2019ANNUAL
REPORT
TOGETHER, WE MAKE IT HAPPEN
30+
MODERN
HIGH-QUALITY
VESSELS
880+
EMPLOYEES ACROSS
THE GLOBE
VESSEL SOLUTIONS AND MARINE
EXPERTISE FOR THE OFFSHORE
OIL AND GAS INDUSTRY
TOGETHER, WE MAKE IT HAPPEN
0.53
TRCF PER MILLION
HOURS WORKED
MIDDLE
EAST
2
ONSHORE FACILITIES
EAST &
WEST AFRICA
KEY
OFFICE
ONSHORE FACILITY
CONTENTS
OVERVIEW
About MMA
Our Key Values
Our Services
2019 Year in Review
Chairman’s Report
Managing Director’s Report
Chief Executive Officer’s Report
Financial Report
Health, Safety, Environment & Quality
Our People
Our Community
Risks
2
3
4
6
8
10
14
18
20
22
24
26
Dubai
SOUTH EAST ASIA
Malaysia
Singapore
Batam
Dampier
Fremantle
AUSTRALIA
GOVERNANCE
Board of Directors
Corporate Governance
Directors’ Report
Auditor’s Independence Declaration
Audit Report
Directors’ Declaration
FINANCIAL REPORT 2019
28
30
34
50
51
56
57
SHAREHOLDER INFORMATION
Additional Securities Exchange Information
93
MMA Offshore Limited 1
ABOUT
MMA
MMA is one of the largest marine service
providers in the Asia Pacific region with
operations in Australia, South East Asia,
the Middle East and Africa.
We specialise in providing marine
solutions and expertise to the offshore
oil and gas industry, underpinned by our
operational excellence and strong safety
culture.
Our modern high-quality fleet of
offshore vessels supports a range of
offshore and subsea activities across
exploration, production, construction and
maintenance.
We pride ourselves on partnering with
our clients to deliver innovative solutions
to solve their complex marine problems.
Our quality vessels, technical marine
expertise and operational excellence sets
us apart from other vessel operators in
the industry as does our track record of
delivering exceptional service where the
cost of failure is high.
AN INNOVATIVE
APPROACH
OUR KEY VALUES
PEOPLE
We provide a workplace built on
trust, cooperation and mutual
respect where our people care
about their safety and the safety
of those around them.
CUSTOMER
RELATIONSHIPS
We understand our customers’
requirements by building long-
term collaborative relationships.
We will provide safe and
proactive solutions that deliver
beyond expectations.
TEAM WORK
We share knowledge, resources
and services across our business.
We will work together as one
team to achieve our common
goals.
OUR STRENGTHS
SAFETY
LEADERSHIP
EXPERIENCED,
INNOVATIVE PEOPLE
MODERN RELIABLE
ASSETS
PROVEN TRACK
RECORD
2 Annual Report 2019
MMA Offshore Limited 3
INNOVATIVE SERVICES THAT FOCUS ON
EXCEEDING
EXPECTATIONS
Walk to Work
Services
Offshore
Services
Project
Logistics
SERVICES
Subsea
Services
Marine
Expertise
Onshore
Services
Strong Services capability with proven track
record in delivering complex projects
TRACK RECORD
OF OPERATIONAL
EXCELLENCE
30+
VESSELS
VESSEL FLEET
4
12
8
6
AHT
9 years
average age
AHTS
8.5 years
average age
PSV
6 years
average age
MPSV / IMR
4.5 years
average age
4 Annual Report 2019
MMA Offshore Limited 5
2019 YEAR
IN REVIEW
Revenue
$239.3m
Operating Cashflow
$22.2m
50%
INCREASE
IN EBITDA
EBITDA
$27.8m
EBIT
$(7.5)m
Normalised NPAT
$(27.0)m
LVR (Net Debt to Fixed Assets)
42%
Cash at Bank
$70.2m
NTA per Share
$0.35
6 Annual Report 2019
MMA Offshore Limited 7
AN UNWAVERING
COMMITMENT
The acquisition of Neptune Marine
Services is a key part of our subsea
expansion strategy enabling us to
package additional services with our
vessels, capturing additional margin
as we move up the value chain. The
acquisition is expected to deliver
improved returns on our assets through
an expanded service offering, increased
asset utilisation and synergies. With the
acquisition undertaken at a low point in
the cycle, the combined business is also
expected to benefit from a recovery in
offshore and subsea investment.
We have also positioned ourselves to
grow our project logistics business with
the creation of “MMA Global Projects”,
a dedicated division that is focusing
on project managing large marine
spreads for major LNG and renewables
projects globally. With a large number
of construction projects in the pipeline,
MMA Global Projects is well placed to
gain a share of this market.
Our ability to innovate and design
specialised marine solutions for our
clients is a core competency that
differentiates us from our competitors
and is a key platform in our overall
strategy. During the year we secured
a number of important new contracts
on the back of our solutions focused
approach.
Our Walk to Work project for Woodside
was the first of its kind for platform
maintenance operations in Australia,
delivering a significant improvement in
productivity to our client and potentially
changing the way personnel transfers
for platform shutdown operations will be
conducted in the Australian oil and gas
sector in the future. MMA was awarded
an “Innovation Award” by the Australian
Chamber of Commerce in Singapore for
the project. Walk to Work is becoming
an increasingly important service offering
for MMA with four separate projects
completed during FY2019.
A number of MMA’s long-term contracts
which currently underpin our earnings
have been won on the basis of MMA
providing a more innovative or technically
sophisticated solution to the client. We
will continue to seek win-win solutions
where we can deliver a better, safer or
more cost-efficient service to our clients,
whilst optimising our return on assets.
Our balance sheet continues to be
an ongoing focus. The Company’s
key debt metric (Net Debt / EBITDA),
whilst improving, remains above our
target range due to the impact of the
downturn on earnings. Our Loan to
Valuation ratio (Net Debt / Property
Plant and Equipment) is well within
acceptable limits at 42%. Our strategy
to improve earnings will in turn improve
our debt metrics. The relationship with
our banking group is positive with our
current debt facilities due for refinancing
by September 2021. We will continue
to proactively manage our debt position
with our current banks as well as engage
with the wider debt markets on the range
of alternatives available to the Company.
I would like to conclude by thanking my
fellow Board members for their valuable
contribution to the business over the
past 12 months. I would also like to
thank the senior management team and
all the staff at MMA for their dedication
and commitment to the business through
good times and bad.
As the market improves, we look
forward to growing the business and
delivering improved returns for you
our shareholders. I thank you for your
ongoing support of the Company.
Andrew Edwards
Chairman
During the year we announced some key
changes to the Executive Management
team at MMA. Jeff Weber our long-
standing Managing Director will step
down at the Company’s Annual General
Meeting on 21st November 2019.
I would like to pay tribute to Jeff for
his strong leadership and unwavering
commitment to the Company over
the past 17 years. Jeff has been
responsible for growing MMA from a
fledgling vessel operator with a fleet
worth $23 million and revenue of $35
million to an internationally renowned
marine services company with vessel
assets approaching $500 million and
revenue of over $230 million. Whilst the
unprecedented downturn over the past
5 years has impacted the Company’s
performance, under Jeff’s leadership
we successfully executed a strategy to
rationalise our assets and strengthen
our balance sheet and we are now well
positioned for growth as the market
returns. Jeff has also been instrumental
in driving a positive culture throughout
the organisation which has made MMA
an employer of choice and a Company
that our customers want to do business
with. We have been fortunate to have
had Jeff at the helm of MMA for so long
and wish him all the best in his future
endeavours.
I would like to congratulate David
Ross, who assumed the role of Chief
Executive Officer on 1 July 2019. David
joined MMA in 2005 and has held a
number of roles at the Company over
that time including General Manager of
Operations, Chief Operating Officer and
more recently relocating to Singapore
initially as Deputy Chief Executive Officer,
to drive the Company’s international
growth. David has an ideal blend of skills
and experience in operational, strategic
and commercial roles to lead MMA
through its next phase of growth and I
very much look forward to working with
him.
Having successfully repositioned the
business over the past two years, we
are now firmly focused on earnings
growth. Our strategy to grow returns for
shareholders focuses around maximising
the returns from our core vessel business
combined with growing our subsea and
project logistics divisions.
CHAIRMAN’S
REPORT
I am pleased to report that MMA delivered improved earnings in FY2019 with EBITDA increasing by 50% on
the prior year. The returns on our assets, whilst still well below our historical average, are gradually improving
and all of our key financial metrics are trending in the right direction. We also maintained our world class
safety performance during the year and continue to strive for ongoing improvements in this area.
Notwithstanding global geopolitical uncertainty which is
impacting market sentiment and commodity prices, the
fundamentals for a recovery in oil and gas spending remain
sound and there is a broad consensus that the vessel market is
in the early stages of recovery.
We are seeing a large number of oil and gas projects being
sanctioned globally, with this trend expected to continue. This
will increase global vessel utilisation and should in turn translate
into higher rates over time. Importantly, there is a high level of
new project activity expected in our key regions of operation
which should impact positively on demand for our vessels.
Global vessel utilisation has bottomed out and is now
increasing and rate improvements are being seen in the more
specialised vessel segments. The view is that the OSV market
is tighter than it appears with long term laid up vessels facing
significant reactivation costs and lower demand due to their
age and condition.
As a business with a high fixed cost base, any improvement
in utilisation or rates will have a significant impact on our
profitability.
8 Annual Report 2019
MMA Offshore Limited 9
While we continue to see geopolitical
issues impacting confidence in global
markets and commodity prices, the
fundamentals for increased oil and gas
spending are sound. Oil companies have
been generating record cash flows at the
current oil prices and the number of oil
and gas projects being sanctioned for
development has increased significantly
during the year. This trend is forecast
to continue over the coming years in
an effort to replace depleting reserves,
following a lack of investment during
the downturn. A number of significant
projects are flagged for final investment
decisions in MMA’s regions of operation
which we expect will lead to increased
demand for our services.
Global OSV utilisation has improved
gradually since bottoming at 48% in
2017 to approximately 55% today, with
vessels younger than 10 years showing a
much stronger recovery profile. Adjusting
for laid up vessels which are of an age
that are unlikely to return to service in
the oil and gas industry, the market is
significantly tighter than it appears. Rates
have increased in some of the more
specialised segments of the market
where there has been a periodic lack of
available vessels to meet demand.
At this stage, we are not seeing rate
increases at a broader level but as
supply tightens over time, we expect rate
increases to follow. With our modern,
high quality fleet, we are well positioned
to benefit from a market upturn.
Operational Highlights
MMA reported a 19.4% increase
in revenue to $239.3 million and a
50.3% increase in EBITDA to $27.8
million. Excluding the impact of asset
revaluations, normalised NPAT improved
from a loss of $36.3 million in FY18 to
a loss of $27.0 million in FY19. After
the impact of asset revaluations, MMA
reported a Net Loss After Tax of $37.4
million.
Our Australian operations contributed
revenue of $159.3 million, up 12% on
FY2018. Revenue from international
operations was $80.0 million, up 37% on
FY2018.
Average utilisation for the year was 72%
up from 68% in FY2018. Our first half
utilisation was stronger at 74% with the
third quarter impacted by the South East
Asian monsoon period..
As at 30 June 2019, MMA had 24 of
its 30 core vessels under short and
long-term contracts with the remaining
vessels available for work in the spot
market. As at 30 June 2019, 27%
of available vessel days for FY2020
were contracted, increasing to 43%
with highly probable contract awards
and potential extension periods. On a
revenue basis, 47% of our budgeted
revenue is already under contract for
FY2020 (62% including highly probable).
This is consistent with our strategy of
maintaining a balance of contracted and
spot revenue in the portfolio in order to
preserve the operating leverage of the
business as rates increase.
MMA maintained its world class safety
performance during FY2019 with a Total
Recordable Case Frequency (“TRCF”)
of 0.53 per million hours worked, well
below the industry average of 1.7 as
measured by the International Maritime
Contractors Association (“IMCA”).
In July 2019, we announced an
agreement to acquire Neptune Marine
Services Limited, a leading provider
of topside and subsea inspection,
maintenance and repair solutions to
the oil and gas, marine and renewable
energy industries.
Australia / New Zealand
Australian utilisation was strong at 81%
with a number of projects contributing
to activity during the year. Utilisation
in the first half was stronger at 86%,
reducing to 77% in the second half as a
number of multi-vessel project scopes
completed.
During the first half, MMA completed
a project logistics scope for Subsea
7, managing a spread of owned
and subcontracted tugs and barges
to transport project materials and
equipment for Woodside’s Greater
Western Flank 2 Subsea Installation
Project. We utilised our onshore facility
at Batam, Indonesia for the barge
mobilisations, providing an integrated
service to the client. The project was
completed in September 2018.
We also completed a multi-vessel
project, supporting ConocoPhillips’
shutdown and drilling operations at their
Bayu Undan gas project in the Timor
Sea. Two PSVs, the MMA Leeuwin
and MMA Responder were engaged to
provide supply support services for the
duration of the drilling campaign. An
additional three vessels were engaged
to support shut down, rig moves and
supply services. The project completed
successfully in December 2018.
FY19 HIGHLIGHTS
Broad consensus that
the OSV market is in
the early stages of a
recovery
50%
Increase in EBITDA
72%
Utilisation increasing
with higher weighting
to larger vessels
Rates increasing in
the more specialised
vessel segments
Strong safety
performance, well
above industry average
47%
FY20 revenue
underpinned by firm
contracts
Continued our track
record of securing
new contracts
ROA and debt metrics
improving and remain
our key priority
Neptune acquisition
to deliver subsea
expansion strategy
Growing position in
Walk to Work market
Executing our growth
strategy to deliver
improved returns for
shareholders
MANAGING
DIRECTOR’S REPORT
REVIEW OF OPERATIONS
During the year, we have seen a continued improvement in MMA’s financial performance, reflecting increased
utilisation and a strong uptake of our established services offering.
Our earnings and cashflow are underpinned by a number of
long-term contracts and our success in securing new contracts
reflects both the quality of our fleet and our track record of
supporting complex projects and delivering quality services to
our customers.
We continue to demonstrate our competence in delivering
innovative and technically complex marine solutions to our
clients including a first of its kind for platform maintenance
in Australia. MMA’s solution, developed in conjunction with
our client, utilised one of our vessels, the MMA Pinnacle as a
“Walk to Work” and accommodation vessel. This resulted in
a safer and more efficient method of transferring personnel to
the platform during the shutdown and paves the way for future
projects in the Australian Oil and Gas Sector.
Our high quality, modern fleet of vessels, positions MMA to
benefit from an increase in activity as does our investment
in building our services offering. The acquisition of Neptune
Marine Services will accelerate the development of our subsea
services offering and we are well placed to continue to grow
our project logistics business and our “Walk to Work” offer.
Market Conditions
There is now a broad market consensus that the offshore
vessel market is improving. Global utilisation has bottomed out,
rates in the more specialised sectors have begun to increase
and the oversupply of vessels is considered to be overstated
given the age and condition of the global fleet currently in layup
and the prohibitive costs to reactivate vessels.
10 Annual Report 2019
MMA Offshore Limited 11
The outlook for activity in Australia is
relatively strong with drilling activity
picking up again and a number of
significant projects currently under
evaluation.
South East Asia
Activity in South East Asia is picking up,
although the reduction in activity during
the monsoon period between December
and March was more pronounced in
FY2019 than in prior years. Utilisation
for the year averaged 62% but reduced
to 56% during the monsoon period.
We are starting to see some periodic
upward pressure on rates in some of the
more specialised sectors, but the more
commoditised vessels remain highly
competitive.
The MMA Prestige and MMA Pinnacle
continued to operate in the subsea
market during the year, supporting a
number of project scopes in South East
Asia including saturation diving, well
intervention, umbilical installation and
inspection, maintenance and repair. In
line with our strategy to increase our
subsea service offering, we also took a
lead contractor role on an air dive project
in Bangladesh with the MMA Prestige
completing a subsea repair scope and a
series of anchor tensioning tasks.
During the year MMA also supported
a number of accommodation support
and walk to work projects with the MMA
Pride and MWV Falcon (a chartered
vessel) fitted with Ampelmann gangways
to support projects for Brunei Shell
Petroleum and BG Shell in India.
The Majestic and Sea Hawk 1, MMA’s
large AHTS vessels were predominantly
active in Malaysia during the year
achieving solid utilisation aside from the
monsoon period.
The MMA Vigilant was active,
undertaking inspection, maintenance and
repair work across the region.
The remainder of the South East Asian
fleet continued to operate in the short-
term market predominantly across
Malaysia, Thailand, Myanmar and Brunei,
where we are seeing increased tendering
activity.
Middle East
MMA’s Middle Eastern operations
performed below expectations during
the year with technical issues impacting
vessel performance and utilisation.
Utilisation for the year averaged 58%.
Results for the region were impacted by
a one-off provision for doubtful debts
amounting to $5.3 million.
MMA currently has four vessels in the
Middle East, three operating in Saudi
Arabia - MMA Chieftain, MMA Centurion
and MMA Cavalier, and the fourth, the
MMA Concordia available in the spot
market across the Middle East.
The market in the Middle East is
currently oversupplied but is poised for a
significant increase in activity with Saudi
Aramco releasing a number of multiple
vessel tenders which should soak up a
high proportion of the available vessels in
the market.
We are focused on strengthening our
local alliances in Saudi Arabia to position
the business to benefit from increased
activity in the region.
Africa
The MMA Privilege continues on its
long-term accommodation and walk to
work scope in West Africa, achieving full
utilisation for the year. The contract was
recently extended to December 2019
with options to extend further to March
2020.
Activity in Africa is also increasing, with
a number of tenders being released and
a shortage of available active vessels.
MMA’s strategy is to move vessels into
the region on the back of long-term
contracts but does not maintain a spot
fleet there at present.
Cost control
Cost control remains an ongoing key
focus for MMA whilst ensuring we never
compromise on the quality or safety of
our operations.
We have active programmes in place
to monitor the operating costs on our
vessels, with vessels continuing to
be down-manned or laid up between
contracts to minimise costs.
In February 2019, MMA was awarded a
contract by Santos to support its 2019
jack-up drilling campaign. The contract
was for the provision of three vessels to
support the drilling campaign, including
two anchor handling tug supply vessels,
the MMA Vision and MMA Coral, and
a platform supply vessel, the MMA
Leeuwin. The scope of services includes
rig tows to and from the field, infield rig
moves and platform supply duties in
support of the Noble Tom Prosser rig.
The contract is ongoing and is expected
to continue until September 2019.
In April 2019, we were awarded a
contract by Woodside to provide
accommodation and walk-to-work
vessel services to support platform
maintenance operations over two
scopes. The MMA Pinnacle was fitted
with a bespoke motion-compensated
gangway system to enable the safe and
efficient transfer of personnel between
the Woodside platforms and their
accommodation facilities on the vessel.
The first scope of work was completed
successfully in May 2019 and the
second scope is due to commence in
September 2019. In the period between
the two Woodside work scopes, the
MMA Pinnacle was engaged on a
number of inspection, maintenance
and repair projects in the North West of
Australia. Once the second Woodside
scope is completed, the MMA Pinnacle
will complete the remainder of its three-
year contract with i-Tech 7, the life of
field business unit of Subsea 7, which
will provide full utilisation for the vessel
through to December 2021.
In December 2018, the MMA Responder,
a PSV that MMA has bareboat chartered
into the fleet, was contracted to a
client in the Bass Strait in support of
production and drilling operations on a
short-term basis. The vessel currently
remains on contract and will extend into
December 2019.
The MMA Valour is currently mobilised
with a spread of geotechnical equipment
for Benthic and completed a number
of scopes in Australia during the year
before being transferred to South East
Asia and more recently East Africa, for
further Benthic work.
MMA’s long-term production support
contracts with Woodside, INPEX, BHP/
Santos and ConocoPhillips continued
through FY2019 providing full utilisation
for 6 of our vessels during the year.
The Woodside contracts were recently
extended by 6 months through to
December 2019.
We continue to seek efficiencies in
procurement to reduce our operating
spend. Operating and corporate
overheads are strictly monitored in all
areas of the business with increased
levels of authorisations in place for key
discretionary spend categories.
Balance Sheet
MMA’s Cash at Bank as at 30 June 2019
was $70.2 million and Net Debt (Interest
Bearing Liabilities less Cash at Bank)
was $200 million.
MMA’s leverage (Net debt to property
plant and equipment) was 41.6% making
MMA one of the lowest geared OSV
companies in the world. MMA also has
substantial cash reserves providing
stability to our customers, shareholders,
financiers and employees.
MMA reviewed the carrying value of its
fleet as at 30 June 2019, in line with
Australian accounting standards, which
resulted in an impairment reversal of
$2.7m. This followed an impairment
charge of $13.1 million at the half year
for a total of $10.4m for the financial
year, representing approximately 2% of
the book value of vessel assets. This
compares to a reversal of previous
impairment charges of $8.4m during the
year ended 30 June 2018. The valuation
of the fleet is expected to continue to
fluctuate, reflecting prevailing market
conditions and the current valuation
methodology of fair value less costs to
sell. As outlined previously, MMA has
already disposed of the majority of its
non-core vessels and expects to retain
the majority of its fleet for the medium
term.
Health & Safety
We maintained our world class safety
performance during FY2019. While
our Total Recordable Case Frequency
(“TRCF”) for FY2019 increased slightly
to 0.53 per million hours worked, this
remains a significant achievement and
well below the industry average of 1.7 as
measured by the International Maritime
Contractors Association (“IMCA”).
Our internally developed Target 365
Strategy is fully embedded across
the organisation and continues to
foster a sustained culture of safety
consciousness, which drives world class
safety performance.
I would like to thank you our
Shareholders for your support over the
years. I would also like to thank the
Board Members I have worked with over
the time I have been with the Company.
MMA has been fortunate to attract
exceptional Board Members over the
years and this has been critical to our
underlying strength as an organisation.
I would finally like to thank the team at
MMA. I have thoroughly enjoyed the
support, commitment and enterprise of
the people at MMA and firmly believe it is
what sets us apart from our peers. It is a
people game.
I intend to remain a major shareholder of
the Company and I am confident David
Ross has the right skills and personnel to
be a success as Chief Executive Officer
and subsequently Managing Director of
the Company. MMA has a solid platform
to build upon as the market recovery
continues.
Jeff Weber
Managing Director
In December 2018, we were awarded
the IMCA Global Safety Award for 2018
for our “Target 365: A perfect day every
day” safety programme which focuses
on each person in the organisation
coming to work each day with the aim
of having a “Perfect Day”, a day without
any material incident or recordable injury.
This approach makes Target 365 unique,
as the initiative not only measures
lagging indicators, but also focuses on
positive reinforcement by measuring
“Perfect Days”.
We are an active contributor to global
HSEQ forums. In May 2019, MMA was
elected as Chair of the IMCA Global
HSSE Committee and is a leadership
member of “Safer Together” a key oil and
gas safety forum in Australia.
Our People
At MMA we value our people and
understand that our success as a
Company depends on good people
making good decisions.
I am very proud of the highly
experienced, capable and dedicated
team we have at MMA. I would like to
thank all our valued team members for
their hard work and commitment through
the past year to help achieve these
results and position MMA for the future.
Thank you
As announced to the ASX, I will be
stepping down as Managing Director of
MMA at the upcoming Annual General
Meeting on 21 November 2019 and
as such this will be my last Managing
Director’s report.
After 17 years with MMA, I reflect
back with great pride in what we have
achieved over the years. The last five
years have been challenging but we have
executed a clear strategy which I believe
makes MMA one of the best placed
OSV Companies in the world to benefit
from the market recovery which we are
beginning to see.
UNIQUE SOLUTIONS TO
SOLVE COMPLEX MARINE
CHALLENGES
12 Annual Report 2019
MMA Offshore Limited 13
REPOSITIONED FOR GROWTH
1
RATIONALISE
AND
STABILISE
• Non-core assets sold
• Reduced exposure to
commoditised market
• Restructed debt
• Strengthened Balance
Sheet
• Reduced costs
2
EXPAND OUR
CORE
CAPABILITY
• Operational excellence
• Safety leadership
• Asset reliability
• Tailored marine
solutions
• Expertise and
innovation
GROWTH
3
• Focus on higher margin
segments
• Differentiation through
technically advanced
assets
• Expand service offering
in Subsea, Walk to Work,
Project logistics
• Third party vessels
• Strategic M&A
Our safety performance is world class
and significantly better than the industry
average, an area of vital importance
to our employees and serves as our
“licence to operate” with our clients.
We have strong systems and processes
in place to ensure that we are fully
compliant in all aspects of the business.
We also practise sound commercial
management and cost discipline within
the business.
Last but not least is our reputation
as a quality service provider. We
pride ourselves on building long term
collaborative relationships with our
clients and having the in-house technical
expertise to solve the most challenging
marine problems.
2. Operational Leverage
The second platform of our strategy is
to drive the returns on our assets by
releasing the operating leverage of the
asset base as the market recovers. As a
high fixed cost business, any increase in
utilisation or rates has a large impact on
our profitability.
We actively manage the balance of
contracted and spot revenue in our
forward order book to ensure that we
sensibly time the release of the capacity
into a recovering market.
We are also focused on chartering
in additional vessels, where it makes
commercial sense, to supplement our
owned fleet, further enhancing our return
on assets.
Offshore Services
MMA has a well-established position
in the offshore services market with a
strong track record in delivering complex
projects. Our strategy is focused on
expanding further into service focused
contracts where we can add value to our
clients through innovation or through our
technical expertise. Some of the growth
areas we see for the OSV business
include offshore accommodation
and motion compensation gangway
personnel transfer (Walk to Work), cost
efficient rig movements and innovative
vessel modifications and contracting
arrangements to deliver true cost
efficiencies to clients. By adding real
value to our clients, we can differentiate
ourselves from our competitors and
generate higher returns on our assets.
Project Logistics
MMA also has a strong project
logistics capability having delivered
a number of major logistics projects
for offshore construction in Australia.
With a projected increase in LNG
and renewables construction on the
horizon globally, MMA is focused on
growing its project logistics business.
We have established a new project
logistics division “MMA Global Projects”
and have put in place an experienced
management team to drive our growth in
this area. The project logistics business
will use predominantly third-party assets
which will enhance our overall return on
assets.
Subsea Services
3. Expanding our Service Offering
The third platform in our growth strategy
focuses on expanding our service
offering.
MMA has been operating in the subsea
and inspection maintenance and repair
market in recent years, predominantly as
a vessel provider.
In July 2019, we announced a binding
agreement to acquire the business of
Neptune Marine Services, a leading
provider of inspection, maintenance
and repair solutions to the oil and gas,
marine and renewable energy industries.
The acquisition will enable us to deliver
an expanded range of subsea services
to our clients enabling us to capture a
greater proportion of the value chain,
increasing our returns on assets.
We expect the acquisition to deliver
substantial revenue synergies through
improved asset utilisation, cross selling
of services and incremental margin on
our vessels. We also anticipate cost
synergies as we integrate the Neptune
business into the MMA Offshore group.
With the acquisition at a low point in
the cycle, the combined business is
expected to benefit from a recovery
in offshore and subsea investment.
4. Balance Sheet Management
The last platform in our growth strategy
is the proactive management of our
Balance Sheet.
As a result of the challenging market
conditions over the past 4 years, our key
debt metric as measured by Net Debt
to EBITDA remains above our targeted
level.
Our focus on improving the returns on
assets through the strategies outlined
above, will in turn improve our debt
metrics.
CHIEF EXECUTIVE
OFFICER’S REPORT
STRATEGY & OUTLOOK
Having been appointed as Chief Executive Officer of MMA on 1 July 2019, I am very pleased to present my
first report to Shareholders with a focus on the Company’s strategy going forward.
Firstly, I would like to thank Jeff Weber, who has led the
Company over the past 17 years and has left MMA in a strong
position to benefit from the expected recovery in the offshore oil
and gas services market. I wish Jeff every success in his future
endeavours.
Growth Strategy
MMA has executed a focused strategy during the prolonged
market downturn over the past four years.
Having rationalised the fleet and invested in our services
capability, we have built a strong platform for growth.
Our growth strategy is focused on delivering increased returns
for our shareholders through four key platforms:
1. Operational Excellence
The first platform of MMA’s strategy which underpins our
business and our reputation in the market is our focus on
operational excellence.
Our vessel fleet is high quality with an average age of only 7
years and has been well maintained through the downturn.
This is a competitive advantage given that much of the excess
tonnage in the market has been cold stacked and will require
significant time and cost to reactivate. This will position MMA to
benefit earlier in a demand led market recovery.
14 Annual Report 2019
MMA Offshore Limited 15
Well Positioned for Growth
Outlook for FY2020
MMA’s growth strategy as outlined above
positions the Company well to benefit
from an ongoing recovery in market
demand.
Our earnings are underpinned by a
number of long-term production support
contracts and our high quality, well
maintained fleet positions us well to
secure higher rates and utilisation as
demand increases.
There is significant operating leverage
in the current fleet with any increase in
utilisation or rates significantly improving
our profitability.
We have a proven track record in
operational excellence with an industry
leading safety record, a strong service
capability and reputation for delivering
complex projects to our blue-chip client
base.
Our experienced leadership team has a
deep marine industry knowledge and is
highly capable of delivering the growth
strategy and driving increased returns for
you our shareholders.
There is now a general market
consensus that the offshore vessels
sector is in recovery. The fundamentals
for increased activity are strong, with a
large number of projects sanctioned or
due for financial investment decisions
over the coming two years.
Activity is increasing, and vessel
availability has tightened in some sectors
of the market, resulting in rate increases
for high quality specialised vessels.
Global fleet utilisation will need to
increase further before we see broad rate
rises across the market.
The oversupply of offshore vessels in the
market is still seen as an issue although
a large proportion of the global fleet
which is currently laid up, will likely never
return to service.
We expect utilisation to continue to
increase over the course of FY2020 with
some modest improvement in day rates
on our more specialised vessels this
financial year.
Cost management remains a strong
focus and we will continue to look for
opportunities across our core business
to reduce costs. The Neptune acquisition
is expected to generate cost and
revenue synergies although these are
only likely to be realised in the latter part
of the financial year.
We remain positive on the outlook for
a recovery in the offshore sector and
in our key markets. MMA’s high quality,
well maintained fleet, expanded service
offering and operational excellence
positions us well to benefit from
increased demand and higher rates. We
expect to see a continuing improvement
in EBITDA during FY2020 as the market
continues its recovery.
David Ross
Chief Executive Officer
INCREASING OUR RETURN ON ASSETS
CORE BUSINESS
IMPROVEMENT
Increasing ROA is MMA’s primary focus which
will also improve the Company’s debt metrics.
EBITDA RETURN ON ASSETS
1,061
19.7%
938
17.3%
17.5%
15.0%
14.5%
9.5%
582
566
540
450
398
277
314
231
2.0%
3.1% 3.3%
5.2%
10
11
12
13
14
15
16
17
18
19
VESSEL SEGMENT ASSETS
EBITDA ROA
NOTES
1 EBITDA figures are Vessel Segment EBITDA less unallocated corporate overhead
adjusting for major one-off projects in 2014 and 2015
2 FY14 asset base and EBITDA is based on pre Jaya acquisition numbers (Jaya
transaction completed on 4 June 2014)
Utilisation
Rates
Costs
Third Party Vessels
EXPANDED SERVICE
OFFERING
Subsea Services
Project Logistics
Walk To Work
OUTLOOK
Fundamentals for increased
activity are strong, with a large
number of projects sanctioned
or due for FID
Expect utilisation to continue
to increase during FY2020 with
some modest improvement
in day rates on our more
specialised vessels this
financial year.
Expect to see a continuing
improvement in EBITDA
during FY2020 as the market
continues its recovery.
A FOCUS ON
RELATIONSHIPS
16 Annual Report 2019
MMA Offshore Limited 17
FINANCIAL REPORT
NET PROFIT/(LOSS) AFTER TAX1
$(27.0)m
EBITDA
$27.8m
39.9
193.1
57.5
18.0
18.5
27.8
15
16
17
18
19
(16.4)
(27.0)
(36.3)
(66.8)
Reported a net loss after tax of $(27.0)m
which is a 26% improvement year on year.
This result excludes a non-cash impairment
charge of $10.4m million against the
carrying value of the Company’s vessels.
1 Excluding impairment, historical comparatives
are for continuing operations only
INTEREST BEARING LIABILITIES
$270.6m
CASH AT BANK
$70.2m
448.5
398.7
324.2
269.0
270.6
124.5
69.6
70.2
49.7
28.8
15
16
17
18
19
15
16
17
18
19
15
16
17
18
19
EBITDA was $27.8 million for FY19
representing an increase of 50% year
on year.
Gross debt prior to any unamortised fees
was $270.6 million. Net debt (offsetting cash
at bank) at 30 June 2019 was $200.4 million.
The company made debt repayments of
$7.3m during the year, however the US dollar
denominated debt increased by $8.9m when
translated into Australian dollars due to the
weakening exchange rate.
At 30 June 2019 the Company had
cash reserves totalling $70.2 million.
OPERATING CASHFLOW
$22.2m
CAPEX
$10.2m
185.4
247.2
120.2
159.3
22.2
(6.1)
(2.3)
31.9
9.2
10.4
NTA PER SHARE
$0.35
2.10
1.70
0.69
0.38
0.35
LVR
(NET DEBT / PROPERTY PLANT
& EQUIPMENT)
41.6%
55.3
41.6
39.4
36.5
31.0
15
16
17
18
19
15
16
17
18
19
15
16
17
18
19
15
16
17
18
19
Cash flow from operations was positive
$22.2m after meeting cash interest
costs on MMA’s debt facility of $(16.9)
million. A working capital release
of $11.7m also occurred in FY19,
positively impacting cashflow.
Sustaining capital expenditure for the year
was $10.2m and represented sustaining
or maintenance capital expenditure. The
$10.2m excludes the finalisation of a delayed
payment for a crane of $7.3 million which
was purchased in a prior year.
As at 30 June 2019, assets exceeded
liabilities by $303.2m and the Company had
858m shares on issue. Property, Plant and
Equipment have been independently valued
and an en-bloc discount applied.
As at 30 June 2019, Net Debt to Property
Plant and Equipment was 41.6% which
is one of the lowest in the offshore vessel
industry. MMA is trading within its debt
covenants and continues to have the support
of its banking group.
18 Annual Report 2019
MMA Offshore Limited 19
At MMA we continue to strive for ‘A
Perfect Day Every Day’ with a perfect
day being a day free of recordable
injuries or material incidents. Perfect
days are the core principle of our
“Target 365” programme with the focus
on a positive target of 365 perfect
days across the year. In FY2019, MMA
achieved 317 Perfect Days at a whole
organisation level, with a number of
individual business units and vessels
achieving the target of 365 perfect
days for the year.
As part of our drive for continuous
improvement, we successfully
implemented several initiatives during the
year, including:
• Simplified our incident reporting
framework to further improve and
encourage an open reporting culture
across the business;
• Completed a comprehensive internal
assurance programme targeted at
verifying that sufficient controls are
in place to prevent incidents and
maintaining our licence to operate;
• Completed the reinvigoration of our
Target 365 Critical Controls which
were updated to reflect current high-
risk activities and controls;
• Completed numerous reviews
and updates to processes and
procedures to ensure we meet and
exceed industry expectations; and
•
Implemented a Senior Management
Engagement Programme whereby
senior managers engage directly
with vessel crews to gather feedback
on how to improve health, safety and
environmental outcomes across our
business.
MMA continues to be active in industry
HSEQ forums sharing insights and
best practice to improve health and
safety culture across the industry. In
May 2019, MMA’s Executive General
Manager of People and Safety, Darren
Thomas was appointed Chairperson
of the International Marine Contractors
Association (“IMCA”) Global Core HSSE
Committee. MMA also takes an active
leadership role on Safer Together WA/NT,
a key oil and gas industry safety forum in
Australia.
Environment
MMA remains committed to achieving
the highest standard of environmental
performance across all of its business
activities.
MMA maintained environmental
certification and all licences required
during FY2019. We also, reduced
the use of single use plastics across
our operations by implementing new
potable water systems on our vessels
and providing multi-use drink containers
across the fleet. We will continue to
focus on finding ways to reduce our
environmental impact.
Quality
MMA maintains global accreditation to
the revised ISO 9001:2015 Standard and
internationally maintains ISO 14001:2015
and OSHAS 18001:2007 accreditations.
MMA’s management systems have been
developed to ensure our processes meet
or exceed our customers’ expectations,
promote continuous improvement
and provide for a safe and productive
workplace.
TOTAL RECORDABLE
CASE FREQUENCY
(PER MILLION HOURS)
1.2
0.95
0.53
0.36
0.28
15
16
17
18
19
MMA TRFC
IMCA AVERAGE
MMA WINS IMCA
GLOBAL SAFETY
AWARD
In November 2018, MMA was awarded the
2018 IMCA Global Safety Award for our
internally developed “Target 365” safety
programme.
“Target 365: A perfect day every day” focuses
on each person in the organisation coming
to work each day with the aim of having a
“Perfect Day”, a day without any material
incident or recordable injury. This approach
makes Target 365 unique, as the initiative
not only measures lagging indicators, but
also focuses on positive reinforcement by
measuring “Perfect Days”.
MMA received positive feedback from the
IMCA judges that Target 365 was led by the
workforce, visible throughout the organisation,
continually developing and had resulted in
improved safety performance.
MMA’s Managing Director Mr. Jeff Weber
said “Our Target 365 strategy has created a
sustained culture of safety consciousness at
MMA, a culture that drives world class safety
performance. We are very pleased to receive
this award from IMCA and I congratulate all
MMA’s crew and employees for their dedication
and commitment in making Target 365 a
fundamental part of the way we work.”
The award attracted submissions from a
high calibre field including Boskalis, Fugro,
Heerema, HMC, KBA Training Centre,
McDermott, Saipem, SBM Offshore and
Subsea 7 and was presented at IMCA’s Annual
Seminar at The Hague, The Netherlands
HEALTH, SAFETY,
ENVIRONMENT &
QUALITY
In 2019 MMA maintained and was recognised for a world class HSEQ performance
At MMA Offshore, the health and safety of our people and
the protection of the environments in which we operate are
fundamental to the way we do business.
All of our decisions and operations are underpinned by
our Target 365 culture, which is fully embedded across the
organisation and continues to cultivate a sustained culture of
safety consciousness.
During FY2019, MMA maintained our world class safety
performance. Our Total Recordable Case Frequency
(“TRCF”) for the year was 0.53 per million hours worked.
Although a slight increase year on year, we continue to
sustain our performance with an 84% improvement over
the past 5-years. This is a leading safety performance by
industry standards and well below the International Marine
Contractors Association (“IMCA”) average for the 2018
calendar year of 1.7.
20 Annual Report 2019
MMA Offshore Limited 21
Industrially, MMA continued its
operations without recording any
interruption from workplace disputes.
The current Enterprise Agreements
covering Australian marine personnel will
continue in place until at least May 2021.
Diversity and Inclusion continues to
be a priority for the company as we
believe that this will enable our people to
contribute to their full potential. The share
of women in management positions
increased to 32.7% from 26.8% in 2018,
with the overall percentage of women
employees (onshore) increasing from
39.4% (2018) to 41.3%.
MMA introduced a key tool to assist
in the implementation of an inclusive
workplace with the launch of the iHub
portal during the year.
iHub has enabled all employees,
no matter what role they play in the
business, to be able to have their say
about innovative ideas and to suggest
improvements in how we operate. KPI’s
are in place so that all iHub suggestions
are responded to by the appropriate
Senior Manager.
Focusing on training and competency is
one of the key pillars of our strategic HR
plan. MMA continues to provide training
opportunities to four Officer Cadets, two
indigenous trainees (Rating and HSEQ)
and seven Timor Leste nationals in Able
Seaman roles. 1,167 unique employees
accessed training during the past
twelve months, completing over 10,600
individual training outcomes.
362
AUSTRALIA
246
INDIA
TOP TEN
EMPLOYEE
NATIONALITIES
TIMOR LESTE 11
MYANMAR 15
NEW ZEALAND 21
UKRAINE 29
SINGAPORE 53
MALAYSIA 122
PHILIPPINES 147
INDONESIA 172
% OF WOMEN EMPLOYED
41.3
39.4
32.7
26.8
16.7
16.7
16.7
16.7
18
19
18
19
18
19
18
19
Total
Organisation
Board of
Directors
Executive
Management
Senior
Management
INNOVATION AWARD
In June 2019, MMA was awarded the
AustCham Singapore Innovation Award
for 2019 for our MMA Pinnacle Walk to Work
Project.
MMA designed a solution in collaboration with
long term client Woodside which involved
fitting the MMA Pinnacle with a bespoke motion
compensated gangway and pedestal system
which enabled the vessel to be used as an
accommodation facility during the platform
shutdown. This resulted in a safer and more
efficient method of transferring maintenance
personnel to the platform, reducing the need
for helicopter transfers and facilitating more
maintenance personnel on site.
Particularly challenging for this project was the
significant height of the gas platform (up to
30 metres) and the variable ocean conditions
requiring a highly engineered solution.
This Innovation Award is testament to MMA’s
innovative approach. The project has paved
the way for an innovative, safer and more
efficient approach to offshore platform
maintenance logistics in the North West Shelf
Region of Australia.
OUR PEOPLE
MMA has a strong company culture which supports our ability to attract and retain the best people
At MMA we are committed to individual and operational
excellence. We offer a diverse and inclusive workplace, built on
trust, competence and safety.
MMA has a strong company culture that supports our ability to
attract and retain the best people, providing opportunities for
individual growth while contributing to the overall success of the
company.
In 2018/19 we have implemented major reviews of our
Performance Management processes, introducing new
appraisals tools for use by all employees throughout every
part of the business. The introduction of the new processes
has seen a rapid increase in appraisal compliance as well as
significant improvement in the quality of performance targets
achieved by employees.
A FOCUS ON
EXCELLENCE
22 Annual Report 2019
MMA Offshore Limited 23
OUR COMMUNITY
To support its community engagement goals MMA is committed to:
Procurement
Employment
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
Creating and maintain 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.
A FOCUS ON
RELATIONSHIPS
Supporting local contractors and
vendors (including indigenous
businesses) is an ongoing priority for
MMA.
In FY2019 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.
Whilst the downturn has had a significant
impact on the spend of the business,
MMA is committed to ensuring we
maintain our operating excellence and
continue to provide the best service
to our customers. To achieve this,
MMA works with reliable and reputable
suppliers to deliver solutions. Uptime on
our vessels is critical to overall operating
and financial performance so sourcing
the right rather than the cheapest
suppliers is critical to success.
In the past twelve months, MMA has
continued its focus on hiring from and
supporting the communities within which
we operate.
Our employees come from 24 countries
and many of whom speak languages
other than English. MMA has in place
four major employee development
programs, each focussing on a specific
region and/or demographic group.
Traineeship programs are in place for
Timor Leste and Indigenous Australians,
providing opportunities both within our
Australian and International operations
for nine seafaring and one HSEQ
trainees.
Our officer cadet program continues
to be successful, with one cadet
graduating the program in August
2019. The technical competence of our
crew has been enhanced over the past
twelve months with the introduction of
an industry sponsored development
program that has seen over one hundred
crew benefit from targeted development
activities. All of these activities contribute
to MMA’s capability to offer our clients a
skilled and knowledgeable workforce.
MMA TIMORESE CADET
WINS AWARD
MMA was delighted that Cristovao Lopes Mendonca,
one of our Timorese cadets, was awarded the prize for
“Best Academic for Engine Ratings” at the Malaysian
Maritime Academy (ALAM). The award was presented
for academic excellence together with other attributes
of a well-rounded personality.
Cristovao was recruited by MMA as part of its
commitment to providing a marine career pathway to
Timorese nationals in conjunction with ConocoPhillips’
operated Bayu Undan project.
MMA is very proud to be associated with Cristovao
and we are sure he has a bright career ahead in the
maritime industry.
24 Annual Report 2019
MMA Offshore Limited 25
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 MMA’s 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.
MMA’s strategy to manage this risk
also includes expanding its subsea
services business through the proposed
acquisition of the Neptune Marine
business – with the combined service
offering likely to result in increased
asset utilisation, an enhanced return on
assets and additional revenue and cost
synergies.
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):
• 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;
• Kidnap and ransom;
•
•
•
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.
Geopolitical, government and
regulatory factors
Our international operations are subject
to more challenging geopolitical risks to
varying degrees.
Changes in the geopolitical climate in
our market areas, such as the outbreak
or resolution of war, nationalisation
of a customer’s oil and gas projects
and changes to industry related
legislation, protectionist measures and
economic sanctions, may open up more
advantageous areas to operate or could
require us to discontinue operating in
that area, leading to corresponding
impacts on vessel and service utilisation.
MMA 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. The prevalence of bribery and/or
corruption in some foreign jurisdictions
also limits MMA’s ability to operate in
these areas.
MMA’s strategic plan considers such
risks and operationally we risk assess
market areas and clients regularly to
limit negative and optimise positive
impacts. A comprehensive Anti-bribery
and Corruption (ABC) Policy and ABC
framework has also been implemented
and is continually monitored to combat
these risks.
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.
RISKS
MMA recognises that risk is an inherent part of its business. Effectively identifying and managing
risk is critical 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 is any of the
information intended to be taken as a
statement of fact. These risks can be
affected by a variety of factors which
can, in turn, impact the Company’s
performance.
Dependence on level of activity
in the offshore oil and gas
industry
The Company is dependent on the
level of activity in the offshore oil and
gas industry, particularly in the areas
where the Company currently operates
(including Australia, 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
will have an adverse effect on MMA’s
business.
The Company aims to mitigate the
impact of lower oil and gas prices and
lower offshore oil and gas activity by
differentiating itself though innovation
and operational excellence, by
diversifying its contract portfolio across
exploration, construction, production
and maintenance/repair phases, by
diversifying its geographic footprint
across a number of key regional areas
and by expanding its subsea services
business through the proposed
acquisition of the Neptune Marine
business.
Further 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 and increasing
its risk exposure.
26 Annual Report 2019
MMA Offshore Limited 27
BOARD OF
DIRECTORS
Mr Hugh Andrew Jon (Andrew) Edwards
Mr Jeffrey Andrew Weber
Ms Eva Alexandra (Eve) Howell
Mr Chiang Gnee Heng
Mr Peter Kennan
Chairman
– Appointed 27 October 2017
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
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. He previously
served as a Non-Executive Director of Nido
Petroleum (delisted 26 June 2017) resigning
in December 2018.
Andrew is a former Managing Partner of
PriceWaterhouseCoopers’ Perth Office
(PwC), a former National Vice President of
the Securities Institute of Australia (now the
Financial Services Institute of Australasia) and
a former President of the Western Australian
division of that Institute. He is a Fellow of the
Australian Institute of Company Directors,
a Fellow of the Chartered Accountants
Australia and New Zealand and has served
as 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.
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.
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.
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 Pacific
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.
28 Annual Report 2019
MMA Offshore Limited 29
CORPORATE GOVERNANCE
3rd Edition ASX Corporate Governance Principles and Recommendations
Comply
1.6
A listed entity should:
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 2019, 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 19 September 2019 and has been approved by the Board.
ASX Corporate Governance Council Recommendations Checklist
ASX Listing Rule 4.10.3 requires companies to disclose the extent to which they have complied with the 3rd Edition ASX Principles
and the reason for any departure from the 3rd Edition ASX Principles.
The table below lists each of the 3rd Edition ASX Principles and the Company’s assessment of its compliance with these for the year
ended 30 June 2019. The Company’s Corporate Governance Statement and Annual Report set 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.
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
most recent “Gender Equality Indicators”, as defined in and published under that Act.
Yes
(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.
1.7
A listed entity should:
(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
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
(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.
2.2
A listed entity should have and disclose a board skills matrix setting out the mix of skills and
Yes
diversity that the board currently has or is looking to achieve in its membership.
2.3
A listed entity should disclose:
(a) the names of the directors considered by the board to be independent 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.
Yes
Yes
Yes
Yes
Yes
Yes
30 Annual Report 2019
MMA Offshore Limited 31
3rd Edition ASX Corporate Governance Principles and Recommendations
Comply
3rd Edition ASX Corporate Governance Principles and Recommendations
Comply
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
(b) if it does not have an audit committee, disclose that fact and the processes it employs that
independently verify and safeguard the integrity of its corporate reporting, including the
processes for the appointment and removal of the external auditor and the rotation of the
audit engagement partner.
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.
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.
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
N/A
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
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
(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.
7.2
The board or a committee of the board should:
(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
8.3
A listed entity which has an equity-based remuneration scheme should:
(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
(b) disclose that policy or a summary of it.
Yes
32 Annual Report 2019
MMA Offshore Limited 33
DIRECTORS’ REPORT
Company Secretary
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 2019.
Directors
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
28 to 29 (including their qualifications, experience and special responsibilities).
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:
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. In addition, Dylan currently holds the role of Executive General Manager Legal.
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 21 years. He holds a Graduate Diploma of Applied Corporate Governance and is a
Fellow of the Institute of Chartered Secretaries and Administrators and a Fellow of 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.
Other than as previously referred to in this annual report, there were no other significant changes in the nature of the activities of the
consolidated entity during the financial year.
Name
Company
Period of Directorship
Review of Operations
Mr A Edwards
Nido Petroleum Limited (delisted 26 June 2017)
December 2009 - December 2018
Ms E Howell
Downer EDI Limited
January 2012 – November 2017
MACA Limited
Since October 2010
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 8-13.
Buru Energy Limited
Since July 2014
Changes in State of Affairs
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
Fully paid ordinary
shares direct
Fully paid ordinary
shares indirect
-
-
-
200,000
-
331,360
3,815,916
372,058
-
77,419,000
Performance
rights direct
-
2,581,441
-
-
-
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.
The Chairman’s Address and the Managing Director’s Report (on pages 8-13) 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
Other than the matter set out below, 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.
As announced by the Company on 24 July 2019, MMA has entered into a contract for the acquisition of the business of Neptune
Marine Services Limited’s (“NMS”) key operating subsidiaries, for an expected total consideration of $18.5 million, comprising $5
million in cash plus approximately $13.5 million in MMA shares. Completion of the acquisition is subject to a number of conditions
precedent, including (without limitation) NMS shareholder approval. If the acquisition does not proceed, the $5 million cash deposit
paid is refundable to the Company.
Remuneration of Key Management Personnel
Future Developments
Information about the remuneration of key management personnel is set out in the Remuneration Report section of this Directors’
Report on pages 38 to 49. The term ‘key management personnel’ refers to those persons having authority and responsibility for
planning, directing and controlling the activities of the consolidated entity (i.e. the MMA group), directly or indirectly, including any
director (whether executive or otherwise) of the consolidated entity.
Rights Granted to Directors and Senior Management
During and since the end of the financial year, an aggregate of 6,698,770 performance rights were granted to the following Director
and to the five highest remunerated officers of the Company as part of their remuneration:
Name
Mr J Weber
Mr D Ross
Mr D Cavanagh
Mr D Roberts
Mr D Thomas
Mr R Furlong
34 Annual Report 2019
Number of rights
granted
2,581,441
1,600,260
1,074,831
504,178
476,809
461,251
Issuing entity
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
Number of ordinary
shares under rights
2,581,441
1,600,260
1,074,831
504,178
476,809
461,251
In general terms, the Chairman’s Address and the Managing Director’s Report (on pages 8-13) 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 all applicable environmental requirements. There were
no known breaches of any applicable environmental laws for the year ended 30 June 2019.
Dividends
In respect of the financial year ended 30 June 2018, 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 2019. Accordingly, no interim or final dividend has
been recommended, declared or paid for the 2019 financial year.
MMA Offshore Limited 35
Unissued Shares under Rights
Directors’ Meetings
Details of unissued shares under rights as at the date of this report are:
Issuing entity
MMA Offshore Limited
MMA Offshore Limited
Number of unissued
shares under rights
10,625,634
2,581,441
Class of
shares
Ordinary
Ordinary
Exercise price
of rights $
0.00
0.00
Vesting date
of rights
1 Jul 2021 (a)
1 Jul 2021 (a)
(a) These performance rights vest on 1 July 2021 subject to the performance criteria as detailed in note 5.2 and have a two year exercise period to
1 July 2023.
The holders of these rights do not have the right, by virtue of the issue of the right, to participate in any share issue of the Company.
Shares Issued on Vesting of Rights
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; and
• There were no officers of the Company who were former partners or directors of Deloitte, whilst Deloitte conducted audits of the
Company.
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, 8 Board meetings, 4 Audit and Risk Committee meetings and 3 Nomination and Remuneration Committee meetings
were held.
Name
Mr A Edwards
Mr J Weber
Ms E Howell
Mr CG Heng
Mr P Kennan
Board of Directors
Audit and Risk Committee
Nomination and
Remuneration Committee
Held
Attended
Held
Attended
Held
Attended
8
8
8
8
8
8
8
8
8
8
4
4
4
4
4
4
4
4
4
4
3
3
3
3
3
3
3
3
3
3
Proceedings on Behalf of the Company
No proceedings have been brought on behalf of the Company, nor has any application been made in respect of the Company,
under section 237 of the Corporations Act 2001 (Cth).
Non-Audit Services
Details of the amounts paid or payable to the external auditor for non-audit services provided during the year are outlined in note 5.5
to the Financial Statements.
During the year, the Company paid Deloitte the sum of $80,341 for the provision of non-audit services (being the provision of tax
compliance services and potential transaction advice) and the sum of $478,431 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 50 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.
36 Annual Report 2019
MMA Offshore Limited 37
Remuneration Report
Key Remuneration Outcomes
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 2019.
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
Having regard to the overall performance of the Company during the 2019 financial year and current market conditions, the key
remuneration outcomes for the Company’s key management personnel in 2019 were as follows:
Fixed Annual Remuneration (FAR)
• The Managing Director, Chief Executive Officer and Chief Financial Officer did not receive an increase in FAR for the 2019
financial year.
• The other Senior Management of the Company did receive a general increase in FAR of 2.9% for the 2019 financial year - with
some additional realignment for those key management personnel whose roles changed.
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 2019 financial year.
Long-term Incentive (LTI)
• The Board exercised its discretion to reinstate the LTI component in relation to the Managing Director and other key
management personnel for the 2019 financial year. Further details of the new 2019 LTI Plan are set out on pages 44 to 45 of
this report.
The Directors and other key management personnel of the consolidated entity during and since the end of the financial year were:
Remuneration Report 2018
Executive Director
Mr J Weber (Managing Director)(1)
Other Key Management Personnel
Mr D Ross (Chief Executive Officer)(2)
Mr D Cavanagh (Chief Financial Officer)
Non-Executive Directors
Mr A Edwards (Chairman)
Ms E Howell
Mr CG Heng
Mr P Kennan
Mr D Roberts (Executive General Manager Legal/Company Secretary)
Ms L Buckey (Executive General Manager Corporate Development)
Mr D Thomas (Executive General Manager People and Safety)
Mr R Furlong (Executive General Manager Operations)(3)
Mr S Edgar (Executive General Manager Project Logistics)(4)
(1) Ceased as Chief Executive Officer on 1 July 2019
(2) Appointed as Chief Executive Officer on 1 July 2019
(3) Appointed to the position of Executive General Manager Operations on 1 January 2019
(4) Appointed to the position of Executive General Manager Project Logistics on 1 January 2019
Apart from Mr J Weber, Mr D Ross, Mr R Furlong and Mr S Edgar (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.
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 2019 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.
MMA Offshore Limited’s Remuneration Report for the 2018 financial year was adopted at the Annual General Meeting on 21
November 2018 with a clear majority of 441,947,720 votes in favour of the motion (representing 85% 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 2019 financial year, there was no increase in Non-Executive Directors’ fees.
In addition, following a review by the Nomination and Remuneration Committee, there has been no increase in Non-Executive
Directors’ fees for the 2020 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:
38 Annual Report 2019
MMA Offshore Limited 39
No.
1
Remuneration Component
Details
Fixed Annual Remuneration (FAR)
• Comprising base salary and superannuation.
Allocation of Executive Remuneration between Fixed and Variable Remuneration
The allocation of total executive remuneration between fixed and variable remuneration for the 2019 financial year is as follows:
MANAGING DIRECTOR
OTHER EXECUTIVES (MAXIMUM)
9%
9%
91%
91%
FAR
LTI
FAR
LTI
Relationship between the Remuneration Policy and Company Performance
The table below summarises information about the Company’s earnings for the 2019 financial year and the Company’s earnings and
movements in shareholder wealth for the five years to 30 June 2019, which is a key factor in the Board’s decision to suspend the
STI remuneration component for both the 2019 and 2020 financial years.
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 2019
$’000
30 June 2018
$’000
30 June 2017
$’000
30 June 2016
$’000
30 June 2015
$’000
239,259
200,444
256,396
481,123
(35,879)(3)
(27,376)(3)
(379,791)(3)
(155,262)(3)
(37,373)
(27,909)
(378,032)
(143,962)
$0.25
$0.18
0cps
0cps
$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
(4.36cps)
(4.11cps)
(93.86cps)(4)
(38.64 cps)
(13.91 cps)
(4.36cps)
(4.11cps)
(93.86cps)(4)
(38.64 cps)
(13.91 cps)
3 year compound annual TSR(2)
(16%)
(21%)
(49%)
(46%)
(32%)
(1) Franked to 100% at 30% corporate income tax rate.
(2) TSR comprises share price growth and dividends.
(3) This includes a non-cash impairment charge of $10.4 million against the carrying value of the Company’s assets as at 30 June 2019 [2018: $8.4
million impairment reversal and 2017: $312 million impairment charge].
(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
raising during this reporting period.
• 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), current market conditions, Company performance and individual
performance.
• As previously reported, the Managing Director, Chief Executive Officer
and Chief Financial Officer did not receive any increase in FAR for the
2019 financial year. The other Senior Management of the Company
did, however, receive a general increase in FAR of 2.9% - with some
additional realignment for those key management personnel whose
roles changed.
• Given the performance of the Company and current market conditions,
the Board has determined that for the 2020 financial year:
(a) The Managing Director, Chief Executive Officer and Chief
Financial Officer will not receive any increase in FAR; and
(b) The other key management personnel will not receive any
increase in FAR.
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
market conditions, the Board exercised its discretion to suspend the STI
component for the 2019 financial year.
• Once again, the Board has exercised its discretion to suspend the STI
component for the 2020 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.
• The Board exercised its discretion to reinstate the LTI component
for the 2019 financial year. The 2019 LTI Plan – which has a 3 year
performance period (expiring 1 July 2021) – includes performance
hurdles relating to Relative TSR (50% weighting), Net Debt to EBITDA
ratio (25% weighting) and Debt Refinancing (25% weighting) targets.
The 2019 LTI Plan for the Managing Director, Chief Executive Officer
and Chief Financial Officer also includes a Stretch Relative TSR tranche
equating to 10% of the relevant parties fixed annual remuneration for
the year - which tranche will only vest in the event that the Company’s
TSR percentile ranking over the Performance Period relative to the
selected Peer Group is above the 90th Percentile. The 2019 LTI
Plan for the Managing Director was approved by shareholders at the
Company’s 2018 AGM on 21 November 2018. The Board considers
that the reinstatement of the 2019 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.
• The Board has once again exercised its discretion to reinstate the LTI
component for 2020 Financial year. The new 2020 LTI Plan has a 3 year
performance period (expiring 1 July 2022) and includes performance
hurdles relating to Relative TSR (50% weighting) and EBITDA Return
on Assets (50% weighting). The Board considers that the 2020 LTI
Plan and the selected performance hurdles are appropriate to retain
key management personnel within the Company and to achieve the
strategic objectives of the Company.
40 Annual Report 2019
MMA Offshore Limited 41
Remuneration of Key Management Personnel
In this Annual Report, remuneration outcomes are presented based on the requirements of accounting standards (which has
the benefit of being readily comparable with other companies) rather than the actual “take-home” pay received by executive key
management personnel (being cash, other benefits and the value of equity vesting during the relevant financial year).
An example of this includes LTI awards which are recognised and accounted for over the performance period (3 years) based
on their assessed value when originally granted to the executive. This may be significantly different to their value, if and when the
incentive vests to that executive.
The following tables disclose:
(A) The actual remuneration of the Directors and other key management personnel of the Company for the 2019 financial year (i.e.
the actual “take-home” pay received by key management personnel for the 2019 financial year); and
(B) The statutory presentation of the remuneration of the Directors and other key management personnel of the Company for the
2019 financial year and for the previous financial year based on the requirements of accounting standards.
(A) Key Management Personnel Remuneration (Actual)
Short-term employee benefits
Post-employment benefits
2019
Salary &
fees
$
Cash
Bonus
$
Non-
monetary(2) Superannuation Termination
$
$
$
Directors
Mr A Edwards
Mr J Weber
Mr P Kennan
Ms E Howell
Mr CG Heng
Senior Management
Mr D Ross
Mr D Cavanagh
Mr D Roberts
Ms L Buckey(4)
Mr D Thomas
Mr R Furlong(1)
Mr S Edgar(1)
Total
164,384
852,371
100,127
100,440
112,910
548,819
335,172
329,469
189,994
310,469
314,110
263,628
3,621,893
-
-
-
-
-
-
-
-
-
-
-
-
-
1,150
-
-
-
105,284
-
22,159
-
-
-
-
128,593
15,616
25,000
-
9,541
6,926
-
24,828
20,531
18,338
20,531
20,531
20,531
182,373
(B) Key Management Personnel Remuneration (Statutory Presentation)
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term employee benefits
Post-employment benefits
2019
Salary &
fees
$
Cash
Bonus
$
Non-
monetary(2) Superannuation Termination
$
$
$
Directors
Mr A Edwards
Mr J Weber
Mr P Kennan
Ms E Howell
Mr CG Heng
Senior Management
Mr D Ross
Mr D Cavanagh
Mr D Roberts
Ms L Buckey(4)
Mr D Thomas
Mr R Furlong(1)
Mr S Edgar(1)
Total
164,384
852,371
100,127
100,440
112,910
548,819
335,172
329,469
189,994
310,469
314,110
263,628
3,621,893
-
-
-
-
-
-
-
-
-
-
-
-
-
1,150
-
-
-
105,284
-
22,159
-
-
-
-
128,593
15,616
25,000
-
9,541
6,926
-
24,828
20,531
18,338
20,531
20,531
20,531
182,373
-
-
-
-
-
-
-
-
-
-
-
-
-
Share
based
payments
Long Service
Leave
$
Rights(3)
$
Total
$
180,000
878,521
100,127
109,981
119,836
654,103
360,000
372,159
208,332
331,000
334,641
284,159
3,932,859
Total
$
180,000
976,769
100,127
109,981
119,836
-
-
-
-
-
-
-
-
-
-
-
-
-
Share
based
payments
Rights(3)
$
-
83,625
-
-
-
53,103
35,667
19,697
11,708
18,627
18,020
14,624
716,139
395,667
397,690
223,512
362,744
358,239
303,519
255,071 4,244,223
-
-
-
-
-
-
-
-
-
-
-
-
-
Long Service
Leave
$
-
14,623
-
-
-
8,933
5,834
3,472
13,117
5,578
4,736
56,293
Short-term employee benefits
Post-employment benefits
Salary &
fees
$
Cash
Bonus
$
Non-
monetary(2) Superannuation
$
$
Termination
$
2018
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
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
Total
3,324,732
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19
-
1,237
-
-
-
48,925
2,608
-
3,929
120
-
-
6,676
13,596
25,000
-
9,554
5,648
17,308
12,212
12,067
20,049
14,651
19,131
20,049
-
-
-
-
-
-
-
-
-
-
216,011
-
-
56,838
175,941
216,011
Share
based
payments
Total
Long
Service
Leave
$
Rights(3)
$
$
-
-
-
-
76,966
156,712
14,546
18,647
907,177
-
-
-
8,705
4,137
-
5,512
3,972
11,867
15,848
64,587
-
-
-
71,399
110,123
105,105
8,775
4,183
588,712
261,968
-
204,150
1,477
1,073
1,274
1,423
341,600
483,186
233,651
334,212
36,852
3,874,961
(1) These salaries & fees are only for part of the financial year as Mr R Furlong was appointed to the position of Executive General Manager Operations
on 1 January 2019; Mr S Edgar was appointed to the position of Executive General Manager Project Logistics on 1 January 2019; Mr A Howarth
retired from the Company on 30 November 2017; Mr P Kennan was appointed as a director of the Company 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 and Mr M Gillett ceased employment with the Company on 22 March 2018.
(2) These non-monetary benefits comprise the provision of housing, relocation costs, forgiveness of employee loans, 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 L 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
Non-Executive Directors
Mr A Edwards
Ms E Howell
Mr CG Heng
Mr P Kennan
Executive Directors
Mr J Weber
Senior Management
Mr D Ross
Mr D Cavanagh
Mr D Roberts
Ms L Buckey
Mr D Thomas
Mr R Furlong(1)
Mr S Edgar(2)
(1) Appointed on 1 January 2019.
(2) Appointed on 1 January 2019.
2019
100%
100%
100%
100%
91%
93%
91%
95%
95%
95%
95%
95%
2018
100%
100%
100%
100%
98%
98%
100%
99%
100%
100%
N/A
N/A
2019
2018
0%
0%
0%
0%
9%
7%
9%
5%
5%
5%
5%
5%
0%
0%
0%
0%
2%
2%
0%
1%
0%
0%
N/A
N/A
No key management personnel appointed during the period received a payment as part of his or her consideration for agreeing to
hold the position.
42 Annual Report 2019
MMA Offshore Limited 43
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 2019 financial year; and
• Once again, suspend the STI component for the 2020 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 granted to either the Managing Director or the other key management personnel as part of their
compensation in previous financial years vested;
• No share-based payments were granted as compensation to either the Managing Director or the other key management
personnel; and
• The Company reinstated the LTI remuneration component (being a performance rights plan) for the Managing Director, Senior
Management and other selected employees (2019 LTI Plan).
Each right under the 2019 LTI Plan converts into one ordinary share of MMA Offshore Limited on vesting. No amounts are paid or
payable by the recipient upon grant of the rights under the 2019 LTI Plan. The rights carry neither rights to dividends nor voting
rights. Please refer to the tables below for details of the performance criteria for the rights granted during the 2019 financial year
under the 2019 LTI Plan.
(A) The table below sets out the relevant performance criteria for the performance rights granted to the Managing Director, Chief
Executive Officer and Chief Financial Officer during the 2019 financial year:
Performance Criteria
Net Debt to
EBITDA Ratio
Debt Refinancing
Performance
Period
Beginning 1 July
2018 and ending
30 June 2021
Beginning 1 July
2018 and ending
30 June 2021
Company’s Total
Shareholder Return
(TSR)(2) percentile
ranking over the
Performance Period
relative to a selected
Peer Group(3)
Stretch Relative TSR
Beginning 1 July
2018 and ending
30 June 2021
Beginning 1 July
2018 and ending
30 June 2021
Percentage
of LTI subject to
Performance Criteria
Performance Criteria Targets
Percentage
of Performance Rights
which vest if Target met
100%
100%
25%
Multiple ≤ 2.5 times
25% The Company securing refinancing
of its existing Debt Facilities(1), or
alternate financing in lieu of the
existing Debt Facilities, and such
terms being acceptable to the
Board in its absolute discretion
having regard to, among other
factors, prevailing market conditions
and the Company's financial
position at that time
50%
Below the 50th percentile
Nil
Between the 50th and the 75th
percentile
50% to 100% (on a
straight-line basis)
Above the 75th percentile
10%
Above the 90th percentile
100%
100%
(B) The table below sets out the relevant performance criteria for the performance rights granted to other key management
personnel (ie. excluding the Managing Director, Chief Executive Officer and Chief Financial Officer) during the financial year:
Performance Criteria
Net Debt to
EBITDA Ratio
Debt Refinancing
Performance
Period
Beginning 1 July
2018 and ending
30 June 2021
Beginning 1 July
2018 and ending
30 June 2021
Percentage
of LTI subject to
Performance Criteria
Performance Criteria Targets
Percentage
of Performance Rights
which vest if Target met
100%
100%
25%
Multiple ≤ 2.5 times
25% The Company securing refinancing
of its existing Debt Facilities(1), or
alternate financing in lieu of the
existing Debt Facilities, and such
terms being acceptable to the
Board in its absolute discretion
having regard to, among other
factors, prevailing market conditions
and the Company’s financial
position at that time
Beginning 1 July
2018 and ending
30 June 2021
Company’s Total
Shareholder Return
(TSR)(2) percentile
ranking over the
Performance Period
relative to a selected
Peer Group(3)
50%
Below the 50th percentile
Nil
Between the 50th and the
75th percentile
50% to 100% (on a
straight-line basis)
Above the 75th percentile
100%
(1) Debt Facilities means those debt facilities referred to in the Company’s ASX announcement ‘Equity Raising Presentation’ dated 16 November 2017.
(2) Total Shareholder Return (TSR) means, broadly, the increase in the share price plus dividends paid (calculated in Australian dollars), excluding
franking credits and taxation, over the Performance Period, to be determined in a manner decided by the Board in its absolute discretion.
(3) Peer Group means the peer group (the composition of which may be changed by the Board in its absolute discretion) comprising of the
constituents of the ASX 200 – Industrials Index being the following ASX listed companies:
ALS Limited (ASX:ALQ), Atlas Arteria Limited (ASX:ALX), Aurizon Holdings Limited (ASX:AZJ), Brambles Limited ASX:BXB), CIMIC Group Limited
(ASX:CIM), Cleanaway Waste Management Limited (ASX:CWY), Downer EDI Limited (ASX:DOW), GWA Group Limited (ASX:GWA), IPH Limited
(ASX:IPH), McMillan Shakespeare Limited (ASX:MMS), Monadelphous Group Limited (ASX:MND), Qantas Airways Limited (ASX:QAN), Qube
Holdings Limited (ASX:QUB), Reliance Worldwide Corporation Limited (ASX:RWC), SEEK Limited (ASX:SEK), Seven Group Holdings Limited
(ASX:SVW), Smartgroup Corporation Ltd (ASX:SIQ), Sydney Airport Limited (ASX:SYD), Transurban Group (ASX:TCL).
During the financial year, the following rights schemes were in existence:
Series
Number issued
Grant date
Expiry date
(1) 10 Feb 2016 (a)
2,001,432
18 Nov 2015
1 Jul 2020
(2) 10 Feb 2016 (a)
8,037,836
7 Dec 2015
1 Jul 2020
(3) 7 Jun 2016 (a)
220,284
18 Apr 2016
1 Jul 2020
(4) 19 Oct 2018 (b)
10,625,634
16 Nov 2018
1 Jul 2023
(5) 27 Nov 2018 (b)
2,581,441
28 Nov 2018
1 Jul 2023
Exercise
price
$
Fair value at
grant date
$
0.00
0.00
0.00
0.00
0.00
0.02
0.02
0.02
0.11
0.10
Vesting date
1 Jul 2018
1 Jul 2018
1 Jul 2018
1 Jul 2021
1 Jul 2021
(a) 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 5.2 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 – 2018 (issued by the Board on 19 October
2018) and the MMA Offshore Limited Managing Director’s Performance Rights Plan – 2018 (as approved by the shareholders at
the Company’s Annual General Meeting on 21 November 2018) the number of performance rights which vest on 1 July 2021 will
depend on the Company achieving the specified Debt Refinancing (25% weighting) targets, the specified Net Debt to EBITDA
ratio (25% weighting) and the Total Shareholder Return (50% weighting) of the Company relative to a selected peer group of
companies as set out in note 5.2 of the Financial Statements. Subject to the performance rights vesting on 1 July 2021, the
vested performance rights must be exercised within a two year period from the vesting date (ie by 1 July 2023) or such other
time as determined by the Board in its sole and absolute discretion.
There has been no alteration of the terms and conditions of the above share-based payment arrangements since the grant date.
44 Annual Report 2019
MMA Offshore Limited 45
The following share-based payments were granted as compensation to the Managing Director and executive key management
personnel during the current financial year:
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 2018
Granted as
compensation
Received on vesting of
Performance Rights
Net other
change
Balance at
30 June 2019
Balance held
nominally
Name
Mr J Weber
Mr D Ross
Performance
rights issued
27 Nov 2018
19 Oct 2018
Mr D Cavanagh
19 Oct 2018
Mr D Roberts
Mr D Thomas
Ms L Buckey
Mr R Furlong
Mr S Edgar
19 Oct 2018
19 Oct 2018
19 Oct 2018
19 Oct 2018
19 Oct 2018
Number
granted
2,581,441
1,600,260
1,074,831
504,178
476,809
299,688
461,251
374,332
Number
vested
% of grant
vested
% of grant
forfeited
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
% of
compensation
for the year
consisting of
share based
payment
9%
7%
9%
5%
5%
5%
5%
5%
During the financial year, no performance rights vested in favour of the Managing Director or other key management personnel.
The following table summarises the value of performance rights to key management personnel which were granted or vested
during the financial year as part of their remuneration:
Name
Mr J Weber
Mr D Ross
Mr D Cavanagh
Mr D Roberts
Mr D Thomas
Ms L Buckey
Mr R Furlong
Mr S Edgar
Value of rights
granted at grant
date
$
Value of rights
at vesting date
$
250,875
159,309
107,002
55,581
52,563
33,038
50,848
41,266
–
–
–
–
–
–
–
–
The following table summarises the number of performance rights that lapsed during the financial year, in relation to performance
rights granted to key management personnel as part of their remuneration:
Name
Mr J Weber
Mr D Ross
Mr D Roberts
Ms L Buckey
Mr D Thomas
Mr R Furlong
Mr S Edgar
Financial year
in which rights
were granted
No. of rights
lapsed during
the current year
2015
2015
2015
2015
2015
2015
2015
2,001,432
941,850
252,126
217,350
242,828
178,794
96,644
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
331,360
3,815,916
-
-
-
-
125,000
-
-
-
-
-
-
-
-
77,419,000
77,419,000
372,058
200,000
1,531,570
21,000
-
1,475
-
1,578
24,706
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
-
-
-
-
-
12,353
21,000
-
1,475
-
1,578
24,706
-
-
-
-
-
-
-
-
-
Mr P Kennan
77,419,000
2019
Mr A Edwards
Mr J Weber
Ms E Howell
Mr CG Heng
Mr D Ross
Mr D Cavanagh
Mr D Roberts
Ms L Buckey
Mr D Thomas
Mr R Furlong(1)
Mr S Edgar(2)
2018
Mr A Edwards
Mr J Weber
231,360
3,815,916
247,058
200,000
1,531,570
21,000
-
1,475
-
1,578
24,706
115,680
1,907,958
Mr P Kennan(3)
38,709,500
Ms E Howell
Mr CG Heng
Mr D Ross
Mr D Cavanagh(4)
Mr D Roberts
Ms L Buckey
Mr D Thomas
Mr R Furlong(1)
Mr S Edgar(2)
123,529
100,000
765,785
21,000
-
1,475
-
1,578
12,353
(1) Appointed 1 January 2019.
(2) Appointed 1 January 2019.
(3) Appointed on 22 September 2017.
(4) Appointed on 4 December 2017.
46 Annual Report 2019
MMA Offshore Limited 47
Details of the performance rights held by executive key management personnel are as follows:
Share Trading Restrictions
Balance at
1 July 2018
Granted as
compensation
Vested
Net other
change
(lapsed)
Balance at
30 June 2019
Vested but not
exercisable
Rights vested
during year
2019
Executives
Mr J Weber
Mr D Ross
Mr D Roberts
Ms L Buckey
Mr D Thomas
Mr R Furlong(2)
Mr S Edgar(3)
2018
Executives
Mr J Weber
Mr D Ross
Mr D Cavanagh(1)
Mr D Roberts
Ms L Buckey
Mr D Thomas
Mr R Furlong(2)
Mr S Edgar(3)
Mr D Cavanagh(1)
-
1,074,831
2,001,432
2,581,441
941,850
1,600,260
252,126
217,350
242,828
178,794
96,644
504,178
299,688
476,809
461,251
374,332
(2,001,432)
2,581,441
(941,850)
1,600,260
-
1,074,831
504,178
299,688
476,809
461,251
374,332
-
-
-
-
-
-
-
-
(252,126)
(217,350)
(242,828)
(178,794)
(96,644)
Net other
change
(lapsed)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
1 July 2017
Granted as
compensation
Vested
Balance at
30 June 2018
Vested but not
exercisable
Rights vested
during year
2,431,507
1,144,238
-
307,602
265,175
296,259
205,029
117,909
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(430,075)
2,001,432
(202,388)
941,850
-
(55,476)
(47,825)
(53,431)
(26,235)
(21,265)
-
252,126
217,350
242,828
178,794
96,644
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) Appointed on 4 December 2017.
(2) Appointed 1 January 2019.
(3) Appointed 1 January 2019.
All performance rights issued to key management personnel during the financial year were made in accordance with the terms of
the respective rights plans.
Further details of the share based payment arrangements during the 2019 and 2018 financial years are contained in note 5.2 of the
Financial Statements.
Loans to Key Management Personnel
During the financial year, the Company forgave a portion of a short-term loan that it had provided to a member of its key
management personnel. This outstanding portion of the short-term loan was forgiven on the basis of an agreement reached with the
relevant key management personnel as part of their remuneration arrangements.
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
Mr R Furlong
Mr S Edgar
Termination notice period
Termination benefits payable
6 months
6 months
12 weeks
12 weeks
12 weeks
12 weeks
12 weeks
12 weeks
Yes(1)
Yes(2)
Yes(3)
No
No
No
No
No
(1) If the employee is made redundant as a result of a material diminution in the nature and level of responsibilities or functions of the employee’s
position 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 an aggregate payment equivalent
to the maximum amount that may be paid to the employee under the Corporations Act and ASX Listing Rules without prior shareholder approval.
(3) 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).
Under these employment contracts, the remuneration package for:
• The Managing Director and Chief Executive Officer consists of an annual base salary and a short-term incentive component and
a long-term incentive component at the discretion of the Nomination and Remuneration Committee and the Board; and
• Other executive key management personnel consists of an annual base salary and statutory superannuation contributions.
Participation in the Company’s incentive schemes is at the discretion of the Board.
This Directors’ Report is signed in accordance with a resolution of Directors made pursuant to section 298(2) of the Corporations
Act 2001 (Cth).
On behalf of the Directors,
Andrew Edwards
Chairman
Fremantle, 19 September 2019
48 Annual Report 2019
MMA Offshore Limited 49
AUDITOR’S INDEPENDENCE DECLARATION
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2
Brookfield Place
123 St Georges Terrace
Deloitte Touche Tohmatsu
Perth WA 6000
ABN 74 490 121 060
GPO Box A46
Perth WA 6837 Australia
Tower 2
Brookfield Place
Tel: +61 8 9365 7000
123 St Georges Terrace
Fax: +61 8 9365 7001
Perth WA 6000
www.deloitte.com.au
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
The Board of Directors
MMA Offshore Limited
1 Mews Road
Fremantle WA 6160
The Board of Directors
MMA Offshore Limited
19 September 2019
1 Mews Road
Fremantle WA 6160
19 September 2019
Dear Board Members
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
Dear Board Members
declaration of independence to the directors of MMA Offshore Limited.
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 2019, I declare that to the best of my knowledge and belief, there have been no
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
contraventions of:
declaration of independence to the directors of MMA Offshore Limited.
the auditor independence requirements of the Corporations Act 2001 in relation to the audit
As lead audit partner for the audit of the financial report of MMA Offshore Limited for the year
•
ended 30 June 2019, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
•
any applicable code of professional conduct in relation to the audit.
Yours faithfully
•
the auditor independence requirements of the Corporations Act 2001 in relation to the audit
•
any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
DELOITTE TOUCHE TOHMATSU
John Sibenaler
Partner
Chartered Accountants
John Sibenaler
Partner
Chartered Accountants
INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s Report to the
members of MMA Offshore Limited
Independent Auditor’s Report to the
members of MMA Offshore Limited
Report on the Audit of the Financial Report
Opinion
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2
Brookfield Place
123 St Georges Terrace
Perth WA 6000
Deloitte Touche Tohmatsu
GPO Box A46
ABN 74 490 121 060
Perth WA 6837 Australia
Tower 2
Tel: +61 8 9365 7000
Brookfield Place
Fax: +61 8 9365 7001
123 St Georges Terrace
www.deloitte.com.au
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
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 2019, the
Report on the Audit of the Financial Report
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
Opinion
to the financial statements, including a summary of significant accounting policies and other
explanatory information, and the directors’ declaration.
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 2019, the
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
Act 2001, including:
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial statements, including a summary of significant accounting policies and other
giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial
(i)
explanatory information, and the directors’ declaration.
performance for the year then ended; and
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
(ii)
Act 2001, including:
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial
performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
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
(ii)
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Basis for Opinion
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
fulfilled our other ethical responsibilities in accordance with the Code.
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
We confirm that the independence declaration required by the Corporations Act 2001, which has been
independence requirements of the Corporations Act 2001 and the ethical requirements of the
given to the directors of the Company, would be in the same terms if given to the directors as at the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
time of this auditor’s report.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
50 Annual Report 2019
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
MMA Offshore Limited 51
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 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
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
Carrying value of the Vessel Cash Generating Unit
As disclosed in Note 3.6, the assessment of the
the Vessels Cash
recoverable amount of
Generating Unit
requires
management to exercise judgement and has
been based on a Fair Value Less Cost of Disposal
(“FVLCOD”) approach.
(“Vessel CGU”)
The Group appointed external valuers
perform a valuation of the Vessel CGU.
to
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.
How the scope of our audit responded to the Key
Audit Matter
Our procedures included, but were not limited to:
Understanding
the
process management
undertakes to evaluate the recoverability of the
Vessel CGU;
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;
Assessing the objectivity and competence of the
external valuers;
Evaluating the external valuations obtained by the
Group by assessing the valuation methodology
adopted and the assumptions used;
Comparing actual sales prices, including ‘en 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.
Recoverability of trade receivables
Our procedures included, but were not limited to:
As disclosed in Note 3.2, the carrying value of
trade receivables is $52.1 million, net of an
allowance for expected credit loss of $9.2 million
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.
Understanding
the
process management
undertakes to evaluate the recoverability of trade
receivables;
Assessing the recoverability of a sample of 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
Assessing the appropriateness of the disclosures in
Note 3.2 to the financial statements.
Other Information
Other Information
The directors are responsible for the other information. The other information comprises the
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2019, but does not
information included in the Group’s annual report for the year ended 30 June 2019, but does not
include the financial report and our auditor’s report thereon.
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
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
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If,
report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If,
based on the work we have performed, we conclude that there is a material misstatement of this other
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.
information; we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
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
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
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
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
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
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
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.
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
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
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
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
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
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
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.
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
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:
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
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
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
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
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
52 Annual Report 2019
MMA Offshore Limited 53
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
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.
Report on the Remuneration Report
Report on the Remuneration Report
Opinion on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 38 to 49 of the Director’s Report for the
We have audited the Remuneration Report included in pages 38 to 49 of the Director’s Report for the
year ended 30 June 2019.
year ended 30 June 2019.
In our opinion, the Remuneration Report of MMA Offshore Limited, for the year ended 30 June 2019,
In our opinion, the Remuneration Report of MMA Offshore Limited, for the year ended 30 June 2019,
complies with section 300A of the Corporations Act 2001.
complies with section 300A of the Corporations Act 2001.
Responsibilities
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
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
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance
with Australian Auditing Standards.
with Australian Auditing Standards.
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.
DELOITTE TOUCHE TOHMATSU
DELOITTE TOUCHE TOHMATSU
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group’s audit. We remain solely
responsible for our audit opinion.
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.
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.
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.
John Sibenaler
John Sibenaler
Partner
Partner
Chartered Accountants
Chartered Accountants
Perth, 19 September 2019
Perth, 19 September 2019
54 Annual Report 2019
MMA Offshore Limited 55
DIRECTORS’ DECLARATION
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 3.1 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 Corporations (Wholly owned
Companies) Instrument 2016/785. 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
Corporations (Wholly owned Companies) Instrument 2016/785 applies, as detailed in note 21 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, 19 September 2019
FINANCIAL
REPORT
2019
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
Statement of Compliance
Basis of Preparation
Basis of Consolidation
Critical Accounting Judgements and
Key Sources of Estimation Uncertainty
2.
Financial Performance
2.1
2.2
2.3
2.4
2.5
Segment Information
Other Income and Expenses
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
5.10 Other Accounting Policies
Additional Securities Exchange Information
58
59
60
61
62
62
62
62
63
64
64
66
67
67
67
68
68
69
69
69
70
71
73
74
75
76
78
78
78
79
80
80
81
82
83
83
84
86
86
90
90
93
56 Annual Report 2019
MMA Offshore Limited 57
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
Revenue
Investment income
Other (losses)/gains
Vessel expenses
Administration expenses
Impairment (charge)/reversal
Finance costs
Loss before tax
Income tax expense
Loss for the Year
Other Comprehensive Income, net of tax
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
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
2.3
2019
$’000
2018
$’000
239,259
200,444
1,278
(556)
463
87
(238,951)
(206,484)
(7,402)
(10,361)
(19,146)
(35,879)
(1,494)
(37,373)
20,742
(8,886)
11,856
(25,517)
(37,373)
(25,517)
(7,092)
8,407
(23,201)
(27,376)
(533)
(27,909)
13,302
(6,087)
7,215
(20,694)
(27,909)
(20,694)
Earnings/(loss) per share
Basic
Cents Per Share Cents Per Share
2.4
(4.36)
(4.11)
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
3.1
3.2
3.3
3.4
3.5
3.7
3.8
3.9
3.8
3.9
4.1
4.2
2019
$’000
70,155
63,275
1,974
1,149
-
2018
$’000
69,648
61,641
1,615
1,062
9,397
136,553
143,363
482,322
482,322
618,875
496,421
496,421
639,784
30,481
831
2,743
11,354
1,806
160
47,375
5,296
262,807
152
268,255
315,630
303,245
32,309
375
1,739
10,665
1,186
-
46,274
5,020
259,933
262
265,215
311,489
328,295
654,735
133,777
654,735
121,454
(485,267)
(447,894)
303,245
328,295
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
58 Annual Report 2019
MMA Offshore Limited 59
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Year Ended 30 June 2019
Balance at 1 July 2018
Loss for the year
Other comprehensive income/(loss) for the year
Total Comprehensive Income/(Loss) for the Year
Recognition of share based payments
Balance at 30 June 2019
654,735
Employee
Equity
Settled
Benefits
Reserve
Issued
Capital
Foreign
Currency
Translation
Reserve
Hedging
Reserve
Accumulated
Losses
$’000
$’000
$’000
$’000
$’000
Total
$’000
654,735
154
(57,290)
178,590
(447,894)
328,295
-
-
-
467
621
-
-
(37,373)
(37,373)
(8,886)
20,742
-
11,856
(8,886)
20,742
(37,373)
(25,517)
-
-
-
467
(66,176)
199,332
(485,267)
303,245
Year Ended 30 June 2018
Balance at 1 July 2017
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
Employee
Equity
Settled
Benefits
Reserve
Issued
Capital
Foreign
Currency
Translation
Reserve
Hedging
Reserve
Accumulated
Losses
$’000
$’000
$’000
$’000
$’000
Total
$’000
561,275
1,114
(51,203)
165,288
(419,985)
256,489
-
-
-
-
-
-
-
-
-
(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
-
-
-
-
-
-
-
Cash Flows from Operating Activities
Receipts from customers
Interest received
Payments to suppliers and employees
Income tax paid
Interest and other costs of finance paid
Net Cash Provided by/(Used in) Operating Activities
Cash Flows from Investing Activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Deposit for investment in business combination
Net Cash Provided by/(Used in) 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
2019
$’000
2018
$’000
241,305
1,278
205,157
463
(202,578)
(189,324)
3.1
3.2
3.8
3.8
(955)
(16,895)
22,155
(17,501)
7,491
(5,000)
(15,010)
-
-
(7,256)
(9)
(7,265)
(1,754)
(16,880)
(2,338)
(9,194)
25,288
-
16,094
97,000
(4,558)
(61,298)
(4,003)
27,141
Net increase/(decrease) in cash and cash equivalents
(120)
40,897
Cash and cash equivalents at the beginning of the financial year
69,648
28,757
Effects of exchange rate changes on the balance of cash held in foreign currencies
627
(6)
Cash and Cash Equivalents at the End of the Financial Year
70,155
69,648
Balance at 30 June 2018
654,735
154
(57,290)
178,590
(447,894)
328,295
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
60 Annual Report 2019
MMA Offshore Limited 61
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. General Notes
1. General Notes (continued)
MMA Offshore Limited (MMA or the Company) is a listed public company incorporated in Australia. Its shares are traded on
the Australian Securities Exchange.
1.4 Critical Accounting Judgements and Key Sources of Estimation Uncertainty
1.1 Statement of Compliance
These financial statements are general purpose financial statements which have been prepared in accordance with
the Corporations Act 2001, Accounting Standards and other authoritative pronouncements issued by the Australian
Accounting Standards Board (AASB), and comply with other requirements of the law.
The accounting policies are consistent with those disclosed in the 2018 financial statements, except for the impact
of all new or amended standards and interpretations as disclosed in note 5.10. The adoption of these standards and
interpretations did not result in any significant changes to the Group’s accounting policies.
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 Group has not elected to early adopt any new or amended standards or interpretations that are issued but not yet
effective.
The following critical judgement, apart from those involving estimation (which are presented separately below),
has been made by the Directors in the process of applying the Group’s accounting policies.
The Financial Statements were authorised for issue by the Directors on 19 September 2019.
1.2 Basis of Preparation
Significant increase in credit risk – 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.
Calculation of loss allowance – refer note 3.2
Useful lives of property, plant and equipment – refer note 3.5
Impairment of property, plant and equipment – refer note 3.6
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 and translation of
foreign operations 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.
62 Annual Report 2019
MMA Offshore Limited 63
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 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 being its Vessel operations.
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:
Vessels
Revenue from external customers
Segment profit/(loss) before impairment
Impairment (charge)/reversal
Segment profit/(loss) after impairment
Investment income
Other gains/(losses)
Administration costs
Finance costs
Loss for the year before income tax
2019
$’000
239,259
308
(10,361)
(10,053)
1,278
(556)
(7,402)
(19,146)
(35,879)
2018
$’000
200,444
(6,040)
8,407
2,367
463
87
(7,092)
(23,201)
(27,376)
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.
Disaggregation of revenue
The Group derives its revenue from a number of different regions being:
Revenue recognition:
Revenue Region
Australia
International
Total
Segment Assets
The following is an analysis of the Group’s assets by reportable segment:
Vessel segment assets (i)
Unallocated assets
Total
(i)
Vessel segment assets include vessels held for sale (refer note 3.4).
2019
$’000
2018
$’000
159,256
80,003
239,259
142,155
58,289
200,444
2019
$’000
539,763
79,112
618,875
2018
$’000
566,129
73,655
639,784
2.
Financial Performance (continued)
2.1 Segment Information (continued)
For the purposes of monitoring segment performance and allocating resources to a segment, all assets are allocated to
reportable segments other than cash and central administration assets.
Other Segment Information
Vessel assets
Unallocated assets
Total
Impairment charges/(reversals)
Depreciation and
amortisation
Additions to
non-current assets
2019
$’000
2018
$’000
2019
$’000
34,766
31,300
10,341
553
603
44
35,319
31,903
10,385
2018
$’000
9,108
86
9,194
In addition to the depreciation charges reported above, the Group also recognised impairment charges/(reversals) (see
note 3.6) in respect of vessels as set out below:
Vessels held for continuing operations
Vessels held for sale
Total
Geographical information
2019
$’000
8,254
2,107
10,361
2018
$’000
(8,236)
(171)
(8,407)
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
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
International
Total
Revenue from
external customers
Non-current assets
2019
$’000
2018
$’000
2019
$’000
2018
$’000
159,256
142,155
80,003
58,289
239,259
200,444
176,327
305,995
482,322
183,478
312,943
496,421
Information about major customers for continuing operations
Included in revenues arising from vessel services are revenues of approximately $35.0 million (2018: $28.8 million)
which arose from sales to the Group’s largest customer, revenues of approximately $31.2 million (2018: $25.9 million)
which arose from sales to the Group’s second largest customer and revenues of approximately $29.3 million (2018:
$22.1 million) which arose from sales to the Group’s third largest customer.
64 Annual Report 2019
MMA Offshore Limited 65
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
2.
Financial Performance (continued)
2.
Financial Performance (continued)
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
Profit/(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
Total
Impairment charges:
Impairment charge recognised on trade receivables
Impairment charge/(reversal) recognised on vessel cash generating unit
Employee benefits:
Post-employment benefits:
Defined contribution plans
Share based payments:
Equity settled share based payments
Other employee benefits
Total
2019
$’000
2018
$’000
(402)
57
(211)
(556)
89
34,218
1,012
35,319
6,462
10,361
(272)
(160)
519
87
90
30,910
903
31,903
1,251
(8,407)
9,115
7,765
467
97,255
106,837
58
95,502
103,325
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have
rendered service entitling them to the contributions.
2.3
Income Taxes
Income tax recognised in profit or loss
Tax expense comprises:
2019
$’000
2018
$’000
Current tax expense in respect of the current year
Adjustment recognised in the current year in relation to tax provisions of prior years
Total income tax expense
The income tax expense for the year can be reconciled to accounting loss as follows:
Loss before tax
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
861
633
1,494
(35,879)
(10,764)
(717)
8,552
(273)
160
2,641
1,262
861
633
1,494
596
(63)
533
(27,376)
(8,213)
(73)
3,186
(273)
-
5,881
88
596
(63)
533
The tax rate used for the 2019 and 2018 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.
2.4 Earnings per Share
The calculation of basic earnings per share is based on the following data:
Loss for the year used in the calculation of basic earnings per share
(37,373)
(27,909)
2019
$’000
2018
$’000
Weighted average number of ordinary shares used in the calculation of basic
earnings per share
2.5 Dividends Provided for or Paid
No dividends have been provided for or paid during the current year.
Adjusted franking account balance
2019
No.’000
2018
No.’000
858,077
678,468
2019
$’000
47,589
2018
$’000
47,589
66 Annual Report 2019
MMA Offshore Limited 67
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
3.
Assets and Liabilities
3.1 Cash
Reconciliation of cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and in banks.
Cash and cash equivalents
Reconciliation of loss for the year to net cash flows from operating activities
Loss for the year
Depreciation of non-current assets
Impairment charge/(reversal) of non-current assets
Amortisation of borrowing costs
(Gain)/loss on sale of property, plant and equipment
(Gain)/loss on sale of assets held for sale
Unrealised foreign exchange loss
Allowance for bad and doubtful debts
Equity settled share based payment
Change in net assets and liabilities:
Decrease in trade and other receivables
(Increase)/decrease in prepayments
(Increase)/decrease in inventories
Increase/(decrease) in current tax balances
Increase/(decrease) in provisions
Increase/(decrease) in trade and other payables
Increase in unearned revenue
Net cash flows Provided by/(Used in) operating activities
2019
$’000
70,155
(37,373)
35,319
10,361
2,258
(57)
211
249
6,454
467
1,513
(60)
(341)
539
890
1,268
457
22,155
2018
$’000
69,648
(27,909)
31,903
(8,407)
3,354
160
(519)
263
1,256
58
4,446
199
1,433
(1,221)
(72)
(7,549)
267
(2,338)
3.
Assets and Liabilities (continued)
3.2 Trade and Other Receivables
Trade receivables
Loss allowance
Other receivables (i)
Total
(i)
2019
$’000
61,257
(9,179)
11,197
63,275
2018
$’000
57,602
(2,624)
6,663
61,641
Other receivables includes an amount of $5 million paid as a deposit for investment in a business combination.
Refer to note 5.9 for further details.
The credit period for customers is negotiated individually on a case by case basis. An allowance has been made for
estimated irrecoverable trade receivable amounts arising from the past rendering of services.
The Group writes off a trade receivable when there is information indicating that the debtor is in significant financial
difficulty and there is no realistic prospect of recovery. Subsequent recoveries of amounts previously written off are
credited against the allowance account.
The Group measures the loss allowance for trade receivables at an amount equal to lifetime expected credit losses
(“ECL”) in two categories.
1. Where there has been no significant increase in credit risk since initial recognition, ECL’s are collectively estimated
using a provision matrix based on the Group’s historical credit loss experience adjusted for factors that are
specific to geographic region, general economic conditions and an assessment of current and forecast conditions
at reporting date. This has resulted in ECL’s being applied to debtors aged over 60 days in our international
business.
2. Where there has been a significant change in credit risk, ECL’s are individually estimated. This assessment is
adjusted for factors that are specific to the debtor including their financial capacity to make payment, discussions
with the debtor on the status of the receivable and any other information relevant to the assessment of the
recoverability.
The following table shows the movement in lifetime ECL that has been recognised for trade receivables in accordance
with the simplified approach set out in AASB 9:
Balance as at 30 June 2018
Transfer to credit-impaired
Foreign exchange gains and losses
Balance as at 30 June 2019
3.3
Inventories
Fuel – at cost
Consumables
Total
Collectively
Assessed
$’000
Individually
Assessed
$’000
-
231
-
231
2,624
6,231
93
8,948
2019
$’000
1,834
140
1,974
Total
$’000
2,624
6,462
93
9,179
2018
$’000
1,289
326
1,615
Inventories are stated at the lower of cost or net realisable value.
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 30 June 2019, the carrying value of the vessel not yet sold was nil (2018: $9.4 million), refer to Note 3.6.
68 Annual Report 2019
MMA Offshore Limited 69
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
3.
Assets and Liabilities (continued)
3.5 Property, Plant and Equipment
3.
Assets and Liabilities (continued)
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 (2018: 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.
The Group has identified the following indicators of impairment at 30 June 2019:
•
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’).
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 2019.
Gross carrying amount:
Balance at 1 July 2017
Additions
Disposals
Net currency exchange differences
Balance at 1 July 2018
Additions
Disposals
Net currency exchange differences
Balance at 30 June 2019
Accumulated depreciation:
Balance at 1 July 2017
Disposals
Impairment charge
Depreciation expense
Net currency exchange differences
Balance at 1 July 2018
Disposals
Impairment reversal
Depreciation expense
Net currency exchange differences
Balance at 30 June 2019
Net book value:
As at 30 June 2018
As at 30 June 2019
Leasehold
Buildings and
Improvements
at cost
$’000
Vessels
at cost
$’000
Plant and
Equipment
at cost
$’000
Total
$’000
13,946
1,015,760
16,056 1,045,762
109
(46)
(13)
8,977
108
9,194
(87,981)
(131)
(88,158)
16,001
432
16,420
13,996
952,757
16,465
983,218
-
10,341
44
10,385
(32)
799
-
61,406
(392)
874
(424)
63,079
14,763
1,024,504
16,991 1,056,258
(12,521)
(522,943)
(11,912)
(547,376)
44
-
87,981
8,407
(90)
(30,910)
(186)
(3,502)
3
-
(903)
(265)
88,028
8,407
(31,903)
(3,953)
(12,753)
(460,967)
(13,077)
(486,797)
28
-
-
273
301
(10,361)
-
(10,361)
(89)
(34,218)
(1,012)
(35,319)
(762)
(40,376)
(622)
(41,760)
(13,576)
(545,922)
(14,438)
(573,936)
1,243
1,187
491,790
478,582
3,388
2,553
496,421
482,322
Leasehold buildings and improvements, vessels and plant and equipment 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.
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. Vessels are generally depreciated over 25 years on a straight line basis. Vessel refits and dry docks are
depreciated over 5 years.
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.
70 Annual Report 2019
MMA Offshore Limited 71
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
3.
Assets and Liabilities (continued)
3.
Assets and Liabilities (continued)
3.6
Impairment of non-current assets (continued)
3.6
Impairment of non-current assets (continued)
The following information relates to impairment charges/(reversals) included in profit or loss:
Segment/CGU
Class of asset
Method
Vessels
Vessels
Total
Property, Plant & Equipment
FVLCOD
Assets classified as held for sale
FVLCOD
Impairment charge/(reversal)
2019
$’000
8,254
2,107
10,361
2018
$’000
(8,407)
-
(8,407)
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
Level 3(i)
$’000
482,322
Recoverable
Amount
$’000
482,322
(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 services sector continues to be in the early stages of recovery with increasing activity and a tightening
in the market for high specification vessels. Sector sentiment has improved around a recovery in the broader oil and
gas market with key industry commentators indicating that the market may have now bottomed. We expect the recovery
to be volatile and timing is still uncertain. The uncertainty is highlighted by the decline in oil price in November 2018
and again in June 2019. At a time when the price had been slowly trending upwards for the previous 18 months, the
decrease was not anticipated. Whilst some of the decrease has since been recovered, it illustrates the variability in the
oil market. To date we have not seen the decrease have a significant impact on sentiment around the offshore support
vessel market with increasing tendering activity in a number of regions. In addition, a proportion of the global cold
stacked vessels are not expected to return to service given the expected downturn, 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.
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 2018 impairment assessment, the company used a discount of 17.5%. The Board have continued to apply this
discount of 17.5% for the current period to reflect the current recoverable value.
The following factors were taken into account in determining this value:
•
the movement in the oil price during the period
• an increase in project and development commitments by the oil and gas majors
•
increasing tender opportunities in the 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 $14 million increase or
decrease in the impairment charge or reversal.
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 one remaining non-core vessel 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 the non-core vessel the Company has taken into consideration the following factors:
• actual sales of the non-core vessels that have been completed to date
• market sales evidence for similar vessels over the past 6 months
• a condition report received for the vessel
Given the current condition of the vessel and expected substantial cost to return it to working order it was decided to
reduce the expected recoverable value to nil.
3.7 Trade and Other Payables
Trade payables
Other payables and accruals
Goods and services tax payable
Total
2019
$’000
8,608
20,563
1,310
30,481
2018
$’000
5,017
26,379
913
32,309
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.
72 Annual Report 2019
MMA Offshore Limited 73
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
3.
Assets and Liabilities (continued)
3.
Assets and Liabilities (continued)
2019
$’000
2018
$’000
3.8 Borrowings (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
4
5,000
(2,261)
2,743
-
265,634
(2,827)
262,807
6
3,992
(2,259)
1,739
4
265,009
(5,080)
259,933
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% (2018: 2.9%).
The Group renegotiated the terms of its Syndicated Debt Facility with its existing lenders during the comparative
period.
The amortisation profile of the facility is:
• $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
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 interest rate on the bank loans is 5.99% at 30 June 2019 (2018: 6.08%).
(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.
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.
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
2019
$’000
2018
$’000
270,634
269,001
-
-
270,634
269,001
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.
2019
Balance at 1 July 2018
Financing cashflows
Non-cash foreign exchange movement
Other changes
Balance at 30 June 2019
2018
Balance at 1 July 2017
Financing cashflows
Non-cash foreign exchange movement
Other changes
Balance at 30 June 2018
3.9 Provisions
Current
Employee benefits – annual leave
Employee benefits – long service leave
Total
Non-current
Hire purchase
liability
$’000
10
(6)
-
-
4
13
(3)
-
-
10
Bank loans
Unamortised
loan fees
$’000
269,001
(7,252)
8,885
-
270,634
324,209
(61,295)
6,087
-
269,001
$’000
(7,339)
(9)
-
2,260
(5,088)
(9,770)
(4,003)
-
6,434
(7,339)
2019
$’000
6,852
4,502
11,354
Total
$’000
261,672
(7,267)
8,885
2,260
265,550
314,452
(65,301)
6,087
6,434
261,672
2018
$’000
6,352
4,313
10,665
Employee benefits – long service leave
152
262
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long
service leave in the period the related service is performed.
Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the
remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of long-term employee benefits are measured at the present value of the estimated
future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.
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.
74 Annual Report 2019
MMA Offshore Limited 75
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
3.
Assets and Liabilities (continued)
3.10 Deferred Tax Balances
Deferred tax assets/(liabilities) arise from the following:
3.
Assets and Liabilities (continued)
3.10 Deferred Tax Balances (continued)
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
2019
$’000
2018
$’000
60,693
19,320
3,784
64,603
19,320
5,668
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.
2019
Gross deferred tax liabilities:
Property, plant and equipment
Inventory
Receivables
Other
Gross deferred tax assets:
Provisions
Unused tax losses and credits
Other
Total
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
Opening
Balance
Recognised in
Profit or Loss
Recognised
in Equity
$’000
$’000
$’000
Closing
Balance
$’000
(13,034)
(183)
(88)
(91)
(5,986)
(129)
(30)
91
(709)
(19,729)
-
-
-
(312)
(118)
-
(13,396)
(6,054)
(709)
(20,159)
170
13,036
190
13,396
-
(130)
5,695
489
6,054
-
-
709
-
709
-
40
19,440
679
20,159
-
(4,543)
(8,371)
(120)
(13,034)
(460)
(668)
44
(5,627)
636
301
4,390
300
5,627
-
277
580
(135)
(7,649)
(466)
21
8,204
(110)
7,649
-
-
-
-
(183)
(88)
(91)
(120)
(13,396)
-
(322)
442
-
120
-
170
-
13,036
190
13,396
-
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.
76 Annual Report 2019
MMA Offshore Limited 77
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
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 2018.
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 leverage ratio (measured as debt to property plant & equipment) to manage its capital. This has changed from
last year where we used a Gearing ratio ( measured as net debt to equity). The change was made as the leverage ratio
provides a more accurate representation of the security position for all stakeholders by comparing the net debt position
to the value of security assets available. The ratio is monitored on a monthly basis by the Board and management.
Leverage Ratio
The leverage ratio at the end of the reporting period was as follows:
Debt(i)
Cash and cash equivalents
Net debt
Property, plant & equipment(ii)
Leverage ratio
2019
$’000
270,634
(70,155)
200,479
482,322
42%
2018
$’000
269,001
(69,648)
199,353
496,421
40%
(i)
(ii)
Debt is defined as gross long and short-term borrowings, as detailed in note 3.8.
Property, plant and equipment includes all fixed assets owned by the group, as detailed in note 3.5.
4.
Capital Structure
4.1
Issued Capital
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
2019
No.’000
858,077
2019
$’000
654,735
-
-
-
-
-
-
-
-
-
-
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
Balance at end of financial year
858,077
654,735
858,077
654,735
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Share Rights
As at 30 June 2019, executives and employees held rights over 13,207,075 ordinary shares (2018: 9,555,660) in
aggregate (see note 5.2).
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
2019
$’000
621
(66,176)
199,332
133,777
2018
$’000
154
(57,290)
178,590
121,454
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 or 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.
78 Annual Report 2019
MMA Offshore Limited 79
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 5. Other Notes
5.1 Commitments for Expenditure
Capital expenditure commitments
Plant and Equipment
Vessels
Total
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)
2019
$’000
15
2,058
2,073
2019
$’000
2018
$’000
-
749
749
2018
$’000
13,695
6,230
3,268
913
4,181
2019
$’000
1,732
943
761
745
4,181
3,828
3,350
7,178
2018
$’000
3,661
1,476
1,066
975
7,178
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 2019, the Company had 2 vessels (2018: three) 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 10 February 2016
2,001,432
18 Nov 2015
1 Jul 2020
(2)
Issued 10 February 2016
8,037,836
7 Dec 2015
1 Jul 2020
(3)
Issued 7 June 2016
220,284
18 Apr 2015
1 Jul 2020
(4)
Issued 16 November 2018
10,625,634
16 Nov 2018
1 July 2023
(5)
Issued 2 December 2018
2,581,441
21 Nov 2018
1 July 2023
Exercise
price
$
Fair Value at
Grant date
$
0.00
0.00
0.00
0.00
0.00
0.02
0.02
0.02
0.11
0.10
None of the Performance Criteria for rights issued during the 2016 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 in July 2018.
Performance Rights issued during the 2019 financial year as part of Series 4 and 5 to executives and employees are
subject to achievement of a number of vesting targets. 25% of the rights are subject to achieving a net debt to EBITDA
ratio, 25% relate to the Company securing refinancing of its existing debt facilities 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.
Please refer to the Remuneration Report on pages [39] to [48] for further details of Performance Rights issued to
executives and employees.
Fair value of share rights granted during the year
The share rights issued during the year are detailed in the above table.
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 2019
MMA Offshore Limited 81
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 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:
2019
2018
Employee Share Right Plans
Weighted
average
exercise price
$
Number of
rights
Balance at the beginning of the financial year
9,555,660
Issued during the financial year
Expired during the financial year
Balance at the end of the financial year
Exercisable at end of the financial year
13,207,075
(9,555,660)
13,207,075
-
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
10,923,881
-
(1,368,221)
9,555,660
-
Share rights outstanding at the end of the year
The following share rights were outstanding at the end of the financial year:
Series
(4)
Issued 16 November 2018
(5)
Issued 2 December 2018
Total
Number
10,625,634
2,581,441
13,207,075
Exercise price
$
0.00
0.00
0.00
Expiry Date
1 Jul 2023
1 Jul 2023
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
2019
$
2018
$
3,750,486
3,381,570
182,373
56,293
-
255,071
175,939
64,587
216,011
36,852
4,244,223
3,874,959
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.
There were no outstanding balances due from related parties that are not members of the Group (2018: Nil)
Loans to related parties
The Group provided a member of its key management personnel with a short-term loan during a prior year. The loan
was forgiven during the year (2018: $25,602).
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 potential transactions
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
2019
$
2018
$
194,250
15,000
-
-
209,250
284,181
65,341
349,522
280,750
-
242,920
18,500
542,170
319,508
39,077
358,585
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 2019
MMA Offshore Limited 83
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 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
Jaya Offshore Services Pte Ltd
PT Jaya Asiatic Shipyard
MMA Global Projects Pte Ltd
MMA Offshore Services Malaysia Sdn Bhd
Note
Country of
Incorporation
(i)
Australia
Ownership
Interest 2019
%
Ownership
Interest 2018
%
(ii) (iii)
(ii) (iii)
(ii) (iii)
(ii) (iii)
(ii)
(iv)
(v)
(vi)
Australia
Australia
Australia
Singapore
Australia
Singapore
Malaysia
Singapore
Singapore
Singapore
Singapore
Malaysia
Malaysia
Singapore
Indonesia
Singapore
Malaysia
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
30
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
(i) MMA Offshore Limited is the ultimate holding company head entity within the tax consolidated group.
(ii)
These companies are members of the tax consolidated group at 30 June 2019.
(iii) Pursuant to ASIC Class Order 98/1418, relief has been granted to these wholly owned controlled entities from
the Corporations Law requirements for preparation, audit and lodgement of the financial report. As a condition of
the Class Order, MMA Offshore Limited and the controlled entities entered into a Deed of Cross Guarantee on 15
February 2012.
(iv)
Jaya Offshore Services Pte Ltd was deregistered 14 December 2018.
(v) MMA Global Projects Pte Ltd was incorporated 15 March 2019.
(vi) MMA Offshore Services Malaysia Sdn Bhd was incorporated 12 March 2019.The Group owns 30% of the shares in
the company. However based on contractual arrangements between the Group and the other investor, the Group
has the power to appoint and remove the majority of the board of directors. Therefore the directors of the Group
have concluded they have control.
The consolidated statements of comprehensive income and financial position of entities which are party to the deed of
cross guarantee are as follows:
Statement of Comprehensive Income
Revenue
Investment income
Other losses
Vessel expenses
Administrative expenses
Impairment (charge)/reversal
Finance costs
Profit/(Loss) before income tax expense
Income tax expense
Profit/(Loss) for the Year
Total Comprehensive Income/(Loss) for the year
2019
$’000
161,404
1,306
(8,542)
2018
$’000
142,938
3,715
(5,525)
(142,003)
(131,804)
(7,445)
(83,351)
(19,137)
(97,768)
-
(97,768)
(97,768)
(7,091)
87,736
(23,100)
66,869
-
66,869
66,869
5. Other Notes (continued)
5.6 Subsidiaries (continued)
Statement of Financial Position
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
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
Accumulated losses
Total Equity
Retained earnings/(accumulated losses)
Accumulated losses at beginning of the financial year
Net profit/(loss)
Accumulated losses at end of the financial year
2019
$’000
2018
$’000
60,740
46,655
1,041
716
58,469
36,473
611
491
109,152
96,044
334,963
104,371
439,334
548,486
53,041
831
2,742
10,682
67,296
6,770
262,804
152
269,726
337,022
211,464
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
654,748
654,735
621
127
(443,905)
(346,137)
211,464
308,725
(346,137)
(97,768)
(443,905)
(413,006)
66,869
(346,137)
84 Annual Report 2019
MMA Offshore Limited 85
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 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
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
2019
$’000
2018
$’000
59,395
519,736
579,131
5,297
270,589
275,886
303,245
57,706
542,311
600,017
5,018
266,705
271,723
328,294
654,748
654,748
(465,765)
(440,716)
114,122
114,122
140
140
303,245
328,294
(25,049)
(20,637)
-
(25,049)
61,136
-
(20,637)
45,822
(i)
A profit reserve 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
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings
Financial risk management objectives
2019
$’000
70,155
63,275
35,777
265,550
2018
$’000
69,648
61,641
37,329
261,672
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
2019
$’000
186,076
7,121
1,344
441
2018
$’000
195,059
3,076
445
561
2019
$’000
49,846
2,588
583
83
2018
$’000
48,652
2,682
12
2,192
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 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)
2019
$’000
(960)
7
(5)
2018
$’000
(394)
12
2
2019
$’000
13,344
405
75
2018
$’000
13,703
24
37
(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 increased at the end of the current period due to higher
net USD denominated assets.
86 Annual Report 2019
MMA Offshore Limited 87
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 5. Other Notes (continued)
5.8 Financial Instruments (continued)
Interest rate risk management
5. Other Notes (continued)
5.8 Financial Instruments (continued)
Liquidity risk management
The Group is exposed to interest rate risk because it borrows funds primarily at floating interest rates. The risk is managed
by the Group by the use of interest rate swap contracts when considered appropriate. Hedging activities are evaluated
regularly to align with interest rate views ensuring the most cost-effective hedging strategies are applied, if required. At this
point in the interest rate cycle the Group is unhedged.
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 $2,655,462 (2018: decrease / increase by $2,690,012). 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 credit worthiness of each customer is assessed to ensure minimal default risk. 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 requested 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.
Debtor concentration risk is low with the top 3 customers of the Group making up only 21% of the total debtor balance. 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.
The table below details the credit quality of the Group’s financial assets.
Trade receivables (i)
Note
3.2
12-month or lifetime
ECL
Gross carrying
amount
Loss
allowance
Net carrying
amount
Lifetime ECL
(simplified approach)
61,257
(9,179)
52,078
(i)
For trade receivables, the Group has applied the simplified approach in AASB 9 to measure the loss allowance at
lifetime ECL (refer to note 3.2).
The Group manages liquidity risk by maintaining adequate cash reserves, borrowing facilities, continuously monitoring
forecast and actual cash flows and managing credit terms with customers and suppliers.
Liquidity and interest risk tables
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities with
agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities
based on the earliest date on which the Group can be required to pay. The table includes both interest and principal
cash flows. To the extent that interest flows are at floating rate, the undiscounted amount is derived from current interest
rates at the end of the reporting period.
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 2019
Non-interest bearing
Hire purchase liability
Variable interest rate instruments
Total
30 June 2018
Non-interest bearing
Hire purchase liability
Variable interest rate instruments
Total
-
2.90
5.99
27,160
1
1,344
28,505
-
19,886
2.90%
6.08%
1
1,390
21,277
2,700
1
2,707
5,408
1,891
1
2,735
4,627
2,502
3
17,116
19,621
859
5
12,239
13,103
3,415
35,777
-
283,557
286,972
5
304,724
340,506
14,693
37,329
5
310,039
324,737
12
326,403
363,744
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 2019
Non-interest bearing
Variable interest rate instruments
Total
30 June 2018
Non-interest bearing
Variable interest rate instruments
Total
-
1.44
32,469
70,239
13,522
17,284
-
-
102,708
13,522
17,284
-
2.20
24,960
69,775
94,735
6,658
17,284
-
-
6,658
29,423
-
-
-
600
-
600
63,275
70,239
133,514
61,641
69,775
131,416
88 Annual Report 2019
MMA Offshore Limited 89
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 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
Other than those listed below, 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.
As announced on 24 July 2019, MMA has entered into a contract for the acquisition of the business of Neptune Marine
Services Limited (“NMS”) key operating subsidiaries, for an expected total consideration of $18.5 million comprising
$5.0 million in cash plus approximately $13.5 million in MMA shares. Completion of the acquisition is subject to a
number of conditions including NMS shareholder approval. If the acquisition does not proceed, the $5.0 million cash
payment is refundable.
5.10 Other Accounting Policies
Adoption of New and Revised Accounting Standards and Interpretations
In the current year, the Group has applied the following new and amended AASB’s that are mandatorily effective for an
accounting period that begins on or after 1 July 2018:
AASB 9 Financial Instruments
AASB 15 Revenue from Contracts with Customers
AASB 9 introduced new requirements for the classification and
measurement of financial assets and liabilities, impairment of
financial assets and general hedge account. Details of the new
requirements as well as their impact on the Group’s consolidated
financial statements are described below.
AASB 15 introduced a 5-step approach to revenue recognition. Far
more prescriptive guidance has been added in AASB 15 to deal
with specific scenarios. Details of the new requirements as well as
their impact on the Group’s consolidated financial statements are
described below.
AASB 9
The Group adopted AASB 9 as of 1 July 2018.
AASB 9 introduced three significant areas of change from AASB 139 Financial Instruments: Classification and
Measurement:
• A new model for classification and measurement of financial assets and liabilities;
• A new expected loss impairment model for determining impairment allowances; and
• A redesigned approach to hedge accounting.
AASB 9 requires an expected credit loss (“ECL”) model for trade receivables 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.
5. Other Notes (continued)
5.10 Other Accounting Policies (continued)
The Group measures the loss allowance for lifetime ECL’s at initial recognition of the trade receivable. The amount of
lifetime ECL’s is updated at each reporting date to reflect changes in credit risk since initial recognition. The ECL’s on
trade receivables are estimated using a provision matrix based on the Group’s historical credit loss experience and an
analysis of the debtor’s current financial position, adjusted for factors that are specific to debtors, geographic region,
general economic conditions and an assessment of current and forecast conditions at reporting date.
The transitional provisions of the standard allow an entity not to restate comparatives, which the Group has adopted.
The directors have reviewed and assessed the Group’s existing financial assets as at 1 July 2018 based on the facts
and circumstances that existed at that date and concluded that the application of AASB 9 has not had a significant
impact on the Group’s financial performance or position.
AASB 15
The Group adopted AASB 15 as of 1 July 2018.
AASB 15 established a single comprehensive model to use in accounting for revenue 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 standards introduced a five-step process for applying this principle which includes guidance in respect of
identifying the performance obligations under the contract, allocation of revenue across those performance obligations
and recognising revenue as those performance obligations are satisfied.
The Group has adopted the new standard using the modified retrospective approach where any adjustment, on initial
recognition, is recognised in retained earnings at 1 July 2018, without adjustment to comparatives. Apart from providing
more extensive disclosures for the Group’s revenue transactions, the application of AASB 15 has not had a significant
impact on the financial position and/or financial performance of the Group. The Group’s new revenue accounting policy
is set out below.
The Group recognises revenue as the promised goods and services are provided to customers in an amount that
reflects the consideration expected to be received in exchange for those goods and services.
Revenue from charter of vessels
Revenue from the charter of vessels is an integrated service provided to customers and includes the charter of the
vessel and crew, mobilisation and demobilisation. Revenue is recognised over the period of time over which the
customer utilises the vessel. Where the entity supplies goods, such as fuel, to the customer as part of the contract,
revenue is recognised at a point in time when the customer obtains control of the goods.
There was no impact to retained earnings or net assets required to be recognised in the financial statements on initial
adoption of the standard.
In the year ended 30 June 2019, the Directors have reviewed all of the new and revised Standards and Interpretations
issued by the Australian Accounting Standards Board (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.
New and amended Accounting Standards and Interpretations issued but not yet effective
AASB 16 Leases (effective from 1 July 2019)
AASB 16 provides a new model for the accounting for leases which will require lessees to recognise assets and
liabilities for all leases with a lease term of more than 12 months unless the underlying asset is of low value. 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.
90 Annual Report 2019
MMA Offshore Limited 91
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 5. Other Notes (continued)
5.10 Other Accounting Policies (continued)
Impact on Lessee Accounting
AASB 16 will change how the Group accounts for leases previously classified as operating leases under AASB 117
Leases, which were off balance sheet.
The Group plans to adopt the modified retrospective approach on transition, where the lease liability is measured at the
present value of future lease payments on the initial date of application, being 1 July 2019. The lease asset is measured
as an amount equal to the lease liability. Under the transition method, prior period comparative financial statements are
not required to be restated.
The Group has completed an impact assessment of AASB 16 and estimates the following impact on its consolidated
statement of financial position as at 1 July 2019:
Estimated Impact on Consolidated Statement of Financial Position:
Right-of-use assets
Right of use lease liabilities
$’000
4,065
4,065
The leases recognised by the Group under AASB 16 predominantly relate to lease of shipyard, office space and
equipment.
Operating lease expenses will no longer be recognised in the calculation of Profit/(Loss) before tax but will be replaced
by depreciation of Right-of-Use assets and lease finance costs.
Impact on Lessor Accounting
Under AASB 16, the lessor continues to classify leases as either finance leases or operating leases and account for
those two types of leases differently. Based on an analysis of the Group’s leases at 30 June 2019 and the facts and
circumstances that exist on that date, the Group has assessed all leases as operating leases and no impact on the
amounts recognised in the Group’s consolidated financial statements.
92 Annual Report 2019
ADDITIONAL SECURITIES EXCHANGE INFORMATION
FOR THE YEAR ENDED 30 JUNE 2019
Ordinary Share Capital (as at 9 September 2019)
858,077,084 fully paid ordinary shares are held by 6,513 individual shareholders. All issued ordinary shares carry one vote
per share.
Substantial shareholders (as at 9 September 2019)
First Samuel Limited
Black Crane Asia Opportunities Fund
Halom Investments Pte Ltd
Thorney Opportunities Ltd / TIGA Trading Pty Ltd(1)
Eley Griffiths Group Pty Ltd
Tribeca Investment Partners Pty Ltd
Forager Funds Management Pty Ltd
Total
(1) Both of these related parties have filed a Substantial Shareholders Notice.
Distribution of Holders of Ordinary Shares (as at 31 August 2019)
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
91,287,667
77,418,996
67,481,946
63,301,921
58,937,264
51,523,200
45,142,236
10.64
9.02
7.86
7.38
6.72
6.00
5.26
455,093,230
52.88
Number of ordinary shareholders
1,497
1,722
992
1,960
362
6,533
Twenty Largest Shareholders (as at 9 September 2019)
Number of
Shares
% of Issued
Capital
1
2
3
4
5
6
7
J P Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
UBS Nominees Pty Ltd
National Nominees Limited
BNP Paribas Nominees Pty Ltd
Evelin Investments Pty Limited
8 Mr Hong Keong Chiu + Ms Yok Kee Khoo
9 Willoughby Capital Pty Ltd
10 BNP Paribas Noms Pty Ltd
11 Zakher Marine Intl Inc
12 HSBC Custody Nominees (Australia) Limited
13 Ms Jennifer Ann Weber + Mr Jeffrey Andrew Weber
14 Vanward Investments Limited
15 BNP Paribas Nominees Pty Ltd
16 Mr Ross Alexander Macpherson
17 Peligan Pty Ltd
18 Warbont Nominees Pty Ltd
19 Mrs Elizabeth Aprieska
20 Mr Wai Foong Lim
Total
195,411,305
133,812,408
127,781,617
67,472,093
32,137,975
30,986,346
9,160,000
8,830,149
8,400,000
5,980,904
5,847,378
4,015,241
3,815,916
3,776,856
3,055,571
2,999,000
2,961,000
2,890,521
2,889,106
2,803,398
22.77
15.59
14.89
7.86
3.75
3.61
1.07
1.03
0.98
0.70
0.68
0.47
0.44
0.44
0.36
0.35
0.35
0.34
0.34
0.33
655,026,784
76.34
MMA Offshore Limited 93
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 ADDITIONAL SECURITIES EXCHANGE INFORMATION
FOR THE YEAR ENDED 30 JUNE 2019 (CONTINUED)
Unmarketable Parcels (as at 31 August 2019)
The number of holders holding less than a marketable parcel of the Company’s shares is as follows:
Minimum Parcel Size
Number of ordinary shareholders
Number of shares
2,632
2,340
2,029,600
Voting Rights
All ordinary shares carry one vote per share without restriction.
Unquoted Options (as at 9 September 2019)
13,207,075 unlisted rights held by 50 individual rights holders.
Shareholder Enquiries
Shareholders can obtain information about their shareholding by contacting the Company’s share registry:
Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne
Victoria 3000 Australia
Enquiries:
(within Australia)
(outside Australia) 61 3 9415 4000
Facsimile:
61 3 9473 2500
web.queries@computershare.com.au
www.computershare.com.au
1300 850 505
Change of Address
Shareholders should notify the share registry immediately if there is a change to their registered address.
Securities Exchange Listing
Shares in MMA Offshore Limited are listed on the Australian Securities Exchange.
Publications
The Annual Report is the main source of information for shareholders.
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94 Annual Report 2019
MMA Offshore Limited 95
TOGETHER, WE MAKE IT HAPPEN
CORPORATE DIRECTORY
Directors
Andrew Edwards
Chairman
Jeffrey Weber
Managing Director
Eve Howell
Non-Executive Director
Chiang Gnee Heng
Non-Executive Director
Peter Kennan
Non-Executive Director
Company Secretary
Dylan Darbyshire-Roberts
Registered Office
Endeavour Shed,
1 Mews Road
FREMANTLE WA 6160
Telephone: +61 8 9431 7431
Facsimile: +61 8 9431 7432
www.mmaoffshore.com
Auditors
Deloitte Touche Tohmatsu
Chartered Accountants
Brookfield Place, Tower 2
123 St Georges Terrace
PERTH WA 6000
Telephone: +61 8 9365 7000
Facsimile: +61 8 9365 7001
Solicitors
Ashurst
Brookfield Place, Tower 2
123 St Georges Terrace
PERTH WA 6000
Telephone: +61 8 9366 8000
Facsimile: +61 8 9366 8111
96 Annual Report 2019
MMAOFFSHORE.COM
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