More annual reports from MMA Offshore Ltd:
2023 ReportPeers and competitors of MMA Offshore Ltd:
Navios MaritimeInnovative in Approach
Global in Perspective
Annual Report 2015
M i d d l e
E a s t
Dubai
E a s t &
W e s t A f r i c a
G l o b a l P r e s e n c e ,
L o c a l K n o w l e d g e
MMA Offshore Limited (“MMA ” o r “ Compa ny” )
provid es global marine solutions th at are supp or t ed
by local teams with specialise d k n owled ge in t h eir
specific areas of ope ration.
K e y
Office
Supply Base
Onshore Facility
S o u t h E a s t A s i a
Malaysia
Batam
Singapore
Broome
Dampier
Fremantle
A u s t r a l i a
Owned Vessels
60+
We own and operate over 60 modern
offshore vessels
39+
20+
64%
Hectares of combined supply base area
Strategically located in Dampier and Broome
Hectares of yard area
18.1ha shipyard in Batam, Indonesia with
5 construction berths; 2.5ha oil and gas
focused facility in Singapore
Improvement to TRCF
Total Recordable Case Frequency (“TRCF”)
of 1.2 in FY15 (rate per million hours worked)
C o n t e n t s
Overview
About Us
Chairman’s Address
Managing Director’s Report
Operating & Financial Review
Financial Position
Risks
Operations
Vessel Operations
Dampier Supply Base
Broome Supply Base
Dampier Slipway
Health, Safety, Environment
& Quality
Our People
Community
Governance
Board of Directors
Corporate Governance
Directors’ Report
Auditor’s Independence Declaration
Audit Report
Directors’ Declaration
2015 Financial Report
Shareholder Information
2
4
6
10
14
16
18
20
21
22
24
25
26
28
34
52
53
55
57
Additional Securities
Exchange Information
111
MMA Offshore Limited 1
Overview
Operating & Financial Review
Governance
2015 Financial Report
Vessel Operations
Dampier Supply Base
Fleet Profile
Type
Newbuilds
AHT
AHTS (<8000 BHP)
AHTS (8000 BHP)
AHTS (>10800 BHP)
Barge
Harbour Tug
IMR
Multi-Purpose
PSV (<800m2)
PSV (>800m2)
Utility
Number in Fleet
5
12
9
10
4
2
3
1
4
4
3
4
MMA owns and operates over 60
vessels throughout Australia and
internationally.
MMA undertakes a range of offshore
marine activities including:
• FPSO offtake support;
• Supply operations - drilling and
production;
• Construction support;
• Survey support;
• Dive and ROV support;
• Subsea installation support;
• Subsea inspection, maintenance
and repair; and
• Tug and barge operations.
Spanning 28 hectares, MMA’s Dampier
Supply Base is strategically located
and capable of servicing the array of
vessels engaged in offshore support
activities with its six berth multi-user
wharf, open sealed laydown areas,
undercover storage and office facilities.
MMA is in the unique position of being
able to offer its clients on the North
West Shelf high quality, safe, flexible
and scalable access to the full range of
marine logistics services, from vessel
support and supply base services to
ship repair and maintenance facilities.
2 Annual Report 2015
A b o u t U s
With it s head off ice locat ed in
Frema nt le, Wester n Aust ralia
and inter national headquar t ers
in Singapore, MM A is one of t he
lar gest mar ine ser vice providers
in t he Asia Pacif ic re gion
Broome Supply Base
Dampier Slipway
International Onshore Facilities
The Broome Supply Base, conducted
through an incorporated joint venture
between MMA and Toll Holdings Ltd,
encompasses over 11 hectares of land,
strategically located adjacent to the
Broome Port to service exploration,
production and construction activities
in the Browse Basin. The Base offers
clients open laydown and undercover
storage, recently built offices, casing
storage and wash-down facilities.
MMA’s Dampier Slipway is strategically
located at the Dampier Supply Base
and is capable of docking vessels up
to 3,500 tonne displacement.
MMA operates two strategically located
international onshore facilities; a
shipyard in Batam, Indonesia and an oil
and gas support facility in Singapore.
The Slipway is a key asset in that it
provides timely maintenance and
repair of MMA’s expanding fleet in the
North West and ensures that MMA is
capable of servicing its clients’ marine
requirements safely and with a degree
of flexibility that no other operator in the
region can provide.
The Batam Shipyard facility includes
an 18.1 hectare yard site and five
construction berths capable of building
high quality commercial vessels and
customised offshore support vessels.
The Shipyard commenced operations
in 1993 and has successfully delivered
over 30 vessels in the last 20 years.
In addition to servicing MMA’s own
fleet, the Slipway provides services
to third party operators including
routine and emergency dockings,
mobilisations and a wide range of
marine repairs and maintenance
services.
The Singapore facility, which includes a
2.5 hectare yard site focuses on vessel
mobilisations and demobilisations for
the oil and gas industry.
MMA Offshore Limited 3
Overview
Operating & Financial Review
Governance
2015 Financial Report
C h a i r m a n ’s A d d r e s s
2015 was an extremely
challenging year for
the C om pany as the
collapse in worl d oil
prices impacted oil and
gas service pro vi ders
globally
Rates and utilisation fell significantly
in all of MMA’s operating regions
resulting in lower profitability and
a disappointing overall result for
shareholders.
anticipated future activity levels.
MMA expects to achieve at least $15
million in annualised cost savings
with the drive for ongoing efficiencies
continuing into FY16.
MMA reviewed the carrying value of
its assets as at 30 June 2015 and
recognised an impairment charge of
$120.7 million, reflecting the impact of
the current market conditions on the
Company’s operations.
Excluding the impact of the impairment
charge, MMA delivered a Net Profit
after Tax (“NPAT”) of $55.3 million, up
2.7% from the prior year and Earnings
per Share (“EPS”) of 15.0 cents per
share, down 20.2%.
The Board has declared a final fully
franked dividend of 1.5 cents per
share, which results in a total dividend
for the year of 5.5 cents per share,
down 56% on FY14 and reflecting a
conservative payout ratio in light of
current market conditions.
In February 2015, MMA commenced
a restructuring programme to
reduce overheads and optimise the
organisational structure in line with
MMA also remains committed to
its fleet optimisation programme
to align the fleet profile with our
strategy of moving away from smaller
commoditised vessels to larger and
more specialised vessels. Whilst the
vessel sales market has been very
difficult, we have recently signed sales
contracts to the value of $20 million
and are focused on executing further
sales in the remainder of the financial
year.
MMA has five new vessels under
construction; two specifically designed
platform supply vessels (“PSVs”) which
are contracted to INPEX for Ichthys
production support for a period of five
years firm, and up to 15 years if the
options to extend are exercised. The
remaining three vessels are specialised
vessels, targeted at the growing
subsea Inspection, Maintenance and
Repair (“IMR”) and production support
and maintenance markets.
4 Annual Report 2015
MMA’s Balance Sheet remains strong
with cash at bank at the end of the
financial year of approximately $125
million. Gearing has increased to
40.8% as a result of the impairment
charge, but is still relatively low by
industry standards. Net Tangible
Assets as at 30 June 2015 was $2.10
per share. The Company continues to
operate within the terms and conditions
of its bank debt facilities, which have
almost four years remaining of the
current term.
Whilst market conditions were
challenging, MMA continued to
provide services to the exploration,
construction and production sectors of
the oil and gas market during the year.
In Australia, LNG construction activity
continues with Shell’s Prelude Project,
INPEX’s Ichthys Project and Chevron’s
Wheatstone Project all underway.
Chevron’s Gorgon Project is nearing
completion, which has reduced the
overall demand for construction
support in the region. However, MMA
continues to have a number of vessels
engaged on this Project, including the
Silja Europa accommodation vessel, a
significant contract that is expected to
continue through the first half of FY16.
Investment in exploration in Australia
has declined given current market
conditions, although there are still a
number of rigs doing development
drilling off the coast of Western
Australia, providing demand for MMA’s
services.
MMA continues to support the majority
of the offshore production facilities in
the North West Shelf. These contracts
are very important to the Company,
particularly in the current market,
although margins have reduced.
Production support will continue to be a
major focus of MMA’s Australian vessel
strategy, as the market transitions from
construction to production over the
medium term. The INPEX production
support contract was a key win for the
Company, with the two PSVs, the MMA
Plover and MMA Brewster, expected
to contribute to earnings in the 2017
financial year.
Activity at the Dampier Supply Base
has been subdued with the scaling
down of the Gorgon construction and
lower exploration activity having a
major impact on demand. Pleasingly,
MMA recently secured a major supply
base contract to provide shore base
services to Chevron’s operations in the
North West. The contract is for a term
of 2 years with an option to extend for
a further year and is worth up to $100
million over the 2 year period. This
contract will provide a stable base load
of earnings for the Dampier Supply
Base going forward and provide
ongoing employment for 25-35 people
during the period of the contract.
Internationally, the markets have
been very challenging, particularly in
the second half of the financial year.
Activity in Asia and Africa has been
significantly impacted with rates and
utilisation down across all vessel
classes. The market in the Middle
East has held up better in terms of
utilisation, but has still experienced
downward rate pressure.
Several of MMA’s international long-
term contracts, were reduced in
duration or were not extended, and a
number of contracts were renegotiated
at lower rates in order to maintain
utilisation. We did extend a number
of longer term production support
contracts in the Middle East and
Thailand, albeit at lower rates.
With activity and utilisation under
pressure, MMA has implemented a
strategy to lay up underutilised vessels
at its Batam Shipyard to reduce
operating costs.
The integration of the Jaya business
has been successful and MMA and
Jaya are now operating under a single
global brand “MMA Offshore”. Whist
the market downturn has unfortunately
impacted operating results, the Board
remains confident in its strategy and
that the Jaya acquisition was the
right strategic move for the Company,
diversifying our earnings and reducing
our dependence on the Australian
market.
Significant improvements were made
in the area of safety during the year.
Safety in our operations is key to MMA’s
success and is a critical focus area for
clients.
As a result of ongoing investment into
our core Target 365 safety strategy,
the Company’s Total Recordable Case
Frequency reduced by 64% to 1.2
in FY15. This is a world class result
and an endorsement that our ongoing
commitment to the Target 365 safety
strategy is positively impacting the
safety culture across the organisation.
MMA signed a new three year
Enterprise Bargaining Agreement for
the Dampier Supply Base in January
2015, providing additional operating
flexibility for the Company. The
negotiations for enterprise agreements
for our offshore personnel are still
ongoing. It is very important that
we achieve a competitive outcome
that supports ongoing activity in the
Australian oil and gas industry.
Looking forward, there is still significant
uncertainty in the market around the
timing and extent of a recovery in the
oil price, which results in a very difficult
operating environment for MMA. With
that in mind, visibility in the vessel
markets is extremely challenging and
we expect subdued activity levels
through FY16 with continued pressure
on rates and utilisation.
In the current environment, MMA is
focused on maximising operating
performance through a strong focus
on customer requirements, safe
and reliable operations, competitive
tendering and taking actions to
improve and streamline the business.
I am confident that these actions will
position the Company very well to take
advantage of future opportunities when
the market improves.
I would like to conclude by thanking
Mr Jeff Weber, Managing Director,
and all management and staff for
their commitment and dedication to
the business in what has been a very
difficult year. I would also like to thank
my fellow members of the Board of
Directors for their valuable contribution.
Finally, I would like to thank you,
our shareholders, for your ongoing
support as we navigate through this
uncertain and challenging period for
the Company.
Tony Howarth AO
Chairman
MMA Offshore Limited 5
Overview
Operating & Financial Review
Governance
2015 Financial Report
M a n a g i n g D i r e c t o r ’s R e p o r t
Whilst current market
Financial summary
Operating summary
conditions are
extremely chal lengi ng,
MMA is taking a range
of actions which wil l
strengthen the business
and position i t well t o
take advantage
of the future upswing
in the cycl e
$796.7m
Revenue
$86.9m1
EBIT (pre-impairment)
$55.3m1
NPAT (pre-impairment)
15.0 cps1
EPS (pre-impairment)
$(51.3)m
Reported Net Loss after Tax
$120.7m
Non cash impairment
charge (pre-tax)
5.5 cps
Full year Dividends
$185.4m
Operating cash flow
40.8%
Gearing
$124.5m
Cash at Bank
2nd half severely impacted
by the collapse in the oil
price, compounded by
the completion of major
construction activity in
Australia
Rates and utilisation
materially down across all
regions
Asset sales programme on
track although market is
difficult
On track to meet $15m cost
reduction target
Our best safety performance
on record
Focusing on operational
excellence and streamlining
the business to position
the Company for the future
upswing in the cycle
1 MMA’s Financial Report complies with Australian Accounting Standards and International Financials Reporting Standards (“IFRS”).
The pre-impairment reported EBIT, NPAT and EPS are unaudited but are derived from audited accounts by removing the impact of the
impairment charge from the reported IFRS audited results. MMA believes the non-IFRS disclosures reflect a more meaningful measure of
the Company’s underlying performance.
6 Annual Report 2015
M o d e r n A s s e t s
W o r l d C l a s s E x p e r t i s e
Challenging market conditions
impacted MMA’s operations
during FY15
The 2015 financial year was an
extremely challenging year for MMA
as the price of oil fell by over 50%
from US$107 per barrel in July 2014
to current levels of under US$50 per
barrel. The unexpected decision by
OPEC in November not to rebalance
the market by cutting production,
caused the oil price to plunge as the
markets reacted to the emergence of a
supply / demand imbalance.
Oil and gas companies reacted swiftly,
dramatically cutting capital expenditure
budgets and seeking ways to reduce
their ongoing operating costs. The
impact on the offshore oil and gas
marine sector has been dramatic
with numerous projects or campaigns
cancelled or deferred, contracts
retendered to achieve lower pricing
and renegotiation of rates on longer
term projects.
The reduced activity has dramatically
impacted vessel utilisation, and
competition for available work is
intense, with operators cutting rates to
historically low levels.
In MMA’s areas of operation, rates have
reduced by up to 30% depending on
the region and vessel class. Combined
with the lower utilisation, this has had
a significantly negative impact on the
business.
In addition, MMA supported the
majority of the offshore production
facilities in the North West Shelf during
the year. On the exploration side, the
Mermaid Leeuwin continued to support
Woodside’s drilling programme.
Vessel performance impacted
by lower utilisation and rates in
all regions
The vessel business delivered a strong
result in the first half but second half
performance was impacted by the
downturn in the market, compounded
by a reduction in construction related
activity in Australia.
Average utilisation for the fleet across
the year was 70%, down from 81% in
FY14. First half utilisation was stronger
at 76% dropping to 65% in the second
half.
Activity in Australia was reasonably
strong during the first half but softened
dramatically in the second half as
construction project work scopes
completed and oil companies reduced
discretionary spending.
Key projects which contributed to the
2015 result included the Gorgon Heavy
Lift and Tie In Project, completed in
January 2015 and the Silja Europa
accommodation vessel, which
continues through the first half of FY16.
The international fleet was hit hard
by the adverse market conditions
with all regions impacted. First half
performance was only marginally
below expectations, but the plunge
in the oil price towards the end of the
calendar year had a significant impact
on the second half.
Several projects and campaigns were
cancelled or deferred with others re-
tendered to achieve lower pricing. A
number of MMA’s long-term contracts
were reduced in duration or were not
extended as anticipated and many had
to be renegotiated at lower rates to
maintain utilisation. Utilisation dropped
from 72% in the first half to 61% in the
second half. Rates have decreased by
up to 30%.
Utilisation remains under pressure and
we expect it to be some time before we
see day rates return to historical levels.
Overall, we expect market conditions
both in Australia and internationally to
remain subdued through FY16.
MMA Offshore Limited 7
Overview
Operating & Financial Review
Governance
2015 Financial Report
Activity levels at the Dampier
Supply Base declined due
to reduced construction and
drilling activity in the region
The Gorgon Project continued
to transition from construction to
production phase gradually reducing
demand for facilities, laydown area,
equipment and personnel across the
Base.
Pleasingly, a new contract with
Chevron was signed in June 2015 to
provide ongoing supply base facilities
and services to Chevron’s production
operations in the North West Shelf. The
contract is for a 2 year term, with an
option to extend for a further year and
is worth up to $100 million over the
initial two years.
Productivity improvements and cost
reduction have been the major focus
during the year as activity at the Supply
Base declines. A number of positions
were made redundant during the
year as the Company reconfigured
operations to meet current and
anticipated demand levels.
MMA’s ongoing focus for the Dampier
Supply Base is around securing new
contracts, enhancing MMA’s service
offering, increasing flexibility for
clients, reducing costs and improving
productivity.
Notwithstanding the recent challenges,
we believe earnings at the Dampier
Supply Base have reached a
sustainable level and we expect
the Base to continue to be a key
contributor to MMA’s earnings into the
future.
Slipway performance was
impacted by reduced overall
activity in the region
The reduction in offshore activity in
the North West Shelf region impacted
demand for Slipway services during
the year.
The Slipway docked 46 vessels in the
2015 financial year, including 29 third
party dockings, down from 58 dockings
in the previous year.
In light of anticipated reduced demand
for Slipway services going forward,
MMA reconfigured the operation
during the year to reduce the fixed
cost structure. The core permanent
workforce has been significantly
reduced and will be supplemented by
contract labour as demand requires.
The focus for the Slipway going forward
will be on servicing MMA’s internal
fleet and that of key external clients,
including terminal tug operators in the
region.
The Broome Supply Base JV
delivered consistent earnings
During the year, the Broome Supply
Base supported Shell and INPEX with
their development drilling programmes
for the Prelude and Ichthys LNG
Projects, as well as exploration drilling
campaigns for Woodside, Conoco
Phillips and Santos.
Exploration drilling activity has reduced
in recent months, however the Broome
Supply Base will continue to support
the development drilling programmes
for Shell and INPEX in FY16.
Woodside recently announced that it
had commenced front end engineering
and design on its proposed Browse
FLNG Development with a final
investment decision currently expected
in late 2016.
With its high quality infrastructure
and proven operational capability,
the Broome Supply Base is very well
placed to support such future projects
in the region.
Newbuild programme on track
MMA has five vessels under
construction which will enter the fleet
in FY16. Two specifically designed
PSVs, contracted to INPEX for long-
term production support are under
construction at the VARD shipyard
in Vietnam. The other three vessels
are specialised vessels being
constructed by our Batam Shipyard;
a Multi-purpose Maintenance Work
vessel, which is nearing completion
and is being bid into contracts in the
production and maintenance markets
and two ROV Support vessels, which
will target the Subsea Inspection
Maintenance and Repair (“IMR”)
market.
Cost reduction on track to meet
$15m in annualised savings
In response to the downturn, MMA
embarked on a cost reduction
programme to reduce overheads and
operating expenses. Actions have
been taken to reduce personnel and
key expenditure items. The programme
is on track to deliver at least $15
million in ongoing annualised savings.
The drive to improve efficiencies will
continue into the 2016 financial year.
Jaya integration largely
complete
The integration of the Jaya business
into MMA’s operations is now largely
completed with a number of cost and
revenue synergies delivered. The MMA
and Jaya businesses now operate
under a single brand “MMA Offshore”.
Vessel sales programme
Asset impairment charge
ongoing
recognised
The vessel sale and purchase market
is weak, making the execution of
the planned fleet rationalisation
programme difficult. However, MMA
has signed sales agreements to a
value of approximately $20 million in
the 2016 financial year to date and
will continue to focus on executing the
strategy.
As at 30 June 2015, MMA recognised
an impairment charge of $120.7 million
against the carrying value of its assets.
The impairment charge reflects the
impact of current market conditions
on the Company’s operations. A $20.7
million impairment was recognised
against the carrying value of goodwill
associated with the Dampier Supply
Base and a further charge of $100
million was booked against the carrying
value of the vessel fleet.
8 Annual Report 2015
Market outlook
In Australia we continue to service our
existing production and construction
support contracts and are tendering
new opportunities for both short and
long-term contracts.
Whilst Gorgon construction is nearing
completion, we expect a number of
MMA vessels to remain on contract
supporting the Project through FY16.
Opportunities for new work scopes for
Wheatstone, Prelude and Ichthys LNG
Projects are also expected in the 2016
financial year.
Competition in Australia from
international operators continues to
intensify as a result of the current
depressed market conditions and we
do not expect to see an improvement in
rates or utilisation in the region for the
2016 financial year.
Internationally, market conditions
remain extremely weak with low
utilisation and rates across all of our
operating regions. Competition is also
fierce for any available opportunities.
Until we see a sustained increase in
the oil price, we do not foresee any
improvement in the international vessel
market.
Overall, visibility in the vessel market
is very challenging with rates and
utilisation expected to remain under
pressure through the next 12 months.
Jeff Weber
Managing Director
In determining the impairment
amount, consideration was given to
the expected future cash flows from
the Company’s assets, based on
assumptions around the outlook for
rates and utilisation. The impairment
charge is a non-cash amount and
will not impact compliance with the
Company’s debt covenants.
The safety of our people is core to the
way MMA does business. It is also
critically important to our clients; a
good safety performance is our licence
to operate.
MMA will continue to drive
improvements in safety across the
organisation with Target 365 at the core
of its strategy.
Strong Balance Sheet
Maintained
People
MMA’s Balance Sheet remains strong
with cash at bank of approximately
$125 million at the end of the financial
year. Gearing has increased from
36.1% to 40.8% as a result of the
Asset Impairment, however it remains
relatively low by industry standards.
The Company continues to operate
within the terms and conditions of its
bank debt facilities.
Net Tangible Assets per share as at
30 June 2015, post the impairment
charge, was $2.10.
Excellent safety performance
On a positive note, MMA had its best
safety performance on record in
FY15. MMA’s Total Recordable Case
Frequency decreased from 3.3 to 1.2
across the organisation, a 64% year
on year improvement and comparable
with world class standards.
This is an excellent result and confirms
that our Target 365 safety strategy
is maturing and having a positive
impact on the safety culture across the
organisation.
Target 365 was developed by MMA
in 2012 and focuses on everyone
coming to work each day with the aim
of having a “Perfect Day”, that is, a day
free of recordable injuries and material
incidents.
Target 365 was recently confirmed as
a finalist in the 2015 APPEA Health,
Safety and Environment Awards
recognising achievement, innovation
and commitment to improving health,
safety and environmental performance
in the Australian oil and gas industry.
At MMA we recognise that our people
are the key to a successful business.
We strive to provide a workplace
built on trust, cooperation and mutual
respect, where our people care about
their safety and the safety of those
around them.
I am very fortunate to be supported by
an extremely capable and dedicated
Senior Management Team who I am
confident will steer the Company
through this challenging period.
I would like to thank the Senior
Management Team and all MMA
staff for their valuable contribution,
hard work and support during what
has been a very difficult year for the
Company.
I would also like to thank the Board of
Directors for their ongoing guidance
and stewardship.
Strategy
MMA’s strategy continues to focus
on maximising opportunities across
our key service areas of oil and gas
support vessels and supply bases in
our key geographic locations, namely;
Australia, South East Asia, the Middle
East and Africa.
In the current environment, MMA is
focused on streamlining the business
and building a strong base for the
future. A range of actions are currently
being undertaken to optimise the
asset base, reduce costs, increase
productivity and improve our overall
operating performance, which will
position the Company well to take
advantage of the future upswing in the
cycle.
MMA Offshore Limited 9
Overview
Operating & Financial Review
Governance
2015 Financial Report
F i n a n c i a l P o s i t i o n
The Company repor te d
a Net Loss af ter Tax f or
the 2015 financi al year
of $( 51.3) mil li on after
booking a non-cash
imp ai r ment charge of
$120.7 m illion against
the car r ying val ue of the
Company’s vesse l f leet
and goodwi ll associated
with the Supply B ase
division
Excluding the impairment charge, the
Company reported a Net Profit after Tax
(“NPAT”) for the year of $55.3 million,
which was 2.7% above the reported
profit for the previous year of $53.9
million.
The Company’s Earnings per Share
(“EPS”) for the 2015 financial year,
excluding the impact of the impairment
charge, was 15.0 cents per share,
down 20.2% on the previous year’s
total of 18.8 cents per share.
NPAT for the first half of the year was
$37.7 million. Earnings for the second
half of the year, excluding the impact
of the impairment charge, reduced
by 53% to $17.6 million, as the drop
in the oil price over the period led to
a significant decline in demand for
services and rates across the offshore
oil and gas support industry.
Net Pro fit After Tax
$55 .3m (pre-impair m ent)
60.3
53.9
55.3
51.0
43.2
11
12
13
14
15
Ear n ing s Per Share
15.0 cents (pre-im pair ment)
25.2
23.4
21.1
18.8
15.0
11
12
13
14
15
10 Annual Report 2015
A g l o b a l r e c o r d
i n r e l i a b l e d e l i v e r y
The Company’s operating margins also
declined during the second half as a
result of the difficult trading conditions,
which also led to a decline in the
Company’s Return on Equity during the
year to 6.8%, prior to the impact of the
impairment charge.
The Company has undertaken a
restructuring programme to reduce
overhead costs and realign the
organisational structure, which will
see annualised savings in excess
of $15 million realised during the
coming year.
Impairment Charge
The Company conducted an
assessment of the recoverable
amounts of the assets comprising the
Vessels, Supply Base and Slipway
Cash-Generating Units at the end of
the financial year, having identified the
following indicators of impairment:
• The carrying value of the
Company’s net assets was more
than the Company’s market
capitalisation, and
• Market conditions in the offshore oil
and gas support industry in both
Australia and internationally had
been significantly impacted by the
large decline in the oil price during
the year.
As a result of the impairment
assessment, the Company recognised
an impairment charge of $120.7
million against the carrying value of
the assets, comprising an impairment
charge of $100 million against the
value of the Vessel assets and a
charge of $20.7 million against the
value of the Goodwill associated with
the Dampier Supply Base.
In determining the impairment amount,
the Company assessed the expected
future cash flows from the Company’s
assets based on the outlook for activity
across the industry and associated
demand and pricing for the Company’s
services.
The impairment charge is a non-cash
charge.
MMA Offshore Limited 11
Overview
Operating & Financial Review
Governance
2015 Financial Report
Op eratin g Cashflow
Cashflow
Dividends
The Company reported cash on hand
at the end of the 2015 financial year
of $124.5 million compared to the
balance of $174.8 million at the end
of the previous year. The funds were
applied during the year to meet the
Company’s capital expenditure, service
the Company’s commitments under
its debt facility and fund the dividend
payments to shareholders.
The Company paid an interim fully
franked dividend for the 2015 financial
year of 4.0 cents per share on 2 April
2015 and has declared a final fully
franked dividend of 1.5 cents per share
to be paid on 29 September 2015. The
total dividends of 5.5 cents per share
for the year represent a payout ratio of
43% of the pre impairment Earnings
per Share of 15.0 cents for the year.
The Company has in place a Dividend
Reinvestment Plan which shareholders
can elect to participate in and have all
or part of their dividends reinvested
in additional shares in the Company.
The subscription price for the shares
to be issued is the average of the daily
volume weighted average sale price of
the Company’s shares sold on the ASX
during the 5 trading days immediately
following the record date for the
dividend.
The Company reported cashflow from
operations for the 2015 financial year
of $185.4 million, up 240.8% on the
previous year’s total of $54.4 million.
The increased operating cashflow was
due to an increase in the operating
revenue during the year, which
included the contribution from the
vessels acquired from Jaya Holdings
in June 2014, and an improvement in
working capital across the Company.
Capital Expenditure
Capital Expenditure for the year totalled
$247.2 million, of which $78 million
related to vessel mobilisations which
will be fully recovered over the term of
the projects.
The major capital expenditure items
for the year related to final payments
made on three newbuild vessels
completed during the first half of
FY15 and construction costs for
the three specialised vessels being
built at the Company’s Shipyard in
Batam, Indonesia, which are due for
completion during the 2016 financial
year.
The Company has capital expenditure
commitments of approximately
$130 million for the coming financial
year. In addition to the three vessels
being completed at the Company’s
Batam Shipyard, the Company will
take delivery of two Platform Supply
Vessels which are contracted to INPEX
to support their Ichthys Project in
Australia.
$ 185 .4m
185.4
79.5
79.6
70.8
54.4
11
12
13
14
15
Ca pi tal Ex penditure
$ 247 .2m
247.2
84.1
71.8
95.6
68.0
11
12
13
14
15
Di vi den ds Per Share
12.5
12.5
5 .5ce nts
11.0
9.0
5.5
11
12
13
14
15
12 Annual Report 2015
Inter es t Be ar ing Liabilities
Debt Management
$4 42.5 m
440.8 442.5
179.6
158.1
134.3
11
12
13
14
15
NTA Pe r Share
$2 .10
1.66
1.37
1.25
2.10
1.95
11
12
13
14
15
Cash A t Ba nk
$1 24.5 m
174.8
124.5
55.1
55.3
58.8
11
12
13
14
15
Ge ar i n g
4 0.8%
32.0
30.0
29.4
40.8
36.1
11
12
13
14
15
In May 2014, the Company entered
into a Syndicated Term Loan Facility
Agreement with National Australia Bank
(“NAB”) and the Australia and New
Zealand Banking Group (“ANZ”) as
mandated lead arrangers, underwriters
and bookrunners. The Syndicated
Facility comprised a A$200 million
facility and a US$227 million facility.
The primary purpose of the A$ facility
was to refinance the Company’s
existing loan facilities, whilst the US$
facility was used to fund the acquisition
of the Jaya business.
The Syndicated Facility has a term
of five years and is fully secured by
fixed and floating charges over certain
controlled entities within the Group,
registered ship mortgages over a
number of the vessels, real property
mortgages and a mortgage by way
of sub-demise over the Company’s
Dampier Supply Base lease.
The security is held by the Security
Trustee on behalf of the banking
members of the Syndicated Facility.
The current weighted average effective
interest rate on the Syndicated Facility
is 3.30%.
Following the principal repayments on
the Loan Facilities during the year, the
balance owing on the A$ facility and
the US$ facility as at 30 June 2015
had reduced to A$180.0 million and
US$204.3 million respectively.
Balance Sheet
The Company’s Balance Sheet
remained strong at the end of the 2015
financial year.
Following the impairment charge,
the Company reported Total Assets
of $1,425.2 million, Net Assets of
$779.1 million and Net Tangible
Assets (“NTA”) of $2.10 per share.
The Company had cash reserves
totalling $124.5 million at the end of
the financial year which will be used
to meet capital expenditure and other
financial commitments going forward.
The Company’s gearing ratio (net debt
to equity) increased slightly during the
year to 40.8%, compared to 36.1% the
previous year.
MMA Offshore Limited 13
Overview
Operating & Financial Review
Governance
2015 Financial Report
R i s k s
The Company recogni ses
that r isk is an inherent
par t of our business.
Effectivel y managing
risk allows us to deliver
on our obj ectives and
position oursel ves for
comp etitive advantage
and sustainabl e growth
14 Annual Report 2015
Competition, vessel oversupply
and fleet composition
misalignment with market
demand
Demand for MMA’s vessels is affected
by the level of activity in the offshore
oil and gas industry, the number of
vessels available in the market and the
competitive landscape.
In recent years a large number
of offshore vessels have been
constructed globally. Without a
corresponding increase in demand
and/or retirement of ageing vessels, the
increase in supply and corresponding
competition may adversely impact
utilisation, rates and contract terms,
thereby impacting MMA’s profits.
Decreases in industry activity also
intensify competition, with an increased
number of available vessels competing
for fewer opportunities.
MMA seeks to manage this risk by
having a clear strategic plan based on
market supply and demand forecasts,
with the aim of having an appropriate
asset mix and capability to meet
market demand. Re-balancing of the
fleet through asset purchases and/
or newbuilds and divestures helps to
ensure that the fleet aligns with market
requirements. Where necessary,
vessels are either cold or warm
stacked, thereby reducing costs and
vessel supply.
MMA aims to differentiate itself from
its competitors through operational
excellence, competitive pricing, quality
service delivery, being proactive and
providing innovative solutions, investing
in customer relationships and providing
responsive account management
to meet customer expectations and
needs.
MMA operates an enterprise risk
management framework aligned to ISO
31000, the international standard for
risk management.
This section describes (in no order of
significance) the material risks that
have been identified and are being
managed in order for the Company
to deliver on its objectives. It is not
intended to be all encompassing, nor
is any of the information intended to
be taken as a statement of fact. These
risks can be affected by a variety of
factors which can, in turn, impact the
Company’s performance.
Dependence on level of activity
in the offshore oil and gas
industry
The Company is dependent on
continued activity and expansion in
the offshore oil and gas industry in
the markets in which the Company
operates (currently Australia, South
East Asia, the Middle East and Africa).
The level of activity in the offshore oil
and gas industry may be affected by
prevailing or predicted future oil and
gas prices, economic growth, energy
demand, the cost and availability of
other energy sources and changes in
energy technology and regulation. Any
prolonged period of low offshore oil
and gas activity would have an adverse
effect on our business.
The Company aims to mitigate the
impact of lower offshore oil and gas
activity by providing a broad range of
marine logistics services, both onshore
and offshore and diversifying our
geographic footprint across a number
of key regional areas.
MMA also aims to diversify its contract
portfolio across the exploration,
construction, production and
maintenance sectors of the oil and gas
cycle, balancing its portfolio between
short term and longer term contracts.
MMA’s strategic plan considers such
risks and operationally we risk assess
market areas and clients regularly to
limit negative and optimise positive
impact.
Industry news, experienced personnel
and industry relationships are
leveraged to ensure we base our
decisions on up to date geopolitical
information. Contingency plans for fast
emerging geopolitical risks are used to
limit business disruption.
Foreign exchange
The majority of MMA’s revenues are
paid in either Australian or US Dollars
and the Company’s operating costs are
primarily denominated in a combination
of Australian, Singaporean and US
Dollars, providing a natural hedge
for our activities. MMA also has a
combination of Australian Dollar and
US Dollar debt.
Adverse movements in these
currencies may result in a negative
impact on MMA’s profitability.
MMA’s treasury policy and contract
management process further mitigates
this risk. The Board also considers
from time to time whether to manage
currency fluctuation risk through
appropriate hedging.
Operational risks
The Company’s operations are subject
to various risks inherent in servicing
the offshore oil and gas industry.
Our international expansion widened
our risk exposure in terms of both
opportunities and threats. Following
the Jaya acquisition, the integration of
our operations has been completed as
planned, with numerous strategic and
operational benefits being realised.
Operational risks include:
•
Increases in input costs such as
crewing, wages or maintenance
costs, which may reduce operating
margins;
• Redeployment costs of assets
that are unable to be used in their
current geography for a period of
time;
• Health and safety incidents;
• Loss of key customers/contracts;
• Failure by customers to pay
for services contracted and/or
performed;
• Loss of key personnel and the
ability to recruit and retain skilled
employees;
•
Inability to source reliable
subcontractors and suppliers;
• Equipment damage, technical
failures or human error;
•
Industrial unrest;
• Capsizing, sinking, grounding,
collisions, fires and explosions,
piracy, vessel seizures or arrests
and acts of terrorism;
• Natural disasters and
environmental and other accidents;
and
• Regulatory and legislative non-
compliance.
Potential consequences related
to these risks include the loss of
human life or serious injury, pollution,
environmental damage, significant
damage or loss to assets and
equipment, business disruption,
client dissatisfaction, damage to our
reputation and legal and regulatory
action, including fines. This could
expose MMA to significant liabilities, a
loss of revenue and/or the incurrence
of additional costs and therefore may
have a materially adverse impact on
the Company’s financial position and
profitability.
We employ numerous well executed
controls to manage these risks,
including, but not limited to,
appropriate insurance coverage,
hazard and risk management
processes, quality audits, preventative
and planned maintenance
programmes, compliance programmes,
tender and contract management
processes, access to in-house and
external legal expertise, industrial
relations strategies, emergency
preparedness and contingency plans,
preferred supplier and subcontractor
processes, client credit risk
assessments and a host of engineering
and operational controls.
Geopolitical, government and
regulatory factors
Our international operations are subject
to more challenging geopolitical
climates to varying degrees. Changes
in the geopolitical climate in our
market areas, such as the outbreak
or resolution of war, nationalisation
of a customer’s oil and gas projects
and changes to industry related
legislation, protectionist measures and
economic sanctions, may open up
more advantageous areas to operate
or could require us to discontinue
operating in that area, leading to
corresponding impacts on vessel and
service utilisation.
MMA Offshore Limited 15
Overview
Operating & Financial Review
Governance
2015 Financial Report
V e s s e l O p e r a t i o n s
Lower rates and
utilisation in all
regions im pacted
Financial overview
Revenue up 56.9%
EBIT up 30.5% (pre-impairment)
2nd half materially down on 1st half
Strategy
Differentiation through superior
service, high quality and safe
operations, integrated value chain
whilst remaining cost competitive
per for mance
$100m impairment charge
Operating overview
Utilisation – average 70%
Rates reduced by up to 30% in 2nd
half
Engaged in a number of key ongoing
contracts
Completing 5 newbuild vessels
Vessel sales programme continuing
Australian EBA negotiations ongoing
Operating scale in key geographic
regions – Australia, Asia, Middle East,
Africa
Optimising the fleet to focus on larger,
more specialised vessels
Outlook
Overall visibility in the vessel market is
challenging with rates and utilisation
expected to remain under pressure
through the next 12 months
EB IT 1
$ 77.1m
52.5
42.7
44.5
77.1
59.1
Financials
Revenue
EBITDA
EBITDA / Revenue
EBIT (pre-impairment)
EBIT / Revenue
Segment Assets
ROA (pre-impairment)
Variance
30 Jun 2015
30 Jun 2014
56.9%
$699.8m
$445.9m
122.5%
$199.1m
$89.5m
8.4%
30.5%
2.3%
8.7%
5.2%
28.5%
20.1%
$77.1m
$59.1m
11.0%
13.3%
$1,061.3m
$976.5m
7.2%
12.4%
11
12
13
14
15
1 EBIT excludes the impact of the $100m impairment charge against vessel assets in FY15
16 Annual Report 2015
Revenue from vessel operations was
$699.8m up 56.9% and EBIT, excluding
the impact of the $100 million
impairment charge to the vessel fleet,
was $77.1m, up 30.5% on the previous
financial year.
International operations contributed
revenue of $157.2 million and EBIT of
$35.8 million, excluding the impairment
charges, during FY15 as compared
to revenue of $27.3 million in FY14,
reflecting a full year contribution from
the Jaya business which was acquired
in June 2014.
Average utilisation for the fleet across
the year was 70%, down from 81% in
FY14. First half utilisation was stronger
at 76%, dropping to 65% in the second
half.
Australia
Activity in Australia was reasonably
strong during the first half but softened
dramatically in the second half as
construction project work scopes
completed and oil companies reduced
spending. Utilisation was 82% in the
first half but declined to 67% in the
second half. In addition, day rates have
reduced by 10 to 15%.
During the first half, construction
activity on the Gorgon Project was
strong with the Subsea 7 Heavy Lift
and Tie In Project contributing to
earnings. This Project involved MMA
project managing a total of 20 vessels
to support delivery of the Project’s
subsea infrastructure to the field. The
Project was largely completed by the
end of the first half with only the MMA
Leveque continuing through to the
second half.
In September 2014, MMA secured a
major new contract on the Project for
the operation and management of the
accommodation vessel, Silja Europa
which houses around 1,200 members
of the Gorgon construction workforce.
The contract is expected to continue
through the first half of FY16.
With the Gorgon construction
approaching completion, the majority
of MMA’s construction related vessel
contracts have concluded or are
expected to roll off by December 2015,
however MMA does expect some
vessels to remain on the project post
this date.
Construction of the Ichthys, Prelude
and Wheatstone LNG Projects also
continues. MMA was engaged on
a number of short-term contracts in
relation to the Prelude and Wheatstone
Projects during the second half through
Technip Oceania. A number of larger
Wheatstone scopes are scheduled
to commence in the third quarter of
FY16 including a contract for five tug
and barge sets and a platform supply
vessel (“PSV”).
Production support continues to be
a key component of MMA’s strategy.
MMA continues to service the majority
of the current production facilities on
the North West Shelf, providing an
important base load of utilisation for the
Australian fleet. However, margins are
under pressure as oil and gas majors
look to reduce their operating costs.
Production support will be the key part
of the Australian vessel support market
in the future as the major LNG projects
move from construction to production.
Importantly, MMA has secured the
INPEX Ichthys LNG production support
contract, which is due to commence
in FY17. The contract is worth $160
million for the firm period and up to
$500 million if all of the options are
exercised.
MMA’s vessel business has a limited
exposure to the exploration market in
Australia and therefore has not been
impacted to a large extent by the
reduction in exploration expenditure
as a result of the fall in the oil price.
The Mermaid Leeuwin continued its
long-term drilling support contract
with Woodside in the Browse Basin.
This scope is expected to complete
September 2015 and the vessel is
being bid into further Australian based
activities.
Looking ahead, MMA will continue
to service its existing production and
construction support contracts and we
are tendering for new opportunities for
both short and long-term contracts.
Construction activity on Wheatstone,
Prelude and Ichthys will provide
opportunities in FY16. Overall, we
expect market conditions to remain
subdued through FY16 with the
combination of low utilisation and
day rates making for very difficult
conditions for vessel operators.
International
The international fleet has been hit very
hard by the current market conditions
with all regions impacted. Utilisation
dropped from 72% in the first half to
61% in the second half and rates have
decreased by up to 30%.
Competition remains intense for
the opportunities that are available
with contracts being let at close to
breakeven rates to maintain utilisation.
The market in South East Asia has
been materially impacted by the
downturn. Rig availability is high in the
region and activity is down significantly
in the exploration and development
sectors. Cost cutting by the oil and gas
companies has also driven down rates.
Activity in the Middle East has held up
more so than other regions but rate
reductions of around 15-20% have
been experienced across all vessel
classes.
East and West Africa have probably
seen the greatest impact due to the
predominantly deep water nature of
their oil and gas fields. Many of the rigs
in the region have had their contracts
terminated early, resulting in high
vessel availability in most categories
and rates on some vessel types are
down by more than 40%. Although
MMA’s direct chartering exposure to
this market is limited, there is activity in
the market mainly for shorter duration
contracts which MMA is tendering in
order to maintain utilisation.
Given the current market conditions,
MMA has implemented a strategy to
lay up vessels at the Batam Shipyard
to reduce the operating costs on idle
vessels. MMA also continues to focus
on its vessel sales programme to
optimise the fleet size and composition.
MMA has three specialised vessels
under construction at its Batam
Shipyard. The MMA Privilege, a Multi-
purpose Maintenance Work Vessel is
nearing completion and is being bid
into contracts in the production and
maintenance markets. The two ROV
Support Vessels will target the Subsea
Inspection Maintenance and Repair
(“IMR”) market.
Utilisation, remains under pressure and
we expect it to be some time before we
see day rates return to historical levels.
Overall, we expect market conditions to
remain subdued through FY16.
MMA Offshore Limited 17
Overview
Operating & Financial Review
Governance
2015 Financial Report
D a m p i e r S u p p l y B a s e
Reduced const ruction
Financial overview
Strategy
and drill ing
activity i mpacted
per for mance
Revenue down 33.6%
EBIT down 49.6% (pre-impairment)
Goodwill impairment $20.7m
Margins significantly impacted by
reduced rates, lower wharf utilisation
and reduced rental income
Operating overview
Secured $100m + Chevron contract
Drilling activity impacted by the
downturn, although some development
drilling is ongoing
Reconfiguring the operation to meet
post construction demand profile
Tendering a number of Supply Base
and logistics opportunities
Focus on exceptional client service
delivery
Maximise all opportunities at existing
Supply Base and leverage skills to
provide supply base services at other
locations
Expand service offering and broaden
customer group
Productivity and operational efficiency
Outlook
Expect activity to stabilise at current
levels with ongoing focus on
productivity improvements
EB IT 1
$1 8.6m
52.3
36.7
36.9
30.4
Financials
Revenue
EBITDA
EBITDA / Revenue
EBIT (pre-impairment)
18.6
EBIT / Revenue
Variance
30 Jun 2015
30 Jun 2014
33.6%
45.2%
6.2%
49.6%
6.7%
$88.5m
$133.3m
$25.9m
$47.3m
29.3%
35.5%
$18.6m
$36.9m
21.0%
27.7%
Segment Assets
20.6%
$134.3m
$169.2m
ROA (pre-impairment)
9.2%
11.5%
20.7%
11
12
13
14
15
1 EBIT excludes the impact of the $20.7m impairment charge against Supply Base goodwill
in FY15
18 Annual Report 2015
Activity levels at the Dampier Supply
Base declined during the year as a
result of reduced construction and
drilling related activity in the region
which saw revenue down by 33.6%
from the previous financial year to
$88.5 million. EBIT also decreased by
49.6% to $18.6 million for the year prior
to the non-cash impairment charge
of $20.7 million which was booked
against Supply Base goodwill as at
30 June 2015.
The Gorgon Project continued
to transition from construction to
production phase gradually reducing
demand for facilities, laydown area,
equipment and personnel across the
Base. The reduction in rental income
has had a significant impact on
margins.
Pleasingly, a new contract with
Chevron was signed in June 2015 to
provide ongoing supply base facilities
and services to Chevron’s production
operations in the North West Shelf. The
contract is for a 2 year term with an
option to extend for a futher year and is
worth up to $100 million over the initial
two years. Under the new contract,
MMA will provide a broader scope of
services which will include quarantine
inspection and remediation services
and freight and materials management
in addition to MMA’s traditional Supply
Base and wharf service offering.
MMA is currently tendering for a
number of other Supply Base and
logistics opportunities and is also
marketing the Base to a wider
customer group to increase land
utilisation and service income. With
the reduced demand and increased
availability of land in the area, margins
have come down from historical levels.
Wharf vessel visits were down
approximately 30% on previous levels
as a result of lower drilling in the region
and reduced project related demand.
Reduced wharf activity resulted in
lower general activity across the Base
and significantly reduced operating
margins.
Productivity improvements and cost
reduction have been a major focus
during the year as activity at the Supply
Base declines. A number of positions
were made redundant during the
year as the Company reconfigured
operations to meet current and
anticipated demand levels.
A new three year Enterprise Bargaining
Agreement was approved in January
2015 and this will provide enhanced
workforce flexibility going forward.
MMA’s ongoing focus is around
securing new contracts, enhancing
MMA’s service offering, increasing
flexibility for clients, reducing costs and
improving productivity.
Notwithstanding the recent challenges,
we believe earnings at the Dampier
Supply Base have reached a
sustainable level and we expect
the Base to continue to be a key
contributor to MMA’s earnings into the
future.
S t r a t e g i c a l l y l o c a t e d o n s h o r e
f a c i l i t i e s
MMA Offshore Limited 19
Overview
Operating & Financial Review
Governance
2015 Financial Report
B r o o m e S u p p l y B a s e
The Broom e Supply
Base is well posi tioned
to sup por t current and
future activity in the
Browse Basi n
MMA’s 50% share of NPAT for the
2015 financial year was $3.4 million,
consistent with the previous year’s
NPAT of $3.5 million.
During the year, the Broome Supply
Base supported Shell and INPEX with
their development drilling programmes
for the Prelude and Ichthys LNG
Projects as well as exploration drilling
campaigns for Woodside, Conoco
Phillips and Santos.
Exploration drilling activity has reduced
in recent months, however the Broome
Supply Base will continue to support
the development drilling programmes
for Shell and INPEX in FY16.
Woodside recently announced that it
had commenced front end engineering
and design on its proposed Browse
FLNG Development with a final
investment decision currently expected
in late 2016.
With its high quality infrastructure
and proven operational capability,
the Broome Supply Base is very well
placed to support such future projects
in the region.
Note: The Broome Supply Base is
operated as a 50/50 joint venture
between MMA and Toll Holdings
Limited.
20 Annual Report 2015
O f f e r i n g a n i n t e g r a t e d s e r v i c e
& t a i l o r e d s o l u t i o n s
D a m p i e r S l i p w a y
Per for mance of the
Dampi er Slipway w as
imp acted by reduced
activity i n t he re gi on
The Slipway performed below
expectations during FY15.
Revenue was $22.7 million, down
22.5% on FY14, and the business
made an EBIT loss of $(0.2) million for
FY15, down from a profit of $3.1 million
in FY14.
The reduction in offshore activity in
the North West Shelf region impacted
demand for Slipway services during
the year. In addition, we have begun
to see more competition from other
providers in Singapore and Perth who
are tendering aggressively for the
larger jobs.
The Slipway docked 46 vessels in FY15
including 29 third party dockings, down
from 58 dockings in FY14.
In addition to servicing offshore
vessels, the Slipway continues to be
a major supplier to terminal towage
operators in the region.
There are now over 40 harbour
tugs operating in the region, which
represents a solid ongoing demand
for Slipway services. However, as
mentioned above, margins are being
squeezed as the resources sector also
focuses on reducing operating costs.
In light of anticipated reduced demand
for Slipway services going forward,
MMA reconfigured the operation
during the year to reduce the fixed
cost structure. The core permanent
workforce has been significantly
reduced and will be supplemented
by contract labour, which is now more
readily available.
The Slipway has always been a key
strategic asset for the Company and
over the past few years has made a
solid EBIT contribution. The focus for
the Slipway going forward will be on
servicing MMA’s internal fleet and that
of key external clients.
EB IT
-$ (0.2 )m
2.9
2.1
3.5
3.1
-0.2
11
12
13
14
15
Financials
Revenue
EBITDA
EBITDA / Revenue
EBIT
EBIT / Revenue
Segment Assets
ROA (averaged)
Variance
30 Jun 2015
30 Jun 2014
22.5%
86.8%
10.8%
106.5%
11.5%
27.8%
18.1%
$22.7m
$29.3m
0.5m
2.2%
-$0.2m
-0.9%
$3.8m
13.0%
$3.1m
10.6%
$14.5m
$20.1m
-1.2%
16.9%
MMA Offshore Limited 21
Overview
Operating & Financial Review
Governance
2015 Financial Report
H e a l t h , S a f e t y, E n v i r o n m e n t & Q u a l i t y
The health and safety of MMA’s
employees and contractors is core to
the way we do business. MMA’s HSEQ
strategy supports the Company’s
mission to eliminate incidents. This is
reflected in our comprehensive suite
of HSEQ policies and procedures that
guide activities across the organisation.
During the 2015 financial year, MMA’s
TRCF decreased from 3.3 to 1.2
across the organisation, a 64% year on
year improvement and the best ever
performance for the Company.
This significant improvement is the
result of:
• Further maturing of MMA’s “Target
365 – A Perfect Day Every Day”
operating strategy which focuses
on everyone coming to work
each day with the aim of having a
“Perfect Day”, that is, a day free
of recordable injuries and material
incidents;
• Extending the reach of the Target
365 safety strategy to include our
International business through the
business integration process;
• Continual review and analysis
of incident risk factors and the
implementation of dedicated
incident prevention campaigns;
and
As part of MMA’s Target 365
Programme, Perfect Days are tracked
via internal reports and communicated
to staff via the Company’s intranet
system on a Perfect Day dashboard. In
the 2015 financial year, MMA achieved
323 Perfect Days. This equates to a
Perfect Day percentage of 89%, a
slight improvement on the previous
year.
In the 2016 financial year, our
organisation wide target is to have
365 Perfect Days.
Per fe ct Days for FY1 5
95.6%
96.4%
Australian
Ve ssel Fleet
349
Dampier
Supply Ba se
352
99.5%
98.4%
• Continuous improvement in the
implementation of health, safety
and risk management systems and
processes.
MMA
Log istics Base
363
Slipway
359
Total Recordable Case
Frequency (“TRCF”)
(per million hours wor ked)
5.3
4.7
4.2
98.1%
100.0%
Inter national
Operations
358
Cor porate
Office s
365
3.3
2.7
1.2
10
11
12
13
14
15
In 2015 MMA recorded
its best ever safet y
per for mance
22 Annual Report 2015
H e a l t h , S a f e t y, E n v i r o n m e n t & Q u a l i t y
A n u n w a i v e r i n g c o m m i t m e n t
t o i n c i d e n t f r e e
In addition, MMA undertakes internal
environmental compliance audits as
well as regularly being audited and
inspected by clients and regulatory
authorities. MMA is also investing in
additional infrastructure to contain and
recycle water run off at the Dampier
Slipway. The recycled water is planned
to be used as a dust suppressant,
further reducing environmental impact
at the Dampier Supply Base.
Quality
MMA maintained certification for its
quality systems accreditation (AS/
NZS ISO 9001: 2008) across global
operations during the reporting period.
We continue to review and refine our
global management systems through
a process of continuous improvement
projects, legal obligations mapping
and annual audit and assurance plans
for both vessel and onshore operations
and projects.
In support of our overall HSEQ strategy,
MMA continues to implement a range
of specific initiatives, which are focused
on continually improving our health and
safety performance, including;
• A dedicated HSEQ department
deployed to support business
activities;
• Strategies to identify and
implement critical HSEQ controls;
• Continually improving the
global management systems to
ensure safe and efficient global
operations;
• A programme to measure Lead
and Lag Indicators and report on
the trends and shortfalls;
• Ongoing training, leadership
and behavioural assessment
programme for employees and
contractors in health and safety risk
management; and
• A compliance assurance
programme to maintain our license
to operate, both onshore and
offshore.
In November 2015, MMA received the
Lloyd’s List Australia Project Cargo
Award. This award was in recognition
of achievements in the transportation
of Project Cargoes using high levels
of expertise and service, in an on-time
fashion, combined with innovative safe
working practices.
This was a significant achievement for
the Company and an endorsement
of our relentless focus on continually
improving safety throughout the
organisation.
Environment
MMA remains committed to achieving
the highest standard of environmental
performance across all our business
activities.
MMA’s environmental policies,
management plans and supporting
procedures are reviewed regularly to
ensure potential environmental impacts
are identified, assessed and controlled.
MMA’s Environmental Management
System has been designed to align
with the requirements of ISO 14001:
2004 and is certified to this standard
for all international operations. Plans
are in place to consolidate certification
across all global operations.
MMA undertakes a programme
of environmental monitoring to
demonstrate compliance with
the implementation conditions
and environmental management
commitments for our Supply Base
(Ministerial Statement No. 535) and
our licence for boat building and
maintenance activities (Licence
L4996/1993/8) at our Slipway. This
includes monitoring of marine water
quality and stormwater and water
discharges, monitoring of sediment
quality, the deployment of bio
sentinel oysters and the monitoring
of mangroves in King Bay. MMA has
increased the environmental monitoring
program to ensure we effectively
manage our environmental impact.
The results are reported annually to the
relevant regulatory authorities.
MMA Offshore Limited 23
Overview
Operating & Financial Review
Governance
2015 Financial Report
O u r P e o p l e
At MMA our Vision i s suppor t ed by our ke y
values of Peopl e, Custom er R el a ti o nsh ips
and Team Work
We recognise that our people are the
key to delivering success and we strive
to provide a workplace built on trust,
cooperation and mutual respect, where
our people care about their safety and
the safety of those around them.
Our Code of Conduct sets out the
standards of behaviour expected from
all of our people when performing
duties at MMA, to ensure that we work
safely, behave considerately and work
ethically in support of our Values, and
to deliver our Vision.
Training and development
We are committed to the development
of our people through performance
feedback, internal development
opportunities and training programmes.
During the 2015 financial year, we
continued the strong emphasis
on setting clear expectations and
achieving key performance objectives
through the implementation and
monitoring of robust Performance
Coaching Agreements.
We strive to continually develop our
people through structured training
outcomes, aligned with our strategic
view to entrench MMA as an employer
of choice for our people and service
provider of choice for our customers.
During the past twelve months, our
online learning environment has gone
from strength to strength, with over
2,800 individual course completions
achieved during the year. Our principal
training focus continues to be on
safety leadership and the practical
components of workplace health and
safety for all employees.
Workplace gender equality
We aim to have a workforce that
best represents the communities in
which our assets are located and
our employees live. MMA continues
to focus on its targets of at least
10% female representation in senior
executive positions (14.3% currently)
and at least 30% female representation
in senior management roles (19.2%
currently).
Activities that support gender equality
continue to be reflected within our
established processes of recruitment,
talent management and remuneration.
% Of Women Employed
21.7
19.2
16.7
16.7
14.3
14.2
14.3
14.3
14
15
14
15
14
15
14
15
Total
Organisation
Board of
Directors
Executive
Management
Senior
Management
O u r p e o p l e a r e
o u r c o m p e t i t i v e
a d v a n t a g e
24 Annual Report 2015
C o m m u n i t y
MMA is committed to making a po sitive c ont ribu tio n
to the communit ies in which it ope rat es by cre at ing
mut ual oppor t unities th at suppo r t e con omic growt h
and social wellbeing
To support this goal, MMA strives to:
•
Invest in local community
projects that have a positive and
sustainable benefit;
• Seek business opportunities with
local suppliers and subcontractors;
• Strive to be good corporate
citizens;
• Develop long term relationships
with local Indigenous communities
in order to increase Indigenous
participation within our workforce
and promote opportunities for
training and development; and
• Create and maintain cross
cultural awareness throughout the
business.
Community sponsorship
MMA is active in engaging with the
communities in the regional areas of
Dampier, Karratha and Broome where
our main Australian operations are
located.
MMA has a regional sponsorship
committee, which reviews sponsorship
applications and allocates funds to a
range of community events, charities
and sporting groups in these regions.
MMA also runs a Target 365 rewards
programme, whereby business units
who achieve exceptional safety
performance are given the opportunity
to donate monetary rewards to
registered charities.
In the 2015 financial year, over $45,000
was donated to charities including the
Salvation Army, Red Cross, the Royal
Flying Doctor Service, Leukaemia
Foundation, the Autism Association of
WA and Ronald McDonald House.
Local and Indigenous
participation
MMA is committed to delivering lasting
social value to the communities in
which it operates through local and
Indigenous participation.
MMA has comprehensive Australian
Industry Participation (“AIP”) and
Indigenous Enterprise Participation
(“IEP”) plans with meaningful targets
in place for the sourcing of local and
Indigenous goods and services.
MMA is also engaged in innovative
collaborations with Aboriginal
businesses, leveraging MMA’s global
sourcing expertise to develop new
Indigenous business opportunities.
MMA was also instrumental in the
formation of the Local Contracting
Alliance (“LCA”) Group which facilitates
new contracting opportunities for
Indigenous businesses, whilst assisting
companies to achieve their local
content targets. Since its inception
in late 2013, over 50 new contracts
have been enabled through the LCA
network.
MMA’s local content philosophy is
guided by the three tenets of cost,
timeliness and quality. Importantly,
MMA actively supports local
businesses in a competitive global
environment whilst ensuring the best
outcome for the Company.
MMA Offshore Limited 25
O u r p e o p l e a r e
o u r c o m p e t i t i v e
a d v a n t a g e
Overview
Operating & Financial Review
Governance
2015 Financial Report
B o a r d o f D i r e c t o r s
Mr Anthony (Tony) John Howarth AO
Mr Jeffrey Andrew Weber
Mr Mark Francis Bradley
Chairman
– Appointed 1 August 2006
Managing Director
– Appointed 31 December 2002
Non-Executive Director
– Appointed 22 September 2000
Jeff began his career as a Marine
Engineer with BHP Transport. He
went on to complete a degree in this
field in 1993 and in 1994 graduated
with a Master’s in Engineering and
Technology Management from the
University of Queensland. During
his 19 years with BHP, Jeff gained
comprehensive project management
experience and helped develop
new business for BHP Transport in
Australia and South-East Asia. He
also managed a major initiative with
BHP’s steel division, reviewing its
logistics arrangements and developing
processes to improve services and
reduce costs. In 1998, Jeff joined
Riverside Marine in Queensland and
helped expand its operations Australia
wide. This included forming a joint
venture company with Wijsmuller
International Towage BV, RiverWijs and
negotiating with Woodside Petroleum
to take over that company’s harbour
towage operation in Dampier, Western
Australia. Jeff is also a Non-Executive
Director of Maritime Super Pty Ltd,
a superannuation fund dedicated to
employees in the maritime industry.
As Managing Director of MMA, Jeff
is responsible for the financial and
operational performance of all of the
Company’s business lines.
A Civil Engineer with a track record
in senior offshore engineering
management, Mark joined the J
Ray McDermott company in 1977
for service on Esso’s Tuna/Mackerel
project in Bass Strait. During the
14 years of technically challenging
work that followed, Mark held senior
positions with the company in
Indonesia, Singapore, Malaysia, Dubai
and Saudi Arabia. Still with McDermott,
but returning to Australia, he then
worked on new projects in Bass Strait
and, finally, the Woodside North Rankin
A and Goodwyn A platforms on the
North West Shelf in Western Australia.
In 1991, Mark joined Clough Offshore
as Project Manager of a number of
North West Shelf projects. Duties
in Thailand, China and Indonesia
followed, and by 1993 he was
Operations/Project Manager for BHP’s
Griffin project. In 1994, Mark became
Managing Director of Clough Offshore.
He then presided over that company’s
fivefold growth. In 1997, Mark joined
the Board of Clough Engineering as
an Executive Director, retiring and
becoming a Director of MMA in 2000.
Mark is the Chairman of the Company’s
Nomination and Remuneration
Committee and a member of the Audit
and Risk Committee.
Tony was appointed as a Director
of the Company on 5 July 2001 and
as Chairman of the Company on 1
August 2006. Tony is also currently a
Non-Executive Director of Wesfarmers
Limited, Alinta Holdings and BWP
Management Limited, the responsible
entity for the BWP Trust. Tony is a
Life Fellow of the Financial Services
Institute of Australasia and has worked
in the banking and finance industry
for over 30 years. He has previously
held the positions of Managing
Director of Challenge Bank Limited,
CEO of Hartleys Limited, Chairman
of Alinta Limited, Deputy Chairman
of the Bank of Queensland Limited, a
Non-Executive Director of AWB Limited
and Chairman of Home Building
Society Limited. Tony is a Fellow of
the AICD. Tony is also Chairman of
St John of God Health Care Inc, on
the Board of Catholic Health Australia
and an Adjunct Professor (Financial
Management) at the University of
Western Australia Business School.
Tony is also involved in a number of
community and business organisations
including being a member of the Rio
Tinto WA Future Fund, the University
of Western Australia Business School
Advisory Board and the Chairman of
the West Australian Rugby Union Inc.
Tony is a member of the Company’s
Nomination and Remuneration
Committee and the Audit and Risk
Committee.
26 Annual Report 2015
Mr Hugh Andrew Jon (Andrew)
Ms Eva Alexandra (Eve) Howell
Mr Chiang Gnee Heng
Edwards
Non-Executive Director
– Appointed 18 December 2009
Non-Executive Director
– Appointed 27 February 2012
Non-Executive Director
– Appointed 5 July 2012
Andrew currently serves as a Non-
Executive Director of Nido Petroleum
Limited, is Non-Executive Chairman
of MACA Ltd and is President
of Activ Foundation Inc. Andrew
is a former Managing Partner of
PriceWaterhouseCoopers, Perth
Office (PWC), a former National Vice
President of the Securities Institute of
Australia (now the Financial Services
Institute of Australasia) and a former
President of the Western Australian
division of that Institute. He is a
Fellow of the Australian Institute of
Company Directors, a Fellow of the
Chartered Accountants Australia
and New Zealand and has served as
State Chairman of the local Education
Committee of that organisation and
was a former member of its National
Education Committee. Andrew
graduated from the University of
Western Australia with a Bachelor
of Commerce degree. He is the
Chairman of the Company’s Audit
and Risk Committee and a member
of the Company’s Nomination and
Remuneration Committee.
Eve has over 40 years of experience
in the oil and gas industry in a number
of technical and managerial roles. Eve
is currently a Director of Downer EDI
Limited, Buru Energy Limited and EMR
Resources Pty Ltd. Eve also currently
holds a senior advisor role with Miro
Advisors Pty Ltd, an independent
business focused on corporate
advisory opportunities in
the natural resources sector.
Eve was recently Executive Chairman
of Tangiers Petroleum Limited,
Executive Vice President for Health,
Safety & Security at Woodside
Energy Ltd and previously served
as Executive Vice President of North
West Shelf at Woodside. Prior to that,
Eve held the position of Managing
Director at Apache Energy Ltd. She
has previously served on a number of
Boards, including the Fremantle Port
Authority, the Australian Petroleum
Production & Exploration Association
and was a Board member and
President of the Australian Mines
and Metals Association. Eve holds a
Bachelor of Science (with Honours in
Geology and Mathematics) from the
University of London and an MBA from
Edinburgh Business School and is a
graduate of the Australian Institute of
Company Directors. Eve is a member
of the Company’s Nomination and
Remuneration Committee and the
Company’s Audit and Risk Committee.
Chiang Gnee graduated as a Marine
Engineer in July 1977 from the
University of Newcastle Upon Tyne
(UK) and spent almost 30 years
working in Singapore government
linked companies and in various
industries including shipyards,
ordnance equipment manufacturing,
aircraft engine component
manufacturing, amusement and
lifestyle businesses and environment
management.
In June 1989, Chiang Gnee attended
the Sloan School of Management
at MIT (USA) and graduated with
a Masters in Management in July
1990. He was formerly the CEO of
Sembawang Shipyard for 10 years
and CEO of Sembcorp Environment
Management Pte Ltd for 2 years
until August 2007. Chiang Gnee is
currently the Executive Director of
Singapore Maritime Institute (SMI)
which focuses on the development
of the Singapore maritime industry
- with special focus on training and
education, research and development,
and policy formulation. Chiang Gnee is
also engaged in workplace health and
safety management and in vocational
technical education. He is Deputy
Chairman of the Singapore Workplace
Safety and Health Council and Deputy
Chairman of the Institute of Technical
Education (ITE) Board of Governors.
Chiang Gnee is also a Director of MMA
Offshore Asia Pte Ltd (Singapore) and
all of its subsidiaries/related companies
in Singapore, Malaysia and Indonesia.
MMA Offshore Limited 27
C o r p o r a t e G o v e r n a n c e
Corporate Governance
The Board of Directors (“Board”) of MMA Offshore Limited (“Company” or “MMA”) is responsible for the corporate governance
of the consolidated entity. The Board is a strong advocate of good corporate governance. The Board regularly reviews and
updates the Company’s governance policies and practices with reference to corporate governance developments and best
practice.
Compliance with Australian Corporate Governance Standards
In accordance with the disclosure requirements of the ASX Listing Rules, the Board believes that the governance policies
and practices adopted by the Company for the year ended 30 June 2015 follow the 3rd edition of the Corporate Governance
Principles and Recommendations (“3rd Edition ASX Principles”) set out by the ASX Corporate Governance Council.
Access to Corporate Governance Statement
The Company’s Corporate Governance Statement which outlines the Company’s corporate governance policies and practices
for the year ended 30 June 2015, can be found on the Company’s website at www.mmaoffshore.com/company/corporate_
governance.phtml#.
This Corporate Governance Statement is current as at 18 September 2015 and has been approved by the Board.
ASX Corporate Governance Council Recommendations Checklist
ASX Listing Rule 4.10.3 requires companies to disclose the extent to which they have complied with the 3rd Edition ASX
Principles.
The table below lists each of the 3rd Edition ASX Principles and the Company’s assessment of its compliance with the ASX
Principles for the year ended 30 June 2015, with reference to the section of the Corporate Governance Statement where further
details can be found.
3rd Edition ASX Corporate Governance Principles and Recommendations
Comply
Reference in
Corporate Governance
Statement
Principle 1: Lay solid foundations for management and oversight
1.1
A listed entity should disclose:
(a) the respective roles and responsibilities of its board and management;
Yes
Recommendation 1.1
and
(b) those matters expressly reserved to the board and those delegated to
Yes
Recommendation 1.1
management.
1.2
A listed entity should:
(a) undertake appropriate checks before appointing a person, or putting
Yes
Recommendation 1.2
forward to security holders a candidate for election as a director; and
(b) provide security holders with all material information in its possession
Yes
Recommendation 1.2
relevant to a decision on whether or not to elect or re-elect a director.
1.3
A listed entity should have a written agreement with each director and
Yes
Recommendation 1.3
senior executive setting out the terms of their appointment.
1.4
The company secretary of a listed entity should be accountable directly to
Yes
Recommendation 1.4
the board, through the chair, on all matters to do with the proper functioning
of the board.
28 Annual Report 2015
2015 Financial ReportOverviewOperating & Financial ReviewGovernance 3rd Edition ASX Corporate Governance Principles and Recommendations
Comply
Reference in
Corporate Governance
Statement
1.5
A listed entity should:
(a) have a diversity policy which includes requirements for the board or
Yes
Recommendation 1.5
a relevant committee of the board to set measurable objectives for
achieving gender diversity and to assess annually both the objectives
and the entity’s progress in achieving them;
(b) disclose that policy or a summary of it; and.
(c) disclose as at the end of each reporting period the measurable
objectives for achieving gender diversity set by the board or a relevant
committee of the board in accordance with the entity’s diversity policy
and its progress towards achieving them, and either:
Yes
Yes
Recommendation 1.5
Recommendation 1.5
(1) the respective proportions of men and women on the board, in senior
Yes
Recommendation 1.5
executive positions and across the whole organisation (including how
the entity has defined “senior executive” for these purposes); or
(2) if the entity is a “relevant employer” under the Workplace Gender
Yes
Recommendation 1.5
Equality Act, the entity’s most recent “Gender Equality Indicators”, as
defined in and published under that Act.
1.6
A listed entity should:
(a) have and disclose a process for periodically evaluating the performance
Yes
Recommendation 1.6
of the board, its committees and individual directors; and
(b) disclose, in relation to each reporting period, whether a performance
Yes
Recommendation 1.6
evaluation was undertaken in the reporting period in accordance with
that process.
1.7
A listed entity should:
(a) have and disclose a process for periodically evaluating the performance
Yes
Recommendation 1.7
of its senior executives; and
(b) disclose, in relation to each reporting period, whether a performance
Yes
Recommendation 1.7
evaluation was undertaken in the reporting period in accordance with
that process.
Principle 2: Structure the Board to add value
2.1
The board of a listed entity should:
(a) have a nomination committee which:
(1) has at least three members, a majority of whom are independent
directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and.
(5) as at the end of each reporting period, the number of times the
committee met throughout the period and the individual attendances
of the members at those meetings; or
Yes
Yes
Yes
Yes
Yes
Yes
Recommendation 2.1
Recommendation 2.1
Recommendation 2.1
Recommendation 2.1
Recommendation 2.1
(b) if it does not have a nomination committee, disclose that fact and
N/A
N/A
the processes it employs to address board succession issues and to
ensure that the board has the appropriate balance of skills, knowledge,
experience, independence and diversity to enable it to discharge its
duties and responsibilities effectively.
MMA Offshore Limited 29
2015 Financial ReportOverviewOperating & Financial ReviewGovernance 3rd Edition ASX Corporate Governance Principles and Recommendations
Comply
Reference in
Corporate Governance
Statement
2.2
A listed entity should have and disclose a board skills matrix setting out
Yes
Recommendation 2.2
the mix of skills and diversity that the board currently has or is looking to
achieve in its membership.
2.3
A listed entity should disclose:
(a) the names of the directors considered by the board to be independent
Yes
Recommendation 2.3
directors;
(b) if a director has an interest, position, association or relationship of
Yes
Recommendation 2.3
the type described in Box 2.3 (Factors relevant to assessing the
independence of a director) but the board is of the opinion that it
does not compromise the independence of the director, the nature of
the interest, position, association or relationship in question and an
explanation of why the board is of that opinion; and.
(c) the length of service of each director.
2.4
2.5
A majority of the board of a listed entity should be independent directors.
The chair of the board of a listed entity should be an independent director
and, in particular, should not be the same person as the CEO of the entity.
Yes
Yes
Yes
Recommendation 2.3
Recommendation 2.4
Recommendation 2.5
2.6
A listed entity should have a program for inducting new directors and
Yes
Recommendation 2.6
provide appropriate professional development opportunities for directors to
develop and maintain the skills and knowledge needed to perform their role
as directors effectively.
Principle 3: Act Ethically and Responsibly
3.1
A listed entity should:
(a) have a code of conduct for its directors, senior executives and
employees; and
(b) disclose that code or a summary of it.
Principle 4: Safeguard Integrity in Corporate Reporting
4.1
The board of a listed entity should:
(a) have an audit committee which:
(1) has a least three members, all of whom are non-executive directors
and a majority of whom are independent directors; and
Yes
Yes
Yes
Yes
Recommendation 3.1
Recommendation 3.1
Recommendation 4.1
Recommendation 4.1
(2) is chaired by an independent director who is not the chair of the
Yes
Recommendation 4.1
board,
and disclose:
(3) the charter of the committee;
(4) the relevant qualifications and experience of the members of
committee; and
(5) in relation to each reporting period, the number of times the
committee met throughout the period and the individual attendances
of the members at those meetings; or
Yes
Yes
Yes
Recommendation 4.1
Recommendation 4.1
Recommendation 4.1
(b) if it does not have an audit committee, disclose that fact and the
N/A
N/A
processes it employs that independently verify and safeguard the
integrity of its corporate reporting, including the processes for the
appointment and removal of the external auditor and the rotation of the
audit engagement partner.
30 Annual Report 2015
2015 Financial ReportOverviewOperating & Financial ReviewGovernance 3rd Edition ASX Corporate Governance Principles and Recommendations
Comply
Reference in
Corporate Governance
Statement
4.2
The board of a listed entity should, before it approves the entity’s financial
Yes
Recommendation 4.2
statements for a financial period, receive from its CEO and CFO a
declaration that, in their opinion, the financial records of the entity have
been properly maintained and that the financial statements comply with
the appropriate accounting standards and give a true and fair view of the
financial position and performance of the entity and that the opinion has
been formed on the basis of a sound system of risk management and
internal control which is operating effectively.
4.3
A listed entity that has an AGM should ensure that its external auditor
Yes
Recommendation 4.3
attends its AGM and is available to answer questions from security holders
relevant to the audit.
Principle 5: Make timely and balanced disclosure
5.1
A listed entity should:
(a) have a written policy for complying with its continuous disclosure
obligations under the Listing Rules; and
(b) disclose that policy or a summary of it.
Principle 6: Respect the rights of shareholders
6.1
6.2
6.3
6.4
A listed entity should provide information about itself and its governance to
investors via its website.
A listed entity should design and implement an investor relations program to
facilitate effective two-way communications with investors.
A listed entity should disclose the policies and procedures it has in place to
facilitate and encourage participation at meetings of security holders.
A listed entity should give security holders the option to receive
communication from and send communications to, the entity and its security
registry electronically.
Principle 7: Recognise and manage risk
7.1
The board of a listed entity should:
(a) have a committee or committees to oversee risk, each of which:
(1) has at least three members, a majority of whom are independent
directors; and;
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and;
(5) as at the end of each reporting period, the number of times the
committee met throughout the period and the individual attendances
of the members at those meetings; or
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Recommendation 5.1
Recommendation 5.1
Recommendation 6.1
Recommendation 6.2
Recommendation 6.3
Recommendation 6.4
Recommendation 7.1
Recommendation 7.1
Recommendation 7.1
Recommendation 7.1
Recommendation 7.1
Recommendation 7.1
(b) if it does not have a risk committee or committees that satisfy (a) above,
N/A
N/A
disclose that fact and the processes it employs for overseeing the
entity’s risk management framework.
MMA Offshore Limited 31
2015 Financial ReportOverviewOperating & Financial ReviewGovernance 3rd Edition ASX Corporate Governance Principles and Recommendations
Comply
Reference in
Corporate Governance
Statement
7.2
The board or a committee of the board should:
(a) review the entity’s risk management framework at least annually to satisfy
Yes
Recommendation 7.2
itself that it continues to be sound; and
(b) disclose, in relation to each reporting period, whether such a review has
Yes
Recommendation 7.2
taken place.
7.3
A listed entity should disclose:
(a) if it has an internal audit function, how the function is structured and what
Yes
Recommendation 7.3
role it performs; or
(b) if it does not have an internal audit function, that fact and the processes
it employs for evaluating and continually improving the effectiveness of
its risk management and internal control processes.
N/A
N/A
7.4
A listed entity should disclose whether it has any material exposure to
economic, environmental and social sustainability risks, and if it does, how it
manages or intends to manage those risks.
Yes
Principle 8: Remunerate fairly and responsibly
8.1
The board of a listed entity should:
(a) have a remuneration committee which:
(1) has at least three members, a majority of whom are independent
directors; and
(2) is chaired by an independent directors,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and;
(5) as at the end of the each reporting period, the number of times the
committee met throughout the period and the individual attendances
of the members at those meetings; or
Yes
Yes
Yes
Yes
Yes
Yes
“Risks” under the
Operating & Financial
Review section of the
2015 Annual Report.
Recommendation 8.1
Recommendation 8.1
Recommendation 8.1
Recommendation 8.1
Recommendation 8.1
Recommendation 8.1
(b) if it does not have a remuneration committee, disclose that fact and
the processes it employs for setting the level and composition of
remuneration for directors and senior executives and ensuring that such
remuneration is appropriate and not excessive.
N/A
N/A
8.2
A listed entity should separately disclose its policies and practices
regarding the remuneration of non-executive directors and the remuneration
of executive directors and other senior executives.
8.3
A listed entity which has an equity-based remuneration scheme should:
Yes
Recommendation 8.2
(a) have a policy on whether participants are permitted to enter into
Yes
Recommendation 8.3
transactions (whether through the use of derivatives or otherwise) which
limit the economic risk of participating in the scheme; and
(a) disclose that policy or a summary of it.
Yes
Recommendation 8.3
32 Annual Report 2015
2015 Financial ReportOverviewOperating & Financial ReviewGovernance L-R Mr Andrew Edwards, Ms Eve Howell, Mr Mark Bradley, Mr Tony Howarth (Chairman), Mr Jeff Weber (Managing Director) and Mr Chiang Gnee Heng.
The Board of Directors of M MA O ffs hore L imite d is re spon sible for the corporat e
gover nance of the consol idated en tit y. T he Bo ard is a s trong advocate of good
corporate gover nance. The B oard reg ular ly re views a nd updates the Company ’s
gover nance pol icies and practi c es with ref ere nc e to co rpor ate gover nance
developments and best pract i ce.
MMA Offshore Limited 33
2015 Financial ReportOverviewOperating & Financial ReviewGovernance D i r e c t o r s ’ R e p o r t
The Directors of MMA Offshore Limited (“Company” or “MMA”) submit herewith the annual financial report of the Company for
the financial year ended 30 June 2015. In order to comply with the provisions of the Corporations Act 2001 (Cth), the Directors
report as follows:
Directorships of Other Listed Companies
Directorships of other listed companies held by the Directors in the three years immediately before and since the end of the
financial year are as follows:
Name
Mr A Howarth
Mr A Howarth
Mr A Edwards
Mr A Edwards
Mr A Edwards
Ms E Howell
Ms E Howell
Ms E Howell
Company
Period of Directorship
Wesfarmers Limited
Since July 2007
BWP Management Limited
Since October 2012
Nido Petroleum Limited
Since December 2009
MACA Limited
Since October 2010
Aspire Mining Limited
July 2011 – May 2015
Downer EDI Limited
Since January 2012
Tangiers Petroleum Limited
September 2012 – February 2014
Buru Energy Limited
Since July 2014
Directors’ Shareholdings
The following table sets out each Director’s relevant interest in shares and rights in shares of the Company as at the date of this
report:
Name
Mr A Howarth
Mr J Weber
Mr M Bradley
Mr A Edwards
Ms E Howell
Mr C G Heng
Fully paid ordinary
shares direct
Fully paid ordinary
shares indirect
384,146
1,487,958
1,573,819
-
-
-
581,756
420,000
-
15,431
120,000
-
Share options/
rights direct
-
1,093,963
-
-
-
-
The Directors do not have any interests in shares, options or rights of any related body corporate of the Company.
Remuneration of Key Management Personnel
Information about the remuneration of key management personnel is set out in the Remuneration Report of this Directors’
Report on pages 38 to 51. The term ‘key management personnel’ refers to those persons having authority and responsibility
for planning, directing and controlling the activities of the consolidated entity, either directly or indirectly, including any Director
(whether executive or otherwise) of the consolidated entity.
34 Annual Report 2015
2015 Financial ReportOverviewOperating & Financial ReviewGovernance2015 Financial ReportOverviewOperating & Financial ReviewGovernance Share Rights Granted to Directors and Senior Management
During and since the end of the financial year, an aggregate of 1,225,946 performance rights were granted to the following
Director and to the six highest remunerated Officers of the Company as part of their remuneration:
Number of
rights granted
430,075
228,161
228,161
161,643
66,954
55,476
55,476
Issuing entity
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
Number of ordinary
shares under rights
430,075
228,161
228,161
161,643
66,954
55,476
55,476
Name
Mr J Weber
Mr D Ross
Mr P Raynor
Mr G Horsington
Mr D Lofthouse
Mr D Roberts
Mr M Gillett
Company Secretary
Mr Dylan Darbyshire-Roberts
– Appointed 19 August 2008
Dylan held the position of Company Secretary of MMA Offshore Limited at the end of the financial year. He joined the Company
in May 2007 in the role of Commercial Manager. Previously, he was a Senior Associate with the law firm DLA Piper Australia
where he practised in the areas of insurance, corporate and marine law. After obtaining a Bachelor of Commerce degree
(1995) and a LLB degree (1997) at the University of Natal (PMB), Dylan qualified as a Solicitor in South Africa, New South
Wales and Western Australia. Dylan has worked in a legal capacity in all of these jurisdictions as well as the UK over the past
15 years. Dylan is an Associate of the Institute of Chartered Secretaries and Administrators and The Governance Institute of
Australia.
Principal Activities
The consolidated entity’s principal activities during the course of the financial year were the provision of marine logistics and
supply base services to the offshore oil and gas industry.
There were no significant changes in the nature of the activities of the consolidated entity during the financial year.
Review of Operations
A review of, and information about the operations of the consolidated entity for the financial year and the results of those
operations are set out in the Chairman’s Address and the Managing Director’s Report in this Annual Report.
Changes in State of Affairs
During the financial year, there were no significant changes in the state of affairs of the consolidated entity.
Subsequent Events
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 consolidated entity, the results of those operations, or the state of
affairs of the consolidated entity in future financial years.
Future Developments
The Chairman’s Address and the Managing Director’s Report give an indication, in general terms, of likely developments in the
Company’s operations in future financial years, and the expected results of those operations.
Environmental Regulations
The Company continues to conduct its operations within the parameters of the Department of Environmental and Conservation
Licence and Ministerial requirements. There were no breaches of licence conditions for the year ended 30 June 2015.
MMA Offshore Limited 35
2015 Financial ReportOverviewOperating & Financial ReviewGovernance2015 Financial ReportOverviewOperating & Financial ReviewGovernance Dividends
In respect of the financial year ended 30 June 2014, as detailed in the Directors’ Report for that financial year, a final dividend
of 7 cents per share franked to 100% at 30% corporate income tax rate was paid to holders of fully paid ordinary shares on 26
September 2014.
In respect of the financial year ended 30 June 2015, an interim dividend of 4 cents per share franked to 100% at 30%
corporate income tax rate was paid to holders of fully paid ordinary shares on 2 April 2015.
Further, in respect of the financial year ended 30 June 2015, the Directors are satisfied that the requirements under section
254T of the Corporations Act 2001 (Cth) have been met and have declared a final dividend of 1.5 cents per share franked
to 100% at 30% corporate income tax rate to be paid on 29 September 2015 to holders of fully paid ordinary shares in the
Company on the record date of 8 September 2015.
Shares under Option/Rights and Issued on Exercise of Options/Rights
Details of unissued shares under option/rights at the date of this Report are:
Issuing entity
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
Number of shares
under option/rights
Class of shares
Exercise price
of options/rights
$
70,000
314,519
165,799
1,312,051
346,023
1,064,007
430,075
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
0.00(a)
0.00(b)
0.00(b)
0.00(c)
0.00(c)
0.00(d)
0.00(d)
Expiry date of
options/rights
5 Jun 2016
1 Jul 2016
1 Jul 2016
1 Jul 2016
1 Jul 2016
1 Jul 2017
1 Jul 2017
(a) These performance rights vest on 5 June 2016 subject to the performance criteria detailed in note 29.
(b) These performance rights vest on 1 July 2016 subject to the performance criteria as detailed in note 29.
(c) These performance rights vest on 1 July 2016 subject to the Company achieving certain performance criteria as detailed in note 29.
(d) These performance rights vest on 1 July 2017 subject to the Company achieving certain performance criteria as detailed in note 29.
The holders of these rights do not have the right, by virtue of the issue of the right, to participate in any share issue of the
Company.
Details of shares issued during or since the end of the financial year as a result of exercise of options/vesting of rights are:
Issuing entity
Number of
shares issued
Class of shares
MMA Offshore Limited
167,189
Ordinary
Amount paid
for shares
$
0.00
Amount unpaid
on shares
$
Nil
Indemnification of Officers and Auditors
During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company (as
named above), the Company Secretary and all Executive Officers of the Company and of any related body corporate against a
liability incurred in acting in their capacity as a Director, Company Secretary or Executive Officer of the Company to the extent
permitted by the Corporations Act 2001 (Cth). The relevant contract of insurance prohibits disclosure of the nature of any
liability and the amount of the premium.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an Officer or auditor of the Company or of any related body corporate against any liability
incurred in acting in their capacity as such an Officer or auditor of the Company.
36 Annual Report 2015
2015 Financial ReportOverviewOperating & Financial ReviewGovernance Directors’ Meetings
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, 6 Board Meetings, 4 Audit and Risk Committee Meetings and 3 Nomination and Remuneration
Committee Meetings were held.
Name
Mr A Howarth
Mr J Weber
Mr M Bradley
Mr A Edwards
Ms E Howell
Mr CG Heng
Board of Directors
Audit and Risk Committee
Nomination and
Remuneration Committee
Held
Attended
Held
Attended
Held
Attended
6
6
6
6
6
6
6
6
6
6
6
6
4
4
4
4
4
4
4
4
4
4
4
4
3
3
3
3
3
3
3
3
3
3
3
3
Proceedings on Behalf of the Company
No persons have applied for leave under section 237 of the Corporations Act 2001 (Cth) to bring, or intervene in, proceedings
on behalf of the Company during the financial year.
Non-Audit Services
Details of the amounts paid or payable to the auditor for non-audit services provided during the year are outlined in note 32 to
the Financial Statements.
The Directors are satisfied that the provision of non-audit services during the year by the auditor (or another person or firm on
the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act
2001 (Cth).
In view of the above, the Directors are of the opinion that the services as disclosed in note 32 to the Financial Statements do
not compromise the external auditors’ independence, based on advice received from the Audit and Risk Committee, for the
following reasons:
• All non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of
the auditor; and
• None of the services undermine the general principles relating to auditor independence as set out in APES 110 ‘Code of
Ethics for Professional Accountants’ issued by the Accounting Professional & Ethical Standards Board, including reviewing
or auditing the auditor’s own work, acting in a management or decision making capacity for the Company, acting as an
advocate for the Company or jointly sharing economic risks and rewards.
Auditor’s Independence Declaration
The Auditor’s Independence Declaration is included on page 52 of this Annual Report.
Rounding Off of Amounts
The Company is a company of the kind referred to in ASIC Class Order 98/100, dated 10 July 1998, and in accordance with
that Class Order, amounts in the Directors’ Report and the Financial Statements are rounded off to the nearest thousand
dollars, unless otherwise indicated.
MMA Offshore Limited 37
2015 Financial ReportOverviewOperating & Financial ReviewGovernance Remuneration Report
This Remuneration Report, which forms part of the Directors’ Report, sets out information about the remuneration of the
Company’s key management personnel for the financial year ended 30 June 2015. The term ‘key management personnel’
refers to those persons having authority and responsibility for planning, directing and controlling the activities of the Company,
either directly or indirectly, including any Director (whether executive or otherwise) of the Company.
During the year, the Board reviewed the remuneration framework to ensure that it aligns with the Company’s strategy and
business objectives. The outcome of this review was that the Board decided to amend the performance criteria targets under
the Long-Term Incentive Plan to be granted in the 2016 financial year to comprise an absolute share price hurdle and a growth
in TSR hurdle with each to have a 50% weighting.
The prescribed details for each person covered by this report are detailed below under the following headings:
• Key Management Personnel;
• Remuneration Policy;
• Relationship between the Remuneration Policy and Company Performance;
• Remuneration of Key Management Personnel;
• Bonus and share based payments granted as compensation for the current financial year; and
• Key Terms of Employment Contracts.
Key Management Personnel
The Directors and other key management personnel of the Company during and since the end of the financial year were:
Directors
Mr A Howarth (Chairman) (Non-Executive Director)
Mr J Weber (Managing Director)
Mr M Bradley (Non-Executive Director)
Mr A Edwards (Non-Executive Director)
Ms E Howell (Non-Executive Director)
Mr CG Heng (Non-Executive Director)
Other Key Management Personnel
Mr D Ross (Chief Operating Officer)
Mr P Raynor (Chief Financial Officer)
Mr D Lofthouse (General Manager Business Development)
Mr D Roberts (General Manager Legal/Company Secretary)
Mr M Gillett (General Manager Human Resources)
Ms L Buckey (General Manager Corporate Development)
Mr D Thomas (General Manager HSEQ)
The above named persons held their current position for the whole of the financial year and since the end of the financial year.
38 Annual Report 2015
2015 Financial ReportOverviewOperating & Financial ReviewGovernance Remuneration Policy
The Company’s Remuneration Policy is focused on driving a performance culture within the Group by linking key management
personnel remuneration to the achievement of the Company’s strategic and business objectives, and ultimately, increasing
shareholder value.
The Nomination and Remuneration Committee is delegated responsibility by the Board for reviewing the remuneration
packages of all Directors and key management personnel on an annual basis and making recommendations to the Board
in this regard. The specific responsibilities of the Nomination and Remuneration Committee are set out in the Committee’s
Charter, which is to be found under Appendix C of the Board Charter.
Remuneration packages are typically reviewed and determined with due regard to current market rates and are benchmarked
against comparable industry salaries, and are adjusted by a performance factor to reflect changes in the performance of the
Company.
In carrying out its review of the remuneration packages of the Chairman, Non-Executive Directors, Managing Director and non-
director key management personnel for the 2015 financial year, the Nomination and Remuneration Committee engaged the
services of an independent remuneration consultant, Godfrey Remuneration Group Pty Ltd, to provide current market rates and
industry benchmarking. Godfrey Remuneration Group Pty Ltd were engaged directly by the Chairman of the Nomination and
Remuneration Committee and were paid the sum of $20,000 (excluding GST) in consideration for providing their remuneration
recommendations.
As the independent remuneration consultant was engaged directly by and provided their advice directly to the Chairman of
the Nomination and Remuneration Committee (without management involvement), the Board is satisfied that the remuneration
recommendations made were free from undue influence by any member of the key management personnel to whom the
recommendations relate.
Non-Executive Directors’ Fees
Non-Executive Directors’ fees are determined within an aggregate Directors’ fee pool which is periodically recommended
for approval by shareholders. The maximum fees payable to Non-Executive Directors are currently $950,000 per annum in
aggregate (as approved by shareholders at the Company’s AGM on 22 November 2012).
Fees paid to Non-Executive Directors are set at levels which reflect both the responsibilities of, and time commitments required
from each Non-Executive Director to discharge their duties. Non-Executive Directors’ fees are reviewed annually by the Board
to ensure they are appropriate for the duties performed, including Board committee duties, and are in line with the market.
Other than statutory superannuation, Directors are not entitled to retirement allowances.
Following a review by the Nomination and Remuneration Committee, there was no increase in Non-Executive Directors’ fees for
the 2015 financial year.
Again, there has been no increase in Non-Executive Directors’ fees for the 2016 financial year.
Other Key Management Personnel
Remuneration of the Managing Director and other key management personnel comprises both a fixed component and an
at-risk component, which is designed to remunerate key management personnel for increasing shareholder value and for
achieving financial targets and business strategies set by the Board. It is also designed to attract and retain high calibre
executives.
The remuneration of the Managing Director and other key management personnel has the following three components:
MMA Offshore Limited 39
2015 Financial ReportOverviewOperating & Financial ReviewGovernance Overview
Operating & Financial Review
Governance
2015 Financial Report
No.
1
Remuneration Component
Details
Fixed Annual Remuneration (“FAR”)
• Comprising base salary and superannuation.
• In setting FAR, consideration is given to current market rates and
industry benchmarking against appropriate comparator groups
(including the median market rates within the sector and industry
peers), Company performance and individual performance.
• The Board approved a flat FAR increase of 3.5% for the Managing
Director and Senior Management for the 2015 financial year, which
was less than the recommendations made by the independent
remuneration consultant, Godfrey Remuneration Group Pty Ltd.
• The Board has determined that the Managing Director and Senior
Management will not receive any increase in FAR for the 2016
financial year.
2
Short-term incentive (“STI”)
• An annual “at-risk” cash component designed to reward
performance against the achievement of key performance indicators
(KPIs).
• The invitation to participate in the STI is at the absolute discretion of
the Board and is subject to such conditions which the Board may
prescribe from time to time.
• The STI KPI’s are set at the start of each financial year and are
chosen to drive the achievement of the Company’s strategic,
financial and operating objectives set by the Board.
• The STI KPI’s during the financial year were a mix of financial and
non-financial measures which were allocated as follows:
• Financial targets (40%);
• Growth targets (30%);
• Business Improvement targets (10%); and
• Safety targets (20%).
• Further details of these KPI’s and the performance against each of
these KPI’s are set out under the Bonus and Share Based Payments
section on page 43.
• Given the overall performance of the Company and current market
conditions, the Board has exercised its discretion not to pay the
Managing Director or other key management personnel an STI
component for the 2015 financial year.
• In addition, the Board has exercised its discretion to suspend the
STI component for the 2016 financial year (subject always to the
Board’s discretion to reinstate the STI component if market conditions
change).
3
Long-term incentive (“LTI”)
• The Company grants rights over its ordinary shares under the LTI.
• The vesting of these rights is based on the achievement of stipulated
performance criteria targets over a 3 year period.
• During the financial year, these performance criteria targets
comprised of the growth in EPS and TSR to ensure a strong link with
the creation of shareholder value and were set by the Board with due
regard to the Company’s long-term strategy.
• The LTI also aims to align executives’ long-term interests with those
of shareholders.
• Further details of the LTI plan and the number of performance rights
granted to the Managing Director and Senior Management during
the financial year are set out under the Bonus and Share Based
Payments section on page 44.
40 Annual Report 2015
Allocation of Executive Remuneration between Fixed and Variable Remuneration
The allocation of total executive remuneration between fixed and variable remuneration for the 2015 financial year is as follows:
Managing Director
Other Executives
31%
33%
69%
67%
FAR
LTI
FAR
LTI
Relationship between the Remuneration Policy and Company Performance
The table below summarises information about the Company’s earnings for the 2015 financial year and the Company’s
earnings and movements in shareholder wealth for the five years to 30 June 2015, which is an important indicator of
performance and a key measure under both the STI and LTI remuneration components.
Having regard to the overall performance of the Company during the 2015 financial year, the Board has exercised its
discretion:
• not to pay any STI to the Managing Director and other key management personnel of the Company; and
•
to grant LTI performance rights to the Managing Director and other key management personnel of the Company as
detailed below.
Revenue
796,666
594,597
449,490
380,358
285,268
30 June 2015
$’000
30 June 2014
$’000
30 June 2013
$’000
30 June 2012
$’000
30 June 2011
$’000
Net profit/(loss) before tax
Net profit/(loss) after tax
Share price at start of the year
Share price at end of the year
Interim dividend (1)
Final dividend (1)
Basic earnings per share
Diluted earnings per share
(48,219)
(51,291)
$2.06
$0.54
4.0cps
1.5cps
77,112
53,884
$3.52
$2.06
5.5cps
7.0cps
83,755
60,298
$2.82
$3.52
5.5cps
7.0cps
71,602
51,036
$3.19
$2.82
5.0cps
6.0cps
58,160
43,150
$2.54
$3.19
4.0cps
5.0cps
(13.91 cps)
18.78cps
25.17cps
23.44cps
21.09cps
(13.91 cps)
18.76cps
24.78cps
22.93cps
20.72cps
3 year compound annual TSR (2)
(32%)
(9%)
15%
19%
30%
(1) Franked to 100% at 30% corporate income tax rate.
(2) TSR comprises share price growth and dividends.
MMA Offshore Limited 41
Remuneration of Key Management Personnel
The following tables disclose the remuneration of the Directors and other key management personnel of the Company for the
2015 financial year to which this report relates and to the previous financial year:
Short-term employee benefits
Post-
employment
benefits
Share based
payment
Total
2015
Salary & fees
Bonus Non-monetary (1)
Superannuation Options & rights
$
$
$
$
$
$
Directors
Mr A Howarth
Mr J Weber
Mr M Bradley
Mr A Edwards
Ms E Howell
Mr CG Heng
Senior Management
Mr D Ross
Mr P Raynor
Mr D Lofthouse
Mr D Roberts
Mr M Gillett
Ms L Buckey (2)
Mr D Thomas
Total
2014
Directors
Mr A Howarth
Mr J Weber
Mr M Bradley
Mr J Carver (3)
Mr A Edwards
Ms E Howell
Mr CG Heng
Senior Management
Mr D Ross
Mr P Raynor
Mr D Lofthouse
Mr D Roberts
Mr M Gillett
Ms L Buckey
Mr D Thomas
Total
227,164
925,687
111,600
111,600
101,600
105,079
535,110
540,110
390,189
308,980
308,980
171,452
296,892
4,134,443
227,164
903,202
111,600
8,872
111,600
101,600
104,987
521,000
521,000
364,425
298,905
298,905
192,986
287,225
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
348,075
-
-
-
-
-
213,800
213,800
57,330
107,502
47,502
47,464
45,750
1,103
18,928
-
-
-
-
1,049
2,354
2,010
2,866
-
-
-
18,783
35,000
10,602
10,602
9,652
6,173
35,000
25,000
18,783
18,783
18,783
19,295
18,783
-
440,789
-
-
-
247,050
1,420,404
122,202
122,202
111,252
-
111,252
277,012
277,012
72,088
59,730
59,730
34,790
26,371
848,171
844,476
483,070
390,359
387,493
225,537
342,046
28,310
245,239
1,247,522
5,655,514
1,584
2,156
-
173
-
-
-
1,528
3,030
1,967
3,193
-
-
-
17,775
25,000
10,323
-
10,323
9,398
6,011
25,000
25,000
17,775
17,775
17,775
17,775
17,775
-
432,946
-
-
-
-
246,523
1,711,379
121,923
9,045
121,923
110,998
-
110,998
218,357
218,357
61,610
51,048
51,048
23,589
12,956
979,685
981,187
503,107
478,423
415,230
281,814
363,706
4,053,471
1,081,223
13,631
217,705
1,069,911
6,435,941
(1) These non-monetary benefits comprise the provision of fuel, travel and other benefits, as applicable.
(2) Ms Buckey is employed on a part-time basis.
(3) Retired on 15 July 2013.
42 Annual Report 2015
2015 Financial ReportOverviewOperating & Financial ReviewGovernance
The relative proportions of these elements of remuneration of Directors are linked to performance:
Fixed Remuneration
Remuneration linked to Performance
Non-Executive Directors
Mr A Howarth
Mr M Bradley
Mr A Edwards
Ms E Howell
Mr CG Heng
Executive Directors
Mr J Weber
2015
100%
100%
100%
100%
100%
69%
2014
100%
100%
100%
100%
100%
54%
2015
0%
0%
0%
0%
0%
31%
2014
0%
0%
0%
0%
0%
46%
No key management personnel appointed during the period received a payment as part of his or her consideration for
agreeing to hold the position.
STI and LTI granted as compensation for the current financial year
STI
Having regard to the overall performance of the Company during the financial year, the Managing Director and other key
management personnel were not granted an STI for the 2015 financial year. As noted above, the Managing Director and
other key management personnel were granted an STI for the 2014 financial year which was granted on 30 June 2014. The
respective amounts under the STI were subject to a number of specified key performance targets being achieved. The STI
performance targets for the 2015 financial year and the Company’s performance against these targets are summarised in the
table below:
STI Performance Target
Comprising
Financial Targets (1)
Growth Targets (1)
Business Improvement
Targets (1)
Safety Targets (2)
Combination of EBITDA, PBT and EPS growth targets.
Identified business growth targets, including securing
and executing a number of identified contracts/projects,
integration of the Jaya business, securing the Chevron
supply base contract and building/developing new identified
services and capabilities.
Identified business improvement targets, including identified
cost reduction/efficiency targets from various specified
initiatives.
Identified health/safety targets for each business unit and the
Company as a whole (including identified Total Recordable
Injury Rate safety targets), identified targets under the
Company’s Target 365 safety programme, timely close out
of Audit action items and the Company’s overall IS Networld
(CHESM) rating.
Weighted
Actual
Performance
0%
0%
Weighting
40%
30%
10%
0%
20%
20%
Total
100%
20%
(1) The Company has not disclosed the specific STI performance targets as from a competition point of view, many of these are market sensitive.
(2) The Company’s performance against its health/safety targets is detailed in the Health, Safety, Environment and Quality section of this Annual
Report.
Subject to the above STI performance targets being met, the Managing Director is eligible for an STI of 50% of his base
salary and superannuation with an up-lift to a maximum of 67.5% for over-performance. The actual performance against the
STI performance targets for the 2015 financial year resulted in the Managing Director, Mr J Weber, being eligible for an STI of
approximately 20% of his base salary, non-monetary benefit and superannuation (2014: 37.5%). However, as noted above,
given the overall performance of the Company and the current market conditions, the Board has exercised its discretion not
to pay the Managing Director the STI component for the 2015 financial year. In addition, the Board has exercised its discretion
to suspend the STI component for the 2016 financial year (subject to the Board’s discretion to reinstate the STI component if
market conditions change).
Subject to the STI performance targets being met, the other key management personnel are eligible for a cash bonus of up to
40% of their base salary and superannuation with an up-lift for over-performance. Based on the actual performance against the
STI performance targets for the 2015 financial year, other key management personnel were eligible for an STI of approximately
20% of their base salary, non-monetary benefit and superannuation (2014: 39%). However, as noted above, given the overall
performance of the Company and the current market conditions, the Board has exercised its discretion not to pay the other
key management personnel the STI component for the 2015 financial year. In addition, the Board has exercised its discretion
to suspend the STI component for the 2016 financial year (subject to the Board’s discretion to reinstate the STI component if
market conditions change).
MMA Offshore Limited 43
2015 Financial ReportOverviewOperating & Financial ReviewGovernance LTI
Under its LTI remuneration component, the Company operates share rights plans for the Managing Director, Senior
Management and other employees. Each share right converts into one ordinary share of MMA Offshore Limited on vesting.
No amounts are paid or payable by the recipient upon grant of the rights. The rights carry neither rights to dividends nor voting
rights. Please refer to the tables below for details of the performance criteria for the rights granted during the year. The table
below sets out the relevant performance criteria for the performance rights granted to the Managing Director, Chief Operating
Officer and Chief Financial Officer during the financial year:
Performance criteria
Performance period
Normalised Earnings per
Share (“EPS”) growth (1)
Beginning 1 July 2014
and ending
30 June 2017
Company’s Total
Shareholder Return (“TSR”)
(2) percentile ranking over
the Performance Period
relative to a selected
Peer Group(3)
Beginning 1 July 2014
and ending
30 June 2017
75%
Percentage of
LTI subject to
performance criteria
Performance
criteria targets
Percentage of
performance rights
which vest if target met
25%
Less than 6%
Equal to 6%
Between 6%
and 12.5%
Equal to 12.5%
Below the
50th percentile
At the 50th percentile
Between the
50th percentile and
the 90th percentile
Nil
50%
50% to 100%
(pro-rata)
100%
Nil
50%
50% to 100%
(pro-rata)
The table below sets out the relevant performance criteria for the performance rights granted to other key management
personnel (ie. excluding the Managing Director, Chief Operating Officer and Chief Financial Officer) during the financial year:
At the 90th percentile
100%
Performance criteria
Performance period
Normalised Earnings
per Share growth (1)
Beginning 1 July 2014
and ending
30 June 2017
Percentage of
LTI subject to
performance criteria
Performance
criteria targets
Percentage of
performance rights
which vest if target met
25%
Below 6%
0%
Company’s Total
Shareholder Return (2)
percentile ranking over
the Performance Period
relative to a selected Peer
Group (3)
Beginning 1 July 2014
and ending
30 June 2017
75%
Equal to 6% and 10%
50% to 100% (on a
straight line basis)
Above 10%
Below the
50th percentile
Between the 50th
percentile and the
75th percentile
Above the
75th percentile
100%
0%
50% to 100% (on a
straight line basis)
100%
(1) Normalised Earnings per Share (EPS) growth means the growth in earnings per share of the Company, annualised over the Performance
Period, to be determined in a manner decided by the Board in its absolute discretion (including any determination that the impact of one-off or
non-recurring items should be excluded for the purposes of the calculation).
(2) Total Shareholder Return (TSR) means broadly, the increase in the share price plus dividends paid (calculated in Australian Dollars), excluding
franking credits and taxation, over the Performance Period, to be determined in a manner decided by the Board in its absolute discretion.
(3) Peer Group means the peer group comprising the following ASX-listed companies, the composition of which may be changed by the Board
in its absolute discretion: XJO 200 Industrial (ASX: XNJ), Asciano Limited (ASX: AIO), ALS Limited (ASX: ALQ), Aurizon Holdings Limited
(ASX: AZJ), Bradken Limited (ASX: BKN), Brambles Limited (ASX: BXB), Cabcharge Australia Ltd (ASX: CAB), Cardno Limited (ASX: CDD),
Downer EDI Limited (ASX: DOW), GWA Group Limited (ASX: GWA), Leighton Holdings Limited (ASX: LEI), Mineral Resources Limited (ASX:
MIN), McMillan Shakespeare Ltd. (ASX: MMS), Monadelphous Group Limited (ASX: MND), Macquarie Atlas Roads Group (ASX: MQA), NRW
Holdings Limited (ASX: NWH), Qantas Airways Limited (ASX: QAN), Qube Holdings Limited (ASX: QUB), Recall Holdings Limited (ASX: REC),
SAI Global Limited (ASX: SAI), SEEK Limited (ASX: SEK), SKILLED Group Limited (ASX: SKE), Spotless Group Holdings Limited (ASX: SPO),
Seven Group Holdings Limited (ASX: SVW), Sydney Airport Limited (ASX: SYD), Transurban Group (ASX: TCL), Toll Holdings Limited (ASX:
TOL), Transpacific Industries Group Ltd. (ASX: TPI), Transfield Services Limited (ASX: TSE), UGL Limited (ASX: UGL) and Veda Group Limited
(ASX: VED).
44 Annual Report 2015
2015 Financial ReportOverviewOperating & Financial ReviewGovernance During the financial year, the following share option and rights schemes were in existence:
Series
Number issued
Grant date
Expiry date
(1) 22 Sep 2009 (a)
475,705
22 Sep 2009
18 Sep 2014
(2) 22 Sep 2009 (b)
3,112,049
22 Sep 2009
18 Sep 2014
(3) 1 Dec 2009 (c)
1,488,356
1 Dec 2009
18 Sep 2014
(4) 18 Oct 2011 (d)
848,863
18 Oct 2011
1 Jul 2014
(5) 18 Oct 2011 (d)
324,650
18 Oct 2011
1 Jul 2014
(6) 24 Nov 2011 (d)
331,142
24 Nov 2011
1 Jul 2014
(7) 25 Oct 2012 (e)
311,634
25 Oct 2012
1 Jul 2015
(8) 25 Oct 2012 (e)
283,254
25 Oct 2012
1 Jul 2015
(9) 22 Nov 2012 (e)
317,865
22 Nov 2012
1 Jul 2015
(10) 20 Dec 2012 (e)
20,981
20 Dec 2012
1 Jul 2015
(11) 22 Oct 2014 (f)
51,546
22 Oct 2014
1 Jul 2015
(12) 22 Oct 2014 (g)
70,000
22 Oct 2014
5 Jun 2016
(13) 3 Dec 2013 (h)
1,092,384
11 Oct 2013
1 Jul 2016
(14) 3 Dec 2013 (h)
339,238
11 Oct 2013
1 Jul 2016
(15) 3 Dec 2013 (h)
346,023
21 Nov 2013
1 Jul 2016
(16) 22 Oct 2014 (i)
1,052,625
22 Oct 2014
1 Jul 2017
(17) 1 Dec 2014 (i)
11,382
1 Dec 2014
1 Jul 2017
(18) 1 Dec 2014 (i)
430,075
1 Dec 2014
1 Jul 2017
Exercise price
$
Fair value at
grant date
$
0.00
3.05
3.05
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.43
0.46
0.47
2.06
1.89
1.69
2.28
2.42
2.47
2.42
1.94
1.76
2.14
2.02
1.71
1.09
1.09
0.75
Vesting date
18 Sep 2012
18 Sep 2012
18 Sep 2012
1 Jul 2014
1 Jul 2014
1 Jul 2014
1 Jul 2015
1 Jul 2015
1 Jul 2015
1 Jul 2015
1 Jul 2015
5 Jun 2016
1 Jul 2016
1 Jul 2016
1 Jul 2016
1 Jul 2017
1 Jul 2017
1 Jul 2017
Except as noted below, there has been no alteration of terms and conditions of the above share based payment arrangements
since the grant date.
(a) In accordance with the terms of the Mermaid Marine Share Option Plan (amended September 2009), 475,705 share
options issued to employees vested on 18 September 2012 subject to the performance hurdle that the Company’s Total
Shareholder Return must exceed the performance of the ASX Small Ordinaries index over a minimum period of three years
commencing on 18 September 2009 and ending on 18 September 2012 and a maximum period of five years commencing
on 18 September 2009 and ending on 18 September 2014. This performance hurdle has been met.
(b) In accordance with the terms of the Senior Executive Share Option Plan (amended September 2009), 3,112,049 share
options vested on 18 September 2012 subject to the performance hurdle that the Company’s Total Shareholder Return
must exceed the performance of the ASX Small Ordinaries index over a minimum period of three years commencing on
18 September 2009 and ending on 18 September 2012 and a maximum period of five years commencing on 18
September 2009 and ending on 18 September 2014. This performance hurdle has been met.
(c) In accordance with the terms of the Managing Director’s Share Option Plan - 2009, 1,488,356 share options vested on
18 September 2012 subject to the performance hurdle that the Company’s Total Shareholder Return must exceed the
performance of the ASX Small Ordinaries index over a minimum period of three years commencing on 18 September 2009
and ending on 18 September 2012 and a maximum period of five years commencing on 18 September 2009 and ending
on 18 September 2014. This performance hurdle has been met.
(d) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rights Plan – 2011 (granted on
18 October 2011) and the Mermaid Marine Australia Limited Managing Director’s Performance Rights Plan – 2011 (as
approved by shareholders at the Company’s AGM on 24 November 2011), a total of 1,504,655 performance rights would
vest on 1 July 2014 subject to meeting the stipulated growth in the Earnings per Share of MMA Offshore Limited and the
total shareholder return of the Company relative to a selected Peer Group of companies.
Only a portion of the stipulated growth in the Earnings per Share of the Company was achieved during the Performance
Period resulting in only 52% of the rights subject to this performance criteria vesting. The Company’s total shareholder
return relative to the selected Peer Group of companies did not meet the minimum level required during the Performance
Period and therefore none of the rights subject to this performance criteria vested. Consequently only 13% of the total
performance rights granted under the 2011 Plans vested.
MMA Offshore Limited 45
2015 Financial ReportOverviewOperating & Financial ReviewGovernance (e) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rights Plan – 2012 (granted on 25
October 2012 and 20 December 2012) and the Mermaid Marine Australia Limited Managing Director’s Performance Rights
Plan – 2012 (as approved by shareholders at the Company’s AGM on 22 November 2012), the number of performance
rights which vest on 1 July 2015 will depend on the growth in the Earnings per Share of MMA Offshore Limited and the total
shareholder return of the Company relative to a selected peer group of companies as set out in note 29 of the Financial
Statements.
No portion of the stipulated growth in Earnings per Share of the Company was achieved during the performance
period, resulting in none of the rights subject to this performance criteria being eligible for vesting. The Company’s total
shareholder return relative to the selected peer group of companies did meet the minimum level required during the
performance period resulting in only 64% (Managing Director, Chief Financial Officer and Chief Operating Officer) and
73% (other senior executives) of the rights subject to this performance criteria being eligible for vesting. Consequently, only
52% (Managing Director, Chief Financial Officer and Chief Operating Officer) and 58% (other senior executives) of the total
performance rights granted under the 2012 plans are eligible for vesting. A total of 480,318 performance rights are eligible
for vesting under the 2012 Performance Rights Plans. However, the Board has exercised its discretion under the Plan
Rules to defer the vesting of these eligible performance rights until 1 July 2016. The vesting of these performance rights is
subject to the continued employment of each Participant by a Group member for an additional 12 month period (ie 1 July
2016) and is once again subject to the Board’s absolute discretion as to whether or not they vest on 1 July 2016.
(f) In accordance with the terms of Mermaid Marine Australia Limited Performance Rights Plan – 2014 (granted 22 October
2014), the performance rights issued to the Chief Financial Officer and Chief Operating Officer (being the deferred
equity portion of their financial year 2014 bonus) which vested on 1 July 2015 is conditional upon the holders’ continued
employment by a Group member during the 1 year performance period as set out in note 29 to the Financial Statements.
This performance hurdle has been met.
(g) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rights Plan – 2014 (granted 22
October 2012), the performance rights issued to the President – Offshore & Business Development (Singapore) which vest
on 4 June 2016 is conditional upon the holder’s continued employment by a Group member during the 2 year performance
period as set out in note 29 of the Financial Statements.
(h) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rights Plan – 2013 (granted on 11
October 2013 and 21 November 2013) and the Mermaid Marine Australia Limited Managing Director’s Performance Rights
Plan – 2013 (as approved by shareholders at the Company’s AGM on 21 November 2013), the number of performance
rights which vest on 1 July 2016 will depend on the growth in the Earnings per Share of MMA Offshore Limited and the total
shareholder return of the Company relative to a selected peer group of companies as set out in note 29 of the Financial
Statements.
(i) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rights Plan – 2014 (granted on 22
October 2014 and 1 December 2014) and the Mermaid Marine Australia Limited Managing Director’s Performance Rights
Plan – 2014 (as approved by the shareholders at the Company’s Annual General Meeting on 18 November 2014) the
number of performance rights which vest on 1 July 2017 will depend on growth in the Earnings per Share of MMA Offshore
Limited and the total shareholder return of the Company relative to a selected peer group of companies as set out in note
29 of the Financial Statements.
The following grants of share based payment compensation to the Managing Director and key management personnel relate
to the current financial year:
Name
Mr J Weber
Mr D Ross
Mr P Raynor
Mr D Lofthouse
Mr D Roberts
Mr M Gillett
Mr D Thomas
Ms L Buckey
Performance
Rights
Issued
Issued
Issued
Issued
Issued
Issued
Issued
Issued
Number
granted
430,075
228,161
228,161
66,954
55,476
55,476
55,431
47,825
Number
vested
28,474
13,958
13,958
4,803
3,980
3,980
-
1,475
% of grant
vested
% of grant
forfeited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
% of
compensation
for the year
consisting of
share based
payment
31%
33%
33%
15%
15%
15%
8%
15%
46 Annual Report 2015
2015 Financial ReportOverviewOperating & Financial ReviewGovernance During the financial year, the following key management personnel exercised options and/or had performance rights vest that
were granted to them as part of their compensation. Each option/performance right converts into one ordinary share of MMA
Offshore Limited.
Name
Mr J Weber
Mr D Ross
Mr P Raynor
Mr D Lofthouse
Mr D Roberts
Mr M Gillett
Ms L Buckey
Number of
rights vested
Number of ordinary
shares of MMA
Offshore Limited
Amount paid
$
Amount unpaid
$
28,474
13,958
13,958
4,803
3,980
3,980
1,475
28,474
13,958
13,958
4,803
3,980
3,980
1,475
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
The following table summarises the value of options and performance rights to key management personnel which were
granted, exercised or lapsed during the financial year:
Name
Mr J Weber
Mr D Ross
Mr P Raynor
Mr D Lofthouse
Mr D Roberts
Mr M Gillett
Ms L Buckey
Mr D Thomas
Value of
rights granted
at grant date
$
Value of
options/rights at
exercise/vesting date
$
318,256
270,603
270,603
72,980
60,469
60,469
52,129
58,240
58,656
28,753
28,753
9,894
8,199
8,199
3,039
-
The Board has adopted a Share Trading Policy that, among other things, prohibits executives from entering into transactions
that limit the economic risk of participating in unvested employee entitlements. The policy also requires executives proposing
to enter into arrangements that limit the economic risk of a vested holding in the Company’s securities to first obtain approval
from the Chairman of the Board (or, in the case of the Chairman, prior approval of the Chairman of the Audit and Risk
Committee) and subsequently provide details of the dealing within five business days of the dealing taking place. Any breach
of the Share Trading Policy is taken very seriously by the Company and is subject to disciplinary action, including possible
termination of a person’s employment or appointment. A copy of the Company’s Share Trading Policy is set out in section 8 and
Appendix E of the Board Charter.
MMA Offshore Limited 47
2015 Financial ReportOverviewOperating & Financial ReviewGovernance Key management personnel equity holdings
Fully paid ordinary shares of MMA Offshore Limited:
2015
Mr A Howarth
Mr J Weber
Mr M Bradley
Mr A Edwards
Ms E Howell
Mr CG Heng
Mr D Ross
Mr P Raynor
Mr D Lofthouse
Mr D Roberts
Mr M Gillett
Ms L Buckey
Mr D Thomas
2014
Mr A Howarth
Mr J Weber
Mr M Bradley
Mr J Carver (1)
Mr A Edwards
Ms E Howell
Mr CG Heng
Mr D Ross
Mr P Raynor
Mr D Lofthouse
Mr D Roberts
Mr M Gillett
Ms L Buckey
Mr D Thomas
Balance at
1 July 2014
Number
Granted as
compensation
Number
Received on vesting of
Performance Rights
Number
Net other
change
Number
Balance at
30 June 2015
Number
Balance held
nominally
Number
865,902
1,779,484
573,819
14,750
-
-
726,054
161,551
222,386
-
55,923
15,349
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28,474
-
-
-
-
13,958
13,958
4,803
3,980
3,980
1,475
-
100,000
100,000
1,000,000
681
120,000
-
-
2,714
87,894
(3,980)
-
(15,349)
-
965,902
1,907,958
1,573,819
15,431
120,000
-
740,012
178,223
315,083
-
59,903
1,475
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
1 July 2013
Number
Granted as
compensation
Number
Received on vesting of
Performance Rights
Number
Net other
change
Number
Balance at
30 June 2014
Number
Balance held
nominally
Number
686,139
2,463,133
573,819
1,590,671
10,417
-
-
991,357
1,240,194
168,845
29,161
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
179,763
865,902
266,351
(950,000)
1,779,484
-
-
-
-
-
-
(903)
4,333
-
-
130,401
(395,704)
130,401
(1,209,044)
44,114
39,276
55,923
14,982
-
9,427
(68,437)
-
367
-
573,819
1,589,768
14,750
-
-
726,054
161,551
222,386
-
55,923
15,349
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) Retired on 15 July 2013.
48 Annual Report 2015
2015 Financial ReportOverviewOperating & Financial ReviewGovernance Share performance rights of MMA Offshore Limited:
Balance at
1 July 2014
Granted as
compensation
Vested
Net other
change
(lapsed)
Number
Balance at
30 June 2015
Vested but not
exercisable
Rights vested
during year
Number
Number
Number
Number
Number
430,075
(28,474)
(302,668)
1,093,963
228,161
(13,958)
(609,611)
228,161
(13,958)
(148,367)
66,954
55,476
55,476
47,825
53,431
(4,803)
(46,557)
(3,980)
(38,576)
(3,980)
(38,576)
(1,475)
(14,301)
-
-
553,597
553,597
169,226
140,216
140,216
91,656
95,979
-
-
-
-
-
-
-
-
28,474
13,958
13,958
4,803
3,980
3,980
1,475
-
Number
995,030
949,005
487,761
153,632
127,296
127,296
59,607
42,548
Balance at
1 July 2013
Number
Granted as
compensation
Number
Exercised/
Vested
Number
Net other
change
Number
Balance at
30 June 2014
Number
Vested but not
exercisable
Number
Rights vested
during year
Number
915,358
909,787
448,543
144,429
122,395
139,042
51,739
-
346,023
(266,351)
169,619
(130,401)
169,619
(130,401)
53,317
44,177
44,177
22,850
42,548
(44,114)
(39,276)
(55,923)
(14,982)
-
-
-
-
-
-
-
-
-
995,030
949,005
487,761
153,632
127,296
127,296
59,607
42,548
-
-
-
-
-
-
-
-
266,351
130,401
130,401
44,114
39,276
55,923
14,982
-
2015
Mr J Weber
Mr D Ross
Mr P Raynor
Mr D Lofthouse
Mr D Roberts
Mr M Gillett
Ms L Buckey
Mr D Thomas
2014
Mr J Weber
Mr D Ross
Mr P Raynor
Mr D Lofthouse
Mr D Roberts
Mr M Gillett
Ms L Buckey
Mr D Thomas
All share rights issued to key management personnel during the financial year were made in accordance with the terms of the
respective rights plans.
During the financial year, 70,628 share rights (2014: 681,448) vested in favour of key management personnel at a weighted
average exercise price of $nil per right. A total of 70,628 (2014: 681,448) ordinary shares in MMA Offshore Limited were issued
on vesting of these rights.
No amounts remain unpaid on the rights vested during the financial year at year end.
Further details of the share based payment arrangements during the 2015 and 2014 financial years are contained in note 29.
MMA Offshore Limited 49
2015 Financial ReportOverviewOperating & Financial ReviewGovernance
Key Terms of Employment Contracts
As at the date of this report, the Managing Director and other key management personnel are all employed by the Company
under an employment contract, none of which are of fixed-term duration.
These employment contracts may be terminated by either party giving the required notice and subject to termination payments
as detailed below:
Jeff Weber - Managing Director
• The Remuneration Package consists of an annual base salary and a short-term incentive component and a long-term
incentive component at the discretion of the Nomination and Remuneration Committee and the Board.
• The Company and the employee are required to provide six months’ notice of termination.
•
If the employee is made redundant as a result of a material diminution in the nature and level of responsibilities or functions
of the employee’s position as a publicly listed company located in Perth, Western Australia, including without limitation
through a change in control of the Company, the employee will be entitled to a payment being the lesser of either:
• 1.5 times the Fixed Annual Remuneration in the relevant year (excluding any short-term incentives or long-term
incentives); or
•
the maximum amount that may be paid to the Managing Director under the Corporations Act and ASX Listing Rules
without prior shareholder approval.
David Ross - Chief Operating Officer
• The Remuneration Package consists of an annual base salary and a short-term incentive component and a long-term
incentive component at the discretion of the Nomination and Remuneration Committee and the Board.
• The Company and the employee are required to provide six months’ notice of termination.
•
If the employee is made redundant as a result of a material diminution in the nature and level of responsibilities or functions
of the employee’s position as a publicly listed company located in Perth, Western Australia, including without limitation
through a change in control of the Company, the employee will be entitled to a payment being the lesser of either:
• 1.5 times the Fixed Annual Remuneration in the relevant year (excluding any short-term incentives or long-term
incentives); or
•
the maximum amount that may be paid to the Chief Operating Officer under the Corporations Act and ASX Listing
Rules without prior shareholder approval.
Peter Raynor - Chief Financial Officer
• The Remuneration Package consists of an annual base salary and a short-term incentive component and a long-term
incentive component at the discretion of the Nomination and Remuneration Committee and the Board.
• The Company and the employee are required to provide six months’ notice of termination.
•
If the employee is made redundant as a result of a material diminution in the nature and level of responsibilities or functions
of the employee’s position as a publicly listed company located in Perth, Western Australia, including without limitation
through a change in control of the Company, the employee will be entitled to a payment being the lesser of either:
• 1.5 times the Fixed Annual Remuneration in the relevant year (excluding any short-term incentives or long-term
incentives); or
•
the maximum amount that may be paid to the Chief Financial Officer under the Corporations Act and ASX Listing Rules
without prior shareholder approval.
David Lofthouse - General Manager Business Development
• Remuneration consists of an annual base salary and statutory superannuation contributions.
• The employee may participate in the Company’s incentive scheme at the discretion of the Company.
• The Company and employee are required to provide 6 weeks’ notice of termination.
• No termination benefits are payable.
Dylan Roberts - General Manager Legal/Company Secretary
• Remuneration consists of an annual base salary and statutory superannuation contributions.
• The employee may participate in the Company’s incentive scheme at the discretion of the Company.
• The Company and employee are required to provide 6 weeks’ notice of termination.
• No termination benefits are payable.
50 Annual Report 2015
2015 Financial ReportOverviewOperating & Financial ReviewGovernance Michael Gillett - General Manager Human Resources
• Remuneration consists of an annual base salary and statutory superannuation contributions.
• The employee may participate in the Company’s incentive scheme at the discretion of the Company.
• The Company and employee are required to provide 8 weeks’ notice of termination.
• No termination benefits are payable.
Liz Buckey - General Manager Corporate Development
• Remuneration consists of an annual base salary and statutory superannuation contributions.
• The employee may participate in the Company’s incentive scheme at the discretion of the Company.
• The Company and employee are required to provide 30 days’ notice of termination.
• No termination benefits are payable.
Darren Thomas - General Manager HSEQ
• Remuneration consists of an annual base salary and statutory superannuation contributions.
• The employee may participate in the Company’s incentive scheme at the discretion of the Company.
• The Company and employee are required to provide 12 weeks’ notice of termination.
• No termination benefits are payable.
This Directors’ Report is signed in accordance with a resolution of Directors made pursuant to section 298(2) of the
Corporations Act 2001 (Cth).
On behalf of the Directors,
Tony Howarth AO
Chairman
Fremantle, 18 September 2015
MMA Offshore Limited 51
2015 Financial ReportOverviewOperating & Financial ReviewGovernance A u d i t o r ’s I n d e p e n d e n c e D e c l a r a t i o n
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Deloitte Touche Tohmatsu
Woodside Plaza
ABN 74 490 121 060
Level 14
240 St Georges Terrace
Woodside Plaza
Perth WA 6000
Level 14
GPO Box A46
240 St Georges Terrace
Perth WA 6837 Australia
Perth WA 6000
GPO Box A46
Tel: +61 (0) 8 9365 7000
Perth WA 6837 Australia
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
The Board of Directors
MMA Offshore Limited
The Board of Directors
1 Mews Road
MMA Offshore Limited
Fremantle WA 6160
1 Mews Road
Fremantle WA 6160
18 September 2015
18 September 2015
Dear Board Members
Dear Board Members
Auditor’s Independence Declaration to MMA Offshore Limited
Auditor’s Independence Declaration to MMA Offshore Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of MMA Offshore Limited.
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of MMA Offshore Limited.
As lead audit partner for the audit of the financial report of MMA Offshore Limited for the year ended
30 June 2015, I declare that to the best of my knowledge and belief, there have been no
As lead audit partner for the audit of the financial report of MMA Offshore Limited for the year ended
contraventions of:
30 June 2015, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to the audit
•
•
•
the auditor independence requirements of the Corporations Act 2001 in relation to the audit
any applicable code of professional conduct in relation to the audit.
•
Yours faithfully
any applicable code of professional conduct in relation to the audit.
Yours faithfully
Deloitte Touche Tohmatsu
Deloitte Touche Tohmatsu
Ross Jerrard
Partner
Ross Jerrard
Chartered Accountants
Partner
Perth, 18 September 2015
Chartered Accountants
Perth, 18 September 2015
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
52 Annual Report 2015
2015 Financial ReportOverviewOperating & Financial ReviewGovernance
A u d i t R e p o r t
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Woodside Plaza
Deloitte Touche Tohmatsu
Level 14
ABN 74 490 121 060
240 St Georges Terrace
Perth WA 6000
Woodside Plaza
GPO Box A46
Level 14
Perth WA 6837 Australia
240 St Georges Terrace
Perth WA 6000
Tel: +61 (0) 8 9365 7000
GPO Box A46
Fax: +61 (0) 8 9365 7001
Perth WA 6837 Australia
www.deloitte.com.au
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report to the members of
MMA Offshore Limited
Independent Auditor’s Report to the members of
Report on the Financial Report
MMA Offshore Limited
We have audited the accompanying financial report of MMA Offshore Limited, which comprises the
Report on the Financial Report
statement of financial position as at 30 June 2015, the statement of profit or loss and other
comprehensive income, the statement of cash flows and the statement of changes in equity for the year
We have audited the accompanying financial report of MMA Offshore Limited, which comprises the
ended on that date, notes comprising a summary of significant accounting policies and other
statement of financial position as at 30 June 2015, the statement of profit or loss and other
explanatory information, and the directors’ declaration of the consolidated entity, comprising the
comprehensive income, the statement of cash flows and the statement of changes in equity for the year
company and the entities it controlled at the year’s end or from time to time during the financial year
ended on that date, notes comprising a summary of significant accounting policies and other
as set out on pages 55 to 110.
explanatory information, and the directors’ declaration of the consolidated entity, comprising the
company and the entities it controlled at the year’s end or from time to time during the financial year
Directors’ Responsibility for the Financial Report
as set out on pages 55 to 110.
The directors of the company are responsible for the preparation of the financial report that gives a
Directors’ Responsibility for the Financial Report
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
The directors of the company are responsible for the preparation of the financial report that gives a
financial report that gives a true and fair view and is free from material misstatement, whether due to
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101
and for such internal control as the directors determine is necessary to enable the preparation of the
Presentation of Financial Statements, that the consolidated financial statements comply with
financial report that gives a true and fair view and is free from material misstatement, whether due to
International Financial Reporting Standards.
fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the consolidated financial statements comply with
Auditor’s Responsibility
International Financial Reporting Standards.
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
Auditor’s Responsibility
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
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
obtain reasonable assurance whether the financial report is free from material misstatement.
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
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
obtain reasonable assurance whether the financial report is free from material misstatement.
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
In making those risk assessments, the auditor considers internal control, relevant to the company’s
in the financial report. The procedures selected depend on the auditor’s judgement, including the
preparation of the financial report that gives a true and fair view, in order to design audit procedures
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
In making those risk assessments, the auditor considers internal control, relevant to the company’s
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
preparation of the financial report that gives a true and fair view, in order to design audit procedures
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
well as evaluating the overall presentation of the financial report.
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
MMA Offshore Limited 53
2015 Financial ReportOverviewOperating & Financial ReviewGovernance
A u d i t R e p o r t
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001,
which has been given to the directors of MMA Offshore Limited, would be in the same terms if given
to the directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a) the financial report of MMA Offshore Limited is in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the consolidated financial statements also comply with International Financial Reporting
Standards as disclosed in Note 2.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 38 to 51 of the directors’ report for the
year ended 30 June 2015. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of MMA Offshore Limited for the year ended 30 June 2015,
complies with section 300A of the Corporations Act 2001.
(cid:39)(cid:40)LOI(cid:55)(cid:55)(cid:40) (cid:55)O(cid:56)(cid:38)(cid:43)(cid:40) (cid:55)O(cid:43)MA(cid:55)(cid:54)(cid:56)
Ross (cid:45)errard
Partner
Chartered Accountants
Perth, 18 September 2015
54 Annual Report 2015
2015 Financial ReportOverviewOperating & Financial ReviewGovernance
D i r e c t o r s ’ D e c l a r a t i o n
The Directors declare that:
(a) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable;
(b) in the Directors’ opinion, the attached Financial Statements are in compliance with International Financial Reporting
Standards, as stated in note 2 to the Financial Statements;
(c) in the Directors’ opinion, the attached Financial Statements and notes thereto are in accordance with the Corporations Act
2001 (Cth), 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 (Cth).
At the date of this declaration, the Company is within the class of companies affected by ASIC Class Order 98/1418. The
nature of the deed of cross guarantee is such that each company, which is party to the deed, guarantees to each creditor
payment in full of any debt in accordance with the deed of cross guarantee.
In the Directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC
Class Order applies, as detailed in note 33 to the Financial Statements will, as a Group, be able to meet any obligations or
liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee.
Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001 (Cth).
On behalf of the Directors,
Tony Howarth AO
Chairman
Fremantle, 18 September 2015
MMA Offshore Limited 55
2015 Financial ReportOverviewOperating & Financial ReviewGovernance A g l o b a l r e c o r d
i n r e l i a b l e d e l i v e r y
2015 Financial ReportOverviewOperating & Financial ReviewGovernance
F i n a n c i a l
R e p o r t
2 0 1 5
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 Financial Statements
1.
2.
Application of New and Revised Accounting Standards
Significant Accounting Policies
3. Critical Accounting Judgements and Key Sources of
Estimation Uncertainty
Segment Information
Profit from Operations
Earnings per Share
Income Taxes
4.
5.
6.
7.
8. Dividends Provided for or Paid
9.
Trade and Other Receivables
10.
Inventories
11. Other Financial Assets
12.
Investments Accounted For Using The Equity Method
13. Property, Plant and Equipment
14. Goodwill
15.
Impairment of Goodwill and Non-current Assets
16. Trade and Other Payables
17. Unearned Revenue
18. Borrowings
19. Provisions
20. Other Current Liabilities
21. Other Financial Liabilities
22.
Issued Capital
23. Reserves
24. Retained Earnings
25. Notes to the Statement of Cash Flows
26. Commitments for Expenditure
27. Leases
28. Business Combinations
29. Share Based Payments
30. Key Management Personnel Compensation
31. Related Party Transactions
32. Remuneration of Auditors
33. Subsidiaries
34. Parent Company Information
35. Financial Instruments
36. Events After the Reporting Period
Additional Securities Exchange Information
58
59
60
61
62
64
73
74
76
77
77
79
80
81
81
81
82
83
83
86
86
86
87
87
87
87
88
88
89
90
90
91
93
99
99
100
101
104
105
110
111
MMA Offshore Limited 57
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2015
Revenue
Investment income
Other gains/(losses)
Share of profits of jointly controlled entity
Vessel expenses
Supply Base expenses
Slipway expenses
Administration expenses
Impairment charge
Finance costs
Profit/(loss) before tax
Income tax expense
Profit/(Loss) for the Year
Other Comprehensive Income, net of tax
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Gain/(loss) on hedge of net investment in a foreign operation
Gain/(loss) on cashflow hedges
Transfer of cashflow hedge loss to initial carrying amount of hedged
items
Other comprehensive income for the year, net of tax
Total Comprehensive Income for the Year
Profit/(loss) attributable to owners of the Company
Total comprehensive income attributable to owners of the Company
Earnings per share
Basic
Diluted
Note
4.5
5(a)
12
2015
$’000
2014
$’000
796,666
594,597
709
4,366
3,385
3,341
(927)
3,555
(622,651)
(386,323)
(67,366)
(12,267)
(11,862)
15
(120,710)
(93,964)
(15,606)
(17,562)
-
(9,999)
77,112
(23,228)
53,884
(11,754)
3,794
(11,504)
7,668
(11,796)
42,088
53,884
42,088
(18,489)
(48,219)
(3,072)
(51,291)
167,041
(53,309)
13,350
-
127,082
75,791
(51,291)
75,791
Cents Per Share Cents Per Share
(13.91)
(13.91)
18.78
18.76
7(a)
23
23
23
23
6
6
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
58 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial Report
Consolidated Statement of Financial Position
As at 30 June 2015
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Prepayments
Total Current Assets
Non-Current Assets
Investments accounted for using the equity method
Property, plant and equipment
Goodwill
Prepayments
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Unearned revenue
Borrowings
Provisions
Current tax liabilities
Other
Total Current Liabilities
Non-Current Liabilities
Unearned revenue
Borrowings
Other financial liabilities
Provisions
Deferred tax liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Retained earnings
Total Equity
Note
25(a)
9
10
11
12
13
14
16
17
18
19
7(c)
20
17
18
21
19
7(d)
22
23
24
2015
$’000
2014
$’000
124,482
200,615
4,724
11,545
27,416
368,782
10,355
1,046,078
-
-
174,768
201,335
6,101
-
36,092
418,296
10,970
896,441
20,710
17,573
1,056,433
945,694
1,425,215
1,363,990
129,173
38,226
49,592
19,270
5,155
5,913
83,601
17,454
47,218
21,979
41,605
4,820
247,329
216,677
393
392,881
-
612
4,883
398,769
646,098
779,117
555,681
115,858
107,578
779,117
2,278
393,625
1,806
1,067
11,695
410,471
627,148
736,842
549,813
(12,260)
199,289
736,842
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
MMA Offshore Limited 59
Consolidated Statement of Changes in Equity
For the year ended 30 June 2015
Employee
Equity
Settled
Benefits
Reserve
$’000
3,916
Issued
Capital
$’000
549,813
Foreign
Currency
Translation
Reserve
Retained
Earnings
$’000
$’000
Total
$’000
(18,164)
199,289
736,842
Hedging
Reserve
$’000
1,988
Year Ended 30 June 2015
Balance at 1 July 2014
Comprehensive income for the year:
Loss for the year
Other comprehensive income/(loss) for the year
Total Comprehensive Income/(Loss) for the Year
Payment of dividends
Issue of shares under dividend reinvestment plan
5,868
Related income tax expense
Recognition of share based payments
Balance at 30 June 2015
-
-
555,681
(792)
1,828
4,952
-
-
(51,291)
(51,291)
(39,959)
167,041
-
127,082
(39,959)
167,041
(51,291)
75,791
-
-
-
-
-
-
-
-
(40,420)
(40,420)
-
-
-
5,868
(792)
1,828
(37,971)
148,877
107,578
779,117
Employee
Equity
Settled
Benefits
Reserve
Issued
Capital
$’000
$’000
226,382
6,660
Foreign
Currency
Translation
Reserve
Retained
Earnings
$’000
$’000
Total
$’000
(6,410)
174,364
403,026
Hedging
Reserve
$’000
2,030
Year Ended 30 June 2014
Balance at 1 July 2013
Comprehensive income for the year:
Profit for the year
Other comprehensive loss for the year
Total Comprehensive Income/(Loss) for the Year
Payment of dividends
Issue of shares under dividend reinvestment plan
10,609
Issue of shares under Institutional Placement
100,058
Issue of shares under Institutional Entitlement Offer
143,445
Issue of shares under Retail Entitlement
73,705
Related income tax expense
Transfer to share capital
Recognition of share based payments
Share issue costs
Balance at 30 June 2014
-
(743)
3,648
(3,648)
-
1,647
(8,034)
-
-
(42)
(42)
-
53,884
53,884
(11,754)
-
(11,796)
(11,754)
53,884
42,088
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(28,959)
(28,959)
-
-
-
-
-
-
-
-
10,609
100,058
143,445
73,705
(743)
-
1,647
(8,034)
549,813
3,916
1,988
(18,164)
199,289
736,842
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
60 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial Report
Consolidated Statement of Cash Flows
For the year ended 30 June 2015
Note
2015
$’000
2014
$’000
Cash flows from Operating Activities
Receipts from customers
Interest received
Payments to suppliers and employees
Income tax paid
Interest and other costs of finance paid
Net Cash Provided by Operating Activities
25(c)
Cash flows from Investing Activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Net cash outflow on purchase of business
28.5
Dividends received
Amounts repaid from jointly controlled entity
Net Cash Used in Investing Activities
Cash flows from Financing Activities
Proceeds from issue of shares
Payment for share issue costs
Proceeds from borrowings
Repayment of borrowings
Payments for borrowing costs
Dividends paid
Net Cash (Used in)/Provided by Financing Activities
828,252
709
615,103
3,262
(575,164)
(530,336)
(51,059)
(17,378)
185,360
(23,617)
(9,999)
54,413
(172,764)
(74,316)
429
-
4,000
-
7
(174,957)
1,500
2,000
(168,335)
(245,766)
-
-
-
(52,867)
-
(34,552)
(87,419)
310,000
(825)
47,147
(24,725)
(4,014)
(18,352)
309,231
Net increase/(decrease) in cash and cash equivalents
(70,394)
117,878
Cash and cash equivalents at the beginning of the financial year
174,768
58,824
Effects of exchange rate changes on the balance of cash held in foreign currencies
20,108
(1,934)
Cash and Cash Equivalents at the End of the Financial Year
124,482
174,768
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
MMA Offshore Limited 61
Notes to the Financial Statements
For the year ended 30 June 2015
1.
Application of New and Revised Accounting Standards
1.1 Standards and Interpretations affecting amounts reported in the current period (and/or prior periods)
In the current year, the Group has applied the following new and revised AASBs issued by the Australian Accounting
Standards Board (AASB) that are mandatorily effective for an accounting period that begins on or after 1 July 2014, and
therefore relevant to the current year end:
AASB 2012-3
‘Amendments to Australian Accounting Standards –
Offsetting Financial Assets and Financial Liabilities’
AASB 2013-3
‘Amendments to AASB 136 – Recoverable Amount
Disclosures for Non-Financial Assets’
AASB 2014-1
‘Amendments to Australian Accounting Standards’
(Part A: Annual Improvements 2010–2012 and
2011–2013 Cycles)
The amendments to AASB 132 clarify the requirements relating to
the offset of financial assets and financial liabilities. Specifically,
the amendments clarify the meaning of ‘currently has a legally
enforceable right of set-off’ and ‘simultaneous realisation and
settlement’.
The amendments have been applied retrospectively. The
Group has assessed whether certain of its financial assets and
financial liabilities qualify for offset based on the criteria set out
in the amendments and concluded that the application of the
amendments does not have any material impact on the amounts
recognised in the Group’s Consolidated Financial Statements.
The amendments to AASB 136 remove the requirement to disclose
the recoverable amount of a cash-generating unit (CGU) to which
goodwill or other intangible assets with indefinite useful lives had
been allocated when there has been no impairment or reversal
of impairment of the related CGU. Furthermore, the amendments
introduce additional disclosure requirements applicable to when
the recoverable amount of an asset or a CGU is measured at fair
value less costs of disposal. These new disclosures include the
fair value hierarchy, key assumptions and valuation techniques
used which are in line with the disclosure required by AASB 13
‘Fair Value Measurements’.
The application of these amendments does not have any material
impact on the disclosures in the Group’s Consolidated Financial
Statements.
The Annual Improvements 2010-2012 has made number of
amendments to various AASBs. The amendments that are relevant
to the Group are summarised as follows:
•
•
•
The amendments to AASB 2 (i) change the definitions
of ‘vesting condition’ and ‘market condition’; and (ii) add
definitions for ‘performance condition’ and ‘service condition’
which were previously included within the definition of ‘vesting
condition’. The amendments to AASB 2 are effective for share
based payment transactions for which the grant date is on or
after 1 July 2014.
The amendments to AASB 8 (i) require an entity to disclose
the judgements made by management in applying the
aggregation criteria to operating segments, including a
description of the operating segments aggregated and the
economic indicators assessed in determining whether the
operating segments have ‘similar economic characteristics’;
and (ii) clarify that a reconciliation of the total of the reportable
segments’ assets to the entity’s assets should only be
provided if the segment assets are regularly provided to the
chief operating decision-maker.
The amendments to the basis for conclusions of AASB
13 clarify that the issue of AASB 13 and consequential
amendments to AASB 139 and AASB 9 did not remove the
ability to measure short-term receivables and payables
with no stated interest rate at their invoice amounts without
discounting, if the effect of discounting is immaterial.
62 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial Report Notes to the Financial Statements
For the year ended 30 June 2015
1.
Application of New and Revised Accounting Standards (continued)
.
AASB 2014-1
‘Amendments to Australian Accounting Standards’
(Part B: Defined Benefit Plans: Employee
Contributions Amendments to AASB 119)
Interpretation 21 ‘Levies’
AASB 1031
‘Materiality’, AASB 2013-9 ‘Amendments to
Australian Accounting Standards’ – Conceptual
Framework, Materiality and Financial Instruments’
(Part B: Materiality), AASB 2014-1 ‘Amendments
to Australian Accounting Standards’ (Part C:
Materiality)
•
The amendments to AASB 124 clarify that a management
entity providing key management personnel services to
a reporting entity is a related party of the reporting entity.
Consequently, the reporting entity should disclose as related
party transactions the amounts incurred for the service paid
or payable to the management entity for the provision of key
management personnel services. However, disclosure of the
components of such compensation is not required.
The application of these amendments does not have any material
impact on the disclosures or on the amounts recognised in the
Group’s Consolidated Financial Statements.
The amendments to AASB 119 clarify how an entity should
account for contributions made by employees or third parties to
defined benefit plans, based on whether those contributions are
dependent on the number of years of service provided by the
employee.
For contributions that are independent of the number of years
of service, the entity may either recognise the contributions as
a reduction in the service cost in the period in which the related
service is rendered, or to attribute them to the employees’ periods
of service using the projected unit credit method; whereas for
contributions that are dependent on the number of years of
service, the entity is required to attribute them to the employees’
periods of service.
The application of these amendments to AASB 119 does not
have any material impact on the disclosures or on the amount
recognised in the Group’s Consolidated Financial Statements.
Interpretation 21 addresses the issue as to when to recognise a
liability to pay a levy imposed by a government. The Interpretation
defines a levy, and specifies that the obligating event that gives
rise to the liability is the activity that triggers the payment of the
levy, as identified by legislation. The Interpretation provides
guidance on how different levy arrangements should be
accounted for, in particular, it clarifies that neither economic
compulsion nor the going concern basis of financial statements
preparation implies that an entity has a present obligation to pay a
levy that will be triggered by operating in a future period.
Interpretation 21 has been applied retrospectively. The application
of this Interpretation does not have any material impact on
the disclosures or on the amounts recognised in the Group’s
Consolidated Financial Statements.
The revised AASB 1031 is an interim standard that cross-
references to other Standards and the ‘Framework for the
Preparation and Presentation of Financial Statements’ (issued
December 2013) that contain guidance on materiality. The AASB is
progressively removing references to AASB 1031 in all Standards
and Interpretations. Once all of these references have been
removed, AASB 1031 will be withdrawn. The adoption of AASB
1031, AASB 2013-9 (Part B) and AASB 2014-1 (Part C) does
not have any material impact on the disclosures or the amounts
recognised in the Group’s Consolidated Financial Statements.
MMA Offshore Limited 63
1.
Application of New and Revised Accounting Standards (continued)
1.2 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
AASB 9 ‘Financial Instruments’, and the relevant
amending standards (1)
AASB 15 ‘Revenue from Contracts with Customers’ and
AASB 2014-5 ‘Amendments to Australian Accounting
Standards arising from AASB 15’
AASB 2014-4 ‘Amendments to Australian Accounting
Standards – Clarification of Acceptable Methods of
Depreciation and Amortisation’
AASB 2015-1 ‘Amendments to Australian Accounting
Standards – Annual Improvements to Australian
Accounting Standards 2012-2014 Cycle’
AASB 2015-2 ‘Amendments to Australian Accounting
Standards – Disclosure Initiative: Amendments to
AASB 101’
AASB 2015-3 ‘Amendments to Australian Accounting
Standards arising from the Withdrawal of AASB 1031
Materiality’
Effective for annual reporting
periods beginning on or after
Expected to be initially applied
in the financial year ending
1 January 2018
30 June 2019
1 January 2017
30 June 2018
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 July 2015
30 June 2016
(1) Part E of the AASB is applicable to reporting periods beginning on or after 1 January 2015.
The potential effect of the revised Standards/Interpretations on the Group’s Financial Statements has not yet been
determined.
At the date of publication, there have been no IASB Standards or IFRIC Interpretations that are issued but not yet
effective.
2.
Significant Accounting Policies
Statement of Compliance
These Financial Statements are general purpose financial statements which have been prepared in accordance with the
Corporations Act 2001 (Cth), 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 the Australian Accounting Standards
ensures that the Financial Statements and notes of the Company and the Group comply with International Financial Reporting
Standards (‘IFRS’).
The Financial Statements were authorised for issue by the Directors on 18 September 2015.
64 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 2.
Significant Accounting Policies (continued)
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 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.
The Company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with
that Class Order, amounts in the Financial Report are rounded off to the nearest thousand dollars, unless otherwise indicated.
The following significant accounting policies have been adopted in the preparation and presentation of the Financial Report:
a.
Basis of consolidation
The Consolidated Financial Statements incorporate the Financial Statements of the Company and entities controlled by
the Company (its subsidiaries). Control is achieved when the Company:
• has power over the investee;
•
is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of
during the year are included in the Consolidated Statement of Profit or Loss and Other Comprehensive Income from the
date the Company gains control until the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to
the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and
to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into
line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members
of the Group are eliminated in full on consolidation.
b.
Business combinations
Acquisitions of business are accounted for using the acquisition method. The consideration transferred in a business
combination is measured at fair value which is calculated as the sum of the acquisition date fair values of assets
transferred by the Group and liabilities incurred by the Group to the former owners of the acquiree. Acquisition related
costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value,
except that:
• deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised
and measured in accordance with AASB 112 ‘Income Taxes’ and AASB 119 ‘Employee Benefits’ respectively.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any)
over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed. If, after
reassessment, the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed
exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the
fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit
or loss as a bargain purchase gain.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those
provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognised, to
reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known,
would have affected the amounts recognised as of that date.
MMA Offshore Limited 65
Notes to the Financial Statements For the year ended 30 June 2015 2.
Significant Accounting Policies (continued)
c.
Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of the acquisition of the
business (see note 2(b) above) less accumulated impairment losses, if any.
For the purpose of impairment testing, goodwill is allocated to the Group’s cash-generating unit 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. 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 in
the Consolidated Statement of Comprehensive Income. 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.
d.
Interests in joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the
net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The results and assets and liabilities of joint ventures are incorporated in these Consolidated Financial Statements using
the equity method of accounting. Under the equity method, an investment in a joint venture is initially recognised in
the Consolidated Statement of Financial Position at cost and adjusted thereafter to recognise the Group’s share of the
profit or loss and other comprehensive income of the joint venture. When the Group’s share of losses of a joint venture
exceeds the Group’s interest in that joint venture (which includes any long-term interests that, in substance, form part of
the Group’s net investment in the joint venture), the Group discontinues recognising its share of further losses. Additional
losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments
on behalf of the joint venture.
An investment in a joint venture is accounted for using the equity method from the date on which the investee becomes
a joint venture. On acquisition of the investment in a joint venture, any excess of the cost of the investment over the
Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill,
which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of
the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in
profit or loss in the period in which the investment is acquired.
When a group entity transacts with a joint venture of the Group, profits and losses resulting from the transactions with
the joint venture are recognised in the Group’s Consolidated Financial Statements only to the extent of interests in the
joint venture that are not related to the Group.
e.
Foreign currencies
The individual financial statements of each group entity are presented in the currency of the primary economic
environment in which the entity operates (its functional currency). For the purposes of the Consolidated Financial
Statements, the results and financial position of each group entity are expressed in Australian Dollars ($), which is the
functional currency of the Company, and the presentation currency for the Consolidated Financial Statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At
the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the exchange
rate prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are
measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise except for:
• exchange differences on transactions entered into in order to hedge certain foreign currency risks (see note 2(q)).
• exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is
neither planned nor likely to occur (therefore forming part of the net investment in a foreign operation), which are
recognised initially in other comprehensive income and reclassified from equity to profit or loss on disposal or partial
disposal of the net investment.
66 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 2.
Significant Accounting Policies (continued)
For the purpose of presenting Consolidated Financial Statements, the assets and liabilities of the Group’s foreign
operations are translated into Australian Dollars using exchange rates prevailing at the end of the reporting period.
Income and expense items are translated at the average exchange rates for the period, unless exchange rates
fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used.
Exchange differences arising, if any, are recognised through other comprehensive income and recognised in equity.
On the disposal of the foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation), all of the
accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss.
f.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
(i)
Rendering of services
Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract.
The stage of completion of the contract is determined progressively at contractual rates as service hours are
delivered and direct expenses incurred.
(ii)
Rental income
Rental income from operating leases is recognised in accordance with the Group’s accounting policy outlined in
note 2(g) below.
(iii) Dividend and interest income
Dividend income from investments is recognised when the Group’s right to receive payment has been established
(provided that it is probable that the economic benefits will flow to the Group and the amount of income can be
measured reliably).
Interest income 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 at the effective interest rate applicable.
g.
Leasing
Leases are classified as finance leases when 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.
(i)
Group as lessor
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of
the leased asset and recognised on a straight-line basis over the lease term.
(ii) Group as lessee
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 charges 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, (see note 2(h) below).
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.
h.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of
those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
MMA Offshore Limited 67
Notes to the Financial Statements For the year ended 30 June 2015 2.
Significant Accounting Policies (continued)
i.
Employee benefits
(i)
Short-term and long-term 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 at 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.
(ii)
Retirement benefits costs
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have
rendered service entitling them to the contributions.
(iii)
Termination benefit
A liability for termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of
the termination benefit and when the entity recognises any related restructuring costs.
j.
Share based payments
Equity settled share based payments to employees and others providing similar services are measured at fair value
of the equity instrument at grant date. Details regarding the determination of fair value of equity settled share based
transactions are set out in note 29.
The fair value determined at the grant date of the equity settled share based payments is expensed on a straight-line
basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a
corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of
equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit
or loss such that the cumulative expense reflects the revised estimate, with corresponding adjustment to the employee
equity settled benefits reserve.
k.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
(i)
Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit 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 and tax laws that have been enacted or substantively enacted
by the reporting date.
(ii) Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in
the 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 deductible temporary differences can be utilised. Such deferred tax assets and liabilities
are not recognised if the temporary differences arise 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.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in
subsidiaries, and interests in joint ventures, except where the Group is able to control the reversal of the
temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary differences associated with such investments and interests
are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to
utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
68 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 2.
Significant Accounting Policies (continued)
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(s) in
which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or
substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or
settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities 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.
(iii) Current and deferred tax for the period
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 or deferred tax arises from
the initial accounting for a business combination, the tax effect is included in the accounting for business
combination.
l.
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value represents the estimated selling
price for inventories less all estimated costs of completion and costs necessary to make the sale.
m.
Property, plant and equipment
Leasehold buildings and improvements, plant and equipment and equipment under finance lease are stated at cost
less, where applicable, accumulated depreciation and impairment losses. Cost includes expenditure that is directly
attributed to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is
deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of
acquisition.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful
lives. Leasehold buildings and improvements are depreciated over the period of the lease or estimated useful life,
whichever is the shorter, using the straight-line method.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets.
The estimated useful lives, residual values and depreciation methods are reviewed at the end of each annual reporting
period.
The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the
difference between the sales proceeds and the carrying amount of the asset and is recognised in profit and loss.
The following rates are used in the calculation of depreciation:
Leasehold buildings and improvements
Vessels
Vessel refits
Plant and equipment
2% - 39% straight-line
4% - 8.33% straight-line
20% - 40% straight-line
1% - 100% straight-line
n.
Impairment of tangible assets
At each reporting date, 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). Where 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.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised in profit or loss immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased
to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset
(cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately.
MMA Offshore Limited 69
Notes to the Financial Statements For the year ended 30 June 2015 2.
Significant Accounting Policies (continued)
o.
Financial assets
All financial assets are initially measured at fair value.
Financial assets are classified into the following specified category; loans and receivables. The classification depends
on the nature and purpose of the financial assets and is determined at the time of initial recognition.
(i)
Effective interest rate method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash receipts (including all fees on points paid or received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or,
where appropriate, a shorter period, to the net carrying amount on initial recognition.
(ii)
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in
an active market are classified as ‘loans and receivables’. They are recorded at amortised cost less impairment.
(iii)
Impairment of financial assets
Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets
are considered to be impaired where 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 investment have
been affected.
For financial assets carried at amortised cost, the amount of the impairment 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 uncollectible, 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 the carrying
amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would
have been had the impairment not been recognised.
(iv) Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire,
or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to
another entity.
p.
Financial liabilities and equity instruments issued by the Group
All financial liabilities are initially measured at fair value.
(i)
Classification as debt or equity
Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the
contractual arrangement.
(ii)
Equity instrument
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all
of its liabilities. Equity instruments issued by the Group are recorded as the proceeds received, net of direct issue
cost.
(iii)
Financial liabilities
Financial liabilities are classified as other financial liabilities.
70 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 2.
Significant Accounting Policies (continued)
(iv) Other financial liabilities
Other financial liabilities including borrowings are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with
interest expense recognised on an effective yield basis. The effective interest method is a method of calculating
the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the
financial liability, or, where appropriate, a shorter period to the net carrying amount on initial recognition.
(v) Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged,
cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and
the consideration paid and payable is recognised in the profit and loss.
q.
Derivative financial instruments
The Group enters into derivative financial instruments to manage its exposure to foreign exchange rate and interest rate
risk. Further details of derivative financial instruments are disclosed in note 35 to the Financial Statements.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit and loss
immediately unless the derivative is designated and effective as a hedging instrument in which event, the timing of the
recognition in profit and loss depends on the nature of the hedge relationship.
(i)
Hedge accounting
Hedges of foreign exchange risk on firm commitments and interest rate risk are accounted for as cash flow
hedges.
At the inception of the hedge relationship the entity documents the relationship between the hedging instrument
and hedged item, along with its risk management objectives and its strategy for undertaking various hedge
transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether
the hedging instrument that is used in a hedging relationship is highly effective in offsetting changes in cash
flows of the hedged item. Note 35 contains details of the fair values of the derivative instruments used for hedging
purposes.
(ii) Cash flow Hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging
reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss and is
included in the “other gains and losses” line item.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified
to profit or loss in the periods when the hedged item is recognised in profit or loss, in the same line as the
recognised hedged item. However, when the forecast transaction that is hedged results in the recognition of a
non-financial asset or a non-financial liability, the gains and losses previously recognised in other comprehensive
income and accumulated in equity are transferred from equity and included in the initial measurement of the cost
of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging
instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any gain or
loss recognised in other comprehensive income and accumulated in equity at that time remains in equity and is
recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is
no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.
(iii) Hedges of net investment in foreign operations
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss
on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive
income and accumulated under the heading of foreign currency translation reserve. The gain or loss relating to
the ineffective portion is recognised immediately in profit or loss, and is included in the ’other gains and losses’
line item.
Gains and losses on the hedging instrument relating to the effective portion of the hedge accumulated in the
foreign currency translation reserve are reclassified to profit or loss on the disposal of the foreign operation.
MMA Offshore Limited 71
Notes to the Financial Statements For the year ended 30 June 2015 2.
Significant Accounting Policies (continued)
r.
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 reporting date, taking into account the risks and uncertainties surrounding the obligation. Where 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.
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.
(i)
Restructurings
A restructuring provision is recognised when the Group has developed a detailed formal plan for restructuring
and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement
the plan or announcing its main features to those affected by it. The measurement of a restructuring provision
includes only the direct expenditures arising from the restructuring, which are those amounts that are both
necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.
(ii) Warranties
Provision for warranties represents the best estimate of the Group’s liabilities to repair or replace products still
under warranty at the end of the reporting period. The provision is based on past experience of the level of repairs
and claims.
(iii) Cancellation Costs
Provisions are recognised for the expected cash outflows for the cancellation of certain committed purchase
orders which is in relation to the Group’s effort in rationalising and optimising the Group’s vessel-build programme
in prior years. Assumptions used to estimate the provision were based on current negotiations with key suppliers.
At the end of this reporting period, the Directors are satisfied that no adjustment is required to be made to the
Group’s provision for cancellation costs.
72 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 3.
Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the Group’s accounting policies, which are described in note 2, the Directors are required to make
judgements, estimates and assumptions about carrying values 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 ongoing 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.
3.1 Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end
of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year.
Impairment of property, plant & equipment and goodwill
Determining whether tangible or intangible assets are impaired requires an estimation of the value in use of the cash-
generating unit to which they have been allocated. The value in use calculation requires the Directors to estimate the
future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate
present value. At the end of the reporting period, the Directors have determined that there is an adjustment required to
the Group’s carrying amount of property, plant & equipment and goodwill.
An impairment of $100 million on property, plant & equipment and $20.7 million on goodwill was recognised during the
year. Please refer to note 15 for further details.
Useful lives of property, plant and equipment
As described in note 2(m), the Group reviews the estimated useful lives of property, plant and equipment at the end
of each annual reporting period. At the end of this reporting period, the Directors have determined that there was no
adjustment required to the Group’s property, plant and equipment’s useful lives.
Provision for warranties
As described in note 2(r)(ii) above, the provision for warranties represent the best estimate of the Group’s liability to
repair vessels and replace affected parts still under warranty. At the end of this reporting period, the Directors are
satisfied that no adjustment is required to be made to the Group’s provision for warranties.
Provision for cancellation costs
As described in 2(r)(iii) above, provisions are recognised for the expected cash outflows for the cancellation of certain
committed purchase orders which is in relation to the Group’s effort in rationalising and optimising the Group’s vessel-
build programme in prior years. Assumptions used to estimate the provision were based on current negotiations with
key suppliers. At the end of this reporting period, the Directors are satisfied that no adjustment is required to be made to
the Group’s provision for cancellation costs.
MMA Offshore Limited 73
Notes to the Financial Statements For the year ended 30 June 2015 4.
Segment Information
4.1 Products and services from which reportable segments derive their revenues
Information reported to the chief operating decision maker (The Board of Directors) for the purposes of resource
allocation and assessment of segment performance focuses on the types of services provided. The Group’s reportable
segments under AASB 8 are therefore as follows:
• Vessels
• Supply Base
• Slipway
Information regarding these segments is presented below. The accounting policies of the reportable segments are the
same as the Group’s accounting policies.
4.2 Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment:
Revenue from
external customers
Inter-segment Revenue
Total Segment Revenue
2015
$’000
2014
$’000
2015
$’000
2014
$’000
2015
$’000
2014
$’000
699,785
85,970
10,911
445,410
130,819
18,368
796,666
594,597
-
2,516
11,776
14,292
516
2,485
10,947
13,948
699,785
88,486
22,687
445,926
133,304
29,315
810,958
608,545
(14,292)
(13,948)
796,666
594,597
Segment Revenues
Vessels
Supply Base
Slipway
Total
Eliminations
Total consolidated revenue
Inter-segment services are provided for amounts equal to competitive market prices charged to external customers for
similar services.
Profit Before Impairment
Impairment Charge
Profit/(loss)
After Impairment
2015
$’000
2014
$’000
2015
$’000
2014
$’000
2015
$’000
2014
$’000
77,134
18,604
(204)
(1,152)
94,382
59,087
(100,000)
36,855
(20,710)
3,071
(309)
-
-
98,704
(120,710)
-
-
-
-
-
(22,866)
(2,106)
(204)
(1,152)
59,087
36,855
3,071
(309)
(26,328)
98,704
709
4,366
3,341
(927)
(11,862)
(17,562)
3,385
3,555
(18,489)
(48,219)
(9,999)
77,112
Segment Profit
Vessels
Supply Base
Slipway
Eliminations
Total for continuing operations
Investment revenue
Other gains/(losses)
Central administration costs
Share of profit of jointly
controlled entity
Unallocated finance costs
Profit/(loss) before income tax
Segment profit represents the profit earned by each segment without allocation of investment revenue, other gains
and losses, central administration costs, share of profits of jointly controlled entity, finance costs and income tax
expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and
assessment of segment performance.
74 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 4.
Segment Information (continued)
4.3 Segment Assets
The following is an analysis of the Group’s assets by reportable operating segment:
Segment assets
Vessels
Supply Base
Slipway
Unallocated
Total
2015
$’000
2014
$’000
1,061,308
134,282
14,503
215,122
976,532
169,245
20,084
198,129
1,425,215
1,363,990
For the purposes of monitoring segment performance and allocating resources between segments, all assets are
allocated to reportable segments other than cash, investments in jointly controlled entities, other financial assets and
central administration assets.
4.4 Other segment information
Depreciation and amortisation
Additions to
non-current assets
Carrying value of equity
accounted investments
2015
$’000
121,923
7,304
746
1,324
2014
$’000
30,367
10,452
749
1,113
2015
$’000
239,566
3,916
1,085
2,670
2014
$’000
486,475
11,661
371
2,754
131,297
42,681
247,237
501,261
2015
$’000
2014
$’000
-
-
-
-
-
-
10,355
10,355
10,970
10,970
Vessels
Supply Base
Slipway
Unallocated
Total
4.5 Revenue from major services
The following is an analysis of the Group’s revenue from its major services:
Vessel services
Supply Base services
Slipway services
Others
Total
4.6 Geographical information
2015
$’000
695,195
84,004
10,910
6,557
796,666
2014
$’000
440,330
130,806
18,368
5,093
594,597
The Group is based in two principal geographical areas – Australia (country of domicile) and Singapore.
During the year, the Group operated vessels in a number of countries outside of Australia. The Group’s revenue from
continuing operations from external customers by location of operations and information about its non-current assets*
by location of assets are detailed in the following table.
Australia
Other
Total
Revenue from external customers
Non-current assets*
2015
$’000
639,433
157,233
796,666
2014
$’000
567,292
27,305
594,597
2015
$’000
529,140
516,938
1,046,078
2014
$’000
434,994
482,157
917,151
* Non-current assets excluding investments accounted for using the equity method and prepayments.
MMA Offshore Limited 75
Notes to the Financial Statements For the year ended 30 June 2015
4.
Segment Information (continued)
4.7
Information about major customers
Included in revenues arising from vessel and supply base services are revenues of approximately $308.6 million (2014:
$216.3 million) which arose from sales to the Group’s largest customer and revenues of approximately $114.6 million
(2014: $144.3 million) which arose from sales to the Group’s second largest customer.
5.
Profit from Operations
(a) Other gains and losses
Net foreign exchange gains/(losses)
Gain/(loss) on disposal of property, plant and equipment
Total
(b) Profit for the year
Profit for the year before income tax has been arrived at after charging the
following:
(i) Depreciation:
Leasehold buildings and improvements
Vessels
Vessels – hire purchase
Plant and equipment
Plant and equipment – hire purchase
Total
(ii) Impairment charges:
Impairment charge recognised on trade receivables
Reversal of impairment charge recognised on trade receivables
Impairment charge recognised on fixed assets and goodwill
(iii) Employee benefits:
Post employment benefits:
Defined contribution plans
Share based payments:
Equity settled share based payments
Other employee benefits
Total
2015
$’000
4,567
(201)
4,366
6,176
120,646
435
3,052
988
131,297
5,483
(431)
120,710
2014
$’000
(928)
1
(927)
8,787
29,149
869
2,892
984
42,681
270
-
-
19,654
18,049
1,828
227,198
248,680
1,647
172,625
192,321
76 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015
6.
Earnings per Share
6.1 Earnings per Share:
The earnings used in the calculation of basic and diluted earnings per share are as follows:
Net profit/(loss)
6.2 Weighted average number of ordinary shares (basic):
2015
$’000
(51,291)
2015
No.‘000
2014
$’000
53,884
2014
No.‘000
Weighted average number of ordinary shares for the purposes of basic earnings
per share
368,841
286,865
6.3 Weighted average number of ordinary shares (diluted):
Weighted average number of ordinary shares used in the calculation of basic
earnings per share
Shares deemed to be issued for no consideration in respect of employee options
and rights
Weighted average number of ordinary shares used in the calculation of diluted
earnings per share
368,841
286,865
-
313
368,841
287,178
The following potential ordinary shares are non-dilutive and are therefore excluded
from the weighted average number of ordinary shares used in the calculation of
diluted earnings per share:
Employee options and rights
7.
Income Taxes
(a)
Income tax recognised in profit or loss
Tax expense comprises:
Current tax expense in respect of the current year
Deferred tax expense in respect of the current year
Adjustment recognised in the current year in relation to tax provisions of
prior years
Total income tax expense
The income tax expense for the year can be reconciled to accounting profit as
follows:
Profit/(loss) from operations
Income tax expense calculated at 30%
Effect of revenue that is exempt from taxation
Effect of expenses that are not deductible in determining taxable profit
Effect of tax deductible items not included in accounting profit
Effect of foreign income taxable in Australia
Effect of tax losses utilised
Effect of different tax rates of subsidiaries operating in other jurisdictions
Adjustment recognised in the current year in relation to tax provisions of
prior years
Total income tax expense
4,172
5,367
2015
$’000
2014
$’000
16,778
(8,858)
(4,848)
3,072
(48,219)
(14,466)
(6,540)
31,593
(721)
3,223
(2,782)
(2,387)
7,920
(4,848)
3,072
26,542
(2,993)
(321)
23,228
77,112
23,134
(936)
2,581
328
344
-
(1,902)
23,549
(321)
23,228
The tax rate used for the 2015 and 2014 reconciliations above is the corporate tax rate of 30% payable by Australian
corporate entities on taxable profits under Australian tax law.
MMA Offshore Limited 77
Notes to the Financial Statements For the year ended 30 June 2015
7.
Income Taxes (continued)
(b)
Income tax recognised directly in equity
Income tax functional currency change of deferred tax balances
Employee share trust
Total
(c) Current tax liabilities
Income tax payable
(d) Deferred tax balances
Deferred tax assets
Deferred tax liabilities
Total
Deferred tax assets/(liabilities) arise from the following:
2015
$’000
$’000
$’000
$’000
Opening
balance
Recognised in
profit or loss
Recognised
in equity
Acquisitions
Gross deferred tax liabilities:
Property, plant and equipment
Inventory
Receivables
Other
Gross deferred tax assets:
Provisions
Share issue costs
Employee share trust
Unearned revenue
Unused tax losses and credits
Other
Total
2014
(19,230)
(798)
(661)
(1,274)
(21,963)
4,091
74
583
5,016
-
505
10,269
(11,694)
Gross deferred tax liabilities:
Property, plant and equipment
(20,485)
Inventory
Receivables
Other
Gross deferred tax assets:
Provisions
Share issue costs
Employee share trust
Unearned revenue
Other
Total
(688)
(712)
(366)
(22,252)
3,149
145
2,250
3,370
320
9,234
(13,018)
11,729
173
3
(9,127)
2,778
156
(60)
479
2,373
3,187
(55)
6,080
8,858
2,181
(110)
51
(908)
1,214
942
(71)
(924)
1,646
185
1,778
2,993
(1,255)
-
-
-
(1,255)
-
-
(792)
-
-
-
(792)
(2,047)
-
-
-
-
-
-
-
(743)
-
-
(743)
(743)
78 Annual Report 2015
2015
$’000
1,255
792
2,047
2014
$’000
-
743
743
(5,155)
(41,605)
15,557
(20,440)
(4,883)
10,268
(21,963)
(11,695)
Closing
balance
$’000
(8,756)
(625)
(658)
(10,401)
(20,440)
4,247
14
270
7,389
3,187
450
15,557
(4,883)
-
-
-
-
-
-
-
-
-
-
-
-
-
(926)
(19,230)
-
-
-
(926)
-
-
-
-
-
-
(926)
(798)
(661)
(1,274)
(21,963)
4,091
74
583
5,016
505
10,268
(11,695)
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015
7.
Income Taxes (continued)
(e) Unrecognised deferred tax assets
2015
$’000
2014
$’000
Deductible temporary differences, unused tax losses and unused tax credits for
which no deferred tax assets have been recognised are attributable to the following:
Tax losses (revenue in nature)
2,629
463
(f)
Tax consolidation
Relevance of tax consolidation to the Group
The Company and its wholly-owned Australian resident entities have formed a tax consolidated group with effect from 1
July 2003 and are therefore taxed as a single entity from that date. The head entity within the tax consolidated group is
MMA Offshore Limited. The members of the tax consolidated group are identified at note 33.
Nature of tax funding arrangements and tax sharing agreements
Entities within the tax consolidated group have entered into a tax funding arrangement and a tax sharing agreement
with the head entity. Under the terms of the tax funding arrangement, MMA Offshore Limited and each of the entities in
the tax consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on the current
tax liability or current tax asset of the entity. Such amounts are reflected in amounts receivable from or payable to other
entities in the tax consolidated group.
The tax sharing agreement entered into between members of the tax consolidated group provides for the determination
of the allocation of income tax liabilities between the entities should the head entity default on its tax payment
obligations or if any entity should leave the tax consolidated group. The effect of the tax sharing agreement is that each
member’s liability for tax payable by the tax consolidated group is limited to the amount payable to the head entity under
the tax funding arrangement.
8.
Dividends Provided for or Paid
Adjusted franking account balance
Impact on franking account balance of dividends not recognised
2015
$’000
45,445
(2,386)
2014
$’000
41,921
(11,003)
2015
Cents
Per Share
2014
Total
$’000
Cents
Per Share
Total
$’000
Recognised Amounts
Fully paid ordinary shares
Interim dividend fully franked at a 30% tax rate
Final dividend fully franked at a 30% tax rate
4.0
7.0
14,746
25,674
5.5
7.0
12,795
16,164
Unrecognised Amounts
Fully paid ordinary shares
Final dividend fully franked at a 30% tax rate
1.5
5,568
7.0
25,674
On 17 August 2015, the Directors declared a fully franked final dividend of 1.5 cents per share in respect of the financial year
ended 30 June 2015 to the holders of fully paid ordinary shares, to be paid on 29 September 2015. The dividend will be paid
to all shareholders on the register of members on 8 September 2015. This dividend has not been included as a liability in these
Financial Statements.
MMA Offshore Limited 79
Notes to the Financial Statements For the year ended 30 June 2015 9.
Trade and Other Receivables
Trade receivables
Allowance for doubtful debts
Other receivables
Total
2015
$’000
2014
$’000
197,605
182,953
(6,068)
9,078
(1,063)
19,445
200,615
201,335
The average credit period on rendering of services is 30 days. An allowance has been made for estimated irrecoverable trade
receivable amounts arising from the past rendering of services.
Of the trade receivables balance at the end of the year, $33.3 million (2014: $50.9 million) is outstanding from the Group’s
largest debtor and $16.5 million (2014: $35.3 million) from the Group’s second largest debtor.
Trade receivables disclosed above include amounts (see below for aged analysis) that are past due at the end of the reporting
period but against which the Group has not recognised an allowance for doubtful receivables because there has not been a
significant change in credit quality and the amounts are still considered recoverable.
Ageing of past due but not impaired
31-60 days
61-90 days
91-120 days
121-150 days
Over 150 days
Total
Movement in the allowance for doubtful debts
Balance at the beginning of the year
Impairment losses recognised on receivables
Amounts written off as uncollectable
Amounts recovered during the year
Amount recognised as part of business combination
Balance at the end of the year
2015
$’000
2014
$’000
28,864
12,341
2,978
12,978
15,293
72,454
1,063
5,483
(47)
(431)
-
6,068
41,436
13,790
8,279
8,970
1,585
74,060
59
270
-
-
734
1,063
In determining the recoverability of trade receivables, the Group considers any change in the credit quality of the trade
receivable from the date credit was initially granted up to the reporting date. Accordingly, the Directors believe that there is no
further credit provision required in excess of the allowance for doubtful debts.
80 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 10.
Inventories
Fuel – at cost
Consumables
Work in progress
Total
11. Other Financial Assets
Derivatives
2015
$’000
2,629
1,319
776
4,724
2015
$’000
2014
$’000
2,027
3,477
597
6,101
2014
$’000
Hedge contracts on vessels under construction
11,545
-
12.
Investments Accounted For Using The Equity Method
Name of Entity
Jointly Controlled Entity
Toll Mermaid Logistics
Broome Pty Ltd
Ownership Interest
Consolidated
Carrying Amount
Principal
Activity
Country of
Incorporation
2015
%
2014
%
2015
$’000
2014
$’000
Australia
50
50
10,355
10,970
Supply base
services in
Broome for
the offshore
oil and gas
industry
Total
10,355
10,970
The reporting date of Toll Mermaid Logistics Broome Pty Ltd (TMLB) is 30 June. The Company acquired a 50% ownership
interest in TMLB in October 2006. Pursuant to a shareholder agreement the Company has the right to cast 50% of the votes at
TMLB shareholder meetings.
Summarised financial information in respect of the Group’s jointly controlled entity is set out below:
Financial position:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Group’s share of jointly controlled entity net assets
Financial performance:
Total revenue
Total profit before tax for the year
Group’s share of jointly controlled entity profit before tax
Group’s share of jointly controlled entity income tax expense
Group’s share of jointly controlled entity profit after tax
Contingent Liabilities and Capital Commitments
2015
$’000
12,213
12,743
(4,106)
(140)
20,710
10,355
40,714
9,734
4,867
(1,482)
3,385
2014
$’000
14,251
13,842
(6,058)
(95)
21,940
10,970
44,852
9,988
4,994
(1,439)
3,555
The Company’s share of the contingent liabilities, capital commitments and other expenditure commitments of the jointly
controlled entity is nil (2014: nil).
MMA Offshore Limited 81
Notes to the Financial Statements For the year ended 30 June 2015 13. Property, Plant and Equipment
Leasehold
Buildings and
Improvements
at cost
$’000
Vessels
– Hire
purchase
at cost
$’000
Plant and
Equipment
at cost
$’000
Vessels
at cost
$’000
Gross carrying amount:
Balance at 1 July 2013
133,403
388,329
18,198
22,223
Additions
8,686
49,488
Acquisitions through
Business Combinations
Disposals
Transfers
Net currency exchange
differences
1,414
357,702
(12,287)
-
(6)
11,005
(10,998)
-
-
-
4,539
4,289
(964)
-
(115)
(10,963)
-
(206)
Plant and
Equipment
– Hire
purchase
at cost
$’000
10,241
2,020
-
(146)
-
-
Fixed Assets
under
Construction
$’000
Total
$’000
-
572,394
3,314
68,047
69,809
433,214
-
-
(13,397)
-
(1,004)
(12,288)
Balance at 1 July 2014
143,382
783,274
7,200
29,881
12,115
72,119
1,047,972
Additions
Disposals
Transfers
3,906
161,241
-
(377)
-
(38)
4,461
(940)
69
(95)
77,560
247,237
-
(1,450)
3,969
49,130
(7,162)
(5,033)
(202)
(40,702)
-
Net currency exchange
differences
2,207
130,803
Balance at 30 June 2015
153,464
1,124,071
Accumulated depreciation:
-
-
2,540
30,909
-
13,574
149,124
11,887
122,551
1,442,883
Balance at 1 July 2013
(28,010)
(79,819)
(4,821)
(8,608)
(2,941)
Disposals
Transfers
-
-
12,286
(2,418)
-
2,418
957
-
144
-
Depreciation expense
(8,787)
(29,149)
(869)
(2,892)
(984)
Net currency exchange
differences
103
1,712
-
148
-
Balance at 1 July 2014
(36,694)
(97,388)
(3,272)
(10,395)
(3,781)
Disposals
Transfers
-
176
-
(1,131)
(4,018)
3,707
Impairment charge
-
(100,000)
-
555
1,322
-
89
120
-
Depreciation expense
(6,176)
(120,646)
(435)
(3,052)
(988)
Net currency exchange
differences
(1,449)
(11,440)
Balance at 30 June 2015
(45,450)
(333,316)
-
-
(1,908)
-
(13,478)
(4,560)
-
-
-
-
-
-
-
-
-
-
-
-
(124,199)
13,387
-
(42,681)
1,962
(151,531)
820
-
(100,000)
(131,297)
(14,797)
(396,805)
Net book value:
As at 30 June 2014
As at 30 June 2015
Assets Pledged as Security
106,688
685,886
3,928
108,014
790,755
-
19,486
17,431
8,334
7,327
72,119
896,441
122,551
1,046,078
In accordance with the security arrangements of liabilities, as disclosed in note 18 to the Financial Statements, all non-current
assets of the Group have been pledged as security, except deferred tax assets.
82 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015
14. Goodwill
Cost
Accumulated impairment charges
Total
Cost
Balance at beginning of year
Amount recognised from business combination occurring during the year
Balance at end of year
Accumulated impairment charges
Balance at beginning of year
Impairment charge recognised in the year (refer note 15)
Balance at end of year
Allocation of goodwill to cash generating units
2015
$’000
20,710
(20,710)
-
20,710
-
20,710
-
(20,710)
(20,710)
2014
$’000
20,710
-
20,710
20,710
-
20,710
-
-
-
Goodwill has been allocated for impairment testing purposes to the Supply Base cash-generating unit.
15.
Impairment of Goodwill and Non-current Assets
The Group performs its impairment testing of goodwill annually on 30 June each year. In addition, market conditions are
monitored for indications of impairment of all of the Group’s operating assets. Where an indication of impairment is identified, a
formal impairment assessment is performed.
The Group has identified the following indicators of impairment at 30 June 2015:
•
the carrying amount of the net assets of the Group is more than the Company’s market capitalisation;
• market conditions in both Australia and internationally have been challenging as the impact of lower oil prices is felt
across the offshore support industry.
As a result, the Group assessed the recoverable amounts of each of the Vessels, Supply Base and Slipway Cash-Generating
Units (‘CGUs’). As part of this process, the annual impairment testing of goodwill in the Supply Base CGU has also been
performed.
Impairment testing
The Group has evaluated whether the recoverable amount of a CGU exceeds its carrying amount. The recoverable amount
is determined to be the higher of its fair value less costs to sell or its value in use. In all instances, the Group has prepared a
value in use model for the purpose of impairment testing as at 30 June 2015.
In calculating value in use, the cash flows include projections of cash inflows and outflows from continuing use of the group of
assets making up the CGUs and of cash flows associated with disposal of any of these assets. The cash flows are estimated
for the assets of the CGUs in their current condition and discounted to their present value using a pre-tax discount rate that
reflects the current market assessments of the risks specific to the CGUs. The Group uses a 5 year discounted cash flow
model based on Board approved budgets with a terminal growth rate for years beyond the 5 year budget period.
The identification of impairment indicators and the estimation of future cash flows require management to make significant
estimates and judgments. Details of the key assumptions used in the value in use calculations at 30 June 2015 are included in
the following table and paragraph.
MMA Offshore Limited 83
Notes to the Financial Statements For the year ended 30 June 2015 15.
Impairment of Goodwill and Non-current Assets (continued)
Key assumptions for CGU Value in Use models
Vessels
Supply Base
Slipway
Terminal growth rate (1)
Discount rate (2)
2015
%
2.5
2.5
2.5
2014 (3)
%
-
2.7
-
2015
%
10.8
12.5
11.9
2014 (3)
%
-
13.9
-
All foreign currency revenues and expenses were converted at the 30 June 2015 spot AUD:USD exchange rate of $0.768.
(1) The terminal value growth rate represents the mid point of the Australian Government’s target inflation range.
(2) The pre tax discount rate used reflects the Group’s long-term weighted average cost of capital adjusted for market and
country risk.
(3) There were no indications of impairment for Vessels and Slipway CGUs in 2014 and, therefore, no impairment testing was
performed.
Impairment charges recognised
The following information relates to impairment charges included in profit or loss:
Segment/CGU
Vessels
Supply Base
Slipway
Total
Vessels
Class of asset
Method
Property, Plant & Equipment
Value in use
Goodwill
Value in use
-
Value in use
Impairment
charge
$’000
100,000
20,710
-
120,710
The decrease in the price of oil over the past year has led to reduced levels of activity in the offshore oil and gas support
industry resulting in lower vessel demand and utilisation both in the Australian and international regions. The lower level of
utilisation has led to increased competition for charters and a resultant decrease in day rates.
Vessel day rates used in the value in use models have been determined on a vessel by vessel basis taking the following
factors into consideration:
•
•
•
current and expected contracted state of the vessel;
geographical region the vessel is expected to operate in;
supply and demand for the particular class of vessel.
Vessel day rates have declined around 20% to 30% over the past year while utilisation levels have declined around 10% to
15%. The Company is forecasting a gradual recovery in day rates over the next 5 year period together with a recovery in
utilisation levels. These rates have been estimated by management based on an anticipated rebound in the global price of oil
during this period. However, if the oil price does not recover as expected during this period it may adversely affect these rates.
At 30 June 2015, the recoverable amount of the Vessels CGU was lower than the carrying value and as a result the Group
recognised an impairment.
84 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 15.
Impairment of Goodwill and Non-current Assets (continued)
Supply Base
Activity on the Company’s Dampier Supply Base is heavily influenced by the level of offshore oil and gas activity in the region.
The lower oil price along with the construction phase of the Gorgon Project nearing completion has led to reduced demand for
supply base services over the past year.
In determining the forecast revenues and operating expenses for the Supply Base, consideration has been given to the
following:
•
•
•
•
•
•
current and potential new contracts for supply base services;
expected offshore oil and gas activity in the region including drilling, construction and production activity;
expected demand for wharf services from vessel operators;
competition for the provision of supply base and wharf services in the region;
labour and associated costs under the current EBA;
lease costs and associated costs of maintaining the supply base infrastructure.
The Company was recently awarded a contract by Chevron Australia Pty Ltd to provide a broad range of supply base and
wharf services for Chevron’s operations in the North West region of Western Australia. The contract commenced on 15 June
2015 for a two year term with an option to extend for a further one year.
This contract will generate a significant portion or the forcast earnings for the Supply Base over this period. In addition to
this contract, the Company will continue to provide supply base and wharf services to a range of customers in the region to
support their drilling, construction and production related activities in the offshore oil and gas industry.
The goodwill associated with the Supply Base CGU arose when the Group purchased a lease for additional land adjacent to
the existing Supply Base in 2012. The decline in market conditions has resulted in the recoverable amount of the Supply Base
CGU being lower than the carrying value as at 30 June 2015 with a resulting impairment being recorded against the total
goodwill amount.
Slipway
The forecast demand for Slipway services during the budget period is expected to remain relatively stable with the demand
from offshore vessels and berthing tugs required to support the ongoing offshore oil and gas and commodity export activities
in the region.
At 30 June 2015, the recoverable amount of the Slipway CGU is in line with the carrying value and accordingly there was no
impairment.
Sensitivity Analysis
Sensitivity analyses for CGUs where indications of impairment have been identified
Changes in key assumptions in the table below would have the following approximate impact on the recoverable amount of the
Group CGUs:
Sensitivity
Discount rate
Vessel day rates
Supply Base service rates
Terminal growth rate
AUD:USD exchange rate
Effect on
Vessels
Value in use
$’m
Effect on
Supply Base
Value in use
$’m
Change in
Variable
+0.5%
-0.5%
+1.0%
-1.0%
+1.0%
-1.0%
+0.5%
-0.5%
+1c
-1c
(47.0)
54.0
36.7
(36.7)
n/a
n/a
43.0
(37.4)
(10.5)
10.8
(7.5)
8.7
n/a
n/a
5.9
(5.9)
6.3
(5.4)
-
-
Effect on
Slipway
Value in use
$’m
(0.8)
0.9
n/a
n/a
n/a
n/a
0.6
(0.5)
-
-
MMA Offshore Limited 85
Notes to the Financial Statements For the year ended 30 June 2015 16. Trade and Other Payables
Trade payables
Other payables and accruals
Goods and services tax payable
Total
2015
$’000
28,079
98,906
2,188
129,173
2014
$’000
26,859
50,913
5,829
83,601
The average credit period on purchases of all goods is 30 days. The Group monitors payments to ensure that all payables are
paid within the credit time frame.
17. Unearned Revenue
Current
Non-current
Total
2015
$’000
38,226
393
38,619
2014
$’000
17,454
2,278
19,732
Unearned revenue represents revenue received in advance to be recognised over the life of the service contract.
18. Borrowings
Secured – at amortised cost
Current
Hire purchase liability (i)
Bank loans (ii)
Total
Non-Current
Hire purchase liability (i)
Bank loans (ii)
Total
2015
$’000
2014
$’000
1,571
48,021
49,592
904
391,977
392,881
4,572
42,646
47,218
2,423
391,202
393,625
Summary of borrowing arrangements:
(i) Secured by hire purchase assets, the borrowings are fixed interest rate debt with repayment periods not exceeding 5
years. The current weighted average effective interest rate on the hire purchase liabilities is 6.98% (2014: 7.57%).
(ii) In May 2014, the Company entered into a Syndicated Facility Agreement with NAB and ANZ as mandated lead arranger,
underwriter and bookrunner. The Syndicated Facility comprised a A$200 million term loan facility and a US$227 million
term loan facility. The primary purpose of the A$ loan facility was to refinance the Company’s existing loan facilities. The
purpose of the US$ loan facility was to support the acquisition of the subsidiaries of Jaya Holdings Ltd. The Syndicated
Facility has a term of 5 years and is fully secured by fixed and floating charges given by certain controlled entities within
the Group, registered ship mortgages over a number of vessels owned by certain controlled entities, real property
mortgages, and a mortgage by way of sub-demise over the Dampier Supply Base lease. The security is held by the
Security Trustee on behalf of the banking members of the Syndicated Facility. The current weighted average effective
interest rate on the bank loans is 3.30% (2014: 3.67%).
86 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 19. Provisions
Current
Employee benefits – annual leave (i)
Employee benefits – long service leave (ii)
Restructuring(iii)
Project related costs (iv)
Total
Non-current
2015
$’000
11,101
3,168
-
5,001
19,270
2014
$’000
11,023
1,807
1,534
7,615
21,979
Employee benefits – long service leave (ii)
612
1,067
(i) Provision for annual leave entitlements accrued.
(ii) Provision represents long service leave entitlements accrued both current and non-current. Vested long service leave
payable falls under current provision.
(iii) Provision for employee redundancy costs in respect of the restructure of the Singapore Shipyard.
(iv) Project related cost provision relates to the following:
a. Provision for cancellation costs $3.8 million (2014: $5.1 million), and
b. Provision for warranties $1.2 million (2014: $2.5 million).
20. Other Current Liabilities
Customer security deposits
2015
$’000
5,913
Amounts charged to customers to be held by the Group to secure the customers’ obligations under contracts.
21. Other Financial Liabilities
Derivatives
Hedge contracts on vessels under construction
22.
Issued Capital
371,219,785 fully paid ordinary shares (2014: 366,766,098)
Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from
1 July 1998. Therefore, the Company does not have a limited amount of authorised capital and issued shares do not have a
par value.
Fully Paid Ordinary Shares
Balance at beginning of financial year
Issue of shares under employee option and rights
plans
Issue of shares under dividend reinvestment plan
Issue of shares under institutional placement
Issue of shares under institutional entitlement
Issue of shares under retail entitlement
Transfer from employee equity settled benefits
reserve
Share issue costs
2015
No.’000
366,766
2015
$’000
549,813
116
4,338
-
-
-
-
-
-
5,868
-
-
-
-
-
2014
No.’000
229,962
981
3,653
41,691
59,769
30,710
-
-
2014
$’000
226,382
-
10,609
100,058
143,445
73,705
3,648
(8,034)
Balance at end of financial year
371,220
555,681
366,766
549,813
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Share Options and Rights
As at 30 June 2015, executives and employees held options and rights over 4,172,468 ordinary shares (2014: 5,539,257) in
aggregate.
Share options and rights granted under the employee share option and rights plans carry no right to dividends and no voting
rights.
MMA Offshore Limited 87
2014
$’000
4,820
2014
$’000
2015
$’000
-
1,806
2015
$’000
2014
$’000
555,681
549,813
Notes to the Financial Statements For the year ended 30 June 2015 23. Reserves
Employee equity settled benefits
Hedging
Foreign currency translation
Balance at end of financial year
Employee equity settled benefits reserve
Balance at beginning of financial year
Share based payment
Transfer to share capital
Deferred income tax benefit
Balance at end of financial year
2015
$’000
4,952
(37,971)
148,877
115,858
3,916
1,828
-
(792)
4,952
2014
$’000
3,916
1,988
(18,164)
(12,260)
6,660
1,647
(3,648)
(743)
3,916
The employee equity settled benefits reserve arises on the grant of share options and rights to executives and employees
under the Company’s share options and rights plans. Amounts are transferred out of the reserve and into issued capital when
the options and rights vest.
Hedging reserve
Balance at beginning of financial year
Gain/(loss) on hedge of net investment in a foreign operation
Gain/(loss) on cash flow hedges
Transfer of cash flow hedge loss to initial carrying amount of hedged items
Balance at end of financial year
2015
$’000
1,988
(53,309)
13,350
-
(37,971)
2014
$’000
2,030
3,794
(11,504)
7,668
1,988
The hedging reserve represents hedging gains or losses recognised on the effective portion of cash flow hedges. The
cumulative deferred gain or loss on the hedge is recognised in profit or loss when the hedged transaction impacts the profit
or loss, or is included as an adjustment to the initial carrying amount of the hedged item, consistent with the applicable
accounting policy.
Foreign currency translation reserve
Balance at beginning of financial year
Translation of foreign operations
Balance at end of financial year
2015
$’000
2014
$’000
(18,164)
167,041
148,877
(6,410)
(11,754)
(18,164)
Exchange differences relating to the translation from the functional currencies of the Group’s foreign controlled entities into
Australian Dollars are brought to account by entries made directly to the foreign currency translation reserve.
24. Retained Earnings
Balance at beginning of financial year
Profit/(loss) attributable to owners of the Company
Dividend provided for or paid
Balance at end of financial year
2015
$’000
199,289
(51,291)
(40,420)
107,578
2014
$’000
174,364
53,884
(28,959)
199,289
88 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 25. Notes to the Statement of Cash Flows
(a) Reconciliation of cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and in banks and
investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of
the reporting period as shown in the statement of cash flows can be reconciled to the related items in the balance sheet
as follows:
Cash and cash equivalents
(b) Non cash financing and investing activities
2015
$’000
2014
$’000
124,482
174,768
During the financial year, the Group acquired property, plant and equipment with an aggregate value of $0.1 million
(2014: $1.8 million), which was financed by bank finance and hire purchase agreements. These acquisitions will be
reflected in the cash flow statement as repayment of borrowings over the term of the facilities.
In addition, the Company issued shares to the value of $5.9 million (2014: $10.6 million) under the Dividend
Reinvestment Plan.
(c) Reconciliation of profit/(loss) for the year to net cash flows
from operating activities
Profit/(loss) for the year after tax
Depreciation of non-current assets
Impairment of non-current assets and goodwill
Amortisation of borrowing costs
Loss on sale of property, plant and equipment
Unrealised foreign exchange (gain)/loss
Allowance for doubtful debts
Bad debts
Equity settled share based payment
Share of jointly controlled entity profit
Change in net assets and liabilities:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in prepayments
Increase in inventories
Increase/(decrease) in provisions
Increase/(decrease) in trade and other payables
Increase/(decrease) in unearned revenue
Increase in deferred tax liabilities
Decrease in current tax liability
Net cash flows from operating activities
(d) Financing facilities
Secured loan facilities with various maturity dates through to 2019 and which may
be extended by mutual agreement:
Amount used
Amount unused
Total
Secured bank overdraft:
Amount used
Amount unused
Total
2015
$’000
(51,291)
131,297
120,710
1,111
201
(2,449)
5,052
47
1,827
(3,385)
17,077
298
(1,147)
(3,496)
(776)
18,271
523
(48,510)
185,360
2014
$’000
53,884
42,681
-
-
-
355
270
-
1,647
(3,555)
(36,883)
(7,234)
(3,077)
3,615
7,238
(3,775)
172
(925)
54,413
439,998
433,848
-
-
439,998
433,848
-
4,000
4,000
-
4,000
4,000
MMA Offshore Limited 89
Notes to the Financial Statements For the year ended 30 June 2015 26. Commitments for Expenditure
(a) Lease Commitments
Hire purchase liabilities and non-cancellable operating lease commitments are disclosed in note 27.
(b) Capital expenditure commitments
Plant and Equipment
Leasehold Improvements
Vessels
Total
27. Leases
(a) Finance lease liabilities
2015
$’000
380
238
116,496
117,114
2014
$’000
2,746
978
148,146
151,870
Not later than 1 year
Later than 1 year and not later than 5 years
Minimum future payments
Less future finance charges
Present value of minimum lease payments
Included in the Financial Statements as:
Borrowings - current (note 18)
Borrowings - non-current (note 18)
Total
Minimum Lease Payments
Present Value of Minimum
Lease Payments
2015
$’000
1,701
970
2,671
(196)
2,475
2014
$’000
5,009
2,615
7,624
(629)
6,995
2015
$’000
1,571
904
2,475
-
2,475
1,571
904
2,475
2014
$’000
4,572
2,423
6,995
-
6,995
4,572
2,423
6,995
Finance leases relate to equipment with lease terms of up to 5 years. The Group has options to purchase the equipment
for a nominated amount at the conclusion of the lease agreements.
(b) Operating leases
Payments recognised as an expense:
Minimum lease payment
Non-cancellable operating lease commitments:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
Aggregate lease expenditure contracted for at balance date
Aggregate operating lease commitments comprise:
Office rental commitments (i)
Supply Base rental commitments (ii)
Vessel charter fee commitments (iii)
Other (iv)
Total
90 Annual Report 2015
2015
$’000
2014
$’000
218,398
171,562
66,163
20,594
1,661
88,418
9,765
18,798
57,443
2,412
88,418
59,526
15,949
3,750
79,225
5,380
19,573
51,505
2,767
79,225
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 27. Leases (continued)
(i) Office rental commitments:
During the year the Company exercised the 5 year option on the head office premises lease at Fremantle, Australia.
The Company is committed under the 5 year arrangement to 4 August 2020, with an option to extend for a further 5
year term. The Group also has a lease agreement in place for the Singapore office until 31 January 2018.
(ii) Supply Base rental commitments:
Supply Base rental commitments relate primarily to the lease of the Dampier Supply Base for a term of 21 years
commencing 1 January 1999, with an option to renew the lease for a further period of 21 years. The Group also has
a rental commitment for the lease of the Singapore Onshore Facility for a term expiring in 2021.
(iii) Vessel charter commitments:
As of 30 June 2015, the Company had 8 vessels under bare boat charter agreements. Vessel charter commitments
represent charter fee payments to be made to the owners of these vessels. These leases are all on commercial
terms for periods of up to 1 year.
(iv) Other lease commitments:
The Group has leases over a number of commercial and residential properties and various items of machinery and
equipment. These leases are all on commercial terms for periods up to 5 years.
(c)
The Group as lessor
The Group has entered into sub lease agreements and equipment rental agreements with clients at the Dampier Supply
Base for periods of up to 2 years, with options to extend. The Group also entered into bareboat charter agreements with
clients, relating to certain vessels with terms up to 6 years.
Non-cancellable operating lease receivables:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
Total
28. Business Combinations
28.1 Acquisition
2015
$’000
15,110
32,464
-
2014
$’000
32,864
63,707
5,342
47,574
101,913
In the comparative period, the subsidiaries of Jaya Holdings Ltd were acquired to provide immediate scale to MMA’s
international operations and represents a strategic platform for further growth as well as expanding the scope of MMA’s
integrated offshore service offering.
28.2 Consideration transferred
The consideration transferred for the acquisition totalled A$546 million (equivalent $625 million Singapore Dollars).
Of this, A$419 million (S$479 million) was allocated to the purchase of subsidiaries as described above and
the remaining A$127 million (S$146 million) was allocated to the novation and assignment of the net intra-group
indebtedness owing by the subsidiaries to Jaya Holdings Limited.
Acquisition related costs amounting to A$7.8 million have been excluded from the consideration transferred and
have been recognised as an expense in the profit and loss statement in the comparative period, within Administration
expenses.
MMA Offshore Limited 91
Notes to the Financial Statements For the year ended 30 June 2015 28. Business Combinations (continued)
28.3 Assets acquired and liabilities assumed at the date of acquisition
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Non-Current Assets
Plant and equipment
Current Liabilities
Trade and other payables
Unearned revenue
Provisions
Current tax provisions
Intercompany debts
Non-Current Liabilities
Deferred tax liabilities
Total
2014
$’000
126,263
42,467
910
27,522
433,214
(31,493)
(12,233)
(8,503)
(31,214)
(126,633)
(941)
419,359
The receivables acquired (which principally comprised trade receivables) in the transaction with a fair value of $42.5
million, had gross contractual amounts of $43.2 million. The best estimate at acquisition date of the contractual cash
flows not expected to be collected was $0.7 million.
28.4 Goodwill arising on acquisition
There was no goodwill arising on the acquisition. The fair value of the consideration transferred is considered to be
equal to the fair value of the assets acquired and liabilities assumed.
28.5 Net cash outflow on acquisition of subsidiaries
Consideration paid in cash
Less: cash and cash equivalents balances acquired
Total
28.6 Impact of acquisitions on the results of the Group
2014
$’000
301,220
(126,263)
174,957
Included in the revenue and net profit after tax for the comparative period is $10.0 million and $2.6 million respectively,
attributable to the additional business generated by the acquisition.
Had the business combination been effected at 1 July 2013, the comparative period revenue of the Group from
continuing operations would have been $808 million, and the profit from continuing operations would have been $93
million. The Directors of the Group consider these ‘pro-forma’ numbers to represent an approximate measure of the
performance of the combined group on an annualised basis and to provide a reference point for comparison in future
periods.
92 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 29. Share Based Payments
29.1 Share option and rights incentive plans
The Group has established ownership based compensation plans whereby executives and employees of the Group
have been issued options and rights over ordinary shares of MMA Offshore Limited.
Upon exercise, each share option or right, converts into one ordinary share of MMA Offshore Limited. No amounts are
paid or are payable by the recipient on receipt of the options or rights. The options or rights carry no rights to dividends
and no voting rights. Holders of options or rights do not have the right, by virtue of the option or right, to participate in
any share issue of the Company. The options and rights may be exercised at any time from their vesting date to the date
of their expiry.
The options or rights are not quoted on the ASX.
The following share based payment arrangements were in existence during the current reporting period:
Series
Number issued
Grant Date
Expiry Date
(1)
Issued 22 September 2009 (a)
3,112,049
22 Sep 2009
18 Sep 2014
(2)
Issued 18 October 2011 (b)
848,863
18 Oct 2011
1 Jul 2014
(3)
Issued 18 October 2011 (b)
324,650
18 Oct 2011
1 Jul 2014
(4)
Issued 24 November 2011 (b)
331,142
24 Nov 2011
1 Jul 2014
(5)
Issued 25 October 2012 (c)
311,634
25 Oct 2012
1 Jul 2015
(6)
Issued 25 October 2012 (c)
304,235
25 Oct 2012
1 Jul 2015
(7)
Issued 22 November 2012 (c)
317,865
22 Nov 2012
1 Jul 2015
(8)
Issued 03 December 2013 (d)
1,092,384
11 Oct 2013
1 Jul 2016
(9)
Issued 03 December 2013 (d)
339,238
11 Oct 2013
1 Jul 2016
(10) Issued 03 December 2013 (d)
346,023
21 Nov 2013
1 Jul 2016
(11) Issued 22 October 2014 (e)
1,052,625
22 Oct 2014
1 Jul 2017
(12) Issued 1 December 2014 (e)
11,382
22 Oct 2014
1 Jul 2017
(13) Issued 1 December 2014 (e)
430,075
18 Nov 2014
1 Jul 2017
(14) Issued 22 October 2014 (f)
(15) Issued 22 October 2014 (g)
51,546
70,000
1 Jul 2014
1 Jul 2015
4 Jun 2014
5 Jun 2016
Exercise
price
$
Fair Value at
grant date
$
3.05
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.46
2.06
1.89
1.69
2.28
2.42
2.47
2.14
2.02
1.71
1.09
1.09
0.75
1.94
1.76
(a) In accordance with the terms of the Senior Executive Share Option Plans (amended September 2009), 3,112,047
share options vested on 18 September 2012 subject to the performance hurdle that the Company’s Total
Shareholder Return must exceed the performance of the ASX Small Ordinaries index over a minimum period of
three years commencing on 18 September 2009 and ending on 18 September 2012 and a maximum period of five
years commencing on 18 September 2009 and ending on 18 September 2014. This performance hurdle has been
met and all options either exercised or lapsed.
MMA Offshore Limited 93
Notes to the Financial Statements For the year ended 30 June 2015 29. Share Based Payments (continued)
(b) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rights Plan – 2011 and the
Mermaid Marine Australia Limited Managing Director’s Performance Rights Plan – 2011 (as approved by the
shareholders at the Company’s AGM on 24 November 2011), the number of performance rights which vest to the
Managing Director, Chief Operating Officer and Chief Financial Officer following the end of the Performance Period
will depend on the growth in the Earning per Share of the Company and the Total Shareholder Return relative to a
selected Peer Group of companies in accordance with the table below:
Performance
Criteria
Performance
Period
Normalised Earnings
per Share (EPS)
growth
Beginning 1 July
2011 and ending
30 June 2014
Percentage of
LTI subject to
Performance
Criteria
25%
Performance
Criteria targets
Less than 6%
Equal to 6%
Percentage of
Performance
Rights which vest
if target met
Nil
50%
Beginning 1 July
2011 and ending
30 June 2014
75%
Company’s Total
Shareholder Return
(TSR) percentile
ranking over the
Performance Period
relative to a selected
Peer Group
Between 6% and
12.5%
50% to 100%
(pro-rata)
Equal to 12.5%
Below the 50th
percentile
100%
Nil
At the 50th percentile
50%
Between the 50th
percentile and the 90th
percentile
50% to 100%
(pro-rata)
At the 90th percentile
100%
The table below sets out the relevant Performance Criteria for the performance rights granted to other senior
management (ie. excluding the Managing Director, Chief Operating Officer and Chief Financial Officer):
Performance
Criteria
Performance
Period
Normalised Earnings
per Share (EPS)
growth
Beginning 1 July
2011 and ending
30 June 2014
Percentage of
LTI subject to
Performance
Criteria
25%
Beginning 1 July
2011 and ending
30 June 2014
75%
Company’s Total
Shareholder Return
(TSR) percentile
ranking over the
Performance Period
relative to a selected
Peer Group
Percentage of
Performance
Rights which vest
if target met
Nil
50% to 100%
(on a straight-line
basis)
100%
Nil
50% to 100%
(on a straight-line
basis)
100%
Performance
Criteria targets
Below 6%
Between 6%
and 10%
Above 10%
Below the 50th
percentile
Between the 50th
percentile and the
75th percentile
Above the 75th
percentile
The Performance Period for this series finished at the end of the previous reporting period. The actual performance
and resulting vesting of rights was as follows:
Performance
Criteria
EPS
TSR percentile rank
Actual Performance
%
Vesting
MD/COO/CFO
%
6.2
36.7
52
Nil
Vesting Other
%
53
Nil
94 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015
29. Share Based Payments (continued)
(c) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rights Plan – 2012 and the
Mermaid Marine Australia Limited Managing Director’s Performance Rights Plan – 2012 (as approved by the
shareholders at the Company’s AGM on 22 November 2012), the number of performance rights which vest to the
Managing Director, Chief Operating Officer and Chief Financial Officer following the end of the Performance Period
will depend on the growth in the Earning per Share of the Company and the Total Shareholder Return relative to a
selected Peer Group of companies in accordance with the table below:
Performance
Criteria
Performance
Period
Normalised Earnings
per Share (EPS)
growth
Beginning 1 July
2012 and ending
30 June 2015
Percentage of
LTI subject to
Performance
Criteria
25%
Beginning 1 July
2012 and ending
30 June 2015
75%
Company’s Total
Shareholder Return
(TSR) percentile
ranking over the
Performance Period
relative to a selected
Peer Group
Percentage of
Performance
Rights which vest
if target met
Nil
50%
50% to 100%
(pro-rata)
100%
Nil
Performance
Criteria targets
Less than 6%
Equal to 6%
Between 6%
and 12.5%
Equal to 12.5%
Below the 50th
percentile
At the 50th percentile
50%
Between the 50th
percentile and the
90th percentile
50% to 100%
(pro-rata)
At the 90th percentile
100%
The table below sets out the relevant Performance Criteria for the performance rights granted to other senior
management (ie. excluding the Managing Director, Chief Operating Officer and Chief Financial Officer):
Performance
Criteria
Performance
Period
Normalised Earnings
per Share (EPS)
growth
Beginning 1 July
2012 and ending
30 June 2015
Beginning 1 July
2012 and ending
30 June 2015
75%
Company’s Total
Shareholder Return
(TSR) percentile
ranking over the
Performance Period
relative to a selected
Peer Group
Percentage of
LTI subject to
Performance
Criteria
Performance
Criteria targets
Percentage of
Performance
Rights which vest
if target met
25%
Below 6%
Nil
Between 6% and 10% 50% to 100% (on a
straight-line basis)
Above 10%
Below the 50th
percentile
Between the 50th
percentile and the
75th percentile
Above the 75th
percentile
100%
Nil
50% to 100% (on a
straight-line basis)
100%
The Performance Period for this series finished at the end of the current reporting period. The actual performance
and resulting vesting of rights was:
Performance
Criteria
EPS
TSR percentile rank
Actual Performance
%
(12.6)
61.5
Vesting
MD/COO/CFO
%
Nil
64.4
Vesting Other
%
Nil
73.1
Following the end of the financial year, the Board has exercised its discretion under the Plan Rules to defer the
vesting of these performance rights until 1 July 2016. The vesting of these performance rights is subject to the
continued employment of each Participant by a Group Member for the additional 12 month period (ie 1 July 2016)
and is once again subject to the Board’s absolute discretion as to whether or not they vest on 1 July 2016.
MMA Offshore Limited 95
Notes to the Financial Statements For the year ended 30 June 2015
29. Share Based Payments (continued)
(d) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rights Plan – 2013 and the
Mermaid Marine Australia Limited Managing Director’s Performance Rights Plan – 2013 (as approved by the
shareholders at the Company’s AGM on 21 November 2013), the number of performance rights which vest to the
Managing Director, Chief Operating Officer and Chief Financial Officer following the end of the Performance Period
will depend on the growth in the Earning per Share of the Company and the Total Shareholder Return relative to a
selected peer group of companies in accordance with the table below:
Performance
Criteria
Performance
Period
Normalised Earnings
per Share (EPS)
growth
Beginning 1 July
2013 and ending
30 June 2016
Percentage of
LTI subject to
Performance
Criteria
25%
Beginning 1 July
2013 and ending
30 June 2016
75%
Company’s Total
Shareholder Return
(TSR) percentile
ranking over the
Performance Period
relative to a selected
Peer Group
Percentage of
Performance
Rights which vest
if target met
Nil
50%
50% to 100%
(pro-rata)
100%
Nil
Performance
Criteria targets
Less than 6%
Equal to 6%
Between 6%
and 12.5%
Equal to 12.5%
Below the 50th
percentile
At the 50th percentile
50%
Between the 50th
percentile and the
90th percentile
50% to 100%
(pro-rata)
At the 90th percentile
100%
The table below sets out the relevant Performance Criteria for the performance rights granted to other employees
(ie. excluding the Managing Director, Chief Operating Officer and Chief Financial Officer) during the financial year:
Percentage of
LTI subject to
Performance
Criteria
Performance
Criteria targets
Percentage of
Performance
Rights which vest
if target met
25%
Below 6%
Nil
Between 6%
and 10%
Above 10%
Below the 50th
percentile
Between the 50th
percentile and the
75th percentile
Above the 75th
percentile
50% to 100% (on a
straight-line basis)
100%
Nil
50% to 100% (on a
straight-line basis)
100%
Performance
Criteria
Performance
Period
Normalised Earnings
per Share (EPS)
growth
Beginning 1 July
2013 and ending
30 June 2016
Beginning 1 July
2013 and ending
30 June 2016
75%
Company’s Total
Shareholder Return
(TSR) percentile
ranking over the
Performance Period
relative to a selected
Peer Group
96 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015
29. Share Based Payments (continued)
(e) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rights Plan – 2014 and the
Mermaid Marine Australia Limited Managing Director’s Performance Rights Plan – 2014 (as approved by the
shareholders at the Company’s AGM on 18 November 2014), the number of performance rights which vest to the
Managing Director, Chief Operating Officer and Chief Financial Officer following the end of the Performance Period
will depend on the growth in the Earning per Share of the Company and the Total Shareholder Return relative to a
selected peer group of companies in accordance with the table below:
Performance
Criteria
Performance
Period
Normalised Earnings
per Share (EPS)
growth
Beginning 1 July
2014 and ending
30 June 2017
Percentage of
LTI subject to
Performance
Criteria
25%
Beginning 1 July
2014 and ending
30 June 2017
75%
Company’s Total
Shareholder Return
(TSR) percentile
ranking over the
Performance Period
relative to a selected
Peer Group
Percentage of
Performance
Rights which vest
if target met
Nil
50%
50% to 100%
(pro-rata)
100%
Nil
Performance
Criteria targets
Less than 6%
Equal to 6%
Between 6%
and 12.5%
Equal to 12.5%
Below the 50th
percentile
At the 50th percentile
50%
Between the 50th
percentile and the
90th percentile
50% to 100%
(pro-rata)
At the 90th percentile
100%
The table below sets out the relevant Performance Criteria for the performance rights granted to other employees
(ie. excluding the Managing Director, Chief Operating Officer and Chief Financial Officer) during the financial year:
Performance
Criteria
Performance
Period
Normalised Earnings
per Share (EPS)
growth
Beginning 1 July
2014 and ending
30 June 2017
Beginning 1 July
2014 and ending
30 June 2017
75%
Company’s Total
Shareholder Return
(TSR) percentile
ranking over the
Performance Period
relative to a selected
Peer Group
Percentage of
LTI subject to
Performance
Criteria
Performance
Criteria targets
Percentage of
Performance
Rights which vest
if target met
25%
Below 6%
Nil
Between 6%
and 10%
Above 10%
Below the 50th
percentile
Between the 50th
percentile and the
75th percentile
Above the 75th
percentile
50% to 100% (on a
straight-line basis)
100%
Nil
50% to 100% (on a
straight-line basis)
100%
(f)
In accordance with the terms of Mermaid Marine Australia Limited Performance Rights Plan – 2014 (granted 22
October 2014), the performance rights issued to the Chief Financial Officer and Chief Operating Officer (being the
deferred equity portion of their financial year 2014 bonus) which vested on 1 July 2015 was conditioned upon the
holders’ continued employment by a Group member during the 1 year performance period. All conditions have
been met.
(g) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rghts Plan – 2014 (granted 22
October 2014), the performance rights issued to the President – Offshore & Business Development (Singapore)
which vest on 4 June 2016 is conditional upon the holder’s continued employment by a Group member during the 2
year performance period.
MMA Offshore Limited 97
Notes to the Financial Statements For the year ended 30 June 2015
29. Share Based Payments (continued)
29.2 Fair value of share rights granted in the year
The weighted average fair value of the rights granted during the year was $1.05 (2014: $2.03). The rights were priced
using a binomial option pricing model. Where relevant, the fair value of the rights has been adjusted for any market
related vesting conditions.
The following table shows the inputs into the model for the rights granted during the year:
2015
Inputs into the model
Series (11)
Series (12)
Series (13)
Series (14)
Series (15)
Grant date share price
Exercise price
Expected volatility
Life of rights
Dividend yield
Risk free rate
$1.88
$0.00
30%
2.7 years
6.8%
2.46%
$1.88
$0.00
30%
2.7 years
6.8%
2.46%
$1.66
$0.00
30%
2.6 years
7.80%
2.54%
$2.06
$0.00
30%
1.0 year
6.10%
2.47%
$2.00
$0.00
30%
2.0 years
6.20%
2.65%
29.3 Movement in share options and rights during the period
The following reconciles the outstanding share options and rights granted under the Managing Director, Senior
Executives and Employee Share Option and Rights Plans at the beginning and end of the financial year:
Employee Share Option and Right Plans
Balance at the beginning of the financial year
Granted during the financial year
Exercised during the financial year
Forfeited during the financial year
Expired during the financial year
Balance at the end of the financial year
Exercisable at end of the financial year
Number
of options/
rights
5,539,257
1,615,628
(115,643)
(1,466,772)
(1,400,002)
4,172,468
-
2015
2014
Weighted average
exercise price
$
Number
of options/
rights
Weighted average
exercise price
$
0.77
0.00
0.00
0.00
3.01
0.00
0.00
4,775,681
1,777,645
(981,092)
(32,977)
-
5,539,257
1,400,002
0.91
0.00
0.08
0.00
-
0.77
3.05
29.4 Share options and rights exercised during the year
The following share options were exercised during the financial year:
2015 - Options – Series
Number exercised
Exercise date
Weighted average
share price at
exercise date
$
(3)
Issued 18 October 2011
(4)
Issued 24 November 2011
87,169
28,474
26 Sept 2014
26 Sept 2014
1.98
1.98
29.5 Share options and rights outstanding at the end of the year
The following share options and rights were outstanding at the end of the financial year:
2015 – Options/Rights - Series
Issued 25 October 2012
Issued 25 October 2012
Issued 22 November 2012
Issued 03 December 2013
Issued 03 December 2013
Issued 03 December 2013
Issued 22 October 2014
Issued 1 December 2014
Issued 1 December 2014
Issued 22 October 2014
Issued 22 October 2014
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
Total
98 Annual Report 2015
Number
311,634
269,267
317,865
972,813
339,238
346,023
1,052,625
11,382
430,075
51,546
70,000
4,172,468
Exercise price
$
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Expiry Date
1 Jul 2015
1 Jul 2015
1 Jul 2015
1 Jul 2016
1 Jul 2016
1 Jul 2016
1 Jul 2017
1 Jul 2017
1 Jul 2017
1 Jul 2015
5 Jun 2016
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 30. Key Management Personnel Compensation
Please refer to the Remuneration Report for details of key management personnel.
30.1 Key management personnel compensation
The aggregate compensation made to the Directors and other key management personnel of the Company and the
Group is set out below:
Short-term employee benefits
Post employment benefits
Share based payments
Total
31. Related Party Transactions
2015
$
2014
$
4,162,753
5,148,325
245,239
1,247,522
5,655,514
217,705
1,069,911
6,435,941
The immediate parent and ultimate controlling party of the Group is MMA Offshore Limited.
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. Details of transactions between the Group and
other related parties are disclosed below.
31.1 Trading transactions
During the year, Group entities entered into the following trading transactions with related parties that are not members
of the Group:
Jointly controlled entity
Sale of Goods
Purchase of Goods
2015
$
37,752
2014
$
2015
$
2014
$
47,948
289,845
123,123
The following balances were outstanding at the end of the reporting period:
Jointly controlled entity
Amounts owed by related party
Amounts owed to related party
2015
$
3,704
2014
$
-
2015
$
-
2014
$
-
Sales and purchases of services to and from related parties were made at normal commercial rates.
Amounts outstanding were unsecured and were settled in cash. No guarantees have been given or received. No
expense has been recognised in the current or prior periods for bad or doubtful debts in respect of amounts owed by
related parties.
31.2 Loans to related parties
There were no loans to related parties as at 30 June 2015 (2014: nil).
MMA Offshore Limited 99
Notes to the Financial Statements For the year ended 30 June 2015 31. Related Party Transactions (continued)
31.3 Other related party transactions
(a)
Equity interests in related parties
Equity interests in subsidiaries:
Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 33.
Equity interests in jointly controlled entities:
Details of interests in jointly controlled entities are disclosed in note 12.
Equity interests in other related parties:
There are no equity interests in other related parties.
(b)
Transaction with key management personnel
Key management personnel compensation:
Details of key management personnel compensation are disclosed in note 30.
Other transactions with key management personnel of the Group:
Consultancy Services
There were no consultancy services provided by related parties during the year ended 30 June 2015 (2014: $8,872 by
Sawtell Pty Ltd, an entity of which former Director Mr J Carver is a director and a shareholder).
(c)
Transactions with other related parties
Other transactions that occurred during the financial year between entities in the wholly owned Group were the charter
of vessels and the provision of Supply Base and Slipway services. These are all provided at commercial rates.
32. Remuneration of Auditors
Auditor of the Parent Entity
Audit or review of the financial report
Taxation compliance services
Taxation consultancy services
Total
Network firms of the Parent Entity Auditor
Audit or review of the financial report
Taxation compliance services
Taxation consultancy services
Total
2015
$’000
2014
$’000
330,750
1,838
-
332,588
410,058
39,782
-
449,840
346,525
72,450
141,747
560,722
423,843
73,567
197,292
694,702
The auditor of MMA Offshore Limited is Deloitte Touche Tohmatsu (“Deloitte”).
Following a detailed review by the Audit and Risk Committee of the nature of the non-audit services provided by the external
auditor during the year, the Board has determined that the services provided, and the amount paid for those services, are
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 (Cth) and that the
auditor’s independence has not been compromised.
100 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 33. Subsidiaries
The Group’s material subsidiaries at the end of the reporting period are as follows:
Parent Entity
MMA Offshore Limited
Subsidiaries
MMA Offshore Vessel Operations Pty Ltd
MMA Offshore Charters Pty Ltd
MMA Offshore Supply Base Pty Ltd
MMA Offshore Asia Pte Ltd
MMA Offshore Logistics Pty Ltd
MMA Offshore Vessel Holdings Pte Ltd
MMA Offshore Malaysia Sdn Bhd
Java Marine Lines Pte Ltd
MMA Offshore Shipyard and Engineering Services Pte Ltd
Airia Jaya Marine (S) Pte Ltd
MMA Offshore Asia Vessel Operations Pte Ltd
JSE Offshore Shipping Pte Ltd
JSE Offshore (Labuan) Pte Ltd
Concord Offshore (Labuan) Ltd
PT Jaya Asiatic Shipyard
Note
Country of
Incorporation
(i)
Australia
(ii) (iii)
(ii) (iii)
(ii) (iii)
Australia
Australia
Australia
Singapore
(ii) (iii)
Australia
(ii)
Singapore
Malaysia
Singapore
Singapore
Singapore
Singapore
Singapore
Malaysia
Malaysia
Indonesia
(iv)
(iv)
(iv)
(iv)
(iv)
(iv)
(iv)
(iv)
Ownership
Interest
2015
%
Ownership
Interest
2014
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(i) MMA Offshore Limited is the head entity within the tax consolidated group.
(ii) These companies are members of the tax consolidated group.
(iii) Pursuant to ASIC Class Order 98/1418, relief has been granted to these wholly owned controlled entities from the
Corporations Law requirements for preparation, audit and lodgement of the financial report. As a condition of the Class
Order, MMA Offshore Limited and the controlled entities entered into a Deed of Cross Guarantee on 15 February 2012.
(iv) These subsidiaries of Jaya Holdings Ltd were acquired on 4 June 2014.
MMA Offshore Limited 101
Notes to the Financial Statements For the year ended 30 June 2015 33. Subsidiaries (continued)
The Consolidated Statements of Comprehensive Income and Financial Position of entities which are party to the deed of cross
guarantee as follows:
Statement of Comprehensive Income
Revenue
Investment income
Dividend revenue
Other gains/(losses)
Share of profits of jointly controlled entity
Vessel expenses
Supply Base expenses
Slipway expenses
Administrative expenses
Impairment charge
Finance costs
Profit before income tax expense
Income tax expense
Profit for the year
Other Comprehensive Income
Gain/(loss) on cashflow hedges
Transfer of cashflow hedge loss to initial carrying amount of hedged items
Other comprehensive income for the year, net of tax
Total Comprehensive Income for the year
2015
$’000
2014
$’000
638,768
567,094
599
104,344
(52,275)
3,385
3,225
3,298
4,159
3,555
(506,760)
(383,204)
(67,366)
(12,267)
(11,862)
(49,970)
(18,489)
28,107
(3,508)
24,599
13,350
-
13,350
37,949
(93,964)
(15,606)
(17,562)
-
(9,999)
60,996
(17,144)
43,852
(11,504)
7,668
(3,836)
40,016
102 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 33. Subsidiaries (continued)
Statement of Financial Position
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Prepayments
Current tax assets
Total Current Assets
Non-Current Assets
Investments accounted for using the equity method
Other financial assets
Property, plant and equipment
Goodwill
Prepayments
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Unearned revenue
Borrowings
Provisions
Current tax liabilities
Total Current Liabilities
Non-Current Liabilities
Unearned revenue
Borrowings
Other financial liabilities
Provisions
Deferred tax liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Retained earnings
Total Equity
Retained earnings
Retained earnings at beginning of the financial year
Net profit
Dividend provided for or paid
Retained earnings at end of the financial year
2015
$’000
2014
$’000
57,737
152,308
2,859
11,545
26,326
17,276
32,001
164,498
3,258
-
8,910
-
268,051
208,667
10,355
809,519
251,609
-
-
1,071,483
1,339,534
105,388
34,977
49,592
13,626
-
10,970
750,442
272,932
20,710
17,573
1,072,627
1,281,294
63,903
14,927
47,218
12,320
9,170
203,583
147,538
393
392,881
-
557
4,252
398,083
601,666
737,868
555,681
17,288
164,899
737,868
180,720
24,599
(40,420)
164,899
1,791
393,625
1,806
1,067
4,428
402,717
550,255
731,039
549,813
506
180,720
731,039
165,827
43,852
(28,959)
180,720
MMA Offshore Limited 103
Notes to the Financial Statements For the year ended 30 June 2015 34. Parent Company Information
The accounting policies of the parent entity, which have been applied in determining the financial information shown below,
are the same as those applied in the Consolidated Financial Statements. Refer to note 2 for a summary of the significant
accounting policies relating to the Group.
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Retained earnings
Employee equity settled benefits reserve
Total Equity
Financial Performance
Profit for the year
Other comprehensive gain
Total comprehensive income
2015
$’000
2014
$’000
42,097
1,137,868
1,179,965
30,316
1,151,828
1,182,144
59,348
391,977
451,325
728,640
555,694
171,451
1,495
728,640
33,920
-
33,920
61,670
391,202
452,872
729,272
549,826
177,951
1,495
729,272
1,279
121
1,400
Guarantees provided under the deed of cross guarantee
150,341
97,383
Commitments for the acquisition of property, plant and equipment by the
parent entity
83,285
67,901
104 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 35. Financial Instruments
35.1 Capital Risk Management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns, while
maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group’s overall
strategy remains unchanged from 2014.
The capital structure of the Group consists of net debt (borrowings as detailed in note 18 offset by cash at bank
balances) and equity of the Group (comprising issued capital, reserves and retained earnings as detailed in notes 22,
23 and 24).
The Group is not subject to any externally imposed capital requirements.
Based on recommendations of management and the Board, the Group will balance its overall capital structure through
payment of dividends, new share issues as well as the establishment of new borrowing facilities or repayment of existing
facilities. The Group uses its gearing ratio to manage its capital. The ratio is monitored on a monthly basis by the Board
and management and is measured as net debt to equity.
35.1.1 Gearing Ratio
The gearing ratio at the end of the reporting period was as follows:
Debt (i)
Cash and cash equivalents
Net debt
Equity (ii)
Net debt to equity
(i) Debt is defined as long and short-term borrowings, as detailed in note 18.
(ii) Equity includes all capital and reserves of the Group that are managed as capital.
35.2 Categories of financial instruments
Financial assets
Cash and cash equivalents
Derivative instrument in designated hedge accounting relationship
Loans and receivables
Financial liabilities
Derivative instrument in designated hedge accounting relationship
Payables and borrowings at amortised cost
35.3 Financial risk management objectives
2015
$’000
2014
$’000
442,473
440,843
(124,482)
(174,768)
317,991
779,117
41%
266,075
736,842
36%
2015
$’000
2014
$’000
124,482
11,545
200,615
-
571,646
174,768
-
201,335
1,806
524,444
The Group’s treasury function includes the management of the Group’s financial assets and commitments including
ensuring adequate procedures and controls are in place to manage financial risks. These risks include market risk
(including currency and interest rate risk) credit risk and liquidity risk.
A Treasury Policy has been approved by the Board and provides guidelines for conducting treasury activities.
Compliance with this Policy is monitored through internal audit procedures and subsequent reporting to the Audit and
Risk Committee.
The Group seeks to minimise the effects of these risks by using, where considered appropriate, derivative financial
instruments to hedge these risk exposures. The allowable financial derivatives and conditions for their use are
documented in the Treasury Policy. The Group does not enter into or trade financial instruments including derivative
financial instruments for speculative purposes.
MMA Offshore Limited 105
Notes to the Financial Statements For the year ended 30 June 2015 35 Financial Instruments (continued)
35.4 Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates. The Group enters into a range of derivative financial instruments to manage its exposure to foreign
currency and interest rate risk, including forward foreign exchange contracts to hedge the exchange rate risk arising
from the purchase or construction of vessels denominated by US Dollar contracts.
At a Group level, market risks are managed through sensitivity analysis.
35.5 Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies. Consequently, exposures to exchange rate
fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign
exchange contracts.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end
of the financial year are as follows.
US Dollars
Euro
Singapore Dollars
Norwegian Kroner
Other
Liabilities
2015
$’000
49,390
48,784
22,977
83
2,690
2014
$’000
31,740
-
21,762
109
-
Assets
2015
$’000
2014
$’000
119,785
235,126
54,140
4,668
22
1,208
-
10,777
4,459
-
35.5.1 Foreign currency sensitivity analysis
The Group is mainly exposed to US Dollars (USD), Euro (EUR) and Singapore Dollars (SGD).
The following table details the Group’s sensitivity to a 10% increase and decrease in the Australian Dollar against the
relevant foreign currencies. The 10% sensitivity represents management’s assessment of the reasonably possible
change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated
monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive
number below indicates an increase in profit or equity where the Australian Dollar strengthens 10% against the relevant
currency. For a 10% weakening of the Australian Dollar against the relevant currency, there would be an equal and
opposite impact on the profit or equity.
US Dollar Impact
Euro Impact
Singapore Dollar Impact
Norwegian Kroner Impact
Profit or Loss
Equity (i)
2015
$’000
1,680
(633)
56
5
2014
$’000
(1,635)
-
3
-
2015
$’000
2014
$’000
(15,623)
(23,000)
146
1,608
1
-
996
(395)
(i) This USD impact is attributable to changes in fair value of derivative instruments designated as hedging instruments
in cash flow hedges of $7.5 million (2014: $6.1 million) and the translation from the functional currencies of the
Groups foreign entities into Australian Dollars of $8.1 million (2014: $16.9 million). The rest of the currency impacts
on equity are attributable to translation of currency exposures in the Group foreign entities into Australian Dollars.
The Group’s profit and loss and equity sensitivity to foreign currency has decreased at the end of the current period due
to a smaller variance between the total value of foreign currency assets and liabilities.
106 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 Outstanding
Contracts
Buy US Dollars
3 to 6 months
6 to 12 months
35. Financial Instruments (continued)
35.5.2 Forward foreign exchange contracts
The Group entered into forward foreign exchange contracts to cover specific foreign currency payments required under
vessel construction contracts denominated in US Dollars.
The following table details the forward foreign exchange contracts outstanding at the end of the financial year:
Average
exchange rate
Foreign currency
Contract value
Fair value
2015
$
2014
$
2015
FC’000
2014
FC’000
2015
$’000
2014
$’000
2015
$’000
2014
$’000
0.888
0.883
-
-
31,982
31,982
-
-
36,007
36,211
-
-
12 to 24 months
-
0.886
-
63,963
-
72,218
Total
5,905
5,640
-
11,545
-
-
(1,806)
(1,806)
At reporting date the aggregate amount of unrealised profits under forward foreign exchange contracts relating to the
construction cost of new vessels is $11,544,571 (2014: loss of $1,805,977). In the 2015 financial year, these unrealised
profits were deferred in the hedging reserve. At the time that these payments relating to the construction of new vessels
are made, the amount deferred in equity will be included in the carrying value of the new vessels.
35.6 Interest rate risk management
The Group is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is
managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, and by the use
of interest rate swap contracts when considered appropriate. Hedging activities are evaluated regularly to align with
interest rate views ensuring the most cost-effective hedging strategies are applied.
The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk
management section of this note.
35.6.1 Interest rate sensitivity analysis
The sensitivity analysis below have been determined based on the exposure to interest rates at the end of the reporting
period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of
the reporting period was outstanding for the whole year. A 100 basis point increase or decrease is used when reporting
interest rate risk internally to key management personnel and represents management’s assessment of the reasonably
possible change in interest rates.
At reporting date, if interest rates had been 100 basis points higher / lower and all other variables were held constant,
the impact on the net profit of the Group would be as follows:
• Net profit would decrease / increase by $4,460,156 (2014: decrease / increase by $4,409,766). This is attributable to
the Group’s exposure to interest rates on its variable borrowings.
The Group’s sensitivity to interest rates has increased during the current year due to the increase in the carrying value of
US Dollar variable rate debt instruments as the US Dollar has strengthened against the Australian Dollar. This was offset
by repayments of both US Dollar and Australian Dollar debt.
MMA Offshore Limited 107
Notes to the Financial Statements For the year ended 30 June 2015 35. Financial Instruments (continued)
35.7 Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has adopted a policy of only dealing with credit worthy counterparties. The Group’s exposures to
its counterparties are continuously monitored by management. Where appropriate, the Group obtains guarantees from
customers. Cash terms, advance payments or letters of credit are required from customers of lower credit standing.
Trade receivables consist of a large number of customers spread across the offshore oil and gas exploration,
development and production industries and across diverse geographical areas. Ongoing credit evaluation is performed
on the financial condition of trade receivable.
Apart from the largest and second largest trade receivables (refer note 9), the Group does not have any significant
credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group
defines counterparties as having similar characteristics if they are related entities. The credit risk on the largest and
second largest receivables is limited due to the customers being large multinational corporations who are making
regular payments to the Group.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with
high credit ratings assigned by international credit rating agencies.
The carrying amount of financial assets recognised in the Financial Statements, which is net of impairment losses,
represents the Group’s maximum exposure to credit risk.
35.8 Liquidity risk management
The Group manages liquidity risk by maintaining adequate cash reserves, overdraft facilities and borrowing facilities, by
continuously monitoring forecast and actual cash flows, and managing credit terms with customers and suppliers. Note
25(d) sets out details of additional undrawn facilities that the Group has at its disposal to further reduce liquidity risk.
35.8.1 Liquidity and interest risk tables
The following tables detail the Group’s remaining contractual maturity for its non- derivative financial liabilities with
agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities
based on the earliest date on which the Group can be required to pay. The table includes both interest and principal
cash flows. To the extent that interest flows are at floating rate, the undiscounted amount is derived from current interest
rates at the end of the reporting period. The contractual maturity is based on the earliest date on which the Group may
be required to pay.
Weighted
average
effective
interest rate
%
Less than
1 month
$’000
1-3
months
$’000
3 months
to 1 year
$’000
1-5
years
$’000
Total
$’000
30 June 2015
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Total
30 June 2014
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Total
-
6.98
3.30
-
7.57
3.67
93,662
112
1,252
95,026
83,601
247
1,373
85,221
-
293
14,853
15,146
-
508
13,727
14,235
35,511
1,296
47,581
84,388
-
4,254
44,564
48,818
-
970
129,173
2,671
429,050
492,736
430,020
624,580
-
2,615
83,601
7,624
443,012
502,676
445,627
593,901
108 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 35. Financial Instruments (continued)
The following table details the Group’s expected maturity for its non-derivative financial assets. The table has been
drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned
on those assets.
Weighted
average
effective
interest rate
%
Less than
1 month
$’000
1-3
months
$’000
3 months
to 1 year
$’000
1-5
years
$’000
30 June 2015
Non-interest bearing
-
71,936
30,411
98,268
Variable interest rate instruments
0.71
124,556
-
-
Total
196,492
30,411
98,268
30 June 2014
Non-interest bearing
Variable interest rate instruments
Fixed interest rate instruments
Total
-
0.60
1.42
97,549
46,522
57,264
132,276
10,707
240,532
-
31,992
78,514
-
-
57,264
-
-
-
-
-
-
-
Total
$’000
200,615
124,556
325,171
201,335
132,276
42,699
376,310
The Group has access to financing facilities as described in note 25(d), of which $4.0 million were unused at the end of
the reporting period (2014: $4.0 million). The Group expects to meet its other obligations from operating cash flows and
proceeds of maturing financial assets.
The following table details the Group’s liquidity analysis for its derivative financial instruments. The table has been drawn
up based on the undiscounted contractual net cash inflows and outflows on the derivative instruments that settle on a
net basis.
Less than
1 month
$’000
1-3
months
$’000
3 months
to 1 year
$’000
1-5
years
$’000
5+ years
$’000
30 June 2015
Net settled:
Foreign exchange contracts
Total
30 June 2014
Net settled:
Foreign exchange contracts
Total
-
-
-
-
-
-
-
-
11,067
11,067
-
-
-
-
(4,317)
(4,317)
-
-
-
-
MMA Offshore Limited 109
Notes to the Financial Statements For the year ended 30 June 2015 35. Financial Instruments (continued)
35.9 Fair value of financial instruments
35.9.1 Fair value of financial instruments carried at amortised cost
The Directors consider that the carrying amounts of financial assets and financial liabilities recognised in the
Consolidated Financial Statements approximate their fair values.
35.9.2 Valuation techniques and assumptions applied for the purposes of measuring fair value
The fair values of financial assets and financial liabilities are determined as follows:
• The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active
liquid markets are determined with reference to quoted market prices.
• The fair values of derivative instruments are calculated using quoted prices. Foreign currency forward contracts
are measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching
maturities of the contracts. Interest rate swaps are measured at the present value of future cash flows estimated and
discounted based on the applicable yield curves derived from quoted interest rates.
• The fair values of other financial assets and financial liabilities (excluding derivative instruments) are determined in
accordance with generally accepted pricing models based on discounted cash flow analysis.
35.9.3 Fair value measurements recognised in the Consolidated Statement of Financial Position
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical
assets or liabilities.
• Level 2 fair value measurements are those derived from inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
30 June 2015
Financial assets at fair value:
Derivative (cashflow hedge)
Total
30 June 2014
Financial liabilities at fair value:
Derivative (cashflow hedge)
Total
-
-
-
-
11,545
11,545
1,806
1,806
-
-
-
-
11,545
11,545
1,806
1,806
There were no transfers between Level 1 and 2 in the period.
36. Events After the Reporting Period
There has not been any matter or circumstance that occurred subsequent to the end of the financial year that has significantly
affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of
affairs of the consolidated entity in future financial years.
110 Annual Report 2015
OverviewOperating & Financial ReviewGovernance2015 Financial ReportNotes to the Financial Statements For the year ended 30 June 2015 Additional Securities Exchange Information
For the year ended 30 June 2015
Ordinary Share Capital (as at 14 September 2015)
371,271,331 fully paid ordinary shares are held by 10,356 individual shareholders. All issued ordinary shares carry one vote
per share.
Substantial shareholders
UBS Group AG
Norges Bank
Distribution of Holders of Ordinary Shares (as at 31 August 2015)
Size of Holding
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Number of
Shares
19,647,728
19,656,615
% of Issued
Capital
5.29
5.29
Number of ordinary shareholders
1,977
3,346
1,880
2,947
266
10,416
Twenty Largest Shareholders (as at 14 September 2015)
Number of
Shares
% of Issued
Capital
1
2
3
4
5
6
7
8
9
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Argo Investments Limited
ABN AMRO Clearing Sydney Nominees Pty Ltd
Continue reading text version or see original annual report in PDF format above