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ANNUAL
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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
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
3 NRW ANNUAL REPORT 2015 | Contents
ANNUAL REPORT
CONTENTS
Chairman’s Letter
Chief Executive Officer Year in Review
CFO Report
NRW Civil
NRW Mining
Action Drill & Blast
AES Equipment Solutions
Human Resources
Health, Safety and Environment
Financial Report
05
08
12
13
16
17
18
19
20
22
NRW ANNUAL REPORT 2015 | Contents 4
CHAIRMAN’S LETTER
The 2015 Financial Year was a year of profound challenges for NRW, both in terms of
operations and consequent financial performance.
I am disappointed to report that NRW incurred a loss of $229.8 million on revenues
of $775.9 million for the year. It should be noted however that the loss was primarily
driven by the impairment of assets and write off of goodwill across the business.
The other significant component of the reported loss relates to the Roy Hill Rail
contract. As has been widely reported in the media, NRW has, unfortunately had to
resort to legal action against the head contractor Samsung C & T, in order to recover
monies owed.
This outcome is particularly regrettable given that the project, valued at over
$600 million was completed and delivered to the client in line with the contract.
Despite these challenges and a continuing softening of market conditions in the
mining services sector the Board remains committed to restoring positive financial
performance from the company in order to deliver value to its shareholders.
It will be a hard road without doubt, however the company has made the difficult
decisions in terms of personnel and operating cost reductions in order to reposition
and respond to the prevailing conditions.
With the support of management, staff and shareholders I remain confident of an
improved performance in the coming year.
DR IAN BURSTON
CHAIRMAN
NRW Holdings Limited
5 NRW ANNUAL REPORT 2015 | Chairman’s Letter
NRW ANNUAL REPORT 2015 | Chairman’s Letter 6
7 NRW ANNUAL REPORT 2015 | CEO: Year in Review
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 2015.
OVERVIEW
• Revenue of $775.9M lower than last
year ($1,134.5M) – due to down cycle of
Resources sector.
• An impairment charge of $157.3M –
higher than reported at the half year
recognising further deterioration of
equipment values in the second half of
the financial year.
• Roy Hill Rail (RHR) Project dispute
ongoing.
• Year-end cash balance impacted by
Samsung C&T (Samsung) dispute and
debt repayments from $155.5M to
$34.6M.
• Significant reduction in Debt of $47.3M
– $142.2M as at June 15 compared to
$189.5M at June 14.
• Net loss reported of $229.8M.
• Order Book of $663M at August 15,
which includes the recent award from Rio
Tinto for Nammuldi and the Middlemount
contract extension to 2020 secured
earlier in the year.
NRW reported revenues of $775.9 million,
lower than last year ($1,134.5 million),
reflecting lower client spend in the mining
services sector and due to projects
completed in the first half of FY14. The result
is a net loss in the year of $229.8 million.
The loss is driven by an impairment of
assets, ($157.3 million) reflecting significant
reductions in current asset market values, a
write-off of goodwill, and a loss on the Roy
Hill Rail Project for Samsung. The loss in
the year compares to net earnings of $44.2
million last year.
The Roy Hill Rail Project loss recognises
that it is unlikely that an outcome can be
negotiated which supports a position where
the company can at least recover costs
incurred on the Contract. Consequently, the
full year accounts assume agreement of a
final Contract value below costs incurred on
the Project. It is worth noting that the Roy
Hill Rail Project was completed within an
extremely challenging timeframe and was
delivered to the required quality standard.
Simultaneously, NRW continued to work
on the Roy Hill Concrete Package for the
same customer and to date, has delivered
a technically and commercially successful
Project to time and cost.
As a consequence of reduced project
opportunities and a highly competitive bid
environment, the company has taken action
to reduce costs to reflect lower activity
levels. Employee numbers have reduced
from 3,092 to 846 as at 30 June 15. The
movement includes blue collar workforce
reductions of 2,022 and staff reductions of
224 people over projects and
business support.
Activity in the year on Civil projects included
the completion of 330km of rail formation
for the Roy Hill Rail Project, continuation of
work on the Roy Hill Concrete Package and
further development work for Rio Tinto on
the Nammuldi Iron Ore site. The business
also secured the Ravensthorpe Heavy
haulage Route Project for Main Roads WA.
The Mining Division maintained relationships
with key clients in the 2015 financial
year. The Division continued to provide a
range of mining services to the North Star
Magnetite Project for Fortescue Metals
Group; completed box cut development
work at the Nova Nickel Project for Sirius
Resources; and supported operations at the
Middlemount Coal Mine for
Middlemount Coal.
NRW’s Middlemount Coal Project is a long
term contract to supply and maintain dry hire
equipment. Earlier this year we were pleased
to announce an extension of that contract
to 2020. The importance of this extension is
the improved certainty it provides to service
current asset financing – Around $79.7
million of the company’s debt relates to
equipment deployed on this Project.
NRW ANNUAL REPORT 2015 | CEO: Year in Review 8
CHIEF EXECUTIVE OFFICER
YEAR IN REVIEW
The new Contract extension is valued at $330
million and provides the basis to fully fund
NRW’s current principle, interest and refinancing
costs on that debt.
Action Drill & Blast’s (ADB) activity levels across
the sector were lower in FY15 resulting in part
from some clients putting their sites into care
and maintenance regimes. Revenues were
lower at $85.9 million compared to $110.0
million in June 14. Earnings of $1.0 million were
down on the previous year ($7.0 million) as a
consequence of lower Revenues and lower
equipment utilisation. The business secured a
contract extension at the Greenbushes Project
for three years and rebid and retained a two year
extension for Fortescue’s Cloudbreak mine site.
New work also included the provision of services
at: Fortescue’s Solomon Project; three coal
projects for Thiess; Nova Nickel for NRW; and St
Ives for Gold Fields.
Revenues in AES Equipment Solutions (AES)
reduced to $15.3 million compared to $28.0
million in the prior comparative period, reflecting
a marked downturn in market activity particularly
for service vehicles and water trucks. The activity
reduction in this part of the business accounted
in full for the pre impairment loss in the year of
$2.0 million – which compared to a loss of $0.8
million in FY14. A number of cost reduction
measures and productivity improvements were
implemented in the year to mitigate the lower
activity levels. The segment result includes
an impairment expense of $21.3 million and
provision for onerous lease of $0.8 million
reflecting the downturn in the market in the
last quarter of the 2014 calendar year and the
resulting impact on expected levels of revenue in
future years.
NRW aims to recruit and retain a skilled
workforce and endorses a safe environment free
from harassment and unlawful discrimination.
NRW’s current workforce levels have decreased
in the year to 846 (June 2015) reflecting NRW’s
strategy to right size the business to align with
work in hand. Safety is paramount across all
NRW Projects and NRW’s Lost Time Injury
Frequency Rate (LTIFR) remained steady
throughout FY15 increasing marginally from 0.17
(30 June 2014) to 0.19.
NRW is focused on improving the sustainable
development of local communities and traditional
owners of the areas in which we work. The
company 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.
Over the past 12 months, the business has
taken further actions to reduce its cost base to
match expected revenue. Headcount numbers
have been reduced by 2,246. The management
team has been restructured to remove layers
in the organisation, which are no longer
appropriate given the lower activity levels. As the
cost base is reset, we have achieved overhead
reductions in excess of 35% whilst ensuring we
still retain the necessary resources to address
major opportunities as they arise.
OUTLOOK
NRW remains committed to working closely with
its clients and is focused on lowering operating
costs and delivering improved productivity.
However, whilst this low commodity price
environment persists, spending on expansions
and new projects in the resources sector is likely
to remain subdued.
Despite these headwinds and the competitive
landscape, recent wins such as the two-year
Nammuldi Mining contract and the three-year
extension to the Middlemount contract to 2020
have provided reason for optimism as we enter
the 2016 financial year.
As at August 2015, NRW’s forward order
book totals $663 million, of which $250 million
is secured revenue for delivery during FY16.
Encouragingly tender activity is high with the
pipeline currently assessed at $2.5 billion.
NRW is also pleased to have been selected
as the only West Australian-based contractor
in consortia with global infrastructure provider
Salini Impregilo as one of three shortlisted
tenderers for the Forrestfield Airport Link Project.
This government-backed Infrastructure project,
together with a number of WA road programs,
is expected to commence during the 2016
calendar year and should provide some balance
to the downturn in the resources sector.
9 NRW ANNUAL REPORT 2015 | CEO: Year in Review
AS AT AUGUST 2015, NRW’S FORWARD ORDER BOOK TOTALS $663
MILLION, OF WHICH $250 MILLION IS SECURED REVENUE FOR
DELIVERY DURING FY16. ENCOURAGINGLY TENDER ACTIVITY IS
HIGH WITH THE PIPELINE CURRENTLY ASSESSED AT $2.5 BILLION.
NRW ANNUAL REPORT 2015 | CEO: Year in Review 10
11 NRW ANNUAL REPORT 2015 | CFO Report
CFO
REPORT
NRW reported a net loss in the year of $229.8 million as a result of an
impairment of assets ($157.3 million) and a loss on the Roy Hill Rail
Project for Samsung C&T (Samsung). The loss in the year compares to net
earnings of $44.2 million last year.
The Roy Hill Rail loss is based on the project completion costs and
an assessment of the likely final contract price, including an agreed
reassessment of the value of the actual contract quantities, an assessment
of variations based on claims determined in favour of NRW through the
Construction Contracts Act 2004 (WA), less allowances for reasonable
back charges due under the contract to Samsung. The impairment charge
includes goodwill write offs in the AES business and reductions to carrying
values of plant due to current market rates and expected lower resale prices
particularly on high hour, low utilisation and non-core fleet. In addition to the
impairment the loss, included is a provision for onerous leases of
$3.4 million.
As a consequence of the loss, net assets reduced to $128.4 million in the
year whilst cash balances reduced from $155.5 million to $34.6 million.
Despite this movement NRW has continued to service all debt servicing
obligations, resulting in a debt reduction from $189.5 million to $142.3
million at 30 June 15. Net debt increased to $107.6 million (FY14
$34.0 million).
The company has worked closely with its banking group throughout the
year, recognising that the Roy Hill Rail Contract would impact liquidity.
The close working relationship with the company’s finance providers
resulted in an agreement of revised covenants, with which NRW was in full
compliance at 30 June 15. However, the agreement was not concluded
until after the balance sheet date and consequently, all debt has been
classified in the balance sheet as current. NRW expects to remain in
compliance with the revised covenants throughout the 2016 financial year.
NRW’s auditors have included in their report, reference to comments in
the ‘Notes to the Accounts’, in particular on the importance of resolving
the current dispute with Samsung on the Roy Hill Rail Project. The Notes
go on to explain the importance of the incremental cash anticipated to
be generated from that settlement to the overall liquidity of the company.
Our internal forecasts indicate there is sufficient capacity, given the
business plans to meet all debt repayments in FY16, as scheduled up to
and including March 2016 – without the need for any receipts from any
settlement with Samsung. In the interim period and with the continued
support from our banking group we will continue to review additional
sources of funds and or to defer debt repayments due in June 2016 and
beyond should a settlement with Samsung not be reached by that date.
Capital expenditure mostly related to a 20% share purchase in NewGen
Drilling Pty Ltd in partnership with CalEnergy. The business provides
services to the region’s on-shore tight gas and shale basins and
component replacements on the major equipment fleet.
Recognition of a loss in the year resulted in a tax benefit of $60.5 million
representing an effective tax rate of 21%. In addition, further tax losses of
$19.2 million were not recognised pending recoverability assessments for
future years. A net deferred tax asset of $22.8 million has been recognised
based on an initial assessment of future taxable profits.
NRW ANNUAL REPORT 2015 | CFO Report 12
NRW CIVIL
OVERVIEW
NRW’s Civil Division continued to remain busy throughout the 2015 financial
year and successfully completed a number of projects in a challenging
market, including the Nammuldi Below Water Table Project, Roy Hill Rail and
Concrete Projects.
The Division continued to build upon its long term relationships with key major
resource clients including Rio Tinto, Fortescue, and Roy Hill. In addition to
its long-term involvement in the resource sector, the Civil Division continued
its diversification into urban infrastructure developments with the award of
Ravensthorpe Heavy Haul Route for Main Roads WA and the shortlisting of the
Salini Impregilo-NRW Joint Venture (SI-NRW JV) for the Forrestfield Airport
Link Project.
During the period, NRW improved its Main Roads WA prequalification rating
for both road and bridge construction. This improved rating will open further
opportunities for tendering government infrastructure projects in both Western
Australia and Queensland.
OUTLOOK
While the volume of resource projects has reduced, the sector remains an
important area of work for NRW going forward. Along with our traditional clients
of Rio Tinto, Fortescue, BHP Iron Ore and Roy Hill, we continue to assist a range
of new clients seeking to develop new projects.
NRW is a leader in resource based civil construction and has the relevant
experience, plant, equipment and people to carry out civil works on both resource
and government infrastructure projects. As NRW continue to diversify, the
company will focus on its involvement in urban infrastructure projects and look
forward to building upon its Joint Venture with Italian contractor, Salini Impregilo.
Through the SI-NRW JV, NRW has become the only Western Australian based
contractor to be in consortia with a global infrastructure provider, for the Forrestfield
Airport Link Project. The Joint Venture is one of three selected to tender the Project
which is expected to commence in 2016.
OPERATIONS
Notwithstanding the difficult commercial issues on the Roy Hill Rail Project, our
projects continue to be completed to client expectations. In FY15, NRW carried out
a number of major contracts and contract extensions including:
• Ravensthorpe Heavy Haul Route – Main Roads WA
• Roy Hill Rail Project – Samsung C&T
• Roy Hill Concrete – Samsung C&T
• Herb Elliot Road – Fortescue Metals Group
• Utah Road Widening – Fortescue Metals Group
• Cape Lambert Minor Civil Works – Rio Tinto
• Mesa J Rail Backtrack – Rio Tinto
• Nammuldi Below Water Table Project – Rio Tinto
13 NRW ANNUAL REPORT 2015 | NRW Civil
NRW ANNUAL REPORT 2015 | NRW Civil 14
15 NRW ANNUAL REPORT 2015 | NRW Mining
NRW MINING
OVERVIEW
The Mining Division provides mining services, including a focus on
mine development and contract mining, waste stripping and ore
haulage. The Division is supported by a fully mobile work force and
an extensive schedule of plant and equipment.
The Mining business notably secured a three year extension to the
Middlemount Contract to provide mining fleet and maintenance
services. The extension to 2020 has an estimated value of $330
million and the project is progressing well with targets being met.
In a Joint Venture between NRW and Njamal ICRG JV Pty Ltd,
work continued at the North Star Mine for Ironbridge Operations,
with mine development and establishment works nominally
completed early in 2015. Following the construction phase, NRW
focussed on the mining, stockpile management and plant feed,
as the plant ramps up to full production.
Cost pressures were significant across the industry in FY15,
as clients sought value and tendering for new work was
competitive. Many new projects were deferred or cancelled due
to restriction of mine development capital expenditure.
OUTLOOK
In July 2015, NRW’s Mining Division announced a new mining
contract for Rio Tinto at the Nammuldi Incremental Tonnes
Project. This two year contract will utilise a significant amount
of NRW plant and equipment and generate revenue of over
$140 million.
While market conditions remain challenging, there is significant
tender activity for projects expected to commence in 2016.
OPERATIONS
During the 2015 financial year, NRW carried out a number of
major contracts and contract extensions including:
• Middlemount Coal Project – Middlemount Coal
• North Star Mine Development – Ironbridge Operations
• Nova Box Cut Development Works – Sirius Resources
NRW ANNUAL REPORT 2015 | NRW Mining 16
OVERVIEW
Action Drill & Blast (ADB) provides integrated drilling and blasting
services to mining and civil projects across Australia.
In the 2015 financial year, the business was impacted by cost
constraints in the resource sector resulting in lower activity levels
in the year. In response, the business implemented a leaner
operating model whilst maintaining a strong client focus.
In FY15 Action Drill & Blast:
• secured its first gold project, providing drilling services for
Goldfields at St Ives;
• was awarded a new three year contract from Talison Lithium
for drilling and blasting services at their Greenbushes
lithium mine;
• secured a 24 month contract extension with Fortescue
Metals Group for drilling services at their Cloudbreak
operations; and
• executed a Joint Venture with Indigenous contractor,
ICRG Guma.
Asset utilisation remains a critical performance indicator for the
business. The second half of the year saw improvements in
utilisation of large drills due to increased short term opportunities
for major producers in Queensland. The same occurred for small
drills on projects such as St Ives, where ADB utilised equipment
previously dedicated to its civil operations.
OUTLOOK
Action Drill & Blast is focussed on continuing to assist clients in
reducing project costs by optimising production and improving
blasting practices.
ADB is determined to increase its blasting services in the
Australian mining and civil industries and is actively targeting
various commodities including coal, gold and iron ore. The
company is focussed on delivering the highest standard of
service and equipment to clients nation-wide.
17 NRW ANNUAL REPORT 2015 | ADB
OVERVIEW
AES Equipment Solutions (AES) provides maintenance
services to the mining and resources sectors including the
fabrication of water and service trucks.
Revenues in the business reduced to $15.3 million for the
2015 financial year, impacted by a continued reduction in
demand for Service and Water Trucks and slowing demand
for equipment repairs and maintenance.
In response, the business implemented a number of cost
reduction measures and changes to improve productivity.
These reductions included removing management and
supervision levels across the business to provide a more
flexible and responsive workforce.
OUTLOOK
The level of growth and opportunities within the business
will continue to be influenced by the level of investment in
the resources and infrastructure sectors.
AES will continue to improve its service offering recognising
the importance of delivering what are clients need,
measured through quality of work, timeliness of delivery
and cost.
NRW ANNUAL REPORT 2015 | AES Equipment Solutions 18
HUMAN
RESOURCES
OVERVIEW
NRW has continued to build on its relationship with
employees by implementing a Civil Enterprise Agreement
(approved by Fair Work Australia). In addition, NRW
negotiated and established a Coal Mining Enterprise
Agreement with its workforce at the Middlemount Coal
Project. During FY15 there was no lost time due to
industrial disputes.
NRW has reported to the Workplace Gender Equality
Agency, with 12.4% females across the total workforce
during the year which is directly comparable to the mining
industry average of 14% and far exceeds the industry
average for the civil industry of 6.9%.
The NRW Graduate Program continued during the year with
an intake of Civil and Mining Engineers as well as Human
Resource and Marketing graduates – of which, another
two successfully completed the Program.
HR SYSTEMS
NRW’s electronic Human Resource management system,
‘Our People and Logistics’ (OPAL) continued to be
enhanced and was tested by the rapid mobilisation and
people management requirements for the Roy Hill
Concrete Package.
OPAL delivered outstanding results in timeliness, accuracy,
reporting, auditable record keeping and highlighted NRW’s
system capabilities to mobilise and manage people
requirements for large scale projects.
INDIGENOUS ENGAGEMENT
NRW reached a peak Indigenous employment of 7.6%
across the group during the 2015 financial year. Further
mentoring support was undertaken at the Roy Hill Project for
graduates of NRW’s Powerup Program.
NRW conducted a number of joint venture projects with
Traditional Landowner groups including:
• Ngarluma & Yindjibarndi Foundation Limited (NYFL)
• Eastern Guruma Pty Ltd
• Jartu JV – Njamal & ICRG
•
ICRG Guma
19 NRW ANNUAL REPORT 2015 | Human Resources
HEALTH SAFETY
& ENVIROMENT
OVERVIEW
NRW is committed to achieving the best possible outcomes in
relation to occupational health and safety performance 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 and
the company successfully re-certified in March 2015.
Certification was also achieved during the year from the Office
of the Federal Safety Commission allowing NRW to tender and
undertake construction work that is wholly or partially funded by the
Federal Government.
In late 2014, NRW adjusted the “A Safe Day. Every Day” Program
to refocus employees’ attention on NRW’s safety culture. The
Program is now well established and achieving good results across
the business as it enters a consistent improvement phase. This
phase involves reviewing the tools and processes that comprise
the Program to identify opportunities for development. These
developments are derived from an adjustment of focus as well as
from efficiency improvements.
One such area that has been identified is workplace inspections.
A full review of the inspection program identified a number of
areas with overlapping inspections and duplication of effort. The
inspection program has now been rewritten and this resulted in a
25% reduction in inspection activities without a reduction
in coverage.
The Lost Time Injury Frequency Rate (LTIFR) remained steady
throughout the financial year, increasing slightly from 0.17 at
the end of June 2014 to 0.19 at the end of June 2015. Both
periods involved one lost time injury. During the same period, the
Total Recordable Injury Frequency Rate increased from 2.36 to
3.88. Both of these increases can be attributed to the extensive
demobilisation activities and the reduction in hours worked.
ENVIRONMENT & QUALITY
NRW is proud to have successfully completed the largest fauna
trapping and translocation program undertaken in Western
Australia on the Roy Hill Rail Project. The size of the project refers
to both the 330km geographical distance and the cost associated
with the conservation of significant species located within the
Roy Hill Rail Project’s construction footprint. A total of 2000
hectares were identified as potentially significant habitat for the
Northern Quoll, Bilby, Mulgara and Pilbara Olive Python. Stringent
government environmental conditions required environmental
professionals to pin point active burrows or habitat. In areas where
these active points could not be avoided, traps were deployed to
capture and translocate these animals to suitable habitats. This
work was effectively completed with all regulatory conditions fulfilled
prior to the commencement of works in the area.
NRW maintained certification to AS/NZS ISO 14001: 2004
Environmental Management Systems and to ISO standard 9001:
2008 and AS/ NZS 4801for its Quality Management System. NRW
was re-certified for both in March 2015.
NRW ANNUAL REPORT 2015 | HSE 20
FINANCIAL REPORT
CONTENTS PAGE
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
Appendix 4E
04
24
29
30
31
32
33
34
35
85
86
88
21 NRW ANNUAL REPORT 2015 | Contents
NRW ANNUAL REPORT 2015 | Contents 22
DIRECTORS’
REPORT
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 2015.
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
Chairman and Independent Non-Executive Director
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)
• Chairman and Non-Executive Director, Kogi Iron (formerly Energio Limited) (Current)
Julian Pemberton
Chief Executive Officer and Managing Director
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’ 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.
Michael Arnett
Non-Executive Director
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). He has been involved in
significant corporate and commercial legal work for the resource industry for over 20 years.
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 (Finished July 2015)
• Non-Executive Director, Nexus Energy Limited (Resigned 2012)
4 NRW ANNUAL REPORT 2015 | Directors’ Report
DIRECTORS’
REPORT CONTINUED
John Cooper
Non-Executive Director
Mr Cooper was appointed as a Director on 29 March 2011.
Mr Cooper has held a range of very senior executive management and board roles associated with
development of major capital works throughout Australia and internationally.
In 21 years with Concrete Constructions, Mr Cooper project managed major construction projects and was
in charge of the group’s South East Asian and Australian operations. He also headed CMPS&F, a design
engineering and project management organisation specialising in oil and gas pipelines and compressor
stations, mining and mine design, infrastructure and environmental contracts in Australia and South East Asia.
Mr Cooper held a role with the Sydney Olympic Games Organising Committee, responsible for all contingency
planning and technology/Games management.
In August 2006, Mr Cooper was appointed by the South African conglomerate, Murray and Roberts Pty Ltd,
as its representative and Deputy Chairman on the Clough Engineering Board, formulating overall strategy for
the business and taking on an interim CEO position until a new management team was put in place in the
restructured organisation.
In 2007 Mr Cooper was appointed to Murray and Roberts’ international board which was responsible for
group operations outside of South Africa, including the Middle East, Canada, Australia and the United Kingdom.
After retiring from the Murray and Roberts group in 2010 he was subsequently appointed to the advisory council
to the Bilfinger Berger Services group to assist in strategy and management development and planning.
Mr Cooper has held the following directorships of listed companies in the three years immediately before the
end of the financial year:
• Non-Executive Director and Chairman, Southern Cross Electrical (Resigned 7 May 2015)
• Non-Executive Director, Aurizon Holdings (Current)
• Non-Executive Director, Flinders Mines (Resigned 2012)
• Non-Executive Director, Neptune Marine Limited (Resigned 2013)
• Non-Executive Director, UGL Limited (appointed 15 May 2015)
Jeff Dowling
Non-Executive Director
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 centres 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 has held the following directorships of listed companies in the three years immediately before the
end of the financial year:
• Chairman of Sirius Resources NL (ASX: SIR)
• Pura Vida Energy NL (Current)
• Non-Executive Director of Atlas Iron Limited (ASX: AGO)
NRW ANNUAL REPORT 2015 | Directors’ Report 5
DIRECTORS’
REPORT CONTINUED
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
Jeff Dowling
Directors’ Meetings Attended
Directors’ Meetings Held
12
12
12
11
12
12
12
12
12
12
Remuneration and Nomination Committee
The Members of the Nomination & Remuneration Committee are Michael Arnett (Chairman), Ian Burston and
John Cooper. During the 2015 financial year one meeting of the Committee was held. Certain responsibilities
of the Committee were also considered at Board Meetings as required.
Audit and Risk Committee
The Committee Members are Jeff Dowling (Chairman), Michael Arnett and John Cooper.
During the 2015 financial year three meetings of the Audit & Risk Committee were held and all members
attended all meetings. In addition some Audit and Risk matters were considered in the course of regular
Board Meetings.
Principal activities
NRW Holdings Limited provides diversified services to Australia’s resource and infrastructure sectors
through three business divisions, NRW Civil & Mining, Action Drill & Blast (ADB) and AES Equipment
Solutions (AES). Further detail on the operation of each of these business divisions and the group is
provided below.
6 NRW ANNUAL REPORT 2015 | Directors’ Report
DIRECTORS’
REPORT CONTINUED
RESULTS FOR THE FULL YEAR AND REVIEW OF OPERATIONS
NRW reported revenues of $775.9 million, lower than last year ($1,134.5 million) reflecting lower client spend
in the Mining Services sector and due to projects which completed in the first half of FY14. The result is a
net loss in the year of $229.8 million. The loss is driven by an impairment of assets, ($157.3 million) reflecting
significant reductions in current asset market values, a write-off of goodwill, and a loss on the Roy Hill Rail
project for Samsung C&T, (Samsung). The loss in the year compares to net earnings of $44.2 million last year.
The Roy Hill Rail contract loss recognises that it is unlikely that an outcome can be negotiated which supports
a position where the company can at least recover costs incurred on the contract. Consequently the full
year accounts assume agreement of a final contract value below costs incurred on the project. The loss
is based on the completion costs and an assessment of the likely final contract price, including an agreed
reassessment of the value of the actual contract quantities and an assessment of variations based on
claims determined in favour of NRW through the Construction Contracts Act 2004 (WA), less allowances for
reasonable back charges due under the contract to Samsung. As advised in May 2015, Samsung stopped
making progress payments in April 2015 which had a significant impact on the company’s liquidity.
It is worth noting that the Roy Hill Rail project was completed within an extremely challenging timeframe
and was delivered to the required quality standard. At the same time NRW has continued to work on the
Concrete project for the same customer on the same overarching project delivering to date a technically and
commercially successful project to time and cost.
The FY15 loss includes a non-cash Impairment of asset carrying values of $157.3 million, and a provision for
onerous leases of $3.4 million. The impairment charge includes goodwill write offs in the AES business and
reductions to carrying values of plant due to current market rates and expected lower resale prices particularly
on high hour, low utilisation and non-core fleet. The impairment charge is higher than reported at the half year
recognising further deterioration in equipment values in the second half of the financial year.
Cash holdings at year end were impacted by Samsung’s actions to withhold cash on the Roy Hill Rail Contract and
as a consequence of paying the majority of the Project costs following Project completion in April. Cash balances
reduced from $155.5 million to $34.6 million. Despite this movement NRW has continued to service all debt
obligations resulting in debt reducing from $189.5 million to $142.3 million at 30 June 2015.
As a consequence of reduced project opportunities and a highly competitive bid environment the company
has taken action to reduce costs to reflect lower activity levels. Headcount numbers have reduced from
3,092 to 846 as at 30 June 15. The movement includes blue collar workforce reductions of 2,022 and staff
reductions of 224 people over both projects and business support.
NRW is a leading contractor in the mining and civil construction industries. NRW is comprised of three
businesses, NRW Civil and Mining, Action Drill & Blast (ADB) and AES Equipment Solutions (AES).
FY15
FY14
Revenue
Earnings pre
Impairment
Impairment
Post
Impairment
Earnings
Revenue
Earnings pre
Impairment
Impairment
Post
Impairment
Earnings
$M
$M
$M
$M
$M
NRW Civil and Mining
694.1
(126.5)
(126.6)
(253.1)
1,029.2
Action Drill & Blast
AES Equipment Solutions
Inter business sales
Corporate costs
85.9
15.3
(19.4)
-
2.1
(2.0)
-
4.8
(1.1)
(21.3)
-
(8.3)
1.0
(23.3)
-
(3.5)
110.0
28.0
(32.7)
-
Total Statutory Revenue / EBIT
775.9
(121.60)
(157.3)
(278.9)
1,134.5
$M
72.9
7.0
(0.8)
-
(8.9)
70.2
$M
-
-
(4.8)
-
-
(4.8)
Finance costs
Taxation benefit / (expense)
Net after tax (loss) / earnings
(11.5)
60.5
(229.8)
$M
72.9
7.0
(5.6)
-
(8.9)
65.4
(14.3)
(7.0)
44.1
NRW ANNUAL REPORT 2015 | Directors’ Report 7
DIRECTORS’
REPORT CONTINUED
NRW Civil and Mining
The Civil and Mining business specialises in the
delivery of private and public civil infrastructure
projects, mine development and contract mining,
waste stripping and ore haulage supported by a
fully mobile work force and an extensive schedule of
plant and equipment. Civil construction projects have
included bulk earthworks, rail formation, concrete
installation, and construction of roads. Mining
projects include work in iron ore, coal and gold.
Activity in the year on Civil projects included the
completion of 330km of rail formation for the Roy Hill
Project, continuation of work on the Roy Hill Concrete
Project and further development work for Rio Tinto on
the Nammuldi Iron Ore site. The business also secured
the Ravensthorpe Heavy haulage Route Project for
Main Roads. The Mining business continued to support
Middlemount Coal, provide a range of mining services
to the North Star magnetite project and completed the
box cut development work for the Nova nickel project for
Sirius Resources. NRW’s Middlemount project is a long
term contract to supply and maintain dry hire equipment.
It was very pleasing to announce earlier this year an
extension of that contract to 2020. The importance
of this extension is the improved certainty provided to
service current asset financing. Around $79.7 million of
the company’s debt relates to equipment deployed on
this project. The new contract extension valued at
$330 million provides the basis to fully fund current
principle, interest and refinancing costs on that debt.
Sales of $694.1 million were down on last year mostly
due to contracts which completed in the first half of
FY14. The business sustained a loss in the year of
$253.1 million due to the loss recognised on the Roy Hill
Rail Contract and impairment of assets ($126.6 million)
as noted above.
Action Drill & Blast
Action Drill & Blast (ADB) provides contract drill
and blast services to mining (including iron ore, gold
and coal) and civil projects throughout Australia.
Activity levels across the sector were lower in FY15
resulting in part from some clients putting their sites
into care and maintenance regimes. Revenues were
lower at $85.9 million compared to $110.0 million.
Earnings of $1.0 million were down on the previous
year ($7.0 million) as a consequence of lower
Revenues and lower equipment utilisation.
The business secured a contract extension of
the Greenbushes project for three years, rebid
and retained a two year extension for Fortescue’s
Cloudbreak mine site, and new work in the year
including providing services at Fortescue’s Solomon
project; Thiess at three coal projects; NRW at Nova
Nickel and for Gold Fields at St Ives.
8 NRW ANNUAL REPORT 2015 | Directors’ Report
AES Equipment Solutions
AES Equipment Solutions (AES) provides maintenance
services to the mining and resources sectors including
the fabrication of water and service trucks. Revenues
in the business reduced to $15.3 million compared to
$28.0 million in the prior comparative period reflecting
a marked downturn in market activity particularly
for service vehicles and water trucks. The activity
reduction in this part of the business accounted in full
for the pre impairment loss in the year of $2.0 million
which compared to a loss of $0.8 million in FY14.
A number of cost reduction measures and productivity
improvements were implemented in the year to
mitigate the lower activity levels. The segment result
includes an impairment expense of $21.3 million and
provision for onerous lease of $0.8 million reflecting
the downturn in the market in the last quarter
of calendar year 14 and the resulting impact on
expected levels of revenue in future years.
BALANCE SHEET, OPERATING CASH FLOW
AND CAPITAL EXPENDITURE
Net assets reduced to $128.4 million in the year due to
the reported loss. Net debt increased to $107.6 million
(FY14 $34.0 million). Capital expenditure mostly related
to major component replacement.
The company has worked closely with its banking
group throughout the year recognising that the Roy
Hill Rail contract would impact in particular liquidity.
Despite the cash delays referred to earlier the
company met all debt repayment obligations in
the year. The close working relationship resulted in
agreement of revised covenants which NRW was in
full compliance with at 30 June 2015. However the
agreement was not concluded until after the balance
sheet date consequently all debt has been classified
in the balance sheet as current. NRW expects to
remain in compliance with the revised covenants
throughout FY16.
PEOPLE AND SAFETY
NRW aims to recruit and retain a skilled workforce and
endorses a safe environment free from harassment
and unlawful discrimination. NRW’s current workforce
levels have decreased in the year to 846 (June 2015)
reflecting NRW’s strategy to right size the business to
align with work in hand.
NRW is focused on improving the sustainable
development of local communities and traditional
owners of the areas in which it works. The company
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.
DIRECTORS’
REPORT CONTINUED
Safety is paramount across all NRW Projects and
NRW’s Lost Time Injury Frequency Rate (LTIFR)
remained steady throughout FY15 increasing
marginally from 0.17 (30 June 2014) to 0.19.
ENVIRONMENTAL REGULATIONS
The group holds various licenses and is subject
to various environmental regulations. No known
environmental breaches have occurred in relation to
the group’s operations.
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.
OUTLOOK
NRW remains committed to working closely with its
clients, with a focus on lowering operating costs and
delivering improved productivity. However, whilst this
low commodity price environment persists, spending
on expansions and new projects in the resources
sector is likely to remain subdued.
Despite these headwinds and the competitive
landscape, recent wins such as the two-year
Nammuldi Mining contract and the three-year
extension to the Middlemount contract to 2020 have
provided reason for optimism as we enter the 2016
financial year.
As at August 2015, NRW’s forward order book
totals $663 million, of which $250 million is secured
revenue for delivery during FY16. Encouragingly
tender activity is high with the pipeline currently
assessed at $2.5 billion.
NRW is also pleased to have been selected as the
only West Australian-based contractor in consortia
with global infrastructure provider Salini Impregilo as
one of three shortlisted tenderers for the Forrestfield
Airport Link project Project. This government-backed
Infrastructure Project, together with a number of WA
road programs,s expected to commence during the
2016 calendar year, should provide some balance to
the downturn in the resources sector.
Over the past 12 months, the business has taken
further actions to reduce its cost base to match
expected revenue. Headcount numbers have been
reduced by 2,246. The management team has been
restructured to remove layers in the organization,
which are no longer appropriate given the lower
activity levels. As the cost base is reset, we have
achieved overhead reductions in excess of 35% whilst
ensuring we still retain the necessary resources to
address major opportunities as they arise.
DIVIDEND
The directors have determined that no dividend
will be paid out of retained profits at 30 June 2015
(2014 – 5.0 cents fully franked).
SIGNIFICANT EVENTS AFTER PERIOD END
Other than the events noted below there has not
arisen in the interval between the end of the financial
year and the date of this report any transaction or
event of a material nature likely in the opinion of the
Directors, to affect significantly the operations of the
consolidated entity, the results of those operations,
or the state of affairs of the consolidated entity in
subsequent financial years.
DIRECTORS’ INTERESTS
As at the date of this report, the relevant interest
of each Director in the ordinary share capital of the
company was:
Director
Ordinary Shares (NWH)
Julian Pemberton
3,014,404
Ian Burston
John Cooper
Michael Arnett
Jeff Dowling
329,492
55,000
344,474
90,000
Transactions between entities within the group and
Director-related entities are set out in Note 36 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.
PERFORMANCE RIGHTS OVER UNISSUED
SHARES OR INTERESTS
As at the date of this report, there are 831,005
Performance Rights outstanding by the company.
During the year no 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 (2014: 32,919 Performance
Rights outstanding).
NRW ANNUAL REPORT 2015 | Directors’ Report 9
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 $280,104 (2014: $269,525).
The company has not otherwise, during or since
the end of the financial year, except to the extent
permitted by law, indemnified or agreed to indemnify
an officer or auditor of the company or of any related
body corporate against a liability incurred as such an
officer or auditor.
DIRECTORS’
REPORT CONTINUED
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 11 to 22.
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 Touche Tohmatsu.
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 29 of this report.
Details of amounts paid or payable to the
auditor for non-audit services provided during
the year are outlined in Note 38 (page 83) 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 38 (page 83) 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.
10 NRW ANNUAL REPORT 2015 | Directors’ Report
DIRECTORS’
REPORT CONTINUED
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 2015 for the following individuals,
who are the Key Management Personal (KMP) of the company:
Name
Position Held
Appointed/Resigned
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
Appointed as Non-Executive Director, 29 March 2011
Appointed as Non-Executive Director, 27 July 2007
Non- Executive Director
Appointed as Non-Executive Director, 21 August 2013
Mr J Pemberton
Chief Executive Officer and Managing Director
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
Managing Director – NRW Civil and Mining
Appointed 1 October 2008
Resigned 19 June 2015
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 AES Equipment Solutions
Appointed 4 March 2014
Resigned 16 March 2015
Mr K Hyman
Company Secretary, Risk Management & Legal Appointed 10 July 2007
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:
Section
Remuneration Governance
Five Year Snapshot
Executive KMP Remuneration Arrangements
Executive KMP Remuneration Outcomes
Executive Director and Executive KMP Remuneration
Additional Statutory Disclosures
Page
12
13
14
16
18
21
NRW ANNUAL REPORT 2015 | Directors’ Report 11
DIRECTORS’
REPORT CONTINUED
Glossary
The following terms used throughout our Remuneration Report are defined here:
EPS
Executives
KMP
LTI
N&RC
Earnings Per Share
Executive full time employees of NRW that are Key Management Personnel, i.e. KMP excluding Non-Executive
Directors
Key Management Personnel according to the definition of that term in the Corporations Act 2001 (Cth).
Long Term Incentive
Nomination and Remuneration Committee
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
RTSR
ROCE
STI
Relative Total Shareholder Return
Return on Capital Employed
Short Term Incentive
Vesting Conditions
The vesting conditions that apply to the vesting of Performance Rights granted by NRW to its Executive KMP
under the NRW Performance Rights Plan
VWAP
Volume Weighted Average Price
1. REMUNERATION GOVERNANCE
NRW has established a Nomination and Remuneration Committee (N&RC) consisting of Michael Arnett
(Chairman), 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.
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.
12 NRW ANNUAL REPORT 2015 | Directors’ Report
DIRECTORS’
REPORT CONTINUED
2. FIVE YEAR SNAPSHOT
Measure
2015
2014
2013
2012
2011
Market Capitalisation
(30 June)
Share Price at
end of year
Share Price at
beginning of year
$ 50.2 million
$ 256.6 million
$ 253.8 million
$842.2 million
$778.1 million
$0.18
$0.92
$0.92
$0.91
$0.91
$3.02
$3.02
$2.79
$2.79
$0.98
Total Revenue
$775.9 million
$1,134.5 million
$1,374.4 million
$1,360.8 million
$751.2 million
EBITDA
EPS
EPS Growth
Net (Loss) / Profit
After Tax
Return on Capital
Employed
Interim Dividend paid
Final Dividend declared
in respect of the year
Annual Total
Shareholder Return (%)
$(77.2) million*
$123.0 million*
$168.3 million
$195.5 million
$95.5 millionz
(82.4) cents
(618.24%)
15.9 cents
(40.40%)
26.6 cents
34.8 cents
16.1 cents
(23.3%)
116%
15%
$(229.8) million
$44.2 million
$ 74.1 million
$97.1 million
$41.2 million
(96.78%)
16.7%
30.9%
44.6%
29.6%
$0.00
$0.00
(80%)
$0.04
$0.05
11%
$0.08
$0.05
(67%)
$0.08
$0.10
15%
$0.04
$0.05
194%
*Impairment charge also added back/excluded from EBITDA.
NRW ANNUAL REPORT 2015 | Directors’ Report 13
DIRECTORS’
REPORT CONTINUED
3. EXECUTIVE KMP REMUNERATION
FRAMEWORK
3.1 Executive (KMP) Remuneration Overview
The board has adopted the following over-arching
principles which recognise the importance of fair,
effective and appropriate remuneration outcomes:
• Alignment: The structure of the remuneration
package is intended to align the interests of
Executives and the company’s shareholders.
• Attract and Retain: Remuneration packages
are established and reviewed to ensure NRW
is able to attract the right people and to retain
those people.
• Motivate: Remuneration plans are structured
to provide strong motivation to achieve both
short and long term business objectives.
Consequently, remuneration packages include
a high proportion of variable remuneration.
• Appropriate: Remuneration packages are
established and reviewed recognising current
market trends in sectors relevant to the
operations of NRW and those sectors which
would be recognised as providing a bench mark
to NRW employees.
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 and
superannuation capped at the relevant concessional
contribution limit. The opportunity to salary sacrifice
benefits on a tax compliant basis is available on
request. Fixed remuneration is set with reference
to role, market and relevant experience, which is
reviewed annually and upon promotion.
Short term incentive (STI): determination of
an STI award is made against annual performance
criteria established at the beginning of each
financial year. The N&RC establishes appropriate
performance criteria which can include earnings,
securing new work and management of liquidity
but may include other objectives determined by
the N&RC to be critical issues facing the business.
STI awards are based on a percentage of the
KMP’s fixed remuneration as disclosed below.
Given the potentially commercially sensitive nature
of performance criteria objectives will only be disclosed
in the remuneration report post the performance period.
The STI scheme has three levels of recognised
performance; Threshold, Plan and Stretch.
No payment is made for performance below
Threshold. Performance between Threshold and
Plan attracts a lower amount of STI. The maximum
14 NRW ANNUAL REPORT 2015 | Directors’ Report
amount of STI is payable only if Stretch targets are
achieved or exceeded. Pro Rata payments are made
for performance between Threshold and Plan or Plan
and Stretch.
STI awards are payable in a combination of cash
and Performance Rights. STI awards up to Plan
performance are normally paid in cash although
the N&RC has the option to remunerate in
Performance Rights. Awards above Plan are paid in
equal amounts of cash and Performance Rights.
50% of all above budget awards (usually the
Performance Right component) are held for a
period of 12 months before vesting to the KMP.
This structure provides a “Hindsight” review period
of performance providing the ability of the N&RC
to apply a clawback of previously awarded STI
and a retention component should there be any
material change which would have affected the
performance period.
Executives are also assessed on the delivery of
a number of agreed personal objectives through
the year. Non-financial objectives, set appropriate to
the individual KMP’s role within the organisation, may
include for example safety, staff development and
client relationships. STI awards can be moderated
downwards if achievement of these non-financial
objectives is not delivered to expectations.
STI payments can be made at the discretion of
the N&RC but only in exceptional circumstances which
require full disclosure in the annual remuneration report.
Long term incentive (LTI): The objective
of the Long term incentive scheme (LTI) is to
focus performance on the creation of long term
shareholder value. In addition the term of the
scheme provides a retention structure. LTI is paid in
Performance Rights which usually vest after a three
year performance period but in some cases may vest
within a two year period.
The N&RC establishes appropriate performance
criteria against which Performance Rights vest which
may include Earnings Per Share growth, relative
TSR or absolute growth in TSR. In addition and only
in special circumstances the N&RC can include a
Tenure obligation as a vesting criteria to support
specific retention objectives.
LTI awards are based on a percentage of the KMP’s
fixed remuneration as disclosed below, converted
into Performance Rights based the market price at
a date or over a period determined by the N&RC.
In some circumstances the N&RC can apply
a premium to that share price as the basis for
determining the number of Rights to be awarded.
This has the effect of reducing the number of Rights
to be awarded and providing an in scheme incentive
to deliver the premium.
DIRECTORS’
REPORT CONTINUED
The LTI scheme has two levels of recognised performance; Plan and Stretch. No payment is made for
performance below Plan. The maximum amount of LTI is payable only if Stretch targets are achieved
or exceeded. Pro Rata payments are made for performance between Plan and Stretch.
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.
The LTI scheme is governed by the “NRW Holdings Limited Performance Rights Plan” approved by
shareholders in 2011.
3.3 Award Levels Relative to Fixed Remuneration
The following table sets out the range of awards for Executive KMP for FY15 under the STI and LTI components
of NRW’s remuneration structure:
STI Award
as % Fixed Remuneration
LTI Award
as % Fixed
Remuneration
Award at Threshold
level of Performance
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
Chief Financial Officer
Managing Director C&M
Divisional General Managers
20%
15%
15%
10%
40%
30%
30%
20%
80%
80%
80%
40%
50%
40%
40%
20%
150%
100%
100%
40%
3.4 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.
3.5 Executive Service Agreements
The Executive Service Agreements in place in respect of NRW’s KMP can be summarised as follows:
• Contain non-compete provisions restraining the executives from operating or being associated with an
entity that competes with the business of NRW in Western Australia up to 12 months after termination;
• 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; and
• Remuneration for all KMP listed is determined by the N&RC under the guidelines contained in this
remuneration report.
NRW ANNUAL REPORT 2015 | Directors’ Report 15
DIRECTORS’
REPORT CONTINUED
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 2015 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; and
• 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.
4.2 Commentary on Performance and metrics
STI: The N&RC established Net Earnings as the critical performance objective for FY15. Performance at plan
level was based on the board approved business plan. The threshold level was set at 90% of Plan and the
Stretch objective was set at 115% of Plan.
The minimum (Threshold) target was not achieved consequently no STI awards were made in the period.
LTI: No LTI awards were made in FY15. The Board sought shareholder approval for an award of 1,961,449
Performance Rights for the CEO however given the change in business operating conditions it was decided
not to make the award.
The proportion of STI and LTI awards forfeited in the year was 100%.
4.3 Performance Criteria for FY12, FY13 and FY14 LTI Awards
The following table sets out the performance criteria and scaling of each of the vesting hurdles for the FY12,
FY13 and FY14 awards, (Note, No LTI awards were made in FY15):
FY12 LTI Award
FY13 and FY14 LTI Award
LTI Vesting
Condition, Weighting
Cut-in level
Maximum vesting
achieved at
Cut-in level
Maximum vesting
achieved at
EPS Growth,
Weighting 40%
0% vesting at 4% EPS growth
between last vesting date
and current vesting date and
current vesting date
100% of the EPS Growth limb
vesting at 10% EPS growth
between last vesting date and
current vesting date
0% vesting at 4% EPS growth
between last vesting date and
current vesting date
100% of the EPS Growth limb
vesting at 12% EPS growth
ROCE,
Weighting 30%
0% vesting at 17% ROCE
for most recently completed
financial year
100% of the ROCE limb vesting
at 25% ROCE for most recently
completed financial year
0% vesting at less than
19.99% ROCE for most
recently completed
financial year
100% of the ROCE limb vesting
at 30% ROCE
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
The following tables set out the numbers of Performance Rights which were granted and which subsequently
vested and are likely to vest or be forfeited in relation to the FY12, FY13 and FY14 schemes.
No further Performance Rights are expected to vest in September 2015 and 2016. Consequently a further
53,176 Performance Rights were forfeited.
16 NRW ANNUAL REPORT 2015 | Directors’ Report
DIRECTORS’
REPORT CONTINUED
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 to vest 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
FY13 & 14 LTI Awards and expected vesting
83,296
34,496
7,274
125,066
-
-
-
-
472,013
195,480
41,222
708,715
FY13 AWARDS
Maximum potential
number of Performance Rights
No. Rights Forfeited
Total number of
Performance Rights granted
under the Award
No. Rights expected to
vest on: 15-Sep-15
Mr J Pemberton
Mr W Rooney
Mr W Fair
Total
684,006
255,362
88,317
1,027,685
649,806
248,017
76,686
974,509
34,200
7,345
11,631
53,176
-
-
-
-
FY14 AWARDS
Maximum potential
number of Performance Rights
No. Rights Forfeited
Total number of
Performance Rights granted
under the Award
No. Rights expected to
vest on: 15-Sep-16
Mr J Pemberton
1,961,449
Mr W Rooney
Mr W Fair
Total
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
-
-
-
-
NRW ANNUAL REPORT 2015 | Directors’ Report 17
DIRECTORS’
REPORT CONTINUED
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 2015 and 30 June 2014:
IN AUD $
Short Term Benefits
Post
Employment
Benefits
Other Long
Term Benefits
Share
Based
Payments
Total
Key Mangagement
Personnel
Year
Salary
& fees
Termination
Payment
STI bonus
FY15
Non cash
benefit (1)
Annual
Leave (2)
Superannuation
Other (3)
Equity
EXECUTIVE
DIRECTORS
Mr J Pemberton
2015 1,310,776
2014 1,332,927
EXECUTIVES
Mr W Rooney (8)
2015 742,720
2014 881,234
Mr A Walsh (5)
2015 600,729
2014 295,751
Mr D James (6)
2015 296,916
2014 129,667
Mr W Fair
2015 391,325
2014 389,418
Mr K Hyman
2015 322,865
2014 335,866
Mr T Raschella (4)
2015
-
2014 173,216
Mr M Wallace (7)
2015
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2014
61,212
55,562
2015 3,665,331
-
Total Compensated
(Consolidated) -
2015
Total Compensated
(Consolidated) -
2014
-
75,000
-
-
-
39,298
-
-
-
-
-
-
-
102,499
18,783
21,295
36,678
1,490,031
102,694
17,765
21,389
39,118
1,692,840
-
178,947
-
-
-
-
34,929
18,783
139,576
3,273
70,586
19,328
-
-
-
-
-
-
-
-
-
50,403
18,783
23,326
6,549
24,304
14,448
10,168
7,519
32,004
18,783
30,622
23,287
26,339
18,783
25,895
17,920
-
-
-
-
-
-
-
-
-
-
5,439
5,033
-
12,016
808,448
30,304
1,144,301
-
-
-
-
669,915
400,626
335,668
147,354
2,159
444,271
6,481
489,106
-
-
-
-
-
-
373,426
384,714
-
191,438
-
121,218
646
8,770
6,978
1,828
-
-
-
4,444
-
-
-
-
-
270,478
108,363
26,734
50,853
4,121,759
2014 3,599,291
55,562
432,821
3,919
272,061
103,790
28,250
75,903
4,571,597
(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 2013 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 AES Equipment Solutions
4 March 2014. Mr D James resigned from the company 16 March 2015.
(7) Mr M Wallace left the company on 7 August 2013.
(8) Mr W Rooney resigned his employment as Managing Director NRW Civil & Mining effective 19th June 2015.
18 NRW ANNUAL REPORT 2015 | Directors’ Report
DIRECTORS’
REPORT CONTINUED
For the year ended 30 June 2015
For Ordinary Shares
Key Person
Held at 1 July 2014
Purchases(1)
Received as
compensation
Received on
options /rights
exercised
Sales / transfers /
net other change
Held at 30 June 2015
Dr I F Burston
Mr J Cooper
Mr M Arnett
Mr J Dowling
329,492
55,000
344,474
90,000
Mr J Pemberton
3,014,404
Mr W Rooney
Mr W Fair
TOTAL
157,473
35,775
4,026,618
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) All purchases were made via purchases of shares on-market.
For the year ended 30 June 2014
For Ordinary Shares
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
329,492
55,000
344,474
90,000
3,014,404
157,473
35,775
4,026,618
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
329,492
55,000
344,474
-
-
-
-
90,000
Mr J Pemberton
2,931,108
Mr W Rooney
Mr W Fair
Mr M Wallace
118,472
24,983
25,381
-
-
-
-
TOTAL
3,828,910
90,000
-
-
-
-
-
-
-
-
-
(1) All purchases were made via purchases of shares on-market.
-
-
-
-
83,296
39,001
10,792
-
133,089
-
-
-
-
-
-
-
25,381
25,381
329,492
55,000
344,474
90,000
3,014,404
157,473
35,775
-
4,026,618
NRW ANNUAL REPORT 2015 | Directors’ Report 19
DIRECTORS’
REPORT CONTINUED
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
2015
($)
2014
($)
3,935,809
4,363,654
26,734
108,363
50,853
28,250
103,790
75,903
4,121,759
4,571,597
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 2015
IN AUD $
Short Term Benefits
Post Employment Benefits
Total
NON-EXECUTIVE DIRECTORS
Salary & fees
Non cash
benefit
Superannuation
Mr I Burston
Mr J Cooper
Mr M Arnett
Mr J Dowling
FY15 NON-EXECUTIVE DIRECTORS TOTAL
122,116
100,001
100,000
100,001
422,118
5,495
4,454
-
5,192
15,141
11,601
9,500
9,500
9,500
40,101
139,212
113,955
109,500
114,693
477,360
20 NRW ANNUAL REPORT 2015 | Directors’ Report
DIRECTORS’
REPORT CONTINUED
For the financial year ended 30 June 2014
IN AUD $
Short Term Benefits
Post Employment Benefits
Total
NON-EXECUTIVE DIRECTORS
Salary & fees
Non cash benefit
Superannuation
Mr I Burston
Mr J Cooper
Mr M Arnett
Mr J Dowling
FY14 NON-EXECUTIVE DIRECTORS TOTAL
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
141,375
112,557
111,352
95,495
460,779
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:
23rd November 2011 &
12th March 2012
28-Nov-12
18-Jun-13
1-Jul-13
11-Nov-13
Award type
Vesting Conditions
Share price at the
grant date
Tranche
Vesting date
Expected life
Risk free interest rate
Volatility
Dividend yield
Performance Rights
Relative TSR, ROCE and EPS
$2.78
$1.48
$0.93
$0.88
$1.24
1
2
3
15-Sep-12
15-Sep-13
15-Sep-14
15-Sep-15
15-Sep-15
25-Nov-16
25-Nov-16
0.8 years
1.8 years
2.8 years
3 years
2.2 years
3.4 years
3 years
3.40%
3.09%
3.07%
2.66%
2.49%
2.88%
3.07%
50%
6.0%
50%
6.0%
50%
6.0%
50%
9.0%
55%
8.5%
60%
60%
8.50%
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 table below shows the valuation methodology used for
each award.
The Vesting conditions for all awards detailed above were Relative TSR, EPS growth and Return on
Capital Employed. The valuation methodology for Relative TSR was Monte-Carlo simulation. EPS growth
and Return on Capital employed were valued using binomial options pricing model. Each valuation
methodology used has been chosen from those available to incorporate an appropriate amount of
flexibility with respect to the particular performance and vesting conditions of the award.
NRW ANNUAL REPORT 2015 | Directors’ Report 21
DIRECTORS’
REPORT CONTINUED
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
25 November 2016
Grant Date
EPS
Growth
& ROCE
($)
Mr J Pemberton 23/11/2011
2.65
Mr W Rooney
12/03/2012
3.73
RTSR
EPS
Growth
ROCE RTSR
EPS
Growth
& ROCE
RTSR Grant Date
EPS
Growth
& ROCE
RTSR Grant Date
($)
1.70
2.93
($)
2.49
3.52
($)
2.65
3.52
($)
1.70
2.64
($)
2.35
3.31
($)
($)
($)
1.61
28/11/2012
1.13
0.36
11/11/2013
0.66
2.50
18/06/2013
0.76
0.11
1/07/2013
0.98
EPS
Growth
& ROCE
($)
RTSR
($)
0.44
0.68
Mr W Fair
12/03/2012
3.73
2.93
3.52
3.52
2.64
3.31
2.50
18/06/2013
0.76
0.11
1/07/2013
0.98
0.68
Relative TSR
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 comparator group used to determine relative TSR
performance for LTI awards made in FY13 and FY14 are; Ausenco Limited, Macmahon Holdings Limited,
Ausdrill Limited, Downer EDI Limited, Bradken Limited, Transpacific Holdings Limited, Sedgman Limited,
Decmil Group Limited, Maca Limited, and Seymour White Limited.
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 and Managing Director
Dr Ian Burston
Chairman and Non-Executive Director
22 NRW ANNUAL REPORT 2015 | Directors’ Report
DIRECTORS’
REPORT CONTINUED
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 2015.
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
2015, 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;
• 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;
• exercising due care and diligence and sound
• has described in the Board Charter the
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;
considerations it takes into account when
determining independence.
NRW ANNUAL REPORT 2015 | Directors’ Report 23
CORPORATE GOVERNANCE
STATEMENTS
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 nine 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 Jeff 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 Jeff 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
8 years
8 years
9 years
4 year
1 year
2015 AGM
2016 AGM
Not Applicable
2016 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.
24 NRW ANNUAL REPORT 2015 | Corporate Governance Statements
CORPORATE GOVERNANCE
STATEMENTS CONTINUED
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 2015 financial year one meeting 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.
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 despatch of board agenda and briefing material.
The responsibilities of the Company Secretary are
stated in the Board Charter.
All Directors have access to the Company Secretary.
The appointment and removal of the Company
Secretary is a matter for decision by the Board.
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).
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.
NRW ANNUAL REPORT 2015 | Corporate Governance Statements 25
CORPORATE GOVERNANCE
STATEMENTS CONTINUED
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;
• The proportion of women employees in the
whole organisation; 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 30 June 2015, the actual
percentage of women employed was 14.26%.
It should be noted that within the NRW Civil and
Mining business (the largest segment employer)
the actual number was 16.35%.
NRW is committed to dedicating 20% of places
available to new entrants to the civil and mining
industry, through our Powerup program, to women.
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.
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
• ensuring the independence and competence of
the company’s external auditors.
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; and
• 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; and
• 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 partner.
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; and
• 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.
26 NRW ANNUAL REPORT 2015 | Corporate Governance Statements
CORPORATE GOVERNANCE
STATEMENTS CONTINUED
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.
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.
•
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; and
• 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.
The Board require management to report to it,
directly, or through the Audit and Risk Management
A copy of this Committee’s Charter is on the
company’s website.
NRW ANNUAL REPORT 2015 | Corporate Governance Statements 27
CORPORATE GOVERNANCE
STATEMENTS CONTINUED
EXECUTIVE REMUNERATION
The Board periodically reviews executive
remuneration practices with a view to ensuring
there is an appropriate balance between fixed and
incentive pay, and that the balance reflects short and
long term performance objectives appropriate to the
company’s circumstances and goals.
Executive remuneration will be published in the
Remuneration Report in the company’s Annual
Report each year (including the Remuneration Report
contained in this Annual Report).
NON-EXECUTIVE DIRECTOR REMUNERATION
ASX guidelines for appropriate practice in
Non-Executive director remuneration are that
Non-Executive directors should:
• 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; and
• not be provided with retirement benefits other
than superannuation.
The company’s current practice for remunerating
Non-Executive Directors is consistent with these
guidelines.
The details of Directors’ remuneration are set out
in the Remuneration Report contained in the
Annual Report.
REMUNERATION POLICY DISCLOSURES
Disclosure of the company’s remuneration
policies is best served through a transparent and
readily understandable framework for executive
remuneration that details the costs and benefits.
The company meets its transparency obligations in
the following manner:
• publishing a detailed Remuneration Report in the
Annual Report each year;
• continuous disclosure of employment
agreements with key executives where those
agreements, or obligations falling due under
those agreements, may trigger a continuous
disclosure obligation under ASX Listing Rule 3.1;
• presentation of the Remuneration Report to
shareholders for their consideration and
non-binding vote at the company’s AGM;
taking into account the outcome of the
non-binding shareholder vote when determining
future remuneration policy; and
•
• providing a response to shareholder questions on
policy where appropriate.
28 NRW ANNUAL REPORT 2015 | Corporate Governance Statements
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 9365 7001
www.deloitte.com.au
31 August 2015
The Board of Directors
NRW Holdings Limited
181 Great Eastern Highway
Belmont WA 6104
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 2015, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
AT Richards
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
29
NRW ANNUAL REPORT 2015 | Auditor's Independence Declaration 29
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 and Managing Director
Dr Ian Burston
Chairman and Non-Executive Director
Perth, 31st August 2015
30 NRW ANNUAL REPORT 2015 | Directors' Declaration
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2015
Consolidated
REVENUE
Finance income
Finance costs
Share of loss from associates
Materials and consumables used
Employee benefits expense
Subcontractor costs
Depreciation and amortisation expenses
Impairment expense
Plant and equipment costs
Other expenses
(Loss) / profit before income tax
Income tax benefit / (expense)
(Loss) / profit for the year
Notes
6
19
8(a)
8(a)
21
8(a)
9(a)
2015
$’000
775,934
1,439
(12,951)
(500)
(132,386)
(320,142)
(242,170)
(44,345)
(157,271)
(151,984)
(5,948)
(290,324)
60,502
(229,822)
2014
$’000
1,134,492
1,990
(16,258)
-
(209,495)
(386,159)
(210,303)
(52,753)
(4,800)
(195,128)
(10,398)
51,188
(6,952)
44,236
OTHER COMPREHENSIVE INCOME (EXPENSE)
Exchange differences arising on translation of foreign operations
Other comprehensive income (expense) for the year, net of tax
31
31
(1)
(1)
TOTAL COMPREHENSIVE INCOME
(229,791)
44,235
(Loss) / Profit Attributable to:
Equity holders of the company
Total Comprehensive Income Attributable to:
Equity holders of the company
EARNINGS / (LOSS) PER SHARE
Basic (loss)/earnings per share
Diluted earnings per share
(229,791)
44,236
(229,791)
44,235
10
Cents
(82.4)
N/A
Cents
15.9
15.8
The consolidated statement of profit and loss and other comprehensive income should be read in conjunction with the
accompanying notes.
NRW ANNUAL REPORT 2015 | Consolidated Statement of Profit or Loss and Other Comprehensive Income 31
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at 30 June 2015
ASSETS
Current assets
Cash and cash equivalents
Receivables
Inventories
Current tax assets
Other current assets
Total current assets
Non-current assets
Investments in associates
Intangibles
Property, plant and equipment
Goodwill
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Borrowings
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
Notes
11
12
13
9(c)
14
19
16
15
20
9(d)
23
24
9(c)
25
24
25
9(d)
26
27
28
2015
$’000
34,631
73,812
28,417
6,125
3,720
146,705
4,812
4,581
190,266
-
22,825
222,484
369,189
86,083
142,255
-
9,134
237,472
-
3,353
-
3,353
240,825
128,364
156,432
2,901
(30,969)
128,364
Consolidated
2014
$’000
155,474
200,541
36,690
-
6,406
399,111
-
12,763
354,759
19,617
-
387,139
786,250
170,887
49,613
6,992
17,178
244,670
139,867
1,541
28,170
169,578
414,248
372,002
156,432
2,772
212,798
372,002
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
32 NRW ANNUAL REPORT 2015 | Consolidated Statement of Financial Position
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the year ended 30 June 2015
Notes
Contributed
equity
Foreign currency
translation reserve
Share based
payment reserve
Total
Reserves
Retained
earnings
Total
Equity
$’000
156,432
$’000
(214)
$’000
2,991
$’000
$’000
$’000
2,777
193,661
352,871
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
28
27
29
27
27
27
-
-
-
-
-
231
(231)
-
(1)
(1)
-
-
-
-
BALANCE AT 30 JUNE 2014
156,432
(215)
-
-
-
-
226
(231)
-
2,987
-
(1)
(1)
-
226
(231)
-
44,236
44,236
-
(1)
44,236
44,235
(25,099)
(25,099)
-
-
-
226
-
(231)
2,772
212,798
372,002
BALANCE AT 1 JULY 2014
156,432
(215)
2,987
2,772
212,798
372,002
Loss 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
28
27
29
27
27
27
-
-
-
-
-
-
-
-
31
31
-
-
-
-
-
-
-
-
98
-
-
-
31
31
-
98
-
-
(229,823)
(229,823)
-
31
(229,823)
(229,792)
(13,944)
(13,944)
-
-
-
98
-
-
BALANCE AT 30 JUNE 2015
156,432
(184)
3,085
2,901
(30,969)
128,364
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
NRW ANNUAL REPORT 2015 | Consolidated Statement of Changes in Equity 33
CONSOLIDATED STATEMENT OF
CASH FLOWS
For the year ended 30 June 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest paid
Interest received
Income tax paid
Note
Consolidated
2015
$’000
965,806
(997,912)
(12,951)
1,439
(3,610)
2014
$’000
1,270,403
(1,156,701)
(16,258)
1,990
4,696
Net cash flow (used) / from operating activities
30
(47,228)
104,129
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of property, plant and equipment
Payment for investment in associate
19
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 (DECREASE) / 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
The consolidated statement of cash flows should be read in
conjunction with the accompanying notes.
2,495
(6,424)
(8,517)
(12,446)
9,355
(56,580)
(13,944)
-
(61,169)
(120,843)
155,474
34,631
5,324
-
(29,555)
(24,231)
38,799
(68,888)
(25,099)
(231)
(55,419)
24,480
130,994
155,474
34 NRW ANNUAL REPORT 2015 | Consolidated Statement of Cash Flows
NOTES TO THE
FINANCIAL STATEMENTS
1. GENERAL INFORMATION
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 2015 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 the provision of
drilling and blasting services.
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 31st August 2015.
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.
Going concern
The financial statements have been prepared on
the going concern basis, which contemplates
the continuity of normal business activity and the
realisation of assets and the settlement of liabilities in
the normal course of business.
During the year ended 30 June 2015 the Consolidated
Entity incurred a loss after tax of $229.8 million and
as at the balance sheet date had a net current asset
deficiency of $90.8 million which resulted from the
reclassification of borrowings ($142.3 million) from
non-current to current.
A total of $79.7 million of borrowings classified
as current are due for repayment beyond 31
August 2016 ($80.3 million beyond 30 June 2016).
The repayments that fall due in the period up to
and including 31 August 2016 are $76.1 million
which is scheduled as follows; to 31 September
2015 $14.4 million, a further $14.3 million to 31
December 2015, a further $16.7 million to 31 March
2016, a further $30.7 million to 30 June 2016 and a
further $0.6 million to 31 August 2016 .
As disclosed in note 32, the Consolidated Entity’s
borrowings are provided by ANZ Leasing (Vic) Pty
Ltd (“ANZ Leasing”) through an asset financing
facility which provides security to ANZ Leasing
by a first ranking specific security over the goods
purchased using the proceeds of that facility being
the majority of plant and equipment held by the
Consolidated Entity as at 30 June 2015.
The Consolidated Entity has worked extensively with
its banking group and has agreed revised covenants
which align to the agreed business plan for the
financial year ending 30 June 2016. As at the date
of signing the annual accounts the company is in
compliance with its obligations under its facilities.
Resolution of the current dispute with Samsung on
the Roy Hill Rail project and the incremental cash
anticipated to be generated from that settlement
is important to overall liquidity although the
Consolidated Entity is continuing to review other
options to meet overall funding requirements.
The Consolidated Entity’s forecasts indicate there is
sufficient capacity given the business plans for FY16
to meet all debt repayments as scheduled up to
and including March 2016 without the need for any
receipts from any settlement with Samsung. In the
event that a settlement with Samsung is not reached
by that date the Consolidated Entity will be required
with the continued support from its banking group to
either seek additional sources of funds and or to defer
the debt repayments due in June 2016 and beyond.
The ability of the Consolidated Entity and Company
to continue as going concerns is dependent on
successfully achieving the matters set out above.
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 35
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
Should the Consolidated Entity and Company
be unable to achieve the matters above a
material uncertainty would exist as to whether the
Consolidated Entity and Company will be able to
continue as going concerns and therefore whether
they will realise their assets and discharge their
liabilities in the normal course of business.
The financial report does not include any
adjustments relating to the recoverability and
classification of recorded asset amounts or to the
amounts and classification of liabilities that might
by necessary should the Consolidated Entity and
Company not continue as going concerns.
2.3 Basis of consolidation
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.
The financial statements of subsidiaries where
appropriate are consistent within 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.
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.
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
36 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
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.
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 associates
An associate is an entity over which the group has
significant influence. Significant influence is the
power to participate in the financial and operating
policy decisions of the investee but is not control or
joint control over those policies.
The results and assets and liabilities of associates
are incorporated in these consolidated financial
statements using the equity method of accounting,
except when the investment, or a portion thereof,
is classified as held for sale, in which case it is
accounted for in accordance with AASB 5.
Under the equity method, an investment in an
associate is initially recognised in the consolidated
statement of financial position at cost and adjusted
thereafter to recognise the group’s share of the
profit or loss and other comprehensive income of
the associate. When the group’s share of losses
of an associate exceeds the group’s interest in
that associate or joint venture (which includes any
long-term interests that, in substance, form part of
the group’s net investment in the associate), the
group discontinues recognising its share of further
losses. Additional losses are recognised only to
the extent that the group has incurred legal or
constructive obligations or made payments on
behalf of the associate.
An investment in an associate is accounted for
using the equity method from the date on which the
investee becomes an associate. On acquisition of
the investment in an associate, any excess of the cost
of the investment over the group’s share of the net
fair value of the identifiable assets and liabilities of
the investee is recognised as goodwill, which is
included within the carrying amount of the investment.
Any excess of the group’s share of the net fair value
of the identifiable assets and liabilities over the cost
of the investment, after reassessment, is recognised
immediately in profit or loss in the period in which the
investment is acquired.
The requirements of AASB 139 are applied to
determine whether it is necessary to recognise
any impairment loss with respect to the group’s
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 37
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
investment in an associate. When necessary, the
entire carrying amount of the investment (including
goodwill) is tested for impairment in accordance with
AASB 136 ‘Impairment of Assets’ as a single asset
by comparing its recoverable amount (higher of
value in use and fair value less costs of disposal) with
its carrying amount, Any impairment loss recognised
forms part of the carrying amount of the investment.
Any reversal of that impairment loss is recognised
in accordance with AASB 136 to the extent that
the recoverable amount of the investment
subsequently increases.
When a group entity transacts with an associate
of the group, profits and losses resulting from the
transactions with the associate are recognised in
the group’s consolidated financial statements only to
the extent of interests in the associate that are not
related to the group.
2.7 Interests in joint operations
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 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.
2.8 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.
When it is probable that total contract costs will
exceed total contract revenue, the expected loss is
recognised as an expense immediately.
When contract costs incurred to date plus
recognised profits less recognised losses
exceed progress billings, the surplus is shown as
amounts due from customers for contract work or
construction work in progress. For contracts where
progress billings exceed contract costs incurred
to date plus recognised profits less recognised
losses, the surplus is shown as the amounts due to
customers for contract work.
Amounts received before the related work is
performed are included in the consolidated
statement of financial position, as a liability, as
advances received. Amounts billed for work
performed but not yet paid by the customer are
included in the consolidated statement of financial
position under trade and other receivables.
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; and
38 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
•
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.
2.9 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.
2.10 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.
Goodwill and fair value adjustments arising on the
acquisition of a foreign operation are treated as
assets and liabilities of the foreign operation and
translated at the rate of exchange prevailing at the
end of each reporting period. Exchange differences
arising are recognised in equity.
2.11 Borrowing costs
Borrowing costs directly attributable to the
acquisition, construction or production of qualifying
assets, which are assets that necessarily take a
substantial period of time to get ready for their
intended use or sale, are added to the cost of those
assets, until such time as the assets are substantially
ready for their intended use or sale.
All other borrowing costs are recognised in profit or
loss in the period in which they are incurred.
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 39
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
2.12 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.
2.13 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.
2.14 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 reporting period.
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.
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
40 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
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.
2.15 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
Leasehold improvements
Major Plant and Equipment
Minor Plant and Equipment
Office Equipment
Furniture and Fittings
Motor Vehicles
20 to 40 years
2 to 5 years
5 to 10 years
(normally based on machine hours)
2 to 10 years
2 to 8 years
5 to 20 years
5 to 10 years
The above bands provide a range of effective lives
regardless of methodology used in the depreciation
process (either hours, diminishing or straight line).
The hours method is a consumption based method
and reflects utilisation within the business and is
supported in the effective lives of each plant and
equipment group, where applicable.
Depreciation rates and methods 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.
2.16 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.
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 41
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
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.
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.
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 note 2.15).
2.17 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.
2.18 Provisions
Provisions are recognised when the group has a
present obligation (legal or constructive) as a result
of a past event, it is probable that the group will be
required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation.
The amount recognised as a provision is the best
estimate of the consideration required to settle the
present obligation at the end of the reporting period,
taking into account the risks and uncertainties
surrounding the obligation. When a provision is
measured using the cash flows estimated to settle
the present obligation, its carrying amount is the
present value of those cash flows (where the effect of
the time value of money is material).
When some or all of the economic benefits required
to settle a provision are expected to be recovered
from a third party, a receivable is recognised as an
asset if it is virtually certain that reimbursement will
be received and the amount of the receivable can be
measured reliably.
Provision for warranties
Provisions are made for the expected cost of
warranty obligations in relation to specific construction
contracts at reporting date. The provision is 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.
Provision for onerous contracts
Present obligations arising under onerous contracts
are recognised and measured as provisions.
An onerous contract is considered to exist where the
group has a contract under which the unavoidable
costs of meeting the obligations under the contract
exceed the economic benefits expected to be
received from the contract.
42 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
2.19 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.
2.20 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.
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.
Fair value
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 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.
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 43
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
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.
2.21 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.
2.22 Trade and Other Payables
These amounts represent liabilities for goods and
services provided to the group prior to the end of
financial year which are unpaid. The amounts are
unsecured and are usually paid within 45 to 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.
2.23 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.
44 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
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FINANCIAL STATEMENTS CONTINUED
2.24 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.
2.25 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.
2.26 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.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account the after income tax effect of interest
and other financing costs associated with dilutive
potential ordinary shares and the weighted average
number of shares assumed to have been issued
for no consideration in relation to dilutive potential
ordinary shares.
2.27 Share-based payments
Share based compensation payments are provided
to employees in accordance to the company’s
Employee Share Plan (‘ESP’) and Long-Term
Incentive Plan (‘LTIP’) detailed in remuneration report.
The Employee Share Plan (‘ESP’) is accounted for
as an “in-substance” option plan due to the limited
recourse nature of the loan between the employees
and the company to finance the purchase of
ordinary shares.
Share based compensation payments are measured
at the fair value of the equity instruments at the grant
date. The fair value at grant date is independently
determined using the valuation methods detailed
in 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.
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 note 3.2), 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
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 45
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
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.
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: Management
regularly update forecast costs at completion in
accordance with agreed upon 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.
As noted in the interim results HY15, it was reported
that the company was not in a position to reliably
estimate the outcome of the Roy Hill Rail contract for
Samsung and had at the interim results recognised
revenue to the extent of contract costs incurred.
From discussions with Samsung over the last six
months it is considered unlikely that an outcome
can be negotiated which supports a position where
the company can at least recover costs incurred on
the contract. Consequently the full year accounts
assume a loss on the project. The loss is based on
the project completion costs and an assessment
of the likely final contract price, including an agreed
reassessment of the value of the actual contract
quantities and an assessment of variations based
on claims determined in favour of NRW through
the Construction Contracts Act 2004 (WA), less
allowances for reasonable back charges due under
the contract to Samsung.
As negotiations are continuing the values of the
amounts assumed are considered to be commercially
sensitive and are not disclosed in these accounts.
Employee entitlements
Management judgement is applied in determining the
following key assumptions used in the calculation of
long service leave at balance date:
future increases in wages and salaries;
(i)
(ii) future on cost rates; and
(iii) employee departures and period of service.
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
Useful lives of property, plant and equipment
As described in note 2.15, 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
46 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
deferred tax benefits. The deferred tax asset
recognised in these accounts is based on the same
assumptions used in the value in use assessments
detailed in Note 21.
Recognition of net deferred tax asset and income
tax accrual
A net deferred tax asset of $22.8 million has been
recognised on the face of the Consolidated Statement
of Financial Position. This tax benefit will be realised
over the next 5-7 years when future taxable profits
are available against which the unused tax losses
can be utilised. This net asset has been raised as it is
considered more likely than not that it will be realised.
In making this assessment of likelihood, a forward
looking estimation of cash flows and the likelihood of
business success has been made. A forward looking
estimation of this nature is inherently uncertain. Details
of deferred tax balances are contained in note 9.
Tax Consolidation
An incremental deferred tax asset which may arise
as a result of the tax consolidation process has not
been recognised as the further analysis is required
before being finalised.
plant and equipment will affect the plant modelling
giving rise to a certain degree of fluctuations
and subjectiveness.
Provision for warranties and Onerous Leases
As described in note 2.18, the group recognises
provisions for warranties for obligations in
relation to specific construction contracts and
for onerous contracts. The future outflow of cash
has been estimated at the best estimate of the
expenditure required to settle the group’s obligation.
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 business plans relating to the
cash-generating units.
The carrying amount of goodwill at 30 June 2015
was $Nil (30 June 2014: $19.6 million). The Directors
determined an impairment of goodwill during the
current period of $19.6 million (2014: $4.8 million).
Details of the recoverable value assessment and
relevant assumptions can be found at Note 20.
Property, Plant and Equipment Impairment
During the period to 30 June 2015 the group
reviewed the carrying value of its property, plant
and equipment in light of the plant and equipment
utilisation level and reduced market demand.
In determining the appropriate recoverable value
the group has considered the fair value less costs of
disposal of the property, plant and equipment and
value in use of the respective cash generating unit
(CGU). Refer note 21.
Income Tax
Income taxes are paid in the jurisdictions where the
group operates, predominantly Australia. Significant
judgement is involved in applying the tax rules and
regulations relevant in deriving the final provision
for income tax. If in subsequent periods matters
arise that cause the final tax outcome to vary to
the reported carrying amounts, such differences
will alter the deferred tax balances in the period the
change is identified.
Recoverability of Deferred tax Asset
The recoverability of the groups deferred tax
balances are recognised only when the Group
considers it is probable that future taxable amounts
will be derived to utilise those losses and associated
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 47
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
4. APPLICATION OF NEW AND REVISED ACCOUNTING STANDARDS
4.1 Amendments to AASBs and the new Interpretation that are mandatorily effective for the current year
In the current year, the group has applied a number of amendments to AASBs and a new Interpretation issued
by the Australian Accounting Standards Board (AASB) that are mandatorily effective for an accounting period
that begins on or after 1 July 2014, and therefore relevant for the current year end.
AASB 2012-3 ‘Amendments
to Australian Accounting
Standards – Offsetting
Financial Assets and
Financial Liabilities’
The amendments to AASB 132 clarify the requirements relating to the offset of financial assets and financial
liabilities. Specifically, the amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ and
‘simultaneous realisation and settlement’.
The amendments have been applied retrospectively. [As the group does not have any financial assets and financial
liabilities that qualify for offset, the application of the amendments does not have any material impact on the
disclosures or on the amounts recognised in the group’s consolidated financial statements. /The group has assessed
whether certain of its financial assets and financial liabilities qualify for offset based on the criteria set out in the
amendments and concluded that the application of the amendments does not have any material impact on the
amounts recognised in the group’s consolidated financial statements.]
AASB 2013-3 ‘Amendments
to AASB 136 – Recoverable
Amount Disclosures for
Non-Financial Assets’
The amendments to AASB 136 remove the requirement to disclose the recoverable amount of a cash-generating
unit (CGU) to which goodwill or other intangible assets with indefinite useful lives had been allocated when there
has been no impairment or reversal of impairment of the related CGU. Furthermore, the amendments introduce
additional disclosure requirements applicable to when the recoverable amount of an asset or a CGU is measured at
fair value less costs of disposal. These new disclosures include the fair value hierarchy, key assumptions and valuation
techniques used which are in line with the disclosure required by AASB 13 ‘Fair Value Measurements’.
The application of these amendments does not have any material impact on the disclosures in the group’s
consolidated financial statements.
AASB 2013-4 ‘Amendments
to Australian Accounting
Standards – Novation of
Derivatives and Continuation
of Hedge Accounting’
The amendments to AASB 139 provide relief from the requirement to discontinue hedge accounting when a derivative
designated as a hedging instrument is novated under certain circumstances. The amendments also clarify that any
change to the fair value of the derivative designated as a hedging instrument arising from the novation should be
included in the assessment and measurement of hedge effectiveness.
As the group does not have any derivatives that are subject to novation, the application of these amendments does
not have any material impact on the disclosures or on the amounts recognised in the group’s consolidated financial
statements.
AASB 2013-5 ‘Amendments
to Australian Accounting
Standards – Investment
Entities’
The amendments to AASB 10 define an investment entity and require a reporting entity that meets the definition of an
investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit
or loss in its consolidated and separate financial statements.
To qualify as an investment entity, a reporting entity is required to:
•
•
•
obtain funds from one or more investors for the purpose of providing them with investment management
services;
commit to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation,
investment income, or both; and
measure and evaluate performance of substantially all of its investments on a fair value basis.
Consequential amendments have been made to AASB 12 and AASB 127 to introduce new disclosure requirements for
investment entities.
As the company is not an investment entity (assessed based on the criteria set out in AASB 10 as at 1 July 2014), the
application of the amendments does not have any material impact on the disclosures or the amounts recognised in
the group’s consolidated financial statements.
48 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
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FINANCIAL STATEMENTS CONTINUED
AASB 2014-1 ‘Amendments
to Australian Accounting
Standards’ (Part A: Annual
Improvements 2010–2012 and
2011–2013 Cycles)
The Annual Improvements 2010-2012 has made number of amendments to various AASBs, which are summarised
below.
•
•
•
•
•
•
•
•
•
The amendments to AASB 2 (i) change the definitions of ‘vesting condition’ and ‘market condition’; and (ii)
add definitions for ‘performance condition’ and ‘service condition’ which were previously included within
the definition of ‘vesting condition’. The amendments to AASB 2 are effective for share based payment
transactions for which the grant date is on or after 1 July 2014.
The amendments to AASB 3 clarify that contingent consideration that is classified as an asset or a liability
should be measured at fair value at each reporting date, irrespective of whether the contingent consideration
is a financial instrument within the scope of AASB 9 or AASB 139 or a non-financial asset or liability.
Changes in fair value (other than measurement period adjustments) should be recognised in profit and loss.
The amendments to AASB 3 are effective for business combinations for which the acquisition date is on or
after 1 July 2014.
The amendments to AASB 8 (i) require an entity to disclose the judgements made by management in applying
the aggregation criteria to operating segments, including a description of the operating segments aggregated
and the economic indicators assessed in determining whether the operating segments have ‘similar economic
characteristics’; and (ii) clarify that a reconciliation of the total of the reportable segments’ assets to the
entity’s assets should only be provided if the segment assets are regularly provided to the chief operating
decision-maker.
The amendments to the basis for conclusions of AASB 13 clarify that the issue of AASB 13 and consequential
amendments to AASB 139 and AASB 9 did not remove the ability to measure short-term receivables and
payables with no stated interest rate at their invoice amounts without discounting, if the effect of discounting
is immaterial.
The amendments to AASB 116 and AASB 138 remove perceived inconsistencies in the accounting for
accumulated depreciation/amortisation when an item of property, plant and equipment or an intangible asset
is revalued. The amended standards clarify that the gross carrying amount is adjusted in a manner consistent
with the revaluation of the carrying amount of the asset and that accumulated depreciation/amortisation is the
difference between the gross carrying amount and the carrying amount after taking into account accumulated
impairment losses.
The amendments to AASB 124 clarify that a management entity providing key management personnel
services to a reporting entity is a related party of the reporting entity. Consequently, the reporting entity
should disclose as related party transactions the amounts incurred for the service paid or payable to the
management entity for the provision of key management personnel services. However, disclosure of the
components of such compensation is not required The Annual Improvements 2011-2013 has made number
of amendments to various AASBs, which are summarised below.
The amendments to AASB 3 clarify that the standard does not apply to the accounting for the formation of all
types of joint arrangements in the financial statements of the joint arrangement itself.
The amendments to AASB 13 clarify that the scope of the portfolio exception for measuring the fair value of a
group of financial assets and financial liabilities on a net basis includes all contracts that are within the scope
of, and accounted for in accordance with, AASB 139 or AASB 9, even if those contracts do not meet the
definitions of financial assets or financial liabilities within AASB 132.
The amendments to AASB 140 clarify that AASB 140 and AASB 3 are not mutually exclusive and application
of both standards may be required. Consequently, an entity acquiring investment property must determine
whether:
•
•
the property meets the definition of investment property in terms of AASB 140; and
the transaction meets the definition of a business combination under AASB 3.
The application of these amendments does not have any material impact on the disclosures or on the amounts
recognised in the group’s consolidated financial statements.
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 49
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
AASB 2014-1 ‘Amendments to Australian
Accounting Standards’ (Part B: Defined
Benefit Plans: Employee Contributions
Amendments to AASB 119)
Interpretation 21 ‘Levies’
The amendments to AASB 119 clarify how an entity should account for contributions made by
employees or third parties to defined benefit plans, based on whether those contributions are
dependent on the number of years of service provided by the employee.
For contributions that are independent of the number of years of service, the entity may either
recognise the contributions as a reduction in the service cost in the period in which the related
service is rendered, or to attribute them to the employees’ periods of service using the projected unit
credit method; whereas for contributions that are dependent on the number of years of service, the
entity is required to attribute them to the employees’ periods of service.
The application of these amendments to AASB 119 does not have any material impact on the
disclosures or on the amount recognised in the group’s consolidated financial statements.
Interpretation 21 addresses the issue as to when to recognise a liability to pay a levy imposed by
a government. The Interpretation defines a levy, and specifies that the obligating event that gives
rise to the liability is the activity that triggers the payment of the levy, as identified by legislation.
The Interpretation provides guidance on how different levy arrangements should be accounted for,
in particular, it clarifies that neither economic compulsion nor the going concern basis of financial
statements preparation implies that an entity has a present obligation to pay a levy that will be
triggered by operating in a future period.
Interpretation 21 has been applied retrospectively. The application of this Interpretation does not have
any material impact on the disclosures or on the amounts recognised in the group’s consolidated
financial statements.
AASB 1031 ‘Materiality’, AASB 2013-9
‘Amendments to Australian Accounting
Standards’ – Conceptual Framework,
Materiality and Financial Instruments’
(Part B: Materiality), AASB 2014-1
‘Amendments to Australian Accounting
Standards’ (Part C: Materiality)
The revised AASB 1031 is an interim standard that cross-references to other Standards and the
‘Framework for the Preparation and Presentation of Financial Statements’ (issued December 2013)
that contain guidance on materiality. The AASB is progressively removing references to AASB 1031
in all Standards and Interpretations. Once all of these references have been removed, AASB 1031
will be withdrawn. The adoption of AASB 1031, AASB 2013-9 (Part B) and AASB 2014-1 (Part C)
does not have any material impact on the disclosures or the amounts recognised in the group’s
consolidated financial statements.
50 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
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 standards(1)
AASB 15 ‘Revenue from Contracts with Customers’ and AASB 2014-5 ‘Amendments to
Australian Accounting Standards arising from AASB 15’
Effective for annual
reporting periods
beginning on or after
Expected to be initially
applied in the financial
year ending
1 January 2018
1 January 2017
30 June 2019
30 June 2018
AASB 2014-3 ‘Amendments to Australian Accounting Standards – Accounting for Acquisitions
of Interests in Joint Operations’
1 January 2016
30 June 2017
AASB 2014-4 ‘Amendments to Australian Accounting Standards – Clarification of Acceptable
Methods of Depreciation and Amortisation’
1 January 2016
30 June 2017
AASB 2014-6 ‘Amendments to Australian Accounting Standards – Agriculture: Bearer Plants’
1 January 2016
AASB 2014-9 ‘Amendments to Australian Accounting Standards – Equity Method in Separate
Financial Statements’
1 January 2016
30 June 2017
30 June 2017
AASB 2014-10 ‘Amendments to Australian Accounting Standards – Sale or Contribution of
Assets between an Investor and its Associate or Joint Venture’
1 January 2016
30 June 2017
AASB 2015-1 ‘Amendments to Australian Accounting Standards – Annual Improvements to
Australian Accounting Standards 2012-2014 Cycle’
1 January 2016
30 June 2017
AASB 2015-2 ‘Amendments to Australian Accounting Standards – Disclosure Initiative:
Amendments to AASB 101’
1 January 2016
30 June 2017
AASB 2015-3 ‘Amendments to Australian Accounting Standards arising from the Withdrawal
of AASB 1031 Materiality’
1 July 2015
30 June 2016
AASB 2015-4 ‘Amendments to Australian Accounting Standards – Financial Reporting
Requirements for Australian Groups with a Foreign Parent’
AASB 2015-5 ‘Amendments to Australian Accounting Standards – Investment Entities:
Applying the Consolidation Exception’
1 July 2015
30 June 2016
1 January 2016
30 June 2017
(1) The AASB has issued the following versions of AASB 9 and the relevant amending standards;
• AASB 9 ‘Financial Instruments’ (December 2009) and the relevant amending standards;
* AASB 9 ‘Financial Instruments’ (December 2010) and the relevant amending standards;
* AASB 2013-9 ‘Amendment to Australian Accounting Standards – Conceptual Framework, Materiality and Financial
Instruments’, Part C – Financial Instruments.
* AASB 9 ‘Financial Instruments’ (December 2014) and the relevant amending standards.
All the standards have an effective date of annual reporting periods beginning on or after 1 January 2018. Either AASB 9
(December 2009) or AASB 9 (December 2010) can be early adopted if the initial application date is before 1 February 2015.
After this date only AASB 9 (December 2014) can be early adopted.
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
Effective for annual reporting periods
beginning on or after
Expected to be initially applied in the
financial year ending
At the date of publication, there have been no IASB Standards or IFRIC Interpretations that are issued but not yet effective.
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 51
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
5. SEGMENT REPORTING
NRW is comprised of three businesses, NRW Civil and Mining, Action Drill & Blast and AES Equipment Solutions.
Segment results include items directly attributable to a segment as well as those that can be allocated on a
reasonable basis. Unallocated items comprise predominantly corporate expenses. Inter-segment pricing is
determined on an arm’s length basis.
The following are the reportable segments:
A) Reportable segments
• NRW Civil and Mining (C&M). The Civil and Mining business specialises in the delivery of private and
public civil infrastructure projects, mine development and contract mining, waste stripping and ore haulage
supported by a fully mobile work force and an extensive schedule of plant and equipment.
• Action Drill & Blast (ADB). The Action Drill & Blast provides contract drill and blast services to mining
(including iron ore, gold and coal) and civil projects throughout Australia.
• AES Equipment Solutions (AES). The AES Equipment Solutions provides maintenance services to the
mining and resources sectors including the fabrication of water and service trucks.
B) Geographical Information
The Guinea operations were completed during the year ended 30 June 2013, however some assets remain in
country pending project leads and tendering.
Revenues and total assets for the two geographical segments comprise:
Revenue from External Customers
Total Current and Non-Current Assets
Australia
West Africa - Guinea
TOTAL
2015
$’000
775,934
-
775,934
C) Reportable segment revenues and results
Year ended 30 June 2015
Segment revenue
Inter-segment eliminations
C&M
$’000
694,103
-
2014
$’000
1,134,492
-
1,134,492
ADB
$’000
85,927
-
AES
$’000
15,298
-
TOTAL FROM CONTINUING OPERATIONS
694,103
85,927
15,298
Segment profit / (loss)
Impairment expense
(126,478)
(126,607)
TOTAL FROM CONTINUING OPERATIONS
(253,085)
2,086
(1,100)
986
(1,980)
(21,293)
(23,275)
Share of loss from associates
Net finance costs
Income tax benefit
LOSS FOR THE PERIOD
2015
$’000
368,163
1,026
369,189
2014
$’000
780,349
5,901
786,250
Unallocated
Consolidated
$’000
-
(19,393)
(19,393)
5,330
(8,272)
(2,942)
$’000
795,328
(19,393)
775,935
(121,042)
(157,272)
(278,311)
(500)
(11,513)
60,502
(229,823)
52 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
Year ended 30 June 2014
C&M
$’000
ADB
$’000
Segment revenue
1,029,157
110,001
Inter-segment eliminations
-
-
AES
$’000
27,992
-
TOTAL FROM CONTINUING OPERATIONS
1,029,157
110,001
27,992
Segment profit / (loss)
Impairment expense
72,944
-
TOTAL FROM CONTINUING OPERATIONS
72,944
7,024
-
7,024
(780)
(4,800)
(5,580)
Share of loss from associates
Net finance costs
Income tax expense
PROFIT FOR THE PERIOD
D) Segment assets and liabilities
Unallocated
Consolidated
$’000
-
(32,658)
(32,658)
(8,932)
-
(8,932)
$’000
1,167,150
(32,658)
1,134,492
70,256
(4,800)
65,456
-
(14,268)
(6,952)
44,236
NRW Civil and Mining
Action Drill & Blast
AES Equipment Solutions
Other unallocated assets
CONSOLIDATED ASSETS
NRW Civil and Mining
Action Drill & Blast
AES Equipment Solutions
Other unallocated liabilities
CONSOLIDATED LIABILITIES
Segment Assets
Segment Liabilities
2014
$’000
643,138
62,509
31,092
49,512
786,250
2014
$’000
(326,602)
(44,982)
(3,985)
(38,679)
(414,248)
2015
$’000
264,193
52,776
8,935
43,284
369,188
2015
$’000
(205,621)
(31,201)
(4,003)
-
(240,825)
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 53
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
E)
Information about major customers
Included in the revenues arising from sales of the reporting segments (note 5.C) are approximate revenues to
arise from the sales to the group’s largest customers.
These are summarised by Segment below for the year end 30 June 2015:
NRW Civil & Mining
Action Drill & Blast
AES Equipment Solutions
Major customer 1
Major customer 2
Major customer 3
TOTAL FOR CONTINUING OPERATIONS
$’000
451,875
108,235
103,072
663,182
$’000
-
23,906
-
23,906
$’000
-
-
3,231
3,231
These are summarised by Segment below for the comparative year end 30 June 2014:
NRW Civil & Mining
Action Drill & Blast
AES Equipment Solutions
Major customer 1
Major customer 2
TOTAL FOR CONTINUING OPERATIONS
$’000
361,300
116,200
477,500
$’000
$’000
-
-
-
-
-
-
Total
$’000
451,875
132,141
106,303
690,319
Total
$’000
361,300
116,200
477,500
F)
Other segment information
Depreciation and amortisation
Additions to non-current assets
NRW Civil and Mining
Action Drill & Blast
AES Equipment Solutions
Other
TOTAL FOR CONTINUING OPERATIONS
6. REVENUE
Revenue from all sources
TOTAL REVENUE
2015
$’000
32,198
5,766
814
5,568
44,346
2014
$’000
38,989
5,454
688
7,622
52,753
2015
$’000
6,982
754
609
6,596
14,941
Consolidated
2015
$’000
775,934
775,934
2014
$’000
11,607
13,889
2,451
1,607
29,554
2014
$’000
1,134,492
1,134,492
54 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
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
Consolidated
2015
$’000
1,439
1,439
(12,950)
(1)
(12,951)
(11,512)
8. PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS
A) Other expenses
Profit for the year from continuing operations has been arrived at after charging:
Consolidated
EMPLOYEE BENEFITS EXPENSE
Wages and salaries
Superannuation contributions
Share based payments
PROFIT / (LOSS) ON SALE OF PROPERTY, PLANT AND EQUIPMENT
Depreciation of non-current assets
Amortisation
Operating lease payments
Rental hire payments
Plant and other related costs
2015
$’000
(301,170)
(18,874)
(98)
(320,142)
593
593
(40,483)
(3,862)
(44,345)
(4,968)
(107,418)
(39,598)
(151,984)
2014
$’000
1,990
1,990
(16,246)
(12)
(16,258)
(14,268)
2014
$’000
(364,247)
(21,686)
(226)
(386,159)
221
221
(49,654)
(3,099)
(52,753)
(7,840)
(152,956)
(34,333)
(195,128)
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 55
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
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
Deferred tax assets not brought to account
TOTAL TAX (BENEFIT) / EXPENSE
B) Reconciliation of effective tax rate
(Loss) / 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
Impairment losses on non-allowable property, plant and equipment
Impairment losses on investment in associates
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
Deferred tax assets not brought to account
TOTAL INCOME TAX (BENEFIT) / EXPENSE
Effective tax rate
56 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
Consolidated
Consolidated
2015
$’000
(32)
(9,476)
(9,508)
(70,154)
19,160
(60,502)
2015
$’000
(290,325)
(87,097)
516
5,885
696
334
-
31
(98)
75
(4)
19,160
(60,502)
20.84%
2014
$’000
16,551
(10,483)
6,068
884
-
6,952
2014
$’000
51,188
15,356
503
1,440
-
-
(1,155)
225
(9,194)
(219)
(4)
-
6,952
13.58%
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
C) Current tax assets and liabilities
CURRENT TAX ASSETS AND LIABILITIES
Income tax receivable
Income tax payable
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
Losses
DEFERRED TAX ASSETS / (LIABILITIES)
Consolidated
2014
$’000
-
(6,992)
(6,992)
2015
$’000
6,124
-
6,124
Assets
Liabilities
Net
2015
$’000
328
-
4,316
-
-
14,957
839
42
10,820
31,303
2014
$’000
311
134
5,560
-
-
88
3,031
72
-
2015
$’000
-
-
(2)
(1,082)
(4,632)
(2,422)
-
(341)
-
2014
$’000
-
-
-
(1,339)
(8,787)
(21,970)
(357)
(4,911)
-
9,194
(8,479)
(37,364)
2015
$’000
328
-
4,314
(1,082)
(4,632)
12,536
839
(299)
10,820
22,824
2014
$’000
311
134
5,560
(1,339)
(8,787)
(21,882)
2,673
(4,839)
-
(28,169)
Relevance of tax consolidation to the group
The company and its wholly-owned Australian resident entities have formed a tax-consolidated group under
Australian taxation law with effect from 1 July 2014 and are therefore taxed as a single entity from that date.
The head entity within the tax-consolidated group is NRW Holdings Limited. The members of the tax-consolidated
group are identified in note 17.
Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences
of the members of the tax-consolidated group are recognised in the separate financial statements of the
members of the tax-consolidated group using the ‘stand-alone taxpayer’ approach by reference to the
carrying amounts in the separate financial statements of each entity and the tax values applying under
tax consolidation. Current tax liabilities and assets and deferred tax assets arising from unused tax losses
and tax credits of the members of the tax-consolidated group are recognised by the company (as head entity
in the tax-consolidated group). Due to the existence of a tax funding arrangement between the entities in
the tax-consolidated group, amounts are recognised as payable to or receivable by the company and each
member of the group in relation to the tax contribution amounts paid or payable between the parent entity and
the other members of the tax-consolidated group in accordance with the arrangement.
The decision to consolidate for tax purposes has not yet been formally notified to the Australian Taxation Office.
Nature of tax funding arrangements and tax sharing agreements
Entities within the tax-consolidated group have entered into a tax funding arrangement and a tax sharing
agreement with the head entity. Under the terms of the tax funding arrangement, NRW Holdings Limited and
each of the entities in the tax-consolidated group has agreed to pay a tax equivalent payment to or from the
head entity, based on the current tax liability or current tax asset of the entity. The tax sharing agreement
entered into between members of the tax-consolidated group provides for the determination of the allocation
of income tax liabilities between the entities should the head entity default on its tax payment obligations or
if an entity should leave the tax consolidated group. The effect of the tax sharing agreement is that each
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 57
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
member’s liability for tax payable by the tax-consolidated group is limited to the amount payable to the head
entity under the tax funding arrangement.
An incremental deferred tax asset which may arise as a result of the tax consolidation process has not been
recognised as further analysis is required before being finalised.
E) Unrecognised Deferred tax balances
Deductible temporary differences, unused tax losses and unused tax credits for which no deferred tax assets
have been recognised are attributable to the following:
Tax losses (revenue in nature)
Tax losses (capital in nature)
Unused tax credits
Deductible temporary differences
10. EARNINGS PER SHARE
Consolidated
2015
$’000
19,160
-
-
-
19,160
2014
$’000
-
-
-
-
-
The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted
earnings per share are as follows:
(Loss) / 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
WEIGHTED AVERAGE NUMBER OF SHARES USED FOR THE PURPOSES OF DILUTED EARNINGS PER SHARE
Diluted earnings per share
11. CASH AND CASH EQUIVALENTS
Cash and cash equivalents
Cash and cash equivalents include cash on hand and in banks.
Consolidated
2015
$‘000
(229,823)
278,877
2014
$‘000
44,235
278,875
(82.4) cents
per share
15.9 cents
per share
N/A
N/A
1,178
280,053
15.8 cents
per share
Consolidated
2015
$’000
34,631
34,631
2014
$’000
155,474
155,474
58 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
12. RECEIVABLES
A) Trade and other receivables
CURRENT RECEIVABLES
Trade receivables
Other receivables
Retentions
SUBTOTAL
Construction work in progress (Note 22)
TOTAL TRADE AND OTHER RECEIVABLES
Consolidated
2014
$’000
45,999
1,591
3,882
51,472
149,069
200,541
2015
$’000
35,042
194
833
36,069
37,743
73,812
The average credit period on sales ranges from 30 to 60 days in most cases. Allowances for doubtful
debts are recognised against trade receivables 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
Consolidated
2014
$’000
-
52
(41)
11
2014
$’000
2
-
9
11
2015
$’000
11
121
(132)
-
2015
$’000
-
-
-
-
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.
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 59
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
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
2015
$’000
137
13
9
159
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
Net realisable value expense
Work in progress
BALANCE AT 30 JUNE
Consolidated
2014
$’000
34,139
-
2,551
36,690
2015
$’000
26,487
(1,597)
3,527
28,417
During the year the directors have reviewed the carrying amount of the group’s inventory. As a result of
reduced mining activity and market deterioration, a particular batch of tyres was written down to their
recoverable value. These tyres were not considered obsolete but the assessment found the original cost
compared to net realisable value required adjustment. In this determination market pricing, selling costs and
physical location were considered.
14. OTHER CURRENT ASSETS
Prepayments
TOTAL
Consolidated
2015
$’000
3,720
3,720
2014
$’000
6,407
6,407
60 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
15. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment held by the Consolidated Group include:
Land
$’000
Buildings
Leasehold
improvements
$’000
$’000
Plant and
equipment
$’000
Total
$’000
COST
BALANCE AS AT 30 JUNE 2013
3,218
7,447
1,239
557,749
569,653
Effect of foreign currency exchange
differences
Additions
Reclassified to intangibles
Disposals
-
-
-
-
BALANCE AS AT 30 JUNE 2014
3,218
Effect of foreign currency exchange
differences
Additions
Disposals
-
-
-
-
24
-
(957)
6,514
-
-
-
-
164
-
-
1,404
-
27
-
BALANCE AS AT 30 JUNE 2015
3,218
6,514
1,431
DEPRECIATION & IMPAIRMENT
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
Depreciation and amortisation expense
Effect of foreign currency exchange
differences
Impairment
Disposals
BALANCE AS AT 30 JUNE 2015
CARRYING VALUES
At 30 June 2014
At 30 June 2015
-
-
-
-
-
-
-
-
1,000
-
1,000
3,218
2,218
1,980
733
-
-
(605)
2,108
832
-
1,319
-
4,259
4,405
2,254
592
143
-
-
-
735
184
-
135
-
1,054
668
375
1
27,607
(6,183)
(13,151)
566,023
13
8,319
(13,119)
561,236
179,385
48,777
1
(207)
(8,400)
219,556
39,466
11
128,002
(11,218)
375,817
346,467
185,419
1
27,795
(6,183)
(14,108)
577,158
13
8,345
(13,119)
572,397
181,957
49,654
1
(207)
(9,005)
222,339
40,482
11
130,457
(11,218)
382,132
354,758
190,266
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 61
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
16. OTHER INTANGIBLE ASSETS
Intangibles held by the Consolidated Entity include:
Software and System Development
COST
BALANCE AS AT 30 JUNE 2013
Additions
Reclassified from property, plant and
equipment
BALANCE AS AT 30 JUNE 2014
Additions
BALANCE AS AT 30 JUNE 2015
AMORTISATION & IMPAIRMENT
BALANCE AS AT 30 JUNE 2013
Amortisation expense
Reclassified from property, plant and
equipment
BALANCE AS AT 30 JUNE 2014
Amortisation expense
Reclassified from property, plant and
equipment
Impairment
BALANCE AS AT 30 JUNE 2015
CARRYING VALUES
At 30 June 2014
At 30 June 2015
$’000
11,727
1,735
6,183
19,645
169
19,813
4,528
2,566
207
7,301
3,592
4,357
15,250
12,344
4,564
Licences
$’000
1,429
24
-
1,453
-
1,453
501
533
-
1,034
270
131
1,436
419
18
Total
$’000
13,156
1,759
6,183
21,098
169
21,267
5,029
3,099
207
8,335
3,862
4,488
16,686
12,763
4,581
62 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
17. CONSOLIDATED ENTITIES
Parent entity
Principle
Activities
Country of
incorporation
Ownership interest
NRW Holdings Limited
Holding company
Australia
WHOLLY OWNED SUBSIDIARIES
NRW Pty Ltd as trustee for NRW Unit Trust
NRW Civil & Mining
Actionblast Pty Ltd
NRW Mining Pty Ltd
NRW Intermediate Holdings Pty Ltd
ACN 107724274 Pty Ltd
NRW Guinea SARL
AES Equipment Solutions
Investment Shell
Intermediary
Plant and Tyre Sales
Contract Services
Indigenous Mining & Exploration Company Pty Ltd
Investment Shell
NRW International Holdings Pty Ltd
Action Drill and Blast Pty Ltd (formerly NRW Drill
& Blast Pty Ltd )
Investment Shell
Action Drill & Blast
Australia
Australia
Australia
Australia
Australia
Guinea
Australia
Australia
Australia
2015
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
2014
-
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.
All of the wholly-owned subsidiaries and Parent entity, incorporated in Australia, have formed a Tax
Consolidation Group effective 1 July 2014.
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.
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 63
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
The consolidated statement of comprehensive income of the entities party to the deed of cross guarantees is
as follows:
Consolidated
STATEMENT OF COMPREHENSIVE INCOME
Revenue
Finance income
Finance costs
Share of loss in associate
Materials and consumables used
Employee benefits expense
Subcontractor costs
Depreciation and amortisation expenses
Impairment expense
Plant and equipment costs
Other expenses
(LOSS) / PROFIT BEFORE INCOME TAX
Income tax expense
(LOSS) / PROFIT FOR THE YEAR
OTHER COMPREHENSIVE INCOME
Exchange differences arising on translation of foreign operations
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
2015
$’000
775,934
1,439
(12,951)
(500)
(129,086)
(320,048)
(243,342)
(44,329)
(157,271)
(151,984)
(5,891)
(288,030)
60,469
(227,562)
2015
$’000
-
(227,652)
2014
$’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)
44,302
2014
$’000
-
44,302
Consolidated
64 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
The consolidated statement of financial position of the entities party to the deed of cross guarantees is:
Consolidated
2015
$’000
2014
$’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
Investment in associates
Property, plant and equipment
Intangibles
Goodwill
Deferred tax assets
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
34,610
73,812
28,417
6,007
3,706
146,552
4,812
189,834
5,009
-
22,825
3
222,483
369,035
83,907
142,255
-
9,134
235,296
-
3,353
-
3,353
238,649
130,387
156,432
3,086
(29,137)
130,387
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
244,816
139,867
1,541
28,170
169,578
414,395
371,794
156,432
2,987
212,374
371,794
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 65
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
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) - completed.
NRW-NYFL Joint Venture
Car Dumper and Bulk Earthworks at Cape Lambert Port B Project.
NRW-Eastern Guruma Joint Venture
Construction of the HME Overpass and the Silvergrass Access
Roads.
NRW-Ocean to Outback Joint Venture
Hope Downs Village construction - completed.
Midwest Rail Joint Venture
Bulk earthworks and rail upgrade of existing 92km rail, from Mullewa
to Tilley Siding, for ore haulage - completed.
City East Alliance
Upgrade of Great Eastern Highway - completed.
NRW, Eastern Guruma and NYFL Joint
Venture
Provision of Early Mining Services – Solomon Phase 1 for Fortescue
Metals Group Limited - completed.
NRW Njamal ICRG Joint Venture
Bulk Earthworks and services for the Iron Bridge (North Star
Magnetite Project) for IB Operations PL (Fortescue Metals Group
Limited).
NRW Rapid JV
Mining Services
2015
33%
50%
50%
50%
50%
15%
50%
50%
50%
2014
33%
50%
50%
50%
50%
15%
50%
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 Rapid 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
Current liabilities
Consolidated
2015
$’000
2014
$’000
66,571
178,912
(63,725)
(170,890)
8,489
6,758
43,815
37,339
66 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
19. ASSOCIATES
The group invested in a 20% share purchase in NewGen Drilling Pty Ltd. CalEnergy Resources Limited holds
the balance of the shares. The acquisition took place on the 24 November 2014 for 6,257,623 shares at a
cost of $6,423,917.
NewGen Drilling Pty Ltd has a financial year ending 31 December. The cost of the investment is accounted for
using the equity accounting methodology. At the time of the acquisition Oil was trading around $80 a barrel:
It is currently trading around $50 a barrel. The reduction has had significant consequences to the Oil and Gas
market including deferment or cancellation of a number of projects. Consequently NewGen Drilling Pty Ltd has
made a loss since acquisition of $500,400 being the movement in the net assets from the financial Wstatements
provided at 31 December 2014 and the net assets at 30 June 2015 at the 20% NRW stake.
NewGen Drilling Pty Ltd
Revenue
Profit/(Loss) for the period after tax
Current assets
Non-current assets
Current liabilities
Non-current liabilities
NET ASSETS
Opening Cost of the investment in associate
Acquisition of investment in associate
Share of (loss) for the period
Impairment
CLOSING COST OF INVESTMENT IN ASSOCIATE
2015
$’000
-
(2,510)
1,020
24,007
2,307
408
26,926
Change
2015
$’000
-
6,424
(500)
(1,112)
4,812
NRW has recognised impairment to the resulting carrying value based on an updated business plan
prepared by the business. The impairment was determined based on an assessment of the current business
environment in which NewGen operates and on an assessment of its future value based on the assumptions
set out in the impairment note (note 21).
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 67
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
20. GOODWILL
The carrying amount of goodwill is tested for impairment annually or whenever there is an indicator of impairment.
The group assesses the recoverable amount of the cash generating unit to which the goodwill is allocated (AES)
based on the value in use calculation. Key assumptions used in this methodology include:
• projected cash flows;
•
the assets recoverable amount is calculated using approved business plans and expected future inflows
over a five year period and terminal value;
• estimated Rate of Growth, of 3.0%; and
•
the weighted average cost of capital including a risk margin was set at a post-tax discount rate of 12.5%.
The AES business has been impacted by the current reduction in expenditure across the mining services
sector and in particular lower demand for service vehicles and water trucks. The business unit reported a loss
in the year of $2.0 million before impairment. Given the medium term outlook remains subdued the Directors
determined having carried out a number of assessments based on the assumptions outlined above that the
carrying value of the goodwill could no longer be supported as disclosed in the half-year Financial Report for
the period ended 31 December 2014. Consequently an Impairment of $19.6 million (2014: $4.8 million) has
been recognised.
Carrying Value
Balance at beginning of the period
Impairment losses recognised during the period
BALANCE AT THE END OF THE FINANCIAL PERIOD
Consolidated
2015
$’000
19,617
(19,617)
-
2014
$’000
24,417
(4,800)
19,617
The carrying value of the AES Equipment Solutions CGU post impairment of goodwill was $5.5 million as at
30 June 2015. In determining the recoverable amount based on the assumptions noted above the company
considered various sensitivities including flexing the growth rate to 2.5% and WACC to 14.5%.
21. IMPAIRMENT
Property, plant and equipment (note 15)
Goodwill (note 20)
Investments in associates (note 19)
Inventory (note 13)
Intangibles (note 16)
Consolidated
2015
$’000
130,457
19,617
1,112
1,597
4,488
157,271
2014
$’000
-
4,800
-
-
-
4,800
68 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
Working capital and CAPEX
Working capital has been adjusted to return to and
reflect what would be considered a normal operating
level to support the underlying business.
Capital expenditure forecasts were based on
the business plan which assumes relatively low
spend in the early years of the forecast as new
programmes utilise current unallocated equipment.
Capital expenditure has been forecast to return
to normal levels and assumes replacement of
equipment in the later and terminal years of the
plan and has been assessed in line with the level of
forecast depreciation.
The recoverable values determined for NRW Civil and
Mining and Action Drill & Blast following the specific
property plant and equipment impairment noted
above were in excess of the carrying values as at
30 June 2015 and accordingly no impairment of the
CGUs was required.
Sensitivity Analysis
The company undertook sensitivity analysis with
regard to the terminal value growth rate (reducing it
to 2.5%) and the discount rate (increasing to 14.5%).
These sensitivities did not result in recoverable values
lower than the carrying value of the CGUs as at
30 June 2015.
The company has considered reasonable changes
to the key assumptions and concluded that these
would be unlikely to cause the CGUs carrying value
to exceed its recoverable amount.
Property, Plant and Equipment
During year the directors determined that an
impairment expense for certain property plant and
equipment and intangible assets was required to
bring the carrying values in line with current business
plan assessments of the underlying value of the
business unit (the recoverable value).
Plant and equipment utilisation and reduced
market demand has placed pressure on the value
of certain plant and equipment held by the group.
Accordingly the group performed a review of its Civil
and Mining and Action Drill & Blast property plant and
equipment determining the recoverable value based
on fair value less costs of disposal.
The assessment of fair value has been based on a
combination of values observable in the market for
the type of property, plant and equipment held by
the company, other unobservable inputs and the
company’s historic experience in the disposal of
such assets. The company obtained certain values
from third parties operating in the market for the
disposal of the assets. Where no external input
was obtained an internal assessment was made
in relation to those assets forming part of the
assessment of the fair value.
Cash Generating Units (CGU’s)
In addition to the specific review of property, plant
and equipment referred to the company identified
indicators of impairment for each of the three Cash
Generating Units (CGUs) – NRW Civil and Mining,
Action Drill & Blast (ADB) and AES Equipment
Solutions (AES) and accordingly assessed the
recoverable value of each of those CGUs on a
value in use basis to determine the estimated
recoverable amount. The estimated recoverable
amount was then compared to the carrying value
of the CGUs post the impairment of property, plant
and equipment referred to above.
The assumptions used in assessing the recoverable
amount of the AES CGU are set out in note
20 Goodwill.
Value in Use Assumptions
EBIT and growth
The value in use assessments for NRW Civil and
Mining and ADB were based on current and forecast
performance as included in internal business forecasts
prepared for FY16 and FY17 and growth assumptions
of 3% per annum for future years including the
terminal value.
Discount rate
A pre-tax discount rate of 17.9% which includes a
risk margin was applied to the cash flows within each
of the CGU’s.
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 69
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
22. AMOUNTS DUE FROM (TO) CUSTOMERS UNDER CONSTRUCTION CONTRACTS
Consolidated
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
23. PAYABLES
CURRENT PAYABLES
Trade payables
Goods and service tax
Non trade payables
Accruals
2015
$’000
1,046,916
1,009,173
37,743
37,743
-
37,743
2015
$’000
38,847
497
4,589
42,150
86,083
Consolidated
2014
$’000
1,261,655
1,112,586
149,069
163,770
(14,701)
149,069
2014
$’000
67,141
3,517
14,830
85,399
170,887
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.
24. BORROWINGS
The dispute on the Roy Hill Rail Project and asset impairments recognised in the year were advised to the
company’s finance providers as events which could potentially result in a breach to existing bank covenants.
The company advised in the half year accounts that agreement had been reached on revised covenants
which the company was in compliance with at 31 December 2014. Following that agreement the company
and its financiers have been working together to agree revised facilities and further changes to covenants.
Revised covenants were agreed and as at the date of signing the annual accounts the company is in
compliance with its obligations under its facilities. However, as confirmation of the revision to covenants was
received after the balance sheet date all long term borrowings have been classified as current.
The revised banking facilities recognise amounts drawn for Bank Guarantees and Asset Financing. All debt
obligations have been met to agreed terms. The company has access to project guarantee facilities through
a number of Surety Providers. The company has prepared cash forecasts which indicate that the company
does not need access to additional working capital facilities.
Information on the amounts drawn under the company’s finance facilities are provided in the table below.
The company expects to be in compliance with agreed covenants throughout the year ending 30 June 2016.
70 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
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
2015
$’000
141,813
442
142,255
-
-
142,255
2014
$’000
48,451
1,162
49,613
139,867
139,867
189,480
B) Finance facilities:
Consolidated finance facilities as at 30 June 2015
Finance Description
Face Vale (limit)
Carrying Amount (utilised)
Unutilised Amount
ASSET FINANCING(1)
Working capital
GUARANTEES AND OTHER FUNDING
Other
(1) Terms range from 1 to 5 years
$’000
146,877
-
6,109
442
$’000
141,813
-
6,109
442
$’000
5,064
-
-
-
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 71
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
Consolidated finance facilities as at 30 June 2014
Finance Description
Face Vale (limit)
Carrying Amount (utilised)
Unutilised Amount
ASSET FINANCING(1)
Working capital
GUARANTEES AND OTHER FUNDING
Other
(1) Terms range from 1 to 5 years
$’000
260,400
35,000
63,500
1,162
$’000
189,477
-
45,662
1,162
$’000
70,923
35,000
17,838
-
Security
The main finance providers are Australia and New Zealand Banking Group Limited (“ANZ”) which provides
working capital facilities to the company including trade finance and performance guarantee facilities and ANZ
Leasing (Vic) Pty Ltd (“ANZ Leasing”) which provides asset finance to the company. The facilities are subject
to annual and periodic reviews and include financial and other covenants usual for facilities of this nature.
The facility provided by ANZ is secured by a first ranking general security interest granted by the company
in favour of ANZ. The facility provided by ANZ Leasing is secured by first ranking specific security over any
goods purchased using the proceeds of that facility.
25. PROVISIONS
CURRENT
Employee benefits
Warranty
Onerous leases
Total current provisions
NON-CURRENT
Employee benefits
Warranty
Onerous leases
Total non-current provisions
TOTAL CURRENT AND NON-CURRENT PROVISIONS
Consolidated
2015
$’000
6,685
1,077
1,372
9,134
1,237
77
2,039
3,353
12,487
2014
$’000
16,101
1,077
-
17,178
1,354
187
-
1,541
18,719
72 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
BALANCE AT 1 JULY 2014
Provisions made during the year
Reductions arising from payments
Reductions resulting from re-measurement
BALANCE AT 30 JUNE 2015
Short-term provisions
Long-term provisions
TOTAL BALANCE AT 30 JUNE 2015
Onerous lease
Warranty provision
Employee benefits
Consolidated
$’000
-
3,411
-
-
3,411
1,372
2,039
3,411
$’000
1,264
(110)
-
-
1,154
1,077
77
1,154
$’000
17,455
34,069
(43,602)
-
7,922
6,685
1,237
7,922
Total
$’000
18,719
37,370
(43,602)
-
12,487
9,134
3,353
12,487
i) The provision for onerous leases recognises mostly reduced occupancy levels in the company’s main offices at 181
Great Eastern Highway which are not anticipated to significantly change over the remaining three and a half years of the
current lease.
ii) 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.
iii) The provision for employee benefits represents annual leave and vested long service leave entitlements accrued and
compensation claims made by employees.
26. CONTRIBUTED EQUITY
Fully paid ordinary shares
ORDINARY SHARES
278,877,219 fully paid ordinary shares
(2013: 278,877,219)
Consolidated
2015
$’000
2014
$’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.
Consolidated
2015
2014
# No. ‘000
# No. ‘000
2015
$’000
2014
$’000
FULLY PAID ORDINARY SHARES
BALANCE AT THE BEGINNING OF THE FINANCIAL YEAR
278,877
278,877
156,432
156,432
Acquisition of treasury shares
Transfer to contributed equity
Share issue costs
-
-
-
(146)
146
-
-
-
-
(231)
231
-
BALANCE AT THE END OF THE PERIOD
278,887
278,877
156,432
156,432
Share options and performance rights granted
Information relating to the group’s options and performance rights, including details of issued, exercised and
lapsed during the financial year and outstanding at the end of the financial year, is set out in the directors
remuneration report.
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 73
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
27. RESERVES
Share based payment reserve
Foreign currency reserve
TOTAL RESERVES
SHARE BASED PAYMENT RESERVE
Balance at the beginning of the financial year
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
2,991
(231)
226
2,987
2014
$’000
(214)
(1)
(215)
2,772
2015
$’000
3,085
(184)
2,901
2015
$’000
2,987
-
98
3,085
2015
$’000
(215)
31
(184)
2,901
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.
28. RETAINED EARNINGS
Balance at the beginning of the financial year
Net profit attributable to members of the parent entity
Dividends paid (Note 29)
BALANCE AT THE END OF THE FINANCIAL YEAR
Consolidated
2015
$’000
212,798
(229,823)
(13,944)
(30,969)
2014
$’000
193,661
44,236
(25,099)
212,798
74 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
29. DIVIDENDS
Dividends paid
RECOGNISED AMOUNTS PAID:
Fully paid ordinary shares, fully franked
Final dividend to 30 June 2014:
Interim dividend to 31 December 2014:
Final dividend to 30 June 2013
Interim dividend to 31 December 2013
UNRECOGNISED AMOUNTS:
Fully paid ordinary shares, fully franked
Final dividend to 30 June 2014
Final dividend to 30 June 2014
2015
2014
Cents per share
Cents per share
Total
$’000
Total
$’000
5.00
-
13,944
-
5.00
4.00
13,944
11,155
25,099
13,944
-
-
5.00
13,944
No dividend will be declared in respect of the financial year ended 30 June 2015.
Franking account
Consolidated
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(1)
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.
2015
$’000
49,899
3,601
(5,976)
-
47,524
(5,935)
-
41,589
2014
$’000
65,352
(4,696)
(5,976)
(4,781)
49,899
7,066
(5,976)
50,989
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 75
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
30. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Reconciliation of profit for the period to net cash flows from operating activities
Consolidated
(LOSS) / PROFIT FOR THE PERIOD
Adjustments for:
Loss/(gain) on sale of property, plant and equipment
Net foreign exchange (gain) / loss
Depreciation and amortisation
Impairment of PP&E (excludes Inventories impairment)
Impairment of goodwill
Share of loss from associates
Share based payment expense
2015
$’000
(229,823)
(593)
31
44,345
136,057
19,617
500
98
2014
$’000
44,236
(221)
(1)
52,753
4,800
-
-
226
OPERATING PROFIT BEFORE CHANGES IN WORKING CAPITAL AND PROVISIONS
(29,768)
101,792
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
31. FINANCIAL INSTRUMENTS
126,729
8,273
2,687
(84,805)
(6,233)
(13,116)
(50,995)
(47,228)
4,511
11,857
(1,007)
(26,052)
1,379
10,764
884
104,129
Financial risk management
The group’s overall financial risk strategy seeks to ensure appropriate funding levels, approved treasury
directives to meet ongoing project needs and to allow flexibility for growth.
The Board has ultimate responsibility to manage the group’s policy of risk management. The risk policies
and procedures are reviewed periodically.
In addition, the going concern basis is reviewed throughout the year, ensuring adequate working capital
is available.
The financial instruments in the group primarily consist of interest bearing debt, cash, trade receivables and
payables. The group has minimal foreign currency risks, although its presence in Guinea West Africa remain,
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.
76 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
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 where it has
been deemed appropriate to own those assets. These are primarily placed under hire purchase borrowing
arrangements under a clubbing arrangement through the ANZ Banking Group Ltd.
The cash position is reviewed regularly.
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 2015 as:
Consolidated
Borrowings (Note 24)
Cash (Note 11)
NET DEBT
Total equity
NET DEBT TO EQUITY RATIO
2015
$’000
142,255
(34,631)
107,624
128,364
84%
2014
$’000
189,480
(155,474)
34,007
372,002
9%
Gearing ratio of 84% as at 30 June 2015 has increased since 30 June 2014.
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 ANZ facility has no outstanding utilisations. Principal and interest payments under the ANZ Leasing
facility are made quarterly (some historical borrowings remain as monthly repayments). The term under the
ANZ Leasing facility is five years or as deemed relevant to that plant utilisation and life. The final payment in
respect of any loan in most cases is set at 25% of the principal amount of that loan.
The Board continues to review its risk associated with any covenants and borrowing conditions on a
regular basis.
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 new drawdown facilities should a project
award require it. In this case the cost of the capital would be considered in the project tender submission and
appropriate approval sort. 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.
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 77
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
A) Consolidated interest and liquidity analysis 2015
FINANCIAL ASSETS
Cash and cash equivalents
Trade and other receivables
FINANCIAL LIABILITIES
Asset financing
Trade and other payables
Effective interest rate
Total
0 to 30 days
31 days to < 1 year
1 to 5 yrs
$’000
$’000
$’000
$’000
0.25%
-
5.93%
-
34,631
73,812
108,443
156,355
86,083
242,438
34,631
41,382
76,013
1,367
40,515
41,882
-
32,430
32,430
74,733
45,568
120,301
-
-
-
80,255
-
80,255
B) Consolidated interest and liquidity analysis 2014
Effective interest rate
Total
0 to 30 days
31 days to < 1 year
1 to 5 yrs
$’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
155,474
101,319
356,015
256,793
216,649
170,887
387,536
1,823
96,667
98,490
-
99,222
99,222
59,536
74,221
-
-
-
155,290
-
133,756
155,290
> 5yrs
$’000
-
-
-
-
-
-
> 5yrs
$’000
-
-
-
-
-
-
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 currencies
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 2015 (at spot) was $20,523 AUD (2014: $35,521 AUD).
Market movements in overseas jurisdictions are considered a low risk, given the majority of the cash is utilised
quickly and intentionally not left idle for long periods.
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 2015 stands at $6.1 million (2014: $45.7 million) and bonds held
stand at $83.1 million (2014: $207.9 million).
78 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
32. 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 31. The average lease term is five years
Interest rates underlying all obligations under finance leases are fixed at respective contract dates ranging
from 5.37% to 7.57% (2014: 5.56% to 11.08%)
No later than 1 year
Later than 1 year and not later than 5 years
Later than five years
MINIMUM FUTURE LEASE PAYMENTS(1)
Less future finance charges
PRESENT VALUE OF MINIMUM LEASE PAYMENTS
Minimum future
lease payments
Present value of minimum future lease
payments
2015
$’000
76,100
80,255
-
156,355
(14,100)
142,255
2014
$’000
61,359
155,290
-
216,649
(27,168)
189,480
2015
$’000
66,847
75,408
-
2014
$’000
49,613
139,867
-
142,255
189,480
-
-
142,255
189,480
(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 24 ‘Borrowings’):
Current borrowings
Non-current borrowings
Consolidated
2015
$’000
142,255
-
142,255
2014
$’000
49,613
139,867
189,480
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 79
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
33. 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
2014
$’000
-
-
-
-
2014
$’000
3,175
9,156
-
12,331
2015
$’000
-
-
-
-
2015
$’000
4,194
5,654
-
9,848
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.
34. CAPITAL AND OTHER COMMITMENTS
CAPITAL EXPENDITURE COMMITMENTS – PLANT AND EQUIPMENT AND OTHER
Within one year
Between one and five years
Later than five years
35. CONTINGENCIES
Bank guarantees
Insurance bonds
BALANCE AT THE END OF THE FINANCIAL YEAR
Consolidated
Consolidated
2014
$’000
1,386
-
-
1,386
2014
$’000
45,663
207,984
253,646
2015
$’000
-
-
-
-
2015
$’000
6,109
83,124
89,233
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.
80 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
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.
36. 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.
Transaction Booked in Group
Transaction Value
2015
$
2014
$
(i) OTHER RELATED PARTY – EXPENSE
Mr W Fair – Northwest Quarries Pty Ltd
Purchase of construction materials.
1,758,908
4,355,253
(ii) INTER GROUP TRANSACTIONS
NRW Pty Ltd – Purchases from Action Mining Services
Repairs and maintenance, plant and module
purchases and labour hire.
5,340,013
8,935,604
NRW Pty Ltd – Sales to Action Mining Services
Back charges for labour and miscellaneous.
30,036
22,869
NRW Pty Ltd - Sales to NRW-NYFL Joint Venture
Subcontractor Services
12,334,723
49,867,452
NRW Pty Ltd - Sales to NRW Eastern Guruma Joint
Venture
Subcontractor Services
39,131,573
280,881,517
NRW Pty Ltd – Sales to NRW EG NYFL JV Solomon
Subcontractor Services
21,961
-
Subcontractor Services
19,854,405
801,920
NRW Pty Ltd – Sales to NRW- Eastern Guruma-NYFL
Joint Venture
NRW Pty Ltd – Sales to Action Drill & Blast
Back charges for plant, labour and other re
project works
NRW Pty Ltd - Purchases from NRW Guinea SARL
Management Fee and cost back charges
Action Drill & Blast – Purchases from Action Mining
Services
Repairs and maintenance, plant and module
purchases and consulting
5,002,671
1,053,661
71,526
58,049
119,186
380,242
NRW Pty Ltd – Purchases from Action Drill & Blast
Drill & Blast Services and back charges
18,966,934
27,279,470
Action Drill & Blast – Sales to NRW-Eastern Guruma Joint
Venture
Drill & Blast Services and back charges
-
3,659,143
Action Drill & Blast – Purchases from NRW Pty Ltd
Materials and consumables, plant and module
purchases and equipment hire
192,802
-
NRW Pty Ltd – interest charged from ACN 107 724 274
Interest levied on intercompany loan balances
ACN 107 724 274 – interest charged from Action
Mining Services
Interest levied on intercompany loan balances
-
-
4,585,809
544,310
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 81
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
Related party outstanding balances
Amounts receivable from or payable to related parties at reporting date were as follows:
Consolidated
ACCOUNT RECEIVABLE BALANCES
Other related parties
Total related party assets
ACCOUNTS PAYABLE BALANCES
Other related parties
Total related party payables
2015
$’000
-
-
-
-
2014
$’000
-
-
9
9
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.W
37. EVENTS AFTER THE REPORTING PERIOD
Other than the events noted below there has not arisen in the interval between the end of the financial year
and the date of this report any transaction or event of a material nature likely in the opinion of the Directors,
to affect significantly the operations of the consolidated entity, the results of those operations, or the state of
affairs of the consolidated entity in subsequent financial years.
82 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
38. AUDITOR’S REMUNERATION
AUDIT SERVICES
Auditors of the Company
Deloitte Touche Tohmatsu
OTHER SERVICES
Deloitte Touche Tohmatsu
Coal levy audits
Procurement strategy (1)
TOTAL
Consolidated
2015
$
2014
$
277,500
310,000
14,000
102,500
394,000
13,174
513,798
836,972
(1) Deloitte Touche Tohmatsu were engaged in 2014 to review the procurement strategies of the group. The finalised fees
were incurred in early FY15.
39. PARENT ENTITY INFORMATION
As at, and throughout, the financial year ended 30 June 2015 the parent company of the group was NRW
Holdings Limited.
The accounting policies of the parent entity, which have been applied in determining the financial information
shown below, are the same as those applied in the consolidated financial statements. Refer to Note 2 for a
summary of the significant accounting policies relating to the group.
A) Financial position
Parent
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
EQUITY
Contributed equity
Retained earnings
RESERVES
Share based payment reserve
TOTAL EQUITY
2015
$’000
65,645
62,550
128,195
-
-
-
156,456
(31,047)
2,786
128,195
2014
$’000
247,353
34,089
281,442
8,424
(595)
7,829
156,456
114,470
2,688
273,613
NRW ANNUAL REPORT 2015 | Notes to the Financial Statements 83
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
B) Financial performance
(Loss) / profit for the year
TOTAL COMPREHENSIVE INCOME
Parent
2015
$’000
(131,996)
(131,996)
C) Guarantees entered into by the parent in relation to the debts of its subisidiaries:
Parent
2015
$’000
142,255
142,255
Debt borrowings
TOTAL
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
2014
$’000
43,421
43,421
2014
$’000
189,480
189,480
Historical unit trust distributions from NRW Unit Trust (subsidiary) to NRW Holdings Limited (parent) have
been historically amended to be compliant with the trust deed. Historical unit trust distributions have not been
settled by way of cash as at 30 June 2015, the balances owing are recorded in the intercompany receivable
and payable of the parent and subsidiary respectively. The deferred tax impacts have also been amended.
84 NRW ANNUAL REPORT 2015 | Notes to the Financial Statements
SHAREHOLDER
INFORMATION
The shareholder information set out below was applicable as at 12 August 2015.
NRW’s contributed equity comprises 278,888,011 fully paid ordinary shares.
Distribution of shareholdings:
Range
Fully paid ordinary shares
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable parcels
183,835,115
74,998,204
12,255,171
7,153,802
645,719
278,888,011
2,694,424
NRW’s 20 Largest Shareholders
Rank
Name
%
65.92
26.89
4.39
2.57
0.23
100.00
0.97
No of Holders
277
2,410
1,504
2,282
1,330
7,803
2,375
%
3.55
30.89
19.27
29.25
17.04
100.00
30.44
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
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
PRUDENTIAL NOMINEES PTY LTD
JULIAN ALEXANDER PEMBERTON THE J P TRUST
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD
ZERO NOMINEES PTY LTD
NATIONAL EXCHANGE PTY LTD
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
BNP PARIBAS NOMS PTY LTD
INTECH SOLUTIONS PTY LTD
SPELIZA INVESTMENTS PTY LTD
MR GRAHAM JAMES JOLLY & MS SYLVIA LILIAN ROFE
MR CHRISTOPHER KING
SPORRAN LEAN PTY LTD
MR CRAIG STEVEN PICKETT
MR MARTIN DUGGAN
Shares
% Interest
29,634,864
10.63%
22,041,605
19,614,947
11,439,188
4,545,774
4,100,000
2,540,014
2,285,701
2,250,277
2,000,000
1,991,733
1,961,534
1,710,263
1,639,993
1,476,393
1,400,000
1,343,348
1,255,000
1,200,973
1,148,000
7.9%
7.03%
4.1%
1.63%
1.47%
0.91%
0.82%
0.81%
0.72%
0.71%
0.7%
0.61%
0.59%
0.53%
0.5%
0.48%
0.45%
0.43%
0.41%
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
Commonwealth Bank of Australia
Credit Suisse Holdings (Australia) Limited
Shares
17,787,138
18,836,818
% Interest
6.37%
6.75%
Voting rights
Every shareholder present in person or represented by a proxy or other representative, shall have one vote for
each share held by them.
NRW ANNUAL REPORT 2015 | Shareholder Information 85
INDEPENDENT AUDITOR’S
REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 9365 7001
www.deloitte.com.au
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
statement of financial position as at 30 June 2015, 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,
notes comprising a summary of significant accounting policies and other explanatory information, and the
directors’ declaration of the consolidated entity, comprising the company and the entities it controlled at the
year’s end or from time to time during the financial year as set out on pages 30 to 84.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 2,
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
Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
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
reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
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
risk assessments, the auditor considers internal control, relevant to the company’s preparation of the
financial report that gives a true and fair view, in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s
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
of the financial report.
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
86
86 NRW ANNUAL REPORT 2015 | Independent Auditor's Report
INDEPENDENT AUDITOR’S
REPORT CONTINUED
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 2015 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.
Emphasis of matter
Without modifying our opinion, we draw attention to Note 2 in the financial report, which indicates
that the company incurred a net loss of $229.8 million during the year ended 30 June 2015. This
condition, along with other matters as set forth in Note 2, indicate the existence of a material
uncertainty that may cast significant doubt about the consolidated entity’s and company’s ability to
continue as going concerns and therefore, the consolidated entity and company may be unable to
realise their assets and discharge their liabilities in the normal course of business.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 11 to 22 of the directors’ report for the year
ended 30 June 2015. 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.
Opinion
In our opinion the Remuneration Report of NRW Holdings Limited for the year ended 30 June 2015,
complies with section 300A of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
AT Richards
Partner
Chartered Accountants
Perth, 31 August 2015
87
NRW ANNUAL REPORT 2015 | Independent Auditor's Report 87
APPENDIX
4E
RESULTS FOR ANNOUNCEMENT TO THE MARKET
For the Year Ended 30 June 2015
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
% Change
up / (down)
Year ended
30 June 2015
Year ended
30 June 2014
-31.60%
-619.54%
-619.48%
$’000
775,934
(229,822)
(229,791)
N/A
N/A
-
-
N/A
N/A
-
-
$’000
1,134,492
44,236
44,235
9 April 2014
12 March 2014
4.0
4.0
29 October 2014
10 October 2014
5.0
5.0
Net tangible asset backing per ordinary security
$0.44
$1.22
Commentary on the Results for the Year
A commentary for the results for the year is contained in the Annual Financial Statements dated 31 August 2015.
Status of Accounts
This statutory financial report is based on audited accounts.
NRW Holdings Limited - ACN 118 300 217
88 NRW ANNUAL REPORT 2015 | Appendix 4E
THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
NRW HOLDINGS LIMITED
181 Great Eastern Highway Belmont
Western Austalia, 6104 Australia
+61 8 9332 4200 | nrw.com.au