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2023 ReportPeers and competitors of MMA Offshore Ltd:
Seacor Marine Holdings Inc.2020
ANNUAL
REPORT
TOGETHER, WE MAKE IT HAPPEN
30+
VESSELS
OPERATING
INTERNATIONALLY
1100+
EMPLOYEES
ACROSS
THE GLOBE
Houston
HIGH-SPECIFICATION VESSELS
AND A COMPREHENSIVE SUITE OF
MARINE AND SUBSEA SERVICES
0.54
TRCF PER MILLION
HOURS WORKED
Aberdeen
WESTERN
EUROPE
MIDDLE
EAST
6
GLOBAL
OPERATIONAL
FACILITIES
EAST &
WEST AFRICA
KEY
OFFICE
OPERATIONAL FACILITY
CONTENTS
OVERVIEW
About MMA
Our Operations
2020 Year in Review
Chairman’s Report
Managing Director’s Report
Health, Safety, Environment & Quality
Our People
Sustainability
Risks
SOUTH EAST
ASIA
Kuala Lumpur
Singapore
Batam
Darwin
AUSTRALIA
Perth
Melbourne
GOVERNANCE
Board of Directors
Corporate Governance
Directors’ Report
Auditor’s Independence Declaration
Audit Report
Directors’ Declaration
FINANCIAL REPORT 2020
2
4
6
8
10
16
18
20
22
24
28
32
47
48
55
57
SHAREHOLDER INFORMATION
Additional Securities Exchange Information
98
MMA Offshore Limited 1
ABOUT
MMA
At MMA Offshore, we specialise in providing
high-specification vessels and a comprehensive
suite of marine and subsea services to the
offshore energy sector and wider maritime
industry.
Our combination of high-quality vessels,
strategically located onshore facilities,
specialised subsea services and in-house
technical marine expertise enables us to partner
with our clients to deliver innovative, fit-for-
purpose marine solutions.
We pride ourselves on the world class safety,
quality and reliability of our operations
underpinned by our Target 365 safety culture
which strives for “A Perfect Day, Every Day”.
STRONG SERVICES CAPABILITY
WITH PROVEN TRACK RECORD
IN DELIVERING COMPLEX
PROJECTS
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 provide safe and proactive
solutions that deliver beyond expectations.
TEAM WORK
We share knowledge, resources and services across
our business. We work together as one team to
achieve our common goals.
THE MARKETS WE SERVICE
OFFSHORE WIND
OIL & GAS
INFRASTRUCTURE
MAINTENANCE
GOVERNMENT
& DEFENCE
2 Annual Report 2020
MMA Offshore Limited 3
OUR OPERATIONS
VESSEL SERVICES
MMA owns and operates 30+ offshore
vessels capable of supporting a range of
offshore marine, renewables and subsea
projects.
Our assets have the capability to serve a
wide range of work scopes – from subsea
construction and maintenance, through
to ongoing production support and heavy
towing operations.
4
AHT
6
MPSV / IMR
30+
VESSELS
8
PSV
4 Annual Report 2020
12
AHTS
SUBSEA SERVICES
Combining state-of-the-art equipment and
highly experienced personnel, MMA provides a
range of subsea services including integrated
maintenance and construction project delivery,
commercial diving services, survey, geophysical
and geotechnical services, and ROV services.
Our extensive scope of services ranges from
subsea stabilisation, specialised subsea
engineering solutions, and manufacturing to testing
and assembly, and dry underwater welding.
MMA Offshore Limited 5
PROJECT LOGISTICS
Supporting global projects is
a key service offering at MMA.
Our dedicated personnel meet
the challenge of managing
complex marine and vessel
spreads, logistics to remote
greenfield sites, and integrated
marine logistics.
Our project logistics team
operates land-based facilities
in Singapore and Batam to
support MMA’s internal and
external customers.
2020
YEAR IN
REVIEW
SIGNIFICANT
INCREASE IN
UNDERLYING
EBITDA
Revenue
Underlying EBITDA1
$273.0M
$48.9M
Operating Cashflow
$38.5M
LVR (Net Debt to Fixed Assets)
45%
Reported EBITDA (pre-impairment)2
NPAT (pre-impairment)2
$26.1M
$(36.5)M
Cash at Bank
$86.6M
NTA per Share
$0.25
1 Underlying EBITDA of $48.9M has been adjusted for the impacts of Provisions for doubtful debts ($13.2M) / Provisions for Legal Settlements ($9.0M) / Acquisition
and Restructuring costs ($4.5M) and Government Subsidies $3.9M
2 During the year MMA reclassified a number of vessels and ROVs as “held for sale” resulting in an asset impairment charge of $57.7M
6 Annual Report 2020
MMA Offshore Limited 7
CHAIRMAN’S
REPORT
I am pleased to report that MMA delivered improved
underlying earnings in FY2020 with EBITDA prior to
one-off items and pre-AASB16 up 52.8% on the prior
year.
This was a strong result for the business, particularly in light of
the COVID-19 pandemic, which significantly impacted activity
during the last quarter of the financial year and continues to
impact the business into FY2021.
The pandemic has been a challenge both financially and
operationally. Demand for our services has been significantly
affected with projects delayed and work scopes suspended as
a result of the significant fall in the oil price due to the drop in
oil demand caused by COVID-19. In addition, the complexity
of our operations has increased significantly due to restrictions
on personnel and asset movements both within Australia and
internationally.
The health and wellbeing of our employees has been
paramount through the pandemic and we quickly implemented
a range of COVID-19 protocols to protect both the physical and
mental wellbeing of our employees. I am pleased to say that,
to date, we have remained COVID-19 free on all of our vessels,
sites and offices globally. We continue to monitor the ever-
evolving situation closely and amend our protocols accordingly.
Whilst the offshore industry had clearly been on a recovery
trajectory prior to the onset of COVID-19, a level of uncertainty
now prevails in the Oil and Gas markets with ongoing
suppressed activity levels. This is expected to continue
through FY2021.
AN UNWAVERING
COMMITMENT
At Board level, we welcomed Ian
Macliver as a Non-Executive Director
in January 2020. I sincerely thank my
fellow board members for their valuable
contribution to the business over the
past 12 months.
I would like to conclude by thanking
the management and staff of MMA for
their perseverance and dedication to the
business in these challenging times.
Whilst the market remains uncertain in
the short term, we are confident in our
strategy and expect that once activity
resumes the business will be well
positioned to deliver improved returns for
our shareholders.
Andrew Edwards
Chairman
Notwithstanding the current market
conditions, MMA is fortunate to have
a solid base of long-term contracts
underpinning revenue, with 61% of
forecast FY2021 vessel revenue under
contract as at 1 July 2020.
We continue to progress our strategy to
expand and diversify our service offering.
In November 2019, we completed the
acquisition of Neptune Marine Services,
a key platform in this strategy. The
acquisition has enabled us to expand
into a range of subsea services capturing
a greater portion of the value chain and
adding value to our vessel business. We
are already seeing the benefits of being
able to offer a more comprehensive suite
of services to our clients and completed
a number of work scopes during the
year utilising our vessels and subsea
capability.
We also enhanced our project logistics
business with the acquisition of
Premium Project Services, a small
start-up business with an experienced
management team and an established
corporate structure in Mozambique,
a key target region for our projects
business.
We reviewed and refined our strategic
direction during the year and conducted
a comprehensive assessment of a range
of markets outside of Oil and Gas where
MMA can deploy its marine capability to
diversify and enhance its earnings base.
In terms of diversification, the Offshore
Wind market is a key target market for
MMA, with significant growth projected
in our operating regions over the coming
years. Pleasingly we have already had
success in securing a number of offshore
wind contracts and currently have all
three of our service lines engaged in
supporting the development of new wind
projects in Taiwan.
We are also targeting the Government
and Defence sectors as well as select
infrastructure maintenance contracts to
further diversify our revenue base. Our
subsea business was recently selected
as a partner in the Australian Department
of Defence’s Hydroscheme Industry
Partnership Program (“HIPP”) which will
deliver hydrographic data to Defence
for charting over the next five years, an
important first step in our strategy to
expand in this area. The subsea business
also has a number of infrastructure
maintenance contracts which we hope
to build on.
Our Balance Sheet continues to be a
key focus area. Due to the impacts of
COVID-19 on our earnings, we received
covenant relief from our banking
syndicate with testing of a number of key
covenants waived until 31 December
2020 as well as a waiver of the cash
sweep for the same period, enabling
MMA to retain any cash above $70
million within the business to support
operations.
With the term of our debt facilities due to
expire in September 2021, we recently
commenced detailed discussions with
our Banking Syndicate to refinance
or extend the current facilities beyond
September 2021. At the time of this
report, discussions remain ongoing.
Having regard to the Company’s
substantial asset backing and
the ongoing discussions with our
Banking Syndicate, MMA’s Board
and management are confident that
the Company’s debt position will
be adequately resolved prior to the
facility expiry date and we are focused
on resolving the matter as soon as
practicable.
MMA Offshore Limited 9
MANAGING
DIRECTOR’S REPORT
REVIEW OF OPERATIONS
MMA’s underlying result for the financial year was
strong, confirming that the business was on a
recovery trajectory prior to the onset of COVID-19.
MMA reported Revenue of $273.0 million, up 14.1% on the
prior year. Underlying EBITDA was $48.9 million, up 76% on
the prior year. EBITDA for FY2020 was inclusive of a $6.0m
benefit from the reclassification of lease costs to depreciation
under the new accounting standard for leases AASB16.
Excluding the impact of AASB16, Underlying EBITDA
increased 54.3% on the prior year.
Cash at bank increased by $16.4 million or 23% to
$86.6 million.
Reported EBITDA was $26.1 million which included the impact
of provisions for legacy doubtful debts and legal settlements
and a number of other one-off restructuring and transaction
costs incurred during FY2020. The reported result also
included the impact of AASB16.
The improvement in MMA’s underlying performance was driven
by a number of factors, including an increase in the provision
of integrated services to our customers on our MPSV and PSV
fleet which increased margins. MMA also benefited from the
removal of overhead costs in the second half of the financial
year, with the full benefit of these cost reductions to be realised
in FY2021 and beyond. The improvement in earnings is a
positive endorsement of our strategy to expand our higher
margin service offerings, utilising our assets and skill base to
deliver complex marine solutions for our customers.
MMA’s activities were impacted by COVID-19 in the fourth
quarter of the financial year with demand for our assets and
services reducing from March 2020 and continuing to impact
the business into FY2021.
Market Conditions
Until March 2020, market conditions for the offshore Oil and
Gas markets had been improving. Activity was increasing and
the outlook for new project approvals was looking strong.
The impact of COVID-19 on the Oil and Gas market has
been severe with demand dropping dramatically and the oil
price falling to levels not seen for some years. The reaction
by Oil and Gas companies has been swift with production
levels and spending reduced. Operations have continued
throughout this period, however, numerous new projects have
been deferred or cancelled, FIDs have been pushed out and
overall expenditure budgets slashed for 2020/2021, putting
pressure on supplier margins. Whilst there have been some
improvements in recent weeks, the outlook for the Oil and Gas
markets remains uncertain while the pandemic continues to
constrain oil and gas demand.
The impact on the Offshore Wind industry
has been less pronounced particularly in
MMA’s focus region of Taiwan where key
projects have already been approved and are
under development. Significant new capacity
is forecast to be installed in our operational
regions over the next 10 years and, as a
vessel intensive industry, this market is a
key focus area of MMA’s longer-term growth
strategy for both the construction and
longer-term maintenance phases.
Other segments such as Government /
Defence and Infrastructure, where our
subsea business has a foothold have seen
less of an impact where delays have been
more directly related to travel and border
restrictions both internationally and in
Australia.
Strategy
During the financial year, we progressed
our strategy to expand our marine services
offering with the acquisition of Neptune
Marine Services, a leading provider of
topside and subsea inspection, maintenance
and repair solutions to the Oil and Gas,
Marine and Renewable Energy industries.
The subsea business has been integrated
into MMA’s operations and we are beginning
to see the benefit of having a broader service
offering and skill base within the business.
Our project logistics division is also starting
to gain traction in East Africa and Taiwan
where it is focused on providing large-
scale logistics management for the LNG
and renewables construction sectors. The
strategy is based on an asset-light model,
utilising third party assets to deliver discrete
logistics scopes.
The strategy for our vessel business
is focused on providing specialised
vessel solutions to our clients and we
will progressively exit out of the more
commoditised sectors of the market where
the returns are suboptimal. We will continue
to supplement our fleet with third-party
chartered vessels to improve our return
on assets as we have successfully done in
FY2020 with the MMA Responder, MWV
Falcon, and Normand Australis.
Whilst the business has traditionally been
focused solely on Oil and Gas, a major
platform in our growth strategy is the
expansion of our services into alternative
market segments such as Offshore Wind,
Government / Defence and Infrastructure
Maintenance. Although in the early stages,
we are building our Offshore Wind services
business in Taiwan and have recently been
successful in winning a number of contracts.
The subsea business already has some
exposure to Defence and Infrastructure
Maintenance which we intend to build upon
to expand those sectors of the business,
allowing MMA to diversify our revenue
streams and build a more stable business.
Underpinning the strategy is the marine
expertise within our business which we have
been careful to preserve and which enables
us to deliver innovative marine solutions
to our clients to differentiate us from our
competitors.
Balance Sheet
MMA increased its Cash at Bank as at 30
June 2020 to $86.6 million, providing stability
in the current economic climate.
In line with our strategy to reduce our
exposure to the more commoditised assets,
MMA reclassified a number of its vessels
and Remote Operated Vehicles (“ROVs”)
as “held for sale” as at 30 June 2020 and
reviewed the estimated realisable value of
these assets in the current market resulting
in an asset impairment charge of $57.7
million. There was no impairment on the core
remaining fleet of vessels or on the residual
subsea assets.
MMA’s Net Debt (Interest Bearing Liabilities
Less Cash) as at 30 June 2020 was $186.8
million.
MMA has made significant progress in
improving its debt metrics over the past
two years with the Company’s Net Debt
to EBITDA ratio reducing from 9.6x at
30 June 2018 to 4.4x at 30 June 2020
(on a normalised basis and excluding the
impact of AASB16). Notwithstanding this
improvement, MMA’s Net Debt to EBITDA
ratio remains well above our targeted gearing
level of 2.5x. We are currently exploring
options to improve our debt metrics given
our earnings are likely to continue to be
impacted by COVID-19 through FY2021.
We have also commenced formal
negotiations with our Banking Syndicate
regarding our debt facilities which are due to
expire in September 2021.
Given the impacts of COVID-19 on the
business, MMA’s banking syndicate have
agreed to waive the testing of key financial
covenants until 31 December 2020 as well
as waiving the cash sweep for the same
period. MMA made principal payments
totalling $5.8 million on the facility during
the year.
FY2020 HIGHLIGHTS
Strong underlying
result - EBITDA $48.9m
before one-off items
Cash at bank
increased to $86.6m
Operations continuing
whilst COVID-19 is delaying
work-scopes, impacting
new project approvals and
complicating project delivery
64%
Average utilisation - with
stronger contribution from
AHT, PSV and MPSV fleet
Subsea impacted by
project delays but scopes
being rescheduled
Making inroads into
the Offshore Wind
market in Taiwan
Maintained world-class
safety performance
(IMCA top quartile)
Strategy realigned with
clear path to maximise
core business and diversify
and grow earnings base
$
Obtained covenant relief
from Banking Syndicate and
commenced refinancing
discussions
MMA Offshore Limited 11
One-Off Items
MMA incurred a number of one-off items
during the year, totalling $22.8 million.
Provisions for doubtful debts contributed
a total of $13.2 million to one-off costs.
Of this amount, MMA has provided for
an additional credit loss of $11.9 million
for a major debtor in the Kingdom of
Saudi Arabia (“KSA”), which has resulted
in the full outstanding amount from this
debtor being provided for in the FY2020
accounts.
As disclosed in the half year accounts,
a portion of the debt (US$6.1 million)
is secured by Promissory Notes which
are a form of Court enforceable security
in KSA. MMA is currently enforcing
the payments under the Promissory
Notes in the KSA Execution Courts,
however, the impact of the COVID-19
pandemic, being either Court closures
or Court delays, is affecting our ability to
enforce the Court orders and collect the
outstanding amounts due.
MMA also has a number of ongoing legal
claims relating to contractual disputes
and has raised provisions totalling $9.0
million for potential costs associated with
these claims.
The balance of $0.6 million comprises
restructuring and acquisition costs which
were offset by Government support via
the JobKeeper Scheme in Australia and
employee support in Singapore.
Cost Control
Cost control remains an ongoing key
focus for MMA whilst ensuring we never
compromise on the quality or safety of
our operations.
During the financial year, we identified,
and are delivering on, annualised savings
of approximately $10.0 million which
include synergies from the Neptune
acquisition.
In the current environment it is critical
that we have the ability to flex the
operating costs of our vessels in line
with market demand. We have a well-
documented protocol for transferring
vessels into a controlled lay-up mode
immediately on completion of contract
work.
These protocols ensure that the
vessels remain in a well maintained,
controlled state which enables them to
be reactivated in a short timeframe to
meet new contract requirements as they
present.
We continue to monitor our cost base
closely to ensure it matches our activity
levels.
Operational Update
Vessel Services
Vessel revenue for the year was $228.9
million, down 4% on FY2019. Vessel
EBITDA was up 35.6% at $47.6 million,
including a $2.1 million benefit from
AASB16.
Average utilisation for the year was
64%, down from 72% in FY2019. First
half utilisation was stronger at 70% with
the impacts of COVID-19 impacting
utilisation in the last quarter, particularly
in June 2020 where utilisation fell to
46%. Utilisation for the commoditised
AHTS fleet averaged 41% for the year,
and 15% for June 2020 bringing down
the average significantly and reinforcing
our strategy to reduce exposure to this
segment.
As at 30 June 2020, MMA had 16 of its
30 vessels under short and long-term
contracts with the remaining vessels
being maintained at the Company’s
Singapore and Indonesian facilities
and in Fremantle, Western Australia.
The remaining vessels are available for
work in the spot market when demand
justifies activating them with a number
of them also being marketed for sale
as part of MMA’s strategy to divest
underperforming assets.
As at 30 June 2020, 32% of available
vessel days for FY2021 were contracted,
increasing to 44% taking into account
highly probable contract awards and
extension periods. This compares to
27% and 43% at the same time last year.
On a revenue basis, 61% of our forecast
revenue was under contract for FY2021,
(79% including highly probable) as at 30
June 2020.
COVID-19 has had a twofold impact
on the vessel business, firstly in terms
of demand with projects cancelled and
suspended and secondly in terms of
increased operational complexity and
cost due to restrictions on personnel
movements across borders which has
significantly impacted our seagoing
personnel and crewing logistics.
During the year, our vessels were active
on a number of key work scopes:
The MMA Vision, MMA Coral and MMA
Leeuwin supported the Noble Tom
Prosser rig for most of the financial year,
initially with Santos providing a range of
services including rig tows to field, infield
rig moves and supply duties. Following
completion of the Santos scope, the
vessels were contracted by AGR to
support the rig on the CarbonNet Project
off the coast of Victoria. Subsequently,
the vessels continued to support the rig
with Esso in the Bass Strait on a multiple
well programme. The rig was suspended
for a period due to COVID-19 in late
March 2020 and the vessels were
placed on standby through to mid-July
when work recommenced. The MMA
Leeuwin has recently been fitted with a
full time ROV to facilitate various subsea
operations for Esso.
The MMA Pinnacle completed its
second Walk-to-Work scope with
Woodside on the North Rankin Platform
in September 2019, receiving positive
feedback from the client. Woodside have
stated their intention to utilise Walk-
to-Work technology for future platform
maintenance operations in Australia
which is a positive for future demand for
vessels such as the Pinnacle. Outside
of the Woodside scope, the Pinnacle
continues on its three-year firm contract
with iTech 7, Subsea 7’s Life of Field
business unit, performing a range of
work scopes in Australia, South East
Asia and the North Sea, where it is
currently operating.
MMA recently secured a contract for
the Mermaid Searcher with Upstream
Production Solutions providing support
services for the Northern Endeavour
FPSO which is currently being operated
in lighthouse mode for the Australian
Government. The contract is firm through
to Q2 FY2021 with further options to
extend.
MMA continued to have a number
of vessels on long-term contracts,
supporting production activities in
Australia. The MMA Plover and MMA
Brewster continued their long-term
contract with INPEX supporting
the Ichthys LNG Project. The MMA
Inscription is on contract with Santos
supporting the Bayu-Undan project and
recently had its contract term extended
to December 2021. The MMA Cove’s
contract with BHP / Santos came to an
end during the year and the vessel has
recently been contracted by Woodside
(replacing the Mermaid Sound) alongside
the MMA Strait, with the firm contract
period for both vessels extended to
March 2022.
The MMA Pride continues to operate
as an Accommodation and Walk-to-
Work vessel for Shell Brunei and had
its contract extended during the year
through to November 2020.
The MMA Privilege completed its
contract in Cote d’Ivoire in May 2020
after a very successful four years
operating as an Accommodation and
Walk-to-Work vessel in the region.
During this period, the vessel completed
over 250,000 passenger transfers with
an exemplary safety and performance
record, achieving zero down time or
incidents. The vessel has now been
relocated back to Singapore and has
completed docking and maintenance
tasks. Following the maintenance period,
the vessel is likely to transfer to Malaysia
/ Brunei for a short-term accommodation
support scope.
The MMA Prestige completed various
short-term ROV and diving scopes
in Malaysia during the first half of the
year, transferring to Saudi Arabia for
the second half for further diving and
ROV work. The contract in Saudi Arabia
completed in the latter part of the
financial year, with the vessel returning
to Singapore to mobilise for an Offshore
Wind project in Taiwan.
The MMA Monarch and MMA Majestic,
our 12,000 BHP AHTS vessels operated
mainly in Malaysia during the year,
supporting Petronas and Shell Sabah
on a range of work scopes. Activity in
Malaysia has been severely impacted
by COVID-19 and utilisation on these
vessels reduced dramatically during the
last quarter. The Majestic is currently in
Singapore and available for spot work
whilst the Monarch recently completed
a short-term towing contract from
Indonesia to Australia.
The MMA Vigilant completed a number
of seismic scopes including a project
for SAExploration deploying seismic
nodes to the seabed floor utilising
our survey and ROV equipment as a
packaged service. This vessel is currently
supporting an offshore wind project in
Taiwan supporting piling works for the
pre-installation of Offshore Wind turbines.
The MMA Leveque completed several
drilling support contracts in both
Australia and South East Asia during
the year and the vessel more recently
secured a work scope in Taiwan
supporting an Offshore Wind farm
development.
The MMA Valour operated with Benthic
on a range of seismic and geotechnical
projects in Australia, South East Asia,
East Africa and Guyana during the year.
Our Middle Eastern vessels completed
their long-term contract with Makamin
Offshore in January 2020 and have
completed a range of short-term scopes
since then. Operating in the Middle
East has become very difficult with the
impacts of COVID-19 affecting crew
movements into the region. The MMA
Cavalier has secured a medium-term
contract, whilst the MMA Centurion and
MMA Chieftain are currently available in
the spot market.
MMA had two third-party chartered
vessels in its fleet during the financial
year, the MWV Falcon, an MPSV vessel
fitted with a Walk-to-Work gangway, and
the MMA Responder, a high-quality PSV.
The Responder was active on a number
of projects in Australia during the year
and has recently completed a contract
with Esso in the Bass Strait. The Falcon
has completed a number of Walk-to-
Work scopes in both India and Malaysia
and has recently secured further work
in India. Chartering in additional high-
quality vessels remains a key part of
MMA’s strategy and subject to market
conditions and contractual positions our
long-term goal is to expand our fleet of
chartered vessels to enhance our return
on assets, balance risk and provide
flexibility in the fleet.
Subsea Services
MMA has been operating in the subsea
sector for some time as a vessel
operator, however, we significantly
enhanced our subsea capability with the
acquisition of Neptune Marine Services,
which completed in November 2019.
The business has been successfully
integrated, with office locations
combined and systems and processes
aligned. We have also completed a
restructuring of the business to better
meet client requirements and align to
the renewed strategy. Annualised cost
synergies of approximately $5 million
have been achieved, in excess of the
original estimated $2 million per annum.
Subsea revenue for the period from
November 2019 was $46.0 million with
EBITDA loss of $(0.7) million which
included a $0.6 million benefit from
AASB16 but excluded the full benefits
of cost reductions due to timing of when
these were realised.
UNIQUE SOLUTIONS TO
SOLVE COMPLEX MARINE
CHALLENGES
12 Annual Report 2020
MMA Offshore Limited 13
REFINED STRATEGY
Project Logistics
Health & Safety
Outlook for FY2020
Our goal is to be the leading diversified marine services provider in the Asia Pacific region
1
MAXIMISE CORE
BUSINESS
2
DIVERSIFY INTO
NEW MARKETS
3
EXTEND
SERVICE
Vessels
Offshore Wind
Innovation
Subsea
Project
Logistics
Engineering
Infrastructure
Maintenance
Government
/ Defence
New Marine
Markets
Sustainability
Marine
Expertise
LEVERAGING OUR
ASSETS AND SKILLS
The subsea business was hit particularly
hard by COVID-19 with a number of
work scopes immediately suspended
due to personnel restrictions on client
sites and the general impact on the
Oil and Gas markets which resulted
in project timelines being deferred.
Unfortunately, with the onset of
COVID-19 in the third quarter, the
restructure of the subsea business was
not completed until May 2020 which
did not allow sufficient time to recover
the negative EBITDA result. Subject to
COVID-19 restrictions, it is anticipated
that the subsea business will significantly
improve earnings in the coming years.
Notwithstanding the issues brought on
by the COVID-19 crisis, we are seeing
the benefits of being able to offer a more
comprehensive suite of services to our
clients and we have delivered a number
of combined work scopes during the
year. An example of this was a seismic
survey scope undertaken for a client
SAExploration in Malaysia. As part of
this project MMA provided the vessel,
the MMA Vigilant, as well as managed
the ROV, survey and positioning services
with a team of over 75 people across
the Company delivering the project
successfully and safely for the client.
We have also had some recent
successes on Offshore Wind projects in
Taiwan with the MMA Vigilant and MMA
Prestige both set to commence survey
and ROV contracts in this sector.
During the year, the subsea business
secured long term survey contracts
to provide rig positioning and subsea
acoustic positioning services offshore.
The first contract is with Chevron
supporting three rigs for a period of
three years with two one-year options
to extend. The second contract is with
INPEX supporting the Maersk Deliverer
rig with the contract expected to run for
up to five years in duration.
The business was also recently
successful in securing a contract with the
Australian navy under the Hydroscheme
Industry Partnership Program
(“HIPP”). The partnership between the
Commonwealth and the Australian
hydrographic survey industry aims to
deliver an extensive program of nautical
charting surveys in Australian waters.
MMA’s survey team will collect data
north-east of Broome, Western Australia
and will commence in late September for
a duration of two-three months. MMA’s
strategy is to expand its services into
Government and Defence and this is a
key early win in this sector.
We also completed an inspection,
maintenance and repair project in
Papua New Guinea under our long-term
frame agreement with Oil Search. The
subsea business provided diving, survey,
engineering and stabilisation services as
part of the overall maintenance scope
utilising a chartered vessel, the Normand
Australis, to support the project.
The subsea business was also
engaged on a number of infrastructure
maintenance scopes during the year
including a jetty refurbishment scope
for South 32 on Groote Eylandt and an
inspection and maintenance contract for
Chevron on Barrow Island.
The UK engineering and fabrication
businesses continued to perform well
serving a number of key clients in the UK
and globally. The engineering group has
a number of Master Service Agreements
in place with major operators and
provided a range of specialised
engineering, design and optimisation
solutions under various work scopes
during the year. These work scopes
included the design and manufacture
of valve suppression strakes to support
a challenging deep-water drilling
campaign in harsh marine conditions
in the Southern Atlantic, as well as the
delivery of our patented subsea valve
reinstatement systems to support North
Sea producing assets.
The fabrication business was awarded
a contract by Baker Hughes to
manufacture and deliver a total of 13
subsea vertical tree frames, guide
funnels and ROV panels for a project in
Australia. These were fully assembled in
Scotland with the project expected to be
completed by September 2020.
The outlook for FY2021 remains difficult
to forecast in the current environment,
however, based on our forward order
book and contract positions our present
expectations are for an operating
EBITDA of $30-35 million in FY2021
(inclusive of the impacts of AASB
16) and we are targeting to return to
stronger and more diversified revenue
growth in FY2022 and beyond.
David Ross
Managing Director
The health and safety of our people
remains fundamental to MMA. The
onset of COVID-19 in all our operating
areas has been a challenge for the
entire organisation and we have been
very clear that our priority is to protect
the MMA team, their families and the
communities in which we operate.
To date we have managed to remain
COVID-19 free on our vessels, operating
sites and offices. This challenge will
remain for the foreseeable future and
we will continue to work to ensure the
best practical practices are deployed
and vigilantly adhered to across the
business.
During FY2020, MMA maintained a
strong safety performance with a Total
Recordable Case Frequency (“TRCF”)
per million hours worked of 0.54,
significantly better than the marine
industry average of 2.1 as measured
by the International Marine Contractors
Association (“IMCA”).
With the subsea acquisition completed
during the year, our focus is on rolling
out our Target 365 and our Critical
Controls programme to our new
employees to embed our culture of
safety consciousness throughout the
entire business.
We are proud of our people and of our
safety performance and culture, but we
recognise that safety is an area in which
you can never become complacent and
we constantly strive to be better.
OUR GOAL IS TO BE THE LEADING
DIVERSIFIED MARINE SERVICES
PROVIDER IN THE ASIA PACIFIC REGION
During the year MMA established a
dedicated Project Logistics division with
the aim of targeting logistics scopes
associated with large LNG and Offshore
Wind projects in East Africa and Taiwan.
In December 2019, MMA acquired 80%
of Premium Project Services, a small
start-up company with an established
corporate structure and contact base
in East Africa and a management team
with extensive experience and contacts
in global project logistics.
The business is beginning to gain
traction and currently has three third-
party vessels engaged on contracts in
East Africa predominantly supporting
Total’s Mozambique LNG Project as well
as a third-party vessel under contract in
Taiwan.
The project logistics segment generated
revenue of $7.0 million for the financial
year and delivered an underlying EBITDA
loss of $(3.0) million which includes the
operating costs associated with MMA’s
land-based facilities at Batam, Indonesia
and Singapore. The reported result for
the segment included an $8.4 million
provision against legacy legal claims.
Both the underlying and reported
EBITDA result included a $0.6 million
benefit from AASB16.
We are currently targeting the growing
Offshore Wind industry with a particular
focus on Taiwan and are looking to
establish a suitable operating structure
in the region.
Whilst the pipeline of major LNG and
Offshore Wind projects has been
delayed by the onset of COVID-19,
tendering activity remains strong and
we expect MMA to be well positioned
to win a share of logistics scopes
associated with project developments
as they occur.
2021 OUTLOOK
Outlook for FY2021
remains difficult to forecast
in the current environment
61% of vessel revenue
for FY2021 contracted
Targeting to return to stronger and
more diversified revenue growth in
FY2022 and beyond
Present expectations are for
an operating EBITDA of $30-35
million in FY2021
14 Annual Report 2020
MMA Offshore Limited 15
•
Introduced new operating standards
by developing two oil and gas vessel
Safety Cases and maintaining our
technical input into an additional
case;
• Undertook numerous health and
safety campaigns including a major
psychological health campaign prior
to and during the global COVID-19
pandemic;
• Completed a comprehensive
internal assurance programme to
ensure our controls are adequately
robust to prevent incidents, protect
the environment and maintain our
licence to operate; and
•
Managed the challenges brought by
the unprecedented global COVID-19
pandemic.
MMA was again active in contributing to
the improvement of HSEQ management
across our industry. Our Managing
Director is the Co-Chair of the Marine
Working Group of Safer Together WA /
NT (Western Australia and Northern
Territory) and our Executive General
Manager of People and Safety continued
as Chair of the International Marine
Contractors Association Global Core
HSSE Committee.
Environment
MMA remains committed to achieving
the highest standard of environmental
performance across all our business
activities. MMA maintained environmental
certification and all licences required
during FY2020 and did not suffer any
reportable or adverse environmental
events. We continue to focus on the
reduction of single use plastics across
our operations and maintain critical
systems designed to prevent spills and
environmental impact.
Quality
MMA maintained global accreditation to
the revised ISO 9001:2015 Standard and
internationally maintains ISO 14001:2015
and OSHAS 18001:2007 accreditations.
Our new management system platform is
the result of our continuous improvement
programme and will be the catalyst
for completing integration of the new
Subsea Services business and gaining
global certification to ISO Standards
9001, 14001 and 45001 in conjunction
with our licence to operate requirements
in FY2021.
TOTAL RECORDABLE
CASE FREQUENCY
(PER MILLION HOURS)
0.95
0.53
0.54
0.36
0.28
16
17
18
19
20
MMA TRFC
IMCA AVERAGE
* Statistics for FY2020 include only MMA
original business units. Subsea Services
statistics will be included following completion
of integration activities in FY2021.
RESPONSE TO COVID-19
PANDEMIC
MMA was proactive in our response to the
COVID-19 pandemic and in January 2020,
our HSEQ Team initiated our prevention of
transmissible disease procedures, and the
Company’s Crisis Management Team was
engaged.
MMA’s Executive Management Team regularly
held crisis management meetings with a view to
always act in the best interests of the health and
safety of our people, clients, suppliers and the
wider community, while consistently maintaining
high operational standards for our clients.
A number of control measures were implemented
during the pandemic response, including ceasing
non-critical travel, working from home guidelines
for all site-based personnel, restricting third party
access to work sites and vessels, symptom
screening/health monitoring of all personnel,
increased hygiene measures, a mental health
campaign aimed at promoting our Employee
Assistance Program, regular health bulletins to
update staff and the running of emergency drills
to ensure our teams were prepared should they
encounter a suspected case.
The rapidly changing nature of the pandemic
and associated government and regulatory
guidelines presented challenges to our
employees, particularly regarding the restrictions
in the movement of personnel globally. We have
maintained close contact with all affected crews
and project personnel to ensure these groups are
kept up to date with the latest medical and travel
advice.
Our staff, crews and project personnel are to
be commended for their perseverance and
commitment to the pandemic response. We
continue to monitor and appropriately adjust our
response to this ongoing situation.
HEALTH, SAFETY,
ENVIRONMENT & QUALITY
In 2020 MMA maintained world class HSEQ performance
At MMA Offshore, protecting the health and safety of our
people and the environment is fundamental to how we do
business. In the past year, the commitment of our staff,
crews and project personnel towards achieving excellence
in health and safety standards has again resulted in world
class performance, even while our teams worked together
to manage and mitigate risks associated with the COVID-19
pandemic.
Our licence to operate is in excellent condition as we have
navigated compliance with numerous legislative frameworks in
shipping, oil and gas, diving and management systems.
In FY2020, our Total Recordable Case Frequency (“TRCF”)
was steady from the previous year at 0.54 per million hours
worked. This result confirms we met our target of maintaining
top quartile industry performance within the global International
Marine Contractors Association (“IMCA”).
At MMA we do not only use TRCF to determine our success.
Key to our Target 365 programme, we continually strive for
‘A Perfect Day Every Day’ with a perfect day being a day
free of recordable injuries or material incidents. In FY2020,
we achieved 324 (89%) perfect days, which although an
improvement on the previous year, did not meet our annual
target of 92%. We continually strive for improvements to both
leading and lagging measures in order to achieve our Target
365 goal.
In FY2020, we continued to undertake improvements on how
we protect our people and the environment. To this end, we:
• Completed integration of our new Subsea Services
business processes into MMA;
• Developed and implemented a new Management System
platform and supporting software to assist our continuous
improvement programme. We will complete the roll out of
the new platform in FY2021 across our global operations;
16 Annual Report 2020
MMA Offshore Limited 17
Diversity and Inclusion continues to be
a priority for the Company as we believe
in fostering a workforce that brings
together a range of skills, backgrounds
and experiences. While the share of
women in management positions
and the overall percentage of women
employees (onshore) has decreased with
the Neptune acquisition, the Company’s
focus will remain on increasing the
percentage of women in all areas of the
business.
The key areas of training and
competency are one of the fundamental
pillars of our strategic HR plan.
MMA continues to provide training
opportunities to Officer Cadets,
Indigenous trainees and Timor-Leste
nationals in Able Seaman roles. 896
unique employees accessed training
during the past 12 months, completing
over 6,500 individual training outcomes.
13
Brunei Darussalam
DIVERSITY AND INCLUSION
519
Australia
204
Malaysia
TOP TEN
EMPLOYEE
NATIONALITIES
13
Romania
15
Ukraine
58
Singapore
102
United Kingdom
130
Philippines
134
Indonesia
143
India
% OF WOMEN EMPLOYED
32.7
29.4
32.7
16.7
16.7
16.7
15.6
14.3
19
20
19
20
19
20
19
20
Total
Organisation
Board of
Directors
Executive
Management
Senior
Management
As a multicultural organisation with team members
from a range of backgrounds and experiences,
MMA’s Diversity and Inclusion Committee plays
a key role in the promotion of diversity and
inclusion within the Company. During the year,
the Committee held a number of engagement
events and activities which were aimed at teaching
MMA stafff more about each other’s experiences,
cultures and traditions.
In February 2020, MMA’s Diversity and Inclusion
Committee brought our personnel together to
share an insightful presentation on the history of
the Lunar New Year and some of the traditions
and customs celebrated. Our teams then shared
a special meal of Chinese cuisine, with our
Singapore office also taking part in a traditional
“Prosperity Toss” ceremony.
As a part of MMA’s International Women’s Day
celebrations held in March 2020, our teams across
the world were able to tune into a live-streamed
presentation from MMA Non-Executive Director,
Eve Howell, held at our Australian Head Office.
Eve shared her inspiring story of her extensive
and illustrious career both within Australia and
internationally, where she has held a number of
management positions across multiple blue-
chip companies and boards. Eve’s inspiring
presentation was followed by office functions held
in celebration of International Women’s Day.
While additional planned engagement activities
were unfortunately withdrawn due to social
distancing restrictions brought on by the COVID-19
pandemic, based on the significantly positive
feedback received from our employees, MMA’s
Diversity and Inclusion Committee will seek to build
upon these activities in FY2021.
OUR PEOPLE
We recognise our success is dependent on our people and our ability to attract and retain the best talent
At MMA, we are committed to fostering a diverse, engaging and
high performance workplace. Our ability to attract and retain the
best talent is supported by our strong cultural foundation built
on trust, cooperation and mutual respect.
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.
During FY2020, aligned to the integration of the acquired
Neptune business, we have implemented major reviews of
all Human Resource Standards, Policies and Procedures.
This has included the updating of recruitment, performance
management, industrial relations and training practices
throughout the business.
A FOCUS ON
EXCELLENCE
18 Annual Report 2020
MMA Offshore Limited 19
SUSTAINABILITY
MMA is committed to achieving sustainable outcomes for our environment, and the communities
in which we operate
Environment
Community
MMA is committed to achieving the
highest standard of environmental
performance across all of its business
activities.
• Our services across our business
support the production of transitional
energy solutions, with over 60% of our
activity currently related to LNG. We
also deliver solutions to the renewable
energy sector, including the provision
of services to support offshore
windfarm development. We currently
have three vessels supporting offshore
wind projects in Taiwan along with
associated subsea and project
logistics services. A key part of our
strategy is to expand this part of our
business.
• We are focused on reducing our
emissions through a range of
energy saving initiatives, and engine
optimisation and operational efficiency
trials on our vessels to minimise fuel
consumption.
• We have a dedicated research and
development team at the forefront of
new technologies, including LNG-
fuelled and battery-powered vessels.
• We are committed to clean oceans
and are targeting the elimination of
single use water bottles on our vessels
by 2024 through the implementation
of new potable water systems on
our vessels and providing multi-use
drink containers across the fleet. We
are also targeting a 10% reduction in
general single use plastics year-on-
year. We also promote the proper
segregation and disposal of waste
across our business, and conduct
shipbuilding and ship repairs only in
environmentally compliant facilities.
• MMA is certified to ISO 14001 in our
international business.
To support our community engagement
goals, MMA is committed to:
•
Investing in local community projects
that have a positive and sustainable
benefit;
• Seeking business opportunities with
local suppliers and subcontractors;
• Striving to be good corporate citizens,
conducting business in an ethical
manner;
• Developing long-term relationships
with local Indigenous communities
in order to increase Indigenous
participation in our workforce and
promote opportunities for training and
development; and
• Creating and maintaining cross-
cultural awareness throughout the
business.
A FOCUS ON
RELATIONSHIPS
Sponsorships
Procurement
Employment
MMA recognises that supporting
community endeavours, either in kind or
monetarily, is a responsibility we have to
the communities in which we operate.
During FY2020, MMA continued to
support our communities through our
Target 365 rewards programme, where
business units that achieve exceptional
safety performance are given the
opportunity to donate monetary rewards
to a range of registered charities and
community initiatives. In FY2020, MMA
donated over $35,000 to a range of
charities including the Make a Wish
Foundation, the Red Cross Foundation,
the Salvation Army, and a number
of New South Wales-based charities
in support of the Australian Bushfire
appeal.
Supporting local contractors and
vendors (including Indigenous
businesses) is an ongoing priority for
MMA. MMA continues to engage with
Aboriginal and Torres Strait Islander
(“ATSI”) enterprises to support its
operations offshore Australia.
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.
As a business with a global focus, MMA
aims to have a workforce that best
represents the communities in which we
operate. In the past 12 months, MMA
has continued its focus on hiring from
and supporting the communities within
which we operate. As of July 2020, we
employ over 1,100 employees from
29 countries, many of whom speak
languages other than English.
MMA has in place four major employee
development programs, each focusing
on a specific region and/or demographic
group. Traineeship programs are also in
place for Timor Leste and Indigenous
Australians, providing opportunities both
within our Australian and International
operations for nine seafaring and one
HSEQ trainees.
The technical competence of our crew
has been enhanced over the past
12 months with the continuation of
an industry sponsored development
program that has seen over 100 crew
benefit from targeted development
activities. All of these activities contribute
to MMA’s capability to offer our clients a
skilled and knowledgeable workforce.
20 Annual Report 2020
MMA Offshore Limited 21
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
United Kingdom, 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 and
macro conditions, such as the impacts
of the global COVID-19 pandemic.
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 or demand or changes in energy
technology 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:
• diversifying its geographic footprint
across a number of key regional
areas;
•
•
expanding its service offering to
include subsea and project logistics
services; and
expanding its service offering into
alternative market sectors such
as offshore wind, government and
defence, infrastructure maintenance
and other new marine markets.
COVID-19
COVID-19 has had a significant impact
on the Company’s activity from Q3 of
FY2020. As a result of COVID-19, MMA
has been impacted by:
• projects being delayed or cancelled
and current work scopes being
suspended;
• border closures and quarantine
restrictions affecting the movement
of our vessels, their crews and
equipment and spares to and from
our vessels;
•
additional cost of quarantining
personnel; and
• working from home and other
Government restrictions.
To manage the COVID-19 risk:
• MMA has stood up the Company’s
Crisis Management Team (as per
Company’s Crisis Management
Plan), which is led by Executive
Management expertise;
•
the Crisis Management Team met
daily for the initial period of the
crisis and currently meets every
two business days to monitor the
ever-changing situation and adjust
the crisis management strategy as
required;
• MMA has appointed expert medical
advice to guide the Company’s
health response;
• MMA has implemented a
Transmissible Disease (Prevention)
Plan;
• differentiating itself though innovation
• MMA has developed specific
and operational excellence;
• diversifying its contract portfolio
across the exploration, construction
and production phases and by
providing maintenance / repair
services;
22 Annual Report 2020
plans based on global risk profile
and changes to prevent disease
transmission and to maintain
operations;
• MMA has increased human
resources to support the Crewing
Team to ensure business continuity
of assets and projects globally;
• MMA maintains regular health and
business continuity communications
with all staff globally; and
• MMA has (where possible)
introduced specific COVID-19
or Force Majeure clauses in its
contracts to try and limit its liability
for non-performance due to
COVID-19.
Debt Refinancing and
Covenant breaches
Further decreases in industry activity or
a lack of recovery in industry activity (as
outlined above) may also increase the
risk of the Company failing to comply
with the covenants associated with
its Banking Facility. In addition, the
Company’s current Banking Facility
expires on 30 September 2021.
MMA seeks to manage these risks
through proactively engaging with its
lenders and by working with its external
advisors to either extend or refinance its
current facilities beyond 30 September
2021.
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 (which has
been exacerbated due to COVID-19),
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.
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. MMA regularly
reviews its fleet composition and
disposes of vessels where returns
•
•
•
are expected to be sub-optimal or
where the vessel is considered non-
core from a strategic perspective;
focusing on regional strategies
to position itself in the most
advantageous areas to operate (both
in terms of demand and clients)
and in emerging markets (such as
the offshore wind services sector in
Taiwan);
having an active lay-up programme
to minimise holding costs for vessels
between contracts with vessels
either cold or warm stacked -
predominantly at MMA’s land-based
facilities in Batam and Singapore to
minimise costs;
expanding its subsea services
business through the acquisition of
Neptune Marine Services - with the
combined service offering likely to
result in expanded vessel capability,
increased asset utilisation and an
enhanced return on assets;
•
expanding its service offering into the
growing offshore wind sector; and
• differentiating itself from its
competitors through operational
excellence, proactive and innovative
solutions, long-term customer
relationships and responsive account
management.
Operational risks
The Company’s operations are subject
to various risks inherent in servicing
the offshore energy and wider marine
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;
• Epidemics / pandemics;
• Domestic and International border
closures;
• Quarantine risks;
• Mental health risks in the current
environment;
• Outbreak of COVID-19 on board
vessel(s) or an on-shore site;
•
•
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, crisis
management processes, quality systems
and 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, economic
sanctions and border closures or
restrictions (due to COVID-19) 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 or COVID
controls and 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 Policy and
Group Whistleblower Policy have
been implemented and are continually
monitored to try and 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.
MMA Offshore Limited 23
BOARD OF DIRECTORS
Mr Hugh Andrew Jon
(Andrew) Edwards
Chairman
– Appointed 27 October 2017
Mr David Colin Ross
Ms Eva Alexandra (Eve) Howell
Mr Chiang Gnee Heng
Mr Peter Kennan
Mr Ian Macliver
Managing Director
– Appointed 13 January 2020
Non-Executive Director
– Appointed 27 February 2012
Non-Executive Director
– Appointed 5 July 2012
Non-Executive Director
– Appointed 22 September 2017
Non-Executive Director
– Appointed 20 January 2020
Andrew was appointed as a Director of
the Company on 18 December 2009
and as Chairman of the Company on 27
October 2017.
David was appointed as CEO of
the Company on 1 July 2019 and
subsequently as Managing Director of
the Company on 13 January 2020.
Andrew currently serves as Non-
Executive Chairman of MACA Limited.
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.
David has spent more than 30 years
working in the maritime industry having
started his career as a seagoing marine
engineer and qualifying as an Engineer
Class 1 – Motor (Marine Chief Engineer)
in 1995.
In 1995, David moved to a shore based
marine career – initially at BHP Transport
in Melbourne and subsequently moving
to operational and strategic roles at BHP
Billiton freight group in the Netherlands.
David has extensive knowledge of
MMA’s operations, having held the
roles of General Manager Operations,
Chief Operating Officer and more
recently relocating to Singapore as Chief
Executive Officer to drive the Company’s
international growth.
David is currently a member of the Board
of Directors of Maritime Industry Australia
Limited (which represents the collective
interests of maritime businesses in
Australia) and director of all of the
Company’s international subsidiaries in
Singapore, UK, USA, Indonesia, Malaysia
and PNG.
As Managing Director of MMA, David
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 and Chairperson of Role Models &
Leaders Australia, a charity providing
educational support programs to
Aboriginal & Torres Strait Islander girls.
Eve was an Executive Vice President
for Woodside Energy Ltd for over
five years, initially as the executive in
charge of the North West Shelf Project
(Australia’s largest petroleum resource
project). In addition to her Woodside
role, she was also CEO of the North
West Shelf Venture (BP, BHP, Chevron,
Shell, Woodside and Mitsubishi/Mitsui)
from 2006 to 2010. In her final eighteen
months with Woodside, she served as
the Executive Vice President for Health,
Safety & Security for all Woodside’s
activities worldwide. Prior to Woodside,
she held the position of Managing
Director at Apache Energy Ltd.
Eve has previously served on a number
of Boards, including Downer EDI Ltd,
Tangiers Petroleum Ltd, the Fremantle
Port Authority, the Australian Petroleum
Production & Exploration Association
and was a Board member and President
of the Australian Mines and Metals
Association. Eve holds a Bachelor of
Science (with Honours in Geology and
Mathematics) from the University of
London and an MBA from Edinburgh
Business School and is a graduate of
the Australian Institute of Company
Directors. Eve is Chair of the Company’s
Audit and Risk Committee and a
member of the Company’s Nomination
and Remuneration Committee.
Peter is the founder and CIO of Black
Crane Capital. He has 23 years of
corporate finance experience across a
diverse range of sectors and transactions
with Black Crane and previously with
UBS Asia and Australia.
The Black Crane Asia Opportunities
Fund, managed by Black Crane Capital,
is a major shareholder of MMA.
Peter founded 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.
Ian is currently the Executive Chairman of
Grange Consulting and Grange Capital
Partners. Prior to establishing Grange,
Ian held positions over nine years in a
general manager or executive director
position for various listed and corporate
advisory companies.
His experience covers all areas of
corporate activity including capital
raisings, acquisitions, divestments,
takeovers, business and strategic
planning, debt and equity
reconstructions, operating projects and
financial reviews and valuations.
Ian is currently Chairman of Western
Areas Limited and a Non-Executive
Director of Sheffield Resources Limited,
both of which are listed on the Australian
Securities Exchange.
Ian holds a Bachelor of Commerce
from the University of Western Australia
and a Post Graduate Diploma from
the Securities Institute of Australia.
He is a Senior Fellow of the Financial
Services Institute of Australasia
and a Fellow of both the Institute of
Chartered Accountants in Australia and
the Australian Institute of Company
Directors.
Ian is a member of both the Company’s
Audit and Risk Committee and
the Company’s Nomination and
Remuneration Committee.
Chiang Gnee graduated as a Marine
Engineer from the University of
Newcastle Upon Tyne (UK) and spent
some 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.
Chiang Gnee attended the Sloan
School of Management at MIT (USA)
and graduated with a Masters in
Management in July 1990. He was
formerly the CEO of Sembawang
Shipyard for 10 years and CEO of
Sembcorp Environment Management
Pte Ltd for 2 years until August 2007.
Chiang Gnee was also formerly the
Executive Director of the Singapore
Maritime Institute (SMI) focusing on the
development of the Singapore maritime
industry through research. Chiang Gnee
was engaged in workplace health and
safety management until 31 March 2018
when he stepped down as Chairman
of the Singapore Workplace Safety and
Health Council. In vocational training and
education, Chiang Gnee was Deputy
Chairman of the Institute of Technical
Education (ITE) Board of Governors until
30 June 2018. Chiang Gnee is currently
the Chairman of the Board of ITE
Education Services Pte Ltd in Singapore.
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.
24 Annual Report 2020
MMA Offshore Limited 25
26 Annual Report 2020
MMA Offshore Limited 27
AN INNOVATIVE APPROACH
Compliance with Australian Corporate Governance Standards
1.7
A listed entity should:
CORPORATE GOVERNANCE
Corporate Governance
The Board of Directors (“Board”) of MMA Offshore Limited (“Company” or “MMA”) is responsible for the corporate governance of the
consolidated entity. The Board is a strong advocate of good corporate governance.
The Board 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 2020, 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 29 September 2020 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 2020. 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
Yes
most recent “Gender Equality Indicators”, as defined in and published under that Act.
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
3rd Edition ASX Corporate Governance Principles and Recommendations
Comply
1.6
A listed entity should:
(a) have and disclose a process for periodically evaluating the performance of the board, its
committees and individual directors; and
(b) disclose, in relation to each reporting period, whether a performance evaluation was
undertaken in the reporting period in accordance with that process.
(a) have and disclose a process for periodically evaluating the performance of its senior
executives; and
(b) disclose, in relation to each reporting period, whether a performance evaluation was
undertaken in the reporting period in accordance with that process.
Principle 2: Structure the Board to add value
2.1
The board of a listed entity should:
(a) have a nomination committee which:
(1) has at least three members, a majority of whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and.
(5) as at the end of each reporting period, the number of times the committee met
throughout the period and the individual attendances of the members at those meetings;
or
(b) if it does not have a nomination committee, disclose that fact and the processes it employs
N/A
to address board succession issues and to ensure that the board has the appropriate
balance of skills, knowledge, experience, independence and diversity to enable it to
discharge its duties and responsibilities effectively.
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
28 Annual Report 2020
MMA Offshore Limited 29
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
30 Annual Report 2020
MMA Offshore Limited 31
DIRECTORS’ REPORT
Rights Granted to Directors and Senior Management
During and since the end of the financial year, an aggregate of 9,831,734 performance rights were granted to the following Director
and to the five highest remunerated officers of the Company as part of their remuneration:
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 2020.
Directors
With the exception of Mr Jeffrey Andrew Weber (who ceased to be a Director on 21 November 2019), the names and particulars
of the Company’s Directors in office during or since the end of the financial year are set out on pages 24 to 25 (including their
qualifications, experience and special responsibilities).
Name
Mr D Ross
Mr D Cavanagh
Mr D Roberts
Mr R Furlong
Mr D Thomas
Mr T Radic
The above-named Directors of the Company held office during the whole of the financial year and since the end of the financial year,
except for:
Company Secretary
Number of
rights granted
3,511,454
1,708,000
1,186,112
1,186,111
1,121,724
1,118,333
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
3,511,454
1,708,000
1,186,112
1,186,111
1,121,724
1,118,333
•
Mr J Weber – who resigned on 21 November 2019;
• Mr D Ross – who was appointed on 13 January 2020; and
•
Mr I Macliver – who was appointed on 20 January 2020.
Directorships of Other Listed Companies
Directorships of other listed companies held by the Directors in the three years immediately before and since the end of the financial
year are as follows:
Name
Company
Period of Directorship
Mr A Edwards
Nido Petroleum Limited (delisted 26 June 2017)
December 2009 - December 2018
Ms E Howell
Downer EDI Limited
January 2012 – November 2017
MACA Limited
Since October 2010
Mr I Macliver
Western Areas Limited
Buru Energy Limited
Sheffield Resources Limited
Since July 2014
Since October 2011
Since August 2019
Dylan Darbyshire-Roberts, solicitor, held the position of Company Secretary of the Company at the end of the financial year.
Dylan joined the Company in May 2007 in the role of Commercial Manager and was appointed as Company Secretary of MMA
Offshore Limited on 19 August 2008.
Previously, he was a Senior Associate with the law firm DLA Piper where he practised in the areas of insurance, corporate and
marine law. After obtaining a Bachelor of Commerce degree and a LLB degree 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 22 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
subsea services to the offshore energy and wider maritime industries.
Other than as previously referred to in this Annual Report (including the acquisition of the business of Neptune Marine Services
Limited on 7 November 2019), there were no other significant changes in the nature of the activities of the consolidated entity during
the financial year.
Otto Energy Limited
January 2004 – November 2019
Review of Operations
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 D Ross
Ms E Howell
Mr C G Heng
Mr I Macliver
Mr P Kennan
Fully paid ordinary
shares direct
Fully paid ordinary
shares indirect
-
917,264
-
200,000
-
-
331,360
614,306
372,058
-
-
182,408,152
Performance
rights direct
-
5,111,714
-
-
-
-
The Directors do not have any interests in shares, options or rights of any related body corporate of the Company as at the date of
this report.
Remuneration of Key Management Personnel
Information about the remuneration of key management personnel is set out in the Remuneration Report section of this Directors’
Report on pages 36 to 46. 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.
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 - 15.
Changes in State of Affairs
The Chairman’s Address and the Managing Director’s Report (on pages 8 - 15) 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 and the acquisition of the business of
Neptune Marine Services Limited on 7 November 2019, there was no significant change in the state of affairs of the consolidated
entity.
Subsequent Events
There has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly affected,
or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the
consolidated entity in future financial years.
Future Developments
In general terms, the Chairman’s Address and the Managing Director’s Report (on pages 8 -15) gives an indication of likely
developments and the expected results of those operations.
32 Annual Report 2020
MMA Offshore Limited 33
Environmental Regulations
The Company continues to conduct its operations within the parameters of the Department of Environmental and Conservation
Licence and Ministerial requirements. There were no known breaches of licence conditions for the year ended 30 June 2020.
Dividends
In respect of the financial year ended 30 June 2019, 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 2020. Accordingly, no interim or final dividend has
been recommended, declared or paid for the 2020 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
Unissued Shares under Rights
Details of unissued shares under rights as at the date of this report are:
Company.
Directors’ Meetings
Issuing entity
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
MMA Offshore Limited
Number of unissued
shares under rights
10,625,634
2,581,441
18,469,539
3,511,454
Class of
shares
Ordinary
Ordinary
Ordinary
Ordinary
Exercise price
of rights
$
0.00 (a)
0.00 (a)
0.00 (b)
0.00 (b)
Vesting date
of rights
1 Jul 2021
1 Jul 2021
1 Jul 2022
1 Jul 2022
(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.
(b) These performance rights vest on 1 July 2022 subject to the performance criteria as detailed in note 5.2 and have a two-year exercise period to
1 July 2024.
The holders of these performance rights do not have the right, by virtue of the issue of the performance 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.
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, eight Board meetings, four Audit and Risk Committee meetings and three Nomination and Remuneration Committee
meetings were held.
Name
Mr A Edwards
Mr J Weber(1)
Mr D Ross(2)
Ms E Howell
Mr CG Heng
Mr P Kennan
Mr I Macliver(3)
Board of Directors
Audit and Risk Committee
Nomination and
Remuneration Committee
Held
Attended
Held
Attended
Held
Attended
8
4
3
8
8
8
3
8
4
3
8
8
8
3
4
2
2
4
4
4
2
4
2
2
4
4
4
2
3
1
2
3
3
3
2
3
1
2
3
3
3
2
(1) Ceased as an Executive Director on 21 November 2019
(2) Appointed as an Executive Director on 13 January 2020
(3) Appointed as a Non-Executive Director on 20 January 2020
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 $40,894 for the provision of non-audit services (being the provision of tax
compliance services and transaction advice) and the sum of $552,035 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.
34 Annual Report 2020
MMA Offshore Limited 35
Auditor’s Independence Declaration
Remuneration Policy
The Auditor’s Independence Declaration is included on page 47 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.
Remuneration Report
This Remuneration Report, which forms part of the Directors’ Report, sets out information about the remuneration of the Company’s
key management personnel for the financial year ended 30 June 2020.
The Company’s ‘key management personnel’ are those persons who have authority and responsibility for planning, directing and
controlling the activities of the consolidated entity, either directly or indirectly, including any Director (whether executive or otherwise)
of the consolidated entity.
The prescribed details for each person covered by this Remuneration Report are detailed below under the following headings:
• Key Management Personnel;
• Remuneration Policy;
• Relationship between the Remuneration Policy and Company Performance;
• Remuneration of Key Management Personnel; and
• Key Terms of Employment Contracts.
Key Management Personnel
The 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 2020 financial year, without engaging the
services of an independent remuneration consultant. The Board is satisfied that the remuneration recommendations made by the
Nomination and Remuneration Committee were free from undue influence by any member of the key management personnel to
whom the recommendations relate.
Key Remuneration Outcomes
Having regard to the overall performance of the Company and current market conditions, the key remuneration outcomes for the
Company’s key management personnel in 2020 were as follows:
Fixed Annual Remuneration (FAR)
•
The Managing Director, Chief Executive Officer, Chief Financial Officer and other Senior Management of the Company did not
receive an increase in FAR for the 2020 financial year.
Short-term Incentive (STI)
• The Board exercised its discretion to suspend the STI component in relation to the Managing Director and other key
management personnel for the 2020 financial year.
Long-term Incentive (LTI)
The Directors and other key management personnel of the consolidated entity during and since the end of the financial year were:
• The Board exercised its discretion to reinstate the LTI component in relation to the Managing Director (Mr D Ross) and other key
Executive Director
Mr D Ross (Managing Director)(1)
Mr J Weber (Managing Director)(2)
Non-Executive Directors
Mr A Edwards (Chairman)
Ms E Howell
Mr CG Heng
Mr P Kennan
Mr I Macliver(3)
Other Key Management Personnel
Mr D Cavanagh (Chief Financial Officer)
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)
Mr S Edgar (Executive General Manager Project Logistics)
Mr T Radic (Executive General Manager Subsea Services) (4)
(1) Appointed as an Executive Director on 13 January 2020
(2) Ceased as an Executive Director on 21 November 2019
(3) Appointed as a Non-Executive Director on 20 January 2020
(4) Appointed as Executive General Manager Subsea Services on 3 February 2020
Apart from Mr D Ross, Mr J Weber, Mr I Macliver and Mr T Radic (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.
management personnel for the 2020 financial year.
Remuneration Report 2019
MMA Offshore Limited’s Remuneration Report for the 2019 financial year was adopted at the Annual General Meeting on 21
November 2019 with a clear majority of 450,152,758 votes in favour of the motion (representing 98% 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 2020 financial year, there was no increase in Non-Executive Directors’ fees.
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:
36 Annual Report 2020
MMA Offshore Limited 37
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 2020 financial year is as follows:
•
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,
Chief Financial Officer and other Senior Management of the Company
did not receive an increase in FAR for the 2020 financial year.
MANAGING DIRECTOR
OTHER EXECUTIVES (MAXIMUM)
23%
28%
2
Short-term Incentive (STI)
• An annual “at-risk” cash component designed to reward performance
77%
72%
against the achievement of key performance indicators (KPIs) set by
the Board.
• The invitation to participate in the STI is at the absolute discretion of
the Board and is subject to such conditions which the Board may
prescribe from time to time.
• As previously reported, given the performance of the Company
and current market conditions, the Board exercised its discretion to
suspend the STI component for the 2020 financial year.
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 three year period.
• The LTI also aims to align executives’ long-term interests with those of
shareholders and to retain executives.
• As previously reported, the Board exercised its discretion to reinstate
the LTI component for 2020 Financial year. The FY2020 LTI Plan has a
three-year performance period (commencing 1 July 2019 and expiring
on 1 July 2022) and includes performance hurdles relating to Relative
TSR (50% weighting) and EBITDA Return on Assets (50% weighting).
The FY2020 LTI Plan was approved by shareholders at the Company’s
AGM on 21 November 2019.
FAR
LTI
FAR
LTI
Relationship between the Remuneration Policy and Company Performance
The table below summarises information about the Company’s earnings for the 2020 financial year and the Company’s earnings and
movements in shareholder wealth for the five years to 30 June 2020, which is a key factor in the Board’s decision not to grant any
increase in FAR and to suspend the STI remuneration component for the 2020 financial year.
Revenue
Net profit/(loss) before tax
Net profit/(loss) after tax
Share price at start of the year
Share price at end of the year
Interim dividend(1)
Final dividend(1)
Basic earnings per share
Diluted earnings per share
30 June 2020
$’000
30 June 2019
$’000
30 June 2018
$’000
30 June 2017
$’000
30 June 2016
$’000
273,011
239,259
200,444
256,396
481,123
(93,657)(3)
(35,879)(3)
(27,376)(3)
(379,791)(3)
(155,262)(3)
(94,187)
(37,373)
(27,909)
(378,032)
(143,962)
$0.18
$0.065
0cps
0cps
$0.25
$0.18
0cps
0cps
$0.15
$0.25
0cps
0cps
$0.31
$0.15
0cps
0cps
$0.54
$0.31
0cps
0cps
(10.44cps)
(4.36cps)
(4.11cps)
(93.86cps)(4)
(38.64 cps)
(10.44cps)
(4.36cps)
(4.11cps)
(93.86cps)(4)
(38.64 cps)
3 year compound annual TSR(2)
(24%)
(16%)
(21%)
(49%)
(46%)
(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 $57.7 million against the carrying value of the Company’s assets as at 30 June 2020 [2019: $10.4
million impairment charge; 2018: $8.4 million impairment reversal; 2017: $312 million impairment charge; and 2016: $139 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.
38 Annual Report 2020
MMA Offshore Limited 39
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 2020 financial year (i.e.
the actual “take-home” pay received by key management personnel for the 2020 financial year); and
(B) The statutory presentation of the remuneration of the Directors and other key management personnel of the Company for the
2020 financial year and for the previous financial year based on the requirements of accounting standards.
(A) Key Management Personnel Remuneration (Actual)
Share
based
payments
Total
Short-term employee benefits
Post-employment benefits
2020
Salary &
fees
$
Cash
Bonus
$
Non-
monetary(2) Superannuation Termination
$
$
$
Annual/Long
Service Leave
Payout
$
Rights(3)
$
Directors
Mr A Edwards
Mr D Ross
Mr J Weber(1)
Mr P Kennan
Ms E Howell
Mr CG Heng(4)
Mr I Macliver(1)
Senior Management
Mr D Cavanagh
Mr D Roberts
Ms L Buckey(5)
Mr D Thomas
Mr R Furlong
Mr S Edgar
Mr T Radic(1)
Total
167,987
576,844
345,535
100,127
100,440
112,910
39,390
335,000
328,998
192,686
309,998
328,998
288,998
119,990
3,347,901
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
89,803
5,427
-
-
-
-
-
-
-
-
-
-
-
95,230
12,013
-
25,000
-
9,541
6,926
3,742
25,000
21,002
18,305
21,002
21,002
21,002
9,472
194,007
-
-
962,832
-
-
-
-
-
-
-
-
-
-
-
962,832
-
-
420,511
-
-
-
-
-
-
-
-
-
-
-
420,511
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
180,000
666,647
1,759,305
100,127
109,981
119,836
43,132
360,000
350,000
210,991
331,000
350,000
310,000
129,462
5,020,481
(B) Key Management Personnel Remuneration (Statutory Presentation)
Short-term employee benefits
Post-employment benefits
Salary &
fees
$
Cash
Bonus
$
Non-
monetary(2) Superannuation Termination
$
$
$
Share
based
payments
Long Service
Leave
$
Rights(3)
$
Total
$
167,987
576,844
345,535
100,127
100,440
112,910
39,390
335,000
328,998
192,686
309,998
328,998
288,998
119,990
3,347,901
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
89,803
5,427
-
-
-
-
-
-
-
-
-
-
-
95,230
12,013
-
25,000
-
9,541
6,926
3,742
25,000
21,002
18,305
21,002
21,002
21,002
9,472
194,007
-
-
962,832
-
-
-
-
-
-
-
-
-
-
-
962,832
-
8,933
5,729
-
-
-
-
-
5,834
3,472
9,654
5,578
4,736
-
43,936
-
204,894
180,000
880,474
13,314 1,357,837
100,127
109,981
119,836
43,132
-
-
-
-
108,682
65,438
38,897
61,886
64,359
56,144
49,747
468,682
421,272
253,360
402,540
419,937
370,880
179,209
663,361 5,307,267
2020
Directors
Mr A Edwards
Mr D Ross
Mr J Weber(1)
Mr P Kennan
Ms E Howell
Mr CG Heng(4)
Mr I Macliver(1)
Senior Management
Mr D Cavanagh
Mr D Roberts
Ms L Buckey(5)
Mr D Thomas
Mr R Furlong
Mr S Edgar
Mr T Radic(1)
Total
40 Annual Report 2020
2019
Directors
Mr A Edwards
Mr J Weber
Mr P Kennan
Ms E Howell
Mr CG Heng(4)
Senior Management
Mr D Ross
Mr D Cavanagh
Mr D Roberts
Ms L Buckey(5)
Mr D Thomas
Mr R Furlong(1)
Mr S Edgar(1)
Short-term employee benefits
Post-employment benefits
Salary &
fees
$
Cash
Bonus
$
Non-
monetary(2) Superannuation
$
$
Termination
$
164,384
852,371
100,127
100,440
112,910
548,819
335,172
329,469
189,994
310,469
314,110
263,628
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,150
-
-
-
105,284
-
22,159
-
-
-
-
15,616
25,000
-
9,541
6,926
-
24,828
20,531
18,338
20,531
20,531
20,531
128,593
182,373
-
-
-
-
-
-
-
-
-
-
-
-
-
Share
based
payments
Total
Long
Service
Leave
$
Rights(3)
$
$
-
-
180,000
14,623
83,625
976,769
-
-
-
8,933
-
5,834
3,472
13,117
5,578
4,736
-
-
-
53,103
35,667
19,697
11,708
18,627
18,020
14,624
100,127
109,981
119,836
716,139
395,667
397,690
223,512
362,744
358,239
303,519
56,293
255,071
4,244,223
Total
3,621,893
(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 J Weber
ceased to be a Director of the Company on 21 November 2019; Mr I Macliver was appointed as a Non-Executive Director on 20 January 2020; and
Mr T Radic was appointed to the position of Executive General Manager Subsea Services on 3 February 2020.
(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. three years).
(4) A component of Mr Heng’s fees are paid in Singapore dollars.
(5) 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
Mr I Macliver(1)
Executive Directors
Mr D Ross(2)
Mr J Weber(3)
Senior Management
Mr D Cavanagh
Mr D Roberts
Ms L Buckey
Mr D Thomas
Mr R Furlong
Mr S Edgar
Mr T Radic(4)
2020
100%
100%
100%
100%
100%
77%
99%
77%
84%
85%
85%
85%
85%
72%
2019
100%
100%
100%
100%
N/A
93%
91%
91%
95%
95%
95%
95%
95%
N/A
2020
2019
0%
0%
0%
0%
0%
23%
1%
23%
16%
15%
15%
15%
15%
28%
0%
0%
0%
0%
N/A
7%
9%
9%
5%
5%
5%
5%
5%
N/A
(1) Appointed on 20 January 2020 (2) Appointed on 13 January 2020 (3) Ceased on 21 November 2019
(4) Appointed on 3 February 2020
No key management personnel appointed during the period received a payment as part of his or her consideration for agreeing to
hold the position.
MMA Offshore Limited 41
Bonus and Share-based payments granted as compensation for the current financial year
Neptune acquisition.
(1) Assets means the Company’s vessels and the relevant operating assets of Neptune Marine Services Limited acquired by the Company under the
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
2020 financial year.
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 and other
key management personnel (FY2020 LTI Plan).
Each right under the FY2020 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 FY2020 LTI Plan. The rights carry neither rights to dividends nor voting
rights. Please refer to the table below for details of the performance criteria for the rights granted during the 2020 financial year
under the FY2020 LTI Plan.
The table below sets out the relevant performance criteria for the performance rights granted to the Managing Director and other
executive key management personnel during the 2020 financial year:
Performance Criteria
FY2022 EBITDA/
Assets(1)
Performance
Period
Beginning 1 July
2019 and ending
30 June 2022
Percentage
of LTI subject to
Performance Criteria
Performance Criteria Targets
50%
0% vesting if FY2022 EBITDA /
Assets is below 10%
Percentage
of Performance Rights
which vest if Target met
100%
Beginning 1 July
2019 and ending
30 June 2022
Company’s Total
Shareholder Return
(TSR)(2) percentile
ranking over the
Performance Period
relative to a selected
Peer Group(3)
50% vesting if FY2022 EBITDA /
Assets is above 10%
Pro-rata vesting (on a straight-line
basis) if FY2022 EBITDA /
Assets is between 10% and 15%
100% vesting if FY2022 EBITDA /
Assets of 15% is achieved
50%
0% vesting if Company’s TSR is
below 50th percentile
100%
50% vesting if Company’s TSR is
equal to 50th percentile
Pro-rata vesting (on a straight-line
basis) if Company TSR is between
50th and 75th percentile
100% vesting if Company’s TSR
is equal to or greater than 75th
percentile
(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.
Notwithstanding that the Performance Criteria targets in respect of TSR may be met, if the TSR is negative over the Performance Period, the Board
has the absolute discretion to decide if any of those Performance Rights vest.
(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), Austal Limited (ASX:ASB), Bingo Industries limited
(ASX:BIN), Brambles Limited ASX:BXB), CIMIC Group Limited (ASX:CIM), Cleanaway Waste Management Limited (ASX:CWY), Downer EDI
Limited (ASX:DOW), Emeco Holdings Limited (ASX:EHL), GWA Group Limited (ASX:GWA), IPH Limited (ASX:IPH), McMillan Shakespeare Limited
(ASX:MMS), Monadelphous Group Limited (ASX:MND), Nearmap Ltd (ASX:NEA), NRW Holdings Ltd (ASX:NWH), Qantas Airways Limited
(ASX:QAN), Qube Holdings Limited (ASX:QUB), Reliance Worldwide Corporation Limited (ASX:RWC), SEEK Limited (ASX:SEK), Service Stream
Limited (ASX:SSM), 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 issued
Number issued
Grant date
Vesting date
(1) 16 Nov 2018 (a)
10,625,634
19 Oct 2018
1 Jul 2021
(2) 28 Nov 2018 (a)
2,581,441
21 Nov 2018
1 Jul 2021
(3) 8 Jun 2020 (b)
18,469,539
29 Nov 2019
1 Jul 2022
(4) 8 Jun 2020 (b)
3,511,454
21 Nov 2019
1 Jul 2022
Exercise price
$
Fair value at
grant date
$
0.00
0.00
0.00
0.00
0.11
0.10
0.16
0.16
Expiry date
(for vested
rights)
1 Jul 2023
1 Jul 2023
1 Jul 2024
1 Jul 2024
(a) In accordance with the terms of the MMA Offshore Limited Performance Rights Plan – 2018 (granted 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.
(b) In accordance with the terms of the MMA Offshore Limited Performance Rights Plan – 2019 (granted by the Board on 29 November 2019 and
19 May 2020) and the Managing Director’s Performance Rights Plan – 2019 (as approved by the shareholders at the Company’s Annual General
Meeting on 21 November 2019) the number of performance rights which vest on 1 July 2022 in relation to the Managing Director and other
executive key management personnel will depend on the Company achieving the specified FY2022 EBITDA to Assets ratio (50% 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. The number of performance rights which vest on 1 July 2022 in relation to other Senior Management of the Company (ie excluding the
Managing Director and other executive key management personnel) will depend on the Company achieving the specified FY2022 EBITDA to Assets
Ratio (40% weighting), a Retention Hurdle (20% weighting) and the Total Shareholder Return (40% 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 2022, the vested
performance rights must be exercised within a two-year period from the vesting date (ie by 1 July 2024) 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.
The following share-based payments were granted as compensation to the Managing Director and executive key management
personnel during the current financial year:
Name
Mr D Ross
Mr D Cavanagh
Mr D Roberts
Mr D Thomas
Ms L Buckey
Mr R Furlong
Mr S Edgar
Mr T Radic
Performance
rights issued
29 Nov 19
29 Nov 19
29 Nov 19
29 Nov 19
29 Nov 19
29 Nov 19
29 Nov 19
19 May 20
Number
granted
3,511,454
1,708,000
1,186,112
1,121,724
705,036
1,186,111
1,050,556
1,118,333
Number
vested
% of grant
vested
% of grant
forfeited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
% of
compensation
for the year
consisting of
share based
payment
23%
23%
16%
15%
15%
15%
15%
28%
During the financial year, no performance rights vested in favour of the Managing Director or other key management personnel.
42 Annual Report 2020
MMA Offshore Limited 43
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:
Details of the performance rights held by executive key management personnel are as follows:
1,600,260
3,511,454
Mr D Cavanagh
1,074,831
1,708,000
Balance at
1 July 2019
Granted as
compensation
Vested
Net other
change
(lapsed)
Balance at
30 June 2020
Vested but not
exercisable
Rights vested
during year
504,178
299,688
476,809
461,251
374,332
1,186,112
705,036
1,121,724
1,186,111
1,050,556
-
1,118,333
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,111,714
2,782,831
1,690,290
1,004,724
1,598,533
1,647,362
1,424,888
1,118,333
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
2020
Executives
Mr D Ross
Mr D Roberts
Ms L Buckey
Mr D Thomas
Mr R Furlong
Mr S Edgar
Mr T Radic(1)
2019
Executives
Mr D Ross
941,850
1,600,260
Mr D Cavanagh
-
1,074,831
Mr D Roberts
Ms L Buckey
Mr D Thomas
Mr R Furlong
Mr S Edgar
Mr T Radic(1)
252,126
217,350
242,828
178,794
96,644
-
504,178
299,688
476,809
461,251
374,332
-
(1) Appointed on 3 February 2020
-
-
-
-
-
-
-
-
(941,850)
1,600,260
-
1,074,831
(252,126)
(217,350)
(242,828)
(178,794)
(96,644)
-
504,178
299,688
476,809
461,251
374,332
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
All performance rights issued to key management personnel during the financial year were made in accordance with the terms of
the respective performance rights plans. As discussed above, no performance rights vested during the financial year.
Further details of the share based payment arrangements during the 2020 and 2019 financial years are contained in note 5.2 of the
Financial Statements.
Name
Mr D Ross
Mr D Cavanagh
Mr D Roberts
Mr D Thomas
Ms L Buckey
Mr R Furlong
Mr S Edgar
Mr T Radic
Value of rights
granted at
grant date
$
Value of rights
at vesting date
$
561,833
273,280
189,778
179,476
112,806
189,778
168,089
178,933
-
-
-
-
-
-
-
-
During the financial year, no performance rights (which were previously granted to key management personnel as part of their
remuneration) lapsed.
Key Management Personnel Equity Holdings
Details of the fully paid ordinary shares of the Company held by key management personnel are as follows:
2020
Balance at
1 July 2019
Granted as
compensation
Received on vesting of
Performance Rights
Net other
change
Balance at
30 June 2020
Balance held
nominally
Mr A Edwards
331,360
Mr P Kennan
77,419,000
Ms E Howell
Mr CG Heng
Mr I Macliver(1)
372,058
200,000
-
Mr D Ross
1,531,570
Mr D Cavanagh
Mr D Roberts
Ms L Buckey
Mr D Thomas
Mr R Furlong
Mr S Edgar
Mr T Radic(2)
21,000
-
1,475
-
1,578
24,706
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
331,360
-
104,989,152
182,408,152
182,408,152
-
-
-
-
-
-
-
-
-
-
-
372,058
200,000
-
1,531,570
21,000
-
1,475
-
1,578
24,706
-
-
-
-
-
-
-
-
-
-
-
-
2019
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
Mr A Edwards
231,360
Mr P Kennan
77,419,000
Ms E Howell
Mr CG Heng
Mr I Macliver(1)
247,058
200,000
-
Mr D Ross
1,531,570
Mr D Cavanagh
Mr D Roberts
Ms L Buckey
Mr D Thomas
Mr R Furlong
Mr S Edgar
Mr T Radic(2)
21,000
-
1,475
-
1,578
24,706
-
(1) Appointed on 20 January 2020
(2) Appointed on 3 February 2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
331,360
-
-
77,419,000
77,419,000
125,000
-
-
-
-
-
-
-
-
-
-
372,058
200,000
-
1,531,570
21,000
-
1,475
-
1,578
24,706
-
-
-
-
-
-
-
-
-
-
-
-
44 Annual Report 2020
MMA Offshore Limited 45
Share Trading Restrictions
The Company’s Share Trading Policy requires key management personnel proposing to enter into arrangements that limit the
economic risk of a vested holding in the Company’s securities to first obtain approval from the Chairman of the Board (for directors),
approval of the Chairman of the Audit and Risk Committee (for the Chairman of the Board), and approval from the Managing
Director (for other executives), and subsequently provide details of the dealing within five business days of the dealing taking place.
Any breach of the Share Trading Policy is taken very seriously by the Company and is subject to disciplinary action, including
possible termination of a person’s employment or appointment. A copy of the Company’s Share Trading Policy can be found on the
Corporate Governance page of our website at www.mmaoffshore.com/investor-centre/corporate-governance.
Key Terms of Employment Contracts
As at the date of this report, the Managing Director and other executive key management personnel are all employed by the
Company under an employment contract, none of which are of fixed-term duration.
These employment contracts may be terminated by either party giving the required notice and subject to termination payments as
detailed in the table below:
Name
Mr D Ross
Mr D Cavanagh
Mr D Roberts
Ms L Buckey
Mr D Thomas
Mr R Furlong
Mr S Edgar
Mr T Radic
Termination notice period
Termination benefits payable
6 months
12 weeks
12 weeks
12 weeks
12 weeks
12 weeks
12 weeks
12 weeks
Yes(1)
Yes(2)
No
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 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.
(2) If the employee is made redundant as a result of a material diminution in the nature and level of responsibilities or functions of the employee’s
position including, without limitation, through a change in control of the Company, the employee will be entitled to a payment equal to 0.5 times the
Fixed Annual Remuneration in the relevant year (excluding any short-term incentives or long-term incentives).
Under these employment contracts, the remuneration package for the Managing Director and other key management personnel
consists of an annual base salary and statutory superannuation contributions. Participation in the Company’s incentive schemes is
at the absolute 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
Welshpool, 29 September 2020
AUDITOR’S INDEPENDENCE DECLARATION
Tower 2
Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Deloitte Touche Tohmatsu
ABN 74 490 121 060
The Board of Directors
MMA Offshore Limited
1 Mews Road
Fremantle WA 6160
19 September 2019
The Board of Directors
MMA Offshore Limited
404 Orrong Road
Welshpool WA 6106
Dear Board Members
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
Tower 2
www.deloitte.com.au
Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
29 September 2020
AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo MMMMAA OOffffsshhoorree LLiimmiitteedd
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of MMA Offshore Limited.
Dear Board Members
AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo MMMMAA OOffffsshhoorree LLiimmiitteedd
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:
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of MMA Offshore Limited.
•
the auditor independence requirements of the Corporations Act 2001 in relation to the audit
any applicable code of professional conduct in relation to the audit.
As lead audit partner for the audit of the financial report of MMA Offshore Limited for the year ended
•
30 June 2020, I declare that to the best of my knowledge and belief, there have been no contraventions
of:
Yours faithfully
•
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
• any applicable code of professional conduct in relation to the audit.
DELOITTE TOUCHE TOHMATSU
Yours faithfully
JJoohhnn SSiibbeennaalleerr
Partner
DELOITTE TOUCHE TOHMATSU
Chartered Accountants
JJoohhnn SSiibbeennaalleerr
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
46 Annual Report 2020
Liability limited by a scheme approved under Professional Standards Legislation.
MMA Offshore Limited 47
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
INDEPENDENT AUDITOR’S REPORT
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ttoo tthhee
mmeemmbbeerrss ooff MMMMAA OOffffsshhoorree LLiimmiitteedd
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ttoo tthhee
mmeemmbbeerrss ooff MMMMAA OOffffsshhoorree LLiimmiitteedd
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
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
Opinion
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
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
Opinion
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
We have audited the financial report of MMA Offshore Limited (the “Company”) and its subsidiaries
to the financial statements, including a summary of significant accounting policies and other
(the “Group”) which comprises the consolidated statement of financial position as at 30 June 2020, the
explanatory information, and the directors’ declaration.
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
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
to the financial statements, including a summary of significant accounting policies and other
Act 2001, including:
explanatory information, and the directors’ declaration.
giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial
(i)
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
performance for the year then ended; and
Act 2001, including:
(ii)
(i)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
performance for the year then ended; and
Basis for Opinion
complying with Australian Accounting Standards and the Corporations Regulations 2001.
(ii)
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
Basis for Opinion
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
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
Report section of our report. We are independent of the Group in accordance with the auditor
fulfilled our other ethical responsibilities in accordance with the Code.
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional
We confirm that the independence declaration required by the Corporations Act 2001, which has been
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
given to the directors of the Company,, would be in the same terms if given to the directors as at the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
time of this auditor’s report.
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
We confirm that the independence declaration required by the Corporations Act 2001, which has been
for our opinion.
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
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.
KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy
AAuuddiitt MMaatttteerr
CCaarrrryyiinngg vvaalluuee ooff tthhee VVeesssseell CCaasshh GGeenneerraattiinngg
UUnniitt
As disclosed in Note 3.7, included in the
Group’s consolidated statement of financial
position at 30 June 2020 are non current assets
associated with the Vessel Cash Generating
Unit (“Vessel CGU”) of $361.1 million. The
assessment of the recoverable amount of the
Vessel CGU requires management to exercise
judgement and has been based on a Fair Value
Less Cost of Disposal (“FVLCD”) approach.
The Group appointed external valuers to
perform a valuation of the Vessel CGU.
Key assumptions used in assessing the
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.
CCaarrrryyiinngg vvaalluuee ooff tthhee SSuubbsseeaa CCaasshh GGeenneerraattiinngg
UUnniitt
As disclosed in Note 3.7, included in the
Group’s consolidated statement of financial
position at 30 June 2020 are non current assets
associated with the Subsea Cash Generating
Unit (“Subsea CGU”) of $23.0 million.
Management undertakes an assessment as to
whether any non current asset or cash
generating unit may be impaired at balance
date.
The assessment requires significant judgement
due to assumptions and estimates involved in
preparing a value in use model (‘VIU’) to
estimate recoverable amount, including:
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 3.7 to the financial statements.
•
•
•
•
•
Our procedures included, but were not limited to:
•
• Obtaining management’s impairment assessment
carried out for the Subsea CGU, and assessing the
work performed against the requirements of the
relevant accounting standard;
In conjunction with our internal valuation
specialists we specifically assessed the
recoverable value modelling for the Subsea CGU,
as it demonstrated characteristics suggesting
impairment testing was required, by:
➢
Inquiring of management and the directors
in relation to forecasting assumptions within
the VIU model and agreeing these to
approved budgets;
48 Annual Report 2020
MMA Offshore Limited 49
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
KKeeyy AAuuddiitt MMaatttteerr
Forecast future cash flows; and
-
- Discount rates.
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy
AAuuddiitt MMaatttteerr
➢ Reviewing the mathematical accuracy and
modelling integrity of the value in use model;
➢ Challenging the assumptions contained in
the cash flow forecasts, including the
revenue and expense projections, forecast
gross margins and capital expenditures
including the impact of COVID-19 and the
outlook for easing of restrictions in relevant
regions; and
➢ Performing sensitivity analysis on key
assumptions within the model, including the
expected revenues, margins, growth rates
and discount rate.
•
Assessing the appropriateness of the disclosures
in Note 3.7 to the financial statements.
CCaarrrryyiinngg vvaalluuee ooff aasssseettss hheelldd ffoorr ssaallee
As disclosed in note 3.4 the Group had classified
certain non-core vessels as assets held for sale.
Our procedures included, but were not limited to:
The assessment of the recoverable amount of
the non-core assets held for sale requires
management to exercise judgement. A market
based approach has been used, reflecting the
value which could be expected to be realised
through sales executed in the period to 30 June
2021.
In assessing the recoverable amount of these
non-core vessels, the Group has used internal
management valuations incorporating existing
industry knowledge
including actual sales
achieved during the period, current discussions
with prospective purchasers and market sales of
similar vessels.
RReeccoovveerraabbiilliittyy ooff ttrraaddee rreecceeiivvaabblleess
As disclosed in Note 3.2, the carrying value of
trade receivables is $52.4 million, net of an
allowance for expected credit loss of $22.4
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 non-
core vessels;
Evaluating and challenging management’s
determination of the carrying value through;
Comparing actual market sale prices of similar
vessels sold in the period to 30 June 2020 and up
to the date of the financial statements;
Evaluating current discussions and/or
negotiations held with prospective purchasers in
respect of non-core vessels;
Evaluated managements ability to forecast
expected carrying value through previously
executed fleet sales; and
Assessing the appropriateness of the related
disclosures in Note 3.7 to the financial statements.
•
•
•
•
•
Our procedures included, but were not limited to:
• 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
KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy
AAuuddiitt MMaatttteerr
future conditions that may impact expected
customer receipts; and
Assessing the appropriateness of the disclosures
in Note 3.2 to the financial statements.
•
AAccqquuiissiittiioonn ooff NNeeppttuunnee MMaarriinnee SSeerrvviicceess
ssuubbssiiddiiaarriieess ((ssuubbsseeqquueennttllyy rreennaammeedd SSuubbsseeaa
SSeerrvviicceess))
As disclosed in Note 3.13 the Group completed
the acquisition of Subsea Services on 7
November 2019 for net purchase consideration
of $19.7 million.
Management has completed the process to
allocate the purchase price to identifiable
assets, liabilities and separately identifiable
intangible assets as relevant.
This process involved estimation and
judgement in determining the equipment
values, inventory, provisions and discount rate
applied to future cash flow forecasts.
SSyynnddiiccaatteedd FFiinnaanncciinngg FFaacciilliittyy
As disclosed in Note 3.9 the Group had total
loans and borrowings of $273.4 million with
repayments of $7.5 million due on both 31
December 2020 and 30 June 2021. The
syndicated financing facility (SFA) matures and
all remaining amounts are payable on 30
September 2021.
The Group continues to closely manage its
financing arrangements and ongoing liquidity
as disclosed in Note 1 to the financial
statements. This requires the achievement of
EBITDA and cash flow forecasts, which are
subject to variation due to factors which are
outside the control of the Group, to enable the
Group to continue to meet its financial
covenant obligations and maintain its liquidity.
Our procedures included, but were not limited to:
•
•
•
•
•
•
Reading the relevant agreements to understand
the key terms and conditions, and confirming our
understanding of the transaction;
Evaluating management’s process for the
identification of the assets and liabilities acquired;
Evaluating management’s process for the
determination of the fair value of the identifiable
assets and liabilities acquired;
In conjunction with our valuation specialists,
assessing the competence and objectivity of
management’s specialist who valued the
intangible assets;
Challenging the values attributable to equipment,
inventory and provisions recognised in respect of
the acquisition; and
Assessing the appropriateness of the disclosures
in Note 3.13 to the financial statements.
Our procedures included, but were not limited to:
•
•
•
•
Assessing the process undertaken by
management to develop the EBITDA and cash
flow forecasts for the period that is not less than
12 months beyond the date these financial
statements are approved;
Assessing last year’s budget with actual results to
assess budgeting accuracy;
Evaluating performance in the period from year
end to the audit opinion date against the
FY20/FY21 budget;
Evaluating the key assumptions used by the
Group in its EBITDA and cash flow forecasts,
which are subject to variation due to factors
outside the control of the Group including the
impact of COVID-19 and other economic factors,
for a period that is not less than 12 months
50 Annual Report 2020
MMA Offshore Limited 51
KKeeyy AAuuddiitt MMaatttteerr
•
•
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy
AAuuddiitt MMaatttteerr
beyond the date these financial statements are
approved;
Performing a sensitivity analysis to determine the
robustness of the EBITDA and cash flow forecasts
and the impact of changing key assumptions;
Reviewing the terms and conditions under the
SFA;
Assessing the forecast financial covenant
calculations over the period to 30 September 2021
to identify whether potential breaches may occur;
and
Assessing the appropriateness of the disclosures
included in Note 1 and 3.9 to the financial
statements.
•
•
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2020 but does not
include the financial report and our auditor’s report thereon. The annual report is expected to be made
available to us after the date of this auditor's 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
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
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 or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud 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.
Our opinion on the financial report does not cover the other information and we will not express any
form of assurance conclusion thereon.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If,
based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
• Conclude on the appropriateness of the directors’ 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.
• 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.
• 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.
52 Annual Report 2020
MMA Offshore Limited 53
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 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 5.6 to the Financial Statements will, as
a Group, be able to meet any obligations or liabilities to which they are, or may become, liable for by virtue of the deed of cross
guarantee.
Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001 (Cth).
On behalf of the Directors,
Andrew Edwards
Chairman
Welshpool, 29 September 2020
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, actions
taken to eliminate threats or safeguards applied.
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.
RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
Opinion on the Remuneration Report
We have audited the Remuneration Report included in on pages 36 to 46 of the Directors’ Report for
the year ended 30 June 2020.
In our opinion, the Remuneration Report of MMA Offshore Limited, for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance
with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
JJoohhnn SSiibbeennaalleerr
Partner
Chartered Accountants
Perth, 29 September 2020
54 Annual Report 2020
MMA Offshore Limited 55
FINANCIAL
REPORT
2020
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
Basis of Preparation
Going Concern
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 and Cash Equivalents
Trade and Other Receivables
Inventories
Assets Classified as Held for Sale
Property, Plant and Equipment
Right of Use Assets
Impairment of Non-current Assets
Trade and Other Payables
Borrowings
3.10 Lease Liabilities
3.11 Provisions
3.12 Deferred Tax Balances
3.13 Acquisition of Subsidiaries
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
Operating Lease Arrangements
5.10 Contingent Liabilities
5.11 Events After the Reporting Period
5.12 Other Accounting Policies
58
59
60
61
62
62
62
63
64
64
68
69
69
69
70
70
70
71
71
72
73
73
78
78
79
80
81
82
84
84
84
85
86
86
86
87
88
88
89
91
91
95
95
96
96
Additional Securities Exchange Information
98
A FOCUS ON
RELIABILITY
56 Annual Report 2020
MMA Offshore Limited 57
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
Note
2.1
2.2
2.1
2.3
Revenue
Finance income
Other income/(expenses)
Vessel expenses
Subsea expenses
Project Logistics expenses
Administration expenses
Impairment charges
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
Owners of the parent
Non-controlling interest
Total comprehensive loss attributable to owners of the Company
Owners of the parent
Non-controlling interest
2020
$’000
2019
$’000
273,011
239,259
823
4,474
1,278
(556)
(220,298)
(238,951)
(41,872)
(18,459)
(15,494)
(57,723)
(18,119)
(93,657)
(530)
(94,187)
7,518
(3,247)
4,271
(89,916)
(93,977)
(210)
(94,187)
(89,706)
(210)
(89,916)
-
-
(7,402)
(10,361)
(19,146)
(35,879)
(1,494)
(37,373)
20,742
(8,886)
11,856
(25,517)
(37,373)
-
(37,373)
(25,517)
-
(25,517)
Loss per share
Basic
Cents Per Share Cents Per Share
2.4
(10.44)
(4.36)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
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
Right-of-use assets
Intangibles
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Unearned revenue
Borrowings
Lease liabilities
Provisions
Current tax liabilities
Customer deposits
Total Current Liabilities
Non-Current Liabilities
Trade payables
Borrowings
Lease liabilities
Provisions
Deferred tax liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Equity attributable to owners of the company
Non-controlling interest
Total Equity
Note
3.1
3.2
3.3
3.4
3.5
3.6
3.13
3.8
3.9
3.10
3.11
3.9
3.10
3.11
3.12
4.1
4.2
2020
$’000
2019
$’000
86,637
52,429
2,216
2,822
41,961
186,065
373,530
10,117
108
383,755
569,820
41,879
538
12,739
3,729
15,815
2,684
-
77,384
-
257,838
7,164
256
57
265,315
342,699
227,121
70,155
63,275
1,974
1,149
-
136,553
482,322
-
-
482,322
618,875
30,481
831
2,743
-
11,354
1,806
160
47,375
5,296
262,807
-
152
-
268,255
315,630
303,245
667,251
139,305
654,735
133,777
(579,244)
(485,267)
227,312
303,245
(191)
-
227,121
303,245
58 Annual Report 2020
MMA Offshore Limited 59
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
-
-
-
-
-
-
-
-
-
12,516
1,257
-
-
12,516
1,257
Cash Flows from Investing Activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
-
19
19
Deposit for investment in business combination
Payment for acquisition of subsidiary, net of cash acquired
3.13
Employee
Equity
Settled
Benefits
Reserve
$’000
Issued
Capital
$’000
Foreign
Currency
Translation
Reserve
$’000
Hedging
Reserve
$’000
Accumulated
Losses
$’000
Equity
Holders
of Parent
$’000
Non-
controlling
Interest
$’000
Total
$’000
Year Ended
30 June 2020
Balance at 1 July 2019
654,735
621
(66,176)
199,332
(485,267)
303,245
-
303,245
-
-
(93,977)
(93,977)
(210)
(94,187)
(3,247)
7,518
-
4,271
-
4,271
(3,247)
7,518
(93,977)
(89,706)
(210)
(89,916)
Loss for the year
Other comprehensive
income/(loss) for the year
Total Comprehensive
Income/(Loss) for the
Year
-
-
-
Issue of shares
12,516
-
-
-
-
Recognition of share
based payments
Non-controlling interest
arising on the acquisition
-
-
1,257
-
Balance at 30 June 2020
667,251
1,878
(69,423)
206,850
(579,244)
227,312
(191)
227,121
Employee
Equity
Settled
Benefits
Reserve
$’000
Issued
Capital
$’000
Foreign
Currency
Translation
Reserve
$’000
Hedging
Reserve
$’000
Accumulated
Losses
$’000
Equity
Holders of
Parent
$’000
Non-
controlling
Interest
$’000
Year Ended
30 June 2019
Balance at 1 July 2018
654,735
154
(57,290)
178,590
(447,894)
328,295
Loss for the year
Other comprehensive
income/(loss) for the year
Total Comprehensive
Income/(Loss) for the
Year
Recognition of share
based payments
-
-
-
-
-
-
-
-
-
(37,373)
(37,373)
(8,886)
20,742
-
11,856
(8,886)
20,742
(37,373)
(25,517)
467
-
-
-
467
Balance at 30 June 2019
654,735
621
(66,176)
199,332
(485,267)
303,245
-
-
-
-
-
-
Total
$’000
328,295
(37,373)
11,856
(25,517)
467
303,245
Cash Flows from Operating Activities
Receipts from customers
Government grants received
Interest received
Payments to suppliers and employees
Income tax paid
Interest and other costs of finance paid
Net Cash Provided by Operating Activities
3.1
Note
2020
$’000
2019
$’000
285,230
241,305
2,819
823
-
1,278
(234,351)
(202,578)
(207)
(15,853)
38,461
(10,448)
1,414
-
(862)
(9,896)
(955)
(16,895)
22,155
(17,501)
7,491
(5,000)
-
(15,010)
3.9
3.9
(5,805)
(7,256)
-
(5,724)
(11,529)
(9)
-
(7,265)
Net Cash Used in Investing Activities
Cash Flows from Financing Activities
Repayment of borrowings
Financing fees on borrowings
Repayment of lease liabilities
Net Cash Used in Financing Activities
Net increase/(decrease) in cash and cash equivalents
17,036
(120)
Cash and cash equivalents at the beginning of the financial year
70,155
69,648
Effects of exchange rate changes on the balance of cash held in
foreign currencies
(554)
627
Cash and Cash Equivalents at the End of the Financial Year
86,637
70,155
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 2020
MMA Offshore Limited 61
1. General Notes
1. General Notes (continued)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
MMA Offshore Limited (“MMA” or the “Company”) is a for profit, listed public company incorporated in Australia. Its shares are
traded on the Australian Securities Exchange.
1.1 Basis of Preparation
The financial statements have been prepared on the historical cost basis, 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.
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.
1.2 Going Concern
The financial statements have been prepared on the going concern basis, which assumes the continuity of normal
business activity and the realisation of assets and settlement of liabilities in the ordinary course of business.
For the financial year ended 30 June 2020 the Group incurred a loss after tax of $94.2 million (2019: $37.4 million)
including a non-cash impairment charge of $57.7 million (2019: $10.4 million). As at 30 June 2020, net current assets of
$108.7 million (2019: net current assets $89.2 million) included cash of $86.7 million (2019: $70.2 million).
The Group had total loans and borrowings at 30 June 2020 of $273.4 million (30 June 2019: $270.6 million) with
repayments of $7.5 million due on both 31 December 2020 and 30 June 2021. The Group’s syndicated financing
facility (SFA) matures on 30 September 2021. Whilst this maturity date is more than 12 months after the date of signing
this financial report, the Group is currently in discussions with the banking syndicate to renegotiate the terms of the
facility. To date the syndicate has been supportive of the Group, as evidenced by the granting of a waiver in respect of
certain financial covenants, as announced on 17 June 2020. Positive discussions are continuing and an update will be
provided in due course. Based upon discussions to date the directors are confident the facility will be restructured and/
or extended such that the maturity date of the facility will be extended beyond the current due date for repayment of 30
September 2021.
In preparing the financial report the directors have made an assessment of the ability of the Group to continue as
a going concern. The Group has prepared detailed cash flow and EBITDA forecasts modelling the operational
performance, financial results, liquidity and the testing of forecast compliance with financial covenants under the
Group’s SFA.
The directors consider that current and expected liquidity from operating cashflow and cash on hand will be adequate
to enable the Group to meet its debts and obligations as and when they fall due for the twelve months from the date of
issuance of this financial report, subject to the matters described below.
In preparing those forecasts the Group has used best estimate assumptions. The directors have assessed the Group’s
cash flow and EBITDA forecasts based on the expected level of market activity across the Group’s operations taking
into account the impact of COVID-19, levels of contracted work, tendering activity and expected activity levels.
The key assumptions underpinning the cash flow and EBITDA forecasts are subject to variation due to factors which are
outside the control of the Group.
The Group’s ability to meet its ongoing operational and financial obligations, and financial covenants as required under
the SFA for the period of twelve months from the approval of this report are primarily dependent upon:
• Achieving cash flow and EBITDA forecasts including all key underlying assumptions, where EBITDA is defined by
the SFA, for the period through to 30 September 2021;
• No further significant slowdown or ceasing of activity as a result of government-imposed closures or customers
choosing to reduce their exposure across their operations by further delaying projects as a result of COVID-19 and
other economic factors; and
• The ongoing financial support of the Company’s debt providers, including but not limited to the successful
restructuring of amounts owing under the SFA such that the maturity date of the facility will be extended beyond the
current due date for repayment of 30 September 2021.
The directors believe that at the date of approving the Annual Report there are reasonable grounds to believe that the
Group will be successful in respect of the above matters and therefore it is appropriate to prepare the report on the
going concern basis.
1.3 Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the Group’s accounting policies, the Directors are required to make judgements (other than
those involving estimations) that have a significant impact on the amounts recognised and to make estimates and
assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
Critical judgements in applying accounting policies
The following critical judgement, 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 and that have the most
significant effect on the amounts recognised in financial statements.
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
Assets classified as held for sale – refer note 3.4
Useful lives of property, plant and equipment – refer note 3.5
Impairment of non-current assets – refer note 3.7
Provisions – refer note 3.11
62 Annual Report 2020
MMA Offshore Limited 63
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 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. Information
regarding the Group’s operating segments is presented below. The accounting policies of the reportable segments are
the same as the Group’s accounting policies.
Information reported to the Board of Directors (CODM) is focused on the category of services provided through the
Groups operating activities.
Following the completion of acquisitions during the year, the group’s reportable segments are now:
• Vessel Services – provision of specialised offshore support vessels;
2.
Financial Performance (continued)
2.1 Segment Information (continued)
Vessels
Services
2019
$’000
239,259
-
239,259
Revenue
External sales
Inter-segment sales
Total revenue
• Subsea Services – services to companies operating in subsea environments including inspection, maintenance and
Inter-segment sales are charged at prevailing market prices
repair; and
• Project Logistics – project management of large marine spreads and complex marine logistics.
Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment:
Vessel
Services
2020
$’000
228,912
-
228,912
Subsea
Services
2020
$’000
38,092
7,887
45,979
Project
Logistics
2020
$’000
6,007
1,037
7,044
Eliminations
Consolidated
2020
$’000
2020
$’000
-
273,011
(8,924)
(8,924)
-
273,011
Revenue
External sales
Inter-segment sales
Total revenue
Inter-segment sales are charged at prevailing market prices
Result
Segment profit/(loss) before
impairment
Impairment charge
Segment loss after impairment
Finance income
Other income/(expenses)
Administration costs
Finance costs
Loss for the year before
income tax
8,614
(3,780)
(12,452)
(55,797)
(47,183)
(1,926)
(5,706)
-
(12,452)
-
-
-
(7,618)
(57,723)
(65,341)
823
4,474
(15,494)
(18,119)
(93,657)
Subsea
Services
2019
$’000
Project
Logistics
2019
$’000
Eliminations
Consolidated
2019
$’000
2019
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
239,259
-
239,259
308
(10,361)
(10,053)
1,278
(556)
(7,402)
(19,146)
(35,879)
Result
Segment profit before
impairment
Impairment charge
Segment loss after impairment
308
(10,361)
(10,053)
Finance income
Other income/(expenses)
Administration costs
Finance costs
Loss for the year before
income tax
Segment profit/(loss) represents the profit/(loss) earned by the Vessels, Subsea Services and Project Logistics
segments without allocation of finance income, other income and expenses, administration costs, finance costs and
income tax expense. This is the measure reported to the CODM for the purposes of resource allocation and assessment
of segment performance.
Disaggregation of revenue
The Group derives its revenue from contracts with customers for the transfer of goods and services over time and at a
point in time in the following major product lines.
Revenue recognised over time:
Vessel hire
Personnel
Mobilisation/Demobilisation
Equipment hire
Fabrication
Materials
Other
Revenue recognised at a point in time:
Fuel sales
Total
2020
$’000
2019
$’000
200,087
198,615
16,161
14,663
1,810
8,620
2,810
20,108
264,259
-
11,979
-
-
-
10,493
221,086
8,752
273,011
18,173
239,259
64 Annual Report 2020
MMA Offshore Limited 65
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
2.
Financial Performance (continued)
2.
Financial Performance (continued)
2.1 Segment Information (continued)
Revenue from charter of vessels
2.1 Segment Information (continued)
Geographical information
The Group is based in two principal geographical areas – Australia (country of domicile) and Singapore, however, the
Vessel Services fleet is traded around the world as a single fleet and moves between all geographical areas. Subsea
Services and Project Logistics are also provided across a number of geographical areas.
During the year, the Group operated 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
2020
$’000
143,572
129,439
273,011
2019
$’000
159,256
80,003
239,259
2020
$’000
127,868
255,887
383,755
2019
$’000
176,327
305,995
482,322
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.
Information about major customers for continuing operations
Included in revenues there are approximately $41.4 million (2019: $29.2 million) which arose from sales to the Group’s
largest customer, revenues of approximately $34.5 million (2019: $28.4 million) which arose from sales to the Group’s
second largest customer and revenues of approximately $27.8 million (2019: $4.9 million) which arose from sales to the
Group’s third largest customer.
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.
Revenue from subsea services
Revenue from subsea services is derived from providing a variety of services to companies operating in subsea
environments including the inspection, maintenance and repair of facilities and equipment. Revenue is recognised over
time based on the input method by reference to estimates of work completed for each contract.
The Group recognises other 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.
Segment Assets
The following is an analysis of the Group’s assets by reportable segment:
Vessel Services (i)
Subsea Services (i)
Project Logistics
Unallocated assets
Total
2020
$’000
2019
$’000
444,646
539,763
30,963
1,895
92,316
569,820
-
-
79,112
618,875
(i)
Vessel and Subsea Services segment assets include assets held for sale (refer note 3.4)
Other Segment Information
Vessel Services
Subsea Services
Project Logistics
Unallocated assets
Total
Impairment charges
Depreciation and
amortisation
Additions to
non-current assets
2020
$’000
38,940
3,091
1,007
2,754
45,792
2019
$’000
34,766
-
-
553
35,319
2020
$’000
9,639
622
-
187
2019
$’000
10,341
-
-
44
10,448
10,385
In addition to the depreciation charges reported above, the Group also recognised impairment charges (see note 3.7)
in respect of vessels and other assets as set out below:
Vessels Service held for continuing operations
Vessels held for sale
Subsea Services held for sale
Total
2020
$’000
-
55,797
1,926
57,723
2019
$’000
8,254
2,107
-
10,361
66 Annual Report 2020
MMA Offshore Limited 67
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 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 income and expenses:
Government grants (i)
Other gains and losses:
Net foreign exchange losses
Profit on disposal of property, plant and equipment
Profit/(loss) on disposal of assets held for sale
Other
Total
2020
$’000
2019
$’000
3,974
-
(569)
455
589
25
4,474
(402)
57
(211)
-
(556)
(i)
The group has received Government grants in Australia ($3.5 million) and Singapore ($0.5 million) to assist in
dealing with the impact of the COVID-19 pandemic. This support has been accounted for on a ‘gross’ basis with
the income included in ‘Other income and expenses’ in the Statement of Profit & Loss. The related employee
expenses are recorded in their respective operating segment. The company will continue to access Government
grants in Australia until the end of September 2020 at which time eligibility will be reassessed in accordance with
the relevant legislation.
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions
attaching to them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group
recognises as expenses the related costs for which the grants are intended to compensate. Government grants that are
receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial
support to the Group with no future related costs are recognised in profit or loss in the period in which they become
receivable.
Depreciation:
Leasehold buildings and improvements
Vessels
Plant and equipment
Total
Impairment and loss allowance charges:
Loss allowance charge recognised on trade receivables
Impairment charge recognised on vessel services cash generating unit
Impairment charge recognised on subsea services cash generating unit
Employee benefits:
Post-employment benefits:
Defined contribution plans
Share based payments:
Equity settled share based payments
Other employee benefits
Total Employee Benefits
4,389
38,551
2,852
45,792
13,158
55,797
1,926
89
34,218
1,012
35,319
6,462
10,361
-
9,525
9,115
1,257
106,698
117,480
467
97,255
106,837
2.3
Income Taxes
Income tax recognised in profit or loss
Tax expense comprises:
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
2020
$’000
2019
$’000
423
107
530
(93,657)
(28,097)
(801)
26,870
(273)
382
2,117
225
423
107
530
861
633
1,494
(35,879)
(10,764)
(717)
8,552
(273)
160
2,641
1,262
861
633
1,494
The tax rate used for the 2020 and 2019 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
(94,187)
(37,373)
2020
$’000
2019
$’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.
2020
No.’000
2019
No.’000
901,886
858,077
2020
$’000
47,589
2019
$’000
47,589
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have
rendered service entitling them to the contributions.
Adjusted franking account balance
68 Annual Report 2020
MMA Offshore Limited 69
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
3.
Assets and Liabilities
3.1 Cash and cash equivalents
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 of non-current assets
Amortisation of borrowing costs
Gain on sale of property, plant and equipment
(Gain) / Loss on sale of assets held for sale
Unrealised foreign exchange loss
Loss allowance on receivables
Equity settled share based payment
Change in net assets and liabilities:
Decrease in trade and other receivables
Increase in prepayments
Decrease/(increase) in inventories
Increase in current tax balances
Increase in provisions
(Decrease)/increase in trade and other payables
(Decrease)/increase in unearned revenue
Decrease in deferred tax liabilities
Net cash flows Provided by operating activities
3.2 Trade and Other Receivables
Trade receivables
Loss allowance
Other receivables
Total
2020
$’000
86,637
2019
$’000
70,155
(94,187)
(37,373)
45,792
57,723
2,261
(455)
(589)
246
13,158
1,257
11,642
(741)
664
335
2,884
(1,204)
(311)
(14)
38,461
2020
$’000
73,537
(22,373)
1,265
52,429
35,319
10,361
2,258
(57)
211
249
6,454
467
1,513
(60)
(341)
539
890
1,268
457
-
22,155
2019
$’000
61,257
(9,179)
11,197
63,275
The Group has provided for an additional credit loss of $11.9 million during the financial year for a major debtor resulting
in the full amount outstanding being provided for. Whilst MMA holds promissory notes (valued at USD$6.1million) and is
enforcing payment of these in the relevant Execution Courts, the impact of the COVID-19 pandemic (being either court
closures or court delays) is affecting our ability to enforce these court orders and collect the outstanding amounts due
under these promissory notes.
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.
3.
Assets and Liabilities (continued)
3.2 Trade and Other Receivables (continued)
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 2019
Transfer to credit-impaired
Foreign exchange gains and losses
Balance as at 30 June 2020
3.3
Inventories
Fuel – at cost
Consumables
Work in progress
Total
Collectively
Assessed
$’000
Individually
Assessed
$’000
231
59
-
290
8,948
13,099
36
22,083
2020
$’000
1,085
998
133
2,216
Total
$’000
9,179
13,158
36
22,373
2019
$’000
1,834
140
-
1,974
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 of disposal. An impairment loss is recognised for any initial write-
down of the asset to fair value less costs of disposal. Information regarding the assets held for sale in the Statement of
Financial Position is presented below.
At 30 June 2020, the Company resolved to dispose of a number of non-core vessels within the fleet plus certain remote
operated vehicles (ROV) from the Subsea business. Refer to note 3.7 for details of impairments recognised on the
reclassification of these assets.
The carrying value of assets classified as held for sale is as follows:
Vessels
Subsea - ROV Equipment
Total
2020
$’000
41,685
276
41,961
2019
$’000
-
-
-
70 Annual Report 2020
MMA Offshore Limited 71
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
3.
Assets and Liabilities (continued)
3.5 Property, Plant and Equipment
3.
Assets and Liabilities (continued)
3.6 Right of Use Assets
Gross carrying amount:
Balance at 1 July 2018
Additions
Disposals
Net currency exchange differences
Balance at 1 July 2019
Additions
Acquisition of subsidiaries
Disposals
Reclassified as held for sale
Net currency exchange differences
Balance at 30 June 2020
Accumulated depreciation and impairments:
Balance at 1 July 2018
Disposals
Impairment charge
Depreciation expense
Net currency exchange differences
Balance at 1 July 2019
Disposals
Impairment charge
Depreciation expense
Reclassified as held for sale
Net currency exchange differences
Balance at 30 June 2020
Net book value:
As at 30 June 2019
As at 30 June 2020
Buildings and
Improvements
at cost
$’000
Vessels
at cost
$’000
Plant and
Equipment
at cost
$’000
Total
$’000
13,996
952,757
16,465
983,218
-
10,341
44
10,385
(32)
799
-
(392)
(424)
61,406
874
63,079
14,763
1,024,504
16,991 1,056,258
-
9,639
809
1,043
-
11,618
10,448
12,661
(63)
(23,874)
(6,987)
(30,924)
-
(337,981)
(2,457)
(340,438)
996
15,239
350
16,585
16,739
687,527
20,324
724,590
(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)
61
-
23,874
6,620
30,555
(55,797)
(1,926)
(57,723)
(94)
(36,772)
(2,511)
(39,377)
-
296,296
2,181
298,477
(1,073)
(7,769)
(214)
(9,056)
(14,682)
(326,090)
(10,288)
(351,060)
1,187
2,057
478,582
361,437
2,553
482,322
10,036
373,530
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.
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.
Balance at 1 July 2019
Additions
Acquisition of subsidiaries
Balance at 30 June 2020
Accumulated depreciation:
Depreciation expense
Balance at 30 June 2020
Carrying amount:
As at 30 June 2020
Leased
Buildings and
Improvements
$’000
Vessels
$’000
Plant and
Equipment
$’000
5,002
795
264
1,236
8,093
-
441
39
662
Total
$’000
6,238
1,539
8,755
13,359
2,031
1,142
16,532
(4,295)
(1,779)
(4,295)
(1,779)
(341)
(341)
(6,415)
(6,415)
9,064
252
801
10,117
The Group leases several assets including:
• head office premises at Welshpool, Australia which expires 30 April 2025, with an option to extend two five-year
terms;
•
two vessels (2019: two) under bare boat charter agreement with an average lease term of 27 months; and
• various items of plant and equipment with an average lease term of five years.
Amounts recognised in profit and loss
Depreciation expense on right-of-use assets
Interest expense on lease liabilities
Income from sub-leasing right-of-use assets
3.7
Impairment of Non-Current Assets
Impairment of Non-Current Assets
2020
$’000
6,415
600
68
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.
Impairment testing
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.
72 Annual Report 2020
MMA Offshore Limited 73
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
3.
Assets and Liabilities (continued)
3.
Assets and Liabilities (continued)
3.7
Impairment of Non-Current Assets (continued)
3.7
Impairment of Non-Current Assets (continued)
The Group has identified the following indicators of impairment at 30 June 2020:
•
the carrying amount of the net assets of the Group is greater than the Company’s market capitalisation; and
• challenging market conditions in both Australia and internationally as the impact of the COVID pandemic and lower
oil prices is felt across the industry.
As a result, the Group assessed the recoverable amounts of the Vessels, Subsea and Project Logistics Cash-Generating
Units (‘CGU’).
The assessment resulted in the following impairment charges included in profit or loss:
Segment/CGU
Class of asset
Method
Vessels
Vessels
Subsea
Subsea
Property, Plant & Equipment
FVLCOD
Assets classified as held for sale
FVLCOD
Property, Plant & Equipment
ViU
Assets classified as held for sale
FVLCOD
Project Logistics
Property, Plant & Equipment
ViU
Total
Impairment charge
2020
$’000
-
55,797
-
1,926
-
57,723
2019
$’000
8,254
2,107
-
-
-
10,361
The inputs used in deriving the recoverable amount of each CGU is categorised in accordance within the following
levels of the fair value hierarchy:
CGU
Vessels
Continuing operations
Held for sale
Subsea
Continuing operations
Held for sale
Project Logistics
Level 3(i)
$’000
361,073
41,685
23,028
276
1,030
Recoverable
Amount
$’000
361,073
41,685
23,028
276
1,030
(i)
Level 3 inputs are unobservable inputs used to measure fair value. In our Vessels 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.
In our Subsea and Project Logistics calculations, the inputs are based on unobservable market data and internal
estimates and assumptions resulting in the classification as Level 3.
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.
Industry Conditions
This financial year has seen a decline in overall market conditions with two major factors contributing:
1. COVID-19; and
2. Oil Price.
Firstly, the impact of the COVID-19 pandemic has created and continues to create uncertainty in world markets and the
economy broadly. In our industry specifically, the impact has led to our customers delaying and or cancelling projects
resulting in a reduction in revenue. In addition, the logistics of managing and crewing vessels and projects around
the globe has become more difficult due to various travel and movement restrictions. Please refer to the Review of
Operations for a more detailed summary of the impact.
Secondly, there was a sharp decline in the oil price in March 2020 as a result of the oil price war between Saudi
Arabia and Russia. At a time when the industry was showing signs of improvement, this created further instability and
uncertainty in the industry. We note however that the subsequent deal in May/June to reduce production did result in a
partial recovery of the oil price which has recently stabilised.
Vessels
As disclosed in note 3.4, a group of non-core vessels in the fleet were classified as being held for sale as at 30 June
2020. 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.
Vessels - 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 2019 impairment assessment, the Company used a discount of 17.5%. The Board have increased this discount to
19.6% for the current period. This specific rate has been used as it falls within the lower end of the range specified by
the independent valuer. The Company considers this appropriate based on the removal of the vessels held for sale from
the continuing fleet resulting in the remaining asset base being a higher quality and forms the basis for this assessment,
while also resulting in a nil impairment.
The following factors were taken into account in determining this value:
•
•
•
the movement in the oil price during the period;
the impact of the COVID-19 pandemic;
the decision to dispose of the vessels classified as held for sale, results in the remaining fleet being higher value
vessels as a result of their age, specifications and capabilities. The demand for these vessels is expected to remain
stronger; and
• acknowledging the impact of the significant vessel tonnage in the industry.
Key assumptions and sensitivity
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
an experienced and qualified valuer to perform valuations. Estimates have also been made on the discount to the
independent vessel valuation to reflect the amount which would be achieved if the fleet was disposed of in one single
transaction, plus the selling costs associated with the sale.
The following provides information on the assumptions made in determining the fair value of the vessels, together with
a sensitivity analysis showing the potential impact on the vessel carrying value based on the movement (increase or
decrease) in the assumption:
74 Annual Report 2020
MMA Offshore Limited 75
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 3.
Assets and Liabilities (continued)
3.
Assets and Liabilities (continued)
3.7
Impairment of Non-Current Assets (continued)
Assumption
En bloc discount
Selling costs
Vessels - Held for Sale
Sensitivity
movement
2.5%
0.5%
Change in
carrying value
$’000
11,231
1,834
Rate used
19.6%
2.0%
The recoverable amount of the non-core vessels was determined using a market based approach, reflecting the value
which could be expected to be realised through an accelerated sale program.
In assessing the fair value of the non-core vessels, the Company has taken into consideration the following factors:
•
•
•
•
the current market values assessed by the independent specialist marine consultancy and broking company;
the recent market evidence of deemed distressed sales of vessels of similar age and classification;
the forecast costs the Company would incur in holding the respective vessels; and
the accelerated timing in which the Company wants to complete the sales.
The price that would be expected to be received in these circumstances for these non-core vessels would be less than
if sold in an orderly transaction with no time restrictions to complete the sale.
3.7
Impairment of Non-Current Assets (continued)
Key assumptions and sensitivity
The recoverable value of the Subsea assets in the current year was assessed using a ViU approach.
The estimation of future cashflows has been prepared based on approved group budgets with estimates and
assumptions regarding future revenue growth rates, operating margins and discount rates.
The following provides information on the assumptions made in determining the recoverable value of the assets,
together with a sensitivity analysis showing the potential impact on the carrying value based on the movement (increase
or decrease) in the relevant estimate or assumption.
Assumption
Discount rate
Terminal year growth rate
Rate used
10.6%
2.0%
Sensitivity
movement
+0.5%
-0.5%
+0.5%
-0.5%
Increase/(Decrease)
in recoverable value
$’000
(1,892)
2,126
1,217
(1,084)
Further, assuming achievement of FY21 budgeted performance, unless an annual average revenue increase of 5% p.a
was achieved over the remaining balance of the 5 year period to 30 June 2025, then the carrying cost and value in use
of the relevant assets may need to be revisited.
Key assumptions and sensitivity
Subsea - Held for Sale
The FVLCOD method requires an estimate of the current market value of the vessels and costs that would be associated
with a disposal of the assets. In estimating the current market value of the vessels and the value to be achieved in an
accelerated sale, estimates have been made about the fair value to be realised. If the value to be realised was 5%
higher or lower then the impairment on these vessels would decrease or increase by $2.2 million.
Subsea
As disclosed in note 3.4, items of plant & equipment from the Subsea CGU were classified as being held for sale as at
30 June 2020. This classification has resulted in two separate recoverable value assessments, being for the ongoing
business and the plant & equipment that is held for sale.
Subsea - Continuing Operations
To assess the recoverable amount of the Subsea CGU, a ViU assessment was performed using five year cash flows and
a terminal value.
In determining the forecast revenues and operating expenses, consideration has been given to the following:
• current and potential new contracts for the Subsea business;
• current and expected tendering activities;
• expected Subsea services activity in the region;
• cost of running the business including labour and overheads;
• project work has been budgeted by applying estimated gross margins, based on historical results, to the estimated
revenues of projects; and
•
in assessing future revenues, potential projects are identified with estimates of their total revenue. A likelihood of
success % is then applied to the revenue to reflect a risk weighted likely revenue amount.
A discount rate of 10.6% has been used for ViU assessments.
In the budget approved by the Board, forecast revenues have been decreased for the FY21 year to reflect the
continuing impact of the COVID-19 pandemic and decline in the oil price during the second half of the FY20 year. In
FY22 and FY23, revenues are budgeted to increase on the assumption of an increase in activity in these years.
The recoverable amount of the Subsea equipment identified for sale 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 subsea equipment, the Company has taken into consideration the following factors:
•
the Current Market Values assessed through review of industry publications;
• consideration of the condition of our ROV’s in comparison to advertised items;
•
the accelerated timing in which the Company wants to complete the sales; and
• current offers that have been received for particular assets.
The price that would be expected to be received in these circumstances for these items would be less than if sold in an
orderly transaction with no time restrictions to complete the sale.
Key assumptions and sensitivity
The FVLCOD method requires an estimate of the current market value of the subsea equipment and costs that would be
associated with a disposal of the assets. In estimating the current market value of the subsea equipment and the value
to be achieved in an accelerated sale, estimates have been made about the fair value to be realised. If the value to be
realised was 5% higher or lower then the impairment on these subsea equipment would decrease or increase by less
than $0.1 million.
Project Logistics
To assess the recoverable amount of the Project Logistics CGU, a ViU assessment was performed using five year cash
flows and a terminal value.
In determining the forecast revenues and operating expenses, consideration has been given to the following:
• current and potential new contracts for the Project Logistics business;
• current and expected tendering activities;
• expected Project Logistics services activity in the region;
• cost of running the business including labour and overheads;
• project work has been budgeted by applying estimated gross margins, based on historical results to the estimated
revenues of projects; and
•
in assessing future revenues, potential projects are identified with estimates of their total revenue. A likelihood of
success % is then applied to the revenue to reflect a risk weighted likely revenue amount.
A discount rate of 10.6% has been used for ViU assessments.
76 Annual Report 2020
MMA Offshore Limited 77
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 3.
Assets and Liabilities (continued)
3.8 Trade and Other Payables
Trade payables
Other payables and accruals
Goods and services tax payable
Total
2020
$’000
14,447
26,416
1,016
41,879
2019
$’000
8,608
20,563
1,310
30,481
The average credit period on purchases of all goods is 30 days. The Group monitors payments to ensure that all
payables are paid within the credit time frame.
3.9 Borrowings
Secured – at amortised cost
Current
Hire purchase liability
Bank loans(i)
Unamortised loan fees(ii)
Total
Non-Current
Bank loans(i)
Unamortised loan fees(ii)
Total
2020
$’000
2019
$’000
-
15,000
(2,261)
12,739
258,404
(566)
257,838
4
5,000
(2,261)
2,743
265,634
(2,827)
262,807
Summary of borrowing arrangements:
(i)
The amortisation profile of the facility is:
• $7.5 million by 31 December 2020;
• $7.5 million by 30 June 2021; and
• The balance is to be repaid on maturity at 30 September 2021.
The facility and the respective amounts outstanding at 30 June 2020, comprises an AUD component (A$101.3
million, 2019: A$99.7 million) and a USD component (USD118.6 million, 2019: USD120.1 million).
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 4.17% at 30 June 2020 (2019: 5.99%).
(ii)
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
There is no re-draw available on the existing facilities.
2020
$’000
2019
$’000
273,404
270,634
-
-
273,404
270,634
3.
Assets and Liabilities (continued)
3.9 Borrowings (continued)
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.
2020
Balance at 1 July 2019
Repayment of borrowings
Non-cash foreign exchange movement
Capitalisation of payment-in-kind interest
(from 2017)
Unamortised loan fees
Balance at 30 June 2020
2019
Balance at 1 July 2018
Repayment of borrowings
Non-cash foreign exchange movement
Unamortised loan fees
Balance at 30 June 2019
Hire purchase
liability
$’000
Bank loans
$’000
Unamortised
loan fees
$’000
Total
$’000
4
(4)
-
-
-
-
10
(6)
-
-
4
270,634
(5,088)
265,550
(5,801)
3,243
5,328
-
273,404
-
-
-
2,261
(2,827)
(5,805)
3,243
5,328
2,261
270,577
269,001
(7,339)
261,672
(7,252)
8,885
-
270,634
(9)
-
2,260
(5,088)
(7,267)
8,885
2,260
265,550
3.10 Lease liabilities
Balance at 1 July 2019
Additions
Repayments
Interest expense
Acquisition of subsidiaries
Net currency exchange differences
Balance at 30 June 2020
Current
Non-current
Total
Maturity analysis:
Year 1
Year 2
Year 3
Year 4
Year 5
Less: unearned interest
2020
$’000
6,238
1,539
(6,324)
600
8,842
(2)
10,893
3,729
7,164
10,893
4,224
3,231
1,610
1,607
1,382
12,054
(1,161)
10,893
78 Annual Report 2020
MMA Offshore Limited 79
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
3.
Assets and Liabilities (continued)
3.
Assets and Liabilities (continued)
3.11 Provisions
Current
Ongoing legal claims
Employee benefits – annual leave
Employee benefits – long service leave
Total
Non-current
2020
$’000
2019
$’000
5,602
5,112
5,101
15,815
-
6,852
4,502
11,354
3.12 Deferred Tax Balances
Deferred tax assets/(liabilities) arise from the following:
Opening
Balance
Recognised in
Profit or Loss
Recognised
in Equity
Acquisition of
Subsidiary
2020
$’000
$’000
$’000
$’000
Gross deferred tax liabilities:
Closing
Balance
$’000
Property, plant and equipment
(19,729)
(4,515)
(375)
(147)
(24,766)
Employee benefits – long service leave
256
152
The Group has various ongoing legal claims relating to contractual disputes. As these claims are currently before the
Courts, the disclosure of specific information relating to them could prejudice the position of the Group in those hearings
and as such, this specific information is not provided. The total impact on profit and loss statement this financial year
is $9.0 million (2019: nil) which includes provisions raised plus removal of other balances associated with the contracts
and legal fees.
Significant Estimates
The Group has raised a net provision for $5.6 million to provide for the possible outcomes relating to these legal claims.
These amounts have been estimated by the Directors as a possible outflow that may be required to settle these legal
claims. As these legal claims have not been finalised as yet, this provision is only an estimate and the actual liability
may differ depending on the outcome of these hearings.
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.
Inventory
Receivables
Other
Gross deferred tax assets:
Provisions
Unused tax losses and credits
Other
Total
2019
(312)
(118)
-
195
115
121
-
-
-
-
-
-
(117)
(3)
121
(20,159)
(4,084)
(375)
(147)
(24,765)
40
19,440
679
20,159
-
140
4,477
(533)
4,084
-
-
417
(42)
375
-
Gross deferred tax liabilities:
Property, plant and equipment
(13,034)
(5,986)
(709)
Inventory
Receivables
Other
Gross deferred tax assets:
Provisions
Unused tax losses and credits
Other
Total
(183)
(88)
(91)
(129)
(30)
91
-
-
-
(13,396)
(6,054)
(709)
170
13,036
190
13,396
-
(130)
5,695
489
6,054
-
-
709
-
709
-
-
130
(40)
90
(57)
-
-
-
-
-
-
-
-
-
-
180
24,464
64
24,708
(57)
(19,729)
(312)
(118)
-
(20,159)
40
19,440
679
20,159
-
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.
80 Annual Report 2020
MMA Offshore Limited 81
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 3.
Assets and Liabilities (continued)
3.12 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
2020
$’000
2019
$’000
85,136
19,748
4,369
60,693
19,320
3,784
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 Limited and each of the entities in
the tax-consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on the current
tax liability or current tax asset of the entity. Such amounts are reflected in amounts receivable from or payable to other
entities in the tax-consolidated group.
The tax sharing agreement entered into between members of the tax-consolidated group provides for the determination
of the allocation of income tax liabilities between the entities should the head entity default on its tax payment
obligations or if any entity should leave the tax consolidated group. The effect of the tax sharing agreement is that each
member’s liability for tax payable by the tax consolidated group is limited to the amount payable to the head entity under
the tax funding arrangement.
3.13 Acquisition of Subsidiaries
Neptune Marine Services
On 7 November 2019, the Group acquired 100% of the Neptune Marine Services group key operating subsidiaries. The
acquisition allows the Group to combine its existing high-quality vessels with the Neptune business subsea expertise
enabling us to deliver a comprehensive suite of subsea services for our clients.
Consideration Transferred
Issued capital (67,655,000 shares) in MMA Offshore Ltd
Cash (deposit paid June 2019)
Working capital adjustment
$’000
12,516
5,000
2,152
19,668
The number and fair value of the ordinary shares issued as part of the consideration paid was determined based on a
maximum transaction value of $0.20 calculated based on the Volume Weighted Average Price for the 30 days prior to
completion. The market value of the shares at completion date was $0.185.
Included in the transaction agreement was contingent consideration to a maximum of $0.5 million subject to certain
events taking place prior to 30 June 2020. The actual amount to be paid under this agreement was $0.1million to date.
Acquisition costs totalling $1.1 million have been excluded from the consideration transferred and have been
recognised as an expense in profit or loss in the half year, within the ‘Administration expenses’ line item.
3.
Assets and Liabilities (continued)
3.13 Acquisition of Subsidiaries (continued)
Assets acquired and liabilities assumed at the date of acquisition
Current assets
Cash
Trade and other receivables
Inventories
Prepayments
Non-current assets
Property, plant and equipment
Right-of-use assets
Current liabilities
Trade and other payables
Lease liabilities
Employee entitlements
Current tax liabilities
Non-current liabilities
Lease liabilities
Other payables
Deferred tax liabilities
$’000
1,239
17,582
884
955
12,661
8,755
(11,294)
(1,882)
(1,529)
(489)
(6,960)
(183)
(71)
19,668
The gross contractual value of receivables acquired was $17.7 million, with the full fair value amount expected to be
collected.
The acquisition contributed $38.1 million revenue and a loss of $5.7 million (after impairment of $1.9 million) to the
results of the Group during the period between date of acquisition and the reporting date.
If the acquisition had been completed on the first day of the financial year, Group revenue would have been $300
million, and the Group loss would have been $93 million.
The $5.0 million cash consideration was paid as a deposit on the transaction last financial year. On 28 January 2020,
the working capital adjustment of $2.0 million was paid.
MMA Global Projects Pte Ltd
On 4 December 2019, the Group acquired an 80% interest in a project logistics business based in Singapore. The
acquisition provides potential for the Group to expand its service offering in the management of large scale and
complex projects including marine spreads, logistics to greenfields sites and integrated marine logistics.
Consideration transferred and liabilities acquired
Cash
Issued capital in MMA Global Project Logistics Pte Ltd
Total consideration
Net liabilities acquired
Goodwill on acquisition
$’000
75
19
94
14
108
Included in the transaction agreement is a contingent consideration arrangement to pay the non-controlling interests
up to an additional $0.8 million Singapore Dollars, comprising cash of $0.6 million and equity of $0.2 million, on
achievement of gross margins in future years. As the business was in the early stage of development with no assets or
contracts at date of acquisition, the Group has estimated the fair value of this consideration to be nil.
The acquisition contributed $2.3 million revenue and a loss of $0.5 million to the results of the Group during the period
between date of acquisition and the reporting date. If the acquisition had been completed on the first day of the
financial year, Group revenue and Group loss’s would have been adjusted by the same amounts.
82 Annual Report 2020
MMA Offshore Limited 83
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
4.
Capital Structure
4.1
Issued Capital
Fully Paid Ordinary Shares
Balance at beginning of financial year
Issue of shares in acquisition of subsidiaries
Balance at end of financial year
2020
No.’000
858,077
67,655
925,732
2020
$’000
654,735
12,516
667,251
2019
No.’000
858,077
-
2019
$’000
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 2020, executives and employees held rights over 35,188,068 ordinary shares (2019: 13,207,075).
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
2020
$’000
1,878
(69,423)
206,850
139,305
2019
$’000
621
(66,176)
199,332
133,777
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.
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 2019.
The capital structure of the Group consists of net debt (borrowings as detailed in note 3.9 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. 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
2020
$’000
273,404
(86,637)
186,767
415,491
45%
2019
$’000
270,634
(70,155)
200,479
482,322
42%
(i)
(ii)
Debt is defined as gross long and short-term borrowings, as detailed in note 3.9.
Property, plant and equipment includes all fixed assets owned by the group, as detailed in note 3.4 and 3.5.
84 Annual Report 2020
MMA Offshore Limited 85
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 5. Other Notes
5.1 Commitments for Expenditure
Capital expenditure commitments
Plant and Equipment
Vessels
Total
5.2 Share Based Payments
Share rights incentive plans
2020
$’000
-
1,136
1,136
2019
$’000
15
2,058
2,073
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 16 November 2018
10,625,634
19 Oct 2018
1 Jul 2023
(2) Issued 28 November 2018
2,581,441
21 Nov 2018
1 Jul 2023
(3) Issued 8 June 2020
18,469.539
29 Nov 2019
1 Jul 2024
(4) Issued 8 June 2020
3,511,454
21 Nov 2019
1 Jul 2024
Exercise
price
$
Fair Value at
Grant date
$
0.00
0.00
0.00
0.00
0.11
0.10
0.16
0.16
Performance Rights issued during the 2019 financial year as part of Series 1 and 2 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 three year vesting
period.
Performance Rights issued during the 2020 financial year as part of Series 3 and 4 to executives and employees are
subject to achievement of a number of vesting targets.
For Key Management Personnel, 50% of the rights are subject to achieving a return on assets of greater than 10% at
the end of the three year vesting period and the remaining 50% are subject to the Company’s Total Shareholder Return
percentile ranking relative to a selected Peer Group over the three year vesting period.
For other employees, 40% of the rights are subject to achieving a return on assets of greater than 10% at the end of the
three year vesting period, 20% relate to a retention hurdle with the participant required to be employed the Group at
the end of the three year vesting period and the remaining 40% are subject to the Company’s Total Shareholder Return
percentile ranking relative to a selected Peer Group over the three year vesting period.
Please refer to the Remuneration Report on pages 36 to 46 for further details of Performance Rights issued to
executives and employees.
5. Other Notes (continued)
5.2 Share Based Payments (continued)
Fair value of share rights granted during the year
The weighted average fair value of rights issued during the year are detailed in the above table. The rights were valued
using the Monte Carlo simulation model.
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.
Movement in share rights during the period
The following reconciles the outstanding share rights at the beginning and end of the financial year:
2020
2019
Employee Share Right Plans
Weighted
average
exercise price
$
Number of
rights
Balance at the beginning of the financial year
13,207,075
Issued during the financial year
Expired during the financial year
21,980,993
-
Balance at the end of the financial year
35,188,068
Exercisable at end of the financial year
-
0.00
0.00
0.00
0.00
0.00
Share rights outstanding at the end of the year
The following share rights were outstanding at the end of the financial year:
Weighted
average
exercise price
$
0.00
0.00
0.00
0.00
0.00
Number of
rights
9,555,660
13,207,075
(9,555,660)
13,207,075
-
Series
(1) Issued 16 November 2018
(2) Issued 2 December 2018
(3) Issued 8 June 2020
(4) Issued 8 June 2020
Total
Number
10,625,634
2,581,441
18,469.539
3,511,454
35,188,068
Exercise price
$
0.00
0.00
0.00
0.00
0.00
Expiry Date
1 July 2023
1 July 2023
1 July 2024
1 July 2024
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
2020
$
2019
$
3,443,131
3,750,486
194,007
43,936
962,832
663,361
182,373
56,293
-
255,071
5,307,267
4,244,223
86 Annual Report 2020
MMA Offshore Limited 87
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 5. Other Notes (continued)
5.4 Related Party Transactions
5. Other Notes (continued)
5.6 Subsidiaries
The immediate parent and ultimate controlling party of the Group is MMA Offshore Limited.
The Group’s material subsidiaries at the end of the reporting period are as follows:
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 (2019: Nil)
Loans to related parties
There were no loans to related parties during the year. A short-term loan to a member of its key management personnel
was forgiven in the prior year.
Other related party transactions
Other transactions that occurred during the financial year between entities in the wholly owned Group were the charter of
vessels and subsea services. These are all provided at commercial rates.
5.5 Remuneration of Auditors
Deloitte and related network firms
Audit or review of financial reports:
- Group
- Subsidiaries and joint operations
Other assurance and agreed-upon procedures under other legislation or
contractual arrangements
Other services:
- Other consulting services
- Tax compliance services
2020
$
2019
$
248,850
303,185
552,035
194,250
284,181
478,431
4,682
-
40,894
-
40,894
597,611
15,000
65,341
80,341
558,772
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.
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 Subsea Services Pty Ltd
MMA Offshore Vessel Holdings Pte Ltd
MMA Offshore Malaysia Sdn Bhd
MMA Offshore Shipyard and Engineering
Services Pte Ltd
Airia Jaya Marine (S) Pte Ltd
MMA Offshore Asia Vessel Operations Pte Ltd
JSE Offshore Shipping Pte Ltd
JSE Offshore (Labuan) Pte Ltd
Concord Offshore (Labuan) Ltd
PT Jaya Asiatic Shipyard
MMA Subsea Services Pte Ltd
MMA Subsea Engineering Services Pte Ltd
Neptune Asset Integrity Services Pty Ltd
Neptune Subsea Engineering Pty Ltd
Neptune Geomatics Pty Ltd
Neptune Subsea Stabilisation Pty Ltd
Neptune Diving Services Pty Ltd
Neptune Offshore Services (PNG) Ltd
Neptune Subsea Stabilisation Pte Ltd
Neptune Marine Pacific Pte Ltd
Neptune Subsea Engineering Ltd
Neptune Offshore Services Ltd
Neptune Subsea Inc
MMA Global Projects Pte Ltd
Premium Project Services Pte Ltd
B&R Marine Pte Ltd
Premium Project Services Middle East LLC
Premium Project Services Limitada
MMA Offshore Services Malaysia Sdn Bhd
Note
Country of
Incorporation
Ownership
Interest 2020
%
Ownership
Interest 2019
%
(i)
Australia
(ii) (iii)
(ii) (iii)
(ii) (iii)
(ii) (iii)
(ii)
(iv)
(iv)
(ii)(iii)(iv)
(ii)(iii)(iv)
(ii)(iii)(iv)
(ii)(iii)(iv)
(ii)(iii)(iv)
(iv)
(iv)
(iv)
(iv)
(iv)
(iv)
(v)
(v)
(v)
(v)
(v)
Australia
Australia
Australia
Singapore
Australia
Singapore
Malaysia
Singapore
Singapore
Singapore
Singapore
Malaysia
Malaysia
Indonesia
Singapore
Singapore
Australia
Australia
Australia
Australia
Australia
PNG
Singapore
Singapore
UK
UK
USA
Singapore
Singapore
Singapore
UAE
Mozambique
Malaysia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
100
100
100
100
30
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
-
-
-
-
-
-
-
-
100
-
-
-
-
30
(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 2020.
(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 which was updated on 8 November 2019.
(iv) On 7 November 2019, MMA acquired 100% of the Neptune Marine Services group key operating subsidiaries
(v) On 4 December 2019, MMA acquired a project logistics business based in Singapore. As a result of this
acquisition, MMA Global Projects Pte Ltd issued additional shares to the vendor such that MMA now holds 80% of
the shares in MMA Global Projects Pte Ltd.
88 Annual Report 2020
MMA Offshore Limited 89
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 5. Other Notes (continued)
5.6 Subsidiaries (continued)
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
Finance income
Other income/(expenses)
Vessel expenses
Subsea expenses
Project Logistics expenses
Administrative expenses
Impairment charge
Finance costs
Loss before income tax expense
Income tax expense
Loss for the Year
Total Comprehensive Income/(Loss) for the year
Statement of Financial Position
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Assets classified as held for sale
Total Current Assets
Non-Current Assets
Other financial assets
Property, plant and equipment
Right-of-use assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Unearned revenue
Borrowings
Lease liabilities
Provisions
Current tax liabilities
Total Current Liabilities
Non-Current Liabilities
Other payables
Borrowings
Lease liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Accumulated losses
Accumulated losses at beginning of the financial year
Net loss
Accumulated losses at end of the financial year
2020
$’000
154,139
772
(3,989)
(100,100)
(26,537)
(706)
(16,611)
(76,556)
(17,812)
(87,400)
(59)
(87,459)
(87,459)
60,264
42,210
466
1,277
5,984
110,201
279,921
91,287
6,981
378,189
488,390
62,914
14
12,739
1,546
9,344
222
86,779
-
257,838
5,675
320
263,833
350,612
137,778
667,264
1,878
(531,364)
137,778
(443,905)
(87,459)
(531,364)
2019
$’000
161,404
1,306
(8,542)
(142,003)
-
-
(7,445)
(83,351)
(19,137)
(97,768)
-
(97,768)
(97,768)
60,740
46,655
1,041
716
-
109,152
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
654,748
621
(443,905)
211,464
(346,137)
(97,768)
(443,905)
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.
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
2020
$’000
2019
$’000
56,254
446,594
502,848
12,846
262,881
275,727
227,121
59,395
519,736
579,131
5,297
270,589
275,886
303,245
667,264
654,748
(554,405)
(465,765)
114,122
114,122
140
140
227,121
303,245
(88,640)
(25,049)
-
(88,640)
74,885
-
(25,049)
61,136
(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
Lease liabilities
Borrowings
2020
$’000
86,637
52,429
41,879
10,893
270,577
2019
$’000
70,155
63,275
35,777
-
265,550
90 Annual Report 2020
MMA Offshore Limited 91
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
5. Other Notes (continued)
5.8 Financial Instruments (continued)
Financial risk management objectives
5. Other Notes (continued)
5.8 Financial Instruments (continued)
Foreign currency sensitivity analysis
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.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates. Where required, the Group can enter into a range of derivative financial instruments to manage its
exposure to these risks.
At a Group level, 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
British Pound Sterling
Other
Liabilities
2020
$’000
2019
$’000
175,646
186,076
7,752
186
3,693
1,874
7,121
1,344
-
441
Assets
2020
$’000
45,100
4,180
9
3,057
2,616
2019
$’000
49,846
2,588
583
-
83
The Group is mainly exposed to US Dollars (USD), Singapore Dollars (SGD), Euro (EUR) and British Pound Sterling
(GBP).
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
British Pound Sterling Impact
Profit or Loss
Equity (i)
2020
$’000
(325)
7
-
-
2019
$’000
(960)
7
(5)
-
2020
$’000
12,400
341
16
613
2019
$’000
13,344
405
75
-
(i)
The current and comparative year USD and British Pound Sterling impact relates to the translation from the
functional currencies of the Group’s foreign entities into Australian Dollars.
Interest rate risk management
The Group is exposed to interest rate risk because it borrows funds primarily at floating interest rates. The risk is
managed by the Group by the use of interest rate swap contracts when considered appropriate. Hedging activities are
evaluated regularly to align with interest rate views ensuring the most cost-effective hedging strategies are applied, if
required. 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 $2,705,774 (2019: decrease / increase by $2,655,462). This is attributable to
the Group’s exposure to interest rates on its variable borrowings.
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.
92 Annual Report 2020
MMA Offshore Limited 93
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 5. Other Notes (continued)
5.8 Financial Instruments (continued)
Debtor concentration risk is low with the top 3 customers of the Group making up only 20% (2019:21%) 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)
73,537
(22,373)
51,164
(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).
Liquidity risk management
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 2020
Non-interest bearing
Variable interest rate instruments
Fixed interest rate instruments
Total
30 June 2019
Non-interest bearing
Hire purchase liability
Variable interest rate instruments
Total
-
4.17
5.99
-
2.90
5.99
20,652
18,302
953
574
1,903
977
22,179
21,182
27,160
1
1,344
28,505
2,700
1
2,707
5,408
2,925
23,363
2,674
28,962
2,502
3
17,116
19,621
-
41,879
261,117
287,336
7,830
12,055
268,947
341,270
3,415
35,777
-
283,557
286,972
5
304,724
340,506
5. Other Notes (continued)
5.8 Financial Instruments (continued)
The following table details the Group’s expected maturity for its non-derivative financial assets. The table has been
drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned
on those assets.
Weighted
average
effective
interest rate
%
Less than
1 month
$’000
1-3
months
$’000
3 months
to 1 year
$’000
1-5 years
$’000
Total
$’000
30 June 2020
Non-interest bearing
Variable interest rate instruments
Total
30 June 2019
Non-interest bearing
Variable interest rate instruments
Total
Fair value of financial instruments
-
0.20
40,746
86,641
11,332
-
127,387
11,332
351
-
351
-
1.44
32,469
70,239
13,522
17,284
-
-
102,708
13,522
17,284
-
-
-
-
-
-
52,429
86,641
139,070
63,275
70,239
133,514
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; and
• 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 Operating lease arrangements
Operating leases, in which the Group is the lessor, relate to the hire of vessels owned by the Group with lease terms of
between one month to five years, with a range of one day to five years extension options.
Maturity analysis of operating lease payments:
Year 1
Year 2
Year 3
Total
5.10 Contingent Liabilities
2020
$’000
39,216
17,049
1,225
57,490
The decision in WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (“Rossato”) has resulted in MMA reviewing the terms
under which we engage our casual staff. We may have casual employees who fall within the scope of the Rossato
decision. We are currently evaluating these employment arrangements to determine whether the Company has any
contingent liability in this regard.
We note that the Rossato case is currently on appeal to the High Court of Australia. In addition, the Commonwealth
Attorney General has indicated that urgent consultation will occur with unions and employers in light of the Rossato
decision, and that if an agreement cannot be reached, legislative change may follow from the Commonwealth
Government.
94 Annual Report 2020
MMA Offshore Limited 95
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 5. Other Notes (continued)
5.11 Events After the Reporting Period
There has not been any matter or circumstance that occurred subsequent to the end of the financial year that
has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those
operations, or the state of affairs of the consolidated entity in future financial years.
5.12 Other Accounting Policies
Adoption of New and Revised Accounting Standards and Interpretations
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
Standards Board (the AASB) that are relevant to its operations and effective for the current year.
The accounting policies and methods of computation adopted in the preparation of the financial report are consistent
with those adopted and disclosed in the company’s 2019 annual financial report for the financial year ended 30 June
2019, except for the accounting policy on leases described below which has changed as a result of the adoption of
AASB 16 Leases. The accounting policies are consistent with Australian Accounting Standards and with International
Financial Reporting Standards.
AASB 16 Leases (adopted 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.
Transition to AASB 16
The Group adopted the new standard using the modified retrospective approach, 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 impact on initial adoption was
Impact on Consolidated Statement of Financial Position:
Right-of-use assets
Right of use lease liabilities
$’000
6,238
6,238
The weighted average discount rate used in discounting the lease liabilities as at 1 July 2019 was 5.99%.
Lease Accounting Policy
When a contract is entered into we consider whether the contract contains a lease. A contract is considered to contain a
lease if it conveys the right to control the use of an identified asset and to obtain substantially all the economic benefits
of the asset throughout the period of the contract.
Group as Lessee
The Group recognises a right of use asset and a corresponding lease liability for all lease arrangements in which it is
the lessee, except for short term leases and leases of low value assets. For these leases, the Group recognises lease
payments as an operating expense on a straight line basis over the term of the contract.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or
before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently
measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a
lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to
exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The
depreciation starts at the commencement date of the lease.
The lease liability is initially measured at the present value of the lease payments that are not paid at commencement
date, discounted by the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its
incremental borrowing rate.
5. Other Notes (continued)
5.12 Other Accounting Policies (continued)
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
Group as Lessor
Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease
transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease.
All other leases are classified as operating leases.
Vessel charter income from operating leases is recognised on a straight-line basis over the term of the relevant contract.
When a contract includes both lease and non-lease components, the Group applies AASB 15 to allocate the
consideration under the contract to each component.
Other new and revised standards
Other new and revised standards and amendments thereof and interpretations effective for the current year that are
relevant to the Group include:
New or revised requirement
Description
AASB 2018-7 Amendment
to Australian Accounting
Standards – Definition of
Material
These amendments are intended to address concerns that the wording in the
definition of ‘material’ was different in the Conceptual Framework for Financial
Reporting, AASB 101 Presentation of Financial Statements and AASB 108 Accounting
Policies, Changes in Accounting Estimates and Errors.
Interpretation 23 Uncertainty
over Income Tax Treatments
AASB 2017-4 Amendments
to Australian Accounting
Standards – Uncertainty over
Income Tax Treatments
The amendments address these concerns by:
•
•
Replacing the term ‘could influence’ with ‘could reasonably be expected to
influence’;
Including the concept of ‘obscuring information’ alongside the concepts of
‘omitting’ and ‘misstating’ information in the definition of material;
• Clarifying that the users to which the definition refers are the primary users of
general-purpose financial statements referred to in the Conceptual Framework;
and
•
Aligning the definition of material across IFRS Standards and other publications.
Interpretation 23 clarifies the accounting for uncertainties in income taxes. The
interpretation is to be applied to the determination of taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits and tax rates (‘tax amounts’), when
there is uncertainty over income tax treatments under AASB 112 Income Taxes.
The Interpretation requires an entity to:
• Use judgement to determine whether each tax treatment should be considered
independently or whether some tax treatments should be considered together;
•
Assume that a taxation authority with the right to examine any amounts reported
to it will examine those amounts and will have full knowledge of all relevant
information when doing so;
• Determine tax amounts on a basis that is consistent with the tax treatment
included in its income tax filings if an entity concludes that it is probable that a
particular tax treatment will be accepted by the taxation authorities; and
• Determine tax amounts using the most likely amount or expected value of the
tax treatment (whichever provides better predictions of the resolution of the
uncertainty) where an entity concludes that it is not probable that a particular tax
treatment will be accepted by the taxation authorities.
Standards and Interpretations issued but not yet effective
At the date of authorisation of the financial statements, there are no other standards that are not yet effective that would
be expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future
transactions.
96 Annual Report 2020
MMA Offshore Limited 97
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 ADDITIONAL SECURITIES EXCHANGE INFORMATION
FOR THE YEAR ENDED 30 JUNE 2020
ADDITIONAL SECURITIES EXCHANGE INFORMATION
FOR THE YEAR ENDED 30 JUNE 2020
Ordinary Share Capital (as at 17 September 2020)
Unmarketable Parcels (as at 17 September 2020)
925,732,084 fully paid ordinary shares are held by 6,943 individual shareholders. All issued ordinary shares carry one vote per
share.
The number of holders holding less than a marketable parcel of the Company’s shares is as follows:
Substantial shareholders (as at 17 September 2020)
Black Crane Asia Opportunities Fund
Halom Investments Pte Ltd
Thorney Opportunities Ltd
Blossomvale Investments Pte Ltd
Total
Number of
Shares
% of Issued
Capital
182,408,200
142,481,946
99,974,194
58,878,407
483,742,747
19.70
15.39
10.80
6.36
52.25
Distribution of Holders of Ordinary Shares (as at 17 September 2020)
Minimum Parcel Size
Number of ordinary shareholders
Number of shares
9,616
4,415
10,385,924
Voting Rights
All ordinary shares carry one vote per share without restriction.
Unquoted Options (as at 17 September 2020)
35,188,068 unlisted rights held by 62 individual rights holders.
Shareholder Enquiries
Number of ordinary shareholders
Shareholders can obtain information about their shareholding by contacting the Company’s share registry:
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
1,949
1,761
936
1,846
451
6,943
Twenty Largest Shareholders (as at 17 September 2020)
Number of
Shares
% of Issued
Capital
1
2
3
4
5
6
7
8
9
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
UBS Nominees Pty Ltd
Blossomvale Investments Pte Ltd
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