59th Annual Report
Year Ended 30 June 2018
ABN 92 000 307 988
2018
(cid:137)(cid:137)(cid:137)(cid:314)(cid:111)(cid:1140)(cid:55)(cid:67)(cid:59)(cid:1140)(cid:55)(cid:118)(cid:314)(cid:49)(cid:111)(cid:108)(cid:314)(cid:45)(cid:134)
Annual Report Contents
Directors' Report
Auditor's Independent Declaration
Financial Statements
Directors' Declaration
Independent Auditor's Report
Corporate Governance Statement
Risk Management Statement
Shareholder Information
Corporate Directory
Page
2
8
9
38
39
42
50
52
53
1
Oldfields Holdings Limited
30 June 2018
Directors' Report
Your Directors present their report on the consolidated entity (referred to herein as the "Group") consisting of Oldfields Holdings Limited (referred to
hereafter as the "Company" or the "Parent Entity") and its controlled entities for the financial year ended 30 June 2018.
Directors' Details
The names and details of the Directors of the Company during the financial year and until the date of this report are set out below. Directors were in
office for this entire period unless otherwise stated.
Richard John Abela
Chief Executive Officer and Managing Director
William Lewis Timms
Non-executive Director and Chairman
Mr Abela has more than 20 years experience in senior/managing
director roles in finance, sales & marketing and supply chain
including a number of years in the building products sector,
scaffolding and trade related industries
Qualifications
Fellow Member of CPA and Master of Business Administration
Other current directorships:
Order of Saint John of Jerusalem, Knights Hospitaller
Mr Timms has more than 30 years experience in accounting, taxation,
audit, commercial real estate and project management
Special responsibilities
Member of the Audit Committee and Member of the Remuneration
Committee
Qualifications
Bachelor of Business (Accounting and Audit), Real Estate and Business
Agent
Previous directorships (last 3 years):
None
Interest in shares and options:
201,000 shares held
Other current directorships:
None
Previous directorships (last 3 years):
Non-executive Director of Buderim Ginger Limited (resigned 28 August
2016)
Interest in shares and options:
39,384,528 shares held
Stephen Charles Hooper
Non-executive Director
Gregory John Park
Chief Financial Officer, Executive Director and Company Secretary
Mr Hooper has more than 20 years experience in senior executive
roles in the fast moving consumer goods industry, with a focus on
supply chain management
Mr Park has more than 20 years experience in senior financial and
general management roles in retailing, manufacturing and distribution in
the fast moving consumer goods industry
Special responsibilities
Chairman of the Audit Committee and Chairman of the
Remuneration Committee
Qualifications
Bachelor of Business and Chartered Accountant
Qualifications
Bachelor of Science
Other current directorships:
None
Previous directorships (last 3 years):
None
Interest in shares and options:
131,534 shares held
Other current directorships:
None
Previous directorships (last 3 years):
None
Interest in shares and options:
None
Principal Activities
The principal activities of the Group during the financial year were:
-
-
-
-
import and distribution of paint brushes, paint rollers, painter's tools and accessories;
manufacture and distribution of garden sheds and outdoor storage systems;
hire and erection of scaffolding and related products; and
manufacture and distribution of scaffolding and related equipment.
There were no significant changes in the nature of the Group's principal activities during the financial year. The majority of operations are conducted in
Australia.
2
Oldfields Holdings Limited
30 June 2018
Review of Operations and Financial Results
Operating Results
Net operating profit for the Group after providing for income tax amounted to $1,550,000 (2017: $312,000).
The Group's earnings before interest, tax, depreciation and amortisation (EBITDA) of $1,121,000 reduced by 45% from the prior year of $2,031,000.
The following table summarises the key reconciling items between profit/(loss) after income tax attributable to the shareholders of the Group and
EBITDA. EBITDA is a financial measure which is not prescribed by Australian Accounting Standards ("AAS") and represents the profit under AAS adjusted
for specific non cash and significant items. The Directors consider EBITDA to reflect the core earnings/(loss) of the Group.
Sales revenue
Profit/(loss) after income tax
Income tax expense
Profit/(loss) before income tax
Depreciation and amortisation expense
Net finance costs
Unrealised foreign exchange losses
Revaluation of deferred senior loan note
Loss on disposal of investment in associated companies
EBITDA
2018
$'000
2017
$'000
2016
$'000
2015
$'000
2014
$'000
25,898 26,721 28,420 27,380 27,231
1,550
309
1,859
312
315
627
(2,576)
(722) (1,102)
352
147
234
(370) (868) (2,429)
912
278
8
303
11
(1,936) 287
-
2,031
-
1,121
803 1,434 1,361 1,168
485
(15)
205
1,363
777
482
(39)
229
-
1,661 1,165
377
(37)
257
-
The Group's revenue from continuing operations for the financial year ended 30 June 2018 was $25,898,000 (2017: $26,721,000) which was a decrease of
3% over prior year. Revenue within the scaffold division grew 9% for the year driven by a new growth strategy and assisted by the buoyant Australian
housing and construction industry which is expected to continue in the next twelve months. The consumer division's revenue declined by 33% having
ceased supply to the Mitre 10 warehouse system because of prohibitive trading terms as well as the result of the ongoing wind down of the sheds and
outdoor storage business.
Depreciation and amortisation expense for the year was $912,000 which was an increase of $109,000 (2017: $803,000) which reflects the increased cost
from investment in hire fleet to support the growth of the scaffold division.
The Group’s net profit after tax was $1,550,000 (2017: $312,000). This was an improvement of $1,238,000 which includes a $1,936,000 favourable
revaluation of the deferred senior loan note. The Group had a loss of $77,000 before income tax and revaluation of the financial derivative (2017: Profit
$914,000). The Group’s gross profit percentage increased from 43% in 2017 to 46% in 2018 reflecting the strategic change of investing in customer
relationships which support sustainable profitable growth. The Group substantially increased investment in it's sales and distribution systems during the
year to underpin the strategic change needed to initiate a strong growth plan.
Net cash provided by operating activities was $1,373,000 in 2018 compared to $2,144,000 in 2017. The reduction primarily due to the investment spend
in sales and distribution which is expected to provide greater benefits in the future. Strong operating cash flow continues to be a major focus for the
Group with increased emphasis on profitable revenue growth and the reduction of working capital in 2019.
(i) Consumer Products - Paint Applications and Outdoor Storage Solutions
Paint equipment sales experienced a decline compared to the prior year. Sales to large national chains with a DIY focus declined 79% primarily as a result
of a strategic reason to cease the supply to the Mitre 10 warehouse network because of prohibitive trading terms. Sales to specialist paint independents
and buying groups, which is the division's core customer base, grew 17% versus the prior year although was below expectations given the anticipated
impact of the Mitre 10 decision. The successful launch of the Pro-Series brush in October 2017 supported the specialist segment's growth and returns
Oldfield to it's heritage position of being master brush makers since 1916. The Group is committed to continue it's program of innovation and product
development to grow the sector which has largely become homogenised. During the year the business worked closely with suppliers resulting in lower
cost of sales. This together with the realigned customer base, has the division with much stronger gross margins which should enable the division to
achieve profitability when reaching critical sales mass.
Outdoor storage sales were 86% lower than the prior year. Sales by Treco are now predominantly online and direct to the public as opposed to
previously via a distributorship network. Whilst gross margin percentages have improved, volumes are insufficient for the division's long term
sustainability. Treco will continue to operate as it sells down inventory. The division is not core to the overall business strategy.
(ii) Scaffolding
The Group focused heavily on growth initiatives during the year and increased divisional revenues by 9% compared to 4% in the prior year. Whilst the
Australian building industry continues to be buoyant, the business has been developing revenue streams to counter the cyclical nature of the industry.
Performance has varied greatly between branches reflecting the complexity associated with large strategic change which has also brought the need of
growth minded branch management and operational improvements. Western Australia suffered the largest decline having also been impacted by the
contraction in mining rolling through into general building and maintenance. Branch specific initiatives have been developed to address their particular
situations. Oldfields continues to identify niche segments and to leverage relationships with national accounts by providing tailored customer solutions.
The division continues to invest in its hire fleet to support the growth strategy (2018: $934,000 compared to 2017: $543,000).
The financial performance of the manufacturing plant in China was weaker than the prior year having been impacted by the higher commodity cost of
aluminium. To increase the competitive offer in scaffold sales, the Group has recently commenced a program to increase the level of automated
production and inhouse value added processes. This has also significantly shortened lead times without the need to increase inventories as well as to
maintain our high quality standards. International sales of scaffold continue to grow although opportunities identified are taking longer to develop than
thought.
Financial Position
The net assets of the Group have increased by $1,232,000 from $4,106,000 at 30 June 2017 to $5,338,000 at 30 June 2018.
A key area of focus for the 2019 financial year will be to continue to trade profitably and further increase the net asset position of the Group.
3
Oldfields Holdings Limited
30 June 2018
Significant Changes in State of Affairs
There were no significant changes in the state of affairs during the financial year.
Dividends
Since the start of the financial year, no dividends have been paid or declared by Oldfields Holdings Limited.
Events after the Reporting Period
There are no matters or circumstances that have arisen since the end of the financial year which significantly affected or could affect the operations of
the Group in future years.
Future Developments, Prospects and Business Strategies
Growth strategies for Paint Applications continue to be developed to achieve critical mass. Sales growth supported by further product innovation is
necessary to return the segment to profitability. The strategies for Scaffold of driving revenue growth with a focus on leveraging national accounts via
our Australia wide offer and non cyclical sectors will continue in the 2019 financial year. There will also be an emphasis on getting all branches to
perform to their maximum potential.
Environmental Regulation and Performance
The Group’s operations are not subject to any particular or significant environmental regulation under the law of the Commonwealth or of a State or
Territory in Australia. The Group has established procedures whereby compliance with existing environmental regulations and new regulations are
monitored continually. This process includes procedures to be followed should an incident adversely impact the environment. The Directors are not
aware of any breaches during the period covered by this report.
Directors' Meetings
The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each
director were as follow:
Director's Name
Richard John Abela
William Lewis Timms
Stephen Charles Hooper
Gregory John Park
Remuneration Report (Audited)
Remuneration Policy
Board
Meetings
Audit Committee
Meetings
Remuneration Committee
Meetings
Number
Eligible to
Attend
Number
Attended
Number
Eligible to
Attend
Number
Attended
Number
Eligible to
Attend
Number
Attended
14
14
14
14
14
14
13
14
-
2
2
-
-
2
2
-
-
1
1
-
-
1
1
-
The remuneration policy of the Group has been designed to align key management personnel (KMP) objectives with shareholder and business objectives
by providing a fixed remuneration component and offering incentives based on key performance areas affecting the consolidated entity's financial
results. The Board believes the remuneration policy to be appropriate and effective in it's ability to attract and retain the high quality KMP to run and
manage the Group, as well as create goal congruence between directors, executives and shareholders.
The Board’s policy for determining the nature and amount of remuneration for KMP of the Group is as follows:
-
-
-
-
The remuneration policy is to be developed by the Remuneration Committee and approved by the Board after professional advice is sought
from independent external consultants when required;
KMP receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits, and
performance incentives;
Performance incentives are generally only paid once predetermined key performance indicators (KPIs) have been met; and
The Remuneration Committee reviews KMP packages annually by reference to the Group’s performance, executive performance and
comparable information from industry sectors.
The performance of KMP is measured against criteria with each executive and is based predominantly on the forecast growth of the Group’s profits and
shareholders’ value. All bonuses and incentives must be linked to predetermined performance criteria. The Board may however exercise its discretion in
relation to approving incentives, bonuses and options, and can recommend changes to the Committee’s recommendations. Any change must be justified
by reference to measurable performance criteria. The policy is designed to attract high calibre executives and reward them for performance results
leading to long-term growth in shareholder wealth.
KMP receive at a minimum, a superannuation guarantee contribution required by the government, which is currently 9.5% of the individual's earnings.
Individuals may however have chosen to sacrifice part of their salary to increase payments towards their superannuation.
Upon retirement, KMP are paid employee benefit entitlements accrued to the date of retirement.
All remuneration paid to KMP is valued at the cost to the Group and expensed.
The Board's policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The Remuneration Committee
determines payments to the non-executive directors and reviews their remuneration annually based on, market practice, duties and accountability.
Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to
approval by shareholders at the Annual General Meeting.
4
Oldfields Holdings Limited
30 June 2018
Engagement of Remuneration Consultants
During the financial year there were no consultants engaged by the Remuneration Committee to review the elements of KMP remuneration and provide
recommendations.
Performance-Based Remuneration
The KPIs are set annually with a certain level of consultation with KMP. The measures are specifically tailored to the area each individual is involved in
and has a level of control over. The KPIs target areas the Board believes hold greater potential for the Group's expansion and profit, covering financial
and non-financial as well as short and long-term goals. The level set for each KPI is based on budgeted figures for the Group and respective industry
standards.
Performance in relation to the KPIs is assessed annually with bonuses being awarded depending on the number and difficulty of the KPIs achieved.
Following the assessment, the KPIs are reviewed by the Remuneration Committee in light of the desired and actual outcomes, and their efficiency is
assessed in relation to the Group’s goals and shareholder wealth before the KPIs are set for the following year.
In determining whether or not a KPI has been achieved the Group bases the assessment on audited figures, however where the KPI involves comparison
of the Group or a division within the Group to the market, independent reports may be sought from organisations such as Standard & Poors.
Employment Details of Members of Key Management Personnel
The following table provides employment details of persons who were, during the financial year, members of KMP of the Group.
Group Key Management Personnel
Richard John Abela
Position Held
During and at 30 June 2018
Managing Director and Chief
Executive Officer
Contract Details:
Duration & Termination
Duration unspecified. Termination 3
months notice
Current Salary / Fees
Incl. Superannuation
$262,800
William Lewis Timms
Non-executive Director
Duration & termination unspecified
Stephen Charles Hooper
Non-executive Director
Duration & termination unspecified
Gregory John Park
Executive Director, Company
Secretary and Chief Financial Officer
Duration unspecified. Termination 3
months notice
The table below illustrates the proportion of remuneration that was performance related and fixed salary/fees.
$98,550
$54,750
$213,525
Richard John Abela
William Lewis Timms
Stephen Charles Hooper
Gregory John Park
Performance
Related
%
-
-
-
-
Fixed
%
Total
%
100
100
100
100
100
100
100
100
The employment terms and conditions of all KMP are formalised in contracts of employment.
There are no pre-defined termination benefits payable to key management personnel other than accrued leave entitlements.
In addition to the above,
the Group is committed to pay the CEO and the CFO up to 6 months of base salary each in the event of a successful takeover offer and their positions are
terminated or made effectively redundant.
5
Oldfields Holdings Limited
30 June 2018
Remuneration Expenses for Key Management Personnel
The following table of benefits and payments represents the components of the current year and comparative year remuneration expenses for each
member of KMP of the Group. Such amounts have been calculated in accordance with Australian Accounting Standards:
Short-Term Benefits
Cash Salary
and Fees
$
Cash
Bonuses &
Incentives
$
Non-
Monetary
Benefits
$
Movement in
Leave
Entitlements
$
237,078
124,692
192,561
182,624
-
128,548
- 9,893
-
- 6,006
25,000
- 7,334
-
-
(5,009)
35,000
-
-
-
(19,493)
- 12,514
90,000
72,500
49,541
48,165
569,180
556,529
-
-
-
-
-
60,000
-
-
-
-
-
-
-
-
- 17,227
(18,496)
12,514
Year
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Long-Term
Benefits
Post
Employment
Benefits
Leave
Entitlements
$
Super-
annuation
$
Total
$
- 22,522
- 11,846
- 18,293
- 20,199
-
-
- 15,371
269,493
167,544
218,188
232,814
-
136,940
8,550
-
6,175
-
4,706
-
-
4,576
- 54,071
- 58,167
98,550
78,675
54,247
52,741
640,478
668,714
Executive Directors
Richard John Abela
(appointed 12 December 2016)
Gregory John Park
Tony Joseph Grima
(resigned 12 December 2016)
Non-Executive Directors
William Lewis Timms
Stephen Charles Hooper
2018 Total KMP
2017 Total KMP
Securities Received that are not Performance Related
No members of KMP are entitled to receive securities that are not performance-based as part of their remuneration package.
Performance-Related Share-based Payments
There were no performance-related share-based payments made to key management personnel during the year.
Options and Rights Granted as Remuneration
There were no options or rights granted as remuneration during the year.
Shares held by Key Management Personnel
The number of ordinary shares in Oldfields Holdings Limited held during the 2018 financial year by each of the KMP of the Group is as follows:
Richard John Abela
William Lewis Timms
Stephen Charles Hooper
Gregory John Park
Total
Granted as
Remuneration
During the
Year
Issued on
Exercise of
Options
During the
Year
Other
Changes
During the
Year
Number at
End of Year
-
-
-
-
-
- 201,000 201,000
39,384,528
-
-
131,534
-
-
-
-
-
- 201,000
39,717,062
Number at
Beginning of
Year
-
39,384,528
131,534
-
39,516,062
Other Transactions with Key Management Personnel
There were no other transactions conducted between the Group and KMP or their related parties, other than those disclosed above or in note 29
relating to equity, compensation and loans, that were conducted other than in accordance with normal employee, customer or supplier relationships on
terms no more favourable than those reasonably expected under arm’s length dealings with unrelated persons.
(This concludes the Remuneration Report which has been audited)
Indemnifying Officers
During or since the end of the financial year, the Company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay
insurance premiums as follows:
-
The Company has paid premiums to insure all past, present and future Directors against liabilities for costs and expenses incurred by them
in defending legal proceedings arising from their conduct while acting in the capacity of Directors of the Company, other than conduct
involving a wilful breach of duty in relation to the Company. The contract of insurance prohibits disclosure of the nature of liability and the
amount of the premium.
Proceedings on Behalf of Company
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party
for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
6
Oldfields Holdings Limited
30 June 2018
Options
At the date of this report, there were no unissued ordinary shares of Oldfields Holdings Limited under options.
Rounding
Oldfields Holdings Limited has applied the relief available to it under ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191.
Accordingly, amounts in the financial statements have been rounded to the nearest thousand dollars unless otherwise stated.
Non-Audit Services
The Board of Directors, in accordance with advice from the Audit Committee, is satisfied that the provision of non-audit services during the year is
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services
disclosed below did not compromise the external auditor’s independence for the following reasons:
-
-
all non-audit services are reviewed and approved by the Audit Committee prior to commencement to ensure they do not adversely affect
the integrity and objectivity of the auditor; and
the nature of the services provided does not compromise the general principles relating to auditor independence in accordance with APES
110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.
Details of the amount paid to the auditors of the Company, BDO East Coast Partnership, and its related practices for audit and non-audit services
provided during the year are set out in note 28 to the financial statements.
Auditor's Independence Declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporation Act 2001 is set out on the following page.
This Directors' Report is signed in accordance with the resolution of the Board of Directors.
Richard Abela
Dated:
31 August 2018
7
Oldfields Holdings Limited
30 June 2018
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY IAN HOOPER TO THE DIRECTORS OF OLDFIELDS HOLDINGS
LIMITED
As lead auditor of Oldfields Holdings Limited for the year ended 30 June 2018, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Oldfields Holdings Limited and the entities it controlled during the
period.
Ian Hooper
Partner
BDO East Coast Partnership
Sydney, 31 August 2018
8
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
Financial Statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Page
10
11
12
13
14
General Information
The financial report includes the consolidated financial statements for Oldfields Holdings Limited (the ultimate parent entity) and its controlled entities
("Oldfields" or the "Group"). The financial report is presented in Australian dollars, which is Oldfields Holdings Limited's functional and presentation
currency.
The financial report consists of the financial statements , notes to the financial statements and the directors' declaration.
Oldfields Holdings Limited is a listed public company limited by shares, incorporated and domiciled in Australia. It's registered office and principal place of
business is:
8 Farrow Road
Campbelltown, NSW, 2560, Australia
A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is not part of the financial
report. The financial report was authorised for issue with a resolution of Directors on 31 August, 2018. The Directors have the power to amend and reissue
the financial report.
9
Oldfields Holdings Limited
30 June 2018
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2018
Sales revenue
Cost of sales
Gross profit
Other income
Other expenses from ordinary activities:
Sales and distribution expenses
Marketing expenses
Occupancy expenses
Administrative expenses
Finance costs
(Loss)/profit before revaluation of derivative financial instruments and income tax
Revaluation of deferred senior loan note derivative component
Profit before income tax
Tax expense
Net profit for the year
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss when specific conditions are met:
Exchange differences on translating foreign operations, net of tax
Other comprehensive income for the year, net of tax
6
16
7
Total comprehensive income for the year
Net profit for the year attributable to:
Members of the parent entity
Non-controlling interest
Total net profit for the year
Comprehensive income attributable to:
Members of the parent entity
Non-controlling interest
Total comprehensive income for the year
Note
5
2018
$'000
25,898
(14,044)
11,854
2017
$'000
26,721
(15,162)
11,559
5
10
45
(7,762)
(318)
(1,406)
(2,177)
(278)
(77)
1,936
1,859
(309)
1,550
30
30
1,580
1,256
294
1,550
1,286
294
1,580
(6,652)
(307)
(1,257)
(2,171)
(303)
914
(287)
627
(315)
312
(16)
(16)
296
47
265
312
31
265
296
Earnings per share from continuing operation attributable to members of the parent entity:
Basic profit per share
Diluted earnings per share
Note
22
22
Cents
Cents
1.528
1.528
0.057
0.057
The accompanying notes form part of these financial statements.
10
Oldfields Holdings Limited
30 June 2018
Consolidated Statement of Financial Position
As at 30 June 2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Current tax liabilities
Employees benefit obligations
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Deferred tax liabilities
Employees benefit obligations
Derivative financial instruments
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Parent interest
Non-controlling interest
TOTAL EQUITY
Note
2018
$'000
2017
$'000
8
9
10
11
12
13
14
7
15
14
7
15
16
19
20
23
23
720
3,542
2,677
6,939
4,841
858
5,699
1,531
3,523
3,228
8,282
4,883
862
5,745
12,638
14,027
2,267
1,481
75
844
4,667
1,562
208
117
746
2,633
7,300
5,338
2,367
2,056
159
797
5,379
1,604
156
100
2,682
4,542
9,921
4,106
21,106
38
(16,534)
4,610
728
21,106
8
(17,790)
3,324
782
5,338
4,106
The accompanying notes form part of these financial statements.
11
Oldfields Holdings Limited
30 June 2018
Consolidated Statement of Changes in Equity
For the year ended 30 June 2018
Issued
Capital
$'000
Other
Reserves
$'000
Accumulated
Losses
$'000
Subtotal
$'000
Note
Non-
Controlling
Interests
$'000
Total
$'000
Balance at 1 July 2017
21,106
8
(17,790)
3,324
782
4,106
Comprehensive income
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Dividends provided for or paid
Total transactions with owners and other transfers
20
21
-
-
-
-
-
-
30
30
-
-
1,256
-
1,256
-
-
1,256
30
1,286
-
-
Balance at 30 June 2018
21,106
38
(16,534)
4,610
294
-
294
(348)
(348)
728
1,550
30
1,580
(348)
(348)
5,338
For the year ended 30 June 2017
Issued
Capital
$'000
Other
Reserves
$'000
Accumulated
Losses
$'000
Subtotal
$'000
Note
Non-
Controlling
Interests
$'000
Total
$'000
Balance at 1 July 2016
21,106
24
(17,837)
3,293
670
3,963
Comprehensive income
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Dividends provided for or paid
Total transactions with owners and other transfers
20
21
-
-
-
-
-
Balance at 30 June 2017
21,106
-
(16)
(16)
-
-
8
47
-
47
-
-
47
(16)
31
-
-
(17,790)
3,324
265
-
265
(153)
(153)
782
312
(16)
296
(153)
(153)
4,106
The accompanying notes form part of these financial statements.
12
Oldfields Holdings Limited
30 June 2018
Consolidated Statement of Cash Flows
For the year ended 30 June 2018
OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Other income received
Finance costs
Income tax paid
Net cash provided by operating activities
INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Net cash used in investing activities
FINANCING ACTIVITIES
Proceeds from borrowings
Repayment of borrowings
Loans from related party
- proceeds from borrowings
- repayments made
Dividends paid by controlled entities to non-controlling interests
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
Note
2018
$'000
2017
$'000
28,472
(26,641)
1,831
10
(127)
(341)
1,373
29,505
(26,967)
2,538
45
(166)
(273)
2,144
167
(1,235)
(1,068)
365
(1,225)
-
-
(348)
(1,208)
(903)
(903)
731
(172)
110
(846)
(736)
97
(1,080)
202
(202)
(153)
(1,136)
272
272
459
731
8
21
8
The accompanying notes form part of these financial statements.
13
Oldfields Holdings Limited
30 June 2018
Notes to the Consolidated Financial
Statements
Note 1
General Information and Statement of Compliance
Note 2
Changes in Accounting Policies
Note 3
Summary of Significant Accounting Policies
Note 4
Segment Information
Note 5
Revenue and Other Income
Note 6
Expenses
Note 7
Income Taxes
Note 8
Cash and Cash Equivalents
Note 9
Trade and Other Receivables
Note 10
Inventories
Note 11
Property, Plant and Equipment
Note 12
Goodwill and Other Intangible Assets
Note 13
Trade and Other Payables
Note 14
Borrowings
Note 15
Provisions
Note 16
Derivative Financial Instruments
Note 17
Financial Risk Management
Note 18
Impairment of Non-Financial Assets
Note 19
Share Capital
Note 20
Reserves
Note 21
Dividends
Note 22
Earnings per Share
Note 23
Accumulated Losses
Note 24
Subsidiaries
Note 25
Commitments and Contingencies
Note 26
Events After the Reporting Period
Note 27
Parent Entity Disclosures
Note 28
Auditor's Remuneration
Note 29
Related Party Transactions
Page
15
15
16
19
21
21
22
23
24
25
25
26
27
27
28
28
30
32
32
33
33
33
34
34
35
35
36
36
37
14
Oldfields Holdings Limited
30 June 2018
Notes to the Consolidated Financial
Statements
1. General Information and Statement of Compliance
These consolidated financial statements and notes represent those of Oldfields Holdings Limited and Controlled Entities (the “Consolidated Group” or
“Group”). The separate financial statements of the Parent Entity, Oldfields Holdings Limited, have not been presented within this financial report as
permitted by the Corporations Act 2001.
The financial statements were authorised for issue on 31 August 2018 by the Directors of the Company.
2. Changes in Accounting Policies
2.1 New and Revised Standards that are Effective for these Financial Statements
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the AASB that are relevant to its
operations and effective for the current financial reporting period. There has been no material impact of these changes on the Group's accounting
policies.
2.2 New and Revised Standards that are Effective for Future Periods
A number of new and revised standards became effective for the first time to annual periods beginning on or after 1 July 2018. Information on the more
significant standards is present below.
(i)
AASB 9: Financial Instruments and Associated Amending Standards
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all previous versions of
AASB 9 and completes the project to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’. AASB 9 introduces new
classification and measurement models for financials assets. This standard introduces additional new disclosures. An assessment has been
performed and the impact of the expected credit loss model will not be significant to the Group.
The directors anticipate that the adoption of AASB 9 will not significantly impact the Group’s financial statements.
(ii)
AASB 15: Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. This standard provides a single standard for
revenue recognition. AASB 15 establishes a principle-based approach which requires identification of performance obligations within a
transaction and an associated transaction price allocation to these obligations. Revenue is recognised only when the performance
obligation is satisfied and the control of goods or service is transferred.
For goods, the performance obligation would be satisfied when the customer obtains control of the goods, typically at the point of sale. For
services, the performance obligation would be satisfied when the service has been provided, typically for promises to transfer services to
the customer. For performance obligations satisfied over time, an entity would select an appropriate measure of progress to determine
how much revenue should be recognised as the performance obligation is satisfied.
In assessing the impact of this standard on the Group’s financial statements, the following revenue categories have been identified:
- Sale of goods
- Hire and erection of scaffold services
The Group will adopt this standard from 1 July 2018 and has performed an initial review of each category. Based on a preliminary
assessment performed, a difference in the current accounting treatment of hire and erection of scaffold services is anticipated as revenue
will be required to be recognised over time. The Directors therefore anticipate that the adoption of the standard will impact on the timing
of the recognition of revenue and the balance of deferred revenue recognised at year end. Based on the preliminary assessment performed
however it is not expected that the adoption of the new standard will have a significant impact on the revenue recognised in the Group’s
consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2018 as disclosed in this financial
report.
(iii)
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019)
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related
Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as
operating or finance leases. The main changes introduced by the new Standard include:
-
-
-
-
recognition of a right-to-use asset and liability for all leases (excluding short-term leases with less than 12 months of tenure and
leases relating to low-value assets);
depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability
in principal and interest components;
variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability using the index
or rate at the commencement date;
by applying a practical expedient, a lessee is permitted to elect not to separate non-lease components and instead account for all
components as a lease; and
- additional disclosure requirements.
15
Oldfields Holdings Limited
30 June 2018
2.2 New and Revised Standards that are Effective for Future Periods (continued)
(iii)
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019) (continued)
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or
recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application.
Although the Directors anticipate that the adoption of AASB 16 will impact the Group's financial statements, at this time the variation has
not been determined.
There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future
reporting periods and on foreseeable future transactions.
3. Summary of Significant Accounting Policies
3.1 Statement of Compliance
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements
also comply with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board ('IASB'). Material
accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated
otherwise.
3.2 Basis of Preparation
The financial statements have been prepared on the historical cost basis except for, where applicable, the revaluation of available-for-sale financial
assets, financial assets and liabilities at fair value through profit or loss, certain classes of property, plant and equipment and derivative financial
instruments.
Where applicable, comparative figures are adjusted to conform to changes in classification and presentation for the current financial year.
3.3 Going Concern
As disclosed in the consolidated financial statements, the Group reported a loss of $77,000 before income tax and revaluation of deferred senior loan
note derivative for the year ended 30 June 2018 (2017: profit of $914,000). The Directors believe that the Group will generate future profits and positive
operating cash flows and as such, the Group will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the
preparation of the consolidated financial report.
3.4 Functional and Presentation Currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity
operates. The consolidated financial statements are presented in Australian dollars which is the Parent Entity's functional currency.
3.5 Rounding
The parent entity has applied the relief available to it under ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 .
Accordingly, amounts in the financial statements have been rounded to the nearest thousand dollars unless otherwise stated.
3.6 Key Judgements, Estimates and Assumptions
In the process of applying the Group's accounting policies management has made a number of judgements, applied estimates and assumptions of future
events. Judgements, estimates and assumptions which are material to the Group's financial report are found in the following notes:
- Revenue and other income
- Income taxes
- Trade and other receivables
- Inventories
- Property, plant and equipment
- Goodwill and other intangible assets
- Provisions
- Derivative financial instruments
- Impairment of non-financial assets
3.7 Principles of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of Oldfields Holdings Limited and all of the subsidiaries.
Subsidiaries are entities the Parent controls. The Parent controls an entity when it is exposed to, or has rights to variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is
obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Inter-company transactions, balances and
unrealised gains or losses on transactions between Group entities are fully eliminated on consolidation. Where necessary, accounting policies of
subsidiaries are changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as ‘Non-Controlling Interests’. The Group initially
recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a proportionate share of the subsidiary’s net
assets on liquidation at either fair value or at the non-controlling interests’ proportionate share of the subsidiary’s net assets. Subsequent to initial
recognition, non-controlling interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling
interests are shown separately within the equity section of the statement of financial position and statement of profit or loss and other comprehensive
income.
16
Oldfields Holdings Limited
30 June 2018
3.8 Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common
control. The business combination will be accounted for from the date that control is obtained, whereby the fair value of the identifiable assets acquired
and liabilities assumed, including contingent liabilities, are recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement
is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is
accounted for within equity.
All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial instrument, are recognised as
expenses in the profit or loss and other comprehensive income statement when incurred.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
3.9 Foreign Currency
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency
monetary items are translated at the year end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange
rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were
determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity as a qualifying cash
flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the
underlying gain or loss is recognised in other comprehensive income, otherwise the exchange difference is recognised in the profit or loss.
The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as
follows:
(i) assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
(ii) income and expenses are translated at average exchange rates for the period; and
(iii) retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are recognised in other
comprehensive income and included in the foreign currency translation reserve in the statement of financial position. The cumulative amount of these
differences is reclassified into profit or loss in the period in which the operation is disposed of.
3.10 Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare
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.
3.11 Leases
Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset (but not the legal ownership) are transferred
to entities in the consolidated group, are classified as finance leases.
Finance leases are capitalised by recognising an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the
present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the
lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as expenses in the periods in
which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the lease term.
3.12 Financial Instruments
Recognition and Initial Measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial
assets, this is equivalent to the date that the Group commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs except where the instrument is classified ‘at fair value through profit or
loss’ in which case transaction costs are expensed to profit or loss immediately.
Classification and Subsequent Measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective interest method, or cost.
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments
and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount
calculated using the effective interest method.
17
Oldfields Holdings Limited
30 June 2018
3.12 Financial Instruments (continued)
The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that discounts
estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) over the expected life (or when this
cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability.
Revisions to expected future net cash flows will necessitate an adjustment to the carrying amount with a consequential recognition of an income or
expense item in profit or loss.
The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting
standards specifically applicable to financial instruments.
(i)
(ii)
(iii)
Financial assets at fair value through profit or loss
Financial assets are classified at “fair value through profit or loss” when they are held for trading for the purpose of short-term profit taking,
derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance
evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a
documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying
amount being included in profit or loss.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and
are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when
the financial asset is derecognised.
Financial liabilities
Non-derivative financial
recognised in profit or loss through the amortisation process and when the financial liability is derecognised.
liabilities other than financial guarantees are subsequently measured at amortised cost. Gains or losses are
Impairment
At the end of each reporting period, the Group assesses whether there is objective evidence that financial assets have been impaired. A financial asset
(or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events (a
“loss event”) having occurred which has an impact on the estimated future cash flows of the financial asset(s).
In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a group of debtors are experiencing
significant financial difficulty; default or delinquency in interest or principal payments; indications that they will enter bankruptcy or other financial
reorganisation; and changes in arrears or economic conditions that correlate with defaults.
When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the Group recognises the impairment
for such financial assets by taking into account the original terms as if the terms have not been renegotiated so that the loss events that have occurred
are duly considered.
Derecognition
Financial assets are derecognised when the contractual rights to receipt of cash flows expire or the asset is transferred to another party whereby the
entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised when
the related obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability extinguished or
transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in
profit or loss.
3.13 Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the
Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from or payable to the
ATO is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from or
payable to the ATO are presented as operating cash flows included in receipts from customers or payments to suppliers.
3.14 Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.
Where the Group retrospectively applies an accounting policy, makes a retrospective restatement or reclassifies items in it's financial statements, an
additional (third) statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statement
is presented.
3.15 Other Accounting Policies
Significant and other accounting policies that summarise the measurement basis used and are relevant to the understanding of the financial statements
are provided throughout the notes to the financial statements.
18
Oldfields Holdings Limited
30 June 2018
4. Segment Information
The Group has identified its operating segments based on the internal reports that are reviewed and used by Chief Operating Decision Maker (CODM),
being the Board of Directors, in assessing performance and in determining the allocation of resources.
The Group is managed primarily on the basis of product category and service offerings as the diversification of the Group's operations inherently have
notably different risk profiles and performance assessment criteria. Operating segments are therefore determined on the same basis.
Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic
characteristics and are also similar with respect to the following:
- The products sold and/or services provided by the segment;
- The manufacturing process;
- The type or class of customer for the products or service;
- The distribution method; and
- Any external regulatory requirements.
Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports
provided to the CODM. The CODM is responsible for the allocation of resources to operating segments and assessing their performance.
Unless stated otherwise, all amounts reported to the Board of Directors, being the CODM with respect to operating segments, are determined in
accordance with accounting policies that are consistent with those adopted in the annual financial statements of the Group.
The primary operating segments during the current financial period were:
(i)
Consumer Products
The consumer products segment imports, manufactures and distributes paint brushes, paint rollers, painter's tools, garden sheds and
outdoor storage systems.
(ii)
Scaffolding
The scaffolding segment manufactures and distributes scaffolding and related equipment.
scaffold and access solutions to the building maintenance and construction industries.
In addition, this segment is engaged in hiring
4.1 Operating Segment Performance
Year ended 30 June 2018
Revenue
Sales revenue
Total segment revenue
Other revenue
Total other revenue
Consumer
Products
$'000
Scaffolding
$'000
Intersegment
Eliminations/
Unallocated
$'000
5,179
5,179
20,832
20,832
8
8
2
2
(113)
(113)
-
-
Total
$'000
25,898
25,898
10
10
Total revenue and other income
5,187
20,834
(113)
25,908
Adjusted segment EBITDA
Depreciation and amortisation expense
Finance costs
Unrealised foreign exchange loss
Profit (loss) before revaluation of derivative financial instruments and income tax
Fair value adjustment to DSLN
Profit (loss) before income tax
Income tax expense
Profit (loss) after income tax
(1,002)
(23)
-
-
(1,025)
-
(1,025)
-
(1,025)
2,196
(843)
-
-
1,353
-
1,353
(309)
1,044
(73)
1,121
(46)
(278)
(8)
(405)
1,936
1,531
-
1,531
(912)
(278)
(8)
(77)
1,936
1,859
(309)
1,550
19
Oldfields Holdings Limited
30 June 2018
4.1 Operating Segment Performance (continued)
Year ended 30 June 2017
Revenue
Sales revenue
Total segment revenue
Other revenue
Total other revenue
Consumer
Products
$'000
Scaffolding
$'000
Intersegment
Eliminations/
Unallocated
$'000
7,711
7,711
11
11
19,095
19,095
35
35
(85)
(85)
(1)
(1)
Total
$'000
26,721
26,721
45
45
Total revenue and other income
7,722
19,130
(86)
26,766
Adjusted segment EBITDA
Depreciation and amortisation expense
Finance costs
Unrealised foreign exchange loss
Profit (loss) before revaluation of derivative financial instruments and income tax
Fair value adjustment to DSLN
Profit (loss) before income tax
Income tax expense
Profit (loss) after income tax
(966)
(38)
-
-
(1,004)
-
(1,004)
-
(1,004)
2,850
(694)
-
-
2,156
-
2,156
(315)
1,841
147
(71)
(303)
(11)
(238)
(287)
(525)
-
(525)
2,031
(803)
(303)
(11)
914
(287)
627
(315)
312
All inter-segment transactions are eliminated on consolidation of the Group's financial statements.
Corporate charges are allocated to reporting segments based on the segment's overall proportion of revenue generation within the Group. The Board of
Directors believes this is representative of likely consumption of head office expenditure that should be used in assessing segment performance and cost
recoveries.
Adjusted segment EBITDA excludes discontinued operations and the effects of individually significant expenditure, such as restructuring costs, legal
expenses, and impairments when the impairment is the result of an isolated non-recurring event. It also excludes the effects of equity-settled share-
based payments when applicable and unrealised gains or losses on financial instruments.
Interest revenue and finance cost are not allocated to segments as this type of activity is driven by the central treasury function which manages the cash
position of the Group.
4.2 Operating Segment Assets and Liabilities
As at 30 June 2018
Segment assets
Segment liabilities
Segment net assets
As at 30 June 2017
Segment assets
Segment liabilities
Segment net assets
Consumer
Products
$'000
2,342
(1,789)
553
Consumer
Products
$'000
3,961
(2,383)
1,578
Intersegment
Eliminations/
Unallocated
$'000
(3,184)
(4,796)
(7,980)
Intersegment
Eliminations/
Unallocated
$'000
(2,969)
(7,106)
(10,075)
Scaffolding
$'000
13,479
(714)
12,765
Scaffolding
$'000
13,035
(432)
12,603
Total
$'000
12,637
(7,299)
5,338
Total
$'000
14,027
(9,921)
4,106
Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of the economic value from the asset.
In most instances segment assets are clearly identifiable on the basis of their nature and physical location.
Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment. Borrowings
and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables
and certain direct borrowings.
Inter-segment loans payable and receivable are initially recognised at the consideration received/to be received net of transaction costs. If intersegment
loans receivable and payable are not on commercial terms, these are not adjusted to fair value based on market interest rates.
20
Oldfields Holdings Limited
30 June 2018
5. Revenue and Other Income
The Group derives the following types of revenue:
Sales revenue
Sale of goods
Hire and erection revenue
Total sales revenue
Other income
Other income
Total other income
Total revenue and other income from continuing operations
5.1 Recognition and Measurement
2018
$'000
11,063
14,835
25,898
10
10
25,908
2017
$'000
12,915
13,806
26,721
45
45
26,766
Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and rebates payables.
When the inflow of consideration is deferred it is treated as the provision of financing and is discounted at a rate of interest that is generally accepted in
the market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue.
Revenue is stated net of the amount of goods and services tax.
Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of
the goods and the cessation of all involvement in those goods.
Revenue from hire of equipment is recognised when the service is provided.
Interest revenue is recognised using the effective interest method.
5.2 Key Judgements, Estimates and Assumptions: Revenue Recognition
Hire and Erection Revenue
Revenue recognition relating to the provision of hire equipment services is determined with reference to the stage of completion of the transaction at
the end of the reporting period where outcome of the contract can be estimated reliably. Stage of completion is determined with reference to the
services performed to date as a percentage of total anticipated services to be performed. Where the outcome cannot be estimated reliably, revenue is
recognised only to the extent that related expenditure is recoverable.
6. Expenses
Profit before income tax includes the following specific expenses by nature:
Inventory recognised as an expense during the year
Depreciation expense
Amortisation expense
Plant and equipment impairment
Employee benefits expense
Bad and doubtful debts provision
Rental expense on operating leases
Finance costs:
Related parties
Unrelated parties
Hire purchase charges
Unwinding of discount on deferred senior loan note
Other borrowing costs
Note
2018
$'000
2017
$'000
11
12
11
29
4,389
6,936
898
14
208
784
19
-
9,311
8,306
17
1,084
-
94
25
151
8
278
61
978
2
136
13
137
15
303
21
Oldfields Holdings Limited
30 June 2018
7. Income Taxes
Income tax expense recognised in the income statement
Current tax
Current tax on profits for the year
Adjustments for current tax of prior periods
Total current tax expense
Deferred income tax
(Increase)/decrease in deferred tax assets
Increase/(decrease) in deferred tax liabilities
Total deferred tax expense/(benefit)
Total income tax expense
Tax reconciliation
Profit/(loss) before income tax expense
Tax at the Australian tax rate of 30%
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-allowable items
Under/(over) provision for income tax in prior year
Unwinding of discount on DSLN not deductible
Revaluation of derivative element of DSLN not deductible
Less tax effect of:
Net tax effect profit from overseas operations
Current year tax loss not brought to account
Income tax expense
Unrecognised tax assets
Tax losses
Tax losses for which no deferred tax asset has been recognised
Operating losses
Capital losses
Potential tax benefit @ 27.5% (2017: 30%)
Current tax liabilities
Income tax liabilities
Total current tax liabilities
Deferred income tax in the balance sheet
Employee benefits
Provision for impairment of trade receivables
Fixed assets
Other
Net deferred tax assets/(liabilities)
7.1 Recognition and Measurement
2018
$'000
268
(11)
257
(6)
58
52
2017
$'000
281
-
281
22
12
34
309
315
2018
$'000
1,859
2017
$'000
627
558
188
3
(11)
45
(580)
15
24
270
309
2018
$'000
3
(35)
41
86
283
(53)
85
315
2017
$'000
11,270
273
3,174
11,189
273
3,439
2018
$'000
75
75
2018
$'000
(34)
4
(190)
12
(208)
2017
$'000
159
159
2017
$'000
4
2
(162)
-
(156)
The income tax expense for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each
jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the
countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in
tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for
each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
22
Oldfields Holdings Limited
30 June 2018
7.1 Recognition and Measurement (continued)
Deferred income tax is provided in full using the liability method, on temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the consolidated financial statements. However deferred tax liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than
a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using
tax rates and laws that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign
operations where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not
reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax
balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset
and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Tax Consolidation
Oldfields Holdings Limited and its wholly-owned subsidiaries have implemented the tax consolidation legislation. As a consequence these entities are
taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly
in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity respectively.
7.2 Key Judgements, Estimates and Assumptions: Unrecognised Deferred Tax Benefits
The Group has unrecognised benefits relating to carried forward losses. The unused tax losses were incurred by the Australian tax consolidated group.
The losses are currently not recognised as it is not sufficiently probable that the Group will generate taxable income in the foreseeable future that will
allow the losses to be utilised.
8. Cash and Cash Equivalents
Cash on hand
Cash at bank
Total cash and cash equivalents
Reconciliation to statement of cash flows
Cash and cash equivalents
Bank overdrafts
Balances per statement of cash flows
Reconciliation of cash flow from operating activities with loss after income tax
Profit/(loss) after income tax
Adjustment for non cash items:
Depreciation and amortisation
Net (gains)/losses on disposal of property, plant and equipment
Write off of plant and equipment
Unwinding of discount on deferred senior loan note
Revaluation of deferred senior loan note to fair value through profit or loss
Stock adjustments
Changes in operating assets and liabilities:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
Increase/(decrease) in trade payables and accruals
Increase/(decrease) in income taxes payable
Increase/(decrease) in deferred taxes payable
Increase/(decrease) in provisions
Cash flow from operating activities
8.1 Recognition and Measurement
Note
14
2018
$'000
2
718
720
2018
$'000
720
(892)
(172)
2018
$'000
1,550
912
1
(7)
151
(1,936)
208
(19)
581
(100)
(84)
52
64
2017
$'000
2
1,529
1,531
2017
$'000
1,531
(800)
731
2017
$'000
312
803
(51)
64
137
287
-
144
614
(303)
8
34
95
1,373
2,144
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value
and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities in the statement of financial position, but included as
a component of cash and cash equivalents for the purpose of the statement of cash flows.
8.2 Acquisition Through Finance Lease
During the year the consolidated group acquired plant and equipment with an aggregate value of $60,350 (2017: $39,221) by means of financial leases.
These acquisitions are not reflected in the statement of cash flow.
23
Oldfields Holdings Limited
30 June 2018
9. Trade and Other Receivables
CURRENT
Trade receivables
Provision for impairment
Net trade receivables
Other receivables
Prepayments
Total current trade and other receivables
Trade receivables past due but not impaired
Up to 3 months
3 to 6 months
Over 6 months
Total
2018
$'000
3,261
(96)
3,165
83
294
3,542
2018
$'000
96
40
9
145
2017
$'000
3,069
(51)
3,018
122
383
3,523
2017
$'000
115
24
-
139
Amounts are considered as ‘past due’ when the debt has not been settled with the terms and conditions agreed between the Group and the customer or
counter party to the transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for
where there are specific circumstances indicating that the debt may not be fully repaid to the Group. Trade receivables that were past due but not
impaired relate to a number of independent customers for whom there is no recent history of default.
9.1 Impairment and Risk Exposure
Aging analysis of impairment
1 to 3 months
4 to 6 months
Over 6 months
Total
Movement in the provision for impairment of receivables
Opening balances
Provision for impairment recognised during the year
Receivables written off during the year as uncollectable
Closing balance
2018
$'000
7
3
86
96
2018
$'000
51
157
(112)
96
2017
$'000
34
15
2
51
2017
$'000
103
36
(88)
51
Other Receivables
These amounts generally arise from transactions outside the usual operating activities of the Group. Collateral is not normally obtained.
Credit Risk
The Group has no significant concentration of credit risk with respect to any single counter party or group of counter parties other than those receivables
specifically provided for and mentioned within note 9. The class of assets described as Trade and Other Receivables is considered to be the main source
of credit risk related to the Group.
9.2 Recognition and Measurement
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method less
any provision for impairment. Trade and Other Receivables include amounts due from customers for goods sold and services performed in the ordinary
course of business. Trade receivables are generally due for settlement within 30 days from month-end and therefore are all classified as current.
A provision for impairment is recognised when there is objective evidence that an individual trade or term receivable is impaired. These amounts have
been included within the administrative expenses item in the consolidated statement of profit or loss and comprehensive income.
9.3 Key Judgements, Estimates and Assumptions: Provision for Impairment of Receivables
The provision for impairment of receivables assessment required a degree of estimation and judgement. The level of provision is assessed by taking into
account the recent sales experience, the ageing of the receivables, historical collection rates and specific knowledge of the individual debtors financial
position.
24
Oldfields Holdings Limited
30 June 2018
10. Inventories
Raw materials - at cost
Work in progress - at cost
Finished goods - at net realisable value
Goods in transit - at cost
Total inventories
10.1 Recognition and Measurement
2018
$'000
286
117
1,916
358
2,677
2017
$'000
407
257
2,079
485
3,228
Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct materials, direct labour and an
appropriate proportion of variable and fixed overheads. Overheads are applied on the basis of normal operating capacity. Costs are assigned on the basis
of weighted average costs.
10.2 Key Judgements, Estimates and Assumptions: Provision for Impairment of Inventories
The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into
account the recent sales experience, the ageing of the inventories, and other factors that affect inventory obsolescence.
11. Property, Plant and Equipment
Year ended 30 June 2018
Cost
Accumulated depreciation
Net book amount
Opening net book amount
Exchange differences
Additions
Disposals and impairment
Depreciation expense
Closing net book amount
Year ended 30 June 2017
Cost
Accumulated depreciation
Net book amount
Opening net book amount
Exchange differences
Additions
Disposals
Depreciation expense
Closing net book amount
Hire
Equipment
$'000
8,148
(3,857)
4,291
Plant and
Equipment
$'000
2,240
(2,083)
157
4,395
-
934
(399)
(639)
4,291
157
15
63
4
(82)
157
Hire
Equipment
$'000
7,588
(3,193)
4,395
Plant and
Equipment
$'000
4,289
(4,132)
157
4,462
(33)
543
(83)
(494)
4,395
231
(3)
27
-
(98)
157
Leasehold
Improve-
ments
$'000
412
(359)
53
41
3
47
(2)
(36)
53
Leasehold
Improve-
ments
$'000
430
(389)
41
54
-
37
(2)
(48)
41
Motor
Vehicles
$'000
1,921
(1,581)
340
290
-
191
-
(141)
340
Motor
Vehicles
$'000
1,762
(1,472)
290
197
-
239
(2)
(144)
290
Total
$'000
12,721
(7,880)
4,841
4,883
18
1,235
(397)
(898)
4,841
Total
$'000
14,069
(9,186)
4,883
4,944
(36)
846
(87)
(784)
4,883
Note
6
Note
6
11.1 Recognition and Measurement
All property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the
acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any
component accounted for as a separate asset is derecognised when replaced. Repairs and maintenance costs are recognised as expenses in profit or loss
during the financial period in which they are incurred.
The depreciable amount of all fixed assets, including capitalised lease assets, are depreciated on a straight-line basis over the asset's useful life to the
Group commencing from the time the asset is held ready for use. The estimated useful lives in the current and comparative periods are as follows:
Hire equipment
Plant and equipment
Leasehold improvements
Motor vehicles
5-20 years
3-15 years
shorter of lease term or useful life
5 years
The assets’ residual values and useful lives are reviewed and adjusted if appropriate at the end of each reporting period.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are recognised in profit or loss in
the period in which they arise.
25
Oldfields Holdings Limited
30 June 2018
11.2 Key Judgements, Estimates and Assumptions: Estimation of Useful Lives of Assets
The Group determined the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and definite
life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. 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. The depreciation
and amortisation charge will increase where the useful lives are less than previously estimated, or technically obsolete or non-strategic assets that have
been abandoned or sold will be written off or down.
Hire equipment is depreciated on a straight line basis over its estimated useful life, taking into account its realisable value at the end of its life. Hire
equipment is constantly maintained and refurbished throughout its useful life resulting in the depreciation to be minimal on certain pieces of equipment.
The Group has assessed the useful life of hire equipment to be up to 20 years. All reconditioning costs of hire equipment are expensed as incurred and
are not taken into account in the carrying value of hire equipment.
12. Goodwill and Other Intangible Assets
Year ended 30 June 2018
Cost
Accumulated amortisation and impairment
Net book amount
Opening net book amount
Additions
Disposals
Amortisation charge
Balance at 30 June 2018
Year ended 30 June 2017
Cost
Accumulated amortisation and impairment
Net book amount
Opening net book amount
Additions
Disposals
Amortisation charge
Balance at 30 June 2017
Note
6
Note
6
Goodwill
$'000
Trademark
& Licences
$'000
Software &
Other
$'000
838
-
838
838
-
-
-
838
187
(170)
17
9
10
-
(2)
17
386
(383)
3
15
-
-
(12)
3
Goodwill
$'000
Trademark
& Licences
$'000
Software &
Other
$'000
838
-
838
838
-
-
-
838
177
(168)
9
9
-
-
-
9
413
(398)
15
34
-
-
(19)
15
2018
$'000
838
Total
$'000
1,411
(553)
858
862
10
-
(14)
858
Total
$'000
1,428
(566)
862
881
-
-
(19)
862
2017
$'000
838
Goodwill is allocated to the Group's cash-generating units (CGUs). A CGU level summary of the goodwill allocation is presented below.
South and Western Australian scaffold branches
12.1 Recognition and Measurement
Goodwill
Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the sum of:
(i) the consideration transferred;
(ii) any non-controlling interest (determined under either the full goodwill or proportionate interest method); and
(iii) the acquisition date fair value of any previously held equity interest;
over the acquisition date fair value of net identifiable assets acquired.
Intangible Assets
Intangible assets acquired are measured on initial recognition at cost. Intangible assets other than goodwill have finite useful
amortisation charges for intangible assets are included under depreciation and amortisation expense per the statement of profit or loss.
lives. The current
Patents and trademarks are recognised at cost of acquisition. They have a finite life and are carried at cost less any accumulated amortisation and any
impairment losses. Patents and trademarks are amortised over their useful lives ranging from 5 to 10 years.
12.2 Key Judgements, Estimates and Assumptions: Goodwill and Other Indefinite Life Intangible Assets
The Group tests annually, or more frequently if changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible
assets have suffered impairment. Recoverable amounts of cash generating units have been determined based on value-in use calculations using
assumptions including discount rates based on the current cost of capital and growth rates of estimated future cash flows.
26
Oldfields Holdings Limited
30 June 2018
13. Trade and Other Payables
CURRENT
Unsecured liabilities
Trade payables
Sundry payables and accrued expenses
Net GST payables
Total trade and other payables
13.1 Recognition and Measurement
2018
$'000
2017
$'000
1,322
746
199
2,267
1,425
775
167
2,367
Trade and other payables represent the liabilities for goods and services received by the Group that remain unpaid at the end of the reporting period.
The balance is recognised as a current liability with the amounts normally paid between 7 and 60 days of recognition of the liability.
The carrying amounts of trade and other payables are assumed to be the same as their fair values due to their short-term nature.
14. Borrowings
CURRENT
Secured liabilities
Bank overdrafts
Bank loans
Other financing liabilities
Hire purchase liabilities
Total current borrowings
NON-CURRENT
Secured liabilities
Bank loans
Hire purchase liabilities
Debt element of deferred senior loan note
Total non-current borrowings
Total borrowings
Bank overdraft
Bank loan
Other financing liabilities
Hire purchase liabilities
Debt element of deferred senior loan note
Total current and non-current secured liabilities
14.1 Recognition and Measurement
Note
2018
$'000
2017
$'000
16
892
379
130
80
1,481
-
138
1,424
1,562
3,043
2018
$'000
892
379
130
218
1,424
3,043
800
1,200
-
56
2,056
229
101
1,274
1,604
3,660
2017
$'000
800
1,429
-
157
1,274
3,660
Loans and borrowings are initially recognised at the fair value of the consideration received net of transaction costs. They are subsequently measured at
amortised cost using the effective interest rate method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are
classified as non-current.
Collateral Provided
The bank debt is secured by a fixed and floating charge over the Group's assets. The facility agreement currently expires in September 2019. Covenants
imposed by the bank includes interest cover ratios; capital expenditure limits; gearing ratios; and the Group cannot create or acquire a new subsidiary
unless that subsidiary becomes a party to the agreement. The Group complied with all its loan covenants during the year.
27
Oldfields Holdings Limited
30 June 2018
15. Provisions
CURRENT
Employee leave obligations
Total current provisions
NON-CURRENT
Employee leave obligations
Total non-current provisions
Total provisions
Amounts not expected to be settled within the next 12 months
Current leave obligations expected to be settled after 12 months
15.1 Recognition and Measurement
2018
$'000
2017
$'000
844
844
117
117
961
2018
$'000
375
797
797
100
100
897
2017
$'000
518
Provisions
Provisions are recognised when the Group has a legal or constructive obligation as a result of past events for which it is probable that an outflow of
economic benefits will result and that outflow can be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.
Short-Term Employee Benefits
Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination
benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the
related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the undiscounted amounts expected to be paid
when the obligation is settled.
Other Long-Term Employee Benefits
Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled wholly within 12 months after the end of
the annual reporting period in which the employees render the related service. Other long-term employee benefits are measured at the present value of
the expected future payments to be made to employees.
Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are discounted at
rates determined by reference to market yields at the end of the reporting period on government bonds that have maturity dates that approximate the
terms of the obligations. Any remeasurements for changes in assumptions of obligations for other long-term employee benefits are recognised in profit
or loss in the periods in which the changes occur.
15.2 Key Estimate: Employee Entitlement Provisions - Long Service Leave
The liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all
employees at the reporting date.
In determining the present value of the liability, estimates of attrition rates and pay increases have been taken into
account.
16. Derivative Financial Instruments
The Group measures and recognises the following assets and liabilities at fair value on a recurring basis after initial recognition:
-
Derivative financial instruments
The Group does not subsequently measure any liabilities at fair value on a non-recurring basis.
Deferred Senior Loan Note (DSLN)
The derivative element of the Deferred Senior Loan Note (DSLN) of $746,000 (June 2017: $2,682,000) has been valued using Level 2 inputs which are
included in the terms and conditions of this instrument. The main terms of the DSLN are as follows:
-
-
-
-
-
-
-
The DSLN is secured against assets of the Group by the bank and has a 10 year maturity date of 21 December 2022;
Interest calculated at 12% p.a. was payable upon early repayment up to 21 December 2017;
From 21 December 2017 and up to the maturity date, the lower of interest at 12% p.a. or a redemption premium is payable;
The premium is equivalent to the difference between the Face Value of the DSLN and the market value. Market value is determined by the
volume weighted average share price (VWAP) 15 business days prior to the redemption or maturity date as applicable multiplied by
23,702,240 reference shares;
If the market value of the reference shares is calculated to be lower than the Face Value of the DSLN, the redemption premium is deemed
to be nil and the only repayment due will be the Face Value of the DSLN;
The bank is also entitled to receive a payment to the equivalent value of any dividend payment if made by the Group prior to the maturity
date of the DSLN;
Other normal conditions apply in respect to meeting gearing and interest cover ratios.
28
Oldfields Holdings Limited
30 June 2018
16.1 Fair Value Hierarchy
AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three
possible levels based on the lowest level input that is significant to the measurement categorised as follows:
Level 1
Measurements based on quoted prices
(unadjusted) in active markets for identical assets
or liabilities that the entity can access at the
measurement date.
Level 2
Measurements based on inputs other than quoted
prices included in Level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 3
Measurements based on unobservable
inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation
techniques maximise, to the extent possible, the use of observable market data.
If all significant inputs required to measure fair value are observable,
the asset or liability is included in Level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included in
Level 3.
The following tables provide the fair values of the Group’s assets and liabilities measured and recognised on a recurring basis after initial recognition and
their categorisation within the fair value hierarchy.
Recurring fair value measurements
Derivative element of DSLN
Total liabilities recognised at fair value
2018
Level 2
$'000
746
746
2017
Level 2
$'000
2,682
2,682
There were no transfers between levels for assets or liabilities measured at fair value on a recurring basis during the reporting period (2017: no
transfers).
16.2 Valuation Techniques and Inputs Used to Measure Level 2 Fair Values
The core debt has been discounted by 12% to net present value over the expected term of the DSLN (i.e. 10 years) and is included in non-current
borrowings. The derivative element has been fair valued including considering the redemption premium payable under the DSLN. Should the Group
repay or partially repay the DSLN before the maturity date, the total amount payable could significantly differ from the respective carrying amounts such
that the final premium is only determinable by the VWAP 15 business days prior to the redemption or maturity date.
An external consultant independently assessed the valuation of the redemption premium of the DSLN as at 30 June 2018 and determined a fair value of
$746,000. The fair value was based on the Black-Scholes Pricing Model. The Directors have recognised the fair value of $746,000 as at 30 June 2018 which
resulted in a $1,936,000 gain on revaluation of DSLN derivative component recognised in the consolidated statement of profit or loss and other
comprehensive income. As at 30 June 2017 the derivative element had been fair valued at the maximum amount of the Redemption Premium on the
Maturity Date under the DSLN i.e. accruing interest at 12% p.a. Prior to 21 December 2017 any repayment was subject to interest calculable at 12% p.a.
and not the VWAP.
16.3 Recognition and Measurement
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently measured to their fair value at
each reporting date.
16.4 Key Judgements, Estimates and Assumptions: Fair Value of Derivative Senior Loan Note
The DSLN has been identified as containing two main components: the core debt being the Face Value of the DSLN and a derivative element capturing
the Redemption Premium payment entitlement.
The Group has made significant judgements and assumptions regarding the Redemption Term of the DSLN (i.e. 10 years) and the expected cash outflows
that would arise from the repayment of the DSLN at the maturity date. As such, the core debt has been discounted by 12% to net present value over the
expected term of the DSLN and is included in non-current borrowings. The derivative element has been fair valued at the Redemption Premium payable
on the Maturity Date under the DSLN i.e. an amount equal to the value of the call option on the Maturity Date being the difference between the market
value and strike price.
Should the Group repay or partially repay the DSLN before the maturity date, the total amount payable under the DSLN could significantly differ from the
respective carrying amounts.
29
Oldfields Holdings Limited
30 June 2018
17. Financial Risk Management
17.1 Categories of Financial Assets and Liabilities
The Group’s financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, accounts receivable
and payable, loans to and from related parties, bills, leases, and derivatives.
The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial
statements, are as follows:
Financial Assets
Cash and cash equivalents
Net trade receivables
Total financial assets
Financial Liabilities
Financial liabilities at amortised cost
Trade and other payables
Borrowings
Financial liabilities at fair value through profit and loss
Derivative instruments
Total financial liabilities
17.2 Financial Risk Management Policies
Note
8
9
13
14
16
2018
$'000
718
3,165
3,883
2,267
3,043
746
6,056
2017
$'000
1,529
3,018
4,547
2,367
3,660
2,682
8,709
The Board of Directors are responsible for managing financial risk policies and exposures of the Group. It also reviews the effectiveness of internal
controls relating to commodity price risk, counterparty credit risk, currency risk, liquidity risk and interest rate risk.
The overall risk management strategy seeks to assist the Group in meeting its financial targets while minimising potential adverse effects on financial
performance. This includes the review of the use of hedging derivative instruments, credit risk policies and future cash flow requirements.
17.3 Specific Financial Risk Exposures and Management
The main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate risk and
foreign currency risk. There have been no substantive changes in the types of risks the Group is exposed to, how these risks arise, or the Board’s
objectives, policies and processes for managing or measuring the risks from the previous period.
(a) Credit Risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to
a financial loss to the Group.
Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems for the approval, granting and renewal
of credit limits, regular monitoring of exposures against such limits and monitoring of the financial stability of significant customers and counterparties),
ensuring to the extent possible, that customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing
receivables for impairment. Depending on the division within the Group, credit terms are generally 30 days from the end of month after invoice date.
Collateral held by the Group securing receivables is detailed in note 9.
The Group has no significant concentration of credit risk with any single counterparty or group of counterparties. Details with respect to credit risk of
trade and other receivables is provided in note 9.
Trade and other receivables that are neither past due or impaired are considered to be of high credit quality. Aggregates of such amounts are as detailed
at note 9.
(b) Liquidity Risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to
financial liabilities. The Group manages this risk through the following mechanisms:
- preparing forward-looking cash flow analyses in relation to its operating, investing and financing activities;
- monitoring undrawn credit facilities;
- maintaining a reputable credit profile; and
- managing credit risk related to financial assets.
The following table details the Group's remaining contractual maturity for its financial instrument liabilities. The table has been drawn up based on the
undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The table includes both
interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the
statement of financial position.
30
Oldfields Holdings Limited
30 June 2018
17.3 Specific Financial Risk Exposures and Management (continued)
(b) Liquidity Risk (continued)
Financial asset and financial liability
maturity analysis
Financial assets - cash flows realisable
Cash and cash equivalents
Trade and other receivables
Total anticipated inflows
Financial liabilities due for payment
Bank overdrafts and bank loans
Debt element of DSLN*
Derivative element of DSLN**
Trade and other payables
Other financing liabilities
Finance lease liabilities
Total expected outflows
Net (outflow) / inflow on financial
instruments
Within 1 Year
2018
$'000
2017
$'000
1 to 5 Years
2018
$'000
2017
$'000
Over 5 Years
2018
$'000
2017
$'000
Total
2018
$'000
718
3,165
3,883
1,271
-
-
2,267
130
80
3,748
1,529
3,018
4,547
2,229
-
-
2,367
-
56
4,652
-
-
-
-
2,370
746
-
-
138
3,254
-
-
-
254
-
-
-
-
101
355
135
(105)
(3,254)
(355)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,370
2,682
-
-
-
5,052
718
3,165
3,883
1,271
2,370
746
2,267
130
218
7,002
2017
$'000
1,529
3,018
4,547
2,483
2,370
2,682
2,367
-
157
10,059
(5,052)
(3,119)
(5,512)
*The debt element of the DSLN has been shown at the face value of the DSLN payable on maturity or early repayment as discussed in note 16.
**The derivative element of the DSLN has been shown at the fair value recognised at balance date.
Financial Assets Pledged as Collateral
Certain financial assets have been pledged as security for debt and their realisation into cash may be restricted subject to terms and conditions attached
to the relevant debt contracts. Refer to note 16 for further details.
(c) Market Risk
(i)
Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a
future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments.
(ii)
Foreign exchange risk
The Board and senior management regularly monitor foreign currency movements and has undertaken to use hedging contracts where
appropriate to the value of up to 100% of its US dollar requirements over a maximum 6 month period.
Sensitivity Analysis
As at the end of the reporting period, the Group had the following variable rate borrowings:
Bank overdrafts and bank loans
Weighted
Average
Interest
Rate
13.81%
2018
2017
Balance
1,271
% of Total
Loans
21%
Weighted
Average
Interest Rate
Balance
10.81% 2,229
% of Total
Loans
26%
The following table illustrates sensitivities to the Group’s exposures to changes in interest rates, exchange rates and commodity and equity prices. The
table indicates the impact on how profit and equity values reported at the end of the reporting period would have been affected by changes in the
relevant risk variable that management considers to be reasonably possible.
These sensitivities assume that the movement in a particular variable is independent of other variables.
+/- 2% in interest rates
Profit
2018
$'000
14
2017
$'000
26
Equity
2018
$'000
14
2017
$'000
26
There have been no changes in any of the methods or assumptions used to prepare the above sensitivity analysis from the prior year.
Fair Value Estimation
The fair values of the Group's financial assets and financial
approximate net fair values.
liabilities included in the Statement of Financial Position are carried at amounts that
31
Oldfields Holdings Limited
30 June 2018
18. Impairment of Non-Financial Assets
At the end of each reporting period the Group assesses whether there is any indication that an asset may be impaired. The assessment will include the
consideration of external and internal sources of information including dividends received from subsidiaries, associates or jointly controlled entities
deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable
amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying amount. Any excess of the asset’s
carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance
with the standard (e.g. in accordance with the revaluation model in AASB 116: Property, Plant and Equipment). Any impairment loss of a revalued asset is
treated as a revaluation decrease in accordance with the standard (AASB 116).
Where 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.
Impairment testing is performed annually for goodwill, intangible assets with indefinite lives and intangible assets not yet available for use.
The Group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of a cash generating unit (CGU) is
determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on a one-year
budget and four-year projections approved by management. Cash flows beyond the one-year budget period are extrapolated using the estimated growth
rates stated below. The growth rates for the terminal period do not exceed the long-term average growth rates for the industry in which each CGU
operates.
Sensitivity
The calculation of value-in-use is most sensitive to changes in the discount rate. The Directors have made judgements and estimates in respect of
impairment testing of goodwill and intangible assets. Should these estimates not occur, the resulting goodwill and intangible assets may vary in carrying
amount. If the discount rate was to increase by 3%, goodwill would not need to be impaired with all other assumptions remaining constant, for scaffold
division.
18.1 Key Judgements, Estimates and Assumptions: Impairment
The Group assesses impairment at the end of each reporting period by evaluating conditions and events specific to the Group that may be indicative of
impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions.
The following key assumptions were used in the value-in-use calculations:
2018
South and Western Australian scaffold branches
2017
South and Western Australian scaffold branches
Growth Rate
Year 1
Year 2-5
Terminal
Period
Growth Rate
Discount
Rate
12%
7%
5%
5%
3%
3%
17%
17%
Management has based the value-in-use calculations on budgets for each reporting segment. These budgets use historical weighted average growth
rates to project revenue. Costs are calculated taking into account historical gross margins as well as estimated weighted average inflation rates over the
period which are consistent with inflation rates applicable to the locations in which the segments operate. Discount rates are pre-tax and are adjusted to
incorporate risks associated with a particular segment.
19. Share Capital
Ordinary fully paid shares
2018
Number
82,176,198
2017
Number
82,176,198
2018
$'000
2017
$'000
21,106
21,106
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
Capital Management
Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio, generate long-term shareholder value and ensure
that the Group can fund its operations and continue as a going concern.
The Group’s debt and capital include ordinary share capital and financial liabilities, supported by financial assets.
The Group is subject to financing covenants as detailed in note 14.
Management effectively manages the Group’s capital by assessing the Group's financial risks and adjusting its capital structure in response to changes in
these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year. This strategy is to identify
opportunities to reduce the Group's gearing ratio. The gearing ratios for the year ended 30 June 2018 and 30 June 2017 are as follows:
Total borrowings
Add: Derivative financial instruments
Less: Cash and cash equivalents
Net debt and derivative financial instruments
Total equity
Total capital
Gearing ratio
32
Note
14
16
8
2018
$'000
3,043
746
(720)
3,069
5,338
8,407
2017
$'000
3,660
2,682
(1,531)
4,811
4,106
8,917
37%
54%
Oldfields Holdings Limited
30 June 2018
20. Reserves
Foreign currency translation
Total reserves
2018
$'000
38
38
2017
$'000
8
8
Foreign currency translation reserve
The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled subsidiary.
21. Dividends
Since the start of the financial year, no dividends have been paid or declared by the Parent Entity.
During the year $348,000 (2017: $153,000) of fully franked dividends were paid to a related party of the Group by Adelaide Scaffold Solutions Pty Limited
to Sibley Investments Pty Limited. Sibley Investments Pty Limited is the minority interest holder in the Group. Adelaide Scaffold Solutions Pty Limited is a
controlled entity of Oldfields Holdings Limited.
Franking account balance
The amount of the franking credits available for subsequent reporting periods are:
Balance at the end of the reporting period
Franking credits that will arise from the payment of the amount of provision for income tax
Franking credits available for subsequent reporting periods based on a tax rate of 30%
21.1 Recognition and Measurement
Dividends are recognised when declared during the financial year and are then no longer at the discretion of the Company.
22. Earnings per Share
a) Reconciliation of earnings to profit or loss
Profit for the year
Less: Profit attributable to non-controlling equity interest
Earnings used to calculate basic EPS
b) Weighted average number of ordinary shares outstanding
during the year used in calculating basic and diluted EPS
c) Profit per share
22.1 Calculation of Earnings per Share
Parent Entity
2018
$'000
2017
$'000
1,045
32
1,077
944
101
1,045
2018
$'000
1,550
(294)
1,256
2017
$'000
312
(265)
47
2018
Number
2017
Number
82,176,198
82,176,198
2018
Cents
2017
Cents
1.528
0.057
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Oldfields Holdings Limited, 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 financial 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.
33
Oldfields Holdings Limited
30 June 2018
23. Accumulated Losses
Movements in accumulated losses were as follows:
Opening balance at 1 July
Net profit for the year
Dividends paid
Closing balance at 30 June
Accumulated losses attributable to:
Members of the parent entity
Non-controlling interest
Total accumulated losses at 30 June
24. Subsidiaries
Note
21
2018
$'000
2017
$'000
(17,008)
1,550
(348)
(15,806)
(17,167)
312
(153)
(17,008)
(16,534)
728
(15,806)
(17,790)
782
(17,008)
The subsidiaries listed below have share capital consisting solely of ordinary shares or ordinary units which are held directly by the Group. The
proportion of ownership interests held equals the voting rights held by the Group. Each subsidiary’s principal place of business is also its country of
incorporation.
Name of Subsidiary
Subsidiaries of Oldfields Holdings Limited:
Oldfields Pty Limited
Oldfields Advance Scaffold Pty Limited
Oldfields Administration Pty Limited
Oldfields International Pty Limited
Advance Scaffold Solutions Pty Limited
Subsidiaries of Oldfields Advance Scaffold Pty Limited:
Adelaide Scaffold Solutions Pty Limited
Subsidiaries of Oldfields Administration Pty Limited:
National Office Service Trust
Subsidiaries of Oldfields International Pty Limited:
Oldfields (NZ) Limited
Oldfields Paint Applications (NZ) Limited
Oldfields USA Incorporated
Subsidiaries of Advance Scaffold Solutions Pty Limited:
Foshan Advcorp Scaffold Limited
Principal
Place of
Business
Australia
Australia
Australia
Australia
Australia
Ownership Interest
Non-Controlling Interests
2018
%
2017
%
2018
%
2017
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Australia
60%
60%
40%
40%
Australia
100%
100%
New Zealand
New Zealand
USA
100%
100%
100%
100%
100%
100%
China
100%
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Subsidiary financial statements used in the preparation of these consolidated financial statements have also been prepared as at the same reporting
date as the Group’s financial statements.
Set out below is the summarised financial information for Adelaide Scaffold Solutions Pty Ltd that has non-controlling interests that are material to the
Group, before any intra-group eliminations. The entity's principal place of business is 5-7 Peekarra Street, Regency Park, South Australia.
Summarised financial information of subsidiaries with material non-controlling interests
Summarised financial position - Adelaide Scaffold Solutions Pty Ltd
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Carrying amount of non-controlling interests
Summarised financial performance - Adelaide Scaffold Solutions Pty Ltd
Revenue
Profit after tax
Other comprehensive income after tax
Total comprehensive income
Profit attributable to non-controlling interests
2018
$'000
1,344
2,031
(452)
(272)
2,651
728
2017
$'000
1,976
1,758
(778)
(172)
2,784
782
5,029
4,522
737
-
737
294
662
-
662
265
34
Oldfields Holdings Limited
30 June 2018
24. Subsidiaries (continued)
Summarised financial information of subsidiaries with material non-controlling interests
Summarised cash flow information - Adelaide Scaffold Solutions Pty Ltd
Net cash from/(used in) operating activities
Net cash from/(used in) investing activities
Net cash from/(used in) financing activities
Net increase in cash and cash equivalents
Distributions paid to non-controlling interests
24.1 Recognition and Measurement
2018
$'000
439
(378)
(813)
(752)
348
2017
$'000
1,116
(171)
(452)
493
153
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by the Group as at 30 June 2018 and the results of all
controlled entities for the year then ended. Control exists when the consolidated entity has the power to govern the financial and operating policies of
an entity so as to obtain benefit from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.
Where control of an entity is obtained during a financial year, its results are included in the consolidated income statement from the date on which
control commences. Where control of an entity ceases during a financial year its results are included for that part of the year during which control exists.
25. Commitments and Contingencies
25.1 Capital Commitments
The Group does not have any capital expenditure commitments at reporting date.
25.2 Lease Commitments
Finance lease commitments
Payable — minimum lease payments
Within one year
Later than one year but not later than five years
Later than five years
Less future finance charges
Present value of minimum lease payments
Note
14
2018
$'000
104
160
-
264
(46)
218
2017
$'000
77
111
-
188
(31)
157
Included in finance lease commitments are hire purchase liabili(cid:415)es that are secured by a charge over the hire purchase assets.
The property leases are non-cancellable leases with 1-5 year terms, with rent payable monthly in advance. Contingent rental provisions within the lease
agreement require that minimum lease payments shall be increased by the lower of the change in the consumer price index or 3-5% per annum. Options
exist to renew certain leases at the end of the term for an additional term of 1-5 years. On renewal the terms of the leases are renegotiated.
Non-cancellable operating lease commitments
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Total operating lease commitments
25.3 Contingencies
The Group does not have any significant contingent liabilities or contingent assets as 30 June 2018 or 30 June 2017.
2018
$'000
2017
$'000
1,226
2,564
3,790
1,118
3,510
4,628
26. Events After the Reporting Period
There are no matters or circumstances that have arisen since the end of the financial year which have significantly affected or could affect the operations
of the Group in future years.
35
Oldfields Holdings Limited
30 June 2018
27. Parent Entity Disclosures
The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian Accounting
Standards.
Statement of Financial Position
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
NET LIABILITIES
EQUITY
Issued capital
Accumulated losses
TOTAL EQUITY
Statement of Profit or Loss and Other Comprehensive Income
Profit (loss) before tax
Total comprehensive profit (loss)
2018
$'000
2017
$'000
479
2,155
2,634
5,236
2,918
8,154
(5,520)
365
2,189
2,554
4,786
4,820
9,606
(7,052)
21,106
(26,626)
(5,520)
21,106
(28,158)
(7,052)
1,532
1,532
(526)
(526)
Guarantees
Oldfields Holdings Limited and it's Australian wholly-owned entities have entered into a deed of cross guarantee under which the Company and its
subsidiaries guarantee the debts of each other.
Contingent liabilities
The Parent Entity did not have any contingent liabilities as at 30 June 2018 or 30 June 2017.
Contractual commitments
The Parent Entity did not have any contractual commitments as at 30 June 2018 or 30 June 2017.
28. Auditors’ Remuneration
During the year the following fees were paid or payable for services provided by the auditor of the Parent Entity, its related practices and non-related
audit firms:
BDO East Coast Partnership Australia
Auditing or reviewing the financial report
Taxation services
Other services
Total auditors’ remuneration
2018
$
2017
$
134,000
29,000
11,000
174,000
117,500
10,500
22,500
150,500
36
Oldfields Holdings Limited
30 June 2018
29. Related Party Transactions
Ultimate controlling entity
Oldfields Holdings Limited (incorporated in Australia).
Key management personnel
Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any
director (whether executive or otherwise) of that entity are considered key management personnel. The following were key management personnel
(KMP) at the end of the reporting period:
Richard John Abela
William Lewis Timms
Stephen Charles Hooper
Gregory John Park
Chief Executive Officer
Non-executive Director
Non-executive Director
Chief Financial Officer and Company Secretary
Details of remuneration
Short-term employee benefits
Post-employment benefits
Total KMP compensation
Transactions with related parties
The following transactions occurred with related parties:
Dividends paid to Sibley Investments Pty Ltd, holder of minority interest in Adelaide Scaffold Solutions Pty Ltd
Interest paid to Timms Realty, being a related party of William Lewis Timms (non-executive director)
Loans from related parties
Loan payable to Timms Realty, being a related party of William Lewis Timms (non-executive director)
Beginning of the year
Loan received
Loan repayments made
Interest charged
Interest paid
End of the year
2018
$'000
586
54
640
2018
$'000
348
-
2018
$'000
-
-
-
-
-
-
2017
$'000
611
58
669
2017
$'000
153
2
2017
$'000
-
202
(202)
2
(2)
-
There is no allowance account for impaired receivables in relation to any outstanding balances, and no expense has been recognised in respect of
impaired receivables due from related parties.
Terms and conditions
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless
otherwise stated.
37
Oldfields Holdings Limited
30 June 2018
Directors' Declaration
In accordance with a resolution of the Directors of Oldfields Holdings Limited, the Directors of the Company declare that:
1.
2.
3.
the financial statements and notes are in accordance with the Corporations Act 2001 and:
(a)
comply with Australian Accounting Standards, which, as stated in accounting policy note 3 to the financial statements, constitutes
compliance with International Financial Reporting Standards (IFRS); and
(b)
give a true and fair view of the financial position as at 30 June 2018 and of the performance for the year ended on that date of the
consolidated entity;
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; and
the Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Chief Executive Officer and
Chief Financial Officer.
Oldfields Holdings Limited and its Australian wholly-owned entities have entered into a deed of cross guarantee under which the Company and it's
subsidiaries guarantee the debts of each other.
At the date of this declaration, there are reasonable grounds to believe that the companies which are party to this deed of cross guarantee will be able to
meet any obligations or liabilities to which they are, or may become, subject to by virtue of the deed.
Richard Abela
Dated:
31 August 2018
38
Oldfields Holdings Limited
30 June 2018
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Oldfields Holdings Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Oldfields Holdings Limited (the Company) and its subsidiaries
(the Group), which comprises the statement of financial position as at 30 June 2018, the statement of
profit or loss and other comprehensive income, the statement of changes in equity and the statement
of cash flows for the year then ended, and notes to the financial report, including a summary of
significant accounting policies and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
39
Scaffolding Hire and Erection Revenue Recognition
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 5, recognition of
Our procedures included, amongst others:
scaffolding hire and erection revenue is
determined as an area of key estimate and
judgement on the basis of the following:
•
Reviewing the appropriateness of management’s judgements
associated with the fair value of consideration expected to
be received by reference to the terms of individual
• Management recognise revenue based on
contracts;
the best estimate of expected
•
Evaluating the accuracy of managements judgements
consideration to be received for individual
associated with the stage of completion of individual
contracts; and
contracts by testing the accuracy of assumptions in relation
•
Scaffolding hire and erection revenue is
to services performed at period end against the expected
recognised with reference to the stage of
total services to be provided under contacts; and
completion of the transaction and there is
judgement associated with determining the
stage of completion.
•
Assessing the recognition of scaffolding hire and erection
revenue under individual contracts by reference to the
assessment of transfer of risk and reward and the impact on
Due to the nature of the key estimates and
related revenue recognition under AASB 118 Revenue.
judgements, this has been determined as a key
audit matter.
Accounting for Deferred Senior Loan Note
Key audit matter
How the matter was addressed in our audit
The Group has recognised Deferred Senior Loan
Our audit procedures included, amongst others:
Note (DSLN) liabilities consisting of the debt
element of the DLSN of $1,424,000 (refer to
Note 14) and the derivative element of the
DSLN of $746,000 (refer to Note 16).
•
Evaluating management’s significant judgements used in
determining the fair value of the DSLN liabilities including
the estimated value of the derivative being the Redemption
Premium payable on the Maturity Date under the DSLN based
Significant judgement has been exercised by
on the share price at report date;
management in determining the fair value of
the DSLN liabilities. We therefore consider this
area to be significant for our audit.
•
•
Assessing the competency and objectivity of the valuation
expert used by management; and
Obtaining the independent expert’s valuation report and
evaluating the underlying inputs and assumptions applied in
determining the fair value.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2018, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
When we read the annual report, if we conclude based on the work we have performed, that there is a
material misstatement of this other information, we are required to report that fact.
40
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_files/ar2.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2018.
In our opinion, the Remuneration Report of Oldfields Holdings Limited, for the year ended 30 June
2018, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001.
Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
BDO East Coast Partnership
Ian Hooper
Partner
Sydney, 31 August 2018
41
Corporate Governance Statement
The Board of Directors of Oldfields Holdings Limited is committed to high standards of corporate governance and adopts wherever
possible the principles outlined in the Corporate Governance Principles and Best Practice Recommendations, 3rd Edition published by
the ASX Corporate Governance Council in March 2014.
The recommendations are written in a principles based fashion and individual boards are able to choose whether to follow the
recommended practices or to adopt other practices that are better suited to the individual circumstances of the Group. Given the size
and specific circumstances of Oldfields Holdings Limited the Board recognises that some of the best practice recommendations are not
suited to obtaining the best shareholder outcomes at the present time. This situation is monitored by the Board and the
recommendations will be adopted as and when the Group’s circumstances allow.
All relevant best practice recommendations of the ASX Corporate Governance Council have been applied for the reporting period
unless specifically disclosed below. Where a recommended practice has not been followed a detailed description of the practices
adopted is provided together with a commentary on how the risks of non-adoption of the recommended practice are mitigated.
Recommendation
Recommended Practice
Oldfields’ Practice
Recommendation 1.1
Establish functions reserved for the board and for
senior management
The recommended practice is adopted
Recommendation 1.2
Undertake appropriate checks prior to appointing as
director
The recommended practice is adopted
Recommendation 1.3
Written agreements in place with directors and
senior executives
The recommended practice is adopted
Recommendation 1.4
Company secretary accountable to board through
the chair
The recommended practice is adopted
Recommendation 1.5
Have a measurable diversity policy
recommended practice
refer below
The
adopted,
recommendation
is partially
to
for variation
Recommendation 1.6
Establish a process for evaluating performance of the
board
This recommendation has not yet been
adopted
Recommendation 1.7
a process
Have
performance of senior executives
for periodically evaluating
Recommendation 2.1
The board should have a nomination committee
Recommendation 2.2
Have a board skills matrix
Recommendation 2.3
Have a list of directors who are deemed to be
independent
The recommended practice is adopted
Nominations are considered by the whole
board
The recommended practice is adopted
The recommended practice is adopted
Recommendation 2.4
Majority of the board should be
directors
independent
The majority of the Board is not independent
and the risk management process is disclosed
Recommendation 2.5
The chair of the board should be independent and
not the CEO
The chair is not an independent director, but is
independent of the CEO
Recommendation 2.6
Have a program for inducting new directors
The recommended practice is adopted
Recommendation 3.1
Establish and disclose a code of conduct
The recommended practice is adopted
Recommendation 4.1
The board should establish an audit committee
The recommended practice is adopted
Recommendation 4.2
Prior to approving financial statements the board
receive from the CFO and CEO declaration of
properly maintained records and compliance with
accounting standards
Recommendation 4.3
External auditor attends AGM
Recommendation 5.1
Establish written policies designed
to ensure
compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a
senior executive
level for that compliance and
disclose those policies or a summary of those
policies
The recommended practice is adopted
The recommended practice is adopted
The recommended practice is adopted
42
Oldfields Holdings Limited
30 June 2018
Recommendation
Recommended Practice
Oldfields’ Practice
Recommendation 6.1
Provide information about itself and its governance
via its website
The recommended practice is adopted
Recommendation 6.2
Design and implement investor relations program for
communication with investors
The recommended practice is adopted
Recommendation 6.3
Policies and processes in place to encourage security
holder participation
The recommended practice is adopted
Recommendation 6.4
Recommendation 7.1
Recommendation 7.2
Provide
communication electronically
security holders option
to
receive
This recommended practice is adopted
Establish policies for the oversight and management
of material business risks and disclose a summary of
those policies
Board to review risk management
annually
framework
The recommended practice is adopted. The
Risk Management Statement is disclosed
The recommended practice is adopted
Recommendation 7.3
Disclosure of internal audit function
The recommended practice is adopted
Recommendation 7.4
Disclose material
environmental and social sustainability risks
exposure
to
economic,
Recommendation 8.1
The board
committee
should establish a
remuneration
Recommendation 8.2
Disclosure of policies and practices of remuneration
of non-executive and executive directors
Recommendation 8.3
Policy on equity based remuneration scheme
The indicated information is provided
recommended practice
is adopted
it does not have a majority of
The
however
independent directors
The recommended practice is adopted
based
equity
No
place,
recommendation will be adopted when
implemented
scheme
in
Current information is available on the Group’s website which contains a clearly marked Corporate Governance section.
43
Oldfields Holdings Limited
30 June 2018
Principle 1. LAY SOLID FOUNDATIONS FOR MANAGEMENT & OVERSIGHT
Recommendation 1.1 – Establish functions reserved for the board and for senior management and disclose those functions.
The Board of Directors is accountable to the shareholders for the performance of the Group. The Board sets the strategic direction and
delegate’s responsibility for the management of the Group to the Chief Executive Officer.
A copy of the Board Charter, which promotes a culture within the Group of accountability, integrity and transparency, is available on
the Group’s website.
Each Board Member must at all times act honestly, fairly and diligently in all respects in accordance with the Group’s Code of Conduct
and all laws that apply to the Group.
Key matters reserved for the Board include:
•
•
•
•
•
•
•
•
Oversight of the Group, including its control, accountability and compliance systems;
Appointment, monitoring, managing performance and if necessary removal of the Chief Executive Officer, Chief Financial
Officer and Company Secretary;
Input, assessment, appraisal and final approval of management’s development of corporate strategy and performance
objectives;
Monitoring risk management;
Approving and monitoring the progress of major capital expenditure, capital management and acquisitions and divestitures;
Approval and monitoring financial and other reporting;
Ensuring the market and shareholders are fully informed of material developments; and
Recognising the legitimate interests of stakeholders.
The expectations of directors are outlined in a formal Letter of Appointment which details the term of appointment, fees, power and
duties and other information pertinent to their roles.
Responsibility for the day-to-day management of the Group and its operations is delegated to senior executive management. The
expectations of senior executive management are outlined in Board decisions which are communicated to the Chief Executive Officer
and recorded in the board minutes and also in the position descriptions and KPI’s for each senior executive role.
The Board holds a minimum of six formal meetings a year, but usually twelve. Additional meetings are held as required.
Details of current members of the Board are disclosed in the Directors’ Report.
Recommendation 1.2 – Undertake appropriate checks before appointing or putting forward to security holders a candidate for election
as a director
Details are provided on a candidate for director. These will be provided to security holders prior to any election of new Directors.
Recommendation 1.3 – Written agreements in place with directors and senior executives
Detailed service contracts are in place for all senior managers and directors, these are established prior to commencement of
employment
Recommendation 1.4 – Company secretary accountable to the board through the chair
The CFO/Company Secretary has clear lines of accountability with the CFO responsibilities reporting directly through to the CEO and all
company secretarial functions reporting through to the Chair.
Recommendation 1.5 – Measurable diversity policy
A detailed diversity policy is in place, and available on the Company’s webpage. In addition to this, the Company’s workplace gender
equality report is available to view. Whilst the policy diverges from some of the recommendations made, key areas in the
recommendation are included in the policy, including the requirement that for all jobs advertised, it is stated that the Company is an
equal opportunity employer, that at least one female applicant is included in the final shortlist of candidates for the role, and
shortlisted candidates are interviewed by a female as well as a male member of staff prior to a final decision on employment where
possible. Specific targets of women in senior positions within the organisation have not been set, as the company will select the best
person for the role.
44
Oldfields Holdings Limited
30 June 2018
Recommendation 1.6 – Process for evaluation of the performance of the board
The Board has not completed a formal evaluation process within the period. The Chairman performs an informal evaluation of
individual Directors and also of each Board Meeting. The Board will be considering obtaining independent advice.
Recommendation 1.7 – Have a process for periodically evaluating the performance of senior management
Senior executive management is evaluated each year on their performance against stated objectives, goals and key performance
indicators (KPI’s).
Overall performance is reviewed by the particular senior executive’s direct supervisor and ultimately by the Chief Executive Officer
and/or Board of Directors.
Principle 2. STRUCTURE THE BOARD TO ADD VALUE
The Board currently has four directors, comprising two non-executive directors, including the Chairman, and two executive directors.
The Board has adopted the following principles:
•
•
•
The same individual should not exercise the roles of Chairman and Chief Executive Officer;
The Board should not comprise a majority of executive directors; and
The Board should comprise persons with a broad range of skills and experience appropriate to the needs of the Group.
Recommendation 2.1 – The board should have a nomination committee
Nominations are considered by the Board as a whole, and are only accepted if the candidate has the relevant skills required to assist
the business in achieving its strategic objectives. Given the size and requirements of the Group, the Board has decided that a
nomination committee is not required at this point in time.
Recommendation 2.2 – Have a board skills matrix
This has been established.
Recommendation 2.3 – Have a list of directors that are deemed to be independent
The Company has one independent director and this is disclosed in the annual report.
Recommendation 2.4 – Majority of the board should be independent directors
Independent directors are those who are independent of management and free of any business or other relationship that could
materially interfere with, or could reasonably be perceived to materially interfere with, the exercise of their unfettered and
independent judgment.
In assessing the independence of directors, an independent director is a non-executive director and:
•
•
•
•
Is not a substantial shareholder, as defined in section 9 of the Corporations Act, of the Group or an officer of, or otherwise
associated directly with, a substantial shareholder of the Group;
Has not within the last three years been employed in an executive capacity by the Group or another Group member, and there
has been a period of at least three years between ceasing such employment and serving on the Board;
Has not within the last three years been a principal of a material professional advisor or a material consultant to the Group or
another Group member, or an employee materially associated with the service provided; and
Is not a material supplier or customer of the Group or other Group member, or an officer of or otherwise associated directly or
indirectly with a material supplier or customer;
At the date of this report there was one independent director.
The following Directors do not meet the independence criteria listed above:
•
•
•
William Lewis Timms: currently a non-executive director and substantial shareholder;
Richard John Abela: currently an executive director and shareholder; and
Gregory John Park: currently an executive director.
The Board manages the risk of having a majority of non-independent directors through restrictions on trading in shares, restrictions on
related party transactions, and a close relationship with the principal provider of debt funding and a strong independent auditor with a
focus on controls.
45
Oldfields Holdings Limited
30 June 2018
Recommendation 2.5 – The chair of the board should be independent and not the CEO
Due to the size and nature of the business, this recommendation has not been adopted. The Chair is a significant shareholder, however
the recommendation of the Chair not being the CEO is in place.
Recommendation 2.6 – Have a program for inducting new directors and ensuring appropriate professional development opportunities
to develop and maintain the skills required to perform their role as directors
There is an appropriate level of induction for new Directors ensuring they understand the business needs and requirements. The Board
discusses from time to time requirements to ensure continuous development of skills for the performance of their role as Director.
Principle 3. PROMOTE ETHICAL AND RESPONSIBLE DECISION – MAKING
Recommendation 3.1 – Establish and disclose a Code of Conduct and disclose the code or a summary of the code as to the practices
necessary to maintain confidence in the company’s integrity, the practices necessary to take into account their legal obligations and the
reasonable expectations of their stakeholders and the responsibility and accountability of individuals for reporting and investigating
reports of unethical practices
The Board has a code of conduct for Directors and Group, Officers and employees. The key elements of the code are:
•
•
•
•
•
•
•
Conflicts of interest;
Corporate opportunities;
Confidentiality;
Fair dealing;
Protection of assets;
Compliance with laws and regulations; and
Promotion of ethical and lawful behavior.
The policy is available on the Company’s webpage.
Principle 4. SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
The Chief Executive Officer and the Chief Financial Officer state, in writing, to the Board that the Group’s financial reports present a
true and fair view, in all material respects, of the Group’s financial position and operational results and are in accordance with relevant
accounting standards.
Recommendation 4.1 – the board should establish an audit committee
The Board has an Audit Committee, which:
•
•
•
Has two members who are Non-Executive Directors;
Has a written charter which can be obtained from the Corporate Governance section of the Group’s website; and
Includes members who are all financially literate.
Details of the members are disclosed in the Director’s Report.
The Board recognises that an independent audit committee is an important feature of good corporate governance.
The Audit Committee:
•
consists only of non-executive directors, however all Directors are entitled to receive the papers of the Committee and to
attend meetings of the Committee and to meet with the auditors;
is chaired by an independent chairman, who is not Chair of the Board;
has two members. Given the size and structure of the Board, as discussed in Recommendation 2.1, the Board feels that two
members both of whom are financially literate, is sufficient at this time.
•
•
The risk with a small committee is that the members will lack the diversity to raise and recognise issues. Risk is managed through
specific working arrangements with the auditors having access to the full Board at any time upon their request and through ensuring
that the Chairman of the Audit Committee is a well-qualified independent director. It is intended to review this arrangement and adopt
the recommended practice if and when the Board composition changes.
46
Oldfields Holdings Limited
30 June 2018
The Audit Committee has a formal charter, the key elements of the charter are:
•
•
•
•
•
•
•
Role of the Committee;
Membership;
Meetings;
Responsibilities;
Authority;
Independence; and
Non-audit work.
The Board and Audit Committee closely monitor the independence of the external auditor. The Audit Committee meets a minimum of
twice a year. The Committee may also meets in private, with management without the external auditor and, at a separate time, with
the external auditor without management where considered necessary.
Recommendation 4.2 – Prior to approving financial statements the board receive from the CFO and CEO a declaration of properly
maintained records and compliance with accounting standards
The Chief Executive Officer and the Chief Financial Officer state, in writing, to the Board that the Group’s financial reports present a
true and fair view, in all material respects, of the Group’s financial position and operational results and are in accordance with relevant
accounting standards.
The members of the Audit Committee are:
•
•
Stephen Charles Hooper (Chairman); and
William Lewis Timms.
The details of the qualifications of the Audit Committee members are disclosed in the Directors’ Report.
The details of the number of Audit Committee Meetings held are contained in the Directors’ Report.
Departures from recommendations included in Principle 4 have been disclosed in the discussion of the relevant recommendations.
Recommendation 4.3 – External auditor attends AGM
The lead partner from the Company’s auditors always attends the Company’s AGM.
Principle 5. MAKE TIMELY AND BALANCED DISCLOSURE
Recommendation 5.1 – Establish policy on ASX Listing Rule disclosure requirements and ensure accountability at a senior executive level
for that compliance and disclose those policies or a summary of those policies
The Group has established procedures to ensure compliance with ASX Listing Rules which require that when an entity becomes aware
of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity’s
securities, the entity must immediately tell ASX that information.
A Continuous Disclosure Policy and Procedure has been prepared and is available from the Corporate Governance section of the
Group’s website.
Principle 6. RESPECT THE RIGHTS OF SHAREHOLDERS
Recommendation 6.1 – Provide information about itself and its governance via its website
The Company has a comprehensive website for security holders, included in this website are full governance policies.
Recommendation 6.2 – Design and implement investor relations program for communications with investors
The Group has developed and implemented a shareholder communication strategy. The Group promotes effective communication with
shareholders and encourages effective participation at the Group’s general meetings.
Shareholders and other parties will be able to access the following information from the Group’s website:
•
•
•
•
Copies of all announcements given to the ASX;
Press releases and copies of letters to shareholders;
Copies of annual and half year financial reports; and
Details of notices of shareholders meetings including information on general meetings.
47
Oldfields Holdings Limited
30 June 2018
The requirements of continuous disclosure ensure that the Group discloses relevant information to the shareholders and the market in
a timely and full manner.
The Shareholder Communication Strategy is available on the Oldfields website.
Recommendation 6.3 – Disclose policies and processes in place to encourage shareholder meeting participation
Security holders who are unable to attend meetings are given the opportunity in shareholder communications to ask questions of the
Directors and responses are provided to them.
Recommendation 6.4 – Provide security holders the option to receive communications electronically
The Company’s share registry provider provides this option to all security holders.
Principle 7. RECOGNISE AND MANAGE RISK
Recommendation 7.1 – Companies should establish policies for the oversight and management of material business risks and disclose a
summary of those policies
The Board recognises that there are a number of complex operational, commercial, financial and legal risks and has in place procedures
to safeguard the Group’s assets and interests.
A Work Health and Safety Committee has been established to monitor and recommend changes to safe working practices and a safe
working environment. The Chairman is not a Director, and the committee comprises the Managing Director, senior executive officers
and employee representatives.
The Board has developed a risk management policy the purpose of which is:
•
•
•
•
•
•
•
Identify, access, monitor and manage risk;
Inform investors of material changes to the Group’s risk profile;
Enhance the environment for capitalising on value creation opportunities;
Ensure compliance with the Corporations Act;
Consider the reasonable expectations of its stakeholders;
The measures and procedures in place to comply with these regulations; and
How compliance with those measures and procedures will be monitored.
A summary of these policies is contained in the Risk Management Statement which is disclosed on the Oldfields website.
Recommendation 7.2 – The board should review the risk management framework annually
The Group’s risk management policy is designed and implemented by the Board of Directors’ which meet regularly to identify all major
risks, ensure appropriate risk management plans are in place and to monitor the effectiveness of the implementation of the risk
management plans.
The Chief Executive Officer and the Chief Financial Officer are required to state in writing to the Board that the Group’s risk
management and internal compliance and control system is operating effectively and efficiently in all material aspects.
Recommendation 7.3 – The board should disclose whether it has an internal audit function, how the function is structured and what
role it performs
From time to time and as required, the Board will outsource the internal audit function to a company that specialises in this work. The
company will review certain areas of controls and compliance and report back to the CEO/CFO and manager of the area. This report
when finalised with comments from management along with timelines for compliance are provided to the Board for review.
Recommendation 7.4 – Disclose material exposure to material exposure to economic, environmental and social sustainability risk
The business is exposed to various risks, in particular economic and social sustainability risk. The Board is fully aware of these and these
risks are mitigated wherever possible. In terms of social sustainability risk, the Company is a party to the packaging covenant
agreement and reviews product packaging for sustainability and recyclability.
48
Oldfields Holdings Limited
30 June 2018
Principle 8. REMUNERATE FAIRLY AND RESPONSIBLY
Recommendation 8.1 – The board should establish a remuneration committee
The Board has established a Remuneration Committee. The Remuneration Committee is responsible for developing and recommending
to the Board:
•
•
•
•
•
•
•
Remuneration policies for Non-Executive Directors;
Remuneration policies for the Chief Executive Officer and Chief Financial Officer;
Remuneration policies for executive management;
All aspects of any executive share option or acquisition scheme;
Superannuation policies;
Policies which motivate senior executives to pursue the long term growth and success of the Group; and
Policies which show a clear relationship between senior executives’ performance and remuneration.
The Board has a remuneration committee which has two members and a documented charter. The members and qualification of the
Remuneration Committee are disclosed in the Directors’ Report.
Due to the size and nature of the Board as discussed in recommendation 2.4 the following items of recommendation are not followed:
•
•
consists of a majority of independent directors; and
has at least three members.
The remuneration of Non-Executive Directors is by way of director’s fees in the form of cash, non-cash benefits and superannuation
benefits.
The total annual remuneration paid to Non-Executive Directors may not exceed the limit set by shareholders at the Annual General
Meeting.
Non-Executive Directors do not receive options unless approved by shareholders.
Recommendation 8.2 – Disclosure of policies and practices of remuneration of non-executive and executive directors
The Group has clearly differentiated the remuneration structure of Executive and Non-Executive Directors. The key elements of the
remuneration philosophy are disclosed in the Remuneration Committee Charter which is available on the Oldfields website.
Recommendation 8.3 – Policy on equity based remuneration scheme
The Company currently does not have an equity based remuneration scheme. Prior to one being implemented and approved by
security holders a policy will be established for security holders to review.
49
Oldfields Holdings Limited
30 June 2018
Risk Management Statement
1.
Introduction
This statement provides an overview of the Group's risk management policies and internal compliance and control systems in
accordance with Principle 7 of the ASX Principles of Good Corporate Governance.
2. Responsibility
The Board of Directors are responsible for oversight on a regular basis of the Group's procedures and risk management policies. The
responsibility of the Board is codified under the Board Charter, which is available on the Group’s website. The Group also has an
audit committee, the responsibilities of which are documented in the Audit Committee Charter which is also available on the
Group’s website.
3. Risk Management Monitoring
The Board has implemented a combination of internal policies and procedures and use of external audits to monitor risk
management and its effectiveness.
3.1. Standard Operating Procedures (SOP's)
The Board has implemented risk management policies covering areas of business risk such as:
•
•
•
•
•
Work health and safety;
Finance and treasury;
Human resources;
Asset protection (insurance); and
Codes of conduct.
The policies referred to are regularly reviewed and an internal mechanism exists whereby the Board and Committee members have
access to these reports on an internal intranet site. The Board manages these risks appropriately with reference to identification,
implementation and review of these risks and procedures.
3.2. External Audits
The external audit of the Group is conducted annually. There is also a formal review at least once every year. Both the audit and
review are conducted by an external auditor.
The Group has a Work Health and Safety Committee which has received training and certification by external OH&S providers.
The Group engages with qualified external advisors annually in relation to asset protection. Where possible the Board adopts the
most practical and affordable insurance policies suitable to protect major assets of the Group.
In general an external qualified auditor and or valuers are engaged by the Board in determining large asset values on acquisition of
assets. An external valuation is obtained to determine and verify carrying values of investment property by an external
independent registered property valuer at least every three years where applicable.
3.3. Risk Management Statements
The integrity of the Group's financial reports relies on sound business and risk control systems.
Annually, the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) are required to sign a Risk Management Statement
that is provided to the audit committee in writing.
The CEO and CFO sign a statement regarding the adequacy of financial controls in accordance with section 295a of the Corporations
Act 2001.
The Board requires management to report on the key business risks for each area of the business at each board meeting.
3.4. Internal Audit
Given the Group's size, an internal auditor is not practical. In addition, the presence of an executive director on the Board allows for
detailed oversight of risks within each business by managers who are familiar with the risk environment but not directly involved in
the management of that particular business. In addition to this the Company from time to time may utilise the services of an
internal auditing company to provide oversight of certain aspects of the business.
50
Oldfields Holdings Limited
30 June 2018
3.5. External Covenants
The Group has voluntarily associated itself with the following self-regulated authorities:
•
•
WGE (Workplace Gender Equality Act): The Group reports annually on targets and policy to an external agency in regards to
Equal Opportunity Guidelines and Policy within the work force. The Board receives and reviews this annually; and
Australian Packaging Covenant: The Group sets targets to reduce packaging waste and environmental impact of packaging
waste. Targets are set and guidelines adopted and where possible administered by management. The Board reviews these
targets annually.
The Group has also entered into an agreement with its principal lender (Westpac Banking Corporation) which provides external
overview of financial risks by a representative of the bank.
4. Formal Risk Management Practices
The Group operates a formal process for risk management which includes:
•
•
•
•
•
•
Risk identification;
Risk analysis;
Risk evaluation;
Risk mitigation;
Risk monitoring and reporting; and
Risk communication.
The risk management process meets appropriate professional standards and is reviewed annually by the Board of Directors. The
process meets, but is not limited to the requirements of Principle 7 of the ASX Principles for Good Corporate Governance.
5. Risk Reporting and Communication
Risks are reported and their monitoring and management are communicated in accordance with the diagram below:
Material Risks
General Reporting
Accountabilities
Direct risk response or accept material
risk
Review and approve
strategies or accept risk
risk mitigation
Oversight of framework and sufficiency of
reporting
Board of Directors
Implement risk response or escalate to
Board of Directors
Review and approve risk reporting and
mitigation strategies
Oversight of corporate risks and adequacy
of framework
Chief Executive Officer (CEO)
Recommend material risk escalation to
CEO or Board of Directors
Consolidate risk assessments and prepare
summary reporting
Implement and monitor ERM framework
and ERM system
Chief Financial Officer (CFO)
Identify and report material risks as they
arise
Prepare risk assessments in accordance
with ERM framework
Operationally manage risks and escalate
issues
Finance Department
Communication
Effective risk management is reliant on the timely and open communication of actual or potential risk events across the
organisation. Free and frank communication is at the heart of the Group's risk management approach, and where the processes and
accountabilities described in these standards may not support a suitably rapid response to any risk, then communication should be
undertaken using whatever means to achieve the best outcome for the Group.
For the avoidance of doubt, Oldfields Holdings Limited has a whistle-blower policy in place and encourages all staff to report risks of
which they are aware.
51
Oldfields Holdings Limited
30 June 2018
Shareholder Information
The shareholder information set below was applicable as at 24 August 2018.
A. Substantial Shareholders
The number of substantial shareholders and their associates are set out below:
Shareholder
Mr Williams Lewis Timms & Mrs Carolyn Jane Timms
Hext Family Investments Pty Ltd
B. Distribution of Equitable Security Holders
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
There were 154 holders of less than a marketable parcel of ordinary shares.
C. Equity Security Holders
The names of twenty largest quoted equity security holders are listed below:
Starball Pty Ltd
Oceanridge Limited
Hext Family Investments Pty Ltd
Benger Superannuation Pty Limited
Dixson Trust Pty Limited
Shareholder
1 Mr Williams Lewis Timms & Mrs Carolyn Jane Timms
2
3
4
5 Mr Rodney Boyce Hass
6
Farrow Rd Pty Ltd
7 Mr Orlando Berardino Di Julio & Ms Catharina Maria Koopman
8
9
10 Dr Gordon Bradley Elkington
11 Netwealth Investments Limited
12
Shandora One Pty Ltd
13 Mr Brian Garfield Benger
14 Mr Paul John Simpson
15
16 Man Investments (NSW) Pty Ltd
17
18 Maparily Pty Ltd
19
20
21* Mr Rhett Anthony John Morson
Emerald Shares Pty Limited
Sanperez Pty Ltd
Seven Bob Investments Pty Ltd
Toveken Properties Pty Ltd
Ordinary Shares
Percentage
of Issued
Shares
47.927%
5.354%
Number Held
39,384,528
4,399,369
Ordinary Shares
Shares
Options
68
78
18
66
46
276
-
-
-
-
-
-
Ordinary Shares
Percentage
of Issued
Shares
Number Held
39,384,528
4,399,369
4,023,796
4,000,000
3,764,054
2,200,000
2,179,887
1,782,486
1,650,000
1,527,108
1,500,000
1,288,000
1,200,000
1,200,000
693,000
675,096
584,394
573,962
500,000
500,000
500,000
74,125,680
47.927%
5.354%
4.897%
4.868%
4.580%
2.677%
2.653%
2.169%
2.008%
1.858%
1.825%
1.567%
1.460%
1.460%
0.843%
0.822%
0.711%
0.698%
0.608%
0.608%
0.608%
90.203%
*Where equal shareholding exist for lowest rankings, all shareholders with such balance are listed.
D. Unquoted Equity Securities
There are no unquoted or unissued securities as at the end of the reporting period.
E. Voting Rights
The voting rights attaching to each class of equity securities are set out below:
Ordinary shares:
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote.
Options:
No voting rights.
F. On-Market Buy Back
There is no current on-market buy back.
52
Corporate Directory
Directors
Richard John Abela
William Lewis Timms
Stephen Charles Hooper
Gregory John Park
Company Secretary
Gregory John Park
Notice of Annual General Meeting
The Annual General Meeting of
Oldfields Holdings Limited will be held at:
8 Farrow Road
Campbelltown NSW 2560
Time: 2:00pm
Date: Thursday 22nd November 2018
Registered Office
Oldfields Holdings Limited
8 Farrow Road
Campbelltown NSW 2560
Principal Place of Business
Oldfields Holdings Limited
8 Farrow Road
Campbelltown NSW 2560
Share Register
Boardroom Pty Limited
Level 12, 225 George Street
Sydney NSW 2000
Banker
Westpac Banking Corporation
Level 12, 55 Market Street
Sydney NSW 2000
Auditor
BDO East Coast Partnership
Level 11, 1 Margaret Street
Sydney NSW 2000
Stock Exchange Listing
Oldfields Holdings Limited shares are listed on
the Australian Securities Exchange
(ASX Code: OLH)
Website
www.oldfields.com.au
53
Oldfields Holdings Limited
30 June 2018