ANNUAL REPORT 2014
SAFEROADS HOLDINGS LIMITED
ABN 81 116 668 538
Innovative Road Safety Solutions
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CONTENTS
Chairman’s overview ........................................................................................................................... 4
Chief Executive Officer’s Review of Operations and Activities ............................................................ 6
The Year in Review................................................................................................................................ 8
Directors’ Report .................................................................................................................................. 12
Auditor’s Independence Declaration ................................................................................................... 21
Corporate Governance Statement....................................................................................................... 22
Financial Statements ........................................................................................................................... 27
Notes to the Financial Statements....................................................................................................... 31
Directors’ Declaration .......................................................................................................................... 49
Independent Auditor’s Report .............................................................................................................. 50
ASX Additional Information .................................................................................................................. 53
Corporate Directory ............................................................................................................................. 54
Saferoads specialises in providing innovative road safety solutions.
Headquartered in Drouin, Victoria, and with representation across Australia and New Zealand, the company
services State Government Departments, local councils and road construction and equipment hire companies
with a broad range of products and services designed to direct, protect, inform and illuminate all road users.
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CHAIRMAN’S OVERVIEW
Dear Shareholder,
On behalf of the board I am pleased to provide the following Chairman’s overview for the 2014 financial
year.
O P E R A T I O N S O V E R V I E W
The 2014 financial year was a continuation of the transformation of the Company and ultimately our
return to profitable performance. We continued to focus on the development and sale of products with
superior margins. This focus on margins and our innovative and patented quality products is providing
us with a clear point of difference in our markets. Importantly we highlight that our gross profit margin
for 2014 has continued to improve with a 13% increase to 37.4% compared to 33.1% in 2013.
We continued our disciplined management of costs and structure to ensure we are as efficient and
productive as we can be. We have progressively restructured our core sales force and our Senior
Management Team to drive efficiency, accountability and results and a focus on continuous improvement
in everything we do.
It is very pleasing to advise our return to underlying profitable operations in the last quarter of the 2014
financial year however we have recorded a statutory loss after tax for the full year of $930,978. This full
year loss includes the burden of restructuring and redundancy costs of $147,198 after tax and from an
underlying results perspective, the 2014 result was a loss of $783,780 after tax. This 2014 underlying
result compares with an underlying loss of $1.56 million in 2013 and the company’s low point underlying
loss of $4.25 million in 2012. As already noted, it is very pleasing and motivating to highlight that we
achieved a last quarter underlying profit and we now envisage that we will be able to sustain profitable
operations for the 2015 financial year and beyond. The poor performing Civil operations have been
successfully wound down with the completion of the majority of our contractual commitments and the
disposal or reallocation of related assets at book value or better. All Civil wind down, termination and
related costs have been fully provided for in the 2014 result.
B A L A N C E S H E E T A N D D E B T M A N A G E M E N T
Our balance sheet continues to improve and we have maintained adequate cash reserves to support
the current working capital needs of the business as well as provide basic funding for our product
innovation projects.
Bank debt continues to be a key focus and it was reduced in 2014 by a further 11% from $5.6 million to
$5.0 million at 30 June 2014. This was achieved mainly from working capital gains and the proceeds
from the sale of non-core assets, mainly Civil related. The Company was in compliance with its financial
covenant over the year and fully met its obligations under the agreed debt repayment requirements.
We expect to comply with all our debt facility obligations in 2015 whilst maintaining adequate working
capital requirements to meet budgeted needs. Our existing facilities expire in July 2015 and we are
currently looking to negotiate a further extension or new facility in this current half.
S T R A T E G I C P R O D U C T O P P O R T U N I T I E S
The company has a history full of innovation and being first to market with quality products. After some
years of distraction I am pleased to assure our shareholders that we are back on track with our focus
on a portfolio of innovations that will have the duel benefits of improved stakeholder value and reduced
human road trauma.
Ironman Hybrid - As outlined in our half year announcement, we are excited about the new Ironman
Hybrid steel and concrete temporary safety barrier solution. As previously announced, we now have
regulatory approval in most key Australian States to market this innovative product for use on open
road and freeway roadworks sites. We are actively marketing this product for sale and as the core
component of our Workzone barrier rental fleet. We are also currently in negotiations with major work
zone rental companies for the sale and exclusive licensing of the Ironman Hybrid barrier solution in
Australia and overseas.
Safepole and Omni Bollard - Unlocking value from these patented assets overseas is also a major
focus for the Board. We are exploring commercial opportunities in North America with existing and new
business partners. The interest in these products in this huge market is substantial.
Other Innovations - With the business better stabilised, our focus is clearly back on identifying and
securing further innovative growth products where we can be first to market and capitalise on the better
margin available. We have an impressive portfolio of new and upgraded products in various stages of
development and we have a proven ability to efficiently and economically complete and launch new
products.
A C K N O W L E D G M E N T S
I would like to acknowledge the efforts and loyalty of our staff who have continued to work tirelessly in
what has been another challenging transitional year for the business. We are now starting to see the
benefits of the difficult structural changes that have been made and I congratulate all our staff on their
contribution and support and I look forward to their assistance to take the business into a new growth
phase.
I also wish to acknowledge the significant dedication and contribution from my fellow directors and
senior management team over the past year. Their expertise, clear thinking and industry insight has
contributed to our ability to execute the turnaround in what is still a difficult trading environment.
With a significant foundation shareholder base within 50 kilometres of our Drouin head office, we have
decided to hold this year’s AGM at Drouin. This will provide us with an opportunity to acknowledge their
ongoing support, present and explain our plans for our product portfolio and for them to see first hand
those major products. I encourage shareholders to take full advantage of this opportunity.
Finally, I wish to thank all our shareholders for their ongoing patience and continued support. I can
assure you all that the directors, management and staff are focused on substantially improving the
financial performance of the company. I believe that for the 2015 financial year we have tangible
capacity and opportunities to enable us to succeed in securing the Company’s sustainable growth and
value improvements into the future.
David Ashmore
Chairman of the Board
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CHIEF EXECUTIVE OFFICER’S REVIEW
OF OPERATIONS AND ACTIVITIES
P E R F O R M A N C E D U R I N G 2 0 1 3 - 2 0 1 4
The Company continued its recovery journey in the past financial year and remained focused on
its core business in providing innovative road safety solutions in the Australian market. To this end,
the Company generated annual operating revenues of $16.3 million (FY2013: $24.3 million) and an
operating loss after tax of $0.9 million (FY2013: $1.4 million loss). Whilst this was prima facie not
a satisfactory outcome, the steps taken over the past year to reverse the extreme depth of losses
has delivered positive results, particularly in the last quarter where we yielded a positive EBIT and
Operating profit (before restructuring costs). Whilst operating revenue fell by 33% this was largely
attributed to the progressive wind down of our non-profitable Civil Services offering. Our greater focus
has been on enhancing trading margin, and whilst overall gross profit derived for the period was only
24% down on the previous year, gross margin increased from 33.1% to 37.4% reflecting our continual
focus on obtaining profitable and sustainable sales.
We have maintained an active focus on cost reduction, without compromising our service capabilities,
achieving over $2.8 million (or 31%) savings over the year in personnel and non-personnel costs
through rationalisation of our operations to a more efficient and effective business model. Additional
restructuring costs associated with the exit from our non-profitable Civil Services offering and surplus
lease space have been incurred and provided for at reporting date.
Whilst overall sales volumes were down as a result of continued stagnant activity in the road
construction industry as State and local governments experienced the challenge of reduced Federal
budget allocations, we did experience growth in some of our core products including the Omni-stopTM
impact-absorbing bollards (up 33%), and some traffic calming solutions including speed humps and
wheel-stops. Our Public Lighting portfolio is a star performer and maintained revenue volumes year on
year increasing our market share not only in our traditional Victorian market but increasingly with an
interstate focus.
We have substantively exited the non-profitable Civil Services offering, with just a couple of minor
legacy contracts to finalise. We realised minor gains in the controlled disposal of surplus Civil plant and
equipment during the year and taken the opportunity to utilise the aggregate proceeds of around $0.5
million to further reduce bank debt.
L O O K I N G A H E A D
Our order book at the start of the current financial year is strong, and we have secured another significant
order for our licenced T-LOK concrete temporary safety barriers in Western Australia as well as gained
regulatory approval of this product for use in NSW where the State Government has committed to a
significant increase in road infrastructure spend in the coming years.
We have commenced commercialisation of the new Ironman Hybrid steel and concrete temporary
safety barrier solution by retrofitting our existing Ironman rental barriers and following recent regulatory
approval for use in most Australian states, we will proactively look for opportunities to introduce this
unique product into the work zone environment and increase utilisation.
With our Electronic Traffic Systems, we have a renewed emphasis on customer relationships and
technical support and have recently launched our new Zone Care technical support program for our
VMS customers. The Zone Care Package provides expert technical support and additional hardware
service options, with most issues resolved in a single call, providing our customers with complete
business assurance. The Zone Care package has been well received by our VMS customer base. We
are pleased to once again be leading from the front in being the first in the industry to offer this level of
care.
Product innovation remains a large part of this Company’s ethos and we have a number of new product
initiatives underway in the areas of temporary road safety barriers, electronic traffic systems and flexible
signage.
During the past financial year, Saferoads participated in Intertraffic, Amsterdam – the world’s leading
trade event associated with the road safety and road infrastructure sectors. Some 810 exhibitors from
50 countries presented their latest products and solutions to a global audience of traffic professionals.
This event has introduced us to numerous overseas parties interested in selling our products in their
respective markets and also identified distribution opportunities for their respective products here in
Australia. Although early days we will pursue these opportunities over the coming year.
Additionally, Saferoads has become affiliated with the International Road Federation (IRF), a non-
governmental, non-profit organisation with the mission to encourage and promote development and
maintenance of better, safer and more sustainable roads and road networks, which is promoting the
UN-sponsored initiative - “Decade of Action for Road Safety 2011-2020”. IRF has members in over
90 countries. This contact is broadening our brand and allowing us to showcase our best-of-breed
innovative products globally, and also allowing us to gain knowledge of the needs of other markets.
These overseas relationships should provide alternative market opportunities to compensate for any
lag in the Australian road safety and construction market.
The following pages showcase our year in review.
Finally, I would like to acknowledge my Senior Management Team and our staff, who have worked
tirelessly in another year of change and restructuring, but one in which I believe we have now set the
building blocks for a more lean, sustainable, and profitable business for the future.
Darren Hotchkin
Chief Executive Officer
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THE YEAR IN REVIEW
I N N O V A T I O N
Ironman Hybrid steel and concrete temporary safety
barrier solution
The Ironman Hybrid safety barrier system is the first 100 kph crash-tested,
non-anchored steel and concrete temporary barrier to be available in
Australia.
CEO, Mr. Darren Hotchkin says “this product creates a new strategic market
opportunity for the Company. The Ironman Hybrid is an attractive alternative
to existing temporary safety barrier solutions for mainstream work zones.”
“There are a number of significant advantages to this system over existing
products in the market including its low deflection, durability,
efficiency to transport and its non-invasive (to the road pavement)
deployment.”
The Ironman Hybrid safety barrier system was assessed and
accepted by ASBAP (Austroads Safety Barrier Assessment
Panel) in May 2014.
“The feedback we have received from road
construction industry participants is that this
system will provide more flexible options for the
layout of work zones to ensure the safety of all
road users and road workers.”
Intertraffic, Amsterdam
The traffic-specific show was attended by almost 27,000 visitors from
128 countries over four days in late March 2014. There was also around
800 exhibitors from 43 countries showcasing their products.
Saferoads had a steady stream of visitors to its stand with over 100
potential sales leads and potential customers requesting additional
information for proposals.
S E R V I C E
ETS ZoneCare
care
Saferoads Electronic Traffic Systems (ETS) Team have achieved several
significant milestones over the past 12 months. The ETS team is focused
on product development and sustainability of the Zone Variable Message
Sign (VMS) fleet.
Several key factors have been implemented which have created a renewed
emphasis on customer service, and re-established Saferoads as one of the
top VMS suppliers in the country. From the design of a more modern technical
manual and the introduction of an advanced Technical Support Program, the
ETS Team are providing a clear differentiation in the VMS marketplace.
The ETS Team have successfully launched Saferoads’ unique Technical Support
Program known as “Zone Care”. ZoneCare provides VMS customers with
renewed levels of confidence, reliability, flexibility, satisfaction and assurance.
The key features of ZoneCare include:
• 24 hour, 7 days a week customer care with
direct access to a dedicated Technical Advisor
• Zone Website access
• Unlimited software support & training
ETS customer
feedback has been profoundly
encouraging. To express their gratitude for the service,
Main Roads WA recently made the following statement:
“Main Roads WA has 30 Zone 400 VMS trailers across
various sites in Western Australia. From time to time
when technical support has been required, Saferoads has
provided a prompt and timely response, and we are very
happy with the level of service provided by the Saferoads
ETS team.”
Saferoads also took the opportunity to visit the other stands to identify opportunities for additional product lines and
partnerships that could be of value to the business.
Public lighting
This show is attended by many prominent Australian and New Zealand businesses and Saferoads’ presence at the show
was invaluable to demonstrate that the company is again at the forefront of road traffic and safety solutions.
One of Saferoads’ largest Public Lighting customers, Underground Cable Systems (UCS) has operated in the electrical
infrastructure business for almost 20 years, servicing the residential and industrial subdivision development industry.
Saferoads is it’s key supplier of standard and decorative light poles and lanterns.
According to UCS’s Design Engineer, David Heywood, “the key aspects, from UCS’s perspective, that Saferoads delivers on
and contributes to our success in a very competitive industry are:
• Supplying competitive priced products that consistently
meet the specifications of the various electrical distribution
companies;
• Being prepared to deliver products to site on a nominated
date and time requested by UCS (sometimes at short notice);
and
• Having a “ can do” attitude by all their Team
The above attributes have contributed to UCS
expanding to our current standing as the
major service provider in the public lighting
sector in Victoria.”
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THE YEAR IN REVIEW
S O L U T I O N S - F O C U S S E D
Pre-casting a success in the West
Over the past three years Saferoads has achieved outstanding temporary
barrier sales with the T-LOK precast concrete temporary barrier in Western
Australia. To date, Saferoads has produced 13.25km of T-LOK
barriers and delivered over 2,500 T-LOK Barriers into the Kwinana
and Mitchell Freeway projects and the Perth Gateway project, as well
as various other smaller projects.
Time frames are often critical with the deployment of concrete barriers,
as they are often installed overnight to minimise disruption to traffic.
The logistics surrounding the scheduling of a fleet of trucks to facilitate
continuous supply of barriers to an onsite crane requires the cooperation
of manufacturer, supplier and customer and this has worked exceedingly
well on these projects.
Saferoads continues to lead the way in innovative road safety solutions
meeting the challenges of building new or upgrading existing infrastructure
whilst safely managing traffic flows.
Omni-stopTM Bollards – Roadside Dining
The growth in Alfresco dining has led to a proliferation in roadside cafés and restaurants placing tables and chairs on the
pavement right up to the edge of the roadway. Whilst local councils have outdoor dining policies focussed on ensuring the
safety of outdoor diners, these policies have been continually tested by a growing number of vehicle/pedestrian incidents
and councils are now insisting on devices that will prevent an errant vehicle entering alfresco dining areas.
The Omni StopTM bollard provides protection for roadside diners from an impact by an errant vehicle whilst not restricting
access. It does not impinge on the road space or dramatically alter the streetscape and it is not a danger to the driver of
the vehicle.
The Omni-stopTM bollard system has a unique energy absorbing
cartridge which is encased in a concrete footing below ground.
The carbon steel bollard is placed into the cartridge and with
surface restoration, the Omni-stopTM bollard presents as any
regular bollard. However, when impacted, the bollard deforms
the cartridge below the ground which causes the vehicle to
safely decelerate with no injury to the occupants and the vehicle
is also stopped from entering the area occupied by diners or
pedestrians.
It is ideally suited to any areas where there is an
interchange between vehicles and pedestrians like
bus stops, tram stops, pedestrian crossings and
refuges, high occupancy footpaths, schools and
kindergartens.
has been successfully
Urban designers and engineers have specified and installed the
Omni-stopTM bollards in a wide variety of applications not envisaged
when the product was first developed.
The Omni-stopTM
trialled at school
crossings and is also suitable to protect assets such as signal and
telecommunication boxes. The construction industry has embraced the
Omni-stopTM bollards when working on high-rise urban developments.
They are used to protect workers when loading and unloading trucks
and provide the flexibility of removal when the road lanes need to be
opened for peak traffic flows.
Q U A L I T Y
SnaplocTM guide posts (QLD)
Queensland’s Banana Shire Council secured the Department of Transport and Main Roads
contract for maintaining main roads in the Shire.
The Council chose Saferoads’ SnaplocTM Guide post as part of its roadside maintenance obligations
because it has a better ground socket, is more versatile, and has a great warranty. In addition, the
SnaplocTM had withstood the test of six months of daily vehicle impacts.
Saferoads originally convinced the Council to install one SnaplocTM
guide post in their maintenance yard to prove its durability. The Council
agreed to run over the guide post every day. The SnaplocTM withstood
all that was pitted against it, which impressed council officers. After
numerous demonstrations to their road maintenance crews, culminating
in an impact by a 4.5 tonne roller, the crews were so impressed by the
product’s ease of installation and durability, they now only use SnaplocTM
for all their guide post needs.
The Council could not be happier – having
invested in a great product at a great price
reflecting the quality design.
Brisbane City Council – flexible signage
As part of a continuous improvement project, the Brisbane City Council identified that their signage
team were constantly replacing Keep Left signs on Brisbane metropolitan roads as a result of
damage and vandalism.
After consulting with other councils and various suppliers, several alternative signs and flexible
posts were chosen for field trials.
According to Brisbane City Council, Saferoads was the only supplier who offered to meet with
the project team and conduct a field-based demonstration. The project team were impressed by
Saferoads’ knowledge of the product and the support provided. After several months of testing,
the data from the field trials was analysed and the Saferoads product
proved superior to all the other sign systems tested.
As a result of the project Brisbane City Council
are now installing Saferoads Supa-Flex signs
and posts and the per annum savings for the
ratepayers are substantial.
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DIRECTORS’ REPORT
Your Directors submit their report for the year ended 30 June 2014.
DIRECTORS
David Ashmore
Non-Executive Chairman
Appointed 22 November 2012
(Appointed Chairman 19 August 2013)
Darren Hotchkin
Executive Director (CEO)
Appointed 21 October 2005
David Cleland
Gary Bertuch
Non-Executive Director
Appointed 1 December 2010
Non-Executive Director
Appointed 31 October 2005
Resigned 19 August 2013
DIRECTOR PROFILES
David Ashmore (Age 62) (FCA GAICD F.FIN)
Non-Executive Director
(Appointed Non-Executive Chairman 19 August 2013)
David Ashmore was appointed to the Board on 22 November 2012 and was re-elected at the November
2013 AGM. He was appointed Chairman of the Board on 19 August 2013. He is a member of the
Remuneration Committee (appointed Chairman of this Committee on 19 August 2013) and the Audit
and Risk Committee (as Chairman up to 19 August 2013).
David is a career Chartered Accountant with 40 years of professional public practice experience
focussed on audit, finance, due diligence, risk and governance advisory. David has worked with many
dynamic private and public companies where his experience has assisted them understanding their
underlying financial position, their financial management issues and business growth challenges.
Those challenges typically included the development of sustainable executive management structures
and business value building initiatives. He also has significant experience with the identification and
management of financial and business risks and the development of structured business decision
making protocols.
David has considerable experience in a leadership and a chairman role through his work on numerous
Audit Committee appointments and as a Senior Partner, Board Member and Practice Leader. He is
a Fellow of the Institute Chartered Accountants in Australia, a Graduate member of the Australian
Institute of Company Directors and a Fellow of the Financial Services Institute of Australia.
Directorships of other listed companies during the preceding three years: iSonea Limited
Darren Hotchkin (Age 50)
Executive Director/Chief Executive Officer
Darren Hotchkin was appointed to the Board on 21 October 2005 as Managing Director. On 7 February
2011 he stepped aside as Managing Director but remained on the Board as a Non-Executive Director
and was re-elected at the October 2011 and November 2013 AGM’s. He was appointed acting Chief
Executive Officer on 10 April 2012 and formal Chief Executive Officer on 30 June 2012.
Darren is the founder of Saferoads. He has a background in the automotive industry where he owned
and operated several businesses. In 1992 he founded the company now trading as our wholly-owned
subsidiary, Saferoads Pty Ltd, to commercialise his invention of a rubber guide post, manufactured
from recycled car tyres.
As Chief Executive Officer, Darren’s key contribution to the business is in the strategic development
of the Company’s product range and manufacturing processes as well as in business development.
He continues to be active in Research and Development and in seeking to effectively expand the
Company’s product base through international research of products which have the potential to find
a sustainable place in the Australian market. Darren is also an eagerly sought-after international
expert speaker on road safety barriers, having recently presented at the International Road Federation
conference in Portland, USA.
Darren has not served as a Director of any other listed companies during the preceding three years.
David Cleland (Age 69) (Dip.ME GAICD FIE (retired))
Non-Executive Director
David Cleland was appointed to the Board on 1 December 2010 and was re-elected at the October
2011 AGM. He was appointed acting Chief Executive Officer on 28 November 2011, handing over the
role to Darren Hotchkin on 10 April 2012. He is a member of the Audit and Risk Committee (becoming
Chairman of this Committee on 19 August 2013) and the Remuneration Committee.
David is a mechanical engineer with extensive experience as Chief Executive Officer of companies
manufacturing and distributing industrial products. His career includes manufacturing experience
(including lean manufacturing), brand management, product research and development, outsourcing
and company mergers and acquisitions. He was formerly an inaugural trust member of the Greater
Metropolitan Cemeteries Trust and is a Director of a privately owned company.
David has not served as a Director of any other listed companies during the preceding three years.
Gary Bertuch (Age 63)
Non-Executive Chairman (resigned 19 August 2013)
Gary Bertuch was appointed to the Board on 31 October 2005 and was re-elected at the October
2008 and November 2012 AGM’s. He resigned as Director and Chairman on 19 August 2013. He was
Chairman of the Remuneration Committee up until his resignation from the Board.
He has extensive experience in the project development, capital raising and construction industries.
He was the former Executive Chairman of HydroChile Pty Ltd, a company which develops, builds and
operates hydro-electric power stations in the Republic of Chile. Prior to that, he was a co-founder of
Pacific Hydro Limited where he served as an Executive Director for a number of years, responsible for
business development and capital raisings.
He is also currently a non-executive director of the international project management group, Thinc
Projects, and a non-executive director of HydroChile Holdings.
Gary holds a Bachelor of Engineering with Honours from Monash University and a Graduate Diploma
in Business Administration from Swinburne University.
Gary has not served as a Director of any other listed companies during the preceding three years.
COMPANY SECRETARIES
Elissa Hansen
Company Secretary (appointed 10 October 2013)
Elissa joined Saferoads on 10 October 2013 and is employed by Boardroom Pty Ltd, the company
which manages Saferoads’ share registry. Elissa is an experienced Chartered Secretary with over 15
years’ experience advising management and boards on investor relations, governance, compliance
and other corporate issues.
Kim Clark
Company Secretary (appointed 31 July 2013, resigned 10 October 2013)
Kim joined Saferoads on 31 July 2013 and is a regional Head of Corporate Services for Boardroom
Pty Ltd, the company which manages Saferoads’ share registry. Kim is an experienced professional
whose career has included 21 years in the Banking and Finance industry focussing on Corporate and
Institutional lending, and more recently 6 years as the Company Secretary for an ASX 300 company.
Fleur Guenther
Company Secretary (appointed 18 July 2012; resigned 31 July 2013)
Fleur was Company Secretary of Saferoads from 18 July 2012 to 31 July 2013. She was a Manager
of Corporate Secretarial Services for Boardroom Pty Ltd, the company which manages Saferoads’
share registry, until her resignation from this business on 31 July 2013. Fleur has experience working
in top tier professional services firms, advising international and ASX 300 companies as well as some
of Australia’s fastest growing private companies.
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DIRECTORS’ REPORT
KEY MANAGEMENT PROFILES
Peter Fearns
Chief Financial Officer
Peter joined Saferoads in December 2011. He has over 14 years’ experience managing finance
functions in the information technology, infrastructure and professional services sectors, covering both
public listed and private companies.
He was Group Financial Controller of ASX listed UXC Limited. His most recent appointment was Chief
Financial Officer of a national privately-owned urban planning and property advisory business.
Peter holds a Bachelor of Business (Accounting) and is a CPA.
Hamish Webb
General Manager, Sales and Marketing
Hamish rejoined Saferoads in May 2013 to develop and implement appropriate sales strategies to build
and improve stronger customer relationships for Queensland, New South Wales and Northern Territory.
From 1 July 2014, he has full responsibility for the sales and marketing functions for the business
gauged with developing appropriate strategies to improve sales and margin across the company’s
varied product portfolio.
Hamish has over 20 years’ experience in the construction, manufacturing and contracting industries.
He was previously General Manager – Strategic Alliances & International Business with Ingal Civil
Products and General Manager – Sales & Operations at Saferoads (2006-2011).
Hamish is a Fellow of the Australian Institute of Management (FAIM).
Paul Williams
General Manager, Workzone Rentals
Paul joined Saferoads in July 2010 as the National Rental Manager, starting up the Barrier Rental
portfolio. From January 2012 he served as the National Sales Manager responsible for the sales and
marketing strategies, and National Workzone Solutions Manager focussed on providing customers
with the choice of buying or renting various workzone products provided by the Company.
From 1 July 2014, he returns to the dedicated role of overseeing the company’s Workzone Rentals
portfolio, with a particular focus now on the commercialisation of the new Ironman Hybrid temporary
steel and concrete safety barrier.
Paul has a background in construction, successfully running his own contracting business before
moving into sales and general management positions in the road construction sectors over the past 12
years.
During his time as a Sales Manager at Coates Hire, Paul worked alongside Saferoads developing the
Ironman temporary steel barrier market.
Casey McMaster
Engineering Solutions Manager
Casey joined Saferoads in 2003 as National Tenders and Installations Manager to head up the rapidly
growing guardrail and wire rope safety barrier supply and installation sector of the Company’s business.
After several role changes in the intervening years, and having built up a wealth of knowledge of the
road safety industry, Casey was appointed as National Engineering Manager in May 2011.
Casey’s main focus today is on providing tailored engineering solutions for customers as well as
providing and facilitating technical input to various research and development projects.
Prior to Saferoads, Casey has held a range of Civil Engineering and Civil Design roles in local
government, public utilities and a private consulting business.
Casey holds a Bachelor of Engineering (Civil) from Swinburne University.
INTEREST IN SHARES
As at the date of this report, Directors’ interests in the shares of the Company are:
NAME
David Ashmore
Darren Hotchkin
David Cleland
SHARES
260,000
5,292,775
120,500
DIVIDENDS
No interim or final dividend was paid or declared for the financial year ended 30 June 2014.
No interim or final dividend was declared or paid for the financial year ended 30 June 2013.
PRINCIPAL ACTIVITIES
The principal activity of the Group continued to be the provision of road safety products and solutions
primarily to end users.
Products and services the Company provides includes flexible guide posts; rubber-based traffic calming
products including separation kerbing and wheel stops; variable messaging sign boards; decorative
and standard street and freeway light poles; permanent and temporary crash cushions and safety
barriers; and guardrail and wire rope safety barriers.
In all its activities, the Company remains focused on products and materials that protect the safety of
all road users – motorists, road construction workers and pedestrians.
REVIEW AND RESULTS OF OPERATIONS
A review of the operations and activities of the Company during the financial period and the results
of these operations is set out in the Chairman’s Overview and Chief Executive Officer’s Review of
Operations and Activities.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
During the 2013-14 year, there has been no significant change in the Company’s state of affairs other
than as disclosed in this financial report.
SIGNIFICANT EVENTS AFTER REPORTING DATE
There has been no matter or circumstance, which has arisen since 30 June 2014 that has significantly
affected or may significantly affect the operations of the consolidated entity or the results of those
operations or the state of affairs of the consolidated entity.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Likely developments in the operations of the entity and the expected results of these operations have
been set out in the Chairman’s Overview and the Chief Executive Officer’s Review of Operations and
Activities.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the year, Directors’ and Officers’ insurance premiums were paid for any person who was a
Director and/or Officer of the Company.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Company’s operations are not regulated by any significant environmental regulations under a law
of the Commonwealth or of a state or territory. In respect of its own activities, the Company is not a
major emitter of green house gases and falls well below the reporting thresholds set by the National
Greenhouse and Energy Reporting Act 2007.
OPTIONS
At the date of this report there were no un-issued shares of the company under option.
14
15
DIRECTORS’ REPORT
REMUNERATION REPORT
The Company’s remuneration policy is to ensure that the level of remuneration paid to key personnel is
market competitive and will help to attract and retain the skills and expertise required. To determine what
is a competitive level of remuneration the Company refers to the Australian Institute of Management
Salary Survey and to information provided by other professional organisations.
REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
NON-EXECUTIVE DIRECTORS
Total remuneration for non-executive Directors for 2013-14 was $149,999. Their remuneration packages
comprised only fixed Directors’ fees plus statutory superannuation (where applicable) and were within
the limits set out in the Company’s constitution. Currently this limit is set at $350,000 per annum, and
can only be changed at a general meeting.
EXECUTIVE DIRECTOR
The remuneration package for Mr Darren Hotchkin, Chief Executive Officer, comprised a total full-time
equivalent salary package of $250,000, inclusive of superannuation, and also a Short Term Incentive
(“STI”). Mr Hotchkin’s actual working hours varied during the year which resulted in his base salary
being adjusted on a prorate basis.
The STI was structured as a cash bonus and was a mechanism upon the Company achieving an above
budget Profit before Tax (“PBT”) for FY2014. Under the STI, if the PBT exceeded $200,000 but was
less than $640,000, then the cash bonus would be equal to one third of the difference between the
Actual PBT and Budget PBT multiplied by 70%. If the PBT exceeded $640,000, then the cash bonus
would be equal to one third of the difference between the Actual PBT and Budget PBT multiplied by
35%.
As the Company did not achieve a PBT above Budget for FY2014, no bonus incentive was paid or
payable.
KEY MANAGEMENT PERSONNEL
Key Management Personnel (“KMP”) is defined by AASB 124 - Related Party Disclosures. Only
Directors and Executive Management that have the authority and responsibility for planning, directing
and controlling the activities of Saferoads, directly or indirectly and are responsible for the entity’s
governance are classified as KMP.
PERFORMANCE-BASED REMUNERATION
Performance-based remuneration (bonus incentives) for Key management personnel (apart from Mr
Hotchkin) for the year ended 30 June 2014 was based on the Company performance (PBT) exceeding
budget. As the Company did not exceed budgeted PBT for FY2014, there was no performance-based
remuneration (bonus incentives) paid or payable to key management personnel for the year.
A summary of Company performance for the past five financial years is below.
EPS (cents)
2014
(3.6)
2013
(5.3)
2012
(35.5)
2011
2.9
2010
7.8
Net profit/(loss) ($)
(930,978)
(1,388,899)
(9,219,362)
747,672
2,035,154
Share price ($)
$0.13
$0.06
$0.09
$0.22
$0.44
EMPLOYMENT CONTRACTS
Executive employment agreements have been entered into with the Chief Executive Officer, the Chief
Financial Officer, and other Key Management Personnel as disclosed. These agreements are of a
standard form containing provisions of confidentiality and restraint of trade usually required in such
agreements. Payments to be made on termination of an executive employment contract have been
clearly detailed and are limited to payout of accrued leave entitlements and up to three months’ salary
as redundancy or termination pay.
REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
30 June 2014
Short Term
Salaries
& Fees
Fringe
Benefits
Cash
Bonus
Termination
Payment
Super-
annuation
$
$
$
$
$
Long
Term
Long
Service
Leave
$
Total
Perfor-
mance
Related
Share
Based
Payment
Options
$
$
%
Non
Executive
Directors
D Ashmore
D Cleland
G Bertuch *
Executive
Director
D Hotchkin
Executives
P Fearns
P Williams
C McMaster
H Webb
P Rogers *
70,175
60,000
12,204
188,576
170,000
153,062
144,254
170,000
85,000
-
-
-
-
-
16,938
25,746
-
-
Total
1,053,271
42,684
* departed during the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
41,678
41,678
6,491
-
1,129
-
-
-
14,218
3,848
15,725
15,725
15,604
15,725
9,274
2,833
2,833
2,833
2,833
-
-
-
-
-
-
-
-
-
-
76,666
60,000
13,333
206,642
188,558
188,558
188,437
188,558
135,952
-
-
-
-
-
-
-
-
-
93,891 15,180
- 1,246,704
16
17
DIRECTORS’ REPORT
REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
30 June 2013
Short Term
Salaries
& Fees
Fringe
Benefits
Cash
Bonus
Termination
Payment
Super-
annuation
$
$
$
$
$
Long
Term
Long
Service
Leave
$
Total
Perfor-
mance
Related
Share
Based
Payment
Options
$
$
%
Non
Executive
Directors
G Bertuch
D Cleland
D Ashmore^
D Smith *
Executive
Director
D Hotchkin
Executives
P Fearns
P Williams
C McMaster
H Webb^
P Rogers^
71,546
55,000
33,485
19,174
233,530
170,000
152,660
144,910
27,243
27,243
-
-
-
-
-
-
17,340
25,414
-
-
934,791
Total
* departed during the year
^ commenced during the year
42,754
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,439
-
3,015
1,726
-
-
-
-
16,470
3,871
15,300
15,300
14,976
2,452
2,452
2,833
2,833
2,833
427
427
-
-
-
-
-
-
-
-
-
-
77,985
55,000
36,500
20,900
253,871
188,133
188,133
188,133
30,122
30,122
-
-
-
-
-
-
-
-
-
-
78,130 13,224
- 1,068,899
SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL
Shares held in Saferoads Holdings Limited:
Balance at
1 July 2013
20,000
5,192,775
-
69,500
-
-
-
-
-
5,282,275
Acquired
Sold
Other*
Balance at
30 June 2014
-
100,000
260,000
51,000
10,000
-
-
118,928
-
539,928
-
-
-
-
-
-
-
-
-
-
(20,000)
-
-
-
-
-
-
-
-
-
5,292,775
260,000
120,500
10,000
-
-
118,928
-
(20,000)
5,802,203
Directors
G Bertuch *
D Hotchkin
D Ashmore
D Cleland
Executives
P Fearns
P Williams
C McMaster
H Webb
P Rogers
Total
18
Acquired
Sold
Other*
Balance at
30 June 2013
Directors
G Bertuch
D Hotchkin
D Smith *
D Ashmore
D Cleland
Executives
P Fearns
P Williams
C McMaster
H Webb
P Rogers
Balance at
1 July 2012
20,000
5,192,775
1,227,580
-
19,500
-
-
-
-
-
-
-
-
-
50,000
-
-
-
-
-
Total
* up to resignation date
6,459,855
50,000
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,227,580)
-
-
20,000
5,192,775
-
-
69,500
-
-
-
-
-
-
-
-
-
-
(1,227,580)
5,282,275
All equity transactions with Key Management Personnel have been entered into under terms and
conditions no more favourable than those the entity would have adopted if dealing at arm’s length.
DIRECTORS’ MEETINGS
The number of meetings of Directors (including meetings of committees of Directors) held during the
year, and the numbers of meeting attended by each Director, were as follows:
Names
Directors
Audit & Risk
Remuneration / Nomination
Eligible
Attended
Eligible
Attended
Eligible
Attended
Mr D Ashmore
Mr D Hotchkin
Mr D Cleland
Mr G Bertuch
14
14
14
1
14
14
14
1
5
-
5
-
5
-
5
-
1
-
1
-
1
-
1
-
19
DIRECTORS’ REPORT
DIVERSITY REPORT
Saferoads has developed and set in place a diversity policy that will influence all personnel recruitment.
A copy of this policy is located on the Company’s web site (www.saferoads.com.au) under the Investor
Relations icon.
In respect of gender diversity the Company’s goal is to maintain the current level of diversity across the
Company and increase this level over time as the business expands.
The Company is an equal opportunity employer recruiting the best available staff from as wide a pool
as possible.
The table below shows the gender balance within the Company in September 2013 and the date of
this report.
Board of Directors
Senior management*
Non-senior management
Total Company wide
September 2013
August 2014
Male (%)
Female (%)
Male (%)
Female (%)
100.0%
83.3%
84.0%
84.8%
0.0%
16.7%
16.0%
15.2%
100.0%
80.0%
91.7%
90.9%
0.0%
20.0%
8.3%
9.1%
* Senior Management is defined as Key Management Personnel and the Company Secretary
AUDITOR’S INDEPENDENCE DECLARATION
The attached independence declaration has been obtained from the Company’s auditors, Grant
Thornton.
Signed in accordance with a resolution of Directors
David Ashmore
Director
Drouin
27 August, 2014
20
AUDITOR’S INDEPENDENCE DECLARATION
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
The Rialto, Level 30
GPO Box 4736
525 Collins St
Melbourne Victoria 3001
Melbourne Victoria 3000
T +61 3 8320 2222
Correspondence to:
F +61 3 8320 2200
GPO Box 4736
E info.vic@au.gt.com
Melbourne Victoria 3001
W www.grantthornton.com.au
T +61 3 8320 2222
F +61 3 8320 2200
Auditor’s Independence Declaration
E info.vic@au.gt.com
Report on the remuneration report
W www.grantthornton.com.au
To the Directors of Saferoads Holdings Limited
We have audited the remuneration report included in the directors’ report for the year
ended 30 June 2014. The Directors of the Company are responsible for the preparation and
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
Auditor’s Independence Declaration
presentation of the remuneration report in accordance with section 300A of the
auditor for the audit of Saferoads Holdings Limited for the year ended 30 June 2014, I
To the Directors of Saferoads Holdings Limited
Corporations Act 2001. Our responsibility is to express an opinion on the remuneration
declare that, to the best of my knowledge and belief, there have been:
report, based on our audit conducted in accordance with Australian Auditing Standards.
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
a
no contraventions of the auditor independence requirements of the Corporations Act
auditor for the audit of Saferoads Holdings Limited for the year ended 30 June 2014, I
2001 in relation to the audit; and
Auditor’s opinion on the remuneration report
declare that, to the best of my knowledge and belief, there have been:
In our opinion, the remuneration report of Saferoads Holdings Limited for the year ended
b
no contraventions of any applicable code of professional conduct in relation to the
a
30 June 2014, complies with section 300A of the Corporations Act 2001.
no contraventions of the auditor independence requirements of the Corporations Act
audit.
2001 in relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the
audit.
GRANT THORNTON AUDIT PTY LTD
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
Chartered Accountants
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
M. A. Cunningham
M. A. Cunningham
Partner - Audit & Assurance
Partner - Audit & Assurance
Melbourne, 27 August 2014
M. A. Cunningham
Melbourne, 27 August 2014
Partner - Audit & Assurance
Grant Thornton Audit Pty Ltd ACN 130 913 594
Melbourne, 27 August 2014
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
Grant Thornton Audit Pty Ltd ACN 130 913 594
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
scheme applies.
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.
21
43
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Saferoads Holdings Limited is responsible for the corporate governance
of the Saferoads group. The Board has considered the ASX Corporate Governance Principles and
Recommendations (“ASX Governance Principles”) and reports on compliance with these Principles.
This Corporate Governance Statement is based on the policies and practices in place and endorsed by
the Board. The Board’s objective is to ensure investor confidence in the Company and its operations
given its size, stage of development and complexity.
The Company has a Corporate Governance Charter, a copy of which is located on the Company’s
website (www.saferoads.com.au) under the Investor Relations icon.
The Board advises that it complies with the ASX Corporate Governance Principles set out below where
stated and provides explanations in accordance with “if not, why not” reporting practices.
ROLES OF BOARD AND MANAGEMENT
The Company has established the functions reserved for the Board and those delegated to Management
which is detailed in the Company’s Corporate Governance Charter and published on the Company’s
website.
The primary responsibilities of the Board are to:
determine the strategic direction of the Company,
set financial targets,
monitor the implementation and execution of strategy and performance against financial targets, and
appoint and oversee the performance of executive management.
The Board has delegated day-to-day management responsibility to the Chief Executive Officer and his
management team, reserving to itself the functions of strategic oversight and managerial guidance.
Senior management responsibilities have been clearly set out in letters of appointment, position
descriptions and employment contracts.
In essence, it is the responsibility of Management to manage the day to day operation of the business,
ensuring that key performance indicators and financial measures are met, whilst also managing the
Company in accordance with the strategies, plans and policies approved by the Board. The Board
has also delegated to Management the responsibility for identifying areas of organic and acquisition
growth, and developing appropriate business cases for board review and strategic decision making.
The Board accepts its responsibility for ensuring the management team performs to a consistently high
standard. This is achieved through monthly board meetings where monthly performance reports are
received and reviewed, and through regular briefings from Senior Management on progress in strategic
developments.
DIRECTOR AND SENIOR EXECUTIVE APPOINTMENTS
The Company will undertake appropriate checks before appointing a person, or putting forward to
shareholders a candidate for election as a director. Further, the Company is committed to providing
shareholders with all material information in its possession relevant to a decision on whether or not to
elect or re-elect a director.
The Company ensures there is a written agreement in place for each director and senior executive of
the Company which sets out the terms of their appointment including their role and responsibilities and
the Company’s expectations of them.
The Company Secretary, Ms Hansen, is accountable directly to the board through the Chairman, Mr
Ashmore.
The Company has a program for inducting new directors and provides appropriate professional
development opportunities for directors to develop and maintain the skill and knowledge needed to
perform their role as directors effectively.
BOARD STRUCTURE
The Company acknowledges the importance of having independent directors on its board and is
committed to having a board whose members have the capacity to act independently, together with
having the composite skills to optimise the financial and operational performance of the Saferoads
group. As at the end of the 2014 Financial Year, the Board comprised two independent directors and
one non-independent director.
None of the Directors deemed to be independent has any business or other relationship with the
Company which could materially interfere with – or which could reasonably be perceived to materially
interfere with – the independent exercise of their judgement.
The skills, experience and expertise of each of the directors are included in the Directors’ Report. It is
noted that all directors have served or are serving on other Boards.
The Chairman of the Board, Mr D Ashmore, is an independent director. Mr Ashmore has advised the
Board that other positions he holds do not hinder his effective performance in the role of Chairman or
pose any conflict of interest. The Chief Executive Officer is Mr D Hotchkin and there is clear delineation
between their respective duties.
BOARD AND SENIOR EXECUTIVE PERFORMANCE
The Company has in place a Board Evaluation and Performance Review Self-Administered
Questionnaire which is broadly aligned with the ASX Corporate Governance Principles and provides
for additional comment from each of the directors. The results of the questionnaire are consolidated,
and then discussed by the Board. The evaluation process for the 2014 year is currently in progress.
The Chief Executive Officer, Chief Financial Officer, General Manager - Sales and Marketing, General
Manager - Workzone Rentals, and Engineering Solutions Manager are performance-evaluated by
the Board on an annual basis against key performance indicators (KPIs) clearly stated in position
descriptions and as updated annually.
The KPIs are primarily growth and earnings related but also address non-financial measures including
quality, safety, environmental and human resource issues.
ACCESS TO EXTERNAL RESOURCES
The Directors have access to external resources including independent professional advice, as required
to fully discharge their obligations as directors of the Company as detailed in the Board Charter,
published on the Company’s website. The use of this resource is co-ordinated through the Chairman
of the Board.
NOMINATION COMMITTEE
The Board has established a combined Remuneration and Nomination Committee which carries out
the duties of both functions under the one Committee. The Remuneration and Nomination Committee
Charter is available on the Company’s website.
The Board reviews its composition periodically and at least annually to ensure that it has the appropriate
mix of expertise and experience. When a vacancy exists, for whatever reasons, or where it is considered
that the Board would benefit from the services of a new Director with particular skills, the Board will
select appropriate candidates with relevant qualifications, skills and experience. External advisors may
be used to assist in such a process. Following the appropriate checks, the Board may then appoint the
most suitable candidate who must stand for election at the next annual general meeting of shareholders.
BOARD SKILLS MATRIX
The Company is in the process of preparing a skills matrix setting out the mix of skills and diversity that
the board currently has and what the board would like to achieve. Further information on each director
including their independence, education, experience and tenure is available in the Directors Report.
22
23
CORPORATE GOVERNANCE STATEMENT
CODE OF CONDUCT
The Company has established a Code of Conduct for directors as a guide to be followed in performing
their duties, with a view to enabling them to achieve the highest possible standards in the discharge of
their obligations. The Code is contained in the Corporate Governance Charter, section 4.
The Company has entered into employment agreements with the Chief Financial Officer, General
Manager – Sales and Marketing, General Manager - Workzone Rentals, and Engineering Solutions
Manager and with other key management personnel. These agreements address issues of ethical and
responsible decision-making in the performance of their respective roles in the Company.
DIVERSITY AND EQUALITY POLICY
The Company has established a Diversity and Equality Policy which enshrines diversity and equality of
employment throughout all levels of the Company.
In respect to gender diversity the Company notes that it is a small to medium sized enterprise that
operates largely in a manufacturing/civil installations environment. The Company recognises that
a talented and diverse workforce is a key element in ongoing growth and business success and
endeavours to employ the best available personnel to manage and service the Company.
A copy of the Company’s Diversity and Equality Policy is located on the Company’s website (www.
saferoads.com.au) under the Investor Relations icon.
Having regard to the Company’s size and operations and recent executive recruitments, the objectives
of the Board are to maintain the current levels of gender diversity across the Company. As the
opportunity to recruit across the Company arises, new appointments will be made in accordance with
the Company’s Diversity and Equality Policy. Performance against this objective is contained in the
Directors’ Report.
AUDIT AND RISK COMMITTEE
The Board has established an Audit and Risk Committee.
Grant Thornton are the appointed independent external auditor. The independent auditor reports
directly to the Audit and Risk Committee, and is also required to attend the annual general meeting of
the Company to answer any shareholder questions about the audit and the preparation and content of
the audit report.
The Audit and Risk Committee comprises Mr D Cleland (non-executive Director and Chairman of the
committee from 19 August 2013) and Mr D Ashmore (non-executive Chairman). Prior to 19 August
2013, the Committee comprised of Mr D Ashmore (Chairman of the Committee up to his appointment
as Chairman of the Board), Mr D Cleland, and Mr G Bertuch up to his resignation from the Board.
Given the size of the Company and the Board, the structure of the Committee is such that all non-
executive Board members are involved.
This structure is considered appropriate at this time given the size and structure of the Board.
It is noted that the Committee structure is not in compliance with the Committee’s own charter which
requires that the Committee comprise three Directors, the Company Secretary and the Managing Director
as an invitee. The current structure of the Committee provides for only two directors rather than three.
The Audit and Risk Committee’s charter provides that the purpose of the Committee is to independently
verify and safeguard the integrity of the company’s financial reporting and to oversee the independence
of the external auditors.
Responsibilities include:
- monitoring the establishment of an appropriate internal control framework
- monitoring corporate risk assessment and compliance with internal controls
- overseeing business continuity planning and risk mitigation arrangements
reviewing reports on any material defalcations, frauds and thefts involving the Company
-
- monitoring compliance with relevant legislative and regulatory requirements (including continuous
-
-
-
-
-
disclosure obligations) and declarations by the Secretary in relation to those requirements
reviewing the nomination, performance and independence of the external auditors
liaising with the external auditors and ensuring that the annual audit is conducted in an effective
manner that is consistent with committee members’ information and knowledge and is adequate
for Shareholder needs
reviewing management processes supporting external reporting
reviewing financial statements and other financial information distributed externally; and
reviewing external audit reports to ensure that, where any major deficiencies or breakdowns in
controls or procedures have been identified, ensure appropriate and prompt remedial action is
taken by management.
The Audit and Risk Committee’s charter is contained within the Company’s Corporate Governance
Charter (Section 5), a copy of which is located on the Company’s website (www.saferoads.com.au)
under the Investor Relations icon.
Before approving Financial Statements, the Board ensures it receives a written declaration from the Chief
Executive Officer and the Chief Financial Officer in accordance with section 295A of the Corporations
Act stating that, in their opinion, the financial records of the entity have been properly maintained and
that the financial statements comply with the appropriate accounting standards and give a true and fair
view of the financial position and performance of the entity and that the opinion has been formed on the
basis of a sound system of risk management and internal control which is operating effectively.
CONTINUOUS DISCLOSURE POLICY
The Board is aware of its obligations to make timely and balanced disclosures both to the ASX and to
the financial market in general. Continuous disclosure is a standing item on the agenda for each Board
meeting. During the course of 2013-14 the Board made several announcements as material issues arose.
The Company has a written Continuous Disclosure Policy designed to ensure compliance with listing
rules. The policy identifies the type of information that should be disclosed, the decision making process
concerning the disclosure obligation, the roles and responsibilities of directors and senior management
in the disclosure context, and identification of the personnel authorised to make disclosure to the ASX
and to discuss corporate issues with analysts, the media, shareholders and the general public.
A copy of the Company’s Continuous Disclosure Policy is located on the Company’s web site (www.
saferoads.com.au) under the Investor Relations icon.
SHAREHOLDER COMMUNICATION POLICY
The Company’s approach to communications with shareholders in contained in Section 2.15 of the
Company’s Corporate Governance Charter. The Company aims to ensure that shareholders are kept
informed of all major developments affecting the Company. This is achieved through compliance
with the ASX continuous disclosure rules and through providing links from the Company’s website to
announcements made to the market via the ASX.
The Board encourages full attendance at and participation in the annual general meeting where
presentations of the Company’s current performance and future growth prospects are made. If
shareholders are unable to attend in person, they are encouraged to appoint a proxy to exercise their
voting rights on their behalf.
A copy of the Company’s Corporate Governance Charter is located on the Company’s website (www.
saferoads.com.au) under the Investor Relations icon.
24
25
CORPORATE GOVERNANCE STATEMENT
RISK
The Company’s Audit and Risk Committee focuses on both audit and risk. The Committee is responsible
for ensuring that adverse risks are identified and appropriate actions put in place to mitigate those risks.
The Company has a Risk Management Policy, a copy of which is located on the Company’s web site
(www.saferoads.com.au) under the Investor Relations icon.
A register of material business risks has been established, risks have been analysed and evaluated, risk
management processes and controls have been put in place and reporting schedules developed. The
Company’s risk management framework is reviewed at least annually to satisfy itself that it continues
to be sound. Such a review was undertaken in 2014.
The Company is in the process of establishing a separate internal audit function and risks are continually
reviewed and evaluated to ensure they are effectively managed. Senior Management has reported to
the Board that it considers that the management of the Company’s material business risks has been
effective. Further, the Company was re-accredited with ISO 9001, 14001 and 18001 this year which
included the review of processes, policies and risks associated with quality assurance, environment
and safety.
REMUNERATION COMMITTEE
The Board is committed to ensuring that appropriate remuneration practices are established and
followed within the Company, and that they are aligned with its Corporate Strategy. For this reason the
Company has established a Remuneration and Nomination Committee.
The Committee’s purpose is to advise on remuneration and issues relevant to remuneration policies
and practices for Senior Management. Responsibilities include:
- Reviewing and evaluating market practices and trends in relation to remuneration relevant to
the Company;
- Reviewing and making recommendations to the Board in relation to the Company’s remuneration
policies and practices for Senior Management; and
- Preparing for the Board any report that may be required under applicable legal or regulatory
requirements in relation to remuneration matters.
- Meetings and attendance are reported in the Directors’ Report.
The Remuneration and Nomination Committee is comprised of Mr D Ashmore (non-executive Director
and Chairman of the committee) and Mr D Cleland. Mr G Bertuch was chairman of the committee up
to his resignation from the Board on 19 August 2013.
Detailed disclosure of the remuneration of non-executive Directors, executive Directors and Senior
Management is made in the remuneration report forming part of the Directors’ Report.
The remuneration of the non-executive directors comprises only directors’ fees and statutory
superannuation. They have no other entitlement. The remuneration of the senior managers comprises
a base salary, statutory superannuation and the opportunity to receive a performance bonus based on
the company exceeding budget Profit Before Tax (”PBT”) achieved in the financial year.
There is no scheme for retirement benefits for non-executive directors, other than for statutory
superannuation for non-executive directors.
The Company does not currently have any active equity-based remuneration schemes.
A copy of the Remuneration Committee Charter is included in the Corporate Governance Charter,
section 6 which is located on the Company’s website (www.saferoads.com.au) under the Investor
Relations icon.
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2014
Notes CONSOLIDATED
Revenue
Cost of direct materials and labour
Movement in inventories
Gross profit
Other income
Employee benefits
Depreciation and amortisation
Finance costs
Motor vehicle costs
Occupancy costs
Restructuring costs
Other expenses
Profit/(loss) before income tax
Income tax benefit/(expense)
Net profit/(loss) for the period
Net profit/(loss) attributable to members of the parent
Other comprehensive income
Items that may be classified subsequently to profit or loss
Exchange differences on translating foreign controlled entity
Total comprehensive income for the period
Total comprehensive income attributable to members of
the parent
Earnings per share
- Basic for profit/(loss) for the full year
- Diluted for profit/(loss) for the full year
Dividend paid per share (cents)
The accompanying notes form part of these financial statements
2014
$
2013
$
16,273,590
(9,011,030)
(1,180,478)
24,324,510
(13,862,207)
(2,413,126)
6,082,082
8,049,177
95,676
(3,716,471)
(471,106)
(533,943)
(440,140)
(426,456)
(210,283)
(1,662,284)
778,507
(5,463,130)
(645,737)
(617,266)
(737,357)
(861,561)
(394,859)
(2,024,853)
(1,282,925)
(1,917,079)
351,947
528,180
(930,978)
(1,388,899)
(930,978)
(1,388,899)
8,689
15,036
(922,289)
(1,373,863)
(922,289)
(1,373,863)
Cents
(3.6)
(3.6)
-
Cents
(5.3)
(5.3)
-
4
4
4
5
6
6
7
26
27
Consolidated Statement of Financial Position
AS AT 30 JUNE 2014
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2014
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Assets classified as held for sale
Total Current Assets
Non-current Assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Unearned income
Interest-bearing loans and borrowings
Provisions
Total Current Liabilities
Non-current Liabilities
Interest-bearing loans and borrowings
Provisions
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained earnings
TOTAL EQUITY
Notes CONSOLIDATED
2014
$
2013
$
CONSOLIDATED
Contributed
Equity
$
Reserves
$
Retained
Earnings
$
Total Equity
$
9
10
24
11
12
5
13
14
15
14
15
16
16
16
1,354,945
2,531,262
2,873,782
378,563
7,138,552
2,196,578
9,335,130
1,317,730
708,390
1,233,586
3,259,706
2,240,533
3,435,043
4,054,260
229,840
9,959,676
85,567
10,045,243
4,291,833
475,178
881,639
5,648,650
At 1 July 2012
Adjustment on correction of error
Restated total equity at 1 July 2012
Net profit/(loss) for the period
Other comprehensive income for the period
4,130,708
-
4,130,708
-
-
(79,603)
-
(79,603)
-
15,036
4,135,745
(289,733)
3,846,012
(1,388,899)
-
8,186,850
(289,733)
7,897,117
(1,388,899)
15,036
At 30 June 2013
4,130,708
(64,567)
2,457,113
6,523,254
At 1 July 2013
Net profit/(loss) for the period
Other comprehensive income for the period
4,130,708
-
-
(64,567)
-
8,689
2,457,113
(930,978)
-
6,523,254
(930,978)
8,689
At 30 June 2014
4,130,708
(55,878)
1,526,135
5,600,965
12,594,836
15,693,893
The accompanying notes form part of these financial statements
1,316,412
2,538,491
151,770
533,245
415,077
223,349
597,715
603,996
2,416,504
3,963,551
4,542,238
35,129
4,577,367
6,993,871
5,175,095
31,993
5,207,088
9,170,639
5,600,965
6,523,254
4,130,708
(55,878)
1,526,135
5,600,965
4,130,708
(64,567)
2,457,113
6,523,254
The accompanying notes form part of these financial statements
28
29
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2014
Notes CONSOLIDATED
2014
$
2013
$
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income tax refund/(paid)
Net cash flows from operating activities
8
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Product development costs
Net cash flows from investing activities
Cash flows from financing activities
Repayment of borrowings
Net cash flows from financing activities
18,906,052
(18,720,974)
185,078
23,786
(537,663)
-
(328,799)
30,532,973
(27,623,434)
2,909,539
24,674
(617,180)
58,835
2,375,868
538,708
(47,948)
(296,908)
193,852
2,666,122
(489,403)
(12,898)
2,163,821
(751,866)
(751,866)
(2,981,967)
(2,981,967)
Net increase/(decrease) in cash and cash equivalents
(886,813)
1,557,722
Cash and cash equivalents at beginning of period
Effects of exchange rate changes on cash
2,240,533
1,225
681,944
867
Cash and cash equivalents at end of period
8
1,354,945
2,240,533
The accompanying notes form part of these financial statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2014
1 CORPORATE INFORMATION
Saferoads Holdings Limited is a company limited by shares incorporated in Australia whose shares are publicly traded
on the Australian Stock Exchange (ASX).
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
The financial report is a general purpose financial report which is prepared in accordance with Australian Accounting
Standards, Australian Accounting Interpretations of the authoritative pronouncements of the Australian Accounting Standards
Board and the Corporations Act 2001. The financial report has also been prepared on a historical cost basis.
Saferoads Holdings Limited is a for-profit entity for the purposes of preparing the financial statements.
(b) Statement of compliance
The financial report has been prepared in accordance with the requirements of the Corporations Act 2001, Australian
Accounting Standards and other authoritive pronouncements of the Australian Accounting Standards Board (AASB).
Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
New and revised standards that are effective for these financial statements
A number of new and revised standards are effective for annual reporting periods beginning on or after 1 July 2013.
Information on these new standards are presented below.
AASB10 - Consolidated Financial Statements supercedes AASB127 Consolidated and Separate Financial Statements, and
AASB Interpretation 112 Consolidation – Special Purpose Entities. AASB10 revises the definition of control and provides
extensive new guidance on its application. These new requirements have the potential to affect which of the Group’s investees
are considered to be subsidiaries and therefore to change the scope of consolidation. The requirements of consolidation
procedures, accounting for changes in non-controlling interests and accounting for loss of control of a subsidiary are
unchanged. Management has reviewed its control assessments in accordance with AASB10 and has concluded that there
is no effect on the classification (as subsidiaries or otherwise) of any of the Group’s investees held during the period or
comparative periods covered by these financial statements.
AASB12 - Disclosure of Interests in Other Entities, integrates and makes consistent the disclosure requirements for various
types of investments, including unconsolidated structured entities. There is no impact on these financial statements in
adopting this standard.
AASB13 - Fair Value Measurement, clarifies the definition of fair value and provides related guidance and enhanced
disclosures about fair value measurements. It does not affect which items are required to be fair - valued. The scope of
AASB 13 is broad and it applies for both financial and non-financial items for which other Australian Accounting Standards
require or permit fair value measurements or disclosures about fair value measurements, except in certain circumstances.
AASB13 applies prospectively for annual periods beginning on or after 1 January 2013. Its disclosure requirements need
not be applied to comparative information in the first year of application.
AASB2011-4 - Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel
Disclosure Requirements, makes amendments to Australian Accounting Standard AASB 124 Related Party Disclosures.
These amendments arise from a decision of the AASB to remove the individual key management personnel (KMP)
disclosures from AASB 124 on the basis they are not part of International Financial Reporting Standards (IFRSs), which
include requirements to disclose aggregate (rather than individual) amounts of KMP compensation and are considered by
the AASB to be more in the nature of governance disclosures that are better dealt with as part of the Corporations Act 2001.
AASB119 - Employee Benefits, has been amended, where employee benefits expected to be settled wholly (as opposed
to due to be settled under the superceded version of AASB 119) within 12 months after the end of the reporting period are
classified as short-term benefits, and are therefore not discounted when calculating leave liabilities.
30
31
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2014
Accounting standards issued but not yet effective and not been adopted early by the Group.
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2014
reporting periods and have not been early adopted by the group. The group’s assessment of the impact of these new
standards and interpretations is set out below.
(i) AASB 9 Financial Instruments, AASB 2009 -11 Amendments to Australian Accounting Standards arising from AASB 9,
AASB 2010 - 7 Amendments to Australian Accounting Standards arising from AASB 9 (December2010) and AASB 2012
- 6 Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and Transition Disclosures
(effective from 1 January 2015)
AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and
financial liabilities. The standard is not applicable until 1 January 2015 but is available for early adoption. When adopted,
the standard will affect in particular the accounting for available-for-sale financial assets, since AASB 9 only permits
the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that
are not held for trading. Fair value gains and losses on available-for-sale debt investments, for example, will therefore
have to be recognised directly in profit or loss. There will be no impact on the group’s accounting for financial liabilities,
as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit
or loss and the group does not have any such liabilities. The derecognition rules have been transferred from AASB
139 Financial Instruments: Recognition and Measurement and have not been changed. The group has not yet decided
when to adopt AASB 9.
The financial statements were authorised for issue by the Directors on 27 August 2014. The Directors have the power to
amend and reissue the financial statements.
(c) Basis of consolidation
The consolidated financial statements comprise the financial statements of the legal parent entity, Saferoads Holdings
Limited and its subsidiaries (‘the Group’). The separate financial statements of the parent entity have not been presented
within this financial report as permitted by the Corporations Act 2001.
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent
accounting policies.
Adjustments are made to bring into line any dissimilar accounting policies that may exist.
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from
the date on which control is transferred out of the Group.
Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the
reporting period during which Saferoads Holdings Limited has control.
(d) Foreign currency translation
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment
in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent
entity’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the year end exchange rate. Non monetary items measured
at historical cost continue to be carried at the exchange rate at the date of the transaction. Non monetary items measured
at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the statement of profit or loss and other
comprehensive income, except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of monetary items are recognised directly in equity to the extent that the
gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the statement of profit or loss
and other comprehensive income.
Group companies
The financial results and position of foreign operations whose functional currency is different from the Group’s presentation
currency are translated as follows:
- assets and liabilities are translated at year end exchange rates prevailing at that reporting date;
- income and expenses are translated at average exchange rates for the period; and
- retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on the translation of foreign operations are transferred directly to the Group’s foreign currency
translation reserve in the statement of financial position. These differences are recognised in the statement of profit or loss
and other comprehensive income in the period in which the operation is disposed.
(e) Property, plant and equipment
Property, plant and equipment are stated at cost less any accumulated depreciation and any impairment in value.
Depreciation is calculated on a diminishing value basis over the estimated useful life of the asset as follows:
Plant and equipment - 20% to 40%
(f) Borrowing costs
Borrowing costs are recognised as an expense when incurred.
(g) Impairment of non-financial assets other than goodwill
The Group assesses whether there is any indication that an asset may be impaired when events or changes in circumstances
indicate the carrying value may not be recoverable. Where an indicator of impairment exists, the Group makes a formal
estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is
considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset,
unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate
cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable
amount is determined for the cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset.
(h) Goodwill and intangible assets
Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business
combination over the group’s interest in the fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated
to each of the group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the
synergies of the combination, irrespective of whether other assets or liabilities of the group are assigned to those units or
groups of units. Each unit or group of units to which the goodwill is so allocated :
- represents the lowest level within the group at which the goodwill is monitored for internal management purposes, and
- is not larger than a segment based on either the group’s primary or the group’s secondary reporting format determined in
accordance with AASB 8 Operating Segments.
Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating
units), to which the goodwill relates. When the recoverable amount of the cash-generating unit (group of cash-generating
units) is less than the carrying amount, an impairment loss is recognised. When goodwill forms part of the cash - generating
unit (group of cash-generating units) and an operation within that unit is disposed of, the goodwill associated with the
operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of
the operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of
and the portion of the cash-generating unit retained.
Intangibles
Intangible assets acquired separately are capitalised at cost and from a business combination are capitalised at fair value
as at the date of acquisition. Following initial recognition, the cost model is applied to the class of intangible.
The useful lives of these intangible assets are assessed to be either finite or indefinite.
Where amortisation is charged on assets with finite lives, this expense is taken to the statement of profit or loss and other
comprehensive income through the amortisation line item.
Intangible assets, excluding development costs, created within the business are not capitalised and expenditure is charged
against profits in the period in which the expenditure is incurred.
Intangible assets are tested for impairment where an indicator of impairment exists, and in the case of indefinite life
intangibles annually, either individually or at the cash generating unit level. Useful lives are also examined on an annual
basis and adjustments, where applicable, are made on a prospective basis.
32
33
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2014
Research and development costs
Research costs are expensed as incurred.
Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably
be regarded as assured.
Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried
at cost less any accumulated amortisation and accumulated impairment losses.
Any expenditure carried forward is amortised over the period of expected future sales from the related project.
The carrying value of each development project is reviewed for impairment annually when the asset is not yet in use, or
more frequently when an indicator of impairment arises during the reporting year indicating that the carrying value may not
be recoverable.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss and other comprehensive
income when the asset is derecognised.
(i) Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
- Raw materials: purchase cost on a first-in, first-out basis;
- Finished goods and work-in-progress: cost of direct materials and labour and a proportion of manufacturing overheads
based on normal operating capacity but excluding borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.
(j) Trade and other receivables
Trade receivables, which generally have 30-60 day terms, are recognised and carried at original invoice amount less an
allowance for any uncollectible amounts.
An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off
when identified.
(k) Cash and cash equivalents
Cash in the statement of financial position comprises cash at bank and on hand.
For the purposes of the statement of cashflows, cash and cash equivalents consist of cash and cash equivalents as defined
above, net of outstanding bank overdrafts.
(l) Assets classified as held for sale
Assets are classified as held for sale and measured at the lower of their carrying amount and fair value less costs to sell if
their carrying amount will be recovered principally through a sale transaction. They are not depreciated or amortised. For
an asset to be classified as held for sale it must be available for immediate sale in its present condition and its sale must
be highly probable.
(m) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs
associated with the borrowing.
Interest expense is recognised as it accrues.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the
effective interest method.
Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are
derecognised as well as through the amortisation process.
(n) Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and benefits of
ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are initially recognised at fair value, or, if lower, at an amount equal to the present value
of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor
is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between
finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance
of the liability.
Finance charges are charged directly against income. Finance leased assets are amortised over the estimated useful life
of the asset.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised
as expenses in the periods in which they are incurred.
(o) Provisions
Provisions are recognised when the Group has a present obligation (legal and constructive) as a result of a past event, it is
probable that an out flow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating
to any provision is presented in the statement of profit or loss and other comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows
at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks
specific to the liability.
(p) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax from the proceeds.
(q) Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can
be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.
Sale of goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and
can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery of the goods to the
customer, or where the customer has explicitly requested that the goods be held on their behalf.
Interest
Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the
financial asset.
Dividends
Revenue is recognised when the shareholders’ right to receive the payment is established.
(r) Income Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from or paid to taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to
compare the amount are those that are enacted by the statement of financial position date.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward or unused tax assets and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and future unused tax assets and unused tax losses can be utilised.
The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income
tax asset to be utilised.
Deferred income tax assets are measured at the tax rates that are expected to apply to the year when the asset is realised,
based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
34
35
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2014
(s) Other Taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
- where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case
the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
- receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables
in the statement of financial position.
Cashflows are included in the statement of cashflows on a gross basis and the GST component of cash flows arising
from the investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as
operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
(t) Employee Benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to reporting
date. Employee benefits expected to be settled wholly within one year have been measured at the amounts expected to
be paid when the liability is settled plus related on-costs. All other employee benefit liabilities are measured at the present
value of the estimated future cash outflows to be made for those benefits.
(u) Trade and other payables
Trade payables and other payables represent liabilities for goods and services provided to the Group prior to the end of
the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the
purchase of these goods and services.
(v) Derivative Financial Instruments
The group may use derivative financial instruments such as forward currency contracts to hedge risks associated with
foreign currency fluctuations. Such derivative financial instruments are initially recognised at fair value at the date on which
the derivative contract is entered into and are subsequently remeasured to fair value. Derivatives are carried as assets
when the fair value is positive and as liabilities when their fair value is negative. Any gains or losses arising from changes in
the fair value of derivatives are taken directly to the statement of profit or loss and other comprehensive income for the year.
(w) Critical Accounting Estimates and Judgements
The Directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and
best available current information. Estimates assume a reasonable expectation of future events and are based on current
trends and economic data, obtained both externally and within the Group.
Key Judgements
(i) Provision for Impairment of Receivables
Collectability of Trade Receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable
are written off by reducing the carrying amount directly. A provision for impairment is established when there is
objective evidence that the company will not be able to collect all amounts due according to the original terms of the
receivables.
36
(x) Going Concern
The consolidated entity has incurred an operating loss after tax of $930,978 for the financial year ended 30 June 2014.
The Company entered into a revised borrowing facilities agreement with its financier, Commonwealth Bank of Australia,
prior to the end of the previous financial year, as previously reported. The financier has agreed a debt repayment plan
subject to the Company meeting its financial covenants. At reporting date, and as at the date of this report, the Company
has complied with the financial covenants and the agreed debt repayment plan.
The Board acknowledges that these matters give rise to uncertainty that may be material and impact the consolidated
entity’s ability to continue as a going concern.
The ability of the consolidated entity to continue as a going concern is dependent on its ability to:
- continue to manage the performance of the business, including increasing sales, maintaining margins and operating cash
flows and continuing to control overheads;
- secure further profitable sales contracts for its emerging products; and
- continue to meet the minimum debt repayment plan and financial covenants set by the financier
At the date of this report and having considered the above factors, the continuance of its banking relationship and the fact
the Company maintains a solid share of the road safety market, the directors are confident that the consolidated entity will
be able to continue as a going concern.
In the unlikely event that the above factors do not eventuate then the going concern basis may not be appropriate and as
a result, the consolidated entity may have to realise assets and discharge its liabilities other than in the ordinary course of
business and at amounts different from those stated in the financial report. No allowance for such circumstances has been
made in the financial report.
3 SEGMENT INFORMATION
The Group’s chief operating decision maker (Chief Executive Officer) reviews financial information on a consolidated basis
and makes strategic decisions based on this consolidated information.
The Group operates predominantly in Australia.
4 REVENUES AND EXPENSES
(a) Specific Items
Profit/(loss) before income tax expense includes the following revenues and expenses whose disclosure is relevant in
explaining the performance of the entity:
CONSOLIDATED
2014
$
2013
$
(i) Revenue
Sale of goods
(ii) Other income
Royalty income
Net gain/(loss) on sale of assets
Interest
Other
(iii) Expenses
Restructuring costs incurred and provided for
Bad and doubtful debts
Motor vehicle costs
Occupancy costs
IT & Communication costs
16,273,590
24,324,510
51,779
10,151
23,786
9,960
95,676
16,369,266
49,017
643,354
24,674
61,462
778,507
25,103,017
210,283
(10,000)
440,140
426,456
225,755
394,859
41,962
737,357
861,561
274,268
37
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2014
INCOME TAX
5
Major components of income tax expense for the year ended 30 June 2014 are:
CONSOLIDATED
2014 2013
$ $
Statement of Profit or Loss and Other
Comprehensive Income
Current income tax charge
Income tax expense/(benefit) reported in statement of
profit or loss and other comprehensive income
A reconciliation of income tax expense applicable
to accounting profit/(loss) before income tax at the
statutory income tax rate to income tax expense at the
Group’s effective income tax rate is as follows:
(351,947)
(528,180)
(351,947)
(528,180)
Accounting profit/(loss) before income tax
(1,282,925)
(1,917,079)
At the statutory income tax rate of 30%
(384,878)
(575,124)
Non-deductible expenses
Deferred income tax
Deferred income tax at 30 June relates to the following:
CONSOLIDATED
Deferred income tax asset/(liability)
Employee entitlements
Research & Development Costs
Other
Deferred tax assets relating to temporary differences
not brought to account
Carry forward tax losses brought to account
Gross deferred income tax (liability)/asset
Deferred income tax charge
32,931
46,944
(351,947)
(528,180)
Statement of Financial
Position
Statement of Profit
or Loss and Other
Comprehensive Income
2014
$
2013
$
2014
$
2013
$
94,229
(208,343)
110,300
(136,862)
-
-
16,071
71,481
-
18,301
(26,252)
115,149
114,114
1,233,586
1,233,586
26,562
881,639
881,639
(87,552)
(107,198)
-
-
-
-
As of 30 June 2014, the consolidated entity has carry forward tax losses with a tax effect of $2,294,680. Carry forward tax
losses with a tax effect of $1,233,586 have been brought to account as a deferred tax asset. Carry forward tax losses with
a tax effect of $1,061,094 relating to a prior year have not been brought to account.
The consolidated entity has realised capital losses with a gross amount of $1,697,483 that is available for offset against any
future taxable capital gains.
6 EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net profit/(loss) for the year attributable to ordinary equity
holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit/(loss) attributable to ordinary shareholders by
the weighted average number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options).
The following reflects the income and share data used in the total operation’s basic and diluted earnings per share
computations:
$ $
CONSOLIDATED
2014 2013
Net profit/(loss) attributable to equity holders from continuing
operations
Net profit/(loss) attributable to equity holders of the parent
Net profit/(loss) attributable to ordinary share holders for diluted
earnings per share
Weighted average number of ordinary shares for basic earnings
Adjusted weighted average number of ordinary shares for diluted
earnings per share
- Basic for profit/(loss) for the full year
- Diluted for profit/(loss) for the full year
(930,978)
(930,978)
(1,388,899)
(1,388,899)
(930,978)
(1,388,899)
26,000,000
26,000,000
26,000,000
26,000,000
Cents
(3.6)
(3.6)
Cents
(5.3)
(5.3)
For the purpose of calculating earnings and dividends per share, it is the ordinary shares of the legal parent that is
used, being the proportionate weighting of the 26,000,000 shares on issue.
7 DIVIDENDS PAID AND PROPOSED
2014 2013
$ $
CONSOLIDATED
Equity dividends on ordinary shares:
Interim franked dividend for 2014: 0.0 cents (2013: 0.0 cents)
Dividends proposed and not recognised as a liability:
Final franked dividend for 2014: 0.0 cents (2013: 0.0 cents)
Franking Credit Balance:
The amount of franking credits available for future reporting
periods after the payment of income tax payable and the impact of
dividends proposed.
-
-
-
-
5,391,050
5,391,050
38
39
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2014
8 NOTES TO THE STATEMENT OF CASH FLOWS
$ $
CONSOLIDATED
2014 2013
Reconciliation of cash
For the purposes of the statement of cash flows, cash and cash
equivalents comprise the following at 30 June:
Cash at bank and on hand
1,354,945
2,240,533
Reconciliation from the net profit/(loss) after tax to the net
cash flows from operations
(930,978)
(1,388,899)
Profit/(loss) after tax for the year
Adjustments for:
Depreciation and amortisation
Impairment of plant and equipment
Net (profit)/loss on disposal of plant and equipment
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
(Increase)/decrease in other assets
Decrease/(increase) in deferred tax asset
(Decrease)/increase in trade and other payables
(Decrease)/increase in unearned income
(Decrease)/increase in provisions
Net cash from operating activities
9 TRADE AND OTHER RECEIVABLES (CURRENT)
Trade receivables
Other receivables
Provision for impairment
Ageing of trade receivables not impaired
1 - 30 days
31 - 60 days
61 - 90 days
91 days and over
471,106
29,612
(10,151)
903,781
1,180,478
(148,723)
(351,947)
(1,214,615)
(71,579)
(185,783)
(328,799)
2,437,497
120,516
(26,751)
2,531,262
1,499,291
739,402
139,431
32,622
2,410,746
645,737
-
(643,354)
3,346,991
1,668,187
282,347
(522,827)
(1,238,188)
144,597
81,277
2,375,868
3,302,957
210,627
(78,541)
3,435,043
1,953,616
825,565
141,543
303,692
3,224,416
250,000
(211,459)
40,000
78,541
Trade receivables are non-interest bearing. Amounts over 60 days are deemed overdue.
Movement in provision for impairment
Balance at the beginning of financial year
Amounts written off
Additional impairment provision recognised/(released)
78,541
(41,790)
(10,000)
26,751
10 INVENTORIES
Stock on hand
40
2,873,782
4,054,260
11 PROPERTY, PLANT AND EQUIPMENT
2014 2013
$ $
CONSOLIDATED
Plant & equipment at cost
Less accumulated depreciation
Total property, plant & equipment
3,540,626
(2,222,896)
1,317,730
7,713,426
(3,421,593)
4,291,833
Movement in carrying amounts
Movement in the carrying amounts for each class of property, plant and equipment between the beginning
and the end of the financial year.
Balance at 1 July 2012
Additions
Assets transferred from Product development costs
Depreciation expense
Reclassified as held for sale (refer Note 24)
Disposals
Carrying amount at 30 June 2013
Balance at 1 July 2013
Additions
Depreciation expense
Impairment
Reclassified as held for sale (refer Note 24)
Disposals
Carrying amount at 30 June 2014
Plant &
Equipment
$
4,682,481
551,232
23,683
(596,993)
(85,567)
(283,003)
4,291,833
4,291,833
134,613
(407,409)
(29,612)
(2,607,050)
(64,645)
1,317,730
Total
$
4,682,481
551,232
23,683
(596,993)
(85,567)
(283,003)
4,291,833
4,291,833
134,613
(407,409)
(29,612)
(2,607,050)
(64,645)
1,317,730
CONSOLIDATED
2013
2014
$
$
12 INTANGIBLE ASSETS
License Agreements at cost
Less accumulated amortisation
Product development costs
Less accumulated amortisation
Movements in Carrying Amounts
73,677
(54,704)
18,973
563,809
(107,604)
456,205
475,178
Licence
agreements
$
73,677
(59,763)
13,914
842,945
(148,469)
694,476
708,390
Balance at 1 July 2012
Capitalisation of costs
Amortisation expense
Transfers to Property, plant & equipment
Disposals
Carrying amount at 30 June 2013
Balance at 1 July 2013
Capitalisation of costs
Amortisation expense
Carrying amount at 30 June 2014
24,032
-
(5,059)
-
-
18,973
18,973
-
(5,059)
13,914
Product
Devt Costs
$
543,713
12,898
(43,685)
(23,683)
(33,038)
456,205
456,205
296,909
(58,638)
694,476
Total
$
567,745
12,898
(48,744)
(23,683)
(33,038)
475,178
475,178
296,909
(63,697)
708,390
41
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2014
13 TRADE AND OTHER PAYABLES (CURRENT)
CONSOLIDATED
15 PROVISIONS
2014 2013
$ $
Trade payables
Accrued expenses
GST payable
1,118,238
109,632
88,542
2,192,333
322,363
23,795
Payables are non-interest bearing and are normally settled between 30 and 60-day terms.
14 INTEREST-BEARING LOANS AND BORROWINGS
1,316,412
2,538,491
Current
Hire purchase
Bank loans
Non-current
Hire purchase
Bank loans
33,245
500,000
533,245
147,715
450,000
597,715
42,238
4,500,000
4,542,238
25,095
5,150,000
5,175,095
The Group was in compliance with its reporting covenants at 30 June 2014 and is subject to a scheduled debt repayment
plan. Therefore, in accordance with Australian Accounting Standard AASB 101, the Company’s long term loans are classified
as current and non-current according to those amounts due within 12 months and those due after 12 months.
Hire purchase liabilities are secured by a charge over the financial assets.
Financing facilities available
At reporting date, the following financing facilities had been negotiated and were available:
Total facilities:
- bank bills
- bank charge card
- trade facilities including bank guarantees
Facilities used at reporting date
- bank bills
- bank charge card
- bank guarantees
Facilities unused at reporting date
- bank charge card
- bank guarantees
5,000,000
150,000
117,419
5,000,000
96,000
74,193
5,600,000
150,000
357,087
5,600,000
129,000
232,678
54,000
43,226
21,000
124,409
The bank facilities are secured by a registered charge over the whole of its assets and undertakings, and also a registered
charge over the assets and undertakings of Saferoads Holdings Ltd.
Saferoads Pty Ltd is required to report to the Commonwealth Bank at the end of each calendar quarter regarding its
compliance with Financial Covenants.
2014
CONSOLIDATED
2013
$
$
Current
Employee benefits
Surplus lease space
Redundancies
Non-Current
Employee benefits
16 EQUITY
278,968
27,428
108,681
335,674
268,322
-
415,077
603,996
35,129
31,993
2014
CONSOLIDATED
2013
$
$
Contributed Equity
Ordinary shares
Issued and fully paid
4,130,708
4,130,708
Movements in ordinary shares on issue (legal parent)
Shares
At 1 July
At 30 June
26,000,000
26,000,000
26,000,000
26,000,000
Ordinary shares carry one vote per share, either in person or by proxy, at a meeting of the Company, and carry the rights to
dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held.
There is no current on-market buy-back of ordinary shares.
2014
$
2013
$
CONSOLIDATED
Retained Earnings
Movements in retained earnings are as follows:
Balance at 1 July
Net profit/(loss) for the year
Balance at 30 June
Reserves
Foreign Currency Translation Reserve
2,457,113
3,846,012
(930,978)
(1,388,899)
1,526,135
2,457,113
This records exchange differences arising on translation of a foreign controlled subsidiary.
42
43
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2014
17 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise commercial bills, hire purchase contracts, cash and short-term
deposits. The main purpose of these financial instruments is to raise finance for the Group’s operations.
The totals for each category of financial instruments are as follows:
2014 2013
$ $
CONSOLIDATED
Financial Assets
- Cash and cash equivalents
- Loans and receivables
Total Financial Assets
Financial Liabilities
- Financial liabilities at amortised cost
Total Financial Liabilities
1,354,945
2,531,262
3,886,207
2,240,533
3,435,043
5,675,576
6,391,895
6,391,895
8,311,301
8,311,301
The Group has various financial instruments such as trade debtors and trade creditors, which arise directly from its operations.
It is, and has been throughout the period under review, the Group’s policy that no trading in financial derivatives shall be
undertaken.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit
risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below.
The Group also monitors the market price risk arising from all financial instruments.
(a) Interest rate risk
The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s long-term debt obligations.
The company’s exposure to interest rate risk, which is the risk that the Financial Instrument’s value will fluctuate as a result
of changes in market interest rates and the effective weighted average interest rates on classes of financial assets and
financial liabilities, is as follows:
Weighted
Average
Interest
Rate
%
Non
Interest
Bearing
$
Variable
Interest
Rate
$
Fixed
Interest Rate
Maturing
Within 1 year
$
1-5 years
$
Total
$
2.68%
-
N/A 2,531,262
2,531,262
1,354,945
-
1,354,945
9.49%
8.35%
N/A 1,316,412
-
-
1,316,412
-
1,400,000
-
1,400,000
-
-
-
-
-
33,245
33,245
-
1,316,412
3,600,000 5,000,000
75,483
3,642,238 6,391,895
42,238
%
$
$
$
$
$
2.86%
N/A
N/A
8.38%
8.50%
-
3,435,043
3,435,043
2,240,533
-
2,240,533
2,538,491
-
-
2,538,491
-
-
-
-
-
-
-
-
2,000,000
147,715
2,147,715
-
-
-
2,240,533
3,435,043
5,675,576
-
2,538,491
3,600,000 5,600,000
172,810
3,625,095 8,311,301
25,095
2014
Financial Assets
- Cash
- Receivables
Total Financial Assets
Financial Liabilities
- Payables
- Bank borrowings
- Hire purchase
Total Financial Liabilities
2013
Financial Assets
- Cash
- Receivables
Total Financial Assets
Financial Liabilities
- Payables
- Bank borrowings
- Hire purchase
Total Financial Liabilities
44
(b) Credit risk
The Group trades only with recognised, credit worthy third parties.
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures and
pre-agreed credit limits.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts
is not significant.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at reporting date recognised
as financial assets is the carrying amount, net of any provisions for doubtful debts which is $26,751 at 30 June 2014 (2013:
$78,541), as disclosed in the statement of financial position and notes to the financial statements. The company holds no
collateral or security in relation to financial assets.
As at reporting date, the amount of financial assets past due, but not impaired, is $172,053 (2013: $445,235).
The Group does not have any material credit risk to any single debt or group of debtors under financial instruments entered
into by the company.
(c) Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of current
working capital, bank loans, and hire purchase contracts.
Maturity analysis of financial liabilities:
2014
- Payables
- Bank borrowings
- Hire purchase
Total Financial Liabilities
2013
- Payables
- Bank borrowings
- Hire purchase
Total Financial Liabilities
Within 1 Year
$
1,316,412
500,000
33,245
1,849,657
Within 1 Year
$
2,538,491
450,000
147,715
3,136,206
1 to 5 Years
$
Over 5 Years
$
Total
$
-
4,500,000
42,238
4,542,238
-
-
-
-
1,316,412
5,000,000
75,483
6,391,895
1 to 5 Years
$
Over 5 Years
$
Total
$
-
5,150,000
25,095
5,175,095
-
-
-
-
2,538,491
5,600,000
172,810
8,311,301
(e) Foreign Exchange Risk
Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating due
to movement in foreign exchange rates of currencies in which the Group holds financial instruments which are other than
the AUD functional currency of the Group.
The following tables hows the foreign currency risk on the financial assets and liabilities of the Group’s operations,
denominated in currencies other than the functional currency of the operations.
Net Financial Assets/(Liabilities) in AUD
2014 NZD
Functional Currency of Group Entity
Australian Dollar
2013
Functional Currency of Group Entity
Australian Dollar
NZD
$
$
4,275
11,618
USD
-
$
USD
$
(5,898)
45
-
-
-
1,354,945
2,531,262
3,886,207
(d) Fair Values
The carrying amount of financial assets and liabilities recorded in the financial statements represents their respective fair
values, determined in accordance with the accounting policies disclosed in Note 2 to the financial statements.
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2014
(f) Sensitivity Analysis
The following table illustrates sensitivities to the Group’s exposures to changes in interest rates on borrowings and exchange
rates on purchases.The table indicates the impact on how profit and equity values reported at reporting date would have
been affected by changes in the relevant risk variable that management considers to be reasonably possible. These
sensitivities assume that the movement in a particular variable is independent of other variables. The following sensitivities
are based on market experience over the last 12 months.
Profit/(loss) Equity
CONSOLIDATED
$
$
Year Ended 30 June 2014
+/-2% in interest rates
+/-5c in $A/$US
Year Ended 30 June 2013
+/-2% in interest rates
+/-5c in $A/$US
18 COMMITMENTS AND CONTINGENCIES
+/-28,000
+/-120,000
+/-28,000
+/-120,000
+/-40,000
+/-130,000
+/-40,000
+/-130,000
CONSOLIDATED
2014
$
2013
$
Operating Leases - properties
Non-cancellable operating leases:
- less than one year
- later than one year but less than five years
Operating Leases - equipment
Non-cancellable operating leases:
- less than one year
- later than one year but less than five years
Total operating lease commitments
Hire Purchases
Hire purchase commitments payable:
- less than one year
- later than one year but less than five years
Less future finance charges
Total hire purchase liability
Reconciled to:
Current liability
Non-current liability
298,844
37,500
336,344
622,843
317,780
940,623
18,396
25,319
43,715
380,059
23,848
44,169
68,017
1,008,640
40,295
45,499
85,794
(10,311)
75,483
154,463
26,611
181,074
(8,264)
172,810
33,245
42,238
75,483
147,715
25,095
172,810
A subsidiary has given guarantees pursuant to performance of various projects and security for leased premises to third
parties in the normal course of business. Where there is a likelihood of a claim and a reliable estimate of an amount can be
made, provision has been raised elsewhere in the financial report.
46
19 SUBSIDIARIES
The consolidated financial statements include the financial statements of Saferoads Holdings Limited and the subsidiaries
listed in the following table.
Name
Saferoads Pty Ltd
Saferoads NZ Limited
Country of
incorporation
Australia
New Zealand
% equity interest
2014
2013
100%
100%
100%
100%
Investment
2014
2013
27,030,708
27,030,708
Note: Saferoads NZ Limited is 100% owned by Saferoads Pty Ltd and is non-operative.
20 RELATED PARTIES
Transactions with Key Management Personnel
D. Hotchkin acquired an Asset Classified as Held for Sale during the year for a market value purchase consideration of
$14,000, which was greater than the respective asset’s book value.
D. Hotchkin procured Civil services at normal commercial rates totalling $6,940 during the year.
21 AUDITORS’ REMUNERATION
Amounts received or due and receivable by:
- Current auditors: Grant Thornton, for the audit of the financial report
Other services (agreed upon procedures): Grant Thornton
22 KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Details of Management Personnel
2014
$
2013
$
74,500
-
73,000
10,000
(i) Directors
David Ashmore
Darren Hotchkin
David Cleland
Gary Bertuch
(ii) Executives
Peter Fearns
Paul Williams
Non-Executive (appointed Chairman 19 August 2013)
Chief Executive Officer
Non-Executive
Non-Executive Chairman (resigned 19 August 2013)
Chief Financial & Operations Officer
National Workzone Solutions Manager / General Manager Southern Region
Casey McMaster National Engineering Solutions Manager
Hamish Webb
Peter Rogers
General Manager, Northern Region
General Manager, Southern Region (up to 20 December 2013)
(b) Compensation of Key Management Personnel
Details of the nature and amount of each element of the remuneration of Key Management Personnel (“KMP”) are disclosed
in the Remuneration Report section of the Directors’ Report.
Compensation of Key Management Personnel by catagory:
- Short-term employee benefits
- Post-employment benefits
- Long-term employee benefits
- Termination benefits
2014
$
2013
$
1,095,955
93,891
15,180
41,678
1,246,704
977,545
78,130
13,224
-
1,068,899
47
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2014
23 PARENT ENTITY DISCLOSURES
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Retained earnings
Profit/(loss) of the parent entity
Total comprehensive income of the parent entity
Guarantees entered into by the parent entity in relation to debts of its
subsidiaries
2014
$
2,923
27,036,766
-
-
27,036,766
27,030,708
6,058
-
-
-
2013
$
2,923
27,036,766
-
-
27,036,766
27,030,708
6,058
-
-
-
DIRECTORS’ DECLARATION
In the opinion of the Directors of Saferoads Holdings Limited and its controlled entities:
(a)
the financial statements and notes of the consolidated entity and the remuneration disclosures that are contained in the
Remuneration Report that forms part of the Directors’ Report are in accordance with the Corporations Act 2001 (Cth),
including:
i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its performance
for the year ended that date; and
ii) complying with Accounting Standards and Corporations Regulations 2001.
(b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable;
(c) The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as
reported in Note 2.
This declaration has been made after receiving the declarations required to be made to the Directors by the Chief Executive
Officer and the Chief Financial Officer in accordance with section 295A of the Corporations Act 2001 (Cth).
Signed in accordance with a resolution of the Directors.
On behalf of the Board.
24 ASSETS CLASSIFIED AS HELD FOR SALE
During the year the directors identified certain assets as held for sale other than in the ordinary course of business.These
include the Company’s rental barrier assets which the Company is actively seeking expressions of interest from third parties
as part of a pending commercialisation of the Ironman Hybrid portable safety barrier solution, and Plant and equipment
associated with the Company’s civil installation services portfolio.
The prior period included assets associated with the Company’s production facility and Civil services assets surplus to the
Company’s operational requirements.
The major classes of assets and liabilities are as follows:
David Ashmore
Director
Drouin
27 August 2014
Property, plant and equipment
CONSOLIDATED
2014
$
2013
$
2,196,578
85,567
25 SUBSEQUENT EVENTS
There has been no matter or circumstance, which has arisen since 30 June 2014 that has significantly affected or may
significantly affect the operations of the consolidated entity or the results of those operations or the state of affairs of the
consolidated entity.
48
49
INDEPENDENT AUDITOR’S REPORT
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
The Rialto, Level 30
F +61 3 8320 2200
525 Collins St
E info.vic@au.gt.com
Melbourne Victoria 3000
W www.grantthornton.com.au
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Saferoads Holdings Limited
Report on the financial report
We have audited the accompanying financial report of Saferoads Holdings Limited (the
“Company”), which comprises the consolidated statement of financial position as at
Independent Auditor’s Report
30 June 2014, the consolidated statement of profit or loss and other comprehensive income,
To the Members of Saferoads Holdings Limited
consolidated statement of changes in equity and consolidated statement of cash flows for
the year then ended, notes comprising a summary of significant accounting policies and
Report on the financial report
other explanatory information and the directors’ declaration of the consolidated entity
We have audited the accompanying financial report of Saferoads Holdings Limited (the
comprising the Company and the entities it controlled at the year’s end or from time to time
“Company”), which comprises the consolidated statement of financial position as at
during the financial year.
30 June 2014, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for
Directors’ responsibility for the financial report
the year then ended, notes comprising a summary of significant accounting policies and
The Directors of the Company are responsible for the preparation of the financial report
other explanatory information and the directors’ declaration of the consolidated entity
that gives a true and fair view in accordance with Australian Accounting Standards and the
comprising the Company and the entities it controlled at the year’s end or from time to time
Corporations Act 2001. The Directors’ responsibility also includes such internal control as
during the financial year.
the Directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
Directors’ responsibility for the financial report
error. The Directors also state, in the notes to the financial report, in accordance with
The Directors of the Company are responsible for the preparation of the financial report
Accounting Standard AASB 101 Presentation of Financial Statements, the financial
that gives a true and fair view in accordance with Australian Accounting Standards and the
statements comply with International Financial Reporting Standards.
Corporations Act 2001. The Directors’ responsibility also includes such internal control as
the Directors determine is necessary to enable the preparation of the financial report that
Auditor’s responsibility
gives a true and fair view and is free from material misstatement, whether due to fraud or
Our responsibility is to express an opinion on the financial report based on our audit. We
error. The Directors also state, in the notes to the financial report, in accordance with
conducted our audit in accordance with Australian Auditing Standards. Those standards
Accounting Standard AASB 101 Presentation of Financial Statements, the financial
require us to comply with relevant ethical requirements relating to audit engagements and
statements comply with International Financial Reporting Standards.
plan and perform the audit to obtain reasonable assurance whether the financial report is
free from material misstatement.
Auditor’s responsibility
Grant Thornton Audit Pty Ltd ACN 130 913 594
Our responsibility is to express an opinion on the financial report based on our audit. We
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
conducted our audit in accordance with Australian Auditing Standards. Those standards
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
require us to comply with relevant ethical requirements relating to audit engagements and
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
plan and perform the audit to obtain reasonable assurance whether the financial report is
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
free from material misstatement.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
41
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
50
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error.
The Rialto, Level 30
In making those risk assessments, the auditor considers internal control relevant to the
525 Collins St
Company’s preparation of the financial report that gives a true and fair view in order to
Melbourne Victoria 3000
design audit procedures that are appropriate in the circumstances, but not for the purpose
Correspondence to:
GPO Box 4736
of expressing an opinion on the effectiveness of the Company’s internal control. An audit
Melbourne Victoria 3001
also includes evaluating the appropriateness of accounting policies used and the
T +61 3 8320 2222
reasonableness of accounting estimates made by the Directors, as well as evaluating the
F +61 3 8320 2200
E info.vic@au.gt.com
overall presentation of the financial report.
W www.grantthornton.com.au
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.
Independent Auditor’s Report
To the Members of Saferoads Holdings Limited
a
b
Auditor’s opinion
In our opinion:
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Report on the financial report
We have audited the accompanying financial report of Saferoads Holdings Limited (the
“Company”), which comprises the consolidated statement of financial position as at
30 June 2014, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for
the year then ended, notes comprising a summary of significant accounting policies and
the financial report of Saferoads Holdings Limited is in accordance with the
other explanatory information and the directors’ declaration of the consolidated entity
Corporations Act 2001, including:
comprising the Company and the entities it controlled at the year’s end or from time to time
during the financial year.
i
ii
giving a true and fair view of the consolidated entity’s financial position as at 30
June 2014 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001.
Directors’ responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001. The Directors’ responsibility also includes such internal control as
the Directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error. The Directors also state, in the notes to the financial report, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, the financial
statements comply with International Financial Reporting Standards.
the financial report also complies with International Financial Reporting Standards as
disclosed in the notes to the financial statements.
Material uncertainty regarding going concern
Without qualification to the conclusion expressed above, we draw attention to Note 2(x) to
Auditor’s responsibility
the financial statements which notes an operating loss after tax of $930,978 for the year
Our responsibility is to express an opinion on the financial report based on our audit. We
ended 30 June 2014. This condition, along with other matters set forth in Note 2(x),
conducted our audit in accordance with Australian Auditing Standards. Those standards
indicates the existence of a material uncertainty which may cast significant doubt about the
require us to comply with relevant ethical requirements relating to audit engagements and
company’s ability to continue as a going concern and therefore, the company may be unable
plan and perform the audit to obtain reasonable assurance whether the financial report is
to realise its assets and discharge its liabilities in the normal course of business, and at the
free from material misstatement.
amounts stated in the financial report.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
51
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.
41
41
42
INDEPENDENT AUDITOR’S REPORT
ASX ADDITIONAL INFORMATION
The shareholder information set out below was applicable as at 30 September 2014. At this date the Company had on issue
26,000,000 ordinary shares in the company held by 691 shareholders.
S U B S T A N T I A L S H A R E H O L D E R S
Holder name
MR DARREN JOHN HOTCHKIN & MRS JENNIFER ANN HOTCHKIN
RUMINATOR PTY LTD and related entities
T W E N T Y L A R G E S T S H A R E H O L D E R S
No. of ordinary shares in which interest is held
5,342,775
2,627,079
Name
No. of shares
% Held
5,342,775
1,913,849
1,389,313
1,100,000
853,665
780,000
603,230
434,000
417,330
400,000
384,776
350,000
320,622
279,925
260,000
221,087
220,000
200,000
185,900
182,295
15,838,767
MR DARREN JOHN HOTCHKIN & MRS JENNIFER ANN HOTCHKIN
RUMINATOR PTY LTD
MR DUNCAN FRANCIS SMITH
NLKM PTY LTD
WAVET FUND NO 2 PTY LTD
BUSINESS MANAGEMENT & INVESTMENT PTY LTD
CONTEMPLATOR PTY LTD
MR ROSS GEORGE YANNIS
MR GLENN SCOTT WADSWORTH & MR RICKI MARK WADSWORTH
MR DANIEL FORBES SPILLMAN
ATKONE PTY LTD
KOONUNG NOMINEES PTY LTD
MR DAVID ALBERT McCLURE ASHMORE & MRS NOLA JOY ASHMORE
ROADWORX GROUP PTY LTD
CIMTECK PTY LTD
FLST PTY LTD
MR PHILIP BOMFORD
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD
MR JAMES MACKY BEVERIDGE & MR ANTHONY CHRISTOPHER EDWARD
MR BILL JAULESKI & MRS YAGODA JAULESKA
D I S T R I B U T I O N O F S H A R E H O L D I N G S
Holdings Ranges
Holders
Total Units
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-and over
128
229
114
180
40
691
73,837
734,414
980,821
5,890,693
18,320,235
26,000,000
%
0.28
2.83
3.77
22.66
70.46
100.00
The number of shareholders’ holdings less than a marketable parcel is 214.
V O T I N G R I G H T S
All ordinary shares carry one vote per share.
N U M B E R O F O R D I N A R Y S H A R E S S U B J E C T T O E S C R O W
Nil.
20.55
7.36
5.34
4.23
3.28
3.00
2.32
1.67
1.61
1.54
1.48
1.35
1.23
1.08
1.00
0.85
0.85
0.77
0.71
0.70
60.92
53
The Rialto, Level 30
525 Collins St
Report on the remuneration report
Melbourne Victoria 3000
We have audited the remuneration report included in the directors’ report for the year
ended 30 June 2014. The Directors of the Company are responsible for the preparation and
presentation of the remuneration report in accordance with section 300A of the
T +61 3 8320 2222
Corporations Act 2001. Our responsibility is to express an opinion on the remuneration
F +61 3 8320 2200
report, based on our audit conducted in accordance with Australian Auditing Standards.
E info.vic@au.gt.com
W www.grantthornton.com.au
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
Auditor’s opinion on the remuneration report
In our opinion, the remuneration report of Saferoads Holdings Limited for the year ended
30 June 2014, complies with section 300A of the Corporations Act 2001.
Independent Auditor’s Report
To the Members of Saferoads Holdings Limited
Report on the financial report
We have audited the accompanying financial report of Saferoads Holdings Limited (the
“Company”), which comprises the consolidated statement of financial position as at
30 June 2014, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for
GRANT THORNTON AUDIT PTY LTD
the year then ended, notes comprising a summary of significant accounting policies and
Chartered Accountants
other explanatory information and the directors’ declaration of the consolidated entity
comprising the Company and the entities it controlled at the year’s end or from time to time
during the financial year.
Directors’ responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report
M. A. Cunningham
that gives a true and fair view in accordance with Australian Accounting Standards and the
Partner - Audit & Assurance
Corporations Act 2001. The Directors’ responsibility also includes such internal control as
the Directors determine is necessary to enable the preparation of the financial report that
Melbourne, 27 August 2014
gives a true and fair view and is free from material misstatement, whether due to fraud or
error. The Directors also state, in the notes to the financial report, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, the financial
statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. Those standards
require us to comply with relevant ethical requirements relating to audit engagements and
plan and perform the audit to obtain reasonable assurance whether the financial report is
free from material misstatement.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
52
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.
41
43
CORPORATE DIRECTORY
Directors
David Ashmore (Chairman)
Solicitors
Maddocks
Darren Hotchkin (Chief Executive Officer)
140 William Street
David Cleland
Melbourne VIC 3000
NOTES
Bankers
Commonwealth Bank of Australia
Warragul VIC 3820
Auditors
Grant Thornton
The Rialto, Level 30
525 Collins Street
Melbourne VIC 3000
GPO Box 4736
Melbourne VIC 3001
ASX Code
SRH
Company Secretary
Elissa Hansen
Registered Office
39 Weerong Rd
Drouin VIC 3818
PO Box 340
Drouin VIC 3818
Telephone:
03 5625 6600
Facsimile:
03 5625 4986
Website:
www.saferoads.com.au
Share Registry
Boardroom Pty Limited
Level 7, 207 Kent St
Sydney NSW 2000
GPO Box 3993
Sydney NSW 2001
Telephone:
02 9290 9600
Facsimile:
02 9279 0664
ISO CERTIFICATIONS:
Certificate No.: 46Q12567 Certificate No.: 27O12567 Certificate No.: 84E12567
PROFESSIONAL AFFILIATIONS:
54
55
56