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Annual Report 2017
Built on Pride
2017
Highlights
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Revenue ($m)
Net profit after tax ($m)1
Ordinary dividends
declared per share (cents)
Earnings per share
(basic) (cents)
22%
Underlying NPAT
22%
Underlying earnings
per share (basic)
4
Industry awards
47%
Reduction in lost time
injury frequency rate
CONTENTs
Chairman’s Letter
Managing Director’s Review
Our People, Our Community
Manufacturing
Australian Trailers
1
2
4
6
8
MaxiPARTS
International
Board of Directors
Executive Leadership Team
Financial Report
10
12
14
15
16
1 Underlying NPAT attributable to equity holders. 2 Excludes impairment charges and restructuring costs.
Cover from left to right: Andrew Glenister Dandenong Service and Repairs Manager Karina seylim MaxiPARTS Marketing Manager Greg Brown Technical Manager.
The breadth of our brands and businesses
helped us to a much improved overall
result, with increased earnings and
profitability compared to the prior year.
Chairman’s Letter
Dear shareholder,
MaxiTRANS has a long and proud history
in the road transport industry. It is a leader
in the heavy road transport trailer market
and is a major player in the trailer parts
market. We have developed an enviable
stable of brands over many years built
on customer-focused product innovation,
high quality manufacturing with scale and
a strong after-sales support network.
Change Agenda
Our success has been driven by passionate people,
guided by a stable Board and management. In order
to build upon this legacy, it is imperative we continue
to inject fresh ideas. As a result, the Board has embarked
on a succession program at the Board and senior executive
levels in recent years. In the last three years, two new
non-executive directors have joined the Board with a
further appointment likely, resulting in a renewal of more
than half of the Board. There has also been a refresh of
much of the senior executive team.
Our long-serving Managing Director, Michael Brockhoff
announced his retirement in January 2017. Michael worked
tirelessly with his team to build a strong business and he
leaves the legacy of a very proud business which is well
positioned to continue its next phase of growth. On behalf
of the Board and the Company, I sincerely thank Michael
for his long and dedicated service.
I would also like to welcome our new Managing
Director, Dean Jenkins. Dean joins MaxiTRANS with
a first class pedigree and a wealth of experience to
continue the Company’s progression and build on its
market-leading position.
The Board is currently working with Dean and the
executive team on our strategy to deliver superior
shareholder returns.
A Much Improved Result in FY17
Our businesses experienced mixed fortunes, however
the breadth of our brands and businesses helped us to
a much improved overall result, with increased earnings
and profitability compared to the prior year.
As a result, notwithstanding our continued investment
in working capital and systems we were able to maintain
our dividend distributions at a similar level as the prior
year, with a full-year dividend of 3.5 cents per share,
fully-franked.
Looking Forward
The Board will continue with its change agenda and
continues to advance our strategic priorities in order
to improve efficiency, shareholder returns and growth
opportunities both domestically and regionally.
robert H. Wylie
Chairman
1
MaxiTRANS Industries Limited Annual Report 2017
At MaxiTRANS, we aim to partner with
operators and service providers in the
freight transport industry to improve their
efficiency and effectiveness with a focus
on adding value to customers to reduce
their operating risk with respect to safety,
compliance, reliability and efficiency.
FY17 Year in Review
MaxiTRANS delivered an improved result for the year
ended 30 June 2017, with improved safety performance
and increased profitability compared to the prior year.
Our safety performance continued to improve with
an 11% reduction in the total injury rate and pleasingly
a 47% reduction in the more serious lost time injury
frequency rate. Whilst we have reduced the number
of injuries by 58% over the past four years since
commencing the MaxiSAFE program, there is still more
work to do and this remains a priority across the business.
From a financial perspective, I’m pleased to report the
reported net profit after tax attributable to equity holders
improved by 104% and underlying net profit after tax
attributable to equity holders improved by 22% to $10.7m.
Revenue of $340.1 million is consistent with the prior
year. A 2% revenue growth from the Australian Trailer
business was offset by a 27% decline in revenue from
the New Zealand Trailer business resulting in revenue
for the Trailers segment remaining flat on the prior year.
A 1.2% increase in MaxiPARTS external revenue and
a 3% increase in revenue from our China business
delivered an overall revenue increase of 1.4% for the
Parts & Components segment.
Underlying net profit before tax for the Trailer segment
declined 16% comprising a 6.7% improvement in the
Australian trailer business which was more than offset
by a 94% decline in New Zealand profitability due to the
continued market uncertainty resulting from the transport
regulation changes affecting trailer dimensions.
The Parts & Components segment net profit before tax
improved 45%, driven by a significant improvement in
the Australian MaxiPARTS business.
Operating cash flow of $4.4m was adversely impacted by
a net working capital outflow principally due to the higher
levels of inventory held as a result of the increased trailer
build rate. Net debt/equity ratio increased from 26% to 32%
reflecting the increased investment in working capital and
continued investment in the upgrade of the Group’s core
IT systems and technology. Notwithstanding this increase,
the Group’s financial position remains strong and we have
significant headroom in our debt facilities. During the year,
the Group refinanced its debt facilities to obtain funding
security over the medium to long term.
Managing
Director’s Review
It is a great honour to join MaxiTRANS
as your new Managing Director. I am in
the fortunate position of joining a company
with a leading market position, a portfolio
of great brands and the opportunity to lead
a team of proud and passionate people.
I would like to thank our former Managing Director,
Michael Brockhoff, for building and leaving a legacy
of a strong, resilient business. During his time, the
Company built a portfolio of diverse products that
enable the movement of freight across a range of
different industries. He is also to be credited with
building a strong dealership network and parts
business, creating a whole-of-life support model
for freight transport operators.
All of this provides a strong platform upon which we
will continue to grow and I look forward to sharing
these plans for growth with you in due course.
Our refreshed strategy will focus on the
following priorities:
– Developing an organisation which has the talent
and culture to lead MaxiTRANS into the future;
– Improving the operating efficiency and
effectiveness of the current business;
– Continuing to maximise the opportunities
in the markets we serve today;
– Identifying growth opportunities in new
markets at home and abroad; and
– Revitalising the Company’s brand and
corporate image.
2
MaxiTRANS Industries Limited Annual Report 2017 Australian Trailer Business
China
We started to see an improvement in some market
conditions with trailer registrations increasing slightly
in 2016 after two years of decline. MaxiTRANS managed
to hold its leading market share position, achieving a
3% increase in unit sales.
Our China panel business continued to grow, with revenue
increasing by 15% and profit improving by 12% on a
constant currency basis. New products launched in FY17
should provide opportunities for further growth in its
local and export markets in future years.
The Company’s diverse product portfolio assisted in
maintaining its market share position and improved profit
result. Strong infrastructure construction activity, most
notably in NSW and increased crop production, drove a 74%
increase in tipper sales. However, sales of the Freighter
general freight products declined during the year as market
confidence remained subdued. Sales of the Maxi-CUBE
refrigerated vans were also lower, however, this was
partly due to the abnormally high sales in the prior year.
The contract awarded during the year to build 395
refrigerated vans and trailers for Coles Supermarkets
commenced in the last quarter, however, it did not make
a material contribution to the financial performance for
the year. The increase in build rate to satisfy the order
was a significant part of the working capital increase
at the end of the year. The order will be largely satisfied
during the first half of FY18 and as such we would expect
an improvement in working capital in FY18.
Reflecting our focus on developing value-added solutions
for our customers, we were proud to receive a number
of awards for product innovation at the Brisbane Truck
Show in May 2017, the largest truck show in Australia.
We are also pleased to announce that we acquired
the minority interest in our South Australian dealership,
Transport Connection, during the year, facilitating the
continued development of our national trailer dealership
business model. This business is now wholly owned
by MaxiTRANS.
Australian MaxiPARTS Parts Business
After experiencing two years of decline, traction gained
from new business initiatives, in particular the technology-
enabled MaxiSTOCK customer managed inventory system
and proprietary suspension system, AirMAX, more than
offset the further decline in Queensland to deliver a 1.2%
increase in external revenue for the MaxiPARTS business.
MaxiSTOCK has experienced strong market acceptance
and is delivering above 20% like-for-like sales growth
from customers embracing this technology.
Additionally, improved product pricing discipline and
strong overhead management saw profit grow
significantly ahead of revenue.
International Businesses
New Zealand
The transport regulation changes affecting trailer
dimensions foreshadowed in last year’s report that impacted
the FY16 result continued to impact the FY17 result. These
changes were enacted in February, 2017, however, orders
did not improve until late in the year. As a result, both
revenue and profit significantly declined. We expect a
significant improvement in FY18 as orders improve.
Outlook
MaxiTRANS remains well positioned to grow in FY18.
With an order bank at the end of the year double the size
from the prior corresponding period, the Australian trailer
business will benefit from the delivery of trailers from the
Coles Supermarkets contract in the first half of FY18 and
the New Zealand business is expected to see improvements
with a stable regulatory environment. This increase in
build rate to record levels will create further opportunities
to implement operational efficiency initiatives across
the business.
We expect continued strong demand for tippers
as infrastructure construction continues and whilst
the current weather outlook for crop production
looks favourable, this is unpredictable and susceptible
to change.
We have not yet seen any meaningful commencement
of the equipment replacement cycle, hence the average
age of the Australian trailer fleet continues to increase.
As business confidence improves, we expect this cycle
to commence.
We are excited to announce that MaxiTRANS has formed
a strategic alliance with Monash and Federation Universities
to enhance our research and development activities.
Via this new collaborative agreement, we aim to further
push the boundaries of trailer design and construction to
maximise the efficiency and environmental sustainability
of our products. The agreement will provide MaxiTRANS
with valuable independent insights via both universities’
world-class research facilities, people and capabilities
to validate and expand on our initiatives. Additionally, it
presents university students with the opportunity to work
on relevant commercial projects and form networking
connections that may lead to future career paths,
delivering mutual benefit to all parties.
As new initiatives are introduced across the MaxiPARTS
business, including the introduction of new products into
the portfolio, as well as the realisation of benefits from
cost saving measures, we expect to see further growth
and improved profitability from this business.
I look forward to being part of the MaxiTRANS team
going forward and helping to build further on the proud
heritage we have.
dean Jenkins
Managing Director and CEO
3
MaxiTRANS Industries Limited Annual Report 2017
Building a strong committed team
Our People, Our Community
FY17 was a positive year for MaxiTRANS in
many respects. Through an increase in order
intake across various divisions, our staffing
levels increased by 13% since January 2017.
One contributing factor was the record
trailer order from Coles, which resulted
in a significant number of new staff being
engaged at our Ballarat facility. The jobs
boost was announced to staff and media
by the Honourable Wade Noonan, Victorian
Minister for Industry and Employment,
at a MaxiTRANS press conference in
April and was a welcome development
for the local community.
safety
In our efforts to make ongoing improvements to employees’
safety, over 20 MaxiTRANS sites completed the financial
year without a lost time or medical treatment injury.
Further, the lost time injury frequency rate reduced
by 47% and total injury frequency rate reduced by over
11%. The result can be attributed to the continuing
influence of MaxiSAFE, additional resources and
improved accident prevention and injury management.
We continue to make a dedicated effort towards
celebrating successes in the safety arena, with
presentations, lunches and small safety-related
gifts arranged for successfully achieving milestones.
People
In late FY17, we undertook a ‘Workplace Gender
Diversity Survey’, designed to garner insights into
staff perception regarding flexible working, paid parental
leave, communication whilst on parental leave and
career development opportunities for women. As a
result of the findings from the survey and to recognise
the commitment to fostering a diverse, inclusive
workplace that provides equal opportunities to all,
the Board approved the introduction of a paid parental
leave policy, which was launched in July 2017.
Following a successful trial in the MaxiPARTS division,
the MaxiTRANS Employee Assistance Program (EAP)
was expanded to the wider business throughout Australia
and New Zealand in FY17. The program assists employees
and their immediate family members with their wellbeing
including counselling focused on issues impacting their
personal and work life, such as stress, depression,
anxiety, addictions, grief, bereavement, children or
family member concerns.
Corporate social Responsibility (CsR)
A highlight of MaxiTRANS’ community support in FY17
was our support of “The Soup Bus”. Guided by its mission
statement “the weather changes, but the need never
does” The Soup Bus provides an after-dark meal service
to Ballarat’s homeless and less fortunate through
the cooperation and support of the local community.
MaxiTRANS provided in-kind support for the bus, by
arranging for it to be painted in our paint lines in Ballarat.
The cause was also embraced by staff, who contributed
by buying sausages at a fund raiser held on site, while
also donating over 500 litres of much-needed milk.
Team collaboration delivers
outstanding safety result
As at the end of FY17, our Derrimut site had achieved
13 months without a lost time or medical treatment
injury. The milestone was achieved through a number
of factors and led by the Site Safety Committee – a
cross-functional team from the various site operations
which collaborates to create a safer workplace for
all employees, contractors and visitors alike. The
Committee identified that clear communication
regarding the MaxiSAFE safety expectations and strong
leadership by management and team leaders would
result in greater engagement on safety from staff.
Combined with further training, better injury
management and a focus on continuing to raise
the bar with regards to housekeeping, Derrimut staff
became further engaged in the safety culture, which
in turn led to an outstanding safety result.
4
MaxiTRANS Industries Limited Annual Report 2017 staff levels
increased by
13%
since January 2017
5
MaxiTRANS Industries Limited Annual Report 2017 Building leadership through improvement
Manufacturing
We have begun or refreshed a number of
initiatives in our manufacturing operations
throughout FY17 to drive positive outcomes.
These initiatives are designed to deliver
balanced outcomes in safety, people,
quality, delivery and efficiency.
People
We have improved our people leadership capability with
the implementation of targeted and strategic recruitment
for various critical positions. This investment in people
brings best practice process and systems to enable
planned and ongoing improvement.
With our new leadership team now in place, a distinct
focus will be placed on leveraging their knowledge and
expertise to introduce robust and repeatable processes
and systems in FY18. Further, the introduction of an
ERP system and processes into our business through
the TRANSForm project will allow for better reporting
and accountability, which will assist us to continue and
increase the current rate of improvement.
safety
Underpinning the Company’s core value to send all our
people home safely every day, we have commenced a
bottom up approach to improve the safety culture across
the manufacturing group, to align with initiatives across
the wider business. To this end, we have invested in the
resources and systems to enable continual improvement,
with a view to creating a mindset that every incident
is preventable. It is a multi-pronged approach, but is
underpinned by a commitment to recognising our people
and teams when meeting their safety performance goals.
Operations
A significant order bank has facilitated the initiatives
focused on improving efficiency, delivery outcomes,
design for manufacture and design for safety. The team
has commenced the development of an auditable and
transparent quality system to implement a robust and
collaborative identification and problem solving process.
We have also seen significant progress in the Richlands
facility, primarily due to the continuous improvement
initiatives implemented throughout the course of the
financial year. Over time, this work will help MaxiTRANS
to lower costs and improve the product value proposition
for the benefit of our customers.
6
MaxiTRANS Industries Limited Annual Report 2017 Industry awards scooped
for innovation and hard work
This year’s Brisbane Truck Show
demonstrated the strength of our
cross-functional research and
development, engineering and
manufacturing teams, with one trailer
winning four out of the seven awards
on offer for all product categories at the
show. Freighter T-Liner Mark II won
the award for ‘Best Trailer’ while beating
all of the major truck manufacturers
on the way to winning the ‘Best
Australian Designed and Engineered
Product’ and ‘Best Australian
Manufactured Innovation’ awards.
Freighter Hanging Load Restraint
Gates also won the award for the
Best Component, Equipment or
Service Innovation.
Two of the major judging criteria were
technical innovation and safety, which
validated and rewarded the hard work
put in by our teams in these fields in
the past year.
Following the Truck Show, the trophies
were returned to our facility in Ballarat
and a presentation ceremony was held
for our team of over 400 to congratulate
and thank them for their contribution
towards the awards success.
20%
improvement in efficiency
in Richlands facility
7
MaxiTRANS Industries Limited Annual Report 2017 Well positioned to grow market share
Australian Trailers
8
MaxiTRANS Industries Limited Annual Report 2017 Tipper products
experienced
sales growth of
74%
year on year
Forward thinking collaboration
builds enduring partnership
VISA Global Logistics has formed a successful
collaborative partnership with MaxiTRANS through
a series of innovative trailer solutions. We have been
able to assist VISA in achieving its goal of increasing
productivity through a variety of forward-thinking
trailer designs, from stag skel combinations to skel
trailers with ramps.
Scott Walker, National Transport Manager at VISA
Global Logistics, said the partnership between the two
companies has lasted for over two decades thanks to
MaxiTRANS’ ability to listen and collaborate. “Using
equipment optimised for the freight task is an
enormous part of the VISA business strategy,
so it is very important to partner with companies
like MaxiTRANS who are willing to consult with us on
the best ways to maximise our productivity,” he said.
“That added value in turn allows us to offer our own
customers a better service offering.”
A case in point is a recent development for VISA,
two Freighter 30m quad/tri Super B-double skel
combinations. The design is a re-imagination of the
standard 26m B-double, which can usually carry one
20-foot container and one 40-foot container. Now, the
elongated trailer combinations can carry two 40-foot
containers, a 33 per cent productivity increase,
while maintaining the same manoeuvrability as
its predecessor.
Via an intelligent design, the 30m Super B-double
combination’s turning circle equals that of a standard
B-double. Produced under the high productivity
Performance-Based Standards (PBS) scheme,
the 30m Super B-double’s manoeuvrability makes
it compliant to run on the Level 2B PBS routes in
Victoria, providing access to the High Productivity
Freight Vehicle (HPFV) network routes, along with
the benefits of the extra 20 feet of container space.
Our Australian trailer sales improved in FY17.
Increased crop production and infrastructure
construction activity led to an outstanding
year for tipper manufacturers, however the
general freight trailer market slowed. The
result was an approximate 5% growth for
trailer registrations in 2016, rebounding
from the large contraction in 2015.
As part of our goal to continue to improve our customer
service every day, we restructured our sales and marketing
department in FY17. With dedicated senior managers
now in place in strategic positions, we are well placed
for improved results and accountability. Further, the
large Coles order has contributed to us finishing FY17
with a strong order book, double the same time last year,
and well positioned to grow market share.
Markets
Our strategic positioning into the waste transfer sector
contributed two of our largest customers for the year.
Unique product offerings such as the AZMEB High Volume
Side Tipper, combined with our wide national footprint,
provide us with a unique value proposition into the waste
transfer market.
The gross value of Australian crop production experienced
an estimated 20% increase in FY17, which was a major driver
behind the 74% growth in our tipper sales. Crop production
is forecast to decline slightly from FY17 but remain above
its five-year average. An increase in roads construction
investment, particularly in NSW, was another key factor
behind our tipper growth and is also expected to continue
into FY18 through projects such as Sydney’s WestConnex.
Product Range
In August, we released two new safe-operation load
restraint gate systems to the market, followed by the
Freighter T-Liner Mark II – an innovative new curtain
sided trailer which reduces the buckles required to open
and close it by up to 70%.
The Company then leveraged the Brisbane Truck Show in
May to make a number of further product announcements.
These included a major evolution to the Maxi-CUBE
Classic which improves thermal efficiency, productivity
and durability; two new Peki rigid truck bodies designed
to complete MaxiTRANS’ “Final Mile” solution; a new
low tare chassis and proprietary tipper liner for Hamelex
White rigid and dog products; and a new aesthetics
package for Lusty EMS designed to modernise Australian
tipper design. The products are all expected to be released
to the market by December 2017.
9
MaxiTRANS Industries Limited Annual Report 2017 Strong demand driving parts expansion
MaxiPARTS
FY17 has seen a number of business initiatives
start to drive results, specifically with regards
to growth and profit improvement across our
MaxiPARTS business.
One such initiative is the MaxiSTOCK customer inventory
management system, which has been well received
by customers of all sizes. As at the end of FY17, over
150 systems have been installed, with average customer
spend increasing by over 20% on average after the
installation. MaxiSTOCK customers gain the benefit
of parts being automatically replaced as they use them,
increasing their efficiency. We expect to continue to roll
out installations in FY18 while also ensuring that we help
existing users to maximise the data that we can now offer.
Product Range
We launched our range of parts to suit Volvo trucks and
are starting to see sales lift from this initiative. We expect
this product group to drive strong sales growth into FY18,
during which we will expand the program to include parts
to suit other truck brands, allowing us to better engage
with our customers across the breadth of their truck and
trailer parts requirements.
Towards the end of the year we expanded our tyre offering
to include Toyo Tyres, which is considered a tier one tyre
brand and has allowed us to better service our customers’
steer and drive tyre requirements. Once again, we expect
this initiative to drive further growth into FY18.
Premises
During the last quarter of FY17 we conducted a
cost-reduction analysis on our premises, which led to us
relocating and renegotiating a number of leases. A large
proportion of these savings will be realised in future years.
One further branch was sold to a local operator. This sale
allowed us to reduce our cost base and working capital
while also establishing a new wholesale customer
relationship with the new business owner that we expect
to drive further profit improvements in future years.
Automated inventory system
drives productivity gains and savings
Auscold Logistics identified a need to better manage their
parts inventory and engaged with MaxiPARTS in Adelaide
to install our MaxiSTOCK customer inventory management
system. MaxiPARTS collaborated with Auscold to identify
their stocking needs, help to reorganise their parts storeroom
and implement MaxiSTOCK. Since the implementation in
May, Auscold has been able to change its buying process
from ad-hoc in nature to planned and consistent orders,
ensuring it has optimum stock levels for its operation at
all times.
Auscold Workshop Supervisor, Damien Farelly, said the
major benefit for his company was simplifying its purchasing
process. “Prior to MaxiSTOCK, we lost time on the phone and
by travelling to various suppliers to pick up parts on a daily
basis. Now, we hold the parts in our workshop and when
we use them, they are replaced automatically by MaxiPARTS
the following day, freeing up our staff to spend their time
more effectively.”
A further benefit for Auscold has been the “big data” that
MaxiSTOCK provides. Through the packaged software,
Damien is able to gain insights into the value of parts being
used on the Company’s trucks and trailers, in order to better
understand each piece of equipment’s whole of life cost.
“ MaxiSTOCK has made our business more efficient and
is saving us money in the process,” said Damien.
Average customer
spend increasing by over
20%
on average after
MaxiSTOCK installation
10
MaxiTRANS Industries Limited Annual Report 2017 11
MaxiTRANS Industries Limited Annual Report 2017 Working together to grow offshore markets
International
Real client benefits through
international cooperation
Demonstrating MaxiTRANS’ international
collaboration, our China division supplies dry
freight and insulated panels for Maxi-CUBE units
in New Zealand. Both are in daily communication,
confirming orders, drawings and lead-time status.
The two teams recently worked together to produce
three dog and two B-train Maxi-CUBE Hi-CUBE Dry
Freight Van combinations for Fliway in New Zealand.
Fliway is one of the country’s largest fully integrated
logistics providers. Publicly listed and with a team of
over 400 people, Fliway uses our Maxi-CUBE trailers
to cart electronics goods and other sensitive freight.
The new Hi-CUBE B-trains for Fliway are optimised
for productivity, translating to 150m3 of capacity to
transport their customers’ valuable cargo.
We ensure that our collaborative attitude is not just
inward-looking. A further Maxi-CUBE truck body
was previously manufactured for Fliway, designed
specifically for the cartage of precious art. The secure
temperature-controlled body was unique; rather than
a refrigeration unit, it was fitted with a humidifier,
which kept the art at an ideal 15-20 degrees.
The three-way relationship between China,
New Zealand and Fliway typifies the MaxiTRANS
cooperative approach, driving real benefits to
shareholders and customers alike.
The MaxiTRANS international businesses
work together in the New Zealand market
as well as operating independently in
their own local markets.
People
In FY17, we appointed a Group General Manager,
International to the Executive Leadership Team as part
of a wider initiative to centralise reporting and increase
the collaboration of our international businesses with
each other and our Australian operations. In addition,
a number of key New Zealand staff were promoted
to local leadership positions, in which they have
embraced and thrived.
Performance
Our China operations experienced a successful
year, with an increase in revenue attributed to the
advancement of the local cold chain and logistics
industries, as well as a trend towards higher quality,
more productive vehicles. We continued our successful
partnership with China Post, delivering a large order
of dry freight panel kits.
In New Zealand, the Transport Authority’s changes
to vehicle dimension and mass regulations meant that
we began FY17 with a small order bank, resulting in
an annual reduction in unit sales. However, following
the regulations being enacted in February, a large
number of opportunities were converted, resulting
in a year-end order bank 81% greater than the prior
corresponding period.
Products
The recent launch of a new rigid body model in
New Zealand, developed in association with our
China division, is expected to allow us to increase
our market share in the small truck body segment
in FY18. The model is engineered for durability and
thermal efficiency, while being designed to allow
high volume production for the large orders
commonly placed by the small body market.
12
MaxiTRANS Industries Limited Annual Report 2017 Yangzhou
China
Trailer orders on our New Zealand
operation increased year on year
and order bank finished the year
81%
above the prior corresponding period
Auckland
New Zealand
13
MaxiTRANS Industries Limited Annual Report 2017 Board of Directors
A
B
C
D
E
Robert Wylie (A) – Chairman, Non-Executive
James Curtis (B) – Deputy Chairman, Non-Executive
Dean Jenkins (C) – Managing Director and CEO
samantha Hogg (D) – Director, Non-Executive
Joseph Rizzo (E) – Director, Non-Executive
14
MaxiTRANS Industries Limited Annual Report 2017 Executive Leadership Team
A
D
B
E
F
Campbell Richards (A) – CFO and Company Secretary, Andrew McKenzie (B) – Group GM, Sales and Marketing,
Anthony Roder (C) – Group GM, Manufacturing, Peter Loimaranta (D) – Group GM, International,
Angelique Zammit (E) – Group Human Resources Manager, Justin O’Brien (F) – Acting General Manager, MaxiPARTS,
scott Harkin (G) – Group Supply Manager, Dean Jenkins – Managing Director and CEO (pictured left)
C
G
15
MaxiTRANS Industries Limited Annual Report 2017 Report of the Directors
and Financial Report
CONTENTs
Financial Summary
Report of the Directors
Directors’ Declaration
Consolidated Statement of Profit or Loss and
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Independent Auditor’s Report
Australian Stock Exchange Additional Information
17
18
36
37
38
39
41
42
78
82
MaxiTRANS Industries Limited
ACN 006 797 173
and Controlled Entities
16
MaxiTRANS Industries Limited Annual Report 2017
Report of the Directors
and Financial Report
Financial Summary
F2013
F2014
F2015
F2016
F2017
Revenue
$’000
362,534
351,968
329,165
340,179
340,072
EBITDA (excluding significant items)(3)
$’000
44,219
30,594
16,247
19,219
21,439
EBIT (excluding significant items)(3)
$’000
38,316
25,185
10,604
14,199
16,836
NPBT (excluding significant items)(3)
$’000
36,358
23,172
8,079
11,840
14,520
NPAT (excluding significant items)(3)(4)
$’000
25,965
17,075
6,303
8,752
10,695
Significant Items (net of tax)
$’000
–
–
(1,806)(1)
(3,517)(2)
–
NPAT – attributable to equity holders
$’000
25,965
17,075
4,497
5,235
10,695
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
14.11
8.50
3,309
1,446
1,148
9.26
6.00
2.43
2.00
2.83
3.00
5.78
3.50
3,600
3,967
3,583
3,541
690
550
1,119
1,126
662
775
562
500
8,354
4,445
6,706
13,239
10,893
9,530
$’000
23,543
16,612
12,138
21,196
$’000
71,662
75,876
78,380
86,278
91,210
$’000
115,764
121,813
120,612
123,337
128,727
Interest bearing liabilities
$’000
26,218
42,580
47,302
43,152
47,697
Finance costs
Total bank debt
Net debt/equity
$’000
$’000
%
Interest cover (excluding significant items)
times
1,958
2,013
2,525
2,359
2,316
3,013
39,713
45,196
41,465
46,214
21%
19.57
31%
12.51
36%
4.20
26%
5.75
32%
7.27
(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.
17
MaxiTRANS Industries Limited Annual Report 2017FOR THE YEAR ENDED 30 JUNE 2017
Report of the Directors
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
associates for the year ended 30 June 2017 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 Robert H. Wylie
Mr James R. Curtis
Mr Michael A. Brockhoff
Mr Geoffrey F. Lord
Mr Joseph Rizzo
Ms Samantha Hogg
Mr Dean Jenkins
(Chairman since 30 June 2016)
(Director since 1987 – Deputy
Chairman since October 1994)
(Retired as Director on
1 March 2017)
(Retired as Director on
21 October 2016)
(Director since June 2014)
(Director since April 2016)
(Appointed Managing Director
on 1 March 2017)
Principal Activities
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 13 April 2017 totalling $3,701,513.
A fully franked final dividend of 1.5 cents per share has
been proposed by the directors after reporting date for
payment on 13 October 2017. The financial effect of this
dividend has not been brought to account in the financial
statements for the year ended 30 June 2017 and will be
recognised in subsequent financial reports.
State of Affairs
There were no significant changes in the state of affairs
of the Group which occurred during the financial year.
18
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 the 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 2017.
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 for both its domestic and export markets.
Trailer Business
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 licensed
dealerships provides a full solution including after sales
service and parts to those customers.
FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
Australia
Parts & Components Business
The Parts & Components business sells trailer and truck
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 FY17, MaxiPARTS
operated 20 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.
Australia
After experiencing two years of decline, traction gained
from new business initiatives, in particular the technology-
enabled MaxiSTOCK customer managed inventory system
and the proprietary suspension system, AirMAX, more than
offset further decline in Queensland and helped to deliver
a 1% increase in external revenue for the MaxiPARTS
business. MaxiSTOCK has experienced strong market
acceptance and is delivering above 20% like-for-like sales
growth from customers embracing this technology.
Additionally, improved product pricing discipline and strong
overhead management saw profit grow significantly ahead
of revenue.
China
Our China panel business continued to grow, with revenue
increasing by 15% and profit improved by 12% on a constant
currency basis. New products launched in FY17 should
provide opportunities for further growth in its local and
export markets in future years.
The Australian trailer market started to show improvement
with trailer registrations increasing slightly in 2016 after
two years of decline.
The Company’s diverse product portfolio assisted in
maintaining its market share position and achieving a 3%
increase in unit sales. Strong infrastructure construction
activity, most notably in NSW and good rains, yielding
increased crop production, drove a 74% increase in tipper
sales. However, sales of the Freighter general freight
trailers declined during the year as market confidence
remained subdued. Sales of the Maxi-CUBE refrigerated
vans also declined, however, the prior year included
abnormally high sales.
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.
The significant contract awarded during the year to build
395 refrigerated vans and trailers for Coles Supermarkets
commenced in the last quarter, however, it did not make
a material contribution to the financial performance for
the year. The increase in build rate to satisfy the order
was a significant part of the working capital increase
at the end of the year. The order will be largely satisfied
during the first half of FY18 and as such, we would expect
an improvement in working capital in FY18.
The Company’s focus on developing value-added solutions
for customers was recognised with us receiving a number
of awards for product innovation at the Brisbane Truck
Show in May 2017, the largest truck show in Australia.
During the year, the Company acquired the minority interest
in its South Australian dealership, Transport Connection,
facilitating the continued development of our national trailer
dealership business model. This business is now wholly
owned by MaxiTRANS.
New Zealand
The transport regulation changes affecting trailer dimensions
foreshadowed in last year’s report that impacted the FY16
result continued to impact FY17’s result. These changes
were enacted in February 2017, however, orders did not
improve until late in the year. As a result, both revenue
and profit significantly declined. We expect a significant
improvement in FY18 as orders improve.
19
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017 FINANCIAL REVIEW
Sales
Total revenue remained flat against prior year with revenue
of $340.1m.
A 2% increase in Australian trailer sales revenue was offset
by a 27% decline in NZ resulting in external sales from the
Trailer business declining marginally to $233.4 million.
The Parts & Components business recorded a 1.4%
external revenue increase to finish FY17 with revenue
of $106.7 million. Revenue in the Australian MaxiPARTS
business grew by 1.2% and the MTC China business grew
revenue by 2.8% (reported currency).
Profit
Net profit after tax attributable to MXI equity holders was
$10.7 million in FY17, an increase of 104% of reported
profit and 22% over FY16 underlying net profit after tax.
Trading margins in the Trailer business were lower in FY17
due to the higher product mix in favour of lower margin
tippers. Sales of Freighter and Maxi-CUBE during the year
were also at lower margins compared to the prior year.
Performance of the Parts & Components businesses
improved significantly over the prior year due to the
following:
Cost reduction measures initiated in the
MaxiPARTS business;
New business initiatives in MaxiPARTS, in particular
the MaxiSTOCK customer inventory management
system as well as the aftermarket truck parts program
and successful launch of our AirMAX suspension
system; and
Improved trading performance of MTC in China.
The major investment activity during the year was
associated with Project TRANSform, our program
to replace our ageing and end-of-life IT systems.
No businesses were acquired during the year, however,
the Group acquired the 20% minority interest in our
South Australian dealer, Transport Connection.
This business is now wholly owned by MaxiTRANS.
Due to the increased working capital and further
investment in our IT systems, gearing levels were
higher at the end of FY17.
Net debt for FY17 increased to 32% of equity, up from
26% in FY16.
External Financing Facilities
During the year, MaxiTRANS renegotiated its debt facilities
totalling $70 million and has entered into a syndicated
facility with the Commonwealth Bank of Australia and
HSBC Bank. The facility will be used to fund ongoing
business requirements and facilitate funding future growth
opportunities. The facility has both three years and five year
maturities and has a number of covenant requirements
and is secured against property owned by the Group.
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 relating to the financial
year ending 30 June 2017 will be 3.5 cents per share
and will be fully franked. The total ordinary dividend
of 3.5 cents per share compared with 3.0 cents per share
in the prior year and represents a 60% payout ratio of FY17
net profit after tax attributable to MXI shareholders.
Cash Generation & Capital Management
RISK
Operating cash flow of $4.4 million was generated during
FY17 which was 79% lower than FY16.
Working capital has increased significantly on the prior
year predominantly due to an increase in inventory arising
from the increased trailer build rate associated with the
Coles contract. It is expected that working capital will
reduce during FY18 to improve cashflow.
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.
20
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017 Operational Risks
Foreign Exchange & Commodities Risk
The Group has identified the following operational risks
as “very high”:
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 broadening 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;
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
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.
product innovation to provide better solutions
to customers;
HEALTH & SAFETY
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.
The Company is actively engaged in 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” 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.
21
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017 In FY17, the program yielded an 11% improvement in safety
performance over the prior year and represents a 58%
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 is currently undertaking a refresh of its
corporate strategy. The strategy will focus on the following
pathways that will drive superior shareholder returns:
Operational excellence that will ensure the Company’s
systems and processes deliver high quality, cost
effective products and services;
Leveraging its market leading position to optimise
growth opportunities in the markets in which
MaxiTRANS operates;
Leveraging its expertise to diversify into new markets;
Develop a comprehensive organisation development
model to continue to recruit, develop and retain the
best people; and
Ensure our corporate image accurately reflects our
market-leading position.
Business Transformation Program
The Company has committed to a significant investment
in a business transformation program known as
“Project TRANSform”.
The program will replace a number of 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 FY17, the new ERP system continued to be
developed and will be further deployed across the
business during FY18.
OUTLOOK
With an order bank at the end of the year double the size
from the prior corresponding period, the Australian trailer
business will benefit from the delivery of trailers from
the Coles Supermarkets contract in the first half of FY18
and the New Zealand business is expected to see
improvements with a stable regulatory environment.
This increase in build rate to record levels will create
further opportunities to implement operational efficiency
initiatives across the business.
We expect continued strong demand for tippers as
infrastructure construction continues and whilst the
current weather outlook for crop production looks
favourable, this is unpredictable and susceptible to change.
We have not yet seen any meaningful commencement
of the equipment replacement cycle, hence the average
age of the Australian trailer fleet continues to increase.
As business confidence improves, we expect this cycle
to commence.
We are excited to announce that MaxiTRANS has formed a
strategic alliance with Monash and Federation Universities
to enhance our research and development activities. Via
this new collaborative agreement, we aim to further push
the boundaries of trailer design and construction to
maximise their efficiency and environmental sustainability.
The agreement will provide MaxiTRANS with valuable
independent insights via both universities’ world-class
research facilities, people and capabilities to validate and
expand on our initiatives. Additionally, it presents university
students with the opportunity to work on relevant
commercial projects and form networking connections
that may lead to future career paths, delivering mutual
benefit to all parties.
As new initiatives are introduced across the MaxiPARTS
business, including the introduction of new products into
the portfolio, as well as the realisation of benefits from
cost saving measures, we expect to see further growth
and improved profitability from this business.
22
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017 Information of Directors
Mr. Robert H. Wylie
Chairman, Independent Non-Executive, (appointed 30 June 2016), Age 67
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 and Nomination Committee. Member
of the Audit & Risk Management Committee and Remuneration Committee.
Interest in Shares:
21,364 ordinary shares beneficially held.
Options over Ordinary Shares:
Nil
Mr. Dean S Jenkins
Managing Director, Executive, Age 45
Qualifications & Experience:
Appointed Managing Director on 1 March 2017.
Most recently Chief Operating Officer & Executive Director of the Weir Group PLC, one of
the world’s leading engineering businesses. Prior to the Weir Group, Mr Jenkins was
CEO of UGL Rail from 2008 to 2010, Australia’s largest supplier and maintainer of rolling
stock. He also spent 11 years in senior leadership roles with QANTAS, culminating in
the role of Group General Manager – Engineering, Material and Logistics.
Interest in Shares:
Nil ordinary shares beneficially held.
Options over Ordinary Shares:
Nil
23
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017
Mr. James R. Curtis
Deputy Chairman, Non-Executive, Age 82
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 64
Qualifications & Experience:
Appointed Managing Director in June 2000 and retired on 1 March 2017.
Thirty-eight years' experience in the road transport industry.
Special Responsibilities:
Former Member of the Nomination Committee.
Interest in Shares:
3,090,172 ordinary shares beneficially held at the date of retirement.
Options over Ordinary Shares:
Nil
Mr. Geoffrey F. Lord
Independent Non-Executive Director, Age 72
Qualifications & Experience:
B. Econ. (Honours), M.B.A. (Distinction), ASSA, Fellow of the Australian Institute of
Company Directors. Appointed Director in October 2000 and retired on 21 October 2016.
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:
Former Member of Audit & Risk Management Committee, Corporate Governance
Committee, Remuneration Committee and Nomination Committee.
Interest in Shares:
1,049,604 ordinary shares beneficially held at the date of retirement.
Options over Ordinary Shares:
Nil
24
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017
Mr. Joseph Rizzo
Independent Non-Executive Director, Age 61
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:
Chairman of the Remuneration Committee and Member of the Audit & Risk Management
Committee, Corporate Governance 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 50
Qualifications & Experience:
Currently the Chairperson of Tasmanian Irrigation and a 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 and Member
of the Corporate Governance Committee, Remuneration Committee and
Nomination 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.
25
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017
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
Robert Wylie
James Curtis
16
16
Michael Brockhoff 10
Geoffrey Lord
Joseph Rizzo
Samantha Hogg
Dean Jenkins
6
16
16
6
16
16
10
5
16
16
6
4
4
3
1
4
4
–
4
4
3
1
4
4
–
4
4
–
2
4
4
–
4
3
–
1
4
4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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.
This mix will change to 20%/20% from 1 July 2017.
26
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017
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.
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 STIs
and LTIs 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.
Except in the case of the Managing Director and Chief
Financial Officer where the key financial performance
objective is “net profit after tax,” the key financial
performance objective for other executives 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, STIs 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.
The Board has set a long term incentive target for
management to achieve an increase in the Group’s
Return on Invested Capital (‘ROIC’).
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.
27
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017 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 has
regard to the indices highlighted in the table on page 31.
Net profit after tax and net profit before tax are considered as
two 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 Dean Jenkins, Managing Director, has a contract
of employment with the Company dated 1 March 2017.
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
28
that year. The service contract can be terminated either
by the Company or Mr Jenkins 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 an 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.
Services of remuneration consultant
In keeping with the above policies, the Remuneration
Committee engaged Mercer as remuneration consultant
to review the amount of senior executive remuneration
during the year. Mercer was paid $38,060 for the
remuneration recommendations.
Remuneration recommendations regarding senior executives
were provided directly to the Remuneration Committee.
A declaration was received from Mercer as part of its report
that advice provided was made free from undue influence
of senior executives.
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017 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
$
$
PRs
(iii)
$
Year
Proportion of
remuneration
performance
related
Value of
PRs as
proportion of
remuneration
$
%
%
DIRECTORS
Non-executive
Mr R Wylie
Chairman
Mr I Davis
2017
105,000
2016
40,000
2017
–
Former Chairman
2016
127,854
Mr J Curtis
Mr G Lord (v)
Mr J Rizzo
Ms S Hogg (vi)
Executive
2017
68,493
2016
68,493
2017
21,064
2016
68,493
2017
47,303
2016
40,000
2017
68,493
2016
12,381
Mr D Jenkins (vii)
2017
248,003
Managing Director
2016
–
Mr M Brockhoff (viii)
2017
655,497
Former Managing Director 2016
672,749
ExECUTIVES
Mr C Richards
2017
332,924
Chief Financial Officer
2016
343,197
and Company Secretary
Mr A Wibberley (ix)
2017
84,323
Former Group General
2016
312,605
Manager – Manufacturing
Mr P Buttler (x)
2017
1,550
Former General Manager 2016
227,401
– Ballarat
MaxiTRANS Australia Pty Ltd
Mr A McKenzie
2017
295,408
Group General Manager
2016
292,238
– Sales and Distribution
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
140,000
75,000
–
140,000
75,000
75,000
23,065
75,000
75,000
75,000
75,000
13,557
–
–
–
–
–
–
–
–
–
–
–
–
–
–
35,000
35,000
–
12,146
6,507
6,507
2,001
6,507
27,697
35,000
6,507
1,176
23,135
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
13,333
284,471
–
–
29,652 68,094 (112,152) 61,199
15,404
69,835
(119,032) 50,614
702,290
689,570
(16.0%)
(17.3%)
(16.0%)
(17.3%)
–
–
31,500
(1,094)
31,500
2,238
–
–
363,330
376,935
(0.3%)
0.6%
(0.3%)
0.6%
1,963
18,615
(54,230) 96,210
–
34,447
(49,369) 30,301
146,880
327,984
(36.9%)
(15.1%)
(36.9%)
(15.1%)
–
–
6,042
(43,336) 62,596
26,909
(46,779) 29,214
26,851
236,745
(161.4%)
(19.8%)
(161.4%)
(19.8%)
3,278
30,365 35,346 22,000
–
29,278
16,330
22,000
386,398
359,846
9.1%
4.5%
9.1%
4.5%
29
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017
Primary
Post
Equity
Other
(iv)
Total
Salary
& fees (i)
$
STI
(ii)
$
Non-cash
benefits Super
$
$
PRs
(iii)
$
Year
$
$
%
%
Proportion of
remuneration
performance
related
Value of
PRs as
proportion of
remuneration
ExECUTIVES (continued)
Mr P Loimaranta
2017
280,430
General Manager
2016
266,785
– MaxiPARTS Pty Ltd
Mr C Wallace (xi)
2017
162,289
Former General Manager 2016
200,742
– Vic Branch
MaxiTRANS Australia Pty Ltd
Mr A Roder (xii)
2017
255,055
Group General Manager
2016
–
– Manufacturing
–
–
–
–
–
–
–
–
28,439
(1,070) 34,446
28,431
(57,516) 29,798
342,245
267,498
(0.3%)
(21.5%)
(0.3%)
(21.5%)
19,412 22,190
(32,434) 171,141
342,598
24,571
23,195
(40,507)
3,710
211,711
(9.5%)
(19.1%)
(9.5%)
(19.1%)
–
–
23,316 15,160
–
–
–
–
293,532
–
5.2%
–
5.2%
–
Notes in relation to table of directors’ and executive officers' remuneration
Includes the accrual of short-term statutory entitlements.
(i)
(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 2017 financial year using the criteria set out in the Remuneration
Report. The amounts were determined after performance reviews were completed. All STI entitlements were forfeited
during the year.
(iii) The fair value of performance rights (PRs) 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 PRs, market conditions have been taken into account. Further
details in respect of PRs are contained on the following page of the Remuneration Report. Details of PRs 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 the 2014 PR scheme will not be met. As a result, the total amount recognised
for services received over the life of the 2014 PR scheme was reversed.
(iv)
Includes the accrual of long-term statutory entitlements.
(v) Mr G Lord retired effective 21 October 2016.
(vi) Ms S Hogg was appointed on 27 April 2016.
(vii) Mr D Jenkins was appointed on 1 March 2017.
(viii) Mr M Brockhoff retired effective 1 March 2017. All PRs held by Mr Brockhoff at that time were cancelled.
(ix) Mr A Wibberley resigned effective 28 October 2016. All PRs held by Mr Wibberley at that time were cancelled.
(x) Mr P Buttler resigned effective 1 July 2016. All PRs held by Mr Buttler at that time were cancelled.
(xi) Mr C Wallace was made redundant on 19 April 2017. All PRs held by Mr Wallace at that time were cancelled.
(xii) Mr A Roder was appointed on 5 September 2016.
30
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017
Analysis of share-based payments granted as remuneration
Details of the vesting profile of the PRs 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 (1)
Company executives
Mr C Richards
Consolidated entity executives
Mr A Roder
Mr P Loimaranta
Mr A McKenzie
Mr S Harkin
Mr C Wallace (2)
PRs granted
Fair value at
(no.)
Grant date
grant date ($)
Vesting date
Expiry date
670,435
31 Aug. 2016
0.4599
31 Aug. 2019
31 Aug. 2023
328,948
31 Aug. 2016
0.4599
31 Aug. 2019
31 Aug. 2023
294,447
296,895
305,740
200,437
217,952
31 Aug. 2016
31 Aug. 2016
31 Aug. 2016
31 Aug. 2016
31 Aug. 2016
0.4599
0.4599
0.4599
0.4599
0.4599
31 Aug. 2019
31 Aug. 2023
31 Aug. 2019
31 Aug. 2023
31 Aug. 2019
31 Aug. 2023
31 Aug. 2019
31 Aug. 2023
31 Aug. 2019
31 Aug. 2023
1. PRs were issued to Mr Brockhoff and approved by the shareholders at the Annual General Meeting held on 21 October 2016,
but not accepted by Mr Brockhoff due to his retirement.
2. On 19 April 2017, the date when Mr Wallace was made redundant, Mr Wallace’s PRs were cancelled.
All PRs expire on the earlier of their expiry date or termination of the individual's employment. In order for PRs to vest,
holders must continue to be in the employment of the Group until vesting date. The PRs vest three years after the date they
were issued, subject to the satisfaction of performance hurdles. PRs may only be exercised during a four year period after
they have vested. Details of the performance criteria are included in the discussion on LTIs.
The estimated maximum value of PRs 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 PRs.
Consolidated Results and Shareholder Returns
2017
2016
2015
2014
2013
Net profit/(loss) attributable
to equity holders of the parent
$10,694,940
$5,235,234
$4,496,951
$17,074,194
$25,965,182
Basic EPS
5.78¢
2.83¢
2.43¢
9.26¢
14.11¢
Dividends declared
$6,477,648
$5,552,270
$3,701,513
$11,104,542
$15,639,438
Dividends declared per share
Share price
3.50¢
67.0¢
3.00¢
45.0¢
2.00¢
39.5¢
6.00¢
97.0¢
8.50¢
$1.065
31
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017
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:
2017 Shares
MaxiTRANS Industries Limited
Directors:
Mr M Brockhoff (retired 1 March 2017)
Mr J Curtis
Mr G Lord (retired 21 October 2016)
Mr R Wylie
Mr J Rizzo
Executives:
Mr P Loimaranta
Mr A Wibberley (resigned 28 October 2016)
Held at
1 July 2016
Purchases
Sales
Held at
30 June 2017
3,090,172
24,943,030
1,049,604
21,364
50,000
260,716
176,507
–
–
–
–
–
–
–
(3,090,172 )(1)
–
(1,049,604 )(1)
–
–
–
176,507 (1)
–
24,943,030
–
21,364
50,000
260,716
–
Ms Hogg, Mr Jenkins, Mr Richards, Mr McKenzie, Mr Roder and Mr Harkin do not hold any shares as at 30 June 2017.
(1) Represent shareholding on the date of retirement/resignation.
2016 Shares
MaxiTRANS Industries Limited
Directors:
Mr M Brockhoff
Mr I Davis (retired 30 June 2016)
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 McKenzie and Mr Harkin did not hold any shares at 30 June 2016.
End of Remuneration Report
32
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017
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 $41,882 (2016: $45,406) in respect of directors’ and officers’ liability
insurance contracts.
Clause 101 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.
33
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017 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 35.
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 and advisory)
Overseas KPMG Firms:
– auditing and reviewing financial statements
– other services (taxation, advisory and due diligence)
Total
Proceedings on Behalf of Company
Consolidated
2017
$
2016
$
306,967
166,219
263,700
111,762
473,186
375,462
82,219
12,605
94,824
79,344
19,052
98,396
568,010
473,858
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.
34
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017
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. Dean Stuart Jenkins, Director
Dated this 25th day of August 2017
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 of MaxiTRANS Industries Limited for the
financial year ended 30 June 2017 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
25 August 2017
Suzanne Bell
Partner
KPMG, an Australian partnership and a 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.
35
FOR THE YEAR ENDED 30 JUNE 2017Report of the Directors (cont)MaxiTRANS Industries Limited Annual Report 2017
Directors’ Declaration
In the opinion of the directors of MaxiTRANS Industries Limited (“the Company”):
(a) the consolidated financial statements and notes as set out on pages 37 to 77, 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 2017 and of its performance for the
financial year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(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 18 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 2017.
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. Dean Stuart Jenkins, Director
Dated this 25th day of August 2017
36
FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
Consolidated Statement of Profit or Loss and
Consolidated Statement of Comprehensive Income
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
2017
$’000
2016
$’000
327,484
330,286
12,588
5,760
9,893
(543)
(209,346)
(205,277)
86
161
80
592
Employee and contract labour expenses
2
(86,108)
(83,326)
Warranty expenses
Depreciation and amortisation expenses
Impairment loss on intangible assets
Finance costs
Other expenses
Share of net profits of associates accounted for using the equity method
Profit before income tax
Income tax expense
Profit for the year
Profit attributable to:
Equity holders of the Company
Non-controlling interests
6,7
7
9
21
3(a)
Earnings per share for profit attributable to the ordinary equity holders of the Company:
12
Basic earnings per share (cents per share)
12
Diluted earnings per share (cents per share)
(1,796)
(4,603)
–
(2,316)
(1,900)
(5,020)
(4,398)
(2,359)
(28,274)
(32,301)
884
14,520
(3,475)
11,045
10,695
350
5.78
5.78
1,089
6,816
(1,320)
5,496
5,235
261
2.83
2.83
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Profit for the year
11,045
5,496
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
6
(1,609)
114
3,557
(1,041)
1,021
12,066
11,782
284
765
34
777
(218)
1,358
6,854
6,640
214
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.
37
FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
Consolidated Statement
of Financial Position
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Other
Total Current Assets
Non-Current Assets
Investment in associate
Property, plant and 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
2017
$’000
6,140
42,122
60,368
1,209
1,562
2016
$’000
10,831
38,386
53,341
2,863
1,120
111,401
106,541
4,442
88,526
37,517
472
1,135
4,187
78,563
37,059
1,780
1,156
132,092
122,745
243,493
229,286
52,600
2,563
118
12,421
67,702
45,134
752
1,144
34
47,064
48,276
1,829
253
12,476
62,834
41,323
446
1,147
199
43,115
114,766
105,949
128,727
123,337
11
56,386
17,481
53,539
56,386
16,643
48,337
127,406
121,366
1,321
1,971
128,727
123,337
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial statements.
38
FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
Consolidated Statement
of Changes in Equity
Issued
capital
$’000
Asset
revaluation
reserve1
$’000
Retained
earnings
$’000
Non-
controlling
interest
$’000
Other
reserves2
$’000
Total
$’000
Note
Balance at 1 July 2016
56,386
12,605
48,337
1,971
4,038
123,337
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
Purchase of 20% minority share
Share-based payment transactions
Other sundry movements
Total transactions with owners
13
19
15
–
–
–
–
–
–
–
–
–
–
–
10,695
350
–
11,045
–
2,516
–
–
–
–
(66)
(1,543)
(1,609)
–
–
–
114
2,516
114
2,516
10,695
284
(1,429)
12,066
–
–
–
–
–
(5,553)
60
–
–
(336)
(596)
–
(2)
–
–
(249)
–
(5,889)
(536)
(249)
(2)
(5,493)
(934)
(249)
(6,676)
Balance at 30 June 2017
56,386
15,121
53,539
1,321
2,360
128,727
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.
39
FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
Consolidated Statement
of Changes in Equity (cont)
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.
40
FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
Consolidated Statement
of Cash Flows
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other costs of finance paid
Income tax paid
Consolidated
Note
2017
$’000
2016
$’000
381,950
(374,000)
86
(2,316)
(1,275)
387,830
(360,793)
80
(2,359)
(3,562)
Net cash provided by operating activities
22
4,445
21,196
Cash flows from investing activities
Payments for property, plant and equipment
Acquisition of non-controlling interest
Dividends received
Proceeds from sale of property, plant and 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
(8,194)
(536)
629
309
(7,792)
(36,000)
40,749
(204)
(5,889)
(1,344)
(4,691)
10,831
(8,703)
–
828
2,047
(5,828)
(3,786)
-
(1,313)
(3,783)
(8,882)
6,486
4,345
6,140
10,831
13
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated financial statements.
41
FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
Notes to the Consolidated
Financial Statements
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
AASB 1057 Application of Australian Accounting
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 2017 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. The financial report contains comparative
information that has been adjusted to align with the
presentation of the current period, where necessary.
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 25 August 2017.
The relevant Australian Accounting Standards and
Interpretations that became effective and that were
early adopted by the Group since 30 June 2016 were:
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 2015-1 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).
Standards taking effect from 1 July 2017 and later
• AASB 9 – Financial Instruments
(i) Classification – Financial assets
AASB 9 contains a new classification and
measurement approach for financial assets that
reflects the business model in which assets are
managed and their cash flow characteristics. AASB 9
contains three principal classification categories for
financial assets: measured at amortised cost, fair
value through other comprehensive income (FVOCI)
and fair value through profit or loss (FWTPL). The
standard eliminates the existing AASB 139 categories
of held to maturity, loans and receivables and
available for sale.
(ii) Impairment – Financial assets
AASB 9 replaces the ‘incurred loss’ model in AASB 139
with a forward-looking ‘expected credit loss’ (ECL)
model. This will require considerable judgement as to
how changes in economic factors effect ECLs, which
will be determined on a probability-weighted basis.
The new impairment model will apply to financial
assets measured at amortised cost or FVOCI.
Under AASB 9, loss allowances will be measured
on either of the following bases:
42
FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(iv) Disclosures
– 12-month ECLs: These are ECLs that result from
possible default events within the 12 months after
the reporting date; and
– Lifetime ECLs: These are ECLs that result from
all possible default events over the expected life
of a financial instrument.
Lifetime ECL measurement applies if the credit
risk of a financial asset at the reporting date has
increased significantly since initial recognition and
12-month ECL measurement applies if it has not.
An entity may determine that a financial asset’s
credit risk has not increased significantly if the
asset has low credit risk at the reporting date.
However, lifetime ECL measurement always
applies for trade receivables without a significant
financing component; an entity may choose to
apply this policy also for trade receivables with
a significant financing component.
The Group does not believe that impairment losses
are likely to increase and become more volatile
for assets in the scope of the AASB 9 impairment
model. However, the Company has not yet finalised
the impairment methodologies that it will apply
under AASB 9.
(iii) Classification – Financial liabilities
AASB 9 largely retains the existing requirements
in AASB 139 for the classification of financial
liabilities. However, under AASB 139 all fair value
changes of liabilities designated as FWTPL are
recognised in profit or loss, whereas under AASB 9
these fair value changes are generally presented
as follows:
– The amount of change in the fair value that is
attributable to changes in the credit risk of the
liability is presented in other comprehensive
income; and
– The remaining amount of change in the fair value
is presented in profit or loss.
The Group has not performed a preliminary
assessment of the impact if AASB 9’s requirements
on the classification of financial liabilities were
applied at 30 June 2017.
AASB 9 will require extensive new disclosures, in
particular about credit risk and ECLs. The Group
has not performed a preliminary assessment of the
impact if AASB 9’s requirements were applied as
at 30 June 2017.
(v) Transition
The Group plans to take advantage of the
exemption allowing it not to restate comparative
information for prior periods with respect to
classification and measurement (including
impairment) changes. Differences in the carrying
amounts of financial assets and financial liabilities
resulting from the adoption of AASB 9 will
generally be recognised in retained earnings and
reserves as at 1 July 2018.
• AASB 15 Revenue from Contracts with Customers
AASB 15 establishes a comprehensive framework
for determining whether, how much and when
revenue is recognised. It replaces existing revenue
recognition guidance, including AASB 118 Revenue,
AASB 111 Constructions Contracts and AASB
Interpretation 13 Customer Loyalty Programmes.
AASB 15 is effective for annual reporting periods
beginning on or after 1 January 2018, with early
adoption permitted. The Group currently plans to
apply AASB 15 initially on 1 July 2018.
(i) Sale of goods and services
For the sale of goods and services, revenue is currently
recognised when the goods are delivered to the
customers’ premises or collected at the Company
premises, which is taken to be the point in time at
which the customer accepts the goods and the related
risks and rewards of ownership transfer. Revenue is
recognised at this point provided that the revenue and
costs can be measured reliably, the recovery of the
consideration is probable and there is no continuing
management involvement with the goods.
Under AASB 15, revenue will be recognised when
a customer obtains control of the goods. For some
made-to-order product contracts, the customer
controls all of the work in progress as the products
are being manufactured. When this is the case,
revenue will be recognised as the products are
43
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
The amendments clarify:
being manufactured. This will result in revenue, and
some associated costs, for these contracts being
recognised earlier than at present – i.e. before the
goods are delivered to the customers’ premises or
collected at the Company’s premises.
(ii) Transition
The Group plans to adopt AASB 15 in its financial
statements for the year ending 30 June 2019
however, once further analysis has been performed
the transition approach will be determined.
The Group is currently performing an assessment
of the impact of the application of AASB 15 and
expects to disclose additional quantitative
information before it adopts AASB 15.
• AASB 16 Leases
AASB 16 removes the lease classification test
for lessees and requires all the leases (including
operating leases) to be brought onto the balance
sheet. The definition of a lease is also amended and
is now the new on/off balance sheet test for lessees.
AASB 16 is effective for annual reporting periods
beginning on or after 1 January 2019, with early
adoption permitted where AASB 15 Revenue from
Contracts with Customers is adopted at the same
time. The Group is assessing the potential impact
on its financial statements resulting from the
application of AASB 16.
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 2016-5 Amendments to Australian Accounting
Standards – Classification and Measurement of
Share-based Payment Transactions.
– cash-settled share-based payments should
be measured using the same approach as for
equity-settled share-based payments
i.e. the modified grant date method
– classification of share-based payments settled
net of tax withholdings; and
– accounting for a modification of a share-based
payment from cash-settled to equity settled.
The Group expects 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.
Accounting policies
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.
44
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
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.
NCI are measured at their proportionate share
of the acquiree’s identifiable net assets at the date
of acquisition. Changes in the Group’s interest
in a subsidiary that do not result in a loss of control
are accounted for as equity transactions.
The Group’s interests in equity-accounted investees
comprise interests in associates. Associates are
those entities in which the Group has significant
influence, but not control or joint control, over the
financial and operating policies.
Interests in associates are accounted for using the
equity method. They are initially recognised at cost,
which includes transaction costs. Subsequent
to initial recognition, the consolidated financial
statements include the Group’s share of profit or
loss and OCI of equity-accounted investees, until
the date on which significant influence 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 an associate.
Unrealised gains arising from transactions with
associates are eliminated to the extent of the
Group’s interest in the associate.
(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.
(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 during the
financial year ending 30 June 2017 in relation to all
land and buildings.
45
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
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
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
46
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
rates in the current and comparative periods:
2017
2016
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.
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
The estimated useful lives are reflected in the following
rates in the current and comparative periods:
(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) Brand names
Brand names acquired by the Group have indefinite
useful lives and are measured at cost less
accumulated impairment. They are tested annually
for impairment, or more frequently if events or
circumstances indicate that they might be impaired.
(iv) Intellectual Property
Intellectual property acquired by the Group with
indefinite useful lives are measured at cost less
accumulated impairment. They are tested annually
for impairment, or more frequently if events or
circumstances indicate that they might be impaired.
(v) Other intangible assets
Other intangible assets that are acquired by
the Group are stated at cost less accumulated
amortisation (see following) and impairment losses.
(vi) 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.
2017
2016
Intellectual property
0-4.0%
0-4.0%
Software
10%
–
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.
(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.
47
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
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.
(j) Calculation of recoverable amount
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
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
post-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.
48
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
(i) Defined contribution superannuation funds
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 $5,166,573
(2016: $5,262,760) were expensed.
(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.
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(p) Income tax
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.
(n) Provisions
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.
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
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.
49
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(s) Revenue
(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.
(r) Earnings per share
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.
50
(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.
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.
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(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.
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 Board 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.
(w) Derivative financial instruments
(i) Impairment of goodwill and intangibles
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.
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
recoverable amount of the cash-generating units
to which the goodwill and intangibles with indefinite
useful lives are allocated.
51
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(ii) Capital management
(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 2017
was 32% (2016: 26%). 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.
52
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
(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 independent valuations.
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.
(ab) Government grants
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 2017, 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 2017 $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 2017 the full amount has been received.
53
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
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
– 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
3. TAxATION
(a) Income tax
Reconciliation of tax expense
Prima facie tax payable on profit before tax
at 30% (2016: 30%)
Add/(deduct) tax effect of:
Research and development allowance
Non-assessable income
Associate equity accounted income
Prior year adjustments
Impact of tax rates in foreign jurisdictions
Consolidated
2017
$’000
2016
$’000
76,336
9,772
86,108
73,637
9,689
83,326
(178)
120
244
186
53
(327)
260
(14)
6,455
6,265
682
892
161
592
4,356
2,045
(295)
(28)
(265)
(245)
(48)
(881)
(232)
(17)
(327)
(48)
(101)
(725)
Income tax expense in consolidated statement of profit or loss
3,475
1,320
54
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
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 and 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)
(c) Current tax asset/(liability)
Consolidated
2017
$’000
2016
$’000
2,947
(206)
773
(39)
3,475
5,414
(5,596)
–
(972)
968
(94)
(280)
1,334
(734)
(880)
(280)
2,222
13
(854)
(61)
1,320
5,976
(4,667)
–
(945)
923
47
1,334
673
886
(225)
1,334
The Group’s current tax asset of $1,209,051 (2016: $2,862,977) and current tax liability of $118,499 (2016: $252,721) 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 2017
Consolidated 2016
Gross
$’000
Impairment
$’000
Total
$’000
Gross
$’000
Impairment
$’000
Total
$’000
26,440
9,139
2,316
3,620
41,515
(166)
(69)
(23)
(49)
26,274
9,070
2,293
3,571
24,354
8,759
2,583
1,655
(145)
(58)
(21)
(108)
24,209
8,701
2,562
1,547
(307)
41,208
37,351
(332)
37,019
914
42,122
1,367
38,386
55
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
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 AND EQUIPMENT
Land and buildings at fair value
Accumulated depreciation
Total land and buildings
Plant and Equipment
Plant and equipment at cost
Accumulated depreciation
Office equipment at cost
Accumulated depreciation
Leased property, plant and equipment
Accumulated depreciation
Capital work in progress
Total plant and equipment
Total property, plant and equipment
Consolidated
2017
$’000
2016
$’000
3,044
35,242
6,913
18,358
(3,189)
60,368
5,298
31,745
4,650
14,568
(2,920)
53,341
43,526
(201)
43,325
41,171
(887)
40,284
41,828
(28,046)
38,638
(27,870)
13,782
10,768
9,522
(8,075)
1,447
7,990
(1,692)
6,298
23,674
45,201
88,526
8,981
(6,997)
1,984
7,819
(643)
7,176
18,351
38,279
78,563
Independent valuations/market assessments were obtained during 30 June 2017 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 26(e) for details of security over land and buildings.
56
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
6. PROPERTY, PLANT AND EQUIPMENT (continued)
Reconciliations
Reconciliations of the carrying amounts for each class of property, plant and equipment are set out below:
Consolidated
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
Transfer from inventories
Transfers from leased plant and equipment
Transfers from capital works in progress
Disposals
Depreciation
Other sundry movements
Carrying amount at the end of the financial year
Office equipment
Carrying amount at the beginning of the financial year
Additions
Transfers from capital works in progress
Transfer from leased plant and equipment
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 software
Transfers to property, plant and equipment
Carrying amount at the end of the financial year
2017
$’000
40,284
–
3,557
–
(524)
8
43,325
10,768
1,496
3,784
15
91
(135)
(2,133)
(104)
13,782
1,984
362
8
2
(13)
(884)
(12)
1,447
7,176
116
(17)
–
(415)
(562)
6,298
18,351
6,380
(958)
(99)
23,674
2016
$’000
39,334
–
777
–
(504)
677
40,284
11,033
1,409
–
52
545
(309)
(1,988)
26
10,768
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)
18,351
57
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
7.
INTANGIBLES
Software at cost
Accumulated depreciation
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:
Software
Carrying amount at the beginning of the financial year
Transfers from capital work in progress
Depreciation
Carrying amount at the end of the financial year
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
58
Consolidated
2017
$’000
2016
$’000
958
(96)
862
–
–
–
24,645
24,645
6,930
(691)
6,239
6,930
(691)
6,239
22,665
(16,894)
22,665
(16,490)
5,771
6,175
891
(891)
–
891
(891)
–
37,517
37,059
–
958
(96)
862
24,645
–
24,645
6,239
6,239
6,175
(404)
–
5,771
–
–
–
–
24,645
–
24,645
6,239
6,239
10,992
(731)
(4,086)
6,175
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
7.
INTANGIBLES (continued)
Patents and trademarks
Carrying amount at the beginning of the financial year
Amortisation
Impairment losses
Carrying amount at the end of the financial year
CGU
Australian Trailers
MaxiPARTS
Yangzhou Maxi–CUBE Tong Composites (China)
MaxiTRANS New Zealand
Consolidated
2017
$’000
2016
$’000
–
–
–
–
356
(44)
(312)
-
Consolidated
Other Intangibles
Allocation
Goodwill
Allocation
2017
$’000
12,872
–
–
–
12,872
2016
$’000
12,414
–
–
–
12,414
2017
$’000
5,193
16,699
2,753
–
24,645
2016
$’000
5,193
16,699
2,753
–
24,645
Impairment tests for Goodwill and Other Intangibles
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% – 2.5%. The growth rate used for years 2-5
is 2.5% – 2.7% which is based on recent Australian Government GDP forecasts and the after-tax nominal discount rates used
were 8.8% – 9.8% (2016: 8.9% – 9.9%).
The recoverable amount of all CGUs was found to be in excess of their respective carrying values. As such, no impairment
charges were required for the year ended 30 June 2017.
8. TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
Total trade and other payables
Consolidated
2017
$’000
2016
$’000
39,776
12,824
52,600
35,113
13,163
48,276
59
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
9.
INTEREST BEARING LOANS AND BORROWINGS
Current
Bank loans – secured
Lease liability
Total current interest bearing liabilities
Non-current
Bank loans – secured
Lease liability
Total non–current interest bearing liabilities
Consolidated
2017
$’000
1,729
834
2,563
44,485
649
45,134
2016
$’000
1,013
816
1,829
40,452
871
41,323
26
26
Bank loans are subject to a floating interest rate. Interest rate swaps have been executed in respect of $20.0m
(2016: $24.0m) of this debt in order to mitigate interest rate risk. Refer to note 26(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 2017 is analysed as follows:
Carrying amount at 1 July 2016
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 2017
60
2,218
98
2,316
2,275
84
2,359
9,420
3,001
9,595
2,881
12,421
12,476
1,092
52
1,144
1,095
52
1,147
10,512
10,690
Warranty
$’000
2,881
988
(182)
(690)
4
Other
$’000
52
34
–
(34)
–
3,001
52
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
11. ISSUED CAPITAL
Balance at 30 June 2016
Balance at 30 June 2017
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 one vote for each fully paid 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
Consolidated
2017 – $’000
2016 – $’000
10,695
10,695
5,235
5,235
2017 – Number
2016 – Number
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
185,075,653
–
185,075,653
185,075,653
–
185,075,653
Diluted earnings per share
The calculation of diluted earnings per share at 30 June 2017 is based on net profit attributable to equity holders of the
company of $10,694,940 and the weighted average number of ordinary shares outstanding after adjustment for the effects
of all dilutive potential ordinary shares of nil.
2017 – Number
2016 – 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
61
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
13. DIVIDENDS
Dividends paid
2017
Interim – ordinary
Total dividends paid
2016
Interim – ordinary
Final – 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
1.00
3.00
3,702
3,702
3,702
1,851
5,553
13 April 2017
30%
100%
14 April 2016
14 October 2016
30%
30%
100%
100%
During the financial year an internal dividend of $1,679,741 was declared by one of the Group’s subsidiaries Transport Connection
Pty Ltd of which $335,948 was paid to its minority shareholder.
Dividends proposed
Final – ordinary
1.50¢
2,776
13 October 2017
30%
100%
The above dividend was declared after the end of the financial year and will be paid on 13 October 2017. The financial effect
of this dividend has not been brought to account in the financial statements for the year ended 30 June 2017 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
2017
$’000
2016
$’000
22,657
20,826
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 $1,189,772 (2016: $793,181).
14. SEGMENT INFORMATION
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.
62
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
14. SEGMENT INFORMATION (continued)
Year ended 30 June 2017
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
233,373
1,706
235,079
106,699
13,182
119,881
–
(14,888)
–
340,072
–
340,072
–
340,072
Segment net profit before tax
9,099
5,293
–
14,392
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
2,632
1,741
147,998
75,651
53,865
27,288
1,691
708
(i) Capital expenditure includes the acquisition of leased assets
884
(756)
14,520
(3,475)
11,045
4,373
230
4,603
223,649
19,845
243,493
81,153
33,613
114,766
2,399
5,955
8,354
–
–
–
–
63
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
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
235,220
1,898
237,118
104,959
11,087
116,046
–
(12,985)
(12,985)
340,179
–
340,179
–
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
–
–
–
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
(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.
64
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
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 (‘PRs’) which upon vesting can be converted
into a specified number of ordinary shares in the Company.
The terms and conditions relating to PRs currently on issue are as follows:
Period
Grant date
Total PRs issued
Total PRs forfeited
Total PRs remaining on issue
Vesting conditions
Base Return on Invested Capital (ROIC)
Target increase in ROIC
1 July 2015 – 30 June 2018
1 July 2016– 30 June 2019
30 September 2015
30 September 2016
4,985,368
2,813,334
2,172,034
ROIC – 50%
EPS – 50%
5.21% (year ended
30 June 2015)
3,817,578
1,533,399
2,284,179
ROIC – 50%
EPS – 50%
6.17% (year ended
30 June 2016)
Average of 1.75% per annum
Average of 1.75% per annum
(10.46% over 3 years)
(5.25% over 3 years)
Percentage increase in base ROIC required
101%
85%
Minimum % of ROIC target that must be
70% (i.e. average of 1.22%
70% (i.e. average of 1.22%
achieved for Performance Rights to vest
per annum)
Target EPS
Basic EPS of 10.50¢. Growth over 2014 EPS
of 9.26¢ given that 2015 EPS was impacted
by non-recurring costs
Minimum service requirement
3 years from grant date
per annum)
Basic EPS – 9.82¢
Growth over 2014 EPS at 9.26c given
that 2015 &2016 EPS was impacted
by non-recurring costs
3 years from grant date
Details of PRs exercised during the year:
Total PRs issued – 2014
Total PRs forfeited
Total PRs exercised
Measurement of fair value
2,072,978
2,072,978
–
The fair value of PRs 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.
PRs 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 PRs 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
2017
45.99¢
61.00¢
50.00%
6 – 7%
2.30%
15.00%
2016
34.18¢
44.00¢
50.00%
5.50%
2.50%
15.00%
65
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
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
2017
$’000
503
(752)
(249)
2016
$’000
592
(937)
(345)
During the period it was determined that the performance and service conditions of the 2014 PR scheme will not be met.
As a result, the total amount recognised for goods and services received over the life of the 2014 schemes was reversed.
In addition where an employee has left the business their PR expense was reversed. The reversal amount is comprised of:
2014 PR scheme
2015 PR scheme
2016 PR scheme
$’000
512
182
58
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 J Curtis (Deputy Chairman)
– Mr G Lord (retired on 21 Oct 2016)
– Mr R Wylie (Chairman)
– Mr J Rizzo
– Ms S Hogg
Executive directors
– Mr M Brockhoff (Former Managing Director
– retired on 1 March 2017)
– Mr D Jenkins (Managing Director – appointed
1 March 2017)
Executives
– Mr C Richards (CFO and Company Secretary)
–
–
–
Mr A Wibberley (Former Group General Manager
– Manufacturing – resigned 28 October 2016)
Mr A Roder (Group General Manager – Manufacturing
– appointed 5 September 2016)
Mr P Buttler (Former General Manager – Ballarat
– resigned 1 July 2016)
–
Mr P Loimaranta (General Manager – MaxiPARTS)
– Mr A McKenzie (Group General Manager – Sales and
Distribution)
–
Mr C Wallace (Former General Manager – Vic Branch
– was made redundant on 19 April 2017)
(b) Directors’ transactions in shares
Directors and their related entities acquired no (2016: $811,817) 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 consulting fees of $nil (2016: $62,370) 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 2016 year, the contractual arrangements
between the parties came to an end. Amounts owing at year end total $nil (2016: $nil).
66
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
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 associate
During the year the Group derived revenue from the associate of $26,708,172 (2016: $37,666,993) for the sale
of new units, parts and the provisions of services. Amounts receivable from the associate at year end total
$1,479,408 (2016: $519,072).
During the year the Group paid for services and parts from the associate totalling $1,260,496 (2016: $1,350,175).
Amounts owing at year end total $45,511 (2016: $118,579).
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
2017
2016
3,147,072
329,407
(193,811)
3,085,725
356,795
(284,314)
3,282,668
3,158,206
67
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
17. PARENT ENTITY
As at 30 June 2017 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
2017
$’000
2016
$’000
(785)
–
(785)
64,832
116,263
1,076
43,833
(400)
–
(400)
32,417
79,475
459
459
72,430
79,016
56,386
586
15,458
72,430
56,386
836
21,795
79,016
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.
68
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
18. CONTROLLED ENTITIES
Particulars in relation to controlled entities
Country of
Incorp.
Class of
Shares
Interest Held
2017 %
2016 %
The Company:
MaxiTRANS Industries Limited
Controlled entities of
MaxiTRANS Industries Limited:
MaxiTRANS Australia Pty Ltd
– Transport Connection Pty Ltd (ii)
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
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Aust.
Spares Pty Ltd)
MaxiTRANS Employee Share Plan Pty Ltd
MaxiTRANS (China) Limited (i)
Yangzhou Maxi–CUBE Tong Composites Co Ltd
Aust.
Aust.
Hong Kong
China
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
Ord.
100
100
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
(i) Dormant entity
(ii) As at 30 June 2017 MaxiTRANS Australia Pty Ltd purchased the remaining 20% minority shareholding
19. ACQUISITION OF NCI
In June 2017, the Group acquired the additional 20% interest in Transport Connection Pty Ltd for $536,405 in cash, increasing
its ownership from 80% to 100%. The carrying amount of Transport Connection Pty Ltd net assets in the Group’s consolidated
financial statements on the date of the acquisition was $2,982,252.
The Group recognised a decrease in NCI of $596,450 and an increase in retained earnings attributable to the owners of the
Company of $60,045.
Carrying amount of NCI acquired ($2,982,252 x 20%)
Consideration paid to NCI
Increase in equity attributable to owners of the Company
2017
$’000
596
536
60
2016
$’000
–
–
–
69
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
20. DEED OF CROSS GUARANTEE
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 2017 is set out as follows:
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 reclassified 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
70
Consolidated
2017
$’000
2016
$’000
285,214
297,609
3,847
(2,116)
(162,586)
(170,353)
161
634
(82,695)
(80,042)
(1,796)
(3,875)
–
(2,127)
(24,963)
884
12,064
(2,770)
9,294
(1,275)
114
3,557
(1,041)
1,355
10,649
(1,900)
(4,217)
(4,398)
(2,078)
(29,294)
1,089
4,934
(744)
4,190
997
34
777
(218)
1,590
5,780
9,294
4,190
10,649
5,780
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
20. 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 and 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
2017
$’000
4,695
31,889
56,610
1,209
1,310
95,713
4,442
7,162
77,988
33,183
215
1,133
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
124,123
115,965
219,836
207,944
42,512
834
–
11,438
54,784
43,406
701
1,144
35
45,286
100,070
39,839
816
253
11,464
52,372
37,371
395
1,147
199
39,112
91,484
119,766
116,460
56,386
15,215
47,302
56,386
14,904
45,170
119,766
116,460
71
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
21. INVESTMENT IN ASSOCIATE
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
2017
%
36.67
2016
%
36.67
$’000
2017
2016
Revenues
(100%)
Net
Profit
after Tax
(100%)
Share of
Associate
Profit
Recognised
Total
Assets
Total
Liabilities
Net Assets as
Reported by
Associate
56,210
70,352
2,411
2,971
884
1,089
18,041
20,050
7,052
9,758
10,988
10,292
Commitments
The share of the associate’s capital commitments contracted but not provided for or payable within one year was $nil
at 30 June 2017 (2016: $nil).
22. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
Reconciliation of cash flows from operating activities with operating profit/(loss) after tax
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 associates profit
Share based payments expense
Change in assets and 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
72
Consolidated
2017
$’000
2016
$’000
11,045
5,496
4,603
–
(161)
(884)
(249)
(4,735)
35
(11,426)
4,331
1,633
517
(264)
4,445
5,020
4,398
(592)
(1,089)
(345)
4,697
757
569
5,038
(1,595)
(864)
(294)
21,196
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
23. 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
Consolidated
2017
$’000
4,426
9,890
1,636
2016
$’000
4,291
7,484
3,506
Total operating lease commitments
15,952
15,281
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
24. CONTINGENT LIABILITIES
13,180
3,580
16,760
7,080
–
7,080
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.
25. REMUNERATION OF AUDITOR
Remuneration of the auditor of the Company for:
$
$
KPMG Australia:
– auditing and reviewing the financial statements
– other services (taxation and advisory)
Overseas KPMG Firms:
– auditing and reviewing financial statements
– other services (taxation, advisory and due diligence)
Total auditor remuneration
306,967
166,219
263,700
111,762
473,186
375,462
82,219
12,605
94,824
79,344
19,052
98,396
568,010
473,858
73
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
26. FINANCIAL INSTRUMENTS
(a) Risk management framework/policies
The Group’s 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
Consolidated
2017
$’000
23,682
24,015
47,697
2016
$’000
12,933
30,219
43,152
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
(140)
140
(191)
191
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
2017
$’000
2016
$’000
2017
$’000
2016
$’000
2017
$’000
2016
$’000
2017
$’000
2016
$’000
Buy USD Dollar
0.7505
0.7309
5,132
3,228
6,839
4,417
(149)
(55)
74
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
26. 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
Consolidated
2017
$’000
2016
$’000
(652)
(435)
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 $1,296,594 (2016: $887,695) are held by Australia and New Zealand Banking Group Limited and
Westpac Banking Corporation 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 2017 – Consolidated
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
(52,600)
(47,697)
(52,600)
(1,099)
–
(1,464)
–
(1,970)
–
(43,164)
Effect of derivative instruments
– Forward exchange contracts
(149)
(149)
–
–
–
(100,446)
(53,848)
(1,464)
(1,970)
(43,164)
75
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
26. FINANCIAL INSTRUMENTS (continued)
30 June 2016 – Consolidated
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
Finance facilities
(61)
(61)
–
–
–
(91,489)
(49,960)
(206)
(30,238)
(11,085)
At year end, the Group had the following financing facilities in place with its bankers:
Consolidated
Loan facility
Overdraft facility
Multi-option facility
Facility Amount
Utilised
Available
2017
$’000
2016
$’000
2017
$’000
2016
$’000
2017
$’000
2016
$’000
64,801
1,000
9,000
64,965
2,000
13,000
46,214
–
4,273
41,465
–
4,103
18,587
1,000
4,727
23,500
2,000
11,313
74,801
79,965
50,487
45,568
24,314
36,813
On 29 June 2017, the Group refinanced its financing facilities. Commonwealth Bank of Australia and HSBC are the Group’s
new banking partners.
The loan, overdraft and other facilities are fully secured by a registered mortgage over certain land and buildings of the
controlled entities.
Core Australian and New Zealand loan facilities of $70.0m mature as follows, subject to continuing compliance with the terms
of the facilities:
– $40.0m in June 2020
– $30.0m in June 2022
Interest rates are a combination of fixed and variable.
The MTC (China) core loan facility is a 3 year facility of RMB 20.0m and is with the ANZ Banking Group in China. 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 2017 and 2016 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.
76
Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
26. 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 2017.
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
Consolidated
2017
$’000
–
193
2016
$’000
–
267
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 2017 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 2016/17, including changes to the
unobservable inputs.
Opening balance as at 1 July 2016
Fair value revaluation
Depreciation recognised in the statement of profit and loss
Exchange rate variance
Closing balance as at 30 June 2017
27. EVENTS SUBSEQUENT TO BALANCE DATE
Consolidated
Land and Buildings
$’000
40,284
3,557
(524)
8
43,325
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 2017.
77
MaxiTRANS Industries Limited Annual Report 2017Notes to the Consolidated Financial Statements (cont)FOR THE YEAR ENDED 30 JUNE 2017
Independent
Auditor’s Report
TO THE SHAREHOLDERS OF MAxITRANS INDUSTRIES LIMITED
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the Financial Report of MaxiTRANS
Industries Limited (the Company).
The Financial Report comprises:
In our opinion, the accompanying Financial Report
of the Company is in accordance with the Corporations
Act 2001, including:
giving a true and fair view of the Group’s financial
position as at 30 June 2017 and of its financial
performance for the year ended on that date; and
complying with Australian Accounting Standards
and the Corporations Regulations 2001.
Consolidated statement of financial position
as at 30 June 2017
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 then ended
Notes including a summary of significant
accounting policies
Directors’ Declaration.
The Group consists of the Company and the entities
it controlled at the year end or from time to time during
the financial year.
BASIS FOR OPINION
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
KEY AUDIT MATTERS
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial
Report of the current period.
This matter was addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on this matter.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under Professional
Standards Legislation.
78
FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017 Independent
Auditor’s Report (cont)
RECOVERABILITY OF GOODWILL AND OTHER INTANGIBLE ASSETS (AUD $37.5M)
Refer to Note 7 Intangibles
The key audit matter
A key audit matter for us was the Group’s annual testing of
goodwill and intangible assets for impairment, given the size
of the balance (being 15% of total assets). Certain conditions
impacting the Group increased the judgement applied by us
when evaluating the evidence available. We focused on the
significant forward-looking assumptions the Group applied
in their value in use, including:
forecast operating cash flows, growth rates and terminal
growth rates – the Group has experienced competitive
market conditions in the current year, as a result of
emerging regulatory change in New Zealand, and
lower customer demand in the freight sector in Australia.
This impacted the Group through a reduction in the
demand for products. These conditions increase the
possibility of goodwill and intangible assets being
impaired, plus the risk of inaccurate forecasts.
discount rate – these are complicated in nature and
vary according to the conditions and environment the
specific Cash Generating Unit (CGU) is subject to from
time to time, and the models approach to incorporating
risks into the cash flows or discount rates. We involved
our valuations specialists with the assessment.
In addition to the above, the carrying amount of the net
assets of the Group exceeded the Group’s market
capitalisation at year end, increasing the possibility of
goodwill and intangibles being impaired. This further
increased our audit effort in this key audit area.
We involved valuation specialists to supplement our senior
audit team members in assessing this key audit matter.
How the matter was addressed in our audit
Our procedures included:
We considered the appropriateness of the value in use
method applied by the Group to perform the annual test
of goodwill for impairment against the requirements of
the accounting standards.
We assessed the integrity of the value in use models
used, including the accuracy of the underlying calculation
formulas.
We assessed the Group’s allocation of corporate assets
to CGUs for consistency based on the requirements of the
accounting standards.
We assessed the Group’s underlying methodology and
documentation for the allocation of corporate costs to
the forecast cash flows contained in the value in use
model, for consistency with our understanding of the
business and the criteria in the accounting standards.
We compared the forecast cash flows contained in
the value in use models to Board approved forecasts.
We assessed the accuracy of previous Group forecasts
to inform our evaluation of forecasts incorporated in the
models.
We considered the sensitivity of the models by varying
key assumptions, such as forecast growth rates, terminal
growth rates and discount rates, within a reasonably
possible range, to identify those CGUs at higher risk
of impairment and to focus our further procedures.
We compared forecast growth rates to published studies
of industry trends and expectations, and considered
differences for the Group’s operations. We used our
knowledge of the Group, their past performance,
business and customers, and our industry experience.
Working with our valuation specialists we independently
developed a discount rate range considered comparable
using publicly available market data for comparable entities,
adjusted by risk factors specific to the Group and the
industry it operates in.
We compared the trading multiples from comparable
companies to the multiples from the Group’s
value-in-use models.
We assessed the disclosures in the financial report
using our understanding of the issue obtained from
our testing and against the requirements of the
accounting standards.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under Professional
Standards Legislation.
79
FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017 Independent
Auditor’s Report (cont)
OTHER INFORMATION
Other Information is financial and non-financial information in MaxiTRANS Industries Limited’s annual report, which is provided in
addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. This includes
the Chairman and Managing Director Review, Financial Summary, Report of the Directors, Remuneration Report and ASX
Additional Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and will not express
an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related
assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider
whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work
we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report.
RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL REPORT
The Directors are responsible for:
preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001
implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view
and is free from material misstatement, whether due to fraud or error
assessing the Group’s ability to continue as a going concern. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group or
to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL REPORT
Our objective is:
to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement,
whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of this Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_files/ar2.pdf. This description forms part of our Auditor’s Report.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under Professional
Standards Legislation.
80
FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017 Independent
Auditor’s Report (cont)
REPORT ON THE REMUNERATION REPORT
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of MaxiTRANS
Industries Limited for the year ended 30 June 2017,
complies with Section 300A of the Corporations Act 2001.
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 responsibilities
We have audited the Remuneration Report included
in pages 26 to 32 of the Directors’ report for the year
ended 30 June 2017.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
KPMG
Melbourne
25 August 2017
Suzanne Bell
Partner
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under Professional
Standards Legislation.
81
FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017 Australian Stock Exchange
Additional Information
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 2017)
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 2017 are:
Ordinary Shares
HGT Investments Pty Ltd
Transcap Pty Ltd and related parties
20,000,000
14,940,739
Voting rights
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
471
1,023
681
1,488
214
3,877
Shareholders with less than a marketable parcel
As at 31 July 2017, there were 264 shareholders holding
less than a marketable parcel of 715 ordinary shares
($0.70 on 31 July 2017) in the Company totalling 69,810
ordinary shares.
As at 31 July 2017, there were 3,877 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 2017, there were no unquoted options over
unissued ordinary shares.
82
FOR THE YEAR ENDED 30 JUNE 2017MaxiTRANS Industries Limited Annual Report 2017
Australian Stock Exchange
Additional Information (cont)
TWENTY LARGEST SHAREHOLDERS – ORDINARY SHARES AS AT 31 JULY 2017
Name
1. HGT INVESTMENTS PTY LTD
2. TRANSCAP PTY LTD
3. CITICORP NOMINEES PTY LIMITED
4. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
5. TOROA PTY LTD
6. J P MORGAN NOMINEES AUSTRALIA LIMITED
7. TRANSCAP PTT LTD
8. RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD
9. DE BRUIN SECURITIES PTY LTD
10. JOHN E GILL TRADING PTY LIMITED
11. MR ERIC DEAN ROSS
12. JOHN E GILL OPERATIONS PTY LTD
13. HORRIE PTY LTD
14. JAMES R CURTIS
15. BNP PARIBAS NOMINEES PTY LTD
16. MAHATA PTY LTD
17. TANERKA PTY LTD
18. BNP PARIBAS NOMS PTY LTD
19. BELGRAVIA STRATEGIC EQUITIES PTY LTD
20. MANDEL PTY LTD
Total ordinary fully paid shares – top 20 holders
Total remaining holders balance
Units
% of Units
20,000,000
10.81
14,940,739
11,710,944
6,271,577
4,286,241
4,097,809
2,994,810
2,438,571
2,129,773
1,571,933
1,406,540
1,391,657
1,345,000
1,328,439
1,254,824
1,222,392
1,202,620
1,058,402
1,049,604
1,000,000
8.07
6.33
3.39
2.32
2.21
1.62
1.32
1.15
0.85
0.76
0.75
0.73
0.72
0.68
0.66
0.65
0.57
0.57
0.54
82,701,875
102,373,778
44.69
55.31
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MaxiTRANS Industries Limited Annual Report 2017 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
share Registry
Computershare Investor Services
Yarra Falls, 452 Johnston Street
Abbotsford VIC 3067
solicitors
Minter Ellison
Level 23, Rialto Towers
525 Collins Street
Melbourne VIC 3000
Auditor
KPMG
Tower 2
Collins Square
727 Collins St
Melbourne VIC 3000
Bankers
Commonwealth Bank of Australia
HSBC Bank Australia Limited
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.
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