More annual reports from Saferoads Holdings Limited:
2023 Report2020
1
Saferoads Holdings Limited
ABN 81 116 668 538
SAFEROADS.COM.AU Improving
public safety
Saferoads is an ASX listed company specialising in the provision of innovative road
safety solutions throughout Australia, New Zealand and North America. The company
provides state government departments, local councils, road construction companies
and equipment hire companies with a broad range of products and services designed
to direct, protect, inform and illuminate for the public’s safety.
2
SAFEROADS.COM.AU Contents
Chairman’s Overview
Chief Executive Officer’s Review of Operations and Activities
The Year in Review
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate Directory
4
7
9
15
23
24
25
29
52
53
56
57
3
SAFEROADS.COM.AU Chairman’s Overview
Dear Shareholder,
Financial Overview
On behalf of the Board, I am pleased to report a profit after tax of $521k,
a significant turnaround from the prior year and a result achieved in what has
become a significantly uncertain economic environment with the COVID-19
global pandemic.
A primary driver was the growth in our equipment rental business on the
back of increased demand and our investment in additional fleet of $2.47
million over the past three years. Our International business was also up
15% on the prior year as we supplied additional product to a key customer
in New Zealand. The company is strategically well placed to continue to
capitalise on the ongoing government infrastructure project spending.
As the COVID-19 global pandemic evolved, our Domestic Products business
saw demand for some of our products waiver and/or deferred. We
responded by acting swiftly and decisively during this period, instituting
cost saving initiatives, including reduced working hours, temporary wage
reductions and improved stock management. We also registered for
various State and Federal government economic assistance programs,
where eligible. The Company is very grateful for the understanding shown
by its staff of the cost containment initiatives directly impacting them and
their continued compliance with COVID-19 safe work practices.
Total revenue was down $1.45 million, or 8% to $16.5 million. There was however an improvement in overall gross margin, mainly driven by
the growth in our equipment rental business. The ongoing focus on supply chain and other cost reductions and our ability to adapt quickly
to adverse trading conditions as COVID-19 began impacting our markets, led to an acceptable profit position albeit not where we had
originally targeted.
4
SAFEROADS.COM.AU The table below summarizes the key metrics over the past three financial years:
Year ending 30 June
Revenue
Gross profit
EBITDA *
Profit/(loss) after tax
Operating cash flows
Gearing ** (net debt / net debt + equity)
2018
$’000
19,193
6,536
1,371
710
1,470
15.6%
2019
$’000
17,946
6,571
1,070
(41)
542
29.7%
2020
$’000
16,497
6,279
1,964
521
2,265
19.7%*
* Incorporating adoption of AASB 16 – Leases from FY2019 onwards
** Excluding right-of-use asset lease liabilities from FY2019 onwards
We expanded our equipment rental business during the year, investing a further $954k in additional temporary barriers, solar powered
Variable Message Sign (VMS) trailers, and portable solar lights, to provide a broader offering to our key customers for their work zone
needs. This growth was facilitated by additional borrowings of only $158k in equipment finance during the year, with improved working
capital and receipt of a $352k tax rebate for prior year research & development providing the balance. The ability to expand our
equipment rental fleet with minimal reliance on debt led to an improved gearing position of just under 20% at year end.
Corporate Activities
In March, we were pleased to appoint Mr. Hayden Wallace to the Board. Hayden is well known in the road safety industry and his
business, Safe Direction, is a market leader in the fixed permanent safety barrier market. His deep knowledge of the road safety industry
and broad industry network has added value to the business from a strategic perspective.
With improved results, the Board is very mindful of the need to reward shareholders with dividends. Any decision on this needs to
balance the responsibility to shareholders, the liquidity of the Company to continue through the COVID-19 recession and to also fulfill its
future growth plans. To this end, we introduced a Dividend Reinvestment Plan in June to assist our cash management and provide an
option for shareholders who wish to reinvest in the company. To date, shareholdings representing 56% of the Company’s capital have
elected to reinvest their future dividends. The cash savings will be used to contribute to the cost of our future expansion initiatives and
will reduce the need to borrow those funds. We are hopeful that, subject to the trading conditions over the coming months as the impact
of the COVID-19 pandemic becomes clearer, we will be able to announce a dividend.
Earlier this month, we announced to the market that we had finalised a revision to our facility agreement with our financier,
Commonwealth Bank of Australia (CBA). The revised facility incorporates the continuation of a $1.6 million term loan out to October 2024,
as well as a new $800k asset finance facility to enable further growth in our equipment rental portfolio. This ongoing support provided
by the CBA demonstrates the bank is supportive of our current business model and growth plans.
5
SAFEROADS.COM.AU Outlook
Whilst the fallout of the COVID-19 global pandemic plays out across the world and governments predict recessionary type economic
environments, we are confident that governments will continue their responses to these circumstances with increased spending to
support the economy and in particular, their public infrastructure spending. We are strategically well placed with our business model
being aligned to the infrastructure sector, that will enable us to support our earnings base and grow by continuing to offer leading edge
products and services to this sector.
We have commenced the new financial year with secured work in hand of $2.2 million at the date of this report.
Our equipment rental business expansion will continue to generate strong returns and we will selectively use debt to grow our rental fleet
to meet our customers’ road safety needs. The returns on this strategy are proven and with the majority of our fleet originating from our
own proprietary products, our investment cost is lower than most of our peers.
We anticipate our international markets will take longer to recover due to the COVID-19 restrictions in effect in the countries we are
dealing with.
Acknowledgments
I would like to again acknowledge and thank our staff and management team for their acceptance and understanding of the steps we
needed to take to ensure the ongoing viability of the business, particularly in the very significantly uncertain times when the COVID-19
pandemic started to impact our local and international communities. During this time, they also continued their dedication and focus
on improving our business model, irrespective of the significant disruption and uncertainty. We have a core team of people whose
knowledge and effort towards improving sales, service and returns will continue to underpin the future strength and viability of the
business.
I also sincerely thank all our shareholders for their continued support. Our primary focus continues to be the improvement in the financial
performance and sustainability of your Company and we are encouraged by the steps taken to date to soon be in a position to reward
this support with dividends.
Finally, I wish to acknowledge the extensive work of my fellow directors and their diligent and collaborative efforts and ongoing guidance
and monitoring of the business during these unprecedented times.
David Ashmore
Chairman of the Board
28 August 2020
6
SAFEROADS.COM.AU Chief Executive Officer’s Review of
Operations and Activities
Performance during 2019 - 2020
The turnaround in profit for the year, despite the impact of the COVID-19
pandemic in the second half, was very pleasing. The base we had established at
the half year was at risk of being eroded if we had not taken swift and decisive
action to safeguard the future viability of the business with various cost saving
initiatives, including reduced working hours, temporary wage reductions and
improved stock management in response to an initial reduction in demand,
particularly in our core Domestic Products business.
It was our equipment rental business - Road Safety Rental – that exceeded
overall performance expectations for the year, with further broadening of its
offering and improved utilisation leading to an 80% increase in revenue on
the prior year. There was strong demand for temporary barriers, portable light
towers and Variable Message Signs, particularly in Victoria. We were also able to
launch our new OmniStopTM portable bollard system through a hire opportunity for
a major community street festival in suburban Melbourne just prior to Christmas
last year, with very favourable feedback from the event organisers.
Internationally, sales increased 15% on the prior year as we secured further sales
of our new HV2TM temporary barrier system to New Zealand, as well as another
order under the distributor agreement for our patented IronmanTM barrier in the
USA. We also had additional sales of our flexible signage products into Belgium,
and further orders for our solar lighting products to New Zealand, and traffic
calming products into New Zealand and Malaysia.
Our Domestic Products business was impacted with reduced demand for
on-grid lighting products and temporary barrier sales. This was exacerbated by
the COVID-19 pandemic as some projects slowed, particularly new residential
housing developments in Victoria.
Our move into off-grid solar lighting solutions, continues to develop, and whilst on-grid lighting sales declined, we were able to
supplement this with sales of permanent and portable solar lighting solutions to a number of existing and new customers across the
country, particularly in Queensland and New South Wales.
Our proprietary Variable Messaging Sign trailer solution had improved sales as we renewed a supply agreement with a State Road
Authority and we had improved sales in some of our traffic calming products.
Innovation Initiatives
Our focus in FY2020 was on commercialising our most recent products – the HV2TM temporary barrier system and the OmniStopTM
portable bollard system. Whilst we were successful with the former, in New Zealand, the latter was impacted by the COVID-19 pandemic
and restrictions on crowd gatherings. As we come out of the COVID-19 restrictions, we will be re-establishing interest in the portable
bollard system with our contacts in events management.
It was pleasing to receive AusIndustry’s R&D tax rebate during the year which returned some of the past investment primarily in these two
new products.
We have made enhancements to various existing products over the year and there are other projects in conceptual design stage and as
we see commercial merit in these, we will advance to simulation modelling and prototypes to test our assumptions.
7
SAFEROADS.COM.AU Looking Ahead
Forecasting in the current economic environment remains challenging. The forward order book is presently reasonable, but factors
outside our control, such as continued government-enforced lockdowns in response to the ongoing COVID-19 pandemic makes doing
business very challenging, particularly when it impacts not only your own business but also your customer base and supply chain. We are
heartened by the fact that some of our customers are involved with critical and essential infrastructure and we provide ongoing support
to these customers and projects.
The COVID-19 global pandemic is changing the way we go to market and we have invested further in online platforms to allow customers
to experience our broad range of products and services. An increasing number of sales opportunities are now coming through these
digital channels.
On the back of our success of introducing our new HV2TM temporary barrier system into New Zealand, we are in early discussions for the
sale of the product in both Australia and Canada.
Our nation’s state road authorities, under the guiding direction set by AustRoads, have advised that all temporary barriers in Australia
must be compliant with the new MASH standard by December 31, 2020. Both our HV2TM temporary barrier and T-LOKTM concrete barrier
systems are MASH compliant and in a strong position to be a select number of compliant temporary barrier systems available to
construction companies and equipment hire companies following the implementation of the new standard.
We will continue to selectively invest further in our Road Safety Rental brand, through offering a broader range of work zone products and
services for the construction sector.
Finally, I would like to acknowledge the support of all the Saferoads team, who have delivered a solid result for FY2020 and have
adapted well to the challenges of operating in the current COVID-19 environment.
Darren Hotchkin
Chief Executive Officer
28 August 2020
8
SAFEROADS.COM.AU T H E Y E A R I N R E V I E W
Domestic Sales
Melbourne Lunch & Learn
Saferoads was proud to present a Lunch and Learn program in
Melbourne on Monday 16th September 2019.
The educational event received great turn
The audience were able to learn more about the new
out, with many stakeholders within the road
and innovative products Saferoads have to offer, including
the HV2 Barrier, OmniStop Portable Bollard System and
safety industry attending. The event was
Roadway Solar V-LED Light.
opened with an insightful speech on road
safety from the Australian Road Safety
Foundation founder, Russell White.
The day also included a live crash test demonstration,
featuring the OmniStop Portable Bollard System.
9
SAFEROADS.COM.AU Omnistop Portable Deployed on the
Block - Open for Inspections
The Block 2019 fans were queuing in the cold
overnight to ensure they had the chance to check
out the the Oslo terrace houses which were open for
inspection on Sunday, October 20th at 10am.
Several of the roads surrounding Grey Street in St Kilda
were closed to accommodate the large crowds.
MC Traffic were enlisted by Channel 9 to manage the
traffic for the event, and required reliable protection against
a potential errant vehicle. Large crowds such as this are
known to be a target for hostile vehicle attacks.
MC Traffic chose Saferoads to provide a crash tested
barrier for the closed roads, that would ensure the safety
of the crowds in the event of an errant vehicle, but also
one that did not restrict the flow of the crowds.
As a result, the OmniStop Portable Bollard System was
unveiled at a public event for the first time at the Block.
Event management could rest assured that the Block
fans were protected from the entrance of dangerous
driver, because the OmniStop Portable Bollard System
is fully crash tested. The system did not slow the entry or
dispersement of the large crowds, and the access gates
allowed for the fast entry of an ambulance if needed.
10
SAFEROADS.COM.AU T H E Y E A R I N R E V I E W
International Sales
HV2 Barrier Deployed in New Zealand
CSP Pacific are New Zealand’s leading supplier of
civil roading construction and road safety products.
The organisation rent a range of road safety products
to third parties, and have been involved in projects
throughout New Zealand and the South Pacific for
the last four decades. The latest and most innovative
temporary crash barriers are included in the company’s
rental fleet, which led to CSP’s interest in Saferoads’ new
HV2 Barrier.
The HV2 Barrier provides CSP Pacific customers the
opportunity to rent a barrier that is fast to deploy. It is
the only barrier in the world to successfully pass MASH
TL-4 crash testing without requiring any anchoring or
pinning to the road surface. This means that the HV2
Barrier can be used to reliably protect road workers in
speed zones up to 100 kilometres per hour. It is tested to
withstand the impact of not only passenger vehicles, but
to also safely deflect a ten tonne truck.
David Russell, National Hire Manager at CSP Pacific,
said that the HV2 Barrier was chosen over other steel
crash barriers because of its low deflection and the
fact that it does not require anchoring or pinning to the
road surface.
“The no pinning is the advantage, and its radius
is the best of all the steel barriers,” he said. Being
unanchored, the deployment and retrieval of HV2 Barrier
is a speedy process for CSP Pacific customers, which
include many construction companies. This is due to the
innovative connection system that allows the task to be
completed even faster than other unanchored barriers.
“A comment from our customer who has been installing
barriers for 20 years was that this is the best and
quickest barrier he had ever used,” said Mr Russell.
11
The no pinning is the advantage, and
its radius is the best of all the steel
barriers
SAFEROADS.COM.AU Variable Message Signs Deployed
in New Zealand
Based in Christchurch, New Zealand, Next Hire
supplies temporary road safety products with
a focus on reliability and renewable energy.
The company’s overall aim is to provide a brighter and
more sustainable future for the next generation.
The organisation rent a range of products, including
portable traffic lights, temporary lighting and Variable
Message Signs.
Next Hire were searching for a cost effective VMS solution
to offer their customers, and, due to having an existing
relationship with Saferoads, the decision was made to trial
Saferoads’ Zone VMS boards in their rental fleet.
The VMS boards were shipped to New Zealand, and were
put to use within an hour of arriving at Next Hire.
Mario Bennett, Business Development Manager at Next
Hire, said that his experience with Saferoads as a VMS
supplier was “spot on. The best thing was how quick it was
to get the boards online. This was key for us, as we needed
to take them straight to a work site.”
He also commented on how easy and intuitive the Zone 2
VMS Online Management System is. “This platform is easy
to navigate, it was great that it didn’t require any downtime
from our staff learning how to use it,” Mr Bennett said.
This platform is easy to navigate, it
was great that it didn’t require any
downtime from our staff learning
how to use it
12
SAFEROADS.COM.AU T H E Y E A R I N R E V I E W
T-Lok Barrier Deployed in Whittlesea
Negri Contractors was founded in 1928 and today is
one of Melbourne’s most experienced and capable
construction companies, regularly undertaking major
works for the likes of Melbourne Airport and VicRoads.
Saferoads’ Road Safety Rental team are proud to regularly
assist Negri in ensuring safe and effective temporary barrier
solutions on their worksites. Negri continue to choose Road
Safety Rental due to the high level of customer service and
the turn-key solutions on offer.
A recent Negri project at Yan Yean Road in Whittlesea
required the highest level of containment and lowest
deflections, so Road Safety Rental recommended the T-Lok
Barrier. This TL-3 barrier has the lowest deflection levels of
any of the approved concrete barrier systems.
Approximately 300 metres of T-Loks were
deployed, and then later switched to the
alternate side of the road as widening
of the corridor was performed on both
northern and southern bound lanes.
This project was delivered in a timely manner with
minimal interruptions to traffic and resulted in a thoroughly
impressed client.
13
SAFEROADS.COM.AU Ironman Hybrid Barrier Deployed
at Christmas Festival
The organising committee of the Christmas Festival of
Lights, which is one of Melbourne’s largest and most
iconic street festivals, needed to ensure the protection
of the crowds enjoying the event, held on Saturday the
30th of November.
The event offers a magical night of fun, entertainment
and festivity.
There are many free activities, such as live theatre, rides,
The Ironman Hybrid Barrier was chosen
due to being freestanding and cost
food trucks and visits with Santa. The night wraps up with an
effective to deploy, whilst still offering event
impressive fireworks display. It attracts upwards of 50,000
people, and is the largest free Christmas event in Victoria.
As the event required several major road closures, Road
Safety Rental were engaged by contractor, Frankston City
Council, to provide a crash barrier solution to ensure an
errant vehicle would not enter the pedestrian area.
organisers peace of mind, being ASBAP
approved up to 80km/h.
14
SAFEROADS.COM.AU Directors’ Report
Your Directors submit their report for the year ended 30 June 2020.
David Ashmore
Darren Hotchkin
David Cleland
Hayden Wallace
Directors’ Profiles
Non-Executive Chairman
Appointed 22 November 2012
Executive Director (CEO)
Appointed 21 October 2005
Non-Executive Director
Appointed 1 December 2010
Non-Executive Director
Appointed 16 March 2020
David Ashmore (Age 68) (FCA GAICD F.FIN)
Darren Hotchkin (Age 56)
Non-Executive Chairman
Executive Director/Chief Executive Officer
David Ashmore was appointed to the Board on 22 November
2012 and was re-elected at the November 2013, October 2015,
October 2017 and October 2019 AGM’s. He was appointed
Chairman of the Board on 19 August 2013. He is Chairman of the
Remuneration/Nomination Committee and a member of the Audit
and Risk Committee.
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 as Chief Executive Officer on
10 April 2012.
David is a career Chartered Accountant with 40 years of
professional public practice experience focused 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.
David has not served as a Director of any other listed companies
during the preceding three years.
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 guidepost, 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 that 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 presented at various
International Road Federation conferences.
Darren has not served as a Director of any other listed companies
during the preceding three years.
15
SAFEROADS.COM.AU David Cleland (Age 75) (Dip.ME GAICD FIE (retired))
Hayden Wallace (Age 49) (MBA, B. Eng.)
Non-Executive Director
Non-Executive Director
David Cleland was appointed to the Board on 1 December 2010
and was re-elected at the October 2011, November 2014, October
2016 and October 2018 AGM’s. He was appointed acting Chief
Executive Officer on 28 November 2011, handing over the role to
Darren Hotchkin on 10 April 2012. He is Chairman of the Audit and
Risk Committee and a member of the Remuneration/Nomination
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.
Hayden Wallace was appointed to the Board on 16 March
2020. He is a member of the Audit and Risk Committee and
Remuneration/Nomination Committee
Mr. Wallace is a respected and leading figure in the road safety
barrier industry with over 20 years’ experience in leading multi-
site product manufacturing and distribution facilities serving the
national road safety barrier market.
Hayden has invented numerous road and vehicle safety barrier
systems covered by international patents. He has been involved in
advancing best practice for safety barrier systems through active
participation in the Australian and New Zealand Standard for
Road Safety Barriers as well as championing the advancement
of numerous public domain road safety barrier systems to the
Australian market.
Hayden has led the design and construction of several
manufacturing plants for production of road safety barriers as
well as a galvanising facility. He is the founding director and
a major shareholder of Safe Direction Pty Ltd, a company that
designs, manufactures, supplies and installs innovative guardrail
systems and safety barriers for roads, car parks, warehouses and
pedestrians. These products are not competitive with, but are
complementary to, Saferoads’ product range.
Hayden holds a Master’s of Business Administration from The
University of Technology, Sydney and Bachelor of Engineering from
The University of Sydney.
Hayden has not served as a Director of any other listed
companies during the preceding three years.
Company Secretary
Peter Fearns (CPA, BBus (Acctg))
Peter joined Saferoads in December 2011 as Chief Financial Officer and was appointed Company Secretary on 22 December 2016. He
has over 20 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 former ASX listed UXC Limited. Prior to Saferoads, he was Chief Financial Officer of a national
privately owned urban planning and property advisory business.
Peter is a Certified Practising Accountant (CPA) and holds a Bachelor of Business degree majoring in Accounting.
16
SAFEROADS.COM.AU 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
Hayden Wallace
Dividends
Shares
1,401,807
9,359,025
508,610
Nil
No interim or final dividend was paid or declared for the financial year ended 30 June 2020.
No interim or final dividend was declared or paid for the financial year ended 30 June 2019.
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 and signage; rubber-based traffic calming products including
separation kerbing and wheel stops; variable messaging sign boards; decorative and standard street and major road light poles and
permanent and temporary public solar lighting poles; permanent and temporary crash cushions including bollards and safety barriers.
In all its activities, the Company remains focused on providing innovative 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 2019-20 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
Since the end of the financial year the Company has entered into a revised facility agreement with its financier, Commonwealth Bank
of Australia, offering an extended term of an additional two years on the Term loan and a new asset finance facility to enable further
growth in the equipment rental portfolio.
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.
17
SAFEROADS.COM.AU Indemnification and Insurance of Directors, Officers and Auditors
During the year, Directors’ and Officers’ insurance premiums were paid for any person who was a Director and/or Officer of the
Company.
The Group has not agreed to indemnify its auditors, Grant Thornton.
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 greenhouse gases and falls well below the reporting
thresholds set by the National Greenhouse and Energy Reporting Act 2007.
Proceedings on Behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the
Company for all or part of those proceedings
Options
At the date of this report, there were no un-issued shares of the company under option.
18
SAFEROADS.COM.AU 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
salary information provided by various professional organisations.
Remuneration of Directors and Key Management Personnel
Non-Executive Directors
Total remuneration for non-executive Directors for 2019-20 was $144,250. 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
Mr Darren Hotchkin, Chief Executive Officer, received total remuneration of $345,880, including statutory superannuation. In addition, Mr
Hotchkin was eligible for a discretionary bonus of $50,000 based on the Company’s financial performance exceeding budget targets for
FY2020. This did not eventuate.
Key Management Personnel
Key Management Personnel (“KMP”) is defined by AASB 124 - Related Party Disclosures. Only Directors and Executive Management
that have the authority and responsibility for planning, directing and controlling the activities of Saferoads, directly or indirectly and are
responsible for the entity’s governance are classified as KMP.
Performance-based Remuneration
No performance-based remuneration (bonus incentives) were paid or payable to key management personnel, including the CEO, for the
year (FY2019: nil). The criteria for discretionary bonuses were the Company’s financial performance exceeding budget targets for FY2020.
This did not eventuate.
A summary of Company performance for the past five financial years is below.
EPS (cents)
Net profit/(loss) ($)
Share price ($)
2020
1.4
521,029
$0.20
2019
(0.1)
(41,586)
$0.22
2018
1.9
709,692
$0.20
2017
0.3
118,847
$0.11
2016
(0.3)
(116,082)
$0.13
19
SAFEROADS.COM.AU Employment Contracts
Executive employment agreements have been entered into with the Chief Executive Officer and the Chief Financial Officer 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 four months’ salary as redundancy or termination pay.
Remuneration of Directors and Key Management Personnel
30 June 2020
Non
Executive
Directors
D Ashmore
D Cleland
H. Wallace
Executive
Director
D Hotchkin
Executive *
P Fearns
Total
Short Term
Long Term
Salaries &
Fees
Non-
monetary
Cash
Bonus
Termination
Payment
Super-
annuation
$
$
$
$
$
Long
Service
Leave
$
Total
Perform-
ance
Related
Share
Based
Payment
Options
$
$
%
67,808
31,514
10,502
-
-
-
302,950
21,927
175,500
588,274
-
21,927
-
-
-
-
-
-
-
-
-
-
-
-
6,442
26,986
998
21,003
22,147
77,576
-
-
-
-
3,662
3,662
-
-
-
-
-
-
74,250
58,500
11,500
345,880
201,309
691,439
* Key management personnel is defined as those persons having authority and responsibility for planning, directing and controlling the activities of the
entity, directly or indirectly.
Note, in response to the COVID-19 situation, the non-executive directors agreed to a 40% reduction and the executive director a 20% reduction in
remuneration for the time period covering April to June 2020.
Short Term
Long Term
Salaries &
Fees
Non-
monetary
Cash
Bonus
Termination
Payment
Super-
annuation
$
$
$
$
$
Long
Service
Leave
$
Total
Perform-
ance
Related
Share
Based
Payment
Options
$
$
%
75,342
42,798
-
-
323,333
17,771
168,250
609,723
-
17,771
-
-
-
-
-
-
-
-
-
-
7,158
22,202
20,531
22,554
72,445
-
-
-
3,652
3,652
-
-
-
-
-
82,500
65,000
361,635
194,456
703,591
30 June 2019
Non
Executive
Directors
D Ashmore
D Cleland
Executive
Director
D Hotchkin
Executive *
P Fearns
Total
20
-
-
-
-
-
-
-
-
-
SAFEROADS.COM.AU Shareholdings of Key Management Personnel
Shares held in Saferoads Holdings Limited:
Directors
D Hotchkin
D Ashmore
D Cleland
H Wallace
Executive
P Fearns
Total
Balance at
1 July 2019
Acquired through
On-Market trade
Acquired through
Off-Market trade
Sold
Balance at
30 June 2020
8,641,655
1,341,807
508,610
-
33,000
10,525,072
227,370
60,000
-
-
-
490,000
-
-
-
-
287,370
490,000
-
-
-
-
-
-
9,359,025
1,401,807
508,610
-
33,000
11,302,442
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 number of meetings
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 H Wallace
11
11
11
4
11
11
11
4
3
-
3
-
3
-
3
-
1
-
1
1
1
-
1
1
Non-Audit services
During the year, Grant Thornton, the Company’s auditors, performed certain other services in addition to their statutory audit duties.
The Board has considered the non-audit services provided during the year by the auditor and, in accordance with written advice
provided by resolution of the Audit and Risk Committee, is satisfied that the provision of those non-audit services during the year is
compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:
• All non-audit services were subject to the corporate governance procedures adopted by the Company and have been
reviewed by the Audit and Risk Committee to ensure they do not impact upon the impartiality and objectivity of the auditor
• The non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a
management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks
and rewards.
Details of the amounts paid to the auditors of the Company, Grant Thornton, and its related practices for audit and non-audit services
provided during the year are set out in Note 21 to the financial statements.
21
SAFEROADS.COM.AU Rounding of Amounts
Saferoads Holdings Limited is a type of Company that is referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest
dollar.
Auditors’ 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
28 August 2020
22
SAFEROADS.COM.AU Grant Thornton Audit Pty Ltd
Level 22 Tower 5
Collins Square
727 Collins Street
GPO Box 4736
Melbourne VIC 3008
T +61 3 8320 2222
Auditor’s Independence Declaration
to the Directors of Saferoads Holdings Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit
of Saferoads Holdings Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and
belief, there have been:
a
no contraventions of the auditor independence requirements of the Corporations Act 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
Chartered Accountants
Michael Climpson
Partner - Audit & Assurance
Melbourne, 28 August 2020
Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited 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 Limited 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. Liability
limited by a scheme approved under Professional Standards Legislation.
www.grantthornton.com.au
23
SAFEROADS.COM.AU 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.
The Board’s objective is to ensure investor confidence in the Company and its operations given its size, stage of development and
complexity.
The Group’s Corporate Governance Statement for the financial year ending 30 June 2020 is dated as at 30 June 2020 and was approved
by the Board on 21 July 2020. The Board advises that it complies with the ASX Corporate Governance Principles set out in the Company’s
Corporate Governance Statement, which is located on the Company’s website www.saferoads.com.au/investors/corporate-governance.
24
SAFEROADS.COM.AU Saferoads Holdings Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2020
Notes
CONSOLIDATED
2020
$
2019
$
Revenue
Revenue from product sales and services
Cost of direct materials and labour
Movement in inventories
Gross profit
Other income
Employee benefits
Motor vehicle costs
Occupancy costs
Travel and accommodation costs
IT & Communications costs
Warehouse costs
Impairment (loss)/gain of financial assets
Other expenses
Earnings before interest, tax, depreciation and amortisation (EBITDA)
Depreciation and amortisation
Earnings before interest and tax (EBIT)
Finance costs
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
Total comprehensive income/(loss) for the period
Total comprehensive income/(loss) 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
25
4
4
9
4
4
5
6
6
7
16,496,950
(9,772,926)
(445,283)
6,278,741
33,655
(2,652,680)
(129,437)
(47,422)
(103,226)
(128,513)
(179,645)
(76,950)
(1,030,579)
1,963,944
(1,083,143)
880,801
(290,616)
590,185
17,946,570
(11,629,058)
253,336
6,570,848
162,248
(3,926,670)
(173,173)
(85,634)
(283,664)
(138,195)
(128,126)
30,000
(957,682)
1,069,952
(869,687)
200,265
(255,292)
(55,027)
(69,156)
13,441
521,029
(41,586)
521,029
(41,586)
-
521,029
-
(41,586)
521,029
(41,586)
Cents
1.43
1.43
-
Cents
(0.11)
(0.11)
-
SAFEROADS.COM.AU Saferoads Holdings Limited
Consolidated Statement of Financial Position
AS AT 30 JUNE 2020
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Total Current Assets
Non-current Assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Other non-current assets
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Contract liabilities
Interest-bearing loans and borrowings
Lease liabilities
Provisions
Total Current Liabilities
Non-current Liabilities
Interest-bearing loans and borrowings
Lease liabilities
Provisions
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Retained earnings
TOTAL EQUITY
The accompanying notes form part of these financial statements
26
Notes
CONSOLIDATED
2020
$
2019
$
8
9
10
11
12
5
13
14
15
16
14
15
16
17
17
1,257,468
1,725,092
3,057,902
256,048
6,296,510
5,950,093
1,272,622
1,198,697
17,939
8,439,351
14,735,861
529,231
2,412,465
3,325,701
197,353
6,464,750
5,982,324
1,642,231
1,267,853
17,937
8,910,345
15,375,095
1,856,926
2,336,266
200,710
155,347
726,728
312,593
76,509
79,773
687,759
487,037
3,252,304
3,667,344
1,502,934
2,071,089
46,991
3,621,014
6,873,318
7,862,543
5,353,905
2,508,638
7,862,543
1,704,286
2,644,548
17,403
4,366,237
8,033,581
7,341,514
5,353,905
1,987,609
7,341,514
SAFEROADS.COM.AU Saferoads Holdings Limited
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2020
CONSOLIDATED
At 1 July 2018
Adjustment from adoption of AASB 16
Net profit/(loss) for the period
Other comprehensive income for the period
At 30 June 2019
At 1 July 2019
Net profit/(loss) for the period
Other comprehensive income for the period
At 30 June 2020
The accompanying notes form part of these financial statements
Contributed Equity
$
Retained
Earnings
$
Total Equity
$
5,353,905
2,110,309
7,464,214
-
-
-
(81,114)
(41,586)
-
(81,114)
(41,586)
-
5,353,905
1,987,609
7,341,514
5,353,905
1,987,609
-
-
521,029
-
7,341,514
521,029
-
5,353,905
2,508,638
7,862,543
27
SAFEROADS.COM.AU Saferoads Holdings Limited
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Net cash flows from operating activities
Cash flows from investing activities
Proceeds from sale of plant and equipment
Purchase of plant and equipment
Product development costs
R&D tax rebate received
Net cash flows from investing activities
Cash flows from financing activities
Proceeds from lease liabilities
Repayment of loans and borrowings
Repayment of lease liabilities
Interest received
Interest paid
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
The accompanying notes form part of these financial statements
Notes
CONSOLIDATED
2020
$
2019
$
18,651,456
(16,386,466)
2,264,990
19,739,579
(19,197,256)
542,323
145,850
(741,787)
(82,866)
351,850
(326,953)
-
(125,778)
(798,447)
5,041
(290,616)
(1,209,800)
728,237
529,231
1,257,468
-
(339,689)
(336,702)
212,414
(463,977)
356,386
(73,765)
(653,832)
2,582
(255,294)
(623,923)
(545,577)
1,074,808
529,231
8
8
28
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
1. CORPORATE INFORMATION
Saferoads Holdings Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the
Australian Securities 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 authoritative 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
For the Financial Report for the year ended 30 June 2019, the group elected to early adopt all of the new or amended Accounting
Standards and Interpretations issued by the Australian Accounting Standard Board (‘AASB’) that were mandatory for the 30 June 2020
reporting period. Other new accounting standards and interpretations published but not yet mandatory for the 30 June 2020 reporting
period have not been early adopted by the group. The group’s initial assessment of the impact of these standards and interpretations
is that there will be no material impact upon future application.
The financial statements were authorised for issue by the Directors on 28 August 2020. 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.
All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been
eliminated in full.
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.
29
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
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 or prime cost method, over the estimated useful life, as denoted below:
• Property/leasehold improvements (prime cost - 10% to 50%)
• Plant and equipment (diminishing value and prime cost - 5% to 50%)
• Motor vehicles (diminishing value - 18% to 25%)
• Rental equipment (prime cost - 5% to 33%)
(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.
30
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
(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 (10 years) 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.
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.
31
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
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.
Any Research and Development tax rebates received or receivable are offset against the respective capitalised development costs to
the extent to which they relate to the claim.
(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
The Group makes use of a simplified approach in accounting for trade and other receivables and records the loss allowance at the
amount equal to the expected lifetime credit losses. In using this practical expedient, the Group uses its historical experience, external
indicators and forward-looking information to calculate the expected credit losses using a provision matrix. The Group assesses
impairment of trade receivables on a collective basis as they possess credit risk characteristics based on the days past due.
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 cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above,
net of any 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.
32
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
(n) Leases
For any new contracts entered into, the Group considers whether a contract is, or contains a lease. A lease is defined as ‘a contract,
or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’.
To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:
• the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified
at the time the asset is made available to the Group
• the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of
use, considering its rights within the defined scope of the contract
• the Group has the right to direct the use of the identified asset throughout the period of use. The Group assess whether it has the
right to direct ‘how and for what purpose’ the asset is used throughout the period of use.
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-
use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by
the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in
advance of the lease commencement date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end
of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment
when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date,
discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed),
variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments
arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to
reflect any reassessment or modification, or if there are changes in in-substance fixed payments.
The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of
recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on
a straight-line basis over the lease term.
(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 outflow 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.
33
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
(q) Revenue
To determine whether to recognise revenue, the Group follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied
In all transactions, the total price for a contract is allocated amongst the various performance obligations based on their relative
stand- alone selling prices. The transaction price for a contract excludes any amounts collected on behalf of third parties.
Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring
the promised goods or services to its customers.
The Group’s future obligation to transfer goods or services to a customer for which the Group has received consideration from the
customer is recognised as a contract liability, and reports these amounts as such in its statement of financial position, until such time
as the performance obligations are satisfied. If the Group satisfies a performance obligation before it receives the consideration, the
Group recognises either a contract asset or a receivable in its statement of financial position, depending on whether something other
than the passage of time is required before the consideration is due.
Sales of goods
Revenue from sales of goods for a fixed fee with no significant service obligation is recognised when or as the Group has transferred
control of the assets to the customer. Control of the asset is considered to transfer to the buyer at the time of delivery of the goods to
the customer.
Rendering of services
Revenue from the provision of services is recognised over time on a straight line basis. The Group utilises the output method to
measure the progress of the services provided.
(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 reporting 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 reporting 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
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
(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.
Cash flows are included in the statement of cash flows 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.
(ii) Intangible assets - capitalised development costs
Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably be
regarded as assured. Determining whether the recognition requirements for the capitalisation of these development costs are met
requires judgement. After capitalisation, management monitors whether the recognition requirements continue to be met and whether
there are any indicators that capitalised costs may be impaired.
35
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
(iii) Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability that future taxable income
will be available against which the deductible temporary differences and tax loss carry-forwards can be utilised.
(iv) Going concern - COVID-19 pandemic
The financial statements have been prepared on the basis that the Consolidated entity is a going concern, which assumes that in the
medium term the Company will return to continuity of normal business activities and the realisation of assets and the settlement of
liabilities in the ordinary course of business.
The COVID-19 global pandemic continues to impact domestic and international economies. The degree and duration of the financial
impact on the activities and financial position of the Company is presently unknown as it is very difficult to assess. The Company will
continue to monitor the COVID-19 situation and react accordingly to protect its employees, assets and shareholder interests.
Whilst the current trading environment has been impacted by the recent Victorian COVID-19 Stage 4 restrictions, the Company is still
servicing demand for critical and essential infrastructure construction.
The Company has the ability to scale back the business where necessary, if the economic conditions worsen, however it is the
Directors’ current view that governments historically have responded to past recessionary situations with significant investments in
public infrastructure and the Company is well-placed to provide its products and services in support of this investment going forward.
At the date of this report, the Company has a strong liquidity position and has support from its primary financier, having recently
renegotiated its financing facilities (refer note 24).
(x) Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received
and the group will comply with all the attached conditions.
Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to match them with
the costs that they are intended to compensate.
Government grants relating to cash subsidies are recognised in the profit or loss as other income.
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. In the current year the Group considers there to be one material segment being the
operations within Australia.
During 2020, $1,653,023 or 10% (2019: $2,363,107 or 13%) of the Group’s revenues depended on a single customer.
36
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
4. REVENUES AND EXPENSES
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:
(i) Revenue
Revenue from product sales - point in time
Revenue from provision of services - over time
(ii) Other income
R&D tax rebate
Product royalty income - International
Net gain/(loss) on sale of assets
Interest
Government grant (export market development)
Government grant (COVID-19 Cash Boost)
Net foreign exchange gains/(losses)
Other
(iii) Expenses
Depreciation and amortisation
- Property, plant & equipment
- Right-of-use assets
- Intangible assets
Impairment of assets
Finance costs
- Bank borrowings
- Leasing arrangements
Bad debts written off
Provision (writeback) for doubtful debts
CONSOLIDATED
2020
$
2019
$
12,770,525
15,862,949
3,726,425
16,496,950
2,083,621
17,946,570
-
-
15,947
5,041
-
50,000
(41,064)
3,731
33,655
88,191
56,362
-
2,582
20,348
-
(19,881)
14,646
162,248
16,530,605
18,108,818
614,351
240,866
227,926
1,083,143
523,506
237,159
109,022
869,687
47,083
3,585
95,012
195,604
290,616
60,920
16,030
102,954
152,338
255,292
-
(30,000)
During the year, the Company was a recipient of a wage subsidy provided by the Australian Federal government in response to the
COVID-19 pandemic. An amount of $318,000 is included as an offset in Employee benefits expense.
37
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
5. INCOME TAX
Major components of income tax expense for the year ended 30 June 2020 are:
CONSOLIDATED
2020
$
2019
$
Statement of Profit or Loss and Other Comprehensive
income
Current income tax charge/(benefit)
69,156
(13,441)
Income tax expense/(benefit) reported in statement of profit
or loss and other comprehensive income
69,156
(13,441)
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:
Accounting profit/(loss) before income tax
590,185
(55,027)
At the statutory income tax rate of (2020: 27.5%; 2019: 27.5%)
Non-deductible expenses
Recognition of prior year unbooked tax losses
162,301
1,812
(94,957)
69,156
(15,132)
1,691
-
(13,441)
Deferred income tax
Deferred income tax at 30 June relates to the following:
CONSOLIDATED
Deferred income tax asset/(liability)
Employee entitlements
Capitalised Research & Development Costs
Other
Deferred tax assets relating to other temporary differences
Carry forward tax losses brought to account
Gross deferred income tax (liability)/asset
Deferred income tax charge
Statement of Financial
Position
Statement of Profit or Loss and
Other Comprehensive Income
2020
$
2019
$
2020
$
2019
$
98,886
(270,351)
15,552
155,913
138,721
(369,749)
11,144
219,884
1,198,697
1,267,853
1,198,697
1,267,853
39,835
(99,398)
(4,408)
(30,986)
94,957
-
9,993
36,081
31,738
(77,812)
-
-
As as 30 June 2020, the consolidated entity has carry forward tax losses with a tax effect of $1,893,549, measured at the new
corporate tax rate of 26%. Carry forward tax losses with a tax effect of $1,198,697 have been brought to account as a deferred tax
asset. Carry forward tax losses with a tax effect of $694,852 relating to a prior year have not been brought to account.
The consolidated entity has realised capital losses with a gross amount of $1,832,149 that is available for offset against any future
taxable capital gains.
38
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
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:
Net profit/(loss) attributable to equity holders from continuing operations
Net profit/(loss) attributable to equity holders of the parent
CONSOLIDATED
2020
$
521,029
521,029
2019
$
(41,586)
(41,586)
Net profit/(loss) attributable to ordinary shareholders for diluted earnings per share
521,029
(41,586)
Weighted average number of ordinary shares for basic earnings per share
Adjusted weighted average number of ordinary shares for diluted earnings per share
36,400,000
36,400,000
36,400,000
36,400,000
- Basic for profit/(loss) for the full year
- Diluted for profit/(loss) for the full year
Cents
1.43
1.43
Cents
(0.11)
(0.11)
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 36,400,000 shares on issue.
7. DIVIDENDS PAID AND PROPOSED
Equity dividends on ordinary shares:
Interim franked dividend for 2020: 0.0 cents (2019: 0.0 cents)
Dividends proposed and not recognised as a liability:
Final franked dividend for 2020: 0.0 cents (2019: 0.0 cents)
Franking Credit Balance:
CONSOLIDATED
2020
$
2019
$
-
-
-
-
The amount of franking credits available for future reporting periods after the payment of
income tax payable and the impact of dividends proposed.
4,134,941
4,347,400
39
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
8. NOTES TO THE STATEMENT OF CASH FLOWS
CONSOLIDATED
2020
$
2019
$
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
1,257,468
529,231
Reconciliation from the net profit/(loss) after tax to the net cash flows from
operations
Profit/(loss) after tax for the year
521,029
(41,586)
Adjustments for:
Depreciation and amortisation
Net (profit)/loss on disposal of plant and equipment
Impairment of assets
Bad and doubtful debts
Interest received
Interest paid
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 contract liabilities
(Decrease)/increase in provisions
Net cash from operating activities
Non-cash financing and investing activities
1,083,143
(15,947)
47,083
76,950
(5,041)
290,616
610,423
273,571
(58,697)
69,156
(606,641)
124,201
(144,856)
2,264,990
866,102
-
3,585
(30,000)
(2,582)
255,292
69,728
(253,336)
74,865
(13,441)
(308,347)
(41,619)
(36,338)
542,323
During the year, the Group acquired plant and equipment (excluding right-of-use assets) with an aggregate value of $157,480 (2019:
$1,253,652) by means of leases.
40
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
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
Trade receivables are non-interest bearing.
Movement in provision for impairment
Balance at the beginning of financial year
Amounts written off
Additional impairment provision recognised/(released)
10. INVENTORIES
INVENTORIES
Stock on hand
41
CONSOLIDATED
2020
$
1,622,174
118,948
(16,030)
1,725,092
986,630
547,264
70,647
1,603
2019
$
2,225,146
187,319
-
2,412,465
1,525,734
628,207
71,205
-
1,606,144
2,225,146
-
-
16,030
16,030
30,000
-
(30,000)
-
CONSOLIDATED
2020
$
2019
$
3,057,902
3,325,701
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
11. PROPERTY, PLANT AND EQUIPMENT
Property, plant & equipment at cost
Less accumulated depreciation
Total plant & equipment
Movements in Carrying Amounts
Balance at 1 July 2018
Adjustment on transition of AASB 16
Additions
Depreciation expense
Assets transferred to product dev’t costs
Assets transferred to inventories
Impairment
CONSOLIDATED
2020
$
2019
$
10,079,373
9,671,215
(4,129,280)
(3,688,891)
5,950,093
5,982,324
Property/
Leasehold
improvements
$
107,050
1,381,277
163,331
(246,805)
-
-
-
Plant &
equipment
Motor
vehicles
Rental
equipment
$
$
$
Total
$
707,127
491,841
2,313,192
3,619,210
-
134,549
(135,303)
-
-
-
-
-
1,381,277
237,714
1,285,573
1,821,167
(122,994)
(14,718)
-
-
(255,563)
(760,665)
-
(60,362)
(3,585)
(14,718)
(60,362)
(3,585)
Carrying amount at 30 June 2019
1,404,853
706,373
591,843
3,279,255
5,982,324
Balance at 1 July 2019
Additions
Depreciation expense
Disposals
Assets transferred to inventories
Impairment
1,404,853
3,123
(253,206)
-
-
-
Carrying amount at 30 June 2020
1,154,770
706,373
48,671
(131,369)
(2,836)
-
(47,083)
573,756
591,843
3,279,255
5,982,324
-
953,950
1,005,744
(101,154)
(122,373)
-
-
(369,488)
(4,694)
(5,772)
-
(855,217)
(129,903)
(5,772)
(47,083)
368,316
3,853,251
5,950,093
Included in the net carrying amount of Property, plant and equipment are right-of-use assets as follows:
Initial
recognition
$
1,381,277
-
1,381,277
Net carrying
amount b/f
Additions
Depreciation
$
133,425
30,455
163,880
$
(227,007)
(10,152)
(237,159)
Additions
Depreciation
Net carrying
amount
$
1,287,695
20,303
1,307,998
Net carrying
amount
$
$
$
$
1,287,695
20,303
1,307,998
-
-
-
(230,714)
1,056,981
(10,152)
10,151
(240,866)
1,067,132
2019
Property
Plant & equipment
Total right-of-use assets
2020
Property
Plant & equipment
Total right-of-use assets
42
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
12. INTANGIBLE ASSETS
Product development costs
Less accumulated amortisation
Website development costs
Less accumulated amortisation
Patents and product approvals
Less accumulated amortisation
CONSOLIDATED
2020
$
2019
$
1,559,516
(576,422)
983,094
56,427
(34,137)
22,290
301,622
(34,384)
267,238
1,272,622
1,745,821
(401,280)
1,344,541
49,077
(15,737)
33,340
264,350
-
264,350
1,642,231
Movement in carrying amounts
Website dev’t
costs
Patents/Product
approvals
Product dev’t
costs
Balance at 1 July 2018
Capitalisation of costs
Assets transferred from plant & equipment
R&D tax rebate allocation
Amortisation expense
Carrying amount at 30 June 2019
Balance at 1 July 2019
Capitalisation of costs
R&D tax rebate allocation
Amortisation expense
Carrying amount at 30 June 2020
$
$
29,982
16,162
-
-
(12,804)
33,340
33,340
7,350
-
(18,400)
22,290
195,623
68,727
-
-
-
$
1,213,338
251,813
14,718
(39,110)
(96,218)
264,350
1,344,541
264,350
37,272
-
(34,384)
267,238
1,344,541
38,244
(224,549)
(175,142)
983,094
Total
$
1,438,943
336,702
14,718
(39,110)
(109,022)
1,642,231
1,642,231
82,866
(224,549)
(227,926)
1,272,622
Patents/product approvals predominantly relate to various applications for new products that have yet to be commercialised. Once
the related asset is in use, then the relevant patent/product approval will be amortised over its expected useful life.
43
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
13. TRADE AND OTHER PAYABLES (CURRENT)
Trade payables
Accrued expenses
GST payable
Payables are non-interest bearing and are normally settled between 30 and 60-day terms.
14. INTEREST-BEARING LOANS AND BORROWINGS
Current
Bank loans
Non-current
Bank loans
The Group was in compliance with its facility covenants at 30 June 2020.
Financing facilities available
At reporting date, the following financing facilities had been negotiated and were
available:
Total facilities:
- term loan
- overdraft
- bank charge card
Facilities used at reporting date
- term loan
- overdraft
- bank charge card
Facilities unused at reporting date
- overdraft
- bank charge card
CONSOLIDATED
2020
$
2019
$
1,556,024
2,056,581
237,712
63,190
217,105
62,580
1,856,926
2,336,266
CONSOLIDATED
2020
$
2019
$
155,347
79,773
1,502,934
1,658,281
1,704,286
1,784,059
CONSOLIDATED
2020
$
2019
$
1,658,281
500,000
75,000
1,784,059
500,000
75,000
1,658,281
1,784,059
-
40,000
-
54,000
500,000
35,000
500,000
21,000
The bank facilities are secured by a registered charge over certain assets and undertakings, and also a registered charge over the
assets and undertakings of Saferoads Holdings Ltd.
Saferoads Pty Ltd is required to provide the Commonwealth Bank with quarterly financial information.
Since the end of the financial year, certain financing facilities have been revised, including the extension of the term loan from
maturity in October 2022 to maturity in October 2024. In addition, a new asset finance facility has been negotiated.
44
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
15. LEASE LIABILITIES
Current
Hire purchase
Right-of-use asset leases
Non-current
Hire purchase
Right-of-use asset leases
Hire purchase liabilities are secured by a charge over the financial assets.
Lease liability commitments payable:
- less than one year
- later than one year but less than five years
- later than five years
Less future finance charges
Total lease liabilities
Lease payments not recognised as a liability
CONSOLIDATED
2020
$
2019
$
485,652
241,076
726,728
465,035
222,724
687,759
1,046,348
1,024,741
2,071,089
1,378,730
1,265,818
2,644,548
CONSOLIDATED
2020
$
2019
$
881,276
2,224,972
112,738
3,218,986
(421,169)
2,797,817
886,491
2,670,571
380,027
3,937,089
(604,782)
3,332,307
The Group has elected not to recognise a lease liability for short term leases (leases with an expected term of 12 months or less)
or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis.
The expense relating to payments not included in the measurement of the lease liability is as follows:
Short-term leases
Leases of low value assets
2020
$
2019
$
-
6,468
6,468
30,533
6,468
37,001
The Group leases its head office and warehouse facility and other warehouse sites with terms ranging from 3 to 10 years.
The Group leases warehouse plant and equipment with a term of 3 years.
There are no material make good obligations with leases, individually or in the aggregate.
The Group has leases for the main warehouse and related facilities, an office and production building, equipment rental assets,
company motor vehicles, production equipment and office equipment. With the exception of short-term leases and leases of
low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. The Group
classifies its right-of-use assets in a consistent manner to its property, plant and equipment (see Note 11).
There are no other commitments or contingent liabilities of the Group.
45
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
16. PROVISIONS
Current
Employee benefits
Non-Current
Employee benefits
17. EQUITY
Contributed Equity
Ordinary shares
Balance at beginning of period
Issued and fully paid
Movements in ordinary shares on issue (legal parent)
Balance at beginning of the period
At 30 June
There were no ordinary share movements during the year.
CONSOLIDATED
2020
$
2019
$
312,593
312,593
487,037
487,037
46,991
46,991
17,403
17,403
CONSOLIDATED
2020
$
2019
$
5,353,905
5,353,905
5,353,905
5,353,905
No. of shares
36,400,000
36,400,000
36,400,000
36,400,000
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.
Retained Earnings
CONSOLIDATED
2020
$
2019
$
1,987,609
2,110,309
-
521,029
2,508,638
(81,114)
(41,586)
1,987,609
Movements in retained earnings are as follows:
Balance at beginning of period
Adjustment from the adoption of AASB 16
Net profit/(loss) for the year
Balance at 30 June
46
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
18. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise a term loan, lease liabilities, 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:
Financial Assets
- Cash and cash equivalents
- Financial assets at fair value through profit & loss
Total Financial Assets
Financial Liabilities
- Financial liabilities at amortised cost
Total Financial Liabilities
CONSOLIDATED
2020
$
2019
$
1,257,468
1,725,092
529,231
2,412,465
2,982,560
2,941,696
6,313,024
7,452,632
6,313,024
7,452,632
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.
47
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
18. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(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
Within 1
year
2 to 5 years
Later than
5 years
Total
Fixed Interest Rate Maturing
%
$
$
$
$
$
$
2020
Financial Assets
- Cash
- Receivables
0.58%
N/A
-
1,257,468
1,725,092
-
Total Financial Assets
1,725,092
1,257,468
Financial Liabilities
- Payables
- Bank borrowings
- Lease liabilities
N/A
4.67%
6.19%
1,856,926
-
1,658,281
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,257,468
1,725,092
-
2,982,560
-
-
1,856,926
1,658,281
-
726,728
1,959,271
111,818
2,797,817
1,856,926
1,658,281
726,728
1,959,271
111,818
6,313,024
%
$
$
$
$
$
$
1.06%
N/A
N/A
5.05%
6.78%
-
529,231
2,412,465
2,412,465
-
529,231
2,336,266
-
1,784,059
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
529,231
2,412,465
2,941,696
-
-
2,336,266
1,784,059
-
687,759
2,276,804
367,744
3,332,307
2,336,266
1,784,059
687,759
2,276,804
367,744
7,452,632
Total Financial
Liabilities
2019
Financial Assets
- Cash
- Receivables
Total Financial Assets
Financial Liabilities
- Payables
- Bank borrowings
- Lease liabilities
Total Financial
Liabilities
48
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
18. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(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
managed closely.
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 $16,030 at 30 June 2020 (2019: nil), 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 $72,250 (2019: $71,205).
The Group does not have any material unmanaged credit risk to any single debtor 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 lease liabilities.
Maturity analysis of financial liabilities:
2020
- Payables
- Bank borrowings
- Lease liabilities
Within 1 Year
1 to 5 Years
Over 5 Years
$
$
$
Total
$
1,856,926
155,347
726,728
-
1,502,934
1,959,271
-
-
111,818
1,856,926
1,658,281
2,797,817
Total Financial Liabilities
2,739,001
3,462,205
111,818
6,313,024
2019
- Payables
- Bank borrowings
- Lease liabilities
Within 1 Year
1 to 5 Years
Over 5 Years
$
$
$
Total
$
2,336,266
79,773
687,759
-
1,704,286
2,276,804
-
-
367,744
2,336,266
1,784,059
3,332,307
Total Financial Liabilities
3,103,798
3,981,090
367,744
7,452,632
(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.
(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.
49
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
18. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(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.
Year Ended 30 June 2020
+/-2% in interest rates
+/-5c in AUD / USD
Year Ended 30 June 2019
+/-2% in interest rates
+/-5c in AUD / USD
19. SUBSIDIARIES
CONSOLIDATED
Profit/(loss)
$
Equity
$
+/-33,000
+/-298,000
+/-33,000
+/-298,000
$
$
+/-35,000
+/-160,000
+/-35,000
+/-160,000
The consolidated financial statements include the financial statements of Saferoads Holdings Limited and the subsidiaries listed in the
following table.
Name
Country of incorporation
Saferoads Pty Ltd
Australia
% equity interest
2020
100%
2019
100%
20. RELATED PARTIES
Transactions with Key Management Personnel
During the financial year the Company acquired certain consumable manufacturing materials and contract labour services from an
entity related to Mr D. Hotchkin at normal commercial rates aggregating $220,550 (2019: $92,700), with $59,175 included in Trade
payables at 30 June 2020 (2019: $50,939).
During the financial year the Company received professional consulting services from an entity related to Mr D. Hotchkin at normal
commercial rates aggregating $6,100 (2019: $9,900), with $3,300 included in Trade payables at 30 June 2020 (2019: $1,430).
21. AUDITORS’ REMUNERATION
Amounts received or due and receivable by:
- Current auditors: Grant Thornton, for the audit of the financial report
73,500
72,000
Other services (R&D tax rebate): Grant Thornton
24,100
11,000
2020
$
2019
$
50
SAFEROADS.COM.AU Saferoads Holdings Limited
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
22. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a)
Details of Management Personnel
(i) Directors
David Ashmore
Darren Hotchkin
David Cleland
Hayden Wallace
(ii) Executives
Peter Fearns
Non-Executive Chairman
Chief Executive Officer
Non-Executive
Non-Executive
Chief Financial Officer / Company Secretary
(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 category:
- Short-term employee benefits
- Post-employment benefits
- Long-term employee benefits
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
2020
$
2019
$
610,201
77,576
3,662
691,439
627,494
72,445
3,652
703,591
2020
$
2019
$
-
-
5,359,929
5,359,929
-
-
5,359,929
5,353,905
6,024
-
-
-
-
5,359,929
5,353,905
6,024
-
-
Guarantees entered into by the parent entity in relation to debts of its subsidiaries
941,815
1,222,290
24. SUBSEQUENT EVENTS
Extension and revision of banking facilities
Since the end of the financial year the Company has entered into a revised facility agreement with its financier, Commonwealth Bank
of Australia, offering an extended term of an additional two years on the Term loan and a new asset finance facility to enable further
growth in the equipment rental portfolio. Refer note 14.
51
SAFEROADS.COM.AU 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 2020 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.
David Ashmore
Director
28 August 2020
52
SAFEROADS.COM.AU Grant Thornton Audit Pty Ltd
Level 22 Tower 5
Collins Square
727 Collins Street
GPO Box 4736
Melbourne VIC 3008
T +61 3 8320 2222
Independent Auditor’s Report
To the Members of Saferoads Holdings Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Saferoads Holdings Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2020, 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, and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited 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 Limited 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. Liability limited by a scheme approved under Professional
Standards Legislation.
www.grantthornton.com.au
53
SAFEROADS.COM.AU Key audit matter
How our audit addressed the key audit matter
Revenue from product sales and services – Note 4
The total revenues from product sales and services earned by
Saferoads Holdings Limited was $16.5 million.
The Group derives revenue through the sale of goods and the
rendering of services which are performed under a
combination of individual agreements and contractual
arrangements.
Revenue recognition relates to whether the treatment of
revenue transactions is appropriately recorded and accounted
for.
This area is a key audit matter due to the inherent risk
associated with revenue recognition.
Our procedures included, amongst others:
Reviewing revenue recognition policies to ensure
compliance with AASB 15 Revenue from contracts with
customers;
Documenting and testing the design effectiveness of
internal controls relating to key revenue streams;
Testing a sample of revenue recognised during the year to
supporting documentation to verify occurrence;
Performing non-substantive analytical testing on revenue
balances;
Assessing the adequacy of the financial statement
disclosures.
Going concern (COVID-19) – Note 2 (w)
The financial statements have been prepared on a going
concern basis, as discussed in note 2(w). How governments
will respond to COVID-19 will continue to provide a level of
uncertainty to the Group.
We included the going concern assumption as a key audit
matter as it relies on assessing the impact of COVID-19 on the
Group’s forecast cash flows, which involves a level of
management judgement.
In assessing the appropriateness of the going concern
assumption used in preparing the financial statements, our
procedures included, amongst others:
Obtaining the Group’s cash flow forecast model and
gaining an understanding of key assumptions and
judgements underlying the model;
Understanding the impact COVID-19 is having on recent
trading results, and comparing this to cash flow forecasts;
As at 30 June 2020, the Group had cash of $1.3m and a
surplus of current assets to current liability of $3.0m.
Considering the terms of the loan facilities;
Challenging the reasonableness of the key assumptions,
including those driving the cash flows underpinning the
analysis;
Performing sensitivity analysis on key assumptions to
assess the impact on forecasted cash flows; and
Assessing the adequacy of the financial statement
disclosures.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
54
SAFEROADS.COM.AU Responsibilities of the Directors 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 and for 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.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1_2020.pdf. This description forms part of
our auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in the Directors’ report for the year ended 30 June 2020.
In our opinion, the Remuneration Report of Saferoads Holdings Limited, for the year ended 30 June 2020 complies with
section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
M J Climpson
Partner – Audit & Assurance
Melbourne, 28th August 2020
55
SAFEROADS.COM.AU ASX Additional Information
The shareholder information set out below was applicable as at 31 August 2020. At this date, the Company had on issue 36,400,000
ordinary shares in the company held by 498 shareholders.
SUBSTANTIAL SHAREHOLDERS
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act.
Holder name
No. of ordinary shares in which interest is held
MR DARREN JOHN HOTCHKIN & MRS JENNIFER ANN HOTCHKIN
RUMINATOR PTY LTD and related entities
MR STEVEN DI FABRIZIO
TWENTY LARGEST SHAREHOLDERS
9,359,025
4,555,897
3,753,710
Name
No. of shares
% Held
MR DARREN JOHN HOTCHKIN & MRS JENNIFER ANN HOTCHKIN
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