ANNUAL
REPORT
2017
MITCHELL SERVICES LTD
ACN 149 206 333
ANNUAL REPORT
30 JUNE 2017
CONTENTS
Chairman’s Report
Chief Executive Officer’s Report
Directors’ Report
Corporate Governance Statement
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Australian Stock Exchange Information
Corporate Directory
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7
CHAIRMAN’S REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Nathan Andrew Mitchell
Executive Chairman
Dear Shareholders
Each year as I begin to write the annual Chairman’s Report, I
am amazed that another financial year has passed so quickly.
This year is no different. What is different compared to previous
years, is the state of the market in which we find ourselves
operating. There has been a material improvement in general
market conditions in recent times. These improved market
conditions have given rise to an increased level of optimism
across the resources sector and we are seeing demand for our
services increase accordingly.
‘Improved market conditions have given rise
to an increased level of optimism across the
resources sector’
The business recorded a positive EBITDA for the year ending
30 June 2017 at an average utilisation level of approximately
35%. This demonstrates that Mitchell Services is well positioned
to take advantage of improved market conditions in the
resource sector and that there is significant leverage within the
business that can be capitalised on as utilisation, productivity,
pricing and contract terms continue to improve.
The growth within the organisation over the past financial year
has been significant, particularly during the final quarter. In
April, the Company announced a material underground drilling
contract award with BHP Billiton at its Olympic Dam mine in
South Australia. In May, the Company announced a three-year
contract with Glencore Coal Assets Australia (GCAA) across
several of their Queensland coal operations. In June, the
Company announced a two-year contract with Glencore at its
Oaky Creek Coal mine in Central Queensland for the provision
of highly technical large diameter drilling and also announced
its material expansion into the New South Wales Hunter Valley
region with the award of multiple contracts and establishment of
an operating support facility in Muswellbrook from which it will
service contracts in the region.
These significant contract awards continue to demonstrate the
Company’s ability to secure and service long term, multi rig
contracts with Tier 1 clients at large, long life mines. These
awards have increased overall utilisation with approximately 40
rigs (or 63%) expected to be operational during Q1 of FY18.
‘The growth within the organisation has been
significant’
It has always been Mitchell Services’ vision to become Australia’s leading
provider of drilling services across multiple drilling types, commodities and
geographies and it is pleasing to note that these key contract awards span
across a range of different drilling types, commodities and geographies and
go a long way to forming the foundations of this vision.
It is also extremely pleasing to note that despite a marked increase in
operating rig count and the number of new employees that have joined our
business, our continually improving safety and risk management systems
and importantly our culture have resulted in both the frequency and severity
of injuries reducing across the business.
In closing I would like to thank all shareholders for your continued patience
and support. I would also like to thank all employees for their huge efforts
during the past year – a year that has seen truly remarkable growth in the
organisation. On behalf of the Board, thank you.
Nathan Andrew Mitchell
Executive Chairman
SIGNIFICANT
LEVERAGE
AS UTILISATION,
PRODUCTIVITY,
PRICING AND
CONTRACT
TERMS
BEGIN TO
IMPROVE
3
4
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017 CHIEF EXECUTIVE OFFICER’S REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Andrew Michael Elf
Chief Executive Officer
There was a marked increase in drilling activities during the
financial year ended 30 June 2017 as the resources sector
continued to improve. The general strengthening of the sector
amid improved commodity prices and general market conditions
was the catalyst for increased drilling programs across most of
the Group’s major Tier 1 clients.
in 2016. This increase was almost exclusively attributable
to Tier 1 clients that operated at or near existing mines as
opposed to junior explorers, with 93% of the Group’s 2017
revenue attributed to Tier 1 clients as opposed to 88% in
2016. Revenues from underground drilling was the a primary
contributor to the increase in Tier 1 revenue.
Despite this significant increase in activity levels our key safety
statistics continue to improve with the Total Recordable Injury
Frequency Rate (TRIFR) decreasing to less than 15 as at
30 June 2017. I’m proud of our safety culture and our team’s
achievement in this area and thank everyone for their efforts in
this regard.
Revenues from underground drilling accounted for 34% of
total revenue as opposed to 23% during the previous year. As
underground drilling is generally performed all year around and
not subject to adverse weather conditions, it provides a natural
hedge to the businesses’ seasonal reduction in revenue that
usually occurs during the traditional wet season in Queensland.
The Group’s average monthly operating rig count for the
year ended 30 June 2017 was 21.67 compared to 17.75 in
2016, whilst the number of shifts increased by 28% over the
same period.
This increase in activity levels has driven a 22% increase in
revenues, with the Group recording $40 million in revenue
for the year ended 30 June 2017 compared to $33 million
The Board and management remain mindful of the importance
of revenue diversity which includes diversity in commodity
mix, drilling type and geography. The Group’s revenue mix by
commodity remains well balanced with 51% derived from coal
based clients and 49% derived from minerals based clients.
Diversity levels with respect to drilling types continues to
increase with 65% of revenue derived from surface drilling and
34% from underground.
The Group has recently made significant progress in regards to its
longer-term goal of geographical diversity with the following representing
important strategic steps:
•
•
•
In April 2017 the Group announced a material contract award in South
Australia with major miner BHP at its Olympic Dam operation.
In June 2017 the Group announced expansion into NSW with
multiple contract awards and the establishment of an operating yard
in Muswellbrook.
The Group is currently in the process of establishing operating yards
in Port Headland and Kalgoorlie with a view to establish a physical
presence in Western Australia.
The Group generated EBITDA of $2.2 million for the year ended 30 June
2017 compared to $0.5million in 2016. EBITDA during the second half of
the 2017 financial year was impacted by significant contract ramp up costs
and interstate transportation and mobilisation costs associated with the
recently awarded major contracts in South Australia and New South Wales.
30 June 2017 EBITDA has increased by $1.7 million compared to 2016
EBITDA of $0.5million. Despite the dilution to EBITDA associated with
ramp up costs, EBITDA as a percentage of revenue has increased from
1.6% in the previous financial year to 5.6% at 30 June 2017.
This increase in EBITDA has resulted in a material improvement in
operating cash flows. Cash flows from operating activities were $4.3
million for the year ended 30 June 2017 compared to negative $0.1 million
in 2016.
In FY18 our goal is to further build on this strong foundation by expanding
geographically and taking advantage of our strong position in the market
underpinned by long term Tier 1 contracts whilst still servicing junior
exploration companies.
I would like to thank the Board for their on-going support and guidance, my
senior executive and all of our teams that have gone above and beyond in
another very challenging year in the mining services industry.
I look forward to a safe, exiting and extremely busy year ahead.
Andrew Michael Elf
Chief Executive Officer
INCREASE
IN ACTIVITY
LEVELS HAVE
DRIVEN A 22%
INCREASE
IN REVENUE.
MATERIAL
IMPROVEMENT
IN OPERATING
CASH FLOWS.
5
6
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017 CURRENT BUSINESS SUMMARY
VISION
TO BE AUSTRALIA’S LEADING PROVIDER OF
DRILLING SERVICES TO THE GLOBAL EXPLORATION,
MINING AND ENERGY INDUSTRIES
REVENUE FOR
2016/17
FULL YEAR
$40.3M
TOTAL RECORDABLE
INJURY FREQUENCY RATE
LESS THAN 15 AT 30 JUNE 2017
MAJOR
CONTRACT
AWARDS IN 2017
WILL INCREASE
GEOGRAPHICAL
DIVERSITY
200+
EXPERIENCED
EMPLOYEES
INCREASE IN TIER 1 REVENUE
FROM $28.9M IN 2016 TO
$37.3M IN 2017
$2.2M EBITDA
IN 2017 IS
4.3 TIMES
2016 EBITDA
7
8
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017 At the date of this report, Mr Miller has relevant interests in
23,905,045 shares.
experience in International Mining Services, Governance and
Strategic Business Growth.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
The Directors of Mitchell Services Limited submit herewith the
financial report of Mitchell Services Limited (Company) and its
subsidiaries (Group) for the year ended 30 June 2017. In order
to comply with the provisions of the Corporations Act 2001, the
Directors’ report as follows:
DIRECTORS
The names and particulars of the Directors of the Company during
or since the end of the financial year are:
Nathan Andrew Mitchell (Executive Chairman)
Mr Mitchell was appointed to the Board on 29 November 2013 and
appointed as Executive Chairman on 19 March 2014.
Mr Mitchell has been involved in the drilling industry for virtually his
entire life. With a career spanning almost 30 years, he has a proven
track record as an industry leader in technical development and
business growth.
Mr Mitchell is currently Executive Chairman of Mitchell Group
including Energy and Equipment. Previously, as CEO of Mitchell
Drilling Contractors, Mr Mitchell led the Company through a period
of rapid local growth and directed an international expansion into
India, China, Indonesia, the United States and southern Africa.
Other directorships include Mitchell Drilling International Pty Ltd and
Sub 161 Pty Ltd. Mr Mitchell also previously served on the board of
Tlou Energy Limited (ASX:TOU) from June 2009 to February 2016.
At the date of this report, Mr Mitchell has relevant interests in
314,763,177 shares.
Peter Richard Miller (Non-Executive Director)
Mr Miller was appointed as Director on 8 February 2011.
Mr Miller has been involved in all aspects of the drilling industry for
the past 29 years and founded Drill Torque in 1992. His experience
encompasses working with all types of drilling rigs, building rigs and
managing drilling companies. Having worked in most exploration
areas in Australia he is intimately familiar with drilling conditions,
equipment requirements and pricing structures to maximise fleet
productivity. Mr Miller is widely known and well regarded in
the industry.
Robert Barry Douglas BCom, LLB (Non-Executive Director)
Mr Douglas was appointed as Non-Executive Director on 29
November 2013. Mr Douglas has over 18 years of experience
in finance and investment banking and is currently an Executive
Director of Morgans Financial.
Mr Douglas has experience in all aspects of corporate advisory
and equity capital raising for listed public companies and
companies seeking to list, including offer structure, prospectus
preparation, due diligence, accounts and forecasting, risk
management, sales and marketing, logistics and legal
requirements. During his time Mr Douglas has worked
extensively with energy and resource companies. Mr Douglas
has served on both the Audit and Risk Committee and the
Remuneration and Nomination Committee since 20 March 2014
and was Chairman of both Committees between 21 November
2014 and 20 October 2015.
At the date of this report, Mr Douglas has relevant interests in
1,964,921 shares.
Neal Macrossan O’Connor LLB, GAICD (Non-Executive
Director)
Mr O’Connor was appointed as Non-Executive Director on 21
October 2015 and is also Chairman of the Audit and Risk and
Remuneration and Nomination Committees.
Mr O’Connor was formerly General Counsel and Company
Secretary and an Executive Committee member of the global
Xstrata Copper. He has extensive experience in the resource
industry and brings an added focus on Corporate Governance
and Risk Management to the Board.
At the date of this report, Mr O’Connor has relevant interests in
1,039,000 shares.
Grant Eric Moyle
Mr Moyle was appointed as Alternate Director for Mr Nathan
Mitchell on 30 May 2014.
Mr Moyle is the Chief Executive Officer of the Mitchell Group in
Brisbane. He brings to the Group his management and board
At the date of this report, Mr Moyle has relevant interests in
2,369,143 shares.
CHIEF EXECUTIVE OFFICER
Andrew Michael Elf BCom, FCPA, MBA, GAICD
Andrew was appointed as Chief Executive Officer on 20
March 2014.
Andrew has over 15 years finance, commercial and
operational experience working in various senior roles both
in Australia and overseas and was a Financial Director
in Indonesia for a top 100 ASX listed company before
transitioning into the drilling industry in early 2004. Andrew
held several senior roles with Boart Longyear before joining
Mitchell Group in March 2010, where he spearheaded the
growth of the African business to an annual turnover in excess
of $30 million.
Andrew has extensive experience in managing drilling
companies in various regions around the world which have
worked for global Tier 1 mining and energy houses.
CHIEF FINANCIAL OFFICER & COMPANY SECRETARY
Gregory Michael Switala BCom (Hons), CA
Gregory Michael Switala was appointed to the position
of Chief Financial Officer and Company Secretary on 1
December 2014.
Greg joined Mitchell Services in 2014 and has lead the finance
team through a period of substantial growth. Greg has over 10
years’ experience in audit and commercial finance roles.
PRINCIPAL ACTIVITIES
The Group specialises in various segments of the drilling
market and has a history of innovation in the drilling industry.
The Group’s offerings include coal exploration, mineral
exploration, mine services, large diameter, coal seam gas,
directional drilling services, coal mine gas drainage and
wireline services.
There were no significant changes in the Group’s nature of
activities during the year.
REVIEW OF OPERATIONS
Revenue grew by 22% to $40.3million for the year ended 30
June 2017 compared to $32.9million in 2016.This increase
was almost exclusively attributable to Tier 1 clients that
operated at or near existing mines as opposed to junior
explorers. Revenue from underground drilling was the main
contributor to this increase in Tier 1 revenue.
The Group generated EBITDA of $2.2 million for the year
ended 30 June 2017 compared to $0.5million in 2016.
This increase in EBITDA has resulted in a material
improvement in operating cash flows. Cash flows from
operating activities were $4.3 million for the year ended 30
June 2017 compared to negative $0.1 million in 2016.
The Group’s operating result after income tax for the year
ended 30 June 2017 was a loss of $4.4million (2016: $6.0
million loss).
Further detailed comments on operations and financial
performance are included in the Chairman’s Report, Chief
Executive Officer’s Report and Financial Statements included
in this Annual Report.
CHANGES IN STATE OF AFFAIRS
The Group provides exploration and mine site drilling services
to the exploration, mining, and energy industries, primarily in
Australia and is currently headquartered in Seventeen Mile
Rocks, Queensland.
There has not been any matter or circumstance occurring
subsequent to the end of the financial year that has
significantly affected, or may significantly affect, the operations
of the Group, the results of those operations, or the state of
affairs of the Group in future financial years.
9
10
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017
SUBSEQUENT EVENTS
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or
agreed to indemnify an officer or auditor of the Company against a liability incurred as such an Officer or auditor.
There has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly affected,
or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future
financial years.
DIRECTORS’ MEETINGS
LIKELY DEVELOPMENTS
The Group will continue to pursue its principal activities during the next financial year.
ENVIRONMENTAL REGULATIONS
The Group’s operations are not subject to any particular and significant environmental regulation under a law of the Commonwealth
or of a State or Territory. However, the Group does provide services to entities that are licensed or otherwise subject to conditions
for the purposes of environmental legislation or regulation. In these instances, the Group undertakes its compliance duties in
accordance with the contractor regime implemented by the licensed or regulated entity.
DIVIDENDS
There were no dividends paid in respect of the year ended 30 June 2017.
SHARES UNDER OPTION
Details of unissued shares or interests under option as at the date of this report are:
Grant Date
23 May 2016
4 August 2017
Expiry Date
7 years after vesting
7 years after vesting
The following table sets out the number of Directors’ meetings (including meetings of Committees of Directors) held during the
financial year and the number of meetings attended by each Director (while they were a Director or Committee Member). During the
financial year, 12 Board meetings, 2 Remuneration and Nomination Committee meetings and 4 Audit and Risk Committee meetings
were held.
Directors
Board of Directors
Remuneration and
Nomination Committee
Audit and Risk Committee
Entitled to Attend
Attended
Entitled to Attend
Attended
Entitled to Attend
Attended
N.A. Mitchell
P.R Miller
R.B Douglas
N.M O'Connor
G.E. Moyle
12
12
12
12
-
NON-AUDIT SERVICES
12
11
12
11
-
-
-
2
2
-
-
-
2
2
-
-
-
4
4
-
-
-
4
4
-
There were no amounts paid or payable to the auditor for non-audit services provided during the year by the auditor. Refer to note 23
to the Financial Statements.
Exercise Price
Number under Option
$0.0395
$0.0539
16,362,395
11,353,565
27,715,960
AUDITOR’S INDEPENDENCE DECLARATION
The Auditor’s Independence Declaration is included on page 24 of the Annual Report.
REMUNERATION REPORT
Options per the above table were granted under the Company’s Executive Share and Option Plan (ESOP).
Further details with regards to the ESOP are provided as part of the Remuneration Report on pages 12 to 17.
During the year ended 30 June 2017, there were no shares in Mitchell Services Limited issued on the exercise of options granted.
INDEMNIFICATION OF OFFICERS AND AUDITORS
During the financial year, the Company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay
insurance premiums as follows:
The Company has paid premiums to insure each of the Directors and Company Officers against liabilities for costs and expenses
incurred by them in defending legal proceedings arising from their conduct while acting in the capacity of Director or Officer of the
Company other than conduct involving a wilful breach of duty in relation to the Company. The total premiums paid in this regard
amounted to $46,158.
11
This Remuneration Report, which forms part of the Directors’ Report, sets out information about the remuneration of the Group’s
Key Management Personnel (KMP) for the financial year ended 30 June 2017. The term Key Management Personnel refers to those
persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly,
including any Director (whether executive or otherwise) of the Group.
Key Management Personnel
The Directors and other KMP of the Group during or since the end of the financial year were:
Nathan Andrew Mitchell (Executive Chairman)
Peter Richard Miller (Non-Executive Director)
Robert Barry Douglas (Non-Executive Director)
Neal Macrossan O’Connor (Non-Executive Director)
Andrew Michael Elf (Chief Executive Officer)
Gregory Michael Switala (Chief Financial Officer and Company Secretary)
12
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017DIRECTORS’ REPORT CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017 Remuneration Policy
The Remuneration Policy of the Group has been designed to align KMP objectives with shareholder and business objectives by
providing a fixed remuneration component and offering specific long-term incentives to key employees based on key performance
areas affecting the Group’s financial results. The Board believes the Remuneration Policy to be appropriate and effective in its ability
to attract and retain high quality KMP to run and manage the Group.
The Board’s policy for determining the nature and amount of remuneration for KMP of the Group is as follows:
•
•
•
•
•
The remuneration policy is to be developed by the Remuneration and Nomination Committee and approved by the Board.
Professional advice may be sought from independent external consultants if required;
All KMP receive a base salary (which is based on factors such as length of service and experience), superannuation, and may
receive fringe benefits and performance incentives;
Any performance incentives will generally only be paid once predetermined key performance indicators have been met;
The performance criteria relating to incentives are aligned with the interests of the Group and therefore shareholders;
The Remuneration and Nomination Committee reviews KMP packages annually by reference to the Group’s performance,
executive performance and comparable information from industry sectors.
The performance of executive KMP is measured against criteria agreed annually based predominantly on the growth of the Group’s
profits and shareholder’s value and take into account critical safety and operational metrics.
Any bonuses and incentives awarded must be linked to predetermined performance criteria. The Board may, however, exercise
its discretion in relation to approving incentives and bonuses, and can recommend changes to the Remuneration and Nomination
Committee’s recommendations. Any change must be justified by reference to measurable performance criteria. The policy is
designed to attract the highest calibre of Executives and Senior Managers and reward them for performance results leading to long-
term growth in shareholder wealth.
KMP receive a superannuation guarantee contribution required by the government, which is currently 9.5% of the individual’s
ordinary earnings, and do not receive any other retirement benefits. Some individuals have chosen to sacrifice part of their salary to
increase payments towards superannuation.
Upon retirement, KMP are paid employee benefit entitlements accrued to the date of retirement. KMP will receive redundancy
benefits if applicable.
The Board’s policy is to remunerate Non-Executive Directors at market rates for time, commitment and responsibilities. The
Remuneration and Nomination Committee determines payments to the Non-Executive Directors and reviews their remuneration
annually, based on market practice, duties and accountability. Independent external advice is sought when required.
Relationship between the Remuneration Policy and Group performance
The Remuneration Policy has been tailored to align the pursuit of growth and success of the Group between shareholders, Directors
and Executives. The tables below set out summary information about the Group’s earnings and movements in share price for the five
years to 30 June 2017.
Revenue
EBITDA
Loss after tax
Share price
30 Jun 17
$’000
30 Jun 16
$’000
30 Jun 15
$’000
30 Jun 14
$’000
30 Jun 13
$’000
40,303
2,238
4,407
32,970
522
6,049
25,175
(4,322)
16,999
15,015
(3,071)
4,607
25,904
2,107
1,912
30 Jun 17
3.3c
30 Jun 16
1.7c
30 Jun 15
2.2c
30 Jun 14
2.1c
30 Jun 13
1.0c
Employment details of members of Key Management Personnel
The employment terms and conditions of KMP are formalised in contracts of employment. A contracted person deemed employed on
a permanent basis may terminate their employment by providing the relevant notice period as outlined below.
Andrew Michael Elf
Gregory Michael Switala
Notice Period
3 months
4 weeks
Long-term employee benefits
Mitchell Services Limited operates an Executive Share and Option Plan (ESOP) for executives and senior employees of the Group.
In accordance with the provisions of the plan, as approved by shareholders at a previous annual general meeting, the Board may
designate a Director or employee of the Company as an eligible participant of the ESOP (Eligible Participant). The Board may offer
rights, options or shares to an Eligible Participant under the ESOP. A participant is not required to pay for the grant of any rights or
options or for the issue of shares.
The objectives of the ESOP are to:
•
•
•
Attract and retain a high standard of managerial and technical personnel for the benefit of the Group
Establish a method by which Eligible Participants can participate in future growth and profitability of the Group
Provide an incentive and reward for Eligible Participants for their contributions to the Group
Equity instruments issued under the ESOP are subject to satisfaction of certain vesting conditions, being:
(a) EBITDA performance of the Company having regard to respective prior years EBITDA performance, performance against
budgets and general market conditions between the date of the offer and the vesting date
the Company’s share price performance between the date of the offer and the vesting date
the Company’s safety performance across all operations as determined on a financial year annual TRIFR basis, having regard
to respective prior years’ TRIFR performance
the Company’s operational performance, having particular regard to key operational metrics
(b)
(c)
(d)
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MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017DIRECTORS’ REPORT CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017 The proportion of the vesting conditions listed above varies according to each Eligible Participant’s role, with the following table
providing indicative guidelines:
The following shares issued and options offered pursuant to the ESOP during the 2016 financial year to KMP still exist at the date of
this report:
Role
Chief Executive Officer
Corporate Management
Operational Management
(a)
30%
40%
(b)
30%
40%
(c)
30%
20%
50%
(d)
10%
50%
The Board may, at its absolute discretion, vary, add, remove or alter the vesting conditions and indicative proportional allocation
for respective Eligible Participant roles in circumstances in which the Board considers that such a change is appropriate to ensure
that the vesting conditions and proportional allocation of them continue to represent a fair measure of performance. The vesting
conditions are tested two years after the relevant securities are offered to an Eligible Participant.
The following shares and options offered pursuant to the ESOP during the 2017 financial year to KMP still exist at the date of this
report:
KMP
Award
Offer date
Number of
Instruments
Fair value per
instrument at
offer date
Vested in
FY2017
Exercisable
at 30 June
2017
Date award may
vest
Andrew Michael Elf
Options
29 June 2017
3,824,355
Gregory Michael
Switala
Shares
29 June 2017
1,148,805
Options
29 June 2017
2,688,992
Shares
29 June 2017
807,754
0.0273
0.0330
0.0273
0.0330
-
-
-
-
-
-
-
-
29 June 2019
29 June 2019
29 June 2019
29 June 2019
Pursuant to offers made under the ESOP, options were granted and shares were issued under the following major terms.
In the case of the options:
(a) Subject to the satisfaction of vesting conditions, each option entitles the holder to purchase one fully paid ordinary share.
(b) The options will expire on a date that is the earlier of:
the date upon which it is deemed that the vesting conditions have not been met
the date upon which the employee ceases employment
(i)
(ii)
(iii) seven years after vesting date.
(c) The exercise price is $0.0539 for each option.
(d) Options granted do not carry dividend or voting rights.
In the case of the shares:
(a) Shares issued under the ESOP are held by a designated Corporate Trustee subject to the satisfaction of vesting conditions.
(b) Upon satisfaction of vesting conditions, shares will be issued for nil consideration.
KMP
Award
Offer date
Number of
Instruments
Fair value per
instrument at
offer date
Vested in
FY2017
Exercisable
at 30 June
2017
Date award may
vest
Andrew Michael Elf
Options
23 May 2016
6,643,133
Gregory Michael
Switala
Shares
23 May 2016
1,995,531
Options
23 May 2016
4,581,471
Shares
23 May 2016
1,376,228
0.0074
0.0140
0.0074
0.0140
-
-
-
-
-
-
-
-
01 May 2018
01 May 2018
01 May 2018
01 May 2018
Pursuant to offers made under the ESOP, options were granted and shares were issued under the following major terms.
In the case of the options:
(a) Subject to the satisfaction of vesting conditions, each option entitles the holder to purchase one fully paid ordinary share.
(b) The options will expire on a date that is the earlier of:
the date upon which it is deemed that the vesting conditions have not been met
the date upon which the employee ceases employment
(i)
(ii)
(iii) seven years after vesting date.
(c) The exercise price is $0.0395 for each option.
(d) Options granted do not carry dividend or voting rights.
In the case of the shares:
(a) Shares issued under the ESOP are held by a designated Corporate Trustee subject to the satisfaction of vesting conditions.
(b) Upon satisfaction of vesting conditions, shares will be issued for nil consideration.
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MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017DIRECTORS’ REPORT CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017
Remuneration of Key Management Personnel
The compensation of each member of the KMP of the Group is set out below:
Fixed remuneration paid
Nathan Andrew Mitchell
Executive Chairman
Peter Richard Miller
Non-Executive Director
Robert Barry Douglas
Non-Executive Director
Neal Macrossan O’Connor
Non-Executive Director
Andrew Michael Elf
Chief Executive Officer
Gregory Michael Switala
Chief Financial Officer and Company Secretary
Short-term
employee
benefits
Post-
employment
benefits
Termination
benefits
Salary
Superannuation
Non-
monetary
benefits
Motor
Vehicles1
Long-term employee
benefits2
Shares
Options
$
$
$
$
$
$
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
80,000
80,000
36,000
36,000
36,000
36,000
52,000
36,344
319,998
260,000
179,998
180,000
7,599
7,599
3,419
3,419
3,419
3,419
2,039
1,806
30,399
24,699
17,099
17,099
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,861
14,902
4,189
4,200
25,339
70,864
1,414
2,353
17,475
48,871
975
1,623
1. The figures in this column relate to use of a Company motor vehicle to carry out duties as well as reasonable personal use. The amount included in the above remuneration table is the
value attributable to such personal use calculated in accordance with the statutory requirements of the Fringe Benefits Tax Act 1986.
2. The figures in these columns for share-based payments are calculated in accordance with the Accounting Standards and are the amortised AASB fair values of equity and equity-related
instruments that have been granted to KMP. Refer to note 17 in the Notes to the Financial Statements.
This Directors’ Report, incorporating the Remuneration Report, is signed in accordance with a resolution of Directors made pursuant
to section 298(2) of the Corporations Act 2001.
On behalf of the Directors
Nathan Andrew Mitchell
Executive Chairman
Dated at Brisbane this 30th day of August 2017
17
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2017
The Board considers there to be a clear and positive
relationship between the creation and delivery of long-term
shareholder value and high-quality corporate governance.
Accordingly, in pursuing its objective, the Board has committed
to corporate governance arrangements that strive to foster
the values of integrity, respect, trust and openness amongst
and between the Board members, management, employees,
customers and suppliers.
Unless stated otherwise in this document, the Board’s corporate
governance arrangements comply with the recommendations of
the ASX Corporate Governance Council for the entire financial
year ended 30 June 2017.
1. Board of Directors
The full Board currently holds not less than 10 scheduled
meetings each year, plus strategy meetings and any
extraordinary meetings at such other times as may be
necessary to address any specific significant matters that
may arise.
The agenda for meetings is prepared by the Company
Secretary in conjunction with the Chairman. Standing items
include the Chief Executive Officer report, People and Risk
report, General Manager’s reports, Financial reports and
Commercial and Business Development reports. The Board
package is provided to all concerned in advance of meetings.
Executives are regularly involved in Board discussions and
Directors have other opportunities, including visits to business
operations, for contact with a wider group of employees.
1.1. Role of the Board
The Board’s primary role is the protection and enhancement of
long-term shareholder value.
The Company Secretary is accountable directly to the Board,
through the Chairman, on all matters to do with the proper
functioning of the Board.
To fulfil this role, the Board is responsible for the overall
corporate governance of the Group including formulating
its strategic direction, approving and monitoring capital
expenditure, setting remuneration, appointing, removing
and creating succession policies for Directors and Senior
Executives, establishing and monitoring the achievement
of management’s goals and ensuring the integrity of
risk management, internal control, legal compliance and
management information systems. It is also responsible for
approving and monitoring financial and other reporting.
The Board has delegated responsibility for operation and
administration of the Group to the Chief Executive Officer and
Executive Management. Responsibilities are delineated by
formal authority delegations.
1.2. Board processes
To assist in the execution of its responsibilities, the Board has
established 2 board committees which include a Remuneration
and Nomination Committee and an Audit and Risk Committee.
Both committees have written charters which are reviewed on
a regular basis. The Board has also established a framework
for the management of the Group including a system of
internal control, a business risk management process and the
establishment of appropriate ethical standards.
1.3. Director and executive education
The Group has an informal induction process to educate new
Directors about the nature of the business, current issues, the
corporate strategy, the culture and values of the Group, and the
expectations of the Group concerning performance of Directors.
In addition, Directors are also educated regarding meeting
arrangements and Director interaction with each other, senior
executives and other stakeholders. Directors also have the
opportunity to visit Group facilities and meet with management
to gain a better understanding of business operations. Directors
are given access to continuing education opportunities to
update and enhance their skills and knowledge.
The Group also has an informal process to educate new senior
executives upon taking such positions. This involves reviewing
the Group’s structure, strategy, operations, financial position
and risk management policies.
Independent professional advice and access to
1.4.
Group information
Each Director has the right of access to all relevant Group
information and to the Group’s Executives and, subject to
prior consultation with the Chairman, may seek independent
professional advice from a suitably qualified adviser at the
Group’s expense. The Directors must consult with an adviser
suitably qualified in the relevant field and obtain the Chairman’s
18
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017DIRECTORS’ REPORT CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017
approval of the fee payable for the advice before proceeding
with the consultation. A copy of the advice received by the
Directors is made available to all other members of the Board.
1.5. Composition of the Board
The names of the Directors of the Company in office at the
date of this report together with their respective mix of skills,
experience and length of service are set out in the Directors’
Report on page 9 and 10 of this report.
The Group believes it is in its best interests to maintain
a small but efficient Board. The Board consists of 3 Non-
executive Directors (being Peter Miller, Robert Douglas and
Neal O’Connor) and Executive Chairman, Nathan Mitchell. As
at the date of this report two of the four board members are
considered independent, being Robert Douglas and
Neal O’Connor.
The Executive Chairman is Mr Nathan Mitchell. Under
the guidelines, Mr Mitchell does not meet the criteria for
independence as he is a Director of a substantial shareholder.
Peter Richard Miller is also a substantial shareholder and does
not meet the criteria for independence. Under the guidelines,
the majority of the Board should be independent as should the
Chair. All Directors are committed to bringing their independent
views and judgement to the Board and, in accordance with the
Corporations Act 2001, must inform the Board if they have any
interest that could conflict with those of the Group. Where the
Board considers that a conflict exists, the Director concerned
will not be present at the meeting while the item is considered.
For these reasons, the Board believes that each of these
Directors may be considered to be acting independently in the
execution of their duties.
The Board considers the mix of skills and the diversity of
Board members when assessing the composition of the Board.
The Board assesses existing and potential Directors’ skills to
ensure they have appropriate industry expertise in the Group’s
business operations. The Board undertakes appropriate checks
before appointing a person as a Director and provides security
holders with all material information relevant to a decision on
whether or not to elect a Director. The Board’s policy is to seek
a diverse range of Directors who have a range of skills, ages,
genders and ethnicity that complements the environment in
which the Group operates and having due regard to the current
19
size of the Group (refer section 8 below on skills and diversity).
2. Remuneration and Nomination Committee
Under the principles and recommendations of the ASX
Corporate Governance Council, the Remuneration and
Nomination Committee should consist of at least 3 members,
each of whom should be Non-Executive Directors. Given the
relatively small size of the Board, the Directors are of the
opinion that 2 members are sufficient to properly discharge
the duties of the Committee. The Chairman of the Committee
should be an independent Director. The Committee has 2
distinct roles as follows:
•
•
Remuneration related matters; and
Nomination related matters.
Executive Directors and Senior Executives are remunerated
by way of salary, non-monetary benefits and statutory
superannuation in accordance with written agreements that set
out the terms of their appointments. Non-Executive Directors
are remunerated by way of salary and statutory superannuation.
There are no schemes for retirement benefits for Directors
other than statutory superannuation arrangements. Further
disclosure on the policies and practices regarding remuneration
is contained in the Remuneration Report of this Annual Report
Nomination related matters
The Committee assists the Board in ensuring that the Board
comprises Directors with a range and mix of attributes
appropriate for achieving its objective. The Committee does
this by:
• Overseeing the appointment and induction process for
The members of the Remuneration and Nomination Committee
during the year were:
•
Directors;
Reviewing the skills and expertise of Directors and
identifying potential deficiencies;
Identifying suitable candidates for the Board;
•
• Overseeing Board and Directors reviews on an annual
• Mr Neal Macrossan O’Connor – Chairman and Non-
Executive Director
• Mr Robert Barry Douglas – Non-Executive Director
The external auditors and the Chief Executive Officer are invited
to Audit and Risk Committee meetings at the discretion of the
Committee. The Committee met 4 times during the year and
Committee members’ attendance record is disclosed in the
table of Directors’ meetings on page 12 of this report.
The Chief Executive Officer and the Chief Financial Officer
declared in writing to the Board that the financial records of the
Group for the financial year have been properly maintained, the
Group’s financial reports for the financial year ended 30 June
2017 comply with accounting standards and present a true
and fair view of the Group’s financial condition and operational
results and that the opinion has been formed on the basis of a
sound system of risk management and internal control which is
operating effectively. This statement is required annually.
4. Performance evaluation
• Mr Neal Macrossan O’Connor – Chairman and Non-
Executive Director
• Mr Robert Barry Douglas – Non-Executive Director
All Directors are invited to Remuneration and Nomination
Committee meetings at the discretion of the Committee. The
Committee met twice during the year and Committee members’
attendance record is disclosed in the table of Directors’
meetings on page 12 of this report.
Remuneration related matters
The Committee assists the Board in the general application
of the remuneration policy. In doing so, the Committee is
responsible for:
•
•
•
Developing remuneration policies for Directors and Key
Management Personnel;
Reviewing Key Management Personnel packages annually
and, based on these reviews, making recommendations
to the Board on remuneration levels for Key Management
Personnel; and
Assisting the Board in reviewing Key Management
Personnel performance annually.
•
basis; and
Establishing succession planning arrangements for the
Executive team.
The Remuneration and Nomination Committee is required
to annually review the effectiveness of the functioning of
the Board, its committees, individual Directors and Senior
Executives through internal peer review.
3. Audit and Risk Committee
The Audit and Risk Committee has a documented
charter, approved by the Board. Under the principles and
recommendations of the ASX Corporate Governance Council,
the Committee should consist of at least 3 members, each of
whom should be Non-Executive Directors. Given the relatively
small size of the Board, the Directors are of the opinion that
2 members are sufficient to properly discharge the duties
of the Committee for the present time. The Chairman of the
Committee should be an independent Director and should not
be Chairman of the Board. The purpose of the Committee is to
assist the Board in the effective discharge of its responsibilities
in relation to the external audit function, accounting policies,
financial reporting, funding, financial risk management,
business risk monitoring and insurance.
The members of the Audit and Risk Committee during the
year were:
5. Risk management
The Board considers identification and management of key
risks associated with the business as vital to creating and
delivering long-term shareholder value.
The main risks that could negatively impact on the performance
of the Group’s business activities include:
•
•
•
•
Safety of our people and our contractors;
Seasonal conditions and business interruptions;
Dependence on key personnel and labour shortages;
Customer demand and outlook for the resources industry.
An assessment of the business’s risk profile is undertaken and
reviewed by the Board annually, covering all aspects of the
business from the operational level through to strategic level
risks. Executive management has been delegated the task of
20
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017CORPORATE GOVERNANCE STATEMENT CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017 implementing internal controls to identify and manage risks for
which the Board provides oversight. The effectiveness of these
controls is monitored and reviewed regularly by management.
Executive management has reported on an ongoing basis (via
monthly board meetings) to board as to whether the Group’s
business risks have been effectively managed.
In addition to their regular reporting on business risks, risk
management and internal control systems, the Chief Executive
Officer and Chief Financial Officer have provided assurance, in
writing to the Board:
•
•
That the financial reporting risk management and
associated compliance and controls have been assessed
and found to be operating effectively; and
The Group’s financial reports are founded on a sound
system of risk management and internal compliance
and control.
All Directors, managers and employees are expected to act
with the utmost integrity and objectivity, striving at all times to
enhance the reputation and performance of the Group. Every
employee has a nominated supervisor to whom they may refer
any issues arising from their employment. The Board reviews
its Code of Conduct and Ethics regularly and processes are in
place to promote and communicate these policies.
Conflict of interest
Directors must keep the Board advised, on an on-going basis,
of any interest that could potentially conflict with those of the
Group. The Board has developed procedures to assist Directors
to disclose potential conflicts of interest.
Where the Board believes that a conflict exists the Director
concerned will not be present at the meeting while the item is
considered. Details of Director related entity transactions with
the Group are set out in note 21 to the financial statements.
The Board is responsible for the overall internal control
framework, but recognises that no cost-effective internal control
system will preclude all errors and irregularities. In the absence
of an internal audit function, comprehensive practices have
been established to ensure:
Code of conduct
The Group has advised each Director, manager and employee
that they must comply with the Group’s Code of Conduct and
Ethics. The code requires all Directors, management and
employees to at all times with all relevant stakeholders:
•
•
•
•
•
•
•
Capital expenditure and revenue commitments above a
certain size obtain prior Board approval;
Financial exposures are controlled;
Health and safety standards and management systems
are monitored and reviewed to achieve high standards of
performance and compliance with regulations;
Business transactions are properly authorised and
executed;
The quality and integrity of personnel;
Financial reporting accuracy and compliance with the
financial reporting regulatory framework. Monthly actual
results are reported against budgets approved by the
Directors and revised forecasts for the year are prepared
regularly; and
Regulation compliance. The Group’s health, safety,
environment and sustainability obligations are monitored
by all members of the Board.
6. Ethical standards
21
•
•
•
•
•
•
Act honestly and in good faith;
Exercise due care and diligence in fulfilling the functions of
office;
Avoid conflicts and make full disclosure of any possible
conflict of interest;
Comply with both the letter and spirit of the law;
Encourage the reporting and investigation of unlawful and
unethical behaviour; and
Comply with the share trading policy.
Share trading policy
The Share Trading Policy restricts Directors and employees
from acting on price sensitive information (which is not available
to the public) until it has been released to the market and
adequate time has been given for this to be reflected in the
company’s share price.
Directors and other Key Management Personnel are also
prohibited from trading during closed periods. Closed periods
are periods other than 6 weeks commencing from:
•
•
•
The release of the Group’s annual result to the ASX;
The release of the Group’s half-yearly result to the
ASX; and
The date of the Annual General Meeting.
The Board encourages full participation of shareholders at the
Annual General Meeting, to ensure a high level of accountability
and identification with the Group’s strategy and goals. Important
issues are presented to the shareholders as single resolutions.
7. Communication with shareholders
8. Skills and diversity
The Board provides shareholders with information using a
comprehensive Continuous Disclosure Policy and investor
relations program which includes identifying matters that may
have a material effect on the price of the Company’s shares and
notifying them to the ASX.
In summary, the Continuous Disclosure Policy operates as
follows:
•
•
•
•
•
•
The Company Secretary (also the Chief Financial
Officer) and the Chief Executive Officer are responsible
for interpreting the Group’s policy and where necessary
informing the Board. The Company Secretary is
responsible for all communications with the ASX. Such
matters are advised to the ASX after they are discovered
but are referred to the Board in the first instance.
The full Annual Report is provided via the Company’s
website to all shareholders (unless a shareholder has
specifically requested to receive a physical copy or not
to receive the document). It provides relevant information
about the operations of the Group during the year, changes
in the state of affairs and details of future developments.
The half-yearly report contains summarised financial
information and a review of the operations of the Group
during the period. The half-year reviewed financial report
is lodged with the ASX and sent to any shareholder who
requests it.
Proposed major changes in the Group which may impact
on share ownership rights are submitted to a vote of
shareholders.
All announcements made to the market can be accessed
via the company’s website after they have been released
to the ASX.
The external auditor attends the Annual General
Meetings to answer questions concerning the conduct
of the audit, the preparation and content of the auditor’s
report, accounting policies adopted by the Group and the
independence of the auditor in relation to the conduct of
the audit.
Diversity
The Company has an established Equity and Diversity Policy
relating to its Board Members, Senior Executives and across
the whole organisation with an objective to recruit and manage
on the basis of qualification for the position and performance;
regardless of gender, age, nationality, race, religious beliefs,
cultural background or sexuality.
In summary, the Equity and Diversity Policy operates as follows:
The Company has zero tolerance toward discrimination.
To achieve this, we are committed to:
•
•
•
•
•
Ensuring a working environment that is free of all forms of
harassment.
Valuing the diversity among our employees, and all those
with whom we do business.
Conducting business activities such as the hiring,
promotion, and compensation of employees without
regard to race, colour, religion, gender, gender identity or
expression, sexual orientation, national origin, genetics,
disability, or age.
The employment and development of Indigenous
employees in all the countries where we operate.
Complying with all applicable legislative requirements.
To achieve this, we will:
•
•
•
•
Adhere to the Company Code of Conduct and be guided
by the Company’s Values.
Recruit a diverse range of people with a diverse range of
talents to help us achieve our goals.
Employ the best person for the job regardless of race,
colour, religion, gender, gender identity or expression,
sexual orientation, national origin, genetics, disability,
or age.
Select on the principles of merit and fairness in all
employment practices.
22
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017CORPORATE GOVERNANCE STATEMENT CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017 •
•
•
Ensure that all reports of workplace discrimination are treated seriously, promptly and fairly with due regard to the principals of
procedural fairness, natural justice and confidentiality.
Take appropriate action against individuals engaging in discriminatory conduct.
Build relationships and promote opportunities for Indigenous peoples throughout all of our operations, while encouraging
cultural awareness and respect amongst our staff.
• Make confidential counselling and support available to employees to as assist with any workplace issues that may arise.
The proportion of women employees in the whole organisation is detailed below:
Women on the Board
Women in senior management roles1
Women employees in the Group
2017
2016
No.
-
1
11
%
-
14.29
5.37
No.
-
1
7
%
-
14.29
4.76
1. The Company has defined senior management roles as those roles which are responsible for a key business function and that report directly to either the Chief Executive Officer or Chief
Financial Officer.
Skills matrix
The Company aims to maintain a diverse, multi-skilled Board with a range of different skills and expertise. At a minimum, these skills
and expertise include:
•
•
•
•
•
•
•
•
•
Capital management and corporate finance experience
Experience at both executive and non-executive levels
An understanding of the drilling industry and mining services sector
Exceptional leadership skills
Experience in workplace health and safety
An understanding of technological advances in the mining services industry
Financial acumen and strategic capabilities
Environment and sustainability experience
An understanding of risk management
AUDITOR’S INDEPENDENCE DECLARATION UNDER S 307C OF THE CORPORATIONS
ACT 2001 TO THE DIRECTORS OF MITCHELL SERVICES LIMITED
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2017 there have been no
contraventions of:
(i)
the auditor independence requirements as set out in the Corporations Act 2001 in relation to the
audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
Rodger Dunstan
Director
Jessups Accountants & Business Advisors
Level 1, 19 Stanley Street, Townsville QLD 4810
Dated this 25th day of August 2017
23
24
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017CORPORATE GOVERNANCE STATEMENT CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2017
Continuing operations
Revenue
Gain/(loss) on sale of assets
Advertising
Drilling consumables
Employee and contract labour expenses
Fuel and oil
Freight and couriers
Hire of plant and equipment
Insurances
Legal and consultant fees
Rent
Service and repairs
Travel expenses
Other expenses
EBITDA
Depreciation expense
EBIT
Finance expenses
Profit/(loss) before tax
Income tax expense
Profit/(loss) for the period from continuing operations
Discontinued operations
Profit/(loss) for the period from discontinued operations
Profit/(loss) for the period
Other comprehensive income, net of income tax
Other comprehensive income for the period, net of income tax
Total comprehensive income for the period
Profit attributable to:
Owners of the parent
Total comprehensive income attributable to:
Owners of the parent
Earnings per share
From continuing and discontinued operations
Basic (cents per share)
Diluted (cents per share)
From continuing operations
Basic (cents per share)
Diluted (cents per share)
25
Note
2
12
25
25
25
25
2017
$
2016
$
40,302,633
(24,612)
(33,230)
(6,847,191)
(19,800,102)
(964,309)
(697,353)
(1,953,855)
(663,694)
(463,150)
(694,809)
(2,701,575)
(1,762,854)
(1,457,622)
2,238,277
(5,434,817)
(3,196,540)
(1,210,369)
(4,406,909)
-
32,970,247
(31,279)
(31,583)
(5,624,283)
(16,810,104)
(1,056,296)
(603,461)
(1,422,765)
(707,452)
(551,150)
(590,090)
(1,946,706)
(1,801,799)
(1,270,881)
522,398
(5,317,026)
(4,794,628)
(1,254,203)
(6,048,831)
-
(4,406,909)
(6,048,831)
-
-
(4,406,909)
(6,048,831)
-
-
(4,406,909)
(6,048,831)
(4,406,909)
(6,048,831)
(4,406,909)
(6,048,831)
(0.30)
(0.30)
(0.30)
(0.30)
(0.43)
(0.43)
(0.43)
(0.43)
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Other assets
Inventories
Total current assets
Non-current assets
Other financial assets
Property, plant and equipment
Investment property
Other assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Bank overdraft
Trade and other payables
Other financial liabilities
Provisions
Total current liabilities
Non-current liabilities
Other financial liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Share issue costs
Contingent option reserve
Retained earnings
Total equity
Note
3(a)
4
5
6
7
5
11
6
3(b)
8
9
10
9
10
14
15
16
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
2017
$
2016
$
816,511
7,120,015
46,740
823,162
1,293,200
10,099,628
11,652
26,932,379
2,975,000
18,000
29,937,031
40,036,659
535,000
8,035,875
2,326,838
1,241,178
12,138,891
13,071,624
181,175
13,252,799
25,391,690
14,644,969
49,454,378
(2,521,167)
-
(32,288,242)
14,644,969
468,973
6,107,742
981
461,808
1,335,189
8,374,693
281
27,275,611
2,975,000
18,000
30,268,892
38,643,585
600,088
4,795,263
2,154,437
726,271
8,276,059
12,274,422
121,534
12,395,956
20,672,015
17,971,570
48,604,378
(2,514,522)
2,122,402
(30,240,688)
17,971,570
26
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
Note
Issued
Capital
Contingent
Option
Reserve
Retained
Earnings
Attributable
to Owners
of the Parent
Total
$
$
$
$
$
Balance at 1 July 2015
37,296,410
2,122,402
(24,164,384)
15,254,428
15,254,428
Comprehensive income
Profit/(loss) for the period
Other comprehensive income for the period
Total comprehensive income for the period
Issue of ordinary shares related to rights issue
Share issue costs
Recognition of share-based payments
Balance at 30 June 2016
Comprehensive income
Profit/(loss) for the period
Other comprehensive income for the period
Total comprehensive income for the period
Transfer contingent option reserve
Issue of ordinary shares
Share issue costs
Recognition of share-based payments
Balance at 30 June 2017
16
16
16
14
15
17
-
-
-
9,385,244
(591,798)
-
-
-
-
-
-
-
(6,048,831)
(6,048,831)
(6,048,831)
-
-
-
(6,048,831)
(6,048,831)
(6,048,831)
-
-
9,385,244
9,385,244
(591,798)
(591,798)
(27,473)
(27,473)
(27,473)
46,089,856
2,122,402
(30,240,688)
17,971,570
17,971,570
-
-
-
-
850,000
(6,645)
-
46,933,211
-
-
-
(4,406,909)
(4,406,909)
(4,406,909)
-
-
-
(4,406,909)
(4,406,909)
(4,406,909)
(2,122,402)
2,122,402
-
-
236,953
-
850,000
(6,645)
236,953
-
850,000
(6,645)
236,953
(32,288,242)
14,644,969
14,644,969
-
-
-
-
Note
2017
$
2016
$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income tax paid
Net cash provided by/(used in) operating activities
18
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment
Payment for other property, plant and equipment
Net cash provided by/(used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Payments for share issue costs
Proceeds from borrowings
Repayment of borrowings
Net cash provided by/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
3(c)
40,438,132
(35,737,360)
4,477
(398,387)
-
4,306,862
15,000
(1,939,903)
(1,924,903)
-
(6,645)
120,120
(2,082,808)
(1,969,333)
412,626
(131,115)
281,511
32,142,839
(31,852,086)
4,426
(360,900)
-
(65,721)
6,251,012
(18,811,975)
(12,560,963)
8,535,244
(591,798)
8,500,000
(3,333,543)
13,109,903
483,219
(614,334)
(131,115)
27
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
28
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
1. SIGNIFICANT ACCOUNTING POLICIES
(a) General information
Mitchell Services Ltd (Company) is a limited company
incorporated in Australia. The addresses of its registered office
and principal place of business are disclosed in the Corporate
Directory of this Annual Report. The principal activities of the
Company and its subsidiaries (Group) involve the provision of
exploration and mine site drilling services to the mining industry.
(b) Statement of compliance
These financial statements are general purpose financial
statements which have been prepared in accordance with
the Corporations Act 2001, Accounting Standards and
Interpretations, and comply with other requirements of the law.
The financial statements comprise the consolidated financial
statements of the Group. For the purposes of preparing
the consolidated financial statements, the Company is a for-
profit entity.
Accounting Standards include Australian Accounting Standards.
Compliance with Australian Accounting Standards ensures that
the financial statements and notes of the Group comply with
International Financial Reporting Standards (IFRS).
The financial statements were authorised for issue by the
Directors on the date shown in the Directors’ Declaration.
(c) Basis of preparation
The consolidated financial statements have been prepared
on the basis of historical cost, except for certain non-current
assets and financial instruments that are measured at re-valued
amounts or fair values, as explained in the accounting policies
below. Historical cost is generally based on the fair values of
the consideration given in exchange for assets. All amounts are
presented in Australian dollars, unless otherwise noted.
(d) Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the
Company (its subsidiaries). Control is achieved where the
Company has the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities.
Income and expense of subsidiaries acquired or disposed of
during the year are included in the consolidated statement
of profit or loss and other comprehensive income from the
effective date of acquisition and up to the effective date of
disposal, as appropriate. Total comprehensive income of
subsidiaries is attributed to the owners of the Company.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into
line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses
are eliminated in full on consolidation.
Changes in the Group’s ownership interests in subsidiaries
that do not result in the Group losing control are accounted for
as equity transactions. The carrying amounts of the Group’s
interest’s and the non-controlling interests are adjusted to reflect
the changes in their relative interests in the subsidiaries. Any
difference between the amount by which the non-controlling
interests are adjusted and the fair value of the consideration
paid or received is recognised directly in equity and attributed to
owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is
recognised in profit or loss and is calculated as the difference
between (i) the aggregate of the fair value of the consideration
received and the fair value of any retained interest and (ii) the
previous carrying amount of the assets (including goodwill), and
liabilities of the subsidiary and any non-controlling interests.
When assets of the subsidiary are carried at re-valued
amounts or fair values and the related cumulative gain or loss
has been recognised in other comprehensive income and
accumulated in equity, the amounts previously recognised in
other comprehensive income and accumulated in equity are
accounted for as if the Group had directly disposed of
the relevant assets (i.e. reclassified to profit or loss or
transferred directly to retained earnings as specified by
applicable Standards).
The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the
fair value on initial recognition for subsequent accounting
under AASB 139 “Financial Instruments: Recognition
and Measurement” or, when applicable, the cost on initial
recognition of an investment in an associate or jointly
controlled entity.
(e) Business combinations
Business combinations are accounted for using the acquisition
method as at the acquisition date (i.e. when control is
transferred to the Group). Control is the power to govern the
financial and operating policies of an entity so as to obtain
benefits from its activities.
The Group measures goodwill at the acquisition date as:
•
•
•
•
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in
the acquiree; plus
if the business combination is achieved in stages, the fair
value of the existing equity interest in the acquiree; less
the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is
recognised immediately in profit or loss.
(f) Goodwill and impairment
Goodwill arising on an acquisition of a business is carried at
cost as established at the date of the acquisition of the business
less accumulated impairment losses, if any.
For the purpose of impairment testing, goodwill is allocated to
each of the Group’s cash-generating units (or groups of cash-
generating units) that is expected to benefit from the synergies
of the combination.
A cash-generating unit to which goodwill has been allocated is
tested for impairment annually, or more frequently when
there is an indication that the unit may be impaired. If the
recoverable amount of the cash-generating unit is less than
its carrying amount, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the
unit and then to the other assets of the unit pro rata based on
the carrying amount of each asset in the unit. Any impairment
loss for goodwill is recognised directly in profit or loss. An
impairment loss recognised for goodwill is not reversed in
subsequent periods.
On disposal of the relevant cash-generating unit, the
attributable amount of goodwill is included in the determination
of the profit or loss on disposal.
(g) Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. Amounts disclosed as revenue are
net of returns, trade allowances and amounts collected on
behalf of third parties. The Group recognises revenue when
the amount of revenue can be reliably measured, it is probable
that economic benefits will flow to the entity and specific criteria
have been met for each of the Group’s activities as described
below. The amount of revenue is not considered to be reliably
measureable until all contingencies relating to the sale have
been resolved.
Revenue is recognised for the major business activities
as follows:
Drilling revenue
Drilling revenue is derived from the depth and type of drilling
and the hours worked on the specific site.
Interest income
Interest income from a financial asset is recognised when it
is probable that the economic benefits will flow to the Group
and the amount of revenue can be measured reliably. Interest
income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which
is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to that asset’s
net carrying amount on initial recognition.
Other revenue is recognised when the right to receive the
revenue has been established.
All revenue is stated net of the amount of goods and services
tax (GST).
(h) Leases
Leases are classified as finance leases whenever the terms
of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as
operating leases.
29
30
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017 Assets held under finance leases are initially recognised as
assets of the Group at their fair value at the inception of the
lease or, if lower, at the present value of the minimum lease
payments. The corresponding liability to the lessor is included in
the statement of financial position as a finance lease obligation.
Lease payments are apportioned between finance expenses
and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability.
Finance expenses are recognised immediately in profit or loss,
unless they are directly attributable to qualifying assets, in
which case they are capitalised in accordance with the Group’s
general policy on borrowing costs. Contingent rentals are
recognised as expenses in the periods in which they
are incurred.
Operating lease payments are recognised as an expense
on a straight-line basis over the lease term, except where
another systematic basis is more representative of the time
pattern in which economic benefits from the leased asset are
consumed. Contingent rentals arising under operating leases
are recognised as an expense in the period in which they
are incurred.
In the event that lease incentives are received to enter into
operating leases, such incentives are recognised as a liability.
The aggregate benefit of incentives is recognised as a reduction
of rental expense on a straight-line basis, except where another
systematic basis is more representative of the time pattern in
which economic benefits from the leased asset are consumed.
(i) Employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave and long service
leave when it is probable that settlement will be required and
they are capable of being measured reliably.
Liabilities recognised in respect of short-term employee
benefits, are measured at their nominal values using the
remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of long term employee benefits
are measured as the present value of the estimated future
cash outflows to be made by the Group in respect of services
provided by employees up to reporting date.
31
Payments to defined contribution plans are recognised as an
expense when employees have rendered service entitling them
to the contributions.
Income taxes
(j)
The Company and its wholly-owned Australian resident entities
are part of a tax-consolidated group. As a consequence, all
members of the tax-consolidated group are taxed as a single
entity. The head entity within the tax-consolidated group is
Mitchell Services Ltd.
Income tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit before tax as reported
in the consolidated statement of profit or loss and other
comprehensive income because of items of income or expense
that are taxable or deductible in other years and items that are
never taxable or deductible. The Group’s liability for current
tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between
the carrying amounts of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used
in the computation of taxable profit. Deferred tax liabilities are
generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax assets
and liabilities are not recognised if the temporary difference
arises from goodwill or from the initial recognition (other than
in a business combination) of other assets and liabilities in
a transaction that affects neither the taxable profit nor the
accounting profit.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates
that are expected to apply in the period in which the liability is
settled or the asset realised, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the end of
the reporting period. The measurement of deferred tax assets
and liabilities reflects the tax consequences that would follow
from the manner in which the Group expects, at the end of the
reporting period, to recover or settle the carrying amount of its
assets and liabilities.
Deferred tax liabilities and assets are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes
levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss,
except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case
the current and deferred tax are also recognised in other
comprehensive income or directly in equity, respectively. Where
current tax or deferred tax arises from the initial accounting
for a business combination, the tax effect is included in the
accounting for the business combination.
recognised in profit or loss.
Subsequent expenditure is capitalised only when it is probable
that future economic benefits associated with the expenditure
will flow to the Group. On-going repairs and maintenance are
expensed as incurred.
Depreciation
Items of property, plant and equipment are depreciated from the
date that they are installed and are ready for use, or in respect
of internally constructed assets, from the date that the asset is
completed and ready for use.
Depreciation is calculated to write off the cost of property,
plant and equipment using both the diminishing value basis or
straight-line basis over their estimated useful lives. Depreciation
is generally recognised in profit or loss. Leased assets are
depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the Group will
obtain ownership by the end of the lease term. Land is
not depreciated.
The depreciation rates used for the current and comparative
years of significant items of property, plant and equipment are
as follows:
(k) Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at
cost less accumulated depreciation and accumulated
impairment losses.
Classes of Fixed Asset
2.5%
Buildings
6.67% - 40%
Plant & Equipment
Motor Vehicles
12.50% - 50%
Office Equipment, Furniture & Fittings 10% - 67.67%
Cost includes expenditure that is directly attributable to the
acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour and any other
costs directly attributable to bringing the assets to a working
condition for their intended use.
Where parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and
equipment (calculated as the difference between the net
proceeds from disposal and the carrying amount of the item) is
Depreciation methods and useful lives are reviewed at each
reporting date and adjusted if appropriate.
Impairment of property, plant and equipment
At the end of each reporting period, the Group reviews the
carrying amounts of its tangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). When it is not possible
to estimate the recoverable amount of an individual asset,
the Group estimates the recoverable amount of the cash-
generating unit to which the asset belongs. When a reasonable
32
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017
and consistent basis of allocation can be identified, corporate
assets are also allocated to individual cash-generating units,
or otherwise they are allocated to the smallest group of
cash-generating units for which a reasonable and consistent
allocation basis can be identified.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset
for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to
its recoverable amount. An impairment loss is recognised
immediately in profit or loss, unless the relevant asset is carried
at a re-valued amount, in which case the impairment loss is
treated as a revaluation decrease.
When an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to
the revised estimate of its recoverable amount, but so that the
increased amount does not exceed the carrying amount that
would have been determined had no impairment loss been
recognised for the asset (or cash-generating unit) in prior years.
A reversal of an impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a re-valued
amount, in which case the reversal of the impairment loss is
treated as a revaluation increase.
Inventories
(l)
Inventories are stated at the lower of cost and net realisable
value. Costs of inventories are determined on first-in-first-out
basis. Net realisable value represents the estimated selling
price for inventories less all estimated costs of completion and
costs necessary to make the sale. The cost of manufactured
products includes direct materials, direct labour and an
appropriate portion of variable and fixed overheads. Overheads
are applied on the basis of normal operating capacity. Costs are
assigned on the basis of weighted average costs.
33
(m) Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it is
probable that the Group will be required to settle the obligation,
and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of
the consideration required to settle the present obligation at the
end of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those
cash flows (where the effect of the time value of money is
material).
When some or all of the economic benefits required to settle
a provision are expected to be recovered from a third party,
a receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably.
(n) Financial instruments
Financial assets
The only category of financial assets held by the Group relates
to “loans and receivables”.
Loans and receivables
Loans and receivables comprise cash and cash equivalents
and, trade and other receivables. The Group initially recognises
loans and receivables on the date that they are originated.
Loans and receivables are financial assets with fixed or
determinable payments that are not quoted in an active market.
Such assets are recognised initially at fair value plus any
directly attributable transaction costs. Subsequent to initial
recognition, loans and receivables are measured at amortised
cost using the effective interest method, less any impairment
losses.
Amortised cost is the amount at which the financial asset or
financial liability is measured at initial recognition less principal
repayments and any reduction for impairment, and adjusted
for any cumulative amortisation of the difference between that
initial amount and the maturity amount calculated using the
effective interest method.
The effective interest method is used to allocate interest
income or interest expense over the relevant period and is
equivalent to the rate that discounts estimated future cash
payments or receipts (including fees, transaction costs and
other premiums or discounts) over the expected life (or when
this cannot be reliably predicted, the contractual term) of the
financial instrument to the net carrying amount of the financial
asset or financial liability. Revisions to expected future net cash
flows will necessitate an adjustment to the carrying value with a
consequential recognition of an income or expense item in profit
or loss.
Impairment of financial assets
The Group’s financial assets are assessed for indicators of
impairment at the end of each reporting period. Financial assets
are considered to be impaired when there is objective evidence
that, as a result of one or more events that occurred after the
initial recognition of the financial asset, the estimated future
cash flows of the financial asset have been affected.
For financial assets carried at amortised cost, objective
evidence of impairment may include: indications that the
debtors or a group of debtors are experiencing significant
financial difficulty, default or delinquency in interest or principal
payments; indications that they will enter bankruptcy or other
financial reorganisation; and changes in arrears or economic
conditions that correlate with defaults.
For financial assets carried at amortised cost, the amount of
the impairment loss recognised is the difference between the
asset’s carrying amount and the present value of estimated
future cash flows, discounted at the financial asset’s original
effective interest rate.
The carrying amount of the financial asset is reduced by
the impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount
is reduced through the use of an allowance account. When
a trade receivable is considered uncollectable, it is written
off against the allowance account. Subsequent recoveries
of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the
allowance account are recognised in profit or loss.
For financial assets measured at amortised cost, if, in a
subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to
an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed through profit
or loss to the extent that the carrying amount of the financial
asset at the date the impairment is reversed does not exceed
what the amortised cost would have been had the impairment
not been recognised.
De-recognition of financial assets
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in
which substantially all the risks and rewards of ownership of the
financial asset are transferred. Any interest in such transferred
financial assets that is created or retained by the Group is
recognised as a separate asset or liability.
On de-recognition of a financial asset in its entirety, the
difference between the asset’s carrying amount and the sum of
the consideration received and receivable is recognised in profit
or loss.
Financial liabilities
The only category of financial liabilities owed by the Group
relates to “other financial liabilities”.
Other financial liabilities
Other financial liabilities comprise loans and borrowings, bank
overdrafts, and trade and other payables. The Group initially
recognises other financial liabilities on the trade date, which
is the date that the Group becomes a party to the contractual
provisions of the instrument.
Other financial liabilities are recognised initially at fair value less
any directly attributable transaction costs. Subsequent to initial
recognition, these financial liabilities are measured at amortised
cost using the effective interest method, with interest expense
recognised on an effective yield basis.
De-recognition of financial liabilities
The Group de-recognises financial liabilities when, and only
when, the Group’s obligations are discharged, cancelled or
they expire. The difference between the carrying amount of the
34
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017
financial liability de-recognised and the consideration paid and
payable is recognised in profit or loss.
(o) Trade and other receivables
Trade and other receivables include amounts due from
customers for goods and services performed in the ordinary
course of business. Receivables expected to be collected within
12 months of the end of the reporting period are classified as
current assets. All other receivables are classified as non-
current assets.
Trade and other receivables are initially recognised at fair
value and subsequently measured at amortised cost using the
effective interest method, less any provision for impairment.
Refer to note 1(n) for further discussion on the determination of
impairment losses.
(p) Trade and other payables
Trade and other payables represent the liabilities for goods and
services received by the Group that remain unpaid at the end
of the reporting period. The balance is recognised as a current
liability with the amounts normally paid within 30 days after the
end of the month in which they were initially recognised as
a liability.
(q) 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 Taxation Office (ATO), it is recognised as
part of the cost of acquisition of an asset or as part of an
item of expense; or
for receivables and payables which are recognised
inclusive of GST.
Investment property
(r)
Investment property is property held to earn rentals or for
capital appreciation or both, rather than for either use in the
production or supply of goods or services or for administrative
purposes or sale in the ordinary course of business.
The Group uses the fair value model for investment property.
The Group’s investment property is assessed for indicators
of impairment at the end of each reporting period. Financial
assets are considered to be impaired when there is objective
evidence that, as a result of one or more events that occurred
after the initial recognition of the financial asset, the estimated
future cash flows of the financial asset have been affected.
An impairment loss is recognised immediately in profit or loss,
unless the investment property is carried at a re-valued
amount, in which case the impairment loss is treated as a
revaluation decrease.
When an impairment loss subsequently reverses, the carrying
amount of the investment property is increased to the revised
estimate of its recoverable amount, but so that the increased
amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised
for the investment property in prior years. A reversal of an
impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a re-valued amount, in
which case the reversal of the impairment loss is treated as a
revaluation increase.
(s) Capital management
Management controls the capital of the Group in order to
maintain an appropriate debt to equity ratio, generate long-
term shareholder value and ensure that the Group can fund its
operations and continue as a going concern.
The net amount of GST recoverable from, or payable to, the
ATO is included as part of receivables or payables.
The Group’s debt and capital include ordinary share capital, and
financial liabilities, supported by financial assets.
Cash flows are included in the cash flow statement on a gross
basis. The GST component of cash flows arising from investing
and financing activities which is recoverable from, or payable to,
the ATO is classified within operating cash flows.
Management effectively manages the Group’s capital by
assessing the Group’s financial risks and adjusting its capital
structure in response to changes in these risks and in the
market. These responses include the management of debt
levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by
35
management to control the capital of the Group since the
prior year.
(t) Critical accounting judgements and key sources of
estimation uncertainty
In the application of the Group’s accounting policies, the
Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience
and other factors that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on
an on-going basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision
and future periods if the revision affects both current and
future periods.
Key estimates – impairment
The Group assesses impairment at each reporting date by
evaluating conditions specific to the Group that may lead to
impairment of assets. Where an impairment trigger exists,
the recoverable amount of the asset is determined. Value in
use calculations performed in assessing recoverable amounts
incorporate a number of key estimates.
(u) Application of new and revised Accounting Standards
Standards and Interpretations affecting amounts reported
in the current period (and/or prior periods)
AASB 2014-4 Amendments to Australian Accounting Standards
– Clarification of Acceptable Methods of Depreciation and
Amortisation and AASB 2015-2 Amendments to Australian
Accounting Standards – Disclosure Initiative: Amendments to
AASB 101
Impact of the application of AASB 2014-4 Amendments
to Australian Accounting Standards – Clarification of
Acceptable Methods of Depreciation and Amortisation
The amendments to AASB 116 prohibit the use of a revenue-
based depreciation method for property, plant and equipment.
Additionally, the amendments provide guidance in the
application of the diminishing balance method for property, plant
and equipment.
The amendments to AASB 138 present a rebuttable
presumption that a revenue-based amortisation method for
intangible assets is inappropriate. This rebuttable presumption
can be overcome (i.e. a revenue-based
amortisation method might be appropriate) only in two (2)
limited circumstances:
•
•
the intangible asset is expressed as a measure of revenue,
for example when the predominant limiting factor inherent
in an intangible asset is the achievement of a revenue
threshold (for instance, the right to operate a toll road
could be based on a fixed total amount of revenue to be
generated from cumulative tolls charged); or
when it can be demonstrated that revenue and the
consumption of the economic benefits of the intangible
asset are highly correlated.
The adoption of these amendments has not had a material
impact on the Group.
Impact of the application of AASB 2014-4 Amendments
to Australian Accounting Standards – Clarification of
Acceptable Methods of Depreciation and Amortisation
The Standard makes amendments to AASB 101 Presentation
of Financial Statements arising from the IASB’s Disclosure
Initiative project.
The amendments:
•
•
•
•
•
clarify the materiality requirements in AASB 101, including
an emphasis on the potentially detrimental effect of
obscuring useful information with immaterial information
clarify that AASB 101’s specified line items in the
statement(s) of profit or loss and other comprehensive
income and the statement of financial position can
be disaggregated
add requirements for how an entity should present
subtotals in the statement(s) of profit and loss and other
comprehensive income and the statement of financial
position
clarify that entities have flexibility as to the order in
which they present the notes, but also emphasise that
understandability and comparability should be considered
by an entity when deciding that order
remove potentially unhelpful guidance in AASB 101 for
identifying a significant accounting policy
36
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017 The adoption of these amendments has not had a material impact on the Group.
Standards and Interpretations in issue not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not
yet effective.
Standard/Interpretation
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
AASB 9 Financial Instruments
AASB 15 Revenue from Contracts with Customers
AASB 16 Leases
AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15
AASB 2014-7 Amendments to Australian Accounting Standards arising from AASB 9
(December 2014)
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or
Contribution of Assets between an Investor and its Associate or Joint Venture
AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of
AASB 15
AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of
Deferred Tax Assets for Unrealised Losses
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative:
Amendments to AASB 107
AASB 2016-3 Amendments to Australian Accounting Standards – Clarifications to
AASB 15
AASB 2016-5 Amendments to Australian Accounting Standards – Classification and
Measurement of Share Based Payment Transactions
AASB 2016-6 Amendments to Australian Accounting Standards – Applying AASB 9
Financial Instruments with AASB 4 Insurance Contracts
AASB 2017-1 Amendments to Australian Accounting Standards – Transfers of
Investment Property, Annual Improvements 2014-2016 Cycle and Other Amendments
AASB 2017-2 Amendments to Australian Accounting Standards – Further Annual
Improvements 2014-2016 Cycle
Interpretation 22 Foreign Currency Transactions and Advance Consideration
1-Jan-18
1-Jan-18
1-Jan-19
1-Jan-18
1-Jan-18
1-Jan-18
1-Jan-17
1-Jan-17
1-Jan-17
1-Jan-18
1-Jan-18
1-Jan-18
1-Jan-18
1-Jan-17
1-Jan-18
30-Jun-19
30-Jun-19
30-Jun-20
30-Jun-19
30-Jun-19
30-Jun-19
30-Jun-18
30-Jun-18
30-Jun-18
30-Jun-19
30-Jun-19
30-Jun-19
30-Jun-19
30-Jun-18
30-Jun-19
Although the Directors anticipate that the adoption of AASB9, AASB15 and AASB16 may have an impact on the Group’s financial
statements, it is impracticable at this stage to provide a reasonable estimate of such impact.
37
2. REVENUE
From continuing operations
Income from operations
Interest received
Management fees
Rental income
Other
Total income from continuing operations
3. CASH AND CASH EQUIVALENTS
2017
$
2016
$
40,003,304
32,630,989
4,477
-
288,577
6,275
299,329
40,302,633
4,426
52,794
282,038
-
339,258
32,970,247
For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents include cash on hand and in banks, net
of outstanding bank overdrafts. Cash and cash equivalents at the end of the year shown in the consolidated statement of cash flows
can be reconciled to the related items in the consolidated statement of financial position as follows.
3(a)
In funds accounts
Bank balances
3(b) Bank overdraft
Bank overdraft
3(c) Net cash at bank
4. TRADE AND OTHER RECEIVABLES
Trade debtors
Less provision for doubtful debts
Bonds and deposits
816,511
468,973
(535,000)
281,511
(600,088)
(131,115)
6,939,895
6,102,542
-
180,120
7,120,015
-
5,200
6,107,742
4(a) CREDIT RISK AND AGEING OF TRADE DEBTORS
The class of assets described as “trade debtors” is considered to be the main source of credit risk related to the Group. The Group
does not hold any collateral over these balances. A single counterparty made up of 20.50% of the total trade receivables at 30 June
2017. All invoices to this counterparty included in the total trade and other receivables at 30 June 2017 have been received as at the
date of this report. The ageing of trade debtors (financial assets) is as follows:
< 1 month
1 to 3 months
3 to 6 months
5,450,529
1,489,366
-
6,939,895
5,866,056
233,674
2,812
6,102,542
38
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017
5. OTHER FINANCIAL ASSETS
8. TRADE AND OTHER PAYABLES
2017
$
2016
$
2017
$
2016
$
Current
Borrowing costs
Non-current
Borrowing costs
5(a) AGEING OF OTHER FINANCIAL ASSETS
The ageing of other financial assets – current is as follows:
< 1 year
The ageing of other financial assets - non-current is as follows:
1 to 5 years
6. OTHER ASSETS
Current
Prepayments
Non-current
Property held for sale
Shares in listed company
7.
INVENTORIES
Finished goods
46,740
46,740
11,652
11,652
46,740
46,740
11,652
11,652
823,162
823,162
18,000
-
18,000
981
981
281
281
981
981
281
281
461,808
461,808
18,000
-
18,000
1,293,200
1,293,200
1,335,189
1,335,189
The cost of inventories recognised as an expense during the year in respect of continuing operations was $6,847,191
(2016: $5,624,283)
Current
Trade creditors
Accrued expenses
GST payable
Income received in advance
8(a) AGEING OF TRADE AND OTHER PAYABLES
The ageing of trade creditors (financial liabilities) is as follows:
< 1 month
1 to 3 months
> 3 months
9. OTHER FINANCIAL LIABILITIES
Current
Equipment finance leases
Working capital loan
Insurance premium funding
Non-current
Equipment finance leases
Working capital loan
Shareholder loan
9(a) FINANCE LEASES
Current
Non-current
5,525,567
1,938,985
571,323
-
8,035,875
2,638,134
2,881,342
6,091
5,525,567
1,696,498
207,806
422,534
2,326,838
4,552,475
19,149
8,500,000
13,071,624
2,896,084
1,490,024
380,191
28,964
4,795,263
1,280,501
1,513,021
102,562
2,896,084
1,651,354
211,572
291,511
2,154,437
3,547,466
226,956
8,500,000
12,274,422
1,696,498
4,552,475
6,248,973
1,651,354
3,547,466
5,198,820
39
40
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017 Minimum future lease payments
Not later than 1 year
Later than 1 year and not later than 5 years
Minimum future lease payments
Less future finance charges
Present value of minimum future lease payments
Not later than 1 year
Later than 1 year and not later than 5 years
2017
$
2016
$
1,975,159
4,826,907
6,802,066
(553,093)
6,248,973
1,684,066
4,564,907
6,248,973
1,893,043
3,860,500
5,753,543
(554,723)
5,198,820
1,862,926
3,335,894
5,198,820
The Group leases certain items of equipment under finance leases. The average term is 3.77 years (2016: 3.83 years). The Group’s
obligations under finance leases are secured by lessor’s title to goods under finance lease.
The Group’s exposure to interest rate risk has been mitigated in that interest rates have been fixed for the duration of the finance
period. Effective interest rates payable under finance leases are between 4.45% and 8.33% (2016: 4.45% and 8.33%).
The fair value of the finance lease liabilities is approximately equal to the carrying amount.
9(b) LOANS
A summary of borrowing arrangements applicable to all loans is included in Note 19(a). Security pledged under these borrowing
arrangements is detailed in Note 11(a).
10. PROVISIONS
Annual leave provision - current
Opening balance
Movement
Closing balance
Long service leave provision - current
Opening balance
Movement
Closing balance
Provision for relocation costs
Opening balance
Movement
Closing balance
Total current provisions
41
607,893
605,327
1,213,220
9,708
18,250
27,958
108,670
(108,670)
-
1,241,178
367,360
240,533
607,893
-
9,708
9,708
-
108,670
108,670
726,271
Long service leave provision - non-current
Opening balance
Movement
Closing balance
Total non-current provisions
2017
$
2016
$
121,534
59,641
181,175
181,175
97,963
23,571
121,534
121,534
The above provisions represent annual leave and long service leave entitlements accrued by the Group’s employees.
11. PROPERTY, PLANT AND EQUIPMENT
At 1 July 2016
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 30 June 2017
Opening net book amount
Additions
Disposals
Depreciation
At 30 June 2017
Cost or fair value
Accumulated depreciation
Net book amount
At 1 July 2015
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 30 June 2016
Opening net book amount
Additions
Disposals
Depreciation
At 30 June 2016
Cost or fair value
Accumulated depreciation
Net book amount
Land and
buildings
Plant and
equipment
Motor
vehicles
Furniture
and fittings
$
$
$
$
Total
$
33,900
31,037,599
14,329,331
220,433
45,621,263
(14,568)
(9,063,431)
(9,115,224)
(152,429)
(18,345,652)
19,332
21,974,168
5,214,107
68,004
27,275,611
19,332
21,974,168
5,214,107
68,004
27,275,611
67,573
4,439,269
362,905
261,451
5,131,198
-
(24,897)
-
(14,716)
(39,613)
(17,906)
(4,244,200)
(1,138,904)
(33,807)
(5,434,817)
68,999
22,144,340
4,438,108
280,932
26,932,379
101,473
35,418,170
14,692,236
361,506
50,573,385
(32,474)
(13,273,830)
(10,254,128)
(80,574)
(23,641,006)
68,999
22,144,340
4,438,108
280,932
26,932,379
33,900
(2,224)
22,874,594
13,273,131
182,981
36,364,606
(7,724,484)
(10,242,001)
(109,081)
(18,077,790)
31,676
15,150,110
3,031,130
73,900
18,286,816
31,676
15,150,110
3,031,130
73,900
18,286,816
-
15,381,215
5,245,348
37,452
20,664,015
-
(4,531,024)
(1,827,170)
-
(6,358,194)
(12,344)
(4,026,133)
(1,235,201)
(43,348)
(5,317,026)
19,332
21,974,168
5,214,107
68,004
27,275,611
33,900
31,037,599
14,329,331
220,433
45,621,263
(14,568)
(9,063,431)
(9,115,224)
(152,429)
(18,345,652)
19,332
21,974,168
5,214,107
68,004
27,275,611
42
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017 Plant and equipment and motor vehicles comprise mainly of drilling rigs and associated vehicles and equipment. Directors and
management continually monitor both domestic and overseas markets on new and used drill rig pricing and availability and
as a result are of the opinion that the net written down book value of the Group’s property, plant and equipment is less than its
recoverable amount.
11(a) ASSETS PLEDGED AS SECURITY
The following has been pledged as security in relation to the Group’s bank overdraft and other financial liabilities.
Bank overdraft
The following securities will secure the repayment of the above facilities:
•
An existing registered mortgage given by Mitchell Services Ltd over the property situated at 133-137 Crocodile Crescent, Mount
St John, Qld (carrying amount of $2,975,000).
Registered general security agreement given by Notch Holdings Pty Ltd as grantor, over all of its present and after acquired
personal and real property including, the goodwill of its business, uncalled and unpaid capital and proceeds.
Existing registered company charge given by Mitchell Services Ltd over all the assets and undertakings of the company
including uncalled and unpaid capital.
Guarantee and indemnity given by Mitchell Services Limited, Well Drilled Pty Ltd, Notch Holdings Pty Ltd and Mitchell
Operations Pty Ltd.
•
•
•
Working capital loan
The following rigs have been pledged as security:
•
•
2008 UDR1200 Rotadrill drill rig (carrying amount of $163,590).
2007 Schramm T685WS Rotadrill drill rig (carrying amount of $293,849).
Shareholder loan
These loans were provided by major shareholders Washington H Soul Pattinson Limited and Mitchell Family Investments (Qld) Pty
Ltd as trustee for the Mitchell Family Investments Trust to partly fund the Nitro asset acquisition. These assets are held by a wholly
owned subsidiary of the Company, Notch No 2 Pty Ltd.
The shareholder loans are secured by a grant of a general security agreement over all Notch No 2 Pty Ltd assets. The carrying
amount of these assets is $11,345,886.
Equipment finance leases
The Group has entered into a number of equipment finance lease arrangements with a range of lenders. Under the terms of these
facilities, security is limited to the assets to which the facility relates.
12.
INCOME TAX EXPENSE
Income tax expense recognised in profit/(loss)
Income tax expense comprises
Current tax
Deferred tax
Derecognised tax losses and tax losses not recognised in current year
2017
$
2016
$
-
(1,311,764)
1,311,764
-
-
(1,809,488)
1,809,488
-
The income tax expense for the year can be reconciled to the accounting profit as follows:
Profit/(loss) before tax from continuing operations
(4,406,909)
(6,048,831)
Income tax expense calculated at 30%
Effect of expenses that are not deductible in determining taxable profit
Derecognised tax losses and tax losses not recognised in current year
Effect of tax rates in foreign jurisdictions (PNG)
Adjustments recognised in current year in relation to current tax of prior years
(1,322,073)
(1,814,649)
10,308
1,311,765
5,161
1,809,488
-
-
-
-
-
-
The tax rate used for 2017 and 2016 reconciliations above is the corporate tax rate of 30% payable by Australian corporate entities
on taxable profits under Australian tax law.
13. TAX ASSETS AND LIABILITIES
Tax assets - current
Income tax receivable
Tax assets - non-current
Deferred tax asset
Tax liabilities - current
Provision for foreign contractor withholding tax PNG
13(a) UNRECOGNISED AMOUNTS
Unused tax losses
Other unrecognised temporary differences
Franking account balance
-
-
-
-
-
-
27,136,337
3,832,210
872,635
22,596,123
3,993,230
872,635
43
44
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017 14.
ISSUED CAPITAL
Fully paid ordinary shares
Balance at the beginning of the period
Issue of shares - rights issue
Issue of shares - share based payments
Fully paid ordinary shares
Balance at the beginning of the period
Issue of shares - rights issue
Issue of shares - share based payments
2017
$
2016
$
48,604,378
-
850,000
49,454,378
39,219,134
8,422,288
962,956
48,604,378
Number of Shares Number of Shares
867,000,217
1,418,373,968
-
53,125,000
495,428,698
55,945,053
1,471,498,968
1,418,373,968
Issue of shares
The following shares were issued during the year ended 30 June 2017:
•
•
•
On 6 July 2016, 31,250,000 fully paid ordinary shares were issued to Washington H Soul Pattinson & Company Limited at an
issue price of $0.016 per share in lieu of interest payable for the second 12 month period in accordance with the terms of the of
the shareholder loan.
On 6 July 2016, 21,875,000 fully paid ordinary shares were issued to Mitchell Family Investments (Qld) Pty Ltd as trustee for
the Mitchell Family Investments Trust at an issue price of $0.016 per share in lieu of interest payable for the second 12 month
period in accordance with the terms of the of the shareholder loan.
On 29 July 2016, 4,915,099 fully paid ordinary shares were issued to Mitchell Services Share Plan Pty Ltd as trustee for
Mitchell Services Employee Share Plan Trust at an issue price of $0.026 per share as part of the Employee Share and Option
Plan. These shares will be held by Mitchell Services Share Plan Pty Ltd until they vest in accordance with the terms of the plan
detailed in the Remuneration Report contained in the Directors’ Report.
The transaction costs directly attributable to the above issue of shares that otherwise would have been avoided have been
accounted for as a deduction from equity, net of income tax benefit (refer note 15).
15. SHARE ISSUE COSTS
Balance at the beginning of the period
Share issue costs
(2,514,522)
(6,645)
(2,521,167)
(1,922,724)
(591,798)
(2,514,522)
16. RETAINED EARNINGS
Balance at the beginning of the period
Profit/(loss) attributable to owners of the company
Transfer from contingent option reserve
Share based payment transactions (refer note 20)
2017
$
2016
$
(30,240,688)
(4,406,909)
2,122,402
236,953
(32,288,242)
(24,164,384)
(6,048,831)
-
(27,473)
(30,240,688)
Transfer contingent option reserve
The contingent option reserve arose on 29 November 2013, when the Group acquired all of the shares in Mitchell Operations Pty
Ltd. As part of the consideration for the purchase, the Group issued 198,660,000 options that were subject to EBITDA and share
price vesting conditions. As at 30 June 2017 all of these options had lapsed and consequently the contingent option reserve was de-
recognised and transferred to retained earnings.
17. SHARE BASED PAYMENT TRANSACTIONS
Expense recognised in profit or loss
Equity-settled share-based payment transactions
Replacement awards granted on 29 November 2013
Executive share and option plan
Shareholder loan interest
Total expense/(income) recognised for equity-settled share-based payment
-
236,953
850,000
1,086,953
(36,750)
9,277
850,000
822,527
Payment in lieu of interest
On 6 July 2016, 31,250,000 new ordinary shares were issued to Washington H Soul Pattinson & Company Limited at an issue
price of $0.016 per share in lieu of interest payable for the second 12 month period in accordance with the terms of the of the
shareholder loan.
On 6 July 2016, 21,875,000 new ordinary shares were issued to Mitchell Family Investments (Qld) Pty Ltd as trustee for the
Mitchell Family Investments Trust at an issue price of $0.016 per share in lieu of interest payable for the second 12 month period in
accordance with the terms of the of the shareholder loan.
The above share based payments have been recognised in the current period as a finance expense to the extent that they relate to
periods between 1 July 2016 and 30 June 2017.
Executive share and option plan
The Group accounts for instruments that are still in their vesting period issued under the Executive Share and Option Plan (ESOP)
by recognising the fair value of the relevant equity instruments as an expense over the vesting period.
The fair value of the equity instruments is calculated at each reporting period and vesting conditions are taken into account by
adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately, the amount
recognised for goods or services received as consideration for the equity instruments granted is based on the number of equity
instruments that eventually vest.
45
46
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017 Measurement of fair values
The calculated fair value of the Rights granted during the year ended 30 June 2016 under the ESOP was $162,198 at 30 June 2017
and has been determined with reference to the closing price of the Company’s fully paid ordinary shares.
The calculated fair value at 30 June 2017 of the Options granted during the year ended 30 June 2016 was $443,905 and has been
determined using the Black-Scholes option pricing model. Expected volatility is estimated by considering historical volatility of
comparable company share prices.
The inputs in the measurement of the fair value at 30 June 2017 of the equity-settled share-based payment plans granted during the
year ended 30 June 2016 were as follows:
Share price
Exercise price
Expected volatility
Time to maturity
Risk-free interest rate
Dividend yield (assumed no dividends paid)
Fair value per option
Number of options
Total fair value of options
$0.0330
$0.0395
94%
8 years
2.79%
0%
$0.0271
16,362,395
$443,905
18. RECONCILIATION OF PROFIT/(LOSS) FOR THE YEAR TO NET CASH FLOWS FROM OPERATING ACTIVITIES
2017
$
2016
$
Profit/(loss) for the year
Adjustments for:
Depreciation and amortisation
Profit on sale of assets
Loss on sale of assets
Income tax expense
Change in trade and other receivables
Change in other assets
Change in inventories
Change in trade payables and accruals
Change in insurance premium funding balance
Change in provisions
Recognition of share based payment
Income tax paid
47
(4,406,909)
(6,048,831)
5,434,817
(314)
24,926
-
(1,012,273)
(418,484)
41,989
2,850,586
131,023
574,548
1,086,953
-
4,306,862
5,317,026
(1,293,437)
1,324,716
-
(307,846)
(19,196)
534,329
(807,652)
30,161
382,482
822,527
-
(65,721)
19. FINANCIAL RISK MANAGEMENT
The Group’s financial instruments mainly consist of deposits with banks, trade receivables and payables and borrowings and leases
from financial institutions. The Board of Directors are responsible for monitoring and managing the financial risks. They monitor these
risks through regular meetings with the Group’s management. The Group does not enter into derivative financial instruments and
does not speculate in any type of financial instrument.
Specific financial risk exposures and management thereof
The main risks the Group is exposed to through its financial instruments are interest rate risk, liquidity risk and credit risk. There have
been no substantive changes in the types of risks the Group is exposed to, how these risks arise, or the Board’s objectives, policies
and processes for managing or measuring the risks from the previous reporting period.
Interest rate risk
19(a)
Exposure to interest rate risk arises on financial assets and liabilities recognised at reporting date whereby a future change in
interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The Group is also exposed to earnings
volatility on floating rate instruments.
The following tables set out the Group’s exposure to interest rate risk.
2017
Bank overdraft
Equipment finance leases
Premium insurance
Working capital loan
Shareholder loan
Expected duration until repayment
Within 1
year
$
1 to 2
years
$
2 to 3
years
$
More than
3 years
$
Total
$
535,000
-
-
-
535,000
1,696,498
2,346,895
1,703,249
502,331
6,248,973
422,534
-
-
-
422,534
207,806
19,149
-
-
226,955
-
-
-
8,500,000
8,500,000
2,861,838
2,366,044
1,703,249
9,002,331
15,933,462
(a)
(b)
(c)
(d)
(e)
(a)
(b)
(c)
(d)
(e)
Interest rates have varied between 5.55% and 5.63% per annum.
Interest rates are commercial lease finance rates and are fixed for the duration of the loan period.
Interest rate is fixed at a flat rate of 2.259% of the amount initially financed.
Interest is fixed at a commercial lease finance rate of 6.6546% for the duration of the loan period.
Interest is fixed at 10% for the duration of the loan period.
48
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017 Expected duration until repayment
Financial liability and financial asset maturity analysis
2016
Bank overdraft
Equipment finance leases
Premium insurance
Working capital loan
Shareholder loan
Within 1
year
$
1 to 2
years
$
2 to 3
years
$
More than
3 years
$
Total
$
600,088
-
-
-
600,088
1,651,354
1,167,849
1,137,295
1,242,322
5,198,820
291,511
-
-
-
291,511
211,572
226,956
-
-
438,528
-
-
-
8,500,000
8,500,000
2,754,525
1,394,805
1,137,295
9,742,322
15,028,947
(a)
(b)
(c)
(d)
(e)
(a)
(b)
(c)
(d)
(e)
Interest rates have varied between 5.43% and 5.78% per annum.
Interest rates are commercial lease finance rates and are fixed for the duration of the loan period.
Interest rate is fixed at a flat rate of 2.2592% of the amount initially financed.
Interest is fixed at a commercial lease finance rate of 6.6546% for the duration of the loan period.
Interest is fixed at 10% for the duration of the loan period.
19(b) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that
are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
The Group manages this risk through the following mechanisms:
ensuring that there is access to adequate capital;
preparing forward looking cash flow analyses in relation to its operational, investing and financial activities;
obtaining funding from a variety of sources;
•
•
• monitoring undrawn credit facilities;
•
• maintaining a reputable credit profile;
• managing credit risk related to financial assets;
•
•
investing surplus cash only with major financial institutions; and
comparing the maturity profile of financial liabilities with the realisation profile of financial assets.
The table below reflects an undiscounted contractual maturity analysis for financial liabilities, compared with financial assets. Bank
overdrafts have been excluded from the analysis below as management does not consider that there is any material risk that the
bank will terminate such facilities.
Cash flows realised from financial assets reflect management’s expectation as to the timing of realisation. Actual timing may
therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflect the earliest
contractual settlement dates and do not reflect management’s expectations that banking facilities will be rolled forward. The
deficiency identified in the table will be met from cash flows generated by the Group’s normal operations.
Financial liabilities due for payment
Trade and other payables (excluding estimated
employee entitlements)
Within 1 year
1 to 7 Years
Total
2017
$
2016
$
2017
$
2016
$
2017
$
2016
$
8,035,875
4,795,263
-
-
8,035,875
4,795,263
Financial liabilities
Total contractual outflows
Total expected outflows
2,326,838
2,154,437
13,071,624
12,274,422
15,398,462
14,428,859
10,362,713
6,949,700
13,071,624
12,274,422
23,434,337
19,224,122
10,362,713
6,949,700
13,071,624
12,274,422
23,434,337
19,224,122
Financial assets - cash flows realisable
Cash and cash equivalents
Trade and other receivables
Total anticipated inflows
816,511
468,973
-
-
816,511
468,973
7,120,015
6,107,742
-
-
7,120,015
6,107,742
7,936,526
6,576,715
-
-
7,936,526
6,576,715
Net (outflow)/inflow on financial instruments (2,426,187)
(372,985)
(13,071,624)
(12,274,422)
(15,497,811)
(12,647,407)
19(c) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s trade and other receivables from customers. The Group has adopted a policy of
only dealing with creditworthy counterparties and uses publicly available financial information and its own trading records to rate its
customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored to mitigate financial loss.
The maximum exposure to credit risk by class of recognised financial assets at balance date, excluding the value of any collateral or
other security held, is equivalent to the carrying value and classification of those financial assets (net of any provisions) as presented
in the Consolidated Statement of Financial Position.
The Group has no significant concentration of credit risk with any single counterparty or group of counterparties. Details with respect
to credit risk of trade and other receivables is provided in note 4(a).
Trade and other receivables that are neither past due or impaired are considered to be of high credit quality. Aggregates of such
amounts are detailed at note 4(a).
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international
credit-rating agencies.
20. NET FAIR VALUES
Fair value estimation
The carrying values of financial assets and financial liabilities as detailed in the Consolidated Statement of Financial Position and
these notes approximate their fair values at reporting date.
49
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MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017
21. RELATED PARTY TRANSACTIONS
21(a) Related parties
The Group’s main related parties are as follows.
(i) Entities exercising control over the Group
The ultimate parent entity that exercises control over the Group is Mitchell Services Ltd ACN 149 206 333. The subsidiary companies
in the Group are Notch Holdings Pty Ltd ACN 009 271 461, Well Drilled Pty Ltd ACN 123 980 343, Mitchell Operations Pty Ltd ACN
165 456 066, Notch No. 2 Pty Ltd ACN 606 170 138 and Mitchell Services Share Plan Pty Ltd ACN 610 901 221.
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been
eliminated on consolidation and are not disclosed in this note.
(ii) Key management personnel
Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly,
including any Director (whether executive or otherwise) of that entity are considered KMP.
Disclosures relating to Key Management Personnel are set out in the remuneration report.
(iii) Other related parties
Other related parties include entities over which KMP have control or joint control.
21(b) Transactions with related parties
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to
other parties unless otherwise stated. The following transactions occurred with related parties.
Transactions with Manutech Engineering and Maintenance
The Group engages Manutech Engineering and Maintenance to purchase parts and in some instances perform repair and
maintenance type services. Manutech Engineering and Maintenance is an entity controlled by Peter Miller. The amount incurred
during the reporting period in relation to these services was $108,897 including GST. Amounts were billed on normal market rates for
such services and were due and payable under normal payment terms. An amount of $20,834 remains owing to this related entity at
the end of the reporting period.
Transactions with Mitchell Group private entities
MEH Equipment Hire Pty Ltd
MEH Equipment Hire Pty Ltd is an entity controlled by Nathan Mitchell. In order to satisfy specific contract requirements, the Group
hired plant and equipment not available in its fleet from MEH Equipment Hire. Hire of plant and equipment from this related entity for
the reporting period amounted to $444,799 including GST and was based on normal market rates and under normal payment terms.
An amount of $79,214 remains owing to this related entity at the end of the reporting period.
On 5 October 2016, the Group entered into a vendor finance asset sale agreement with MEH Equipment Hire Pty Ltd for the
purchase of a Schramm T685 truck-mounted drill rig for $798,600 including GST. The purchase price was determined based on
normal market rates and the interest rate on outstanding amounts is 5% per annum. At the end of the reporting period $622,600
remained outstanding and is fully repayable in October 2018.
Mitchell Family Investments (QLD) Pty Ltd
Mitchell Family Investments (QLD) Pty Ltd is an entity controlled by Nathan Mitchell. The Group leases the majority of the premises
located at 112 Bluestone Circuit, Seventeen Mile Rocks Brisbane, which is owned by Mitchell Family Investments (QLD) Pty Ltd. In
order to facilitate the Group’s growth and associated requirement for additional office and workshop space, the Group entered into
a revised 5 year lease covering an expanded portion of the property. The rental associated with this property for the reporting period
amounted to $116,520 net of $81,000 in applied rental reductions associated with the revised lease. An amount of $11,625 remains
owing to this related entity at the end of the reporting period.
On 6 July 2015, the Group entered into a 5 year debt facility agreement of $3.5million with Mitchell Family Investments (QLD) Pty Ltd
at an interest rate of 10%. Interest accruing on the loan for the first two years is payable in Company shares. 21,875,000 Company
shares were issued to Mitchell Family Investments (QLD) Pty Ltd on 6 July 2016 as settlement for the second years’ interest.
Mitchell Group Pty Ltd
Mitchell Group Pty Ltd is an entity controlled by Nathan Mitchell. On 30 November 2016, the Group entered into a licence deed with
Mitchell Group for the use by Mitchell Group of a designated area within 112 Bluestone Circuit, Seventeen Mile Rocks Brisbane.
There are no rental charges associated with this property and no amount remains owing to this related entity at the end of the
reporting period.
Mitchell Family Superannuation Fund
Mitchell Family Superannuation Fund is an entity controlled by Nathan Mitchell. On 30 November 2016, the Group entered into
a licence deed with Mitchell Family Superannuation Fund for the use by the Group of 119 Thomas Mitchell Drive, Muswellbrook
to facilitate the Group’s expansion into NSW. There are no rental charges associated with this property and an amount of $1,961
remains owing to this related entity at the end of the reporting period in relation to outgoings.
22. KEY MANAGEMENT PERSONNEL
Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to each member
of the Group’s KMP for the year ended 30 June 2017.
23. AUDITORS REMUNERATION
During the year, the following fees were paid or payable for services provided by the auditor or its related practices:
Audit and review of financial statements
Other
2017
$
2016
$
69,312
-
69,312
85,796
-
85,796
51
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MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017 2017
$
2016
$
27(b) The Group generates revenue from external customers who individually account for greater than 10% of the Groups total
revenue. The below table sets out the applicable revenue percentage generated from each of these customers.
External Customer 1
External Customer 2
External Customer 3
External Customer 4
External Customer 5
External Customer 6
2017
$
23.61%
17.82%
16.30%
12.99%
11.00%
10.78%
2016
$
23.80%
18.28%
31.49%
0.00%
10.52%
3.47%
28. EVENTS AFTER THE REPORTING DATE
There has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly affected,
or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future
financial years.
24. OPERATING LEASE COMMITMENTS
Operating leases relate to leases of land and buildings with varying lease terms not exceeding five (2016: five) years. Some lease
contracts contain provision for market rental reviews within the remaining lease term.
Non-cancellable operating lease commitments:
Not later than 1 year
Between 1 and 3 years
Later than 3 years
25. EARNINGS PER SHARE
Basic earnings per share
From continuing operations
Diluted earnings per share
From continuing operations
366,283
821,101
471,910
1,659,294
(0.30)
(0.30)
259,049
170,943
-
429,992
(0.43)
(0.43)
Basic earnings per share and diluted earnings per share are calculated using earnings and weighted average number of ordinary
shares as follows:
Profit/(loss) for the year attributable to owners
Weighted average number of ordinary shares
26. SUPERANNUATION CONTRIBUTIONS
(4,406,909)
(6,048,831)
1,470,625,680
1,404,763,006
The Group contributes superannuation on behalf of qualifying employees to superannuation funds. The only obligation of the
Group is to make specified contributions in accordance with contractual employment and statutory obligations. The total expense
recognised in the statement of profit or loss and other comprehensive income of $1,448,168 (2016: $1,184,386) represents the
contributions payable by the Group to these plans in accordance with contractual employment and statutory obligations. As at 30
June 2017, contributions of $421,739 due in respect of the 2017 reporting period (2016: $332,437) had not been paid over to the
plans. These amounts were paid subsequent to the end of the 2017 reporting period.
27. OPERATING SEGMENTS
27(a) The Group operates primarily within Australia, providing services wholly to a discrete industry segment (provision of drilling
services to the mining industry). These geographic and operating segments are considered based on internal management reporting
and the allocation of resources by the Group’s chief decision makers (Board of Directors). On this basis, the financial results of the
reportable operating and geographic segments are equivalent to the financial statements of the Group as a whole and no separate
segment reporting is disclosed in these financial statements.
53
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MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2017
DIRECTORS’ DECLARATION
The Directors declare that:
in the Directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when
(a)
they become due and payable;
in the Directors’ opinion, the attached financial statements are in compliance with International Financial Reporting Standards,
(b)
as stated in note 1(b) to the financial statements;
in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001,
(c)
including compliance with accounting standards and giving a true and fair view of the financial position and performance of the
consolidated entity; and
(d)
the Directors have been given the declarations required by section 295A of the Corporations Act 2001
Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001.
On behalf of the Directors
Nathan Mitchell
Executive Chairman
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
MITCHELL SERVICES LIMITED
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
OPINION
We have audited the financial report of Mitchell Services Limited (the Company) and Controlled Entities (the
Group), which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion:
(a) the accompanying financial report of Mitchell Services Limited and Controlled Entities is in accordance
with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001, and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
BASIS FOR OPINION
We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110: Code of Ethics for Professional Accountants (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the company, would be in the same terms if given to the directors as at the time of this auditor’s
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Dated at Brisbane this 30th day of August 2017
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 for the year ended 30 June 2017. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Going Concern
During the second half of the 2017 financial year, the Group was awarded contracts by multiple Tier 1 mining
companies. The up-front cash outflows required in relation to capital expenditure and mobilisation will be
significant and the Group needs to ensure that it has sufficient access to capital to meet these costs.
Accordingly, our review of the going concern assumption was significant to the audit and considered a key audit
matter.
55
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MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
MITCHELL SERVICES LIMITED (CONTINUED)
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
MITCHELL SERVICES LIMITED (CONTINUED)
Our audit procedures to address the ability of the Group to continue as a going concern included:
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL REPORT
§ We assessed the Group’s forecast cash flow for the period that covers twelve months after the date of this
audit report. We checked the mathematical accuracy of the forecast and the reasonableness of the
assumptions contained therein. We assessed whether the financial performance within the cash flow was
achievable given contracts in place, contracts not yet awarded, prior year and forecast margins and the
overhead costs required to operate the business.
§ The forecast cash flows on a monthly basis were assessed in light of the Group’s current finance facilities
to ensure that it has access to sufficient capital during the periods where up-front mobilisation costs and
capital expenditure may place a strain on cash flow. We confirm that the Group has access to a $2.5m
overdraft facility and a $2.6m working capital facility which support the Group’s forecast cash flows.
Revenue Recognition
This is a key audit matter given that it is material to the Group’s results and the rates at which revenue is
charged to customers is complex and varies depending on the type of drilling service performed and whether
the drilling service is coal or minerals based.
Our audit procedures to address the risk of material misstatement relating to the determination and recognition
of drilling service revenue included, amongst others:
§ We obtained a detailed understanding of the revenue streams and the processes for calculating and
recording revenue. We also gained an understanding of the key internal controls in place to ensure that
recorded revenue had occurred and was accurate and that revenue had been completely recorded. We
tested these controls on a sample basis to ensure that they were operating effectively throughout the year.
§ We tested a sample of revenue transactions to the daily drilling reports (which are signed by the customer),
to signed contracts (ensuring rates charged were accurate) and to receipt of funds in the Group’s bank
account.
§ We tested a sample of revenue earning activities from the daily drilling reports to customer invoices
ensuring that revenue earned had been recorded as revenue.
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2017, but does not include the financial report
and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and
accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the
financial report, our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL REPORT
The directors of the company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial
report, the directors are responsible for assessing the ability of the Group to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of this financial
report.
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_responsibilities/ar2.pdf. This
description forms part of our auditor’s report.
REPORT ON THE REMUNERATION REPORT
We have audited the remuneration report included in pages 12 - 17 of the directors’ report for the year ended
30 June 2017. The directors of the company are responsible for the preparation and presentation of the
remuneration report in accordance with s 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing
Standards.
AUDITOR’S OPINION
In our opinion, the remuneration report of Mitchell Services Limited, for the year ended 30 June 2017, complies
with s 300A of the Corporations Act 2001.
Rodger Dunstan
Director
Jessups Accountants & Business Advisors
Level 1, 19 Stanley Street, Townsville QLD 4810
Dated this 30th day of August 2017
57
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MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017
ADDITIONAL AUSTRALIAN STOCK EXCHANGE
INFORMATION
The following information is current as at 14 August 2017.
MSV Quoted Ordinary Shares
Spread of holdings
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
Greater than 100,000
Total
Holding less than a marketable parcel
The twenty largest listed security holders comprise:
Rank
Shareholder
Washington H Soul Pattinson and Company Ltd
Mitchell Group Holdings Pty Ltd
Mitchell Family Investments (QLD) Pty Ltd
J P Morgan Nominees Australia
CVC Limited
RBC Investor Services Australia Nominees Pty Ltd
Farjoy Pty Ltd
BNP Paribas Noms Pty Ltd
Jumani Pty Ltd
Citicorp Nominees Pty Limited
National Nominees Limited
Sonya Miller
Peter Miller
Banjo Superannuation Fund Pty Ltd
Pacific Development Corporation Pty Ltd
Patricia Property Investments Pty Ltd
Berne No 132 Nominees Pty Ltd
Poal Pty Ltd
Carinda Pty Ltd
Hancroft Pty Ltd
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total
59
Number of
holders
Shares
% of total capital
issued
11
21
36
273
518
859
72
2,397
63,519
317,250
14,237,516
1,461,793,390
1,476,414,072
n/a
0.00%
0.01%
0.02%
0.96%
99.01%
100%
n/a
Unquoted and Restricted Securities
The following options granted as part of the Employee Share and Option Plan are on issue. The exercise of these options is subject
to vesting conditions. For more information, refer to the Directors’ Report.
Class
Management options
Number of options
27,715,960
Substantial Shareholders
Rank
Shareholder
1
2
Mitchell Group Holdings Pty Ltd and associates
Washington H Soul Pattinson and Company Limited
Ordinary Shares
314,763,177
180,427,561
% of total
capital issued
21.32%
12.22%
Ordinary
Shares
180,427,561
176,785,715
136,748,950
64,920,350
64,511,561
60,503,771
56,114,711
26,510,623
25,866,914
23,303,523
19,908,342
19,816,810
19,816,809
17,740,000
15,000,001
13,000,000
12,552,941
12,004,233
11,000,000
10,260,000
966,792,815
% of total
capital issued
Voting Rights
12.22%
11.97%
9.26%
4.40%
4.37%
4.10%
3.80%
1.80%
1.75%
1.58%
1.35%
1.34%
1.34%
1.20%
1.02%
0.88%
0.85%
0.81%
0.75%
0.69%
65%
Ordinary shares
The voting rights attached to ordinary shares is set out below:
On a show of hands, every member present at a meeting in person, or by proxy, shall have one vote, and upon a poll, each share
shall have one vote.
No other classes of securities have voting rights
Recently listed entities
For the period from 1 July 2016 to 30 June 2017, the Group has used the cash and assets in a form readily convertible to cash that it
had at the time of admission in a way that is consistent with its business objectives.
60
MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017
CORPORATE DIRECTORY
Board of Directors
Executive Chairman
Nathan Andrew Mitchell
Directors
Peter Richard Miller
Robert Barry Douglas
Neal Macrossan O’Connor
Chief Executive Officer
Andrew Michael Elf
Chief Financial Officer and Company Secretary
Gregory Michael Switala
Registered Office
Mitchell Services Ltd
ABN 31 149 206 333
112 Bluestone Circuit
Seventeen Mile Rocks
Qld 4073
Principal Place of Business
112 Bluestone Circuit
Seventeen Mile Rocks
Qld 4073
PO Box 3250
Darra Qld 4076
Share Registry
Advanced Share Registry
110 Stirling Highway
Nedlands Western Australia 6909
Ph: 08 9389 8033
Fax: 08 9262 3723
Website: www.advancedshare.com.au
Auditors
Jessups
Level 1, 19 Stanley Street
Townsville Qld 4810
Ph: 07 4755 3330
Fax: 07 4721 4513
Website: www.jessupsnq.com.au
Taxation Advisors
PricewaterhouseCoopers
123 Eagle Street
Brisbane Qld 4000
Ph: 07 4721 8500
Fax: 07 4721 8599
Website: www.pwc.com.au
Bankers
Suncorp Metway Ltd
61-73 Sturt St
Townsville Qld 4810
Ph: 07 3722 7222
Fax: 07 3722 7256
Website: www.mitchellservices.com.au
Ph: 07 4760 8229
Fax: 07 4771 6348
Website: www.suncorpbank.com.au
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MITCHELL SERVICES LTD MITCHELL SERVICES LTD ANNUAL REPORT 2017ANNUAL REPORT 2017 www.mitchellservices.com.au