad was
employed by Cockburn Corporation
Ltd as group accountant.
peter gunzBurg
Non-Executive Director
Bachelor of Commerce
Age 62 lives in Perth
Mr Gunzburg was appointed to the
board of Fleetwood in 2002.
Mr Gunzburg has over 20 years
experience as a stockbroker. He has a
Commerce Degree from the University
of Western Australia and has previously
been a director of Resolute Limited,
the Australian Stock Exchange Limited,
Eyres Reed Limited and CIBC World
Markets Australia Limited, Strike Oil
Limited and Matra Petroleum Plc.
He is currently Executive Chairman
of Eurogold Limited, Non-Executive
Chairman of Newzulu Limited and
a Non-Executive Director of Dragon
Mining Limited.
John BonD
Non-Executive Director
B. Juris, L. LB, B. Comm.
Age 58 lives in Perth
John became a Non-Executive
Director in 2013. John has been a
Director of Primewest Management
Ltd since 2000, and as a professional
property investor, he has over 20
years experience in negotiating
acquisitions, overseeing the
development of properties and
asset management. John is currently a
Director of ASX listed JCurve Solutions
Ltd and Chairman of the Fathering
Project.
yanya o’hara
Company Secretary
Lawyer
LL.B. (Hon), LL.M.
Yanya was appointed as Company
Secretary on 1 August 2014. Prior
to this, Yanya was employed by the
Company for three years as Assistant
Company Secretary. Prior to joining
Fleetwood, Yanya practiced as a
Corporate Attorney in New York and
as a Barrister and Solicitor in Perth.
FLEETWOOD CORPORATION annuaL report 2014 / 5
Managing Director’s Review
•
•
•
Revenue up 10% to $366.5m
EBIT down 57% to $10.6m, excluding impairment charge of $5m and $0.7m loss from discontinued operation
Net debt of $56.0m at 30 June 2014
A significant increase in demand in the education sector partially offset poor performance in the resources and
recreational vehicles sectors.
While subdued conditions in the recreational vehicles market have resulted in an impairment charge in respect of the
company’s caravan manufacturing business, restructuring actions undertaken are starting to contribute operational
efficiencies and financial benefits.
revenue ($ million)
DiviDenDs
467
291
383
334
367
A fully franked final dividend of 2 cents per share will be paid on 30
September 2014, resulting in a total dividend payment of 4 cents per
share for the 2014 financial year.
In considering the dividend payment, the directors noted the strong
cash generation achieved by the company, with operating cash flows
of $30.9m during the year.
The Dividend Reinvestment Plan will be available for the final dividend
at a reinvestment discount of 2.5%.
2010
2011
2012
2013
2014
manufactureD accommoDation
eBit ($ million)
75.41
79.31
54.99
24.47
10.60
2010
2011
2012
2013
2014
6 \ FLEETWOOD CORPORATION annuaL report 2014
Education sector demand increased markedly in 2014. This was driven
in part by government initiatives to move year seven students into high
school in Western Australia
and Queensland.
$ million
2013
2014
Revenue
Volume from the Victorian
increased
transfer program
during the year. The program
involves
relocation,
storage and refurbishment of classrooms for the Victorian Department
of Education.
220.7
229.7
31.6
16.0
EBIT
the
Demand for accommodation in Karratha remained moderate resulting
in occupancy at Searipple averaging approximately 40% throughout
the year.
In April 2014 construction of the Osprey village in Port Hedland was
completed. The village comprises approximately 300 transportable
homes used to accommodate key workers in the region and generates
a Government underwritten earnings stream which is not dependent
on village occupancy. Subject to finalisation of commercial terms,
Fleetwood will operate the village for the WA Department of Housing
for a term of 15 years.
In June 2014 the company announced the award of a contract to build
and rent to Laing O’Rourke a 200 person fly camp and a 350 person
construction camp at Combabula in Queensland. The project utilises
$5m of existing company owned buildings and requires further capital
expenditure of approximatly $12m, to be funded from existing facilities.
The project will be completed in the first half of the 2015 financial year.
recreationaL vehicLes
The recreational vehicles division continued to experience soft trading
conditons during the year, reflecting weak consumer sentiment. There has
also been a shift towards lower specification budget vehicles which has
affected industry revenue and margins. An impairment charge of $5m has
been recorded against goodwill of the caravan manufacturing business.
Despite sales of new light commercial vehicles declining during the year,
revenue from canopies and trays increased marginally. Additionally margin
was improved as a result of restructuring activities undertaken.
$ million
Revenue
2014
2013
136.5
111.4
Operating EBIT
- 2.1*
- 4.7
*excludes $0.7m loss from discontinued
operation and an impairment charge of
$5m.
Camec continued to experience competitive pressure during the year and a
fall in volumes as a result of weaker production volumes in the recreational vehicle industry.
DeBt
Net debt at 30 June was $56.0m of which $32.0m relates to the Osprey project, which is supported by an earnings
agreement with the State government of Western Australia.
peopLe
2014 was a challenging year for Fleetwood. Difficult trading conditions required our people to extend themselves
during the year. On behalf of the directors, I sincerely thank our people for rising to meet these challenges.
outLook
Notwithstanding soft trading conditions in the RV market, the consolidation of caravan manufacturing activities
undertaken last year resulted in improved revenue in 2014. In addition, importation of caravans from China commenced.
Continued broadening of Asian supply is expected to result in further economies for the recreational vehicles division.
On 12 August, Fleetwood announced the acquisition of Bocar, a NSW based distributor of aluminium trays for light
commercial vehicles. The acquisition provides increased scale for Flexiglass in New South Wales, and the opportunity to
distribute Bocar products throughout its existing Australia wide network.
Demand for accommodation in Karratha varied during the year however opportunities to increase utilisation at Searipple
are being pursued.
While demand in the resource sector remains challenging, activites to improve Fleetwood competitiveness are currently
being undertaken.
Activity in the education sector is driven by government expenditure. Recent funding allocations by government in
Victoria and Western Australia will support these markets.
Fleetwood continues to target opportunities in the affordable housing market. The sector is large and diverse with some
opportunities being driven by government initiatives to increase affordable accommodation.
FLEETWOOD CORPORATION annuaL report 2014 / 7
Consolidated statement of profit or loss
and other comprehensive income
Fleetwood Corporation Limited
Year ended 30 June 2014
Continuing operations
Sales revenue
Other income
Materials used
Sub-contract costs
Employee benefits
Operating leases
Impairment of Goodwill
Other expenses
Profit before interest, tax, depreciation and amortisation (EBITDA)
Depreciation and amortisation
Profit before interest and tax (EBIT)
Finance costs
Profit before income tax expense
Income tax expense
Profit from continuing operations
Loss from discontinued operation
Profit for the year
Other comprehensive income
Items that may subsequently be reclassified to profit or loss
Net exchange difference relating to foreign controlled entities (net of tax)
Total comprehensive income for the year
Earnings per share from continuing and discontinued operations
Diluted earnings per share (cents)
Basic earnings per share (cents)
Earnings per share from continuing operations
Diluted earnings per share (cents)
Basic earnings per share (cents)
To be read in conjunction with the accompanying notes.
Note
2
2
3
3
4
34
24
23
7
7
7
7
2014
$ '000
2013
$ '000
366,289
332,947
229
925
(146,573)
(107,418)
(90,935)
(86,972)
(66,181)
(67,516)
(11,173)
(10,963)
(5,000)
-
(23,430)
(20,458)
23,226
40,545
(17,624)
(16,074)
5,602
24,471
(2,227)
(1,267)
3,375
23,204
(2,809)
(6,556)
566
(490)
16,648
(4,193)
76
12,455
359
435
319
12,774
0.1
0.1
0.9
0.9
20.7
20.8
27.6
27.8
Fleetwood Corporation Limited Financial Report 2014
Page 1
Consolidated statement of financial position
Fleetwood Corporation Limited
As at 30 June 2014
Current assets
Cash and cash equivalents
Trade and other receivables
Tax assets
Inventories
Non-current assets held for sale
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Inventories
Goodwill
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest bearing liabilities
Tax liabilities
Provisions
Other financial liabilities
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
To be read in conjunction with the accompanying notes.
Note
8
9
10
11
9
12
10
13
14
4
15
17
16
20
16
22
23
24
2014
$ '000
6,405
46,654
55
44,504
51
2013
$ '000
12,665
54,054
-
41,707
4,168
97,669
112,594
-
11
109,702
114,471
45,745
59,431
4,844
4,396
14,088
64,435
3,028
3,973
224,118
200,006
321,787
312,600
37,853
62,411
-
3,743
139
45,167
44,610
1,147
4,416
-
104,146
95,340
-
3,232
3,232
11
3,158
3,169
107,378
98,509
214,409
214,091
194,096
193,001
(219)
20,532
(578)
21,668
214,409
214,091
Fleetwood Corporation Limited Financial Report 2014
Page 2
Consolidated statement of changes in equity
Fleetwood Corporation Limited
Year ended 30 June 2014
Balance 1 July 2012
Profit for the year
Exchange differences arising on translation of foreign operations
Total comprehensive income for the year
Dividends paid
Share-based payments
Shares issued pursuant to employee and executive option plans
Foreign
currency
translation
reserve
$ '000
Issued
capital
$ '000
Retained
earnings
$ '000
Total
$ '000
179,425
(897)
52,717
231,245
-
-
-
9,187
1,470
2,919
-
12,455
12,455
319
319
-
-
-
-
319
12,455
12,774
(43,504)
(34,317)
-
-
1,470
2,919
Balance at 30 June 2013
193,001
(578)
21,668
214,091
Profit for the year
Exchange differences arising on translation of foreign operations
Total comprehensive income for the year
Dividends paid
Share-based payments
Balance at 30 June 2014
To be read in conjunction with the accompanying notes.
-
-
-
150
945
-
359
359
-
-
76
-
76
76
359
435
(1,212)
(1,062)
-
945
194,096
(219)
20,532
214,409
Fleetwood Corporation Limited Financial Report 2014
Page 3
Consolidated statement of cash flows
Fleetwood Corporation Limited
Year ended 30 June 2014
Cash flows from operating activities
Receipts in the course of operations
Payments in the course of operations
Interest received
Income taxes paid
Finance costs paid
Note
2014
$ '000
2013
$ '000
415,906
370,494
(378,631)
(334,339)
120
(4,224)
(2,227)
206
(9,602)
(1,310)
Net cash provided by operating activities
28.1
30,944
25,449
Cash flows from investing activities
Acquisition of property, plant and equipment
Proceeds from sale of non-current assets
Payment for intangible assets
Payment for capital work in progress
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Net cash provided by financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effect of exchange rate changes on the balance of cash held in foreign currencies
22
(21,289)
(37,976)
844
(2,813)
(30,718)
941
(1,638)
(3,856)
(53,976)
(42,529)
-
47,390
(29,600)
(1,062)
2,919
47,728
(4,000)
(34,318)
16,728
12,329
(6,304)
(4,751)
12,665
17,380
44
36
Cash and cash equivalents at the end of the financial year
8
6,405
12,665
To be read in conjunction with the accompanying notes.
Fleetwood Corporation Limited Financial Report 2014
Page 4
Notes to the financial statements
Fleetwood Corporation Limited
Year ended 30 June 2014
1 Statement of significant accounting policies
The significant policies which have been adopted in the preparation of this financial report are:
1.1 Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001,
Accounting Standards and Interpretations, and complies with other requirements of the law. Compliance with Australian Accounting
Standards ensures the consolidated financial statements and notes of the consolidated entity comply with International Financial
Reporting Standards. The Company is a for profit entity and the financial statements comprise the consolidated financial statements of
the Group.
The financial statements were authorised for issue by the directors on 30 September 2014.
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board
(the AASB) that are relevant to its operations and effective for the current annual reporting period. Adoption of these standards has had
no effect on the amounts reported for the current or prior period.
The date of authorisation of the financial statements, the following applicable standards and interpretations were in issue but not yet
effective:
Standard
AASB 9 ‘Financial Instruments’, and the relevant amending standards1
AASB 1031 ‘Materiality’ (2013)
AASB 2012-3 ‘Amendments to Australian Accounting Standards – Offsetting Financial
Assets and Financial Liabilities’
AASB 2013-3 ‘Amendments to AASB 136 – Recoverable Amount Disclosures for Non-
Financial Assets’
AASB 2013-4 ‘Amendments to Australian Accounting Standards – Novation of Derivatives
and Continuation of Hedge Accounting’
Effective for
reporting
periods
beginning on or
after:
Expected to
be applied in
the year
ending:
1 January 2018
30 June 2019
1 January 2014
30 June 2015
1 January 2014
30 June 2015
1 January 2014
30 June 2015
1 January 2014
30 June 2015
AASB 2013-5 ‘Amendments to Australian Accounting Standards – Investment Entities’
1 January 2014
30 June 2015
AASB 2013-9 ‘Amendments to Australian Accounting Standards – Conceptual Framework,
Materiality and Financial Instruments’
1 January 2014
30 June 2015
INT 21 ‘Levies’
1 January 2014
30 June 2015
AASB 2014-1 ‘Amendments to Australian Accounting Standards’
Part A: ‘Annual Improvements 2010–2012 and 2011–2013 Cycles’
Part B: ‘Defined Benefit Plans: Employee Contributions (Amendments to AASB 119)’
Part C: ‘Materiality’
AASB 2014-1 ‘Amendments to Australian Accounting Standards’ – Part D: ‘Consequential
Amendments arising from AASB 14’
AASB 2014-1 ‘Amendments to Australian Accounting Standards’ – Part E: ‘Financial
Instruments’
AASB 14 ‘Regulatory Deferral Accounts’
AASB 2014-3 ‘Amendments to Australian Accounting Standards – Accounting for
Acquisitions of Interests in Joint Operations’
AASB 2014-4 ‘Amendments to Australian Accounting Standards – Clarification of
Acceptable Methods of Depreciation and Amortisation’
1 July 2014
30 June 2015
1 January 2016
30 June 2017
1 January 2015
30 June 2016
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 The AASB has issued the following versions of AASB 9 and the relevant amending standards:
AASB 9 ‘Financial Instruments’ (December 2009), AASB 2009-11 ‘Amendments to Australian Accounting Standards arising from
AASB 9’, AASB 2012-6 ‘Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and Transition
Disclosures’
AASB 9 ‘Financial Instruments’ (December 2010), AASB 2010-7 ‘Amendments to Australian Accounting Standards arising from
AASB 9 (December 2010)’, AASB 2012-6 ‘Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB
9 and Transition Disclosure’.
In December 2013 the AASB issued AASB 2013-9 ‘Amendment to Australian Accounting Standards – Conceptual Framework,
Materiality and Financial Instruments’, Part C – Financial Instruments. This amending standard has amended the mandatory
effective date of AASB 9 to 1 January 2017. For annual reporting periods beginning before 1 January 2017, an entity may early
adopt either AASB 9 (December 2009) or AASB 9 (December 2010) and the relevant amending standards.
In June 2014 the AASB issued AASB 2014-1 ‘Amendment to Australian Accounting Standards’, Part E – Financial Instruments.
This amending standard has amended the mandatory effective date of AASB 9 to 1 January 2018. For annual reporting periods
beginning before 1 January 2018, an entity may early adopt either AASB 9 (December 2009) or AASB 9 (December 2010) and
the relevant amending standards.
Fleetwood Corporation Limited Financial Report 2014
Page 5
At the date of authorisation of the financial statements, the following IASB Standards and IFRIC Interpretations were also in issue but
not yet effective, although Australian equivalent Standards and Interpretations have not yet been issued.
Standard / Interpretation
Effective for
reporting
periods
beginning on or
after:
Expected to
be applied in
the year
ending:
IFRS 15 ‘Revenue from Contracts with Customers’
1 January 2017
30 June 2018
Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41)
1 January 2016
30 June 2017
IFRS 9 Financial Instruments
1 January 2018
30 June 2019
Equity Method in Separate Financial Statements (Amendments to IAS 27)
1 January 2016
30 June 2017
Narrow-scope amendments to IFRS 10 Consolidated Financial Statements and IAS 28
Investments in Associates and Joint Ventures (2011)
1 January 2016
30 June 2017
Management are in the process of determining the potential impact of the initial application of the Standards and Interpretations. These
Standards and Interpretations will be first applied in the financial report of the Group that relates to the annual reporting period
beginning on or after the effective date of each pronouncement.
1.2 Basis of preparation
The financial report has been prepared on the basis of historical costs, except for certain non-current assets and financial instruments
that are measured at revalued amounts or fair values, as explained in the accounting policies below. Cost is generally based on the fair
values of the consideration given in exchange for assets. Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is
directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes
into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing
the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial
statements is determined on such a basis, except for share-based payment transactions that are within the scope of AASB 2, leasing
transactions that are within the scope of AASB 117, and measurements that have some similarities to fair value but are not fair value,
such as net realisable value in AASB 2 or value in use in AASB 136. Accounting policies have been consistently applied and except
where there are changes in accounting policy, are consistent with those of the previous year. All amounts are presented in Australian
Dollars unless otherwise noted.
The Company is of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order
amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.
1.3 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its
subsidiaries). Control is achieved when the Company has power over the investee, is exposed, or has rights, to variable returns from its
involvement with the investee, and has the ability to use its power to affect its returns. The Company reassesses whether or not it
controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are
sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant
facts and circumstances in assessing whether or not the Company's voting rights in an investee are sufficient to give it power, including
the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other vote holders, potential
voting rights held by the Company, other vote holders or other parties, rights arising from other contractual arrangements, and any
additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant
activities at the time that decisions need to be made, including voting patterns at previous shareholders' meetings.
Income and expense of subsidiaries acquired or disposed of during the year are included in the consolidated statement of profit or loss
and other comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total
comprehensive income of subsidiaries is attributed to the owners of the Company even if this results in the non-controlling interests
having a deficit balance.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those
used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
When the Group loses control of a subsidiary, a gain or loss is recognised in the profit or loss and is calculated as the difference
between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous
carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. When assets of the
subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognised in other
comprehensive income and accumulated in equity, the amounts previously recognised in other comprehensive income and
accumulated in equity are accounted for as if the Group had directly disposed of the relevant assets (i.e. reclassified to profit or loss or
transferred directly to retained earnings as specified by applicable Standards). The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under AASB 139
‘Financial Instruments: Recognition and Measurement’ or, when applicable, the cost on initial recognition of an investment in an
associate or jointly controlled entity.
1.4 Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is
measured at fair value which is calculated as the sum at the acquisition-date of the fair values of assets transferred by the Company,
Fleetwood Corporation Limited Financial Report 2014
Page 6
liabilities incurred by the Company to the former owners of the acquiree and the equity instruments issued by the Company in exchange
for control of the acquiree. Acquisition related costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that deferred
tax assets or liabilities or assets related to employment benefit arrangements are recognised and measured in accordance with AASB
112 ‘Income Taxes’ and AASB 119 ‘Employee Benefits’ respectively.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition date
amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts
of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-
controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is
recognised immediately in profit or loss as a bargain purchase gain.
Business combinations that took place prior to 1 July 2009 were accounted for in accordance with the previous version of AASB 3.
1.5 Revenue recognition
Revenue is recognised at the fair value of consideration received or receivable net of goods and services tax (GST).
Sale of goods
Revenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which time all the following
conditions are satisfied:
the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective
control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the Group; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Construction contracts
When the stage of contract completion can be reliably measured, revenue is recognised in proportion to the stage of completion of the
contract. The stage of completion is measured based on the proportion of contract costs incurred for work performed to date relative to
the estimated total contract cost. Variations in contract work, claims and incentive payments are included to the extent that the amount
can be measured reliably and its receipt is considered probable. Where the outcome of a contract cannot be reliably estimated, contract
costs are immediately recognised as an expense. Where it is probable costs will not be recovered, revenue is only recognised to the
extent costs are recoverable. An expected loss is recognised immediately as an expense.
When contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as
amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus
recognised profits less recognised losses, the surplus is shown as the amounts due to customers for contract work. Amounts received
before the related work is performed are included in the consolidated statement of financial position, as a liability, for advances
received. Amounts billed for work performed but not yet paid are included in the consolidated statement of financial position as trade
and other receivables.
Rental
Rental income is recognised on a straight line basis over the term of the relevant rental contract.
Interest
Interest is recognised on an accrual basis, taking into account the effective yield on the financial asset.
Sale of non-current assets
Gains or losses on sale of non-current assets are included as income or expenses at the date the significant risks and rewards of the
asset pass to the buyer, usually when an unconditional contract of sale is signed. The gain or loss on disposal is calculated as the
difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal.
Dividends
Dividends and distributions from subsidiaries are recognised by the parent entity when they are declared by the subsidiaries. Dividends
received out of pre-acquisition reserves are eliminated against the carrying amount of the investment and not recognised as revenue.
1.6 Foreign currency
Functional currency
The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the
entity operates (its functional currency). The results and financial position of each group entity are expressed in Australian Dollars (‘$’),
which is the functional currency of the Company and the presentation currency for the consolidated financial statements.
Transactions
Foreign currency transactions are translated to Australian currency at the rates of exchange ruling at the dates of the transactions.
Amounts receivable and payable in foreign currencies at balance date are translated at the rate of exchange ruling on that date.
Exchange differences relating to amounts payable and receivable in foreign currencies are brought to account as exchange gains or
losses in the statement of comprehensive income in the financial year in which they arose.
Translation of controlled foreign operations
The assets and liabilities of foreign operations, including subsidiaries, are translated at the rates of exchange ruling at balance date.
Equity items are translated at historical rates. Exchange differences arising from translation are taken directly to the foreign currency
reserve until disposal or partial disposal of the operations.
Income and expense items are translated at the average exchange rates for
the period. Exchange differences are recognised in other comprehensive income and accumulated in equity.
1.7 Goods and services tax
Revenues, expenses and assets are recognised net of goods and services tax (GST), except where the amount of GST incurred is not
recoverable from the taxation authority. In these circumstances, GST is recognised as part of the cost of acquisition of the asset or as
part of an item of expense.
Fleetwood Corporation Limited Financial Report 2014
Page 7
Receivables and payables are stated with the amount of GST included. The net GST recoverable from, or payable to, the taxation
authority is included as a current asset or liability in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from investing and
financing activities, which are recoverable from, or payable to, the taxation authority are classified as operating cash flows.
1.8 Taxation
Current tax
Current tax is calculated by reference to the amount of income tax payable or recoverable in respect of the taxable profit or tax loss for
the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by the reporting date. Current
tax for current and prior periods is recognised as a liability or asset to the extent that it is unpaid or refundable.
Taxable profit differs from profit before tax as reported in the consolidated statement of profit or loss and other comprehensive income
because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible.
Deferred tax
Deferred tax is accounted for using the comprehensive statement of financial position liability method in respect of temporary
differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those
items.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent
that it is probable that a sufficient taxable amount will be available against which deductible temporary differences or unused tax losses
and tax offsets can be utilised. Deferred tax assets and liabilities are not recognised if the temporary differences arise from the initial
recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor
accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable differences arising from goodwill.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and
interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences
associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable
profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the assets and the
liabilities giving rise to them are realised or settled, based on tax rates and tax laws that have been enacted or substantively enacted by
the reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the consolidated entity expects, at the reporting date, to recover or settle the carrying amount of its assets and
liabilities.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the
company/consolidated entity intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the statement of comprehensive income, except when it relates to
items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the
initial accounting for a business combination, in which case it is taken into account in the determination of goodwill.
1.9 Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash, which are subject to an insignificant risk of changes in fair value and have a maturity of three
months or less at the date of acquisition.
1.10 Acquisition of assets
All assets including property, plant and equipment and intangibles are initially recorded at their cost at the date of acquisition, being the
fair value of the consideration provided plus incidental costs directly attributable to the acquisition. The costs of assets constructed or
internally generated by the consolidated entity, other than goodwill, include the cost of materials, direct labour, directly attributable
overheads and other incidental costs.
Expenditure, including that on internally generated assets other than development costs, is only recognised as an asset when it is
probable that future economic benefits will eventuate and the costs can be measured reliably. Costs attributable to feasibility and
alternative approach assessments are expensed as incurred.
Costs incurred on assets subsequent to initial acquisition are capitalised when it is probable future economic benefits will flow to the
consolidated entity. Costs that do not meet the criteria for capitalisation are expensed as incurred.
1.11 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 amount will be recovered through a sale transaction rather than through
continuing use. This condition is only met when the sale is highly probable and the asset is available for immediate sale in its present
condition and the sale is expected to be completed within one year from the date of classification.
1.12 Receivables
Trade debtors are recorded at amortised cost less impairment. The collectability of debts is assessed at year-end and a provision is
made for any doubtful debts. Changes in the carrying amount of the allowance are recognised in profit or loss.
1.13 Inventories
Inventories are carried at the lower of cost and net realisable value. Cost is determined using standard cost and for work in progress
includes an appropriate share of both variable and fixed costs. Net realisable value represents the estimated selling prices for the
inventories less all estimated costs of completion and costs necessary to make the sale.
Fleetwood Corporation Limited Financial Report 2014
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1.14 Impairment of assets other than goodwill
At each reporting date, the carrying amounts of tangible and intangible assets are reviewed to determine whether there is any indication
those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of any impairment loss. Where the asset does not generate cash flows that are independent from other assets,
the consolidated entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and
whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, 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 which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of
the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately,
unless the relevant asset is carried at fair value through equity, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but only to the extent the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value through equity, in which
case the reversal of the impairment loss is treated as a revaluation increase.
1.15 Leases
Payments made under operating leases are expensed on a straight-line basis over the term of the lease, except where an alternative
basis is more representative of the pattern of benefits to be derived from the leased property.
1.16 Property, plant and equipment
Each class of property, plant and equipment is stated at historical cost less, where applicable, any accumulated depreciation and
impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Property in the course of construction for production, supply or administrative purposes, or for purposes not yet determined, are carried
at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in
accordance with the Group’s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences
when the assets are ready for their intended use.
Freehold land is not depreciated.
Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land and properties under construction)
less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and
depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a
prospective basis.
The cost of self-constructed assets includes the cost of materials and direct labour and any other costs attributable to bringing an asset
to a working condition ready for its intended use.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from
the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
1.17 Depreciation and amortisation
All non-financial assets of the entity (except land) have limited useful lives and are depreciated / amortised using the straight-line
method over their estimated useful lives to their estimated residual values. Assets are depreciated or amortised from the time an asset
is ready for use.
Depreciation and amortisation rates and methods and residual values are reviewed annually for appropriateness. When changes are
made adjustments are reflected in current and future periods only. Depreciation and amortisation are expensed, except to the extent
they are included in the carrying amount of another asset as an allocation of production overheads.
Depreciation / amortisation rates used for each class of asset are as follows:
Buildings
Leasehold property and improvements
Plant and equipment
1.18 Investment Property
2014
2.5%
2013
2.5%
2% - 25%
2% - 25%
2.5% - 50% 2.5% - 50%
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such
purposes). Investment properties are measured initially at its cost, including transaction costs. Subsequent to initial recognition,
investment properties are measured at fair value. Gains and losses arising from changes in the fair value of investment properties are
included in profit or loss in the period in which they arise.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no
future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the
property is derecognised.
Fleetwood Corporation Limited Financial Report 2014
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1.19 Goodwill
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating
units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an
indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the
unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or
loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss
on disposal.
1.20 Product development costs
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An intangible asset arising from product development (or from the development phase of an internal project) is recognised if the
following are demonstrated:
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset; and
the expenditure attributable to the intangible asset during its development can be measured reliably.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the
asset first meets the recognition criteria. Where no internally-generated asset can be recognised, development expenditure is
recognised in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and
accumulated impairment losses.
Internally generated intangible assets are stated at cost less accumulated amortisation and impairment and are amortised on a straight-
line basis over their useful lives of 2 to 5 years.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or
losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the
carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.
1.21 Employee benefits
Wages, salaries, annual and long service leave
Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave and sick leave
when it is probable that settlement will be required and they are capable of being measured reliably. Provisions expected to be settled
within 12 months are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.
Provisions which are not expected to be settled within 12 months are measured as the present value of the estimated future cash flows
to be made in respect of services provided by employees up to the reporting date.
Share based payments
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity
instruments at the grant date.
The fair value determined at grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting
period, based on the estimate of equity instruments that will eventually vest. At the end of each reporting period, estimate of the number
of equity instruments expected to vest is reviewed. The impact of the revision is recognised in profit or loss such that the cumulative
expense reflects the revised estimate, with a corresponding adjustment to equity.
Superannuation
Contributions to employee superannuation funds are expensed when the employees have rendered service entitling them to the
contributions.
1.22 Financial liabilities and equity instruments issued by the Group
Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual
arrangement. Equity instruments issued by the Group are recognised at the amount received, net of direct issue costs.
Payables
Liabilities are recognised for amounts to be paid in the future for goods or services received regardless of whether they have been billed
to the consolidated entity. They are initially valued at fair value, net of transaction costs.
Interest bearing liabilities
Bank loans are recognised initially at fair value net of transaction costs. Subsequent to initial recognition, bank loans are measured at
amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit or loss
over the period of the borrowing using the effective interest rate. Interest expense is recognised on an accrual basis.
The Group derecognises liabilities when, and only when, the obligations are discharged, cancelled or expire. The difference between
the carrying amount of the liability derecognised and the consideration paid and payable is recognised in profit or loss.
1.23 Comparative information
Comparative information has been restated to account for the impact of the discontinued operation and other reclassifications to bring
them in line with the current year classifications.
Fleetwood Corporation Limited Financial Report 2014
Page 10
1.24 Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the
assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
1.25 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
the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the
reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the
cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the
time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is
recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured
reliably.
1.26 Derivative financial instruments
The Group enters into foreign exchange forward contracts to manage its exposure to foreign exchange rate risk. Further details of
derivative financial instruments are disclosed in note 20.
Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are subsequently remeasured to
their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the
derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on
the nature of the hedge relationship.
1.27 Critical accounting judgments and key sources of estimation uncertainty
In the application of accounting policies, management is required to make judgments, estimates and assumptions. The estimates and
associated assumptions are based on experience and other factors that are considered relevant. Actual results may differ from these
estimates.
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting
period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year.
Accounting for construction contracts involves the continuous use of assessed estimates based on assumptions consistent
with project scope and schedule, contract and risk management processes. Contracts may span several accounting
periods. Estimates of forecast costs are regularly updated in accordance with the agreed work scope and schedule under the
contract. Forecasts are based on the cost expected to apply when the related activity is undertaken. Contingencies are
included in order to cover the risks in those forecasts. Revenues reflect the price agreed in the contract and variations where
they have been approved or if it is probable they will be approved. Claims are included in contract revenue only where
negotiations have reached an advanced stage such that it is probable that the client will accept the claim and recovery of the
amount involved is probable.
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which
goodwill has been allocated except for where fair value less cost to sell has been applied. The value in use calculation
requires the directors to estimate the future cash flows expected to arise from the cash-generating unit and a suitable
discount rate in order to calculate the present value. Details of goodwill and the subsequent testing for impairment are set out
in Note 13. Where the actual future cash flows are less than expected, a material impairment loss may arise.
The Company uses valuation techniques that include inputs that are not based on observable market data to estimate the fair
value of options issued during the year. Note 21 provides information about the key assumptions used in the determination of
the fair value of these options. The Directors believe that the chosen valuation techniques and assumptions used are
appropriate in determining the fair value of the options.
The carrying amount of goodwill at 30 June 2014 was $59.4 million (30 June 2013: $64.4 million) after an impairment loss of
$5 million was recognised during 2014 (2013: nil). Details of the impairment loss calculation including key assumptions are
set out in note 13.
As disclosed in the interest bearing liabilities note 17, the Westpac facility is due for refinancing or repayment on or before 21
November 2014. As at the date of this report, the company is in discussion with Westpac regarding the facility renewal,
however the discussions have not been concluded. While certainty regarding renewal and likely terms of that renewal cannot
be gained at this stage, the Directors are of the opinion that there are reasonable grounds to believe the debt will be
refinanced on terms acceptable to the company. In arriving at this position the Directors have reviewed the quantum and
timing of discretionary expenditure, and where necessary, these costs will be minimised or deferred to suit the group’s cash
flow forecast. Additionally, a large proportion of the group’s current debt position is related to construction of the Osprey
project, which has a government underwritten income stream. This provides reasonable certainty regarding facility renewal.
As part of the assessment of the preparation of the financial report the forecast for a period of 12 months from the date of the
financial report has been considered including the finance facilities of the Company and the terms of which those facilities are
available. The use of estimates is inherently uncertain and requires a significant of level of judgement. Forward looking
estimates have been used in the preparation of the financial report in respect of impairment of assets, the Company’s ability
to extend the current Wespac debt facility, the appropriate level of provisions and preparation of the financial report on a
going concern basis. Management and the Directors have concluded that appropriate assessments have been made with
respect to the use of forecasts in the preparation of the financial report.
Fleetwood Corporation Limited Financial Report 2014
Page 11
General information
Fleetwood Corporation Limited is a public company listed on the Australian Stock Exchange (trading under the symbol
incorporated in Australia and operating in Australia and New Zealand.
‘FWD’),
The registered & business address of the Company is 21 Regal Place, East Perth, Western Australia.
2 Revenue
Revenue from continuing operations comprises:
Sales revenue
Goods
Construction
Rental
Other income
Interest
Gain on revaluation of investment property
Gain / (loss) on sale of non-current assets
All rental fleet units are available for sale. The sale of rental units is included in sales
revenue - goods rather than profit on sale of non-current assets.
3 Profit from ordinary activities before
income tax expense
Expenses from continuing operations contain the following items:
Cost of sales
Depreciation and amortisation of:
buildings
leasehold improvements
plant and equipment
product development
Finance costs:
Bank loans and overdraft
Charges on hire purchases
Net bad and doubtful debts
Research and development costs
Superannuation expense
Equity settled share-based payments
2014
$ '000
2013
$ '000
179,769
139,772
46,748
140,489
131,835
60,623
366,289
332,947
120
-
109
229
206
1,151
(432)
925
366,518
333,872
280,295
235,118
34
5,307
11,290
993
69
4,854
10,583
568
17,624
16,074
2,198
29
2,227
1,218
49
1,267
(58) (29)
23
5,003
945
245
4,854
1,470
Fleetwood Corporation Limited Financial Report 2014
Page 12
4 Income taxes recognised in profit or loss
Current tax expense
Deferred tax expense relating to origination and reversal of temporary differences
Under/(over) provision of income tax in prior year
Continuing operations
Discontinued operations
Reconciliation of income tax expense to the accounting profit
Note
2014
$ '000
2013
$ '000
2,990 6,665
(424) (76)
243 (33)
2,809
6,556
34
(210)
(1,801)
Profit before tax from continuing operations
3,375
23,204
Income tax expense calculated at 30% (2013: 30%)
1,013 6,961
Effect of lower tax rates on overseas income
Non-deductible expenses
Research & development allowance
Rights to future income deductions
Non-assessable amounts
Sundry items
Adjustments relating to income tax in prior year
(13)
1,784
(221)
(39)
42
-
2,566
243
2,809
(14)
441
(249)
(474)
(104)
28
6,589
(33)
6,556
The tax rate used for 2014 and 2013 is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under
Australian tax law.
Deferred tax:
Deferred tax relating to:
Property, plant and equipment
Employee provisions
Other provisions
Accruals
Balance
2012
$ '000
Charged
to income
$ '000
Balance
2013
$ '000
Charged
to income
$ '000
Balance
2014
$ '000
1,476
2,229
30
220
3,955
107
42
(6)
(126)
17
1,583
2,271
24
94
3,972
543
(179)
2
58
424
2,126
2,092
26
152
4,396
Tax consolidation
The Company and its wholly-owned Australian resident entities have elected to be taxed as a single entity from 1 July 2003.
Fleetwood Corporation Limited, as the head entity, and the subsidiaries in the tax consolidated group continue to account for their own
current and deferred tax amounts. The amounts are measured as if each entity continues to be a stand-alone taxpayer in its own right.
The current tax balances are then transferred to the head entity via intercompany balances. The entities within the Group have entered
a tax funding arrangement whereby each subsidiary will compensate the head entity for the amount of tax payable that would be
calculated as if the subsidiary was a tax paying entity.
The method used to calculate current and deferred tax amounts is summarised in Note 1.8.
Fleetwood Corporation Limited Financial Report 2014
Page 13
5 Segment information
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors
(chief operating decision makers) in assessing performance and determining the allocation of resources.
Business segments
Products / Services
Recreational Vehicles
Manufacture of caravans and vehicle parts and accessories
Manufactured Accommodation
Design, manufacture, sale and rental of manufactured accommodation
Corporate
Corporate is an aggregation of the Group's corporate function
Group revenue and results by reportable operating segment:
Segment
revenue
Depreciation &
amortisation
Goodwill
Impairment
2014
$ '000
136,520
229,702
296
2013
$ '000
111,408
220,662
1,802
2014
$ '000
2,839
14,581
204
2013
$ '000
2,454
13,383
237
2014
$ '000
5,000
-
-
366,518
333,872
17,624
16,074
5,000
2013
$ '000
-
-
-
-
Recreational Vehicles
Accommodation
Corporate
Finance costs
Profit before income tax expense
Income tax expense
Profit from continuing operations
Loss from discontinued operations
Profit attributable to members of the parent entity
Segment result (EBIT)
2014
$ '000
(7,129)
15,977
(3,246)
2013
$ '000
(4,714)
31,637
(2,452)
5,602
24,471
(2,227)
(1,267)
3,375
23,204
(2,809)
(6,556)
566
16,648
(490)
(4,193)
76
12,455
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 1. Segment
results represents earnings before interest and tax of each segment without the allocation of corporate overheads.
Group assets and liabilities by reportable operating segment:
Recreational Vehicles
Manufactured Accommodation
Corporate*
Segment assets
2013
$ '000
2014
$ '000
Additions to
non-current assets
2013
$ '000
2014
$ '000
81,018
222,103
18,666
88,198
195,489
28,913
3,432
57,176
91
4,064
48,685
46
Segment
liabilities
2014
$ '000
18,236
25,322
63,820
2013
$ '000
18,169
33,747
46,593
321,787
312,600
60,699
52,795
107,378
98,509
For the purposes of monitoring segment performance and allocating resources all assets and liabilities are allocated to the reportable
segments other than current and deferred tax amounts and assets and liabilities directly utilised by the Corporate entity.
The Group operates in two principal geographical areas - Australia (country of domicile) and New Zealand.
Group non-current assets and revenues by geographical segment:
Australia
New Zealand
* Includes non-current assets held for sale.
Segment non-current
assets
Revenue from external
customers
2014
$ '000
2013
$ '000
2014
$ '000
2013
$ '000
219,181
541
195,517
516
360,305
6,213
328,284
5,588
219,722
196,033
366,518
333,872
Fleetwood Corporation Limited Financial Report 2014
Page 14
6 Dividends
Recognised amounts
Interim 2014 - paid 2 cents per share fully franked
Interim 2013 - paid 30 cents per share fully franked
Final 2012 - paid 43 cents per share fully franked
Unrecognised
Final 2014 - 2 cents per share fully franked
2014
$ '000
2013
$ '000
1,212
-
-
-
18,031
25,473
1,212
43,504
1,212
-
On 26 August 2014 the Directors declared a final dividend of 2 cents per share which was
paid on 30 September 2014. As the dividend was not announced until after 30 June 2014 it
has not been included as a liability in these financial statements.
Dividend franking account
30% franking credits available to shareholders of Fleetwood Corporation Limited for
subsequent years
26,267 22,730
7 Earnings per share
Earnings used in the calculation of basic and diluted earnings per share from continuing
and discontinued operations
Adjustment to exclude loss from discontinued operation
Earnings used in the calculation of basic and diluted earnings per share from continuing
operations
76 12,455
490 4,193
566 16,648
The weighted average number of ordinary shares used in the calculation of diluted earnings
per share reconciles to the weighted average number of ordinary shares used in the
calculation of basic earnings per share as follows:
Weighted average number of ordinary shares used in the calculation of basic EPS
Number of shares deemed to be issued for no consideration in respect of options
Weighted average number of ordinary shares used in the calculation of diluted EPS
From continuing and discontinued operations
Basic earnings per share (cents)
Diluted earnings per share (cents)
From continuing operations
Basic earnings per share (cents)
Diluted earnings per share (cents)
From continuing operations before impairment
Basic earnings per share (cents)
Diluted earnings per share (cents)
There are no potential ordinary shares that are anti-dilutive.
Weighted average
number of shares used
60,537,267
59,944,825
74,423
302,073
60,611,690
60,246,898
0.1
0.1
0.9
0.9
9.2
9.2
20.8
20.7
27.8
27.6
27.8
27.6
Fleetwood Corporation Limited Financial Report 2014
Page 15
8 Cash and cash equivalents
Cash and cash equivalents
6,405
12,665
Cash at bank is at call and received interest at a weighted average rate of 1.61%
(2013: 2.16%).
2014
$ '000
2013
$ '000
9 Trade and other receivables
Current
Trade receivables
Less: allowance for doubtful debts
Term loans - secured
Other debtors
32,939
(15)
-
13,730
44,244
(102)
7
9,905
46,654
54,054
Trade and other debtors are non-interest bearing and are generally on terms ranging between 7 and 60 days. The average credit
period on sales of goods is 30 to 60 days. All trade and other debtors are expected to be settled within 60 days of year end.
Non-current
Term loans - secured
The weighted average interest rate on term loans in 2013 was 12.5%.
Concentrations of risk
The five largest outstanding receivables at 30 June 2014 by customer are as follows:
Department of Education & Early Childhood Development (Victorian State Government)
GE Commercial Finance
Jon Christopher Neilsen
Department of Education, Training & Employment (Queensland State Government)
FK Gardner & Sons Pty Ltd
-
11
5,158
4,540
4,530
4,470
1,989
3,179
7,282
-
821
758
Trade receivables include amounts that are past due at the end of the reporting period but against which the Group has not recognised
an allowance for doubtful receivables because there has not been a significant change in the credit quality and the amounts are still
considered recoverable. The Group does not hold any collateral over these balances. An analysis of aged receivables is included
below:
Less than 3 months
Between 3 - 6 months
Longer than 6 months
Movement in allowance for doubtful debts
Balance at beginning of year
Impairment losses recognised on receivables
Amounts written off during the year as uncollectable
4,879
166
144
5,189
102
55
(142)
15
6,772
2,426
2,259
11,457
269
9
(176)
102
Fleetwood Corporation Limited Financial Report 2014
Page 16
10 Inventories
Current
Raw materials & stores
Work in progress
Finished goods
Non-current
Work in progress
2014
$ '000
2013
$ '000
8,477
14,200
21,827
44,504
8,844
10,811
22,052
41,707
45,745
14,088
45,745
14,088
The cost of inventories recognised as an expense during the year in respect of continuing operations was $146.6 million (2013: $107.4
million).
11 Non-current assets held for sale
Land
Buildings
Plant & equipment
-
-
51
51
2,961
1,108
99
4,168
The group entered into a sale contract to dispose of an investment property, comprised of land and buildings in 2013, which settled in
the 2014 financial year. Plant & equipment held for sale are residual assets from the discontinued operation.
12 Property, plant and equipment
Freehold land
Cost
Buildings
Cost
Accumulated depreciation
Leasehold property and improvements
Cost
Accumulated amortisation
Plant and equipment
Cost
Accumulated depreciation
Assets under construction
Cost
1,408
1,408
1,342
(272)
1,070
1,342
(238)
1,104
53,461
(36,621)
53,528
(31,410)
16,840
22,118
130,268
(54,492)
134,536
(53,226)
75,776
81,310
14,608
8,531
109,702
114,471
Fleetwood Corporation Limited Financial Report 2014
Page 17
12 Property, plant and equipment (continued)
Movement
equipment:
in the carrying amounts for each class of property, plant and
2014 Financial Year
Balance at 1 July 2013
Additions
Transferred from assets under construction
Transferred to plant and equipment
Transferred to product development
Disposals
Depreciation and amortisation
Effect of foreign exchange differences
Freehold
land Buildings
Leasehold
Property
Plant and
equipment
Assets under
Construction
Total
1,408
1,104
22,118
-
-
-
-
-
124
-
-
-
(16)
81,310
5,742
9,346
8,531
114,471
18,633
24,499
-
9,346
-
(9,346)
(9,346)
(121)
(9,240)
(259)
(380)
(2,951)
(12,207)
(34)
-
(5,386)
(11,290)
-
29
-
-
(16,710)
29
-
-
-
-
-
-
-
Balance at 30 June 2014
1,408
1,070
16,840
75,776
14,608
109,702
2013 Financial Year
Balance at 1 July 2012
Additions
3,218
2,281
-
-
20,318
6,870
Transferred to non current assets held for sale
(1,810)
(1,108)
Transferred from assets under construction
Transferred to plant and equipment
Disposals
Depreciation and amortisation
Effect of foreign exchange differences
-
-
-
-
-
-
-
-
(69)
-
71,323
19,464
(140)
7,517
-
-
-
-
(179)
(6,218)
(4,891)
(10,656)
-
20
4,405
101,545
12,480
38,814
-
-
(7,517)
(837)
(3,058)
7,517
(7,517)
(7,234)
-
-
(15,616)
20
Balance at 30 June 2013
1,408
1,104
22,118
81,310
8,531
114,471
No items of property, plant and equipment are pledged as security.
Fleetwood Corporation Limited Financial Report 2014
Page 18
13 Goodwill
Goodwill
Reconciliation of the carrying amount of Goodwill is set out below:
Carrying amount at beginning of year
Impairment loss in respect of caravan manufacturing CGU
Effect of foreign exchange differences
Individual cash-generating units (CGU) allocations:
Caravan manufacturing
Parts and accessories
Canopies, trays and accessories
Manufactured accommodation
2014
$ '000
2013
$ '000
59,431
64,435
64,435
(5,000)
(4)
64,435
-
-
59,431
64,435
2,097
12,401
6,613
38,320
7,097
12,401
6,617
38,320
59,431
64,435
The recoverable amount of the cash generating units has been determined as the higher of fair value less costs to sell and value in
use.
The value in use has been calculated using cashflow projections over five years based on financial budgets and business plans
approved by the board for the first three years, and utilising a cashflow growth rate of 2.6% (2013: 2.6%) for caravan manufacturing
CGU, 4% (2013: 4%) for canopies, trays and accessories CGU and 5% (2013: 5%) for manufactured accommodation CGU for those
years not modelled in the board approved budgets and plans.
Assessment of the recoverable amount of the caravan manufacturing CGU involved consideration of the likely impact of future
initiatives including Asian sourcing and stock reduction strategies.
The implied discount rates of 14.7% (2013: 18.0%) for caravan manufacturing CGU, 14.7% (2013: 18.0%) for canopies, trays and
accessories CGU and 9.3% (2013: 8.4%) for manufactured accomodation CGU, reflect the respective CGU’s pre-tax weighted average
cost of capital, and has been used in the value in use calculations of the respective CGU. The terminal growth rate used is 2.5% (2013:
2%).
At 30 June 2014, if the forecast EBITDA for the caravan manufacturing CGU decreased by 5.7% in the first year, with all other
variables held constant, it would result in a further impairment of goodwill of approximately $2.1m. At 30 June 2014, if the forecast
EBITDA for the canopies, trays and accessories CGU decreased by 30-40%, with all other variables held constant, the carrying
amount would likely exceed the recoverable amount for this CGU. For the manufactured accommodation CGU there is no reasonably
possible change in the key assumptions which would result in the carrying amount exceeding the recoverable amount.
The recoverable amount for the parts and accessories CGU has been assessed using a fair value less cost to sell model, utilising a
discounted cash flow projection over 10 years based on the financial budgets and business plans as approved by the board for the first
year and utilising a cash flow growth rate of 2.6% thereafter. The assumed cost of sale is then deducted to arrive at the recoverable
value of the CGU. A a pre-tax discount rate of 20.0% and a terminal growth rate of 2.5% is utilised in this analysis. At 30 June 2013
the CGU was valued using an EBIT multiple against historical earnings of the CGU. At 30 June 2014, if the forecast cashflow for the
parts and accessories CGU decreased by 30-40% in the first year, with all other variables held constant, the carrying amount would
likely exceed the recoverable amount. These assumptions are considered to be Level 2 inputs, other than quoted prices that are
observable for the CGU either directly or indirectly.
Testing for impairment is carried out on an annual basis and whenever there is an indication of impairment. A $5 million impairment
has been recorded against the goodwill of
the caravan manufacturing CGU reflecting the challenging demand environment for
recreational vehicles. No impairment charge has been recorded since recognising goodwill except those mentioned. The recoverable
amount of each CGU equals or exceeds the carrying amount of goodwill as at 30 June 2014. The key assumptions used in
determining the recoverable amounts are based on past experience and where applicable are consistent with external sources of
information.
Fleetwood Corporation Limited Financial Report 2014
Page 19
14 Intangible assets
Product development
At cost
Accumulated amortisation
Product development WIP
At cost
Reconciliation of the carrying amounts is set out below:
Product development
Cost
Opening balance
Transferred from product development WIP
Transferred from property, plant and equipment
Additions
Disposals
Accumulated amortisation
Opening balance
Amortisation charged for the year
Eliminated on disposal
Product development WIP
Carrying amount at beginning of year
Additions
Disposals
Transferred to product development
15 Trade and other payables
Trade creditors
Payments in advance
Other creditors and accruals
2014
$ '000
2013
$ '000
4,684
(1,921)
4,670
(2,788)
2,763
1,882
2,081
4,844
1,146
3,028
4,670
515
380
983
7,209
1,390
-
67
(1,864)
(3,996)
4,684
4,670
2,788
993
(1,860)
6,133
593
(3,938)
1,921
2,788
1,146
1,450
-
(515)
2,081
1,445
1,571
(480)
(1,390)
1,146
23,706
182
13,965
37,853
25,084
-
20,083
45,167
Payables include amounts for goods received not invoiced. Trade and other payables are non-interest bearing. The average credit
period on purchases is 45 days.
Fleetwood Corporation Limited Financial Report 2014
Page 20
16 Provisions
Current
Employee benefits
Other
Non-current
Employee benefits
Aggregate employee benefits
2014
$ '000
2013
$ '000
3,638
105
3,743
4,005
411
4,416
3,232
3,158
6,870
7,163
Provisions for employee benefits represent accrued annual
amounts required to remove asbestos from portable buildings and other costs associated with the discontinued operation.
leave and long sevice leave entitlements. Other provisions represent
17 Interest bearing liabilities
Current - at amortised cost
Bank loans - secured
Hire purchase creditors - secured
18
19
62,400
11
62,411
44,000
610
44,610
The existing funding arrangements with Westpac are due to expire with a repayment date of 21 November 2014. Negotiations with
Westpac have commenced regarding renewal of the facility for a further term. In the existing facility $32 million relates to the Osprey
project.
Hire purchases have repayment periods of less than 1 year (2013: 1 to 5 years), with interest rates payable of 7.46% to 7.47% (2013:
6.18% to 7.47%).
18 Financing arrangements
The consolidated entity has access to the following lines of credit:
Facilities available
Bank loans
Bank guarantees
Multi Option Facility
68,400
3,000
71,400
50,000
5,000
55,000
Under the terms of the Multi Option Facility, the consolidated entity is entitled to draw on any mix of commercial bill, bank guarantees,
standby letter of credit or bank overdraft.
Facilities utilised
Bank loans
Bank guarantees
Facilities not utilised
Bank loans
Bank guarantees
17
62,400
1,973
64,373
6,000
1,027
7,027
44,000
3,189
47,189
6,000
1,811
7,811
Bank loans
Bank loans are secured by a mortgage debenture over the assets of the consolidated entity and bear interest at the BBSY rate plus
1.00% (2013: 0.60%) plus a line fee of 1.00% (2013: 0.6%). The effective annual interest rate at the end of the financial year was
3.57% (2013: 3.48%).
Bank guarantees
Bank guarantees are utilised for construction contracts. No liability has been recognised in the statement of financial position in
respect of bank guarantees.
Fleetwood Corporation Limited Financial Report 2014
Page 21
19 Commitments
Operating lease commitments
Within one year
Between one and five years
Later than five years
2014
$ '000
2013
$ '000
8,111
11,591
-
9,314
15,597
-
19,702
24,911
The Group has a number of non-cancellable operating lease arrangements for land and buildings with lease terms of between 1 to 5
years. The leases have varying terms and renewal rights. The majority of these lease contracts contain market review clauses in the
event that the lessee exercises its option to renew. The lessee does not have the option to purchase the property at the expiry of the
lease period.
Operating lease receivables
Within one year
Between one and five years
Later than five years
24,932
9,672
-
28,571
33,527
-
34,604
62,098
The Group has a number of non-cancellable operating lease arrangements for portable buildings and contracts for the provision of
accommodation services. The leases have varying terms and renewal rights. The majority of these lease contracts contain market
review clauses. The lessee does not have the option to purchase the property at the expiry of the lease period.
Hire purchase commitments
Within one year
One year or later and no later than five years
Later than five years
Less: future finance charges
Present value of minimum lease payments
20 Other financial liabilities
Current
Minimum lease
payments
Present value of
minimum lease
payments
2014
$ '000
2013
$ '000
2014
$ '000
2013
$ '000
11
-
-
11
-
11
639
11
-
650
(29)
621
11
-
-
11
-
11
610
11
-
621
-
621
Derivatives not in designated hedge accounting relationships
139
-
The Group has entered into forward exchange contracts to hedge foreign currency risk on highly probable future purchases of
inventory from overseas suppliers.
Fleetwood Corporation Limited Financial Report 2014
Page 22
21 Share based payments
Employee option plan
Employees with more than 1 years service with the consolidated entity are granted options to purchase ordinary shares in Fleetwood
Corporation Limited. No amounts are payable for the options. 50% of the options are exercisable 1 year from the date of issue and a
further 25% are exercisable in each of the next 2 years. The options expire 5 years from the date of issue. There are no voting or
dividend rights attaching to the options.
Summary of movements:
Exercise
price
$
Options at
beginning of
year
No.
Options
granted
No.
Options
expired /
forfeited
No.
Options
exercised
(shares
issued)
No.
Options
at end of
year
No.
Vested
at end of
year
No.
Proceeds
received on
exercise
$
Fair value
(market value)
of shares on
exercise
$
8.30
4.20
6.00
8.02
8.68
9.39
2.56
222,750
-
(106,500)
(116,250)
-
-
964,875
1,171,290
110,200
203,350
195,327
312,277
330,394
470,465
356,571
492,625
-
-
-
-
-
-
-
-
(110,200)
(39,200)
-
(53,950)
-
110,200
-
110,200
-
226,590
-
538,713
(28,870)
(62,450)
-
(54,500)
166,457
195,327
166,457
195,327
-
327,000
-
536,940
(51,195)
(100,538)
-
(39,533)
279,199
330,394
279,199
219,934
-
317,055
-
390,264
(56,438)
(103,779)
-
(32,275)
300,133
356,571
220,989
182,188
-
280,147
-
318,583
437,570
-
-
573,250
(70,930)
(135,680)
-
584,850
(75,800)
-
-
-
366,640
437,570
183,775
-
509,050
-
-
-
-
-
-
-
1,430,062
1,701,467
584,850
573,250
(393,433)
(548,147)
-
(296,508)
1,621,479
1,430,062
850,420
707,649
-
2,115,667
-
2,955,789
Issue
date
31/10/07
2013
14/11/08
2014
2013
31/10/09
2014
2013
31/10/10
2014
2013
02/09/11
2014
2013
29/08/12
2014
2013
30/08/13
2014
2014
2013
Weighted average
exercise price ($)
2014
2013
Options information:
5.16
7.42
2.56
9.39
6.09
8.04
N/A
7.14
6.53
8.03
8.09
7.04
Option
life
Issue Date Expiry Date Years
Volatility
%
Dividend
yield
%
Risk free
interest
rate
%
Fair value
at grant
date
$
Exercise
price
$
Share
price at
grant date
$
Weighted
average share
price at
exercise date
2014
$
Weighted
average share
price at
exercise date
2013
$
31/10/07
14/11/08
31/10/09
31/10/10
02/09/11
29/08/12
30/08/13
30/10/12
13/11/13
30/10/14
30/10/15
01/09/16
28/08/17
30/08/18
5
5
5
5
5
5
5
28.01
45.90
50.00
40.00
35.69
35.80
45.03
6.88
10.74
8.54
6.14
6.18
7.59
3.64
7.20
3.97
4.53
4.50
4.50
2.77
2.54
1.64
0.42
2.09
4.03
2.53
2.31
0.90
8.30
4.20
6.00
8.02
8.68
9.39
2.56
10.68
5.25
7.57
10.02
10.66
11.78
3.10
-
-
-
-
-
-
-
10.08
9.99
9.85
9.87
9.87
-
-
Fleetwood Corporation Limited Financial Report 2014
Page 23
21 Share based payments (continued)
Executive option plan
Executives are granted options to purchase ordinary shares in Fleetwood Corporation Limited. No amounts are payable for the options.
For options issued prior to 1 July 2012, one third of the options are exercisable after the 30 June subsequent to the date of issue, a
further one third of the options are exercisable in each of the next 2 years. Options issued after 1 July 2012 vest three years from the
issue date. The options are only exercisable if the company’s total shareholder return equals or exceeds 15% p.a. compounded from
the inception of the plan (1999) and is equal to or greater than the ASX300 All Industrials Accumulation Index. The options expire 5
years from the date of issue. There are no voting or dividend rights attaching to the options.
Summary of movements:
Exercise
price
$
Options at
beginning of
year
No.
Options
granted
No.
Options
expired /
forfeited
No.
Options
exercised
(shares
issued)
No.
Options
at end of
year
No.
Vested
at end of
year
No.
Proceeds
received on
exercise
$
Fair value
(market value)
of shares on
exercise
$
Issue
date
31/10/07
2013
14/11/08
2014
2013
31/10/09
2014
2013
31/10/10
2014
2013
02/09/11
2014
2013
20/02/13
2014
2013
30/08/13
2014
2014
2013
8.30
7.25
6.00
8.02
8.68
10.57
2.88
-
(24,000)
-
-
199,200
262,800
(31,122)
-
-
(11,329)
-
31,122
-
31,122
-
82,135
-
120,185
-
-
-
(65,669)
16,000
16,000
16,000
16,000
-
394,014
-
262,822
(33,334)
-
-
(16,000)
101,666
135,000
101,666
70,667
-
128,320
-
160,400
24,000
31,122
42,451
16,000
81,669
135,000
151,000
206,337
206,337
-
-
-
-
-
-
-
-
-
(75,000)
-
325,000
-
-
325,000
(135,000)
-
-
580,000
(230,000)
-
-
-
-
-
131,337
206,337
87,558
68,779
190,000
325,000
350,000
-
-
-
-
-
-
-
-
-
-
-
-
-
713,459
505,457
580,000
325,000
(504,456)
-
-
(116,998)
789,003
713,459
205,224
186,568
-
803,669
-
806,207
Weighted average
exercise price ($)
2014
2013
Options information:
9.29
7.91
2.88
10.57
6.41
N/A
N/A
6.87
6.42
9.29
8.14
7.96
Option
life
Issue Date Expiry Date Years
Volatility
%
Dividend
yield
%
Risk free
interest
rate
%
Fair value
at grant
date
$
Exercise
price
$
Share
price at
grant date
$
Weighted
average share
price at
exercise date
2014
$
Weighted
average share
price at
exercise date
2013
$
14/11/08
31/10/09
31/10/10
02/09/11
20/02/13
30/08/13
13/11/13
30/10/14
30/10/15
01/09/16
19/02/18
30/08/18
5
5
5
5
5
5
45.90
50.00
40.00
35.69
35.39
45.03
10.74
8.54
6.14
6.18
7.59
3.64
3.97
4.53
4.50
4.50
2.85
3.68
0.32
2.09
2.43
2.53
1.15
1.40
7.25
6.00
8.02
8.68
10.57
2.88
5.25
7.57
10.02
10.66
9.66
3.10
-
-
-
-
-
-
10.61
12.02
10.03
-
-
-
Fleetwood Corporation Limited Financial Report 2014
Page 24
21 Share based payments (continued)
Employee and Executive share options outstanding at the end of the financial year had a weighted average remaining contractual life of
730 days.
The grant date weighted average fair value of options in existence at reporting date is as follows:
Options issued in 2010: $1.73 per option
Options issued in 2011: $3.24 per option
Options issued in 2012: $2.50 per option
Options issued in 2013: $1.57 per option
Options issued in 2014: $0.67 per option
Employee Options were valued using the Black-Scholes option pricing model. The expected life used in the model has been adjusted
based on management’s best estimate of the effects of exercise restrictions and behavioral considerations. The expected volatility is
based on historical share price volatility over the past 5 years, and the risk free interest rate and dividend yield have been assessed
based on prevailing market conditions.
Executive Options were valued using a Monte Carlo simulation model. The expected volatility is based on historical share price volatility
over the past 5 years, and the risk free interest rate and dividend yield have been assessed based on prevailing market conditions.
2014
$ '000
2013
$ '000
22 Issued capital
Issued and paid-up capital
60,581,211 (2013: 60,522,619) ordinary shares, fully paid
194,096 193,001
Holders of ordinary shares are entitled to receive dividends as declared and to one vote per share held.
2014
2013
# Shares
$ '000
# Shares
$ '000
Movements in ordinary share capital
Balance at beginning of year
Equity settled share-based payments
Shares issued pursuant to Dividend Reinvestment Plan
Shares issued pursuant to Employee and Executive Option Plans
60,522,619
-
58,592
-
193,001
945
150
-
59,217,993
-
891,120
413,506
179,425
1,470
9,187
2,919
Balance at the end of year
60,581,211
194,096
60,522,619
193,001
Ordinary shares are allotted under the dividend reinvestment plan at a discount to the weighted average price of ordinary shares sold
on the ASX over the period of 5 business days up to and including the record date. The current discount is 2.5% (2013: 2.5%).
At 30 June 2014, employees held options over 1,621,479 ordinary shares of the Company, of which 166,457 will expire on 30 October
2014. At 30 June 2013, employees held options over 1,430,062 ordinary shares of the Company, of which 110,200 expired on 13
November 2013.
At 30 June 2014, executives held options over 789,003 ordinary shares of the Company, of which 16,000 will expire on 30 October
2014. At 30 June 2013, executives held options over 713,459 ordinary shares of the Company, of which 31,122 expired on 13
November 2013.
Fleetwood Corporation Limited Financial Report 2014
Page 25
23 Reserves (net of income tax)
Foreign currency translation reserve
Balance at beginning of year
Translation of foreign operations
Reserves relate to exchange differences on the translation of self-sustaining foreign operations.
24 Retained earnings
Balance at beginning of year
Profit attributable to members of the parent entity
Dividends recognised
25 Auditors' remuneration
Audit services
Other services - taxation and accounting assistance
The auditor of Fleetwood Corporation Limited is Deloitte Touche Tohmatsu.
2014
$ '000
2013
$ '000
(578)
359
(219)
(897)
319
(578)
21,668
76
(1,212)
52,717
12,455
(43,504)
20,532
21,668
208
13
221
176
29
204
Fleetwood Corporation Limited Financial Report 2014
Page 26
26 Deed of cross guarantee
Pursuant to an ASIC Class Order 98/1418 dated 13 August 1998, relief was granted to the wholly owned subsidiaries listed below from
the requirement to prepare, have audited and lodge financial reports.
It is a condition of the Class Order that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect of
the Deed is that the Company guarantees to each creditor, payment in full of any debt in the event of winding up of any subsidiaries
under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Law, the Company will only
be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in
the event that the Company is wound up.
Subsidiaries subject to the deed are:
Bendigo Re-locatable Buildings Pty Ltd
BRB Modular Pty Ltd
Camec Pty Ltd
Fleetwood Recreational Vehicles Pty Ltd
Fleetwood Finance (WA) Pty Ltd
Fleetwood Pty Ltd
Flexiglass Challenge Pty Ltd
Windsor Caravans Pty Ltd
A consolidated statement of financial performance and financial position comprising the Company and its subsidiaries, which are party
to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee is set out below:
Statement of profit or loss
and other comprehensive income
Continuing operations
Sales revenue
Other income
Materials used
Sub-contract costs
Employee benefits expense
Operating leases
Other expenses
Profit before interest, tax, depreciation and amortisation and impairment (EBITDA before
impairment)
Depreciation and amortisation expense
Profit before interest, tax and impairment (EBIT before impairment)
Impairment of goodwill
Profit before interest and tax (EBIT)
Finance costs
Profit before income tax expense for the year
Income tax expense
Profit from continuing operations for the year
Discontinued operations
Loss from discontinued operation
Total profit and other comprehensive income for the year
2014
$ '000
2013
$ '000
360,337
1,023
(142,308)
(90,935)
(65,493)
(10,884)
(23,357)
327,570
7,028
(103,704)
(86,972)
(66,800)
(10,699)
(20,346)
28,383
46,077
(17,551)
(16,010)
10,832
30,067
(5,000)
-
5,832
30,067
(2,227)
3,605
(2,633)
(1,267)
28,800
(6,360)
972
22,440
(490)
482
(4,193)
18,247
Fleetwood Corporation Limited Financial Report 2014
Page 27
26 Deed of cross guarantee (continued)
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Tax assets
Non-current assets held for sale
Total current assets
Non-current assets
Trade and other receivables
Investments
Property, plant and equipment
Goodwill
Intangible assets
Inventories
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest bearing liabilities
Tax liabilities
Provisions
Other financial liabilities
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
27 Financial instruments
Capital management
2014
$ '000
2013
$ '000
5,980
45,562
41,995
99
51
12,189
53,029
39,269
-
4,168
93,687
108,655
-
74
109,434
59,457
4,844
45,745
4,400
11
102
114,207
64,457
3,028
14,089
3,976
223,954
199,870
317,641
308,525
37,103
62,411
-
3,702
139
103,355
-
3,232
3,232
44,526
44,610
1,112
4,373
-
94,621
11
3,158
3,169
106,587
97,790
211,054
210,735
194,092
(219)
17,181
193,001
(578)
18,312
211,054
210,735
The Group manages capital to ensure it will be able to continue as a going concern, while maximising returns to shareholders through
optimisation of debt and equity balances. The categories of financial instruments of the entity are apparent from the statement of
financial position. The Group’s overall strategy remains unchanged since 2013.
The capital structure of the Group includes borrowings and related repayment terms (as detailed in note 17), cash and cash equivalents
(as detailed in note 8) and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings
(as detailed in notes 22, 23 and 24).
Operating cash flows are used to maintain and expand the Group’s operating assets, make payments of tax and dividends and to repay
debt. Group policy is to borrow centrally to meet funding requirements. The Group does not have a target gearing ratio.
The group has requirements imposed by its financier pertaining to gearing ratio, shareholders’ funds and interest cover. There was no
instance of non-compliance with these requirements during the period.
Fleetwood Corporation Limited Financial Report 2014
Page 28
27 Financial instruments (continued)
Financial risk management objectives
Financial instruments comprise cash, receivables, payables, hire purchase creditors, and bank loans. All financial instruments except
forward foreign exchange contracts are carried at amortised cost. The Group manages its exposure to key financial risks, including
interest rate and currency risk in accordance with the Group financial risk management policy. The objective of the policy is to support
delivery of financial targets whilst providing financial security.
The main financial instrument risks are interest rate, foreign currency, credit and liquidity risk. Different methods are used to measure
and manage of risks including monitoring exposure to interest and foreign exchange rates and assessments of market forecasts for
interest and foreign exchange rates. Ageing analysis and monitoring of specific credit allowances are undertaken to manage credit risk.
Liquidity risk is monitored through the development of rolling cash flow forecasts.
Policies for managing each of these risks is summarised below.
Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies. Consequently, exposures to exchange rate fluctuations arise.
Exchange rate exposures are managed within approved policy parameters utilising forward exchange contracts. The Group is mainly
exposed to United States Dollars and the Euro.
Foreign exchange sensitivity analysis to a 10% movement in the Australian Dollar
- 10%
+ 10%
USD
$ '000
Euro
$ '000
Total
$ '000
USD
$ '000
Euro
$ '000
Total
$ '000
2014 Profit
2013 Profit
2014 Equity
2013 Equity
(198)
-
(198)
-
(80)
-
(80)
-
(279)
-
(279)
-
198
-
198
-
80
-
80
-
279
-
279
-
Forward foreign exchange contracts
Group policy is to enter into forward foreign exchange contracts to manage the risk associated with anticipated purchases denominated
in foreign currency. Anticipated purchases are assessed out to six months from the date the contract is entered into, with 40-60% of the
anticipated exposure covered. Basis adjustments are made to the carrying amounts of non-financial items when the anticipated
purchase transaction takes place.
Forward foreign currency contracts outstanding at the end of the reporting period:
Outstanding
contracts
Buy USD
Less than 3 months
3 to 6 months
Buy Euro
Less than 3 months
3 to 6 months
Average exchange rate
Foreign Currency
Notional Value
Fair Value
2014
$
0.88
0.93
0.66
0.68
2013
$
2014
FC '000
2013
FC '000
-
-
-
-
1,534
450
504
300
-
-
-
-
2014
$ '000
1,743
484
764
441
2013
$ '000
2014
$ '000
2013
$ '000
-
-
-
-
(104)
(4)
(26)
(5)
(139)
-
-
-
-
-
Fleetwood Corporation Limited Financial Report 2014
Page 29
27 Financial instruments (continued)
Interest rate risk management
Interest rate risk arises from borrowings. Group policy is to manage finance costs by using a mix of fixed and variable rate debt after
considering market forecasts.
Interest rate sensitivity analysis to interest rate risk
Financial assets
Cash and cash equivalents - 2014
Cash and cash equivalents - 2013
Financial liabilities
Borrowings - 2014
Borrowings - 2013
2014
2013
Credit risk management
Carrying
amount
$ '000
6,405
12,665
62,411
44,623
- 75 bps
+ 75 bps
Profit
$ '000
Equity
$ '000
Profit
$ '000
Equity
$ '000
(48)
(95)
468
335
420
240
(48)
(95)
468
335
420
240
48
95
(468)
(335)
(420)
(240)
48
95
(468)
(335)
(420)
(240)
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Group
policy is to deal with creditworthy counterparties and obtain sufficient collateral where appropriate as a means of mitigating the risk of
financial loss from default. Reviews of a customer’s creditworthiness are undertaken before payment and delivery terms are offered.
The review assesses credit quality of the customer, taking into account its financial position, past experience, industry reputation and
other factors. Purchase limits are established for each customer, and compliance with credit limits is regularly monitored. Customers
that fail to meet benchmark creditworthiness may transact with the Group only on a prepayment basis. Sales to retail customers are
required to be settled in cash or by using major credit cards, mitigating credit risk.
The carrying amount of financial assets recorded in the financial statements represents the Group’s maximum exposure to credit risk.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who have built an appropriate liquidity risk
framework for the management of short, medium and long-term funding. Liquidity risk is managed by maintaining adequate reserves
and banking facilities, by monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and
liabilities. Note 18 lists unused facilities that the Group has at its disposal to reduce liquidity risk. The remaining contractual maturities
of the Group are:
3 months or less: Trade and other payables as disclosed at Note 15. Trade and other payables do not attract an interest
charge and are expected to be settled within 60 days of year end.
3 months or less: Bank Loans as disclosed at Note 17. Weighted average interest rate 4.18% (2013: 4.18%). Loans are
expected to be settled within three months of year end.
12 months or less: Hire purchase creditors – 2014 $11,407 (2013: $610,364). Weighted average interest rate 7.47% (2013:
6.31%). The hire purchase creditors are expected to be settled during the 2015 financial year.
Greater than 12 months: Hire purchase creditors – 2014 $Nil (2013: $11,407). Weighted average interest rate in 2013 was
6.43%.
Fleetwood Corporation Limited Financial Report 2014
Page 30
27 Financial instruments (continued)
Fair value of financial assets and liabilities
The fair value of financial assets and liabilities recognised in the statement of financial position is based on cash flows due from
customers or payable to suppliers. The cash flows have not been discounted to their present value, except as disclosed in the table
below. The carrying values approximate fair value.
The fair values of financial instruments are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
There are clearly observable quoted prices for all financial instruments held by the Group.
Some of the Group’s financial liabilities are measured at fair value and the end of each reporting period. Information about how the fair
values of these financial liabilities are determined (in particular, the valuation techniques and inputs used).
Financial
liabilties
Fair value as at
2014
2013
Fair value
Hierarchy
Valuation technique and
key inputs
Significant
unobservable
inputs
Relationship of
unobservable
inputs to fair
value
Foreign currency
forward contracts
$139,408
Nil
Level 2
cash
flow.
Discounted
flows are
Future cash
on
estimated
based
forward exchange
rates
and contract forward rates,
discounted to their present
value.
N/A
N/A
28 Notes to the consolidated statement of cash flows
28.1 Reconciliation of profit from ordinary activities after income tax to net
cash provided by operating activities
Operating profit after income tax
Less items classified as investing activities:
(Gain) / loss on sale of non-current assets
Add / (subtract) non-cash items:
Equity settled share-based payments
Depreciation and amortisation expense - continuing operations
Depreciation and amortisation expense - discontinued operations
Written down value of rental fleet sold
Gain on revaluation of investment property
Impairment on Goodwill
Changes in assets and liabilities during the year:
Increase in inventories
(Increase) decrease in trade and other receivables
Decrease in other financial assets
Increase (decrease) in trade and other payables
Increase (decrease) in provisions
Decrease in income taxes payable
Increase in deferred taxes receivable
Increase in other financial liabilities
2014
$ '000
2013
$ '000
76
12,455
(109)
983
945
17,624
79
8,984
-
5,000
(3,736)
7,411
4,069
(7,314)
(598)
(1,202)
(424)
139
1,469
16,074
135
5,277
(1,151)
-
(5,524)
(509)
41
904
142
(4,829)
(18)
-
Net cash provided by operating activities
30,944
25,449
28.2 Non-cash financing and investing activities
During the year, dividends of $148,824 (2013: $9,187,172) were reinvested in the Company as 58,592 (2013: 891,120) fully paid
ordinary shares pursuant to the Dividend Reinvestment Plan.
The Company received dividends of $25,384,307 (2013: $72,565,976) from controlled entities by way of an increase in controlled
entities loan accounts.
Fleetwood Corporation Limited Financial Report 2014
Page 31
29 Contingent liabilities
Under the terms of the Deed of Cross Guarantee, the Company has guaranteed the repayment of all current and non-current liabilities
totalling $106,448,000 (2013: $97,789,810) in the event any of the entities which are party to the Deed are wound up.
The Directors are not aware of any circumstances or information that would lead them to believe these liabilities will crystallise and
consequently no provisions are included in the financial statements in respect of these matters.
Certain claims arising out of construction and insurance contracts have been made by or against controlled entities in the ordinary
course of business, some of which involved litigation or adjudication. The Directors do not consider that the outcome of any of these
claims will have a material adverse impact on the financial position of the consolidated entity.
Included within Trade and Other Receivables is an amount of $0.5m which remains unpaid at the date of this report. A further $0.9m is
included within Inventories and relates to works performed for the same customer.
30 Particulars relating to controlled entities
Fleetwood Corporation Limited (Ultimate parent entity)
Controlled entities
Place of
Incorporation
Principal Activities
Interest held (%)
Bendigo Re-locatable Buildings Pty Ltd
Australia
Dormant
BRB Modular Pty Ltd
Camec Pty Ltd
Australia
Australia
Fleetwood Recreational Vehicles Pty Ltd
Australia
Fleetwood Pty Ltd
Australia
Accommodation solutions provider
to the resources, education and
affordable housing sectors.
Manufacturer and distributor of
parts and accessories to the
recreational vehicles industry.
Manufacturer of caravans, pop-
tops and campers distributed
through a national dealer network.
Accommodation solutions provider
to the resources, education and
affordable housing sectors.
Fleetwood Finance (WA) Pty Ltd
Australia
Provider of finance
Flexiglass Challenge Pty Ltd
Australia
Distributor of canopies and trays
for commercial vehicles.
Windsor Caravans Pty Ltd
Australia
Dormant
Flexiglass Challenge Industries (NZ) Limited
New Zealand
Dormant
2014
100
2013
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Camec NZ Limited
New Zealand
Manufacturer and distributor of
parts and accessories to the
recreational vehicles industry.
100
100
Fleetwood Corporation Limited is the head entity within the tax consolidated group. All companies incorporated in Australia are
members of the tax consolidated group.
31 Related parties
Directors
The names of each person holding the position of Director of Fleetwood Corporation Limited during the financial year were P Gunzburg,
M Hardy, G Tate, J. Bond. Details of directors’ remuneration is set out in the Remuneration Report contained in the Directors’ Report.
No Director has entered into a material contract with the Company or the consolidated entity during and since the end of the financial
year and there were no material contracts involving directors’ interests existing at year-end.
Directors of the Company or its controlled entities may purchase goods from the consolidated entity. These purchases are on the same
terms and conditions as those entered into by other consolidated entity employees.
Further information on remuneration of key management personnel can be found in the Remuneration Report.
Fleetwood Corporation Limited Financial Report 2014
Page 32
31 Related parties (continued)
Key management personnel
Aggregate compensation of the key management personnel of the consolidated entity and the Company for the year:
Short-term employee benefits
Post-employment benefits
Share-based payments
2014
$
2013
$
2,161,262
130,747
149,762
2,533,672
139,769
218,938
2,441,771
2,892,379
Transactions between Fleetwood Corporation and its related parties
During the financial year subsidiaries of the parent company made dividend payments totaling $25,384,307 (2013: $72,565,976) to the
parent entity.
Non-current loans totaling $218,928,724 (2013: $174,593,998) repayable to the parent are outstanding at reporting date.
Transactions and balances between the company and its subsidiaries were eliminated in the preparation of the consolidated financial
statements of the Group.
32 Parent entity disclosures
32.1 Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Retained earnings
Total equity
32.2 Financial performance
Total comprehensive income
10,604
261,076
16,864
253,780
271,680
270,644
63,844
452
50,095
745
64,296
50,840
194,096
13,288
193,001
26,803
207,384
219,804
(12,305)
63,261
32.3 Guarantees entered into by the parent entity in relation to debts of
its subsidiaries
Guarantee provided under the deed of cross guarantee
Note
26
106,587
97,790
32.4 Commitments
Operating lease commitments
Within one year
One year or later and no later than five years
Later than five years
364
606
-
970
350
970
-
1,320
Fleetwood Corporation Limited Financial Report 2014
Page 33
32 Parent entity disclosures (continued)
The accounting policies of the parent entity, which have been applied in determining the financial information above are the same as
those applied in the consolidated financial statements.
Under the terms of the Deed of Cross Guarantee, the Company has guaranteed the repayment of all current and non-current liabilities
totaling $106,448,000 (2013: $97,789,810) in the event any of the entities which are party to the Deed are wound up.
The parent entity had no other contingent liabilities as at 30 June 2014 (2013: nil).
33 Business combination
Fleetwood Corporation Ltd entered into an agreement to purchase the assets of Bocar Pty Ltd (Bocar) on 12 August 2014, as per the
ASX announcement lodged that day.
Bocar was established over 25 years ago and is a leading New South Wales based aluminium tray and accessory manufacturer for the
automotive sector. The acquisition provides Fleetwood subsidiary Flexiglass with increased scale in New South Wales, and the
opportunity to distribute Bocar products through its Australia wide network.
The estimated total cost of the transaction is $4,750,000 funded from existing facilities with Westpac. Transfer duty, legal and other
costs of the transaction are estimated to be $150,000.
The acquisition was executed and completed after the end of the reporting period and as at the date of this report the initial accounting
for the business combination is incomplete,
including the determination of fair values of identifiable assets acquired (including
identifiable intangibles). However, included in the acquisition price was $339,000 of inventory and plant & equipment.
34 Discontinued operation
On 2 November 2012 the Company closed its Victorian caravan manufacturing operations. Financial
discountinued operation for the period is set out below.
information relating to the
34.1 Financial performance
Revenue
Expenses
Loss from discontinued operation before income tax
Attributable income tax
Loss from discontinued operation after income tax
34.2 Cashflow information
Net cash outflows from operating activities
Net cash inflows (outflows) from investing activities
Net cash outlfow from discontinued operations
2014
$ '000
2013
$ '000
1,288
(1,988)
4,326
(10,320)
(700)
210
(490)
(684)
-
(684)
(5,994)
1,801
(4,193)
(5,608)
334
(5,274)
Revenue relates to the sale of caravans manufactured at the Victorian caravan manufacturing operation prior to its closure.
35 Significant events after the reporting period
Fleetwood Corporation Limited appointed Bradley Denison as its Managing Director on 1 August 2014. The company finalised the
purchase of Bocar Pty Ltd on 12 August 2014, as stated in note 33.
Fleetwood Corporation Limited Financial Report 2014
Page 34
Corporate Governance Statement
Compliance with the ASX Corporate Governance Council’s Principles and
Recommendations
Fleetwood has a governance culture based on the ASX Corporate Governance Council’s Corporate Governance Principles and
Recommendations 2nd Edition (ASX Principles).
This statement outlines the main corporate governance practices of the Company which were in place throughout the year and at the
date of this report. In accordance with the ASX Principles, the Company has posted copies of its corporate governance practices on its
website www.fleetwoodcorporation.com.au.
Areas of non-compliance and the reasons for non-compliance are detailed in this statement.
Role of the Board and the Managing Director
The Board operates in accordance with the general principles set out in its Charter. The major roles of the Board are to:
set the strategic direction of the Group with management and monitor implementation of the strategy;
select and appoint the Managing Director, determine conditions of service and monitor performance;
ratify appointment of the Chief Financial Officer and Company Secretary;
approve conditions of service and monitor performance of senior executives;
monitor financial outcomes and the integrity of reporting;
set limits of authority for committing to expenditure, entering into contracts or acquiring businesses;
ensure effective audit, risk management and compliance systems are in place;
monitor compliance with regulatory requirements and ethical standards;
review executive succession planning and development on a regular basis; and
ensure effective and timely reporting to Shareholders.
The Board delegates responsibility for managing the day-to-day operations of the Group to the Managing Director. There are clear lines
of communication between the Chairman and the Managing Director. The Managing Director is supported by Senior Executives who
report directly to him.
Board Structure
The Board determines its size and composition subject to limits imposed by the Company’s constitution.
With the exception of the Managing Director, Directors must retire from office no later than the third Annual General Meeting or three
years following the Director’s last election or appointment, whichever is last to occur. The director is then eligible for re-election.
The Board is currently comprised of four non-executive Directors and one executive Managing Director, with the majority being
independent. Mr. M. Hardy, who is the Chairman, Mr. P. Gunzburg, and Mr. J. Bond are non-executive independent Directors who are
free of any business or other relationship, interest or association which could interfere with the exercise of their independent judgment.
Mr. G. Tate is a non-executive Director who is not independent due to the nature of his shareholdings in the Company. Managing
Director Mr. Denison is not independent as he is employed in an executive capacity.
The period of office together with the background, skills and experience of each Director is described in the Annual Report.
The Company recognises the importance of having a Board comprised of directors with appropriate backgrounds, skills, diversity and
experience. Matters to do with Board succession are reviewed regularly by the Directors. In considering candidates for appointment
the Board considers the qualifications, expertise, experience and the professional and personal reputation of the person.
Newly appointed directors participate in an induction program which introduces the director to the financial, strategic, operational and
risk management systems, and the culture and values of the Company. The duties and responsibilities required and expected of newly
appointed directors are described in an offer letter and or employment contract.
The Board considers the establishment of a Nominations Committee unnecessary as the Company is not of a size sufficient to justify
the formation of a sub-committee for this task, and in this regard the responsible entity does not comply with Recommendation 2.4 of
the ASX Principles.
Company Secretary
The Company Secretary is directly accountable to the Board, through the Chairman, for all governance matters that relate to the
Board’s proper functioning. Each of the Directors have unfettered access to the Company Secretary and to other senior executives and
officers.
Review of Director and Board Performance
Fleetwood has processes in place to review the performance of Directors and the Board.
The assessment and monitoring of the Managing Director is undertaken annually by the Chairman and discussed with Board members.
The Managing Director’s performance is evaluated by reference to the overall performance of the Company together with relevant key
performance indicators and period specific objectives.
The Chairman is also responsible for monitoring the contribution of the Directors. The Board plays a similar role in respect of the
Chairman’s performance.
The Board undertakes an annual performance review of itself that compares the performance of the Board with the requirements of its
Charter.
During the reporting period the performance of each Director and the Board was reviewed as described above.
Each year the Board considers broad corporate governance matters. Subject to normal privacy requirements Directors have
unrestricted access to Company records and information, and senior executives and officers. Directors receive regular detailed reports
on financial and operational aspects of the Company and may request elaboration or explanation of those reports at any time. The
Fleetwood Corporation Limited Financial Report 2014
Page 35
Directors have the right to seek independent professional advice at the Company’s expense.
Directors and senior management are encouraged to expand and enhance their knowledge of the Company’s business by keeping
abreast of developments in business generally by attending relevant professional development activities. The Company meets
expenses involved in such activities.
Ethics and Conduct
The Company has a policy on conflicts of interest and share trading by Directors, key management personnel and senior managers.
These policies are available on the Company’s website. Due to the limited financial products available to facilitate hedging of unvested
or vested options and the operation of clause 206J of the Corporations Act (Cth) 2001 (No hedging of remuneration of key management
personnel) the Company is of the view that it is not relevant for the policy on share trading to address such transactions.
The Company has implemented codes of conduct for Directors and employees. The codes establish the standards of ethical behaviour
and the practices necessary to comply with legal obligations and include a code entitled “Delivering the Promise” which outlines the
Company’s objective and the standards of behaviour expected of its people. These codes of conduct seek to enhance shareholder
confidence in the Company by clearly articulating the acceptable practices of the Board, senior executives and employees. These
codes are available on the Company’s website.
Diversity
The Company has a Diversity Policy, which is available on the Company’s website.
The policy supports and promotes the achievement in the Group of diversity in gender, ethnicity, religion, culture, language, sexual
orientation, disability, and age. The Board believes that diversity contributes to an inclusive workplace culture where there is equality of
opportunity and treatment, which attracts and retains talented people and creates diversity of thought.
In accordance with the Company’s Diversity Policy and the ASX Principles, the Company has established measurable objectives for
achieving diversity. Those objectives and the progress towards achieving those objectives are described below.
Measureable Objective
1. Review equality of remuneration.
Progress
Undertaken annually
2. Review candidates from diverse backgrounds, both
internal and external, to identify key talent for
purposes of promotion/employment.
Ongoing
3.
Assess and provide flexible working arrangements
that balance employee and Company needs.
Ongoing
The Diversity Policy, objectives and progress towards achieving the objectives are reviewed and assessed by the Board on an annual
basis. The Group’s most recent ‘Gender Equality Indicators’ are disclosed in its annual filing with the Workplace Gender Equality
Agency, a copy of which is available at www.wgea.gov.au/public-reports-0.
In relation to Recommendation 3.4 of the ASX Principles, the proportion of women employees within the Group is described below:
Number
Women
Men
Board
Executives
Managers
Admin & other
Total
5
9
107
496
617
0%
33%
14%
15%
15%
100%
67%
86%
85%
85%
Audit Committee
The Audit Committee provides advice and assistance to the Board in fulfilling its responsibilities relating to the Company’s financial
statements, reporting processes, internal audit, external audit, risk management, and such other matters as the Board may request from
time to time.
All non-executive Directors are members of the Audit Committee, with the majority being independent of the Company and
management. All members have appropriate business and financial expertise. The chairman of the Audit Committee is nominated by
the Board and is not the Chairman of the Board. Mr. P. Gunzburg is the chairman of the Audit Committee.
The Audit Committee oversees the adequacy of the accounting and financial policies and controls of the Company. The committee also
holds discussions with management and external auditors and seeks assurance on compliance with relevant regulatory and statutory
requirements.
In exercising its oversight role, the Audit Committee may investigate any matter relevant to its Charter, and each member has the right
to seek independent professional advice at the Company’s expense.
The Audit Committee reviews and reassesses its Charter at least annually and recommends any changes it considers necessary to the
Board.
The number of Audit Committee meetings and attendances are noted in the Directors’ Report.
The Audit Committee’s Charter is available on the Company’s website.
Fleetwood Corporation Limited Financial Report 2014
Page 36
Financial Reporting
The Managing Director provides a declaration that the Group’s financial records have been properly maintained, that the financial
reports present a true and fair view and are in accordance with relevant accounting standards, and that the risk management and
internal control systems are operating effectively in all material respects.
The Managing Director and the external auditor attend Audit Committee meetings at the discretion of the committee. The minutes of
each Audit Committee meeting are reviewed at the subsequent meeting of the Board.
The role and responsibilities of the Audit Committee includes reviewing:
the annual audit plan with the external auditor;
accounting and financial reporting practices, ASX listing requirements and corporate legislation;
significant transactions which are not a normal part of the Group’s business;
half-year and full-year accounts;
audit reports and reports on risk management activities;
performance of the external auditor and the use of auditors to provide consulting and other services; and
other financial matters which the Audit Committee or the Board determines desirable.
Continuous Disclosure
A continuous disclosure regime operates throughout the Group. Policies and procedures are in place to ensure matters that a person
could reasonably expect to have a material effect on the price or value of securities are announced to the ASX in a timely manner. The
Company Secretary has primary responsibility for ensuring that the Company complies with its disclosure obligations. Directors receive
copies of all announcements immediately after notification to the ASX. All announcements are posted on the Company website.
In the event a decision is made not to notify the ASX of a particular event or development, the reasons for non-notification are advised
to the Board.
Shareholders Rights and Communications
The Company keeps its Shareholders informed of matters likely to be of interest to them through:
reports to the ASX;
half-yearly profit announcements;
annual reports; and
information provided to analysts.
These are posted on the Company website.
The Company also conducts teleconferences for shareholders and interested parties upon the release of half year and full year results.
Shareholders are able to receive Company communications electronically from the Company’s share registry and shareholders are able
to communicate with the Company electronically.
At the Annual General Meeting questions and comments from Shareholders are encouraged. In the interests of clarity, questions on
operational matters may be answered by the Managing Director or other appropriate members of management. The external auditor is
available at the meeting to respond to questions about the conduct of the audit and the preparation and content of the Independent
Audit Report.
Risk Management
The Company is committed to the identification, monitoring and management of material risks associated with its business activities and
has embedded in its reporting systems a number of overarching risk management controls.
The Company manages the diverse nature of its operations as autonomous divisions. The management of each division is required to
design and implement risk management policies and internal control systems to best manage the material business risks of the division
in accordance with the Company’s Risk Management Policy. During the reporting period, the effectiveness of the internal control
systems of each division in managing the material business risks were periodically reported to and reviewed by the Audit Committee.
The Board has received a written assurance from the Managing Director that to the best of his knowledge and belief, the declaration
provided by him in accordance with section 295A of the Corporations Act (Cth) 2001 is founded on a sound system of risk management
and internal controls and that the system is operating effectively in relation to financial reporting risks in all material respects.
The Group’s Risk Management Policy is available on the Company’s website.
Workplace Health and Safety
The Company places a high importance on workplace health and safety and has implemented a comprehensive Workplace Health and
Safety Management System, which is reviewed and audited at least annually.
Since the introduction of this System workplace health and safety culture in the Group has improved resulting in Lost Time Injury
Frequency Rates, Medically Treated Injury Frequency Rates, and first aid injuries being significantly reduced.
Environment
Protecting the environment is a core Company value. The Company is committed to reduce, re-use and recycle across all its
operations so as to minimise the impact the Group has on the environment. The Company has implemented an Environmental Policy,
which is available on the Company website.
During the reporting period a Water Efficiency Initiative for Searipple Village in Karratha was realised. With the support of the Water
Corporation, Fleetwood constructed and commissioned a waste water treatment plant that substantially reduces water usage at the
village. The recycled treated water is used to “green” the village environment.
Remuneration
Details of the Remuneration Committee and remuneration policies are set out in the Directors’ Report in the Annual Report under the
heading “Remuneration Report”.
Fleetwood Corporation Limited Financial Report 2014
Page 37
Directors’ Report
Fleetwood Corporation Limited
The Directors of Fleetwood Corporation Limited present their report for the year ended 30 June 2014.
Directors and Officers
The names, qualifications, experience, special responsibilities and previous directorships for the last 3 years of the Directors who are in
office at the date of the report or have been appointed subsequent to the date of the report are disclosed on page 5 of this Annual
Report.
Stephen Price ceased to be Chief Executive Officer on 27 June 2014. Mr. Price served in that position for four years, prior to which he
was employed in the Wesfarmers group for 12 years, initially in business development then as Director and General Manager of two
Wesfarmers subsidiaries.
Principal Activities
The principal activities of the entities in the Group during the financial year were:
manufacture and sale of caravans, parts and accessories; and
design, manufacture, sale and rental of manufactured accommodation.
Operations
A review of operations for the year is contained in the Managing Director’s Review. Results of operations for the year are contained in
the Financial Report.
Financial Position
A summary of the financial position of the Group is disclosed on page 2 of this Annual Report.
State of Affairs
During the financial year there was no significant change in the state of affairs of the consolidated entity.
Significant Events After the Reporting Period
The Company entered into an agreement to purchase the assets of Bocar Pty Ltd (Bocar) on 12 August 2014. Bocar is a leading New
South Wales based aluminium tray and accessory manufacturer for the automotive sector. The acquisition provides Fleetwood
subsidiary Flexiglass with increased scale in New South Wales, and the opportunity to distribute Bocar products through its Australia
wide network. The estimated cost of the transaction was $4.9m. Further information is contained in note 33 of the financial statements.
Fleetwood Corporation Limited appointed Bradley Denison as its Managing Director on 1 August 2014.
Other than the above, there were no significant events which occurred after the reporting period.
Future Developments
The consolidated entity will continue to pursue its policy of increasing profitability and market share in its major business sectors.
Further information as to likely developments and expected future results are disclosed in the Managing Director’s Review.
Dividends
A final dividend for the year to 30 June 2014 of 2 cents per ordinary share will be paid on 30 September 2014. Dividends paid and
declared during the year are disclosed in note 6 to the financial statements.
All dividends paid or declared by the Company since the end of the previous financial year were 100% franked at the income tax rate of
30%.
Share Options
Details of all share based payment arrangements in existence at 30 June 2014 and unissued shares the subject of options at the date of
this Annual Report and shares issued pursuant to the exercise of options during or since the end of the year are disclosed in note 21 to
the financial statements. No options have been issued subsequent to year end. 20,595 options have been forfeited subsequent to year
end. Details of unissued shares the subject of options as at the date of this report are outlined below.
Employee Options
Issue date
Total unissued shares under option
Exercise price ($)
Expiry date
Executive Options
Issue date
Total unissued shares under option
Exercise price ($)
Expiry date
31/10/2009
166,457
6.00
30/10/2014
31/10/2010
279,199
8.02
30/10/2015
2/09/2011
300,133
8.68
1/09/2016
29/08/2012
366,640
9.39
29/08/2017
30/08/2013
509,050
2.56
30/08/2018
31/10/2009
16,000
6.00
30/10/2014
31/10/2010
101,666
8.02
30/10/2015
2/09/2011
131,337
8.68
1/09/2016
20/02/2013
190,000
10.57
20/02/2018
30/08/2013
350,000
2.88
30/08/2018
There are no voting or dividend rights attaching to the options. Details of options granted to Directors and key management personnel
are contained in note 21 to the financial statements and in the Remuneration Report.
Fleetwood Corporation Limited Financial Report 2014
Page 38
Indemnification of Directors and Officers
The Company has indemnified current and former Directors and officers of the Company against all liabilities to another person (other
than the Company or a related body corporate) that may arise from their position as Director or officer of the Company, except where
the liability arises out of conduct involving a lack of good faith. The agreement stipulates that the Company will meet the full amount of
any such liabilities, including costs and expenses.
Insurance premiums in this regard relate to costs and expenses incurred by the relevant Directors and officers in defending
proceedings, whether civil or criminal and whatever their outcome and other liabilities that may arise from their position, with the
exception of conduct involving a wilful breach of duty or improper use of information or position to gain a personal advantage.
The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or
agreed to indemnify an auditor of the Company or any related body corporate against a liability incurred as an auditor.
Directors’, Audit Committee and Remuneration Committee Meetings
Number of Board, Audit Committee and Remuneration Committee meetings held and attended by each Director of the Company during
the financial year are as follows:
Board
Held
Attended
Audit Committee
Attended
Held
Remuneration Committee
Held
Attended
9
9
9
9
8
8
9
8
4
4
4
4
3
3
3
3
1
1
1
1
1
1
1
1
Peter Gunzburg
Michael Hardy
Greg Tate
John Bond
Directors’ Shareholdings
The relevant interest of each Director in shares of the Company at the date of this report, as notified by the Directors to the ASX in
accordance with s205G(1) of the Corporations Act 2001 are as follows:
Michael Hardy
Greg Tate
John Bond
Brad Denison
Remuneration Report
Number of
shares
16,975
6,581,271
20,000
45,464
Number of
options
-
-
-
231,837
The Remuneration Committee is responsible for determining the remuneration of Board members, executives and key management
personnel. All non-executive Directors are members of the Remuneration Committee, with the majority being independent of the
Company and management. Mr. P. Gunzburg is the chairman of the Remuneration Committee.
During the year the Remuneration Committee reviewed:
conditions of service and remuneration of the Directors, executives, and key management personnel;
remuneration policies of the Group;
proposals for new issues under, or changes to, the Company’s option plans;
succession plans for senior management; and
other related matters.
The Remuneration Committee has authority to seek independent legal, financial, remuneration or other advice it considers necessary to
achieve its objectives and fulfil its responsibilities. In doing so it may invite external consultants and/or executives to its meetings to
seek input on the Group’s remuneration policies, however no senior executive is directly involved in deciding their own remuneration.
The Remuneration Committee reviews and reassesses its charter annually, and recommends any changes it considers necessary to
the Board. The Remuneration Committee’s charter is available on the Company website.
The remuneration of non-executive directors is determined by the Board upon recommendation by the Remuneration Committee, within
the aggregate limits approved by shareholders. The remuneration arrangements of executive directors, executives and key
management personnel is determined by the Remuneration Committee.
When considering remuneration arrangements for executives and key management personnel the Remuneration Committee seeks to
ensure that the remuneration arrangement motivates the recipient to pursue the short and long term performance objectives of the
Company. It does this by ensuring that there is a clear relationship between Company performance and remuneration by striking an
appropriate balance between fixed and variable (‘at risk’) remuneration.
The proportion of fixed and variable remuneration is based on available market data for comparable roles, the capacity of the individual
to influence the overall outcome of Company operations and return to shareholders. When considering the fixed component of
remuneration, the Remuneration Committee will take into account the person’s responsibilities, qualifications and experience. When
considering the variable component of remuneration, the Remuneration Committee considers the capacity of the individual to affect
profit earned by the Company and the individual’s performance against key responsibilities, key competencies and period specific
objectives. The variable remuneration includes short-term incentives in the form of cash payments and long-term incentives in the form
of share options and or shares, which are subject to performance hurdles and vesting provisions.
The short-term incentive amounts received by senior executives and key management personnel are determined in accordance with the
provisions of the Fleetwood Short Term Incentive Plan (STIP). Fleetwood’s STIP was implemented in the 2011 financial year. The
objective of the STIP is to motivate superior performance and to align the financial interests of the participant with that of the Company.
Fleetwood Corporation Limited Financial Report 2014
Page 39
Remuneration Report (continued)
The STIP uses a combination of individual and Company performance targets. The weighting is generally 30% non-financial and 70%
financial, though can differ depending on the individual and their role within the Company. Individual performance targets are derived
from position descriptions, key responsibilities, key competencies and period specific objectives which are in turn aligned with key
business strategies identified annually during the business planning process. Financial performance targets are derived from budgeted
Earnings Before Interest and Tax and Return on Capital. These targets are considered appropriate given their effectiveness in
measuring the efficiency and profitability of invested capital. Depending on the individual and their role within the Group, some targets
may be restricted to the operating company in which the participant is employed, or expanded to include a Division and/or the Group as
a whole. Financial targets are expressed as a range over which performance will be measured. The standard range is 95% to 110% of
the applicable budget. The maximum amount a participant can earn through the STIP is capped at a percentage of the participant’s
Annual Fixed Remuneration (AFR), and payments are based on the achievement of individual and financial key performance indicators.
In order for a payment under the STIP to be made, the participant must: meet the minimum financial and non-financial performance
hurdles, be an employee at the time the payment is to be made, and not have tendered their resignation at the time the payment is
made.
The Remuneration Committee’s determination of the parameters of the STIP for FY2014 as applicable to key management personnel
were as follows:
Participant
Maximum
STIP as % of
AFR
Stephen Price1
Bradley Denison
Bradley Van Hemert
Ben Rosser
David Martin2
Steve Carroll
50.0
40.0
40.0
40.0
40.0
30.0
STI Component Summary % – FY2014
Non-financial Targets
30.0
30.0
30.0
30.0
30.0
30.0
Group EBIT,
ROC
35.0
35.0
20.0
20.0
20.0
20.0
Operating Company EBIT,
ROC
35.0
35.0
50.0
50.0
50.0
50.0
The Remuneration Committee is of the opinion that the STIP appropriately aligns executive remuneration with shareholder wealth
generation.
Long-term incentives in the form of options received by senior executives and key management personnel are determined in
accordance with the provisions of the executive option plan, which plan is currently under review by the Remuneration Committee. The
objective of this plan is to retain and reward executives and key management personnel and to align executives’ long term interests with
those of shareholders. Invitation to participate in the plan is at the discretion of the Board, however participants generally must be
employed in an executive or key management position for a minimum period of two years before such invitation will be extended.
Under the plan, executives are granted options to purchase ordinary shares in Fleetwood. The number of options granted is determined
by the Board with reference to the participant’s individual performance over the immediately preceding financial year, the Group’s
financial performance and shareholder wealth generation. No amounts are payable for the options. Each option entitles the holder to
subscribe for one share upon exercise. Assuming the participant continues to be employed by Fleetwood and the performance hurdles
are reached, for options issued after 1 July 2012 100% of the issued options vest on the third anniversary of the grant date, and for
options issued prior to 1 July 2012, one third of the options vest after 30 June subsequent to the date of issue, a further one third of the
options vest over each of the next 2 years. The exercise price of options issued is calculated using the Volume Weighted Average Price
(VWAP) of the shares over the five days prior to the issue date. The maximum discount that can be applied to the VWAP is 10%.
Executive options are only exercisable if the company’s total shareholder return equals or exceeds 15% p.a. compounded from the
inception of the plan and is equal to or greater than the ASX 300 All Industrials Accumulation Index. The Remuneration Committee
considers that the use of this index reduces sensitivity to the performance of a particular competitor or the influence of cyclical industry
specific factors.
In the event that a performance hurdle is not reached, the options do not vest. If the participant ceases to be an employee for reasons
other than death, illness, injury, the attainment of the normal age of retirement or for other reasons approved by the Board, the options
lapse and terminate. The options expire 5 years from the date of issue. There are no voting or dividend rights attaching to the options.
Movements in shareholder wealth for the five years to 30 June 2014:
Share price at start of year ($)
Share price at end of year ($)
Dividend per share (cents)
Earnings per share (cents)
Diluted earnings per share (cents)
$ Million
Revenue
Net profit before tax
Net profit after tax
2010
5.90
9.19
68.0
72.6
71.5
291.3
54.5
38.7
2011
9.19
11.33
73.0
90.0
88.6
466.6
73.6
51.3
2012
11.33
11.74
76.0
90.4
89.2
332.9
75.6
53.2
2013
11.74
3.60
30.0
20.8
20.7
332.9
23.2
16.6
2014
3.60
2.33
2.0
0.1
0.1
366.3
3.4
0.6
1 Mr. Price resigned on 27 June 2014.
2 Mr. Martin resigned on 26 December 2013.
Fleetwood Corporation Limited Financial Report 2014
Page 40
Remuneration Report (continued)
Remuneration of Directors and senior management
Post
Short-term employee benefits
Employment
Bonus Non-monetary Superannuation
$
$
$
Share
Based
Payment
Options
$
Performance
based
Total
$
remuneration
%
Key management
personnel
Directors
Michael Hardy
2014
2013
Stephen Gill
(Resigned 23/11/12)
2013
Peter Gunzburg
2014
2013
Greg Tate
2014
2013
John Bond
(Appointed 18/03/13)
2014
2013
Executives
Stephen Price
CEO, Fleetwood Corporation
(Resigned 27/06/14)
2014
2013
Bradley Denison
Chief Financial Officer
2014
2013
Bradley Van Hemert
CEO, Fleetwood RV
2014
2013
Ben Rosser
CEO, Fleetwood Pty Ltd
2014
2013
Steve Carroll
GM, Camec Pty Ltd
2014
2013
David Martin
CEO, BRB Modular Pty Ltd
(Resigned 26/12/13)
2014
2013
2014 Company and
2013 Consolidated
Salary & fees
$
85,000
85,000
35,000
70,000
70,000
70,000
70,000
70,000
20,192
-
-
-
-
-
-
-
-
-
618,253
591,667
-
75,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
85,000
85,000
35,000
70,000
70,000
70,000
70,000
70,000
20,192
25,000
25,000
(30,983)
74,981
612,270
766,648
290,287
283,913
-
40,000
7,803
8,431
25,000
25,000
55,532
42,698
378,622
400,042
296,538
385,288 (1)
-
36,000
-
-
25,000
25,000
46,358
41,562
367,896
487,850
267,130
258,855
-
42,000
5,725
3,572
24,710
23,297
53,418
37,806
350,983
365,530
208,860
191,197
-
11,000
23,878
33,759
22,460
25,000
28,275
19,053
283,473
280,009
147,788
261,798
2,123,856
2,252,910
-
31,000
-
235,000
-
-
37,406
45,762
8,577
16,472
130,747
139,769
(2,838)
2,838
149,762
218,938
153,527
312,108
2,441,771
2,892,379
-
-
-
-
-
-
-
-
-
(5.1)
19.6
14.7
20.7
12.6
15.9
15.2
21.8
10.0
10.7
(1.8)
10.8
6.1
15.7
For FY2014 no key management personnel qualified for a STIP payment.
(1)
Includes $86,538 of unused long-service leave entitlements paid in lieu of exercising entitlements, accrued and recognised in
prior periods.
Fleetwood Corporation Limited Financial Report 2014
Page 41
Remuneration Report (continued)
There are no post-employment benefits other than superannuation. Executive contracts do not provide for any termination payments,
other than the payment of accrued leave entitlements.
The amount included in remuneration as share-based payments are not related to or indicative of the benefits (if any) that individual
executives may ultimately realise should the equity instruments vest.
Share based payment arrangements in existence at the reporting date
Exercise
price
$
Options at
beginning of
year
No.
Options
granted
No.
Options
expired /
forfeited
No.
Options
exercised
(shares
issued)
No.
Options
at end of
year
No.
Vested
at end of
year
No.
Proceeds
received on
exercise
$
Fair value
(market value)
of shares on
exercise
$
Issue
date
31/10/07
2013
14/11/08
2014
2013
31/10/09
2014
2013
31/10/10
2014
2013
02/09/11
2014
2013
20/02/13
2014
2013
30/08/13
2014
2014
2013
8.30
7.25
6.00
8.02
8.68
10.57
2.88
Weighted average
price ($)
2014
2013
Options information:
-
(24,000)
-
-
199,200
262,800
(31,122)
-
-
(11,329)
-
31,122
-
31,122
-
82,135
-
1,996,370
-
-
-
(58,335)
16,000
16,000
16,000
-
-
350,010
-
182,515
(33,334)
-
-
(10,000)
101,666
135,000
101,666
70,667
-
80,200
-
94,700
24,000
31,122
42,451
16,000
74,335
135,000
145,000
206,337
206,337
-
-
-
-
-
-
-
-
-
(75,000)
-
310,000
-
-
310,000
(135,000)
-
-
540,000
(230,000)
-
-
-
-
-
131,337
206,337
87,558
68,779
175,000
310,000
310,000
-
-
-
-
-
-
-
-
-
-
-
-
-
698,459
492,123
540,000
310,000
(504,456)
-
-
(103,664)
734,003
698,459
205,224
170,568
-
711,545
-
2,536,385
9.27
7.94
2.88
10.57
6.41
N/A
N/A
6.86
6.53
9.27
8.14
8.15
Option
life
Issue Date Expiry Date Years
Volatility
%
Dividend
yield
%
Risk free
interest
rate
%
Fair value
at grant
date
$
Exercise
price
$
Share
price at
grant date
$
Weighted
average share
price at
exercise date
2014
$
Weighted
average share
price at
exercise date
2013
$
14/11/08
31/10/09
31/10/10
02/09/11
20/02/13
30/08/13
13/11/13
30/10/14
30/10/15
01/09/16
19/02/18
30/08/18
5
5
5
5
5
5
45.90
50.00
40.00
35.69
35.39
45.03
10.74
8.54
6.14
6.18
7.59
3.64
3.97
4.53
4.50
4.50
2.85
3.68
0.32
2.09
2.43
2.53
1.15
1.40
7.25
6.00
8.02
8.68
10.57
2.88
5.25
7.57
10.02
10.66
9.66
3.10
-
-
-
-
-
-
10.61
12.02
10.03
-
-
-
Fleetwood Corporation Limited Financial Report 2014
Page 42
Remuneration Report (continued)
Shares and options held by Directors, executives and key management personnel and movements during the reporting period;
Shares
Directors
Michael Hardy
2014
2013
Stephen Gill
(Resigned 23/11/12)
2013
Greg Tate
2014
2013
John Bond
2014
2013
Executives
Bradley Denison
2014
2013
Bradley Van Hemert
2014
2013
Stephen Price
(Resigned 27/06/14)
2014
2013
Ben Rosser
2014
2013
2014
2013
Shares at
beginning of year
No.
Options
exercised
No.
Net other
change
No.
Shares at
end of year
No.
1,975
-
-
-
15,000
1,975
16,975
1,975
3,028,823
-
(3,028,823)
-
6,569,427
6,526,220
-
41,667
11,844
1,540
6,581,271
6,569,427
-
-
25,464
116,464
175,334
247,794
16,666
16,666
10,000
-
-
-
-
-
20,000
-
20,000
-
20,000
(91,000)
45,464
25,464
-
51,997
114
(124,457)
175,448
175,334
-
-
-
10,000
-
-
-
-
16,666
16,666
10,000
10,000
6,798,866
9,935,967
-
103,664
66,958
(3,240,765)
6,865,824
6,798,866
Peter Gunzburg, Steve Carroll and David Martin did not hold any shares during FY2013 or FY2014.
Fleetwood Corporation Limited Financial Report 2014
Page 43
Remuneration Report (continued)
Options
Directors
Greg Tate
2013
Executives
Steve Carroll
2014
2013
Bradley Denison
2014
2013
Bradley Van Hemert
2014
2013
Stephen Price
(Resigned 27/06/14)
2014
2013
Ben Rosser
2014
2013
David Martin
(Resigned 26/12/13)
2014
2013
2014
2013
Options at
beginning
of year
No.
Granted
No.
Forfeited
No.
Exercised
No.
Options at
end of year
No.
Vested
during the
year
No.
Vested at
end of year
No.
Proceeds
received on
exercise
$
41,667
-
-
(41,667)
-
41,667
-
250,002
58,433
33,433
50,000
25,000
131,837
81,837
100,000
50,000
-
-
-
-
-
-
-
-
108,433
58,433
231,837
131,837
150,293
162,290
80,000
40,000
(31,122)
-
-
(51,997)
199,171
150,293
218,334
108,334
150,000
110,000
(368,334)
-
-
-
-
218,334
114,562
64,562
80,000
60,000
-
-
-
(10,000)
194,562
114,562
11,144
11,144
26,390
42,389
26,390
43,057
41,667
41,667
21,520
21,520
27,288
16,144
68,779
42,389
-
-
-
-
97,235
70,845
-
381,343
-
41,667
43,040
21,520
-
-
-
80,200
25,000
-
698,459
492,123
80,000
25,000
(105,000)
-
-
540,000
310,000
(504,456)
-
-
(103,664)
-
25,000
734,003
698,459
-
-
-
-
-
-
127,111
201,444
236,342
192,565
-
711,545
Option values that form part of current year remuneration;
Executives
Stephen Price
(Resigned 27/06/14)
2013
Bradley Denison
2014
2013
Bradley Van Hemert
2014
2013
Ben Rosser
2014
2013
Steve Carroll
2014
2013
David Martin
(Resigned 26/12/13)
2013
2014
2013
Year Options Granted
2012
$
2013
$
2011
$
-
15,780
-
12,624
-
12,624
-
9,468
-
4,734
-
-
-
50,496
-
46,712
9,659
24,397
9,659
24,397
8,523
21,526
4,545
11,481
-
-
32,386
117,031
-
12,489
20,493
5,677
16,394
4,541
24,591
6,812
10,246
2,838
-
2,838
71,725
29,520
Fleetwood Corporation Limited Financial Report 2014
2014
$
-
25,380
-
46,358
-
53,418
-
28,275
-
-
-
153,431
-
Total
$
-
74,981
55,532
42,698
72,411
41,562
86,532
37,806
43,067
19,053
-
2,838
257,542
216,100
Page 44
Remuneration Report (continued)
Movements in option entitlements during the year:
Key management
personnel
Stephen Price
Bradley Denison
Bradley Van Hemert
Ben Rosser
Steve Carroll
David Martin
Options granted
No. at
grant
date
150,000
100,000
80,000
80,000
50,000
80,000
Value at
grant
date
$
129,440
86,293
69,034
69,034
43,147
69,034
Options exercised
(shares issued)
Value at
exercise
date
$
No.
during
year
Amounts
paid
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Options
Vested
No.
during
year
41,667
26,390
26,390
21,520
11,144
-
Value
of options
included in
remuneration Remuneration
by options
%
for the year
$
(30,983)
55,532
46,358
53,418
28,275
(2,838)
(5.1)
14.7
12.6
15.2
10.0
(1.8)
The issue date of the options granted to the executives was 30 August 2013. Each option entitles the holder to subscribe for one share
upon exercise at an exercise price of $2.88 per share. There have been no alterations to the terms and conditions of this grant since
the grant date.
Due to the limited financial products available to facilitate hedging of unvested or vested options the Board does not impose any
restrictions in relation to a person limiting his or her exposure to the risk in respect of options issued by the Company. No Director is a
party to a contract whereby such person would have a right to call for or deliver shares in, or debentures of or interests in a registered
scheme made available by the Group.
No options issued during the year vested during the year and no bonuses were forfeited during the year because the person did not
meet service or performance criteria. 31,122 options lapsed during the year and 473,334 options were forfeited during the year because
the person did not meet service or performance criteria.
The terms and conditions of employment of senior executives and key management personnel are governed by individual employment
contracts. Employment contracts are not limited in duration and do not contain termination payments. Each employment contract may
be terminated by either party upon the giving of 4 weeks’ notice. However, the Company may terminate an employment contract at any
time and without notice if serious misconduct has occurred.
Non-audit Services
The Directors are satisfied that the provision of non-audit services during the year by the auditor is compatible with the general standard
of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services
by the auditors did not compromise the auditor independence requirement of the Corporations Act 2001 for the following reasons:
all non-audit services have been reviewed by the Audit Committee to ensure that they do not impact impartiality and
objectivity of the auditor; and
none of the services undermine the general principle relating to auditor independence as set out in the Corporations Act 2001
or the Code of Conduct APES 110 Code of Ethics for Professional Accountants, as amended, issued by the Accounting
Professional and Ethical Standards board, including reviewing or auditing the auditors own work, acting in a management or a
decision making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and
rewards.
Details of the amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in note
25 to the financial statements.
Company Secretary
Yanya O’Hara was appointed Company Secretary on 1 August 2014. Yanya has been employed by the Company for three years as
Assistant Company Secretary. Prior to joining Fleetwood, Yanya practiced as a Corporate Attorney in New York and as a Barrister and
Solicitor in Perth. The previous Company Secretary Mr. Denison resigned on 1 August 2014.
Rounding
The Company is of a kind referred to in ASIC Class Order 98/0100 dated 10 July 1998 and accordingly amounts in the financial report
and directors’ report have been rounded to the nearest one thousand dollars, unless otherwise indicated.
Signed in accordance with a resolution of the Directors.
M Hardy
Chairman
30 September 2014
Fleetwood Corporation Limited Financial Report 2014
Page 45
Directors’ Declaration
The directors of Fleetwood Corporation Limited declare that:
(a)
(b)
(c)
in the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when
they become due and payable;
the attached financial statements are in compliance with International Financial Reporting Standards, as stated in note 1 to
the financial statements;
in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act
2001, including compliance with accounting standards and giving a true and fair view of the financial position and
performance of the consolidated entity; and
(d)
the directors have been given the declarations required by s.295A of the Corporations Act 2001.
At the date of this declaration, the company is within the class of companies affected by ASIC Class Order 98/1418. The nature of the
deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of any debt in
accordance with the deed of cross guarantee.
In the directors’ opinion, there are reasonable grounds to believe that the company and the companies to which the ASIC Class Order
applies, as detailed in note 25 to the financial statements will, as a group, be able to meet any obligations or liabilities to which they are,
or may become, subject by virtue of the deed of cross guarantee.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
M Hardy
Chairman
30 September 2014
Fleetwood Corporation Limited Financial Report 2014
Page 46
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
The Board of Directors
Fleetwood Corporation Limited
21 Regal Place
East Perth WA 6004
30 September 2014
Dear Board Members
Fleetwood Corporation Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Fleetwood Corporation Limited.
As lead audit partner for the audit of the financial statements of Fleetwood Corporation Limited
for the financial year ended 30 June2014, I declare that to the best of my knowledge and belief,
there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to
the audit and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Peter Rupp
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report to the
members of Fleetwood Corporation Limited
Report on the Financial Report
We have audited the accompanying financial report of Fleetwood Corporation Limited, which
comprises the statement of financial position as at 30 June 2014, the statement of profit or loss and
other comprehensive income, the statement of cash flows and the statement of changes in equity for
the year ended on that date, 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
as set out on pages 1 to 34 and 46.
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 control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the consolidated 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 whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control, relevant to the entity’s
preparation of the financial report that gives a true and fair view, in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001,
which has been given to the directors of Fleetwood Corporation Limited, would be in the same terms
if given to the directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a) the financial report of Fleetwood Corporation 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 2014
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 consolidated financial statements also comply with International Financial Reporting
Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included on pages 39 to 45 of the directors’ report for the
year ended 30 June 2014. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of Fleetwood Corporation Limited for the year ended 30 June
2014 complies with section 300A of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
Peter Rupp
Partner
Chartered Accountants
Perth, 30 September 2014
ASX Additional Information
as at 24 September 2014
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this report is
set out below.
Twenty largest shareholders
Name
Karrad Pty Ltd
HSBC Custody Nominees (Australia) Limited
Zero Nominees Pty Ltd
Citicorp Nominees Pty Limited
National Nominees Limited
J P Morgan Nominees Australia Limited
Adventure Holdings Pty Ltd
HSBC Custody Nominees (Australia) Limited - GSCO ECA
Jarli Pty Ltd
Argo Investments Limited
Nulis Nominees (Australia) Limited
Mr John Ian Amos + Mrs Cintra Gail Amos
Ace Property Holdings Pty Ltd
Mr Greg Tate
Navigator Australia Ltd
Tideways Classic Pty Ltd
Mr Stephen Gill + Mrs Suzanne Gill
BNP Paribas Noms Pty Ltd
Karrad Pty Ltd
Mr Alistair Robert Graeme Paton
Substantial shareholders
The number of shares held by substantial shareholders are set out below:
Name
Greg Tate
HSBC Custody Nominees (Australia) Limited
Zero Nominees Pty Ltd
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Limited
Distribution of equity security holders
Category
1 -1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Shareholders holding less than a marketable parcel
Number
of ordinary
shares held
5,211,823
3,484,250
2,739,493
2,361,162
2,212,649
2,101,618
1,540,388
843,594
800,000
795,997
367,417
309,143
300,000
300,000
260,067
191,860
167,220
165,548
165,035
158,566
%
8.60%
5.75%
4.52%
3.90%
3.65%
3.47%
2.54%
1.39%
1.32%
1.31%
0.61%
0.51%
0.50%
0.50%
0.43%
0.32%
0.28%
0.27%
0.27%
0.26%
24,475,830
40.40%
6,581,271
4,343,985
2,739,493
2,361,163
2,101,618
10.86%
7.17%
4.52%
3.90%
3.47%
Number of
shareholders
4,138
4,966
960
577
25
10,666
1,001
Voting rights of shareholders
On a show of hands, every member in person or by proxy shall have one vote. Upon a poll, voting rights of such members shall be
one vote for each share held.
On market buy-back
There is no current on market buy-back.
Other information
Fleetwood Corporation Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.
Fleetwood Corporation Limited Financial Report 2014
Page 50
21 Regal Place, East Perth, WA 6004 | Tel: (08) 9323 3300 | Fax: (08) 9202 1106 | info@fleetwood.com.au
ABN 69 009 205 261