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2023 ReportPeers and competitors of MMA Offshore Ltd:
Wilh. Wilhelmsen Holding ASAA N N U A L R E P O R T
2 0 1 8
Specialised
Offshore Fleet
Marine Logistics
Support
Technical
Expertise
We own and operate a specialised, high
specification fleet of 28 core vessels with
an average age of approximately 6 years
Our vessel service offering is supported
by two strategically located onshore
facilities in South East Asia
Strong project management capability
delivering innovative and fit for purpose
marine solutions
World Class Safety
Performance
Total Recordable Case Frequency
(“TRCF”) of 0.28 in FY2018 (rate per
million hours worked)
Middle
East
Dubai
East &
West Africa
Malaysia
Batam
Singapore
South East Asia
Contents
Overview
About Us
Chairman’s Address
Managing Director’s Report
Operating & Financial Review
Financial Position
Risks
Operations
Vessel Operations
Health, Safety, Environment
& Quality
Our People
Our Community
Governance
Board of Directors
Corporate Governance
Directors’ Report
Auditor’s Independence Declaration
Providing vessel solutions and marine expertise
to the offshore oil and gas industry.
Dampier
Fremantle
Australia/
New Zealand
Audit Report
Directors’ Declaration
2018 Financial Report
Shareholder Information
Additional Securities
Exchange Information
Key
Office
Onshore Facility
About the cover
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The Multipurpose Support Vessel MMA Prestige is one of MMA’s flagship vessels and has operated successfully in South East Asia and the Middle
East since delivery from MMA’s Batam Shipyard in 2016. The MMA Prestige has been designed and constructed to provide customers the opportunity
for faster, more efficient and cost-effective project mobilisation times. MMA Prestige offers superior ultra-deep water lift capabilities and has been
designed with on-board systems and infrastructure to be on location longer with minimised external support, and maximum shipboard facilities for
productive offshore work.
MMA Offshore Limited 1
Overview
Operating & Financial Review
Governance
2018 Financial Report
Worl d Class Assets and E xper tise .
A b o u t U s
MMA Offshore is one of the larg es t p rov ider s o f mar ine services
to the offshore o il and gas indus try in the As ia P acific regi on.
C ore F le et
4
12
7
5
AHT
8 yrs average age
AHTS
8 yrs average age
PSV
5 yrs average age
MPSV/IMR
4 yrs average age
MMA’s combination of quality offshore
vessels, technical marine expertise and
strategically located onshore facilities
enables it to provide innovative, fit for
purpose vessel solutions to the offshore
oil and gas industry. This includes
collaborating with clients on specialised
vessel designs, vessel conversions
and modification projects to meet their
unique project requirements.
MMA also has a strong capability in
project managing larger marine logistics
projects, supplementing its owned fleet
with chartered vessels as required. MMA
can leverage its land based facilities
in South East Asia as staging and
preparation facilities to service these
projects.
MMA prides itself on the quality, safety
and reliability of its operations which
are critical to success in the offshore
industry.
Onshore Facilities
Supporting vessel operations are MMA’s
two onshore facilities in South East Asia.
Singapore Onshore Support Facility
MMA’s Singapore Facility includes a 2.5
hectare site with 130 meters of water
frontage, making it an ideal facility for
vessel modification projects, mobilisation
and demobilisation scopes and as a
staging area for offshore projects.
Batam Shipyard Facility
MMA’s Batam Shipyard includes an
18.1 hectare yard site, fabrication and
construction areas and warehouse
storage facilities. The facility was
previously used to build customised
offshore support vessels and is now
used as a multi-user storage, staging
and project preparation facility.
Offshore Vessels
MMA currently owns and operates a
fleet of 28 high quality offshore vessels
with an average age of approximately 6
years. The owned fleet is supported by
chartered vessels as required.
Our key regions of operation include
Australia/New Zealand, South East Asia,
the Middle East and Africa.
MMA’s fleet is capable of undertaking
a range of offshore marine and subsea
services including:
• Offtake support;
• Supply operations – drilling and
production;
• Construction support;
• Seismic and survey support;
• Tug and barge operations;
• Anchor handling and towing;
• Accommodation support;
• Dive and ROV support;
• Subsea installation support; and
• Subsea inspection, maintenance and
repair.
2 Annual Report 2018
MMA Offshore Limited 3
Overview
Operating & Financial Review
Governance
2018 Financial Report
C h a i r m a n ’s A d d r e s s
MMA has streamlined its busi ness and s trengt hened it s balance s heet
to p osition the Company for an im prov ement in mar ke t co ndit ions
Whilst we continue to feel the impact of
the prolonged downturn in the offshore
vessel market, the broader oil and gas
market has improved over the course of
FY2018 with the oil price recovering and
holding over US$70 per barrel (Brent) for
the past six months.
The outlook for the oil price appears to
be more positive with industry experts
now predicting a tightening in the
supply-demand balance with limited
spare production capacity in the market.
Notwithstanding this, we can expect
the oil market to remain volatile and
be subjected to ongoing supply and
demand fluctuations.
The outlook for LNG has also improved
with increased demand expected over
the coming years, particularly from
China.
The improved oil price, in conjunction
with significant reductions in operating
costs has begun to translate to oil
company earnings, with the majors
recently reporting large profit increases.
In addition, project FIDs are expected
to increase significantly in 2018 and
2019, as previously deferred projects
are sanctioned in an effort to replace
depleting reserves. This bodes well for
an increase in vessel activity over time.
On the supply side, the vessel market
remains oversupplied, however there
is increasing consensus that a large
number of vessels which have been laid
up during the downturn may not return
to service due to prohibitive reactivation
costs and a reluctance by oil companies
to contract vessels which have been out
of service for long periods of time. These
circumstances should reduce some of
the supply overhang.
MMA has had a focused strategy over
the past three years to manage its cash
flow and debt obligations and to position
the Company for a return to more normal
trading conditions.
As part of our ongoing cost reduction
programme, we have significantly
reduced our direct operating costs and
overheads with corporate and vessel
overheads reduced by 50% since
FY2015.
A key part of our strategy was
the disposal of assets which were
considered to not be core to the
business going forward. This included
the Company’s Australian Supply Base
assets which were sold for $52.8 million
in the previous financial year. In addition,
we reviewed our fleet and sold 36 of our
smaller, older and more commoditised
vessels realising cash of approximately
$100 million. The proceeds from these
asset sales were predominantly used
to reduce debt, improving our gearing
and reducing our interest costs. The
sales programme has also stemmed
the ongoing operating losses and cash
drain from these underutilised vessels,
an estimated cumulative saving of $20
million.
Following the strategic repositioning of
the fleet, MMA is now focused on the
more complex and higher margin sectors
of the industry where it can leverage
its marine expertise to generate higher
returns on its assets. The core fleet
now comprises 28 high quality vessels
with an average age of approximately
six years, young by industry standards.
We have been diligent in maintaining
our vessels to a high standard during
the downturn which will position these
vessels well to compete for contracts as
market activity increases.
In addition to the asset sales mentioned
above, MMA further strengthened
its balance sheet in December 2017
through an equity raising under which
the Company raised $97 million (before
costs) and concurrently secured
valuable amendments to the terms of
the Company’s debt facilities. These
amendments included an extension of
the term of the facilities by two years
through to September 2021, amended
covenants including a covenant holiday
until June 2019, a reduced interest rate
and revised amortisation profile.
The equity raising was oversubscribed
and the funds raised at a very modest
discount to the share price at the time
which was pleasing. MMA now has an
improved cash buffer and a stronger
platform to take advantage of future
opportunities.
Notwithstanding the strengthened
balance sheet, MMA’s net debt as a
multiple of its current earnings remains
well above our target level.
A key focus is to improve the returns on
our assets to acceptable levels which will
in turn improve our debt metrics.
Returns should improve through
increased utilisation and rates as
the market normalises. However, we
are not relying solely on this to drive
improved returns on our assets. We
are also focused on boosting returns
through providing additional services to
clients, chartering in additional vessels,
managing large logistics projects and
increasing our presence in the subsea
vessel market. Whilst we have made
progress on these initiatives in FY18
we plan to accelerate these efforts in
the current year as we strive to improve
financial performance as quickly as
possible.
Fundamental to our success is our
operational excellence and service
delivery to clients. MMA has a strong
reputation as a quality operator with
a unique skill in delivering innovative
marine solutions to our clients. This
has translated into a number of very
significant contract wins over the past
three years in a highly competitive
market.
Safety is core to our operations and
pleasingly MMA maintained its excellent
safety performance in FY2018 with a
total recordable case frequency of 0.28
per million hours worked. This truly is
a world class safety performance and
significantly better than the marine
industry average of 1.8.
We expect market conditions in terms of
vessel utilisation to improve during the
course of FY2019. It will, however, take
time for higher utilisation to translate into
higher day rates.
We are targeting a cash flow neutral
position for the business in FY2019 while
we continue to position the Company
to take advantage of improved market
conditions and opportunities as they
emerge.
I would like to conclude by thanking
my fellow Board members for their
valuable contribution and stewardship
of the business over what continues to
be a challenging time for our industry. I
would like to welcome our newest Board
member, Mr Peter Kennan, who joined
the Board in September 2017. Peter is
the Managing Partner and CIO of Black
Crane Capital, MMA’s largest shareholder
and we welcome his valuable expertise
to the Board of Directors.
I would also like to pay tribute to Mr
Tony Howarth AO, who retired from the
Board in November 2017. Tony made a
tremendous contribution to MMA during
his 16 years on the Board, 11 of which
he served as Chairman.
We are very lucky to have an excellent
team of people at MMA. I would like to
acknowledge our Managing Director,
Mr Jeff Weber and all management and
staff for their ongoing dedication and
commitment to MMA.
Finally, I would like to thank you, our
shareholders for your ongoing support of
the Company.
Andrew Edwards
Chairman
4 Annual Report 2018
MMA Offshore Limited 5
Overview
Operating & Financial Review
Governance
2018 Financial Report
M a n a g i n g D i r e c t o r ’s R e p o r t
MMA h as strategi cal ly reposi ti on ed it s bu sin ess
and i s now well placed to benef i t f rom a re cove ry
in market conditions.
Financial summary
Operating summary
Strategy
Market conditions for the
FY2018 saw an improvement in
Strategic repositioning of the
$200.4m
Revenue
$18.5m
EBITDA
$(13.4)m
EBIT(1)
$(36.3)m
Normalised NPAT(1)
$(2.3)m
Operating Cashflow
60.7%
Gearing
$69.6m
Cash at Bank
$0.38
NTA per Share
Financial result in line with
expectations (EBITDA of $18.5m
including Slipway loss of $2.3m)
Utilisation 56% (FY17 52%)
Rates at historic lows
Slipway operation ceased in Jun-18
Maintained our world class safety
performance
Strengthened the Balance Sheet
through $97m equity raising and
debt amendments
Secured a number of significant
contracts during the year
Signed 3 year contract for MMA
Pinnacle commencing Q2 FY2019
Strategically repositioned the fleet
Focused on higher margin and more
complex market segments
Focused on operating scale in key
geographic regions
Building our subsea capability
Leveraging our onshore assets and
experience in project logistics
Focused on achieving economic
returns on our assets and improving
our debt metrics
Outlook
Market conditions for offshore
vessels remain challenging but the
market is improving
Expect higher utilisation through the
course of FY2019 with only modest
improvement in day rates this
financial year
Goal to be cash flow neutral in
FY2019
1 EBIT and Normalised NPAT exclude a reversal of prior period impairment charges of $8.4m. MMA’s Financial Report complies with Australian
Accounting Standards and International Financial Reporting Standards (“IFRS”). The pre-impairment reported EBIT and NPAT are unaudited but are
derived from audited accounts by removing the impact of the impairment reversal from the reported IFRS audited results. MMA believes the non-
IFRS disclosures reflect a more meaningful measure of the Company’s underlying performance.
offshore vessel market continued
EBITDA and utilisation over the
fleet completed
to be challenging during FY2018
previous financial year
Revenue for the year was $200.4 million,
down 9.6% on FY2017. EBITDA was
up 2% at $18.5 million, including a
$2.3 million loss from Dampier Slipway
which ceased operations in June
2018. Excluding this loss, the business
produced an EBITDA of $20.8 million up
15.6% on the previous year.
Australian operations contributed
revenue of $142.2 million during FY2018,
down slightly on the $148.8 million
generated in FY2017. Revenue from
international operations was $58.2
million, down from $72.9 million in
FY2017.
Average utilisation for the year was 56%
up from 52% in FY2017. Second half
utilisation was stronger at 65% (1H 47%)
as a number of our non-core vessels
were disposed of. The sale of these
vessels reduced the drag on utilisation
and also improved our margins as
holding costs were eliminated. Excluding
vessels held for sale, utilisation for the
core fleet was 69%.
MMA’s strategic repositioning of its
fleet through its non-core vessel sales
programme has been very successful,
saving cash and reducing MMA’s
exposure to vessels which are not
expected to generate a satisfactory
return on assets over time.
Nine vessels were sold during the
FY2018 financial year for a total of
approximately A$27 million with a further
vessel sold in July 2018 for A$5.1 million.
Since FY2016, MMA has disposed of 36
vessels for a total of approximately $100
million.
The programme has resulted in the
elimination of cumulative cash operating
losses on these vessels of approximately
$20 million from date of sale through to
30 June 2018. In addition, there have
been substantial savings in interest costs
and docking costs.
The majority of vessels sold have been
older tonnage not relevant to the future
market, or more commoditised vessels
which we anticipate will be the slowest
market to recover. The sales programme
has freed up operational capacity
to focus on higher margin and more
complex sectors of the industry where
MMA can leverage its marine expertise
to generate better returns.
although the signs of a recovery
continue to be positive
The broader oil and gas market has
improved with the oil price increasing
60% since the beginning of the financial
year.
As a result of the downturn over
the past few years, there has been
significant underinvestment by oil and
gas companies in the replacement of
depleting reserves. We are starting to
see some signs of this changing with
Rystad Energy recently predicting that
project FIDs will rise significantly in 2018
and 2019 as previously deferred projects
are sanctioned.
Seismic and subsea companies are also
reporting increases in activity, all of which
are early indicators of an increase in
vessel activity over time.
Offshore maintenance expenditure,
which has been deferred during the
downturn should also increase as
conditions improve, increasing demand
in the IMR market.
Whilst the broader oil and gas market
is improving, this has yet to translate to
the offshore vessel sector due to the
lag between investment decisions by
oil companies and an increase in vessel
demand. However, the indicators are
positive and we do appear to be at the
bottom of the cycle with utilisation, rates
and asset values appearing to have
stabilised over the past 12 months.
6 Annual Report 2018
MMA Offshore Limited 7
Overview
Operating & Financial Review
Governance
2018 Financial Report
Under the amendments to MMA’s debt
facilities which were agreed in November
2017, the Company committed to $30
million in amortisation from vessel sales
by 31 December 2018. As at the date of
this report, the full $30 million target has
been met.
The vessel sales programme is almost
complete with two vessels remaining on
the sales list with one of these currently
under a sales contract.
Ongoing cost reduction
programme has resulted in a
significantly reduced cost base
MMA has taken significant steps to
sustainably reduce its cost base over
the past three years with corporate
and vessel overheads down 50% since
FY2015.
There has also been a major focus
on reducing our direct costs through
retendering key expense items and
ongoing supplier renegotiations.
MMA continues to review all aspects
of its business for improvements and
efficiencies.
As mentioned previously the non-core
vessel sales programme has been a
major initiative to reduce holding costs
on underutilised vessels.
MMA also actively manages costs on its
vessels between contracts to minimise
operating costs.
The decision to close the Dampier
Slipway on 30 June 2018, which posted
a loss of $2.3 million for FY18, will
reduce costs in FY2019. Unfortunately
the volume of activity in the region made
it no longer sustainable to have an
in-house vessel maintenance facility in
Australia.
MMA continues to focus on reducing
costs in all areas of the business whilst
maintaining high safety and operating
standards which are essential to success
in the offshore oil and gas industry.
Strengthened Balance Sheet
World class safety performance
Our people are key to
Refined strategy focused on core
Market Outlook
our success
vessel operations
At MMA we understand that our people
are critical to our success.
The last four years have been very
challenging for MMA from a people
perspective as market conditions
necessitated a significant reduction in our
workforce. I would like to acknowledge
all those who contributed to MMA over
the years who are no longer with the
Company.
I would like to thank my Senior
Management Team who have shown
strong leadership and commitment
and all MMA staff for their valuable
contribution to the business over what
has been a difficult time.
We had a number of changes to the
Board of Directors during the year.
I would like to pay special tribute to
Tony Howarth our former Chairman
who retired in November 2017 after 16
years on the Board. I would also like to
formally acknowledge our new Chairman
Andrew Edwards who has seamlessly
transitioned into the role. I would
also like to welcome our most recent
appointment to the Board, Mr Peter
Kennan who joined the Board during
the year. Peter is the representative of a
major shareholder, Black Crane Capital
and brings a wealth of investment and
corporate finance skills to the Company.
I would like to take this opportunity to
thank the Board of Directors for their
valuable guidance and stewardship.
MMA has strategically repositioned its
business over the past 2 years with the
sale of its Australian supply base assets
and non-core vessels.
MMA’s strategy is now focused on a core
fleet of 28 high quality vessels targeting
more specialised and complex projects
where MMA can leverage its marine
expertise to extract the most value from
its assets.
The owned fleet will be supplemented by
chartered vessels as required to boost
earnings.
MMA has a strong project management
capability and will continue to leverage
this expertise to project manage
larger marine logistics projects. MMA’s
land based facilities in South East
Asia provide additional capability and
resources to mobilise and deliver these
types of projects.
MMA is also focused on building its
subsea capability focusing on the light
construction, inspection maintenance
and repair and dive support sectors of
the market. MMA currently has 5 vessels
working in this sector and is seeking to
grow its fleet and internal capability to
meet expected increased demand.
Regionally, we continue to focus on
maintaining operating scale in our key
regions of Australia/New Zealand, the
Middle East and South East Asia, with
operations in Africa on the back of long
term contracts.
Market sentiment continues to be
positive around a recovery in market
conditions for offshore vessels. We
are already starting to see improved
conditions in the broader oil and gas
market and early signs of a recovery in oil
and gas investment including increased
FIDs, seismic and subsea orders.
Unfortunately there is a lag between
investment decisions by oil and gas
companies and an increase in vessel
demand so we expect market conditions
to remain challenging in FY2019.
The oversupply of offshore vessels in
the market is still an issue, although we
anticipate that a large proportion of the
global cold stacked fleet will not return to
service which will eliminate some of the
supply overhang.
MMA currently has 18 of its 28 core
vessels under contract with the
remaining vessels operating in the spot
market. As at 30 June 2018, MMA had
41% of total vessel days contracted for
FY2019 (58% for the PSV fleet, 51%
for the MPSV/IMR fleet and 30% for the
AHT/AHTS fleet).
We expect utilisation to increase across
the course of FY2019 with only modest
improvement in day rates this financial
year.
Jeff Weber
Managing Director
MMA continues to improve its safety
performance. MMA’s Total Recordable
Case Frequency (“TRCF”) for FY2018
was 0.28 per million hours worked,
the Company’s best ever performance
and significantly better than the marine
industry average.
MMA continues to strive for ‘A Perfect
Day Every Day’, that is a day free of
recordable injuries or illness and material
incidents. In FY2018, we achieved 339
Perfect Days across the organisation,
up from 310 perfect days in FY2017.
We continue to strive for our target of
365 perfect days, a target we believe is
achievable.
We also completed a comprehensive
review of our Target 365 Critical
Controls during the year, to ensure that
they remain relevant to our changing
business.
Safety is a critical focus area for
MMA and we will continue to drive
improvements in safety across the
organisation.
In December 2017, MMA completed
a balance sheet recapitalisation,
raising $97m in equity combined with
amendments to the Company’s debt
facilities.
The equity component was fully
underwritten and comprised a $22.4
million institutional placement and
a $74.6 million 1 for 1, pro-rata,
accelerated, non-renounceable
entitlement offer.
The proceeds of the equity raising were
used to repay, in part, $30 million of debt
and provide an improved cash buffer
and stronger capital structure for the
Company.
As part of the recapitalisation, MMA’s
existing lenders agreed to a number
of important amendments to the
Company’s debt facilities including:
• An extension of the term to
30 September 2021;
• A reduction in the interest rate and
removal of the payment in kind (PIK)
interest;
• Amended covenants including a
covenant holiday until 30 June 2019;
and
• A revised amortisation profile with
scheduled amortisation commencing
in June 2020 including a cash sweep
above $70 million.
Full details of the equity raising and debt
facility amendments can be found in the
Equity Raising Investor Presentation,
dated 16 November 2017, which can be
found on the Company’s website.
Following the equity raising and debt
amendments, MMA’s cash at bank as
at 30 June 2018 was $69.6 million and
Net Debt (Interest Bearing Liabilities
less Cash at Bank) was $199.0 million.
Gearing (Net debt / Equity) has reduced
from 115.2% as at 30 June 2017 to
60.7% as at 30 June 2018.
MMA reviewed the carrying value of
its fleet as at 31 December 2017, in
line with accounting standards, which
resulted in a small reversal of the
previous impairment charge of $8.4m.
No further adjustments to the carrying
value of MMA’s assets were required on
30 June 2018.
8 Annual Report 2018
MMA Offshore Limited 9
Overview
Operating & Financial Review
Governance
2018 Financial Report
F i n a n c i a l R e p o r t
MMA’s focus during FY2018 w as on st reng thening the balance s heet
and m aximisi ng EBITDA.
Ne t P ro fit/(Loss) After Tax 1
$(36.3)m
$39.9m
$22.1m
14
15
16
17
18
$(16.4)m
$(36.3)m
$(66.8)m
1 From Continuing Operations
(Pre-impairment charge)
EBITDA
$18.5m
$193.1
$72.1
$57.5
$18.0
$18.5
14
15
16
17
18
Financially FY2018 was focused on
two key areas: firstly, strengthening
the Balance Sheet through the capital
raising, debt amendments and asset
sales and secondly, maximising earnings
before interest, tax and depreciation
(EBITDA) through utilisation and cost
rationalisation in the current challenging
market conditions.
The capital raising has delivered
stability to the balance sheet, giving
our customers surety that we are a
genuine long-term partner and providing
sufficient cash runway to capitalise on
opportunities during the recovery.
Impairment Reversal
The Company reported a net loss after
tax for the 2018 financial year of $(27.9)
million. This included a reversal of non-
cash impairment charges of $8.4 million
against the carrying value.
In accordance with Australian
Accounting Standards, the Company
assessed the recoverable amount of its
vessel assets as at 31 December 2017
and again at 30 June 2018.
EBITDA was $18.5 million which
included a ($2.3) million EBITDA loss
from the Company’s Slipway operations.
The Slipway ceased operations on 30
June 2018. Adjusting for the Slipway
loss, underlying EBITDA for the year was
$20.8m.
A recapitalisation of the Company
occurred in December 2017 with
net funds of $92.4 million raised to
strengthen the balance sheet and
position the Company for a recovery
in market conditions. Of the net $92.4
million, $30.0 million was used to pay
down debt.
An independent valuation of the fleet was
undertaken which indicated that market
values appear to have stabilised over
the past 12 months. This assessment
resulted in a reduction to the enbloc
discount, which is applied to the vessel
valuation, from 20.0% to 17.5% as at
December 2017. This reduction along
with foreign exchange movements and
depreciation resulted in a write back of
previous vessel impairments to the value
of $8.4m.
10 Annual Report 2018
MMA Offshore Limited 11
Underlying EBI TDA wa s $2 0.8 M up 11 % on the pri o r yea r
Overview
Operating & Financial Review
Governance
2018 Financial Report
Ope ra ting Cashflow
$(2.3)m
Capital Expe nd itu re
$9.2 m
Interest Bearing L iab ilities 1
$26 9m
C ash At B an k
$ 69 .6m
N TA Pe r Sh are
$ 0.3 8
$185.4m
$247.2m
$448.0m $448.5m
$120.2m
$159.3m
$54.4m
$68.0m
$(6.1)m
$(2.3)m
$31.9m
$9.2m
$398.7m
$324.2m
$269.0m
$174.8m
$124.5m
$2.10
$1.95
$1.70
$69.6m
$49.7m
$28.8m
$0.69
$0.38
41.6%
37.1%
G earing
60.7%
115.2%
55.0%
60.7%
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16
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18
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1 (excluding unamortised fees)
Cashflow
Capital Expenditure
Debt Management
Balance Sheet
Dividends
In addition to the capital raising, the
Company received net proceeds of
$25.3 million during the year from asset
sales which included the sale of nine
non-core vessels in the fleet during
FY2018.
A further $6.0 million of funds from prior
year sales, which were on balance sheet
at 30 June 2017, were also remitted to
the banking syndicate over the year.
Total repayment of borrowings during the
year including the funds from the capital
raising was $61.3 million.
Cash flow from operations for the 2018
financial year was negative $(2.3) million
after meeting interest and cash costs on
the Company’s debt facilities of $(16.9)
million.
Capital expenditure for the year of $9.2
million represented sustaining capital
expenditure only. Sustaining capital
expenditure is required to maintain the
Company’s vessels as well as its licence
to operate to generate income.
No growth capital expenditure was
incurred during the financial year due
to the prevailing market conditions and
availability of assets to charter in, limiting
the need for MMA to deploy capital to
secure contracts in the short term.
In December 2017, MMA undertook a
recapitalisation of the Company, raising
$97m in equity before costs, $30m of
which was used to repay debt.
As part of the recapitalisation MMA
secured the following key amendments
to the Company’s existing debt facilities:
• A facility extension to 30 Sept 2021;
• Reduced interest rate including the
removal of payment in kind (PIK)
interest;
• Amended covenants including a
covenant holiday to 30 June 2019;
No dividends have been declared for
the 2018 financial year.
• A revised amortisation profile with
scheduled amortisation commencing
in June 2020 including a cash sweep
above $70 million.
The Company has the ongoing support
of its Banking Syndicate who continue
to work with the Company during these
challenging trading conditions.
The Company continues to have a
strong asset base comprising its core
fleet of high quality vessels with an
average age of just over six years. At 30
June 2018, the Company reported Total
Assets of $639.8 million, Net Assets of
$328.3 million and a NTA backing of
$0.38 per share.
At 30 June 2018 the Company had
cash reserves totalling $69.6 million.
The Company’s gearing ratio (net debt
to equity) at 30 June 2018 following
the impairment reversal for the year
decreased to 60.7%, compared to
115.2% the previous year.
MMA st rengthened its bal anc e sh ee t du rin g th e yea r through a $97M equity
rais ing and amendments t o th e com pan y’s d ebt f ac ilities
12 Annual Report 2018
MMA Offshore Limited 13
Overview
Operating & Financial Review
Governance
2018 Financial Report
R i s k s
Effectively ident ifyi ng and mana ging
ris k i s cr itical to MMA’s success.
MMA operates an enterprise risk
management framework aligned to
ISO 31000:2018, 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 are any of the
assumptions 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 in the offshore oil and
gas industry, particularly in the areas
where the Company currently operates
(including Australia, New Zealand, South
East Asia, the Middle East and Africa).
The level of activity in the offshore oil
and gas industry may vary and be
affected by, amongst other things,
prevailing or predicted future oil and gas
prices. A number of other factors also
affect the offshore oil and gas industry,
including economic growth, energy
demand, the cost and availability of other
energy sources and changes in energy
technology and regulation. There can
be no assurance that the current levels
of offshore oil and gas activity will be
maintained or increased in the future
or that oil and gas companies will not
further reduce their offshore activities
and capital expenditure. Any prolonged
period of low offshore oil and gas activity
(such as that which is currently being
experienced) will have an adverse effect
on MMA’s business.
The Company aims to mitigate the
impact of lower offshore oil and gas
activity by differentiating itself through
innovation and operational excellence, by
diversifying our contract portfolio across
exploration, construction, production and
maintenance/repair and by diversifying
our geographic footprint across a
number of key regional areas.
Any decreases in industry activity or a
lack of recovery in industry activity may
also increase the risk of the Company
failing to comply with the covenants
associated with its Banking Facilities.
In addition to the controls listed above,
MMA seeks to manage this risk through
proactively engaging with its lenders
and through ongoing monitoring and
review of the Company’s Balance Sheet
strategy.
Competition, vessel oversupply
and fleet composition
misalignment with market
demand
Demand for MMA’s vessels is also
affected by the number of vessels
available in the market and the
competitive landscape.
In the current market, there is
an oversupply of vessels and a
corresponding misalignment with
demand. This has led to an increase in
competition which adversely impacts
vessel utilisation, rates and contract
terms, thereby impacting MMA’s
earnings and profitability.
MMA seeks to manage this risk by
having a clear strategic plan including
an ongoing review of its asset mix and
capability to meet market demand.
To this end, MMA has disposed of a
number of non-core vessels from the
fleet which are commoditised in nature to
focus on more technically sophisticated
vessels where MMA can utilise its marine
expertise to extract the most value out
of both its own assets and those assets
bareboat chartered from third party
owners.
MMA also has an active lay-up
programme to minimise holding costs
for vessels between contracts. These
laid-up vessels are either cold or warm
stacked predominantly at our land based
facilities in Batam and Singapore to
minimise costs.
MMA’s strategic plan to manage this risk
also focuses on regional strategies to
position itself in the most advantageous
areas to operate (both in terms of
demand and clients).
MMA’s strategy is to differentiate
itself from its competitors through
operational excellence, proactive
and innovative solutions, long-term
customer relationships and responsive
account management - whilst remaining
competitive on price.
Operational risks
The Company’s operations are subject
to various risks inherent in servicing
the offshore oil and gas industry. Our
international operations broaden our risk
exposure in terms of both opportunities
and threats.
Operational risks include (but are not
limited to):
Geopolitical, government and
regulatory factors
• Health and safety incidents;
•
•
Loss of key customers/contracts;
Failure by customers to pay
for services contracted and/or
performed;
• Redeployment costs of assets that
are unable to be used in their current
geography for a period of time;
• 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;
• Environmental pollution/
contamination and other related
accidents;
• Regulatory and legislative non-
compliance;
Fraud and theft;
Increases in input costs;
Loss of key personnel; and
•
•
•
• Contractual assumptions of risk.
Potential consequences associated with
these risks include the loss of human life
or serious injury, pollution, environmental
damage, significant damage to or loss
of assets and equipment, business
disruption, client dissatisfaction, loss
of contracts, 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,
counterparty risk assessments and a
host of engineering and operational
controls.
Our international operations are subject
to 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 project 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 may face restrictions on its ability
to win work in certain countries due to
changing cabotage regulations and/or
may be required to form joint ventures
in some countries in order to access the
local offshore oil and gas markets. Joint
ventures may introduce a higher level of
operational, financial and counterparty
risk.
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 and market
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 processes further mitigate
this risk. The Board also considers from
time to time whether to manage currency
fluctuation risk through appropriate
hedging.
14 Annual Report 2018
MMA Offshore Limited 15
Overview
Operating & Financial Review
Governance
2018 Financial Report
O p e r a t i o n s
Operational Highlights
Overall Fleet Utilisation 56%
(1H 48%; 2H 65%)
Core fleet Utilisation 69%
(1H 63%; 2H 74%)
Rates remain at historically low levels
Strong utilisation in Australia
particularly in 2H
3 key projects during the year including:
ConocoPhillips – support for drilling and
shutdown operations (4 vessels)
Technip: Greater Enfield Pipehaul Project
(2 vessels)
Subsea 7: Greater Western Flank Tug
and Barge Project (6 vessels)
Ongoing production support contracts
for 6 vessels (options recently exercised
for Strait and Sound)
MMA Privilege continues on full time
contract in Côte d’Ivoire
Signed key 3 year contract for
MMA Pinnacle with iTech/Subsea 7
(commencing October 18)
Extended key contracts in Middle East to
30 June 19 (3 Vessels)
Ongoing spot work across SEA
and Middle East
MMA Pinnacle and MMA Prestige
impacted by Q3 seasonality
Vess e ls Historical Performance
76%
140
120
100
80
60
40
35.2
20
0
85%
120.7
76%
65%
78.4
60% 58%
65%
53%
50%
48%
54.2
58.1
6.7
7.5
17.3
11.4
13.8
1H14 2H14 1H15 2H15
1H16
2H16
1H17
2H17
1H18
2H18
Vessel EBITDA
Overall Fleet Utilisation
100%
80%
60%
40%
20%
0%
Australia/New Zealand
MMA’s Australian operations performed
relatively well with a number of significant
contracts boosting activity in the second
half. Second half utilisation for the
Australian fleet was 81%, a level that we
have not seen for some time.
In January 2018, MMA commenced a
contract with Technip for the provision of
two platform supply vessels (“PSVs”), the
MMA Leveque and the MMA Valour, for
a pipehaul project at Woodside’s Greater
Enfield project off Exmouth in Western
Australia. The scope of work included
the transportation of line pipe from the
Exmouth Gulf to the Greater Enfield Field
from the Pipe Carrier Vessel ‘Global
1201’. MMA also supplied a vessel to
carry cargo from Vietnam to Dampier
for the project. The project completed
successfully in May 2018.
In March 2018, MMA commenced a 10
month contract with ConocoPhillips for
a multi-vessel marine spread to support
drilling and shutdown operations at the
Bayu-Undan gas field in the Timor Sea.
Two PSVs, the MMA Leeuwin and MMA
Responder (a PSV specifically chartered
in for the project) are contracted to
provide supply support services for
the duration of the drilling campaign.
In addition to the PSVs a number of
anchor handling tug supply vessels
(AHTSs) are supporting shut down, rig
moves and additional supply scopes.
This is an important project for MMA and
will provide utilisation for these vessels
through to the second half of FY2019.
Fl ee t B rea kd o wn ( % o f Boo k Value)
37%
34%
29%
AHT/AHTS (16)
PSV (7)
MPSV (5)
R eg ion al Fleet Breakdo wn (Jun-18)
5
1
8
15
Australia*
SEA
Africa
Middle East
South East Asia
We are seeing a reasonable amount
of activity in Brunei and Malaysia and
our two large AHTS vessels, the Jaya
Majestic and Sea Hawk 1, were active in
those markets on a number of projects
during the year achieving utilisation of
over 60%.
The MMA Almighty, a smaller AHTS,
completed its long term production
support with Ophir in Thailand early in
the financial year and spent most of the
remainder of the year idle. The contract
was retendered and awarded at less
than cash breakeven rates, an indication
of the competitive nature of the South
East Asian market for these more
commoditised vessels.
Our IMR vessels, the MMA Pinnacle and
Prestige, are building a solid reputation
in the IMR and dive support market,
completing a number of short term
work scopes across all of our operating
regions during the first half. The South
East Asian monsoon impacted demand
towards the end of the calendar year
with both vessels idle from the latter
half of December and through most of
the third quarter. Utilisation for the first
half for these two vessels was 75%
dropping to 52% in the second half. The
lower utilisation in the second half had a
significant impact on our financial result
as the holding costs on these vessels are
relatively high. As mentioned previously,
the MMA Pinnacle has secured a three
year contract with iTech/Subsea 7,
commencing in Oct 2018, which will
secure a baseload of utilisation for that
vessel over the contract period.
During the year, MMA was also
contracted by Subsea7 for the provision,
management and operation of tug and
barge support vessels to transport
project materials and equipment for
Woodside’s Greater Western Flank-2
Subsea Installation Project. The vessel
spread includes a combination of owned
and sub-contracted vessels including
two of MMA’s 8,000bhp AHTSs, the
MMA Coral and MMA Crystal, in
addition to two smaller chartered in
tugs and 2 chartered cargo barges.
MMA managed and carried out the
required mobilisation for the barges at
its onshore facility in Batam, Indonesia.
The project commenced in June 2018
and is expected to continue through to
September 2018.
In addition to the project work described
above, MMA’s long term production
support contracts in Australia continue
to provide full utilisation for a number
of our vessels. The MMA Brewster,
MMA Plover, MMA Inscription, MMA
Sound, MMA Strait and MMA Cove all
experienced close to full utilisation during
the year.
There has also been a slight uptick in
the amount of seismic work in the region
with the MMA Searcher, which was
relocated to New Zealand, completing
seismic work for Shell and Schlumberger.
The vessel has since returned to
Australia to continue operations as
a seismic support vessel. The MMA
Vantage was also mobilised to support
the seismic market and has been active
during the year conducting a number
of scopes in Australia for Polarcus and
other clients.
MMA currently has 15 vessels working
in Australia / New Zealand.
16 Annual Report 2018
MMA Offshore Limited 17
Overview
Operating & Financial Review
Governance
2018 Financial Report
MMA secured a numbe r o f sign ifi ca nt
contracts during the year inclu ding a 3 yea r
contract f or the MMA Pinnacle
South East Asia (continued)
Middle East
Africa
The remainder of the international spot
fleet had low utilisation of approximately
30%, excluding vessels held for sale,
reflective of the ongoing difficult market
conditions.
Tendering activity has increased
somewhat in recent months with
both volume of tenders and quality of
counterparties improving.
We are also starting to see the impact
of long term laid up vessels on market
availability, with some owners’ vessels
being disqualified from tender awards
due to lack of maintenance and
compliance standards. We anticipate
that a large proportion of long term laid
up vessels will never return to the market
due to the significant costs associated
with bringing them back to acceptable
operating standards. MMA has been
diligent in maintaining its vessels
throughout the downturn to ensure that
they are available for work as and when
required.
At this stage it is difficult to say when
market conditions will improve, although
the region is set for a number of FIDs
which should increase activity over time.
MMA currently has 8 vessels working
in South East Asia.
The MMA Centurion and MMA Chieftain
continued their long term contracts for
a client in Saudi Arabia achieving full
utilisation during the year. A third vessel,
the MMA Concordia went back on hire
on this contract during the second half
following an extended period off hire due
to technical difficulties. Pleasingly, these
contracts have been extended for a
further year and will run through to
Jun-19 with a further 1 year option.
The MMA Pride and MMA Cavalier
are currently positioned in the Middle
East and are working the spot market.
These vessels are also mobilised to
other regions for specific contracts,
for example the Pride has recently
been mobilised to Brunei for a 90 day
contract.
We are currently seeing strong tendering
activity out of the Middle East region
although competition remains intense.
The Middle East requires a high level
of technical and operational expertise
and is well suited to MMA’s skillset. As
such, MMA is focused on growing our
presence in this region.
The MMA Privilege, a large multipurpose
maintenance vessel, is currently on a
long term maintenance support contract
in Côte d’Ivoire in West Africa. The vessel
has been operating in Côte d’Ivoire since
it was delivered from MMA’s Batam
shipyard in 2016. MMA secured a further
one year contract for the vessel in April
2018.
MMA currently does not have any
vessels operating in the West African
spot market due to the current market
conditions but we will transfer vessels
into this market on the back of long term
contracts.
Whilst market activity in West Africa
remains subdued, the longer term
prospects for East Africa remain
promising with a number of LNG projects
flagged for development. In June 2017,
ENI sanctioned its Coral South FLNG
project in offshore Mozambique. Key
EPC contracts have been awarded
and the project is targeting first gas in
2022. A final investment decision is also
expected on Anadarko’s Mozambique
LNG Project in 2019. East Africa is
an emerging region with significant
gas discoveries and MMA will seek to
leverage its experience in frontier LNG
developments in Australia to support
these projects.
FY 18 U ti lisa t ion ( exc lu din g vesse ls he ld f or sa le )
AHT/AHTS
PSV
MPSV/IMR
Overall Fleet
56%
70%
63%
76%
84%
80%
68%
71%
70%
63%
74%
69%
Global
Avg
~50%
1H18
2H18
FY18
FY 19 C ont ra ct ed U t ili sat ion (D a ys un d er c o nt ra c t)
AHT/AHTS
11%
30%
41%
PSV
58%
58%
MPSV/IMR
51%
6%
57%
Total Core Fleet
41%
7%
48%
Already Contracted
Highly Probable
18 Annual Report 2018
MMA Offshore Limited 19
Overview
Operating & Financial Review
Governance
2018 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
Total Re co rdable Case
Frequ ency
(per mi llion hours)
3.3
IMCA
Average
1.8
1.2
0.95
0.36
0.28
14
15
16
17
18
MMA TRCF
MMA 3 Yr Avg
In 2018 MMA ma inta ined a wo rld c las s HS EQ per f o rm ance.
At MMA Offshore, the health and safety
of our employees, contractors, visitors
and clients is fundamental to the way we
do business.
Our operations are underpinned by
our Target 365 Culture, our relentless
commitment to the systematic
management of health and safety and
the environment in which we operate in.
In FY2018 MMA maintained a world
class HSEQ performance. MMA’s Total
Recordable Case Frequency “TRCF”
for the year was 0.28, per million hours
worked, our best ever performance, a
70% improvement on 2017 and a 91%
improvement over the past five years.
This is world class health and safety
performance compared to our industry
peers with the IMCA average for 2017 at
1.8 per million hours worked.
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”. MMA tracks
the number of ‘Perfect Days’ across its
global operations with our target being
365 perfect days each year. In FY2018,
MMA achieved a level of 93% Perfect
Days across the whole organisation,
an 8% improvement on the previous
reporting period.
MMA continues to encourage an open
reporting culture and is now including
measures relating to asset reliability in its
Target 365 reporting.
As part of our continuous improvement
culture, we have implemented a number
of initiatives during the year, including:
• A comprehensive internal assurance
programme targeted at verifying that
sufficient controls are in place to
prevent incidents and maintain our
licence to operate;
• Continued to embed and completed
a comprehensive review of our
Target 365 Critical Controls. We will
roll out an updated set of Target 365
Critical Control’s in FY2019, which
have been benchmarked against
industry standards; and
• Undertaking our largest ever review
of our management systems.
In FY2019, we will complete a
significant change to our systems to
ensure efficient and effective global
operations.
MMA continues to be active in industry
HSEQ forums by openly sharing lessons
learned and through active involvement
in events and forums across our
global operations. MMA contributed
to the International Marine Contractors
Association (“IMCA”) Global HSSE
Committee as the representative for
the Asia Pacific region and is an active
member of Safer Together WA/NT in
Australia.
Environment
MMA remains committed to achieving
the highest standard of environmental
performance across all of its business
activities.
MMA completed a programme of
environmental monitoring and reporting
during FY2018, in compliance with our
onshore environmental licences.
Quality
During FY2018, MMA attained global
accreditation to the revised ISO
9001:2015 Standard and maintained ISO
14001:2015 and OSHAS 18001:2007
internationally.
MMA continues to improve its systems
and processes to ensure that they
reduce risk and are operationally
efficient. In FY2019, we will complete a
significant project to align management
systems to new industry frameworks.
CRITICAL
CONTROLS
LIVE A PERFECT
DAY EVERY DAY
DO IT THE RIGHT WAY
20 Annual Report 2018
MMA Offshore Limited 21
Overview
Operating & Financial Review
Governance
2018 Financial Report
O u r P e o p l e
MMA’s strength li es i n i ts abi li ty t o att r act and ret ain the bes t pe ople in t he bus ines s
O u r C o m m u n i t y
At MMA we strive to provide a diverse,
high performance workplace built on
trust, cooperation and mutual respect.
The key to our success is our ability to
attract and retain the best people in the
business. This is in part due to a strong
culture that unites our people across
business groups, countries and vessels,
as well as the professional development
opportunities that come with a career at
MMA.
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.
In 2017, we finalised new Enterprise
Agreements covering our Australian
marine personnel for a period of four
years. The agreements have now been
in operation for over a year and will
continue to provide certainty to our
clients and employees through to 2021.
Additionally, FY2018 saw the continued
refinement of MMA’s resource planning
and utilisation analysis tools, which has
enabled the business to optimise the
scheduling of our offshore employees.
342
Australia
Top Ten
Employee
Nationalities
Training and Development
MMA is committed to the development
of our people through performance
feedback, internal development
opportunities and training programmes.
MMA continues to focus on providing
our people with the right skills so that
they can perform their roles safely and
competently.
During FY2018, MMA redesigned and
renewed its focus on our Performance
Management framework with the aim of
further embedding a high performance
culture within the business.
We have continued with the commitment
to providing in-house training activities
during the year, with several new training
programmes developed to meet specific
needs or risks within the business.
Throughout the year, 820 employees
completed 7,014 individual training
programmes. Of these, 80% were
developed in-house using MMA’s online
learning environment and 859 were
verification of competencies completed
by our crew onboard a vessel.
MMA also resumed its cadet training
programme during the year emphasising
its commitment to developing the next
generation of ocean going seafarers in
Australia. Four Deck and Engineering
Officer Graduates commenced with
MMA during the past twelve months,
with each of these undertaking on-shore
study at the Australian Maritime College
in Launceston Tasmania.
Russian F ederation
Timo r Leste
Myanmar
Thailand
Ukraine
Singap ore
Malays ia
5
5
13
14
25
58
81
Philipp ines
85
Ind ones ia 123
Aligned closely to their study, each
Graduate is gaining valuable sea
time experience on vessels from our
Australian based fleet.
Diversity
As a business with a global focus, MMA
aims to have a workforce that best
represents the communities in which we
do business.
MMA’s employees are made up of
22 different nationalities, with 519 of
our people coming from non-English
speaking backgrounds.
Employment opportunities for Timor
Leste citizens have increased in line with
the company’s increased operational
presence in the region.
Increasing the employment opportunities
for Indigenous Australians continues
to be a focus as well as providing
opportunities for women in non-
traditional seafaring roles.
In terms of gender diversity, the
percentage of women holding senior
management positions within the
company for FY2018 was as follows:
• Board of Directors - 20%
• Executive Management - 20%
• Senior Management - 26.8%
% Of Wome n Employed
42.8
39.4
28.2
26.8
20.0
20.0
20.0
16.7
17
18
17
18
17
18
17
18
Ind ia 156
Total
Organisation
Board of
Directors
Executive
Management
Senior
Management
MMA is committed to makin g a po s itive con tr ibutio n to the commun iti es i n whi ch we operate.
To support its community engagement
goals MMA is committed to:
•
Investing in local community projects
that have a positive and sustainable
benefit;
• Seeking business opportunities with
local suppliers and subcontractors;
• Striving to be good corporate
citizens, conducting business in an
ethical manner;
• Developing long term relationships
with local indigenous communities
in order to increase indigenous
participation in our workforce and
promote opportunities for training
and development; and
• Creating and maintaining cross
cultural awareness throughout the
business
MMA strives to enhance community
participation through the procurement
of local goods and services as well as
through the promotion of opportunities
for training and development. MMA
also continues its participation in
locally-based industry network groups
to enhance its interaction with local
stakeholders.
Procurement
Supporting local contractors and
vendors (including indigenous
businesses) is a key priority for MMA.
Where practical, MMA aims to procure
at least 80% of its operational spend
through localised supply and service
agreements.
We also actively look for ways to develop
new capabilities in the communities in
which we operate.
Typically, we identify opportunities
where local providers have the ability
to directly service MMA’s requirements
and where this is not possible, we work
with counterparties to develop these
offerings.
In FY2018 MMA continued to engage
with Aboriginal and Torres Strait Islander
(“ATSI”) enterprises to support its
operations offshore Australia.
The range of products and services
supplied by ATSI businesses includes
waste management services, office
supplies, personal protective equipment,
lifting and rigging equipment and
consumables, victualling supplies,
facilities maintenance, graphic design,
and payroll and recruitment services.
Employment
As a business with a global focus, MMA
aims to have a workforce that best
represents the communities in which we
operate.
MMA has a number of targeted
employment opportunities and
programmes in place including a Timor-
Leste Local Content Strategy and an
ATSI traineeship programme.
MMA’s operations increased in the
Timor Sea during FY2018, as a result
of its contract to support operations at
ConocoPhillips’ Bayu-Undan project.
Through its activities in this region, MMA
is committed to providing a marine
career pathway for Timorese nationals.
Two STCW-rated cadets have graduated
from the Akademi Laut Malaysia Seafarer
Program. An additional five Timorese
cadets have been recruited and will
undertake their study during 2018/19.
These graduates will then have the
opportunity to enter our international
fleet to gain valuable sea time as well as
have access to ongoing positions within
the fleet.
MMA’s ATSI Traineeship programme is
providing marine careers to ATSI people
in Northern Australia. With a growing
number of vessels operating from
Darwin, ATSI communities are a key
stakeholder in our operations.
In the last 12 months, one ATSI trainee
has successfully completed a Certificate
III in Maritime Operations (Integrated
Rating) at South Metropolitan TAFE. This
trainee has progressed to sea time in
order to gain eligibility for an Integrated
Rating Certificate of Proficiency. An
additional ATSI trainee has commenced
the on-shore study component of the
traineeship.
Sponsorship
As part of MMA’s ongoing Target 365
rewards programme, business units
contributed donations to a range of
charities during FY2018 including Motor
Neuron Disease Australia, The Starlight
Children’s Foundation, Red Nose, The
Royal Flying Doctor Service and a range
of fundraisers through Everyday Hero.
MMA recognises that supporting
community endeavours, either in kind or
monetarily, is a responsibility we have to
the communities in which we operate.
We look forward to continuing our
corporate citizenship in FY2019.
22 Annual Report 2018
MMA Offshore Limited 23
B o a r d o f D i r e c t o r s
Mr Hugh Andrew Jon (Andrew)
Mr Jeffrey Andrew Weber
Ms Eva Alexandra (Eve) Howell
Mr Chiang Gnee Heng
Mr Peter Kennan
Mr Anthony (Tony) John Howarth AO
Edwards
Chairman
– Appointed 27 October 2017
Andrew was appointed as a Director of
the Company on 18 December 2009
and as Chairman of the Company on
27 October 2017.
Andrew currently serves as Non-
Executive Chairman of MACA Limited
and a Non-Executive Director of Nido
Petroleum (delisted 26 June 2017).
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 Chartered Accountants Australia and
New Zealand and has served as a State
Councillor of that organisation. Andrew
graduated from the University of Western
Australia with a Bachelor of Commerce
degree.
Andrew is a member of both the
Company’s Audit and Risk Committee
and the Company’s Nomination and
Remuneration Committee.
Managing Director
– Appointed 31 December 2002
Non-Executive Director
– Appointed 27 February 2012
Non-Executive Director
– Appointed 5 July 2012
Non-Executive Director
– Appointed 22 September 2017
Jeff began his career as a Marine
Engineer with BHP Transport. He went
on to complete a degree in this field
in 1993 and in 1994 graduated with a
Master’s in Engineering and Technology
Management from the University of
Queensland. During his 19 years with
BHP, Jeff gained comprehensive project
management experience and helped
develop new business for BHP Transport
in Australia and South East Asia. He also
managed a major initiative with BHP’s
steel division, reviewing its logistics
arrangements and developing processes
to improve services and reduce costs.
In 1998, Jeff joined Riverside Marine
in Queensland and helped expand its
operations Australia wide. This included
forming a joint venture company with
Wijsmuller International Towage BV,
RiverWijs and negotiating with Woodside
Petroleum to take over that company’s
harbour towage operation in Dampier,
Western Australia. Jeff is also a Non-
Executive Director of Maritime Super Pty
Ltd, a superannuation fund dedicated to
employees in the maritime industry.
As Managing Director of MMA, Jeff
is responsible for the financial and
operational performance of all of the
Company’s business lines.
Eve has over 40 years of experience in
the Australian and international oil and
gas industry in a number of technical
and managerial roles. Eve is currently a
Non-Executive Director of Buru Energy
Ltd. She is also a Senior Adviser to
African Geopolitics, a socio-political
advisory group helping enterprises work
successfully in Africa.
Eve was an Executive Vice President
for Woodside Energy Ltd for over
five years, initially as the executive in
charge of the North West Shelf Project
(Australia’s largest petroleum resource
project). In addition to her Woodside
role, she was also CEO of the North
West Shelf Venture (BP, BHP, Chevron,
Shell, Woodside and Mitsubishi/Mitsui)
from 2006 to 2010. In her final eighteen
months with Woodside, she served as
the Executive Vice President for Health,
Safety & Security for all Woodside’s
activities worldwide. Prior to Woodside,
she held the position of Managing
Director at Apache Energy Ltd.
Eve has previously served on a number
of Boards, including Downer EDI Ltd,
Tangiers Petroleum Ltd, 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 Chair of the Company’s Audit
and Risk Committee and a member
of the Company’s Nomination and
Remuneration Committee.
Peter is currently Managing Partner and
CIO of Black Crane Capital. He has 23
years of corporate finance experience
across a diverse range of sectors and
transactions with Black Crane and
previously with UBS Asia and Australia.
The Black Crane Asia Opportunities
Fund, managed by Black Crane Capital,
is a major shareholder of MMA.
Peter established Black Crane in 2009.
Prior to that, he was the Head of Asian
Industrials Group for UBS Asia, a
corporate finance sector team covering
energy, infrastructure, resources,
consumer/retail and general industrial
companies.
Peter was also the Head of Telecoms
and Media sector team for UBS Australia
specialising in M&A, advising on many
large, complex transactions. Prior to
UBS, Peter spent seven years with BP in
a variety of engineering and commercial
roles.
Peter graduated from Monash University
with a Bachelor of Engineering
(Honours). He also has completed a
Graduate Diploma in Applied Corporate
Finance with the Securities Institute of
Australia.
Peter is a member of both the
Company’s Audit and Risk Committee
and the Company’s Nomination and
Remuneration 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 two years until August 2007.
Chiang Gnee was also formerly the
Executive Director of the Singapore
Maritime Institute (SMI) which focuses
on the development of the Singapore
maritime industry through research.
Chiang Gnee was engaged in workplace
health and safety management until 31
March 2018 and in vocational technical
education in Singapore. He was
Chairman of the Singapore Workplace
Safety and Health Council and Deputy
Chairman of the Institute of Technical
Education (ITE) Board of Governors until
30 June 2018.
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.
In addition, Chiang Gnee is Chair
of the Company’s Nomination and
Remuneration Committee.
Former Chairman /
Non-Executive Director
– Appointed 5 July 2001
– Retired 30 November 2017
Tony was appointed as a Director of
the Company on 5 July 2001 and as
Chairman of the Company on 1 August
2006. Tony stood down as Chairman of
the Company on 27 October 2017 and
retired as a Director of the Company on
30 November 2017.
Tony is a Life Fellow of the Financial
Services Institute of Australasia, a Fellow
of the AICD and has more than 30 years’
experience in the banking and finance
industry. He has held several senior
management positions during his career,
including Managing Director of Challenge
Bank Limited and Chief Executive Officer
of Hartley’s Limited.
Tony is currently a Non-Executive
Director of Wesfarmers Limited,
Alinta Energy Pty Limited and BWP
Management Limited (the responsible
entity for the BWP Trust).
Tony was previously Chairman of
Home Building Society Limited, Deputy
Chairman of Bank of Queensland Limited
and a director of AWB Limited. He is
also the former Chairman of St John of
God Health Care Inc. and the former
Chairman of the West Australian Rugby
Union Inc.
He is an Adjunct Professor (Financial
Management) at The University of
Western Australia Business School
and a former member of The University
of Western Australia Business School
Advisory Board.
24 Annual Report 2018
MMA Offshore Limited 25
2018 Financial ReportOverviewOperating & Financial ReviewGovernance ASX Listing Rule 4.10.3 requires companies to disclose the extent to which they have complied with the 3rd Edition ASX Principles
and the reason for any departure from the 3rd Edition ASX Principles.
1.7
A listed entity should:
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.
Compliance with Australian Corporate Governance Standards
The Board believes that the Company follows the 3rd edition of the Corporate Governance Principles and Recommendations (“3rd
Edition ASX Principles”) set by the ASX Corporate Governance Council, or where it does not, has sound reasons for not doing so as
explained in the Company’s Corporate Governance Statement.
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 2018, can be found on the Company’s website at www.mmaoffshore.com/investor-centre/corporate-
governance.
The Company’s Corporate Governance Statement is current as at 20 September 2018 and has been approved by the Board.
ASX Corporate Governance Council Recommendations Checklist
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 2018. The Company’s Corporate Governance Statement sets out in greater detail the Company’s assessment of its
compliance with the 3rd Edition ASX Principles.
3rd Edition ASX Corporate Governance Principles and Recommendations
Comply
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; and
(b) those matters expressly reserved to the board and those delegated to management.
1.2
A listed entity should:
(a) undertake appropriate checks before appointing a person, or putting forward to security
holders a candidate for election as a director; and
(b) provide security holders with all material information in its possession 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 senior executive setting
out the terms of their appointment.
Yes
Yes
Yes
Yes
Yes
1.4
The company secretary of a listed entity should be accountable directly to the board, through the
Yes
chair, on all matters to do with the proper functioning of the board.
3rd Edition ASX Corporate Governance Principles and Recommendations
Comply
1.5
A listed entity should:
(a) have a diversity policy which includes requirements for the board or a relevant committee of
Yes
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
(1) the respective proportions of men and women on the board, in senior executive positions
Yes
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 Equality Act, the entity’s
Yes
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 of the board, its
committees and individual directors; and
(b) disclose, in relation to each reporting period, whether a performance evaluation was
undertaken in the reporting period in accordance with that process.
(a) have and disclose a process for periodically evaluating the performance of its senior
executives; and
(b) disclose, in relation to each reporting period, whether a performance 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
(b) if it does not have a nomination committee, disclose that fact and the processes it employs
N/A
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.
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
26 Annual Report 2018
MMA Offshore Limited 27
2018 Financial ReportOverviewOperating & Financial ReviewGovernance 3rd Edition ASX Corporate Governance Principles and Recommendations
2.2
A listed entity should have and disclose a board skills matrix setting out the mix of skills and
diversity that the board currently has or is looking to achieve in its membership.
Comply
Yes
2.3
A listed entity should disclose:
(a) the names of the directors considered by the board to be independent directors;
(b) if a director has an interest, position, association or relationship of 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.
2.6
A listed entity should have a programme for inducting new directors and 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
(2) is chaired by an independent director who is not the chair of the 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
Yes
Yes
Yes
Yes
Yes
Yes
Yes, but a brief
period of non-
compliance during
the reporting period
Yes, but a brief
period of non-
compliance during
the reporting period
Yes
Yes
Yes
(b) if it does not have an audit committee, disclose that fact and the processes it employs that
N/A
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.
3rd Edition ASX Corporate Governance Principles and Recommendations
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.
Comply
Yes
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.
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, but a brief
period of non-
compliance during
the reporting period
Yes, but a brief
period of non-
compliance during
the reporting period
Yes
Yes
Yes
(b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact
N/A
and the processes it employs for overseeing the entity’s risk management framework.
28 Annual Report 2018
MMA Offshore Limited 29
2018 Financial ReportOverviewOperating & Financial ReviewGovernance 3rd Edition ASX Corporate Governance Principles and Recommendations
Comply
7.2
The board or a committee of the board should:
D i r e c t o r s ’ R e p o r t
(a) review the entity’s risk management framework at least annually to satisfy itself that it
continues to be sound; and
(b) disclose, in relation to each reporting period, whether such a review has taken place.
7.3
A listed entity should disclose:
(a) if it has an internal audit function, how the function is structured and what 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.
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.
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 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
N/A
Yes
Yes
Yes
Yes
Yes
Yes
Yes
(b) if it does not have a remuneration committee, disclose that fact and the processes it employs
N/A
for setting the level and composition of remuneration for directors and senior executives and
ensuring that such remuneration is appropriate and not excessive.
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.
Yes
The Directors of MMA Offshore Limited (“Company” or “MMA”) present their Directors’ Report (including the Remuneration Report)
together with the Financial Statements of the consolidated entity, being the Company and its controlled entities, for the financial year
ended 30 June 2018.
Directors
During the financial year, as part of the Board renewal program:
• Mr Peter Kennan was appointed as a Non-Executive Director of the Company on 22 September 2017;
• Mr Andrew Edwards assumed the role of Chairman from Mr Tony Howarth on 27 October 2017; and
• Mr Tony Howarth retired as a Non-Executive Director of the Company on 30 November 2017.
The names and particulars of the Company’s Directors in office during or since the end of the financial year are set out on pages 24
to 25 (including their qualifications, experience and special responsibilities).
With the exception of Mr Tony Howarth (who retired as a director on 30 November 2017) and Mr Peter Kennan (who was appointed
as a director on 22 September 2017), the Directors of the Company held office during the whole of the financial year and since the
end 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
Company
Period of Directorship
Mr A Edwards
Nido Petroleum Limited (delisted 26 June 2017)
Since December 2009
Mr A Howarth(1)
Wesfarmers Limited
MACA Limited
BWP Management Limited
Since October 2010
Since July 2007
Since October 2012
8.3
A listed entity which has an equity-based remuneration scheme should:
Ms E Howell
Downer EDI Limited
January 2012 – November 2017
(a) have a policy on whether participants are permitted to enter into transactions (whether
Yes
through the use of derivatives or otherwise) which limit the economic risk of participating in
the scheme; and
(1) Mr A Howarth retired as a Director on 30 November 2017
Buru Energy Limited
Since July 2014
(b) disclose that policy or a summary of it.
Yes
Directors’ Shareholdings
The following table sets out each current Director’s relevant interest in the securities of the Company as at the date of this report:
Name
Mr A Edwards
Mr J Weber
Ms E Howell
Mr C G Heng
Mr P Kennan(1)
Fully paid ordinary
shares direct
Fully paid ordinary
shares indirect
Performance
rights direct
-
-
-
200,000
-
231,360
3,815,916
247,058
-
77,419,000
-
-
-
-
-
(1) Mr P Kennan was appointed as a Director on 22 September 2017
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.
30 Annual Report 2018
MMA Offshore Limited 31
2018 Financial ReportOverviewOperating & Financial ReviewGovernance Remuneration of Key Management Personnel
Dividends
Information about the remuneration of key management personnel is set out in the Remuneration Report section of this Directors’
Report on pages 35 to 44.
Rights Granted to Directors and Senior Management
During the financial year, no performance rights were granted to either the Managing Director or any key management personnel as
part of their remuneration.
Company Secretary
Dylan Darbyshire-Roberts, solicitor, held the position of Company Secretary of the Company at the end of the financial year.
Dylan joined the Company in May 2007 in the role of Commercial Manager and was appointed as Company Secretary of MMA
Offshore Limited on 19 August 2008.
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 20 years. He holds a Graduate Diploma of Applied Corporate Governance and is a
Fellow of the Institute of Chartered Secretaries and Administrators and the Governance Institute of Australia.
Principal Activities
The principal activities and operations of the consolidated entity during the financial year were the provision of marine logistics and
marine services to the offshore oil and gas industry.
During the financial year, the Company completed an equity raise and amendments to its debt facilities. Details of these are
contained in notes 3.8 and 4.1 to the financial statements. Other than as previously referred to in the annual report, there were no
other significant changes in the nature of the activities of the consolidated entity during the financial year.
Review of Operations
A review of the operations of the consolidated entity during the financial year and the results of those operations are set out in the
Chairman’s Address and the Managing Director’s Report on pages 4 - 9.
Changes in State of Affairs
The Chairman’s Address and the Managing Director’s Report (on pages 4 - 9) sets 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
In general terms, the Chairman’s Address and the Managing Director’s Report (on pages 4 - 9) gives an indication of likely
developments 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 2018.
In respect of the financial year ended 30 June 2017, as detailed in the Directors’ Report for that financial year, the Directors
suspended the payment of dividends (both interim and final) in order to retain cash to support business operations until market
conditions improve.
This position remains the same in respect of the financial year ended 30 June 2018. Accordingly, no interim or final dividend has
been recommended, declared or paid for the 2018 financial year.
Unissued Shares under Rights
As at the date of this report, there are no unissued shares under rights.
Shares Issued on Vesting of Rights
No shares were issued during or since the end of the financial year as a result of the vesting of rights.
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 by 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.
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, or agreed to pay, any premium in relation to any insurance for Deloitte or a body corporate related
to Deloitte.
• No indemnity payment has been made under any of the documents referred to above during or since the end of the financial
year.
• There were no officers of the Company who were former partners or directors of Deloitte, whilst Deloitte conducted audits of the
Company.
32 Annual Report 2018
MMA Offshore Limited 33
2018 Financial ReportOverviewOperating & Financial ReviewGovernance Directors’ Meetings
Remuneration Report
The following table sets out the number of Directors’ meetings (including meetings of Committees of Directors) held during the
financial year and the number of meetings attended by each Director (while they were a Director or Committee member). During the
financial year, 9 Board meetings, 4 Audit and Risk Committee meetings and 3 Nomination and Remuneration Committee meetings
were held.
Name
Mr A Edwards
Mr A Howarth(1)
Mr J Weber
Ms E Howell
Mr CG Heng
Mr P Kennan(2)
Board of Directors
Audit and Risk Committee
Nomination and
Remuneration Committee
Held
Attended
Held
Attended
Held
Attended
9
6
9
9
9
6
9
6
9
9
9
6
4
2
4
4
4
2
4
2
4
4
4
2
3
1
3
3
3
2
3
1
3
3
3
2
(1) Mr A Howarth retired as a Director on 30 November 2017.
(2) Mr P Kennan was appointed as a Director on 22 September 2017
Proceedings on Behalf of the Company
This Remuneration Report, which forms part of the Directors’ Report, outlines the remuneration of the Company’s key management
personnel for the financial year ended 30 June 2018.
The Company’s ‘key management personnel’ are those persons who have 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.
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; and
• Key Terms of Employment Contracts.
Key Management Personnel
The Directors and other key management personnel of the consolidated entity during and since the end of the financial year were:
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).
Executive Director
Mr J Weber (Managing Director)
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 5.5
to the Financial Statements.
During the year, the Company paid Deloitte the sum of $300,497 for the provision of non-audit services (being extensive debt
restructuring advice) and the sum of $600,258 for the provision of audit services. 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).
The Directors are of the opinion that the services as disclosed in note 5.5 to the Financial Statements do not compromise the
external auditor’s 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 45 of this Annual Report.
Rounding Off of Amounts
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.
Non-Executive Directors
Mr A Edwards (Chairman)(1)
Mr A Howarth (former Chairman) – retired(2)
Ms E Howell
Mr CG Heng
Mr P Kennan(3)
Other Key Management Personnel
Current KMP
Mr D Ross (Chief Operating Officer)
Mr D Cavanagh (Chief Financial Officer)(4)
Mr D Roberts (General Manager Legal/Company Secretary)
Ms L Buckey (General Manager Corporate Development)
Mr D Thomas (General Manager People and Safety)(5)
Former KMP
Mr P Raynor (former Chief Financial Officer)(6)
Mr M Gillett (former General Manager Human Resources)(7)
(1) Appointed as Chairman on 27 October 2017
(2) Retired on 30 November 2017
(3) Appointed on 22 September 2017
(4) Appointed on 4 December 2017
(5) Appointed to the position of General Manager People and Safety on 22 March 2018
(6) Ceased employment on 21 December 2017
(7) Ceased employment on 22 March 2018
Apart from Mr A Edwards, Mr A Howarth, Mr P Kennan, Mr D Cavanagh, Mr D Thomas, Mr P Raynor and Mr M Gillett (who only
held their respective positions for part of the financial year), the above named persons held their current position for the whole of the
financial year and since the end of the financial year.
34 Annual Report 2018
MMA Offshore Limited 35
2018 Financial ReportOverviewOperating & Financial ReviewGovernance Remuneration Policy
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 can be found
on the Corporate Governance page of our website at www.mmaoffshore.com/investor-centre/corporate-governance.
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.
Given current financial constraints, the Nomination and Remuneration Committee carried out an internal review of the remuneration
packages of the Managing Director and non-director key management personnel for the 2018 financial year, without engaging the
services of an independent remuneration consultant. The Board is satisfied that the remuneration recommendations made by the
Nomination and Remuneration Committee were free from undue influence by any member of the key management personnel to
whom the recommendations relate.
Key Remuneration Outcomes
Having regard to the overall performance of the Company during the 2018 financial year and current market conditions, the key
remuneration outcomes for the Company’s key management personnel in 2018 were as follows:
Fixed Annual Remuneration (FAR)
• The Managing Director, Chief Financial Officer (former) and Chief Operating Officer accepted a 10% decrease in FAR for the
2018 financial year.
• The other Senior Management of the Company did not receive any increase in FAR for the 2018 financial year.
Short-term Incentive (STI)
• The Board exercised its discretion to suspend the STI component in relation to the Managing Director and other key
management personnel for the 2018 financial year.
Long-term Incentive (LTI)
• The Board exercised its discretion to suspend the LTI component in relation to the Managing Director and other key
management personnel for the 2018 financial year.
Remuneration Report 2017
MMA Offshore Limited’s Remuneration Report for the 2017 financial year was adopted at the Annual General Meeting on 19
December 2017 with a clear majority of 396,521,717 votes in favour of the motion (representing 77% 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).
Non-Executive Directors are paid fixed fees for their services in accordance with the Company’s Constitution. 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.
For the 2018 financial year, there was a general 10% decrease in Non-Executive Directors’ fees, with the Chairman agreeing to a
27% decrease in fees for the 2018 financial year.
In addition, following a review by the Nomination and Remuneration Committee, there has been no increase in Non-Executive
Directors’ fees for the 2019 financial year.
Other Key Management Personnel
Remuneration of the Managing Director and other executive key management personnel generally comprises both a fixed
component and an incentive or “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.
The remuneration of the Managing Director and other key management personnel has the following three components:
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, the Managing Director, Chief Financial Officer
(former) and Chief Operating Officer accepted a 10% decrease in
FAR for the 2018 financial year. The other Senior Management of the
Company did not receive any increase in FAR for the 2018 financial
year.
• Given the performance of the Company and current market conditions,
the Board has determined that for the 2019 financial year:
(a) The Managing Director, Chief Financial Officer (current) and Chief
Operating Officer will not receive any increase in FAR; and
(b) The other key management personnel will receive a general
increase in FAR of 2.9% - with some additional realignment for
those key management personnel whose roles changed.
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 2018 financial year.
• Once again, the Board has exercised its discretion to suspend the STI
component for the 2019 financial year (subject always to the Board’s
discretion to reinstate the STI component if the Company’s performance
or 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.
• The LTI also aims to align executives’ long-term interests with those of
shareholders and to retain executives.
• Given the performance of the Company and current market conditions,
the Board exercised its discretion to suspend the LTI component for the
2018 financial year.
• The Board has exercised its discretion to reinstate the LTI component
for the 2019 financial year. The Board is currently developing a new LTI
plan. It is anticipated that the new LTI Plan – which will have a 3 year
performance period (expiring 1 July 2021) – will include performance
hurdles relating to Relative TSR (50% weighting), Net Debt to EBITDA
ratio (25% weighting) and Debt Refinancing (25% weighting) targets.
The new LTI Plan for the Managing Director will be presented for
shareholder approval at the Company’s 2018 AGM. The Board
considers that the reinstatement of the LTI Plan and the selection of
these performance hurdles is appropriate in the current circumstances
to achieve its business turnaround strategy, to retain key management
personnel within the Company and to achieve the strategic objectives of
the Company.
36 Annual Report 2018
MMA Offshore Limited 37
2018 Financial ReportOverviewOperating & Financial ReviewGovernance Allocation of Executive Remuneration between Fixed and Variable Remuneration
Remuneration of Key Management Personnel
The allocation of total executive remuneration between fixed and variable remuneration for the 2018 financial year is as follows:
Managing Director
Other Executives (Maximum)
2%
2%
98%
98%
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 2018 financial year (i.e.
the actual “take-home” pay received by key management personnel for the 2018 financial year); and
(B) The statutory presentation of the remuneration of the Directors and other key management personnel of the Company for the
2018 financial year and for the previous financial year based on the requirements of accounting standards.
FAR
LTI
FAR
LTI
(A) Key Management Personnel Remuneration (Actual)
Relationship between the Remuneration Policy and Company Performance
2018
Short-term employee benefits
Post-employment benefits
The table below summarises information about the Company’s earnings for the 2018 financial year and the Company’s earnings and
movements in shareholder wealth for the five years to 30 June 2018, which is a key factor in the Board’s decision to suspend both
the STI and LTI remuneration components for the 2018 financial year.
Revenue
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
30 June 2018
$’000
30 June 2017
$’000
30 June 2016
$’000
30 June 2015
$’000
30 June 2014
$’000
200,444
256,396
481,123
(27,376)(3)
(379,791)(3)
(155,262)(3)
(27,909)
(378,032)
(143,962)
$0.15
$0.25
0cps
0cps
$0.31
$0.15
0cps
0cps
$0.54
$0.31
0cps
0cps
796,666
(48,219)
(51,291)
$2.06
$0.54
4.0cps
1.5cps
594,597
77,112
53,884
$3.52
$2.06
5.5cps
7.0cps
(4.11cps)
(93.86cps)(4)
(38.64 cps)
(13.91 cps)
18.78cps
(4.11cps)
(93.86cps)(4)
(38.64 cps)
(13.91 cps)
18.76cps
3 year compound annual TSR(2)
(21%)
(49%)
(46%)
(32%)
(9%)
(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 reversal of $8.4 million against the carrying value of the Company’s assets as at 30 June 2018 [2017: $312
million impairment charge and 2016: $139 million impairment charge].
Salary &
fees
$
Cash
bonus
$
Non-
monetary(2) Superannuation Termination
$
$
$
Annual/Long
Service Leave
Payout
$
Rights(3)
$
Directors
Mr A Howarth(1)
Mr A Edwards
Mr J Weber
Mr P Kennan(1)
Ms E Howell
Mr CG Heng
Senior Management
Mr D Ross
Mr P Raynor(1)
Mr D Cavanagh(1)
Mr D Roberts
Mr M Gillett(1)
Ms L Buckey(4)
Mr D Thomas
Total
70,271
143,116
847,747
71,399
100,569
99,457
504,999
238,828
192,083
310,633
247,359
201,379
296,892
3,324,732
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19
-
1,237
-
-
-
48,925
2,608
-
3,929
120
-
-
56,838
6,676
13,596
25,000
-
9,554
5,648
17,308
12,212
12,067
20,049
14,651
19,131
20,049
175,941
-
-
-
-
-
-
-
-
-
-
216,011
-
-
216,011
-
-
-
247,421
-
-
67,321
-
-
314,742
(B) Key Management Personnel Remuneration (Statutory Presentation)
Short-term employee benefits
Post-employment benefits
(4) The calculations of the 30 June 2017 basic and diluted earnings per share have been retrospectively adjusted to reflect the impact of the capital
2018
raising during this reporting period.
Salary &
fees
$
Cash
bonus
$
Non-
monetary(2) Superannuation Termination
$
$
$
Directors
Mr A Howarth(1)
Mr A Edwards
Mr J Weber
Mr P Kennan(1)
Ms E Howell
Mr CG Heng
Senior Management
Mr D Ross
Mr P Raynor(1)
Mr D Cavanagh(1)
Mr D Roberts
Mr M Gillett(1)
Ms L Buckey(4)
Mr D Thomas
Total
70,271
143,116
847,747
71,399
100,569
99,457
504,999
238,828
192,083
310,633
247,359
201,379
296,892
3,324,732
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19
-
1,237
-
-
-
48,925
2,608
-
3,929
120
-
-
56,838
6,676
13,596
25,000
-
9,554
5,648
17,308
12,212
12,067
20,049
14,651
19,131
20,049
175,941
-
-
-
-
-
-
-
-
-
-
216,011
-
-
216,011
38 Annual Report 2018
Long Service
Leave
$
-
-
14,546
-
-
-
8,705
4,137
-
5,512
3,972
11,867
15,848
64,587
Share
based
payments
Total
$
76,966
156,712
873,984
71,399
110,123
105,105
571,232
501,069
204,150
334,611
545,462
220,510
316,941
4,088,264
Total
$
76,966
156,712
907,177
71,399
110,123
105,105
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Share
based
payments
Rights(3)
$
-
-
18,647
-
-
-
8,775
4,183
-
1,477
1,073
1,274
1,423
588,712
261,968
204,150
341,600
483,186
233,651
334,212
36,852 3,874,961
MMA Offshore Limited 39
2018 Financial ReportOverviewOperating & Financial ReviewGovernance
Total
3,873,057
11,300
231,100
302,342
55,220
394,657
4,867,676
Series
Number issued
Grant date
Expiry date
(1) These salaries & fees are only for part of the financial year as Mr A Howarth retired from the Company on 30 November 2017, Mr P Kennan was
(1) 22 Oct 2014 (a)
1,052,625
22 Oct 2014
1 Jul 2017
Short-term employee benefits
Post-employment benefits
Salary &
fees
$
Cash
bonus
$
Non-
monetary(2) Superannuation
$
$
Termination
$
Long
Service
Leave
$
2017
Directors
Mr A Howarth
Mr A Edwards
Mr J Weber
Mr M Bradley(1)
Ms E Howell
Mr CG Heng
Senior Management
Mr D Ross
Mr P Raynor
Mr D Lofthouse(1)
Mr D Roberts
Mr M Gillett
Ms L Buckey(4)
Mr D Thomas
227,164
111,600
926,456
45,928
107,485
104,987
535,495
540,110
144,920
308,980
308,980
214,061
296,892
1,628
-
2,158
-
-
-
2,198
2,002
816
2,497
-
-
-
19,616
10,602
34,231
4,363
10,211
6,174
29,615
25,000
12,826
19,616
19,616
19,616
19,616
-
-
-
-
-
-
-
-
302,342
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Share
based
payments
Total
Rights(3)
$
$
-
-
248,407
122,202
16,012
120,440
1,099,297
-
-
-
88,480
88,480
23,326
19,327
19,327
16,662
18,615
50,291
117,696
111,161
665,207
665,011
485,224
355,897
355,559
256,601
335,123
9,419
9,419
994
5,477
7,636
6,263
-
appointed as a director on 22 September 2017, Mr D Cavanagh commenced employment with the Company on 4 December 2017, Mr P Raynor
ceased employment with the Company on 21 December 2017, Mr M Gillett ceased employment with the Company on 22 March 2018 and Mr D
Lofthouse ceased employment with the Company on 15 November 2016.
(2) These non-monetary benefits comprise the provision of housing, relocation costs, 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 statutory remuneration of key management personnel that are
linked to performance:
Fixed Remuneration
Remuneration linked to Performance
2017
100%
100%
100%
100%
100%
89%
87%
-
87%
95%
95%
94%
94%
2018
2017
0%
0%
0%
0%
0%
2%
2%
0%
2%
1%
0%
0%
0%
0%
0%
0%
0%
0%
11%
13%
-
13%
5%
5%
6%
6%
Non-Executive Directors
Mr A Edwards
Mr A Howarth(1)
Ms E Howell
Mr CG Heng
Mr P Kennan(2)
Executive Directors
Mr J Weber
Senior Management
Mr D Ross
Mr D Cavanagh(3)
Mr P Raynor(4)
Mr D Roberts
Mr M Gillett(5)
Ms L Buckey
Mr D Thomas
2018
100%
100%
100%
100%
100%
98%
98%
100%
98%
99%
100%
100%
100%
(1) Retired on 30 November 2017
(2) Appointed on 22 September 2017
(3) Appointed on 4 December 2017
(4) Ceased employment on 21 December 2017
(5) Ceased employment on 22 March 2018
40 Annual Report 2018
No key management personnel appointed during the period received a payment as part of his or her consideration for agreeing
to hold the position.
Bonus and Share-based payments granted as compensation for the current financial year
STI (Cash Bonuses)
As noted above, 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 2018 financial year; and
• Once again, suspend the STI component for the 2019 financial year (subject to the Board’s discretion to reinstate the STI
component if the Company’s performance or market conditions change).
LTI (Performance Rights/Share Based Payments)
During the financial year:
• No performance rights were granted to either the Managing Director or the other key management personnel;
• No share-based payments were granted as compensation to either the Managing Director or the other key management
personnel; and
• No performance rights granted to either the Managing Director or the other key management personnel as part of their
compensation in previous financial years vested.
During the financial year, the following rights schemes were in existence:
(2) 1 Dec 2014 (a)
(3) 1 Dec 2014 (a)
11,382
1 Dec 2014
1 Jul 2017
430,075
18 Nov 2014
1 Jul 2017
(4) 10 Feb 2016 (b)
2,001,432
18 Nov 2015
1 Jul 2020
(5) 10 Feb 2016 (b)
8,037,836
7 Dec 2015
1 Jul 2020
(6) 7 Jun 2016 (b)
220,284
18 Apr 2016
1 Jul 2020
Exercise
price
$
Fair value at
grant date
$
0.00
0.00
0.00
0.00
0.00
0.00
1.09
1.09
0.75
0.02
0.02
0.02
Vesting date
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 – 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 vested on 1 July 2017 depended 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. These performance hurdles have not been met. As such, all of these performance rights have lapsed in accordance
with the terms of the relevant plan rules.
(b) 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 vested on 1 July 2018 depended 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. These performance hurdles have not been met. As such, all of these performance rights have lapsed
in accordance with the terms of the relevant plan rules.
There has been no alteration of the terms and conditions of the above share-based payment arrangements since the grant date.
MMA Offshore Limited 41
2018 Financial ReportOverviewOperating & Financial ReviewGovernance
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:
Details of the performance rights held by executive key management personnel are as follows:
Mr P Kennan(1)
38,709,500
Name
Mr J Weber
Mr D Ross
Mr P Raynor
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
2014
2014
2014
2014
2014
2014
2014
430,075
202,388
202,388
55,476
55,476
47,825
42,548
Key Management Personnel Equity Holdings
Details of the fully paid ordinary shares of the Company held by key management personnel are as follows:
Balance at
1 July 2017
Granted as
compensation
Received on vesting of
Performance Rights
Net other
change
Balance at
30 June 2018
Balance held
nominally
2018
Mr A Edwards
Mr J Weber
Ms E Howell
Mr CG Heng
Mr D Ross
Mr D Cavanagh(2)
Mr D Roberts
Ms L Buckey
Mr D Thomas
2017
Mr A Edwards
Mr J Weber
Ms E Howell
Mr CG Heng
Mr D Ross
Mr D Roberts
Ms L Buckey
Mr D Thomas
115,680
1,907,958
123,529
100,000
765,785
21,000
-
1,475
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
115,680
231,360
1,907,958
3,815,916
-
-
38,709,500
77,419,000
77,419,000
123,529
100,000
765,785
-
-
247,058
200,000
1,531,570
21,000
-
1,475
-
-
-
-
-
-
-
-
Balance at
1 July 2016
Granted as
compensation
Received on vesting of
Performance Rights
Net other
change
Balance at
30 June 2017
Balance held
nominally
115,680
1,907,958
123,529
-
765,785
-
1,475
-
-
-
-
-
-
-
-
-
-
-
-
100,000
-
-
-
-
-
-
-
-
-
115,680
1,907,958
123,529
100,000
765,785
-
1,475
-
-
-
-
-
-
-
-
-
Balance at
1 July 2017
Granted as
compensation
Vested
Net other
change
(lapsed)
Balance at
30 June 2018
Vested but not
exercisable
Rights vested
during year
Mr D Cavanagh(1)
-
2,431,507
1,144,238
1,144,238
307,602
307,602
265,175
296,259
2018
Executives
Mr J Weber
Mr D Ross
Mr P Raynor
Mr D Roberts
Mr M Gillett
Ms L Buckey
Mr D Thomas
2017
Executives
Mr J Weber
Mr D Ross
Mr P Raynor
Mr D Roberts
Mr M Gillett
Ms L Buckey
Mr D Thomas
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(430,075)
2,001,432
(202,388)
941,850
-
941,850
252,126
252,126
217,350
242,828
-
(202,388)
(55,476)
(55,476)
(47,825)
(53,431)
Net other
change
(lapsed)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
1 July 2016
Granted as
compensation
Vested
Balance at
30 June 2017
Vested but not
exercisable
Rights vested
during year
2,943,329
1,395,131
1,395,131
375,403
375,403
300,244
338,807
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(511,822)
2,431,507
(250,893)
1,144,238
(250,893)
1,144,238
(67,801)
(67,801)
(35,069)
(42,548)
307,602
307,602
265,175
296,259
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) Appointed on 4 December 2017
During the financial year, no performance rights vested in favour of the Managing Director or other key management personnel.
In addition, all performance rights held by executive key management personnel as at 30 June 2018 have since lapsed in
accordance with the terms or the 2015 Performance Rights Plan Rules.
Further details of the share based payment arrangements during the 2018 and 2017 financial years are contained in note 5.2 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. 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 2017
24,732
Interest
charged
870
Allowance for
doubtful receivables
Balance as at
30 June 2018
Number of key
management personnel
-
25,602
1
(1) Appointed on 22 September 2017
(2) Appointed on 4 December 2017
42 Annual Report 2018
MMA Offshore Limited 43
2018 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/investor-centre/corporate-governance.
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 D Cavanagh
Mr D Roberts
Ms L Buckey
Mr D Thomas
Termination notice period
Termination benefits payable
6 months
6 months
12 weeks
6 weeks
30 days
12 weeks
Yes(1)
Yes(1)
Yes(2)
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 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.
(2) 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 including, without limitation, through a change in control of the Company, the employee will be entitled to a payment equal to 0.5 times the
Fixed Annual Remuneration in the relevant year (excluding any short-term incentives or long-term incentives).
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
Tower 2
Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Deloitte Touche Tohmatsu
Perth WA 6837 Australia
ABN 74 490 121 060
The Board of Directors
MMA Offshore Limited
1 Mews Road
Fremantle WA 6160
The Board of Directors
20 September 2018
MMA Offshore Limited
1 Mews Road
Fremantle WA 6160
Dear Board Members
Tel: +61 8 9365 7000
Tower 2
Fax: +61 8 9365 7001
Brookfield Place
www.deloitte.com.au
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
20 September 2018
Auditor’s Independence Declaration to MMA Offshore Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of MMA Offshore Limited.
Dear Board Members
Auditor’s Independence Declaration to MMA Offshore Limited
As lead audit partner for the audit of the financial report of MMA Offshore Limited for the year
ended 30 June 2018, 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.
•
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.
As lead audit partner for the audit of the financial report of MMA Offshore Limited for the year
•
ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
Yours faithfully
Under these employment contracts, the remuneration package for:
• The Managing Director and Chief Operating 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
•
•
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.
• 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.
DELOITTE TOUCHE TOHMATSU
Yours faithfully
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,
Andrew Edwards
Chairman
Fremantle, 20 September 2018
44 Annual Report 2018
John Sibenaler
DELOITTE TOUCHE TOHMATSU
Partner
Chartered Accountants
Perth, 20 September 2018
John Sibenaler
Partner
Chartered Accountants
Perth, 20 September 2018
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.
MMA Offshore Limited 45
Member of Deloitte Touche Tohmatsu Limited
2018 Financial ReportOverviewOperating & Financial ReviewGovernance
A u d i t R e p o r t
Independent Auditor’s Report to the
Independent Auditor’s Report to the
members of MMA Offshore Limited
members of MMA Offshore Limited
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
Opinion
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2
Brookfield Place
Tower 2
123 St Georges Terrace
Brookfield Place
Perth WA 6000
123 St Georges Terrace
GPO Box A46
Perth WA 6000
Perth WA 6837 Australia
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
Tel: +61 8 9365 7000
www.deloitte.com.au
Fax: +61 8 9365 7001
www.deloitte.com.au
Opinion
We have audited the financial report of MMA Offshore Limited (the “Company”) and its subsidiaries
(the “Group”) which comprises the consolidated statement of financial position as at 30 June 2018,
We have audited the financial report of MMA Offshore Limited (the “Company”) and its subsidiaries
the consolidated statement of profit or loss and other comprehensive income, the consolidated
(the “Group”) which comprises the consolidated statement of financial position as at 30 June 2018,
statement of changes in equity and the consolidated statement of cash flows for the year then
the consolidated statement of profit or loss and other comprehensive income, the consolidated
ended, and notes to the financial statements, including a summary of significant accounting policies
statement of changes in equity and the consolidated statement of cash flows for the year then
and other explanatory information, and the directors’ declaration.
ended, and notes to the financial statements, including a summary of significant accounting policies
and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial
performance for the year then ended; and
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial
performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
(i)
(ii)
(ii)
Basis for Opinion
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Report section of our report. We are independent of the Group in accordance with the auditor
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Report section of our report. We are independent of the Group in accordance with the auditor
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
fulfilled our other ethical responsibilities in accordance with the Code.
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
We confirm that the independence declaration required by the Corporations Act 2001, which has been
time of this auditor’s report.
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. These matters were addressed in the context
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. These matters were addressed in the context
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.
46 Annual Report 2018
Member of Deloitte Touche Tohmatsu Limited
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter
value of
value of
the Vessel Cash
Carrying
Key Audit Matter
Generating Unit
the Vessel Cash
Carrying
As disclosed in Note 3.6, the assessment of
Generating Unit
the recoverable amount of the Vessels
Cash Generating Unit (“Vessel CGU”)
As disclosed in Note 3.6, the assessment of
requires management to exercise
the recoverable amount of the Vessels
judgement and has been based on a Fair
Cash Generating Unit (“Vessel CGU”)
Value Less Cost of Disposal (“FVLCOD”)
requires management to exercise
approach.
judgement and has been based on a Fair
Value Less Cost of Disposal (“FVLCOD”)
The Group appointed external valuers to
approach.
perform a valuation of the Vessel CGU.
The Group appointed external valuers to
Key assumptions used in assessing
perform a valuation of the Vessel CGU.
recoverable amount include current and
forecast economic conditions including
Key assumptions used in assessing
potential movements in the market as a
recoverable amount include current and
consequence of commodity prices and the
forecast economic conditions including
application of an ‘en bloc’ discount to the
potential movements in the market as a
vessel fleet.
consequence of commodity prices and the
application of an ‘en bloc’ discount to the
vessel fleet.
Recoverability of trade receivables
As disclosed in Note 3.2, the carrying value
Recoverability of trade receivables
of trade receivables is $61.6 million, net of
an allowance for doubtful debts of $2.6
As disclosed in Note 3.2, the carrying value
million
of trade receivables is $61.6 million, net of
an allowance for doubtful debts of $2.6
Significant judgment is required in assessing
million
the recoverability of trade receivables. This
includes assessing the credit risk of trade
Significant judgment is required in assessing
receivables which have been outstanding
the recoverability of trade receivables. This
for a period longer than average payment
includes assessing the credit risk of trade
terms.
receivables which have been outstanding
for a period longer than average payment
terms.
How the scope of our audit responded to the Key
Audit Matter
Our procedures included, but were not limited to:
How the scope of our audit responded to the Key
Audit Matter
Understanding the process management
Our procedures included, but were not limited to:
undertakes to evaluate the recoverability of
the Vessel CGU;
Understanding the process management
Assessing management’s determination of the
undertakes to evaluate the recoverability of
Vessel CGU based on our understanding of
the Vessel CGU;
the nature of the Group’s business and the
Assessing management’s determination of the
economic environment in which the segments
Vessel CGU based on our understanding of
operate;
the nature of the Group’s business and the
economic environment in which the segments
the external valuers;
operate;
Assessing the objectivity and competence of
Evaluating the external valuations obtained by
Assessing the objectivity and competence of
Comparing actual sales prices, including ‘en
the Group by assessing the valuation
the external valuers;
methodology adopted and the assumptions
Evaluating the external valuations obtained by
used;
the Group by assessing the valuation
Comparing actual sales prices, including ‘en
methodology adopted and the assumptions
bloc’ discounts, of vessels during and post the
used;
reporting period to evaluate the
reasonableness of the valuation; and
bloc’ discounts, of vessels during and post the
Assessing the appropriateness of the
reporting period to evaluate the
disclosures in Note 3.6 to the financial
reasonableness of the valuation; and
statements.
Assessing the appropriateness of the
disclosures in Note 3.6 to the financial
statements.
Our procedures included, but were not limited to:
Understanding the process management
Our procedures included, but were not limited to:
undertakes to evaluate the recoverability of
trade receivables;
Understanding the process management
Assessing the recoverability of a sample of
undertakes to evaluate the recoverability of
trade receivables by reviewing cash received
trade receivables;
subsequent to year end;
Assessing the recoverability of a sample of
Reviewing other evidence including customer
trade receivables by reviewing cash received
correspondence and holding discussions with
subsequent to year end;
management to challenge their knowledge of
Reviewing other evidence including customer
future conditions that may impact expected
correspondence and holding discussions with
customer receipts; and
management to challenge their knowledge of
Assessing the appropriateness of the
future conditions that may impact expected
disclosures in Note 3.2 to the financial
customer receipts; and
statements.
Assessing the appropriateness of the
disclosures in Note 3.2 to the financial
statements.
MMA Offshore Limited 47
2018 Financial ReportOverviewOperating & Financial ReviewGovernance
Other Information
The directors are responsible for the other information. The other information comprises the
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
information included in the annual report, but does not include the financial report and our auditor’s
provide a separate opinion on these matters.
report thereon.
Key Audit Matter
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
How the scope of our audit responded to the Key
Audit Matter
Our procedures included, but were not limited to:
the Vessel Cash
value of
Carrying
Generating Unit
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
undertakes to evaluate the recoverability of
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
the Vessel CGU;
Understanding the process management
As disclosed in Note 3.6, the assessment of
the recoverable amount of the Vessels
Cash Generating Unit (“Vessel CGU”)
requires management to exercise
judgement and has been based on a Fair
Value Less Cost of Disposal (“FVLCOD”)
approach.
Responsibilities of the Directors for the Financial Report
Assessing management’s determination of the
Vessel CGU based on our understanding of
the nature of the Group’s business and the
economic environment in which the segments
operate;
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information; we are required to report that fact. We have nothing to report in this regard.
Assessing the objectivity and competence of
The Group appointed external valuers to
perform a valuation of the Vessel CGU.
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
the Group by assessing the valuation
methodology adopted and the assumptions
used;
Evaluating the external valuations obtained by
the external valuers;
Key assumptions used in assessing
recoverable amount include current and
forecast economic conditions including
potential movements in the market as a
consequence of commodity prices and the
application of an ‘en bloc’ discount to the
vessel fleet.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
bloc’ discounts, of vessels during and post the
reporting period to evaluate the
reasonableness of the valuation; and
Assessing the appropriateness of the
disclosures in Note 3.6 to the financial
Auditor’s Responsibilities for the Audit of the Financial Report
statements.
Comparing actual sales prices, including ‘en
Recoverability of trade receivables
Our procedures included, but were not limited to:
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As disclosed in Note 3.2, the carrying value
of trade receivables is $61.6 million, net of
an allowance for doubtful debts of $2.6
million
undertakes to evaluate the recoverability of
trade receivables;
Assessing the recoverability of a sample of
Understanding the process management
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Significant judgment is required in assessing
the recoverability of trade receivables. This
includes assessing the credit risk of trade
receivables which have been outstanding
for a period longer than average payment
terms.
trade receivables by reviewing cash received
subsequent to year end;
Reviewing other evidence including customer
correspondence and holding discussions with
management to challenge their knowledge of
future conditions that may impact expected
customer receipts; and
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
Assessing the appropriateness of the
disclosures in Note 3.2 to the financial
statements.
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
Obtain an understanding of internal control relevant to the audit in order to design audit
provide a separate opinion on these matters.
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Key Audit Matter
How the scope of our audit responded to the Key
Audit Matter
Our procedures included, but were not limited to:
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
the Vessel Cash
estimates and related disclosures made by the directors.
Carrying
Generating Unit
value of
Understanding the process management
As disclosed in Note 3.6, the assessment of
the recoverable amount of the Vessels
Cash Generating Unit (“Vessel CGU”)
requires management to exercise
judgement and has been based on a Fair
Value Less Cost of Disposal (“FVLCOD”)
approach.
Conclude on the appropriateness of the director’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
Assessing management’s determination of the
Vessel CGU based on our understanding of
the nature of the Group’s business and the
economic environment in which the segments
operate;
undertakes to evaluate the recoverability of
the Vessel CGU;
Assessing the objectivity and competence of
the external valuers;
The Group appointed external valuers to
perform a valuation of the Vessel CGU.
the Group by assessing the valuation
methodology adopted and the assumptions
used;
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
Evaluating the external valuations obtained by
Key assumptions used in assessing
recoverable amount include current and
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
forecast economic conditions including
business activities within the Group to express an opinion on the financial report. We are
potential movements in the market as a
responsible for the direction, supervision and performance of the Group’s audit. We remain solely
consequence of commodity prices and the
responsible for our audit opinion.
application of an ‘en bloc’ discount to the
vessel fleet.
bloc’ discounts, of vessels during and post the
reporting period to evaluate the
reasonableness of the valuation; and
Assessing the appropriateness of the
disclosures in Note 3.6 to the financial
statements.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
Comparing actual sales prices, including ‘en
Recoverability of trade receivables
Our procedures included, but were not limited to:
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
undertakes to evaluate the recoverability of
trade receivables;
As disclosed in Note 3.2, the carrying value
of trade receivables is $61.6 million, net of
an allowance for doubtful debts of $2.6
million
Understanding the process management
Assessing the recoverability of a sample of
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Significant judgment is required in assessing
the recoverability of trade receivables. This
includes assessing the credit risk of trade
receivables which have been outstanding
for a period longer than average payment
terms.
Reviewing other evidence including customer
correspondence and holding discussions with
management to challenge their knowledge of
future conditions that may impact expected
customer receipts; and
trade receivables by reviewing cash received
subsequent to year end;
Assessing the appropriateness of the
disclosures in Note 3.2 to the financial
statements.
48 Annual Report 2018
MMA Offshore Limited 49
2018 Financial ReportOverviewOperating & Financial ReviewGovernance
Overview
Operating & Financial Review
Governance
2018 Financial Report
Report on the Remuneration Report
Opinion on the Remuneration Report
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 39 to 43 of the Director’s Report for the
Opinion on the Remuneration Report
year ended 30 June 2018.
We have audited the Remuneration Report included in pages 39 to 43 of the Director’s Report for the
In our opinion, the Remuneration Report of MMA Offshore Limited, for the year ended 30 June 2018,
year ended 30 June 2018.
complies with section 300A of the Corporations Act 2001.
In our opinion, the Remuneration Report of MMA Offshore Limited, for the year ended 30 June 2018,
Responsibilities
complies with section 300A of the Corporations Act 2001.
The directors of the Company are responsible for the preparation and presentation of the
Responsibilities
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
The directors of the Company are responsible for the preparation and presentation of the
with Australian Auditing Standards.
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.
DELOITTE TOUCHE TOHMATSU
DELOITTE TOUCHE TOHMATSU
John Sibenaler
Partner
Chartered Accountants
John Sibenaler
Perth, 20 September 2018
Partner
Chartered Accountants
Perth, 20 September 2018
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 1.1 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 5.6 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,
Andrew Edwards
Chairman
Fremantle, 20 September 2018
50 Annual Report 2018
MMA Offshore Limited 51
F i n a n c i a l
R e p o r t
2 0 1 8
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. General Notes
1.1
1.2
1.3
1.4
1.5
Statement of Compliance
Basis of Preparation
Basis of Consolidation
New Accounting Standards
Critical Accounting Judgements and
Key Sources of Estimation Uncertainty
2.
Financial Performance
2.1
2.2
2.3
2.4
2.5
2.6
Segment Information
Other Income and Expenses
Discontinued Operations
Income Taxes
Earnings per Share
Dividends Provided for or Paid
3.
Assets and Liabilities
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
Cash
Trade and Other Receivables
Inventories
Assets Classified as Held for Sale
Property, Plant and Equipment
Impairment of Non-current Assets
Trade and Other Payables
Borrowings
Provisions
3.10 Deferred Tax Balances
4. Capital Structure
4.1
4.2
4.3
Issued Capital
Reserves
Capital Risk Management
5. Other Notes
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
Commitments for Expenditure
Share Based Payments
Key Management Personnel Compensation
Related Party Transactions
Remuneration of Auditors
Subsidiaries
Parent Company Information
Financial Instruments
Events After the Reporting Period
Additional Securities Exchange Information
53
54
55
56
57
57
57
57
58
59
60
60
62
63
64
65
65
66
66
67
68
68
69
70
72
73
74
75
77
77
77
78
79
79
81
82
83
83
84
86
86
90
91
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2018
Continuing Operations
Revenue
Investment income
Other gains/(losses)
Vessel expenses
Administration expenses
Impairment reversal/(charge)
Finance costs
Loss before tax from continuing operations
Income tax (expense)/benefit
Loss for the Year from continuing operations
Discontinued Operations
Loss from discontinued operations
Loss for the Year
Other Comprehensive Income, net of tax
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Gain/(loss) on hedge of net investment in a foreign operation
Other comprehensive income for the year, net of tax
Total Comprehensive Loss for the Year
Loss attributable to owners of the Company
Total comprehensive loss attributable to owners of the Company
Note
2.1
2.2
2.1
2.4
2.3
2018
$’000
2017
$’000
200,444
221,766
463
87
(206,484)
(7,092)
8,407
(23,201)
(27,376)
(533)
133
(14,960)
(241,636)
(7,377)
(287,542)
(26,444)
(356,060)
1,729
(27,909)
(354,331)
-
(23,701)
(27,909)
(378,032)
13,302
(6,087)
7,215
(6,906)
7,142
236
(20,694)
(377,796)
(27,909)
(20,694)
(378,032)
(377,796)
Earnings/(loss) per share
From continuing operations
Basic
From continuing and discontinued operations
Basic
Cents Per Share Cents Per Share
2.5
2.5
(4.11)
(87.97)
(4.11)
(93.86)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
52 Annual Report 2018
MMA Offshore Limited 53
OverviewOperating & Financial ReviewGovernance2018 Financial Report
Consolidated Statement of Financial Position
As at 30 June 2018
Consolidated Statement of Changes in Equity
For the year ended 30 June 2018
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Assets classified as held for sale
Total Current Assets
Non-Current Assets
Property, plant and equipment
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Unearned revenue
Borrowings
Provisions
Current tax liabilities
Customer deposits
Total Current Liabilities
Non-Current Liabilities
Trade payables
Borrowings
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Note
2018
$’000
2017
$’000
3.1
3.2
3.3
3.4
3.5
3.7
3.8
3.9
3.8
3.9
4.1
4.2
69,648
61,641
1,615
1,062
9,397
143,363
496,421
496,421
639,784
32,309
375
1,739
10,665
1,186
-
46,274
5,020
259,933
262
265,215
311,489
328,295
28,757
65,317
3,032
1,254
35,944
134,304
498,386
498,386
632,690
37,386
66
5
10,208
2,607
2,000
52,272
8,597
314,447
885
323,929
376,201
256,489
654,735
121,454
561,275
115,199
(447,894)
(419,985)
328,295
256,489
Year Ended 30 June 2018
Balance at 1 July 2017
Employee
Equity
Settled
Benefits
Reserve
Issued
Capital
Foreign
Currency
Translation
Reserve
Retained
Earnings/
(Accumulated
Losses)
Hedging
Reserve
$’000
$’000
$’000
$’000
$’000
Total
$’000
561,275
1,114
(51,203)
165,288
(419,985)
256,489
Comprehensive income/(loss) for the year:
Loss for the year
Other comprehensive income/(loss) for the year
Total Comprehensive Income/(Loss) for the Year
-
-
-
Issue of shares under institutional placement
22,385
Issue of shares under institutional entitlement offer
15,605
Issue of shares under retail entitlement offer
Share issue costs
Transfer to share capital
Recognition of share based payments
59,010
(4,558)
1,018
(1,018)
-
58
-
-
-
-
-
-
-
-
-
(27,909)
(27,909)
(6,087)
13,302
-
7,215
(6,087)
13,302
(27,909)
(20,694)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,385
15,605
59,010
(4,558)
-
58
Balance at 30 June 2018
654,735
154
(57,290)
178,590
(447,894)
328,295
Year Ended 30 June 2017
Balance at 1 July 2016
Comprehensive income/(loss) for the year:
Loss for the year
Other comprehensive income/(loss) for the year
Total Comprehensive Income/(Loss) for the Year
Employee
Equity
Settled
Benefits
Reserve
Issued
Capital
Foreign
Currency
Translation
Reserve
Retained
Earnings/
(Accumulated
Losses)
Hedging
Reserve
$’000
$’000
$’000
$’000
$’000
Total
$’000
556,566
5,704
(58,345)
172,194
(41,953)
634,166
-
-
-
-
-
-
-
7,142
7,142
-
(378,032)
(378,032)
(6,906)
(6,906)
-
236
(378,032)
(377,796)
Transfer to share capital
Recognition of share based payments
Related income tax benefit
Balance at 30 June 2017
4,709
(4,709)
-
-
285
(166)
-
-
-
-
-
-
-
-
-
-
285
(166)
561,275
1,114
(51,203)
165,288
(419,985)
256,489
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
54 Annual Report 2018
MMA Offshore Limited 55
OverviewOperating & Financial ReviewGovernance2018 Financial Report
Operating & Financial Review
Consolidated Statement of Cash Flows
For the year ended 30 June 2018
Cash Flows from Operating Activities
Receipts from customers
Interest received
Payments to suppliers and employees
Income tax (paid)/received
Interest and other costs of finance paid
Net Cash Used in Operating Activities
Cash Flows from Investing Activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from sale of investment
Dividends received
Net Cash Provided by Investing Activities
Cash Flows from Financing Activities
Proceeds from issue of shares
Payment of share issue costs
Repayment of borrowings
Financing fees on borrowings
Net Cash provided by/(Used in) Financing Activities
Note
2018
$’000
2017
$’000
205,157
244,195
463
133
(189,324)
(236,413)
3.1
3.8
3.8
(1,754)
(16,880)
(2,338)
(9,194)
25,288
-
-
16,094
97,000
(4,558)
(61,298)
(4,003)
27,141
6,638
(20,647)
(6,094)
(28,033)
75,536
425
9,063
56,991
-
-
(67,326)
(3,723)
(71,049)
Net increase/(decrease) in cash and cash equivalents
40,897
(20,152)
Cash and cash equivalents at the beginning of the financial year
28,757
49,725
Effects of exchange rate changes on the balance of cash held in foreign currencies
(6)
(816)
Cash and Cash Equivalents at the End of the Financial Year
69,648
28,757
Notes to the Financial Statements
For the year ended 30 June 2018
1. General Notes
MMA Offshore Limited (MMA or the Company) is a listed public company incorporated in Australia. Its shares are traded on
the Australian Securities Exchange.
1.1 Statement of Compliance
These financial statements are general purpose financial statements which have been prepared in accordance with
the Corporations Act 2001, Australian Accounting Standards (AASB’s) and other authoritative pronouncements of
the Australian Accounting Standards Board. The financial statements comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board.
The accounting policies are consistent with those applied in previous reporting periods.
The Financial Statements were authorised for issue by the Directors on [20] September 2018.
1.2 Basis of Preparation
The 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. Transactions in foreign currencies are
recognised at the rates of exchange prevailing at the dates of the transactions. Monetary items denominated in foreign
currencies at reporting date are translated at the exchange rate prevailing at that date. Exchange differences are
recognised in profit or loss in the period in which they arise except for certain hedging transactions as described in note
4.2.
For the purposes of preparing the financial statements, the Company is a for-profit entity.
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.
1.3 Basis of Consolidation
The 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.
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.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
56 Annual Report 2018
MMA Offshore Limited 57
OverviewGovernance2018 Financial Report Notes to the Financial Statements
For the year ended 30 June 2018
1. General Notes (continued)
1.5 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 – refer note 3.2
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.
Useful lives of property, plant and equipment – refer note 3.5
Impairment of property, plant and equipment – refer note 3.6
Governance
Notes to the Financial Statements
For the year ended 30 June 2018
1. General Notes (continued)
1.4 New Accounting Standards
Adoption of New and Revised Accounting Standards and Interpretations
In the current year, the Group has applied the following new and amended AASBs that are mandatorily effective for an
accounting period that begins on or after 1 July 2017:
AASB 2016-2 Amendments to Australian
Accounting Standards – Disclosure Initiative:
Amendments to AASB 107
The amendments require an entity to provide disclosures that
enable users of financial statements to evaluate changes in
liabilities arising from financing activities, including both cash and
non-cash changes.
In the year ended 30 June 2018, the Directors have reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Company and effective for the current annual reporting period. As a result
of this review the Directors have determined that there is no material impact of the new and revised Standards and
Interpretations on the Company, and therefore, no material change is necessary to the Group accounting policies.
Standards and Interpretations issued but not yet effective
At the date of authorisation of the Financial Statements, the Standards and Interpretations listed below relevant to the
Group’s operations, were issued but not yet effective:
AASB 15 Revenue from Contracts with Customers (effective from 1 July 2018)
AASB 15 establishes a single comprehensive model to use in accounting for revenue arising from contracts with
customers. The core principal of AASB 15 is that revenue is recognised as the promised goods or services are provided
to customers in an amount that reflects the consideration expected to be received in exchange for those goods or
services. The standard introduces a five-step process for applying this principle which includes guidance in respect
of identifying the performance obligations under the contract, allocation of the revenue across those performance
obligations and recognising the revenue as those performance obligations are satisfied.
The Group plans to adopt the new standard from 1 July 2018 using the modified transitional approach where any
adjustment on initial recognition is recognised in retained earnings at 1 July 2018 without adjustment to comparatives. It
will only be applied to contracts that remain in place at that date.
The Group’s revenue is mainly derived from the time charter of vessels. The supply of each vessel is considered to
be a single performance obligation provided over time for a contracted day rate. Apart from providing more extensive
disclosures on the Group’s revenue transactions the application of AASB 15 will not have an impact on the financial
position or financial performance of the Group.
AASB 9 Financial Instruments (effective from 1 July 2018)
In relation to the impairment of financial assets, AASB 9 requires an expected credit loss model as opposed to an
incurred credit loss model under AASB 139. The expected credit loss model requires an entity to account for expected
credit losses and changes in expected losses to reflect changes in credit risk since initial recognition. It is no longer
necessary for a credit event to have occurred before credit losses are recognised.
In general, the directors anticipate that the application of the expected credit loss model will result in earlier recognition
of any credit losses. However, given the credit risk management approach on our current customers and receivables we
do not anticipate this having a significant impact on the financial position or financial performance of the Group.
AASB 16 Leases (effective from 1 July 2019)
AASB 16 introduces a new model for the accounting for lessees which will require the recognition of assets and
liabilities for all leases. The standard removes the current distinction of between operating and finance leases and is
replaced by a model where a right of use asset and a corresponding liability are recognised for all leases except for
short term leases and leases of low value assets. The right of use asset will be depreciated over the lease term and the
lease liability will be adjusted for lease payments and interest charged. The impact on the financial performance of the
company will be to reduce administration expenses with a related increase in finance costs.
A preliminary assessment of the Group’s leases at 30 June 2018 has indicated that some existing non cancellable
operating leases, for example office leases, would qualify as leases under the new standard resulting in recognition of
right of use assets and corresponding liabilities. Due to the potential changing nature of these agreements we have not
yet quantified the potential impact of applying the new standard.
58 Annual Report 2018
MMA Offshore Limited 59
OverviewOperating & Financial Review2018 Financial Report 2.
Financial Performance
2.1 Segment Information
An operating segment is a component of a group that engages in business activities from which it may earn revenue
and incur expenses and whose operating results are regularly reviewed by the chief operating decision maker (The
Board of Directors) for the purposes of resource allocation and assessment of segment performance. For the current
reporting period the Group had one reportable segment in continuing operations being its Vessel operations.
The Group’s previously reportable Supply Base and Slipway segments were sold during the prior reporting period and
were classified as discontinued operations (see note 2.3).
Information regarding the Vessel operating segment is presented below. The accounting policies of the reportable
segment are the same as the Group’s accounting policies.
Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment:
Revenue from
external customers
Impairment
reversal/(charge)
Profit/(loss)
after impairment
2018
$’000
2017
$’000
2018
$’000
2017
$’000
2018
$’000
2017
$’000
Continuing Operations
Vessels
200,444
221,766
8,407
(287,542)
2,367
(307,412)
Investment income
Other gains/(losses)
Administration expenses
Finance costs
Loss from continuing operations
before income tax
463
87
133
(14,960)
(7,092)
(7,377)
(23,201)
(26,444)
(27,376)
(356,060)
Segment profit/(loss) represents the profit/(loss) earned by the Vessel segment without allocation of investment revenue,
other gains and losses, administration costs, 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.
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.
Segment Assets
The following is an analysis of the Group’s assets by reportable segment:
Vessel segment assets(i)
Unallocated assets
Total continuing assets
Assets relating to discontinued operations(ii)
Total
2018
$’000
566,129
73,655
639,784
-
639,784
2017
$’000
582,002
41,742
623,744
8,946
632,690
(i)
Vessel segment assets include vessels held for sale (see note 3.4)
(ii)
Trade receivables outstanding at 30 June 2017 related to Supply Base and Slipway.
For the purposes of monitoring segment performance and allocating resources between segments, all assets are
allocated to reportable segments other than cash and central administration assets.
2.
Financial Performance (continued)
2.1 Segment Information (continued)
Other segment information
Vessel assets
Unallocated assets
Total
Depreciation and
amortisation
Additions to
non-current assets
2018
$’000
2017
$’000
31,300
44,708
603
833
31,903
45,541
2018
$’000
9,108
86
9,194
2017
$’000
31,010
49
31,059
Impairment reversals/(charges) from continuing operations
In addition to the depreciation charges reported above, the Group also recognised impairment reversals/(charges) (see
note 3.6) in respect of vessels as set out below:
Vessels held for continuing operations
Vessels held for sale
Total
Geographical information
2018
$’000
8,236
171
8,407
2017
$’000
(158,089)
(129,453)
(287,542)
The Group is based in two principal geographical areas – Australia (country of domicile) and Singapore, however the
fleet is traded around the world as a single fleet and moves between all geographical areas.
During the year, the Group operated vessels in a number of countries outside 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
2018
$’000
2017
$’000
2018
$’000
2017
$’000
142,155
148,804
58,289
72,962
200,444
221,766
183,478
312,943
496,421
187,018
311,368
498,386
Information about major customers for continuing operations
Included in revenues arising from vessel services are revenues of approximately $28.8 million (2017: $30.5 million)
which arose from sales to the Group’s largest customer, revenues of approximately $25.9 million (2017: $28.7 million)
which arose from sales to the Group’s second largest customer and revenues of approximately $22.1 million (2017:
$26.5 million) which arose from sales to the Group’s third largest customer.
60 Annual Report 2018
MMA Offshore Limited 61
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report
2.
Financial Performance (continued)
2.
Financial Performance (continued)
2018
$’000
2017
$’000
2.3 Discontinued Operations
2.2 Other Income and Expenses
Profit/(loss) for the year has been arrived at after recognising the following specific
amounts
Other gains and losses:
Net foreign exchange losses
Loss on disposal of property, plant and equipment
Profit/(Loss) on disposal of assets held for sale
Total
Depreciation:
Leasehold buildings and improvements
Vessels at cost
Plant and equipment
Plant and equipment – hire purchase
Total
Impairment charges:
(272)
(160)
519
87
90
30,910
903
-
31,903
(271)
(11,423)
(3,266)
(14,960)
261
43,548
1,678
54
45,541
Impairment charge recognised on trade receivables
Impairment reversal/(charge) recognised on vessel cash generating unit
1,251
8,407
8,631
(287,542)
Employee benefits:
Post-employment benefits:
Defined contribution plans
Share based payments:
Equity settled share based payments
Other employee benefits
Total
7,765
9,675
56
95,504
103,325
285
99,193
109,153
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have
rendered service entitling them to the contributions.
A discontinued operation is a component of the Group that has been disposed of or is classified as held for sale and
represents a major segment(s) of the business and is part of a single coordinated plan to dispose of such a line of
business. Information regarding the results of the discontinued operations presented separately in the Statement of
Profit or Loss and Other Comprehensive Income is presented below.
Discontinued operations for the year ended 30 June 2017:
Dampier Supply Base and Slipway businesses
On 15 June 2017, the Group disposed of the Dampier Supply Base and Slipway businesses.
Investment in Toll Mermaid Logistics Broome Pty Ltd (TMLB)
On 28 April 2017 the Group disposed of its investment in TMLB.
Analysis of profit/(loss) for the year from discontinued operations
The combined results of the discontinued operations included in the profit/(loss) for the year are set out below.
Profit/(Loss) for the period of discontinued operations
Revenue
Share of profit from jointly controlled entity
Total revenue
Expenses
Loss on sale of discontinued operations
Impairment charge on measurement to fair value
Loss before tax
Attributable income tax expense
Loss for the period from discontinued operations
Cash flows from discontinued operations
Net cash inflows from operating activities
Net cash inflows from investing activities
Net cash outflows from financing activities
Net cash inflows
2018
$’000
-
-
-
-
-
-
-
-
-
8,946
-
-
8,946
2017
$’000
34,630
522
35,152
(33,365)
(842)
(24,646)
(23,701)
-
(23,701)
92
50,355
(861)
49,586
62 Annual Report 2018
MMA Offshore Limited 63
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report
2.
Financial Performance (continued)
2.
Financial Performance (continued)
2.4
Income Taxes
Income tax recognised in profit or loss
Tax expense/(benefit) 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 expense/(benefit)
The income tax expense/(benefit) 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 unused tax losses and temporary differences not recognised as deferred
tax assets
Effect of different tax rates of subsidiaries operating in other jurisdictions
Adjustment recognised in the current year in relation to tax provisions of prior years
Total income tax expense/(benefit)
2018
$’000
2017
$’000
596
-
(63)
533
1,063
(3,160)
368
(1,729)
(27,376)
(8,213)
(356,060)
(106,818)
(73)
3,186
(273)
-
5,881
88
596
(63)
533
(226)
75,842
(461)
570
25,230
3,766
(2,097)
368
(1,729)
The tax rate used for the 2018 and 2017 reconciliations above is the corporate tax rate of 30% payable by Australian
corporate entities on taxable profits under Australian tax law.
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on the 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.
2.5 Earnings per Share
The earnings used in the calculation of basic earnings per share are as follows:
Loss for the year used in the calculation of basic earnings per share from
continuing operations
Loss from discontinued operations
Loss for the year used in the calculation of basic earnings per share
2018
$’000
(27,909)
-
(27,909)
2018
No.’000
2017
$’000
(354,331)
(23,701)
(378,032)
2017
No.’000
Weighted average number of ordinary shares used in the calculation of basic
earnings per share
678,468
402,771
The calculations of the comparative basic earnings per share have been retrospectively adjusted to reflect the impact of
the capital raising during this reporting period.
2.6 Dividends Provided for or Paid
No dividends have been provided for or paid during the current year.
Adjusted franking account balance
2018
$’000
47,589
2017
$’000
47,589
64 Annual Report 2018
MMA Offshore Limited 65
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report
3.
Assets and Liabilities
3.1 Cash
Reconciliation of cash and cash equivalents
Cash balances include $nil (2017: $10.2 million) held in Escrow under the terms of the Group’s Syndicated Loan Facility.
For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and in banks.
Cash and cash equivalents
Reconciliation of loss for the year to net cash flows from operating activities
Loss for the year
Depreciation of non-current assets
Impairment (reversal)/charge of non-current assets
Amortisation of borrowing costs
Loss on sale of property, plant and equipment
Loss on sale of assets held for sale
Loss on sale of discontinued operation
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:
(Increase)/decrease in trade and other receivables
Decrease in prepayments
Decrease in inventories
Increase/(decrease) in current tax balances
Decrease in provisions
Decrease in trade and other payables
Increase/(decrease) in unearned revenue
Decrease in deferred tax liabilities
Net cash flows from operating activities
2018
$’000
69,648
(27,909)
31,903
(8,407)
3,354
160
(519)
-
263
(15,435)
16,691
56
-
4,448
199
1,433
(1,221)
(72)
(7,549)
267
-
(2,338)
2017
$’000
28,757
(378,032)
47,933
312,188
3,900
11,423
3,266
842
(71)
8,474
157
285
(522)
(8,482)
2,085
1,172
8,043
(4,566)
(7,343)
(3,713)
(3,133)
(6,094)
3.
Assets and Liabilities (continued)
3.2 Trade and Other Receivables
Trade receivables
Allowance for doubtful debts
Other receivables
Total
2018
$’000
57,602
(2,624)
6,663
61,641
2017
$’000
76,834
(21,240)
9,723
65,317
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, $13.8 million (2017: $16.1 million) is outstanding from the
Group’s largest debtor and $7.4 million (2017: $6.8 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.
The carrying amount of trade receivables is reduced by the impairment loss through the use of an allowance account
when collection is considered at risk. When a trade receivable is subsequently 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.
Ageing of receivables past due but not impaired:
31-60 days
61-90 days
Over 90 days
Total
2018
$’000
5,548
2,744
15,071
23,363
2017
$’000
1,932
4,680
13,744
20,356
The Group holds valid bank guarantees to the value of $6.7 million over receivables in the Over 90 days category.
Movement in the allowance for doubtful debts
Balance at the beginning of the year
Impairment losses recognised on receivables
Amounts written off as uncollectable
Impairment losses reversed
Foreign exchange translation
Balance at the end of the year
Significant Accounting Judgement
21,240
1,251
(16,691)
(3,735)
559
2,624
13,456
8,788
(157)
-
(847)
21,240
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. 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. Accordingly, the Directors
believe that there is no further credit provision required in excess of the allowance for doubtful debts.
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.
66 Annual Report 2018
MMA Offshore Limited 67
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report
3.
Assets and Liabilities (continued)
3.3
Inventories
Fuel – at cost
Consumables
Work in progress
Total
2018
$’000
1,289
326
-
1,615
2017
$’000
2,501
511
20
3,032
Inventories are stated at the lower of cost or 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.
3.4 Assets Classified as Held for Sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale
transaction rather than through continuing use and a sale is considered highly probable. They are measured at the
lower of their carrying amount or fair value less costs to sell. An impairment loss is recognised for any initial write-down
of the asset to fair value less costs to sell. Information regarding the assets held for sale in the Statement of Financial
Position is presented below.
At 31 December 2016, the Group resolved to dispose of a number of non-core vessels within the fleet.
At 30 June 2018, the carrying value of the vessels not yet sold was $9.4 million (2017: $35.9million).
3.
Assets and Liabilities (continued)
3.5 Property, Plant and Equipment
Leasehold
Buildings and
Improvements
at cost
$’000
Vessels
at cost
$’000
Plant and
Equipment
at cost
$’000
Plant and
Equipment
– Hire
Purchase
at cost
$’000
Fixed Assets
under
Construction
at cost
$’000
Total
$’000
155,363
1,243,937
32,763
11,195
111,645 1,554,903
194
12,162
(964)
(73,088)
-
134,202
106
(106)
160
569
(690)
(135)
18,834
31,865
-
(74,848)
(134,227)
-
Gross carrying amount:
Balance at 1 July 2016
Additions
Disposals
Transfers
Reclassification of assets held for sale
(140,363)
(349,852)
(16,625)
(10,426)
-
(517,266)
Net currency exchange differences
(284)
48,399
(242)
(513)
3,748
51,108
Balance at 1 July 2017
13,946
1,015,760
16,056
Additions
Disposals
Net currency exchange differences
109
(46)
(13)
8,977
(87,981)
16,001
108
(131)
432
Balance at 30 June 2018
13,996
952,757
16,465
-
-
-
-
-
-
-
-
-
-
1,045,762
9,194
(88,158)
16,420
983,218
Accumulated depreciation:
Balance at 1 July 2016
Disposals
Impairment charge
Depreciation expense
Transfers
(93,319)
(462,912)
(18,520)
(6,940)
(17,430)
(599,121)
291
45,256
(21,457)
(275,126)
(1,738)
(43,549)
-
(27,616)
72
(3,494)
(2,311)
(125)
Reclassification of assets held for sale
105,683
292,472
12,318
Net currency exchange differences
(1,981)
(51,468)
148
Balance at 1 July 2017
(12,521)
(522,943)
(11,912)
Disposals
Impairment reversal
Depreciation expense
Net currency exchange differences
44
-
87,981
8,236
(90)
(30,910)
(186)
(3,331)
3
-
(903)
(265)
Balance at 30 June 2018
(12,753)
(460,967)
(13,077)
Net book value:
As at 30 June 2017
As at 30 June 2018
1,425
1,243
492,817
491,790
4,144
3,388
431
-
46,050
(1,256)
(10,855)
(312,188)
(335)
101
7,913
86
-
(47,933)
27,640
-
-
418,386
645
(52,570)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(547,376)
88,028
8,236
(31,903)
(3,782)
(486,797)
498,386
496,421
Leasehold buildings and improvements, vessels, 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.
68 Annual Report 2018
MMA Offshore Limited 69
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report
3.
Assets and Liabilities (continued)
3.
Assets and Liabilities (continued)
3.5 Property, Plant and Equipment (continued)
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 estimated useful lives, residual values and depreciation methods are reviewed at the end of each annual reporting
period. 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
5% - 100% straight-line
Key source of estimation uncertainty
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.
3.6
Impairment of non-current assets
The Group performs a review of non-current asset values at each reporting period and whenever events occur or
changes in circumstances indicate that the carrying amount of an asset group may be impaired. Market conditions are
monitored for indications of impairment for all of the Group’s operating assets and where such indications are identified,
a formal impairment assessment is performed.
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.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-
generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
Key source of estimation uncertainty
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 Cost of Disposal (FVLCOD) approach
was used (2017: FVLCOD 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.
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. We note an assessment of impairment was performed at 31 December
2017, resulting in an impairment reversal of $8.4 million.
The Group has identified the following indicators of impairment at 30 June 2018:
•
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 the Vessels Cash-Generating Unit (‘CGU’).
The Supply Base and Slipway CGU’s were classified as Held for Sale as at 31 December 2016 resulting in the
recognition of an impairment at that date as disclosed below. These assets were subsequently disposed of on 15 June
2017.
3.6
Impairment of non-current assets (continued)
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 FVLCOD method was used for the purpose of impairment testing on 30 June 2018.
Impairment reversals/(charges) recognised
The following information relates to impairment reversals/(charges) included in profit or loss:
Segment/CGU
Vessels
Supply Base
Slipway
Total
Class of asset
Method
Property, Plant & Equipment
FVLCOD
Property, Plant & Equipment
FVLCOD
Property, Plant & Equipment
FVLCOD
Impairment reversal/(charge)
2018
$’000
8,407
-
-
8,407
2017
$’000
(287,542)
(22,315)
(2,331)
(312,188)
The impairment reversal/(charge) recognised for Vessels is reflected as part of the Group’s continuing operations (note
2.2) while the impairment charge for Supply Base and Slipway CGUs are reflected in discontinued operations (note 2.3).
The inputs used in deriving the recoverable amount of each CGU is categorised in accordance within the following
levels of the fair value hierarchy:
CGU
Vessels
Continuing operations
Held for sale
Level 3(i)
$’000
496,421
9,397
Recoverable
Amount
$’000
496,421
9,397
(i)
Level 3 inputs are unobservable inputs used to measure fair value. In our calculations the inputs used are based
on both observable and unobservable market data prepared by an independent valuation consultant together with
internally determined valuations. Due to the unobservable market data and internal valuation components of the
valuations, the inputs are considered Level 3.
Vessels
The oil and gas sector has been through one of its worst periods in history over the past three and a half years.
However, sector sentiment has improved significantly around a recovery in oil and gas markets with key industry
commentators indicating that the market may have bottomed. We expect the recovery to be volatile and the timing is still
uncertain. The oil markets are rebalancing and demand remains strong whilst supply is tighter as a result of production
cuts. Sentiment around the offshore support vessel markets has become more positive with increasing tendering activity
in a number of regions and work scopes. In addition, a proportion of the global cold stacked vessels are not expected
to return to service eliminating some of the supply overhang.
As disclosed in note 3.4, a group of non-core vessels in the fleet were classified as being held for sale as at 31
December 2016. This classification has resulted in two separate fair value assessments for the fleet, being those core
vessels used for continuing operations and those non-core vessels that are held for sale.
70 Annual Report 2018
MMA Offshore Limited 71
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report
3.
Assets and Liabilities (continued)
3.6
Impairment of non-current assets (continued)
Continuing Operations
The recoverable amount of the core vessels was determined using a market based approach, reflecting the value which
could be expected to be realised through the disposal of the vessels, in an orderly market, on an “as is where is” basis
between a willing buyer and willing seller.
An independent valuation of the fleet was undertaken by a specialist marine valuation consultancy and shipbroking
company. In preparing their valuation report, some of the factors they considered include the current market conditions
in which the vessels operate, a review of recent market sales of similar vessels, consideration of the specification and
earnings potential of each vessel and the inherent value and replacement cost of each vessel.
A key input into the recoverable amount of the CGU was the application of a discount to the independent vessel
valuation to reflect the amount which would be achieved if the fleet was disposed of in one single transaction. In the
June 2017 impairment assessment, the company used a discount of 20%. Given the stabilisation of the market, where
we are in the cycle and taking into account the independent valuers assessment of the fleet, the Board have applied a
discount of 17.5% to the value for the fleet which reflects recoverable value.
The following factors were taken into account in determining this value:
• The stable rising trend in oil prices during the 2018 financial year
• An increase in project and development commitments by the oil and gas majors
•
•
Increasing tender opportunities in the market
Increasing activity in the vessel sales market
• Acknowledging the increased activity in the industry is still at an early stage in the market cycle and there is
uncertainty about the extent and timing of recovery
• Acknowledging the impact of the significant vessel tonnage in the industry
A 2.5% increase or decrease in the ‘en bloc discount rate would result in a corresponding $15 million increase or
decrease in the impairment reversal or charge.
Another key input was the estimated costs of disposal. The Company has adopted a selling cost equal to 2% of the sale
value of each vessel based on actual selling costs of between 1.5% and 2.5% for previous vessel sales.
Inputs in determining the classification level within the fair value hierarchy are reassessed at each reporting period as
part of the impairment process. The inputs used within calculations are assessed and discussed internally to determine
the extent to which they can be compared to observable market information and classified accordingly.
Held for Sale
The recoverable amount of the non-core vessels was determined using a market based approach, reflecting the value
which could be expected to be realised through an accelerated sale program.
In assessing the fair value of these non-core vessels the Company has taken into consideration the following factors:
• actual sales of the non-core vessels that have been completed to date
• current sale contracts and negotiations on the remaining non-core vessels
• market sales evidence for similar vessels over the past 6 months
The price that would be expected to be received in these circumstances for these non-core vessels would be less than
if sold in an orderly transaction with no time restrictions to complete the sale.
A 5% increase or decrease of expected sale proceeds would result in corresponding $0.5 million decrease or increase
in the fair value for these non-core vessels.
3.7 Trade and Other Payables
Trade payables
Other payables and accruals
Goods and services tax payable
Total
2018
$’000
5,017
26,379
913
32,309
2017
$’000
7,826
24,390
5,170
37,386
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.
3.
Assets and Liabilities (continued)
3.8 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
2018
$’000
2017
$’000
6
3,992
(2,259)
1,739
4
265,009
(5,080)
259,933
5
-
-
5
8
324,209
(9,770)
314,447
Summary of borrowing arrangements:
(i)
(ii)
The hire purchase liabilities are fixed interest rate debt with repayment periods not exceeding 3 years. The current
weighted average interest rate on the hire purchase liabilities is 2.9% (2017: 2.9%).
In conjunction with the capital raising that occurred during this reporting period, the Group was able to renegotiate
the terms of its Syndicated Debt Facility with its existing lenders. The key amendments to the Facility included:
• Extending the term for a further 2 years from maturity on 30 September 2019 to 30 September 2021
• Reducing the interest rate
• Agreeing certain amendments and holidays to specified covenants
• Cash sweep of excess cash above $70.0 million from 30 June 2020, 31 December 2020 and 30 June 2021
• Agreeing to a revised amortisation profile
The revised amortisation profile includes:
• A payment of $30.0 million by 31 December 2017 which was linked with the capital raising and was paid
• $5.0 million by 30 June 2020
• $7.5 million by 31 December 2020
• $7.5 million by 30 June 2021
• The balance is to be repaid on maturity at 30 September 2021
In addition, proceeds from the sale of non-core vessels will continue to be applied against the outstanding
amount with $30.0 million to be repaid by 31 December 2018. Any shortfall is to be funded from the Group’s cash
reserves. This obligation has now been met as a result of the successful completion of vessel sales, with $26.0
million repaid prior to 30 June 2018 and a further $5.1 million repaid in July 2018.
The facility is fully secured by fixed and floating charges given by controlled entities within the Group, registered
ship mortgages over a number of vessels owned by certain entities and real property mortgages.
The current weighted average interest rate on the bank loans is 6.08% (2017: 7.6%).
(iii)
The unamortised loan fees are in relation to the Syndicated Facility Agreement.
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.
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 or payable is recognised in the profit and loss.
72 Annual Report 2018
MMA Offshore Limited 73
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report
3.
Assets and Liabilities (continued)
3.
Assets and Liabilities (continued)
3.8 Borrowings (continued)
Available borrowing facilities
Secured loan facilities with various maturity dates through to 2021 and which may
be extended by mutual agreement:
Amount used
Amount unused
Total
Secured bank overdraft:
Amount used
Amount unused
Total
2018
$’000
2017
$’000
269,001
324,209
-
-
269,001
324,209
-
-
-
-
4,000
4,000
Reconciliation of liabilities arising from financing activities:
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non
cash changes.
2018
Balance at 1 July 2017
Financing cashflows
Non-cash foreign exchange movement
Other changes
Balance at 30 June 2018
2017
Balance at 1 July 2016
Financing cashflows
Non-cash foreign exchange movement
Other changes
Balance at 30 June 2017
Hire purchase
liability
$’000
13
(3)
-
-
10
923
(921)
-
11
13
Bank loans
Unamortised
loan fees
$’000
324,209
(61,295)
6,087
-
269,001
397,755
(66,405)
(7,141)
-
$’000
(9,770)
(4,003)
-
6,434
(7,339)
(6,853)
(3,723)
-
806
Total
$’000
314,452
(65,301)
6,087
6,434
261,672
391,825
(71,049)
(7,141)
817
324,209
(9,770)
314,452
3.9 Provisions
Current
Employee benefits – annual leave
Employee benefits – long service leave
Restructuring costs – shipbuilding operations
Total
Non-current
2018
$’000
6,352
4,313
-
2017
$’000
6,553
3,507
148
10,665
10,208
Employee benefits – long service leave
262
885
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.
3.9 Provisions (continued)
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.
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.
A restructuring provision is recognised when the Group has developed a detailed formal plan for restructuring and has
raised a valid expectation with 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.
3.10 Deferred Tax Balances
Deferred tax assets/(liabilities) arise from the following:
2018
Gross deferred tax liabilities:
Property, plant and equipment
Inventory
Receivables
Other
Gross deferred tax assets:
Provisions
Employee share trust
Unused tax losses and credits
Other
Total
2017
Gross deferred tax liabilities:
Property, plant and equipment
Inventory
Receivables
Other
Gross deferred tax assets:
Provisions
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
(4,543)
(8,371)
(120)
(13,034)
(460)
(668)
44
(5,627)
636
301
4,390
300
5,627
-
(11,098)
(903)
(674)
(104)
(12,779)
684
382
104
7,995
521
9,686
(3,093)
277
580
(135)
(7,649)
(466)
21
8,204
(110)
7,649
-
6,219
443
6
148
6,816
(48)
85
(104)
(3,368)
(221)
(3,656)
3,160
-
-
-
(183)
(88)
(91)
(120)
(13,396)
-
(322)
442
-
120
-
170
-
13,036
190
13,396
-
336
(4,543)
-
-
-
(460)
(668)
44
336
(5,627)
-
(166)
-
(237)
-
(403)
(67)
636
301
-
4,390
300
5,627
-
74 Annual Report 2018
MMA Offshore Limited 75
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report
3.
Assets and Liabilities (continued)
3.10 Deferred Tax Balances (continued)
4.
Capital Structure
4.1
Issued Capital
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 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.
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.
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.
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
2018
$’000
2017
$’000
64,603
19,320
5,668
39,371
19,313
10,116
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.
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.
Fully Paid Ordinary Shares
Balance at beginning of financial year
Issue of shares under institutional placement
Issue of shares under institutional entitlement offer
Issue of shares under retail entitlement offer
Share issue costs
Transfer employee equity settled benefits reserve
2018
No.’000
373,077
111,923
78,027
295,050
-
-
2018
$’000
561,275
22,385
15,605
59,010
(4,558)
1,018
2017
No.’000
373,077
2017
$’000
556,566
-
-
-
-
-
-
-
-
-
4,709
Balance at end of financial year
858,077
654,735
373,077
561,275
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Share Rights
As at 30 June 2018, executives and employees held rights over 9,555,660 ordinary shares (2017: 10,923,881) in
aggregate (see note 5.2). All remaining share rights lapsed in July 2018.
Share rights granted under the employee share rights plans carry no right to dividends and no voting rights.
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 at the proceeds received, net of direct issue costs.
4.2 Reserves
Employee equity settled benefits
Hedging
Foreign currency translation
Balance at end of financial year
2018
$’000
154
(57,290)
178,590
121,454
2017
$’000
1,114
(51,203)
165,288
115,199
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 or
expire.
The hedging reserve is used to record gains and losses on hedges designated as cash flow hedges including hedges
of net investments in a foreign operation. Gains and losses accumulated in the hedge reserve are taken to the 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. For a net investment in a foreign operation any gains and losses are taken to profit and loss
on disposal of the foreign operation.
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.
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. 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.
76 Annual Report 2018
MMA Offshore Limited 77
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report 4.
Capital Structure (continued)
4.3 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 2017.
The capital structure of the Group consists of net debt (borrowings as detailed in note 3.8 offset by cash at bank
balances) and equity of the Group (comprising issued capital and reserves as detailed in notes 4.1 and 4.2 and
accumulated losses).
The Group is not subject to any externally imposed capital requirements other than normal banking requirements.
Based on recommendations of management and the Board, the Group will balance its overall capital structure through
new share issues as well as the establishment of new borrowing facilities or repayment of existing facilities. The Group
uses its gearing ratio (measured as net debt to equity) to manage its capital. The ratio is monitored on a monthly basis
by the Board and management.
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)
Gearing ratio
(i)
(ii)
Debt is defined as long and short-term borrowings, as detailed in note 3.8.
Equity includes all capital and reserves of the Group that are managed as capital.
2018
$’000
261,672
(69,648)
192,024
328,295
58%
2017
$’000
314,452
(28,757)
285,695
256,489
111%
5. Other Notes
5.1 Commitments for Expenditure
Capital expenditure commitments
Plant and Equipment
Vessels
Total
2018
$’000
-
749
749
2017
$’000
339
1,149
1,488
Finance lease liabilities
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 3.8)
Borrowings – non-current (note 3.8)
Total
Minimum Lease Payments
Present Value of Minimum
Lease Payments
2018
$’000
2017
$’000
2018
$’000
2017
$’000
7
5
12
(2)
10
6
10
16
(3)
13
6
4
10
-
10
6
4
10
5
8
13
-
13
5
8
13
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.
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.
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 costs and reduction of the lease obligations so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance costs are recognised immediately in profit or
loss.
78 Annual Report 2018
MMA Offshore Limited 79
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report 5. Other Notes (continued)
5.1 Commitments for Expenditure (continued)
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
Total non-cancellable operating lease commitments
Aggregate operating lease commitments comprise:
Office rental commitments(i)
Onshore facility rental commitments(ii)
Vessel charter fee commitments(iii)
Other(iv)
Total
(i)
2018
$’000
2017
$’000
6,230
14,848
3,828
3,350
7,178
3,661
1,476
1,066
975
7,178
3,345
5,483
8,828
4,363
3,969
-
496
8,828
Office rental commitments:
The Group has a lease on the head office premises at Fremantle, Australia which expires on 4 August 2020,
with an option to extend for a further 5-year term. The Group also has a 2-year lease agreement in place for the
Singapore office expiring on 31 January 2020.
(ii) Onshore facility rental commitments:
The Group 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 2018, the Company had three vessels (2017: Nil) under 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.
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.
5. Other Notes (continued)
5.2 Share Based Payments
Share rights incentive plans
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.
The following share based payment arrangements were in existence during the current reporting period:
Series
Number issued
Grant Date
Expiry Date
(1)
Issued 22 October 2014
1,052,625
22 Oct 2014
1 Jul 2017
(2)
Issued 1 December 2014
11,382
1 Dec 2014
1 Jul 2017
(3)
Issued 1 December 2014
430,075
18 Nov 2014
1 Jul 2017
(4)
Issued 10 February 2016
2,001,432
18 Nov 2015
1 Jul 2020
(5)
Issued 10 February 2016
8,037,836
7 Dec 2015
1 Jul 2020
(6)
Issued 7 June 2016
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
1.09
1.09
0.75
0.02
0.02
0.02
None of the Performance Criteria for rights issued during the 2015 financial year as part of Series 1, 2 and 3 were met.
As such, all the rights have lapsed in accordance with the terms of the Plan rules.
Performance Rights issued during the 2016 financial year as part of Series 4, 5 and 6 to executives and employees are
subject to achievement of a number of vesting targets. 50% of the rights are subject to achieving a share price target
and the remaining 50% are subject to the Company’s Total Shareholder Return percentile ranking relative to a selected
Peer Group over the 3-year vesting period. At 30 June 2018 none of the performance criteria for these rights had been
met and they will lapse in accordance with the terms of the Plan rules.
Please refer to the Remuneration Report on pages 35 to 44 for further details of Performance Rights issued to
executives and employees.
Fair value of share rights granted during the year
There were no share rights granted during the year.
Equity settled share based payments to employees are measured at fair value of the equity instrument at grant date.
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.
80 Annual Report 2018
MMA Offshore Limited 81
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report 5. Other Notes (continued)
5.2 Share Based Payments (continued)
Movement in share rights during the period
The following reconciles the outstanding share rights at the beginning and end of the financial year:
2018
2017
Employee Share Right Plans
Weighted
average
exercise price
$
Number of
rights
Balance at the beginning of the financial year
10,923,881
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
-
(1,368,221)
9,555,660
-
0.00
0.00
0.00
0.00
0.00
Weighted
average
exercise price
$
0.00
0.00
0.00
0.00
0.00
Number of
rights
13,718,778
(815,406)
(1,979,491)
10,923,881
-
Share rights outstanding at the end of the year
The following share rights were outstanding at the end of the financial year:
Series
(4)
(5)
(6)
Total
Issued 10 February 2016
Issued 10 February 2016
Issued 7 June 2016
Number
2,001,432
7,333,944
220,284
9,555,660
Exercise price
$
0.00
0.00
0.00
0.00
Expiry Date
1 Jul 2020
1 Jul 2020
1 Jul 2020
5.3 Key Management Personnel Compensation
Please refer to the Remuneration Report for details of key management personnel.
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
Other long-term benefits
Termination benefits
Share based payments
Total
2018
$
2017
$
3,381,570
3,884,357
175,939
64,587
216,011
36,852
231,100
55,220
302,342
394,657
3,874,959
4,867,676
5. Other Notes (continued)
5.4 Related Party Transactions
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.
Trading transactions
During the year, the Group entities did not enter into any trading transactions with related parties that are not members of
the Group:
Jointly controlled entity
Sale of Goods
Purchase of Goods
2018
$
-
2017
$
44,809
2018
$
-
2017
$
8,770
There were no outstanding balances due from related parties that are not members of the Group (2017: Nil).
Loans to related parties
The Group provided a member of its key management personnel with a short term loan during the prior year. The
outstanding balance at the end of the year was $25,602 (2017: $24,732).
Other related party transactions
Other transactions that occurred during the financial year between entities in the wholly owned Group were the charter of
vessels. These are all provided at commercial rates.
5.5 Remuneration of Auditors
Auditor of the Parent Entity
Audit or review of the financial report
Advice relating to debt restructure
Advice relating to equity raising
Total
Network firms of the Parent Entity auditor
Audit or review of the financial report
Taxation compliance services
Total
2018
$
2017
$
280,750
242,920
18,500
542,170
319,508
39,077
358,585
313,076
344,978
-
658,054
285,822
62,780
348,602
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.
82 Annual Report 2018
MMA Offshore Limited 83
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report 5. Other Notes (continued)
5.6 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
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
Ownership
Interest 2018
%
Ownership
Interest 2017
%
(i)
Australia
(ii) (iii)
(ii) (iii)
(ii) (iii)
(ii) (iii)
(ii)
Australia
Australia
Australia
Singapore
Australia
Singapore
Malaysia
Singapore
Singapore
Singapore
Singapore
Malaysia
Malaysia
Indonesia
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.
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
Continuing Operations
Revenue
Investment income
Dividend income
Other income/(losses)
Vessel expenses
Administrative expenses
Impairment charge
Finance costs
Loss before income tax expense from continuing operations
Income tax benefit/(expense)
Loss for the year from continuing operations
Discontinued Operations
Loss from discontinued operations
Loss for the Year
Total Comprehensive Income/(Loss) for the year
2018
$’000
2017
$’000
142,938
3,715
-
(5,525)
(131,804)
(7,091)
87,736
(23,100)
66,869
-
150,341
2,759
9,063
3,906
(146,544)
(7,377)
(453,437)
(26,450)
(467,739)
(368)
66,869
(468,107)
-
66,869
66,869
(23,701)
(491,808)
(491,808)
5. Other Notes (continued)
5.6 Subsidiaries (continued)
Statement of Financial Position
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Assets classified as held for sale
Total Current Assets
Non-Current Assets
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
Other payables
Borrowings
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Retained earnings/(accumulated losses)
Total Equity
Retained earnings/(accumulated losses)
Retained earnings at beginning of the financial year
Net profit/(loss)
Retained earnings/(accumulated losses) at end of the financial year
2018
$’000
2017
$’000
58,469
36,473
611
491
-
24,944
38,831
1,535
717
857
96,044
66,884
420,923
109,303
530,226
626,270
39,307
375
1,734
10,064
51,480
5,875
259,928
262
266,065
317,545
308,725
335,537
112,932
448,469
515,353
39,285
-
-
9,447
48,732
1,901
314,452
885
317,238
365,970
149,383
654,735
127
561,275
1,114
(346,137)
(413,006)
308,725
149,383
(413,006)
66,869
(346,137)
78,802
(491,808)
(413,006)
84 Annual Report 2018
MMA Offshore Limited 85
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report 5. Other Notes (continued)
5.7 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.
5. Other Notes (continued)
5.8 Financial Instruments (continued)
Market risk
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/(accumulated losses)
Profit reserve - 2016(i)
Employee equity settled benefits reserve
Total Equity
Financial Performance
Loss for the year
Other comprehensive gain
Total comprehensive gain/(loss)
Guarantees provided under the deed of cross guarantee
2018
$’000
2017
$’000
57,706
542,311
600,017
5,018
266,705
271,723
328,294
17,352
563,601
580,953
4,982
319,482
324,464
256,489
654,748
561,289
(440,716)
(420,079)
114,122
140
328,294
114,122
1,157
256,489
(20,637)
(420,079)
-
(20,637)
45,822
-
(420,079)
41,506
(i)
A profit reserve was created in the prior year and represents an appropriation of amounts from retained earnings
for the payment of future dividends.
5.8 Financial Instruments
Categories of financial instruments
Financial assets
Cash and cash equivalents
Loans and receivables
Financial liabilities
2018
$’000
69,648
61,641
2017
$’000
28,757
65,317
Payables and borrowings at amortised cost
299,001
360,435
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.
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, these 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.
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, when it is considered appropriate.
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
Other
Liabilities
Assets
2018
$’000
25,724
3,076
445
561
2017
$’000
17,061
3,518
643
975
2018
$’000
48,652
2,682
12
2,192
2017
$’000
41,844
2,335
877
1,224
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
Profit or Loss
Equity(i)
2018
$’000
(394)
12
2
2017
$’000
(788)
1
(17)
2018
$’000
(1,691)
24
37
2017
$’000
(1,465)
107
(5)
(i)
The current and comparative year USD impact relates to the translation from the functional currencies of the
Group’s foreign entities into Australian Dollars.
The Group’s profit and loss sensitivity to foreign currency has decreased at the end of the current period due to lower
net USD denominated assets.
86 Annual Report 2018
MMA Offshore Limited 87
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report 5. Other Notes (continued)
5.8 Financial Instruments (continued)
Interest rate risk management
5. Other Notes (continued)
5.8 Financial Instruments (continued)
Liquidity and interest risk tables
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 has 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 $2,690,012 (2017: decrease / increase by $3,242,085). 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.
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 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, second and third largest trade receivables (refer note 3.2), 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 three
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.
Liquidity risk management
The Group manages liquidity risk by maintaining adequate cash reserves and borrowing facilities, continuously
monitoring forecast and actual cash flows and managing credit terms with customers and suppliers.
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.
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 2018
Non-interest bearing
Hire purchase liability
Variable interest rate instruments
Total
30 June 2017
Non-interest bearing
Hire purchase liability
Variable interest rate instruments
Total
-
2.90
6.08
-
2.90
7.60
19,886
1
1,390
21,277
37,386
1
2,899
40,286
1,891
1
2,735
4,627
-
1
4,124
4,125
859
5
12,239
13,103
-
4
18,457
18,461
14,693
37,329
5
310,039
324,737
8,597
10
355,106
363,713
12
326,403
363,744
45,983
16
380,586
426,585
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
Total
$’000
30 June 2018
Non-interest bearing
Variable interest rate instruments
Total
30 June 2017
Non-interest bearing
Variable interest rate instruments
Total
-
2.20
-
1.06
24,960
69,775
94,735
23,354
28,782
52,136
6,658
29,423
-
-
6,658
29,423
8,430
27,084
-
-
8,430
27,084
600
-
600
6,449
-
6,449
61,641
69,775
131,416
65,317
28,782
94,099
88 Annual Report 2018
MMA Offshore Limited 89
Notes to the Financial Statements For the year ended 30 June 2018Notes to the Financial Statements For the year ended 30 June 2018OverviewOperating & Financial ReviewGovernance2018 Financial Report 5. Other Notes (continued)
5.8 Financial Instruments (continued)
Fair value of financial instruments
The Directors consider that the carrying amounts of financial assets and financial liabilities recognised in the
consolidated financial statements approximate their fair values.
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 other financial assets and financial liabilities (excluding derivative instruments) are determined in
accordance with generally accepted pricing models based on discounted cash flow analysis.
5.9 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.
Additional Securities Exchange Information
For the year ended 30 June 2018
Ordinary Share Capital (as at 14 September 2018)
858,077,084 fully paid ordinary shares are held by 7,112 individual shareholders. All issued ordinary shares carry one vote per
share.
Substantial shareholders
Black Crane Asia Opportunities Fund
Halom Investments Pte Ltd
Paradice Investment Management Pty Ltd
Tribeca Investment Partners Pty Ltd
Eley Griffiths Group Pty Ltd
TIGA Trading Pty Ltd
Thorney Opportunities Ltd
First Samuel Limited
Distribution of Holders of Ordinary Shares (as at 31 August 2018)
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
% of Issued
Capital
77,418,996
67,481,946
62,537,998
51,523,200
48,370,356
46,806,956
46,806,956
45,466,875
9.02
7.86
7.29
6.00
5.64
5.45
5.45
5.30
Number of ordinary shareholders
1,556
1,932
1,108
2,148
361
7,105
Twenty Largest Shareholders (as at 14 September 2018)
Number of
Shares
% of Issued
Capital
1
2
3
4
5
6
J P Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
National Nominees Limited
UBS Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd
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