MAXITRANS
INDUSTRIES
LIMITED
ANNUAL
REPORT
2016
2016
FINANCIAL
REVIEW
Revenue ($m)
Net profit after tax ($m)1
363
352
329
340
277
26.0
17.1
12.3
8.8
6.3
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
Ordinary dividends declared
per share (cents)
Earnings per share (Basic) (cents)
8.5
6.0
4.3
14.1
9.2
6.7
3.0
2.0
4.7
3.4
2012
2013
2014
2015
2016
2012
2013
2014
20152
20162
1 Underlying NPAT attributable to equity holders.
2 Excludes impairment charges and restructuring costs.
B
Revenue 3.3%
Underlying NPAT 39%
(attributable to MXI shareholders)
Earnings per share 39%
(excludes impairment charges and restructuring costs)
Dividends 50%
11
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED Freighter Sliding
Post Load Restraint
Gates received the
2016 TrailerTorque
Technology &
Innovation Award.
TrailerTorque Editor
Chris Mullett (left),
presents Freighter
General Manager
Mario Colosimo
(right) with
the award.
The launch of MaxiSTOCK
has provided MaxiPARTS
customers with automatic
reordering of any parts
and consumables as they
are used.
INNOVATION
ACROSS
THE BUSINESS
2
Freighter T-Liner Mark II
has been released to the
market, featuring less than
a third as many buckles
as a standard T-Liner.
CHAIRMAN AND
MANAGING DIRECTOR
REVIEW
MAXITRANS RETURNS TO GROWTH
MaxiTRANS is pleased to report revenue of $340.2 million
in FY16, a 3.3% increase on the prior year in what continue
to be challenging market conditions. Reported net profit
after tax attributable to MaxiTRANS equity holders of $5.23
million is 16% above prior year. Underlying net profit after
tax attributable to MaxiTRANS equity holders of $8.75
million is 39% above prior year and is also above the trading
update provided to the market in May, 2016.
The underlying net profit after tax excludes the closure costs
of the Bundaberg manufacturing facility in November 2015
of $0.4 million post-tax and impairment charges totalling
$3.1 million post-tax against the carrying values of the
intangible assets relating to Hamelex White and Lusty EMS.
Based on the inherent volatility in the markets in which our
tipper products operate, such as weather conditions and
construction activity levels, it is difficult to predict the future
earnings of these products. Accordingly, given the
challenging market conditions in recent years and uncertain
outlook, the Company has impaired the carrying values
of these intangible assets.
TRAILER BUSINESS
Australia
The Australian trailer market was significantly adversely
impacted in the second half of FY16 by the announcement of
the Federal Election on 2 July, 2016 and the uncertainty
created by the Road Safety Remuneration Tribunal’s order on
contractor minimum rates. These factors contributed to unit
sales in the second half of FY16 declining 10% below the first
half of FY16. This particularly impacted sales of the
Freighter-type general freight trailers.
However, we continue to see an increase in the average age
of trailer fleets, thereby placing increased pressure on
operators to upgrade their fleets to take advantage of
efficiency improvements resulting from trailer design
innovation and to minimize maintenance costs.
Whilst trailer unit sales were flat year on year, MaxiTRANS’
market share in 2016 has marginally improved. Our diverse
product portfolio creates a broad exposure to many sectors
of the economy, thus mitigating the impact on the business of
the downturn of any particular sector.
Strong demand for Maxi-CUBE’s superior refrigerated vans
led to a 7% sales growth and an increase in its share of the
Company’s product mix. However, this revenue and market
share growth came at the expense of margins as aggressive
discounting was experienced across the market. Whilst the
efficiencies realised from the Company’s continuous
improvement program reduced the margin impact of the
sales discounting the underlying profit of the Australian
trailer business improved slightly.
Improved rainfall along the east coast of Australia has
improved confidence in the agricultural sector and increased
construction activity resulted in tipper unit sales improving
4% over the prior year. The closure of our Bundaberg
manufacturing facility in November, 2015 and consolidation
of production into our Queensland facility ensured margins
for these products were maximised.
Furthermore, the opening of our Company-owned dealership
in Sydney in November 2015 is enabling us to capture
additional opportunities that arise in the buoyant NSW
market. Our experienced team and substantial facilities
have allowed it to quickly establish itself in the market.
New Zealand
The business experienced a strong first half performance,
however the announcement of proposed transport regulation
changes affecting vans resulted in customers delaying
purchasing decisions in the second half of FY16. The business’
sales mix comprised lower margin units, thereby impacting
profitability. As a result, revenue declined 7% on prior year and
profitability declined by 16%, most of which occurred in H2 FY16.
The new regulations are in the final stages of consultation
and are expected to come into effect in 2017. We expect to
experience improved order levels once these changes
take effect.
In addition, the business continues to build its product
portfolio, including the MaxiTRANS’ tipper range to improve
its customer offering and gain market share.
PARTS & COMPONENTS BUSINESSES
Revenue for the Parts & Components businesses were
flat on prior year, largely due to further declines in the
MaxiPARTS business.
Australia
The MaxiPARTS business experienced further softening in
the truck and trailer parts market in FY16, in particular in
Queensland, its largest market, and Western Australia where
further contraction in resources activity and continued
drought has had a significant economic impact.
Furthermore, the wholesale business was also impacted
by lower sales to other trailer manufacturers in Western
Australia due to lower trailer sales in that market. These
market conditions led to revenue declining by 7%, however
cost saving measures resulted in profitability remaining flat
after removing the effects of the product recall costs
incurred in FY15.
3
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED In terms of our market presence, we should experience
an improvement in trailer sales as the NSW dealership
continues to establish itself within its market. With the
closure of the Bundaberg facility behind us, the business
will continue to benefit from efficiencies created through
the continuous improvement program together with a full
year of the rationalised manufacturing footprint.
MaxiPARTS
The new business initiatives launched by MaxiPARTS in
late FY16 should gain traction in the market in FY17 to
more than offset any further underlying deterioration in
market conditions.
Offshore markets
In our offshore markets, New Zealand should experience an
improvement in sales as the regulation change takes effect
and it continues to launch new products.
Our China business should continue to benefit from the
evolution of the supply chain in China and growth
opportunities pursued across Asia.
MaxiTRANS believes that its focus on delivering innovative
customer solutions and efficiencies led through continuous
process improvement will see it deliver growth ahead of
the market.
Robert Wylie
Chairman
Michael Brockhoff
Managing Director
CHAIRMAN AND
MANAGING DIRECTOR REVIEW
CONTINUED
During the year, the business launched a number of new
initiatives to offset the decline in the traditional retail
business and provide platforms for growth. Most notably,
it has:
significantly expanded its truck parts product range;
added a new sales channel by launching a technology-
enabled customer managed inventory system, MaxiSTOCK,
which has gained strong customer acceptance and is
generating solid sales growth; and
added its second proprietary suspension solution to
its product portfolio which has also gained strong
market acceptance.
China
A renewed sales strategy resulting in several new customers
combined with increased sophistication and regulation of the
Chinese transport and logistics sector saw our China panel
business, MTC, experience strong growth in FY16 with
revenue increasing 43% and profit improving 200%.
The business will look to further growth as it launches
a number of new products in FY17.
DIVIDENDS
The Board has resolved that a final dividend for FY16 of
$0.01 per share will be paid. The Company paid an interim
fully franked dividend of 2.0 cents per share in April, 2016,
representing a full year payout ratio of 106% of reported
net profit after tax attributable to MaxiTRANS shareholders
(63% of underlying net profit after tax attributable to
MaxiTRANS shareholders).
OUTLOOK
Australian Trailer Business
The Company has entered FY17 with a trailer order bank
significantly stronger than the prior corresponding period
and with a number of significant opportunities in the market.
If business confidence returns in the aftermath of the
Australian Federal election and the contractor minimum
rates issue does not arise again, a number of recent product
improvements should position us well to capture any
improved demand. The demand for refrigerated vans
remains strong and our market-leading Maxi-CUBE products
will continue to drive further growth. Furthermore, the
recent rains along the Australian east coast has led to an
improved order bank for MaxiTRANS’ tipper products.
The business continues to focus on new product innovation
and improving its existing product range to deliver value-
added solutions to its customers. The continuous
improvement program is expanding across the wider business
to optimise efficiency opportunities and eliminate waste.
4
4
MaxiTRANS has opened
its new Company-owned
dealership in the Sydney
suburb of Smeaton Grange.
MaxiTRANS NZ
delivered its 100th
Maxi-CUBE rigid body
to the Countdown
supermarket group
in early 2016.
The ongoing MaxiSAFE
program has seen a
range of further safety
initiatives undertaken,
including the addition
of blue lights to warn
of oncoming forklifts.
MAXITRANS INDUSTRIES LIMITED
5
ANNUAL REPORT 2016 OFFICES &
OFFICERS
Company Secretary
Mr. C. Richards
Registered Office
346 Boundary Road
Derrimut VIC 3030
Principal Place
of Business
346 Boundary Road
Derrimut VIC 3030
Contact numbers
Tel +61 3 8368 1100
Fax +61 3 8368 1178
BOARD
OF DIRECTORS
Share Registry
Computershare Investor Services
Yarra Falls, 452 Johnston Street
Abbotsford VIC 3067
Bankers
Australia and New Zealand
Banking Group Limited
Westpac Banking Corporation
Solicitors
Minter Ellison
Level 23, Rialto Towers
525 Collins Street
Melbourne VIC 3000
Auditor
KPMG
147 Collins Street
Melbourne VIC 3000
Stock Exchange
The Company is listed on the Australian Securities
Exchange. The Home Exchange is the Australian
Securities Exchange. The Company’s home
branch of the Australian Securities Exchange
is Melbourne.
Other Information
MaxiTRANS Industries Limited
ACN 006 797 173 incorporated and domiciled
in Australia, is a publicly listed company limited
by shares.
Left to right:
Michael Brockhoff
Managing Director
Samantha Hogg
Non-Executive Director
Ian Davis
Former Chairman &
Non-Executive Director
Robert Wylie
Chairman & Non-Executive
Director
James Curtis
Deputy Chairman &
Non-Executive Director
Geoffrey Lord
Non-Executive Director
Joseph Rizzo
Non-Executive Director
6
CONTENTS
Financial Summary
Report of the Directors
Directors’ Declaration
Consolidated Statement of Profit or Loss &
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Independent Auditor’s Report
ASX Additional Information
8
9
28
29
30
31
33
34
68
69
REPORT OF THE
DIRECTORS AND
FINANCIAL REPORT
MaxiTRANS Industries Limited
ACN 006 797 173
and Controlled Entities
7
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED REPORT OF THE DIRECTORS
AND FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Financial Summary
F2012
F2013
F2014
F2015
F2016
Revenue
$’000
276,767
362,534
351,968
329,165
340,179
EBITDA (excluding significant items)(3)
$’000
23,549
44,219
30,594
16,247
19,219
EBIT (excluding significant items)(3)
$’000
18,116
38,316
25,185
10,604
14,199
NPBT (excluding significant items)(3)
$’000
16,795
36,358
23,172
8,079
11,840
NPAT (excluding significant items)(3)(4)
$’000
12,334
25,965
17,075
6,303
8,752
Significant Items (net of tax)
$’000
–
–
–
(1,806)(1)
(3,517)(2)
NPAT – attributable to equity holders
$’000
12,334
25,965
17,075
4,497
5,235
Basic EPS
Ordinary dividends/share declared
Depreciation
Amortisation – leased assets
Amortisation – intangibles
Capex additions
Operating cash flow
NTA
Net assets
cents
cents
$’000
$’000
$’000
$’000
6.70
4.25
3,818
835
780
14.11
8.50
3,309
1,446
1,148
9.26
6.00
2.43
2.00
2.83
3.00
3,600
3,967
3,583
690
550
1,119
1,126
662
775
4,701
6,706
13,239
10,893
9,530
$’000
17,567
23,543
16,612
12,138
21,196
$’000
55,033
71,662
75,876
78,380
86,278
$’000
98,695
115,764
121,813
120,612
123,337
Interest bearing liabilities
$’000
29,884
26,218
42,580
47,302
43,152
Finance costs
Total bank debt
Net debt/equity
Interest cover (excluding significant items)
times
$’000
1,321
1,958
2,013
2,525
2,359
$’000
26,000
23,013
39,713
45,196
41,465
%
26%
13.71
21%
19.57
31%
12.51
36%
4.20
26%
5.75
(1) Relates to impairment loss on AZMEB intangible assets of $2.58m pre-tax (disclosed above net of tax).
(2) Relates to the impairment loss on Lusty EMS and Hamelex White intangible assets of $4.398m pre-tax and the closure cost of the Bundaberg
facility of $0.626m pre-tax (disclosed above net of tax).
(3) EBIT, EBITDA, NPBT and NPAT excluding significant items are non-IFRS financial measures, which have not been subject to review or
audit by the Group’s external auditors. These measures are presented to enable understanding of the underlying performance of the
Group by users.
(4) Also referred to as underlying net profit after tax attributable to MaxiTRANS equity holders.
8
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 JUNE 2016
Your directors submit their report together with the
consolidated financial report of MaxiTRANS Industries
Limited (“the Company”) and its subsidiaries (together
referred to as the "Group"), and the Group's interest in joint
ventures for the year ended 30 June 2016 and the auditor’s
report thereon.
Directors
The names of directors in office at any time during or since
the end of the financial year are:
Mr Ian R. Davis
Mr Robert H. Wylie
Mr James R. Curtis
Mr Michael A. Brockhoff
Mr Geoffrey F. Lord
Mr Joseph Rizzo
Ms Samantha Hogg
Principal Activities
(Retired on
30 June 2016)
(Director from 2008 –
Appointed Chairman on
30 June 2016)
(Deputy Chairman since 1994)
(Managing Director since 2000)
(Director since 2000)
(Director since 2014)
(Appointed Director on
27 April 2016)
The principal activities of the Group during the year
consisted of the design, manufacture, sale, service and
repair of transport equipment and related components
and spare parts. There were no changes in the nature of
the Group’s principal activities during the financial year.
Dividends
Dividends paid or declared for payment are as follows:
Ordinary shares
A fully franked interim dividend of 2.00 cents per share was
paid on 14 April 2016 totalling $3,701,513.
Events Subsequent to Balance Date
There were no material events subsequent to balance date
impacting on the financial statements.
Corporate Governance Statement
The Corporate Governance Statement of the Directors
and the accompanying Appendix 4G is separately
lodged with ASX and forms part of this Directors’ Report.
It may also be found on the Company’s website at
www.maxitrans.com.
Environmental Regulation
The Group’s environmental obligations are regulated
under Local, State and Federal Law. All environmental
performance obligations are internally monitored and
subjected to regular government agency audit and site
inspections. The Group has a policy of complying with its
environmental performance obligations. No breach of any
environmental regulation or law has been notified to the
Group during or since the year ended 30 June 2016.
Operating & Financial Review
REVIEW OF OPERATIONS
The Group operates two types of businesses: the Trailer
businesses comprising the design, manufacture, sale and
servicing of trailers in Australia and New Zealand; and the
Parts and Components businesses comprising
MaxiPARTS, a trailer and truck parts business in Australia
and an 80% share in a Chinese company, Yangzhou
Maxi-CUBE Tong Composites Co Ltd (“MTC”), that
manufactures panels in China for refrigerated and dry
freight trailers in both its domestic and export markets.
Trailer Business
A fully franked final dividend of 1.00 cent per share has
been proposed by the directors after reporting date for
payment on 14 October 2016. The financial effect of this
dividend has not been brought to account in the financial
statements for the year ended 30 June 2016 and will be
recognised in subsequent financial reports.
The Trailer business has a diverse portfolio of trailers with
market leading brands and a reputation for high quality
with customers. Sales of products through our dealer
network, comprising both owned dealerships and licenced
dealerships provides a full solution including after sales
service and parts to those customers.
State of Affairs
There were no significant changes in the state of affairs
of the Group which occurred during the financial year.
9
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Australia
New Zealand
The Australian trailer market was significantly adversely
impacted in the second half of FY16 by the announcement
of the Federal Election on 2 July, 2016 and the uncertainty
created by the Road Safety Remuneration Tribunal’s order
on contractor minimum rates. These factors contributed to
unit sales in the second half of FY16 declining 10% below
the first half of FY16. This particularly impacted sales of
the Freighter-type general freight trailers.
However, we continue to see an increase in the average
age of trailer fleets, thereby placing increased pressure on
operators to upgrade their fleets to take advantage of
efficiency improvements resulting from trailer design
innovation and to minimize maintenance costs.
Whilst trailer unit sales were flat year on year, MaxiTRANS’
market share in 2016 has marginally improved. Our diverse
product portfolio creates a broad exposure to many sectors
of the economy, thus mitigating the impact on the business
of the downturn of any particular sector.
Strong demand for Maxi-CUBE’s superior refrigerated
vans led to a 7% sales growth and an increase in its share
of the company’s product mix. However, this revenue and
market share growth came at the expense of margins as
aggressive discounting was experienced across the
market. Whilst the efficiencies realised from the Company’s
continuous improvement program reduced the margin
impact of the sales discounting the net profit before tax
of the Australian trailer business improved slightly.
Improved rainfall along the east coast of Australia has
improved confidence in the agricultural sector and
increased construction activity resulted in tipper unit
sales improving 4% over the prior year. The closure of our
Bundaberg manufacturing facility in November, 2015 and
consolidation of production into our Queensland facility
ensured margins for these products were maximised.
Furthermore, the opening of our Company-owned
dealership in Sydney in November 2015 is enabling us to
capture additional opportunities that arise in the buoyant
NSW market. Our experienced team and substantial
facilities has allowed it to quickly establish itself in the
market.
The business experienced a strong first half performance,
however, the announcement of proposed transport
regulation changes affecting vans resulted in customers
delaying purchasing decisions in the second half of FY16.
The business’ sales mix comprised lower margin units,
thereby impacting profitability. As a result, revenue
declined 7% on prior year and profitability declined by
16%, most of which occurred in H2 FY16.
The new regulations are in the final stages of consultation
and are expected to come into effect in early 2017.
We expect to experience improved order levels once
these changes take effect.
In addition, the business continues to build its product
portfolio including the MaxiTRANS’ tipper range to improve
its customer offering and gain market share.
Parts & Components Business
The Parts & Components business sells truck and trailer
parts at both a wholesale and retail level in Australia.
The retail business sells parts to road transport operators
as well as truck and trailer service and repair providers
mainly along the eastern seaboard of Australia. The
wholesale business operates in Victoria, Queensland,
New South Wales and Western Australia. Wholesale
customers are typically truck dealers and trailer
manufacturers. At the end of FY16, MaxiPARTS operated
22 wholesale sites and retail stores.
As outlined above, the Parts & Components business
also includes the panel manufacturing operation in China
through our 80% shareholding in MTC.
Revenue for the Parts & Components businesses
decreased 1.5% from prior year. A weak performance from
the MaxiPARTS business was largely offset by a strong
trading performance from MTC in China. Net profit before
tax for the segment improved due to the non-recurrence of
the product recall costs in FY15 and the improved trading
performance of MTC in China.
10
REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Australia
The MaxiPARTS business experienced further softening in
the truck and trailer parts market in FY16, in particular in
Queensland, its largest market, and Western Australia
where further contraction in the resources market had a
significant economic impact. Furthermore, the wholesale
business was also impacted by lower sales to other trailer
manufacturers in Western Australia due to lower trailer
sales in that market. These market conditions led to
revenue declining by 7%, however cost saving measures
resulted in profitability remaining flat after removing the
effects of the product recall costs incurred in FY15.
During the year, the business launched a number of new
business initiatives to offset the decline in the traditional
retail business and provide platforms for growth. Most
notably, the business has:
significantly expanded its truck parts product range;
added a new sales channel by launching a technology-
enabled customer managed inventory system,
“MaxiSTOCK” which has gained strong customer
acceptance and is generating solid sales growth; and
launched its second proprietary trailer suspension
solution to its product portfolio which has also gained
strong market acceptance.
China
A renewed sales strategy resulting in several new
customers combined with increased sophistication and
regulation of the Chinese transport and logistics sector
saw our China panel business, MTC, experience strong
growth in FY16 with revenue increasing 43% and profit
improving 200%.
The business will look to further growth as it launches a
number of new products in FY17.
FINANCIAL REVIEW
Sales
Total revenue increased by 3.3% to $340.2 million for FY16,
up from $329.2 million in FY15.
The Trailer business achieved external sales revenue of
$233.5 million, a 5.5% increase over FY15 principally due to
a strong performance from sales of Maxi-CUBE vans in
Australia partially offset by reductions across the other
brands.
The Parts & Components business recorded a 1.5%
external revenue decline to finish FY16 with revenue of
$105 million. Revenue in the Australian MaxiPARTS
business declined by 7%, however, this was partially offset
by 43% revenue growth in the MTC China business.
Profit
Net profit after tax and significant items attributable to
MXI equity holders was $5.2 million in FY16, an increase
of 16% on FY15. Underlying net profit after tax attributable
to MXI equity holders was $8.7 million, an increase of 39%.
Underlying net profit after tax excludes the Bundaberg
closure costs of $0.4m post tax and the impairment of the
intangible assets relating to Hamelex White and Lusty EMS
of $3.1m post tax.
Trading margins in the Trailer business were slightly lower
in FY16, due to continued aggressive price competition in
the Australian market required to maintain volumes and
lower margin product mix in the New Zealand business.
The pricing impact was partially mitigated by cost
reductions realized by the manufacturing continuous
improvement program.
Performance of the Parts & Components businesses
improved significantly over the prior year due to the
following:
Cost reduction measures initiated in the MaxiPARTS
business to offset the volume decline;
Non-recurrence of the costs associated with the recall
of a core suspension product in the MaxiPARTS
business in FY15;
Launch of new business initiatives in MaxiPARTS; and
Significantly improved trading performance of MTC in
China.
Financing costs of $2.3 million were lower than FY15 due
to lower net borrowings arising from the lower capital
expenditure and improved working capital performance.
Cash Generation & Capital Management
Operating cash flow of $21.2 million was generated during
FY16 which was 74% higher than FY15.
Working capital has improved on the prior year with
continued focus on inventory management and cashflow
management.
The major investment activity during the year was
associated with Project TRANSform. No businesses were
acquired during the year.
11
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Due to the stronger operating cash flows, gearing levels
were lower at the end of FY16 than at the end of FY15.
Net debt for FY16 decreased to 26% of equity, down from
36% in FY15.
External Financing Facilities
MaxiTRANS has syndicated debt facilities totalling
$75 million with the ANZ Banking Group and Westpac
Banking Corporation. The facility is used to fund ongoing
business requirements and facilitate funding future
growth opportunities. The facility has both three years
and five year maturities and have a number of covenant
and ratio requirements.
These facilities are sufficient to support the business in
its current form.
In addition, MTC has a three year RMB 20 million facility
with ANZ Banking Group in China and has an additional
uncommitted facility of RMB 5 million.
Dividends
The total dividend to shareholders for the year was 3.0
cents per share and was fully franked. The total ordinary
dividend of 3.0 cents per share compared with 2.0 cents
per share in the prior year and represents an 106% payout
ratio of FY16 net profit after tax attributable to MXI
shareholders and a 63% payout ratio of underlying net
profit after tax attributable to MXI shareholders.
RISK
The MaxiTRANS Audit & Risk Management Committee, a
sub-committee of the Board, governs the framework and
process for the identification and mitigation of material
business risks. A business risk is the threat that an event
or action will pose to MaxiTRANS’ ability to meet its
business objectives or capture an opportunity.
During the year, the business undertook a review of its risk
management framework and risk assessment process
facilitated by a third party. This process requires the
business to identify the material business risks and
classify them as between “very high”, “high”, “medium”
or “low” based on the consequences arising from the
occurrence of the risk and the likelihood of it occurring.
The business is then required to develop action plans to
mitigate these risks and determine action plans in the
event they occur.
Operational Risks
The Group has identified the following operational risks as
“very high” in its most recent risk assessment:
The Trailer business, which contributes in excess of
65% of Group revenue and in excess of 60% of business
segment net profit before tax, is engaged in the
manufacture and sale of high value discretionary
capital goods. The success of this business is largely
dependent on the prosperity of the economy driving
freight movement. There is a risk that any decline in
the domestic economy will reduce freight movement
and therefore the demand for new trailers and
expanding customer fleets.
The Group has sought to mitigate this risk by:
ensuring that its products are of consistently
high quality;
expanding into other sectors;
expanding the Parts & Components business to
provide more stable recurring income; and
expanding into international markets including by
improving product offerings in New Zealand and
improving manufacturing capacity in China.
The risk of greater competition from offshore
competitors selling imported trailers in the Australian
market resulting in a potential loss of market share.
The Group has sought to mitigate this risk by:
ensuring that product quality remains high thereby
protecting its brands;
product innovation to provide better solutions to
customers;
investigating low cost country sourcing
opportunities to maintain margins;
reducing the manufacturing cost base through
efficiencies to maintain margins; and
minimising lead times to delivery.
Foreign Exchange & Commodities Risk
The Group has exposure to movements in the Australian
dollar against the United States dollar and the Euro. The
Trailer business has exposures to these currencies arising
from the purchase of raw materials and components
consumed in the manufacture of trailers. The Trailer
business also has significant exposure to commodity price
fluctuations for steel and aluminium used in the
12
REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
manufacturing process. Similarly, the Parts & Components
businesses also have exposure to these currencies as a
result of importing parts for sale.
The Group has a policy of only hedging foreign currency
cash flow risk utilising forward contracts to protect against
movements in short term committed expenditure. The
Group does not hedge against currency risk arising from
the translation of foreign operations.
Depreciation of the Australian dollar may:
adversely affect the operating cost base and therefore
margins. The Group currently hedges short term
committed foreign currency purchases. Some or
all of this risk may be further mitigated by price
management and efficiency improvement, however;
may also benefit the Group insofar as it also acts
as a potential barrier to entry for imports that may
be uncompetitive in price against locally produced
products.
Conversely, an appreciating Australian dollar against
major currencies increases the risk of import competition.
The specialised and customised nature of the trailer
industry, together with demand for short delivery times,
reduces this risk.
HEALTH & SAFETY
In FY14, the Company commenced a major program to
step change the safety culture of the organisation and
provide a high level of care for all employees.
This program, known as “MaxiSAFE” has been conducted
over the past three years at eight principal sites. It will
equip and empower management to drive improvements in
health and safety and engage all employees in a cultural
shift in respect of work health and safety. The same
improvements will be progressively implemented across
all Company sites.
In FY16, the program yielded a 35% improvement in safety
performance over the prior year and represents a 50%
improvement since the program began in FY14. This safety
performance is the best experienced by the business in the
past decade. The program has had a positive effect on
organizational culture and employee engagement.
The Board currently monitors, and will continue to
monitor, the Group’s health and safety performance
on a monthly basis.
STRATEGY
MaxiTRANS' strategy focuses on the following pillars
that will drive superior shareholder returns:
developing new trailing solutions including innovative
new products for our customers to provide them with
a competitive advantage;
continuing to improve the efficiency and capacity
of manufacturing facilities;
continuing to diversify participation, both in terms
of industry sectors and geographic presence; and
continuing to build the Parts & Components
businesses through a combination of organic and
acquisitive growth initiatives.
Developing new trailing solutions
As our markets evolve and customer needs change,
MaxiTRANS is working with its customers to identify
innovative new solutions, both in terms of trailer products
and related product offerings, to provide its customers with
a competitive advantage.
Improving Manufacturing Efficiency
The focus is on optimising the utilisation of the
manufacturing facilities by:
improving the efficiency of manufacturing processes
through a major continuous improvement program;
continually improving the quality of product produced
at these facilities; and
managing the volume and mix of products produced
at each facility.
Consistent with this strategy, the Company relocated the
production of its AZMEB products to its Richlands
manufacturing facility and closed the Bundaberg
manufacturing facility due to the poor outlook for the
resources sector into the forseeable future.
Expanding Industry Sector & Geographical Coverage
The current product portfolio provides the Company with
opportunities in most freight based industry sectors
throughout Australia and New Zealand.
The Board will continue to identify organic growth and
acquisition opportunities in both the product portfolio and
distribution channels to increase our geographic coverage.
13
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
During FY16, a new Company-owned trailer dealership
commenced in NSW, replacing its former independent
dealer. The dealership provides the company with improved
opportunities to further increase market share.
Business Transformation Program
Recognising the Company’s history of growth through
acquisitions, each with their own legacy systems and
processes, the Company has committed to a significant
investment in a business transformation program known
as “Project TRANSform”.
The program will replace thirteen outdated legacy IT
systems with a single enterprise resource planning (“ERP”)
system across the business. This will allow the Company
to streamline many business processes, thus creating
operational efficiencies and mitigating business risk.
During FY16, the development of the new ERP system was
undergoing the build and testing phases and is on track to
be deployed across the business during FY17.
OUTLOOK
Australian Trailer Business
The Company has entered FY17 with a trailer order bank
significantly stronger than the prior corresponding period
and with a number of significant opportunities in the
market.
If business confidence returns in the aftermath of the
Australian Federal election and the contractor minimum
rates issue does not arise again, a number of recent
product improvements should position us well to capture
any improved demand. The demand for refrigerated vans
remains strong and our market-leading Maxi-CUBE
products will continue to drive further growth.
Furthermore, the recent rains along the Australian east
coast has led to an improved order bank for MaxiTRANS’
tipper products.
The business continues to focus on new product innovation
and improving its existing product range to deliver
value-added solutions to its customers. The continuous
improvement program is expanding across the wider
business to optimise efficiency opportunities and eliminate
waste.
In terms of our market presence, we should experience
an improvement in trailer sales as the NSW dealership
continues to establish itself in its market. With the closure
of the Bundaberg facility behind us, the business will
continue to benefit from efficiencies created through the
continuous improvement program together with a full year
of the rationalised manufacturing footprint.
MaxiPARTS
The new business initiatives launched by MaxiPARTS in
late FY16 should gain traction in the market in FY17 to
more than offset any further underlying deterioration in
market conditions.
Offshore Markets
In our offshore markets, New Zealand should experience
an improvement in sales as the regulation change takes
effect and it continues to launch new products.
Our China business should continue to benefit from
the evolution of the supply chain in China and growth
opportunities are pursued across Asia.
MaxiTRANS believes that its focus on delivering innovative
customer solutions and efficiency led through continuous
process improvement will see it deliver growth ahead of
the market
14
REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Information of Directors
Mr. Ian R. Davis
Former Chairman, Independent Non-Executive, Age 71
Qualifications & Experience:
Law degree with honours from University of Melbourne.
Appointed Chairman 1994 and retired on 30 June 2016.
Head of Private Wealth and previously National Chairman of international law firm, Minter
Ellison, Mr. Davis has extensive experience in the corporate and commercial area of law
in which he practices. He was formerly a Non-Executive Director of Redflex Holdings Ltd
from October 2009 to February 2013, and is a former Non-Executive Chairman and
former Non-Executive Director of a number of publicly listed and private companies.
Special Responsibilities:
Former Chairman of Corporate Governance Committee, Remuneration Committee and
Nomination Committee. Former member of Audit & Risk Management Committee.
Interest in Shares:
1,602,193 ordinary shares beneficially held.
Options over Ordinary Shares:
Nil
Mr. Robert H. Wylie
Chairman (appointed 30 June 2016), Age 66
Qualifications & Experience:
Fellow of the Institute of Chartered Accountants in Australia, a member of the Institute
of Chartered Accountants of Scotland and a Fellow of the Australian Institute of Company
Directors. Appointed Director in September 2008.
Currently a Director of The Walter + Eliza Hall Institute of Medical Research, Mr. Wylie
has wide ranging experience in professional service in a variety of management roles with
Deloitte. He has previously held senior positions with Deloitte Touche USA LLP. Prior to this,
he was Deputy Managing Partner Asia Pacific. This followed a long career with Deloitte
Australia, including eight years as National Chairman. Mr. Wylie also served on the Global
Board of Directors and the Governance Committee of Deloitte Touche Tohmatsu and
the Global Board of Directors of Deloitte Consulting. Mr Wylie is also a former National
President of the Institute of Chartered Accountants in Australia. Formerly a Director of
Elders Limited from November 2009 to August 2012 and Director of both Centro Properties
Limited and CPT Manager Limited from October 2008 to December 2011.
Special Responsibilities:
Chairman of Corporate Governance Committee, Remuneration Committee and
Nomination Committee. Former member of Audit & Risk Management Committee.
Interest in Shares:
21,364 ordinary shares beneficially held.
Options over Ordinary Shares:
Nil
15
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Mr. James R. Curtis
Deputy Chairman, Non-Executive, Age 81
Qualifications & Experience:
Appointed Deputy Chairman in 1994.
Mr. Curtis was one of the founders of the Group in 1972. He has over 50 years' experience
in the transport equipment industry and is a pioneer of fibreglass road transport
equipment in Australia.
Special Responsibilities:
Member of Corporate Governance Committee, Audit & Risk Management Committee,
Remuneration Committee and Nomination Committee.
Interest in Shares:
24,943,030 ordinary shares beneficially held.
Options over Ordinary Shares:
Nil
Mr. Michael A. Brockhoff
Managing Director, Executive, Age 63
Qualifications & Experience:
Appointed Managing Director in June 2000.
Thirty-eight years' experience in the road transport industry.
Special Responsibilities
Member of Nomination Committee.
Interest in Shares:
3,090,172 ordinary shares beneficially held.
Options over Ordinary Shares:
Nil
Mr. Geoffrey F. Lord
Independent Non-Executive Director, Age 71
Qualifications & Experience:
B. Econ. (Honours), M.B.A. (Distinction), ASSA, Fellow of the Australian Institute of
Company Directors. Appointed Director in October 2000.
Chairman and Chief Executive Officer of Belgravia Group. Chairman of Terrain Capital
Ltd. Former chairman of LCM Litigation Fund Pty Ltd. Former Chairman and Deputy
Chairman of UXC Limited since September 2002. Deputy Chairman of Institute of Drug
Technology Limited since October 1998. Board member of the Melbourne Business
School. Formerly a Director of Northern Energy Corporation from December 2007 to
October 2011. Former Chairman/inaugural member of Melbourne Victory.
Special Responsibilities:
Member of Audit & Risk Management Committee, Corporate Governance Committee,
Remuneration Committee and Nomination Committee.
Interest in Shares:
1,049,604 ordinary shares beneficially held.
Options over Ordinary Shares:
Nil
16
REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Mr. Joseph Rizzo
Independent Non-Executive Director, Age 60
Qualifications & Experience:
Bachelor of Economics (Monash University), Executive Program (University of Michigan),
Graduate of the Australian Institute of Company Directors (GAICD). Appointed
Non-Executive Director 2014.
Formerly Managing Director of PACCAR Australia Pty Ltd with thirty-five years’ experience
in the road transport equipment manufacturing industry. Mr. Rizzo has a wide knowledge
of the industry generally along with strong manufacturing, sales and marketing experience
in a directly related field. Former Vice President of the Truck Industry Council.
Special Responsibilities:
Member of Audit & Risk Management Committee, Corporate Governance Committee,
Remuneration Committee and Nomination Committee.
Interest in Shares:
50,000 ordinary shares beneficially held.
Options over Ordinary Shares:
Nil
Ms. Samantha Hogg
Independent Non-Executive Director, Age 49
Qualifications & Experience:
Currently a non-executive director of Hydro Tasmania and TasRail and has previously
held senior executive finance roles at the Transurban Group, Vale Inco and WMC
Resources.
Special Responsibilities:
Chairperson of the Audit and Risk Management Committee.
Interest in Shares:
Nil ordinary shares beneficially held.
Options over Ordinary Shares:
Nil
Company Secretaries
Mr. Campbell R. Richards
B. Bus. (Acc), CA
Appointed to the position of Company Secretary in June 2013.
Mr. Albert Retief
B. Bus. (Acc), CA
Appointed to the position of Assistant Company Secretary in May 2016.
Mr. David Poldrugovac
B. Eco. (Acc), CA
Appointed to the position of Assistant Company Secretary in March 2014.
Resigned 18 May 2016.
17
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Details of attendances by directors at Board and committee meetings during the year are as follows:
Directors’
Meetings
Audit & Risk
Management
Committee
Remuneration
Committee
Nomination
Committee
Number Number
eligible
attended
to attend
Number Number
eligible
attended
to attend
Number Number
eligible
attended
to attend
Number Number
eligible
attended
to attend
Ian Davis
Robert Wylie
James Curtis
15
15
15
Michael Brockhoff 15
Geoffrey Lord
Joseph Rizzo
Samantha Hogg
15
15
2
15
15
15
15
13
15
2
4
4
4
4
4
4
1
4
4
3
4
4
4
1
1
1
1
1
1
1
–
1
1
1
1
1
1
–
2
2
2
2
2
2
–
2
2
2
1
2
2
–
Remuneration Report
Information contained in the Remuneration Report is audited.
Remuneration levels for directors, secretaries and
executives of the Company, and relevant group executives
of the Group (“the directors and senior executives”)
are competitively set to attract and retain appropriately
qualified and experienced directors and senior executives.
The Remuneration Committee obtains independent advice
on the appropriateness of remuneration of non-executive
directors and the Managing Director having regard to trends
in comparative companies and the objectives of the Group’s
remuneration strategy.
The remuneration structures explained below are
designed to attract suitably qualified candidates, reward
the achievement of strategic objectives, and achieve the
broader outcome of creation of value for shareholders.
The remuneration structures take into account:
The capability and experience of the directors and
senior executives;
The directors’ and senior executives’ ability to control
the relevant segment/s’ performance;
The Group’s performance including the Group’s
earnings per share; and
The amount of incentives within each director’s and
senior executive’s remuneration.
The Directors continue to be focussed on ensuring that
MaxiTRANS provides a remuneration structure which
genuinely attracts, motivates and retains executive talent
and aligns the interests of management and shareholders.
The following is a summary of the key elements of the
structure of remuneration for executive directors and senior
management:
the structure of executive director and senior
management remuneration includes a mix of fixed
and performance-linked components;
the mix of total remuneration between fixed and
performance-linked components to average 60%
and 40% respectively;
the performance-linked component of total
remuneration comprises a Short Term Incentive (‘STI’)
scheme and a Long Term Incentive (‘LTI’) scheme; and
the mix of performance-linked remuneration (as a
percentage of total remuneration) between STI and LTI
components to average 15% and 25% respectively;
The Directors are of the view that the remuneration structure
supports alignment between the Group and shareholders.
Each of the components of total remuneration for executive
directors and senior management are described in more
detail below.
18
REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Fixed remuneration
Fixed remuneration consists of base remuneration,
including any FBT charges related to employee benefits
which have been salary sacrificed, as well as employer
contributions to superannuation funds.
Remuneration levels are reviewed annually by both the
Remuneration Committee and the Managing Director
through a process that considers individual, segment
and overall performance of the Group. In addition and as
required, external consultants may be engaged to provide
analysis and advice to ensure the directors’ and senior
executives’ remuneration is competitive in the market
place. A senior executive’s remuneration is also reviewed
on promotion.
Performance-linked remuneration
Performance linked remuneration includes both STI's
and LTI's and is designed to reward executive directors
and senior executives for meeting or exceeding specified
objectives. The STI includes an “at risk” incentive provided
in the form of cash.
The LTI is provided in the form of Performance Rights.
The MaxiTRANS Performance Rights Plan (‘PRP’) was
approved by the shareholders at the Annual General
Meeting held on 15 October 2010.
STI
Each year KPIs (key performance indicators) are set for
senior executives and executive directors. The KPIs generally
include measures relating to the Group, the relevant
segment, and the individual, and include financial, people,
customer, strategy and risk measures. The measures are
chosen as they directly align the individual’s reward to the
KPIs of the Group and to its strategy and performance.
The key financial performance objective is “net profit
before tax” compared to budgeted amounts. The non-
financial objectives vary with position and responsibility
and include measures such as achieving strategic
outcomes, safety and environmental performance,
customer satisfaction and staff development.
At the end of the financial year the actual performance
of the Group, the relevant segment and individual is measured
against the KPIs set at the beginning of the financial year.
The method of assessment was chosen as it provides an
objective assessment of the individual’s performance.
In line with the Group’s philosophy of rewarding employees
for performance, STI's based on the achievement of KPIs
are also available to staff other than executive directors
and senior management.
LTI
The LTI scheme available to executive directors and to
senior management is based on the annual grant of a
specified number of Performance Rights which can be
converted by executive directors and senior management
into a specified number of ordinary shares in the Company.
Performance Rights will vest and will be able to be
exercised upon the achievement of specified long term
performance targets in a period not less than three years
after the date upon which the Performance Rights are
granted to executive directors and senior management
provided they remain in the employment of the Group
throughout that period.
Traditionally, the Board has set a long term incentive
target for management to achieve an increase in the
Group's Return on Invested Capital ('ROIC'). During
financial year 2015 the Board introduced a secondary LTI
target based on Earnings Per Share growth. Both targets
are weighted equally and operate independently of the
other. The parameters that have been set by the Board
are set out in Note 15.
If the minimum ROIC target is reached, 50% of the
Performance Rights will vest. The percentage of
Performance Rights that vest increases on a sliding
scale once the minimum target is reached. 100% of the
Performance Rights will vest where the target is fully
achieved or exceeded. No director or senior executive
has entered a hedging arrangement with respect to the
value of unvested Performance Rights.
The Earnings Per Share target represents an absolute
hurdle with no sliding scale for achievement below
the target.
19
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Other benefits
Non-executive directors are not entitled to receive
additional benefits as a non-cash benefit. Non-executive
directors may receive a component of their directors’ fees
as superannuation.
Senior executives can receive additional benefits as
non-cash benefits, as part of the terms and conditions
of their appointment. Other benefits typically include
payment of superannuation, motor vehicles, telephone
expenses and allowances, and where applicable, the
Group pays fringe benefits tax on these benefits.
Consequences of performance on shareholder wealth
In considering the Group’s performance and benefits for
shareholder wealth, the remuneration committee have
regard to the indices highlighted in the table on page 23.
Net profit before tax is considered as one of the financial
performance targets in setting the STI.
Service agreements
It is the Group’s policy that service contracts for executive
directors and senior executives be unlimited in term but
capable of termination on up to six months notice and
that the Group retains the right to terminate the contract
immediately, by making payment of up to twelve months’
pay in lieu of notice.
The Group has entered into service contracts with each
executive director and senior executive that entitle those
executives to receive, on termination of employment, their
statutory entitlements of accrued annual and long service
leave, together with any superannuation benefits.
The service contract outlines the components of
remuneration paid to the executive directors and senior
executives but does not prescribe how remuneration
levels are modified year to year. Remuneration levels
are reviewed each year to take into account cost-of-living
changes, any change in the scope of the role performed
by the senior executive and any changes required to
meet the principles of the remuneration policy including
performance related objectives if applicable.
Mr Michael Alan Brockhoff, Managing Director, has a
contract of employment with the Company dated 3 May 2000.
The contract specifies the duties and obligations to be
fulfilled by the Managing Director and provides that the
Board and Managing Director will early in each financial
year, consult and agree objectives for achievement during
that year. The service contract can be terminated either by
the Company or Mr Brockhoff providing six months notice.
The Company may make a payment in lieu of notice of six
months, equal to base salary, motor vehicle allowance
and superannuation. This payment represented market
practice at the time the terms were agreed. The Managing
Director has no entitlement to a termination payment in
the event of removal for misconduct or breach of any
material terms of his contract of employment.
Mr Campbell Richards, Chief Financial Officer and
Company Secretary, has a contract of employment with
the Company dated 3 May 2013.
The contract can be terminated either by the Company or
Mr Richards providing three months notice. The Company
may make a payment in lieu of notice of three months,
equal to base salary and superannuation.
Non-executive directors
Total remuneration for all non-executive directors, last
voted upon by shareholders at the 2012 AGM, is not to
exceed $600,000 per annum and directors' fees are set
based on advice from external advisors with reference to
fees paid to other non-executive directors of comparable
companies. Directors’ base fees (inclusive of superannuation)
for the year were $75,000 per annum. The Chairperson
received $140,000 per annum. Non-executive directors
do not receive performance related remuneration and are
not entitled to either a STI or LTI. Directors’ fees cover all
main board activities and membership or chairing of all
committees. Non-executive directors are not entitled to
any retirement benefits.
20
REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ and executive officers’ remuneration
Details of the nature and amount of each major element of remuneration of each director of the Company and other key
management personnel of the Group:
Primary
Post
Equity
Other
(iv)
Total
Salary
& fees (i)
$
STI
(ii)
$
Non-cash
benefits Super
$
$
PR’s
(iii)
$
Year
Proportion of
remuneration
performance
related
Value of
PR's as
proportion of
remuneration
DIRECTORS
Non-executive
Mr I Davis
2016
127,854
Former Chairman
2015
127,854
Mr R Wylie
Chairman
Mr J Curtis (v)
Mr G Lord
Mr J Rizzo
Ms S Hogg (x)
Executive
2016
40,000
2015
40,000
2016
68,493
2015
68,493
2016
68,493
2015
68,493
2016
40,000
2015
40,000
2016
12,381
2015
–
Mr M Brockhoff
2016
672,749
Managing Director
2015
651,461
EXECUTIVES
Mr C Richards
2016
343,197
Chief Financial Officer
2015
351,360
and Company Secretary
Mr A Wibberley
2016
312,605
Group General Manager
2015
300,293
– Manufacturing
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
20,000
–
–
–
–
–
–
$
%
%
140,000
140,000
75,000
75,000
75,000
95,000
75,000
75,000
75,000
75,000
13,557
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12,146
12,146
35,000
35,000
6,507
6,507
6,507
6,507
35,000
35,000
1,176
–
–
–
–
–
–
–
–
–
–
–
–
–
15,404
69,835 (119,032) 50,614
3,627
64,201 156,641 50,229
689,570
926,159
(17.3%)
16.9%
(17.3%)
16.9%
–
–
31,500
2,238
31,500
36,886
–
–
376,935
419,746
0.6%
8.8%
0.6%
8.8%
–
34,447
(49,369) 30,301
2,291
30,633
67,297
37,451
327,984
437,965
(15.1%)
15.4%
(15.1%)
15.4%
Mr P Buttler
2016
227,401
–
–
26,909
(46,779) 29,214
General Manager
2015
231,469 28,253
14,258
26,086
57,324
21,636
236,745
379,026
(19.8%)
21.9%
(19.8%)
14.7%
– Ballarat
MaxiTRANS Australia Pty Ltd
Mr A McKenzie (vi)
2016
292,238
Group General Manager
2015
64,437
– Sales and Distribution
Mr S Harkin (vii)
2016
180,327
Group Supply Manager
2015
75,880
–
–
–
–
–
–
29,278 16,330 22,000
6,112
–
4,428
359,846
74,977
26,850 16,864 10,320
–
5,267
7,171
–
4,935
234,361
93,253
4.5%
–
4.4%
–
4.5%
–
4.4%
–
21
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Primary
Post
Equity
Salary
& fees (i)
$
STI
(ii)
$
Non-cash
benefits Super
$
$
PR’s
(iii)
$
Year
Other
(iv)
$
Total
$
–
Proportion of
remuneration
performance
related
Value of
PR's as
proportion of
remuneration
%
%
–
2.0%
–
2.0%
–
–
–
24,348
5,431
26,621
271,371
28,431
(57,516) 29,798
28,423
68,314
31,099
267,498
403,726
(21.5%)
16.9%
(21.5%)
16.16.9%
24,571
23,195
(40,507)
3,710
211,711
(19.1%)
(19.1%)
–
–
–
–
–
–
–
EXECUTIVES (continued)
Mr N Zantuck (viii)
2016
–
General Manager
2015
214,971
– Vic Branch,
MaxiTRANS Australia Pty Ltd
Mr P Loimaranta
2016
266,785
General Manager
2015
275,890
– MaxiPARTS Pty Ltd
Mr C Wallace (ix)
2016
200,742
General Manager
2015
–
– Vic Branch,
MaxiTRANS Australia Pty Ltd
–
–
–
–
–
–
–
–
–
–
Notes in relation to table of directors’ and executive officers' remuneration
(i)
Includes the accrual of short-term statutory entitlements.
(ii)
STI entitlement is 15% of total remuneration for each of the individuals listed above. The short-term cash incentives
disclosed above are for performance for the 30 June 2016 financial year using the criteria set out in the Remuneration
Report. The amounts were determined after performance reviews were completed. All STI entitlements was forfeited
during the year.
(iii) The fair value of performance rights (PR's) is calculated at the date of grant using the Monte Carlo simulation
model and allocated to each reporting period evenly over the period from grant date to vesting date, adjusted for
any changes in the probability of performance and service targets being achieved. The value disclosed is the portion
of the fair value recognised in this reporting period. In valuing the PR's, market conditions have been taken into
account. Further details in respect of PR's are contained on the following page of the Remuneration Report.
Details of PR’s vested during the period are contained in Note 15 – Share Based Payments. During the period it was
determined that the performance and service conditions of both the 2012 and 2013 PR schemes will not be met. As a
result, the total amount recognised for services received over the life of the 2012 and 2013 PR schemes were
reversed.
(iv)
Includes the accrual of long-term statutory entitlements.
(v)
Other remuneration relates to the provision of consulting services to the Group.
(vi) Mr A McKenzie was appointed 20 April 2015.
(vii) Mr S Harkin was appointed 9 February 2015.
(viii) Mr N Zantuck resigned effective 27 May 2015. All PR’s held by Mr Zantuck at that time were cancelled.
(ix) Mr C Wallace was appointed 1 July 2015.
(x) Ms S Hogg was appointed on 27 April 2016.
22
REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Analysis of share-based payments granted as remuneration
Details of the vesting profile of the PR's granted as remuneration to each of the Company directors and other key
management personnel of the Group during the reporting period are detailed below.
Directors
Mr M Brockhoff
Company executives
Mr C Richards
Consolidated entity executives
Mr A Wibberley
Mr P Loimaranta
Mr A McKenzie
Mr S Harkin
Mr P Butler
Mr C Wallace
PR's granted
Fair value at
(no.)
Grant date
grant date ($)
Vesting date
Expiry date
902,086
31 Aug. 2015*
0.3418
31 Aug. 2018
31 Aug. 2022
442,607
31 Aug. 2015
0.3418
31 Aug. 2018
31 Aug. 2022
433,245
399,368
426,662
269,693
346,206
295,928
31 Aug. 2015
31 Aug. 2015
31 Aug. 2015
31 Aug. 2015
31 Aug. 2015
31 Aug. 2015
0.3418
0.3418
0.3418
0.3418
0.3418
0.3418
31 Aug. 2018
31 Aug. 2022
31 Aug. 2018
31 Aug. 2022
31 Aug. 2018
31 Aug. 2022
31 Aug. 2018
31 Aug. 2022
31 Aug. 2018
31 Aug. 2022
31 Aug. 2018
31 Aug. 2022
* PR's were issued to Mr Brockhoff and approved by the shareholders at the Annual General Meeting held on 5 November 2015.
All PR's expire on the earlier of their expiry date or termination of the individual's employment. In order for PR's to vest,
holders must continue to be in the employment of the Group until vesting date. The PR's vest three years after the date they
were issued, subject to the satisfaction of performance hurdles. PR's may only be exercised during a four year period after
they have vested. Details of the performance criteria are included in the discussion on LTI's.
The estimated maximum value of PR's on issue for future years is the current share price. This is subject to future
movements in the share price. The estimated minimum value is $nil.
Unissued Shares Under Rights
At the date of this report there are no unissued ordinary shares of the Company relating to vested PR's.
Consolidated Results and Shareholder Returns
2016
2015
2014
2013
2012
Net profit/(loss) attributable
to equity holders of the parent
$5,235,000
$4,497,000
$17,075,000
$25,965,000
$12,334,000
Basic EPS
2.83¢
2.43¢
9.26¢
14.11¢
6.70¢
Dividends declared
$5,552,270
$3,701,513
$11,104,542
$15,639,438
$7,819,719
Dividends declared per share
3.00¢
Share price
45.0¢
2.00¢
39.5¢
6.00¢
97.0¢
8.50¢
$1.065
4.25¢
61.5¢
23
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Directors’ and executives’ holdings of shares
For key management personnel, the movements in shares held directly, indirectly or beneficially at the reporting date in the
Company are set out below:
2016 Shares
MaxiTRANS Industries Limited
Directors:
Mr M Brockhoff
Mr I Davis
Mr J Curtis
Mr G Lord
Mr R Wylie
Mr J Rizzo
Executives:
Mr P Loimaranta
Mr A Wibberley
Mr P Buttler
Mr C Wallace
Held at
1 July 2015
3,090,172
1,502,193
24,943,030
1,049,604
21,364
50,000
260,716
221,507
145,321
119,571
Purchases
Sales
Held at
30 June 2016
-
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
45,000
145,321
119,571
3,090,172
1,602,193
24,943,030
1,049,604
21,364
50,000
260,716
176,507
-
-
Ms Hogg, Mr Richards, Mr Mackenzie and Mr Harkin do not hold any shares as at 30 June 2016.
2015 Shares
MaxiTRANS Industries Limited
Directors:
Mr M Brockhoff
Mr I Davis
Mr J Curtis
Mr G Lord
Mr R Wylie
Mr J Rizzo
Executives:
Mr P Loimaranta
Mr A Wibberley
Mr P Buttler
Mr N Zantuck
Held at
1 July 2014
3,138,338
1,502,193
24,380,030
1,049,604
21,364
–
126,522
140,447
–
119,716
Purchases
Sales
Held at
30 June 2015
451,834
–
563,000
–
–
50,000
162,123
170,083
145,321
142,085
500,000
–
–
–
–
–
27,929
89,023
–
–
3,090,172
1,502,193
24,943,030
1,049,604
21,364
50,000
260,716
221,507
145,321
n/a
Mr Richards, Mackenzie and Harkin do not hold any shares as at 30 June 2015.
End of Remuneration Report
24
REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Audit and Risk Management Committee
As at the date of this report, the Company had an Audit and Risk Management Committee of the Board of Directors that met
four times during the year. The details of the functions and memberships of the committees of the Board are presented in the
Corporate Governance Statement.
Indemnity
With the exception of the matters noted below the Company has not, during or since the end of the financial year, in respect
of any person who is or has been an officer or auditor of the Company or a related body corporate:
(i)
(ii)
Indemnified or made any relevant agreement for indemnifying against a liability incurred as an officer, including
costs and expenses in successfully defending legal proceedings; or
Paid or agreed to pay a premium in respect of a contract insuring against a liability incurred as an officer for the
costs or expenses to defend legal proceedings.
The Group has entered into a contract of insurance in relation to the indemnity of the Group’s directors and officers. The
insurance policy relates to claims for damages, judgements, settlements or costs in respect of wrongful acts committed by
directors or officers in their capacity as directors or officers but excluding wilful, dishonest, fraudulent, criminal or malicious
acts or omissions by any director or officer. The directors indemnified are those existing at the date of this report. The officers
indemnified include each full time executive officer and secretary.
During the financial year, the Group paid premiums of $45,406 (2015: $43,971) in respect of directors’ and officers’ liability
insurance contracts.
Clause 98 of the Company’s constitution contains indemnities for officers of the Company.
The Company has entered into a deed of protection with each of the directors to:
(i)
Indemnify the director to ensure that the director will have the benefit of the indemnities after the director ceases
being a director of any group company;
(ii)
Insure the director against certain liabilities after the director ceases to be a director of any group company; and
(iii)
Provide the director with access to the books of group companies.
Share Options
Share options granted to directors and highly remunerated officers
No options were granted to any of the directors or the seven most highly remunerated executives of the Company or Group
as part of their remuneration during or since the end of the financial year.
Shares Issued on the Exercise of Options
No options were exercised during the financial year.
Further details on the Group's Performance Rights Plan are detailed in Note 15 to the consolidated financial statements
and in the Remuneration Report.
25
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Non-Audit Services
During the year, KPMG, the Company’s auditor, performed certain other services in addition to their statutory duties.
The Board has considered the non-audit services provided during the year by the auditor and in accordance with written
advice provided by resolution of the Audit and Risk Management Committee, is satisfied that the provision of those non-audit
services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements
of the Corporations Act 2001 for the following reasons:
All non-audit services were subject to the corporate governance procedures adopted by the Group and have been reviewed
by the Audit and Risk Management Committee to ensure they do not impact the integrity and objectivity of the auditor; and
The non-audit services provided do not undermine the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work,
acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing
risks and rewards.
A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act is included in,
and forms part of this Report of the Directors on page 27.
Details of the amounts paid to the auditor of the Company, KPMG, for audit and non-audit services provided during the year
are set out below.
Remuneration of Auditor
Remuneration of the auditor of the Group for:
KPMG Australia:
– auditing and reviewing the financial statements
– other services (taxation & advisory)
Overseas KPMG Firms:
– auditing and reviewing financial statements
– other services (taxation, advisory & due diligence)
Total
Proceedings on Behalf of Company
Consolidated
2016
$
2015
$
263,700
111,762
286,200
55,590
375,462
341,790
79,344
19,052
76,350
28,916
98,396
105,266
473,858
447,056
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to
which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings. The Company was not a party to any such proceedings during the year.
26
REPORT OF THE DIRECTORS (cont)
FOR THE YEAR ENDED 30 JUNE 2016
Rounding of Accounts
The parent entity has applied the relief available to it in ASIC Corporations (Rounding in Financial/Directors Reports
Instruments 2016/191 and, accordingly, amounts in the financial statements and Report of the Directors have been rounded
to the nearest thousand dollars unless specifically stated to be otherwise.
This report has been made in accordance with a resolution of the Board of Directors.
Mr. Robert H Wylie, Director,
Mr. Michael Alan Brockhoff, Director
Dated this 19th day of August 2016
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To: the directors of MaxiTRANS Industries Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2016 there
have been:
(i)
No contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation
to the audit; and
(ii) No contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Melbourne
19 August 2016
Tony Romeo
Partner
KPMG, an Australian partnership and member firm of the KPMG
network of independent member firms affiliated with KPMG
Liability limited by a scheme approved under Professional
International Cooperative ("KPMG International"), a Swiss entity.
Standards Legislation
27
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2016
In the opinion of the directors of MaxiTRANS Industries Limited (“the Company”):
(a) the consolidated financial statements and notes as set out on pages 29 to 67, are in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2016 and of its performance for the
financial year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
There are reasonable grounds to believe that the Company and the group entities identified in Note 19 will be able to meet
any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between
the Company and those group entities pursuant to ASIC Class Order 98/1418.
The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive
Officer and Chief Financial Officer for the financial year ended 30 June 2016.
The directors draw attention to Note 1 to the consolidated financial statements, which includes a statement of compliance
with International Financial Reporting Standards.
This declaration is made in accordance with a resolution of the Board of Directors.
Mr. Robert H Wylie, Director
Mr. Michael Alan Brockhoff, Director
Dated this 19th day of August 2016
28
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Sale of goods
Rendering of services
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Interest income
Other income - sale of assets
Consolidated
Note
2016
$’000
2015
$’000
330,286
317,678
9,893
(2,513)
11,487
(1,011)
(203,307)
(199,809)
80
592
97
–
Employee and contract labour expenses
2
(83,326)
(82,924)
Warranty expenses
Depreciation and amortisation expenses
Impairment loss on intangible assets
Finance costs
Other expenses
Share of net profits of joint ventures accounted for using the equity method
6,7
7
9
20
(1,900)
(5,020)
(4,398)
(2,359)
(5,375)
(5,643)
(2,580)
(2,525)
(32,301)
(24,893)
Profit before income tax
Income tax expense
Profit for the year
Profit attributable to:
Equity holders of the company
Non-controlling interests
3(a)
(1,320)
1,089
6,816
5,496
5,235
261
2.83
2.83
997
5,499
(1,036)
4,463
4,497
(34)
2.43
2.43
Earnings per share for profit attributable to the ordinary equity holders of the company:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
12
12
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Profit for the year
5,496
4,463
Other comprehensive income
Items that may subsequently be re-classified to profit or loss:
Net exchange difference on translation of financial
statements of foreign operations
Other sundry movements
Items that will never be re-classified to profit or loss:
Revaluation of land and buildings
Related tax
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income attributable to:
Equity holders of the company
Non-controlling interests
765
34
777
(218)
1,358
6,854
6,640
214
597
(81)
3,127
(917)
2,726
7,189
6,992
197
The consolidated statement of profit or loss and consolidated statement of comprehensive income is to be read in conjunction
with the accompanying notes to the consolidated financial statements.
29
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
CONSOLIDATED
BALANCE SHEET
FOR THE YEAR ENDED 30 JUNE 2016
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Other
Total Current Assets
Non-Current Assets
Investment in joint venture
Property, plant & equipment
Intangible assets
Deferred tax assets
Other
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Interest bearing loans and borrowings
Current tax liability
Provisions
Total Current Liabilities
Non-Current Liabilities
Interest bearing loans and borrowings
Deferred tax liabilities
Provisions
Other
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Retained earnings
Equity attributable to equity holders of the Company
Non-controlling interest
Total Equity
Note
4
5
3(c)
6
7
3(b)
8
9
3(c)
10
9
3(b)
10
Consolidated
2016
$’000
10,831
38,386
53,341
2,863
1,120
2015
$’000
4,345
42,961
53,735
1,410
1,790
106,541
104,241
4,187
78,563
37,059
1,780
1,156
3,926
73,354
42,232
933
1,156
122,745
121,601
229,286
225,842
48,276
1,829
253
12,476
62,834
41,323
446
1,147
199
43,115
43,216
5,266
362
12,694
61,538
42,036
260
1,152
244
43,692
105,949
105,230
123,337
120,612
11
56,386
16,643
48,337
56,386
15,583
46,805
121,366
118,774
1,971
1,838
123,337
120,612
The consolidated balance sheet is to be read in conjunction with the notes to the consolidated financial statements.
30
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Issued
capital
$’000
Asset
revaluation
reserve1
$’000
Retained
earnings
$’000
Non-
controlling
interest
$’000
Other
reserves2
$’000
Total
$’000
Note
Balance at 1 July 2014
56,386
9,836
50,457
1,901
3,233
121,813
4,497
(34)
–
4,463
Comprehensive income for the year
Profit for the year
Other comprehensive income
Net exchange differences on translation of
financial statements of foreign operations
Revaluation of land and buildings
Other sundry movements
Total comprehensive income for the year
Transactions with owners recorded
directly in equity
Dividends to equity holders
Share-based payment transactions
13
15
Total transactions with owners
–
–
–
–
–
–
–
–
–
–
2,210
–
–
–
–
2,210
4,497
–
–
–
(7,866)
(283)
(8,149)
231
–
–
197
(260)
–
(260)
366
–
(81)
285
597
2,210
(81)
7,189
–
19
19
(8,126)
(264)
(8,390)
Balance at 30 June 2015
56,386
12,046
46,805
1,838
3,537
120,612
1. Asset revaluation reserve
The asset revaluation reserve includes the net revaluation increments arising from the revaluation of land and buildings.
2. Other reserves
Other reserves comprises the foreign currency translation reserve, share based payment reserve and hedging reserve.
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated financial statements.
31
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Issued
capital
$’000
Asset
revaluation
reserve1
$’000
Retained
earnings
$’000
Non-
controlling
interest
$’000
Other
reserves2
$’000
Total
$’000
Note
Balance at 1 July 2015
56,386
12,046
46,805
1,838
3,537
120,612
Comprehensive income for the year
Profit for the year
Other comprehensive income
Net exchange differences on translation of
financial statements of foreign operations
Revaluation of land and buildings
Other sundry movements
Total comprehensive income for the year
Transactions with owners recorded
directly in equity
Dividends to equity holders
Share-based payment transactions
13
15
Total transactions with owners
–
–
–
–
–
–
–
–
–
5,235
261
–
5,496
–
559
–
559
–
–
–
–
–
–
5,235
(3,702)
–
(3,702)
(47)
–
–
214
(81)
–
(81)
812
–
34
846
765
559
34
6,854
–
(3,783)
(345)
(345)
(345)
(4,128)
Balance at 30 June 2016
56,386
12,605
48,337
1,971
4,038
123,337
1. Asset revaluation reserve
The asset revaluation reserve includes the net revaluation increments arising from the revaluation of land and buildings.
2. Other reserves
Other reserves comprises the foreign currency translation reserve, share based payment reserve and hedging reserve.
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated financial statements.
32
CONSOLIDATED STATEMENT
OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers & employees
Interest received
Interest & other costs of finance paid
Income tax paid
Consolidated
Note
2016
$’000
2015
$’000
387,830
(360,793)
80
(2,359)
(3,562)
360,828
(341,211)
97
(2,525)
(5,051)
Net Cash Provided by Operating Activities
21(a)
21,196
12,138
Cash Flows from Investing Activities
Payments for property, plant & equipment
Dividends received
Proceeds from sale of property, plant & equipment
Net Cash Used in Investing Activities
Cash Flows from Financing Activities
Repayment of borrowings
Proceeds from borrowings
Payment of finance lease liabilities
Dividends paid
Net Cash Used in Financing Activities
Net increase/(decrease) in cash
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
(8,703)
828
2,047
(5,828)
(10,026)
1,065
218
(8,743)
(3,786)
-
(1,313)
(3,783)
(8,882)
6,486
4,345
10,831
–
5,219
(1,184)
(8,126)
(4,091)
(696)
5,041
4,345
13
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated financial statements.
33
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Standards taking effect from 1 July 2016 and later
MaxiTRANS Industries Limited (the ‘Company’) is
a company domiciled in Australia and its registered
office is 346 Boundary Road, Derrimut, Victoria.
The consolidated financial statements of MaxiTRANS
Industries Limited as at and for the year ended
30 June 2016 comprise the Company and its subsidiaries
(together referred to as the ‘Group’) and the Group’s
interest in joint ventures and jointly controlled entities.
The Group is a for-profit entity.
Basis of preparation
The financial report is a general purpose financial
report which has been prepared in accordance with
Australian Accounting Standards (‘AASBs’) adopted by
the Australian Accounting Standards Board (‘AASB’)
and the Corporations Act 2001. The financial report
also complies with International Financial Reporting
Standards ('IFRSs') adopted by the International
Accounting Standards Board ('IASB').
The financial report has been prepared on an accruals
basis and is based on historical costs and does not take
into account changing money values or, except where
stated, current valuations of non-current assets. Cost
is based on the fair values of the consideration given in
exchange for assets. These accounting policies have
been consistently applied to all periods presented in the
consolidated financial report by each entity in the Group
and are consistent with those of the previous year.
These consolidated financial statements are presented
in Australian dollars, which is the Company's
functional currency.
The Group has applied the relief available to it in ASIC
Corporations (Rounding in Financial/Directors Reports)
Instruments 2016/191 and, accordingly, amounts in the
financial statements and Report of the Directors have
been rounded to the nearest thousand dollars unless
specifically stated to be otherwise.
The financial report was approved by the board of
directors on 19 August 2016.
The relevant Australian Accounting Standards and
Interpretations that became effective and that were
early adopted by the Group since 30 June 2015 was:
Revenue from contracts with customers
(Amendments to AASB 15) – applicable for annual
reporting periods beginning on or after 1 January 2017
– The standard contains a single model that
applies to contracts with customers and two
approaches to recognising revenue: at point in
time or over time. The model features a contract-
based five-step analysis of transactions to determine
whether, how much and when revenue is recognised.
IFRS 9 Financial Instruments – applicable for annual
reporting periods beginning on or after 1 January 2018
– The new standard includes revised guidance on the
classification and measurement of financial assets,
including a new expected credit loss model for
calculating impairment, and supplements the
new general hedge accounting requirements
previously published. It supersedes AASB 9
(issued in December 2009 – as amended) and
AASB 9 (issued in December 2010 – as amended).
AASB 16 Leases – applicable for annual reporting
periods beginning on or after 1 January 2019.
The new standard introduces a single lessee
accounting model and requires a lessee to recognise
assets and liabilities for all leases with a term of
more than 12 months, unless the underlying asset is
of low value.
AASB 2016 – 1 Amendments to Australian
Accounting Standards – Recognition of Deferred Tax
Assets for Unrealised Losses (mandatory for years
beginning on or after 1 January 2017).
AASB 2016 – 2 Amendments to Australian
Accounting Standards – Disclosure Initiative:
Amendments to AASB 107 (mandatory for years
beginning on or after 1 January 2017).
AASB 1057 Application of Australian Accounting
Standards; AASB 2015-9 Amendments to Australian
Accounting Standards – Scope and Application
paragraphs (mandatory for years beginning on or
after 1 July 2016).
AASB 2015-2 Amendments to Australian
Accounting Standards – Disclosure initiative:
Amendments to 101 (mandatory for years beginning
on or after 1 July 2016).
AASB 2015-3 Amendments to Australian Accounting
Standards arising from the withdrawal of AASB 1031
Materiality.
34
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
AASB 2015-1 Amendments to Australian Accounting
Standards – Annual Improvements to Australian
Accounting Standards 2012-2014 Cycle (mandatory
for years beginning on or after 1 July 2016).
AASB 2014-4 Amendments to Australian Accounting
Standards – Clarification of Acceptable methods of
depreciation and amortisation (mandatory for years
beginning on or after 1 July 2016).
The Group expect to adopt these standards in the
financial year they apply. The financial impact of
adopting the new or amended standards has not
yet been determined.
The following is a summary of the material accounting
policies adopted by the Group in the preparation of the
financial report.
(a) Principles of consolidation
The consolidated financial report comprises the
financial statements of MaxiTRANS Industries
Limited and all of its subsidiaries. A subsidiary
is any entity controlled by MaxiTRANS Industries
Limited or any of its subsidiaries. Control exists
where MaxiTRANS Industries Limited is exposed
to, or has rights to, variable returns from its
involvement with the entity and has the ability to
affect those returns through its power over the
entity. A list of subsidiaries is contained in Note 18
to the financial statements.
All inter-company balances and transactions
between entities in the Group, including any
unrealised profits or losses, have been eliminated
on consolidation.
Business combinations are accounted for using the
acquisition method as at the acquisition date, which
is the date on which control is transferred to the Group.
Costs related to the acquisition, other than those
associated with the issue of debt or equity securities,
that the Group incurs in connection with a business
combination are expensed as incurred.
Any contingent consideration payable is recognised
at fair value at the acquisition date. If the contingent
consideration is classified as equity, it is not
remeasured and settlement is accounted for within
equity. Otherwise, subsequent changes to the fair
value of the contingent consideration are recognised
in profit or loss.
Where subsidiaries have entered or left the Group
during the year, their operating results have been
included from the date control was obtained or until
the date control ceased. The accounting policies of
subsidiaries have been changed when necessary to
align them with the policies adopted by the Group.
Joint ventures are those entities for which the Group
has joint control, but not control, whereby the Group
has rights to the net assets of the arrangement
rather than rights to its assets and obligations
for its liabilities. The financial statements include
the Group’s share of the total recognised gains and
losses of the joint venture on an equity accounted
basis, from the date that joint control commences
until the date that joint control ceases.
When the Group’s share of losses exceeds its
interest in an associate, the Group’s carrying
amount is reduced to nil and recognition of further
losses is discontinued except to the extent that the
Group has incurred legal or constructive obligations
or made payments on behalf of a joint venture.
Unrealised gains arising from transactions with
associates are eliminated to the extent of the
Group’s interest in the joint venture.
(b) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated
at the foreign exchange rate ruling at the date of
the transaction. Monetary assets and liabilities
denominated in foreign currencies at the reporting
date are translated into Australian dollars at the
foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are
recognised in the consolidated statement of profit
or loss. Non-monetary assets and liabilities that are
measured in terms of historical cost in a foreign
currency are translated using the exchange rate at
the date of the transaction. Non-monetary assets
and liabilities denominated in foreign currencies
that are stated at fair value are translated into
Australian dollars at foreign exchange rates ruling
at the dates the fair value was determined.
35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(ii) Financial statements of foreign operations
The assets and liabilities of foreign operations,
including goodwill and fair value adjustments
arising on consolidation, are translated into
Australian dollars at foreign exchange rates ruling
at the reporting date. The revenues and expenses
of foreign operations are translated into Australian
dollars at rates approximating the foreign exchange
rates ruling at the dates of the transactions. Foreign
exchange differences arising on translation are
recognised directly in a separate component of equity.
(c) Inventories
Inventories are valued at the lower of cost and net
realisable value. Costs are assigned on a weighted
average basis and include direct materials, direct
labour and an appropriate proportion of variable
and fixed factory overheads, based on the normal
operating capacity of the production facilities.
Net realisable value is determined on the basis
of each inventory line’s normal selling pattern.
(d) Property, plant and equipment
(i) Owned assets
Land and buildings
Property whose fair value can be measured reliably
is carried at a revalued amount, being its fair value
at the date of the revaluation less any subsequent
accumulated depreciation and subsequent
accumulated impairment losses. Revaluations are
made with sufficient regularity to ensure that the
carrying amount does not differ materially from that
which would be determined using fair value at the
reporting date.
Independent valuations were obtained at 30 June 2016
in relation to the majority of land and buildings.
These were considered by the directors in
establishing revaluation amounts.
If an asset’s carrying amount is increased as a
result of a revaluation, the increase is credited
directly to equity under the heading of Asset
Revaluation Reserve. However, the increase is
recognised in profit or loss to the extent that it
reverses a revaluation decrease of the same asset
previously recognised in profit or loss. If an asset’s
36
carrying amount is decreased as a result of a
revaluation, the decrease is recognised in profit
or loss. However, the decrease is debited directly
to equity under the heading of Asset Revaluation
Reserve to the extent of any credit balance existing
in the revaluation reserve in respect of that asset.
Changes to an asset’s carrying amount are brought
to account together with the tax effects applicable
to the revaluation amount. On realisation of any
amounts contained in the Asset Realisation Reserve,
the balance is transferred to retained earnings.
Plant and equipment
Items of plant and equipment are stated at cost or
deemed cost less accumulated depreciation and
impairment losses (see accounting policy (i)). The
cost of self-constructed assets includes the cost
of materials, direct labour, and an appropriate
proportion of production overheads. The cost
of self-constructed assets and acquired assets
includes (i) the initial estimate, at the time of
installation and during the period of use, when
relevant, of the costs of dismantling and removing
the items and restoring the site on which they are
located, and (ii) changes in the measurement of
existing liabilities recognised for these costs
resulting from changes in the timing or outflow
of resources required to settle the obligation or
from changes in the discount rate.
Where parts of an item of property, plant and
equipment have different useful lives, they are
accounted for as separate items of property, plant
and equipment.
(ii) Leased assets
Leases for which the Group assumes substantially
all of the risks and rewards of ownership are
classified as finance leases. The plant and equipment
acquired by way of a finance lease is stated at an
amount equal to the lower of its fair value and the
present value of the minimum lease payments at
inception of the lease, less accumulated depreciation.
Lease payments are accounted for as described in
accounting policy (v).
(iii) Depreciation
Depreciation is charged to the consolidated profit
and loss on a straight-line basis over the estimated
useful lives of each part of an item of property,
plant and equipment. Land is not depreciated. The
estimated useful lives are reflected in the following
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
rates in the current and comparative periods:
2016
2015
Buildings
2.5-4.0%
2.5-4.0%
Plant and equipment
5-50%
5-50%
Leased plant
and equipment
10-30%
10-30%
The residual value, the useful life and the
depreciation method applied to an asset are
reassessed at least annually.
(e) Intangibles
(i) Goodwill
All business combinations are accounted for by
applying the acquisition method. Goodwill represents
the difference between the consideration transferred
for the acquisition and the net recognised amount
(generally fair value of the identifiable assets
acquired and liabilities assumed), all measured
as of acquisition date.
Goodwill is stated at cost less any accumulated
impairment losses. Goodwill is allocated to
cash-generating units and is tested annually for
impairment (see accounting policy (i)). In respect of
joint ventures, the carrying amount of goodwill is
included in the carrying amount of the investment
in the joint venture.
Negative goodwill arising on an acquisition is
recognised directly in profit or loss.
(ii) Research and development
Expenditure on research activities, undertaken with
the prospect of gaining new scientific or technical
knowledge and understanding, is recognised in the
profit and loss as an expense as incurred.
Expenditure on development activities, whereby
research findings are applied to a plan or design
for the production of new or substantially improved
products and processes, is capitalised if the product
or process is technically and commercially feasible
and the Group has sufficient resources to complete
development.
The expenditure capitalised includes the cost of
materials, direct labour and an appropriate
proportion of overheads. Other development
expenditure is recognised in the profit and loss as
an expense as incurred. Capitalised development
expenditure is stated at cost less accumulated
amortisation (see below) and impairment losses
(see accounting policy (i)).
(iii) Other intangible assets
Other intangible assets that are acquired by
the Group are stated at cost less accumulated
amortisation (see following) and impairment losses.
(iv) Amortisation
Amortisation of intangibles other than goodwill is
charged to the profit and loss on a straight-line
basis over the estimated useful lives of intangible
assets unless such lives are indefinite. Goodwill
and intangible assets with an indefinite useful life
are tested for impairment at least at each annual
reporting date. Other intangible assets are amortised
from the date that they are available for use. The
estimated useful lives are reflected in the following
rates in the current and comparative periods:
Brand names
2016
0%
2015
0%
Intellectual property
0-4.0%
0-4.0%
Patents & trademarks
5-12%
5-12%
Amortisation methods, useful lives and residual
values are reviewed at each financial year end and
adjusted if appropriate.
(f) Non-current assets held for sale
Non-current assets that are expected to be
recovered primarily through sale or distribution
rather than through continuing use, are classified
as held for sale. Immediately before classification,
the assets are remeasured in accordance with the
Group's accounting policies. Thereafter, generally
the assets are measured at the lower of their
carrying amount and fair value less costs to sell.
Impairment losses on initial classification as
held for sale and subsequent gains or losses on
remeasurement are recognised in profit or loss.
Gains are not recognised in excess of any cumulative
impairment loss.
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(g) Trade and other receivables
Trade and other receivables are stated at their
amortised cost less impairment losses (see
accounting policy (i)).
(h) Cash and cash equivalents
Cash and cash equivalents comprise cash balances
and call deposits with an original maturity of three
months or less. Bank overdrafts that are repayable
on demand and form an integral part of the Group’s
cash management are included as a component of
cash and cash equivalents for the purpose of the
statement of cash flows.
(i) Impairment
The carrying amounts of the Group’s assets, other
than inventories (see accounting policy (c)) and
deferred tax assets (see accounting policy (p)),
are reviewed at each reporting date to determine
whether there is any indication of impairment. If
any such indication exists, the asset’s recoverable
amount is estimated.
For goodwill, assets that have an indefinite useful
life and intangible assets that are not yet available
for use, the recoverable amount is estimated at
least annually.
An impairment loss is recognised whenever the
carrying amount of an asset or its cash generating
unit exceeds its recoverable amount. Impairment
losses are recognised in the profit and loss unless
the asset has previously been revalued, in which
case the impairment loss is recognised as a reversal
to the extent of that previous revaluation with any
excess recognised through the profit and loss.
Impairment losses recognised in respect of
cash-generating units are allocated first to reduce
the carrying amount of any goodwill allocated to the
cash-generating unit (group of units) and then, to
reduce the carrying amount of the other assets in
the unit (group of units) on a pro rata basis.
interest rate computed at initial recognition of these
financial assets). Receivables with a short duration
(less than 12 months) are not discounted.
The recoverable amount of other assets is the
greater of their fair value less costs to sell and value
in use. In assessing value in use, the estimated
future cash flows are discounted to their present
value using a pre-tax nominal discount rate that
reflects current market assessments of the time
value of money and the risks specific to the asset.
For an asset that does not generate largely
independent cash inflows, the recoverable amount
is determined for the cash-generating unit to which
the asset belongs.
(k) Reversals of impairment
An impairment loss in respect of receivables carried
at amortised cost is reversed if the subsequent
increase in recoverable amount can be related
objectively to an event occurring after the impairment
loss was recognised.
An impairment loss in respect of goodwill is not
reversed.
In respect of other assets, an impairment loss is
reversed if there has been a change in the estimates
used to determine the recoverable amount.
An impairment loss is reversed only to the extent
that the asset’s carrying amount does not exceed
the carrying amount that would have been
determined, net of depreciation or amortisation,
if no impairment loss had been recognised.
(l) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially
at fair value less attributable transaction costs.
Subsequent to initial recognition, interest-bearing
borrowings are stated at amortised cost with any
difference between cost and redemption value being
recognised in the profit or loss over the period of the
borrowings on an effective interest basis.
(m) Employee benefits
(j) Calculation of recoverable amount
(i) Defined contribution superannuation funds
The recoverable amount of the Group’s receivables
carried at amortised cost is calculated as the present
value of estimated future cash flows, discounted at
the original effective interest rate (i.e., the effective
Obligations for contributions to defined contribution
superannuation funds are recognised as an expense
in the profit or loss as incurred. During the year
superannuation contributions of $5,262,760
(2015: $4,683,366) were expensed.
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(n) Provisions
(ii) Long-term service benefits
The Group’s net obligation in respect of long-term
service benefits, other than pension plans, is the
amount of future benefit that employees have
earned in return for their service in the current and
prior periods. The obligation is calculated using
expected future increases in wage and salary rates
including related on-costs and expected settlement
dates, and is discounted using the rates attached to
corporate bonds at the reporting date which have
maturity dates approximating the terms of the
Group’s obligations.
(iii) Share based payments transactions
MaxiTRANS Industries Limited grants performance
rights from time to time to certain employees under
the Performance Rights Plan.
The fair value of performance rights granted
is recognised as an employee expense with a
corresponding increase in equity recorded over
the vesting period.
The fair value of the performance rights is
calculated at the date of grant using a Monte Carlo
simulation model and allocated to each reporting
period over the period from grant date to vesting
date. The value disclosed is the portion of the fair
value of the performance rights allocated to this
reporting period. Where relevant, in valuing the
performance rights, market conditions have been
taken into account in both the current and prior period.
(iv) Wages, salaries, annual leave, sick leave and
non-monetary benefits
Liabilities for employee benefits for wages, salaries,
annual leave and sick leave represent present
obligations resulting from employees’ services
provided to reporting date, calculated at undiscounted
amounts based on remuneration wage and salary
rates that the Group expects to pay as at reporting
date including related on-costs, such as workers
compensation insurance and payroll tax. Non-
accumulating non-monetary benefits, such as
medical care, housing, cars and free or subsidised
goods and services, are expensed based on the net
marginal cost to the Group as the benefits are taken
by the employees.
A provision is recognised in the consolidated balance
sheet when the Group has a present legal or
constructive obligation as a result of a past event,
and it is probable that an outflow of economic
benefits will be required to settle the obligation.
If the effect is material, provisions are determined
by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments
of the time value of money and, when appropriate,
the risks specific to the liability.
(o) Warranties
A provision for warranties is recognised when
the underlying products or services are sold. The
provision is based on historical warranty data and
known warranty claims.
(p) Income tax
Income tax expense comprises current and deferred
tax. Income tax is recognised in the profit or loss
except to the extent that it relates to items recognised
directly in equity, in which case it is recognised
in equity.
Current tax is the expected tax payable on the
taxable income for the year, using tax rates enacted
or substantially enacted at the reporting date,
and any adjustment to tax payable in respect of
previous years.
In determining the amount of current and deferred
tax, the Group takes into account the impact of
uncertain tax positions. The Group believes that its
accruals for tax liabilities are adequate for all open
tax years. This assessment relies on estimates and
assumptions and may involve judgements about
future events.
Deferred tax is provided using the balance sheet
liability method, providing for temporary differences
between the carrying amounts of assets and
liabilities for financial reporting purposes and the
amounts used for taxation purposes. The following
temporary differences are not provided for: goodwill,
the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit, and
differences relating to investments in subsidiaries
to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax
provided is based on the expected manner of
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(r) Earnings per share
realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted
or substantially enacted at the reporting date.
A deferred tax asset is recognised only to the extent
that it is probable that future taxable profits will be
available against which the asset can be utilised.
Deferred tax assets are reduced to the extent that it
is no longer probable that the related tax benefit will
be realised.
Additional income taxes that arise from the distribution
of dividends are recognised at the same time as the
liability to pay the related dividend.
(q) Tax consolidation
The Company and its wholly-owned Australian
resident entities have formed a tax-consolidated
group with effect from 1 July 2003 and are therefore
taxed as a single entity from that date. The head
entity within the tax consolidated group is MaxiTRANS
Industries Limited.
Due to the existence of a tax contribution agreement
between the entities in the tax consolidated group,
the parent entity recognises the tax effects of its
own transactions and the current tax liabilities and
the deferred tax assets arising from unused tax
losses and unused tax credits assumed from the
subsidiary entities.
Current tax income/expense, deferred tax liabilities
and deferred tax assets arising from temporary
differences of the members of the tax-consolidated
group are recognised in the separate financial
statements of the members of the tax consolidated
group using the ‘separate taxpayer within group’
approach by reference to the carrying amounts
of assets and liabilities in the separate financial
statements of each entity and the tax values
applying under tax consolidation.
In accordance with the tax contribution agreement,
the subsidiary entities are compensated/charged
for the assets and liabilities assumed by the parent
entity as intercompany receivables and payables
and for amounts which equal the amounts initially
recognised by the subsidiary entities.
Basic earnings per share (“EPS”) is calculated by
dividing the net profit attributable to members of
the parent entity for the reporting period, by the
weighted average number of ordinary shares of
the Company.
Diluted EPS is calculated by dividing the basic
earnings, adjusted by the after tax effect of financing
costs associated with dilutive potential ordinary
shares and the effect on revenues and expenses
of conversion to ordinary shares associated with
dilutive potential ordinary shares, by the weighted
average number of ordinary shares and dilutive
potential ordinary shares.
(s) Revenue
(i) Revenue from the sale of goods
Revenue from the sale of goods is recognised upon
the constructive delivery of goods to customers in
accordance with contracted terms, at which point
the significant risks and rewards of ownership are
transferred.
(ii) Revenue from the rendering of services
Revenue from the rendering of services is
recognised as the services are performed/rendered.
(iii) Other income
Interest income is recognised in the profit and loss
as it accrues, using the effective interest method.
(iv) Dividend income
Dividend revenue is recognised when the right to
receive a dividend has been established.
(t) Goods and services tax
Revenues, expenses and assets are recognised net
of the amount of goods and services tax (GST),
except where the amount of GST incurred is not
recoverable from the Australian Tax Office (ATO).
In these circumstances the GST is recognised as
part of the cost of acquisition of the asset or as part
of an item of the expense.
Receivables and payables are stated with the amount
of GST included.
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
The net amount of GST recoverable from, or payable
to, the ATO is included as a current asset or liability
in the consolidated balance sheet.
Cash flows are included in the statements of cash
flows on a gross basis. The GST components of cash
flows arising from investing and financing activities
which are recoverable from, or payable to, the ATO
are classified as operating cash flows.
(u) Trade and other payables
Liabilities are recognised for amounts to be paid
in the future for goods or services received. Trade
accounts payable are normally settled within 60 days.
(v) Expenses
(i) Operating lease payments
Payments made under operating leases are
recognised in the profit or loss on a straight-line
basis over the term of the lease. Lease incentives
received are recognised in the profit or loss as an
integral part of the total lease expense and spread
over the lease term.
(ii) Finance lease payments
Minimum lease payments are apportioned between
the finance charge and the reduction of the
outstanding liability. The finance charge is allocated
to each period during the lease term so as to produce
a constant periodic rate of interest on the remaining
balance of the liability.
(iii) Finance costs
Finance costs comprise interest payable on
borrowings calculated using the effective interest
method, foreign exchange losses, and losses on
hedging instruments that are recognised in the
profit and loss. Borrowing costs that are directly
attributable to the acquisition, construction or
production of a qualifying asset are capitalised as
part of the cost of the asset. All other borrowing
costs are recognised in the profit and loss using
the effective interest method.
(w) Derivative financial instruments
The Group from time to time uses derivative financial
instruments to hedge its exposure to foreign exchange
and interest rate risks arising from operational,
financing and investment activities. The Group does
not hold or issue derivative financial instruments for
trading purposes. However, derivatives that do not
qualify for hedge accounting are accounted for as
trading instruments.
Derivative financial instruments are recognised
initially at fair value. Subsequent to initial recognition,
derivative financial instruments are stated at fair
value. The gain or loss on remeasurement to fair
value is recognised immediately in profit or loss.
However, where derivatives qualify for hedge
accounting, recognition of any resultant gain or loss
depends on the nature of the item being hedged.
When a derivative is designated as a cash flow
hedging instrument, the effective portion of changes
in the fair value of the derivative is recognised in
OCI and accumulated in the hedging reserve.
Any ineffective portion of changes in the fair value
of the derivative is recognised in the profit or loss.
The amount accumulated in equity is retained in OCI
and reclassified to profit or loss in the same period
or periods during which the hedged item affects
profit or loss.
If the hedging instrument no longer meets the
criteria for hedge accounting, expires or is sold,
terminated or exercised, or the designation is
revoked, then hedge accounting is discontinued
prospectively. If the forecast transaction is no longer
expected to occur, then the amount accumulated in
equity is reclassified to profit or loss.
(x) Accounting estimates and judgements
Management discussed with the Audit and Risk
Management Committee the development, selection
and disclosure of the Group’s critical accounting
policies and estimates and the application of these
policies and estimates. The estimates and
judgements that have a significant risk of causing
a material adjustment to the carrying amounts
of assets and liabilities within the next financial
year are discussed below.
(i) Impairment of goodwill and intangibles
The Group assesses whether goodwill and intangibles
with indefinite useful lives are impaired at least
annually in accordance with accounting policy (i).
These calculations involve an estimation of the
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(ii) Capital Management
recoverable amount of the cash-generating units to
which the goodwill and intangibles with indefinite
useful lives are allocated.
(ii) Provisions
The calculation of the provisions for warranty
claims and impairment provisions for inventory
and receivables involves estimation and judgement
surrounding future claims and potential losses and
exposures based primarily on past experience, the
likelihood of claims or losses and exposures arising
in the future as well as management knowledge and
experience together with a detailed examination of
financial and non financial information and trends.
Refer accounting policy (n) for details of the
recognition and measurement criteria applied.
(y) Financial Risk Management
(i) Overview
The Group has exposure to credit, market and
liquidity risks associated with the use of financial
instruments.
The Board has delegated to the Audit and Risk
Management Committee responsibility for the
establishment of policies on risk oversight and
management.
Risk management policies are established to
identify and analyse the risks faced by the Group,
to set appropriate risk controls, and to monitor
risks and adherence to limits.
The Group does not enter into or trade financial
instruments, including derivative financial
instruments, for speculative purposes.
The Group’s activities expose it primarily to the
financial risks associated with changes in foreign
currency exchange rates and interest rates. The
carrying value of financial assets and financial
liabilities recognised in the accounts approximate
their fair value with the exception of borrowings
which are recorded at amortised cost.
There have not been any changes to the objectives,
policies and procedures for managing risk during
the current year or in the prior year.
The Board’s policy is to maintain a strong capital
base so as to maintain investor, creditor and market
confidence and to sustain future development of the
business.
The Board monitors the earnings per share and the
levels of dividends to ordinary shareholders together
with the net debt/equity ratio, which at 30 June 2016
was 26% (2015: 36%). The Dividend Reinvestment
Plan was suspended on 21 June 2011. The Board
seeks to maintain a balance between higher returns
that might be possible with higher levels of
borrowings and the advantages afforded by a sound
capital position.
(z) Segment reporting
Operating segments are identified and segment
information disclosed on the basis of internal
reports that are regularly provided to, or reviewed
by the Group's chief operating decision maker
which, for the Group, is the Managing Director.
In this regard, such information is provided using
different measures to those used in preparing
the consolidated statement of profit or loss and
consolidated balance sheet. Reconciliations of
such management information to the statutory
information contained in the financial report have
been included.
(aa) Determination of fair values
A number of the Group’s accounting policies and
disclosures require the determination of fair value,
for both financial and non-financial assets and
liabilities. Fair values have been determined for
measurement and / or disclosure purposes based
on the following methods. When applicable, further
information about the assumptions made in
determining fair values is disclosed in the notes
specific to that asset or liability.
(i) Land and buildings
The fair value of property is based on market values.
The market value of property is the estimated
amount for which a property could be exchanged
on the date of valuation between a willing and
knowledgeable buyer and seller in an arm’s length
transaction after proper marketing.
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(ab) Government grants
(ii) Derivatives
The fair value of forward exchange contracts is
based on their listed market price, if available. If a
listed market price is not available, then fair value is
estimated by discounting the difference between the
contractual forward price and the current forward
price for the residual maturity of the contract.
The fair value of interest rate swaps is based
on broker quotes. Those quotes are tested for
reasonableness by discounting estimated future
cash flows based on the terms and maturity of
each contract and using market interest rates
for a similar instrument at the measurement date.
Fair values reflect the credit risk of the instrument
and include adjustments to take account of the
credit risk of the Group entity and counterparty
when appropriate.
(iii) Trade and other receivables
The fair value of trade and other receivables is
estimated as the present value of future cash flows,
discounted at the market rate of interest at the
reporting date. This fair value is determined for
disclosure purposes.
(iv) Non-derivative financial liabilities
Fair value, which is determined for disclosure
purposes, is calculated based on the present value
of future principal and interest cash flows, discounted
at the market rate of interest at the reporting date.
For finance leases the market rate of interest is
determined by reference to similar lease agreements.
From time to time the Group becomes eligible for
government grants. These grants are accounted
for in accordance with AASB 120 Accounting for
Government Grants and Disclosure of Government
Assistance. The current grants relate to assets,
and have been presented in the balance sheet by
deducting the grant value from the cost of the asset
in arriving at the asset carrying amount.
As at 30 June 2016, the Group has accounted for
three government grants.
The first grant, relating to the relocation of the
Hamelex White manufacture and assembly
production line from Hallam to Ballarat, amounts to
$2.5 million. At 30 June 2016 $2.35 million has been
received. In accordance with the terms of the grant,
the Group is required to recruit and maintain certain
levels of employee numbers, and maintain and
operate the facility for a period of not less than
3 years from the date of completion. The grant has
been offset against the cost of setting up the new
production line within plant and equipment.
The second grant, relating to relocation
compensation for the MTC (China) facility amounts
to $3.42 million. At 30 June 2016 the full amount has
been received. Conditions relating to this grant have
been met, and the company has initially applied the
grant against the write off of the old facility ($0.8m),
and the balance of the grant has been applied
against the cost of the new facility ($2.62m).
The third grant, relating to the purchase and
installation of a Laser Cutter Machine to improve
efficiency, output and design capabilities within the
Ballarat manufacturing plant, amounts to $0.25m.
Conditions relating to this grant have been met and
as at 30 June 2016 $0.245m has been received.
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
2. PROFIT FROM ORDINARY ACTIVITIES
Employee and contract labour expenses:
– employee expenses
– contract labour expenses
Total employee and contract labour expenses
Net (income)/expenses from movements in provision for:
– employee entitlements
– warranty (1)
– other
Net (income)/expense resulting from movements in provisions
Rental expense on operating leases
Research and development expenditure
written off as incurred
Crediting as income:
Net gain on disposal of:
– property, plant and equipment
(1) the prior year amount includes a provision for product recall costs of $2.45m pre-tax.
3. TAXATION
(a) Income tax
Reconciliation of tax expense
Prima facie tax payable on profit before tax
at 30% (2014: 30%)
Add/(deduct) tax effect of:
Research & development allowance
Non-deductible/(deductible) expenses
Joint venture equity accounted income
Prior year adjustments
Impact of tax rates in foreign jurisdictions
Consolidated
2016
$’000
2015
$’000
73,637
9,689
83,326
53
(327)
260
(14)
6,265
76,078
6,846
82,924
600
1,567
315
2,482
5,812
892
821
592
(43)
2,045
1,650
(232)
(17)
(327)
(48)
(101)
(725)
(400)
123
(299)
(19)
(19)
(614)
Income tax expense in consolidated statement of profit or loss
1,320
1,036
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
3. TAXATION (continued)
Income tax expense attributable to operating
profit is made up of:
Current tax expense
Prior year adjustment – current tax
Deferred tax expense
– origination and reversal of temporary difference
– prior year adjustment – deferred differences
Income tax expense in consolidated statement of profit or loss
(b) Deferred tax assets/(deferred tax liabilities)
The deferred tax assets/(deferred tax liabilities) are made
up of the following estimated tax benefits/(cost):
– Provisions and accrued employee benefits
– Property, plant & equipment
– Leases
– Intangible assets
– Inventory
– Other
Net deferred tax asset/(liability)
Balance at beginning of year
Recognised in profit or loss
Recognised in equity
Net deferred tax asset/(liability)
Consolidated
2016
$’000
2015
$’000
2,222
13
(854)
(61)
1,320
5,976
(4,667)
–
(945)
923
47
1,334
673
886
(225)
1,334
3,323
735
(2,268)
(754)
1,036
6,166
(4,498)
(3)
(2,163)
654
517
673
(1,561)
3,075
(841)
673
(c) Current tax asset/(liability)
The Group’s current tax asset of $2,862,977 (2015: $1,409,887) and current tax liability of $252,721 (2015: $362,328) represents
the amount of income taxes receivable/(payable) in respect of current and prior financial periods.
4. TRADE AND OTHER RECEIVABLES
Impairment losses
Not past due
Past due 0 – 30 days
Past due 31 – 60 days
Past due over 61 days
Trade debtors
Other receivables
Total trade and other receivables
Consolidated 2016
Consolidated 2015
Gross
$’000
Impairment
$’000
Total
$’000
Gross
$’000
Impairment
$’000
Total
$’000
24,354
8,759
2,583
1,655
(145)
(58)
(21)
(108)
24,209
8,701
2,562
1,547
30,264
9,951
1,607
77
(200)
(51)
(11)
(56)
30,064
9,900
1,596
21
37,351
(332)
37,019
41,899
(318)
41,581
1,367
38,386
1,380
42,961
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
5.
INVENTORIES
Second–hand units – at net realisable value
Finished goods – at cost
Work in progress – at cost
Raw materials – at cost
Less: provision for impairment loss
Total inventories
6. PROPERTY, PLANT & EQUIPMENT
Land and buildings at fair value
Accumulated depreciation
Total land and buildings
Plant and Equipment
Plant & equipment at cost
Accumulated depreciation
Office equipment at cost
Accumulated depreciation
Leased property, plant & equipment
Accumulated depreciation
Capital work in progress
Total plant and equipment
Total property, plant and equipment
Consolidated
2016
$’000
2015
$’000
5,298
31,745
2,943
16,275
(2,920)
53,341
4,848
32,693
4,245
14,675
(2,726)
53,735
41,171
(887)
40,284
39,396
(62)
39,334
38,638
(27,870)
39,267
(28,234)
10,768
11,033
8,981
(6,997)
1,984
7,819
(643)
7,176
18,351
38,279
78,563
8,706
(6,174)
2,532
9,120
(1,329)
7,791
12,664
34,020
73,354
Independent valuations/market assessments were obtained at 30 June 2016 in relation to all land and buildings held at that
time, for use by the directors in assessing land and buildings at fair value.
Refer to Note 25(e) for details of security over land and buildings.
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
6. PROPERTY, PLANT & EQUIPMENT (continued)
Reconciliations
Reconciliations of the carrying amounts for each class of property, plant and equipment are set out below:
Land and buildings
Carrying amount at the beginning of the financial year
Additions
Fair value increment
Disposals
Depreciation
Other sundry movements
Carrying amount at the end of the financial year
Plant and equipment
Carrying amount at the beginning of the financial year
Additions
Transfers from leased plant and equipment
Transfers from capital works in progress
Disposals
Depreciation
Other sundry movements
Consolidated
2016
$’000
2015
$’000
39,334
–
777
–
(504)
677
40,284
11,033
1,409
52
545
(309)
(1,988)
26
37,173
–
3,127
–
(494)
(472)
39,334
9,129
3,115
496
43
(163)
(1,955)
368
Carrying amount at the end of the financial year
10,768
11,033
Office equipment
Carrying amount at the beginning of the financial year
Additions
Transfers from capital works in progress
Disposals
Depreciation
Other sundry movements
Carrying amount at the end of the financial year
Leased property, plant and equipment
Carrying amount at the beginning of the financial year
Additions
Transfers to plant and equipment
Disposals
Other sundry movements
Amortisation
Carrying amount at the end of the financial year
Capital works in progress
Carrying amount at the beginning of the financial year
Additions
Transfers to property, plant and equipment
2,532
542
–
(2)
(1,090)
2
1,984
7,791
1,347
(52)
(1,143)
(105)
(662)
7,176
12,664
6,232
(545)
3,023
621
–
(12)
(1,138)
38
2,532
7,637
685
(496)
–
895
(930)
7,791
6,235
6,472
(43)
Carrying amount at the end of the financial year
18,351
12,664
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
Consolidated
2016
$’000
2015
$’000
24,645
24,645
6,930
(691)
6,239
6,930
(691)
6,239
22,665
(16,490)
22,665
(11,673)
6,175
10,992
891
(891)
-
891
(535)
356
37,059
42,232
24,645
–
24,645
6,239
6,239
24,945
(300)
24,645
6,239
6,239
10,992
(731)
(4,086)
11,730
(738)
-
6,175
10,992
356
(44)
(312)
-
3,024
(388)
(2,280)
356
7.
INTANGIBLES
Goodwill at cost
Brand names at cost
Accumulated amortisation
Intellectual property at cost
Accumulated amortisation
Patents and trademarks at cost
Accumulated amortisation
Total Intangibles
Reconciliations
Reconciliations of the carrying amounts for each class of intangible assets are set out below:
Goodwill
Carrying amount at the beginning of the financial year
Impairment losses
Carrying amount at the end of the financial year
Brand names
Carrying amount at the beginning of the financial year
Carrying amount at the end of the financial year
Intellectual property
Carrying amount at the beginning of the financial year
Amortisation
Impairment Losses
Carrying amount at the end of the financial year
Patents and trademarks
Carrying amount at the beginning of the financial year
Amortisation
Impairment losses
Carrying amount at the end of the financial year
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
7.
INTANGIBLES (continued)
CGU
Australian Trailers (1)
MaxiPARTS
Yangzhou Maxi–CUBE Tong Composites (China)
Maxitrans New Zealand
Consolidated
Other Intangibles
Allocation
Goodwill
Allocation
2016
$’000
12,414
–
–
–
12,414
2015
$’000
17,587
–
–
–
17,587
2016
$’000
5,193
16,699
2,753
–
24,645
2015
$’000
5,193
16,699
2,753
–
24,645
Impairment tests for Goodwill and Other Intangibles
(1) During the year following a restructure, the company redefined its CGU’s whereby its Australian trailer brands are
aggregated into a single CGU. As a result, the CGU information for both 2016 and 2015 are disclosed based on the new
CGU’s as identified above.
The recoverable amount of the CGU’s to which goodwill and other intangible assets with indefinite useful lives are allocated is
determined based on value–in–use calculations. These calculations use cash flow projections based on most recent budgeted
projections by key operational management. and are subsequently reviewed by the Board. These projections are derived
based on current market conditions, order intake and expectations with regards to market share. Projections are extrapolated
using estimated growth rates for a five year period with a terminal growth rate of 2% which is below the long–term market
average. The growth rate used for years 2-5 is 2.75% which is based on recent Australian Government GDP forecasts and the
after-tax nominal discount rates used were 8.9% – 9.9 % (2015: 9.6% – 10.6%).
As a result of this testing, the carrying amount of the former Lusty EMS and Hamelex White CGU’s were determined to be
higher than their recoverable amount. Based on the inherent volatility in the markets in which our tipper products operate,
such as weather conditions and construction activity levels, it is difficult to predict the future earnings of these products.
Accordingly, given the challenging market conditions in recent years and uncertain outlook, the Company has impaired the
carrying values of these intangible assets being intellectual property and patents. An impairment loss of $2,136,000 and
$2,262,000 respectively have therefore been recognised for the year ended 30 June 2016. These amounts have both been
allocated against Other Intangibles.
The recoverable amount of all other CGUs, was found to be in excess of their respective carrying values. As such, no
additional impairment charges were required for the year ended 30 June 2016.
8. TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
Total trade and other payables
Consolidated
2016
$’000
2015
$’000
35,113
13,163
48,276
31,871
11,345
43,216
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
9.
INTEREST BEARING LOANS AND BORROWINGS
Current
Bank loans – secured
Lease liability
Total current interest bearing liabilities
Non Current
Bank loans
Lease liability
Total non–current interest bearing liabilities
Consolidated
2016
$’000
1,013
816
1,829
40,452
871
41,323
2015
$’000
4,196
1,070
5,266
41,000
1,036
42,036
25
25
Bank loans are subject to a floating interest rate. Interest rate swaps have been executed in respect of $24.0m
(2015: $13.5m) of this debt in order to mitigate interest rate risk. Refer to note 25(b) for further details.
Finance Costs:
– Interest on bank loans
– Finance lease charges
Total finance costs
10. PROVISIONS
Current
Employee entitlements
Warranty
Total current provisions
Non Current
Employee entitlements
Other
Total non current provisions
Aggregate employee entitlements liability
Provisions at 30 June 2016 is analysed as follows:
Carrying amount at 1 July 2015
Provisions made during the year
Provisions written back during the year
Payments made during the year
Foreign Currency Exchange differences
Carrying amount at 30 June 2016
50
2,275
84
2,359
2,359
166
2,525
9,595
2,881
9,485
3,209
12,476
12,694
1,095
52
1,147
1,152
-
1,152
10,690
10,637
Warranty
$’000
3,209
1,395
(535)
(1,207)
19
2,881
Other
$’000
-
52
-
-
-
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
11. ISSUED CAPITAL
Balance at 30 June 2015
Balance at 30 June 2016
Number of
Ordinary Shares
Share Capital
$’000
185,075,653
185,075,653
56,386
56,386
Ordinary shares
Subject to the Constitution of the Company, holders of ordinary shares are entitled to vote as follows:
Every shareholder may vote;
On a show of hands every shareholder has one vote;
On a poll every shareholder has:
(i) One vote for each fully paid share; and
(ii) For each partly paid share held by the shareholder, a fraction of a vote equivalent to the proportion which the amount
paid (not credited) is of the total amounts paid and payable (excluding amounts credited) on the share.
Subject to the Constitution of the Company, ordinary shares attract the right in a winding up to participate equally in the
distribution of the assets of the Company (both capital and surplus), subject only to any amounts unpaid on shares.
12. EARNINGS PER SHARE
Basic earnings per share
Earnings reconciliation
Net profit attributable to equity holders of the company
Basic earnings
Weighted average number of shares
Ordinary shares on issue at 1 July
Effect of shares issued during the year
Weighted average number for basic earnings per share
Diluted earnings per share
Consolidated
2016 – $’000
2015 – $’000
5,235
5,235
4,497
4,497
2016 – Number
2015 – Number
185,075,653
–
185,075,653
185,075,653
–
185,075,653
The calculation of diluted earnings per share at 30 June 2016 is based on net profit attributable to equity holders of the
company of $5,235,000 and the weighted average number of ordinary shares outstanding after adjustment for the effects
of all dilutive potential ordinary shares of nil.
2016 – Number
2015 – Number
Weighted average number of shares (diluted)
Weighted average number of shares (basic)
Effect of Performance Rights on issue
185,075,653
–
Weighted average number for diluted earnings per share
185,075,653
185,075,653
–
185,075,653
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
13. DIVIDENDS
Dividends paid
2016
Interim – ordinary
Total dividends paid
2015
Interim – ordinary
Total dividends paid
Cents per
share
Total amount
$’000
Date of
payment
Tax rate for
franking credit
Percent
franked
2.00
2.00
2.00
2.00
3,702
3,702
3,702
3,702
14 April 2016
30%
100%
16 April 2015
30%
100%
No final dividend was paid for the financial year ended 30 June 2015. During the financial year a internal dividend of $420,000
was declared by one of the Group’s subsidiaries Transport Connection Pty Ltd of which $81,000 was paid to its minority
shareholder.
Dividends proposed
Final - ordinary 1.00 1,851 14 October 2016 30% 100%
The above dividend was declared after the end of the financial year and will be paid on 14 October 2016. The financial effect of
this dividend has not been brought to account in the financial statements for the year ended 30 June 2016 and will be
recognised in subsequent financial statements.
Dividend franking account
Franking credits available to shareholders of
MaxiTRANS Industries Limited for subsequent financial years
The Company
2016
$’000
2015
$’000
20,826
18,685
The ability to utilise the franking credits is dependent upon the ongoing solvency of the Company.
The impact on the dividend franking account of dividends proposed after the reporting date but not recognised as a liability
is to reduce it by $793,181 (2015: $nil).
14. SEGMENT INFORMATION
During the year the company has restructured its operations. As a consequence both its reportable segments and CGU’s
have been redefined. In accordance with AASB 8 – Operating Segments the company has two segments:
1. “Trailing Solutions”, encompassing trailer Manufacturing and Retail & Service divisions;
2. “Parts & Components”, encompassing MaxiPARTS and China divisions.
The restatement of both its CGUs and reportable segments is based on how management views and assesses the Group’s
cash inflows, profitability and operational activity. As a result, the segment information for both 2016 and 2015 are disclosed
based on the new segments as identified above.
It is the Group’s policy that inter–segment pricing is determined on an arm’s length basis. Segment results, assets and
liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Unallocated items mainly comprise, interest–bearing loans, borrowings and expenses, and corporate assets and expenses.
Total finance costs of the Group are included in unallocated corporate costs.
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
14. SEGMENT INFORMATION (continued)
Year ended 30 June 2016
Business Segments
Revenue
External segment revenue
Inter–segment revenue
Total segment revenue
Unallocated sundry revenue
Total revenue
Trailer
Solutions
Parts &
Components
Eliminations
Consolidated
$’000
$’000
$’000
$’000
233,532
1,898
235,430
104,959
11,087
116,046
–
(12,985)
(12,985)
338,491
–
338,491
1,688
340,179
Segment Net profit before tax
5,961
3,648
–
9,609
Share of net profit of equity
accounted investments
Unallocated corporate expenses
Profit before related income
tax expense
Income tax expense
Net profit
Depreciation and amortisation
Unallocated depreciation
and amortisation
Total depreciation and amortisation
Assets
Segment assets
Unallocated corporate assets
Consolidated total assets
Liabilities
Segment liabilities
Unallocated corporate liabilities
Consolidated total liabilities
Capital expenditure(i)
Unallocated capital expenditure
Consolidated capital expenditure
2,809
2,004
-
127,171
76,097
–
46,562
28,486
–
2,590
740
–
(i) Capital expenditure includes the acquisition of leased assets
1,089
(3,882)
6,816
(1,320)
5,496
4,813
207
5,020
203,268
26,018
229,286
75,048
30,901
105,949
3,330
6,200
9,530
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
14. SEGMENT INFORMATION (continued)
Year ended 30 June 2015
Business Segments
Revenue
External segment revenue
Inter–segment revenue
Total segment revenue
Unallocated sundry revenue
Total revenue
Trailer
Solutions
Parts &
Components
Eliminations
Consolidated
$’000
$’000
$’000
$’000
221,317
1,766
223,083
106,570
10,127
116,697
–
(11,893)
(11,893)
327,887
–
327,887
1,278
329,165
Segment Net profit before tax
8,757
(781)
–
7,976
Share of net profit of equity
accounted investments
Unallocated corporate expenses
Profit before related income
tax expense
Income tax expense
Net profit
Depreciation and amortisation
Unallocated depreciation
and amortisation
Total depreciation and amortisation
Assets
Segment assets
Unallocated corporate assets
Consolidated total assets
Liabilities
Segment liabilities
Unallocated corporate liabilities
Consolidated total liabilities
Capital expenditure(i)
Unallocated capital expenditure
Consolidated capital expenditure
3,435
1,949
–
133,013
76,757
–
40,089
24,229
–
1,804
2,821
–
997
(3,474)
5,499
(1,036)
4,463
5,384
259
5,643
209,770
16,072
225,842
64,318
40,912
105,230
4,625
6,268
10,893
(i) Capital expenditure includes the acquisition of leased assets
Geographical segments
The Group’s external revenues are predominantly derived from customers located within Australia.
The customer base is sufficiently diverse to ensure the Group is not reliant on any particular customer.
The Group’s assets and capital expenditure activities are predominantly located within Australia.
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
15. SHARE BASED PAYMENTS
On 15 October 2010, the Group established the MaxiTRANS Performance Rights Plan (‘PRP’) that entitles executive directors
and senior management to receive a specified number of Performance Rights (‘PR’s’) which upon vesting can be converted
into a specified number of ordinary shares in the Company.
The terms and conditions relating to PR’s currently on issue are as follows:
Period
Grant date
Total PR's Issued
Total PR’s Forfeited
Total PR's remaining on issue
Vesting conditions
Base ROIC
Target increase in ROIC
1 July 2015 – 30 June 2018
1 July 2014 – 30 June 2017
30 September 2015
30 September 2014
4,985,368
–
4,985,368
ROIC – 50%
EPS – 50%
5.21% (year ended
30 June 2015)
2,072,978
130,456
1,942,522
ROIC – 50%
EPS – 50%
9.62% (year ended
30 June 2014)
Average of 1.75% per annum
Average of 1.50% per annum
(10.46% over 3 years)
(4.50% over 3 years)
Percentage increase in base ROIC required
10%
47%
Minimum % of ROIC target that must be
70% (i.e. average of 1.22%
67% (i.e. average of 1.00%
achieved for Performance Rights to vest
per annum)
per annum)
Target EPS
Minimum service requirement
Details of PR’s exercised during the year:
Total PR's issued – 2012
Total PR’s issued – 2013
Total PR’s forfeited
Total PR’s exercised
Measurement of fair value
Basic EPS of 10.50¢. Growth over 2014 EPS
of 9.26¢ given that 2015 EPS was impacted
by non-recurring costs
3 years from grant date
Average 10.0% compound
growth over 2014
Basic EPS – 9.26¢
3 years from grant date
1,831,097
1,532,292
3,363,389
–
The fair value of PR’s is calculated at the date of grant by an independent external valuer, Grant Thornton, using the
Monte Carlo simulation model and allocated to each reporting period evenly over the period from grant date to vesting date.
Expected volatility is estimated by considering historic average share price volatility.
PR’s are granted under a service condition and, for grants to key management personnel, non–market performance
conditions. Non–market performance conditions are not taken into account in the grant date fair value measurement
of the services received.
The inputs used in the measurement of the fair values at grant date of the PR’s on issue are as follows:
Fair value at grant date
Share price at grant date
Expected volatility
Expected dividend yield
Risk–free rate of return
Liquidity discount
2016
34.18¢
44.00¢
50.00%
5.50%
2.50%
15.00%
2015
76.83¢
86.50¢
40.00%
6.50%
2.90%
15.00%
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
15. SHARE BASED PAYMENTS (continued)
Expense/(income) recognised in profit and loss
Consolidated
Share based payments expense recognised
Share based payments reversed
Total share based payment expense/(income) recognised as employee costs
2016
$’000
592
(937)
(345)
2015
$’000
570
–
570
During the period it was determined that the performance and service conditions of both the 2012 and 2013 PR schemes will
not be met. As a result, the total amount recognised for goods and services received over the life of the 2012 and 2013 PR
schemes were reversed. The reversal amount is comprised of:
2012 PR scheme
2013 PR scheme
$’000
421
516
16. RELATED PARTY DISCLOSURES
(a) Director and other key management personnel disclosures
Key management personnel have authority and responsibility for planning, directing and controlling the activities
of the Group. Key management personnel comprise the directors of the Company and executives for the Group.
The following were key management personnel of the Group at any time during the reporting period and unless
otherwise indicated were key management personnel for the entire period:
Non-executive directors
– Mr I Davis (Chairman-resigned 30 June 2016)
Executives
– Mr C Richards (CFO and Company Secretary)
– Mr J Curtis (Deputy Chairman)
– Mr G Lord
– Mr R Wylie (Appointed Chairman on 30 June 2016)
– Mr J Rizzo
– Ms S Hogg (Appointed Director on 27 April 2016)
–
–
–
Mr A Wibberley (Group General Manager – Manufacturing)
Mr P Buttler (General Manager – Ballarat)
Mr P Loimaranta (General Manager – MaxiPARTS)
– Mr A McKenzie (Group General Manager – Sales and
Distribution)
Executive directors
– Mr M Brockhoff (Managing Director)
–
–
Mr S Harkin (Group Supply Manager)
Mr C Wallace (General Manager – Vic Branch)
(b) Directors’ transactions in shares
Directors and their related entities acquired 811,816 existing ordinary shares in MaxiTRANS Industries Limited during
the year.
(c) Director and other key management personnel transactions
MaxiTRANS Industries Limited and controlled entities paid legal fees of $238,904 (2015: $621,204) to Minter Ellison
of which Mr I. Davis was a senior partner. Mr Davis retired from Minter Ellison on 30 June 2015 and remains with the
firm in the capacity of a consultant. All dealings were in the ordinary course of business and on normal commercial
terms and conditions. Amounts owing at year end total $4,763 (2015: $nil).
MaxiTRANS Industries Limited and controlled entities paid consulting fees of $62,370 (2015: $1,470,406) to
UXC Red Rock Pty Ltd, a subsidiary of UXC Limited of which Mr G Lord was Deputy Chairman. All dealings were in
the ordinary course of business and on normal commercial terms and conditions. During the year, the contractual
arrangements between the parties came to an end. Amounts owing at year end total $nil (2015: $nil).
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
16. RELATED PARTY DISCLOSURES (continued)
Apart from the details disclosed in this note, no key management personnel have entered into a material contract
with the Company or the Group since the end of the previous financial year and there were no material contracts
involving directors’ interests existing at year end.
(d) Transactions with joint venture
During the year the Group derived revenue from the joint venture of $37,666,993 (2015: $35,668,496) for the sale
of new units, parts and the provisions of services. Amounts receivable from the joint venture at year end total
$519,072 (2015: $6,838,947).
During the year the Group paid for services and parts from the joint venture totalling $1,350,175 (2015: $1,268,351).
Amounts owing at year end total $118,579 (2015: $37,573).
All dealings were in the ordinary course of business and on normal commercial terms and conditions.
(e) Key management personnel remuneration
The key management personnel remuneration (see Remuneration Report) is as follows:
Short–term employee benefits
Post–employment benefits
Share based payment benefits
Consolidated
2016
2015
3,085,725
356,795
(284,314)
2,760,695
313,634
391,894
3,158,206
3,466,223
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
17. PARENT ENTITY
As at 30 June 2016 and throughout the financial year ending on that date, the parent company of the Group was MaxiTRANS
Industries Limited.
Results of the parent company
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income
Financial position of the parent company
Current assets
Total assets
Current liabilities
Total liabilities
Net Assets
Total equity of the parent company comprising of:
Issued capital
Reserves
Retained earnings
Total equity
Company
2016
$’000
400
–
400
32,417
79,475
459
459
2015
$’000
11,659
–
11,659
36,763
83,863
400
400
79,016
83,463
56,386
836
21,795
79,016
56,386
1,181
25,896
83,463
Parent company investment in subsidiaries and joint ventures
Investments in subsidiaries and joint ventures are carried at historical cost in the parent company less, where applicable,
any impairment charge.
Parent company contingencies
At any given point in time, the parent company may be engaged in defending legal actions brought against it. The directors
are not aware of any such actions that would give rise to a material contingent liability to the parent company.
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
18. CONTROLLED ENTITIES
Particulars in relation to controlled entities
Country of
incorp.
Class of
shares
Interest held
2016 %
2015 %
The Company:
MaxiTRANS Industries Limited
Controlled entities of
MaxiTRANS Industries Limited:
MaxiTRANS Australia Pty Ltd
– Transport Connection Pty Ltd
Transtech Research Pty Ltd
Trail Truck Parts Pty Ltd (i)
MaxiTRANS Industries (N.Z.) Pty Ltd
Peki Pty Ltd (i)
Ultraparts Pty Ltd (i)
MaxiTRANS Services Pty Ltd
MaxiTRANS Finance Pty Ltd (i)
Lusty EMS Pty Ltd
Hamelex White Pty Ltd (i)
MaxiPARTS Pty Ltd (formerly Colrain Pty Ltd)
– Colrain Queensland Pty Ltd
– Colrain (Albury) Pty Ltd
– Queensland Diesel Spares Pty Ltd (formerly Colrain
(Ballarat) Pty Ltd) (i)
– Colrain Pty Ltd (formerly Colrain (Geelong) Pty Ltd) (i)
– MaxiPARTS (Qld) Pty Ltd (formerly Queensland Diesel
Spares Pty Ltd)
MaxiTRANS Employee Share Plan Pty Ltd
MaxiTRANS (China) Limited (i)
Yangzhou Maxi–CUBE Tong Composites Co Ltd
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Hong Kong
China
(i) Dormant entity
19. DEED OF CROSS GUARANTEE
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
100
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
100
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
The Company, together with its subsidiaries, MaxiTRANS Australia Pty Ltd, Transtech Research Pty Ltd, Lusty EMS Pty Ltd,
Peki Pty Ltd, MaxiTRANS Industries (N.Z.) Pty Ltd, MaxiPARTS Pty Ltd (effective 1 September 2008, previously ineligible) and
Queensland Diesel Spares Pty Ltd (effective 22 June 2012, previously ineligible) each of which are incorporated in Australia,
entered into a “Deed of Cross Guarantee” so as to seek the benefit of the accounting and audit relief available under Class
Order (98/1418) made by the Australian Securities & Investments Commission which was granted on 30 June 2006.
A consolidated statement of comprehensive income and consolidated balance sheet, comprising the Company and
controlled entities which are party to the Deed, after eliminating all transactions between parties to the Deed of Cross
Guarantee, for the year ended 30 June 2016 is set out as follows:
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
19. DEED OF CROSS GUARANTEE (continued)
Consolidated statement of comprehensive income
Total revenue
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Other income
Employee expenses
Warranty expenses
Depreciation and amortisation expenses
Impairment loss on intangible assets
Finance costs
Other expenses
Share of net profits of joint ventures accounted
for using the equity method
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Items that may subsequently be re-classified to profit or loss:
Net exchange difference on translation of financial
statements of foreign operations
Other sundry movements
Items that will never be re-classifed to profit or loss:
Revaluation of land and buildings
Related tax
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income for the year
Profit attributable to:
Equity holders of the company
Total comprehensive income attributable to:
Equity holders of the company
60
Consolidated
2016
$’000
2015
$’000
297,609
294,824
(2,116)
(541)
(170,353)
(172,266)
634
90
(80,042)
(79,809)
(1,900)
(4,217)
(4,398)
(2,078)
(5,375)
(4,857)
(2,580)
(2,322)
(29,294)
(22,296)
1,089
4,934
(744)
4,190
997
34
777
(218)
1,590
5,780
997
5,865
(1,197)
4,668
(558)
(81)
3,127
(917)
1,571
6,239
4,190
4,668
5,780
6,239
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
19. DEED OF CROSS GUARANTEE (continued)
Consolidated balance sheet
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Other
Total Current Assets
Non-Current Assets
Investment in joint venture
Investments in controlled entities
Property, plant & equipment
Intangible assets
Deferred tax assets
Other
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Interest bearing loans and borrowings
Current tax liability
Provisions
Total Current Liabilities
Non-Current Liabilities
Interest bearing loans and borrowings
Deferred tax liabilities
Provisions
Other
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Retained profits
Total Equity
Consolidated
2016
$’000
8,539
29,154
50,386
2,863
1,037
91,979
4,187
6,625
69,832
32,721
1,443
1,157
2015
$’000
2,974
37,284
49,886
–
3,123
93,267
3,926
7,294
63,631
37,895
288
1,157
115,965
114,191
207,944
207,458
39,839
816
253
11,464
52,372
37,371
395
1,147
199
39,112
91,484
35,686
1,069
291
11,747
48,793
42,036
311
1,152
244
43,743
92,536
116,460
114,922
56,386
14,904
45,170
56,386
13,612
44,924
116,460
114,922
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
20. INVESTMENT IN JOINT VENTURE
Name of Entity
Principal Activity
Trailer Sales Pty Ltd
Trailer retailer. Repairs and service provider.
Sale of spare parts within Australia,
which is the country of incorporation.
Ownership
2016
%
36.67
2015
%
36.67
$’000
2016
2015
Revenues
(100%)
Net
profit
after tax
(100%)
Share of
joint venture
profit
recognised
Total
assets
Total
liabilities
Net assets as
reported by
joint venture
71,947
64,765
2,971
2,718
1,089
997
20,050
23,069
9,758
13,489
10,292
9,580
Commitments
The share of the joint venture’s capital commitments contracted but not provided for or payable within one year was $nil
at 30 June 2016 (2015: $nil).
21. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
(a) Reconciliation of cash flows from operating activities with operating profit/(loss) after tax
Consolidated
2016
$’000
2015
$’000
5,496
4,463
5,020
4,398
(592)
(1,089)
(345)
4,697
757
569
5,038
(1,595)
(864)
(294)
5,643
2,580
(43)
(997)
(264)
(202)
269
584
2,316
(1,229)
(3,175)
2,193
21,196
12,138
Profit for the year
Non cash items in operating profit
Depreciation/amortisation of assets
Impairment loss on intangible assets
Profit on sale of fixed assets
Share of joint venture profit
Share based payments expense
Change in assets & liabilities
(Increase)/decrease in receivables
(Increase)/decrease in other assets
(Increase)/decrease in inventories
Increase/(decrease) in trade payables
and other liabilities
Increase/(decrease) in income tax payable
Increase/(decrease) in deferred taxes
Increase/(decrease) in provisions
Net cash flows from operating activities
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
21. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
(b) Non-cash financing and investing activities
Acquisition of plant & equipment by means of finance leases
These acquisitions are not reflected in the consolidated statement of cash flows.
22. CAPITAL AND LEASING COMMITMENTS
(a) Operating lease commitments
Future operating lease rentals not provided for in the financial statements and payable:
– not later than 1 year
– later than 1 year but not later than 5 years
– later than 5 years
Total operating lease commitments
Consolidated
2016
$’000
2015
$’000
–
684
4,291
7,484
3,506
4,907
8,789
4,452
15,281
18,148
The Group leases property under operating leases expiring from one to ten years. Leases generally provide the Group with
a right of renewal at which time all terms are renegotiated.
(b) Capital expenditure commitments
Payable
– not later than 1 year
– later than 1 year but not later than 5 years
Total capital expenditure commitments
23. CONTINGENT LIABILITIES
7,080
–
7,080
9,715
–
9,715
At any given point in time the Group may be engaged in defending legal actions brought against it. In the opinion of the
directors such actions are not expected to have a material effect on the Group’s financial position.
24. REMUNERATION OF AUDITOR
Remuneration of the auditor of the Company for:
$
$
KPMG Australia:
– auditing and reviewing the financial statements
– other services (taxation & advisory)
Overseas KPMG Firms:
– auditing and reviewing financial statements
– other services (taxation, advisory & due diligence)
Total
263,700
111,762
286,200
55,590
375,462
341,790
79,344
19,052
76,350
28,916
98,396
105,266
473,858
447,056
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
25. FINANCIAL INSTRUMENTS
(a) Risk management framework/policies
The Groups key activities include the design, manufacture, sale, service and repair of transport equipment and related
component and spare parts. These activities expose the Group to a variety of financial risks, including liquidity risk, credit
risk and market risk such as currency and interest rate risk.
The Group’s financial risk management program seeks to minimise the potential adverse effects of the unpredictability
of financial markets on the financial performance of the Group by utilising derivative financial instruments for purchase
of supplies and raw materials. The Group measures risk exposure through sensitivity analysis in the case of currency risk,
cash flow forecasting and ageing analysis for credit risk.
(b) Interest rate risk
The Group is exposed to interest rate risk as it borrows at both fixed and floating interest rates. The risk is managed by the
use of fixed interest rate contracts. Hedging activities are evaluated regularly to align with interest rate views and defined
risk appetite, ensuring optimal hedging strategies are applied, by either positioning the statement of financial performance
or protecting interest rate expense through different interest rate cycles.
As at reporting date the interest rate profile of the Group’s interest bearing financial instruments were:
Borrowings – fixed rate
Borrowings – floating rate
2016
$’000
12,933
30,219
43,152
2015
$’000
21,070
26,232
47,302
As at reporting date, if interest rates on borrowings had moved as illustrated in the table below, with all other variables held
constant, post tax profit for the year would have been affected as follows:
100bp increase
100bp decrease
(c) Currency risk
2016
$’000
(191)
191
2015
$’000
(136)
136
The Group is exposed to foreign currency risk on purchases that are denominated in foreign currency, primarily United
States Dollars. Derivative financial instruments (forward exchange contracts) are used by the Group to economically hedge
exposure to exchange rate risk associated with foreign currency transactions.
Forward exchange contracts
The following table summarises the US Dollar forward exchange contracts outstanding as at the reporting date:
Average Exchange Rate
Foreign Currency
Contract Value
Fair Value
2016
$’000
2015
$’000
2016
$’000
2015
$’000
2016
$’000
2015
$’000
2016
$’000
2015
$’000
Buy USD Dollar
0.7309
0.8292
3,228
2,637
4,417
3,180
(55)
297
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
25. FINANCIAL INSTRUMENTS (continued)
As at reporting date, if the Australian Dollar had moved against the US Dollar currency as illustrated in the table below,
with all other variables held constant, post tax profit for the year would have ben affected as follows:
USD 10.0 cents increase
(d) Credit risk
2016
$’000
2015
$’000
(435)
(87)
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Group. The Group is exposed to credit risk from its operating activities, primarily from trade and other receivables
and financing activities, including deposits with financial institutions. The carrying amount of these financial assets at
year-end represented the Group’s maximum exposure to credit risk. The Group has a policy of only dealing with credit
worthy counterparties and obtaining sufficient security where appropriate, as a means of mitigating the risk of financial
losses from defaults. The Group does not have any significant credit risk exposure to any single counter party. The
majority of accounts receivable are due from entities within the transport industry.
Guarantees
Performance guarantees of $614,194 (2015: $1,414,194) are held by Australia and New Zealand Banking Group Limited
on behalf of MaxiTRANS Australia Pty Ltd and MaxiPARTS Pty Ltd. MaxiTRANS Industries Limited guarantees the loan
facility MTC (China) has with the Australia and New Zealand Bank (China) Company Limited. Refer to (e) below for details
of the MTC (China) loan facility.
(e) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group
manages liquidity risk by maintaining adequate cash reserves, committed banking facilities and reserve borrowing
facilities and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial
assets and liabilities.
The Group’s liquidity management policies include Board approval of all changes to debt facilities including the terms of
fixed rate debt. The liquidity management policies ensure that the Group has a well diversified portfolio of debt, in terms
of maturity and source, which significantly reduces reliance on any one source of debt in any one particular year. Liquidity
risk is managed by the Group based on net inflows and outflows from financial assets and financial liabilities.
The following table summarises the maturities of the Group’s financial liabilities based on the remaining earliest
contractual maturities, excluding net interest payable on borrowings.
30 June 2016
Carrying
Amount
$’000
6 months
or less
$’000
6–12
months
$’000
1–2
years
$’000
2–5
years
$’000
Trade and other payables and accruals
Borrowings
(48,276)
(43,152)
(48,276)
(1,623)
–
(206)
–
(30,238)
–
(11,085)
Effect of Derivative Instruments
– Forward exchange contracts
(61)
(61)
–
–
–
(91,489)
(49,960)
(206)
(30,238)
(11,085)
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
25. FINANCIAL INSTRUMENTS (continued)
30 June 2015
Carrying
Amount
$’000
6 months
or less
$’000
6–12
months
$’000
1–2
years
$’000
2–5
years
$’000
Trade and other payables and accruals
Borrowings
(43,216)
(47,302)
(43,216)
(4,767)
–
(499)
–
(30,701)
–
(11,335)
Effect of Derivative Instruments
– Forward exchange contracts
Finance facilities
277
277
–
–
–
(90,241)
(47,706)
(499)
(30,701)
(11,335)
At year end, the Group had the following financing facilities in place with its bankers:
Loan facility
Overdraft facility
Multi-option facility
Facility Amount
Utilised
Available
2016
$’000
2015
$’000
2016
$’000
2015
$’000
2016
$’000
2015
$’000
64,965
2,000
13,000
64,196
2,000
13,000
41,465
–
1,687
45,196
–
2,106
23,500
2,000
11,313
19,000
2,000
10,894
79,965
79,196
43,152
47,302
36,813
31,894
The loan, overdraft and other facilities are fully secured by a registered charge (mortgage debenture) over the whole of
the assets and undertakings of the Group and a registered mortgage over certain land and buildings of controlled entities.
Core Australian and New Zealand loan facilities of $75.0m mature as follows, subject to continuing compliance with the terms
of the facilities:
– $45.0m in January 2018;
– $30.0m in December 2018.
Interest rates are a combination of fixed and variable.
The MTC (China) core loan facility is a 3 year facility of RMB 20.0m. It also has an uncommitted facility of RMB 5.0m.
The terms and conditions of the bank facilities contain covenants in relation to gearing ratio, interest cover and EBITDA ratio.
These covenants have been satisfied during the 2016 and 2015 financial years.
(f) Fair value
Determination of fair value
Net fair value has been determined in respect of financial assets and financial liabilities, with reference to the carrying
amount of such assets and liabilities in the consolidated balance sheet, determined in accordance with the accounting
policies disclosed in Note 1 to the financial statements.
The carrying amount approximates estimated net fair value for the Group’s financial assets and liabilities.
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016
25. FINANCIAL INSTRUMENTS (continued)
Classification of fair value
Fair Value Measurement requires that financial and non-financial assets and liabilities measured at fair value (being forward
exchange contracts, interest rate swaps and land and buildings) be disclosed according to their position in the fair value
hierarchy. There were no transfers between levels within the fair value hierarchy at 30 June 2016.
Level 1 is based on quoted prices in active markets for identical items;
Level 2 is based on quoted prices or other observable market data not included in level 1;
Level 3 valuations are based on inputs other than observable market data.
Forward exchange contracts and interest rate swaps are classified as Level 2 and their fair value is determined by reference
to observable inputs from active markets or prices from markets not considered active. They are priced with reference to
an active yield or rate, but with an adjustment applied to reflect the timing of maturity dates.
The fair value of forward exchange contracts and interest rate swaps at balance date is as follows:
Derivative assets
Derivative liabilities
2016
$’000
–
267
2015
$’000
22
–
Land and buildings are classified as Level 3 and their fair value reflects the use of directly unobservable market inputs in their
valuation, including assumptions about rents, yields and discount rates obtained from analysed transactions.
Valuations and assessments against current market prices have been performed at 30 June 2016 by external, independent
property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of
the property being valued. The valuation technique is based on the highest and best use to market participants.
The following table present changes in the fair value of land and buildings during 2015/16, including changes to the unobservable
inputs.
Opening balance as at 1 July 2015
Fair value revaluation
Depreciation recognised in the statement of profit and loss
Exchange rate variance
Closing balance as at 30 June 2016
26. EVENTS SUBSEQUENT TO BALANCE DATE
Land and Buildings
$’000
39,334
777
(504)
677
40,284
There have been no events subsequent to the reporting date which would have a material effect on the Group’s financial
statements for the year ended 30 June 2016.
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont)FOR THE YEAR ENDED 30 JUNE 2016ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
INDEPENDENT AUDITOR'S REPORT
FOR THE YEAR ENDED 30 JUNE 2016
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF MAXITRANS INDUSTRIES LIMITED
REPORT ON THE FINANCIAL REPORT
We have audited the accompanying financial report of
MaxiTRANS Industries Limited (the Company), which
comprises the consolidated balance sheet as at 30 June 2016,
and consolidated statement of profit or loss, consolidated
statement of comprehensive income, consolidated statement
of changes in equity and consolidated statement of cash flows
for the year ended on that date, notes 1 to 26 comprising
a summary of significant accounting policies and other
explanatory information and the directors’ declaration
of the Group comprising the Company and the entities
it controlled at the year’s end or from time to time during
the financial year.
Directors’ responsibility for the financial report
The directors of the Company are responsible for the
preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards
and the Corporations Act 2001 and for such internal control
as the directors determine is necessary to enable the
preparation of the financial report that is free from material
misstatement whether due to fraud or error. In note 1,
the directors also state, in accordance with Australian
Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements of the Group
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. These
Auditing 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 performed the procedures to assess whether in all
material respects the financial report presents fairly, in
accordance with the Corporations Act 2001 and Australian
Accounting Standards, a true and fair view which is consistent
with our understanding of the Group’s financial position
and of its performance.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
audit opinion.
Independence
In conducting our audit, we have complied with the
independence requirements of the Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a) the financial report of the Group is in accordance
with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’s financial
position as at 30 June 2016 and of its performance
for the year ended on that date; and
(ii) complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
(b) the financial report also complies with International
Financial Reporting Standards as disclosed in note 1.
REPORT ON THE REMUNERATION REPORT
We have audited the Remuneration Report included in
pages 18 to 24 of the directors’ report for the year ended
30 June 2016. 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 auditing standards.
Auditor’s opinion
In our opinion, the remuneration report of MaxiTRANS
Industries Limited for the year ended 30 June 2016,
complies with Section 300A of the Corporations Act 2001.
KPMG
Melbourne
19 August 2016
Tony Romeo
Partner
KPMG, an Australian partnership and member firm of the KPMG
Liability limited by a scheme approved under Professional
network of independent member firms affiliated with KPMG
Standards Legislation
International Cooperative ("KPMG International"), a Swiss entity.
68
AUSTRALIAN STOCK EXCHANGE
ADDITIONAL INFORMATION
FOR THE YEAR ENDED 30 JUNE 2016
Additional information required by the Australian Stock
Exchange Limited Listing Rules and not disclosed elsewhere
in this report.
Distribution of shareholders
(As at 31 July 2016)
Category – No of shares
No of shareholders
SHAREHOLDINGS
Substantial shareholders
The names of the substantial shareholders listed in the
Company’s register as at 31 July 2016 are:
Ordinary shares
Transcap Pty Ltd & related parties
HGT Investments Pty Ltd
25,547,972
19,750,000
Voting rights
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
506
1176
764
1495
218
4,159
Shareholders with less than a marketable parcel
As at 31 July 2016, there were 525 shareholders holding
less than a marketable parcel of 1,064 ordinary shares
($0.47 on 31 July 2016) in the Company totalling 310,498
ordinary shares.
As at 31 July 2016, there were 4,159 holders of ordinary
shares of the Company.
On market buy-back
There is no current on-market buy-back
Subject to the Constitution of the Company, holders
of ordinary shares are entitled to vote as follows:
(a) every shareholder may vote;
(b) on a show of hands every shareholder
has one vote;
(c) on a poll every shareholder has:
(i) one vote for each fully paid share; and
(ii) for each partly paid share held by the
shareholder, a fraction of a vote equivalent
to the proportion which the amount paid
(not credited) is of the total amounts paid
and payable (excluding amounts credited)
on the share.
As at 31 July 2016, there were no unquoted options over
unissued ordinary shares.
69
ANNUAL REPORT 2016MAXITRANS INDUSTRIES LIMITED
AUSTRALIAN STOCK EXCHANGE
ADDITIONAL INFORMATION (cont)
FOR THE YEAR ENDED 30 JUNE 2016
TWENTY LARGEST SHAREHOLDERS – ORDINARY SHARES AS AT 31 JULY 2016
Name
HGT Investments Pty Ltd
Transcap Pty Ltd
Citicorp Nominees Pty Ltd
J P Morgan Nominees Australia Limited
Toroa Pty Ltd
HSBC Custody Nominees Australia Limited
Transcap PTT Ltd
De Bruin Securities Pty Ltd
Brockhoff Super Fund A/C
John E Gill Trading Pty Ltd
Mr E D Ross
Denvorcorp Holdings Pty Ltd
John E Gill Operations Pty Ltd
Mr J R Curtis
Tanerka Pty Ltd
Navigator Australia Limited
Mahata Pty Ltd
Mandel Pty Ltd
GEN Lord Superannuation Pty Ltd
Debusey Pty Ltd
TOTAL
Number of fully paid
ordinary shares held
Percentage held of
issued ordinary shares
19,750,000
14,940,739
11,615,445
6,493,864
4,286,241
3,726,104
2,994,810
2,129,773
1,592,500
1,571,933
1,406,540
1,402,193
1,391,657
1,328,439
1,276,100
1,244,470
1,222,392
955,000
939,604
897,056
81,164,860
10.67%
8.07%
6.28%
3.51%
2.32%
2.01%
1.62%
1.15%
0.86%
0.85%
0.76%
0.76%
0.75%
0.72%
0.69%
0.67%
0.66%
0.52%
0.51%
0.48%
43.85%
70
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