28 August 2020
APPENDIX 4E
Preliminary Final Report
for the year ended 30 June 2020
Reporting Period
The reporting period is for the year ended 30 June 2020 with the corresponding reporting period being
for the year ended 30 June 2019.
Results for announcement to the market
30 June 2020
A$'000
Revenue from continuing operations
Profit for the year
Profit after tax attributable to members
up
up
up
122%
131%
131%
to
to
to
33,823
1,857
1,857
Net tangible assets per share (cents)
12.53
12.28
30 June 2020
30 June 2019
Dividends
There is no proposal to pay dividends for the year ended 30 June 2020.
Audit
This report is based on accounts which have been audited.
Commentary on results for the period
Commentary on the results for the period is contained within the Annual Report and ASX announcement
accompanying the report.
Annual Meeting
The annual meeting is expected to be held as follows:
Date: 13 November 2020
-ENDS-
CONTACTS
Announcement authorised by:
Todd Alder
CEO & Managing Director
Tel: +61 8 9441 2311
Email: contact@orbitalcorp.com.au
For further information, contact:
Ian Donabie
Communications Manager
Tel: +61 8 9441 2165
Email: idonabie@orbitalcorp.com.au
About Orbital UAV
Orbital UAV provides integrated propulsion systems and flight critical components for tactical unmanned aerial vehicles (UAVs).
Our design thinking and patented technology enable us to meet the long endurance and high reliability requirements of the UAV
market. We have offices in Australia and the United States to serve our prestigious client base.
Forward-looking statements
This release includes forward-looking statements that involve risks and uncertainties. These forward-looking statements are
based upon management's expectations and beliefs concerning future events. Forward-looking statements are necessarily
subject to risks, uncertainties and other factors, many of which are outside the control of the Company that could cause actual
results to differ materially from such statements. Actual results and events may differ significantly from those projected in the
forward-looking statements as a result of a number of factors including, but not limited to, those detailed from time to time in the
Company’s Annual Reports. The Company makes no undertaking to subsequently update or revise the forward-looking
statements made in this release to reflect events or circumstances after the date of this release.
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2 O 2 0 A N N U A L R E P O R T
CORPORATE
PROFILE
Orbital UAV provides integrated propulsion systems and flight critical
components for tactical unmanned aerial vehicles (UAVs).
Our design thinking and patented technology enable us to meet the long
endurance and high reliability requirements of the UAV market. We have offices
in Australia and the United States to serve our prestigious client base.
CONTENTS
Directors’ Report
Auditor’s Independence Declaration
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 financial statements
Directors’ declaration
Independent auditor’s report
Shareholding details
Corporate information
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59
BC
DIRECTORS’ REPORT
for the year ended 30 June 2020
The Directors present their report together with the financial report of Orbital Corporation Limited (the Company or Orbital) and of the Group,
being the Company and its subsidiaries for the year ended 30 June 2020 and the auditor's report thereon.
Reference
Contents of Directors’ Report
Page
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2.
3.
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5.
6.
7.
8.
9.
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12.
13.
14.
15.
16.
17.
18.
Operating and Financial Review
Directors
Company Secretary
Directors’ Meetings
Principal Activities
Dividends
Events Subsequent to Balance Sheet Date
Proceedings on Behalf of Company
Likely Developments and Expected Results
Environmental Regulation and Performance
Directors’ Interests
Share Options
Auditor Independence and Non-Audit Services
Indemnification
Corporate Governance Statement
Rounding Off
Remuneration Report
Lead Auditor’s Independence Declaration
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2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020 DIRECTORS’ REPORT
for the year ended 30 June 2020
1. OPERATING AND FINANCIAL REVIEW
John Welborn
Chairman
Non-Executive Director
Todd Alder
Managing Director and Chief Executive Officer
Dear Shareholders,
On behalf of the Board of Directors (“the Board”), we are pleased to present the annual report of Orbital Corporation (“Orbital” or “the Company”)
and its subsidiaries (“the Group”) for the year ended 30 June 2020.
Overview
FY20 highlights
•
•
•
•
•
•
Delivery of $33.8M revenue and $1.9M net profit – top end of guidance range ($25M to $35M) and commitment to ongoing profitability;
Second engine model under the Insitu Inc. long term agreement into production, with third engine in development;
Designated Primary Engine Supplier to Insitu Inc.;
New contracts signed with Northrop Grumman and one of Singapore’s largest defence companies;
Visit from Australia’s Minister for Defence, Senator the Hon Linda Reynold CSC; and
First test flights of Orbital UAV engines in Australia.
FY20 – transition to sustainable underlying earnings
In FY20, Orbital brought its second engine model into production as part of the Long Term Agreement (“LTA”) with key customer Insitu Inc., a
wholly owned subsidiary of the Boeing Company. The second model began shipping in January 2020 and contributed to operating revenue of
$33.8 million and earnings after interest and tax of $1.9 million. This is after receiving a one off legal settlement as disclosed in the financial
statements.
The LTA with Insitu was announced in October 2018 and forms the foundation for Orbital’s near-term revenue growth. The Agreement covers
the delivery of multiple propulsion systems and services, to be applied across the Boeing subsidiary’s entire fleet of unmanned aerial vehicles
(UAVs).
Financial results
The Company reported strong financial results for the year ended 30 June 2020, with revenue from continuing operations of $33,823,000
(2019: $15,253,000) and a net profit after tax of $1,857,000 (2019: loss of $5,906,000).
The Company reports a strong balance sheet with cash and receivables of $14,681,000 (2019: $15,127,000) and net current assets of
$11,851,000 (2019: $13,453,000).
Net cash from operating activities during the period was $3,726,000 (2019: $1,783,000).
Shareholder returns
Closing share price ($)1
Market capitalisation ($m)
2020
0.75
58.2
Basic EPS (cents) from operations
2.40
1 as at 30 June
2019
0.30
23.2
(7.63)
2018
0.36
27.9
2.87
2017
0.50
38.6
(15.55)
2016
0.69
52.4
2.73
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2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020
DIRECTORS’ REPORT
for the year ended 30 June 2020
Management and Board transition
On 10 February 2020, Mr David Bonomini was appointed Chief Financial Officer and Company Secretary. Mr Bonomini is a respected finance
executive with global experience leading governance, regulatory and commercial initiatives in high growth companies. He is a qualified CPA
and holds a Bachelor of Commerce degree.
Mr Bonomini replaced Ms Roulé Jones, who resigned from the Company to pursue other interests.
With effect from 18 November 2019, Mr Terry Stinson stepped down from his position as Non-Executive Director on the Orbital Board.
Change in operations
Like many businesses in Australia, the USA and around the world, Orbital has closely monitored – and continues to monitor – the business
risks presented by the Coronavirus (COVID-19) pandemic. The physical wellbeing and mental health of all our people is a priority and the
Company implemented a COVID-19 Response Plan to minimise the risk of contracting and spreading the virus.
Throughout the pandemic our sites in Australia and the USA have remained fully operational and continue to manufacture as normal. In the
USA, Orbital operates within the Defense Industrial Base and is therefore considered part of the Critical Infrastructure Sector as defined by
the US Department of Homeland Security.
As an advanced aerospace manufacturer supplying global defence prime contractors, our product demand remained unaffected by the COVID-
19 outbreak. We continued to deliver on our production commitments and strengthened our global supply chain where necessary.
Delivery of our products continued through our established logistics providers, and contingency plans were put in place should existing
channels of delivery be impacted.
The Company will continue to support the public health effort to minimise the spread of COVID-19.
Outlook
Orbital’s LTA with Boeing subsidiary Insitu remains the Company’s primary focus and forms the foundation for improved revenue growth in
the near term. Under the LTA, the Company begins FY21 with two engine models in production, with the third in development.
In March 2020, Orbital was designated primary engine supplier status by Insitu. Primary supplier status will increase Orbital’s share of Insitu
designed engine orders and provides the Company with opportunities to increase production volumes under the LTA. The award supports the
Company’s decision to locate Orbital’s new production facility in Hood River, Oregon and provides incentive for further investment in production
capacity.
Building on the successful Insitu LTA and partnership, Orbital developed further growth opportunities in the global tactical UAV market during
FY20.
In March 2020, the Company signed a new MoU with one of Singapore’s largest defence companies for the design, development and initial
low rate production of a multi-fuel UAV engine.
In April 2020, Orbital announced a new contract with leading aerospace and defence technology company Northrop Grumman to develop a
hybrid propulsion system for a Vertical Take-Off and Landing UAV.
These two new engine development contracts demonstrate Orbital’s growing reputation as a world leading supplier of propulsion solutions
and flight critical components in the global tactical UAV market. The Company will progress these exciting engineering development projects
during FY21 while continuing to focus on its production priorities under the Insitu LTA.
The Chairman and Managing Director would like to thank the ongoing commitment of the Company’s shareholders and staff.
2. DIRECTORS
The Directors of the Company at any time during or since the end of the financial year are:
Mr John Paul Welborn, BCom, FCA, FAIM, MAICD, MAusIMM, JP
Chairman
Joined the Board in June 2014 and appointed as Chairman in March 2015. Mr Welborn is the Managing Director and Chief Executive Officer
of Resolute Mining Limited, an ASX (ASX: RSG) and LSE (LSE: RSG.L) listed gold producer with two operating gold mines in Africa and
Australia.
Mr Welborn is a Chartered Accountant with a Bachelor of Commerce degree from the University of Western Australia and holds memberships
of the Institute of Chartered Accountants in Australia (ICAA), the Financial Services Institute of Australasia (FINSIA) and the Australian Institute
of Company Directors (AICD).
Mr Welborn is a former international rugby union player with extensive experience in the resources sector as a senior executive and in corporate
management, finance and investment banking. He has served on the Boards of a number of charitable organisations and is a former
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2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020
DIRECTORS’ REPORT
for the year ended 30 June 2020
Commissioner of Tourism Western Australia.
Mr Welborn also serves as a director of Resolute Mining Limited (appointed February 2015) and Equatorial Resources Limited (appointed
August 2010).
Mr Todd Alder, BEc (Acc), CPA, ACIS
Managing Director and Chief Executive Officer
Joined Orbital as Chief Financial Officer and Company Secretary in December 2016 and appointed as Managing Director and Chief Executive
Officer in August 2017. Mr Alder’s experience includes successful start-ups, acquisitions and the implementation of lean concept business
transformations. Mr Alder is an accomplished leader focused on financial discipline, strategy alignment and operational efficiency.
His previous role was Chief Financial Officer and Company Secretary at Toro Energy Limited, where he was responsible for financial and
management accounting, company secretarial functions, investor relations and information technology. Mr Alder has also worked with
Capgemini Consulting (previously Ernst & Young) and Origin Energy Limited.
Mr Steve Gallagher, B.E (Hons), B.Com, MAICD
Non-Executive Director
Joined the Board in April 2017. Mr Gallagher is Principal of Agere Pty Ltd, an advisory and investment company drawing on his capability and
professional networks established over 30 years as a CEO and director of global businesses.
Mr Gallagher has operated in various business sectors including industrial automation, building technology and power systems, having spent
15 years living and working in Asia (China, Hong Kong and Singapore) and Europe (Switzerland).
Mr Gallagher is currently a Non-Executive Director with Optal Ltd (an innovative global payment solutions company), Vix Technology Ltd (an
industry leader in transport ticketing, fare collection/payments), Transact1 Pty Ltd (a financial services provider for cash management
optimisation and Littlepay Pty Ltd (transit payment processing service provider).
Mr Gallagher is also the chairman of the Company’s Audit and Risk Committee.
Mr Kyle Abbott, B.Com (Hons 1st), CA
Non-Executive Director
Joined the Board in May 2018. Mr Abbott is an experienced aerospace and defense industry executive. Mr Abbott was Managing Director of
Western Australian Specialty Alloys (WASA) from 1996 to 2015. During this period WASA grew from a Western Australian specialised alloy
manufacturer to become a major supplier to the global aerospace industry, with key customers in the United States, the United Kingdom and
Japan. In 2000, Mr Abbott managed the successful sale of WASA to United States-based Precision Castparts Corporation (PCC), an S&P
500 company. PCC was subsequently acquired by Berkshire Hathaway in 2015.
Mr Abbott is also a member of the Company’s Audit and Risk Committee.
Mr Terry Dewayne Stinson, B.Bus Admin (magna cum laude)
Non-Executive Director
Mr Terry Stinson stepped down from his position as Non-Executive Director on the Orbital Board with effect from 18 November 2019.
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2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020
DIRECTORS’ REPORT
for the year ended 30 June 2020
3. COMPANY SECRETARY
Mr David Bonomini, B.Com, CPA
Mr David Bonomini was appointed as Chief Financial Officer and Company Secretary in February 2020. Mr Bonomini is a respected finance
executive with global experience leading governance, regulatory and commercial initiatives in high growth companies. He is a qualified CPA
and holds a Bachelor of Commerce degree. In his previous CFO roles with Compass Group Australia and KB Food Company, Mr Bonomini
was responsible for commercial, financial, tax and mergers and acquisitions during periods of significant expansion.
4. DIRECTORS’ MEETINGS
The number of Directors’ meetings and the number of meetings attended by each of the Directors of the Company during the financial year
are shown below.
Director
J P Welborn
T M Alder
T D Stinson
S Gallagher
K Abbott
Directors Meetings
Audit and Risk Committee Meetings
No. of meetings
attended
No. of meetings held1
No. of meetings
attended
No. of meetings held2
6
6
-
6
6
6
6
-
6
6
-
-
-
6
6
-
-
-
6
6
1 Number of meetings held during the time the Director held office during the year.
2 The Audit and Risk Committee was established in March 2019.
5. PRINCIPAL ACTIVITIES
Orbital’s focus is on the revolutionary design, proven manufacturing processes and rigorous testing to deliver superiority in UAV propulsion
systems and flight critical components.
The Company drives its UAV-focused strategy from its dedicated production facilities in WA, Australia and Oregon, USA. Our intellectual
property, know-how and industry experience, enable us to meet the long endurance and high reliability requirements of the rapidly evolving
UAV market.
Working with our international customers and supply chain, we continue to design, develop and manufacture world-leading propulsion system
solutions and associated technologies to meet the changing demands and increasing mission parameters of tactical UAVs.
6. DIVIDENDS
No dividend has been paid or proposed in respect of the current financial year.
7. EVENTS SUBSEQUENT TO BALANCE SHEET DATE
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material
and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the results of those
operations, or the state of affairs of the Group, in future years.
8. PROCEEDINGS ON BEHALF OF THE COMPANY
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations
Act 01.
9. LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Information as to the likely developments in the operations of the Group is set out in the operating and financial review above.
10. ENVIRONMENTAL REGULATION AND PERFORMANCE
The Directors do not believe that the Group has significant environmental obligations. The Group’s policy is to comply with any applicable
environmental regulations that are in force during the reporting period.
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2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020
DIRECTORS’ REPORT
for the year ended 30 June 2020
11. DIRECTORS’ INTERESTS
The relevant interest of each Director in the share capital of the Company shown in the Register of Directors’ Shareholdings as at 30 June
2020 is as follows: -
Director
J P Welborn
T M Alder
S Gallagher
K Abbott
Total
Ordinary
Shares
850,000
372,333
100,000
30,000
Performance
Rights
-
1,242,250
-
-
1,352,333
1,242,250
12. SHARE OPTIONS
The Company has no unissued shares under option at the date of this report.
13. AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and
experience with the Company and/or the Group are important. For the year ended June 2020, the Group engaged with
PricewaterhouseCoopers in non-audit services that included Tax & Research and Development Government grants. Refer to Note F.5 in the
Financial Statements for summary of fees paid. The Board of Directors has considered the position and, in accordance with advice received
from the Audit Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001.
14. INDEMNIFICATION
Indemnification and insurance of officers
To the extent permitted by law, the Company indemnifies every officer of the Company against any liability incurred by that person:
(a)
(b)
in his or her capacity as an officer of the Company; and
to a person other than the Company or a related body corporate of the Company
unless the liability arises out of conduct on the part of the officer which involves a lack of good faith.
During the year, the Company paid a premium in respect of a contract insuring all Directors, Officers and employees of the Company (and/or
any subsidiary companies of which it holds greater than 50% of the voting shares) against liabilities that may arise from their positions within
the Company and its controlled entities, except where the liabilities arise out of conduct involving a lack of good faith. The Directors have not
included details of the nature of the liabilities covered or the amount of the premium paid in respect of the insurance contract as disclosure is
prohibited under the terms of the contract.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, PricewaterhouseCoopers, as part of the terms of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to
indemnify PricewaterhouseCoopers during or since the financial year.
15. CORPORATE GOVERNANCE STATEMENT
The Board of Orbital Corporation Limited is responsible for corporate governance. The Board has prepared the Corporate Governance
Statement in accordance with the third edition of the ASX Corporate Governance Council’s Principles and Recommendations, which is
available on the Company’s website at www.orbitaluav.com under the About Us/Corporate Governance section.
16. ROUNDING OFF
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, dated 24 March
2016, and in accordance with that Instrument, amounts in the financial report and Directors’ Report have been rounded off to the nearest
thousand dollars unless otherwise indicated.
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2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020
DIRECTORS’ REPORT
for the year ended 30 June 2020
REMUNERATION REPORT - AUDITED
KEY MANAGEMENT PERSONNEL AND SUMMARY OF ORBITAL’S FIVE-YEAR PERFORMANCE
Key management personnel (“KMP”)
This Remuneration Report outlines the remuneration in place and outcomes achieved for KMPs during the year ended 30 June 2020.
KMPs are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group,
directly or indirectly, including any Director, whether executive or otherwise, of the parent company.
The names and positions of the individuals who were KMP during 2020 are set out in Table 1.
Table 1 – KMP
Executive
Executive Director
Todd M Alder (Chief Executive Officer and Managing Director)
Senior Executives
Geoff P Cathcart (Chief Technical Officer)
Roulé Jones1 (Chief Financial Officer & Company Secretary)
David Bonomini3 (Chief Financial Officer & Company Secretary)
Non-Executive Directors
John P Welborn (Chairman)
Terry D Stinson2
Steve Gallagher (Chairman of the Audit & Risk Committee)
Kyle Abbott (Member of the Audit & Risk Committee)
1. Ms Jones resigned as a KMP effective 28 February 2020
2. Mr Stinson retired as a Non-Executive Director 18 November 2019
3. Mr Bonomini became a KMP effective 10 February 2020
Table 2 – Five-year performance
The table below outlines Orbital’s performance over the last five years against key metrics.
Closing share price ($)
Market capitalisation ($m)
Basic EPS (cents) from operations
2020
0.75
58.2
2.40
2019
0.30
23.2
(7.63)
2018
0.36
27.9
2.87
2017
0.50
38.6
(15.55)
2016
0.69
52.4
2.73
Short term incentives were paid in 2020, 2018 and 2016. No short term incentives were paid in 2019 and 2017.
REMUNERATION OVERVIEW
The Group’s remuneration strategy is designed to attract, motivate and retain employees in a globally competitive market. The Board structures
remuneration so that it rewards those who perform, is valued by executives, and is strongly aligned to the Company’s strategic direction and
the creation of returns to shareholders.
Total Fixed Remuneration (“TFR”) is determined by the scope of the executive’s role and their level of knowledge, skills and experience.
Executive members of the KMP may receive a short-term incentive (“STI”) approved by the Board as reward for exceptional performance in a
specific matter of importance. STI amounts of $194,508 were accounted for during the year ended 30 June 2020 (2019: $Nil).
Long-term incentives (“LTI”) consisting of performance rights that vest based on attainment of pre-determined performance goals are awarded
to selected executives. During the 2018 financial year, the Group introduced new performance milestones under the Performance Rights Plan
as part of its long-term incentive arrangements for the Managing Director and CEO, which were approved by shareholders on 27 October
2017 and 23 May 2018. During the 2020 financial year, no rights have vested under the Performance Rights Plan (2019: Nil).
The remuneration of Non-Executive Directors of the Company consists only of Directors’ fees. Director fees were not reviewed or adjusted
during the 2020 financial year.
Remuneration Report at 2019 AGM
The 2019 Remuneration Report received positive shareholder support at the 2019 AGM with a vote of 99 per cent of votes cast in favour.
Remuneration strategy
The Group’s remuneration strategy is designed to attract, motivate and retain employees and Non-Executive Directors by identifying and
rewarding high performers and recognising the contribution of each employee to the continued growth and success of the Group.
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2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020
DIRECTORS’ REPORT
for the year ended 30 June 2020
To this end, key objectives of the Company’s reward framework are to ensure that remuneration practices:
• Are aligned to the Group’s business strategy;
• Offer competitive remuneration, benchmarked against the external market;
• Provide strong linkage between individual and Group performance and rewards; and
• Align the interests of executives with shareholders through measuring the Company’s market capitalisation or share price.
Key changes to remuneration structure in 2020
There were no changes to the remuneration structure of executives or Directors during the 2020 financial year.
REMUNERATION GOVERNANCE
Board of Directors
The Board reviews and approves remuneration packages and policies applicable to Directors, the Company Secretary and the senior
executives of the Group.
Data is obtained from independent surveys to ensure that compensation throughout the Group is set at market rates having regard to
experience and performance. In this regard, formal performance appraisals are conducted at least annually for all employees. Compensation
packages may include a mix of fixed compensation, performance-based compensation and equity-based compensation.
Remuneration approval process
The Board approves the remuneration arrangements of the CEO and executives and all awards made under the LTI plan. The Board also sets
the aggregate remuneration of Non-Executive Directors which is then subject to shareholder approval.
The Board approves, having regard to the recommendations made by the CEO, the STI bonus plan and any discretionary bonus payments.
Remuneration structure
In accordance with best practice corporate governance, the structure of Non-Executive Directors and executive remuneration is separate and
distinct.
Services from remuneration consultants
From 1 July 2011, all proposed remuneration consultancy contracts (within the meaning of section 206K of the Corporations Act 2001) are
subject to prior approval by the Board or Human Resources.
No consultants were engaged during the year ended 30 June 2020 (2019: nil).
CHIEF EXECUTIVE OFFICER AND EXECUTIVE KMP REMUNERATION
Objective
The Group aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the
Group and aligned with market practice. The Group undertakes an annual remuneration review to determine the total remuneration positioning
against the market.
Structure
Orbital Corporation’s remuneration structure for the CEO and executive KMP is comprised of one component that is fixed, being Total Fixed
Remuneration (TFR), and two components that are variable, being short-term incentives (STI) and long-term incentives (LTI).
The STI is an annual “at risk” component of remuneration for executives. It is payable based on performance against key performance
indicators (KPIs) set at the beginning of the financial year. STIs are structured to remunerate executives for achieving annual Company targets
and their own individual performance targets. The net amount of any STI after allowing for applicable taxation, is payable in cash.
LTI targets are set as a percentage of fixed remuneration, converted to performance rights with vesting conditions subject to the Company’s
share price performance. Vesting of performance rights is subject to share price targets with the overall value exposed to the upside or
downside of the share price movement, therefore closely aligning with shareholder interests.
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2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020
DIRECTORS’ REPORT
for the year ended 30 June 2020
The proportion of fixed remuneration and variable remuneration (potential short-term and long-term incentives) established for each executive
is approved by the Board and for the year ended 30 June 2020 was as follows:
CEO
Other executives
Fixed Remuneration (50%)
Target STI (20%)
Target LTI (30%)
Fixed Remuneration (69%)
Target STI (14%)
Target LTI (17%)
Fixed Remuneration
Variable Remuneration
The remuneration structure for the 2020 financial year is explained below:
Summary of executive KMP remuneration for the 2020 financial year
Total Fixed Remuneration (“TFR”)
TFR consists of base compensation, which is calculated on a total cost basis and includes any fringe benefits tax charges related to employee
benefits including motor vehicles, as well as employer contributions to superannuation funds.
Executive contracts of employment do not include any guaranteed base pay increases. TFR is reviewed annually by the Board. The process
consists of a review of Company, business division and individual performance, relevant comparative remuneration internally and externally
and, where appropriate, external advice independent of management.
The fixed component of executives’ remuneration is detailed in the Statutory Table on page 14.
Variable Annual Reward - Short-term incentive (“STI”)
Under the STI, all executives have the opportunity to earn an annual incentive award which is delivered in cash. The STI recognises and
rewards annual performance.
How is performance measured?
The STI performance measures were chosen as they reflect the core drivers of short-term performance and provide a framework for delivering
sustainable value to the Group, its shareholders and customers. Minimum Group performance targets need to be achieved before STI is
eligible.
Key performance indicators (“KPIs”) are measured covering financial and non-financial measures of performance. For each KPI, a target and
stretch objective is set. A summary of the measures and weightings are set out below:
CEO
Other Executives
Financial
Revenue
70%
0%
Non-financial
Group KPIs
30%
100%
Revenue is the measure against which management and the Board assess the short-term performance of the Group. If the revenue measure
is met, performance against non-financial KPIs are used to determine the STI that the executive is entitled to, as follows:
•
•
Individual performance rating in respect of the quality of work performed in all essential areas of responsibility;
Individual cultural rating in respect of the extent to which demonstrated behavior aligns with the Values of the Group.
How much can executives earn?
The maximum STI for the Chief Executive Officer is 40 per cent of fixed remuneration. The maximum STI for other executives is
20 per cent of fixed remuneration.
The minimum STI that may be awarded to the Chief Executive Officer and other executives is nil where the Company performance
factor is zero.
When is it paid?
The STI award is determined after the end of the financial year following a review of performance over the year against the STI performance
measures by the Executive Team. The Board approves the final STI award based on this assessment of performance.
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2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020
DIRECTORS’ REPORT
for the year ended 30 June 2020
Actual STI performance for the year ending 30 June 2020
The following table outlines the proportion of the maximum STI earned in relation to the 2020 financial year. Please refer to Table 1 on Page
14 for further details on the actual STI paid to KMPs for the year ended 30 June 2020.
Maximum STI opportunity
(Percentage of fixed remuneration)
Percentage of
maximum STI earned
Todd M Alder
Geoff P Cathcart
Roulé Jones1
David Bonomini
40%
20%
20%
20%
1. Ms Jones resigned as a KMP effective 28 February 2020
Long-term incentive (“LTI”)
100%
70%
0%
62%
Under the LTI, the grant of performance rights and share acquisition performance rights in 2018 were made to executives to align remuneration
with the creation of shareholder value over the long-term.
How is it paid?
Executives are eligible to receive performance rights and share acquisition performance rights; that is, being the right to receive a given number
of ordinary shares in the Group if a nominated performance milestone is achieved.
2018 Performance Rights Plan – Long-term incentives
The Company introduced a new Performance Rights Plan (“2018 LTI Plan”) which was approved by shareholders on 27 October 2017.
Performance rights were issued to the Managing Director and CEO (“CEO LTIs”) and other executives (“Executive LTIs”) under the 2018 LTI
Plan in two tranches, with each tranche subject to a separate performance milestone linked to the volume weighted average share price
(“VWAP”) of the Company and tested over a three-year period as follows:
Tranche
Performance
condition
Expiry
date
Grant date
(CEO LTIs)
Grant date
(Exec LTIs)
10 August
2020
27 October
2017
23 May
2018
Fair
value/right
(CEO LTIs)
Fair
value/right
(Exec LTIs)
36.5 cents
20.9 cents
Vesting
of rights
50 per
cent
10 August
2020
27 October
2017
23 May
2018
27.8 cents
13.8 cents
50 per
cent
1
2
The Company having a 60-day
VWAP of at least $0.90 per
share between 27 October
2017 and 10 August 2020.
The Company having a 60-day
VWAP of at least $1.20 per
share between 27 October
2017 and 10 August 2020.
The allocation of performance rights to executives was as follows:
Executive
Title
Mr T.Alder
Managing Director and CEO
Mr G.Cathcart
Chief Technical Officer
Ms R.Jones
Chief Financial Officer
Total
Performance
rights issued
Tranche 1
Performance
rights issued
Tranche 2
340,000
116,284
87,500
543,784
255,000
87,213
65,625
407,838
Total
595,000
203,497
153,125
951,622
10
10
2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020 DIRECTORS’ REPORT
for the year ended 30 June 2020
Performance Rights Plan – 2018 Share Acquisition Performance Rights (“2018 SAPR Plan”)
On 11 August 2017, the Group announced the appointment of Mr Todd Alder as Managing Director and Chief Executive Officer. The
announcement also set out the material terms of his employment which included the grant of two Share Acquisition Performance Rights
(“SAPRs”) for each share acquired by Mr Alder during the period 11 August 2017 to 31 December 2017.
During the relevant period Mr Alder acquired 372,333 shares in the Group resulting in a maximum entitlement of 647,250 SAPRs. The grant
of the performance rights was approved by shareholders at an extraordinary general meeting held on 23 May 2018. The performance rights
were issued under the terms of the Performance Rights Plan.
The SAPRs are subject to a share price performance milestone of a 30-day VWAP of $0.62 tested over a three-year period and 100 per cent
of the SAPRs will vest if this performance milestone is achieved. Any SAPRs that do not vest will lapse and are not restated.
Performance condition
Expiry date
Grant date
Fair value/right
Total number of
rights granted
The Company having a 30-day VWAP equal
to or greater than $0.62 per share between
11 August 2017 and 10 August 2020.
Total
When is performance measured?
10 August 2020
23 May 2018
31.6 cents
647,250
647,250
Performance rights may vest at any time during the three-year period to 10 August 2020, subject to the abovementioned performance
milestones. Performance rights lapse if the employment of the executive is terminated with cause, or by resignation, prior to vesting.
Performance rights may vest prior to the satisfaction of the vesting conditions upon a change of control event, or if the Board allows early
exercise on cessation of employment or in light of specific circumstances.
No performance rights vested for the year ended 30 June 2020 (2019: nil).
How is performance measured?
Awards are subject to the market capitalisation of the Group. The performance rights link the rewards payable to KMPs to the creation of
shareholder value by increasing the share price of the Company. The Company’s share price at the date of calling the AGM to approve the
CEO LTIs was $0.52 per share. The Company’s share price at the date of calling the EGM to approve the 2018 SAPR was $0.39 per share.
The vesting of performance rights will only occur where the Company’s share price increases to $0.62, $0.90 and $1.20 per share as set out
in the abovementioned tables.
Actual LTI performance for the year ending 30 June 2020
During the financial year, no rights vested under the 2018 LTI Plan, the SAPR Plan or for any earlier plans issued in previous financial years
(2019:nil).
Performance Rights Plans approved in prior years
Mr T.Stinson, the previous Managing Director and CEO of the Group, was issued 500,000 performance rights based on market capitalisation
and share price milestones to be met over a three-year period which was approved by shareholders on 8 November 2016.
Under this long-term incentive plan, performance rights only vest if the terms and conditions detailed below are satisfied.
Tranche
Performance condition
1*
2
Total
The Company having a market capitalisation of $125 million and
share price of $1.50 per share for a period of 30 consecutive days.
The Company having a market capitalisation of $200 million and a
share price of $2.00 per share for a period of 30 consecutive days.
Expiry
7 November
2018
7 November
2019
Fair value
per right
Performance
rights issued
50.0 cents
200,000
42.0 cents
300,000
500,000
*During the year ended 30 June 2019, the performance conditions related to Tranche 1 were not met, resulting in 200,000 performance rights
expiring on 7 November 2018. During the year ended 30 June 2020, the performance conditions related to Tranche 2 were not met, resulting
in 300,000 performance rights expiring on 7 November 2019.
11
11
2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020 DIRECTORS’ REPORT
for the year ended 30 June 2020
OTHER EQUITY PLANS
Orbital has a history of providing employees with the opportunity to participate in ownership of shares in the Company using equity to support
a competitive base remuneration position.
Employee Share Plan
Eligible employees are offered shares in the Company, at no cost to the employees, to the value of $1,000 per annum under the terms of the
Company’s Employee Share Plan. There are no performance conditions, because the plan is designed to align the interests of participating
employees with those of shareholders. No Directors or KMPs participated in the share plan in 2020 (2019: Nil).
CONTRACTS FOR KMP
All KMP have a contract for employment. The table below contains a summary of the key contractual provisions of the contracts of employment
for the executive KMP.
Fixed Remuneration
Contract Duration
Termination notice
period (Company)1, 2
Termination notice
period (Executive)
T Alder
G Cathcart 4
R Jones3
D Bonomini
$340,000
$322,283
$250,531
$280,000
Unlimited
Unlimited
Unlimited
Unlimited
3 months
3 months
3 months
3 months
3 months
3 months
3 months
3 months
1. Termination provisions – Orbital may choose to terminate the contract immediately by making a payment in lieu of notice equal to the fixed remuneration the
executive would have received during the ‘Company Notice Period’. In the event of termination for serious misconduct or other nominated circumstances,
executives are not entitled to this termination payment. Any payments made in the event of a termination of an executive contract will be consistent with the
Corporations Act 2001 (Cth).
2. On termination of employment, executives will be entitled to the payment of any fixed remuneration calculated up to the termination date and any leave
entitlement accrued up to the termination date. Unvested LTI awards are forfeited upon termination for serious misconduct or employee initiated termination
and at Board discretion if termination is initiated by the Company.
3. Ms Jones resigned effective 28 February 2020.
4. In the event of the Group terminating the employment of Mr G Cathcart (Chief Technical Officer), other than by reason of serious misconduct or material
breach of service agreement, an equivalent of three months salaries is payable, in addition to:
• two weeks’ salaries for each completed year of service to ten years of service
• one half of a week of salaries for each year of service beyond ten years of service
NON-EXECUTIVE DIRECTORS REMUNERATION
Objective
The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain Directors of the
highest calibre, whilst incurring a cost that is acceptable to shareholders.
Structure
The amount of aggregate remuneration sought to be approved by shareholders and the fee structure is reviewed against fees paid to Non-
Executive Directors of comparable companies. The Board considers advice from external consultants when undertaking the review process.
The Company’s constitution and the ASX listing rules specify that the Non-Executive Directors’ fee pool shall be determined from time to time
by a general meeting. The latest determination was at the 2001 Annual General Meeting (AGM) held on 25 October 2001 when shareholders
approved an aggregate fee pool of $400,000 per year. The Board will not seek any increase for the Non-Executive Director pool at the 2020
AGM.
Fees
Non-Executive Directors do not receive retirement benefits, nor do they participate in any incentive programs.
The Chairman of the Board receives a fee of $120,000 (2019: $120,000) and the Non-Executive Directors receive a base fee of $60,000 (2019:
$60,000).
The remuneration of Non-Executive Directors for the year ended 30 June 2020 and 30 June 2019 is detailed in Table 1 of this report on page
14.
The maximum annual aggregate fee pool limit is $400,000 and was approved by shareholders.
12
12
2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020 DIRECTORS’ REPORT
for the year ended 30 June 2020
OTHER TRANSACTIONS WITH KMP AND THEIR RELATED PARTIES
There were no other transactions with KMPs and their related parties, such as purchases, sales and investments, for the year ended 30 June
2020.
REPORTING NOTES
Reporting in Australian dollars
In this report, the remuneration and benefits reported are in Australian dollars. This is consistent with the functional and presentational currency
of the Company.
13
13
2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020 DIRECTORS’ REPORT
for the year ended 30 June 2020
Statutory tables
Table 1 - Compensation of Non-Executive Directors and executive KMP's for the year ended 30 June 2020 and 2019
Short Term Benefits
Post-
Employment
Long-
term
Benefits
Share Based
Payments
Total
s
e
e
F
s
'
r
o
t
c
e
r
i
D
&
y
r
a
a
S
l
$
s
e
s
u
n
o
B
h
s
a
C
y
r
a
t
e
n
o
m
-
n
o
N
l
a
t
o
T
$
$
$
$
n
o
i
t
a
u
n
n
a
r
e
p
u
S
l
r
e
y
o
p
m
E
s
n
o
i
t
u
b
i
r
t
n
o
C
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
109,589
10,411
109,589
10,411
21,781
2,681
54,795
5,205
60,000
60,000
60,000
60,000
-
-
-
-
251,370
13,092
284,383
15,616
455,034
21,003
318,679
21,321
-
-
-
-
2020
251,370
2019
284,383
2020
319,034
136,000
2019
318,679
2020
2019
-
-
-
-
-
Non-executive Directors
J Welborn
Chairman and Director
(Non-executive)
T Stinson (1)
2020
109,589
2019
109,589
2020
21,781
Director (Non-executive)
2019
54,795
S Gallagher
2020
60,000
Director (Non-executive)
2019
60,000
K Abbott
2020
60,000
Director (Non-executive)
2019
60,000
Total Consolidated, all
non-executive directors
Executive Director
T Alder
Managing Director and Chief
Executive Officer
T Stinson (2)
Managing Director and Chief
Executive Officer
Executive Key Management
Personnel
G Cathcart (3)
2020
292,992
44,988
-
337,980
33,316
Chief Technical Officer
2019
299,662
R Jones (4)
2020
239,765
Chief Financial Officer
2019
229,128
-
-
-
D Bonomini (5)
2020
99,614
13,520
Chief Financial Officer
2019
-
-
15,101
314,763
22,621
-
-
-
-
-
239,765
21,403
229,128
21,403
113,134
8,078
-
-
1,145,913
83,800
Total Consolidated, Executive Key
Management Personnel
2020
951,405
194,508
2019
847,469
-
15,101
862,570
65,345
s
t
i
f
e
n
e
B
n
o
i
t
a
n
m
r
e
T
i
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
s
t
n
e
m
e
l
t
i
t
n
E
e
v
a
e
L
$
-
-
-
-
-
-
-
-
-
-
12,642
9,626
-
-
30,038
35,876
-
22,771
10,117
-
52,797
68,273
l
s
n
a
P
e
r
a
h
S
e
e
y
o
p
m
E
l
l
i
n
a
P
s
t
h
g
R
e
c
n
a
m
r
o
f
r
e
P
$
$
-
-
-
-
-
-
-
-
-
-
n
o
i
t
a
r
e
n
u
m
e
R
l
a
t
o
T
$
n
o
i
t
a
r
e
n
u
m
e
r
f
o
n
o
i
t
r
o
p
o
r
P
l
d
e
t
a
e
r
e
c
n
a
m
r
o
f
r
e
p
%
120,000
120,000
24,462
60,000
60,000
60,000
60,000
60,000
264,462
300,000
-
-
-
-
-
-
-
-
-
-
133,539
622,218
43%
133,174
482,800
28%
-
-
-
59,838
59,838
100%
16,420
417,754
15%
16,375
389,634
4%
12,355
273,523
5%
12,322
285,624
4%
-
-
131,329
10%
-
-
162,314
1,444,824
25%
221,708
1,217,897
18%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1. Mr. Stinson retired as Non-Executive Director effective 18 November 2019.
2. Refer to note F.2 for Mr. Stinson performance rights plan
3. Mr. Cathcart was seconded to the USA facility during the financial year ended June 2020. Non-monetary benefits arose from the secondment
4. Ms. Jones ceased as a KMP on 28 February 2020
5. Mr. Bonomini became a KMP on 10 February 2020
14
14
2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020
DIRECTORS’ REPORT
for the year ended 30 June 2020
Table 2 – Summary of CEO and Executive
Type of equity
Grant date
Expiry date
Awarded
but not
vested
Vested
% of
total
vested
Lapsed
Fair value
of equity
($)1
T Stinson(2)
Director (Non-executive)
T Alder
Director and Chief Executive Officer
G Cathcart
Chief Technical Officer
R Jones(3)
Chief Financial Officer
Equity rights
8 November 2016
7 November 2019
-
Equity rights
Equity rights
Equity rights
Equity rights
Equity rights
Equity rights
Equity rights
23 May 2018
27 October 2017
27 October 2017
23 May 2018
23 May 2018
23 May 2018
23 May 2018
10 August 2020
10 August 2020
10 August 2020
10 August 2020
10 August 2020
10 August 2020
10 August 2020
647,250
340,000
255,000
116,284
87,213
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,000
-
-
-
-
-
87,500
65,625
0.420
0.316
0.365
0.278
0.209
0.138
0.209
0.138
1. In accordance with AASB2 Share-based Payments, the fair value of variable pay rights as at the grant date has been determined by applying the Monte Carlo simulation model. For the
assumptions used in the valuation of the rights, please refer to note F.2. The amount included as remuneration is not related to or indicative of the benefit (if any) that individual executives
may ultimately realise should these equity instruments vest
2. Mr. Stinson retired as Non-Executive Director effective 18 November 2019.
3. Ms. Jones resigned as Chief Financial Officer on 28 February 2020
Table 3 – KMP share and equity holdings
Details of shares and rights help by KMP including their personally related entities for the 2020 financial year are as follows:
Type of equity (1)
Opening
holding at
1 July 2019
Rights allocated in
2020
Rights vested in
2020
Net Changes
other
Closing
holding at
30 June 2020 (2)
-
850,000
(300,000)
-
Non-executive Directors
J Welborn
T Stinson (3)
S Gallagher
K Abbott
Executive Directors
T Alder
Executives
G Cathcart
R Jones (4)
D Bonomini (5)
Shares
850,000
Equity Rights
300,000
Shares
Shares
Shares
1,672,621
100,000
30,000
Equity Rights
1,242,250
Shares
372,333
Equity Rights
Shares
Equity Rights
Shares
Equity Rights
Shares
203,497
272,720
153,125
5,313
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,672,621)
-
-
-
-
-
-
(153,125)
(5,313)
-
-
1. Opening holding represents amounts carried forward in respect of KMP
2. Closing equity rights holdings represent unvested rights held at the end of the reporting period. There were no rights vested but unexercised as at 30 June 2020
3. Mr. Stinson retired as Non-Executive Director effective 18 November 2019.
4. Ms. Jones ceased as a KMP on 28 February 2020
5. Mr. Bonomini became a KMP on 10 February 2020
End of Remuneration Report
-
100,000
30,000
1,242,250
372,333
203,497
272,720
-
-
-
-
15
15
2020 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2020
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2020
DIRECTORS’ REPORT
for the year ended 30 June 2020
Signed in accordance with a resolution of the Directors:
J P Welborn
Chairman
T M Alder
Managing Director and Chief Executive Officer
Dated at Perth, Western Australia this 28th August 2020
16
16
2020 ANNUAL REPORT AUDITOR’S INDEPENDENCE DECLARATION
Auditor’s Independence Declaration
As lead auditor for the audit of Orbital Corporation Limited for the year ended 30 June 2020, I declare
that to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Orbital Corporation Limited and the entities it controlled during the
period.
Ben Gargett
Partner
PricewaterhouseCoopers
Perth
28 August 2020
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA
6840 T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
17
2020 ANNUAL REPORT
FINANCIAL STATEMENTS
CONTENTS
CONTENTS
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 financial statements
About these statements
A. Current year performance
A.1 Operating segments
A.2 Revenue
A.3 Other income
A.4 Expenses
A.5 Taxes
A.6 Earnings per share (EPS)
B. Growth assets
B.1 Plant and equipment
B.2 Intangible assets
C. Working capital management
C.1 Inventories
C.2 Trade and other receivables
C.3 Cash and cash equivalents
C.4 Other financial assets
C.5 Trade and other payables
C.6 Deferred revenue
C.7 Leases
19
20
21
22
23
26
27
28
30
31
33
34
35
37
38
38
39
39
39
40
D. Debt and capital
D.1 Borrowings
D.2 Share capital
D.3 Reserves
E. Other assets and liabilities
E.1 Provisions
E.2 Government grants
F. Other notes
F.1 Related parties
F.2 Share based payments
F.3 Subsidiaries
F.4 Parent entity information
F.5 Auditor remuneration
F.6 Events after the end of the reporting period
F.7 Other accounting policies
F.8 Adopted accounting standards
F.9 New accounting standards
Directors' declaration
Independent auditor's report
Shareholding details
Corporate information
41
41
42
43
44
45
46
48
48
49
49
49
50
50
51
52
60
18
2020 ANNUAL REPORT CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
OTHER COMPREHENSIVE INCOME
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
for the year ended 30 June 2020
Continuing operations
Sale of goods
Engineering services revenue
Royalty and licence revenue
Interest revenue
Total revenue
Other income
Materials and consumables expenses
Employee benefits expenses
Depreciation expenses
Amortisation of intangibles
Engineering consumables and contractor expenses
Occupancy expenses
Travel and accommodation expenses
Communications and computing expenses
Patent expenses
Insurance expenses
Audit, compliance and listing expenses
Finance costs
Allowance for impairment of other receivables
Other expenses
Profit/(loss) before income tax from continuing operations
Income tax (expense)/benefit
Profit/(loss) for the year from continuing operations
Profit/(loss) is attributable to:
Equity holders of the parent
Profit/(loss) for the year
Other comprehensive income
Items that will not be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Total comprehensive profit/(loss) for the year
Attributable to:
Equity holders of the parent
Total comprehensive profit/(loss) for the year
Earnings per share
Basic profit/(loss) for the year attributable to ordinary equity holders of the parent (cents)
Diluted profit/(loss) for the year attributable to ordinary equity holders of the parent (cents)
Earnings per share from continuing operations
Basic profit/(loss) for the year attributable to ordinary equity holders of the parent (cents)
Diluted profit/(loss) for the year attributable to ordinary equity holders of the parent (cents)
The accompanying notes form part of the financial statements.
Notes
A.2
A.3
A.4(d)
A.4(a)
B.2
A.4(b)
A.4(c)
A.5
A.6
A.6
A.6
A.6
2020
$'000
31,989
1,617
176
41
33,823
5,079
(13,914)
(14,370)
(1,633)
(247)
(781)
(532)
(449)
(1,018)
(414)
(1,003)
(249)
(622)
206
(1,901)
1,975
(118)
1,857
1,857
1,857
3
1,860
1,860
1,860
2.40
2.35
2.40
2.35
2019
$'000
10,978
3,992
129
154
15,253
1,929
(4,383)
(9,220)
(690)
(45)
(1,659)
(1,486)
(532)
(809)
(269)
(785)
(392)
(615)
(1,379)
(861)
(5,943)
37
(5,906)
(5,906)
(5,906)
(42)
(5,948)
(5,948)
(5,948)
(7.63)
(7.63)
(7.63)
(7.63)
19
2020 ANNUAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2020
ASSETS
Current assets
Cash and cash equivalents
Other financial assets
Trade and other receivables
Inventories
Prepayments
Finance lease receivable
Total current assets
Non-current assets
Intangibles
Deferred taxation asset
Plant and equipment
Right of use asset
Finance lease receivable
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade payables and other liabilities
Deferred revenue
Borrowings
Government grants
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Trade payables and other liabilities
Lease liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
The accompanying notes form part of the financial statements.
20
Notes
C.3
C.4
C.2
C.1
B.2
A.5
B.1
C.7
C.5
C.6
D.1
E.2
C.7
E.1
C.7
D.1
E.1
D.2
D.3
2020
$'000
8,749
585
5,347
9,380
375
332
2019
$'000
7,487
585
7,055
6,698
1,023
-
24,768
22,848
898
5,423
4,150
2,062
542
13,075
37,843
4,482
1,321
3,756
-
1,131
2,227
12,917
-
1,898
4,854
72
6,824
19,741
18,102
924
5,542
4,516
-
-
10,982
33,830
4,077
2,911
-
74
-
2,333
9,395
71
-
8,277
108
8,456
17,851
15,979
31,220
2,395
(15,513)
18,102
31,178
2,171
(17,370)
15,979
20
2020 ANNUAL REPORT CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2020
)
s
e
s
s
o
l
d
e
t
l
a
u
m
u
c
c
A
(
$'000
e
v
r
e
s
e
r
s
t
i
f
e
n
e
b
y
t
i
u
q
e
e
e
y
o
p
m
E
l
D.3
$'000
e
v
r
e
s
e
r
n
o
i
t
l
a
s
n
a
r
t
y
c
n
e
r
r
u
c
i
n
g
e
r
o
F
D.3
$'000
l
a
t
i
p
a
c
e
r
a
h
S
D.2
$'000
31,178
(17,370)
2,203
(32)
-
-
-
-
42
1,857
-
-
1,857
-
31,220
(15,513)
-
-
-
-
221
2,424
31,144
(10,697)
1,974
-
-
-
-
34
(5,906)
(767)
-
(5,906)
-
31,178
(17,370)
-
-
-
-
229
2,203
-
-
3
3
-
(29)
9
-
-
(42)
(42)
-
(32)
n
o
i
t
i
a
r
e
d
s
n
o
c
t
n
e
g
n
i
t
n
o
C
e
v
r
e
s
e
r
n
o
i
t
a
d
i
l
o
s
n
o
C
e
v
r
e
s
e
r
e
t
o
n
e
b
l
i
t
r
e
v
n
o
C
D.3
$'000
D.3
$'000
D.3
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,440
(4,455)
-
-
(3,440)
4,455
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
248
-
(248)
-
-
-
-
y
t
i
u
q
e
l
a
t
o
T
$'000
15,979
1,857
-
3
1,860
263
18,102
21,663
(5,906)
-
(42)
(5,948)
263
15,979
Notes
At 1 July 2019
Profit for the year
Transfer to accumulated losses
Foreign currency translation
Total comprehensive profit for the year
Share based payments
At 30 June 2020
At 1 July 2018
Loss for the year
Transfer to accumulated losses
Foreign currency translation
Total comprehensive loss for the year
Share based payments
At 30 June 2019
The accompanying notes form part of the financial statements.
21
21
2020 ANNUAL REPORT
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2020
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Proceeds from legal settlement
Interest received
Interest paid
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of subsidiary
Purchase of plant and equipment
Payments for intangible asset
Net cash used in investing activities
Cash flows from financing activities
Fee for standby facility
Principal elements of lease payments
Proceeds from borrowings
Repayment of borrowings
Notes
C.3
A.4(b)
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 July
Effects of exchange rate fluctuations on the balances of cash held in foreign currencies
Cash and cash equivalents at 30 June
C.3
The accompanying notes form part of the financial statements.
2020
$'000
34,257
(33,763)
3,255
41
(64)
3,726
200
(540)
(221)
(561)
-
(1,201)
2,276
(2,395)
(1,320)
1,845
7,487
(583)
8,749
2019
$'000
22,776
(21,147)
-
154
-
1,783
100
(2,990)
(2,390)
(5,280)
(108)
-
-
-
(108)
(3,605)
9,926
1,166
7,487
22
22
2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
The exchange differences arising on translation for consolidation
are recognised in OCI. On disposal of a foreign operation, the
component of OCI relating to that particular foreign operation is
reclassified to profit or loss.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191,
dated 24 March 2016, and in accordance with that Instrument,
amounts in the financial report and Directors’ Report have been
rounded off to the nearest thousand dollars unless otherwise
indicated.
Basis of preparation
The consolidated financial statements have been prepared on
the historical cost basis.
The financial statements comprise the financial results of the
Group and its subsidiaries as at 30 June each year. Subsidiaries
are fully consolidated from the date of which control is obtained
by the Group and cease to be consolidated from the date at
which the Group ceases to have control.
The financial statements of subsidiaries are prepared for the
same reporting period as the parent company, using consistent
accounting policies. All intercompany balances and transactions,
including unrealised profits and losses arising from intra-group
transactions, have been eliminated in full.
Profit or loss and other comprehensive income are attributed to
the equity holders of the parent of the Group, and to the non-
controlling interests, even if this results in the non-controlling
interests having a deficit balance.
Comparative information has been reclassified where required
for consistency with the current year's presentation.
Other accounting policies
Significant and other accounting policies that summarise the
measurement basis used and are relevant to understanding the
financial statements are provided throughout the notes to the
financial statements.
About these statements
Orbital Corporation Ltd ("Orbital" or the "Group") is a for-profit
company limited by shares, incorporated and domiciled in
Australia. Its shares are publicly traded on the Australian
Stock Exchange ("ASX"). The registered office is 4 Whipple
Street, Balcatta, Western Australia.
The nature of the operations and principal activities of the
Group are described in the Directors Report and in the
segment information in Note A.1.
The financial statements were authorised for issue in
accordance with a resolution of the Directors on 30 August
2020.The Directors have the power to amend and reissue the
financial report.
Statement of compliance
The financial statements are general purpose financial
statements, which have been prepared in accordance with
the requirements of the Corporations Act 2001 (Cth),
Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards
Board. The financial statements comply with International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
The Group applied for the first time new and amended
Accounting Standards and Interpretations which are effective
for annual periods beginning on or after 1 July 2019. The
Group has not early adopted any standards, interpretations or
amendments that have been issued but not yet effective. The
adoption of these standards, interpretations or amendments
has not significantly affected the Group's accounting policies,
financial position or performance.
Currency
The financial statements are presented in Australian dollars,
which is the functional currency of the Company.
Transactions are recorded in the functional currency of the
transacting entity using the spot rate. Monetary assets and
liabilities denominated in foreign currencies are translated at
the functional currency spot rate of exchange at the reporting
date. Differences arising on settlement or translation of
monetary items are recognised in profit or loss. Non-
monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates
at the dates of the initial transactions.
On consolidation, the assets and liabilities of foreign
operations are translated into Australian dollars at the rate of
exchange prevailing at the reporting date and their
statements of profit or loss are translated at exchange rates
prevailing at the dates of the transactions.
23
23
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
Financial and capital risk management
The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management strategy, policy
and key risk parameters. The Board of Directors have oversight of the Group's internal control system and risk management process.
The Group's management of financial and capital risks is aimed at ensuring that available capital, funding and cash flows are sufficient
to meet the Group's financial commitments as and when they fall due and maintain the capacity to fund its committed project
developments. During 2020 the Group's strategy remained unchanged from 2019, the gearing ratio at 30 June 2020 was 48% (2019:
52%). Gearing ratio's are calculated by dividing net debt (as per note D.1) divided by total equity.
The below risks arise in the normal course of the Group's business. Risk information can be found in the following sections:
Section A Foreign currency risk
Page 25
Section C Liquidity risk
Page 36
Section C Interest Rate risk
Page 37
Section C Credit risk
Page 37
Section D Capital risk management Page 41
Key estimates and judgements
In applying the Group's accounting policies, management continually evaluates judgements, estimates and assumptions based on
experiences and other factors, including expectations of future events that may have an impact on the Group. Significant judgements,
estimates and assumptions made by management in the preparation of these financial statements are found in the following notes:
Note Key estimate/ judgement
A.5
B.1
Recoverability of deferred tax assets
Impairment of non-current assets
Page
31
34
Impact of COVID-19
Like many businesses in Australia, the USA and around the world, Orbital has closely monitored – and continues to monitor – the
business risks presented by the Coronavirus (COVID-19) pandemic. The physical wellbeing and mental health of all our people is a
priority and the Company implemented a COVID-19 Response Plan to minimise the risk of contracting and spreading the virus.
Throughout the pandemic our sites in Australia and the USA have remained fully operational and continue to manufacture as normal.
In the USA, Orbital operates within the Defense Industrial Base and is therefore considered part of the Critical Infrastructure Sector as
defined by the US Department of Homeland Security.
As an advanced aerospace manufacturer supplying global defence prime contractors, our product demand remained unaffected by
the COVID-19 outbreak. We continued to deliver on our production commitments and strengthened our global supply chain where
necessary.
Delivery of our products continued through our established logistics providers, and contingency plans were put in place should existing
channels of delivery be impacted.
The Company will continue to support the public health effort to minimise the spread of COVID-19.
Going Concern
The consolidated financial statements have been prepared on a going concern basis, which assumes the Group will continue its
operations and be able to meet its obligations as and when they become due and payable. This assumption is based on the Group’s
ability to meet its future cash flow requirements given the cash flow projection for the 30 June 2021 financial year, and existing cash
reserves held as at 30 June 2020.
The Group assessed how the current events and conditions impact its operations and while the long-term strategy of the Group
remains unchanged, regular forecasting is performed on future expected cashflows. The Group has critically assessed cash flow
forecasts for the 12 months from the date of this report based on expected sales and related costs.
Furthermore, the Group have also taken the following matters into consideration in forming the view that the Group is a going concern:
- The Group has cash and trade receivables of $14,7 million as at 30 June 2020;
- The Group achieved its revenue guidance in FY20 and has issued an increased revenue guidance for FY21
- Forecast sales to customers based on purchase orders at agreed unit sale prices
- Operating costs and margins expected to be achieved as the Group continues to increase production over FY21
24
24
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS A. CURRENT YEAR PERFORMANCE
for the year ended 30 June 2020
In this section
This section addresses financial performance of the Group for the reporting period including, where applicable, the accounting policies
applied and the key estimates and judgements made. The section also includes the tax position of the Group for and at the end of the
reporting period.
A.
A.1
A.2
A.3
A.4
A.5
A.6
Current Year Performance
Operating segments
Revenue
Other income
Expenses
Taxes
Earnings per share
Page 26
Page 27
Page 28
Page 30
Page 31
Page 33
Financial risks in this section
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate as a result of changes in foreign
exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates to the Group’s operating activities, in
which sales and purchases are denominated in foreign currencies.
The Group manages its exposure to foreign currency risk by regularly monitoring and performing sensitivity analysis on the Group's
financial position and performance as a result of movements in foreign exchange rates. The Group holds bank accounts in foreign
denominated currencies which are converted to Australian dollars through rate orders for targeted exchange rates. The Group has foreign
currency hedging facilities available as part of its bank facilities. Currently the Group does not directly hedge against its foreign currency
exchange risk to a material extent.
Exposure
The Group’s exposure to USD at the reporting date for the years ended 30 June 2020 and 2019 are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
2020
2019
A$'000
A$'000
7,101
4,063
2,121
3,937
992
943
For the year ended 30 June 2020, revenue from external customers denominated in USD was A$29,102,000 (2019: A$9,324,000).
Sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in USD exchange rates, with all other variables held
constant. The impact on the Group’s profit before tax is due to changes in the fair value of monetary assets and liabilities. There is no
impact on changes in foreign currencies on other comprehensive income. The Group’s exposure to foreign currency changes for all other
currencies is not material.
The Group has used the observed range of actual historical rates for the preceding five year period, with a heavier weighting placed on
recently observed market data, in determining reasonably possible exchange movements as part of their sensitivity analysis. Past
movements in exchange rates are not necessarily indicative of future movements.
Change in
AUD/USD
rate
+10%
-10%
+10%
-10%
Increase /
(Reduction)
on profit
before taxes
(925)
1,130
(465)
568
2020
2019
25
25
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020A. CURRENT YEAR PERFORMANCE2020 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS A. CURRENT YEAR PERFORMANCE
for the year ended 30 June 2020
A.1 Operating segments
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the executive management
team (the chief operating decision makers) in assessing performance and in determining the allocation of resources.
Segment performance is evaluated based on Revenue and Earnings Before Interest and Tax ("EBIT") which is allocated to the reportable
segments according to the geographic location in which the item arose or relates to.
The geographical location of the segment assets is based on the physical location of the assets.
Segment information
Year ended 30 June 2020
Segment revenue
EBIT
Finance expenses
Profit/(loss) before income tax
Assets
Liabilities
Net assets/(liabilities)
Australia
2020
$'000
28,228
2,854
(555)
2,299
2019
$'000
14,742
(2,942)
(615)
(3,557)
Australia
2020
$'000
30,140
17,999
12,142
2019
$'000
27,250
9,472
17,778
US
Consolidated
2020
$'000
5,595
(257)
(67)
(324)
2019
$'000
511
(2,386)
-
(2,386)
2020
$'000
33,823
2,597
(622)
1,975
2019
$'000
15,253
(5,328)
(615)
(5,943)
US
Consolidated
2020
$'000
7,703
1,742
5,960
2019
$'000
6,581
8,379
(1,798)
2020
$'000
37,843
19,741
18,102
2019
$'000
33,831
17,851
15,980
26
26
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020A. CURRENT YEAR PERFORMANCE2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS A. CURRENT YEAR PERFORMANCE
for the year ended 30 June 2020
A.2 Revenue
Revenue
Total external revenue
Timing of revenue recognition
At a point in time
Over time
Australia
2020
$'000
28,228
28,228
2019
$'000
14,742
14,742
US
Consolidated
2020
$'000
5,595
5,595
2019
$'000
511
511
2020
$'000
33,823
33,823
2019
$'000
15,253
15,253
27,017
1,211
28,228
11,250
3,492
14,742
5,189
406
5,595
11
500
511
32,206
1,617
33,823
11,261
3,992
15,253
Revenues of approximately $29,160,000 (2019: $11,761,000) are derived from a single external customer.
Recognition and measurement
Revenue is recognised in accordance with the core principle by applying the following steps:
• Step 1: Identify the contract(s) with a customer
• Step 2: Identify the performance obligations in the contract
• Step 3: Determine the transaction price
• Step 4: Allocate the transaction price to the performance obligations in the contract
• Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
The specific recognition criteria described below must also be met before revenue is recognised:
ꞏ Revenue from rendering of services
The Group's general terms and conditions with customers specify a right to payment for work completed, therefore performance
obligations are satisfied over time. Using the output method for revenue recognition, the Group recognises revenue based on an
appraisal of results achieved or percentage complete.
ꞏ Sale of goods
Revenue from the sale of goods is recognised on a per-unit basis as the goods are delivered to the customer premise which is deemed to
be the time when the performance obligation is performed. A receivable is recognised when the goods are delivered as this is the point in
time that the consideration is unconditional because only the passage of time is required before the payment is due.
27
27
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020A. CURRENT YEAR PERFORMANCE2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS A. CURRENT YEAR PERFORMANCE
for the year ended 30 June 2020
A.2 Revenue (continued)
ꞏ License and royalties
Revenue earned under licencing and royalty arrangements is recognised on a cash basis upon the delivery of an engine meeting
specified performance targets and using the patented technologies of the Group.
Under the terms of the licence and royalty agreements, licensees are not specifically obliged to commence production and sale of
engines using technology patented by the Group. Licensees may terminate the agreements upon notice to the Group. If a licensee were
to terminate its agreement with the Group, the licensee would forfeit the licence and any technical disclosure fees paid through to the
date of termination.
ꞏ Interest revenue
Interest revenue is recorded using the effective interest rate method ("EIR"). The EIR is the rate that exactly discounts the estimated cash
receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the
financial asset.
Assets and liabilities related to contracts with customers
The Group has recognised the following assets and liabilities related to contracts with customers:
Contract Assets
Accrued revenue
Contract Liabilities
Deferred revenue
Refer to Note C.6 deferred revenue for a breakdown of deferred revenue recognised in the current year.
A.3 Other income
Grant income
Rental income
Research and development grant
Net foreign exchange (loss) / gain
Legal settlement proceeds
Other
Recognition and measurement
2020
$'000
2019
$'000
70
500
1,321
2,911
2020
$'000
75
71
437
(28)
4,470
54
5,079
2019
$'000
225
458
130
1,099
-
17
1,929
ꞏ Grant income, including research and development tax incentives
In accordance with research and development tax legislation the Group is entitled to a refundable R&D tax offset accounted for as
research and development grant. Government grants are recognised when it is probable that the grant will be received and all attached
conditions will be complied with. When the grant relates to an asset, it is recognised as a reduction in the related asset. When the grant
relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is
intended to compensate, are expensed.
28
28
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020A. CURRENT YEAR PERFORMANCE2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS A. CURRENT YEAR PERFORMANCE
for the year ended 30 June 2020
A.3 Other income (continued)
ꞏ Legal settlement proceeds
On 26 February 2020 Orbital entered into a Settlement and Patent License Agreement (“Agreement”) with Daimler AG, Mercedes-Benz
USA LLC, Mercedes-Benz U.S. International, Inc. (collectively “Mercedes”), Robert Bosch GmbH and Robert Bosch LLC ( collectively
“Bosch”) in settlement of the patent litigation brought by Orbital against Mercedes and Bosch in the United States District Court Eastern
District of Michigan Southern Division Case Number 15-12398 (see ASX announcement 1 December 2014).
Under the Agreement:
(a) the Parties filed a stipulation of dismissal regarding all claims and counterclaims in the litigation, without making any admissions or
concessions concerning the factual or legal positions taken in the litigation; and
(b) Orbital granted Mercedes/Bosch a non-exclusive patent license and release in exchange for the payment to Orbital Fluid
Technologies Inc.
Amounts paid to Orbital Fluid Technologies Inc. were allocated in accordance with the protocols specified in the revenue sharing
agreements that Orbital had with its various partners in this litigation, including US law firm Pepper Hamilton.
29
29
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020A. CURRENT YEAR PERFORMANCE2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS A. CURRENT YEAR PERFORMANCE
A. CURRENT YEAR PERFORMANCE
for the year ended 30 June 2020
A.4 Expenses
(a)
Employee benefits expense
(d)
Materials and consumable expenses
Raw materials and consumables
Change in inventories
Recognition and measurement
2020
$'000
16,596
(2,682)
13,914
2019
$'000
8,927
(4,544)
4,383
ꞏ Defined contribution plans
Obligations for contributions to defined contribution
superannuation funds are recognised as an expense as
incurred.
The Group contributes to defined contribution plans for the
provision of benefits to Australian employees on retirement,
death or disability. Employee and employer contributions are
calculated on percentages of gross salaries and wages. Apart
from contributions required under law, there is no legally
enforceable right for the Group to contribute to a
superannuation plan.
Salaries and wages
Defined contribution plans
Share based payments (Note F.2)
Annual and long service leave (Note E.1)
Other personnel costs
sts
(b)
Finance costs
Interest expense
Standby facility fee (Note F.1)
2020
$'000
12,083
889
245
164
989
14,370
2020
$'000
622
-
622
2019
$'000
7,089
759
263
307
802
9,220
2019
$'000
507
108
615
The Group has an unsecured Standby working capital facility
with UIL Limited. Refer note F.1 for further detail.
(c)
Other expenses
Administration
Legal fees - settlement proceeds
Marketing and investor relations
Warranties (Note E.1)
Other
2020
$'000
649
1,214
148
(216)
106
1,901
2019
$'000
402
-
41
253
165
861
The Group incurred legal fees in the Settlement and Patent
License Agreement (“Agreement”) with Daimler AG, Mercedes-
Benz USA LLC, Mercedes-Benz U.S. International, Inc.
(collectively “Mercedes”), Robert Bosch GmbH and Robert
Bosch LLC ( collectively “Bosch”) in settlement of the patent
litigation brought by Orbital against Mercedes and Bosch in
the United States District Court Eastern District of Michigan
Southern Division Case Number 15-12398 (see ASX
announcement 1 December 2014). Refer note A.3 for further
detail.
30
30
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020A. CURRENT YEAR PERFORMANCE2020 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS A. CURRENT YEAR PERFORMANCE
A. CURRENT YEAR PERFORMANCE
for the year ended 30 June 2020
A.5 Taxes
The major components of the income tax benefit/(expense) for
the years ended 30 June 2020 and 2019 are:
Deferred tax balances comprise of the following deferred tax
assets/(deferred tax liabilities):
Deferred income tax (expense)/benefit
Total income tax (expense)/benefit
2020
$'000
(118)
(118)
2019
$'000
37
37
The reconciliation of the income tax benefits/(expenses) and
accounting profit multiplied by the Australian domestic tax rate
for the years ended 30 June 2020 and 2019 are:
Accounting profit/(loss) before tax from
continuing operations
Accounting profit/(loss)
before income tax
At Australia's statutory income tax rate of
27.5% (2019: 27.5%)
Adjustments in respect of the change in
statutory income tax rate
Difference in overseas tax rates
Non assessable income
Recognition of previously unrecognised
tax losses
Deferred tax asset not recognised
Other
Non-deductible expenses
Income tax (expense)/benefit
Income tax (expense)/benefit reported in
the statement of profit or loss
2020
$'000
1,975
2019
$'000
(5,943)
1,975
(545)
(5,943)
1,634
-
-
(185)
120
1,398
(601)
-
(305)
(118)
(118)
(247)
36
-
(791)
3
(598)
37
37
Inventory
Plant and equipment
Provisions and accruals
Intangible asset
Tax losses
Net deferred tax asset
2020
$'000
44
(170)
652
(247)
5,144
5,423
2019
$'000
82
(170)
701
(218)
5,147
5,542
The Group has unused tax losses that arose in Australia, for
which no deferred tax assets have been recognised of
$39,532,875 (2019: $56,200,261) and are available indefinitely
for offsetting against future taxable profits of the Group and its
controlled entities in which those losses arose. Since 2019, tax
loss testing has been undertaken in relation to Australian
carried forward tax losses, and that testing determined that
approximately $11,583,749 of previously carried forward losses
have a high probably of failing the relevant tests. We have
therefore conservatively reflected a reduction in the carried
forward amount of losses. As those losses were not previously
recognised in the deferred tax asset balance, no tax expense
adjustments arise.
Under the tax laws of the United States of America, unused tax
losses that cannot be fully utilised for tax purposes during the
current period may be carried forward into future periods,
subject to statutory limitations. At 30 June 2020, the Group had
unused tax losses for which no deferred tax assets have been
recognised of US$12,331,000 (2019: US$10,368,000) of
which US$9,518,000 will expire by 2023.
Recognition and measurement
ꞏ Current income tax
Current income tax assets and liabilities are measured at the
amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the
amount are those that are enacted at the reporting date in the
countries where the Group operates and generates taxable
income.
ꞏ Deferred tax
Deferred tax is provided for using the full liability method on
temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes at the reporting date.
31
31
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020A. CURRENT YEAR PERFORMANCE2020 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS A. CURRENT YEAR PERFORMANCE
A. CURRENT YEAR PERFORMANCE
for the year ended 30 June 2020
A.5 Taxes (continued)
ꞏ Deferred tax
Deferred tax liabilities are recognised for all taxable temporary
differences, except:
• When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a transaction
that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable
profit or loss
• In respect of taxable temporary differences associated with
investments in subsidiaries, when the timing of the reversal of
the temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for deductible temporary
differences to the extent that it is probable that taxable profit
will be available against which the deductible temporary
differences and carry forward of unused tax credits and
unused tax losses may be utilised, except:
• When the deferred tax asset relating to the deductible
temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither
accounting profit or loss
• In respect of deductible temporary differences associated
with investments in subsidiaries, deferred tax assets are
recognised only to the extent that it is probable that the
temporary differences will reverse in the foreseeable future
and taxable profit will be available against which the temporary
differences may be utilised.
The carrying amount of deferred tax assets is reviewed at
each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available or
allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that it is
probable that future taxable profits will allow the deferred tax
asset to be recovered. Deferred tax assets and liabilities are
measured at the tax rates that are expected to apply in the
year when the asset is realised or the liability is settled, based
on tax rates and tax laws that have been enacted or
substantively enacted at the reporting date.
Key estimate: Recoverability of deferred tax assets
At 30 June 2020, the Group recognised $5,423,000 (2019:
$5,542,000) of deferred tax assets after assessing the
likelihood of offsetting unused tax losses against future taxable
profits. The unused tax losses for which a deferred tax asset is
recognised relate to operations in Australia and the United
States of America.
The Board assessed that the deferred tax asset was
recoverable based on forecast taxable income included in the
Business Plan. Forecasted income included in Orbital’s
Business Plan is founded on existing supply contracts plus
maturing contract negotiations on expanded revenue
opportunities.
Offsetting deferred tax balances
Deferred tax assets and liabilities are offset only if there is a
legally enforceable right to offset current tax assets and
liabilities and when they relate to income taxes levied by the
same taxation authority on either the same taxable entity or
different taxable entities that the Group intends to settle its
current tax assets and liabilities on a net basis.
Tax consolidation
Orbital Corporation Limited and its 100 per cent owned
Australian resident subsidiaries formed a tax consolidated
group with effect from 1 July 2002. Orbital Corporation Limited
is the head entity of the tax consolidated group. Members of
the tax consolidated group have entered into a tax sharing
agreement that provides for the allocation of income tax
liabilities between the entities should the head entity default on
its tax payment obligations. No amounts were recognised in
the financial statements in respect of this agreement on the
basis that the probability of default was assessed as remote.
Orbital Corporation Limited and its controlled entities continue
to account for their own current and deferred tax amounts. The
Group has applied the 'separate taxpayer within Group'
approach by reference to the carrying amount in the separate
financial statements of each entity and the tax values applying
under tax consolidation. In addition to its own current and
deferred tax amounts, Orbital Corporation Limited also
recognised current tax liabilities (or assets) and deferred tax
assets arising from unused tax losses assumed from its
controlled entities in the tax consolidated group.
32
32
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020A. CURRENT YEAR PERFORMANCE2020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS A. CURRENT YEAR PERFORMANCE
A. CURRENT YEAR PERFORMANCE
for the year ended 30 June 2020
There have been no transactions involving ordinary shares or
potential ordinary shares between the reporting date and the
date of authorisation of the financial statements.
The number of potential ordinary shares not considered dilutive
and contingently issuable are as follows:
Contingent consideration (Note D.3)
Total
2020
Number
3,440,000
3,440,000
A.6 Earnings per share (EPS)
Basic EPS is calculated by dividing the profit for the year
attributable to ordinary equity holders of Orbital Corporation
Limited (“the Parent”) by the weighted average number of
ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the profit attributable to
ordinary equity holders of the Parent by the weighted average
number of ordinary shares outstanding during the year, plus
the weighted average number of ordinary shares that would be
issued on conversion of all dilutive potential ordinary shares
into ordinary shares.
The following table reflects the income and share data used in
the basic and diluted EPS computations:
Profit/(loss) attributable to ordinary equity
holders of the Parent:
Continuing operations
Discontinued operations
Profit/(loss) attributable to
equity holders of the Parent for
basic earnings
2020
$'000
2019
$'000
1,857
-
(5,906)
-
1,857
(5,906)
Performance rights granted to key management personnel
and contingent consideration arising from the acquisition of
the remaining 38.50 per cent interest in REMSAFE Pty Ltd
were deemed potential ordinary shares. Refer to Notes F.2
and D.3 for further details.
2020
2019
Number
77,524,513
Number
77,403,115
78,882,042
77,403,115
Weighted average number of ordinary
shares for basic EPS
Weighted average number of ordinary
shares adjusted for the effect of
dilution
Earnings per share
Basic profit/(loss)earnings per share
Diluted profit/(loss)earnings per share
Cents
2.40
2.35
Earnings per share from continuing operations
Basic profit/(loss) earnings per share
Diluted profit/(loss) earnings per share
Cents
2.40
2.35
Cents
(7.63)
(7.63)
Cents
(7.63)
(7.63)
33
33
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020A. CURRENT YEAR PERFORMANCE2020 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS B. GROWTH ASSETS
B. GROWTH ASSETS
for the year ended 30 June 2020
In this section
This section addresses the strategic growth and assets position of the Group at the end of the reporting period including, where applicable,
the accounting policies applied and the key estimates and judgements made.
B.1 Plant and equipment
Gross carrying amount at cost
At 1 July 2018
Additions
Disposals
At 30 June 2019
Additions
Disposals
At 30 June 2020
Depreciation and impairment
At 1 July 2018
Depreciation charge for the year
Disposals
At 30 June 2019
Depreciation charge for the year
Disposals
At 30 June 2020
Net book value
At 30 June 2020
At 30 June 2019
Plant and
equipment
Leasehold
improvements
Total
$’000
$’000
$’000
18,086
1,873
(1,565)
18,394
475
(408)
18,461
(17,075)
(592)
1,564
(16,103)
(623)
408
(16,318)
1,433
1,117
-
2,550
65
(20)
2,595
19,519
2,990
(1,565)
20,944
540
(428)
21,056
(227)
(98)
-
(325)
(282)
19
(588)
(17,302)
(690)
1,564
(16,428)
(905)
427
(16,906)
2,143
2,291
2,007
2,225
4,150
4,516
Plant and equipment was pledged as security under the
Acknowledgement of Debt entered into with the Department of Jobs,
tourism, Science and Innovation and is subject to floating charges.
Refer to Note D.1 for further details.
Refer to note C.7 for lease disclosure.
Recognition and measurement
Plant and equipment is stated at cost, net of accumulated
depreciation and accumulated impairment losses, if any. Such costs
include the cost of replacing part of the plant and equipment. When
significant parts of plant and equipment are required to be replaced
at intervals, the Group depreciates those parts separately based on
their specific useful lives. Likewise, when a major inspection is
performed, its cost is recognised in the carrying amount of the plant
and equipment as a replacement if the recognition criteria are
satisfied. All other repairs and maintenance costs are expensed as
incurred to occupancy expenses in the statement of profit or loss
and other comprehensive income. An item of plant and equipment is
derecognised upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss arising on the
de-recognition of the asset, calculated as the difference between the
net disposal proceeds and the carrying amount of the assets, is
included in other income or other expenses in the statement of profit
or loss and other comprehensive income when the asset is
derecognised.
Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is
an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is
required, the Group estimates the recoverable amount of the
asset or cash generating unit (“CGU”). The recoverable
amount of the asset or the CGU is the higher of its fair value
less costs of disposal and its value in use. The recoverable
amount is determined for an individual asset, unless the asset
does not generate cash flows that are largely independent of
those from other assets or groups of assets. When the
carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down
to its recoverable amount.
Impairment losses of continuing operations are recognised in
the statement of profit or loss in expense categories consistent
with the function of the impaired asset.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of
money and the risks specific to the asset. In determining fair
value less costs of disposals, recent market transactions are
taken into account. If no such transactions can be identified,
an appropriate valuation model is used. These calculations are
corroborated by valuation multiples, quoted share prices for
publicly traded companies or other available fair value
indicators.
Key estimate - Impairment of non-current assets
The Group bases its impairment calculation on detailed
budgets and forecast calculations, which are prepared
separately for each of the Group’s CGUs to which the
individual assets are allocated. The budgets and forecast
calculations cover a period of three years, or the contract
period.
Depreciation
Depreciation is calculated on a straight-line basis over the
estimated useful life as follows:
Plant and equipment: 3 to 15 years
Leasehold improvements: 3 to 15 years
The residual values, useful lives and methods of depreciation
of plant and equipment are reviewed at each financial year-
end and adjusted prospectively, as appropriate.
34
34
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS B. GROWTH ASSETS
B. GROWTH ASSETS
for the year ended 30 June 2020
B.2 Intangible assets
Consolidated
Year ended 30 June 2020
Cost
Accumulated amortisation and impairment
R&D tax offset recognised
Net carrying amount
Movement
Net carrying amount at the beginning of the year
Additions
Amortisation for the year
Net carrying amount at the end of the year
Year ended 30 June 2019
Cost
Accumulated amortisation and impairment
R&D tax offset recognised
Net carrying amount
Movement
Net carrying amount at the beginning of the year
Additions
Amortisation for the year
R&D tax offset recognised
Net carrying amount at the end of the year
Internally
generated
intangible
2,611
(292)
(1,421)
898
924
221
(247)
898
2,390
(45)
(1,421)
924
-
2,390
(45)
(1,421)
924
Total
2,611
(292)
(1,421)
898
924
221
(247)
898
2,390
(45)
(1,421)
924
-
2,390
(45)
(1,421)
924
The intangible asset comprises of capitalised development costs for the advancement of the modular propulsion systems. The intangible
asset will be amortised using the straight-line method over a finite period of five years.
Recognition and measurement
Intangible assets are measured on initial recognition at cost. Following initial recognition; intangible assets are carried at cost less
amortisation, any impairment losses and research and development tax grants received. Intangible assets with finite useful lives are
amortised on a straight-line basis over their useful lives and tested for impairment whenever there is an indication that they may be
impaired. The amortisation period and method is reviewed at each financial year end.
Intangible asset
Internally generated intangible
Useful life
Finite (up to five years)
Research and development
Research costs are expensed as incurred. Development expenditures on individual projects are recognised as an intangible asset when the
Group can demonstrate:
• the technical feasibility of completing the intangible asset so that the asset will be available for use or sale
• its intention to complete and its ability and intention to use or sell the asset
• how the asset will generate future economic developments
• the availability of resources to complete the asset
• the ability to measure reliably the expenditure incurred during the development of the asset
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and
accumulated impairment losses. Amortisation of the asset begins when the development is complete and the asset is available for use. It is
amortised over the period of expected future benefit. During the period of development, the asset is tested for impairment annually.
35
35
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS C. WORKING CAPITAL MANAGEMENT
C. WORKING CAPITAL MANAGEMENT
for the year ended 30 June 2020
In this section
This section addresses inventories, trade and other receivables, cash, other financial assets and trade and other payables of the Group
at the end of the reporting period including, where applicable, the accounting policies applied and the key estimates and judgements
made.
C. Working Capital Management
C.1 Inventories
C.2 Trade and other receivables
C.3 Cash and cash equivalents
C.4 Other financial assets
C.5 Trade and other payables
C.6 Deferred revenue
C.7 Leases
Page 37
Page 38
Page 38
Page 39
Page 39
Page 39
Page 40
Financial and capital risks in this section
Liquidity risk management
Liquidity risk arises from the financial liabilities of the Group and the Group's subsequent ability to meet its obligations to repay financial
liabilities as and when they fall due. The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet
its financial commitments in a timely and cost effective manner.
The Group's liquidity position is managed by the Board of Directors who regularly review cash-flow forecasts prepared by management,
which includes the Group's short and long-term obligations, cash position and forecast liability position to maintain appropriate liquidity
levels. At 30 June 2020, the Group has a total of $8,749,000 of cash at its disposal (2019: $7,487,000) and a net current asset position
$11,851,000 (2019: $13,453,000). The remaining contractual maturities of the Group's financial liabilities are:
Less than
3 months
$'000
3-12 months
1-5 years
$'000
$'000
Over 5 years Total contractual
cashflows
$'000
$'000
Carrying amount
(assets)/liabilities
$'000
At 30 June 2020
Borrowings
Trade payables and other
liabilities
Lease liabilities
At 30 June 2019
Borrowings
Trade payables and other
liabilities
-
3,756
6,230
-
-
-
1,091
4,847
2,048
8,278
-
-
-
-
86
8,933
72
1,053
-
4,482
262
4,744
-
3,919
3,919
9,986
4,482
3,401
17,869
9,986
4,077
8,610
4,482
3,029
16,121
8,277
4,077
12,354
86
9,005
1,053
14,063
36
36
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS C. WORKING CAPITAL MANAGEMENT
C. WORKING CAPITAL MANAGEMENT
for the year ended 30 June 2020
Interest rate risk management
Interest rate risk is the risk that the Group's financial position will fluctuate due to changes in the market interest rates.
The Group's exposure to market interest rates relates primarily to the Group's cash and term deposits with financial institutions. The
primary goal of the Group is to maximise returns on surplus cash, using deposits with maturities of 90 days or less. Management
continually monitors the returns on funds invested. The exposure to interest rate risk as at 30 June 2020 is as follows:
Cash and cash equivalents (Note C.3)
Short-term deposits (Note C.4)
2020
$'000
8,749
585
9,334
2019
$'000
7,487
585
8,072
A reasonable possible change in the interest rate (+0.5%/-0.5%) (2019: +0.5%/-0.5%)), with all variables held constant, would have
resulted in a change in post tax profit/(loss) of $44,000/($44,000) (2019: $37,000)/($37,000)) and no impact to other comprehensive
income.
Credit risk management
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a
financial loss. The Group is exposed to credit risk from its operating and investing activities, including trade receivables and short-term
deposits with financial institutions. Maximum exposure to credit risk equals to the carrying amount of these financial assets (as outlined in
each applicable note). The significant concentration of credit risk within the Group relate to receivable balances from the Group's major
customer.
The maximum exposure to credit risk for the components of the statement of financial position at 30 June 2020 and 2019 is the carrying
amounts as illustrated in Note C.2.
It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an
assessment of their independent credit rating, financial position, past experience and industry reputation. Key individual customer
receivable balances are monitored on an ongoing basis. The significant concentrations of credit risk within the Group relate to receivable
balances from the Group's major customer and cash held with investment grade financial institutions.
The investment of surplus cash in short-term deposits is only invested with a major financial institution to minimise the risk of default of
counterparties.
C.1 Inventories
Raw materials
Provision for obsolescence
Work in progress
Finished goods
2020
$'000
7,965
(159)
1,574
-
9,380
2019
$'000
4,741
(298)
2,255
-
6,698
Recognition and measurement
Inventories are carried at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location
and condition are accounted for as follows:
• Raw materials: weighted average cost
• Finished goods and work in progress: weighted average cost of direct materials and direct manufacturing labour and a proportion of
manufacturing overhead costs
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling
expenses.
37
37
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS C. WORKING CAPITAL MANAGEMENT
for the year ended 30 June 2020
C. WORKING CAPITAL MANAGEMENT
C.2 Trade and other receivables
C.3 Cash and cash equivalents
Trade receivables
Other receivables (b)
Allowance for Impairment of other receivables (a)
2020
2019
$'000
5,307
1,253
(1,213)
5,347
$'000
4,093
4,341
(1,379)
7,055
(a) At 30 June 2020, the Group has $1,213,000
(2019:$1,350,000) as a provision for impaired receivables. This
amount covers $1,150,000 receivable from Avidsys Pty Ltd as
consideration for the disposal of REMSAFE Pty Ltd on 18
December 2017.
See the "Credit risk management" section on credit risk of trade
receivables, which explains how the Group manages and
measures the quality of trade receivables that are neither past
due nor impaired.
The Group's payment terms on trade receivables range from 30 -
35 days. The credit risk of trade receivables neither past due nor
impaired was assessed as remote as historical default rates with
associated customers are negligible.
Recognition and measurement
Trade and other receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted in an
active market.
Trade and other receivables are recognised on initial recognition
at fair value. Subsequent to initial recognition, trade receivables
are measured at amortised cost using the effective interest rate
method, less an allowance for uncollectible amounts.
Impairment
Trade receivables and contract assets are subject to the expected
credit loss model. The Group applies the AASB 9 simplified
approach to measuring expected credit losses which uses the
lifetime expected loss allowance for all trade receivable and
contract assets. The identified impairment loss was immaterial.
While cash and cash equivalents are also subject to the
impairment requirements of AASB 9, the identified impairment
loss was immaterial.
Cash at bank
2020
$'000
8,749
8,749
2019
$'000
7,487
7,487
The reconciliation of net profit/(loss) after tax to net cash flows from
operations for the years ended 30 June 2020 and 2019 is as follows:
Profit/(loss) after income tax from continuing
operations
Profit/(loss) after income tax
Depreciation & amortisation
R&D tax offset (Note B.2)
Government grants (Note E.2)
Interest expense
Surplus lease space (Note E.1)
Warranties (Note E.1)
Employee benefits (Note E.1)
Provision for doubtful debt (Note C.2)
Share based payment expense (Note F.2)
Net foreign exchange gain
Net cash from/(used in) operating activities
before changes in assets and liabilities
Changes in assets and liabilities during the year:
Decrease/(increase) in receivables and
prepayments
(Increase)/decrease in inventories
(Increase)/decrease in deferred tax assets
Increase/(decrease) in payables
2020
$'000
1,857
1,857
1,153
-
(76)
333
(88)
(218)
163
(167)
264
33
2019
$'000
(5,906)
(5,906)
735
1,421
(225)
507
(53)
(31)
307
1,379
263
(1,200)
3,254
(2,804)
2,324
6,950
(2,683)
118
713
472
(4,546)
(37)
2,218
4,587
Net cash generated from operating activities
3,726
1,783
Recognition and measurement
Cash and cash equivalents in the statement of financial
position comprise cash at bank and short-term deposits with
an original maturity of three months or less, which are subject
to an insignificant risk as to change in value.
Fair value
The carrying amount of trade and other receivables
approximates their fair value.
Fair value
The carrying amount of short-term deposits approximates their
fair value.
38
38
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS C. WORKING CAPITAL MANAGEMENT
for the year ended 30 June 2020
C. WORKING CAPITAL MANAGEMENT
C.4 Other financial assets
C.6 Deferred revenue
Deferred revenue includes revenue allocated to unsatisfied
performance obligations in engineering services contracts with
customers, unsatisfied performance obligations on sale of
goods to customers and long-term advances received from
customers.
A reconciliation of deferred revenue for the years ended 30
June 2020 and 2019 is as follows:
At 1 July
Deferred during the year
Released to the statement of profit or loss
At 30 June
2020
$'000
2,911
9,622
(11,212)
1,321
2019
$'000
943
4,426
(2,458)
2,911
Recognition and measurement
Deferred revenue is recognised as a liability when
consideration is received prior to performance obligations
being satisfied with a customer. The deferred revenue is
recognised as income over the periods that the performance
obligations are met.
Short term deposits
2020
$'000
585
585
2019
$'000
585
585
The Group has pledged short term deposits of $585,000 (2019:
$585,000) as collateral for financing facilities. Refer to Note D.1
for details on long-term borrowings.
Short-term deposits
Recognition and measurement
Short-term deposits represent term deposits with financial
institutions for periods greater than 90 days and less than 365
days earning interest at the respective interest rate at time of
lodgement. Short-term deposits are stated at amortised cost.
Fair value
The carrying amount of short-term deposits approximates their
fair value.
C.5 Trade and other payables
Trade payables
Lease liabilities
Taxes payable
Other payables
2020
$'000
4,280
-
11
191
4,482
2019
$'000
3,800
173
10
94
4,077
Recognition and measurement
Trade and other payables are financial liabilities recognised when
goods and services are received prior to the end of the reporting
period, irrespective of whether or not billed to the Group. Trade
and other payables are recognised on initial recognition at fair
value. Subsequent to initial recognition, trade and other payables
are measured at amortised cost.
Fair value
The carrying amount of trade and other payables approximates
their fair value.
39
39
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS C. WORKING CAPITAL MANAGEMENT
D. DEBT AND CAPITAL
for the year ended 30 June 2020
C.7 Leases
The Group has adopted AASB 16 Leases with effect from 1 July
2019 but has not restated comparatives for the 2019 reporting
period, as permitted under the specific transitional provisions in
the standard. The reclassifications and the adjustments arising
from the new leasing rules are therefore recognised in the
opening balance sheet on 1 July 2019.
AASB 16 Leases introduces a new framework for accounting for
leases and replaces AASB 117 Leases, AASB Interpretation 4
Determining whether an Arrangement contains a Lease, AASB
Interpretation 115 Operating Leases-Incentives and AASB
Interpretation 127 Evaluating the Substance of Transactions
Involving the Legal Form of a Lease. AASB 16 Leases sets out
the principles for the recognition, measurement, presentation and
disclosure of leases and requires lessees to account for all leases
under a single on-balance sheet model similar to the accounting
for finance leases under AASB 117 Leases. At the
commencement date of a lease, a lessee will recognise a liability
to make lease payments (i.e. the lease liability) and an asset
representing the right to use the underlying asset during the lease
term (i.e. the right-of-use asset). Lessees are required to
separately recognise the interest expense on the lease liability
and the depreciation expense on the right-of-use asset.
Set out below is a summary of the amounts disclosed in the
Consolidated Statement of Financial Position:
The recognised right-of-use assets relate to the following types
of assets:
Properties
Total right-of-use assets
2020 01-Jul-19
$'000
$'000
1,710
2,062
1,710
2,062
Amounts recognised in the statement of profit or loss
The statement of profit or loss shows the following amounts
relating to leases:
Depreciation charge of right-of-use assets
Interest expense (included in finance cost)
Interest income
2020
$'000
728
146
-
2019
$'000
-
-
-
Practical expedients applied
In applying AASB 16 Leases for the first time, the Group has
used the following practical expedients permitted by the
standard:
- the use of a single discount rate to a portfolio of leases with
reasonably similar characteristics;
- reliance on previous assessments on whether leases are
onerous as an alternative to performing an impairment review,
leading to the existing onerous lease being written off up front;
The Group’s leasing activities and how these are accounted
Lease Liabilities
Current
Non Current
2020
$'000
1,131
1,898
3,029
2019
$'000
-
-
-
The Group leases various premises. Until the 2019 financial
year, leases of property were classified as operating leases.
Payments made under operating leases (net of any incentives
received from the lessor) were charged to profit or loss on a
straight-line basis over the period of the lease.
a) Adjustments recognised on adoption of AASB 16
On adoption of AASB 16 Leases, the Group recognised lease
liabilities in relation to leases which had previously been classified
as ‘operating leases’ under the principles of AASB 117 Leases.
These liabilities were measured at the present value of the
remaining lease payments, discounted using the lessee’s
incremental borrowing rate as of 1 July 2019. The lease
payments are discounted using the interest rate implicit in the
lease. If that rate cannot be determined, the lessee’s incremental
borrowing rate is used. The weighted average lessee’s
incremental borrowing rate applied to the lease liabilities on 1 July
2019 was 8.9%.
Lease Liability
Operating lease commitments disclosed as at 30
June 2019
Discounted using the lessee’s incremental
borrowing rate of at the date of initial application
Lease liability recognised as at 1 July
Spilt between
- Current lease liabilities
- Non-current lease liabilities
$'000
2,372
(157)
2,215
1,034
1,181
2,215
From 1 July 2019, leases are recognised as a right-of-use
asset and a corresponding liability at the date at which the
leased asset is available for use by the Group. Each lease
payment is allocated between the liability and finance cost.
The right-of-use asset is depreciated over the lease term on a
straight-line basis.
Assets and liabilities arising from a lease are initially measured
on a present value basis. Lease liabilities include the net
present value of the following lease payments:
- variable lease payment that are based on an index or a
rate
The recognised right-of-use assets relate to the following types
of assets:
-
the amount of the initial measurement of lease liability
A sub lease previously recognised as an operating lease has
been recognised as a Finance Lease Receivable under AASB
16 Leases. This reduced the right-of-use asset on adoption.
Payments associated with short-term leases and leases of low-
value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less.
40
40
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS D. DEBT AND CAPITAL
D. DEBT AND CAPITAL
for the year ended 30 June 2020
In this section
This section addresses the debt and capital position of the Group at the end of the reporting period including, where applicable, the
accounting policies applies and the key estimates and judgements made.
D.
D.1
D.2
D.3
Debt and capital
Borrowings
Share capital
Reserves
Page 41
Page 41
Page 42
Financial and capital risks in this section
Capital risk management
For the purposes of the Group's capital management, capital includes contributed shareholder equity. When managing capital, management's
objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other
stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital, provides a strong capital base so
as to maintain investor, creditor and market confidence and to sustain future development of the business. In order to maintain or adjust the
capital structure, the Group may issue new shares or debt.
D.1 Borrowings
Current
Non-current
2020
$'000
3,756
4,854
8,610
2019
$'000
-
8,277
8,277
Changes in borrowings arising from financing activities are as
follows:
At 1 July
$'000
Cash flows
$'000
8,277
7,770
-
-
Finance
costs
$'000
333
507
At 30 June
$'000
8,610
8,277
2020
2019
On 25 January 2010, the Department of Jobs, Tourism, Science
and Innovation provided the Group with an interest-free loan of
$14,346,000 under the terms of a Deed (Acknowledgment of
Debt) (“the Deed”). The terms and conditions attached to the
Deed are as follows:
• The term of the loan was 25 January 2010 to 30 May 2025
• Repayments commenced on 25 May 2010 at $200,000 per
annum
• A deed of variation was confirmed during the year ending 30
June 2019 to defer 2019 and 2020 repayments to 30 May 2021
•Accelerated repayments then occur across the life of the loan,
concluding on 30 May 2025
The interest-free loan was secured by way of a first ranking
floating debenture over the whole of the assets and undertakings
of the Group.
Fair value
The fair value of the Group's secured loan at 30 June 2020 was
$7,693,000 (2019: $6,868,000). The fair value measurement is
classified as Level 3 on the fair value hierarchy. The fair value of
the secured loan was calculated by discounting future cash flows
at the prevailing market interest rate at 30 June 2020 of 12.00%
(2019: 12.00%).
Recognition and measurement
The interest-free loan was initially recognised at fair value and
subsequently stated at amortised cost using the effective interest rate
(“EIR”) method. The EIR is the rate that exactly discounts the
estimated future cash payments over the expected life of the loan or a
shorter period, where appropriate, to the net carrying amount of the
financial liability. The effective interest rate was 6.52 per cent.
D.2 Share capital
Ordinary shares issued and fully paid
Movement in ordinary shares
At 1 July 2018
Employee Share plan number 1
At 30 June 2019
At 1 July 2019
Employee Share plan number 1
At 30 June 2020
2020
$'000
31,220
2019
$'000
31,178
Number
77,369,210
83,716
$000's
31,144
34
77,452,926 31,178
77,452,926
133,997
77,586,923
31,178
42
31,220
Recognition and measurement
Share capital is recognised at the fair value of the consideration
received. The cost of issuing shares is shown in the share capital as a
deduction, net of tax, from the proceeds. Own equity instruments that
are re-acquired are recognised at cost and deducted from equity. No
gain or loss is recognised in profit or loss on the purchase, sale, issue
or cancellation of the Group’s own equity instruments.
Holders of ordinary shares are entitled to receive dividends as
declared from time to time and are entitled to one vote per share at
shareholders’ meetings. In the event of winding up of the Company,
ordinary shareholders rank after creditors and are fully entitled to any
proceeds of liquidation.
41
41
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS D. DEBT AND CAPITAL
E. OTHER ASSETS AND LIABILITIES
for the year ended 30 June 2020
D.3 Reserves
At 1 July 2018
Foreign currency translation
Rights issued pursuant to performance rights plan
Transferred to accumulated losses
At 30 June 2019
At 1 July 2019
Foreign currency translation
Rights issued pursuant to performance rights plan
At 30 June 2020
Nature and purpose of reserves
Employee
benefits
reserve
$000's
1,975
-
229
-
2,204
.
2,204
-
221
2,425
Foreign currency
translation
reserve
$000's
9
(42)
-
-
(33)
Contingent
consideration
$000's
3,440
-
-
(3,440)
-
Consolidation
reserve
$000's
(4,455)
-
-
4,455
-
Convertible notes
reserve
$000's
248
-
-
(248)
-
(33)
3
-
(30)
-
-
-
-
-
-
-
-
-
-
-
-
Total
$000's
1,217
(42)
229
767
2,171
2,171
3
221
2,395
Employee benefits reserve
The employee benefits reserve records the share-based payments provided to key management personnel as part of their long-term incentive
remuneration. Refer to Note F.3 for further details.
Contingent consideration
On 13 October 2016, the Group acquired the remaining 38.5 per cent minority interest in REMSAFE Pty Ltd from the Lane Trust in
consideration for the issue of ordinary shares in the Group. The terms of the sale provided for an incentive to achieve performance targets
linked to future accumulated annual sales with consideration payable as follows:
• 2,000,000 ordinary shares in the Group if REMSAFE achieves $25,000,000 accumulated annual sales for any 12 month period; and,
• 2,000,000 ordinary shares in the Group if REMSAFE achieves $40,000,000 accumulated annual sales for any 12 month period.
Contingent consideration was measured with reference to the Group’s share price on 13 October 2016 and considered the probability that the
accumulated annual sales targets would be met, which was assessed as 100 per cent.
The fair value measurement of the contingent consideration was classified as Level 2 on the fair value hierarchy.
On 18 December 2017, the Group publicly announced the divestment of its 100 per cent interest in REMSAFE Pty Ltd to Avidsys Pty Ltd
(“Avidsys”) in support of the Group’s strategy to strengthen its position in the UAV market. Should the REMSAFE business satisfy one or more
of the abovementioned accumulated annual sales targets pertaining to the contingent consideration arrangement, Avidsys is obliged to
reimburse the Group for the value of the consideration transferred under the arrangement up to a maximum amount of $2,200,000. At 30 June
2020, the Group re-assessed the probability that the abovementioned accumulated annual sales targets would be met as nil. As a result, no
financial asset for contingent consideration receivable from Avidsys was recognised in these financial statements.
Consolidation reserve
The consolidation reserve records the difference between the amount paid to acquire a non-controlling interest and the change in the
proportionate interest in net assets held by the non-controlling interest.
Convertible note reserve
The convertible note reserve records the equity component of the convertible notes issued in the 2016 financial year. The convertible notes
were extinguished in prior periods.
42
42
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS E. OTHER ASSETS AND LIABILITIES
for the year ended 30 June 2020
E. OTHER ASSETS AND LIABILITIES
In this section
This section addresses the other assets and liabilities position of the Group at the end of the reporting period including, where
applicable, the accounting policies applies and the key estimates and judgements made.
E.
E.1
E.2
Other assets and liabilities
Provisions
Government grants
Page 43
Page 44
E.1 Provisions
At 1 July 2019
Arising during the year
Utilised
Expired
At 30 June 2020
Current
Non-current
At 1 July 2018
Arising during the year
Utilised
At 30 June 2019
Current
Non-current
Surplus
lease
space Warranties
$000's
$000's
88
-
(88)
-
-
-
-
-
141
33
(86)
88
57
31
88
738
380
-
(597)
521
521
-
521
770
253
(285)
738
738
-
738
Employee
benefits
$000's
1,614
666
(502)
-
1,778
1,706
72
1,778
1,307
491
(183)
1,615
1,537
77
1,614
Total
$000's
2,440
1,046
(590)
(597)
2,298
2,227
72
2,299
2,218
777
(554)
2,441
2,333
108
2,441
Recognition and measurement
Provisions are recognised when the Group has a present
obligation, legal or construction, as a result of a past event, it is
probable that an outflow of resources embodying benefits will be
required to settle an obligation and a reliable estimate can be
made of the amount of the obligation.
If the effect of the time value of money is material, provisions are
discounted using a pre-tax discount rate that reflects, where
appropriate, the risks specific to the liability. When discounting
is used, the increase in the provision due to the passage of time
is recognised as a finance cost.
Provision for surplus lease space
The Group recognised a provision for surplus lease space for
unused office space under an operating lease, expiring 16
February 2021. The provision for surplus lease space has been
offset against the Right of Use Asset upon adoption of IFRS 16
"Leases". Refer to note C7 for further detail
Provision for warranties
The Group provides for a provision for warranties for
general repairs for two years after its propulsion system
assemblies ("PSA") are sold. The provision for warranties
represents the liability for potential warranty claims against
the Group and is recognised at the point in time when a
PSA is sold. The valuation of the provision for warranties is
based on the product of the estimated defect rate, the cost
of the PSA and the volume of PSAs sold. Estimates of the
provision for warranties are revised annually.
Employee benefits
The Group does not expect its long-service or annual leave
benefits to be settled wholly within twelve months of each
reporting date. These liabilities are measured at the
present value of the estimated future cash outflow to be
made to the employees using the projected unit credit
method. Expected future payments are discounted using
market yields at the reporting date on high quality corporate
bonds with terms to maturity and currencies that match, as
closely as possible, estimated future cash flows.
Other employee benefits expected to be wholly settled
within one year after the end of the period in which the
employees render the related services are classified as
short-term benefits and are measured at the amount due to
be paid.
43
43
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS E. OTHER ASSETS AND LIABILITIES
for the year ended 30 June 2020
F. OTHER ITEMS
E.2 Government grants
At 1 July
Released to the statement of profit and loss
At 30 June
Current
Non-current
2020
$'000
74
(74)
-
-
-
2019
$'000
299
(225)
74
74
-
In June 2008, the Group received a $2,760,000 grant from the Commonwealth of Australia through the Alternative Fuels
Conversion Program administered by the Department of the Environment, Water, Heritage and the Arts towards the construction of
a heavy duty engine test facility. There are no unfulfilled conditions or contingencies attached to the grants.
Recognition and measurement
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions
will be complied with. Government grants are recognised in other income in the statement of profit or loss and other
comprehensive income over the periods necessary to match them with the related costs which they are intended to compensate,
on a systematic basis. When a government grant relates to compensation for expenses or losses already incurred, or for the
purposes of giving immediate financial support to the entity with no future related costs, government grants are recognised as
income in the period in which it becomes receivable. When the grant relates to an asset, it is recognised as deferred revenue in
the statement of financial position and income is recognised in equal amounts over the expected useful life of the related asset.
44
44
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS F. OTHER NOTES
F. OTHER ITEMS
for the year ended 30 June 2020
In this section
This section addresses information on other items which require disclosure to comply with Australian Accounting Standards and the
Corporations Act 2001 (Cth). This section includes Group structure information and other disclosures.
Other items
F.
F.1 Related parties
F.2 Share based payments
F.3 Subsidiaries
F.4 Parent entity information
F.5 Auditor remuneration
F.6 Events after the end of the reporting period
F.7 Other accounting policies
F.8 Adopted accounting standards
F.9 New accounting standards
45
46
48
48
49
49
49
50
50
F.1 Related parties
Group structure
Note F.3 provides information about the Group’s structure, including details of subsidiaries.
Transactions with key management personnel
Agere Pty Ltd, a company of which Mr. Steve Gallagher is a director, received $60,000 (2019: $60,000) in director's fees for his
service to the Group. At 30 June 2020, a total of $5,000 remains due and payable (2019: $5,000). Payment terms are 7 days.
No other director or key management personnel entered into a material contract with the Group from the end of the previous financial
year.
Compensation of key management personnel of the Group
Short term employee benefits
Post-employment benefits
Long-term employee benefits
Share based payments
2020
$
1,397,283
96,892
52,797
162,314
2019
$
1,146,953
80,962
68,273
221,708
1,709,286
1,517,897
The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management
personnel. The compensation of key management personnel is included in the employee benefits expense in the statement of profit or
loss and other comprehensive income.
Refer to table 2 and table 3 of the Remuneration report for KMP share and equity holdings, including performance rights.
Loans from related parties
The Group has an unsecured US$3 million (A$4 million) standby working capital facility with UIL Limited. UIL Limited is the Group's
largest shareholder, currently holding 30% of the Group's shares. The establishment of the standby facility secures an additional
source of working capital should the Group decide to accelerate further investments in product development. Interest on any funds
drawn down will be incurred at an interest rate of Libor plus 6% .The facility is available from 11 March 2019 to 10 September 2020.
The Group drew down US$1.5 million (A$2.3 million) during September 2019. The standby working capital facility was repaid in full
during June 2020 (US$1.6 million / $A2.3 million)
45
45
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS F. OTHER NOTES
F. OTHER ITEMS
for the year ended 30 June 2020
2017 CEO LTI Plan
The 2017 performance rights plan related to Mr. Terry Stinson
(the previous Managing Director and CEO) and was approved by
shareholders on 7 November 2016. Pages 10-11 of the Directors'
Report details the terms of the performance rights. During the
year no rights under the plan vested. The total expense
recognised during the period is $15,000 (2019: $59,000).
Movements during the year
The following table illustrates the number of performance rights
during the year:
Outstanding at 1 July
Granted during the year
Lapsed during the year
Outstanding at 30 June
2020
Number
2,010,654
-
(653,125)
1,357,529
2019
Number
2,354,373
-
(343,719)
2,010,654
The weighted average remaining contractual life of performance
rights outstanding at 30 June 2020 was 0 years (2019: 1 years).
The following tables list the inputs into the models used for the
four plans for the years ended June 30, 2017 and 2018,
respectively:
2017
CEO LTI
Plan
2018
Executive
LTI Plan
CEO
SAPR's
7/11/2016 23/05/2018 27/10/2017 23/05/2018
2018 CEO
LTI Plan
7/09/2019 10/08/2020 10/08/2020 10/08/2020
$ 0.93 $ 0.44 $ 0.54 $ 0.44
0.500
0.209
0.365
0.316
0.420
70%
1.68%
0.138
59%
1.98%
0.278
60%
1.95%
-
59%
1.98%
1.19 years 2.12 years 2.12 years 2.12 years
Monte
Carlo
Monte
Carlo
Monte
Carlo
Monte
Carlo
Grant date
Expiry date
Share price at grant
Fair value ($/right) -
Tranche 1
Fair value ($/right) -
Tranche 2
Expected volatility
Risk-free interest rate
Remaining
contractual life
Model used
F.2 Share based payments
Equity-settled share based payment
transactions
2020
$'000
245
245
2019
$'000
263
263
There were no cancellations or modifications to awards in
the 2020 or 2019 financial years. Share-based payment
plans are explained below:
Employee Share Plan No. 1
The Group provides benefits to its employees in the form of
share based payments in which employees render services
for ordinary shares in the Group. Under the plan, each
eligible employee is offered fully paid ordinary shares to a
maximum value of $1,000 per annum.
For the year ended 30 June 2020, 133,997 ordinary shares
(2019: 83,716 ordinary shares) were issued on 18
December 2020 at a market value on the date of issue of
$42,000 (2019: $34,000 ).
CEO Share Acquisition Performance Rights
On 11 August 2017, the Group announced the appointment
of Mr. Alder as the Managing Director and Chief Executive
Officer of the Group. The announcement set out the material
terms of his employment, which include the grant of two
performance rights for each share acquired by Mr. Alder
during the period from 11 August 2017 to 31 December
2017.
During the year ended 30 June 2018, Mr. Alder acquired
372,333 ordinary shares in the Group, resulting in a
maximum entitlement of 647,250 share acquisition
performance rights ("SAPR's"). The grant of the
performance rights was approved by the shareholders at an
extraordinary general meeting on 23 May 2018.
The terms of the performance rights issued to Mr. Alder are
subject to a vesting condition of a 30-day volume weighted
average share price of $0.62 per ordinary share.
During the year ended 30 June 2020, no performance rights
issued under the plan vested. The share based payment
expense recognised for the year ended 30 June 2020 was
$68,000 (2019: $68,000).
2018 Executive LTI Plan and 2018 CEO LTI Plan
On 27 October 2017 and 23 May 2018, the Group issued
951,622 performance rights to key management personnel
as part of their long-term incentive plan. The terms of the
performance rights are set out on pages 10-11 of the
Directors' Report. During the year ended 30 June 2019, no
performance rights issued under the plan vested. The share
based payment expense recognised for the year ended 30
June 2020 was $103,000 (2019: $101,000).
46
46
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS F. OTHER NOTES
F. OTHER ITEMS
for the year ended 30 June 2020
F.2 Share based payments (continued)
The expected life of the performance rights is based on historical data and current expectations and is not necessarily indicative of
exercise patterns that may occur. The expected volatility of performance rights reflects the assumption that the historical volatility over
a period similar to the life of the performance rights is indicative of future trends, which may not necessarily be the actual outcome.
Recognition and measurement
Employees, including key management personnel, of the Group receive remuneration in the form of share-based payments, whereby
employees render services as consideration for equity instruments; that is, equity-settled transactions.
The cost of equity-settled transactions is determined using the fair value of the equity instrument at the date when the grant is made
using an appropriate valuation model.
The cost arising from share-based payments is recognised as an employee benefits expense, together with a corresponding increase
in equity over the period in which the service and, where applicable, the performance conditions, are fulfilled; that is, the vesting
period. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the
extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately
vest. The expense or credit in the statement of profit or loss and other comprehensive income represents the movement in the
cumulative expense recognised as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of the awards,
but the likelihood of the condition being met is assessed as part of the Group’s best estimate of the number of shares that will vest.
Market performance conditions are reflected within the grant date fair value.
47
47
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS F. OTHER NOTES
F. OTHER ITEMS
for the year ended 30 June 2020
F.3 Subsidiaries
The ultimate parent company of the Group is Orbital Corporation Limited. The consolidated financial statements of the Group include:
Class of
shares
Country of
incorporation
Principal activities
% equity interest
2020
2019
Ordinary
Australia
Production &
Development
Entity
Orbital Australia Pty Ltd
Orbital Australia Manufacturing Pty Ltd
OEC Pty Ltd
S T Management Pty Ltd
OFT Australia Pty Ltd
Investment Development Funding Pty Ltd
Power Investment Funding Pty Ltd
Kala Technologies Pty Ltd
Orbital Share Plan Pty Ltd
Note
(b)
(c)
(a)
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Orbital Holdings (USA) Inc.
Orbital Fluid Technologies Inc.
Ordinary
Ordinary
United States
United States
Orbital UAV USA, LLC
Ordinary
United States
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Production &
Development
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(a) Orbital Share Plan Pty Ltd was established on 22 September 2008 and acts as the trustee for Executive Long Incentive Performance Rights Plans.
(b) The Production segment is focussed on the manufacture, assembly and delivery of engines and propulsion systems for unmanned aerial vehicles, and the
continuous improvement of propulsion system and component part costs; product quality; and timing of product delivery.
(c) The Development segment specialises in the development of new UAV propulsion systems and flight critical components, including unmanned aerial vehicle
engineering studies, engine mapping, maintenance certification and engineering technical support across the Group.
F.4 Parent entity information
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Issued capital
Accumulated losses
Employee benefits reserve
Total equity
Profit/(loss) of the parent
Total comprehensive profit/(loss) of the parent entity
48
2020
$'000
2
24,768
-
8,610
16,160
31,220
(17,485)
2,425
16,160
1,357
1,357
2019
$'000
2
22,848
-
8,277
14,573
31,178
(18,842)
2,237
14,573
(4,835)
(4,835)
48
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS F. OTHER NOTES
F. OTHER ITEMS
for the year ended 30 June 2020
F.5 Auditor remuneration
The auditor for the Group is PricewaterhouseCoopers
("PwC")
2020
$
2019
$
Amounts received or due and receivable for:
Audit and review of the consolidated
financial statements
Tax compliance services
135,278 127,500
72,670 73,011
207,948 200,511
F.6 Events after the end of the reporting period
There has not arisen in the interval between the end of the
financial year and the date of this report any item,
transaction or event of a material and unusual nature likely,
in the opinion of the Directors of the Group, to affect
significantly the operations of the Group, the results of those
operations, or the state of affairs of the Group, in future
years.
F.7 Other accounting policies
Goods and services tax
Revenue, expenses and assets are recognised net of the
amount of GST, except where the amount of GST incurred
is not recoverable from the taxation authority. In these
circumstances, the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amounts of
GST included. The net amount of GST recoverable from, or
payable to, the Australian Taxation Office (“ATO”) is
included as a current asset or liability in the consolidated
statement of financial position.
Cash flows are included in the statement of cash flows on a
gross basis. The GST components of cash flows arising
from investing and financing activities which are recoverable
from, or payable to, the ATO are classified as operating
cash flows.
Intangible assets
Patents
Patents, licences and technology development and
maintenance costs, not qualifying for capitalisation, are
expensed as incurred.
Fair value measurement
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest
level input that is significant to the fair value measurement as a
whole:
► Level 1 — Quoted (unadjusted) market prices in active
markets for identical assets or liabilities
► Level 2 — Valuation techniques for which the lowest level
input that is significant to the fair value measurement is directly or
indirectly observable
► Level 3 — Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable
For assets and liabilities that are recognised in the financial
statements at fair value on a recurring basis, the Group
determines whether transfers have occurred between levels in the
hierarchy by re-assessing categorisation (based on the lowest
level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
49
49
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS F. OTHER NOTES
F. OTHER ITEMS
for the year ended 30 June 2020
F.8 Adopted accounting standards
Adopted standards and interpretations
A number of adopted standards and interpretations have been issued as at the financial reporting date.
The Group has reviewed these standards and interpretations and with the exception of the items listed below, none of the new and
amended accounting standards and interpretations will significantly affect the Group's accounting policies, financial position or
performance.
Title
Application of new
standard
Summary
Adopted 1 July 2019
AASB 16
Leases
("AASB 16")
AASB 16 requires lessees to account for all leases under a single on-balance sheet model in
a similar way to finance leases under AASB 117 Leases. The standard includes two
recognition exemptions for lessees – leases of ’low-value’ assets (e.g. personal computers)
and short-term leases (i.e. leases with a lease term of 12 months or less). At the
commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e.
the lease liability) and an asset representing the right to use the underlying asset during the
lease term (i.e. the right-of-use asset). Lessees will be required to separately recognise the
interest expense on the lease liability and the depreciation expense on the right-of-use asset.
Lessees will be required to re-measure the lease liability upon the occurrence of certain
events (e.g. a change in the lease term, a change in future lease payments resulting from a
change in an index or rate used to determine those payments). The lessee will generally
recognise the amount of the remeasurement of the lease liability as an adjustment to the right
of-use asset.
Lessor accounting is substantially unchanged from today’s accounting under AASB 117.
Lessors will continue to classify all leases using the same classification principle as in AASB
117 and distinguish between two types of leases: operating and finance leases.
The Group's current operating leases comprise only of real estate. Upon adoption of AASB
16, the Group's balance sheet is expected to include a right of use asset and liability related to
these operating lease arrangements.
Transition to AASB 16:
The Group has evaluated the impact of current lease arrangements for the lease of real
estate. The impact on the balance sheet at 1 July 2019 was an increase in leased related
assets of $1,710,000 and an increase in lease liabilities of $2,215,000. Furthermore the
sublease will give rise to a finance lease receivable of $505,000.
F.9 New accounting standards
New standards and interpretations
The Group has reviewed new standards and interpretations and none of the new and amended accounting standards and
interpretations will significantly affect the Group's accounting policies, financial position or performance.
50
50
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20202020 ANNUAL REPORT DIRECTORS’ DECLARATION
DIRECTORS' DECLARATION
In accordance with a resolution of the Directors of Orbital Corporation Limited, I state that:
1.
In the opinion of the Directors:
(a)
The financial statements and notes and the additional disclosures included in the Directors’ Report designated
as audited, of the Group are in accordance with the Corporations Act 2001, including:
(i)
(ii)
Giving a true and fair view of the financial position of the Group as at 30 June 2020 and of their
performance, as represented by the results of their operations and their cash flows, for the year ended
on that date; and
Complying with Accounting Standards in Australia and the Corporations Act 2001.
The financial statements and notes also comply with International Financial Reporting Standards as disclosed in
note 2(a).
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
(b)
(c)
2.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance
with Section 295A of the Corporations Act 2001, from the Chief Executive Officer and Chief Financial Officer for the
financial year 30 June 2020.
On behalf of the Board,
JP Welborn
Chairman
TM Alder
Managing Director & Chief Executive Officer
Dated at Perth, Western Australia 28 August 2020
51
51
2020 ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT
Independent auditor’s report
To the members of Orbital Corporation Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Orbital Corporation Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 30 June 2020 and of its
financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the consolidated statement of financial position as at 30 June 2020
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the financial statements, which include a summary of significant accounting policies
the directors’ declaration.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of 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 (including Independence
Standards) (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.
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
52
52
2020 ANNUAL REPORT
INDEPENDENT AUDITOR’S REPORT
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
The Group specialises in designing and manufacturing unmanned aerial vehicle propulsion systems
for its customers. The Group has manufacturing operations in Australia and in the United States of
America. The accounting processes are structured around a Group finance function at its corporate
head office in Perth, where we predominantly performed our audit procedures.
Materiality
•
For the purpose of our audit we used overall Group materiality of $340,000, which represents approximately
1% of the Group’s total Revenue.
• We applied this threshold, together with qualitative considerations, to determine the scope of our audit and
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the
financial report as a whole.
• We chose Group Revenue because, in our view, it is the benchmark against which the performance of the
Group is most commonly measured.
• We utilised a 1% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds for entities of this nature.
Audit Scope
•
Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
53
53
2020 ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit 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. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit and Risk Committee.
Key audit matter
How our audit addressed the key audit matter
Basis of preparation of financial report
(Notes to the Financial Statements – pg 24)
As described in the financial report, the financial
statements have been prepared by the Group on a going
concern basis, which contemplates that the Group will
continue to meet its commitments, realise its assets
and settle its liabilities in the normal course of
business.
The Group has invested in the construction of a
manufacturing facility in Hood River, USA and is still
increasing production under the expanded agreement
with its largest customer.
Assessing the appropriateness of the Group’s basis of
preparation for the financial report was a key audit
matter due to its importance to the financial report as a
whole and the level of judgement involved in assessing
the operational status, future funding and cash flows
from sales in particular with respect to the Group
forecasting future cash flows for a period of at least 12
months from the date of the financial report (cash flow
forecasts).
In assessing the appropriateness of the Group’s
going concern basis of preparation for the financial
report, we performed the following procedures,
amongst others:
● evaluated the appropriateness of the Group's
assessment of its ability to continue as a going
concern, including whether the level of detail in
the assessment is appropriate given the nature
of the Group, the period covered is at least 12
months from the date of our auditor’s report
and relevant information of which we are aware
as a result of the audit has been included
● enquired of management and the directors as to
their knowledge of events or conditions that
may cast significant doubt on the Group's ability
to continue as a going concern, including the
potential impact of COVID-19 on the Group
● evaluated selected data and assumptions in
the Group’s cash flow forecasts for at least
12 months from the date of signing the
auditor’s report, including comparing
selected elements, such as purchase orders
from customers, in the cash flow forecasts to
existing contracts and agreements
● requested written representations from
management and the board of directors
regarding their plans for future action and the
feasibility of these plans
● evaluated whether, in view of the requirements
of Australian Accounting Standards, the
financial report provide adequate disclosures.
54
54
2020 ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT
Key audit matter
How our audit addressed the key audit matter
Carrying value of Inventory
(Refer to note C1) $9.3 million
We performed the following procedures, amongst
others:
At 30 June 2020 the Group held inventory with a
carrying value of $9.3 million. This inventory
comprises parts, consumables and sub-assemblies of
engines which will be used in the construction of
engines by the Group. Inventory for the Group is held
in Perth, Australia and Hood River, USA.
We focused on this area due the significance of the
inventory balance to the consolidated statement of
financial position and the complexities associated with
the allocation of direct labour and direct material costs
due to the multiple stages of assembly in the
construction of the engines.
● attended the inventory counts at Perth and
Hood River and traced a sample of our
inventory counts to the Group’s year end
inventory listings
● assessed the application of inventory costing
methodologies and whether this was
consistent with Australian Accounting
Standards
● compared a sample of inventory cost items
to third party invoices
● on a sample basis, evaluated the direct
labour costs allocated to engines in
inventory by inspecting timesheets and
agreeing the labour cost to the payroll
system
● on a sample basis, recalculated the
mathematical accuracy of sub-assembly bill
of materials that comprise engines in
inventory
● assessed the adequacy of the provision for
obsolete stock
● evaluated whether inventory was carried at
the lower of cost and net realisable value by
comparing costs per unit in inventory
against sale prices in approved purchase
orders received from customers.
55
55
2020 ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT
Key audit matter
How our audit addressed the key audit matter
Recognition and measurement of deferred tax
assets
(Refer to note A5) $5.4 million
At 30 June 2020, the Group recognised $5.4 million of
net deferred tax assets, which includes $5.1 million in
respect of tax losses carried forward to reduce future
tax payable in both Australia and the USA.
In determining the quantum of probable tax loss
utilisation, the Group made a number of judgements,
including assessing whether it has access to the carry
forward tax losses and its forecast taxable income in
both Australia and the USA for the period during which
the carry forward tax losses are available.
Assessing the appropriateness of recognising these
deferred tax assets was a key audit matter due to the
level of judgement applied by the Group in forecasting
future taxable income and the probability of the carry
forward tax losses being utilised.
We performed the following procedures, amongst
others:
● evaluated the accuracy of the Group’s
reconciliation of the available carry forward
tax losses at 30 June 2020 by agreeing the
opening balance of carry forward losses to
losses recorded in previous years’ tax
returns and agreeing the losses for the
current year to the current year calculations.
● together with PwC tax experts, we evaluated
the Group’s ability to access the carry
forward losses under Australian and USA
income tax legislation
● evaluated the Group’s calculation for the
recognition and measurement of the
temporary differences to be recognised as
deferred tax assets and liabilities in light of
the requirements of Australian Accounting
Standards
● obtained the calculation of forecast taxable
income for the operations of the Group to
evaluate the Group’s conclusion that there is
convincing evidence that sufficient taxable
income would likely be earned in the future
to utilise the tax losses for which deferred
tax assets have been recognised. We
evaluated selected data and assumptions in
the Group’s cash flow forecasts, including
comparing selected elements, such as
customer purchase orders, in the cash flow
forecasts to existing contracts and
agreements
● evaluated the adequacy of the disclosures
made in Note A5 in light of the
requirements of Australian Accounting
Standards.
56
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2020 ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2020, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly 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.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
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 the 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 at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
57
57
2020 ANNUAL REPORT
INDEPENDENT AUDITOR’S REPORT
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 7 to 15 of the directors’ report for the year
ended 30 June 2020.
In our opinion, the remuneration report of Orbital Corporation Limited for the year ended 30 June
2020 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Ben Gargett
Partner
Perth
28 August 2020
58
58
2020 ANNUAL REPORT
SHAREHOLDING DETAILS
SHAREHOLDING DETAILS
Class of Shares and Voting Rights
As at 17 August 2020 there were 4,854 shareholders of the ordinary shares of the Company. The voting rights attaching to the ordinary shares, set
out in Article 8 of the Company’s Constitution, subject to any rights or restrictions for the time being attached to any class or classes of shares, are:
a)
b)
at meetings of members or class of members, each member entitled to vote may vote in person or by proxy or representative; and
on a show of hands every person present who is a member has one vote, and on a poll every person present in person or by proxy or
representative has one vote for each ordinary share held.
Substantial Shareholders and Holdings as at 17 August 2020
UIL Limited
(as notified 13 April 2017)
Mitsubishi UFJ Financial Group, Inc.
Comprising voting power of over 20% in Morgan Stanley; and
voting power of 100% in Carol Australia Holdings Pty Limited
(as notified 2 August 2019)
Distribution of Shareholdings as at 17 August 2020
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Number of shareholders
Total Shares on Issue
Number of unmarketable parcels
Top 20 Shareholders as at 17 August 2020
23,627,904
30.45%
10,597,522
2,628,064
7,969,458
13.66%
2,718
1,273
395
415
53
4,854
77,586,923
-
% OF
SHARES
31.43
12.51
3.40
3.39
2.38
2.03
2.00
1.45
1.40
1.28
1.16
1.10
0.99
0.89
0.71
0.64
0.48
0.46
0.46
0.42
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
ANNAPURNA PTY LTD
MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LIMITED
DEBUSCEY PTY LTD
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
BIRKETU PTY LTD
SWEET AS DEVELOPMENTS PTY LTD
MR MICHAEL WILLIAM FORD & MRS NINA BETTE FORD
MR JOSHUA LEIGH SWEETMAN & MRS CAROLINE SWEETMAN
FUNDING SECURITIES PTY LTD
MR JOHN PAUL WELBORN & MS CAROLINE ANNE WELBORN
BNP PARIBAS NOMINEES PTY LTD
MR CHRISTOPHER IAN WALLIN & MS FIONA KAY MCLOUGHLIN & MRS SYLVIA FAY
BHATIA
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BOND STREET CUSTODIANS LIMITED
MR TODD MATHEW ALDER
MR TERRY STINSON
MR JOHN AYRES
TEXAS HOLDINGS PTY LTD
NUMBER OF
SHARES HELD
24,383,396
9,707,512
2,635,000
2,626,694
1,850,000
1,575,471
1,552,641
1,121,414
1,086,672
990,662
900,000
850,000
771,831
689,200
554,548
500,000
372,333
360,000
356,667
325,000
Top 20 Shareholders Total
53,209,041
68.58
The 20 largest shareholders hold 68.58% of the ordinary shares of the Company (2019: 71.89%).
On-market share buy-back
There is no current on-market buy-back.
59
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2020 ANNUAL REPORT | @OrbitalCorpASX
| OrbitalUAV
CORPORATE
INFORMATION
ABN 32 009 344 058
REGISTERED AND PRINCIPAL OFFICE
4 Whipple Street
Balcatta, Western Australia 6021
Australia
CONTACT DETAILS
Australia
Telephone: 61 (08) 9441 2311
Facsimile: 61 (08) 9441 2111
USA
Address: 210 Wasco Loop, Hood River, OR 97031, USA
Telephone: +1 541.716.5930
INTERNET ADDRESS
http://www.orbitaluav.com
Email: contact@orbitalcorp.com.au
DIRECTORS
J.P. Welborn, Chairman
T.M. Alder, Managing Director and Chief Executive Officer
S.B. Gallagher
F.K. Abbott
COMPANY SECRETARY
D. Bonomini
SHARE REGISTRY
Link Market Services Limited
Level 12, QV1 Building
250 St Georges Terrace
Perth, Western Australia 6000
Telephone: 61 (08) 9211 6670
SHARE TRADING FACILITIES
Australian Stock Exchange Limited (Code “OEC”)
AUDITORS
PricewaterhouseCoopers
125 St Georges Terrace
Perth, Western Australia 6000
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ORBITAL CORPORATION LIMITED ASX:OEC | ABN 32 009 344 058
A: 4 Whipple Street Balcatta, Western Australia, 6021 | PO Box 901, Balcatta, Western Australia, 6914
P : +61 (08) 9441 2311 | F : +61 (08) 9441 2345 | E : contact@orbitalcorp.com.au | ORBITALUAV.COM