More annual reports from Quickstep Holdings Limited:
2023 ReportPeers and competitors of Quickstep Holdings Limited:
Chemring GroupE
R
U
T
U
E F
H
R T
Y W A I T F O
3 W H
1
0
T 2
R
O
P
E
L R
A
U
N
N
A
CORPORATE
DIRECTORY
CONTENTS
KEY MESSAGES
Directors
Mr Tony Quick
Non-Executive Chairman
Mr Philippe Marie Odouard
Managing Director
Mr Nigel Ian Ampherlaw
Non-Executive Director
Mr Peter Chapman Cook
Non-Executive Director
Mr Bruce Griffiths
Non-Executive Director
Mr Mark Bernard Jenkins
Non-Executive Director
Air Marshal Errol John McCormack
(Ret’d) AO
Non-Executive Director
Mr David Singleton
Non-Executive Director
Company Secretary
Mr Jaime Pinto
Principal Office
361 Milperra Road
Bankstown Airport
NSW 2200
Australia
T +61 2 9774 0300
F +61 2 9771 0256
E info@quickstep.com.au
www.quickstep.com.au
Registered Office
Level 2, 160 Pitt Street
Sydney, NSW 2000 Australia
Auditors
KPMG
Chartered Accountants
10 Shelley Street
Sydney, NSW 2000 Australia
Solicitors
Clifford Chance
Level 7, 190 St Georges Terrace
Perth, WA 6000 Australia
Patent Attorney
Watermark
Building 1, Binary Centre
Level 3, 3 Richardson Place
North Ryde, NSW 2113 Australia
Share Registry
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross, WA 6153 Australia
Stock Exchange
Australian Securities Exchange Limited
Exchange Centre
20 Bridge Street
Sydney, NSW 2000 Australia
ASX Code: QHL
Milestones
Chairman’s Report
Managing Directors’ Report
Resin Spray Transfer
Automotive Opportunity
4
6
8
10
12
Aerospace and Defence Capability 13
Financial Report
– Directors’ Report
15
16
– Corporate Governance Statement 35
– Consolidated Statement
of Comprehensive Income
– Consolidated Statement
of Financial Position
– Consolidated Statement
of Change in Equity
– Consolidated Statement
of Cash Flows
– Notes to and forming part
of the Financial Statements
– Directors’ Declaration
– Auditor’s Independence
Declaration
– Independent Auditor’s Report
Shareholder Information
40
41
42
44
45
84
85
86
88
To listen live to the Managing Directors’ Report during Quickstep’s AGM at 3.15pm on 21 November 2013 and to replay thereafter,
go to http://www.brr.com.au/event/117237
Join over 1,500 Quickstep followers and receive our ASX releases.
info@quickstep.com.au www.quickstep.com.au facebook.com/quickstep.technologies twitter.com/QuickstepTech
Commenced delivery of aerospace
parts from Bankstown and achieved
$6.8 million in sales and revenue
for the year
Continued
strong
growth
expected in
FY2014
Firm order book
now more than
$30 million
The only Australian
listed company with
direct
exposure to the
fast-growing carbon-
fibre market
2
2
Quickstep Holdings Limited. Annual Report 2013
Quickstep Holdings Limited. Annual Report 2013
3
3
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 MILESTONES
Successful
transition
from Coogee to Bankstown
whist maintaining the build-
up in JSF parts delivery
Significant
orders received
for Joint Strike Fighter carbon-
fibre composite parts from
the world’s largest military
aerospace program
First Quickstep Process
sale to leading satellite launcher
part manufacturer for the production of large
carbon-fibre composite shielding, and taking Quickstep into the
space market
Delivered the
first flying part
for the Joint Strike Fighter
manufactured at Quickstep’s
state-of-the-art facility at
Bankstown Airport
Secured largest purchase order
to date, valued at
$12 million,
for Lockheed Martin
C – 130J carbon-fibre
composite wing flaps contract
Completed all qualification
tasks for Lockheed Martin’s
engineering testing program,
receiving
‘qualified
producer status’
in July 2013
Achieved technical success
developing Quickstep’s
resin spray
transfer (RST)
technology for high-volume,
low-cost automotive production
and enabling spectacular finish
Quickstep continued to lead a
joint
development
project with
Audi and supported
by the German government
to manufacture carbon-fibre
composite parts for
the automotive industry
4
4
Quickstep Holdings Limited. Annual Report 2013
Quickstep Holdings Limited. Annual Report 2013
5
5
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013
CHAIRMAN’S REPORT
“Quickstep is a
company which looks
to the future, and we
are today the only
ASX-listed company
with direct exposure
to the multibillion
dollar global
advanced carbon-fibre
composites market”
FY2013 was a year of outstanding
achievement for Quickstep, as we
consolidated the progress of the
previous year and achieved new and
significant successes. We moved our
operations from Perth to Sydney,
achieved the necessary qualifications
and secured purchase orders related
to prestigious aerospace and
defence contracts. Furthermore we
demonstrated the commercial potential
of our patented technology.
Quickstep is a company which looks to the
future, and we are today the only ASX-
listed company with direct exposure to the
multibillion dollar global advanced carbon-
fibre composites market. Transport and other
industries are changing as the increasing
cost of fuel and taxes on carbon dioxide
emissions drive a shift towards the use of
strong lightweight composites. Our specialist
skills and technologies provide us with a
substantial market opportunity as we seek
to consolidate a position in the global supply
chains of both aerospace and defence and
automotive markets.
The aerospace and defence industry
is valued at more than US$700 billion
annually, and Quickstep is delighted to
have as its flagship contract the Joint Strike
Fighter program which is the world’s largest
military aerospace program. We have
also been selected, against international
competition, to supply C-130J carbon-fibre
composite wing flaps to Lockheed Martin.
We continued to meet qualification and
delivery milestones for these programs
during the year.
Legislation is forcing manufacturers to meet
new emission standards. Lightening vehicles
is a critical way to achieve this, and carbon-
fibre composite materials are destined to
play a major role. More than 80 million
new vehicles were delivered worldwide in
2012, and carbon-fibre passenger cars will
be launched this year. Our initial marketing
of Quickstep’s patented resin spray
transfer (RST) technology to automotive
manufacturers has been very well received.
RST provides a carbon-fibre composite
solution capable of manufacturing parts
at low cost, high speed, and importantly,
it enables the finish the most demanding
automotive companies require.
Your company, therefore, has excellent
prospects for rapid growth as we continue
to pursue our commercialisation strategies.
In order to fund our path of substantial
growth, we raised more than $12.7 million
net after balance date. This included a
$5.6 million institutional placement in
August/September 2013 and we were
pleased by strong shareholder support
for our subsequent share purchase plan
which raised $7.1 million. This ensures a
strong cash position for your company as it
continues its sales expansion in the world’s
major markets.
Having taken over as chairman in February
2013, I would like to thank Mark Jenkins
for his previous six years as chairman.
While Mark Jenkins continues as an
independent non-executive director of
the company, two long serving directors
– Deryck Graham Jnr and Dale Brosius –
retired as directors, and I would also like
to thank them for their services.
We continued renewal of the board
and welcomed Bruce Griffiths as a
non-executive director of the company,
following his highly successful career
with Futuris Automotive, and in July
2013 Nigel Ampherlaw, an experienced
director and chartered accountant, also
joined Quickstep’s board. Following the
retirement of David Wills, all of the board
would like to thank David for his 3 years
of contribution to the Company.
In my first year as chairman, I would
like to recognise the ongoing support
of our shareholders, customers and my
colleagues on the board. I also thank
Philippe Odouard, our Managing Director,
the executive team and all Quickstep staff
for their hard work and dedication.
Your company has bright prospects to
increase sales in the year ahead. We have
innovative technologies, skilled staff, and
a strong track record of delivery. Today,
Quickstep is Australia’s largest independent
high grade carbon-fibre composites
company. We have demonstrated capacity
to win competitive long-term defence
sector contracts, and a tremendous
opportunity to license our patented RST
technology to the automotive market. I am
confident that the strength of the team will
enable Quickstep to successfully pursue
growth in FY2014.
TONY QUICK
Chairman
6
6
Quickstep Holdings Limited. Annual Report 2013
Quickstep Holdings Limited. Annual Report 2013
7
7
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 MANAGING
DIRECTOR’S REPORT
I am pleased to report
that this year Quickstep
has continued to grow
and make substantial
progress towards
becoming a leading
supplier of carbon-
fibre composite
parts and processes
for Aerospace and
Automotive.
We achieved a five-fold increase
in sales revenue to $2.6 million in
FY 2013, compared to $0.5 million
in the previous year. We also generated
a combined sales and revenue of
$6.8 million for the year 2012/13.
This demonstrated the strength of
our increasing sales momentum from
major military aerospace manufacturing
contracts. Operating cash receipts for
FY2013 were $16.4 million compared
to $0.9 million in FY2012, indicating the
company’s strong focus on cash flow as
well as sound cash management.
Our sales momentum is accelerating, and
based on contracts secured before the end
of August 2013, our firm order book now
stands in excess of $30 million, mostly to be
delivered before the end of December 2014.
We continued to demonstrate strong
progress against our strategy by focusing
on two revenue-generating components:
– Winning and delivering manufacturing
contracts using traditional manufacturing
technologies, such as autoclaves,
and “next generation” technologies,
such as our patented Quickstep Process;
–
Licensing the Quickstep Process and
associated technologies, such as our
resin spray transfer (RST) system,
to the aerospace, defence and
automotive industries.
8
8
Quickstep Holdings Limited. Annual Report 2013
Quickstep’s aerospace and
defence contracts ramp up
A highlight of the year was the on-time
delivery of our first Joint Strike Fighter
parts to our principal F-35 partner,
Northrop Grumman, from our new facility
at Bankstown Airport. This program is
ramping up, with 140 JSF aircraft complete
or under construction. Our JSF agreements
are expected to generate up to $700 million
over the next 20 years.
During the year, we transferred production
from our Western Australian plant to
Sydney and closed the Perth facility.
Purchase orders steadily increased and
firm orders covering all three groups of
parts were approximately $7 million when
Quickstep delivered its 100th carbon-fibre
composite manufactured part in July 2013.
We received our first Lockheed Martin
C-130J Super Hercules production purchase
order, valued at $12 million, in September
2012. This covered the manufacture and
delivery of the first sets of carbon-fibre
wing flaps for 24 aircraft. Subsequently,
we completed all qualification tasks and
received qualified producer status in July
2013, which paved the way for delivery of
parts to begin. This contract, won against
international competition, is expected
to generate revenue of between
$75 million – $100 million over the next
five years, and deliveries are expected to
begin during FY2014.
Commercialising Quickstep’s
technologies
Quickstep is also focused on developing
licensing opportunities in the global
automotive sector, where we aim to drive
revenue through the use of our resins,
licensing fees and sale of plant to component
manufacturers. In FY2013 we finalised
development of new technologies which
are poised to revolutionise the industry.
The Quickstep Process is an innovative
system that uses a liquid to cure carbon-
fibre parts much faster than traditional
autoclave methods. When used with our
RST technology, we can produce carbon-
fibre composite parts straight out of the
mould enabling spectacular finishes
– ideal for the high-volume, high-
technology automotive industry.
Development of this technology was
partially funded by a $2.6 million
government grant.
Quickstep’s RST offers a quantum
leap forward in manufacturing strong,
lightweight carbon-fibre car parts that can
dramatically reduce finishing time, making
advanced composites a competitive
replacement for metal automotive body
parts. We have demonstrated our products
and a compelling business case to a
number of automotive manufacturers,
and negotiations are continuing.
We are also continuing to lead the PRESCHE
joint development project to manufacture
larger series of carbon-fibre composite parts
for the automotive industry. This project
with Audi is supported by the German
government and aims to reduce the
production costs of existing processes by
approximately one-third using Quickstep’s
carbon-fibre technology.
First Quickstep Process sale
We were delighted to announce our
first sale of the Quickstep Process in July
2013 to the Russian company, ORPE
Technologiya, which will produce large
carbon-fibre shield for satellite launching
using our technology. This contract is
valued at €4.2 million (AUD $6 million),
opening up the satellite and a number
of new markets to Quickstep. Importantly,
it demonstrates our capability to produce
large parts cured in a single shot. In the
past year, we have been working
to demonstrate how our technology
can be used to build wing skins with
integrated stiffeners for commercial
aircraft. This further application could
open up the commercial aircraft market
for Quickstep, as the next generation
of aeroplanes will transition from using
aluminium to primary carbon-fibre parts.
Outlook
We anticipate strong sales growth as
production for both the Joint Strike Fighter
and C-130J Hercules programs increase,
and expect sales to exceed $15 million in
FY2014, a six time increase compared to
last year. Based on our firm order book
and scheduled delivery dates, Quickstep
expects to become cash flow positive
during FY2015. With our recent success
in raising over $12.7 million of equity on
the market, we have a strong cash basis to
deliver this aggressive continuing growth.
Our performance for the Joint Strike Fighter
program has earned Quickstep a positive
reputation for high quality and delivery.
We continue to bid for new aerospace and
defence work, and we are well positioned
to capitalise on opportunities.
Quickstep’s resin spray technology offers
a unique technology for the automotive
sector, and we believe we have significant
commercial opportunities to licence RST
and sell plants and associated services.
I would like to thank our existing
shareholders for their confidence in the
future of the company and their support
during the SPP. I would like to welcome
our new shareholders, from Australia
and more and more from overseas who
invested in Quickstep through
the placement or the market.
In closing, I would like to acknowledge the
hard work and dedication of our strong
team of executives and staff that manage
the company’s rapid expansion and
commissioning of manufacturing plants,
delivering this massive growth in a short
period of time.
Yours sincerely,
PHILIPPE ODOUARD
Managing Director
Quickstep Holdings Limited. Annual Report 2013
9
9
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 QUICKSTEP’S
RST
Quickstep’s mini-plant automates
production using the company’s
breakthrough Quickstep Process and
resin spray transfer (RST) technology
to make carbon-fibre components
in minutes. Bespoke configurations
enable tailoring for automotive or
aerospace and defence purposes
and for manufacturing small or
large sized parts.
The Quickstep Process transfers heat 25
times faster than the autoclave to mould
carbon-fibre composites more efficiently.
This high-speed system facilitates mass
production and reduces capital costs.
The spectacular finish supported by
Quickstep’s RST technology is a carbon-
fibre industry first, eliminating the need
for labour-intensive bogging and sanding.
10
10
Quickstep Holdings Limited. Annual Report 2013
Quickstep Holdings Limited. Annual Report 2013
11
11
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 QUICKSTEP’S AUTOMOTIVE
OPPORTUNITY
QUICKSTEP’S AEROSPACE
AND DEFENCE CAPABILITY
of the sector’s leading organisations
including Airbus, BAE Systems, EADS,
Eurocopter, Lockheed Martin, Northrop
Grumman and Sikorsky.
As Australia’s largest independent carbon-
fibre composites manufacturer, we have
a tremendous opportunity to consolidate
our position in the growing global
supply chain.
Quickstep has contracts in place with
several of the world’s largest and most
recognised aerospace companies.
We entered the global defence sector
in 2009 with a cornerstone agreement
to supply centre fuselage carbon-fibre
components for the F-35 Lightning II
Joint Strike Fighter program, which is
the world’s largest military contract.
Nine nations – Australia, the United States,
United Kingdom, Italy, the Netherlands,
Turkey, Canada, Denmark, and Norway –
partnered to develop the JSF, and Israel and
Singapore have agreed to join the program
as security cooperation participants.
Quickstep will manufacture 21 different
parts for the JSF program for Northrop
Grumman over the next twenty years.
This work represents a significant
proportion of our current forward order
book, and Quickstep has earned a positive
reputation for on-time performance
through this flagship contract. We have,
therefore, a strong opportunity to establish
a position in the global aerospace and
defence supply chain, supported by the
Australian government’s defence industry
participation program. Military contracts
have very high barriers to entry and our
high value added specialised focus ensures
protection from competition in low-labour
cost countries.
We have already capitalised on this
performance by winning, against global
competition, a contract to manufacture
wing flaps for Lockheed Martin’s C-130J
military transport aircraft. Fifteen countries
have already selected the C-130J to
meet their airlift requirements. Quickstep
services these large-scale, long-term
contracts through our new state-of-
the-art carbon-fibre composites facility
at Bankstown Airport, which also has
capacity for expansion.
Quickstep is actively bidding for further
contracts with a number of other
potential clients. Our aerospace and
defence partners to date include some
We entered the global defence sector
in 2009 with a cornerstone agreement
to supply centre fuselage carbon-fibre
components for the F-35 Lightning II
Joint Strike Fighter program, which is
the world’s largest military contract.
Quickstep is focused on developing
licensing opportunities for its
technologies in the global automotive
sector. Over the decade the demand
for carbon-fibre is expected to increase
tenfold and the automotive sector
is expected to become one of the
largest users of carbon-fibre
composite technology.
The industry’s shift to composites is being
driven by legislation in Europe and the
United States to reduce carbon dioxide
emissions. Carbon-fibre can halve the
weight of components compared to steel,
and is just as strong. We believe that our
resin spray transfer (RST) technology is
poised to revolutionise the industry.
It allows strong components to be made in
minutes and at very low cost compared to
traditional, more capital intensive methods.
In fact, RST meets the industry’s ‘holy grail’
of producing carbon-fibre parts at low
cost, high speed and with a spectacular
finish. Until RST, no composite solution
met all three objectives. Its capacity to
mass-produce car parts with a high-quality
finish direct from the mould is a powerful
leap forward compared to prior carbon-
fibre processes.
Quickstep has embarked on a program
to provide demonstration parts and
business cases to leading global
automotive manufacturers.
This has been well received and luxury
‘supercar’ manufacturers have proven the
value of RST in their extreme environmental
ageing tests. Negotiations are continuing,
and we are also pursuing large-volume
production tests in cooperation with
industrial partners in Germany, including
Audi. Our development facilities in
Australia, Germany and the USA, place us
at the forefront of carbon-fibre technology.
Additionally, we have commissioned our
first production plant using the patented
Quickstep Process technology.
This plant, located at Bankstown Airport,
fully automates production of lightweight
carbon-fibre composite car panels.
These plants can be replicated and
sold as separate units, with specialised
resins and services also providing revenue
for Quickstep.
More than 80 million new vehicles were
produced worldwide in 2012, indicating
a significant automotive industry market
for Quickstep.
Carbon-fibre can
halve the weight of
components compared
to steel, and is just
as strong.
12
12 Quickstep Holdings Limited. Annual Report 2013
Quickstep Holdings Limited. Annual Report 2013 13
13
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 FINANCIAL REPORT
FOR THE YEAR END 30 JUNE 2013
14
14
Quickstep Holdings Limited. Annual Report 2013
Quickstep Holdings Limited. Annual Report 2013 15
15
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 DIRECTOR’S REPORT
DIRECTOR’S REPORT
D I R E C T O R S ’ R E P O R T
D I R E C T O R S ’ R E P O R T
The Directors present their report together with the financial statements of the Group, being Quickstep Holdings
Limited (the “Company”) and its subsidiaries, for the financial year ended 30 June 2013 and the auditor’s report
thereon.
1. Directors
The Directors of the Company at any time during or since the end of the financial year were:
Mr Tony Quick, MA (Cantab)
Independent Non Executive Chairman - appointed 14 February 2013
Mr Tony Quick, aged 57, is also Chair of the Defence Materials Technology Centre which is a Defence funded
Co-operative Research Centre. He is also the TCF Supplier Advocate in the Department of Industry, and an
Adjunct Professor at RMIT University.
After graduating from Cambridge University, Mr Quick spent most of his career in International Business
Development, Program and Business Management. He joined an Aerospace composites business in 1988 and in
1993 he joined Westland Helicopters in England where he held senior international business development and
program management roles. In 2001 he set up GKN Aerospace Engineering Services Pty Ltd in Australia to
service global demand for engineering services, he was the Director and General Manager until 2009. The
company provided design services to the F-35 Joint Strike Fighter program for Lockheed Martin and Northrop
Grumman.
Its parent company, GKN Aerospace, is one of the world’s largest independent first-tier composite
suppliers to the global aerospace industry. Mr Quick was the Director of the Defence Industry Innovation Centre,
Enterprise Connect from 2009 to 2011.
Mr Philippe Marie Odouard, M.Sc (Bus)
Managing Director and CEO - appointed 13 October 2008
Mr Philippe Odouard, aged 58, was appointed Chief Executive Officer and Managing Director in October 2008.
He has significant management experience within the global aerospace and defence sectors, both of which are
primary target markets for Quickstep's technology.
Prior to joining Quickstep, Mr Odouard held a dual role with Thiess Pty Ltd - one of Australia's largest
infrastructure and services contractors - as Senior Manager of Strategy and Business Development: Defence, and
Project Director for the $3 billion Melbourne desalination plant.
Mr Odouard has also held a number of senior management roles with profit and loss responsibility within
Thomson-CSF (now Thales Group) - a world leader in information systems for the aerospace, defence and
security markets. During this time Mr Odouard was responsible for managing large contracts with innovative
developments as well as technology transfers in both Australia and Europe. He negotiated and managed long
term contracts with major global aerospace and defence groups including several worth in excess of $1 billion.
Significantly, Mr Odouard managed the Minehunter project, which at the time was the largest user of composites
in Australia. In addition, he negotiated and managed significant contracts with Eurocopter when they sold the all-
composite Tiger helicopter to the Australian Defence Force.
Mr Nigel Ian Ampherlaw, B.Com, FCA, MAICD
Independent Non Executive Director - appointed 8 July 2013
Mr Nigel Ampherlaw, aged 58, joined the Quickstep Board in July 2013 and is chairman of the Audit, Risk and
Compliance Committee. He was a Partner of PricewaterhouseCoopers for 22 years where he held a number of
leadership positions, including heading the financial services audit, business advisory services and consulting
businesses. He also held a number of senior client Lead Partner roles. Mr Ampherlaw has extensive experience
in Risk Management, technology, consulting and auditing in Australia and the Asia-Pacific region.
Mr Ampherlaw's current corporate Directorships include a Non-Executive Directorship with Credit Union Australia,
where he is Chair of the Risk and Technology Committees and a member of the Audit and Strategy Committees;
and a Non-Executive Director of the Australia Red Cross Blood Service, where he is a member of the Finance
and Audit Committee and of the Risk Committee. Mr Ampherlaw has also been a member of the Grameen
Foundation Australia charity Board since 2012.
Mr Dale Edwin Brosius, B. Sc. (Chem. Eng.), MBA
Executive Director and President Quickstep Composite LLC - appointed 13 August 2004, resigned as director
14 February 2013. Dale remains as an Executive of the Group.
Mr Dale Brosius, aged 55 - as President of Quickstep Composites LLC, the Company’s USA subsidiary in Dayton,
Ohio, is responsible for the commercial development of the Company’s technology in the Americas. He brings
extensive practical experience in the composites field, having led composites-oriented businesses in the USA, with a
strong emphasis on materials. He is based near Indianapolis, Indiana.
Mr Brosius spent eight years with Dow Chemical, in manufacturing and commercial development roles, with a focus
on automotive composites. He then spent twelve years in various commercial and general management roles at
Fiberite and Cytec Fiberite, gaining considerable exposure to advanced composites processes and applications in
aerospace, sporting goods, and industrial markets.
In 1999 Mr Brosius created a successful consulting business serving manufacturers of composite materials,
equipment and parts manufacturers worldwide. During this time he obtained a thorough understanding of the global
market and developed numerous relationships at the original equipment manufacturer (OEM) and supplier levels.
Mr Brosius is active in leadership levels in key composites professional associations and is the author of over forty
published articles in the field.
In 1979 Mr Brosius graduated with a Bachelor of Science in Chemical Engineering from Texas A&M University,
and in 1990 earned his MBA from the University of Phoenix.
Mr Peter Chapman Cook, MPharm., PhC, CChem, FMonash, FRMIT, MPS, MRACI, MAICD.
Independent Non Executive Director - appointed 14 July 2005
Mr Peter Cook, aged 66, is the Chairman of the Remuneration, Nomination and Diversity Committee and has
extensive business experience, both within Australia and overseas.
Prior to his most recent Executive appointment as Managing Director and Chief Executive Officer of Biota
Holdings Limited, Mr Cook had held the positions of Managing Director and Chief Executive Officer of Orbital
Corporation Limited, Chief Executive Officer of Faulding Hospital Pharmaceuticals, President of Ansell’s
Protective Products Division, Deputy Managing Director of Invetech and Director of Research and Development
for Nicholas Kiwi. Mr Cook has had extensive experience in the commercialisation of innovation, both in new and
established markets. Mr Cook also has considerable experience in mergers and acquisitions, particularly with
technology-based companies, and has a strong manufacturing background.
Mr Cook has had a wide exposure of international commercial experience in Europe, USA and Asia, where he
has both lived and worked. He holds a Masters Degree in Pharmacy, post graduate qualifications in Management
from RMIT University and is a Fellow of Monash University.
Mr Deryck Fletcher Gow Graham, Dip. Co. Dir.
Executive Director (not classified as Independent) - appointed 16 June 2001, resigned as director and Executive
14 February 2013
Mr Deryck Graham, aged 52, has over 25 years’ experience in senior management, administration and marketing
positions.
His experience includes five years as Managing Director of an ASX listed Company that designed, developed,
manufactured and distributed hardware and software products for the broadcasting and entertainment industries.
He has been a director of Eagle Aircraft Australia Limited, where he held the role of Marketing Director. Since
1986, Mr Graham has been involved in the composites and aerospace industries. Mr Graham is also a founder
and adviser to emerging technology companies in the mining, civil engineering, software development and marine
industries.
Mr Graham assisted Quickstep on corporate communication and marketing strategy in addition to his role as
Director.
Mr Graham holds a Diploma of Company Directors from the Australian Institute of Company Directors.
16
5
6
17
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK DIRECTOR’S REPORT
DIRECTOR’S REPORT
D I R E C T O R S ’ R E P O R T
D I R E C T O R S ’ R E P O R T
Mr Bruce Griffiths, OAM
Independent Non Executive Director - appointed 14 February 2013
Mr David Patrick Alexander Singleton, BSc (Hons)
Independent Non Executive Director - appointed 11 October 2010
Mr Bruce Griffiths OAM, aged 63, is a member of the Remuneration, Nomination and Diversity Committee. Bruce
has had a successful and extensive career, spanning more than 40 years, in the manufacturing industry. He has
held a number of senior Executive roles within the industry and has a long history in working with Government.
Bruce was recently awarded the Order of Australia Medal for services to the automotive manufacturing industry
and to the community.
Current appointments include: Rail Supplier Advocate since 2009, Board Member - Industry Capability Network
Limited (ICNL), Director - Air International Thermal Systems, Chairman - Sail Melbourne ISAF Sailing World Cup.
Previous appointments include: Chairman - Futuris Automotive Group (2007-2012), Managing Director - Futuris
Automotive Group (1992 -2007), Chairman - Air International Thermal Systems (2008-2011), Board Member -
AutoCRC (Advanced Automotive Technology Ltd) (Inception -2012), Vice President of the Federation of
Automotive Products Manufacturers (FAPM) (1990-2012). Member - Automotive Industry Innovation Council,
Advisory Board Member - Enterprise Connect
Mr Griffiths’ honours include: Order of Australia Medal – 2013, Centenary Medal for Services to the Development
of the Auto Industry Policy, Victorian Manufacturing Hall of Fame for services to the Manufacturing Industry.
Mr Mark Bernard Jenkins, B. Comm., Grad. Dip. Bus.
Independent Non Executive Director - appointed as director 14 July 2005; appointed as Chairman 13 March
2007. Resigned as Chairman 14 February 2013
Mr Mark Jenkins, aged 49, is a member of the Audit, Risk and Compliance Committee. Mark has over 20 years
consulting, operational/financial management and business development experience in professional services
firms (chartered accountants), investment banking, government agencies and public companies.
Initially qualifying as a Chartered Accountant in Australia, his career includes two extended periods in London and
has involved successful and extensive investment, commercial, financial and government dealings in Australia,
Asia, the United States of America and Europe. Mr Jenkins has also been involved as an advisor and investor in
early stage technology companies, taking them through the initial funding and commercialisation stages.
Mr Jenkins holds a Bachelor Degree in Commerce from the University of Western Australia and a Graduate
Diploma in Business from Curtin University. He has also been involved in numerous professional development
programs, including Cranfield University in England.
Air Marshal Errol John McCormack (Ret’d), AO
Independent Non Executive Director - appointed 11 August 2010
Air Marshal Errol McCormack, aged 72, is a member of the Audit, Risk and Compliance Committee. Errol has
extensive experience as a Senior Commander in the Royal Australian Air Force.
Errol McCormack served in the Royal Australian Air Force for 39 years, retiring in 2001 as Chief of Air Force with
the rank of Air Marshal. During his period of service he commanded at unit, wing and command level, held staff
positions in capability development, operations and educational posts and attended both RAAF and Joint
Services Staff Colleges. His overseas postings included flying tours in Vietnam, Thailand, Malaysia and
Singapore, an exchange tour with the US Air Force flying the RF4C, Air Attaché Washington and Commander
Integrated Air Defence System in the Five Power Defence Agreement between Malaysia, Singapore, UK, New
Zealand and Australia.
Since his retirement from the RAAF he has established a company providing consultancy services for multi-
national companies working with the Australian Department of Defence.
He is also Non-Executive Chairman of Chemring Australia Pty Ltd, a countermeasures and pyrotechnic
manufacturing company based in Victoria, and consults for Chemring Group PLC and General Electric Military
Engines.
His pro-bono work includes Chairman of the Board of the Sir Richard Williams Foundation, an independent think-
tank supporting development of Australian military aviation policy. He is a member of the Royal Aeronautical
Society and the Australian Institute of Company Directors.
Mr David Singleton, aged 53, is a member of the Audit, Risk and Compliance Committee and the Remuneration,
Nomination and Diversity Committee. David worked for 19 years for BAE Systems (formerly British Aerospace) in
a variety of roles. He was the Group Head of Strategy, Mergers and Acquisitions for BAE Systems based in
London. Prior to that, Mr Singleton spent three successful years as the Chief Executive Officer of Alenia Marconi
Systems (a BAE Systems European Joint Venture) and was based in Rome, Italy. Mr Singleton has served as a
member of the National Defence Industries Council in the UK, and as a Board member and Vice-President of
Defence for Intellect. Mr Singleton became the Chief Executive Officer and Managing Director of Poseidon Nickel
in July 2007. He was the Chief Executive Officer and Managing Director of Clough Limited between August 2003
and January 2007. He is a Non-Executive Director of Austal Ships based in Perth WA and also Deputy Chair of
Council to Methodist Ladies College in Perth.
Mr. Singleton has a degree in Mechanical Engineering from University College London.
Mr David Edward Wills, B Comm., FCA
Independent Non Executive Director - appointed 26 November 2010, retired 5 July 2013
Mr David Wills, aged 65, was Chairman of the Audit, Risk and Compliance Committee until his recent retirement.
David is a Chartered Accountant, having been a Partner in PricewaterhouseCoopers (and its predecessor firm
Coopers & Lybrand) for 25 years. He was Deputy Chairman of the firm from 2000 to 2004, Managing Partner of
the Sydney office from 1997 until 2003 and Chairman of the firm’s manufacturing practice from 1995 - 1997. Mr
Wills’ major area of practice throughout all of his career was as an audit partner and his client base included many
large manufacturing companies, both publicly listed in Australia and subsidiaries of US based companies. In
addition to audit, Mr Wills was experienced in mergers and acquisitions and special investigations of companies.
Mr Wills is now (or has been) a director of the following publicly listed companies:
Washington H Soul Pattinson Limited (since 2006);
Clover Corporation Limited (from 2004 to July 2013); and
Souls Private Equity Limited (since 2005);
In addition, Mr Wills is Chairman of Sir David Martin Foundation, a charity that raises funds to support youth
programs undertaken by Mission Australia.
Mr Wills graduated from the University of New South Wales with a Bachelor of Commerce in 1970 and qualified
as a Chartered Accountant in 1972.
2. Company Secretary
Mr. Jaime Pinto, B.Com, CA. - appointed 20 November 2012
Mr Pinto, aged 42, is a Chartered Accountant with over 20 years experience in both professional practise and
commerce. He has held senior finance roles in organisations of varying size and complexity, including small
private businesses, large national groups and ASX listed entities. He is currently the Company Secretary of a
number of ASX-listed and unlisted companies in the manufacturing, investing, real estate and advisory industries.
Mr Pinto holds a Bachelor Degree in Commerce from the University of NSW, and is a member of The Institute of
Chartered Accountants Australia.
Mr Phillip James MacLeod, B. Bus., ASA. MAICD - resigned 20 November 2012
Mr MacLeod, aged 48, was appointed to the position of Company Secretary on 13 November 2009. Mr MacLeod
has over 20 years commercial experience and has held the position of Company Secretary with listed companies
since 1995. Mr MacLeod has provided corporate, management and accounting services to domestic and
international public companies involved in the technology, resources, healthcare and property industries.
Mr MacLeod holds a Bachelor Degree in Business from Edith Cowan University and is an associate member of
CPA Australia having qualified as a CPA.
18
7
8
19
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK DIRECTOR’S REPORT
D I R E C T O R S ’ R E P O R T
3. Directors’ Meetings
The number of Directors’ meetings (including meetings of committees of Directors) and the number of meetings
attended by each of the Directors of the Company during the financial year are:
Audit, Risk
and
Compliance
Committee
Meetings
Remuneration,
Nomination and
Diversity
Committee
Meetings
A
B
A
B
Board
Meetings
B
A
6
12
-
7
12
7
6
12
12
12
12
6
12
-
4
9
7
6
11
11
10
10
-
-
-
-
-
-
-
-
3
3
3
-
-
-
-
-
-
-
-
3
3
3
-
-
-
-
5
-
1
-
-
5
5
-
-
-
5
-
1
-
-
3
5
Director
Mr T Quick
Mr P M Odouard
Mr N Ampherlaw
Mr D E Brosius
Mr P C Cook
Mr D F G Graham
Mr B Griffiths
Mr M B Jenkins
Mr E J McCormack
Mr D Singleton
Mr D E Wills
A – Number of meetings held during the time the director held office during the year
B – Number of meetings attended
4. Principal Activities
During the financial year, the principal activities of the Group consisted of:
delivery of the first twelve months of production parts to Northrop Grumman for the Joint Strike Fighter
Project including those manufactured at the new Bankstown manufacturing facility;
building the capability and capacity of the organisation in advance of the start of production of C-130J wing
flaps for Lockheed Martin;
working closely with potential customers through the international network of Quickstep ‘Centres of
Excellence’ to qualify the Quickstep Process as a viable and effective alternative to traditional autoclave-
based composite manufacturing techniques;
further expansion of the Group’s existing portfolio of international research and development alliances and
partnerships with major aerospace, industrial and automotive groups and their tier one suppliers; and
coordination of a cohesive strategic plan for the Group’s global research & development initiatives;
DIRECTOR’S REPORT
D I R E C T O R S ’ R E P O R T
8. Events Subsequent to Reporting Date
Since the end of the financial year the Group:
delivered its 100th manufactured carbon-fibre composite part for its F-35 Lightning II Joint Strike Fighter
contract with global aerospace company Northrop Grumman Corporation
Completed all qualification tasks required by Lockheed Martin's materials and process technical
engineering testing program for manufacture of C130J wing flaps
Secured a EUR 4.2m contract to provide leading Russian aircraft composites manufacturer, ORPE
Technologiya, with its Quickstep Process to manufacture large carbon-fibre composite components
Advanced its patented Resin Spray Transfer (RST) technology with a key European automotive
manufacturer targeted at lightweight strong vehicle parts to be produced at relatively high speed and low
cost with a high quality finish
Raised $6.1m (before costs) through two placements of fully paid ordinary shares to institutional and
sophisticated investors
Raised $7.2m (before costs) through a share purchase plan with existing investors
Received additional purchase orders to the value of $2.6m for non-recurring work relating to existing
aerospace agreements
9.
Likely Developments
Strategies, Prospects and Risk by Division
Manufacturing
Strategic Objective
Prospects
Risks
Achieve sales revenue from new
and existing manufacturing
contracts
Program schedules indicate a
significant increase in sales for the
2014 financial year
Steep ramp up over a short period,
mitigated by strong management team
Begin delivery of C-130J ships sets
Start delivery of C-130J during
2013/14
Control of labour hours and
material costs to proposed levels
Achieve budget performance
Sign new manufacturing
agreements to deliver more
manufacturing hours
A number of bids are being
negotiated as present
Manage the transition of the work from
Boeing and the design authority from
Boeing to Lockheed Martin, mitigated
by employing a number of
professionals and staff from Boeing as
they close down their site in
Bankstown
Risk mitigated by strong management
team and systems
Introduce new work in addition to a
fast ramp up on the 2 existing
contracts, mitigated by the end of the
non recurring phase of Northrop
Grumman’s work
5. Results
The Group incurred a loss after tax of $16,985,894 for the year ended 30 June 2013 (2012: loss of $11,801,601).
Quickstep Systems
6. Operating Review
A review of operations and activities for the financial year is set out in the Managing Director’s Review.
7.
Dividends
No dividend has been declared or paid by the Company to the date of this report.
Strategic Objective
Prospects
Risks
Fully demonstrate RST cell
capability by producing motor
vehicle parts capable of sale
Develop real parts for manufacture
Finalise all related technologies to the
parts (Tools, faster machine...)
Manufacture and deliver first motor
vehicle part to an Original
Equipment Manufacturer (OEM)
Sign a contract with OEM to produce
such part
New technology needs to be accepted,
risk mitigated by a growing team of
automotive specialist on the technical
and sales areas.
20
9
10
21
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK DIRECTOR’S REPORT
D I R E C T O R S ’ R E P O R T
10. Directors’ Interests
The relevant interest of each Director in the shares, rights and options at the date of this report unless otherwise
indicated is as follows:
Director
Shares
Options
Rights
Mr T Quick
Mr P M Odouard
Mr. N. Ampherlaw(5)
Mr D E Brosius(6)
Mr P C Cook (2)
Mr D F G Graham (1)
Mr B Griffiths
Mr M B Jenkins
Mr E McCormack(3)
Mr D Singleton
Mr D E Wills(4)
-
-
2,134,205
3,563,073
275,000
600,000
220,758
26,039,341
-
-
369,315
-
460,107
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.
2.
3.
4.
5.
6.
The registered holder of the shares is Decta Holdings Pty Ltd, the trustee for a discretionary trust of which Mr
Graham is a potential beneficiary. Mr Graham resigned as Director on 14 February 2013. The interest
disclosed is at the date of cessation as Director.
The registered holder of the shares is Bond Street Custodians Limited as custodian for the Lloyds Wharf
Superannuation Fund, of which Mr Cook is a trustee.
The registered holder of the shares is Aviops Pty Ltd, of which Mr McCormack is a director.
The registered holder of the shares is Jammit Pty Ltd, of which Mr Wills is a director. Mr Wills retired as a
Director on 5 July 2013. The interest disclosed is at the date of cessation as Director.
The registered holder of the shares is NIJS Fund which is a superannuation fund of which Mr Ampherlaw is a
trustee and member.
The registered holder of the shares resigned as Director on 14 February 2013. The interest disclosed is at the
date of cessation as Director.
11. Share Options and Rights
During the financial year 987,739 options were granted under the Quickstep Employee Incentive Plan (EIP) to the
CEO, Mr Philippe Odouard, as part of his remuneration with vesting based on future conditions. No options
granted in prior years were exercised during the year ending 30 June 2013. No other options have been granted
during or since the end of the financial year.
During the financial year, the Company granted 255,363 in rights to Michelle Withers for no consideration over
unissued ordinary shares in the Company as part of her remuneration. No other key management personnel were
granted any rights during the financial year.
DIRECTOR’S REPORT
D I R E C T O R S ’ R E P O R T
Unissued shares under options and rights
At the date of this report, unissued ordinary shares of the Company under options and rights are:
Employee
Earliest Possible
Vesting Date
Expiry Date
Exercise Price
Options
Mr P Odouard
Mr P Odouard
Mr P Odouard
Mr P Odouard
Rights
Mr S Godbille
Mr S Godbille
Mr J Johnson
Mr J Johnson
Mr A Vihersaari
Mr B Pillay
Total
1/7/2012
1/7/2013
31/8/2014
31/08/2015
12/7/2013
31/12/2013
1/7/2013
31/12/2013
1/7/2013
31/12/2013
30/03/2017
26/11/2017
23/11/2018
22/11/2019
12/7/2013
31/12/2013
1/7/2013
31/12/2013
1/7/2013
31/12/2013
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Number of
Shares
1,397,624
471,337
706,373
987,739
267,605
764,818
471,698
688,337
250,000
312,620
6,318,151
These options and rights do not entitle the holders to participate in any share issue of the Company or any other
body corporate.
Shares issued on exercise of options and rights
During the prior financial year, the Company issued ordinary shares as a result of the exercise of rights as follows
(there were no amounts unpaid on the shares issued):
Number of
Shares
769,131
Amount paid on
each Share
$0.00
No ordinary shares were issued as a result of exercise of options.
12.
Indemnification and Insurance of Officers
Except as indicated below, the Group has not otherwise, during or since the financial year, indemnified or agreed to
indemnify an officer of the Group or of any related body corporate against a liability incurred as an officer.
Indemnification
The Group has indemnified the Directors (as named in this Report) and all Executive officers of the Group and of
any related body corporate against any liability incurred as a Director, Secretary or Executive officer to the
maximum extent permitted by the Corporations Act 2001.
Insurance Premiums
The Group has paid a premium in respect of a directors’ and officers’ liability insurance policy, insuring the Directors
of the Company, the Company Secretary and all executive officers of the Company and Group against a liability
incurred as such a Director, Secretary or executive officer to the extent permitted by the Corporations Act 2001. The
Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in
respect of the directors’ and officers’ liability and legal expenses’ insurance contracts; as such disclosure is
prohibited under the terms of the contract.
13. Non-audit Services
During the financial year, KPMG, the Group’s auditor, has not performed any additional services to their statutory
duties.
22
11
12
23
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK DIRECTOR’S REPORT
DIRECTOR’S REPORT
D I R E C T O R S ’ R E P O R T
14. Lead Auditor’s Independence Declaration
The lead auditor’s independence declaration as required under Section 307C of the Corporations Act 2001, which
forms part of this Directors’ Report for the financial year ended 30 June 2013, is set out on page 73
15. REMUNERATION REPORT - AUDITED
The remuneration report is set out under the following main headings:
A:
B:
C:
D:
E:
Principles of compensation
Service agreements
Details of remuneration
Share-based compensation
Analysis of bonuses in remuneration
Remuneration is referred to as compensation throughout this report.
A.
Principles of compensation
Key management personnel have authority and responsibility for planning, directing and controlling the activities
of the Group, including Directors of the Company. Key management personnel comprise the Directors of the
Company and Executives for the Group.
The report includes details relating to:
Non Executive Directors
Mr T Quick
Chair of Board (appointed 14th February 2013)
D I R E C T O R S ’ R E P O R T
The Board has established a Remuneration, Nomination and Diversity (RN&D) Committee which assists the
Board in formulating policies on and in determining:
the remuneration packages of Executive Directors, Non-Executive Directors and senior Executives; and
cash bonuses and equity based incentive plans, including appropriate performance hurdles, total
payments proposed and plan eligibility criteria.
If necessary, the RND Committee obtains independent advice on the appropriateness of remuneration packages
given trends in comparable companies and in accordance with the objectives of the Group. The Corporate
Governance Statement provides further information on the role of this committee.
Compensation levels for key management personnel of the Group are competitively set to attract and retain
appropriately qualified and experienced directors and executives. The remuneration structures are designed to
attract suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader
outcome of creation of value for shareholders. Compensation packages include a mix of fixed compensation,
short-term incentives and equity-based compensation as well as employer contributions to superannuation funds.
Shares and options may only be issued to directors subject to approval by shareholders in a general meeting.
The Group does not have any scheme relating to retirement benefits for its key management personnel other than
contributions defined under its statutory obligations.
Fixed compensation
Fixed compensation consists of base compensation (which is calculated on a total cost basis), as well as employer
contributions to superannuation funds.
Compensation levels are reviewed annually through a process that considers current labour market rates,
individual achievement of objectives and overall performance of the Group. Compensation is also reviewed in the
event of promotion or significant change in responsibilities.
Mr N I Ampherlaw
Chair of Audit Risk and Compliance Committee (appointed 8th July 2013)
Performance linked compensation
Mr P Cook
Mr B Griffiths
Mr M Jenkins
Chair of Remuneration, Nomination and Diversity Committee
(appointed 14th February 2013)
(resigned as Chair of Board 14th February 2013)
Air Marshal (R’td) E McCormack
Mr D Singleton
Mr D Wills
Executive Directors
Mr P Odouard
Mr D Brosius
Mr D Graham (Jnr)
Executives and Officers
Mr J Pinto
M P Macleod
Mr J Johnson
Mr S Godbille
Mr P Robertson
Mr M Schramko
Mr P Salvati
Ms T Swinley
Dr J Schlimbach
Mr A Vihersaari
Ms M Withers
Chair of Audit Risk and Compliance Committee (retired 5th July 2013)
Managing Director and Chief Executive Officer
President Quickstep Composite LLC (resigned as Director 14th February 2013)
Business Development Manager – Australia (resigned 14th February 2013)
Company Secretary (appointed 20th November 2012)
Company Secretary (resigned 20th November 2012)
Vice President of Commercial and Admin
Vice President of Quickstep Systems
Vice President of Finance (appointed 19th October 2012)
Vice President of Manufacturing and Operations
Quality Manager (until 1st October 2012)
Vice President of Human Resources (appointed 3rd December 2012)
Joint CEO, Quickstep GmbH
Vice President of Global Business Development
Vice President of Human Resources (resigned 21st December 2012)
Performance linked compensation includes both short and long term incentives and is designed to reward key
management personnel for meeting or exceeding their financial and personal objectives. Each individual’s
performance linked compensation is capped as a percentage uplift of fixed compensation. Other than as
disclosed in this report, there have been no performance-linked payments made by the Group to key
management personnel.
(i)
Short-term incentives
Certain key management personnel receive short-term incentives (STI), in cash, based on achievement of key
performance indicators (KPIs). Each year, the RN&D Committee considers the appropriate targets and KPIs and
the alignment of the individuals rewards to the Group’s performance. These targets may include measures related
to the annual financial performance of the Group or specified parts of the group and are measured against actual
outcomes.
The RN&D Committee is responsible for assessing whether the KPIs meet the criteria set out at the beginning of
the year. No bonus is awarded where performance fall below the minimum level of performance. The RN&D
Committee recommends the total incentive to be paid to the individuals for approval by the Board.
(ii)
Equity-based compensation (long-term incentives)
(ii.a) Employee Incentive Plan
Long-term incentives may be provided to key management personnel via the Quickstep Employee Incentive Plan
(EIP) (refer to note 34 to the financial statements). The incentives are provided as options over ordinary shares of
the Company and the plan is open to eligible employees of the Group. The incentives include performance
targets related to Total Shareholder Return and are measured against actual share price performance over a
period of 3 years. The incentives are considered to promote alignment of management and shareholder interests,
continuity of employment and to encourage superior performance.
(ii.b) Share based payments
Certain key management personnel received long-term incentives (LTI) as share based payments based on
achievement of certain short term key performance indicators (KPIs) in respect of current year performance. The
RN&D Committee considers the appropriate targets and KPIs and the individual’s contribution to the Group’s
performance. These targets may include measures related to the annual financial performance of the Group or
specified parts of the Group and are measured against actual outcomes.
24
13
14
25
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK DIRECTOR’S REPORT
D I R E C T O R S ’ R E P O R T
(ii.c) Other Equity-based compensation
Other incentives may be provided to key management personnel as rights over ordinary shares of the Company.
These rights have been provided as;
loyalty bonuses as an incentive for continuity of employment; and
Executive performance and retention bonuses (EPRB) for performance against objectives relating to the
Company’s relocation objectives and continuity of employment such as the transfer of manufacturing to
NSW.
The RN&D Committee considers that the above performance linked compensation structure is generating the
desired outcomes. The benefits of such incentives for shareholder’s wealth creation may not directly align with the
Company’s current market performance, particularly during its current investment and developmental stage, and
considers market performance is not representative of the achievements of the Group. Factors such as the attraction
and retention of key staff, securing long term contracts and commercialisation and development of technology will
provide longer term shareholder wealth.
Non Executive Directors’ fees
Total remuneration for all Non Executive Directors, last voted upon by shareholders at the 2010 Annual General
Meeting, is not to exceed $600,000 per annum. Fees are set with reference to fees paid to Non Executive directors
of comparable companies. Directors are entitled to receive a fee which covers all main Board activities and
membership of committees.
In 2011 a fee for Chairmanship of a committee of $5,000 p.a. was introduced. The
table below indicates the maximum annual fees based on directors responsibilities at the date of this report. Non-
Executive directors do not receive performance related compensation.
Non Executive Directors
T Quick
N Ampherlaw (apt. 08/07/2013)
P Cook
B Griffiths
M Jenkins
E McCormack
D Singleton
Fees
126,000
60,000
60,000
60,000
60,000
84,000
60,000
Committee
Chairmanship
N/A
5,000
5,000
N/A
N/A
N/A
N/A
DIRECTOR’S REPORT
D I R E C T O R S ’ R E P O R T
B.
Service agreements
Key management personnel have entered into service agreements. These employment contracts outline the
components of compensation paid to the key management personnel and are reviewed on an annual basis.
Mr P M Odouard
Initial
Agreement
Date
13 October
2008
Duration
Notice
Period
Termination Benefits
Open
6 months
12 months annual salary
and pro-rated annual
bonus (at Board’s
discretion)
STI (1)
% of
salary
LTI (2)
% of
salary
Other
Benefits
(4)(5)
25
50(3)
588,235
rights(4)
Mr D E Brosius
1 September
2005
Open
3 months
6 months of annual salary
20 (5)
-
-
package;
Any cash bonus due but
not paid; and
Pro rated current year cash
bonus (in accordance with
contract).
Mr S Godbille
10 June 2010
Open
3 months
3 months of annual salary
12.5
12.5
Mr J Johnson
1 April 2011
Open
3 months
package; and
Pro-rated annual bonus (at
Board’s discretion).
6 months of annual salary
package; and
Pro rated annual bonus (at
Board’s discretion)
Dr J Schlimbach
1 Jan 2012
Mr A J Vihersaari
1 July 2011
Ms Tracy Swinley
(from December 3,
2012)
26 November
2012
Fixed
term
Fixed
term
Open
3 months
n/a
1 month
3 months
Mr M Schramko
25 July 2011
Open
3 months
Mr Paul
Robertson (from
October 19, 2012)
19 October
2012
Open
3 months
n/a
3 months of annual salary
package; and
Pro-rated annual bonus (at
Board’s discretion).
3 months of annual salary
package; and
Pro-rated annual bonus (at
Board’s discretion).
3 months of annual salary
package; and
Pro-rated annual bonus (at
Board’s discretion).
267,605
rights(4)
764,818
rights (4)
471,698
rights(4)
688,337
rights (4)
-
250,000
rights(4)
-
-
-
20
20
12.5
12.5
12.5
12.5
12.5
12.5
12.5
12.5
12.5
12.5
(1)
(2)
(3)
(4)
(5)
STI (Short Term Incentive) is determined on performance against key performance indicators (KPIs) set and
reviewed by the RN&D Committee or the Board as appropriate. Percent (%) of salary refers to the maximum
amount payable (as per service agreement). The KPIs include company financial objectives, such as order
intake, profit and cash flow, and personal objectives including control of responsibility centre expenditure and
functional outcomes aligned to the annual strategic plan.
LTI (Long Term Incentive) is determined on performance against key performance indicators (KPIs) set
and reviewed by the RN&D Committee or the Board as appropriate.
LTI determined on performance against total shareholder’s return.
Retention single bonus based on continuity of service, payable in shares.
Maximum US$30,000
26
15
16
27
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK DIRECTOR’S REPORT
DIRECTOR’S REPORT
s
t
n
e
m
y
a
P
d
e
s
a
b
-
e
r
a
h
S
-
g
n
o
L
r
e
h
t
O
m
r
e
T
t
s
o
P
t
n
e
m
y
o
p
m
E
l
l
a
t
o
T
$
&
s
n
o
i
t
p
O
s
t
h
g
i
r
$
s
e
r
a
h
S
$
-
m
r
e
T
n
o
i
t
a
n
i
s
t
i
f
e
n
e
B
$
$
-
r
e
p
u
S
n
o
i
t
a
u
n
n
a
y
v
e
L
e
e
t
n
a
r
a
u
G
$
l
a
t
o
T
-
n
o
N
y
r
a
t
e
n
o
M
s
t
i
f
e
n
e
b
$
m
r
e
T
t
r
o
h
S
h
s
a
c
I
T
S
)
3
(
s
u
n
o
b
$
/
y
r
a
l
a
S
$
s
e
e
f
r
a
e
Y
:
e
r
a
r
a
e
y
e
h
t
r
o
f
p
u
o
r
G
e
h
t
f
o
l
e
n
n
o
s
r
e
p
t
n
e
m
e
g
a
n
a
m
y
e
k
r
e
h
t
o
d
n
a
y
n
a
p
m
o
C
e
h
t
f
o
r
o
t
c
e
r
i
d
h
c
a
e
f
o
n
o
i
t
a
r
e
n
u
m
e
r
e
h
t
f
o
l
t
n
e
m
e
e
r
o
a
m
h
c
a
e
j
f
o
t
n
u
o
m
a
d
n
a
e
r
u
t
a
n
e
h
t
f
o
s
l
i
a
t
e
D
n
o
i
t
a
r
e
n
u
m
e
r
f
o
s
l
i
a
t
e
D
.
C
T
R
O
P
E
R
’
S
R
O
T
C
E
R
I
D
28
s
n
o
i
t
p
o
f
o
e
u
l
a
V
n
o
i
t
r
o
p
o
r
p
s
a
n
o
i
t
a
r
e
n
u
m
e
r
f
o
%
f
o
n
o
i
t
r
o
p
o
r
P
n
o
i
t
a
r
e
n
u
m
e
r
e
c
n
a
m
r
o
f
r
e
p
d
e
t
a
l
e
r
%
%
8
.
7
2
%
2
.
0
1
%
7
.
3
3
%
5
.
2
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
)
2
.
3
(
-
-
-
-
-
`
-
-
-
-
-
6
2
4
,
8
0
5
0
2
6
,
2
2
4
0
0
5
,
2
5
-
0
0
0
,
0
6
8
1
4
,
0
6
0
0
0
,
5
5
0
5
2
,
1
7
2
1
7
,
3
2
-
0
0
0
,
2
0
1
0
0
2
,
7
2
1
7
9
9
,
3
8
0
2
3
,
4
8
0
0
0
,
0
6
9
2
2
,
0
6
8
4
2
,
1
6
0
9
1
,
0
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0
4
3
,
1
4
1
5
1
1
,
3
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
s
n
o
i
t
p
o
f
o
e
u
l
a
V
n
o
i
t
r
o
p
o
r
p
s
a
n
o
i
t
a
r
e
n
u
m
e
r
f
o
%
f
o
n
o
i
t
r
o
p
o
r
P
n
o
i
t
a
r
e
n
u
m
e
r
e
c
n
a
m
r
o
f
r
e
p
d
e
t
a
l
e
r
%
l
a
t
o
T
$
&
s
n
o
i
t
p
O
s
t
h
g
i
r
$
s
e
r
a
h
S
$
s
t
n
e
m
y
a
P
d
e
s
a
b
-
e
r
a
h
S
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
6
.
0
1
%
7
.
3
1
%
3
.
5
%
5
.
7
3
%
1
.
1
3
%
9
.
6
2
%
3
.
0
3
-
-
-
-
-
1
0
8
,
1
5
4
7
9
,
8
2
2
4
0
4
,
0
0
2
0
5
8
,
2
6
3
8
2
2
,
3
1
3
9
2
2
,
9
7
3
8
7
3
,
0
6
4
-
0
0
5
,
7
1
0
0
0
,
2
4
0
0
0
,
2
3
%
2
.
4
1
2
4
9
,
1
3
1
-
)
%
1
.
4
1
(
%
2
.
4
1
%
7
.
9
%
0
.
2
1
%
4
.
7
%
3
.
4
1
-
8
3
4
,
3
3
4
3
9
,
3
5
1
6
9
4
,
9
7
1
9
8
2
,
1
7
1
9
7
7
,
9
2
2
6
9
9
,
9
1
2
-
-
-
-
7
4
5
,
6
1
1
0
1
0
,
6
6
6
5
4
,
8
1
1
7
0
7
,
3
8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6
5
5
,
8
4
6
6
,
5
1
)
5
0
5
,
1
1
(
9
0
9
,
7
2
-
-
-
-
-
5
7
3
,
9
)
8
7
3
,
2
(
8
3
9
,
0
1
6
4
6
,
7
5
6
4
,
0
1
5
4
5
,
8
8
6
7
,
5
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6
3
4
,
1
3
8
3
1
,
1
3
-
-
-
-
-
-
-
-
-
-
6
3
9
,
6
2
6
9
,
6
5
5
9
,
4
3
7
9
,
4
7
5
0
,
5
4
4
1
,
4
7
1
0
5
6
,
5
3
3
7
6
3
,
8
4
3
0
0
5
,
2
5
-
0
0
0
,
0
6
8
1
4
,
0
6
0
0
0
,
5
5
0
5
2
,
1
7
2
1
7
,
3
2
-
0
0
0
,
2
0
1
0
0
2
,
7
2
1
1
6
0
,
7
7
8
5
3
,
7
7
5
4
0
,
5
5
6
5
2
,
5
5
1
9
1
,
6
5
6
4
0
,
6
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
5
8
,
1
5
6
1
5
,
6
9
2
2
1
0
2
2
3
9
,
9
2
8
1
7
,
5
0
3
3
1
0
2
)
2
&
1
(
d
r
a
u
o
d
O
M
P
r
M
s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0
0
5
,
2
5
-
0
0
0
,
0
6
8
1
4
,
0
6
0
0
0
,
5
5
)
0
5
2
,
2
(
0
0
5
,
3
7
-
2
1
7
,
3
2
0
0
0
,
2
0
1
3
1
0
2
0
0
2
,
7
2
1
2
1
0
2
1
6
0
,
7
7
8
5
3
,
7
7
5
4
0
,
5
5
6
5
2
,
5
5
1
9
1
,
6
5
6
4
0
,
6
4
3
1
0
2
2
1
0
2
3
1
0
2
2
1
0
2
3
1
0
2
2
1
0
2
3
1
0
2
2
1
0
2
3
1
0
2
2
1
0
2
3
1
0
2
2
1
0
2
3
1
0
2
2
1
0
2
)
3
1
/
2
0
/
4
1
d
e
t
i
n
o
p
p
a
(
i
k
c
u
Q
T
r
M
e
v
i
t
u
c
e
x
E
-
n
o
N
m
a
h
a
r
G
G
F
D
r
M
k
o
o
C
C
P
r
M
)
3
1
/
2
0
/
4
1
d
e
n
o
p
p
a
(
t
i
s
h
t
i
f
f
i
r
G
B
r
M
O
A
k
c
a
m
r
o
C
c
M
J
E
l
a
h
s
r
a
M
r
i
A
i
s
n
k
n
e
J
B
M
r
M
)
3
1
/
/
7
5
d
e
r
i
t
e
r
(
s
l
l
i
W
E
D
r
M
l
t
n
o
e
g
n
S
D
i
r
M
-
g
n
o
L
r
e
h
t
O
m
r
e
T
t
s
o
P
t
n
e
m
y
o
p
m
E
l
m
r
e
T
t
r
o
h
S
-
m
r
e
T
n
o
i
t
a
n
i
s
t
i
f
e
n
e
B
$
$
-
r
e
p
u
S
n
o
i
t
a
u
n
n
a
y
v
e
L
e
e
t
n
a
r
a
u
G
$
l
a
t
o
T
-
n
o
N
y
r
a
t
e
n
o
M
s
t
i
f
e
n
e
b
$
h
s
a
c
I
T
S
)
3
(
s
u
n
o
b
$
/
y
r
a
l
a
S
$
s
e
e
f
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
5
4
,
3
4
0
3
,
8
5
9
8
,
9
1
7
3
9
,
8
1
6
8
8
,
2
2
4
7
6
,
8
2
-
-
-
-
-
6
4
3
,
9
0
5
1
,
3
4
0
9
,
0
1
-
-
4
8
5
,
8
1
1
6
5
,
5
1
8
1
-
3
4
3
,
8
4
0
7
6
,
0
2
2
4
0
4
,
0
0
2
2
5
8
,
7
1
2
7
1
6
,
2
1
2
2
9
3
,
9
4
2
8
8
0
,
0
2
3
-
0
0
5
,
7
1
0
0
0
,
2
4
0
0
0
,
2
3
-
1
2
2
,
3
1
1
6
6
6
,
2
3
2
9
0
,
2
3
1
0
5
8
,
1
7
1
4
2
8
,
0
6
1
0
5
6
,
2
0
2
7
6
6
,
8
8
1
-
-
-
-
6
1
5
,
5
7
2
8
,
2
4
2
1
1
,
6
9
0
4
,
1
3
9
4
1
,
3
8
1
3
1
0
2
i
s
u
s
o
r
B
E
D
r
M
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
5
6
,
0
1
9
4
7
,
9
8
1
2
1
0
2
0
4
9
,
0
1
2
1
9
,
6
0
2
3
1
0
2
4
6
6
,
5
1
3
5
9
,
6
9
1
2
1
0
2
e
l
l
i
b
d
o
G
S
r
M
)
0
0
9
,
4
(
2
9
2
,
4
5
2
3
1
0
2
)
2
(
n
o
s
n
h
o
J
F
J
r
M
9
0
9
,
7
2
9
7
1
,
2
9
2
2
1
0
2
-
-
-
-
-
0
0
5
,
7
1
0
0
0
,
2
4
0
0
0
,
2
3
3
1
0
2
2
1
0
2
3
1
0
2
2
1
0
2
)
2
1
/
1
1
/
0
2
d
e
n
g
s
e
r
(
i
d
o
e
L
c
a
M
J
P
r
M
)
2
1
/
1
1
/
0
2
d
e
n
o
p
p
a
(
t
i
o
t
i
n
P
J
r
M
5
7
3
,
9
6
4
8
,
3
0
1
3
1
0
2
)
2
1
/
0
1
/
9
1
d
e
c
n
e
m
m
o
c
(
n
o
s
t
r
e
b
o
R
P
r
M
-
-
)
4
3
3
,
2
(
0
0
0
,
5
3
2
1
0
2
3
1
0
2
8
3
9
,
0
1
4
5
1
,
1
2
1
2
1
0
2
9
5
7
,
9
1
9
0
,
2
6
1
3
1
0
2
1
1
0
,
0
1
3
1
8
,
0
5
1
2
1
0
2
)
2
1
/
0
1
/
1
l
i
t
n
u
(
i
t
l
a
v
a
S
P
r
M
h
c
a
b
m
i
l
h
c
S
J
r
D
8
6
7
,
5
1
9
9
8
,
2
7
1
2
1
0
2
3
6
5
,
8
7
8
0
,
4
9
1
3
1
0
2
)
1
1
/
7
/
5
2
d
e
c
n
e
m
m
o
c
(
o
k
m
a
r
h
c
S
M
r
M
29
T
R
O
P
E
R
’
S
R
O
T
C
E
R
I
D
r
a
e
Y
3
1
0
2
2
1
0
2
)
1
1
/
8
/
2
1
d
e
n
g
s
e
r
(
i
l
s
e
k
c
e
B
W
r
M
s
e
v
i
t
u
c
e
x
E
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK
DIRECTOR’S REPORT
DIRECTOR’S REPORT
-
-
-
-
-
-
%
3
.
0
1
5
1
9
,
9
8
-
%
2
.
0
1
%
6
.
2
2
%
2
.
9
%
7
.
0
3
-
1
2
9
,
9
6
1
5
4
1
,
1
0
2
5
3
3
,
7
8
1
1
4
0
,
5
4
2
-
-
7
1
0
,
5
1
3
9
2
,
6
2
3
3
7
,
3
2
5
3
5
,
5
4
-
5
2
6
,
4
)
6
0
9
(
7
1
2
,
8
)
9
7
1
,
3
(
9
9
7
,
4
1
-
-
-
-
-
0
2
1
,
1
8
-
-
-
-
-
-
-
-
-
0
6
6
,
6
5
5
0
,
8
0
2
1
,
5
1
-
0
3
6
,
8
7
0
1
8
,
5
5
1
5
3
6
,
6
6
1
6
0
6
,
7
7
7
8
5
,
9
6
1
-
-
-
-
-
-
s
n
o
i
t
p
o
f
o
e
u
l
a
V
n
o
i
t
r
o
p
o
r
p
s
a
n
o
i
t
a
r
e
n
u
m
e
r
f
o
%
f
o
n
o
i
t
r
o
p
o
r
P
n
o
i
t
a
r
e
n
u
m
e
r
e
c
n
a
m
r
o
f
r
e
p
d
e
t
a
l
e
r
%
l
a
t
o
T
$
&
s
n
o
i
t
p
O
s
t
h
g
i
r
$
s
e
r
a
h
S
$
-
m
r
e
T
n
o
i
t
a
n
i
s
t
i
f
e
n
e
B
$
$
-
r
e
p
u
S
n
o
i
t
a
u
n
n
a
y
v
e
L
e
e
t
n
a
r
a
u
G
$
l
a
t
o
T
-
n
o
N
y
r
a
t
e
n
o
M
s
t
i
f
e
n
e
b
$
h
s
a
c
I
T
S
)
3
(
s
u
n
o
b
$
/
y
r
a
l
a
S
$
s
e
e
f
s
t
n
e
m
y
a
P
d
e
s
a
b
-
e
r
a
h
S
-
g
n
o
L
r
e
h
t
O
m
r
e
T
t
s
o
P
t
n
e
m
y
o
p
m
E
l
m
r
e
T
t
r
o
h
S
-
-
5
2
6
,
4
5
0
0
,
4
7
9
9
7
,
4
1
8
8
7
,
4
5
1
2
1
0
2
8
0
9
,
0
1
7
2
7
,
5
5
1
2
1
0
2
6
8
1
,
3
4
2
6
,
2
5
1
3
1
0
2
)
2
(
i
r
a
a
s
r
e
h
V
A
i
r
M
)
4
9
2
,
3
(
0
0
9
,
0
8
3
1
0
2
)
2
1
/
2
1
/
1
2
d
e
n
g
s
e
r
(
i
)
2
(
s
r
e
h
t
i
W
M
s
M
:
n
o
i
t
a
r
e
n
u
m
e
r
f
o
l
e
b
a
t
e
h
t
o
t
n
o
i
t
a
e
r
l
n
i
s
e
t
o
N
r
a
e
Y
3
1
0
2
2
1
0
2
)
2
1
/
2
1
/
3
d
e
c
n
e
m
m
o
c
(
s
e
v
i
t
u
c
e
x
E
l
i
y
e
n
w
S
T
s
M
T
R
O
P
E
R
’
S
R
O
T
C
E
R
I
D
30
.
r
a
e
y
l
i
a
c
n
a
n
i
f
r
o
i
r
p
e
h
t
g
n
i
r
u
d
i
d
a
p
s
t
n
u
o
m
a
l
a
u
t
c
a
r
o
f
I
T
S
d
e
u
r
c
c
a
e
h
t
o
t
s
t
n
e
m
t
s
u
d
a
s
u
p
l
j
s
u
n
o
b
h
s
a
c
d
e
u
r
c
c
a
n
a
f
o
d
e
s
i
r
p
m
o
c
s
i
)
I
T
S
(
e
v
i
t
n
e
c
n
I
m
r
e
T
t
r
o
h
S
e
h
T
)
3
(
9
1
D I R E C T O R S ’ R E P O R T
D.
Share based compensation
(i)Shares
Retention incentives accrued in the prior year have been settled through share based payments during the year,
valued at the market value on the day of issue:
No of Shares
granted and
vested
83,745
50,955
50,724
73,728
68,133
327,285
Mr S Godbille
Mr P Salvati
Dr J Schlimbach
Mr M Schramko
Ms M Withers
Total
Fair Value
Total Fair Value
($)
$0.168
$0.168
$0.168
$0.168
$0.168
($)
14,069
8,560
8,522
12,386
11,447
54,984
Long term incentives accrued in the current year of $95,804 are expected to be settled through share based
payments during the next financial year, valued at the market value on the day of issue.
(ii)Options
During 2013, Mr Odouard accepted an offer of 987,739 (2012: 706,373) options from the Quickstep Employee
Incentive Plan (EIP) in accordance with the resolutions passed at the 2012 Annual General Meeting. The number
of options granted was calculated with reference to the volume weighted average of the ASX quoted price for
QHL shares at 31 August 2012 being 16.95 cents (Prior year: 22.79 cents).
The options will vest if certain performance hurdles relating to an increase in share value are achieved at the
prescribed testing dates. Such a performance hurdle is chosen to align the performance objectives of key
Executives with those of the Company’s shareholders. The fair value of the options, as calculated under the
accounting standards, (refer note 34), takes into account a range of assumptions including the likelihood of the
options vesting and the projected share price at the time of vesting (see below). The fair value of options granted
in 2013 is $123,467 (2012:$122,203).
No options granted during 2013 vested, were exercised or lapsed.
The expense recorded in the financial statements of $141,340 (2012: $139,110) is the portion of the current offer
and all prior offers attributable to the current financial year as required by accounting standards.
No options vested or were exercised in the current year (2012: nil).
Unvested options at 30/6/2013 are as follows:
Earliest
possible
vesting date
No. of
options
granted
Fair value
per option at
grant date
Total fair
value
($)
($)
Tranche 3 -
30/06/2011
Tranche 4 -
30/06/2012
2010 Year –
30/06/2013
2011 Year –
31/8/2014
2012 Year –
31/8/2015
925,926
$0.3150
291,667
471,698
$0.2700
127,358
471,337
$0.3620
170,624
706,373
$0.1730
122,203
987,739
$0.1250
123,467
Total
3,563,073
835,319
All of the above options have an exercise price of $nil and an expiry date of 4 years after their earliest possible
vesting date.
20
31
e
u
s
s
i
f
o
y
a
d
e
h
t
n
o
e
u
a
v
l
t
e
k
r
a
m
e
h
t
t
a
d
e
u
a
v
l
,
r
a
e
y
e
h
t
g
n
i
r
u
d
s
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
s
h
g
u
o
r
h
t
d
e
l
t
t
e
s
n
e
e
b
e
v
a
h
r
a
e
y
r
o
i
r
p
e
h
t
n
i
s
e
v
i
t
n
e
c
n
i
r
e
h
t
O
:
e
d
u
c
n
l
i
s
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
S
)
1
(
)
2
(
s
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
s
h
g
u
o
r
h
t
d
e
l
t
t
e
s
e
b
o
t
r
a
e
y
t
n
e
r
r
u
c
e
h
t
o
t
g
n
i
t
a
e
r
l
s
e
v
i
t
n
e
c
n
I
m
r
e
T
g
n
o
L
d
e
t
a
m
i
t
s
e
f
o
l
a
u
r
c
c
A
s
e
v
i
t
n
e
c
n
I
m
r
e
T
g
n
o
L
s
a
d
e
u
s
s
i
s
e
r
a
h
S
s
t
n
e
m
t
s
u
d
a
j
l
a
u
r
c
c
A
)
B
R
P
E
(
s
e
s
u
n
o
b
n
o
i
t
n
e
t
e
r
d
n
a
e
c
n
a
m
r
o
f
r
e
p
e
v
i
t
u
c
e
x
E
.
i
i
i
s
e
s
u
n
o
b
y
t
l
a
y
o
L
.
i
i
:
f
o
r
a
e
y
t
n
e
r
r
u
c
e
h
t
o
t
)
P
E
I
(
s
n
o
i
t
p
O
.
i
l
t
e
b
a
u
b
i
r
t
t
a
n
o
i
t
r
o
p
e
h
T
.
a
.
b
.
c
.
d
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK
DIRECTOR’S REPORT
D I R E C T O R S ’ R E P O R T
Details of the vesting profile of the options granted in this and prior years are detailed below.
Number of
options granted
Grant date
% vested
in this
year
%
forfeited
in this
year (1)
Financial years in
which grant vests
Directors
Mr P Odouard
Mr P Odouard
Mr P Odouard
Mr P Odouard
Mr P Odouard
925,926
471,698
471,337
706,373
987,739
30/03/2010
30/03/2010
26/11/2010
23/11/2011
22/11/2012
0
0
0
0
0
0
0
0
0
0
2013
2013
2014
2015
2016
(1) The % forfeited in the year represents the reduction from the maximum number of options available to
vest due to performance criteria not being achieved.
Exercise of options granted as compensation
During the reporting period no shares were issued on the exercise of options previously granted as compensation.
No options lapsed.
(iii)Rights to shares
(iii.a) Executive Performance and Retention Bonus
Mr Godbille, Mr Johnson and Ms Withers were granted, as compensation during the previous reporting period,
rights to shares offered through a performance and retention bonus scheme. The rights vest on 31 December
2013 upon performance of criteria related to the Company’s relocation objectives and are conditional upon
continued employment. Ms Withers resigned from the company on 21 December 2013 and as a consequence, her
entitlements under the retention bonus scheme have lapsed. Refer to the table below for further details.
The rights have a $nil exercise price and have no expiry date. During the 2013 Financial Year, Ms Withers’ rights
were forfeited due to termination of employment (2012: nil).
The rights have been valued at fair value based on a Monte Carlo simulation (refer note 34) at the issue date. An
expense of $169,244 (2012:$96,046) has been included in the financial statements as the portion of the current
offer attributable to the current financial year as required by accounting standards.
Number of
rights granted
during 2012
Grant date
Fair value at
grant date ($)
Expensed
($)
Number vested
during the year
Executives
Mr S Godbille
Mr J Johnson
Mrs M Withers
Total
764,818
688,337
434,847
1,888,002
10/02/12
10/02/12
10/02/12
190,400
171,360
108,254
100,719
90,647
(22,122)
169,244
0
0
0
DIRECTOR’S REPORT
D I R E C T O R S ’ R E P O R T
(iii.b) Loyalty Bonus
Rights have been issued to a number of key management personnel in prior years as retention incentives. The
rights vest in two tranches provided the employee remains employed with the Group. 1/3 vest 2 years from the
date granted, 2/3 vest 3 years from the date granted.
The rights are valued at market value of the Group’s share on the date of grant of the rights. An expense of
$104,509 (2012:$135,502) has been included in the financial statements as the portion of the offer attributable to
the current financial year as required by accounting standards.
769,131 rights vested (2012: 680,235 vested) during the period.
The value disclosed is the portion of the fair value of the options recognised in the reporting period.
(iii.c) Vesting profile of Rights
Details of the vesting profile of the rights to shares granted as remuneration to each key management person of
the Group are detailed below.
Number
of rights
granted
Grant date
No of
rights
vested in
year (2)
No of
rights
forfeited
in year(1)
Executives
Mr S Godbille
Mr J Johnson
Mr A Vihersaari
Ms M Withers
(2)
(3)
(2)
(3)
(2)
(2)
(2)
(1)
267,605
764,818
471,698
688,337
250,000
276,000
255,363
434,847
12/07/2010
10/02/2012
01/04/2011
10/02/2012
01/07/2010
01/10/2009
06/07/2012
10/02/2012
89,202
-
157,233
-
83,333
184,000
255,363
-
-
-
-
-
-
-
-
434,847
%
vested
in year
33.33%
-
33.33%
-
33.33%
66.67%
100.00%
-
Market
Value of
rights
vested(2)
$
23,193
-
41,667
-
22,499
58,880
40,858
-
Financial
years in which
grant vests
2013 & 2014
2014
2013 & 2014
2014
2013 & 2014
2012 & 2013
2013
2014
(1)
(2)
Rights were forfeited due to termination of employment.
Rights vest in two tranches provided the employee remains with the group. 1/3 vest 2 years from the date
granted, 2/3 vest 3 years from the grant date. During the year 769,131 rights were exercised at $nil
consideration. The market value of the rights exercised was $187,097.
(3)
Rights vest subject to performance conditions.
(iv) Modification of terms of equity-settled share-based payment transactions
No terms of equity-settled share-based payment
transactions (including options and rights granted as
compensation to a key management person) have been altered or modified by the issuing entity during the
reporting period or the prior period.
32
21
22
33
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK DIRECTOR’S REPORT
CORPORATE GOVERNANCE STATEMENT
D I R E C T O R S ’ R E P O R T
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
E.
Analysis of bonuses included in remuneration
Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to each director of
the Company and each of the named Company Executives and relevant Group Executives and other key
management personnel of the Group are detailed below:
Short-term incentive bonus 2013
Included in
remuneration
$ (1)
% vested in
year
% forfeited
in year (2)
Directors
Mr P Odouard
Executives
Mr D Brosius
Mr S Godbille
Mr J Johnson
Mr P Robertson
Dr J Schlimbach
Mr M Schramko
Ms T Swinley
Mr A Vihersaari
29,932
39.16%
60.84%
31,409
10,940
(4,900)
9,375
9,759
8,563
4,625
3,186
87.39%
43.89%
-
50.00%
83.85%
35.90%
20.00%
22.45%
12.61%
56.11%
100.00%
50.00%
16.15%
64.10%
80.00%
77.55%
(1)
Amounts included in remuneration for the financial year represent the amount that vested in the financial
year based on achievement of Group and/or personal goals and satisfaction criteria. No amounts vest in
future financial years in respect of the bonus schemes for the 2013 year. The amounts included in
remuneration for the current reporting period include adjustments to the 2012 bonus paid during the current
reporting period compared to the bonus accrual made in the prior reporting period.
(2)
The amounts forfeited are due to the Group performance, personal performance or service criteria not being
met in relation to the current financial year.
Dated at Sydney, New South Wales this 30 day of September 2013.
Signed in accordance with a resolution of the Directors:
P M Odouard
Managing Director
This statement outlines the main corporate governance practices in place throughout the financial year, which
comply with the ASX Corporate Governance Council recommendations, unless otherwise stated.
1.
Board of directors
Role of the Board
The Board’s Charter identifies its key objectives as:
increasing shareholder value;
safeguarding shareholders’ rights and interests; and
ensuring that the Company is properly managed.
The Board is responsible for:
guiding the development of an appropriate culture and values for the Group through the establishment and
review of Codes of Conduct and policies and procedures to enforce ethical behaviour and provide
guidance on appropriate work methods;
monitoring financial performance, including approval of the annual and half-year financial statements and
liaison with the Company’s auditors;
appointment of, and assessment of the performance of, the Chief Executive Officer;
monitoring managerial performance;
ensuring that an appropriate set of internal controls is implemented so that significant risks facing the
Company and its controlled entities have been identified;
reporting to shareholders and regulatory authorities; and
making all decisions outside the scope of powers and authorities otherwise delegated.
Day-to-day management of the Group’s affairs and the implementation of the corporate strategy and policy
initiatives are delegated by the Board to the Managing Director and senior Executives.
Board Processes
To assist in the execution of its responsibilities, the Board has established a number of Board committees
including an Audit, Risk and Compliance Committee and a Remuneration, Nomination and Diversity Committee.
These committees have written mandates and operating procedures, which are reviewed on a regular basis. The
Board has also established a framework for the management of the Group including a system of internal control,
a business risk management process and the establishment of appropriate ethical standards.
The full Board currently hold 9 scheduled meetings each year, including strategy meetings, plus additional
meetings at such other times as are necessary to address any specific significant matters that may arise.
The agenda for meetings is prepared in conjunction with the Chairperson, Chief Executive Officer and Company
Secretary. Standing items include the Chief Executive Officer’s report, financial reports, strategic matters,
governance and compliance. Submissions are circulated in advance. Executives are regularly involved in Board
discussions and directors have other opportunities, including visits to business operations, for contact with a wider
group of employees.
Director and Executive education
The Group has a formal process to educate new directors about the nature of the business, current issues, the
corporate strategy and the expectations of the Group concerning performance of directors. Directors also have
the opportunity to visit Group facilities and meet with management to gain a better understanding of business
operations. Directors are given access to continuing education opportunities to update and enhance their skills
and knowledge.
The Group also has a formal process to educate new senior Executives upon taking such positions. The
induction program includes reviewing the Group’s structure, strategy, operations, financial position and risk
management policies. It also familiarises the individual with the respective rights, duties, responsibilities and roles
of the individual and the Board.
34
23
24
35
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
Independent professional advice and access to Company information
Each director has the right of access to all relevant Company information and to the Company’s Executives and,
subject to prior consultation with the Chairperson, may seek independent professional advice from a suitably
qualified adviser at the Group’s expense. The director must consult with an advisor suitably qualified in the
relevant field, and obtain the Chairperson’s approval of the fee payable for the advice before proceeding with the
consultation. A copy of the advice received by the director is made available to all other members of the Board.
Composition of the Board
During the prior financial year, the Board composition changed to comprise seven Non-Executive directors, one of
whom is the Chairperson, and one Executive director.
The Company’s Constitution provides that the number of directors shall not be less than three and not more than
nine. There is no requirement for any shareholding qualification.
The Board considers the mix of skills and the diversity of Board members when assessing the composition of the
Board. The Board assesses existing and potential directors’ skills to ensure they have appropriate industry
experience in the Group’s operating segments.
The Board, through its Remuneration, Nomination and Diversity (RN&D) Committee, is responsible for establishing
criteria for Board membership, reviewing Board membership and identifying and nominating directors. Board
membership is regularly reviewed to ensure the Board has an appropriate mix of qualifications, skills and
experience. Directors appointed by the Board hold office only until the next Annual General Meeting and are then
eligible for re-appointment.
Directors, (other than the Managing Director) are eligible for re-appointment by shareholders, no later than the
third anniversary following their last appointment. Subject to the requirements of the Corporations Act, there is no
maximum period of service as a director.
The Managing Director may be appointed for any period and on any terms the Directors, through its RN&D
Committee, identify as appropriate, although they shall be guided by current market practices and rates.
2.
Remuneration, Nomination and Diversity Committee
The RN&D Committee is comprised of three Non-Executive Directors, and meets at least twice per year.
The function of the RN&D Committee is to assist the Board in formulating policies on and in determining:
the remuneration packages of Executive directors, Non-Executive directors and senior Executives;
cash bonuses and equity based incentive plans, including appropriate performance hurdles and total
payments proposed;
the size and composition of the Board;
the selection of new directors and senior Executives;
the evaluation methods used in determining the performance of directors and senior Executives; and
a corporate culture of ethnic, gender, religious and social diversity.
The RN&D Committee is chaired by Mr Peter Cook. Attendance at RN&D Committee meetings held during the
financial year is disclosed in the Directors’ Meetings section of the Directors Report.
3.
Audit, Risk and Compliance Committee
The Audit, Risk and Compliance (AR&C) Committee is comprised of four independent non-Executive directors,
and meets at least twice per year. Its key roles are to:
monitor the integrity of the financial statements of the Group;
review significant financial reporting judgements;
recommend to the Board the appointment of external auditors and in particular the scope of the audit, level
of fees and their independence; and
oversee the establishment, implementation and review of the Group’s risk management systems
The AR&C Committee was chaired by Mr David Wills for the year ended 30 June 2013. Since balance date, Mr
David Wills retired as Director and Chairman of the AR&C Committee, and has been replaced by Mr Nigel
Ampherlaw.
4.
Risk Management
Oversight of the risk management system
The AR&C Committee oversees the establishment, implementation and review of the Group’s risk management
systems which have been established by management for assessing, monitoring and managing operational,
financial reporting and compliance risks. The Chief Executive Officer and the Vice President of Finance have
provided assurance, in writing to the Committee and the Board, that the financial reporting risk management and
associated compliance and controls have been assessed and found to be operating effectively. The operational
and other risk management compliance and controls have also been assessed and found to be operating
effectively.
Risk profile
Management provide a risk profile on a regular basis to the AR&C Committee that outlines the material business
risks to the Company. Risk reporting includes the status of risks through integrated risk management programs
aimed at ensuring risks are identified, assessed and appropriately managed.
The AR&C Committee reports the status of material business risks to the Board on a regular basis. Further
details of the Company’s risk management policy and internal compliance and control system are available on the
Company’s website.
Each business operational unit is responsible and accountable for implementing and managing the standards
required by the program.
Material business risks for the Company may arise from such matters as actions by competitors, government
policy changes, the impact of exchange rate movements on the price of raw materials and sales, difficulties in
sourcing raw materials, environment, occupational health and safety, property, financial reporting, and the
purchase, development and use of information systems.
Risk management and compliance control
The Group strives to ensure that its products are of the highest standard. Towards this aim it has undertaken a
program to achieve AS/NZS ISO 9002 accreditation for each of its business segments.
The Board is responsible for the overall internal control framework, but recognises that no cost-effective internal
control system will preclude all errors and irregularities. The Board’s policy on internal control comprises the
Company’s internal compliance and control systems, including:
Operating unit controls – Operating units confirm compliance with financial controls and procedures
including information systems controls detailed in procedures manuals;
Functional speciality reporting – Key areas subject to regular reporting to the Board include treasury and
derivatives operations, environmental, legal matters; and
Investment appraisal – Guidelines for capital expenditure include annual budgets, detailed appraisal and
review procedures,
levels of authority and due diligence requirements where businesses are being
acquired or divested.
Comprehensive practices have been established to ensure:
capital expenditure and revenue commitments above a certain size obtain prior Board approval;
financial exposures are controlled, including the use of derivatives. Further details of the Company’s
policies relating to interest rate management, forward exchange rate management and credit risk
management are included in note 29 to the financial statements;
occupational health and safety standards and management systems are monitored and reviewed to
achieve high standards of performance and compliance with regulations;
business transactions are properly authorised and executed;
the quality and integrity of personnel (see below); and
financial reporting accuracy and compliance with the financial reporting regulatory framework (see below).
36
25
26
37
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
Quality and integrity of personnel
CORPORATE GOVERNANCE STATEMENT
6.
Communication with shareholders
Written confirmation of compliance with policies in the Ethical Standards Manual is obtained from all operating
units. Formal appraisals are conducted at least annually for all employees. Training and development and
appropriate remuneration and incentives with regular performance reviews create an environment of cooperation
and constructive dialogue with employees and senior management. A formal succession plan is also in place to
ensure competent and knowledgeable employees fill senior positions when retirements or resignations occur.
The Board encourages participation of shareholders at the Annual General Meeting. In addition, Quickstep
proactively provides additional information with its quarterly reports to the ASX and periodically produces
Shareholder newsletters to update on the latest developments and results for the Group.
Further information can be found on Quickstep Holdings Limited official website www.quickstep.com.au.
Financial reporting
7.
Diversity
The Chief Executive Officer and the Vice President of Finance have provided assurance in writing to the Board
that the Company’s financial reports are founded on a sound system of risk management and internal compliance
and control which implements the policies adopted by the Board.
Monthly actual results are reported against budgets approved by the Directors and revised forecasts for the year
are prepared regularly.
Appropriate risk management strategies and procedures are developed to mitigate any identified risks to the
business. The procedures include identifying the context, registering, analysing, evaluating, treating, monitoring
and escalating the identified risks accordingly.
Environmental regulation
The Group’s activities to date have not been subject to any particular and significant environmental regulation
under Laws of either the Commonwealth or a State or Territory. The Company has adopted policies requiring
compliance with environmental laws. The Directors are not aware of any material breach of these laws.
5.
Ethical standards
All directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all
times to enhance the reputation and performance of the Group. Every employee has a nominated supervisor to
whom they may refer any issues arising from their employment supplemented by a Whistleblower policy.
Conflict of interest
Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with
those of the Company. The Board has developed procedures to assist directors to disclose potential conflicts of
interest.
Where the Board believes that a significant conflict exists for a Director on a Board matter, the Director concerned
does not receive the relevant Board papers and is not present at the meeting whilst the item is considered.
Details of Director related entity transactions with the Company and the Group are set out in note 32 to the
financial statements.
Code of conduct
An Employee Code of Conduct has been developed and applies to all directors, managers, employees and
contractors. The code specifies the standards of behaviour and the following principles embody the Code:
To act with integrity and professionalism in the performance of duties and be scrupulous in the proper use
of the Group’s information, funds, equipment and facilities;
To edify the Company and colleagues when dealing with customers, visitors, suppliers and shareholders;
To exercise fairness, equity, proper courtesy, consideration and sensitivity in all dealings in the course of
carrying out duties;
To avoid real, apparent or perceived conflicts of interest; and
To increase shareholder value within an appropriate framework to safeguard the rights and interests of the
Company’s shareholders and the financial community.
Trading in general company securities by directors and employees
A security Trading Policy has been established and is published on the Company web site. It requires that
directors, officers and employees who wish to trade in Company securities must have regard to the statutory
provisions of the Corporations Act 2001 dealing with insider trading. Furthermore, directors and officers are
required to observe Blackout Periods in accordance with ASX rulings and to notify the Chairman prior to
undertaking transactions at any other time.
The Company has established and disclosed on its website its Diversity Policy. The Board is committed to
appointing employees, directors and other officers based on merit, free from positive or negative bias on any
ground including ethnicity, gender, religion or social background, recognising the security obligations of
Quickstep’s business activities. The Board is still developing comprehensive processes and procedures to
support this policy, and measurable objectives to assess its effectiveness.
The Board has therefore determined that the most appropriate initial measurable objectives addressing gender
diversity will be those that ensure Quickstep implements appropriate workplace policies and practices, including
but not limited to the recruitment and retention of employees and Board members.
The following table outlines the measureable objectives the Company will initially focus on to achieve gender
diversity:
Objective
Develop and promote a Diversity Policy that promotes
a corporate culture of diversity
recruitment documents, processes, and
Update
partners to ensure the Company always appeals to,
and targets, a diverse pool of potential employees
Update internal policies and procedures to reflect
flexible work culture
Progress achieved to date
Policy developed, displayed on corporate website
Performing review of existing recruitment documents
and RN&D policies and procedures
Performing review of current policies.
The Group’s current gender representation at Board, key management and employee level is as follows:
Gender representation
Female (%)
Male (%)
Female (%)
Male (%)
30 June 2013
30 June 2012
Board representation
Key management personnel
representation
Other employee representation
Total Officers and Employees
Director Performance Evaluation
0%
11%
17%
14%
100%
89%
83%
86%
0%
13%
20%
16%
100%
87%
80%
84%
The performance of the Board and the various committees is formally reviewed annually by the full Board. The
performance of each director is continually monitored by the Chairman and the other directors and is reviewed by
each director with the Chairman. The performance of the Chairman is reviewed by the other directors and the
results discussed with the Chairman by a nominated director.
Director’s Disclosure Obligations
This policy is included in the Code of Conduct to ensure trading in the Company’s securities is conducted on a fair
basis. Quickstep directors are obliged (subject to specific exceptions) to advise the ASX of any information that a
reasonable person would expect to have material effect on the price or value of the Company’s issued securities.
Independent Professional Advice
Individual directors have the right, in connection with their duties and responsibilities as directors, to seek
independent professional advice at the Company’s expense. With the exception of expenses for legal advice in
relation to a director’s rights and duties, the engagement of outside advisors is subject to prior approval of the
Chairman, which will not be unreasonably withheld.
ASX Guidelines on Corporate Governance
Pursuant to ASX Listing Rule 4.10.3, the directors believe that the Company has followed the best practice
recommendations set by the ASX Corporate Governance Council.
38
27
28
39
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
C O N S O L I D AT E D S T AT E M E N T O F P R O F I T O R L O S S A N D
O T H E R C O M P R E H E N S I V E I N C O M E
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2013
C O N S O L I D AT E D S T AT E M E N T O F F I N A N C I AL P O S I T I O N
A S A T 3 0 J U N E 2 0 1 3
Revenue
Cost of sales
Gross profit
Government grant income
Other income
Operational expenses
Marketing expenses
Corporate and administrative expenses
Research and development expenses
Other expenses
Loss from operating activities
Financial income
Financial expense
Net financing income/(cost)
Loss before income tax
Income tax benefit
Loss for the period
Other comprehensive loss, net of income tax
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation difference for foreign operations
Effective portion of changes in fair value of cash flow hedges
Other comprehensive income for the period, net of
income tax
Note
2013
$
2012
$
5
5
5
6
8
8
2,562,621
503,168
(2,722,373)
(1,502,637)
(159,752)
(999,469)
3,710,624
4,257,448
517,557
393,532
(8,581,401)
(7,130,207)
(860,211)
(1,072,049)
(5,748,934)
(5,882,128)
(3,770,178)
(2,968,978)
(1,228,556)
(261,596)
(16,120,851)
(13,663,447)
355,157
2,072,655
(1,220,200)
(210,809)
(865,043)
1,861,846
(16,985,894)
(11,801,601)
-
-
(16,985,894)
(11,801,601)
162,102
-
162,102
(70,601)
71,065
464
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other current assets
Assets held for sale
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Deferred income
Loans and borrowings
Employee benefits
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables
Deferred income
Loans and borrowings
Employee benefits
Note
i)
ii)
2013
$
2012
$
12
13
14
15
16
17
18
19
21
22
23
25
21
22
23
25
1,393,320
4,564,303
1,650,674
390,400
387,430
1,878,000
3,000,672
4,915,978
418,591
690,400
326,301
-
10,264,127
9,351,942
13,799,229
65,422
16,491,346
230,776
13,864,651
16,722,122
24,128,778
26,074,064
2,569,237
2,795,014
1,696,785
261,289
3,352,297
-
10,700
292,961
7,322,325
3,655,958
654,118
6,086,391
9,773,722
26,668
561,365
-
5,241,938
-
TOTAL NON-CURRENT LIABILITIES
16,540,899
5,803,303
TOTAL LIABILITIES
23,863,224
9,459,261
Total comprehensive loss for the period
(16,823,792)
(11,801,137)
NET ASSETS
265,554
16,614,803
Loss attributable to:
Owners of the Company
Total comprehensive loss attributable to:
Owners of the Company
Earnings per share
(16,985,894)
(11,801,601)
(16,823,792)
(11,801,137)
Basic loss (cents/share) for Quickstep Holdings Ltd
Diluted loss (cents/share) for Quickstep Holdings Ltd
11
11
(5.25)
(5.25)
(3.96)
(3.96)
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the
accompanying notes.
EQUITY
Share capital
Reserves
Accumulated losses
TOTAL EQUITY
26
27
28
74,754,828
2,959,344
(77,448,618)
74,754,828
2,322,699
(60,462,724)
265,554
16,614,803
The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
40
29
30
41
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2013
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2012
i
s
e
t
o
n
g
n
y
n
a
p
m
o
c
c
a
e
h
t
h
t
i
w
n
o
i
t
c
n
u
n
o
c
n
j
i
d
a
e
r
e
b
o
t
s
i
y
t
i
u
q
e
n
i
1
3
s
e
g
n
a
h
c
f
o
t
n
e
m
e
t
a
t
s
d
e
t
a
d
i
l
o
s
n
o
c
e
h
T
-
2
0
1
,
2
6
1
-
-
)
4
9
8
,
5
8
9
,
6
1
(
)
4
9
8
,
5
8
9
,
6
1
(
-
-
-
)
2
9
7
,
3
2
8
,
6
1
(
)
4
9
8
,
5
8
9
,
6
1
(
-
$
$
s
e
s
s
o
l
$
e
v
r
e
s
e
r
s
t
n
e
m
y
a
p
y
t
i
u
q
e
l
a
t
o
T
d
e
t
a
l
u
m
u
c
c
A
d
e
s
a
b
e
r
a
h
S
3
0
8
,
4
1
6
,
6
1
)
4
2
7
,
2
6
4
,
0
6
(
6
5
9
,
3
1
6
,
2
3
4
5
,
4
7
4
3
4
5
,
4
7
4
4
5
5
,
5
6
2
-
-
3
4
5
,
4
7
4
3
4
5
,
4
7
4
)
8
1
6
,
8
4
4
,
7
7
(
9
9
4
,
8
8
0
,
3
i
g
n
g
d
e
H
e
v
r
e
s
e
R
e
v
r
e
s
e
r
n
o
i
t
a
l
s
n
a
r
T
l
a
t
i
p
a
c
e
r
a
h
S
e
t
o
N
$
-
-
-
-
-
-
-
-
-
-
2
0
1
,
2
6
1
2
0
1
,
2
6
1
-
-
-
-
-
-
-
-
$
$
)
7
5
2
,
1
9
2
(
8
2
8
,
4
5
7
,
4
7
8
2
7
2
7
2
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
d
o
i
r
e
p
e
h
t
r
o
f
s
s
o
L
d
o
i
r
e
p
f
o
e
u
a
v
l
r
i
a
f
n
i
s
e
g
n
a
h
c
f
o
n
o
i
t
r
o
p
e
v
i
t
c
e
f
f
E
e
c
n
e
r
e
f
f
i
d
n
o
i
t
l
a
s
n
a
r
t
y
c
n
e
r
r
u
c
i
n
g
e
r
o
F
s
e
g
d
e
h
w
o
l
f
h
s
a
c
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
d
o
i
r
e
p
d
e
d
r
o
c
e
r
,
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
T
y
t
i
u
q
e
n
i
y
l
t
c
e
r
i
d
o
t
i
s
n
o
i
t
u
b
i
r
t
s
d
d
n
a
y
b
s
n
o
i
t
u
b
i
r
t
n
o
C
s
r
e
n
w
o
l
2
1
0
2
y
u
J
1
t
a
s
a
e
c
n
a
a
B
l
7
2
s
t
n
e
m
y
a
p
n
o
i
t
c
a
s
n
a
r
t
d
e
s
a
b
e
r
a
h
S
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
t
l
a
t
o
T
)
5
5
1
,
9
2
1
(
8
2
8
,
4
5
7
,
4
7
3
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
l
a
B
I
Y
T
U
Q
E
N
I
S
E
G
N
A
H
C
F
O
T
N
E
M
E
T
A
T
S
D
E
T
A
D
L
O
S
N
O
C
I
3
1
0
2
E
N
U
J
0
3
D
E
D
N
E
R
A
E
Y
E
H
T
R
O
F
42
$
$
s
e
s
s
o
l
$
e
v
r
e
s
e
r
s
t
n
e
m
y
a
p
y
t
i
u
q
e
l
a
t
o
T
d
e
t
a
l
u
m
u
c
c
A
d
e
s
a
b
e
r
a
h
S
$
$
$
e
v
r
e
s
e
r
i
g
n
g
d
e
H
e
v
r
e
s
e
r
n
o
i
t
a
l
s
n
a
r
T
l
a
t
i
p
a
c
e
r
a
h
S
e
t
o
N
8
8
6
,
9
2
9
,
9
1
)
3
2
1
,
1
6
6
,
8
4
(
7
3
6
,
7
2
0
,
2
)
5
6
0
,
1
7
(
)
6
5
6
,
0
2
2
(
5
9
8
,
4
5
8
,
6
6
l
1
1
0
2
y
u
J
1
t
a
s
a
e
c
n
a
a
B
l
I
Y
T
U
Q
E
N
I
S
E
G
N
A
H
C
F
O
T
N
E
M
E
T
A
T
S
D
E
T
A
D
L
O
S
N
O
C
I
2
1
0
2
E
N
U
J
0
3
D
E
D
N
E
R
A
E
Y
E
H
T
R
O
F
)
1
0
6
,
0
7
(
5
6
0
,
1
7
-
-
)
1
0
6
,
1
0
8
,
1
1
(
)
1
0
6
,
1
0
8
,
1
1
(
-
-
-
5
6
0
,
1
7
-
-
-
-
)
1
0
6
,
0
7
(
)
7
3
1
,
1
0
8
,
1
1
(
)
1
0
6
,
1
0
8
,
1
1
(
-
5
6
0
,
1
7
)
1
0
6
,
0
7
(
-
-
-
-
-
8
8
4
,
7
3
9
0
0
0
,
0
2
5
,
7
)
5
5
5
,
7
5
5
(
9
1
3
,
6
8
5
2
5
2
,
6
8
4
,
8
-
-
-
-
-
-
-
-
9
1
3
,
6
8
5
9
1
3
,
6
8
5
3
0
8
,
4
1
6
,
6
1
)
4
2
7
,
2
6
4
,
0
6
(
6
5
9
,
3
1
6
,
2
-
-
-
-
-
-
i
s
e
t
o
n
g
n
y
n
a
p
m
o
c
c
a
e
h
t
h
t
i
w
n
o
i
t
c
n
u
n
o
c
n
j
i
-
-
-
-
-
8
8
4
,
7
3
9
0
0
0
,
0
2
5
,
7
)
5
5
5
,
7
5
5
(
3
3
9
,
9
9
8
,
7
8
2
7
2
7
2
6
2
6
2
6
2
7
2
d
o
i
r
e
p
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
d
o
i
r
e
p
e
h
t
r
o
f
s
s
o
L
f
o
e
u
a
v
l
r
i
a
f
n
i
s
e
g
n
a
h
c
f
o
n
o
i
t
r
o
p
e
v
i
t
c
e
f
f
E
e
c
n
e
r
e
f
f
i
d
n
o
i
t
l
a
s
n
a
r
t
y
c
n
e
r
r
u
c
i
n
g
e
r
o
F
s
e
g
d
e
h
w
o
l
f
h
s
a
c
d
o
i
r
e
p
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
d
e
d
r
o
c
e
r
,
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
T
y
t
i
u
q
e
n
i
y
l
t
c
e
r
i
d
o
t
i
s
n
o
i
t
u
b
i
r
t
s
d
d
n
a
y
b
s
n
o
i
t
u
b
i
r
t
n
o
C
t
s
e
o
n
f
o
i
n
o
s
r
e
v
n
o
c
e
h
t
n
o
s
e
r
a
h
s
f
o
e
u
s
s
I
s
r
e
n
w
o
s
t
n
e
m
y
a
p
n
o
i
t
c
a
s
n
a
r
t
d
e
s
a
b
e
r
a
h
S
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
t
l
a
t
o
T
s
e
r
a
h
s
i
y
r
a
n
d
r
o
f
o
e
u
s
s
I
s
t
s
o
c
g
n
s
a
r
i
i
e
r
a
h
S
d
a
e
r
e
b
o
t
s
i
y
t
i
u
q
e
n
i
2
3
s
e
g
n
a
h
c
f
o
t
n
e
m
e
t
a
t
s
d
e
t
a
d
i
l
o
s
n
o
c
e
h
T
)
7
5
2
,
1
9
2
(
8
2
8
,
4
5
7
,
4
7
2
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
l
a
B
43
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2013
C O N S O L I D AT E D S T AT E M E N T O F C AS H F L O W S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
Note
2013
$
2012
$
1.
(a)
Significant accounting policies
Reporting entity
Cash flows from operating activities
Cash receipts in the course of operations
Interest received
Interest paid
Research and development tax incentive and
government grants
Cash payments in the course of operations
10,732,977
95,829
(140,868)
489,172
392,192
(211,604)
4,763,093
(18,495,694)
392,778
(16,332,179)
Net cash used in operating activities
31
(3,044,663)
(15,269,641)
Cash flows from investing activities
Acquisition of plant and equipment
Receipts from (Investment in) term deposit
Government grants
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issues of shares
Payment of transaction costs
Proceeds from convertible loans
Repayment of convertible note
Proceeds from borrowings
Repayment of borrowings
Payment of borrowing costs
Finance lease payments
(4,006,642)
300,000
-
(10,180,301)
-
3,000,000
(3,706,642)
(7,180,301)
-
-
-
-
8,353,192
(2,822,835)
(340,835)
(39,441)
7,520,000
(557,509)
468,456
(604,017)
6,106,048
-
(871,400)
(17,645)
Net cash from financing activities
5,150,081
12,043,933
Net (decrease) / increase in cash and cash
equivalents
Effects of exchange rate changes on cash held in
foreign currencies
(1,601,224)
(10,406,009)
(6,128)
464
Quickstep 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 2013 comprise the Company and its subsidiaries
(together referred to as the “Group” and individually as “Group Entities”). The Group is a for-profit entity and is
primarily involved in the manufacture of composite components for the aerospace industry, and continuing research
and development in composite manufacturing processes.
(b)
Basis of preparation
Statement of compliance
The consolidated financial statements are general purpose financial statements, which have been prepared in
accordance with the Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards
Board (AASB) and the Corporations Act 2001. The consolidated financial statements of the Group comply with
the International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board
(IASB).
The consolidated financial statements were authorised for issue by the Board of Directors on 30 September 2013.
Basis of measurement
The financial statements are prepared on the historical cost basis except for financial liabilities measured at fair value
through the profit and loss (refer note 24) and derivative financial instruments measured at fair value. These
consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency.
Use of estimates and judgements
The preparation of financial statements in conformity with AASBs requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities,
income and expenses. 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 estimates are revised and in any future periods affected.
Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amount recognised in the financial statements are described in the
following notes:
Note 1 (d) – Financial position and going concern;
Note 17 – Recoverable amount of assets held for sale;
Note 18 – Recoverable amount of property, plant and equipment;
Note 21 – Royalties payable; and
Note 34 – Share-based payments
Cash and cash equivalents at 1 July
3,000,672
13,406,217
(c)
Significant accounting policies
Cash and cash equivalents at 30 June
12
1,393,320
3,000,672
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements, and have been applied consistently by all entities in the Group.
(d)
Going concern
The Group has incurred a loss after tax for the year ended 30 June 2013 of $16,985,894 (2012: loss after tax of
$11,801,601). The loss reflects a combination of the ongoing commercialisation of the operations of the Group and
a number of one off costs associated with the relocation of the business from Western Australia to New South
Wales. To fund these activities the Group has fully drawn its existing loan facilities and has received a customer
payment of $8,881,405 in advance of manufacture and delivery of product, which has been recognised as deferred
income in the statement of financial position.
Management and the Directors expect that during the 2014 and 2015 financial years the level of production required
to satisfy orders placed for the JSF project and to fulfil advance paid orders under the C-130J contract will increase.
As a consequence the level of working capital required will also increase.
Subsequent to year end the Group successfully raised $6.1 million (before costs) from the placement of shares to
institutional and sophisticated investors, and an additional $7.2 million (before costs) through a share purchase plan
offered to eligible investors, raising a total of $12.7 million net of transaction costs.
44
33
34
45
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
The financial report has been prepared on the basis of going concern. This basis presumes that funds will be
available to finance future operations and that the realisation of assets and settlement of liabilities will occur in the
normal course of business. The projected build up of working capital arising from increasing customer orders will
require further funding until the Group becomes cash flow positive (which, assuming research and development
expenditure remains consistent with current development expenditure, is currently expected to occur during the
financial year ending 30 June 2015). Until then, the ability of the Group to continue as a going concern in the
ordinary course of business and to achieve its business growth strategies and objectives is dependent upon the
ability of the Group to do a sufficient combination of the following things to enable its commitments to be met:
raising debt funding;
receiving further advance payments from customers
reducing cash outflows through cost control measures; and
reducing the Group’s expenditure on research and development.
The Directors are of the view that reducing expenditure on research and development would not be in the best
interests of long term wealth creation for shareholders. Consequently,
the Directors would prefer to use a
combination of the other measures listed above to manage its working capital requirements if possible, none of
which are committed at the date of this report.
The Directors consider that there are reasonable grounds to expect that the Group will be able to meet its
commitments through the measures listed above, and accordingly have prepared the financial report on a going
concern basis in the belief that the Group will realise its assets and settle its liabilities and commitments in the normal
course of business. However, should the Group not be successful in the matters discussed above, there is some
uncertainty as to whether the Group would be able to continue as a going concern.
(e)
Basis of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Quickstep
Holdings Limited (“Company” or “parent entity”) as at 30 June 2013 and the results of all subsidiaries for the year
then ended. Quickstep Holdings Limited and its subsidiaries together are referred to in the financial statements
as the consolidated entity or the Group.
A subsidiary is any entity controlled by the Company. Control exists where the Company has the power, directly
or indirectly, to govern the financial and operating policies of another entity so as to obtain benefits from its
activities. Subsidiaries are fully consolidated from the date on which control is transferred to the Group, and de-
consolidated from the date that control ceases.
Intra-group balances, and any recognised gains and losses or income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements.
Associates and jointly controlled entities (equity accounted investees)
Associates are those entities in which the Group has significant influence, but not control, over the financial and
operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of
the voting power of another entity. Jointly controlled entities are those entities over whose activities the Group
has joint control, established by contractual agreement and requiring unanimous consent for strategic financial
and operating decisions. Associates and jointly controlled entities are accounted for using the equity method
(equity accounted investees) and are initially recognised at cost. The Group’s investment includes goodwill
identified on acquisition, net of any accumulated impairment losses.
The consolidated financial statements include the Group’s share of the income and expenses and equity
movements of equity accounted investees, after adjustments to align the accounting policies with those of the
Group, from the date that significant influence or joint control commences until the date that significant influence
or joint control ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee,
the carrying amount of that interest (including any long-term investments) is reduced to zero and the recognition
of further losses is discontinued except to the extent that the Group has an obligation or has made payments on
behalf of the investee.
(f)
Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to
Australian dollars at the foreign exchange rate at that date. Foreign exchange differences arising on translation
are recognised in profit and loss. Non-monetary assets and liabilities that are measured in terms of historical cost
in a foreign currency are translated using the exchange rate at the date of the transaction.
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on
acquisition, are translated to Australian dollars at exchange rates at the reporting date. The income and
expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to
Australian dollars at exchange rates at the dates of the transactions.Foreign currency differences are recognised
in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in
equity. When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred
to the statement of comprehensive income.
Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign
operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form
part of a net investment in a foreign operation and are recognised directly in equity in the FCTR.
(g)
(i)
Financial instruments
Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they are originated. All other
financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade
date at which the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially
all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial
assets that is created or retained by the Group is recognised as a separate asset of liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when,
and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
The Group has the following non-derivative financial assets: held-to-maturity financial assets, and loans and
receivables.
Held-to-maturity financial assets
If the Group has the positive intent and ability to hold debt securities to maturity, then such financial assets are
classified as held-to-maturity. Held-to-maturity financial assets are recognised initially at fair value plus any
directly attributable transaction costs. Subsequent to initial recognition held-to-maturity financial assets are
measured at amortised cost using the effective interest method, less any impairment losses. Any sale or
reclassification of a more than insignificant amount of held-to-maturity investments not close to their maturity
would result in the reclassification of all held-to-maturity investments as available-for-sale, and prevent the Group
from classifying investment securities as held-to-maturity for the current and the following two financial years.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active
market. Such assets are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest
method, less any impairment losses.
Loans and receivables comprise cash and cash equivalents and trade and other receivables including service
concession receivables.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and on hand and short-term deposits with
an original maturity of three months or less. For the purposes of the cash flow statement, cash consists of cash
and short-term deposits as defined above, net of outstanding bank overdrafts.
(ii)
Non-derivative financial liabilities
All financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on
the trade date at which the Group becomes a party to the contractual provisions of the instrument. The Group
derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. Financial
assets and liabilities are offset and the net amount presented in the statement of financial position when, and only
when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the
asset and settle the liability simultaneously.
46
35
36
47
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
The Group has the following non-derivative financial liabilities recorded at amortised cost:
Separable embedded derivatives
Trade and other payables
Royalties payable (refer note 21).
Loans and borrowings, including a secured loan facility from the ANZ Bank of $10 million plus capitalised
interest of $3.3 million, and secured loan from Macquarie Bank for the R&D factoring facility.
(iii)
Share Capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares
and share options are recognised as a deduction from equity, net of any tax effects.
Dividends
Dividends are recognised as a liability in the period in which they are declared.
(iv)
Compound financial instruments
The liability component of a compound financial instrument is recognised initially at the fair value of a similar
liability that does not have an equity conversion option. The equity component is recognised initially at the
difference between the fair value of the compound financial instrument as a whole and the fair value of the liability
component. Any directly attributable transaction costs are allocated to the liability and equity components in
proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at
amortised cost using the effective interest method. The equity component of a compound financial instrument is
not re-measured subsequent to initial recognition.
Interest, dividends, losses and gains relating to the financial liability are recognised in profit or loss. Distributions
to the equity holders are recognised against equity, net of any tax benefit.
(v)
Derivative financial instruments, including hedge accounting
Embedded derivatives are separated from the host contract and accounted for separately if
the economic
characteristics and risks of the host contract and the embedded derivative are not closely related, a separate
instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the
combined instrument is not measured at fair value through profit or loss.
On initial designation of the derivative as the hedging instrument, the Group formally documents the relationship
between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in
undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the
hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on
an ongoing basis, whether the hedging instruments are expected to be “highly effective” in offsetting the changes in
the fair value or cash flows of the respective hedged items during the period for which the hedge is designated, and
whether the actual results of each hedge are within a range of 80-125 percent. For a cash flow hedge of a forecast
transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash
flows that could ultimately affect reported profit or loss.
Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss as
incurred. Subsequent to initial recognition, derivatives are measured at fair value and changes therein are
accounted for as described below.
Cash flow hedges
Changes in the fair value of a derivative hedging instrument designated as a cash flow hedge are recognised in
other comprehensive income to the extent that the hedge is effective and presented in the hedging reserve in equity.
To the extent that the hedge is ineffective, changes in fair value are recognised in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or
exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain
or loss previously recognised in other comprehensive income and presented in the hedging reserve in equity
remains there until the forecast transaction affects profit or loss. When the hedged item is a non-financial asset, the
amount recognised in other comprehensive income is transferred to the carrying amount of the asset when the asset
is recognised. If the forecast transaction is no longer expected to occur, then the balance in other comprehensive
income is recognised immediately in profit or loss. In other cases the amount recognised in other comprehensive
income is transferred to profit or loss in the same period that the hedged item affects profit or loss.
Changes in the fair value of separable embedded derivatives are recognised immediately in profit or loss.Other non-
trading derivatives
When a derivative financial instrument is not held for trading, and is not designated in a qualifying hedge relationship,
all changes in its fair value are recognised immediately in profit or loss.
(h)
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, the costs of dismantling the items and restoring the
site on which they are located and capitalised borrowing costs.
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. The gain or loss on disposal of an item of
property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of
property, plant and equipment and is recognised net within other income/other expense in profit or loss.
Government grants that compensate the Group for the cost of an asset are recognised as a deduction in arriving at
the carrying value of the asset.
Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are
assessed and if a component has a useful life that is different from the remainder of the asset, that component is
depreciated separately. Depreciation is recognised in profit and loss on a reducing balance basis over the estimated
useful lives of each component of an item of property plant and equipment. The depreciation rates used for each
class of depreciable asset for the current and prior years are:
Class of depreciable asset
Plant and factory equipment
Office equipment
(i)
(i)
Intangible assets
Research and development
Depreciation rate
6.67% to 37.50%
6.67% to 50.00 %
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and
understanding, is recognised in the statement of comprehensive income as an expense as incurred.
Development activities involve a plan or design of new or substantially improved products and processes.
Development expenditure is only capitalised if development costs can be measured reliably, the product or process
is technically or commercially feasible, future economic benefits are probable and the Group intends to and has
sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the
cost of materials, direct labour and overheads costs that are directly attributable to preparing the asset for its
intended use and capitalised borrowing costs. Capitalised development expenditure is measured at cost less
accumulated amortisation and accumulated impairment losses.
(ii)
Other Intangible Assets
Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less
accumulated amortisation and accumulated impairment losses.
(iii)
Amortisation
Amortisation is based on the cost of an asset less its residual value. Amortisation is recognised in profit and loss
on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that
they are available for use. The estimated useful lives in the current and comparative periods are as follows:
Licences, patents and rights to technology
10 years
Royalty buy-back
Capitalised development costs
Software
10 years
5 – 10 years
2 ½ years
48
37
38
49
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
(j)
Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as
finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair
value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is
accounted for in accordance with the accounting policy applicable to that asset.
Other leases are operating leases and the leased assets are not recognised on the Group’s statement of financial
position.
(k)
Inventories
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.
(l)
(i)
Impairment
Non-Derivative Financial assets
A financial asset not carried at fair value through profit and loss is assessed at each reporting date to determine
whether there is any objective evidence that it is impaired. A financial asset is impaired if objective evidence
indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event has a
negative effect on the estimated future cash flows of that asset that can be measured reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of the estimated future cash flows discounted at the original
effective interest rate.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial
assets are assessed collectively in groups that share similar credit risk characteristics.
All impairment losses are recognised in profit or loss.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment
loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in profit or loss.
(ii)
Non-financial assets
The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether there is
any indication of impairment.
If any such indication exists, the asset’s recoverable amount is estimated. For
goodwill and intangible assets that have indefinite useful lives or are not yet available for use, the recoverable
amount (the value in use of the asset in the cash generating unit (CGU) to which it relates) is estimated each year at
the same time. An impairment loss is recognised if the carrying amount of an asset exceeds its estimated
recoverable amount.
Impairment losses are recognised in the statement of comprehensive income unless the asset has previously been
revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with
any excess recognised through the statement of comprehensive income.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of
any goodwill allocated to the cash-generating unit (group of units) and then, to reduce the carrying amount of the
other assets in the unit (group of units) on a pro rata basis.
An impairment write down to goodwill may not be reversed in future years. In respect of other assets, impairment
losses recognised in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. 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.
(m)
Employee entitlements
Wages, salaries, annual leave and non-monetary benefits
Liabilities for employee benefits for wages, salaries, annual leave and other entitlements represent present
obligations resulting from employees’ services provided to reporting date, and are calculated at undiscounted
amounts based on remuneration wage and salary rates that the Group expects to pay as at reporting date
including related on-costs, such as, workers compensation insurance and payroll tax.
Provisions made in respect of other employee entitlements which are not expected to be settled within 12 months
(such as long service leave) are measured as the present value of the estimated future cash outflows to be made
by the Group in respect of services provided by employees up to the reporting date.
Share-based payment transactions
An expense is recognised for all equity-based remuneration and other transactions, including shares, rights and
options issued to employees and directors. The fair value of equity instruments granted is recognised, together
with a corresponding increase in equity, over the period in which the performance and/or service conditions are
fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’).
The amount recognised is adjusted to reflect the actual number of shares and options that vest, except for those
that fail to vest due to market conditions not being met. The fair value of equity instruments granted is measured
using a generally accepted valuation model, taking into account the terms and conditions upon which the equity
instruments were granted. The fair value of shares, options and rights granted is measured based on relevant
market prices at the grant date.
(n)
Revenue
Revenue from sale of goods is recognised in the profit and loss when persuasive evidence exists, usually in the form
of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the
buyer, recovery of consideration is probable, the associated costs and possible return of the goods can be estimated
reliably, there is no continuing management involvement with the goods, and the amount of revenue can be
measured reliably. Revenue from the rendering of a service is recognised in the income statement in proportion to
the stage of completion of the transaction at balance sheet date. The stage of completion is assessed by reference
to analysis of work performed.
To the extent to which amounts are received in advance of the provision of the related services, the amounts are
recorded as unearned income and credited to the statement of comprehensive income as earned.
Licence fee revenue is recognised on an accruals basis when the Group has the right to receive payment under the
relevant agreement and has performed its obligations.
(o)
Government grants
Government grants that compensate the Group for expenses incurred are recognised initially as deferred income
where there is a reasonable assurance that the grant will be received and all grant conditions will be met and are
recognised in profit or loss as other income on a systematic basis in the same periods in which the expenses are
recognised. Grants that compensate the Group for the cost of an asset are recognised as a deduction in arriving at
the carrying value of the asset.
(p)
Lease payments
Payments made under operating leases are recognised in the statement of comprehensive income on a straight-
line basis over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as
to produce a constant periodic rate of interest on the remaining balance of the liability.
50
39
40
51
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. A
specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that specified
asset. An arrangement conveys the right to use the asset if the arrangement conveys to the Group the right to
control the use of the underlying asset.
(q)
Finance income and finance costs
Finance income comprises interest income on funds invested (including available-for-sale financial assets),
dividend income, gains on the disposal of available-for-sale financial assets and fair value gains on financial
assets at fair value through profit and loss. Interest income is recognised as it accrues in profit and loss, using
the effective interest method.
Finance costs comprise interest expense on borrowings calculated using the effective interest method, dividend
income, transaction costs, unwinding discounting of provisions and foreign exchange gains and losses. The
interest expense component of finance lease payments is recognised in the profit and loss using the effective
interest method.
(r)
Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit and
loss except to the extent that it related to a business combination, or items recognised directly in equity or in other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates
enacted or substantially enacted at reporting date, and any adjustment to tax payable in respect of previous
years. Current tax payable also included any tax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of 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: goodwill, the initial recognition of assets or liabilities that affect neither accounting
nor taxable profit, nor differences relating to investments in subsidiaries to the extent that they will probably not
reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, based on the laws that have been enacted or substantively enacted at
the reporting date.
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.
Quickstep Holdings Limited and its subsidiaries have unused tax losses. However, no deferred tax balances
have been recognised, as it is considered that asset recognition criteria have not been met at this time.
(s)
Goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where
the amount of GST incurred is not recoverable from the taxation authority.
In these circumstances, the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from,
or payable to, the ATO is included as a current asset or liability in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows
arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as
operating cash flows.
(t)
Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the year, adjusted for own shares held. Diluted EPS is determined by
adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares
outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise
share options and rights granted and convertible notes and convertible loans on issue.
(u)
Segment reporting
Determination and presentation of operating segments
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components. All operating segments’ operating results are regularly reviewed by the Group’s CEO to make
decisions about resources to be allocated to the segment and assess its performance, and for which discrete
financial information is available.
Segment results that are reported to the CEO include items directly attributable to a segment as well as those that
can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the
Company’s headquarters), head office expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment,
and intangible assets other than goodwill.
(v)
New standards and interpretations not yet adopted
The Group has adopted all new and amended Australian Accounting Standards and Australian Accounting
Standards Board (AASB) interpretations that are mandatory for the current reporting period and relevant to the
Group.
Adoption of these standards and interpretations has not resulted in any material changes to the Group’s financial
statements.
New accounting standards
Several new accounting standards have been published that are not mandatory for this reporting period and have
not yet been adopted by the Group.
AASB 9 Financial Instruments (2010);
AASB10 Consolidated Financial Statements;
AASB 11 Joint Arrangements;
AASB 12 Disclosure of Interests in Other Entities;
AASB 13 Fair Value Measurement;
AASB 119 Employee Benefits revised; and
AASB 128 Investments in Associates and joint Ventures
The impact of these changes are still being fully assessed, however, initial assessments indicate that there will be no
significant impact on the Group’s financial statements.
2.
Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities. Where applicable, further information about the assumptions
made in determining fair values is disclosed in the notes specific to that asset or liability.
(a)
Trade and other receivables
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at
the market rate of interest at the reporting date. This fair value is determined for disclosure purposes.
(b)
Non-derivative financial liabilities
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 the reporting date. In respect of the
liability component of convertible notes and loans, the market rate of interest is determined by reference to similar
liabilities that do not have a conversion option. For finance leases the market rate of interest is determined by
reference to similar lease agreements.
52
41
42
53
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
(c)
Share-based payment transactions
(c)
Liquidity risk
The fair value of the Employee Incentive Plan (EIP) is measured using Monte Carlo Simulation. The fair value of
the share rights is measured using the Black-Scholes formula. Measurement inputs include share price on
measurement date, the exercise price of the instrument, expected volatility (based on weighted average historic
volatility adjusted for expected changes expected due to publicly available information), expected term of the
instruments (based on historical experience and general option holder behaviour), expected dividends, and the
risk-free interest rate (based on government bonds).
In the case of the EIP, market performance conditions
attaching to the grant are taken into account in the Monte Carlo Simulation in determining fair value. Service and
non-market performance conditions attached to the EIP transactions are not taken into account in determining fair
value.
(d)
Derivatives
The fair value of forward exchange contracts is based on their quoted market price, if available. If a quoted market
price is not available, then fair value is estimated by discounting the difference between the contractual forward
price and the current forward price for the residual maturity for the contract using a risk-free interest rate.
3.
(a)
Financial risk management
Overview
The Group has exposure to the following risks from their use of financial instruments:
credit risk;
liquidity risk; and
market risk.
This note presents information about the Group’s exposure to each of the above risks, their objectives, policies
and processes for measuring and managing risk, and the management of capital. Further quantitative disclosures
are included throughout these financial statements.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management
framework and is responsible for developing and monitoring risk management policies.
Risk management policies 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 policies and systems are
reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through training
and management standards and procedures, aims to develop a disciplined and constructive control environment
in which all employees understand their roles and obligations.
The Group’s Audit, Risk and Compliance Committee oversees how management monitors compliance with the
Group’s risk management policies and formally documented procedures and reviews the adequacy of the risk
management framework in relation to the risks faced by the Group.
(b)
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 and cash
balances and deposits.
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 other characteristics including the demographics of the Group’s customer
base, the default risk of the industry and country in which customers operate, as these factors may have an
influence on credit risk. Geographically, other than in Australia for amounts due from the Australian Taxation
Office, there is no concentration of credit risk. Goods are generally sold subject to retention of title clauses, so
that in the event of non-payment the Group may have a secured claim. The Group does not require collateral in
respect of trade and other receivables.
Cash balances and deposits
The Group limits its exposure to credit risk by only investing in liquid securities and only with counterparties that
have a credit rating of at least A+ from Standard & Poor’s. Given these high credit ratings, management has
assessed the risk that counterparties fail to meet their obligations as low.
As at the reporting date, no financial assets are neither past due or impaired.
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 liquid assets to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
Typically, the Group ensures that it has sufficient cash or funds otherwise reasonably available to it from
fundraising activities to meet expected operational expenses, including the servicing of financial obligations; this
excludes the potential impact of circumstances that cannot reasonably be predicted. Further details are set out in
Note 1(d).
(d)
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.
Interest rate risk
The Group is exposed to interest rate risk predominantly on cash balances and deposits. Given the relatively
short investment horizon for these, management has not found it necessary to establish a policy on managing the
exposure of interest rate risk.
The Group has entered into a variable rate secured loan agreement for a period of 10 years. The facility includes
an allowance to defer interest payments up to $3,333,333 over the first 5 years of the loan and interest will be
accrued on deferred amount. Interest is re-set on a monthly basis in accordance with the 30 days bank bill rate.
The facility includes an interest rate cap which limits the bank bill rate component of the variable rate to a
maximum of 5.03%. This limit will ensure that the interest to be capitalised will not exceed the capitalisation limit.
Currency risk
The Group is exposed to currency risk on sales, purchases and cash holdings that are denominated in a currency
other than the respective functional currencies of Group entities, primarily the Australian dollar (AUD), Euro (EUR)
and US Dollar (USD). The currencies in which these transactions primarily are denominated are AUD, EUR and
USD.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its
net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to
address short-term imbalances.
The Group’s investment in its German and USA subsidiaries are not hedged as the currency positions are
considered to be long-term in nature.
(e)
Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern, so as to maintain a strong capital base sufficient to maintain future development in accordance with the
business strategy. In order to maintain or adjust the capital structure, the Group may return capital to
shareholders or issue new shares. The Group’s focus has been to raise sufficient funds through equity and
borrowings so as to fund its working capital and commercialisation of technology requirements.
There were no changes in the Group’s approach to capital management during the year.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
Fair Value Hierarchy
As at the reporting date, all financial instruments held by Quickstep Holdings Limited are considered level 1 in the
fair value hierarchy. Quickstep Holdings Limited’s financial instruments are primarily made up of cash and cash
equivalents and trade receivables, to which there is active market to ascertain its value. During the year, there
have been no transfers from levels in the fair value hierarchy.
54
43
44
55
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
4.
Operating Segments
Major Customers
The Group has two operating segments, Manufacturing and Quickstep Systems. This has changed from the
previous year to exclude Research & Development (R&D) as an operating segment. Instead, R&D becomes a
support function of the two operating segments.
The following summary describes the operations in each of the Group’s reportable segments:
Manufacturing - Targeting manufacturing contracts utilising a range of manufacturing solutions including
traditional manufacturing technologies such as autoclaves and ‘next generation’ technologies such as the
patented “Quickstep Process”.
Quickstep Systems - Licensing our “Quickstep Process” technology to Original Equipment Manufacturers
(OEM’s) and their suppliers, and providing them with Quickstep machines and support services.
The amount earned by the manufacturing segment is attributable to the following customers:
Northrop Grumman ISS Int, Inc
Lockheed Martin Aeronautics
$1,283,665
$ 939,032
Geographical information
The Manufacturing and Quickstep Systems segments are managed at Quickstep’s head office in Australia.
In presenting information on the basis of geographical segments, segment revenue is based on the geographical
location of customers. Segment assets are based on the geographical location of the assets.
Manufacturing
Quickstep Systems
Total
2013
2,225,997
1,982,433
2012
130,068
-
2013
336,624
2,245,748
2012
373,100
4,650,980
2013
2,562,621
4,228,181
2012
503,168
4,650,980
2,908,176
2,225,082
372,358
273,980
3,280,534
2,499,062
960,807
184,610
224,948
-
1,185,755
184,610
(7,598,330)
(6,451,746)
(2,604,877)
(1,741,150)
(10,203,207)
(8,192,896)
17,381,123
17,135,012
5,097,790
5,101,709
22,478,912
22,236,721
20,913,124
7,123,044
1,177,744
1,357,297
20,090,868
8,480,341
3,160,200
9,073,926
321,924
105,285
3,482,124
9,179,211
External revenues
Other income
Depreciation,
amortisation and
impairment
Interest expense
Reportable
segment
profit/(loss) before
income tax
Reportable
segment assets
Reportable
segment liabilities
Reportable Capital
Expenditure
Reconciliation of reportable segment loss
Total loss for reportable segments
Unallocated amount: other corporate expenses
Consolidated loss before income tax
Reconciliation of reportable segment assets
Total assets for reportable segments
Unallocated amount: other corporate assets
Consolidated total assets
Reconciliation of reportable segment liabilities
Total liabilities for reportable segments
Unallocated amount: other corporate liabilities
Consolidated total liabilities
Consolidated
2013
$
2012
$
(10,203,207)
(6,782,687)
(16,985,894)
(8,192,896)
(3,608,705)
(11,801,601)
22,478,912
1,649,866
24,128,778
22,236,721
3,837,343
26,074,064
22,090,868
1,772,356
23,863,224
8,480,341
978,920
9,459,261
Australia
Germany
United States of America
Total
5.
Revenue and Income
Sales
Total revenue from operating actives
Government grant income
R & D tax incentive
Climate ready grant
SADI program grant
Other government grant income
Total government grant income
Other Income
Profit on foreign exchange transactions
Profit on sale of assets
Other income
Total other income
2013
$
Revenue
3,300
53,972
2,505,349
Non-current
assets
13,233,270
544,855
86,526
2012
$
Revenue
-
103,739
399,429
Non-current
assets
16,188,012
425,360
108,750
2,562,621
13,864,651
503,168
16,722,122
Consolidated
2013
$
2012
$
2,562,621
2,562,621
503,168
503,168
3,310,882
(1,451)
128,695
272,498
3,710,624
3,267,459
670,821
170,413
148,755
4,257,448
-
1,200
516,357
517,557
120,993
30,490
242,049
393,532
56
45
46
57
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
Note
Consolidated
2013
$
2012
$
6.
Other expenses
Amortisation of intangibles
Loss on disposal of assets
Impairment of assets held for sale
7.
Personnel expenses
Wages and salaries
Defined contribution plan expense
Other associated personnel expenses
Increase/(decrease) in liability for annual leave
Expense of share based payments
8.
Finance income and expense
Recognised in profit and loss
Interest income
Change in fair value of derivatives at fair value through profit or
loss
Change in fair value of deferred income through profit or loss
Realised foreign currency gains
Finance income
Finance lease interest paid
Convertible loan costs
Borrowing cost
Other
Interest expense on liabilities measured at amortised cost
Finance expense
19
17
34
24
209,060
11,785
1,007,711
1,228,556
6,949,944
599,779
987,249
107,029
474,543
9,118,544
83,445
-
201,460
70,252
355,157
(3,003)
-
(3,227)
(28,215)
(1,185,755)
(1,220,200)
261,596
-
-
261,596
6,013,199
470,899
812,032
(23,618)
490,321
7,762,833
325,675
1,746,980
-
-
2,072,655
(4,450)
(15,436)
(10,312)
(3,748)
(176,863)
(210,809)
Net finance income/ (expense)
(865,043)
1,861,846
Recognised in other comprehensive income
Foreign currency translation differences for foreign operations
Effective portion of changes in fair value of cash flow hedges
Finance income recognised in other comprehensive income, net
of tax
Attributable to:
Owner of the Company
Finance income recognised in other comprehensive income, net
of tax
9.
(a)
Income tax
Income tax benefit
The major components of income tax benefit are:
Current income tax benefit
Adjustments in respect of current income tax of previous years
Income
statement
tax benefit reported
the consolidated
in
income
162,102
-
162,102
162,102
162,102
(70,601)
71,065
464
464
464
-
-
-
-
-
-
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
(b)
Numerical reconciliation between tax benefit and
pre-tax net loss
A reconciliation between tax benefit and the product of
accounting loss before income tax multiplied by the Group’s
applicable income tax rate is as follows:
Loss before tax from continuing operations
At the statutory income tax rate of 30%
Expenditure not allowable for income tax purposes
Effect of different tax rate for overseas subsidiaries
Income not assessable
Deferred tax asset not brought to account
Income tax benefit
(c)
Tax losses not brought to account
Consolidated
2013
$
2012
$
(16,985,894)
(11,801,601)
(5,095,768)
2,719,443
28,981
(1,060,499)
3,407,843
-
(3,540,480)
1,916,529
11,650
1,612,301
-
The tax effect of unused tax losses for which no deferred tax
asset has been recognised.
54,997,902
39,046,886
(d)
Temporary differences not brought to account
Deferred tax assets/(liabilities):
Prepayments
Other provisions
Borrowing costs
Deductible capital raising costs and black hole expenditure
Property, plant and equipment
Intangibles
Deferred tax assets relating to temporary differences not
recognised
(3,213)
964,532
43,535
221,000
927,123
207,754
-
1,134,346
45,600
163,962
558,314
443,386
(2,360,731)
(2,345,608)
-
-
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets
have not been recognised in respect of these items because it is not probable at this time that future taxable profit
will be available against which the Group can utilise such benefits.
(e)
Tax consolidation legislation
Quickstep Holdings Limited and its 100% owned Australian resident subsidiaries have formed a tax consolidated
group effective from 1 July 2010.
(f)
R&D tax offset incentive
An R&D tax offset incentive of $3,310,882 (2012: $3,267,459) has been recorded as a receivable as at 30 June
2013 based on eligible expenditure incurred during the year of tax. This amount has been recorded as a government
grant (refer Note 5).
10.
Auditor’s remuneration
Amounts received or due and receivable by the auditor for:
Audit services
KPMG – current year
KPMG – under/(over) accrual from prior year
171,100
100,667
271,767
128,000
70,000
198,000
58
47
48
59
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
14.
Inventories
Raw materials and consumables
Work in progress
Consolidated
2013
$
2012
$
1,404,184
246,490
1,650,674
347,427
71,164
418,591
Inventories of $1,557,009 have been pledged as collateral against a secured bank loan (refer to Note 23).
15.
Other financial assets
Held-to-maturity investments
390,400
690,400
Held-to-maturity investments comprises of an interest bearing deposit which matures in May 2014.
16. Other current assets
Prepayments
Other
17. Assets held for sale
Consolidated
2013
$
2012
$
359,425
28,005
387,430
302,959
23,342
326,301
During the de-commissioning of the North Coogee, WA site, it was determined that a number of high value items of
capital equipment had become surplus to the needs of the Company. As a consequence, management have
committed to selling the surplus assets and they are presented as assets held for sale. The fair value less costs to
sell of these assets at 30 June 2013 is $1,878,000, after recognition of a $1,007,711 impairment.
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
11.
Loss per share
The calculation of basic loss per share at 30 June 2013 was based on the loss attributable to ordinary
shareholders of $16,985,894 (2012:$11,801,601) and a weighted average number (W.A.N.) of ordinary shares
outstanding during the financial year ended 30 June 2013 of 323,412,485 (2012:297,979,266) calculated as
follows:
Issued ordinary shares 1 July
Effect of shares issued
Effect of conversion of notes
Effect of shares issued on
exercise of rights and to
Executives as remuneration
Effect of share options
exercised
Issued ordinary shares at 30
June
2013
2012
Note
26
Actual No.
W.A.N.
Actual No.
W.A.N.
322,748,630
-
-
322,748,630
-
-
270,038,762
47,000,000
4,689,810
270,038,762
23,693,151
3,623,998
1,096,415
663,855
1,020,058
623,355
26
323,845,045
323,412,485
322,748,630
297,979,266
Potential ordinary shares on issue are not considered to be dilutive and therefore the diluted loss per share
equals the basic loss per share.
Weighted average number of ordinary shares (basic)
Basic loss cents per share
12.
Cash and cash equivalents
Cash at bank and on hand
Short-term bank deposits
2013
$
323,412,485
2012
$
297,979,266
(5.25)
(3.96)
Consolidated
2013
$
2012
$
1,393,320
-
1,393,320
1,000,672
2,000,000
3,000,672
Cash and cash equivalents of $309,633 have been pledged as collateral against a secured bank loan (refer to Note
23).
13.
Trade and other receivables
Current
Trade receivables
Other receivables:
R&D tax incentive and government grants receivable (i)
GST and VAT receivable
Accrued interest
Other
1,087,096
497,800
3,395,130
38,521
2,237
41,319
4,564,303
3,906,594
401,265
14,717
95,602
4,915,978
(i) The R&D Tax Incentive Receivable of $3,310,882 have been pledged as security against a short term facility
agreement (refer to Note 23).
60
49
50
61
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
18. Property, plant & equipment
19.
Intangible assets
Consolidated
Plant &
Equipment
Assets Under
Construction
$
$
Office
Furniture &
Equipment
$
Total
$
Costs
Balance at 1 July 2011
11,198,333
5,345,851
667,571
17,211,755
Additions
Disposals
Transfers
Government Grant deducted in arriving at the
carrying value of assets
(3,000,000)
Effect of movements in exchange rates
(33,443)
-
-
5,278,477
3,719,356
181,378
9,179,211
(1,658,564)
-
(137,595)
(1,796,159)
7,403,900
(7,403,900)
-
-
-
(3,000,000)
(24,318)
(57,761)
Balance at 30 June 2012
19,188,703
1,661,307
687,036
21,537,046
Balance at 1 July 2012
19,188,703
1,661,307
687,036
21,537,046
Additions
Disposals
Transfers
870,742
2,376,201
235,181
3,482,124
(257,896)
-
(215,823)
(473,719)
2,132,319
(2,587,199)
454,880
-
Assets Held For Sale
(4,687,840)
-
-
(4,687,840)
Effect of movements in exchange rates
186,398
1,960
148,721
337,079
Balance at 30 June 2013 (i)
17,432,426
1,452,269
1,309,995
20,194,690
Accumulated depreciation and impairment losses
Balance at 1 July 2011
Depreciation for the year
Disposals
Transfers
Effect of movements in exchange rates
Balance at 30 June 2012
Balance at 1 July 2012
Depreciation for the year
Disposals
Transfers
Assets Held For Sale
Effect of movements in exchange rates
Balance at 30 June 2013
Carrying Amounts
At 1 July 2011
At 30 June 2012
At 1 July 2012
3,869,474
2,220,967
(1,623,408)
235,802
(8,664)
4,694,171
4,694,171
2,874,587
(225,255)
-
(1,802,129)
133,018
5,674,392
235,802
337,032
4,442,308
-
-
156,270
2,377,237
(132,482)
(1,755,890)
(235,802)
-
-
-
-
-
-
-
-
-
-
-
(9,291)
(17,955)
351,529
5,045,700
351,529
5,045,700
351,440
3,226,027
(93,843)
(319,098)
-
-
-
(1,802,129)
111,943
244,961
721,069
6,395,461
7,328,859
5,110,049
330,539
12,769,447
14,494,532
1,661,307
335,507
16,491,346
14,494,532
1,661,307
335,507
16,491,346
At 30 June 2013
1,452,269
(i) Refer to Note 23 for details of fixed and floating charges over certain of the above assets
11,758,034
588,926
13,799,229
Patents &
Rights
$
Royalty
Buy-Back
$
Computer
Software
Total
$
Costs
Balance at 1 July 2011
649,027
94,419
739,398
1,482,844
Additions
Disposals
5,307
(7,426)
-
-
-
-
5,307
(7,426)
Balance at 30 June 2012
646,908
94,419
739,398
1,480,725
Costs
Balance at 1 July 2012
646,908
94,419
739,398
1,480,725
Additions
Disposals
Effect of movement in exchange rates
-
-
-
-
-
-
44,730
44,730
(101,573)
(101,573)
6,448
6,448
Balance at 30 June 2013
646,908
94,419
689,003
1,430,330
Accumulated amortisation and impairment losses
Balance at 1 July 2011
Amortisation for the year
Disposals
Effect of movement in exchange rates
603,884
75,539
307,195
986,618
30,607
8,655
222,334
261,596
-
-
-
-
-
-
1,735
1,735
Balance at 30 June 2012
634,491
84,194
531,264
1,249,949
Balance at 1 July 2012
Amortisation for the year
Disposals
Effect of movement in exchange rates
634,491
84,194
531,264
1,249,949
12,417
10,225
186,418
209,060
-
-
-
-
(98,974)
(98,974)
4,873
4,873
Balance at 30 June 2013
646,908
94,419
623,581
1,364,908
Carrying amounts
At 1 July 2011
At 30 June 2012
At 1 July 2012
At 30 June 2013
45,143
18,880
432,203
496,226
12,417
10,225
208,134
230,776
12,417
10,225
208,134
230,776
-
-
65,422
65,422
62
51
52
63
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
20. Group entities
Country of
incorporation
Entity interest
2013
Entity interest
2012
Parent entity
Quickstep Holdings Limited
Controlled entities
Quickstep Technologies Pty Ltd
Quickstep Operations Pty Ltd
Quickstep GmbH
Quickstep Composites LLC
Quickstep Australia Pty Ltd
Commercial Aerospace Composites Pty Ltd
Australia
Australia
Australia
Germany
USA
Australia
Australia
21. Trade and other payables
Current
Unsecured trade payables
Sundry payables and accrued expenses
Royalties payable (i)
Non-current
Royalties payable (i)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Consolidated
2013
$
2012
$
738,837
1,460,178
370,222
2,569,237
1,387,109
1,482,637
482,551
3,352,297
654,118
654,118
561,365
561,365
(i) On 21 July 2005, a Heads of Agreement was executed between Quickstep Holdings Limited (QHL), Quickstep
Technologies Pty Ltd (QTPL) and VCAMM Limited which agreed the value of services provided by VCAMM to
the Group during the period 1 July 2003 to 30 June 2005 and which formalised arrangements that existed
before 30 June 2005 between the parties. The agreed consideration for services provided was $1,790,000,
which was satisfied by the grant of 2,160,000 ordinary fully paid shares in QHL (issued at $0.25 per share),
with the balance of $1,250,000 to be paid to VCAMM on a quarterly basis from total cash revenues received
by QTPL on a percentage basis (varying from 4% to 7% of QTPL’s cash revenues for the period), subject to a
maximum annual repayment of $650,000. The discount rate that has been used to calculate the royalties
payable is 3.31%.
22. Deferred income
Current
Deferred Income
Non-current
Deferred Income
2,795,014
2,795,014
6,086,391
6,086,391
-
-
-
-
The amounts reported as deferred income refer to amounts received as a 77.10% prepayment of the first 24 ship
sets of C-130J wing flaps to be sold to Lockheed Martin in 2014.
23. Loans and borrowings
Current
Finance lease liability
Short term facility agreement
Prepaid borrowing cost
Non-current
Secured bank loan
Capitalised interest
Prepaid borrowing cost
Finance lease liability
Consolidated
2013
$
2012
$
6,821
1,750,405
(60,441)
1,696,785
10,000,000
600,156
(842,540)
16,106
9,773,722
10,700
-
-
10,700
6,106,048
131,825
(997,857)
1,922
5,241,938
Term and debt repayment schedule
Terms and conditions of outstanding loans were as follows:
2013
2012
Effective
interest
rate %
Year of
maturity
Maximum
Facility
Value
Carrying
amount
Maximum
Facility
Value
Carrying
amount
bank
9.286
2021
10,000,000
10,000,000
10,000,000
6,106,048
9.286
2021
3,333,333
600,156
3,333,333
131,825
Secured
loan
Capitalised
Interest
Short term facility
agreement
19.897
2013
2,400,000
1,750,405
-
-
Finance
liabilities
lease
12.990
2014
n/a
22,927
n/a
12,622
Secured Bank Loan
On 1 November 2011 Quickstep Technologies Pty Ltd, a subsidiary Company of the Group, executed an Export
Finance Facility Agreement with Australian and New Zealand Banking Group Limited (ANZ) (Financier) and Export
Finance and Insurance Corporation (EFIC)(Guarantor) to fund certain capital expenditure. The Agreement provides
for a loan facility of up to $10,000,000 plus capitalised interest of up to $3,333,333. At 30 June 2013 the facility had
been fully drawn to $10,000,000 together with capitalised interest of $600,156.
Interest is to be capitalised for the first five years of the facility after which it is payable half yearly in arrears.
Loan repayments commence in the fifth year of the facility, with the final repayment due in year 10.
The interest rate on the facility comprises a variable base rate, a fixed margin payable to the Financier and a fixed
guarantee fee payable to the Guarantor. Unused limit fees are payable to both the Financier and the Guarantor on
the undrawn principle balance.
The facility includes an interest rate cap which limits the maximum rate applicable to the base rate for the duration of
the capitalisation period to 5.03%. This cap ensures that the interest accruing on the facility remains within the
capitalised interest limit. The cost of the cap ($680,400) has been recorded as prepaid borrowing cost and is
recognised in the profit and loss through the effective interest rate method.
EFIC has agreed to guarantee certain of the subsidiary’s obligations under the facility. The subsidiary has provided
EFIC with a fixed and floating charge over its assets and undertakings. The carrying value of total assets pledged as
collateral at 30 June 2013 is $17,649,676 which represents the cash and cash equivalents, plant and equipment,
inventory and other assets owned by Quickstep Technologies Pty Ltd.
64
53
54
65
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
24. Financial liabilities at fair value through profit and loss
On 24 April 2011 the Group executed a Funding Agreement subject to conditions precedent with La Jolla Cove
Investors Inc (La Jolla); a US private equity firm, for the issue of US$15,000,000 of convertible notes. The
Agreement included an initial issue of a convertible note for US$ 7,500,000 (initial note) with an option at the Group’s
discretion, to subsequently issue another convertible note of US$7,500,000 (Subsequent Note).
On 12 May 2011 the conditions precedent were satisfied and the Group issued the initial Note with the issue price of
US$7,500,000 to La Jolla. The Group elected to account for these instruments at fair value through the profit and
loss.
In December 2011 the Group executed a termination agreement, under which the balance of the convertible notes at
20 December 2011, of $604,016 was repaid. There were no termination costs. On termination, the resulting net
decrease in fair value of the financial instrument, $1,746,980, was recognised through the profit and loss as finance
income.
Valuation
The fair value of the convertible notes has been determined using a Monte Carlo simulation.
Reconciliation of Fair Value Measurement
Balance 1 July
Convertible note drawdown’s
Convertible notes repaid
Conversion to Equity
Gain / Loss recognised through Profit and Loss
Balance 30 June
Consolidated
2013
$
2012
$
-
-
-
-
-
-
2,820,000
468,456
(603,988)
(937,488)
(1,746,980)
-
Under this agreement, Quickstep Technologies Pty Ltd (Chargor) has agreed to the following restrictions on title on
any of the assets under which EFIC (Chargee) has a fixed charge over. Without the consent of the Chargee, the
Chargor may not:
dispose of the Secured Property; or
lease or license the Secured Property or any interest in it, or deal with any existing lease or licence; or
part with possession of the Secured Property; or
waive any of the Chargor’s rights or release any person from its obligations in connection with the Secured
Property; or
deal in any other way with the Secured Property or any interest in it, or allow any interest in it to arise or be
varied.
Quickstep Holdings Limited has entered into a subordination agreement which subordinates certain intercompany
debts due to it from Quickstep Technologies Pty Ltd to the amounts due under the Export Finance Facility. The face
value of this subordinated intercompany debt at 30 June 2013 is $72,737,544 and its carrying value net of
impairment is $33,357,874.
Short Term Facility Agreement
On 29 October 2012 Quickstep Holdings Ltd executed a Facility Agreement which provides for a loan facility of up to
$2,400,000 and is secured against the Australian Taxation Office R&D Tax Offset receivable (note 13).
The Interest Rate of the facility comprises of a rate being equal to the greater of:
The aggregate of:
o
o
BBR on the first day of the Interest Period; and
9% per annum; or
12.50% per annum
A commitment fee is also payable on the undrawn balance of the facility at a flat rate of 5% per annum. As at 30
June 2013 the undrawn facility balance is $649,595.
Both the Interest and Commitment fees are payable monthly in arrears.
As at 30 June 2013 the face value of the Facility was $1,750,405.
Finance lease liabilities
Future
minimum
lease
payments
$
2013
8,426
17,555
25,981
Interest
$
2013
1,605
1,449
3,054
Present
value of
minimum
lease
payments
$
2013
6,821
16,106
22,927
Future
minimum
lease
payments
$
2012
11,717
1,953
Interest
$
2012
1,017
31
Present
value of
minimum
lease
payments
$
2012
10,700
1922
13,670
1,048
12,622
Less than one year
Between one and five years
66
55
56
67
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
Key term/Note
component/Clause
Description
Number of notes
2
Face value of each
US$7,500,000
Coupon / Interest
Rate
Fixed rate of 3.00% p.a. payable monthly in arrears, calculated on the unconverted
principal amount.
Initial Note
The initial payment of US$400,000 for Note 1
Interest is payable in Ordinary shares at Quickstep’s election
The remaining US$7,100,000 of Note 1 is to be received in monthly payments:
of not less than US$500,000; and
not more than US$1,000,000 (or such higher amount as Quickstep agrees in
writing).
Subsequent Note –
Note 2)
The form of and terms of the Subsequent Note, the purchase of the Subsequent Note,
and the payment of the US$7,500,000 for the Subsequent Note, are subject to the
same terms and conditions of this Agreement applicable to the Initial Note
Term / Maturity Date
Each note has a term of 4 years from the date of initial drawdown
Conversion Option
At the investors option, a note may be converted into ordinary shares at the
Conversion Price, either in whole or in part,,
Conversion Option
Quickstep has the option to force conversion of the outstanding principal amount into
ordinary shares. This election can be made in the six months prior to maturity of the
note
Conversion price
The number of shares to be issued on conversion is calculated as:
US$ face value x exchange rate / Conversion Price
The Conversion Price is the lesser of:
AU$0.90 (as adjusted for any stock splits, stock dividends, combinations,
subdivisions, recapitalisations or the like); or
80% of the average VWAP1 of Quickstep’s shares during the 10 days prior to
conversion
Cash settlement
option
If the investor elects to convert the notes, when the VWAP is below AU$0.28 then
Quickstep has the right to prepay that portion of the note
If Quickstep makes the election to prepay the cash amount, then the investor has the
right to withdraw the conversion notice.
There are certain circumstances in which Quickstep may be required to settle /
redeem the notes for cash.
Contingent Settlement
Provisions / Cash
Settlement
25. Employee benefits
Current
Liability for annual leave
Other employee benefits
Non-current
Liability for long service leave
26. Share capital
Issued capital
(i)
323,845,045 (2012: 322,748,630) fully paid ordinary shares
The following movements in issued capital occurred during the year:
Consolidated
2013
$
2012
$
261,289
-
261,289
26,668
26,668
154,259
138,702
292,961
-
-
74,754,828
74,754,828
Note
2013
No. of
shares
$
2012
No. of
shares
$
Balance at the beginning of the year
322,748,630
74,754,828
270,038,762
66,854,895
Shares issued for cash (a)
Shares issued on exercise of options (ii)
Shares issued on conversion of notes
Shares issued on exercise of rights (b)
Shares issued to Executives as
remuneration (b)
Shares issued under share purchase plan
Share issue and capital raising costs
24
-
-
-
769,130
327,285
-
-
-
-
-
-
-
-
-
47,000,000
-
4,689,810
680,235
339,823
7,520,000
-
937,488
-
-
-
-
-
(557,555)
Balance at the end of the year
323,845,045
74,754,828
322,748,630
74,754,828
(a)
(b)
Last financial year the Company issued 47,000,000 shares at an issue price of 16 cents to raise
$7,520,000.
During the year, the Company issued 1,096,415 (2012: 1,020,058) shares pursuant to share-based
payment arrangements with certain key management personnel.
The Company does not have authorised capital or par value in respect of its issued shares. All issued 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. All shares rank equally with regard to the Company’s residual
assets.
68
57
58
69
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
(ii)
Options
Options granted during the year
During the financial year, the Company granted options as follows.
Expiry Date
Exercise Price
Number of Options
22 November 2019
23 November 2018
$0.00
$0.00
2013
987,739
-
2012
-
706,373
Unissued shares under option
At 30 June 2013, unissued ordinary shares of the Company under option are:
Expiry Date
Exercise Price
Number of Options
30 March 2017
26 November 2017
23 November 2018
22 November 2019
$0.00
$0.00
$0.00
$0.00
2013
1,397,624
471,337
706,373
987,739
2012
1,397,624
471,337
706,373
-
These options do not entitle the holders to participate in any share issue of the Company or any other body
corporate.
Exercise of options
No options were exercised during this or last financial year.
Lapse of options
During the current and prior financial years, no options lapsed.
(iii)
Rights
At 30 June 2013, unissued ordinary shares of the Company under rights totalled 2,425,310 (2012: 3,373,924).
The rights are issued pursuant to:
Executive services agreements which vest at various times in the future according to years of service
completed; and
an Executive performance and retention bonus scheme which vest on 31 December 2013 upon
performance of criteria related to the Company’s relocation objectives and are conditional upon
continued employment
The exercise price of the rights is nil and the rights are forfeited if employment is terminated prior to the vesting
date (Refer to Note 34).
During the year, 769,130 shares (2012: 680,235 shares) were issued as a result of the exercise of rights. A total
of 434,847 rights (2012: nil) were forfeited in the current year on the termination of employment of employees.
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 2
27. Reserves
Share based payments reserve
Balance at the beginning of the year
Grant of rights to shares to key management personnel
Grant of options to key management personnel
Issue of shares to key management personnel
Balance at the end of the year
Consolidated
2013
$
2012
$
2,613,956
278,219
141,340
54,984
3,088,499
2,027,637
379,958
139,110
67,251
2,613,956
This reserve is used to record the fair value of options over ordinary shares and rights to ordinary shares granted
as consideration for services provided.
Foreign currency translation reserve
Balance at the beginning of the year
Foreign currency translation differences
Balance at the end of the year
(291,257)
162,102
(129,155)
(220,656)
(70,601)
(291,257)
The foreign currency translation reserve comprises foreign currency differences arising from the translation of the
financial statements of foreign operations.
Hedging reserve
Balance at the beginning of the year
Effective portion of changes in fair value of cash flow hedges
Balance at the end of the year
-
-
-
(71,065)
71,065
-
The hedging reserve comprises difference arising from the translation of foreign currency hedges, being the
variation between the original hedge exchange rate and the revaluation rate on balance date.
Total reserves
28. Accumulated losses
Accumulated losses at the beginning of the year
Loss for the year
Accumulated losses at the end of the year
2,959,344
2,322,699
(60,462,724)
(16,985,894)
(77,448,618)
(48,661,123)
(11,801,601)
(60,462,724)
70
59
60
71
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
29. Financial instruments
Credit risk
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s
maximum exposure to credit risk at the reporting date was:
Cash and cash equivalents
Held-to-maturity financial assets
Trade and other receivables
Consolidated
2013
$
1,393,320
390,400
4,564,303
2012
$
3,000,672
690,400
4,915,978
6,348,023
8,607,050
As at 30 June 2013, no financial asset was considered past due (2012: nil).
As at 30 June 2013, no financial asset was considered impaired (2012: nil).
The Group’s maximum exposure to credit risk for trade and other receivables at the reporting date by geographic
region was:
Australia
Germany
USA
Liquidity risk
2013
$
3,441,686
38,686
1,083,931
4,564,303
2012
$
4,468,799
225,708
221,471
4,915,978
The following are the contractual maturities of financial liabilities, including estimated interest payments and
excluding the impact of netting agreements:
30 June 2013
Carrying
amount
Contractual
Cash Flows
6 months or
less
6-12 months
1-2 years
2-5 years
5 years+
VCAMM royalties
payable
Trade and other
payables
Finance lease
liabilities
1,024,340
(1,043,749)
(183,989)
(183,989)
(675,771)
2,199,015
(2,199,015)
(2,199,015)
-
-
-
-
22,927
(25,982)
(4,213)
(4,213)
(8,427)
(9,129)
-
-
-
Secured Bank Loan
9,757,616
(15,978,577)
(150,000)
(150,000)
(300,000)
(6,177,885)
(9,200,693)
Short Term Facility
Agreement
30 June 2012
VCAMM royalties
payable
Trade and other
payables
Finance lease
liabilities
1,689,964
(1,878,455)
(1,878,455)
-
-
-
-
14,693,862
(21,125,778)
(4,415,672)
(338,202)
(984,198)
(6,187,014)
(9,200,693)
1,043,916
(1,065,629)
(239,692)
(239,692)
(586,245)
2,869,746
(2,869,746)
(2,869,746)
-
-
12,622
(12,622)
(5,177)
(5,523)
(1,922)
-
-
-
-
-
-
Secured Bank Loan
5,240,016
(10,687,961)
(97,526)
(100,770)
(211,744)
(1,739,939)
(8,537,982)
9,166,300
(14,635,958)
(3,212,141)
(345,985)
(799,911)
(1,739,939)
(8,537,982)
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
Currency risk
Exposure to currency risk
The Group’s exposure to foreign currency risk at balance date was as follows, based on notional amounts:
2013
Cash
Trade payables
Receivables
2012
Cash
Trade payables
Receivables
USD
186,904
(80,538)
20,531
126,897
USD
54,590
(55,961)
125,822
124,451
EUR
621,601
(24,249)
54,462
651,814
EUR
25,203
(152,516)
225,708
98,395
The following significant exchange rates applied during the year:
Average Rate
2013
1.0270
0.7936
2012
1.0314
0.7705
Reporting Date
Spot Rate
2013
2012
0.9275
0.7095
1.0191
0.8092
AUD v USD
AUD v EUR
Sensitivity analysis
A 10 percent movement of the Australian dollar against the following currencies at 30 June would have increased
(decreased) profit or loss and equity on balances denominated in foreign currencies by the amounts shown below.
This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is
performed on the same basis for 2012.
2013
2012
(Increase)/decrease
consolidated loss
(Increase)/decrease
consolidated loss
+10%
$
(38,146)
(32,042)
(70,188)
-10%
$
46,623
39,162
85,785
2013
(Increase)/decrease
consolidated
Equity
+10%
$
-10%
$
(118,127)
(235,335)
144,378
287,632
(353,462)
432,010
+10%
$
(12,445)
(9,839)
(22,284)
-10%
$
12,445
9,839
22,284
2012
(Increase)/decrease
consolidated
Equity
+10%
$
-10%
$
-
-
-
-
-
-
USD
EUR
USD
EUR
72
61
62
73
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
Interest rate risk
Profile
At the reporting date the interest rate profile of the Group’s interest-bearing financial assets/(liabilities) was:
Fair values
The carrying amounts of financial assets and liabilities approximate fair value.
Fixed rate instruments
Held-to-maturity term deposits
Finance lease liabilities
Variable rate instruments
Cash and cash equivalents
Secured bank loan
Short term facility agreement
Consolidated
2013
$
390,400
(22,927)
367,473
2012
$
690,400
(12,622)
677,778
1,393,320
3,000,672
(10,600,156)
(6,237,873)
(1,750,405)
10,957,241
-
(3,237,201)
Cash includes funds held in short term deposits during the year, which earned a weighted average interest rate of
3.19% (2012: 5.33%).
The interest rates applicable to the Group’s finance leases are 12.99% (2012: 12.99%).
Financial assets held-to-maturity includes a security deposit for $390,400 with an interest rate of 4.1%, which
matures on 10 November 2013.
(i)
(ii)
The secured loan balance (inclusive of capitalised interest) incurs a variable rate of interest, inclusive
of a base rate plus margin. The Group has purchased an interest rate cap which limits the base rate for
the first five years of the loan to 5.03%. The base rate plus margin of this facility was 4.43% at 30 June
2013.
The secured loan balance (inclusive of capitalised interest) incurs a rate of interest of the higher of
12.5% or the aggregate of the BBR on the first day of the interest period and 9% per annum. The base
rate plus margin of this facility was 12.5% at 30 June 2013.
All other material financial assets and liabilities are non-interest bearing.
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss.
Therefore a change in interest rates at the reporting date would not affect profit or loss.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or
loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency
rates, remain constant. The analysis is performed on the same basis for 2012.
Effect in AUD
30 June 2013
Variable rate instruments
Cash flow sensitivity (net)
30 June 2012
Variable rate instruments
Cash flow sensitivity (net)
(Increase)/decrease
Consolidated
loss
100 bp
increase
100 bp
decrease
(13,933)
(13,933)
(32,372)
(32,372)
13,933
13,933
32,372
32,372
30. Capital and other commitments
Operating lease commitments
Non-cancellable operating lease contracted for but not
capitalised in the financial statements
Payable
-
-
-
less than 1 year
between 1 and 5 years
more than 5 years
Consolidated
2013
$
2012
$
998,662
7,685,481
8,852,388
17,536,531
759,895
3,024,358
2,269,206
6,053,459
The Company's operating lease commitments comprise of three property leases.
The first lease relates to premises at North Coogee, WA. It is a non-cancellable lease with a five year term with
provision for rent reviews on an annual basis. Subsequent to reporting date, this lease was re-assigned to an
unrelated third party.
The second lease relates to premises at Bankstown, NSW. It is a non-cancellable lease with a ten year term with
two options to renew for five years each. This lease contains provision for rent reviews on an annual basis.
The third lease relates to premises at Bankstown, NSW. It was entered into subsequent to reporting date, and is
non-cancellable with a ten year term with two options to renew for five years each. It contains provision for rent
reviews on an annual basis.
Capital commitments
The Group’s commitments in respect of plant and equipment contracted for but not provided for are set out below:
Payable
-
less than 1 year
31. Cash flow information
Reconciliation of cash flows from operating activities to loss
after income tax:
Loss for the year
Adjustments for:
-
-
-
-
-
-
-
-
Amortisation of intangibles
Depreciation
Share based payment expense
Forex revaluation reserve
Finance costs
Impairment
Present value on deferred income
Change in fair value of derivatives at fair value through
profit and loss
Operating loss before changes in working capital
(Increase)/decrease in trade & other receivables
(Increase)/decrease in inventories
(Increase)/decrease in other current assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in employee benefits
Increase/(decrease) in deferred income
Increase in prepaid interest
Net cash used in operating activities
19
18
27
27
8
17
8
24
588,401
588,401
799,935
799,935
(16,985,894)
(11,801,601)
209,060
3,226,027
474,543
162,102
1,185,755
1,007,711
201,460
261,596
2,377,238
586,319
-
176,863
-
-
-
(1,746,980)
(10,519,236)
351,675
(1,232,083)
(61,129)
(228,101)
(5,004)
8,881,405
(232,190)
(10,146,565)
(4,119,265)
(219,535)
(192,517)
(461,198)
40,887
-
(171,448)
(3,044,663)
(15,269,641)
74
63
64
75
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
Note
Consolidated
2013
$
2012
$
Equity holdings
Options and rights over shares
32. Related parties
Key management personnel compensation
The key management personnel compensation included in “personnel expenses” in note 7 is as follows:
Short-term employee benefits
Post-employment benefits
Share based payments
Termination Benefit
2,387,006
145,265
435,873
81,120
3,040,264
2,427,150
139,871
368,420
-
2,935,441
Individual Directors and Executives compensation (key management personnel remuneration)
disclosures
Information regarding individual Directors’ and Executives’ compensation and some equity instruments
disclosures as required by Corporations Regulations 2M.3.03 is provided in the Remuneration Report section of
the Directors’ Report.
Apart from the details disclosed in the Remuneration Report and below, no Director has entered into a material
contract with the Company or the Group since the end of the previous financial year.
Key management personnel transactions
Mr D Graham, a previous key management person of the Group, held positions in other entities that resulted in
him having control or significant influence over the financial or operating policies of those entities.
During the comparative financial year, the entities transacted with the Company or its subsidiaries. The terms and
conditions of those transactions were no more favourable than those available, or which might reasonably be
expected to be available, on similar transactions to unrelated entities on an arm’s length basis.
The aggregate amounts recognised during the year relating to key management personnel and their related
parties were as follows:
Director
Mr D Graham
Note
(i)
(ii)
Transaction value
2013
$
-
-
2012
$
24,000
50,000
(i) A company associated with Mr Graham, Offshore Marine Pty Ltd, provided prototype design services, patent
portfolio management and development program coordination.
(ii) A company associated with Mr Graham, Quickboat Holdings Pty Ltd, purchased 100% of the share capital of
QuickBoats Pty Ltd on 5 April 2012 for a consideration of $50,000 paid in full at that time. At the time of the sale,
QuickBoats Pty Ltd had net assets of $24,942. Associated with the sale,
the Group has entered into an
agreement to supply technical services to Quickboat Holdings Pty Ltd in return for ongoing fees amounting to
$100 per unit up to $500,000 and then $50 per unit for a further $1,000,000 capped at $1.5 million and subject to
the intellectual property remaining in good stead. No services were provided during the period.
(i)
Rights
2013
Directors
Mr P M Odouard
Executives
Mr S Godbille
Mr J Johnson
Mr A Vihersaari
Ms M Withers
The movements during the year in the number of options and rights over ordinary shares in Quickstep Holdings
Limited held directly, indirectly or beneficially by each key management persons, including their personally-related
entities, are as follows:
Held at
1 July
Granted as
Compensation
Exercised
Other changes
Held at 30 June
Vested during
the year
Vested and
exercisable at
30 June
-
-
-
-
-
-
1,032,423
1,160,035
250,000
618,847
3,061,305
-
-
-
255,363
255,363
(89,202) (1)
(157,233) (1)
(83,333) (1)
(439,363) (1)
(769,131)
-
-
-
(434,847) (2)
(434,847)
943,221
1,002,802
166,667
-
2,112,690
89,202
157,233
83,333
439,363
769,131
(1) Share price at date of exercise $0.168
(2) Shares were forfeited due to cessation of employment
2012
Directors
Mr P M Odouard
588,235
-
(588,235) (3)
Executives
Mr S Godbille
Mr J Johnson
Mr A Vihersaari
Ms M Withers
267,605
471,698
250,000
276,000
1,853,538
(3) Share price at date of exercise $0.185
764,818
688,337
-
434,847
1,888,002
-
-
-
(92,000) (3)
(680,235)
-
-
-
-
-
-
-
588,235
1,032,423
1,160,035
250,000
618,847
3,061,305
-
-
-
92,000
680,235
-
-
-
-
-
-
-
-
-
-
-
-
(ii)
Options
2013
Directors
Mr P M Odouard
2012
Directors
Mr P M Odouard
Held at
1 July
Granted as
compen-
sation
2,575,334
987,739
1,868,961
706,373
Exercised
Other changes
Held at 30 June
Vested during
the year
Vested and
exercisable at
30 June
-
-
-
-
3,563,073
2,575,334
-
-
-
-
76
65
66
77
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
Shares
The movements during the year in the number of ordinary shares held, directly, indirectly or beneficially by each
key management person, including their personally-related entities, are as follows:
Held at 1 July
Purchases
Disposals
Received on
exercise or
options / rights
Issued as
compensation
Held at 30
June
2013
Directors
Mr T Quick (c)
Mr P M Odouard
Mr N Ampherlaw (a)
Mr P C Cook
Mr D F G Graham (e)
Mr B Griffiths (c)
Mr M Jenkins
Mr E J McCormack
Mr D Wills (b)
Executives
Mr D E Brosius
Mr S Godbille
Mr J F Johnson
Mr J Schlimbach
Mr M Schramko
Mr A Vihersaari
Ms M Withers (d)
2012
Directors
Mr P M Odouard
Mr D E Brosius
Mr P C Cook
Mr D F G Graham(e)
Mr E J McCormack
Mr D Wills(b)
Executives
Mr S Godbille
Mr J F Johnson
Mr J Schlimbach
Ms M Withers(d)
Mr A Vihersaari
-
2,134,205
-
145,758
26,039,341
-
-
294,315
460,107
600,000
67,992
252,943
36,342
-
35,203
158,773
1,545,970
600,000
145,758
26,039,341
50,250
210,106
-
71,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
244,065
250,001
-
48,180
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
89,202
157,233
-
-
83,333
439,363
588,235
-
-
-
-
-
-
-
-
92,000
-
-
-
-
-
-
-
-
-
-
-
83,745
-
50,724
73,728
-
68,133
-
-
-
-
-
-
67,992
133,513
36,342
66,773
35,203
-
2,134,205
-
145,758
26,039,341
-
-
294,315
460,107
600,000
240,939
410,176
87,066
73,728
118,536
666,269
2,134,205
600,000
145,758
26,039,341
294,315
460,107
67,992
252,943
36,342
158,773
35,203
a
b
c
d
e
Commenced as a Director 8 July 2013, after year end. Shareholding at 30 June 2013 excluded.
Ceased being a Director 5 July 2013, after year end. Relevant interest noted is interest as at date of retirement.
Commenced as a Director 14 February 2013, and has held nil relevant interest in QHL shares during the term of his appointment to date.
Ceased being an Executive on 21 December 2012. Relevant interest noted is interest as at date employment ceased.
Ceased being a Director 14 February 2013. Relevant interest noted is interest as at date of retirement.
33. Equity accounted investments
On 1 May 2008 the Group acquired a 20 percent investment in QuickPipes Pty Ltd for the amount of $2. This
investee was established as an incorporated joint venture in conjunction with Vortex Pipes Ltd to research and
develop a composite pipe for industrial applications. At reporting date, Quickstep has no financial obligations or
liabilities under the joint venture agreement.
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
34. Share based payments
Options
Quickstep Employee Incentive Plan
The Company has established the Quickstep Employee Incentive Plan (EIP). Under the EIP, the Board may
grant options to selected Quickstep employees on such terms as it determines appropriate. Participation in
the EIP is open to all employees of the Group, with the Board determining those employees eligible to
participate in each grant under the EIP. Each option is a conditional right to one Quickstep ordinary share,
subject to the satisfaction of the applicable performance conditions and payment of the exercise price (if any).
The EIP provides sufficient flexibility for the Board to grant short-term or long-term incentives to eligible
employees. That is, the performance conditions set by the Board may apply over the period of time the
Board determines appropriate in the circumstances.
It is currently intended that the “short-term” grants under
the EIP will be in the form of an equity retention incentive, with the applicable performance condition based
on the key performance indicators set under the Company’s short term incentive program, and that the “long
term” grants will be subject to performance criteria based on achieving total shareholder return targets over a
three year period.
In general, the options will not vest until the performance criteria specified by the Board at the time of the
If the performance
grant have been achieved and provided the participant remains a Group employee.
criteria are not satisfied at the end of the applicable performance period the options will lapse. The options
may lapse in other circumstances provided for in the EIP rules, including forfeiture where the employee
engages in dishonest or fraudulent conduct, where there is a change in control and where the employee
ceases employment. Subject to the rules and the terms of grant, options will lapse on the seventh
anniversary of their grant date.
At 30 June 2013, the Group’s CEO is the only employee to be granted options pursuant to the EIP.
The number and weighted average exercise prices (WAEP) of options issued under the EIP are as follows:
Employee Incentive Plan
Outstanding at 1 July
Granted during the period
Outstanding at the end of the year
Exercisable at the end of the year
2013
Number
2,575,334
987,739
3,563,073
-
2013
WAEP
$0.00
$0.00
$0.00
$0.00
2012
Number
1,868,961
706,373
2,575,334
-
2012
WAEP
$0.00
$0.00
$0.00
$0.00
The options granted from the EIP are subject to performance conditions based on achieving pre-set
In
accumulated absolute Total Shareholder Return (TSR) targets over the applicable performance period.
summary, TSR combines share price appreciation over a period and dividends paid during that period to show
the total return to shareholders over that period. For the purposes of the performance conditions attached to
the options, TSR will be calculated as the 45 day volume weighted average price (VWAP) of Quickstep shares
as at a test date (30 June or 31 August). The options vest on the day after the test date. This calculation has
been adopted bearing in mind Quickstep’s market capitalisation and to ensure the performance hurdle and
testing process remain appropriate in all the circumstances.
All options are subject to a three year performance condition from their grant date.
The specific TSR targets for each Tranche are set out below.
If the Threshold hurdle of TSR is achieved at a test date, 25% of the Options in the tranche will vest.
Target hurdle of TSR is achieved at a test date in any given year, 50% of Options in the tranche will vest.
the Stretch hurdle of TSR is achieved at a test date in any given year 100% of Options in the tranche will vest.
After the initial vesting period, re-testing of the performance conditions occurs annually. Re-testing will occur
over the longer performance period and against the higher TSR hurdle.
If the
If
78
67
68
79
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
Grant
Earliest vesting date
TSR Hurdle VWAP as at
Tranche 3
01/07/11
30 June
2011
Tranche 4
01/07/12
30 June
2012
2010 Year
1/7/2013
30 June
2013
2011 Year
1/9/2014
31 Aug
2014
2012 Year
31/08/15
31 Aug
2015
% Annual
Growth
(TP)
% Vesting
Initial value
Threshold
Target
Stretch
5
8
12
25
50
100
$0.165
$0.188
$0.204
$0.227
$0.250
$0.290
$0.315
$0.352
$0.326
$0.378
$0.410
$0.458
$0.228
$0.264
$0.287
$0.320
$0.169
$0.196
$0.214
$0.239
If the employee ceases employment with the Group due to death, disability, bona fide redundancy or any other
reason which may meet with the approval of the Board, the Board may determine that any unvested options
he holds will vest as at his date of cessation, having regard to such factors as the Board considers relevant,
including pro rata performance against the performance condition over the period from the grant date to the
date of cessation.
If they cease employment in these circumstances and hold vested options they may exercise those options
within the 12 month period following his date of cessation (or, the remaining period until the expiry of the
options, if less than 12 months).
If they cease employment for any other reason any unvested options they hold will lapse on the date of
cessation unless the Board determines otherwise, and any vested options must be exercised within three
months.
Details of the fair value of unvested options granted are set out below
Grant
Tranche 3
Tranche 4
2010 Year
2011 Year
2012 Year
Total
No. of options
925,926
471,698
471,337
706,373
987,739
3,563,073
Fair value per option
at the grant date
$
0.3150
0.2700
0.3620
0.1730
0.1250
Total fair value
$
291,667
127,358
170,624
122,203
123,467
835,319
During 2013, an expense of $141,340 (2012:$139,100) has been included in the financial statements as the
portion of the attributable to the current financial year as required by accounting standards.
A Monte-Carlo simulation has been used to value Tranche 3 and 4 and the 2010 year, 2011 year and 2012
year grants that had a future vesting condition at the grant date of the options. Assumptions used in the
valuation of the options in Tranche 3, 4 and 2010 year, 2011 year and 2012 year at grant date included:
Tranche
Grant date
First testing date
Expiry date
Share price at grant
date
Exercise price
Expected life (years)
Volatility
Risk free interest rate
Dividend yield
3
4
2010 Year
2011 Year
2012 Year
30/03/2010
30/06/2011
30/03/2017
30/03/2010
30/06/2012
30/03/2017
26/11/2010
30/06/2013
26/11/2017
23/11/2011
31/8/2014
23/11/2018
22/11/2012
31/8/2015
23/11/2019
$0.41
Nil
2.9
75%
5.07
0%
$0.21
Nil
3.1
75%
3.08%
0%
$0.17
Nil
3.0
55%
2.68%
0%
$0.35
Nil
1.3
80%
4.66%
0%
$0.35
Nil
2.3
80%
5.01%
0%
69
80
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
Rights
Executive Performance and Retention Bonus
During the previous year the Company has granted rights over 2,200,621 shares with a fair value of
$547,840 through an Executive performance and retention bonus scheme. The rights vest on 31 December
2013 upon performance of criteria related to the Company’s relocation objectives and are conditional upon
continued employment. In the event that the share price of the Company at the exercise date is below $0.18,
the number of shares to be issued will be increased by the percentage variation of the share price from
$0.18.
The rights have been valued at fair value based on a Monte Carlo simulation at the issue date. An expense of
$210,413 (2012:$111,950) has been included in the financial statements as the portion of the current offer
attributable to the current financial year as required by accounting standards.
A Monte-Carlo model was utilised to value the rights per dollar issued. The key assumptions utilised were as
follows:
Input / assumption
Valuation/Grant Date
Maturity Date
Share price at grant date
Volatility
Risk free rate
Dividend yield
Trigger price
Issue price
Loyalty Bonus
Value
10 February 2012
31 December 2013
$0.17
70%
3.55%
Nil
$0.18
$0.2092
Rights have been issued to a number of key management personnel in prior years as long term retention
incentives. The rights vest in two tranches provided the employee remains employed with the Group. 1/3 vest
2 years from the date granted, 2/3 vest 3 years from the date granted
The rights are valued at the market value of the Group’s share on the date of issue of the rights. An expense
of $104,509 (2012: $135,502) has been included in the financial statements as the portion of the offer,
attributable to the current financial year as required by accounting standards.
769,131 rights vested (2012: 680,253 rights vested) during the period.
Performance rights issued were as follows:
2013
Number
2012
Number
Vesting conditions
Loyalty bonus
Performance rights on issue July 1
1,173,303
1,853,538
Performance rights terminated
-
-
Performance rights exercised
(769,131)
(680,235)
Performance rights granted
Performance rights on issue 30 June
255,363
659,535
-
1,173,303
Vest in two tranches provided the
employee remains with the Group. 1/3
vest 2 years from the date granted, 2/3
vest 3 years from the date granted
Executive performance and retention
bonus
Vest on 31/12/2013 provided the
employee remains with the Group and
achieves defined performance objectives.
Performance rights on issue July 1
2,200,621
-
Performance rights granted
-
2,200,621
Performance rights forfeited
Performance rights on issue 30 June
(434,847)
1,765,774
-
2,200,621
70
81
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
Shares
The Company issued 327,285 shares as long term incentives accrued for in the prior year (refer Note 32).
The fair value of shares granted is determined as the quoted price on the ASX of the shares of the Company
on the day of the grant.
Incentives accrued for in the current year of $101,307 are expected to be settled through share based
payments during the next financial year.
Employee Expenses
The expense recorded in the financial report for the portion attributable to the current financial year as
required by accounting standards is:
N O T E S T O A N D F O R M I N G P A R T O F T H E F I N A N C I A L S T AT E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
36. Subsequent events
Since the end of the financial year the Group:
Raised $6.1 million through the placement of fully paid ordinary shares to institutional and sophisticated
investors; and
Raised $7.2 million through a share purchase plan with all eligible investors.
Combined equity raising net of costs since balance date totalled $12.7 million.
Other than the matters referred to above, there have been no events subsequent to balance date which would
have a material effect on the Group’s financial statements as at 30 June 2013.
Employee expenses
Shares
Share rights granted
Options
35. Parent entity
Consolidated
2013
$
2012
$
101,307
231,896
141,340
474,543
103,759
247,452
139,110
490,321
Company
2013
$
2012
$
As at, and throughout, the financial year ending 30 June 2013 the parent company of the Group was Quickstep
Holdings Limited.
Results of the parent entity
Profit/(Loss) for the period
Other comprehensive income
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Share capital
Share based payments reserve
Accumulated losses
Total equity
(16,985,894)
162,102
(16,823,792)
(11,801,601)
464
(11,801,137)
3,869,695
35,541,672
6,703,537
20,192,457
2,358,178
2,358,178
3,577,654
3,577,654
74,754,828
2,959,344
(77,448,618)
265,554
74,754,828
2,613,956
(60,753,981)
16,614,803
82
71
72
83
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013 DIRECTOR’S DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
D I R E C T O R S ’ D E C L A R A T I O N
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 3
In the opinion of the directors of Quickstep Holdings Limited:
1.
(a)
the consolidated financial statements and notes and Remuneration Report in the Directors’ Report,
set out on pages 29 to 72 and pages 5 to 23 respectively, are in accordance with the Corporations Act
2001, including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as at 30 June 2013 and their
performance, for the financial year ended on that date; and
complying with Australian Accounting Standards
Interpretations) and the Corporations Regulations 2001;
(including
the Australian Accounting
(b)
the financial statements comply with International Financial Reporting Standards as described in
Note 1 (b).
2.
During 2014 and 2015 financial years the level of production required to satisfy orders placed for the JSF
project and to fulfil advance paid orders under the C-130J contract is expected to increase. As a
consequence the level of working capital
required will also increase. The projected build-up of working
capital arising from increasing customer orders will require further funding through debt raisings or
advanced payments from customers. As these facilities have not been finalised at the date of this report,
there is some uncertainty as to whether the Group will be able to arrange these working capital facilities
and pay debts as and when they become due and payable. Further information can be found in Note 1(d)
of the Financial Statements.
3.
The directors have been given the declarations required by s.295A of the Corporations Act 2001 for the
financial year ended 30 June 2013
Dated at Sydney, New South Wales this 30 day of September 2013.
Signed in accordance with a resolution of the Directors:
P M Odouard
Managing Director
84
73
85
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
86
87
Quickstep Holdings Limited. Annual Report 2013Quickstep Holdings Limited. Annual Report 2013THIS PAGE IS DELIBERATELY BLANK SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
S H A R E H O L D E R I N F O R M AT I O N
S H A R E H O L D E R I N F O R M AT I O N
DETAILS OF SHARES AND OPTIONS AS AT 24 SEPTEMBER 2013
DETAILS OF SHARES AND OPTIONS AS AT 24 SEPTEMBER 2013
Voting rights
The voting rights attaching to ordinary shares are:
On a show of hands every member present in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
Options do not carry any voting rights.
Substantial shareholders
The names of substantial shareholders in the Company and the number of shares to which each substantial
shareholder and their associates have a relevant interest are set out below:
Substantial Shareholder
No. of Shares
%
Washington H Soul Pattinson and Company Limited
Decta Holdings Pty Ltd
68,172,570
26,039,341
17.71%
6.76%
On-Market buy back
There is no current on-market buy back.
Distribution schedules
Distribution of each class of security as at 24 September 2013:
Ordinary fully paid shares
1
1,001
5,001
10,001
100,000
Range
-
-
-
-
-
Total
1,000
5,000
10,000
100,000
Over
Holders
401
902
764
2,488
526
5,081
Options exerciseable at $0.00 on or before 31 August 2015 (unlisted)
1
1,001
5,001
10,001
100,000
Range
-
-
-
-
-
Total
1,000
5,000
10,000
100,000
Over
Holders
-
-
-
-
1
1
Options exerciseable at $0.00 on or before 30 March 2017 (unlisted)
1
1,001
5,001
10,001
100,000
Range
-
-
-
-
-
Total
1,000
5,000
10,000
100,000
Over
Holders
-
-
-
-
1
1
77
88
Units
141,676
2,862,353
6,438,136
95,242,746
280,300,134
384,985,045
Units
-
-
-
-
987,739
987,739
Units
-
-
-
-
1,397,624
1,397,624
%
0.04
0.74
1.67
24.74
72.81
100.00
%
-
-
-
-
100.00
100.00
%
-
-
-
-
100.00
100.00
Options exerciseable at $0.00 on or before 25 November 2017 (unlisted)
1
1,001
5,001
10,001
100,000
Range
-
-
-
-
-
Total
1,000
5,000
10,000
100,000
Over
Holders
-
-
-
-
1
1
Options exerciseable at $0.00 on or before 25 November 2018 (unlisted)
1
1,001
5,001
10,001
100,000
Range
-
-
-
-
-
Total
1,000
5,000
10,000
100,000
Over
Unmarketable parcels
Holders
-
-
-
-
1
1
Units
-
-
-
-
471,337
471,337
Units
-
-
-
-
706,373
706,373
%
-
-
-
-
100.00
100.00
%
-
-
-
-
100.00
100.00
Holdings less than a marketable parcel of ordinary shares (being 2,326 shares at $0.215 per share):
Holders
693
Top Holders
Units
646,976
The 20 largest registered holders of each class of quoted security as at 24 September 2013 were:
Name
Washington H Soul Pattinson and Company Limited
Decta Holdings Pty Ltd
WSF Pty Ltd
Continue reading text version or see original annual report in PDF format above