31 August 2022
APPENDIX 4E
Preliminary Final Report for the year ended 30 June 2022
Reporting Period
The reporting period is for the year ended 30 June 2022 with the corresponding reporting period being
for the year ended 30 June 2021.
Results for announcement to the market
30 June 2022
A$'000
Revenue from continuing operations
Loss for the year
Loss after tax attributable to members
Down
Down
Down
50%
3%
3%
To
To
To
15,722
(11,131)
(11,131)
Net tangible assets per share (cents)
(1.70)
0.56
30 June 2022
30 June 2021
Dividends
There is no proposal to pay dividends for the year ended 30 June 2022.
Audit
This report is based on accounts which have been audited.
Commentary on results for the period
The 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:
Place: City of Perth Library
573 Hay Street
Perth, Western Australia
Date: 16 November 2022
-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 uncrewed 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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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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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.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
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 2022 and the auditor's report thereon.
Reference
Contents of Directors’ Report
Page
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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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2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022 DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
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 2022 (‘FY22’).
Overview
FY22 highlights
•
•
•
•
•
•
•
•
Delivery of $18.3 million revenue and other income
Secured second engine development program with Textron Systems
Successful Renounceable Entitlement Offer to raise $6.5 million
Completion of initial engineering contract for Singapore customer
New customers Skyways and Anduril Industries announced
Confirmation of involvement in Australian Army’s Land129 Phase 3 program
Facility visits from Prime Minister the Hon Scott Morrison and Minister for Defence the Hon Peter Dutton
Restructured for profitability in FY23
Orbital achieved revenue of $15.7 million in FY22, underpinned by two engine model production lines for customer Insitu Inc., a wholly owned subsidiary
of the Boeing Company (‘Boeing Insitu’). Revenue was down against prior year due to Boeing Insitu first engine model volume downgrade, delay of the
second engine model as production transferred from the USA to Australia and termination of the third engine model development program.
Other income of $2.5 million was achieved via Commonwealth Government grants and the delivery of operational milestones in the first half and
associated loan repayment offsets set out in the Company’s WA Government Loan Deed of Variation.
Customer diversification & engineering programs
During the year, the Company continued to progress its customer diversification strategy. A second engine development program was secured
with Textron Systems in October 2021 and memorandums of understanding (‘MoUs’) were signed with new customers Skyways and Anduril
Industries in October 2021 and May 2022 respectively. The additional program of work with Textron Systems demonstrates a growing
relationship with the largest supplier of uncrewed aircraft systems (‘UAS’) to the US Army.
New relationships with Skyways and Anduril represent opportunities for Orbital to demonstrate its superior heavy fuel engine capability for new
uncrewed aerial vehicles (‘UAVs’). Texas-based Skyways is an emerging leader in uncrewed cargo transport, currently working with the US
Navy. Anduril is a major disruptor within the global defence industry, pioneering products to support the next generation of military technology.
In addition to engineering work conducted for these customers, the Company also progressed programs with its major Singapore client and in
house product development.
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2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
Renounceable Entitlement Offer
In November 2021 the Company successfully completed a $6.5 million renounceable entitlement offer. The Entitlement Offer was well
supported by eligible shareholders who subscribed for a total of 8,417,063 new shares pursuant to their entitlements and a further 2,989,798
shares out of the shortfall pursuant to the Top Up Facility detailed in the Offer Booklet. Major shareholders, UIL Limited and First Sentier
Investors, along with all of Orbital's Directors, took up 100% of their available entitlements. In total, eligible shareholders subscribed for $5.7
million, with a shortfall of approximately $0.8 million allocated in accordance with the shortfall allocation policy.
Funds raised from the offer were directed towards: contracted engine development programs; enhancing the Company’s Australian production
facility capabilities; driving product research and development; and general working capital.
LAND129-3 Program & government relations
In March 2022 the Australian Department of Defence confirmed Orbital customer Insitu Pacific Pty Ltd as the preferred supplier of the
LAND129 Phase 3 Program – supplying Army’s next generation of tactical UAS.
As Boeing Insitu’s primary engine supplier, Orbital will manufacture the propulsion system that will power Boeing Insitu’s ‘Integrator’ platform
for this program.
Over the year, Orbital continued to engage with State and Federal Government, demonstrating the Company’s unique defence industry
capability. In recognition of Orbital’s growing reputation and presence within the Australian defence industry, the Company hosted Minister for
Defence the Hon Peter Dutton MP and Prime Minister the Hon Scott Morrison at its Balcatta facility in March 2022 and May 2022 respectively.
Financial results
The Company reported financial results for the year ended 30 June 2022, with revenue from continuing operations of $15.7M (2021:
$31.2M and a net loss after tax of $11.1M (2021: loss of $11.5M).
Operational net loss of $4.1M has been adjusted for the following one-off items:
•
•
•
•
•
One off inventory provision of $3M due to Boeing Insitu first engine volume downgrade and third engine model settlement;
One off third engine labour and facility expense of $0.6M;
Restructure cost of $0.2M;
FX Gain (net) of $0.7M; and
Australian Deferred Tax Asset of $4.1M relating to tax losses available for use against future Australian taxable income was written off in the
first half of FY22. The tax losses remain available for utilisation but are not recognised as an asset on the balance sheet.
The Company reports a balance sheet with cash and receivables of $4.0M (2021: $7.7M) and net current liabilities of $5.0M (2021: $0.5M).
Net cash outflow from operating activities during the period was $4.1M (2021: net cash outflow $1.6M). The net cash outflow increase was due to the third
engine model unrecovered cost of $0.9M, second engine model production delay from the transfer of the production from the US to Australia of $0.6M and
material purchases supporting production and engineering programs.
The annual report for the year ended 30 June 2022 contains an independent auditor’s report which highlights the existence of a material uncertainty that
may cast significant doubt about the Group’s ability to continue as a going concern. For further information, refer to Note 1.J to the financial statements,
together with the auditor’s report.
WA Government loan
In August 2021, the business agreed a deed of variation replacing the previous repayment schedule with one that allows for repayments to be offset in
accordance with specified clauses being met by certain dates/milestones. As such, the repayment amounts cease to be a portion of the debt if Orbital
demonstrates, to the satisfaction of the Minister, that the relevant milestones set out in the deed of variation have been met by Orbital on or before the
repayment dates.
For FY22 H1, the operational milestones of $1.5M were achieved and the loan repayments were offset, reducing the outstanding loan value to $8.5M.
With the cancellation of the third engine model for Boeing Insitu, the FY22 H2 operational milestones targets were not achieved. The WA Government
agreed to defer the loan repayments for the first half of the new financial year to agree a revised loan repayment schedule and loan offset operational
milestones.
Shareholder returns
Closing share price ($)1
Market capitalisation ($m)
2022
0.23
20.93
2021
0.83
64.46
Basic EPS (cents) from operations
(12.92)
(14.74)
1 as at 30 June
2020
0.75
58.2
2.40
2019
0.30
23.2
(7.63)
2018
0.36
27.9
2.87
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2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
Management transition
On 5 May 2022, Mr Mikael Bergman was appointed Chief Technical Officer. Mr Bergman has spent more than 20 years in leadership
roles at Husqvarna in Sweden. As a Senior Technical Advisor at Husqvarna, Mr Bergman focused on the company’s overall technical
roadmap and architecture, and leading large, complex development programs from conception to production. With his extensive 2-
stroke engineering knowledge and broader product design and development experience, Mr Bergman’s appointment supports Orbital’s
aspirations to grow the business within the uncrewed aerospace market.
Change in operations
As part of Orbital’s cost reduction measures, the Company transitioned its engine build work from Hood River, USA and consolidated all new
production work in Balcatta, Australia. The Hood River operation continued to conduct sustainment work on the Company’s production
engines.
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 at its operations in Australia
and the USA.
Through robust planning and the commitment of our people, Orbital’s ability to continue manufacturing at our operations and our product
demand was not impacted directly by the COVID-19 pandemic. We continued to work closely with our global supply chain to deliver on our
production commitments.
The Company will continue to support the public health effort to minimise the spread of COVID-19.
Outlook
Continued investment in new product development has supported Orbital’s successful customer diversification strategy over the past two
years. Adding the likes of Textron Systems, one of Singapore’s largest defence companies, Skyways and Anduril Industries to the Company's
customer portfolio during this period demonstrates the progress made and the growing global reputation of Orbital UAV’s technology and
capabilities.
In Australia, the Company’s capabilities are now being applied within the Australian Defence Force via the supply of engines to Insitu Pacific
Pty Ltd for Army’s LAND129 Phase 3 Program. Involvement in this program gives prominence to the Company’s unique technology and
capabilities and will support Orbital UAV’s objective to identify further opportunities within the domestic defence market.
In FY23, production from the Company’s two established Boeing Insitu engine model lines will be complimented by a strong pipeline of
engineering programs from the Company’s additional customers, Textron, Anduril, Skyways and one of Singapore’s largest defence
companies. Each of these engine development programs will transition into revenue generating production lines over the next 18-24 months.
Working with an expanded group of customers with confirmed production orders and engineering programs during FY23 represents a pathway
back to improved revenue and a sustainable and profitable business.
Revenue for FY23 is forecast at $20M-$25M and the Company is targeting net profitability.
The Chairman and Managing Director would like to thank the ongoing commitment of the Company’s shareholders and staff.
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2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
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 Equatorial Resources Limited, an ASX listed (ASX: EQX) iron ore exploration and development company.
Mr Welborn is a Chartered Accountant with a Bachelor of Commerce degree from the University of Western Australia and is a Fellow of the
Institute of Chartered Accountants in Australia and New Zealand and holds memberships of the Australian Institute of Company Directors
(AICD) and the Australasian Institute of Mining and Metallurgy (AusIMM).
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 charitable organisations and is a former
Commissioner of Tourism Western Australia.
Mr Welborn also serves as a Director of Equatorial Resources Limited (appointed August 2010), and as a Non-Executive Director of Apollo
Minerals Ltd (appointed February 2021) and Fenix Resources Limited (appointed November 2021).
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, director, and Executive GM of global businesses with companies including Vix
Technology Ltd, Siemens AG, Landis & Gyr AG and CCRTT Ltd..
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 and Chair of ICM Mobility Ltd (an investment holding company for mobility services
companies in transportation including Vix Technology Ltd, Littlepay Ltd, Kuba Payments Ltd, Snapper Services Ltd, Unwire Ltd), Transact1 Pty
Ltd (a financial services provider for cash management optimisation), DTI Ltd (ASX listed passenger information and surveillance business).
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.
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2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
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
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
5
5
4
5
5
5
5
5
-
-
4
4
-
-
4
4
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 operations 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
Orbital and Boeing Insitu announced a settlement agreement on the 30 August 2022 for third engine model cost reimbursement dispute.
The settlement includes:
•
•
•
an immediate advance payment to Orbital of $1.8M with the amount to be offset against future Orbital engine production;
agreement both parties will not seek to recover outstanding cost; and
an agreement to negotiate in good faith an extension to the current supply agreement through a further five-year maintenance, repair and overhaul
support contract.
The impact of the settlement was incorporated as an adjusting event to the estimate of the provision for inventory, as disclosed in Note C.1. In
FY23, all materials outlined in the agreement are required to be delivered to Boeing Insitu. As a result, the deferred revenue $2.4M will be
released and recognised as revenue with a nil net profit impact.
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 2001.
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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2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
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
2022 is as follows:
Director
J P Welborn
T M Alder
S Gallagher
K Abbott
Total
Ordinary
Shares
991,667
434,389
116,668
35,000
Performance
Rights
-
1,361,650
-
-
1,577,724
1,361,650
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 and/or
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 Group engaged with
important. For
PricewaterhouseCoopers in non-audit services that included Tax & other Corporate advisory services. Refer to Note F.6 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.
the year ended June 2022,
the Group are
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 fourth 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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2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
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 2022.
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 2022 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 Cathcart1 (Chief Technical Officer)
David Bonomini (Chief Financial Officer & Company Secretary)
Martin Johnston2 (Chief Operating Officer)
Mikael Bergman3 (Chief Technical Officer)
Non-Executive Directors
John P Welborn (Chairman)
Steve Gallagher (Chairman of the Audit & Risk Committee)
Kyle Abbott (Member of the Audit & Risk Committee)
1 Mr. Cathcart resigned as Chief Technical Officer on 8 October 2021
2 Mr. Johnston became a KMP on 1 July 2020 and resigned as Chief Operating Officer on 18 February 2022
3 Mr. Bergman became a KMP on 05 May 2022
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)
2022
0.23
20.93
2021
0.83
64.46
Basic EPS (cents) from operations
(12.92)
(14.74)
2020
0.75
58.2
2.40
2019
0.30
23.2
(7.63)
2018
0.36
27.9
2.87
Short term incentives were paid in 2020 and 2018. No short term incentives were paid in 2022, 2021 and 2019.
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. No STI were awarded during the year ended 30 June 2022 (2021: 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 (2018 LTI Plan).
During the 2021 financial year, the first tranche of 475,675 performance rights vested in full under the 2018 LTI Plan and the remaining 342,213
performance rights expired on 10 August 2020. No rights have vested under the 2020 LTI Plan during the year ended 30 June 2022.
The remuneration of Non-Executive Directors of the Company consists only of Directors’ fees. Director fees were not reviewed or adjusted
during the 2022 financial year.
Remuneration Report at 2021 AGM
The 2021 Remuneration Report received positive shareholder support at the 2021 AGM with more than 75% of votes cast in favour.
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2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
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.
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 2022
There were no changes to the remuneration structure of executives or Directors during the 2022 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 2022 (2021: 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.
9
9
2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
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 2022 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 2022 financial year is explained below:
Summary of executive KMP remuneration for the 2022 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 15.
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.
10
10
2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
Actual STI performance for the year ending 30 June 2022
The following table outlines the proportion of the maximum STI earned in relation to the 2022 financial year. Please refer to Table 1 on page
15 for further details on the actual STI paid to KMPs for the year ended 30 June 2022.
Maximum STI opportunity
(Percentage of fixed remuneration)
Percentage of
maximum STI earned
Todd M Alder
Geoff P Cathcart
David Bonomini
Martin Johnston
Mikael Bergman
Long-term incentive (“LTI”)
40%
20%
20%
20%
20%
0%
0%
0%
0%
0%
Under the LTI, the grant of performance rights and share acquisition performance rights 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 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
Mr G.Cathcart
Mr M Johnston
Mr D Bonomini
Total
Managing Director and CEO
Chief Technical Officer
Chief Operating Officer
Chief Financial Officer
Performance
rights issued
Tranche 1
Performance
rights issued
Tranche 2
340,000
116,284
60,091
19,391
535,766
255,000
87,213
0
0
342,213
Total
595,000
203,497
60,091
19,391
877,979
During year ended 30 June 2021, the first tranche of 535,766 performance rights vested in full. The remaining 342,213 performance
rights expired on 10 August 2020.
11
11
2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
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.
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
10 August 2020
23 May 2018
31.6 cents
647,250
647,250
The performance rights vested in full during the year ended 30 June 2021.
2020 Performance Rights Plan – Long-term incentives
The Company introduced a new Performance Rights Plan (“2020 LTI Plan”) which was approved by shareholders on 24 November 2020.
Performance rights were issued to the Managing Director and CEO (“CEO LTIs”) and other executives (“Executive LTIs”) and employees
under the 2020 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)
30
September
2023
04
December
2020
28 October
2020
Fair
value/right
(CEO LTIs)
Fair
value/right
(Exec LTIs)
98 cents
97 cents
Vesting
of rights
50 per
cent
1
2
The Company having a 90-day
VWAP of at least $1.50 per
share between 01 October
2020 and 30 September 2023.
The Company having a 60-day
VWAP of at least $2.50 per
share between 01 October
2020 and 30 September 2023.
30
September
2023
04
December
2020
28 October
2020
73 cents
76 cents
50 per
cent
The allocation of performance rights to KMPs was as follows:
Executive
Title
Performance rights
issued Tranche 1
Performance rights
issued Tranche 2
Mr T.Alder
Mr G.Cathcart
Mr D.Bonomini
Mr M.Johnston
Total
Managing Director and CEO
Chief Technical Officer
Chief Financial Officer
Chief Operating Officer
234,000
77,500
70,000
66,749
448,249
140,400
46,500
42,000
40,049
268,949
Total
374,400
124,000
112,000
106,798
717,198
During year ended 30 June 2022, the performance rights issued to Mr G Cathcart and Mr M Johnston lapsed as they resigned in
current year.
12
12
2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
Performance Rights Plan – 2018 Share Acquisition Performance Rights (“2018 SAPR Plan”)
When is performance measured?
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.
Performance rights may vest at any time during the three-year period to 30 September 2023, 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 under the 2020 LTI Plan for the year ended 30 June 2022.
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.
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 $1.14 per share. The vesting of performance rights will only occur where the Company’s share price increases to $1.50 and
$2.50 per share as set out in the abovementioned tables.
10 August 2020
23 May 2018
31.6 cents
647,250
Actual LTI performance for the year ending 30 June 2022
During the financial year, no rights vested under the 2020 LTI Plan or for any other earlier plans issued in previous financial years.
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 2022 (2021: 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 3
D Bonomini
M Johnston
M Bergman
$390,000
$291,856
$297,372
$290,000
$280,000
Unlimited
Unlimited
Unlimited
Unlimited
Unlimited
3 months
3 months
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 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
13
13
Performance condition
Expiry date
Grant date
Fair value/right
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
The performance rights vested in full during the year ended 30 June 2021.
2020 Performance Rights Plan – Long-term incentives
Total number of
rights granted
647,250
The Company introduced a new Performance Rights Plan (“2020 LTI Plan”) which was approved by shareholders on 24 November 2020.
Performance rights were issued to the Managing Director and CEO (“CEO LTIs”) and other executives (“Executive LTIs”) and employees
under the 2020 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)
Fair
Fair
value/right
(CEO LTIs)
value/right
(Exec LTIs)
The Company having a 90-day
30
04
28 October
98 cents
97 cents
VWAP of at least $1.50 per
share between 01 October
2020 and 30 September 2023.
September
December
2020
2023
2020
The Company having a 60-day
30
04
28 October
73 cents
76 cents
VWAP of at least $2.50 per
share between 01 October
2020 and 30 September 2023.
September
December
2020
2023
2020
1
2
The allocation of performance rights to KMPs was as follows:
Executive
Title
Performance rights
Performance rights
issued Tranche 1
issued Tranche 2
Managing Director and CEO
Chief Technical Officer
Chief Financial Officer
Chief Operating Officer
234,000
77,500
70,000
66,749
448,249
140,400
46,500
42,000
40,049
268,949
Mr T.Alder
Mr G.Cathcart
Mr D.Bonomini
Mr M.Johnston
Total
current year.
During year ended 30 June 2022, the performance rights issued to Mr G Cathcart and Mr M Johnston lapsed as they resigned in
Vesting
of rights
50 per
cent
50 per
cent
Total
374,400
124,000
112,000
106,798
717,198
12
2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
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 2022
AGM.
Fees
Non-Executive Directors do not receive retirement benefits other than statutory superannuation contributions, where required, nor do they participate in
any incentive programs.
The Chairman of the Board receives a fee of $120,548 (2021: $120,000) and the Non-Executive Directors receive a base fee of $60,000 (2021:
$60,000).
The remuneration of Non-Executive Directors for the year ended 30 June 2022 and 30 June 2021 is detailed in Table 1 of this report on page
15.
The maximum annual aggregate fee pool limit is $400,000 and was approved by shareholders.
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
2022.
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.
14
14
2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
Statutory tables
Table 1 - Compensation of Non-Executive Directors and executive KMP's for the year ended 30 June 2022 and 2021
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
t
y
r
a
e
n
o
m
-
n
o
N
l
t
a
o
T
s
n
o
i
t
u
b
i
r
t
n
o
C
s
t
n
e
m
e
l
t
i
t
n
E
e
v
a
e
L
n
a
P
l
s
t
h
g
R
i
e
c
n
a
m
r
o
f
r
e
P
n
o
i
t
a
r
e
n
u
m
e
R
l
t
a
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
t
d
e
a
e
r
e
c
n
a
m
r
o
f
r
e
p
n
o
i
t
a
u
n
n
a
r
e
p
u
S
l
r
e
y
o
p
m
E
$
$
$
$
$
$
$
$
%
Non-executive Directors
J Welborn
2022
109,589
Chairman and Director (Non-executive)
2021
109,589
S Gallagher
Director (Non-executive)
K Abbott
Director (Non-executive)
Total Consolidated, all non-executive
directors
Executive Director
T Alder
Managing Director and Chief Executive
Officer
Executive Key Management Personnel
2022
2021
2022
2021
60,000
60,000
60,000
60,000
2022
229,589
2021
229,589
2022
366,432
2021
366,958
D Bonomini
2022
273,270
Chief Financial Officer
2021
258,306
G Cathcart (1)
2022
327,442
Chief Technical Officer
2021
277,675
M Johnston (2)
2022
179,329
Chief Operating Officer
2021
250,813
M Bergman (3)
Chief Technical Officer
Total Consolidated,
Total Consolidated, Executive Key
Management Personnel
2022
2021
31,329
-
2022
1,201,608
2021
1,153,752
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58,692
-
-
109,589
10,959
109,589
10,411
60,000
60,000
60,000
60,000
-
-
-
-
229,589
10,959
229,589
10,411
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
120,548
120,000
60,000
60,000
60,000
60,000
240,548
240,000
-
-
-
-
-
-
-
-
366,432
23,568
27,727
95,170
512,897
19%
366,958
21,694
12,382
84,356
485,390
17%
273,270
23,568
5,615
27,964
330,417
258,306
21,694
7,875
23,064
310,939
8%
7%
327,442
336,367
9,304
29,455
(298,414)
(20,951)
17,381
(121%)
22,026
26,765
424,613
6%
179,329
16,395
(30,760)
(18,045)
146,919
(12%)
250,813
21,694
13,111
21,993
303,663
-
-
-
-
31,329
3,133
3,133
-
-
-
-
-
37,585
-
-
-
-
1,201,608
70,290
(310,837)
84,138
1,045,199
8%
58,692
1,212,444
94,537
55,394
156,178
1,514,605
10%
6%
0%
-
1. Mr. Cathcart was seconded to the USA facility during the financial year ended June 2021. Mr. Cathcart resigned as Chief Technical Officer on 8 October 2021.
2. Mr. Johnston resigned as Chief Operating Officer on 18 February 2022
3. Mr. Bergman became a KMP on 05 May 2022
15
15
2022 ANNUAL REPORTDIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
Table 2 – Summary of CEO and Executive
T Alder
Director and Chief Executive
Officer
G Cathcart
Chief Technical Officer
D Bonomini
Chief Financial Officer
M Johnston
Chief Operating Officer
T Alder
Director and Chief Executive
Officer
G Cathcart (2)
Chief Technical Officer
D Bonomini
Chief Financial Officer
M Johnston (3)
Chief Operating Officer
Type of equity
Grant date
Expiry date
Equity rights
23 May 2018
10 August 2020
Equity rights
27 October 2017
10 August 2020
Equity rights
27 October 2017
10 August 2020
Equity rights
23 May 2018
10 August 2020
Equity rights
23 May 2018
10 August 2020
Equity rights
23 May 2018
10 August 2020
Equity rights
23 May 2018
10 August 2020
Equity rights
23 May 2018
10 August 2020
Equity rights
23 May 2018
10 August 2020
Equity rights
04 December 2020
30 September 2023
Equity rights
04 December 2020
30 September 2023
Equity rights
28 October 2020
30 September 2023
Equity rights
28 October 2020
30 September 2023
Equity rights
28 October 2020
30 September 2023
Equity rights
28 October 2020
30 September 2023
Equity rights
28 October 2020
30 September 2023
Equity rights
28 October 2020
30 September 2023
Awarded
but not
vested
647,250
340,000
255,000
116,284
87,213
19,391
-
60,091
-
234,000
140,400
77,500
46,500
70,000
42,000
66,749
40,049
Vested
% of total
vested
Lapsed
647,250
100%
340,000
100%
-
-
-
255,000
116,284
100%
-
-
-
87,213
19,391
100%
-
-
60,091
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
77,500
46,500
-
-
66,749
40,049
Fair
value
of
equity
($) 1
0.316
0.365
0.278
0.209
0.138
0.209
0.138
0.209
0.138
0.808
0.538
0.841
0.614
0.841
0.614
0.841
0.614
1.
2.
3.
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 | trinomial
valuation 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
Mr. Cathcart resigned as Chief Technical Officer on 8 October 2021
Mr. Johnston resigned as Chief Operating Officer on 18 February 2022
Table 3 – KMP share and equity holdings
Details of shares and rights help by KMP including their personally related entities for the 2022 financial year are as follows:
Type of equity
(1)
Opening
holding at
1 July 2021
Rights allocated in
2022
Rights lapsed in
2022
Net Changes
other
Closing
holding at
30 June 2022 (2)
Non-executive Directors
J Welborn
S Gallagher
K Abbott
Executive Directors
T Alder
Executives
G Cathcart (3)
D Bonomini
M Johnston (4)
Shares
Shares
Shares
850,000
100,000
30,000
Equity Rights
Shares
1,361,650
372,333
Equity Rights
Shares
Equity Rights
Shares
Equity Rights
Shares
240,284
272,720
131,391
-
166,889
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
141,667
16,668
5,000
-
62,056
(240,284)
(272,720)
-
-
(106,798)
(60,091)
-
-
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.
3. Mr. Cathcart resigned as Chief Technical Officer on 8 October 2021
4. Mr. Johnston resigned as Chief Operating Officer on 18 February 2022
End of Remuneration Report
16
991,667
116,668
35,000
1,361,650
434,389
-
-
131,391
-
-
-
16
2022 ANNUAL REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
FOR THE YEAR ENDED 30 JUNE 2022
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 31 August 2022
17
17
2022 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 2022, 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.
Ian Campbell
Partner
PricewaterhouseCoopers
Perth
31 August 2022
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.
18
2022 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
1.A 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
20
21
22
23
24
28
28
30
31
32
34
35
37
39
40
40
41
41
41
42
D. Debt and capital
D.1 Borrowings
D.2 Share capital
D.3 Reserves
E. Other assets and liabilities
E.1 Provisions
F. Other notes
F.1 Key management personnel compensation
F.2 Related parties
F.3 Share based payments
F.4 Subsidiaries
F.5 Parent entity information
F.6 Auditor remuneration
F.7 Events after the end of the reporting period
F.8 Other accounting policies
F.9 New accounting standards
Directors' declaration
Independent auditor's report
Shareholding details
Corporate information
43
44
44
45
46
46
47
48
48
49
49
49
49
50
51
58
59
20
19
2022 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 2022
for the year ended 30 June 2022
Notes
A.2
A.3
A.4(d)
A.4(a)
B.2
A.4(b)
B.1, C.7
E.1
A.4(c)
A.5
Continuing operations
Sale of goods
Engineering services revenue
Royalty and licence revenue
Interest revenue
Total revenue
Other income
Materials and consumables expenses
Write down of excess inventory
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
Asset impairment expenses
Warranty expenses
Other expenses
Foreign exchange gains/(losses)
Loss before income tax from continuing operations
Income tax expense
Loss for the year from continuing operations
Other comprehensive income
Items that will not be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Total comprehensive loss for the year
Attributable to:
Equity holders of the parent
Total comprehensive loss for the year
Earnings per share
Basic loss for the year attributable to ordinary equity holders of the parent (cents)
Diluted loss for the year attributable to ordinary equity holders of the parent (cents)
A.6
A.6
The accompanying notes form part of the financial statements.
20
2022
$'000
12,641
3,075
5
1
15,722
2,543
(6,511)
(2,980)
(9,641)
(980)
(276)
(526)
(542)
(306)
(981)
(386)
(1,047)
(465)
(670)
(75)
-
(91)
(580)
731
(7,061)
(4,070)
(11,131)
(495)
(11,626)
(11,626)
(11,626)
(12.92)
(12.92)
2021
$'000
25,994
5,054
150
4
31,202
537
(14,837)
(401)
(11,797)
(1,576)
(303)
(725)
(723)
(227)
(1,074)
(414)
(1,251)
(473)
(1,508)
335
(2,514)
(2,083)
(1,571)
(1,034)
(10,437)
(1,008)
(11,445)
464
(10,981)
(10,981)
(10,981)
(14.74)
(14.74)
21
2022 ANNUAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
as at 30 June 2022
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
Inventories
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
Lease liabilities
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.
Notes
C.3
C.4
C.2
C.1
B.2
A.5
B.1
C.1
C.7
C.5
C.6
D.1
C.7
E.1
C.7
E.1
D.2
D.3
2022
$'000
2021
$'000
2,363
586
1,007
11,074
172
184
15,386
3,402
-
1,705
1,776
341
-
7,224
22,610
3,060
4,046
8,486
113
766
3,892
20,363
-
48
48
20,411
2,199
3,116
585
4,004
12,767
245
334
21,051
1,981
4,070
1,647
-
857
180
8,735
29,786
1,742
4,285
9,986
-
982
4,530
21,525
847
72
919
22,444
7,342
37,683
2,605
(38,089)
2,199
31,265
3,035
(26,958)
7,342
22
21
2022 ANNUAL REPORT CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2022
)
s
e
s
s
o
l
l
d
e
t
a
u
m
u
c
c
A
(
$'000
(26,958)
(11,131)
-
(11,131)
-
-
(38,089)
(15,513)
(11,445)
-
(11,445)
-
(26,958)
l
a
t
i
p
a
c
e
r
a
h
S
D.2
$'000
31,265
-
-
-
6,374
44
37,683
31,220
-
-
-
45
31,265
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
2,600
-
-
-
-
65
2,665
2,424
-
-
-
176
2,600
e
v
r
e
s
e
r
l
n
o
i
t
a
s
n
a
r
t
y
c
n
e
r
r
u
c
i
n
g
e
r
o
F
D.3
$'000
435
-
(495)
(495)
-
-
(60)
(29)
-
464
464
-
435
y
t
i
u
q
e
l
a
t
o
T
$'000
7,342
(11,131)
(495)
(11,626)
6,374
109
2,199
18,102
(11,445)
464
(10,981)
221
7,342
Notes
At 1 July 2021
Loss for the year
Foreign currency translation
Total comprehensive loss for the year
Issue of ordinary shares
Share based payments
At 30 June 2022
At 1 July 2020
Loss for the year
Foreign currency translation
Total comprehensive loss for the year
Share based payments
At 30 June 2021
The accompanying notes form part of the financial statements.
22
23
2022 ANNUAL REPORT
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2022
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Interest received
Interest paid
Net cash used in operating activities
Cash flows from investing activities
Purchase of plant and equipment
Payments for intangible asset
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issues of shares
Share issue transaction costs
Principal elements of lease payments
Net cash (used in)/from financing activities
Net 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
The accompanying notes form part of the financial statements.
Notes
C.3
D.2
C.3
2022
$'000
18,918
(22,886)
1
(127)
(4,094)
(505)
(1,697)
(2,202)
6,479
(105)
(986)
5,388
(908)
3,116
155
2,363
2021
$'000
32,991
(34,498)
4
(187)
(1,690)
(735)
(1,386)
(2,121)
-
-
(1,070)
(1,070)
(4,881)
8,749
(752)
3,116
24
23
2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
1.A 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 31
August 2022.The Directors have the power to amend
and reissue the financial report.
1.B 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 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 will not significantly
impact the Group's accounting policies, financial
position or performance.
1.C 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.
The exchange differences arising on translation for
consolidation are recognised in the Foreign Currency
Translation Reserve (FCTR), via Other Comprehensive
Income (OCI). On disposal of a foreign operation, the
component of FCTR relating to that particular foreign
operation is reclassified to profit or loss.
1.D 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.
1.E 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.
1.F 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.
24
25
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
1.G 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 has 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 2022 the Group's strategy
remained unchanged from 2021, the gearing ratio at 30 June 2022 was 386% (2021: 136%). Gearing ratios are
calculated by dividing net debt (as per note D.1) 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
Section C
Section C
Section C
Section D
Foreign currency risk
Liquidity risk
Interest Rate risk
Credit risk
Capital risk management
Page
Page
Page
Page
Page
27
38
39
39
43
1.H 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 Recoverability of deferred tax assets
B.1 Impairment of non-current assets
C.1 Recoverable value of inventory
Page
33
36
39
1.I Impact of COVID-19
As a defence industry supplier, Orbital UAV’s business has been largely shielded from the significant economic
downturn driven by the COVID-19 pandemic. The defence sector has remained resilient through the pandemic.
Through proactive and ongoing risk mitigation, the Company has ensured its people remain safe and well during this
period, and operations in Australia and the USA have continued with minimal disruption.
The Company has continued to deliver on its production commitments and has been focused on managing and
supporting its global supply chain where necessary. Distribution of our products continued through our established
logistics providers.
26
25
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
NOTES TO THE FINANCIAL STATEMENTS
1.J 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.
For the year ended 30 June 2022, the Group recorded an after tax loss of $11,131,000 and operating cash outflows
of $4,094,000. As at 30 June 2022, the Group had net assets of $2,199,000 and net current liabilities of $4,977,000.
The Group also had cash outflows from investing activities of $2,202,000 and cash inflows from financing activities of
$5,388,000.
The going concern assumption is based on the Group’s cash flow projections and existing cash reserves as at 30
June 2022 and covers a period of at least twelve months from the date of this report.
The projections show that the continuing viability of the Group and its ability to continue as a going concern and meet
its debts and commitments as they fall due is dependent upon a number of factors including:
• Renegotiating the terms of the WA government loan, as described in note D.1, such that repayments are not
required within the forecast period. Management intends to recommence discussions with the WA government in the
coming weeks.
• Achieving forecasted operational performance and positive operational cash flows from the existing engine
production and engineering programs.
• Reducing overheads through cost saving initiatives.
• Securing funding above and beyond the Group’s existing committed facilities if required.
As a result of these matters, there is a material uncertainty that may cast significant doubt about the Group's ability to
continue as a going concern and therefore that the Group may be unable to realise its assets and discharge its
liabilities in the normal course of business.
Exposure
The Group’s exposure to USD at the reporting date for the years ended 30 June 2022 and 2021 are as follows:
The Directors consider that the Group will be successful in the above matters and have therefore prepared the
financial report on a going concern basis.
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
for the year ended 30 June 2022
A. CURRENT YEAR PERFORMANCE
In this section
Group for and at the end of the reporting period.
A.1 Operating segments
A.2 Revenue
A.3 Other income
A.4 Expenses
A.5 Taxes
A.6 Earnings per share
Financial risks in this section
Foreign currency risk
Page 28
Page 28
Page 30
Page 31
Page 32
Page 34
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.
2022
A$'000
2021
A$'000
832
954
511
2,531
2,858
192
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
A$27,160,000).
Sensitivity
For the year ended 30 June 2022, revenue from external customers denominated in USD was A$12,180,000 (2021:
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.
2022
2021
Change in
Increase / (Reduction) on
AUD/USD rate
profit before taxes
+10%
-10%
+10%
-10%
(116)
142
(472)
577
26
27
28
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
A. CURRENT YEAR PERFORMANCE
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.1 Operating segments
A.2 Revenue
A.3 Other income
A.4 Expenses
A.5 Taxes
A.6 Earnings per share
Page 28
Page 28
Page 30
Page 31
Page 32
Page 34
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 2022 and 2021 are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
2022
A$'000
2021
A$'000
832
954
511
2,531
2,858
192
For the year ended 30 June 2022, revenue from external customers denominated in USD was A$12,180,000 (2021:
A$27,160,000).
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.
2022
2021
Change in
AUD/USD rate
+10%
-10%
+10%
-10%
Increase / (Reduction) on
profit before taxes
(116)
142
(472)
577
28
27
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022A. CURRENT YEAR PERFORMANCE2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
A. CURRENT YEAR PERFORMANCE
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 2022
Segment revenue
EBIT
Finance expenses
Loss before income tax
Assets
Liabilities
Net assets
A.2 Revenue
Revenue
Total external revenue
Timing of revenue recognition
At a point in time
Over time
Australia
2022
$'000
15,722
(5,921)
(645)
(6,566)
2021
$'000
26,905
(437)
(1,469)
(1,905)
Australia
2022
$'000
22,457
20,199
2,258
2021
$'000
25,129
19,362
5,767
US
Consolidated
2022
$'000
-
(470)
(25)
(495)
2021
$'000
4,297
(8,493)
(39)
(8,532)
2022
$'000
15,722
(6,391)
(670)
(7,061)
2021
$'000
31,202
(8,930)
(1,508)
(10,437)
US
Consolidated
2022
$'000
153
212
(59)
2021
$'000
4,657
3,082
1,575
2022
$'000
22,610
20,411
2,199
2021
$'000
29,786
22,444
7,342
Australia
2022
$'000
15,722
15,722
2021
$'000
26,905
26,905
US
Consolidated
2022
$'000
-
-
2021
$'000
4,297
4,297
2022
$'000
15,722
15,722
2021
$'000
31,202
31,202
12,647
3,075
15,722
21,851
5,054
26,905
-
-
-
4,297
-
4,297
12,647
3,075
15,722
26,148
5,054
31,202
Revenues of approximately $11,570,000 (2021: $26,462,000 ) were 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:
28
29
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022A. CURRENT YEAR PERFORMANCE2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
A. CURRENT YEAR PERFORMANCE
A.1 Operating segments
Identification of reportable segments
resources.
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
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 2022
Segment revenue
EBIT
Finance expenses
Loss before income tax
Assets
Liabilities
Net assets
A.2 Revenue
Revenue
Total external revenue
Timing of revenue recognition
At a point in time
Over time
Australia
US
Consolidated
Australia
2022
$'000
2021
$'000
15,722
26,905
(5,921)
(645)
(6,566)
(437)
(1,469)
(1,905)
2022
$'000
22,457
20,199
2,258
2021
$'000
25,129
19,362
5,767
2022
$'000
2021
$'000
2022
$'000
15,722
15,722
26,905
26,905
12,647
3,075
15,722
21,851
5,054
26,905
US
Consolidated
2022
$'000
-
(470)
(25)
(495)
2022
$'000
153
212
(59)
-
-
-
-
-
2021
$'000
4,297
(8,493)
(39)
(8,532)
2021
$'000
4,657
3,082
1,575
2021
$'000
4,297
4,297
4,297
-
4,297
2022
$'000
15,722
(6,391)
(670)
(7,061)
2022
$'000
22,610
20,411
2,199
2021
$'000
31,202
(8,930)
(1,508)
(10,437)
2021
$'000
29,786
22,444
7,342
2022
$'000
15,722
15,722
2021
$'000
31,202
31,202
12,647
3,075
15,722
26,148
5,054
31,202
Australia
US
Consolidated
Revenues of approximately $11,570,000 (2021: $26,462,000 ) were 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:
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
A. CURRENT YEAR PERFORMANCE
A.2 Revenue (continued)
· 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.
· 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.
· 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.
· 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.
2022
$'000
2021
$'000
-
844
4,046
4,285
29
30
29
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022A. CURRENT YEAR PERFORMANCE2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
A. CURRENT YEAR PERFORMANCE
A. CURRENT YEAR PERFORMANCE
A.3 Other income
Grant income
Rental income
Research and development grant
Other
Recognition and measurement
· Grant income
2022
$'000
2,093
122
134
194
2,543
2021
$'000
100
111
89
237
537
In FY22, Orbital achieved the relevant operational milestones and reduced the WA government loan value by $1.5M.
Accounting standards require interest to be imputed while the loan is interest free. The benefit of the loan reduction of
$1.5M and it being interest free $0.6M are recognised as grant income, in accordance with AASB 120 Accounting for
Government Grants. Refer to Note D.1 for further details.
In FY21, temporary cash flow boosts were provided by the government to support small and medium businesses and not-
for-profit organisations during the economic downturn associated with COVID-19. Eligible businesses who employ staff
received between $20,000 to $100,000 in cash flow boost amounts by lodging their activity statements up to the month or
quarter of September 2020. During third quarter of FY21, the Company received $100,000 in cash flow boost amounts from
the government.
· Research and development grant
The Group received grants from the Commonwealth of Australia through the CDIC Defence Global Competitiveness Grants
Program administered by the Department of Industry, Science, Energy and Resources. There are no unfulfilled conditions
or contingincies attached to the grants.
· Other income
The other income represents non-recurring IP sales.
30
31
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022A. CURRENT YEAR PERFORMANCE2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
A. CURRENT YEAR PERFORMANCE
A. CURRENT YEAR PERFORMANCE
A.4 Expenses
(a)
Employee benefits expense
(d) Materials and consumable expenses
Salaries and wages
Defined contribution plans
Share based payments (Note F.3)
Annual and long service leave
Other personnel costs
(b)
Finance costs
Interest expense
Loan modification loss
(c)
Other expenses
Administration
Marketing and investor relations
Corporate consulting services
Freight
Other
2022
$'000
6,831
876
109
1,008
817
9,641
2022
$'000
670
-
670
2022
$'000
118
100
147
166
49
580
2021
$'000
8,368
1,049
241
992
1,147
11,797
2021
$'000
890
618
1,508
2021
$'000
314
99
1,060
43
55
1,571
Raw materials and consumables
Change in inventories
Recognition and measurement
2022
$'000
4,818
1,693
6,511
2021
$'000
18,224
(3,387)
14,837
· 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.
32
31
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022A. CURRENT YEAR PERFORMANCE2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
A. CURRENT YEAR PERFORMANCE
A. CURRENT YEAR PERFORMANCE
The Group has unused tax losses that arose in Australia, for
which no deferred tax assets have been recognised of
$46,875,353 (2021: $33,040,509) and are available
indefinitely for offsetting against future taxable profits of the
Group and its controlled entities in which those losses
arose.
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 2022, the
Group had unused tax losses for which no deferred tax
assets have been recognised of US$13,764,000 (2021:
US$18,361,000) of which US$9,518,000 will expire by
2023.
Recognition and measurement
· 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.
· 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.
A.5 Taxes
The major components of the income tax expense for the
years ended 30 June 2022 and 2021 are:
Deferred income tax expense
Adjustments in respect of prior years
Total income tax expense
2022
$'000
(4,393)
323
(4,070)
2021
$'000
(2,106)
1,098
(1,008)
The reconciliation of the income tax benefits/(expenses)
and accounting profit multiplied by the Australian domestic
tax rate for the years ended 30 June 2022 and 2021 are:
Accounting loss before tax from
continuing operations
Accounting loss
before income tax
At Australia's statutory income tax
rate of 25.0% (2021: 26.0%)
Adjustments in respect of the change
in statutory income tax rate
Difference in overseas tax rates
Non assessable income
Adjustments in respect of prior years
Deferred tax asset not recognised
Deferred tax asset derecognised
Other
Non-deductible expenses
Income tax expense
Income tax expense reported in the
statement of profit or loss
2022
$'000
(7,061)
2021
$'000
(10,437)
(7,061)
1,765
(10,437)
2,714
(107)
(77)
(20)
33
323
(2,326)
(4,070)
-
332
(4,070)
(427)
49
1,098
(3,943)
-
(1)
(421)
(1,008)
(4,070)
(1,008)
Deferred tax balances comprise of the following deferred
tax assets/(deferred tax liabilities):
Inventory
Revenue received in advance
Plant and equipment
Provisions and accruals
Intangible asset
ROU leasing assets
ROU leasing liabilities
Foreign exchange gains/losses
Other
Unrecognised temporary differences
Tax losses
Net deferred tax asset
2022
$'000
747
998
(47)
1,179
(761)
(126)
127
(14)
(254)
(1,849)
-
-
2021
$'000
31
925
(35)
1,336
(427)
(347)
361
580
235
-
1,409
4,070
32
33
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022A. CURRENT YEAR PERFORMANCE2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
A. CURRENT YEAR PERFORMANCE
A. CURRENT YEAR PERFORMANCE
Key estimate: Recoverability of deferred tax assets
At 30 June 2022, the Group recognised nil (2021:
$4,070,000) of deferred tax assets after assessing the
likelihood of offsetting unused tax losses against future
taxable profits.
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.
A.5 Taxes (continued)
· 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.
34
33
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022A. CURRENT YEAR PERFORMANCE2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
A. CURRENT YEAR PERFORMANCE
A. CURRENT YEAR PERFORMANCE
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:
Performance rights granted to key management personnel
were deemed potential ordinary shares. Refer to Note F.3
for further details.
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:
2022
Number
1,549,105
1,549,105
2022
$'000
2021
$'000
Performance rights
Total
Loss attributable to ordinary equity
holders of the Parent:
Continuing operations
Discontinued operations
Loss attributable to
equity holders of the Parent for
basic earnings
Weighted average number of
ordinary shares for basic EPS
Weighted average number of
ordinary shares adjusted for the
effect of dilution
(11,131)
-
(11,445)
-
(11,131)
(11,445)
2022
2021
Number
86,161,094
Number
77,626,071
86,161,094
77,626,071
Earnings per share
Basic loss per share
Diluted loss per share
Cents
(12.92)
(12.92)
Earnings per share from continuing operations
Basic loss per share
Diluted loss per share
Cents
(12.92)
(12.92)
Cents
(14.74)
(14.74)
Cents
(14.74)
(14.74)
34
35
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
B. GROWTH ASSETS
B. GROWTH ASSETS
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
B.2
Plant and equipment
Intangible assets
Page 35
Page 37
B.1 Plant and equipment
Plant and
equipment
Leasehold
improvements
Total
$’000
$’000
$’000
Gross carrying amount at cost
At 1 July 2020
Additions
Disposals
At 30 June 2021
Additions
At 30 June 2022
18,461
504
(5,664)
13,301
499
13,800
Depreciation and impairment
At 1 July 2020
Depreciation charge
Impairment
Disposals
At 30 June 2021
Depreciation
At 30 June 2022
(16,318)
(607)
(651)
5,664
(11,912)
(393)
(12,305)
2,595
174
(187)
2,582
6
2,588
(588)
(260)
(1,475)
(1)
(2,324)
(54)
(2,378)
21,056
678
(5,851)
15,883
505
16,388
(16,906)
(867)
(2,126)
5,663
(14,236)
(447)
(14,683)
Net book value
At 30 June 2022
At 30 June 2021
1,495
1,389
210
258
1,705
1,647
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 C.7 for
lease disclosure and Note D.1 for further details.
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.
36
35
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
B. GROWTH ASSETS
B. GROWTH ASSETS
B.1 Plant and equipment (continued)
Impairment of non-financial assets
Key estimate - Impairment of non-current 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.
When indicators of impairment are identified, 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.
During the year ended 30 June 2021, a strategic
decision was made to cease production in the US and
transition it to Australia. As a result, the CGUs located
in the US became idle and not expected to generate
any future cash flow in the short term, the US assets
were written down to nil value. There were no indicators
of impairment or reversal of impairment in the year
ended 30 June 2022, with remaining assets expected to
be recovered in full from future business activities.
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.
36
37
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
B. GROWTH ASSETS
B. GROWTH ASSETS
B.2 Intangible assets
Consolidated
Year ended 30 June 2022
Cost
Accumulated amortisation and
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 2021
Cost
Accumulated amortisation and
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
Model 2019
Development
$'000
Model 2021
Development
$'000
2,611
(871)
(1,421)
319
595
-
(276)
319
2,611
(595)
(1,421)
595
898
-
(303)
595
3,083
-
-
3,083
1,386
1,697
-
3,083
1,386
-
-
1,386
-
1,386
-
1,386
Total
$'000
5,694
(871)
(1,421)
3,402
1,981
1,697
(276)
3,402
3,997
(595)
(1,421)
1,981
898
1,386
(303)
1,981
The intangible assets comprise of capitalised development costs for the advancement of the modular propulsion
systems. The intangible assets will be amortised using the straight-line method over a finite period of five years from
completion of development.
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. Model 2021 is in the late stages of development and so amortisation has not yet commenced.
Intangible asset
Internally
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.
38
37
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
C. WORKING CAPITAL MANAGEMENT
C. WORKING CAPITAL MANAGEMENT
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.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 39
Page 40
Page 40
Page 41
Page 41
Page 41
Page 42
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 2022, the Group has a total of $2,363,000 of cash at its disposal (2021: $3,116,000) and a net
current liability position $4,508,000 (2021: $474,000). 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 2022
Borrowings 1
Trade payables and other
Lease liabilities
At 30 June 2021
Borrowings
Trade payables and other
Lease liabilities
1 Refer to Note D.1 for details.
8,486
3,060
295
11,841
9,986
1,742
297
12,025
-
-
472
472
-
-
893
893
-
-
-
-
-
-
775
775
-
-
-
-
-
-
-
-
8,486
3,060
767
12,313
9,986
1,742
1,965
13,693
8,486
3,060
766
12,312
9,986
1,742
1,829
13,557
38
39
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
C. WORKING CAPITAL MANAGEMENT
C. WORKING CAPITAL MANAGEMENT
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 2022 is as follows:
Cash and cash equivalents (Note C.3)
Short-term deposits (Note C.4)
2022
$'000
2,363
586
2,949
2021
$'000
3,116
585
3,701
A reasonable possible change in the interest rate (+0.5%/-0.5%) (2021: +0.5%/-0.5%)), with all variables held constant, would have
resulted in a change in post tax profit/(loss) of $12,000/($12,000) (2021: $16,000)/($16,000) 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 2022 and 2021 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 impairment
Work in progress
Finished goods
Current
Non current
2022
$'000
11,946
(2,991)
3,671
224
12,850
11,074
1,776
2021
$'000
11,741
(123)
990
159
12,767
12,767
-
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.
Key estimate - Recoverability of inventory
The Group's inventory is predominantly composed of purchased parts used in the construction of engines for sale. The recoverability
of inventory is therefore highly dependent on the level of expected future orders of those engines by the Group's customers. The
estimate of engine sales used in the calculation of the provision recognised at 30 June 2022 was informed by recent discussions with
the Group's major customer as to their expected volume requirements for the first engine program as well as the impact of the
termination of the third engine program discussed further in note F.7.
40
39
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
C. WORKING CAPITAL MANAGEMENT
C. WORKING CAPITAL MANAGEMENT
C.2 Trade and other receivables
C.3 Cash and cash equivalents
Trade receivables
Other receivables
Accrued revenue
Allowance for Impairment of other receivables (a)
2022
$'000
1,065
866
-
(924)
1,007
2021
$'000
3,100
909
844
(849)
4,004
(a) At 30 June 2022, the Group has $924,000 (2021:$849,000)
as a provision for impaired receivables. This amount includes
$849,000 provided in a previous period in respect of an amount
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.
Fair value
The carrying amount of trade and other receivables
approximates their fair value.
Cash at bank
2022
$'000
2,363
2,363
2021
$'000
3,116
3,116
The reconciliation of net loss after tax to net cash flows from
operations for the years ended 30 June 2022 and 2021 is as follows:
Loss after income tax from continuing
operations
Loss after income tax
Depreciation & amortisation (Note B.1)
Impairment of asset
Government loan forgiven
Interest expense
Provision for excess stock
Warranties (Note E.1)
Employee benefits (Note E.1)
Provision for doubtful debt
Share based payment expense (Note F.3)
Net foreign exchange gain
Net cash 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
2022
$'000
(11,131)
2021
$'000
(11,445)
(11,131)
723
-
(1,387)
-
2,868
14
(675)
75
109
(416)
(11,445)
867
2,499
-
1,376
-
2,074
229
(63)
220
(496)
(9,820)
(4,739)
3,234
2,346
(2,951)
4,070
1,373
5,726
(3,387)
1,354
2,736
3,049
Net cash used in operating activities
(4,094)
(1,690)
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 short-term deposits approximates their
fair value.
40
41
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
C. WORKING CAPITAL MANAGEMENT
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. Included within deferred revenue is $2.4M in
relation to the terminated third engine model. See Note F.7 for
further information.
A reconciliation of deferred revenue for the years ended 30
June 2022 and 2021 is as follows:
At 1 July
Deferred during the year
Released to the statement of profit or loss
At 30 June
2022
$'000
4,285
6,156
(6,395)
4,046
2021
$'000
1,321
6,803
(3,839)
4,285
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
2022
$'000
586
586
2021
$'000
585
585
The Group has pledged short term deposits of $586,000 (2021:
$585,000) as collateral for financing facilities.
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
Other payables
2022
$'000
2,846
214
3,060
2021
$'000
1,668
74
1,742
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.
42
41
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
C. WORKING CAPITAL MANAGEMENT
C. WORKING CAPITAL MANAGEMENT
C.7 Leases
The Group leases various premises. Lease terms are negotiated
on an individual basis and contain a range of different terms and
conditions.
Amounts recognised in the balance sheet
Set out below is a summary of the amounts disclosed in the
Consolidated Statement of Financial Position:
Assets and liabilities arising from a lease are initially measured
on a present value basis. Lease liabilities include the net present
value of variable lease payments that are based on index or a
rate.
Right-of-use assets
Properties
Total
The recognised right-of-use assets relate to the amount of the
initial measurement of lease liability.
A sub lease has been recognised as a Finance Lease
Receivable under AASB 16 Leases. This reduced the right-of-
use asset on adoption.
Lease Liabilities
Current
Non Current
2022
2021
$'000
341
341
$'000
857
857
2022
2021
$'000
766
-
766
$'000
982
847
1,829
Lease payments are allocated between principal and finance
cost. The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on
the remaining balance of the liability for each period. 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.
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
Impairment
Interest expense (included in finance cost)
2022
$'000
533
-
77
2021
$'000
710
373
131
The total cash outflow for leases in 2022 was $871,000 (2021:
$846,000).
42
43
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
D. DEBT AND CAPITAL
D. DEBT AND CAPITAL
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.1
D.2
D.3
Borrowings
Share capital
Reserves
Page 43
Page 44
Page 44
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
2022
$'000
8,486
-
8,486
2021
$'000
9,986
-
9,986
Changes in borrowings arising from financing
activities are as follows:
At 1 July 2021
Loan forgiveness grant income
Grant income (loan deferral)
Interest expenses
At 30 June 2022
At 1 July 2020
Finance costs
At 30 June 2021
$'000
9,986
(1,500)
(593)
593
8,486
8,610
1,376
9,986
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
• The loan balance $9.9M was reclassified as current
borrowings under the loan terms in place at 30 June
2021 while it was under renegotiation.
• Orbital successfully renegotiated the loan and
received formal confirmation of a Deed of Variation on
12 August 2021.
• The Deed of Variation includes an extended
repayment schedule over the next four years and
repayment offset options up to the entire value of the
loan. The loan also remained interest free.
• The repayment offset options provide the potential to
forgive the entire value of the loan. The offset provisions
are contingent on the Company achieving operational
milestones aligned with its increasing engine business
in Australia over the four-year period.
• For the year ended 30 June 2022, Orbital achieved
certain operational milestones and reduced the loan
value by $1.5M.
• As at 30 June 2022, extension was granted to allow
the Company to refine the milestones until 31
December 2022. The loan balance $8.5M was
reclassified as current borrowings under the loan terms
in place while this renegotiation progresses.
Accounting standards require interest to be imputed
while the loan is interest free. The benefit of extension
of interest free terms agreed under the Deed of
Variation ($0.6M) is recognised on contract effective
date as grant income, in accordance with AASB 120
Accounting for Government Grants.
The interest-free loan is secured by way of a first
ranking floating debenture over the whole of the assets
and undertakings of the Group.
44
43
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
D. DEBT AND CAPITAL
D. DEBT AND CAPITAL
D.2 Share capital
Ordinary shares issued and fully paid
Movement in ordinary shares
At 1 July 2020
Employee Share
At 30 June 2021
At 1 July 2021
Issue of ordinary shares
Share issue transaction costs
Employee Share
At 30 June 2022
Recognition and measurement
2022
$'000
37,683
2021
$'000
31,220
Number
77,586,923
71,853
77,658,776
$000's
31,220
45
31,265
77,658,776
12,985,114
-
352,804
90,996,694
31,265
6,479
(105)
44
37,683
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. The Company does not have authorised capital or par
value in respect of its issued shares.
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.
D.3 Reserves
At 1 July 2020
Foreign currency translation
Rights issued pursuant to performance rights plan
At 30 June 2021
At 1 July 2021
Foreign currency translation
Rights issued pursuant to performance rights plan
At 30 June 2022
Nature and purpose of reserves
Employee
benefits
reserve
$000's
2,424
-
176
2,600
.
2,600
-
65
2,665
Foreign currency
translation reserve
$000's
(29)
464
-
435
435
(495)
-
(60)
Total
$000's
2,395
464
176
3,035
3,035
(495)
65
2,605
Foreign currency translation reserve
Used to record foreign exchange differences arising from the translation of the financial statements of foreign
entities from their functional currency to the Group’s presentation currency.
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.
44
45
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
E. OTHER ASSETS AND LIABILITIES
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.1
Provisions
Page 45
E.1 Provisions
s NC
At 1 July 2021
Arising during the year
Utilised
At 30 June 2022
Current
Non-current
At 1 July 2020
Arising during the year
Utilised
At 30 June 2021
Current
Non-current
Warranties
$000's
2,595
157
(119)
2,633
2,633
-
2,633
521
2,083
(9)
2,595
2,595
-
2,595
Employee
benefits
$000's
2,007
518
(1,218)
1,307
1,259
48
1,307
1,778
942
(713)
2,007
1,935
72
2,007
Total
$000's
4,602
675
(1,337)
3,940
3,892
48
3,940
2,299
3,025
(722)
4,602
4,530
72
4,602
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 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.
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.
46
45
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
F. OTHER ITEMS
F. OTHER NOTES
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.
F.1 Key management personnel compensation
F.2 Related parties
F.3 Share based payments
F.4 Subsidiaries
F.5 Parent entity information
F.6 Auditor remuneration
F.7 Events after the end of the reporting period
F.8 Other accounting policies
F.9 New accounting standards
46
46
47
48
48
49
49
49
49
F.1 Key management personnel compensation
Compensation of key management personnel of the Group
Short term employee benefits
Post-employment benefits
Long-term employee benefits
Share based payments
2022
$
2021
$
1,407,391 1,442,033
104,948
55,394
156,178
1,285,747 1,758,553
86,927
(292,709)
84,138
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.
F.2 Related parties
Group structure
Note F.4 provides information about the Group’s structure, including details of subsidiaries.
Transactions with directors
There were no transactions with directors during the year. Key management personnel compensation is disclosed in Note F.1.
No other director or key management personnel entered into a material contract with the Group from the end of the previous financial year.
Loans from related parties
The Group has an unsecured A$1 million standby working capital facility with ICM Limited. ICM 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 10% .The facility is available from 1 July 2022 to 30 June 2023.
46
47
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
F. OTHER ITEMS
F. OTHER NOTES
F.3 Share based payments
Equity-settled share based payment
transactions
2022
$'000
109
109
2021
$'000
241
241
The weighted average remaining contractual life of performance
rights outstanding at 30 June 2022 was 1.25 years (2021: 2.25
years).
The following tables list the inputs into the models used for the
plans for the years ended 30 June 2021 respectively:
There were no cancellations or modifications to awards in the 2022
or 2021 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 2022, 104,520 ordinary shares (2021:
39,634 ordinary shares) were issued on 24 December 2021 at a
market value on the date of issue of $44,000 (2021: $45,000 ).
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 11-12 of the Directors' Report. The share based
payment expense recognised for the year ended 30 June 2022 was
$nil (2021: $18,000).
2020 Executive LTI Plan and 2020 CEO LTI Plan
On 28 October 2020 and 04 December 2020, the Group issued
717,198 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 12 of the Directors' Report. During the
year ended 30 June 2022, no performance rights issued under the
plan vested. The share based payment expense recognised for the
year ended 30 June 2022 was $64,000 (2021: $155,000).
Movements during the year
The following table illustrates the number of performance rights
during the year:
Outstanding at 1 July
Granted during the year
Exercised during the year
Lapsed during the year
Outstanding at 30 June
2022
Number
2,230,420
-
(240,250)
(441,065)
1,549,105
2021
Number
1,557,529
1,157,181
-
(484,290)
2,230,420
Grant date
Expiry date
Share price at grant date
Fair value ($/right) - Tranche 1
Fair value ($/right) - Tranche 2
Expected volatility
Risk-free interest rate
Remaining contractual life
Model used
2020 CEO
LTI Plan
2020
Executive
LTI Plan
28/10/2020
4/12/2020
30/09/2023
30/09/2023
$ 1.19 $ 1.18
0.980
0.730
70%
0.13%
1.25 years
0.970
0.760
70%
0.12%
1.25 years
Monte
Carlo
Monte
Carlo
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
48
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
F. OTHER ITEMS
F. OTHER NOTES
F.4 Subsidiaries
The ultimate parent company of the Group is Orbital Corporation Limited. The consolidated financial statements of the Group include:
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
Orbital Holdings (USA) Inc.
Orbital Fluid Technologies Inc.
Orbital UAV USA, LLC
Note
(b)
(c)
(a)
Class of
shares
Country of
incorporation
Principal
activities
% equity interest
2022
2021
Ordinary
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Production &
Development
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Ordinary
Ordinary
United States
United States
Dormant
Dormant
Ordinary
United States
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 activities are 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 activities specialise 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.5 Parent entity information
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Issued capital
Accumulated losses
Employee benefits reserve
Total equity
Loss of the parent
Total comprehensive loss of the parent entity
2022
$'000
-
9,349
8,486
-
863
37,682
(39,484)
2,665
863
(9,033)
(9,033)
2021
$'000
-
13,417
9,987
-
3,430
31,220
(30,451)
2,661
3,430
(12,966)
(12,966)
48
49
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2022
F. OTHER NOTES
F. OTHER ITEMS
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.
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.
F.6 Auditor remuneration
During the year the following fees were paid or payable for services
provided by PricewaterhouseCoopers Australia (PwC) as the
auditor of the parent entity, Orbital Corporation Limited, by PwC’s
related network firms and by non-related audit firms:
2022
$
(a) Auditors of the Group - PwC and related network firms
Audit and review of financial reports
149,360
Tax compliance services
179,762
Other services
93,562
422,684
(b) Other auditors and their related network firms
Tax compliance services
26,669
26,669
2021
$
160,000
113,462
270,137
543,599
113,462
113,462
F.7 Events after the end of the reporting period
Orbital and Boeing Insitu reached a settlement agreement on the
30 August 2022 for third engine model cost reimbursement dispute.
The settlement includes:
• an immediate advance payment to Orbital of $1.8M with the
amount to be offset against future Orbital engine production;
• agreement both parties will not seek to recover outstanding cost;
and
• an agreement to negotiate in good faith an extension to the
current supply agreement through a further five-year maintenance,
repair and overhaul support contract.
The impact of the settlement was incorporated as an adjusting
event to the estimate of the provision for inventory, as disclosed in
Note C.1. In FY23, all materials outlined in the agreement are
required to be delivered to Boeing Insitu. As a result, the deferred
revenue $2.4M will be released and recognised as revenue with a
nil net profit impact.
F.8 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.
50
49
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20222022 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)
Giving a true and fair view of the financial position of the Group as at 30 June 2022 and of their
performance, as represented by the results of their operations and their cash flows, for the year ended
on that date; and
(ii)
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).
Other than the matters raised in Note 1.J 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 2022.
On behalf of the Board,
JP Welborn
Chairman
TM Alder
Managing Director & Chief Executive Officer
Dated at Perth, Western Australia 31 August 2022
50
51
2022 ANNUAL REPORT DIRECTORS' DECLARATION
INDEPENDENT AUDITOR’S REPORT
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:
Independent auditor’s report
To the members of Orbital Corporation Limited
Report on the audit of the financial report
(i)
Giving a true and fair view of the financial position of the Group as at 30 June 2022 and of their
performance, as represented by the results of their operations and their cash flows, for the year ended
on that date; and
Our opinion
In our opinion:
(ii)
Complying with Accounting Standards in Australia and the Corporations Act 2001.
(b)
The financial statements and notes also comply with International Financial Reporting Standards as disclosed in
note 2(a).
(c)
Other than the matters raised in Note 1.J there are reasonable grounds to believe that the Company will be able
to pay its debts as and when they become due and payable.
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 2022.
On behalf of the Board,
JP Welborn
Chairman
TM Alder
Managing Director & Chief Executive Officer
Dated at Perth, Western Australia 31 August 2022
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 2022 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 2022
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 consolidated financial statements, which include significant accounting policies
and other explanatory information
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 & 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
Liability limited by a scheme approved under Professional Standards Legislation.
51
51
2022 ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT
Material uncertainty related to going concern
We draw attention to Note 1.J in the financial report, which indicates that the Group incurred a net loss
of $11,131,000 during the year ended 30 June 2022 and, as of that date, the Group’s current liabilities
exceeded its current assets by $4,977,000. As a result the Group is dependent on achieving future
forecast cash flows, including renegotiating the terms of its loan with the Western Australian State
Government. These conditions, along with other matters set forth in Note 1.J, indicate that a material
uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
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 accounting processes are structured around a Group finance function at its
corporate head office in Perth, where we performed our audit procedures.
Materiality
•
For the purpose of our audit we used overall Group materiality of $157,200, which represents
approximately 1% of the Group’s total revenues.
• 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.
52
2022 ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT
Audit Scope
• Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
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.
In addition to the matter described in the Material uncertainty related to going concern section, we
have determined the matter(s) described below to be the key audit matters to be communicated in our
report.
Key audit matter
How our audit addressed the key audit matter
Valuation of Inventory
(Refer to note C.1) $12.8 million
At 30 June 2022 the Group held inventory with a
cost of $15.8 million. This inventory comprises
parts, consumables and sub-assemblies of parts
which will be used in the construction of engines
by the Group.
At 30 June 2022, the Group recorded a
provision of $3.0 million to reduce the carrying
value of certain items of inventory to its net
realisable value, as required by Australian
Accounting Standards.
We focused on this area due to the significance
of the inventory balance to the Consolidated
Statement of Financial Position and the
estimation required in determining the quantum
of the provision.
In assessing the Group’s valuation of
inventory at the lower or cost or net realisable
value we performed the following procedures,
amongst others:
•
•
•
•
assessed the application of inventory
costing methodologies and whether
this was consistent with the
requirements of Australian Accounting
Standards.
agreed the cost of a sample of
inventory items to that shown in third
party invoices.
on a sample basis, evaluated the
direct labour costs allocated to work in
progress by inspecting timesheets and
agreeing the labour cost to the payroll
system.
evaluated whether inventory was
carried at the lower of cost and net
realisable value by comparing the cost
of inventory in each engine's
respective final bill of material against
sale prices in customer contracts.
53
2022 ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT
Key audit matter
How our audit addressed the key audit matter
• evaluated whether individual
components of inventory items were
expected to be utilised within future
engine sales by inspecting the future
quantities of engine sales secured
under existing contracts and open
purchase orders with customers and
determining the number of units of the
relevant component required to
complete those engines.
• assessed the adequacy of the
provision for obsolete or excess
inventory given expected future
demand, as well as the settlement with
the Group’s major customer disclosed
in Note F.7.
• evaluated the adequacy of the
disclosures made in Note C.1 in light
of the requirements of Australian
Accounting Standards.
In assessing the appropriateness of the
Group’s recognition and measurement of
deferred tax assets in the financial report, we
performed the following procedures,
amongst others:
• assessed management's conclusion
that the evidence currently available to
support the probability of the Group
generating future taxable income was
not sufficient to meet the requirements
of accounting standards.
• evaluated the adequacy of the
disclosures made in Note A.5 in light
of the requirements of Australian
Accounting Standards.
Recognition and measurement of
deferred tax assets
(Refer to note A.5)
At 30 June 2022, the Group recognised
deferred tax assets only to the extent that they
offset deferred tax liabilities in the relevant
jurisdiction. $4.1 million of previously
recognised deferred tax assets were
derecognised during the year.
In determining the amount of deferred tax
assets to recognise at 30 June 2022, the Group
made a number of judgements, including
assessing whether it had convincing evidence
as required by the Australian Accounting
standards that it would be able to utilise
deferred tax assets against future taxable
profit.
Assessing the appropriateness of recognising
these deferred tax assets was a key audit matter
due to the magnitude of deferred tax assets
derecognised in the period.
54
2022 ANNUAL REPORT
INDEPENDENT AUDITOR’S REPORT
Key audit matter
How our audit addressed the key audit matter
Accounting for the WA Government loan
(Refer to note D.1)
During the year, the Group renegotiated the
terms of the loan with the Western Australian
State Government (‘WA Government loan’),
resulting in new repayment terms and the ability
to offset repayments if operational milestones
were met.
Through the application of the Australian
Accounting Standards, the Group recognised
$2.1m in Grant Income and $0.6m in interest
expense relating to the loan for the year ended
30 June 2022.
As a result of changes in the likelihood of
meeting the relevant milestones at 30 June 2022
the loan repayment terms were under
renegotiation at balance date.
In assessing the accounting for WA Government
loan, we performed the following procedures,
among others:
• obtained an understanding of the key
terms of the amended loan agreement.
• obtained an understanding of the
accounting treatment adopted by the
Group in accounting for the revised loan
terms.
• assessed the assumptions used by the
Group in determining which portions of
the loan had been or were sufficiently
likely to be forgiven by obtaining
supporting evidence of the likelihood of
completing the milestone.
•
reperformed management’s calculations
of grant income and interest expense
arising from the loan.
The accounting for the WA Government loan
was determined to be a key audit matter due to
the significance of the loan balance and grant
income recognised to the Group.
• assessed the reasonableness of interest
rate assumptions utilised by
management in determining the initial
fair value of the loan.
• evaluated management calculations in
determining the carrying value and
classification of the loan as at 30 June
2022 by inspecting correspondence and
the deed of variation with the WA
Government.
• evaluated the adequacy of the
disclosures made in Note D.1 in light of
the requirements of Australian
Accounting Standards.
55
2022 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 2022, 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.
56
2022 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 8 to 16 of the directors’ report for the year
ended 30 June 2022.
In our opinion, the remuneration report of Orbital Corporation Limited for the year ended 30 June 2022
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
Ian Campbell
Partner
Perth
31 August 2022
57
2022 ANNUAL REPORT
SHAREHOLDING DETAILS
SHAREHOLDING DETAILS
Class of Shares and Voting Rights
As at 21 July 2022 there were 5,001 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 21 July 2022
UIL Limited
(as notified 13 April 2017)
Mitsubishi UFJ Financial Group, Inc.
Comprising voting power of 100% in First Sentier Investors Holdings Pty Ltd; and
voting power of over 20% in Morgan Stanley Australia Securities
(as notified 6 May 2021)
Distribution of Shareholdings as at 21 July 2022
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 21 July 2022
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
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
MORANBAH NOMINEES PTY LTD
MR MICHAEL WILLIAM FORD & MRS NINA BETTE FORD
MR JOHN PAUL WELBORN & MS CAROLINE ANNE WELBORN
BOND STREET CUSTODIANS LIMITED
RACT SUPER PTY LTD
MR KENT MILLER LOGIE
MR TODD MATHEW ALDER
MR JOHN AYRES
K & P SUPER VIC PTY LTD
MR DARRYL JAMES SMALLEY
TEXAS HOLDINGS PTY LTD
27,565,888
30.32%
12,560,399
10,242,456
2,317,943
13.82%
2,659
1,385
450
537
70
5,101
90,902,089
-
NUMBER OF
SHARES HELD
27,791,629
12,360,077
3,074,167
2,317,943
1,850,000
1,829,225
1,455,688
1,272,218
1,053,521
1,044,067
1,039,105
792,287
583,334
500,000
488,978
434,389
416,112
362,667
350,000
% OF
SHARES
30.57
13.60
3.38
2.55
2.04
2.01
1.60
1.40
1.16
1.15
1.14
0.87
0.64
0.55
0.54
0.48
0.46
0.40
0.39
Top 20 Shareholders Total
59,015,407
64.92
The 20 largest shareholders hold 64.92% of the ordinary shares of the Company (2021: 68.85%).
On-market share buy-back
There is no current on-market buy-back.
58
59
2022 ANNUAL REPORT CORPORATE INFORMATION
| @OrbitalCorpASX
| OrbitalUAV
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
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 | E : contact@orbitalcorp.com.au | ORBITALUAV.COM