ANNUAL
REPORT
2017
SIMONDS GROUP
ANNUAL REPORT 2017
2
Contents
Founder’s Message
New Chairman’s Message
Board of Directors
Financial Summary
Diversified Earnings Strategy
FY17 Financial Report
Shareholder Information
5
6
8
10
12
15
88
3
SIMONDS GROUPANNUAL REPORT 2017 4
SIMONDS GROUPANNUAL REPORT 2017 FOUNDER’S
MESSAGE
Dear Shareholder,
We started Simonds 67 years ago, from small and humble beginnings.
With the support of many people we have built over 35,000 houses and helped families achieve their dream. It is a great thrill
to me to be part of this experience for families to move into their own home. It gives me a great sense of pride and satisfaction
in what we do in this volume building industry.
After over sixty years with Simonds, the last three years as Chairman of the ASX listed company, I made the decision to retire
from this role and look forward to being Senior Advisor to the Board.
Iain Kirkwood is the new Independent Chair. He brings experience as a corporate Chairman with considerable practical and
operational expertise gained from a successful business career spanning 38 years across a range of industries. My grandson
Rhett has been appointed Interim CEO and will remain on the Board. Delphine Cassidy and Neil Kearney join the Board as
Independent Non-Executive Directors, along with Piers O’Brien and Scott Mahony as Non-Executive Directors. My son,
Mark, comes onto the Board and will Chair the Development Committee to identify key growth opportunities.
It has been my pleasure to have grown this business from humble beginnings in 1949 to see what it has become today.
Yours sincerely,
Gary Simonds
Simonds Founder and Senior Advisor
“ It is a great thrill to me to
be part of the experience
for families to move into their
own home.”
Gary Simonds
Simonds Founder and Senior Advisor
5
SIMONDS GROUPANNUAL REPORT 2017
NEW CHAIRMAN’S
MESSAGE
“ To be asked to Chair the Simonds
Group is a privilege and honour
as is to be working with the new
Board. Its collective expertise will
be engaged to drive strong growth,
performance and safety.”
Iain Kirkwood
Chairman
Dear Shareholder,
I am very honoured to have been asked to Chair the Simonds Group
by $11.4 million. Statutory earnings EBITDA was $10.1m, also an
and look forward to working with the new Board comprising an
improvement on last year.
excellent blend of experienced, independent directors and strong,
hands-on industry knowledge and expertise.
Simonds Homes Australia (SHA) remained the key driver of Simonds
Group’s results for the year. With housing affordability high on the
Simonds has been an industry leader in volume home building and
government’s agenda, and demand for quality homes in each of the
pleasingly has had an excellent record of safety as a company.
regions where Simonds Homes has a presence, the market fundamentals
Plans going forward include a focus on growth, operational efficiencies
in the residential homes sector remain strong. In FY17 the Homes
and to maintain the strong emphasis on safety within our company.
business recorded 2,391 site starts, slightly down on last year, which
I would like to personally pay tribute to Gary Simonds who established
the business in 1949 and served as the Chairman of the Board since
were impacted by continued delays experienced in the release of titled
land, trade availability, wet weather and infrastructure delays.
listing the Company in 2014. We are very fortunate in having him
For Builders Academy Australia (BAA), course enrolments and the number
remain involved with the company as Senior Advisor to the new Board.
of graduated students were down on the last financial year as course
Gary’s legacy is substantial having built tens of thousands of homes
durations were extended to improve course quality and the overall student
for Australian families over his 67-year career. He has dedicated his
experience. The Education business has continued to build a sustainable
career to Simonds and its growth into one of Australia’s leading
business platform, investing in the quality of course delivery materials.
home builders.
Increased audit and compliance costs were incurred by the business
During 2017 Simonds Group continued work towards resetting the
due to the pressures felt across the sector. All calendar 2016 audit
business to become a sustainable business focused on profit rather
activity has been concluded and all outstanding matters have been
than revenue. Halfway through a two-year journey of transformation
we are progressing well, having laid the foundations for success.
satisfactorily resolved with no adverse findings.
The Directors have determined that no dividend will be paid in relation
Revenues were down in 2017 to $587.4 million. An overall net profit
to the 2017 financial year.
after tax of $2.1 million (for continuing operations) is a noteworthy
improvement on last year and was achieved by reducing overheads
6
SIMONDS GROUPANNUAL REPORT 2017 Continuing to reset the business for profitable
growth
The business has undertaken a significant turnaround during the 2017
financial year, with strong cash flows and reduced debt exposure and
both the Homes and Education businesses have solid pipelines for the
2018 financial year and beyond.
During FY17 we’ve laid the foundations to transform Simonds Group
into a sustainable, profitable business. We’ve redefined our core purpose
and reset our strategy to shift the focus from volume growth to profitable
growth that is sustainable, all supported by the right structure.
We’ve built on our strong base by developing new product in the Homes
business, focusing on further improving our operating margins, core
business processes and consolidating our building locations. There is
an inherent long lead time to reap the benefits of our reset, and we
have some remaining legacy contracts still to work through the system.
For SHA, our focus remains on executing against our new business
rules and reducing changes to standard house designs which will
drive improved margins in future periods. Due to the long lead times
in the homes business, legacy contracts will continue to impact
margins in the short to medium term.
All of the planks of our strategy and new operating model that we
have put in place will lead to sustained, profitable growth once our
new products and business rules work through the product pipeline.
Investment will be made in marketing, displays homes and IT
Safety
The Simonds Group has an excellent safety record as a result of
continued focus on safety systems. We have made good progress in
further strengthening safety in the business since the last reporting
year. The main objective in Simonds’ safety program is to ensure that
safety is a core value that results in a positive safety culture, as well as
a healthy, engaged workforce.
This can only be achieved by the business continually reviewing its
safety management system to ensure that it remains highly visible in
company and continues to meet and reflect current legislation. We
remain committed to safety in the home building sector, and we have
a voice in industry through our involvement in the Volume Builders
Safety Alliances in each state, and our participation in industry
programs around the country with the regulators.
We recognise our moral obligations to safety in the community and we
believe that our system reflects ‘best practice’ and legal compliance.
We aim to make our people leaders in safety and strive to become role
models for safety behaviour. We want to effectively target hazards and
remove them so as to eliminate preventable injuries. We do this by
initiating the following programs in our company:
• Risk assessment in our designs
• Systems management training programs
• Company Safety Standards developed in consultation with our
trade partners
infrastructure to support our longer-term strategy.
• Continuous improvement in our reporting
Challenges remain in maintaining and growing market share in our
core regions in the homes business and the operating environment for
vocational education continues to evolve. Our clear business strategy
and focus on improving operating margins will deliver a more robust
and sustainable business model.
The future prospects of Simonds Group are bright under a renewed
Board which will lead a reinvigoration of the business, drive
performance, growth and safety.
Iain Kirkwood
Chairman
7
SIMONDS GROUPANNUAL REPORT 2017
BOARD OF
DIRECTORS
Iain Kirkwood
Iain was appointed Non-Executive Chairman of the Simonds Group on
20 September 2017.
Iain is an experienced corporate Chairman and has worked as a senior
executive and Non-Executive Director across a range of industries,
including auditing, resources, manufacturing and latterly healthcare in
Australia, the USA and Britain.
Iain is Chairman of Bluechiip Ltd and Novita Healthcare Limited and has held Non-Executive
Director roles with Medical Developments International Ltd and Vision Eye Institute Ltd.
Mark Simonds
Rhett Simonds
Mark was appointed an Executive Director on
20 September 2017 and brings 40 years of
executive management experience with
Simonds Homes, prior to listing.
Mark has been focussed on Simonds
Consolidated with a focus on venture capital
and private equity, building and construction, real estate and the
vocational education sector.
Rhett was appointed Interim CEO on 6
October 2017 by the Board. Rhett has been
a Simonds Group Board member since 2016
and was a member of the Remuneration and
Nominations Committee.
Prior to accepting the Interim CEO role,
Rhett was CEO of Simonds Consolidated
since 2005 focussed on technology,
vocational education, real estate and
construction ventures.
Neil Kearney
Scott Mahony
Scott was appointed a Non-Executive Director
on 20 September 2017 and is a member of the
Audit and Risk Committee.
As a Chartered Accountant, Scott has held
Chief Financial Officer roles at two of Australia’s
largest volume builders in a career spanning
more than 25 years. Scott has had various accounting roles with Telstra,
P. Sartori & Co Chartered Accountants and Australian Unity.
Neil was appointed Non-Executive Director
on 20 September 2017 and will Chair the
Audit & Risk Committee, and brings significant
leadership experience to the Simonds Group
Limited Board. Neil has been in senior
executive roles in Australian and international
companies, including Goodman Fielder Limited and National Foods
Limited (including as Chief Financial Officer and Chief Strategy Officer).
He is currently Chairman of Huon Aquaculture Group Ltd, Chairman
at Felton, Grimwade & Bosisto’s Pty Ltd and Non-Executive Director
at Brainwave Australia. Previous directorships include Warrnambool
Cheese and Butter Factory Company Holdings Limited and National
Foods Limited.
8
SIMONDS GROUPANNUAL REPORT 2017 Delphine Cassidy
Piers O’Brien
Delphine was appointed a Non-Executive
Director on 20 September 2017 and will
Chair the Remuneration and Nomination
Committee.
Delphine is an investor relations expert as
a senior executive for ASX 200 companies.
Piers was appointed a Non-Executive Director
on 20 September 2017 and is a member of the
Remuneration and Nominations Committee.
Piers is a qualified lawyer with over 18 years’
professional experience at firms including K&L
Gates Lawyers specialising in mergers &
An accountant by profession, she spent over 15 years in financial,
acquisitions, corporate transactions and board advisory work. Piers
accounting and treasury roles. Delphine is currently the Vice
has spent the last 10 years working in in-house legal roles as both
President of Investor Relations at Orica. Delphine has been a
General Manager Legal and General Counsel. During this time, he
member of the Australasian Investor Relations Association (AIRA)
managed the legal function at ASX200 company Skilled Group Limited
Issues Committee and the ASX Issuer Services Working Group.
for approximately 8 years.
Delphine is a Non-Executive Director of CreateCare Global.
Piers is a Non-Executive Director of Dylan Alcott Foundation Limited.
9
SIMONDS GROUPANNUAL REPORT 2017 Financial Summary
FINANCIAL
SUMMARY
Pro forma EBITDA ($m)
Pro forma revenue ($m)
37.9
576.9
628.5
587.4
499.2
477.1
18.1
16.1
15.1
13.8
FY13
FY14
FY15
FY16
FY17
FY13
FY14
FY15
FY16
FY17
Note: Pro forma revenue and EBITDA for the period FY13 – FY16 have been adjusted to exclude The Madisson business, which has been
presented as discontinued operations in the FY2017 accounts.
Pro forma Historical
$M
Revenue
Gross Profit
EBITDA
EPS (cents)
DPS (cents)
Div Payout Ratio
FY13
499.2
104.8
21.0%
16.1
FY14
477.1
109.6
23.0%
18.1
Statutory reconciliation ($m)
Pro forma Result
Impairment of non-core development land and other current assets
Transaction costs associated with the proposed Scheme of Arrangement
Management restructure costs
Statutory Result
10
FY15
576.9
138.2
24.0%
37.9
15.64
5.3
65%
FY16
628.5
131.7
21.0%
15.1
3.52
Nil
Nil
FY17
587.4
125.9
21.4%
13.8
3.22
Nil
Nil
EBITDA
NPAT
13.8
(1.4)
(1.8)
(0.5)
10.1
4.6
(1.0)
(1.2)
(0.3)
2.1
SIMONDS GROUPANNUAL REPORT 2017
Pro forma Results
Proforma results reflect adjustment for transaction costs associated
with the proposed Scheme of Arrangement, impairment of non-core
development land and other current assets and management
restructure costs.
• EBITDA results of $13.8m
• NPAT results of $4.6m
Balance sheet
The key balance sheet movements during FY17 were significant
reductions in Trade Receivables as well as Trade and Other Payables.
Receivables were $10.9 million lower and benefited from an increased
focus on customer billing and collections. Trade and Other Payables
reduced by $14.4 million.
The Group’s net assets at 30 June 2017 were negative $3.1 million,
an improvement on the position at 31 December 2016 and marginally
better than 30 June 2016.
Cash flow
Cash flow from operations were $8.8 million (excluding transaction
costs incurred as a result of the proposed Scheme of Arrangement)
and Cash / Cash Equivalents at 30 June 2017 were $10.2 million –
a $7.0 million improvement on 30 June 2016. The Group’s net debt
decreased by $3.1 million as a result of improved cash management
activities and the release of display homes previously held on the
balance sheet.
At 30 June 2017, the Group had drawn debt under its corporate
finance facility arrangements with Commonwealth Bank of Australia
of $8.3 million, with facility headroom available of $22.4 million.
As at 24 August 2017 the unused facilities were $22.9 million.
Dividend
The Directors of Simonds Group have determined that no final dividend
will be paid in relation to the year ended June 2017.
Corporate Governance
A copy of our corporate governance statement can be found on our
website at simondsgroup.com.au/corporateGovernance
Financial Summary
11
SIMONDS GROUPANNUAL REPORT 2017 Financial Summary
Diversified Earnings Strategy
SHA
BAA
Land development
• FY17 pro forma EBITDA of $12m
• FY17 pro forma EBITDA of $1.3m
• FY17 pro forma EBITDA of $0.5m
• 2391 site starts
• 2,586 course enrolments
• 3 current projects
• Operations in Victoria, New South Wales
• 1,973 graduated enrolments
• 74 total lots to be delivered in 2018.
& Queensland
• Operations in Victoria, New South Wales
& Queensland
With strong underlying market fundamentals in the residential homes
offered a Victorian 2017 Standard VET Funding Contract that allows
sector, demand for quality homes remain strong.
for students to access government subsidised training under the new
The Victorian and South Australian operations of Simonds Homes Australia
Victorian 'Skills First' Scheme.
(SHA) continue to perform well, the Queensland business has increased
The Group expects to realise the benefits from the organisational
site starts achieved during the 2017 financial year, while challenges
management and operational restructure completed in 2016, which has
remain with the New South Wales business. Federal Government
delivered a reduction of $11.4m in overheads and significant items, and
initiatives in the second half of FY17 to assist first home owners caused
enabled a more flexible overhead base that is better able to respond to
a number of customers to delay contracting with us until FY18.
changes in our key markets.
We expect to improve our market penetration, sales and ultimately site
The Group has undertaken a significant turnaround during the 2017
starts in the future with greater focus on building strategic relationships
financial year, with strong cash flows and reduced debt exposure and
in partnership with land developers, the location of display homes in
both the Homes and Education businesses have solid pipelines for
key growth zones, consolidation of our existing product range and the
FY18 and beyond.
release of new product.
The Group remains focussed on continuing to build a business that
Builders Academy Australia (BAA) continues to focus on delivering
delivers improved operating margins and sustainable profits. With our
high quality trade qualifications that meet the needs of the Australian
business review, strategy reset and organisational restructure now
workforce. Through diversifying funding sources, delivery modes and
completed, the business transformation is underway. However, the
market segments including expanded delivery in states other than
Victoria, BAA and City-Wide Building and Training Services (CWTBS)
inherent long lead time in seeing the benefits, and some remaining
legacy contracts still to work through the system, we still have work
continue to prepare graduates to realise sustainable career outcomes.
to do to realise all of the benefits. Additional investment in marketing,
The business remains focused on meeting the increased demands
displays homes and IT infrastructure is required to support our longer
placed on it from the ever-changing regulatory environment in this
term strategy.
sector, and that continues to be a major risk and opportunity for the
Group. In December 2016, BAA received confirmation that it had been
12
SIMONDS GROUPANNUAL REPORT 2017 13
SIMONDS GROUPANNUAL REPORT 2017 14
SIMONDS GROUPANNUAL REPORT 2017 FY17
FINANCIAL REPORT
FOR YEAR ENDING 30 JUNE 2017
Contents
Directors’ Report
Auditor’s Independence Declaration
Independent Auditor’s Report
Directors’ Declaration
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
17
42
43
47
48
49
50
51
52
15
SIMONDS GROUPANNUAL REPORT 2017 16
SIMONDS GROUPANNUAL REPORT 2017 The directors of Simonds Group Limited (“the Company”) submit herewith the annual financial report of the consolidated entity consisting of the
Company and the entities it controlled (the “Group”) for the financial year ended 30 June 2017. In order to comply with the provisions of the
Corporations Act 2001, the directors report as follows:
Information about the directors
The names and particulars of the directors of the Company during or since the end of the financial year are:
Name
Date Appointed
Current Position
Vallence Gary Simonds
24 May 2010
Susan Oliver
6 October 2014
Chairman
Deputy Chair
Matthew Chun
25 September 2014
Managing Director & Chief Executive Officer
Leon Gorr (1)
Rhett Simonds
Michael Humphris
25 September 2014
Non-Executive Director
20 April 2016
29 March 2017
Non-Executive Director
Non-Executive Director
1. Leon Gorr resigned as Non-Executive Director on 29 March 2017.
The particulars of the directors are as follows:
Name
Experience and Directorships
Vallence Gary Simonds
• Gary has dedicated his career to Simonds and its growth into one of Australia’s leading home builders.
• Gary established Simonds in 1949 and has had a career spanning more than 65 years within the Australian
homebuilding industry.
• Gary holds directorships for a number of private Australian companies.
Susan Oliver
(FAICD)
Matthew Chun
• Susan is a director of CNPR Ltd, an independent member of the Investment Committee for Industry Funds
Management (IFM) and founding Chair of Scale Investors Ltd. Susan's previous directorships include
Coffey International, Transurban Group, Programmed Group, The Just Group, MBF Australia and the
restructure Board of Centro Properties Group. Susan was also chair of Fusion Retail Brands, a privately
owned retail group comprising Colorado, Jag, Diana Ferrari, Williams and Mathers brands.
• Susan has contributed significantly to the innovation, IT and arts policy agendas in Australia.
• Susan was awarded the Prime Minister’s Centenary Medal 2003 and was one of Australian Financial Review’s
top 100 women of influence in 2013.
• In 2017 Susan was a Judge in the EY Southern Region Entrepreneur of Year.
• Susan holds a Bachelor of Property and Construction from the University of Melbourne and a Certificate
in Financial Management AIM.
• Matthew was appointed Managing Director and Chief Executive Officer of the Simonds Group on 1 April 2016.
Prior to that, he was a non-executive director of Simonds Group Limited.
• Matthew has over 25 years’ senior management and corporate advisory experience and ran a private
property development and advisory business based in Melbourne prior to his appointment as CEO of
Simonds Group.
• Matthew was previously an Executive Director and CEO of ASX listed Becton Property Group.
• Prior to Becton Property Group Matthew held positions at Cbus Super Fund and Coles Myer.
• Matthew holds a Bachelor of Economics from La Trobe University, a Graduate Diploma in Property,
Graduate Diploma in Applied Investment and Finance and is a licenced Estate Agent.
17
SIMONDS GROUPDirectors’ Report ANNUAL REPORT 2017 The particulars of the directors (Cont’d)
Name
Experience and Directorships
Rhett Simonds
Michael Humphris
• Rhett is a member of the Simonds family and has been involved with the business since joining the
Simonds Group of Companies in 2005.
• Rhett has a strong focus on technology-based education and training platforms with job placement
outcomes.
• Appointed to the Simonds board as a non-executive director as part of the board succession plan for
Mr. Vallence Gary Simonds.
• Michael is a Chartered Accountant with over 35 years’ experience through former roles as Partner in both
Arthur Andersen and Ernst & Young, Director of Duesbury’s, and BDO Kendalls.
• Michael has extensive board experience across a range of large and complex businesses.
• Michael is currently Chairman of VicForests’ Board and Chair of the Executive Remuneration Committee,
a Director (former Chair) of Tox Free Solutions Ltd, and the Chairman of CNPR Ltd.
• Michael is a Senior Associate of the Financial Services Institute of Australasia, a Member of the Australian
Institute of Company Directors, and a Fellow of the Chartered Accountants Australia and New Zealand.
Directors’ Shareholding
The following table sets out each of the directors’ relevant interest in shares, debentures and rights or options on shares or debentures of the
Company or related body corporate as at the date of this report:
Directors
V.G Simonds
Susan Oliver
Rhett Simonds
Matthew Chun
Fully Paid Ordinary shares (Number)
Share options (Number)
56,138,895
44,000
14,044
-
-
-
-
4,000,000
18
SIMONDS GROUPDirectors’ Report ANNUAL REPORT 2017 Remuneration of key management personnel
Operating and Financial Review
Information about the remuneration of key management personnel
is set out in the remuneration report section of this directors’ report.
Business Overview
The term ‘key management personnel’ refers to those persons having
authority and responsibility for planning, directing, and controlling
the activities of the Group, directly or indirectly, including any director
(whether executive or otherwise) of the Group.
Company Secretary
Simonds Group Limited is an ASX listed integrated homebuilder
(Simonds Homes), Registered Training Organisation (Builders Academy
Australia) and niche land developer.
With continual operations since 1949, Simonds Homes operate a
number of display homes across the Australian eastern seaboard and
South Australia, and remains one of Australia’s largest home builders
Ms Elizabeth Hourigan was appointed as Company Secretary of
with 2,391 homes constructed during the 2017 financial year. The core
the Company on 20 April 2016. Elizabeth was previously Company
product of Simonds Homes is single storey detached homes, with a
Secretary and Senior Counsel at Federation Centres, and prior to
target market being first and second home families in the outer-
that Centro Properties. Elizabeth holds a Bachelor of Laws from the
metropolitan areas of capital and large regional cities.
University of Melbourne and is a fellow of the Governance Institute
of Australia and a graduate of the Australian Institute of Company
Directors.
Principal activities
The Group’s principal activities in the course of the financial year were
the design and construction of residential dwellings, the development
of residential land and providing registered training courses.
Builders Academy Australia (BAA) is a Registered Training Organisation
with a focus on offering nationally accredited qualifications in building
and construction. Embedded within one of Australia’s leading home
builders, BAA is ‘builders training builders’. Completion of courses
offered enables successful students to increase their career and
employment opportunities; as well as provide a well-trained network
of employees, suppliers and contractors for Simonds Homes.
The Group maintains a small development land portfolio via direct
land ownership, and participation in other development land projects
via indirect holdings. The Group also provides project management
services via Hub Property Group.
On 31 August 2016, the Group announced a Scheme Implementation
Agreement with SR Residential Pty Ltd (SR Residential) (which is jointly
owned by entities associated with Roche Holdings Pty Ltd and Simonds
Family Office Pty Ltd (SFO) under which it was proposed that SR
Residential would acquire all shares in the Company not already owned
by associates of the Consortium by way of the Scheme.
On 28 November 2016, the Group announced that the Scheme
Implementation Agreement had been terminated by mutual agreement
of the Group and SR Residential. The Group incurred transaction costs
of $1.817m, which have been disclosed as a significant item for year
ended 30 June 2017.
19
SIMONDS GROUPDirectors’ Report ANNUAL REPORT 2017 Reconciliation of statutory financial statements to pro forma results
Pro forma EBITDA is reported to give information to shareholders that provides a greater understanding of the underlying performance
of Simonds Group Limited’s operations.
In accordance with ASIC Regulatory Guidance 230, a reconciliation of the 2017 statutory to pro forma results is provided below as follows:
Year ended 30 June 2017
Sales $m
EBITDA1 $m
EBIT2 $m
NPAT $m
FY2017 Statutory results from continuing operations
587.4
Transaction costs associated with proposed Scheme of Arrangement
Impairment of non-core development land and other current assets
Management restructure costs
FY2017 pro forma results
-
-
-
587.4
10.1
1.8
1.4
0.5
13.8
5.1
1.8
1.4
0.5
8.8
2.1
1.2
1.0
0.3
4.6
1. Pro forma EBITDA is net profit after tax from continuing operations $2.1m before financing items ($1.7m), tax expenses ($1.3m), depreciation and amortisation ($5.0m),
and other significant items ($3.7m).
2. Pro forma EBIT is net profit after tax from continuing operations $2.1m before financing items ($1.7m), tax expenses ($1.3m) and other significant items ($3.7m).
Earnings per share
The directors have elected to present results and Earnings per Share (EPS) on both a statutory and pro forma basis.
The calculation of “Statutory EPS” is presented in Note 13. The calculation of “Pro forma EPS” is presented below.
Statutory EPS has been calculated in accordance with the requirements of Accounting Standards based on:
• profit after tax attributable to shareholders (Statutory profit); and
• the weighted average number of ordinary shares outstanding during the period ended 30 June 2017.
Pro forma EPS is a non-International Financial Reporting Standards (IFRS) measure which has been calculated on the 2017 financial year based on:
• statutory profit after tax adjusted on a pro forma basis for:
− the impacts arising from a number of non-recurring items impacting the 2017 financial result, being:
> Transaction costs associated with the proposed Scheme of Arrangement;
> Impairment of non-core development land and other current assets;
> Management restructure costs; and
− the related income tax effect of the above adjustments
• the weighted average number of ordinary shares outstanding during the period ended 30 June 2017:
− Basic:
143,841,655
The directors believe that the presentation of Pro forma EPS provides users with a better understanding of the underlying financial performance of
the ongoing business and allows for a more relevant comparison of financial performance between financial periods.
Note
13
30 June 2017
30 June 2016
cents per share
cents per share
1.44
(1.53)
30 June 2017
30 June 2016
Note
cents per share
cents per share
3.22
3.52
Statutory EPS from continuing operations
Basic
Pro forma EPS from continuing operations
Basic
20
SIMONDS GROUPDirectors’ Report ANNUAL REPORT 2017
Balance sheet
Outlook
During the 2017 financial year, whilst the Group continued to encounter
The Victorian and South Australian operations of Simonds Homes
some of the challenges that adversely impacted the performance of its
Australia (SHA) continue to perform well, the Queensland business
Residential and Education segments in 2016, strategies to improve the
has increased site starts achieved during the 2017 financial year,
Group’s liquidity have improved working capital as measured by current
while challenges remain with the New South Wales business. With
assets less current liabilities by $5.8m, resulting in a positive working
greater focus on building strategic relationships in partnership with
capital balance of $5.1m at 30 June 2017.
land developers, the location of display homes in key growth zones,
As announced on 21 January 2016, the Madisson business is a
discontinued operation and has been disclosed as such for the year
ended 30 June 2017. This business has been disclosed as a
consolidation of our existing product range and the release of new
product, we expect to improve our market penetration, sales and
ultimately site starts in the future.
discontinued operation with additional provision recognised for
Builders Academy Australia continues to focus on delivering high
maintenance and warranty obligations of $2.7m during the financial year.
quality trade qualifications that meet the needs of the Australian
Operating cash flows
The operating cash flows of the Group have decreased from the
prior year, which benefited by the accelerated sale of display homes,
non-core development speculative land and construction holdings
from inventory required in the second half of the 2016 financial year.
workforce. Through diversifying funding sources, delivery modes
and market segments including expanded delivery in states other
than Victoria, Builders Academy Australia and City-Wide Building and
Training Services continue to prepare graduates to realise sustainable
career outcomes. The business remains focused on meeting the
increased demands placed on it from the ever-changing regulatory
environment in this sector, and that continues to be a major risk and
The Group has significantly reduced cash outflows from its investing
opportunity for the Group. In December 2016, BAA received
activities having ceased a number of IT projects as well as not investing
confirmation that it had been offered a Victorian 2017 Standard VET
in business acquisitions or investment funds which occurred during the
Funding Contract that allows for students to access government
2016 financial year.
subsidised training under the new Victorian “Skills First” Scheme.
Cash inflows from financing activities during the 2017 financial year
The Group expects to realise the benefits from the organisational
of $2.558m predominantly related to funding through the Group’s
banking facilities.
management and operational restructure completed in 2016, which has
delivered a reduction of $11.4m in overheads and significant items, and
enabled a more flexible overhead base that is better able to respond to
changes in our key markets.
21
SIMONDS GROUPDirectors’ Report ANNUAL REPORT 2017 Summary of key business risks
The Board remains optimistic about the Group’s future trading
performance but acknowledges there are certain factors that may
pose a risk to the achievement of the Group’s business strategies
and future performance.
Departure of key personnel leading to loss of industry or
corporate knowledge and expertise:
The Group may from time to time be impacted by the departure of key
personnel, which may affect adversely the operations of the business
until suitable replacements are recruited.
Every business faces risks with the potential to impair its ability to
The Group endeavours to ensure that it remains competitive in terms
execute its strategy or achieve its objectives. There are a number of key
of remuneration and other incentives, and reviews employee incentive
risks, both specific to the Group’s home building, provision of training
arrangements from time to time with a view to aligning management's
courses, and land and project management services, and external risks,
and employees' interests with those of the Group and its shareholders.
for example the economic environment, over which the Group has no
control. The Group’s risk management approach is to identify, evaluate,
Information Technology (“IT”) security and data security breaches:
and mitigate or manage its financial, operational and business risks. Our
The potential failure of IT security measures may result in the loss,
risk assessment approach includes an estimation of the likelihood of risk
inability to access information, destruction or theft of customer, supplier,
occurrence and potential impact on the financial results. Risks are
and financial or other commercially-sensitive information including
assessed across the business and reported to the Audit and Risk
intellectual property. This has the potential to adversely affect our
Committee and to the Board where required under our risk
operating results and potentially damage the reputation of the Simonds
management framework.
or Builders Academy Australia brands, and/or create other liabilities for
Set out below are the key risks which may materially impact the execution
the Group.
and achievement of the Group’s business strategies and prospects for
There are a number of key controls either planned or already in place
the Group in future financial years. These key risks should not be taken
aligned to improving the security posture; the implementation,
to be a complete or exhaustive list of risks faced by the Group.
maintenance and supervision of operational policies intended to
preserve the integrity of the IT systems and supporting infrastructure;
Deterioration in economic conditions resulting in a fall in demand:
regular independent audit and review of IT security; and the ongoing
The Group’s revenue and growth is susceptible to a deterioration in the
review, practice and updating of a disaster/crisis management plan
states and regions it operates. There are a number of general economic
relating to IT systems.
conditions, such as interest rate movements, overall levels of demand
for housing, economic and political stability, and government fiscal and
Regulatory actions affecting Registered Training
regulatory policies that can impact the level of consumer confidence
Organisations (RTO):
and demand, thereby affecting revenue from sales to customers and/or
Wholly owned subsidiaries, House of Learning Pty Ltd (trading as
fees received from students.
While general economic conditions are outside the Group's control, the
Group seeks to reduce its exposure to these risks by monitoring closely
both internal and external sources of information that provide insights to
Builders Academy Australia, or BAA) and City-Wide Building Training
Services Pty Ltd (CWBTS), are nationally accredited RTO’s under the
Australian Skills Quality Authority (ASQA) and hold funding contracts
across multiple states.
changes in demand within the markets and regions in which it operates.
Both CWBTS and BAA continue to focus on embedding a quality
framework across operations recognising that providers in this sector
Competition resulting in a loss of market share in the regions
continue to face major risk due to an ever changing regulatory
and markets in which we operate:
environment and adaptions to state and federal funding models.
The Group is susceptible to competition for the provision of homes and
course offerings in the markets in which we operate.
As part of the ongoing accreditation process and approval process
for RTO’s and for approved delivery under state and federal funding
This risk is mitigated by a large geographically diversified customer and
regimes, RTO’s are reasonably expected to be regularly subject to
student base reducing the impact of pricing strategies and demands
compliance monitoring activity and audits.
from any one customer or student group.
Economic downturn in the property sector leading to softening
in property asset values:
With a significant property portfolio, comprising display homes,
speculative land and development land holdings the Group is exposed
to potential reductions in property values within the residential
property sector.
The Group’s policy is to adopt a selective and prudent acquisition and
development strategy, which focusses on maintaining the appropriate
number of high-quality displays in each market region to minimise our
exposure in any one particular segment.
22
It is recognised that any adverse findings from National or State
regulators and/or funding bodies have the potential to have a material
adverse impact on the Group’s RTO operations, financial performance
and financial position.
Both CWBTS and BAA have experienced compliance audits and
reviews over the 2016 and 2017 financial years from both funding bodies
and ASQA, which have not resulted in any material adverse findings.
SIMONDS GROUPDirectors’ Report ANNUAL REPORT 2017 Summary of key business risks (Cont’d)
Subsequent events
Loss of Funding Arrangements:
BAA and CWBTS hold various funding contracts in Victoria,
New South Wales, Queensland and the Australian Capital Territory.
BAA has also been successful in being granted a VET Student Loans
contract with the Federal Department of Education and Training.
There have been no events that have occurred subsequent to the
reporting date that have significantly affected or may significantly affect
the Group’s operations, results or state of affairs in future years.
Dividends
These funding contracts which allow students to access subsidised
As announced on 24 August 2017, the directors have declared $nil
training or take out government supported loans to pay for their training
dividend in relation to the 2017 financial year.
are the primary source of revenue for both BAA and CWBTS. Both
entities have been successful in being granted approval for all contracts
for which they have applied during the 2017 financial year.
It is recognised that if either entity was to lose these contracts for
Indemnification of officers and auditors
During the financial year, the Company paid a premium in respect of a
contract insuring the directors of the Company, the Company secretary,
material breaches or non-compliance, or not be granted future approval
and all executive officers of the Company and of any related body
when applications are required for extensions of these contracts, the
corporate against a liability incurred as such a director, secretary or
funding currently received would no longer be available. This could
executive officer to the extent permitted by the Corporations Act 2001.
have a material adverse impact on BAA and/or CWBTS and the
The contract of insurance prohibits disclosure of the nature of the liability
Group’s operations, financial performance and financial position.
and the amount of the premium.
Non-IFRS financial information
The Company has not otherwise, during or since the end of the financial
year, except to the extent permitted by law, indemnified or agreed to
The financial measures included in the Directors’ Report have been
indemnify an officer or auditor of the Company or of any related body
calculated to exclude the impact of various costs and adjustments
corporate against a liability incurred as such an officer or auditor.
associated with the Company’s listing on the stock exchange during
the previous financial year as well as adjustments made for the current
financial year relating to the Madisson business and non-recurring
impairments and management restructure costs. The directors believe
the presentation of non-IFRS financial measures is useful for the users
of this financial report as they reflect the underlying financial
performance of the business.
23
SIMONDS GROUPDirectors’ Report ANNUAL REPORT 2017 Directors meetings
The following table sets out the number of directors’ meetings (including meetings of committees of directors) held during the financial year and the
number of meetings attended by each director (while they were a director or committee member). During the financial year, sixteen Board meetings,
seven Nomination and Remuneration Committee meetings and seven Audit and Risk Management Committee meetings were held.
Directors
Vallence Gary Simonds
Susan Oliver
Matthew Chun
Leon Gorr
Rhett Simonds
Michael Humphris
Board of Directors
Nomination and Remuneration
Committee
Audit and Risk Management
Committee
Held*
Attended
Held*
Attended
Held*
Attended
16
16
16
14
16
2
14
16
16
14
16
2
-
7
-
6
7
1
-
7
-
6
7
1
7
7
-
6
-
1
6
7
-
6
-
1
*Meetings held has been adjusted to reflect the number of meetings since the date of appointment for each director.
Susan Oliver was appointed to the Chair of Nomination and Remuneration Committee on 29 March 2017 and also held the position of the Chair of Audit
and Risk Management Committee from 1 April 2016 to 28 March 2017.
Michael Humphris was appointed to the Chair of Audit and Risk Management Committee on 29 March 2017.
Non-audit services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in note 33 to the financial
statements.
The directors are satisfied that the provision of non–audit services, during the year, by the auditor (or by another person or firm on the auditor’s
behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed on note 33 to the financial statements do not compromise the external auditors’
independence, based on advice received from the Audit and Risk Management Committee, for the following reasons:
• All non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and
• None of the services undermine the general principles relating to auditor independence as set out in APES 110 ‘Code of Ethics for Professional
Accountants’ issued by the Accounting Professional & Ethical Standards Board, including reviewing or auditing the auditors own work,
acting in a management or decision making capacity for the Company, acting as advocate for the Company or jointly sharing economic
risks and rewards.
24
SIMONDS GROUPDirectors’ Report ANNUAL REPORT 2017
Introduction
This remuneration report, which forms part of the directors’ report, sets out information about the remuneration of key management personnel (KMP)
for the year ended 30 June 2017.
The KMP disclosed in this report are listed in the table below:
Current Non-Executive Directors (NED)
Name
Vallence Gary Simonds
Position
Chairman
Appointment Date 1
25 September 2014
Susan Oliver
Deputy Chair, Non-executive Director
6 October 2014
Rhett Simonds
Michael Humphris
Non-Executive Director
Non-Executive Director
20 April 2016
29 March 2017
Former 2 Non-Executive Directors
Name
Position
Appointment Date 1
Resignation date
Leon Gorr
Non-Executive Director
25 September 2014
29 March 2017
Current Senior Executives
Name
Matthew Chun
Mick Myers
John Thorburn
Position
Appointment Date 1
Group Chief Executive Officer (CEO) & Managing
Director
1 April 2016
Chief Financial Officer (CFO)
30 May 2016
Group General Manager, Simonds Homes
Australia
5 December 2016
1. Appointment date is the date commenced in the position.
2. Former Non-executive Directors and Senior Executives resigned from their position during the year ended 30 June 2017.
25
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 Remuneration Policy Summary
The Simonds Group Limited remuneration policy has been designed to
Remuneration Governance in Year Ended
30 June 2017
ensure its remuneration practices attract, motivate and retain top talent
The Board reviews its remuneration policy and practices on a regular
from a diverse range of backgrounds with the experience, knowledge,
basis. The objectives of the Board’s remuneration policy are to:
skills and judgment to drive the Group’s performance and appropriately
reward their contribution towards shareholder wealth creation.
• create a consistent and sustainable system of determining the
appropriate level of remuneration of all levels of the Group,
The key principles that support the remuneration policy are as follows:
including KMP;
• employees are rewarded fairly and competitively according to job
• encourage KMP to perform to their highest level; and
level, market trends and individual skills, experience and
• align the remuneration of KMP with the performance of the business.
performance;
The policy details the types of remuneration to be offered by the
• the reward strategy is in line with the overall business strategy in
Group and factors to be considered by the Board, Nomination and
relation to acquisition, growth and retention of talent;
Remuneration Committee (the Committee) and executives in
• the reward strategy encompasses elements of salary, benefits,
recognition and incentives to support talent management for
business and shareholder outcomes;
• it is simple, flexible, consistent and scalable across the business
allowing for sustainable business growth;
• it supports the business strategy whilst reinforcing our culture
and values; and
• it is regularly reviewed for relevance and reliability.
Executive Remuneration Principles and Strategy
A key principle of the Group’s approach to executive remuneration is
that it should demonstrate strong links with Group performance and
shareholder returns. Remuneration is aligned with Group performance
by requiring a significant portion of remuneration to vary with short-
term and long-term performance.
The remuneration of KMP is structured taking into account the
following factors:
• the principles highlighted above;
• the level and structure of remuneration paid to executives of other
comparable publicly listed Australian companies of a similar size;
• the position and responsibilities of each executive; and
• other appropriate benchmarks and targets to reward senior
executives for the Group and individual performance.
determining the appropriate remuneration strategy.
The Board’s Role in Remuneration
The Board approved the Nomination and Remuneration Committee
Charter on 17 November 2014. The decisions of the Committee are
subject to approval by the Board. The Board also has the authority to
directly seek independent, professional and other advisers as required
for the Board to carry out its responsibilities. The Board appoints,
removes and/or replaces members of the Committee at its discretion.
The Nomination and Remuneration Committee
(the Committee)
The role of the Committee is to assist the Board by providing advice
in relation to the remuneration packages for KMP, which includes
non-executive directors. It also oversees management succession
planning, performance targets and the remuneration of employees
generally.
The Committee also reviews and makes recommendations to the Board
on the Group’s overall remuneration strategy, policies and practices, and
monitors the effectiveness of the Group’s overall remuneration
framework in achieving the Group’s remuneration strategy.
The Committee reviews the remuneration strategy and policy at least
once a year and has the authority to engage external professional
advisers with the approval of the Board.
Any remuneration recommendations have been made free from undue
influence by members of the Group’s KMP.
The Committee met seven times during the year. The CEO, CFO and
any remaining directors are also regularly invited to attend meetings.
No individuals are present during any discussions related to their own
remuneration arrangements.
During the year ended 30 June 2017, the Committee was at all times
comprised of two non-executive directors.
Further details of the Committee’s responsibilities are outlined in the
Corporate Governance Statement, available from the Group’s website
at www.simondsgroup.com.au.
26
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 Non-Executive Director Remuneration
Executive Remuneration Components
Non-executive directors are remunerated by way of fixed fees
in the form of cash and superannuation in accordance with
Recommendation 8.3 of the ASX Corporate Governance
Council’s Principles and Recommendations.
During the year ended 30 June 2017, fees paid to non-executive
directors totalled $521,152 (exclusive of superannuation and cash
salary and fees).
Shareholdings of non-executive directors are set out on page 18 of
the directors’ report.
The Company and each of the non-executive directors have agreed
terms of appointment (as permitted under the ASX Listing Rules).
Non-executive directors are not appointed for a specific term and their
appointment may be terminated by notice from the individual director
or otherwise pursuant to section 203B or 203D of the Corporations
Act 2001.
The maximum annual aggregate directors’ fee pool limit is $750,000
and was approved at the Annual General Meeting of Simonds Group
Limited held on 2 October 2014.
Remuneration tables for non-executive directors for the year
ended 30 June 2017 are set out commencing on page 33 of this
remuneration report.
KMP Remuneration Framework
The KMP remuneration framework comprises three principal elements:
• a total employment cost (TEC) comprising a fixed component,
consisting of a base salary, superannuation contributions and other
related allowances;
• a performance based, variable ‘at risk’ component, comprising cash
and/or equity settled short-term incentives (STI); and
• a performance and service based, variable ‘at risk’ component,
comprising of options and/or performance rights and/or cash
equivalents referred to as long-term incentives (LTI).
The Group’s mix of fixed and at risk components for each of the
KMP disclosed in this report, as a percentage of total target annual
remuneration for financial year 2017, is as follows:
TEC overview
TEC is benchmarked against the market median, also known as the
50th percentile, referencing market practice and comparable and
similar sized organisations. While comparative levels of remuneration
are monitored on a periodic basis, there is no contractual requirement
or expectation that any adjustments will be made.
STI overview
The Group STI Plan ensures that a proportion of remuneration is tied
to Group performance measured annually in line with the financial year.
Executives can only realise their STI at-risk component if challenging
pre-determined objectives are achieved. The achievement of budgeted
Group EBITDA is an initial gateway to realise a STI amount. All STI’s
are subject to the achievement of relevant key performance measures
which are determined with reference to the Balanced Scorecard
approach. The Balance Scorecard Approach encompasses the
following areas of focus: Financial, Operational, Customer and
People, safety & values.
This aligns executive interests with shareholder interests and focuses
executive performance on those areas aligned to the achievement
of the Group’s operational strategy.
The STI payment is made in cash or in shares at the Board’s discretion
as part of the annual remuneration review after finalisation of the
Group’s audited results.
LTI overview
The Group’s LTI Plan ensures that a proportion of remuneration is tied
to Group performance over the long term and measured annually in
line with the financial year. Executives can only realise their LTI at-risk
component if challenging pre-determined objectives are achieved.
This aligns executive interests with shareholder interests and focuses
executive performance on sound business decisions resulting in
sustainable shareholder wealth. LTI consists of the granting of
Performance Rights and/or options and/or cash equivalents that vest
after a defined period, subject to Group and individual financial and
non-financial performance hurdles. Vesting conditions may be waived
at the absolute discretion of the Board.
27
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 Long term Incentive Key Features
Award Structure
FY2017 Performance Rights
Consideration for the
Performance Rights
The Performance Rights will be granted for nil consideration
Vesting Period
Each tranche has a vesting period of approximately three years.
Performance Measure
Vesting of Performance Rights is dependent on two discrete performance measures (hurdles):
Grant Date
Tranche 1
Total Share Holder Return (TSR) representing
50% of the Performance Rights Granted
Tranche 2
(CAGR EPS) representing 50% of the
Performance Rights Granted
31 January 2017
Up to 50% of the Performance Rights granted will
vest if the Group’s (TSR) achieves a percentile
ranking against the constituent companies within
the S&P ASX Small Ordinaries Index (ASX Code
XSI), excluding resource companies, over the
Measurement Period. Percentile Ranking and
percentage vesting rights are outlined below.
The Measurement Period for the Compound
Annual Growth Rate (CAGR) EPS Hurdle is
across the three financial years across the period
1 July 2016 to 30 June 2019
Simonds Group Limited Percentile Ranking
Percentage of Performance Rights to vest
Less than the 50th percentile
None
Between the 50th and 75th percentile
50% (straight-line interpolation between the
50th and 75th percentile)
At or above the 75th percentile
100%
TSR Vesting Schedule
(Tranche 1)
CAGR EPS Vesting Schedule
(Tranche 2) & CEO Options
CAGR in EPS
Percentage of Performance Rights to vest:
Less than 7.5% per annum
None
Between 7.5% and 10% per annum
Straight line interpolation applies
At or above 10.0% per annum
100%
Service Vesting Condition
The Service Vesting Condition is continuous employment with the Company from Grant date to
30 September 2019.
28
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 Award Structure
FY2017 CEO Options
Considerations for Options
Options carry an exercise price of $0.40
Vesting Period
Vesting period of approximately three years. Grant Date: 31 January 2017
Performance Measure
Vesting of options is dependent on one discrete performance measure (hurdle):
CAGR in EPS
Percentage of Options to vest:
Less than 7.5% per annum
None
Between 7.5% and 10% per annum
Straight line interpolation applies
At or above 10.0% per annum
100%
Service Vesting Condition
The Service Vesting Condition is continuous employment with the Company from Grant date to
30 September 2019.
The FY2017 Performance Rights and CEO Options have been issued to the Current Senior Executives defined as KMP in this report.
29
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 Long term Incentive Key Features (Cont’d)
Award Structure
FY2016 Performance Rights
Consideration for the
Performance Rights
The Performance Rights will be granted for nil consideration
Vesting Period
Each tranche has a vesting period of approximately three years.
Performance Measure
Vesting of Performance Rights is dependent on two discrete performance measures (hurdles):
Grant Date
Tranche 1
Total Share Holder Return (TSR) representing
50% of the Performance Rights Granted
Tranche 2
(CAGR EPS) representing 50% of the
Performance Rights Granted
30 November 2015
Up to 50% of the Performance Rights granted will
vest if the Group’s (TSR) achieves a percentile
ranking against the constituent companies within
the S&P ASX Small Ordinaries Index (ASX Code
XSI), excluding resource companies, over the
Measurement Period. Percentile Ranking and
percentage vesting rights are outlined below.
The Measurement Period for the Compound
Annual Growth Rate (CAGR) EPS Hurdle is
across the three financial years across the period
1 July 2015 to 30 June 2018
TSR Vesting Schedule
(Tranche 1)
Simonds Group Limited Percentile Ranking
Percentage of Performance Rights to vest
Less than the 50th percentile
None
Between the 50th and 75th percentile
50% (straight-line interpolation between the 50th
and 75th percentile)
At or above the 75th percentile
100%
CAGR EPS Vesting Schedule
(Tranche 2)
CAGR in EPS
Percentage of Performance Rights to vest:
Less than 7.5% per annum
None
Between 7.5% and 10% per annum
Straight line interpolation applies
At or above 10.0% per annum
100%
Service Vesting Condition
The Service Vesting Condition is continuous employment with the Company from Grant date to
31 August 2018.
The FY2016 Performance Rights have been issued to the Senior Executives previously defined as KMP in this report.
30
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 Award Structure
FY2015 Performance Rights
Consideration for the
Performance Rights
The Performance Rights will be granted for nil consideration
Vesting Period
Each tranche has a vesting period of three years
Performance Measure
Vesting of Performance Rights is dependent on three discrete performance measures (hurdles):
Grant Date
Tranche 1
Total Share Holder Return (TSR) representing
1/3 of the Performance Rights Granted.
Tranche 2
(CAGR EPS) representing 1/3 of the
Performance Rights Granted.
Tranche 3
Prospectus Forecast Earnings representing
1/3 of Performance Rights Granted.
17 November 2014
Up to 1/3 of the Performance Rights granted will
vest if the Group’s (TSR) achieves the following
percentile ranking against the constituent
companies within the S&P/ASX Small Ordinaries
Index (ASX Code XSI), excluding resources, over
the Measurement Period
The Measurement Period for the CAGR EPS
Hurdle shall be the three financial years 2015,
2016 and 2017. EPS CAGR will be calculated
based on the pro-forma NPAT for the year ended
2015 and not the statutory profit or reported EPS
for that year.
The specific EPS methodology will be determined
by the Board.
1/3 of the Performance Rights granted will vest
if the Group achieves the Prospectus forecast
in earnings for the year ended 30 June 2015.
TSR Vesting Schedule
(Tranche 1)
Simonds Group Limited Percentile Ranking
Percentage of Performance Rights to vest
Less than the 50th percentile
None
At or above the 50th percentile
50% (straight-line interpolation between the
50th and 75th percentile)
At or above the 75th percentile
100%
CAGR EPS Vesting Schedule
CAGR in EPS
Percentage of Performance Rights to vest:
(Tranche 2)
Less than 26.3% per annum
None
At or above 26.3% per annum
50% (straight-line interpolation between 26.3%
and 29% per annum)
At or above 29.0% per annum
100%
Prospectus Forecast Earnings
Vesting Condition
(Tranche 3)
1/3 of the Performance Rights granted will vest in three years if Simonds Group Limited achieves the
Prospectus forecast earnings for the year ended 30 June 2015
The FY2015 Performance Rights have been issued to the Senior Executives previously defined as KMP in this report.
31
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 Remuneration Structure and Performance/Shareholder Wealth Creation
The Group’s annual financial performance and indicators of shareholder wealth for the current financial period are summarised below. As the Group listed
on 17 November 2014, the corresponding performance measures for the financial periods prior to this date have not been included.
The Board believes it misleading to provide historical information from prior to listing on the ASX, with the exception of 2015 pro forma financial information
as described in the Prospectus and the 2014 statutory actual results due to changes in the Company Remuneration Policy, structure and ownership. The
Board believes a comparison to the Prospectus pro forma forecasts and prior year (during which the KMP commenced managing the business) is more
meaningful for assessing the performance of KMP and their remuneration relative to Group performance.
Financial Performance
Revenue
EBITDA1
NPAT2
Share Price at beginning of period
Share Price at end of period
Dividends (cents per share)
EPS (cents per share)
FY2017
FY2016
FY2015
FY2014
Pro Forma
Actual $m
Statutory
Actual
(Continuing
Operations)
$m
Pro Forma
Actual
$m
Statutory
Actual
(Continuing
Operations)
$m
Prospectus
Pro Forma
Forecast
$m
Pro Forma
Actual
$m
Statutory
Actual
$m
587.4
587.4
628.5
628.5
638.2
634.4
543.8
13.8
4.6
0.28
0.31
-
3.22
10.1
2.1
0.28
0.31
-
1.44
15.1
5.3
1.40
0.28
-
4.4
(2.2)
1.40
0.28
-
34.0
20.4
-
1.40
5.3
34.8
21.1
-
1.40
5.3
3.52
(1.53)
13.47
15.64
15.7
7.5
-
-
-
-
1. Statutory EBITDA is net profit after tax from continuing operations $2.1m before financing items ($1.7m), tax expenses ($1.3m), and depreciation and amortisation ($5.0m).
2. Statuary NPAT is net profit after tax from continuing operations $2.1m.
32
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 Remuneration Tables – Details of KMP Remuneration
Details of the remuneration of the KMP, including Directors (as defined in AASB 124 Related Party Disclosures) of the Group are set out in the
following tables. Comparative information is also included below.
FY2017
Short Term Employee Benefits
Termination
Benefits
Post-
employment
Benefits
Long–term Benefits
Share–based
Payments
(SBP)
Name
Directors
Fees $
Cash Salary
and Fees $
Short Term
Incentive $
Non–
monetary
Benefits $
Termination
Payments
V G Simonds
182,648
-
S Oliver
186,638
30,0001
L Gorr2
75,516
R Simonds
44,977
M Humphris
31,373
-
-
-
Total NED
521,152
30,000
Senior Executive (Current and Former)
M Chun
M Myers
J Thorburn3
Total
Senior
Executive
TOTAL
KMP
-
-
-
-
595,385
300,000
194,630
1,090,015
521,152
1,120,015
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Super $
17,352
17,730
7,174
4,273
2,980
49,509
Annual
Leave $
Long
Service
Leave $
Performance
Rights $
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total $
200,000
234,368
82,690
49,250
34,353
600,661
19,616
10,567
1,325
88,192
715,085
19,616
16,626
12,503
8,209
582
169
14,091
350,915
14,091
229,602
51,735
35,402
2,076
116,374
1,295,602
101,244
35,402
2,076
116,374
1,896,263
1. Fees paid to S Oliver as Chair of the Independent Board Committee as part of the proposed Scheme of Arrangement.
2. L Gorr resigned as Non-Executive Director on 29 March 2017.
3. J Thorburn was appointed as Group General Manager, Simonds Homes Australia on 5 December 2016.
33
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 Remuneration Tables – Details of KMP Remuneration (Cont’d)
FY2016
Short Term Employee Benefits
Termination
Benefits
Post-
employment
Benefits
Long–term Benefits
Share–based
Payments
(SBP)
Name
Directors
Fees $
Cash
Salary and
Fees $
Short Term
Incentive $
Non–
monetary
Benefits $
Termination
Payments
V.G Simonds
182,648
S Oliver
160,221
L Gorr
86,291
R Simonds1
-
-
-
-
-
M Chun2
90,000
105,2283
R Colless4
102,389
-
Total NED
621,549
105,228
Senior Executive (Current and Former)
M Chun
M Myers5
A Shea6
P McMahon7
-
-
-
-
148,923
27,308
19,700
306,988
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,989
19,092
-
-
-
-
-
-
-
-
-
-
-
Annual
Leave $
Long
Service
Leave $
Performance
Rights $
Total $
Super $
17,352
22,422
8,198
-
8,550
9,727
66,249
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,827
13,143
126
2,594
2,410
1,708
1,739
23
17
13,049
40,639
5,870
(86,002)
299,636
-
-
-
-
-
-
-
-
-
-
200,000
182,643
94,489
-
203,778
112,116
793,026
167,019
32,335
25,153
1. Fees for the financial year ended 30 June 2016 are nil.
2. Prior to M Chun’s appointment to the role of Group CEO and Managing Director, he was an Independent Non-executive Director of the Board and Independent Chair of the
Audit and Risk Committee. M Chun resigned as Independent Non-executive Director and Chair of the Audit and Risk Committee on 31 March 2016 prior to his appointment
as Group CEO and Managing Director.
3. Amounts paid to M Chun, excluding directors’ fees, relate to advisory services provided as part of the normal course of business.
4. R Colless resigned as Independent Non-executive Director on 20 April 2016.
5. M Myers was appointed as CFO on 30 May 2016.
6. A Shea was appointed as Acting CEO of Builders Academy Australia on 26 May 2016.
7. P McMahon ceased to be Group CEO and Managing Director on 22 January 2016.
34
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 Remuneration Tables – Details of KMP Remuneration (Cont’d)
FY2016
Short Term Employee Benefits
Termination
Benefits
Post-
employment
Benefits
Long–term Benefits
Share–based
Payments
(SBP)
Directors
Fees $
Cash
Salary and
Fees $
Short
Term
Incentive $
Non–
monetary
Benefits $
Termination
Payments
Super $
Annual
Leave $
Long
Service
Leave $
Performance
Rights $
Total $
Name
R Stubbs1
M Gerolemou 2
C Troman3
G Healy4
-
-
-
-
379,475
247,162
390,933
277,975
Total Senior
Executive
-
1,798,464
TOTAL KMP
621,549
1,903,692
-
-
-
-
-
-
20,000
199,738
19,308
33,490
(7,285)
293,341
938,067
20,000
133,581
19,308
21,813
4,726
195,562
642,152
18,205
259,312
19,308
34,501
(5,277)
405,852
1,122,834
23,205
-
19,308
24,532
(4,793)
(34,401)
305,826
102,491
592,631
99,410
172,267
(6,593)
774,352
3,533,022
102,491
592,631
165,659
172,267
(6,593)
774,352
4,326,048
1. R Stubbs ceased to be CFO on 30 June 2016. Please refer to page 36 of the directors’ report for details in relation to vested performance rights.
2. M Gerolemou ceased to be CHRO on 30 June 2016. Please refer to page 36 of the directors’ report for details in relation to vested performance rights.
3. C Troman ceased to be CEO of Simonds Homes Australia on 27 May 2016. Please refer to page 36 of the directors’ report for details in relation to vested performance rights.
4. G Healy ceased to be CEO of Builders Academy Australia on 3 June 2016.
Key terms of the Executive Services Agreement Group Chief Executive Officer (CEO) & Managing Director
The material terms of the Executive Services Agreement between Matthew Chun and the Company for the role of Group Chief Executive Officer (CEO) &
Managing Director are as follows:
Term:
No fixed term. Ongoing until terminated by either party in accordance with the Agreement
Total Employment Cost (TEC):
$615,000 per annum including superannuation, reviewed annually
Short Term Incentive (STI) for
FY16/17:
Long Term Incentive (LTI) for
FY16/17:
Maximum opportunity of $600,000 per annum, subject to performance
Options and Performance Rights issued under the Simonds Group Employee Share Plan
12 months by either party
Notice Period / Termination
Entitlements:
Employment may be ended immediately in certain circumstances including misconduct, incapacity,
and mutual agreement or in the event of a fundamental change in the CEO’s role or responsibilities.
The Company may elect to make a payment in lieu of any unserved notice period.
Post-Employment Restraint:
A 6 month post-employment restraint provision applies
35
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 STI Payments to KMP
There were no STI payments made to KMP during the financial year ended 30 June 2017 (2016: Nil). The achievement of budgeted Group EBITDA is
an initial gateway to realise a STI amount. All STI’s are subject to the achievement of relevant key performance measures which are determined with
reference to the Balanced Scorecard approach. The Balance Scorecard Approach encompasses the following areas of focus: Financial, Operational,
Customer and People, safety & values.
KMP LTI
The following tables provide the details of performance rights allocated to the KMP pursuant to the LTI Plan.
Number of equity instruments granted, vested and expired/forfeited – performance rights
FY2017
Name
M Chun
M Myers
J Thorburn
TOTAL
FY2016
Name
M Chun
M Myers
A Shea
P McMahon
R Stubbs
M Gerolemou
C Troman
G Healy
TOTAL
Performance Rights
1 July 2016
Performance Rights
Granted
Performance Rights
Vested
Performance Rights
Expired / Forfeited
Balance
30 June 2017
-
-
-
-
453,401
314,861
314,861
1,083,123
-
-
-
-
-
-
-
-
453,401
314,861
314,861
1,083,123
Performance Rights
1 July 2015
Performance Rights
Granted
Performance Rights
Vested
Performance Rights
Expired / Forfeited
Balance
30 June 2016
-
-
-
280,899
168,539
112,360
168,539
112,360
-
-
-
-
212,284
141,523
424,568
247,665
-
-
-
-
(380,823)
(253,883)
(593,107)
-
-
-
(280,899)
-
-
-
-
(360,025)
842,697
1,026,040
(1,227,813)
(640,924)
-
-
-
-
-
-
-
-
-
Number of equity instruments granted, vested and expired/forfeited – options
Options
1 July 2016
Options Granted
Options Vested
Options Expired /
Forfeited
Balance
30 June 2017
-
4,000,000
-
-
4,000,000
FY2017
Name
M Chun
36
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 Value of performance rights granted, exercised and expired/forfeited – performance rights
FY2017
Name
Rights issue
Tranche
Fair value at
grant date
$ per share
No. of
Performance
Rights
Accounting
Fair Value at
grant date $
Exercised /
Vested $
Expired /
Forfeited $
M Chun
FY2017
M Myers
FY2017
J Thorburn
FY2017
FY2016
TSR
EPS
TSR
EPS
TSR
EPS
0.23
0.35
0.23
0.35
0.23
0.35
226,701
226,700
157,431
157,430
157,431
157,430
52,141
79,345
36,209
55,100
36,209
55,100
-
-
-
-
-
-
-
-
-
-
-
-
Name
Rights issue
Tranche
Fair value at
grant date
$ per share
No. of
Performance
Rights
Accounting
Fair Value at
grant date $
Exercised /
Vested $
Expired /
Forfeited $
M Chun
M Myers
A Shea
P McMahon
R Stubbs
M Gerolemou
C Troman
G Healy
-
-
-
FY2016
FY2015
FY2016
FY2015
FY2016
FY2015
FY2016
FY2015
FY2016
FY2015
-
-
-
TSR
EPS
TSR
EPS
Prospectus
TSR
EPS
TSR
EPS
Prospectus
TSR
EPS
TSR
EPS
Prospectus
TSR
EPS
TSR
EPS
Prospectus
TSR
EPS
TSR
EPS
Prospectus
-
-
-
-
-
1.0349
1.5512
1.5512
0.31
0.75
1.0349
1.5512
1.5512
0.31
0.75
1.0349
1.5512
1.5512
0.31
0.75
1.0349
1.5512
1.5512
0.31
0.75
1.0349
1.5512
1.5512
-
-
-
-
-
93,633
93,633
93,633
106,142
106,142
56,180
56,180
56,179
70,762
70,761
37,453
37,453
37,454
212,284
212,284
56,180
56,180
56,179
123,833
123,832
37,453
37,453
37,454
-
-
-
-
-
96,901
145,244
145,244
32,904
79,607
58,141
87,146
87,145
21,936
53,071
38,760
58,097
58,099
65,808
159,213
58,141
87,146
87,145
38,388
92,874
38,760
58,097
58,099
-
-
-
-
-
-
-
-
-
-
-
-
-
96,901
145,244
145,244
32,904
79,607
58,141
87,146
87,145
21,936
53,071
38,760
58,097
58,099
65,808
159,213
58,141
87,146
87,145
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
38,388
92,874
38,760
58,097
58,099
Accounting
Fair Value
at year end
30 June 17 $
52,141
79,345
36,209
55,100
36,209
55,100
Accounting
Fair Value
at year end
30 June 16 $
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
37
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 Value of performance options granted, exercised and expired/forfeited – performance options
FY2017
Name
Options issue
Tranche
Fair value at
grant date
$ per share
No. of
Performance
Rights
Accounting
Fair Value at
grant date $
Exercised /
Vested $
Expired /
Forfeited $
Accounting
Fair Value
at year end
30 June 17 $
M Chun
FY2017
EPS (Options)
0.11
4,000,000
440,000
-
-
440,000
Non–Executive Directors and KMP Shareholdings
Shareholdings of non–executive directors and KMP are set out below:
FY2017
Name
Opening balance
Acquired
Other 1
Closing balance
Number of shares
Non–executive Directors (Current and Former)
V.G Simonds
56,138,895
S Oliver
L Gorr
R Simonds
M Humphris
Total NED
Senior Executive
M Chun
M Myers
J Thorburn
Total Senior Executive
44,000
461,180
14,044
-
56,658,119
-
-
-
-
TOTAL KMP
56,658,119
1. Other relates to when KMP ceased their position with the Company.
-
-
-
-
-
-
-
-
-
-
-
-
-
(461,180)
-
-
56,138,895
44,000
-
14,044
-
(461,180)
56,196,939
-
-
-
-
-
-
-
-
(461,180)
56,196,939
38
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 FY2016
Name
Opening balance
Acquired
Other 1
Closing balance
Number of shares
Non–executive Directors (Current and Former)
V.G Simonds
56,138,895
S Oliver
L Gorr
R Simonds
M Chun
R Colless
Total NED
Senior Executive
M Chun
Non–executive Directors (Current and Former)
M Myers
A Shea
P McMahon
R Stubbs
M Gerolemou
C Troman
G Healy
17,000
56,180
14,044
-
-
-
-
-
4,040,561
375,561
-
-
-
Total Senior Executive
TOTAL KMP
4,416,122
60,642,241
Executive Service Agreements
56,226,119
432,000
-
27,000
405,000
-
-
-
-
-
-
-
-
-
-
-
-
432,000
-
-
-
-
-
-
-
-
-
-
(4,040,561)
(375,561)
-
-
-
(4,416,122)
(4,416,122)
56,138,895
44,000
461,180
14,044
-
-
56,658,119
-
-
-
-
-
-
-
-
-
56,658,119
Name
M Chun
M Myers
J Thorburn
Minimum Notice Period
Contract Length
Termination by Executive
Termination by Company
No fixed term
No fixed term
No fixed term
12 months
6 months
3 months
12 months
6 months
3 months
1. Other relates to when KMP ceased their position with the Company.
39
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 Loans to Director
The Group has not provided any loans to directors or their related parties during the year ended 30 June 2017 (2016: Nil).
Other KMP Transactions
During the financial year, the Group entered into a number of transactions with related parties of KMP. This part of the Remuneration Report
is to be read in conjunction with note 30 Related Parties included on page 78 of the financial statements for the year ended 30 June 2017.
Profit for the year includes the following items of revenue and expense that resulted from transactions, other than compensation, loans or
equity holdings, with KMP or their related entities:
Consolidated revenue includes the following amounts arising from transactions with
KMP of the Group or their related parties:
Revenue – Sales
Consolidated profit includes the following expenses arising from transactions with
KMP of the Group or their related parties:
Leasing and rental costs
Purchase of goods
Total assets arising from transactions with KMP of the Group or their related parties:
Current
Non-Current
Total liabilities arising from transactions with KMP of the Group or their related parties:
Current
Non-Current
2017
$
2016
$
683,400
683,400
1,231,463
1,231,463
674,735
465,963
529,087
1,161,912
1,140,698
1,690,999
–
–
–
–
–
–
–
–
–
36,000
–
36,000
40
Director’s Report: Remuneration ReportSIMONDS GROUPANNUAL REPORT 2017 Director’s Report
Auditor’s independence declaration
The auditor’s independence declaration is included after this report on page 42.
Rounding of Amounts
The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Director’s Reports) instrument 2016/191,
dated 24 March 2016, and in accordance with that ASIC Corporations Instrument amounts in the Director’s Reports and the financial
statements are rounded off to the nearest thousand dollars, unless otherwise indicated.
This directors’ report is signed in accordance with a resolution of directors made to pursuant to s.298 (2) of the Corporations Act 2001.
On behalf of the directors
Vallence Gary Simonds
Director
Melbourne, 24 August 2017
41
SIMONDS GROUPANNUAL REPORT 2017 SIMONDS GROUP
The Board of Directors
Simonds Group Limited
Level 4, 570 St Kilda Road
Melbourne VIC 3000
24 August 2017
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
550 Bourke Street
Melbourne VIC 3000
GPO Box 78B
Melbourne VIC 3001 Australia
Tel: +61 3 9671 7000
Fax: +61 3 9671 7001
www.deloitte.com.au
Simonds Group Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Simonds Group Limited.
As lead audit partner for the audit of the consolidated financial report of Simonds Group
Limited for the financial year ended 30 June 2017, I declare that to the best of my
knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation
to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely,
DELOITTE TOUCHE TOHMATSU
Genevra Cavallo
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
42
31
ANNUAL REPORT 2017
SIMONDS GROUP
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
550 Bourke Street
Melbourne VIC 3000
GPO Box 78B
Melbourne VIC 3001 Australia
Tel: +61 3 9671 7000
Fax: +61 3 9671 7001
www.deloitte.com.au
Independent Auditor’s Report to the Members of
Simonds Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Simonds Group Limited (the “Company”) and its
subsidiaries (the “Group”) which comprises the consolidated statement of financial position as at 30
June 2017, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant
accounting policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
financial performance for the year then ended; and
(ii)
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 confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of the Company, would be in the same terms if given to the directors as
at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
32
43
ANNUAL REPORT 2017
SIMONDS GROUP
Key Audit Matters
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
550 Bourke Street
Melbourne VIC 3000
GPO Box 78B
Melbourne VIC 3001 Australia
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report for 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.
The Board of Directors
Simonds Group Limited
Level 4, 570 St Kilda Road
Melbourne VIC 3000
Tel: +61 3 9671 7000
Fax: +61 3 9671 7001
www.deloitte.com.au
Key Audit Matter
How the scope of our audit responded to the Key
Audit Matter
Recognition of revenue and work
24 August 2017
progress on construction contracts
in
Simonds Group Limited
For the year ended 30 June 2017, the Group’s
revenue from residential construction contracts
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Simonds Group Limited.
totalled $569.864m. Revenue from construction
contracts is recognised with reference to the
As lead audit partner for the audit of the consolidated financial report of Simonds Group
stage of completion of the contract activity at
Limited for the financial year ended 30 June 2017, I declare that to the best of my
knowledge and belief, there have been no contraventions of:
the end of the reporting period, measured based
on the proportion of contract costs incurred for
work performed
the
to date
estimated total contract costs as disclosed in
Note 3.7.1.
(i) the auditor independence requirements of the Corporations Act 2001 in relation
relative
(ii) any applicable code of professional conduct in relation to the audit.
to the audit; and
to
Our audit procedures included, but were not limited to:
Obtaining an understanding of
the process
undertaken by management to account for the
recognition of revenue and work in progress;
Testing key controls in respect of the revenue
process,
Assessing management’s determination of the
percentage of completion allocated to each stage of
the build process against historical cost profiles;
Testing a sample of inputs into the model used to
establish management’s percentage of completion
allocated to each stage;
Assessing management’s estimation of costs to
complete, including comparing historical actual
performance against forecast;
Recalculating, on a sample basis,
revenue
recognised based on the stage of completion of
selected jobs;
Challenging contracts which exhibited heightened
risk characteristics; and
Agreeing, on a sample basis, job data back to
customer
source
contracts, approved variations and job costs.
documentation,
including
We also assessed
the
disclosures in notes 3.7.1 and 4 to the financial
statements.
the appropriateness of
Our audit procedures included, but were not limited to:
Assessing the process undertaken by management
to develop the budget and cash flow forecasts and
confirming they had been approved by the Board;
31
Assessing forecasted key assumptions including
site starts, start value, number of displays and
student numbers, with reference to those achieved
for the 2016 financial year:
Assessing forecasted debt repayments against
repayment schedules;
Assessing the level of available bank facilities
during the forecast period;
Testing compliance with covenant requirements at
year end and reviewing management’s forecast
covenant compliance calculations for the forecast
period;
Performing sensitivity analysis on the financial
forecasts; and
Evaluating performance in the period since year
end to audit report date against the forecast.
the appropriateness of
We also assessed
disclosures in note 3.3 to the financial statements.
the
33
is
required
Yours sincerely,
As disclosed in Note 4, significant management
estimation
the
following:
-
Estimation of total contract revenue and
costs; and
DELOITTE TOUCHE TOHMATSU
- Determination of stage of completion.
in assessing
Genevra Cavallo
Partner
Chartered Accountants
Compliance with Bank Covenants
As disclosed in Note 3.3 the appropriateness of
Liability limited by a scheme approved under Professional Standards Legislation.
the going concern assumption was assessed
Member of Deloitte Touche Tohmatsu Limited
with reference to detailed financial forecasts
which demonstrate that the Group will be able
to operate within its bank covenants for the 12
months following the date of the financial
report, and therefore have access to its banking
facilities for that period.
Management estimation is inherent in the
preparation of the financial forecasts.
44
ANNUAL REPORT 2017
SIMONDS GROUP
Other Information
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
550 Bourke Street
Melbourne VIC 3000
GPO Box 78B
Melbourne VIC 3001 Australia
The directors are responsible for the other information. The other information comprises the
Directors’ Report, ASX announcement and full year results presentation which we obtained prior to
the date of the auditor’s report, and also includes the following information which will be included
in the Group’s annual report (but does not include the financial report and our auditor’s report
The Board of Directors
thereon): the Chairman’s Welcome Letter, Letter from the Group CEO and Managing Director,
Simonds Group Limited
Level 4, 570 St Kilda Road
Financial Highlights and additional securities exchange information, which is expected to be made
Melbourne VIC 3000
available to us after that date.
Tel: +61 3 9671 7000
Fax: +61 3 9671 7001
www.deloitte.com.au
24 August 2017
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon.
Simonds Group Limited
In connection with our audit of the financial report, our responsibility is to read the other
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
information identified above and, in doing so, consider whether the other information is materially
following declaration of independence to the directors of Simonds Group Limited.
inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears
As lead audit partner for the audit of the consolidated financial report of Simonds Group
to be materially misstated. If, based on the work we have performed on the other information that
Limited for the financial year ended 30 June 2017, I declare that to the best of my
knowledge and belief, there have been no contraventions of:
we obtained prior to the date of this auditor’s report, 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.
(i) the auditor independence requirements of the Corporations Act 2001 in relation
to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
When we read the Chairman’s Welcome Letter, Letter from the Group CEO and Managing Director
and Financial Highlights, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to the directors and use our professional judgment to
Yours sincerely,
determine the appropriate action.
Responsibilities of the Directors for the Financial Report
DELOITTE TOUCHE TOHMATSU
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
Genevra Cavallo
Partner
misstatement, whether due to fraud or error.
Chartered Accountants
In preparing the financial report, the directors are responsible for assessing the ability of the Group
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 has 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
Liability limited by a scheme approved under Professional Standards Legislation.
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
Member of Deloitte Touche Tohmatsu Limited
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.
31
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
45
34
ANNUAL REPORT 2017
SIMONDS GROUP
•
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Conclude on the appropriateness of the directors’ use of the going concern basis of
550 Bourke Street
accounting and, based on the audit evidence obtained, whether a material uncertainty
Melbourne VIC 3000
GPO Box 78B
exists related to events or conditions that may cast significant doubt on the Group’s ability
Melbourne VIC 3001 Australia
to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
Tel: +61 3 9671 7000
Fax: +61 3 9671 7001
www.deloitte.com.au
The Board of Directors
Simonds Group Limited
Level 4, 570 St Kilda Road
Melbourne VIC 3000
•
24 August 2017
Evaluate the overall presentation, structure and content of the financial report, including
the disclosures, and whether the financial report represents the underlying transactions
and events in a manner that achieves fair presentation.
Simonds Group Limited
•
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Simonds Group Limited.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial report.
We are responsible for the direction, supervision and performance of the Group’s audit. We
remain solely responsible for our audit opinion.
As lead audit partner for the audit of the consolidated financial report of Simonds Group
Limited for the financial year ended 30 June 2017, I declare that to the best of my
knowledge and belief, there have been no contraventions of:
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
(i) the auditor independence requirements of the Corporations Act 2001 in relation
(ii) any applicable code of professional conduct in relation to the audit.
to the audit; and
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
Yours sincerely,
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
DELOITTE TOUCHE TOHMATSU
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
Genevra Cavallo
Partner
reasonably be expected to outweigh the public interest benefits of such communication.
Chartered Accountants
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 25 to 40 of the Directors’ Report
for the year ended 30 June 2017.
In our opinion, the Remuneration Report of Simonds Group Limited, for the year ended 30 June
Liability limited by a scheme approved under Professional Standards Legislation.
2017, complies with section 300A of the Corporations Act 2001.
Member of Deloitte Touche Tohmatsu Limited
Responsibilities
31
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.
DELOITTE TOUCHE TOHMATSU
Genevra Cavallo
Partner
Chartered Accountants
Melbourne, 24 August 2017
46
35
ANNUAL REPORT 2017
SIMONDS GROUP
Directors’ Declaration
The directors declare that:
Directors’ Declaration
a) in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable;
b) in the directors’ opinion, the attached financial statements are in compliance with International Financial Reporting Standards,
as stated in note 3.1 to the financial statements; and
c) in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001,
including compliance with accounting standards and giving a true and fair view of the financial position and performance of the
consolidated entity
d) the directors have been given the declarations required by s.295A of the Corporations Act 2001.
At the date of this declaration, the Company is within the class of companies affected by ASIC Class Order 98/1418. The nature of the deed
of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of any debt in accordance
with the deed of cross guarantee.
In the directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Class Order applies,
as detailed in note 16 to the financial statements will, as a group, be able to meet any obligations or liabilities to which they are, or may become,
subject by virtue of the deed of cross guarantee.
Signed in accordance with a resolution of the directors made pursuant to s.295 (5) of the Corporations Act 2001.
On behalf of the Directors
Vallence Gary Simonds
Director
Melbourne, 24 August 2017
47
ANNUAL REPORT 2017 Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2017
Continuing
Revenue
Cost of sales
Gross profit
Expenses
Profit before significant items, financing items,
depreciation and amortisation
Significant items
Notes
5
11
12
Profit before financing items, depreciation and amortisation
Depreciation and amortisation charges
17,18
Profit / (Loss) before financing items and tax
Financing items
Interest income
Interest expense
Net financing cost
Profit / (Loss) before tax
Income tax benefit / (expense)
Profit / (Loss) from continuing operations
Discontinued operations
Loss from discontinued operations after tax
Profit / (Loss) after tax for the year
Other comprehensive income, net of income tax
Total Comprehensive Income for the year
Earnings per share
From continuing operations
Basic (cents per share)
Diluted (cents per share)
From continuing and discontinuing operations
Basic (cents per share)
Diluted (cents per share)
The accompanying notes form part of these financial statements.
48
7
8
9
10
13
13
13
13
Year ended
30/06/17
$’000
587,369
(461,436)
125,933
(112,096)
13,837
(3,703)
10,134
(5,020)
5,114
1
(1,728)
(1,727)
3,387
(1,309)
2,078
(1,873)
205
-
205
1.44
1.44
0.14
0.14
Year ended
30/06/16
$’000
628,508
(496,795)
131,713
(116,622)
15,091
(10,643)
4,448
(5,594)
(1,146)
112
(2,212)
(2,100)
(3,246)
1,005
(2,241)
(12,650)
(14,891)
-
(14,891)
(1.53)
(1.53)
(10.14)
(10.14)
SIMONDS GROUPANNUAL REPORT 2017 Consolidated Statement of Financial Position
Consolidated statement of financial position as at 30 June 2017
Notes
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
Assets
Current Assets
Cash and bank balances
Trade and other receivables
Inventories
Other financial assets
Tax receivable
Other assets
Total current assets
Non–Current Assets
Property, plant and equipment
Intangible assets
Other financial assets
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Current Liabilities
Trade and other payables
Borrowings
Provisions
Deposits and income in advance
Total current liabilities
Non–Current Liabilities
Borrowings
Provisions
Deferred tax liabilities
Total Non–Current Liabilities
Total liabilities
Net assets / (liabilities)
Equity
Issued capital
Share buy–back reserve
Share based payments reserve
Accumulated losses
Total equity / (deficit)
34
14
15
20
9
19
17
18
20
9
21
22
23
24
22
23
9
25
25
31
26
10,204
32,690
48,185
1,260
1,441
3,174
96,954
7,878
5,676
-
5,839
19,393
116,347
61,168
3,875
12,989
13,774
91,806
11,349
7,878
8,439
27,666
119,472
(3,125)
12,911
(7,204)
30,243
(39,075)
(3,125)
3,176
43,630
49,610
-
4,109
3,382
103,907
9,800
4,798
1,260
3,946
19,804
123,711
75,630
1,790
14,658
12,484
104,562
9,500
6,877
6,097
22,474
127,036
(3,325)
12,911
(7,204)
30,248
(39,280)
(3,325)
The accompanying notes form part of these financial statements.
49
SIMONDS GROUPANNUAL REPORT 2017
SIMONDS GROUP
Consolidated Statement of Changes in Equity
Consolidated statement of changes in equity for the year ended 30 June 2017
Notes
31
31
Balance at 1 July 2015
Share buy-back
Employee share plan
Performance rights vested
Dividend paid
Loss for the year
Issued
capital
$’000
Share based
payments reserve
$’000
Share buy–back
reserve
$’000
Accumulated
losses
$’000
13,590
29,424
-
(16,359)
(679)
-
(7,204)
-
-
-
-
1,332
(508)
-
-
-
-
-
-
Total
$’000
26,655
(7,883)
1,332
(508)
-
-
-
(8,030)
(8,030)
(14,891)
(14,891)
Balance at 30 June 2016
12,911
30,248
(7,204)
(39,280)
(3,325)
Balance at 1 July 2016
Share buy-back
Employee share plan expense
Performance and service rights vested
/ forfeited
Dividend paid
Profit for the year
31
31
12,911
30,248
(7,204)
(39,280)
(3,325)
-
-
-
-
-
-
229
(234)
-
-
-
-
-
-
-
-
-
-
-
205
-
229
(234)
-
205
Balance at 30 June 2017
12,911
30,243
(7,204)
(39,075)
(3,125)
The accompanying notes form part of these financial statements.
50
ANNUAL REPORT 2017 SIMONDS GROUP
Consolidated Statement of Cash Flows
Consolidated statement of cash flows for the year ended 30 June 2017
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Cash generated from operations
Transaction costs associated with proposed Scheme of Arrangement
Finance costs
Income taxes refund / (paid)
Net cash generated / (used in) from operating activities
Cash flows from / (used in) investing activities
Interest received
Payment to acquire subsidiary and its working capital, net of cash acquired
Proceeds from disposal of property, plant and equipment
Notes
8
34
7
36
Investment in land fund
Payments for property, plant and equipment
Payments for intangibles assets
Net cash used in investing activities
Cash flows from / (used in) financing activities
Proceeds from borrowings
Payment for finance leases
Amounts advanced from related parties
Share buy-back
Dividends paid to shareholders
Net cash generated from / (used in) financing activities
Net increase / (decrease) in cash and cash equivalents
The accompanying notes form part of these financial statements
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
34
The accompanying notes form part of these financial statements.
Year ended
30/06/17
$’000
604,503
(596,599)
7,904
(1,757)
(1,728)
2,649
7,068
1
-
355
-
(554)
(2,400)
(2,598)
4,726
(2,168)
-
-
-
2,558
7,028
3,176
10,204
Year ended
30/06/16
$’000
664,047
(637,699)
26,348
-
(2,212)
(9,192)
14,944
112
(1,647)
478
(1,260)
(3,129)
(1,891)
(7,337)
7,000
(1,152)
157
(7,883)
(8,030)
(9,908)
(2,301)
5,477
3,176
51
ANNUAL REPORT 2017 SIMONDS GROUP
Notes to the Financial Statements
1. General information
The Company is incorporated in Australia and is a for-profit entity.
The Company’s registered office and principal place of business is as follows:
Level 1, 570 St Kilda Road
MELBOURNE VIC 3004
These financial statements comprise the consolidated financial statements of the Company and the entities it controls (the “Group”). The entities
controlled by the Company are detailed in note 16 to the financial report. The principal activities of the Group are the design and construction of
residential dwellings, the development of residential land and providing registered training courses.
2. Application of new and revised accounting standards
2.1 Amendments to AASBs and the new interpretation that are mandatorily effective for the current year
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB)
that are relevant to their operations and effective for the current year.
The application of these amendments does not have any material impact on the disclosures or the amounts recognised in the Group’s consolidated
financial statements.
2.2 Standards and interpretations in issue not yet adopted
At the date of authorisation of the financial statements, the Directors have reviewed all Standards and Interpretations on issue but not yet effective
and with the exception of the following standards, do not expect these Standards and Interpretations to have a material effect on the financial
statements of the Group.
Standard / Interpretation
Effective for annual reporting periods
beginning on or after
(i)
AASB 15 ‘Revenue from Contracts with Customers’, and the relevant amending standards
1 January 2018
AASB 15 establishes a single comprehensive model for entities to use in accounting for revenue
arising from contracts with customers. AASB 15 will supersede the current revenue recognition
guidance including AASB 118 ‘Revenue’, AASB 111 ‘Construction Contracts’ and the related
Interpretations which it becomes effective.
(ii)
AASB 16 ‘Leases’
1 January 2019
AASB 16 introduces a comprehensive model for the identification of lease arrangements and
accounting treatments for both lessors and lessees. AASB 16 will supersede the current lease
guidance including AASB 117 ‘Leases’ and the related interpretations. AASB 16 eliminates the
distinction between operating and finance leases for lessees and will result in lessees bringing
most lease onto their statements of financial position.
The Directors are in the process of completing their assessment of the potential impacts of these standards.
52
ANNUAL REPORT 2017
3. Significant accounting policies
3.3 Going concern
3.1 Statement of compliance
These financial statements are general purpose financial statements
which have been prepared in accordance with the Corporations Act
2001, Accounting Standards and Interpretations, and comply with
other requirements of the law. The financial statements comprise the
consolidated financial statements of the Group.
Accounting Standards include Australian Accounting Standards.
Compliance with Australian Accounting Standards ensures that the
financial statements and notes of the Company and the Group comply
with International Financial Reporting Standards (‘IFRS’). The financial
statements were authorised for issue by the directors on 24 August 2017.
3.2 Basis of preparation
The financial report has been prepared on the going concern basis,
which assumes continuity of normal business activities and the
realisation of assets and settlement of liabilities in the ordinary course
of business.
The Group incurred a net profit after tax (NPAT) for the year ended
30 June 2017 of $0.205m (2016: loss $14,891m). The results include
transaction costs of $1.817m (2016: $Nil); impairment of non-core
development land and other current assets of $1.413m (2016: $1.700m);
and management restructure costs of $0.473m (2016: $2.587m) (refer
to note 12 for significant items). The Group has a deficit net asset
position of $3.125m as at 30 June 2017.
As a result of these indicators, along with the need to comply with bank
covenants, the Group has assessed the appropriateness of the going
The consolidated financial statements have been prepared on the
concern basis as follows:
basis of historical cost, except for certain financial instruments that
• Management has prepared detailed financial forecasts for the
are measured at revalued amounts or fair values at the end of each
12 months following the date of this report. These forecasts
reporting period, as explained in the accounting policies below.
indicate that the Group will have sufficient funds to continue to
Historical cost is generally based on the fair values of the consideration
given in exchange for goods and services. All amounts are presented
in Australian dollars, unless otherwise noted.
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants
at the measurement date, regardless of whether that price is directly
observable or estimated using another valuation technique. In estimating
the fair value of an asset or a liability, the Group takes into account the
characteristics of the asset or liability if market participants would take
those characteristics into account when pricing the asset or liability at
the measurement date. Fair value for measurement and/or disclosure
purposes in these consolidated financial statements is determined on
pay its debts as and when they become due and payable.
• The Group has complied with all bank covenants in its banking
arrangements during the year and based on the forecasts noted
above, expects to operate within its bank covenants for the 12
months following the date of this report and therefore continue
to have access to its banking facilities.
• As described in note 22 the Group has $23.035m in unused
facilities (excluding finance leases) available at 30 June 2017.
Based on all available information to management and the Directors
at the date of signing, the Directors are of the opinion that the Group
is a going concern and accordingly the Directors have deemed it
appropriate for the financial report to be prepared on a going
such a basis, except for share-based payment transactions that are
concern basis.
within the scope of AASB 2, leasing transactions that are within the
scope of AASB 117, and measurements that have some similarities
3.4 Basis of consolidation
to fair value but are not fair value, such as net realisable value in
Consolidation of a subsidiary begins when the Company obtains control
AASB 102 or value in use in AASB 136.
Rounding of amounts
The Company is a company of the kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191, dated
over the subsidiary and ceases when the Company loses control of the
subsidiary. Specifically, income and expenses of a subsidiary acquired
or disposed of during the year are included in the consolidated
statement of profit or loss and other comprehensive income from the
date the Company gains control until the date when the Company
24 March 2016, and in accordance with that Class Order amounts in the
ceases to control the subsidiary.
financial report are rounded off to the nearest thousand dollars, unless
otherwise indicated.
Profit or loss and each component of other comprehensive income are
attributed to the owners of the Company.
When necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with the Group's
accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash
flows relating to transactions between members of the Group are
eliminated in full on consolidation.
5353
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 Notes to the Financial Statements
3.5 Business combinations
3.7 Revenue recognition
Acquisitions of businesses are accounted for using the acquisition
Revenue is measured at the fair value of the consideration received or
method. The consideration transferred in a business combination is
receivable. Revenue is reduced for rebates and other similar allowances.
measured at fair value which is calculated as the sum of the acquisition-
date fair values of assets transferred by the Group, liabilities incurred by
3.7.1 Construction Contracts
the Group to the former owners of the acquiree and the equity
instruments issued by the Group in exchange for control of the acquiree.
Acquisition-related costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities
assumed are recognised at their fair value, except that:
• deferred tax assets or liabilities and assets or liabilities related to
employee benefit arrangements are recognised and measured in
accordance with AASB 112 ‘Income Taxes’ and AASB 119
‘Employee Benefits’ respectively;
When the outcome of a construction contract can be estimated reliably,
revenue and costs are recognised by reference to the stage of
completion of the contract activity at the end of the reporting period,
measured based on the proportion of contract costs incurred for work
performed to date relative to the estimated total contract costs, except
where this would not be representative of the stage of completion.
Variations in contract work, claims and incentive payments are included
to the extent that the amount can be measured reliably and its receipt is
considered probable.
• liabilities or equity instruments related to share-based payment
When the outcome of a construction contract cannot be estimated
arrangements of the acquiree or share-based payment
reliably, contract revenue is recognised to the extent of contract costs
arrangements of the Group entered into to replace share-based
incurred and that it is probable that it will be recovered. Contract costs
payment arrangements of the acquiree are measured in accordance
are recognised as expenses in the period in which they are incurred.
with AASB 2 ‘Share-based Payment’ at the acquisition date; and
When it is probable that total contract costs will exceed total contract
• assets (or disposal groups) that are classified as held for sale
in accordance with AASB 5 ‘Non-current Assets Held for Sale
and Discontinued Operations’ are measured in accordance with
that Standard.
revenue, the expected loss is recognised as an expense immediately.
When contract costs incurred to date plus recognised profits less
recognised losses exceed progress billings, the surplus is shown as
amounts due from customers for contract work. Amounts received
Goodwill is measured as the excess of the sum of the consideration
before the related work is performed are included in the consolidated
transferred, the amount of any non-controlling interests in the
statement of financial position as a liability, as income in advance.
acquiree, and the fair value of the acquirer's previously held equity
Amounts billed for work performed but not yet paid by the customer are
interest in the acquiree (if any) over the net of the acquisition-date
included in the consolidated statement of financial position under trade
amounts of the identifiable assets acquired and the liabilities assumed.
and other receivables.
3.6 Goodwill
Goodwill arising on an acquisition of a business is carried at cost as
established at the date of the acquisition of the business less
accumulated impairment losses, if any.
3.7.2 Sale of Speculative Homes, Display Homes and Land
Revenue from the sale of speculative homes, display homes and land is
recognised when the goods are delivered and titles have passed at
which time all the following conditions are satisfied:
For the purposes of impairment testing, goodwill is allocated to each of
the Group's cash generating units (or groups of cash-generating units)
that is expected to benefit from the synergies of the combination.
• the Group has transferred to the buyer the significant risks and
rewards of ownership of the goods;
• the Group retains neither continuing managerial involvement to the
A cash-generating unit to which goodwill has been allocated is tested
degree usually associated with ownership nor effective control over
for impairment annually, or more frequently when there is an indication
the goods sold;
that the unit may be impaired. If the recoverable amount of the
cash-generating unit is less than its carrying amount, the impairment
loss is allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit pro rata
based on the carrying amount of each asset in the unit. Any impairment
loss for goodwill is recognised directly in profit or loss. An impairment
loss recognised for goodwill is not reversed in subsequent periods.
• the amount of revenue can be measured reliably;
• it is probable that the economic benefits associated with the
transaction will flow to the Group; and
• the costs incurred or to be incurred in respect of the transaction can
be measured reliably.
3.7.3 Rendering of registered training services
On disposal of the relevant cash-generating unit, the attributable
Revenue from registered training services is recognised over the
amount of goodwill is included in the determination of the profit or loss
duration of the course by reference to the percentage of services
on disposal.
54
provided and when the Group is entitled to claim the funding from
the government.
SIMONDS GROUPANNUAL REPORT 2017 3.7.4 Interest income
3.9.2 Superannuation contributions
Interest income from a financial asset is recognised when it is probable
Contributions to defined contribution superannuation plans are
that the economic benefits will flow to the Group and the amount of
expensed when employees have rendered services entitling them
revenue can be measured reliably. Interest income is accrued on a time
to the contributions.
basis, by reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly discounts
3.9.3 Termination benefit
estimated future cash receipts through the expected life of the financial
asset to that asset’s net carrying amount on initial recognition.
A liability for a termination benefit is recognised at the earlier of when
the entity can no longer withdraw the offer of the termination benefit
and when the entity recognises any related restructuring costs.
3.8 Leasing
Leases are classified as finance leases whenever the terms of the lease
3.9.4 Bonus entitlements
transfer substantially all the risks and rewards of ownership to the
lessee. All other leases are classified as operating leases.
A liability is recognised for bonus entitlements where contractually
obliged or where there is a past practice that has created a constructive
Assets held under finance leases are initially recognised as assets of
the Group at their fair value at the inception of the lease or, if lower, at
the present value of the minimum lease payments. The corresponding
obligation.
3.10 Taxation
liability to the lessor is included in the statement of financial position as
Income tax expense represents the sum of the tax currently payable and
a finance lease obligation. Lease payments are apportioned between
deferred tax.
finance expenses and reduction of the lease obligation so as to achieve
a constant rate of interest on the remaining balance of the liability.
3.10.1 Current tax
Finance expenses are recognised immediately in profit or loss, unless
The tax currently receivable is based on the financial result for the year.
they are directly attributable to qualifying assets, in which case they
Taxable profit differs from profit as reported in the statement of profit or
are capitalised in accordance with the Group’s general policy on
loss and other comprehensive income because of items of income or
borrowing costs.
In the event that lease incentives are received to enter into operating
leases, such incentives are recognised as a liability. The aggregate
benefit of incentives is recognised as a reduction of rental expense
on a straight-line basis.
3.9 Employee benefits
expense that are taxable or deductible in other years and items that are
never taxable or deductible. The Group’s liability for current tax is
calculated using tax rates that have been enacted or substantively
enacted by the end of the reporting period. Adjustments are made for
transactions and events occurring within the tax-consolidated group
that do not give rise to a tax consequence for the Group or that have a
different tax consequence at the level of the Group.
3.9.1 Short-term and Long-term employee benefits
3.10.2 Deferred tax
Short term employee benefits
A liability is recognised for benefits accruing to employees in respect of
wages and salaries, annual leave, long service leave, and sick leave
when it is probable that settlement will be required and they are capable
of being measured reliably. Liabilities recognised in respect of short-
term employee benefits, are measured at their nominal values using the
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary
differences. Adjustments are made for transactions and events
occurring within the tax-consolidated group that do not give rise to a tax
consequence for the Group or that have a different tax consequence at
remuneration rate expected to apply at the time of settlement.
the level of the Group.
Other long term employee benefits
Liabilities for annual leave and long service leave that are not expected
to be settled wholly within 12 months after the end of the period in which
the employees render the related service, are recognised in the
provision for employee entitlements and are measured at the present
value of the estimated future cash outflows to be made by the Group
in respect of services provided by employees up to reporting date.
Consideration is given to expected future wage and salary levels,
departures and periods of service.
These employee benefit entitlements are presented as current liabilities
in the balance sheet if the Group does not have an unconditional right to
defer settlement for at least 12 months after the reporting date,
regardless of when the actual settlement is expected to occur.
Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that taxable profits
will be available against which those deductible temporary differences
can be utilised. Such deferred tax assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the
initial recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable profit nor
the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of
each reporting period and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
55
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 3.10.3 Current and deferred tax for the year
The following estimated useful lives are used in the calculation of depreciation:
Current and deferred tax are recognised in profit or loss, except
when they relate to items that are recognised in other comprehensive
income or directly in equity, in which case the current and deferred
tax are also recognised in other comprehensive income or directly
in equity, respectively.
3.10.4 Tax consolidation
The entities, except the trusts within the Group have formed a tax-
Leasehold improvements
5 years or the period of the lease
Computer equipment
3 years
Office furniture and fittings
5 years
Display home furniture, fixtures
and fittings
consolidated group with effect from 1 July 2010 and are therefore taxed
Motor vehicles
as a single entity from that date. The head entity within the tax-
consolidated group is Simonds Group Limited. Current tax expense/
(income), deferred tax liabilities and deferred tax assets arising from
Plant and equipment
temporary differences of the members of the tax-consolidated group
3.12 Intangible assets
are recognised in those entities using the ‘separate taxpayer within
5 years
5 years
5 years
group’ approach by reference to the carrying amounts of assets and
3.12.1 Intangible assets acquired separately
liabilities in the separate financial statements of each entity and the tax
values applying under tax consolidation.
The head entity, in conjunction with other members of the tax-
Intangible assets with finite lives that are acquired separately are carried
at cost less accumulated amortisation and accumulated impairment
losses. Amortisation is recognised on a straight-line basis over their
consolidated group, has entered into a tax funding arrangement which
estimated useful lives. The estimated useful life and amortisation method
sets out the funding obligations of members of the tax-consolidated
are reviewed at the end of each reporting period, with the effect of any
group in respect of tax amounts.
The tax funding arrangements require payments to/(from) the head
entity equal to the current tax liability/(asset) assumed by the head entity
and any tax-loss deferred tax asset assumed by the head entity,
resulting in the head entity recognising an inter-entity receivable/
(payable) equal in amount to the tax liability/(asset) assumed.
The inter-entity receivable/(payable) are at call. Contributions to fund
the tax liabilities are payable as per the tax funding arrangement and
reflect the timing of the head entity’s obligation to make payments for
tax liabilities to the relevant tax authorities.
changes in estimate being accounted for on a prospective basis.
Intangible assets with indefinite useful lives that are acquired separately
are carried at cost less accumulated impairment losses. The useful life in
relation to the licence is the time at which the licence is due for renewal.
3.12.2 Internally-generated intangible assets – research
and development expenditure
Expenditure on research activities is recognised as an expense in
the period in which it is incurred. An internally-generated intangible
asset arising from development (or from the development phase of
an internal project) is recognised if, and only if, all of the following
The head entity in conjunction with other members of the tax-
have been demonstrated:
consolidated group has also entered into a tax sharing agreement.
The tax sharing agreement provides for the determination of the
allocation of income tax liabilities between the entities should the
head entity default on its tax payment obligations.
No amounts have been recognised in the financial statements in respect
of this agreement as payment of any amounts under the tax sharing
• the technical feasibility of completing the intangible asset so that it
will be available for use or sale;
• the intention to complete the intangible asset and use or sell it;
• the ability to use or sell the intangible asset;
• how the intangible asset will generate probable future economic
agreement is considered remote.
benefits;
3.11 Property, plant and equipment
• the availability of adequate technical, financial and other resources
to complete the development and to use or sell the intangible asset;
The carrying amount of property, plant and equipment which is valued on
and
the cost basis, is subject to impairment testing and is reviewed to determine
• The ability to measure reliably the expenditure attributable to the
whether they are in excess of their recoverable amount at balance date.
intangible asset during its development.
If the carrying amount of a property, plant and equipment exceeds its
recoverable amount, the asset is written down to the lower amount. The
write-down is expensed in the reporting period in which it occurs.
Depreciation is calculated on a straight line basis so as to write off the
net cost or other revalued amount of each asset over its expected useful
life to its estimated residual value. Leasehold improvements are
depreciated over the period of the lease or estimated useful life,
whichever is the shorter, using the straight line method. The estimated
useful lives, residual values and depreciation method are reviewed at
the end of each annual reporting period.
The amount initially recognised for internally-generated intangible assets
is the sum of the expenditure incurred from the date when the intangible
asset first meets the recognition criteria listed above. Where no internally-
generated intangible asset can be recognised, development expenditure
is recognised in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets
are reported at cost less accumulated amortisation and accumulated
impairment losses, on the same basis as intangible assets that are
acquired separately.
56
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 3.13 Impairment of tangible and intangible assets other
When some or all of the economic benefits required to settle a provision
than goodwill
At the end of each reporting period, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether there
is any indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
are expected to be recovered from a third party, a receivable is
recognised as an asset if it is virtually certain that reimbursement will be
received and the amount of the receivable can be measured reliably.
3.15.1 Maintenance and warranty
estimated in order to determine the extent of the impairment loss (if any).
Provisions for the cost of maintenance and warranty is the directors’
Intangible assets with indefinite useful lives and intangible assets not yet
available for use are tested for impairment at least annually, and
whenever there is an indication that the asset may be impaired.
best estimate of the expenditure required to settle the Group’s
obligations are under legislative requirements.
3.15.2 Make good
Recoverable amount is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows
Provisions based on the directors’ best estimates of the costs required
to reinstate the display homes under legislation; or requirement to be at
are discounted to their present value using a pre-tax discount rate that
a saleable standard.
reflects current market assessments of the time value of money and the
risks specific to the asset for which the estimates of future cash flows
3.16 Financial instruments
have not been adjusted. If the recoverable amount of an asset (or
cash-generating unit) is estimated to be less than its carrying amount,
3.16.1 Financial assets
the carrying amount of the asset (or cash-generating unit) is reduced to
Investments in subsidiaries are recognised and derecognised on trade
its recoverable amount. An impairment loss is recognised immediately in
date where purchase or sale of an investment is under a contract whose
profit or loss.
3.14 Inventories
terms require delivery of the investment within the timeframe established
by the market concerned, and are initially measured at fair value, net of
transaction costs. Subsequent to initial recognition, investments are
Inventories are stated at the lower of cost and net realisable value. Costs
measured at cost.
of inventories are determined on a first-in-first-out basis. Net realisable
value represents the estimated selling price for inventories less all
3.16.2 Loans and receivables
estimated costs of completion and costs necessary to make the sale.
Trade receivables, loans and other receivables are recorded at
amortised cost using the effective interest method less impairment.
Construction contracts
Construction work-in-progress is stated at the aggregate of contract
3.16.3 Investment in land fund
costs incurred to date plus recognised profits less recognised losses
The Group has investments which are units held in a land fund that are
and progress billings. Contract costs include all costs directly related to
stated at fair value because the directors consider that fair value can be
specific contracts, and costs that are specifically chargeable to the
reliably measured.
customer under the terms of the contract. The stage of completion is
measured using the percentage of completion method.
Land at cost:
Cost includes the costs of acquisition, development, borrowings and all
other costs directly related to specific projects.
Speculative Homes and Displays
Cost includes the costs of building the speculative and display homes.
3.15 Provisions
Provisions are recognised when the Group has a present obligation
(legal or constructive) as a result of a past event, it is probable that the
Group will be required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end of the
reporting period, taking into account the risks and uncertainties
surrounding the obligation. When a provision is measured using the
cash flows estimated to settle the present obligation, its carrying amount
is the present value of those cash flows (where the effect of the time
value of money is material).
Gains and losses arising from changes in fair value are recognised in
other comprehensive income and accumulated in the investments
revaluation reserve with the exception of impairment losses, interest
calculated using the effective interest method and foreign exchange
gains and losses on monetary assets which are recognised in profit or
loss. Where the investment is disposed of or is determined to be
impaired, the cumulative gain or loss previously accumulated in the
investments revaluation reserves is reclassified to profit or loss.
3.17 Goods and services tax
Revenues, expenses and assets are recognised net of the amount of
goods and services tax (GST), except:
a) where the amount of GST incurred is not recoverable from the
taxation authority, it is recognised as part of the cost of acquisition
of an asset or as part of an item of expense; or
b) for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation
authority is included as part of receivables or payables.
57
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 3.17 Goods and services tax (Cont’d)
Provision for impairment losses on land development
Cash flows are included in the cash flow statement on a gross basis.
The Group holds land stock for development, which is recorded as
The GST component of cash flows arising from investing and financing
inventory in the financial statements. At 30 June 2017, the directors
activities which is recoverable from, or payable to, the taxation authority
assessed the value of the land stock inventory, referencing contracts,
is classified within operating cash flows.
other documentary evidence and comparative sales data to determine
3.18 Share-based payment transactions
Equity-settled share-based payments to employees are measured at
Impairment of goodwill
valuations of certain land titles.
the fair value of the equity instruments at the grant date. The expected
The recoverable amount of a cash-generating unit (CGU) is determined
life used in the model has been adjusted, based on management's
based on value-in-use calculations which require the use of assumptions.
best estimate, for the effects of non-transferability, exercise restrictions
The calculations use cash flow projections covering a five-year period
and behavioural considerations. The fair value determined at the grant
based on financial budgets approved by management for the subsequent
date of the equity-settled share-based payments is expensed on a
financial year. These growth rates do not exceed the long-term average
straight-line basis over the vesting period, based on the Group's estimate
growth rates for the industry in which each CGU operates.
of shares that will eventually vest, with a corresponding increase in
equity. At the end of each reporting period, the Group revises its
estimate of the number of equity instruments expected to vest.
The impact of the revision of the original estimates, if any, is recognised
in profit or loss such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to the equity-settled
employee benefits reserve.
Cash flow projections for CGUs are based on budgeted EBITDA
during the projection period, increasing by underlying cash flow
growth rates of 2.0% per annum. The cash flows beyond the five-year
projection period have been extrapolated using a steady growth rate
of 2.0%. The underlying growth rates have been determined by
management based on most recent financial budgets and forecasts
and expected industry growth rates.
4. Critical accounting judgements and key sources of
In performing the value-in-use calculations for each CGU, the Group
has applied post-tax discount rate to discount the forecast future
attributable post-tax cash flows. The equivalent pre-tax discount rate
applied is 17.0%.
estimation uncertainty
In the application of the Company’s accounting policies, which are
described in note 3, the directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and
other factors that are considered to be relevant. Actual results may differ
from these estimates.
Percentage of completion on the construction contracts
Estimate of construction contracts on a percentage completion basis,
in particular with regard to accounting for variations, the timing of profit
recognition and the amount of profit recognised can often result in an
adjustment to the reported revenues and expenses and/or the carrying
amount of assets and liabilities.
Provision for maintenance and warranties
At each year end the Group considers its legal and constructive
obligations for warranties and maintenance on properties constructed.
Typically, the Group makes provision for warranties for a period of up to
seven years following the completion of a construction contract. The
directors take into account the annual build program, history of defects
relating to materials used or in services provided and the historical
liabilities the Group has assumed in respect of warranties in estimating
the provision for warranties. The directors use a present value
methodology to recognise the best estimate of the expenditure required
to settle the Group’s obligation.
In April 2017, KPMG Actuarial Pty Ltd was engaged by Simonds Group
Ltd to analyse historical maintenance and warranty spend and provide
an estimate for the maintenance and warranty provision as at 30 June
2017. The Group has adopted the key assumptions provided by KPMG
while retaining the model used historically for calculating the
maintenance and warranty provision.
58
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 5. Revenue
The following is an analysis of the Group’s operations revenue for the year (excluding interest income – note 7).
Continuing operations
Revenue from residential construction contracts
Revenue from rendering of registered training services
Revenue from developments
Discontinued operations
6. Segment information
Year ended
30/06/17
$’000
569,864
13,434
4,071
587,369
6,194
593,563
Year ended
30/06/16
$’000
600,746
19,097
8,665
628,508
34,372
662,880
6.1 Products and services from which reportable segments derive their revenue
Information on segment performance focusing on the types of products and services the Group provides.
No operating segments have been aggregated in arriving at the reportable segments of the Group. Specifically, the Group’s reportable segments
under AASB 8 Operating Segments are as follows:
• Residential construction - this includes activities relating to contracts for residential home construction, speculative home building and the
building of display home inventory.
• Registered training - this includes activities relating to registered training provided by House of Learning Pty Ltd trading as Building Academy
Australia and City-Wide Building and Training Services Pty Ltd.
• Development - this includes activities relating to land development and sales, and project management services.
Madisson Homes Pty Ltd (Madisson Homes) is a subsidiary of the Group and in the prior years formed part of the residential construction segment.
Madisson Homes operated in the medium density market, building apartments and townhouses for commercial developers using the concepts,
designs and specifications provided by the developers. For the year ended and as at 30 June 2017 this business has been presented as
discontinued operations in note 10 with prior year comparatives restated.
6.2 Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment.
Segment
Segment revenue
Segment profit / (loss)1
Residential construction
Registered training
Land development
Discontinued operations
Income tax benefit / (expense)
Year ended
30/06/17
$’000
569,864
13,434
4,071
587,369
6,194
-
Year ended
30/06/16
$’000
600,746
19,097
8,665
628,508
34,372
-
Total
593,563
662,880
Year ended
30/06/17
$’000
3,085
433
(131)
3,387
(2,714)
(468)
205
Year ended
30/06/16
$’000
(4,023)
2,811
(2,034)
(3,246)
(18,067)
6,422
(14,891)
1. Segment profit/(loss) represents the profit/(loss) before tax generated by each segment. This is the measure reported to the chief operating decision maker for the purposes of
resource allocation and assessment of segment performance.
59
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 6. Segment information (Cont’d)
6.3 Segment assets and liabilities
Segment assets
Residential construction
Registered training
Land development
Discontinued operations
Total segment assets
Segment liabilities
Residential construction
Registered training
Land development
Discontinued operations
Total segment liabilities
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
105,857
110,434
4,520
4,968
115,345
1,002
116,347
5,416
5,624
121,474
2,237
123,711
115,524
118,006
1,097
12
116,633
2,839
119,472
1,235
16
119,257
7,779
127,036
For the purposes of monitoring segment performance and allocating resources between segments, all assets and liabilities are allocated to
reportable segments.
60
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 6. Segment information (Cont’d)
6.4 Other segment information
Residential construction
Registered training
Land development
Discontinued Operations
Total
Residential construction
Registered training
Land development
Interest expense
Depreciation and amortisation
Year ended
30/06/17
$’000
1,728
-
-
1,728
-
1,728
Year ended
30/06/16
$’000
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
1,991
141
80
2,212
-
2,212
4,150
870
-
5,020
-
5,020
4,157
1,423
14
5,594
168
5,762
Additions to non-current assets
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
3,446
879
10
4,335
8,050
1,342
-
9,392
In addition to the interest expense, depreciation and amortisation reported above, impairment losses of $1.413m (2016: $4.391m) were recognised
in respect of land stock held on hand and other current assets as at 30 June 2017. These impairment losses were attributable to the following
reporting segments:
Residential construction
Registered training
Land development
Total impairment
Impairment losses
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
768
-
645
1,413
6,356
-
1,700
8,056
6.5 Revenue by Geographical region
The Group operates in one geographical area – Australia. The Group’s revenue and profits are all generated from this region.
6.6 Information about major customers
No single customer contributed 10% or more to the Group’s revenue for the year ended 30 June 2017 and the year ended 30 June 2016.
61
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 7. Interest income
Interest income:
Bank deposits
8. Finance costs
Interest on bank overdrafts, finance leases and loans
9. Income taxes
9.1 Income tax recognised
Current tax
Benefit in respect of the current year
Benefit in respect of prior years
Deferred tax
(Benefit) / expense in respect of the current year
(Benefit) / expense in respect of prior years
Consolidated income tax expense/(benefit) recognised in the current year
Income tax expense / (benefit) from continuing operations
Income tax expense / (benefit) from discontinued operations
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
1
1
Year ended
30/06/17
$’000
1,728
1,728
112
112
Year ended
30/06/16
$’000
2,212
2,212
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
-
(55)
(55)
299
224
523
468
1,309
(841)
468
(23)
(735)
(758)
(6,230)
566
(5,664)
(6,422)
(1,005)
(5,417)
(6,422)
62
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 9.1 Income tax recognised (Cont’d)
The income tax expense can be reconciled to the accounting profit as follows:
Profit / (Loss) before tax from continuing operations
Profit / (Loss) before tax from discontinued operations
Profit / (Loss) before tax
Income tax benefit calculated at 30% (2016: 30%)
Effect of Executive Share Based Payments non-deductible
Effect of expenses that are not deductible in determining taxable profit
Adjustments recognised in the current year in relation to the current tax of prior years
Income tax expense / (benefit) recognised in profit or loss
Income tax expense / (benefit) from continuing operations
Income tax expense / (benefit) from discontinued operations
Year ended
30/06/17
$’000
3,387
(2,714)
673
202
37
60
299
169
468
1,309
(841)
468
Year ended
30/06/16
$’000
(3,246)
(18,067)
(21,313)
(6,393)
-
140
(6,253)
(169)
(6,422)
(1,005)
(5,417)
(6,422)
The tax rate used for the 2017 and 2016 reconciliations above is the corporate tax rate of 30% payable by Australian corporate entities on taxable
profits under Australian tax law.
9.2 Current tax assets and liabilities
Current tax asset
Income tax refundable
9.3 Deferred tax balances
Deferred tax assets
Deferred tax liabilities
Net deferred tax
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
1,441
1,441
Year ended
30/06/17
$’000
5,839
(8,439)
(2,600)
4,109
4,109
Year ended
30/06/16
$’000
3,946
(6,097)
(2,151)
63
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 9.3 Deferred tax balances (Cont’d)
2017
Opening balance
$’000
Under / over
$’000
Recognised in
profit or loss
$’000
Other
$’000
Closing balance
$’000
Construction Contracts income
(5,844)
(319)
(1,647)
(253)
444
1,256
1,364
882
-
25
2
-
24
44
10
(2,151)
(214)
(402)
399
(61)
(80)
144
1,346
(301)
-
-
-
-
-
12
54
66
(7,810)
(630)
845
1,195
1,308
1,082
1,410
(2,600)
Opening balance
$’000
Under / over
$’000
Recognised in
profit or loss
$’000
Other
$’000
Closing balance
$’000
(10,946)
(138)
571
417
1,492
1,162
-
(25)
(541)
-
-
-
5,102
(90)
787
839
(128)
(280)
-
-
(373)
-
-
-
(5,844)
(253)
444
1,256
1,364
882
(7,442)
(566)
6,230
(373)
(2,151)
Capitalised Courses and Product Design
Property, Plant, Equipment & Intangibles
Provision for warranty and contract
maintenance
Employee Entitlements
Other
DTA on Losses & Carry Forward
Non-Refundable R&D offset
2016
Construction Contracts income
Capitalised Courses and Product Design
Property, Plant, Equipment & Intangibles
Maintenance Liability
Employee Entitlements
Other
64
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 10. Discontinued Operations
Following a comprehensive review instigated by the Directors on 16 November 2015, the Group announced a plan for the orderly closure of the
Madisson business unit of the Group on 21 January 2016 upon completion of the remaining projects. All projects have been completed as at
30 June 2017.
The tables presented below show the loss incurred, inclusive of all costs associated with contractual obligations, impairments, and loss making
projects relating to the Madisson business for the year ended 30 June 2017:
Loss for the year from the Madisson business
Revenue
Expenses
Loss before tax
Attributable income tax benefit
Loss for the year
Statement of Cash Flows from the Madisson business
Cash flows from operating activities
Cash flows from / (used in) investing activities
Cash flows from financing activities
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
11. Expenses for the year
Loss on disposal of property, plant and equipment
Marketing and selling expenses
Corporate and administrative expenses
Employee benefits expense
Total expenses
Year ended
30/06/17
$’000
6,194
(8,908)
(2,714)
841
(1,873)
Year ended
30/06/17
$’000
(2,870)
-
2,875
5
1
6
Year ended
30/06/17
$’000
(48)
(19,480)
(29,608)
(62,960)
Year ended
30/06/16
$’000
34,372
(52,439)
(18,067)
5,417
(12,650)
Year ended
30/06/16
$’000
(6,102)
-
6,708
606
(605)
1
Year ended
30/06/16
$’000
(198)
(20,022)
(31,088)
(65,314)
(112,096)
(116,622)
65
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 12. Significant items for the year
Transaction costs associated with proposed Scheme of Arrangement(i)
Impairment of IT project costs
Impairment of non-core development land and other current assets
Impairment of display homes, non-core speculative land inventories associated with
operation review and restructure
Costs associated with organisational review and management restructure including
settlement of share based payments
Total significant items
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
(1,817)
-
(1,413)
-
(473)
-
(3,665)
(1,700)
(2,691)
(2,587)
(3,703)
(10,643)
(i) On 31 August 2016, the Group announced a Scheme Implementation Agreement with SR Residential Pty Ltd (SR Residential) (which is jointly owned by entities associated with
Roche Holdings Pty Ltd and Simonds Family Office Pty Ltd (SFO)) under which it was proposed that SR Residential would acquire all shares in the Company not already owned
by associates of the Consortium by way of the Scheme. On 28 November 2016, the Group announced that the Scheme Implementation Agreement has been terminated by
mutual agreement of the Group and SR Residential. During this process, the Group has incurred transaction costs of $1.817m for year ending 30 June 2017.
13. Earnings per share
From continuing operations
Total basic profit/loss per share
Total diluted profit/loss per share
From continuing and discontinued operations
Total basic profit/loss per share
Total diluted profit/loss per share
13.1 Basic earnings per share
Year ended
30/06/17
Cents per share
Year ended
30/06/16
Cents per share
1.44
1.44
0.14
0.14
(1.53)
(1.53)
(10.14)
(10.14)
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings are as follows:
From continuing operations
Profit / (Loss) for the year attributable to owners of the Company
2,078
(2,241)
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
From continuing and discontinued operations
Profit / (Loss) for the year attributable to owners of the Company
205
Shares
(14,891)
Shares
Weighted average number of ordinary shares for the purposes of the basic earnings per share
143,841,655
146,834,376
66
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 13.2 Diluted earnings per share
From continuing operations
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
Profit / (Loss) for the year attributable to owners of the Company
2,078
(2,241)
From continuing and discontinued operations
Profit / (Loss) for the year attributable to owners of the Company
205
Shares
(14,891)
Shares
Weighted average number of ordinary shares for the purposes of the basic earnings per share
143,841,655
146,834,376
Shares deemed to be issued for no consideration in respect of: Service Rights
31,204
-
Weighted average number of ordinary shares for the purposes of the diluted earnings per share
143,872,859
146,834,376
The following potential ordinary shares are anti-dilutive and are therefore excluded from the weighted average number of ordinary shares for the
purpose of diluted earnings per share.
Options
Performance Rights
Year ended
30/06/17
Shares
4,000,000
3,660,683
Year ended
30/06/16
Shares
-
-
These shares have been excluded from the diluted earnings per share (EPS) calculation on the basis that the exercise price of the options is higher
than the average share price or the performance conditions are yet to be met at the end of the reporting period. Diluted loss per share is the same as
basic loss per share for the year ended 30 June 2016. Potential ordinary shares are anti-dilutive as their conversion to ordinary shares will result in a
decrease of loss per share. The calculation of diluted loss per share does not assume, conversion, exercise or other issue of potential ordinary
shares that would have an anti-dilutive effect on loss per share.
14. Trade and other receivables
Current
Trade receivables (i)
Other receivables
(i) The amounts pertaining to related party receivables are disclosed in note 30.
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
32,191
32,191
499
32,690
43,333
43,333
297
43,630
67
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017
14. Trade and other receivables (Cont’d)
14.1 Trade receivables
The average settlement terms for progress invoices in relation to residential contracts are between 7 and 45 days. The Group has provided fully or
written off all receivables that are known to be uncollectable or there is objective evidence that the Group will not be able to collect the outstanding
amount. Prior to accepting a new customer for the construction of a dwelling, the Group ensures that appropriate contractual terms are in place with
the customer and that the customer has secured financing in advance of the commencement of construction.
In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade receivable from the date the
credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated and
dwellings constructed for customers serving as a security against the receivable.
14.1.1 Age of receivables from continuing operations that are past due but not impaired
46 – 60 days
61 – 90 days
91 – 120 days
Over 120 days
Total
Average age (days)
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
1,459
624
396
2,053
4,532
110
1,430
1,122
586
2,619
5,757
113
Average credit terms for customers are 7 to 45 days. Receivables past due but not impaired primarily relate to final settlement payments upon
completion of construction and supplier rebates, where terms vary.
15. Inventories
Work in progress on residential construction contracts
Speculative and display homes, land stock
Provision for impairment of inventories
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
28,226
21,319
49,545
(1,360)
48,185
23,391
27,484
50,875
(1,265)
49,610
68
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 16. Subsidiaries
Details of the Group’s subsidiaries at the end of the reporting period are as follows:
Name
Principle activity
Simonds Homes Victoria Pty Ltd
Residential – Victoria
Simonds Homes NSW Pty Ltd
Residential – NSW
Place of
incorporation
and operation
Australia
Australia
Simonds Queensland Constructions Pty Ltd
Residential – Queensland
Australia
Simonds SA Pty Ltd
Simonds WA Pty Ltd
Residential – South Australia
Australia
Residential – Western Australia
Australia
Madisson Homes Australia Pty Ltd
Residential – Victoria
Simonds Personnel Pty Ltd
Simonds Assets Pty Ltd
Payroll service entity
Asset service entity
Australia
Australia
Australia
Simonds IP Pty Ltd
Intellectual property service entity
Australia
Simonds Corporate Pty Ltd
Asset service entity
Australia
House of Learning Pty Ltd
Registered training organisation
Australia
City Wide Building and Training Services Pty Ltd
Registered training organisation
Australia
Jackass Flats Developments Pty Ltd
Land development and sales
Australia
Simonds Land Development Pty Ltd
Land development and sales
Australia
Bridgeman Downs Land Project Pty Ltd
Land development and sales
Australia
Discover Developments Pty Ltd
Land development and sales
Australia
Discover Gisborne Pty Ltd
Land development and sales
Australia
Proportion of ownership
interest and voting power
held by the Group
2017
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2016
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Hub Property Advisory Pty Ltd ATF Hub Property
Advisory Unit Trust
Land development and sales
Australia
100%
100%
• Simonds Group Limited is the head entity within the tax consolidated group.
• All Group subsidiaries are members of the tax consolidated group.
• Simonds Group Limited and its subsidiaries have entered into a deed of cross guarantee with Simonds Group Limited pursuant to ASIC Class
Order 98/1418 and are relieved from the requirement to prepare and lodge an audited financial report.
• No subsidiaries have been acquired or incorporated in the year ended 30 June 2017.
The above companies represent a “Closed Group” for the Class Order. The closed Group’s Statement of Profit or loss and Other Comprehensive
Income for the year and closed group’s Financial Position as at 30 June 2017 are the same as Consolidated Statement of Profit or Loss and
Other Comprehensive Income for the year and Consolidated Statement of Financial Position as at 30 June 2017 disclosed on page Pages 48
and 49 respectively.
69
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017
17. Property, plant and equipment
Leasehold
improvements
$’000
Computer
equipment
$’000
Office
Furniture and
Fittings
$’000
Display Home
Furniture,
Fixtures & Fittings
$’000
Motor
Vehicles
$’000
Plant and
Equipment
$’000
Total
$’000
Cost
Balance at 1 July 2015
3,438
2,287
2,547
469
6,368
1,293
16,402
Additions
Disposals
1,353
1,178
(1,686)
(1,535)
657
(677)
Balance at 30 June 2016
3,105
1,930
2,527
Cost
Balance at 1 July 2016
Additions
Disposals
3,105
563
(120)
Balance at 30 June 2017
3,548
2,188
Accumulated depreciation
1,930
2,527
258
-
78
(706)
1,899
705
(391)
783
783
39
(134)
688
1,868
(1,571)
6,665
6,665
975
(1,383)
6,257
26
5,787
(1,160)
(7,020)
159
15,169
159
22
-
181
15,169
1,935
(2,343)
14,761
Balance at 1 July 2015
(1,539)
(1,841)
(1,138)
(275)
(2,935)
(1,241)
(8,969)
Depreciation expense
Disposals / transfers
Balance at 30 June 2016
Accumulated depreciation
Balance at 1 July 2016
Depreciation expense
Disposals / transfers
(658)
1,677
(520)
(520)
(775)
102
(489)
1,535
(795)
(795)
(603)
-
(467)
637
(968)
(968)
(457)
616
(280)
377
(178)
(178)
(445)
111
(1,269)
1,418
(2,786)
(2,786)
(1,208)
1,155
(37)
(3,200)
1,156
(122)
6,800
(5,369)
(122)
(5,369)
(10)
-
(3,498)
1,984
Balance at 30 June 2017
(1,193)
(1,398)
(809)
(512)
(2,839)
(132)
(6,883)
Net book value
As at 30 June 2016
As at 30 June 2017
2,585
2,355
1,135
790
1,559
1,090
605
176
3,879
3,418
37
49
9,800
7,878
70
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 18. Intangible assets
Cost
Balance at 1 July 2015
Additions
Impairment of IT project costs
Disposals
Balance at 30 June 2016
Cost
Balance at 1 July 2016
Additions
Impairment of IT project costs
Disposals
Computer
Software
$’000
Capitalised
courses
$’000
Goodwill from
acquisitions
$’000
RTO Licence
$’000
Capitalised
Product
Designs
$’000
8,332
2,333
(3,665)
(752)
6,248
6,248
366
-
-
399
649
-
-
-
-
2,976
1,245
-
-
-
-
1,048
2,976
1,245
1,048
842
-
-
2,976
1,245
-
-
-
-
-
-
1,192
-
-
-
-
-
-
-
-
Total
$’000
8,731
7,203
(3,665)
(752)
11,517
11,517
2,400
-
-
Balance at 30 June 2017
6,614
1,890
2,976
1,245
1,192
13,917
Accumulated amortisation
Balance at 1 July 2015
Amortisation Expense
Disposal/Transfers/Impairment
Balance 30 June 2016
Accumulated amortisation
Balance at 1 July 2016
Amortisation Expense
Disposal/Transfers/Impairment
(4,597)
(1,167)
494
(5,270)
(5,270)
(627)
-
(54)
(326)
-
(380)
(380)
(694)
-
Balance 30 June 2017
(5,897)
(1,074)
-
-
-
-
-
-
-
-
Net Book Value
As at 30 June 2016
As at 30 June 2017
978
717
668
816
2,976
2,976
-
(1,069)
-
(1,069)
(1,069)
(176)
-
(1,245)
176
-
-
-
-
-
-
(25)
-
(25)
-
1,167
(4,651)
(2,562)
494
(6,719)
(6,719)
(1,522)
-
(8,241)
4,798
5,676
71
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017
19. Other assets
Prepayments
Other assets
20. Other financial assets
Current
Units held in land fund
Non - current
Units held in land fund
21. Trade and other payables
Trade payables
Construction accruals
Goods and services tax payable
Other payables and accruals
22. Borrowings
Current
Insurance Finance
Commercial bills
Finance lease liability
Non - current
Commercial bills
Finance lease liability
Display fund facility
72
Year ended
30/06/17
$’000
2,977
197
3,174
Year ended
30/06/16
$’000
3,255
127
3,382
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
1,260
1,260
-
-
-
-
1,260
1,260
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
41,716
12,553
2,212
4,687
61,168
50,497
14,380
750
10,003
75,630
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
401
1,995
1,479
3,875
4,330
2,019
5,000
11,349
-
-
1,790
1,790
2,000
2,500
5,000
9,500
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 22.1 Summary of borrowing arrangements
The Group has a debt facility with Commonwealth Bank of Australia (CBA), which has been extended to 7 November 2018 during the year ended 30
June 2017. Details of the facility are as follows:
Facility
Utilised
$’000
Unutilised
$’000
Interest
Charge
Description
Maturity
Date
Market Rate Loan
6,325
Nil
Business Corporate
Credit Card Facility
500
Nil
Bank Guarantees
1,465
635
Multi Option Facility
Nil
22,400
Variable
Market Rate
Corporate
Charge Card
Facility
Interest Rate
Fixed Market
Rate
Variable
Market Rate
The group’s facilities are secured by all Simonds Group
Limited corporate entities. Simonds have extended the
existing corporate finance facility arrangements in place
with Commonwealth Bank Australia to 7 November 2018.
7 Nov ‘18
Finance Lease
3,191
809
Fixed Market
Asset under finance leases are secured by the assets leased
Rate
with repayments periods not exceeding 5 years.
Total
11,481
23,844
In addition to the debt facility outlined above, the Group has additional facilities as below:
Facility
Utilised
$’000
Unutilised
$’000
Interest
Charge
Description
Maturity
Date
Repayment
periods are
not exceeding
5 years.
Finance Lease
307
Nil
Display Funds
5,000
Nil
Fixed Market
Rate
Fixed Interest
Rate
Asset under finance leases are secured by the assets leased.
These facilities are held with Westpac Banking Corporation
and Global Rental & Leasing Pty Ltd.
The Group entered in to a mortgage facility with Simonds
Homes Display Fund with an initial expiry of 15 September
30 Nov ‘18
2016. The facility has been extended to 30 November 2018.
Insurance Premium
Funding
401
Nil
Fixed Interest
Rate
The Group entered in to a premium funding contract with
Attvest Finance Pty Ltd, which covers various corporate
30 Sep ‘17
insurances for period from 30 Apr ‘17 to 30 Apr ‘18.
Total
5,708
Nil
73
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 23. Provisions
Provision for employee benefits (i)
Provision for warranty and contract maintenance (ii)
Provision for make good
Current
Non – current
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
6,278
13,648
941
20,867
12,989
7,878
20,867
6,387
14,209
939
21,535
14,658
6,877
21,535
(i) The provision for employee benefits represents annual leave and long service leave entitlements accrued and compensation claims made by employees. The measurement and
recognition criteria for employee benefits have been included in note 3 of the financial statements.
(ii) The provision for warranty claims represents the present value of the directors’ best estimate of the future outflow of economic benefits that will be required under the Group’s
obligations for warranties related to residential construction. The estimate has been made on the basis of historical warranty trends and may vary as a result of the annual build
program, the history of defects relating to materials used or in the nature of services provided.
(iii) Provisions based on the directors’ best estimates of the costs required to reinstate the display homes under legislation; or requirement to be at a saleable standard.
The current portion for this provision includes the total amount accrued for annual leave entitlements and the amounts accrued for long service leave
entitlements that have vested due to employees having completed the required period of service. Based on past experience, the consolidated entity
does not expect the full amount of annual leave classified as current liabilities to be settled wholly within the next 12 months. However, these
amounts must be classified as current liabilities since the consolidated entity does not have an unconditional right to defer the settlement of these
amounts in the event employees wish to use their leave entitlement. The non-current portion for this provision includes amounts accrued for long
service leave entitlements that have not yet vested in relation to those employees who have not yet completed the required period of service.
The following amounts reflect annual leave that is not expected to be taken or paid within the next 12 months which is currently:
Year ended
30/06/17
$’000
1,124
Year ended
30/06/17
$’000
13,774
Year ended
30/06/17
$’000
12,911
12,911
Year ended
30/06/16
$’000
1,423
Year ended
30/06/16
$’000
12,484
Year ended
30/06/16
$’000
12,911
12,911
Leave obligations expected to be settled after 12 months
24. Deposits and income in advance
Arising from construction contracts
25. Issued capital
143,841,655 fully paid ordinary shares
74
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 25. Issued capital (Cont'd)
Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998.
Therefore, the Company does not have a limited amount of authorised capital and issued shares do not have a par value.
Number of shares
Share capital ($’000)
Year ended
30/06/17
Year ended
30/06/16
Balance at beginning of the period
143,841,655
151,412,268
Cancelled Shares (i)
-
(7,570,613)
Balance at end of the period
143,841,655
143,841,655
Share buy - back reserve
Share buy – back (i)
Share buy – back cancellation (i)
Balance at the end of the year
Year ended
30/06/17
12,911
-
12,911
Year ended
30/06/17
$’000
(7,204)
-
-
(7,204)
Year ended
30/06/16
13,590
(679)
12,911
Year ended
30/06/16
$’000
-
(7,883)
679
(7,204)
(i) On 20 August 2015, the Group announced its intention to undertake an on-market share buy-back (“buy-back”) to enable the Group to acquire up to a maximum of 7.570m
shares within a 12-month period. The buy-back was part of the Group’s ongoing capital management strategy, and determined by the Directors to be an appropriate use of
Group capital resources given current market conditions at the time. The Group bought back 7,570,613 of its issued shares for a total amount of $7.883m. As a result, a
reduction in capital of $0.679m has been recognised based on an implied value per share of 8.97c and the remaining balance was recorded in the share buy-back reserve.
26. Accumulated losses
Balance at the beginning of the year
Profits/(Losses) attributable to owners of the Group (net of tax)
Payment of dividends (refer to note 27)
Balance at the end of the year
27. Dividends paid or payable
During the year, Simonds Group Limited made the following dividend payments:
Year ended
30/06/17
$’000
(39,280)
205
-
Year ended
30/06/16
$’000
(16,359)
(14,891)
(8,030)
(39,075)
(39,280)
Final dividend
Year ended 30 June 2017
Year ended 30 June 2016
Cents per share
Total $’000
Cents per share
Total $’000
-
-
-
-
5.3
5.3
8,030
8,030
The company’s adjusted franking account balance as at 30 June 2017 is $8.061m (2016: $10.704m).
75
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 28. Financial instruments
28.1 Capital risk management
Directors review the capital structure on an ongoing basis. As a part of this review the directors consider the cost of capital and the risks associated
with each class of capital. The Group will balance its overall capital structure through the payment of dividends, new share issues, and the issue or
repayment of debt.
The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 22, cash, and equity attributable to equity
holders of the parent, comprising issued capital, accumulated losses and dividends, as disclosed in notes 25, 26 and 27.
28.2 Categories of financial instruments
At the reporting date there are no significant concentrations of credit risk relating to loans and receivables at fair value through profit or loss. The carrying
amount reflected in the statement of financial position represents the Group’s maximum exposure to credit risk for such loans and receivables.
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial asset
Financial liabilities
Trade and other payables
Borrowings
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
10,204
32,690
1,260
61,168
15,224
3,176
43,630
1,260
75,630
11,290
28.3 Financial risk management objectives
The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The use of financial
instruments is governed by the Group’s policies which are approved by the directors. The Chief Financial Officer is responsible for managing the
Group’s treasury requirements in accordance with this policy.
28.4 Interest rate risk management
The Group is exposed to interest rate risk as the entities in the Group borrow funds at both fixed and variable interest rates. As at 30 June 2017,
there were borrowings from CBA of $6.325m (2016: $2.000m), Simonds Homes Display Fund from Australian Executor Trustees Limited of $5.000m
(2016: $5.000m), and other finance leases of $3.498m (2016: $4.290m).
The bill rates are benchmarked against the BBSY bid rate (Australian Bank Bill Swap Reference Rate – Average Bid Rate) on a quarterly basis.
The overdraft rate is fixed at 7.75% p.a. charged on a monthly basis and the Simonds Homes Display Fund rate is fixed at 7.2% p.a. charged on a
quarterly basis.
28.4.1 Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period. For floating rate
liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the
whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents
management’s assessment of the reasonably possible change in interest rates.
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s profit for the year ended
30 June 2017 would decrease/increase by $31,625 (2016: $41,050). This is mainly attributable to the Group’s exposure to interest rates on
its variable rate borrowings.
The Group’s sensitivity to interest rates has increased during the current year mainly due to the increase in overdraft limit.
76
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 28.5 Credit risk management
Credit risk arises from financial assets which comprise cash and cash equivalents, trade and other receivables and the granting of financial
guarantees. Exposure to credit risk arises from potential default of the counterparty, with a maximum exposure equal to the carrying amount of the
financial assets as well as in relation to financial guarantees granted.
Construction contracts require the customer to obtain finance prior to starting the build. Contracts for Speculative Housing, Displays and Land
require payment in full prior to passing of title to customers. The Group has no significant concentrations of credit risk and does not hold any credit
derivatives to offset its credit exposure.
Registered training is delivered under the terms provided by the Department of Education and Early Childhood Development (the Department) in
accordance with the Victorian Training Guarantee Program.
28.6 Liquidity risk management
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring
forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
Year ended 30 June 2017
Financial Liabilities
Finance lease liability
Borrowings
Overdraft
Simonds Homes Display Fund
Insurance premium funding
Year ended 30 June 2016
Financial Liabilities
Finance lease liability
Borrowings
Overdraft
Simonds Homes Display Fund
28.7 Fair value risk
Weighted average
effective interest
rate %
< 6 months
$’000
6 – 12 months
$’000
>1 – 5 years
$’000
Total
$’000
5.94
3.96
7.75
7.2
2.15
809
985
-
90
401
670
1,010
-
-
-
2,019
4,330
-
5,000
-
3,498
6,325
-
5,090
401
2,285
1,680
11,349
15,314
Weighted average
effective interest
rate %
< 6 months
$’000
6 – 12 months
$’000
>1 – 5 years
$’000
Total
$’000
6.76
4.64
7.75
7.2
1,022
3
4,167
91
5,283
768
-
-
-
768
2,500
2,000
-
5,000
9,500
4,290
2,003
4,167
5,091
15,551
The Group’s investment in the land fund is measured at fair value at the end of each reporting period. The fair value risk arises as changes in one or
more of the unobservable assumption inputs would significantly change the fair value determined.
The Group is exposed to fair value risk as the holding units of the land fund are not traded in active market. This financial asset has been classified
as a level 3 investment. Fair value is calculated as the present value of expected future economic benefits derived from the ownership of the
holding units.
77
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 29. Key management personnel compensation
The aggregate compensation made to directors and other members of key management personnel of the Company and the Group is set out below:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
30. Related party transactions
30.1 Trading transactions
Year ended
30/06/17
$
1,641,167
101,244
37,478
-
116,374
Year ended
30/06/16
$
2,627,732
165,659
165,674
592,631
774,352
1,896,263
4,326,048
During the year group entities entered into the following transactions with related parties which are not members of the Group.
Sale of goods
Leases and services rendered
Business combinations
Year ended
30/06/17
$
Year ended
30/06/16
$
Year ended
30/06/17
$
Year ended
30/06/16
$
Year ended
30/06/17
$
Year ended
30/06/16
$
Vallence Gary Simonds and related entities:
One display home constructed at the group’s usual list
prices and in line with relevant internal discount policies
Sub-lease agreement with SFO Consulting Pty Ltd
Properties leased on an arms-length basis
Services received from OZSoft Solutions Pty Ltd
(VETrack) and RTOMS Pty Ltd
Remuneration for employee services
Consulting expenses incurred during the year
Leon Gorr and related entities:
Legal services provided by HWL Ebsworth Lawyers
Rhett Simonds and related entities:
Construction of a residential home provided at cost
-
-
-
-
-
-
-
-
-
-
-
735,615
1,703
-
-
-
-
-
-
-
-
522,485
450,398
286,198
688,767
96,480
91,542
-
20,000
737,318
905,163
1,250,707
-
-
83,285
256,603
83,285
256,603
34,118
34,118
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
78
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 30.1 Trading transactions (Cont’d)
Sale of goods
Leases and services
rendered
Business combinations
Year ended
30/06/17
$
Year ended
30/06/16
$
Year ended
30/06/17
$
Year ended
30/06/16
$
Year ended
30/06/17
$
Year ended
30/06/16
$
Matthew Chun and related entities:
Construction of a residential home provided on an
arms-length basis
Property development advisory fee
Acquisition of Hub Property Group (formerly Chun
Property Advisory)
Michael Gerolemou and related entities:
Construction of a personal home as part of the normal
course of business and abides by the Simonds Group
Staff Discount Policy
Paul McMahon and related entities:
Two display homes leased on an arms-length basis
John Thorburn and related entities:
Display home leased on an arms-length basis
683,400
-
-
683,400
-
-
-
-
-
-
-
-
-
-
460,027
460,027
-
-
-
-
-
-
-
-
-
-
-
-
-
105,000
-
105,000
-
-
78,689
78,689
152,250
152,250
-
-
Total
683,400
1,231,463
1,140,698
1,690,999
The following balances were outstanding at the end of the reporting period:
-
-
-
-
-
-
-
-
-
-
-
-
-
555,000
555,000
-
-
-
-
-
-
555,000
Vallence Gary Simonds and related entities
-
-
-
36,000
Amounts owed by related parties
Amounts owed to related parties
Year ended
30/06/17
$
Year ended
30/06/16
$
Year ended
30/06/17
$
Year ended
30/06/16
$
79
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017
30.2 Loans to related parties
During the year ended 30 June 2017 there were no loans to related parties (2016: Nil).
30.3 Other related party transactions
Other related party transactions include the salaries and other benefits paid to directors and other key management personnel. These are in the
ordinary course of business.
On 31 August 2016, The Group announced the Scheme Implementation Agreement with SR Residential Pty Ltd (SR Residential) (which is jointly
owned by entities associated with Roche Holdings Pty Ltd and Simonds Family Office Pty Ltd (SFO)) under which it was proposed that SR
Residential would acquire all shares in the Company not already owned by associates of the Consortium by way of the Scheme.
On 28 November 2016, the Group announced that the Scheme Implementation Agreement has been terminated by mutual agreement of the Group
and SR Residential. During this process, the Group has incurred transaction costs of $1.817m (refer to note 12) disclosed as a significant item in the
expenses for the year ended 30 June 2017.
31. Share based payments
31.1 Share based payments
Employee share plan
A range of different employee share scheme (ESS) interests were created as part of the Simonds Group Employee Share Plan. The Share plan has
been created to promote employee share ownership amongst staff members and to encourage retention and appropriate reward for executives and
employees.
Share based payments made to the management team during the year were $0.229m (2016: $1.332m).
3,406,800 performance rights (2016: 1,592,132 performance rights) were granted to 10 senior executives (2016: 8 senior executives) and the CEO
was granted 4,000,000 options during the period. As at 30 June 2017, the following performance rights remaining on issue are: FY17: 3,406,800,
FY16: 141,523 and FY15: 112,360.
Incentives
Financial
Year
Tranche
Grant Date
Fair Value at
Grant Date
Vesting Date
Other
Vesting Condition
FY17
FY17
FY16
FY16
FY15
FY15
FY15
FY17
Tranche 1
31 Jan’17
Tranche 2
31 Jan’17
Tranche 1
30 Nov’ 15
Tranche 2
30 Nov’ 15
Tranche 1
17 Nov’ 14
Tranche 2
17 Nov’ 14
Tranche 3
17 Nov’ 14
Options
31 Jan’17
$0.23
$0.35
$0.31
$0.75
$1.03
$1.55
$1.55
$0.11
30 Sep’ 19
Market
30 Sep’ 19
Non market
31 Aug’ 18
Market
31 Aug’ 18
Non market
31 Aug’ 17
Market
31 Aug’ 17
Non market
31 Aug’ 17
Non market
30 Sep’ 19
Non market vesting only
FY15
Tranche 2
17 Nov’ 14
$1.61
24 Nov’ 16
Non market vesting only
(1), (4)
(1), (5)
(2), (4)
(2), (5)
(3), (4)
(3), (5)
(6)
(5)
(7)
Performance
rights
Options
Service
rights
(1) Gateway Hurdle Condition exists whereby FY17 Performance Rights may not vest unless the individual remains employed up to and including 30 September 2019.
(2) Gateway Hurdle Condition exists whereby FY16 Performance Rights may not vest unless the individual remains employed up to and including 31 August 2018.
(3) Gateway Hurdle Condition exists whereby FY15 Performance Rights may not vest unless the individual remains employed up to and including 31 August 2017.
(4) V esting condition linked to the Group's Total Shareholder Return (TSR) and the percentile ranking against the constituent companies within the S&P / ASX Small Ordinaries
Index.
(5) Vesting condition linked to compound annual growth rate in Earnings Per Share (EPS) where EPS is calculated based on Net Profit Before Tax for the relevant period with
the specific EPS methodology to be determined by the board.
(6) Vesting condition linked to achievement of Prospectus forecast earnings for the period ended 30 June 2015.
(7) There are no service rights remaining as at 30 June 2017. The 67,409 service rights vested during FY17 amounting to $0.019m and remaining 16,852 were forfeited.
80
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 31.1 Share based payments (Cont’d)
The following table outlines the share based payments made under the management incentive and employee share plan for the period ended
30 June 2017:
Employee share plan
Share based payments
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
229
229
1,332
1,332
31.2 Fair value of performance rights, service rights and options granted in the year
For performance rights subject to non-market vesting conditions the FY17 and FY16 performance rights (Tranche 2) used the Black Scholes Pricing
Model, while FY15 (Tranche 2 and Tranche 3) the model used was a Binominal Approximation Option Valuation Model. FY17 EPS Options has been
valued using the Black Scholes Model. Expected volatility is estimated using the daily rolling three-year standard deviation of a relevant Peer Group.
The risk free rate is derived from the average of the 3 and 4-year Commonwealth Treasury Bond Rate. This yield was converted to a continuously-
compounded rate for the purposes of the rights valuation.
Fair value model inputs and assumptions
Fair value at
grant date
Exercise Price
Expected life of
instruments
(days)
Expected
volatility
Expected
dividend yield
Risk -
free rate
$0.23
$0.35
$0.00
$0.00
972
972
50%
50%
5.5%
5.5%
1.91%
1.91%
$0.11
$0.40
972
50%
5.5%
2.06%
$0.31
$0.75
$1.03
$1.55
$1.55
$0.00
$0.00
$0.00
$0.00
$0.00
1,004
1,004
1,018
1,018
1,018
45%
45%
40%
40%
40%
6.0%
6.0%
4.92%
4.92%
4.92%
2.11%
2.11%
2.57%
2.57%
2.57%
FY17 Performance rights:
Tranche 1
Tranche 2
CEO Options:
EPS
FY16 Performance rights:
Tranche 1
Tranche 2
FY15 Performance rights:
Tranche 1
Tranche 2
Tranche 3
FY15 Service rights:
Tranche 2
$1.61
$0.00
738
40%
4.92%
2.71%
81
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 31 Share based payments (Cont’d)
31.3 Movements in performance rights, service rights and options during the year
The following reconciles the performance and service rights outstanding at the beginning and end of the year:
2017
Financial
Year Issued
Performance Rights
Tranche 1
FY2017
Tranche 2
FY2017
Opening
balance
Granted during the year
Vested during the year
Forfeited during the year
Closing
balance
Number of
rights
Number of
rights
Weighted
average fair
value
Number of
rights
Weighted
average fair
value
Number of
rights
Weighted
average fair
value
Total
number of
rights
-
-
1,703,403
$0.23
1,703,397
$0.35
-
-
-
-
-
-
-
-
1,703,403
1,703,397
Tranche 1
FY2016
283,048
Tranche 2
FY2016
283,044
Tranche 1
FY2015
112,359
Tranche 2
FY2015
112,359
Tranche 3
FY2015
112,363
Service Rights
Tranche 2
FY2015
84,261
CEO Options
-
-
-
-
-
-
-
-
-
-
-
-
141,524
$0.31
70,762
$0.31
70,762
141,522
$0.75
70,761
$0.75
70,761
37,453
$1.03
37,453
$1.03
37,453
37,453
$1.55
37,453
$1.55
37,453
37,454
$1.55
37,454
$1.55
37,455
67,409
$1.61
16,852
$1.61
-
EPS
FY2017
-
4,000,000
$0.11
-
-
-
-
4,000,000
TOTAL
987,434
7,406,800
$0.19
462,815
$0.89
270,735
$0.95
7,660,684
The performance rights outstanding at the end of the year had an exercise price of $0.00 (2016: $0.00) and a weighted average contractual life of
973 days (2016: 1,009 days).
31.4 Performance and service rights vested during the year
Performance rights of 395,406 vested during the year ended 30 June 2017 as a result of the organisational review and management restructure.
Tranche 1 service rights of 67,409 vested on 24 November 2016.
31.5 Performance and service rights forfeited during the year
There were 16,852 (2016: nil) service rights and nil (2016: 640,924) performance rights forfeited during the year.
82
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 31.6 Share based payments reserve
Balance at the beginning of the year
Amounts expensed
Settlement of share based payments (non-cash) arising from organisation review and
management restructure
Performance rights vested
Performance rights forfeited
Service rights vested
Service rights forfeited
Year ended
30/06/17
$’000
30,248
Year ended
30/06/16
$’000
29,424
229
-
(110)
(80)
(19)
(25)
404
928
(508)
-
-
-
Balance at the end of the year
30,243
30,248
32. Commitments for expenditure
Lease commitments
Non – cancellable operating lease payments
No longer than 1 year
Longer than 1 year and not longer than 5 years
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
9,543
10,904
20,447
9,746
12,344
22,090
The Group has no capital expenditure commitments. Lease commitments relate primarily to office leases, display home leases and information
technology leases. The operating lease expense for the year ended 30 June 2017 is $8.315m (2016: $7.543m).
33. Auditors remuneration
Audit or review of financial statements
Non – audit services – corporate advisory services
Tax services
The Group’s auditors are Deloitte Touche Tohmatsu.
Year ended
30/06/17
$
345,600
113,874
249,647
709,121
Year ended
30/06/16
$
328,500
254,200
285,600
868,300
83
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 34. Cash and cash equivalents
For the purposes of the consolidated statement of cash flows, cash and cash equivalents include cash on hand and in banks, net of outstanding
bank overdrafts. Cash and cash equivalents at the end of the reporting period as shown in the consolidated statement of cash flows can be
reconciled to the related items in the consolidated statement of financial position as follows:
Cash and bank balances
34.1 Reconciliation of profit for the year to net cash flows from operating activities
Cash flows from operating activities
Profit/Loss for the year
Income tax expense recognised in profit or loss
Finance costs recognised in profit or loss
Interest received
Significant one-off items:
Impairment of IT project costs
Impairment of non-core development land and other current assets
Impairment of display homes, non-core speculative land inventories associated
with operation review and restructure
Management incentive and share based payments
Depreciation and amortisation of non-current assets
Movements in working capital
Decrease in trade and other receivables
Decrease in inventories
(Increase) / decrease in other assets
Increase / (decrease) in trade and other payables
Increase / (decrease) in provisions
Increase / (decrease) in other liabilities
Cash generated by operating activities
Interest paid
Income taxes refunded / (paid)
Net cash generated from operating activities
84
Year ended
30/06/17
$’000
10,204
10,204
Year ended
30/06/16
$’000
3,176
3,176
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
205
468
1,728
(1)
-
645
-
(5)
5,020
8,060
10,941
780
208
(13,172)
(669)
-
6,148
(1,728)
2,648
7,068
(14,891)
(6,422)
2,212
(112)
3,665
1,700
2,691
824
5,762
(4,571)
1,167
17,685
(238)
8,939
3,366
-
26,348
(2,212)
(9,192)
14,944
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 34.2. Non-cash transactions
During the current year, the Group entered into non-cash investing and financing activities which are not reflected in the consolidated statement of
cash flows. The Group acquired $2.168m of equipment under a finance lease in 2017 (2016: $2.458m).
35. Parent entity information
The parent entity is Simonds Group Limited. The accounting policies of the parent entity, which have been applied in determining the financial
information shown below, are the same as those applied in the consolidated financial statements.
Year ended
30/06/17
$’000
Year ended
30/06/16
$’000
Statement of financial position
Other financial assets
Intercompany loan receivables
Other receivables
Total assets
Intercompany loan payables
Trade and other payables
Total liabilities
Net assets / (liabilities)
Issued capital
Share buy-back reserve
Share based payments reserve
Retained earnings
Total equity / (deficit)
Income statement
Dividend income
Operating expense
PROFIT / (LOSS) FOR THE YEAR
Other comprehensive income, net of income tax
Items that will not be reclassified subsequently to profit or loss:
Items that may be reclassified subsequently to profit or loss:
840
41,116
-
41,956
43,838
575
44,413
(2,457)
12,911
(7,204)
1,327
(9,491)
(2,457)
-
(2,452)
(2,452)
-
-
892
41,105
1,527
43,524
43,524
-
43,524
-
12,911
(7,204)
1,332
(7,039)
-
-
(13,193)
(13,193)
-
-
Total comprehensive loss for the year
(2,452)
(13,193)
85
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 36. Business combinations
The Group has made no acquisitions during the financial year ended 2017.
During financial year ended 2016, the Group acquired City-Wide Building and Training Services Pty Ltd (CWBTS) and Hub Property Group (HUB)
(formerly Chun Property Advisory Pty Ltd).
36.1 Subsidiaries acquired
Principal activity
Date of acquisition
Proportion of
shares acquired %
CWBTS
HUB
Provision of registered training services
01/07/2015
Development and consulting services
08/04/2016
36.2 Consideration transferred
Cash
CWBTS
HUB
Total
100
100
Year ended
30/06/16
$’000
4,543
555
5,098
36.3 Assets and liabilities assumed at the date of acquisition
The accounting for the acquisition of CWBTS and HUB has been determined at financial year ended 30 June 2016. There are no other intangible
assets identified other than the RTO license and the assets acquired and liabilities assumed are as follow:
Cash
Trade receivables
Plant and Equipment
Inventory
RTO Licence
Total assets
Trade payables and provisions
Deferred tax liability
Total liabilities
Net assets
Cash paid
Net assets acquired
Goodwill(i)
Year ended
30/06/16
$’000
451
837
26
26
1,245
2,585
89
374
463
2,122
5,098
(2,122)
2,976
(i) The total goodwill is comprised of $2.603m from the acquisition of City-Wide Building and Training Services Pty Ltd (CWBTS) and $0.373m from the acquisition of
Hub Property Group (formerly Chun Property Advisory Pty Ltd).
86
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 36.4 Net cash outflow on acquisition of subsidiaries
Consideration paid
– Deposit pending regulatory approval(i)
– Final payment on completion
Cash balance assumed at acquisition
(i) Cash outflow of $0.500m relates to a retention amount which was payable in accordance with the share purchase agreement pursuant to conditions being met.
37. Contingent liabilities and contingent assets
Other guarantees(i)
Year ended
30/06/17
$’000
1,465
Year ended
30/06/16
$’000
(500)
(1,598)
451
(1,647)
Year ended
30/06/16
$’000
2,126
(i) Represents guarantees for property rentals, project contracts, crossing deposits and merchant facility. The Group has in place a guarantee with a Significant Investor
Fund
for the acquisition and leaseback of displays.
Litigation
There are a small number of legal matters relating to the construction of residential dwellings and personal injury claims from employees,
contractors or the public that are the subject of litigation or potential litigation. A provision is raised in respect of claims where an estimate may be
reliably established and legal or other advice indicates that it is probable that the Group will incur costs either in progressing its investigation of the
claim or ultimately in settlement.
38. Subsequent events
There have been no events that have occurred subsequent to the reporting date that have significantly affected or may significantly affect the Group’s
operations, results or state of affairs in future years.
87
Notes to the Financial StatementsSIMONDS GROUPANNUAL REPORT 2017 In accordance with ASX Listing Rule 4.10, the Company provides the
Listing Rule 4.10.3, the Corporate Governance Statement will be available
following information to shareholders not elsewhere disclosed in this
on Simonds website www.simondsgroup.com.au, and will be lodged
Annual Report. The information provided is current as at 30 September
with ASX at the same time that this Annual Report is lodged with ASX.
2017 (Reporting Date).
1. Corporate governance statement
The distribution and number of holders of equity securities on issue in
The Company has prepared a Corporate Governance Statement which
the Company as at the Reporting Date, and the number of holders
sets out the corporate governance practices that were in operation
holding less than a marketable parcel of the Company’s ordinary shares,
throughout the financial year for the Company. In accordance with ASX
based on the closing market price as at the Reporting Date, is as follows:
2. Distribution of equity securities
Holding
Ordinary shares
Performance rights
Performance options
Holders
No. of shares
Holders
No. of
performance
rights
Holders
No. of performance
rights
Class of equity security
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
189
96
107
245
67,962
304,850
818,167
8,260,142
100,001 and over
68
134,390,534
Total
705
143,841,655
There were 197 holders of less than a marketable parcel of ordinary shares ($500).
3. Twenty largest quoted equity security holders
-
-
-
-
10
10
-
-
-
-
3,660,684
3,660,684
-
-
-
-
1
1
-
-
-
-
4,000,000
4,000,000
The Company only has one class of quoted securities, being ordinary
the number of ordinary shares and the percentage of capital held by
shares. The names of the twenty largest holders of ordinary shares,
each holder is as follows:
Name
Simonds Custodians Pty Ltd
McDonald Jones Homes
Simonds Constructions Pty Ltd
FJP Pty Ltd
ABN Amro
Henry Morgan Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia
Madisson Constructions Pty Ltd
National Nominees Limited
Poal Pty Ltd
88
Number held
Percentage of issued shares
32,800,020
22,910,975
21,485,018
15,270,660
8,314,975
8,105,272
4,612,714
2,408,043
1,572,678
1,380,699
1,000,000
22.80%
15.93%
14.94%
10.62%
5.78%
5.63%
3.21%
1.67%
1.09%
0.96%
0.70%
Shareholder InformationSIMONDS GROUPANNUAL REPORT 2017
3. Twenty largest quoted equity security holders (Cont'd)
Name
Banjo Superannuation Fund Pty
Mr Mark Vujovich
Aust Executor Trustees Ltd
Moat Investments Pty Ltd
Mr Hoang Huy Huynh
Mast Financial Pty Ltd
Intergrala Pty Ltd
Robert Stubbs
Jet Invest Pty Ltd
Other shareholders
Total shareholders
4. Substantial Shareholders
Number held
Percentage of issued shares
1,000,000
880,000
844,310
700,000
600,000
500,000
425,000
381,384
380,545
125,572,293
18,269,362
143,841,655
0.70%
0.61%
0.59%
0.49%
0.42%
0.35%
0.30%
0.27%
0.26%
87.30%
12.70%
100.00%
As at the Reporting Date, the names of the substantial holders of
holders and their associates have a relevant interest, as disclosed in
Simonds and the number of equity securities in which those substantial
substantial holding notices given to Simonds, are as follows:
Name
Vallence Gary Simonds
F.J.P. Pty Ltd
McDonald Jones Homes
Total
5. Voting Rights
Number held
Percentage of issued shares
56,138,895
15,070,660
22,910,875
94,120,430
39.03%
10.48%
15.93%
65.44%
6. Unquoted equity securities
The voting rights attaching to each class of equity security are set
3,660,684 unlisted performance rights have been granted to
out as follows:
5.1 Ordinary Shares
10 people and 4,000,000 unlisted performance options have been
granted to 1 person. There are no people who hold 20% or more
of performance rights that were not issued or acquired under an
At a general meeting of Simonds, every holder of ordinary shares
present in person or by proxy, attorney or representative has one
vote on a show of hands and on a poll, one vote for each ordinary
employee incentive scheme.
7. On-market buy-back
share held.
The Company is not currently conducting an on-market buy-back.
5.2 Performance Rights
Performance rights do not carry any voting rights.
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Shareholder InformationSIMONDS GROUPANNUAL REPORT 2017
SIMONDS GROUP
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ANNUAL REPORT 2017 SIMONDS GROUP
ANNUAL REPORT 2017
Disclaimer
While every effort is made to provide accurate and complete information, Simonds Group does not warrant or
represent that the information in this presentation is free from errors or omissions or is suitable for your intended
use. The information provided in this presentation may not be suitable for your specific situation or needs and
should not be relied upon by you in substitution of you obtaining independent advice. Subject to any terms implied
by law and which cannot be excluded, Simonds Group accepts no responsibility for any loss, damage, cost
or expense (whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in
information in this presentation. All information in this presentation is subject to change without notice. The material
contained in this presentation is for information purposes only and does not constitute financial product advice.
The information contained in this presentation has been prepared without taking into account the investment
objectives, financial situation or particular needs of any particular person. Before making any investment decision,
you should consider, with or without the assistance of a financial advisor, whether an investment is appropriate
in light of your particular investment needs, objectives and financial circumstances. Nothing in this presentation
is a promise or a representation as to the future. Statements or assumptions in this presentation as to future
matters may prove to be incorrect and the differences may be material.
91
SIMONDS GROUP LIMITED
Level 1, 570 St Kilda Road Melbourne VIC 3004
Postal Address:
Locked Bag 4002 South Melbourne VIC 3205
Telephone: +61 3 9682 0700
ABN 54 143 841 801 ASX Code: SIO
Email: company.secretary@simonds.com.au
simondsgroup.com.au
SHARE REGISTRY
Boardroom Pty Ltd
Level 12, 255 George Street Sydney NSW 2000
Postal Address:
GPO Box 3993 Sydney NSW 2001
Telephone: 1300 737 760
International: +61 2 9290 9600
Email: simonds@boardroomlimited.com.au