Annual Report
2021
PWR Holdings Limited (ASX:PWH)
Global Operations
Indianapolis
Silverstone
PWR NORTH AMERICA
PWR EUROPE
South East
Queensland
PWR GROUP
HEADQUARTERS
INDIANAPOLIS, USA
PWR NORTH AMERICA
(C&R RACING INC.)
Our Indianapolis based
facility is deep-rooted
in supplying world-class
motorsports and performance
automotive industry cooling
solutions. With a history of
providing components to top
professional race teams and
key industry organizations,
our products have been
proven to withstand the
toughest environments.
As a leader in cooling
research and development,
PWR North America offers
full engineering and design
services with flexible on-site
manufacturing, including a
state of the art Controlled
Atmosphere Brazing Furnace.
b
ABN 85 105 326 850
SILVERSTONE,
UNITED KINGDOM
Based in Silverstone, England,
PWR Europe extends the
same broad scope of company
services and cutting-edge
cooling componentry that
has established PWR as a
worldwide resource for best-
in-class cooling solutions.
From design, testing to
development, our Europe
facility offers access to the
broad range of ever-growing
technical resources that
PWR prides itself on.
ORMEAU, SOUTH EAST
QUEENSLAND
PWR Performance Products
and PWR Advanced Cooling
Technology are headquartered
in South East Queensland
Australia and supply
innovative cooling solutions
to Motorsports, Aerospace &
Defence, OEM and Industrial
customers around the world.
Every aspect of the
manufacturing process is
controlled completely within
our own facility at Ormeau,
which enables PWR to offer
its global customers quick
turn around and the unique
opportunity to customize
products to suit their
specific needs.
Annual Report 2021 PWR Holdings Limited Contents
2021 Highlights............................................................................................................................................................................................ 2
Who we are. How we work. What we do. ................................................................................................................................................ 3
Chairman’s Review ..................................................................................................................................................................................... 6
Managing Director’s Review .................................................................................................................................................................... 7
Where We Came From ............................................................................................................................................................................. 10
Sustainability ..............................................................................................................................................................................................12
Operating and financial review................................................................................................................................................................18
Directors .................................................................................................................................................................................................... 22
Executives .................................................................................................................................................................................................. 23
Directors’ Report......................................................................................................................................................................................26
Lead Auditors Independence Declaration Under Section 307C of the Corporations Act 2001 ................................................31
Remuneration Report .............................................................................................................................................................................. 32
Consolidated Statement of Profit or Loss and Other Comprehensive Income ............................................................................49
Consolidated Statement of Financial Position ....................................................................................................................................50
Consolidated Statement of Changes in Equity ....................................................................................................................................51
Consolidated Statement of Cash Flows ................................................................................................................................................ 52
Notes to the Consolidated Financial Statements ............................................................................................................................... 53
Directors’ Declaration .............................................................................................................................................................................86
Independent Auditor’s Report to the Members of PWR Holdings Limited ................................................................................... 87
ASX Additional Information .....................................................................................................................................................................91
Corporate Directory ................................................................................................................................................................................ 93
2021 Highlights
Chairman’s Review
Sustainability
Page 2
Page 6
Page 12
1
2021 Highlights
REVENUE
EBITDA
NPAT
$79.2m
$29.0m
$16.8m
Increased by 20.5%
Increased by 23.6%
Increased by 28.7%
EARNINGS PER SHARE
DIVIDENDS PER SHARE
16.8c
8.80c
HEADCOUNT
363
Increased by 28.6%
Increased by 49.2%
Increased by 16.3%
2
Annual Report 2021 PWR Holdings Limited Who we are. How we work. What we do.
PWR is a global designer, manufacturer and supplier of technically advanced high performance
cooling solutions, investing in research and development to provide solutions to our customers
using advanced cooling technology. We adopt a flexible manufacturing approach and take pride
in supporting our customers through a truly unique system of technical partnership.
OUR VISION
The Global Leader in Cooling Technology Inspired
by Engineering Excellence
OUR PURPOSE
Through passionate people and innovative solutions we lead the way in advanced cooling system
design and supply, to exceed the expectations of our global partners across diverse industries.
OUR STRATEGIC GOALS
Diversification
Efficiency
Solid Foundations
Profitable growth through
diversification into Aerospace,
Defence and Emerging
Technologies
Operating model to optimise
supply chain, manage risk and
drive efficiency
Build capability, systems and
processes to support profitable
growth
HOW WE WORK
PWR DNA
While our strategy outlines what we do to achieve our purpose, our values of respect, passion and
teamwork guide how we do it. Every day, our values shape the way we behave and the standards we
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set for ourselves and others.
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• We turn up to work on time
• We turn up to work on time
• We are polite and courteous
• We are polite and courteous
• We speak the truth, we mean what we say,
• We speak the truth, we mean what we say,
we keep our word
we keep our word
we keep our word
• We turn up to work on time
We do what we say
we will do.
We always follow through.
We rely on each other to
do the right thing.
• We talk to people and not about them
• We are polite and courteous
• We speak the truth, we mean what we say,
• We talk to people and not about them
• We talk to people and not about them
• We are passionate about what we can
achieve
We are driven to
• We are passionate about what we can
achieve our vision.
We always find a way and
• We are solutions focused – we take
take pride in what we do.
• We are solutions focused – we take
achieve
achieve
• We are solutions focused – we take
• We are driven to achieve our vision
We work together and
solve problems together.
• We are flexible and always find a way
We know that together
we are better.
• We work together
• We work together
• We are passionate about what we can
• We are driven to achieve our vision
• We are driven to achieve our vision
• We are flexible and always find a way
• We are flexible and always find a way
• We work together
customers problems and make them our
own
customers problems and make them our
own
customers problems and make them our
own
• We talk to each other
• We talk to each other
• We talk to each other
• We listen and are open to feedback
• We listen and are open to feedback
• We listen and are open to feedback
• We have a positive ‘can do’ attitude
• We have a positive ‘can do’ attitude
• We have a positive ‘can do’ attitude
• We chip in when one of the team is under
pressure
pressure
pressure
• We chip in when one of the team is under
• We chip in when one of the team is under
• We respect the PWR uniform and take
• We respect the PWR uniform and take
• We respect the PWR uniform and take
pride in our personal appearance
pride in our personal appearance
pride in our personal appearance
• We look out for our team-mates
• We look out for our team-mates
• We look out for our team-mates
excellence
• We take pride in what we do
• We take pride in what we do
• We take pride in what we do
• We take responsibility for product
• We take responsibility for product
excellence
• We take responsibility for product
excellence
• We deliver together
• We deliver together
• We deliver together
• We solve problems together
• We solve problems together
• We solve problems together
• We meet our deadlines
• We meet our deadlines
• We meet our deadlines
• We clean up after ourselves
• We clean up after ourselves
• We clean up after ourselves
• We value people who get in and have a go
• We value people who get in and have a go
• We value people who get in and have a go
• We achieve together
• We achieve together
• We achieve together
regardless of their skill set
regardless of their skill set
regardless of their skill set
• We celebrate together
• We celebrate together
• We celebrate together
• We treat the equipment as if it is our own
• We treat the equipment as if it is our own
• We treat the equipment as if it is our own
• We care about working safely and are
mindful of our environmental impact
• We care about working safely and are
mindful of our environmental impact
• We care about working safely and are
mindful of our environmental impact
• We treat every $ like it is our own
• We treat every $ like it is our own
• We treat every $ like it is our own
• We own up if we make a mistake so we can
• We own up if we make a mistake so we can
all learn from it
• We own up if we make a mistake so we can
all learn from it
all learn from it
• We are passionate about developing people
• We are passionate about developing people
who want to achieve
who want to achieve
• We are passionate about developing people
who want to achieve
• We are passionate about our customers
• We are passionate about our customers
• We are passionate about our customers
• We work as a team with our customers
• We work as a team with our customers
• We work as a team with our customers
• We are open and transparent in order to
maintain good working relationships
• We are open and transparent in order to
maintain good working relationships
• We are open and transparent in order to
maintain good working relationships
3
• We are agile and resilient and take ownership
• We are agile and resilient and take ownership
of change together
• We are agile and resilient and take ownership
of change together
of change together
• We work on a no surprises basis
• We work on a no surprises basis
• We work on a no surprises basis
• We want to win, all the time
• We want to win, all the time
• We want to win, all the time
• We do what we say we will do and we
• We do what we say we will do and we
• We do what we say we will do and we
• We don’t accept the status quo and are
• We don’t accept the status quo and are
• We don’t accept the status quo and are
always follow through
always follow through
always follow through
always looking for the next opportunity
always looking for the next opportunity
always looking for the next opportunity
• We always remember where we have come
• We always remember where we have come
• We always remember where we have come
from
from
from
Draft | 28 June 2021
Draft | 28 June 2021
Draft | 28 June 2021
Who we are. How we work. What we do.
continued
WHAT WE DO
We provide leading edge cooling solutions to our customers in many industries:
– Motorsport
– OEM
– Aerospace
– Automotive Aftermarket
– Defence
– Renewable Energy
– Electric and Hybrid
Vehicles
– Research and
Development
WELDING &
FABRICATION
Quality orientated, our
welders receive product
specific training and
adhere to multiple welding
standards while maintaining
quality processes in
alignment with AS9100.
TESTING AND
VALIDATION
Whether designed as
product development
parts or customer specific
projects, PWR has the
ability to test and measure
a range of coolers in our
Windtunnel against a series
of performance criteria all
under one roof, enabling
accurate product validation
and rapid development
times.
CT SCANNING
Used primarily for research
and development and
quality assurance, our
CT scanner opens-up a
multitude of potential
for further product
development and non-
destructive testing for
external partners and
research institutions.
4
ADDITIVE
MANUFACTURING
AND 3-D PRINTING
PWR is leading the thermal
management industry
with unique additive
technology which allows
us to manufacture thinner
structures requiring less
build support to enable
more complex heat
exchanger and component
designs with unmatched
performance.
SIMULATION
PWR relies on simulation
not only to shorten
the time to market of
product development
but also to improve
the thermohydraulic
performance of each
product design prior to
manufacture and real world
validation testing.
RESEARCH AND
DEVELOPMENT
PWR’s research and
development capabilities
are constantly evolving with
application of the latest
advanced manufacturing
technology and materials
science, offering short
product realisation lead
times through internal
capabilities.
Annual Report 2021 PWR Holdings Limited CNC MACHINING
PWR has 3,4 and 5 axis
CNC machines, including
fully automated palletised
systems. We have a large
programming team across
our two production
locations allowing for
24 hour around the clock
programming to deliver
a high level of service to
our customers.
VACUUM BRAZING
AND HEAT
TREATMENT
PWR’s Aluminium Vacuum
Brazing facilitates light
weight heat exchangers and
aluminium cold plates to be
manufactured with superior
structural integrity with the
use of high strength alloys.
ENGINEERING
AND DESIGN
PWR possesses the
capability to provide
turn-key cooling system
solutions through an
integrated engineering
and design approach
from prototype design,
specification and simulation,
through manufacture, test
verification and volume
production.
LOW AND
HIGH VOLUME
PRODUCTION
Having the ability to engage
in projects from first stage
prototyping allows PWR to
support concepts through
to production, to ensure the
end product is optimized
for performance and mass,
whilst adhering to packaging
and design constraints.
CNC SHEET METAL
AND STAMPING
Hosting a significant
number of sheet metal
fabrication machines, PWR
has increased its capabilities
and technology investment
to be an industry leader in
sheet metal manufacturing
processes, allowing our
products to compete on
the world stage.
PROTOTYPING
AND CUSTOM
MANUFACTURING
PWR designs and
manufactures prototype
and custom heat exchange
products for a range of
market sectors such as
Motorsport, Automotive,
Emerging Technologies and
Aerospace and Defence.
TOOLING, JIG,
FIXTURE DESIGN
AND MANUFACTURE
The tooling and fixtures
required to produce our
cutting-edge cooling
solutions are developed
by our experienced
design team with a focus
on ensuring that critical
tolerances can be achieved
with a high level of
repeatability.
CLEAN ROOM AND
ASSEMBLY SERVICES
Four isolated and
environmentally controlled
clean rooms allow PWR
to independently manage
complex precision
assemblies for some of
PWR’s state of the art heat
exchanger solutions and
assembly processes.
5
Chairman’s Review
Leveraging our
expertise into
new industries
I am delighted to present to you PWR’s 2021 annual
report.
COVID-19 continued to have an impact on PWR’s business
during FY2021, largely driven by customers reducing or
closing their operations for a period of time and some
relevant sporting events around the globe being cancelled
or postponed. Kees and the PWR team, however, were
agile, focused and passionate about delivering returns to
shareholders and the implementation of plans in pursuit of
our strategic objectives of diversification, efficiency and
building solid foundations. The Board recognises that this
called for extraordinary efforts from the entire workforce
and the Board is deeply grateful to each and every
member of the PWR team for the way they were able to
remain focused on our customers and deliver innovative
and high-quality products, using our advanced technology.
PWR delivered a strong result for the 2021 financial
year, with NPAT of $16.8m up 28.7% on the prior period
(FY2020: $13.1m). The Group continued to deliver on its
strategic objective to build solid foundations through
implementation of its ongoing capital investment program
while still producing a strong return on equity at 26%
(FY2020: 24%).
Cash flows remain strong and together with efficient
working capital management resulted in an EBITDA to
cash conversion ratio of 115% and a strong cash balance
at 30 June 2021 of $19.9m. PWR also repaid the drawn
balance on its multicurrency credit facility with the full
$10 million facility limit available to draw down to support
future operational requirements, if required.
Considering these results and balance sheet position, the
Board has declared a fully franked final dividend of 6.0
cents per share. This takes the total dividend for FY2021 to
8.8 cents per share, an increase of 49.2% on the FY2020
final dividend.
6
During the year, we invested in our people and their
development, leading edge technology and equipment
and our systems and processes. We are committed to
building the solid foundations which will enable PWR to
continue to grow and diversify.
Another strategic priority this year and into the future
is to leverage our motorsport knowledge and expertise
into the aerospace and defence industry. This has taken a
significant step forward with the achievement of AS9100
certification (Rev D). This is an independent endorsement
of the quality of the processes the team has built in-house
to support our growing aerospace and defence segment.
This year, Kees was named the 2021 Australian of the
Year by the Australian Automotive Performance Council
and we could not be more proud. A fitting accolade for
a visionary leader. On behalf of the Board and the PWR
team, we congratulate Kees on a career that has led him
and PWR to be such exceptional representatives of the
Australian Performance Automotive Industry.
Looking ahead, uncertainty is likely to persist for some
time and we expect to face our share of challenges as the
world continues to respond to COVID-19. Shareholders
can be confident that your Board will continue to preserve
our strong balance sheet and focus on creating long-term
value. Kees and his team are passionate and committed
to positioning PWR for further growth and success as we
meet these challenges.
On behalf of your Board, I would like to thank all
shareholders for their continued support of PWR.
Teresa Handicott
Chairman
Annual Report 2021 PWR Holdings Limited Managing Director’s Review
Powering ahead
The 2021 financial year has seen PWR recover from the early effects of COVID-19 to deliver solid revenue and profit
growth across all market sectors. We have maintained a strong balance sheet and are well prepared to deliver on
opportunities in the next few years
Financial Highlights
Revenue
NPAT
Ordinary DPS
Cash on Hand
EBITDA to operating cash conversion
Employee Headcount
FY21
$79.2m
$16.8m
8.80 cps
FY20
$65.7m
$13.1m
5.9 cps
$19.9m
$20.8m
115%
363
94%
312
Change
20.5%
28.7%
49.2%
(4.6%)
21.0%
16.3%
REVENUE
Group revenue grew strongly in FY21 with solid growth across all key market sectors including motorsports, automotive
aftermarket, automotive OEM and emerging technologies. Revenue also grew across all major geographic markets
with the strongest growth in North America which grew an impressive 64.2% due to growth in automotive OEM and
emerging technologies.
Unfavourable currency movements during FY21 negatively impacted revenue to the tune of 5.2%.
Revenue by Market Sector
Motorsports
Automotive Aftermarket
OEM
Emerging Technologies*
Industrial & Other
FY21
(A$’00)
%
FY20
(A$’00)
%
Growth
$42,813
54%
$38,026
58%
$14,867
$11,732
$8,683
$1,113
19%
15%
11%
1%
$11,554
$9,956
$4,082
$2,113
18%
15%
6%
3%
$79,208
100%
$65,731
100%
13%
29%
18%
113%
(47%)
21%
*
Emerging technologies includes revenue from aerospace and defence, and revenue from other market sectors generated from new technologies –
cold plate, micro matrix and additive manufacturing. The sector grew 113% and now represents 11% of total revenue.
7
Managing Directors’ Report
continued
FY21 SALES CATEGORY ANALYSIS ($’000)
(FY20 Comparatives)
THIRD PARTY REVENUE BY CURRENCY
Sales to third parties by currency (‘000)
$1,113
1%
(FY20 3%)
$11,732
15%
(FY20 15%)
$8,683
11%
(FY20 6%)
$14,867
19%
(FY20 18%)
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
$42,813
54%
(FY20 58%)
Motorsports
Automotive Aftermarket
Emerging Technologies
OEM
Industrial & Other
10.8%
71.4%
27.9%
AUD
GBP
USD
FY17
FY18
FY19
FY20
FY21
Conversion of source currency to Australian dollars based
on average exchange rate for each year
8
Annual Report 2021 PWR Holdings Limited We have strict confidentiality procedures in place when
developing new technology. We also operate restricted
areas within our manufacturing sites and do not permit
phones on the factory floor.
CASHFLOW
Our working capital management remained strong
for the period ended 30 June 2021 which resulted in a
cash balance of A$19.9m. We believe we have achieved
a balanced outcome for all stakeholders and expected
future business requirements by declaring a fully franked
final dividend of 6.0 cents per share.
Our EBITDA to cash conversion ratio was 115% and
remains strong.
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.
To support growth in FY21, PWR increased the headcount
from 312 to 363. PWR expects continued growth in FY22
and beyond and expects further increase to headcount,
together with a focus on increased productivity and
efficiency.
We continue to review the organisational structure
and employee development to ensure this aligns with
expected operational requirements.
The PWR Team 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 the PWR Team this year with the objective of making
FY22 another record year on all fronts.
Kees Weel
Founder & Managing Director
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 on the prior page.
PWR NORTH AMERICA
PWR North America has successfully delivered
automotive OEM and emerging technology programs,
including solid growth in the automotive aftermarket.
PWR North America is well placed to further develop
and support these market sectors.
CENTRES OF EXCELLENCE
PWR has two (2) manufacturing hubs able to service
customers globally.
A key aspect of our corporate strategy is having Centres
of Excellence for the different aspects of our business
including manufacturing operations, engineering, design,
testing, research and development and corporate
services. These will ensure appropriately located and
resourced specialised teams are collectively focused on
delivering the best outcomes for the Group.
TECHNOLOGY DEVELOPMENTS
PWR deploys advanced technologies into our
manufacturing processes to ensure we remain at the
forefront of manufacturing capability and complexity
for both existing customers as well as potential new
customers and industries.
During FY21, these technologies of cold plates, micro
matrix and additive manufacturing have been further
developed and commercialised. Our application of these
technologies continues to expand as current and potential
customers embrace the benefits, including customers in
the aerospace and defence sector.
INTELLECTUAL PROPERTY AND MANAGING
CYBERSECURITY RISK
Protection of PWR’s intellectual property and that of our
customers is paramount. We have strict protocols in place
to manage our intellectual property.
We have undertaken an independent external review of
our IT and potential cyber security exposures and have
subsequently implemented all recommendations arising
from this review. On completion of the implementation
of the recommendations, a further independent external
assessment was completed to test and confirm the
effectiveness of cyber security robustness.
9
Where We Came From
Kees with his son Paul Weel
opened Paul Weel Radiators
(PWR).
PWRs new factory at
Ormeau, Queensland
started construction.
PWR started designing and
manufacturing Formula
1 and Nascar cooling
packages, developing
unique manufacturing
processes.
1997
1997
2001 – 2002
2001 – 2002
2006
2006
2008
2008
2009
2009
2012
2012
PWRs vision and
growth continued
with demand
for aluminium
cooling products
rapidly increasing
at Currumbin,
Queensland
headquarters.
Growth of staff
to 20.
PWR’s World
Headquarters opened
with a staff of 45 and an
increased global demand
for its products.
PWR built the
largest calorific
wind tunnel in
the southern
hemisphere to test
heat exchangers at
real world operating
conditions.
10
Annual Report 2021 PWR Holdings Limited PWR achieved
certification to
AS9100 (Rev D).
This is an aerospace
and defence
standard (AS) that
was released by
the International
Aerospace Quality
Group (IAQG)
based on the
internationally
recognized
standard ISO
9001. For defence
and aerospace
customers, PWR
manufactures
products such as bar
and plate coolers,
micromatrix coolers
and cold plate
coolers, backing it
up with the added
processes such
as CT scanning
and Additive
Manufacturing (3D
printing aluminium).
PWR celebrates supplying
its 4th Formula 1 World
Championship win, having
supplied cooling systems
to Red Bull Racing from
2010 to 2013 inclusive.
PWRs CNC machine shop
doubled in size, introducing
palletised and self-loading 5
axis machining cells to run
unmanned.
PWR continues to
diversify its products
into battery and
electronics cooling
systems as well
as targeting the
aerospace and
defence industries.
Product offering
also expands to now
include MicroMatrix
production.
2013
2015
2017
2018
2019
2020
2021
PWR acquired US based
C&R to strategically
expand its manufacturing
footprint and gain further
traction in the US market.
PWR listed on the
Australian Stock Exchange
with a staff of 80 in
Australia.
PWR Advanced Cooling
Technology continues to
revolutionise the cooling
industry with a staff of
170. Factory footprint
in Australia expands
significantly to include the
building alongside its main
headquarters which is now
dedicated to Engineering,
R&D and Advanced
Manufacturing.
PWR obtains leading-
edge manufacturing
equipment and new
technologies including
aluminium Additive
Manufacturing
machines, SLA machine,
Yxlon 3D CT Scanner
and a Vacuum Furnace
plus a Heat Treatment
Furnace, expanding
on a substantial list
of manufacturing
capabilities to ensure
PWR can manage the
production of the best
solutions by whichever
manufacturing
methodology provides
the greatest advantage
to its customers.
11
Sustainability
Investing in Things
that Matter Go Hand-
in-Hand with Building
a Sustainable Business
PWR is committed to
operating in a manner
which acknowledges and
proactively manages those
issues which are most
material to the long-term
sustainability of our business.
OUR PEOPLE
At the heart of PWR is its people. We believe in them,
support their health, safety and wellbeing and ensure they
have access to learning and development opportunities.
We encourage a work place that is diverse, empowered
and demonstrates good decision making and one which
fosters innovation and high productivity.
We take a particular interest in recruiting apprentices,
offering work experience to high school students and
investing in them to build a capable and committed
workforce to maintain PWR’s exceptional quality
workmanship and customer service.
Development and Diversity
Diversity is a consideration that forms part of PWR’s
long term commercial success and strategy and PWR’s
commitment to diversity will make it stronger and deliver
benefits, including diversity of thought, improved business
performance, enhanced service delivery and increased
staff attraction, retention, motivation and satisfaction.
We recognise, embrace and value the differences and
experiences of our people and their unique contribution
to the workplace. PWR is committed to promoting
equality within its culture and believes this is vital for
developing and maintaining a high performing and positive
workplace. PWR strives to reinforce its DNA (respect,
passion and teamwork) in every decision we make or
interaction we have.
12
CASE STUDY
Passionate and Diverse Leadership Helps
to Build PWR’s Future
PWR embraces diversity and is thrilled to have
Natarsha as a team leader in our main production
area of Transmissions and Auxiliary. “Tarsh” as we
call her recently joined other PWR leaders in a
front-line leadership training day and is excited
about her future.
Natarsha Rathmell
“ When I started with PWR in 2015 I had no idea
how much work goes into cooling performance
cars. I never had much of an interest in cars really,
other than when Indy600 came to the Gold Coast
each year. But my mum worked here building
various car radiators and she would come home
and tell me the different car models she’d built
that week, from Landcruisers one day, to Audi
GT3 the next. It all sounded really interesting and
if she enjoyed it, I might too. Now having worked
with PWR for 6 years, I am the team leader for
the transmissions and auxiliary department, and
I’ve worked in so many areas within the main
production department. I have helped with various
components for F1 and am proof that all you
need is a can-do attitude, willingness to learn
and a bit of enthusiasm. You don’t need a degree
or a mechanical mind to progress within such a
large company. I came from working in a petfood
factory to working on cooling products and
performance parts for a range of categories from
aftermarket to motorsport. I have already taken
part in the leadership training and am looking
forward to the direction my career is going.
The food’s not too bad either.”
Annual Report 2021 PWR Holdings Limited We are focused on ensuring PWR’s recruitment and development programs are inclusive and can support all our people,
whatever stage they are at in life and their career.
PWR is proud to have helped develop over 30 apprentices and 16 school work-experience students over the past year.
Diversity Objectives
The Group’s objectives for diversity over the next three years are and how we performed in FY2021 are set out below:
FY2021
Actual
FY2021
Target
FY2022
Target
FY2023
Target
Number of women in Executive Management
over the next 3 years
Increase female representation
in PWR’s workforce:
PWR
PWR NA
PWR Europe
Board composition remains at least 30% female as per
the ASX Governance Principles and Recommendations.
1
11%
13%
17%
25%
2
14%
16%
33%
2
16%
17%
33%
3
20%
20%
35%
At least 30% female membership
As we continue to recruit, our diversity objectives will remain front of mind.
CASE STUDY
We Support our Schools and Apprentices with Development Opportunities
Our apprenticeship and school work experience programs help PWR to build talent for PWR’s future, while also
giving the trainees the learning opportunities they need to keep moving forward in their careers.
Max Norris has been with PWR since 2018, initially through the PWR School Work Experience Program, Max is
now in his third year of his Fitter and Turner Apprenticeship. Max is already running the 5 Axis CNC machines
worth in excess of $1m.
“ The few years I have worked at PWR thus far has been nothing
short of an exciting, high paced environment that is filled with
a positive atmosphere wherever you go. The abundance of
knowledge that surrounds me and other apprentices is second
to none. For myself to be given the opportunity to operate
world class 5 axis CNC machines and rub shoulders with
talented machinist and programmers so early in my career is
a challenge that I do not take lightly, and with the support of
incredible mentors and management, I am confident in my
abilities as a machinist and constantly eager to learn more.
I am excited for the future of PWR and cannot wait to see
where it can take us next.”
Max Norris
Achievements
Some of the achievements we are proud of are:
We employed 30 apprentices and 16 work experience students this year
We made a conscious decision to recruit for part-time roles that cater for those people with the need to be free
to drop off and pick up their children from school
We invested in leadership training for our supervisors and plan to continue that programme into the future given
the tangible benefits it has already delivered.
13
Sustainability
continued
HEALTH, SAFETY AND WELLBEING
We care about our employees and are committed to ensuring a safe and healthy workplace.
COVID-19
As the COVID-19 pandemic was with us again during the year, we maintained personal hygiene and social distancing
measures at all sites in line with government and Safe Work Australia guidelines. We have played our part in Australia’s drive
to vaccinate its population against COVID and have given our staff time off to attend COVID vaccination clinics and we pay
for their transport to and from their vaccination appointments.
Employee Wellbeing
At PWR we believe that investing in the well-being of our employees is an investment in PWR’s future.
CASE STUDY
Looking after our People
At PWR we believe in looking after the health and well-being of our people and one way we can do that is
through Weely’s Diner at PWR’s Ormeau manufacturing facility which employs over 270 people.
Weely’s Diner is a state-of-the-art purpose-built canteen that offers free of charge, “home” cooked meals to
our staff at Ormeau in Brisbane. Our head chef Grant, along with Sam and Adrienne serve breakfast, morning
tea and a hot lunch to all of our staff and the occasional visitor who happens to be here at the right time.
Kees Weel, Founder and Managing Director, opened up Weely’s Diner in 2008 as he firmly believes that a well
fed and hydrated workforce is a happier and more productive one. As an added bonus it prompts staff to leave
their workstations and get up from their chairs, stretch, refresh themselves and interact with others - especially
those from other teams or departments where they exchange ideas and return to work rejuvenated.
“ The “Weely’s Diner” represents more than just a financial
saving for me personally as it takes away the stress and time
of having to prepare food for myself every day which is hugely
valuable in my busy lifestyle. Not only is the quality of food
second to none but the diner also gives a great opportunity to
catch up both professionally and personally with colleagues
and is often a highlight of the day.”
- Ben Jackson
Sam Makim
14
Annual Report 2021 PWR Holdings Limited
CASE STUDY
Mental Health First Aid Officers
Supporting the mental wellbeing of our employees
is good for everyone and enhances personal
and organisational resilience, and success. We
are proud to have two members of our human
resources team, Amy and Lauren, trained as
mental health first aid officers, giving them skills
to support our employees in times of need.
Amy Kinnane and Lauren Stratton
“ We are very proud to have our Certification
in Mental Health Frist Aid. We are both very
passionate about shining a light on the importance
of Mental Health and the power of not suffering
in silence. We have over 270 staff of all ages and
backgrounds, who spend more time here at work
than they do at home with their families. It is
so important that we are able to support every
single staff member in their physical and mental
wellbeing by giving them support, guidance and
access to professional help when and if they need
it. We want to create an inhouse support network
so no one ever feels like they are alone and know
that just one conversation could save a life.”
Safety
We saw an increase in our Lost Time Injury Frequency
Rate (LTIFR) in 2021 increasing from 3.3 to 5.9, and
have invested in enhancing our internal governance
for health and safety oversight and risks which includes
the establishment of a Health and Safety Committee,
identification and development of associated mitigation
actions for our critical safety risks and undertaking
root cause analysis when a safety or high potential
incidents occur.
There have been no fatalities, fines or prosecutions arising
from safety related breaches across the Group.
Achievements
Free influenza vaccinations to our people
Assistance with bookings, time off and paid
transport to COVID-19 vaccination clinics
Served approx. 203,000 meals to our 270 employees
at our Ormeau manufacturing site in Queensland
Trained mental health first aid officers to support
our workforce
Fully functional employee Work Health and Safety
Committee
Identification, communication and training on
Critical Safety Risks across our global operations
COMMUNITY AND STAKEHOLDERS
Our Shareholders
We are committed to engaging with all of our
shareholders and we set a precedent in 2019 when we held
our Annual General Meeting at our manufacturing site at
Ormeau where we provided shareholders with site tours
so they could see first-hand what we do.
Unfortunately COVID prevented that from happening in
2020 and we held a virtual AGM where we did our best
to communicate with our shareholders. We are hopeful
to hold the 2021 Annual General meeting at our Ormeau
manufacturing site, offer site tours and interact on a
personal level with our shareholders, COVID permitting.
We invested in upgrading our website which includes our
investor portal so shareholders have quick access to key
reports, announcements, share price and governance
policies.
Our Customers
When entering into a relationship with our customers,
PWR does not limit the service to the sale of product,
but instead partners with the customer to understand
their project objectives, engaging PWR’s Engineering
Centre of Excellence and utilising PWR’s expertise in
advanced technology to quickly develop unique cooling
solutions that are right for the customer’s application.
Building upon PWR’s extensive capability from design
conception through to project delivery and validation,
this collaborative approach often extends as far as having
customers, including the world’s premier Formula 1 teams,
work on-site alongside PWR engineering and production
staff to optimise their cooling solutions.
15
Sustainability
continued
Community Support
PWR’s employees are active participants in the community and foster a healthy sense of competitive tension in the
workplace through participation in a number of community initiatives. This year we participated in and raised money
for the Great Cycle Challenge (kids fighting cancer), Movember, Shave for a Cure and held gold coin donation lunches
for community causes such as drought relief and bushfires and raised over $5,000.
OUR CORPORATE GOVERNANCE AND RISK MANAGEMENT PRACTICES
The Corporate Governance statement of the Group is available through the Group website and is also released to the
ASX as part of our annual reporting. The Corporate Governance statement adopted by the Board reflects the Board’s
endorsement and adoption of the recommendations contained in the ASX Corporate Governance Council’s Principles
and Recommendations.
Risk management is fundamental to maximising the value of our business and informing PWR’s strategic direction.
We believe that effective risk management enables us to identify priorities, allocate resources, demonstrate due diligence
in discharging legal and regulatory obligations, and meet the standards and expectations of our stakeholders.
PWR’s risk management approach is a structured process to identify potential threats to the success of the business, and
defines the risk appetite and strategy for eliminating or minimising the impact of these risks.
We particularly focus on strategic and material risks and PWR is committed to ensuring that risk management is regarded
as an essential element in our management processes with linkages to every aspect of our business including development
of existing business, expansion into new markets, relationships with major customers and suppliers and our treasury and
capital management activities.
See below for summary of our material risks and how we manage them:
Protecting the health, safety and wellbeing of our people
PWR’s DNA calls out respect.
Respect for our employees
and respect for each other.
We strive to ensure that a
culture of respect promotes
a safe workplace where
everyone goes home safe
every day. We also believe
that providing our employees
with health and wellbeing
opportunities supports a
happier, healthier, more
productive workforce and
workplace.
We have identified and regularly talk about our critical safety risks.
We investigate the root cause of all safety incidents, identify key learnings and talk
about them in our toolbox talks.
We are continuously improving our working environments to make them safer and
more productive for our people.
We have set up an Employee Assistance Program to help employees deal with life’s
challenges by giving them and their families free access to professionals who can
provide them with strategies to minimise stress and manage their mental health.
We have two qualified mental health first aid officers at PWR’s Ormeau
manufacturing facility.
Managing the challenges that come with rapid growth
PWR has worked hard to get
where we are and have grown
our business year on year but
with this comes challenge.
The challenge of managing
and communicating with
a larger workforce, more
workload, the need for
more factory space, better
systems and processes, more
customers and new advances
in technology, to name a few.
16
We seek to address this risk through one of our strategic objectives –
Solid Foundations.
First and foremost we need to stay focused on our people at all times, no matter
how demanding our business growth becomes - because our people are responsible
for driving our growth. We have invested in a highly capable human resource area to
provide the extra support and focus required.
With growth comes change and maintaining open channels of communication with
our people is essential. We are committed to ensuring each and every employee
understands our vision and purpose and their role in helping to deliver them.
We are focused on ensuring we have robust systems and processes that facilitate
knowledge transfer for the production of our many products. When everyone
follows a well-tested set of steps, we reduce the likelihood of mistakes, delays
and duplicated effort.
We are investing in a new Enterprise Resource Planning system that will support
PWR’s business for years to come.
Annual Report 2021 PWR Holdings Limited
Protecting our intellectual property and managing cyber security risks
Protection of PWR’s
intellectual property and
that of our customers is
paramount.
We have undertaken an independent external review of our IT and potential cyber
security exposures and have subsequently implemented all recommendations arising
from this review. On completion of the implementation of the recommendations,
a further independent external assessment was completed to test and confirm the
effectiveness of cyber security robustness.
We have strict confidentiality procedures in place when developing new technology.
We operate restricted areas within our manufacturing sites and do not permit phones
on the factory floor.
Talent identification, recruitment and retention
Our ability to identify,
attract and retain key talent
and develop capabilities is
fundamental to delivering
our strategic objectives.
Diversifying our business
Our objective is to
leverage our research and
development and success in
providing cooling solutions
to motorsport into other
industries where we can use
our know-how and add value.
We focus on enhancing our offerings to employees and potential employees to
distinguish ourselves in the market through targeted and effective approaches to
talent and recruitment management.
We focus on succession planning and we identify key talent and provide them with
experience and growth through time in critical roles and identify relevant external
training for their skills development.
We continue to improve our long-term workforce planning and talent management
program across PWR.
We invest in our leaders to support their skills in leading and managing their teams.
We keep our strategy front of mind as it informs the decisions, we make about
leveraging our existing cooling solutions into new industries.
We regularly evaluate our strategic objectives with the Board.
We have a dedicated advanced technology team focused on building a pipeline
of opportunities.
We strategically invest in leading edge manufacturing technology.
We invested in securing AS9100 accreditation (aerospace and defence quality
standard) and are working towards other important certifications.
Maintaining our leading edge through innovation and advanced technology
Technology and innovation
are advancing at a rapid
pace and we pride ourselves
at being at the forefront of
technology advances in the
field of cooling however
it requires continued
investment and focus and
falling behind is not an option.
We are continuously investing in research and development.
We adopt quality control approaches in everything we do and use advanced
technology to problem solve for customers.
We introduced capability for serialisation of products including full traceability
of components and raw materials used in the production process back to raw
material source.
We attend trade shows and keep up to date with the latest advances in technology.
OUR RESOURCE MANAGEMENT
Although the PWR Group is not subject to any significant environmental regulations, the Group manages environmental
aspects and impacts through its ISO 14001 compliant management system.
The Group is focussed on environmental management by:
– ensuring exhaust gases generated in the manufacturing process are removed via activated compounds prior to being
released into the environment
– recycling raw materials, cardboard and office materials
– disposal of wastes and hazardous materials in accordance with government regulations.
RECYCLING
At PWR, aluminium is used almost exclusively in the production of our high-performance cooling solutions. This material
is abundant, easy to fabricate and one of the most widely recycled materials. During the 2020-2021 financial year we
recycled 181 tonnes of aluminium, up 11% on that recycled in 2019-20.
17
Operating and financial review
The operating and financial results for the year ended 30 June 2021 have been impacted by the COVID-19 outbreak which
is discussed in more detail below.
COVID–19
This significant public health issue has impacted the full year results of the Group with customers either reducing their
operations or closing them for a period of time. In addition, sporting events globally, including motorsport, were stopped
for a period of time in FY20 and FY21 and have since resumed on a full or modified program.
The impact on the business of this uncertainty has been partly mitigated by Federal Government initiatives in Australia
and the USA. In Australia, PWR Performance Products Pty Ltd was an eligible employer for the JobKeeper program. This
program commenced in April 2020 and continued until 27 September 2020.
The Group has not restated or separately identified any aspect of its results for the impact of COVID-19 other than
disclosing the actual benefits received or due from the Australian Federal Government JobKeeper program for FY20 and
FY21, and the USA Federal Government Pay Check Protection Program for FY20. The UK Government furlough scheme
was immaterial to the Group results due to the small number of eligible staff employed at PWR Europe Ltd.
JobKeeper assistance
Pay Check Protection Program
Total before tax assistance
2021
$’000
1,980
–
1,980
2020
$’000
1,743
1,769
3,512
Our strong balance sheet has enabled us to maintain all our operations in a ready state and no staff have been retrenched
as a result of COVID-19. PWR has repaid the drawn balance on the multicurrency credit facility with the full $10 million
facility limit available to draw down to support operational requirements if required.
Summary of financial results
Revenue
EBITDA1
EBITDA1 margin
Net profit after tax (NPAT)
Operating cash flow (excluding interest and tax)
Earnings per share
FY21
A$’000
79,208
28,963
36.6%
16,797
31,368
FY20
A$’000
65,731
23,430
35.6%
13,049
20,323
16.77 cents
13.04 cents
Change
%
20.5%
23.6%
28.7%
54.3%
28.6%
1.
Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) is a non-IFRS term which has not been subject to audit or review but has been
determined using information presented in the annual financial report.
Reconciliation of profit before tax to EBITDA
A reconciliation of EBITDA1 to the reported profit before tax in the consolidated statement of profit or loss and other
comprehensive income is as follows:
Profit for the period before tax
Add : net finance costs
Add : depreciation & amortisation
Underlying EBITDA1
FY21
A$’000
22,547
677
5,739
FY20
A$’000
18,235
490
4,705
28,963
23,430
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.
18
Annual Report 2021 PWR Holdings Limited Revenue
The Group achieved overall revenue growth of 20.5% compared to the prior corresponding period. Organic revenue
increased by 25.7% but was offset by unfavourable exchange rate movements of (5.2%).
The above growth was primarily driven by third party sales out of the United States of America, United Kingdom and Australia,
where sales grew 64.2%, 10.3% and 17.2% respectively. 5. OPERATING AND FINANCIAL REVIEW (continued)
Exchange rate movements saw the GBP being 2.7% stronger at 30 June 2021 and the US dollar being (9.6%) weaker
compared to the prior period. In contrast, average rates during the financial year saw the GBP (4.1%) weaker and the US dollar
(11.2%) weaker than the prior period.
The net impact of exchange rate movements had an unfavourable impact on revenue for the year of ($3.40m) (FY20:
favourable $2.58m).
EBITDA
Despite the negative impact on revenue of foreign exchange rate movements, EBITDA in FY21 compared to the prior
corresponding period was stronger mainly due to:
– Solid revenue growth across the motorsports, OEM, automotive aftermarket and emerging technologies sectors;
– Production costs control;
– Benefits from the JobKeeper program; and
– Administration and overhead costs increasing at a lower rate than sales and EBITDA.
19
Operating and financial review
continued
Net profit after tax
Net profit after tax of the Group for the year ended 30 June 2021 was $16.80 million (FY20: $13.05 million).
Operating cash flow
The Group continued its strong cash conversion rate with FY21 operating cash flow (excluding change in working capital,
interest and tax) of $33.2 million, a conversion of 115% from EBITDA.
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)
FY21
FY20
53.8%
31.2%
15.0%
61.8%
24.1%
14.1%
Balance sheet management
The balance sheet remains strong with cash of $19.9 million (FY20: $20.8 million).
Working capital utilisation has improved from 128 days at 30 June 2020 to 66 days at 30 June 2021 due largely to a
reduction in stock turnover days.
Capital expenditure for the year was $10.4 million (FY20: $7.8 million). Our strong balance sheet can support ongoing
expected capital expenditure for potential future growth opportunities whilst still having access to available and unused
financing facilities.
With the solid working capital position, expected future capital investment requirements and the ongoing strong
contribution of EBITDA to operating cash flows, the Board has declared a final 2021 dividend of 6.00 cents per share
bringing the total dividend to 8.80 cents per share.
Review of operating segments
The Group has two operating segments, PWR Performance Products which comprises its Australian and European operations,
and PWR North America which comprises its C&R USA operations.
The PWR Performance Products segment generated external revenue of $54.9 million (FY20: $50.2 million), The increase was
due to the recovery of customer operations post the initial impact of COVID-19.
The C&R segment generated external revenue of $24.3 million (FY20: $15.6 million). This is a strong result resulting from
increased sales from the OEM, Automotive Aftermarket and Emerging Technology sectors.
The carrying value of goodwill and trademarks is assessed on an ongoing basis to ensure these are not impaired. This assessment
has been performed at 30 June 2021 and using currently available information has resulted in the current values continuing to
be recognised.
20
Annual Report 2021 PWR Holdings Limited Review of principal businesses
During the year ended 30 June 2021, in addition to the items outlined above, the Group:
– Enhanced our new micro matrix and cold plate technology product offerings;
– Increased supplies into new industries including aerospace and defence; and
– Increased employee headcount to expand capacity to delivery on new and potential contracts.
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.
21
Directors
Teresa Handicott
Independent Chairman,
Non-Executive Director
Kees Weel
Managing Director and
Chief Executive Officer
Jeffrey Forbes
Independent,
Non-Executive Director
Roland Dane
Independent,
Non-Executive Director
A
N
A
N
A
N
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.
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.
Kees Weel is the founder of PWR and
has been awarded the 2021 Australian
Performance Automotive Industry
“Australian of the Year”. From the humble
beginnings of hand making his first copper
and brass radiator in 1982 to a visionary
leader of PWR, Kees has lead PWR on an
extraordinary journey that has cemented
PWR’s reputation globally for quality
and innovative cooling products and
unparalleled customer service.
It was Kees’ inspiration to begin
manufacturing radiators that quickly
led to a ready-made customer base
that required superior quality and
capability from radiators. With an
ever growing business and in-demand
product, in 2006 Kees started building,
what is today, PWR’s state of the art
manufacturing facility at Ormeau. Kees’s
uniquely Australian approach to business is
his greatest strength, where no challenge
is too big and an ethos that everything can
be made with time, money and hard work.
Following its listing on the ASX, Kees has
continued to oversee the extraordinary
growth of PWR while still maintaining its
commitment to quality and customer
service and that ‘family feel’ amongst
employees.
Kees continues to develop PWR’s
business capabilities and leads his high
performance team to be innovative, listen
to the customer and always have a can
do attitude. Printed in supersized letters
on the wall at the Ormeau manufacturing
facility is Kees’ motto: Most people see
things as they are and say why. We dream
of things that never were and say why not?
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 Limited, 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 Limited, Intega Group Limited and
Chairman of Herron Todd White Australia
and Herron Todd White Consolidated.
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 35 years ago.
He is also the Managing Director
of the successful Triple Eight
Race Engineering team, winning
8 out of the last 13 V8 Supercar
championships.
Key Audit and Risk Committee Nomination and Remuneration Committee Committee Chair
N
A
22
Annual Report 2021 PWR Holdings Limited Executives
Matthew Bryson
Chief Operating Officer
(COO)
Martin McIver
Chief Financial Officer
(CFO)
Stuart Smith
Former Chief Financial
Officer
Matthew is responsible for overseeing the
operations of engineering, production and
quality management of the Group.
Matthew completed his Mechanical
Engineering Trade as a special class Fitter
and Machinist/Toolmaker concurrently
studying Mechanical Engineering, before
working as a mechanical design engineer,
and then applying both engineering and
trade skillsets to the motorsport industry.
Matthew joined PWR in 2000 as a design
and manufacturing engineer contributing
to PWR’s formative years across
product and production engineering
responsibilities. This role progressed to
the position of Engineering Manager
at PWR, as a position held for 15 years,
working closely with PWR’s customers
to grow the business, and overseeing the
continued development of PWR’s product
and advanced manufacturing capabilities.
Matthew commenced his current position
of COO at PWR in July 2020.
Martin McIver is responsible for finance,
treasury, human resources, information
technology, and procurement. Martin
was previously the CFO at WorkPac with
7 years’ service and is currently Chairman
at Tlou Energy Ltd (ASX:TOU). Earlier he
held the position of Director in Corporate
Finance with PricewaterhouseCoopers
with a focus on mergers and acquisitions.
Martin has a Bachelor of Business
from QUT and is a MBA graduate from
the American Graduate School of
International Management (Thunderbird).
Stuart Smith was the CFO of PWR until
12 April 2021 and then provided support
to the new CFO, Martin McIver while he
settled into the role.
Stuart ceased employment at PWR
on 23 April 2021.
23
Financial
Report
FY21
for the year ended 30 June 2021
24
Annual Report 2021 PWR Holdings Limited Contents
Directors’ Report...................................................................................................................................................................................... 26
Lead Auditors Independence Declaration Under Section 307C of the Corporations Act 2001 ................................................31
Remuneration Report .............................................................................................................................................................................. 32
1. Letter from Chairman of the Nomination and Remuneration Committee ................................................................................... 32
2. How We Performed in FY2021 .......................................................................................................................................................................34
3. Remuneration of Executive KMP and How it Aligns to FY2021 Performance Outcomes .....................................................35
4. PWR’s Pay for Performance Framework ...................................................................................................................................................36
5. Contract duration and termination requirements ................................................................................................................................43
6. Remuneration of Non-Executive Directors during Reporting Period ..........................................................................................43
7. Key Management Personnel | Statutory Remuneration Table ........................................................................................................... 44
8. Shareholdings of Key Management Personnel ...................................................................................................................................... 46
9. Voting and comments made at the Company’s 2020 Annual General Meeting ....................................................................... 46
10. Rights over equity instruments granted as remuneration ............................................................................................................... 46
11. Equity Instruments ............................................................................................................................................................................................47
Consolidated Statement of Profit or Loss and Other Comprehensive Income ............................................................................49
Consolidated Statement of Financial Position ....................................................................................................................................50
Consolidated Statement of Changes in Equity ....................................................................................................................................51
Consolidated Statement of Cash Flows ................................................................................................................................................ 52
Notes to the Consolidated Financial Statements ............................................................................................................................... 53
Section A About this Report ................................................................................................................................................................................53
Section B Business Performance ...................................................................................................................................................................... 54
Section C Operating Assets and Liabilities .................................................................................................................................................... 57
Section D Employee Benefits ..............................................................................................................................................................................62
Section E Taxation ................................................................................................................................................................................................... 64
Section F Capital Structure and Borrowings .................................................................................................................................................66
Section G Group Structure .................................................................................................................................................................................69
Section H Other Information .............................................................................................................................................................................. 73
Section I Significant Accounting Policies ....................................................................................................................................................... 79
Directors’ Declaration .............................................................................................................................................................................86
Independent Auditor’s Report to the Members of PWR Holdings Limited ................................................................................... 87
ASX Additional Information .....................................................................................................................................................................91
Corporate Directory ................................................................................................................................................................................93
25
Directors’ Report
for the year ended 30 June 2021
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 2021 (“reporting period”) and the auditor’s report thereon.
The report is prepared in accordance with the requirements of the Corporations Act, with the following information
forming part of the report:
– Operating and financial review on the inside front cover to page 30
– Director biographical information on page 22 and Company Secretary biographical information on page 26
– Remuneration report on pages 32 to 48
– Note H1 Financial risk management objectives and policies on page 73
– Note I10 Share capital on page 83
– Note H3 Auditor’s remuneration on page 78
– Note D3 Employee share based payments on page 63
– Directors’ declaration on page 86
– Auditor report on page 87
– Shareholder information on pages 91 to 92
– Corporate directory (inside back cover).
1. DIRECTORS
At the date of this report, the Directors in office were:
Teresa Handicott
Kees Weel
Jeffrey Forbes
Roland Dane
Appointed 1 October 2015
Appointed 30 June 2003
Appointed 7 August 2015
Appointed 1 March 2017
You can find information about our Directors’ qualifications, experience, special responsibilities and other directorships
on page 22.
2. COMPANY SECRETARY
Lisa Dalton (B.App.Sc., M.App.Sc., LLB (Hons), FAICD, FCSA, FCIS)
Lisa Dalton was appointed as PWR’s company secretary on 7 August 2015 and remains the company secretary at the date
of this report.
Lisa is an accomplished lawyer, governance professional, senior executive and leader with over 25 years’ experience in the
mining, energy, construction, manufacturing, medical, agricultural and infrastructure sectors.
Lisa is currently Chairman of Second Skin Pty Ltd, a non-executive director of Healthia Limited and Company Secretary
of both PWR Holdings Limited and Jameson Resources Limited. Lisa is also an independent member of the Audit and Risk
Committee of the Queensland Department of Justice and Attorney General and the Queensland Department of Regional
Development, Manufacturing and Water.
26
Annual Report 2021 PWR Holdings Limited Directors’ Report
for the year ended 30 June 2021
3. DIRECTORS’ MEETINGS
Our Chairman sets the agenda for Board meetings, with the Managing Director and the Company Secretary. The meetings
typically include:
– Minutes of the previous meeting
– Matters arising
– Strategy discussion
– MD’s report
– Chief Operating Officer report
– Chief Financial Officer report
– People report
– Health and Safety report
– Board Committee Chair reports
– Continuous disclosure checkpoint
– Share trading checkpoint
Closed sessions with Directors and as required, a closed session with Non-Executive Directors only are held periodically
throughout the year.
Our Board also receives periodic reports on operational and other important business matters including regulatory
updates, market research and investor relations activities.
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
Teresa Handicott
Jeffrey Forbes
Roland Dane
Kees Weel
Board Meetings
Audit and
Risk Committee Meetings
Nomination and
Remuneration Committee
Meetings
Attended
Held
Attended
Held
Attended
Held
11
11
11
11
11
11
11
11
5
5
5
-
5
5
5
-
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 technology sectors for domestic and international markets.
The Group has manufacturing and distribution facilities in Australia and the USA and distribution facilities in the UK from
which our European customers are serviced.
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.
27
Directors’ Report
for the year ended 30 June 2021
5. OPERATING AND FINANCIAL REVIEW
Pages 18 to 20 sets out our review of operations and financial review.
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 2020 ordinary
Interim 2021 ordinary
Total amount
Note
F4
F4
Cents per
share
Total amount
$
Date of payment
4.00
4,007,191 25 September 2020
2.80
2,805,034
26 March 2021
6,812,225
Declared after end of year
The following dividend was declared by the Directors since the end of the financial year:
Final 2021 ordinary dividend
Total amount
Cents per
share
Total amount
$
Date of payment
6.00
6,010,786
24 September 2021
6,010,786
The financial effect of these dividends has not been brought to account in the consolidated financial statements for the
year ended 30 June 2021 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 categories and markets and
pursue opportunities with emerging technologies in existing and new markets and categories 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 2021 ordinary dividend of 6.00 cents per share. The financial effect of this dividend
has not been brought to account in the consolidated financial statements for the year ended 30 June 2021.
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.
28
Annual Report 2021 PWR Holdings Limited 10. PROCEEDINGS ON BEHALF OF THE COMPANY
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
Audit and review of financial statements
Services other than audit and review of financial statements
Total paid to KPMG
Note
H3
2021
143,500
21,450
164,950
29
Directors’ Report
for the year ended 30 June 2021
14. LEAD AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration is set out on page 31 and forms part of the directors’ report for the financial
year ended 30 June 2021.
15. DIRECTORS’ INTERESTS
Details of the Directors’ interests in the securities of the Company are disclosed in the remuneration report on page 46.
This report is made with a resolution of the directors:
_________________________________
__________________________________
Teresa Handicott
Chairman
Brisbane
19th August 2021
Kees Weel
Managing Director
Brisbane
19th August 2021
30
Annual Report 2021 PWR Holdings Limited
Lead Auditors Independence Declaration Under
Section 307C of the Corporations Act 2001
for the year ended 30 June 2021
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 of PWR Holdings Limited for
the year ended 30 June 2021 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the Corporations
Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Erin Neville-Stanley
Partner
Brisbane
19 August 2021
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights
reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the
KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
31
31
Remuneration Report
for the year ended 30 June 2021
1. LETTER FROM CHAIRMAN OF THE NOMINATION AND REMUNERATION COMMITTEE
Dear Shareholders,
On behalf of the Board, I’m pleased to present the Remuneration Report for the year ended 30 June 2021.
This report seeks to describe, in a simple and transparent way, our approach to remunerating Executive key management
personnel (Executive KMP) and the key principles that underpin our Pay for Performance Framework, as well as
remuneration for our Non-Executive Directors.
Short-term incentive
The intent of the Short-Term Incentive (STI) is to focus our Executive KMP on what they can influence in the performance
year. For the STI to be activated for Executive KMP, they have to meet the STI Gate established by the Board. If PWR
exceeds the STIP Gate, this unlocks a greater STI amount for Executive KMP and forms the basis of a stretch target. This
is a key feature of the STI Plan that assists the Board in aligning the creation of shareholder value with actual company
performance. The STI Gate is a financial measure linked to budgeted EBIT or NPAT. Depending on whether the gate is met
or exceeded, the Corporate Scorecard which sets out a number of key performance indicators (KPIs) that focus Executive
KMP and other STI Plan participants on areas that align to growth, safety and product quality. The more the STI Gate is
exceeded, the more of the Corporate Scorecard is unlocked.
As outlined in more detail on page 41, the Company fell slightly short of the STI gate and accordingly Executive KMP did
not earn STIs for the year ended 30 June 2021. This was disappointing given the significant effort and contribution they
made during the reporting period for which I and my fellow directors sincerely thank them.
Long-term incentive
The LTI is the component of Executive KMP remuneration most closely linked to the shareholder experience as it rewards
Executive KMP for delivery of returns to shareholders that exceed peer benchmarks over a three-year period.
The LTI has two performance hurdles and a service condition that are assessed at the end of a 3-year performance period.
For LTI grant in FY2021, the Board modified the EPS hurdle so going forward the performance hurdles for the LTIP are
compound growth in Earnings Per Share (EPS) and Total Shareholder Return (TSR) benchmarked against the ASX 300
(excluding Energy sector (oil, gas and coal)). The modified EPS hurdle aligns more closely with shareholders’ interests and
participants now need to demonstrate a compound annual growth rate for EPS over the 3-year performance period in
excess of 10% for all rights linked to that hurdle to vest.
Long-term incentive | vesting
Just as shareholders have been rewarded by the increase in PWR’s share price, Executive KMP were rewarded by the
increase in value of their performance rights and their ultimate LTI vesting outcome during the reporting period with the
exception of the Managing Director who elects not to participants in the LTIP given his significant shareholding.
At the end of June 2020, following a 3-year performance period:
– PWR ranked at the 90th percentile for Total Shareholder Return (TSR) for the performance period for the FY2018
performance rights (1 July 2017 to 30 June 2020) when compared to the benchmark group of ASX 300 (excluding
Energy sector (oil, gas and coal))
– our EPS hurdle for the FY2018 performance rights was measured by the growth in EPS from FY2018 (base year) to the
end of the third year of the Performance Period (FY2020). The EPS growth rate was 40.5%, a compound growth rate
of 12%
As a result, 100% of the FY2018 performance rights vested on 1 September 2020 and provided the Executives an
equivalent number of PWR shares.
32
Annual Report 2021 PWR Holdings Limited Remuneration Report
for the year ended 30 June 2021
1. LETTER FROM CHAIRMAN OF THE NOMINATION AND REMUNERATION COMMITTEE (continued)
Looking forward
The Board has confidence in the integrity of the Pay for Performance Framework and believes it incorporates the
necessary flexibility to continue to balance rewarding our Executive KMP for performance and recognising the interests
of shareholders, however we plan to engage a remuneration consultant to undertake a review of our framework in FY2022
and will report the outcomes of this review to shareholders in our FY2022 remuneration report.
Executives who report to the Managing Director will not receive an increase to Fixed Remuneration in FY2022 and Fees
for the Non-Executive Directors will also remain unchanged in FY2022. The Managing Director received a 9% increase in
TFR to bring it closer to the median of the benchmark.
Our Corporate Scorecard for FY2022 will continue to focus our Executive KMP and people they lead on our business
priorities including implementing controls to keep our people safe and well, growing our emerging technology business,
maintaining exceptional product quality and improving productivity.
In what continues to be an extraordinary time, managing the impact of COVID-19, I wish to thank our shareholders for their
continued support.
Sincerely,
_________________________________
Teresa Handicott
Chairman, NRC
33
Remuneration Report
for the year ended 30 June 2021
2. HOW WE PERFORMED IN FY2021
179%
3-year Total
Shareholder Return
15.1%
Compound Annual
Growth in EPS over
3-years
21%
Revenue
Growth
51
New
Employees
Table 1 PWR Group’s Historical Performance below summarises and compares the Group’s performance in recent financial
years ending 30 June.
Table 1 PWR Group’s Historical Performance
EBITDA
Net profit after tax
Ordinary dividend
per share (cents)
Special dividend per
share (cents)
Change in share price
Earnings per share
Total Shareholder
Return Ranking1
Units
Note
2021
2020
2019
2018
2017
2016
$’000
$’000
cents
cents
$
cents
B5
percentile
$28,963
$23,430
$21,763
$16,336
$14,727
$16,903
$16,797
$13,049
$14,206
$11,001
$9,280
$8,735
8.80
5.90
8.50
7.30
5.60
4.40
-
$2.60
16.77
-
$0.37
13.04
3.00
$1.41
14.21
98th
percentile
90th
percentile
70th
percentile
-
-
-
$0.36
$(0.43)
$1.28
11.00
n/a
9.28
n/a
9.31
n/a
1
Compares PWR’s TSR to the S&P/ASX 300 excluding companies operating in the Energy sector (oil, gas and coal) and those that have de-listed since
1 July 2017 over a three year performance period ending on 30 June for the relevant financial year
2.1 PWR’s 3-year Total Shareholder Return
Figure 1 PWR’s Total Shareholder Return (3 years to 30 June 2021) shows how PWR compared to the ASX 300 (excluding
Energy sector (oil, gas and coal)) over the three year performance period to 30 June 2021, ranking PWR at the 98th
percentile of the benchmark group.
Figure 1 PWR’s TSR (3 years to 30 June 2021)
PWR's Relative TSR for 3 years to 30 June 2021 against the Top 50 ASX 300 Companies
(Excluding Energy)
400%
350%
300%
250%
200%
150%
100%
50%
0%
34
Top 3 companies
exceeded 400%
PWH 179%
98th percentile
PWR's Relative TSR for 3 years to
30 June 2021 against the Top 50 ASX
300 Companies (Excluding Energy)
1 2 3 4 5 6 7 8 9 10 11
12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
Three-year relative TSR
Median (114.92%)
Annual Report 2021 PWR Holdings Limited Remuneration Report
for the year ended 30 June 2021
2. HOW WE PERFORMED IN FY2021 (continued)
2.2 PWR’s 3-year growth in EPS to 30 June 2021
Figure 2 PWR’s EPS growth to 30 June 2021, shows a year-on-year increase in PWR’s Earnings Per Share which equates to a
compound annual growth rate in EPS of 15.1% over the three-year period.
Figure 2 PWR’s EPS growth to 30 June 2021
PWR 3-year Earnings Per Share to June 2021 and Compound Annual Growth Rate over same period
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3. REMUNERATION OF EXECUTIVE KMP AND HOW IT ALIGNS TO FY2021 PERFORMANCE
OUTCOMES
3.1 Overview of Components of Remuneration for Executive KMP
FY2022
Total Fixed Remuneration
FY2021
Short Term Incentive
Vesting of FY2018
Long Term Incentive Rights
Grant of FY2021
Long Term Incentive Rights
– The Managing Director
– Despite delivering a
– PWR’s TSR ranked at the
– 27,599 FY2021
will receive a 9%
increase to Total Fixed
Remuneration to align
with the midpoint of
TFR of benchmarked
companies
– No increase will be
applied to Total Fixed
Remuneration for other
Executive KMP
– See page 23 for details
on the leaders of PWR
and who make up the
Executive KMP
solid performance with a
NPAT of $16.8M, this was
short of the STIP Gate
after adjusting for unpaid
Executive KMP bonuses
and prior year tax
adjustments. Therefore,
the Executive KMP were
not entitled to receive
a short term incentive
for performance during
FY2021
– See page 45 for
details on FY2020 STI
outcomes which were
earned in FY2020 but
paid in FY2021
90th percentile against
the ASX 300 (exclduing
energy, oil and gas) at
30 June 2020 resulting
in all rights allocated to
this performance hurdle
vesting on 1 September
2020
– PWR’s 3-year EPS
growth rate for the
3-year performance
period to 30 June 2020
was 40.5% resulting in
all rights allocated to
this performance hurdle
vesting on 1 September
2020
– See page 47 for details
on FY2018 LTI outcomes
performance rights
have been granted to
Executive KMP during
the reporting period
(with the exception of
the Managing Director)
– The Managing Director
elects not to participate
in the LTIP given his
significant shareholding
– Performance hurdles for
the 3-year performance
period ending on 30 June
2023 TSR and compound
growth in EPS
– See page 42 for details
on grants of FY2021
performance rights
3.2 Actual Pay for Executive KMP in FY2021
Table 2 Actual Executive KMP Pay in respect of FY2021, provides shareholders with an understanding of cash and other
benefits Executive KMP earned in FY2021.
The actual pay for Executive KMP in FY2021 includes:
– Total Fixed Remuneration earned in FY2021 (inclusive of superannuation)
– Total FY2021 STI earned based on performance during FY2021. It does not include STI earned in FY2020 and paid in FY2021
– LTI awards that vested and were exercised in September 2020 for the 3-year performance period to 30 June 2020.
35
Remuneration Report
for the year ended 30 June 2021
3. REMUNERATION OF EXECUTIVE KMP AND HOW IT ALIGNS TO FY2021 PERFORMANCE
OUTCOMES (continued)
Table 2 Actual Executive KMP Pay in respect of FY2021
Executive KMP
Kees Weel (Managing Director)
Matthew Bryson (Chief Operating Officer)
Martin McIver (Chief Financial Officer)5
Stuart Smith (Former Chief Financial Officer)6
Total Fixed
Remuneration
actually received
FY2021
FY2021 STIP
Cash
Value of shares
issued upon
vesting of per-
formance rights
in. FY20212
$509,675
$378,959
$74,873
$329,716
0
0
0
0
n/a3
$180,955
0
$266,135
Actual Pay4
$509,675
$559,914
$74,873
$693,351
1.
2.
3.
4.
5.
6.
Total Fixed Remuneration actually received includes cash salary and fees, and superannuation.
Relates to FY2018 performance rights assessed over the performance period 1 July 2017 to 30 June 2020 and which vested on 1 September 2020.
Value of LTI is based on the 5-day VWAP at the time of the issue of the shares as a result of exercise by the KMP
Kees Weel, while eligible to participate in the LTIP, subject to shareholder approval, elects not to do so given he has a significant shareholding
Actual Pay includes cash salary and fees, cash bonus, superannuation, termination benefits, long service leave payments and share based payments.
Refer to the table on page 45 for a full breakdown
As Martin McIver joined PWR on 12 April 2021, his TFR is based on what he has earned since commencement. Martin is eligible to participate in the STIP
and LTIP from 1 July 2021
As Stuart Smith ceased employment on 23 April 2021 his TFR reflects his earnings to the date of cessation of employment and includes 7 weeks
payment in lieu of notice and an amount equivalent to his full FY2021 STI entitlement. In addition to vesting of FY2018 performance rights, the Board
exercised its discretion to accelerate the vesting of his FY2019 Performance Rights. The value of LTI is the actual price paid for the shares when
purchased on market to satisfy the accelerated vesting
4. PWR’S PAY FOR PERFORMANCE FRAMEWORK
The pages of the Remuneration Report that follow (together with Table 1 PWR Group’s Historical Performance) have been
prepared in accordance with section 300A of the Corporations Act 2001 (Cth) (Act) and audited as required by section
308(3C) of the Act. These sections relate to those persons who were KMP of PWR during FY21, being the Executive KMP
named on page 23 and the Non-Executive Directors of PWR named on page 22.
4.1 Remuneration Governance
The Board is accountable for establishing the remuneration policies and framework for the PWR Group and ensuring
remuneration of the Managing Director and Senior Executives is fair and reasonable and aligned with the interests of
shareholders. Outlined below is the Board’s framework for remuneration governance:
Board
Nomination and
Remuneration
Committee (NRC)
The Board is responsible for setting remuneration policy and determining Non-Executive Director,
Managing Director and Executive remuneration. In addition, the Board is responsible for approving
all key performance indicators and performance hurdles set under the Executive KMP variable
remuneration framework, being the Short Term Incentive Plan (STIP) and the Long Term Incentive
Plan (LTIP). The Board delegates responsibility to the Nomination and Remuneration Committee
(NRC) for reviewing and making recommendations to the Board on these matters. The Board
retains full discretion to decrease or increase outcomes to ensure that they are fair and reasonable.
It can use this discretion to decrease or increase the outcome as it considers appropriate. The
Board has regular contact with each of the Executive KMP during the year.
The NRC makes recommendations to the Board regarding all aspects of Executive KMP
remuneration. This includes making recommendations in relation to the targets to be included in
the STIP (both the financial and non-financial) and in relation to setting performance hurdles that
attach to Performance Rights under the LTIP. The Group’s Managing Director provides updates and
makes recommendations to the NRC on these matters in relation to his direct reports throughout
the year. To inform the Board and NRC, and to assist with their decision-making processes,
additional information and data is sought from management and remuneration consultants, as
required. The NRC Charter sets out further information regarding the Committee’s objectives
and role.
36
Annual Report 2021 PWR Holdings Limited Remuneration Report
for the year ended 30 June 2021
4. PWR’S PAY FOR PERFORMANCE FRAMEWORK (continued)
Responsibility for
determining NED
remuneration
The Board is responsible for assessing Non-Executive Director (NED) fees, assisted by the NRC.
Shareholders approve the total NED remuneration cap. Shareholders have approved a cap of
$750,000 per annum. Reviews of NED Board and Committee fees are carried out periodically with
assistance of independent benchmarking reports and/or consultants.
Managing Director Our Managing Director makes recommendations to the NRC regarding Executives and how the
Pay for Performance Policy and framework applies to all our employees.
Remuneration
Consultants
Godfrey Remuneration Group Pty Limited (GRG) provided advice on the Termination Benefit Limit
and how it applied to a member of the Executive KMP of the Company. GRG was paid $2,000 +
GST for the advice.
4.2 Pay for Performance Remuneration Principles
The guiding principles governing PWR’s Pay for Performance Policy and how we implement them are summarised in the
table below:
How we meet these principles
Remuneration will incorporate
external market reference
to maintain market
competitiveness
We periodically undertake remuneration benchmarking using
independent renumeration consultants to maintain market
competitiveness and ensure our reward supports PWR in
both attracting and retaining key talent.
Guiding Principles
Attract and Retain
Pay Executives for
Performance that
Delivers Value to
Shareholders
Make clear the line of sight
between performance and
reward to ensure that superior
performance is recognised
and rewarded, with a view to
driving long-term growth and
shareholder value
We set key performance indicators that have stretch
targets, evidenced by improvement over and above actual
results achieved from the prior year or specifically linked
to achievement of an outcome linked to our strategic
objectives.
We also ensure our reward outcomes are aligned to
performance by providing a significant part of Executive
KMP’s ‘at risk” remuneration on achieving both financial and
non-financial measures
We align short term and long term performance measures to
our strategy and vision. This includes a focus on PWR being
a safe place to work, ensuring our reputation for quality
products is maintained, achieving key strategic priorities and
achieving leading total shareholder returns.
PWR’s DNA is at the centre of how we work together to
deliver on our goals.
Internal equity is achieved partly through external
benchmarking and internally moderating performance
assessments across the business.
The Board maintains ultimate discretion under PWR’s
incentive plans to make awards or not and all awards are
subject to consideration of the Company’s ability to pay.
We attempt to report in a transparent manner on the link
between reward and performance under our incentive
schemes and outline the governance process to give
confidence to our shareholders.
Promote Internal
Fairness and Equity
Always Consider
PWR’s Capacity to Pay
Build Trust by
Promoting
Transparency
Provide fair, consistent
and internally equitable
reward to appropriately
compensate employees
for their contributions and
performance outcomes
Manage the balance between
reward funding and Company
performance / financial
outcomes
Ensure a level of transparency
and clarity in reward design
and governance processes –
4.3. Pay for Performance Framework
The remuneration framework for Executive KMP comprises two elements:
1. Fixed remuneration, and
2. Performance linked or “at risk” remuneration (short and long term components).
37
Remuneration Report
for the year ended 30 June 2021
4. PWR’S PAY FOR PERFORMANCE FRAMEWORK (continued)
4.3.1. Fixed Remuneration
Fixed remuneration is set with reference to the median of PWR’s peers and is a function of size and complexity of the role,
individual responsibilities, experience, skills and market remuneration levels. This consists of cash salary, salary sacrifice
items, employer superannuation, annual leave provisions and any fringe benefits tax charges related to employee benefits.
The opportunity to salary sacrifice benefits on a tax-compliant basis is available.
The Board determines an appropriate level of fixed remuneration for the Executive KMP following recommendations from
the NRC. The NRC has the delegated authority from the Board to engage independent remuneration consultants as it
sees fit.
Fixed remuneration is reviewed annually following performance reviews at the end of the financial year and takes into
account the Executive KMP’s role and accountabilities, relevant market benchmarks and attraction, retention and
motivation of Executives in the context of the overall market.
4.3.2. Short Term Incentive Plan (STIP) - at risk
The Executive KMP are eligible to participate in the Group’s short-term incentive plan.
STIP Design
Under the STIP, Executive KMP have an opportunity to receive an annual cash bonus calculated as a percentage of their
total fixed remuneration (TFR). There are three components to the STIP:
1. STIP Gate
2. Company Scorecard (financial and non-financial KPIs at a company level)
3.
Personal Scorecard (financial and non-financial KPIs at a business unit\personal level together with demonstration of
PWR’s DNA)
Figure 3 Operation of STIP for Executive KMP, presents a diagrammatic representation of the mechanics of the STIP with
targeted STIP being up to 55% of maximum and stretch components providing up to 100% of maximum STIP opportunity.
Figure 3 Operation of STIP for Executive KMP
NOT MET
STIP not activated for Executive KMP
No STI Award
Company
Scorecard
Personal KPIs
and PWR DNA
MET
Weighting
Max 15%
Max 40%
Company
Scorecard
Personal KPIs
and PWR DNA
EXCEEDED
Weighting
Between
>15% & 60%
Max 40%
STI Award
up to 55% of
maximum
STI Award
between
55% & 100%
e
t
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I
38
Annual Report 2021 PWR Holdings Limited
Remuneration Report
for the year ended 30 June 2021
4. PWR’S PAY FOR PERFORMANCE FRAMEWORK (continued)
STIP Gate
Table 3 STIP Gate Assessment
The STIP gate must at least be met for the STIP to be activated for Executive KMP. The amount by which the gate is
exceeded then determines the maximum that can be attributed to each KPI on the Company Scorecard.
STIP Gate Assess-
ment
Gate Met
Gate + ≥5%
Gate + ≥10%
Gate + ≥15%
Company Scorecard KPI outcome has
maximum 25% weighting
Company Scorecard KPI outcome has
maximum 50% weighting
Company Scorecard KPI outcome has
maximum 75% weighting
Company Scorecard KPI outcome has
maximum 100% weighting
Company Scorecard
Personal Scorecard
Up to 15% of maximum
Up to 40% of maximum
Up to 30% of maximum
Up to 40% of maximum
Up to 45% of maximum
Up to 40% of maximum
Up to 60% of maximum
Up to 40% of maximum
Company Scorecard
The Board establishes company KPIs that form the Company scorecard on an annual basis. These are determined by
assessing key drivers that are required to deliver on our strategic objectives and require the Executive KMP to work as a
team to achieve.
Figure 4 Company Scorecard FY2021
Organic
Revenue Growth
NPAT
Organic
revenue growth
demonstrates
achievement of
PWR’s growth
objective growing
both our existing
business and
developing new
areas of business.
An increase in Group
NPAT over the prior
year’s budgeted
NPAT is chosen
because it reflects
how the business
manages total costs
and generates a
profit to provide
shareholder returns,
Group NPAT is
assessed following
the preparation and
audit of the annual
financial statements.
LTIFR
Safety performance
is measured through
the lost time Injury
frequency rate
(LTIFR) at the Group
and was chosen to
reflect the Group’s
relentless focus
on providing safe
workplaces for all
employees.
Critical
Safety Risks
Quality
Identifying and
documenting critical
safety risks for
PWR’s operations
and then monitoring
the implementation
of associated
actions to mitigate
these risks was
selected to embed
PWR’s commitment
to a safe workplace
for all employees
Providing quality
products is what
PWR does best.
Warranty claims
and customer
returns as % of total
despatched items
must be carefully
monitored to ensure
PWR continues to
excel in customer
service and
satisfaction
20%
30%
12.5%
12.5%
25%
39
Remuneration Report
for the year ended 30 June 2021
4. PWR’S PAY FOR PERFORMANCE FRAMEWORK (continued)
Personal Scorecard
At the beginning of the performance period, the Board establishes personal KPIs for the Managing Director and the Managing
Director recommends personal KPIs for the Executives for Board approval. Personal KPIs represent 40% of the maximum
potential cash bonus payable to the Executive KMP and for payment to be made against these KPIs, the STI gate must have been
met. If the STIP gate is not met, irrespective of whether the KPIs have been achieved, they attract no cash payment.
4.3.3. Long Term Incentive Plan (LTIP) – at risk
The Executive KMP are eligible to participate in the Group’s long term incentive plan.
The LTIP is an equity-based incentive designed to provide participants with the incentive to deliver growth in shareholder value.
Performance Rights
Executive KMP are invited by the Board to apply for performance rights (“Rights”) on an annual basis under the LTIP.
Performance Period
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.
Performance Hurdles
The performance hurdles for the Rights granted in FY2021 are:
– 50% of the rights will vest upon the achievement of Total Shareholder Return (TSR) ranking criteria relative to the TSR
of constituents of the S&P/ASX300 (excluding Energy sector (oil, gas and coal)). TSR is calculated by an independent
third party, comparing the TSR percentile rank that PWR holds relative to the benchmark group for the relevant 3-year
performance period.
TSR Ranking (TSR)
TSR is 50% or less
TSR is more than 50% but less than 75%
TSR is 75% or more
Vesting outcome
Nil vesting
Pro rata vesting
100% vesting
– 50% of the rights will vest based on compound growth in annual Earnings Per Share (“EPS”) relative to a target set by
the Board. Vesting is determined by the compound annual growth rate in EPS over the 3-year Performance Period
measured against specific EPS targets.
Earnings Per Share (EPS)
Vesting outcome
Compound annual growth rate of EPS <4%
Nil vesting
Compound annual growth rate of EPS ≥4% to ≤ 10%
Pro rata vesting
Compound annual growth rate of EPS >10%
100% vesting
The EPS hurdle for the FY2021 Rights is different to that attached to Rights granted in prior financial years. The Board,
following feedback from some shareholders, changed the hurdle from an EPS growth rate to compound annual growth
rate over the 3-year performance period. The revised EPS hurdle applies to Rights granted from FY2021 onwards.
Service Condition
Participants must remain continually employed with the Company until the date of 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 may be forfeited and lapse unless the Board in its
discretion determines otherwise. Rights do not entitle holders to dividends that are declared during the vesting period.
40
Annual Report 2021 PWR Holdings Limited Remuneration Report
for the year ended 30 June 2021
4. PWR’S PAY FOR PERFORMANCE FRAMEWORK (continued)
4.4. FY2021 Remuneration Mix
Table 4 Remuneration Mix for Executive KMP FY2021, sets out the Total Fixed Remuneration that the Executive KMP
were entitled to during the FY2021 year together with their variable remuneration as a percentage of TFR.
Table 4 Remuneration Mix for Executive KMP FY2021
Executive KMP
Kees Weel (Managing Director)
Matthew Bryson (Chief Operating Officer
Martin McIver (Chief Financial Officer)
Stuart Smith (Former Chief Financial Officer)
Fixed Remuneration
Variable Remuneration
Total Fixed
Remuneration
FY2021
($/annum)
STIP
Maximum
Potential
% TFR
LTIP
Maximum
Potential
% TFR
$500,000
$375,000
$350,000
$325,000
50%
30%
30%2
30%3
50%1
30%
30%2
30%3
1. Kees Weel, subject to shareholder approval, is eligible to participate in the LTIP however he elects not to do so given his significant shareholding
2. Martin McIver commenced 12 April 2021 and is eligible to participate in the STIP and LTIP from 1 July 2021.
3.
Stuart Smith ceased employment on 23 April 2021. The Board exercised its discretion to award an amount equivalent to Mr Smith’s STI for FY2021
which was paid out on cessation of employment. He was not granted any performance rights under the LTIP in FY2021. Refer to Table 12 for the vesting
of performance rights during the reporting period.
4.5. FY2021 STIP Outcomes
4.5.1. STIP Gate
The gate for the STIP for FY2021 was the NPAT target established by the Board. If the STIP gate is met, the FY2021
Company Scorecard is then assessed with the outcome making up 25% of the maximum attributed to the Company
Scorecard. An increasing amount of STIP is available depending on by how much the STIP gate is exceeded. In FY2021, the
NPAT had to be exceeded by 5% to receive 50% entitlement, by 10% to receive 75% entitlement and 15% to receive 100%
entitlement to the Company Scorecard outcome.
The NPAT gate was not met for FY2021.
At the beginning of the reporting period, the Board established Company KPIs which together formed the Company
Scorecard. Subject to the STIP gate being met or exceeded the Company Scorecard accounts for up to 60% of the
maximum potential cash bonus payable to Executive KMP. Corporate KPIs on the Company Scorecard align interest and
performance at a Group level and to be achieved require strategic thinking, collaboration, and business wide leadership
which ultimately improves both short and long term shareholder value.
Notwithstanding that the STIP gate was not met, for transparency an assessment of Corporate KPIs is outlined below:
Figure 5 Company Scorecard Outcomes FY2021
Organic Revenue
Growth
20%
NPAT
30%
LTIFR
12.5%
Critical Safety Risk
Tasks
12.5%
>15%
FY21 budgeted NPAT
< 3.5
9
Quality
25%
<0.5%
Achieved
Not achieved
Not achieved
Achieved
Achieved
Organic revenue
growth of 25.6%
compared to revenue
in FY2020 meant
that this KPI was fully
achieved.
The NPAT target (a
separate target to
the STIP gate) is a
stretch target of 15%
above the prior year’s
budgeted NPAT and
was not met.
The Group recorded
a LTIFR of 5.9 at 30
June 2021 compared
with a LTIFR of 3.3
at 30 June 2020.
This KPI was not met.
Warranty claims and
customer returns
to <0.5% of total
dispatched items was
achieved.
PWR’s critical safety
risks focus on the
prevention of serious
injuries and fatalities
and all 9 critical safety
tasks established as
KPIs for this year were
achieved.
41
Remuneration Report
for the year ended 30 June 2021
4. PWR’S PAY FOR PERFORMANCE FRAMEWORK (continued)
4.5.2. Personal Scorecards
Personal KPIs included specific targets for revenue growth in particular segments, global supply chain efficiencies, working
capital management and the establishment of specific programs in new markets. A summary of the outcome of Executive
KMP personal KPIs is set out below:
Figure 6 Executive KMP Personal KPI Outcomes
Executive KMP
Personal KPI
– Targets related to succession planning for all critical roles
Weighting
Outcome
40%
Partially
achieved
– Targets related to quality standards and reporting, procurement,
40%
critical safety risks and succession planning
Partially
achieved
Kees Weel
(Managing
Director)
Matthew Bryson
(Chief Operating
Officer)
4.5.3. FY2021 STIP Awards
Table 5 Executive KMP FY2021 STIP Awards
Executive KMP
Kees Weel (Managing Director)
Matthew Bryson (Chief Operating Officer)
Martin McIver (Chief Financial Officer)1
Stuart Smith (Former CFO)2
Maximum Poten-
tial STIP (% TFR)
Actual Bonus
Received
(% TFR)
Bonus included
in FY21 remu-
neration ($)
50%
30%
n/a
30%
0
0
n/a
0
0
0
n/a
0
1. Martin McIver commenced 12 April 2021 and is eligible to participate in STIP and LTIP from 1 July 2021.
2.
Stuart Smith resigned 23 April 2021 and on cessation of employment was paid an amount equivalent to all of his STIP entitlement for FY2021 following
the exercise of discretion by the Board. This amounted to $97,500.
4.6. LTIP Grants in FY2021
A grant of Rights was made to Executive KMP in the 2021 financial year with the exception of the Managing Director who
has elected not to participate in the LTIP given his significant shareholding in the Company, the former CFO who ceased
employment on 23 April 2021 and the incoming CFO who commenced on 12 April 2021.
Table 6 Executive KMP FY2021 LTIP Grants
Description
of Rights
Number
of Rights
granted
Number of Rights subject to
Performance Hurdles
TSR
Component
EPS
Component
Grant
Date
Vesting
Date
Expiry
Date
FY21 LTIP
27,599
13,799
13,799
07/06/21
01/09/23
01/03/24
Executive KMP
Matthew Bryson
(COO)
42
Annual Report 2021 PWR Holdings Limited Remuneration Report
for the year ended 30 June 2021
5. 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.
Table 7 Executive KMP Notice Periods
Name
Executive Director
Kees Weel
Executives
Matthew Bryson
Martin McIver
Position
Notice Period
Managing Director
6 months
Chief Operating Officer
Chief Financial Officer
6 months
3 months
6. REMUNERATION OF NON-EXECUTIVE DIRECTORS DURING REPORTING PERIOD
6.1. NED Remuneration Policy
Non-Executive Directors receive remuneration for undertaking their role. They do not participate in the Group’s incentive
plans nor receive any variable remuneration. Non-Executive Directors are not entitled to retirement payments.
The objective of the 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.
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.
6.2. NED Remuneration
The following table sets out the remuneration rates for Non-Executive Directors through annual Board and Committee
fees (inclusive of superannuation) during the reporting period.
Table 8 Non-Executive Directors Fees
Role
Chairman
Non-Executive Director
Audit and Risk Committee Chairman
Nomination and Remuneration Committee Chairman
Approved
Director Fees
per annum
$150,000
$95,000
$20,000
$20,000
43
Remuneration Report
for the year ended 30 June 2021
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Annual Report 2021 PWR Holdings Limited
Remuneration Report
for the year ended 30 June 2021
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F
Remuneration Report
for the year ended 30 June 2021
8. SHAREHOLDINGS 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:
Table 10 Shareholdings of KMP
Name
Non-Executive Directors
Teresa Handicott
Jeff Forbes
Roland Dane
Managing Director and Senior Executives
Kees Weel(i)
Matthew Bryson(ii)
Martin McIver
Former Senior Executives
Stuart Smith(iii)(iv)
Shareholdings of KMP
Opening
Balance
1 July 2020
Shares
acquired
during the
year
Shares
disposed of
during the
year
Closing
Balance
30 June 2021
Other
39,500
20,000
60,885
27,429,885
–
–
–
–
–
–
–
(7,122,097)
3,526,309
37,330
(175,000)
–
–
–
10,000
56,303
(56,303)
–
–
–
–
–
–
–
39,500
20,000
60,885
20,307,788
3,388,639
–
10,000(iv)
(i)
61,385 shares held personally by Kees Weel; 20,246,403 shares held by entities controlled by Kees Weel; 10,000,000 shares held by Wagon Weel Pty
Ltd as trustee for the Wagon Weel Trust. At 30 June 2021 Kees Weel is a director of the trustee and beneficiary of the trust; 10,246,403 shares held
by KPW Property Holdings Pty Ltd as trustee for the KPW Holdings Trust. At 30 June 2021 Kees Weel is a director of the trustee and beneficiary of
the trust.
(ii) 37,330 shares acquired by Matthew Bryson on vesting of FY2018 performance rights.
(iii) Stuart Smith ceased employment on 23 April 2021. 24,886 shares were acquired by Stuart Smith on vesting of FY2018 performance rights and 31,417
shares were acquired by Stuart Smith when the Board exercised its discretion to accelerate vesting of FY2019 performance rights as part of cessation
of employment arrangements. All other performance rights lapsed and no rights were granted in FY2021.
(iv) Closing balance represents closing balance at date employment ceased (23 April 2021).
9. VOTING AND COMMENTS MADE AT THE COMPANY’S 2020 ANNUAL GENERAL MEETING
The Company received 91.91% ‘for’ votes on its remuneration report for the 2020 financial year. The Company did not
receive any specific feedback or comments at the 2020 AGM on its remuneration report.
10. 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
Executive KMP during the reporting period are included Table 9 KMP Statutory Remuneration Table on page 45.
There were no alterations to the terms and conditions of performance rights granted as remuneration to KMP since their
grant date.
46
Annual Report 2021 PWR Holdings Limited Remuneration Report
for the year ended 30 June 2021
10. RIGHTS OVER EQUITY INSTRUMENTS GRANTED AS REMUNERATION (continued)
123,497 performance rights vested during the reporting period. Total Performance Rights on issue at 30 June 2021 are as
follows:
Table 11 Rights Over Equity Instruments Granted as Remuneration
Description
of Rights
FY19 LTIP
FY20 LTIP
FY21 LTIP
Executive KMP
Matthew Bryson
(Chief Operating
Officer)
Total on Issue to
Executive KMP
Total on Issue to
Non KMP
Total Vested during
the reporting period
Total Forfeited due
to resignation
Total on issue at
30 June 2021
Fair Value per Right
at Grant Date
Number
of Rights
granted
TSR
Component
$
EPS
Component
$
Grant
Date
Vesting
Date
Expiry
Date
1.82
3.17
4.33
2.68
4.49
6.00
22/08/18
19/09/19
07/06/21
01/09/21
01/09/22
01/09/23
01/03/22
01/03/23
01/03/24
31,417
23,243
27,599
82,259
225,493
123,497
(23,243)
307,752
11. EQUITY INSTRUMENTS
11.1. Performance rights over equity instruments
The movement during the reporting period, by number of rights over ordinary shares in PWR Holdings Ltd held, directly,
indirectly or beneficially by each key management person, including their related parties, is as follows:
Table 12 Performance Rights Over Equity Instruments
Rights
Held
1 July 2020
Granted
as
compensa-
tion
Exercised
Lapsed
Forfeited
Held 30
June
2021
Vested
during
year
Vested and
exercisable
at 30 June
2021
Matthew Bryson
91,990
27,599
37,330
Martin McIver
–
Stuart Smith
79,546
–
–
–
56,303
–
–
–
–
–
23,243
82,259
37,330
–
–
–
56,303
–
–
–
The forfeited Rights represent those Rights that did not vest due to failure to meet service conditions.
47
Remuneration Report
for the year ended 30 June 2021
11. EQUITY INSTRUMENTS (continued)
During the reporting period, the following shares were issued on the exercise of Rights previously granted as
compensation:
Table 13 Rights That Vested to Executive KMP During the Reporting Period
Executive KMP
Matthew Bryson
Stuart Smith
Number of
shares
Amount paid
per share ($)
37,330
56,303
$-
$-
The value of Rights over ordinary shares in the Company granted and exercised by each Executive KMP during the
reporting period is detailed below.
Table 14 Value of Rights That Vested to KMP During the Reporting Period
Matthew Bryson
Stuart Smith
Granted in
year
$(a)
Value of rights
exercised in
year $(b)
$142,549
$180,955
–
$266,135
(a)
The total value of rights granted in the year is the fair value of the rights calculated at grant date. This amount is allocated to remuneration over the
vesting period.
(b)
The value of rights exercised during the year is the market price based on the previous 5 days VWAP at vesting date after deducting the price paid to
exercise the right or if shares were purchased on market, the market price paid
11.2. 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 not material.
This report is made with a resolution of the directors:
_________________________________
__________________________________
Teresa Handicott
Chairman
Brisbane
19th August 2021
Kees Weel
Managing Director
Brisbane
19th August 2021
48
Annual Report 2021 PWR Holdings Limited
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
for the year ended 30 June 2021
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
Total depreciation and amortisation expense
Finance income
Finance costs
Net finance (costs)/income
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
C5
B4
B1
E1
2021
$’000
79,208
2,760
(18,013)
(30,932)
(562)
(3,498)
28,963
2020
$’000
65,731
4,177
(14,249)
(28,313)
(490)
(3,426)
23,430
(5,739)
(5,739)
(4,705)
(4,705)
24
(701)
(677)
22,547
(5,750)
16,797
39
(529)
(490)
18,235
(5,186)
13,049
(528)
16,269
(324)
12,725
Basic and diluted earnings per share
B5
16.77 cents
13.04 cents
The accompanying notes are an integral part of these financial statements.
49
Consolidated Statement of Financial Position
At 30 June 2021
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
Deferred Income
Contract liabilities
Employee benefits
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Loans and borrowings
Deferred Income
Contract liabilities
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.
50
Note
2021
$’000
2020
$’000
C1
C2
C3
C4
C5
C6
E2
C7
F1
F2
C8
D1
E2
F1
F2
C8
D1
F3
19,857
9,341
6,489
1,646
37,333
34,280
14,915
770
49,965
87,298
5,333
1,789
443
901
2,626
2,001
173
13,266
6,667
1,746
1,351
306
10,070
23,336
63,962
26,223
12
37,727
63,962
20,805
6,932
6,528
2,912
37,177
29,296
15,034
876
45,206
82,383
4,770
1,882
208
–
2,050
1,886
133
10,929
16,145
798
–
261
17,204
28,133
54,250
26,071
437
27,742
54,250
Annual Report 2021 PWR Holdings Limited Consolidated Statement of Changes in Equity
for the year ended 30 June 2021
Foreign
currency
translation
reserve
$’000
Share based
payments
reserve
Retained
earnings
$’000
Total
equity
$’000
(87)
524
27,742
54,250
Note
Balance at 1 July 2020
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
Total transactions with owners
Balance at 30 June 2021
Balance at 1 July 2019
D3
F4
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
Total transactions with owners
Balance at 30 June 2020
D3
F4
Share
Capital
$’000
26,071
–
–
–
152
–
152
26,223
25,921
–
–
–
150
–
150
–
(528)
(528)
–
–
–
(615)
237
–
(324)
(324)
–
–
–
The accompanying notes are an integral part of these financial statements.
26,071
(87)
–
–
–
103
–
103
627
16,797
–
16,797
–
(6,812)
(6,812)
16,797
(528)
16,269
255
(6,812)
(6,557)
37,727
63,962
344
26,495
52,997
–
–
–
180
–
180
524
13,049
13,049
–
13,049
(324)
12,725
–
(11,802)
(11,802)
27,742
330
(11,802)
(11,472)
54,250
51
Consolidated Statement of Cash Flows
for the year ended 30 June 2021
Cash flows from operating activities
Cash receipts from customers
Government COVID-19 grants received
Cash paid to suppliers and employees
Cash generated from operating activities
Interest paid
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/(repayment of borrowings)
Payment of lease liabilities
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 30 June
The accompanying notes are an integral part of these financial statements.
Note
2021
$’000
2020
$’000
80,111
1,980
62,271
3,512
(50,723)
(45,460)
C1
31,368
(340)
(4,619)
26,409
55
24
4
(10,365)
(10,282)
(6,812)
(8,585)
(1,819)
(17,216)
(1,089)
20,805
141
20,323
(413)
(3,741)
16,169
1,040
39
19
(7,763)
(6,665)
(11,802)
5,000
(1,670)
(8,472)
1,032
20,223
(450)
C1
19,857
20,805
52
Annual Report 2021 PWR Holdings Limited Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
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 2021 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 (AASB) 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 19th August 2021.
(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 B3
(Government grants) and C6 (Intangible assets).
A3 Significant accounting policies
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.
53
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION B BUSINESS PERFORMANCE
B1 Operating segments
The Group has two strategic divisions, which are its operating segments. These divisions offer similar products and
services, but are managed separately because they require different technology, apply contrasting marketing strategies
and cater to different markets.
The following summary describes the operations of each reportable segment.
Operating segments
Operations
PWR Performance Products
PWR North America
Designing and manufacturing high end racing products, OEM products, Emerging
Technology products, and automotive aftermarket products for non-USA markets.
Designing and manufacturing racing and OEM and Emerging Technology products
primarily for the USA market. The PWR North America segment had previously been
referred to as C&R with the composition of this segment remaining the same.
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
PWR North America
2021
$’000
2020
$’000
2021
$’000
2020
$’000
Total
2021
$’000
2020
$’000
Revenue from sale of
manufactured products
Revenue from services
External revenues
Inter-segment revenues
Segment revenue
Operating EBITDA1
54,513
423
54,936
3,098
58,034
22,724
525
50,160
923
51,083
20,494
Depreciation and amortisation
(4,391)
(3,126)
Segment profit/(loss) before
interest and tax
Capital expenditure
18,333
9,350
17,368
7,259
49,635
23,880
15,408
78,393
65,043
392
24,272
1,788
26,060
6,158
(1,348)
4,810
1,015
163
15,571
1,987
17,558
2,792
815
79,208
4,886
84,094
28,882
688
65,731
2,910
68,641
23,286
(1,578)
(5,739)
(4,704)
1,214
504
23,143
10,365
18,582
7,763
1 Operating EBITDA is the segment’s profit from operations before interest, taxation, depreciation and amortisation.
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 loss/(profit)
Net finance (costs)/income
Consolidated profit before tax
54
2021
$’000
2020
$’000
84,094
(4,886)
79,208
68,641
(2,910)
65,731
23,143
18,582
81
(677)
143
(490)
22,547
18,235
Annual Report 2021 PWR Holdings Limited Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
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 19% of
Group’s revenue for the year ended 30 June 2021 (2020 – Three customers comprised 26%).
Below is an analysis of the Group’s revenue based on the location of the Group’s customers.
2021
2020
Revenue
$’000
Non-current
assets(i)
$’000
Revenue
$’000
Non-current
assets(i)
$’000
10,114
22,199
25,257
11,185
3,271
7,182
37,964
9,957
1,274
–
–
–
8,434
15,648
21,008
8,808
4,196
7,637
33,210
11,109
11
–
–
–
79,208
49,195
65,731
44,330
Note
2021
$’000
2020
$’000
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
78,393
65,043
815
79,208
688
65,731
732
1,980
70
2,782
42,813
14,867
11,732
8,683
1,113
79,208
607
3,512
–
4,119
38,026
11,554
9,956
4,082
2,113
65,731
Government grants – COVID-19 assistance
Government grants – incentive assistance
B3
Customer Revenue by Market Sector
Motorsports
Automotive Aftermarket
Automotive OEM
Emerging Technologies1
Industrial and Other
1
Emerging Technology includes revenue from Aerospace and Defence across all technologies, and revenue from other market sectors generated by
cold plate, micro matrix and additive manufacturing.
The Group recognised $450,000 (2020: nil) in customer revenue from satisfying performance obligation for contract
liabilities (refer Note C8).
55
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION B BUSINESS PERFORMANCE (continued)
B3 Expenses and Income
Significant items
During the year, the Group received Government assistance for COVID-19 in Australia through the JobKeeper programme.
The Group has received confirmation that the prior year Pay Check loan forgiveness has been approved, supporting the
position adopted in the prior year financial statements.
JobKeeper assistance
Pay Check Protection Program
Total before tax assistance
2021
$’000
1,980
–
1,980
2020
$’000
1,743
1,769
3,512
Research and Development
The Group recognised $8,515,807 (2020: $7,259,654) 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
Finance income
Interest expense
Net foreign exchange loss
Finance costs
Net finance income/(costs)
B5 Earnings per share
Basic and diluted earnings per share
2021
$’000
2020
$’000
24
24
(340)
(361)
(701)
(677)
39
39
(413)
(116)
(529)
(490)
2021
2020
16.77 cents
13.04 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 $16,797,132 (2020: $13,048,905).
Weighted average number of ordinary shares
Issued ordinary shares at 1 July
Weighted number of ordinary shares at 30 June
2021
No.
2020
No.
100,087,694 100,000,000
100,163,924 100,058,462
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.
56
Annual Report 2021 PWR Holdings Limited Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION C OPERATING ASSETS AND LIABILITIES
C1 Cash and cash equivalents
Bank balances
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
(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)
2021
$’000
19,857
19,857
2020
$’000
20,805
20,805
16,797
13,049
5,739
4,705
732
563
255
22
607
394
330
–
(2,409)
(2,243)
39
563
1,266
621
2,336
(115)
663
71
(1,349)
548
(14)
(592)
26,409
16,169
9,335
6
9,341
6,923
9
6,932
Provisioning for trade receivables has been assessed considering known factors including COVID–19 and is consistent with
prior reporting periods. No impairment is considered necessary.
C3 Inventories
Raw materials
Work in progress
Finished goods
Consumables
Allowance for inventory obsolescence
3,062
672
3,626
115
(986)
6,489
The cost of inventories sold and recognised as an expense during the year end 30 June 2021 was $38,281,175
(2020: $31,330,228).
2,924
898
3,799
98
(1,191)
6,528
57
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION C OPERATING ASSETS AND LIABILITIES (continued)
C4 Other assets
Prepayments
Deposits
Other assets (including JobKeeper receipts)
C5 Property, plant and equipment
Plant and equipment – at cost
Accumulated depreciation
Motor vehicles – at cost
Accumulated depreciation
Land and buildings – at cost
Accumulated amortisation
Under construction
2021
$’000
829
–
817
1,646
42,188
(16,362)
25,826
377
(313)
64
11,607
(3,691)
7,916
474
2020
$’000
715
490
1,707
2,912
29,324
(12,809)
16,515
351
(309)
42
10,752
(1,824)
8,928
3,811
34,280
29,296
Reconciliations
Reconciliations of the carrying amounts for each class of property, plant and equipment are set out below:
Land and
buildings
$’000
Plant and
equipment
$’000
Motor
vehicles
$’000
Under
construction
$’000
Total
$’000
10,752
1,053
–
–
(215)
29,324
279
13,351
(52)
(714)
11,590
42,188
1,824
12,809
–
1,867
(17)
3,674
7,916
(26)
3,858
(279)
16,362
25,826
351
36
–
–
(10)
377
309
–
14
(10)
313
64
3,811
44,238
10,049
(13,351)
–
(35)
474
–
–
–
–
–
474
11,417
–
(52)
(974)
54,629
14,942
(26)
5,739
(306)
20,349
34,280
2021
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
58
Annual Report 2021 PWR Holdings Limited Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION C OPERATING ASSETS AND LIABILITIES (continued)
2020
Cost
Opening balance
Additions
Transfers
Disposals
Effect of movements in exchange rates
Land and
buildings
$’000
Plant and
equipment
$’000
Motor
vehicles
$’000
Under
construction
$’000
–
24,844
349
10,674
–
–
78
7
4,521
(247)
199
–
–
–
2
574
7,756
(4,521)
–
2
Total
$’000
25,767
18,437
–
(247)
281
Closing balance
10,752
29,324
351
3,811
44,238
Accumulated depreciation
Opening balance
Disposals
Depreciation
Effect of movements in exchange rates
Closing balance
Net carrying amount
–
–
1,824
–
1,824
8,928
10,125
(231)
2,866
49
12,809
16,515
292
–
15
2
309
42
–
–
–
–
–
3,811
10,417
(231)
4,705
51
14,942
29,296
The land and buildings balances comprise right-of-use assets with carrying value of $7,915,607 (2020: $8,928,000).
The plant and equipment balance as at 30 June 2021 does not include assets with carrying amounts under finance lease
(2020: $229,200). During the year, the Group did not acquire any assets under finance lease (2020: NIL).
Right-of-use assets
The Group leases its office and factory facilities under leases are accounted for using AASB16 Leases. These leases
typically run for between five (5) year and ten (10) years with options to extend.
Right-of-use assets relate to leased properties that do not meet the definition of investment property are presented as
property, plant and equipment (see Note C5).
2021
Right of Use Lease Assets:
Balance at beginning of year
Additions to right-of-use assets
Amortisation charge for the year
Effect of movements in exchange rates
Balance at end of year
2020
Right of Use Lease Assets:
Balance at beginning of year
Additions to right-of-use assets
Amortisation charge for the year
Effect of movements in exchange rates
Balance at end of year
Land and
Buildings
$’000
8,928
1,053
Total
$’000
8,928
1,053
(1,850)
(1,850)
(215)
7,916
Land and
Buildings
$’000
–
10,674
(1,824)
78
8,928
(215)
7,916
Total
$’000
–
10,674
(1,824)
78
8,928
59
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION C OPERATING ASSETS AND LIABILITIES (continued)
C6 Intangible assets
2021
Cost
Accumulated amortisation
2020
Cost
Accumulated amortisation
Reconciliation
2021
Carrying amount at beginning of year
Effect of movements in exchange rates
Balance at the end of the year
2020
Carrying amount at beginning of year
Effect of movements in exchange rates
Balance at the end of the year
Goodwill
$’000
Trademarks
$’000
Total
$’000
3,930
10,985
14,915
–
–
–
3,930
10,985
14,915
4,049
10,985
15,034
–
–
–
4,049
10,985
15,034
4,049
10,985
15,034
(119)
–
(119)
3,930
10,985
14,915
4,018
31
4,049
10,985
15,003
–
31
10,985
15,034
Impairment
For impairment testing, goodwill and trademarks are allocated to the Group’s cash generating units (CGUs) as follows:
PWR Performance Products
PWR North America
2021
$’000
2,122
8,432
2020
$’000
1,904
8,432
10,554
10,336
2021
$’000
1,808
2,553
4,361
2020
$’000
2,145
2,553
4,698
Goodwill
Trademarks
60
Annual Report 2021 PWR Holdings Limited
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION C OPERATING ASSETS AND LIABILITIES (continued)
Impairment
For 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 2022 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 estimated impact of COVID-19 and other factors on
each CGU’s financial performance.
For the PWR North American CGU, the cashflow projections include management’s estimate of the expected growth from
PWR North America’s involvement in OEM programs as a cooling assembly supplier, growth in Emerging Technologies, 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. Given the uncertainties in respect to the
volatility in capital markets.
Management have considered sensitivities to the recoverable amount. The sensitivities applied includes a decrease in
revenue of 10% for FY22 with revenue returning to forecast from FY23 onwards to determine the recoverable amount.
Whilst headroom would reduce, the recoverable amount of each CGU would exceed the base value carrying amount.
Key assumptions used in the estimation of value in use over the five year period including the terminal value were:
PWR Performance Products
Discount rate – pre tax
Terminal value growth rate
Revenue – compound annual growth rate
Average EBITDA margin
PWR North America
Discount rate – pre tax
Terminal value growth rate
Revenue – compound annual growth rate
Average EBITDA margin
2021
%
%
12.0%
2.0%
4.4%
37.4%
11.6%
2.0%
8.1%
15.8%
2020
%
%
13.6%
2.0%
2.0%
35.6%
11.5%
2.0%
5.2%
16.4%
61
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION C OPERATING ASSETS AND LIABILITIES (continued)
C7 Trade and other payables
Trade and other payables are carried at amortised cost.
Trade payables
Other payables
2021
$’000
1,335
3,998
5,333
2020
$’000
2,077
2,693
4,770
C8 Contract liabilities
The contract liabilities primarily relate to the advance consideration received from customers for performance obligations,
for which revenue is recognised over time.
The amount of revenue recognised from performance obligations satisfied (or partially satisfied) in 2021 was $450,000
(2020: nil).
Less than one year
Between one and two years
Between two and five years
Balance at end of year
SECTION D EMPLOYEE BENEFITS
D1 Employee benefits
Current
Annual leave liability
Long service leave liability
Non-current
Long service leave liability
2021
$’000
901
901
450
2,252
2021
$’000
$’000
1,979
647
2,626
2020
$’000
–
–
–
–
2020
$’000
$’000
1,538
512
2,050
306
261
During the year ended 30 June 2021, the Group contributed $1,432,382 (2020: $1,315,553) 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
62
2021
$’000
1,606
98
130
446
37
2,317
2020
$’000
1,990
56
161
91
18
2,316
Annual Report 2021 PWR Holdings Limited Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION D EMPLOYEE BENEFITS (continued)
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 2020 to 30 June 2023.
27,599 (2020: 46,486) 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 2021, 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 $400,899 (2020: $330,000) was recognised during the year and included
in “employee expenses” in the statement of profit or loss and other comprehensive income.
The EPS performance hurdle for the performance rights issued during the year is based on the compound annual growth
rate in EPS. The EPS performance hurdle for performance rights issued in prior years is based on the three year growth in
EPS. At 30 June 2021, there were 54,660 performance rights that had been issued in prior years that are subject to the
three year growth in EPS performance hurdle.
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
2021
2020
TSR
component
EPS
component
TSR
component
EPS
component
$4.33
$6.24
Nil
36%
0.35%
3 Years
1.77%
$6.00
$6.24
Nil
N/A
N/A
3 Years
1.77%
$3.47
$4.78
Nil
37%
0.70%
3 years
2.19%
$4.49
$4.78
Nil
N/A
N/A
3 years
2.19%
Expected volatility has been based on an evaluation of the historical volatility of the Company’s share price prior to the
grant date.
63
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
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
Over provision of tax on Pay Check Program in prior period
Other
2021
$’000
2020
$’000
5,921
(536)
5,385
365
5,750
16,797
5,750
22,547
6,764
(217)
(392)
(460)
55
5,750
5,107
–
5,107
79
5,186
13,049
5,186
18,235
5,470
(182)
(224)
–
122
5,186
64
Annual Report 2021 PWR Holdings Limited
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION E TAXATION (continued)
E2 Tax assets and liabilities
Current tax assets and liabilities
The current tax liability of $2,000,811 (2020: $1,885,681) represents the amount of income tax payable in respect of
current and prior periods to the relevant tax authority.
Net balance
at 1 July
$’000
Recognised
in profit or
loss
$’000
Recognised
through
Equity
$’000
Net
$’000
Deferred tax
assets
$’000
Deferred tax
liabilities
$’000
2021
Property, plant and equipment
(1,444)
Intangible assets
Employee benefits
Accruals
Inventories
Unrealised foreign exchange
Tax losses
Capital raising costs
Other items
Net tax assets/(liabilities)
2020
Property, plant and equipment
Intangible assets
Employee benefits
Accruals
Inventories
Unrealised foreign exchange
Tax losses
Capital raising costs
Other items
Net tax assets/(liabilities)
(747)
784
8
344
(368)
2,293
–
6
876
(1,060)
(766)
681
–
404
(484)
2,198
227
(245)
955
(692)
(19)
213
44
28
67
(929)
–
923
(365)
(384)
19
103
8
(60)
115
95
(227)
250
(79)
–
–
–
–
–
259
–
–
–
259
–
–
–
–
–
–
–
–
–
–
(2,136)
(766)
997
52
372
(42)
1,364
–
929
770
(1,444)
(747)
784
8
344
(368)
2,293
–
6
876
–
–
997
52
490
1
1,364
–
1,337
4,241
–
654
784
8
575
1
2,293
–
390
4,705
(2,136)
(766)
–
–
(118)
(43)
–
–
(408)
(3,471)
(1,444)
(1,401)
–
–
(230)
(369)
–
–
(385)
(3,829)
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.
65
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION F CAPITAL STRUCTURE AND BORROWINGS
F1 Loans and borrowings
Current
Finance lease liability
Right-of-use liability
Non-current
Right-of-use liability
Multi-currency facility loans
2021
$’000
2020
$’000
–
1,789
1,789
6,667
–
6,667
229
1,653
1,882
7,560
8,585
16,145
The multi-currency facility loans were denominated in AUD and GBP. Interest on the AUD loan was charged quarterly at
2.10% pa and the GBP loan was based on GBP 3 month LIBOR rates plus a margin.
Reconciliation of movements in liabilities to cash flows arising from financing activities
Long term borrowings (GBP)
Long term borrowings (AUD)
Lease liabilities
Total liabilities from financing facilities
2020
Carrying
Value
$’000
3,585
5,000
9,213
17,798
Non-cash changes
Foreign
exchange
movements
$’000
Right-of-use
movements
$’000
–
–
(202)
(202)
–
–
1,282
1,282
Cash
flows
$’000
(3,585)
(5,000)
(1,819)
(10,404)
2021
Carrying
Value
$’000
–
–
8,456
8,456
Finance facilities
The terms and conditions of the Group’s finance facilities at 30 June 2021 were as follows:
Facility
Corporate credit card
Finance lease
Multi-currency
facility
Currency
Nominal
interest rate
Maturity
2021
2020
Facility
limit
$’000
Carrying
amount
$’000
Facility
limit
$’000
Carrying
amount
$’000
AUD
USD
Variable
Variable
AUD
5.4%–8.2%
2023
–
2023
100
100
7,500
AUD
Varies
2023
10,000
–
–
–
–
100
100
7,500
–
–
229
20,000
8,585
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.
66
Annual Report 2021 PWR Holdings Limited Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION F CAPITAL STRUCTURE AND BORROWINGS (continued)
Finance leases
Finance lease liabilities are payable as follows:
Future minimum lease
payments
2021
$’000
2020
$’000
Interest
2021
$’000
Present value of minimum
lease payments
2020
$’000
2021
$’000
2020
$’000
Less than one year
Between one and five years
–
–
–
232
–
232
–
–
–
3
–
3
–
–
–
The Group has no operating equipment used in the manufacturing process under finance leases.
F2 Deferred income
Less than one year
Between one and five years
Balance at end of year
Note
I15
2021
$’000
443
1,746
2,189
229
–
229
2020
$’000
208
798
1,006
Government grants
The Group was awarded a government grant during the current period and a retention payment for a grant awarded in the
prior period, together amounting to $1.19m (2020: $1.04m) and has been recognised as deferred income. The grants are
being amortised over the useful life of the equipment in relation to which the grants were provided.
F3 Capital and reserves
Share capital
Ordinary shares
2021
No. of
shares
$’000
2020
No. of
shares
$’000
Balance at beginning of year
100,087,694
26,071 100,000,000
25,921
Issue of shares on vesting of FY17 performance rights
Issue of shares on vesting of FY18 & 19 performance rights
–
92,080
–
152
87,694
–
150
–
Balance at end of year
100,179,774
26,223 100,087,694
26,071
Capital management
The Board aims to maintain a strong capital base 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.
67
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION F CAPITAL STRUCTURE AND BORROWINGS (continued)
F4 Dividends
Dividends recognised by the Company are:
2021
Interim 2021 ordinary
Final 2020 ordinary
Total amount
2020
Interim 2020 ordinary
Final 2019 ordinary
Special 2019
Total amount
Cents
per share
$
Total
amount
$
Franked/
unfranked
Date of
payment
2.80
2,805,034
Franked
26 March 2021
4.00
4,007,191
Franked
6,812,225
25 September
2020
1.90
1,901,666
Franked
27 March 2020
6.90
6,900,000
Franked 19 September 2019
3.00
3,000,000
Franked 19 September 2019
11,801,666
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
942,805
425,869
2021
2020
At 30 June 2021, the franking credits of the Group were 4,185,254 (2020: 3,109,903).
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.
F5 Commitments
Amounts recognised in the Consolidated Profit and Loss
Total Interest on lease liabilities
Amounts recognised in the Consolidated Statement of Cash Flows
Total cash outflow for leases
2021
$’000
2020
$’000
(229)
(266)
2021
$’000
2020
$’000
(1,819)
(1,803)
68
Annual Report 2021 PWR Holdings Limited
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION F CAPITAL STRUCTURE AND BORROWINGS (continued)
Lease extension options
The property leases include extension options exercisable by the Group between three (3) and six (6) months before the
expiry of the non-cancellable contract period. Where practicable, the Group seeks to include extension options in new
leases to provide operational flexibility and certainty. Extension options held are exercisable only by the Group and not by
the lessors.
The Group assesses at the lease commencement dates whether it is reasonably certain to exercise the extension options.
The Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant
changes in circumstances within its control.
Other commitments
At 30 June 2021, the Group had agreed to purchase plant and equipment for $3.3 million (2020: $4.9 million) within
12 months.
SECTION G GROUP STRUCTURE
G1 Parent entity information
As at and throughout the financial year ended 30 June 2021, 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
2021
$’000
8,188
8,188
77
31,976
32,053
–
–
–
2020
$’000
10,896
10,896
50
30,575
30,625
202
–
202
32,053
30,423
26,223
627
5,203
32,053
26,071
524
3,828
30,423
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 2021.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in the notes.
69
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION G GROUP STRUCTURE (continued)
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.
P.W.R 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
2021
%
100
100
100
100
100
2020
%
100
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:
P.W.R Performance Products Pty Ltd
PWR IP Pty Ltd
Both subsidiaries became a party to the Deed on 18 May 2017.
70
Annual Report 2021 PWR Holdings Limited Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
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 2021 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
Retained earnings at beginning of year
Transfers to and from reserves
Dividends recognised during the year
Retained earnings at end of year
2021
$’000
52,127
2,764
(8,696)
(22,233)
(378)
(2,511)
21,073
(4,290)
16,783
1,580
(1,917)
(337)
16,446
(4,833)
11,613
11,613
25,060
(13)
(6,812)
2020
$’000
45,179
2,350
(6,889)
(19,178)
(355)
(2,459)
18,648
(3,119)
15,529
1,831
(1,791)
40
15,569
(4,628)
10,941
10,941
26,962
(1,041)
(11,802)
29,848
25,060
71
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
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
Deferred income
Tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Loans and borrowings
Deferred income
Deferred tax liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
72
2021
$’000
2020
$’000
9,714
8,962
4,172
–
9,661
9,940
3,988
–
22,848
23,589
26,213
11,751
5,990
7,142
3,486
54,582
77,430
2,503
1,209
2,451
1,313
1,003
124
8,603
4,282
2,930
3,947
306
11,465
20,068
57,362
26,223
1,291
29,848
57,362
21,459
11,751
12,240
7,142
337
52,929
76,518
2,432
1,438
1,895
208
1,051
92
7,116
14,072
798
1,511
262
16,643
23,759
52,759
26,071
1,628
25,060
52,759
Annual Report 2021 PWR Holdings Limited Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
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
2021
$’000
19,857
9,341
29,198
2020
$’000
20,805
6,932
27,737
Cash and cash equivalents
The Group held cash and cash equivalents of $19,857,387 at 30 June 2021 (2020: $20,804,705), 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.
73
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
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
2021
$’000
2,495
5,152
1,694
9,341
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
8,363
830
63
85
9,341
–
9,341
2020
$’000
975
4,328
1,629
6,932
5,820
1,059
6
47
6,932
–
6,932
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. Management’s analysis of customer credit risk has
considered the estimated impact of COVID-19 on the economic environment and its assessment of expected credit losses.
No impairment losses were recognised in respect of trade and other receivables during the year (2020: 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$100,000 corporate credit card facility; and
– USD$100,000 corporate credit card facility.
74
Annual Report 2021 PWR Holdings Limited Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
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.
2021
Trade and other payables
Foreign currency loan (GBP)
Local currency loan (AUD)
Right of use liabilities
Finance lease liabilities
2020
Trade and other payables
Foreign currency loan
Local currency loan (AUD)
Right of use liabilities
Finance lease liabilities
Note
Carrying
amount
$’000
Contractual cash flows
Total
$’000
12 months
$’000
1-5 years
$’000
C7
F1
F1
F1
F1
C7
F1
F1
F1
F1
5,333
(5,333)
(5,333)
–
–
–
–
–
–
–
–
–
8,456
(8,456)
(1,789)
(6,667)
–
–
–
–
13,789
(13,789)
(7,122)
(6,667)
4,770
3,585
5,000
9,213
229
(4,770)
(3,672)
(5,105)
(9,213)
(232)
(4,770)
(87)
(105)
(1,653)
(232)
–
(3,585)
(5,000)
(7,560)
–
22,244
(22,992)
(6,847)
(16,145)
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 2021, the Group had entered into participating forward contracts to manage its
exposure to sales denominated in GBP. These contracts, which settle monthly until 30 December 2021, have a total
notional amount of £3.9 million (2020: £1.15 million) and have been accounted for at fair value through the profit and loss.
The fair value at year end was a liability of $54,240 (2020: $105,123 asset).
During the year ended 30 June 2021, the Group recognised $202,892 in realised gains (2020: $172,362 gain) and
$563,280 in unrealised losses on derivatives (2020: $288,506 loss). This has been included in finance income or costs in
the income statement.
75
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION H OTHER INFORMATION (continued)
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
Note
C2
C7
F1
30 June 2021
30 June 2020
AUD
$’000
2,574
(625)
GBP
£’000
2,722
(254)
USD
$’000
1,302
(419)
AUD
$’000
1,145
(682)
GBP
£’000
2,255
(305)
USD
$’000
1,193
(476)
–
–
–
(5,000)
(2,000)
–
1,949
2,468
883
(4,537)
(50)
717
–
3,900
–
–
1,150
–
Sensitivity analysis
At 30th June, exchange rates used to translate the above were 0.5426 to the GBP and 0.7512 to the USD (2020: 0.5579
to the GBP and 0.6854 to the USD). 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 2020, using consistent foreign exchange rate variances, as indicated below.
Profit or loss (net of tax)
Equity (net of tax)
Strengthening
$’000
Weakening
$’000
Strengthening
$’000
Weakening
$’000
(318)
(82)
6
(73)
289
75
(6)
67
(318)
(82)
6
(73)
289
75
(6)
67
30 June 2021
GBP (10% movement)
USD (10% movement)
30 June 2020
GBP (10% movement)
USD (10% movement)
76
Annual Report 2021 PWR Holdings Limited Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION H OTHER INFORMATION (continued)
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
Note
2021
$’000
–
–
2020
$’000
(229)
(229)
C1
F1
19,857
20,805
–
19,857
(8,585)
12,220
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.
30 June 2021
Variable rate instruments
Cash flow sensitivity (net)
30 June 2020
Variable rate instruments
Cash flow sensitivity (net)
Profit or loss (net of tax)
Equity (net of tax)
100bp
increase
$’000
100bp
decrease
$’000
100bp
increase
$’000
100bp
decrease
$’000
139
139
85
85
(139)
(139)
(85)
(85)
139
139
85
85
(139)
(139)
(85)
(85)
Fair values
The fair values of the Group’s financial assets and liabilities approximate their carrying amounts recognised in the
statement of financial position.
77
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION H OTHER INFORMATION (continued)
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)
2021
$’000
2020
$’000
2021
$’000
2020
$’000
Bayswater Road Radiators Pty Ltd(i)
Sales of goods
Triple Eight Race Engineering Pty Ltd(ii)
Sales of goods
51
5
45
2
6
–
9
–
(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 and review of financial statements
Accountability GB
2021
$
2020
$
143,500
144,000
Audit and review of financial statements – controlled entities
15,837
14,075
Other services
Auditors of the Group - KPMG
IT Advisory services
21,450
68,407
H4 Subsequent events
The Board declared a fully franked final ordinary dividend of 6.00 cents per share. The financial effect of the 2021 declared
final dividend has not been brought to account in the consolidated financial statements for the year ended 30 June 2021.
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.
78
Annual Report 2021 PWR Holdings Limited
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION H OTHER INFORMATION (continued)
H5 New accounting standards
Changes in accounting policies -new standards and interpretations adopted
The accounting policies applied in these financial statements are the same as those applied in the Group’s consolidated
financial statements as at and for the year ended 30 June 2020. A number of other new standards are effective from
1 July 2020 but they do not have a material effect on the Group’s financial statements.
In April 2021, the International Financial Reporting Standards Interpretation Committee (IFRIC) issued a final agenda
decision, Configuration or Customisation Costs in a Cloud Computing Arrangement. The decision discusses whether
configuration or customisation expenditure relating to Software-as-a-Service (SaaS) arrangements is able to be
recognised as an intangible asset and if not, over what time period the expenditure is expensed. The Group has adopted
this agenda decision within the financial statements.
The Group has not extensively utilised SaaS arrangements and the historical accounting policy has been to expense all such
costs in the profit or loss over the period in which the service is received. The adoption of this agenda decision has not
impacted the financial statements of the Group.
New Standards and Interpretations Not Yet Adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2021
reporting and have not been early adopted by the Group.
The most significant of these to the Group are AASB 2020-3 Amendments to Australian Accounting Standards –
Annual Improvements and Other Amendments, and AASB 2020-1 Amendments to Australian Accounting Standards –
Classification of Liabilities as Current or Non-current.
The Group has not yet considered the estimated impact that these Amendments to Australian Accounting Standards will
have on its consolidated financial statements.
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
Intangible assets and goodwill
9.
10. Share capital
11. Provisions
12. Leases
13. Financial instruments
14. Fair value measurement
15. Government Grants
79
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION I SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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 transaction or balance 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 consolidated 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 (AUD) 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.
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.
80
Annual Report 2021 PWR Holdings Limited Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION I SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
6 Income Tax
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.
In determining the amount of current and deferred tax the Group considers 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.
81
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION I SIGNIFICANT ACCOUNTING POLICIES (continued)
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
2021
2020
2-10 years
2-10 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.
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.
82
Annual Report 2021 PWR Holdings Limited Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION I SIGNIFICANT ACCOUNTING POLICIES (continued)
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 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.
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 most of the liability over the next year.
83
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION I SIGNIFICANT ACCOUNTING POLICIES (continued)
12 Leases
Leased assets
Assets held by the Group under finance 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. After initial recognition, the assets are accounted for in
accordance with the accounting policy applicable to that asset.
Assets held under other leases are recognised in the Group’s statement of financial position under AASB16. These assets
are classified as right-of-use assets and are presented as property, plant and equipment. Further information about the
right-of-use assets is included in Note C5 – Property, Plant and Equipment.
AASB 16 Leases
The Group, as a lessee, assesses whether a contract is or contains a lease. Under AASB 16, a contract is, or contains, a lease
if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.
The Group recognises right of use assets and lease liabilities for most leases – i.e. these leases are on-balance sheet.
However, the Group has elected not to recognise right of use assets and lease liabilities for some leases of low-value
assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over
the lease term.
The Group recognises a right of use asset and a right of use lease liability at the lease commencement date. The right
of use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any
lease incentives received.
The right of use asset is subsequently depreciated using the straight-line and/or diminishing value basis from the
commencement date to the end of the lease term. The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that
rate cannot be readily determined, the Group’s incremental borrowing rate. The Group uses its incremental borrowing rate
as the discount rate.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments
made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change
in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the
assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is
reasonably certain not to be exercised.
Where applicable, the Group has applied some judgement to determine the lease term for some lease contracts which
include renewal options or terminations. The assessment of whether the Group is reasonably certain to exercise such
options impacts the lease term, which affects the amount of lease liabilities and right-of-use asset.
84
Annual Report 2021 PWR Holdings Limited Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
SECTION I SIGNIFICANT ACCOUNTING POLICIES (continued)
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. After 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. After 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.
Derivatives are recognised initially at fair value. Any directly attributable transaction costs are recognised in profit or loss
as they are incurred. After initial recognition, derivatives are measured at fair value, and changes therein are generally
recognised in profit or loss.
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.
Several 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 I13 – financial instruments
– Note D3 – share based payments.
15 Government Grants
Government grants related to assets are initially recognised as deferred income at fair value when received. They are then
recognised in profit or loss as other income on a systematic basis over the useful life of the asset to which the grant relates.
Grants that compensate the Group for expenses incurred are recognised in profit or loss on a systematic basis in the
periods in which the expenses are recognised.
85
Directors’ Declaration
for the year ended 30 June 2021
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 pages 49 to 85 and the Remuneration report on
pages 32 to 48 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 2021 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 2021.
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
19th August 2021
86
Annual Report 2021 PWR Holdings Limited
Independent Auditor’s Report to the
Members of PWR Holdings Limited
for the year ended 30 June 2021
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 2021 and of
its financial performance for the year ended
on that date; and
•
complying with Australian Accounting
Standards and the Corporations Regulations
2001.
The Financial Report comprises:
• Consolidated statement of financial
position as at 30 June 2021;
• 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.
Basis for opinion
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 (including Independence Standards) (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
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.
This matter was 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.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights
reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the
KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
87
87
Independent Auditor’s Report to the
Members of PWR Holdings Limited
for the year ended 30 June 2021
Valuation of goodwill and intangible assets $14.9m
Refer to Note C6 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Our procedures included:
• We considered the appropriateness of the
value in use methods applied by the Group
to perform the annual impairment testing of
goodwill and intangible assets against the
requirements of the accounting standards.
• We, along with our valuation specialists,
assessed the integrity of the value in use
models used, including the accuracy of the
underlying calculation formulas.
• We compared the forecast cash flows
contained in the value in use models to
Board approved budgets and the Group’s
business plans.
• We assessed the accuracy of previous
Group budgets to inform our evaluation
of forecasts incorporated in the
models.
• We considered the sensitivity of the models
by varying key assumptions, such as
forecast cash flows, forecast growth rates
and discount rates, within a reasonably
possible range. We did this 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 rate assumptions
including PWR NA’s ability to convert OEM and
emerging technology opportunities, and market
uncertainties associated with COVID-19. We
used our knowledge of the Group, their past
performance and our understanding of factors
impacting the business and customers in which
the CGUs operate in. We used the Group’s
recent performance to inform our assessment
of the Group’s recovery from COVID-19.
• 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 Group, CGUs and the
industry it operates in.
• We assessed the disclosures in the financial
report using our understanding obtained from
our testing and against the requirements of the
accounting standards.
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
17% of total assets).
We focused on the significant forward-looking
assumptions the Group applied in their value in
use models, including:
•
forecast cash flows – the Group
experienced business disruption as a result
of COVID-19. This condition, and the
uncertainty of recurrence, increases the risk
of inaccurate forecasts. We focused on the
expected rate of recovery from COVID-19
for the Group when assessing the feasibility
of the Group’s forecast cash flows.
•
forecast growth rates – in addition to the
uncertainty described above, the PWR North
America (PWR NA) Cash Generating Unit
(CGU) includes the Group’s estimate of the
expected growth from PWR NA’s
involvement in original equipment
manufacture (OEM) programs and emerging
technologies. The Group’s model is
sensitive to changes, and negative changes
to these assumptions reduces available
headroom. This drives additional audit effort
specific to the feasibility of forecast growth
rates.
• discount rates – these are complicated by
nature and vary according to the conditions
and environment the specific CGU is subject
to from time to time.
The Group uses complex models in performing
their 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.
88
88
Annual Report 2021 PWR Holdings Limited
Independent Auditor’s Report to the
Members of PWR Holdings Limited
for the year ended 30 June 2021
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.
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 and whether the use of
the going concern basis of accounting is appropriate. 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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
89
89
Independent Auditor’s Report to the
Members of PWR Holdings Limited
for the year ended 30 June 2021
Report on the audit of the Financial Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of PWR
Holdings Limited for the year ended 30 June
2021 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 36 to 48 of the Directors’ Report
for the year ended 30 June 2021.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit
conducted in accordance with Australian Auditing
Standards.
KPMG
Erin Neville-Stanley
Partner
Brisbane
19 August 2021
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90
Annual Report 2021 PWR Holdings Limited
ASX Additional Information
Shareholder Information at 27 July 2021
DISTRIBUTION OF EQUITY SECURITY HOLDERS
The following table shows the distribution of PWR shareholders by size of shareholding and number of shareholders and
shares at 27 July 2021.
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Number of
Ordinary
shares
Number of
Security
Holders
645,874
4,785,226
4,095,651
8,215,051
82,437,972
100,179,774
1,489
1,747
554
355
23
4,168
85 shareholders hold less than a marketable parcel of ordinary shares of 69 shares as at 27 July 2021.
TWENTY LARGEST SHAREHOLDERS
The following table sets out the 20 largest shareholders of ordinary shares listed on our shareholder register and the
details of their shareholding as at 27 July 2021.
Name
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
3 KPW PROPERTY HOLDINGS PTY LTD
4 WAGON WEEL CO PTY LTD
5 CITICORP NOMINEES PTY LIMITED
6 MAMLEC PTY LTD
7 ANACACIA PTY LTD
8 NATIONAL NOMINEES LIMITED
9 BNP PARIBAS NOMINEES PTY LTD
10 UBS NOMINEES PTY LTD
11 NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT>
12 TRUEBELL CAPITAL PTY LTD
13 NETWEALTH INVESTMENTS LIMITED
14 BNP PARIBAS NOMS PTY LTD
15 BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
16 WASK MANAGEMENT PTY LTD
17 WEELY'S PTY LTD
18 UQ ENDOWMENT FUND LTD
19 CITICORP NOMINEES PTY LIMITED
20 MS DESLEA MARY SNEDDON
Top 20 holders of ordinary fully paid shares
Total remaining holders balance
Number of
ordinary
shares held
Percentage
of capital
held %
20,295,471
19,443,640
10,246,403
10,000,000
7,784,020
3,325,000
2,335,438
1,973,424
1,738,132
1,095,080
836,591
633,125
434,352
426,557
414,123
364,575
217,181
160,000
159,802
150,250
20.26
19.41
10.23
9.98
7.77
3.32
2.33
1.97
1.74
1.09
0.84
0.63
0.43
0.43
0.41
0.36
0.22
0.16
0.16
0.15
82,033,164
18,146,610
81.08
18.92
91
ASX Additional Information
Shareholder Information at 27 July 2021
SUBSTANTIAL SHAREHOLDERS
At 27 July 2021, PWR Holdings Limited had 6 substantial shareholders who, together with their associates, hold five per
cent or more of the voting rights in PWR, as notified to PWR under the Australian Corporations Act.
Shareholder
KPW Property Holdings Pty Ltd
Wagon Weel Co Pty Ltd
Perennial Value Management Ltd
FIL Limited
Perpetual Limited
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
7
307,752
VOTING RIGHTS
Number
10,246,403
10,000,000
6,109,243
6,092,515
5,358,768
5,255,497
Ordinary shares
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.
Securities Exchange
The Company is listed on the Australian Securities Exchange. The Home exchange is Sydney.
Ticker Code
ASX:PWH
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.
92
Annual Report 2021 PWR Holdings Limited Corporate Directory
PWR HOLDINGS LIMITED
ABN 85 105 326 850
WEBSITE
www.pwr.com.au
DIRECTORS
Teresa Handicott
Kees Weel
Jeffrey Forbes
Roland Dane
COMPANY SECRETARY
Lisa Dalton
PRINCIPAL REGISTERED OFFICE
LOCATION OF SHARE REGISTRY
Computershare Investor Services Pty Ltd
Level 1, 200 Mary Street
Brisbane, 4000
Queensland
ASX TICKER CODE:
PWH
PWR Holdings Limited
103 Lahrs Road
Ormeau, 4208
Queensland
Phone: 07 5547 1600
07 5547 1666
Fax:
info@pwr.com.au
Email:
POSTAL ADDRESS
PO Box 6425
Yatala QLD 4207
NORTH AMERICA
PWR North America
(C&R Racing)
6950 Guion Road
Indianapolis, IN 46268
USA
Phone: +1 317-293-4100
+1 317-293-4110
Fax:
info@crracing.com
Email:
EUROPE
PWR Europe
1141 Silverstone Park, Buckingham Road
Silverstone, Northants, NN12 8FU
United Kingdom
Enquiries
Phone: +44 (0) 1327 362940
+44 (0) 1327 362960
Fax:
Email: sales@pwreurope.com
93