ANNUAL REPORT 2016
GLOBAL PRESENCE, LOCAL KNOWLEDGE
Global Presence,
Local Knowledge
MMA Offsh ore Limit ed (“MM A” or “Com pany”) pr ovid es glo bal
mar ine solutions t o the off shore oi l an d g as ind ust r y.
Middle
East
Dubai
East &
West Afr ica
Key
Office
Supply Base
Onshore Facility
50+
39+
20+
Owned Vessels
We own and operate over 50 modern
offshore vessels
Hectares of 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 support facility in Singapore
Contents
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
2016 Financial Report
Shareholder Information
2
4
6
10
14
16
20
22
23
24
26
27
28
30
36
53
54
56
57
Additional Securities
Exchange Information
106
MMA Offshore Limited 1
MMA Offshore Limited 1
South East Asia
Malaysia
Batam
Singapore
Broome
Dampier
Fremantle
Australia
70%
Improvement to TRCF
Total Recordable Case Frequency
(“TRCF”) of 0.36 in FY2016
(rate per million hours worked)
Overview
Operating & Financial Review
Governance
2016 Financial Report
N
WORLD CLASS
OPERATIONS
E
A b o u t U s
Vessel Operations
Dampier Supply Base
With its head offic e locat ed
in Frem antle, Wester n
Australia and int er nati onal
headq uar ters i n Singa pore,
MMA is one of the l arge st
marine service providers
in the Asia Pac ifi c regio n
MMA owns and operates over 50
vessels throughout Australia and
internationally.
MMA undertakes a range of offshore
marine activities including:
Number in Fleet
• FPSO offtake support;
8
8
10
4
3
3
4
4
5
2
51
• 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.
MMA’s key areas of operation include
Australia, South East Asia, the Middle
East and Africa.
Fleet Profile
Type
AHT
AHTS (<8000 BHP)
AHTS (8000 BHP)
AHTS (>10800 BHP)
Barge
IMR
Multi-Purpose
PSV (<800m2)
PSV (>800m2)
Utility
Total
2 Annual Report 2016
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.
Broome Supply Base
Dampier Slipway
International Onshore Facilities
The Broome Supply Base, operated
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, 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.
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 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 23 years.
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
2016 Financial Report
N
INNOVATIVE
MAR INE
SOLUT IONS
E
C h a i r m a n ’s
A d d r e s s
MMA continued t o face
extremely chal lengi ng
market conditions
through FY2016
4 Annual Report 2016
Market conditions in the offshore oil
and gas industry remained extremely
challenging throughout FY2016 as
the ongoing low oil price resulted in
massive spending cuts across the
industry.
The price of Brent oil fell a further 22%
over the course of the 2016 financial
year from $62 per barrel to $48 per
barrel with a low of $27 in February of
this year. The market remains volatile
which does not bode well for spending
decisions by our clients who will be
unlikely to resume spending until a
sustainable recovery in the oil price is
felt. In the current environment and with
so many factors at play on both the
supply and demand side, the timing
and extent of recovery is very difficult
to predict.
All of MMA’s operating divisions were
impacted by the downturn with revenue
down 40% on the previous year and
EBITDA down 65%.
MMA reviewed the carrying value
of its assets as at 30 June 2016 in
light of the further deterioration in
market conditions and recognised an
impairment charge against the value of
the Company’s assets of $139 million.
Excluding the impact of the impairment
charge, MMA delivered a Net Loss
after Tax of $(20.2) million, down
136.5% from the prior year and
corresponding Earnings per Share
(“EPS”) was a loss of (5.4) cents
per share.
As announced in February 2016, the
Board has suspended dividends to
preserve cash until trading conditions
improve. Consequently no dividend
has been declared for the full year.
In the current environment, MMA has
undertaken a significant restructuring
programme to reduce costs.
Headcount has been reduced by over
50% over the past two years and we
have reduced our Corporate overhead
by $20 million or 24% between FY2015
and FY2016. We have also reduced our
direct operating costs through a range
of initiatives including renegotiations
with suppliers, operational efficiency
and closely managing our costs on
vessels between contracts.
Our vessel sales programme is
delivering results with 17 of our smaller
vessels sold for a total of A$40 million
to date, although difficult conditions in
the vessel sale and purchase market
meant that we fell short of our A$78
million target for FY2016.
We have recently refreshed our asset
sales strategy to accelerate the sales
programme in FY2017.
This is more important than ever in the
current environment where competition
is fierce for every available opportunity.
Three high specification newbuild
vessels were added to the fleet during
the year with the final two vessels
in our newbuild programme close
to completion. The three completed
vessels have gone into quality long
term contracts with the remaining two
vessels targeting the subsea inspection
maintenance and repair (“IMR”) market
which is seeing ongoing demand even
in the current environment. This brings
to an end our major capital expenditure
programme which will ease the
pressure on cashflow during FY2017.
At this point MMA does not anticipate
adding any further vessels to the fleet
and as such will cease shipbuilding
operations on completion of the current
newbuild programme in October 2016.
In line with MMA’s reduced earnings
profile in the current market, the MMA
Board is focused on strengthening the
Balance Sheet and reducing debt as a
priority. MMA’s asset sales programme
is core to this strategy and the Board is
also looking at a range of alternatives
to supplement the asset sales
programme if required.
MMA’s Banking Syndicate remains
supportive and in February 2016, MMA
agreed a number of amendments to
the terms and financial covenants
of its Syndicated Loan Facility with
the members of the Syndicate in
response to the ongoing difficult
trading conditions in the offshore oil
and gas industry. On 24 August 2016,
MMA received approval of some
further amendments to the Facility
from the Syndicate and has committed
to an increase in the annual principal
repayments over the remaining term of
the Facility.
Importantly, whilst our earnings are
currently being impacted by the
downturn, the Company remains
backed by a strong asset base. Net
Tangible Assets as at 30 June 2016
after the impairment charge were
$634 million or $1.70 per share.
Gearing has increased following the
impairment charge and was 53.9% as
at 30 June 2016.
MMA aims to differentiate itself through
the quality of its operations and its
ability to deliver innovative solutions to
clients to meet their needs.
MMA secured a number of significant
new long term contracts during the
year including a five year contract with
ConocoPhillips and a key contract with
Woodside supporting its production
assets in the North West of Australia.
These were significant contract wins
in the current competitive market and
are an endorsement of MMA’s ability to
provide innovative solutions to clients
meeting their requirements for first
class operational performance whilst
also delivering cost savings.
MMA also signed a number of vessel
sharing contracts with oil and gas
operators in the North West Shelf of
Australia during the year. This was an
innovative approach not previously
seen in the market but was a win-win
in the current environment, securing
utilisation for MMA’s vessels whilst
reducing operating costs for our
clients.
Internationally the market remains
tough, but we were successful in
securing and extending key contracts
during the year.
We are expanding our presence in
the Middle East, a market which has
held up comparatively well through the
downturn. We opened a branch office
in Dubai during the year, and have
transferred additional vessels into the
region.
With activity and utilisation under
pressure, MMA has laid up a number
of vessels to reduce operating costs.
Fortunately our Singapore and Batam
shipyards enable us to store vessels at
a significantly reduced cost and enable
us to maintain them at a high standard
so that they can be brought back into
operation as required.
Our safety performance continues
to be a shining light through these
challenging times. The Company
has made a significant investment
in this area though our Target 365
Strategy which is now producing
sustainable improvements in safety
culture and performance across the
business. FY2016 was our best safety
performance on record with a Total
Recordable Case Frequency of 0.36
per million hours worked – a world
class performance which has been
recognised by our clients.
Our safety performance is our licence
to operate and can differentiate us in
this highly competitive market. It is also
a key value of the Company that we
look after the safety and welfare of our
employees and we will remain focused
on maintaining and improving our
performance in this area.
Looking forward, there is little change
to the outlook from where we stood
this time last year. There is still
significant uncertainty around the
timing and extent of a recovery in the
oil price, which means that our clients
will continue to defer spending and
focus on cost control. Compounding
the issues facing the offshore vessel
market is a significant overhang of
vessel supply, which, even once oil
prices recover, will take some time to
absorb. With that in mind we expect
subdued activity levels to continue
through FY2017 with continued
pressure on rates and utilisation.
Whilst the short term outlook for the
oil and gas industry is uncertain, the
longer term fundamentals are sound.
The current underinvestment in new
supply to offset depleting reserves will
eventually result in a supply shortage
which should result in improved market
conditions and a return to spending.
In the current environment, MMA
continues to focus on the things that
it can control: operational excellence,
safety performance, reducing costs
and increasing productivity. We are
also focused on strengthening the
balance sheet through asset sales
and debt reduction. These actions
should position the Company well to
take advantage of improved market
conditions when they occur.
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 through these challenging
times. 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.
Tony Howarth AO
Chairman
MMA Offshore Limited 5
Overview
Operating & Financial Review
Governance
2016 Financial Report
N
CLIENT FOC US
E
M a n a g i n g
D i r e c t o r ’s
R e p o r t
FY2016 was a di fficul t
year for the C ompany
as ongoing adverse
oil and gas market
conditions i mpact ed
demand for our
services ac ross all of
our operating regio ns
Financial summary
Operating summary
$481.1m
Revenue
$75.5m
EBITDA
$(13.5)m(1)
EBIT (pre-impairment)
$(20.2)m(1)
NPAT (pre-impairment)
(5.4) cps(1)
EPS (pre-impairment)
$(144.0)m
Reported Net Loss
after Tax
$139.0m
Non cash impairment
charge (pre-tax)
$120.2m
Operating cash flow
53.9%
Gearing
$49.7m
Cash at Bank
Operations severely
impacted by the ongoing
adverse market conditions
Rates and utilisation at
historic lows
Vessel sales programme
ongoing but market
conditions remain difficult
Secured a number of
significant contract wins
during the year
Exceeded $15 million cost
reduction target
Ongoing focus on
operational excellence
and business efficiency to
position the Company for
improved market conditions
Maintained excellent safety
performance
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 2016
Market conditions for the
offshore oil and gas industry
continued to be extremely
challenging throughout FY2016
The low oil price has resulted in
dramatic cuts to expenditure by oil and
gas companies with E&P spending
reportedly down 25% in 2015 and
expected to reduce a further 20-
25% during calendar year 2016; an
estimated US$380 billion in projects
have been deferred. As a result,
offshore vessel utilisation has dropped
significantly and day rates have come
down by approximately 50% over the
past two years, significantly impacting
returns for vessel operators.
MMA’s operations were severely
impacted by the current conditions with
our Vessel Operations, Supply Base
and Slipway businesses all reporting
declines in revenue and earnings for
FY2016, particularly in the second half.
Adverse market conditions
significantly impacted the
Vessel business
Revenue fell 40.7% to $414.7 million
and EBITDA fell 67.5% to $64.8 million.
Average utilisation for the fleet across
the year was 59%, down from 75% in
FY2015. Utilisation in Australia was
higher during the first half at 80%
dropping to 72% in the second half as
a number of project scopes completed.
International utilisation was consistent
at around 50% throughout the year.
The Australian business benefited from
a higher percentage of the fleet being
engaged on long term production
support contracts which have been
impacted to a lesser extent by the
downturn.
MMA had vessels engaged on key
Australian LNG construction projects
during the year including the Gorgon,
Wheatstone, Prelude and Ichthys
projects. MMA was also active in
supporting the majority of production
support facilities in the North West of
Australia during the year.
Importantly, MMA was successful
in securing a number of significant
long term contracts during the year
including the Woodside Integrated
Fleet contract and a five year
platform supply vessel contract with
ConocoPhillips. These contracts are
a testament to the quality of MMA’s
operations and our ability to deliver
innovative and cost competitive
solutions to meet our clients’
requirements.
The international offshore vessel market
continued to be extremely challenging
with rates and utilisation at historic lows
and intense competition for available
work.
MMA was successful in extending a
number of key international contracts
during the year. Unfortunately, offsetting
this, two key contracts in Malaysia were
suspended due to a rig being taken out
of service by a client and we recently
discounted the rate on a number of key
contracts to avoid cancellation. Such
actions are becoming more common
in the current environment, resulting in
extremely difficult and unpredictable
conditions for service providers to the
industry.
We continue to expand our presence
in the Middle East with a new
regional office and a Master Services
agreement signed with a major
contracting company which may
provide future contract opportunities for
MMA’s vessels in the region.
Whilst we are seeing some positive
signs around the underlying
fundamentals of the oil and gas market,
it will take time for any recovery in the
oil price to filter through to the offshore
vessel market. At this stage we do
not expect to see an improvement
in current trading conditions through
FY2017.
MMA Offshore Limited 7
Overview
Operating & Financial Review
Governance
2016 Financial Report
Earnings from the Dampier
The Broome Supply Base
Supply Base declined further
also experienced lower
as a result of reduced activity
activity levels
in the region
Revenue fell 29.7% to $62.2 million and
EBITDA fell 22.8% to $20.0 million.
The Chevron Shorebase contract
provided a baseload of activity for the
Supply Base during the year, however
activity declined during the second half
in line with expected reduced freight
volumes. We expect earnings from
this contract to reduce significantly in
FY2017.
Productivity improvement and cost
reduction continue to be major focus
areas for the Company given current
activity levels. The workforce has been
reduced by 30% and changes have
been made to rostering arrangements
to reduce costs. The focus on cost
reduction will continue into FY2017.
Given current suppressed offshore oil
and gas activity levels in the region
and a reducing contribution from the
Chevron Shorebase contract, we
expect earnings at the Dampier Supply
Base to reduce significantly in FY2017.
The Slipway had a difficult year
with low demand for its services
in the current economic climate
Revenue for the year was $9.8 million
and EBITDA was a loss of $2.1 million,
down significantly on the prior year.
The reduction in offshore activity in
the North West Shelf combined with
increased competition from South East
Asian facilities impacted demand for
the Slipway’s services. In addition,
vessel operators are cutting costs and
reducing the amount of repairs and
maintenance work being undertaken.
In light of current market conditions,
the Slipway has been restructured to
operate on a significantly reduced
permanent workforce, supplemented
with contract labour to match work flow.
This model is feasible in the current
environment with contract labour in
ready supply.
With activity levels expected to remain
subdued through FY2017, the focus for
the Slipway will be on servicing MMA’s
internal fleet and that of key external
clients with the aim of delivering
improved financial performance.
MMA’s share of earnings from the
Broome Supply Base reduced by
23.5% during the year to $2.6 million.
During the first half of the year the
Broome Supply Base supported both
Shell and INPEX with their development
drilling programmes for the Prelude
and Ichthys LNG projects. Second half
activity was lower as Shell’s drilling
programme completed and INPEX
reduced from two rigs to one.
Exploration drilling activity in the region
is currently subdued given the current
market environment.
During the year a significant
restructuring programme was
completed, reducing employee
numbers and overhead costs to match
activity levels.
The Broome Supply Base will continue
to support INPEX’s drilling programme
through FY2017, however overall
market activity is expected to remain
subdued over the next 12 months.
Vessel sales programme is
ongoing with 17 vessels sold
to date
MMA remains firmly focused on its
vessel sales programme to optimise
the fleet composition and reduce debt.
Whilst the sale and purchase market
continues to be difficult, we have seen
reasonable interest in MMA’s vessels.
To date we have been successful in
selling 17 of our smaller vessels for a
total of A$40 million.
MMA has recently reviewed and
refreshed its vessel sales strategy with
the aim of accelerating sales through
FY2017.
Newbuild programme is close
to completion
MMA’s newbuild programme is almost
complete with three vessels, the MMA
Plover, MMA Brewster and MMA
Privilege all delivered during the year
and committed to long term contracts.
The remaining two vessels are close
to completion and currently being
tendered into a number of potential
work scopes in the global Inspection,
Maintenance and Repair (“IMR”)
market which is seeing ongoing
demand albeit at lower charter rates.
Post completion of the newbuild
programme, MMA’s capital expenditure
requirements will be minimal
as expenditure is reduced to a
maintenance level.
At this point MMA does not anticipate
adding any further vessels to the fleet
in the near future unless backed by
long term contracts.
Cost reduction programme
delivering results
MMA has taken significant steps to
reduce its cost base over the past
18 months. During FY2016, MMA
achieved a reduction in overhead
costs of $20 million, down 24% on the
previous financial year overhead with
further savings to occur in FY2017.
Headcount across the business has
reduced by over 50% over the past
two years (excluding crew) and salary
packages for non-marine personnel
have materially reduced with base
salaries frozen and no short term
bonuses paid or long term bonuses
vested for the past two years.
In addition to overhead savings,
MMA has also achieved significant
reductions in direct operating costs.
Over the past 18 months MMA
has negotiated with suppliers and
re-tendered key expenditure items
achieving savings of approximately
25%. MMA has also implemented
a number of business efficiency
initiatives to reduce costs, including
preventative maintenance programmes
and the strict management of costs on
vessels between contracts which has
resulted in material savings.
A culture of cost control is evident
across the business with a general
focus on minimising all discretionary
expenditure in the current environment.
Notwithstanding the focus on costs,
MMA is mindful that operational and
safety performance is critical to its
success. MMA is careful to ensure
that cost savings are not made at the
expense of the quality, reliability and
safety of our operations.
MMA will continue its focus on this area
through FY2017.
8 Annual Report 2016
Asset impairment charge
recognised
As at 30 June 2016, MMA recognised
an impairment charge of $139 million
against the carrying value of its assets
reflecting the impact of the current
market conditions on the Company’s
operations.
A charge of $100 million was booked
against the carrying value of the Vessel
fleet, a $36 million charge against the
Dampier Supply Base and a $3 million
charge against the Dampier Slipway.
The impairment charge is a non-cash
amount and will not impact compliance
with the Company’s debt covenants.
MMA’s Net Tangible Assets (“NTA”) as
at 30 June 2016 was $1.70 per share,
post the impairment charge.
Ongoing support of Banking
Syndicate
In February 2016, the Company
agreed a number of amendments to
the terms and financial covenants of
its Syndicated Loan Facility with the
members of the Syndicate in response
to the difficult trading conditions in the
offshore oil and gas industry.
On 24 August 2016, the Company
received approval of some further
amendments to the terms and financial
covenants of the Facility from the
Syndicate and has committed to
an increase in the annual principal
repayments over the remaining term of
the Facility which it will fund from the
proceeds of the Company’s ongoing
vessel sales programme, operating
earnings and any additional funding
options available to the Company.
MMA’s cash at bank as at 30 June
2016 was $49.7 million and Gearing
has increased to 53.9% following the
impairment charge.
Excellent safety performance
maintained
MMA continued to achieve
improvements in its safety
performance, recording a 70%
improvement in its Total Recordable
Case Frequency (“TRCF”) in FY2016.
MMA’s TRCF at 30 June 2016 was
0.36 (per million hours worked) which
represents a world class safety
standard.
MMA’s Target 365 Strategy continues
to evolve and produce sustainable
improvements in safety performance
and culture throughout the
organisation.
In the current environment, MMA’s
focus is on maintaining utilisation,
operational excellence and safe and
reliable operations whilst remaining
competitive on price.
We will also continue to seek
opportunities to leverage our in-house
marine capability to gain a competitive
advantage in the current environment.
MMA will continue to work with current
and potential clients to achieve
mutually beneficial outcomes through
innovative marine solutions that deliver
cost savings for clients and increased
utilisation of MMA’s fleet.
MMA also continues to streamline the
business through its cost reduction and
business efficiency initiatives.
Market Outlook
FY2016 was an extremely challenging
year for the Company as the oil
and gas market continued to face
enormous headwinds. The offshore
vessel market is experiencing its most
difficult period in over 30 years with
rates and utilisation at historic lows,
intense competition and an increasing
percentage of the fleet going into
layup.
Whilst there has been some positive
sentiment recently around the oil
markets returning to balance, there are
numerous factors at play which make
forecasting the timing of a recovery in
the market extremely difficult.
The current market expectation is for a
recovery in the oil price during 2017,
however there will be a lag before any
recovery in the oil price will translate
to increased activity for the offshore
vessel market. On this basis, we expect
the current challenging conditions to
continue through FY2017.
Jeff Weber
Managing Director
During FY2016, MMA launched a new
initiative, “Target 365 Critical Controls”,
which focuses on the eight highest
risk activities across the business
and promotes awareness of the key
controls required to prevent serious
injury or damage to the environment.
The initiative has been rolled out across
the organisation and is now being used
to manage high risk activities across
MMA’s operations.
MMA will continue to drive
improvements in safety across the
organisation with Target 365 at the core
of its strategy.
Our people remain critical to
our success
At MMA we recognise that our people
are critical to the success of our
business.
MMA is fortunate to have a highly
capable and dedicated Senior
Management Team to navigate
the Company through the current
challenging market conditions. I would
like to personally thank the Senior
Management Team and all MMA staff
for their valuable contribution, hard
work and support during what has
been a very challenging period for the
Company.
MMA is also fortunate to have a highly
experienced Board of Directors and
I would like to take this opportunity
to thank the Board for their ongoing
stewardship throughout the year.
We remain focused on
our 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.
During the year we expanded our
presence in the Middle East with a new
regional office and an increased on the
ground presence in the region. MMA
sees the Middle East as a key platform
in our future strategy.
MMA Offshore Limited 9
Overview
Operating & Financial Review
Governance
2016 Financial Report
F i n a n c i a l
P o s i t i o n
The Company repor t ed
a Net Loss aft er Tax for
the 2016 financial year
of $( 144.0) milli on, af ter
booking a non-cash
imp ai r ment charge of
$139.0 m illion before tax
against the car r ying val ue
of the Company’s Vessel s,
Supply Base and Sli pway
divisions
10 Annual Report 2016
Excluding the impairment charge, the
Company reported a Net Loss After Tax
for the year of $(20.2) million.
The Company reported negative
Earnings per Share (EPS) for the 2016
financial year of (38.6) cents and (5.4)
cents after excluding the impact of the
impairment charge.
The Company reported a Net Profit
After Tax for the first half of the year of
$6.5 million. However, the Company
recorded a Net Loss After Tax for the
second half of the year of $(26.7)
million, excluding the impact of the
impairment charge, as a number of
construction contracts in the Australian
region were completed and the
continued low oil price led to lower
rates and reduced demand for services
across the Company’s Vessels, Supply
Base and Slipway business divisions.
The Company’s operating margins also
declined during the second half as a
result of the difficult trading conditions.
Net Pr ofit Afte r Tax
(Pre-impair ment charge)
-$20 .2m
60.3
51.0
53.9
55.3
12
13
14
15
16
-20.2
Ear n ings Pe r Share
(Pre-impair ment charge)
-5.4c
25.2
23.4
18.8
15.0
12
13
14
15
16
-5.4
N
W
INTEGRATED SERV ICES
The Company recognised a total
impairment charge of $139.0 million
against the carrying value of the assets
comprising an impairment charge of
$100.0 million against the value of
the Vessel assets, a charge of $36.0
million against the value of the Supply
Base assets and a charge of $3 million
against the value of the Slipway assets.
In determining the impairment amount,
consideration was given to the fair
market value, less cost of disposal
of the assets in each of the CGUs,
as at 30 June 2016, based on an
independent valuation provided by a
specialist valuation consultant. The
impairment charge is a non-cash
charge.
The Company continued to work
through a significant restructuring
programme during the year which
resulted in a $20 million reduction
in overhead costs from the previous
financial year.
Impairment Charge
The Company conducted an
assessment of the recoverable
amounts of the assets comprising the
Company’s three Cash Generating
Units (CGUs) – Vessels, Supply Base
and Slipway at the end of the financial
year, having identified the following
indicators of impairment:
• The carrying value of the
Company’s net assets was greater
than the Company’s market
capitalisation; and
• Market conditions in the offshore
oil and gas support industry in
both Australia and internationally
remained challenging due to the
continued low oil price during the
year.
MMA Offshore Limited 11
Overview
Operating & Financial Review
Governance
2016 Financial Report
Op eratin g Ca shflow
Cashflow
Dividends
$ 120 .2m
185.4
120.2
79.6
70.8
54.4
12
13
14
15
16
Ca pi tal Ex penditure
$ 159 .3m
The Company reported cash on hand
at the end of the 2016 financial year
of $49.7 million compared to $124.5
million at the end of the previous year.
The reduction in the cash balance was
a result of funds being applied during
the year to meet the Company’s capital
expenditure commitments for the new
vessels under construction, to service
the Company’s commitments under
its debt facility and to fund the final
dividend for the 2015 financial year.
The Company reported a total cashflow
from operations for the 2016 financial
year of $120.2 million. In addition, the
Company received $35.0 million during
the year, primarily from the sale of a
number of the smaller vessels in the
fleet and $4.0 million in dividends from
the Broome Supply Base joint venture
business, which it operates with Toll
Holdings Ltd.
247.2
Capital Expenditure
Capital Expenditure for the year totaled
$159.3 million. The major capital
expenditure items for the year were the
final payments made on completion
of the Company’s two new Platform
Supply Vessels, MMA Plover and
MMA Brewster, which are contracted
to INPEX and the construction costs
associated with the three specialised
vessels being built at the Company’s
Shipyard in Batam, Indonesia. The
first of these vessels, MMA Privilege,
was completed in March 2016 and
has secured a contract operating in
Cote d’Ivoire for up to two years. The
remaining two vessels, MMA Prestige
and MMA Pinnacle will be completed
early in the 2017 financial year.
Following completion of the final
two vessels, the Company does not
anticipate acquiring or building any
further new vessels, unless backed by
long term contracts. Accordingly, the
Company’s capital expenditure going
forward will be significantly lower than
in previous years.
159.3
95.6
84.1
68.0
12
13
14
15
16
Inter es t Be ar ing Liabilities
$3 98.7 m
448.0 448.5
398.7
179.6
158.1
12
13
14
15
16
12 Annual Report 2016
Due to the difficult trading conditions
which the Company experienced
during the past year, the Board has
suspended the Company’s dividend
programme. Accordingly, the Company
did not declare a dividend for the 2016
financial year. The final dividend for
the 2015 financial year of 1.5 cents per
share was paid to shareholders on 29
September 2015.
Debt Management
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.
In response to the difficult trading
conditions experienced during the past
year, in February 2016 the Company
agreed a number of amendments to
the terms and financial covenants of
its Syndicated Loan Facility with the
members of the Syndicate. On 24
August 2016, the Company received
approval of some further amendments
to the terms and financial covenants
of the Facility and committed to
an increase in the annual principal
repayments over the remaining term of
the Facility to $75 million, payable in six
month instalments of $37.5 million, with
the first payment due on 31 December
2016. The principal repayments will
be funded from the proceeds of the
Company’s ongoing vessel sales
programme, operating earnings
and any additional funding options
available to the Company.
The weighted average interest rate on
the Syndicated Loan Facility at 30 June
2016 was 3.77%.
1.37
NTA Per Share
$1.7 0
2.10
1.95
1.66
1.70
Following the principal repayments
during the year, the balance owing
on the A$ facility and the US$ facility
as at 30 June 2016 had reduced to
A$153.8 million and US$181.6 million
respectively.
Balance Sheet
The Company continues to have a high
quality asset base. At 30 June 2016,
the Company reported Total Assets of
$1,094.5 million, Net Assets of $634.2
million and a Net Tangible Asset
backing per share (“NTA”) of $1.70
per share.
At 30 June 2016 the Company had
cash reserves totaling $49.7 million.
However, the Company had net current
liabilities of $7.6 million. As mentioned
above, the Company expects to
meet its ongoing commitments from
the proceeds of the vessels sales
programme, operating earnings and
any other additional funding options
available to the Company.
The Company’s gearing ratio (net debt
to equity) following the impairment
charge at 30 June 2016 increased
to 53.9%, compared to 40.8% the
previous year.
12
13
13
15
16
Cash At Bank
$49 .7m
174.8
124.5
55.3
58.8
49.7
12
13
14
15
16
Gear in g
53.9 %
53.9
40.8
36.1
32.0
30.0
12
13
14
15
16
MMA Offshore Limited 13
Overview
Operating & Financial Review
Governance
2016 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 2016
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 earnings.
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 acquisitions and
divestures helps to ensure that the
fleet aligns with market requirements.
In the current market, vessels which
are not being utilised in the medium to
long term are either being marketed
for sale or cold/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 the
level of 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 will be affected
by prevailing and 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 quality marine logistics services,
both onshore and offshore, on a cost-
competitive basis and by diversifying
our geographic footprint across a
number of key regional areas.
Decreases in industry activity may
also increase the risk of the Company
failing to comply with the terms and
financial covenants of its Syndicated
Loan Facility. MMA seeks to manage
this risk through the controls detailed
in the paragraph above, by aggressive
tendering for new work scopes and by
its existing divestiture programme to
reduce current debt.
Operational risks
The Company’s operations are subject
to various risks inherent in servicing
the offshore oil and gas industry. Our
international operations widen our risk
exposure in terms of both opportunities
and threats.
Operational risks include (but are not
limited to):
•
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;
• 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 utilisation, 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 a number of well
executed controls to manage these
risks, including, but not limited to,
appropriate insurance coverage,
hazard and risk management
processes, quality audits, 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’s strategic plan considers such
risks and operationally we risk assess
market areas and clients regularly to
limit negative and optimise positive
impacts.
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 earnings.
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.
MMA Offshore Limited 15
Overview
Operating & Financial Review
Governance
2016 Financial Report
N
OPERATIONAL
EXCELLEN CE
E
V e s s e l
O p e r a t i o n s
Adverse market
conditions
significantly
imp acted
per for mance of the
Vessel busi nes s
during FY2016
Ves sel EBIT 1 ($M )
77.1
59.1
52.5
44.5
Financial overview
Revenue down 40.7%
EBIT down 120.0% (pre-impairment)
Second half lower with major contracts
completing
$100m vessel impairment charge
Operating overview
Utilisation – average 59%
Strategy
Differentiation through innovative client
solutions, superior service, high quality
and safe operations, integrated value
chain whilst remaining cost competitive
Operating scale in key geographic
regions – Australia, Asia, Middle East,
Africa
Optimising the fleet to focus on larger,
more specialised vessels
Rates remain under pressure across all
regions and vessel segments
Outlook
Oversupply and low demand
conditions expected to continue
through FY2017
Secured and extended a number of
key long term contracts
Added three new high specification
vessels into the fleet with two further
newbuild vessels close to completion
Vessel Sales Programme ongoing –
17 vessels sold for a total of $40m
Expanding our presence in the Middle
East
Financials
Revenue
EBITDA
EBITDA / Revenue
Variance
30 Jun 2016
30 Jun 2015
40.7%
67.5%
12.9%
$414.7m
$699.8m
$64.8m
$199.1m
15.6%
28.5%
EBIT (pre-impairment)1
120.0%
-$15.4m
$77.1m
12
13
14
15
16
EBIT / Revenue1
Segment Assets
-15.4
ROA (pre-impairment)1
14.7%
11.6%
8.7%
-3.7%
11.0%
$937.7m
$1,061.3m
-1.5%
7.2%
1 EBIT and ROA are shown excluding the impact of the $100m impairment charge against
vessel assets in FY2016 and $100m impairment charge in FY2015
16 Annual Report 2016
Revenue for the year was $414.7
million, down 40.7% on the previous
year and we recorded an EBIT loss
(excluding the impact of the $100
million impairment charge to the vessel
fleet) of $(15.4) million, down 120.0%.
Australian operations contributed
revenue of $323.6 million during
FY2016, down 40% on the prior
year and international operations
contributed revenue of $91.1 million,
down 42%.
The Australian business benefited from
a higher percentage of the fleet being
engaged on long term production
support contracts which have been
impacted to a lesser extent by the
downturn.
The international offshore vessel market
continued to be extremely challenging
with rates and utilisation at historic lows
and intense competition for available
work.
Average utilisation for the fleet across
the year was 59%, down from 75% in
FY2015. Utilisation in Australia was
higher during the first half at 80%
dropping to 72% in the second half as
a number of project scopes completed.
International utilisation was consistent
at around 50% throughout the year. It
should be noted that a number of our
Australian vessels have been moved to
South East Asia to reduce costs which
has had an impact on the international
utilisation figure and earnings.
Australia
Activity in Australia was stronger
during the first half with the Silja
Europa accommodation vessel
and LNG construction support
activity contributing to earnings.
The completion of these contracts
combined with generally subdued
construction and exploration activity in
Australia resulted in reduced utilisation
for MMA’s fleet in the second half.
Production support remains a key focus
of MMA’s Australian strategy and MMA
continues to service the majority of
production facilities on the North West
Shelf. In the current environment, MMA
has been proactive in working with its
clients to seek ways to assist them in
reducing operating costs. Initiatives
which have been implemented include
vessel sharing arrangements between
clients and technical modifications
to vessels, enabling them to perform
multiple functions, reducing the overall
fleet requirement for a client.
During the year MMA was successful
in securing and extending a number
of significant long term production
support contracts. In November 2015,
MMA was awarded the Woodside
Integrated Fleet contract which
involves the provision of three vessels
to support Woodside’s North West
Shelf, Pluto and AusOil production
assets. The contract is for a firm period
plus a number of options and is valued
at approximately A$50 million and up to
A$110 million, should all the options be
exercised.
In December 2015, MMA secured
a five year platform supply vessel
(“PSV”) contract with ConocoPhillips.
The contract is for the provision of
platform supply and static tow services
in support of the client’s Bayu-Undan
operations in the Timor Sea. MMA
proposed an innovative technical
solution which resulted in substantial
cost savings to the client and enabled
MMA to secure the contract in a highly
competitive environment. This was
a very important contract win for the
Company, securing full utilisation for
one of MMA’s PSVs for a period of
five years in an extremely challenging
market.
MMA also signed vessel sharing
contracts with Quadrant, BHP Billiton,
Vermilion and Santos during the year.
MMA’s two newbuild PSVs, which were
specifically built to support INPEX’s
Ichthys LNG project, will contribute to
earnings in FY2017. The first of these
vessels, the MMA Plover, commenced
operations in August 2016 and the
second vessel, the MMA Brewster,
will commence in the second half of
FY2017. The vessels were delivered
during FY2016 in accordance with the
requirements of the contract and have
been held at our Singapore facility
incurring holding costs whilst awaiting
contract commencement. These are
important long term contracts for MMA
with an initial firm contract term of five
years with two five year options to
extend.
A number of production support
contracts for new LNG facilities are
also expected to be tendered during
FY2017.
Whilst construction activity in Australia
has declined significantly, there is still
some activity in the region around the
major LNG projects.
MMA had a number of vessels
engaged on the Gorgon project during
the year including the Silja Europa
accommodation vessel which was
a significant earnings contributor
during the first half. MMA’s vessels
progressively completed their contracts
with Gorgon during the year as the
project completed construction with the
last remaining vessel on the project,
the Bibby Renaissance, finishing up in
early August 2016.
MMA was also active on the
Wheatstone LNG project during the
year with five tug and barge sets,
two infield tug vessels and a supply
vessel contracted to transport subsea
equipment from Henderson to the
gas field for installation. MMA also
supported the Prelude LNG project,
transporting subsea infrastructure from
Malaysia to Australia using a six vessel
spread. MMA was also active on the
Ichthys project providing international
towing services and infield support
work for various contractors on the
project.
During the year MMA also secured
a contract to provide maintenance
support to an FPSO in New Zealand.
Whilst the New Zealand market is
relatively small, it is a logical market
for MMA and this contract has the
potential to lead to further opportunities
in the region.
Exploration activity in Australia
continues to be subdued with the rig
count in Australia at historically low
levels. MMA has traditionally had a
limited exposure to the exploration
market in Australia and therefore the
vessel business has not been impacted
to a large extent by the reduction in
exploration activity.
MMA has a layup strategy in place to
minimise operating costs in between
contracts for vessels which are not
working. Currently MMA has six vessels
laid up in Australia in order to reduce
holding costs.
The negotiations for new Enterprise
Bargaining Agreements for our marine
personnel are ongoing with recent
positive progress. MMA is seeking to
negotiate a sustainable agreement to
support the Australian offshore oil and
gas industry and create job security
through a difficult period.
MMA Offshore Limited 17
Overview
Operating & Financial Review
Governance
2016 Financial Report
Looking ahead, MMA will continue
to service its existing production and
construction support contracts in
Australia and we continue to tender
for new opportunities for both short
and long term contracts as they arise.
Overall, we expect market activity
to remain at historically low levels in
Australia through FY2017.
International
Market conditions internationally remain
extremely challenging across all of
MMA’s operating regions with delays to
projects and cutbacks to operational
spending putting further pressure on
rates. Competition remains intense for
the opportunities that are available with
some operators accepting loss making
contracts to maintain utilisation.
Utilisation remained steady during
the year at approximately 50%. This
includes laid up vessels and vessels
being marketed for sale.
South East Asia continued to feel
the impact of the downturn with no
improvement to utilisation and rates
falling by a further 10-20%. Contracts
continue to be tendered but schedules
and start dates are being deferred.
MMA currently has 11 vessels working
in South East Asia. We were successful
in extending key contracts in Thailand
during the year. Unfortunately,
offsetting this, two key contracts in
Malaysia were suspended as a rig
was taken out of service by the client.
In the current market such actions are
becoming more common, resulting in
extremely difficult and unpredictable
conditions for service providers to the
industry.
Activity in the Middle East is stronger
but competition has increased with
vessels moving into the market from
other regions.
Further rate reductions of up to 20%
have also been experienced and MMA
recently had to discount the rate on a
number of its key long term contracts to
avoid cancellation. MMA currently has
seven vessels operating in the Middle
East and views this region as a key
platform in its future strategy. MMA’s
Dubai office opened in March 2016
and we have engaged an experienced
Regional Manager to drive the strategy.
To date we have made inroads with
a Master Services Agreement signed
with a major contracting company
which may provide future contract
opportunities for MMA’s vessels in the
region.
The African market continues to
be challenging with a significant
oversupply of vessels and limited
work. Pleasingly, we were successful
in securing a long term contract for our
newbuild Multi-Purpose Maintenance
Vessel (“MPV”), the MMA Privilege, with
a major marine contractor for a period
of one year firm with one further year in
options. We currently have four vessels
operating in Africa and will only move
further vessels into this market on the
back of long term contracts.
MMA continues to lay up underutilised
vessels at its Batam and Singapore
shipyards, significantly reducing the
operating costs on these vessels.
Whilst we are seeing some positive
signs around the underlying
fundamentals of the oil and gas
markets, it will take time for any
recovery to filter through to the offshore
vessel market. At this stage we do
not expect an improvement in current
trading conditions through FY2017.
Newbuild Programme
MMA’s newbuild programme is almost
complete. The MMA Prestige will
soon be delivered from MMA’s Batam
shipyard and is being tendered into
a number of potential work scopes.
The MMA Pinnacle will be delivered in
October 2016. These are high quality,
high specification vessels targeting the
global Inspection, Maintenance and
Repair (“IMR”) market which is seeing
ongoing demand albeit at lower charter
rates.
The MMA Privilege, MMA Plover and
MMA Brewster were also delivered
during FY2016 and have long term
contracts in place with key clients.
Post completion of the newbuild
programme, MMA’s capital expenditure
requirements will be minimal
as expenditure is reduced to a
maintenance level. At this point MMA
does not anticipate adding any further
vessels to the fleet in the near future
unless backed by long term contracts.
Vessel Sales Programme
MMA remains firmly focused on its
vessel sales programme to optimise
the fleet composition and reduce debt.
Whilst the sale and purchase market
continues to be difficult, we have seen
reasonable interest in MMA’s vessels.
To date we have been successful in
selling 17 of our smaller vessels for a
total of A$40 million.
We will continue to focus on
rationalising the smaller end of the
fleet and other selected vessels where
appropriate. Most of the vessels are
being actively traded in the spot market
whilst being marketed for sale, with a
cost control programme in place for
vessels laid up between contracts.
18 Annual Report 2016
N
W
RELI ABLE &
EFFICIENT O PERATIO NS
MMA Offshore Limited 19
Overview
Operating & Financial Review
Governance
2016 Financial Report
N
STRATE GI C
LOCATI ONS
E
D a m p i e r
S u p p l y
B a s e
Activity level s at
the D am pier Supply
Base declined
fur ther dur ing t he
year as a resul t of
reduced acti vit y in
the region
Da mpi er Supply Base
EB IT 1 ($ M)
52.3
36.7
36.9
18.6
13.1
Financial overview
Revenue down 29.7%
EBIT down 29.6% (pre-impairment)
Second half activity significantly lower
Redundancy costs of $0.9m expensed
Non-cash impairment charge of $36m
Operating overview
Maintaining key clients although at
lower levels of activity and rates
Strategy
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
Drilling activity at historically low levels
impacting wharf visits
Outlook
Implemented a range of cost reduction
and productivity measures during the
year
Targeting alternative clients to increase
land and services utilisation
Experiencing historically low demand
for services across exploration,
construction and production sectors
of the market which will lead to a
substantial reduction in earnings in
FY2017
Financials
Revenue
EBITDA
EBITDA / Revenue
EBIT (pre-impairment)1
EBIT / Revenue1
Segment Assets
ROA (pre-impairment)1
Variance
30 Jun 2016
30 Jun 2015
29.7%
22.8%
2.9%
29.6%
$62.2m
$20.0m
32.2%
$88.5m
$25.9m
29.3%
$13.1m
$18.6m
nil
21.0%
21.0%
47.1%
0.7%
$71.0m
$134.3m
10.8%
11.5%
12
13
14
15
16
1 EBIT and ROA are shown excluding the impact of the $36m asset impairment charge in
FY2016 and the $20.7m impairment charge against Supply Base goodwill in FY2015
20 Annual Report 2016
Activity levels at the Dampier Supply
Base declined further during the year
as a result of reduced construction and
drilling related activity in the region.
Revenue for the year was $62.2 million,
down 29.7% on the previous financial
year and EBIT was $13.1 million, down
29.6%, excluding the impact of the
non-cash impairment charge of $36.0
million which was booked against
Supply Base assets as at 30 June
2016.
The Chevron Shorebase contract
provided a baseload of activity for the
Supply Base during the year with MMA
providing a range of services to the
client including laydown, personnel
and equipment hire, wharf services,
quarantine, freight and materials
management.
Activity in relation to the contract
declined in the second half in line with
expected reduced freight volumes
which resulted in a reduction in the
amount of rental and services income
generated from the project in the
second half. We expect earnings from
this contract to reduce significantly in
FY2017.
MMA signed a new Supply Base
contract with BHP Billiton during the
year and is actively marketing the
Base to a wider customer group to
increase land utilisation and service
income. With activity in the region at
significantly reduced levels combined
with increased land availability, margins
have continued to decline.
Vessel visits to MMA’s wharf were down
approximately 25% on FY2015 as a
result of generally low activity in the
region.
Productivity improvements and cost
reduction continue to be major focus
areas for the Company given current
activity levels and we managed to
maintain our operating margins during
FY2016. The workforce has been
reduced by 30% and changes have
been made to rostering arrangements
to reduce costs. This focus will
continue into FY2017 with overhead
costs expected to reduce further.
Given current suppressed offshore oil
and gas activity levels in the region
and a reducing contribution from the
Chevron Shorebase contract, we
expect earnings at the Dampier Supply
Base to reduce significantly in FY2017.
MMA Offshore Limited 21
Overview
Operating & Financial Review
Governance
2016 Financial Report
N
KEY ONSHORE
ASSE TS
E
B r o o m e
S u p p l y
B a s e
Reduced activity i n
the B rowse B as in
region resu lted in
reduced ear nings for
the B roome Supply
Base
MMA’s 50% share of earnings from
the Broome Supply Base for the 2016
financial year was $2.6 million, down
23.5% on FY2015.
During the first half of the year the
Broome Supply Base supported both
Shell and INPEX with their development
drilling programmes for the Prelude
and Ichthys LNG projects. Second half
activity was lower as Shell’s drilling
programme completed and INPEX
reduced from two rigs to one.
Exploration drilling activity in the region
is currently subdued given the current
market environment.
During the year a significant
restructuring programme was
completed reducing employee
numbers and overhead costs to match
activity levels.
Whilst activity in the region is currently
low, the Broome Supply Base has
quality infrastructure and a proven
operational capability to support future
activity in the Browse Basin region
when market conditions improve.
The Base is also being marketed to
alternative clients and industries to
improve utilisation.
The Broome Supply Base will continue
to support INPEX’s drilling programme
through FY2017, however overall
market activity is expected to remain
subdued over the next 12 months.
22 Annual Report 2016
D a m p i e r
S l i p w a y
The Slipway had a
difficult year wi th
low dem and f or
its services i n t he
current economic
climate
Sl ipway EBIT 1 ($M)
3.5
3.1
2.1
12
13
14
16
15
-0.2
Revenue was $9.8 million, down 56.8%
on the previous financial year and EBIT,
excluding the impact of a $3 million
impairment charge on the value of the
Slipway assets, was a loss of $(2.9)
million, down from a loss of $(0.2)
million in FY2015.
The reduction in offshore activity in
the North West Shelf has impacted
the number of vessels in the region
requiring Slipway services. In addition,
vessel operators are cutting costs and
reducing the amount of repairs and
maintenance work being undertaken.
South East Asian facilities are also
competing aggressively for work to
maintain utilisation in their shipyards
through the downturn, resulting in an
increased number of Australian vessels
going to South East Asia to complete
major repair work.
The Slipway docked 28 vessels in the
2016 financial year, including 19 third
party vessels, down from a total of 46
in FY2015.
In addition to servicing offshore
vessels, the Slipway continues to
focus on servicing the terminal
towage operators in the region.
There are approximately 50 harbour
tugs operating in the region which
represents a solid market for the
Slipway. However, as mentioned above,
competition is strong for this work and
margins are under severe pressure.
In light of current market conditions,
the Slipway has been restructured to
operate on a significantly reduced
permanent workforce, supplemented
with contract labour to match work flow.
This model is feasible in the current
environment with contract labour in
ready supply.
There is an ongoing focus on reducing
costs wherever possible and we are
also utilising the Slipway as a cost
effective layup facility for MMA’s
vessels between contracts.
With activity levels expected to remain
subdued through FY2017, the focus for
the Slipway will be on servicing MMA’s
internal fleet and that of key external
clients with the aim of delivering
improved financial performance.
Financials
Revenue
EBITDA
EBITDA / Revenue
EBIT (pre-impairment)1
EBIT / Revenue1
Segment Assets
Variance
30 Jun 2016
30 Jun 2015
$12.9m
$2.6m
23.6%
$2.7m
28.5%
48.3%
21.9%
$9.8m
-$2.1m
-21.4%
-$2.9m
-29.4%
$7.5m
-23.1%
$22.7m
0.5m
2.2%
-$0.2m
-0.9%
$14.5m
-1.2%
-2.9
ROA (pre-impairment)1
1 EBIT and ROA are shown excluding the impact of the $3m impairment charge in FY2016
MMA Offshore Limited 23
Overview
Operating & Financial Review
Governance
2016 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
Looking to the future, MMA will
continue to focus on continuously
improving health and safety
performance, maintaining excellent
TRCF rates and on increasing the
number of Perfect Days across the
Company.
We will do this by:
• Maintaining our licence to operate
and increasing reliability through
a robust internal assurance
programme;
• Embedding our Target 365 Critical
Controls into all operations and
verifying their effectiveness; and
•
Improving our management
systems to ensure efficient and
effective global operations.
MMA continues to strive for ‘A Perfect
Day Every Day’, that is a day free
of recordable injuries or illness and
material incidents; our “Target 365”.
During the 2016 financial year, MMA’s
Total Recordable Case Frequency
“TRCF” decreased from 1.2 to 0.36
incidents per million hours worked,
a 70% improvement on FY2015
and MMA’s best ever Company
performance.
Importantly, this performance
continues a 3-year trend of significant
improvement.
MMA also tracks the number of ‘Perfect
Days’ across its global operations.
In 2016, MMA achieved 310 Perfect
Days across the whole organisation,
equating to a percentage of 85%, a
slight decrease in the percentage from
the previous year of 89%. Whilst the
number of Perfect Days has reduced
there has been a decrease in the
severity of incidents and an increased
reporting culture. Our target is to have
365 Perfect Days each year and a
number of our vessels and working
groups achieved this during the year.
In 2016 MMA c ontinued
to achieve i mprove ment s
in its s afety cul ture and
per for mance
Tota l R e cord able Case
Fre que nc y
(p er mil lion h ours)
4.7
3.3
2.7
1.2
0.36
12
13
14
15
16
24 Annual Report 2016
N
W
TARG ET 3 65 -
A PERFECT DAY
EVERY DAY
CRITICAL
CONTROLS
LIVE A PERFECT
DAY EVERY DAY
DO IT THE RIGHT WAY
Environment
Quality
Case Study:
MMA maintained certification for its
quality systems accreditation (AS/
NZS ISO 9001: 2008) across global
operations during the reporting
period and OHSAS 18001: 2007 and
ISO 14001: 2015 in our international
operations.
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.
MMA remains committed to achieving
the highest standard of environmental
performance across all of its business
activities.
MMA undertakes a programme
of environmental monitoring and
has demonstrated 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.
In 2016, MMA successfully
commissioned a self-contained waste
water treatment plant at the Dampier
Slipway. The plant is now able to
capture all water runoff and treat the
water to a standard where it is recycled
for alternative uses.
MMA Target 365 Critical Controls
Through employee feedback, risk
assessment and industry benchmarking,
it was identified that MMA needed to
elevate the visibility of the critical controls
associated with the Company’s highest
risk activities.
Over a 10-month period, 163 employees
and management from MMA’s global
operations attended workshops to
identify the highest risk activities across
the organisation and identify the simple,
non-negotiable controls, that when in
place, prevent serious injury or damage
to the environment from occurring.
In December 2015, MMA’s “Target
365 Critical Controls” programme was
launched and has been rolled out
across the business. The initiative is now
being actively used to manage high risk
activities across MMA’s operations.
MMA has received positive feedback on
the initiative from employees, clients and
regulators and will continue to embed
Critical Controls into our operations
including conducting ongoing reviews of
their effectiveness.
MMA Offshore Limited 25
Overview
Operating & Financial Review
Governance
2016 Financial Report
O u r P e o p l e
In a r apidly changing
industr y environment,
our success is dependent
upon our people, their
capabi li ties and our
Company’s abilit y t o
remain agile
495
Austral i a
Top Ten
Employee
Nationalities
26 Annual Report 2016
In-house training activities increased
during the year, with several new
training programmes being developed
to meet specific needs or risks within
the business, including MMA’s Target
365 Critical Controls programme.
In total, 1,171 employees completed
5,895 internally developed training
programmes. Of these, 74% were
accessed and completed via MMA’s
online learning environment.
Diversity
As a business with a global focus,
MMA aims to have a workforce that
best represents the communities in
which our assets are located and our
employees live.
MMA’s employees are made up of
21 different nationalities, with 320 of
our people coming from non-English
speaking backgrounds.
Our target for FY2016 was for women
to hold at least 10% of senior executive
positions (14.3% currently) and at least
30% of senior management roles; a
goal we have achieved this year.
MMA strives 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.
MMA’s workforce planning principles
continue to be based on a dynamic
model that plans for the right person, to
be in the right job, with the right skills,
at the right time.
Training and Development
MMA is committed to the development
of our people through performance
feedback, internal development
opportunities and training programmes.
FY2016 saw the successful
implementation of an innovative
solution to manage the strategic
planning and resource allocation
of offshore crew. The process is
underpinned by the competency
and skills framework built into MMA’s
ERP system and has resulted in
significant benefits and efficiencies
being achieved in the areas of human
resource planning and vessel crew
allocation/utilisation.
MMA continues to focus on providing
our people with the right skills so that
they can perform their roles safely and
competently.
% Of Women Employed
16.7
16.7
14.2
14.3
14.3
10.1
30
19.2
7
Myan mar
Unite d Kingdom 11
15
30
31
35
Ukraine
New Zea land
Philippines
Malaysia
Sing apore
53
India
69
Indo nesia
77
Total
Organisation
Board of
Directors
Executive
Management
Senior
Management
15
16
15
16
15
16
15
16
N
W
CO MM UNI TY
COMM ITMENT
C o m m u n i t y
MMA has establish ed its reput ati o n fo r c omm un ity co mmitm ent , through
creating and developing oppor tun itie s t ha t hav e eco no mically and socially
beneficial outcomes
MMA’s focus on local content,
Aboriginal engagement and community
sponsorship supports the dual aims
of growing existing economic and
social capacity and supporting and
developing new capabilities in the
community.
Local Content
MMA uses a wide range of suppliers
and contractors local to the places
in which we operate. Over 80% of
our operational spend is executed
through localised supply and service
agreements. Typically, we identify
opportunities where local providers
have the ability to directly service
MMA’s requirements. Where this is not
possible, we work with counterparties
to develop these offerings.
A leading example of this collaborative
approach is our wire spooling offering
in Dampier. We now partner with a local
Aboriginal business to provide spooling
services to support requirements of our
offshore and onshore clients. This is a
new service offering, with the potential
of steady revenue and high local
content, highlighting the possibilities of
co-creative approaches.
The MMA Maritime Cadet programme
in Timor-Leste is currently underway,
with our first intake of STCW-rated
cadets expected to graduate from
Akademi Laut Malaysia in early 2017.
Graduates will enter our international
fleet to gain valuable sea-time and
ongoing positions, adding real value
to our operations and leading the way
in marine career pathways for their
Timorese peers.
Local content is embedded in our
approach, and while many more
success stories exist, these examples
illustrate what can be achieved with a
committed strategy.
Aboriginal Engagement
Outside of direct and indirect
employment opportunities, MMA
has made considerable gains in its
engagement of Aboriginal businesses
in the past 12 months.
MMA’s overall spend with Aboriginal
enterprises since the inception of
business engagement in FY2015 has
surpassed $1 million and is expected
to continue to grow. The range of
products and services supplied by
Aboriginal businesses includes waste
management services, office supplies,
personal protective equipment,
lifting and rigging equipment and
consumables, victualling supplies,
facilities maintenance, graphic design,
payroll and recruitment services.
MMA is proud to be a leader amongst
our peers in this area.
MMA continues its support of
the Local Contracting Alliance
(LCA), which assists businesses in
achieving their local content targets.
Specifically aligned to Aboriginal
business engagement, the LCA is
reporting strong success in facilitating
collaboration between Indigenous and
non-Indigenous enterprises.
Community Sponsorship
MMA’s sponsorship of community
events, clubs and charities throughout
the year provides the means for
organisations to extend their support of
communities.
Staff organised activities like the “Big
Family” event for underprivileged
children in Batam, and staff book
collection for Erub Island School in the
Torres Strait reflect the degree to which
MMA engages on a personal level with
the wider community.
The continuance of MMA’s Target
365 programme saw business units
donate over $40,000 of their Target 365
rewards to a range of charities during
FY2016 including The Salvation Army,
Royal Flying Doctor Service, Legacy
WA and the Motor Neurone Disease
Association.
MMA is committed to the places in
which it works and looks forward to
continuing leadership in corporate
citizenship.
MMA Offshore Limited 27
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
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, Chairman of Home Building
Society Limited, Deputy Chairman
of the Bank of Queensland Limited
and a Non-Executive Director of AWB
Limited. Tony is a Fellow of the AICD.
Tony is also Chairman of St John of
God Health Care Inc. 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 is 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.
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.
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.
As Managing Director of MMA, Jeff
is responsible for the financial and
operational performance of all of the
Company’s business lines.
Mark is the Chairman of the Company’s
Nomination and Remuneration
Committee and a member of the Audit
and Risk Committee.
The above named Directors held office during the whole of the financial year and since the end of the financial year.
28 Annual Report 2016
2016 Financial ReportOverviewOperating & Financial ReviewGovernance 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.
Andrew 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 Non-Executive Director
of Downer EDI Ltd and Buru Energy
Ltd. She is a Senior Adviser to Miro
Advisors Pty Ltd, an independent
business focused on corporate
advisory in the natural resources
sector. She is also a Senior Adviser to
African Geopolitics, a socio-political
advisory group helping enterprises
work successfully in Africa.
Eve is a former Executive Vice
President for Woodside Energy Ltd
responsible for Health, Safety &
Security and before that, the North
West Shelf Project. Prior to that,
Eve held the position of Managing
Director at Apache Energy Ltd. She
has previously served on a number of
Boards, including Tangiers Petroleum
Limited, 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 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 29
2016 Financial ReportOverviewOperating & Financial ReviewGovernance 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 2016 follows the 3rd edition of the Corporate Governance
Principles and Recommendations (“3rd Edition ASX Principles”) set 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 2016, can be found on the Company’s website at www.mmaoffshore.com/company/corporate_
governance.phtml.
The Company’s Corporate Governance Statement is current as at 19 September 2016 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 these for the
year ended 30 June 2016, 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.
30 Annual Report 2016
2016 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
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 31
2016 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 programme 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.
32 Annual Report 2016
2016 Financial ReportOverviewOperating & Financial ReviewGovernance 3rd Edition ASX Corporate Governance Principles and Recommendations
Comply
Reference in
4.2
The board of a listed entity should, before it approves the entity’s financial
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.
Corporate Governance
Statement
Yes
Recommendation 4.2
4.3
A listed entity that has an AGM should ensure that its external auditor
attends its AGM and is available to answer questions from security holders
relevant to the audit.
Yes
Recommendation 4.3
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
programme 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 33
2016 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 director,
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
2016 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
34 Annual Report 2016
2016 Financial ReportOverviewOperating & Financial ReviewGovernance L-R Mr Tony Howarth (Chairman), Ms Eve Howell, Mr Jeff Weber (Managing Director), Mr Mark Bradley, Mr Chiang Gnee Heng and Mr Andrew Edwards.
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 35
2016 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 2016. In order to comply with the provisions of the Corporations Act 2001 (Cth), the Directors
report as follows:
Directors
The names and details of the Company’s Directors in office during the financial year and until the date of this report are set out
on pages 28 to 29 (including their qualifications, experience and special responsibilities). The Directors were in office during
the whole of the financial year.
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
Company
Period of Directorship
Wesfarmers Limited
Since July 2007
BWP Management Limited
Since October 2012
Mr A Edwards
Nido Petroleum Limited
Since December 2009
Ms E Howell
Downer EDI Limited
Since January 2012
MACA Limited
Since October 2010
Aspire Mining Limited
July 2011 – May 2014
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 the securities 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
-
2,823,819
-
-
-
781,756
1,907,958
-
115,680
123,529
-
Performance
rights direct
-
2,431,507
-
-
-
-
The Directors do not have any interests in shares, options or rights of any related body corporate of the Company as at the
date of this report.
Remuneration of Key Management Personnel
Information about the remuneration of key management personnel is set out in the Remuneration Report section of this
Directors’ Report on pages 40 to 52. 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.
36 Annual Report 2016
2016 Financial ReportOverviewOperating & Financial ReviewGovernance Rights Granted to Directors and Senior Management
During and since the end of the financial year, an aggregate of 4,936,502 performance rights were granted to the following
Director and to the six highest remunerated officers of the Company as part of their remuneration:
Name
Mr J Weber
Mr D Ross
Mr P Raynor
Mr D Lofthouse
Mr D Roberts
Mr M Gillett
Mr D Thomas
Company Secretary
Number of
rights granted
Issuing entity
Number of ordinary
shares under rights
2,001,432
MMA Offshore Limited
2,001,432
941,850
941,850
304,290
252,126
252,126
242,828
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
941,850
941,850
304,290
252,126
252,126
242,828
Dylan Darbyshire-Roberts was appointed as Company Secretary of MMA Offshore Limited on 19 August 2008 and held this
position at the end of the financial year.
Dylan joined the Company in May 2007 in the role of Commercial Manager. Previously, he was a Senior Associate with the
law firm DLA Piper 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 18 years. He holds a Graduate Diploma of Applied Corporate Governance and 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
The Chairman’s Address and the Managing Director’s Report (in this Annual Report) set out a number of matters which have
had a significant effect on the state of affairs of the consolidated entity. Other than those matters, there was no significant
change 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 (in this Annual 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 known breaches of licence conditions for the year ended 30 June 2016.
MMA Offshore Limited 37
2016 Financial ReportOverviewOperating & Financial ReviewGovernance Dividends
In respect of the financial year ended 30 June 2015, as detailed in the Directors’ Report for that financial year, a final dividend
of 1.5 cents per share franked to 100% at 30% corporate income tax rate was paid to the holders of fully paid ordinary shares
on 29 September 2015.
In respect of the financial year ended 30 June 2016, the Directors have suspended the payment of dividends (both interim and
final) in order to retain cash to support business operations until market conditions improve.
Accordingly, no interim or final dividend has been recommended, declared or paid for the 2016 financial year.
Unissued Shares under Rights
Details of unissued shares under rights as at the date of this report are:
Issuing entity
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
Number of unissued
shares under rights
Class of shares
938,146
430,075
7,554,228
2,001,432
Ordinary
Ordinary
Ordinary
Ordinary
Exercise price
of rights
$
0.00(a)
0.00(a)
0.00(b)
0.00(b)
Expiry date
of rights
1 Jul 2017
1 Jul 2017
1 Jul 2020
1 Jul 2020
(a) These performance rights vest on 1 July 2017 subject to the performance criteria as detailed in note 24.
(b) These performance rights vest on 1 July 2018 subject to the performance criteria as detailed in note 24 and have a 2 year exercise period
to 1 July 2020.
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.
Shares Issued on Vesting of Rights
Details of shares issued during or since the end of the financial year as a result of the vesting of rights are:
Issuing entity
Number of
shares issued
Class of shares
MMA Offshore Limited
121,546
Ordinary
Amount paid
for shares
$
0.00
Amount unpaid
on shares
$
Nil
Insurance and Indemnification of Directors and Officers
During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company, 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 the liability and the amount
of the premium.
The Company’s Constitution requires the Company, so far as permitted under applicable law and to the extent the person is
not otherwise indemnified, to indemnify each officer of the Company and its wholly owned subsidiaries, and may indemnify
its auditors, against a liability incurred as such an officer or auditor to any person (other than the Company or a related body
corporate) including a liability incurred as a result of appointment or nomination by the Company or subsidiary as trustee or
as an officer of another corporation, unless the liability arises out of conduct involving a lack of good faith. The Company
has entered into Deeds of Indemnity, Insurance and Access with each of the Directors of the Company and its wholly owned
subsidiaries in terms of the indemnity provided under the Company’s Constitution.
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 of the Company.
No indemnity payment has been made under any of the documents referred to above during or since the end of the financial
year.
38 Annual Report 2016
2016 Financial ReportOverviewOperating & Financial ReviewGovernance Indemnification of Auditors
The Company’s auditor is Deloitte.
The Company has agreed with Deloitte, as part of its terms of engagement, to indemnify Deloitte against certain liabilities
to third parties arising from the audit engagement. The indemnity does not extend to any liability resulting from the wilful
misconduct or fraudulent act or omission by Deloitte.
During the financial year:
• The Company has not paid any premium in relation to any insurance for Deloitte or a body corporate related to Deloitte;
and
• There were no officers of the Company who were former partners or directors of Deloitte, whilst Deloitte conducted audits
of the Company.
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).
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
12
12
12
12
12
12
12
12
12
12
12
11
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 proceedings have been brought on behalf of the Company, nor has any application been made in respect of the Company
under section 237 of the Corporations Act 2001 (Cth).
Non-Audit Services
Details of the amounts paid or payable to the external auditor for non-audit services provided during the year are outlined in
note 27 to the Financial Statements.
The Directors are satisfied that the provision of non-audit services during the year by the external auditor (or by 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 27 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 53 of this Annual Report.
Rounding
The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument
2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument, amounts in the Directors’ Report and
the Financial Statements are rounded off to the nearest thousand dollars, unless otherwise indicated.
MMA Offshore Limited 39
2016 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 2016. 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.
The prescribed details for each person covered by this Remuneration 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:
Executives
Executive Director
Mr J Weber (Managing Director)
Non-Executive Directors
Mr A Howarth (Chairman)
Mr M Bradley
Mr A Edwards
Ms E Howell
Mr CG Heng
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.
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 to reflect changes in the performance of the Company.
40 Annual Report 2016
2016 Financial ReportOverviewOperating & Financial ReviewGovernance In carrying out its review of the remuneration packages of the Managing Director and non-director key management
personnel for the 2016 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.
Key Remuneration Outcomes
The key remuneration outcomes for the Company’s key management personnel in 2016 were as follows:
• Having regard to the overall performance of the Company during the 2016 financial year and current market conditions,
the Board has exercised its discretion to:
•
Freeze the Fixed Annual Remuneration (FAR) component for the Managing Director and other key management
personnel for the 2016 financial year and again for the 2017 financial year;
• Suspend the Short-term Incentive (STI) component in relation to the Managing Director and other key management
personnel for the 2016 financial year and again for the 2017 financial year; and
• Grant Long-term Incentive (LTI) performance rights to the Managing Director and other key management personnel of
the Company for the 2016 financial year and to suspend the LTI component for the 2017 financial year.
• Following a review by the Nomination and Remuneration Committee:
• There was no increase in Non-Executive Directors’ fees for the 2016 financial year; and
• Again, there has been no increase in Non-Executive Directors’ fees for the 2017 financial year.
Remuneration Report 2015
MMA Offshore Limited’s Remuneration Report for 2015 was adopted at the Annual General Meeting on 18 November 2015 with
a clear majority of 94,991,344 votes in favour of the motion (representing 92% of the votes received).
Non-Executive Directors’ Remuneration
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.
Non-Executive Directors do not receive performance-based remuneration. 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 2016 financial year and again, there has been no increase in Non-Executive Directors’ fees for the 2017 financial year.
Other Key Management Personnel
Remuneration of the Managing Director and other executive 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 41
2016 Financial ReportOverviewOperating & Financial ReviewGovernance 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.
• As previously reported, given the performance of the Company and
current market conditions, the Board determined that the Managing
Director and Senior Management would not receive any increase in
FAR for the 2016 financial year.
• Once again, the Board has determined that the Managing Director
and Senior Management will not receive any increase in FAR for the
2017 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) set by the Board.
• 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.
• As previously reported, given the performance of the Company
and current market conditions, the Board exercised its discretion to
suspend the STI component for the 2016 financial year.
• Once again, the Board has exercised its discretion to suspend the
STI component for the 2017 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 2016 financial year, these performance criteria targets
comprised of an absolute share price hurdle and a growth in TSR
hurdle (with each having a 50% weighting) to ensure a strong link
with both the creation of shareholder value and with 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 2016 financial year are set out under the “Remuneration of Key
Management Personnel” section of this Report.
• Given the performance of the Company and current market
conditions, the Board has exercised its discretion to suspend the LTI
component for the 2017 financial year.
42 Annual Report 2016
2016 Financial ReportOverviewOperating & Financial ReviewGovernance Allocation of Executive Remuneration between Fixed and Variable Remuneration
The allocation of total executive remuneration between fixed and variable remuneration for the 2016 financial year is as follows:
Managing Director
Other Executives (Maximum)
17%
18%
83%
82%
FAR
LTI
FAR
LTI
Relationship between the Remuneration Policy and Company Performance
The table below summarises information about the Company’s earnings for the 2016 financial year and the Company’s
earnings and movements in shareholder wealth for the five years to 30 June 2016, which is an important indicator of
performance and a key measure when assessing both the STI and LTI remuneration components.
Having regard to the overall performance of the Company during the 2016 financial year, the Board has exercised its discretion
to:
• Freeze the FAR component for the Managing Director and other key management personnel for the 2016 financial year;
• Suspend the STI component in relation to the Managing Director, other key management personnel and all employees of
the Company for the 2016 financial year; and
• Grant LTI performance rights to the Managing Director and other key management personnel of the Company for the 2016
financial year as detailed below.
Revenue
481,123
796,666
594,597
449,490
380,358
30 June 2016
$’000
30 June 2015
$’000
30 June 2014
$’000
30 June 2013
$’000
30 June 2012
$’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
(155,262)(3)
(48,219)(3)
(143,962)
(51,291)
$0.54
$0.31
0cps
0cps
$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
(38.64 cps)
(13.91 cps)
18.78cps
25.17cps
23.44cps
(38.64 cps)
(13.91 cps)
18.76cps
24.78cps
22.93cps
3 year compound annual TSR (2)
(46%)
(32%)
(9%)
15%
19%
(1 ) Franked to 100% at 30% corporate income tax rate.
(2) TSR comprises share price growth and dividends.
(3) This includes a non-cash impairment charge of $139 million against the carrying value of the Company’s assets as at 30 June 2016
(2015: $120.7 million).
MMA Offshore Limited 43
2016 Financial ReportOverviewOperating & Financial ReviewGovernance Remuneration of Key Management Personnel
In this Annual Report, remuneration outcomes are presented based on the requirements of accounting standards (which has
the benefit of being readily comparable with other companies) rather than the actual “take-home” pay received by executive
key management personnel (being cash, other benefits and the value of equity vesting during the relevant financial year).
An example of this includes LTI awards which are recognised and accounted for over the performance period (3 years) based
on their assessed value when originally granted to the executive. This may be significantly different to their value, if and when
the incentive vests to that executive.
The following tables disclose:
(A) The actual remuneration of the Directors and other key management personnel of the Company for the 2016 financial year
(i.e. the actual “take-home” pay received by key management personnel for the 2016 financial year); and
(B) The statutory presentation of the remuneration of the Directors and other key management personnel of the Company for
the 2016 financial year and for the previous financial year based on the requirements of accounting standards.
Please note that while there were no salary or fee increases during the 2016 financial year, there was an additional pay cycle
during the 2016 financial year which caused the resultant increases.
(A)
Key Management Personnel Remuneration (Actual)
Short-term employee benefits
Post-
employment
benefits
Share based
payment
Total
2016
Salary & fees(1)
Cash bonus
Non-monetary(2)
Superannuation
Rights(3)
$
$
$
$
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(4)
Mr D Thomas
Total
235,900
961,290
115,892
115,892
105,507
105,706
555,691
560,883
391,285
320,863
320,863
205,944
308,310
4,304,026
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,537
2,266
-
-
-
-
4,776
5,830
1,848
2,642
-
-
-
19,307
36,346
11,009
11,009
9,652
6,411
31,153
25,961
19,307
19,307
19,307
19,307
19,307
18,899
247,383
$
-
-
-
-
-
-
13,402
13,402
-
-
-
-
-
26,804
$
256,744
999,902
126,901
126,901
115,159
112,117
605,022
606,076
412,440
342,812
340,170
225,251
327,617
4,597,112
44 Annual Report 2016
2016 Financial ReportOverviewOperating & Financial ReviewGovernance (B)
Key Management Personnel Remuneration (Statutory Presentation)
Short-term employee benefits
Post-
employment
benefits
Share based
payment
Total
2016
Salary & fees
Cash bonus Non-monetary(2) Superannuation
Rights(3)
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(4)
Mr D Thomas
Total
2015
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(4)
Mr D Thomas
Total
$
235,900
961,290
115,892
115,892
105,507
105,706
555,691
560,883
391,285
320,863
320,863
205,944
308,310
4,304,026
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
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
$
$
$
1,537
2,266
-
-
-
-
4,776
5,830
1,848
2,642
-
-
-
19,307
36,346
11,009
11,009
9,652
6,411
31,153
25,961
19,307
19,307
19,307
19,307
19,307
18,899
247,383
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
-
200,495
-
-
-
-
126,481
126,481
38,839
32,181
32,181
20,030
30,994
607,681
-
440,789
-
-
-
-
277,012
277,012
72,088
59,730
59,730
34,790
26,371
256,744
1,200,398
126,901
126,901
115,159
112,117
718,101
719,155
451,278
374,992
372,351
245,281
358,611
5,177,989
247,050
1,420,404
122,202
122,202
111,252
111,252
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) Salaries & Fees for FY2016 included an additional payment cycle – there were 27 fortnightly pay cycles in FY2016.
(2) These non-monetary benefits comprise the provision of motor vehicle, fuel, travel and other benefits, as applicable.
(3) The value of the rights granted to key management personnel as part of their remuneration is calculated as at the grant date using the binomial
pricing model. The amounts disclosed as part of remuneration for the financial year have been determined by allocating the grant date value
on a straight-line basis over the period from the grant date to the vesting date (i.e. 3 years).
(4) Ms Buckey is employed on a part-time basis.
The table below sets out the relative proportions of the elements of remuneration of key management personnel linked to
performance:
Fixed Remuneration
Remuneration linked to Performance
Non-Executive Directors
Ms A Howarth
Mr M Bradley
Mr A Edwards
Ms E Howell
Mr CG Heng
Executive Directors
Mr J Weber
Senior Management
Mr D Ross
Mr P Raynor
Mr D Lofthouse
Mr D Roberts
Mr M Gillett
Ms L Buckey
Mr D Thomas
2016
100%
100%
100%
100%
100%
83%
82%
82%
91%
91%
91%
92%
91%
2015
100%
100%
100%
100%
100%
69%
67%
67%
85%
85%
85%
85%
92%
2016
0%
0%
0%
0%
0%
17%
18%
18%
9%
9%
9%
8%
9%
2015
0%
0%
0%
0%
0%
31%
33%
33%
15%
15%
15%
15%
8%
MMA Offshore Limited 45
2016 Financial ReportOverviewOperating & Financial ReviewGovernance Bonus and Share based payments granted as compensation for the current financial year
STI (Cash Bonuses)
Having regard to the overall performance of the Company and current market conditions, the Board has, in relation to the
Managing Director and other key management personnel, exercised its discretion to:
• Suspend the STI component for the 2016 financial year; and
• Once again, suspend the STI component for the 2017 financial year (subject to the Board’s discretion to reinstate the STI
component if market conditions change).
LTI (Performance Rights)
Under its LTI remuneration component, the Company operates performance rights plans for the Managing Director, Senior
Management and other employees. Each 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 financial 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
Percentage of
LTI subject to
Performance Criteria
Performance
Criteria Targets
Percentage of
Performance Rights
which vest if Target met
Share Price Target(1)
Beginning 1 July 2015
and ending
30 June 2018
50%
Lower than $1.60
Equal to $1.60
Nil
50%
Company’s Total
Shareholder Return (TSR)(2)
percentile ranking over the
Performance Period relative
to a selected Peer Group(3)
Beginning 1 July 2015
and ending
30 June 2018
Between $1.60 and
$2.40
50% to 100%
(pro-rata)
50%
Equal to or greater
than $2.40
Below the 50th
percentile
At the 50th percentile
Between the 50th and
90th percentile
100%
Nil
50%
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 key management
personnel (i.e. excluding the Managing Director, Chief Operating Officer and Chief Financial Officer) during the financial year:
Performance Criteria
Performance Period
Percentage of
LTI subject to
Performance Criteria
Performance
Criteria Targets
Percentage of
Performance Rights
which vest if Target met
Share Price Target (1)
Beginning 1 July 2015
and ending
30 June 2018
50%
Lower than $1.60
Equal to $1.60
Nil
50%
Beginning 1 July 2015
and ending
30 June 2018
50%
Company’s Total
Shareholder Return
(“TSR”)(2) percentile
ranking over the
Performance Period
relative to a selected Peer
Group(3)
Between $1.60 and
$2.40
50% to 100%
(pro-rata)
Equal to or greater
than $2.40
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%
46 Annual Report 2016
2016 Financial ReportOverviewOperating & Financial ReviewGovernance
(1) Share Price Target means the closing price of MMA Offshore Limited’s (ASX: MRM) fully paid ordinary shares on the last day of the
Performance Period.
(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),
CIMIC Group Ltd (ASX:CIM), Credit Corp Group Ltd (ASX:CCP), Downer EDI Limited (ASX: DOW), GWA Group Limited (ASX: GWA), Mineral
Resources Limited (ASX: MIN), McMillan Shakespeare Ltd. (ASX: MMS), Monadelphous Group Limited (ASX: MND), Macquarie Atlas Roads
Group (ASX: MQA), Qantas Airways Limited (ASX: QAN), Qube Holdings Limited (ASX: QUB), Recall Holdings Limited (ASX: REC), SAI Global
Limited (ASX: SAI), SEEK Limited (ASX: SEK), Spotless Group Holdings Limited (ASX: SPO), Seven Group Holdings Limited (ASX: SVW),
Sydney Airport Limited (ASX: SYD), Transurban Group (ASX: TCL), Transpacific Industries Group Ltd. (ASX: TPI), Transfield Services Limited
(ASX: TSE), UGL Limited (ASX: UGL) and Veda Group Limited (ASX: VED).
During the financial year, the following rights schemes were in existence:
Series
Number issued
Grant date
Expiry date
Exercise price
$
Fair value at
grant date
$
(1) 25 Oct 2012 (a)
(2) 25 Oct 2012 (a)
(3) 22 Nov 2012 (a)
(4) 20 Dec 2012 (a)
(5) 22 Oct 2014 (b)
(6) 22 Oct 2014 (c)
(7) 3 Dec 2013 (d)
(8) 3 Dec 2013 (d)
(9) 3 Dec 2013 (d)
(10) 22 Oct 2014 (e)
(11) 1 Dec 2014 (e)
(12) 1 Dec 2014 (e)
(13) 10 Feb 2016 (f)
(14) 10 Feb 2016 (f)
(15) 7 Jun 2016 (f)
311,634
283,254
317,865
20,981
51,546
70,000
1,092,384
339,238
346,023
1,052,625
11,382
430,075
2,001,432
8,037,836
220,284
25 Oct 2012
25 Oct 2012
22 Nov 2012
20 Dec 2012
22 Oct 2014
22 Oct 2014
11 Oct 2013
11 Oct 2013
21 Nov 2013
22 Oct 2014
1 Dec 2014
18 Nov 2014
18 Nov 2015
7 Dec 2015
18 Apr 2016
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
1 Jul 2020
1 Jul 2020
1 Jul 2020
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
2.28
2.42
2.47
2.42
1.94
1.76
2.14
2.02
1.71
1.09
1.09
0.75
0.02
0.02
0.02
Vesting date
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
1 Jul 2018
1 Jul 2018
1 Jul 2018
(a) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rights Plan – 2012 (issued by the
Board 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
24 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 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 52% (Managing Director, Chief Financial Officer and Chief Operating Officer) and 58% (other senior executives) of the
total performance rights granted under the respective 2012 plans being eligible for vesting (a total of 480,318 performance
rights). However, the Board exercised its discretion under the relevant plan rules to defer the vesting of these eligible
performance rights until 1 July 2016, subject to the continued employment of each Participant by a Group member until 1
July 2016. Having regard to the overall performance of the Company and the current market conditions, the Board again
exercised its discretion that these performance rights would not vest on 1 July 2016. As such, the remaining 480,318
performance rights have lapsed in accordance with the terms of the relevant plan rules.
(b) In accordance with the terms of Mermaid Marine Australia Limited Performance Rights Plan – 2014 (issued by the Board
on 22 October 2014), the performance rights issued to the Chief Financial Officer and Chief Operating Officer (being the
deferred equity portion of their 2014 financial year 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 24 of the Financial
Statements. This performance hurdle has been met.
(c) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rights Plan – 2014 (issued by
the Board on 22 October 2012), the performance rights issued to the President – Offshore & Business Development
(Singapore) which vested 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 24 of the Financial Statements. This performance hurdle has been
met.
(d) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rights Plan – 2013 (issued by the
Board on 11 October 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 24 of the Financial
Statements. These performance hurdles have not been met. As such, the performance rights have lapsed in accordance
with the terms of the relevant plan rules.
MMA Offshore Limited 47
2016 Financial ReportOverviewOperating & Financial ReviewGovernance (e) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rights Plan – 2014 (issued by the
Board 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 24 of the Financial Statements.
(f) In accordance with the terms of the MMA Offshore Limited Performance Rights Plan – 2015 (issued by the Board on 7
December 2015 and 18 April 2016) and the MMA Offshore Limited Managing Director’s Performance Rights Plan – 2015
(as approved by the shareholders at the Company’s Annual General Meeting on 18 November 2015) the number of
performance rights which vest on 1 July 2018 will depend on the Company achieving the specified share price target(s)
for MMA Offshore Limited and the total shareholder return of the Company relative to a selected peer group of companies
as set out in note 24 of the Financial Statements. Subject to the performance rights vesting on 1 July 2018, the vested
performance rights must be exercised within a 2 year period from the vesting date (i.e. by 1 July 2020) or such other time
as determined by the Board in its sole and absolute discretion.
Except as detailed in (a) above, there has been no alteration of the terms and conditions of the above share-based payment
arrangements since the grant date.
The following share-based payments were granted as compensation to the Managing Director and executive key management
personnel during 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
Number
granted
10 Feb 2016
2,001,432
10 Feb 2016
10 Feb 2016
10 Feb 2016
10 Feb 2016
10 Feb 2016
10 Feb 2016
10 Feb 2016
941,850
941,850
304,290
252,126
252,126
242,828
217,350
Number
vested
-
25,773
25,773
-
-
-
-
-
% of grant
vested
% of grant
forfeited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
% of
compensation
for the year
consisting of
share based
payment
17%
18%
18%
9%
9%
9%
9%
8%
During the financial year, the following key management personnel had performance rights vest that were granted to them as
part of their compensation. Each performance right converts into one ordinary share of MMA Offshore Limited.
Name
Mr D Ross
Mr P Raynor
Number of
rights vested
Number of
ordinary shares
Amount paid
$
Amount unpaid
$
25,773
25,773
25,773
25,773
Nil
Nil
Nil
Nil
48 Annual Report 2016
2016 Financial ReportOverviewOperating & Financial ReviewGovernance The following table summarises the value of performance rights to key management personnel which were granted or vested
during the financial year as part of their remuneration:
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 rights at
vesting date
$
43,031
20,250
20,250
5,934
4,916
4,916
4,238
4,735
-
13,402
13,402
-
-
-
-
-
The following table summarises the number of performance rights that lapsed during the financial year, in relation to
performance rights granted to key management personnel as part of their remuneration:
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
Financial year
in which rights
were granted
No. of rights
lapsed during the
current year
2012
2012
2012
2012
2012
2012
2012
-
152,066
74,543
74,543
20,443
16,939
16,939
8,762
-
MMA Offshore Limited 49
2016 Financial ReportOverviewOperating & Financial ReviewGovernance Key Management Personnel Equity Holdings
Details of the fully paid ordinary shares of the Company held by key management personnel are as follows:
2016
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
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
Balance at
1 July 2015
Granted as
compensation
Received on vesting of
Performance Rights
Net other
change
Balance at
30 June 2016
Balance held
nominally
965,902
1,907,958
1,573,819
15,431
120,000
-
740,012
178,223
315,083
-
59,903
1,475
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,773
25,773
-
-
-
-
-
200,000
-
1,250,000
100,249
3,529
-
-
996
(90,873)
-
-
-
-
1,165,902
1,907,958
2,823,819
115,680
123,529
-
765,785
204,992
224,210
-
59,903
1,475
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
1 July 2014
Granted as
compensation
Received on vesting of
Performance Rights
Net other
change
Balance at
30 June 2015
Balance held
nominally
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50 Annual Report 2016
2016 Financial ReportOverviewOperating & Financial ReviewGovernance Details of the performance rights held by executive key management personnel are as follows:
2016
Executives
Mr J Weber
Mr D Ross
Mr P Raynor
Mr D Lofthouse
Mr D Roberts
Mr M Gillett
Ms L Buckey
Mr D Thomas
2015
Executives
Mr J Weber
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 2015
Granted as
compensation
Vested
Net other
change
(lapsed)
Balance at
30 June 2016
Vested but not
exercisable
Rights vested
during year
1,093,963
2,001,432
-
(152,066)
2,943,329
553,597
553,597
169,226
140,216
140,216
91,656
95,979
941,850
(25,773)
(74,543)
1,395,131
941,850
(25,773)
(74,543)
1,395,131
304,290
252,126
252,126
217,350
242,828
-
-
-
-
-
(20,443)
(16,939)
(16,939)
(8,762)
0
453,073
375,403
375,403
300,244
338,807
-
-
-
-
-
-
-
-
-
25,773
25,773
-
-
-
-
-
Balance at
1 July 2014
Granted as
compensation
Vested
Net other
change
(lapsed)
Balance at
30 June 2015
Vested but not
exercisable
Rights vested
during year
995,030
949,005
487,761
153,632
127,296
127,296
59,607
42,548
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
-
All performance 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, 51,546 performance rights (2015: 70,628) vested in favour of key management personnel at a
weighted average exercise price of $nil per right. A total of 51,546 (2015: 70,628) 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 2016 and 2015 financial years are contained in note 24 of
the Financial Statements.
Loans to Key Management Personnel
The Company has provided a member of its key management personnel with a short-term loan at rates comparable to the
average commercial rate of interest. This loan is unsecured.
The following table outlines aggregate amounts in respect of loans made to key management personnel of the Group.
Balance as at 1 July 2015
Interest charged
Arm’s length
interest
differential(1)
Allowance
for doubtful
receivables
Balance as at
30 June 2016
Number of key
management
personnel
-
1,248
-
-
34,870
1
(1) The arm’s length interest differential refers to the difference between the amount of interest paid and payable in the reporting period and the
amount of interest that would have been charged on an arms-length basis.
MMA Offshore Limited 51
2016 Financial ReportOverviewOperating & Financial ReviewGovernance Share Trading Restrictions
The Company’s Share Trading Policy requires key management personnel 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
(for directors), approval of the Chairman of the Audit and Risk Committee (for the Chairman of the Board), and approval from
the Managing Director (for other executives), 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 can be found on the Corporate Governance page of our website at www.mmaoffshore.com/company/corporate_
governance.phtml.
Key Terms of Employment Contracts
As at the date of this report, the Managing Director and other executive 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 in the table below:
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
Termination notice period
Termination benefits payable
6 months
6 months
6 months
6 weeks
6 weeks
8 weeks
30 days
12 weeks
Yes(1)
Yes(1)
Yes(1)
No
No
No
No
No
(1) 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 in 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 employee under the Corporations Act and ASX Listing Rules without prior shareholder
approval.
Under these employment contracts, the remuneration package for:
• The Managing Director, Chief Operating Officer and Chief Financial Officer 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; and
• Other executive key management personnel consists of an annual base salary and statutory superannuation contributions.
Participation in the Company’s incentive schemes is at the discretion of the Board.
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, 19 September 2016
52 Annual Report 2016
2016 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
The Board of Directors
MMA Offshore Limited
1 Mews Road
Fremantle WA 6160
The Board of Directors
19 September 2016
MMA Offshore Limited
1 Mews Road
Dear Board Members
Fremantle WA 6160
Tower 2
Brookfield Place
123 St Georges Terrace
Perth WA 6000
Deloitte Touche Tohmatsu
GPO Box A46
ABN 74 490 121 060
Perth WA 6837 Australia
Tower 2
Tel: +61 8 9365 7000
Brookfield Place
Fax: +61 8 9365 7001
123 St Georges Terrace
www.deloitte.com.au
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Auditor’s Independence Declaration to MMA Offshore Limited
19 September 2016
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.
Dear Board Members
the auditor independence requirements of the Corporations Act 2001 in relation to the audit
As lead audit partner for the audit of the financial report of MMA Offshore Limited for the year
Auditor’s Independence Declaration to MMA Offshore Limited
ended 30 June 2016, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
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 2016, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
Yours faithfully
•
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.
any applicable code of professional conduct in relation to the audit.
•
DELOITTE TOUCHE TOHMATSU
Yours faithfully
John Sibenaler
DELOITTE TOUCHE TOHMATSU
Partner
Chartered Accountants
John Sibenaler
Partner
Chartered Accountants
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
2016 Financial ReportOverviewOperating & Financial ReviewGovernance
A u d i t R e p o r t
Independent Auditor’s Report
Independent Auditor’s Report
to the members of MMA Offshore
to the members of MMA Offshore
Limited
Limited
Report on the Financial Report
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Deloitte Touche Tohmatsu
Tower 2
ABN 74 490 121 060
Brookfield Place
123 St Georges Terrace
Tower 2
Perth WA 6000
Brookfield Place
GPO Box A46
123 St Georges Terrace
Perth WA 6837 Australia
Perth WA 6000
GPO Box A46
Tel: +61 8 9365 7000
Perth WA 6837 Australia
Fax: +61 8 9365 7001
www.deloitte.com.au
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Report on the Financial Report
We have audited the accompanying financial report of MMA Offshore Limited, which comprises the
statement of financial position as at 30 June 2016, the statement of profit or loss and other
We have audited the accompanying financial report of MMA Offshore Limited, which comprises the
comprehensive income, the statement of cash flows and the statement of changes in equity for the
statement of financial position as at 30 June 2016, the statement of profit or loss and other
year ended on that date, notes comprising a summary of significant accounting policies and other
comprehensive income, the statement of cash flows and the statement of changes in equity for the
explanatory information, and the directors’ declaration of the consolidated entity, comprising the
year ended on that date, notes comprising a summary of significant accounting policies and other
company and the entities it controlled at the year’s end or from time to time during the financial year
explanatory information, and the directors’ declaration of the consolidated entity, comprising the
as set out on pages 56, and 58 to 105.
company and the entities it controlled at the year’s end or from time to time during the financial year
as set out on pages 56, and 58 to 105.
Directors’ Responsibility for the Financial Report
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
The directors of the company are responsible for the preparation of the financial report that gives a
and for such internal control as the directors determine is necessary to enable the preparation of the
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
financial report that gives a true and fair view and is free from material misstatement, whether due
and for such internal control as the directors determine is necessary to enable the preparation of the
to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB
financial report that gives a true and fair view and is free from material misstatement, whether due
101 Presentation of Financial Statements, that the consolidated financial statements comply with
to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB
International Financial Reporting Standards.
101 Presentation of Financial Statements, that the consolidated financial statements comply with
International Financial Reporting Standards.
Auditor’s Responsibility
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
obtain reasonable assurance whether the financial report is free from material misstatement.
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
An audit involves performing procedures to obtain audit evidence about the amounts and
including the assessment of the risks of material misstatement of the financial report, whether due
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
to fraud or error. In making those risk assessments, the auditor considers internal control, relevant
including the assessment of the risks of material misstatement of the financial report, whether due
to the company’s preparation of the financial report that gives a true and fair view, in order to design
to fraud or error. In making those risk assessments, the auditor considers internal control, relevant
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
to the company’s preparation of the financial report that gives a true and fair view, in order to design
opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
appropriateness of accounting policies used and the reasonableness of accounting estimates made
opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the
by the directors, as well as evaluating the overall presentation of the financial report.
appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
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
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,
In conducting our audit, we have complied with the independence requirements of the Corporations
which has been given to the directors of MMA Offshore Limited, would be in the same terms if given
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001,
to the directors as at the time of this auditor’s report.
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.
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.
54 Annual Report 2016
Member of Deloitte Touche Tohmatsu Limited
2016 Financial ReportOverviewOperating & Financial ReviewGovernance
A u d i t R e p o r t
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 2016
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 40 to 52 of the directors’ report for the
year ended 30 June 2016. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of MMA Offshore Limited for the year ended 30 June 2016,
complies with section 300A of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
John Sibenaler
Partner
Chartered Accountants
Perth, 19 September 2016
MMA Offshore Limited 55
2016 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 28 to the Financial Statements will, as a Group, be able to meet any obligations or
liabilities to which they are, or may become, liable for 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, 19 September 2016
56 Annual Report 2016
2016 Financial ReportOverviewOperating & Financial ReviewGovernance F i n a n c i a l
R e p o r t
2 0 1 6
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/(Loss) 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.
Impairment of Non-current Assets
15. Trade and Other Payables
16. Borrowings
17. Provisions
18.
Issued Capital
19. Reserves
20. Retained Earnings/(Accumulated Losses)
21. Notes to the Statement of Cash Flows
22. Commitments for Expenditure
23. Leases
24. Share Based Payments
25. Key Management Personnel Compensation
26. Related Party Transactions
27. Remuneration of Auditors
28. Subsidiaries
29. Parent Company Information
30. Financial Instruments
31. Events After the Reporting Period
Additional Securities Exchange Information
58
59
60
61
62
63
71
72
74
75
76
78
79
79
80
80
81
82
84
84
85
85
86
86
87
88
88
89
95
95
96
97
99
100
105
106
MMA Offshore Limited 57
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2016
Revenue
Investment income
Other gains
Share of profits of jointly controlled entity
Vessel expenses
Supply Base expenses
Slipway expenses
Administration expenses
Impairment charge
Finance costs
Loss before tax
Income tax benefit/(expense)
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
Reclassification of exchange differences on disposal of entities
Loss on hedge of net investment in a foreign operation
Gain on cashflow hedges
Transfer of cashflow hedge gain to initial carrying amount of hedged items
Other comprehensive income for the year, net of tax
Total Comprehensive Income/(Loss) for the Year
Loss attributable to owners of the Company
Total comprehensive income/(loss) attributable to owners of the Company
Note
4(e)
5(a)
12
2016
$’000
2015
$’000
481,123
796,666
937
12,354
2,611
709
4,366
3,385
(430,171)
(622,651)
(47,432)
(8,634)
(9,365)
(67,366)
(12,267)
(11,862)
14
(139,000)
(120,710)
7(a)
19
19
19
19
19
(17,685)
(155,262)
11,300
(143,962)
(18,489)
(48,219)
(3,072)
(51,291)
25,152
167,041
(1,835)
(8,829)
6,294
(17,839)
2,943
(141,019)
(143,962)
(141,019)
-
(53,309)
13,350
-
127,082
75,791
(51,291)
75,791
Earnings per share
Basic
Diluted
Cents Per Share Cents Per Share
6
6
(38.64)
(38.64)
(13.91)
(13.91)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
58 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial Report
Consolidated Statement of Financial Position
As at 30 June 2016
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Current tax assets
Prepayments
Total Current Assets
Non-Current Assets
Investments accounted for using the equity method
Property, plant and equipment
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Unearned revenue
Borrowings
Provisions
Current tax liabilities
Customer security deposits
Total Current Liabilities
Non-Current Liabilities
Unearned revenue
Borrowings
Provisions
Deferred tax liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Retained earnings/(Accumulated losses)
Total Equity
Note
21(a)
9
10
11
7(c)
12
13
15
16
17
7(c)
16
17
7(d)
18
19
20
2016
$’000
2015
$’000
49,725
66,676
4,263
-
5,712
3,349
129,725
8,966
955,782
964,748
124,482
200,615
4,724
11,545
-
27,416
368,782
10,355
1,046,078
1,056,433
1,094,473
1,425,215
43,940
3,489
73,083
14,633
-
2,210
137,355
129,173
38,226
49,592
19,270
5,155
5,913
247,329
311
393
318,742
392,881
806
3,093
322,952
460,307
634,166
556,566
119,553
(41,953)
634,166
612
4,883
398,769
646,098
779,117
555,681
115,858
107,578
779,117
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 2016
Issue of shares under dividend reinvestment plan
885
Year Ended 30 June 2016
Balance at 1 July 2015
Comprehensive income/(loss) for the year:
Loss for the year
Other comprehensive income/(loss) for the year
Total Comprehensive Income/(Loss) for the Year
Payment of dividends
Recognition of share based payments
Related income tax benefit
Balance at 30 June 2016
Year Ended 30 June 2015
Balance at 1 July 2014
Comprehensive income/(loss) for the year:
Loss for the year
Other comprehensive income/(loss) for the year
Total Comprehensive Income/(Loss) for the Year
Payment of dividends
Employee
Equity
Settled
Benefits
Reserve
Issued
Capital
Foreign
Currency
Translation
Reserve
Retained
Earnings/
(Accumulated
Losses)
Hedging
Reserve
$’000
$’000
$’000
$’000
$’000
Total
$’000
555,681
4,952
(37,971)
148,877
107,578
779,117
-
-
(143,962)
(143,962)
(20,374)
23,317
-
2,943
(20,374)
23,317
(143,962)
(141,019)
-
-
-
-
-
-
-
-
(5,569)
(5,569)
-
-
-
885
915
(163)
-
-
915
(163)
556,566
5,704
(58,345)
172,194
(41,953)
634,166
Employee
Equity
Settled
Benefits
Reserve
$’000
3,916
Issued
Capital
$’000
549,813
Foreign
Currency
Translation
Reserve
Retained
Earnings/
(Accumulated
Losses)
Hedging
Reserve
$’000
$’000
$’000
Total
$’000
1,988
(18,164)
199,289
736,842
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Issue of shares under dividend reinvestment plan
5,868
Recognition of share based payments
Related income tax benefit
Balance at 30 June 2015
-
-
1,828
(792)
555,681
4,952
(37,971)
148,877
107,578
779,117
-
-
(51,291)
(51,291)
(39,959)
167,041
-
127,082
(39,959)
167,041
(51,291)
75,791
-
-
-
-
-
-
-
-
(40,420)
(40,420)
-
-
-
5,868
1,828
(792)
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
60 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial Report
Consolidated Statement of Cash Flows
For the year ended 30 June 2016
Note
2016
$’000
2015
$’000
Cash Flows from Operating Activities
Receipts from customers
Interest received
Payments to suppliers and employees
Income tax received/(paid)
Interest and other costs of finance paid
Net Cash Provided by Operating Activities
21(c)
Cash Flows from Investing Activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Dividends received
Net Cash Used in Investing Activities
Cash Flows from Financing Activities
Repayment of borrowings
Financing fees on borrowings
Dividends paid
Net Cash Used in Financing Activities
579,893
828,252
937
709
(451,668)
(575,164)
6,959
(15,947)
120,174
(51,059)
(17,378)
185,360
(172,014)
(172,764)
34,997
4,000
429
4,000
(133,017)
(168,335)
(58,660)
(2,574)
(4,684)
(65,918)
(52,867)
-
(34,552)
(87,419)
Net decrease in cash and cash equivalents
(78,761)
(70,394)
Cash and cash equivalents at the beginning of the financial year
124,482
174,768
Effects of exchange rate changes on the balance of cash held in foreign currencies
4,004
20,108
Cash and Cash Equivalents at the End of the Financial Year
49,725
124,482
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 2016
1.
Application of New and Revised Accounting Standards
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 2015 and,
therefore, relevant to the current year end:
AASB 2015-3
‘Amendments to Australian Accounting Standards arising
from the Withdrawal of AASB
1031 Materiality’
This amendment completes the withdrawal of references to AASB
1031 in all Australian Accounting Standards and Interpretations,
allowing that Standard to effectively be withdrawn.
Standards and Interpretations in issue not yet adopted
At the date of authorisation of the Financial Statements, the Standards and Interpretations listed below were issued but not yet
effective:
Standard/Interpretation
AASB 9 ‘Financial Instruments’, and the relevant
amending standards(i)
AASB 15 ‘Revenue from Contracts with Customers’ and
AASB 2014-5 ‘Amendments to Australian Accounting
Standards arising from AASB 15’
AASB 16 Leases
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 2016-2 ‘Amendments to Australian Accounting
Standards – Disclosure Initiative: Amendments AASB
107’
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 2018
30 June 2019
1 January 2019
1 January 2016
30 June 2020
30 June 2017
1 January 2016
30 June 2017
1 January 2017
30 June 2018
(i) 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.
Assessments are currently being undertaken to estimate the potential impacts of the material pronouncements in issue but not
yet effective.
At the date of authorisation of the financial statements, the following IASB Standards and IFRIC Interpretations were in issue
but not yet effective:
Standard/Interpretation
Effective for annual reporting
periods beginning on or after
Expected to be initially applied
in the financial year ending
Clarifications to IFRS 15 ‘Revenue from Contracts with
Customers’
1 January 2018
30 June 2019
62 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial Report Notes to the Financial Statements
For the year ended 30 June 2016
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 19 September 2016.
Basis of Preparation
The consolidated financial statements have been prepared on the basis of historical cost, except for certain assets which have
been impaired and financial instruments that are measured at fair values. 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 Corporations (Rounding in Financials/Directors’ Reports) Instrument
2016/191, dated 24 March 2016, and in accordance with this Corporations Instrument, amounts in the financial statements are
rounded off to the nearest thousand dollars, unless otherwise indicated.
Going Concern
The financial statements have been prepared on a going concern basis, which assumes the continuity of normal business
activity and the realisation of assets and the settlement of liabilities in the normal course of business.
For the financial year ended 30 June 2016 the Group incurred a loss after tax of $144.0 million (2015: $51.3 million) and had
net current liabilities of $7.6 million (2015: net current assets $121.5 million).
In February 2016, the Company agreed a number of amendments to the terms and financial covenants of its Syndicated Loan
Facility Agreement with the members of the Syndicate, in response to the difficult trading conditions in the offshore oil and gas
industry.
On 24 August 2016, the Company received approval of some further amendments to the terms and financial covenants of the
Facility from the Syndicate members and has committed to an increase in the annual principal repayments over the remaining
term of the Facility to $75.0 million per annum, with $37.5 million to be settled by 31 December 2016. The principal repayments
will be funded from the proceeds of the Company’s ongoing vessel sales programme, operating earnings and any additional
funding options available to the Company. The amended Facility Agreement and supporting documents were fully executed
on 16 September 2016. Refer to note 16 for further details on the Company’s borrowings.
The Directors believe that at the date of approving the Annual Report there are reasonable grounds to believe that the Group
will have sufficient funds to meet their obligations as and when they fall due and are of the opinion that the use of the going
concern basis remains appropriate.
MMA Offshore Limited 63
2.
Significant Accounting Policies (continued)
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.
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 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.
c.
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(o)); and
• 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.
64 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 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.
d.
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(e) 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.
e.
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.
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.
f.
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 65
Notes to the Financial Statements For the year ended 30 June 2016 2.
Significant Accounting Policies (continued)
g.
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 in the period the related service is performed.
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.
h.
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 24.
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.
i.
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.
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.
66 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 2.
Significant Accounting Policies (continued)
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.
j.
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.
k.
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.
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
l.
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.
MMA Offshore Limited 67
Notes to the Financial Statements For the year ended 30 June 2016
2.
Significant Accounting Policies (continued)
m.
Financial assets
All financial assets are initially measured at fair value.
Financial assets are classified as 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)
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.
(ii)
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.
The carrying amount of trade receivables is reduced by the impairment loss 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.
(iii) Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the assets
expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset
to another entity.
n.
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.
(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.
68 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 2.
Significant Accounting Policies (continued)
o.
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 30 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 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 30 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.
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.
(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.
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 69
Notes to the Financial Statements For the year ended 30 June 2016 2.
Significant Accounting Policies (continued)
p.
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.
(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.
70 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 3.
Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the Group’s accounting policies, the Directors are required to make judgements, estimates and
assumptions about 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.
Critical judgements in applying accounting policies
The following critical judgement has been made by the Directors in the process of applying the Group’s accounting policies.
Allowance for doubtful debts
The Directors has reviewed the carrying value of the Group’s trade debtors and associated allowance for doubtful debts.
In making their judgement on the appropriateness of the allowance for doubtful debts they have considered the outcomes
of regular meetings with customers, ongoing contractual arrangements and regularity of receipts from the customers. After
assessing these facts the Directors have concluded that the allowance for doubtful debts is appropriate.
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
Determining whether assets are impaired requires an estimate of the recoverable value of the assets. In order to determine the
recoverable value of the assets in the current year, a fair value less costs of disposal (FVLCOD) approach was used (2015:
value in use approach). The FVLCOD method requires an estimate of the current market value of the assets and the costs that
would be associated with a disposal of the assets. In estimating the current market value of the assets, the Group engaged
experienced and qualified valuers to perform valuations. At the end of the reporting period, the Directors have determined that
there is an impairment charge required to the Group’s carrying amount of property, plant & equipment.
An impairment charge of $139 million on property, plant & equipment was recognised during the year. Please refer to note 14
for further details.
Useful lives of property, plant and equipment
As described in note 2(k), 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.
MMA Offshore Limited 71
Notes to the Financial Statements For the year ended 30 June 2016 4.
Segment Information
(a) 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.
(b) Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment:
Revenue from
external customers
2016
$’000
2015
$’000
414,724
699,785
60,515
5,884
85,970
10,911
481,123
796,666
Inter-segment revenue(i)
Total segment revenue
2016
$’000
-
1,696
3,920
5,616
2015
$’000
2016
$’000
2015
$’000
-
414,724
699,785
2,516
11,776
14,292
62,211
9,804
88,486
22,687
486,739
810,958
(5,616)
(14,292)
481,123
796,666
Segment Revenues
Vessels
Supply Base
Slipway
Total
Eliminations
Total consolidated revenue
(i) Inter-segment services are provided for amounts equal to competitive market prices charged to external customers
for similar services.
Profit/(loss)
before impairment
Impairment charge
Profit/(loss)
after impairment
2016
$’000
2015
$’000
2016
$’000
2015
$’000
2016
$’000
2015
$’000
(15,447)
77,134
(100,000)
(100,000)
(115,447)
(22,866)
13,083
(2,881)
131
18,604
(36,000)
(20,710)
(22,917)
(204)
(1,152)
(3,000)
-
-
-
(5,881)
131
(2,106)
(204)
(1,152)
Segment Profit
Vessels
Supply Base
Slipway
Eliminations
Total for continuing operations
(5,114)
94,382
(139,000)
(120,710)
(144,114)
(26,328)
Investment income
Other gains
Central administration costs
Share of profit of jointly
controlled entity
Finance costs
Loss before income tax
937
12,354
709
4,366
(9,365)
(11,862)
2,611
3,385
(17,685)
(18,489)
(155,262)
(48,219)
Segment profit represents the profit earned by each segment without allocation of investment income, 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.
72 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 4.
Segment Information (continued)
(c) Segment Assets
The following is an analysis of the Group’s assets by reportable operating segment:
Segment assets
Vessels
Supply Base
Slipway
Unallocated
Total
2016
$’000
2015
$’000
937,658
1,061,308
71,048
7,461
78,306
134,282
14,503
215,122
1,094,473
1,425,215
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,
current tax assets and central administration assets.
(d) Other segment information
Depreciation and amortisation
Additions to
non-current assets
Carrying value of equity
accounted investments
2016
$’000
2015
$’000
2016
$’000
2015
$’000
2016
$’000
2015
$’000
Vessels
Supply Base
Slipway
Unallocated
Total
80,286
121,923
156,403
239,566
6,942
779
1,024
7,304
746
1,324
2,504
3,916
413
-
1,085
2,670
89,031
131,297
159,320
247,237
-
-
-
8,966
8,966
(e) 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
Total
(f) Geographical information
2016
$’000
414,724
60,515
5,884
481,123
-
-
-
10,355
10,355
2015
$’000
699,785
85,970
10,911
796,666
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.
Location
Australia
Other
Total
Revenue from external customers
Non-current assets(i)
2016
$’000
2015
$’000
2016
$’000
2015
$’000
390,015
91,108
481,123
639,433
157,233
796,666
340,597
615,185
955,782
361,878
684,200
1,046,078
(i) Non-current assets excluding investments accounted for using the equity method.
MMA Offshore Limited 73
Notes to the Financial Statements For the year ended 30 June 2016
4.
Segment Information (continued)
(g)
Information about major customers
Included in revenues arising from vessel and supply base services are revenues of approximately $165.4 million
(2015: $308.6 million) which arose from sales to the Group’s largest customer, revenues of approximately $64.9 million
(2015: $7.1 million) which arose from sales to the Group’s second largest customer and revenues of approximately
$49.2 million (2015: $67.5 million) which arose from sales to the Group’s third largest customer.
5.
Profit/(Loss) from Operations
(a) Other gains and losses
Net foreign exchange gains
Loss on disposal of property, plant and equipment
Gain on disposal of investment(i)
Total
2016
$’000
981
(3,791)
15,164
12,354
2015
$’000
4,567
(201)
-
4,366
(i) On 6 January 2016, the Company completed the sale of three wholly owned Singapore based subsidiary Companies. The
Company acquired a number of subsidiary Companies as part of the transaction in June 2014 to acquire the business activities of
Jaya Holdings Pte Ltd. The sale of the three Companies is part of the Company’s strategy to consolidate the number of operating
subsidiaries in the Group.
(b) Profit/(loss) for the year
Profit/(loss) 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 losses:
2016
$’000
2015
$’000
6,369
78,106
-
3,674
882
89,031
6,176
120,646
435
3,052
988
131,297
Impairment charge recognised on trade receivables
Reversal of impairment charge recognised on trade receivables
7,279
(1)
5,483
(431)
Impairment charge recognised on fixed assets and goodwill
139,000
120,710
(iii) Employee benefits:
Post employment benefits:
Defined contribution plans
Share based payments:
Equity settled share based payments
Other employee benefits
Total
15,045
19,654
915
169,982
185,942
1,828
227,198
248,680
74 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016
6.
Earnings per Share
(a) Earnings per Share:
The earnings used in the calculation of basic and diluted earnings per share are as follows:
Loss for the Year
2016
$’000
2015
$’000
(143,962)
(51,291)
2016
No.‘000
2015
No.‘000
(b) Weighted average number of ordinary shares (basic):
Weighted average number of ordinary shares used in the calculation of basic
earnings per share
372,581
368,841
(c) Weighted average number of ordinary shares (diluted):
Weighted average number of ordinary shares used in the calculation of basic
earnings per share
372,581
368,841
Shares deemed to be issued for no consideration in respect of employee rights
-
-
Weighted average number of ordinary shares used in the calculation of diluted
earnings per share
372,581
368,841
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 rights
13,719
4,172
MMA Offshore Limited 75
Notes to the Financial Statements For the year ended 30 June 2016
7.
Income Taxes
(a)
Income tax recognised in profit or loss
Tax (benefit)/expense comprises:
Current tax expense in respect of the current year
Deferred tax benefit in respect of the current year
Adjustment recognised in the current year in relation to tax provisions of
prior years
Total income tax (benefit)/expense
The income tax (benefit)/expense for the year can be reconciled to accounting
loss as follows:
Loss from operations
Income tax benefit 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 unused tax losses and temporary differences not recognised as
deferred tax assets
Non-refundable franking credits
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 (benefit)/expense
2016
$’000
2015
$’000
2,635
(2,700)
(11,235)
(11,300)
(155,262)
(46,578)
(884)
29,272
(466)
1,671
(1,623)
17,480
514
549
(65)
(11,235)
(11,300)
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
The tax rate used for the 2016 and 2015 reconciliations above is the corporate tax rate of 30% payable by Australian
corporate entities on taxable profits under Australian tax law.
(b)
Income tax recognised directly in equity
Income tax functional currency of deferred tax balances
Employee share trust
Total
(c) Current tax assets/(liabilities)
Income tax receivable/(payable)
(d) Deferred tax balances
Deferred tax assets
Deferred tax liabilities
Total
2016
$’000
747
163
910
2015
$’000
1,255
792
2,047
5,712
(5,155)
9,686
(12,779)
(3,093)
15,557
(20,440)
(4,883)
76 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 7.
Income Taxes (continued)
Deferred tax assets/(liabilities) arise from the following:
2016
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
2015
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
Opening
balance
Recognised in
profit or loss
Recognised
in equity
$’000
$’000
$’000
Closing
balance
$’000
(8,756)
(625)
(658)
(10,401)
(20,440)
4,247
14
270
7,389
3,187
450
15,557
(4,883)
(1,197)
(278)
(16)
10,297
8,806
(3,563)
(14)
275
(7,285)
4,410
71
(6,106)
2,700
(1,145)
(11,098)
-
-
-
(903)
(674)
(104)
(1,145)
(12,779)
-
-
(163)
-
398
-
235
684
-
383
104
7,994
521
9,686
(910)
(3,093)
(19,230)
11,729
(1,255)
(798)
(661)
(1,274)
(21,963)
4,091
74
583
5,016
-
505
10,269
(11,694)
173
3
(9,127)
2,778
156
(60)
479
2,373
3,187
(55)
6,080
8,858
-
-
-
(1,255)
-
-
(792)
-
-
-
(792)
(2,047)
(8,756)
(625)
(658)
(10,401)
(20,440)
4,247
14
270
7,389
3,187
450
15,557
(4,883)
MMA Offshore Limited 77
Notes to the Financial Statements For the year ended 30 June 2016
7.
Income Taxes (continued)
(e)
Unrecognised deferred tax assets
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)
Tax losses (capital in nature)
Deductible temporary differences
(f)
Tax consolidation
Relevance of tax consolidation to the Group
2016
$’000
2015
$’000
10,057
837
10,976
2,629
-
-
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 Ltd.
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 Ltd 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
2016
$’000
44,000
-
2015
$’000
45,445
(2,386)
2016
2015
Cents
Per Share
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
-
1.5
-
5,569
4.0
7.0
14,746
25,674
Unrecognised Amounts
Fully paid ordinary shares
Final dividend fully franked at a 30% tax rate
-
-
1.5
5,569
78 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016
9.
Trade and Other Receivables
Trade receivables
Allowance for doubtful debts
Other receivables
Total
2016
$’000
71,181
(13,456)
8,951
66,676
2015
$’000
197,605
(6,068)
9,078
200,615
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, $18.3 million (2015: $33.3 million) is outstanding from the Group’s
largest debtor and $6.6 million (2015: $16.5 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 receivables 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
Foreign exchange translation
Balance at the end of the year
2016
$’000
2,863
4,342
1,362
2,610
18,096
29,273
6,068
7,197
-
(1)
192
13,456
2015
$’000
28,864
12,341
2,978
12,978
9,225
66,386
1,063
5,483
(47)
(557)
126
6,068
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.
10.
Inventories
Fuel – at cost
Consumables
Work in progress
Total
2016
$’000
2,996
1,215
52
4,263
2015
$’000
2,629
1,319
776
4,724
MMA Offshore Limited 79
Notes to the Financial Statements For the year ended 30 June 2016 11. Other Financial Assets
Derivatives
2016
$’000
2015
$’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
Principal
Activity
Country of
Incorporation
2016
%
2015
%
2016
$’000
2015
$’000
Ownership Interest
Carrying Amount
Australia
50
50
8,966
10,355
Supply base
services in
Broome for
the offshore
oil and gas
industry
Total
8,966
10,355
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
2016
$’000
7,321
11,878
(1,223)
(44)
17,932
8,966
29,768
7,458
3,729
(1,118)
2,611
2015
$’000
12,213
12,743
(4,106)
(140)
20,710
10,355
40,714
9,734
4,867
(1,482)
3,385
The Company’s share of the contingent liabilities, capital commitments and other expenditure commitments of the jointly
controlled entity is nil (2015: nil).
80 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 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
Plant and
Equipment
– Hire
Purchase
at cost
$’000
Fixed Assets
under
Construction
$’000
Total
$’000
Gross carrying amount:
Balance at 1 July 2014
143,382
783,274
7,200
29,881
12,115
72,119
1,047,971
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 1 July 2015
153,464 1,124,071
Additions
Disposals
Transfers
Net currency exchange
differences
2,012
122,237
(5,409)
(90,716)
-
49,895
5,296
38,450
Balance at 30 June 2016
155,363 1,243,937
Accumulated depreciation:
-
-
-
-
-
-
-
2,540
-
13,574
149,124
30,909
11,887
122,551
1,442,882
1,469
(2,057)
(61)
-
33,602
159,320
(690)
-
(98,872)
-
(49,834)
-
2,503
(2)
5,326
51,573
32,763
11,195
111,645
1,554,903
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)
-
-
-
-
-
-
-
-
(151,530)
820
-
(100,000)
(131,297)
(14,797)
(396,804)
60,084
-
-
(89,031)
(34,370)
(1,908)
-
(13,478)
(4,560)
1,919
(1,845)
(3,674)
585
(882)
(1,442)
1
(2,084)
(17,430)
(139,000)
(18,520)
(6,940)
(17,430)
(599,121)
17,431
14,243
7,327
4,255
122,551
1,046,078
94,215
955,782
Net currency exchange
differences
(1,449)
(11,440)
Balance at 1 July 2015
(45,450)
(333,316)
Disposals
285
57,295
Impairment charge
(35,071)
(82,570)
Depreciation expense
(6,369)
(78,106)
Net currency exchange
differences
(6,714)
(26,215)
Balance at 30 June 2016
(93,319)
(462,912)
Net book value:
As at 30 June 2015
As at 30 June 2016
108,014
790,755
62,044
781,025
Assets Pledged as Security
-
-
-
-
-
-
-
-
-
In accordance with the security arrangements of liabilities, as disclosed in note 16 to the financial statements, all non-current
assets of the Group have been pledged as security.
MMA Offshore Limited 81
Notes to the Financial Statements For the year ended 30 June 2016
14.
Impairment of Non-current Assets
The Group performs its impairment testing annually on 30 June each year. In addition, market conditions are monitored for
indications of impairment for 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 2016:
•
the carrying amount of the net assets of the Group is greater than the Company’s market capitalisation; and
• market conditions in both Australia and internationally have continued to be 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’).
Impairment testing
The Group has evaluated whether the recoverable amount of each CGU exceeds its carrying amount. The recoverable amount
is determined to be the higher of its fair value less costs of disposal (“FVLCOD”) or its value in use. In all instances, the Group
has used the FVLCOD model for the purpose of impairment testing as at 30 June 2016. This has changed from the previous
year where the value in use model was used for each CGU.
Impairment charges recognised
The following information relates to impairment charges included in profit or loss:
Segment/CGU
Vessels
Supply Base
Slipway
Total
Segment/CGU
Vessels
Supply Base
Slipway
Total
Class of asset
Method
Property, Plant & Equipment
FVLCOD
Property, Plant & Equipment
FVLCOD
Property, Plant & Equipment
FVLCOD
Class of asset
Method
Property, Plant & Equipment
Value in use
Goodwill
Value in use
-
Value in use
Impairment charge
2016
$’000
100,000
36,000
3,000
139,000
Impairment charge
2015
$’000
100,000
20,710
-
120,710
In the current year, the inputs used in deriving the recoverable amount of each CGU are categorised within the following level
of the fair value hierarchy:
CGU
Vessels
Supply Base
Slipway
Level 2 (i)
$’000
885,000
62,000
6,900
Recoverable
Amount
$’000
885,000
62,000
6,900
(i) Level 2 inputs are those other than quoted prices in active markets that are observable. In our calculations these inputs
are market valuations prepared by an independent valuation consultant for each CGU.
82 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 14.
Impairment of Non-current Assets (continued)
Vessels
Industry conditions in Australia and internationally continue to be challenging as the impact of the continued decline in the oil
prices and over supply of vessels is felt across the offshore oil and gas support industry. Oil prices have recovered from near
12-year lows, but continue to remain subdued, reflecting ongoing surplus concerns. MMA is impacted through lower utilisation
and charter rates for its vessels.
The recoverable amount of the vessels was determined using a market based approach, reflecting the value which could
be expected to be realised through the disposal of the vessels with reference to recent transactions for similar vessels in the
current market.
An independent valuation of the fleet was undertaken by a specialist marine valuation consultancy and ship broking company.
In preparing their Valuation Report, some of the factors they considered included the current market conditions in which the
vessels operate, a review of recent vessel sales and consideration of the specification and earnings potential of each vessel.
Whilst vessels are not individually inspected the standard premise applied to each vessel is ‘as is where is’, charter free and a
transaction between a willing buyer and willing seller.
A further key input into the recoverable amount of the CGU was the application of a discount to the independent valuation to
reflect the amount which would be achieved if the fleet was disposed of in one single transaction. We have applied a discount
of 7.5% being a rate within a range provided by the independent valuer.
An additional key input was the estimated costs of disposal. We have assumed these to be 2% of the sale value of each
vessel. Based on past sales, we have seen actual costs between 1.5% to 2.5% and have used the midpoint of this range.
At 30 June 2016, the recoverable amount of the Vessels CGU was lower than the carrying value and as a result the Group
recognised an impairment charge.
Supply Base
Activity on MMA’s Dampier Supply Base is heavily influenced by the level of offshore oil and gas activity in the region. As a
result of the continued low oil price, together with the completion of the construction phase of the Gorgon Project, the demand
for services at the Supply Base was significantly reduced over the past year.
An independent valuation of the Supply Base facility was undertaken by a leading global real estate valuation and services
company. In preparing their Valuation Report they considered the following valuation approaches:
(a)
Cost approach – This approach reflects the cost to another party of constructing a similar asset.
The significant inputs used by the independent valuer under this approach include:
•
the estimated construction cost of the Supply Base which was based on the original cost;
• an allowance for the economic life of the various assets by applying a depreciation factor to them based on current
age and category of asset; and
• a further depreciation rate over the entire facility to account for economic obsolescence.
(b)
Income approach – This approach converts future cash flows from the market rent for which MMA could potentially sub
lease the supply base facility. The valuer used two methods under this approach. Each method and their significant
inputs are as follows:
(i)
Capitalisation of market rentals method: This calculation applies a capitalisation rate to the net market rental of the
Supply Base. The significant inputs include:
• market rent of the various areas and facilities on the Supply Base; and
• a capitalisation rate of 15.6%.
(ii) Discounted Cash Flow method: Net operating cash flows are identified over a 10 year period and discounted to
arrive at a present value of expected future cash flows. The significant inputs include:
• market rent of the various areas and facilities on the Supply Base;
• a terminal value of the Supply Base at the end of the 10 year period; and
• a discount rate of 18% was used.
At 30 June 2016, the recoverable amount of the Supply Base CGU was lower than the carrying value and as a result the Group
recognised an impairment charge.
MMA Offshore Limited 83
Notes to the Financial Statements For the year ended 30 June 2016
14.
Impairment of Non-current Assets (continued)
Slipway
The number of vessels operating in the region of the Slipway decreased during the past year as construction activity in the
offshore oil and gas industry was completed and other activity was subdued as a result of the continuing low oil price. This
resulted in a decline in demand for use of the Slipway facilities.
In conjunction with the independent valuation of the Supply Base, the Slipway was also valued. The approach and significant
inputs used by the valuer for the Slipway valuation are the same as described above for the Supply Base.
At 30 June 2016, the recoverable amount of the Slipway CGU was lower than the carrying value and as a result the Group
recognised an impairment charge.
15. Trade and Other Payables
Trade payables
Other payables and accruals
Goods and services tax payable
Total
2016
$’000
9,372
34,443
125
43,940
2015
$’000
28,079
98,906
2,188
129,173
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.
16. Borrowings
Secured – at amortised cost
Current
Hire purchase liability (i)
Bank loans (ii)
Unamortised loan fees (iii)
Total
Non-Current
Hire purchase liability (i)
Bank loans(ii)
Unamortised loan fees(iii)
Total
2016
$’000
2015
$’000
432
75,000
(2,349)
73,083
491
322,755
(4,504)
318,742
1,571
49,557
(1,536)
49,592
904
396,458
(4,481)
392,881
Summary of borrowing arrangements:
(i)
(ii)
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 6.41% (2015: 6.98%).
In May 2014, the Company entered into a Syndicated Facility Agreement with NAB and ANZ as mandated lead arranger,
underwriter and book runner. 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.
In February 2016, the Company agreed a number of amendments to the terms and financial covenants of the Facility
with the members of the Syndicate in response to the difficult trading conditions in the offshore oil and gas industry.
84 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016
16. Borrowings (continued)
On 24 August 2016, the Company received approval of some further amendments to the terms and financial covenants
of the Facility from the Syndicate members and has committed to an increase in the annual principal repayments
over the remaining term of the Facility to $75.0 million per annum, with $37.5 million to be settled by 31 December
2016. The principal repayments will be funded from the proceeds of the Company’s ongoing vessel sales programme,
operating earnings and any additional funding options available to the Company. The amended Facility Agreement and
supporting documents were fully executed on 16 September 2016.
The current weighted average effective interest rate on the bank loans is 3.77% (2015: 3.30%).
(iii)
Fees in relation to the Syndicated Facility Agreement.
17. Provisions
Current
Employee benefits – annual leave
Employee benefits – long service leave
Restructuring costs – shipbuilding operations
Warranty & Cancellation costs – shipbuilding operations
Total
Non-current
Employee benefits – long service leave
18.
Issued Capital
373,076,993 fully paid ordinary shares (2015: 371,219,785)
2016
$’000
7,075
3,418
889
3,251
14,633
2015
$’000
11,101
3,168
-
5,001
19,270
806
612
2016
$’000
2015
$’000
556,566
555,681
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 rights plans
Issue of shares under dividend reinvestment plan
2016
No.’000
371,220
122
1,735
2016
$’000
555,681
-
885
2015
No.’000
366,766
116
4,338
2015
$’000
549,813
-
5,868
Balance at end of financial year
373,077
556,566
371,220
555,681
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Share Rights
As at 30 June 2016, executives and employees held rights over 13,718,778 ordinary shares (2015: 4,172,468) in aggregate.
Share rights granted under the employee share rights plans carry no right to dividends and no voting rights.
MMA Offshore Limited 85
Notes to the Financial Statements For the year ended 30 June 2016 19. Reserves
Employee equity settled benefits(i)
Hedging(ii)
Foreign currency translation(iii)
Balance at end of financial year
(i) Employee equity settled benefits reserve
Balance at beginning of financial year
Share based payment
Deferred income tax benefit
Balance at end of financial year
2016
$’000
5,704
(58,345)
172,194
119,553
4,952
915
(163)
5,704
2015
$’000
4,952
(37,971)
148,877
115,858
3,916
1,828
(792)
4,952
The employee equity settled benefits reserve arises on the grant of share rights to executives and employees under the
Company’s share rights plans. Amounts are transferred out of the reserve and into issued capital when the rights vest.
(ii) Hedging reserve
Balance at beginning of financial year
Loss on hedge of net investment in a foreign operation
Gain on cash flow hedges
Transfer of cash flow hedge gain to initial carrying amount of hedged items
Balance at end of financial year
2016
$’000
(37,971)
(8,829)
6,294
(17,839)
(58,345)
2015
$’000
1,988
(53,309)
13,350
-
(37,971)
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.
(iii) Foreign currency translation reserve
Balance at beginning of financial year
Translation of foreign operations
Reclassification of exchange differences on disposal of entities
Balance at end of financial year
2016
$’000
2015
$’000
148,877
25,152
(1,835)
(18,164)
167,041
-
172,194
148,877
The foreign currency translation reserve represents exchange differences relating to the translation from the functional
currencies of the Group’s foreign controlled entities into Australian Dollars.
20. Retained Earnings/(Accumulated Losses)
Balance at beginning of financial year
Loss attributable to owners of the Company
Dividend provided for or paid
Balance at end of financial year
2016
$’000
107,578
(143,962)
(5,569)
(41,953)
2015
$’000
199,289
(51,291)
(40,420)
107,578
86 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 21. 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.
Cash and cash equivalents
(b) Non cash financing and investing activities
2016
$’000
2015
$’000
49,725
124,482
During the financial year, the Group acquired property, plant and equipment with an aggregate value of nil (2015: $0.1
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 $0.9 million (2015: $5.9 million) under the Dividend
Reinvestment Plan.
(c) Reconciliation of loss for the year to net cash flows
from operating activities
Loss for the year
Depreciation of non-current assets
Impairment of non-current assets
Amortisation of borrowing costs
Loss on sale of property, plant and equipment
Gain on disposal of investment
Unrealised foreign exchange gain
Allowance for doubtful debts
Bad debts
Equity settled share based payment
Share of jointly controlled entity profit
Change in net assets and liabilities:
Decrease in trade and other receivables
Decrease in prepayments
(Increase)/decrease in inventories
Increase in current tax receivable/decrease in current tax liability
Decrease in provisions
Decrease in trade and other payables
Increase/(decrease) in unearned revenue
Increase/(decrease) in deferred tax liabilities
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
2016
$’000
(143,962)
89,031
139,000
1,739
3,791
(15,164)
(228)
7,279
-
915
(2,611)
131,343
6,562
558
(2,377)
(8,525)
(50,163)
(35,050)
(1,964)
120,174
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)
(48,510)
(3,496)
(776)
18,271
523
185,360
397,755
446,015
-
-
397,755
446,015
-
4,000
4,000
-
4,000
4,000
MMA Offshore Limited 87
Notes to the Financial Statements For the year ended 30 June 2016 22. Commitments for Expenditure
(a) Lease commitments
Hire purchase liabilities and non-cancellable operating lease commitments are disclosed in note 23.
(b) Capital expenditure commitments
Plant and Equipment
Leasehold Improvements
Vessels
Total
23. Leases
(a) Finance lease liabilities
2016
$’000
13
132
7,331
7,476
2015
$’000
380
238
116,496
117,114
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 16)
Borrowings – non-current (note 16)
Total
Minimum Lease Payments
Present Value of Minimum
Lease Payments
2016
$’000
475
513
988
(65)
923
2015
$’000
1,701
970
2,671
(196)
2,475
2016
$’000
432
491
923
-
923
432
491
923
2015
$’000
1,571
904
2,475
-
2,475
1,571
904
2,475
Finance leases relate to various 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
88 Annual Report 2016
2016
$’000
2015
$’000
118,222
218,398
10,309
13,585
-
23,894
7,153
11,919
3,788
1,034
23,894
66,163
20,594
1,661
88,418
9,765
18,798
57,443
2,412
88,418
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 23. Leases (continued)
(i) Office rental commitments:
In the prior year, the Company exercised a 5 year option on the head office premises lease at Fremantle, Australia
and is committed under the arrangement until 4 August 2020, with an option to extend for a further 5 year term. The
Group also has a 3 year lease agreement in place for the Singapore office expiring on 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 on 15 April 2021.
(iii) Vessel charter commitments:
As of 30 June 2016, the Company had 1 vessel under a bare boat charter agreement. Vessel charter commitments
represent charter fee payments to be made to the owners of these vessels.
(iv) Other lease commitments:
The Group has leases over a number of 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 4 years.
Non-cancellable operating lease receivables:
Not later than 1 year
Later than 1 year and not later than 5 years
Total
24. Share Based Payments
24.1 Share rights incentive plans
2016
$’000
12,652
23,335
35,987
2015
$’000
15,110
32,464
47,574
The Group has established ownership based compensation plans whereby executives and employees of the Group
have been issued rights over ordinary shares of MMA Offshore Limited.
Upon exercise, each share right, converts into one ordinary share of MMA Offshore Limited. No amounts are paid or
are payable by the recipient on receipt of the rights. The rights carry no entitlement to dividends and no voting rights.
Holders of rights do not have the entitlement, by virtue of the right, to participate in any share issue of the Company.
The rights may be exercised at any time from their vesting date to the date of their expiry.
The rights are not quoted on the ASX.
MMA Offshore Limited 89
Notes to the Financial Statements For the year ended 30 June 2016 24. Share Based Payments (continued)
The following share based payment arrangements were in existence during the current reporting period:
Series
Number issued
Grant Date
Expiry Date
(1)
Issued 25 October 2012 (a)
311,634
25 Oct 2012
1 Jul 2015
(2)
Issued 25 October 2012 (a)
304,235
25 Oct 2012
1 Jul 2015
(3)
Issued 22 November 2012 (a)
317,865
22 Nov 2012
1 Jul 2015
(4)
Issued 03 December 2013 (b)
1,092,384
11 Oct 2013
1 Jul 2016
(5)
Issued 03 December 2013 (b)
339,238
11 Oct 2013
1 Jul 2016
(6)
Issued 03 December 2013 (b)
346,023
21 Nov 2013
1 Jul 2016
(7)
Issued 22 October 2014 (c)
1,052,625
22 Oct 2014
1 Jul 2017
(8)
Issued 1 December 2014 (c)
11,382
1 Dec 2014
1 Jul 2017
(9)
Issued 1 December 2014 (c)
430,075
18 Nov 2014
1 Jul 2017
(10) Issued 22 October 2014 (d)
51,546
22 Oct 2014
1 Jul 2015
(11) Issued 22 October 2014 (e)
70,000
22 Oct 2014
5 Jun 2016
(12) Issued 10 February 2016 (f)
2,001,432
18 Nov 2015
1 Jul 2020
(13) Issued 10 February 2016 (f)
1,883,700
7 Dec 2015
1 Jul 2020
(14) Issued 10 February 2016 (f)
6,154,136
7 Dec 2015
1 Jul 2020
(15) Issued 07 June 2016 (f)
220,284
18 Apr 2015
1 Jul 2020
Exercise
price
$
Fair Value at
Grant date
$
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
2.28
2.42
2.47
2.14
2.02
1.71
1.09
1.09
0.75
1.94
1.76
0.02
0.02
0.02
0.02
(a) 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
Executive and Senior Management following the end of the Performance Period depended on the growth in
the Earning per Share of the Company and the Total Shareholder Return relative to a selected Peer Group of
companies.
The performance period for this series finished at the end of the previous 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 previous financial year, the Board exercised its discretion under the Plan rules to defer the
vesting of these performance rights until 1 July 2016.
Having regard to the overall performance of the Company and the current market conditions, the Board again
exercised its discretion that these rights would not vest at 1 July 2016. As such the rights have lapsed in
accordance with the terms of the Plan rules.
90 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016
24. Share Based Payments (continued)
(b) 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%
Performance
Criteria targets
Less than 6%
Equal to 6%
Percentage of
Performance
Rights which vest
if target met
Nil
50%
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
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 employees
(i.e. excluding the Managing Director, Chief Operating Officer and Chief Financial Officer):
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% to 100%
(pro-rata)
100%
Nil
50% to 100%
(pro-rata)
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
None of the Performance Criteria were met. As such, all the rights have lapsed in accordance with the terms of the
Plan rules.
MMA Offshore Limited 91
Notes to the Financial Statements For the year ended 30 June 2016
24. Share Based Payments (continued)
(c) 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
Normalised Earnings
per Share (EPS) growth
Performance
Period
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
(i.e. excluding the Managing Director, Chief Operating Officer and Chief Financial Officer):
Performance
Criteria
Normalised Earnings
per Share (EPS) growth
Performance
Period
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% 50% to 100%
Above 10%
Below the 50th
percentile
Between the 50th
percentile and the
75th percentile
Above the 75th
percentile
(pro-rata)
100%
Nil
50% to 100%
(pro-rata)
100%
(d) 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) vested on 1 July 2015 subject to the holders’
continued employment by a Group member during the 1 year performance period. This condition was met and the
corresponding shares were issued on 19 August 2015.
(e) In accordance with the terms of the Mermaid Marine Australia Limited Performance Rights Plan – 2014 (granted
22 October 2014), the performance rights issued to the President – Offshore & Business Development (Singapore)
vested on 4 June 2016 conditional upon the holder’s continued employment by a Group member during the 2 year
performance period. This condition was met and the corresponding shares were issued on 10 June 2016.
92 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016
24. Share Based Payments (continued)
(f) In accordance with the terms of the MMA Offshore Limited Performance Rights Plan – 2015 and the MMA Offshore
Limited Managing Director’s Performance Rights Plan – 2015 (as approved by the shareholders at the Company’s
AGM on 18 November 2015), 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 achieving
a Share Price Target for the Company and the Total Shareholder Return relative to a selected peer group of
companies in accordance with the table below:
Performance
Criteria
Share Price Target
Performance
Period
Beginning 1 July
2015 and ending
30 June 2018
Percentage of
LTI subject to
Performance
Criteria
Performance
Criteria targets
Percentage of
Performance
Rights which vest
if target met
50%
Lower than $1.60
Equal to $1.60
Nil
50%
Beginning 1 July
2015 and ending
30 June 2018
50%
Company’s Total
Shareholder Return
(TSR) percentile
ranking over the
Performance Period
relative to a selected
Peer Group
Between $1.60 and
$2.40
50% to 100%
(pro-rata)
Equal to or greater
than $2.40
Below the 50th
percentile
Equal to the 50th
percentile
Between the 50th
percentile and the
90th percentile
100%
Nil
50%
50% to 100%
(pro-rata)
Equal to or greater
than 90th percentile
100%
The table below sets out the relevant Performance Criteria for the performance rights granted to other employees
(i.e. excluding the Managing Director, Chief Operating Officer and Chief Financial Officer) during the financial year:
Performance
Criteria
Share Price Target
Performance
Period
Beginning 1 July
2015 and ending
30 June 2018
Percentage of
LTI subject to
Performance
Criteria
Performance
Criteria targets
Percentage of
Performance
Rights which vest
if target met
50%
Lower than $1.60
Equal to $1.60
Nil
50%
Beginning 1 July
2015 and ending
30 June 2018
50%
Company’s Total
Shareholder Return
(TSR) percentile
ranking over the
Performance Period
relative to a selected
Peer Group
Between $1.60 and
$2.40
50% to 100%
(pro-rata)
Equal to or greater
than $2.40
Below the 50th
percentile
Between the 50th
percentile and the
75th percentile
Above the 75th
percentile
100%
Nil
50% to 100%
(pro-rata)
100%
MMA Offshore Limited 93
Notes to the Financial Statements For the year ended 30 June 2016 24. Share Based Payments (continued)
24.2 Fair value of share rights granted in the year
The weighted average fair value of the rights granted during the year was $0.02 (2015: $1.05). 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:
Inputs into the model
Grant date share price
Exercise price
Expected volatility
Life of rights
Dividend yield
Risk free rate
Series (12)
Series (13)
Series (14)
Series (15)
$0.25
$0.00
40%
$0.25
$0.00
40%
$0.23
$0.00
40%
$0.23
$0.00
40%
2.6 years
2.6 years
2.6 years
2.6 years
6.9%
2.14%
6.9%
2.14%
7.6%
2.20%
7.6%
2.20%
24.3 Movement in share rights during the period
The following reconciles the outstanding share rights at the beginning and end of the financial year:
2016
2015
Employee Share 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
rights
4,172,468
10,259,552
(121,546)
-
(591,696)
13,718,778
-
Weighted average
exercise price
$
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Number of
rights
5,539,257
1,615,628
(115,643)
(1,466,772)
(1,400,002)
4,172,468
-
Weighted average
exercise price
$
0.77
0.00
0.00
0.00
3.01
0.00
0.00
24.4 Share rights exercised during the year
The following share rights were exercised during the financial year:
Series
Number exercised
Exercise date
Share price at
exercise date
$
(10)
Issued 22 October 2014
(11)
Issued 22 October 2014
51,546
70,000
19 Aug 2015
10 Jun 2016
0.52
0.40
24.5 Share rights outstanding at the end of the year
The following share rights were outstanding at the end of the financial year:
Series
(1) & (2)
(3)
(4) & (5)
(6)
(7)
(8)
(9)
(12)
(13)
(14)
(15)
Total
Issued 25 October 2012
Issued 22 November 2012
Issued 03 December 2013
Issued 03 December 2013
Issued 22 October 2014
Issued 01 December 2014
Issued 01 December 2014
Issued 10 February 2016
Issued 10 February 2016
Issued 10 February 2016
Issued 07 June 2016
Number
314,519
165,799
1,153,150
346,023
1,038,278
11,382
430,075
2,001,432
1,883,700
6,154,136
220,284
13,718,778
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 2016
1 Jul 2016
1 Jul 2017
1 Jul 2017
1 Jul 2017
1 Jul 2020
1 Jul 2020
1 Jul 2020
1 Jul 2020
94 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 25. Key Management Personnel Compensation
Please refer to the Remuneration Report for details of key management personnel.
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
26. Related Party Transactions
2016
$
2015
$
4,322,925
4,162,753
247,383
607,681
5,177,989
245,239
1,247,522
5,655,514
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.
26.1 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
2016
$
65,505
2015
$
37,752
2016
$
2,191
2015
$
289,845
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
2016
$
17,893
2015
$
3,704
2016
$
-
2015
$
-
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.
26.2 Loans to related parties
The Group provided a member of its key management personnel with a short term loan during the year, at a rate
comparable to the average commercial rate of interest. The outstanding balance at end of the year was $34,870
(2015: nil).
MMA Offshore Limited 95
Notes to the Financial Statements For the year ended 30 June 2016 26. Related Party Transactions (continued)
26.3 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 28.
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 25.
Loans to key management personnel:
Details are provided in note 26.2 and the Remuneration Report.
(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.
27. Remuneration of Auditors
Auditor of the Parent Entity
Audit or review of the financial report
Taxation compliance services
Total
Network firms of the Parent Entity auditor
Audit or review of the financial report
Taxation compliance services
Total
2016
$’000
2015
$’000
361,725
-
361,725
382,566
43,652
426,218
330,750
1,838
332,588
410,058
39,782
449,840
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.
96 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 28. 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)
(ii) (iii)
(ii)
(iv)
Australia
Australia
Australia
Singapore
Australia
Singapore
Malaysia
Singapore
Singapore
Singapore
Singapore
Singapore
Malaysia
Malaysia
Indonesia
Ownership
Interest
2016
%
Ownership
Interest
2015
%
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) Company was sold on 6 January 2016.
The consolidated statements of comprehensive income and financial position of entities which are party to the deed of cross
guarantee are as follows:
Statement of Comprehensive Income
Revenue
Investment income
Dividend income
Other losses
Share of profits of jointly controlled entity
Vessel expenses
Supply Base expenses
Slipway expenses
Administrative expenses
Impairment charge
Finance costs
Profit/(loss) before income tax expense
Income tax expense
Profit/(loss) for the year
Other Comprehensive Income
Gain on cashflow hedges
Transfer of cashflow hedge gain to initial carrying amount of hedged items
Other comprehensive income/(loss) for the year, net of tax
Total Comprehensive Income/(Loss) for the year
2016
$’000
2015
$’000
390,015
2,696
50,025
(10,258)
2,611
(307,563)
(47,432)
(8,634)
(9,365)
(124,866)
(17,075)
(79,846)
(682)
(80,528)
6,294
(17,839)
(11,545)
(92,073)
638,768
599
104,344
(52,275)
3,385
(506,760)
(67,366)
(12,267)
(11,862)
(49,970)
(18,489)
28,107
(3,508)
24,599
13,350
-
13,350
37,949
MMA Offshore Limited 97
Notes to the Financial Statements For the year ended 30 June 2016 28. 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
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Unearned revenue
Borrowings
Provisions
Total Current Liabilities
Non-Current Liabilities
Unearned revenue
Borrowings
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/(loss)
Dividend provided for or paid
Retained earnings at end of the financial year
98 Annual Report 2016
2016
$’000
2015
$’000
35,767
33,487
3,063
-
2,474
11,128
85,919
8,966
748,071
235,880
992,917
1,078,836
34,143
1,980
73,083
9,955
57,737
152,308
2,859
11,545
26,326
17,276
268,051
10,355
809,519
251,609
1,071,483
1,339,534
105,388
34,977
49,592
13,626
119,161
203,583
311
393
318,742
392,881
806
-
319,859
439,020
639,816
556,566
4,448
78,802
639,816
164,899
(80,528)
(5,569)
78,802
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
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 29. 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/(loss) for the year
Other comprehensive gain
Total comprehensive income/(loss)
2016
$’000
2015
$’000
39,599
1,030,163
1,069,762
59,372
1,101,027
1,160,399
73,220
324,549
397,769
671,993
556,579
114,122
1,292
671,993
(36,811)
-
(36,811)
48,022
398,686
446,708
713,691
555,694
156,502
1,495
713,691
18,971
-
18,971
Guarantees provided under the deed of cross guarantee
41,251
154,957
Commitments for the acquisition of property, plant and equipment by the
parent entity
-
83,285
MMA Offshore Limited 99
Notes to the Financial Statements For the year ended 30 June 2016 30. Financial Instruments
30.1 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 2015.
The capital structure of the Group consists of net debt (borrowings as detailed in note 16 offset by cash at bank
balances) and equity of the Group (comprising issued capital, reserves and retained earnings as detailed in notes 18,
19 and 20).
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.
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 16.
(ii) Equity includes all capital and reserves of the Group that are managed as capital.
30.2 Categories of financial instruments
Financial assets
Cash and cash equivalents
Derivative instrument in designated hedge accounting relationship
Loans and receivables
Financial liabilities
2016
$’000
391,825
(49,725)
342,100
634,166
54%
2016
$’000
49,725
-
66,676
2015
$’000
442,473
(124,482)
317,991
779,117
41%
2015
$’000
124,482
11,545
200,615
Payables and borrowings at amortised cost
435,765
571,646
30.3 Financial risk management objectives
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.
100 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 30. Financial Instruments (continued)
30.4 Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates. Where required, the Group can enter into a range of derivative financial instruments to manage its
exposure to these risks.
At a Group level, market risks are managed through sensitivity analysis. There is no change in the manner in which
these risks are managed and measured in the current year.
30.5 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
Singapore Dollars
Euro
Norwegian Kroner
Other
Liabilities
Assets
2016
$’000
28,473
10,626
937
629
2,235
2015
$’000
49,390
22,977
48,784
83
2,690
2016
$’000
63,394
3,494
59
-
1,443
2015
$’000
119,785
4,668
54,140
22
1,208
Foreign currency sensitivity analysis
The Group is mainly exposed to US Dollars (USD), Singapore Dollars (SGD) and Euro (EUR).
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
Singapore Dollar Impact
Euro Impact
Norwegian Kroner Impact
Profit or Loss
Equity (i)
2016
$’000
(103)
75
14
5
2015
$’000
1,680
56
(633)
5
2016
$’000
(3,072)
573
66
52
2015
$’000
(15,623)
1,608
146
1
(i) The current year USD impact relates to the translation from the functional currencies of the Group’s foreign entities
into Australian Dollars. The prior year USD impact is attributable to the translation from the functional currencies
of the Group’s foreign entities into Australian Dollars of $8.1 million and to changes in fair value of derivative
instruments designated as hedging instruments in cash flow hedges of $7.5 million.
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.
MMA Offshore Limited 101
Notes to the Financial Statements For the year ended 30 June 2016 30. Financial Instruments (continued)
Forward foreign exchange contracts
In prior years, 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:
Outstanding
Contracts
Buy US Dollars
3 to 6 months
6 to 12 months
Total
Average
exchange rate
Foreign currency
Contract value
Fair value
2016
$
2015
$
2016
FC’000
2015
FC’000
2016
$’000
2015
$’000
2016
$’000
2015
$’000
-
-
0.888
0.883
-
-
31,982
31,982
-
-
36,007
36,211
-
-
-
5,905
5,640
11,545
At reporting date the aggregate amount of unrealised profits/(losses) under forward foreign exchange contracts is nil
(2015: profit of $11,544,571).
30.6 Interest rate risk management
The Group is exposed to interest rate risk because it borrows funds primarily at floating interest rates. The risk is
managed by the Group 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, if
required.
The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk
management section of this note.
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 $3,977,559 (2015: decrease / increase by $4,460,156). This is attributable to
the Group’s exposure to interest rates on its variable borrowings.
The Group’s sensitivity to interest rates has decreased during the current year due to the decrease in the carrying value
of the variable rate debt instruments as a result of the principal repayments made during the year.
102 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016 30. Financial Instruments (continued)
30.7 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 receivables.
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 managed through regular meetings with the customers, on-going contractual
arrangements and regular receipts for the balances outstanding.
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.
30.8 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
21(d) sets out details of additional undrawn facilities that the Group has at its disposal to further reduce liquidity risk.
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 2016
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Total
30 June 2015
Non-interest bearing
Finance lease liability
Variable interest rate instruments
Total
-
6.41
3.77
-
6.98
3.30
43,940
62
1,435
45,437
93,662
112
1,252
95,026
-
124
2,503
2,627
-
293
14,853
15,146
-
290
85,471
85,761
35,511
1,296
47,581
84,388
-
518
43,940
994
342,409
431,818
342,927
476,752
-
970
129,173
2,671
429,050
492,736
430,020
624,580
MMA Offshore Limited 103
Notes to the Financial Statements For the year ended 30 June 2016 30. 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
-
1.22
8,638
49,776
58,414
4,521
49,868
3,649
-
-
-
4,521
49,868
3,649
116,452
Total
$’000
66,676
49,776
30 June 2016
Non-interest bearing
Variable interest rate instruments
Total
30 June 2015
Non-interest bearing
Variable interest rate instruments
0.71
124,556
-
-
Total
196,492
30,411
98,268
-
71,936
30,411
98,268
-
-
-
200,615
124,556
325,171
The Group has access to financing facilities as described in note 21(d), of which $4.0 million were unused at the end
of the reporting period (2015: $4.0 million). The Group expects to meet its other obligations from the proceeds of the
ongoing vessel sales programme, 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 2016
Net settled:
Foreign exchange contracts
Total
30 June 2015
Net settled:
Foreign exchange contracts
Total
-
-
-
-
-
-
-
-
-
-
11,067
11,067
-
-
-
-
-
-
-
-
104 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial ReportNotes to the Financial Statements For the year ended 30 June 2016
Notes to the Financial Statements
For the year ended 30 June 2016
30. Financial Instruments (continued)
30.9 Fair value of financial instruments
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.
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.
• 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.
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 2016
Financial assets at fair value:
Derivative (cashflow hedge)
Total
30 June 2015
Financial assets at fair value:
Derivative (cashflow hedge)
Total
-
-
-
-
-
-
11,545
11,545
-
-
-
-
-
-
11,545
11,545
There were no transfers between Level 1 and 2 in the period.
31. 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, except as set out below.
As disclosed in note 16 Borrowings, on 24 August 2016 the Company received approval of some further amendments to
the terms and financial covenants of the Syndicated Facility Agreement from the Syndicate members. The amended Facility
Agreement and supporting documents were executed on 16 September 2016.
MMA Offshore Limited 105
Additional Securities Exchange Information
For the year ended 30 June 2016
Ordinary Share Capital (as at 9 September 2016)
373,076,993 fully paid ordinary shares are held by 8,958 individual shareholders. All issued ordinary shares carry one vote
per share.
Substantial shareholders
Halom Investments Pte Ltd
Mr Hassan El Ali
Black Crane Asia Opportunities Fund
Distribution of Holders of Ordinary Shares (as at 31 August 2016)
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
57,282,144
19,849,123
18,974,282
% of Issued
Capital
15.35
5.32
5.09
Number of ordinary shareholders
1,812
2,732
1,544
2,621
274
8,983
Twenty Largest Shareholders (as at 9 September 2016)
Number of
Shares
% of Issued
Capital
1
2
3
4
5
6
7
8
9
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
ABN AMRO Clearing Sydney Nominees Pty Ltd
J P Morgan Nominees Australia Limited
Argo Investments Limited
Evelin Investments Pty Limited
BNP Paribas Nominees Pty Ltd
CVC Limited
Hishenk Pty Ltd
10 Mr Mark Francis Bradley
11 Mr Michael Sydney Simm
12 Ms Jennifer Ann Weber & Mr Jeffrey Andrew Weber [JAWS Family A/C]
13 National Nominees Limited
14 UBS Nominees Pty Ltd
15 Buttonwood Nominees Pty Ltd
16 Dental Union Of Australia Pty Ltd
17 Mrs Elizabeth Aprieska
18 Ms Suzanne Margaret Buckley + Mr Kevin John Higgs
19 Mr Yong Zheng
20 Akir Pty Ltd
Total
76,439,123
55,010,107
18,410,506
16,260,953
13,862,997
4,580,000
2,476,801
2,301,712
2,300,000
2,250,000
2,194,659
1,907,958
1,813,892
1,799,610
1,563,588
1,500,000
1,444,553
1,400,000
1,309,080
1,270,924
20.49
14.74
4.93
4.36
3.72
1.23
0.66
0.62
0.62
0.60
0.59
0.51
0.49
0.48
0.42
0.40
0.39
0.38
0.35
0.34
210,096,463
56.31
106 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial Report Additional Securities Exchange Information
For the year ended 30 June 2016 (continued)
Unmarketable Parcels (as at 31 August 2016)
The number of holders holding less than a marketable parcel of the Company’s shares is as follows:
Minimum Parcel Size
Number of ordinary shareholders
Number of shares
1,471
2,194
1,177,631
Voting Rights
All ordinary shares carry one vote per share without restriction.
Unquoted Rights (as at 9 September 2016)
10,923,881 unlisted rights are held by 70 individual rights holders.
Shareholder Enquiries
Shareholders can obtain information about their shareholding by contacting the Company’s share registry:
Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne
Victoria 3000 Australia
Enquiries:
(within Australia)
(outside Australia) 61 3 9946 4439
Facsimile:
61 3 9473 2500
web.queries@computershare.com.au
www.computershare.com.au
1300 727 014
Change of Address
Shareholders should notify the share registry immediately if there is a change to their registered address.
Securities Exchange Listing
Shares in MMA Offshore Limited are listed on the Australian Securities Exchange.
Publications
The Annual Report is the main source of information for shareholders.
MMA Offshore Limited 107
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108 Annual Report 2016
OverviewOperating & Financial ReviewGovernance2016 Financial Report C o r p o r a t e
D i r e c t o r y
Directors
Tony Howarth
Chairman
Jeffrey Weber
Managing Director
Mark Bradley
Non-Executive Director
Andrew Edwards
Non-Executive Director
Eve Howell
Non-Executive Director
Chiang Gnee Heng
Non-Executive Director
Company Secretary
Dylan Darbyshire-Roberts
Registered Office
Endeavour Shed, 1 Mews Road
FREMANTLE WA 6160
Tel: +61 8 9431 7431
Fax: +61 8 9431 7432
www.mmaoffshore.com
Auditors
Deloitte Touche Tohmatsu
Chartered Accountants
Brookfield Place, Tower 2
123 St Georges Terrace
PERTH WA 6000
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
Solicitors
Ashurst
Brookfield Place, Tower 2
123 St Georges Terrace
PERTH WA 6000
Tel: +61 8 9366 8000
Fax: +61 8 9366 8111
www.mmaoffshore.com
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