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Morgan Sindall GroupAnnuAl RepoRt
2012
Holdings Limited corPorate
regisTry
Directors
Dr ian Burston
non-executive chairman
Julian PemBerton
managing Director and
chief executive officer
michael arnett
non-executive Director
John cooPer
non-executive Director
comPany secretary
Kim hyman
registereD office
181 great eastern highway
Belmont wa 6104
Telephone: +61 8 9232 4200
+61 8 9232 4232
Facsimile:
info@nrw.com.au
email:
auDitor
Deloitte touche tohmatsu
level 14 wooDsiDe Plaza
240 st georges terrace
Perth wa 6000
share registry
linK marKet services limiteD
grounD floor
178 st georges terrace
Perth wa 6000
Telephone: +61 2 8280 7111
+61 2 8287 0303
Facsimile:
asX coDe
nwh – nrw holDings limiteD
fully PaiD orDinary shares
Web page
www.nrw.com.au
Holdings Limited
annual rePort
conTenTs
06
2011/2012
highlighTs
08
chairman’s
leTTer
34
chief financial officer
Financial year in reVieW
34
38
corPorate
goVernance sTaTemenT
38
10
10
14
18
20
22
24
26
28
30
32
chief eXecutive officer
year in reVieW
financial overview
nrw civil
nrw mining
action Drill & Blast
action mining services
human resources
inDigenous engagement
health, safety anD environment
comPany outlooK
4
NRW ANNuAl RepoRt 2012
130 shareholDer
inFormaTion
130
46
financial
reporT
Directors’ rePort
auDitor’s inDePenDence Declaration
Directors’ Declaration
consoliDateD statement of comPrehensive income
consoliDateD statement of financial Position
consoliDateD statement of changes in equity
consoliDateD statement of cash flows
133 inDePenDent
aUDiTor’s reporT
133
46
48
72
73
74
75
76
77
78
78
notes to the
Financial sTaTemenTs
NRW ANNuAl RepoRt 2012
5
2011/2012
highlighTs
FirsT oil anD
gas conTracT
wheatstone
access roaDs anD
BulK earthworKs
Client // BeChtel
Value // $105.0 million
loCation // PilBara, Western australia
the award of a $105.0 million earthworks contract for
access roads at the Wheatstone project represented a
key strategic win for the business, heralding NRW’s entry
into the oil and gas sector.
inDigenoUs
Joint ventures
At NRW we are committed to forming sustainable
business partnerships with Indigenous organisations,
particularly with regards to projects that lie on lands with
an historical connection to our partners.
our joint ventures with eastern Guruma pty ltd and the
Ngarulma and Yindjibarndi Foundation limited (NYFl)
have been extremely successful and together we have
now undertaken, or been awarded, over $1.0 billion
worth of projects.
6
highlights
NRW ANNuAl RepoRt 2012
6 a saFe Day
every Day
In 2012, NRW Civil & Mining launched and rolled out a
refreshed company-wide safety program, A safe day,
every day.
As a direct result of the increased awareness and
ownership of safety across all levels of the organisation,
we have seen significant performance improvements
with the total Recordable Injury Frequency Rate (tRIFR)
improving from 10.94 at the end of FY11 to 5.22 at the
end of FY12.
acTion
Drill & Blast
our newest subsidiary, Action Drill & Blast, reinforced
its position as an emerging market leader in the
drill and blast sector Australia wide with contracts
undertaken in Western Australia, South Australia, the
Northern territory and Queensland.
Created two years ago with the purpose of primarily
servicing internal projects, Action Drill & Blast has
experienced exceptional growth with a 307% increase
in revenue to $113.1 million from $27.8 million in FY11.
NRW ANNuAl RepoRt 2012
highlights
7
chairman’s
leTTer
8 “ i woulD liKe to
acKnowleDge the
quality of the worK our
emPloyees unDertaKe
anD i congratulate
them on the high
stanDarDs achieveD.”
chairman’s
leTTer
It is with great pleasure we present
NRW Holdings limited 2012 Annual
Financial Year Report. Building upon
a year of consolidation in 2011,
NRW was successful in achieving
an outstanding result during the year
ended 30 June 2012.
the Group’s net profit after tax was $97.1 million, an
increase of 136% over the result achieved in 2011. the
result was generated from revenue growth across all
Divisions of the Group; $731.7 million from Civil, $542.2
million from Mining, $113.1 million from Action Drill & Blast
and $46.6 million from Action Mining Services.
the Board is cognisant of the need to achieve consistent
financial performance year-on-year in order to deliver
value to its shareholders. the reported profit this year has
delivered on this and the outlook for NRW remains positive.
I would like to thank our employees and leadership team
for their contribution during what has been a challenging
year for the Company. their commitment to achieving
improved outcomes across the Company has been a
significant factor in delivering the outstanding result.
I would like to acknowledge the quality of the work our
employees undertake and I congratulate them on the high
standards achieved.
the professionalism and dedication of our people has
been further evidenced this year by another outstanding
safety result and the Board commends our employees on
their commitment to continually improving safety across
the organisation.
I look forward to reporting improved profitability in the
2013 Financial Year.
Dr ian Burston
Chairman
nrW holdings limited
chief eXecutive officer
year in reVieW
10 FinanCial highlights:
ρ Record revenue of $1.358 billion:
82% increase on FY11
ρ eBIt of $154.0 million:
138% increase on FY11
ρ Net profit After tax $97.1 million:
136% increase on FY11
ρ Conservative Net Debt / equity
position of 18%
ρ Cash balance $138.0 million:
95% increase on FY11
ρ Final dividend of 10 cents (fully
franked), totalling 18 cents for
full financial year
recorD revenue
82%increase on fy11
$1.358 billion
chief eXecutive officer
year in reVieW
It is with great pleasure that we
present to our shareholders and
stakeholders alike the results of NRW
Holdings limited for the financial year
ended 30 June 2012.
For the fifth consecutive year since listing on the Australian
Securities exchange, NRW has recorded record revenue.
this financial year revenue was $1.358 billion, an increase
of 82% on the previous corresponding period. this
reflects an increase in net profit after tax (NpAt) of $97.1
million, up 136%. Returns on average capital employed
reached 41%, and the Company preserved a conservative
net debt to equity position of 18%.
this has been a record year for NRW, with all Divisions
reporting revenue growth and increased profitability.
Conditions for the 2012 financial year were generally very
positive with the majority of our order book secured at
the commencement of the financial year. over the last 12
months, our reputation for successfully delivering quality
projects meant further awards and extensions were
predominantly negotiated with key clients. We have grown
our workforce to 4,592 people and have commenced
or undertaken over $1.0 billion in projects with our
Indigenous joint venture partners.
the NRW Civil Division had a successful year, with
revenue of $731.7 million, representing a 91% increase
on FY11 ($382.6 million). the award of a $105.0 million
earthworks contract for access roads at the Wheatstone
project represented a key strategic win for the business,
heralding NRW’s entry into the oil and gas sector. We
expanded our geographical civil footprint nationally, and
this was achieved with the BHp Billiton Mitsubishi Alliance
(BMA) Special Services Agreement, and Minmetals
Resources’ Dugald River project, both in Queensland.
the expansion of NRW’s concrete capability continued
with the award of a $69.0 million concrete and
earthworks package at Rio tinto Iron ore’s (RtIo)
Western turner Syncline project, awarded as part of the
large Western turner Brockman project. A number of
other concrete projects were completed, commenced
and continued through the financial year and our
annualised revenue for in-house concrete delivery
currently stands at more than $150.0 million.
chief eXecutive officer
year in reVieW
NRW Mining continued its growth in revenue to $542.2
million, representing a 69% increase on FY11. the key
contributing projects for the Division were continuing
operations at Fortescue’s Christmas Creek Mine and
RtIo’s Western turner Syncline in the pilbara. the
expansion of NRW’s pre-mining development works
contract at Solomon Hub and the continued ramp-up
of operations at the Middlemount project in Queensland
further contributed to the Division’s record revenue.
our newest subsidiary, Action Drill & Blast, reinforced its
position as an emerging market leader in the drill and
blast sector Australia wide with contracts undertaken in
Western Australia, South Australia, the Northern territory
and Queensland. Created two years ago with the purpose
of primarily servicing internal projects, Action Drill & Blast
has experienced exceptional growth with a 307% increase
in revenue to $113.1 million from $27.8 million in FY11.
Action Mining Services (AMS) also experienced impressive
improvements in operations and revenue growth this
financial year with $46.6 million in revenue compared to
$28.1 million in FY2011, representing a 66% increase.
overall, the 2012 financial year has been a very successful
one for the Company. NRW has been committed to
diversifying into new locations, commodities, capabilities
and clients, while remaining focused on existing markets.
this has led to our record growth and profitability in line
with our business strategy and we remain optimistic on
continued growth into FY13 and beyond.
aWarDeD
oil anD gas conTracT
at WheaTsTone
ProJect
12
Ceo: Year in reVieW
NRW ANNuAl RepoRt 2012
chief eXecutive officer
year in reVieW
oPerational highlights:
ρ
ρ
ρ
ρ
ρ
ρ
Concrete capability increased and now represents
20% of civil revenue
Awarded oil and gas contract at Wheatstone project
60% of civil contracts negotiated based on strong
reputation with key clients
2 year Special Services Agreement signed with BMA
in Queensland
Action Drill & Blast achieves 307% growth in revenue
Awarded 3 year extension to services contract
at Simandou
ρ order book of $1.9 billion (excludes Framework and
eCI projects)
“ nrw recorDeD
recorD revenue
of $1.358 Billion,
an increase of
82% on fy11.”
orDer
BooK of
$1.9
billion
(eXcluDes frameworK anD eci ProJects)
ACTION DRILL &
BLAST ACHIEVES
307%
groWTh
IN REVENUE
NRW ANNuAl RepoRt 2012
Ceo: Year in reVieW
13
financial
oVerVieW
FinanCial PerFormanCe
NRW Holdings limited has successfully increased revenue by 82% to a record $1.358 billion and increased profits after tax
to $97.1 million. the table below summarises the results of the Group.
FinanCial PerFormanCe ($m’s)
1hY12
2hY12
Full Year FY12
FY11
Change
sales reVenue
Civil
Mining
Action Drill & Blast
Action Mining Services
other *
total sales reVenue
eBItDA
eBIt
nPat
epS (basic) cents
DpS cents
323.9
246.5
50.9
21.0
(31.8)
610.5
89.4
70.4
45.3
16.2
8.0
407.8
295.7
62.2
25.6
(43.0)
748.3
106.5
83.6
51.8
18.6
10.0
731.7
542.2
113.1
46.6
(74.8)
1,358.80
195.9
154.0
97.1
34.8
18.0
382.6
321.7
27.8
28.1
(15.0)
745.2
95.5
64.6
41.2
16.1
9.0
91%
69%
307%
66%
-
82%
105%
138%
136%
116%
100%
* other includes unallocated income and consolidation eliminations for Action Drill & Blast ($68.4)m, Action Mining Services ($6.4)m.
14
Ceo: Year in reVieW
NRW ANNuAl RepoRt 2012
financial
oVerVieW
FinanCial Position
equity attributable to shareholders increased by 23% compared to 2011, and is valued at $329.2 million at the end of
FY12. NRW has maintained a conservative gearing of 18% net debt to equity. Working capital decreased below 2011 levels
and is reflective of the efficient conversion of cash of the business. payment cycles are positive which in turn is illustrated in
the cash balance of the Group.
FinanCial Position ($m’s)
Working Capital (less cash and current debt)
Non-Current Assets
Non-Current liabilities (less debt)
Funded by:
Cash / (overdraft)
Debt
net FunDing
shareholDers equitY
Return on equity
Net debt / equity
DiViDenD
FY12
15.0
391.1
(16.2)
389.9
138.0
(198.8)
(60.8)
329.2
30%
18%
FY11
36.9
293.0
(10.2)
319.6
70.6
(123.5)
(52.9)
266.7
15%
20%
FY10
30.1
178.8
(0.4)
208.5
21.4
(60.8)
(39.4)
169.1
21%
23%
FY09
26.4
156.7
(0.6)
182.5
20.6
(60.8)
(40.2)
142.2
27%
28%
FY08
56.4
165.5
(12.3)
209.6
(11.3)
(81.0)
(92.3)
117.2
32%
79%
on the 24 August 2012, the Board of NRW Holdings limited declared a final dividend for the financial year ended 30 June
2012. the final dividend payable is 10.0 cents per share and brings the full year dividend to 18.0 cents per share fully franked.
NRW ANNuAl RepoRt 2012
Ceo: Year in reVieW
15
financial
oVerVieW
CONCRETE CAPABILITY
noW RepReSentS
20%of ciVil reVenUe
FInAl DIVIDenD FOR FY12 OF
ShARe
10¢ PER
18¢
BRINgINg FULL
YEAR DIVIDEND TO
PER
ShARe
Cash
the cash position at the end of the financial year was
$138.0 million compared to the prior corresponding
period of $70.6 million. Cash from operations continues
to be strong, owing to efficient management of working
capital, project claims, contract variations and supplier
arrangements. this, in conjunction with Group earnings
growth, has seen a positive effect on operating cash flow.
FunDing
Base secured funding is in excess of $765.0 million
comprising facilities for working capital, performance
bonding and asset funding.
the table below illustrates the current headroom of
facilities for further growth and the acquisition of income
producing capital. NRW has successfully negotiated
substantial facilities to enable the Company to undertake
projects with secured funding options.
FunDing Position ($m’s)
FY12
Cash
Debt (Balance Sheet)
Net Debt
Net-Debt / equity
Capex
FunDing heaDroom
138.0
(198.8)
(60.8)
18%
144.4
418.2
FY11
70.6
(123.5)
(52.9)
20%
150.2
323.0
16
Ceo: Year in reVieW
NRW ANNuAl RepoRt 2012
“ all Divisions
rePorteD recorD
revenue growth
anD increaseD
ProfitaBility.”
financial
oVerVieW
orDer Book
the order book is valued at $1.9 billion comprising
$1.0 billion in the Mining Services Division, $0.7 billion
in the Civil Contracting Division and $0.2 billion in Action
Drill & Blast.
the order book excludes future expected revenue from
projects included in the Rio tinto Iron ore Framework
Agreement, eCI projects and the Special Services
Agreement with BMA in Queensland.
mInIng SERVICES DIVISION
$1.0 BIllIon
$0.7 BIllIon
$0.2 BIllIon
cIVIl CONTRACTINg DIVISION
ActIon DRILL & BLAST
NRW ANNuAl RepoRt 2012
Ceo: Year in reVieW
17
nrw
ciVil
Civil & Mining
the growth of the Civil Division has
been outstanding, with revenue
almost doubling in the 12 months
to 30 June 2012, reaching $731.7
million, up from $382.6 million last
financial year. the Division further
increased its concrete capability with
the expansion of the recently formed
concrete team.
oVerVieW
Besides successfully completing the $200.0 million Karara
earthworks and concrete package in June 2012, NRW
was awarded a number of other significant concrete
packages, mostly in conjunction with existing or new
earthworks packages.
NRW maintained a steady pipeline of work and built the
Civil Division workforce up to a record 2,196 people,
complemented by the recruitment of key personnel from
overseas including South Africa, the united Kingdom
and Ireland.
In order to further improve financial controls and
performance across the Division, a number of strategies
were employed including additional commercial support
on site. Increased engagement and safety awareness by
the workforce as a part of the wider corporate initiative
A safe day, every day resulted in improved safety
performance, with NRW’s Civil Division reaching and
maintaining a total Recordable Injury Frequency Rate
(tRIFR) of 4.0.
18
Ceo: Year in reVieW
NRW ANNuAl RepoRt 2012
nrw
ciVil
oPerations
Major contracts and contract extensions awarded
during the period included:
ρ Main line Rail Duplication
– Fortescue
ρ
ρ
ρ
ρ
Herb elliott port (Anderson point)
– Fortescue
Special Services Agreement for 2 years
– BMA
Access Roads for the Wheatstone project
– Bechtel
Cape lambert Car Dumper Bulk earthworks
– Rio tinto Iron ore
ρ Western turner Syncline Civil / Concrete Works
ρ
ρ
ρ
– Rio tinto Iron ore
Boolgeeda Aerodrome
– Rio tinto Iron ore
port Hedland Inner Harbour project
– BHp Billiton Iron ore
Solomon rail
– Fortescue
outlook
the Civil Division currently has record work in hand
($700.0 million) and is targeting solid revenue growth
whilst being cognisant of potential delays in major project
approvals. It is also a strategic objective to build the
concrete component of the overall Civil revenue from 20%
to 30% by 30 June 2013.
the Division is focused on the successful delivery of current
projects such as the Wheatstone project, works at Cape
lambert port, Western turner Brockman and Western
turner Syncline, BHp Billiton Iron ore’s Inner Harbour
project, and ongoing works for Fortescue including the
Herb elliott port and Solomon Spur rail works.
Developing profitable partnerships and epC capability with
chosen partners whilst building upon our already successful
Indigenous joint ventures will continue to be a strategic
driver for the Division as we further investigate opportunities
for larger projects within our current areas of operations as
well as further afield. We will be targeting an expansion of
our Queensland civil footprint and will also look to establish
a structure to focus on civil expansion in Simandou.
With mobilisation and ramp up at Wheatstone currently
underway, we look forward to delivering an efficient
and quality product on our first oil and gas project with
expectations that further works in this new market will
follow. An increased focus will also be on early Contractor
Involvement, cost reimbursable and smaller Design and
Construct projects as we develop and build upon the
Division’s capability.
civil revenue
91%
increase on fy11
Significant Achievements throughout
the year included:
Revenue increase by 91% on FY2011
ρ
ρ ongoing geographic diversification,
particularly Queensland
ρ
ρ
ρ
ρ
ρ
ρ
ρ
ρ
ρ
Awarded first major oil and Gas project
on the Wheatstone project
60% of civil contracts negotiated based
on strong reputation with key clients
Successful expansion of concrete capability
to 20% of Civil revenue
Successful Indigenous JV’s with the Ngarluma
and Yindjibarndi Foundation limited (NYFl)
and eastern Guruma pty ltd
First metropolitan Government infrastructure
project – Great eastern Highway upgrade in
alliance with leighton Contractors and GHD
Continued improvement in safety performance
with tRIFR at 4.0.
Successful recruitment of highly skilled and
experienced workforce in difficult labour
market conditions,
Industry leading retention of 90% amongst
civil staff
Indigenous employment of 10% which
exceeds industry averages
“ we looK forwarD to
Delivering an efficient
anD quality ProDuct
on our first oil anD
gas ProJect.”
NRW ANNuAl RepoRt 2012
Ceo: Year in reVieW
19
Civil & Mining
the overall Divisional revenue
reached $542.2 million in FY12, up
69% from the prior corresponding
period (FY11: $321.7m). the Mining
Division workforce increased to
1,643 people.
nrw
nrw
mining
mining
oVerVieW
the key contributing projects for the Division were
continuing operations at Fortescue’s Christmas Creek
Mine and Rio tinto Iron ore’s Western turner Syncline.
the expansion of NRW’s pre-mining development works
contract at Solomon and the continued ramp-up of
operations at the Middlemount project in Queensland
further contributed to the Division’s record revenue. the
Division also undertook works at Simandou (Guinea),
Cloudbreak, Hope Downs, Bootu Creek, and Karara.
the Solomon contract entails pre-mining development
works including roads, a tailings dam and RoM pad.
these works are being carried out in joint venture with
eastern Guruma pty ltd and Ngarluma and Yindjibarndi
Foundation limited (NYFl), representing one of the
largest revenue generating projects for an Indigenous joint
venture in Western Australia.
the Mining Division’s Indigenous employment numbers
continued to increase over the last financial year, with the
NRW-eastern Guruma Joint Venture at Western turner
Syncline reaching an Indigenous employment rate of 28%
for on-site labour, equalling 55 Indigenous employees.
Although there was significant revenue growth during
FY12, the mining margins were impacted by lower than
expected productivity in the pilbara and Middlemount due
to adverse weather conditions.
20
Ceo: Year in reVieW
NRW ANNuAl RepoRt 2012
nrw
mining
oPerations
Contracts awarded and extensions during the period include:
ρ
ρ
ρ
ρ
Solomon pre-mining development works – Fortescue
Solomon tailings Dam – Fortescue
extensions of scope at Christmas Creek – Fortescue
3 year extension Simandou contract – Simfer SA
Safety performance across the Division dramatically
improved due to a number of strategies, including
increased employee engagement and safety awareness
as part of the A safe day, every day program. the
heightened sense of accountability across all levels of
the business has also driven ownership of site of safety
issues. Whilst still requiring improvements, the Mining
Division’s total Recordable Injury Frequency Rate (tRIFR)
dropped from 10.47 at the end of FY2011 to 6.13 this
financial year – this will continue to be a focus area
progressing into FY13.
outlook
We will continue to build on our strengths in iron ore
and coal with existing clients, and seek to expand our
east coast and international operations with the right
opportunity. the strategy remains that of diversification
into other commodities and we will continue to review
prospects as they arise.
the Mining Division remains focused on retaining and
developing its workforce whilst providing the best possible
service to all projects and anticipate further growth in the
2013 financial year. the Division continues to enhance its
reputation for reliable delivery of services across numerous
sectors within Australia as well as overseas.
With approximately $1.0 billion worth of work in hand, the
Mining Division looks forward to another successful year in
FY13, with increased operational efficiencies, longer tenured
mining contracts and further geographical expansion.
“ with aPProXimately
$1.0 Billion worth of
worK in hanD, the mining
Division looKs forwarD
to another successful
year in fy13.”
solomon
PRE MININg
DeveloPment worKs
ForTescUe
AWARDED
solomon
TAILINgS DAM - ForTescUe
AWARDED
EXTENSIONS OF SCOPE AT
chrisTmas
creeK
AWARDED
3 YEAR
eXtension simanDoU
simFer sa
CONTRACT -
NRW ANNuAl RepoRt 2012
Ceo: Year in reVieW
21
action
Drill & blasT
oVerVieW
Action Drill & Blast operates in 3 primary units, namely
Mining, Civil and Coal, and currently has a workforce
of 350 employees, up from 190 at the end of the last
financial year, and a fleet of 36 drills.
the Mining unit focuses on the supply of drill and blast
services to open cut operations, predominantly in Western
Australia and in particular to the iron ore majors. the drill
fleet is specifically chosen to provide a combination of
large rotary drills and versatile down-hole-hammer drills to
enable clients the best opportunity of optimising the drill
and blast efficiencies of their projects.
the Civil unit focuses on the smaller, technical area of
the market where blasting in close proximity to existing
infrastructure, such as rail and existing port infrastructure
including conveyors stackers, is required. the skill levels
required for this precise work are exceptionally high and we
are extremely pleased with our ability to attract and retain
our civil crew which unarguably contains some of the best
people in the drill and blast business in Australia today.
the Coal unit focuses primarily on the supply of drilling
and blasting activities for coal overburden mining. our
drill fleet of large rotary drills is the newest in the industry
and is proving to have significant performance and safety
benefits for our clients.
Since commencing operations two
years ago Action Drill & Blast has
now firmly established itself as a
provider of quality and professional
drill and blast services to the
Australian mining and civil excavation
industries. the 2012 financial year
represented an exceptional year
of growth and consolidation with
revenue of $113.1 million, a 307%
increase on the 2011 financial year
results of $27.8 million revenue.
22
Ceo: Year in reVieW
NRW ANNuAl RepoRt 2012
action
Drill & blasT
oPerations
Action Drill & Blast currently has 11 contracts in Western
Australia and 4 in Queensland. the largest current
operation is at Fortescue’s Solomon Hub project where
there is currently over 100 employees and 8 drills on site.
Action Drill & Blast has an excellent safety record with a
total Recordable Injury Frequency Rate of 1.59 for the
year to June 2012, compared to 5.68 for the previous
financial year. In 2013, an increased focus on continual
improvement in safety will include actively seeking ways
to improve the techniques and methods used, as well as
utilising the latest technology.
A continued emphasis on training and up-skilling our
workforce will ensure we operate at the highest levels
of safety and efficiency. With the help of specific training
partners a tailored management training package has
been developed that leads to a Diploma in Management
or Diploma in Surface extraction. this is offered to all
supervisory and management staff and it is expected
that over time all will participate. Action Drill & Blast has
developed a suite of 17 equipment specific, nationally
accredited RII09 operator training packages.
outlook
In the upcoming financial year we look forward to a
focused expansion of our contract base with existing
and new clients in the WA and Queensland market. the
current order book for the business is $200.0 million of
which $108.0 million represents internal projects including
Middlemount Coal, Cape lambert and Western turner
Syncline. externally the business has work in hand of
$92.0 million for clients including talison lithium, peabody,
Brierty, leighton, Cimeco, Macmahon and Downer.
We have committed over $20.0 million in capital for the
2013 financial year to further expand our drill fleet and
support equipment, with 6 drills on order. In addition we
expect to grow our workforce from its current level of 350
people up to 485.
We are seeking to expand our blasting services business in
Queensland by focusing on providing a quality and timely
service with the technical support required to ensure that
the mine owners’ needs are met. We look forward to the
2013 year as one of continued growth and successes.
It is the business’ mandate to derive revenue in excess
of 50% from external clients in the medium term as new
opportunities arise, whilst increasing our market share.
oUTsTanDing
INCREASE in revenue to
$113.1 million
307%
groWTh on fy11
external projects undertaken and awarded
during the period included:
ρ Greenbushes lithium operations – talison
ρ
Christmas Creek Drill only – Downer
ρ
ρ
ρ
South Middleback Ranges – HWe
FMG Rail – Summit North & South &
Cloudbreak – Brierty
Karara DSo – Karara Mining
ClASCo – Macmahon
ρ
ρ West Angelas power Station – Cimeco
ρ Gregory Crinum – BMA
ρ Millennium Shot Crew – peabody energy
Significant achievements throughout the
year included:
ρ
ρ
Successfully completed contracts at
Karara, South Middleback Ranges and
Christmas Creek.
expansion in the Queensland coal market
with a new blasting contract at Millennium
for peabody and a second drill being utilised
at Gregory Crinum.
ρ Maintained an exceptional safety performance
with tRIFR of 1.59
NRW ANNuAl RepoRt 2012
Ceo: Year in reVieW
23
action
mining serVices
oVerVieW
Increased demand in the sector allowed the production of
Support Vehicles to be increased to match demand levels
and alongside improvements to efficiency, enabled us to
improve delivery lead times.
A separate fabrication and assembly shop is also on the
premises where service truck and water tanker fabrication
is undertaken. these products are fully mine site
compliant and are marketed to resources, hire and mining
services companies.
Major clients include Brooks Hire, Jones Mining and
Innovation, equiprent, Westrac, leighton Contractors,
Komatsu, Alliance and titan plant Hire.
Significant achievements throughout the year included:
ρ
ρ
Support vehicle sales outperformed, with units sold
exceeding the forecast budget by 64%.
the 200th Water tank was invoiced in May with the
100th Service Module due to come off the production
line in August 2013.
ρ overall staff grew by 17% to 145 employees with
apprentice numbers remaining steady.
ρ
A program has been developed between NRW and
AMS for the upcoming financial year (FY13) which will
see the arrival of at least thirty 457 visa tradesman
from overseas.
Action Mining Services provides
repairs and refurbishment to all
brands of earthmoving and mining
equipment. A comprehensive
mechanical repair and rebuild facility,
sand blasting, painting, boiler making
repair and fabrication services are
also offered to our clients. Revenue
growth in the 2012 financial year was
exceptional with revenue of $46.6
million, up 66% from the previous
financial year (FY2011:$28.1m).
24
Ceo: Year in reVieW
NRW ANNuAl RepoRt 2012
action
mining serVices
outlook
the outlook for continuing growth within the services unit
remains influenced by investment in the resources and
oil and gas sector. However with several large projects
commencing in Western Australia the outlook remains
positive with AMS well placed to take advantage of growth.
Fabricated products comprising service modules, water
tankers, drill support trucks and our range of modified
high cube sea-containers including purpose built site
workshops for maintenance personnel, have been
successfully developed and remain highly regarded
throughout the industry. It is expected that the future will
provide strong demand from customers both in the Civil
and Mining industry.
New products within this field that take advantage of the
AMS skill base and the group customer relationships are
currently being developed to widen the client base and
sales locations within Australia. We expect to increase
revenues this year with the introduction of a new Service
Module, AMS 12000; and completion of the prototype
service module AMS 15000 in first half of the 2013
financial year.
Further growth is also expected within the service division as
a result of changes to management structures and systems.
Development of apprentices continues to be a focus
with apprentices completing the first two years at Action
Mining Services and then rotating through various NRW
Civil and Mining sites to gain practical site experience. our
strategy for recruiting a number of overseas tradespeople
is to build a strong, consistent heavy duty trade workforce
within the business.
revenue growth fy2012
66%
$46.6 million
from fy11 ($28.1 million)
“ suPPort vehicle sales
outPerformeD, with
units solD eXceeDing
the forecast BuDget
By 64%.”
NRW ANNuAl RepoRt 2012
Ceo: Year in reVieW
25
human
resoUrces
NRW expanded its work force to 4,592 people at 30
June 2012, an increase of almost 70% on the prior
corresponding period (FY11: 2,500 people), and
continued its concerted efforts to attract and retain
the best employees. the workforce includes direct
employees, sub-contractors and apprentices.
A number of initiatives were introduced to ensure that NRW
remained an attractive option to candidates in a competitive
market for experienced and skilled personnel including:
ρ overseas recruitment options continued to be
employed to source highly skilled professionals.
ρ
ρ
ρ
upskilling of existing employees to continue to grow
internal capacity.
the expansion of the Indigenous employment
program and addition of a general entry training
program to introduce new employees into the industry.
the monitoring of pay and conditions to ensure
the Company is competitively placed in the
employment market.
NRW also continues to develop training and development
opportunities to improve its supervisory skills and continue
its exemplary relationship with its workforce. there were
no disputes or time lost due to industrial action in 2012.
Approximately 15.7% of the workforce is female, an
increase from last year, and approximately 8.2% of the
workforce is Indigenous.
“ nrw eXPanDeD its worKforce
to 4,592 PeoPle anD
continueD its concerteD
efforts to attract anD
retain the Best emPloyees.”
26
Ceo: Year in reVieW
NRW ANNuAl RepoRt 2012
human
resoUrces
PoWeruP
powerup is NRW’s intensive three week pre-employment
work ready program, run in conjunction with the
Department of education, employment and Workplace
Relations, and continues to attract strong support from
the Indigenous community.
powerup provides opportunities for Indigenous candidates
lacking entry level skills to break into the civil and mining
industry. Involving RII20209 Certificate II: Surface
extraction operations, powerup exposes participants to
a simulator and hands-on activities in a controlled ‘real life
mining pit’ in haul truck and roller operations. During the
innovative three week program, trainees are mentored by
experienced professional trainers and human resources
staff - consisting of 40 hours of classroom activities in
Canningvale, 80 hours at Neerabup quarry north of perth.
Since its inception in 2008, powerup has been
progressing steadily and in the 2012 financial year NRW
held 12 programs. the program enjoys a very high
retention rate with over 80% of graduates remaining with
the Company.
12 poWeRup
PROgRAMS WERE HELD
IN FY12,
WITH
80%graDUaTe reTenTion
CURRENT WORkFORCE OF
4,592
70%
increase on fy11
15.7%OF THE WORkFORCE IS
FemAle
APPROXIMATELY
8.2%
OF THE
WORkFORCE IS
InDIgenouS
NRW ANNuAl RepoRt 2012
Ceo: Year in reVieW
27
inDigenous
engagemenT
NRW recognises that its long-term success depends on
the well-being and development of the communities in
which it operates, including local communities as well as
the traditional owners of the land.
We respect the importance of Indigenous Australian culture
and value its diversity. We have successfully employed and
supported Indigenous people within our Civil and Mining
operations since the forming of the Company in 1994.
Increasing Indigenous representation in employment on
our projects is an integral part of NRW’s philosophy.
Besides NRW’s Indigenous employment targets and
powerup program, we also joint venture with a number
of Indigenous organisations to provide sustainable
business opportunities to these groups and the
communities they represent.
the NRW-eastern Guruma joint venture has undertaken
or been awarded the following contracts in the 2012
financial year:
ρ Western turner Syncline Mining – Rio tinto Iron ore
ρ Western turner Syncline Civil / Concrete Works
– Rio tinto Iron ore
ρ Western turner Brockman – Rio tinto Iron ore
Boolgeeda Aerodrome – Rio tinto Iron ore
ρ
the NRW-NYFl joint venture has undertaken or been
awarded the following contracts in the 2012 financial year:
ρ
Cape lambert Car Dumper Bulk earthworks
– Rio tinto Iron ore
ρ Western turner Syncline Civil / Concrete Works
– Rio tinto Iron ore
the NRW-eastern Guruma-NYFl joint venture was also
awarded works at Fortescue Metals Group’s Solomon
Hub operations in the pilbara.
together the value of Indigenous joint ventures NRW
has engaged in reaches over $1.0 billion – a fantastic
achievement and one NRW is very proud of.
28
Ceo: Year in reVieW
NRW ANNuAl RepoRt 2012
inDigenous
engagemenT
inDigenous
engagemenT
VALUE OF
InDIgenouS
joInt VENTURES
OVER $1.0
REACHES
BIllIon
WE RESPECT THE
ImpoRtAnce OF
InDIgenouS
AUSTRALIAN cultuRe
NRW ANNuAl RepoRt 2012
Ceo: Year in reVieW
29
health safety anD
enVironmenT
health & saFetY
NRW is committed to achieving the highest possible
performance in occupational health and safety across
all business operations. NRW’s Health, Safety and
environmental (HSe) Management Systems are accredited
to AS4801:2001, the applicable Australian Standard and
subject to continuous audit - NRW was re-certified in
January 2012.
the Company manages risk through hazard identification,
minimisation, monitoring and control procedures, and
by reviewing safety performance. NRW ensures that all
employees, including subcontractors’ employees, are fully
HSe inducted, trained and assessed in the tasks each
will be required to perform, plus deemed competent via
a Registered training organisation (Rto) process in the
operation of plant and equipment.
In early 2012, NRW rolled out and launched a revitalised
company wide safety culture program, A safe day, every
day. the program contains elements of reward and
recognition to reinforce the efforts of employees, as well
as to raise awareness of safety issues across all sites. It
also increases the key performance indicators used to
measure and record progress of projects, making the
individual projects more accountable.
FY2012 has seen significant re-structuring of the HSe
department within NRW and the new structure will provide
stronger support for projects, whilst enabling NRW to
improve outcomes as it continues to grow.
During the year one of the main focuses has been in
the area of hazard identification and hazard removal
from work processes. the success of the program has
been reflected in the improved performance with lost
time Injury Frequency Rate (ltIFR) currently at 0.64,
which represents a 62.7% decrease from the previous
year (FY2011: 1.8). A corresponding decrease in total
Recordable Injury Frequency Rate was also achieved -
this is currently at 5.22, down from 10.94 in FY2011.
30
Ceo: Year in reVieW
NRW ANNuAl RepoRt 2012
health safety
& enVironmenT
enVironment
SAFETY PERFORMANCE
NRW maintained certification to AS/NZS ISo 14001:
2004 environmental Management Systems which
covers environmental Management Systems in the civil
engineering and mining industries. this certification
reinforces NRW’s commitment to maintaining strict
environmental protocols on all projects undertaken. this
certification is subject to continuing audit by external
agencies and NRW was re-certified in January 2012.
qualitY assuranCe
NRW maintained certification to ISo standard 9001:
2008 and AS/NZS 4801 (achieved in May 2009) for its
Quality Management System. NRW was re-certified in
January 2012.
Man hours
000’s
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
40
35
30
25
20
15
10
5
0
FY08
FY09
FY10
FY11
FY12
Man Hours
LTIFR (Lost Time Injury Frequency Rate)
TRIFR (Total Recordable Injury Frequency Rate)
“ ltifr imProveD 62.7% from fy11 anD is currently at 0.64.
a corresPonDing Decrease is trifr was also achieveD -
currently at 5.2, Down from 10.94 in fy11.”
NRW ANNuAl RepoRt 2012
Ceo: Year in reVieW
31
comPany
oUTlooK
NRW is confident of continued growth with an order
book of $1.9 billion, including secured revenue for FY13
of $1.2 billion.
NRW is targeting revenue growth of at least 15% in FY13.
We expect to secure further work in Queensland and
currently have a number of tenders pending decision in
the region, including with new clients across the lNG
sector. this is in line with our ongoing strategic plan to
diversify by geography, commodity and client.
With current tender activity still high and submitted
tenders of $2.6 billion, we are confident of not only
securing additional works to achieve our targeted growth
this year but also further building our order book for FY14
and beyond.
Strategically, the Company is expecting the Civil Division’s
concrete business to increase its scale and capability
to represent up to 30% of the Civil Division’s revenue
in FY13. Selected joint ventures on large infrastructure
projects will also be a priority for future growth, both
domestically and internationally.
We anticipate future growth in our Mining Division from
existing clients in iron ore and coal, and we will continue
to assess opportunities in other commodities both
domestically and in emerging markets.
We are confident Action Drill & Blast will continue its
strong growth profile through its existing client base in
Western Australia and Queensland, as well as capitalising
on new contract opportunities throughout Australia.
Action Mining Services’ performance will be influenced by
investment in the resource sector for sales of products and
outlook remains positive with increased sales to the east
Coast through agency agreements as well as its traditional
Western Australia market expected to drive revenue.
the Group’s balance sheet, funding facilities and cash
position provide a strong foundation for future organic
growth or suitable acquisitions.
Despite continued uncertainly in global markets and
delays in formal approval of some resource projects,
NRW remains confident there is ample opportunity in the
medium term for the business to continue to grow, as
reflected by the strength of the current order book, tender
pipeline and diversification strategy.
“ nrw is targeting revenue
growth of at least 15%
in fy13…”
32
Ceo: Year in reVieW
NRW ANNuAl RepoRt 2012
comPany
oUTlooK
NRW ANNuAl RepoRt 2012
Ceo: Year in reVieW
33
chief financial officer
Financial year in reVieW
34 chief financial officer
Financial year in reVieW
chief financial
oFFicer
FY12 reVieW
the Financial Year ended 30 June 2012 was a highly
successful one for NRW Holdings limited having
achieved important milestones in terms of its growth and
planned strategy.
the Group continued to increase revenue, net earnings
and returns on capital employed while maintaining
conservative net gearing levels. the Group is continuing
to diversify across all operating divisions by client,
commodity and by geography.
ρ
ρ
ρ
ρ
the Civil Contracting Division commenced work at
the Wheatstone project for Bechtel, signalling NRW’s
entry into the competitive oil and gas market. Works
were also undertaken in Queensland and extensively
throughout Western Australia. Civil revenue grew 91%
and margins increased from 10% to 11%.
Mining revenue grew 69% and margins increased
from 10% to 12% despite adverse weather conditions
mainly impacting the Middlemount operation during
the second half.
Action Drill and Blast experienced exceptional
growth with revenue increasing 307% on FY11.
Margins improved due to increased contribution of
external contracts.
Action Mining Services revenue and margins grew
as a result of increased demand for both mechanical
services and product sales of water trucks and
service truck modules.
$m's
FY2012
Revenue
Segment profit
return on reVenue
FY2011
Revenue
Segment profit
return on reVenue
Revenue Growth
Segment profit Growth
nrW CiVil
ContraCting
nrW
mining serViCes
aCtion
Drill & Blast
aCtion
mining serViCes
731.7
81.6
11%
382.6
39.7
10%
91%
106%
542.2
64.0
12%
321.7
32.0
10%
69%
100%
113.1
18.7
17%
27.8
2.9
10%
307%
545%
46.6
4.6
10%
28.1
2.2
8%
66%
109%
NRW ANNuAl RepoRt 2012
CFo: FinanCial Year in reVieW
35
chief financial
oFFicer
inVestment returns
earnings per share continued to
increase in line with the profitability
of the business; the compound
average growth rate of epS since
FY07 is 41.2%. With activity in
the resources sector expected
to improve, it is expected NRW’s
earnings per share will continue the
strong growth trend with investment
in people, systems and equipment.
Consistent with growth in epS
the Board of Directors seek to
maximise dividend payments to NRW
shareholders. the dividend payout
for FY12 as a percentage of earnings
per share is 52% compared to 56%
in the prior corresponding period.
the Group continued to achieve
high returns on average capital
employed combining high utility of
plant, project execution and a clear
focus on balance sheet, cash and
capital allocation.
EARNINGS & DIVIDENDS PER SHARE
Cents
40
35
30
25
20
15
10
5
0
FY08
FY09
FY10
FY11
FY12
Earnings Per Share
Dividends Per Share
RETURN ON CAPITAL EMPLOYED
$m’s
450
400
350
300
250
200
150
100
50
0
%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
FY08
FY09
FY10
FY11
FY12
Net Fixed Assets
Return on Average Capital Employed
CaPital exPenDiture
Capital expenditure was concentrated in the Mining Services division with the majority of equipment being allocated to the
Middlemount Coal project in Queensland.
CaPital exPenDiture
NRW Civil Division
NRW Mining Division*
Drill & Blast
Action Mining Services
Miscellaneous
totAl
FY12
16.6
105.5
15.1
0.6
6.7
$144.4
FY11
6.9
120.4
7.5
0.6
14.8
$150.2
*FY11 includes assets purchased from Comiskey Earthmoving Pty Ltd
In line with the demand for the services that Action Drill & Blast provides, the $15.1 million of capital expense relates to
the purchase of 11 rigs. A further $20.0 million has been allocated to the purchase of additional rigs to expand the fleet
and cater for ongoing demand.
the Miscellaneous category of expenditure relates to investment in information systems and leasehold improvements to
allow for the centralisation of staff in the new perth headquarters.
36
CFo: FinanCial Year in reVieW
NRW ANNuAl RepoRt 2012
chief financial
oFFicer
Cash FloW
NRW’s operating cash flow in FY12 was $173.2
million and increased in line with growth in eBItDA.
the growth in operating cash was a result of
the efficient management of resources, minimal
investment in working capital and efficient cash
conversion of trade debtors and creditors.
the increase in eBItDA, combined with increase in
operating cash, high utilisation of net fixed assets
and high returns of average capital employed has
resulted in Group cash reserves of $138.0 million at
30 June 2012.
BalanCe sheet anD FunDing
the Group Balance Sheet has continued to
strengthen following a de-gearing process
commenced in the financial year ending 30 June
2009. As a direct consequence, the balance sheet
is in excellent shape to underpin growth expected in
FY13 and beyond.
A Structured Debt Facility (ANZ lead arranger),
negotiated in June 2011, has provided NRW with
the capability and flexibility to fund asset purchases
into the future, with the additional ability to scale up
as required with the participation of other lenders on
standard terms and conditions.
Currently the Group has total funding capacity
(inclusive of financed and operating facilities) totalling
$418.2 million; adequate for immediate requirements.
$m’s
200
180
160
140
120
100
80
60
40
20
0
$m’s
100
90
80
70
60
50
40
30
20
10
0
OPERATING CASH FLOW
FY08
FY09
FY10
FY11
FY12
Operating Cash FLow
NET DEBT POSITION
%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FY08
FY09
FY10
FY11
FY12
Net Debt ($m’s)
Net Debt/Equity
FaCilitY ($m’s)
Bonding
Asset Funding
Working Capital
totAl
sYstems
limit
208
507
50
$765
DraWn
aVailaBle
132
215
0
$347
76
292
50
$418
NRW has continued to invest in information systems to improve transparency of project performance, resource allocation
and cash management, to assist on-site project managers as well as the corporate management of the Company.
With the continued growth of the Company, it is imperative systems are designed so as to integrate information pertaining
to all facets of the business including human resources, plant assets, project costing and supply chain management in a
timely manner.
We will continue to develop the business’ systems and tools in FY13 in order to provide better management of risk,
transparency and accountability to address any issues that may occur with the onset of continued company growth.
NRW ANNuAl RepoRt 2012
CFo: FinanCial Year in reVieW
37
corPorate governance
sTaTemenT
38 corPorate
goVernance sTaTemenT
ASX Governance principles
and ASX Recommendations
the Australian Securities exchange
Corporate Governance Council sets
out best practice recommendations,
including corporate governance
practices and suggested disclosures.
ASX listing Rule 4.10.3 requires
companies to disclose the extent to
which they have complied with the
ASX recommendations and to give
reasons for not following them.
unless otherwise indicated the best practice
recommendations of the ASX Corporate Governance
Council, including corporate governance practices
and suggested disclosures, have been adopted by the
Company for the full year ended 30 June 2012.
In addition, the Company has a Corporate Governance
section on its website: www.nrw.com.au which includes
the relevant documentation suggested by the ASX
Recommendations.
the extent to which NRW has complied with the ASX
Recommendations during the year ended 30 June 2012,
and the main corporate governance practices in
place are set out below.
NRW ANNuAl RepoRt 2012
CorPorate goVernanCe statement
39
corPorate
goVernance sTaTemenT
PrinCiPle 1:
laY soliD FounDation For
management anD oVersight
the Board has implemented a Board Charter that details
its functions and responsibilities together with those of the
Chairman and individual Directors.
Key responsibilities of the Board include:
ρ
approving the strategic objectives of the Group and
establishing goals to promote their achievement;
ρ monitoring the operational and financial position and
performance of the Group;
ρ
ρ
ρ
ρ
ρ
ρ
ensuring the Directors inform themselves of the
Group’s business and financial status;
establishing investment criteria including acquisitions
and divestments, approving investments, and
implementing ongoing evaluations of investments
against such criteria;
providing oversight of the Company, including its
control and accountability systems;
exercising due care and diligence and sound
business judgment in the performance of those
functions and responsibilities;
considering and approving the Group’s budgets;
reviewing and ratifying systems of risk management
and internal compliance and control, codes of
conduct and legal compliance;
ρ monitoring senior management’s performance and
implementation of strategy and ensuring appropriate
resources are available;
ρ
ρ
ρ
ensuring that business risks facing the Group are,
where possible, identified and that appropriate
monitoring and reporting internal controls are in place
to manage such risks;
approving and monitoring financial and other
reporting; and
ensuring the Company complies with its
responsibilities under the Corporations Act, the ASX
listing Rules, the Company’s Constitution and other
relevant laws and regulations.
PrinCiPle 2:
struCture oF the
BoarD to aDD Value
BoarD ComPosition
Details of the Directors in office at the date of this
report, including their qualifications, experience, date
of appointment and their status as non-executive,
independent or executive Directors are set out in the
Director’s Report.
the Board Charter (a copy of which has been published
on the Company’s website) currently provides that at
least one third of its Directors will be independent Non-
executive Directors and that the Chairman must also be
an independent Non-executive Director.
the Board currently has four Directors, three of whom
are non-executive. the three Non-executive Directors,
including the Chairman, are considered to be independent.
the roles of the Chair and Managing Director are
exercised by different individuals.
inDePenDent DeCision-making
the Board agrees that all Directors should bring an
independent judgement to bear in decision-making.
Accordingly, the Board:
ρ
ρ
ρ
has adopted a procedure for Directors to take
independent professional advice if necessary at the
Company’s expense (with the prior approval of the
Chairman, which will not be unreasonably withheld)
as much as is reasonably practicable within the
constraints of its current Board size and structure,
sets aside sessions at its scheduled meetings to
confer without management present
has described in the Board Charter the considerations
it takes into account when determining independence.
“the comPany has a corPorate
governance section on its
weBsite: www.nrw.com.au”
40
CorPorate goVernanCe statement
NRW ANNuAl RepoRt 2012
corPorate
goVernance sTaTemenT
DireCtor inDePenDenCe
ConFliCts oF interest
A Director’s obligations to avoid a conflict of interest are
set out in the Board Charter and reinforced in the Code of
Conduct – the Company’s obligations to Stakeholders.
Directors and employees of the Company are expected
to act at all times in the Company’s best interests and to
exercise sound judgment unclouded by personal interests
or divided loyalties. they must avoid the appearance
of, as well as actual, conflicts of interest both in their
performance of duties for the Company and in their
outside activities.
the Charter states that Directors must comply strictly with
Corporations Act requirements and the Board Charter for
the avoidance of conflicts.
the Board’s Charter lists relationships it takes into account
when determining the independent status of Directors.
Criteria that the Board takes into account when determining
Director independence include that the Director:
ρ
ρ
ρ
ρ
ρ
ρ
ρ
is not a substantial shareholder of the Company or
an officer of, or otherwise associated directly with a
substantial shareholder of the Company (as defined in
section 9 of the Corporations Act 2001);
has not, within the last 3 years, been employed in
an executive capacity by a member of the Group,
or been a director after ceasing to hold any such
employment;
has not, within the last 3 years, been a principal of a
material professional adviser or a material consultant
to the Group, or an employee materially associated
with the service provided;
is not a material supplier or customer of the Group,
or an officer of or otherwise associated, directly or
indirectly, with a material supplier or customer;
has no material contractual relationship with the
Group other than as a director of the Company;
has not served on the Board for a period which
could, or could reasonably be perceived to, materially
interfere with the director’s ability to act in the best
interests of the Company; and
is free from any interest and any business or other
relationship which could, or could reasonably be
perceived to, materially interfere with the director’s
ability to act in the best interests of the Company.
the Board has reviewed the independence status of its
Directors and has determined the following Directors to be
“independent” (in accordance with the criteria listed above):
Dr Ian Burston (Chairman)
ρ
ρ Mr Michael Arnett
ρ Mr John Cooper
the period of office held by each Director in office is as
follows on the table below.
DireCtor
Dr. Ian Burston
Mr. Michael Arnett
Mr Julian pemberton
Date aPPointeD
PerioD in oFFiCe
Due For re-eleCtion
27 July 2007
17 July 2007
1 July 2006
5 years
5 years
6 years
1 year
Not Applicable
2012 AGM
Not Applicable
Not Applicable
Mr. John Cooper
29 March 2011
NRW ANNuAl RepoRt 2012
CorPorate goVernanCe statement
41
corPorate
goVernance sTaTemenT
nomination anD remuneration Committee
the Board has established a Nomination and
Remuneration Committee and adopted a Charter
that sets out the committee’s role and responsibilities,
composition and membership requirements.
nomination responsibilities:
the role of the Nomination and Remuneration Committee
when carrying out its Nomination responsibilities includes:
ρ
ρ
ρ
ρ
identifying nominees for directorships and other key
executive appointments;
the composition of the Board;
ensuring that effective induction and education
procedures exist for new Board appointees and key
executives; and
ensuring that appropriate procedures exist to assess
and review the performance of the Chair, executive
and Non-executive Directors, senior management,
Board committees and the Board as a whole.
the responsibilities of this Committee with respect to
remuneration are set out under principle 8.
Composition of the Committee
the Committee Charter states that the composition
should include:
ρ
ρ
a minimum of three members, the majority of whom
must be independent, and
a Chairman who is an independent Director.
Committee membership is disclosed in the Directors
Report included as part of the Annual Report along with
details of meetings attended. Membership is consistent
with the composition requirements of the Charter and the
recommendations of the ASXCGC principles.
During the 2012 financial year two meetings of the
Nomination and Remuneration Committee were
held. Certain responsibilities of the Nomination and
Remuneration Committee were also considered at Board
meetings by the full Board as required.
seleCtion, aPPointment, inDuCtion anD
Continuing DeVeloPment ProCesses
Directors must retire at the third AGM following their
election or most recent re-election. At least one third
of Directors must stand for election at each AGM. Any
Director appointed to fill a casual vacancy since the
date of the previous AGM must submit themselves to
shareholders for election at the next AGM.
Re-appointment of Directors by rotation is not automatic
(the above retirement and re-election provisions do not
apply to the Managing Director).
All notices of meeting at which a Director is standing for
election or re-election are accompanied by information to
enable shareholders to make an informed decision.
As part of the induction process, meetings will be
arranged with other Board members and key executives
prior to the Director’s appointment.
All Directors are expected to maintain the skills required
to discharge their obligations to the Company. Directors
are encouraged to undertake continuing professional
education and where this involves industry seminars
and approved education courses, to be paid for by the
Company where appropriate.
the skills, experience and expertise relevant to the
position of director held by each director in office at the
date of the Annual Report is set out in the Directors
Report included in the Annual Report.
the Board will undertake an annual performance
evaluation that reviews:
ρ
ρ
ρ
ρ
performance of the Board against the requirements of
the Board Charter;
performance of Board Committees against the
requirements of their respective Charters;
individual performances of the Chair, Managing
Director, Directors, and Chief executive officer and
the Board Charter, the Committee Charters
and the procedures of the Board with a view to
continuous improvement.
42
CorPorate goVernanCe statement
NRW ANNuAl RepoRt 2012
corPorate
goVernance sTaTemenT
ComPanY seCretarY
the Company Secretary plays an important role in
supporting the effectiveness of the Board by monitoring
that Board policy and procedures are followed, and
co-ordinating the timely completion and despatch of
board agenda and briefing material. the responsibilities of
the Company Secretary are stated in the Board Charter.
All Directors have access to the Company Secretary.
PrinCiPle 4:
saFeguarD integritY in FinanCial rePorting
auDit anD risk management Committee
the Board has established an Audit and Risk Management
Committee to assist the Board in discharging its oversight
responsibilities and has adopted a formal Charter that sets
out the Committee’s role and responsibilities, composition
and membership requirements.
the appointment and removal of the Company Secretary
is a matter for decision by the Board.
the role of the Audit and Risk Management
Committee includes:
PrinCiPle 3:
Promote ethiCal anD resPonsiBle
DeCision making
CoDe oF Business ethiCs anD ConDuCt
NRW has adopted a Code of Business ethics and
Conduct that applies to its Directors, management and
employees and which seeks to establish the minimum
standards the Board believes are necessary to maintain
the highest level of confidence for all stakeholders in the
integrity of the NRW group. this Code is published on the
Company’s website.
DiVersitY PoliCY
the Committee is also required to assess the skills,
experience and personal qualities of any candidate in
line with the principles and objectives of the Company’s
Diversity policy which is available on the Company website.
NRW currently has no women Directors although the
Company is actively seeking suitable candidates. the
percentage of females in the workforce is approximately
15.7% and 12.2% of senior management are women.
seCurities Dealing PoliCY
the Board has adopted a Securities Dealing policy
that is binding on all Directors, employees, contractors,
consultants and advisers to NRW. the policy is intended
to assist in maintaining market confidence in the integrity
of dealings in the Company’s securities.
this policy is provided to all new employees at induction.
the Company will obtain a periodic acknowledgement
from members of the management team of their
compliance with this policy.
ρ
ρ
ρ
reviewing the integrity of management’s presentation
of the Company’s financial position;
reviewing the integrity of management reporting on
Company performance in all other key operational
compliance areas subject to external audit; and
ensuring the independence and competence of the
Company’s external auditors.
In order to assist the Audit and Risk Management
Committee, chartered accountants and business advisors
Grant thornton have been engaged to conduct internal
audit of systems and processes for the NRW Holdings ltd
group of companies.
ComPosition oF the Committee
the Board has determined that the Audit and Risk
Management Committee should comprise:
ρ
ρ
ρ
at least three members
a majority of independent Non-executive Directors
an independent chair who is not the Chair of the Board.
In addition, the Audit and Risk Management Committee
should include:
ρ members who are financially literate
ρ
at least one member with relevant qualifications
and experience
ρ
at least one member with an understanding of
the industry in which the entity operates.
Committee membership is disclosed in the Directors’
Report included as part of the Annual Report along with
details of meetings attended. Membership is consistent
with the composition requirements of the Charter and the
ASX principles.
the Charter is published on the Company’s website. the
website also contains information on the procedures for
the selection and appointment of the external auditor and
for the rotation of external audit partners.
NRW ANNuAl RepoRt 2012
CorPorate goVernanCe statement
43
corPorate
goVernance sTaTemenT
PrinCiPle 5:
make timelY anD BalanCeD DisClosure
PrinCiPle 7:
reCognise anD manage risk
the Company is committed to ensuring that:
ρ
ρ
all investors have equal and timely access to
material information concerning the Company
– including its financial situation, performance,
ownership and governance
Company announcements are factual and presented
in a clear and balanced way.
the Board has adopted a Continuous Disclosure policy
that complies with ASX and other statutory obligations
with the Company Secretary responsible for external
communications.
PrinCiPle 6:
resPeCt the rights oF shareholDers
the Company is committed to effective communications
with its shareholders, providing them with understandable
and accessible information about the Company and
facilitating shareholder participation at general meetings.
the Board has established a Shareholder
Communications policy, its purpose being to set out in
conjunction with the Continuous Disclosure obligations:
ρ
ρ
ρ
Company strategy;
strategy implementation; and
financial results flowing from the implementation of
Company strategy.
the full Shareholder Communications policy is published
on the Company website.
eleCtroniC CommuniCations
the Company maintains an up-to-date website on
which all ASX and media announcements are posted.
prior to the AGM shareholders are also invited to submit
questions to the Company through the office of the
Company Secretary.
risk management PoliCY
the Company has adopted a Risk Management policy,
the primary objective of which is to ensure that the
Company maintains an up-to-date understanding of
areas where the Company may be exposed to risk and
compliance issues and implement effective management
of those issues.
this policy is published on the Company’s website under
the Charter of Audit and Risk Management.
oversight of Risk Management is undertaken by the
amalgamated Audit and Risk Management Committee.
this Committee assists the Board in its oversight role by:
ρ
the implementation and review of risk management
and related internal compliance and control systems;
ρ monitoring the Company’s policies, programs and
procedures to ensure compliance with relevant laws,
the Company’s Code of Conduct; and,
ρ
the establishment and ongoing review of the
Company’s corporate governance policies,
procedures and practices.
the Board require management to report to it, directly, or
through the Audit and Risk Management Committee, as
to the effectiveness of the Company’s management of its
material business risks.
the Managing Director is required to report to the Board
on the progress of, and on all matters associated with,
risk management. the Managing Director is to report
to the Board as to the effectiveness of the Company’s
material business risks at least annually.
NRW has established a risk management foundation that
will be developed and enhanced over time to meet best
practice standards including the recent appointment of an
internal auditor.
external auDitor’s agm attenDanCe
the external auditor is required to attend the Company’s
AGM and to respond to questions from shareholders
about the conduct of the audit and the preparation and
content of the auditor’s report.
the Board has received an assurance from the Managing
Director and Chief Financial officer that there is a sound
system of risk management and internal control and that
the system is operating effectively in all material respects
in relation to the financial reporting risks.
44
CorPorate goVernanCe statement
NRW ANNuAl RepoRt 2012
corPorate
goVernance sTaTemenT
PrinCiPle 8:
remunerate FairlY anD resPonsiBlY
nomination anD remuneration Committee
the Board has established a Nomination and
Remuneration Committee and adopted a Charter that
sets out the Committee’s role and responsibilities,
composition and membership requirements.
remuneration responsibilities:
the role of the Nomination and Remuneration Committee
when carrying out its Remuneration responsibilities
includes responsibility for providing the Board with
advice and recommendations regarding the ongoing
development of an executive remuneration policy that:
ρ
ρ
ρ
is designed to attract, maintain and motivate
directors and senior management with the aim of
enhancing the performance and long-term growth
of the Company
clearly sets out the relationship between the
individual’s performance and remuneration; and
complies with the reporting requirements relating to
the remuneration of directors and key executives as
required by ASX listing Rules, Accounting Standards
and the Corporations Act.
the Committee must review the remuneration policy
and other relevant policies on an ongoing basis and
recommend any necessary changes to the Board.
the composition requirements for and membership of
this Committee is consistent with the Charter and with
ASXCGC principles.
Committee membership is disclosed in the Directors
Report included as part of the Annual Report along with
details of meetings attended.
A copy of this Committee’s Charter is on the
Company’s website.
exeCutiVe remuneration
the Board periodically reviews executive remuneration
practices with a view to ensuring there is an appropriate
balance between fixed and incentive pay, and that
the balance reflects short and long term performance
objectives appropriate to the Company’s circumstances
and goals.
executive remuneration will be published in the
Remuneration Report in the Company’s Annual Report
each year (including the Remuneration Report contained
in this Annual Report).
non-exeCutiVe DireCtor remuneration
ASX guidelines for appropriate practice in Non-
executive Director remuneration are that Non-executive
Directors should:
ρ
ρ
ρ
ρ
normally be remunerated by way of fees (in the
form of cash, non-cash benefits, superannuation
contributions or salary sacrifice into equity)
not normally participate in schemes designed for
the remuneration of executives
not receive options or bonus payments
not be provided with retirement benefits other
than superannuation.
the Company’s current practice for remunerating Non-
executive Directors is consistent with these guidelines.
the details of Directors’ remuneration are set out in the
Remuneration Report contained in the Annual Report.
remuneration PoliCY DisClosures
Disclosure of the Company’s remuneration policies is best
served through a transparent and readily understandable
framework for executive remuneration that details the
costs and benefits.
the Company intends to meet its transparency obligations
in the following manner:
ρ
ρ
ρ
ρ
ρ
publishing a detailed Remuneration Report in the
Annual Report each year
continuous disclosure of employment agreements
with key executives where those agreements, or
obligations falling due under those agreements, may
trigger a continuous disclosure obligation under ASX
listing Rule 3.1.
presentation of the Remuneration Report to
shareholders for their consideration and non-binding
vote at the Company’s AGM
taking into account the outcome of the non-
binding shareholder vote when determining future
remuneration policy and,
providing a response to shareholder questions on
policy where appropriate.
NRW ANNuAl RepoRt 2012
CorPorate goVernanCe statement
45
financial
reporT 2012
46 financial
reporT 2012
48
72
73
74
75
76
77
78
Directors’ rePort
auDitor’s inDePenDence Declaration
Directors’ Declaration
consoliDateD statement of comPrehensive income
consoliDateD statement of financial Position
consoliDateD statement of changes in equity
consoliDateD statement of cash flows
notes to the
Financial sTaTemenTs
78
130 shareholDer
inFormaTion
130
133 inDePenDent
aUDiTor’s reporT
133
NRW ANNuAl RepoRt 2012
FinanCial rePort
47
Directors’
reporT
the Directors present their report together with the financial report of NRW Holdings limited (“the Company”) and of the
Consolidated Group (also referred to as “the Group”), comprising the Company and its subsidiaries, for the financial year
ended 30 June 2012.
DireCtors
the following persons held office as Directors of NRW Holdings limited during the financial year and up to the date of this report:
name
status
qualiFiCations, sPeCial resPonsiBilities anD other DireCtorshiPs
Dr Ian Burston Chairman
Dr Ian Burston was appointed as a Director and Chairman on 27 July 2007.
Independent
Non-executive
Director
His career includes former positions as Managing Director of portman limited,
Managing Director and Chief executive officer of Aurora Gold ltd, Chief executive
officer of Kalgoorlie Consolidated Gold Mines pty ltd, Vice president – WA Business
Development of CRA ltd and Managing Director of Hamersley Iron pty ltd. He was
a Non-executive Director of the esperance port Authority for ten years, Chairman of
the Broome port Authority and executive Chairman of Cape lambert Iron ore ltd.
Dr Burston is currently a Non-executive Director of Mincor Resources Nl, Kansai
Mining Corporation and energio limited.
Dr Burston has a Bachelor of engineering (Mech) degree from Melbourne university
and a Diploma in Aeronautical engineering from Royal Melbourne Institute of
technology. He has completed the Insead Management Course in paris and the
Harvard Advanced Management program in Boston.
He was awarded the Western Australian Citizen of the Year (category of Industry
and Commerce) in 1992, the order of Australia (General Division) in 1993 and an
Honorary Doctor of Science (Curtin) in 1995.
Dr Burston has held the following directorships of listed companies in the 3 years
immediately before the end of the financial year:
ρ
ρ
ρ
ρ
ρ
ρ
ρ
Non-executive Chairman, Imdex limited (Resigned 15 october 2009)
Non-executive Director, Mincor Resources Nl (Current)
Non-executive Director, energio limited (Current)
Non-executive Director, Kansai Mining Corporation (Current)
Non-executive Director, Fortescue Metals Group (Resigned 2011)
Non-executive Director, Carrick Gold limited (Resigned 2010)
Non-executive Director, Condor Nickel limited (Resigned 2010)
Julian
pemberton
Chief
executive
officer and
Managing
Director
Mr pemberton was appointed as a Director on 1 July 2006. Appointed as Chief
executive officer and Managing Director 7 July 2010.
He has over 20 years of experience in business, sales and management in both
Australia and the united Kingdom. Mr pemberton joined NRW in 1997 and initially
worked on site before progressing into the sales and hire area. He has held roles as
operations Manager, General Manager and Chief operating officer for NRW prior to
his current role.
48
FinanCial rePort
NRW ANNuAl RepoRt 2012
Directors’
reporT
name
status
qualiFiCations, sPeCial resPonsiBilities anD other DireCtorshiPs
Michael Arnett Non-executive
Mr Arnett was appointed as a Director on 27 July 2007.
Director
John Cooper
Non-executive
Director
Mr Arnett is a consultant to and former partner of and member of the Board of
Directors and national head of the Natural Resources Business unit of the law firm
Norton Rose (formally Deacons). Michael has been involved in significant corporate
and commercial legal work for the resource industry for over 20 years.
Mr Arnett is currently Chairman and a Non-executive Director of New Guinea Nl
and a Non-executive Director of Nexus energy limited.
Mr Arnett has held the following directorships of listed companies in the 3 years
immediately before the end of the financial year:
ρ
ρ
ρ
ρ
Chairman, New Guinea energy Nl (Current)
Non-executive Director, Nexus energy limited (Current)
Non-executive Director, Global Resources Corporation limited (Resigned 2011)
Non-executive Director, Archipelago Resources plC (Resigned 2010)
Mr Cooper was appointed as a Director on 29 March 2011.
Mr Cooper has held a range of very senior executive management and Board roles
associated with development of major capital works throughout Australia
and internationally.
In 21 years with Concrete Constructions, Mr Cooper project managed major
construction projects and was in charge of the group’s South east Asian and
Australian operations. He also headed CMpS&F, a design engineering and project
management organisation specialising in oil and gas pipelines and compressor
stations, mining and mine design, infrastructure and environmental contracts in
Australia and South east Asia.
Mr Cooper held a role with the Sydney olympic Games organising Committee,
responsible for all contingency planning and technology/Games management.
In August 2006, Mr Cooper was appointed by the South African conglomerate,
Murray and Roberts pty ltd, as its representative and Deputy Chairman on the
Clough engineering Board, formulating overall strategy for the business and taking
on an interim Ceo position until a new management team was put in place in the
restructured organisation.
In 2007 Mr Cooper was appointed to Murray and Roberts’ international board
which was responsible for group operations outside of South Africa, including the
Middle east, Canada, Australia and the united Kingdom. After retiring from the
Murray and Roberts Group in 2010 he was subsequently appointed to the advisory
council to the Bilfinger Berger Services group to assist in strategy and management
development and planning.
Mr Cooper has held the following directorships of listed companies in the 3 years
immediately before the end of the financial year:
ρ
ρ
ρ
ρ
Non-executive Director and Chairman, Southern Cross electrical (Current)
Non-executive Director, Flinders Mines (Current)
Non-executive Director, QR National (Current)
Non-executive Director, Neptune Marine limited (Current)
NRW ANNuAl RepoRt 2012
FinanCial rePort
49
Directors’
reporT
ComPanY seCretarY
Mr Kim Hyman was appointed to the position of company
secretary on 10 July 2007. Mr Hyman has responsibility for
company secretarial services and coordination of general
legal services, as well as the risk management portfolio.
DireCtors’ meetings
the number of Directors’ meetings and number of
meetings attended by each of the Directors of the
Company during the financial year are:
DireCtor
Ian Burston
Julian pemberton
Michael Arnett
John Cooper
DireCtors’
meetings
attenDeD
DireCtors’
meetings helD
6
6
6
6
6
6
6
6
the Remuneration Committee met once during this period.
this meeting comprised of Michael Arnett (Chairman), John
Cooper and Ian Burston as the Remuneration Committee.
the Nomination Committee was not required to meet
during this period.
the Audit and Risk Management Committee met
in conjunction with each Board Meeting held. the
members of this Committee are Michael Arnett
(Chairman), Ian Burston and John Cooper.
PrinCiPal aCtiVities
the principal continuing activities of the Group,
comprising the Company and the entities that it controlled
during the financial year, were:
civil contracting services
ρ
ρ mining services
ρ
equipment sales
ρ
ρ
drilling and blasting services
fabrication, quarantine and repair services
reVieW oF oPerations anD results
the net profit after tax of the consolidate entity for the
year was $97.1 million (2011: $41.2 million).
A review of the operations and results for the Group for the
financial year to 30 June 2012, as well as information on
the financial position of the Group, is set out in the Year in
Review on pages 10 to 33 in this Annual Financial Report.
state oF aFFairs
there were no significant changes in the state of affairs of
the Company or the Group during the financial year.
signiFiCant eVents aFter Year enD
No matter or circumstance has arisen since the end of
the financial year that has significantly affected, or may
significantly affect, the Group’s operations, the results
of those operations, or its state of affairs in future
financial years.
likelY DeVeloPments
likely developments in the Group’s operations in
future financial years and the expected results of those
operations are reported, as appropriate, in the Year in
Review on pages 10 to 33 in this Annual Financial Report.
Further information about likely developments in the
Group’s operations in future financial years, the expected
results of those operations and the Group’s business
strategy and prospects for future financial years has not
been included in this report because disclosure of such
information would be likely to result in unreasonable
prejudice to the Company and the Group.
enVironmental regulations
the Group holds various licenses and is subject to various
environmental regulations. No known environmental
breaches have occurred in relation to the Group’s operations.
50
FinanCial rePort
NRW ANNuAl RepoRt 2012
Directors’
reporT
DiViDenDs
A fully franked interim dividend of $0.08 per ordinary share
was paid during the financial year ended 30 June 2012
(2011: $0.04 per ordinary share).
the Directors have declared a fully franked final
dividend of $0.10 per ordinary share, in relation to 30
June 2012, payable on 31 october 2012 (2011: $0.05
per ordinary share)
DireCtors’ interests
As at the date of this report, the relevant interest of each
Director in the ordinary share capital of the Company was:
DireCtor
orDinarY
shares (nWh)
PerFormanCe
rights
Julian pemberton
2,540,414
841,377
Ian Burston
John Cooper
Michael Arnett
329,492
10,000
280,474
-
-
-
transactions between entities within the Group and
Director-related entities are set out in Note 35 to the
financial statements.
oPtions oVer unissueD
shares or interests
other than those mentioned in the remuneration policy,
there were no options for ordinary shares on issue during
the financial year, and none had been granted or were on
issue as at the date of this report.
PerFormanCe rights oVer
unissueD shares or interests
As at the date of this report, there are 1,129,062
performance Rights on issue by the Company. During
the year to 30 June 2012, 1,710,703 performance
Rights were issued to Key Management personnel
(2011: Nil). Since the end of the financial period, 586,641
performance Rights vested on 15 September 2012 and
converted into ordinary shares in the Company. As of the
date of this report, no performance Rights that have been
granted have been cancelled or forfeited.
performance Rights have no exercise price on vesting and
upon exercise result in the issuance of ordinary shares. No
performance Rights holder has any right under the terms
of the performance Rights to participate in any other
share issue of the Company.
Details of performance Rights granted to executives as
part of their remuneration are set out in the Remuneration
Report on pages 53 to 71.
Details of performance Rights issued by NRW Holdings
limited as at the date of this report are set out below:
Class oF
seCurities
performance
Rights -
unlisted
numBer
Vesting Dates
1,129,062
ρ
ρ
ρ
564,531 are eligible to vest on 15
September 2013.
564,531 are eligible to vest on 15
September 2014.
All performance Rights that are
eligible to vest will be subject to
measurement of performance
against the Vesting Conditions.
NRW ANNuAl RepoRt 2012
FinanCial rePort
51
inDemniFiCation anD insuranCe
oF oFFiCers anD auDitors
the Company has executed a deed of access, indemnity
and insurance in favour of each Director. the indemnity
requires the Company to indemnify each Director for
liability incurred by the Director as an officer of the
Company subject to the restrictions prescribed in the
Corporations Act 2001. the deed also gives each Director
a right of access to Board papers and requires the
Company to maintain insurance cover for the Directors.
the Company has also executed an indemnity and
insurance deed in favour of certain executives of the
Company. the deed requires the Company to indemnify
each of these executives for liability incurred by them as
executives of NRW subject to the restrictions prescribed
in the Corporations Act 2001. the deed also requires
the Company to maintain insurance cover for these
executives. the total amount of insurance premiums paid
during the financial year was $259,208 (2011: $237,915.).
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 a
liability incurred as such an officer or auditor.
Directors’
reporT
auDitor
the Company’s auditor is Deloitte touche tohmatsu who
was appointed at the AGM held on November 28, 2007.
During the financial year there were no officers of the
Company who were former partners or directors of Deloitte.
auDitor’s inDePenDenCe anD
non-auDit serViCes
the Directors received the Auditor’s Independence
Declaration from the auditor of the Company, which is
included on page 72 of this report.
Details of amounts paid or payable to the auditor for
non-audit services provided during the year are outlined in
Note 37 (page 127) to the financial statements.
the Directors are satisfied that the provision of non-audit
services, during the year, by the 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.
the Directors are of the opinion that the services
as disclosed in Note 37 (page 127) to the financial
statements do not compromise the external auditors’
independence, based on advice received from the Audit
and Risk Management Committee, for the following
reasons:
ρ
ρ
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 Code
of Conduct ApeS 110 Code of ethics for professional
Accountants issued by the Accounting professional
and 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 advocate for the Company or
jointly sharing economic risks and rewards.
52
FinanCial rePort
NRW ANNuAl RepoRt 2012
Directors’
reporT
letter From the nomination & remuneration Committee Chair – unauDiteD
Holdings Limited
NRW PTY LTD
ABN: 69 828 799 317
181 Great Eastern Highway, Belmont, Western Australia 6104
PO Box 592, Welshpool, Western Australia 6986
Tel +61 (0)8 9232 4200 Fax +61 (0)8 9232 4234
Web www.nrw.com.au
28 September 2012
Dear Shareholders,
The NRW Nomination and Remuneration Committee (N&RC) and NRW Board are pleased to
present the 2012 Remuneration Report. This report explains the refreshed remuneration programme
that NRW has put in place over the last 12 months. Most of this refresh relates to the introduction of
structured short-term incentive (STI) and long-term incentive (LTI) programmes. These programmes
bring NRW’s remuneration practices in line with the market and, more importantly, ensure NRW
can maintain and extend its competitive position through retaining our key executives and attracting
best-in-market executives to the Company. We have developed these programmes to ensure a
strong link between executive key management personnel (Executive KMP) incentives and three
core components of shareholder value – NRW maintaining its competitive position and strength,
growth in earnings and ensuring that capital utilised to grow earnings achieves an attractive Return
on Capital Employed.
As detailed in the Chairman’s report, in FY12 NRW delivered significant growth in revenue and
NPAT and your Company also reached a market capitalisation in excess of $1.2 billion prior to the
recent downturn in global equity markets. These achievements are not overnight phenomena; they
are the result of a significant and sustained effort over a number of years by our senior executives.
The dedication and commitment of these Executives has remained very strong during difficult and
trying times as well as through periods of intense growth in demand for our Company’s services.
Moreover, they have done this without an incentive programme in place, albeit that the Company
had given them an undertaking to put one in place. As shareholders, you played a vital role in the
Company delivering on the incentive program through your approval of the NRW Performance
Rights Plan at the 2011 AGM. That Plan provides for annual LTI awards to be made by the N&RC.
The first of those LTI awards has been made in respect of NRW’s performance in FY12. In
recognition of the Company’s undertaking to its senior executives and the exemplary growth
achieved for our Company over the past 4 years, the FY12 LTI award under the Performance
Rights Plan will be eligible to vest in three tranches (34%, 33% and 33%) over three years on 15
September 2012, 15 September 2013 and 15 September 2014. This vesting schedule reflects the
‘one-off’ nature of the FY12 LTI award, which allows for a transitionary implementation of the NRW
LTI programme. Any LTI award that will be made in respect of FY13 and ongoing will be eligible
to vest as to 100% on the third anniversary of an LTI award being made, subject of course to the
achievement of vesting conditions.
We have also listened to and taken into account comments from our shareholders in formulating our
remuneration programme. As you will read in the Remuneration Report, NRW has modified some
of the Performance Rights Plan rules (e.g. in respect of vesting on a takeover / control transaction).
In doing this, and in formulating the LTI programme for FY13 and beyond, NRW has addressed
most of the comments and feedback we received from shareholders leading up to and following the
Company’s AGM in November 2011. Also in response to this feedback, we feel that it is important
Civil & Mining
181 Great Eastern Highway, Belmont, Western Australia 6104
PO Box 592, Welshpool, Western Australia 6986
50 Belgravia Street, Belmont, Western Australia 6104
PO Box 692, Belmont, Western Australia 6984
103 Stirling Crescent, Hazelmere, Western Australia 6055
Po Box 1189, Midland, Western Australia, 6936
Tel +61 (0)8 9232 4200 Fax +61 (0)8 9232 4234
Tel +61 (0)8 9232 4306 Fax +61 (0)8 9232 4432
Tel +61 (0)8 9274 1736 Fax +61 (0)8 9274 5684
NRW ANNuAl RepoRt 2012
FinanCial rePort
53
Directors’
reporT
to highlight that NRW’s LTI awards are subject to two stringent tests – (i) challenging intra-year
performance criteria that determine the quantum of an LTI award and thereby the number of
Performance Rights granted and (ii) ongoing market-competitive performance thresholds, or vesting
conditions, that determine the vesting of the Performance Rights.
You may be aware that NRW received its ‘first strike’ in respect of NRW’s 2011 Remuneration Report.
In formulating its refreshed remuneration programme NRW has taken an active approach to addressing
comments made by our shareholders in respect of the 2011 Remuneration Report, namely:
•
•
•
•
Reviewing each Executive KMP’s level of fixed remuneration against the remuneration of
executives holding comparable positions with both direct competitors and ASX-listed companies
operating in a similar environment to NRW. Salaries for the CEO, Managing Director NRW Civil
& Mining and the General Manager NRW Civil, being the Executive KMP with the three highest
fixed remuneration amounts, have been frozen for FY13;
Confirming that the FY12 LTI award is a one-off award that is transitionary in nature, and that
moving forward NRW will have vesting regime for Performance Rights whereby they are only
eligible to vest three years after an award is made, subject to the achievement of vesting
conditions;
Reviewing our vesting condition hurdles against those of direct competitors and companies
listed on the Australian Securities Exchange that have a similar market capitalisation to NRW.
Our conclusion from this review is that NRW’s vesting conditions in respect of EPS Growth
and Return on Capital Employed are in line with or more challenging than the companies that
we reviewed. In respect of our Relative Total Shareholder Return vesting condition, whilst our
“peer group” of direct competitors is typically smaller than the peer group adopted by the other
companies, our vesting profile is similar to the companies that we reviewed;
Ensuring we are adequately communicating the threshold tests and performance conditions that
apply to determination of awards in both our short-term incentive (“STI”) and LTI plans.
Despite the changes that we have made to our remuneration structure and the introduction of STI
and LTI programmes, the outstanding result of growth in NPAT and EPS of 116% has been achieved
where the total KMP remuneration expense has increased by only 33%; all of this increase is
attributable to the at-risk incentive payments of the STI and LTI expense, and in fact, the total fixed
remuneration expense for NRW’s KMP decreased by 9% in FY12. Further detail on the STI and LTI
components of NRW’s remuneration programme are set out in the Remuneration Report.
NRW is committed to ensuring the remuneration programme we have in place supports our growth
profile and business strategy, takes into account the characteristics and conditions of the markets
we work in and takes into account the views of our shareholders.
Yours sincerely,
Michael Arnett
Chairman
Nomination & Remuneration Committee
Civil & Mining
181 Great Eastern Highway, Belmont, Western Australia 6104
PO Box 592, Welshpool, Western Australia 6986
50 Belgravia Street, Belmont, Western Australia 6104
PO Box 692, Belmont, Western Australia 6984
103 Stirling Crescent, Hazelmere, Western Australia 6055
Po Box 1189, Midland, Western Australia, 6936
Tel +61 (0)8 9232 4200 Fax +61 (0)8 9232 4234
Tel +61 (0)8 9232 4306 Fax +61 (0)8 9232 4432
Tel +61 (0)8 9274 1736 Fax +61 (0)8 9274 5684
54
FinanCial rePort
NRW ANNuAl RepoRt 2012
Directors’
reporT
remuneration rePort (auDiteD)
introDuCtion
remuneration
reporT
the information provided in this report has been prepared based on the requirements of the Corporations Act 2001 and
the applicable accounting standards. the report has been audited. the report outlines the remuneration arrangements
for the Company for the period to 30 June 2012 for the following individuals, who are the Key Management personnel
(KMp) of the Company:
name
Position helD
resigneD/aPPointeD
non-exeCutiVe DireCtors
Dr i Burston
Chairman and Non-executive Director
mr J CooPer
Non-executive Director
mr m arnett
Non-executive Director
exeCutiVe DireCtor
mr J a PemBerton
Managing Director and Chief executive officer
Appointed as Non-executive Director, 27th July
2007
Appointed as Non-executive Director, 29th
March 2011
Appointed as Non-executive Director, 27th July
2007
Appointed as Director of the Company 1st July
2006 and as Chief executive officer 7th July
2010.
exeCutiVes
mr W rooneY
mr m steWart
mr t Cook
mr W Fair
mr k Bounsell
mr m WallaCe
mr s luCas
mr k hYman
Managing Director – NRW Civil & Mining
Appointed 1 october 2008
General Manager – NRW Civil
Appointed 1 July 2008
General Manager – NRW Mining – WA, Nt and
overseas
Appointed 30 May 2011
General Manager – Action Drill & Blast pty
limited
Appointed 1 March 2012
General Manager Assets
Appointed 22 November 1994
Chief Financial officer
Appointed 8 December 2008
General Manager east Coast Mining
Appointed 1 January 2008
Resigned 18 May 2012
Company Secretary, Risk Management & legal
Appointed 10 July 2007
the report refers to both Non-executive Directors and executives. unless noted executive Directors are included in
discussion of executives.
the Remuneration Report is divided into the following sections:
seCtion
1.
2.
3.
4.
5.
Remuneration governance
Five Year Snapshot
Response to shareholder concerns
executive remuneration
Non-executive Director remuneration
Page
57
58
59
60
71
NRW ANNuAl RepoRt 2012
FinanCial rePort
55
Directors’
reporT
glossarY
remuneration
reporT
the following terms used throughout our Remuneration Report are defined here:
ASX
epS
Australian Securities exchange
earnings per Share
executive KMp
executive full time employees of NRW that are Key Management personnel, i.e. KMp excluding Non-executive Directors
FY12
FY13
Group
KMp
ltI
N&RC
NRW
the financial year ending 30 June 2012
the financial year ending 30 June 2013
NRW and all its subsidiary and associate companies
Key Management personnel according to the definition of that term in the Corporations Act 2001 (Cth), including
Non-executive Directors
long term Incentive
Nomination and Remuneration Committee
NRW Holdings limited
NRW performance
Rights plan
performance Right
the performance Rights plan of NRW approved by shareholders in general meeting on 23 November 2011
A right that converts into one ordinary share in NRW on the meeting of the specified vesting conditions on the
specified vesting dates
Relative tSR
Relative total Shareholder Return
RoCe
StI
Return on Capital employed
Short term Incentive
Vesting Conditions
the vesting conditions that apply to the vesting of performance Rights granted by NRW to its executive KMp
under the NRW performance Rights plan
VWAp
Volume Weighted Average price of NRW ordinary shares quoted on the ASX
56
FinanCial rePort
NRW ANNuAl RepoRt 2012
Directors’
reporT
remuneration
reporT
1.
remuneration goVernanCe
NRW has established a Nomination and Remuneration
Committee (N&RC) consisting of Michael Arnett,
Ian Burston and John Cooper, being all of NRW’s
independent Non-executive Directors. the N&RC is
responsible for making recommendations to the Board
on the remuneration arrangements for non executive
directors and executives as set out in the N&RC Charter.
the N&RC provides advice, recommendation and
assistance to the Board with respect to:
ρ
ρ
ρ
ρ
ρ
the remuneration of Non-executive Directors,
including the Chair of the Board;
the remuneration policies which are designed to
attract and retain executives with the expertise to
enhance the competitive advantage, performance
and growth of NRW;
ensuring that the level and composition of executive
remuneration packages are fair, reasonable and
adequate, and display a clear relationship between
the performance of the individual and performance
of NRW;
termination and redundancy policies and the payments
made to outgoing executives and senior managers;
Disclosures to be included in the corporate
governance section of NRW’s annual report which
relate to NRW’s remuneration policies and procedures.
the N&RC is mandated to engage external and
independent remuneration advisors who do not have a
relationship with or advise NRW management. During
the reporting period the N&RC did not engage any
such advisors. However during this period the N&RC
took an active role in meeting and liaising with some
of NRW’s shareholders as well as shareholder proxy
groups to discuss directly their views in respect of market
remuneration practices, NRW’s remuneration programme
and how the market practices can be best applied to
NRW’s remuneration programme.
the N&RC met four times during the reporting period.
the N&RC assesses performance of NRW’s executive
KMp largely through budget setting and consequently
through the measuring metrics that underpin the
achievement of those budgets. As detailed below, the
N&RC also takes into account personal targets for the
executive KMp.
Budgets are set at the business unit and Group levels with
regard to the market conditions and opportunities that
are open to existing business and strategies that NRW is
pursuing in terms of its longer-term strategic growth and
evolution. through this process the Board sets a ‘target’
level of performance, and, given the opportunities and
market conditions facing the Company, a ‘demanding’
level of performance is also established.
the latter typically reflects a set of outcomes that the
Board considers achievable where risks are minimised
to the fullest extent possible and growth opportunities
are realised without undue risk being assumed; those
outcomes would represent exemplary growth in our
existing business, achievement of a material step up in
the market position and strength of the Company or the
successful execution of the corporate growth strategy
either on or ahead of time or at a reduced cost.
In setting targets for StI and ltI awards, the N&RC will
take the budgets set by the Board and will focus on the
metrics that are critical to the production of the ‘target’ or
‘demanding’ outcomes. the N&RC pays close attention
to ensuring that the metrics selected balance against each
other so that outcomes are not pursued at the expense of
overall performance of the Group.
the main focus is to ensure that growth in earnings is
pursued with a sharp focus on the amount of capital
required to generate that growth, and within that the
business units and the Group as a whole continue to focus
on the Return on Capital employed that it achieves. NRW
is conscious that it is seen as a capital intensive business;
and the Board and executive KMp work hard to assure our
shareholders that whatever capital is utilised, it generates
attractive, and where possible, market-leading returns.
Metrics selected for determining StI and ltI awards
normally include revenue, contribution margin,
contribution margin improvement, achievement of cost
control initiatives, net profit after tax (Group), return
on capital employed (Group and business unit), asset
utilisation, cost ratios, staff turnover, order book quantum
and tenure and capital expenditure management. the
N&RC regard these metrics as key determinants of
earnings growth and the quality and sustainability of
earnings growth, in turn metrics that underpin growth in
shareholder value.
NRW ANNuAl RepoRt 2012
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Directors’
reporT
remuneration
reporT
2.
FiVe Year snaPshot
the table below sets out summary information on the entity’s earnings and wealth for the past 5 years.
measure
2012
2011
2010
2009
2008
Market Capitalisation (30 June)
$842.2 million
$778.1 million
$246.2 million
$238.7 million
$489.9 million
Share price at end of year
Share price at beginning of year
$3.02
$2.79
$2.79
$0.98
$0.98
$0.95
$0.95
$1.95
$1.95
$2.00
total Revenue
$1,360.8 million
$751.2 million
$615.6 million
$519.0 million
$478.3 million
eBItDA(1)
epS
epS Growth
$195.9 million
$95.5 million
$87.5 million
$81.2 million
$71.8 million
34.8 cents
16.1 cents
14 cents
15 cents
13.6 cents
116%
15%
-7%
10%
n/a
Net profit After tax
$97.1 million
$41.2 million
$35.1 million
$37.1 million
$32.8 million
Interim Dividend paid per share
Final Dividend per share declared
in respect of the year
$0.08
$0.10
$0.04
$0.05
$0.03
$0.03
$0.01
$0.01
$0.04
$0.0423
(1) EBITDA is calculated from net profit after tax, adding tax back, as well as finance costs and depreciation.
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NRW ANNuAl RepoRt 2012
Directors’
reporT
remuneration
reporT
3.
resPonse to shareholDer ConCerns
NRW received a ‘first strike’ on the 2011 Remuneration Report at the 2011 Annual General Meeting.
the shareholder views expressed at and following the 2011 Annual General Meeting and the action taken by NRW to
address these views are outlined below:
shareholDer VieW
ComPanY resPonse anD aCtion
the change of control provisions for
the proposed ltI is too generous.
the Ceo fixed remuneration quantum
is high compared to other companies
the vesting conditions are not
sufficiently stretching
NRW revised the plan Rule provisions that apply to vesting of performance Rights upon a
change of control event occurring. the number of performance Rights that can vest following
a change of control is reduced to reflect the period served. the eligible performance Rights
that can vest are then tested against relevant performance conditions. the quantum of
performance Rights vesting on a change of control event is therefore pro-rated for both time
elapsed and performance levels achieved.
our research in this area suggests that for companies with similar market capitalisation, this
may to some extent be true. the Board compared the fixed remuneration of NRW’s Ceo to
that of direct competitors, and undertook soundings as to the fixed remuneration that NRW
would have to pay were it in need of recruiting a new Ceo. this confirmed our view that the
level of fixed remuneration paid to NRW’s Ceo is not only reasonable, but also that there is a
relatively smaller pool of talent that could take up this position compared to the pool of talent
for Ceo’s of companies with a similar market capitalisation to NRW.
We also note that in the FY11 Remuneration Report, the Ceo’s reported remuneration
included ~$300,000 of accruals in respect of annual and long-service leave. these amounts
were non-cash benefits that resulted from Mr. pemberton’s appointment to the Ceo role
from his previous role as Chief operating officer. these amounts relate to the rebasing
of his annual and long service leave entitlements that had accrued over his 14 years of
service with the Company to the remuneration at the Ceo level, reflecting that when taking
leave the entitlement, and thereby the amount paid whilst on leave, is recorded at the Ceo
remuneration level.
our research shows that the vesting conditions set by NRW as to epS growth, RoCe and
Relative tSR are in line with or more demanding than other ltI vesting conditions in the
market, particularly in respect of the proportion of rights that vest on achieving various levels
of performance. Specifically, a number of ltI programmes of other ASX-listed companies
that we reviewed commence vesting at a cut-in level of 50% of the total rights or options that
can vest against a given measure (e.g. epS Growth, RoCe or Relative tSR performance).
In contrast, NRW’s cut-in levels for epS Growth and RoCe are 0% and graduate up to the
maximum allocation against each of the three Vesting Conditions noted above (this is reflected
graphically, below at section 4.5).
Notwithstanding this, we have extended upward the Vesting Condition thresholds for ltI
awards in FY13 and beyond, and note that our cut-in levels remain at 0%. this means that
in order to achieve vesting of performance Rights, NRW executives must achieve higher
relative levels of performance than direct competitors and companies with a similar level of
market capitalisation to NRW. Moreover, as noted in the letter from the Chairman of the N&RC
preceding this Remuneration Report, NRW’s ltI award mechanics require an individual to
attain a significant and demanding level of performance on an intra-year basis in order that the
quantum of an ltI award can be determined.
the performance period for the ltI
is too short to reflect ‘long-term
performance’
As explained above, the FY12 ltI award will vest over three years reflecting the one-off and
transitionary nature of the FY12 ltI award.
For the ltI awards in FY13 and beyond, vesting will be eligible as to 100% of an award on the
third anniversary of that award.
the specific performance conditions
for the StI are difficult to assess as
limited information is available.
In 2012 NRW implemented a formal StI programme. Details in respect of the StI component
of NRW’s remuneration programme are set out further in section 4.2 below.
NRW ANNuAl RepoRt 2012
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59
Directors’
reporT
remuneration
reporT
4.
exeCutiVe remuneration
ρ
4.1.
executive remuneration
strategy and mix
NRW’s remuneration programme has the following
over-arching principles:
ρ
ρ
set remuneration policy and positioning to
maintain and extend nrW’s competitive
advantage and positioning: NRW believes that
its fixed and at-risk remuneration must be in the
top quartile of competitive benchmarking in order
to attract and retain best-in-market individuals as
its executive KMp. the Board believes that this
approach is also required given the relatively small
pool of experienced executive talent that exists in
the industry and markets in which NRW competes.
NRW’s view is that this positioning is fundamental
to maintaining NRW’s competitiveness, financial
performance leadership relative to peers and
leadership in customer satisfaction with projects
that NRW delivers.
adapt market practice, benchmark to direct
competitors, relate to the risk and competitive
environment: the industry and markets that NRW
competes in have significantly different operating
risks and a significantly smaller pool of experienced
talent compared to companies with a market
capitalisation similar to NRW’s market capitalisation
(+/- 50%). Accordingly whilst NRW’s remuneration
programme takes account of relevant market
practices, benchmarking of individual positions are
weighted heavily to directly comparable companies
and competitors, as opposed to the data of similar
sized companies. Remuneration policies in general
are overlaid with and take account of the risks in and
competitive nature of NRW’s operating environment.
ρ
ensure at-risk remuneration is set against
demanding levels that themselves are balanced
to the long term stability of the Company: NRW’s
approach to at-risk remuneration for both StI and
ltI awards is that achievement of budgeted levels
of performance result in only modest incentive
awards and that demanding levels of performance
are required to deliver what would be a top-quartile
remuneration outcome for a given KMp member.
Whilst the demanding levels of performance are
predominantly quantitative / financial in nature, the
targets take into account the quality of financial
outcomes. that is, they are structured to ensure that
executives pursue growth in a way that does not
compromise the value of NRW in the medium to long
term. For example, NRW pays attention to RoCe
metrics to ensure that epS Growth is pursued with
a keen eye to minimising the amount of capital that
must be utilised to generate epS Growth.
Proportions of fixed and variable remuneration
should weight toward variable as performance
levels increase: Maximum award levels are
structured to ensure that at the maximum level
of remuneration there is a significant weighting to
variable (StI and ltI) components of remuneration.
this weighting is increased the more senior the role
and the higher the level of responsibility that the
individual has for earnings, personnel and strategy.
the relative mix of StI to ltI is also considered in the
context of the nature and level of responsibility of the
individual’s role, the desire of the Company to have
its executive KMp owning NRW shares as well as
succession planning requirements.
60
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NRW ANNuAl RepoRt 2012
Directors’
reporT
remuneration
reporT
long term incentive (lti): An award of ltI is granted
via performance Rights under the NRW performance
Rights plan approved by NRW shareholders at
the Company’s AGM on 23 November 2011. Any
performance Rights granted are subject to Vesting
Conditions and vesting periods – these are discussed
further below in section 4.5.
Determination of an ltI award quantum is made against
the same annual performance criteria that apply to StI
awards – these are discussed further in section 4.4. An
ltI award quantum is then converted into a number of
performance Rights determined by dividing the quantum
of the ltI award by the 60-day VWAp of the NRW
share price as of the day that NRW announced its prior
financial year full-year result. For example, for the FY13 ltI
award, an ltI quantum once determined for an individual
following the end of FY13 will be divided by $2.9605,
which was the 60-day VWAp of the NRW share price
at 24 August 2012, the day on which NRW announced
its FY12 result to the ASX. the result will be the number
of performance Rights awarded to that individual.
performance Rights granted are then subjected to vesting
conditions that are tested on the applicable vesting date.
As noted above StI and ltI awards determined with
reference to achievement against annual performance criteria
and are based on a percentage of fixed remuneration.
4.2.
structure of executive remuneration
ρ
the NRW remuneration programme and consequently
the remuneration components for each executive KMp
member comprise:
ρ
ρ
Fixed remuneration: comprising salary, benefits that
the individual elects, superannuation and applicable
taxes. Fixed remuneration is set with reference to role,
market and relevant experience, which is reviewed
annually and upon promotion. In determining the
appropriate remuneration quantum, the N&RC
reviews information from databases to which NRW
subscribes (e.g. McDonald & Company Australia,
CRA plan Advisors), available market data for direct
competitors, companies of a similar size to NRW
(based on market capitalisation) and similar industry
(i.e. Capital Goods, energy and Materials, Metals
and Mining, oil, Gas and Consumable Fuels industry
group companies). this comparator group is deemed
to be appropriate as it represents the companies
for whom talent is likely to be recruited from, and to
which talent may be lost, and therefore competitive
remuneration against these groups is assessed in
setting fixed remuneration levels for NRW’s Key
Management personnel.
short term incentive (sti): determination of an
StI award is made against annual performance
criteria established at the beginning of each financial
year. StI awards are typically payable in cash. At
the election of the N&RC, the after tax amount of a
portion of an StI award might in some circumstances
be paid in ordinary NRW shares. this may occur for
example where an individual has achieved a high
nominal StI award, or where the balance of an overall
award (inclusive of fixed remuneration, StI and ltI)
is overweight in StI. Any portion of an StI can be
deferred by the N&RC in its discretion with or without
conditions extending beyond continued employment.
performance thresholds relating to StI awards are
discussed further in section 4.4.
NRW ANNuAl RepoRt 2012
FinanCial rePort
61
Directors’
reporT
remuneration
reporT
4.3.
award levels relative to Fixed remuneration
the following table sets out the range of award that executive KMp can be eligible for in FY13 and beyond under the StI
and ltI components of NRW’s remuneration programme:
StI Award FY13 and Beyond as % Fixed Remuneration
ltI Award FY13 & Beyond as % Fixed Remuneration
maximum aWarD
at target leVel oF
PerFormanCe
maximum aWarD at
DemanDing leVel oF
PerFormanCe
maximum aWarD
at target leVel oF
PerFormanCe
maximum aWarD at
DemanDing leVel oF
PerFormanCe
Chief executive officer
Managing Director – NRW Civil
& Mining
Divisional General Managers,
CFo
20%
20%
20%
55%
70%
70%
50%
30%
10%
150%
80%
60%
Any determination of an award following the completion of a financial year is based on:
1.
2.
3.
4.
the performance of an individual according to annual performance criteria set by the N&RC before the end of the
first quarter of a financial year and measured against NRW’s audited results for that financial year (where available);
Recommendations made to the N&RC by the Ceo in respect of executive KMp reporting to the Ceo;
the N&RC’s consideration and recommendation to the Board of NRW;
the Board of NRW exercising its discretion in respect of StI and ltI awards within the boundaries of the
maximum payment levels and the terms and conditions of the NRW performance Rights plan.
62
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NRW ANNuAl RepoRt 2012
Directors’
reporT
remuneration
reporT
4.4.
annual performance criteria
4.5.
lti Vesting Period and Criteria
Annual StI and ltI awards are determined against the
same performance criteria. the specifics and detail of the
criteria are set by the N&RC before the end of the first
quarter in each financial year and are shaped for each
executive KMp member according to their specific role
and responsibilities. the criteria comprise the following
types of measures and weightings:
ρ
ρ
ρ
Financial measures – 80% weighting: Within this
limb of the criteria targets are set at Group and
business unit levels. typically, for a divisional General
Manager, the Group target will be weighted as to
20% – 30%, and the business unit targets will be
weighted as to 50% - 60%. the annual criteria will
be set according to the overall Group targets and
strategy, business unit targets and strategy and
specific areas within each division that the Group
executive determine require focus in that year.
Criteria can include revenue, contribution margin,
contribution margin improvement, achievement of
cost control initiatives, net profit after tax (Group),
return on capital employed (Group and business
unit), asset utilisation, cost ratios, staff turnover,
order book quantum and tenure and capital
expenditure management.
safety measures – 10% weighting: Safety targets,
and in particular NRW’s lost time Injury Frequency
Rate (ltIFR) are set according to NRW’s Group safety
targets, which in turn play a key part in NRW’s ability
to maintain and secure demand for NRW’s services.
Personal measures – 10% weighting: personal
criteria relate to targets that are specific to an
individual’s non-financial performance, career
development and leadership qualities. Whilst these
targets are personal to the individual, they may
include such measures focusing on areas required
for leadership development, succession planning
requirements, strategic planning goals and outcomes.
the FY12 ltI award will vest over three years reflecting the
one-off and transitionary nature of the FY12 ltI award. this
vesting will be as to 34% of performance Rights granted
under the FY12 award on 15 September 2012, 33% on 15
September 2013 and 33% on 15 September 2014.
For the ltI awards in FY13 and beyond, vesting will be
eligible as to 100% of an award on the third anniversary of
the award.
the vesting criteria applicable to ltI awards and the
subsequent granting of performance Rights under the
NRW performance Rights plan are as follows:
ρ
ρ
ρ
ePs growth – 40% weighting: epS is a primary
determinant of shareholder value in a listed company
context. As such NRW views epS Growth as an
important metric for NRW KMp to focus on. epS
Growth is measured over the period that the vesting
applies to. For example, an ltI award made in
respect of FY13 will be measured as to growth in
NRW’s epS at the beginning of FY13 (end of FY12) to
NRW’s epS at the end of FY15.
roCe – 30% weighting: As NRW’s business
necessarily involves capital expenditures, in order to
balance epS Growth, NRW has adopted a RoCe
measure to ensure that epS and epS Growth are
being pursued with a keen eye on the amount of
capital employed in generating net profit after tax and
thereby epS.
relative tsr – 30% weighting: NRW benchmarks
its total shareholder return to ten direct competitors.
Where insufficient competitors are listed on the ASX,
NRW will assess companies that have similar degrees
of complexity, personnel management, risk, revenue
and turnover to NRW. the companies that NRW
measures its Relative tSR against in respect of the
FY12 ltI Award are; Ausenco limited, Clough limited,
Macmahon Holdings limited, Ausdrill limited, Downer
eDI limited, Sedgman limited, Decmil Group limited,
Brierty limited, Maca limited and Watpac limited
(FY12 Comparator Group). For FY13 NRW proposes
using a comparator group that is the same as the
FY12 Comparator Group except that Brierty limited
and Watpac limited will be removed. the size and
comparative strength of these companies warranted
their removal and substitution by Bradken limited
and transpacific Industries limited, which the Board
feels better represents a comparator company, given
their size, service delivery, capital goods utilisation and
employee numbers.
NRW ANNuAl RepoRt 2012
FinanCial rePort
63
Directors’
reporT
remuneration
reporT
the following table sets out the vesting period cut-in and scaling of each of the vesting hurdles for the FY12 award, and
also for future ltI awards in FY13 and beyond:
lti Vesting ConDition,
Weighting
epS Growth, Weighting 40%
FY12 lti aWarD
FY13 & BeYonD lti aWarDs
Cut-in leVel
0% vesting at 4% epS
growth between last
vesting date and current
vesting date
maximum Vesting
aChieVeD at
100% of the epS Growth
limb vesting at 10% epS
growth between last
vesting date and current
vesting date
Cut-in leVel
0% vesting at 4% epS
growth between last
vesting date and current
vesting date
maximum Vesting
aChieVeD at
100% of the epS Growth
limb vesting at 12% epS
growth between last
vesting date and current
vesting date
RoCe, Weighting 30%
0% vesting at 17%
RoCe for most recently
completed financial year
date
100% of the RoCe limb
vesting at 25% RoCe for
most recently completed
financial year date
0% vesting at 20%
RoCe for most recently
completed financial year
date
100% of the RoCe limb
vesting at 30% RoCe for
most recently completed
financial year date
Relative tSR, Weighting 30%
5th out of 11 comparators
in the peer group = 66% of
the Relative tSR vests
3rd or better out of 11
comparators in the peer
group = 100% of the
Relative tSR limb vests
As per FY12 ltI award
As per FY12 ltI award
We note again that NRW’s epS Growth and RoCe Vesting Conditions cut–in at 0% and graduate linearly to the maximum
allocation for each limb of the vesting conditions.
NRW has selected the three vesting conditions discussed above on the following bases:
ρ
ρ
ρ
epS Growth is a fundamental measure of growth in shareholder value;
However, to ensure that epS growth is pursued with a focus on the amount of capital required to generate epS or
NpAt, Return on Capital employed (RoCe) is measured to ensure that the growth in epS is achieved at or above
NRW’s targeted levels of RoCe;
Relative total Shareholder Return, whilst in NRW’s view is something that is influenced by the investing methodologies of
investors that invest in shares of companies listed on the Australian Securities exchange as opposed to the performance of
NRW and its executives per se, NRW believes that it is important for the performance of its management to be measured
against the total shareholder return that is achieved by direct competitor and peer companies that face a similar operating
environment, opportunities and risks as NRW.
Vesting Periods
As noted above, and in recognition of the transitionary nature of the FY12 ltI Award, performance Rights granted under
the FY12 ltI award will be eligible to vest in three tranches as to:
ρ
ρ
ρ
34% on 15 September 2012;
33% on 15 September 2013; and
33% on 15 September 2014:
subject always to the performance of and testing against the Vesting Conditions.
For future ltI Awards (ltI Awards made in respect of FY13 and beyond), any performance Rights granted will be eligible to
vest 3 years after they are granted subject to the application of Vesting Conditions.
Any performance Rights that are eligible to vest on a vesting date that do not meet the Vesting Conditions, lapse on that
date and thereby are not eligible to vest at any subsequent date.
64
FinanCial rePort
NRW ANNuAl RepoRt 2012
Directors’
reporT
remuneration
reporT
the charts below depict the comparison between how NRW’s vesting conditions apply relative to the vesting conditions of
ASX-listed companies having a similar market capitalisation to NRW (+/- 50%) that were reviewed. proportions that vest on
meeting vesting conditions, shown on the vertical axis, are higher in most cases than under NRW’s vesting condition regime.
Vesting ConDitions - FY13, FY14, FY15
EPS GROWTH VESTING PROFILE
NRW
OTHER ASX-LISTED
COMPANIES (see pg 63)
4%
5%
6%
7%
8%
9%
10%
11%
12%
13%
14%
15%
ROCE VESTING PROFILE
NRW
OTHER ASX-LISTED
COMPANIES (see pg 63)
12%
14%
16%
18%
20%
22%
24%
26%
28%
30%
32%
34%
36%
38%
RELATIVE TSR VESTING PROFILE
NRW
OTHER ASX-LISTED
COMPANIES (see pg 63)
e
C
n
a
m
r
o
F
r
e
P
F
o
n
o
t
r
o
P
o
r
P
i
e
C
n
a
m
r
o
F
r
e
P
F
o
n
o
t
r
o
P
o
r
P
i
e
C
n
a
m
r
o
F
r
e
P
F
o
n
o
t
r
o
P
o
r
P
i
t
s
e
V
t
a
h
t
s
t
h
g
r
i
t
s
e
V
t
a
h
t
s
t
h
g
r
i
t
s
e
V
t
a
h
t
s
t
h
g
r
i
%
60
50
40
30
20
10
0
%
60
50
40
30
20
10
0
%
60
50
40
30
20
10
0
50th
percentile
55th
percentile
60th
percentile
65th
percentile
70th
percentile
75th
percentile
80th
percentile
NRW ANNuAl RepoRt 2012
FinanCial rePort
65
Directors’
reporT
remuneration
reporT
Other Considerations applicable to LTI Awards and Performance Rights
If a KMp’s employment with NRW ceases for reasons other than death or permanent disability, any unvested performance
Rights will lapse and expire. Where a KMp has died or becomes permanently disabled, or where the Board of NRW
considers it appropriate in the circumstances to consider the vesting of any unvested performance Rights, the Board may
determine that the performance Rights will not lapse and will be tested against the Vesting Conditions on the applicable
vesting dates.
upon change of control occurring in respect of NRW, the number of performance Rights that can vest will be reduced
to reflect the period of time elapsed. For example if a takeover of NRW becomes unconditional two years after a grant of
performance Rights was made and that award was eligible for vesting at the third anniversary of it being granted, then
two-thirds of the performance Rights that were eligible to vest under that grant would be assessed against the Vesting
Conditions up to the date of the takeover becoming effective. the performance Rights which do not meet the Vesting
Conditions at that point will lapse and expire.
4.6.
FY12 awards – Performance against annual Performance Criteria
As noted in the Chairman’s and Ceo’s Reports, in FY12 NRW achieved increases over FY11 in revenues of 82%, in NpAt
of 136% and in epS of 116%. these results were significantly above the budgeted levels of performance and reflect
what the Board considers to be the achievement of an extraordinary result. the results that the executive KMp achieved
as a percentage of the maximum score that they could have achieved ranged from 77% to 95%, with a weighted score
of 86%. the fact that none of our executive KMp scored 100% against the target set for them reinforces that NRW’s
performance criteria applied to determining StI and ltI award quantum are indeed testing, even under scenarios where
results are as impressive as they were in FY12.
4.7.
FY12 awards – remuneration mix
the following table shows the remuneration mix for NRW’s executive KMp for the year ending 30 June 2012. the data
provided here is based on the remuneration in respect of each executive KMp as set out in the remuneration outcome
table shown below.
%
100
90
80
70
60
50
40
30
20
10
0
FIXED
STI
LTI
M
r
W
R
o
o
n
e
y
M
r
M
S
t
e
w
a
r
t
M
r
T
C
o
o
k
M
r
W
F
a
i
r
M
r
K
B
o
u
n
s
e
l
l
M
r
M
W
a
l
l
a
c
e
M
r
K
H
y
m
a
n
^
M
r
J
A
P
e
m
b
e
r
t
o
n
^ Mr Hyman, whilst being a KMP, is not eligible for LTI awards due to his role carrying no responsibility for revenue, earnings and earnings quality results.
66
FinanCial rePort
NRW ANNuAl RepoRt 2012
Directors’
reporT
remuneration
reporT
4.8.
FY12 lti awards – Performance rights granted
In respect of the ltI component of the FY12 Awards, the following table shows the total number of performance Rights
granted to NRW’s KMp. the Vesting Conditions noted above at section 4.5 have been applied against the first tranche
of those performance Rights (34% of performance Rights granted). the number of performance Rights that vested and
converted into ordinary shares in NRW on 15 September 2012 are also shown alongside each executive KMp member.
the table also sets out the number of performance Rights that will be eligible to vest, subject to application of the vesting
conditions on each subsequent vesting date.
total numBer oF
PerFormanCe rights
granteD unDer the
FY12 aWarD
tranChe 1
PerFormanCe rights
that VesteD on 15
sePtemBer 2012^
tranChe 2
PerFormanCe rights
that are eligiBle to
Vest on 15 sePtemBer
2013
tranChe 3
PerFormanCe rights
that are eligiBle to
Vest on 15 sePtemBer
2014
Mr J A pemberton
Mr W Rooney
Mr M Stewart
Mr t Cook
Mr W Fair
Mr K Bounsell
Mr M Wallace
total
841,377
348,448
211,570
76,015
73,479
85,165
74,649
286,069
118,472
71,934
25,845
24,983
28,957
25,381
277,654
114,988
69,818
25,085
24,248
28,104
24,634
277,654
114,988
69,818
25,085
24,248
28,104
24,634
1,710,703
586,641
564,531
564,531
^ See explanation in paragraph and table on page 68 regarding actual vesting that occurred on 15 September 2012.
NRW ANNuAl RepoRt 2012
FinanCial rePort
67
Directors’
reporT
remuneration
reporT
the following table sets out the independently assessed fair value of the performance Rights granted to each executive
KMp member as at the date on which the grant of performance Rights was made to the individual concerned (Grant Date).
Within each tranche the performance Rights are ascribed a fair value according to the Vesting Condition limb against which
they are tested, namely epS Growth (40% weighting), RoCe (30% weighting) and Relative tSR (30% weighting).
grant
Date
tranChe 1
PerFormanCe rights that
VesteD on
15 sePtemBer 2012
tranChe 2
PerFormanCe rights that
are eligiBle to Vest on
15 sePtemBer 2013
tranChe 3
PerFormanCe rights that
are eligiBle to Vest on
15 sePtemBer 2014
epS
Growth
RoCe
RtSR
epS
Growth
RoCe
RtSR
epS
Growth
RoCe
RtSR
Mr J A
pemberton
Mr W Rooney
Mr M Stewart
Mr t Cook
Mr W Fair
Mr K Bounsell
Mr M Wallace
23
November
2011
12 March
2012
12 March
2012
12 March
2012
12 March
2012
12 March
2012
12 March
2012
$2.65
$2.65
$1.70
$2.49
$2.49
$1.65
$2.35
$2.35
$1.61
$3.73
$3.73
$2.93
$3.52
$3.52
$2.64
$3.31
$3.31
$2.50
$3.73
$3.73
$2.93
$3.52
$3.52
$2.64
$3.31
$3.31
$2.50
$3.73
$3.73
$2.93
$3.52
$3.52
$2.64
$3.31
$3.31
$2.50
$3.73
$3.73
$2.93
$3.52
$3.52
$2.64
$3.31
$3.31
$2.50
$3.73
$3.73
$2.93
$3.52
$3.52
$2.64
$3.31
$3.31
$2.50
$3.73
$3.73
$2.93
$3.52
$3.52
$2.64
$3.31
$3.31
$2.50
In respect of the performance Rights that were eligible to vest on 15 September 2012, through the application of the
Vesting Conditions, all (100%) of the performance Rights that were eligible to vest to each executive KMp under the
First tranche of the FY12 Award (34% of all performance Rights granted under the FY12 Award) vested. the applicable
outcomes of the Vesting Conditions tested in respect of the First tranche of the FY12 ltI Award are as follows:
FY12 lti aWarD – PerFormanCe rights
aPPliCation oF Vesting ConDitions to rights that VesteD on 15 sePtemBer 2012
lti Vesting Condition,
Weighting
maximum vesting
achieved at
Basis of measurement
result achieved
Vesting
ePs growth,
Weighting 40%
roCe,
Weighting 30%
epS Growth of 8%
Audited result
RoCe of 27%
Audited result
epS Growth
of 116%
RoCe of
41%
relative tsr,
Weighting 30%
NRW’s Relative tSR being
3rd or better
link Market Services /
Miraqle Metrics providing
independent calculation of
NRW Relative tSR
NRW’s Relative tSR
performance of
1st out of 11
total Vesting
100% x 40% weighting
=
40% vesting
100% x 30% weighting
=
30% vesting
100% x 30% weighting
=
30% vesting
100%
68
FinanCial rePort
NRW ANNuAl RepoRt 2012
Directors’
reporT
remuneration
reporT
DireCtors’ anD exeCutiVe oFFiCers’ remuneration (ComPanY anD grouP)
the table below sets out the remuneration outcomes for each of NRW’s KMp for the financial year ending 30 June 2012
salarY
& Fees
sti
Cash
Bonus
FY12
sti
Cash
Bonus
FY111
non-
Cash
BeneFit2
annual
leaVe3
suPer-
annuation
other
long
term
BeneFits4
share
BaseD
PaYments5
total6
-
-
-
-
-
-
-
-
6,497
3,036
-
9,533
-
-
-
-
11,250
9,000
9,180
29,430
-
-
-
-
-
-
-
-
142,747
112,036
111,179
365,962
non-executive
Directors
Dr I Burston
125,000
Mr M Arnett
100,000
Mr J Cooper
101,999
326,999
total Non-
executive
Directors
executive
Directors
Mr J A
pemberton
executives
1,298,289
384,750
100,000
6,012
153,451
15,489
54,586
749,579
2,762,156
Mr W Rooney
833,886
232,372
75,000
6,603
70,325
Mr M Stewart
635,088
169,309
50,000
39,202
53,328
Mr t Cook
369,488
121,662
Mr W Fair
329,172
117,604
Mr K Bounsell
541,105
40,000
Mr M Wallace
370,801
119,476
-
-
-
-
10,796
34,116
-
30,113
21,373
53,432
44,999
36,055
Mr K Hyman
310,021
60,000
25,000
1,927
29,206
Mr S lucas7
418,250
-
-
81,603
-
32,948
60,582
42,251
30,912
12,952
15,471
26,046
37,101
-
-
-
-
331,186
1,582,320
201,089
1,208,598
72,249
650,562
69,839
577,640
21,962
80,946
771,770
-
70,951
657,753
7,015
-
-
-
459,215
536,954
total executive
Directors and
executives
total all
Directors and
executives
5,106,100
1,245,173
250,000
212,515
460,026
273,752
83,563
1,575,839
9,206,968
5,433,099
1,245,173
250,000
222,048
460,026
303,182
83,563
1,575,839
9,572,930
1.
2.
A short term incentive payment was approved by the R&NC after determination of NRW’s FY11 audited result. Whilst applicable to performance in the
financial year ended 30 June 2011, it is reported here as a payment made during the financial year ended 30 June 2012.
The non-cash benefits comprised mostly motor vehicle benefits offered to the Key Management Personnel, including the applicable grossed up fringe
benefits tax.
3. Represents the accrued leave during the period.
4. Represents the accrued long service leave during the period.
5. Represents the expensing of the FY12 LTI award and consequent grant of Performance Rights in accordance with AASB 2 – Share based payments
6. No termination payments were made during FY12
7. S Lucas resigned his employment with the Company on 18 May 2012.
NRW ANNuAl RepoRt 2012
FinanCial rePort
69
Directors’
reporT
remuneration
reporT
DireCtors’ anD exeCutiVe oFFiCers’ remuneration (ComPanY anD grouP)
the table below sets out the remuneration outcomes for each of NRW’s KMp for the financial year ending 30 June 2011
salarY
& Fees
sti Cash
Bonus
non-Cash
BeneFit1
annual
leaVe2
suPerannuation
other
long term
BeneFits3
share
BaseD
PaYments
total
non-executive
Directors
Dr I Burston
Mr M Arnett
91,743
80,000
Mr J Cooper4
16,923
188,666
total Non-
executive
Directors
executive
Directors
Mr JW McGlinn5
704,763
Mr J A
pemberton
executives
1,162,770
Mr W Rooney
818,197
Mr M Stewart
629,076
Mr t Cook6
32,692
Mr W Fair
355,061
Mr K Bounsell
548,156
Mr M Wallace
409,091
Mr K Hyman
269,795
Mr S lucas
376,069
Mr NJR
Silverthorne
total executive
Directors and
executives
total all
Directors and
executives
462,561
5,768,231
5,956,897
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,892
-
-
4,892
11,948
-
-
-
-
-
8,257
1,800
1,523
11,580
68,305
-
-
-
-
-
63,206
189,704
15,199
121,271
7,083
6,967
22,712
10,755
-
-
1,701
5,824
33,664
-
47,660
13,647
825
23,238
96,386
41,358
-
-
73,638
56,617
2,942
31,956
50,056
15,199
24,282
33,853
90,000
-
-
-
-
37,657
-
8,438
-
-
324,840
251,836
462,047
167,366
329,732
251,836
473,627
167,366
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
104,892
81,800
18,446
205,138
785,014
1,552,150
905,885
719,160
37,335
392,841
669,533
485,597
326,578
506,308
593,919
6,974,320
7,179,458
1.
2.
3.
The non-cash benefits comprised mostly of the motor vehicle benefits offered to Executive KMP, including the applicable grossed up fringe benefits.
Represents the annual leave movement provisions, which in the case of Mr. Pemberton relate to the rebasing of his salary following his appointment to
CEO in July 2010 whereupon his accrued annual leave that had accumulated over 14 years of service was rebased to his CEO level of remuneration.
Represents the long service leave movement provisions, which in the case of Mr. Pemberton relate to the rebasing of his salary following his appointment
to CEO in July 2010 whereupon his accrued long service leave accumulated over 14 years of service was rebased to his CEO level of remuneration.
4. Appointed 29 March 2011.
5. J McGlinn resigned 7 July 2010 and amount paid represents payment of accrued entitlements.
6. Appointed 30 May 2011.
70
FinanCial rePort
NRW ANNuAl RepoRt 2012
Directors’
reporT
remuneration
reporT
4.9.
executive service agreements
For the year ended 30 June 2012 NRW has an executive service agreement with Julian pemberton as Chief executive
officer. the main terms of that agreement are:
ρ
ρ
ρ
ρ
ρ
It is not a fixed term agreement and continues on an ongoing basis until terminated;
contains non-compete provisions restraining the executives from operating or being associated with an entity that
competes with the business of NRW in Western Australia for 12 months after termination;
provides for an annual salary of $1,350,000;
provides for remuneration to be reviewed by NRW annually at the conclusion of each financial year (note that there is
no change to the annual salary for Mr pemberton for the financial year ended 30 June 2013); and
may be terminated by either the executive or the Company giving three months’ notice.
All other executive KMp are retained on standard letters of employment that provide for annual reviews of base salary and
between 4 and 12 week’s termination notice by either party. the appointments are not for any fixed term and carry no
termination payments other than statutory entitlements.
5.
non-exeCutiVe DireCtor remuneration
Non-executive Director remuneration is benchmarked against market remuneration data for ASX-listed companies that
have a market capitalisation similar to NRW.
Non-executive Directors received a fixed fee for Board and Committee duties and are not entitled to any performance
related remuneration. the NRW constitution provides that Non-executive Directors’ remuneration must not exceed the
maximum aggregate sum determined by the Company in a general meeting. At present, the maximum sum is fixed at
$500,000, in aggregate, per annum. this maximum sum cannot be increased without member’s approval by ordinary
resolution at a general meeting.
For FY13, reflecting the current market capitalisation of NRW and the desire for NRW to appoint further Non-executive
Directors to its Board, the Board of NRW is seeking an increase in the maximum aggregate sum of payments to Non-
executive Directors to $750,000.
Non-executive Director fees (excluding superannuation and non-cash benefits) to be paid by the Company are as follows:
non-exeCutiVe DireCtor
Fee Per annum auD
Dr I Burston
Mr J Cooper
Mr M Arnett
125,000
100,000
100,000
Non-executive Directors are also entitled to receive reimbursement for travelling and other expenses that they properly incur in
attending Board meetings, attending any general meetings of the Company or in connection with the Company’s business.
(enD oF remuneration rePort)
rounDing oF amounts
the amounts contained in this report and the financial report have been rounded to the nearest $1,000 (where rounding
is applicable) under the option available to the Company under ASIC Class order 98/0100. the Company is an entity to
which the Class order applies.
this report has been made in accordance with a resolution of the Directors of the Company.
Julian PemBerton
ChieF exeCutiVe oFFiCer
perth, 28 September 2012
Dr ian Burston
Chairman
NRW ANNuAl RepoRt 2012
FinanCial rePort
71
auDitor’s inDePenDence
DeclaraTion
auDitor’s inDePenDenCe DeClaration
28 September 2012
The Board of Directors
NRW Holdings Limited
181 Great Eastern Highway
BELMONT WA 6104
Dear Board Members
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 9365 7001
www.deloitte.com.au
NRW Holdings Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of NRW Holdings Limited.
As lead audit partner for the audit of the financial statements of NRW Holdings Limited for the financial
year ended 30 June 2012, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
A T Richards
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
72
FinanCial rePort
NRW ANNuAl RepoRt 2012
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 2 to the financial statements;
(c)
in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations
Act 2001, 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 s.295A of the Corporations Act 2001.
At the date of this declaration, the Company is within the class of companies affected by ASIC Class order 98/1418. the
nature of the deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor
payment in full of any debt in accordance with the deed of cross guarantee.
In the Directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC
Class order applies, as detailed in Note 17 to the financial statements will, as a Group, be able to meet any obligations or
liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee.
Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001.
on behalf of the Directors
Julian PemBerton
ChieF exeCutiVe oFFiCer
Dr ian Burston
Chairman
perth, 28 September 2012
NRW ANNuAl RepoRt 2012
FinanCial rePort
73
consoliDateD statement of
comprehensiVe income
FOR THE YEAR ENDED 30 JUNE 2012
reVenue
other income
Finance costs
Materials and consumables used
employee benefits expense
Subcontractor costs
Depreciation and amortisation expenses
plant and equipment costs
travel and accommodation
other expenses
ProFit BeFore inCome tax
Income tax expense
ProFit For the Year
other comprehensive income (expense)
exchange differences arising on translation of foreign operations
other ComPrehensiVe inCome (exPense) For the Year, net oF tax
Notes
6
7
8
9(A)
9(A)
10(A)
ConsoliDateD
2012
$’000
2011
$’000
1,358,776
745,341
2,063
(12,860)
(176,779)
(395,823)
(283,767)
(41,894)
5,847
(5,664)
(96,678)
(217,479)
(160,243)
(30,937)
(268,604)
(154,492)
(31,855)
(8,123)
141,134
(43,992)
97,142
6
6
(20,161)
(6,614)
58,920
(17,724)
41,196
(215)
(215)
total ComPrehensiVe inCome
97,148
40,981
ProFit attriButaBle to:
equity holders of the Company
97,142
41,196
total ComPrehensiVe inCome attriButaBle to:
equity holders of the Company
97,148
40,981
earnings Per share
Basic earnings per share
Diluted earnings per share
11
Cents
Cents
34.8
34.7
16.1
16.1
The consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
74
FinanCial rePort
NRW ANNuAl RepoRt 2012
consoliDateD statement of
Financial posiTion
AS AT 30 JUNE 2012
assets
Current assets
Cash and cash equivalents
Receivables
Inventories
other current assets
total Current assets
non-Current assets
property, plant and equipment
Goodwill
total non-Current assets
total assets
liaBilities
Current liaBilities
payables
Borrowings
Current tax liabilities
provisions
total Current liaBilities
non-Current liaBilities
Borrowings
provisions
Deferred tax liabilities
total non-Current liaBilities
total liaBilities
net assets
equitY
Contributed equity
Reserves
Retained earnings
total equitY
notes
12
13
14
15
16
19
21
22
10(D)
23
22
23
10(e)
24
25
26
ConsoliDateD
2012
$’000
137,955
280,438
33,374
4,149
455,916
366,705
24,417
391,122
847,038
250,418
49,592
22,913
29,576
2011
$’000
70,628
155,340
23,029
3,059
252,056
268,537
24,417
292,954
545,010
134,654
52,932
51
9,800
352,499
197,437
149,178
26
16,157
165,361
517,860
329,178
156,456
2,969
169,753
329,178
70,634
30
10,200
80,864
278,301
266,709
156,456
1,387
108,866
266,709
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
NRW ANNuAl RepoRt 2012
FinanCial rePort
75
consoliDateD statement of
changes in eqUiTy
FOR THE YEAR ENDED 30 JUNE 2012
notes
ContriButeD
equitY
Foreign
CurrenCY
translation
reserVe
share BaseD
PaYment
reserVe
total
reserVes
retaineD
earnings
total equitY
$’000
$’000
$’000
$’000
$’000
$’000
BalanCe at 1 JulY 2010
82,211
profit for the year
exchange differences arising on
translation of foreign operations
total ComPrehensiVe
inCome For the Year
payment of dividends
Issue of ordinary shares under
institutional share placement
Issue of ordinary shares under
Share purchase plan
26
25
26
-
-
-
-
24(A)
70,000
24(A)
5,802
Share issue costs
24(A)
(2,225)
Income tax relating to share
issue costs
24(A)
668
(33)
-
(215)
(215)
-
-
-
-
-
1,635
1,602
85,256
169,069
-
-
-
-
-
-
-
-
-
(215)
(215)
-
-
-
-
-
41,196
41,196
-
(215)
41,196
40,981
(17,586)
(17,586)
-
-
-
-
70,000
5,802
(2,225)
668
BalanCe at 30 June 2011
156,456
(248)
1,635
1,387
108,866
266,709
Balance at 1 July 2011
156,456
(248)
1,635
1,387
108,866
266,709
profit for the year
exchange differences arising on
translation of foreign operations
total ComPrehensiVe
inCome For the Year
payment of dividends
Issue of ordinary shares under
institutional share placement
Issue of ordinary shares under
Share purchase plan
Share issue costs
Income tax relating to share
issue costs
Share based payments
26
25
26
24(A)
24(A)
24(A)
24(A)
25
-
-
-
-
-
-
-
-
-
-
6
6
-
-
-
-
-
-
BalanCe at 30 June 2012
156,456
(242)
-
-
-
-
-
-
-
-
-
6
6
-
-
-
-
-
1,576
3,211
1,576
2,969
97,142
97,142
-
6
97,142
97,148
(36,255)
(36,255)
-
-
-
-
-
-
-
-
-
1,576
169,753
329,178
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
76
FinanCial rePort
NRW ANNuAl RepoRt 2012
consoliDateD statement of
cash FloWs
FOR THE YEAR ENDED 30 JUNE 2012
note
ConsoliDateD
2012
$’000
2011
$’000
Cash FloWs From oPerating aCtiVities
Receipts from customers
payments to suppliers and employees
Interest paid
Interest received
Income tax paid
net Cash FloW From oPerating aCtiVities
28(A)
1,236,684
760,539
(1,035,468)
(664,995)
(14,358)
1,498
(15,173)
173,183
(6,152)
488
(12,134)
77,746
Cash FloWs From inVesting aCtiVities
proceeds from the sale of property, plant and equipment
3,478
2,022
Acquisition of property, plant and equipment
proceeds from related parties
(38,143)
(101,880)
-
4,972
net Cash FloW From in inVesting aCtiVities
(34,665)
(94,886)
Cash FloWs From FinanCing aCtiVities
proceeds from the issue of share capital (net of share issue costs)
proceeds from borrowings
Repayment of borrowings and finance/hire purchase liabilities
payment of dividends to shareholders
payment of share issue costs
net Cash FloW From FinanCing aCtiVities
net inCrease in Cash anD Cash equiValents
Cash and cash equivalents at beginning of the year
-
15,664
(50,600)
(36,255)
-
(71,191)
67,327
70,628
Cash anD Cash equiValents at the enD oF the Year
12
137,955
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
75,802
47,758
(37,424)
(17,586)
(2,225)
66,325
49,185
21,443
70,628
NRW ANNuAl RepoRt 2012
FinanCial rePort
77
notes to the
Financial
sTaTemenTs
78 notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
1.
general inFormation
2.3
Basis oF ConsoliDation
NRW Holdings limited (the ‘Company’) is a public
company listed on the Australian Securities exchange
and incorporated and domiciled in Australia. the address
of the Company’s registered office is 181 Great eastern
Highway, Belmont, Western Australia. the consolidated
financial statements of the Company for the year ended 30
June 2012 comprises the Company and its subsidiaries
(together referred to as ‘Consolidated’, the ‘Consolidated
Group’ or the ‘Group’). the Group is primarily involved in
civil and mining contracting, the fabrication and, repairs to
plant and drilling and blasting activities.
2.
summarY oF signiFiCant
aCCounting PoliCies
the principal accounting policies adopted in the
preparation of the financial report are set out below. these
policies have been consistently applied to all the years
presented, unless otherwise stated.
2.1
statement oF ComPlianCe
the financial statements are general purpose financial
statements which have been prepared in accordance
with the Corporations Act 2001, Australian Accounting
Standards and other authoritative pronouncements of the
Australian Accounting Standards Board and Interpretations.
the consolidated financial statements of the Group also
comply with International Financial Reporting Standards
(‘IFRS’) as issued by the International Accounting
Standards Board.
these financial statements were authorised for issue by
the Directors on 28 September 2012.
For the purpose of preparing the financial statements, the
consolidated entity is a for-profit entity.
2.2
Basis oF PreParation
the consolidated financial statements have been
prepared on the historical cost basis, except for certain
non-current assets and financial instruments that are
measured at revalued amounts or fair value, as explained
in the accounting policies below. Historical cost is
generally based on the fair values of the consideration
given in exchange for assets. All amounts are presented in
Australian dollars, unless otherwise noted.
the Company is a company of the kind referred to in
ASIC Class order 98/100, dated 10 July 1998, and in
accordance with that Class order amounts in the financial
report are rounded off to the nearest thousand dollars,
unless otherwise indicated.
the consolidated financial statements incorporate
the financial statements of the Company and entities
(including special purpose entities) controlled by the
Company (its subsidiaries). Control is achieved where
the Company has the power to govern the financial and
operating policies of an entity so as to obtain benefits
from its activities.
Income and expense of subsidiaries acquired or disposed
of during the year are included in the consolidated
statement of comprehensive income from the effective
date of acquisition and up to the effective date of
disposal, as appropriate. total comprehensive income of
subsidiaries is attributed to the owners of the Company
and to the non-controlling interests even if this results in
the non-controlling interests having a deficit balance.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies
into line with those used by other members of the Group.
All intra-group transactions, balances, income and
expenses are eliminated in full on consolidation.
Changes in the Group’s ownership interests in
subsidiaries that do not result in the Group losing
control are accounted for as equity transactions. the
carrying amounts of the Group’s interests and the
non-controlling interests are adjusted to reflect the
changes in their relative interests in the subsidiaries.
Any difference between the amount by which the non-
controlling interests are adjusted and the fair value of the
consideration paid or received is recognised directly in
equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or
loss is recognised in profit or loss and is calculated as the
difference between (i) the aggregate of the fair value of the
consideration received and the fair value of any retained
interest and (ii) the previous carrying amount of the assets
(including goodwill), and liabilities of the subsidiary and any
non-controlling interests. When assets of the subsidiary
are carried at revalued amounts or fair values and the
related cumulative gain or loss has been recognised in
other comprehensive income and accumulated in equity,
it is accounted for as if the Group had directly disposed
of the relevant assets (i.e. reclassified to profit or loss or
transferred directly to retained earnings as specified by
applicable Standards).
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
79
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
2.4
Business ComBinations
Acquisitions of businesses are accounted for using the
acquisition method. the consideration transferred in a
business combination is measured at fair value which is
calculated as the sum of the acquisition-date fair values of
assets transferred by the Group, liabilities incurred by the
Group to the former owners of the acquiree and the equity
instruments issued by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised
in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired
and the liabilities assumed are recognised at their fair
value at the acquisition date, except that:
ρ
ρ
ρ
deferred tax assets or liabilities and liabilities or
assets related to employee benefit arrangements
are recognised and measured in accordance with
AASB 112 ‘Income taxes’ and AASB 119 ‘employee
Benefits’ respectively;
liabilities or equity instruments related to share-based
payment arrangements of the acquiree or share-
based payment arrangements of the Group entered
into to replace share-based payment arrangements of
the acquiree are measured in accordance with AASB
2 ‘Share-based payment’ at the acquisition date; and
assets (or disposal groups) that are classified as held
for sale in accordance with AASB 5 ‘Noncurrent
Assets Held for Sale and Discontinued operations’
are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of
the consideration transferred, the amount of any non-
controlling interests in the acquiree, and the fair value
of the acquirer’s previously held equity interest in the
acquiree (if any) over the net of the acquisition-date
amounts of the identifiable assets acquired and the
liabilities assumed. If, after reassessment, the net of
the acquisition-date amounts of the identifiable assets
acquired and liabilities assumed exceeds the sum of
the consideration transferred, the amount of any non-
controlling interests in the acquiree and the fair value of
the acquirer’s previously held interest in the acquiree (if
any), the excess is recognised immediately in profit or loss
as a bargain purchase gain.
Non-controlling interests that are present ownership
interests and entitle their holders to a proportionate share
of the entity’s net assets in the event of liquidation may
be initially measured either at fair value or at the non-
controlling interests’ proportionate share of the recognised
amounts of the acquiree’s identifiable net assets. the
choice of measurement basis is made on a transaction-
by-transaction basis. other types of non-controlling
interests are measured at fair value or, when applicable,
on the basis specified in another Standard.
Where the consideration transferred by the Group in
a business combination includes assets or liabilities
resulting from a contingent consideration arrangement,
the contingent consideration is measured at its
acquisition-date fair value. Changes in the fair value of
the contingent consideration that qualify as measurement
period adjustments are adjusted retrospectively,
with corresponding adjustments against goodwill.
Measurement period adjustments are adjustments that
arise from additional information obtained during the
‘measurement period’ (which cannot exceed one year
from the acquisition date) about facts and circumstances
that existed at the acquisition date.
the subsequent accounting for changes in the fair
value of contingent consideration that do not qualify
as measurement period adjustments depends on how
the contingent consideration is classified. Contingent
consideration that is classified as equity is not remeasured
at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent
consideration that is classified as an asset or liability is
remeasured at subsequent reporting dates in accordance
with AASB 139, or AASB 137 ‘provisions, Contingent
liabilities and Contingent Assets’, as appropriate, with the
corresponding gain or loss being recognised in profit or loss.
Where a business combination is achieved in stages, the
Group’s previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date (i.e. the
date when the Group attains control) and the resulting
gain or loss, if any, is recognised in profit or loss.
Amounts arising from interests in the acquiree prior to the
acquisition date that have previously been recognised in
other comprehensive income are reclassified to profit or
loss where such treatment would be appropriate if that
interest were disposed of.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which
the combination occurs, the Group reports provisional
amounts for the items for which the accounting is
incomplete. those provisional amounts are adjusted
during the measurement period (see above), or additional
assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that
existed as of the acquisition date that, if known, would
have affected the amounts recognised as of that date.
80
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
2.5
gooDWill
Goodwill arising on an acquisition of a business
is carried at cost as established at the date of the
acquisition of the business (see Note 2.4) less
accumulated impairment losses, if any. For the purposes
of impairment testing, goodwill is allocated to each of
the Group’s cash-generating units (or groups of cash-
generating units) that is expected to benefit from the
synergies of the combination.
A cash-generating unit to which goodwill has been
allocated is tested for impairment annually, or more
frequently when there is indication that the unit may
be impaired. If the recoverable amount of the cash-
generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to
the other assets of the unit pro rata based on the carrying
amount of each asset in the unit. Any impairment loss
for goodwill is recognised directly in profit or loss in the
consolidated statement of comprehensive income/income
statement. An impairment loss recognised for goodwill is
not reversed in subsequent periods.
on disposal of the relevant cash-generating unit,
the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
the Group’s interests in assets where the Group does
not have joint control are accounted for in accordance
with the substance of the Group’s interest. Where such
arrangements give rise to an undivided interest in the
individual assets and liabilities of the joint venture, the
Group recognises its undivided interest in each asset and
liability and classifies and presents those items according
to their nature.
the Group reports its interests in jointly controlled entities
using proportionate consolidation. the Group’s share of the
assets, liabilities, income and expenses of jointly controlled
entities is combined with the equivalent items in the
consolidated financial statements on a line-by-line basis.
When a group entity transacts with a jointly controlled
entity of the Group, unrealised profits and losses resulting
from the transactions with the jointly controlled entity
are recognised in the Group’s consolidated financial
statements only to the extent of interests in the jointly
controlled entity that are not related to the Group.
2.7
reVenue reCognition
Revenue is measured at the fair value of the
consideration received or receivable. Revenue is reduced
for estimated customer returns, rebates and other similar
allowances if applicable.
2.6
interests in Joint Ventures
2.7.1
sale of goods
A joint venture is a contractual arrangement whereby the
Group and other parties undertake an economic activity
that is subject to joint control (i.e. when the strategic
financial and operating policy decisions relating to the
activities of the joint venture require the unanimous
consent of the parties sharing control).
When a group entity undertakes its activities under joint
venture arrangements directly, the Group’s share of jointly
controlled assets and any liabilities incurred jointly with
other venturers are recognised in the financial statements of
the relevant entity and classified according to their nature.
liabilities and expenses incurred directly in respect of
interests in jointly controlled assets are accounted for
on an accrual basis. Income from the sale or use of the
Group’s share of the output of jointly controlled assets,
and its share of joint venture expenses, are recognised
when it is probable that the economic benefits associated
with the transactions will flow to/from the Group and their
amount can be measured reliably.
Revenue from the sale of goods is recognised when all
the following conditions are satisfied:
ρ
ρ
ρ
ρ
ρ
the Group has transferred to the buyer the significant
risks and rewards of ownership of the goods;
the Group retains neither continuing managerial
involvement to the degree usually associated with
ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated
with the transaction will flow to the Group; and
and the costs incurred or to be incurred in respect
of the transaction can be measured reliably.
Specifically, revenue from the sale of goods is recognised
when goods are delivered and legal title is passed.
2.7.2 rendering of services
Revenue from the rendering of a service is recognised in
profit or loss in proportion to the stage of completion of the
transaction at the reporting date. the stage of completion
is assessed by reference to surveys of work performed.
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
81
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
2.7.3
interest income
2.9
leases
Interest income is accrued on a time basis, by reference
to the principal amount outstanding and at the effective
interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the
expected life of the financial asset of that asset’s net
carrying amount.
the Group’s policy for recognition of revenue from
construction contracts is described at 2.8 below.
2.8
ConstruCtion ContraCts
When the outcome of a construction contract can be
estimated reliably, revenue and costs are recognised
by reference to the stage of completion of the contract
activity at the end of the reporting period, measured
based on the proportion of contract costs incurred
for work performed to date relative to the estimated
total contract costs, except where this would not be
representative of the stage of completion. Variations
in contract work, claims and incentive payments are
included to the extent that the amount can be measured
reliably and its receipt is considered probable.
When the outcome of a construction contract cannot be
estimated reliably, contract revenue is recognised to the
extent of contract costs incurred that it is probable will be
recoverable. Contract costs are recognised as expenses
in the period in which they are incurred.
When it is probable that total contract costs will exceed
total contract revenue, the expected loss is recognised as
an expense immediately.
When contract costs incurred to date plus recognised
profits less recognised losses exceed progress billings,
the surplus is shown as amounts due from customers
for contract work or construction work in progress. For
contracts where progress billings exceed contract costs
incurred to date plus recognised profits less recognised
losses, the surplus is shown as the amounts due to
customers for contract work.
Amounts received before the related work is performed
are included in the consolidated statement of financial
position, as a liability, as advances received. Amounts
billed for work performed but not yet paid by the customer
are included in the consolidated statement of financial
position under trade and other receivables.
leases are classified as finance leases whenever the
terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are
classified as operating leases.
Where the Group is the lessee, assets held under finance
leases are initially recognised as assets of the Group at
their fair value at the inception of the lease or, if lower,
at the present value of the minimum lease payments.
the corresponding liability to the lessor is included in the
statement of financial position as a finance lease obligation.
lease payments are apportioned between finance
expenses and reduction of the lease obligation so as
to achieve a constant rate of interest on the remaining
balance of the liability. Finance expenses are recognised
immediately in profit or loss, unless they are directly
attributable to qualifying assets, in which case they are
capitalised in accordance with the Group’s general policy
on borrowing costs. Contingent rentals are recognised as
expenses in the periods in which they are incurred.
operating lease payments are recognised as an expense
on a straight-line basis over the lease term, except where
another systematic basis is more representative of the
time pattern in which economic benefits from the leased
asset are consumed. Contingent rentals arising under
operating leases are recognised as an expense in the
period in which they are incurred.
2.10
Foreign CurrenCY translation
2.10.1 Functional and presentation currency
the individual financial statements of each group entity
are presented in the currency of the primary economic
environment in which the entity operates (its functional
currency). For the purpose of the consolidated financial
statements, the results and financial position of each group
entity are expressed in Australian dollars (‘$’), which is the
functional currency of the Company and the presentation
currency for the consolidated financial statements.
82
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
2.10.2 transactions and balances
2.12
emPloYee BeneFits
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign
currencies are recognised in profit or loss, except when
deferred in equity as qualifying cash flow hedges and
qualifying net investment hedges or are attributable to part
of the net investment in a foreign operation.
Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at
the rates prevailing at the date when the fair value was
determined. Non-monetary items that are measured in terms
of historical cost in a foreign currency are not retranslated.
2.10.3
Foreign operations
For the purpose of presenting consolidated financial
statements, the assets and liabilities of the Group’s foreign
operations are translated into Australian dollars using
exchange rates prevailing at the end of the reporting
period. Income and expense items are translated at the
average exchange rates for the period, unless exchange
rates fluctuated significantly during that period, in which
case the exchange rates at the dates of the transactions
are used. exchange differences arising, if any, are
recognised in the foreign currency translation reserve in
other comprehensive income and accumulated in equity
(attributed to non-controlling interests as appropriate).
on the disposal of a foreign operation, all of the
accumulated exchange differences in respect of that
operation attributable to the Group are reclassified to
profit or loss.
Goodwill and fair value adjustments arising on the
acquisition of a foreign operation are treated as assets and
liabilities of the foreign operation and translated at the rate
of exchange prevailing at the end of each reporting period.
exchange differences arising are recognised in equity.
2.11
BorroWing Costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time
to get ready for their intended use or sale, are added to
the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in
the period in which they are incurred.
A liability is recognised for benefits accruing to employees
in respect of wages and salaries, annual leave, long
service leave, and sick leave when it is probable that
settlement will be required and they are capable of being
measured reliably.
liabilities recognised in respect of short-term employee
benefits, are measured at their nominal values using the
remuneration rate expected to apply at the time
of settlement.
liabilities recognised in respect of long term employee
benefits are measured as 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.
payments to defined contribution retirement benefit plans
are recognised as an expense when employees have
rendered service entitling them to the contributions.
2.13
taxation
Income tax expense represents the sum of the tax
currently payable and deferred tax.
2.13.1 Current tax
the tax currently payable is based on taxable profit for
the year. taxable profit differs from profit as reported in
the consolidated statement of 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 that have been enacted or
substantively enacted by the end of the reporting period.
2.13.2 Deferred tax
Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities
in the consolidated financial statements and the
corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences. Deferred
tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable
that taxable profits will be available against which those
deductible temporary differences can be utilised. Such
deferred tax assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither
the taxable profit nor the accounting profit.
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FOR THE YEAR ENDED 30 JUNE 2012
Deferred tax liabilities are recognised for taxable
temporary differences associated with investments
in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the
reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable
future. Deferred tax assets arising from deductible
temporary differences associated with such investments
and interests are only recognised to the extent that it is
probable that there will be sufficient taxable profits against
which to utilise the benefits of the temporary differences
and they are expected to reverse in the foreseeable future.
the carrying amount of deferred tax assets is reviewed
at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to
be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the period in which the
liability is settled or the asset realised, based on tax rates
(and tax laws) that have been enacted or substantively
enacted by the end of the reporting period. 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 end of the reporting
period, 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.
2.13.3 Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss,
except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case
the current and deferred tax are also recognised in other
comprehensive income or directly in equity, respectively.
Where current tax or deferred tax arises from the initial
accounting for a business combination, the tax effect is
included in the accounting for the business combination.
Additional information on accounting policies shall be
included where the entity has other material tax balances
not covered by the above analysis, such as in relation to
tax deductible share-based payment arrangements.
2.14 ProPertY, Plant anD equiPment
properties in the course of construction for production,
supply or administrative purposes, or for purposes not
yet determined, are carried at cost, less any recognised
impairment loss. Cost includes professional fees and,
for qualifying assets, borrowing costs capitalised
in accordance with the Group’s accounting policy.
Depreciation of these assets, on the same basis as other
property assets, commences when the assets are ready
for their intended use.
property, plant and equipment are stated at historical
cost less accumulated depreciation and accumulated
impairment losses. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Group
and the cost of the item can be measured reliably. All
other repairs and maintenance are charged to profit or
loss during the financial period in which they are incurred.
All property, plant and equipment, other than freehold
land, is depreciated or amortised at rates appropriate
to the estimated useful life of the assets or in the case
of certain leased plant and equipment, the shorter lease
term or hours (usage) reflecting the effective lives. the
expected useful lives bands are as follows:
Buildings
leasehold improvements
plant and equipment
office equipment
Furniture and Fittings
Motor Vehicles
20 to 40 years
2 to 5 years
2 to 20 years
2 to 8 years
5 to 20 years
5 to 10 years
the above bands provide a range of effective lives regardless
of methodology used in the depreciation process (either
hours, diminishing or straight line). the hours method is a
consumption based method and reflects utilisation within the
business and is supported in the effective lives of each plant
and equipment group, where applicable.
Depreciation rates and methods shall be reviewed at least
annually. Where depreciation rates or methods are changed,
the net written down value of the asset is depreciated
from the date of the change in accordance with the new
depreciation rate or method. Depreciation recognised in
prior financial years shall not be changed, that is, the change
in depreciation rate or method shall be accounted for on a
‘prospective’ basis.
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Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
An asset’s carrying amount is written down immediately
to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Any gain or loss arising on the disposal or retirement of an
item of property, plant and equipment is determined as the
difference between the sales proceeds and the carrying
amount of the asset and is recognised in profit or loss.
2.15
inVentories
Inventories are stated at the lower of cost and net
realisable value. Costs of inventories are determined on a
first-in-first-out basis. Net realisable value represents the
estimated selling price for inventories less all estimated
costs of completion and costs necessary to make the sale.
2.16
ProVisions
provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past
event, it is probable that the Group will be required to
settle the obligation, and a reliable estimate can be made
of the amount of the obligation.
the amount recognised as a provision is the best estimate
of the consideration required to settle the present
obligation at the end of the reporting period, taking
into account the risks and uncertainties surrounding
the obligation. When 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
(where the effect of the time value of money is material).
When some or all of the economic benefits required to
settle a provision are expected to be recovered from a
third party, a receivable is recognised as an asset if it is
virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably.
2.16.1 Provision for warranties
provisions are made for the expected cost of warranty
obligations in relation to specific construction contracts at
reporting date. the provision is measure as the present
value of future cash flows estimated to be required to
settle the warranty obligation. the future cash flows has
been estimated at the Directors’ best estimate of the
expenditure required to settle the Group’s obligation and
history of warranty claims.
2.17
FinanCial instruments
Financial assets and financial liabilities are recognised
when a Group entity becomes a party to the contractual
provisions of the instrument.
Financial assets and financial liabilities are initially measured
at fair value. transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities
at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition.
transaction costs directly attributable to the acquisition of
financial assets or financial liabilities at fair value through
profit or loss are recognised immediately in profit or loss.
2.18
FinanCial assets
Financial assets are classified into the following specified
categories: financial assets ‘at fair value through profit or
loss’ (FVtpl), ‘held-to-maturity’ investments, ‘available-for-
sale’ (AFS) financial assets and ‘loans and receivables’. the
classification depends on the nature and purpose for which
the investments were acquired. Management determines
the classification of its investments at initial recognition.
All regular way purchases or sales of financial assets are
recognised and derecognised on a trade date basis. Regular
way purchases or sales are purchases or sales of financial
assets that require delivery of assets within the time frame
established by regulation or convention in the marketplace.
2.18.1 effective interest method
the effective interest method is a method of calculating
the amortised cost of a debt instrument and of allocating
interest income over the relevant period. the effective
interest rate is the rate that exactly discounts estimated
future cash receipts (including all fees on points paid or
received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts)
through the expected life of the debt instrument, or (where
appropriate) a shorter period, to the net carrying amount
on initial recognition.
Income is recognised on an effective interest basis
for debt instruments other than those financial assets
classified as at FVtpl.
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85
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Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
2.18.2 Fair value
2.18.4 held-to-maturity investments
the fair values of quoted investments are based on
current bid prices. If the market for a financial asset is not
active (and for unlisted securities), the Group establishes
fair value by using valuation techniques. these include the
use of recent arm’s length transactions, reference to other
instruments that are substantially the same, discounted
cash flow analysis, and option pricing models making
maximum use of market inputs and relying as little as
possible on entity-specific inputs.
2.18.3 Financial assets at FVtPl
Financial assets are classified as at FVtpl when the
financial asset is either held for trading or it is designated
as at FVtpl.
A financial asset is classified as held for trading if:
ρ
ρ
ρ
it has been acquired principally for the purpose of
selling it in the near term; or
on initial recognition it is part of a portfolio of identified
financial instruments that the Group manages
together and has a recent actual pattern of short-term
profit-taking; or
it is a derivative that is not designated and effective as
a hedging instrument.
A financial asset other than a financial asset held for
trading may be designated as at FVtpl upon initial
recognition if:
ρ
ρ
ρ
such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would
otherwise arise; or
the financial asset forms part of a group of financial
assets or financial liabilities or both, which is managed
and its performance is evaluated on a fair value basis,
in accordance with the Group’s documented risk
management or investment strategy, and information
about the grouping is provided internally on that
basis; or
it forms part of a contract containing one or more
embedded derivatives, and AASB 139 ‘Financial
Instruments: Recognition and Measurement’ permits
the entire combined contract (asset or liability) to be
designated as at FVtpl.
Financial assets at FVtpl are stated at fair value, with
any gains or losses arising on remeasurement recognised
in profit or loss. the net gain or loss recognised in profit
or loss incorporates any dividend or interest earned on
the financial asset and is included in the ‘other gains and
losses’ line item in the statement of comprehensive income.
Bills of exchange and debentures with fixed or
determinable payments and fixed maturity dates that the
Group has the positive intent and ability to hold to maturity
are classified as held-to-maturity investments. Held-to-
maturity investments are measured at amortised cost
using the effective interest method less any impairment.
2.18.5 aFs financial assets
listed shares held by the Group that are traded in an
active market are classified as AFS and are stated at fair
value. Investments in unlisted shares that are not traded in
an active market, are also classified as AFS financial assets
and stated at fair value (because the Directors consider
that fair value can be reliably measured). Gains and
losses arising from changes in fair value are recognised
in other comprehensive income and accumulated in the
investments revaluation reserve, with the exception of
impairment losses, interest calculated using the effective
interest method, and foreign exchange gains and losses
on monetary assets, which are recognized in profit or loss.
Where the investment is disposed of or is determined
to be impaired, the cumulative gain or loss previously
accumulated in the investments revaluation reserve is
reclassified to profit or loss.
Dividends on AFS equity instruments are recognised
in profit or loss when the Group’s right to receive the
dividends is established.
the fair value of AFS monetary assets denominated in
a foreign currency is determined in that foreign currency
and translated at the spot rate at the end of the reporting
period. the foreign exchange gains and losses that are
recognised in profit or loss are determined based on
the amortised cost of the monetary asset. other foreign
exchange gains and losses are recognised in other
comprehensive income.
2.18.6 loans and receivables
trade receivables, loans, and other receivables that have
fixed or determinable payments that are not quoted in an
active market are classified as ‘loans and receivables’.
loans and receivables are measured at amortised cost
using the effective interest method, less any impairment.
Interest income is recognised by applying the effective
interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
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2.18.7 impairment of financial assets
2.19.3 other financial liabilities
Financial assets, other than those at FVtpl, are assessed
for indicators of impairment at the end of each reporting
period. Financial assets are considered to be impaired
when there is objective evidence that, as a result of one
or more events that occurred after the initial recognition of
the financial asset, the estimated future cash flows of the
investment have been affected.
For certain categories of financial asset, such as trade
receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a
collective basis.
For financial assets carried at cost, the amount of the
impairment loss is measured as the difference between
the asset’s carrying amount and the present value of the
estimated future cash flows discounted at the current
market rate of return for a similar financial asset. Such
impairment loss will not be reversed in subsequent periods.
the carrying amount of the financial asset is reduced by
the impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount
is reduced through the use of an allowance account. When
a trade receivable is considered uncollectible, it is written
off against the allowance account. Subsequent recoveries
of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the
allowance account are recognised in profit or loss.
2.19
FinanCial liaBilities anD
equitY instruments
2.19.1 Classification as debt or equity
Debt and equity instruments are classified as either
financial liabilities or as equity in accordance with the
substance of the contractual arrangement.
2.19.2 equity instruments
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 recognised at the proceeds received, net of direct
issue costs.
Repurchase of the Company’s own equity instruments is
recognised and deducted directly in equity. No gain or loss
is recognised in profit or loss on the purchase, sale, issue
or cancellation of the Company’s own equity instruments.
other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs.
other financial liabilities are subsequently measured at
amortised cost using the effective interest method, with
interest expense recognised on an effective yield basis.
the effective interest method is a method of calculating
the amortised cost of a financial liability and of allocating
interest expense over the relevant period. the effective
interest rate is the rate that exactly discounts estimated
future cash payments through the expected life of the
financial liability, or (where appropriate) a shorter period, to
the net carrying amount on initial recognition.
2.19.4 Derecognition of financial liabilities
the Group derecognises financial liabilities when, and only
when, the Group’s obligations are discharged, cancelled or
they expire. the difference between the carrying amount
of the financial liability derecognised and the consideration
paid and payable is recognised in profit or loss.
2.20
traDe anD other PaYaBles
these amounts represent liabilities for goods and services
provided to the Group prior to the end of financial year which
are unpaid. the amounts are unsecured and are usually
paid within 45 to 60 days of recognition. trade and other
payables are presented as current liabilities unless payment
is not due within 12 months from the reporting date.
2.21 gooDs anD serViCes tax
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GSt), except:
ρ
ρ
where the amount of GSt incurred is not recoverable
from the taxation authority, it is recognised as part
of the cost of acquisition of an asset or as part of an
item of expense; or
for receivables and payables which are recognised
inclusive of GSt.
the net amount of GSt recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables.
Cash flows are included in the statement of cash flows on
a gross basis. the GSt component of cash flows arising
from investing and financing activities which is recoverable
from, or payable to, the taxation authority is classified
within operating cash flows.
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87
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Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
2.22 Cash anD Cash equiValents
2.25 share-BaseD PaYments
Cash and cash equivalents include cash on hand, deposits
held at call with banks, other short-term highly liquid
investments with original maturities of three months or less.
Bank overdrafts are shown within short-term borrowings in
current liabilities on the statement of financial position.
2.23 DiViDenDs
provision is made for the amount of any dividend
declared, being appropriately authorised and no longer
at the discretion of the entity, on or before the end of the
financial year but not distributed at balance date.
2.24
earnings Per share
2.24.1 Basic earnings per share
Basic earnings per share is calculated by dividing the
profit attributable to equity holders of the Company,
excluding any costs of servicing equity other than ordinary
shares, by the weighted average number of ordinary
shares outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the year.
2.24.2 Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account the after income tax effect of interest and other
financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares
assumed to have been issued for no consideration in
relation to dilutive potential ordinary shares.
Share based compensation payments are provided to
employees in accordance to the Company’s employee
Share plan (‘eSp’) and long term Incentive plan (‘ltIp’)
detailed in Note 30. the employee Share plan (‘eSp’)
is accounted for as an “in-substance” option plan due
to the limited recourse nature of the loan between the
employees and the Company to finance the purchase of
ordinary shares.
Share based compensation payments are measured at
the fair value of the equity instruments at the grant date.
the fair value at grant date is independently determined
using the valuation methods detailed in Note 30. the fair
value of the options granted is adjusted to reflect market
vesting conditions, but excludes the impact of any non-
market vesting conditions.
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 Company’s estimate of equity instruments that will
eventually vest. At the end of each reporting period, the
Company 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 a corresponding adjustment to the equity-
settled employee benefits reserve.
upon the exercise of options / performance Rights, the
balance of the share-based payments reserve relating to
those options / performance Rights is transferred to issued
capital and the proceeds received, net of any directly
attributable transaction costs, are credited to issued capital.
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notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
3.
CritiCal aCCounting
JuDgments anD keY sourCes
oF estimation unCertaintY
In the application of the Group’s accounting policies, which
are described in Note 2, the Directors are required to
make judgements, estimates and assumptions about the
carrying amounts of assets and liabilities. the estimates
and associated assumptions are based on historical
experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
the estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is
revised if the revision affects only that period, or in the
period of the revision and future periods if the revision
affects both current and future periods.
3.1
CritiCal JuDgements in aPPlYing
aCCounting PoliCies
the following are the critical judgements, apart from those
involving estimations (see 3.2 below), that the Directors’
have made in the process of applying the Group’s
accounting policies and that have the most significant
effect on the amounts recognised in the consolidated
financial statements.
3.1.1 revenue recognition
Construction contract revenue is recognised in profit
or loss when the outcome of a construction contract
can be measured reliably, in proportion to the stage of
completion of the contract. Contract revenue includes the
initial amount agreed in the contract plus any variations
in contract work, claims and incentive payments to the
extent that it is probable that they will result in revenue
and can be measured reliably. the stage of completion
is assessed by reference to surveys of work performed.
When the outcome of a construction contract cannot be
measured reliably, contract revenue is recognised only to
the extent of contract costs incurred that are likely to be
recoverable. An expected loss on a contract is recognised
immediately in profit or loss.
3.1.2
share based payments
the Group measures the cost of equity settled
transactions with Key Management personnel at the fair
value of the equity instruments at the date at which they
are granted. the fair value is determined using valuation
methods detailed in Note 30.
one of the inputs into the valuation model is volatility of
the underlying share price which is estimated on the
2 year history of the share price and has been estimated
at 50%. the share price used in the valuation model is
based on the Company’s share price at grant date of each
performance right.
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 a corresponding adjustment to
the share based payment reserve.
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.
the preparation of financial statements requires
management to make judgements, estimates and
assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from
these estimates.
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
and in any future periods affected.
3.2.1 Construction contracts
the Group accounts for construction contracts in
accordance with AASB 111 Construction Contracts.
Accounting for construction contracts involves the
continuous use of assessed estimates based on
a number of detailed assumptions consistent with
the project scope and schedule, contract and risk
management processes. these contracts may span
several accounting periods requiring estimates and
assumptions to be updated on a regular basis.
Details of the estimation procedures followed in accounting
for the Group’s construction contracts are detailed below.
(i)
(ii)
Forecast costs to completion: Regularly management
update forecast costs at completion in accordance
with upon agreed work scope and variations. Forecast
costs are based on rates expected to be applied to
the related activity to be undertaken.
Revenues: Revenues reflect the contract price agreed
in the contract and variations where it is probable
that the client will approve those variations or where
negotiations are at final stages with the client.
NRW ANNuAl RepoRt 2012
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89
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
3.2.2 goodwill impairment
Determining whether goodwill is impaired requires an
estimation of the inputs of the value in use of the cash-
generating units to which goodwill has been allocated.
the value in use calculation requires the entity to estimate
the future cash flows expected to arise from the cash-
generating unit and a suitable discount rate in order to
calculate present value. In this regard the future cash
flows are estimated based on approved budgets relating
to the cash-generating units.
the carrying amount of goodwill at 30 June 2012 was
$24.4 million (30 June 2011: $24.4 million). the Directors
determined no impairment of goodwill during the current
year (2011: Nil). Details of the goodwill carrying amount
can be found at Note 19.
3.2.3
emPloYee entitlements
Management judgement is applied in determining the
following key assumptions used in the calculation of long
service leave at balance date:
ρ
ρ
ρ
future increases in wages and salaries;
future on cost rates; and
employee departures and period of service.
3.2.4
useful lives of property, plant and equipment
As described at 2.14 above, the Group reviews the
estimated useful lives of property, plant and equipment
at the end of each reporting period. the effective lives
are based on intended utilisation and working conditions.
Also demand for specific plant and equipment will affect
the plant modelling giving rise to a certain degree of
fluctuations and subjectiveness.
3.2.5 Provision for warranties
As described in 2.16.1, the Group recognises provisions
for warranties for obligations in relation to specific
construction contracts. the future outflow of cash has
been estimated at the Directors’ best estimate of the
expenditure required to settle the Group’s obligation and
history of warranty claims.
4.
4.1
aPPliCation oF neW anD reViseD
aCCounting stanDarDs
stanDarDs anD interPretations
aDoPteD in the Current Year
the Company has adopted all of the new and revised
Standards and Interpretations issued by the Australian
Accounting Standards Board that are relevant to their
operations and are effective for the current financial
reporting period beginning 1 July 2011.
the following new and revised Standards and
Interpretations have been adopted in the current period:
ρ
ρ
ρ
ρ
AASB 124 ‘Related party Disclosures’ (revised
December 2009) and AASB 2009-12 ‘Amendments
to Australian Accounting Standards’
AASB 2010-4 ‘Further Amendments to Australian
Accounting Standards arising from the Annual
Improvements project’
AASB 2010-5 ‘Amendments to Australian Accounting
Standards’
AASB 2010-6 ‘Amendments to Australian Accounting
Standards – Disclosures on transfers of Financial
Assets’
AASB 1054 ‘Australian Additional Disclosures’
ρ
the impact of the adoption of these Standards and
Interpretation did not have a material impact on the Group.
4.2
stanDarDs anD interPretations
in issue not Yet aDoPteD
At the date of authorisation of the financial statements,
the following Australian Accounting Standards and
Interpretations have recently been issued or amended but
are not yet effective and have not been adopted by the
Company for the year ended 30 June 2012:
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notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
stanDarD/interPretation
AASB 9 ‘Financial Instruments’ (December 2009), AASB 2009- 11
‘Amendments to Australian Accounting Standards arising from AASB 9’
AASB 9 ‘Financial Instruments’ (December 2010) and AASB 2010-7
‘Amendments to Australian Accounting Standards arising from AASB 9
(December 2010)’
AASB 10 ‘Consolidated Financial Statements’
AASB 11 ‘Joint Arrangements’
AASB 12 ‘Disclosure of Interests in other entities’
AASB 127 ‘Separate Financial Statements’ (2011)
AASB 128 ‘Investments in Associates and Joint Ventures’ (2011)
eFFeCtiVe For annual
rePorting PerioDs
Beginning on or aFter
exPeCteD to Be initiallY
aPPlieD in the FinanCial
Year enDing
1 January 2015
30 June 2016
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
30 June 2014
30 June 2014
30 June 2014
30 June 2014
30 June 2014
AASB 13 ‘Fair Value Measurement’ and AASB 2011-8 ‘Amendments to
Australian Accounting Standards arising from AASB 13’
1 January 2013
30 June 2014
AASB 119 ‘employee Benefits’ (2011) and AASB 2011-10 ‘Amendments to
Australian Accounting Standards arising from AASB 119 (2011)’
1 January 2013
30 June 2014
AASB 2010-8 ‘Amendments to Australian Accounting Standards – Deferred
tax: Recovery of underlying Assets’
1 January 2012
30 June 2013
AASB 2011-4 ‘Amendments to Australian Accounting Standards to Remove
Individual Key Management personnel Disclosure Requirements’
1 July 2013
30 June 2014
AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from
the Consolidation and Joint Arrangements Standards’
1 January 2013
30 June 2014
AASB 2011-9 ‘Amendments to Australian Accounting Standards – presentation
of Items of other Comprehensive Income’
1 July 2012
30 June 2013
Interpretation 20 ‘Stripping Costs in the production phase of a Surface Mine’
and AASB 2011-12 ‘Amendments to Australian Accounting Standards arising
from Interpretation 20’
1 January 2013
30 June 2014
AASB 2012-2 ‘Amendments to Australian Accounting Standards – Disclosures
– offsetting Financial Assets and Financial liabilities (Amendments to AASB 7)’
1 January 2013
30 June 2014
AASB 2012-3 ‘Amendments to Australian Accounting Standards – offsetting
Financial Assets and Financial liabilities (Amendments to AASB 132)’
1 January 2014
30 June 2015
AASB 2012-5 Amendments to Australian Accounting Standards arising from
Annual Improvements 2009–2011 Cycle
1 January 2013
30 June 2014
AASB 2012-6 Amendments to Australian Accounting Standards – Mandatory
effective Date of AASB9 and transition Disclosures
1 January 2015
30 June 2016
At the date of authorisation of the financial statements the following IASB Standards and IFRIC Interpretations were also in
issue but not yet effective, although Australian equivalent Standards and interpretations have not yet been issued and have
not been adopted by the Company for the year ended 30 June 2012.
stanDarD/interPretation
eFFeCtiVe For annual
rePorting PerioDs
Beginning on or aFter
exPeCteD to Be initiallY
aPPlieD in the FinanCial
Year enDing
Consolidated Financial Statements, Joint Arrangements and Disclosure of
Interests in other entities: transition Guidance (Amendments to IFRS 10, IFRS
11 and IFRS 12)
1 January 2013
30 June 2014
the impact of these recently issued or amended standards and interpretations have not been determined as yet by
the Company.
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
91
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
5.
segment rePorting
the Group’s operating segments are based on the information that is available to the chief operating decision maker and
the Board of Directors.
Segment results are reviewed regularly by the chief operating decision maker and the Board of Directors.
the segment results and segment assets include all items directly attributable to each of the segments and any transaction,
asset or liability that can be allocated on a reasonable basis. unallocated items comprise predominantly of expenses that
are not specific to the performance of an individual operating segment.
All intercompany and related transactions are made at arm’s length at what is considered by management to be
commercial rates as outlined in the related party - Note 35.
the operating segments remain unchanged from prior years and represent core activity of the group. the following are the
reportable segments:
(a)
rePortaBle segments
ρ
ρ
ρ
ρ
ρ
Civil Contracting. the provision of civil infrastructure and other construction services including rail formation, concrete
installation, bulk earthworks and detailed road and tunnel construction.
mining services. this segment continues to operate in mining contracting services including earth moving, waste
stripping, ore haulage and related ancillary services.
Drilling and Blasting. to provide services to internal and external requirements regarding drilling and blasting activities,
commencing in Australia.
equipment sales. An historical activity that has since wound up. the activity comprised predominantly of plant and
equipment sales and earth moving tyres.
Fabrication and repair services. the provision of equipment repairs, sandblasting and painting services, service
truck and water tanker fabrication and import services, including quarantine cleaning.
92
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
(B)
geograPhiCal inFormation
the Group’s activities of the above segments continue throughout the international market arena as relevant. However as
with prior years the predominantly core geographic regions comprise of Australia and West Africa – Guinea.
Revenue volumes and total assets achieved in the two geographical segments comprise of:
reVenue From external Customers
total Current anD non-Current assets
2012
$’000
1,322,004
36,772
1,358,776
2011
$’000
717,001
28,340
745,341
2012
$’000
832,811
14,227
847,038
2011
$’000
531,544
13,466
545,010
Australia
West Africa - Guinea
total
(C)
rePortaBle segment reVenues anD results
segment reVenue
segment ProFit (loss)
Civil Contracting
Mining Services
Drilling and Blasting Services
equipment Sales
Fabrication and Repair Services
eliminations
2012
$’000
731,691
542,161
113,135
547
46,591
(75,349)
total for continuing operations
1,358,776
other unallocated expenses
Net finance costs
Income tax expense
ProFit For the PerioD
2011
$’000
382,642
321,742
27,812
3,736
28,152
(18,743)
745,341
2012
$’000
81,639
63,957
18,744
(1,045)
4,610
-
167,905
(13,911)
(12,860)
(43,992)
97,142
2011
$’000
39,659
31,954
2,908
(1,015)
2,155
-
75,661
(11,077)
(5,664)
(17,724)
41,196
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
93
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
(D)
segment assets anD liaBilities
Civil Contracting
Mining Services
Drilling and Blasting Services
equipment Sales
Fabrication and Repair Services
other unallocated assets
ConsoliDateD assets
Civil Contracting
Mining Services
Drilling and Blasting Services
equipment Sales
Fabrication and Repair Services
other unallocated liabilities
ConsoliDateD liaBilities
segment assets
segment liaBilities
2012
$’000
274,221
477,661
39,082
26
39,817
16,231
847,038
2012
$’000
(171,567)
(288,694)
(35,159)
(68)
(6,305)
(16,067)
(517,860)
2011
$’000
159,062
324,613
25,140
1,182
34,497
516
545,010
2011
$’000
(91,458)
(165,995)
(6,836)
(158)
(3,654)
(10,200)
(278,301)
(e)
inFormation aBout maJor Customers
Revenue derived from each of the segment’s major customers are calculated as $256.802 million (2011:$138.33 million)
in the civil division relating to one customer, $261.404 million (2011: $110.47 million) in the mining division relating to one
customer, $67.88 million (2011:$8.93 million) in the drilling and blasting division relating to one customer, $0.31 million
(2011:$2.77 million) in the equipment sales division relating to one customer and $9.36 million (2011:$7.46 million) in the
fabrication and repair division relating to one customer.
(F)
other segment inFormation
Civil Contracting
Mining Services
Drilling and Blasting Services
equipment Sales
Fabrication and Repair Services
other
total For Continuing oPerations
DePreCiation anD amortisation
aDDitions to non-Current assets
2012
$’000
11,516
27,002
1,880
26
346
1,124
41,894
2011
$’000
3,920
26,037
611
53
316
-
30,937
2012
$’000
16,571
105,526
15,110
-
559
6,657
144,423
2011
$’000
6,906
120,427
7,466
19
574
14,765
150,157
94
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
6.
reVenue
Revenue from the sale of goods
Revenue from the rendering of services
total reVenue
7.
other inCome
Net (loss) on sale of property plant and equipment
other income
total
8.
FinanCe Costs
Interest Income
total FinanCe inCome
Interest on obligations under finance leases
Interest on bank overdrafts and loans
total FinanCe exPenses
net FinanCe exPense
ConsoliDateD
ConsoliDateD
ConsoliDateD
2012
$’000
26,108
1,332,668
1,358,776
2012
$’000
(887)
2,950
2,063
2012
$’000
1,498
1,498
(14,209)
(149)
(14,358)
(12,860)
2011
$’000
14,189
731,152
745,341
2011
$’000
(1,560)
7,407
5,847
2011
$’000
488
488
(5,572)
(580)
(6,152)
(5,664)
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
95
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
9.
ProFit For the Year From Continuing oPerations
(a)
other exPenses
profit for the year from continuing operations has been arrived at after charging:
Depreciation of non-current assets
operating lease payments
Rental hire payments
employee benefits expense:
Wages and salaries
Superannuation contributions
Share based payments
ConsoliDateD
2012
$’000
(41,894)
(41,894)
(5,141)
(198,086)
(203,227)
(366,794)
(27,453)
(1,576)
(395,823)
2011
$’000
(30,937)
(30,937)
(2,538)
(114,889)
(117,427)
(203,072)
(14,407)
-
(217,479)
96
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
10.
inCome taxes relating to Continuing oPerations
(a)
reCogniseD in ProFit or loss
ConsoliDateD
Current tax exPense
Current year income tax
Adjustments for prior years income tax
DeFerreD tax exPense
origination and reversal of temporary differences
total tax exPense
(B)
reConCiliation oF eFFeCtiVe tax rate
profit for the period
total income tax expense
ProFit aFter inCome tax
2012
$’000
37,897
1,385
39,282
4,710
43,992
2012
$’000
141,134
(43,992)
97,142
2011
$’000
11,576
(6,138)
5,438
12,286
17,724
2011
$’000
58,920
(17,724)
41,196
ConsoliDateD
inCome tax using the ComPanY’s DomestiC tax rate oF 30%
42,340
17,676
Changes in income tax expense due to:
Non-allowable expenses
tax losses forgone
under provision for prior years
effect of different income tax rates for subsidiaries operating in a different tax
jurisdiction
551
1,165
(67)
3
57
-
4
(13)
total inCome tax exPense
43,992
17,724
effective tax rate
31.17%
30.08%
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
97
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
(C)
reCogniseD DireCtlY in equitY
Share issue costs (30%)
total
(D)
Current tax liaBilities
Current tax liaBilitY
Income tax payable
the Group is not part of a tax consolidated group.
(e)
DeFerreD tax BalanCes
ConsoliDateD
ConsoliDateD
2012
$’000
-
-
2012
$’000
22,913
22,913
2011
$’000
668
668
2011
$’000
51
51
assets
liaBilities
net
Costs of the initial public offer
Costs of equity raising FY2011
2012
$’000
-
401
2011
$’000
775
534
provisions
8,577
2,892
Work in progress (construction)
Inventories
pp&e
-
15
93
-
-
-
other creditors and accruals
4,383
1,674
other assets
Doubtful debts
losses
DeFerreD tax assets /
(liaBilities)
72
-
-
-
17
964
2012
$’000
-
-
-
(14,376)
(6,590)
(6,960)
-
(1,772)
-
-
2011
$’000
-
-
-
(8,421)
(5,699)
(2,359)
-
(577)
-
-
2012
$’000
-
401
8,577
(14,376)
(6,575)
(6,867)
4,383
(1,700)
-
-
2011
$’000
775
534
2,892
(8,421)
(5,699)
(2,359)
1,674
(577)
17
964
13,541
6,856
(29,698)
(17,056)
(16,157)
(10,200)
98
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
11.
earnings Per share
Basic earnings per share
Diluted earnings per share
ConsoliDateD
2012
2011
Cents Per share
Cents Per share
34.8
34.7
16.1
16.1
(a)
BasiC earnings Per share
the earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:
profit for the year
Weighted average number of shares for the purposes of basic earnings per share
ConsoliDateD
2012
$‘000
97,142
278,888
(B)
DiluteD earnings Per share
the earnings used in the calculation of diluted earnings per share is as follows:
profit for the year
ConsoliDateD
2012
$‘000
97,142
2011
$‘000
41,196
256,402
2011
$‘000
41,196
the weighted average number of ordinary shares used in the calculation of diluted earnings per share is as follows:
ConsoliDateD
Weighted average number of shares for the purposes of basic earnings per
share
Shares deemed to be issued for no consideration in respect of:
- options
- performance Rights
2012
$‘000
278,888
-
765
2011
$‘000
256,402
-
-
Weighted average number of shares used for the purposes of diluted earnings
per share
279,653
256,402
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
99
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
12.
Cash anD Cash equiValents
Cash and cash equivalents
13.
reCeiVaBles
(a)
traDe anD other reCeiVaBles
Current reCeiVaBles
trade Receivables
other Receivables
Retentions
Securities (property bonds)
Allowance for Doubtful Debts (b)
suBtotal
Construction Work in progress (Note 20)
total traDe anD other reCeiVaBles
ConsoliDateD
ConsoliDateD
2012
$’000
137,955
137,955
2012
$’000
134,038
311
164
83
-
134,596
145,842
280,438
2011
$’000
70,628
70,628
2011
$’000
107,547
1,014
145
20
(56)
108,670
46,670
155,340
the average credit period on sales of goods is 45 days. Allowances for doubtful debts are recognised against trade
receivables between 60 days and 120 days based on estimated irrecoverable amounts determined by reference to past
default experience of the counterparty and an analysis of the counterparty’s current financial position.
(B)
moVement in the alloWanCe For DouBtFul DeBts:
ConsoliDateD
Balance at the beginning of the year
Impairment losses recognised on receivables
Amounts written off during the year as uncollectible
Amounts recovered during the year
BalanCe at enD oF Year
2012
$'000
(56)
-
-
56
-
2011
$'000
(198)
-
-
142
(56)
100
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
Ageing of impaired trade receivables.
60-90 days
90-120 days
120+ days
BalanCe at enD oF Year
ConsoliDateD
2012
$’000
-
-
-
-
2011
$’000
-
-
56
56
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade
receivable from the date credit was initially granted up to the end of the reporting period. the Directors believe that there is
no further allowance required in excess of the allowance for doubtful debts.
(C)
age oF reCeiVaBles that are Past Due But not imPaireD
60-90 days
90-120 days
120+ days
total
ConsoliDateD
2012
$'000
4,073
294
2,505
6,872
2011
$'000
1,960
2,131
4,030
8,121
these relate to a number of trade receivable balances where for various reasons the payment terms have not been met.
these receivables have been assessed to be fully recoverable.
14.
inVentories
Raw materials and consumables
Work in progress
Finished goods
BalanCe at 30 June
ConsoliDateD
2012
$'000
28,356
5,018
-
33,374
2011
$'000
20,401
2,384
244
23,029
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
101
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
15. other Current assets
prepayments
total
16.
ProPertY, Plant anD equiPment
property, plant and equipment held by the consolidated entity include:
ConsoliDateD
2012
$'000
4,149
4,149
2011
$'000
3,059
3,059
BuilDings
leaseholD
imProVements
Plant anD
equiPment
$’000
$’000
$’000
Cost
Balance at 30 June 2010
effect of foreign currency exchange differences
other acquisitions
Disposals
BalanCe as at 30 June 2011
effect of foreign currency exchange differences
Acquisitions
Disposals
BalanCe as at 30 June 2012
DePreCiation
Balance at 30 June 2010
Depreciation and amortisation expense
effect of foreign currency exchange differences
Disposals
BalanCe as at 30 June 2011
Depreciation and amortisation expense
effect of foreign currency exchange differences
Disposals
BalanCe as at 30 June 2012
CarrYing amounts
At 30 June 2011
At 30 June 2012
1,156
-
1,203
(400)
1,959
-
4,290
(2)
6,247
246
248
-
(109)
385
545
-
(2)
928
1,574
5,319
1,521
-
(9)
(429)
1,083
-
122
-
1,205
233
106
-
-
339
121
-
-
460
744
745
242,205
(36)
148,963
(4,647)
386,485
2
140,011
(7,466)
519,032
91,467
30,583
(15)
(1,769)
120,266
41,228
1
(3,104)
158,391
266,219
360,641
total
$’000
244,882
(36)
150,157
(5,476)
389,527
2
144,423
(7,468)
526,484
91,946
30,937
(15)
(1,878)
120,990
41,894
1
(3,106)
159,779
268,537
366,705
102
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
17.
ConsoliDateD entities
Parent entitY
NRW Holdings limited
WhollY oWneD suBsiDiaries
NRW pty ltd as trustee for NRW unit trust
Actionblast pty ltd
NRW Mining pty ltd
NRW Intermediate Holdings pty ltd
ACN 107724274 pty ltd
NRW Guinea SARl
Indigenous Mining & exploration Company pty ltd
NRW International Holdings pty ltd
NRW Drill & Blast pty ltd
CountrY oF inCorPoration
oWnershiP interest
2012
2011
Australia
-
-
Australia
Australia
Australia
Australia
Australia
Guinea
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
All of the wholly-owned subsidiaries in Australia have entered into a deed of cross guarantee with NRW Holdings limited
pursuant to the ASIC Class order 98/1418 and are relieved from the requirement to prepare and lodge an audited
financial report.
NRW Guinea SARl is a wholly owned subsidiary of NRW Holdings limited and is incorporated in the Republic of Guinea
(West Africa) and not part of the above deed of cross guarantee arrangements.
the consolidated statement of comprehensive income of the entities party to the deed of cross guarantees are:
ConsoliDateD
statement oF ComPrehensiVe inCome
Revenue
other income
Financial income
Financial expenses
Materials and consumables used
employee benefits expense
Subcontractor costs
Depreciation and amortisation expenses
Impairment expense
plant and equipment costs
travel and accommodation
other expenses
ProFit BeFore inCome tax
Income tax expense
ProFit For the Year
2012
$’000
1,358,690
1,927
1,498
(14,358)
(176,754)
(394,608)
(283,767)
(41,887)
-
(268,365)
(31,855)
(9,447)
141,074
(43,971)
97,103
2011
$’000
745,341
5,550
488
(6,152)
(96,704)
(216,606)
(160,243)
(30,921)
-
(154,320)
(20,161)
(7,086)
59,186
(17,817)
41,369
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
103
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
ConsoliDateD
statement oF FinanCial Position
assets
Current assets
Cash and cash equivalents
trade and other receivables
Inventories
other current assets
total Current assets
non-Current assets
property, plant and equipment
Goodwill
Financial assets
Deferred tax assets
total non-Current assets
total assets
liaBilities
Current liaBilities
trade and other payables
Borrowings
Current tax liabilities
provisions
total Current liaBilities
non-Current liaBilities
Borrowings
provisions
Deferred tax liabilities
total non-Current liaBilities
total liaBilities
net assets
equitY
Issued capital
Reserves
Retained earnings
total equitY
2012
$’000
137,676
280,436
33,374
4,089
455,575
366,667
24,417
3
-
391,087
846,662
250,194
49,592
22,956
29,576
352,318
149,178
26
16,157
165,361
517,679
328,983
156,456
3,211
169,316
328,983
2011
$’000
70,439
155,492
23,029
2,992
251,952
268,495
24,417
3
-
292,915
544,867
134,630
52,932
83
9,800
197,445
70,633
30
10,200
80,863
278,308
266,559
156,456
1,635
108,468
266,559
104
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
18.
uninCorPorateD Joint Ventures
the Group has the following significant interests in the following jointly controlled operations:
name oF Venture
PrinCiPal aCtiVitY
grouP interest
2012
2011
NRW VDM Joint Venture
Mine Asset Development (earthworks) and Breakwater
Construction.
lJN Consortium
Asset Development projects (camps rail etc).
NRW NYFl Joint Venture
Car Dumper and Bulk earthworks at Cape lambert
port B project.
NRW eastern Guruma Joint Venture
Mining and haulage of Section 10 iron ore deposit and
Western turner Brockman Bulk earthworks.
NRW ocean to outback Joint Venture
Hope Downs Village construction.
Midwest Rail Joint Venture
Bulk earthworks and rail upgrade of existing 92km rail,
from Mullewa to tilley Siding, for ore haulage.
City east Alliance
upgrade of Great eastern Highway.
NRW, eastern Guruma and NYFl Joint Venture
provision of early Mining Services – Solomon phase 1
for Fortescue Metals Group limited.
50%
33%
50%
50%
50%
50%
15%
50%
50%
33%
50%
50%
50%
50%
15%
-
there has been no change in the Group’s ownership or voting interests in these joint ventures for the reported years.
the following amounts are included in the Group’s consolidated financial statements as a result of the proportionate
consolidation of the above interests in Joint Ventures.
FinanCial inFormation
ConsoliDateD
statement oF FinanCial PerFormanCe
Income
expenses
statement oF FinanCial Position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
2012
$’000
339,652
334,955
74,708
656
76,543
-
2011
$’000
86,339
88,691
30,019
924
33,495
-
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
105
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
19. gooDWill
Cost
Accumulated impairment losses
Cost
Balance at beginning of financial year
BalanCe at enD oF FinanCial Year
aCCumulateD imPairment
Balance at beginning of financial year
Impairment losses recognised during the year
BalanCe at enD oF FinanCial Year
ConsoliDateD
ConsoliDateD
ConsoliDateD
2012
$’000
27,127
(2,710)
24,417
2012
$’000
27,127
27,127
2012
$’000
(2,710)
-
(2,710)
2011
$’000
27,127
(2,710)
24,417
2011
$’000
27,127
27,127
2011
$’000
(2,710)
-
(2,710)
the carrying amount of goodwill is tested for impairment annually at 30 June or whenever there is an indicator that the
asset may be impaired. the Group assesses the recoverable amount of the cash-generating unit based on the value-in-use
calculation. Key assumptions made in determining “value-in-use” are as follows:
Projected cash flows
the assets recoverable amount or “value in use” is calculated using the Board approved budget for the year ending 30
June 2013 plus cash flow projections up to and including the year ended 30 June 2017.
Estimated rate of growth
the estimated growth rate of 5% has been chosen based on historical performance and consideration of future projects
and management insight.
Weighted average cost of capital
the weighted average cost of capital including a risk margin has been set at a pre-tax discount rate of 16.43% (2011:
14.3%). the Directors assess there is no impairment of the goodwill as at 30 June 2012 (30 June 2011: nil).
Sensitivities
the Board has also performed a sensitivity assessment on the value-in-use calculation on the 5% growth rate used. the
sensitivity assessment was performed at both 3% and 7%, with all other key assumptions remaining the same, neither of
which resulted in an impairment to goodwill.
106
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
20.
amounts Due From (to) Customers unDer ConstruCtion ContraCts
ConsoliDateD
2012
$’000
ContraCts in Progress
Construction costs incurred plus recognised profits less recognised losses to date
1,025,514
less: progress billings
Recognised and included in the consolidated financial statements as amounts due:
From customers under construction contracts
to customers under construction contracts
(1,059,672)
145,842
153,845
(8,003)
145,842
21.
Payables
2011
$’000
893,397
(846,727)
46,670
74,405
(27,735)
46,670
the Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit
terms. All payables are expected to be settled within the next 12 months.
ConsoliDateD
Current PaYaBles
trade payables
Goods and service tax
other payables
Non trade payables and accruals
2012
$’000
167,777
1,823
-
80,818
250,418
2011
$’000
82,685
2,808
959
48,202
134,654
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
107
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
22.
BorroWings
(a)
the grouP BorroWings is ComPriseD oF:
seCureD at amortiseD Cost
Current
Finance lease liability
Insurance funding
trade finance liability
total Current
Non-Current
Finance lease liability
total non-Current
grouP total
ConsoliDateD
2012
$’000
49,492
100
-
49,592
149,178
149,178
198,770
2011
$’000
49,639
557
2,736
52,932
70,634
70,634
123,566
(B)
FinanCe FaCilities:
Consolidated finance facilities as at 30 June 2012
FinanCe DesCriPtion
FaCe Value (limit)
$’000
CarrYing amount (utiliseD)
$’000
unutiliseD amount (utiliseD)
$’000
Asset Financing(1)
Working Capital
trade Finance(2)
other
465,217
50,000
-
100
198,670
-
-
100
266,647
50,000
-
-
Consolidated finance facilities as at 30 June 2011
FinanCe DesCriPtion
FaCe Value (limit)
$’000
CarrYing amount (utiliseD)
$’000
unutiliseD amount (utiliseD)
$’000
287,072
51,500
2,736
3,970
120,273
-
2,736
557
166,799
51,500
-
3,413
Asset Financing(1)
Working Capital
trade Finance(2)
other
(1)
(2)
Terms range from 3 to 5 years
Terms range from 0 to 6 months
security
the main finance provider is the ANZ Banking Group which provides overdraft, trade finance, performance guarantees,
asset financing etc. Annual and periodic reviews take place as necessary subject to bank covenants and conditions as set
in the agreement between the parties. As such the ANZ Banking Group has in place security by way of a fixed and floating
charge over all the Group’s present and future assets, undertaking (including goodwill) and unpaid/uncalled capital of the
Company excluding security attaching to other asset financiers.
108
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
23.
ProVisions
Current
employee benefits
Warranty
total Current ProVisions
Non-current
employee benefits
total non-Current ProVisions
total Current anD non-Current ProVisions
Balance at 1 July 2011
provisions made during the year
Reductions arising from payments
Reductions resulting from re-measurement
unwinding of discount
Balance at 30 June 2012
Short-term provisions
long-term provisions
total BalanCe at 30 June 2012
ConsoliDateD
2012
$’000
22,653
6,923
29,576
26
26
29,602
ConsoliDateD
WarrantY
ProVision
emPloYee
BeneFits
$’000
29
6,923
-
(29)
-
6,923
6,923
-
6,923
$’000
9,801
19,522
(6,644)
-
-
22,679
22,653
26
22,679
2011
$’000
9,771
29
9,800
30
30
9,830
total
$’000
9,830
26,445
(6,644)
(29)
-
29,602
29,576
26
29,602
i)
the warranty provisions relates to the present value of the Directors’ best estimate of the future outflow of economic
benefits that will be required under the Groups obligations for warranties arising from specific construction contracts at
reporting date. the future cash flows has been estimated at the Directors’ best estimate of the expenditure required to
settle the Group’s obligation and history of warranty claims.
ii)
the provision for employee benefits represents annual leave and vested long service leave entitlements accrued and
compensation claims made by employees.
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
109
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
24.
ContriButeD equitY
(a)
FullY PaiD orDinarY shares
orDinarY shares
278,888,011 fully paid ordinary shares
(2011: 278,888,011)
ConsoliDateD
2012
$’000
2011
$’000
156,456
156,456
the Company does not have authorised capital or par value in respect of its issued shares. All issued shares are fully paid.
All shares rank equally.
Fully paid ordinary shares carry one vote per share and carry a right to dividends.
ConsoliDateD
ConsoliDateD
2012
2011
# no. ‘000
# no. ‘000
2012
$’000
FullY PaiD orDinarY shares
BalanCe at the Beginning oF the FinanCial Year
278,888
251,223
156,456
Issue of ordinary shares under equity Raising
Issue of ordinary shares under Share purchase plan
Share issue costs
Income tax relating to transactions with owners
Repayment of limited recourse loan as part of the ‘eSp’
-
-
-
-
-
25,547
2,118
-
-
-
-
-
-
-
-
2011
$’000
82,211
70,000
5,802
(2,225)
668
-
BalanCe at the enD oF the PerioD
278,888
278,888
156,456
156,456
(B)
share oPtions anD PerFormanCe rights granteD
Information relating to the Group’s options and performance Rights, including details of issued, exercised and lapsed
during the financial year and outstanding at the end of the financial year, is set out in Note 30.
110
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
25.
reserVes
Share based payment reserve
Foreign currency reserve
total reserVes
share BaseD PaYment reserVe
Balance at the beginning of the financial year
equity compensation
BalanCe at the enD oF the FinanCial Year
ConsoliDateD
ConsoliDateD
2012
$’000
3,211
(242)
2,969
2012
$’000
1,635
1,576
3,211
2011
$’000
1,635
(248)
1,387
2011
$’000
1,635
-
1,635
the share based payment reserve arose on the grant of ordinary shares to Key Management personnel (issued prior to Ipo
and in lieu of cash bonuses) and also includes the share based payment arrangements relating to performance Rights issued to
KMp’s. Refer to the Remuneration Report (pages 55 to 71) for the grant of performance Rights to Key Management personnel.
ConsoliDateD
Foreign CurrenCY translation reserVe
Balance at the beginning of the financial year
exchange differences arising on translation of foreign operations
BalanCe at the enD oF the FinanCial Year
total reserVes
2012
$’000
(248)
6
(242)
2,969
2011
$’000
(33)
(215)
(248)
1,387
exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation
reserve. the reserve is recognised in the income statement when the foreign operation is disposed of.
26.
retaineD earnings
Balance at the beginning of the financial year
Net profit attributable to members of the parent entity
Dividends paid (Note 27)
BalanCe at the enD oF the FinanCial Year
ConsoliDateD
2012
$’000
108,866
97,142
(36,255)
169,753
2011
$’000
85,256
41,196
(17,586)
108,866
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
111
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
27.
DiViDenDs
(a)
DiViDenDs PaiD
reCogniseD amounts PaiD:
Fully paid ordinary shares, fully franked
Final dividend to 30 June 2010:
Interim dividend to 31 December 2010:
Final dividend to 30 June 2011
Interim dividend to 31 December 2011
unreCogniseD amounts:
Fully paid ordinary shares, fully franked
Final dividend to 30 June 2011
2012
2011
Cents Per
share
total
$’000
Cents Per
share
total
$’000
5.00
8.00
13,944
22,311
36,255
3.00
4.00
7,537
10,049
17,586
5.00
13,944
Final dividend to 30 June 2012
10.00
27,889
on 23 August 2012, the Directors declared a fully franked final dividend of 10 cents per share to the holders of fully paid
ordinary shares in respect of the financial year ended 30 June 2012, to be paid to shareholders on 30 october 2012.
(B)
Franking aCCount
ConsoliDateD
Franking aCCount BalanCe at 1 JulY
Australian income tax paid(1)
Franking credits attached to dividends paid:
- as final dividend
- as interim dividend
Franking aCCount BalanCe at 30 June
Franking credits that will arise from the payment of income tax payable as at
reporting date
Franking credits that will arise from the payment of declared before the financial
report was authorised for issue but not recognised as a distribution to equity
holders during the period.
net Franking CreDits aVailaBle
(1)
excludes income tax payments made in overseas tax jurisdictions.
2012
$’000
41,076
15,154
(5,976)
(9,562)
40,692
23,034
(11,952)
51,774
2011
$’000
36,498
12,115
(3,230)
(4,307)
41,076
83
(5,976)
35,183
112
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
28.
reConCiliation oF Cash FloWs From oPerating aCtiVities
(a)
reConCiliation oF ProFit For the PerioD to net Cash FloWs From oPerating aCtiVities
ConsoliDateD
ProFit For the PerioD
Adjustments for:
loss/(gain) on sale of property, plant and equipment
Net foreign exchange (gain)/loss
Depreciation
Share based payment expense
Amortised bank guarantees
oPerating ProFit BeFore Changes in Working CaPital anD
ProVisions
Change in trade and other receivables
Change in provision for doubtful debts
Change in inventories
Change in other assets
Change in trade and other payables
Change in provisions and employee benefits
Change in provision for income tax
Change in deferred tax balances
net Cash From oPerating aCtiVities
2012
$’000
97,142
887
3
41,894
1,576
-
141,502
(125,041)
(56)
(10,345)
2,767
115,764
19,773
22,953
5,866
173,183
2011
$’000
41,196
1,560
(214)
30,937
-
1,053
74,532
7,933
(142)
(9,665)
2,746
(5,636)
2,388
(6,697)
12,287
77,746
(B)
non-Cash inVesting aCtiVities
During the year, the Group acquired $117,664,059 (2011: $48,240,401) of equipment under finance lease and asset
trade finance. these acquisitions will be reflected in the statement of cash flows over the term of the finance leases via
repayments of borrowings and finance leases.
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
113
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
29.
FinanCial instruments
FinanCial risk management
the Board has ultimate responsibility to manage the Group’s risk management policy. In addition suitable prevention controls
and action plans are put in place and the risk policies and procedures are reviewed periodically.
the Group’s overall financial risk strategy seeks to ensure appropriate funding levels, approved treasury directives to meet
ongoing project needs and new growth. In addition it is seen as critical that the going concern basis is maintained and
adequate working capital is available.
primarily interest bearing debt, cash and cash deposits, trade receivables and payables are the main focus of financial
instruments engaged by the Group. the Group is also exposed to some foreign currency risks although considered minimal.
CaPital risk management
the capital structure of the Group comprises of debt (borrowings), cash and cash equivalents, and equity to the
relevant stakeholders.
the majority of capital funding is required for the long term purchase of operating assets. these are primarily placed under
hire purchase borrowing arrangements under a clubbing arrangement through the ANZ Banking Group ltd.
the cash position is reviewed regularly and ensures the Group will be able to pay its debts as and when they fall due.
gearing ratio:
the Board meets regularly to determine the level of borrowings and funding required. the gearing ratio is influenced directly
from the capital structure including the payment of dividends and any other movement in debt. the gearing ratio was
calculated at 30 June as:
Borrowings
Debt (Note 22)
Cash (Note 12)
net DeBt
equity
net DeBt to equitY ratio
Fair value of financial instruments
ConsoliDateD
2012
$’000
198,770
(137,955)
60,815
329,178
18%
2011
$'000
123,566
(70,628)
52,938
266,709
20%
the carrying values of financial assets and financial liabilities recorded in the financial statement continue to approximate
their fair values and require no further adjustment.
114
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
interest rate risk management
During the year the Group has successfully introduced a debt clubbing arrangement with its main banker the ANZ Banking
Group ltd. under this arrangement a progressive drawdown is used to aid the supply of new assets and subsequently
these repayments are grouped into a tranche where a hire purchase repayment schedule is set up. Repayments are
generally made quarterly and the progressive draw incurs interest only. Furthermore a residual is in most cases set at 25%
and terms tend to be for 5 years.
the Board continues to review its risk associated with any covenants and borrowing conditions. the Bank imposes various
covenants and ratio calculations that must be met. these are calculated quarterly.
the Group enjoys a mixture of fixed and variable borrowings to manage both cash and long term capital purchases. the
long term debt specifically relating to capital purchases of plant and machinery is fixed.
the Group does not enter into any specific swaps or hedging relative to any interest rate volatility. ongoing reviews of
available cash or credit in anticipation of contract awards continues and is formally reported monthly or ad hoc subject to
any market activity.
Given the Group has most of the financing under fixed rate hire purchase or other similar asset financing agreements,
the exposure to market rate volatility lies mainly in the overdraft and progressive drawdown facilities. It is not considered
material that such a swing will impact on the Business during any one operating cycle. A simple sensitivity analysis of an
increase in costs of 100 basis points confirms a potential immaterial cost increase of less than $100,000 on historical
overdraft and redraw balances.
liquiDitY risk management
ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate
liquidity risk management framework for the management of the Company’s short-, medium- and long-term funding and
liquidity management requirements. the Company manages liquidity risk by maintaining banking facilities, ensuring a
tight credit control program, continuously monitoring forecast and actual cash flows, and considering the level of capital
commitment commensurate with market demand for commodities.
the contractual maturity for its financial liabilities and financial assets are set out in the following tables.
the table shows the effective interest rates and average interest rates as relevant to each class.
ConsoliDateD interest anD liquiDitY analYsis 2012:
eFFeCtiVe
interest
rate
total
0 to 30 DaYs
31 DaYs to
< 1 Year
1 to 5 Yrs
> 5Yrs
%
$'000
$'000
$'000
$'000
$'000
FinanCial assets
Cash and cash equivalents
2.50%
trade and other receivables
-
137,955
280,438
418,393
FinanCial liaBilities
Asset financing
trade finance
trade and other payables
8.46%
234,585
-
-
-
-
250,418
190,550
59,868
other borrowings
9.24%
100
20
80
485,103
192,206
121,855
171,042
137,955
143,255
281,210
1,636
-
-
137,183
137,183
-
-
-
61,907
171,042
-
-
-
-
-
-
-
-
-
-
-
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
115
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
ConsoliDateD interest anD liquiDitY analYsis 2011:
eFFeCtiVe
interest
rate
total
0 to 30 DaYs
31 DaYs to
< 1 Year
1 to 5 Yrs
> 5Yrs
FinanCial assets
Cash and cash equivalents
trade and other receivables
FinanCial liaBilities
Asset financing
trade finance
trade and other payables
other borrowings
%
4.0
-
8.40
8.28
-
4.28
$'000
$'000
$'000
$'000
$'000
70,628
155,340
225,968
137,948
2,736
70,628
130,743
201,371
1,251
642
134,654
98,177
557
102
-
23,665
23,665
55,991
2,094
36,477
455
-
932
932
80,706
-
-
-
275,895
100,172
95,017
80,706
-
-
-
-
-
-
-
-
Foreign exChange anD CurrenCY exPosure
the Group reports its functional currency in Australian dollars.
the Board considers that movements in foreign currency (negative or positive) will have minimal impact on operating
profits, given that most projects are agreed and billed in Australian dollars. Any new developments which the Group
considers or bids for are considered as part of the risk management by the Board. other than specific transactions or
purchases negotiated with the supplier, the majority of transactions dealing in foreign currency are dealt with at spot.
the Group’s operations in West Africa – Guinea have a continued minor exposure to foreign currency movements given
the traded currency is Guinea Francs. No material changes have occurred from prior years and as such predominantly,
the exposure to foreign currency fluctuations is based on the transfer of funds for services rendered in the country of
West Africa – Guinea and for reimbursing on payments made by NRW Guinea SARl on behalf of NRW pty ltd. the cash
balances held in Guinea at 30 June 2012 (at spot) was $278,659 AuD (2011: $188,799 AuD). Whilst the foreign currency
exchange rates can move in a negative direction, a simple 10% sensitivity analysis performed within the Group could add
an immaterial annual cost increase of approximately $360,000. For cash held, this same 10% move could expose the
Business to additional cost pressures of less than $50,000.
No hedging is entered into for the purposes of the Guinea operations. Cash is converted to uSD and then into GNF
as required. Volatile market movements are considered low risk, given the majority of the cash is utilised quickly and
intentionally not left idle for long periods. Contract income however is negotiated and invoiced in Australian dollars.
CreDit risk
the credit risk associated with the Group is primarily if any third party fails to meet its obligations to pay its debt as and
when they fall due. trade and other receivables primarily continue in the 30 to 60 day band. Cash retentions are small in
nature given the priority to utilise bonds and bank guarantees. the retention or guarantee/bond period varies from contract
to contract under the terms of each contract.
Where terms are exceeded by the customer no interest is charged on late payments, however management continue to
follow a strict credit policy as part of day to day cash flow management and pursue any delays or late payments vigorously.
the carrying amount of financial assets recorded in the financial statements net of any allowance for losses, represents the
Groups maximum exposure to credit risk without taking into account the value of any collateral.
the total amount of guarantees/bonds at 30 June 2012 stands at $132,411,298 (2011: $86,716,841) and cash retentions
held as receivables stand at $95,984,753 (2011: $145,454).
116
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
30.
share BaseD PaYments
senior management anD DireCtor oPtion Plan (“smDoP”)
the SMDop is a senior management and director share option plan and has been put in place since NRW’s admission to
the ASX. No options have been issued under the plan to date. the Board has the discretion to determine the terms and
conditions applying to each offer of options under the SMDop including performance conditions attaching to the exercise
of options, restrictions on transfer and disposal, exercise price of options and amount payable for a grant of options.
the SMDop will be accounted for as equity settled share-based payments where the fair value determined at the grant
date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest.
emPloYee giFt oFFer (“ego”)
No new issues of shares have been provided during the year ended 30 June 2012. (2011: Nil).
in-suBstanCe oPtions
No new limited recourse loans were issued to Key Management personnel.
Historically, the employees’ obligation for repayment of these loans is limited to the dividends declared and the capital
returns by the Company, and in the event that the employee ceases employment, the market price achieved on the sale of
the shares held as security by the Company for the loans.
prior loans were repaid in full and no balances exist as unpaid at 30 June 2012 (2011: Nil).
PerFormanCe inCentiVe rights Plan
the Group has refreshed its remuneration programme by introducing short-term incentive (StI) and long-term incentive (ltI)
programmes. In this case the compensation arrangement is one where one or more directors, executives or employees
receive a cash settled or equity settled award.
the first of those ltI awards has been made in respect of NRW’s performance in FY12. In recognition of the Company’s
undertaking to its senior executives and the exemplary growth achieved for our Company over the past 4 years, the FY12
ltI award under the performance Rights plan will be eligible to vest in three tranches (34%, 33% and 33%) over three years
on 15 September 2012, 15 September 2013 and 15 September 2014. this vesting schedule reflects the ‘one-off’ nature
of the FY12 ltI award, which allows for a transitionary implementation of the NRW ltI programme. Any ltI award that will
be made in respect of FY13 and ongoing will vest only on the third anniversary of an ltI award being made, subject to the
achievement of vesting conditions.
No amounts are paid or payable by the recipient or employee on receipt of the performance Rights.
the following performance Rights were in existence during the current year:
grant
Date
numBer
exPirY
Date
exerCise
PriCe
Fair Value
at grant Date
23-Nov-11
841,377
14-Sep-12
12-Mar-12
869,326
12-Mar-12
$Nil
$Nil
total
1,710,703
tranChe 1
tranChe 2
tranChe 3
Relative
tSR
epS
growth
RoCe
Relative
tSR
epS
growth
RoCe
Relative
tSR
epS
growth
RoCe
$1.70
$2.65
$2.65
$1.65
$2.49
$2.49
$1.61
$2.35
$2.35
$2.93
$3.73
$3.73
$2.64
$3.52
$3.52
$2.50
$3.31
$3.31
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
117
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
Fair Value oF PerFormanCe rights
the estimation of the fair value of share-based payment awards requires judgement with respect to the appropriate
valuation methodology. the choice of valuation methodology is determined by the structure of the awards, particularly the
vesting conditions. the table below shows the valuation methodology used for each award.
Valuation methoDologY For eaCh aWarD
aWarD tYPe
grant Date
Vesting ConDitions
Valuation methoDologY
performance Rights
23 November 2011 and
12 March 2012
Relative tSR
epS Growth
RoCe
Monte-Carlo simulation
Binomial tree
Binomial tree
each valuation methodology we have used has been chosen from those available to us to incorporate an appropriate
amount of flexibility with respect to the particular performance and vesting conditions of the award.
Valuation assumPtions
the following table summarises the key assumptions adopted for valuation of the awards.
key assumptions for the awards granted on 23 november 2011
aWarD tYPe
PerFormanCe rights
Vesting conditions
Share price at the grant date
tranche
Vesting date
expected life
Risk free interest rate
Volatility
Dividend yield
Relative tSR, RoCe and epS
$2.78
1
2
3
15 September 2012
15 September 2013
15 September 2014
0.8 years
1.8 years
2.8 years
3.40%
50%
6.0%
3.09%
50%
6.0%
3.07%
50%
6.0%
118
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
keY assumPtions For the aWarDs granteD on 12 marCh 2012
aWarD tYPe
PerFormanCe rights
Vesting conditions
Share price at the grant date
tranche
Vesting date
expected life
Risk free interest rate
Volatility
Dividend yield
Relative tSR, RoCe and epS
$3.85
1
2
3
15 September 2012
15 September 2013
15 September 2014
0.5 years
1.5 years
2.5 years
3.91%
50%
6.0%
3.63%
50%
6.0%
3.53%
50%
6.0%
In respect of the performance Rights that were eligible to vest on 15 September, through the application of the Vesting
Conditions, all (100%) of the performance Rights that were eligible to vest to each executive KMp vested. the applicable
outcomes of the Vesting Conditions (which apply to all executive KMp that were granted performance Rights in respect of
their performance Rights that were eligible to vest) for FY12 are as follows:
movements in Performance rights during the year
2012
2011
numBer oF
PerFormanCe
rights
WeighteD
aVerage
exerCise PriCe
numBer oF
PerFormanCe
rights
WeighteD
aVerage
exerCise PriCe
Balance at the beginning of the year
-
Granted during the year
1,710,703
Forfeited during the year
-
Balance at the end of the year
1,710,703
exercisable at end of year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
119
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
31.
FinanCe leases
FinanCe leases as lessee
Non-cancellable finance leases are payable as follows:
the majority of new plant and equipment purchases are financed using hire purchase as described in the financial
instrument Note 29. the average lease term is 5 years
Interest rates underlying all obligations under finance leases are fixed at respective contract dates ranging from 7.0%% to
10.25% (2011: 7.1% to 10.35%)
minimum Future lease
PaYments
Present Value oF
minimum Future lease
PaYments
2012
$’000
2011
$’000
2012
$’000
2011
$’000
No later than 1 year
63,543
57,242
49,492
49,639
later than 1 year and not later than 5 years
171,042
80,706
149,178
70,634
later than five years
-
-
-
-
minimum Future lease PaYments(1)
234,585
137,948
198,670
120,273
less future finance charges
(35,915)
(17,675)
-
-
Present Value oF minimum lease PaYments
198,670
120,273
198,670
120,273
(1) Minimum future lease payments include the aggregate of all the lease payments and any guaranteed residual value.
Included in the financial statement as: (Note 22 ‘Borrowings’):
Current borrowings
Non-Current borrowings
ConsoliDateD
2012
$’000
49,492
149,178
198,670
2011
$’000
49,639
70,634
120,273
120
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
32. oPerating leases
oPerating leases as lessee
Non-cancellable operating lease rentals (excluding property rentals - see below) are payable are as follows:
ConsoliDateD
less than one year
Between one and five years
More than five years
property lease rentals are payable as follows:
less than one year
Between one and five years
More than five years
2012
$’000
15,963
7,453
-
23,416
2012
$’000
5,157
18,271
854
24,282
ConsoliDateD
2011
$’000
2,179
3,523
-
5,702
2011
$’000
2,473
10,023
5,227
17,223
the majority of property leases relate to commercial property. the majority of these property leases contain market or CpI
review clauses during the term of the leases.
the Group does not have the option to purchase the leased assets at the end of the lease period.
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
121
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
33.
CaPital anD other Commitments
CaPital exPenDiture Commitments – Plant anD equiPment
anD other
Within one year
Between one and five years
later than five years
34.
ContingenCies
Bank guarantees
Insurance bonds
BalanCe at the enD oF the FinanCial Year
ConsoliDateD
ConsoliDateD
2012
$’000
12,124
48,496
-
60,620
2012
$’000
36,426
95,985
132,411
2011
$’000
15,786
94,303
8,101
118,190
2011
$’000
28,074
58,642
86,716
the Group has bank guarantees and bonds issued in respect of contract performance in the normal course of business in
respect to its construction contracts.
Claims
Certain claims arising out of construction contracts have been made by or against certain controlled entities in the ordinary
course of business, some of which involve litigation or arbitration. the Directors do not consider the outcome of any of
these claims will have a material adverse impact on the financial position of the consolidated entity.
35.
relateD Parties
the ultimate parent entity within the Group is NRW Holdings limited. the interests in subsidiaries are set out in Note 17.
(a)
traDing summarY
Sales of goods or services made to related parties were made at arm’s length and under normal commercial market
conditions. they comprise of:
122
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
keY management Person anD/or relateD PartY.
transaCtion BookeD in grouP
transaCtion Value
2012
$
2011
$
(i) other relateD PartY – reVenue
Mr W Fair - JSW Australia
(ii) inter grouP transaCtions
NRW pty ltd – purchases from ACN 107 724 274
NRW pty ltd – purchases from Action Mining Services
NRW pty ltd – Sales to Action Mining Services
NRW pty ltd – Sales to ACN 107 724 274
NRW pty ltd – Revenue from NRW Holdings
Revenue on services income for civil
contracting works.
(51,925)
3,112,883
purchases of tyres, electrical equipment
and back charge of repairs and
maintenance.
309,087
444,464
Repairs and maintenance, plant and
module purchases and labour hire.
6,254,103
9,116,204
Back charges for labour and
miscellaneous.
10,508
421,662
Back charges for repairs and maintenance,
management fee and miscellaneous
-
699,345
transfer of grants and government
incentives or payments received
806,727
805,855
NRW pty ltd - Sales to NRW VDM Joint Venture
Subcontractor Services
5,313,362
14,338,630
NRW pty ltd - Sales to NRW NYFl Joint Venture
Subcontractor Services
86,226,526
3,282,201
NRW pty ltd - Sales to l J N Joint Venture
Subcontractor Services
7,295,628
81,813,250
NRW pty ltd - Sales to NRW eastern Guruma Joint Venture
Subcontractor Services
194,881,835
72,278,378
NRW pty ltd – Sales to otoC Joint Venture
Subcontractor Services
298,570
833,745
NRW pty ltd – Sales to the Mid West Rail Joint Venture
Subcontractor Services
33,886,452
259,367
NRW pty ltd – Sales to City east Alliance
Subcontractor Services
1,007,794
371,896
NRW pty ltd – Sales to NRW eastern Guruma NYFl Joint Venture
Subcontractor Services
108,014,192
-
NRW pty ltd – Sales to Action Drill & Blast
NRW pty ltd - purchases from NRW VDM Joint Venture
NRW pty ltd - purchases from l J N Joint Venture
Back charges for plant, labour and other re
project works
19,495,586
24,342,107
employee travel and accommodation
charges and other
3,790,950
811,172
Mostly diesel back charges consumed by
NRW plant
-
5,142,998
NRW pty ltd - purchases from NRW SARl
Management Fee and cost back charges
1,627,465
2,717,488
Action Drill & Blast – Sales to NRW eastern Guruma NYFl Joint
Venture
Subcontractor Services
23,111,425
-
NRW pty ltd – purchases from Action Drill & Blast
Drill & Blast Services and back charges
68,238,811
9,060,647
Action Drill & Blast – Sales to NRW eastern Guruma Joint Venture
Drill & Blast Services and back charges
6,038,791
7,500,000
Action Drill & Blast – purchases from Action Mining Services
Repairs and maintenance, plant and
module purchases and labour hire.
119,683
174,219
Action Drill & Blast – Sales to Action Mining Services
Back charges of labour
2,494
-
Action Mining Services – Sales to ACN 107 724 274
Water trucks, service trucks, repairs and
maintenance.
-
686,913
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
123
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
(B)
relateD PartY outstanDing BalanCes
Amounts receivable from or payable to related parties at reporting date were as follows:
ConsoliDateD
account receivable Balances
other related parties
total related party assets
accounts Payable Balances
other related parties
total related party payables
2012
$
-
-
-
-
2011
$
2,026,858
2,026,858
-
-
the amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No
expense has been recognised in the current or prior periods for bad or doubtful debts in respect of the amounts owed by
related parties.
(C)
keY management Personnel remuneration
the following were Key Management personnel of the Group at any time during the reporting period and unless otherwise
indicated were Key Management personnel for the entire period.
DireCtors
Dr I F Burston
Mr J Cooper
Mr M Arnett
Mr J A pemberton
exeCutiVes
Mr K Hyman
Mr M Wallace
Mr K Bounsell
Mr W Rooney
Mr M Stewart
Mr t Cook
Mr W Fair
Mr S lucas
Chairman and Non-executive Director
Non-executive Director
Non-executive Director
Managing Director and Chief executive officer
Company Secretary, Risk Management and legal
Chief Financial officer
General Manager – Assets
Managing Director - Civil and Mining
General Manager – Civil
General Manager Mining – West Coast and overseas Mining
Drill & Blast General Manager
General Manager - east Coast Mining (Resigned)
124
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
the Key Management personnel compensation included in ‘employee benefits expense’ (see Note 9(A)) is as follows:
ConsoliDateD
Short term employee benefits
other long term benefits
post employment benefits
Share based payments
total
2012
$
7,610,346
83,563
303,182
1,575,839
9,572,930
2011
$
6,538,465
167,366
473,627
-
7,179,458
Detailed information on remuneration of Key Management personnel is set out in the Remuneration Report (pages 55 to
71) in the Directors’ Report.
(D)
oPtions oVer equitY instruments granteD as ComPensation
Apart from the in-substance options described in the Directors’ Report, no options were issued to or held by Key
Management personnel or their related parties during the reporting period (2011: Nil).
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
125
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
(e)
moVements in orDinarY shares
the movement during the reporting period in the number of ordinary shares in NRW Holdings limited held directly,
indirectly or beneficially, by each Key Management personnel, including their related parties, is:
For the year ended 30 June 2012
for ordinary shares
helD at 1
JulY 2011
PurChases(1)
reCeiVeD as
ComPensation
reCeiVeD
on oPtions
/rights
exerCiseD
sales /
transFers
/ net other
Change
helD at 30
June 2012
keY Person
Mr J A pemberton
Dr I F Burston
Mr J Cooper
Mr M Arnett
Mr K Hyman
Mr M Wallace
Mr M Stewart
Mr W Rooney
Mr t Cook
Mr W Fair
2,540,014
329,492
-
-
-
10,000
280,474
22,474
23,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(57,500)
2,540,014
329,492
10,000
280,474
22,474
-
-
-
-
-
-
-
4,419,892
(57,500)
7,625,846
Mr S lucas (resigned)
57,500
Mr K Bounsell
3,381,843
1,038,049
totAl
6,635,297
1,048,049
(1) All purchases were made via purchases of shares on-market.
For the year ended 30 June 2011
for ordinary shares
keY Person
Mr J A pemberton
Dr I F Burston
Mr J Cooper
Mr M Arnett
Mr K Hyman
Mr M Wallace
Mr M Stewart
Mr W Rooney
Mr t Cook
Mr W Fair
Mr S lucas
Mr K Bounsell
totAl
helD at 1
JulY 2010
PurChases(1)
reCeiVeD as
ComPensation
reCeiVeD
on oPtions
/rights
exerCiseD
sales /
transFers
/ net other
Change
helD at 30
June 2011
2,534,540
324,992
-
275,000
17,000
-
-
-
-
-
57,500
3,381,843
5,474
4,500
-
5,474
5,474
23,500
-
-
-
-
-
-
6,590,875
44,422
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,540,014
329,492
-
280,474
22,474
23,500
-
-
-
-
57,500
3,381,843
6,635,297
(1) All purchases were made via purchases of shares on-market.
126
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
(F)
PerFormanCe rights oVer equitY instruments granteD as ComPensation
All performance Rights issued to Key Management personnel were made in accordance with the provisions of the
Company’s long term Incentive plan as outlined in the Remuneration Report (pages 55 to 71).
In respect of the ltI component of the FY12 Awards, the following table shows the total number of performance Rights
granted to NRW’s KMp. the table also sets out the number of performance Rights that will be eligible to vest, subject to
application of the vesting conditions on each subsequent vesting date.
BalanCe
at 1 JulY
2012
granteD as
ComPensation
exerCiseD
net other
Change
BalanCe at
30 June 2012
VesteD at
30 June 2012
VesteD anD
exerCisaBle
PerFormanCe
rights VesteD
During the
Year
Mr J A
pemberton
Mr W Rooney
Mr M Stewart
Mr t Cook
Mr W Fair
Mr K
Bounsell
Mr M Wallace
-
-
-
-
-
-
-
841,377
348,448
211,570
76,015
73,479
85,165
74,649
-
-
-
-
-
-
-
-
-
-
-
-
-
-
841,377
348,448
211,570
76,015
73,479
85,165
74,649
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
No performance Rights were issued during the year ended 30 June 2011.
36.
eVents aFter the rePorting PerioD
other than the events noted below there has not arisen in the interval between the end of the financial year and the date
of this report any transaction or event of a material nature likely in the opinion of the Directors, to affect significantly the
operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in
subsequent financial years.
37.
auDitor’s remuneration
ConsoliDateD
2012 ($)
2011 ($)
auDit serViCes
Auditors of the Company
Deloitte Touché Tohmatsu
Audit and review of financial reports
299,500
196,000
other serViCes
Deloitte Touché Tohmatsu
Advisory Services
total
1,155
300,655
2,600
198,600
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
127
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
38.
Parent entitY inFormation
As at, and throughout, the financial year ended 30 June 2012 the parent company of the Group was NRW Holdings limited.
the accounting policies of the parent entity, which have been applied in determining the financial information shown below,
are the same as those applied in the consolidated financial statements. Refer to Note 2 for a summary of the significant
accounting policies relating to the Group.
(a)
FinanCial Position
Parent
assets
Current assets
Non-current assets
total assets
liabilities
Current liabilities
Non-current liabilities
total liabilities
equity
Contributed equity
Retained earnings
reserves
Share based payment reserve
total equity
2012
$’000
282,719
34,489
317,208
19,521
8,254
27,775
156,456
129,766
3,211
289,433
2011
$’000
228,345
35,398
263,743
1,122
9,740
10,862
156,456
94,790
1,635
252,881
128
notes to the FinanCial statements
NRW ANNuAl RepoRt 2012
notes to the
Financial sTaTemenTs
FOR THE YEAR ENDED 30 JUNE 2012
(B)
FinanCial PerFormanCe
profit after tax for the year
other comprehensive income
total ComPrehensiVe inCome
(C)
guarantees entereD into BY the Parent entitY
in relation to the DeBts oF its suBsiDiaries:
Debt borrowings
total
NRW Holdings limited has entered into a Deed of Cross Guarantee with:
ρ
ρ
ρ
ρ
ρ
NRW pty ltd AtF NRW unit trust
NRW Drill & Blast pty ltd
Actionblast pty ltd
A.C.N. 107724274 pty ltd (formerly promac Sales pty ltd)
NRW Intermediate Holdings pty ltd
Parent
Parent
2012
$’000
71,231
-
71,231
2012
$’000
198,770
198,770
2011
$’000
29,835
-
29,835
2011
$’000
123,566
123,566
NRW ANNuAl RepoRt 2012
notes to the FinanCial statements
129
shareholDer
inFormaTion
130 shareholDer
inFormaTion
the shareholder information set out below was applicable as at 25 September 2012.
NRW’s contributed equity comprises 278,888,011 fully paid ordinary shares.
DistriBution oF shareholDings
range
FullY PaiD orDinarY shares
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
total
unmarketable parcels
243,422,270
21,043,830
7,163,093
6,588,398
670,420
278,888,011
13,619
%
87.28
7.55
2.57
2.36
0.24
100.00
0.00
no oF holDers
84
844
906
2,203
1,331
5,368
288
%
1.56
15.72
16.88
41.04
24.80
100.00
5.37
nrW’s 20 largest shareholDers
rank
name
shares
% interest
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
J p MoRGAN NoMINeeS AuStRAlIA lIMIteD
HSBC CuStoDY NoMINeeS (AuStRAlIA) lIMIteD
NAtIoNAl NoMINeeS lIMIteD
Jp MoRGAN NoMINeeS AuStRAlIA lIMIteD
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