NEW
AVENUES
TO
GROWTHAnnual Report 2021
2021
HIGHLIGHTS
CHAIR’S
REPORT
NEW
AVENUES
TO GROWTH
BOARD OF DIRECTORSMD & CEO’S REVIEWINNOVATION & TECHNOLOGYSTRONG LEADERSHIPINVESTMENT IN OUR PEOPLE OUR ACHIEVEMENTS
1
Sales revenue up 3%
Underlying PBT comparable
with FY20
Operating cash flow
NEW COLLABORATIONS
TRIUMPH AVIATION SERVICES ASIA (TASA):
NON-BINDING MOU PROPOSED
AFTERMARKET SERVICES
VAULTA MOU: TO DEVELOP SMARTER
TECHNOLOGIES FOR RENEWABLES,
MANNED AND UNMANNED AIRCRAFT
AND ELECTRIC FLIGHT
VOLANSI MOU: TO DEVELOP THE AUSTRALIAN
MARKET AND EXPLORE MANUFACTURING
OPTIONS FOR VOLANSI’S DRONE SUITE
CARBONIX MANUFACTURING PARTNERSHIP:
NEXT GENERATION UNMANNED SOLUTIONS
FOR COMMERCIAL AND MILITARY APPLICATIONS
M&A ACTIVITIES
QAS: ACQUISITION OF BACR MRO
AT MELBOURNE AIRPORT
MINORITY INVESTMENT
IN CARBONIX
In this, our 20th year, we have expanded our capability and
investment into MRO (maintenance, repair & overhaul) of defence
and commercial aircraft through acquisition of the Boeing MRO
capability in Melbourne; an exciting new vertical for Quickstep.
As part of our unmanned systems strategy we have also created
a new vertical: Quickstep Advanced Air Mobility (QAAM). New
relationships and business opportunities continue to be developed
in the space and guided weapons segments.
CONTENTS
1
2
2021 Highlights
Chair’s Report
4 MD & CEO’s Review
6
9
10
12
New Avenues to Growth
Operations
Leadership Team
Board of Directors
16 Director’s Report
25 Remuneration Report
33 Financial Report
79 Shareholder Information
81 Corporate Directory
OUR ACHIEVEMENTS
$2.1m$7.8m$85.1mREMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORYQUICKSTEP ANNUAL REPORT 2021 2
CHAIR’S
REPORT
CHAIR’S
REPORT
I am proud of how the entire Quickstep team performed
throughout this challenging, but exciting year. We introduced
new health and safety measures to reduce the risk of COVID-19
spread, particularly in our Sydney and Melbourne operating
sites. We adapted to these procedures and ensured that there
were strong, additional support mechanisms in place. Despite
the undeniable challenges brought on by a global pandemic,
Quickstep’s baseline is firm and has steadily improved – our
amount of total sales and our net cash from operating activities
both increased in FY2021. As I look ahead, I know that these are
exciting, dynamic times for the aerospace and defence industries,
and I am excited that Quickstep is well-positioned to play a key
role in these sectors.
FINANCIAL PERFORMANCE
Our financial results for FY2021 reflect
Quickstep’s steady improvement and
business development, with total sales of
$85.1 million in FY2021, up 3.4% on FY2020.
Despite funding the Boeing acquisition in
a difficult trading environment, Quickstep’s
stable profit before tax (PBT) and the more
than 30% decrease of net debt underlie
this financial year’s strong performance.
The Company also achieved an excellent
cash conversion of $7.8 million, which
was a marked improvement on the $0.2
million achieved in FY2020. The Company
delivered a statutory PBT loss of $1.2 million,
which is a $2.9 million reduction on FY2020.
However, this reduction includes the one-off
$2.8 million flares facility impairment charge,
the $0.5 million Quickstep Aerospace
Services (QAS) acquisition costs and
absorbing $0.8 million in losses from the
QAS business acquisition in February 2021.
BOARD OF DIRECTORS2021 HIGHLIGHTSMD & CEO’S REVIEWINNOVATION & TECHNOLOGYSTRONG LEADERSHIPINVESTMENT IN OUR PEOPLE 3
BUSINESS GROWTH
Throughout FY2021, we have demonstrated
ongoing revenue growth in core
manufacturing operations. A further
interesting potential opportunity for growth
is the Commonwealth’s initiative around the
creation of a Guided Weapons Enterprise.
In February 2021, we welcomed the
Tullamarine QAS team to Quickstep and
would like to congratulate them on a
positive start since they joined the company.
We believe that QAS is a unique MRO
(maintenance, repair & overhaul) capability
in Australia. We expect the outlook for the
commercial airlines market will improve,
supporting the continued development and
growth of the QAS business.
FY2021 marked the launch of our new
business vertical in the Advanced Air
Mobility (AAM) sector. AAM represents a
significant advancement for Quickstep as
it ensures that we have a presence in the
rapidly growing and exciting unmanned
systems sector. Expect more developments
on our role in this sector which will be a key
focus for the Quickstep team throughout
FY2022 and beyond.
We are very fortunate to be well
positioned in a very dynamic marketplace
with significant new technologies
coming onstream.
CLOSING REMARKS
This is my first annual letter to shareholders
since taking over as Chair in September
last year. As mentioned at the 2020 AGM,
Quickstep owes a debt of gratitude to Tony
Quick who guided the business over many
years as Chair and played a significant role
in the transformation of Quickstep from a
start-up to a business delivering consistent
underlying profitability and positive
operational cash flow.
Over the past year we completed the
board renewal process that Tony started
and I believe that we have a cohesive, well
balanced and competent board in place to
help guide Quickstep through the exciting
growth potential that we see ahead. I would
like to thank my fellow directors for their
support and guidance over the last year.
Finally, I would like to thank our managing
director, Mark Burgess, the executive team
and all employees for their contribution
to both delivering a strong business
performance in FY2021 as well as pushing
forward on the first steps of a number of
growth initiatives. A business is only as good
as its team and Quickstep is fortunate to
have a great team!
Patrick Largier
Chairman
OPERATING ENVIRONMENT
COVID-19 risk management and control
measures continue to ensure that
we provide a safe and secure work
environment for all our employees. We
currently have many employees working
from home, but the majority still attend
work as authorised workers. We are
conscious of the stress and strain to both
these groups and have ensured that
there are strong support mechanisms
in place, including the introduction of a
new and improved employee assistance
program (EAP) with a different supplier.
The Company has demonstrated a high
level of resilience throughout FY2021, and
both the board and executive team remain
steadfast in their commitment to employee
health and wellbeing.
The cyber security environment continues
to be an area of concern and focus for
the board and executive team. We work
closely with our customers, suppliers,
and government agencies to ensure we
achieve high standards of cyber security
and resilience.
Despite the challenges of COVID-19,
Quickstep is in a strong position, and we
expect to emerge from the current phase
of the pandemic with a firm baseline. From
here, our goal is to deliver continued
operational excellence, high levels of
customer satisfaction and consistent
growth. We expect the aerospace
and defence market environments to
remain dynamic, which will undoubtedly
present some exciting opportunities for
the Company. The current decade will
be transformational for the aerospace
sector, and we are delighted to be at
the heart of it.
CHAIR’S REPORT
REMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORYQUICKSTEP ANNUAL REPORT 2021 4
4
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
MD & CEO’S
REVIEW
Despite a tumultuous year, I am
proud to say that the Quickstep
team have come out of 2021
stronger than ever. Yet again, the
Quickstep team have exceeded
expectations in a particularly
challenging year. I am delighted to
report that in FY2021, Quickstep
experienced revenue growth,
outstanding operating cash
flow performance, and stable
underlying profits despite
absorbing an acquisition. Against
the odds, Quickstep continues
to be a formidable force in our
industry, even as the world
constantly throws us challenges.
Accelerated
4.0
Digital journey
Signed an
MOU
to participate
in the AMRF
Implemented
3D
Experience
A CULTURE OF GROWTH
Quickstep is committed to continual
growth and advancement. In FY2021, one
way we demonstrated strong continual
growth is through our core manufacturing
business. The talented and passionate
team at Quickstep have created 10 new
F-35 centre fuselage parts that are
progressively entering series production.
We secured a $4.7 million additional
order for F-35 Vertical Tail components,
as well as almost $1 million of incremental
commercial orders from Waurn Ponds.
FY2021 also saw significant business
development come in the form of
Quickstep’s first acquisition and the
creation of Quickstep Aerospace Services.
This has proven to be highly effective in
further establishing the company as a
strong competitor in our industry. It also
demonstrates the company’s ability to
deploy capital focused on future growth.
We are proud to have bought a great
asset with highly talented employees.
Additionally, this move will bring work
into Australia – work that has never been
undertaken by an independent MRO
business before.
Another notable business venture
conducted by Quickstep in FY2021 was
our first major move into the unmanned
systems sector, with the announcement
of a $1 million investment in the Australian
company, CarbonicBoats Pty Ltd (trading
as Carbonix). Carbonix are experts in
the design, manufacture, and operation
of next-generation unmanned solutions
for commercial and military applications,
and we expect our investment to help
establish Quickstep as an active player in
the unmanned systems field. The $1 million
investment will be funded by operating
cash flow and is currently planned to be
paid in two equal tranches over the first
half of FY2022. This progression comes
alongside the creation of a new business
vertical in the Advanced Air Mobility
sector. It is strongly anticipated that this
AAM sector will see explosive growth over
the coming years.
Despite our pleasing number of
accomplishments over FY2021, our
research and development (R&D) team
continue to look for more ways we can
succeed. Over the past year, our R&D team
have developed exciting new process
applications for AeroQure™, as well as
new ways to deploy the technology. Our
commitment to research and development
in the industry has resulted in Quickstep
becoming recognised as a significant
player in the engineering space. There are
many more sectors where we have early
stage development programs underway.
UNWAVERING OPERATIONAL
PERFORMANCE
A strong team equals strong operational
performance. Our employees have been a
valuable asset to Quickstep over FY2021.
All departments have collectively worked
to ensure satisfied customers, timely
deliveries, industry-leading supplier
management, and high-quality standards
across all business operations.
Quickstep’s impressive operational
performance is materialised in the
company’s financial successes. In FY2021,
our total sales amounted to $85.1 million,
which is a 3.4% increase from our FY2020
sales. This increase can be largely
attributed to the ongoing growth in our
Joint Strike Fighter (JSF) program volumes,
which are now at full rate production,
and growing market share on the vertical
tails contract. The total revenue from
our JSF endeavours was $63.9 million,
a 4% increase from FY2020. We have
partnered with the JSF program for years
now, with increasing success each year
as we continue to grow our manufacturing
business – delivering our 10,000th F-35
component during the year.
BOARD OF DIRECTORS2021 HIGHLIGHTSCHAIR’S REPORTMD & CEO’S REVIEWINNOVATION & TECHNOLOGYSTRONG LEADERSHIPINVESTMENT IN OUR PEOPLE DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
5
5
Sales revenue up 3%
Underlying PBT comparable
with FY20
Operating cash flow
We believe this trend will continue over the
next two years as Quickstep continues to
leverage existing growth paths and expand
the avenues for growth available to us.
The new business models and strategies
that arose from the pandemic and any
business shortcomings over FY2021 will
continue to act as a learning curve for the
Quickstep team.
I would like to thank the Quickstep Board,
my leadership team and every employee
within the business for their pride and
dedication to building a unique Australian
aerospace success story.
Mark Burgess
CEO and Managing Director
Additionally, the serious outbreaks of
COVID-19 infections across Sydney and
Melbourne have drastically changed the
public health risk at our largest operating
sites. As a result, we have been forced to
adapt our procedures through methods
such as remote working, shift and team
segregation, in addition to the standard
public health requirements. The safety of our
team and our wider community is our highest
priority, and we strive to protect public safety
by maintaining a strict risk management
framework and operating in compliance
with all public health orders. Through these
measures, we can maximise people’s safety
and wellbeing during the pandemic, while
minimising disruption of business operations.
While the pandemic has been challenging
for many, there is one good piece of news
for investors – in my view there is never a
more opportune time to invest than in the
middle of a crisis. I said this in last year’s
annual report, but in my view it remains
just as true today.
Quickstep’s operational performance has
also resulted in strong operating cash
flow. In FY2021, we generated $7.8 million
(net) cash from operating activities alone,
which is a $7.6 million increase from the
previous year. This can be credited to
Quickstep’s material reduction in inventory
over FY2021, despite very significant supply
chain challenges, as well as excellent
cash management. Regardless of our past
performance, we will strive to find new
avenues for growth and advancement.
Therefore, we have invested a capital
expenditure of $2.3 million to provide new
capability, increased capacity, and improved
operational efficiency.
LOOKING AHEAD
While we have met the challenges of FY2021
with adaptability and determination, this isn’t
to say that operating during the COVID-19
global pandemic has been easy. Over the
year, the challenges from the pandemic have
persisted. For example, the pandemic has
affected the efficiency of Quickstep’s supply
chain, especially our air and sea freight
routes, an issue that is predicted to persist
for most of the upcoming year as the world
gets back on its feet. We have combated
this issue through tight management of the
supply chain, which has helped us avoid any
material disruptions to date. However, the
risk of disruption is anticipated to remain
high as the global pandemic continues to
impact offshore supply chains and freight
routes across the globe.
“ Quickstep experienced
revenue growth, outstanding
operating cash flow
performance, and stable
underlying profits despite
absorbing an acquisition.”
MD & CEO’S REVIEW
$2.1m$7.8m$85.1mREMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORYQUICKSTEP ANNUAL REPORT 2021 6
INNOVATION
& TECHNOLOGY
NEW AVENUES
TO GROWTH
HELPING AUSTRALIAN BUSINESSES
QAS is a newcomer in a competitive
industry. Commercial air travel has been
hit hard by COVID·19 as many fewer
people have travelled. However, the
domestic recovery of our airline industry
will facilitate the growth of QAS.
The anticipated recovery of commercial
aviation in Australia, New Zealand, and the
region will also bring new opportunities
for Australian MRO businesses. The
changing nature of this pandemic is
driving previously offshore aviation
component maintenance back to Australia.
As a specialty maintenance service
provider, QAS is expected to profit from
this anticipated shift. We are already
increasing our onshore capabilities so that
we can leverage this anticipated growth
from domestic operators.
NEW OPPORTUNITIES
To address increasing domestic and
regional demands, QAS is expected
to expand its capabilities and improve
overall efficiency. Over the last nine
months, Quickstep has already committed
$5 million of total investment to our
Tullamarine business. Currently, we
are planning to upgrade its facilities,
equipment, and business processes. We
are also supporting new and existing
employees through our focus on education.
Our in-house training provides QAS
employees with the opportunity to learn
new technologies and expand their
qualifications. Taken together, these
improvements will drive QAS’s services
and allow us to pursue new contracts
and customers.
QUICKSTEP AEROSPACE
SERVICES (QAS)
In FY2021, Quickstep took a
significant step forward by
completing our first acquisition.
We acquired a highly capable
facility: Boeing Australia’s
aerospace maintenance, repair,
and overhaul (MRO) capability,
based in Tullamarine, Victoria.
This acquisition led to the
creation of an exciting new
business called Quickstep
Aerospace Services (QAS).
QAS manages a wide range
of composite, bonded and
conventional metal aircraft
structures for both commercial
and military operators. All our
aircraft structures are made with
cutting-edge equipment and
state-of-the-art MRO capabilities.
BOARD OF DIRECTORS2021 HIGHLIGHTSCHAIR’S REPORTMD & CEO’S REVIEWSTRONG LEADERSHIPINVESTMENT IN OUR PEOPLE 7
FUTURE PLANS
After establishing QAS as a significant
player in the aerospace sector, we plan
to deliver a Regional Centre for Aviation
Excellence in the Asia Pacific region. This
centre is intended to support local supply
chains, provide secure technical jobs,
and house sovereign, commercial, and
defence capabilities at Melbourne Airport.
We intend to also provide continuous
training, upskilling of current technicians,
and the potential addition of new
apprentices and engineering graduates.
When these plans are complete, QAS’s
strategic plan is to bring new opportunities
to the Australian economy, including:
• Boosting the local supply chain.
• Providing Australians with skilled MRO
jobs. The QAS team aims employ new
workers to meet short-term demand and
regional growth.
• Skills, training, and apprenticeships.
Quickstep is committed to investing
in employee qualifications and
professional development of the
Victorian workforce.
• Establishing Victoria as a regional
leader. QAS aims to help ensure
Victoria’s regional MRO leadership.
• Protecting Australia’s defence sector.
We aim to improve Australia’s sovereign
defence capability with our Advanced
Industry 4.0 factory.
Quickstep is committed to its aim of
transforming QAS into a world-class
provider of composite MRO services.
We intend that our efforts will bring
significant economic and reputational
benefits to Australia.
ENGINEERING AND
TECHNOLOGY
FY21 has been filled with
exciting developments in the
engineering and technology
sector. We, at Quickstep,
are ready to meet new
challenges and capitalise on
growth opportunities in our
core defence manufacturing
business. Our high-quality
manufacturing processes are
expected to assist us to obtain
further aerospace opportunities
from global operational
equipment manufacturers
(OEMs), such as Boeing Defence,
Space & Security, and the
Lockheed Martin Corporation.
CORE MANUFACTURING BUSINESS
Quickstep’s core contracts, including the
F-35 Joint Strike Fighter and the Lockheed
Martin C-130J Super Hercules, provide
a valuable, stable, and long-term base
business. Even though we will continue to
develop these programs, there are other
areas of strategic focus in the dynamic
defence aerospace sector. The rapid
evolution of several new sovereign defence
industry programs (space, unmanned,
autonomous, guided weapons) will support
long term growth plans.
GOVERNMENT DEFENCE PRIORITIES
We are developing our technical
capabilities and partnerships to further
align with the Commonwealth’s key
defence priorities. These priorities include
the Sovereign Guided Weapons Enterprise,
and a renewed focus on space and
autonomous systems, which are two areas
with considerable long-term prospects and
substantial government support.
Under the Sovereign Guided Weapons
Enterprise, the Australian Defence Force
(ADF) anticipates spending $100 billion on
guided weapons over the next 20 years.
The Government has also committed to
funding technology development as part
of a $270 billion, 10-year investment in
Australia’s defence industry.
With our advanced manufacturing
capabilities in Bankstown, coupled with
our research and development (R&D)
capabilities at Deakin University in
Geelong, Quickstep is well-positioned to
deliver composite aerostructures for this
initiative. We have already engaged with
the Commonwealth, both independently
and as part of a consortium of leading
defence industry companies.
The Minister for Defence Industry has
recently revealed four additional defence
industry priorities. Two of these priorities –
space and autonomous systems – directly
support our strategic aims and may further
bolster our growth plans. For the space
sector, launch vehicles and satellites are
predominantly composite in construction,
which furthers the need for our advanced
composite manufacturing capabilities.
Our relationships with several US based
OEMs, who are leaders in the space
manufacturing sector, may also help fuel
Quickstep’s growth in this area.
NEW AVENUES TO GROWTH
REMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORYQUICKSTEP ANNUAL REPORT 2021 8
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
NEW AVENUES
TO GROWTH
We are in discussions with several US
and Australian drone manufacturers,
who have identified us as their
preferred manufacturing partner.
Some of the companies also seek our
operational support to help guide their
entry into new markets and increase
manufacturing demand.
CLOSING REMARKS
This decade will be transformational for
the aerospace sector, potentially the
most exciting period since the dawn of
the jet age, and we are delighted to have
a strong presence in this dynamic and
innovative field.
Over the next year, we plan to invest in
technologies that further promote electric
aviation solutions. As the AAM sector
continues to grow and the regulatory
framework around this sector adapts,
drones will continue to increase in size
and payload capacity. Quickstep is ready
to supply electric propulsion assemblies,
incorporating technologies such as
hydrogen, fuel cells, and batteries into
these drones. The future looks bright for
Quickstep, and we are well-positioned
to capitalise on defence industry and
commercial aviation priorities, including
the rapidly developing electric aircraft
and electric retrofit markets.
ADVANCED AIR MOBILITY (AAM)
In August, we announced the formation of
our newest business vertical Quickstep
Advanced Air Mobility (QAAM). QAAM
covers a range of autonomous aircraft types
and end-uses from cargo drones to air taxis,
a market estimated to be US$90 billion by
2030.1 This sector has rapidly progressed
from concept to reality and has garnered
significant industrial and political support.
QAAM will predominantly operate from our
Geelong facility where we have established
a ‘Drone Centre of Excellence’. After
in-depth US and Australian market analysis,
we identified that AAM start-ups require
partners with aerospace or automotive
manufacturing know-how. These partners
can help shift low volume prototype
development into full-rate, commercial
production. At Quickstep, our experience
in development and production, coupled
with our ability to leverage our proprietary
Qure™ and AeroQure™ technology, positions
us as a highly desirable engineering and
manufacturing partner.
1. The Future of the Drone Economy’. A Report from Levitate Capital – December 2020.
BOARD OF DIRECTORS2021 HIGHLIGHTSCHAIR’S REPORTMD & CEO’S REVIEWINVESTMENT IN OUR PEOPLE 9
OPERATIONS
At Quickstep, our Operations
team is focused on investing
in our people and facilities,
as well as our relationships
with suppliers and customers.
We focus on maintaining
the excellent quality that our
customers deserve, while
looking to lower costs for
them. We are also committed
to employee safety and
wellbeing, because we know
that Quickstep would not be a
successful, strong and resilient
business without our dedicated
and talented team.
QUICKSTEP LEARNING ACADEMY
The establishment of a Quickstep Learning
Academy (QLA), a purpose-built training
facility, staffed with some of our most
experienced people, marks a paradigm
shift in our approach to training. We know
that internally developed training programs
will further improve Quickstep’s quality and
efficiency. These programs combine broad
technology training with detailed skills-
based and supervised on-the-job training.
New operators, who have participated
in these training programs, are already
demonstrating improved retention. They
are also quickly meeting their quality and
efficiency targets.
The QLA’s scope has expanded to
encompass the retraining of all existing
production operators. This helps ensure
consistency of process and performance
across our entire workforce. The QLA’s
activities are also managed through a new
online human resources system (HR Hub),
which streamlines our operations and
provides a range of delivery options.
WORKPLACE SAFETY
Quickstep’s commitment to workplace
safety is supported by an ongoing
investment in safety systems for the
operations environment and the expansion
of our dedicated safety team. Hazard
identification and elimination is an
ongoing focus, which is supported at all
levels through broad participation in our
safety audit program.
ALWAYS IMPROVING
Our capital investment continues to be
focused on improving quality, efficiency,
and reliability. This year saw the
completion of our ply-cutting machine
replacement program. Ply-cutting is critical
to our overall process reliability. The
introduction of advanced new equipment
has improved our efficiency, reduced
material consumption and ensured high
levels of process reliability.
We are now approaching the final
stages of a program that upgrades the
control systems across our major capital
equipment. Along with improved process
capability, these new control systems
will enable our Industry 4.0 Roadmap.
With this Roadmap, real-time collection of
equipment performance data is combined
with existing labour performance and
quality data, providing a complete digital
picture of factory performance.
Our Continuous Improvement (CI) program
now delivers steady reductions in
labour, material, and consumable costs.
The CI programs reduces these costs
by implementing point-of-use tooling,
standardised work, Kanban systems,
and process flow.
Finally, we have worked steadily to improve
the overall integration of our supply chain.
This has been particularly important
during COVID-19 and has helped us avoid
any significant material disruptions. A
supplier risk assessment process drives
our material planning parameters and
supplier engagement strategies. We also
use supply chain mapping to develop
revised shipping strategies that improve
reliability and stabilise freight costs
during this period of unprecedented
turbulence. Without these actions, we
could not be the reliable suppliers our
customers depend on.
CLOSING REMARKS
A dedicated team works across all areas
of Quickstep to support our ongoing
improvement. Their initiatives ensure that
we can meet the precise requirements of
our customers while steadily improving
Quickstep’s internal operations. At
Operations, we know that our dedication
to efficiency, education and continual
improvement plays a key role in supporting
the new Quickstep verticals.
OPERATIONS
REMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORYQUICKSTEP ANNUAL REPORT 2021 10
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
LEADERSHIP
TEAM
MARK BURGESS
CEO and Managing Director
DAVID DORAL
Chief Technical Officer
and Head of Engineering
“Although this has been a really
challenging year from a leadership
perspective I am so proud of the
Quickstep team and our partners.
They kept safe, kept working
and kept smiling. It reinforces my
confidence that we can take on
any challenge and prevail.”
“Throughout the most unique
period we have ever lived
through on a global scale,
Quickstep has managed to
navigate well these challenging
times, while setting ourselves up
for further growth with exciting
opportunities ahead of us.”
SARAH HART
Human Resources Manager
“This last year we successfully
navigated COVID-19 challenges that
have impacted the people agenda.
We are excited for the year ahead
as it provides the whole HR team
an opportunity for professional and
personal growth with challenging
and rewarding initiatives.”
TIM GENT
Executive General Manager,
Quickstep Aerospace Services
“The launch of Quickstep Aerospace
Services has been well received by
the aviation industry and customers
in the region. Our highly skilled
team is ready to support the
recovery phases of the commercial
aviation industry. We also look
forward to providing sovereign
capability to our defence partners
into the future. We are grateful to
have been recognised as a true
world class supplier and will continue
to grow our capabilities in line with
customer need.”
BOARD OF DIRECTORS2021 HIGHLIGHTSCHAIR’S REPORTMD & CEO’S REVIEWINNOVATION & TECHNOLOGY 11
GARY ROBINSON
Executive General Manager Operation
“I am grateful to all the staff at Bankstown and
Geelong for keeping safe while maintaining clear
focus on delivering quality products to our customers
and continuing to improve operational efficiency.
There is real excitement across the business
as we prepare to use our advanced composite
manufacturing skills across some of the new strategic
initiatives in Advanced Air Mobility, Satellites
and Electrification.”
STEVE OSBORNE
General Manager, Global Business Development and
Business Leader – Quickstep Advanced Air Mobility (QAAM)
“In a challenging year we posted solid sales from our core
advanced manufacturing and MRO businesses. Looking
ahead, Advanced Air Mobility and Electric Aviation are
exciting high growth markets that we’re very capable
of competing in. We’re already making fantastic strides
in building our presence and forming partnerships with
globally recognised sector leaders. The future is electric
and we plan to be a big part of it!”
ALAN TILLEY
Chief Financial Officer
Alan resigned in early FY22 and his
replacement Stephen Gaffney was
announced 5 October 2021
LEADERSHIP TEAM
REMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORYQUICKSTEP ANNUAL REPORT 2021 12
STRONG
LEADERSHIP
BOARD OF
DIRECTORS
BOARD OF
DIRECTORS
KYM OSLEY
RISK MANAGEMENT | DEFENCE
& AEROSPACE MARKETS |
STRATEGIC PLANNING | AEROSPACE
MAINTENANCE, REPAIR & OVERHAUL
ELISABETH MANNES
CHAIR OF THE REMUNERATION
NOMINATION DIVERSITY COMMITTEE |
BUSINESS MANAGEMENT |
OPERATIONAL EXCELLENCE | RISK AND
COMPLIANCE | PEOPLE & CULTURE
JILLIAN MCGREGOR
COMPANY SECRETARY
2021 HIGHLIGHTSCHAIR’S REPORTMD & CEO’S REVIEWINNOVATION & TECHNOLOGYINVESTMENT IN OUR PEOPLE 13
PATRICK LARGIER
CHAIR OF THE BOARD | MERGERS
& ACQUISITIONS | HEALTH SAFETY
& ENVIRONMENT | STRATEGY
| MANUFACTURING | GENERAL
MANAGEMENT
LEANNE HEYWOOD
CHAIR OF THE AUDIT, RISK
COMMITTEE | BUSINESS FINANCE |
COMPLIANCE | STRATEGIC MARKETING
| M&A
MARK BURGESS
CEO & MANAGING DIRECTOR |
AEROSPACE & DEFENCE | BUSINESS
LEADERSHIP | OPERATIONAL
EXCELLENCE | PEOPLE & CULTURE
BOARD OF DIRECTORS
REMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORYQUICKSTEP ANNUAL REPORT 2021 14
FINANCIALS
BOARD OF DIRECTORS2021 HIGHLIGHTSCHAIR’S REPORTMD & CEO’S REVIEWINNOVATION & TECHNOLOGYSTRONG LEADERSHIPINVESTMENT IN OUR PEOPLE 15
“ QUICKSTEP IS INVESTING IN NEW
TECHNOLOGY, ROBOTICS , AUTOMATION
AND ADVANCED SYSTEMS.
THE FUTURE OF AEROSPACE
MANUFACTURING LOOKS VERY
DIFFERENT TO THE PAST.”
REMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORYQUICKSTEP ANNUAL REPORT 2021FINANCIALS 16
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Directors’ Report
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 2021. Throughout the report, the consolidated entity is
referred to as the “Group” or “Quickstep”.
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. P Largier
Mr. M H Burgess
Mrs. L Heywood
Mrs. E Mannes
Air Vice-Marshal K Osley (Ret’d)
The following person was appointed Chairman of Quickstep Holdings Limited during the financial year and continues up
to the date of this report:
Mr. P Largier was appointed Chairman on 31 August 2020 and continues in office at the date of this report.
Mr. T H J Quick was a Director and Chairman from the beginning of the financial year until his resignation on 31
August 2020.
Principal Activities
During the year the continuing principal 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 the Joint Strike Fighter vertical tails for BAE Systems and Marand Precision Engineering
•
•
•
• manufacturing and development of parts using Qure technology
• maintenance, repair and overhaul of aircraft
•
continued development of technologies for scaled volume production.
Review of Operations
Total sales for the year ended 30 June 2021 were $85.1 million (FY20: $82.3 million) representing a 3.4% increase on
the prior year. The increase is attributable to ongoing growth in Joint Strike Fighter (JSF) program volumes to full rate
production and growing market share on the vertical tails contract. Total revenue from JSF was $63.9 million
(FY20: $61.3 million) representing a 4% increase.
The $0.1 million operating profit for FY21 is a decrease of $4.5 million on the prior year including a $2.8 million non-
recurring impairment charge on the flare housing facility, reduction in gross profit of $2.7 million in part due to the
apppreciation of the AUD vs the USD noting that revenue on the JSF contract is denominated in US dollars. Acquisition
costs $0.5 million and initial losses $0.8 million from the QAS business acquired in early 2021 have further impacted
profitability in FY21. The impairment charge reflects the low likelihood of the flare housing facility producing units under
a supply contract in the foreseeable future.
The FY21 net loss of $0.3 million represents a decrease of $4.2 million on FY20 comprising the $4.5 million decrease in
operating profit, a decrease in net financing costs of $1.6 million and a $1.3 million reduction in the tax benefit
recognised.
Quickstep Holdings Limited
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Directors’ Report
Review of Operations
Net $7.8 million cash from operating activities for FY21 was $7.6 million favourable to that reported for FY20 noting a
$3.2 million reversal of deferred income on the C-130J contract during FY20. A material reduction in inventory over FY21
and strong underlying cash profits are the drivers of the pleasing operating cash flow result. Capital expenditure of $2.3
million (net of grants $2.0 million) has been invested to provide new capability, increased capacity and improved
operational efficiency.
Excluding the impact of lease liabilities coming on to the balance sheet with the implementation of AASB 16, net debt
has decreased by $1.8 million to $4.6 million since 30 June 2020 despite investing $3.1m to purchase the QAS business,
as a consequence of better working capital management and ongoing profitability. Total bank debt outstanding as at 30
June 2020 is $7.7 million. Total debt also includes lease liabilities of $19.5 million under AASB 16.
Material Risks
The material business risks faced by the Group that are likely to have an effect on the financial prospects of the Group
and how the Group manages these risks include:
-
-
-
-
Foreign exchange – the reliance on sales from a key customer which are billed in US dollars has resulted in sales
and operating profit below expectations this year because of an appreciation of the Australian dollar against
the US dollar. This operating profit impact has been partially offset as a very high proportion of raw materials
are paid for in US dollars. The Profit Before Tax impact has been further mitigated by partial hedging. The risk
associated with exchange rate fluctuation is expected to continue.
Supply chain – the absence of alternate suppliers in some cases and disruption of supply chains by COVID-19
has the potential to disrupt production. Tight management of the supply chain has avoided any material
disruptions to date however the risk remains high, particularly whilst COVID-19 impacts offshore supply chains
and freight routes in and out of Australia.
Equipment failure – an extended failure on critical equipment has the potential to disrupt production.
Preventative maintenance programmes, monitoring tools, critical spares stock and equipment supplier support
arrangements are in place to mitigate this risk which has not impacted the financial outcome this year.
Revenue growth – the Group’s recently acquired MRO business in Tullamarine is expected to be a key driver of
revenue and profit growth in future years. The likelihood of this growth materialising depends to a certain
degree on the volume of, and ongoing recovery in, commercial airline traffic, particularly domestic. This
recovery is directly linked to the impact of potential domestic border closures associated with COVID-19.
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 (2020: $ Nil).
Significant Changes in the State of Affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Events Since the end of the Financial Year
On 29 July 2021 the Group announced that it had signed an agreement to invest $1million for a minority stake in
CarbonicBoats Pty Ltd (trading as Carbonix), an Australian company with strong capability in the design, development,
manufacture and operation of next generation unmanned solutions for commercial and military applications. The $1
Quickstep Holdings Limited
3
FINANCIALS
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2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
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INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Directors’ Report
million commitment is expected to be paid in 2 equal tranches over the first half of FY22 and will be funded by operating
cash flow.
Other than the matter disclosed above, no matter or circumstance has arisen since 30 June 2021 that has significantly
affected the Group’s operations, results or state of affairs, or may do so in future years.
Shares under Options
There are Nil (2020 Nil) unissued ordinary shares of Quickstep Holdings Limited under option at the date of this report.
No options were granted during the year and since the end of the financial year.
Quickstep Holdings Limited
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19
Directors’ Report
Information on Directors
The following information is current as at the date of this report
Mr. Patrick Largier
Independent Non-Executive Director - appointed 19 December 2019
Mr Largier is an experienced non-executive director and has over 30 years’ executive experience in the
oil, chemicals and industrial sectors in Australia, the UK and South Africa.
Prior to taking up non-executive director roles, he was Managing Director of Ludowici, an ASX-listed
global specialist mining services company with operations across five continents. Over five years he led
the company through a turnaround, followed by rapid international growth and the ultimate sale of the
company to the Danish group FLSmidth in 2012. He then became Managing Director of FLSmidth Pty
Limited for two years. Before this, Patrick spent 15 years in numerous business general manager roles at
ICI and Orica's Plastics and Chemicals Groups. His final role in the company was on Orica's Group
Executive team as General Manager - Strategy & Acquisitions. Before emigrating to Australia in 1992,
Patrick spent ten years with Shell in Cape Town and Shell International in London.
Since 2014 he has focussed his energies on non-executive director roles. He is currently a non-executive
director and chairman of several private, private equity and public unlisted companies.
Patrick has a Chemical Engineering degree (with honours) from the University of Cape Town and
completed the Advanced Management Program (AMP) at Harvard in 2004. He is also a Graduate of the
AICD.
Chair of the Board from 31 August 2020
Director of Murray Irrigation Ltd
Ordinary shares in Quickstep Holdings Limited
2,500,000
Mr. Mark H Burgess
CEO and Managing Director - appointed 18 May 2017
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.
Mark 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
4,209,707
Experience and
expertise
Qualifications
Special
responsibilities
Other current
Directorships
Interests in shares
and options
Experience and
expertise
Qualifications
Special
responsibilities
Interests in shares
and options
Quickstep Holdings Limited
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2021
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REPORT
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BOARD OF
DIRECTORS
Directors’ Report
Information on Directors
Mrs. Leanne Heywood
Independent Non-Executive Director - appointed 21 February 2019
Mrs Heywood joined the Quickstep board in February 2019 and brings experience as an ASX listed non-
executive director, Audit and Risk committee and Nominations and Remuneration committee chair plus
broad general management experience gained through an international career in the sales and
distribution, mining, rural, government and not-for-profit sectors.
Leanne has extensive international and domestic marketing experience and brings international
customer relationship management, stakeholder management (including governments and investment
partners) and team leadership experience in China, Japan, Mongolia, Singapore, South America, Europe
and India.
Leanne is an experienced leader of transformational change having lead organisational restructuring,
disposals and acquisitions, including integration. She has strong skills across Marketing, Business
Analysis, Contracts, Procurement, Logistics, Accounting and Business Improvement along with an
advanced ability to facilitate complex negotiations.
Leanne holds an executive MBA from Melbourne Business School and a Bachelor of Business (majoring in
Accounting) from Charles Sturt University. She is a graduate of the AICD International Company Directors
Course and a Fellow of CPA Australia.
Chair of the Audit, Risk and Compliance Committee and member of the Remuneration, Nomination and
Diversity Committee.
Leanne is a Non-Executive Director, Chair of the Audit and Risk Committee and member of the
Nominations and Remuneration Committee for Orocobre, an ASX200 lithium Miner with operations in
Argentina and a Director, Chair of the Audit and Risk Management Committee and Member of the Work
Health and Safety Committee of Midway Limited, an ASX wood fibre processor and exporter with
operations in Australia, New Zealand and Asia.
She is also a Director, Chair of the Nominations and Remuneration Committee and member of the Audit
and Risk Committee for the Australian Meat Processor Corporation (AMPC), a graduate member of the
Council of Charles Sturt University (CSU) and a Member of the Audit Committee of the Australian
Radiation Protection and Nuclear Safety Authority (ARPANSA).
Ordinary shares in Quickstep Holdings Limited
195,220
Mrs. Elisabeth Mannes
Independent Non-Executive Director - appointed 22 August 2019
Mrs Mannes joined the Quickstep board in July 2019, she is a highly experienced C-Suite executive with
a career that has spanned both the fast-moving consumer and industrial goods industries.
She has international and domestic general and operations management experience and is currently the
Executive General Manager of CHEP Australia Limited - a wholly owned subsidiary of Brambles Limited
(ASX:BXB).
Lis brings global leadership skills and has a depth and breadth of experience in operational excellence
and business transformations, including managing for growth. Prior to joining CHEP she was Executive
General Manger of the Consumer and Industrial division of Pact Group Holdings (ASX:PGH), and previous
to this she was Operations and Business Development Director of Tip Top, a division of George Weston
Foods (GWF) - a wholly owned subsidiary of Associated British Foods (ABF.L). Her skill set includes
Business Strategy, P&L Management, Human Resources, Procurement and Operational Excellence. She
also has a strong compliance focus with deep knowledge of the practice of Quality Assurance and Health
& Safety management.
She was a founder board member of the National Association of Women in Operations (NAWO).
Lis is a Chartered Engineer (CEng) and a Fellow of the UK Institution of Mechanical Engineers (FIMechE).
She holds an MBA, completed the AMP at INSEAD and is a Graduate of the AICD.
Chair of the Remuneration, Nomination and Diversity Committee and member of the Audit, Risk and
Compliance Committee.
Lis is a director of AG Hicks Limited, a family business in the UK
Ordinary shares in Quickstep Holdings Limited – (held in spouse’s
name)
194,954
Experience and
expertise
Qualifications
Special
responsibilities
Other current
Directorships
Interests in shares
and options
Experience and
expertise
Qualifications
Special
responsibilities
Other current
Directorships
Interests in shares
and options
Quickstep Holdings Limited
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Directors’ Report
Information on Directors
Air Vice-Marshal Kym Osley(Ret’d)
Independent Non-Executive Director - appointed 11 June 2020
Air Vice-Marshal Osley joined the Quickstep board in June 2020 and has over 44 years of Defence and
aerospace experience including prior experience as the Program Manager of the Australian F-35 Joint
Strike Fighter Program. Kym recently retired from his full-time position as a Managing Director in the
international consulting firm of PricewaterhouseCoopers, working with Government and Defence
clients, and has taken a part-time position as the NSW Defence Advocate within Investment NSW.
Kym has extensive international experience with Defence and aerospace industry gained through
various Defence-related appointments in the UK and the US, and through his previous work as a
Reservist officer promoting exports as a military specialist and leader in Team Defence Australia. He was
awarded a Defence Industry Service Commendation by the Minister for Defence in 2019 for leading PwC
teams that have been supporting future Defence capability planning since 2016. Earlier in his military
career, Kym was an aviator who flew in F-111, Phantom and F-18 aircraft with the RAAF and USAF. He
was awarded a Conspicuous Service Cross in 1997 and made a Member of the Order of Australia in 2008
for services to Defence.
Kym is currently the Chair of the Australian Air Force Cadet Foundation and remains an independent
member of the PwC Global Government Defence Network Board.
Kym is a graduate of the Harvard Business School (Advanced Management Program) and is a Fellow of
the Centre for Defence and Strategic Studies. He has a Master of Arts (International Relations), Master of
Defence Studies, a BSc (Physics) and a Graduate Diploma of Management Studies and is a Graduate of
the AICD.
Member of the Audit, Risk and Compliance Committee.
Nil
Ordinary shares in Quickstep Holdings Limited
300,000
Experience and
expertise
Qualifications
Special
responsibilities
Other current
Directorships
Interests in shares
and options
Quickstep Holdings Limited
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HIGHLIGHTS
CHAIR’S
REPORT
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INNOVATION
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BOARD OF
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Directors’ Report
Information on Directors
Ms. Jillian McGregor
Company Secretary - appointed 31 July 2020
Ms. McGregor has approximately 20 years’ experience as a corporate lawyer and 6 years’ experience as a
company secretary of ASX listed companies. She has regularly advised companies and directors on
compliance with the Corporations Act 2001 (Cth), ASX listing rules and other corporate legal matters.
Ms. McGregor holds a Bachelor of Laws and Bachelor of Commerce (Merit) from the University of NSW and
holds a Graduate Diploma of Applied Corporate Governance from the Governance Institute of Australia
She is currently the Company Secretary of a number of ASX listed and unlisted companies in the financial
services and information technology industries.
Ordinary shares in Quickstep Holdings Limited
Nil
Experience and
expertise
Qualifications
Other current
roles
Interests in shares
and options
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 Chair 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.
https://www.quickstep.com.au/wp-content/uploads/2021/04/QHL-RND-Committee-Charter-Reviewed-and-Approved-
April-2021.pdf
https://www.quickstep.com.au/wp-content/uploads/2021/07/QHL-Selection-and-Appointment-of-Directors-Policy-v-
2021-June-Board-Approved-formatted-for-web_.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.
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 interests
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”).
Quickstep Holdings Limited
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Directors’ Report
Directors’ Meetings
The numbers of meetings of the Company's board of Directors and of each board committee held during the financial
year ended 30 June 2021, and the numbers of meetings attended by each Director were:
Director
Board Meetings
Audit, Risk and Compliance
Committee Meetings
Remuneration, Nomination
and Diversity
Committee Meetings
HHeelldd
AAtttteennddeedd
HHeelldd
AAtttteennddeedd
HHeelldd
AAtttteennddeedd
Mr. P Largier
Mr. M H Burgess
Mrs. L Heywood
Mrs. E Mannes
AVM K Osley (Ret’d)
Mr. T H J Quick
18
18
18
18
18
6
18
17
18
18
18
6
-
-
4
4
4
-
-
2
4
4
4
-
-
-
4
4
-
1
-
4
4
4
-
1
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.
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Directors’ Report
Auditor’s Independence Declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set
out on page 72.
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 26 August 2021.
M H Burgess
Director
Sydney, New South Wales
Quickstep Holdings Limited
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Remuneration Report – Audited
The Directors present the Quickstep Holdings Limited 2021 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 (KMP) comprise the Directors of the company and the senior leadership team. KMP have
authority and responsibility for planning, directing and controlling the activities of the Group.
The report includes details relating to:
Executive Director
Mr. M H Burgess
Non-Executive Directors
Mr. T H J Quick
Mrs. L Heywood
Mrs. E Mannes
Mr. P Largier
AVM K Osley (Ret’d)
Chief Executive Officer and Managing Director
Chair of Board and Chair of Remuneration, Nomination and Diversity Committee
retired 31 August 2020
Chair of Audit, Risk and Compliance Committee
Chair of Remuneration, Nomination and Diversity Committee from 31 August 2020
Chair of Board from 31 August 2020
Other Key Management Personnel
Mr. A J Tilley
Chief Financial 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. Further information on the role of
the committee is contained in the charter available at http://www.quickstep.com.au/Investors-Media/Corporate-
Governance.
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.
Compensation levels for KMP 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 value creation 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.
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Remuneration Report – Audited
1. Principles of Compensation
The Group does not have any scheme relating to retirement benefits for its KMP other than superannuation
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.
Short Term Incentive - Cash and equity settled short term incentive
KMP receive short-term incentives (STI) in cash and 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 performance. These targets include measures related to the annual performance of the Group and specific
measures related to the activities of individual KMPs.
In FY21, a suite of Corporate KPIs were used, including two financial KPIs (weighting 45%), several KPIs relating to people
and safety (weighting 20%), two growth and technology focused KPIs (weighting 25%) and one operational KPI (weighting
10%). The weighting of corporate KPIs used in the determination of an executive’s STI is 70% for KMP excluding the Chief
Executive Officer and 100% for the Chief Executive Officer.
The RN&D Committee is responsible for assessing whether the Corporate 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 FY21 there was one financial threshold metric.
Actual performance is then assessed against both a target outcome and a stretch outcome. Where performance falls
below the target outcome no payment is generally made against that KPI and where performance exceeds the stretch
outcome the maximum stretch is payable. 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 are payable.
After determining the overall achievement of KPIs based on the above review process and hurdle, the RN&D Committee
has recommended that no STI is payable in respect of FY21 as the financial metric threshold was not achieved.
Quickstep Holdings Limited
12
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
27
Remuneration Report – Audited
1. Principles of Compensation
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 2019 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) with the total value of 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 FY21 and none
arose from PRs or DRs granted during the year.
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 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 scales will apply to
all tranches:
Performance Level
Below Threshold
Threshold
Target
Stretch and Above
Company’s TSR Relative to AOAI Movement of 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
50%
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 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.
Quickstep Holdings Limited
13
FINANCIALS
28
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Remuneration Report – Audited
1. Principles of Compensation
Long Term Incentive - Quickstep Incentive Rights Plan (IRP)
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.
Non-Executive Directors’ Fees
Remuneration for all non-executive directors was approved at a board meeting on 19 October 2017. 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
Director Fees
Committee Fees
Mr. P Largier
Mrs. L Heywood
Mrs. E Mannes
AVM K Osley(Ret’d)
$126,000
$60,000
$60,000
$60,000
n/a
$12,500
$12,500
$2,500
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.
2021
2020
2019
2018
2017
PPrrooffiitt // ((lloossss)) aattttrriibbuuttaabbllee ttoo oowwnneerrss
ooff tthhee ccoommppaannyy (($$000000))
DDiivviiddeennddss ppaaiidd
OOppeerraattiinngg iinnccoommee (($$000000))
CChhaannggee iinn sshhaarree pprriiccee
RReettuurrnn oonn ccaappiittaall eemmppllooyyeedd
(271)
$nil
85,097
(38%)
0.5%
3,891
$nil
82,252
(3.4%)
24.7%
2,693
$nil
73,275
13%
18.4%
(2,891)
$nil
59,036
(22.7%)
(22.8%)
(6,662)
$nil
51,915
(25.4%)
(69.8%)
Return on capital employed is calculated as profit/ (loss) before interest and tax (EBIT) divided by total assets, excluding
deferred tax asset, less liabilities.
Quickstep Holdings Limited
14
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
29
Remuneration Report – Audited
1. Principles of Compensation
Service Agreements
Name
Initial agreement
date
Duration
Notice
period (3)
Termination benefits
Mr. M H Burgess
8 May 2017
Open
NES
12 months annual 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
STI cap
as a % of
TFR (1)
LTI cap
as a % of TFR (2)
50
50
Mr. A J Tilley
25 June 2018
Open
NES
3 months of TFR and pro-rated
annual bonus (at Board's
discretion)
40
40
(1) Short Term Incentive (STI) is determined on performance against 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 and shares, as a percentage
of Total Fixed Remuneration (TFR). The KPIs include company financial objectives and growth, operational and
people objectives including new contracts, technology development, project delivery and functional outcomes
aligned to the annual business 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 TFR.
This is the measure currently used in the IRP applicable to FY21.
(3) NES refers to the National Employment Standard in the Fair Work Act (2009). Under section (3) (ss117-118) and
employee is entitled to a minimum notice period depending on length or service and age.
Quickstep Holdings Limited
15
FINANCIALS
30
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Remuneration Report – Audited
2. Details of Remuneration
The following tables detail the remuneration received by KMP of the Group for the current and previous financial year.
Name
Executive Directors
Mr. M H Burgess
Non-Executive Directors
Mr. T H J Quick
Mrs. L Heywood
Mrs. E Mannes
Mr. P Largier
AVM K Osley(Ret’d)
Mr. J C Douglas
Mr. B A Griffiths
Other KMPs
Mr. A J Tilley
Executive Directors
Mr. M H Burgess
Non-Executive Directors
Mr. T H J Quick
Mrs. L Heywood
Mrs. E Mannes
Mr. P Largier
AVM K Osley(Ret’d)
Mr. J C Douglas
Mr. B A Griffiths
Other KMPs
Mr. A J Tilley
Salary / Fees
$
STI (2)
$
SGC
$
Termination
$
LTI Rights (1)
$
Total
$
478,306
21,000
72,500
64,735
115,000
57,266
-
-
298,306
21,694
-
-
6,150
-
5,440
-
-
21,694
-
-
-
-
-
-
-
-
-
2020
478,997
85,000
21,003
126,000
71,875
54,395
35,000
2,950
25,259
11,667
-
-
-
-
-
-
-
-
-
5,167
-
280
2,400
-
298,997
50,854
21,003
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
153,061
653,061
-
-
-
-
-
-
-
21,000
72,500
70,885
115,000
62,706
-
-
68,146
388,146
186,180
771,180
-
-
-
-
-
-
-
126,000
71,875
59,562
35,000
3,231
27,658
11,667
53,746
424,600
(1)
(2)
(3)
LTI rights include the accounting expense attributable to the current year under the IRP.
STI is comprised of an accrued current year bonus.
There are no related party transactions between the Group and the KMP apart from compensation in
the form of annual remuneration.
Quickstep Holdings Limited
16
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
31
Remuneration Report – Audited
3. Share Based Compensation
Long term Incentive - Quickstep Incentive Rights Plan (IRP)
At 30 June 2021 executives have accrued performance rights pursuant to the IRP. Movements in IRP rights during the
year are set out below:
KMP
Tranche
refer
Note
Grant
date
FV per
right at
grant
date (a)
First
testing
date
Balance
at
30 June
2020
Number
Granted
during
the year
(b)
Number
Issued
during the
year
Number
Balance
at
30 June
2021
Number
Fair
Value at
grant
date
$
Cum
vesting
level
Mr. M H Burgess
CEO 1
01/12/17
$0.089
31/08/18
412,376
-
412,376
$36,701
Mr. M H Burgess
CEO 2
01/12/17
$0.089
31/08/19
825,248
Mr. M H Burgess
FY18
01/12/17
$0.069
31/08/20
2,475,247
Mr. M H Burgess
FY19
01/09/18
$0.068
31/08/21
2,846,505
Mr. M H Burgess
FY20
01/09/19
$0.068
31/08/22
2,140,411
-
-
-
-
825,248
$73,447
- 2,475,247
$170,792
- 2,846,505
$193,562
- 2,140,411
$145,547
Mr. M H Burgess
FY21
15/01/21
$0.0429
31/08/23
-
3,086,420
- 3,086,420
$132,407
Mr. A J Tilley
Mr. A J Tilley
Mr. A J Tilley
FY19
01/09/18
$0.068
31/08/21
1,457,411
FY20
01/09/19
$0.068
31/08/22
1,095,890
-
-
- 1,457,411
$99,104
- 1,095,890
$74,520
FY21
15/01/21
$0.0426
31/08/23
-
1,580,247
- 1,580,247
$67,319
0%
0%
0%
0%
0%
0%
0%
0%
0%
The fair value of rights granted was calculated using a Monte Carlo simulation analysis. Refer to Note E.4, for the
(a)
model’s key assumptions.
(b) The fair value of rights granted in the year is $199,726 (2020: $423,833). The total value of the rights is allocated
to remuneration over the vesting period.
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.
Movements in ordinary shares
The movement during the reporting period in the number of ordinary shares in the Company held, directly, indirectly
or beneficially, by each key management person, including their related parties, is as follows:
KMP
Mr. P Largier
Mrs. L Heywood
Mrs. E Mannes
AVM K Osley(Ret’d)
Mr. M H Burgess
Mr. A J Tilley
Held at
1 July 2020
Number
Received on
exercise of options
Number
Other
changes (*)
Number
Held at
30 June 2021
Number
300,000
83,498
80,000
-
3,595,837
1,045,498
-
-
-
-
-
-
2,200,000
111,722
114,954
300,000
613,864
115,172
2,500,000
195,220
194,954
300,000
4,209,701
1,160,670
(*)
Other changes represent shares that were purchased or sold during the year.
Quickstep Holdings Limited
17
FINANCIALS
32
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Remuneration Report – Audited
4. Analysis of Bonuses included in Remuneration
Details of the vesting profile of the short-term incentives awarded as remuneration to each Director of the Company
and each of the named other key management personnel of the Group are detailed below:
KMP
EExxeeccuuttiivvee DDiirreeccttoorr
Mr. M H Burgess
OOtthheerr KKMMPP
Mr. A J Tilley
Included in
remuneration (1)
% vested in
year (1)
% lapsed in
year (1)
-
-
-
-
100
100
(1)
No STI is payable for FY21 as the financial metric threshold was not achieved
During FY21 the RN&D committee undertook a market benchmarking study of Senior Executive Remuneration. The work
was undertaken by Egan Associates, one of Australia’s leading advisers to Boards and Board Remuneration Committee
Chairs for a total cost of $40,000, and included a declaration by them, that the recommendations had been made free
from undue influence by KMP, to whom the recommendations related. The resultant report which was discussed and
considered by the RN&D committee and the Board, presented data, findings and recommendations in relation to the
market competitiveness of Quickstep's remuneration practices for its Chief Executive Officer, Senior Executives and
Non-Executive directors. The structure of the current executive STI and LTI plans was also reviewed and considerations
and recommendations were provided for each.
Quickstep Holdings Limited
18
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
33
Financial Statements
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
A. About this Report
B. Business Performance
B.1 Key Performance Measures
B.2 Segment Reporting
B.3 Profit per Share
B.4 Notes to Statement of Cash Flows
B.5 Income Tax Benefit
C. Capital and Financial Risk Management
C.1 Loans and Borrowings
C.2 Leases
C.3 Finance Income and Finance Expenses
C.4 Financial Instruments
C.5 Financial Risk Management
C.6 Capital and Reserves
C.7 Capital and Other Commitments
C.8 Provisions
D. Operating Assets and Liabilities
D.1 Trade and Other Receivables
D.2 Inventories
D.3 Contract Assets
D.4 Property, Plant and Equipment and Software
E. Employee Benefits
E.1 Employee Benefit Obligations
E.2 Employee Benefit Expense
E.3 Related Party Transactions
E.4 Quickstep Incentive Rights Plan (IRP)
E.5 Equity Settled Short Term Incentive
F. Other Disclosures
F.1 Group Entities
F.2 Parent Entity Financial Information
F.3 Deed of Cross Guarantee
F.4 Auditors’ Remuneration
F.5 Business Combinations
F.6 Subsequent Events
F.7 New Accounting Standards
Directors’ Declaration
Lead Auditor’s Independence Declaration
Independent Auditor’s Report to the Members
Page
20
21
22
23
24
27
28
29
30
31
33
34
36
36
37
41
42
42
43
44
44
45
48
48
49
50
50
52
52
53
52
54
56
56
57
58
59
Quickstep Holdings Limited
19
FINANCIALS
34
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
for the year ended 30 June 2021
Revenue
Cost of sales of goods
Gross profit
Other income
Research and development expenses
Business development expenses
Corporate and administrative expenses
Impairment expense
Profit from operating activities
Finance income
Finance expenses
Net finance costs
Profit / (loss) before income tax
Income tax benefit
Profit / (loss) for the year
Other comprehensive income / (loss) net of income tax
Item that may be reclassified to profit or loss
Cash flow hedges
Exchange difference on translation of a foreign operation
Other comprehensive income / (loss) for the period, net of income tax
Total comprehensive income for the year
Notes
B. 2
D. 4
C. 3
B. 5
2021
$000
85,097
(70,478)
14,619
441
(1,800)
(1,176)
(9,174)
(2,812)
98
11
(1,280)
(1,269)
(1,171)
900
(271)
2020
$000
82,252
(64,961)
17,291
95
(2,303)
(1,608)
(8,899)
-
4,576
18
(2,915)
(2,897)
1,679
2,212
3,891
22
69
91
(184)
(43)
(227)
(180)
3,664
Profit per share:
Basic profit / (loss) per share
Diluted profit/ (loss) per share
B. 3
B. 3
Cents
(0.04)
(0.04)
Cents
0.55
0.54
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
Quickstep Holdings Limited
20
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
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QUICKSTEP ANNUAL REPORT 2021
35
Consolidated Balance Sheet
as at 30 June 2021
Consolidated balance sheet
ASSETS
Current assets
Cash and cash equivalents
Term deposits
Trade and other receivables
Prepayments and other assets
Inventories
Contract assets
Total current assets
Non-current assets
Property, plant and equipment and software
Right-of-use asset
Goodwill
Deferred tax asset
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Financial instruments
Loans and borrowings
Lease liabilities
Employee benefit obligations
Total current liabilities
Non-current liabilities
Loans and borrowings
Lease liabilities
Provisions
Employee benefit obligations
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Accumulated losses
Total equity
Notes
2021
$000
2020
$000
B. 4
C. 5
D. 1
D. 2
D. 3
D. 4
C. 2
F. 5
B. 5
C. 8
C. 4
C. 1
C. 2
E. 1
C. 1
C. 2
C. 8
E. 1
C. 6
2,353
733
8,845
1,240
9,660
8,051
30,882
15,378
16,526
2,287
4,101
38,292
69,174
1,690
718
7,716
787
10,136
9,556
30,603
17,335
15,661
-
3,201
36,197
66,800
13,352
12,176
-
18
4,464
1,275
2,073
21,182
3,205
18,179
3,448
1,235
26,067
47,249
21,925
421
41
7,316
1,059
1,683
22,696
1,505
16,973
3,156
734
22,368
45,064
21,736
120,785
6,466
120,785
6,007
(105,326)
(105,056)
21,925
21,736
The consolidated balance sheet should be read in conjunction with the accompanying notes.
Quickstep Holdings Limited
21
FINANCIALS
36
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Consolidated Statement of Changes in Equity
for the year ended 30 June 2021
2021
Balance at 1 July 2020
Profit / (loss) for the year
Other comprehensive (loss)
Foreign currency translation difference
for foreign operations
Effective portion of changes in fair
value of cash flow hedges
Total comprehensive income/ (loss)
for the year
Transactions with owners of the
company:
Share based payments expenses
Foreign
currency
translation
reserve
$000
Share
capital
$000
Cash flow
hedges
reserve
$000
Share
based
payments
$000
Accumulated
losses
$000
Total
equity
$000
120,785
(316)
(41)
6,364
(105,056)
21,736
-
-
-
-
-
-
69
-
69
-
-
-
22
22
-
-
-
-
(271)
(271)
-
-
69
22
(271)
(180)
-
(19)
369
6,733
-
369
(105,327)
21,925
Balance at 30 June 2021
120,785
(247)
2020
Balance at 1 July 2019
Adjustment on initial application of
AASB 16 Refer Note F.6
120,785
(273)
143
5,448
(104,065)
22,038
-
-
-
-
(4,882)
(4,882)
Adjusted balance at 1 July 2019
120,785
(273)
143
5,448
(108,947)
17,156
Profit for the year
Other comprehensive (loss)
Foreign currency translation difference
for foreign operations
Effective portion of changes in fair
value of cash flow hedges
Total comprehensive income/ (loss)
for the year
Transactions with owners of the
company:
Share based payments expenses
-
-
-
-
-
-
(43)
-
-
-
(184)
(43)
(184)
-
-
-
-
3,891
3,891
-
-
(43)
(184)
3,891
3,664
Balance at 30 June 2020
120,785
(316)
-
-
(41)
916
6,364
-
916
(105,056)
21,736
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Quickstep Holdings Limited
22
DIRECTORS’
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FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
37
Consolidated Statement of Cash Flows
for the year ended 30 June 2021
Cash flows from operating activities
Cash receipts in course of operations
Interest received
Interest paid
Other income
Cash payments in the course of operations
Net cash from operating activities
Cash flows from investing activities
Acquisition costs of plant and equipment and intangible assets
Proceeds from government grants for capital works
Payment to fund business acquisition
Receipts/(payment) for restricted cash and term deposit
Net cash (used in) investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment of lease liabilities
Payment of borrowing costs
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
Notes
2021
$000
2020
$000
B. 4
87,435
11
(1,549)
47
(78,112)
7,832
(2,289)
372
(3,137)
(15)
(5,069)
9,310
(10,295)
(1,147)
(167)
(2,299)
464
1,690
199
79,259
18
(2,011)
95
(77,184)
177
(6,002)
397
-
91
(5,514)
9,400
(8,657)
(934)
(220)
6,244
(5,748)
7,333
105
1,690
Cash and cash equivalents at end of period
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
2,353
Quickstep Holdings Limited
23
FINANCIALS
38
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
A. About this Report
Introduction
This is the financial report of Quickstep Holdings Limited (the “Company”) and its controlled entities (the “Group”).
The Company is domiciled in Australia and 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.
Materiality
Information is only included in the financial report to the extent that it has been considered material and relevant to
the understanding of the financial statements. Factors that influence if a disclosure is material and relevant, include
whether:
•
•
•
•
•
the dollar amount is significant in size (quantitative factor)
the dollar amount is significant by nature (qualitative factor)
the Group’s results cannot be understood without the specific disclosure (qualitative factor)
it is critical to allow a user to understand the impact of significant changes in the Group’s business during the period;
and
it relates to an aspect of the Group’s operations that is important to its future performance.
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 26 August 2021.
Basis of Preparation
The financial statements have been prepared on the historical cost basis. These consolidated financial statements are
presented in Australian dollars, which is the Group’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.
Quickstep Holdings Limited
24
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
39
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
A. About this Report
Accounting Estimates and Judgements
The preparation of financial statements in conformity with AASBs requires management to make judgements, estimates
and assumptions about future events.
Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies are
described below:
Going concern
The financial statements have been prepared on the going concern basis which contemplates the continuity of normal
business activities and the realisation of assets and discharge of liabilities in the normal course of business.
The Group has generated a loss after tax for the year ended 30 June 2021 of $271,000 (30 June 2020 $3,891,000 profit
after tax). The Group has net assets of $21,925,000 (30 June 2020 $21,736,000) and net current assets of $9,700,000
(30 June 2020 $7,907,000). Current loans and borrowings are $5,739,000 (including lease liabilities of $1,275,000)
compared to 30 June 2020 $8,375,000. Operating cash inflow for the year was $7,815,000 (30 June 2020 $177,000)
noting $3,160,000 of deferred income reversal on the C-130J contract in the year ended 30 June 2020. Customer receipts
on the C-130J contract are now closely aligned to deliveries.
Profitability and operating cash flow are both expected to improve over FY22 benefiting from an increase in profits on
the back of contracted revenue growth, an ongoing focus on cost control and new business in QAS. During the year
ended 30 June 2021 and until the date of this report the Group has not experienced any significant impacts due to the
onset of the COVID-19 pandemic and has continued to operate without the need to curtail or lockdown operations. The
forecast for FY22 does not include any expected changes in revenues, sales volumes or supply costs as a consequence
of the pandemic as there is no indication that there will be a significant impact on the Group’s continuing activities or
operations at this time.
A $6,000,000 short term working capital facility is in place with Export Finance Australia. The facility is available to draw
upon until 22 September 2022 and is drawn to $1,900,000 as at 28 August 2021.
The directors of Quickstep consider it appropriate that the Group will continue to fulfil all obligations as and when they
fall due for the foreseeable future and accordingly consider that the Group’s financial statements should be prepared
on a going concern basis. Accordingly, no adjustments have been made to the financial report relating to the
recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might
be necessary should the Group not continue as a going concern.
Recognition of tax benefits
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. Future taxable profits are estimated based on future profits forecast taking into
account income tax reconciliation required under the current tax legislation.
Quickstep Holdings Limited
25
FINANCIALS
40
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
A. About this Report
Significant Accounting Policies
The accounting policies have been applied consistently to all periods presented in these consolidated financial
statements and have been applied consistently by all entities in the Group. Other significant accounting policies are
contained in the notes to the consolidated financial statements to which they relate.
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 2021 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 parent entity. 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.
Foreign currency translation
Transactions, assets and liabilities denominated in foreign currencies are translated into Australian dollars at reporting
date using the following exchange rates:
Foreign currency amount
Applicable exchange rate
Transactions
Date of transaction
Monetary assets and liabilities
Reporting date
Foreign exchange gains and losses resulting from translation are recognised in the Income Statement, except for
qualifying cash flow hedges which are deferred to equity.
On consolidation, the assets, liabilities, income and expenses of foreign operations are translated into Australian dollars
using the following applicable exchange rates:
Foreign currency amount
Applicable exchange rate
Income and expenses
Average monthly rate
Assets and liabilities
Equity and reserves
Reporting date
Historical date
Foreign currency differences resulting from translation 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.
Quickstep Holdings Limited
26
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
41
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
B. Business Performance
This section provides the information that is most relevant to understanding the financial performance of the Group
during the financial year and, where relevant, the accounting policies applied, and the critical judgements and estimates
made.
B.1
B.2
B.3
B.4
B.5
Key Performance Measures
Segment Reporting
Profit per Share
Notes to Statement of Cash Flows
Income Tax Benefit
B.1 Key Performance Measures
The key performance measures for the year were:
Revenue
EBIT before impairment loss
EBIT
Net profit / (loss)
2021
$000
85,097
2,910
98
(271)
2020
$000
82,252
4,576
4,576
3,891
EBIT measure refers to profit from operating activities disclosed in the Consolidated Statement of Profit or Loss and
Other Comprehensive Income.
Recognition and Measurement
Revenue
Under AASB 15 the Group has determined that for made-to-order parts, the customer controls all the work in progress
as the products are being manufactured. This is because under those contracts, parts are made to a customer’s
specification and if a contract is terminated by the customer, then the Group is entitled to reimbursement of the costs
incurred to date, including a reasonable margin. Therefore, revenue from these contracts and the associated costs are
recognised over time – i.e. before the goods are delivered to the customers’ premises. Invoices are issued according to
contractual terms. Uninvoiced amounts are presented as contract assets.
The Group uses the input method (costs-incurred) to measure progress as this measure faithfully depicts the
transformation of the work in progress. Under this approach, the entity recognises revenue based on the costs incurred
to date relative to the estimated total costs to complete the performance obligation.
To the extent to which amounts are received in advance of the provision of the related parts, the amounts are recorded
as contract liability and credited to the statement of comprehensive income as goods delivered.
Research and development expenses
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.
Quickstep Holdings Limited
27
FINANCIALS
42
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
B.1 Key Performance Measures
Government grants
Grants from the government that compensate the Group for expenses incurred are recognised in the profit and loss as
Other Income on a systematic basis in the periods in which the expenses are recognised.
Grants that the Group receives in relation to assets have been presented as a deduction in arriving at the carrying
amount of the asset.
The Group has complied with all grant conditions.
B.2 Segment Reporting
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.
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.
Revenue:
United States of America
Australia
Total
Non-current assets:
United States of America
Australia
Total
Program Information
Revenue:
Joint Strike Fighter
Other
Total
Major Customers
2021
$000
2020
$000
66,722
18,375
85,097
-
38,292
37,392
2021
$000
63,856
21,241
85,097
65,960
16,292
82,252
-
36,197
36,197
2020
$000
61,345
20,907
82,252
78.1% (2020: 80.0%) of revenue for the Group is attributable to the following customers:
• Northrop Grumman ISS Int. Inc.
•
Lockheed Martin Aeronautics Co.
Quickstep Holdings Limited
28
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
43
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
B. Business Performance
B.3 Profit per Share
The calculation of basic profit per share is based on the profit attributable to ordinary shareholders and a weighted-
average number (WAN) of ordinary shares outstanding.
Profit / (loss) attributable to ordinary shareholders
Weighted average number of ordinary shares:
Shares at beginning of period
Shares issued during the year
Weighted average number of shares used as the denominator in calculating basic
earnings per share
Adjustment for calculation of diluted earnings per share
Under share based payment arrangements
Weighted average number of shares used as the denominator in calculating
diluted earnings per share
Basic profit / (loss) cents per share
Diluted profit / (loss) cents per share
2021
$
2020
$
(270,620)
3,891,000
2021
Number
2020
Number
713,435,303
1,739,339
710,307,982
1,846,042
715,174,642
712,154,024
10,436,809
7,602,768
725,611,451
719,756,792
(0.04)
(0.04)
0.55
0.54
Rights granted under IRP which have passed their first testing date are considered to be potential ordinary shares. They
have been included in the determination of diluted earnings per share.
Quickstep Holdings Limited
29
FINANCIALS
44
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
B. Business Performance
B.4 Notes to Statement of Cash Flows
Cash and Cash Equivalents
Cash at bank and in hand
Reconciliation of Net Profit to Net Cash Provided by Operating Activities
Profit / (loss) for the period
Adjustments for:
ROU asset amortisation
Depreciation and amortisation
(Gains)/loss on asset disposals
Impairment loss
Share based payment expense
Net foreign currency losses
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in prepayments and other assets
(Increase)/decrease in inventories
Decrease in contract assets
Increase in deferred tax asset
(Decrease)/increase in trade and other payables
(Decrease)/increase in provisions
(Increase) /decrease in prepaid interest
Increase in employee benefit obligations
Net cash from operating activities
2021
$000
2,353
2021
$000
(271)
1,672
2,409
(10)
2,812
368
(282)
(1,129)
(452)
476
1,504
(900)
453
291
-
891
7,832
2020
$000
1,690
2020
$000
3,891
1,579
2,047
-
916
993
(863)
(233)
(1,675)
276
(2,212)
(1,821)
(3,160)
(157)
596
177
Quickstep Holdings Limited
30
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
45
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
B. Business Performance
B.5
Income Tax Benefit
Reconciliation of Income Tax Benefit Recognised in Statement of Profit or Loss
Numerical reconciliation of income tax benefit to prima facie tax payable is as follows:
Profit / (loss) from continuing operations
Tax expense/ (benefit) at the Australian tax rate of 30% (2020 - 30.0%)
Expenditure not allowable for income tax purposes
Origination and reversal of temporary difference
Effect of different tax rate for overseas subsidiaries
Deferred tax asset related to foreign jurisdictions
Current year losses for which no deferred tax asset is recognised
Deferred tax asset recognised
Income tax benefit
Tax Losses not brought to Account
The gross amount of unused tax losses for which no deferred tax asset has been
recognised
Deferred tax assets/(liabilities)
Deferred tax assets/(liabilities):
Other provisions
Lease liabilities
Borrowing costs
Blackhole expenditure
Property, plant and equipment and right-of-use assets
Tax losses brought to account
Deferred tax asset not brought to account
Deferred tax assets
2021
$000
(1,171)
(351)
125
(1,032)
4
(4)
1,259
(900)
(900)
2020
$000
1,679
504
324
150
4
(4)
-
(3,190)
(2,212)
2021
$000
2020
$000
58,580
56,726
2021
$000
2020 (*)
$000
1,159
5,836
0
201
796
5,410
2
208
(3,797)
(1,985)
702
-
-
(1,230)
4,101
3,201
(*) Note: The comparative information for temporary differences has been restated.
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 it prudent to defer recognition until
the Group generates consistently taxable income.
Quickstep Holdings Limited
31
FINANCIALS
46
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
B. Business Performance
B.5
Income Tax benefit
Tax Consolidation Legislation
Quickstep Holdings Limited and its 100% owned Australian resident subsidiaries have formed a tax consolidated Group
effective from 1 July 2010.
Recognition and Measurement
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 for the year, using tax rates enacted or
substantially enacted at reporting date, and any adjustment to tax payable in respect of previous years.
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 nor 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.
The Group has recognised a deferred tax asset relating to previously unrecognised tax losses to the extent there are
sufficient taxable temporary differences against which the unused tax losses can be utilised. Utilisation of tax losses also
depends on the ability of the entity to satisfy certain tests at the time the losses are recouped. The recognised tax losses
are subject to the shareholder continuity test.
As a result of improved forecast profitability, the Group has reviewed previously unrecognised tax losses and
determined that it was now probable that future taxable profits will be available against which the tax losses can be
utilised. As a consequence, a deferred tax asset of $900,000 was recognised for the year. An estimated tax loss of
$4,195,000 arising from the 2021 year is deferred until it is probable that the Group generates sufficient taxable profits
to allow recognition of this tax loss.
Quickstep Holdings Limited
32
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
47
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
C. Capital and Financial Risk Management
This section provides information relating to the Group’s capital structure and its exposure to financial risks, how they
affect the Group’s financial position and performance and how the risks are managed.
C.1
C.2
C.3
C.4
C.5
C.6
C.7
C.8
Loans and Borrowings
Leases
Finance Income and Finance Expenses
Financial Instruments
Financial Risk Management
Share Capital
Capital and other Commitments
Provisions
C.1
Loans and Borrowings
Current
$000
2021
Non-
current
$000
Total
$000
Current
$000
2,564
3,205
5,769
2,957
-
-
2,564
1,900
4,464
-
-
3,205
-
3,205
-
-
5,769
1,900
7,669
492
167
3,616
3,700
7,316
2020
Non-
current
$000
-
1,505
-
1,505
-
1,505
Total
$000
2,957
1,997
167
5,121
3,700
8,821
Effective
interest rate
3.09%
N/A
5.63%
Year of maturity
2023
N/A
2022
2021
Maximum facility
value
$000
5,769
-
6,000
2020
Maximum facility
value
$000
10,000
3,333
6,000
Secured bank loan
Capitalised interest facility
Accrued borrowing cost
Secured bank loan carrying amount
Short term facility-EFA
Term and Debt Repayment Schedule
Secured bank loan
Capitalised Interest
Short term facility
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
Australia (EFA) (formerly Export Finance and Insurance Corporation) (Guarantor) to fund certain capital expenditure.
The Agreement provided 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 scheduled for October 2021. This facility was repaid
in February 2021 and replaced by a new facility with ANZ.
On 16 February 2021 Quickstep Holdings Limited executed a loan agreement with ANZ for $6,410,000 to refinance the
existing ANZ facility and fund the acquisition of QAS. Quarterly repayments commenced on 30 June 2021 with the final
repayment due on 30 September 2023. The facility limit is reduced by the amount of each payment. The interest rate
on the facility comprises a variable base rate and fixed margin.
Quickstep Holdings Limited
33
FINANCIALS
48
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
C. Capital and Financial Risk Management
C.1
Loans and Borrowings
Short term facility
Quickstep Holdings Limited executed an Export Contract Loan (ECL) agreement with EFA on 28 June 2017, and the most
recent variation deed dated 22 June 2021. This revolving loan facility is limited to $6,000,000 (2020 $6,000,000) 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 and is available to be drawn
up to 22 September 2022 with final repayment no later than 22 July 2023.
The interest rate on the facility is a variable rate calculated as the sum of the base rate plus a margin of 5.5%, payable
to EFA quarterly on funds drawn. A commitment fee of 1.5%pa accrues from the date of the agreement and is payable
to EFA quarterly.
Recognition and Measurement
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.
C.2
Leases
The Group leases assets including properties, production equipment and IT equipment. The Group initially adopted AASB
16 Leases effective from 1 July 2019. In applying AASB 16, the Group recognised right-of-use assets and lease liabilities
for the leases. Lease liabilities are measured at the present value of the remaining lease payments, discounted using the
lessee’s incremental borrowing rate of 6.88%.
The Group has elected not to recognise right-of-use assets and lease liabilities of low value assets. The Group recognises
the lease payments associated with these leases as an expense on a straight line basis over the term of the lease.
Right-of-use assets
Right-of-use assets related to leased properties and equipment are recognised under AASB 16 and presented in the
following table.
Right-of-use assets:
Opening net book amount
Initial adoption of AASB 16
Adjustments to ROU assets due to reassessment or modification
Addition of new leases
Amortisation charge for the year
Closing net book amount
2021
$000
2020
$000
15,661
-
(134)
2,671
(1,672)
16,526
-
17,129
-
108
(1,576)
15,661
Quickstep Holdings Limited
34
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
49
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
C. Capital and Financial Risk Management
C.2
Leases
Lease liabilities
Lease liabilities related to leased properties and equipment are recognised under AASB 16 and presented in the
following table.
Lease liabilities:
Current
Non-current
Total lease liabilities
2021
$000
2020
$000
1,275
18,179
19,454
1,059
16,973
18,032
Amounts recognised in Consolidated Statement of Profit or Loss
The following table summarises expenses related to AASB 16 leases that are included in the Consolidated Statement of
Profit or Loss.
AASB 16 leases:
Interest on lease liabilities
Amortisation charge
Total expenses
2021
$000
2020
$000
1,216
1,672
2,888
1,294
1,576
2,870
Quickstep Holdings Limited
35
FINANCIALS
50
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
C. Capital and Financial Risk Management
C.3
Finance Income and Finance Expenses
Finance income
Interest income
Finance expenses
Interest expense on liabilities measured at amortised cost
Interest expenses leased liabilities
Foreign currency gains or (losses)
Other expenses and adjustment to borrowing costs
Finance expenses
Net finance costs
Recognition and Measurement
Finance income and finance expenses
2021
$000
11
(364)
(1,216)
282
18
(1,280)
(1,269)
2020
$000
18
(560)
(1,294)
(993)
(68)
(2,915)
(2,897)
Finance income comprises interest income on funds invested (including available-for-sale financial assets). Interest
income is recognised as it accrues in profit and loss, using the effective interest method.
Finance expenses 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.
C.4
Financial Instruments
Current liability
Forward foreign exchange contracts – cash flow hedges
Recognition and Measurement
2021
$000
(18)
2020
$000
(41)
Fair Value Measurement
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of
the derivative is recognised in Other Comprehensive Income and accumulated in the cash flow hedge reserve. Any
ineffective portion of changes in the fair value of the derivative is recognised immediately in profit and loss. The Group
uses forward foreign exchange contracts to hedge its currency exposure risk in relation to sales in US dollars – all hedges
have a maturity date less than one (1) year from reporting date.
Valuation of Financial Measurement – cash flow hedges
Foreign currency forward contracts are initially recognised at fair value on the date a derivative contract is entered into
and are subsequently remeasured to their fair value at the end of each reporting period. The Group documents at the
inception of the hedging transaction the relationship between hedging instruments and hedged items, as well as its risk
management objective and strategy for undertaking various hedge transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging
transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged
items.
Quickstep Holdings Limited
36
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
51
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
C. Capital and Financial Risk Management
Financial Risk Management
C.5
Overview
The Group has exposure to the following risks from its use of financial instruments:
• Credit risk;
•
• Market risk.
Liquidity risk, and
This note presents information about the Group’s exposure to each of the above risks, its objectives, policies and
processes for measuring and managing risk, and the management of capital. Further quantitative disclosures are
included throughout these financial statements.
The Company’s 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.
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. The carrying amount of the Group’s financial assets represents the maximum credit exposure.
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 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.
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.
Quickstep Holdings Limited
37
FINANCIALS
52
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
C. Capital and Financial Risk Management
C.5 Financial Risk Management
Exposure to credit risk
The Group’s maximum exposure to credit risk for trade and other receivables at the reporting date by
geographic region was:
Australia
United States of America
Liquidity Risk
2021
$000
2,644
6,201
8,845
2020
$000
2,300
5,416
7,716
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.
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 2021
Trade and other payables
Secured bank loan
Short term facility – EFA
Lease liabilities
At 30 June 2020
Trade and other payables
Secured bank loan
Short term facility – EFA
Lease liabilities
Carrying
amount
$000
Contractual
Cash flows
$000
Less than
6 months
$000
6 – 12
months
$000
Between 1
and 2 years
$000
Between 2
and 5 years
$000
Greater
than 5 years
$000
13,352
(13,352)
(13,352)
-
-
5,769
1,900
19,454
45,475
(5,769)
(1,900)
(27,027)
(1,282)
(1,900)
(1,246)
(48,048)
(17,780)
(1,282)
(2,564)
-
(1,248)
(2,530)
-
(2,495)
(5,059)
-
(641)
-
(7,485)
(8,126)
-
-
-
(14,553)
(14,553)
12,597
(12,597)
(12,597)
-
-
5,121
3,700
18,032
39,450
(5,121)
(3,700)
(26,032)
(1,725)
(3,700)
(1,110)
(47,450)
(19,132)
(1,725)
(1,671)
-
(1,118)
(2,843)
-
(2,152)
(3,823)
-
-
-
-
-
-
(6,654)
(6,654))
(14,998)
(14,998)
Quickstep Holdings Limited
38
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
53
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
C. Capital and Financial Risk Management
C.5
Financial Risk Management
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable parameters, while optimising the return.
Interest rate risk
The Group has entered into a variable rate loan agreement for a period of 2.5 years. The applicable interest rate is re-
set on a monthly basis in accordance with the 30 days bank bill rate.
The Group is exposed to interest rate risk pre-dominantly on cash balances and deposits and loans and borrowings.
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.
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
Variable rate instruments
Cash and cash equivalents
Secured bank loan
Short term facility agreement – EFA
2021
$000
2020
$000
733
718
2,353
(5,769)
(1,900)
(5,316)
1,690
(5,121)
(3,700)
(7,131)
As at the end of the reporting period, the Group had the following instruments outstanding:
Held-to maturity term deposits
Amount
$733,000
Interest rate
Maturity date
0.20%
18 August 2021
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 FY20.
Variable rate instruments - increase by 100 basis points
Variable rate instruments - decrease by 100 basis points
2021
$000
(53)
53
2020
$000
(70)
70
Quickstep Holdings Limited
39
FINANCIALS
54
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
C. Capital and Financial Risk Management
C.5
Financial Risk Management
Currency risk
The Group is exposed to currency risk on sales, purchases and cash holdings that are denominated in a currency other
than the respective functional currencies of Group entities, primarily the Australian dollar (AUD), Euro (EUR), Great
Britain Pounds (GBP) 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.
The Group's exposure to foreign currency risk at the end of the reporting period was as follows:
2021
USD 000
2021
EUR 000
2021
GBP 000
2020
USD 000
2020
EUR 000
2020
GBP000
Receivables
Cash
Trade payables
3,531
1,454
(3,415)
1,570
-
-
(23)
(23)
-
-
(62)
(62)
3,726
58
(2,921)
863
-
-
(48)
(48)
-
-
(182)
(182)
The following significant exchange rates applied have been applied:
AUD v USD
AUD v EUR
AUD v GBP
Average rate
2021
0.7480
0.6268
0.5532
2020
0.6720
0.6204
0.5537
Year-end spot rate
2020
2021
0.6879
0.7563
0.6344
0.5450
0.6114
0.5559
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 FY20.
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%
GBP/AUD exchange rate - increase (10%)
GBP/AUD exchange rate - decrease 10%
Fair Value Hierarchy
Profit or loss
2021
$000
(189)
231
3
(4)
10
(12)
39
2020
$000
(114)
139
-
-
30
(36)
19
Equity, net of tax
2020
$000
2021
$000
(189)
231
3
(4)
10
(12)
39
(118)
144
879
(1,096)
-
-
(173)
Financial assets and liabilities, including foreign currency hedges are considered level 2 in the fair value hierarchy. The
carrying value of financial assets and liabilities carried at amortised costs, approximate their fair value. During the year,
there have been no transfers between levels in the fair value hierarchy.
Quickstep Holdings Limited
40
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
55
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
C. Capital and Financial Risk Management
C.6 Capital and Reserves
Capital Management
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, business growth and
commercialisation of technology. There were no changes in the Group’s approach to capital management during the
year.
Movements in Share Capital
Opening balance
Shares issued under share based payments
arrangements
Closing balance
2021
Shares
713,435,303
2020
Shares
710,307,982
2021
$000
2020
$000
120,785
120,785
2,834,041
3,127,321
-
-
716,269,344
713,435,303
120,785
120,785
During the year, the Company issued 2,834,041 (2020: 3,127,321) shares pursuant to share-based payment
arrangements with certain key management personnel.
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.
The Company does not have authorised capital or par value in respect of its issued shares. All issued shares are fully
paid.
There are Nil (2020 Nil) unissued ordinary shares of Quickstep Holdings Limited under option at the date of this report.
No options were granted during the year and since the end of the financial year.
Nature and purpose of reserves
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements
of foreign operations, as well as the effective portion of any foreign currency differences arising from hedges of a net
investment in a foreign operation.
Cash flow hedge reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging
instruments used in cash flow hedges pending subsequent recognition in profit or loss or directly included in the initial
cost or other carrying amount of a non-financial asset or non-financial liability.
Share based payments reserve
The reserve for share based payments comprises the fair value of equity instruments granted by the Group based on
market prices taking into account the terms and conditions upon which the instruments were granted.
Quickstep Holdings Limited
41
FINANCIALS
56
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
C. Capital and Financial Risk Management
C.7 Capital and Other Commitments
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
2021
$000
289
2020
$000
574
Other Commitments – Pledged as Collateral against Secured Bank Loan
On 18 February 2021 Quickstep Holdings Limited (the Company) executed a loan agreement with Australian and New
Zealand Banking Group Limited (ANZ) to refinance the existing ANZ facility and fund the acquisition of QAS. The
Company has provided ANZ with a Corporate Guarantee and Indemnity as well as a security interest over the Group’s
assets by way of a General Security Agreement (GSA). In addition, the Company, ANZ and Export Finance Australia (EFA)
are party to a Security Sharing Deed:
Cash and cash equivalents
Trade and other receivables
Inventories
Property, plant and equipment
2021
$000
2,353
8,844
9,660
14,995
2020
$000
1,683
7,489
9,870
13,639
Under the agreement with ANZ, Quickstep Holdings Limited and the other Group companies party to the GSA have
agreed to the following restricted dealings. Without the consent of ANZ they may not:
• Create or allow another interest in any Collateral other than and Permitted Encumbrance,
• Dispose, or part with possession, of any Collateral.
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.
C.8 Provisions
Balance at 1 July 2020
Provisions made during the year
Provisions used during the year
Balance at 30 June 2021
Restructuring costs
$000
421
Make good provision
$000
3,156
-
(421)
-
292
-
3,448
Total
$000
3,577
292
(421)
3,448
Restructuring costs of $421,000 were provided as at 30 June 2020 and paid out during the year ended 30 June 2021.
Quickstep is required to restore all leased premises to their original condition at the end of the respective lease terms.
A provision has been recognised for the present value of the estimated expenditure required to remove any leasehold
improvements. These costs have been capitalised as part of the cost of leasehold improvements and are amortised
over the term of the lease.
Quickstep Holdings Limited
42
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
57
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
D. Operating Assets and Liabilities
This section provides information relating to the operating assets and liabilities of the Group. Quickstep has a strong
focus on maintaining a strong balance sheet through continued focus on cash conversion. The Group’s strategy also
considers expenditure, growth and acquisition requirements.
D.1 Trade and Other Receivables
D.2
Inventories
D.3 Contract Assets
D.4 Property, Plant and Equipment
D.5
Intangibles
D.1 Trade and Other Receivables
Current assets
Trade receivables
Other receivables
All trade receivables are current.
Recognition and Measurement
2021
$000
8,744
101
8,845
2020
$000
7,622
94
7,716
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.
Quickstep Holdings Limited
43
FINANCIALS
58
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
D. Operating Assets and Liabilities
D.2
Inventories
Current assets
Raw materials and consumables
Work in progress
Recognition and Measurement
2021
$000
9,239
421
9,660
2020
$000
9,868
268
10,136
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.
D.3 Contract Assets
Current
2021
$000
8,051
2020
$000
9,556
Contract assets primarily relate to the Group’s rights to consideration for work performed but not billed at the reporting
date. Under AASB 15 the Group has determined that for made-to-order parts, the customer controls all the work in
progress as the products are being manufactured. This is because under those contracts, parts, are made to a customer’s
specification and if a contract is terminated by the customer, then the Group is entitled to reimbursement of the costs
incurred to date, including a reasonable margin. Therefore, revenue from these contracts and the associated costs are
recognised over time – i.e. before the goods are delivered to the customers’ premises. Invoices are issued according to
contractual terms. Uninvoiced amounts are presented as contract assets.
Quickstep Holdings Limited
44
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
59
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
D. Operating Assets and Liabilities
D.4 Property, Plant and Equipment and Software
Plant and
equipment
$000
Assets under
construction
$000
Office furniture
& equipment
$000
Software
$000
June 2021
Opening net book amount
Additions
Acquired through business combination
Government funding received
Transfers from assets under construction
Disposals
Amortisation of grant
Depreciation charge
Impairment charge
Closing net book amount
Cost
Accumulated depreciation
June 2020
Opening net book amount
Additions
Customer and government funding received
Transfers from assets under construction
Amortisation of grant
Depreciation charge
Closing net book amount
Cost
Accumulated depreciation
12,489
-
748
(68)
2,036
(12)
406
(2,602)
4,305
2,902
-
(304)
(2,489)
-
-
-
-
(2,812)
12,997
39,854
(26,857)
12,273
25
-
2,136
406
(2,351)
12,489
35,935
(23,446)
1,602
1,602
-
2,238
4,906
(397)
(2,442)
-
-
4,305
4,305
-
213
328
-
-
-
298
-
-
(115)
-
396
1,271
(875)
297
-
-
3
-
(87)
213
952
(739)
-
-
-
155
-
-
(100)
-
383
1,242
(859)
40
-
-
303
-
(15)
328
1,093
(765)
Total
$000
17,335
2,902
748
(372)
-
(12)
406
(2,817)
(2,812)
15,378
43,969
(28,591)
14,848
4,931
(397)
-
406
(2,453)
17,335
42,285
(24,950)
Quickstep Holdings Limited
45
FINANCIALS
60
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
D. Operating Assets and Liabilities
D.4 Property, Plant and Equipment and Software
Recognition and Measurement
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 Asset
Depreciation Rates
Plant and factory equipment
Office equipment
4% to 51%
3% to 52%
Impairment
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. 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 loss in relation to flare housing facility
During the year the Group was unsuccessful with a proposal to supply MJU-68B flare housings to Chemring Australia
(CHA). Given the low probability of securing flare housings revenue in the foreseeable future, and the specialised nature
of the facility, the Group has estimated the recoverable amount of the assets comprising the flare housing facility to be
significantly lower than their carrying amount, giving rise to the impairment loss recognised in the current reporting
period. In performing the impairment test, the recoverable amount of the assets is determined to be its fair value less
costs of disposals. The fair value less costs of disposal is based on quoted prices in active markets for identical assets
(Level 1), that is the purchase price of these assets which is determined to be the fair value at the measurement date.
Quickstep Holdings Limited
46
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
CORPORATE
DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
61
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
D. Operating Assets and Liabilities
D.4 Property, Plant and Equipment and Software
Recognition and Measurement
The recognised impairment loss is calculated as follows.
Recoverable amount of flares housing facility
Carrying amount of assets
Write-down amount (impairment loss)
Reconciliation of carrying amount
Property, plant and equipment – flare housing facility
Opening carrying amount
Impairment loss
Closing carrying amount
2021
$000
939
3,751
2,812
2021
$000
2020
$000
3,751
(2,812)
939
3,751
-
3,430
Quickstep Holdings Limited
47
FINANCIALS
62
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
E. Employee Benefits
This section provides a breakdown of the various programs Quickstep uses to reward and recognise employees and Key
Management Personnel (KMP). Quickstep believes that these programs reinforce the value of ownership and incentives
and drive performance both individually and collectively to deliver better returns to shareholders.
E.1 Employee Benefit Obligations
E.2 Employee Benefit Expense
E.3 Related Party Transactions
E.4 Quickstep Incentive Rights Plan (IRP)
E.5 Equity Settled Short Term Incentive
E.1 Employee Benefit Obligations
Employee benefit obligation
- Annual leave (current)
- Long service leave (non-current)
Recognition and Measurement
2021
$000
2,073
1,235
3,308
2020
$000
1,683
734
2,417
Long service leave
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 future
wages and salaries, 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.
E.2 Employee Benefit Expense
Wages and salaries
Defined superannuation contribution expense
Increase in leave liabilities
Share based payments expense
2021
$000
24,951
2,353
891
368
28,563
2020
$000
24,675
2,041
596
916
28,228
Quickstep Holdings Limited
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Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
E. Employee Benefits
E.2 Employee Benefit Expense
Recognition and Measurement
Wages and salaries
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
employees’ 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 is recognised in the provision for employee benefits. All other
short-term employee benefit obligations are presented as payables.
Share-based payment transactions
An expense is recognised for all equity-based remuneration 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.
E.3 Related Party Transactions
Key Management Personnel Compensation
The key management personnel compensation included in “Employee benefit expense” in Note E.2 is as follows:
Short-term employee benefits
Share-based payments
The total value of the rights is allocated to remuneration over the vesting period.
2021
$000
1,162
221
1,383
2020
$000
2,393
384
2,777
Quickstep Holdings Limited
49
FINANCIALS
64
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
E. Employee Benefits
E.4 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. In 2015 the Board
adopted Revised Rules for the IRP to ensure the IRP continued to reflect market practice and remained appropriate for
the Company. These Revised Rules were approved by shareholders at the Company’s 2015 Annual General Meeting.
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) with the total value of 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.
During 2021 an expense of $387,000 (2020: $916,000), refer Note B.4 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 Performance Rights
Tranche
Grant date
First testing date
Expiry date
Share price at grant date
Expected life (years)
Risk free factor
Volatility of QHL
Volatility of AOAI
Dividend yield
FY16
01/06/16
31/08/18
31/08/20
$0.14
2.7
1.65%
45%
15%
0%
FY17
01/03/17
31/08/19
31/08/21
$0.105
2.9
1.97%
40%
13%
0%
FY18
01/12/17
31/08/20
31/08/22
$0.089
3.1
1.93%
40%
12%
0%
FY19
01/09/18
31/08/21
31/8/23
$0.091
3.3
2.03%
40%
12%
0%
FY20
01/09/19
31/08/22
31/08/24
$0.11685
3.3
1.04%
50%
12%
0%
FY21
15/01/21
31/08/23
31/08/25
$0.090
3.0
0.11%
55%
20%
0%
Quickstep Holdings Limited
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65
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
E. Employee Benefits
E.4 Quickstep Incentive Rights Plan (IRP)
Rights
Movements in unissued shares under rights:
Opening balance
Granted during the year
Rights vested
Rights forfeited/lapsed
Closing balance
The rights are issued pursuant to:
2021
No of rights
31,118,897
9,242,025
(363,870)
(5,419,909)
2020
No of rights
24,491,718
7,452,427
(825,248)
-
34,577,143
31,118,897
•
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.
•
E.5 Equity Settled Short Term Incentive
Certain executives are eligible to receive short term incentives (STI) in cash and 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 FY21 1,296,522 (2020: 2,302,073) shares were issued to employees.
Quickstep Holdings Limited
51
FINANCIALS
66
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
F. Other Disclosures
This section provides details on other required disclosures relating to the Group to comply with the accounting
standards and other pronouncements.
Group Entities
Parent Entity Financial Information
Deed of Cross Guarantee
Auditors’ Remuneration
Business Combinations
Subsequent Events
F.1
F.2
F.3
F.4
F.5
F.6
F.7 New Accounting Standards Not Yet Adopted
F.1 Group Entities
Name of entity
Parent entity
Quickstep Holdings Limited
Controlled entities
Quickstep Technologies Pty Limited *
Quickstep Systems Pty Limited *
Quickstep GmbH
Quickstep Automotive Pty Limited *
Quickstep Aerospace Pty Limited *
Quickstep USA Inc.
Quickstep Aerospace Services Pty Limited^
Quickstep Unmanned Services Pty Limited^
Country of
Incorporation
Australia
Australia
Australia
Germany
Australia
Australia
USA
Australia
Australia
Ownership Interest
2020
2021
%
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
* Companies entered into deed of cross guarantee with Quickstep Holdings Limited.
^ Incorporated during the year.
F.2 Parent Entity Financial Information
As at, and throughout, the financial year ending 30 June 2021 the parent entity of the Group was Quickstep Holdings
Limited.
Results of the parent entity
(Loss) for the year
Total Comprehensive (loss)
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
Share based payments reserve
Foreign currency translation reserve
Accumulated losses
Total equity
2021
$000
2020
$000
(7,138)
(7,138)
8,780
(9,119)
(339)
120,785
6,732
671
(128,527)
(339)
(2,608)
(2,608)
7,585
(4,975)
2,610
120,785
6,363
671
(125,209)
2,610
Quickstep Holdings Limited
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Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
F. Other Disclosures
F.3 Deed of Cross Guarantee
Under the terms of ASIC Corporations (Wholly owned Companies) Instrument 2016/785, certain wholly owned
controlled entities have been granted relief from the requirement to prepare audited financial reports. Quickstep
Holdings Limited has entered into an approved deed of indemnity for the cross-guarantee of liabilities with those
controlled entities in Note F.1.
The following consolidated Statement of Comprehensive Income and Balance Sheet comprise Quickstep Holdings
Limited and its controlled entities which are party to the Deed of Cross Guarantee (refer Note F.1), after eliminating
all transactions between parties to the Deed.
2021
$000
2020
$000
Statement of Profit and other Comprehensive Income
Revenue
Profit / (loss) before income tax
Income tax benefit
Profit for the year
Cash flow hedges
Total comprehensive income for the year
Balance Sheet
Assets
Current assets
Cash and cash equivalents
Term deposits
Trade and other receivables
Contract asset
Prepayments and other assets
Inventories
Total current assets
Non-current assets
Property, plant and equipment and software
Right-of-use asset
Goodwill
Deferred tax asset
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Financial instruments
Loans and borrowings
Lease liabilities
Employee benefit obligations
Total current liabilities
Non-current liabilities
Loans and borrowings
Lease liabilities
Provisions
Employee benefit obligations
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
Quickstep Holdings Limited
84,286
(325)
900
575
22
597
2,304
733
8,102
8,052
915
9,008
29,114
14,622
13,985
2,287
4,101
34,995
64,109
11,531
-
18
4,464
983
2,072
19,068
3,205
15,874
3,189
1,236
23,504
42,572
21,537
82,252
1,710
2,212
3,922
(184)
3,738
1,690
718
7,716
9,556
732
10,136
30,548
17,334
15,662
-
3,201
36,197
66,745
10,771
421
41
7,316
1,059
1,683
21,291
1,505
16,973
3,156
734
22,368
43,659
23,086
120,785
7,385
(106,633)
21,537
120,785
6,994
(104,693)
23,086
53
FINANCIALS
68
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
INNOVATION
& TECHNOLOGY
STRONG
LEADERSHIP
INVESTMENT
IN OUR PEOPLE
BOARD OF
DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
F. Other Disclosures
F.4 Auditor’s Remuneration
Amounts received or due and receivable by the auditor KPMG for:
Audit services
Other services
Accounting and tax services
Total non-audit fee
F.5
Business Combinations
Summary of acquisition
2021
$
2020
$
223,400
221,400
11,385
11,385
234,785
-
-
221,400
On 18 February 2021, the Group purchased Boeing Defense Australia’s aerospace maintenance, repair and overhaul
(MRO) capability based in Tullamarine, Victoria, Australia. The facility has an integrated engineering and MRO
capability to service the defence and commercial aerospace markets, both in Australia and internationally. The
acquisition allows the Group to offer extensive MRO services across a wide range of composite, bonded and
conventional metal aircraft structures to defence, government and commercial aircraft operators with high quality
standards, fast turnaround times and attractive pricing.
Under the terms of the Asset Purchase Agreement (APA) Quickstep Aerospace Services Pty Ltd acquired operating
assets plus inventories from Boeing Australia Component Repairs Pty Ltd (BACR) for a cash purchase price of $2.64
million. Quickstep also assumed relevant employees benefit obligations and certain other liabilities under the terms
of purchase agreement.
Details of the purchase consideration are as follows:
Purchase consideration
Cash paid
Total purchase consideration
Acquisition related costs
2021
$000
2,640
2,640
The Group incurred acquisition related costs of $496,944 being legal fees, advisory fees and other transition costs.
These costs have been included in “Corporate and administrative expenses” in the Consolidated Statement of Profit
or Loss.
Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of
acquisition.
Quickstep Holdings Limited
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Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
F. Other Disclosures
F.5
Business Combinations
Property, plant and equipment
Rotable assets
Right of use asset
Inventory and consumables
Employee liabilities
Lease liability
Make good provision
Identifiable net assets acquired (fair value)
Add: Goodwill
Total assets acquired
2021
$000
498
250
2,671
455
(591)
(2,671)
(259)
353
2,287
2,640
Identifiable assets are measured at fair value. The valuation techniques used for measuring fair value of material
assets acquired were as follows.
Property, plant and equipment:
Market comparison technique and cost technique: The valuation model considers market prices for similar items
when they are available, and depreciated replacement cost when appropriate. Depreciated replacement cost
reflects adjustments for physical deterioration as well as functional and economic obsolescence.
Inventories:
Market comparison technique: The fair value is determined based on the estimated selling price in the ordinary
course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the
effort required to complete and sell the inventories.
Goodwill
Goodwill arising from the acquisition has been recognised as follows.
Consideration transferred
Fair value of identifiable net assets
Goodwill
2021
$000
2,640
(353)
2,287
For the four months ended 30 June 2021, QAS contributed revenue of $0.8 million and a loss of $0.8 million to the
Group’s results. The entity’s financial performance continues to be reviewed by the Group whilst it continues to
establish this business during the measurement period, that is, one year from the date of acquisition. The recoverable
amount of this goodwill, based on fair value less costs of disposal exceeds the carrying amount and, on this basis, no
impairment to goodwill has been recorded as at 30 June 2021.
If new information obtained within one year of the date of acquisition about facts and circumstances that existed at the
date of acquisition identifies adjustments to the goodwill recognised, or any additional provisions that existed at the
date of acquisition, then the accounting for the acquisition will be revised.
Quickstep Holdings Limited
55
FINANCIALS
70
2021
HIGHLIGHTS
CHAIR’S
REPORT
MD & CEO’S
REVIEW
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& TECHNOLOGY
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IN OUR PEOPLE
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DIRECTORS
Notes to the Consolidated Financial Statements
for the year ended 30 June 2021
Subsequent Events
F.6
Management have considered the matters or circumstances that have arisen since 30 June 2021 up to the date of this
report that would significantly affect:
•
•
•
the operations of the Consolidated Entity;
the results of those operations; and
the state of affairs of the Consolidated Entity.
On that basis, the following subsequent event is disclosed.
Carbonix investment
On 29 July 2021 the Group announced that it had signed an agreement to invest $1 million for a minority stake in
CarbonicBoats Pty Ltd (trading as Carbonix), an Australian company with strong capability in the design, development,
manufacture and operation of next generation unmanned solutions for commercial and military applications. The $1
million commitment is expected to be paid in 2 equal tranches over the first half of FY22 and will be funded by operating
cash flow.
F.7 New Accounting Standards Not Yet Adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2021
reporting periods and have not been early adopted by the Group. These standards are not expected to have a
material impact on the entity in the current or future reporting periods.
International Financial Reporting Standards Interpretations Committee final agenda decisions
In April 2021, the International Financial Reporting Standards Interpretations Committee (IFRIC) issued a final agenda
decision, Configuration or customisation costs in a cloud computing arrangement. The decision discusses whether
configuration or customisation expenditure relating to cloud computing arrangements is able to be recognised as an
intangible asset and if not, over what time period the expenditure is expensed. The Group does not have any cost
related to cloud computing arrangements as intangible assets in the Balance Sheet. The adoption of this agenda
decision does not result in a reclassification of these intangible assets to either a prepaid asset in the Balance Sheet
and/or recognition as an expense in the Statement of Profit or Loss and Other Comprehensive Income.
Quickstep Holdings Limited
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Directors’ Declaration for the year ended 30 June 2021 Quickstep Holdings Limited 57 In the Directors' opinion: (a)the consolidated financial statements and notes set out on pages 33 to 70 and the Remuneration report on pages 25 to 32 in the Directors’ report, are in accordance with the Corporations Act 2001, including:i.complying with Australian Accounting Standards and the Corporations Regulations 2001; andii.giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its performance for the year ended on that date; and(b)there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.The directors have been given the declarations required by section 295A of the Corporations Act 2001 from the chief executive officer and chief financial officer for the financial year ended 30 June 2021. The directors confirm that the financial statements comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. There are reasonable grounds to believe that the Company and the Group entities identified in Note F.1 will be able to meet any obligations or liabilities to which they are, or may become, subject to by virtue of the Deed of Cross Guarantee between the Company and those Group entities pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785. This declaration is made in accordance with a resolution of Directors. Mr. M H Burgess Director 26 August 2021 Sydney, New South Wales FINANCIALS 72
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58 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 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 of Quickstep Holdings Limited for the financial year ended 30 June 2021 there have been: i.no contraventions of the auditor independence requirements as set out in theCorporations Act 2001 in relation to the audit; andii.no contraventions of any applicable code of professional conduct in relation to the audit.KPMGTraceyDriverPartner Sydney26 August 2021 DIRECTORS’
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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 2021 and of its financial
performance for the year ended on
that date; and
• complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
Basis for opinion
The Financial Report comprises:
• Consolidated balance sheet as at 30 June 2021;
• Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of cash
flows for the year then ended 30 June 2021;
• Notes including a summary of significant accounting
policies; and
• Directors' Declaration.
The Group consists of Quickstep Holdings Limited (the
Company) and the entities it controlled at the year-end or
from time to time during the financial year.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of
the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the
Code.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
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Key Audit Matters
The Key Audit Matters we identified
are:
• Revenue recognition;
• Going concern basis of accounting;
and
• Recognition of deferred tax assets
relating to tax losses.
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in our
audit of the Financial Report of the current period.
These matters were addressed in the context of our audit of
the Financial Report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Revenue recognition ($85,097,000)
Refer to Note B.1 ‘Key Performance Measures’ to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group generates revenue through sale of
goods to customers under long-term contract
arrangements and the Group’s policy is revenue
is recognised over time based on performance
completed to date of each individual customer’s
made to order parts.
We focused on revenue recognition 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.
Our procedures included:
obtaining an understanding of the Group’s
process for revenue recognition and assessed
the Group’s revenue recognition policy in
accordance with the accounting standards;
testing a sample of revenue transactions
recognised for customer orders completed
during the year to customer invoices, customer
signed dispatch dockets or evidence of delivery;
selecting a sample of pre and post year end
revenue transactions and checked the
recognition of revenue in the period to
underlying customer invoices, customer signed
dispatch dockets or evidence of delivery or
performance obligations completed;
selecting a sample of transactions of customer
purchase orders in progress from the Group’s
Work in Progress Report, and checked the
labour and materials performance completed to
date to underlying documentation, such as,
invoices and timesheets to assess the
recognition of the associated contract asset in
accordance with the Group’s revenue
recognition policy; and
evaluating the Group’s revenue disclosures in
the financial report using our understanding
obtained from our testing and against
accounting standard requirements.
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Going concern basis of accounting
Refer to Note A ‘About this Report’ to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group’s use of the going concern basis of
accounting and the associated extent of
uncertainty is a key audit matter due to the high
level of judgement required by us in evaluating
the Group’s assessment of going concern and
the events or conditions which may cast
significant doubt on their ability to continue as a
going concern. These are outlined in Note A.
The Directors have prepared the financial report
on a going concern basis of accounting. Their
assessment of going concern was based on cash
flow projections. The preparation of these
projections incorporated a number of
assumptions and significant judgements. The
range of possible outcomes considered in arriving
at this judgement has been concluded by the
Directors to not give rise to significant uncertainty
casting significant doubt on the Group’s ability to
continue as a going concern.
We critically assessed the levels of uncertainty,
as it is related to the Group’s ability to continue
as a going concern, within these assumptions
and judgements, focusing on the following:
the Group’s planned levels of operational
expenditure including efficiencies and,
improvement in working capital. This included
the feasibility, projected timing, and quantum
of potential improvement in working capital
and efficiencies and progress of these plans;
the Group’s planned levels of significant
non-routine forecast outflows in relation to
its investment activities, and the ability of
the Group to achieve cash outflows within
available funding; and
the Group’s ability to raise additional funds.
In assessing this key audit matter, we involved
senior audit team members who understand the
Group’s business, industry and the economic
environment it operates in.
Our procedures included:
analysing the cash flow projections by:
- evaluating the underlying data used to
generate the projections. We specifically
looked for their consistency with those used
by the Directors, and tested by us, their
consistency with the Group’s intentions, and
their comparability to past practices;
- analysing the impact of possible changes in
projected cash flows and their timing, to the
projected periodic cash positions. Assessing
the resultant impact to 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
from our test results of the accuracy of
previous Group cash flow projections and
sensitivity analysis on key cash flow
projection assumptions;
- assessing the planned levels of operating
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;
- assessing significant non-routine forecast
outflows in relation to its investment
activities and the impact of working capital
improvements and efficiencies in operating
costs for feasibility, quantum and timing, and
their impact to going concern. We used our
knowledge of the client, its industry and
status to assess the level of associated
uncertainty;
we read Directors minutes and relevant
correspondence with the Group’s advisors to
assess the Group’s ability to raise additional
funds; and
evaluating 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
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flow projection assessment, the Group’s plans
to address those events or conditions, and
accounting standard requirements.
Recognition of deferred tax assets relating to tax losses $4,101,000
Refer to Note A ‘About this report’ and B.5 ‘Income Tax Benefit’ to the Financial Report
The key audit matter
How the matter was addressed in our audit
The recoverability of deferred tax assets (DTA)
relating to tax losses is dependent on the ability
of the Group to generate sufficient taxable
income in the future to which the historical tax
losses can be applied.
This is a key audit matter due to the high level of
judgement required by us in evaluating the
Group’s assessment of the probability of
sufficient taxable income being generated in the
future, given the Group’s history of tax losses.
We involved our tax specialists and senior audit
team members in assessing this key audit
matter.
Our procedures included:
involving our tax specialists in assessing the
Group’s continuity of ownership assessment
and the tax loss availability for consistency with
regulatory parameters and legislation;
comparing the forecasts included in the Group’s
estimate of future taxable income used in the
DTA recoverability assessment to those used in
the Group’s assessment of the going concern
assumption for consistency. Our approach in
testing these forecasts was consistent with the
approach detailed above in addressing the key
audit matter relating to the going concern basis
of accounting;
understanding the timing of future taxable
income and considering the consistency of the
timeframes of expected recovery to our
knowledge of the business and its plans; and
evaluating the Group’s tax disclosures in the
financial report by comparing them to our
understanding of the tax matters occurring
during the year, and accounting standard
requirements.
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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
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001;
• implementing necessary internal control to enable the preparation of a Financial Report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error; and
• assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate
the Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
• to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
• to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
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78 Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of Quickstep Holdings Limited for the year ended 30 June 2021, complies with Section 300A of the Corporations Act 2001. Directors’ responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibilities We have audited the Remuneration Report included in pages 25 to 32 of the Directors’ report for the year ended 30 June 2021. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Tracey Driver Partner Sydney 26 August 2021 DIRECTORS’
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REPORT
FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
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DIRECTORY
QUICKSTEP ANNUAL REPORT 2021
79
Shareholder Information
for the year ended 30 June 2021
The shareholder information set out below was applicable as at 17 August 2021.
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
The sole substantial shareholder in the Company is Australian Super with 72,882,585 shares based on latest available
information.
C.
On Market buy back
There is no current on-market buy back.
D.
Distribution schedules
Distribution of each class of security as at 17 August 2021:
Ordinary fully paid shares
Range
Holders
Units
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - Over
Total
E. Unmarketable parcels
260
183
859
2,884
946
5,132
14,479
663,335
7,321,048
111,791,067
596,479,415
716,269,344
%
0.00%
0.09%
1.02%
15.61%
83.28%
100.00%
Holdings less than a marketable parcel of ordinary shares (being $500 parcel at $0.0460 per share):
Holders
1,364
Units
8,649,520
Quickstep Holdings Limited
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Shareholder Information
for the year ended 30 June 2021
D. Top holders
The 20 largest registered holders of each class of quoted security as at 17 August 2021 were:
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Holder Name
J P Morgan Nominees Australia Pty Limited
Deakin University
HSBC Custody Nominees (Australia) Limited
CS Third Nominees Pty Limited
Sandhurst Trustees Ltd
BNP Paribas Nominees Pty Ltd
Farjoy Pty Ltd
Carrier International Pty Limited
State One Stockbroking Pty Ltd
Romsup PL
Citicorp Nominees Pty Limited
WSF Pty Ltd
Exwere Investments Pty Ltd
Hobson Cove Pty Ltd
Mr Andrew James Vercetti
Yarraandoo Pty Ltd
Smartequity EIS Pty Ltd
Mr James Winston Hunter + Mrs Elizabeth Joan Henderson-Hunter
Mr Stephen Brown
Mr Ronald Smit + Mrs Julie Marie Smit
Securities
73,531,585
33,333,333
23,716,279
18,792,851
17,985,432
14,241,092
13,680,981
11,500,355
10,046,288
8,812,430
8,026,263
6,415,325
5,400,000
5,000,000
3,919,000
3,509,933
3,070,146
3,007,145
2,960,000
2,914,738
%
10.27
4.65
3.31
2.62
2.51
1.99
1.91
1.61
1.40
1.23
1.12
0.90
0.75
0.70
0.55
0.49
0.43
0.42
0.41
0.41
Total
269,863,176
37.68
Quickstep Holdings Limited
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Corporate Directory
for the year ended 30 June 2021
Directors
Mr. P Largier
Chair
Mr. M H Burgess
CEO and Managing Director
Mrs. L Heywood
Non-Executive Director
Mrs. E Mannes
Non-Executive Director
AVM K Osley (Ret’d)
Non-Executive Director
Secretary
Ms. J McGregor
Principal Office
361 Milperra Road
Bankstown Airport
New South Wales 2200
Australia
Telephone: +61 2 9774 0300
Website: www.quickstep.com.au
Email: info@quickstep.com.au
Registered Office
361 Milperra Road
Bankstown Airport
New South Wales 2200
Australia
Auditor
KPMG
Chartered Accountants
Tower 3
300 Barangaroo Avenue
Sydney
New South Wales 2000
Australia
Share registry
Computershare Investor Services Pty Ltd
452 Johnston Street
Abbotsford
Victoria 3067
Telephone +61 3 9415 5000
Stock Exchange
Australian Securities Exchange Limited
Exchange Centre
20 Bridge Street
Sydney
New South Wales 2000
ASX Code: QHL
Quickstep Holdings Limited
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