ANNUAL REPORT
2014
SHARE REGISTRY
Link Market Services Limited, Level 4 Central Park
152 St Georges Terrace, Perth WA 6000
T + 61 1300 554 474 F +61 2 8287 0303
ASX CODE
NWH – NRW Holdings Limited
Fully Paid Ordinary Shares
www.nrw.com.au
Corporate Registry
DIRECTORS
Dr Ian Burston
Non-Executive Chairman
Julian Pemberton
Executive Director and Chief Executive Officer
Michael Arnett
Non-Executive Director
John Cooper
Non-Executive Director
Jeffrey Dowling
Non-Executive Director
COMPANY SECRETARY
Kim Hyman
REGISTERED OFFICE
181 Great Eastern Highway, Belmont WA 6104
T + 61 8 9232 4200 F +61 8 9232 4232 E info@nrw.com.au
AUDITOR
Deloitte Touche Tohmatsu, Level 14 Woodside Plaza
240 St Georges Terrace, Perth WA 6000
ANNUAL REPORT
CONTENTS
06
CHAIRMAN’S LETTER
08
CHIEF EXECUTIVE OFFICER YEAR IN REVIEW
12
16
18
FINANCIAL SNAPSHOT
NRW CIVIL
NRW MINING
20
ACTION DRILL & BLAST
22
ACTION MINING SERVICES
24
HUMAN RESOURCES
26
28
30
32
38
60
66
67
68
69
70
71
72
119
121
INDIGENOUS ENGAGEMENT
HEALTH, SAFETY AND ENVIRONMENT
COMPANY OUTLOOK
FINANCIAL YEAR REVIEW
DIRECTORS’ REPORT
CORPORATE GOVERNANCE STATEMENT
AUDITOR’S INDEPENDENCE DECLARATION
DIRECTORS’ DECLARATION
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
SHAREHOLDER INFORMATION
INDEPENDENT AUDITOR REPORT
123
APPENDIX 4E
4
Contents
NRW ANNUAL REPORT 2014
NRW ANNUAL REPORT 2014 ANNUAL REPORT
CONTENTS
NRW ANNUAL REPORT 2014
Contents
5
NRW ANNUAL REPORT 2014 Chairman’s letter
It is with great pleasure we present NRW Holdings Limited’s 2014
annual financial year report. The past 12 months have seen NRW
undertake our largest projects to date and the company has
achieved a solid result for the year ended 30 June 2014.
The group’s Net Profit After Tax (NPAT) was $44.2 million on revenue of $1.1 billion. Divisional
revenue was $842 million from Civil, $187 million from Mining, $110 million from Action Drill &
Blast and $28 million from Action Mining Services.
The Board remains committed to achieving consistent financial performance year-on-year in
order to deliver value to its shareholders. Despite challenging market conditions, the group
delivered a strong cash result contributing to a significant debt reduction of $54.6 million in
the year. The net debt position at year end of $34 million results in a gearing ratio of 9.1%,
the strongest balance sheet position since listing in 2007.
NRW’s focus on safety has once again been further evidenced by another outstanding
safety result and the Board commends our employees on their commitment to continually
improving safety across the organisation. Particularly pleasing was the 56.8% improvement
in the group’s Total Recordable Injury Frequency Rate (TRIFR) to 2.36.
As NRW enters its 20th year of operations, I would like to thank all of our employees for their
efforts throughout the year and our leadership team for their contribution to the business.
During those 20 years NRW has made a significant contribution to communities in which we
work, particularly in the area of indigenous engagement.
From humble beginnings as a small business with only a handful of machines, NRW has
grown to be one of the most respected contractors in the civil construction and mining
industries. This success would not have been possible without our employees and the
quality of the work they undertake. I congratulate them on the high standards achieved and
the positive culture they embrace across all operations.
DR IAN BURSTON
CHAIRMAN
NRW Holdings Limited
6
Chairman’s Letter
NRW ANNUAL REPORT 2014
NRW ANNUAL REPORT 2014 “From humble beginnings as a small
business with only a handful of machines,
NRW has grown to be one of the
most respected contractors in the civil
construction and mining industries.”
NRW ANNUAL REPORT 2014
Chairman’s Letter
7
NRW ANNUAL REPORT 2014 “It was pleasing to report revenues
of $1.1 billion for the year in line
with guidance despite challenging
market conditions.”
8
CEO: Year in Review
NRW ANNUAL REPORT 2014
NRW ANNUAL REPORT 2014 Chief Executive Officer
Year in review
I present to both our shareholders and stakeholders the results of
NRW Holdings Limited for the financial year ended 30 June 2014.
Financial Overview:
•
•
•
•
Revenue of $1.1 billion
EBITDA – $123.0M, 10.8% of revenue
EBIT of $65.5M; NPAT of $44.2 million
Strong cash position of $155.5 million
• Net Debt – $34.0M a reduction of $54.6 million
• Order book maintained at $1 billion
•
Final fully franked dividend
- 5 cents per share (9 cents for the full year)
- Payout ratio 57.0%
• Net Debt / Equity at 9.1%
NRW reported Revenue of $1.1 billion and net after tax profits (“NPAT”) of $44.2 million
both lower than the same period last year (Revenue of $1.4 biillion and NPAT of $74.1
million). The reduction in business activity reflects the completion of a number of
expansion programs undertaken in iron ore and within a challenging market environment
particularly in the contract mining coal sector.
The company’s balance sheet continued to strengthen through the period with both cash
balances and debt improving in the year to $155.5 million and $189.5 million respectively.
Net debt reduced in the year by $54.6 million to $34 million reflecting strong cash flows
from operations and lower Capex.
Profit before tax (“PBT”) of $51.2 million was down on the same period last year reflecting
lower activity across the business and an impairment expense ($4.8 million) further
details of which are provided below. The full year effective tax rate at 14% reflects
income tax and R&D credits. Net interest expense for the year was at a similar level to
the previous financial year at $14.3 million.
With a refresh of the “A Safe Day. Every Day” Program, the company experienced
continued improvement and focus on safety performance across the business, sustaining
a positive trend. This is reflected in the Lost Time Injury Frequency Rate (LTIFR) currently
at 0.17, which represents a 69.1% decrease from the previous year (FY13: 0.55). The
group’s Total Recordable Injury Frequency Rates (TRIFR) is industry leading and at 30
June 2014 is at 2.36, 56.8% less than the prior corresponding period (FY13: 5.47).
CEO: Year in Review
9
NRW ANNUAL REPORT 2014
Chief Executive Officer
Year in review continued...
FY14 saw NRW’s Civil Division secure its largest contract to date, the Roy Hill Rail Project.
The Division’s revenue of $842.3 million represented a slight decrease, the result of a
more competitive market. The award of the Roy Hill Rail Project (valued at $620 million) to
construct approximately 330 kilometres of main line heavy rail formation and associated
works was a major coup in the history of NRW. Following the successful award of the Rail
Project, NRW was subsequently awarded a Concrete Package and Bulk Earthworks Contract
at the Roy Hill Mine Site, valued at $200 million.
The Mining Division’s sales of $186.9 million were down on last year following the decision
made by the client at the Middlemount Coal Mine to transition to a dry hire model and the
loss of certain iron ore contracts as part of the industry majors cost improvement initiatives.
Whilst EBIT reduced to $13.1 million, reflecting the sales reduction, it was pleasing to see an
improvement in margins following cost restructuring initiatives implemented over the last 12
months and the positive contribution of some smaller projects completed during the year.
Action Drill & Blast’s revenue of $110.0 million and EBIT of $7 million were below last year
due to lower civil work and consequently underutilisation of assets. The business secured
a number of new contracts in the year including the drill and blast scope for the Roy Hill
Rail Contract which improved utilisation in the second six months contributing to the
better second half performance. Of particular note, the Division was awarded a three year
Contract, valued at $60 million, for drill and blast operations at the Middlemount Coal Mine
in Queensland.
Revenues in the Action Mining Services business reduced to $28 million compared to $41.8
million in the prior comparative period reflecting a downturn in market activity. The lower
revenues resulted in an operating loss of $0.8 million in the year compared to an operating
profit of $3.3 million in the corresponding period. A number of business improvement and
restructuring initiatives were implemented in the second half of the year. The business is
expected to recover to profit in FY15 however reviews of the ongoing business concluded
that the current carrying value of Goodwill be reduced by $4.8 million to reflect the more
competitive market going forward. The impairment charge has been included in the full
year result.
As of 30 June 2014, NRW employed a workforce (including direct, subcontractors and
apprentices) of 3,092 people, up from 2,283 in FY13. We maintained a diverse workforce with
approximately 14% female personnel; an industry leading 8% Indigenous participation; and
high retention rates.
During the year a number of cost control and productivity improvement initiatives were put
in place to improve our overall cost effectiveness. This past year also reinforced the need
to continue our strategy of diversification across client, commodity, location and service
delivery, and how this will shape the way we do business in the future.
10
NRW ANNUAL REPORT 2014CEO: Year in Review NRW’s board visited the Roy Hill Concrete Package in June 2014. (L-R): Project
Manager, Rick Gray, CFO, Andrew Walsh, Deputy Project Manager, Michael
Sigrist, Non-executive Director, Michael Arnett, CEO, Jules Pemberton, Chairman,
Ian Burston, Non-executive Director John Cooper, Non-executive Director, Jeff
Dowling, Managing Director, NRW Civil and Mining, Willie Rooney, Construction
Manager, Chris Ashton and Company Secretary, Kim Hyman.
11
NRW ANNUAL REPORT 2014CEO: Year in Review FINANCIAL
SNAPSHOT
FINANCIAL PERFORMANCE
FINANCIAL PERFORMANCE ($M’s)
1HY14
2HY14
FY14
FY13
Change
SALES REVENUE
Civil
Mining
Action Drill & Blast
Action Mining Services
Other*
TOTAL SALES
EBITDA
EBIT
NPAT
EPS (basic) cents
DPS cents
365.1
101.9
52
15.6
(13.7)
520.9
59.6
35.1
27.6
8.0
8.0
477.2
85.0
58
12.4
(19.0)
613.6
58.6
30.4
16.6
7.9
7.8
842.3
186.9
110
28.0
(32.7)
1,134.5
118.2
65.5
44.2
15.9
15.8
860.6
404.5
150.5
41.8
(83.1)
1,374.3
168.3
119.4
74.1
26.6
26.5
(2%)
(54%)
(27%)
(33%)
-
(17%)
(30%)
(45%)
(30%)
(40%)
(40%)
*Other includes unallocated income and consolidations eliminations.
12
CEO: Year in Review
NRW ANNUAL REPORT 2014 FINANCIAL
SNAPSHOT
FINANCIAL POSITION
FINANCIAL POSITION ($M’S)
Working Capitalcurrent debt)
Non-Current Assets
Non-Current Liabilities (less debt)
Funded by:
Cash / (overdraft)
Debt
Net Funding
Shareholders Equity
Return on Equity
Net debt / equity
FY14
48.6
387.1
(29.7)
406.0
155.5
(189.5)
(34.0)
372.0
12%
9%
FY13
49.7
420.2
(28.5)
441.4
131.0
(219.6)
(88.6)
352.8
21%
25%
FY12
15.0
391.1
(16.2)
389.9
138.0
(198.7)
(60.7)
329.2
30%
18%
FY11
36.9
293.0
(10.2)
319.7
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%
NRW ANNUAL REPORT 2014
CEO: Year in Review
CEO: Year in Review
13
13
NRW ANNUAL REPORT 2014 FINANCIAL
SNAPSHOT
DIVIDEND
The Directors have declared a fully franked final dividend of 5.0 cents per share payable on 29 October 2014 maintaining
the final dividend at the same level as last year (2013: 5 cents per share final dividend). Total dividends payable for the
financial year will be 9 cents per share representing a payout ratio on after tax earnings of 57%, compared to a payout ratio
of 49% in FY13.
BALANCE SHEET, OPERATING CASH FLOW AND CAPITAL
EXPENDITURE
Net assets increased by $19.1 million to $372.0 million in the year. Cash balances improved by $24.5 million to $155.5 million
whilst debt reduced by $30.1 million to $189.5 million. The improvement in the level of net debt was due to the operating
result in the period, lower capital expenditure and tax refunds. Capital expenditure of $29.6 million mostly relates to the buy
out of drilling and civil fleet asset operating leases and major equipment maintenance. Capital expenditure was well below
last year’s level of $93.1 million which included the balance of equipment acquired to support the Middlemount Project and
to grow the Drill and Blast business.
Gearing improved to 9.1% as at 30 June 2014. The business has undrawn facilities at year end which include $35 million for
working capital, $90 million for contract guarantees/bonds and $71 million for asset financing.
BORROWING FACILITY ($M’s)
Asset Funding
Working Capital
SUB TOTAL BORROWING
OTHER FACILITY
Bonding
Bank Guarantees
SUB TOTAL OTHER
TOTAL
Limit
260.4
35.0
295.4
Limit
280.0
63.5
343.5
638.9
Drawn
189.5
-
189.5
Drawn
207.9
45.7
253.6
443.1
Available
70.9
35.0
105.90
Available
72.1
17.8
89.90
195.8
14
CEO: Year in Review
NRW ANNUAL REPORT 2014 FINANCIAL
SNAPSHOT
NRW ANNUAL REPORT 2014
CEO: Year in Review
15
NRW ANNUAL REPORT 2014 NRW
CIVIL
OVERVIEW
The Civil Division’s revenue of $842.3 million signifies only a minor reduction from FY13 at a time
where available work in the industry is at a low.
In the 2014 financial year, the Civil Division was awarded its largest contract to date for Samsung
C&T on behalf of Roy Hill. The $620 million contract includes the construction of approximately
330 kilometres of heavy haul rail formation between the Roy Hill Mine and Port Hedland and is
the largest resource sector earthworks project currently being undertaken in Western Australia.
The overall materials moved will be approximately 10.5 million cubic meters, of which 3.5m³
is rock. The Project has a peak manning of 1,650. Preliminary construction commenced in
October 2013 and the scheduled completion date is March 2015. NRW will then conduct
maintenance of the Rail Service Track until August 2015.
Following the successful delivery of the Roy Hill Rail Project, NRW was subsequently
awarded a $200 million Concrete Package at the Roy Hill Mine, which includes 50,000m3
of concrete. The Division’s strategic objective to increase the concrete component of the
overall Civil revenue to 20% was achieved with the award of this Project.
The Division’s safety performance continued to improve with their Total Recordable Injury
Frequency Rate (TRIFR) reducing from 2.5 (FY13) to 2.1 through a concerted focus across
all projects. A majority of civil projects recorded a TRIFR of zero for the 2014 financial
year.
OUTLOOK
The Division is focused on the successful delivery of the Roy Hill Concrete Package for
the Mine’s iron ore processing facilities as well as the Roy Hill Rail Project which was
50% complete at 30 June 2014.
Opportunities exist within NRW’s traditional and new iron ore client base in Western
Australia and within the Queensland resource and infrastructure sectors – including
rail opportunities on the back of our demonstrated capability at the Roy Hill Rail
Project.
NRW will continue to pursue civil opportunities outside of construct only, including
Design & Construct (D&C) and EPC, following the development of key partner
relationships. Further to this, the Civil Division will explore additional maintenance
style contracts and government infrastructure projects in joint venture. The
Division is actively tendering Main Roads WA projects and seeking an increase
in their prequalification level.
The Civil Division currently has an order book of $509.3 million, with a further
$900 million in active tenders.
16
NRW ANNUAL REPORT 2014CEO: Year in Review OPERATIONS
NRW was awarded a number of new
major contracts and contract extensions
during this period including:
Significant achievements throughout the
year included:
Roy Hill Rail Project – Samsung C&T
for Roy Hill
• Continued improvement in safety
performance – TRIFR to 2.1
(previously 2.5 at June 13).
•
•
Roy Hill Concrete Package –
Samsung C&T for Roy Hill
• Mooka Ore Car Repair Shop – BHP
Billiton Iron Ore
• Various Rio Tinto projects including:
Mesa J Rail Backtrack; Mesa J TSF
Extension; ongoing maintenance
works at Cape Lambert; and
significant additional works at
Nammuldi.
•
Following the success of the
Anderson Point Port Expansion
Project for Fortescue Metals Group
(FY12), NRW was awarded further
works at the Port.
•
•
•
•
•
Revenue similar level to FY13 – minor
reduction reflects low levels of
available work.
Secured a $620M contract for the
Roy Hill Rail Project to construct
approximately 330 kilometres
of heavy haul rail formation and
associated works.
Successful delivery of 50% of
the Rail Project (at 30 June 2014)
demonstrated NRW’s improved
rail capability and enhanced our
reputation as a contractor capable of
delivering large projects.
Roy Hill Rail Project led to the award
of a $200 million Concrete Works
Package, achieving our strategy
(FY13) of increasing the Division’s
concrete work component to 20%.
Strategy of diversification into
maintenance service works was
achieved through the award of a
maintenance contract at Rio Tinto’s
Cape Lambert Project.
CEO: Year in Review
CEO: Year in Review
17
NRW ANNUAL REPORT 2014CEO: Year in Review NRW
MINING
OVERVIEW
The Mining Divisional revenue was $186.9 million in FY14.
Projects undertaken during the year included Western Turner Syncline for Rio Tinto,
Middlemount for Middlemount Coal, Ranger for ERA, North Star for Fortescue Metals
Group Formosa JV, and Bootu Creek for OM Holdings.
NRW’s mining operations continued to be impacted by the commodity downturn
and cost cutting by major clients throughout the year. Projects bid during the year
were tendered in a very competitive environment with increased competition due to
surplus capacity of available resources in the market and limited other opportunities.
At Middlemount Coal, NRW provides the mining fleet and maintenance services. This
contract is progressing satisfactorily with the plant availability targets nominated for
the various equipment types within the contract being met.
Work commenced on Fortescue’s North Star Mine with early establishment works. In
early 2014, NRW signed a Joint Venture agreement between NRW and Njamal ICRG
JV Pty Ltd, in preparation for bulk earthworks at Fortescue’s Iron Bridge Project –
situated on the traditional lands of the Njamal People. The Jartu Joint Venture was
so named to pay homage to the improvised tool used by Njamal people for mining
ventures in the mid-20th century. In January 2014 the JV commenced works at
North Star for Ironbridge Operations. The Joint Venture has achieved an Indigenous
employment engagement of 18.3%.
Safety performance across the Division was a highlight following an increased focus
on lead indicators which had a positive impact, the Division performance when
measured in relation to TRIFR improved from 7.59 in FY13 to 3.3 in FY14.
18
CEO: Year in Review
NRW ANNUAL REPORT 2014
NRW ANNUAL REPORT 2014 OUTLOOK
Difficult market conditions will remain during the
remainder of FY15, however the Division’s strategy
remains to diversify into other commodities and clients,
with a number of opportunities identified including in base
metals for mid-tier miners. Geographical diversification
will also take place as the Division pursues international
opportunities with selected clients.
Full utilisation of existing mining fleet is capable of
delivering an additional $150 million revenue per annum
with no additional capital investment.
The Mining Division currently has an order book of $349.3
million, with a further $1 billion in the tender pipeline.
NRW ANNUAL REPORT 2014
CEO: Year in Review
19
NRW ANNUAL REPORT 2014 OVERVIEW
OPERATIONS
After four years of operations Action
Drill & Blast is recognised as a provider
of quality and professional drilling and
blasting contract services.
Particularly pleasing for the 2014 financial
year was the award of a three year $60
million drill and blast contract direct to
Middlemount Coal Pty Ltd for operations
at the Middlemount Coal Mine in
Queensland. The other significant contract
awarded during the financial year was the
second contract for blasting services at
the Talison Lithium Greenbushes Mine in
Western Australia, which was awarded as
a three year contract at $11 million.
The industry’s shift from infrastructure
to production along with the fluctuating
commodity prices continued to impact
the market resulting in Action Drill & Blast
experiencing a downturn in opportunities
and reduced civil drill and blast activity in
FY14. This was reflected in their revenue
of $110 million.
At the end of the 2014 financial year
Action Drill & Blast had six contracts
in Western Australia and three in
Queensland, with the largest contract at
Fortescue Metals Group’s Cloudbreak
Mine. The business maintained an
average of 250 personnel through the
year and utilised a fleet of 37 drills.
Action Drill & Blast worked on 19
contracts throughout the year including
external contracts to the following clients:
•
•
Fortescue Metals Group
Talison Lithium
• Middlemount Coal
•
•
•
Rio Tinto
Isaac Plains Coal Management
Brierty
• Downer EDI
• MACA
•
Rock JV
As at 30 June 2014 Action Drill & Blast
achieved 827 consecutive LTI free days.
Action Drill & Blast’s safety performance
has improved with a TRIFR of 3.59 at 30
June 2014, from 12.77 at 30 June 2013.
20
CEO: Year in Review
NRW ANNUAL REPORT 2014 OUTLOOK
Action Drill & Blast currently has an order book
of $163.1 million, with a further $200 million in
active tenders.
The current market remains very competitive,
however the business is seeking commodity
and geographical diversification with new
project opportunities under review domestically
and internationally. The focus in FY15 will include
smaller mining contracts for under-utilised civil
drill fleet.
NRW ANNUAL REPORT 2014
CEO: Year in Review
21
NRW ANNUAL REPORT 2014 OVERVIEW
Action Mining Service’s revenue of $28 million for
the 2014 financial year was impacted by significant
maintenance cut-backs and slowing of demand for
products and services.
•
implementation of a business wide lean training
and education program targeting productivity and
efficiency improvements on the shop floor to enhance
our competitive capability.
Not withstanding the challenging market conditions,
AMS have focused on improving business performance
capability and have invested in people and processes.
An operational review was completed during the year
resulting in:
•
a restructure and downsizing of business capacity
to reduced overheads and other non-critical costs.
During this process a diligent approach was taken to
protect and enhance key capabilities.
AMS achieved more than 1,550 days Lost Time Injury (LTI)
free in the workplace.
Market conditions are expected to remain subdued near
term. In the medium term the equipment maintenance
cycle is expected to recover.
22
NRW ANNUAL REPORT 2014CEO: Year in Review OUTLOOK
As per previous years, the level of growth and opportunities within
the services unit will be influenced by the level of investment in the
resources and infrastructure sectors. However, a strategic review
has been undertaken resulting in the following:
•
•
expanded business model approved to increase revenue and
profit opportunities.
focus on employee and customer engagement to drive
strategic agenda.
• market conditions are expected to remain subdued near term.
•
in the medium term the equipment maintenance cycle is
expected to recover.
CEO: Year in Review
23
NRW ANNUAL REPORT 2014 HUMAN
RESOURCES
OVERVIEW
FY14 saw the successful mobilisation of NRW’s workforce to the Roy Hill Rail Project. As a result of this rapid mobilisation,
NRW Holdings Limited’s workforce increased by 35% to 3,092 personnel this financial year (FY13: 2,283). The workforce
includes direct employees, sub-contractors and apprentices.
Roy Hill has been the largest and most rapid mobilisation of a project NRW has completed to date and fast and efficient
ramp up of labour was also required for the Roy Hill Concrete Works Package.
In FY14 we implemented new labour agreements, compliant with Fair Work legislation for Action Drill & Blast and NRW’s Civil
and Mining Divisions. These agreements provide clarity of employment conditions for our workforce and enhancing our
competitiveness for future work.
A number of system enhancements were undertaken on OPAL, NRW’s HR/Payroll system increasing our capacity in
recruitment and mobilsation of labour as well improving payroll.
NRW remains committed to ensuring it retains its core staff to maximise its capacity to secure and execute future work. A
number of training initiatives, including frontline supervisor training, were introduced to equip existing supervisors with the
necessary skills and expertise to effectively manage their teams and to continue to deliver the high standard of service
clients have become accustomed to receiving from NRW and its subsidiary companies.
Action Mining Services experienced rationalisation of their workforce to align to a more competitive business model,
resulting in decreased operating costs.
In the 2014 financial year NRW continued its close relationship with its workforce and there were zero disputes and no lost
time due to industrial action. The workforce remains diverse with 14% female personnel (FY13: 14%), and 8% Indigenous
personnel (FY13: 6.5%), with a 90% Indigenous retention rate.
24
CEO: Year in Review
NRW ANNUAL REPORT 2014 GRADUATE PROGRAM
NRW’s engineering graduates undertake a three year Graduate
Program, which aims to develop them into future leaders of
our industry. Through diverse training and development, NRW
graduates are exposed to various projects, clients, markets,
commodities and infrastructures.
FY14 saw the Program expand to include other disciplines such
as Human Resources and Marketing. Extending the Program
to service departments was a first for NRW and these 18 month
programs see Graduates rotate through various areas of their
departments ensuring they gain well rounded experience.
Graduates from all disciplines are involved in an orientation week
which covers: induction sessions with each department; two full
days at a training facility where graduates have the opportunity
to operate heavy machinery; a team building day with other
graduates including those in different stages of the Program; and
a networking dinner with senior management.
Importantly, each graduate is assigned a senior mentor and
engineering graduates are offered a structured pathway to
chartership through Engineers Australia.
WORKFORCE
INCREASED
35%
DUE TO
MOBILISATION
ON ROY HILL
RAIL PROJECT
Civil Engineer, Jennifer
Cabassi, with Graduates,
Vanessa Gutterson (L)
and Rix Burnett (R) at their
induction week training.
CEO: Year in Review
25
NRW ANNUAL REPORT 2014 INDIGENOUS
ENGAGEMENT
OVERVIEW
POWERUP
Powerup is NRW’s intensive work ready program, providing
opportunities for Indigenous candidates lacking entry
level skills. Run in conjunction with the Department of
Education, Employment and Workplace Relations, the
Program continues to attract strong support from the
Indigenous community.
In April 2014, NRW celebrated the graduation of the 250th
Powerup employee, Neil Mourambine. Following his
successful graduation, Neil now works as a Roller Operator
at the Roy Hill Rail Project. Powerup has a successful track-
record with 88% of graduates remaining in employment with
NRW and others moving on to jobs in other sectors.
Powerup exposes participants to hands-on activities in
a controlled ‘real life mining pit’ in haul truck and roller
operations. During the innovative program, trainees are
mentored by experienced professional trainers and human
resources staff and trained to an equivalent standard to
RII20209 Certificate II: Surface Extraction Operations.
As part of our commitment to the Indigenous community
in which we operate, NRW tailored the Powerup Program
to provide opportunities on the Roy Hill Rail Project for
members of the Palyku, Kariyarra and Nyiyaparli Traditional
Owner groups.
Participants were trained and mentored by an experienced
professional trainer. This support continues during the
individual’s career with NRW.
NRW recognises that its long-term success depends on the
well-being and sustainable development of the communities
in which it operates, comprising 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, and
this continued with the acquisition of Action Mining Services
in 2007, and the forming of Action Drill & Blast in 2010.
Ensuring Indigenous representation in employment on our
projects and within our organisations is an integral part of
the NRW philosophy.
In FY14 NRW continued to support this philosophy
by ensuring all new employees attended Cultural
Awareness Workshops.
JOINT VENTURES
In the 2014 financial year, NRW experienced continued
success with our Indigenous Joint Venture partners Eastern
Guruma Pty Ltd and Ngarluma and Yindjibarndi Foundation
Limited. During the year, we upheld our commitment to
Indigenous communities by signing an agreement with
Njamal ICRG JV Pty, to form the Jartu Joint Venture – our
third Indigenous Joint Venture.
The Jartu Joint Venture is a significant milestone as it is
the first of its kind for the Njamal people. This inaugural
Joint Venture provides a pathway to self-sustainability and
independence through employment, training and ground
breaking business opportunities. Njamal people can now
participate in mining projects with a renewed focus, and
greater parity.
26
CEO: Year in Review
NRW ANNUAL REPORT 2014 Graduate, Neil Mourambine (centre) with (L-R) NRW
Civil & Mining’s Managing Director Willie Rooney,
Indigenous Training Advisor / Mentor Lester Filbay,
Indigenous Development Coordinator Tracy Bellotti,
General Manager HR Janette Woodham and
Indigenous Development Manager Grant Bobongie
at the Powerup Graduation ceremony.
Powerup Graduate, Finola Wooldley,
at work as a Roller Operator on the
Roy Hill Rail Project.
CEO: Year in Review
27
NRW ANNUAL REPORT 2014 HEALTH SAFETY &
ENVIROMENT
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 2013.
NRW Civil and Mining underwent a series of third party
HSE auditing to establish if our robust HSE management
system met the following criteria for the Australian Federal
Government safety standards, and an Achilles’ audit to
ensure we met or exceeded the Oil and Gas industries
HSE standards:
•
•
Australian Federal Governments Bureau of Safety audit
standards (passed)
Achilles’ HSE audit protocols (FPS) First Point Supply
base prequalification audit to be able to tender for Oil and
Gas projects (passed)
The company manages risk through hazard identification,
minimisation, monitoring and control procedures, and
by reviewing safety performance. NRW ensures that all
employees, including subcontractor 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.
NRW’S 5 GOLDEN RULES
In late 2013, NRW refreshed the “A Safe Day. Every Day”
Program to refocus employees’ attention on our safety culture.
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. In FY14 additional recognition awards, including
Employee of the Month, Quarter and Year were added at the
request of our employees.
During the year, we introduced NRW’s 5 Golden Rules,
applicable to all Civil and Mining projects. These Golden Rules
are key in keeping our people safe and hold each employee
accountable for their safety behavior. Each site is also asked
to develop another 5 Golden Rules that will be site specific to
their project team.
To further strengthen our hazard identification and elimination
skills, the HSE department undertook the task of testing and
rewriting (as required) specific hazard identification tools,
namely the JHA and Take 5 processes.
The success of the overarching “A Safe Day. Every Day”
Program is evident in the consistent safety performance which
is reflected in the Lost Time Injury Frequency Rate (LTIFR)
currently at 0.17, which represents a 69.1% improvement from
the previous year (FY13: 0.55). The group’s Total Recordable
Injury Frequency Rate (TRIFR) is industry leading and at 30
June 2014 is at 2.36, 56.8% less than the prior corresponding
period (FY13: 5.47).
1
POSITIVE
COMMUNICATION:
Always establish positive
communications with plant
operators when approaching
their operating area. Never
breach operating
exclusion zones.
2
AUTHORISED
OPERATION OF
EQUIPMENT:
Never operate a piece
of equipment for which
you are not trained,
assessed and
authorised.
3
4
5
PERSONAL
ISOLATION:
Always apply your personal
lock and tag and then test for
“dead” before commencing
work on equipment.
SAFETY
PROTECTION
DEVICES:
Never make any
unauthorised modification
to any safety protection
device.
MOBILE
PHONES:
Never use a mobile phone
whilst in control of any
mobile plant.
28
CEO: Year in Review
NRW ANNUAL REPORT 2014
HEALTH SAFETY &
ENVIROMENT
ENVIRONMENT
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
recertified in January 2013.
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.
SAFETY PERFORMANCE
Man hours
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
FY11
FY12
FY13
FY14
Man Hours
LTIFR (Lost Time Injury Frequency Rate)
TRIFR (Total Recordable Injury Frequency Rate)
40
35
30
25
20
15
10
5
0
CEO: Year in Review
29
NRW ANNUAL REPORT 2014 COMPANY
OUTLOOK
Although the industry continues to face some headwinds NRW is
well placed commencing FY15 with a strong balance sheet and
solid order book of $1 billion.
The group’s balance sheet, funding facilities and solid cash
position provide a strong foundation for future organic growth and
to continue to review potential acquisitions or to implement Capital
Management programs.
Further investigate sectors with cycles that are not directly
correlated to mining industry (e.g. energy, infrastructure).
Ongoing focus on cost management programs, efficiencies and
continuous improvement processes.
Revenues in FY15 which remain dependent on the timing of new
work are expected to be between $1 billion to $1.2 billion of which
circa $0.7 billion is currently in the order book.
30
CEO: Year in Review
NRW ANNUAL REPORT 2014 CEO: Year in Review
31
NRW ANNUAL REPORT 2014 FINANCIAL YEAR
REVIEW
FY14 REVIEW
NRW reported Revenue of $1.1 billion and net after tax profits
(“NPAT”) of $44.2 million both lower than the same period
last year (Revenue of $1.4 billion and NPAT of $74.1 million).
The reduction in business activity reflects the completion of a
number of expansion programmes undertaken in Iron Ore and
a challenging market environment particularly in the contract
mining Coal sector.
The company’s balance sheet continued to strengthen
through the period with both cash balances and debt
improving in the year to $155.5 million and $189.5 million
respectively. Net debt reduced in the year by $54.6 million to
$34.0 million reflecting strong cash flows from operations and
lower Capex.
CASH AND NPAT
$M’s
180
160
140
120
100
80
60
40
20
0
FY10
FY11
FY12
FY13
FY14
Cash
NPAT
DIVISIONAL
PERFORMANCE ($M’s)
NRW Civil
NRW Mining
Action
Drill & Blast
Action
Mining Services
FY2014
Revenue
Segment Profit
Return on revenue
FY2013
Revenue
Segment Profit
Return on revenue
842.3
59.8
7%
860.6
92.0
11%
186.9
13.1
7%
404.5
17.9
4%
110.0
7.0
6%
150.5
16.8
11%
28.0
(0.8)
(3)%
41.8
3.3
8%
32
CEO: Financial Year in Review
NRW ANNUAL REPORT 2014 FINANCIAL YEAR
REVIEW
FOR THE YEAR ENDED 30 JUNE 2014
FINANCIAL YEAR REVIEW
INVESTMENT RETURNS
CAPITAL EXPENDITURE
Capital expenditure of $30.1 million mostly relates to the
buyout of drilling and civil fleet asset operating leases and
major equipment maintenance. Capital expenditure was well
below last year’s level of $93.1 million which included the
balance of equipment acquired to support the Middlemount
Project and to grow the Drill and Blast business.
Capital Expenditure ($M’s)
FY14
FY13
FY12
NRW Civil Division
NRW Mining Division
Drill & Blast
Action Mining Services
Miscellaneous
10.9
0.7
13.9
2.5
1.6
11.8
51.6
15.9
1.8
12.0
16.6
105.5
15.1
0.6
6.7
TOTAL
$29.6
$93.1
$144.4
Earnings per share were 15.9 cents.
The Directors declared a fully franked final dividend of 5.0
cents per share maintaining the final dividend at the same
level as last year. Total dividends payable for the financial
year will be 9 cents per share representing a payout ratio on
after tax earnings of 57%, compared to a payout ratio of 49%
in FY13.
EARNINGS & DIVIDENDS PER SHARE
Cents
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0
FY10
FY11
FY12
FY13
FY14
EPS
DPS
CEO: Financial Year in Review
33
NRW ANNUAL REPORT 2014 FOR THE YEAR ENDED 30 JUNE 2014
FINANCIAL YEAR REVIEW
BALANCE SHEET, CASH FLOW AND FUNDING
Cash balances improved by $24.5 million to $155.5 million whilst debt reduced by $30.1 million to $189.5 million. The
improvement in the level of net debt was due to the operating result in the period, lower capital expenditure and tax refunds.
Debt to Equity Gearing improved to 9.1% as at 30 June 2014. The business has undrawn facilities at year end which include
$35 million for working capital, $90 million for contract guarantees/bonds and $71 million for asset financing.
The group’s balance sheet, funding facilities and solid cash position provide a strong foundation for future organic growth
and to continue to review potential acquisitions or to implement Capital Management programs.
NET DEBT POSITION
NET DEBT POSITION
OPERATING CASH FLOW ($M’S)
25%
23%
20%
18%
$M’s
$100
$90
$80
$70
$60
$50
$40
$30
$20
$10
$0
$M’s
200
180
160
140
120
100
80
60
40
20
0
9%
FY10
FY11
FY12
FY13
FY14
FY10
FY11
FY12
FY13
FY14
Net Debt ($m’s)
Net Debt/Equity
Operating Cash Flow
34
34
CEO: Financial Year in Review
NRW ANNUAL REPORT 2014
NRW ANNUAL REPORT 2014 FOR THE YEAR ENDED 30 JUNE 2014
FINANCIAL YEAR REVIEW
Limit
260.4
35.0
295.4
Limit
280.0
63.5
343.5
638.9
Drawn
189.5
-
189.5
Drawn
207.9
45.7
253.6
443.1
Available
70.9
35.0
105.9
Available
72.1
17.8
89.9
195.8
BORROWING FACILITY ($M’s)
Asset Funding
Working Capital
SUB TOTAL BORROWING
OTHER FACILITY
Bonding
Bank Guarantees
SUB TOTAL OTHER
TOTAL
SYSTEMS
Following a period of major investment in systems our focus in the financial year has been to ensure we
generate value from that investment. The updated system has now been fully implemented across the
company whilst development work, primarily in key areas such as project management and project reporting
and plant management and control systems, are continuing.
NRW ANNUAL REPORT 2014
CEO: Financial Year in Review
35
35
NRW ANNUAL REPORT 2014 FINANCIAL REPORT
CONTENTS PAGE
38 DIRECTORS’ REPORT
60 CORPORATE GOVERNANCE STATEMENT
66 AUDITOR’S INDEPENDENCE DECLARATION
67 DIRECTORS’ DECLARATION
68 CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
69 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
70 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
71 CONSOLIDATED STATEMENT OF CASH FLOWS
72 NOTES TO THE FINANCIAL STATEMENTS
119 SHAREHOLDER INFORMATION
121 INDEPENDENT AUDITOR REPORT
123 APPENDIX 4E
36
Contents
NRW ANNUAL REPORT 2014 FINANCIAL REPORT
CONTENTS PAGE
Contents
37
NRW ANNUAL REPORT 2014 The Directors present their report together with the financial statements 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 2014.
DIRECTORS
The following persons held office as Directors of NRW Holdings Limited during the
financial year and up to the date of this report:
Dr Ian Burston
Status Chairman - Independent Non-Executive Director
Qualifications, special responsibilities and other Directorships
Dr Ian Burston was appointed as a Director and Chairman on 27 July 2007.
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 and Chairman of Kogi
Iron (formerly 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 three years
immediately before the end of the financial year:
• Non-Executive Director, Mincor Resources NL (Current)
• Non-Executive Director, Kogi Iron (formerly Energio Limited) (Current)
38
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report Julian Pemberton
Status Chief Executive Officer and Managing Director
Qualifications, special responsibilities and other Directorships
Mr Julian (Jules) Pemberton was appointed as a Director on 1 July 2006. Appointed as Chief
Executive Officer and Managing Director 7 July 2010.
He has over 25 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.
John Cooper
Status Non-Executive Director
Qualifications, special responsibilities and other Directorships
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 led 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 three years
immediately before the end of the financial year:
• Non-Executive Director and Chairman, Southern Cross Electrical (Current)
• Non-Executive Director, Aurizon Holdings (Current)
• Non-Executive Director, Flinders Mines (Resigned 2012)
• Non-Executive Director, Neptune Marine Limited (Resigned 2013)
39
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report Michael Arnett
Status Non-Executive Director
Qualifications, special responsibilities and other Directorships
Mr Arnett was appointed as a Director on 27 July 2007.
Mr Arnett is a former consultant to, 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 Energy Ltd and
a Non-Executive Director of Seqwater.
Mr Arnett has held the following directorships of listed companies in the three years
immediately before the end of the financial year:
• Chairman, New Guinea Energy Ltd (Current)
• Non-Executive Director, Nexus Energy Limited (Resigned 2012)
Jeffrey Dowling
Status Non-Executive Director
Qualifications, special responsibilities and other Directorships
Mr Dowling is a highly experienced corporate leader with 36 years’ experience in
professional services with Ernst & Young. He has held numerous leadership roles within Ernst
& Young which focused on the mining, oil and gas and other industries.
His professional expertise centre around audit, risk and financial acumen derived from acting
as lead partner on large public company audits, capital raisings and corporate transactions.
Mr Dowling’s career with Ernst & Young culminated in his appointment as Managing
Partner of the Ernst & Young Western Region for a period of five years. He also led Ernst &
Young’s Oceania China Business group, responsible for building Ernst & Young’s Oceania
relationships with Chinese Corporations.
Mr Dowling has a Bachelor of Commerce from University of Western Australia and is a fellow
of the Institute of Chartered Accountants, the Australian Institute of company Directors and
the Financial Services Institute of Australasia.
Mr Dowling is currently Chairman of Sirius Resources NL (ASX: SIR) and Pura Vida Energy NL
and a non-Executive Director of Atlas Iron Limited (ASX: AGO).
40
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s 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 co-ordination 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
Jeffrey Dowling(1)
Directors’ Meetings Attended
Directors’ Meetings Held
8
8
8
8
6
8
8
8
8
6
(1) Since appointment on 21 August 2013.
During the 2014 financial year one meeting of the Nomination & Remuneration Committee was held. Certain responsibilities of
the Nomination and Remuneration Committee were also considered at Board meetings by the full Board as required.
NRW’s Board (L-R): Jeffrey Dowling, Michael Arnett,
Ian Burston, John Cooper, Jules Pemberton.
41
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report Principal activities
NRW Holdings Limited provides diversified services to Australia’s resource and infrastructure sectors through four business
divisions, NRW Civil, NRW Mining, Action Drill and Blast and Action Mining Services. Further detail on the operation of each of
these segments and the group is provided below.
RESULTS FOR THE FULL YEAR AND REVIEW OF OPERATIONS
Financial Performance
NRW reported Revenue of $1.1 billion and net after tax profits (“NPAT”) of $44.2 million both lower than the same period last
year (Revenue of $1.4 biillion and NPAT of $74.1 million). The reduction in business activity reflects the completion of a number
of expansion programmes undertaken in iron ore and within a challenging market environment particularly in the contract
mining Coal sector. It was however pleasing to secure the rail earthworks construction contract from Samsung C&T for the Roy
Hill Project valued at $620 million, one of the largest projects to be undertaken by NRW.
The company’s balance sheet continued to strengthen through the period with both cash balances and debt improving in
the year to $155.5 million and $189.5 million respectively. Net debt reduced in the year by $30.1 million to $34.0 million
reflecting strong cash flows from operations and lower Capex.
Profit before tax (“PBT”) of $51.2 million was down on the same period last year reflecting lower activity across the business
and an impairment expense ($4.8 million) further details of which are provided below. The full year effective tax rate at 14%
reflects income tax and R&D credits. Net interest expense for the year was at a similar level to the previous financial year at
$14.3 million.
NRW is a leading contractor in the mining and civil construction industries reporting its results through four
business units the performance of which is outlined below:
F Y 1 4
F Y 1 3
Revenue
Earnings
Margin
Revenue
Earnings
Margin
$M
842.3
186.9
110.0
28.0
(32.7)
1,134.5
Civil
Mining
Action Drill & Blast
Action Mining Services
Inter business sales
Corporate costs
Impairment
Total Statutory
Revenue / EBIT
Finance costs
Taxation
Net after tax earnings
$M
59.8
13.1
7.0
(0.8)
-
(8.9)
(4.8)
65.5
(14.3)
(7.0)
44.2
%
7.1
7.0
6.4
(2.8)
$M
860.6
404.5
150.5
41.8
(83.1)
5.8
1,374.4
3.9
$M
92.0
17.9
16.8
3.3
-
(10.6)
-
119.4
(14.6)
(30.7)
74.1
%
10.7
4.4
11.2
7.9
8.7
5.4
42
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report NRW Civil Contracting
The provision of civil infrastructure and other construction
services including rail formation, concrete works, bulk
earthworks and detailed road and tunnel construction. The
business secured a $620 million contract for the Roy Hill Project
to construct approximately 330 kilometres of heavy haul rail
formation. Sales in the year at $842.3 million were slightly down
on the historic high levels reported last year and included work
for Rio Tinto on a number of iron ore projects, earthworks for
the Roy Hill mine site development and the Roy Hill Rail Project
which was around 50% complete at 30 June 2014. The business
delivered EBIT of $59.8 million, representing a 7.1% margin
compared to 10.7% in the previous financial year reflecting a
more competitive market.
NRW Mining Services
The provision of mining contracting services including earth
moving, waste stripping, ore haulage and related ancillary
services. Sales of $186.9 million were down on last year
following the decision made by the client at the Middlemount
Coal Mine to transition to a dry hire model and the loss
of certain iron ore contracts as part of the industry majors
cost improvement initiatives. Whilst EBIT reduced to $13.1
million, reflecting the sales reduction, it was pleasing to
see an improvement in margins following cost restructuring
initiatives implemented over the last 12 months and the
positive contribution of some smaller projects completed
during the year.
Action Drill and Blast
The provision of services to meet internal and external
requirements regarding drilling and blasting activities in
Australia predominantly in civil and mining projects. Revenues
of $110 million and EBIT of $7 million were below last year
due to lower civil work and consequently underutilisation of
assets. The business secured a number of new contracts in
the year including the drill and blast scope for the Roy Hill Rail
Contract which improved utilisation in the second six months
contributing to the better second half performance.
Action Mining Services
The provision of equipment repairs, sandblasting and
painting services, service truck and water tanker fabrication
and import services, including quarantine cleaning and the
marketing and sales of the fabricated water and service
trucks. Revenues in the business reduced to $28 million
compared to $41.8 million in the prior comparative period
reflecting a downturn in market activity. The lower revenues
resulted in an operating loss of $0.8 million in the year
compared to an operating profit of $3.3 million in the
corresponding period. A number of business improvement
and restructuring initiatives were implemented in the second
half of the year. The business is expected to recover to profit
in FY15 however reviews of the ongoing business concluded
that the current carrying value of Goodwill be reduced by
$4.8 million to reflect the more competitive market going
forward. The impairment charge has been included in the full
year result.
Balance Sheet, Operating Cash Flow and
Capital Expenditure
Net assets increased by $19.1 million to $372.0 million in the
year. Cash balances improved by $24.5 million to $155.5
million whilst debt reduced by $30.1 million to $189.5 million.
The improvement in the level of net debt was due to the
operating result in the period, lower capital expenditure and
tax refunds. Capital expenditure of $29.6 million mostly relates
to the buy out of drilling and civil fleet asset operating leases
and major equipment maintenance. Capital expenditure was
well below last year’s level of $93.1 million which included the
balance of equipment acquired to support the Middlemount
Project and to grow the Drill and Blast business. Debt to Equity
Gearing improved to 9.1% as at 30 June 2014. The business
has undrawn facilities at year end which include $35 million for
working capital, $90 million for contract guarantees/bonds and
$71 million for asset financing.
People and Safety
NRW’s success is built on our people, our combined passion
and our underlying commitment to be a leading contractor in
the resources and infrastructure industries. Workforce levels
have increased in the year to 3,092 from 2,283 at June
2013 to support current major projects under construction.
NRW remains committed to ensuring it retains core staff to
maximise its capacity to secure and execute future work.
The company recognises that its long term success
depends on the wellbeing and sustainable development
of the communities in which it operates, comprising local
communities and as well the traditional owners of the land.
NRW has specific Indigenous employment targets and a
successful Powerup Program which provides training and
employment opportunities to Indigenous members of the
community where the company works. The company also
operates a number of projects in Joint venture with various
Indigenous organisations to provide sustainable business
opportunities to these groups and the communities they
represent. Currently 8% of the workforce is Indigenous.
NRW is committed to achieving the highest possible
performance in Occupational Health and Safety across its
business operations. The success of programs core to the
day to day management of safety like the “A Safe Day. Every
Day” Program have contributed to further improvements
43
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report to the safety performance of the company. The Lost Time
Injury Frequency Rate (LTIFR) improved in the year to 0.17
compared to 0.55 in the previous financial year. The Total
Recordable Injury Frequency Rate at 2.36 was significantly
better than the previous year (5.47).
Significant Events after Period End
No matter or circumstance has arisen since year end 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 periods.
Environmental Regulations
Directors’ Interests
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.
As at the date of this report, the relevant interest of each
Director in the ordinary share capital of the company was:
Director
Julian Pemberton
Ian Burston
John Cooper
Michael Arnett
Jeffrey Dowling
Ordinary Shares(NWH)
3,014,404
329,492
55,000
344,474
90,000
Transactions between entities within the group and
Director-related entities are set out in Note 34 to the
financial statements.
Options over Unissued Shares or Interests
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.
Risk Management
NRW has risk management policies and procedures in place
to provide early identification of business risks and to monitor
the mitigation of those risks across all aspects of the business.
These include risk assessment in the tender and contracting
phase, management of specifically identified project risks,
treasury management and credit risks. For further information
in relation to NRW’s risk management approach refer to
principle 7 in the corporate governance statement.
Likely Developments and Outlook
Although the industry continues to face some headwinds
NRW is well placed commencing FY15 with a strong balance
sheet and solid order book of $1.1 billion. The group’s
balance sheet, funding facilities and solid cash position
provide a strong foundation for future organic growth and
to continue to review potential acquisitions or to implement
Capital Management programs.
Revenues in FY15 which remain dependent on the timing
of new work are expected to be between $1 billion to $1.2
billion of which circa $1.1 billion is currently in the order book.
Dividend
The Directors have declared a fully franked final dividend of
5 cents per share payable on 29 October 2014 maintaining
the final dividend at the same level as last year (2013: 5 cents
per share final dividend). Total dividends payable for the
financial year will be 9 cents per share representing a payout
ratio on after tax earnings of 57%, compared to a payout ratio
of 49% in FY13.
44
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report Performance Rights over Unissued Shares or Interests
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
$269,525 (2013: $252,546).
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.
The NRW Audit and Risk Management Committee,
comprising Mr Jeff Dowling (Chairman), Ian Burston and Mr
Michael Arnett met twice during the financial year.
As at the date of this report, there are 863,924 Performance
Rights outstanding by the company. During the year
32,919 (2013: 96,849) Performance Rights were issued to
Key Management Personnel (KMP) under the terms of the
company’s Long-Term Incentive (LTI) Plan as approved by
shareholders on 23 November 2011.
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 46 to 59.
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 66 of this report.
Details of amounts paid or payable to the auditor for
non-audit services provided during the year are outlined in
Note 36 (page 117) 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 36 (page 117) 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:
• 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 & 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.
45
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report
Remuneration Report (Audited)
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 2014 for the following individuals, who are the Key Management Personal (KMP)
of the company:
Name
Position Held
Resigned / Appointed
Non-Executive Directors
Dr I Burston
Mr J Cooper
Mr M Arnett
Mr J Dowling
Executive Director
Chairman and Non-Executive Director
Appointed as Non-Executive Director, 27 July 2007
Non-Executive Director
Non-Executive Director
Non- Executive Director
Appointed as Non-Executive Director, 29 March 2011
Appointed as Non-Executive Director, 27 July 2007
Appointed as Non-Executive Director, 21 August 2013
Mr J Pemberton
Managing Director and Chief Executive Officer
Appointed as a Director of the company 1 July 2006
and as Chief Executive Officer 7 July 2010.
Executives
Mr W Rooney
Mr A Walsh
Mr W Fair
Mr D James
Mr K Hyman
Mr T Raschella
Mr M Wallace
Managing Director – NRW Civil & Mining
Appointed 1 October 2008
Chief Financial Officer
Appointed 6 January 2014
General Manager - Action Drill & Blast Pty Limited
Appointed 1 March 2012
General Manager – Performance (group)
and Executive Director of Action Mining Services
Appointed 4 March 2014
Company Secretary, Risk Management & Legal
Appointed 10 July 2007
Acting Chief Financial Officer
Acting appointment 7 August 2013 to 5 January 2014
Chief Financial Officer
Appointed 8 December 2008 - Resigned 7 August 2013
The report refers to both Non-Executive Directors and Executive KMP. Unless noted Executive Directors are included in the discussion
of Executive KMP.
The Remuneration Report is divided into the following sections:
Remuneration Governance
Five Year Snapshot
Executive KMP Remuneration Arrangements
Executive KMP Remuneration Outcomes
Executive Director and Executive KMP Remuneration
Additional Statutory Disclosures
Page
47
48
49
52
55
58
Section
1.
2.
3.
4.
5.
6.
46
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report Glossary
The following terms used throughout our Remuneration Report are defined here:
ASX
EPS
Executive KMP
FY12
FY13
FY14
FY15
KMP
LTI
N&RC
NRW
Australian Securities Exchange
Earnings Per Share
Executive full time employees of NRW that are Key Management Personnel, i.e. KMP excluding Non-Executive
Directors
The financial year ending 30 June 2012
The financial year ending 30 June 2013
The financial year ending 30 June 2014
The financial year ending 30 June 2015
Key Management Personnel according to the definition of that term in the Corporations Act 2001 (Cth).
Long Term Incentive
Nomination and Remuneration Committee
NRW Holdings Limited
NRW Performance Rights Plan
The Performance Rights plan of NRW approved by shareholders in general meeting on 23 November 2011
Performance Right
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
Vesting Conditions
Return on Capital Employed
Short Term Incentive
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
1. REMUNERATION GOVERNANCE
NRW has established a Nomination and Remuneration Committee (N&RC) consisting of Michael Arnett, Ian Burston and
John Cooper. The N&RC is responsible for making recommendations to the Board on the remuneration arrangements for
Non-Executive Directors and Executive KMP as set out in the N&RC Charter. The N&RC provides advice, recommendation
and assistance to the Board with respect to:
• 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 that the
remuneration received by Executive KMP displays a clear relationship between the performance of the individual and performance
of NRW;
• Termination and redundancy policies and the payments made to outgoing Executives;
• Disclosures to be included in the corporate governance section of NRW’s annual report which relate to NRW’s remuneration
policies and procedures.
47
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report
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.
The N&RC met once during the reporting period.
2. FIVE YEAR SNAPSHOT
Measure
2014
2013
2012
2011
2010
Market Capitalisation
(30 June)
Share Price at
end of year
Share Price at
beginning of year
$256.6 million
$ 253.8 million
$842.2 million
$778.1 million
$246.2 million
$0.92
$0.91
$0.91
$3.02
$3.02
$2.79
$2.79
$0.98
$0.98
$0.95
Total Revenue
$1,134.5 million
$1,374.4 million
$1,360.8 million
$751.2 million
$615.6 million
EBITDA
EPS
EPS Growth
$123.0 million*
$168.3 million
$195.5 million
$95.5 million
$87.5 million
15.9 cents
(40.40%)
26.6 cents
(23.3%)
34.8 cents
116%
16.1 cents
15%
14 cents
(7%)
Net Profit After Tax
$44.2 million
$74.1 million
$97.1 million
$41.2 million
$35.1 million
Return on Capital
Employed
Interim Dividend paid
Final Dividend declared
in respect of the year
Annual Total
Shareholder Return (%)
16.7%
$0.04
$0.05
9%
30.9%
$0.08
$0.05
(67%)
44.6%
$0.08
$0.10
15%
29.6%
$0.04
$0.05
194%
31.4%
$0.03
$0.03
9%
* Impairment charge of $4.8 million also added back to EBITDA.
48
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report 3. EXECUTIVE KMP REMUNERATION
ARRANGEMENTS
3.1 Executive KMP Remuneration Strategy & Mix
NRW’s executive remuneration program has the
following over-arching principles:
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 program
takes account 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.
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.
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 and
also succession planning requirements.
3.2 Structure of Executive KMP Remuneration
The NRW remuneration program and consequently
the remuneration components for each Executive KMP
member comprise:
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.
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 (page 52).
Long term incentive (LTI): An award of LTI is granted via
Performance Rights under the NRW Performance Rights
Plan. Any Performance Rights granted are subject to Vesting
Conditions and vesting periods – these are discussed
further below in Section 4. The FY12 award was intended
as a transitionary award that provided for vesting in three
tranches over three successive years. From FY13 onwards
LTI awards vest over a three-year performance period in
one tranche. Executive KMP are not eligible to participate in
dividends during the vesting period.
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. 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, to determine the number of awards for the
FY14 LTI, the LTI quantum will be divided by the 60-day
VWAP of the NRW share price on the day on which NRW
announced its FY13 result to the ASX (i.e., on 21 August 2013
using VWAP of $1.0324), Performance Rights granted are
then subjected to Vesting Conditions that are tested on the
applicable vesting date.
As noted above STI and LTI awards are determined with
reference to achievement against annual performance criteria
and are based on a percentage of fixed remuneration.
49
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report
3.3 Award Levels Relative to Fixed Remuneration
The following table sets out the range of award that Executive KMP were eligible for in FY14 under the STI and
LTI components of NRW’s remuneration structure:
STI Award
as % Fixed Remuneration
LTI Award
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, CFO
Divisional General Managers
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. 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);
2. Recommendations made to the N&RC by the CEO in respect of Executive KMP reporting to the CEO;
3. The N&RC’s consideration and recommendation to the Board of NRW; and
4. 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.
3.4 Details of Incentive Plans
STI and LTI Awards
Annual STI and LTI awards are determined against the same performance criteria. There is no automatic eligibility for the LTI. The
initial performance criteria sets the quantum of the LTI award, which is then further subject to certain performance conditions (EPS
growth, ROCE and relative TSR). 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 indicative weightings:
• 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. The criteria are
revenue, contribution margin, net profit after tax (group), asset utilisation, cost ratios, order book quantum and tenure and capital
expenditure management.
• Safety measures – 10% weighting: Safety targets, and in particular NRW’s Total Recorded Injury Frequency Rate (TRIFR) 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, staff turnover, succession planning requirements,
strategic planning goals and outcomes.
50
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report 3.5 LTI Vesting Conditions
NRW has three LTI awards in place, being awards granted in FY12, FY13 and awards granted in the current reporting
period (FY14).
The vesting criteria applicable to all LTI awards and the subsequent granting of Performance Rights under the NRW
Performance Rights Plan are as follows:
• 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 FY14 will be measured as to growth in NRW’s EPS at the beginning of FY14 (end of
FY13) to NRW’s EPS at the end of FY16.
• 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. ROCE is determined according to the following formula:
Earnings before interest tax and abnormals / (Average Net Assets – Average Cash + Average Debt – Average Intangibles)
• Relative TSR – 30% weighting: NRW benchmarks its Total Shareholder Return (TSR) 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 FY14 LTI Award
are; Ausenco Limited, Macmahon Holdings Limited, Ausdrill Limited, Downer EDI Limited, Bradken Limited, Transpacific Holdings
Limited, Sedgman Limited, Decmil Group Limited, Brierty Limited, Maca Limited and Watpac Limited (FY14 Comparator group).
For FY14 NRW has used a comparator group that is the same as the FY13 Comparator group except Clough Limited has been
removed as it is no longer listed. Clough has been replaced by Seymor White, which the Board felt represented a comparator
company not currently in the comparator group.
The following table sets out the vesting period cut-in and scaling of each of the vesting hurdles for the FY12,
FY13 and FY14 awards:
LTI Vesting Condition,
Weighting
FY12 LTI Award
FY13 and FY14 LTI Award
Cut-in level
0% vesting at 4% EPS
growth between last
vesting date and current
vesting date
0% vesting at 17%
ROCE for most recently
completed financial year
Maximum vesting
achieved at
100% of the EPS Growth
limb vesting at 10% EPS
growth between last
vesting date and current
vesting date
100% of the ROCE limb
vesting at 25% ROCE for
most recently completed
financial year
Cut-in level
Maximum vesting
achieved at
0% vesting at 4% EPS
growth between last
vesting date and current
vesting date
0% vesting at less than
19.99%
ROCE for most recently
completed financial year
100% of the EPS Growth
limb vesting at 12% EPS
growth
100% of the ROCE limb
vesting at 30% ROCE
EPS Growth, Weighting 40%
ROCE, Weighting 30%
Relative TSR, Weighting 30%
A TSR ranking 6th position
or worse will result in 0%
vesting
A TSR ranking 3rd position or
better = 100% of the
Relative TSR limb vesting
A TSR ranking 6th position
or worse will result in 0%
vesting
A TSR ranking 3rd position or
better = 100% of the
Relative TSR limb vesting
NRW has selected the three Vesting Conditions discussed above on the following basis:
• 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.
51
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report 3.6 LTI Vesting Period
Performance Rights granted under the FY12 LTI award are eligible to vest in three tranches as follows:
• 34% on 15 September 2012,
• 33% on 15 September 2013, and
• 33% on 15 September 2014, subject to the performance of and testing against the Vesting Conditions.
The performance rights granted under the FY13 LTI and FY14 awards will be eligible to vest in a single tranche on 15 September
2015 and 15 November 2016 respectively, subject to the performance of and testing against the 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.
3.7 Other Considerations applicable to LTI Awards
If a KMP’s employment with NRW ceases for reasons other than death or permanent disability, any unvested Performance
Rights will lapse and expire unless the Board of NRW considers it appropriate in the circumstances to consider the vesting
of any unvested shares. Where a KMP has died or becomes permanently disabled, 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.
3.8 Executive Service Agreements
The Executive Service Agreements in place in respect of NRW’s KMP can be summarised as follows:
• Are not fixed term agreements and continue on an ongoing basis until terminated;
• Contain non-compete provisions restraining the executives from operating or being associated with an entity that competes
withthe business of NRW in Western Australia for 12 months after termination;
• Provide for remuneration to be reviewed annually by NRW;
All Executive KMP as listed in the remuneration table, are employed on standard letters of appointment that provide for annual
reviews of base salary and up to six months notice of termination by either party. The appointments are not for any fixed term
and carry no termination payments other than statutory entitlements.
Remuneration for all KMP listed is determined by the N&RC under the guidelines contained in this remuneration report.
4. EXECUTIVE KMP REMUNERATION OUTCOMES
4.1 Executive KMP Total Earnings
The following tables provide information on the remuneration of the Executive KMP for the year ending 30 June 2014 and
comparable information for the previous year. Information is provided detailing
• Fixed Remuneration
• Short term incentive (STI) awards and the extent of STI forfeited in the year
• The weighting of measures within the STI and LTI scheme which were used in determining the extent of any award
• The number of Performance Rights granted in the year and the number of Performance Rights forfeited
The number of Performance Rights which vested in the year and the number of Performance Rights previously granted but
which were forfeited in the year
The levels of Fixed remuneration to KMP was unchanged in the year. Minor changes in the remuneration table mostly reflect
timing of payroll accruals and provision movements for the leave provisions.
52
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report 4.2 Commentary on Performance
Overall the performance in the year was below the targets set by the board which resulted in significant parts of both the STI
and LTI potential awards being forfeited. Revenue targets were exceeded at group level due to higher activity than planned
in the Civil business. Profitability was below target and did not result in any award. Personal objectives including a continued
improving Safety performance were met by some of the KMP. Personal objectives which were not met included equipment
utilisation which was below the targets set by the board.
Final performance measures for the year resulted in the Managing Director and CEO achieving only 24.1% of the potential STI
payment and consequently forfeiting 75.9% of the maximum STI payable under the scheme.
The STI objectives in the year are used to determine both the STI award and to determine the number of Performance Rights
in the LTI scheme to be carried forward through the vesting period. As commented on above the level of performance in
the year was below target and consequently the numbers of Performance rights retained as a percentage of the maximum
number granted was relatively low. The CEO achieved 23.6% of the maximum number of rights granted under the scheme for
FY14 resulting in 76.4% of rights being forfeited.
Performance Measures and STI and LTI outcomes FY14
KMP
Measures (STI& LTI)
Proportion of maxi-
mum STI Earned and
Forfeited in FY14
Proportion of maxi-
mum LTI Earned and
Forfeited in FY14
Group
Financial
Divisional
Financial
Personal
Safety
Total
Earned
Forfeited
Earned
Forfeited
%
80
40
40
30
N/A
%
-
40
-
50
N/A
%
10
10
50
10
%
10
10
10
10
N/A
N/A
%
100
100
100
100
N/A
(%)
24.1
21.1
36.2
12.9
N/A
(%)
75.9
78.9
63.8
77.1
N/A
(%)
23.6
22.6
N/A
10.9
N/A
(%)
76.4
77.4
N/A
79.1
N/A
Mr J Pemberton
Mr W Rooney
Mr A J Walsh
Mr W Fair
Mr D James
Performance Rights initially granted in the LTI scheme are retained or forfeited based on achievement against the annual
targets. The retained rights are then subject to further performance criteria being met through the performance period.
As detailed above, these criteria include meeting targets for Earnings per share growth, Return on Capital Employed and
incrementing shareholder value compared to a benchmark group of companies, (RTSR). As each three year award period
completes Performance Rights vest based on achievement against these criteria.
In the current financial year rights awarded in FY12 vested as disclosed in the FY13 annual accounts and as set out in the tables
below. The number of rights which vested to KMP totalled 125,066. No further additional rights will vest on the 15th September
2014. Consequently 708,715 performance rights were forfeited.
53
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report FY12 LTI Awards vesting table
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 vested on
15 September 2013
Tranche 3
Performance Rights
eligible tovest on
15 September 2014
Total
Performance Rights
Forfeited
Mr J Pemberton
Mr W Rooney
Mr W Fair
Total
841,377
348,448
73,479
1,263,304
286,069
118,472
24,983
429,523
83,296
34,496
7,274
125,066
-
-
-
-
472,013
195,480
41,222
708,715
The FY13 LTI scheme remains in place until the performance period concludes at the end of FY15. The status of performance
rights granted remains unchanged from that reported last year. In total 53,176 Performance rights have been granted. An
updated assessment of the likely number of rights expected to vest on 15 September next year has been completed which
shows only 18,075 of those rights are likely to vest given the results achieved in FY14. The reduction reflects the current market
cycle and in particular awards which require similar performance to be achieved to that achieved at the top of the cycle.
FY13 LTI Awards and expected vesting
Mr J Pemberton
Mr W Rooney
Mr W Fair
Mr M Wallace
Total
Maximum potential
number of
Performance
Rights for FY13 Award
No. Rights
Forfeited
Total number of
Performance Rights
granted under the
FY13 Award
Number of
Performance Rights
expected to vest on
15 September 2015
684,006
255,362
88,317
101,081
649,806
248,017
76,686
101,081
1,128,766
1,075,590
34,200
7,345
11,631
-
53,176
11,625
2,497
3,953
-
18,075
The FY14 LTI scheme again includes a one year short term performance period which determines the final number of
Performance rights to be retained of the maximum number granted under the scheme. Of the 2,946,980 maximum
performance rights available to KMP 655,758 of those granted remain in place until the performance period concludes
at the end of FY16.
FY14 LTI Awards and expected vesting
Maximum potential
number of
Performance Rights
for FY14 Award
No. Rights
Forfeited
Total number of
Performance Rights
granted under the
FY14 Award
No. of Performance
Rights expected
to vest on
15 November 2016
1,961,449
732,274
-
-
253,256
2,946,980
1,498,910
566,567
-
-
225,744
2,291,222
462,539
165,707
-
-
27,512
655,758
138,762
49,712
-
-
8,254
196,727
Mr J Pemberton
Mr W Rooney
Mr A J Walsh
Mr D James
Mr W Fair
Total
54
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report
Executive Directors’ and Executive KMP remuneration (company and group)
The table below sets out the remuneration outcomes for each of NRW’s Executive KMP for the financial year
ending 30 June 2014 and 30 June 2013:
IN AUD $
Short Term Benefits
Post
Employment
Benefits
Other
Long Term
Benefits
Share
Based Pay-
ments
Total
Year
Salary
& fees
Termination
Payment
STI cash
bonus FY14
Non cash
benefit (1)
Annual
(2)
Leave
Superannuation Other (3)
Equity
Key
management
personnel
EXECUTIVE
DIRECTORS
Mr J Pemberton
2014
1,332,927
2013
1,295,127
-
-
-
-
-
-
-
-
-
-
-
-
-
-
178,947
-
102,694
37,125
1,258
102,516
17,765
16,470
21,389
21,353
39,118
388,952
1,692,840
1,862,801
139,576
17,337
75,000
-
-
-
39,298
48,233
-
-
-
-
-
-
3,273
5,106
-
-
-
-
-
-
-
-
70,586
72,889
23,326
-
10,168
-
30,622
32,244
25,895
56,896
646
8,770
-
-
-
-
-
41,246
19,328
25,000
6,549
-
7,519
-
23,287
46,532
17,920
20,824
6,978
-
4,444
16,023
-
-
-
-
-
-
-
-
5,033
15,001
1,828
-
-
-
30,304
351,763
-
-
-
-
6,481
74,197
-
-
-
-
-
75,356
1,144,301
1,367,602
400,626
-
147,354
-
489,106
572,951
384,714
418,165
191,438
-
121,218
601,129
881,234
895,507
295,751
-
129,667
-
389,418
371,745
335,866
325,444
173,216
-
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
61,212
55,562
468,504
-
2014
3,599,291
55,562
432,821
3,919
272,061
103,790
28,250
75,903
4,571,597
2013
3,356,327
-
102,695
6,364
305,791
124,849
36,354
890,268
4,822,648
EXECUTIVES
Mr W Rooney
Mr A Walsh (5)
Mr D James (6)
Mr W Fair
Mr K Hyman
Mr T Raschella (4)
Mr M Wallace (7)
Total
Compensated
(Consolidated)
- 2014
Total
Compensated
(Consolidated)
- 2013(8)
1-The non-cash benefits comprised mostly motor vehicle benefits offered to the key management personnel, including the applicable
grossed up fringe benefits tax.
2-Represents the movement in accrued annual leave.
3-Represents the movement in accrued long service leave.
4 -Mr T Raschella temporary appointment as Acting Chief Financial Officer for the period 7 August 2014 to 05 January 2014.
5-Mr A Walsh appointed as Chief Financial Officer 6 January 2014.
6-Mr D James appointed as General Manager – Performance (group) and Executive Director of Action Mining Services 4 March 2014.
7-M Wallace left the company on 7 August 2013.
8-General managers reporting to the Managing Director of the Civil and Mining business have been excluded from the KMP analysis.
55
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report FOR THE YEAR ENDED 30 JUNE 2014
For ordinary shares
Key Person
Held at 1 July 2013
Purchases(1)
Received as
compensation
Received on options
/rights exercised
Sales / transfers /
net other change
Held at
30 June 2014
Dr I F Burston
Mr J Cooper
Mr M Arnett
Mr J Dowling
Mr J Pemberton
Mr W Rooney
Mr A Walsh
Mr W Fair
Mr K Hyman
Mr M Wallace
329,492
55,000
344,474
-
2,931,108
118,472
-
24,983
-
25,381
-
-
-
90,000
-
118,472
-
-
-
-
TOTAL
3,804,910
90,000
-
-
-
-
-
118,472
-
-
-
-
-
-
-
-
-
83,296
39,001
-
10,792
-
-
133,089
(1) All purchases were made via purchases of shares on-market.
FOR THE YEAR ENDED 30 JUNE 2013
For ordinary shares
-
-
-
-
-
-
-
-
-
-
-
329,492
55,000
344,474
90,000
3,014,404
157,473
-
35,775
-
25,381
4,051,999
Key Person
Held at 1 July 2012
Purchases(1)
Received as
compensation
Received on options
/rights exercised
Sales / transfers /
net other change
Held at 30 June
2013
Dr I F Burston
Mr J Cooper
Mr M Arnett
329,492
10,000
344,474
Mr J Pemberton
2,534,539
Mr W Rooney
Mr W Fair
Mr K Hyman
Mr M Wallace
118,472
-
-
474
-
45,000
-
110,500
118,472
-
-
-
TOTAL
3,240,979
155,500
(1) All purchases were made via purchases of shares on-market.
-
-
-
-
-
-
-
-
-
-
-
-
286,069
118,472
24,983
-
-
-
-
-
-
-
-
-
(22,474)
329,492
55,000
344,474
2,931,108
118,472
24,983
-
25,381
25,381
-
3,828,410
The key management personnel compensation included in ‘Employee benefits expense’ (see Note 8(a)) is as follows:
Short term employee benefits
Other long term benefits
Post employment benefits
Share based payments
Total
56
Consolidated
2014
4,363,654
28,250
103,790
75,903
2013
3,771,177
36,354
124,849
890,268
4,571,597
4,822,648
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report 5. NON-EXECUTIVE DIRECTORS REMUNERATION
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 $750,000, in
aggregate, per annum. This maximum sum cannot be increased without member’s approval by ordinary resolution at a
general meeting.
Non-Executive Director Fees (excluding superannuation and non-cash benefits) to be paid by the company are
as follows:
Director
Dr I Burston
Mr J Cooper
Mr M Arnett
Mr J Dowling
Fee per annum AUD
125,000
100,000
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.
The table below sets out the remuneration outcomes for each of NRW’s Non-Executive Directors:
For the financial year ended 30 June 2014
IN AUD $
Short Term Benefits
Post Employment
Benefits
Total
Non-executive
directors
Mr I Burston
Mr J Cooper
Mr M Arnett
Mr J Dowling
FY14 NON-EXECUTIVE
DIRECTORS TOTAL
Salary & fees
Non cash benefit
Superannuation
125,000
100,001
100,000
83,847
408,848
4,811
3,304
2,101
3,892
14,108
11,563
9,250
9,250
7,756
37,819
For the financial year ended 30 June 2013
IN AUD $
Short Term Benefits
Post Employment
Benefits
Non-executive
directors
Mr I Burston
Mr J Cooper
Mr M Arnett
Mr J Dowling
FY13 NON-EXECUTIVE
DIRECTORS TOTAL
Salary & fees
Non cash benefit
Superannuation
125,000
98,462
100,000
-
354,712
9,087
3,675
7,368
-
20,130
8,438
8,862
9,000
-
26,300
141,375
112,557
111,352
95,495
460,779
Total
173,775
110,999
116,368
-
401,142
57
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report 6. ADDITIONAL STATUTORY DISCLOSURES
This section sets out the additional disclosures required under the Corporations Act 2001.
Performance Rights Fair Value
For all awards, the volatility assumption is representative of the level of uncertainty expected in the movements of the
company’s share price over the life of the award. The assessment of volatility includes the historic volatility of the market price
of the company’s share and the mean reversion tendency of volatilities. The expected volatility of each company in the peer
group is determined based on the historic volatility of the companies’ share prices. In making this assumption, two years of
historic volatility was used where available.
Key assumptions for
the awards granted on
Award type
Vesting Conditions
Share price at the grant date
Tranche
Vesting date
Expected life
Risk free interest rate
Volatility
Dividend yield
23rd November 2011 & 12th March 2012
28 Nov 12
18 Jun 13
1 Jul 13
11 Nov 13
Performance Rights
Relative TSR, ROCE and EPS
1
15 Sep 12
0.8 years
3.40%
50%
6.0%
2
15 Sep 13
1.8 years
3.09%
50%
6.0%
$2.78
3
15 Sep 14
2.8 years
3.07%
50%
6.0%
$1.48
$0.93
$0.88
$1.24
15 Sep 15
15 Sep 15
25 Nov 16
25 Nov 16
3 years
2.66%
50%
9.0%
2.2 years
3.4 years
3 years
2.49%
55%
8.5%
2.88%
60%
8.50%
3.07%
60%
7.80%
The estimation of the fair value of share-based payment awards requires judgement with respect to the appropriate valuation
methodology. The choice of valuation methodology is determined by the structure of the awards, particularly the Vesting
Conditions. The RTSR condition is based on a Monte Carlo simulation whilst the EPS and ROCE conditions are based on
Binomial Tree methodologies. Each valuation methodology used has been chosen from those available to incorporate an
appropriate amount of flexibilty with respect to the particular performance and vesting conditions of the award.
58
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report
Valuation assumptions
The following tables summarise the key assumptions adopted for valuation of the awards.
The following table sets out the basis of the independently assessed fair value of the Performance Rights granted to each
Executive KMP member as at the date on which the grant of Performance Rights was made to the individual concerned (Grant
Date) for the FY13 and FY14 LTI awards. Within each tranche the Performance Rights are ascribed a fair value according to
the Vesting Condition limb against which they are tested, namely EPS Growth (40% weighting), ROCE (30% weighting) and
Relative TSR (30% weighting).
FY12 AWARDS
FY13 AWARDS
FY14 AWARDS
Tranche 1
Tranche 2
Tranche 3
Performance
Rights that
vested on
15 September
2012
Performance Rights that
are eligible to vest on
15 September 2013
Performance
Rights that are
eligible to vest
on
15 September
2014
Performance Rights that
are eligible to vest on
15 September 2015
Performance Rights that
are eligible to vest on
15 November 2016
RTSR
EPS
Growth
ROCE
RTSR
RTSR
EPS
Growth
& ROCE
Grant
Date
EPS
Growth
& ROCE
RTSR
Grant
Date
EPS
Growth
& ROCE
RTSR
($)
1.70
2.64
N/A
N/A
2.64
2.64
($)
($)
($)
($)
($)
2.35
1.61
28/11/2012
1.13
0.36
11/11/2013
0.66
3.31
N/A
N/A
3.31
3.31
2.50
18/06/2013
0.76
N/A
N/A
N/A
N/A
N/A
N/A
2.50
18/06/2013
0.76
2.50
18/06/2013
0.76
0.11
N/A
N/A
0.11
0.11
1/07/2013
0.98
N/A
N/A
N/A
N/A
1/07/2013
0.98
1/07/2013
0.98
($)
0.44
0.68
N/A
N/A
0.68
0.68
Grant
Date
EPS
Growth
& ROCE
($)
Mr J Pemberton
23/11/2011
2.65
($)
1.70
($)
($)
2.49
2.65
Mr W Rooney
12/03/2012
3.73
2.93
3.52
3.52
Mr A Walsh
Mr D James
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Mr W Fair
12/03/2012
3.73
2.93
3.52
Mr M Wallace
12/03/2012
3.73
2.93
3.52
N/A
N/A
3.52
3.52
End of Remuneration Report (Audited).
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, 19 August 2014
Dr Ian Burston
Chairman
59
FOR THE YEAR ENDED 30 JUNE 2014DIRECTOR’S REPORTNRW ANNUAL REPORT 2014Director’s Report 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 2014.
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 2014,
and the main corporate governance practices in place are
set out below.
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:
•
approving the strategic objectives of the group and
establishing goals to promote their achievement;
• monitoring the operational and financial position and
performance of the group;
• 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;
• monitoring senior management’s performance and
implementation of strategy and ensuring appropriate
resources are available;
• 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 five Directors, four of whom are
Non-Executive. The four 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:
• 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.
60
FOR THE YEAR ENDED 30 JUNE 2014CORPORATE GOVERNANCE STATEMENTNRW ANNUAL REPORT 2014Corporate Governance Statement DIRECTOR INDEPENDENCE
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:
•
•
•
•
•
•
•
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 three 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 three 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)
• Mr Michael Arnett
• Mr John Cooper
• Mr Jeffrey Dowling
The period of office held by each Director in office is as follows:
Director
Dr Ian Burston
Mr Michael Arnett
Mr Julian Pemberton
Mr John Cooper
Mr Jeffrey Dowling
Date Appointed
Period in office
Due for Re-election
27 July 2007
27 July 2007
1 July 2006
29 March 2011
21 August 2013
7 years
7 years
8 years
3 years
Less than 1 year
2015 AGM
2014 AGM
Not Applicable
2014 AGM
2015 AGM
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.
61
FOR THE YEAR ENDED 30 JUNE 2014CORPORATE GOVERNANCE STATEMENTNRW ANNUAL REPORT 2014Corporate 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:
•
•
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:
•
•
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 2014 financial year two meetings of the Nomination
& 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:
• 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.
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 dispatch 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.
The appointment and removal of the Company Secretary is a
matter for decision by the Board.
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
(a) NRW’s Diversity policy incorporates measurable
objectives as set by the Board and is assessed on an annual
basis.
(b) NRW’s Diversity policy can be found on the company’s
website www.nrw.com.au
(c) The measurable objectives include;
62
FOR THE YEAR ENDED 30 JUNE 2014CORPORATE GOVERNANCE STATEMENTNRW ANNUAL REPORT 2014Corporate Governance Statement •
•
The proportion of women employees in the whole
organisation
•
ensuring the independence and competence of the
company’s external auditors.
The proportion of women employees in Senior Executive
roles; and
•
The number of women on the Board
The Board had set an objective of women employed by the
NRW Holdings group of 14.0%. For the year ended June 30,
2014 the actual percentage of women employed was 13.85%. It
should be noted that within the NRW Civil & Mining (the largest
segment employer) the actual number was 14.19%.
The number of senior women executives remained static at
16.67%.
During this year NRW has expanded the scope of its Graduate
Program with seven new graduates including four women
candidates accepted from the Human Resources and
marketing streams.
There are no women members of the Board however the
company remains committed to identifying suitable candidates
for appointment.
NRW is a relevant employer under the Workplace Gender
Equality Act and the company’s most recent Gender Equality
Indicators report is published on the website.
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.
COMPOSITION OF THE COMMITTEE
The Board has determined that the Audit and Risk
Management Committee should comprise:
•
•
•
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:
• members who are financially literate
•
•
at least one member with relevant qualifications and
experience
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.
Principle 5: Make Timely and Balanced Disclosure
The company is committed to ensuring that:
•
•
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 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 role of the Audit and Risk Management Committee
includes:
•
•
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
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:
•
•
•
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.
63
FOR THE YEAR ENDED 30 JUNE 2014CORPORATE GOVERNANCE STATEMENTNRW ANNUAL REPORT 2014Corporate Governance Statement 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.
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.
Principle 7: Recognise and Manage Risk
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:
•
•
•
the implementation and review of risk management and
related internal compliance and control systems;
monitoring the company’s policies, programs and
procedures to ensure compliance with relevant laws, the
company’s Code of Conduct; and
the establishment and ongoing review of the company’s
corporate governance policies, procedures and practices.
The Board requires 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.
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.
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:
•
•
•
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;
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.
64
FOR THE YEAR ENDED 30 JUNE 2014CORPORATE GOVERNANCE STATEMENTNRW ANNUAL REPORT 2014Corporate Governance Statement 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 Financial Report and
Statements 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:
• 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 Financial Report
and Statements.
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 meets its transparency obligations in the following manner:
• publishing a detailed Remuneration Report in the Annual Financial Report and Statements 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.
65
FOR THE YEAR ENDED 30 JUNE 2014CORPORATE GOVERNANCE STATEMENTNRW ANNUAL REPORT 2014Corporate Governance Statement FOR THE YEAR ENDED 30 JUNE 2014
AUDITOR’S INDEPENDENCE DECLARATION
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 (0) 9365 7001
www.deloitte.com.au
The Board of Directors
NRW Holdings Limited
181 Great Eastern Highway
Belmont WA 6104
19 August 2014
Dear Board Members
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 2014, 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
Darren Hall
Partner
Chartered Accountants
66
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
NRW ANNUAL REPORT 2014
FOR THE YEAR ENDED 30 JUNE 2014
DIRECTORS’ DECLARATION
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, 19th August 2014
67
NRW ANNUAL REPORT 2014 FOR THE YEAR ENDED 30 JUNE 2014
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
Revenue
Finance income
Finance costs
Materials and consumables used
Employee benefits expense
Subcontractor costs
Depreciation and amortisation expenses
Impairment expense
Plant and equipment costs
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
Consolidated
Notes
2014
$’000
2013
$’000
6
1,134,492
1,374,403
8(a)
8(a)
8(a)
9(a)
1,990
(16,258)
(209,495)
(386,159)
(210,303)
(52,753)
(4,800)
(195,128)
(10,398)
51,188
(6,952)
44,236
(1)
(1)
786
(15,462)
(243,343)
(426,805)
(297,538)
(48,885)
-
(226,169)
(12,224)
104,763
(30,656)
74,107
28
28
TOTAL COMPREHENSIVE INCOME
44,235
74,135
Profit Attributable to:
Equity holders of the company
Total Comprehensive Income Attributable to:
Equity holders of the company
EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
44,236
74,107
44,235
Cents
15.9
15.8
74,135
Cents
26.6
26.5
10
The consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
68
NRW ANNUAL REPORT 2014 FOR THE YEAR ENDED 30 JUNE 2014
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
Notes
Consolidated
2014
$’000
11
12
13
9(c)
14
16
15
19
21
22
9(c)
23
22
23
9(d)
24
25
26
155,474
200,541
36,690
-
6,406
399,111
12,763
354,758
19,617
387,138
786,249
170,887
49,613
6,992
17,178
244,670
139,867
1,541
28,169
169,577
414,247
372,002
156,432
2,772
212,798
372,002
2013
$’000
130,994
205,052
48,547
3,773
5,400
393,766
8,126
387,696
24,417
420,239
814,005
196,939
52,379
-
16,139
265,457
167,191
1,201
27,286
195,678
461,135
352,870
156,432
2,777
193,661
352,870
ASSETS
Current assets
Cash and cash equivalents
Receivables
Inventories
Current tax assets
Other current assets
Total current assets
Non-current assets
Intangibles
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
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
69
NRW ANNUAL REPORT 2014 FOR THE YEAR ENDED 30 JUNE 2014
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
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 2012
Profit for the year
Exchange differences arising on translation
of foreign operations
Total comprehensive income for the year
Payment of dividends
Share based payments
Acquisition of treasury shares
Transfer to issued capital
BALANCE AT 30 JUNE 2013
BALANCE AT 1 JULY 2013
Profit for the year
Exchange differences arising on translation
of foreign operations
Total comprehensive income for the year
Payment of dividends
Share based payments
Transfer to issued capital
Acquisition of treasury shares
26
25
27
25
24
24
26
25
27
25
24
24
156,456
(242)
3,211
2,969
-
-
-
-
-
(1,285)
1,261
156,432
156,432
-
-
-
-
-
231
(231)
-
-
28
28
-
-
-
-
(214)
(214)
-
(1)
(1)
-
-
-
-
-
-
-
-
-
1,042
-
(1,261)
2,992
-
28
28
-
1,042
-
(1,261)
2,778
2,992
2,778
-
-
-
-
226
(231)
-
-
-
(1)
(1)
-
226
(231)
-
-
169,753
74,107
329,178
74,107
-
28
74,107
(50.199)
-
-
-
74,135
(50,199)
1,042
(1,285)
-
193,661
352,871
193,661
44,236
352,871
44,236
-
(1)
44,236
44,235
(25,099)
(25,099)
-
-
-
-
226
-
(231)
-
BALANCE AT 30 JUNE 2014
156,432
(215)
2,987
2,772
212,798
372,002
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
70
NRW ANNUAL REPORT 2014 FOR THE YEAR ENDED 30 JUNE 2014
CONSOLIDATED STATEMENT
OF CASH FLOWS
Consolidated
Note
2014
$’000
2013
$’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)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of property, plant and equipment
Acquisition of property, plant and equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Repayment of borrowings and finance/hire purchase liabilities
Payment of dividends to shareholders
Acquisition of treasury shares
Net cash used in financing activities
NET INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at the end of the year
11
1,270,402
(1,156,701)
(16,258)
1,990
4,696
104,129
5,324
(29,555)
(24,231)
38,799
(68,888)
(25,099)
(231)
(55,419)
24,480
130,994
155,474
1,618,858
(1,453,433)
(15,462)
786
(46,213)
104,535
12,326
(93,138)
(80,812)
62,689
(41,889)
(50,198)
(1,285)
(30,683)
(6,961)
137,955
130,994
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
71
NRW ANNUAL REPORT 2014 1. GENERAL INFORMATION
2.3 Basis of consolidation
NRW Holdings Limited (the ‘company’) is a public company
listed on the Australian Securities Exchange which is
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
2014 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 of 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 financial statements comprise the consolidated financial
statements of the group. For the purposes of preparing the
consolidated financial statements, the company is a for-profit
entity. Accounting Standards include Australian Accounting
Standards. Compliance with Australian Accounting Standards
ensures that the financial statements and notes of the
company and the group comply with International Financial
Reporting Standards (‘IFRS’).
These financial statements were authorised for issue by the
Directors on 18 August 2014.
2.2 Basis of preparation
The consolidated financial statements have been prepared
on the historical cost basis, as explained in the accounting
policies below where applicable. 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 controlled
by the company and its subsidiaries. Control is achieved
when the company:
• has power over the investee;
•
is exposed, or has rights, to variable returns from its
involvement with the investee; and
• has the ability to use its power to affect its returns.
The company reassesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control
listed above.
When the company has less than a majority of the voting
rights of an investee, it has power over the investee when
the voting rights are sufficient to give it the practical ability to
direct the relevant activities of the investee unilaterally. The
company considers all relevant facts and circumstances in
assessing whether or not the company’s voting rights in an
investee are sufficient to give it power, including:
•
the size of the company’s holding of voting rights relative to
the size and dispersion of holdings of the other vote holders;
• potential voting rights held by the company, other vote
holders or other parties;
•
•
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the
company has, or does not have, the current ability to direct the
relevant activities at the time that decisions need to be made,
including voting patterns at previous shareholders’ meetings.
Consolidation of a subsidiary begins when the company
obtains control over the subsidiary and ceases when the
company loses control of the subsidiary. Specifically, income
and expenses of a subsidiary acquired or disposed of during
the year are included in the consolidated statement of profit
or loss and other comprehensive income from the date the
company gains control until the date when the company
ceases to control the subsidiary.
Profit or loss and each component of other comprehensive
income are attributed to the owners of the company and to
the non-controlling interests. Total comprehensive income of
subsidiaries is attributed to the owners of the company and
to the non-controlling interests even if this results in the non-
controlling interests having a deficit balance.
When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies
into line with the group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses
and cash flows relating to transactions between members of
the group are eliminated in full on consolidation.
72
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements Changes in the group’s ownership interests in existing
subsidiaries
•
Changes in the group’s ownership interests in subsidiaries
that do not result in the group losing control over the
subsidiaries 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. All amounts previously recognised
in other comprehensive income in relation to that subsidiary
are accounted for as if the group had directly disposed of the
related assets or liabilities of the subsidiary (i.e. reclassified
to profit or loss or transferred to another category of equity
as specified/permitted by applicable AASBs). The fair value
of any investment retained in the former subsidiary at the
date when control is lost is regarded as the fair value on
initial recognition for subsequent accounting under AASB
139, when applicable, the cost on initial recognition of an
investment in an associate or a joint venture.
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:
• 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.
73
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 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.
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 as
disclosed where applicable. 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.
2.6 Interests in joint operations
decisions about the relevant activities require unanimous
consent of the parties sharing control.
When a group entity undertakes its activities under joint
operations, the group as a joint operator recognises in
relation to its interest in a joint operation:
•
•
•
•
•
its assets, including its share of any assets held jointly;
its liabilities, including its share of any liabilities incurred jointly;
its revenue from the sale of its share of the output arising
from the joint operation;
its share of the revenue from the sale of the output by the
joint operation; and
its expenses, including its share of any expenses
incurred jointly.
The group accounts for the assets, liabilities, revenues
and expenses relating to its interest in a joint operation
in accordance with the AASBs applicable to the particular
assets, liabilities, revenues and expenses.
When a group entity transacts with a joint operation in
which a group entity is a joint operator (such as a sale
or contribution of assets), the group is considered to be
conducting the transaction with the other parties to the
joint operation, and gains and losses resulting from the
transactions are recognised in the group’s consolidated
financial statements only to the extent of other parties’
interests in the joint operation.
When a group entity transacts with a joint operation in which
a group entity is a joint operator (such as a purchase of
assets), the group does not recognise its share of the gains
and losses until it resells those assets to a third party.
2.7 Revenue recognition
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.
A joint operation is a joint arrangement whereby the parties
that have joint control of the arrangement have rights to
the assets, and obligations for the liabilities, relating to
the arrangement. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when
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
74
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 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.
Revenue from the sale of goods is recognised when the
goods are delivered and titles have passed, at which time all
the following conditions are satisfied:
•
•
•
•
•
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;
the costs incurred or to be incurred in respect of the transaction
can be measured reliably.
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.
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.
2.8 Leases
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.
2.9 Foreign currency translation
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.
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.
For the purpose of presenting consolidated financial
statements of foreign operations, 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.
75
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 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.
2.10 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.
2.13 Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
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 report period.
All other borrowing costs are recognised in profit or loss in
the period in which they are incurred.
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.
2.11 Government grants
Government grants are not recognised until there is reasonable
assurance that the group will comply with the conditions
attaching to them and that the grants will be received.
Government grants that are receivable as compensation for
expenses or losses already incurred or for the purpose of
giving immediate financial support to the group with no future
related costs are recognised in profit or loss in the period in
which they become receivable.
Government assistance which does not have conditions
attached specifically relating to the operating activities of
the entity is recognised in accordance with the accounting
policies above.
2.12 Employee benefits
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.
76
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 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.
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.
Research and Development Tax Offset
Whilst there exist several registrations for the tax offset
surrounding research and development in the group no
material amounts are expected in the near term. The repair
and fabrication segment is in the final stages of testing and
in due course marketing the research and development
product currently underway.
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.
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
20 to 40 years
Leasehold improvements 2 to 5 years
Major Plant and Equipment 5 to 10 years
(normally based on machine hours)
Minor Plant and Equipment 2 to 10 years
Office Equipment
2 to 8 years
Furniture and Fittings
5 to 20 years
Motor Vehicles
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 are normally 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.
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.
77
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements
2.15 Intangible assets
Intangible assets acquired separately
Intangible assets with finite lives that are acquired separately
are carried at cost less accumulated amortisation and
accumulated impairment losses. Amortisation is recognised
on a straight-line basis over their estimated useful lives. The
estimated useful life and amortisation method are reviewed
at the end of each reporting period, with the effect of any
changes in estimate being accounted for on a prospective
basis. Intangible assets with indefinite useful lives that are
acquired separately are carried at cost less accumulated
impairment losses.
Internally-generated intangible assets - research and
development expenditure
Expenditure on research activities is recognised as an
expense in the period in which it is incurred. An
internally-generated intangible asset arising from
development (or from the development phase of an internal
project) is recognised if, and only if, all of the following have
been demonstrated:
•
•
•
the technical feasibility of completing the intangible asset so
that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
• how the intangible asset will generate probable future
economic benefits;
•
•
the availability of adequate technical, financial and other
resources to complete the development and to use or sell
the intangible asset; and
the ability to measure reliably the expenditure attributable to
the intangible asset during its development.
The amount initially recognised for internally-generated
intangible assets is the sum of the expenditure incurred from
the date when the intangible asset first meets the recognition
criteria listed above. Where no internally-generated
intangible asset can be recognised, development
expenditure is recognised in profit or loss in the period in
which it is incurred.
Subsequent to initial recognition, internally-generated
intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses, on the
same basis as intangible assets that are acquired separately.
Impairment of tangible and intangible assets other
than goodwill
At the end of each reporting period, the group reviews
the carrying amounts of its tangible and intangible assets
to determine whether there is any indication that those
assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the
impairment loss (if any). When it is not possible to estimate
the recoverable amount of an individual asset, the group
estimates the recoverable amount of the cash generating
unit to which the asset belongs. When a reasonable and
consistent basis of allocation can be identified, corporate
assets are also allocated to individual cash-generating units,
or otherwise they are allocated to the smallest group of
cash-generating units for which a reasonable and consistent
allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment at
least annually, and whenever there is an indication that the
asset may be impaired.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is
reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss, unless the relevant
asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease
(see 2.15 above).
2.16 Inventories
Inventories are stated at the lower of cost and net realisable
value. Costs of inventories are determined normally 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.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when
no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of an
intangible asset, measured as the difference between the net
disposal proceeds and the carrying amount of the asset are
recognised in profit or loss when the asset is derecognised.
2.17 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.
78
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 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.
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.
Provision for warranties
Fair value
Provisions are made for the expected cost of warranty
obligations in relation to specific construction contracts at
reporting date. The provision is based on the present value
of future cash flows estimated to be required to settle the
warranty obligation. Cash flows estimated based on the best
estimate of the expenditure required to settle the group’s
obligation and history of warranty claims.
2.18 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.
2.19 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.
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.
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:
•
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:
•
•
•
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
79
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 2.20 Financial liabilities and equity instruments
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.
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
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.
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.
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.
Held-to-maturity investments
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.
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.
Impairment of financial assets
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.
80
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 2.21 Trade and other payables
Diluted earnings per share
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 75 days of recognition. Trade and other payables
are presented as current liabilities unless payment is not due
within 12 months from the reporting date.
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.
2.26 Share-based payments
Share based compensation payments are provided to
employees in accordance to the company’s Long Term
Incentive Plan (‘LTIP’) detailed in remuneration report.
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 the remuneration report.
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.
2.22 Goods and services tax
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GST), except:
• 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.
2.23 Cash and cash equivalents
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.
2.24 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.
2.25 Earnings per share
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.
81
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 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 Section 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.
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.
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 the
remuneration report. One of the inputs into the valuation model
is volatility of the underlying share price which is estimated on
the two year history of the share price and has been estimated
as disclosed in the remuneration report. 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.
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) 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.
(ii) 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.
82
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements
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 2014 was $19.6 million (30 June 2013: $24.4 million). The Directors determined an
impairment of goodwill during the current year of $4.8 million (2013: Nil). Details of the goodwill carrying amount can be found
at Note 19.
Employee entitlements
Management judgement is applied in determining the following key assumptions used in the calculation of long service leave
at balance date:
(i)
future increases in wages and salaries;
(ii)
future on cost rates; and
(iii) employee departures and period of service.
Useful lives of property, plant and equipment
As described at Section 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.
Provision for warranties
As described in 2.17, the group recognises provisions for warranties for obligations in relation to specific construction
contracts. The future outflow of cash has been estimated at the best estimate of the expenditure required to settle the group’s
obligation and history of warranty claims.
83
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 4. APPLICATION OF NEW AND REVISED ACCOUNTING STANDARDS
4.1 New and revised AASBs affecting amounts reported and/or disclosures in the financial statements
In the current year, the group has applied a number of new and revised AASBs issued by the Australian Accounting
Standards Board (AASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2013.
AASB 2011-4 ‘Amendments to Australian
Accounting Standards to Remove Individual
Key Management Personnel Disclosure
Requirements’
This standard removes the individual key management personnel disclosure requirements in AASB 124 ‘Related
Party Disclosures’ As a result the group only discloses the key management personnel compensation in total
and for each of the categories required in AASB 124.
In the current year the individual key management personnel disclosure previously required by AASB 124 (note
45.2.1 and 45.3.2 in the 30 June 2013 financial statements) is now disclosed in the remuneration report due to
an amendment to Corporations Regulations 2001 issued in June 2013.
AASB 2012-2 ‘Amendments to Australian
Accounting Standards – Disclosures –
Offsetting Financial Assets and Financial
Liabilities’
The group has applied the amendments to AASB 7 ‘Disclosures – Offsetting Financial Assets and Financial
Liabilities’ for the first time in the current year. The amendments to AASB 7 require entities to disclose infor-
mation about rights of offset and related arrangements (such as collateral posting requirements) for financial
instruments under an enforceable master netting agreement or similar arrangement.
The amendments have been applied retrospectively. As the group does not have any offsetting arrangements
in place, the application of the amendments does not have any material impact on the consolidated financial
statement.
AASB 2012-5 ‘Amendments to Australian
Accounting Standards arising from Annual
Improvements 2009-2011 Cycle’
The Annual Improvements to AASBs 2009 - 2011 have made a number of amendments to AASBs. The amend-
ments that are relevant to the group are the amendments to AASB 101 regarding when a statement of financial
position as at the beginning of the preceding period (third statement of financial position) and the related notes
are required to be presented. The amendments specify that a third statement of financial position is required
when a) an entity applies an accounting policy retrospectively, or makes a retrospective restatement or
reclassification of items in its financial statements, and b) the retrospective application, restatement or reclas-
sification has a material effect on the information in the third statement of financial position. The amendments
specify that related notes are not required to accompany the third statement of financial position.
AASB 2012-9 ‘Amendment to AASB 1048
arising from the Withdrawal of Australian
Interpretation 1039’
This standard makes amendment to AASB 1048 ‘Interpretation of Standards’ following the withdrawal of Austra-
lian Interpretation 1039 ‘Substantive Enactment of Major Tax Bills in Australia’. The adoption of this amending
standard does not have any material impact on the consolidated financial statements.
AASB CF 2013-1 ‘Amendments to the Aus-
tralian Conceptual Framework’ and AASB
2013-9 ‘Amendments to Australian Account-
ing Standards – Conceptual Framework,
Materiality and Financial Instruments’ (Part A
Conceptual Framework)
This amendment has incorporated IASB’s Chapters 1 and 3 Conceptual Framework for Financial Reporting as
an Appendix to the Australian Framework for the Preparation and Presentation of Financial Statements. The
amendment also included not-for-profit specific paragraphs to help clarify the concepts from the perspective of
not-for-profit entities in the private and public sectors.
As a result the Australian Conceptual Framework now supersedes the objective and the qualitative character-
istics of financial statements, as well as the guidance previously available in Statement of Accounting Concepts
SAC 2 ‘Objective of General Purpose Financial Reporting’. The adoption of this amending standard does not
have any material impact on the consolidated financial statements.
84
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements New and revised Standards on consolidation, joint arrangements, associates and Disclosures
In August 2011, a package of five standards on consolidation, joint arrangements, associates and disclosures was issued
comprising AASB 10 ‘Consolidated Financial Statements’, AASB 11 ‘Joint Arrangements’, AASB 12 ‘Disclosure of Interests in
Other Entities’, AASB 127 (as revised in 2011) ‘Separate Financial Statements’ and AASB 128 (as revised in 2011) ‘Investments in
Associates and Joint Ventures’. Subsequent to the issue of these standards, amendments to AASB 10, AASB 11 and AASB 12
were issued to clarify certain transitional guidance on the first-time application of the standards.
The impact of the application of these standards is set out below.
AASB 10 ‘Consolidated Financial Statements’
and AASB 2011-7 ‘Amendments to Australian
Accounting Standards arising from the
consolidation and Joint Arrangements
standards’
AASB 11 ‘Joint Arrangements’ and AASB
2011-7 ‘Amendments to Australian Account-
ing Standards arising from the consolidation
and Joint Arrangements standards’
AASB 12 ‘Disclosure of Interests in Other
Entities’ and AASB 2011-7 ‘Amendments to
Australian Accounting Standards arising
from the consolidation and Joint Arrange-
ments standards’
AASB 10 replaces the parts of AASB 127 ‘Consolidated and Separate Financial Statements’ that deal with con-
solidated financial statements and Interpretation 112 ‘Consolidation – Special Purpose Entities’. AASB 10 chang-
es the definition of control such that an investor controls an investee when a) it has power over an investee,
b) it is exposed, or has rights, to variable returns from its involvement with the investee, and c) has the ability
to use its power to affect its returns. All three of these criteria must be met for an investor to have control over
an investee. Previously, control was defined as the power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities. Additional guidance has been included in AASB 10 to explain
when an investor has control over an investee. Some guidance included in AASB 10 that deals with whether or
not an investor that owns less than 50 per cent of the voting rights in an investee has control over the investee
is relevant to the group.
AASB 11 replaces AASB 131 ‘Interests in Joint Ventures’, and the guidance contained in a related interpretation,
Interpretation 113 ‘Jointly Controlled Entities – Non-Monetary Contributions by Venturers’, has been incor-
porated in AASB 128 (as revised in 2011). AASB 11 deals with how a joint arrangement of which two or more
parties have joint control should be classified and accounted for. Under AASB 11, there are only two types of
joint arrangements – joint operations and joint ventures. The classification of joint arrangements under AASB
11 is determined based on the rights and obligations of parties to the joint arrangements by considering the
structure, the legal form of the arrangements, the contractual terms agreed by the parties to the arrangement,
and, when relevant, other facts and circumstances.
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint
operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint ven-
ture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint venturers)
have rights to the net assets of the arrangement.
Previously, AASB 131 contemplated three types of joint arrangements – jointly controlled entities, jointly con-
trolled operations and jointly controlled assets. The classification of joint arrangements under AASB 131 was pri-
marily determined based on the legal form of the arrangement (e.g. a joint arrangement that was established
through a separate entity was accounted for as a jointly controlled entity).
The initial and subsequent accounting of joint ventures and joint operations is different. Investments in joint
ventures are accounted for using the equity method (proportionate consolidation is no longer allowed).
Investments in joint operations are accounted for such that each joint operator recognises its assets (including
its share of any assets jointly held), its liabilities (including its share of any liabilities incurred jointly), its revenue
(including its share of revenue from the sale of the output by the joint operation) and its expenses (including its
share of any expenses incurred jointly).
Each joint operator accounts for the assets and liabilities, as well as revenues and expenses, relating to its
interest in the joint operation in accordance with the applicable Standards.
AASB 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint
arrangements, associates and/or unconsolidated structured entities.
85
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements AASB 13 ‘Fair Value Measurement’ and
AASB 2011-8 ‘Amendments to Australian
Accounting Standards arising from AASB 13’
The group has applied AASB 13 for the first time in the current year. AASB 13 establishes a single source of
guidance for fair value measurements and disclosures about fair value measurements. The scope of AASB 13
is broad; the fair value measurement requirements of AASB 13 apply to both financial instrument items and
non-financial instrument items for which other AASBs require or permit fair value measurements and disclo-
sures about fair value measurements, except for share based payment transactions that are within the scope
of AASB 2 ‘Share-based Payment’, leasing transactions that are within the scope of AASB 117 ‘Leases’, and
measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the
purposes of measuring inventories or value in use for impairment assessment purposes).
AASB 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction in the principal (or most advantageous) market at the measurement date under current mar-
ket conditions. Fair value under AASB 13 is an exit price regardless of whether that price is directly observable
or estimated using another valuation technique. Also, AASB 13 includes extensive disclosure requirements.
AASB 13 requires prospective application from 1 July 2013. In addition, specific transitional provisions were
given to entities such that they need not apply the disclosure requirements set out in the Standard in compar-
ative information provided for periods before the initial application of the Standard. In accordance with these
transitional provisions, the group has not made any new disclosures required by AASB 13 for the 2013 compar-
ative period (please see notes 15, 16 and 28 for the 2014 disclosures). Other than the additional disclosures,
the application of AASB 13 does not have any material impact on the amounts recognised in the consolidated
financial statements.
AASB 2012-10 ‘Amendments to Australian
Accounting Standards – Transition Guidance
and Other Amendments’
This standard amends AASB 10 and various Australian Accounting Standards to revise the transition guidance
on the initial application of those Standards. This standard also clarifies the circumstances in which adjust-
ments to an entity’s previous accounting for its involvement with other entities are required and the timing of
such adjustments. The adoption of this amending standard does not have any material impact on the consoli-
dated financial statements.
4.2 Standards and Interpretations in issue not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in
issue but not yet effective.
Standard/Interpretation
AASB 9 ‘Financial Instruments’, and the relevant amending standards1
AASB 1031 ‘Materiality’ (2013)
AASB 2012-3 ‘Amendments to Australian Accounting Standards – Offsetting Financial Assets and
Financial Liabilities’
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
1 January 2017
30 June 2018
1 January 2014
30 June 2015
1 January 2014
30 June 2015
AASB 2013-3 ‘Amendments to AASB 135 – Recoverable Amount Disclosures for Non-Financial Assets’
1 January 2014
30 June 2015
AASB 2013-4 ‘Amendments to Australian Accounting Standards – Novation of Derivatives and Continu-
ation of Hedge Accounting’
1 January 2014
30 June 2015
AASB 2013-5 ‘Amendments to Australian Accounting Standards – Investment Entities’
1 January 2014
30 June 2015
AASB 2013-9 ‘Amendments to Australian Accounting Standards – Conceptual Framework, Materiality
and Financial Instruments’
INT 21 ‘Levies’
1 January 2014
30 June 2015
1 January 2014
30 June 2015
86
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 1. The AASB has issued the following versions of AASB 9 and the relevant amending standards;
• AASB 9 ‘Financial Instruments’ (December 2009), AASB 2009-11 ‘Amendments to Australian AccountingStandards arising
from AASB 9’, AASB 2012-6 ‘Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and
Transition Disclosures’.
• AASB 9 ‘Financial Instruments’ (December 2010), AASB 2010-7 ‘Amendments to Australian Accounting Standards arising from
AASB 9 (December 2010)’, AASB 2012-6 ‘Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9
and Transition Disclosure’.
•
In December 2013 the AASB issued AASB 2013-9 ‘Amendment to Australian Accounting Standards – Conceptual Framework,
Materiality and Financial Instruments’, Part C – Financial Instruments. This amending standard has amended the mandatory
effective date of AASB 9 to 1 January 2017. For annual reporting periods beginning before 1 January 2017, an entity may early
adopt either AASB 9 (December 2009) or AASB 9 (December 2010) and the relevant amending standards.
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.
Standard/Interpretation
Narrow-scope amendments to IAS 19 Employee Benefits entitled
Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)
Annual Improvements to IFRSs 2010-2012 Cycle
Annual Improvements to IFRSs 2011-2013 Cycle
IFRS 14 Regulatory Deferral Accounts
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
1 July 2014
30 June 2015
1 July 2014
1 July 2014
1 January 2016
30 June 2015
30 June 2015
30 June 2017
The impact of these recently issued or amended standards and interpretations have not been determined as yet by the company.
87
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 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.
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.
The operating segments remain unchanged from prior years and represent core activity of the group. The following are the
reportable segments:
A) Reportable segments
• Civil Contracting. The provision of civil infrastructure and other construction services including rail formation, concrete works,
bulk earthworks and detailed road and tunnel construction.
• Mining Services. The provision of mining contracting services including earth moving, waste stripping, ore haulage and related
ancillary services.
• Action Mining Services. The provision of equipment repairs, sandblasting and painting services, service truck and water tanker
fabrication and import services, including quarantine cleaning and the marketing and sales of the fabricated water and service trucks.
• Action Drill & Blast. The provision of services to meet internal and external requirements regarding drilling and blasting activities
in Australia predominantly in civil and mining projects.
B) Geographical Information
The predominant core geographic region was Australia. The Guinea operations were completed during FY13.
Revenues and total assets for the two geographical segments comprise:
Revenue from External Customers
Total Current and Non-Current Assets
2014
$’000
1,134,492
-
1,134,492
2013
$’000
1,352,275
22,128
1,374,403
2014
$’000
780,3498
5,901
786,249
2013
$’000
807,652
6,353
814,005
Australia
West Africa - Guinea
Total
88
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements C) Reportable segment revenues and results
Segment Revenue
Segment Profit (Loss)
2014
$’000
842,292
186,865
110,001
27,992
(32,658)
2013
$’000
860,641
404,526
150,533
41,804
(83,102)
1,134,492
1,374,402
Civil Contracting
Mining Services
Action Drill & Blast
Action Mining Services
Eliminations
Total for continuing
operations
Other unallocated expenses
Impairment expense
Net finance costs
Income tax expense
Profit for the period
D) Segment assets and liabilities
Civil Contracting
Mining Services
Action Drill & Blast
Action Mining Services
Other unallocated assets
Consolidated assets
Civil Contracting
Mining Services
Action Drill & Blast
Action Mining Services
Other unallocated liabilities
Consolidated liabilities
2014
$’000
59,804
13,140
7,024
(780)
-
79,188
(8,932)
(4,800)
(14,268)
(6,952)
44,236
2014
$’000
386,641
256,497
62,509
31,092
49,510
786,249
2014
$’000
(187,337)
(139,265)
(44,982)
(3,985)
(38,679)
(414,248)
2013
$’000
92,034
17,938
16,819
3,308
-
130,099
(10,659)
-
(14,677)
(30,656)
74,107
Segment Assets
2013
$’000
291,422
395,788
52,782
41,720
32,292
814,005
Segment Liabilities
2013
$’000
(172,930)
(213,400)
(37,009)
(7,464)
(30,332)
(461,135)
89
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements E) Information about major customers
Included in revenues arising from sales of Civil of $842.3m (2013: $860.6m) (see 5.C above) are revenues of approximately
$361.3m (2013: $420.5m) which arose from the sales to the group’s largest customer. Similarly, included in revenues arising
from sales of Mining of $186.9m (2013: $404.5m) (see 5.C above) are revenues of approximately $116.2m (2013: $161.8m) which
arose from the sales to the group’s second most significant customer. No other single customer contributed 10% or more to
the group’s revenue for both 2014 and 2013.
F) Other segment information
Depreciation and amortisation
Additions to non-current assets
2014
$’000
12,293
26,696
5,454
688
7,622
52,753
2013
$’000
11,198
32,187
3,996
425
1,078
48,885
2014
$’000
10,937
670
13,889
2,451
1,607
29,554
2014
$’000
1,134,492
1,134,492
2014
$’000
1,990
1,990
(16,246)
(12)
(16,258)
(14,268)
2013
$’000
11,825
51,581
15,924
1,815
12,003
93,148
Consolidated
2013
$’000
1,374,403
1,374,403
Consolidated
2013
$’000
786
786
(15,450)
(13)
(15,462)
(14,677)
Civil Contracting
Mining Services
Action Drill & Blast
Action Mining Services
Other
Total for continuing operations
6. REVENUE
Revenue from all sources
Total Revenue
7. NET FINANCE EXPENSE
Interest Income
Total finance Income
Interest on obligations under finance leases
Interest on bank overdrafts and loans
Total finance expenses
Net finance expense
90
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 8. 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
Amortisation
Operating lease payments
Rental hire payments
Plant and other related costs
Employee benefits expense:
Wages and salaries
Superannuation contributions
Share based payments
9. INCOME TAXES RELATING TO CONTINUING OPERATIONS
A) Recognised in profit or loss
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
Consolidated
2013
$’000
(43,930)
(4,955)
(48,885)
(12,928)
(156,096)
(57,145)
(226,169)
(396,984)
(28,779)
(1,042)
(426,805)
Consolidated
2013
$’000
19,002
524
19,526
11,130
30,656
2014
$’000
(49,654)
(3,099)
(52,753)
(7,840)
(152,956)
(34,332)
(195,128)
(364,247)
(21,686)
(226)
(386,159)
2014
$’000
16,551
(10,483)
6,068
884
6,952
91
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements B) Reconciliation of effective tax rate
Consolidated
Profit for the period
Income tax using the company’s domestic tax rate of 30%
Changes in income tax expense due to:
Effect of expenses that are not deductible in determining taxable profit
Impairment losses on goodwill that are not deductible
Effect of previously unrecognised and unused tax losses
Adjustments recognised in the current year in relation to the current tax of prior years
(effect of expenses that are not deductible in determining taxable profit)
Adjustments recognised in the current year in relation to the current tax of prior years
(effect of income that is exempt from taxation)*
Adjustments recognised in the current year in relation to the current tax of prior years
(effect of research and development concession)
Effect of different income tax rates for subsidiaries operating in a different tax jurisdiction
Total income tax expense
Effective tax rate
2014
$’000
51,188
15,356
503
1,440
(1,155)
225
(9,194)
(219)
(4)
6,952
13.58%
2013
$’000
104,763
31,429
161
-
2
(504)
-
(435)
4
30,656
29.26%
* An uncertain tax position was provided for in the prior year. The position has now been finalised and the provision reversed.
C) Current tax assets and liabilities
Current tax assets and liabilities
Income tax receivable
Income tax payable
The group is not part of a tax consolidated group.
Consolidated
2014
$’000
-
(6,992)
(6,992)
2013
$’000
3,773
-
3,773
92
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements D) Deferred tax balances
Share based payments
Costs of equity raising FY2011
Provisions
Work in progress (construction)
Inventories
PP&E
Other creditors and accruals
Other assets
Deferred tax assets / (liabilities)
10. EARNINGS PER SHARE
Assets
Liabilities
Net
2014
$’000
311
134
5,560
-
-
88
3,031
72
9,196
2013
$’000
313
267
5,202
-
-
171
3,169
17
9,138
2014
$’000
2013
$’000
-
-
-
(1,339)
(8,787)
(21,970)
(357)
(4,911)
-
-
-
(10,313)
(9,098)
(14,237)
-
(2,775)
2014
$’000
311
134
5,560
(1,339)
(8,787)
(21,882)
2,673
(4,839)
2013
$’000
313
267
5,202
(10,313)
(9,098)
(14,067)
3,169
(2,758)
(37,364)
(36,424)
(28,169)
(27,286)
The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per
share are as follows:
Profit for the year
Weighted average number of shares for the purposes of basic earnings per share
Basic earnings per share
Shares deemed to be issued for no consideration in respect of:
-Performance rights
2014
$’000
44,236
278,875
15.9 cents
per share
1,178
Weighted average number of shares used for the purposes of diluted earnings per share
280,053
Diluted earnings per share
11. CASH AND CASH EQUIVALENTS
Cash and cash equivalents
Cash and cash equivalents include cash on hand and in banks.
15.8 cents
per share
2014
$’000
155,474
155,474
Consolidated
2013
$’000
74,107
278,877
26.6 cents
per share
271
279,148
26.5 cents
per share
Consolidated
2013
$’000
130,994
130,994
93
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 12. RECEIVABLES
A) Trade and other receivables
Current receivables
Trade receivables
Other receivables
Retentions
Securities (property bonds)
Subtotal
Construction work in progress (Note 20)
Total trade & other receivables
Consolidated
2014
$’000
2013
$’000
45,999
1,591
3,882
-
51,472
149,069
200,541
67,096
434
4,324
80
71,934
133,118
205,052
The average credit period on sales is normally 30 to 60 days. Allowances for doubtful debts are recognised against trade receiv-
ables where review of carrying values determines amounts are non-collectable.
B) Movement in the allowance for doubtful debts:
Balance at the beginning of the year
Impairment losses recognised on receivables
Amounts written off during the year as uncollectible
Balance at end of year
C) Ageing of impaired trade receivables
60-90 days
90-120 days
120+ days
Balance at end of year
Consolidated
2014
$’000
-
52
(41)
11
2013
$’000
-
-
-
-
Consolidated
2014
$’000
2013
$’000
2
-
9
11
-
-
-
-
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. No further allowance is deemed to be required in
excess of the allowance for doubtful debts.
94
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements D) Age of receivables that are past due but not impaired
60-90 days
90-120 days
120+ days
Total
Consolidated
2014
$’000
649
682
1,579
2,910
2013
$’000
3,112
159
3,124
6,395
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.
13. INVENTORIES
Raw materials and consumables
Work in progress
Balance at 30 June
14. OTHER CURRENT ASSETS
Prepayments
Total
Consolidated
Consolidated
2013
$’000
42,953
5,594
48,547
2013
$’000
5,400
5,400
2014
$’000
34,139
2,551
36,690
2014
$’000
6,407
6,407
95
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 15. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment held by the consolidated entity include:
Land
Buildings
Leasehold
improvements
Plant and
equipment
Total
$’000
$’000
$’000
$’000
$’000
Cost
Balance at 30 June 2012
Effect of foreign currency
exchange differences
Additions
Disposals
Balance as at 30 June 2013
Effect of foreign currency
exchange differences
Additions
Reclassified to intangibles
Disposals
-
-
3,218
-
3,218
-
-
-
-
Balance as at 30 June 2014
3,218
Depreciation
Balance at 30 June 2012
Depreciation and amortisation
expense
Effect of foreign currency
exchange differences
Disposals
Balance as at 30 June 2013
Depreciation and amortisation
expense
Effect of foreign currency
exchange differences
Reclassified to intangibles
Disposals
Balance as at 30 June 2014
Carrying values
At 30 June 2013
At 30 June 2014
-
-
-
-
-
-
-
-
-
-
3,218
3,218
6,246
-
1,201
-
7,447
-
24
-
(957)
6,514
928
1,052
-
-
1,980
733
-
-
(605)
2,108
5,467
4,406
1,205
518,026
525,477
-
34
-
1,239
-
164
-
-
9
76,090
(36,771)
557,354
1
27,607
(6,183)
(13,151)
9
80,543
(36,771)
569,258
1
27,795
(6,183)
(14,108)
1,403
565,628
576,763
461
131
-
-
592
143
-
-
-
735
647
668
157,910
42,698
4
(21,621)
178,991
48,777
1
(207)
(8,400)
219,162
378,363
346,466
159,299
43,881
4
(21,621)
181,563
49,654
1
(207)
(9,005)
222,005
387,696
354,758
96
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 16. INTANGIBLES
Intangibles held by the consolidated entity include:
Cost
Balance at 30 June 2012
Additions
Disposals
Balance as at 30 June 2013
Additions
Reclassified from property, plant and equipment
Disposals
Balance as at 30 June 2014
Amortisation
Balance at 30 June 2012
Amortisation expense
Disposals
Balance as at 30 June 2013
Amortisation expense
Reclassified from property, plant and equipment
Disposals
Balance as at 30 June 2014
Carrying values
At 30 June 2013
At 30 June 2014
Software and System
Development
Licences
$’000
$’000
1,005
11,165
(51)
12,119
1,735
6,185
-
-
1,429
-
1,429
24
-
-
20,039
1,453
479
4,453
(11)
4,921
2,566
207
-
7,694
7,198
12,345
-
502
-
502
533
-
-
1,035
927
418
Total
$’000
1,005
12,594
(51)
13,548
1,759
6,185
-
21,492
479
4,955
(11)
5,423
3,099
207
-
8,729
8,126
12,763
97
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 17. CONSOLIDATED ENTITIES
Parent entity
Principle
Activities
Country of
incorporation
Ownership interest
2014 2013
NRW Holdings Limited
Holding Company
Australia
Wholly owned subsidiaries
NRW Pty Ltd as trustee for NRW Unit Trust
Civil and Mining
Actionblast Pty Ltd
NRW Mining Pty Ltd
Repairs and Fabrication
Investment Shell
NRW Intermediate Holdings Pty Ltd
Intermediary
ACN 107724274 Pty Ltd
NRW Guinea SARL
Indigenous Mining & Exploration
Company Pty Ltd
Plant and Tyre Sales
Contract Services
Investment Shell
NRW International Holdings Pty Ltd
Investment Shell
Action Drill and Blast Pty Ltd
(formerly NRW Drill & Blast Pty Ltd )
Drilling and Blasting
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 Republique of Guinea
(West Africa) and not part of the above deed of cross guarantee arrangements.
98
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements The consolidated statement of comprehensive income of the entities party to the deed of cross guarantees is as follows:
Statement of comprehensive income
Revenue
Finance income
Finance costs
Materials and consumables used
Employee benefits expense
Subcontractor costs
Depreciation and amortisation expenses
Impairment expense
Plant and equipment costs
Other expenses
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Exchange differences arising on translation of foreign operations
Total comprehensive income for the year
Consolidated
2014
$’000
2013
$’000
1,134,492
1,990
(16,258)
(209,494)
(386,040)
(210,423)
(52,728)
(4,800)
(195,128)
(10,321)
51,290
(6,989)
44,301
2014
$’000
-
44,301
1,374,333
786
(15,462)
(243,322)
(426,147)
(298,751)
(48,871)
-
(226,067)
(11,819)
104,680
(30,627)
74,053
Consolidated
2013
$’000
-
74,053
99
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements The consolidated statement of financial position of the entities party to the deed of cross guarantees is:
Consolidated
2014
$’000
2013
$’000
Statement of financial position
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Goodwill
Financial 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
100
155,438
200,541
36,690
-
6,395
399,064
354,741
12,763
19,617
3
387,124
786,188
170,960
49,613
7,066
17,178
244,817
139,867
1,541
28,170
169,578
414,395
371,793
156,432
2,987
212,374
371,793
131,029
205,052
48,547
3,733
5,388
393,750
392,544
3,236
24,417
3
420,199
813,949
193,390
52,379
-
19,910
265,679
167,191
1,201
27,286
195,677
461,356
352,593
156,432
2,991
193,170
352,593
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 18. UNINCORPORATED JOINT OPERATIONS
The group has the following significant interests in the following jointly controlled operations:
Name of Operation
Principal Activity
Group Interest
LJN Consortium
Asset Development Projects (camps rail etc).
NRW-NYFL Joint Venture
NRW-Eastern Guruma Joint Venture
Car Dumper and Bulk Earthworks at Cape
Lambert Port B Project.
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
NRW Njamal ICRG Joint Venture
Provision of Early Mining Services – Solomon
Phase 1 for Fortescue Metals Group Limited.
Bulk Earthworks and services for the Iron Bridge
(North Star Magnetite Project) for IB Operations
PL (Fortescue Metals Group Limited).
2014
33%
50%
50%
50%
50%
15%
50%
50%
2013
33%
50%
50%
50%
50%
15%
50%
-
There has been no change in the group’s ownership or voting interests for the reported years with the exception of the
recently created new joint operations being NRW Njamal ICRG JV.
The following amounts are included in the groups consolidated financial statements as a result of the proportionate
consolidation of the above interests in Joint Operations.
Financial information
Statement of financial performance
Income
Expenses
Statement of financial position
Current assets
Non-current assets
Current liabilities
Consolidated
2013
$’000
320,817
(308,950)
69,176
387
61,961
2014
$’000
178,912
(170,890)
43,815
-
37,339
101
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 19. GOODWILL
The carrying amount of goodwill is tested for impairment annually 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. The
AMS business, the acquisition of which gave rise to the goodwill, sustained a loss in FY14 giving rise to a potential impairment.
Internal reviews of the business valuation resulted in the recognition of a $4.8 million impairment. This impairment review
was based on the historic performance of the business through a number of market cycles. The key driver in the valuation
was historic cash flow. Estimated growth rates were assessed at 2.5% which were also included in the terminal valuation. The
weighted average cost of capital used in the valuation, on a pre-tax basis, including a risk margin was 18.0% (2013: 18.0%).
The assessment was supported by the current board approved business plan. Given the valuation methodology which
included a significant risk factor in the discount rate and the business plan support, the Directors concluded that any
reasonable changes in the key assumptions on which the recoverable amount was based would not cause the cash
generating unit to exceed the recoverable amount.
Cost
Balance at beginning offinancial year
Balance at end of financial year
Accumulated impairment
Balance at beginning offinancial year
Impairment losses recognised during the year
Balance at end of financial year
Carrying value
Balance at beginning offinancial year
Impairment losses recognised during the year
Balance at end of financial year
102
Consolidated
Consolidated
Consolidated
2013
$’000
27,127
27,127
2013
$’000
(2,710)
-
(2,710)
2013
$’000
24,417
-
24,417
2014
$’000
27,127
27,127
2014
$’000
(2,710)
(4,800)
(7,510)
2014
$’000
24,417
(4,800)
19,617
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 20. AMOUNTS DUE FROM (TO) CUSTOMERS UNDER CONSTRUCTION CONTRACTS
Contracts in progress
Construction costs incurred plus recognised profits less recognised losses to date
Less: progress billings
Recognised and included in the consolidated financial statements as amounts due:
- from customers under construction contracts
- to customers under construction contracts
21. PAYABLES
Current payables
Trade payables
Goods and service tax
Non trade payables
Accruals
Consolidated
2014
$’000
2013
$’000
1,261,655
1,112,586
149,069
163,770
(14,701)
149,069
Consolidated
2014
$’000
67,141
3,517
14,830
85,399
170,887
1,343,617
1,210,499
133,118
139,191
(6,073)
133,118
2013
$’000
115,671
936
14,940
65,392
196,939
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.
103
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 22. BORROWINGS
A) The group borrowings is comprised of:
Secured at Amortised Cost
Current
Finance lease liability
Insurance funding
Total Current
Non-Current
Finance lease liability
Total Non-Current
Group Total
Consolidated
2013
$’000
52,379
-
52,379
167,191
167,191
219,570
2014
$’000
48,451
1,162
49,613
139,867
139,867
189,480
B) Finance facilities:
Consolidated finance facilities as at 30 June 2014
Finance description
Face value
(limit)
Carrying amount
(utilised)
Unutilised amount
(utilised)
Asset Financing (1)
Working Capital
Guarantees and other funds
Other
(1) Terms range from 2 to 5 years
Consolidated finance facilities as at 30 June 2013
Finance description
Asset Financing (1)
Working Capital
Guarantees and other funds
Other
(1) Terms range from 2 to 5 years
104
$’000
260,400
35,000
63,500
1,162
$’000
189,477
-
45,662
1,162
$’000
70,923
35,000
17,838
-
Face value
(limit)
Carrying amount
(utilised)
Unutilised amount
(utilised)
$’000
315,982
35,000
63,500
-
$’000
219,570
-
32,284
-
$’000
96,412
35,000
31,216
-
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 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 (including goodwill) and unpaid/uncalled capital of the company excluding
security attaching to other asset financiers.
23. PROVISIONS
Current
Employee benefits
Warranty
Total current provisions
Non-current
Employee benefits
Warranty
Total non-current provisions
Total current and non-current provisions
Balance at 1 July 2013
Provisions made during the year
Reductions arising from payments
Reductions resulting from re-measurement
Balance at 30 June 2014
Short-term provisions
Long-term provisions
Total balance at 30 June 2014
Consolidated
2014
$’000
16,101
1,077
17,178
1,354
187
1,541
18,719
Consolidated
Warranty provision (i) Employee benefits (ii)
$’000
1,919
-
-
(655)
1,264
1,077
187
1,264
$’000
15,421
19,804
(17,770)
-
17,455
16,101
1,354
17,455
2013
$’000
14,220
1,919
16,139
1,201
-
1,201
17,340
Total
$’000
17,340
19,804
(17,770)
(655)
18,719
17,178
1,541
18,719
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 have been estimated at the 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.
105
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 24. CONTRIBUTED EQUITY
Fully paid ordinary shares
Ordinary shares
278,877,219 fully paid ordinary shares
(2013: 278,877,219)
Consolidated
2014
$’000
2013
$’000
156,432
156,432
All issued shares are fully paid and rank equally. Fully paid ordinary shares carry one vote per share and carry a right
to dividends.
Fully paid ordinary shares.
Balance at the beginning of the
financial year
Acquisition of treasury shares
Transfer to contributed equity
Share issue costs
Consolidated
2014
2013
# No. ‘000
# No. ‘000
2014
$’000
2013
$’000
278,877
278,888
156,432
156,456
(146)
146
-
(587)
576
-
(231)
231
-
(1,285)
1,261
-
Balance at the end of the period
278,877
278,877
156,432
156,432
106
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements
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 the directors remuneration report.
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
Shares issued for vested rights
Share based payments
Balance at the end of the financial year
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
Consolidated
Consolidated
Consolidated
2014
$’000
2,987
(215)
2,772
2014
$’000
2,992
-
(231)
226
2,987
2014
$’000
(214)
(1)
(215)
2,772
2013
$’000
2,991
(214)
2,777
2013
$’000
3,211
-
(1,261)
1,042
2,992
2013
$’000
(242)
28
(214)
2,777
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
2014
$’000
193,661
44,236
(25,099)
212,798
2013
$’000
169,753
74,107
(50,199)
193,661
107
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 27. DIVIDENDS
A) Dividends paid
Recognised amounts paid:
Fully paid ordinary shares,
fully franked
Final dividend to 30 June 2013:
Interim dividend to 31 December 2013:
Final dividend to 30 June 2012
Interim dividend to 31 December 2012
Unrecognised amounts:
Fully paid ordinary shares,
fully franked
Final dividend to 30 June 2013
2014
2013
Cents
per share
Total
$’000
Cents
per share
Total
$’000
5.00
4.00
13,944
11,155
25,099
10.00
8.00
27,888
22,311
50,199
5.00
13,944
Final dividend to 30 June 2014
5.00
13,944
On 18 August 2014, the Directors declared a fully franked final dividend of 5 cents per share to the holders of fully paid ordinary
shares in respect of the financial year ended 30 June 2014.
B) Franking account
Franking account balance at 1 July
Australian income tax paid/(refund)(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 /(refund) of income tax payable as at reporting date
Franking credits that will arise from the payment of dividends 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.
108
Consolidated
2013
$’000
40,692
46,174
(11,952)
(9,562)
65,352
(3,733)
(5,976)
55,643
2014
$’000
65,352
(4,696)
(5,976)
(4,781)
49,899
7,066
(5,976)
50,989
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 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 and amortisation
Impairment
Share based payment expense
Operating profit before changes in working capital and provisions
Change in trade and other receivables
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
29. FINANCIAL INSTRUMENTS
Financial risk management
2014
$’000
44,236
(221)
(1)
52,753
4,800
226
101,793
4,511
11,857
(1,007)
(26,052)
1,379
10,764
884
104,129
2013
$’000
74,107
2,811
29
48,885
-
1,042
126,873
75,386
(15,173)
(1,253)
(53,479)
(12,262)
(26,686)
11,129
104,535
The Board has ultimate responsibility to manage the group’s risk management policy. 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 to allow new growth. In addition, the going concern basis is reviewed throughout the year,
ensuring adequate working capital is available.
Primarily interest bearing debt, cash, trade receivables and payables comprise the financial instruments in the group. The
group has minimal foreign currency risks, although remnant operations exist in Guinea West Africa, including some assets that
are strategically held there for new project development and bids. No cash is held other than to meet the day to day running
costs of these remnant operations. This is constantly reviewed and reformulated where relevant to take into account changing
markets and expected demand for these services that will utilise this equipment.
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. During the year
there has not been any material change to project needs or funding arrangements. The cash position is reviewed regularly
and ensures the group will be able to pay its debts as and when they fall due.
109
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 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 (Note 22)
Cash (Note 11)
Net Debt
Equity
Net Debt to Equity Ratio
Consolidated
2014
$’000
189,480
(155,474)
34,006
372,002
9%
2013
$’000
219,570
(130,994)
88,576
352,870
25%
Fair value of financial instruments
The carrying values of financial assets and financial liabilities recorded in the financial statement approximate their fair values.
Interest rate risk management
The debt clubbing arrangement with its main banker the ANZ Banking Group Ltd continues for the group and remains largely
unchanged from prior year. Under this arrangement a progressive drawdown is used to support the acquisition of new assets.
Subsequently repayments are grouped into a tranche where a hire purchase schedule is set up at a fixed rate and set residual
payment. Repayments are generally made quarterly (some historical borrowings remain as monthly repayments) and the
progressive draw incurs interest only. Furthermore, the residual in most cases is set at 25% and term of the borrowing tends to
be set for five years or as deemed relevant to that plant utilisation and life.
The bank requires covenants and ratio calculations to be met. The covenants are calculated quarterly. The Board continues to
review its risk associated with any covenants and borrowing conditions on a regular basis.
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.
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. If the group were to
consider a swing of 5% in the interest rate or cost of funds, there would not be a material impact to the cost of capital.
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 suitable credit
control program, continuously monitoring forecast and actual cash flows, and considering the level of capital commitment
commensurate with project demand and other market forces.
The estimated contractual maturity for its financial liabilities and financial assets are set out in the following tables. The tables
show the effective interest rates and average interest rates as relevant to each class.
110
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements A) Consolidated interest and liquidity analysis 2014
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
Trade and other receivables
Financial liabilities
Asset financing
Trade and other payables
1.90%
-
6.79%
-
155,474
200,541
356,015
216,649
170,887
387,536
155,474
101,319
256,793
1,823
96,667
98,490
-
99,222
99,222
59,536
74,220
-
-
-
155,290
-
133,756
155,290
-
-
-
-
-
-
B) Consolidated interest and liquidity analysis 2013
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
Trade and other receivables
Financial liabilities
Asset financing
Trade and other payables
1.50%
-
7.12%
-
130,994
205,052
336,046
256,140
196,939
453,079
130,994
65,195
196,189
3,946
154,412
158,358
-
139,857
139,857
48,433
42,527
90,960
-
-
-
203,761
-
203,761
-
-
-
-
-
-
Foreign exchange and currency exposure
The group reports its functional currency in Australian dollars.
The Board considers that movements in foreign currency will have virtually no impact on operating profits, given that most
projects are agreed and billed in Australian dollars and cash holdings in other currency other than AUD is negligible. Should
foreign operations expand then suitable risk measures would be put in place accordingly. 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 transactions dealing in foreign currency are dealt with at spot.
The cash balances held in Guinea at 30 June 2014 (at spot) was $35,521 AUD (2013: $35,198 AUD).
Market movements are considered a low risk, given the majority of the cash is utilised quickly and intentionally not left idle for
long periods.
111
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements
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
group’s maximum exposure to credit risk without taking into account the value of any collateral.
The total amount of guarantees at 30 June 2014 stands at $45.7 million (2013: $32.3 million) and bonds held stand at $208.0
million (2013: $100.6 million).
30. 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 five years.
Interest rates underlying all obligations under finance leases are fixed at respective contract dates ranging from 5.56% to
11.08% (2013: 7.0% to 10.25%).
Minimum
future lease payments
Present value of
minimum future lease payments
No later than 1 year
2014
$’000
61,359
Later than 1 year and not later than 5 years
155,290
Later than five years
Minimum future lease payments(1)
Less future finance charges
Present value of minimum lease
payments
-
216,649
(27,169)
189,480
2013
$’000
61,658
194,482
-
256,140
(36,571)
219,570
2014
$’000
49,613
139,867
-
189,480
-
189,480
2013
$’000
52,379
167,191
-
219,570
-
219,570
(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
112
Consolidated
2014
$’000
49,613
139,867
189,480
2013
$’000
52,379
167,191
219,570
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 31. OPERATING LEASES
Operating leases as lessee
Non-cancellable operating lease rentals (excluding property rentals - see below) are payable are as follows:
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
Consolidated
Consolidated
2013
$’000
8,278
101
-
8,379
2013
$’000
3,037
11,462
867
15,366
2014
$’000
-
-
-
-
2014
$’000
3,175
9,156
-
12,331
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.
113
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 32. CAPITAL AND OTHER COMMITMENTS
Capital expenditure commitments – Plant and equipment and Other
Within one year
Between one and five years
Later than five years
33. CONTINGENCIES
Bank guarantees
Insurance bonds
Balance at the end of the financial year
Consolidated
2013
$’000
3,980
23,083
-
27,063
Consolidated
2013
$’000
32,284
100,592
132,876
2014
$’000
1,386
-
-
1,386
2014
$’000
45,663
207,984
253,647
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. It is considered that the outcome of these claims will not
have a materially adverse impact on the financial position of the consolidated entity.
114
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 34. 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:
Key management person
and/or related party.
(i) Other related party – Expense
Transaction Booked in Group
Transaction Value
2014
$
2013
$
Mr W Fair – Northwest Quarries Pty Ltd
Purchase of of construction materials.
4,355,253
7,096,922
(ii) Inter Group Transactions
NRW Pty Ltd – Purchases from Action Mining Services
Repairs and maintenance, plant and
module purchases and labour hire.
8,935,604
10,644,444
NRW Pty Ltd – Sales to Action Mining Services
Back charges for labour and miscellaneous.
22,869
-
NRW Pty Ltd – Revenue from NRW Holdings
Transfer of grants and government
incentives or payments received
NRW Pty Ltd - Sales to NRW-NYFL Joint Venture
Subcontractor Services
NRW Pty Ltd - Sales to NRW Eastern Guruma Joint Venture
Subcontractor Services
NRW Pty Ltd – Sales to OTOC Joint Venture
Subcontractor Services
NRW Pty Ltd – Sales to The Mid West Rail Joint Venture
Subcontractor Services
NRW Pty Ltd – Sales to City East Alliance
Subcontractor Services
-
316,227
49,867,452
108,059,714
280,881,517
339,877,555
-
-
-
480,691
5,032,084
623,244
NRW Pty Ltd – Sales to NRW- Eastern
Guruma-NYFL Joint Venture
Subcontractor Services
801,920
73,755,163
NRW Pty Ltd – Sales to Action Drill & Blast
Back charges for plant, labour and other re project works
1,053,661
12,811
NRW Pty Ltd - Purchases from NRW Guinea SARL
Management Fee and cost back charges
119,186
1,212,930
Action Drill & Blast – Sales to NRW-Eastern
Guruma-NYFL Joint Venture
Subcontractor Services
-
12,598,914
NRW Pty Ltd – Purchases from Action Drill & Blast
Drill & Blast Services and back charges
27,279,470
72,083,292
Action Drill & Blast – Sales to NRW-Eastern
Guruma Joint Venture
Action Drill & Blast – Purchases from
Action Mining Services
NRW Pty Ltd – interest charged from
ACN 107 724 274
ACN 107 724 274 – interest charged
from Action Mining Services
Drill & Blast Services and back charges
3,659,143
13,044,018
Repairs and maintenance, plant and module
purchases and labour hire.
380,242
546,373
Interest levied on intercompany loan balances
4,585,809
Interest levied on intercompany loan balances
544,310
-
-
115
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements
B) Related party outstanding balances
Amounts receivable from or payable to related parties at reporting date were as follows:
Account Receivable Balances
Other related parties
Total related party assets
Accounts Payable Balances
Other related parties
Total related party payables
Consolidated
2014
$’000
-
-
9
9
2013
$’000
-
-
2,104
2,104
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.
The key management personnel compensation included in ‘Employee benefits expense’ (see Note 8(a)) is as follows:
Short term employee benefits
Other long term benefits
Post employment benefits
Share based payments
Total
Consolidated
2014
4,363,654
28,250
103,790
75,903
2013
3,771,177
36,354
124,849
890,268
4,571,597
4,822,648
Detailed information on remuneration of key management personnel is set out in the Remuneration Report in the Directors Report.
35. EVENTS AFTER THE REPORTING PERIOD
Other than the events noted 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.
116
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements 36. AUDITOR’S REMUNERATION
Audit services
Auditors of thec ompany
Deloitte Touche Tohmatsu
Other Services
Deloitte Touche Tohmatsu
- Coal levy audits
- Procurement strategy
Total
Consolidated
2014
$
2013
$
310,000
306,525
13,174
513,798
23,344
230,000
836,972
559,869
37. PARENT ENTITY INFORMATION
As at, and throughout, the financial year ended 30 June 2014 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
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
Parent
2013
$’000
220,782
34,745
255,527
230
-
230
156,456
96,149
2,692
255,297
2014
$’000
247,353
34,089
281,442
8,424
(595)
7,829
156,456
114,469
2,688
273,613
117
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements (B) Financial performance
Profit for the year
Total comprehensive income
Parent
201t4
$’000
43,421
43,421
2013
$’000
31,328
31,328
(C) Guarantees entered into by the parent entity in relation to the debts of its subsidiaries:
Parent
2014
$’000
189,480
2013
$’000
219,570
Debt borrowings
NRW Holdings Limited has entered into a Deed of Cross Guarantee with:
• NRW Pty Ltd ATF NRW Unit Trust
• Action Drill & Blast Pty Ltd
• Actionblast Pty Ltd
• A.C.N. 107724274 Pty Ltd
• NRW Intermediate Holdings Pty Ltd
Historical unit trust distributions from NRW Unit Trust (subsidiary) to NRW Holdings Limited (parent) are compliant with the
trust deed. Historical unit trust distributions have not been settled by way of cash as at 30 June 2013, the balances owing are
recorded in the intercompany receivable and payable of the parent and subsidiary respectively.
Profit for the year
Other comprehensive income (expense) for the year, net of tax
Total comprehensive income
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Contributed equity
Reserves
Retained earnings
Total equity
118
2013 OLD
32,631
-
32,631
2013 OLD
222,085
34,745
256,830
230
-
230
156,456
2,692
97,452
256,600
Adj.
(1,303)
-
(1,303)
Adj.
(1,303)
-
(1,303)
-
-
-
-
-
(1,303)
(1,303)
2013 NEW
31,328
-
31,328
2013 NEW
220,782
34,745
255,527
230
-
230
156,456
2,692
96,149
255,297
FOR THE YEAR ENDED 30 JUNE 2014NOTES TO THE FINANCIAL STATEMENTSNRW ANNUAL REPORT 2014Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2014
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 4th August 2014. NRW’s contributed equity comprises
278,888,011 fully paid ordinary shares.
Distribution of shareholdings:
Range
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
Fully paid
ordinary shares
197,061,131
58,591,789
13,574,477
8,882,769
777,845
278,888,011
74,668
%
70.66
21.01
4.87
3.19
0.28
100.00
0.03
No of Holders
135
2,134
1,667
2,837
1,502
8,275
497
%
1.63
25.79
20.15
34.28
18.15
100.00
6.01
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
CITICORP NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
ZERO NOMINEES PTY LTD
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
JULIAN ALEXANDER PEMBERTONTHE J P TRUST
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD
BRISPOT NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
QIC LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 3
MR STEVEN SCHALIT & MS CANDICE SCHALIT
PRUDENTIAL NOMINEES PTY LTD
NATIONAL EXCHANGE PTY LTD
MR PETER DE SAN MIGUEL
ABN AMRO CLEARING SYDNEYNOMINEES PTY LTD
50,577,150
48,290,609
19,170,374
12,814,643
7,095,593
5,338,688
3,772,328
2,656,102
2,540,014
2,505,064
2,084,788
1,730,000
1,662,885
1,541,366
1,324,346
1,035,498
1,020,000
1,000,000
843,367
834,286
18.14
17.32
6.87
4.5
2.54
1.91
1.35
0.95
0.91
0.90
0.75
0.62
0.60
0.55
0.47
0.37
0.37
0.36
0.30
0.30
119
NRW ANNUAL REPORT 2014 FOR THE YEAR ENDED 30 JUNE 2014
SHAREHOLDER INFORMATION
Substantial shareholders
As at the date of this report, the names of substantial holders in the company who have notified the company in accordance
with Section 671B of the Corporations Act 2001 are set out below:
Name
Celeste Funds Mgt
Dimensional Fund Advisors
Voting rights
Shares
20,985,408
14,365,093
% Interest
7.5
5.2
Every shareholder present in person or represented by a proxy or other representative, shall have one vote for each share
held by them.
120
NRW ANNUAL REPORT 2014 FOR THE YEAR ENDED 30 JUNE 2014
INDEPENDENT AUDITOR’S REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Deloitte Touche Tohmatsu
Woodside Plaza
ABN 74 490 121 060
Level 14
240 St Georges Terrace
Woodside Plaza
Perth WA 6000
Level 14
GPO Box A46
240 St Georges Terrace
Perth WA 6837 Australia
Perth WA 6000
GPO Box A46
Tel: +61 8 9365 7000
Perth WA 6837 Australia
Fax: +61 (0) 9365 7001
www.deloitte.com.au
Tel: +61 8 9365 7000
Fax: +61 (0) 9365 7001
www.deloitte.com.au
Independent Auditor’s Report
to the members of NRW Holdings Limited
Independent Auditor’s Report
to the members of NRW Holdings Limited
Report on the Financial Report
We have audited the accompanying financial report of NRW Holdings Limited, which comprises the
Report on the Financial Report
statement of financial position as at 30 June 2014, the statement of profit or loss and other comprehensive
income, the statement of cash flows and the statement of changes in equity for the year ended on that date,
We have audited the accompanying financial report of NRW Holdings Limited, which comprises the
notes comprising a summary of significant accounting policies and other explanatory information, and the
statement of financial position as at 30 June 2014, the statement of profit or loss and other comprehensive
directors’ declaration of the consolidated entity, comprising the company and the entities it controlled at the
income, the statement of cash flows and the statement of changes in equity for the year ended on that date,
year’s end or from time to time during the financial year as set out on pages 38 to 97.
notes comprising a summary of significant accounting policies and other explanatory information, and the
67 to 118.
directors’ declaration of the consolidated entity, comprising the company and the entities it controlled at the
Directors’ Responsibility for the Financial Report
year’s end or from time to time during the financial year as set out on pages 38 to 97.
The directors of the company are responsible for the preparation of the financial report that gives a true and
Directors’ Responsibility for the Financial Report
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
The directors of the company are responsible for the preparation of the financial report that gives a true and
gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 2,
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
internal control as the directors determine is necessary to enable the preparation of the financial report that
Statements, that the consolidated financial statements comply with International Financial Reporting
gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 2,
Standards.
the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the consolidated financial statements comply with International Financial Reporting
Auditor’s Responsibility
Standards.
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
Auditor’s Responsibility
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
reasonable assurance whether the financial report is free from material misstatement.
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
reasonable assurance whether the financial report is free from material misstatement.
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of
the risks of material misstatement of the financial report, whether due to fraud or error. In making those
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
risk assessments, the auditor considers internal control, relevant to the company’s preparation of the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of
financial report that gives a true and fair view, in order to design audit procedures that are appropriate in
the risks of material misstatement of the financial report, whether due to fraud or error. In making those
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s
risk assessments, the auditor considers internal control, relevant to the company’s preparation of the
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
financial report that gives a true and fair view, in order to design audit procedures that are appropriate in
reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s
of the financial report.
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
of the financial report.
audit opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
121
NRW ANNUAL REPORT 2014
FOR THE YEAR ENDED 30 JUNE 2014
INDEPENDENT AUDITOR’S REPORT
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001. We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of NRW Holdings Limited, would be in the same terms if given to the directors
as at the time of this auditor’s report.
Opinion
In our opinion:
(a) the financial report of NRW Holdings Limited is in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of
its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the consolidated financial statements also comply with International Financial Reporting Standards as
disclosed in Note 2.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 13 to 36 of the directors’ report for the year
ended 30 June 2014. The directors of the company are responsible for the preparation and presentation of
the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
46 to 59
Opinion
In our opinion the Remuneration Report of NRW Holdings Limited for the year ended 30 June 2014,
complies with section 300A of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
Darren Hall
Partner
Chartered Accountants
Perth, 19 August 2014
122
NRW ANNUAL REPORT 2014
FOR THE YEAR ENDED 30 JUNE 2014
APPENDIX 4E
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Change up / (down)
Year ended 30 June 2014
Year ended 30 June 2013
$’000
1,134,492
44,236
44,235
9 April 2014
12 March 2014
4.0
4.0
$’000
1,374,403
74,107
74,135
28 March 2013
4 March 2013
8.0
8.0
29 October 2014
10 October 2014
29 October 2013
11 October 2013
5.0
5.0
1.22
5.0
5.0
1.15
%
(17.4)
(40.31)
(40.33)
Revenues from ordinary activities
Profit from ordinary activities after tax attributable to
members
Total Comprehensive Income
Interim Dividend
Date dividend is payable
Record date to determine entitlements to dividend
Interim dividend payable per security (cents)
Franked amount of dividend per security (cents)
Final Dividend
Date dividend is payable
Record date to determine entitlements to dividend
Final dividend payable per security (cents)
Franked amount of dividend per security (cents)
Ratios and Other Measures
Net tangible asset backing per ordinary security
Commentary on the Results for the Year
A commentary for the results for the year is contained
in the statutory financial report dated 19 August 2014.
Status of Accounts
This statutory financial report is based on audited accounts
NRW HOLDINGS LIMITED - ACN 118 300 217
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NRW Holdings Limited
181 Great Eastern Highway Belmont WA 6104 Australia
T: +61 8 9332 4200
F: +61 8 9232 4232
E: info@nrw.com.au
nrw.com.au