30 August 2024
APPENDIX 4E
Preliminary Final Report for the year ended 30 June 2024
Reporting Period
The reporting period is for the year ended 30 June 2024 with the corresponding reporting period being
for the year ended 30 June 2023.
Results for announcement to the market
30 June 2024
A$'000
Revenue from continuing operations
Down
25%
To
12,664
Profit for the year
Down
180%
To
67
Profit after tax attributable to members
Down
180%
To
67
30 June 2024
30 June 2023
Net tangible assets per share (cents)
3.26
2.18
Dividends
There is no proposal to pay dividends for the year ended 30 June 2024.
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: Orbital UAV
4 Whipple Street
Balcatta, Western Australia
Date: 16 November 2024
CONTACTS
Announcement authorised by:
For further information, contact:
John Welborn
Thomas Spencer
Chairman
CFO & Company Secretary
Tel: +61 8 9441 2311
Tel: +61 8 9441 2135
Email: contact@orbitalcorp.com.au
Email: tspencer@orbitalcorp.com.au
About Orbital UAV
Orbital UAV provides integrated propulsion systems and flight critical components for tactical unmanned aerial vehicles (UAVs).
Our design thinking and patented technology enable us to meet the long endurance and high reliability requirements of the UAV
market. We have offices in Australia and the United States to serve our prestigious client base.
Forward-looking statements
This release includes forward-looking statements that involve risks and uncertainties. These forward-looking statements are
based upon management's expectations and beliefs concerning future events. Forward-looking statements are necessarily
subject to risks, uncertainties and other factors, many of which are outside the control of the Company that could cause actual
results to differ materially from such statements. Actual results and events may differ significantly from those projected in the
forward-looking statements as a result of a number of factors including, but not limited to, those detailed from time to time in the
Company’s Annual Reports. The Company makes no undertaking to subsequently update or revise the forward-looking
statements made in this release to reflect events or circumstances after the date of this release.
2O24 ANNU AL REP OR T
CONTENTS
Directors’ Report
1
Auditor’s Independence Declaration
16
Financial Statements
17
Consolidated statement of profit or loss and other comprehensive income
18
Consolidated statement of financial position
19
Consolidated statement of changes in equity
20
Consolidated statement of cash flows
21
Notes to the consolidated financial statements
22
Consolidated entity disclosure statement
48
Directors’ declaration
49
Independent auditor’s report
50
Shareholding details
54
Corporate information
55
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 2024
ANNUAL REPORT 2024 1
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 2024 and the auditor's report thereon.
Reference
Contents of Directors’ Report
Page
1.
Operating and Financial Review
2
2.
Directors
5
3.
Company Secretary
6
4.
Directors’ Meetings
6
5.
Principal Activities
6
6.
Dividends
6
7.
Events Subsequent to Reporting Date
6
8.
Proceedings on Behalf of the Company
6
9.
Likely Developments and Expected Results
6
10.
Environmental Regulation and Performance
6
11.
Directors’ Interests
6
12.
Share Options
7
13.
Auditor Independence and Non-Audit Services
7
14.
Indemnification
7
15.
Corporate Governance Statement
7
16.
Rounding Off
7
17.
Remuneration Report
8
18.
Lead Auditor’s Independence Declaration
16
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 2
1.
OPERATING AND FINANCIAL REVIEW
John Welborn
Chairman
Non-Executive Director
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 2024 (‘FY24’).
Overview
FY24 highlights
•
Delivery of $15.7M revenue and other income
•
Net profit after tax of $0.1M
•
Successful Equity raise of $4M with new cornerstone shareholders
•
Achievement of milestones for WA government loan valuing $1.5M
•
Improved Net Asset position from $6.9M to $10.8M
•
Closing cash and equivalents position of $4.8M
Orbital achieved operational revenue of $12.6M in FY24, with $9.1M through the export of heavy fuel engine models to core clients in both the US
and Singapore. This represents a decrease in the production volumes from prior reporting periods and reflects the transition of export supplies to
core client Boeing Insitu, toward pre-production activities for other key customers Engineering development revenues of $3.5M is associated with
the development of larger capacity engine models under contract and support the new production lines that commenced in the current financial year
and predominantly focusses on technical integration works for Orbital core systems into customer supplied airframes.
Other income of $1.5M was achieved through the successful delivery of key milestones associated with the Company’s WA Government Loan
agreement as well as $1.8M Research and Development grants received against the innovation outlays from the previous financial year.
Customer performance
During the year, the Company delivered against mandates for key clients across the globe including:
•
engine shipment programs with Boeing Insitu for both the N20 and V3 models,
•
the maturity of the development program with DSO National Laboratories to production readiness for its Volace 60 program,
•
Production commencement for Textron Systems Aerosonde® unmanned aircraft system,
•
Finance International to supply units into a south-east Asian defence organisation.
These new or expanded relationships demonstrate Orbital’s superior heavy fuel engine capability for uncrewed aerial vehicles (‘UAVs’) and
notably broadens customer relationships across the world.
Equity Offer
In September 2023 the Company announced a $4M equity offer to new and existing shareholders. The offer was successfully closed in two
tranches, in September 2023 and November 2023, with the second tranche subject to and following approval at the Company’s November AGM.
A total of 28,571,429 new shares were issued pursuant to the prospectus. Orbital’s largest shareholder, UIL Limited, participated in the offer.
Funds raised from the offer continue to support new engine development programs and to provide general working capital.
Financial results and financial position
The Company reported financial results for the year ended 30 June 2024, with revenue from continuing operations of $12.6M (2023:
$16.8M), other income of $3.1M (2023: 5.7M) and a net profit after tax of $0.1M (2023: $0.02M).
The Company reported a balance sheet with cash and receivables of $6.1M (2023: $5.2M), net current assets of $3.4M (2023: $2.2M) and net
assets of $10.8M (2023: $6.9M).
Net cash outflow from operating activities during the period was $0.03M (2023: $3.5M) and net cash inflows from financing activities was $3.3M
(2023: $3.9M).
The Total Debt position reported for the year ended 30 June 2024 is $2.4M (2023: $3.8M) after continued milestone achievements on the WA
government loan.
The annual report for the year ended 30 June 2024 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.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 3
WA Government loan
In January 2023, the Company agreed a deed of variation with the WA Government, replacing previous repayment schedules and refining
milestone deliverables better aligned to industry success. Repayment amounts continue to reduce the loan principal where 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 FY24, the operational milestones of $1.5M were achieved and the loan repayments were offset, reducing the outstanding loan value to
$2.4M. The Company expects to have fully repaid the loan by the end of December 2024.
Shareholder returns
2024
2023
2022
2021
2020
Closing share price ($)1
0.08
0.18
0.23
0.83
0.75
Market capitalisation ($m)
11.68
20.52
20.93
64.46
58.20
Basic EPS (cents) from operations
0.05
0.02
(12.92)
(14.74)
2.40
1 as at 30 June
Material Business Risks
The Group actively manages risk exposures through a comprehensive risk management framework overseen by the Audit and Risk Committee.
Current exposures relevant to the information provided in this report include:
Concentration Risk
The Group's business relies on business relationships, including its relationships with its key suppliers and customers. For the Group's reporting
period ended 30 June 2024, the Company’s long term agreement (LTA) with Boeing Insitu accounted for approximately 70% of the Company’s
revenue. Insitu may terminate the LTA for convenience, default or force majeure and this may have a material adverse effect on the financial
performance, financial position and/or reputation of the Company. It is anticipated that the concentration risk associated with the Insitu LTA will be
reduced as the Group transitions Textron and DSO National Laboratory programs into production, thus reducing the weighting of Insitu related
revenues.
Market Risk
The Group currently operates predominantly in the aerospace sector. The level of activity in this sector will be influenced by external factors
including supply and demand, competitiveness of manufacturing operations and technology, availability and cost of key resources including
people, equipment and critical consumables (among other things). Variations in such factors, which are beyond the control of the Group, may
have an adverse effect on future operating results of the Company.
The Group conducts regular market analysis and engages with market leading defence contractors to position its products and services in areas
of key demand. Research and Innovation initiatives are designed to maintain the Group's competitiveness in the sector.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because 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 because 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 at prevailing rates and maintains hedging facilities for risk mitigation for longer
term exposures.
Interest Rate Risk
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. There is currently no credit interest rate risk exposures on the Group’s balance sheet.
Credit Risk
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. The significant concentration of credit risk
within the Group relate to receivable balances from the Group's major customer.
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, 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.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 4
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 from time to time.
Outlook
Entering financial year 2025 (‘FY25’), the production teams will be delivering against existing orders for the three engine models. It is anticipated
that orders will be expanded for the existing lines and business development activities continue to identify additional demand for Orbital propulsion
systems for both new and existing clients.
The Company continues to invest in new products to drive future revenue performance and meet client demands for larger power units with world
leading power to weight ratios.
It is expected that the continued success of milestone delivery against the WA government legacy loan will see a full repayment of all outstanding
debt by December 2024. The Company’s balance sheet has been greatly strengthened by the debt repayments and recent equity raises and
positions the company well to execute on the competitive advantage in heavy fuel propulsion for the defence industry.
The Chairman would like to thank the ongoing commitment of the Company’s shareholders and staff.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 5
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 a Chartered Accountant with a Bachelor of Commerce
degree from the University of Western Australia and is a Fellow Chartered Accountant 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 Non-Executive Director of Equatorial Resources Limited (appointed August 2010), and as a Non-Executive
Chairman of Athena Resources Ltd (appointed July 2024) and is Executive Chairman of Fenix Resources Limited (appointed November 2021).
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, 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 defence 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.
Dr Grant Lukey, B.E (Hons), Grad Dip (Law), PhD, MAICD
Non-Executive Director
Dr Lukey joined the Board in December 2023. Dr Lukey is the CEO and Managing Director of Coogee Chemicals Pty Ltd and has significant
experience in Chemical Engineering. He holds a PhD in Minerals Processing and has completed the Advanced Management Program at Harvard
University (AMP 188). Currently a board member on the Kwinana Industries Council, and from 2015-2018 Grant also held the position of director
on the board of Chemistry Australia.
Mr Todd Alder, BEc (Acc), CPA, ACIS
Managing Director and Chief Executive Officer
Mr Todd Alder stepped down from his position as Managing Director and Chief Executive Officer with effect from 22 September 2023.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 6
3.
COMPANY SECRETARY
Mr Thomas Spencer, B.Bus, CPA, MAICD
Mr Thomas Spencer was appointed as Chief Financial Officer and Company Secretary in October 2022. Mr Spencer is a seasoned finance
executive with multinational experience, leading strategy development, governance and commercial initiatives across a spectrum of industries.
He is a qualified CPA and holds a Bachelor of Business degree and is a member of the Australian Institute of Company Directors. In his previous
roles with Capital International, McRae Investments and GMP Securities, Mr Spencer was responsible for the success of investment portfolios,
commercial operations, financial integrity, acquisitions, dispositions and growth mandates for both institutional and private equity backed assets.
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.
Directors Meetings
Audit and Risk Committee Meetings
Director
No. of meetings attended
No. of meetings held1
No. of meetings attended
No. of meetings held
J P Welborn
7
7
-
-
T M Alder
2
2
-
-
S Gallagher
7
7
4
4
K Abbott
6
7
4
4
G Lukey
4
4
-
-
1 Number of meetings held during the time the Director held office during the year.
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 Group 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 REPORTING DATE
There were no reportable events subsequent to the reporting date of 30 June 2024.
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.
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
2024 is as follows:
Director
Ordinary Shares
Options
Performance Rights
J P Welborn
2,216,785
500,000
-
S Gallagher
366,668
50,000
-
K Abbott
105,000
25,000
-
G Lukey
730,726
-
-
Total
3,419,179
575,000
-
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 7
12.
SHARE OPTIONS
The Company issued 17,500,000 options as part of the capital raising activities completed in February 2023. Options were issued for nil cash
consideration and were valued at $1,033,205 using the Black Scholes method of calculation at issue date of 7 February 2023. The options are
exercisable at $0.35 on or before the date that is 3 years after the date of issue.
13.
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and
experience with the Company and/or the Group are important. For the year ended June 2024, the Group engaged with Nexia Perth Audit
Services Pty Ltd in non-audit services that included corporate tax advice. Refer to Note F.6 of 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 directors are of the opinion that the services as disclosed in note F.6 to the financial statements do not compromise the external auditor's
independence requirements of the Corporations Act 2001 for the following reasons:
•
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and
•
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics Professional
Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work,
acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks
and rewards.
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)
in his or her capacity as an officer of the Company; and
(b)
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 an insurance contract covering 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, Nexia Perth Audit Services Pty Ltd, 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 Nexia Perth Audit Services 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.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 8
17. 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 2024.
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 2024 are set out in Table 1.
Table 1 – KMP
Executive
Non-Executive Directors
Executive Director
Todd M Alder1 (Chief Executive Officer and Managing Director)
Senior Executives
John P Welborn (Chairman)
Steve Gallagher (Chairman of the Audit & Risk Committee)
Kyle Abbott (Member of the Audit & Risk Committee)
Grant Lukey
Thomas Spencer2 (Chief Financial Officer & Company Secretary)
Andrew Mills3 (Interim Chief Executive Officer)
1 Mr Alder resigned as CEO and Managing Director on 27 September 2023
2 Mr. Spencer was appointed as CFO & Company Secretary on 31 October 2022
3 Mr. Mills became a KMP on 27 September 2023 and ceased to be a KMP on 31 March 2024
Table 2 – Five-year performance
The table below outlines Orbital’s performance over the last five years against key metrics.
2024
2023
2022
2021
2020
Closing share price ($)
0.08
0.18
0.23
0.83
0.75
Market capitalisation ($m)
11.68
20.52
20.93
64.46
58.20
Basic EPS (cents) from operations
0.05
0.02
(12.92)
(14.74)
2.40
Short term incentives were paid in 2020. No short term incentives were paid since 2020.
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 was awarded during the year ended 30 June 2024 (2023: 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 2024. The 2020
LTI Plan expired on 30 September 2023.
The remuneration of Non-Executive Directors of the Company consists only of Directors’ fees. Director fees were not reviewed or adjusted during
the 2024 financial year.
Remuneration Report at 2023 AGM
The 2023 Remuneration Report received positive shareholder support at the 2023 AGM with more than 98% of votes cast in favour.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 9
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 2024
There were no changes to the remuneration structure of executives or Directors during the 2024 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 LTI plans. 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 2024 (2023: 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.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 10
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 2024 was as follows:
Fixed Remuneration
Variable Remuneration
CEO
Fixed Remuneration (50%)
Target STI (20%)
Target LTI (30%)
Other executives
Fixed Remuneration (69%)
Target STI (14%)
Target LTI (17%)
The remuneration structure for the 2024 financial year is explained below:
Summary of executive KMP remuneration for the 2024 financial year
Total Fixed Remuneration (“TFR”)
TFR consists of base compensation, which is calculated on a total cost basis and includes any fringe benefits tax charges related to employee
benefits including motor vehicles, as well as employer contributions to superannuation funds.
Executive contracts of employment do not include any guaranteed base pay increases. TFR is reviewed annually by the Board. The process
consists of a review of Company, business division and individual performance, relevant comparative remuneration internally and externally and,
where appropriate, external advice independent of management.
The fixed component of executives’ remuneration is detailed in the Statutory Table on page 14.
Variable Annual Reward - Short-term incentive (“STI”)
Under the STI, all executives have the opportunity to earn an annual incentive award which is delivered in cash. The STI recognises and rewards
annual performance.
How is performance measured?
The STI performance measures were chosen as they reflect the core drivers of short-term performance and provide a framework for delivering
sustainable value to the Group, its shareholders and customers. Minimum Group performance targets need to be achieved before STI is eligible.
Key performance indicators (“KPIs”) are measured covering financial and non-financial measures of performance. For each KPI, a target and
stretch objective is set. A summary of the measures and weightings are set out below:
Financial
Non-financial
Earnings
Group KPIs
CEO
70%
30%
Other Executives
0%
100%
Earnings is the measure against which management and the Board assess the short-term performance of the Group. If the earnings 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 behaviour 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 comprising of the CEO, CFO, COO and CEng. The Board approves the final STI award based on this
assessment of performance.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 11
Actual STI performance for the year ending 30 June 2024
The following table outlines the proportion of the maximum STI earned in relation to the 2024 financial year. There were no STI amounts paid
to KMPs for the year ended 30 June 2024.
Maximum STI opportunity (Percentage of fixed
remuneration)
Percentage of maximum STI earned
Todd M Alder
40%
0%
Andrew Mills
20%
0%
Thomas Spencer
20%
0%
Long-term incentive (“LTI”)
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.
2020 Performance Rights Plan – Long-term incentives
The Company introduced a 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
Value/Right
(CEO LTIs)
Fair
Value/Right
(Exec LTIs)
Vesting of
Rights
1
The Company having a 90-day
VWAP of at least $1.50 per share
between 01 October 2020 and 30
September 2023.
30 September
2023
04 December
2020
28 October
2020
98 cents
97 cents
50 per cent
2
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
Total
Mr T.Alder
Managing Director and CEO
234,000
140,400
374,400
Total
234,000
140,400
374,400
During year ended 30 June 2024, the performance rights issued to Mr Alder lapsed as he resigned on 22 September 2023.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 12
When is performance measured?
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 2024.
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.
Actual LTI performance for the year ending 30 June 2024
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 2024 (2023: 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 KMP.
Fixed Remuneration
Contract Duration
Termination Notice
Period (Company)1, 2
Termination Notice
Period (Executive)
T Alder
$390,000
Unlimited
3 months
3 months
A Mills3
$204,000
Unlimited
6 months
6 months
T Spencer
$280,000
Unlimited
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 Mr Mills’ inclusion in the KMP was for part period 22 September 2023 to 31 March 2024.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 13
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 2024
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 base fee of $60,000 (2023: $121,095) and the Non-Executive Directors receive a base fee of $30,000 (2023:
$60,000).
The remuneration of Non-Executive Directors for the year ended 30 June 2024 and 30 June 2023 is detailed in Table 1 of this report on page
14.
The maximum annual aggregate fee pool limit is $400,000 and was approved by shareholders.
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
2024.
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.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 14
Statutory tables
Table 1 - Compensation of Non-Executive Directors and executive KMPs for the year ended 30 June 2024 and 2023
Short Term Benefits
Post-
Employment
Long-term
Benefits
Share
Based
Payments
Total
Salary & Director's Fees
Cash Bonuses
Non-monetary
Total
Employer Superannuation
Contributions
Leave Entitlements
Performance Rights Plan
Total Remuneration
Proportion of remuneration
performance related
$
$
$
$
$
$
$
$
%
Non-executive Directors
J Welborn
2024
70,074
-
-
70,074
7,708
-
-
77,782
-
Chairman and Director (Non-executive)
2023
109,589
-
-
109,589
11,506
-
-
121,095
-
S Gallagher
2024
37,500
-
-
37,500
-
-
-
37,500
-
Director (Non-executive)
2023
60,000
-
-
60,000
-
-
-
60,000
-
K Abbott
2024
37,500
-
-
37,500
-
-
-
37,500
-
Director (Non-executive)
2023
60,000
-
-
60,000
-
-
-
60,000
-
G Lukey3
2024
15,000
-
-
15,000
-
-
-
15,000
-
Director (Non-executive)
2023
-
-
-
-
-
-
-
-
-
Total Consolidated, all non-executive
2024
160,074
-
-
160,074
7,708
-
-
167,782
-
directors
2023
229,589
-
-
229,589
11,506
-
-
241,095
-
Executive Directors
T Alder 1
2024
233,008
-
-
233,008
13,699
(115,011)
-
131,696
0%
Managing Director and Chief
Executive Officer
2023
364,708
-
-
364,708
25,292
33,954
58,004
481,958
12%
Executive Key Management Personnel
A Mills2
2024
189,668
-
-
189,668
14,332
8,447
-
212,447
0%
Interim Chief Executive Officer
2023
-
-
-
-
-
-
-
-
0%
T Spencer
2024
246,772
-
-
246,772
26,862
(2,119)
-
271,515
0%
Chief Financial Officer
2023
146,947
-
-
146,947
14,592
12,608
-
174,147
0%
Total Consolidated, Executive directors,
2024
669,448
-
-
669,448
54,893
(108,683)
-
615,658
0%
Executive Key Management Personnel
2023
511,655
-
-
511,655
39,884
46,562
58,004
656,105
9%
Total Consolidated, Non-executive
2024
829,522
-
-
829,522
62,601
(108,683)
-
783,440
0%
Directors, Executive directors, and
Executive Key Management Personnel
2023
741,244
-
-
741,244
80,864
46,562
58,004
926,674
6%
1 Mr. Alder ceased as a KMP on 22 September 2023.
2 Mr. Mills joined as KMP on 22 September 2023 and ceased on 31 March 2024.
3 Dr. Lukey joined as KMP on 1 December 2023.
Table 2 – Summary of CEO and Executive
Type of equity
Grant date
Expiry date
Awarded
but not
vested
Vested
% of total vested
Lapsed
Fair value
of equity ($)1
T Alder
Equity rights
27 October 2017
10 August 2020
255,000
-
-
255,000
0.278
Director and Chief Executive
Officer
Equity rights
27 October 2017
10 August 2020
-
340,000
100%
-
0.365
Equity rights
23 May 2018
10 August 2020
-
647,250
100%
-
0.316
Equity rights
4 December 2020
30 September 2023
234,000
-
-
234,000
0.808
Equity rights
4 December 2020
30 September 2023
140,400
-
-
140,400
0.538
1 In accordance with AASB2 Share-based Payments, the fair value of variable pay rights as at the grant date has been determined by applying the Monte
Carlo|trinomial valuation model. For the assumptions used in the valuation of the rights, please refer to note F.3. 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.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 15
Table 3 – KMP share and equity holdings
Details of shares and rights help by KMP including their personally related entities for the 2024 financial year are as follows:
Type of equity1
Opening
holding at
1 July 2023
Rights allocated in 2024 Rights lapsed in 2024
Net Changes other
Closing holding at
30 June 20242
Non-executive Directors
J Welborn
Shares
1,991,667
-
-
225,118
2,216,785
Options
500,000
-
-
-
500,000
S Gallagher
Shares
216,668
-
-
150,000
366,668
Options
50,000
-
-
-
50,000
K Abbott
Shares
85,000
-
-
20,000
105,000
Options
25,000
-
-
-
25,000
G Lukey
Shares
-
-
-
730,726
730,726
Options
-
-
-
-
-
Executive Directors
T Alder
Equity Rights
374,400
-
(374,400)
-
-
Shares
1,471,639
-
-
(1,471,639)
-
Options
25,000
-
-
-
25,000
Executive Key Management Personnel
A Mills
Shares
-
-
-
-
-
Options
-
-
-
-
-
T Spencer
Shares
-
-
-
-
-
Options
-
-
-
-
-
1 Opening holding represents amounts carried forward in respect of KMP.
2 Net Other Changes includes KMP participation in the equity placement during the year and other 'on-market' activity.
3 Closing equity rights holdings represent unvested rights held at the end of the reporting period.
End of Remuneration Report
Signed in accordance with a resolution of the Directors:
J P Welborn
Chairman
Dated at Perth, Western Australia this 30 August 2024
16
To the Board of Directors of Orbital Corporation Limited
Auditor’s Independence Declaration under section 307C of the Corporations Act 2001
As lead auditor for the audit of the financial statements of Orbital Corporation Limited for the financial year
ended 30 June 2024, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(b)
any applicable code of professional conduct in relation to the audit.
Yours sincerely
Nexia Perth Audit Services Pty Ltd
Muranda Janse Van Nieuwenhuizen
Director
Perth, Western Australia
30 August 2024
ANNUAL REPORT 2024
CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
ANNUAL REPORT 2024 17
Financial statements
D. Debt and capital
Consolidated statement of profit or loss and other
comprehensive income
18
D.1 Borrowings
40
D.2 Share capital
41
Consolidated statement of financial position
19
D.3 Option Reserves
41
Consolidated statement of changes in equity
20
D.4 Reserves
42
Consolidated statement of cash flows
21
E. Other assets and liabilities
Notes to the financial statements
E.1 Provisions
43
1.A About these statements
22
F. Other notes
A. Current year performance
F.1 Key management personnel compensation
44
A.1 Operating segments
26
F.2 Related parties
44
A.2 Revenue
26
F.3 Share based payments
45
A.3 Other income
28
F.4 Subsidiaries
46
A.4 Expenses
29
F.5 Parent entity information
46
A.5 Taxes
30
F.6 Auditor remuneration
47
A.6 Earnings per share (EPS)
32
F.7 Contingent assets
47
F.8 Contingent liabilities
47
B. Growth assets
F.9 Commitments
47
B.1 Plant and equipment
33
F.10 Events after the end of the reporting period
47
B.2 Intangible assets
35
F.11 Other accounting policies
47
F.12 New accounting standards
47
C. Working capital management
C.1 Inventories
37
C.2 Trade and other receivables
38
C.3 Cash and cash equivalents
38
Consolidated Entity Disclosure Statement
48
C.4 Non-cash investing and financing activities
38
Directors' declaration
49
C.5 Other financial assets
39
Independent auditor's report
50
C.6 Trade and other payables
39
Shareholding details
54
C.7 Deferred revenue
39
Corporate information
55
C.8 Leases
39
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 18
Notes
2024
2023
$'000
$'000
Continuing operations
Sale of goods
9,110
12,350
Engineering services revenue
3,456
4,426
Interest revenue
98
26
Total revenue
A.2
12,664
16,802
Other income
A.3
3,054
5,711
Materials and consumables expenses
A.4(d)
(5,144)
(8,216)
Recovered excess inventory
372
404
Employee benefits expenses
A.4(a)
(7,496)
(8,648)
Depreciation expenses
(844)
(1,046)
Amortisation of intangibles
B.2
(408)
(276)
Engineering consumables and contractor expenses
(949)
(792)
Occupancy expenses
(446)
(718)
Travel and accommodation expenses
(135)
(255)
Communications and computing expenses
(684)
(744)
Patent expenses
(208)
(191)
Insurance expenses
(688)
(832)
Audit, compliance and listing expenses
(260)
(540)
Finance costs
A.4(b)
(334)
(214)
Bad debts recovered
185
-
Warranty expenses
E.1
1,667
(236)
Other expenses
A.4(c)
(159)
(249)
Foreign exchange gains/(losses)
(120)
60
Profit/(loss) before income tax
67
20
Income tax expense
A.5
-
-
Profit/(loss) for the year from
67
20
Other comprehensive income
Items that will not be reclassified to profit or loss:
Exchange differences on translation of foreign operations
2
2
Total comprehensive profit/(loss) for the year
69
22
Earnings per share
Basic profit/(loss) for the year attributable to ordinary equity holders of the parent
(cents)
A.6
0.05
0.02
Diluted profit/(loss) for the year attributable to ordinary equity holders of the parent
(cents)
A.6
0.05
0.02
The accompanying notes form part of the financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
ANNUAL REPORT 2024 19
2024
2023
ASSETS
Notes
$'000
$'000
Current assets
Cash and cash equivalents
C.3
4,784
2,292
Other financial assets
C.5
748
751
Trade and other receivables
C.2
577
2,125
Contract assets
C.2
890
-
Inventories
C.1
4,020
5,980
Prepayments
322
191
Finance lease receivable
C.8
433
430
Total current assets
11,774
11,769
Non-current assets
Intangibles
B.2
3,312
3,238
Plant and equipment
B.1
1,138
1,299
Inventories
C.1
2,896
2,238
Right-of-use asset
C.8
2,758
1,141
Finance lease receivable
C.8
332
253
Other receivables
C.2
21
-
Total non-current assets
10,457
8,169
Total assets
22,231
19,938
LIABILITIES
Current liabilities
Trade payables and other liabilities
C.6
1,660
1,979
Deferred revenue
C.7
1,330
1,243
Borrowings
D.1
2,438
1,452
Lease liabilities
C.8
690
752
Provisions
E.1
2,265
4,096
Total current liabilities
8,383
9,522
Non-current liabilities
Lease liabilities
C.8
2,945
1,083
Borrowings
D.1
-
2,344
Provisions
E.1
73
51
Total non-current liabilities
3,018
3,478
Total liabilities
11,401
13,000
Net assets
10,830
6,938
Equity
Share capital
D.2
45,203
41,380
Options reserve
D.3
1,033
1,033
Reserves
D.4
2,596
2,594
Accumulated losses
(38,002)
(38,069)
Total equity
10,830
6,938
The accompanying notes form part of the financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 20
Share capital
(Accumulated losses)
Employee
equity benefits reserve
Foreign currency
translation reserve
Option reserve
Total equity
Notes
D.2
D.4
D.4
D.3
$'000
$'000
$'000
$'000
$'000
$'000
At 1 July 2023
41,380
(38,069)
2,652
(58)
1,033
6,938
Profit for the year
-
67
-
-
-
67
Foreign currency translation
-
-
-
2
-
2
Total comprehensive profit for the year
-
67
-
2
-
69
Issue of ordinary shares, net of costs
3,787
-
-
-
-
3,787
Issue of share options
-
-
-
-
-
-
Share based payments
36
-
-
-
-
36
At 30 June 2024
45,203
(38,002)
2,652
(56)
1,033
10,830
At 1 July 2022
37,682
(38,089)
2,665
(60)
-
2,198
Profit for the year
-
20
-
-
-
20
Foreign currency translation
-
-
-
2
-
2
Total comprehensive profit for the year
-
20
-
2
-
22
Issue of ordinary shares, net of costs
3,662
-
-
-
-
3,662
Issue of share options
-
-
-
-
1,033
1,033
Share based payments
36
-
(13)
-
-
23
At 30 June 2023
41,380
(38,069)
2,652
(58)
1,033
6,938
The accompanying notes form part of the financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 21
2024
2023
Notes
$'000
$'000
Cash flows from operating activities
Cash receipts from customers
14,211
12,937
Cash paid to suppliers and employees
(15,715)
(16,938)
Cash receipts from R&D rebates
1,442
732
Interest received
98
26
Interest paid
(70)
(251)
Net cash used in operating activities
C.3
(34)
(3,494)
Cash flows from investing activities
Payments for financial instruments
4
(166)
Purchase of plant and equipment
(311)
(290)
Grant rebates received
364
920
Payments for intangible asset
(847)
(836)
Net cash used in investing activities
(790)
(372)
Cash flows from financing activities
Proceeds from issues of shares and options
D.2
4,000
5,000
Share issue transaction costs
(213)
(305)
Principal elements of lease payments
(485)
(807)
Net cash from financing activities
3,302
3,888
Net decrease in cash and cash equivalents
2,478
22
Cash and cash equivalents at 1 July
2,292
2,363
Effects of exchange rate fluctuations on the balances of cash held in foreign
currencies
14
(93)
Cash and cash equivalents at 30 June
C.3
4,784
2,292
The accompanying notes form part of the financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 22
1.A About these statements
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.
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.
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.
The financial statements were authorised for issue in
accordance with a resolution of the Directors on 30
August 2024.The Directors have the power to amend and
reissue the financial statements.
1.B Statement of compliance
1.E Basis of preparation
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 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.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024 23
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 2024 the Group's strategy
remained unchanged from 2023, the gearing ratio at 30 June 2024 was 23% (2023: 55%). 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
Foreign currency risk
Page
25
Section C
Liquidity risk
Page
36
Section C
Interest Rate risk
Page
36
Section C
Credit risk
Page
37
Section D
Capital risk management
Page
40
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 Page
31
B.1 Impairment of non-current assets
Page
34
C.1 Recoverability of inventories
Page
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
24
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 2024, the Group recorded an after tax profit of $67,000 (2023: $20,000) and operating
cash outflows of $34,000 (2023: $3,494,000). As at 30 June 2024, the Group had net assets of $10,830,000
(2023: $6,938,000) and net current assets of $3,391,000 (2023: 2,247,000). The Group also had cash outflows
from investing activities of $790,000 (2023: 372,000) and cash inflows from financing activities of $3,302,000
(2023: 3,888,000).
The going concern assumption is based on the Group’s cash flow projections and existing cash reserves as at 30
June 2024 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:
• Successful continued development of new engine models, leading to further committed engineering and
production revenues.
• Achieving the milestones required under the terms of the WA government loan, as described in note D.1, such
that grants are received and repayments are not required within the forecast period.
• 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.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
25
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
Page 26
A.2
Revenue
Page 26
A.3
Other income
Page 28
A.4
Expenses
Page 29
A.5
Taxes
Page 30
A.6
Earnings per share
Page 32
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 2024 and 2023 are as follows:
2024
A$'000
2023
A$'000
Financial assets
Cash and cash equivalents
476
1,159
Trade and other receivables
140
623
Financial liabilities
Trade and other payables
220
95
For the year ended 30 June 2024, revenue from external customers denominated in USD was A$8,344,000 (2023:
A$7,034,000).
Sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in USD exchange rates, with all other
variables held constant. The impact on the Group’s profit before tax is due to changes in the fair value of monetary
assets and liabilities. There is no impact on changes in foreign currencies on other comprehensive income. The Group’s
exposure to foreign currency changes for all other currencies is not material.
The Group has used the observed range of actual historical rates for the preceding five year period, with a heavier
weighting placed on recently observed market data, in determining reasonably possible exchange movements as part of
their sensitivity analysis. Past movements in exchange rates are not necessarily indicative of future movements.
Change in
AUD/USD rate
Increase / (Reduction) on
profit before taxes
2024
+10%
(36)
-10%
44
2023
+10%
(153)
-10%
187
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
26
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 2024
Australia
US
Consolidated
2024
2023
2024
2023
2024
2023
$'000
$'000
$'000
$'000
$'000
$'000
Segment revenue
12,664
16,802
-
-
12,664
16,802
EBIT
569
449
(168)
(215)
401
234
Finance expenses
(265)
(192)
(69)
(22)
(334)
(214)
Profit/(loss) before income tax
304
257
(237)
(237)
67
20
Australia
US
Consolidated
2024
2023
2024
2023
2024
2023
$'000
$'000
$'000
$'000
$'000
$'000
Assets
21,125
18,498
1,106
1,440
22,231
19,938
Liabilities
10,237
11,399
1,164
1,601
11,401
13,000
Net assets
10,888
7,099
(58)
(161)
10,830
6,938
A.2 Revenue
Australia
US
Consolidated
2024
2023
2024
2023
2024
2023
$'000
$'000
$'000
$'000
$'000
$'000
Revenue
12,664
16,802
-
-
12,664
16,802
Total external revenue
12,664
16,802
-
-
12,664
16,802
Timing of revenue recognition
At a point in time
9,208
12,376
-
-
9,208
12,376
Over time
3,456
4,426
-
-
3,456
4,426
12,664
16,802
-
-
12,664
16,802
Revenues of approximately $9,887,000 (2023: $7,440,000) 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 CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
27
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.
Revenue for goods sold but not delivered is recognised if:
(a) the reason for the bill-and-hold arrangement must be substantive;
(b) the product must be identified separately as belonging to the customer;
(c) the product currently must be ready for physical transfer to the customer:
(d) the entity cannot have the ability to use the product or to direct it to another customer.
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.
· Interest income
Interest income 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:
2024
2023
$'000
$'000
Contract Liabilities
Deferred revenue
1,330
1,243
Refer to Note C.7 deferred revenue for a breakdown of deferred revenue recognised in the current year.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
28
A. CURRENT YEAR PERFORMANCE
A.3 Other income
2024
2023
$'000
$'000
Grant income
1,500
4,825
Rental income
94
150
Research and development grant
1,442
732
Other
18
4
3,054
5,711
Recognition and measurement
· Grant income
In FY24, 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 $0.1M are recognised as grant income, in accordance with AASB 120 Accounting for
Government Grants. Refer to Note D.1 for further details.
· Research and development grant
In accordance with research and development tax legislation the Group is entitled to a refundable R&D tax offset
accounted for as research and development grant. Government grants are recognised when it is probable that the
grant will be received and all attached conditions will be complied with. When the grant relates to an asset, it is
recognised as a reduction in the related asset. When the grant relates to an expense item, it is recognised as income
on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
· Other income
The other income represents sales income from asset disposals.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
29
A. CURRENT YEAR PERFORMANCE
A.4 Expenses
(a)
Employee benefits expense
(d)
Materials and consumable expenses
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Salaries and wages
5,409
6,351
Raw materials and consumables
3,184
3,122
Defined contribution plans
778
798
Change in inventories
1,960
5,094
Share based payments (Note F.3)
36
23
5,144
8,216
Annual and long service leave
722
807
Other personnel costs
551
669
Recognition and measurement
7,496
8,648
· Defined contribution plans
(b)
Finance costs
Obligations for contributions to defined contribution
superannuation funds are recognised as an expense as
incurred.
2024
2023
$'000
$'000
Interest expense
334
214
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.
334
214
(c)
Other expenses
2024
2023
$'000
$'000
Administration
84
119
Marketing and investor relations
5
27
Freight
40
66
Other
30
37
159
249
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
30
A. CURRENT YEAR PERFORMANCE
A.5 Taxes
The major components of the income tax expense for the years
ended 30 June 2024 and 2023 are:
The Group has unused tax losses that arose in
Australia, for which no deferred tax assets have
been recognised of $52,194,180 (2023:
$52,846,066) and are available indefinitely for
offsetting against future taxable profits of the Group
and its controlled entities in which those losses
arose.
2024
2023
$'000
$'000
Deferred income tax expense
-
-
Adjustments in respect of prior years
-
-
Total income tax expense
-
-
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 2024, the Group had unused
tax losses for which no deferred tax assets have
been recognised of US$4,246,000 (2023:
US$13,764,000).
The reconciliation of the income tax benefits/(expenses) and
accounting profit multiplied by the Australian domestic tax rate
for the years ended 30 June 2024 and 2023 are:
2024
2023
$'000
$'000
Accounting profit/(loss) before tax
from continuing operations
67
20
Recognition and measurement
Accounting profit/(loss)
before income tax
67
20
· Current income tax
At Australia's statutory income tax
rate of 25.0% (2023: 25.0%)
(17)
(5)
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.
Non assessable income
(736)
(1,389)
Expenses subject to R&D tax
incentive
1,175
1,210
Non-deductible expenses
51
52
Deferred tax asset not recognised
(473)
132
Income tax expense
-
-
· Deferred tax
Income tax expense reported in the
statement of profit or loss
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.
-
-
Deferred tax balances comprise of the following deferred tax
assets/(deferred tax liabilities):
2024
2023
$'000
$'000
Inventory
416
639
Revenue received in advance
110
311
Plant and equipment
(76)
25
Provisions and accruals
774
1,256
Intangible asset
(828)
(809)
ROU leasing assets
120
(97)
ROU leasing liabilities
(123)
138
Foreign exchange gains/losses
2
29
Other
42
61
Unrecognised temporary differences
(437)
(1,553)
Net deferred tax asset
-
-
ANNUAL REPORT 2024
31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
A. CURRENT YEAR PERFORMANCE
A.5 Taxes (continued)
· Deferred tax
Key estimate: Recoverability of deferred tax
assets
Deferred tax liabilities are recognised for all taxable
temporary differences, except:
At 30 June 2024, the Group recognised nil (2023:
nil) of deferred tax assets after assessing the
likelihood of offsetting unused tax losses against
future taxable profits.
• 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.
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.
• 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.
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.
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.
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.
• 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
32
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.
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:
The following table reflects the income and share data
used in the basic and diluted EPS computations:
2024
Number
2023
Number
Options
17,500,000
17,500,000
2024
2023
Performance rights
-
430,464
$'000
$'000
Total
17,500,000
17,930,464
Profit/(loss) for the year
ended attributable to ordinary
equity holders of the Parent:
Continuing operations
67
20
2024
2023
Number
Number
Weighted average number of
ordinary shares for basic
EPS
137,892,988
104,435,036
Weighted average number
of ordinary shares adjusted
for the effect of dilution
137,892,988
104,435,036
Earnings per share
Cents
Cents
Basic profit/(loss) per share
0.05
0.02
Diluted profit/(loss) per share
0.05
0.02
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
33
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
Plant and equipment
Page 33
B.2
Intangible assets
Page 35
B.1 Plant and equipm ent
Plant and
equipment
Leasehold
improvements
Total
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.
$’000
$’000
$’000
Gross carrying amount at cost
At 30 June 2022
13,800
2,588
16,388
Additions
246
44
290
Grant rebate
(196)
-
(196)
At 30 June 2023
13,850
2,632
16,482
Additions
219
92
311
Disposals
(234)
-
(234)
At 30 June 2024
13,835
2,724
16,559
Depreciation and impairment
At 30 June 2022
(12,305)
(2,378)
(14,683)
Depreciation
(452)
(48)
(500)
At 30 June 2023
(12,757)
(2,426)
(15,183)
Depreciation
(359)
(36)
(395)
Disposals
157
-
157
At 30 June 2024
(12,959)
(2,462)
(15,421)
Net book value
At 30 June 2024
876
262
1,138
At 30 June 2023
1,093
206
1,299
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.
ANNUAL REPORT 2024
34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
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.
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.
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 2024, with remaining assets
expected to be recovered in full from future business
activities.
Impairment losses are recognised in the statement of
profit or loss in expense categories consistent with the
function of the impaired asset.
Depreciation
Depreciation is calculated on a straight-line basis over
the estimated useful life as follows:
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.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
35
B. GRO WT H ASSETS
B.2 Intangible assets
Consolidated
Model 2019
Development
$'000
Model 2021
Development
$'000
Models 2023
Development
$'000
Total
$'000
Year ended 30 June 2024
Cost
2,611
4,223
542
7,376
Accumulated amortisation and impairment
(1,190)
(365)
-
(1,555)
R&D tax offset recognised
(1,421)
(1,088)
-
(2,509)
Net carrying amount
-
2,770
542
3,312
Movement
Net carrying amount at the beginning of the year
43
3,195
-
3,238
Additions
-
304
542
846
Amortisation for the year
(43)
(365)
-
(408)
R&D tax offset recognised
-
(364)
-
(364)
Net carrying amount at the end of
the year
-
2,770
542
3,312
Year ended 30 June 2023
Cost
2,611
3,919
-
6,530
Accumulated amortisation and impairment
(1,147)
-
-
(1,147)
R&D tax offset recognised
(1,421)
(724)
-
(2,145)
Net carrying amount
43
3,195
-
3,238
Movement
Net carrying amount at the beginning of the year
319
3,083
-
3,402
Additions
-
836
-
836
Amortisation for the year
(276)
-
-
(276)
R&D tax offset recognised
-
(724)
-
(724)
Net carrying amount at the end of
the year
43
3,195
-
3,238
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.
Models 2023 are in the early stages of development and so amortisation has not yet commenced.
Intangible asset
Useful life
Internally generated intangible
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
36
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
Page 37
C.2 Trade and other receivables
Page 38
C.3 Cash and cash equivalents
Page 38
C.4 Non-cash investing and financing activities
Page 38
C.5 Other financial assets
Page 39
C.6 Trade and other payables
Page 39
C.7 Deferred revenue
Page 39
C.8 Leases
Page 39
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 2024, the Group has a total of $4,784,000 of cash at its disposal (2023:
$2,292,000) and a net current asset position $3,391,000 (2023 net current asset: $2,247,000). The remaining contractual
maturities of the Group's financial liabilities are:
Less than
3 months
3-12
months
1-5
years
Over 5
years
Total
contractual
cashflows
Carrying amount
(assets)/liabilities
$'000
$'000
$'000
$'000
$'000
$'000
At 30 June 2024
Borrowings
-
2,486
-
-
2,486
2,438
Trade payables and other liabilities
1,660
-
-
-
1,660
1,660
Lease liabilities
228
749
4,149
482
5,608
3,635
1,888
3,235
4,149
482
9,754
7,733
At 30 June 2023
Borrowings
-
1,500
2,486
-
3,986
3,796
Trade payables and other liabilities
1,979
-
-
-
1,979
1,979
Lease liabilities
314
539
1,221
-
2,074
1,835
2,293
2,039
3,707
-
8,039
7,610
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
2024 is as follows:
2024
2023
$'000
$'000
Cash and cash equivalents (Note C.3)
4,784
2,292
Short-term deposits (Note C.5)
748
751
5,532
3,043
A reasonably possible change in the interest rate (+0.5%/-0.5%) (2023: +0.5%/-0.5%)), with all variables held constant,
would have resulted in a change in post tax profit/(loss) of $24,000/($24,000) (2023: $11,000)/($11,000) and no impact to
other comprehensive income.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
37
C. WORKING CAPITAL MANAGEMENT
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 2024 and
2023 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
2024
2023
$'000
$'000
Raw materials
6,304
8,944
Provision for impairment
(1,664)
(2,558)
Work in progress
2,171
1,832
Finished goods
105
-
6,916
8,218
Current
4,020
5,980
Non current
2,896
2,238
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 inventories
The Group's inventories are predominantly composed of purchased parts used in the construction of engines for sale.
The recoverability of inventories 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
reporting date is informed by discussions with the Group's customers as to expected volume requirements for the
engine programs.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
38
C. WORKING CAPITAL MANAGEMENT
C.2 Trade and other receivables
C.3 Cash and cash equivalents
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Trade receivables
392
2,101
Cash at bank
4,784
2,292
Contract assets
890
-
4,784
2,292
Other receivables
849
873
Impairment of other receivables (a)
(849)
(849)
The reconciliation of net loss after tax to net cash flows
from operations for the years ended 30 June 2024 and
2023 is as follows:
Recovery of bad debt (a)
185
-
Retention receivable
21
-
1,488
2,125
2024
2023
Current
1,467
2,125
$'000
$'000
Non current
21
-
Profit/(loss) after income tax from continuing
operations
67
20
(a) At 30 June 2024, the Group has $664,000 (2023:
$849,000) as a provision for impaired receivables in respect
of an amount receivable from Avidsys Pty Ltd as
consideration for the disposal of REMSAFE Pty Ltd on 18
December 2017), where receivables of $185,000 were
recovered as of 30 June 2024. 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.
Profit/(loss) after income tax
67
20
Depreciation & amortisation (Note B.1)
880
777
Government loan forgiven
(1,358)
(4,690)
Provision for excess stock
(893)
(434)
Warranties (Note E.1)
(1,667)
236
Employee benefits (Note E.1)
(163)
(29)
Provision for doubtful debt
(185)
(75)
Share based payment expense (Note F.3)
36
23
Net foreign exchange gain
108
2
Net cash used in operating activities before
changes in assets and liabilities
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.
(3,175)
(4,170)
Changes in assets and liabilities during the year:
Decrease/(increase) in receivables and
prepayments
1,494
(984)
Recognition and measurement
(Increase)/decrease in inventories
2,195
5,065
Trade and other receivables are non-derivative financial
assets with fixed or determinable payments that are not
quoted in an active market.
(Increase)/decrease in deferred tax assets
-
-
Increase/(decrease) in payables
(548)
(3,405)
3,141
676
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.
Net cash used in operating activities
(34)
(3,494)
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.
Contract assets are recognised when the consolidated entity
has transferred goods or services to the customer but where
the consolidated entity is yet to establish an unconditional
right to consideration. Contract assets are treated as financial
assets for impairment purposes.
Fair value
The carrying amount of short-term deposits approximates
their fair value.
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. While cash and cash
equivalents are also subject to the impairment requirements
of AASB 9, there is no material impairment in the current
year.
C.4 Non-cash investing and financing activities
2024
2023
$'000
$'000
Additions to the right-of use assets
1,617
800
Additions to the finance lease receivable
82
499
Changes in borrowings
1,358
4,690
Changes in lease liabilities
(1,800)
(1,069)
Shares issued under employee share plan
36
36
Fair value
1,293
4,956
The carrying amount of trade and other receivables
approximates their fair value.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
39
C. WORKING CAPITAL MANAGEMENT
C.5 Other financial assets
C.8 Leases
2024
2023
$'000
$'000
The Group leases various premises. Lease terms are
negotiated on an individual basis and contain a range of
different terms and conditions.
Short term deposits
748
751
748
751
The Group has pledged short term deposits of $748,000 (2023:
$751,000) as collateral for financing and lease facilities.
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.
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.
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.
Fair value
The carrying amount of short-term deposits approximates their
fair value.
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.
C.6 Trade and other payables
2024
2023
$'000
$'000
Trade payables
1,552
1,767
Taxes payable
108
212
1,660
1,979
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.
Amounts recognised in the balance sheet
Set out below is a summary of the amounts disclosed in the
Consolidated Statement of Financial Position:
Right-of-use assets
2024
2023
$'000
$'000
Properties
2,758
1,141
Fair value
Total right-of-use assets
2,758
1,141
The carrying amount of trade and other payables approximates
their fair value.
Finance Lease Receivable
2024
2023
$'000
$'000
C.7 Deferred revenue
Current
433
430
Non Current
332
253
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.
765
683
Lease Liabilities
2024
2023
$'000
$'000
Current
690
752
Non Current
2,945
1,083
A reconciliation of deferred revenue for the years ended 30 June
2024 and 2023 is as follows:
3,635
1,835
2024
2023
Amounts recognised in the statement of profit or loss
$'000
$'000
The statement of profit or loss shows the following amounts
relating to leases:
At 1 July
1,243
4,046
Deferred during the year
6,666
7,825
2024
2023
Released to the statement of profit or loss
(6,579)
(10,628)
$'000
$'000
At 30 June
1,330
1,243
Depreciation charge of right-of-use assets
449
546
Impairment
-
-
Recognition and measurement
Interest expense (included in finance cost)
152
57
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.
Interest income
-
-
The total cash outflow for leases in 2024 was $485,000
(2023: $807,000).
ANNUAL REPORT 2024
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
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
Borrowings
Page 40
D.2
Share capital
Page 41
D.3
Option reserves
Page 41
D.4
Reserves
Page 42
Financial and capital risks in this section
Capital risk management
For the purposes of the Group's capital management, capital includes contributed shareholder equity. When
managing capital, management's objective is to ensure the entity continues as a going concern as well as to
maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a
capital structure that ensures the lowest cost of capital, provides a strong capital base so as to maintain investor,
creditor and market confidence and to sustain future development of the business. In order to maintain or adjust the
capital structure, the Group may issue new shares or debt.
D.1 Borrowings
2024
2023
• 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 31 January
2023.
• The Deed of Variation changed the repayment due
dates so that the term of the loan was reduced to 31
December 2024.
• 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 over the remaining period.
• For the year ended June 2024, Orbital achieved
various operational milestones and reduced the loan by
$1.5M.
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
($0.3M) 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.
$'000
$'000
Current
2,438
1,452
Non-current
-
2,344
2,438
3,796
Changes in borrowings arising from financing
activities are as follows:
$'000
At 30 June 2023
3,796
Loan forgiveness grant income
(1,500)
Interest expenses
142
At 30 June 2024
2,438
At 1 July 2022
8,486
Loan forgiveness grant income
(4,500)
Grant income (loan deferral)
(325)
Interest expenses
135
At 30 June 2023
3,796
On 25 January 2010, the Department of Jobs,
Tourism, Science and Innovation ("JTSI") 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:
ANNUAL REPORT 2024
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
D. DEBT AND CAPITAL
D.2 S hare capital
2024
2023
$'000
$'000
Ordinary shares issued and fully paid
45,203
41,380
Movement in ordinary shares
Number
$000's
At 1 July 2022
90,996,694
37,682
Issue of ordinary shares
25,000,000
3,968
Share issue transaction costs
-
(306)
Employee Share plan
1,238,610
36
At 30 June 2023
117,235,304
41,380
At 1 July 2023
117,235,304
41,380
Issue of ordinary shares
28,571,429
4,000
Share issue transaction costs
-
(213)
Employee Share plan
250,182
36
At 30 June 2024
146,056,915
45,203
Recognition and measurement
Share capital is recognised at the fair value of the consideration received. The cost of issuing shares is shown in the
share capital as a deduction, net of tax, from the proceeds. Own equity instruments that are re-acquired are
recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale,
issue or cancellation of the Group’s own equity instruments. 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 Options reserve
2024
2023
$'000
$'000
Issued Options
1,033
1,033
Movement in options
Number
$000's
At 1 July 2022
-
-
Issue of options
17,500,000
1,033
At 30 June 2023
17,500,000
1,033
Movement in options
Number
$000's
At 1 July 2023
17,500,000
1,033
Issue of options
-
-
At 30 June 2024
17,500,000
1,033
During the 2023 financial year, 17,500,000 new Options were issued for nil cash consideration and were valued at
$1,033,205 using the Black Scholes method of calculation at issue date of 7 February 2023. A volatility rate of 99.8%
and a risk-free rate of 3.16% was used in the calculation. The options are exercisable at $0.35 on or before the date
that is 3 years after the date of issue.
ANNUAL REPORT 2024
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
D. DEBT AND CAPITAL
D.4 Reserves
Employee
benefits
reserve
Foreign currency
translation reserve
Total
$000's
$000's
$000's
At 1 July 2022
2,665
(60)
2,605
Foreign currency translation
-
2
2
Rights issued pursuant to performance rights plan
(13)
-
(13)
At 30 June 2023
2,652
(58)
2,594
.
At 1 July 2023
2,652
(58)
2,594
Foreign currency translation
-
2
2
Rights issued pursuant to performance rights plan
-
-
-
At 30 June 2024
2,652
(56)
2,596
Nature and purpose of reserves
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
43
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 43
E.1 Provisions
Warranties
Contract
performance
liabilities
Employee
benefits
Total
$000's
$000's
$000's
$000's
At 1 July 2023
2,869
-
1,278
4,147
Arising during the year
125
21
483
629
Utilised
-
-
(646)
(646)
Expired
(1,792)
-
-
(1,792)
At 30 June 2024
1,202
21
1,115
2,338
Current
1,202
-
1,063
2,265
Non-current
-
21
52
73
1,202
21
1,115
2,338
At 1 July 2022
2,633
-
1,307
3,940
Arising during the
year
338
-
681
1,019
Utilised
(11)
-
(710)
(721)
Expired
(91)
-
-
(91)
At 30 June 2023
2,869
-
1,278
4,147
Current
2,869
-
1,227
4,096
Non-current
-
-
51
51
2,869
-
1,278
4,147
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.
ANNUAL REPORT 2024
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
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
Page 44
F.2 Related parties
Page 44
F.3 Share based payments
Page 45
F.4 Subsidiaries
Page 46
F.5 Parent entity information
Page 46
F.6 Auditor remuneration
Page 47
F.7 Contingent assets
Page 47
F.8 Contingent liabilities
Page 47
F.9 Commitments
Page 47
F.10 Events after the end of the reporting period
Page 47
F.11 Other accounting policies
Page 47
F.12 New accounting standards
Page 47
F.1 Key management personnel compensation
Compensation of key management personnel of the Group
2024
2023
$
$
Short term employee benefits
829,522
1,061,639
Post-employment benefits
62,601
80,864
Long-term employee benefits
(108,683)
21,029
Share based payments
-
289
783,440
1,163,821
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.
ANNUAL REPORT 2024
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
F. OTHER NOTES
F.3 Share based payments
2020
Executive
LTI Plan
2020 CEO
LTI Plan
2024
2023
$'000
$'000
Equity-settled share based payment
transactions
36
23
Grant date
28/10/2020
4/12/2020
Expiry date
30/09/2023
30/09/2023
36
23
Share price at grant date
$1.19
$1.18
Fair value ($/right) - Tranche 1
0.970
0.980
There were no cancellations or modifications to awards in
the 2024 or 2023 financial years. Share-based payment
plans are explained below:
Fair value ($/right) - Tranche 2
0.760
0.730
Expected volatility
70%
70%
Risk-free interest rate
0.12%
0.13%
Remaining contractual life
1.25 years
1.25 years
Employee Share Plan
Model used
Monte
Carlo
Monte
Carlo
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.
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.
For the year ended 30 June 2024, 250,182 ordinary
shares (2023: 231,969 ordinary shares) were issued on
19 March 2024 at a market value on the date of issue of
$35,776 (2023: $35,955).
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
2024, no performance rights issued under the plan
vested. The share based payment expense recognised
for the year ended 30 June 2024 was $nil (2023: $nil).
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.
Movements during the year
The following table illustrates the number of performance
rights during the year:
2024
Number
2023
Number
Outstanding at 1 July
430,464
1,549,105
Granted during the year
-
-
Exercised during the year
-
(1,006,641)
Lapsed during the year
(430,464)
(112,000)
Outstanding at 30 June
-
430,464
The weighted average remaining contractual life of
performance rights outstanding at 30 June 2024 was 0.00
years (2023: 0.25 years).
The following tables list the inputs into the models used
for the plans for the years ended 30 June 2024 and 2023
respectively:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
46
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:
Note
Class of
shares
Country of
incorporation
Principal
activities
% equity interest
Entity
2024
2023
Orbital Australia Pty Ltd
(b)
(c)
Ordinary
Australia
Production &
Development
100
100
Orbital Australia Manufacturing Pty Ltd
Ordinary
Australia
Dormant
100
100
OEC Pty Ltd
Ordinary
Australia
Dormant
100
100
S T Management Pty Ltd
Ordinary
Australia
Dormant
100
100
OFT Australia Pty Ltd
Ordinary
Australia
Dormant
100
100
Investment Development Funding Pty Ltd
Ordinary
Australia
Dormant
100
100
Power Investment Funding Pty Ltd
Ordinary
Australia
Dormant
100
100
Kala Technologies Pty Ltd
Ordinary
Australia
Dormant
100
100
Orbital Autogas Systems Pty Ltd
Ordinary
Australia
Dormant
100
100
Orbital Share Plan Pty Ltd
(a)
Ordinary
Australia
Dormant
100
100
Orbital Holdings (USA) Inc.
Ordinary
United States
Dormant
100
100
Orbital Fluid Technologies Inc.
Ordinary
United States
Dormant
100
100
Orbital UAV USA, LLC
Ordinary
United States
Production &
Development
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
2024
2023
$'000
$'000
Current assets
-
-
Non-current assets
7,661
7,625
Current liabilities
2,438
1,451
Non-current liabilities
-
2,344
Net assets
5,223
3,830
Issued capital
45,203
41,380
Share Options Reserve
1,033
1,033
Accumulated losses
(43,665)
(41,235)
Employee benefits reserve
2,652
2,652
Total equity
5,223
3,830
Profit / (loss) of the parent
1,541
4,689
Total comprehensive profit/ (loss) of the parent entity
1,541
4,689
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
ANNUAL REPORT 2024
47
F. OTHER NOTES
F.6 Auditor remuneration
Intangible assets
During the year the following fees were paid or payable for
services provided by Nexia Perth Audit Services Pty Ltd
(2023: 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:
Patents
Patents, licences and technology development and
maintenance costs, not qualifying for capitalisation,
are expensed as incurred.
2024
2023
$
$
Fair value measurement
(a) Auditors of the Group
Audit and review of financial reports
97,638
273,138
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:
Tax compliance services
20,000
50,601
Other services
-
20,400
117,638
344,139
F.7 Contingent assets
►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
The Group had no contingent assets as at 30 June 2024
and 30 June 2023.
F.8 Contingent liabilities
The Group had no contingent liabilities as at 30 June 2024
and 30 June 2023.
F.9 Commitments
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.
The Group had no commitments that are not recognised as
liabilities as at 30 June 2024 and 30 June 2023.
F.10 Events after the end of the reporting period
There were no reportable events after the reporting period
end.
F.12 New accounting standards
F.11 Other accounting policies
New standards and interpretations
Goods and services tax
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.
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.
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
AS AT 30 JUNE 2024
ANNUAL REPORT 2024
48
Name of entity
Type of entity
Trustee,
partner, or
participant
in joint
venture
% of share
capital held
Australian
resident or
foreign resident
(for tax
purposes)
Foreign tax
jurisdiction(s)
of foreign
residents
Orbital Corporation Limited
Body corporate
n/a
100%
Australia
n/a
Orbital Australia Pty Ltd
Body corporate
n/a
100%
Australia
n/a
Orbital Australia Manufacturing Pty Ltd
Body corporate
n/a
100%
Australia
n/a
OEC Pty Ltd
Body corporate
n/a
100%
Australia
n/a
S T Management Pty Ltd
Body corporate
n/a
100%
Australia
n/a
OFT Australia Pty Ltd
Body corporate
n/a
100%
Australia
n/a
Investment Development Funding Pty Ltd
Body corporate
n/a
100%
Australia
n/a
Power Investment Funding Pty Ltd
Body corporate
n/a
100%
Australia
n/a
Kala Technologies Pty Ltd
Body corporate
n/a
100%
Australia
n/a
Orbital Autogas Systems Pty Ltd
Body corporate
n/a
100%
Australia
n/a
Orbital Share Plan Pty Ltd
Body corporate
n/a
100%
Australia
n/a
Orbital Holdings (USA) Inc.
Body corporate
n/a
100%
Foreign
United States
Orbital Fluid Technologies Inc.
Body corporate
n/a
100%
Foreign
United States
Orbital UAV USA, LLC
Body corporate
n/a
100%
Foreign
United States
Orbital Corporation (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated group
under the tax consolidation regime.
DIRECTORS’ DECLARATION
ANNUAL REPORT 2024
49
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 2024 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.
(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 here are reasonable grounds to believe that the Company will be
able to pay its debts as and when they become due and payable.
(d)
The information disclosed in the attached consolidated entity disclosure statement is true and correct.
2.
This declaration has been made after receiving the declaration required to be made to the Directors in accordance
with Section 295A of the Corporations Act 2001, from the Chief Financial Officer for the financial year 30 June 2024.
On behalf of the Board,
JP Welborn
Chairman
Dated at Perth, Western Australia 30 August 2024
50
Independent Auditor’s Report to the Members of Orbital Corporation Limited
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Orbital Corporation Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2024,
the consolidated statement of comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, and notes to the financial statements,
including material accounting policy information, the consolidated entity disclosure statement and the
directors’ declaration.
In our opinion, the accompanying financial statements of the Group is in accordance with the Corporations
Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2024 and of its performance
for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the financial statements
section of our report. 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 statements in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the directors of the Company, would be in the same terms if given to the directors as at the time of this
auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1.J in the financial statements, which indicates that the Group recorded an after
tax profit of $67,000 (2023: $20,000) and operating cash outflows of $34,000 (2023: $3,494,000). As at 30
June 2024, the Group had net assets of $10,830,000 (2023: 6,938,000) and net current assets of $3,391,000
(2023: 2,247,000). The Group also had cash outflows from investing activities of $790,000 (2023: 372,000)
and cash inflows from financing activities of $3,302,000 (2023: 3,888,000). As stated in Note 1.J, these
events or conditions, along with other matters as 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.
ANNUAL REPORT 2024
51
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key audit matter
How our audit addressed the key audit
matter
Valuation of Inventories
Refer to note C.1
As at 30 June 2024, the Group held inventories with
a carrying value of $6,916,000, comprising of raw
materials and work in progress which will be used
in the construction of engines.
In accordance with AASB 102: Inventories (“AASB
102”), inventories shall be measured at the lower
of cost and net realisable value.
As at 30 June 2024, the Group recognised a
provision of $1,664,000 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 matter due to the significance
of the Inventories balance to the Consolidated
Statement of Financial Position and the significant
level of estimation in determining the quantum of
the provision.
There is a risk that inventories are not carried at
lower of cost and net realizable value and not
recognised and disclosed in accordance with AASB
102.
Our procedures included, amongst others:
• assessed the application of inventory costing
methodologies and whether this was consistent
with the requirements of AASB 102;
• agreed the cost of a sample of inventory items to
supplier invoices;
• on a sample basis, evaluated the direct labour
costs allocated to engines in inventories by
inspecting timesheets and agreeing the labour
cost to payroll data;
• on a sample basis, recalculated the mathematical
accuracy of weighted average and standard cost
and matched to closing cost per the inventory
report;
• checked the accuracy of allocation of overhead
costs per the basis of calculation determined by
the management;
• evaluated whether inventories were carried at the
lower of cost and net realisable value, by
comparing the cost of inventories in each engine's
respective final bill of material against sale prices
in customer contracts;
• checked the adequacy for provision for obsolete
and slow moving stocks based on future use of
those inventory for production or rework; and
• evaluated the adequacy of the disclosures made
in Note C.1 in the light of the requirements of
AASB 102.
Other Information
The directors are responsible for the other information. The other information comprises the information in
the Group’s annual report for the year ended 30 June 2024, but does not include the financial statements
and the auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the other
information we are required to report that fact. We have nothing to report in this regard.
ANNUAL REPORT 2024
52
Responsibilities of the Directors for the Financial statements
The directors of the Company are responsible for the preparation of:
a)
the financial statements (other than the consolidated entity disclosure statement) that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001;
and
b)
the consolidated entity disclosure statement that is true and correct in accordance with the
Corporations Act 2001, and
for such internal control as the directors determine is necessary to enable the preparation of:
i)
the financial statements (other than the consolidated entity disclosure statement) that gives a true
and fair view and is free from material misstatement, whether due to fraud or error; and
ii)
the consolidated entity disclosure statement that is true and correct and is free of misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s ability 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 statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial statements.
A further description of our responsibilities for the audit of the financial statements is located at The
Australian Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar2_2020.pdf
ANNUAL REPORT 2024
53
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 15 of the Directors’ Report for the year
ended 30 June 2024.
In our opinion, the Remuneration Report of Orbital Corporation Limited for the year ended 30 June 2024
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.
Nexia Perth Audit Services Pty Ltd
Muranda Janse Van Nieuwenhuizen
Director
Perth, Western Australia
30 August 2024
ANNUAL REPORT 2024
SHAREHOLDING DETAILS
ANNUAL REPORT 2024
54
Class of Shares and Voting Rights
As at 5 July 2024 there were 4,831 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)
at meetings of members or class of members, each member entitled to vote may vote in person or by proxy or representative; and
b)
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 5 July 2024
UIL Limited
45,278,204
31.10%
BONEYARD INVESTMENTS PTY LTD
21,471,639
14.75%
CITICORP NOMINEES PTY LIMITED
15,869,287
10.90%
Distribution of Shareholdings as at 5 July 2024
1-1,000
2,539
1,001-5,000
1,209
5,001-10,000
432
10,001-100,000
550
100,001 and over
101
Number of shareholders
4,831
Total Shares on Issue
145,584,770
Number of unmarketable parcels
4,820,689
Top 20 Shareholders as at 30 June 2024
NUMBER OF
SHARES
HELD
% OF
SHARES
1
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
45,278,204
31.10
2
BONEYARD INVESTMENTS PTY LTD
21,471,639
14.75
3
CITICORP NOMINEES PTY LIMITED
15,869,287
10.90
4
ANNAPURNA PTY LTD
3,074,167
2.11
5
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
2,428,507
1.67
6
MR ANTHONY SHANE KITTEL & MRS MICHELE THERESE KITTEL
2,000,000
1.37
7
DEBUSCEY PTY LTD
1,850,000
1.27
8
BNP PARIBAS NOMINEES PTY LTD
1,777,347
1.22
9
BIRKETU PTY LTD
1,455,688
1.00
10
MR JOHN PAUL WELBORN
1,199,380
0.82
11
MR KENT MILLER LOGIE
1,049,603
0.72
12
MR MICHAEL WILLIAM FORD & MRS NINA BETTE FORD
1,039,105
0.71
13
BNP PARIBAS NOMS PTY LTD
930,007
0.64
14
VULCAN INVESTMENTS PTY LTD
900,000
0.63
15
MR JOHN PAUL WELBORN & MS CAROLINE ANNE WELBORN
792,287
0.55
16
MAGLO INVESTMENTS PTY LTD
730,726
0.50
17
TJM AUSTRALIA PTY LTD
714,286
0.49
18
MR ADRIANO DINO CUGOLA
700,000
0.48
19
MR GEOFFREY VICTOR DAY
600,000
0.41
20
BOND STREET CUSTODIANS LIMITED
583,334
0.40
Top 20 Shareholders Total
104,443,567
71.74
The 20 largest shareholders hold 71.74% of the ordinary shares of the Company (2023: 66.74%).
On-market share buy-back
There is no current on-market buy-back.
CORPORATE INFORMATION
ANNUAL REPORT 2024
55
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
contact@orbitalcorp.com.au
USA
Address: 210 Wasco Loop, Hood River, OR 97031, USA
info@orbitaluav.com
INTERNET ADDRESS
www.orbitaluav.com
DIRECTORS
J.P. Welborn, Chairman
S.B. Gallagher
F.K. Abbott
G. Lukey
COMPANY SECRETARY
T. B. Spencer
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
Nexia Perth Audit Services Pty Ltd
Level 3, 88 William Street
Perth, Western Australia 6000