Annual Report 2017
ADVANCED COMPOSITES MANUFACTURING Contents
Significant increase in JFS deliveries
1,230 PARTS
increase of 108% on 590 parts in FY16
716 PANELS,
SKINS AND
CLOSURES PARTS
versus 558 in FY16
514 VERTICAL TAIL
PARTS IN FY17
versus 32 in FY16
Increased sales revenue
$51.9M IN
FY17 UP 4%
from $50.1m in FY16
1
Highlights
2
About
Quickstep
4
Chair’s
Report
6
CEO and
Managing
Director’s
Review
12
Leadership
Team
14
Our
People
18
Financial
Report
78
Corporate
Directory
Quickstep Annual Report 2017 Highlights
NEW MD, MARK BURGESS
appointed/Revised leadership team implemented
DELIVERED 100TH SHIP‑SET
of wing flaps to Lockheed Martin
Supply of
FIRST WING FLAP PARTS FOR LM‑100J
commercial aircraft
Start of production of
MICRO‑X CARBON FIBRE CHASSIS
at Geelong using the Qure process
Capex increased to
$4.0M IN FY17
completing projects for forecast volume increases
R&D SPEND OF $5.5M
including new technology & product development
FRONT FENDER
demonstration project progressed
COMPLETION KIST PROJECT
in South Korea
AMGC GRANT OF $250K
secured for automotive Fender demonstration project
AUTOMATED DRILLING EQUIPMENT
commissioned at Bankstown
Strategic review undertaken, leading to adoption of
ONEQUICKSTEP CHANGE PROGRAM
GENERAL ATOMICS ‘TEAM REAPER’
participation by Quickstep
Commencement of the
QUICKSTEP PRODUCTION SYSTEM (QPS)
1
REALIGNMENT
FOR GROWTH AND
PROFITABILITY
At the beginning of FY18 Quickstep announced that it was
realigning the business to drive profitability and growth under
the OneQuickstep banner. The introduction of the OneQuickstep
change program followed a comprehensive strategy and
operational review by Mark Burgess, the new CEO/Managing
Director, the executive management team and the Quickstep
Board. The review identified a number of important changes that
are being implemented in FY18, with the objective of accelerating
profitability and growth over the short, medium and longer term.
OneQuickstep is a values system and cultural change program
that provides Quickstep with a vision and corporate values that
will drive the behaviours of all employees and deliver improved
financial performance for the business. The program includes a
revised organisational structure and leadership roles, productivity
and efficiency improvements, refocused R&D investment and
a focus on targeted business development and growth.
2
Quickstep Annual Report 2017 The key elements of OneQuickstep are:
A SINGULAR,
SIMPLIFIED
corporate structure
REVISED &
SIMPLIFIED
leadership team
Shared services through
A MATRIX
ORGANISATION
Further developing our
HIGHLY SKILLED AND
CAPABLE WORKFORCE
LEAN
ENTERPRISE
ETHOS
underpinning all functions and all levels
Productivity and
CONTINUOUS
IMPROVEMENT
WORLD‑CLASS
competitiveness and efficiency
FOCUSED R&D
and technology commercialisation
‘ASSET RIGHT’
solutions for customers
GLOBAL
supply chain integration
CREATION OF
SHAREHOLDER VALUE
as a central tenant to the entire business
WORLD‑CLASS
MARKETING,
communications and sales
The Aerospace and Defence sectors will take a much more
prominent role in Quickstep’s growth activities in the short to
medium-term, based on the size of the existing market, the
attractive compound annual growth rates in these segments,
our current expertise and their margin opportunities.
This concentration on Aerospace and Defence does not
preclude Quickstep from seeking growth opportunities in
other market segments – such as Automotive, Transportation,
Medical Devices, Wind/Energy and other Advanced Sectors –
however, it will be the focus of Quickstep’s main investment
and growth initiatives in FY18.
The OneQuickstep program is expected to deliver significant
benefits and improvements to the business in FY18 and
beyond, and is the cornerstone of Quickstep’s vision for
the future, which is to become a leading global provider
of advanced composite solutions.
3
4
Quickstep Annual Report 2017ASSETS ON THE GROUND – BUILDING A FOUNDATION FOR THE FUTURE Our business has benefited from completing
JSF production at initial low volumes.
Following this, with the benefit of learning
curve experience, we are ready for higher
volume production. We achieved strong quality
and customer delivery performance throughout
the year and new capital assets are in place
to support future production growth. We have
a new and focused management team, with
the skills, capabilities, experience and drive to
deliver future shareholder value, accelerated
growth and profitability.
In addition to the capital expansion for
the JSF program at Bankstown, our new
investment included the commissioning of
an automated robotic drilling cell for C-130J
production. This takes the total investment
at the Bankstown site to around $30 million
and provides further production capacity to
meet booked growth and take on additional
manufacturing work.
At our Geelong facility, we invested further
in research and development (R&D) and
industrialisation of our process solutions
and in additional advanced manufacturing
equipment to support demonstration and
production programs. The Geelong site
features a fully operational and upgraded
‘Qure’ cell, along with other manufacturing
equipment to produce advanced composite
components and assemblies. We are now
moving from R&D into commercialisation of
the new technology and have secured the
first production contract using Qure.
CHAIR’S
REPORT
We are Australia’s leading independent carbon fibre
composites manufacturer, with key contracts including
work for the Joint Strike Fighter Program and Lockheed
Martin’s C-130J ‘Super Hercules’ aircraft. FY17 was a year
of significant expansion and development for Quickstep,
as we move to higher volume manufacturing of advanced
carbon fibre components and assemblies in FY18. In FY17
we completed a $10 million capital expansion program
and our Joint Strike Fighter (JSF) program production
volumes rose significantly. We now have manufacturing
capacity available to take on additional aerospace and
defence programs at Bankstown.
We have also strengthened our proprietary process
technologies and capabilities to support customers
with our advanced composite manufacturing solutions.
FY17 saw a significant change in our
leadership team with the recruitment of
Mark Burgess as CEO and Managing Director
in May 2017, following the resignation of
David Marino. A strategy and operational
review undertaken by Mark and the Board,
resulted in a simplification of the executive
management team. We have a highly capable
leadership team with extensive aerospace,
defence and broader manufacturing and
automotive expertise, with experience in
running, improving and growing a globally
focused advanced manufacturing business.
FY17 was a consolidation year as we
prepared for growth in FY18 and invested
in R&D to develop our capabilities, with
sales revenue rising from $50.1 million in
FY16 to A$51.9 million in FY17. EBIT was
$(0.2) million before R&D costs in FY17,
impacted by lower C-130J volumes against
FY16 (a 22% reduction) and learning curve
costs associated with new programs and the
automated drilling project. We expect that
higher volumes, cost initiatives and expense
reductions will improve margins during FY18.
I would like to recognise the ongoing support
of our shareholders, customers and suppliers
and my fellow Board members. I would
like to thank Mark Burgess, our recently
appointed CEO and Managing Director,
David Marino, our previous CEO, who left
us in May 2017, the executive management
team and all of the Quickstep staff for their
hard work and dedication throughout FY17.
Your company set itself up in FY17 ready
for a bright future in advanced composites
manufacturing. FY18 will see a more targeted
focus by the company on new Aerospace and
Defence programs, focused R&D activities to
accelerate growth, and the implementation
of our OneQuickstep change program to
further enhance our future order book and
deliver profitability and long-term value for
all our shareholders.
Tony Quick
Chair
5
It is an honour to deliver this report to you
as the CEO and Managing Director of Quickstep.
Having taken up the role in early May 2017,
I am immensely proud of what has been
achieved and excited about the outlook for
the business over the next five years. We have
recently announced a number of important
and far-reaching changes to the strategy and
operations of Quickstep and these represent
the start of a growth program that will
accelerate the delivery of shareholder value.
FY17 was a successful year for Quickstep from a project
delivery perspective. During the year, we completed major capital
expansion projects to support the C-130J transport aircraft and
Joint Strike Fighter (JSF) programs at Bankstown; we delivered a
record number of JSF parts; we produced and delivered our first
LM-100J (commercial version of C-130J) freighter aircraft shipsets;
we commenced series production of carbon fibre composite parts
for Micro-X, using our proprietary out-of-autoclave process Qure; we
produced, delivered and installed a Qure solution for KIST and we
continued to progress several development programs including an
important automotive front fender project.
In FY17, we increased the production rate of components for the
Joint Strike Fighter (JSF) program dramatically. A total of 1,230 JSF
parts were delivered in the year, up 108% from 590 parts in FY16.
This included 716 JSF parts to Northrop Grumman and 514 vertical tail
parts to BAE Systems and Marand for FY17, including fulfilment of an
additional order for BAE Systems, compared to 32 vertical tail parts in
FY16. Our JSF production program is expected to continue this strong
growth trajectory, as manufacturing volumes are scheduled to nearly
double over the next two years.
While we have achieved much from a project delivery perspective,
we are not satisfied with a number of areas of our performance,
including profitability, productivity and efficiency, new program growth
and the delivery of shareholder value. To this end, we undertook a
detailed review of the company’s strategic direction and operational
performance in the latter part of FY17 and recently introduced a
comprehensive change program to realign the business for growth
and profitability.
CEO AND
MANAGING
DIRECTOR’S
REVIEW
6
Quickstep Annual Report 2017ONEQUICKSTEP – REALIGNMENT FOR GROWTH AND PROFITABILITY 7
CEO AND
MANAGING
DIRECTOR’S
REVIEW
(CONTINUED)
8
Quickstep Annual Report 2017 Outlook for FY18
FY18 will be an exciting year for Quickstep: a year of change,
development and the acceleration of our growth plans. While we will
be moderating our research and development (R&D) spend in FY18,
we will continue our investment in product and process technology.
We have capped investment at about $2.8 million, which is significant
for a company of our size. Our future R&D investment will be more
focused and follow a more aggressive commercialisation path. We
will be dedicating more resources to the aerospace and defence
sector, and the rapid exploitation of QPS.
In order to accelerate our growth, we need to become a ‘world
class’ marketing, communications and sales organisation and we
will strengthen these areas significantly in FY18. We will be much
more diligent in focusing our resources on our target segments
and key customer relationships. Aerospace & Defence is what we
know best and what we do today; we have the capabilities and
capacity to immediately deliver programs in these segments. This
sector is growing strongly and offers significant market size and
margin opportunities.
Our concentration on Aerospace and Defence does not preclude
us from seeking growth opportunities in other market segments –
Micro-X and the front fender projects attest to this - however,
Aerospace and Defence will be the main focus for our investment
and growth in FY18.
Productivity and continuous improvement will be a central factor of
our business. Maximising our performance in all areas of the business
and ensuring world-class competitiveness in all that we do is essential
for Quickstep. This includes being globally competitive in all bid
and proposal activities and improving the performance of existing
customer programs.
I cannot overstate the significance of OneQuickstep as a values
system and cultural change program within our company. A singular,
simplified corporate structure, where shared services ensure
consistency and quality and a lean ethos underpins the actions of
our executive and wider leadership team. OneQuickstep provides
the company with a vision and corporate values that will drive our
behaviours and give prominence to the creation of shareholder value
at all levels within the Quickstep business.
In FY18 we expect that OneQuickstep will deliver cost reductions
with gross margin improvement coming from increased capacity
utilisation and program maturity. Based on existing contract growth,
we expect $90 million in annual sales by FY21 and we are targeting
an additional $25 million per annum in new sales by the end of this
period. Our aim is to achieve double digit % EBIT margin at full
capacity. We will be increasing our sales and business development
investment in FY18 to accelerate growth and will leverage QPS to
deliver additional volumes and shareholder value.
In closing, I would like to sincerely thank all of our shareholders,
customers and partners for their ongoing support and confidence in
Quickstep and the future of this company. I would like to thank my
predecessor, David Marino, for his valuable inputs and efforts in FY17,
in preparing the Quickstep business for its next stage of development
and growth. I would also like to acknowledge the hard work and
dedication of our Board of Directors, our leadership team and all
our dedicated employees – you are responsible for the success of
this business.
Mark Burgess
CEO and Managing Director
9
OneQuickstep Change Program
Our vision is to be a leading global provider of advanced composite
solutions and we have set about achieving this through the adoption
of the OneQuickstep change program. This is a comprehensive and
all-encompassing program to realign the business and accelerate
growth and profitability. OneQuickstep consists of a series of
actions to drive cultural change, including:
• Implementation of a simplified management structure
• Adoption of a functional matrix organisation
• Removal of discrete business segments, reducing ‘silo’ activities
• Refocusing R&D investment, targeting aerospace and
defence markets
• Increasing business development resources
• Leveraging our long-term booked business
• Ceasing non-core activities and programs
• Productivity improvements
• Commencement of cost reduction and efficiency programs
• Further development of the Qure process solution and Quickstep
Production System (QPS) for growth
• Accelerated growth and expansion over time
• Exploring future Partnership opportunities
I am genuinely excited about the future prospects of the Quickstep
Production System (QPS) which offers a complete material to finished
part solution, focused on rate improvement, process efficiency,
automation and one piece material flow. QPS can be adapted to
multiple market and part applications, and we plan to implement QPS
internally at each of our facilities and for new customer programs.
OUR
DIRECTORS
10
Quickstep Annual Report 2017 “Quickstep is a proven innovator
in the carbon fibre industry and
continues to show how Australia’s
manufacturing sector can advance,”
Dr Jens Goennemann
AMGC
“Quickstep’s achievements in advanced
manufacturing – creating new products,
processes and technologies – are an
inspiration not only to other businesses but
also our future engineers and scientists.”
Craig Laundy
Assistant Minister for Industry,
Innovation and Science
11
OUR
LEADERSHIP
TEAM
The business has strong long term contracts, and has
commenced the next stage to deliver profitability and
accelerated growth. This will be delivered through a
continuous improvement mindset and from leadership
at all levels of the business. The focus over short term
is to take actions that will deliver sustainable benefits to
our business and to demonstrate and communicate this
progress to shareholders and stakeholders. Embedding
a successful lean manufacturing culture, a focus on
excellence across the business and collaboration and
teamwork will be critical. Success will be measured by
delivering a profitable business that generates returns that
benchmark to our peers and a platform for further growth
through excellence in people, processes and systems.
Andrew Crane
Chief Financial Officer
“I have extensive experience in
manufacturing organisations –
both large and small, and I am
looking forward to Quickstep
making the transition from a
company with growth ambitions
and innovative technologies into
a more focussed business that
provides strong shareholder
returns with sound financials.
Having delivered on the challenges of deploying
capital equipment, the development of capabilities
and the leadership of teams through the JSF program,
we now enter a phase of intense focus on continuous
improvement. Through the execution of a lean program
across the entire business, we will create a continuous
improvement culture, making us world class and truly
globally competitive. Engaging all our employees at
every level, we will apply the proven methodologies
of lean manufacturing and continuous improvement
to drive profitability and the rapid development of
QPS and innovative manufacturing solutions.
Kevin Boyle
Chief Operating Officer
“As an experienced manufacturing
professional across both Australian and
Global manufacturing businesses and
professional services I am committed to
creating and driving a level of operational
excellence required to succeed globally in
advanced composites supply. I am extremely
excited about the market potential for
Quickstep and to have this opportunity
to maximise our future results.”
12
Quickstep Annual Report 2017 Quickstep has an executive leadership team with extensive experience and capabilities in the
aerospace, defence, automotive and other manufacturing sectors. Under the OneQuickstep
change program, the leadership team has been simplified and a cross functional matrix
organisational structure has been implemented across the business.
The leadership team is focused on delivering efficiency, profitability, growth and shareholder
value and ensuring Quickstep’s vision of being a global advanced composites solutions provider.
Building on the positive launch of the JSF program,
Quickstep is well poised to expand its customer portfolio
and grow our top line revenue. A targeted focus on
business development, in conjunction with our compelling
business offering through QPS, combined with both
traditional and our Quickstep patented technologies
provides a solid opportunity for growth. Our focus in
the next twelve months is on expanding our business
with new and existing customers that demonstrate our
capability as an engineered systems solution provider
and winning business with new customers enabling us
to build our credibility as a lead into major contracts in
the future. The Technology team is focused on delivering
solutions to customer problems that will provide near
term commercial returns to Quickstep while providing
a point of competitive differentiation.
Our challenge is to achieve a greater level of diversity
to deliver improved results year on year. We will explore
creative ways to build our talent pool and be an ‘Employer
of Choice’. We will continue to invest in the development
of our staff to build technical and leadership capability,
which is critical to our business. This will set us
apart from our competitors and enable us to deliver
engineered composite solutions to global customers.
Our corporate values will continue to build, reinforce
and enhance our culture: one that drives profitability
and growth to provide our employees with the prospect
of Quickstep being their long term employer where they
will receive encouragement, support and opportunities
to develop rewarding careers.
Ross Mahon
Chief Business
Development and
Technical Officer
“After a successful career in the
global automotive industry where
I have led efforts to combine
new technology, engineering
and a solution based approach
to win major new contacts and
deliver exponential growth, I am
excited about the opportunity
to work at Quickstep and bring
these same skills to drive future
growth and deliver strong returns
to shareholders.”
Jacque Courtney-Pitman
Chief Human Resources Officer
“As an accomplished and MBA qualified
HR business professional I have held
senior leadership positions in global and
publically listed companies for multiple
industries. With my passion and energy
for achieving business objectives, the
focus for Quickstep is to drive our
OneQuickstep culture, build capability
and diversity to achieve exceptional
results for our customers whilst creating
a workplace that is engaging, challenging
and supportive.”
13
ALIGNED & EXPERIENCED OUR
PEOPLE
STRONG CULTURE
Underpinning OneQuickstep are people,
our most important asset. We have a highly
skilled and motivated team, capable of
delivering our vision of being a ‘leading global
provider of advanced composite solutions’.
Guiding our people are our core values:
Integrity
Excellence
Responsibility/
Agility
Innovation
Teamwork
OUR ONEQUICKSTEP CULTURE WILL ENABLE AND ENSURE THAT:
• Profitable growth is accelerated, driving sustainability and opportunity
• There are no barriers to success, only opportunities for our people
• There is a focus on the greater good, rather than individual or siloed successes
• Knowledge is shared to achieve best practice and continuous improvement
• Expertise is shared and our functional matrix structure supports the best outcomes
14
Quickstep Annual Report 2017 DIVERSITY AND INCLUSION
One of our key initiatives is to create a more diverse and inclusive workplace,
through focusing on specific strategies to increase female representation; support
employee transition to retirement and; renewing our workforce by strengthening
ties with the local schools, vocational institutions and universities. We aim
to leverage the maximum potential of our people, irrespective of individual
differences, such as gender, ethnicity, age, physical abilities, sexual identify,
family status, beliefs and perspectives.
HEALTH AND SAFETY
We are committed to delivering on our safety first culture by ensuring all
employees are trained on our ‘Safety Management System’. We are proactive
in providing an environment where everyone has the responsibility to identify
and address hazards. We have embedded a culture of learning and corrective
actions are shared across the business to increase awareness and prevention.
DEVELOPING TALENT
Our employees are critical to our future
success and are key contributors to delivering
our customer programs. Attracting, developing
and retaining talented and qualified staff is
paramount to our success. We are developing
a highly engaged workforce which is critical
to delivering growth and profitability. We are
focusing on lean practices that will further
drive employee involvement and enablement.
15
OUR CUSTOMERS
Quickstep is at the forefront of advanced composites
manufacturing and technology development and is the
largest independent aerospace-grade advanced composite
manufacturer in Australia, partnering with some of the
world’s largest Aerospace and Defence organisations
including: Lockheed Martin (USA), Northrop Grumman
(USA), BAE Systems (UK), as well as Victorian-based
Marand Precision Engineering.
“Quickstep’s advanced
composites manufacturing
capabilities provide us with
a higher production rate than
traditional autoclave solutions.”
Peter Rowland
Managing Director of Micro-X
16
Quickstep Annual Report 2017WORLD-LEADING CUSTOMER BASE “This client [Quickstep] here is
an example of the future of
manufacturing in Australia”
Malcolm Turnbull
Prime Minister
“Quickstep is a key supplier to the JSF program and
has made substantial investments in its Bankstown
manufacturing facilities. I am pleased to see that
Quickstep has made itself ready, in preparation for
the JSF volume growth that is about to commence”
Jeff Babione
Lockheed Martin’s Executive Vice President
and General Manager of the F-35 Program
Source: QHL press release
Quickstep has also provided advanced composite products and
solutions to a range of other customers including: Ford Australia,
Thales Australia, Micro-X, the Korean Institute of Science and
Technology (South Korea) and a European luxury vehicle producer.
Quickstep is currently negotiating with new and existing customers
for additional growth opportunities.
Quickstep is also engaged in a number of development projects.
These projects are co-funded by Quickstep and its collaboration
partners, and are expected to lead to future production contracts.
17
Quickstep Holdings Limited
ACN 096 268 156
Annual Report
for the year ending 30 June 2017
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Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Directors’ Report
30 June 2017
The directors present their report on the consolidated entity consisting of Quickstep Holdings Limited and the entities it
controlled at the end of, or during, the year ended 30 June 2017. Throughout the report, the consolidated entity is referred
to as the Group.
Directors
The following persons were directors of Quickstep Holdings Limited during the whole of the financial year and up to the
date of this report:
Mr. T H J Quick
Mr. N I Ampherlaw
Mr. P C Cook
Mr. B A Griffiths
Air Marshal E J McCormack (Ret’d)
Mr. J C Douglas
Mr. M H Burgess was appointed as director on 18 May 2017 and continues in office at the date of this report.
Mr. D J Marino was a director from the beginning of the financial year until his resignation on 18 May 2017.
Principal activities
During the year the principal continuing activities of the Group consisted of:
production of parts for Northrop Grumman for the Joint Strike Fighter Project
production of C-130J wing flaps for Lockheed Martin
production of parts for Joint Strike Fighter vertical tails for BAE Systems and Marand Precision Engineering
manufacturing and development of parts using Qure technology
continued development of technologies for scaled volume production
Dividends
No dividends have been paid during the financial year. The Directors do not recommend that a dividend be paid in respect
of the financial year (2016 $Nil).
Review of operations
Volumes begin to Ramp-up – Strong platform for Expansion
At Bankstown, production volumes for the JSF program ramped up significantly, and a total of 1,230 JSF parts were
manufactured in FY17 including production of 514 vertical tail components for BAE Systems and Marand.
We delivered 27.25 ship-sets of wing flaps, comprising 26 ship-sets and 5 spares, to Lockheed Martin. This was for the
C-130J transport aircraft and also included our first set of wing flaps for the new LM-100J commercial air freighter. While
lower than the previous year, this was in line with long-term production expectations. The JSF and C-130J programs provide
Quickstep with long-term revenue generation, global credibility and a strong platform for future growth and expansion.
Gross margin for FY17 was impacted by the change in business mix from the stable C-130J program to higher JSF revenues.
Margin was impacted by the learning curve as the business ramped up vertical tails production (514 parts delivered in FY17
versus 32 in the prior year), commissioning of the automated drilling equipment for C-130J in February 2017 and the low
capacity utilisation at Bankstown.
19
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Review of operations (continued)
Several advanced manufacturing projects were undertaken in FY17 at our Geelong facility, involving the application of our
advanced composites solutions and the industrialisation of our patented ‘Qure’ process technology. These advanced
manufacturing projects included:
Ford Australia: Completion of a contract to manufacture 620 carbon fibre air intake ducts for Ford’s XR6 Sprint
performance car. This was the first carbon fibre air intake duct for any Ford vehicle globally.
KIST: Manufacture, supply and installation of a complete ‘Qure’ composite manufacturing solution for the Korean
Institute of Science and Technology (KIST) in South Korea.
Micro-X: Production has commenced for a new contract, manufacturing a carbon fibre chassis for a portable
x-ray device. This program uses the Qure process and the device is being sold in export markets.
Front Fender: Development and demonstration of an advanced production solution, using Qure, for a complex
engineered part for a European luxury vehicle manufacturer. This process will improve production rates and has
multi-segment applicability.
QPS: Development of the Quickstep Production System (QPS), a complete ‘material-to-finished part’ solution for
the manufacturing of advanced composite parts.
We also completed a number of component parts for the Thales Hawkei project at Geelong during the year, but took the
decision to cease this project after the completion of the final production order, projected to be mid FY18. The project does
not fit Quickstep’s future growth plans, as the parts are glass-fibre based and do not use our core technologies.
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of the Group during the financial year.
Events since the end of the financial year
On 1 August, 2017 the Company announced a number of changes to drive profitability and growth, following a
comprehensive strategy and operational review by the new CEO and Managing Director, the executive management team
and the Board. The updated strategy, OneQuickstep, includes a revised organizational structure and leadership roles,
productivity and efficiency improvements, refocused R&D investment and a focus on targeted business development and
growth. There have been no other significant events that have occurred since the end of the reporting period.
20
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Likely developments and expected results FY18
Strategic objective
Prospects
Risks
Implement the OneQuickstep change
program and achieve planned
productivity and efficiency
improvements.
Internal and external feedback positive.
Detailed plans in place and early results
positive.
Meeting all cost reduction and
productivity improvement plans in the
required timeframes.
Deliver growth of current contracts.
Program forecast indicates a continued
increase in JSF volumes for FY18 to FY20.
Overall program risk. Stronger AUD may
impact export sales in USD and
profitability.
Implement Quickstep Production System
(QPS) at Bankstown and Geelong sites.
Commenced. Delivery of improved
manufacturing efficiency and productivity
underway at both locations.
Implementing QPS plans in the
timeframe required.
New defence/aerospace contract(s)
secured to optimise assets at Bankstown
and improve overhead utilization.
Discussions are underway with existing and
new customers. Recruiting significant
additional business development resources
in FY18.
Long timescales for new programs.
Ensuring total offering delivers value
against global competition.
Award of additional manufacturing
contracts using Quickstep’s proprietary
technology and capabilities.
A number of opportunities currently under
discussion or advanced demonstration with
customers.
Adoption of alternative technologies for
the same opportunities.
Capacity constraints for existing process
technologies. Product development
programs underway.
Required rate and quality not achieved
using QPS.
Engagement commenced.
Inability to establish partnerships will
slow down or increase cost of
deployment.
Technology development of Quickstep
Production System (QPS) to take
advantage of niche to medium volume
manufacturing opportunities in the
global market.
Partnerships formally established in core
target markets to accelerate technology
deployment.
Shares under options
Unissued ordinary shares of Quickstep Holdings Limited under option at the date of this report are as follows
Date options granted
9 January 2015
Expiry date
31 December 2018
Issue price of Shares Number under option
$0.1625
25,000,000
No option holder has any right under the options to participate in any other share issue of the Company or any controlled
entities.
No options were granted during the year, and no options granted in prior years were exercised during the year ending 30
June 2017. No other options have been granted since the end of the financial year.
21
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Information on Directors
The following information is current as at the date of this report
Mr. Tony H J Quick, MA (Cantab) Chair – independent non-executive director - appointed 14 February 2013
Experience and expertise
Mr. Quick joined Quickstep following a highly successful career in the aerospace and defence
industries. 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
October 2000 he left Westland to emigrate to Australia and, in 2001, set up GKN Aerospace
Engineering Services Pty Ltd to service global demand for engineering services. The Company’s
parent, GKN Aerospace, is one of the world’s largest independent first-tier suppliers to the
integrated metal and composite assemblies for
global aviation
aerostructures and engine products. GKN Aerospace Engineering Services Pty Ltd provided
design services to the F-35 Joint Strike Fighter program for Lockheed Martin and Northrop
Grumman and grew to employ more than 240 aerospace engineering staff in Australia. He was
a Director and General Manager of that company until 2009. Mr. Quick was the Director of
the Defence Industry Innovation Centre, Enterprise Connect from 2009 to 2011.
Chair of the board
Chair of the Defence Materials Technology Centre.
industry providing
Ordinary shares in Quickstep Holdings Limited
456,062
Special responsibilities
Other current directorships
Interests in shares and
options
Mr. Mark H Burgess - CEO and Managing Director - appointed 18 May 2017
Experience and expertise
Mr Burgess joined Quickstep in May 2017 bringing with him over 20 years’ experience in the
global aerospace and defence industry, where his successful delivery of profitable growth and
complex projects in advanced technology businesses has led to significant employer, customer
and industry recognition. Mr Burgess has held leadership roles of increasing responsibility
across Europe, USA, the Middle East and Asia Pacific. After a long career with BAE Systems
covering sales, contracts, project and general management he joined Honeywell in 2013 as
Vice President Honeywell Aerospace, Asia Pacific. During his four years at Honeywell, he was
responsible for driving sustained profitable growth across a defence, space and commercial
helicopter portfolio. Mr Burgess has extensive experience of governance and stakeholder
management, working with public, private and not-for-profit sectors. He has managed several
successful post acquisition integration projects and has held numerous board positions on
subsidiaries and international joint ventures. He holds a degree in Politics and Economics from
the University of Hull and has completed several post graduate studies in business and
operations management.
Chief Executive Officer
Ordinary shares in Quickstep Holdings Limited
102,500
Special responsibilities
Interests in shares and
options
Special responsibilities
Other current directorships
Mr. Nigel I Ampherlaw B Com, FCA, MAICD – independent non-executive director - appointed 8 July 2013
Experience and expertise
Mr. Ampherlaw 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. He has extensive experience in Risk Management, technology, consulting and
auditing in Australia and the Asia-Pacific region.
Chairman of the Audit, Risk and Compliance Committee
Current Directorships include a Non-Executive Director of Credit Union Australia where he is
Chairman elect, and member of the Strategy Committee; Elanor Investor Group where he is
Chair of the Audit and Risk Committee and a member of the Remuneration and Nominations
Committee; 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. He has also been
a member of the Grameen Foundation Australia Charity Board since 2012.
Interests in shares and
options
Ordinary shares in Quickstep Holdings Limited
500,000
22
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Information on Directors (continued)
Mr. Peter C Cook, MPharm, CChem, FMonash, FRMIT, MPS, MRACI, MAICD- independent non-executive director-
appointed 14 July 2005
Experience and expertise
Mr. Cook’s most recent Executive appointment was as Managing Director and CEO of Biota
Holdings Limited. Mr. Cook has also 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. 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.
Chairman of the Remuneration, Nomination and Diversity Committee
Chair, Pharmaceutical Science Advisory Group (Monash University), Chair, Monash Institute
of Pharmaceutical Science’s Foundation and Director Myostin Therapeutics.
Ordinary shares in Quickstep Holdings Limited
1,590,685
Special responsibilities
Other current directorships
Interests in shares and
options
Mr. Bruce A Griffiths, OAM – independent non-executive director - appointed 14 February 2013
Experience and expertise
Mr. Griffiths 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.
Previous appointments include: Rail Supplier Advocate from 2009 to 2014, 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, Chairman - Sail Melbourne
ISAF Sailing World Cup. Mr. Griffiths’ honors 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.
Member of the Remuneration, Nomination and Diversity Committee.
Current appointments include: Board Member - Industry Capability Network Limited (ICNL),
Director - Carbon Revolution Pty Limited
Ordinary shares in Quickstep Holdings Limited
1,238,167
Special responsibilities
Other current directorships
Interests in shares and
options
Air Marshal Errol J McCormack (Ret’d) AO – independent non-executive director - appointed 11 August 2010
Experience and expertise
Mr. McCormack has extensive experience as a Senior Commander in the Royal Australian Air
Force. Mr. 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. His pro-bono work includes Deputy Chairman of the Board of the Sir
Richard Williams Foundation, an independent think-tank supporting development of
Australian military aviation policy.
Member of the Audit, Risk and Compliance Committee and the Remuneration, Nomination
and Diversity Committee.
Other current directorships Non-Executive Chairman of Chemring Australia Pty Ltd.
Interests in shares and
options
Ordinary shares in Quickstep Holdings Limited
Special responsibilities
590,319
23
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Information on Directors (continued)
Mr. James C Douglas, LLB, BSc – non-executive director - appointed 19 December 2016
Experience and expertise
Mr. Douglas is Chairman of Australian composite automotive wheels manufacturer Carbon
Revolution and a founder of investment firm Newmarket Capital, a strategic investor in the
carbon fibre manufacturing sector. James has over 20 years of global investment banking
experience and has held former roles as Global Head of Consumer Products at Merrill Lynch,
Head of Consumer Products – Americas at UBS and Head of Global Banking Australia & New
Zealand at Citi. He holds a LLB and BSc from the University of Melbourne.
Member of the Audit, Risk and Compliance Committee.
Chairman of Carbon Revolution. Director of Newmarket Capital and Krash Industries.
Ordinary shares in Quickstep Holdings Limited
Rights to shares in Quickstep Holdings Limited
(part of Newmarket)
980,401
8,333,333
Special responsibilities
Other current directorships
Interests in shares and
options
Mr. David J Marino, - CEO and Managing Director - appointed 16 February 2016 resigned 18 May 2017
Experience and expertise
Mr. Marino resigned as director on 18 May 2017, and departed the Company on 31 May 2017.
Interests in shares and
options
Ordinary shares in Quickstep Holdings Limited
Rights in shares in Quickstep Holdings Limited
894,025
4,667,069
Mr. Jaime Pinto, B.Com, CA, AIGA - company secretary - appointed 20 November 2012
Experience and expertise
Mr. Pinto is a Chartered Accountant with over 20 years experience in both professional
practice 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.
Other current roles
Mr. Pinto holds a Bachelor Degree in Commerce from the University of NSW, is a member of
The Institute of Chartered Accountants Australia, and an Associate Member of Governance
Institute.
He is currently the Company Secretary of a number of ASX-listed and unlisted companies in
the manufacturing, investing, real estate and advisory industries
Board Structure & Director Independence
The Company continually monitors the structure and performance of the Board to ensure it is of an appropriate size,
composition and skill to lead the Company and meet its current governance and strategic needs.
The Chairman manages the Board to achieve responsive and effective business outcomes with highly committed directors.
Quickstep has a Remuneration, Nomination and Diversity Committee (RND Committee), whose responsibilities include the
development and on-going review of Board competencies, structure, performance and renewal. Both the RND Committee
Charter and “Policy and Procedure for Selection and Appointment of Directors” are accessible from the Company’s website
as follows.
http://www.quickstep.com.au/files/files/359_QHL_RND_Committee_Charter_-_September_2014.pdf
http://www.quickstep.com.au/files/files/366_QHL_Selection_and_Appointment_of_Directors_Policy_V1_-_02102014.pdf
The Policy and Procedure for Selection and Appointment of Directors includes a matrix of skills that are considered
necessary within the non-executive director group to facilitate an effective and efficient Board. The RND Committee
periodically reviews both this matrix and the directors’ actual skills mix to ensure they satisfy the current and immediately
foreseeable needs of the Company.
24
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Board Structure & Director Independence (continued)
The Board maintains a varied level of tenure amongst its directors, which is seen as essential for its effective functioning
given the significant growth and change experienced by Quickstep in recent years. This has resulted in both an influx of
fresh ideas and the retention of sufficient Quickstep specific understanding to optimise strategic and operational changes.
As the business evolves this is continually reviewed.
The Board is committed to a majority of its directors being independent to ensure the Board acts in the best interest of the
entity itself, its security holders and stakeholders generally. Director independence is assessed on a regular basis, and all
directors are required to advise the Board of any actual or potential conflicts of interest as they arise, with any such conflicts
tabled at Board meetings.
In assessing independence the Board considers a number of factors which include, but are not limited to, the “Factors
relevant to assessing the independence of a director” listed in Recommendation 2.3 of the Corporate Governance Principles
and Recommendations 3rd Edition established by the ASX Corporate Governance Council (‘the ASX Principles and
Recommendations”).
Meetings of Directors
The numbers of meetings of the Company's board of Directors and of each board committee held during the financial year
ended 30 June 2017, and the numbers of meetings attended by each Director were:
Board
Meetings
Audit, Risk and
Compliance Committee
Meetings
Director
Mr. T H J Quick
Mr. M H Burgess (appointed 18 May 2017)
Mr. N I Ampherlaw
Mr. P C Cook
Mr. B A Griffiths
Air Marshal E J McCormack (Ret’d)
Mr. J C Douglas
Mr. D J Marino (resigned 18 May 2017)
A
13
2
13
13
13
13
13
12
B
13
2
13
13
13
13
13
10
A
-
-
4
-
-
4
4
-
B
-
-
4
-
-
4
4
-
Remuneration,
Nomination and
Diversity Committee
Meetings
A
-
-
-
7
7
7
-
-
B
-
-
-
7
6
7
-
-
A = Number of meetings held during the time the Director held office during the year
B = Number of meetings attended
Insurance of officers and indemnities
Except as indicated below, the Group has not otherwise, during or since the end of 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.
Insurance
During the financial year, Quickstep Holdings Limited 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 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 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.
Indemnities
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.
25
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Non-audit services
During the financial year, KPMG, the Group’s auditor, has performed certain other services in addition to the audit and
review of the financial statements.
The board of directors has considered the position and, in accordance with advice received from the Audit Risk and
Compliance Committee, are satisfied that the provision of the non-audit services is compatible with the general standard
of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-
audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons- all non-audit services have been reviewed by the audit and risk committee
to ensure they do not impact the impartiality and objectivity of the auditor, and none of the services undermine the general
principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.
Details of the amounts paid to the auditor of the Group, KPMG, for non-audit services provided during the year are set out
below:
Other services
Grant assurance – NACC
Grant assurance – Invest Victoria
Total non-audit fee
Auditor’s independence declaration
2017
$
2016
$
15,700
7,500
23,200
-
-
-
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 70.
Rounding of amounts
The Company is a kind referred to in ASIC Legislative Instrument 2016/191, relating to the “rounding off” of amounts in the
directors’ report and financial statements. Amounts in the directors’ report and financial statements have been rounded
off to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Corporate Governance Statement
Quickstep’s Corporate Governance Statement can be found on the Company’s website at the following address:
http://www.quickstep.com.au/Investors-Media/Corporate-Governance
This report is made in accordance with a resolution of directors on 28 September 2017.
M H Burgess
Director
28 September 2017
Sydney, New South Wales
26
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Remuneration Report
The directors present the Quickstep Holdings Limited 2017 remuneration report, outlining key aspects of the Group’s
remuneration policy and framework, and remuneration awarded this year.
The report is structured as follows:
1
2
3
4
Principles of compensation
Details of remuneration
Share based compensation
Analysis of bonuses included in remuneration
1. Principles of compensation
Key management personnel, including directors of the Company, have authority and responsibility for planning, directing
and controlling the activities of the Group. Key management personnel comprise the directors of the company and senior
leadership team.
The report includes details relating to:
Executive Directors
Mr. M H Burgess
Mr. D J Marino
Non-Executive Directors
Mr. T H J Quick
Mr. N I Ampherlaw
Mr. P C Cook
Mr. B A Griffiths
Air Marshal E J McCormack(Ret’d)
Mr. J C Douglas
Other Key Management Personnel
CEO and Managing Director (from 18 May 2017)
CEO and Managing Director (until 18 May 2017)
Chairman
Chair of Audit, Risk and Compliance Committee
Chair of Remuneration, Nomination and Diversity Committee
Mr. J Pinto
Mr. A R Crane
Ms J E Courtney-Pitman
Mr. K J Boyle
Mr. R L Mahon
Company Secretary
Chief Financial Officer
Chief Human Resources Officer
Chief Operating Officer
Chief Business Development and Technical Officer
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 other key management
personnel, and
Cash bonuses and equity based incentive plans, including appropriate performance hurdles, total payments
proposed and plan eligibility criteria.
If necessary, the RN&D 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.
Quickstep has also developed an Executive Remuneration Policy and a Director Remuneration Policy that are available on
the Company’s website at http://www.quickstep.com.au/Investors-Media/Corporate-Governance.
27
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Remuneration Report (continued)
1. Principles of compensation (continued)
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 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 cash incentives and equity-based incentives.
Shares, options or rights 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.
The Company’s policy is to provide executives with a competitive fixed compensation comparable to the median paid by
like sized companies undertaking similar work and offers additional short and long term incentives to allow the executive
to achieve top quartile compensation, if all performance hurdles are met. All incentives are capped.
The Company’s policy is to provide non-executive directors with a fixed fee comparable to the median of that paid by similar
sized ASX listed companies operating in similar fields. Non-executive directors are not eligible for participation in any of the
Company’s incentive schemes.
Fixed compensation
Fixed compensation consists of base compensation, as well as statutory employer contributions to superannuation.
Compensation levels are reviewed annually through a process that considers current labour market rates, the individual's
contribution and overall performance of the Group. Compensation is also reviewed in the event of promotion or significant
change in responsibilities.
Performance linked compensation
Performance linked compensation includes both short and long term incentives and is designed to reward key management
personnel, excluding non-executive directors, for meeting or exceeding the Company's business and their 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.
(a) Short term incentive
Cash and equity settled short term incentive
Certain executives receive short-term incentives (STI) in cash and/or shares on achievement of key performance indicators
(KPIs). Each year, the RN&D Committee considers the appropriate KPIs and associated targets to align individual rewards to
the Group’s desired performance. These targets may include measures related to the annual performance of the Group,
and/or specified parts of the Group.
In FY17 nine Corporate KPIs were used, including three financial KPIs (weighting 35%), two KPIs relating to people and safety
(weighting 15%), two growth and technology focused KPIs (weighting 20%) and two project and operational KPIs (weighting
30%). The weighting of corporate KPIs used in the determination of an executive’s STI ranged from 70% for functional
specialists to 100% for the Managing Director and Chief Financial Officer.
The RN&D Committee is responsible for assessing whether the KPIs have been achieved and meet the criteria set out at the
beginning of the year. Each year a limited number of corporate KPIs are designated as threshold metrics, with no STI payable
to any executive if these are not achieved. In FY17 there was one threshold metric.
Actual performance is then assessed against both a target outcome and a stretch outcome. Generally, where performance
falls below the target outcome no payment is made against that KPI and where performance exceeds the stretch outcome
the stretch cap is payable. Generally, where performance falls between target and stretch outcomes an appropriate
proportion of the KPI is payable. When the target is achieved 50% of the weighting for the KPIs is payable. When both the
target and stretch outcomes are achieved 100% of the weighting for the KPIs is payable.
After determining the overall achievement of KPIs based on the above review process and hurdle, the RN&D Committee
has recommended that a STI is payable in respect of FY17.
28
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Remuneration Report (continued)
1. Principles of compensation (continued)
(b) Long term incentive
Quickstep Incentive Rights Plan (IRP)
In November 2013 the Company established the Quickstep Incentive Rights Plan (IRP). The IRP was designed to facilitate
the Company moving towards best practice remuneration structures for executives, and offers under the IRP have been
made to a number of executives since its introduction. The terms of the IRP were most recently approved by shareholders
at the 2015 AGM.
The IRP authorises the granting of Rights to executives of the Company, in the form of Performance Rights (PRs) and/ or
Deferred Rights (DRs) and/or Restricted Rights - (RRs) (together, Rights). These Rights represent an entitlement on vesting
to fully paid ordinary shares in the issued capital of the Company (Shares) and cash(capped at $1,000) with the total value
of cash and shares being equal to the value of vested Rights (number of vested Rights x market value of a Share). PRs may
vest if Performance Conditions are satisfied. DRs may vest if service conditions are satisfied. There were no RRs granted in
FY17 and none arose from PRs or DRs.
The Board has the discretion to set the terms and conditions on which it will offer PRs under the IRP, including the
performance conditions and modification of the terms and conditions as appropriate to ensuring the IRP operates as
intended. All PRs offered will be subject to performance conditions which are intended to be challenging.
The PRs are subject to a performance condition based on achieving a relative Total Shareholder Return (TSR) equivalent to
or in excess of the ASX All Ordinaries Accumulation Index (AOAI) over the performance period. The AOAI is an index of total
shareholder return achieved by ASX listed companies which combines both share price movement and dividends paid during
the performance period (assuming that they are reinvested into Shares). As a general rule, Quickstep uses a performance
period of three (3) years with an anniversary date of 1 September each year.
For vesting to occur the Company's TSR (share price movement plus dividends) over the performance period must be
positive (i.e. if shareholders have not gained then PRs will not vest) relative to the AOAI. If the Company's TSR is positive
but the AOAI movement is negative over the performance period then vesting, if any, will be at the discretion of the Board
(i.e. only applies if the Company has outperformed a general fall in the market by protecting against a similar fall in the
Company's share price). If the Company's TSR is positive and the movement in the AOAI is also positive then the following
vesting scale will apply:
Performance Level
Below threshold
Threshold
Target
Stretch and above
Company's TSR relative to AOAI movement over the
performance period
< Increase in the AOAI
= Increase in the AOAI
> 100% of AOAI increase & < 110% of AOAI increase
110% of AOAI increase
> 110% of AOAI increase & < 120% of AOAI increase
120% of AOAI increase
Vesting %
0%
25% Pro-rata
60% Pro-rata
100%
For PRs issued to executives, testing of the TSR hurdle will occur on the third anniversary of the commencement of the
performance period and then semi-annually until the rights lapse or the fifth anniversary of the commencement of the
performance period. Once a right has vested it may not become unvested based on performance at a subsequent test date.
If at a test date some rights have previously vested and the Company’s performance at the test date is higher than at
previous test dates then additional rights will vest. Such vesting will apply on the basis that the total number of rights that
have vested from a tranche (previous and current vesting) is equal to the number that would have vested at the current
test date had no vesting occurred earlier.
29
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Remuneration Report (continued)
1. Principles of compensation (continued)
(b) Long term incentive (continued)
Upon the satisfaction of the performance conditions, the value of PRs granted under the IRP will be evaluated. The Board
has discretion to vary vesting if it considers it to be appropriate to do so given the circumstances that prevailed over the
performance period. This provision aims to address situations where vesting may otherwise be inconsistent with
shareholder expectations.
The IRP contains provisions concerning the treatment of vested and unvested rights in the event that a participant ceases
employment. Unless the Board determines otherwise, if a participant ceases employment in other than special
circumstances (death, total and permanent disablement, retrenchment, redundancy, permanent retirement from full-time
work with the consent of the Board or other circumstances determined by the Board), all unvested rights held by the
participant will lapse.
Unless the Board determines otherwise, if a participant ceases employment under special circumstances, rights that were
granted to the participant during the financial year in which the termination occurred will be lapsed in the same proportion
as the remainder of the financial year bears to the full year. All remaining rights for which performance conditions have not
been satisfied as at the date of cessation of employment will then remain "on foot", subject to the original performance
conditions.
(c) Non-executive directors’ fees
Total remuneration for all non-executive directors was last voted upon by shareholders at the 2010 Annual General
Meeting, and is not to exceed $600,000 per annum. Director fees were set in FY11 with reference to fees that were paid to
non-executive directors of comparable companies. There has been no increase or change since. Directors are entitled to
receive a fee which covers all main Board activities, a fee for Chairmanship of a committee of $10,000 p.a. and $2,500 for
membership of each committee. 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
Mr. T H J Quick
Mr. N I Ampherlaw
Mr. P C Cook
Mr. B A Griffiths
Air Marshal E J McCormack(Ret’d)
Mr. J C Douglas
Director fees $
126,000
60,000
60,000
60,000
84,000
60,000
Committee fees $
n/a
10,000
10,000
2,500
*2,500
2,500
* Air Marshal E J McCormack(Ret’d) is a member of two committees but elects to receive compensation for one.
(d) Consequences of performance on shareholder wealth
In considering the Group’s performance and benefits for shareholder wealth, the RN&D committee gives regard to the
following indices in respect of the current financial year and the previous four financial years.
Loss attributable to owners of the company ($000)
Dividends paid
Operating income ($000)
Change in share price
Return on capital employed
2017
$(6,662)
$nil
$51,915
(25.4%)
(33.3%)
2016
$(5,785)
$nil
$50,128
(18.2%)
(8.6%)
2015
$(3,937)
$nil
$39,511
(12.4%)
(6.1%)
2014
$(11,181)
$nil
$12,001
35.7%
(66.4%)
2013
$(16,985)
$nil
$2,562
(17.6%)
(95.9%)
Loss amounts have been calculated in accordance with Australian Accounting Standards (AASBs). Return on capital
employed is calculated as Profit before interest and tax (EBIT) divided by total assets less current liabilities.
30
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Remuneration Report (continued)
1. Principles of compensation (continued)
(e) Service agreements
Name
Mr. M H Burgess
Initial
agreement
date
8 May 17
Duration
Open
Notice
period (3)
NES
Mr. D J Marino
16 Feb 15 31 May 17
NES
STI cap
as a % of
TFR (1)
50
Termination benefits
12 months annual Total Fixed Remuneration
(TFR); and pro-rated annual bonus (at
Board's discretion). If due to change of
control, 100% of annual TFR is paid
immediately plus pro-rated annual bonus
LTI cap
as a % of
TFR (2)
50
12 months annual Total Fixed Remuneration
(TFR); and pro-rated annual bonus (at
Board's discretion). If due to change of
control, 100% of annual TFR is paid
immediately plus pro-rated annual bonus
50
50
Mr. A R Crane
24 Sept 15
Open
NES
3 months of annual salary package; and pro-
rated annual bonus (at Board's discretion)
30
30
Ms. J E Courtney-
Pitman
30 Mar 16
Open
NES
3 months of annual salary package; and pro-
rated annual bonus (at Board's discretion)
20
20
Mr. K J Boyle
23 Mar 16
Open
NES
3 months of annual salary package; and pro-
rated annual bonus (at Board's discretion)
20
20
Mr. R L Mahon
11 Jan 17
Open
NES
3 months of annual salary package; and pro-
rated annual bonus (at Board's discretion)
20
20
(1) Short Term Incentive (STI) is determined on performance against key performance indicators (KPIs) set and reviewed
by the RN&D Committee or the Board as appropriate. The STI cap refers to the maximum amount payable in cash
(other than Mr. Burgess and Mr. Marino, whose STI is payable in a combination of cash and shares), as a percentage
of Total Fixed Remuneration (TFR). The KPIs include company financial objectives, such as sales, profit and cash flow,
and other growth, operational and people objectives including new contracts, technology development, project
delivery and functional outcomes aligned to the annual strategic plan.
(2)
Long Term Incentive (LTI) is determined on the Group's performance against relative Total Shareholder Return and
is tested at multiple dates. The LTI cap refers to the maximum amount payable in shares as a percentage of Total
Fixed Remuneration (TFR). This is the measure currently used in the IRP applicable to the 2017 financial year.
(3) NES refers to the National Employment Standard, in the Fair Work Act (2009). Under section (3) (ss117-118) an
employee is entitled to a minimum notice period depending on length of service and age.
31
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Remuneration Report (continued)
2. Details of remuneration
The following tables show details of the remuneration received by the Directors and the key management personnel
of the Group for the current and previous financial year.
2017
Name
Executive Directors
Mr. M H Burgess (5)
Mr. D J Marino
Non-Executive Directors
Mr. T H J Quick
Mr. N I Ampherlaw
Mr. P C Cook
Mr. B A Griffiths
Air Marshal E J
McCormack (Ret’d)
Mr. J C Douglas
Other key management
personnel
Mr. J Pinto
Mr. A R Crane
Ms. J E Courtney-Pitman
Mr. K J Boyle
Mr. R L Mahon (5)
Salary / fees
$
STI (3)
$
Discretionary
payment (4)
$
Super-
annuation levy
$
Equity based
short term
incentive (1)
$
73,289
488,426
-
99,171
-
125,000
4,904
19,616
126,000
69,463
63,825
61,500
78,870
57,249
-
-
-
-
-
-
-
-
-
-
-
-
60,000
335,045
238,136
249,397
142,990
-
41,652
26,198
25,594
11,971
-
75,000
20,000
20,000
-
-
537
6,175
-
7,630
5,251
-
19,616
16,933
19,616
9,808
-
-
-
-
-
-
-
-
-
-
-
-
-
Rights (2)
$
Total
$
-
335,110
78,193
1,067,323
-
-
-
-
-
-
126,000
70,000
70,000
61,500
86,500
62,500
-
16,960
8,494
8,072
2,637
60,000
488,273
309,761
322,679
167,406
(1)
Equity based STI includes an accrual of estimated STI relating to the current year to be settled through share based
payments.
(2) Rights include the accounting expense attributable to the current year under the IRP.
(3)
The Short Term Incentive (STI) is comprised of an accrued current year cash bonus.
(4)
The RN&D Committee recommended and the Board approved a discretionary payment to select key management
personnel in FY17. This reflected a level of activity beyond standard requirements to deliver key projects in line with
or ahead of agreed timelines.
(5)
For personnel that commenced employment during FY17, these figures represent the period from start date (refer
Remuneration Report 1(e) Services Agreements) to 30 June 2017.
32
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Remuneration Report (continued)
2. Details of remuneration (continued)
2016
Name
Salary / fees
STI cash
bonus (3)
Non-
monetary
benefits
Super-
annuation
levy
Termination
benefits
Equity based
short term
incentive (1) Rights (2)
Total
$
$
$
$
$
$
$
$
458,538
352,256
(13,933) 21,771
(22,680) 29,969
19,750
19,308
-
400,000
(13,933)
(22,680)
187,682
(131,242)
659,875
624,931
Executive Directors
Mr. D J Marino
Mr. P M Odouard (4)
Non-Executive Directors
Mr. T H J Quick (5)
Mr. N I Ampherlaw
Mr. P C Cook
Mr. B A Griffiths
Air Marshal E J
McCormack (Ret’d)
Mr. J C Douglas
Mr. D P A Singleton
Other key management
personnel
Mr. J Pinto
Mr. A R Crane (6)
Ms. J E Courtney-Pitman (6)
Mr. K J Boyle (6)
126,000
63,927
63,927
61,500
78,995
35,817
35,388
60,000
207,823
54,144
62,950
52,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,073
6,073
-
7,505
3,403
3,362
-
-
7,249
6,152
-
14,481
4,827
4,827
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
178,500
70,000
70,000
61,500
86,500
39,220
38,750
9,706
1,066
1,197
60,000
232,010
67,286
75,126
63,073
1,374,550
Former other KMP’s (7)
1,168,759
(55,953) 25,562
92,362
80,747
(1) Equity based STI includes an accrual of estimated STI relating to the current year to be settled through share based
payments net of any prior year accrual adjustments.
(2) Rights include the accounting expense attributable to the current year of both the EIP and IRP.
(3) The Short Term Incentive (STI) is comprised of an accrued current year cash bonus plus adjustment for differences
between the amount accrued during the prior financial year and the amount paid in the current financial year. This
adjustment results in a negative expense appearing in the tables above in relation to executives for whom the prior
year accrual exceeded the payment made in the current year in respect of the prior year.
(4)
Includes full year figures for Mr. Odouard – covering both roles in FY16 – Executive Director from 1 July 2015 to
15 October 2015 and as General Manager, Strategy and Business Development (Aerospace & Defence) from
16 October 2015 until his departure on 30 June 2016.
(5) The STI cash bonus for Mr. Quick represents ex-gratia payment for achievements during his interim appointment
as Executive Chairman from 29 May 2014 to 15 February 2015, The RN&D committee calculated the quantum of
the payment on the same basis as the current CEO’s STI incentive i.e. 41.5% x 50% x TFR, being only those fees
relating to his executive duties and not his ongoing chairman fees.
(6) For personnel that commenced employment during FY16, these figure represent the period from start date
(refer Remuneration Report 1(e) Services Agreements) to 30 June 2016.
(7) Relates to FY16 KMPs who were no longer considered to be KMPs at the start of FY17.
33
Quickstep Holdings Limited
Directors’ Report
30 June 2017
Remuneration Report (continued)
3. Share Based Compensation
(a) Short term Incentive
Equity settled short term incentive
Short term performance incentives accrued in the prior year that 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 during FY17 in respect
of FY16 performance
Fair value
$
Total fair value
$
Mr. D Marino
Nil
Nil
Nil
Equity settled short term incentive accrued in the current year for FY17 performance are expected to be settled through
share based payments during the next financial year, valued at the market value on the day of issue.
(b) Long term Incentive
Quickstep Incentive Rights Plan (IRP)
At 30 June 2017 executives have accrued rights pursuant to the IRP. Movements in IRP rights during the year are set out
below:
Tranche
refer
Note
15(b)
Grant
date
FV per
right at
grant
date (a)
First
testing
date
Balance
at 30
June
2016
Number
Granted
during
the year
(b)
Number
Vested/
Lapsed
during the
year
Number
Balance
at 30
June
2017
Number
Fair
Value at
grant
date
$
Cum
vesting
level
2
16/02/15 $0.200 31/08/16 415,283
-
(415,283)
-
- 100%
2
3
FY16
FY17
FY16
FY17
16/02/15 $0.110 31/08/16 415,283
16/02/15 $0.155 31/08/17 1,245,847
01/06/16 $0.085 31/08/18 1,262,626
01/03/17 $0.072 31/08/19
01/06/16 $0.085 31/08/18 446,970
-
01/03/17 $0.072 31/08/19
-
-
-
- 2,158,596
-
906,610
(415,283)
-
-
- 1,245,847 $193,106
- 1,262,626 $107,323
- 2,158,596 $155,419
$37,992
- 446,970
$65,276
- 906,610
0%
0%
0%
0%
0%
0%
FY16
01/06/16 $0.085
31/08/18 123,737
-
- 123,737
$10,518
0%
FY17
FY16
FY17
FY17
31/08/19
01/03/17 $0.072
-
01/06/16 $0.085 31/08/18 131,313
-
01/03/17 $0.072 31/08/19
-
01/03/17 $0.072 31/08/19
431,719
-
457,622
276,300
- 431,719
- 131,313
- 457,622
- 276,300
$31,084
$11,162
$32,949
$19,894
0%
0%
0%
0%
Deferred Rights
Mr. D J Marino (c)
Performance Rights
Mr. D J Marino (d)
Mr. D J Marino
Mr. D J Marino
Mr. D J Marino
Mr. A R Crane
Mr. A R Crane
Ms. J E Courtney-
Pitman
Ms. J E Courtney-
Pitman
Mr. K J Boyle
Mr. K J Boyle
Mr. R L Mahon
(a) The fair value of rights granted was calculated using a Monte Carlo simulation analysis. Refer to Note 15(b), for the
model’s key assumptions.
(b) The fair value of rights granted in the year is $304,622 (2016 $245,059). The total value of the rights is allocated to
remuneration over the vesting period.
(c) These rights vested during FY17 with vesting satisfied by the issue of $1,000 and 406,649 shares.
(d) These rights lapsed during FY17 due to the threshold metrics not being achieved.
Modification of terms of equity-settled share-based payment transactions
No terms of equity-settled share-based payment transactions (including 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.
Remuneration Report (continued)
34
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Directors’ Report
30 June 2017
4. 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 other key management personnel of the Group are detailed below:
Executive Director
Mr. D Marino
Other key management personnel
Mr. A R Crane
Ms. J E Courtney-Pitman
Mr. K J Boyle
Mr. R L Mahon
Included in
remuneration $ (1)
% vested in year
(2)
% lapsed in year
(2)
99,171
36.3%
63.7%
41,652
26,198
25,594
11,971
36.3%
47.9%
44.1%
36.7%
63.7%
52.1%
55.9%
63.3%
(1) Amounts included in remuneration for the financial year represent the amount that vested in the financial year
based on estimated achievement of Group and/or personal goals and satisfaction criteria.
(2) The amounts lapsed are due to the Group performance, personal performance or service criteria not being met in
relation to the current financial year.
5. Key management personnel related transactions
On 19 December 2016 Mr. J Douglas became a non-executive director of the Group. Mr. Douglas is also a director of
Newmarket. Therefore at 30 June 2017 the Newmarket Options (Note 6(g)) are considered to be held by a related party.
35
Contents
Financial statements
Consolidated statement of profit or loss and other comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Financial Reporting by Segment
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Revenue
Other income and expenses
Loss per share
Income tax expense
Financial assets and financial liabilities
Non-financial assets and liabilities
Equity
Cash flow information
Financial instruments - fair values and risk management
Group entities
Capital and other commitments
Events occurring after the reporting period
Related party transactions
Share-based payments
Remuneration of auditors
Parent entity financial information
Significant accounting policies
Determination of fair values
Directors' declaration
Lead auditor’s independence declaration
Independent auditor's report to the members
37
38
39
40
41
41
42
43
43
44
47
49
50
51
55
56
56
56
57
59
59
60
68
69
70
71
36
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2017
Revenue
Cost of sales of goods
Gross profit
Other income
Research and development expenses
Corporate and administrative expenses
Other expenses
Loss from operating activities
Finance income
Finance expenses
Net finance costs
Loss before income tax
Income tax benefit
Loss for the period
Other comprehensive income/ (loss) net of income tax
Item that may be reclassified to profit or loss
Reclassification of foreign currency translation reserve on closure of
US subsidiary
Exchange difference on translation of a foreign operation
Other comprehensive income/ (loss) for the period, net of income tax
Notes
2
2017
$000
2016
$000
51,915
(44,175)
7,740
50,128
(39,700)
10,428
3(a)
532
460
3(b)
3(e)
3(e)
5
(5,492)
(7,919)
(561)
(5,700)
606
(1,568)
(962)
(6,662)
-
(3,487)
(7,567)
(2,015)
(2,181)
1,008
(4,612)
(3,604)
(5,785)
-
(6,662)
(5,785)
-
68
68
301
(55)
246
Total comprehensive (loss)/ income for the period
(6,594)
(5,539)
SPACE
Earnings per share for loss attributable to the ordinary equity holders
of the company:
Basic loss per share
Diluted loss per share
Cents
Cents
4
4
(1.18)
(1.18)
(1.17)
(1.17)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.
37
Quickstep Holdings Limited
Consolidated balance sheet
As at 30 June 2017
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Other current assets
Inventories
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Deferred revenue
Loans and borrowings
Employee benefit obligations
Total current liabilities
Non-current liabilities
Deferred revenue
Loans and borrowings
Employee benefit obligations
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Accumulated losses
Total equity
Notes
6(a)
6(b)
6(c)
6(d)
7(a)
7(b)
6(e)
6(f)
6(g)
7(c)
6(f)
6(g)
7(c)
2017
$000
3,722
6,292
718
635
10,599
21,966
14,753
61
14,814
36,780
10,346
4,220
3,763
1,138
19,467
682
8,240
210
9,132
28,599
2016
$000
7,578
5,320
963
398
11,906
26,165
13,058
25
13,083
39,248
7,196
3,182
2,159
950
13,487
1,566
9,764
199
11,529
25,016
8,181
14,232
8(a)
8(b)
8(c)
109,118
4,077
(105,014)
109,118
3,466
(98,352)
8,181
14,232
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
38
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Consolidated statement of changes in equity
for the year ended 30 June 2017
Share
capital
Notes
$000
Foreign
currency
translation
reserve
$000
Share
based
payments
Accumulated
losses
Total
equity
$000
$000
$000
Year ended 30 June 2016
Balance at 1 July 2015
Loss for the period
Other comprehensive (loss)/ income
Foreign currency translation difference
for foreign operations
Reclassification of foreign currency
translation reserve on closure of US
subsidiary
Total comprehensive (loss)/ income for
the period
Transactions with owners of the
company:
Contributions of equity, net of
transaction costs and tax
Share based payments expenses
Total transactions with owners
8(c)
8(b)
8(b)
8(a)
8(b)
88,228
-
-
-
-
20,890
-
20,890
(549)
-
3,655
(92,567)
(1,233)
-
(5,785)
(5,785)
(55)
301
246
-
-
-
-
(55)
301
(5,785)
(5,539)
- 20,890
114
- 21,004
-
-
114
114
Balance at 30 June 2016
109,118
(303)
3,769
(98,352) 14,232
Year ended 30 June 2017
Balance at 1 July 2016
Loss for the period
Other comprehensive (loss)/ income
Foreign currency translation difference
for foreign operations
Total comprehensive (loss)/ income for
the period
Transactions with owners of the
company:
8(c)
8(b)
Share based payments expenses
8(b)
Total transactions with owners
109,118
-
-
-
-
-
(303)
-
68
68
-
-
3,769
(98,352) 14,232
-
-
-
543
543
(6,662)
(6,662)
-
68
(6,662)
(6,594)
-
-
543
543
Balance at 30 June 2017
109,118
(235)
4,312
(105,014)
8,181
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
39
Quickstep Holdings Limited
Consolidated statement of cash flows
For the year ended 30 June 2017
Cash flows from operating activities
Cash receipts in course of operations
Interest received
Interest paid
Government and industry grants
Cash payments in the course of operations
Notes
2017
$000
2016
$000
50,515
31
(74)
532
(50,910)
49,190
83
(1,370)
460
(53,278)
Net cash from / (used in) operating activities
9
94
(4,915)
Cash flows from investing activities
Acquisition costs of plant and equipment and intangible assets
Proceeds from government grant for capital
Receipts from /(investment in) restricted cash and term deposit
Net cash (used in) investing activities
Cash flows from financing activities
Net proceeds from issue of shares
Proceeds from borrowings
Repayment of borrowings
Payment of borrowing costs
Finance lease payments
Net cash (used in) / from financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
7(b)
8(a)
(4,437)
467
245
(4,034)
622
(254)
(3,725)
(3,666)
-
1,500
(1,250)
(542)
(1)
20,890
-
(5,500)
(329)
(8)
(293)
15,053
(3,924)
7,578
68
6,472
1,170
(64)
Cash and cash equivalents at end of period
6(a)
3,722
7,578
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
40
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
1. Financial Reporting by Segments
The Group operates in the manufacturing of advanced carbon fibre composites.
The Company is managed as a whole and is considered to have a single operating segment. There is no further division of the
Company or internal segment reporting used by the Directors, when making strategic decisions or resource allocation decisions.
Following a comprehensive strategy and operational review by the new CEO/Managing Director, the executive management
team and the board, it was decided to realign the business to drive profitability and growth – under the ‘OneQuickstep’ banner.
The OneQuickstep program includes a revised organizational structure and leadership roles, productivity and efficiency
improvements, refocused R&D investment and a focus on targeted business development and growth.
(a)
Major customers
Approximately 94.9% (2016 93.1%) of revenue for the Group is attributable to the following customers
Northrop Grumman ISS Int. Inc
Lockheed Martin Aeronautics Co
(b)
Geographical information
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.
Australia
Europe
Asia
United States of America
Total
2017
Revenue
$000
5,012
2,200
1,475
43,228
51,915
2017
Non-current
assets
$000
14,566
248
-
-
14,814
2016
Revenue
$000
644
984
-
48,500
50,128
2016
Non-current
assets
$000
12,798
285
-
-
13,083
2. Revenue
The Group derived the following type of revenue from continuing operations
Sale of goods
2017
$000
51,915
2017
$
2016
$000
50,128
2016
$
41
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
3. Other income and expenses
This note provides a breakdown of the items included in ’other income’, ‘other expenses’, ‘finance income and expense’ and an
analysis of expenses by nature.
Notes
2017
$000
2016
$000
(a)
Other income
Grants received as revenue
(b)
Other expenses
Marketing expenses
Write off bad debt
Indirect taxes related to German operations
Loss on disposal of plant and equipment
(c)
Breakdown of expense by nature
Employee benefit expenses
Depreciation and amortisation
Operating lease expense
(d)
Employee benefits expenses
Wages and salaries
Defined contribution plan expense
Increase in leave liabilities
Share based payments expense
(e)
Finance income and expense
Finance income
Interest income
Change in fair value of share option liability
Finance income
Finance expenses
Interest expense on liabilities measured at amortised cost
Foreign currency losses
Other expenses
Finance expense
Net finance costs
532
460
216
345
-
-
561
199
-
1,633
183
2,015
21,328
2,239
2,527
21,467
2,200
2,331
26,094
25,998
19,050
1,536
199
543
21,328
19,710
1,355
288
114
21,467
31
575
606
83
925
1,008
(947)
(546)
(75)
(1,568)
(3,137)
(1,391)
(84)
(4,612)
(962)
(3,604)
3(d)
8(b)
3(c)
6(g)
6(g)
42
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
4. Loss per share
The calculation of basic loss per share at 30 June 2017 was based on the loss attributable to ordinary shareholders of
$6,662,000 (2016 $5,785,000) and a weighted average number (W.A.N.) of ordinary shares outstanding during the
financial year ended 30 June 2017 of 562,538,761 (2016 495,782,664) calculated as follows:
Note
2017
Actual No.
W.A.N.
Actual No.
W.A.N.
2016
Issued ordinary shares 1 July
Share issue
Shares issued under share based
payments arrangements
Issued ordinary shares at 30 June
562,474,143
-
562,474,143
-
397,873,501
164,005,589
397,873,501
97,611,636
8(a)
406,649
562,880,792
64,618
562,538,761
595,053
562,474,143
297,527
495,782,664
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 and diluted)
Basic and diluted loss cents per share
5. Income tax expense
(a)
Income tax expense
Current tax
Deferred tax
Adjustments for current tax of prior periods
Income tax benefit reported in the consolidated income statement
Numerical reconciliation of income tax expense to prima facie tax payable
(b)
Loss from continuing operations before income tax expense
Tax at the Australian tax rate of 30.0% (2016 - 30.0%)
Expenditure not allowable for income tax purposes
Effect of different tax rate for overseas subsidiaries
Income not assessable
Other
Deferred tax asset not brought to account
Prior year adjustment
Income tax expense
2017
2016
562,538,761 495,782,664
(1.17)
(1.18)
2017
$000
-
-
-
-
(6,662)
(1,999)
100
213
(173)
21
1,258
580
-
2016
$000
-
-
-
-
(5,785)
(1,736)
37
391
(277)
-
1,298
287
-
TaxTax losses not bought to account
(c)
The gross amount of unused tax losses for which no deferred tax asset has been recognised
68,623
64,247
43
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
5. Income tax expense (continued)
Temporary differences not brought to account
(d)
Deferred tax assets/(liabilities):
Other provisions
Borrowing costs
Deductible capital raising costs
Property, plant and equipment
Intangibles
Deferred tax assets relating to temporary differences not recognised
2017
$000
2016
$000
646
9
251
1,804
208
(2,918)
-
630
14
363
2,063
208
(3,278)
-
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 the Group considers that it is not currently probable that the deferred tax
asset will be recovered in the near future.
(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.
6. Financial assets and financial liabilities
(a)
Cash and cash equivalents
Current assets
Cash at bank and in hand
2017
$000
2016
$000
3,722
7,578
Cash and cash equivalents of $1,634,000 (2016 $7,533,000) have been pledged as collateral against a secured bank loan (refer
Note 6(g)).
(b)
Trade and other receivables
Current assets
Trade receivables
Other receivables
Government grant receivable
GST and VAT receivables
Payroll tax refund receivable
Other
2017
$000
2016
$000
4,756
4,394
-
1,252
284
-
6,292
77
276
292
281
5,320
Trade and other receivables of $5,914,000 (2016 $4,371,000) have been pledged as collateral against a secured bank loan
(refer Note 6(g)).
44
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
6. Financial assets and financial liabilities (continued)
(c)
Other financial assets
Current assets
Held to maturity term deposits
(d)
Other assets
Current assets
Prepayments
Other
(e)
Trade and other payables
Current liabilities
Trade payables
Sundry payables and accrued expenses
(f)
Deferred revenue
2017
$000
2016
$000
718
963
2017
$000
635
-
635
2016
$000
365
33
398
2017
$000
2016
$000
8,255
2,091
10,346
4,728
2,468
7,196
2017
Non-
current
$000
Current
$000
Total
$000
Current
$000
2016
Non-
current
$000
Total
$000
Deferred revenue
4,220
682
4,902
3,182
1,566
4,748
The amounts reported as 2017 deferred revenue include:
1.
2.
Lockheed Martin Aeronautics Co - a 30% advance payment for long lead time materials for C-130J wing flaps, income
will be recognised by September 2017.
Lockheed Martin Aeronautics Co - amount received in advance to support the robotic drill project, income will be
recognised by September 2019.
3. Marand Precision Engineering Pty Ltd - amount received in advance for Vertical Tails to be on sold to BAE, income
expected to be fully recognised by September 2017.
4. Thales Australia Ltd - amount received in advance to support the setup costs including new tooling for a future sales
order, income will be recognised by September 2017.
45
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
6. Financial assets and financial liabilities (continued)
(g)
Loans and borrowings
2017
Non-
current
$000
2016
Non-
current
$000
Total
$000
Total
$000
Current
$000
6,500
1,740
-
8,240
-
-
-
8,240
8,250
2,031
97
10,378
1,500
125
-
12,003
1,250
208
-
1,458
-
700
1
2,159
9,500
8,250
1,882
1,674
(160)
(160)
9,764 11,222
-
700
1
9,764 11,923
-
-
-
Current
$000
1,750
291
97
2,138
1,500
125
-
3,763
Secured bank loan (ii)
Capitalised interest facility (ii)
Accrued /(deferred) borrowing cost (ii)
Secured bank loan carrying amount
Short term facility-Efic (iii)
Newmarket share options at fair value (iv)
Finance lease liability
(i) Term and debt repayment schedule
Effective interest rate
Year of maturity
2017
2016
Maximum
facility value
$000
Carry
amount
$000
Maximum
facility
value $000
Carry
amount
$000
8.26
8.26
7.85
n/a
2021
2021
2018
2017
10,000
3,333
3,000
-
8,250
2,031
1,500
-
10,000
3,333
-
n/a
9,500
1,882
-
1
Secured bank loan
Capitalised Interest
Short term facility - Efic
Finance lease liabilities
(ii) 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 $3,333,000.
Loan repayments commenced on 30 April 2016, with the final repayment due in October 2021.
Interest will be capitalised until the maximum facility value of $3,333,000 is reached. At 30 June 2017 the interest facility has
been drawn to $2,031,000 (2016 $1,882,000), The Company has paid in this financial year an amount of $208,000
(2016 $83,000).
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.
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
2017 is $31,208,000 (2016 $34,831,000) which represents the cash and cash equivalents, plant and equipment, inventory and
other assets owned by Quickstep Technologies Pty Ltd.
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:
lease or license the Secured Property or any interest in it, or deal with any existing lease or licence,
dispose of the Secured Property,
part with possession of the Secured Property,
waive any of the Chargor’s rights or release any person from its obligations in connection with the Secured Property,
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 2017 is $83,271,000 (2016 $94,570,000) and its carrying value net of impairment
is $43,892,000 (2016 $55,190,000).
46
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
6. Financial assets and financial liabilities (continued)
(g)
Loans and borrowings (continued)
(iii) Short term facility – Efic
Quickstep Holdings Limited executed an Export Contract Loan (ECL) agreement with Efic on 28 June, 2017. This revolving loan
facility is limited to $3,000,000 and each drawing under the facility will be due for repayment within 10 months of the drawdown
date. The facility is in place to support additional working capital requirements related to growth of JSF deliveries.
The interest rate on the facility is a variable rate calculated as the sum of the Base Rate plus a margin of 4.85%, payable to Efic
quarterly on funds drawn. Loan establishment fees of $31,500 were made during FY17 and have been recognised through the
profit and loss as finance expense (Note 3). A commitment fee of 1.5%pa accrues from the date of the agreement and is payable
to Efic quarterly.
(iv) Newmarket share options at fair value
Newmarket Financing Management Pty Ltd and Associates (Newmarket) holds 25,000,000 (2016 25,000,000) options to acquire
ordinary shares in Quickstep. These options expire on 31 December 2018.
The options were revalued at 30 June 2017 to a fair value of 0.5 cents (2016 2.8 cents) per share or $125,000 (2016 $700,000).
The gain of $575,000 (2016 $925,000) has been recognised through the profit and loss as finance income, refer Note 3.
A Binomial Tree model was used to value these rights per dollar issued. The model's key assumptions were as follows:
Valuation date
Award type
Expiry date
Share price at the valuation date
Exercise price
Contractual life
Risk free interest rate
Volatility of QHL
Dividend yield
30 June 2017
Options
31 December 2018
$0.0970
$0.1625
1.5 years
1.70%
40%
0%
7. Non-financial assets and liabilities
(a)
Inventories
Current assets
Raw materials and consumables
Work in progress
Finished goods
2017
$000
2016
$000
6,136
3,920
543
10,599
6,154
4,448
1,304
11,906
Inventories of $9,791,000 (2016 $10,758,000) have been pledged as collateral against a secured bank loan (refer Note 6(g)).
47
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
7. Non-financial assets and liabilities (continued)
(b)
Property, plant and equipment
Consolidated
Plant and
equipment
$000
Assets under
construction
$000
Office furniture &
equipment
$000
At 1 July 2015
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2016
Opening net book amount
Additions
Government grant received
Disposals
Effect of movements in exchange rates
Amortisation of grant
Depreciation charge
Closing net book amount
At 30 June 2016
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2017
Opening net book amount
Additions
Government grant received
Transfers from assets under construction
Effect of movements in exchange rates
Amortisation of grant
Depreciation charge
Closing net book amount
At 30 June 2017
Cost
Accumulated depreciation
Net book amount
25,582
(13,883)
11,699
11,699
863
(622)
(183)
6
319
(2,412)
9,670
25,384
(15,714)
9,670
9,670
174
(467)
6,558
(1)
341
(2,428)
13,847
31,648
(17,801)
13,847
30
-
30
30
3,114
-
-
-
-
-
3,144
3,144
-
3,144
3,144
4,198
-
(6,560)
-
-
-
782
782
-
782
Total
$000
26,554
(14,529)
12,025
12,025
4,010
(622)
(183)
9
319
(2,500)
13,058
29,512
(16,454)
13,058
13,058
4,373
(467)
-
(1)
341
(2,551)
14,753
942
(646)
296
296
33
-
-
3
-
(88)
244
984
(740)
244
244
1
-
2
-
-
(123)
124
987
(863)
124
33,417
(18,664)
14,753
Property, plant and equipment of $13,485,000 (2016 $11,950,000) have been pledged as collateral against a secured
bank loan (refer to Note 6(g)).
(c)
Employee benefit obligations
Heading
Liability for annual leave
Liability for long service leave
Total
Current
$000
2017
Non-current
$000
1,138
-
1,138
-
210
210
Total
$000
1,138
210
1,348
Current
$000
2016
Non-Current
$000
Total
$000
950
-
950
-
199
950
199
199
1,149
48
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
8. Equity
(a)
Share capital
2017
Shares
2016
Shares
2017
$000
2016
$000
Ordinary shares - fully paid
562,880,792
562,474,143
109,118
109,1 18
(i) Movements in ordinary shares
2017
Shares
2016
Shares
2017
$000
Opening balance
Issue of ordinary shares, net of costs
Shares issued under share based payments arrangements
Closing balance
562,474,143
-
406,649
562,880,792
397,873,501
164,005,589
595,053
562,474,143
109,118
-
-
109,118
2016
$000
88,228
20,890
-
109,118
During the year, the Company issued 406,649 (2016 595,053) 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.
(ii) Options
Unissued shares under option
Movements in unissued shares under option:
Opening balance
Options lapsed
Closing balance
2017
No of options
25,000,000
-
25,000,000
2016
No of options
28,256,593
(3,256,593)
25,000,000
These options do not entitle the holders to participate in any share issue of the Company or any other body corporate.
At 30 June 2017, details of unissued ordinary shares of the Company under option are:
Expiry date
Exercise price
31 December 2018
$0.1625
Number of options
2017
25,000,000
Further details regarding the 25,000,000 of options are set out in Note 6(g) (iv).
(iii) Rights
Movements in unissued shares under rights:
Opening balance
Granted during the year
Rights vested
Rights forfeited/lapsed
Closing balance
2017
No of rights
5,773,667
6,116,592
(415,283)
(415,283)
11,059,693
2016
No of rights
5,449,313
2,883,055
(415,282)
(2,143,419)
5,773,667
The rights are issued pursuant to:
Executive services agreements, which rights vest at various times in the future according to years of service completed.
Offers under the Incentive Rights Plan (IRP), which vests at various future dates upon satisfaction of performance
conditions and service criteria.
The exercise price of the rights is Nil and the rights are lapsed if employment is terminated prior to the vesting date,
refer Note 15.
49
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
8. Equity (continued)
(b)
Reserves
Balance at 1 July 2015
Grant of rights to shares to key management personnel
Grant of options to key management personnel
Issue of shares to key management personnel
Foreign currency on translation of a foreign operation
Transfer to profit & loss on closure of US subsidiary in prior year
Balance at 30 June 2016
Balance at 1 July 2016
Grant of rights to shares to key management personnel
Foreign currency on translation of a foreign operation
Balance at 30 June 2017
(c)
Accumulated losses
Balance at beginning of year
Net (loss) for the year
Balance at close of year
9. Cash flow information
Reconciliations of cash flows from operating activities to loss after income tax:
Loss for the year
Amortisation of intangibles
Depreciation and grant amortisation
Bad debt writeoff
Interest income
Share based payment expense
Loss on disposal of assets
Non-cash finance costs
Net foreign currency losses
Change in fair value of share option liability
Change in operating assets and liabilities:
(Increase) in trade and other receivables
Decrease/(increase) in inventories
(Increase)/decrease in other current assets
Increase in trade and other payables
Increase in employee benefits
Increase/(decrease) in deferred revenue
Decrease in prepaid interest
Net cash from/(used in) operating activities
Quickstep Holdings Limited
50
Notes
15(d)
15(d)
15(d)
15(d)
Share- based
payments
$000
Foreign currency
translation
reserve
$000
3,655
143
8
(37)
-
-
3,769
3,769
543
-
4,312
(549)
-
-
-
(55)
301
(303)
(303)
-
68
(235)
Total
$000
3,106
143
8
(37)
(55)
301
3,466
3,466
543
68
4,077
2017
$000
(98,352)
(6,662)
(105,014)
2016
$000
(92,567)
(5,785)
(98,352)
2017
$000
(6,662)
29
2,210
345
-
543
-
-
546
(575)
(1,402)
1,307
(152)
2,604
199
154
948
94
2016
$000
(5,785)
19
2,181
-
(83)
114
183
2,676
332
(925)
(186)
(5,924)
130
2,713
288
(882)
234
(4,915)
Quickstep Annual Report 2017Financial Report
Notes to the consolidated financial statements
30 June 2017
10. Financial instruments – fair values and risk management
(a)
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.
(i) Trade 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. 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.
(ii) 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, financial assets are neither past due or impaired.
(iii) Exposure to credit risks
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
2017
$000
3,722
718
6,292
10,732
2016
$000
7,578
963
5,320
13,861
The Group’s maximum exposure to credit risk for trade and other receivables at the reporting date by geographic region
was:
Australia
Europe
USA
2017
$000
1,286
940
4,066
6,292
2016
$000
1,408
347
3,565
5,320
51
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
10. Financial instruments – fair values and risk management (continued)
(c)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient 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 18(c).
(i) Maturities of financial assets
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the
impact of netting agreements:
Contractual maturities of
financial liabilities
At 30 June 2017
Trade and other payables
Secured bank loan
Short term facility
Newmarket options
At 30 June 2016
Trade and other payables
Finance lease liabilities
Secured bank loan
Newmarket options
Carrying
amount
$000
10,346
10,378
1,500
125
22,349
7,196
1
11,222
700
19,119
Contractual
cash
flows
$000
Less than 6
months
000$
(10,346)
(12,226)
(1,618)
-
(24,190)
(10,346)
(1,039)
(59)
-
(11,444)
(7,196)
(1)
(14,163)
-
(21,360)
(7,196)
(1)
(761)
-
(7,958)
6 - 12
months
$000
Between 1
and 2 years
$000
Between 2
and 5 years
$000
Over 5
years
$000
-
(1,331)
(1,559)
-
(2,890)
-
-
(1,053)
-
(1,053)
-
(2,953)
-
-
(2,953)
-
-
(2,397)
-
(2,397)
-
(6,903)
-
-
(6,903)
-
-
(8,066)
-
(8,066)
-
-
-
-
-
-
-
(1,886)
-
(1,886)
52
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
10. Financial instruments – fair values and risk management (continued)
(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.
(i) 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 $3,333,000 and interest will be accrued on the deferred amount. Interest is re-
set on a monthly basis in accordance with the 30 days bank bill rate.
Profile
At the reporting date the interest rate profile of the Group’s interest-bearing financial assets/ (liabilities) was:
Fixed rate instruments
Held-to-maturity term deposits (a)
Finance lease liabilities (b)
Variable rate instruments
Cash and cash equivalents (c)
Secured bank loan (d)
Short term facility agreement – Efic (e)
2017
$000
718
-
718
2016
$000
963
(1)
962
3,722
(10,281)
(1,500)
(8,059)
7,578
(11,382)
-
(3,804)
As at the end of the reporting period, the Group had the following instruments outstanding:
(a)
Held-to maturity term deposits include three security deposits as follows:
Amount
$274,000
$324,000
$120,000
Interest rate
2.32%
2.21%
1.77%
Maturity date
28 August 2017
4 October 2017
4 September 2017
(b)
(c)
(d)
(e)
The average interest rate applicable to the Group’s finance leases is Nil (2016 8.397%).
Cash includes funds held in short term deposits during the year, which earned a weighted average interest rate
of 2.18% (2016 2.2%).
The secured loan balance (inclusive of capitalised interest and excluding borrowing costs) incurs a variable rate
of interest, inclusive of a base rate plus margin. The effective interest rate of this facility was 8.26% at
30 June 2017.
The short term facility provided by Efic incurs a variable rate of interest inclusive of a base rate margin. The
effective interest rate of this facility was 7.85% at 30 June 2017
All other material financial assets and liabilities are non-interest bearing.
53
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
10. Financial instruments – fair values and risk management (continued)
(d)
Market risk (continued)
(i) Interest rate risk (continued)
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 as FY16.
Variable rate instruments - increase by 100 basis points
Variable rate instruments - decrease by 100 basis points
Cash flow sensitivity (net)
(ii) Currency risk
2017
$000
(81)
81
-
2016
$000
(40)
40
-
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 subsidiary is not hedged as the currency positions are considered to be long-term in
nature.
Exposure
The Group's exposure to foreign currency risk at the end of the reporting period was as follows:
Receivables
Cash
Trade payables
2017
USD 000
2017
EUR 000
2016
USD 000
2016
EUR 000
3,115
1,075
(3,321)
869
66
74
(59)
81
2,634
4,442
(1,167)
5,909
232
4
(78)
158
The following significant exchange rates applied have been applied:
AUD v USD
AUD v EUR
Average rate
2017
2016
Year end spot rate
2017
2016
0.7530
0.6903
0.7283
0.6581
0.7662
0.6718
0.7387
0.6681
54
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
10. Financial instruments – fair values and risk management (continued)
(d)
Market risk (continued)
(ii) Currency risk (continued)
Sensitivity analysis
A 10 percent movement of the Australian dollar against the following currencies at 30 June would have affected the
movement of financial instruments denominated in a foreign currency and effected profit and loss by the amounts shown
below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of
forecast sales and purchases. The analysis is performed on the same basis as FY16.
Index
US/AUD exchange rate - increase (10%)
US/AUD exchange rate - decrease 10%
EUR/AUD exchange rate - increase (10%)
EUR/AUD exchange rate - decrease 10%
(e)
Capital management
Profit or loss
Equity, net of tax
2017
$000
103
(126)
11
(13)
(25)
2016
$000
699
(854)
22
(26)
(159)
2017
$000
(103)
126
625
(768)
(120)
2016
$000
(699)
854
1,080
(1,320)
(85)
The Group’s objectives are to safeguard the Group’s ability to continue as a going concern and 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, aerospace growth and commercialisation
of technology requirements.
There were no changes in the Group’s approach to capital management during the year.
Fair value hierarchy
All financial liabilities including Newmarket options are considered level 2 in the fair value hierarchy. The carrying value of
liabilities considered level 2 approximates their fair value. During the year, there have been no transfers from levels in the
fair value hierarchy.
11. Group entities
Name of entity
Parent entity
Quickstep Holdings Limited
SPACE
Controlled entities
Quickstep Technologies Pty Limited
Quickstep Systems Pty Limited
Quickstep GmbH
Quickstep Automotive Pty Limited
Quickstep Aerospace Pty Limited
Country of
incorporation
Ownership
interest
2017
%
2016
%
Australia
Australia
Australia
Germany
Australia
Australia
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
55
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
12. Capital and other commitments
(a)
Capital commitments
Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is as follows:
Property, plant and equipment
(b)
Non-cancellable operating leases
2017
$000
2016
$000
784
1,554
The Group leases various premises and IT equipment under non-cancellable operating. The leases have varying terms,
escalation and renewal rights. On renewal, the terms of the leases are negotiated.
2017
$000
Commitments for minimum lease payments in relation to non-cancellable operating leases
are payable as follows:
Less than one year
Between one and five years
More than five years
2,253
7,847
-
2016
$000
2,275
9,004
1,358
10,100
12,637
13. Events occurring after the reporting period
On 1 August, 2017 the Company announced a number of changes to drive profitability and growth, following a
comprehensive strategy and operational review by its new CEO and Managing Director, the executive management team
and the Board. The updated strategy, OneQuickstep, includes a revised organizational structure and leadership roles,
productivity and efficiency improvements, refocused R&D investment and a focus on targeted business development and
growth. There have been no other significant events that have occurred since the end of the reporting period.
14. Related party transactions
(a)
Key management personnel compensation
The key management personnel compensation included in “Personnel expenses” in Note 3(d) is as follows:
Short-term employee benefits
Share-based payments
Termination benefits
2017
$000
2,599
371
-
2,970
2016
$000
3,063
95
481
3,639
Individual Directors and Key Management Personnel remuneration disclosures
Information regarding individual Directors’ and Executives’ compensation and some equity instruments disclosures as
required by Corporations Regulations 2010 2M.3.03 is provided in the Remuneration Report section of the Directors’
Report.
The fair value of rights granted in the year is $304,622 (2016 $245,059). The total value of the rights is allocated to
remuneration over the vesting period.
On 19 December 2016 Mr. J Douglas became a non-executive director of the Group. Mr. Douglas is also a director of
Newmarket. Therefore at 30 June 2017 the Newmarket Options (Note 6(g)) are considered to be held by a related party.
56
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
15. Share based payments
(a)
Quickstep Employee Incentive Plan (EIP) – plan ceased in FY16
The Company previously established the Quickstep Employee Incentive Plan (EIP). Under the EIP, the Board could grant
options to selected Quickstep employees on such terms as it determined appropriate. Participation in the EIP was open to
all employees of the Group, with the Board determining those employees eligible to participate in each grant under the EIP.
Each option was 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). Further details regarding the EIP are set out in the
Remuneration Report.
Mr. P Odouard was the only employee to be granted options pursuant to the EIP. On 30 June 2016 Mr. P Odouard ceased
employment with Quickstep, as a result all options lapsed and this Plan has ceased to operate in FY16.
The number and weighted average exercise prices (WAEP) of options under the EIP are as follows:
As at 1 July
Lapsed during the year
As at 30 June
2017
2016
No. of options
WAEP
-
-
-
$0.00
-
$0.00
No. of options
3,256,593
(3,256,593)
-
WAEP
$0.00
$0.00
During 2017 $Nil (2016 $8,000) has been included as an expense in the financial statements as the portion attributable to
the current financial year as required by accounting standards.
(b)
Quickstep Incentive Rights Plan (IRP)
During the 2014 financial year the Company established the Quickstep Incentive Rights Plan (IRP).
The IRP was designed to facilitate the Company moving towards best practice remuneration structures for executives.
The IRP authorises the granting of Rights to executives of the Company, in the form of Performance Rights (PRs) and/or
Deferred Rights (DRs) (together, Rights). These rights represent an entitlement on vesting to fully paid ordinary shares in
the issued capital of the Company (Shares) and cash (capped at $1,000) with the total value of cash and Shares being equal
to the value of vested Rights (number of vested Rights x market value of a Share). PRs may vest if Performance Conditions
are satisfied. DRs may vest if service conditions are satisfied. Further details regarding the IRP are set out in the
Remuneration Report.
At 30 June 2017 executives had accrued rights pursuant to the IRP.
During 2017 an expense of $543,000 (2016 $143,000) has been recognised in the financial statements in respect of the
portion of the fair value of rights attributable to the current financial year as required by accounting standards.
A Monte-Carlo model was used to value the rights. The model's key assumptions were as follows:
In relation to Deferred Rights
Tranche
Grant date
First testing date
Share price at grant date
Exercise price
Expected life (years)
Risk free factor
Volatility of QHL
Dividend yield
2
16/02/15
31/08/16
$0.20
Nil
1.5
1.87%
55%
0%
57
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
15. Share based payments (continued)
(b)
Quickstep Incentive Rights Plan (IRP) (continued)
In relation to Performance Rights
Tranche
2
3
FY15
FY15(a)
FY16
FY17
Grant date
First testing date
Expiry date
Share price at grant date
Exercise price
Expected life (years)
Risk free factor
Volatility of QHL
Volatility of AOAI
Dividend yield
16/02/15
31/08/16
31/08/16
$0.20
Nil
1.5
1.87%
55%
12%
0%
16/02/15
31/08/17
31/08/19
$0.20
Nil
2.9
1.86%
55%
12%
0%
31/08/14
31/08/17
31/08/19
$0.185
Nil
3.3
2.69%
55%
12%
0%
19/02/15
31/08/17
31/08/19
$0.20
Nil
2.9
1.83%
55%
12%
0%
01/06/16
31/08/18
31/08/20
$0.14
Nil
2.7
1.65%
45%
15%
0%
01/03/17
31/08/19
31/08/21
$0.105
Nil
2.9
1.97%
40%
13%
0%
(c)
Equity settled short term incentive
Certain executives are eligible to receive short term incentives (STI) in cash and/or shares based on achievement of key
performance indicators (KPIs). Each year the RN&D Committee considers the appropriate targets and KPIs and the alignment
of individual rewards to the Group's performance. These targets may include measures related to the annual performance
of the Group and/or specified parts of the Group and are measured against actual outcomes. The number of shares issued
to executives is based on the accrued equity settled STI value divided by the weighted average share price on the date the
shares are granted.
In FY17 Nil (2016 179,771) shares were issued to employees.
(d)
Employee expenses
The expense recorded in the financial report for the portion attributable to the current financial year as required by
accounting standards is:
Equity settled short term incentive
IRP, performance rights
EIP options
2017
$000
-
543
-
543
2016
$000
(37)
143
8
114
58
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
16. Remuneration of auditors - KPMG
Amounts received or due and receivable by the auditor KPMG for:
Audit services
Other services
Grant assurance
NACC
Invest Victoria
Total non-audit fee
2017
$
2016
$
205,000
220,723
15,700
7,500
23,200
228,200
-
-
-
220,723
17. Parent entity financial information
Summary financial information
As at, and throughout, the financial year ending 30 June 2017 the parent entity of the Group was Quickstep Holdings
Limited.
Results of the parent entity
Profit /(loss) for the year
Total Comprehensive income
Financial position of the parent entity at year end
Total assets
Total liabilities
Net assets / (liabilities)
Total equity of the parent entity comprises
Share capital
Reserves
Accumulated losses
Total Equity
2017
$000
2016
$000
1,073
(21,599)
1,100
(21,599)
2,854
960
(2,612)
(1,818)
242
(858)
109,118
4,767
(113,643)
109,118
4,740
(114,716)
242
(858)
59
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
18. Significant accounting policies
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.
(a) Reporting entity
Quickstep Holdings Limited (“the Company”) is a company domiciled in Australia. The consolidated financial statements of
the Company comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group
Entities”). The Group is a for-profit entity. The Group is at the forefront of advanced composites manufacturing and
technology development and is the largest independent aerospace-grade advanced composite manufacturer in Australia,
currently partnering with some of the world’s largest aerospace/defence organisations and commencing penetration into
the automotive sector.
(b) Basis of preparation
Statement of compliance
These general purpose financial statements have been prepared in accordance with the Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. The consolidated
financial statements of the Group also comply with the International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
The consolidated financial statements were authorised for issue by the Board of Directors on 28 September 2017.
Basis of measurement
The financial statements are prepared on the historical cost basis. These consolidated financial statements are presented
in Australian dollars, which is the company’s functional currency.
Rounding of amounts
The company is of a kind referred to in Class Order 2016/191 issued by the Australian Securities and Investments
Commission, relating to the ‘rounding off” of amounts in the financial statements and directors’ report. Amounts in the
financial statements and directors’ report have therefore been rounded off to the nearest thousand dollars, or in certain
cases, to the nearest dollar.
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 Note 18(c).
(c) Going concern
The Group has incurred a loss after tax for the year ended 30 June 2017 of $6,662,000 (2016 $5,785,000). The Group has
net assets of $8,181,000 (2016 $14,232,000). Operating cashflow for the year was $94,000 after R&D investment of
$5,492,000.
The loss reflects the ongoing investment by the business in R&D and lower margins from its operations due to the JSF
program still being below 50% of future volumes, changed business mix, learning curve costs in the first year of vertical tails
production and commissioning of the C-130J automated drilling equipment.
The existing cash position of the Group and the need to further support growth requirements, uncertainty associated with
foreign exchange rate fluctuations on US$ denominated sales and commercialization of new technology has resulted in
some risk as to the future cash flow of the Group being dependent on a combination of the following solutions:
cost controls;
delivering manufacturing efficiencies for existing programs;
reduced R&D spend; and
additional sources of debt funding.
60
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
18. Significant accounting policies (continued)
(c) Going concern (continued)
The going concern basis presumes that a combination of the above operational and funding solutions, as deemed
appropriate by the Directors, will be achieved and that the realisation of assets and settlement of liabilities will occur in the
normal course of business. Notwithstanding the confidence of the Directors, if the combined effect of the above solutions
should not be wholly successful there is a material uncertainty as to whether the Group would continue as a going concern.
The Directors consider that there is a basis to expect the Group will be able to meet its commitments and accordingly, the
financial report has been prepared on the basis of a going concern. The business announced a number of measures on
1 August 2017 under the OneQuickstep program which include a revised organizational structure and leadership roles,
productivity and efficiency improvements, refocused R&D investment and a focus on targeted business development and
growth
(d) 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, 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.
(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 2017 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. The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group, and de-consolidated
from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
(f) 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. The
Company is managed as a whole and is considered to have a single operating segment. There is no further division of the
Company or internal segment reporting used by management when making strategic or resource allocation decisions.
(g) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates, (the functional currency). The consolidated financial statements are
presented in Australian dollars, which is Quickstep Holdings Limited functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
of monetary assets and liabilities denominated in foreign currencies at year and exchange rates are generally 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.
61
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
18. Significant accounting policies (continued)
(g) Foreign currency translation (continued)
Foreign currency translation
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 in equity. When a foreign operation is disposed of, in part or in full, the relevant
amount in the foreign currency translation reserve 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 foreign currency translation reserve.
(h) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of
returns, trade allowances, rebates.
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.
Construction contracts
Construction contract revenue recognised results from the construction of Quickstep process machines. These machines
have been constructed based on specifically negotiated contracts with customers.
Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and
incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably.
If the outcome of a construction contract can be estimated reliably, then contract revenue is recognised in profit or loss in
proportion to the stage of completion of the contract. The stage of completion is assessed with reference to manufacturing
schedules. Otherwise, contract revenue is recognised to the extent of contract costs incurred that are likely to be
recoverable.
Contract expenses are collected and held in Inventory WIP when incurred they are recognised, when the contract revenue
is released in the statement of profit or loss as cost of sales.
(i) Government grants
Grants from the government 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.
62
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
18. Significant accounting policies (continued)
(j) 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 income tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities
are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of
the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when
the related deferred income tax asset is realised or the deferred income tax liability is settled.
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.
(k) Leases
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.
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
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.
(l) Impairment of assets
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.
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.
63
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
18. Significant accounting policies (continued)
(l) Impairment of assets (continued)
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) 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
(n) 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
Depreciation rate
6.67% to 37.50%
6.67% to 50.00%
64
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
18. Significant accounting policies (continued)
(o) 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
(p) Employee benefits
Wages, salaries, annual leave and non-monetary benefits
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months
after the end of the period in which the employees render the related service are recognised in respect of employee's
services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities
are settled. The liability for annual leave and accumulating sick leave is recognised in the provision for employee benefits.
All other short-term employee benefit obligations are presented as payables.
The liabilities for long service leave are not expected to be settled wholly within 12 months after the end of the period in
which the employees render the related service. They are therefore recognised in the provision for employee benefits and
measured as the present value of expected future payments to be made in respect of services provided by employees up
to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage
and salary levels, experience of employee departures and periods of service. Expected future payments are discounted
using market yields at the end of the reporting period of high quality corporate bonds with terms and currencies that match,
as closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments and
changes in actuarial assumptions are recognised in profit or loss.
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.
(q) Contributed equity
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.
(r) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing-
the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares by the
weighted average of ordinary shares outstanding during the financial year adjusted for bonus elements in ordinary shares
during the year and excluding treasury shares.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive ordinary shares and the weighted
average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive
potential ordinary shares. Currently there are no potential ordinary shares on issue that are considered to be dilutive.
65
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
18. Significant accounting policies (continued)
(s) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the consolidated
balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
(t) 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 de-recognises 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.
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.
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.
Derivative financial instruments
The Group holds a derivative financial instrument in the form of options issued in relation to borrowed funds.
Derivatives are recognised initially at fair value, any directly attributable transaction costs are recognised in profit and loss
as they are incurred. Subsequent to initial recognition, derivatives are measured at fair value and changes therein are
generally recognised in profit and loss.
(u) Research and development
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.
66
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
18. Significant accounting policies (continued)
(v) 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
Royalty buy-back
Capitalised development costs
Software
10 years
10 years
5 – 10 years
2 ½ years
(w) Impact of standards issued but not yet applied by the entity
AASB 9 Financial Instruments
AASB 9 Financial instruments addresses the classification, measurement and derecognition of financial assets and financial
liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. The standard is
effective from 1 January 2018 but is available for early adoption. The Group has decided to adopt AASB 9 in FY19.
The Group does not expect the new guidelines to have a significant impact on the classification and measurement of its
financial assets as debt instruments currently classified as held-to-maturity and measured at amortised cost, appear to meet
the conditions for classification at amortised cost under AASB 9. There will be no impact on the Group’s accounting for
financial liabilities, as the new requirements only affect financial liabilities that are designated at fair value through profit
and loss and the Group does not have any such liabilities. The derecognition rules have been transferred from AASB 139
Financial Instruments: Recognition and Measurement and have not been changed.
The new hedge accounting rules do not apply as the Group currently do not have any hedged transactions.
The new impairment model requires the recognition of impaired provisions based on expected credit losses (ECL) rather
than only incurred credit losses as is the case under AASB 139. It applies to financial assets classified at amortised cost,
contract assets under AASB 15 Revenue from Contracts with Customers, loan commitments and certain financial guarantee
contracts. The new standard also introduces expanded disclosure requirements and changes in presentation. These are
expected to change the nature and extent of the Group’s disclosure about its financial instruments particularly in the year
of the adoption of the new standard.
AASB 15 Revenue from contracts with customers
The AASB have issued a new accounting standard for the recognition of revenue. This will replace AASB 118 which covers
revenue arising from the sale of goods and the rendering of services and AASB 111 which covers construction contracts.
The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a
customer.
This standard permits either a full retrospective or a modified retrospective approach for the adoption. The standard is
effective for the first interim period within annual reporting periods beginning after 1 January 2018. The Group has decided
to adopt AASB 15 in FY19.
Management continue to determine the impact of the new standard.
67
Quickstep Holdings Limited
Notes to the consolidated financial statements
30 June 2017
18. Significant accounting policies (continued)
(w) Impact of standards issued but not yet applied by the entity (continued)
AASB 16 Leases
AASB 16 was issued in February 2016. It will result in almost all leases being recognised on the balance sheet, as the
distinction between operating and financial leases is removed. Under the new standard, an asset (the right to use the leased
item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.
The accounting for lessors will not significantly change.
The standard will affect primarily the accounting for the Group’s operating leases. As at the reporting date, the Group has
non-cancellable lease commitments of $10,100,000. However, the Group has not yet determined to what extent these
commitments will result in the recognition of an asset and a liability for future payments and how this will affect the Group’s
loss and classification of cash flows.
Some of the commitments may be covered by the exception for short-term and low-value leases and some commitments
may relate to arrangements that will not qualify as leases under AASB 16.
This standard permits either a full retrospective or a modified retrospective approach for the adoption. The standard is
effective for the first interim period within annual reporting periods beginning after 1 January 2019. The Group has decided
to adopt AASB 16 in FY20.
19. 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.
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.
Share based payment transactions
The fair value of the Incentive Rights Plan (IRP) is measured using Monte Carlo Simulation. 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 behavior), expected dividends, and the risk-free
interest rate (based on government bonds). In the case of the IRP, market performance conditions attaching to the grant
are taken into account in the Monte Carlo Simulation in determining fair value.
Loans and borrowings
The fair value of the Newmarket options (Note 6(g)) is measured using the Binomial tree methodology. 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 due to publicly available information), remaining term of the
instruments to the date of expiry, expected dividends, and the risk-free interest rate (based on government bonds).
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.
68
Quickstep Annual Report 2017Financial Report
Directors' declaration
In the Directors' opinion:
(a)
(b)
(c)
(d)
the financial statements and notes set out on pages xx to xx are in accordance with the Corporations Act 2001, including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements, and
(ii)
giving a true and fair view of the consolidated entity's financial position as at 30 June 2017 and of its performance
for the year ended on that date, and
subject to the matters outlined in Note 18(c) there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable, and
the directors have been given the declarations required by section 295A of the Corporations Act 2001 from the chief executive
officer and chief financial officer for the financial year ended 30 June 2017.
the directors confirm that the financial statements also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board.
This declaration is made in accordance with a resolution of Directors.
Mr. M Burgess
Director
28 September 2017
Sydney, New South Wales
69
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Quickstep Holdings Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year
ended 30 June 2017 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Cameron Slapp
Partner
Sydney, 28 September 2017
KPM_INI_01
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
70
Quickstep Annual Report 2017Financial Report
Independent Auditor’s Report
To the shareholders of Quickstep Holdings Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Quickstep Holdings Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance with
the Corporations Act 2001, including:
• giving a true and fair view of the Group’s
financial position as at 30 June 2017 and of
its financial performance for the year ended
on that date; and
•
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Financial Report comprises:
• Consolidated balance sheet as at 30 June 2017
• Consolidated Statement of profit or loss and
other comprehensive income, Consolidated
Statement of changes in equity, and
Consolidated Statement of cash flows for the
year then ended
• Notes including a summary of significant
accounting policies
• Directors’ Declaration.
The Group consists of the Company and the
entities it controlled at the year-end or from time
to time during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in
Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
71
Material uncertainty related to going concern
We draw attention to Note 18(c) “Going Concern” in the financial report. The conditions disclosed in
Note 18(c), indicate a material uncertainty exists that may cast doubt on the Group’s ability to
continue as a going concern and, therefore, whether it will realise its assets and discharge its
liabilities in the normal course of business, and at the amounts stated in the financial report. Our
opinion is not modified in respect of this matter.
In concluding there is a material uncertainty related to going concern we evaluated the extent of
uncertainty regarding events or conditions casting significant doubt in the Group’s assessment of
going concern. This included:
• Evaluating the underlying data used by management to derive forecast cash flows. We
specifically considered the consistency of the underlying data with budgets and forecasts
approved by the Directors and tested by us. We also considered the consistency of the
underlying data with our understanding of the Group’s intentions, as outlined in Directors minutes
and strategy documents.
• Analysing the potential impact of reasonably possible changes in projected cash flows and their
timing, to the projected periodic cash positions. Assessing the resultant impact on the ability of
the Group to pay debts as and when they fall due and continue as a going concern. The specific
areas we focused on were informed by the outcomes of testing the accuracy of previous Group
cash flow projections and sensitivity analysis on key cash flow projection assumptions;
• Assessing the planned levels of operating and capital expenditures for consistency of
relationships and trends to the Group’s historical results, results since year end, and our
understanding of the business, industry and economic conditions of the Group. We have also
considered the ability of the Group to defer or cancel forecast uncommitted capital and research
and development expenditure;
• Assessing significant non-routine forecast cash outflows by inspecting associated third party
correspondence to consider the impact of possible changes on the quantum and timing of
amounts to be paid on the cashflow projections;
• Assessing the Group’s forecast of advance payments from customers. We checked assumptions
of quantum and timing to customer correspondence and signed customer contracts, to assess
their accuracy to the cashflow projections;
• Reading correspondence with existing financiers to understand and assess the options available
to the Group including renegotiation of existing debt facilities and negotiation of additional or
revised funding arrangements; and
• We evaluated the Group’s going concern disclosures in the financial report by comparing them to
our understanding of the matter, the events or conditions incorporated into the cash flow
projection assessment, the Group’s plans to address those events or conditions, and accounting
standard requirements.
72
Quickstep Annual Report 2017Financial Report
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgment, were of most significance in
our audit of the Financial Report of the current period.
These matters were addressed in the context of our audit of the Financial Report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material uncertainty related to going concern section, we
have determined the matter described below to be the Key Audit Matter.
Revenue recognition ($51.9m)
Refer to Note 3 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group generates revenue through sale of
goods. The Group also receives payments in
advance of sale which result in deferred revenue
being recognised.
Our procedures included:
• We evaluated the Group’s process for revenue
recognition and deferral of advanced payments
in accordance with the accounting standards;
We focused on this as a key audit matter due to the
significance of the quantum of revenue recognised
combined with the large volume of transactions.
This necessitated additional audit effort across the
transactions
• We tested a statistical sample of revenue
transactions and checked recognition against
underlying invoices to customers, customer
signed dispatch dockets and the Group’s
revenue recognition policy;
• We selected a sample of pre and post year end
revenue transactions and checked the timing of
revenue recognition against underlying invoices
to customers, customer signed dispatch dockets
and the Group’s revenue recognition policy;
• We selected a sample of post year end credit
notes to assess the recognition of revenue in
the appropriate period;
• We selected a sample of advanced payment
receipts from customers to check the deferral of
revenue in accordance with the Group’s revenue
recognition policy.
Other Information
Other Information is financial and non-financial information in Quickstep Holdings Limited’s annual
reporting which is provided in addition to the Financial Report and the Auditor's Report. The Directors
are responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
73
Remuneration Report and our related assurance opinions.
In connection with our audit of the Financial Report, our responsibility is to read the Other
Information. In doing so, we consider whether the Other Information is materially inconsistent with
the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
•
implementing necessary internal control to enable the preparation of a Financial Report that gives
a true and fair view and is free from material misstatement, whether due to fraud or error
• assessing the Group’s ability to continue as a going concern. This includes disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting
unless they either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of this Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_files/ar2.pdf.
This description forms part of our Auditor’s Report.
74
Quickstep Annual Report 2017Financial Report
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Quickstep Holdings Limited for the year ended
30 June 2017, complies with Section 300A of
the Corporations Act 2001.
The Directors of the Company are responsible for
the preparation and presentation of the
Remuneration Report in accordance with Section
300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report
included in pages 27 to 35 of the Directors’ report
for the year ended 30 June 2017.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit
conducted in accordance with Australian Auditing
Standards.
KPM_INI_01
KPMG
Cameron Slapp
Partner
Sydney, 28 September 2017
75
Quickstep Holdings Limited
Shareholder information
30 June 2017
The shareholder information set out below was applicable as at 31 August 2017.
A.
Voting rights
The voting rights attaching to each class of equity securities are set out below:
(a) 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.
(b) Options do not carry any voting rights.
B.
Substantial holders
Substantial holders in the Company are set out below:
C.
On Market buy back
There is no current on-market buy back.
D.
Distribution schedules
Distribution of each class of security as at 31 August 2017:
Ordinary fully paid shares
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - Over
Total
Holders
Units
439
944
894
2,949
774
6,000
104,222
3,157,497
7,305,321
114,120,257
438,193,495
562,880,792
%
0.02
0.56
1.30
20.27
77.85
Options exercisable at the lesser of $0.25 or 25% above the issue price of any equity capital raising up to $10M undertaken
prior to 31 December 2018 (unlisted).
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - Over
Total
D.
Unmarketable parcels
Holders
-
-
-
-
1
1
Units
-
-
-
-
25,000,000
25,000,000
%
-
-
-
-
100.00
100.00
Holdings less than a marketable parcel of ordinary shares (being 4,545 shares at $0.105 per share):
Holders
1,199
Units
2,235,122
76
Quickstep Annual Report 2017Financial Report
Quickstep Holdings Limited
Shareholder information
30 June 2017
E.
Top holders
The 20 largest registered holders of each class of quoted security as at 31 August 2017 were:
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Holder Name
Washington H Soul Pattinson And Company Limited
Deakin University
Farjoy PL
State One Stockbroking Pty Ltd
Romsup PL
HSBC Custody Nominees (Australia) Limited
Code Nom PL
Decta Holdings Pty Ltd
WSF Pty Ltd
Yarraandoo Pty Ltd
Best Holding Pty Ltd
J P Morgan Nom Aust Ltd
Petia Super Pty Ltd
Anacacia PL
Sols Super Pty Ltd
Hobson Cove PL
State One Holdings Pty Ltd
Zimmer Manfred
Peeters Richard Cornelis
Exwere Investments Pty Ltd
Total
Securities
89,419,161
33,333,333
13,680,981
11,904,134
8,812,430
7,797,256
7,207,580
6,788,904
6,305,793
3,509,933
3,300,000
3,217,389
3,021,183
3,012,430
2,748,830
2,500,000
2,216,000
2,137,876
2,120,000
2,000,000
215,033,213
%
15.89
5.92
2.43
2.11
1.57
1.39
1.28
1.21
1.12
0.62
0.59
0.57
0.54
0.54
0.49
0.44
0.39
0.38
0.38
0.36
38.20
77
CORPORATE
DIRECTORY
Directors
Mr. T H J Quick
Chair
Mr. M H Burgess
CEO and Managing Director
Mr. N I Ampherlaw
Non-Executive Director
Mr. P C Cook
Non-Executive Director
Mr. B A Griffiths
Non-Executive Director
Air Marshal E J McCormack (Ret’d)
Non-Executive Director
Mr. J C Douglas
Non-Executive Director
Secretary
Mr. J Pinto
Principal Office
361 Milperra Road
Bankstown Airport
New South Wales 2200
Australia
T: +61 2 9774 0300
E: info@quickstep.com.au
www.quickstep.com.au
Registered Office
Level 2,
160 Pitt Street
Sydney New South Wales 2000
Auditor
KPMG
Chartered Accountants
Tower3,
300 Barangaroo Avenue
Sydney Australia 2000
Share registry
Computershare Investor Services Pty Ltd
452 Johnston Street
Abbotsford Victoria 3067
Stock Exchange
Australian Securities Exchange Limited
Exchange Centre
20 Bridge Street
Sydney New South Wales 2000
ASX Code
QHL
Quickstep Holdings Limited
ACN 096 268 156
78
Quickstep Annual Report 2017Financial Report 79