PWR Holdings Limited
Annual Report 2019

Plain-text annual report

PWR Holdings Limited Contents 2019 Highlights ......................................................................................................1 Chairman’s Year in Review ......................................................................................... 2 Managing Director’s Report ....................................................................................... 3 Directors’ Report ......................................................................................................... 5 Lead Auditors Independence Declaration ............................................................. 21 Consolidated Statement of Profit or Loss and Other Comprehensive Income ........................................................................ 22 Consolidated Statement of Financial Position ...................................................... 23 Consolidated Statement of Changes in Equity ...................................................... 24 Consolidated Statement of Cash Flows ................................................................. 25 Notes to the Consolidated Financial Statements .................................................. 26 Section A About this Report .................................................................................... 26 Section B Business Performance ........................................................................... 27 Section C Operating Assets and Liabilities ............................................................ 30 Section D Employee Benefits .................................................................................. 34 Section E Taxation .................................................................................................... 35 Section F Capital Structure and Borrowings ......................................................... 36 Section G Group Structure ...................................................................................... 39 Section H Other Information .................................................................................. 43 Section I Significant Accounting Policies ............................................................... 49 Directors’ Declaration ............................................................................................... 55 Independent Auditor’s Report ................................................................................. 56 ASX Additional Information ..................................................................................... 60 Corporate Directory .................................................................................................. 62 ABN 85 105 326 850 2019 Highlights REVENUE NPAT $65.4m Increased by 26% $14.2m Increased by 29% EARNINGS PER SHARE DIVIDEND 14.2c Increased by 29% 11.5cps Increased by 57% GLOBAL TEAM 291 Australia, Europe and USA PWR Holdings Limited Annual Report 2019 1 Chairman’s Review Teresa Handicott I am delighted to present to you PWR’s 2019 annual report. The solid performance of the Group has been made possible by investments made in people and equipment over the past 18 months. Despite a high capital investment program, our return on equity has improved to 26.8%, up from 23.7% in the prior comparative period. Capitalising on this growth requires solid foundations and an efficient corporate support structure. The Group has already started investing in cyber security, IT infrastructure and systems and processes to ensure ongoing growth is both executed and managed effectively and efficiently. The Group delivered a 29% increase in statutory net profit after tax (NPAT) and a 17% increase in underlying NPAT to $14.2m which was another record for PWR. Improved working capital management has resulted in an EBITDA to cash conversion ratio of 102.9% and a strong cash balance at 30 June 2019 of over $20.2m with overall net cash. Considering these results and improved balance sheet position, the Board has declared: – – a final dividend of 6.9 cents per share which is an increase of over 11% on the prior year final dividend of 6.2 cents per share; and a special dividend of 3.0 cents per share. The full year dividend for FY19 increased to 11.5 cents per share, up from 7.3 cents per share in the prior year, an increase of 58%. Managing growth efficiently is a central pillar for the next two years as management execute the strategic plan. This includes further investment in leading edge manufacturing equipment and technologies including an additive manufacturing machine, a 3D CT scanner and a vacuum furnace. Diversification has been a key focus of your Board and this strategy appears to be coming to fruition with solid progress being made in categories outside of motorsport. Deliveries under our OEM contracts have commenced with deliveries for the Ford GT500 program of 8,000 vehicles under way. Micro matrix and cold plate technologies are also showing encouraging sales in the emerging technologies category. The successes of the past year has been rewarding for staff, management and directors and I take this opportunity to thank all employees at PWR. On behalf of your Board, I would like to thank all shareholders for their continued support of PWR. Teresa Handicott Chairman 2 Annual Report 2019 PWR Holdings Limited Managing Director’s Review Kees Weel The 2019 financial year has been another record year for PWR. REVENUE Group revenue for FY19 was up significantly at 26% with Europe being the stand out performer whose growth was over 40%. This significant increase was offset by the reduction in revenue at C&R resulting from the exit from non-cooling related operations whose revenue was included in the prior year comparative period. Favourable foreign currency movements during FY19 accounted for 5% of the revenue growth. THIRD PARTY REVENUE BY CURRENCY 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 39.6% -7.4% 16.9% AUD GBP USD FY16 YTD FY17 YTD FY18 YTD FY19 YTD Conversion of source currency to Australian dollars based on average exchange rate for each year C&R is now a fully operational manufacturing facility which successfully completed a significantly higher volume of production throughput for the Group with inter segment sales increasing from $0.38m in FY18 to $4.0m in FY19. Leveraging this production capability and capacity for the Group will be a key focus area in FY20 and beyond.  Motorsport has been a major driver of the higher revenue in FY19 and further growth is expected albeit at a lower rate of growth than that achieved in FY19. The OEM and emerging technology segments are expected to see continued sales increases in FY20. Growth Rates FY19 FY18 Change Motorsports $43,988 $33,850 Automotive Market $10,387 $9,530 Emerging Technologies OEM $2,513 $2,023 $6,229 $4,027 Industrial & Other $2,294 $2,459 $65,411 $51,889 30% 9% 24% 55% -7% 26% PWR Holdings Limited Annual Report 2019 3 Managing Directors’ Report continued TECHNOLOGY DEVELOPMENTS The introduction of advanced technologies into our manufacturing processes will ensure we remain at the forefront of manufacturing capability and complexity for both existing customers as well as potential new customers and industries. Our new products have been extensively tested and have recently been commercialised with initial sales commencing. These new products provide compelling solutions to new industries and initial sales have been made to customers in both aerospace and military segments. THE FUTURE Visibility of our growth potential for the next two to three years is now better than what we have previously had which allows us to invest with confidence. PWR now has over 300 team members globally. Staff numbers are expected to increase further, although at a lower rate given our focus on productivity and efficiency. Exchange rates will continue to affect results and this is inherent in the nature of our business. Our treasury policy has been further revised and, as at 30 June 2019, GBP forward cover of £10.65m is in place through to June 2020, thereby reducing the risk of foreign exchange fluctuations materially impacting our FY20 financial results. Staff go beyond what is expected of them on a regular basis and I thank them for the dedication and commitment which is so often demonstrated. Thank you to shareholders, customers and staff for your continued support and I am looking forward to working with PWR and C&R staff this year with the objective of making FY20 another record year on all fronts. Kees Weel Managing Director $2,294 3.5% (FY18 4.7%) $6,229 9.5% (FY18 7.8%) $2,513 3.8% (FY18 3.9%) $10,387 15.9% (FY18 18.4%) $43,988 67.2% (FY18 65.2%) Motorsports Automotive Aftermarket Emerging Technologies OEM Industrial & Other PWR AUSTRALIA AND EUROPE PWR continues to supply the majority of motorsport categories with cooling technology and this continues to be our primary category as noted in the graphical analysis above. The Australian and European operations have performed exceptionally well in FY19 in this category. OEM PROGRAMMES The previously announced OEM programmes have commenced production at C&R which has the capacity to deliver current programs and future OEM growth. OEM programmes are expected to be an important source of growth for PWR. CASHFLOW Our working capital management has improved at 30 June 2019 which, combined with higher revenues, has resulted in a cash balance of over $20m at 30 June 2019. Your directors are conscious of the need to balance returning funds to shareholders and retaining funds to finance future growth plans and opportunities. We believe we have achieved a balanced outcome for both shareholders and expected future business requirements by declaring a special dividend of 3.0 cents per share. Our EBITDA to cash conversion ratio was 102.9% which is a significant improvement over FY18. 4 Annual Report 2019 PWR Holdings Limited Directors’ Report For the year ended 30 June 2019 The Directors present their report together with the financial report of PWR Holdings Limited (the “Company”) and its controlled entities (the “Group”) for the year ended 30 June 2019 (“Reporting Period”) and the auditor’s report thereon. 1. DIRECTORS The Directors of the Company at any time during or since the end of the financial year are: Director Teresa Handicott Independent Chairman, Non-Executive Director Chairman of Nomination and Remuneration Committee Member of Audit and Risk Committee Experience Teresa is a former corporate lawyer, with over 30 years experience in mergers and acquisitions, capital markets and corporate governance. She was a partner of national law firm Corrs Chambers Westgarth for 22 years, serving as a member of its National Board for seven years including four years as National Chairman. Teresa is a director of ASX listed company Downer EDI Limited and of Peak Services Holdings Pty Ltd, a subsidiary of The Local Government Association of Queensland (LGAQ), which is responsible for the LGAQ’s commercial operations. She is also a director of Bangarra Dance Theatre Limited. Teresa is a Divisional Councillor of the Queensland Division of the Australian Institute of Company Directors (AICD) and a member of the AICD’s National Law Committee. She is a Member of Chief Executive Women (CEW), is a Senior Fellow of Finsia and a Fellow of the AICD. Teresa was previously a Member of the Queensland University of Technology Council, the Takeovers Panel, Associate Member of the Australian Competition and Consumer Commission (ACCC), member of the Finsia Queensland Regional Council, Director of CS Energy Limited, Principal Law Lecturer for the Securities Institute of Australia (now Finsia) and Tutor in Corporate Governance for the AICD Directors Course. Year of next scheduled re-election 2020 Current directorships of listed entities Downer EDI Limited Directorships of listed entities over last 3 years Nil PWR Holdings Limited Annual Report 2019 5 Chairman’s Review Directors’ Report For the year ended 30 June 2019 1. DIRECTORS (continued) Director Jeffrey Forbes Independent, Non-Executive Director Chairman of Audit and Risk Committee Member of Nomination and Remuneration Committee Experience Jeff has over 30 years’ experience in senior finance and management roles with extensive mergers and acquisitions experience. Jeff retired in March 2013 as Chief Financial Officer, Executive Director and Company Secretary of Cardno, an ASX-listed engineering consultancy company. Prior to joining Cardno, Jeff was Chief Financial Officer and Executive Director at Highlands Pacific and has previously held senior finance roles in the resources sector. Jeff holds a Bachelor of Commerce from the University of Newcastle and is a Graduate of the Australian Institute of Company Directors. Jeff is a Non-Executive Director of Cardno and Chairman of Herron Todd White Australia and Herron Todd White Consolidated. Jeff also sits on the board of not-for-profit Community Housing Ltd, and its subsidiaries Horizon Housing Group and Australian Affordable Housing. Year of next scheduled re-election Current directorships of listed entities 2021 Cardno Limited Directorships of listed entities over last 3 years CMI Limited Kees Weel Managing Director and Chief Executive Officer Kees has in excess of 30 years of experience in the automotive cooling industry. He is a key relationship and business development manager for top tier local and overseas customers. Kees also actively leads the product development management team. Kees was a team principal of PWR Racing V8 Super Car Team 1998-2007 and was a board member for Tega V8 Supercars in 2007. Year of next scheduled re-election Not applicable Current directorships of listed entities Directorships of listed entities over last 3 years Nil Nil Roland Dane Independent, Non-Executive Director Member of Audit and Risk Committee Member of Nomination and Remuneration Committee Roland has extensive automotive business experience in the UK, Asia and Australia. Roland was the founder of, and remains the principle shareholder in, the Park Lane (UK) vehicle acquisition business in the UK some 33 years ago. He is also the Managing Director of the successful Triple Eight Race Engineering team, winners of 8 out of the last 11 V8 Supercar championships. Year of next scheduled re-election Current directorships of listed entities Directorships of listed entities over last 3 years 2019 Nil Nil 6 Annual Report 2019 PWR Holdings Limited Directors’ Report For the year ended 30 June 2019 2. COMPANY SECRETARY Lisa Dalton (B.App. Sc., M.App. Sc., LLB (Hons), FAICD, FCIS) was appointed as Company Secretary on 7 August 2015. Lisa is an experienced governance professional having been company secretary of a number of listed and unlisted companies over the past 18 years. 3. DIRECTORS’ MEETINGS The number of Directors’ meetings (including meetings of committees of Directors) and number of meetings attended by each of the Directors of the Company during the financial year are: Director Kees Weel Jeffrey Forbes Teresa Handicott Roland Dane Board Meetings Audit and Risk Committee Meetings Nomination and Remuneration Committee Meetings Attended Held Attended Held Attended Held 10 10 10 10 10 10 10 10 – 4 4 4 – 4 4 4 – 3 3 3 – 3 3 3 4. PRINCIPAL ACTIVITIES The Company’s registered office and principal place of business is 103 Lahrs Road, Ormeau, Queensland 4208. The principal activities of the Group during the year were the design, prototyping, production, testing, validation and sales of advanced cooling products and solutions to the motorsports, automotive original equipment manufacturing (“OEM”), automotive aftermarket and emerging technologies sectors for domestic and international markets. Other than items outlined in the Operating and Financial review, there were no significant changes in the nature of the activities of the Group during the year. 5. OPERATING AND FINANCIAL REVIEW Summary of financial results Statutory Profit and Loss Summary Revenue EBITDA1 EBITDA1 margin Net profit after tax (NPAT) Operating cash flow Earnings per share FY19 A$’000 65,411 21,763 33.3% 14,206 22,397 FY18 A$’000 FY18 to FY19 % 51,889 16,336 31.5% 11,001 16,639 +26.1% + 33.2% + 29.1% + 34.6% + 29.1% 14.21 cents 11.00 cents 1  Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) is a non-IFRS term which has not been subject to audit or review but has been determined using information presented in the annual financial report. PWR Holdings Limited Annual Report 2019 7 Directors’ Report For the year ended 30 June 2019 5. OPERATING AND FINANCIAL REVIEW (continued) Underlying Profit and Loss Summary A reconciliation of underlying EBITDA1 to the reported profit before tax in the consolidated statement of profit or loss and other comprehensive income is as follows: Profit for the period before tax Add: loss on sale and write down of assets held for sale Add: settlement of distribution agreement dispute Add: net finance costs Add: depreciation & amortisation Underlying EBITDA1 FY19 A$’000 FY18 A$’000 19,836 14,688 – – (543) 2,470 21,763 856 413 (18) 1,666 17,605 1  Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) is a non-IFRS term which has not been subject to audit or review but has been determined using information presented in the annual financial report. The prior year (FY18) statutory profit and loss includes the C&R deferred tax adjustment and several items arising from the restructuring and repositioning of the operations at C&R in the USA none of which are expected to reoccur. These items are as follows: – – – $0.85 million ($0.63m after tax) for the loss on sale and write down in the carrying value of assets held for sale in the USA the majority of which were disposed of in April 2018. $0.41 million ($0.3m after tax) for the termination of a distribution agreement $0.18 million charge to income tax expense for the decrease in the net deferred tax balance in the USA following their reduction in their federal corporate tax rate from 35% to 21%. Incorporating the above items, underlying results are as follows: Underlying Profit and Loss Summary Underlying revenue Underlying EBITDA Underlying EBITDA margin Underlying net profit after tax Underlying operating cash flow Underlying earnings per share FY19 A$’000 65,411 21,763 33.3% 14,206 22,397 FY18 A$’000 FY18 to FY19 51,889 17,605 33.9% 12,115 16,639 26.1% 23.6% (1.8%) 17.3% 34.6% 17.3% 14.21 cents 12.11 cents Revenue The Group achieved overall revenue growth of 26.1% compared to the prior corresponding period. Organic revenue growth of 21.5% was supplemented by exchange rate movements of 4.6%. The above growth was primarily driven out of Europe where sales increased by 40%. Sales in the Australian and American markets were static although activity at both these manufacturing operations increased significantly to support the increased sales in Europe. With reporting in Australian dollars, exchange rate fluctuations have seen the GB pound being 1.7% stronger at 30 June 2019 and the US dollar being 4.7% stronger compared to the prior period. In addition, average rates during the financial year saw a US dollar being 7.7% stronger and the pound 4.2% stronger. The net impact of exchange rate movements had a favourable impact on revenue for the year of $2,345,523 (2018: $615,395). 8 Annual Report 2019 PWR Holdings Limited Directors’ Report For the year ended 30 June 2019 5. OPERATING AND FINANCIAL REVIEW (continued) EBITDA In addition to the positive impact on revenue of foreign exchange rates mentioned above, the higher EBITDA in FY19 compared to the prior corresponding period was mainly due to: – Overall revenue growth at consistent margins; – Production and overhead costs increasing consistently with sales volume increases; and – Administration and overhead costs increasing at a lower rate than sales and EBITDA increases supporting the higher revenue and margins generated. Net profit after tax Net profit after tax of the Group for the year ended 30 June 2019 was $14.21 million. The 2018 NPAT of $11.00 million, included the recognition of $1.1 million (after tax) of one-off expenses in relation to the changes to Federal corporate tax rates in the USA, the loss on sale and write down of the C&R non core non cooling business and costs associated with the termination of a distribution agreement at C&R. Operating cash flow The Group continued its strong cash conversion rate with FY19 operating cash flow of $22.4 million, a conversion of 102.9% from EBITDA. This high EBITDA to cash conversion rate is due primarily to improved working capital management. Foreign currency The Group is exposed to movements in foreign exchange rates, with consolidated revenue generated in various currencies (using average exchange rates through the reporting period) as outlined below: British pounds (GBP) US dollars (USD) Australian dollars (AUD) FY19 FY18 66.7% 20.7% 12.6% 57.6% 25.4% 17.0% Balance sheet management The balance sheet remains strong with cash of $20.2 million (2018: $12.1 million). Working capital utilisation has improved with the working capital cycle reducing from 122 days at 30 June 2018 to 86 days at 30 June 2019 contributing to a higher year end cash balance. Capital expenditure for the year was $5.9 million (FY18: $5.2 million) which completed the majority of the capital investment program announced in April 2018. Our strong balance sheet can support ongoing expected capital expenditure for potential future growth opportunities whilst still having access to available financing facilities. With the improved working capital position, expected future capital investment requirements and the ongoing strong contribution of EBITDA to operating cash flows, the Board has declared a Special 2019 dividend of 3.00 cents per share in addition to the Final 2019 dividend of 6.90 cents per share. Review of operating segments The Group has two operating segments, PWR Performance Products which comprises its Australian and European operations, and C&R which comprises its USA operations. The PWR Performance Products segment generated external revenue of $52.50 million (2018: $39.07 million), primarily arising from increased market penetration in the motorsports sector in the United Kingdom and Europe. The C&R segment generated external revenue of $12.91 million (2018: $12.81 million). This is a positive development considering FY18 revenue included $1.29 million of revenue for the now exited non-core, non cooling components of C&R’s business. Review of principal businesses During the year ended 30 June 2019, in addition to the items outlined above, the Group: – Continued to be appointed cooling assembly supplier for additional OEM programs; – Released our new Micro Matrix and cold plate technology products; – Completed the majority of its capital program of works providing additional capacity; – Was awarded a grant from the State Government of over $1m from the Made in Queensland program; – Commenced prototype supplies into new industries including aerospace and the military. PWR Holdings Limited Annual Report 2019 9 Directors’ Report For the year ended 30 June 2019 5. OPERATING AND FINANCIAL REVIEW (continued) Business risks PWR recognises the importance of, and is committed to, the identification, monitoring and management of material risks associated with its activities. The following information sets out the material risks of PWR which are kept under review and actively managed within PWR’s risk management framework. These are not in any particular order. Strategic Operational Loss of key management personnel – – Damage to or dilution of PWR brand – Consequences of BREXIT Loss of critical supply inputs or infrastructure – Threats from cyber security breaches – – Loss of intellectual property protection – Reduction in product quality standards Loss of data security and integrity – Financial – Currency volatility Significant changes in the state of affairs Other than as outlined in the operating and financial review, there were no significant changes in the state of affairs of the Group during the year. 6. DIVIDENDS Dividends paid or declared by the Company to members since the end of the previous financial year were: Declared and paid during the year Final 2018 ordinary Interim 2019 ordinary Total amount Cents per share Total amount $ Date of payment 6.20 1.60 6,200,000 14 September 2018 1,600,000 7,800,000 5 April 2019 Declared after end of year The following dividend was declared by the Directors since the end of the financial year: Final 2019 ordinary dividend Special 2019 dividend Total amount Cents per share Total amount $ Date of payment 6.90 3.00 6,900,000 19 September 2019 3,000,000 19 September 2019 9,900,000 The financial effect of these dividends have not been brought to account in the consolidated financial statements for the year end 30 June 2019 and will be recognised in subsequent financial reports. There is no dividend re-investment plan in operation. 7. LIKELY DEVELOPMENTS The Group will continue its strategy of increasing profitability and market share within existing markets and pursue opportunities in emerging markets during the next financial year. Further information about likely developments in the operations of the Group and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the Group. 8. EVENTS SUBSEQUENT TO REPORTING DATE The Board declared a fully franked final 2019 ordinary dividend of 6.90 cents per share and a special fully franked 2019 dividend of 3.00 cents per share. The financial effect of these dividends have not been brought to account in the consolidated financial statements for the year ended 30 June 2019. 10 Annual Report 2019 PWR Holdings Limited Directors’ Report For the year ended 30 June 2019 8. EVENTS SUBSEQUENT TO REPORTING DATE (continued) Other than the matter noted above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years. 9. ROUNDING OF AMOUNTS The Company is of a kind referred to in ASIC Corporations Instrument 2016/191 issued by the Australian Securities and Investment Commission, relating to the “rounding off” of amounts in the Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with that Instrument to the nearest thousand dollars unless otherwise stated. 10. ENVIRONMENTAL REGULATION The Group is not subject to any significant environmental regulations. 11. INDEMNIFICATION AND INSURANCE OF OFFICERS The Group has indemnified the Directors and Executives for costs incurred, in their capacity as a Director or Executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the Group paid insurance premiums in respect of a contract to insure the Directors and Executives of the Group against a liability to the extent permitted by the Corporations Act 2001. The insurance contract prohibits disclosure of the nature of liability and the amount of the premium. 12. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. 13. NON-AUDIT SERVICES During the year KPMG, the Group’s auditor, has performed certain other services in addition to the audit and review of the financial statements. The Board has considered the non-audit services provided during the year by the auditor and in accordance with written advice provided by resolution of the audit committee, is satisfied that the provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons: – – all non-audit services were subject to the corporate governance procedures adopted by the Group and have been reviewed by the audit committee to ensure they do not impact the integrity and objectivity of the auditor; and the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards. Details of the amounts paid to the auditor of the Group, KPMG, and its network firms for audit and non-audit services provided during the year are set out below. In dollars Services other than audit and review of financial statements:  IT advisory services Audit and review of financial statements Total paid to KPMG 2019 39,607 147,500 187,107 14. LEAD AUDITOR’S INDEPENDENCE DECLARATION The lead auditor’s independence declaration is set out on page 21 and forms part of the directors’ report for the financial year ended 30 June 2019. 15. DIRECTORS’ INTERESTS Details of the Directors’ interests in the securities of the Company are disclosed in the remuneration report. At the date of this report their holdings do not differ from the amount held at 30 June 2019. PWR Holdings Limited Annual Report 2019 11 Directors’ Report For the year ended 30 June 2019 16. REMUNERATION REPORT – AUDITED The information provided in this Remuneration Report has been prepared in accordance with section 300A of the Corporations Act 2001 (Cth). A. Key Management Personnel The remuneration report outlines remuneration for those people considered to be Key Management Personnel (KMP) of the Group during the Reporting Period. KMP are persons having authority and responsibility for planning, directing and controlling the activities of the Group. KMP consist of: – Non-Executive Directors; and – Executive Directors and certain senior executives. The table below summarises details of KMP of the Group that were KMP on 30 June 2019 or who were KMP during the financial year ended 30 June 2019, their roles and appointment/cessation dates. Key Management Personnel during the Reporting Period Name Role Non-Executive Directors Teresa Handicott Non-Executive Director and Chairman Jeff Forbes Roland Dane Non-Executive Director Non-Executive Director Executive Director and Senior Executives Appointment Date 1 October 2015 19 October 2017 7 August 2015 1 March 2017 Kees Weel Stuart Smith Matthew Bryson Jim Ryder1 Andy Burton1 Managing Director 30 June 2003 Chief Financial Officer 13 November 2017 General Manager, Engineering 11 April 2006 General Manager, USA 10 January 2017 General Manager, Europe 1 July 2017 1  Jim Ryder, General Manager USA and Andy Burton, General Manager Europe became KMP effective 1 January 2018 following an organisational restructure. Mr Burton was a consultant to PWR Europe Ltd prior to his appointment date. B. Remuneration Governance The following shows the Board’s framework to establish and review remuneration for KMP and employees of the Group: Board Approves the overall remuneration framework and policy, ensuring it is fair, transparent and aligned with long term outcomes Nomination and Remuneration Committee (“NRC”) NRC is delegated to review and make recommendations to the Board on remuneration policies for non-executive directors, senior executives and all employees including incentive arrangements and awards. The NRC can appoint remuneration consultants and other external advisors to provide independent advice Managing Director Provides all relevant information to the NRC to facilitate the NRC making recommendations to the Board on remuneration decisions 12 Annual Report 2019 PWR Holdings Limited Directors’ Report For the year ended 30 June 2019 16. REMUNERATION REPORT – AUDITED (continued) C. Non-Executive Director Remuneration C1. Policy A copy of the remuneration policy for Non-Executive Directors is available on the Group’s website. The Board’s Non- Executive Director remuneration policy is to: – Provide a clear fee arrangement that avoids potential conflicts of interest associated with performance incentives, – Remunerate Directors at market rates for their commitment and responsibilities, and – Obtain independent external remuneration advice when required. Non-Executive Directors receive remuneration for undertaking their role. They do not participate in the Group’s incentive plans or receive any variable remuneration. Non-Executive Directors are not entitled to retirement payments. The aggregate Non-Executive Director remuneration cap approved by shareholders in 2016 is $750,000 per annum (inclusive of superannuation contributions). The Board determines the distribution of Non-Executive Director fees within the approved remuneration cap. C2. Remuneration of Non-Executive Directors during Reporting Period The following table sets out the annual Board and Committee fees (inclusive of superannuation) for Non-Executive Directors during the reporting period. Role Chairman Non-Executive Director Audit and Risk Committee Chairman Nomination and Remuneration Committee Chairman Timeframe Director Fees per annum Reporting Period $150,000 Reporting Period Reporting Period Reporting Period $95,000 $20,000 $20,000 D. Executive Director and Senior Executive Remuneration D1. Remuneration policy for senior executives The Board’s policy for determining the nature and amount of remuneration for the Managing Director and other senior executives is: – Provide for both fixed and performance based remuneration, – Provide a remuneration package based on an annual review of employment market conditions, the Group’s performance and individual performance, and – Obtain independent external remuneration advice when required. The remuneration framework for senior executives comprises two elements: 1. Fixed remuneration; and 2. “At risk” or performance linked remuneration. D1.1 Fixed remuneration Fixed remuneration is a function of size and complexity of the role, individual responsibilities, experience, skills and market pay levels. This consists of cash salary, salary sacrifice items, employer superannuation, annual leave provisions and any fringe benefits tax charges related to employee benefits. Superannuation is paid at the relevant statutory rate. The opportunity to salary sacrifice superannuation benefits on a tax-compliant basis is available upon request. The Board determines an appropriate level of fixed remuneration for the senior executives with recommendations from the Nomination and Remuneration Committee. Fixed remuneration is reviewed annually following performance reviews at the end of the financial year and takes into account the role and accountabilities, relevant market benchmarks and attraction, retention and motivation of executives in the context of the talent market. The Managing Director and senior executives did not receive increases to their fixed remuneration during the Reporting Period. PWR Holdings Limited Annual Report 2019 13 Directors’ Report For the year ended 30 June 2019 16. REMUNERATION REPORT – AUDITED (continued) D1.2 Performance linked remuneration Short-term incentive plan The Managing Director and senior executives are eligible to participate in the Group’s short-term incentive plan. Under the plan, participants have an opportunity to receive an annual cash bonus calculated as a percentage of their total fixed remuneration (“TFR”) and conditional on the achievement of short-term financial and non-financial performance measures at a corporate and individual level. For the year ended 30 June 2019, the operation of the short term-incentive plan had a NPAT target, established by the Board at the commencement of the Reporting Period, to trigger its operation, which was achieved by PWR but not at C&R. Individual and corporate key performance measures (KPI’s), established at the beginning of the reporting period, are then measured against actual performance for the period. The corporate KPI’s include measures on revenue, profitability, safety and quality all of which are key metrics for the Group’s collective success. Short-term incentives were awarded to the Managing Director and senior executives of PWR (but not C&R) as outlined below. Analysis of cash bonuses included in remuneration The Board awarded the Managing Director and senior executives the following cash bonuses for the Reporting Period: Employed at 30 June 2018 Position Max Potential Bonus % TFR Actual Bonus % TFR Bonuses included in FY19 remuneration Kees Weel Stuart Smith Matthew Bryson Jim Ryder(i) Andrew Burton(ii) Managing Director Chief Financial Officer General Manager, Engineering General Manager, USA General Manager, Europe 50% 30% 30% 30% 20% 44% 26% 26% – $168,630 $72,270 $72,270 – 16% $40,000 (i) Employed by C&R Racing Inc and remunerated in USD. The AUD equivalent is shown above. (ii) Employed by PWR Europe and remunerated in GBP. The AUD equivalent is shown above. Long-term incentive plan Shareholders approved the implementation of a long-term incentive plan (“LTIP”) at the 2016 Annual General Meeting (“AGM”). The LTIP is an equity-based incentive designed to provide participants with the incentive to deliver growth in shareholder value. Senior Executives receive performance rights (“Rights”) on an annual basis under the Performance Rights Plan, subject to the approval of the Board. The Managing Director is entitled to receive Performance Rights on an annual basis under the Performance Rights Plan, subject to approval of shareholders. A grant of Rights was made to Senior Executives in the 2019 financial year. No Rights were issued to the Managing Director in the current or prior year. Rights convert to ordinary shares in the Company on a one-for-one basis at the end of the three-year performance period depending on the extent to which performance hurdles are achieved and service conditions met. 14 Annual Report 2019 PWR Holdings Limited Directors’ Report For the year ended 30 June 2019 16. REMUNERATION REPORT – AUDITED (continued) The performance hurdles are the achievement of Total Shareholder Return (“TSR”) ranking criteria relative to the TSR of constituents of the S&P/ASX300 (excluding mining and exploration entities) and growth in annual Earnings Per Share (“EPS”) relative to a target set by the Board. Participants must remain continually employed with the Company until the date of vesting. Vesting on each tranche is as follows: TSR Ranking (50%) EPS Growth (50%) The percentage of Performance Rights linked to TSR will be 50%. TSR is calculated by an independent third party, comparing the TSR percentile rank that the Company holds relative to all S&P ASX 300 constituent companies (excluding Energy sector (oil, gas and coal)) for the relevant 3-year Performance Period. The percentage of the Performance Rights linked to the EPS hurdle will be 50%. Vesting is determined by the growth in EPS from the financial year immediately prior to the start of the Performance Period (base year) to the end of the third year of the Performance Period, measured against specific EPS targets outlined below. TSR Ranking Vesting outcome EPS Vesting outcome TSR is 50% or less Nil vesting EPS growth is 4% or less Nil vesting TSR is more than 50% but less than 75% Rateable vesting between 20% and 99% EPS growth is more than 4% but less than 12% Rateable vesting between 50% and 99% TSR is 75% or more 100% vesting EPS growth is 12% or more 100% vesting Rights that do not vest at the end of the three-year period lapse, unless the Board in its discretion determines otherwise. Upon cessation of employment prior to the vesting date, Rights will be forfeited and lapse. Rights do not entitle holders to dividends that are declared during the vesting period. The Board believes that performance hurdles, in combination, serve to align the interests of the individual senior executives with the interests of the Company’s shareholders. E. Company performance and remuneration outcomes The various components of the way the Group remunerates key management personnel have been structured to support the Group’s strategy and business objectives which in turn are designed to generate shareholder wealth. When setting targets and determining the quantum of the remuneration increases and the proportion of fixed and performance linked remuneration components, the Board refers to remuneration benchmarking reports provided by independent sources and remuneration consultants from time to time. The at risk component (short-term incentive plan and long-term incentive plan) of the remuneration structure intends to reward achievement against Group and individual performance measures over one year and three-year timeframes, respectively. The table below summarises the Group’s performance in recent financial years ending 30 June: EBITDA (2016 excludes IPO costs) Net profit after tax (2016 excludes IPO costs) Total dividends per share Change in share price Earnings per share Note 2019 $’000 $21,763 $14,206 2018 $’000 $16,336 $11,001 2017 $’000 2016 $’000 $14,727 $16,903 $9,280 $8,735 11.50 cents 7.30 cents 5.60 cents 4.40 cents 1.41 0.36 (0.43) 1.28 B5 14.21 cents 11.00 cents 9.28 cents 9.31 cents PWR Holdings Limited Annual Report 2019 15 Directors’ Report For the year ended 30 June 2019 16. REMUNERATION REPORT – AUDITED (continued) F. Contract duration and termination requirements The Company has contracts of employment with no fixed tenure requirements with the Managing Director and senior executives. The notice period for each is outlined in the table below. Termination with notice may be initiated by either party. The contracts contain customary clauses dealing with immediate termination for gross misconduct, confidentiality and post-employment restraint of trade provisions. Name Executive Director Kees Weel Senior Executives Stuart Smith Matthew Bryson Andrew Burton Jim Ryder Position Notice Period Managing Director 6 months Chief Financial Officer General Manager, Engineering General Manager, Europe General Manager, USA 3 months 3 months 3 months 3 months G. Services from remuneration consultants The Nomination and Remuneration Committee (NRC) engaged Godfrey & Associates (Godfrey) as remuneration consultant to the board to review the amount and elements of the key management personnel remuneration and provide recommendations in relation thereto. Godfrey was paid $10,000 for the remuneration recommendations in respect of reviewing the amount and elements of remuneration. Godfrey did not provide any other services. The engagement of Godfrey by the NRC was based on a documented set of protocols that would be followed by Godfrey, members of the NRC, and members of the key management personnel for the way in which remuneration recommendations would be developed by Godfrey and provided to the board. The protocols included the prohibition of Godfrey providing advice or recommendations to key management personnel before the advice or before Godfrey’s recommendations were given to members of the NRC and not unless Godfrey had approval to do so from members of the NRC. These arrangements were implemented to ensure that Godfrey would be able to carry out its work, including information capture and the formation of its recommendations, free from undue influence by members of the key management personnel about whom the recommendations may relate. The board is satisfied that the remuneration recommendations were made by Godfrey free from undue influence by members of the key management personnel about whom the recommendations may relate. The board undertook its own inquiries and review of the processes and procedures followed by Godfrey during the course of its assignment and is satisfied that its remuneration recommendations were made free from undue influence. These inquiries included arrangements under which Godfrey was required to provide the board with a summary of the way in which it carried out its work, details of its interaction with key management personnel in relation to the assignment and other services and respond to questioning by members of the board after the completion of the assignment. The results of this review have been implemented in the financial year beginning 1 July 2019 (FY20) and there is no impact on the reported results for the Reporting Period. 16 Annual Report 2019 PWR Holdings Limited Directors’ Report For the year ended 30 June 2019 s t n e m y a p d e s a b - e r a h S m r e t - g n o L s t i f e n e b t s o P s t fi e n e B t n e m y o p m E l s t i f e n e b m r e t - t r o h S $ l a t o T $ s t h g i r $ e v a e l e c n a m r o f r e P e c i v r e s g n o L $ n o i t a i - n m r e T s t fi e n e b $ r e p u S s t fi e n e b $ l a t o T 0 0 0 0 7 1 , 0 0 0 0 7 1 , 0 0 0 5 1 1 , 0 0 0 5 1 1 , 0 0 0 5 9 , 0 0 0 5 9 , 0 0 0 0 8 3 , 0 0 0 0 8 3 , – – – – – – – – – – – – – – – – – – – – – – – – – – 4 1 0 3 1 , 4 1 0 3 1 , 7 7 9 9 , 7 7 9 9 , 1 9 9 2 2 , 1 9 9 2 2 , 6 8 9 6 5 1 , 6 8 9 6 5 1 , 3 2 0 5 0 1 , 3 2 0 5 0 1 , 0 0 0 5 9 , 0 0 0 5 9 , 9 0 0 7 5 3 , 9 0 0 7 5 3 , $ – – – – – – – – s t fi e n e b h s a c - n o N $ h s a C s u n o B $ s e e f h s a C & y r a l a s – – – – – – – – 6 8 9 6 5 1 , 6 8 9 6 5 1 , 3 2 0 5 0 1 , 3 2 0 5 0 1 , 0 0 0 5 9 , 0 0 0 5 9 , 9 0 0 7 5 3 , 9 0 0 7 5 3 , r a e Y 9 1 0 2 8 1 0 2 9 1 0 2 8 1 0 2 9 1 0 2 8 1 0 2 9 1 0 2 8 1 0 2 r o t c e r i D e v i t u c e x E - n o N n a m r i a h C s r o t c e r i D e v i t u c e x e - n o N ) i ( i t t o c d n a H a s e r e T t n e r r u C r o t c e r i D e v i t u c e x E - n o N r o t c e r i D e v i t u c e x E - n o N e n a D d n a o R l s e b r o F f f e J n o i t a r e n u m e R ’ s r o t c e r i D e v i t u c e x E - n o N - l a t o T PWR Holdings Limited Annual Report 2019 17 : e r a d o i r e P g n i t r o p e R e h t r o f p u o r G e h t f o e v i i t u c e x e r o n e s d n a r o t c e r i D h c a e f o n o i t a r e n u m e r j l f o t n e m e e r o a m h c a e f o t n u o m a d n a e r u t a n e h t f o s l i a t e D ) d e u n i t n o c ( D E T I D U A – T R O P E R N O I T A R E N U M E R . 6 1 n o i t a r e n u m e R l e n n o s r e P t n e m e g a n a M y e K . H Directors’ Report For the year ended 30 June 2019 . 6 2 3 . 2 4 3 . 4 7 2 . 9 4 2 . 6 0 3 . 9 5 2 . 1 4 1 . 2 6 1 . 0 0 1 . 3 4 2 – – – – . 6 5 2 . 3 2 2 . 5 1 2 . 8 8 1 5 2 0 9 2 6 , 0 6 6 6 3 , 6 3 5 5 , , 2 5 1 1 2 6 8 5 3 6 3 , 6 3 5 5 , 6 3 8 0 9 3 , 1 8 7 4 3 , 9 6 4 7 3 2 , 3 6 8 8 , – – 4 9 4 7 2 4 , 7 3 6 8 5 , 4 5 9 3 , 8 4 8 5 0 4 , 1 3 7 9 2 , 4 5 9 3 , , 5 5 2 4 8 2 5 4 9 0 4 1 , – – 4 4 1 1 5 2 , 5 3 0 5 2 , 3 1 5 7 2 1 , 8 2 2 9 , – – , 5 7 1 4 4 1 , 2 4 9 4 4 2 – – – – – – – – – – – – – – – – – – – – – – – 3 5 3 9 4 , 0 5 2 3 3 , 2 2 5 8 2 , 5 1 6 4 1 , 8 0 9 0 3 , 0 5 7 3 2 , – 9 1 5 6 , – – – – – – 4 4 9 9 5 , 8 0 3 7 , 3 2 9 6 7 , 0 6 0 9 6 , 2 6 3 6 1 , 0 2 5 9 5 1 , – 5 8 2 8 1 1 , , 4 5 7 2 8 9 1 , , 4 4 0 2 2 9 1 , , 4 5 7 2 6 3 2 , , 4 4 0 2 0 3 2 , , 3 1 1 5 5 1 0 9 4 9 , – , 3 8 7 8 0 1 0 8 1 4 8 , 0 9 4 9 , 4 0 0 9 2 1 , 4 0 8 1 0 1 , , 3 1 1 5 5 1 0 9 4 9 , – 4 7 7 1 3 1 , 0 8 1 4 8 , 0 9 4 9 , 4 0 0 9 2 1 , 5 9 7 4 2 1 , , 8 6 3 9 0 7 1 , , 6 6 5 7 9 5 1 , , 7 7 3 6 6 0 2 , , 5 7 5 4 5 9 1 , , 5 5 2 4 8 2 6 2 4 4 3 1 , – – 0 0 0 0 4 , , 5 5 2 4 4 2 9 1 0 2 2 4 8 2 2 , 4 8 5 1 1 1 , 8 1 0 2 , 9 0 1 6 2 2 7 0 0 7 1 , – , 2 0 1 9 0 2 9 1 0 2 6 7 4 7 3 5 , 6 4 8 8 1 , 0 3 6 8 6 1 , 0 0 0 0 5 3 , 9 1 0 2 , 8 0 0 6 4 5 2 9 1 0 2 , 6 1 8 5 7 1 , 0 0 0 0 5 3 , 8 1 0 2 3 3 5 7 2 3 , 3 6 2 5 , 0 7 2 2 7 , 0 0 0 0 5 2 , 9 1 0 2 1 9 9 3 1 2 , 2 1 9 9 , 3 3 2 0 5 , 6 4 8 3 5 1 , 8 1 0 2 , 5 9 9 3 3 3 5 2 7 1 1 , 0 7 2 2 7 , 0 0 0 0 5 2 , 9 1 0 2 d n a s r o t c e r i D e v i t u c e x E s e v i t u c e x e r o n e s i r e c i f f O l a i c n a n F i f e i h C n o s y r B w e h t t a M r o t c e r i D g n g a n a M i ) i ( h t i m S t r a u t S l e e W s e e K t n e r r u C , 3 1 4 8 4 3 3 6 0 3 2 , 0 5 3 5 7 , 0 0 0 0 5 2 , 8 1 0 2 g n i r e e n g n E i , r e g a n a M l a r e n e G – – – – – 4 3 8 1 2 , 1 5 4 6 9 , 8 1 0 2 – – – – – – 3 2 9 6 7 , 9 1 0 2 8 1 0 2 9 1 0 2 0 2 5 9 5 1 , 8 1 0 2 1 4 8 2 5 , , 0 7 1 3 5 3 7 6 1 3 5 , , 5 7 0 6 4 3 1 4 8 2 5 , , 0 7 1 3 5 3 7 6 1 3 5 , , 5 7 0 6 4 3 , 7 5 3 3 0 3 1 , , 4 2 3 8 9 1 1 , , 1 1 7 0 6 6 1 , , 3 3 3 5 5 5 1 , 9 1 0 2 8 1 0 2 9 1 0 2 8 1 0 2 e p o r u E , r e g a n a M l a r e n e G ) i i ( n o t r u B w e r d n A A S U , r e g a n a M l a r e n e G ) i i ( r e d y R m i J r e c i f f O l a i c n a n F i f e i h C ) v i ( n n a V l l a h s r a M r e g a n a M l a r e n e G ) i i i ( s s r u P m a d A r e m r o F ’ s r o t c e r i D e v i t u c e x E - l a t o T ’ s e v i t u c e x e r o n e s d n a i n o i t a r e n u m e R n o i t a r e n u m e R P M K - l a t o T % f o n o i t - u m e r - r o p o r P n o i t a r e n - r o f r e p e c n a m d e t a l e r - e r a h S d e s a b s t n e m y a p m r e t - g n o L s t i f e n e b t s o P s t fi e n e B t n e m y o p m E l s t i f e n e b m r e t - t r o h S $ l a t o T $ - r o f r e P e c n a m s t h g i r $ g n o L e v a e l e c i v r e s $ n o i t a i - n m r e T s t fi e n e b $ r e p u S s t fi e n e b $ l a t o T $ s t fi e n e b h s a c - n o N $ h s a C s u n o B $ s e e f h s a C & y r a l a s r a e Y ) d e u n i t n o c ( D E T I D U A – T R O P E R N O I T A R E N U M E R . 6 1 18 Annual Report 2019 PWR Holdings Limited . e r u t c u r t s e r l i a n o i t a s n a g r o n a g n w o i l l o f 8 1 0 2 y r a u n a J 1 e v i t c e ff e P M K e m a c e b s e v i t u c e x E . 7 1 0 2 r e b m e v o N 2 1 d e n g s e R i . 7 1 0 2 r e b m e v o N 3 1 d e t n o p p A i ) i ( ) i i ( ) i i i ( . 8 1 0 2 y r a u r b e F 4 d e n g s e R i ) v i ( Directors’ Report For the year ended 30 June 2019 16. REMUNERATION REPORT – AUDITED (continued) I. Share holdings of Key Management Personnel The movement during the year in the number of ordinary shares in PWR Holdings Limited held, directly, indirectly or beneficially, by each member of the Key Management Personnel, including their related parties, is as follows: Name Non-executive Directors Current Jeff Forbes Teresa Handicott Roland Dane Executive Directors and Senior Executives Current Kees Weel Matthew Bryson Stuart Smith Jim Ryder Andy Burton Shareholdings of KMP Opening Balance 1 July 2018 Shares acquired during the year Shares disposed of during the year Closing Balance 30 June 2019 Other 20,000 25,500 174,159 38,368,500(i) 3,773,308 10,000 – 92,739 – – – – – – – – – – (39,685) – – – 20,000 25,500 134,474 (8,500,000) (273,308) – – – – 29,868,500(i) – – – – 3,500,000 10,000 – 92,739 (i) 19,868,500 shares held by KPW Property Holdings Pty Ltd as trustee for the KPW Holdings Trust. At 30 June 2019 Kees Weel is a director of the trustee and beneficiary of the trust. 10,000,000 shares held by Wagon Weel Pty Ltd as trustee for the Wagon Weel Trust. At 30 June 2019 Kees Weel is a director of the trustee and beneficiary of the trust. J. Voting and comments made as the Company’s 2018 Annual General Meeting The Company received more than 75% of “yes” votes on its remuneration report for the 2018 financial year. The Company did not receive any specific feedback at the 2018 AGM on its remuneration report. PWR Holdings Limited Annual Report 2019 19 Directors’ Report For the year ended 30 June 2019 16. REMUNERATION REPORT – AUDITED (continued) K. Rights over equity instruments granted as remuneration Details of performance rights over ordinary shares in the Company that were granted as remuneration to members of KMP during the Reporting Period are included in the KMP remuneration report. There were no alterations to the terms and conditions of performance rights granted as remuneration to KMP since their grant date. No performance rights vested during the Reporting Period. Total Performance Rights issued at 30 June 2019 are as follows: Fair Value per Right at Grant Date Description of Rights Number of Rights granted TSR Component $ EPS Component $ Grant Date Vesting Date Expiry Date FY17 LTIP FY17 LTIP FY18 LTIP FY19 LTIP FY18 LTIP FY19 LTIP FY18 LTIP FY19 LTIP Kees Weel Managing Director Matthew Bryson General Manager, Engineering Stuart Smith Chief Financial Officer Jim Ryder General Manager, USA Total on issue to KMP Non KMP Total on issue at 30 June 2019 64,958 27,839 37,330 31,417 24,886 31,417 25,909 15,101 258,857 114,185 373,042 0.86 0.86 0.87 1.82 0.87 1.82 0.87 1.82 2.37 2.37 2.43 2.68 2.43 2.68 2.43 2.68 21/10/16 6/12/16 24/11/17 22/8/18 24/11/17 22/8/18 24/11/17 22/8/18 1/9/19 1/9/19 1/9/20 1/9/21 1/9/20 1/9/21 1/9/20 1/9/21 1/3/20 1/3/20 1/3/21 1/3/22 1/3/21 1/3/22 1/3/21 1/3/22 L. Key management personnel transactions KMP, or their related parties, may hold positions in other entities that result in them having control, or joint control, over the financial or operating policies of those entities. These entities may transact with the Group. The terms and conditions of the transactions with KMP and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm’s length basis. From time to time, directors of the Group, or their related entities, may purchase goods from the Group. These purchases are on the same terms and conditions as those entered into by other Group employees or customers and are trivial or domestic in nature. This report is made with a resolution of the directors: _______________________________ ______________________________ Teresa Handicott Chairman Brisbane 29th August 2019 Kees Weel Managing Director Brisbane 29th August 2019 20 Annual Report 2019 PWR Holdings Limited Lead Auditors Independence Declaration Under Section 307C of the Corporations Act 2001 For the year ended 30 June 2019 Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of PWR Holdings Limited I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2019 there have been: i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii. no contraventions of any applicable code of professional conduct in relation to the audit. PAR_SIG_01 PAR_NAM_01 PAR_POS_01 PAR_DAT_01 PAR_CIT_01 KPMG Jason Adams Partner Brisbane 29 August 2019 22 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation. PWR Holdings Limited Annual Report 2019 21 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2019 Revenue Other income Raw materials and consumables used Employee expenses Occupancy expenses Other expenses Loss on disposal of assets held for sale Profit before depreciation, net finance costs and income tax Depreciation and amortisation Profit before net finance costs and income tax Finance income Finance costs Net finance income/(costs) Profit before income tax Income tax expense Profit for the year attributable to equity holders of the parent Other comprehensive income Items that are or may be reclassified to profit or loss: Exchange differences on translating foreign operations Total comprehensive income for the year Note B2 B2 2019 $’000 2018 $’000 65,411 51,889 600 665 B3 B4 E1 (13,928) (9,934) (24,942) (20,746) (2,084) (3,294) – (1,885) (2,937) (716) 21,763 16,336 (2,470) 19,293 (1,666) 14,670 614 (71) 543 45 (27) 18 19,836 (5,630) 14,206 14,688 (3,687) 11,001 (103) 14,103 237 11,238 Basic and diluted earnings per share B5 14.21 cents 11.00 cents The accompanying notes are an integral part of these financial statements. 22 Annual Report 2019 PWR Holdings Limited Consolidated Statement of Financial Position At 30 June 2019 ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Other assets Total current assets Non-current assets Property, plant and equipment Intangible assets Deferred tax assets Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Loans and borrowings Employee benefits Current tax liabilities Provisions Total current liabilities Non-current liabilities Loans and borrowings Employee benefits Total non-current liabilities Total liabilities Net assets EQUITY Issued capital Reserves Retained earnings Total equity The accompanying notes are an integral part of these financial statements. Note 2019 $’000 2018 $’000 C1 C2 C3 C4 C5 C6 E2 C7 F1 D1 E2 F1 D1 20,223 4,689 7,194 1,563 12,110 4,054 6,785 1,734 33,669 24,683 15,350 14,237 1,721 31,308 64,977 4,812 119 1,907 1,293 139 8,270 3,523 187 3,710 11,980 52,997 11,573 14,102 2,114 27,789 52,472 3,397 155 1,624 278 115 5,569 328 100 428 5,997 46,475 F2 25,921 25,921 581 26,495 52,997 465 20,089 46,475 PWR Holdings Limited Annual Report 2019 23 Consolidated Statement of Changes in Equity For the year ended 30 June 2019 Balance at 1 July 2018 Total comprehensive income for the year Note Profit for the year Other comprehensive income Total comprehensive income Transactions with owners, recorded directly in equity Employee share-based payments Dividends paid Total transactions with owners Balance at 30 June 2019 Balance at 1 July 2017 D3 F3 Total comprehensive income for the year Profit for the year Other comprehensive income Total comprehensive income Transactions with owners, recorded directly in equity Employee share-based payments Dividends paid F3 Total transactions with owners Balance at 30 June 2018 Foreign currency translation reserve $’000 Share based payments reserve Retained earnings $’000 Total equity $’000 340 125 20,089 46,475 Share Capital $’000 25,921 – – – – – – 25,921 25,921 – – – – – – – (103) (103) – – – 237 103 – 237 237 – – – – – – 219 – 219 344 49 – – – 76 – 76 14,206 14,206 – (103) 14,206 14,103 – (7,800) (7,800) 219 (7,800) (7,581) 26,495 52,997 14,888 40,961 11,001 11,001 – 237 11,001 11,238 – (5,800) (5,800) 76 (5,800) (5,724) 25,921 340 125 20,089 46,475 The accompanying notes are an integral part of these financial statements. 24 Annual Report 2019 PWR Holdings Limited Consolidated Statement of Cash Flows For the year ended 30 June 2019 Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Cash generated from operating activities Interest paid Income tax refund – prior year over payment Income tax paid Net cash from operating activities Cash flows from investing activities Government grant income received Interest received Proceeds from sale of property, plant and equipment Payments for property, plant and equipment Net cash used in investing activities Cash flows from financing activities Dividends paid Proceeds from borrowings Payment of finance lease liabilities Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at 1 July Effect of exchange rate fluctuations on cash held Note 2019 $’000 2018 $’000 65,295 51,243 (42,898) (34,604) 22,397 16,639 C1 (71) – (3,675) 18,651 – 49 11 (5,985) (5,925) (7,800) 3,503 (257) (4,554) 8,172 12,110 (59) (27) 1,258 (3,858) 14,012 65 33 225 (5,199) (4,876) (5,800) – (281) (6,081) 3,055 9,064 (9) Cash and cash equivalents at 30 June C1 20,223 12,110 The accompanying notes are an integral part of these financial statements. PWR Holdings Limited Annual Report 2019 25 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION A ABOUT THIS REPORT A1 Reporting entity PWR Holdings Limited (the “Company”) is a Company domiciled in Australia. The consolidated financial statements of the Company as at and for the year ended 30 June 2019 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group Entities”). The Group is involved in the design, engineering, testing, production, validation and sale of customised cooling products and solutions to the motorsports, automotive original equipment manufacturing, automotive aftermarket and emerging technologies sectors for domestic and international markets. The Company’s registered office and principal place of business is 103 Lahrs Road, Ormeau, Queensland 4208. The Group is a for-profit entity for the purposes of preparing these financial statements. A2 Basis of preparation (a) Statement of compliance The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB). The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 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 stated. The financial statements were approved by the Board of Directors on 29 August 2019. (b) Functional and presentation currency These consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency. (c) Use of estimates and judgements The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about carrying values of the entities within the Group. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. Information about critical judgements, estimates and assumptions in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements is included in the Notes C3 (Inventories) and C6 (Intangible assets). A3 Significant accounting policies Apart from the first time adoption of AASB 9 and AASB 15 as described in Note H5, the accounting policies set out in Section I to the consolidated financial statements have been applied consistently to all periods presented in these consolidated financial statements. 26 Annual Report 2019 PWR Holdings Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION B BUSINESS PERFORMANCE B1 Operating segments The Group determines its operating segments based on information presented to the Managing Director being the chief operating decision maker, with operating segments based on the Group’s operating divisions. Intersegment pricing is determined based on cost plus a margin. PWR Performance Products 2019 $’000 2018 $’000 C&R 2019 $’000 2018 $’000 Total 2019 $’000 Revenue from sale of manufactured products Revenue from services External revenues Inter-segment revenues Segment revenue Operating EBITDA1 Significant Items (refer to Note B3) Depreciation and amortisation Segment profit/(loss) before interest and tax Capital expenditure 52,070 38,678 12,691 12,679 64,761 433 52,503 1,676 54,179 20,399 – (1,433) 18,966 5,038 396 39,074 2,856 41,930 17,856 – (993) 16,863 1,841 217 12,908 3,994 16,902 1,487 – (1,037) 450 941 136 12,815 379 13,194 (630) (1,269) (673) (2,572) 2,965 650 65,411 5,670 71,081 21,886 – (2,470) 19,416 5,979 1 Operating EBITDA is the segment’s profit from operations before interest, taxation, depreciation and amortisation. 2018 $’000 51,357 532 51,889 3,235 55,124 17,226 (1,269) (1,666) 14,291 4,806 Reconciliation of reportable segment profit or loss Revenues Total revenue for reportable segments Elimination of inter-segment revenue Consolidated revenue Profit before tax Profit before tax for reportable segments Elimination of inter-segment (profit)/loss Net finance income/(costs) Consolidated profit before tax 2019 $’000 2018 $’000 71,081 (5,670) 65,411 55,124 (3,235) 51,889 19,416 14,291 (123) 543 379 18 19,836 14,688 PWR Holdings Limited Annual Report 2019 27 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION B BUSINESS PERFORMANCE (continued) Geographic information The Group operates manufacturing facilities and/or sales offices in Australia, the UK and the USA, and sells its products to customers in various countries throughout the world. Three customers in the PWR Performance segment comprise 27% of Group’s revenue for the year ended 30 June 2019. The information below is an analysis of the Group’s revenue on the basis of the location of the Group’s customers. Australia USA UK Italy Germany Other Countries (i) Excluding deferred tax assets. B2 Revenue and other income Revenue from contracts with customers Sales of goods Rendering of services Other income R&D tax incentive Government grant B3 Expenses 2019 2018 Revenue $’000 Non-current assets(i) $’000 Revenue $’000 Non-current assets(i) $’000 6,836 13,268 22,703 8,827 7,044 6,733 20,511 9,294 11 – – – 6,286 14,622 16,081 7,091 3,217 4,592 16,700 8,959 16 – – – 65,411 29,816 51,889 25,675 2019 $’000 2018 $’000 64,761 650 65,411 600 – 600 51,309 580 51,889 600 65 665 Significant items During the prior year, the Group disposed of non-core, non cooling components of the business at C&R in the USA. This disposal and write down comprised: Loss on sale of assets disposed Write down of other assets Impact on profit before tax Income tax benefit Impact on profit after tax $’000 $’000 – – – – – 716 140 856 (223) 633 In addition, during the prior year, C&R settled a dispute with a distributor resulting in an expense of $412,693 being recognised in 2018 profit before tax ($305,393 after tax). 28 Annual Report 2019 PWR Holdings Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION B BUSINESS PERFORMANCE (continued) Research and Development The Group recognised $8,985,006 (2018: $8,127,787) as an expense in relation to its research and development activities. This is included in employee expenses, raw materials, consumables and overheads in the income statement. B4 Finance income and finance costs Interest income Net foreign exchange gain Finance income Interest expense Finance costs Net finance income/(costs) B5 Earnings per share Basic and diluted earnings per share 2019 $’000 2018 $’000 49 565 614 (71) (71) 543 33 12 45 (27) (27) 18 2019 2018 14.21 cents 11.00 cents Profit attributable to ordinary shareholders The calculation of both basic and diluted earnings per share was based on profit attributable to equity holders of the Company of $14,205,702 (2018: $11,001,600). Weighted average number of ordinary shares Issued ordinary shares at 1 July Weighted number of ordinary shares at 30 June 2019 No. 2018 No. 100,000,000 100,000,000 100,000,000 100,000,000 The impact of the performance rights issued by the Group during the year and in prior years was not material to the calculation of the Group’s diluted earnings per share. PWR Holdings Limited Annual Report 2019 29 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION C OPERATING ASSETS AND LIABILITIES C1 Cash and cash equivalents Bank balances Cash on hand Cash and cash equivalents in the statement of cash flows Reconciliation of cash flows from operating activities Cash flows from operating activities Profit for the year Adjustments for: Depreciation and amortisation Research & development tax credit Unrealised foreign exchange loss/(gain) Share based remuneration Loss on disposal of assets held for sale (Profit)/Loss on sale of property, plant and equipment Changes in: Trade and other receivables Inventories Trade and other payables Other assets Employee benefits Other Tax balances Net cash from operating activities C2 Trade and other receivables Trade receivables Trade receivables due from related parties (refer Note H2) C3 Inventories Raw materials Work in progress Finished goods Consumables Allowance for inventory obsolescence 2019 $’000 2018 $’000 20,223 12,107 – 3 20,223 12,110 14,206 11,001 2,470 1,666 600 (342) (219) – (4) (635) (406) 920 297 370 (14) 1,408 18,651 4,688 1 4,689 2,721 683 4,283 320 (813) 7,194 601 (12) (76) 716 (11) (609) 495 476 (1,233) 215 76 707 14,012 4,051 3 4,054 3,330 812 3,658 42 (1,057) 6,785 The cost of inventories sold and recognised as an expense during the year end 30 June 2019 was $31,147,358 (2018: $24,021,000). 30 Annual Report 2019 PWR Holdings Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION C OPERATING ASSETS AND LIABILITIES (continued) C4 Other assets Prepayments Deposits Other assets C5 Property, plant and equipment Plant and equipment – at cost Accumulated depreciation Motor vehicles – at cost Accumulated depreciation Under construction 2019 $’000 1,252 311 – 1,563 24,844 (10,125) 14,719 349 (292) 57 574 2018 $’000 1,241 444 49 1,734 18,640 (7,656) 10,984 375 (286) 89 500 15,350 11,573 Reconciliations Reconciliations of the carrying amounts for each class of property, plant and equipment are set out below: 2019 Cost Opening balance Additions Transfers Disposals Effect of movements in exchange rates Closing balance Accumulated depreciation Opening balance Disposals Depreciation Effect of movements in exchange rates Closing balance Net carrying amount Plant and equipment $’000 Motor vehicles $’000 Under construction $’000 Total $’000 19,515 5,979 – (85) 358 500 5,951 (5,886) – 9 574 25,767 – – – – – 574 7,942 (79) 2,472 82 10,417 15,350 18,640 28 5,886 (54) 344 24,844 7,656 (54) 2,446 77 10,125 14,719 375 – – (31) 5 349 286 (25) 26 5 292 57 PWR Holdings Limited Annual Report 2019 31 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION C OPERATING ASSETS AND LIABILITIES (continued) Plant and equipment $’000 Motor vehicles $’000 Under construction $’000 2018 Cost Opening balance Additions Transfers Disposals Effect of movements in exchange rates Closing balance Accumulated depreciation Opening balance Disposals Depreciation Effect of movements in exchange rates Closing balance Net carrying amount Total $’000 14,114 4,806 – (99) 694 2,085 – (1,585) – – 500 19,515 – – – – – 500 6,224 (37) 1,666 89 7,942 11,573 11,651 4,769 1,585 (55) 690 18,640 5,981 (33) 1,623 85 7,656 10,984 378 37 – (44) 4 375 243 (4) 43 4 286 89 The plant and equipment balance as at 30 June 2019 includes assets with carrying amounts of $226,635 under finance lease (2018: $483,516). During the year, the Group did not acquire any assets under finance lease (2018: NIL). C6 Intangible assets 2019 Cost Accumulated amortisation 2018 Cost Accumulated amortisation Reconciliations 2019 Carrying amount at beginning of year Amortisation Effect of movements in exchange rates Balance at the end of the year 2018 Carrying amount at beginning of year Amortisation Effect of movements in exchange rates Balance at the end of the year 32 Annual Report 2019 PWR Holdings Limited Note Goodwill $’000 Trademarks $’000 Total $’000 3,252 10,985 14,237 – – – 3,252 10,985 14,237 3,117 10,985 14,102 – – – 3,117 10,985 14,102 3,117 10,985 14,102 – 135 – – – 135 3,252 10,985 14,237 3,144 10,985 14,129 – (27) – – – (27) 3,117 10,985 14,102 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION C OPERATING ASSETS AND LIABILITIES (continued) Impairment For the purpose of impairment testing, goodwill and trademarks are allocated to the Group’s cash generating units (CGUs) as follows: Goodwill Trademarks PWR Performance Products C&R 2019 $’000 1,904 8,432 2018 $’000 1,904 8,432 10,336 10,336 2019 $’000 1,348 2,553 3,901 2018 $’000 1,213 2,553 3,766 For the purpose of impairment testing, the recoverable amount of each CGU was based on its value in use, determined by discounting the future cash flows to be generated from the continuing use of each CGU. The carrying amount of each CGU was determined to be less than its recoverable amount and accordingly, no impairment loss was recognised. Value in use is calculated based on the present value of the cash flow projections over a five year period and include a terminal value at the end of year five. The cash flow projections over the five year period are based on the Group’s budget for 2020 and growth over the forecast periods based on the Group’s business plans and management’s assessment of the impacts of underlying economic conditions, past performance and other factors on each CGU’s financial performance. For the C&R CGU, the cashflow projections include management’s estimate of the expected growth from C&R’s involvement in OEM programs as a cooling assembly supplier as well as growth into the automotive aftermarket. The long term growth rate used in calculating the terminal value is based on long term inflation estimates for the country and industry in which each CGU operates. The cash flows are discounted to their present value using a pre-tax discount rate based on a weighted average cost of capital adjusted for country and industry specific risks associated with each CGU. Key assumptions used in the estimation of value in use were: PWR Performance Products Discount rate – pre tax Terminal value growth rate Revenue – compound annual growth rate Average EBITDA margin C&R Discount rate – pre tax Terminal value growth rate Revenue – compound annual growth rate Average EBITDA margin C7 Trade and other payables Trade and other payables are carried at amortised cost. Trade payables Other payables 2019 % 2018 % 14.6% 2.0% 2.0% 35.7% 13.5% 2.0% 5.5% 15.1% 2019 $’000 2,383 2,429 4,812 16.4% 2.0% 2.0% 35.7% 13.7% 2.0% 5.6% 17.3% 2018 $’000 1,324 2,073 3,397 PWR Holdings Limited Annual Report 2019 33 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION D EMPLOYEE BENEFITS D1 Employee benefits Current Annual leave liability Long service leave liability Non-current Long service leave liability 2019 $’000 2018 $’000 1,487 420 1,907 1,269 355 1,624 187 100 During the year ended 30 June 2019, the Group contributed $1,151,394 (2018: $932,853) to defined contribution plans. These contributions are included in employee expenses in the statement of profit or loss and other comprehensive income. D2 Key management personnel compensation Key management personnel compensation comprised the following: Short-term employee benefits Termination benefits Post-employment benefits Share based payments Other long term benefits 2019 $’000 2,067 – 132 155 9 2018 $’000 1,955 129 125 84 9 2,363 2,302 D3 Share based payments During the year the Board granted performance rights to employees under the terms of the Performance Rights Plan (the Plan) approved at the Company’s Annual General Meeting on 21 October 2016. Under the Plan, the Board may issue employees conditional performance rights for no consideration. Subject to the achievement of vesting conditions, the performance rights entitle the employee to receive ordinary shares in the Company at no cost. Vesting of the performance rights approved during the year is subject to meeting a 3 year service condition and achievement of performance hurdles (based on either an EPS growth target or total shareholder return (TSR) ranking). The performance period for the rights issued is from 1 July 2018 to 30 June 2021. 162,790 (2018: 158,364) performance rights were issued to key management personnel during the year with 50% subject to the EPS performance hurdle and 50% subject to the TSR performance hurdle. At 30 June 2019, all of these performance rights remain on issue. In accordance with the Group’s accounting policy, the grant date fair values of the rights issued will be recognised as an expense over the vesting period. An expense of $219,000 (2018: $75,518) was recognised during the year and included in “employee expenses” in the statement of profit or loss and other comprehensive income. 34 Annual Report 2019 PWR Holdings Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION D EMPLOYEE BENEFITS (continued) Measurement of fair values The fair value of the TSR component of the performance rights has been measured using a Monte Carlo simulation. The fair value of the EPS component of the performance rights has been measured using the Black Scholes formula. The inputs used in the measurement of the fair values at grant date of the equity-settled share-based payments were as follows: Fair value at grant date Share price at grant date Exercise price Expected volatility Risk free rate Expected life Expected dividends 2019 2018 TSR component EPS component TSR component EPS component $1.82 $2.90 Nil 34% 2.03% 3 years 2.66% $2.68 $2.90 N/A N/A N/A $0.87 $2.20 Nil 40% 1.90% $2.43 $2.20 N/A N/A N/A 3 years 2.77 years 2.77 years 2.66% 2.20% 2.20% Expected volatility has been based on an evaluation of the historical volatility of the Company’s share price prior to the grant date. SECTION E TAXATION E1 Income tax expense Current tax expense Current period (Over)/under provision in prior period Deferred tax expense Origination and reversal of temporary differences Total income tax expense Numerical reconciliation between tax expense and pre-tax accounting profit Profit for the period Total income tax expense Profit excluding income tax Income tax using the Company’s domestic tax rate of 30% Tax effect of R&D benefit Effect of tax rates in foreign jurisdictions Other 2019 $’000 2018 $’000 5,238 (1) 5,237 393 5,630 3,923 (145) 3,778 (91) 3,687 14,206 5,630 19,836 11,001 3,687 14,688 5,951 4,406 (180) (212) 71 (180) (216) (323) 5,630 3,687 PWR Holdings Limited Annual Report 2019 35 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION E TAXATION (continued) E2 Tax assets and liabilities Current tax assets and liabilities The current tax liability of $1,293,174 (2018: $278,242) represents the amount of income tax payable in respect of current and prior periods to the relevant tax authority. Movement in deferred tax balances Net balance at 1 July $’000 Recognised in profit or loss $’000 Recognised in equity $’000 2019 Property, plant and equipment Employee benefits Accruals Inventories Unrealised foreign exchange Tax losses Capital raising costs Other items Net tax assets/(liabilities) 2018 Property, plant and equipment Employee benefits Accruals Inventories Unrealised foreign exchange Tax losses Capital raising costs Other items (312) 595 24 418 (211) 1,200 454 (54) 2,114 (450) 662 63 770 – 362 681 (65) Net tax assets/(liabilities) 2,084 (748) 86 (24) (14) (273) 998 (227) (191) (393) 138 (67) (39) (352) (211) 838 (227) (50) 30 – – – – – – – – – – – – – – – – – – Net $’000 (1,060) 681 – 404 (484) 2,198 227 (245) 1,721 (312) 595 24 418 (211) 1,200 454 (54) 2,114 Deferred tax assets $’000 Deferred tax liabilities $’000 – 681 – 555 1 2,198 227 182 3,844 – 595 24 499 – 1,200 454 177 2,949 (1,060) – – (151) (485) – – (427) (2,123) (312) – – (81) (211) – – (231) (835) The Group’s tax losses recognised as a deferred tax asset arise from its US operations. Management considers that based on the Group’s plans for this business, it is probable that future taxable profits will be generated against which the tax losses can be recovered. SECTION F CAPITAL STRUCTURE AND BORROWINGS F1 Loans and borrowings Current Finance lease liability Non-current Finance lease liability Foreign currency loan 2019 $’000 2018 $’000 119 155 108 3,415 3,523 328 – 328 The foreign currency loan is denominated in GBP and interest is based on GBP 3 month LIBOR rates plus a margin. 36 Annual Report 2019 PWR Holdings Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION F CAPITAL STRUCTURE AND BORROWINGS (continued) Reconciliation of movements in liabilities to cash flows arising from financing activities Long term borrowings Lease liabilities Total liabilities from financing facilities 2018 Carrying Value $’000 – 483 483 Non cash changes Foreign exchange movements $’000 (88) 1 (87) Cash flows $’000 3,503 (257) 3,246 2019 Carrying Value $’000 3,415 227 3,642 Finance facilities The terms and conditions of the Group’s finance facilities at 30 June 2019 were as follows: Facility Trade finance Corporate credit card Finance lease Multi currency facility Foreign currency advance facility Currency Nominal interest rate Maturity 2019 Facility limit $’000 Carrying amount $’000 2018 Facility limit $’000 Carrying amount $’000 AUD AUD USD AUD AUD USD Variable Variable Variable 5.4%–8.2% Varies 2023 2023 – 2023 2023 750 100 100 7,500 10,000 – – – 227 3,415 500 100 100 5,000 – N/A N/A – – 4,000 – 2 38 483 – – Finance facilities are secured by charges over the Group’s assets. Under the terms of the agreements, the Company and several of its wholly owned subsidiaries jointly and severally guarantee and indemnify the lender in relation to the borrower’s obligations. Finance leases Finance lease liabilities are payable as follows: Less than one year Between one and five years Future minimum lease payments 2019 $’000 2018 $’000 Interest 2019 $’000 Present value of minimum lease payments 2018 $’000 2019 $’000 2018 $’000 131 110 241 172 344 516 12 2 14 17 16 33 119 108 227 155 328 483 The Group leases operating equipment used in the manufacturing process under finance leases. PWR Holdings Limited Annual Report 2019 37 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION F CAPITAL STRUCTURE AND BORROWINGS (continued) F2 Capital and reserves Share capital Ordinary shares Balance at beginning of year Balance at end of year 2019 No. of shares $’000 2018 No. of shares 100,000,000 25,921 100,000,000 100,000,000 25,921 100,000,000 $’000 25,921 25,921 Capital management The Board aims to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the capital base as well as the level of dividends to ordinary shareholders. There were no changes in the Group’s approach to capital management during the year. F3 Dividends Dividends recognised by the Company are: 2019 Interim 2019 ordinary Final 2018 ordinary Total amount 2018 Interim 2018 ordinary Final 2017 ordinary Total amount Cents per share $ Total amount $ Franked/ unfranked Date of payment 1.60 1,600,000 Franked 5 April 2019 6.20 6,200,000 Franked 7,800,000 14 September 2018 1.10 4.70 1,100,000 Franked 6 April 2018 4,700,000 Franked 18 September 2017 5,800,000 Franked dividends declared or paid during the year were fully franked at the tax rate of 30 percent. Dividend franking account 30 percent franking credits available to shareholders of PWR Holdings Limited 1,483,687 1,132,457 2019 2018 At 30 June 2019, the franking credits of the Group were 5,172,544 (2018: 5,280,419). The ability to utilise the franking credits is dependent upon the ability to declare dividends. Recognition and measurement Dividends are recognised as a liability in the period in which they are declared. 38 Annual Report 2019 PWR Holdings Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION F CAPITAL STRUCTURE AND BORROWINGS (continued) F4 Commitments Operating leases Non-cancellable operating leases are payable as follows: Less than one year Between one and five years More than five years 2019 $’000 2018 $’000 2,038 7,609 2,124 1,805 7,002 3,383 11,771 12,190 The Group leases its office and factory facilities under operating leases. During the financial year ended 30 June 2019 an amount of $2,084,474 was recognised as an expense in the income statement in respect of operating leases (2018: $1,885,328). Other commitments At 30 June 2019, the Group had agreed to purchase plant and equipment for $2.0 million (2018: $2.5 million) within 12 months. SECTION G GROUP STRUCTURE G1 Parent entity information As at and throughout the financial year ended 30 June 2019, the parent and ultimate parent entity of the Group was PWR Holdings Limited. Statement of profit or loss and other comprehensive income Profit/(Loss) after income tax Total comprehensive income Statement of financial position Total current assets Total non-current assets Total assets Total current liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Retained earnings Total equity 2019 $’000 11,244 11,244 23 31,137 31,160 163 – 163 2018 $’000 5,445 5,445 21 27,678 27,699 203 – 203 30,997 27,496 25,921 25,921 344 4,732 124 1,451 30,997 27,496 PWR Holdings Limited Annual Report 2019 39 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION G GROUP STRUCTURE (continued) Contingent liabilities The parent entity is party to a cross guarantee and indemnity in relation to the Group’s borrowing arrangements, refer Note F1. The parent had no other contingent liabilities at 30 June 2019. Significant accounting policies The accounting policies of the parent entity are consistent with those of the Group, as disclosed in the notes. G2 Controlled entities The following entities are subsidiaries of the parent entity, the results of which are included in the consolidated financial statements of the Group. PWR Performance Products Pty Ltd PWR IP Pty Ltd PWR Europe Limited C&R Racing Inc PWR EU B.V. Country of incorporation Australia Australia UK USA Netherlands Ownership interest 2019 % 100 100 100 100 100 2018 % 100 100 100 100 – G3 Deed of cross guarantee Pursuant to ASIC Corporations (wholly-owned companies) Instrument 2016/785, the wholly owned subsidiaries listed below are relieved from the Corporations Act 2001 requirements for the preparation, audit and lodgement of financial reports, and Directors’ reports. It is a condition of the Instrument that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect of the Deed is that the Company guarantees to each creditor, payment in full of any debt in the event of winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act, the Company will only be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the event that the Company is wound up. The subsidiaries subject to the Deed are:  PWR Performance Products Pty Ltd  PWR IP Pty Ltd Both subsidiaries became a party to the Deed on 18 May 2017. 40 Annual Report 2019 PWR Holdings Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION G GROUP STRUCTURE (continued) A consolidated statement of comprehensive income and consolidated statement of financial position, comprising the Company and controlled entities which are a party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, for the year ended 30 June 2019 is set out below. Statement of profit or loss and other comprehensive income Revenue Other income Raw materials and consumables used Employee expenses Occupancy expenses Other expenses Profit before depreciation, net finance costs and income tax Depreciation and amortisation Profit before net finance costs and income tax Finance income Finance costs Net finance income/(costs) Profit before income tax Income tax expense Profit for the year attributable to equity holders of the parent Total comprehensive income for the year 2019 $’000 2018 $’000 46,659 36,955 600 876 (7,012) (5,997) (17,574) (14,280) (1,459) (2,153) 19,061 (1,423) 17,638 2,955 (1,536) 1,419 19,057 (5,609) 13,448 13,448 (1,212) (1,529) 14,813 (980) 13,833 810 (29) 781 14,614 (3,902) 10,712 10,712 PWR Holdings Limited Annual Report 2019 41 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION G GROUP STRUCTURE (continued) Statement of financial position Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Other assets Total current assets Non-current assets Property, plant and equipment Intangible assets Related party loans Investments in subsidiaries Deferred tax assets Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Loans and borrowings Employee benefits Tax liabilities Provisions Total current liabilities Non-current liabilities Loans and borrowings Deferred tax liabilities Employee benefits Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Retained earnings Total equity 42 Annual Report 2019 PWR Holdings Limited 2019 $’000 2018 $’000 14,571 11,191 4,120 – 10,380 5,812 4,363 1,195 29,882 21,750 9,526 10,985 9,471 1,944 1,362 33,288 63,170 1,876 119 1,790 800 99 4,684 3,523 1,511 187 5,221 9,905 53,265 5,917 10,985 7,687 1,944 1,425 27,958 49,708 1,942 155 1,549 467 81 4,194 328 – 100 428 4,622 45,086 25,921 25,921 382 26,962 53,265 394 18,771 45,086 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION H OTHER INFORMATION H1 Financial risk management The Group has exposure to the following risks arising from financial instruments: credit risk – – liquidity risk – market risk The note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. Risk management framework The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management activities are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management activities are reviewed to reflect changes in market conditions and the Group’s operations. The Group aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s receivables from customers. The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate. Management assesses each new customer for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the end of the reporting period was as follows. Cash and cash equivalents Trade and other receivables Note C1 C2 Carrying amount 2019 $’000 20,223 4,689 24,912 2018 $’000 12,110 4,054 16,164 Cash and cash equivalents The Group held cash and cash equivalents of $20,223,016 at 30 June 2019 (2018: $12,110,095), which represents its maximum credit exposure on these assets. The cash and cash equivalents are held with bank and financial institution counterparties, which are rated A to AA-, based on independent rating agency ratings. Trade and other receivables The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Group’s customer base, including the default risk of the country in which customers operate, as these factors may have an influence on credit risk. PWR Holdings Limited Annual Report 2019 43 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION H OTHER INFORMATION (continued) Exposure to credit risk The maximum exposure to credit risk for trade and other receivables at the end of the reporting period by geographic region was as follows: Carrying amount Australia UK USA The ageing of the Group’s trade and other receivables at the end of the reporting date was as follows: Not past due Past due 1-30 days Past due 31-60 days Past due > 61 days Provision for impairment 2019 $’000 647 2,574 1,468 4,689 3,487 1,148 34 20 2018 $’000 1,084 2,091 879 4,054 3,228 801 22 3 4,689 4,054 – – 4,689 4,054 Management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full, based on historic payment behaviour and analysis of customer credit risk. No impairment losses were recognised in respect of trade and other receivables during the year (2018: Nil). Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. In addition, the Group maintains the following lines of credit: (refer Note F1) – A$10,000,000 foreign currency advance facility (multicurrency); – A$7,500,000 asset finance facility; – A$750,000 trade finance facility; – A$100,000 corporate credit card facility; and – USD$100,000 corporate credit card facility. 44 Annual Report 2019 PWR Holdings Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION H OTHER INFORMATION (continued) The following are the remaining contractual maturities at the end of the reporting period of financial liabilities, including estimated interest payments. 2019 Trade and other payables Foreign currency loan Finance lease liabilities 2018 Trade and other payables Finance lease liabilities Carrying amount $’000 Note C7 F1 F1 C7 F1 4,812 3,415 227 8,454 3,397 483 3,880 Total $’000 (4,812) (3,756) (241) (8,809) (3,397) (516) (3,913) Contractual cash flows 12 months $’000 1-5 years $’000 (4,812) (68) (131) – (3,688) (110) (5,011) (3,798) (3,397) (172) (3,569) – (344) (344) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Currency risk The Group is exposed to currency risk on its financial assets and liabilities arising from sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities, being the Australian dollar (AUD), Pound Sterling (GBP) and US dollar (USD). The currencies in which these transactions are denominated are primarily AUD, GBP and USD. Under the Group’s financial risk management policies, the Group may use derivative financial instruments to manage its foreign currency risks. At 30 June 2019, the Group had entered into participating forward contracts to manage its exposure to sales denominated in GBP. These contracts, which settle monthly until 30 June 2020, have a total notional amount of £10.65m and have been accounted for at fair value through the profit and loss. The fair value at year end was an asset of $258,036 (2018: NIL). During the year ended 30 June 2019, the Group recognised $218,960 in realised gains and $341,904 in unrealised gains on derivatives (2018: $236,000 loss). This has been included in finance income or costs in the income statement. Exposure to currency risk A summary of quantitative data about the Group’s exposure to currency risk on financial assets and liabilities at year end is as follows: Trade receivables Trade payables Foreign currency loan Net statement of financial position exposure Notional amount of foreign currency derivatives 30 June 2019 GBP £’000 1,757 (812) (2,000) AUD $’000 324 (433) – USD $’000 829 (306) – 30 June 2018 GBP £’000 1,230 (280) – AUD $’000 470 (684) – USD $’000 1,076 (201) – Note C2 C7 F1 (109) (1,055) 523 (214) 950 875 – 10,650 – – – – PWR Holdings Limited Annual Report 2019 45 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION H OTHER INFORMATION (continued) Sensitivity analysis A strengthening (weakening) of the GBP or USD against the AUD at 30 June would have affected the measurement of financial instruments denominated in a foreign currency and increased or (decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. The analysis is performed on the same basis for 2018, using consistent foreign exchange rate variances, as indicated below. 30 June 2019 GBP (10% movement) USD (10% movement) 30 June 2018 GBP (10% movement) USD (10% movement) Profit or loss (net of tax) Equity (net of tax) Strengthening $’000 Weakening $’000 Strengthening $’000 Weakening $’000 133 (52) 108 76 (29) 47 (118) (83) 133 (52) 108 76 (29) 47 (118) (83) Interest rate risk At the end of the reporting period the interest rate profile of the Group’s interest-bearing financial instruments as reported to the management of the Group was as follows: Fixed rate instruments Financial liabilities Variable rate instruments Financial assets Financial liabilities Nominal amount 2019 $’000 (227) (227) 20,223 (3,415) 16,808 2018 $’000 (483) (483) 12,110 – 12,110 Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the end of reporting period would have increased or (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. Profit or loss (net of tax) Equity (net of tax) 100bp increase $’000 100bp decrease $’000 100bp increase $’000 100bp decrease $’000 117 117 84 84 (117) (117) (84) (84) 117 117 84 84 (117) (117) (84) (84) 30 June 2019 Variable rate instruments Cash flow sensitivity (net) 30 June 2018 Variable rate instruments Cash flow sensitivity (net) 46 Annual Report 2019 PWR Holdings Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION H OTHER INFORMATION (continued) Fair values The fair values of the Group’s financial assets and liabilities approximate their carrying amounts recognised in the statement of financial position. H2 Related party information Certain key management personnel, or their related parties, hold positions in other entities that result in them having control, joint control or significant influence over the financial or operating policies of these entities. A number of these entities transacted with the Group during the year. The terms and conditions of the transactions with key management personnel and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm’s length basis. The aggregate value of transactions and outstanding balances relating to key management personnel and entities over which they have control, joint control or significant influence were as follows: Entity Transaction Transaction values during the year Balance outstanding Receivable/(Payable) 2019 $’000 2018 $’000 2019 $’000 2018 $’000 Bayswater Road Radiators Pty Ltd(i) Sales of goods Triple Eight Race Engineering Pty Ltd(ii) Sales of goods 30 4 36 13 1 – 3 – (i) Bayswater Road Radiators Pty Ltd is an entity associated with Kees Weel, which purchases goods from the Group. (ii) Triple Eight Race Engineering Pty Ltd is an entity associated with Roland Dane, which purchases goods from the Group. H3 Auditor Remuneration Audit services Auditors of the Group  KPMG  Audit of financial reports  Accountability GB  Audit of financial reports Other services Auditors of the Group  KPMG  IT Advisory services  Accountability GB  Taxation services 2019 $ 2018 $ 147,500 142,500 14,000 14,157 39,607 – 2,407 1,598 PWR Holdings Limited Annual Report 2019 47 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION H OTHER INFORMATION (continued) H4 Subsequent events The Board declared a fully franked final ordinary dividend of 6.90 cents per share and a special FY19 dividend of 3.00 cents per share. The financial effect of the 2019 declared final and special dividend has not been brought to account in the consolidated financial statements for the year ended 30 June 2019. Other than the matter noted above, there has not arisen in the interval since the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Group, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. H5 New accounting standards Changes in accounting policies -new standards and interpretations adopted Effective from 1 July 2018, AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers have been adopted by the Group. The nature and effect of these standards being adopted are disclosed below. AASB 9 Financial Instruments AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement and includes revised guidance on the classification and measurement of financial instruments, a new ‘expected credit loss’ (“ECL”) model for calculating impairment on financial assets and new general hedge accounting requirements. As the Group does not hold complex financial instruments or long dated receivables, there was no material impact of adopting AASB 9 on the Group’s financial statements in the current or comparative period. New standards and interpretations adopted AASB 15 Revenue from Contracts with Customers AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue (AASB 118). AASB 15 is a significant change from the revenue recognition requirements under AASB 118 and will involve more judgements and estimates as it requires revenue to be recognised when control of a good or service transfers to a customer, or on satisfaction of performance obligations, which replaced the previous recognition concept of transfer of risks and rewards. The application of AASB 15 has not had a material impact on the Group in the current or comparative period including the timing of recognition of the Group’s key revenue streams. For the sale of manufactured products, revenue will be recognised at the point in time that the performance obligation is satisfied which is generally on shipment of the goods to the customer from the Group’s warehouse. For services, including wind tunnel testing and freight, revenue is recognised over time as those services are provided. New standards and interpretations not yet adopted AASB 16 Leases The Group has not early adopted AASB 16 Leases. The Group will apply AASB 16 initially in its financial statements for the year ending 30 June 2020. AASB 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are optional exemptions for short-term leases and leases of low value items. The Group has started an initial assessment of the potential impact on its consolidated financial statements, with the most significant impact identified so far being that the Group will recognise new assets and liabilities for its operating leases of factory and office facilities. In addition, the nature of expenses related to those leases will now change as AASB 16 replaces the straight-line operating lease expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities. The Group has not yet decided whether it will use the optional exemptions. No significant impact is expected for the Group’s finance leases. Although the Group has not yet fully quantified the impact on its reported assets and liabilities of adoption of AASB 16, based on an initial assessment the impact on the net profit after tax is not expected to be significant. The quantitative effect will depend on, inter alia, the transition method chosen, the extent to which the Group uses the practical expedients and recognition exemptions, and any additional leases that the Group enters into. 48 Annual Report 2019 PWR Holdings Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 Income tax Inventories SECTION I SIGNIFICANT ACCOUNTING POLICIES 1. Basis of consolidation 2. Foreign currency 3. Revenue 4. Employee benefits 5. Finance income and finance costs 6. 7. 8. Property, plant and equipment 9. Intangible assets and goodwill 10. Share capital 11. Impairment 12. Provisions 13. Leases 14. Financial instruments 15. Fair value measurement 1 Basis of consolidation Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. 2 Foreign currency Transactions in foreign currencies are translated to the respective functional currencies of the Groups’ entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated to the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss. The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition are translated to the functional currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to the functional currency at exchange rates at the dates of the transactions. Foreign currency translation differences are recognised in other comprehensive income and presented in the foreign currency translation reserve in equity. 3 Revenue Sale of goods For the sale of manufactured products, revenue is recognised at the point in time that the performance obligation is satisfied which is generally on shipment of the goods to the customer from the Group’s warehouse. Rendering of services For services, including wind tunnel testing and freight, revenue is recognised over time as those services are provided. PWR Holdings Limited Annual Report 2019 49 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION I SIGNIFICANT ACCOUNTING POLICIES (continued) 4 Employee benefits Short-term employee benefits Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past services provided by the employee and the obligation can be estimated reliably. Long-term employee benefits The Group’s net obligation in respect of long-term employee benefits is the amount of future benefits that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Re-measurements are recognised in profit or loss in the period in which they arise. Share based payment transactions The grant-date fair value of share-based payment awards granted to employees is recognised as an expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. Termination benefits Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted. Defined contribution funds Obligations for contributions to defined contribution plans are expensed as the related service is provided. 5 Finance income and finance costs Finance income comprises interest income on funds invested and changes in the fair value of derivative financial instruments at fair value through profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Finance costs comprise interest expense on borrowings and changes in the fair value of derivative financial instruments at fair value through profit or loss. Interest expense is recognised using the effective interest method. Foreign currency gains and losses on monetary assets and liabilities are reported on a net basis as either finance income or finance costs depending on whether foreign currency movements are in a net gain or net loss position. Income Tax 6 Income tax on the profit or loss for the year comprises current and deferred tax. Current and deferred tax is recognised in the statement of comprehensive income except to the extent that it relates to items recognised directly in equity, or in other comprehensive income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance date, and any adjustments to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from the declaration of dividends. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: initial recognition of goodwill, the initial recognition of assets and liabilities that affect neither accounting nor taxable profit, and difference relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. 50 Annual Report 2019 PWR Holdings Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION I SIGNIFICANT ACCOUNTING POLICIES (continued) In determining the amount of current and deferred tax the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities; such as changes to tax liabilities will impact tax expense in the period that such a determination is made. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend. Inventories 7 Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. 8 Property, plant and equipment Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, and the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Cost also may include transfers from other comprehensive income of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within other income in profit or loss. Subsequent costs Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group. Ongoing repairs and maintenance are expensed as incurred. Depreciation Depreciation is calculated to write off the cost of property, plant and equipment less their estimated residual values using the straight-line and/or diminishing value basis over their estimated useful lives, and is generally recognised in profit or loss. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. The estimated useful lives are as follows: Plant and equipment Motor vehicles 2019 2018 2-7 years 2-7 years 4-6 years 4-6 years Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. PWR Holdings Limited Annual Report 2019 51 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION I SIGNIFICANT ACCOUNTING POLICIES (continued) 9 Intangible assets and goodwill Goodwill Goodwill on acquisition is initially measured at cost, being the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. At the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination’s synergies. Goodwill is not amortised. Trademarks Separately acquired trademarks are measured initially at cost of acquisition. Trademarks acquired in a business combination are recognised at fair value at the acquisition date. Fair value is determined using the relief from royalty method. The Group’s trademarks are subsequently carried at cost less impairment losses and are not amortised as they are considered to have an indefinite useful life. Research and development Research expenditure is recognised as an expense as incurred. Concessional tax benefits and incentives receivable are recognised as other income based on an estimate of the eligible research and development expenditure incurred during the financial year. Costs incurred on development projects are recognised as intangible assets only when it is probable that a project will, after assessment of its commercial and technical feasibility, be completed and generate future economic benefits and can be measured reliably. Impairment of non financial assets The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. Goodwill and trademarks with an indefinite life are tested annually for impairment. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amount. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. 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 or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of other assets in the CGU on a pro rata basis. An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 10 Share capital Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to issue of ordinary shares are recognised as a deduction from equity, net of any related income tax benefit. The Company does not have authorised capital or par value in respect of its issued shares. All shares are fully paid. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. Foreign currency translation reserve The foreign currency translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations, as well as the effective portion of any foreign currency differences arising from hedges of a net investment in a foreign operation. Share based payments reserve The share based payments reserve comprises the grant-date fair value of share-based payment awards granted to employees. 52 Annual Report 2019 PWR Holdings Limited Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION I SIGNIFICANT ACCOUNTING POLICIES (continued) 11 Provisions Warranties A provision for warranties is recognised when the underlying products are sold, based on historical warranty data and a weighting of possible outcomes against their assumed possibilities. Provision for warranties relates to products sold during the current and prior financial years. The provision is based on estimates made from historical warranty data. The Group expects to settle the majority of the liability over the next year. 12 Leases Leased assets Assets held by the Group under leases that transfer to the Group substantially all the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset. Assets held under other leases are classified as operating leases and are not recognised in the Group’s statement of financial position. Lease payments Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. 13 Financial instruments Non-derivative financial instruments Trade and other receivables are initially recognised as fair value and subsequently measured at amortised cost less impairment. Trade receivables are due for settlement no more than 30-60 days from the date of recognition. The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at reporting date. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest rate method. Interest-bearing loans and liabilities are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis. Derivative financial instruments The Group may use derivative financial instruments to manage its foreign currency exposures. Embedded derivatives are separated from the host contract and accounted for separately if certain criteria are met. Derivatives are recognised initially at fair value, any directly attributable transaction costs are recognised in profit or loss as they are incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss. PWR Holdings Limited Annual Report 2019 53 Notes to the Consolidated Financial Statements For the year ended 30 June 2019 SECTION I SIGNIFICANT ACCOUNTING POLICIES (continued) 14 Fair value measurements The consolidated financial statements have been prepared on the historical cost basis except for any derivative financial instruments which are recognised at fair value. ‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk. A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. When one is available, the Group measures the fair value using the quoted price in an active market for that asset or liability. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. When an active market is not available, the Group uses observable market data as far as possible. Further information about the methods and assumptions made in determining fair values for measurement and/or disclosure purposes is included in the following notes: – Note I14 – financial instruments – Note D3 – share based payments. 54 Annual Report 2019 PWR Holdings Limited Directors’ Declaration For the year ended 30 June 2019 DIRECTORS’ DECLARATION 1. In the opinion of the directors of PWR Holdings Limited (the “Company”): (a) the consolidated financial statements and notes that are set out on 22 to 54 and the Remuneration report in section 16 in the Directors’ report, are 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 2019 and of its performance for the financial year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. 3. 4. There are reasonable grounds to believe that the Company and the group entities identified in Note G3 will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company and those group entities pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2019. The directors draw attention to Note A2 to the consolidated financial statements, which includes a statement of compliance with International Financial Reporting Standards. Signed in accordance with a resolution of directors. ______________________________ Kees Weel Director Brisbane 29th August 2019 PWR Holdings Limited Annual Report 2019 55 Independent Auditor’s Report to the Members of PWR Holdings Limited For the year ended 30 June 2019 Report on the Remuneration Report Opinion Directors’ responsibilities In our opinion, the Remuneration Report of PWR Holdings Limited for the year ended 30 June 2019 complies with Section 300A of the Corporations Act 2001. 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 responsibilities We have audited the Remuneration Report included in pages 12 to 20 of the Directors’ Report for the year ended 30 June 2019. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Jason Adams Partner Brisbane 29 August 2019 65 56 Annual Report 2019 PWR Holdings Limited Independent Auditor’s Report to the Members of PWR Holdings Limited For the year ended 30 June 2019 Other Information Other Information is financial and non-financial information in PWR Holdings Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’ Report and ASX Additional Information. The Chairman’s Letter and Managing Director’s Report are expected to be included in the Annual Report, and made available to us after the date of the Auditor's Report. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for: • • • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and assessing the Group and Company’s ability to continue as a going concern. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objective is: • • to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf . This description forms part of our Auditor’s Report. 64 PWR Holdings Limited Annual Report 2019 57 Independent Auditor’s Report to the Members of PWR Holdings Limited For the year ended 30 June 2019 Valuation of goodwill and intangible assets $14.2m Refer to Note C6 to the Financial Report The key audit matter How the matter was addressed in our audit A key audit matter for us was the Group’s annual testing of goodwill and intangible assets for impairment given the size of the balance (being 21.9% of total assets). We focused on the significant forward-looking assumptions the Group applied in its value in use models, including forecast cash flows, growth rates and discount rates. The Group uses complex models in performing its annual impairment testing. These models use forward looking assumptions based on the Group’s budgeting and business plans and a range of other internal and external sources as inputs to the assumptions. Complex modelling using forward-looking assumptions tend to be prone to greater risk for potential bias, error and inconsistent application. These conditions necessitate additional scrutiny by us, in particular to address the objectivity of sources used for assumptions, and their consistent application. We involved valuation specialists to supplement our senior audit team members in assessing this key audit matter. Our procedures included: • We considered the appropriateness of the value in use method applied by the Group to perform the annual impairment testing against the requirements of the accounting standards. • We assessed the integrity of the value in use models used, including the accuracy of the underlying calculation formulas. • We considered the Group’s determination of its CGUs based on our understanding of the Group’s operations and how independent cash inflows were generated, against the requirements of the accounting standards. • We compared the forecast cash flows contained in the value in use model to Board approved budgets and the Group’s business plans. • We assessed the accuracy of previous Group forecasts to inform our evaluation of forecasts incorporated in the models. • We considered the sensitivity of the models by varying key assumptions, such as forecast growth rates, terminal growth rates and discount rates, within a reasonably possible range, to identify those CGUs at higher risk of impairment and to focus our further procedures. • We challenged the Group’s significant forecast cash flow and growth assumptions using our knowledge of the Group, its past performance and our understanding of factors impacting the business and customers in which the CGUs operate in. • Working with our valuation specialists, we independently developed a discount rate range considered comparable using publicly available market data for comparable entities, adjusted by risk factors specific to the CGU and the industry it operates in. • We assessed the disclosures in the financial report using our understanding obtained from our testing and the requirements of the accounting standards. 63 58 Annual Report 2019 PWR Holdings Limited Independent Auditor’s Report to the Members of PWR Holdings Limited For the year ended 30 June 2019 Independent Auditor’s Report To the shareholders of PWR Holdings Limited Report on the audit of the Financial Report Opinion We have audited the Financial Report of PWR Holdings Limited (the Company). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: • • giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial performance for the year ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion The Financial Report comprises: • Consolidated statement of financial position as at 30 June 2019; • Consolidated statement of profit or loss and other comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended; • Notes including a summary of significant accounting policies; and • Directors’ Declaration. The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year. We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code. Key Audit Matters The Key Audit Matter we identified was the valuation of goodwill and intangible assets. Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 62 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation. PWR Holdings Limited Annual Report 2019 59 ASX Additional Information Shareholdings as at 9 September 2019 DISTRIBUTION OF EQUITY SECURITY HOLDERS Category 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over 62 shareholders hold less than a marketable parcel of ordinary shares of 120 shares. TWENTY LARGEST SHAREHOLDERS Name 1 KPW Property Holdings Pty Ltd 2 HSBC Custody Nominees (Australia) Limited 3 JP Morgan Nominees Australia Pty Ltd 4 Wagon Weel Co Pty Ltd 5 Citicorp Nominees Pty Limited 6 National Nominees Limited 7 Mamlec Pty Ltd 8 Accbell Nominees Pty Ltd 9 BNP Paribas Noms Pty Ltd 10 Merrill Lynch (Australia) Nominees Pty Limited 11 BNP Paribas Nominees Pty Ltd 12 Sandhurst Trustees Ltd 13 ECapital Nominees Pty Ltd 14 Wask Management Pty Ltd 15 UBS Nominees Pty Ltd 16 Citicorp Nominees Pty Limited 17 Neweconomy Com Au Nominees Pty Ltd 18 Invia Custodian Pty Ltd 19 Citicorp Nominees Pty Ltd 20 UQ Endowment Fund Ltd Top 20 holders of ordinary fully paid shares Total remaining holders balance 60 Annual Report 2019 PWR Holdings Limited Number of Ordinary shares Number of Security Holders 459,609 4,918,118 4,530,225 8,420,419 81,671,629 883 1,720 606 392 28 100,000,000 3,629 Number of ordinary shares held Percentage of capital held % 17,368,500 13,757,739 11,124.386 10,000,000 7,999,086 7,053,867 3,500,000 2,500,000 1,498,864 1,284,235 1,274,445 846,853 631 919 364,575 363,865 286,895 254,992 238,975 174,971 160,000 17.37 13.76 11.12 10.00 8.00 7.05 3.50 2.50 1.50 1.28 1.27 0.85 0.63 0.36 0.36 0.29 0.26 0.24 0.18 0.16 80,684,167 19,315,833 80.68 19.32 ASX Additional Information Shareholdings as at 9 September 2019 SUBSTANTIAL SHAREHOLDERS The number of shares held by substantial shareholders and their associates are set out below: Shareholder KPW Property Holdings Pty Ltd IOOF Holdings Ltd Wagon Weel Co Pty Ltd Tribeca Investment Partners Pty Ltd RIGHTS The number of performance rights on issue are set out below: Number of rights holders Number of rights on issue 9 373,042 VOTING RIGHTS Ordinary shares Refer to Note I 11 in the financial statements Securities Exchange The Company is listed on the Australian Securities Exchange. The Home exchange is Sydney. Other information PWR Holdings Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares. On-market buy-back There is no current on-market buy-back. Number 17,368,500 11,310,765 10,000,000 7,759,412 PWR Holdings Limited Annual Report 2019 61 Corporate Directory PWR Holdings Limited ABN 85 105 326 850 OFFICES AND OFFICERS Directors Teresa Handicott Jeffrey Forbes Roland Dane Kees Weel Company Secretary Lisa Dalton Principal Registered Office PWR Holdings Limited 103 Lahrs Road Ormeau, 4208 Queensland Locations of Share Registry Computershare Investor Services Pty Ltd Level 1, 200 Mary Street Brisbane 4000 Queensland 62 Annual Report 2019 PWR Holdings Limited www.pwr.com.au PWR Holdings Limited 103 Lahrs Road, Ormeau, 4208 Queensland Phone: 07 5547 1600 www.pwr.com.au 

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