BUILT
STRONG
ANNUAL REPORT 2022
Over the last 73 years in business, we at Simonds have weathered
many storms and as industry-wide challenges continue, our
resilience is tested. We have strong roots that are built on family
heritage, enduring partnerships with communities and suppliers,
and our commitment to customers and employees.
We understand how great the achievement is of building a home.
We’ve built thousands of new homes and created over 150 display
centres across the country. The Simonds story all started with
a passionate family-man, Gary Simonds. It’s still his vision that
guides us and what makes a Simonds home more than just a house.
As we adapt to the future, we are certain of continuing to help
Australians fulfil their dream of owning a quality, affordable home.
This enduring focus on quality has led us to where we are today –
one of Australia’s leading volume home builders.
ii
CONTENTS
3 Who We Are
4 Chief Executive Officer’s Report
6
People, Safety and Communities
8 Our People
11 Our Core Values
12 Health and Safety
14 Community
16 Our Board
19 Financials
1
2
WHO
WE ARE
Simonds Group is one of Australia’s
largest volume home builders.
With sites and display homes
across the Australian eastern
seaboard and South Australia, we
create homes and spaces where
communities thrive.
Our growing range includes single
and double storey detached
residential homes throughout
Australia’s state capitals and large
regional centres.
OUR PURPOSE
To deliver the shareholder value
needed to ensure we can honour
our heritage and continue to help
Australians fulfil their dream of
owning a quality, affordable home.
OUR MISSION
To design and build quality,
affordable homes and deliver the
entire experience our customers
expect based on the great
value and great service that’s
foundational to our core values.
3
BUILT STRONG
RHETT SIMONDS
CEO AND EXECUTIVE CHAIRMAN
Dear Shareholder
On behalf of the Board, I present the 2022 Simonds Group
Limited Annual Report.
The Great Australian Builder
Over the past year, we have seen the return of ‘The Great
Australian Builder’ as our key message to customers. It
captures the strength, resilience and leadership earned
through our rich legacy and the recent sector-wide
challenges. It is also a nod to our extensive reach in
education and training, community engagement and our
commitment to building quality and affordable homes for all
Australians.
Our company
The past year has been confronting for the construction
industry. This is the result of a global construction boom,
unprecedented supply chain issues, skill shortages, severe
weather events in QLD and NSW, ongoing price increases
and lingering impacts of the COVID-19 pandemic. These
pressures have been difficult, and I am grateful for the hard
work and resilience of the Simonds Team and the patience
and kindness of our valued customers during this time.
Our strategy
To adapt and better equip our business for the multiple
challenges we face, Simonds Group have reset our
organisational structure and approach. We have a new
Executive Team and a focus on proactive decision making,
customer service, enhancing systems and innovation. We
have a 73-year track record of delivering value to our
customers safely and sustainability and the transformation
strategy will firstly focus on our core business operations
with the aim of Simonds ultimately becoming an innovative
industry leader. As we embark on this new way of operating,
this powerful quote by leadership expert Peter Drucker
motivates me every day:
“The greatest danger in times of turbulence is not the
turbulence; it is to act with yesterday’s logic.”
Builders Academy Australia
In response to challenges presented over the past year,
Simonds Group completed the sale of Builders Academy
Australia (BAA) for $10.3 million*.
*Total consideration of $10.3 million included net debt of the divested
business of $1.3 million. The adjusted consideration received in cash was
$9.0 million.
4
The sale was completed on 30 November 2021 of its wholly
owned subsidary, House of Learning Pty Ltd to UP Education
Australia Pty Ltd, a private education provider.
The BAA team continues to expand its education and
training services to people seeking to enter the construction
industry or to enhance their skills. We wish them all the best
for the future.
Financial performance
Despite our uncertain world, I am proud to report that
Simonds is in a financially stable position with a positive
outlook ahead. The Simonds Group achieved $687.5 million
in revenue, an increase of $25.9 million on last year. Site
starts of 2,376 were 13% lower than FY21 given land title
delays and supply chain challenges, but this was offset by
the increased values of jobs going to site. The EBITDA
($3.7 million) for the period remained positive. During FY22,
the Company responded to rapidly rising inflation and supply
challenges by increasing prices and focusing on profitable
work. The resulting orders on hand have a significantly higher
average contract value, with efficient delivery continuing to
preserve profit margins.
The working capital position reflects effective management
of resources, including the disposal of BAA, which supported
working capital and cash balances. As the Company has no
core debt and net available cash of $11 million as at 30 June,
it is in a strong position to trade through the current
downturn. Near term challenges remain, but the Company is
refocusing its approach to strengthen core operations and
improve profitability through the right sizing of its cost base.
This will result in a healthy and sustainable business that can
continue to support its employees and customers for years
to come.
People, safety and communities
Our greatest asset is our people. We strive for an inclusive
culture where all employees feel valued and safe and
diversity is supported. We have introduced improved training
programs that provide digital and customised solutions to
ensure our people are best equipped to be healthy and safe
at work.
Simonds has had a stellar year of nurturing community
initiatives to help our employees get behind the charities
that matter most to them as well as make broader positive
impacts.
NET OPERATING REVENUE
(CONTINUING OPERATIONS)
$687.5 million
EBITDA
(CONTINUING OPERATIONS)
$3.7 million
NET ASSETS
$13.5 million
NEW HOME STARTS
2,376
Environment, social and governance
performance
We advocate for environment, social and governance (ESG)
performance across our value chain to make a lasting impact.
We work with our suppliers to promote sustainable sourcing
and we are striving to find new opportunities to reduce,
reuse and recycle waste. As a large volume builder, Simonds
is committed to exploring innovative ways to reduce
emissions and mitigate climate change.
Outlook
As always, we are looking for ways to expand and diversify
via our marketing and sales channels to improve our
operating margins. We aim to strengthen relationships with
developers, keep establishing display homes in major growth
zones, and consolidate and modernise our product range.
We are confident in our approach and where it will take us.
Since the very beginning, my grandfather Gary’s work ethic
and commitment to helping people build their own homes
has been unwavering. He is one of the longest-serving
individuals in the industry, and it is an honour to continue his
legacy in making Simonds the preferred home builder for
Australians.
Murnane 32, Coomera, QLD
Acknowledgements
Our commitment to family extends to our loyal and talented
staff, sub-contractors, suppliers and industry partners.
Thank you for your loyalty in recent challenging times. The
construction industry supply shortage reinforced how much
we value our long-term partnerships as they were critical
to meet demands and deliver on the Federal Government’s
Home Builder commitments.
Thank you to the Board and Shareholders of Simonds Group
for your valuable input and strategic counsel. Finally, thank
you to our customers and communities who continue to put
faith in us to help fulfil the dream of owning your own home.
We are built strong and proud to serve you.
RHETT SIMONDS
CEO and Executive Chairman, Simonds Group Limited
5
PEOPLE, SAFETY
AND COMMUNITIES
6
BUILT TO LAST
As we honour our strong heritage and
build for the future, we are firmly focused
on doing what’s right for our people,
communities and the environment. We
care about everyone impacted by our work,
and that starts with the health, safety and
wellbeing of our extended workforce. As
we emerged from COVID-19 lockdowns,
we reunited our people Australia-wide and
worked with our valued, long-term partners
to deliver responsible, sustainable homes
where people and communities can thrive.
7
750
FULL TIME EMPLOYEES
5100+
SUBCONTRACTORS
7.9
EMPLOYEE ENGAGEMENT SCORE
OUR PEOPLE
We strive to support our people by providing a safe,
supportive and rewarding work environment. The Simonds
family of employees, suppliers and contractors all make our
success possible.
Diversity, inclusion and equity key
Simonds supports an inclusive culture where employees
are valued for their diverse experiences and backgrounds.
We have a range of initiatives to encourage equity, starting
with our recruitment and selection process, and continuing
throughout our employee’s journey with us.
We strive for continuous improvement and believe respect
reflects how we:
• work together
• do business
• serve our customers
• contribute to our communities
Learning and development training
A key driver of our transformation project ‘Synergy by
Simonds’ is about ‘fixing the core’ whereby we align our
people, systems and customer service to achieve our central
objectives. To deliver on our commitment, we purchased
a Learning Management System (LMS) to support the
development and training of staff from onboarding through
to career development, elevate employee skills and offer
training initiatives that invest in our people, and our brand.
Many of our employees are undertaking a variety of
tailored courses and workshops including leadership and
management training.
Leadership team shares new
transformation strategy
We were fortunate to come together as an entire national
team for the first time since 2019 to reconnect and share
our transformation strategy presentation: ‘Adapting to
the Future’. Our Victorian staff joined the event at Hoyts
Melbourne Central where it was live streamed to New South
Wales, Queensland and South Australia.
The purpose of the meeting was to share the new three-year
transition plan plus reflect on recent issues that the sector
has faced. Next steps involve leadership change readiness
workshops and training courses to support our new learning
management system.
8
Gary Simonds speaking at the ‘Adapting to the Future’
event in Melbourne.
“For the last 73 years, every
staff member has contributed
something to make Simonds
what it is today. The people are
what makes a business.”
GARY SIMONDS AM
Founder of Simonds Group Ltd
9
10
OUR CORE VALUES
In March 2021, we launched a new transformation strategy
that includes our refreshed core values, mission and
purpose. Our values are underpinned by our commitment
to safety. At Simonds we have a prevention culture where
we value informed behaviour when dealing with work
health and safety risks.
OUR ORGANSATION’S
CORE VALUES ARE:
1
CUSTOMER CENTRIC
Our customers are the most important visitors to our home.
Our focus is to make each and every one of them feel
welcome and special.
2 HONESTY AND ACCOUNTABILITY
We are responsible and accountable for the choices we
make, the actions we take and the outcomes we deliver.
3 TEAMWORK
We always work as a team and acknowledge that our goals
can only be achieved when every team member plays their
role.
4 GREAT COMMUNICATION
Candid and constructive communication is vital in keeping
us informed, aligned and connected.
5 INNOVATION
Innovation is key to our success. If there’s a better way, we
need to know about it and work together to make it happen.
6 FINANCIAL RESPONSIBILITY
We are smart with what we have and always try to
accomplish more with less.
7 SAFETY
Safety is part of everything we do. The physical and mental
wellbeing of all our people is vitally important and is infused
into all elements of our business.
11
HEALTH AND SAFETY
Training and alliances
The WHS Team have been providing training to the
Construction Team with a focus on identifying common
scaffolding hazards, safe work methods, high risk
construction activities and working with power.
Victoria, South Australia and New South Wales have
completed this training, and Queensland will complete their
state’s training by September 2022.
We maintain a strong voice in the industry through our
involvement with the Volume Home Builders Safety
Alliances in each state. The purpose of these alliances
is to share problems, industry issues, safety concerns
and solutions. They allow us to participate in industry
improvement programs and maintain positive relationships
with regulators.
Wellbeing focus and technology for staff
We support our team members and their families via the
Simonds Employee Assistance Program (EAP), together
with our commitment to daily communication and proactive
initiatives to help our teams feel safe, connected and
supported.
In September 2021 our EAP Partner, Assure, launched their
Wellbeing Gateway app – an easy way for staff to access
wellbeing resources, coaching and support including:
• a wide range of engaging programs and activities
• articles, videos and audios about parenting, home and
family, health, emotional issues, work life, money matters
and much more
• relaxation tools to encourage good health
• a chat feature with an experienced health professional at
the touch of a button.
The health, wellbeing and safety of our employees and
contractors is paramount. Whether working remotely, on
site or in the office, our goal is for zero work related injuries
and illnesses for Simonds employees and contractors.
Safety management systems
Simonds are internationally accredited in Workplace Health
and Safety, Quality and Environment with the following
standards in place: ISO 45001 WHS, ISO 9001 Quality and
ISO 14001 Environmental.
These systems are externally audited by professional,
independent auditing businesses who vigorously measure us
against international standards and criteria.
The Workplace Health and Safety (WHS) Team use
customised solutions to improve productivity, quality and
safety in their regions through inspection reports coupled
with photographic evidence to maintain transparency and
accountability. We actively use an application called QIN
CodeSafe.
CodeSafe uses a proven methodology to create and deliver
visual resources and digital solutions, customised to solve
workplace health and safety challenges in the residential
construction sector.
LOST TIME INJURY FREQUENCY RATE (LTIFR) AND TOTAL
RECORDABLE INJURY FREQUENCY RATE (TRIFR)
INTERNAL STAFF – 12 MONTH ROLLING AVERAGE
d
e
k
r
o
w
s
r
u
o
h
n
a
m
n
o
i
l
l
i
m
r
e
p
s
e
i
r
u
n
I
j
20
18
16
14
12
10
8
6
4
2
0
11.3
11.5
12.4
3.0
0.8
0.7
JAN 2020
JAN 2021
JAN 2022
LOST TIME INJURY FREQUENCY RATE (LTIFR)
TOTAL RECORDABLE INJURY FREQUENCY RATE (TRIFR)
This year, safety has improved recording a
decrease in lost time injuries from 0.8 to 0.7.
Furthermore, our total recordable injury
frequency rate (TRIFR) has decreased from
12.4 to 11.5 over the past year.
12
Working from home and returning to the office
Employee wellness remained a strong focus of our health and safety initiatives, as we continued
to support our people through the COVID-19 pandemic. When employees were advised to work
from home they did so with agility.
Our People and Culture Team organised virtual fitness sessions throughout October 2021 with
Fit2Box Boxing Studio, giving employees an opportunity to get together virtually and unwind
over lunchtime.
When we returned to the office after working from home, the new SimSocial Committee aimed
to foster and maintain interpersonal connections amongst staff and between departments.
The committee organised Monthly Mingles and Coffee Karma fundraising events like our
Biggest Morning Tea to bring staff together and build a strong team environment.
13
COMMUNITY
Our mission for building homes and futures requires far
more than just bricks and mortar. It requires a commitment
to respect and care for the communities where we live and
work, with the aim to boost their wellbeing and prosperity.
Across Australia, Simonds is committed to actively nurturing
and supporting many community initiatives to help our
employees get behind the charities that matter most to
them as well as make broader positive impacts.
WHETHER IT IS THROUGH
LARGE SCALE PROJECTS THAT
ARE YEARS IN THE MAKING
OR THROWING OUR SUPPORT
BEHIND GRASSROOTS INITIATIVES,
WE’RE PROUD TO HAVE RAISED
THOUSANDS FOR CHARITABLE
ORGANISATIONS IN FY21-FY22.
Kicking goals with Western United Football
Club
Raising funds to support medical research
and improve patient care
As the principal partner of Western United Football Club
(WUFC), we are proud to support a team who lives and
breathes their community values, both on and off the field.
Claiming victory in a history-making A-League Grand Final
in their third season as a franchise is a testament to the
dedication and talent of the squad, as well as everyone
working behind the scenes. Based in our heartland of
Melbourne’s West, we look forward to continuing our close
partnership with WUFC, winning more championships, and
building the future of the West together, for years to come.
From the soccer pitch to life-changing advances in medical
research and treatment, we are proud to be partnering
closely with Flinders Foundation through our newly built
charity home in Lightsview, South Australia.
The auction proceeds will be going towards the Foundation’s
mission of preventing, curing and caring for patients across
the Flinders medical precinct. We are looking forward to the
upcoming completion and auction of the charity home and
thank all of those involved who have been instrumental to
this project.
14
SUPPORTING MOVEMBER AND
HELPING RAISE AWARENESS
OF MEN’S HEALTH ISSUES
THROUGH OUR MONTHLY
COFFEE KARMA INITIATIVE.
This year, we surpassed our Biggest Morning Tea
fundraising goal of $1,000 to raise $1,554.
Cycling for the greater good and supporting
causes we are passionate about
As part of our monthly Coffee Karma initiative, Queensland
Simonds team members Ricky Cassells, Dallas Woods and
Cameron Archibald took part in the August 2021 Noosa
Classic Cycling Event. They rode 160km each to raise funds
for Beyond Blue, aiming to break down the stigma associated
with men suffering from mental health issues.
Each month, our employees raise funds for charities through
our Coffee Karma fundraising initiative. Over the last year,
we’ve donated to Cystic Fibrosis Australia, Movember, the
Cancer Council, the Smith Family’s Toy and Book Appeal,
Beyond Blue, Foodbank Victoria and more. This is an
opportunity to give back to causes close to our staff’s hearts
and to those in need.
Local sports partnerships
This last year, we have supported clubs across the country
including the Huntly Hawks, Sandhurst Cricket Club, Bright
Football and Netball Club, Walkerville Netball Club, Loddon
Valley Football Netball League, Collegians Football Club,
Altona Football Club, Koo Wee Rup Football Club and more.
15
OUR BOARD
Rhett Simonds, Chief Executive Officer
(CEO) and Executive Chairman
Rhett joined the business in 2005. He has a strong focus
on the property and construction sector, where he sits on
several private company boards and executive management
teams. Rhett is also a director of and investor in several
technology and finance-related businesses. He has a
Bachelor of Commerce from Deakin University.
Mark Simonds, Executive Director
For over 40 years, Mark has been immersed in the volume
home building industry. He holds a registered builder’s
license in Victoria, New South Wales, Queensland and South
Australia. Prior to 2014, when Simonds Group limited was
ASX listed, Mark was engaged in the day-to-day executive
management of Simonds Homes. From 1973 until its
listing, Mark worked alongside his father Gary Simonds,
and understands what is required for a successful volume
building business. Mark is the Deputy Chairman of Simonds
Consolidated, primarily focused on venture capital and
private equity building and construction, real estate, and
vocational education.
Iain Kirkwood, Independent Non-Executive
Director
Iain is an experienced, listed-company Non-Executive
Director and Chairman, and has worked as a Senior
Executive and Non-Executive Director across a range of
industries including auditing, resources, manufacturing and
healthcare in Australia, the United States and Britain. Iain
is Chairman of Bluechip Ltd, former Chairman of Novita
Healthcare Limited and has held Non-Executive Director
roles with Medical Developments International Ltd and
Vision Eye Institute Ltd. Iain is the Chair of the Group’s
Audit & Risk Committee and is a member of the Group’s
Nomination & Remuneration Committee.
Piers O’Brien, Non-Executive Director
Piers is a qualified lawyer with over 20 years of professional
experience. For the last 12 years, he has worked in-house as
both General Manager Legal and General Counsel. During
this time, Piers managed the legal function at ASX 200
company Skilled Group Ltd for approximately eight years.
Piers started his career in private practice with K&L Gates
Lawyers (and its predecessor firms), where he specialised in
mergers and acquisitions, corporate transactions, and board
advisory work. He is a member of the Group’s Audit & Risk,
and Nomination & Remuneration Committees.
Andrew Bloore, Non-Executive Director
Andrew is an experienced Non-Executive Director,
entrepreneur and farmer. He has designed, built and sold
a number of businesses focused on the development of
key disruptive technologies and distribution services in
traditional markets including Smartsuper, SuperIQ and Class
Super. Andrew is currently Chairman of Guild Group and
an independent, Non-Executive Director of IOOF Limited.
Andrew is also a Non-Executive Director of Simonds Family
Office Pty Ltd. Andrew has been appointed as the Chair of
the Group’s Nomination & Remuneration Committee and is
a member of the Group’s Audit & Risk Committee.
David Denny, Independent Non-Executive
Director
David Denny is a former partner at PwC, where he was a
leader of mergers and acquisitions, and corporate finance
advisory businesses for Australia and the Asia Pacific region.
David has international business experience including cross-
border transactions, international leadership roles and a
secondment to Asia. He has provided strategic, transactional
and financial advice to many businesses operating in a
diverse range of industries, including construction and home
building.
16
TOUGH TIMES
MAKE US
STRONGER
We have been building for over 70 years. In that time, we
have built tens of thousands of homes for families just like
your family and mine. We are the most awarded builder
in Australia. We have been recognised by the Federal
Government with the Order of Australia for exceptional
achievement.
To be where we are today has taken a lot of hard work and
dedication. I would leave home in the dark and come home
in the dark. Despite this I never wanted to be the biggest
builder. I never wanted to be the richest. But I badly wanted
to be the best builder. Today, we still have the aim to be the
best builder in Australia.
I am fortunate to have seen our business grow and expand
and am incredibly proud to have had my son, Mark, and
grandson, Rhett, at the helm. We have experienced a tough
period with COVID-19, but we have been through tough
times before, and they made us stronger.
We are very confident in going forward. As we embark on our
new transformation strategy, I feel excited for the future of
Simonds. Our mission to support Australians to build and own
a home is as relevant as ever. Our potential to imagine and
innovate is needed more than ever.
The big thing about achieving what you want to achieve is
people, people, people. My grandson, son and I oversee the
work at Simonds, but you have got to have good people. The
people are what makes a business.
For the last 73 years, every staff member has contributed
something to make Simonds what it is today. Although
we are a public company, I still consider Simonds a family
business. I consider my staff as part of my family and
appreciate all of their hard work.
Thank you to my wonderful Simonds family for another
successful year.
GARY SIMONDS AM
FOUNDER OF SIMONDS GROUP LTD
17
18
FINANCIALS
20 Directors’ Report
44 Auditor’s Independence
Declaration
45
Independent Auditor’s Report
49 Directors’ Declaration
50 Consolidated Statement of Profit
or Loss and Other Comprehensive
Income
51 Consolidated Statement of
Financial Position
52 Consolidated Statement of
Changes in Equity
53 Consolidated Statement of
Cash Flows
54 Notes to the Consolidated
Financial Statement
96 Shareholder Information
99 Corporate Directory
19
DIRECTORS’ REPORT
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 2022.
To comply with the provisions of the Corporations Act 2001, the directors report as follows:
Information about the directors
The names of the directors of the Company during or since the end of the financial year are:
Current Directors
Name
Date appointed
Current Position
Rhett Simonds
20 April 2016
Chief Executive Officer (CEO) and Executive Chairman1
Mark Simonds
Iain Kirkwood
Piers O’Brien
20 September
2017
20 September
2017
20 September
2017
Executive Director
Independent Non-Executive Director2
Non-Executive Director
Andrew Bloore
27 July 2021
Non-Executive Director
David Denny3
1 November 2021
Independent Non-Executive Director
Former Directors
Name
Date appointed
Date resigned
Current Position
Delphine Cassidy4
Neil Kearney4
20 September
2017
20 September
2017
27 July 2021
Independent Non-Executive Director
27 July 2021
Independent Non-Executive Director
1On 27 July 2021, Rhett Simonds became Executive Chair of the Company’s Board effective 27 July 2021 while retaining his role as CEO.
2On 27 July 2021, Simonds announced Iain Kirkwood stepped down as Chair of the Company’s Board effective from the date of the announcement.
3On 1 November 2021, David Denny was appointed as an Independent, Non-Executive Director of the Company.
4On 27 July 2021, Simonds announced both Neil Kearney and Delphine Cassidy had resigned as non-executive directors effective 27 July 2021.
20
The particulars of the directors are as follows:
Name
Rhett Simonds
Experience and Directorships
•
•
•
•
Rhett is the Chief Executive Officer (CEO) and Executive Chairman of the Board.
Rhett holds a Bachelor of Commerce from Deakin University.
Rhett has been involved with the business since joining the Simonds Group of Companies in
2005. Rhett has a strong focus on the property and construction sector, where he sits on a
number of private company boards.
In addition to his experience in the property and construction sector, Rhett is a director of
and investor in a number of technology and finance related businesses.
Mark Simonds
• Mark holds a registered builder’s licence in Victoria, New South Wales, Queensland and
South Australia. Mark has spent over 40 years immersed in the volume home building
industry.
Iain Kirkwood
Piers O’Brien
•
Prior to Simonds Group Limited listing in 2014, Mark was fully engaged in the day-to-
day executive management of Simonds Homes. From 1973 until its listing, Mark worked
alongside his father Gary Simonds, and understands what is required for a successful volume
building business.
• Mark is the Deputy Chairman of Simonds Consolidated, which is primarily focussed on
venture capital, private equity, building and construction and the broader real estate sector.
•
•
•
•
•
•
•
•
•
Iain was educated at Glenalmond College in Scotland and holds a Master of Arts from
Oxford University. Iain is a Fellow of CPA Australia (FCPA).
Iain is the Chair of the Group’s Audit & Risk Committee and is a member of the Nomination
& Remuneration Committee.
Iain is an experienced listed company Non-Executive Director & 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 Bluechip Ltd, former Chairman of Novita Healthcare Limited and has
held Non-Executive Director roles with Medical Developments International Ltd and Vision
Eye Institute Ltd.
Iain began his business career with Arthur Andersen & Co in London and went on to hold
several senior financial and general management positions in Woodside Petroleum Ltd,
Santos Ltd, Pilkington Plc, F.H Faulding & Co Ltd and Clinuvel Pharmaceuticals Ltd.
Piers is a qualified lawyer with over 20 years’ professional experience.
Piers is a member of the Group’s Audit & Risk Committee and Nomination & Remuneration
Committee.
Piers is the Chief Operating Officer of the Simonds Family Office before which he spent
the previous 12 years working in in-house legal roles as both General Manager Legal and
General Counsel. During this time, he managed the legal function at ASX 200 company
Skilled Group Limited for approximately eight years.
Piers started his career in private practice with K&L Gates Lawyers (and its predecessor
firms) where he spent eight years specialising in mergers and acquisitions, corporate
transactions and board advisory work.
21
SIMONDS GROUP ANNUAL REPORT 2022 DIRECTORS’ REPORT (CONT’D)
Name
Experience and Directorships
Andrew Bloore
•
•
•
•
•
Andrew is an experienced Non-Executive Director, entrepreneur, and farmer. He has
designed, built and sold a number of businesses focussed on the development of key
disruptive technologies and distribution services in traditional markets, to create business
efficiencies including Smartsuper, SuperIQ and Class Super.
Andrew has worked on a range of Senate and Treasury Committees, and with the Australian
Taxation Office Regulations Committee on regulation of the superannuation industry.
In 2016, Andrew sold his superannuation administration business to AMP, stepped down
from the Senate and Treasury Committees and is now focussed on contributing to the
organisations as a Non-Executive Director.
Andrew is currently Chairman of Guild Group and an independent, Non-Executive Director
of Insignia Financial Limited. Andrew is also a Non-Executive Director of Simonds Family
Office Pty Ltd.
Andrew has been appointed as the Chair of the Group’s Nomination & Remuneration
Committee and is a member of the Group’s Audit & Risk Committee.
David Denny
• David was appointed as an Independent, Non-Executive Director of Simonds Group Limited
on 1 November 2021.
• David was a Partner of PriceWaterhouseCoopers (PwC) for 21 years, including as the
practice leader of PwC’s Mergers & Acquisition advisory and Corporate Finance advisory
businesses in Australia and the Asia-Pacific region.
• David has extensive international experience, including cross-border transactions,
international leadership roles and a secondment to Asia.
Neil Kearney
• Neil holds a Bachelor of Economics from Monash University, has completed the Advanced
Management Program at INSEAD and is a Graduate of the Australian Institute of Company
Directors.
• Neil has held senior executive roles in Australian and International companies, including
Goodman Fielder Limited and National Foods Limited (including as Chief Financial Officer &
Chief Strategy Officer).
• Neil is currently Chairman of Huon Aquaculture Group Ltd, Chairman of Youfoodz Holdings
Ltd, Chairman of Felton, Grimwade & Bosisto’s Pty Ltd and a Non-Executive Director of
Craig Mostyn Group.
Delphine Cassidy
• Delphine is an accountant with over 20 years’ experience specialising in financial,
accounting and treasury roles.
• Delphine has become an investor relations expert, working as a senior executive in this field
for several ASX 200 Companies.
• Delphine has been a member of the Australasian Investor Relations Association (AIRA)
Issues Committee and the ASX Issuer Services Working Group.
• Delphine is currently Chief Communications Officer at Orica Limited.
22
Directors’ Shareholding
The following table sets out each of the directors’ relevant interest in shares and rights or options on shares of the
Company or related body corporate as at the date of this report:
Directors
Rhett Simonds
Mark Simonds
Iain Kirkwood
Piers O’Brien
Andrew Bloore
David Denny
Neil Kearney
Delphine Cassidy
Fully Paid
Ordinary shares
(Number)
14,044
56,741
75,000
-
-
-
90,000
30,000
Share options
(Number)
633,824 1
-
-
-
-
-
-
-
1These rights may be settled in either shares in the Company or the equivalent value in cash, at the discretion of the Board.
Remuneration of key management personnel
Information about the remuneration of key management personnel is set out in the remuneration report section of this
directors’ report. 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
Amanda Jones was appointed Company Secretary of Simonds Group Limited on 27 June 2022. Amanda is a member of
the Executive Leadership Team and the Group’s General Counsel and Company Secretary. Amanda holds a Bachelor of
Arts /Bachelor of Laws (Hons) from Monash University and is a Fellow of the Governance Institute of Australia. Prior to
joining the Group, Amanda held the roles of General Counsel & Company Secretary and General Manager Corporate
Services at MaxiPARTS Limited (ASX:MXI, formerly MaxiTRANS Industries Limited).
Operating and Financial Review
Principal activities
The Group’s principal activities during the financial year were the design, sale and construction of residential dwellings
and providing registered training courses through Registered Training Organisation which has now been discontinued.
Business Overview
Building homes since 1949, Simonds Homes is one of Australia’s largest volume homebuilders, with display homes located
across the Australian eastern seaboard and South Australia. Simonds Homes product range includes single and double
storey detached homes, with a target market being first and second home families in the metropolitan areas and large
regional cities.
Builders Academy Australia (BAA) is a Registered Training Organisation with a focus on offering nationally accredited
qualifications in building and construction. In previous years, the Simonds Group consisted of Simonds Homes and BAA
which was embedded into the company as a registered training organisation. On 30 November 2021 the Group sold its
wholly owned BAA business to UP Education Australia Pty Ltd for an adjusted cash consideration of $8.980 million1.
1 Consideration of $10.300m less net debt of the divested business of $1.320m.
23
SIMONDS GROUP ANNUAL REPORT 2022 DIRECTORS’ REPORT (CONT’D)
The Group also maintains a small development land portfolio via direct land ownership, and participation in other
development land projects via indirect holdings.
Operations
Group revenue from continuing operations for the period was $687.493 million compared to the previous corresponding
period of $661.586 million. Simonds Homes recorded 2,376 site starts for the period, 343 or 13% down on the previous
corresponding period. The increase in Group revenue reflects the impact of increased site start values of jobs going to
site. However, this was offset by the cost impact of the challenges faced by the construction industry during this period.
Earnings per share
The calculation of earnings per share (EPS) is presented in Note 11.
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 year ended 30 June 2022 of 146,258,855
(2021: 143,841,655).
EPS from continuing operations
Basic
Balance sheet
30 June 2022
Cents per share
30 June 2021
Cents per share
Note
11
(8.33)
2.59
The Group working capital position continues to reflect the effective management of resources despite the
unprecedented challenges faced by the construction industry. The financial results were materially impacted by the
cost implications of government imposed COVID shutdown in October 2021 and the subsequent worksite restrictions.
The construction industry also faced supply delays, high supply cost inflation and trade labour shortages impacting
productivity. In addition, severe weather events impacted operations in Queensland and New South Wales. These factors
negatively impacted profitability which resulted in the net assets of the Group reducing from $22.249 million at 30 June
2021 to $13.452 million at 30 June 2022.
The Group’s financial position remains strong, enabling it to trade through these short-term challenges and management
is re-aligning the operations to be more efficient and profitable in the near future.
Despite a negative operating result, the Group maintained a relatively strong net cash position (measured by cash and
cash equivalents) of $11.133 million at 30 June 2022, achieved through the sale of BAA and effective working capital
management.
During the year, the Group continued to operate within its banking covenants. Refer to Note 3 for further details.
Operating cash flows
The lower operating result for the financial period is reflected in the reduced operating cash flows of ($2.335) million
(2021: surplus of $13.731 million). Collections from customers remained strong but was offset by the significant increases
in supply and labour input costs during the period.
The lower operating cash position was offset by an inflow of cash from investment activities through the receipt of
$8.972 million from the disposal of BAA.
24
Future developments
Near term challenges remain and the industry still experiences land title delays, but this is expected to improve during the
first half of FY23. Management is working closely with suppliers to diversify the supply base and reduce the risk of further
building cost inflation.
As part of its strategic response to the current market conditions, the Group is refocusing its approach to strengthen
core operations and is actively taking steps to improve profitability through the right sizing of the entire cost base.
Although these decisions are never taken lightly, given the impact it will have on our people, it will result in a healthy and
sustainable business that can continue to support its employees and customers for years to come.
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, in particular the
potential ongoing impact of supply chain and trade labour shortages.
The Group’s risk management approach is to identify, evaluate, and mitigate or manage its financial, operational and
business risks. Our risk assessment approach includes an estimation of the likelihood of risk occurrence and potential
impacts on the financial results. Risks are assessed across the business and reported to the Audit & Risk Committee and to
the Board where required under the Group’s Risk Management Framework.
Supply chain delays
Supply chains continue to remain under pressure due to demand pressure and external international factors such as
the war in Ukraine and the impact of COVID lockdowns in China. The local industry is facing a severe shortage in trade
labour due to the impact of reduced migration during the COVID period. The Group seeks to reduce the impact of supply
constraints by leveraging its long-term relationships and is pro-actively expanding its supply base to ensure competitive
pricing and continued allocation of supplies across the jobs going to site.
Deterioration in economic conditions resulting in a fall in demand
There are several general economic conditions, such as interest rate movements, overall levels of demand for housing
because of the reduced migration of the last two years, that can impact the level of consumer confidence and demand,
thereby affecting revenue from sales to customers.
While general economic conditions are outside the Group’s control, the Group has a strong pipeline of jobs that were
generated over the last 12 months and is being processed to site start over the next 12 months. Management continues
to reduce its exposure to these risks by monitoring closely both internal and external sources of information that provide
insights to changes in demand within the markets and regions in which it operates.
Subsequent events
Subsequent to year end, the Group has obtained conditional approval on a new borrowing facilities term sheet of
$34.500 million, dated 26 August 2022, including revised related debt covenants, which aims to extend the Group’s
current borrowing facilities from September 2023 until 31 December 2023. The Directors expect to sign the final
borrowing documentation in the coming weeks in substantially the same form as the conditionally approved term sheet.
Apart from this, there are no other events that occurred subsequent to the reporting date that may significantly affect
Group’s operations, results or state of affairs in future periods.
Dividends
Given the financial results of the Group for the current financial year combined with the ongoing industry related
challenges, the directors have determined that no dividend will be paid in relation to the 2022 financial year (2021: nil).
Future dividends will be subject to the directors’ assessment of the Company’s financial position at the appropriate time.
25
SIMONDS GROUP ANNUAL REPORT 2022 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, and all executive officers of the Company and of any related body corporate against a liability
incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The
contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
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 indemnify an officer or auditor of the Company or of any related body corporate against a
liability incurred as such an officer or auditor.
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, 9 Board meetings, 3 Nomination & Remuneration Committee meetings and 4 Audit &
Risk Committee meetings were held.
Directors
Rhett Simonds
Mark Simonds
Iain Kirkwood
Piers O’Brien
Andrew Bloore
David Denny
Neil Kearney
Delphine Cassidy
Board of Directors
Nomination & Remuneration
Committee
Audit & Risk
Management Committee
Held*
Attended
Held*
Attended
Held*
Attended
9
9
9
9
9
4
-
-
9
8
9
9
9
4
-
-
2
2
3
3
3
1
-
-
2
2
3
3
3
1
-
-
2
2
4
3
3
1
1
1
2
2
4
3
2
1
1
1
* Meetings held has been adjusted to reflect the number of meetings since the date of appointment, and to exclude meetings where there was conflict
of interest for each director.
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 32 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 in note 32 to the financial statements do not compromise
the external auditor’s independence, based on advice received from the Audit & Risk 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.
26
DIRECTORS’ REPORT:
REMUNERATION REPORT
Remuneration Report
Dear Shareholder,
On behalf of the Board I am pleased to present our Remuneration Report for the 2022 financial year.
2022 started with much promise as we hoped to see easing of restrictions and a more normal existence. The year was one
of varied and significant challenges, with supply issues, rapid and significant price rises as well as the continuing effects of
COVID-19 on our work force. Simonds, of course was not alone in this. Simonds recognises the strains this has put on our
customers, our staff and our shareholders.
People are at the heart of everything we do. To us, “our people” is an all-encompassing term, reflecting the commitments
we make to each other, our shareholders, customers, suppliers, and other stakeholders. It is this premise that shapes this
year’s remuneration report.
During FY22, we adapted our targeted COVID-19 pandemic response constantly to work with the ongoing needs of our
stakeholders, ensuring COVID-safe operations and workplace safety generally remained our primary focus throughout
the year.
The increase in stimulus-driven sales through FY21 has been positive for the business in FY22.
As a result there has been a strong focus on the retention of appropriate people and the development of high performing
talent in the business to ensure a positive culture that has had to adapt and change to the conditions faced during FY22.
The Board continues to review our approach to executive remuneration, to ensure it is fit for purpose.
Notable changes to the framework include:
This effort has resulted in a strong, continual focus on our customers, process improvements, and agile and practical
responses to look after our people.
1. A 25 per cent reduction in Directors' fees which was maintained for the six months till December
2020 whilst the COVID-19 effect on the industry was being understood.
FY22 Remuneration
2. A Performance Framework has been developed to be adopted throughout the Company in FY22.
No amounts were paid as STI payments for FY22, given the financial performance of the Company during the financial
year.
3. Our STI program has been reviewed and a number of changes will take effect in FY22.
At the time of the writing of this report the business has commenced a number of Key Management
There were no increases in directors’ fees in FY22 and none have been recommended for FY23.
Personnel changes and notes the commencement of the evolution of the remuneration structure for
FY22 as outlined.
The Board continues to review our approach to executive remuneration, to ensure it is fit for purpose.
As a result, the directors believe that the Company's remuneration framework and levels are appropriate
for a company of its size and nature.
The directors believe that the Company’s remuneration framework and levels are appropriate for a company of its size
and nature.
Yours sincerely
Yours sincerely
R A Bloore
R A Bloore
Chair, Nomination & Remuneration Committee
Chair, Nomination & Remuneration Committee
27
14
SIMONDS GROUP ANNUAL REPORT 2022
DIRECTORS’ REPORT:
REMUNERATION REPORT (CONT’D)
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 2022. KMP are defined as those persons having authority and
responsibility for planning, directing and controlling the activities of the Group.
The KMP of the Group for the year ended 30 June 2022 disclosed in this report are listed in the table below:
Non-Executive Directors (NED)
Name
Iain Kirkwood
Piers O’Brien
Position
Independent Non-Executive Director1
Non-Executive Director
Andrew Bloore
Non-Executive Director
David Denny2
Independent Non-Executive Director
Former Non-Executive Directors (NED)
Appointment Date
20 September 2017
20 September 2017
27 July 2021
1 November 2021
Name
Position
Appointment Date
Resignation Date
Delphine Cassidy
Independent Non-Executive Director
20 September 2017
Neil Kearney
Independent Non-Executive Director
20 September 2017
27 July 2021
27 July 2021
Executive Directors (ED)
Name
Position
Appointment Date
Rhett Simonds
Group Chief Executive Officer (CEO) & Executive Chairman3
1 January 2021
Mark Simonds
Executive Director
20 September 2017
Current Senior Executives
Name
Position
Bertus Strydom
Interim Group Chief Financial Officer (CFO)
Tim Bradfield
Group Chief Financial Officer (CFO)
Cameron Worth
Chief Experience Officer (CXO)
Duncan Brand
Chief Operating Officer (COO)
Former Senior Executives
Appointment Date
3 June 2022
4 October 20214
1 August 2021
1 June 2022
Name
Position
Appointment Date
Resignation Date
Michael Myers
Group Chief Financial Officer (CFO)
30 May 2016
1 October 2021
1On 27 July 2021, Simonds announced Iain Kirkwood stepped down as Chair of the Company’s Board effective from the date of the announcement.
2 On 1 November 2021, David Denny was appointed as an Independent, Non-Executive Director of the Company.
3 On 27 July 2021 Simonds announced Rhett Simonds became Executive Chair of the Company’s Board effective 27 July 2021 while retaining his role as
CEO.
4 On 3 June 2022 Simonds announced Tim Bradfield will be leaving on 3 September 2022.
28
Remuneration Policy Summary
The Simonds Group Limited remuneration policy has been designed to ensure its remuneration practices attract, motivate
and retain top talent from a diverse range of backgrounds with the experience, knowledge, skills and judgment to drive
the Group’s performance and appropriately reward their contribution towards shareholder wealth creation.
The key principles that support the remuneration policy are as follows:
• employees are rewarded fairly and competitively according to job level, market trends and individual skills, experience
and performance;
• the reward strategy is in line with the overall business strategy in relation to acquisition, growth and retention of talent;
• 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 considering 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 of the Group and individual performance.
Remuneration Governance
The Board reviews its remuneration policy and practices on a regular basis. The objectives of the Board’s remuneration
policy are to:
• create a consistent and sustainable system of determining the appropriate level of remuneration of all levels of the
Group, including KMP;
• encourage KMP to perform to their highest level; and
• align the remuneration of KMP with the performance of the business.
The policy details the types of remuneration to be offered by the Group and factors to be considered by the Board,
Nomination & Remuneration Committee (the Committee) and executives in determining the appropriate remuneration
strategy.
29
SIMONDS GROUP ANNUAL REPORT 2022
DIRECTORS’ REPORT:
REMUNERATION REPORT (CONT’D)
The Board’s Role in Remuneration
The Board approved the Nomination & 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 advice 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 & 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 on a regular basis 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 engages external remuneration consultants from time to time to provide advice on remuneration related
issues. During the year ended 30 June 2022, no remuneration recommendations were provided (as defined by the
Corporations Act 2001).
The Committee met three times during the year. The Executive Chair and Group CEO, and the remaining directors who
were not members of the Committee, are also regularly invited to attend meetings. No individuals are present during any
discussions related to their own remuneration arrangements.
During the period from 1 July 2021 to September 2021, the Committee was at all times comprised of at least two
Non-Executive Directors. From September 2021, all Directors are now members of the Committee.
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.
Non-Executive Director Remuneration
Non-Executive Directors are remunerated by way of fixed fees in the form of cash and superannuation in accordance with
Recommendation 8.2 of the ASX Corporate Governance Council’s Principles and Recommendations (4th Edition).
During the year ended 30 June 2022, fees paid to Non-Executive Directors totalled $378,392 (exclusive of
superannuation and cash salary and fees). There were no increases in director’s fees in FY22 and none have been
recommended for FY23.
Shareholdings of Non-Executive Directors are set out on page 41 of the directors’ report.
The Company and each of the Non-Executive Directors have agreed terms of appointment (in accordance with
Recommendation 1.3 of the ASX Corporate Governance Council’s Principles and Recommendations (4th edition)).
Non-Executive Directors are not appointed for a specific term and their appointment may end by notice from the
individual director or otherwise pursuant to section 203B or 203D of the Corporations Act 2001 and the Company’s
constitution.
The maximum annual aggregate for fees paid to Non-Executive Directors is $750,000. This limit 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 2022 are set out commencing on page 34
of this remuneration report.
30
KMP Remuneration Framework
The KMP remuneration framework comprises three principal elements:
• a total fixed remuneration (TFR) 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).
Executive Remuneration Components
TFR overview
TFR 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
Given the financial results of the Group for FY22, no STI payments were made in relation to FY22.
LTI overview
The Group’s LTI Plan ensures that a proportion of remuneration is linked 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 sustainable shareholder
wealth. LTI’s 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.
The LTI payment is cash based or in shares at the Board’s discretion as part of the annual remuneration review after
finalisation of the Group’s audited results.
No LTIs were offered during FY22.
31
SIMONDS GROUP ANNUAL REPORT 2022 DIRECTORS’ REPORT:
REMUNERATION REPORT (CONT’D)
Long term Incentive Key Features
Award Structure
FY2021 Cash Rights
Consideration for the
Performance Rights
Grant Date
Vesting Period
Performance Measure
The Cash Rights will be granted for nil consideration.
25 June 2021
Each right has a vesting period of approximately three years.
Vesting of Performance Rights is dependent on one discrete performance measure
(hurdle):
FY2023 EPS
The performance measure is to achieve an EPS target for the financial year ending 30
June 2023.
This performance measure was not met, and the rights will not vest.
CAGR EPS Vesting
Schedule
FY2023 EPS
Below 6.00 cps
Between 6.01cps and 8.93 cps
Between 8.94 cps and 9.58 cps
Percentage of Performance Rights to vest:
None
Straight line pro-rata vesting between 25%
and 50%
Straight line pro-rata vesting between 51%
and 100%
At or above 9.59 cps
100%
Service Vesting Condition
The Service Vesting Condition is continuous employment with the Company from Grant
date to vesting date.
Other conditions
These rights may be settled in either shares in the Company or the equivalent value in
cash, at the discretion of the Board.
Award Structure
FY2020 Cash Rights
Consideration for the
Performance Rights
Grant Date
Vesting Period
Performance Measure
CAGR EPS Vesting
Schedule
The Cash Rights will be granted for nil consideration.
9 March 2020
Each right has a vesting period of approximately three years.
Vesting of Performance Rights is dependent on one discrete performance measure
(hurdle):
CAGR EPS
The Measurement Period for the Compound Annual Growth Rate (CAGR) EPS Hurdle is
across the three financial years across the period 1 July 2019 to 30 June 2022.
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 vesting date.
Other conditions
These rights may be settled in either shares in the Company or the equivalent value in
cash, at the discretion of the Board.
32
Remuneration Structure and Performance/Shareholder Wealth Creation
The Group’s annual financial performance and indicators of shareholder wealth are summarised below.
Financial Performance
Revenue
EBITDA
NPAT
Share Price at beginning of period ($)
Share Price at end of period ($)
Dividends (cents per share)
EPS (cents per share)3
FY2022
FY20214
FY2020
FY2019
FY2018
Statutory
Actual2
Statutory
Actual2
Statutory
Actual2
Statutory
Actual2
Statutory
Actual2
$m
687.5
3.71
(9.7)
0.60
0.20
-
(8.33)
$m
661.6
27.5
4.7
0.35
0.60
-
2.59
$m
664.8
31.5
5.5
0.33
0.35
-
4.95
$m
687.7
23.2
11.7
0.36
0.33
-
8.16
$m
605.2
13.7
4.8
0.31
0.36
-
3.31
1 Statutory EBITDA is net loss after tax from continuing operations ($12.190m) before financing items $2.021m, tax benefit ($6.440m), and depreciation
and amortisation $20.296m.
2 The Madisson business was discontinued on 21 January 2016 and is classified as a discontinued operation after this date. As the Madisson business is
a discontinued operation it is not reflected in the results presented above for FY2017-2022. The Group’s wholly owned subsidiary, Builders Academy
Australia was disposed 30 November 2021. BAA was classified as a discontinued operation for current financial year with comparative information re-
presented.
3 EPS is based on Earnings for continuing operations only.
4 Comparative figures have been re-presented to classify discontinued operations consistently with current year disclosure.
33
SIMONDS GROUP ANNUAL REPORT 2022 DIRECTORS’ REPORT:
REMUNERATION REPORT (CONT’D)
Remuneration Tables – Details of KMP Remuneration
Details of the remuneration of KMP, including directors (as defined in AASB 124 ‘Related Party Disclosures’) of the Group
are set out in the following tables. Comparative informationis also included below.
FY2022
Current Non-Executive Directors
I Kirkwood
P O’Brien
A Bloore
D Denny
Former Non-Executive Directors
D Cassidy
N Kearney
Total
Current Executive Directors
R Simonds1
M Simonds
Total
Current Senior Executives
B Strydom
T Bradfield2
C Worth
D Brand
Former Senior Executives
M Myers
Total
TOTAL KMP
Short Term Employee Benefits
Directors
Fees
$
Cash Salary
and Fees
$
Short Term
Incentive
$
Non-
monetary
Benefits
$
Annual
Leave
$
113,394
86,758
102,137
57,839
9,132
9,132
378,392
-
-
-
-
-
-
-
-
676,432
91,324
91,324
-
676,432
-
-
-
-
-
-
23,074
298,269
373,036
39,703
94,108
828,190
469,716
1,504,622
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,384
-
9,384
787
6,285
8,615
787
2,307
18,781
28,165
-
-
-
-
-
-
-
60,802
8,085
68,887
1,959
22,944
42,444
3,537
6,954
77,838
146,725
1 On 27 July 2021, Rhett Simonds became Executive Chair of the Company’s Board while retaining his role as CEO. Rhett Simonds does not receive
additional remuneration for becoming the Executive Chair.
2 On 3 June 2022 Simonds announced Tim Bradfield will be leaving on 3 September 2022.
34
Termination
Employment
Benefits
Benefits
Long-Term
Benefits
Post
Share-based
Payments
(SBP)
Percentage of
remuneration fixed and at
risk
Termination
Payments
$
Long Service
Performance
Leave
Rights/Options
Super
$
11,339
8,676
10,214
5,784
913
913
37,839
23,568
9,132
32,700
1,247
17,676
19,894
3,970
5,892
48,679
119,218
$
-
-
-
-
-
-
-
11,457
2,490
13,947
18
-
38
12,804
$
-
-
-
-
-
-
-
-
-
-
-
-
(102,031)
(102,031)
Total
$
124,733
95,434
112,351
63,623
10,045
10,045
416,231
679,612
111,031
790,643
27,085
472,220
456,793
48,035
(28,106)
(15,246)
(1,299)
(192,901)
(192,901)
(294,932)
116,490
1,120,623
2,327,497
Fixed
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
At Risk
%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
-
-
-
-
-
-
-
-
-
-
-
-
-
127,046
228,236
355,282
355,282
Current Non-Executive Directors
Former Non-Executive Directors
FY2022
I Kirkwood
P O’Brien
A Bloore
D Denny
D Cassidy
N Kearney
Total
R Simonds1
M Simonds
Total
B Strydom
T Bradfield2
C Worth
D Brand
M Myers
Total
TOTAL KMP
Current Executive Directors
Current Senior Executives
Former Senior Executives
Short Term Employee Benefits
Directors
Cash Salary
Short Term
and Fees
Incentive
Non-
monetary
Benefits
$
Annual
Leave
$
Fees
$
113,394
86,758
102,137
57,839
9,132
9,132
378,392
91,324
91,324
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
676,432
676,432
23,074
298,269
373,036
39,703
94,108
828,190
469,716
1,504,622
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,384
9,384
787
6,285
8,615
787
2,307
18,781
28,165
-
-
-
-
-
-
-
60,802
8,085
68,887
1,959
22,944
42,444
3,537
6,954
77,838
146,725
Termination
Benefits
Termination
Payments
$
-
-
-
-
-
-
-
-
-
-
-
127,046
-
-
228,236
355,282
355,282
Post
Employment
Benefits
Long-Term
Benefits
Share-based
Payments
(SBP)
Percentage of
remuneration fixed and at
risk
Super
$
11,339
8,676
10,214
5,784
913
913
37,839
23,568
9,132
32,700
1,247
17,676
19,894
3,970
5,892
48,679
119,218
Long Service
Leave
$
Performance
Rights/Options
$
-
-
-
-
-
-
-
11,457
2,490
13,947
18
-
12,804
38
-
-
-
-
-
-
-
(102,031)
-
(102,031)
-
-
-
-
Total
$
124,733
95,434
112,351
63,623
10,045
10,045
416,231
679,612
111,031
790,643
27,085
472,220
456,793
48,035
(28,106)
(15,246)
(1,299)
(192,901)
(192,901)
(294,932)
116,490
1,120,623
2,327,497
Fixed
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
At Risk
%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
35
SIMONDS GROUP ANNUAL REPORT 2022 DIRECTORS’ REPORT:
REMUNERATION REPORT (CONT’D)
FY2021
Current Non-Executive Directors
I Kirkwood
P O’Brien1
D Cassidy1
N Kearney1
Total
Current Executive Directors
R Simonds2
M Simonds1
FormerExecutive Director
K Ryan
Total
Current Senior Executives
M Myers
Total
TOTAL KMP
Short Term Employee Benefits
Directors
Fees
$
Cash Salary
and Fees
$
Short Term
Incentive
$
Non-
monetary
Benefits
$
Annual
Leave
$
141,552
79,909
110,000
100,457
431,918
-
-
-
-
-
-
-
-
-
-
-
532,384
450,000
81,068
-
-
-
211,531
150,000
81,068
743,915
600,000
-
-
-
-
-
-
-
-
-
-
-
357,653
357,653
512,986
1,101,568
125,000
125,000
725,000
9,120
9,120
9,120
-
-
-
-
-
38,965
6,393
13,085
58,443
30,907
30,907
89,350
1.
Given the prolonged impact of COVID-19, the Director agreed to take a 25% reduction in Directors fees commencing 1 May 2020 to 31
December 2020.
2. On 10 December 2020 Simonds announced the appointment of Rhett Simonds as Group CEO and Managing Director with effect from 1 January
2021. Prior to this date, Rhett Simonds was the Joint CEO and Managing Director and was a non-executive director appointed to the Board on
20 April 2016. On 27 July 2021 Simonds announced Rhett Simonds will be Executive Chair of the Company’s Board effective 27 July 2021 while
retaining his role as CEO. Rhett Simonds will not receive additional remuneration for becoming the Executive Chair.
Termination
Employment
Benefits
Benefits
Long-Term
Benefits
Post
Share-based
Payments
(SBP)
Percentage of
remuneration fixed and at
risk
Termination
Payments
$
Long Service
Performance
Leave
Rights/Options
Super
$
13,448
7,591
-
9,543
30,582
21,694
8,242
10,847
40,783
21,694
21,694
93,059
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
7,864
2,315
10,179
8,442
8,442
18,621
$
-
-
-
-
-
-
140,558
456,395
596,953
167,333
167,333
764,286
Total
$
155,000
87,500
110,000
110,000
462,500
1,191,465
98,018
841,858
2,131,341
720,149
720,149
3,313,990
Fixed
%
100%
100%
100%
100%
50%
100%
28%
At Risk
%
0%
0%
0%
0%
50%
0%
72%
59%
41%
36
Current Non-Executive Directors
FY2021
I Kirkwood
P O’Brien1
D Cassidy1
N Kearney1
Total
R Simonds2
M Simonds1
K Ryan
Total
M Myers
Total
TOTAL KMP
Current Executive Directors
FormerExecutive Director
Current Senior Executives
Short Term Employee Benefits
Directors
Cash Salary
Short Term
and Fees
Incentive
Annual
Leave
Non-
monetary
Benefits
$
$
-
-
-
-
-
-
$
-
-
-
-
-
-
532,384
450,000
211,531
150,000
81,068
743,915
600,000
Fees
$
141,552
79,909
110,000
100,457
431,918
81,068
-
-
-
-
357,653
357,653
125,000
125,000
725,000
512,986
1,101,568
9,120
9,120
9,120
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
38,965
6,393
13,085
58,443
30,907
30,907
89,350
Termination
Benefits
Termination
Payments
$
-
-
-
-
-
-
-
-
-
-
-
-
Post
Employment
Benefits
Long-Term
Benefits
Share-based
Payments
(SBP)
Percentage of
remuneration fixed and at
risk
Super
$
13,448
7,591
-
9,543
30,582
21,694
8,242
10,847
40,783
21,694
21,694
93,059
Long Service
Leave
$
Performance
Rights/Options
$
-
-
-
-
-
7,864
2,315
-
10,179
8,442
8,442
18,621
-
-
-
-
-
140,558
-
456,395
596,953
167,333
167,333
764,286
Total
$
155,000
87,500
110,000
110,000
462,500
1,191,465
98,018
841,858
2,131,341
720,149
720,149
3,313,990
Fixed
%
100%
100%
100%
100%
50%
100%
28%
At Risk
%
0%
0%
0%
0%
50%
0%
72%
59%
41%
37
SIMONDS GROUP ANNUAL REPORT 2022 DIRECTORS’ REPORT:
REMUNERATION REPORT (CONT’D)
Key terms of the Executive Services Agreement Group Chief Executive Officer (CEO) &
Managing Director
The material terms of the Executive Services Agreement between Rhett Simonds and the Company for the role of Group
CEO & Managing Director are as follows:
Term:
No fixed term. Ongoing until terminated by either party in accordance with the
Agreement.
Total Fixed Remuneration
(TFR):
Short Term Incentive (STI)
for FY21:
$700,000 per annum (including superannuation)
STI eligibility up to $600,000 per annum, subject to performance.
No STI payment was made in relation to FY22.
Long Term Incentive (LTI)
for FY21:
LTI eligibility up to the value of $300,000 per annum may be offered pursuant to the
Simonds Group Employee Share Plan.
Notice Period /
Termination Entitlements:
LTI participation and terms are at the discretion of the Board.
No LTI offer was made in FY22.
The notice of termination periods in Mr Simonds’ employment are:
•
•
3 months if notice is provided by Mr Simonds to the Company; and
6 months if notice is provided by the Company to Mr Simonds.
Employment may be ended immediately in certain circumstances including misconduct,
incapacity, mutual agreement or in the event of a fundamental change in the Group CEO’s
role or responsibilities.
The Company may elect to make a payment in lieu of any unserved notice period.
A 12-month post-employment restraint provision applies.
Post-Employment
Restraint:
Executive Service Agreements other key terms
Name
R Simonds
M Simonds
B Strydom
T Bradfield (Resigned 3
September 2022)
C Worth
D Brand
Contract Length
Termination by Executive
Termination by Company
Minimum Notice Period
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
3 months
1 month
2 months
3 months
2 months
3 months
6 months
1 month
2 months
3 months
2 months
3 months
STI Payments to KMP
No STIs were paid to KMP in respect of FY22.
38
KMP LTI
The following tables provide details of performance rights allocated to KMP pursuant to the LTI Plan.
Number of cash settled performance rights granted, vested, and expired/forfeited
FY2022
Name
R Simonds
M Myers
TOTAL
FY2021
Name
K Ryan
R Simonds
M Myers
TOTAL
Performance
Rights
1 July 2021
Performance
Rights
Granted
Performance
Rights Vested
Performance
Rights Expired
/ Forfeited
633,824
617,647
1,251,471
-
-
-
-
-
-
-
(617,647)
(617,647)
Other
Balance
30 June 2022
-
-
-
633,824
-
633,824
Performance
Rights
1 July 2020
Performance
Rights
Granted
Performance
Rights Vested
Performance
Rights Expired
/ Forfeited
698,529
183,824
770,873
1,653,226
150,000
450,000
250,000
850,000
-
-
-
-
(201,613)
(201,613)
(201,613)
(201,613)
Other
(848,529)1
-
-
(848,529)
Balance
30 June 2021
-
633,824
617,647
1,251,471
1On 10 December 2020 Simonds announced the retirement of Kelvin Ryan as Joint CEO and Managing Director effective from 31 December 2020. So
as at 30 June 2021, Kelvin Ryan has ceased being a KMP.
Number of equity settled performance rights granted, vested and expired/forfeited
FY2022
Name
M Myers
TOTAL
FY2021
Name
K Ryan
M Myers
TOTAL
Performance
Rights
1 July 2020
Performance
Rights
Granted
Performance
Rights Vested
Performance
Rights Expired
/ Forfeited
Other
Balance
30 June 2021
333,332
333,332
-
-
(105,367)
(105,367)
(227,965)
(227,965)
-
-
-
-
Performance
Rights
1 July 2020
Performance
Rights
Granted
Performance
Rights Vested
Performance
Rights Expired
/ Forfeited
2,133,332
333,332
2,466,664
-
-
Other
Balance
30 June 2021
(2,133,332)
-
(2,133,332)
-
333,332
333,332
39
SIMONDS GROUP ANNUAL REPORT 2022 DIRECTORS’ REPORT:
REMUNERATION REPORT (CONT’D)
Value of cash settled performance rights granted, exercised and expired/forfeited
Rights
Issue
Tranche
Fair value
at grant
date $
per right
Fair value
at 30
June $
per right
No. of Per-
formance
Rights
Account-
ing Fair
Value at
grant
date $
Exercised /
Vested
$
Expired/
Forfeited
$
Expired /
Forfeited
%
Other
$
FY2022
R Simonds
FY2021
R Simonds
FY2020
M Myers
FY2021
M Myers
FY2020
FY2021
K Ryan
K Ryan
FY2021
FY2020
R Simonds
FY2021
R Simonds
FY2020
M Myers
FY2021
M Myers
FY2020
M Myers
FY2018
EPS
EPS
EPS
EPS
EPS
EPS
EPS
EPS
EPS
EPS
TSR
EPS
0.50
0.34
0.50
0.34
0.50
0.34
0.50
0.34
0.50
0.34
0.19
0.30
0.20
0.20
-
-
450,000
225,000
183,824
62,500
250,000
125,000
367,647
125,000
0.595
150,000
75,000
0.595
698,529
237,500
0.595
450,000
225,000
0.595
183,824
62,500
0.595
250,000
125,000
0.595
367,647
125,000
201,613
38,306
-
-
(75,000)
(237,500)
(125,000)
(125,000)
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
(38,306)
-
-
-
-
-
-
50%
-
201,613
60,484 (60,484) 2
-
1 Our assessment indicates that probability of rights vesting is 0%. As such, no accrual was made at 30 June 2022.
2 Rights were settled in cash at a value of $0.348 per right equating to a total cash settlement of $70,255.
Rights under plans FY2021 and FY2020 may be settled in either shares in the Company or the equivalent value in cash, at
the discretion of the Board. These are shown as “cash settled” in the table above.
Value of equity settled performance rights granted, exercised and expired/forfeited
Rights
Issue
Tranche
FY2022
M Myers
FY2019
FY2021
K Ryan
FY2019
M Myers
FY2019
TSR
EPS
TSR
EPS
TSR
EPS
Fair
value at
grant
date
$ per
right
0.27
0.38
Account-
ing Fair
Value at
grant
date $
No. of Per-
formance
Rights
Exercised
/ Vested $
Expired/
Forfeited
$
Expired/
Forfeited
%
Other
$
166,666
45,000 (27,900)1
(17,100)
166,666
63,333
(773)
(62,560)
38%
99%
-
-
0.27
1,066,666 288,000
0.38 1,066,666 405,333
0.27
0.38
166,666
45,000
166,666
63,333
-
-
-
-
-
-
-
-
-
-
-
-
(288,000)
(405,333)
- 42,575
- 63,333
Accrued
Fair Value
at
30 June
$
59,973
-1
-
-
-
-
-
-
-
-
89,087
72,917
49,493
145,833
-
-
Accrued
Fair
Value at
30 June
$
-
-
-
-
1 A set dollar amount to vest was agreed upon resignation of M Myers (Former CFO).
40
KMP Shareholdings
Shareholdings of KMP are set out below:
FY2022
Name
Non-executive Directors
I Kirkwood
Former Non-executive Directors
N Kearney
D Cassidy
Total Non-Executive Directors
Executive Directors
R Simonds
M Simonds
Total Executive Directors
Former Senior Executives
M Myers
Total Senior Executive
TOTAL KMP
FY2021
Name
Non-executive Directors
I Kirkwood
N Kearney
D Cassidy
Total Non-Executive Directors
Executive Directors
R Simonds
M Simonds
Former Executive Directors
K Ryan
Total Executive Directors
Senior Executives
M Myers
Total Senior Executive
TOTAL KMP
Loans to Director
Opening Balance
Acquired
Other
Closing Balance
Number of Shares
75,000
90,000
30,000
195,000
14,044
56,741
70,785
20,000
20,000
285,785
-
-
-
-
-
-
-
105,368
105,368
105,368
Number of Shares
-
-
-
-
-
-
-
-
-
-
75,000
90,000
30,000
195,000
14,044
56,741
70,785
125,368
125,368
391,153
Opening Balance
Acquired
Other
Closing Balance
75,000
90,000
30,000
195,000
14,044
56,741
61,623
132,408
20,000
20,000
347,408
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
75,000
90,000
30,000
195,000
14,044
56,741
61,623
132,408
20,000
20,000
347,408
The Group has not provided any loans to directors or their related parties during the year ended 30 June 2022 (2021: Nil).
41
SIMONDS GROUP ANNUAL REPORT 2022 DIRECTORS’ REPORT:
REMUNERATION REPORT (CONT’D)
Other KMP Transactions
During the year group entities entered into the following transactions with related parties which are not members of the
Group.
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:
Sales
Cost of goods
Leases and services
rendered
Non-cash
remuneration
30 June
2022
$
30 June
2021
$
30 June
2022
$
30 June
2021
$
30 June
2022
$
30 June
2021
$
30 June
2022
$
30 June
2021
$
Vallence Gary Simonds and related entities:
Properties leased on an arms-
length basis
Advisory fee paid during the
year
Remuneration for employee
services
Service payment to The Trustee
for the Consolidated Yacht
Charter Trust
Car park provided
Simonds Family Office Pty Ltd 1
Supply payment to Delos
Welltek Australia Pty Ltd 2
Latitude Invest Pty Ltd 3
Service payment to Latitude
Invest Pty Ltd
Mark Simonds and related entities4:
Payment for use of building
licence
Remuneration for employee
services
Michael Myers and related entities:
Property leased on an arms-
length basis
Property purchased on an arms-
length basis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,313
-
12,313
-
-
-
-
-
283,425 305,500
100,457
84,817
69,342
62,630
-
-
-
-
-
-
-
-
-
-
-
-
18,769
18,240
- 453,224 452,947
18,769
18,240
170,141, 922,580
-
316,290
-
-
-
-
-
-
-
-
-
-
166,667
100,000
11,808
236
178,474 100,236
10,1005
30,188
- 484,250
-
-
- 484,250
10,100
30,188
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 Mark Simonds and Rhett Simonds are directors of Simonds Family Office Pty Ltd.
2 There is a Supply Agreement between Delos Welltek Australia Pty Ltd and Simonds Group for the inclusion of the “DARWIN Essentials Package”
into all homes in Victoria. Simonds Family Office Pty Ltd (of which Mark Simonds and Rhett Simonds are directors) hold 25% interest in Delos Welltek
Australia Pty Ltd.
3 An interim service agreement between Latitude Invest Pty Ltd and Simonds Group was entered into to provide marketing and sales support in the
Wholesale channel. Mark Simonds and Rhett Simonds hold a 50% interest in Latitude Invest Pty Ltd.
4 One family member of Mark Simonds was employed by the Group on a casual basis and remuneration was based on an ‘arm’s length’ basis.
5 Where a person is not a KMP for the full period, related parties are only considered during the period they held a KMP position.
42
Sales
Cost of goods
Leases and services
rendered
Non-cash
remuneration
30 June
2022
$
30 June
2021
$
30 June
2022
$
30 June
2021
$
30 June
2022
$
30 June
2021
$
30 June
2022
$
30 June
2021
$
Tim Bradfield and related entities:
Properties leased on an arms-
length basis1
10,000
Duncan Brand and related entities:
Property leased on an arms-
length basis2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
10,000 484,250 192,554 1,269,058
631,698
553,183
18,769
18,240
1 Relates to residential building contract entered during FY22 which was on a cost plus 10% agreement, this rate was approved by the Board.
2 Where a person is not a KMP for the full period, related parties are only considered during the period they held a KMP position. The contract was
entered in prior year and relates to a residential build.
Auditor’s independence declaration
Auditor’s independence declaration
The auditor’s independence declaration is included after this report on page 33.
The auditor’s independence declaration is included after this report on page 44.
Rounding of amounts
The Company is a company of the kind referred to in ASIC Corporations (Rounding in
Rounding of amounts
Financial/Directors’ Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that
Class Order amounts in the financial report are rounded off to the nearest thousand dollars, unless
The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports)
otherwise indicated.
Instrument 2016/191, dated 24 March 2016, and in accordance with that Class Order amounts in the financial report are
rounded off to the nearest thousand dollars, unless otherwise indicated.
This directors’ report is signed in accordance with a resolution of directors pursuant to s.298 (2) of the
Corporations Act 2001.
This directors’ report is signed in accordance with a resolution of directors pursuant to s.298 (2) of the Corporations Act
2001.
On behalf of the directors
On behalf of the directors
Rhett Simonds
Rhett Simonds
Chief Executive Officer and Executive Chairman
Chief Executive Officer and Executive Chairman
Melbourne, 30 August 2022
Melbourne, 25 August 2021
43
32
SIMONDS GROUP ANNUAL REPORT 2022
AUDITOR’S INDEPENDENCE DECLARATION
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
477 Collins Street
Melbourne VIC 3000
Tel: +61 3 9671 7000
www.deloitte.com.au
30 August 2022
The Board of Directors
Simonds Group Limited
Level 4, 570 St Kilda Road
Melbourne VIC 3000
SSiimmoonnddss GGrroouupp LLiimmiitteedd
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 financial report of Simonds Group Limited for the financial year
ended 30 June 2022, 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
Paul Schneider
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
44
INDEPENDENT AUDITOR'S REPORT
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
477 Collins Street
Melbourne VIC 3000
Tel: +61 3 9671 7000
www.deloitte.com.au
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt ttoo tthhee MMeemmbbeerrss ooff
SSiimmoonnddss GGrroouupp LLiimmiitteedd
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
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 2022, 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 2022 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 & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have 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.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report 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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
45
SIMONDS GROUP ANNUAL REPORT 2022 KKeeyy AAuuddiitt MMaatttteerr
CCaasshhffllooww ffoorreeccaassttss
As disclosed
in Note 3 to the financial
statements the directors consider that the
Group will be able to meet its debts as and
when they fall due and it expects to operate
within its agreed debt covenants.
The Group is dependent on the generation of
forecast positive cash flows from the Group’s
operations for at least the 12 months following
the approval of the annual financial report and
continuing use of its borrowing facilities to
maintain adequate working capital.
includes
The Group’ cash flow forecast as presented by
the directors
judgements and
estimates based on the directors’ input of key
market and operational assumptions. Given
the current macroeconomic climate and its
impact on the construction industry through
high supply cost inflation, supply chain and
trade labour shortages and increased costs of
living, we considered the appropriateness of
these cashflows to be a key audit matter.
RReeccooggnniittiioonn ooff ccoonnssttrruuccttiioonn rreevveennuuee aanndd
rreellaatteedd ccoonnttrraacctt aasssseettss
For the year ended 30 June 2022, the Group’s
revenue from construction contracts totaled
$687.493 million, as disclosed in Note 5.
from construction contracts
is
Revenue
recognised over
as performance
time
obligations are fulfilled. Construction revenue
is recognised with 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 as disclosed in
Note 3.
As disclosed in Note 4, significant management
estimation
the
following:
-
completion on
in assessing
required
the
is
Percentage of
construction contracts.
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt
MMaatttteerr
Our audit procedures included, but were not limited to:
•
•
•
•
•
•
Obtaining an understanding of the process undertaken
by the directors to prepare the cash flow forecast;
Challenging the key assumptions
in the directors’
forecast cash flows for at least the 12 months following
the approval of the financial report;
Comparing the cash flow forecasts against the budget
approved by the directors and testing the mathematical
accuracy of the model;
Performing stress tests for a range of reasonably possible
scenarios on the cash flow and the compliance with
covenants for at least the 12 months following the
approval of the financial report;
Challenging the Group’s plans for mitigating any
identified exposures; and
Assessing the revised borrowing facilities term sheet obtained
subsequent to year end.
We also assessed the appropriateness of the disclosures in
Notes 3 and 38 to the financial statements.
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 contract assets;
Testing relevant 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 management’s model
used to establish the percentage of completion allocated
to each stage;
Assessing management’s estimation of costs
complete,
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 source
documentation, including customer contracts, approved
variations and job costs.
to
comparing historical actual
including
We also assessed the appropriateness of the disclosures in
Notes 3, 4 and 5 to the financial statements.
46
INDEPENDENT AUDITOR’S REPORT (CONT’D)
Other Information
The directors are responsible for the other information. The other information comprises the Directors’ Report,
ASX announcements 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 thereon): the CEO and Executive Chairman’s Letter, Financial
Highlights and additional securities exchange information, which is expected to be made available to us after that
date.
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.
In connection with our audit of the financial report, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the financial report
or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we
have performed on the other information that 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.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the 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 have no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
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.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability 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.
47
SIMONDS GROUP ANNUAL REPORT 2022 • 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.
• 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..
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.
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 matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated with the directors, we determine those matters that were of most 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 reasonably be expected to outweigh the public interest
benefits of such communication.
RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 27 to 43 of the Directors’ Report for the year ended
30 June 2022.
In our opinion, the Remuneration Report of Simonds Group Limited, for the year ended 30 June 2022, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Paul Schneider
Partner
Chartered Accountants
Melbourne, 30 August 2022
48
DIRECTORS’ DECLARATION
The Directors declare that:
a. in the directors’ opinion, there are reasonable grounds to believe that the Group 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 to the financial statements;
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 Group; and
Auditor’s independence declaration
The auditor’s independence declaration is included after this report on page 33.
d. the directors have been given the declarations required by s.295A of the Corporations Act 2001.
Rounding of amounts
At the date of this declaration, the Company is within the class of companies affected by ASIC Class Order 98/1418. The
The Company is a company of the kind referred to in ASIC Corporations (Rounding in
nature of the deed of cross guarantee is such that each company which is party to the deed, guarantees to each creditor
Financial/Directors’ Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that
payment in full of any debt in accordance with the deed of cross guarantee.
Class Order amounts in the financial report are rounded off to the nearest thousand dollars, unless
otherwise indicated.
In the directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC
This directors’ report is signed in accordance with a resolution of directors pursuant to s.298 (2) of the
Class Order applies, as detailed in note 3 to the financial statements will, as a group, be able to meet any obligations or
Corporations Act 2001.
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
On behalf of the Directors
Rhett Simonds
Rhett Simonds
Chief Executive Officer and Executive Chairman
Chief Executive Officer and Executive Chairman
Melbourne, 25 August 2021
Melbourne, 30 August 2022
32
49
SIMONDS GROUP ANNUAL REPORT 2022
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
Continuing operations
Revenue
Cost of sales
Gross profit
Expenses
Profit before financing items, depreciation and amortisation
Depreciation and amortisation charges
Profit before financing items and tax
Financing items
Interest expense
Net financing cost
(Loss) / Profit before tax
Income tax benefit / expense
(Loss) / Profit from continuing operations after tax
Discontinued operations
Loss from discontinued operations after tax
(Loss) / Profit after tax for the year
Other comprehensive income, net of income tax
Items that may be reclassified subsequently to profit or loss
Total comprehensive income for the year
Earnings per share
From continuing operations
Basic (cents per share)
Diluted (cents per share)
From continuing and discontinued operations
Basic (cents per share)
Diluted (cents per share)
Notes
30 June 2022
$’000
30 June 2021
$’000
5
10
16,17,36
7
8
9
11
11
11
11
687,493
661,586
(551,645)
(506,278)
135,848
(132,161)
3,687
(20,296)
(16,609)
(2,021)
(2,021)
(18,630)
6,440
(12,190)
2,521
(9,669)
155,308
(127,789)
27,519
(19,927)
7,592
(1,563)
(1,563)
6,029
(2,304)
3,725
968
4,693
(9,669)
4,693
(8.33)
(8.33)
(6.61)
(6.61)
2.59
2.55
3.26
3.21
The accompanying notes form part of these financial statements. Comparative figures have been re- presented to classify discontinued operations
consistently with current year disclosure.
50
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
AS AT 30 JUNE 2022
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Tax receivable
Accrued revenue
Inventories
Other assets
Total current assets
Non-Current Assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Total non-current assets
Total assets
Liabilities
Current Liabilities
Trade and other payables
Deferred revenue
Customer deposits
Borrowings
Lease liability
Provisions
Total current liabilities
Non-Current Liabilities
Lease liability
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
The accompanying notes form part of these financial statements.
Notes
30 June 2022
$’000
30 June 2021
$’000
33
12
8
13
14
18
16
17
36
19
22
20
36
21
36
21
8
23
24
25
11,133
38,210
9,933
67,569
18,442
2,418
147,705
5,980
4,602
25,626
36,208
183,913
91,566
1,788
18,685
286
11,962
15,669
22,781
33,368
2,266
50,698
27,311
1,213
137,637
5,795
8,342
21,867
36,004
173,641
78,513
404
21,153
312
10,042
16,671
139,956
127,095
14,758
9,115
6,632
30,505
170,461
13,452
13,505
21,644
(21,697)
13,452
12,052
10,895
1,350
24,297
151,392
22,249
12,911
22,830
(13,492)
22,249
51
SIMONDS GROUP ANNUAL REPORT 2022 CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
Share based
payments
reserve
$’000
Share buy-
back reserve
$’000
Accumulated
losses
$’000
29,725
(7,204)
-
-
-
-
(7,204)
(7,204)
-
-
-
-
(18,185)
4,693
-
-
-
(13,492)
(13,492)
(9,669)
620
-
844
-
424
(115)
-
30,034
30,034
-
(38)
(304)
(844)
28,848
Total
$’000
17,247
4,693
424
(115)
-
22,249
22,249
(9,669)
1,176
(304)
-
(7,204)
(21,697)
13,452
Consolidated
Balance at 1 July 2020
Profit after tax for the year
Employee share plan expense
Performance and service rights
vested / forfeited
Transfer to accumulated losses
Balance at 30 June 2021
Balance at 1 July 2021
Loss after tax for the year
Employee share plan expense
Performance and service rights
vested / forfeited
Transfer to accumulated losses
Balance at 30 June 2022
Notes
30
30
30
30
30
The accompanying notes form part of these financial statements.
Issued
capital
$’000
12,911
-
-
-
-
12,911
12,911
-
594
-
-
13,505
52
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2022
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Cash generated from operations
Finance costs
Income taxes refund / (paid)
Net cash (used in) / generated from operating activities
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment
Payments for property, plant and equipment
Payments for intangibles assets
Net cash from disposal of discontinued business
Net cash generated from / (used in) investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of lease liability
Proceeds from issue of equity
Net cash used in 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
The accompanying notes form part of these financial statements.
Notes
30 June 2022
$’000
30 June 2021
$’000
735,610
(738,616)
(3,006)
(2,275)
2,946
(2,335)
504
(3,858)
(2,875)
8,972
2,743
(26)
(12,940)
910
(12,056)
(11,648)
22,781
11,133
731,343
(706,249)
25,094
(1,563)
(9,800)
13,731
30
(2,845)
(3,359)
-
(6,174)
(841)
(12,217)
-
(13,058)
(5,501)
28,282
22,781
7
33
37
33
33
53
SIMONDS GROUP ANNUAL REPORT 2022
NOTES TO 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 4, 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 15 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
Amendments to AASBs and the new interpretation that are mandatorily effective for the current year
New and amended accounting standards relevant to the Group that are effective for the period are as follows:
•
Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS9, IAS39, IFRS 7, IFRS 4 and IFRS 16.
There are no new standards effective in the current financial year that have a material effect on the financial statements
of the Group.
Standards and interpretations in issue not yet adopted
At the date of signing these financial statements, the Directors have reviewed all Standards and Interpretations on issue
but not yet effective and do not expect these Standards and Interpretations to have a material effect on the financial
statements of the Group.
3. Significant accounting policies
Statement of compliance
These financial statements are general purpose financial statements which have been prepared in accordance with
the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements issued by the
Australian Accounting Standards Board (AASB) and comply with other requirements of the law. The financial statements
comprise the consolidated financial statements of the Group.
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’) as issued by the International Accounting
Standards Board (IASB). Consequently, this financial report has been prepared in accordance with and complies with IFRS
as issued by the IASB. The financial statements were authorised for issue by the directors on 30 August 2022.
Basis of preparation
The consolidated financial statements have been prepared on the basis of historical cost, except for certain financial
instruments that are measured at revalued amounts or fair values at the end of each reporting period, as explained in the
accounting policies below.
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
54
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 such a basis, except for share-based payment transactions that are
within the scope of AASB 2, leasing transactions that are within the scope of AASB 16, and measurements that have some
similarities to fair value but are not fair value, such as net realisable value in AASB 102 or value in use in AASB 136.
Comparatives have been reclassified where appropriate to ensure consistency and comparability with the current period.
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 24 March 2016, and in accordance with that Class Order amounts in the financial report are
rounded off to the nearest thousand dollars, unless otherwise indicated.
Going concern
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 has incurred a net loss after tax of $9.669 million (2021: profit $4.693 million) and negative operating
cash flows of $2.335 million (2021: positive operating cash flows of $13.731 million) for the year ended 30 June 2022.
These results were impacted by the continuing global COVID-19 pandemic, which resulted in pandemic restrictions and
shutdowns across various states during the year, and ongoing economic challenges faced by the residential construction
industry, including high supply cost inflation, rising interest rates, supply chain and trade labour shortages. The Group has
a positive net asset value position of $13.452 million (2021: $22.249 million) as at 30 June 2022.
The residential construction industry will continue to face challenges through the coming year with continued supply
constraints and price increases for building materials, labour shortages and the broader impact of inflation on the cost of
living.
In response to these ongoing challenges, the directors have:
• Assessed and challenged the detailed cash flow forecasts prepared by management for the 12 months following the
date of signing this financial report;
• Commenced immediate implementation of an organisational wide transformation project to reduce overheads and
-
increase the efficiency of the Group’s delivery of completed housing to its customers, which includes, amongst others:
ongoing focused management of sales contracts including their respective costing and re- pricing mechanisms
-
and timing of site starts;
executing operational improvements designed to maximise productivity and enhance profitability on each
contracted build;
continuing drive to diversify, reduce costs and secure supply in partnership with the Group’s major suppliers. The
Group has successfully managed to achieve this in the past through its ongoing operations during the global
COVID-19 pandemic; and
-
• Obtained conditional approval on a new borrowing facilities term sheet of $34.500 million, dated 26 August 2022,
including revised related debt covenants, which aims to extend the Group’s current borrowing facilities from 30
September 2023 until 31 December 2023. The Directors expect to sign the final borrowing documentation in the
coming weeks in substantially the same form as the conditionally approved term sheet. As described in Note 20,
the Group has $23.201 million in unused facilities (excluding finance leases) within its existing borrowing facilities of
$37.060 million available as at 30 June 2022.
Depending on the rate of completion and corresponding billing receipts for the house builds and other working capital
movements, the cash balance of the Group at any point in time will be subject to a degree of volatility.
55
SIMONDS GROUP ANNUAL REPORT 2022
NOTES TO FINANCIAL STATEMENTS
(CONT'D)
The Group will, if necessary, employ all operational and financial tools available to it to minimise the impact of any further
residential construction industry decline, which may impact the Group’s ability to generate positive cash flows.
As a result, the Directors have concluded that these cash flow forecasts, along with the continued support of its bankers,
show that the Group has sufficient forecast liquidity, undrawn borrowing facilities and an active and ongoing capital
management strategy to continue to operate to enable it to pay its debts as and when they become due and payable. The
Group expects to operate within the proposed covenants of the new borrowing facilities term sheet.
Based on the available information to the Directors at the date of signing this financial report, the Directors are of the
opinion that the Group will be able to pay its debts as and when they fall due and accordingly the Directors consider it
appropriate for the financial report to be prepared on the going concern basis.
Basis of consolidation
Consolidation of a subsidiary begins when the Company obtains control 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 ceases to control the subsidiary.
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.
Shares in subsidiary companies are measured at cost less any impairment in the parent entity only financial statements
(refer to Note 34).
Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business
combination is 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 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;
•
liabilities or equity instruments related to share-based payment arrangements of the acquiree, or share-based payment
arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured
in accordance with AASB 2 ‘Share-based Payment’ at the acquisition date; and
• 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.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non- controlling
interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
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.
56
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.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when
there is an indication 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.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of
the profit or loss on disposal.
Revenue recognition
Construction contracts
Contracts entered into are for the construction of residential homes. The construction of each dwelling is taken to be
one performance obligation. The transaction price is normally fixed at the start of the contracts. When a variation for
the building works is required and agreed upon per the contract the variation will be included in the transaction price and
accounted for accordingly. As a result, the one performance obligation is recognised and fulfilled over time and as such
revenue is recognised over time.
Revenue earned is referenced to the stage of completion of the contract activity, based on the proportion of contract
costs incurred for work performed to date relative to the estimated total contract costs. Our customers are invoiced
on achievement of each key milestone in the build program. Invoices are paid on normal commercial terms. Deposit
payments received prior to work being performed are recognised as deferred revenue on the balance sheet.
Display homes
Revenue in respect of the sale of display homes is recognised at a point in time when control is transferred to customer.
Revenue is measured at the transaction price agreed under the contract.
Registered training courses – (discontinued during the current year)
The Group derives revenue by providing training courses to students. The performance obligation is fulfilled over
the duration of the course. The transaction price is determined and agreed at the beginning of the course and is not
variable unless the student stops part way through the course. Revenue is recognised in the accounting period in which
the courses are delivered and when the Group is entitled to claim course funding from the relevant federal or state
government body. This funding is not considered a state government grant. Funding received in respect of courses is in
relation to specific students completing a period of study for a specific course. Payment is received following invoice on
normal commercial terms.
Development
The Group generates revenue from the sale of land developments for residential homes.
Revenue in respect of the sale of land developments is recognised when control passes to a third party along with
fulfillment of all performance obligations on a contract. Revenue is measured at the transaction price agreed under
the contract. Payment is received on actual settlement of individual parcels of land when control is transferred to the
customer. Costs in relation to individual settlements are recognised in proportion to the total costs for the project and
based on the percentage of revenue recognised for each settled unit.
57
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
Variable consideration
Where consideration in respect of a contract is variable, the expected value of revenue is only recognised when the
uncertainty associated with the variable consideration is subsequently resolved (as this is the point in time when there
can be reasonable assurance that there will be significant reversal) known as “constraint” requirements. The Group
assesses the constraint requirements on a periodic basis when estimating the variable consideration to be included in the
transaction price. The estimate is based on all available information including historic performance. Where variations in
design or requirements are entered into, the transaction price is updated to reflect these when the variation has been
agreed.
Contract assets and liabilities
The Group has adopted the terms accrued revenue for ‘contract assets’ and deferred revenue for ‘contract liabilities’ as
defined within AASB 15 ‘Revenue from Contracts with Customers’. A contract asset is the Group’s right to payment for
goods and services transferred to a customer if that right to payment is conditional on something other than passage of
time. A contract liability is the Group’s obligation to transfer goods or services to a customer at the earlier of (a) when the
customer pays consideration or (b) the time that the customer’s consideration is due for goods and services the Group
will yet provide.
Contract fulfilment costs
Costs incurred prior to the commencement of construction of building may arise due to feasibility studies, environmental
impact studies and preliminary design activities as these are costs incurred to fulfil a contract. Where these costs are
expected to be recovered, they are capitalised and amortised over the course of the contract consistent with the
transfer of service to the customer. Where the costs, or a portion of these costs, are reimbursed by the customer, the
amount received is recognised as deferred revenue and allocated to the performance obligations within the contract and
recognised as revenue over the course of the contract.
Incremental costs
Commissions payable to sales consultants in respect of contracts to build are recognised as an asset when expected to be
recovered and released over the period of the build.
Financing components
The Group does not have any contracts where the period between the transfer of the promised goods or services to the
customer represents a financing component. As a consequence, the Group does not adjust any of the transaction prices
for the time value of money.
Other revenue
Interest revenue is recognised on an accruals basis.
Dividend income is recognised when the dividend is declared.
Revenue received in respect of the Group arranging a purchaser to acquire land from a land developer is recognised once
all benefits of owning the land are transferred to the new owner.
Financial instruments
Non-derivative financial instruments
Classification
The Group has classified its financial assets in the following measurement categories:
• Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or
loss), and
58
• Those to be measured at amortised cost.
The classification depends on the Group’s business model for managing financial assets and the contractual terms
of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at
fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. Measurement
of cash and cash equivalents, trade receivables, loan and other receivables remain at amortised cost consistent with the
comparative period.
Impairment
For trade receivables, loan and other receivables, the Group applies the simplified approach permitted by AASB 9
‘Financial Instruments’, which requires expected lifetime loss to be recognised from initial recognition of the receivables.
For all other financial instruments, the Group assesses expected credit loss on a forward-looking basis and the impairment
methodology applied will depend on whether there has been a significant increase in credit risk.
Non-derivative financial liabilities
Interest bearing liabilities
All loans and borrowings are initially recognised at fair value, being the amount received less attributable transaction
costs. After initial recognition, interest bearing liabilities are stated at amortised cost with any difference between
cost and redemption value being recognised in the statement of profit or loss over the period of the borrowings on an
effective interest basis.
Trade and other payables
Liabilities are recognised for amounts to be paid for goods or services received. Trade payables are settled on terms
aligned with the normal commercial terms in the Group’s countries of operation.
Leases
The Group as lessee
Definition of a lease
The Group assesses whether a contract is or contains a lease based on the definition of a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses
the definition of a lease in AASB 16 ‘Leases’. At commencement or on modification of a contract that contains a lease
component, the Group allocates the consideration in the contract to each lease component on the basis of its relative
stand-alone prices.
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a
right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured
at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before
the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to
the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the
lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the
59
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis
as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if
any, and adjusted for certain remeasurements of the lease liability. The Group applies AASB 136 ‘Impairment of Assets’ to
determine whether a right-of-use assets is impaired.
The lease liability is initially measured at the present value of the lease payments that are not paid at the initial application
date or commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate. The Group determines its incremental borrowing rate by obtaining
interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and
type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
• amounts expected to be payable under a residual value guarantee; and
• the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an
optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early
termination of a lease unless the Group is reasonably certain not to terminate early
The lease liability is subsequently measured by adjusting the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. It is
remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change
in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its
assessment of whether it will exercise a purchase, extension, or termination option or if there is a revised in-substance
fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the
carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset
has been reduced to zero.
For leases of low value and short-term leases the Group recognise the lease payments as an operating expense on a
straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in
which economic benefits from the lease assets are consumed.
Employee benefits
Short-term and Long-term employee benefits
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
remuneration rate expected to apply at the time of settlement.
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.
60
These employee benefits 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.
Superannuation contributions
Contributions to defined contribution superannuation plans are expensed when employees have rendered services
entitling them to the contributions.
Termination benefit
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.
Bonus entitlements
A liability is recognised for bonus entitlements where contractually obliged or where there is a past practice that has
created a constructive obligation.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
Current tax payable / (recoverable) is based on the financial result for the year. Taxable profit / (loss) differs from profit
/ (loss) as reported in the statement of profit or loss and other comprehensive income because of items of income or
expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s asset
/ 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.
Deferred tax
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 the level of the Group. 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.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted
by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences
that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle
the carrying amount of its assets and liabilities.
61
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the year
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.
Tax consolidation
The entities, except the trusts within the Group have formed a tax-consolidated group with effect from 1 July 2010 and
are therefore taxed 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 temporary differences
of the members of the tax-consolidated group are recognised in those entities using the ‘separate taxpayer within group’
approach by reference to the carrying amounts of assets and 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-consolidated group, has entered into a tax funding
arrangement which sets out the funding obligations of members of the tax-consolidated 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.
The head entity in conjunction with other members of the tax-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 agreement is considered remote.
Property, plant and equipment
The carrying amount of property, plant and equipment which is valued on the cost basis, is subject to impairment testing
and is reviewed to determine whether they are in excess of their recoverable amount at balance date. If the carrying
amount of property, plant and equipment exceeds its recoverable amount, the asset is written down to its recoverable
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 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.
62
The following estimated useful lives are used in the calculation of depreciation:
Leasehold improvements
Computer equipment
Office furniture and fittings
Display home furniture, fixtures and fittings
Motor vehicles
Plant and equipment
Intangible assets
Intangible assets acquired separately
Useful Life
5 years or the period of the lease
3 - 5 years
5 years
2 years
5 years
5 years
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 estimated useful lives. The
estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any
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 following estimated useful lives are used in the calculation of depreciation:
Computer Software
Capitalised Courses
RTO Licence
Useful Life
3 years
2-3 years
Source
External
External / Internal
Over the life of the licence
External
Capitalised Product Designs
3 years
External / Internal
Right of use lease asset
Over the life of the lease
External
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 have been demonstrated:
• 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 benefits;
• the availability of adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset; and
• the ability to measure reliably the expenditure attributable to the intangible asset during its development.
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.
63
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
Impairment of tangible and intangible assets other 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 estimated in order to determine the extent of the impairment loss (if any).
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.
Recoverable amount is the higher of fair value less costs to sell and value in use. 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 tangible and intangible assets other than goodwill, the Group takes into account
the characteristics of the asset if market participants would take those characteristics into account when pricing the asset
at the measurement date. In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset
(or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-
generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a first-in-first-
out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion
and costs necessary to make the sale.
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 direct costs of building the speculative and display homes.
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).
When some or all of the economic benefits required to settle a provision 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.
Maintenance and warranty
Provisions for the cost of maintenance and warranty is the directors’ best estimate of the expenditure required to settle
the Group’s obligations under legislative requirements.
Make good
Provisions for make good are 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.
64
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.
Cash flows are included in the Statement of cash flows on a gross basis. The GST component of cash flows arising from
investing and financing activities which is recoverable from, or payable to, the taxation authority is classified within
operating cash flows.
Share-based payment transactions
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant
date. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations. The fair value determined at the grant date
of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the
Group's estimate 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.
For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at
the fair value of the liability. At each reporting date until the liability is settled, and at the date of settlement, the fair value
of the liability is remeasured, with any changes in fair value recognised in profit or loss for the year.
4. Critical accounting judgements and key sources of 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
Percentage complete is based on the estimated cost to construct a building incurred to date, compared against the total
estimated cost of completing that building. The total cost of that build is based on a historical average of similar builds.
The amount of revenue recognised during the build is based on this percentage complete calculation. This historical
average is reviewed annually to ensure that it is a materially accurate reflection of current build costs.
Estimate of construction contracts on a percentage completion basis, in particular with regard to accounting for
variations of cost, 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 ten 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.
65
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
The Group use an actuarial model based on historical maintenance and warranty spend to provide an estimate for the
maintenance and warranty provision. Key assumptions in this model were developed by an independent actuary and are
reviewed internally regularly, to ensure they remain appropriate for calculating the maintenance and warranty provision as
at 30 June 2022 There has been no significant change to the model assumptions to those used in the prior financial year.
Measurement of net realisable value of land development
The Group holds land stock for development, which is recorded as inventory in the financial statements. The directors
assess the net realisable value at 30 June 2022 of the land stock inventory, referencing contracts, other documentary
evidence and comparative sales data to determine valuations of certain land titles.
5. Revenue
The following is an analysis of the Group’s revenue for the year.
Continuing operations
Revenue from residential construction contracts
Discontinued operations
1 Comparative information has been re-presented due to the disposal of BAA.
6. Segment information
30 June 2022
$’000
30 June 20211
$’000
687,493
687,493
6,357
693,850
661,586
661,586
14,496
676,082
Products and services from which reportable segments derive their revenue
Information on segment performance focuses 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.
• Development - this includes activities relating to land development and sales.
• Discontinued operations
o
o
House of Learning Pty Ltd and City-Wide Building and Training Services Pty Ltd previously formed the registered
training segment which was divested on 30 November 2021 and as such are presented as a discontinued
operation in this year’s annual financial report (refer note 9 for more information).
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. Consistent
with the prior reporting period, this business unit has been presented as a discontinued operation (refer note 9
for more information).
66
Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment.
Segment revenue
Segment (Loss) / Profit before Tax
Continuing operations
Residential construction
Land development
Discontinued Operations
Consolidated segment revenue and profit/
(loss) before tax for the period
Segment assets and liablities
30 June 2022
$’000
30 June 2021
$’000
30 June 2022
$’000
30 June 2021
$’000
687,493
661,586
-
687,493
6,357
693,850
-
661,586
14,496
676,082
(18,611)
(19)
(18,630)
3,603
(15,027)
6,034
(5)
6,029
1,388
7,417
Continuing operations
Segment assets
Residential construction
Land development
Discontinued operations
Total segment assets
Total assets
Segment liabilities
Residential construction
Land development
Discontinued Operations
Total segment liabilities
Total liabilities
30 June 2022
$’000
30 June 2021
$’000
182,471
586
183,057
856
183,913
183,913
145,309
7,741
153,050
17,411
170,461
170,461
168,836
1,128
169,964
3,677
173,641
173,641
126,485
8,262
134,747
16,645
151,392
151,392
For the purposes of monitoring segment performance and allocating resources between segments, all assets and
liabilities are allocated to reportable segments.
67
SIMONDS GROUP ANNUAL REPORT 2022
NOTES TO FINANCIAL STATEMENTS
(CONT'D)
Other segment information
Continuing operations
Residential construction
Land development
Discontinued Operations
Total
Continuing operations
Residential construction
Registered training
Discontinued Operations
Interest expense
Depreciation and Amortisation
30 June 2022
$’000
30 June 2021
$’000
30 June 2022
$’000
30 June 2021
$’000
1,888
133
2,021
254
2,275
1,563
-
1,563
-
1,563
18,875
1,421
20,296
252
20,548
19,927
-
19,927
688
20,615
30 June 2022
$’000
30 June 2021
$’000
16,719
252
16,971
342
17,313
13,862
-
13,862
775
14,637
Revenue by Geographical region
The Group operates in one geographical area – Australia. The Group’s revenue and profits are all generated from this
region.
Information about major customers
No single customer contributed 10% or more to the Group’s revenue for the year ended 30 June 2022 and the year
ended 30 June 2021.
7. Finance costs
Interest on bank overdrafts, loans and lease liability under AASB 16
Continuing operations
Discontinued operations
Total
30 June 2022
$’000
30 June 2021
$’000
2,021
254
2,275
1,563
-
1,563
68
8. Income taxes
Income tax recognised
Current tax
(Benefit) / expense in respect of the current year
(Benefit) in respect of prior years
Deferred tax
Expense/(benefit) in respect of the current years
Expense/(benefit) in respect of prior years
Consolidated income tax expense recognised in the current year
Income tax (benefit) / expense from continuing operations
Income tax expense from discontinued operations
The income tax expense can be reconciled to the accounting profit as follows:
(Loss) / profit before tax from continuing operations
(Loss) / profit before tax from discontinued operations
Profit before tax
Income tax (benefit) / expense calculated at 30% (2021: 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 deferred and current tax of
prior years
Income tax (benefit) / expense recognised in profit or loss
Income tax (benefit) / expense from continuing operations
Income tax (benefit) / expense from discontinued operations
30 June 2022
$’000
30 June 2021
$’000
(10,010)
(631)
(10,641)
4,787
495
5,282
(5,359)
(6,440)
1,081
(5,359)
893
(75)
818
1,952
(46)
1,906
2,724
2,304
420
2,724
30 June 2022
$’000
30 June 2021
$’000
(18,630)
3,603
(15,027)
(4,508)
(645)
(50)
(5,203)
(156)
(5,359)
(6,440)
1,081
(5,359)
6,029
1,388
7,417
2,225
354
267
2,846
(122)
2,724
3,337
(613)
2,724
The tax rate used for the 2022 and 2021 reconciliations above is the corporate tax rate of 30% payable by Australian
corporate entities on taxable profits under Australian tax law.
69
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
Current tax assets and liabilities
Income tax refundable
30 June 2022
$’000
30 June 2021
$’000
9,9331
9,933
2,266
2,266
1 The Group will be utilising the loss carry back measures and carry back its tax loss made in the current year against its income tax liability in the
preceding years, having regards to the amount of tax paid in those tax periods. Under these measures, the Group will be eligible to carry back up to
$9.933m as this represents the tax paid during the last two preceding years.
Deferred tax balances
Amounts recognised in profit or loss
Deferred tax assets
Deferred tax liabilities
Amounts recognised in other comprehensive income
Deferred tax liabilities
Net deferred tax
2022
Construction Contracts
income
Capitalised Courses and
Product Design
Property, Plant, Equipment &
Intangibles
Provision for warranty and
contract maintenance
Employee Entitlements
DTA on losses
Other
Opening
Balance
$’000
(7,215)
Under / Over
$’000
Recognised in
profit or loss
$’000
(5,497)
(609)
1,977
1,067
2,896
-
534
(1,350)
137
(692)
(198)
(875)
1,889
449
(4,787)
(494)
(1)
(495)
30 June 2022
$’000
30 June 2021
$’000
14,112
(20,744)
(6,632)
-
(6,632)
Recognised
in other
comprehensive
income
$’000
-
-
-
-
-
-
-
-
14,594
(15,944)
(1,350)
-
(1,350)
Closing
Balance
$’000
(12,712)
(472)
791
869
2,021
1,889
982
(6,632)
70
Opening
Balance
$’000
(5,466)
(749)
1,580
1,081
3,197
913
556
Under / Over
$’000
-
-
(17)
-
56
7
46
Recognised in
profit or loss
$’000
(1,749)
140
414
(14)
(357)
(386)
(1,952)
Recognised
in other
comprehensive
income
$’000
-
-
-
-
-
-
-
Closing
Balance
$’000
(7,215)
(609)
1,977
1,067
2,896
534
(1,350)
2021
Construction Contracts
income
Capitalised Courses and
Product Design
Property, Plant, Equipment &
Intangibles
Provision for warranty and
contract maintenance
Employee Entitlements
Other
9. Discontinued Operations
Madisson Business
Following a comprehensive review initiated 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 were completed in financial year ended 30 June 2017. As part of the warranty rules under the
statutory regulations, the business is still incurring warranty claims. As such, the expenses are predominantly related to
warranty and related activities.
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
Net increase 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
30 June 2022
$’000
30 June 2021
$’000
-
(1,822)
(1,822)
547
(1,275)
(1)
(1)
5
4
-
(2,044)
(2,044)
613
(1,431)
2
2
3
5
71
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
Builders Academy Australia
On 30 September 2021, the Group entered into a sale agreement to dispose its wholly owned subsidiaries, Builders
Academy Australia (BAA) and City-Wide Building & Training Services Pty Ltd (CWBTS), collectively referred to as House
of Learning Pty Ltd (HOL), which operated as a registered training organisation. The disposal was completed on 30
November 2021, on which date control of BAA passed to the acquirer UP Education Australia Pty Ltd. Details of the
assets and liabilities disposed of, and the calculation of the profit or loss on disposal, are disclosed in note 37.
The result of the discontinued operations, which have been included in the profit for the year, was as follows:
Profit for the year from Registered training operations are summarised as follows:
Revenue
Expenses
(Loss)/ profit before tax
Attributable tax benefit / (expense)
Profit from disposal of BAA
Attributable tax expense
Net profit after tax for the period
Cash flow from Registered training operations during the year
Cash flow used in operating activities
Cash flow from investing activities
Cash flow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
10. Expenses for the year
Profit/ (loss) on disposal of property, plant and equipment and intangible assets
Marketing and selling expenses
Corporate and administrative expenses
Employee benefits expense
Transformation expenses (i)
30 June 2022
$’000
30 June 2021
$’000
6,357
(6,974)
(617)
185
6,041
(1,813)
3,796
(680)
342
344
6
2
8
14,496
(11,064)
3,432
(1,033)
-
-
2,399
3,222
(579)
(2,639)
4
(2)
2
30 June 2022
$’000
30 June 2021
$’000
304
(23,443)
(21,997)
(84,622)
(2,403)
(132,161)
(49)
(22,954)
(19,468)
(85,318)
-
(127,789)
(i) The transformation costs include expenses attributable to non-underlying activities which are outside of ordinary course of the business such as
restructure of the business. Included within transformation expenses are employee benefits expense of $2.184m and corporate and administrative
expenses of $0.219m, which are excluded from expenses lines above.
72
11. Earnings per share
From continuing operations
Total basic (loss) / profit per share
Total diluted (loss) / profit per share
From continuing and discontinued operations
Total basic (loss) / profit per share
Total diluted (loss) / profit per share
Basic earnings per share
30 June 2022
Cents per share
30 June 2021
Cents per share
(8.33)
(8.33)
(6.61)
(6.61)
2.59
2.55
3.26
3.21
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings are as follows:
From continuing operations
(Loss) / profit for the year attributable to owners of the Company
(12,190)
3,725
30 June 2022
$’000
30 June 2021
$’000
From continuing and discontinued operations
(Loss) / profit for the year attributable to owners of the Company
(9,669)
Shares
4,693
Shares
Weighted average number of ordinary shares for the purposes of the basic
earnings per share
146,258,855
143,841,655
Diluted earnings per share
From continuing operations
30 June 2022
$’000
30 June 2021
$’000
(Loss) / profit for the year attributable to owners of the Company
(12,190)
3,725
From continuing and discontinued operations
(Loss) / profit for the year attributable to owners of the Company
Weighted average number of ordinary shares for the purposes of the basic
earnings per share
Shares deemed to be issued for no consideration in respect of:
• Performance Rights / Options / Service Rights
Weighted average number of ordinary shares for the purposes of the diluted
earnings per share
(9,669)
Shares
4,693
Shares
146,258,855
143,841,655
4,195,890
-
-
2,190,048
150,454,746
146,031,703
The following potential ordinary shares are excluded from the weighted average number of ordinary shares for the
purpose of diluted earnings per share.
Performance Rights
-
1,866,666
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.
73
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
12. Trade and other receivables
Current
Trade receivables (i)
Other receivables
30 June 2022
$’000
30 June 2021
$’000
37,572
37,572
638
38,210
32,833
32,833
535
33,368
(i) The amounts pertaining to related party receivables are disclosed within note 29.
Trade receivables
The average settlement terms for progress invoices in relation to residential contracts are between 7 and 45 days. The
Group has 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 receivables, 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.
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)
30 June 2022
$’000
30 June 2021
$’000
1,186
1,622
1,447
2,574
6,829
114
289
1,985
805
1,079
4,158
109
Receivables past due but not impaired primarily relate to final settlement payments upon completion of construction
and supplier rebates, where terms vary. The Group has included in its considerations for any expected credit loss of these
receivables, impacts of the current pandemic with no current material indication requiring a provision as at 30 June 2022.
13. Accrued Revenue
Work in progress on residential construction contracts
30 June 2022
$’000
30 June 2021
$’000
67,569
50,698
74
14. Inventories
Display homes, land stock
Provision for impairment of inventories
30 June 2022
$’000
30 June 2021
$’000
18,442
-
18,442
27,427
(116)
27,311
The impairment provision of display homes above is assessed using recent market values. This assessment includes current
independent valuations, current offers to purchase the display homes, and current asking prices to sell these display
homes. In conducting the assessment as at 30 June 2022, current market conditions have been taken into account and no
adjustment was deemed necessary.
15. Subsidiaries
Details of the Group’s subsidiaries at the end of the reporting period are as follows.
Place of
Incorporation
and operation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Name
Principal Activity
Simonds Homes Victoria Pty Ltd
Residential – Victoria
Simonds Homes NSW Pty Ltd
Residential – NSW
Simonds Queensland Constructions Pty Ltd Residential – Queensland
Simonds SA Pty Ltd
Simonds WA Pty Ltd
Residential – South Australia
Residential – Western Australia
Australia
Madisson Homes Australia Pty Ltd
Residential – Victoria
Simonds Personnel Pty Ltd
Simonds Assets Pty Ltd
Simonds IP Pty Ltd
Payroll service entity
Asset service entity
Intellectual property service entity Australia
Simonds Corporate Pty Ltd
Asset service entity
Jackass Flat Developments Pty Ltd
Land development and sales
Simonds Land Development Pty Ltd
Land development and sales
Bridgeman Downs Land Project Pty Ltd
Land development and sales
Discover Developments Pty Ltd
Land development and sales
Discover Gisborne Pty Ltd
Land development and sales
Australia
Australia
Australia
Australia
Australia
Australia
• Simonds Group Limited is the head entity within the tax consolidated group.
• All Group subsidiaries are members of the tax consolidated group.
Proportion of ownership
interest and voting
power held by the
Group
2022
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2021
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
• 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 during the year ended 30 June 2022 (30 June 2021: None).
• 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 Statement of Financial Position as at 30 June 2022
are the same as the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year and the
Consolidated Statement of Financial Position as at 30 June 2022 disclosed on pages 50-51.
75
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
16. Property, plant and equipment
Leasehold
improve-
ments
$’000
Computer
equipment
$’000
Office
furniture
& fittings
$’000
Display home
furniture,
fixtures &
fittings
$’000
Motor
Vehicles
$’000
Plant and
equip-
ment
$’000
Cost
Balance at 1 July 2020
Additions
Disposals
Balance at 30 June 2021
Cost
Balance at 1 July 2021
Additions
Disposals
Divestment of
discontinued business
6,219
69
(32)
6,256
6,256
682
-
(71)
4,295
986
-
3,220
95
(93)
5,281
3,222
5,281
1,871
(6)
(83)
3,222
104
-
(51)
2,418
1,658
(94)
3,982
3,982
1,190
(12)
-
970
-
(61)
909
909
-
(290)
(36)
Total
$’000
17,482
2,845
(302)
20,025
360
37
(22)
375
375
20,025
12
-
(58)
3,859
(308)
(299)
Balance at 30 June 2022
6,867
7,063
3,275
5,160
583
329
23,277
Accumulated depreciation
Balance at 1 July 2020
Depreciation expense
Disposals
(4,356)
(684)
32
(2,786)
(908)
-
(1,773)
(408)
93
(1,456)
(1,062)
94
(731)
(116)
59
(186)
(64)
22
(11,288)
(3,242)
300
Balance at 30 June 2021
(5,008)
(3,694)
(2,088)
(2,424)
(788)
(228)
(14,230)
Accumulated depreciation
Balance at 1 July 2021
Depreciation expense
Disposals
Divestment of
discontinued business
(5,008)
(596)
(3,694)
(1,078)
(2,088)
(358)
3
30
11
42
1
33
(2,424)
(1,325)
-
-
(788)
(228)
(14,230)
(56)
247
31
(68)
(3,481)
3
13
265
149
Balance at 30 June 2022
(5,571)
(4,719)
(2,412)
(3,749)
(566)
(280)
(17,297)
Net book value
As at 30 June 2021
As at 30 June 2022
1,248
1,296
1,587
2,344
1,134
863
1,558
1,411
121
17
147
49
5,795
5,980
76
17. Intangible Assets
Cost
Balance at 1 July 2020
Additions
Disposals
Balance at 30 June 2021
Cost
Balance at 1 July 2021
Additions
Disposals
Divestment of
discontinued business
Computer
Software
$’000
Capitalised
courses
$’000
Goodwill
from
acquisitions
$’000
RTO Licence
$’000
Capitalised
Product
Designs
$’000
5,434
1,493
(324)
6,603
6,603
1,097
(257)
(51)
2,406
542
-
2,948
2,948
261
(2,271)
(938)
2,603
1,245
-
-
-
-
2,603
1,245
2,603
1,245
-
-
-
-
(2,603)
(1,245)
4,053
1,324
(560)
4,817
4,817
1,517
(522)
-
Total
$’000
15,741
3,359
(884)
18,216
18,216
2,875
(3,050)
(4,837)
Balance at 30 June 2022
7,392
-
(1,894)
(670)
-
(2,564)
(2,564)
(225)
2,271
518
-
384
-
Accumulated amortisation
Balance at 1 July 2020
Amortisation Expense
Disposal
Balance 30 June 2021
Accumulated amortisation
Balance at 1 July 2021
Amortisation Expense
Disposals
Divestment of
discontinued business
(1,734)
(1,824)
324
(3,234)
(3,234)
(1,932)
1
49
Balance 30 June 2022
(5,116)
3,369
2,276
Net Book Value
As at 30 June 2022
As at 30 June 2022
18. Other assets
Prepayments
Loan to sales consultants
Other assets
-
-
-
-
-
-
-
-
-
-
2,603
-
-
5,812
13,204
(1,245)
-
-
(1,245)
(1,245)
-
-
1,245
-
-
-
(2,070)
(1,182)
421
(2,831)
(2,831)
(1,132)
477
-
(6,943)
(3,676)
745
(9,874)
(9,874)
(3,289)
2,749
1,812
(3,486)
(8,602)
1,986
2,326
8,342
4,602
30 June 2022
$’000
30 June 2021
$’000
2,191
42
185
2,418
1,065
123
25
1,213
77
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
19. Trade and other payables
Trade payables
Construction accruals
Goods and services tax payable
Other payables and accruals
20. Borrowings
Current
Other borrowings
Summary of borrowing arrangements
Details of the Group’s borrowing facility as at 30 June 2022 are as follows:
30 June 2022
$’000
30 June 2021
$’000
61,817
24,041
894
4,814
91,566
54,638
15,644
922
7,309
78,513
30 June 2022
$’000
30 June 2021
$’000
286
286
312
312
Utilised
$’000
Nil
2,299
Unutilised
$’000
Interest
Charge Description
3,000 Fixed Market
Rate
2,701 Fixed Market
Rate
ThThe Group’s facilities are
secured by all Simonds Group
Limited corporate entities.
Maturity Date
30 September
2023
Facility
Market Rate
Loan
Bank
Guarantees
Overdraft
Facility
Business
Corporate
Credit Card
Facility
Nil
17,500 Variable
1,560
Market Rate
- Option Index
Rate
Finance Lease
7,8301
2,170 Fixed Market
Rate
Charged Card facility made
available to Simonds Group
30 September
2023
Asset under finance leases are
secured by the assets leased
with repayments periods not
exceeding 5 years.
Repayment
periods are not
exceeding 5
years
Total
11,689
25,371
1 Finance lease with CBA were previously classified as finance leases under AASB 117, these are now shown under the more generic term of lease
liabilities under AASB 16.
78
In addition to the debt facility outlined above, the Group has additional facilities as below:
Facility
Microsoft
Financing
Utilised
$’000
286
Unutilised
$’000
Interest
Charge Description
- Fixed Interest
Rate
The Group entered into a
Master Instalment Payment
Agreement with De Lage Landen
Pty Ltd, which covers license
subscription for Microsoft
products for the period from
January 2022 to December
2022
Maturity Date
31 December
2022.
Total
286
21. Provisions
Provision for employee benefits (i)
Cash settled share-based payment
Provision for warranty and contract maintenance (ii)
Provision for make good (iii)
Current
Non – current
30 June 2022
$’000
30 June 2021
$’000
10,521
80
12,967
1,216
24,784
15,669
9,115
24,784
11,274
1,602
13,295
1,395
27,566
16,671
10,895
27,566
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 movement in provisions during the financial year is as below:
2022
At 30 June 2021
Additional provision recognised during
the year
Credited to profit or loss
At 30 June 2022
Employee
benefits
$’000
Cash settled
share-based
payment
$’000
Warranty
and contract
maintenance
$’000
Make good
$’000
11,274
3,810
(4,563)
10,521
1,602
132
(1,654)
80
13,295
4,917
(5,245)
12,967
1,395
473
(652)
1,216
Total
$’000
27,566
9,332
(12,114)
24,784
79
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
2021
At 30 June 2020
Additional provision recognised during
the year
Credited to profit or loss
At 30 June 2021
22. Customer deposits
Arising from construction contracts
23. Issued capital
Employee
benefits
$’000
Cash settled
share-based
payment
$’000
Warranty
and contract
maintenance
$’000
Make good
$’000
9,153
4,241
(2,120)
11,274
730
1,073
(201)
1,602
13,994
4,084
(4,783)
13,295
1,284
802
(691)
1,395
Total
$’000
25,161
10,200
(7,795)
27,566
30 June 2022
$’000
30 June 2021
$’000
18,685
21,153
30 June 2022
$’000
30 June 2021
$’000
13,505
13,505
12,911
12,911
147,234,268 fully paid ordinary shares (June 2021: 143,841,655 )
Number of Shares
Share Capital ($’000)
30 June 2022
30 June 2021
30 June 2022
30 June 2021
Balance at beginning of the period
143,841,655
143,841,655
Movement in treasury shares
Balance at end of the period
3,392,613
-
147,234,268
143,841,655
12,911
594
13,505
12,911
-
12,911
24. Reserves
Share Buy-back Reserve
Share Based Payment Reserve
Share Buy-back Reserve
30 June 2022
$’000
30 June 2021
$’000
(7,204)
28,848
21,644
(7,204)
30,034
22,830
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 7.570m of its issued shares and as a result,
the balance between the total buy-back and the amount deemed a reduction in capital was recorded in the share buy-
back reserve.
Share Based Payment Reserve
This reserve is used to recognise the value of equity settled benefits provided to employees and directors as part of their
remuneration.
80
25. Accumulated losses
Balance at the beginning of the year
Profits attributable to owners of the Group (net of tax)
Performance and service rights vested / forfeited
Transfers between reserves
Balance at the end of the year
26. Dividends paid or payable
30 June 2022
$’000
30 June 2021
$’000
(13,492)
(9,669)
620
844
(18,185)
4,693
-
-
(21,697)
(13,492)
During the year, Simonds Group Limited made the following dividend payments:
Final dividend
-
-
-
-
The company’s adjusted franking account balance as at 30 June 2022 is $19.693m (2021: $22.638m).
Year ended 30 June 2022
Year ended 30 June 2021
Cents per share
Total $’000 Cents per share
Total $’000
27. Financial Instruments
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 20, cash, and equity
attributable to equity holders of the parent, comprising issued capital, accumulated losses and dividends, as disclosed in
notes 23, 24 and 25.
Financial risk management
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.
The Group hold the following financial instruments:
Financial Assets
Cash and Cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
Lease liabilities
Borrowings
30 June 2022
$’000
30 June 2021
$’000
11,133
38,210
49,343
91,566
26,720
286
118,572
22,781
33,368
56,149
78,513
22,094
312
100,919
81
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
Market risk
i. Interest rate risk management
Refer to note 20 for details of debt facilities the Group holds as at 30 June 2022.
The Group is exposed to interest rate risk as the entities in the Group borrow funds at both fixed and variable interest
rates. There is an interest rate exposure for these utilised facilities when they are used during each financial year (Refer to
note 20 for details of these facilities).
A sensitivity analysis has been determined based on the exposure to interest rates at the end of the reporting period. 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 2022 would decrease/increase by $0.032m (2021: $0.002m). This is mainly attributable to the
Group’s exposure to interest rates on its variable rate borrowings.
ii. Price risk
The Group has no foreign exchange exposure or price risk on equity securities.
Credit risk
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.
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.
Liquidity risk
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.
i. Financial arrangements
The Group had access to the following debt facilities at the end of the reporting period:
Expiring within 1 year
Expiring beyond 1 year
Utilised
Unutilised
Total
2022
$’000
6,067
2,049
8,116
2021
$’000
1,059
496
1,555
2022
$’000
-
22,670
22,670
2021
$’000
29,137
-
2022
$’000
6,067
24,719
29,317
30,786
2021
$’000
30,376
496
30,872
82
ii. Maturities of financial liabilities
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on their contractual
maturities.
The amounts disclosed in the table are the contractual undiscounted cash flows.
Balance due within 12 months equal their carrying balances as the impact of discounting is not significant.
Year ended 30 June 2022
Financial Liabilities
Trade and other payables
Lease liabilities
Borrowings
Year ended 30 June 2021
Financial Liabilities
Trade and other payables
Lease liabilities
Borrowings
< 6 months
$’000
6 -12 months
$’000
>1 -5 years
$’000
91,566
1,085
286
92,865
-
11,439
-
11,439
-
15,908
-
15,908
< 6 months
$’000
6 -12 months
$’000
>1 -5 years
$’000
78,513
1,817
312
80,642
-
9,172
-
9,172
-
14,585
-
14,585
Total
$’000
91,566
28,432
286
120,212
Total
$’000
78,513
25,574
312
104,399
28. 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 June 2022
$’000
30 June 2021
$’000
2,149,228
2,438,024
119,218
(1,299)
355,282
(294,932)
2,327,497
93,059
18,621
-
764,286
3,313,990
83
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
29. Related party transactions
Trading Transactions
During the year group entities entered the following transactions with related parties which are not members of the
Group.
Sales
Cost of goods
Leases and services
rendered
Non-cash
remuneration
30 June
2022
$
30 June
2021
$
30 June
2022
$
30 June
2021
$
30 June
2022
$
30 June
2021
$
30 June
2022
$
30 June
2021
$
Vallence Gary Simonds and related entities:
Properties leased on an arms-
length basis
Advisory fee paid during the
year
Remuneration for employee
services
Service payment to The
Trustee for the Consolidated
Yacht Charter Trust
Car park provided
Simonds Family Office Pty Ltd 1
Supply payment to Delos
Welltek Australia Pty Ltd 2
Latitude Invest Pty Ltd 3
Service payment to Latitude
Invest Pty Ltd
Mark Simonds and related entities 4:
Payment for use of building
licence
Remuneration for employee
services
Michael Myers and related entities:
Property leased on an arms-
length basis
Property purchased on an
arms-length basis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,313
-
12,313
-
-
-
-
-
-
283,425 305,500
100,457
84,817
69,342
62,630
-
-
-
-
-
-
-
-
-
-
-
-
18,769
18,240
453,224 452,947
18,769
18,240
170,141
922,580
316,290
-
-
-
-
-
-
-
-
-
-
-
166,667
100,000
11,808
236
178,474
100,236
10,1005
30,188
- 484,250
-
-
- 484,250
10,100
30,188
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 Mark Simonds and Rhett Simonds are directors of Simonds Family Office Pty Ltd.
2 There is a Supply Agreement between Delos Welltek Australia Pty Ltd and Simonds Group for the inclusion of the “DARWIN Essentials Package”
into all homes in Victoria. Simonds Family Office Pty Ltd (of which Mark Simonds and Rhett Simonds are directors) hold 25% interest in Delos Welltek
Australia Pty Ltd.
3 An interim service agreement between Latitude Invest Pty Ltd and Simonds Group was entered into to provide marketing and sales support in the
Wholesale channel. Mark Simonds and Rhett Simonds hold a 50% interest in Latitude Invest Pty Ltd.
4 One family member of Mark Simonds was employed by the Group on a casual basis and remuneration was based on an ‘arm’s length’ basis.
5 Where a person is not a KMP for the full period, related parties are only considered during the period they held a KMP position.
84
Sales
Cost of goods
Leases and services
rendered
Non-cash
remuneration
30 June
2022
$
30 June
2021
$
30 June
2022
$
30 June
2021
$
30 June
2022
$
30 June
2021
$
30 June
2022
$
30 June
2021
$
Tim Bradfield and related entities:
Property purchased on a non
arms-length basis1
10,000
Duncan Brand and related entities:
Property purchased on an
arms length basis2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000
484,250 192,554 1,269,058
631,698 553,183
18,769 18,240
1 Relates to residential building contract entered during FY22 which on a cost plus 10% agreement, this rate was approved by the Board
2 Where a person is not a KMP for the full period, related parties are only considered during the period they held a KMP position. The contract was
entered in prior year and relates to residential build. As such, there is no disclosure for the current period.
At 30 June 2022, there were no balances outstanding from related parties (2021: nil).
Loans to related parties
During the year ended 30 June 2022 there were no loans to related parties outside the Group (2021: Nil).
Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated
upon consolidation and disclosed in this note.
85
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
30. 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. During the current financial year:
• Share based payments made to key management personal and other employees amounted to$0.594m (2021:
$1.405m).
• No performance rights (2021: 2,050,000) were granted to any senior executives (2021: 8) as at 30 June 2022,
1,482,353 performance rights remain.
• As at 30 June 2022, performance rights / performance options remaining on issue are:
- FY2020 Plan: 882,353 (performance rights)
- FY2021 Plan: 600,000 (performance rights)
• No options were granted (2021: Nil) during the period.
Incentives
Financial
Year
Cash Settled
FY 2021
FY 2020
Notes:
Tranche Grant Date
Fair Value
at Grant
Date
Vesting Date Expiry Date
Other
Vesting
Condition
1
1
25 Jun’ 2021 $0.50
30 Jun’ 2023 30 Jun’ 2023 Non-market
(1), (2)
9 Mar’ 2020 $0.34
30 Sep’ 2022 30 Sep’ 2022 Non-market
(1), (3)
1.
2.
3.
Gateway Hurdle Condition exists whereby FY20 Performance Rights may not vest unless the individual remains employed up to and including 30
September 2022. These Performance Rights are settled either as shares in the Company or as cash at the discretion of the Board.
Vesting 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.
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.
The following table outlines the share-based expense (excluding forfeitures and lapses) under the management incentive
and employee share plan for the year ended 30 June 2022:
Employee share plan
Share based expense (excluding forfeitures)
30 June 2022
$’000
30 June 2021
$’000
(38)
(38)
424
424
86
Fair value of performance rights, service rights and options granted in the year
Cash rights subject to market-based vesting conditions.
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
FY 2021 Cash rights:
Tranche 1 1
FY 2020 Cash rights:
$0.50
$0.00
Tranche 1 2
$0.34
$0.00
1 The fair value at 30 June 2022 is $0.20
2 The fair value at 30 June 2022 is $0.20.
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Movements in performance rights, service rights and options during the year
The following reconciles the cash rights, performance rights and option rights outstanding at the beginning and end of
the financial year:
Opening
balance
Granted during the
year
Vested during the
year
Forfeited during the
year
Financial
Year
Issued
Number of
rights
Number
of
rights
Weighted
average
fair value
Number
of rights
Weighted
average
fair value
Number of
rights
Weighted
average
fair value
Closing
balance
Total
number
of rights
2022
Cash Rights
Tranche 1
Tranche 2
FY 2021
2,050,000
FY 2020
3,014,707
Performance Rights
Tranche 1
Tranche 2
FY 2019
FY 2019
1,866,666
1,866,666
CEO Options
EPS
Total
FY 2017
2,275,720
11,073,759
-
-
-
-
1,450,000
2,132,354
0.38 600,000
0.38
882,353
1,095,333
21,559
0.27
0.38
771,333
1,845,107
0.27
0.38
-
-
-
-
-
-
-
-
-
-
-
-
2,275,720
3,392,612
-
-
-
0.53
-
-
0.44
6,198,794
0.37 1,482,353
87
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
Opening
balance
Granted during the
year
Vested during the
year
Forfeited during the
year
Closing
balance
Financial
Year
Issued
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
FY 2021
-
2,050,000
0.50
-
- 2,050,000
-
-
-
-
-
-
-
-
-
-
-
-
735,294
645,162
-
-
- 645,160
0.35
-
0.39
3,014,707
0.11
-
-
-
-
-
-
-
-
-
-
-
-
229,008
229,008
0.27
1,866,666
0.38
1,866,666
-
-
2,275,720
11,507,391
2,050,000
0.50 645,160
0.35 1,838,472
0.27
11,073,759
2021
Cash Rights
Tranche 1
Tranche 1
Tranche 1
Tranche 2
FY 2020
3,750,001
FY 2018
FY 2018
645,162
645,160
Performance Rights
Tranche 1
Tranche 2
FY 2019
2,095,674
FY 2019
2,095,674
CEO Options
EPS
Total
FY 2017
2,275,720
Cash rights outstanding at the end of the current financial year had an exercise price of $nil (2021: nil).
The weighted average contractual life of cash rights was 835 days (2021: 557). The weighted average contractual life of
performance rights was 944 days (2021: 883 days).
Performance and service rights vested during the year
1,116,892 (2021: 645,160) performance rights and 2,275,720 (2021: nil) options were vested during the year ended 30
June 2022, 3,392,613 were settled in shares, while nil were settled with cash.
Performance and service rights forfeited during the year
There were 3,582,354 (2021: 1,380,456) cash rights and 2,616,440 (2021: 458,016) performance rights forfeited during
the year.
Share based payments reserve
Balance at the beginning of the year
Amounts expensed
Performance rights vested
Performance rights forfeited
Transfer to accumulated losses
Balance at the end of the year
30 June 2022
$’000
30 June 2021
$’000
30,034
29,725
(38)
(304)
-
(844)
28,848
424
-
(115)
-
30,034
88
31. 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
32. Auditor’s remuneration
Deloitte and related network firms*
Audit or review of financial statements
-Group
-Subsidiaries-House of Learning Pty Ltd
Statutory assurance services required by the legislation to be provided by the
auditor
Other services
-Tax services
-Financial advisory services
*The Group’s auditor is Deloitte Touche Tohmatsu.
30 June 2022
$’000
30 June 2021
$’000
-
-
-
-
1,061
1,061
-
1,061
30 June 2022
30 June 2021
-
281,500
18,500
300,000
15,000
148,295
-
463,295
315,000
-
315,000
35,500
169,807
165,658
685,965
89
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
33. 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 cash equivalents
Notes
30 June 2022
$’000
30 June 2021
$’000
11,133
11,133
22,781
22,781
Reconciliation of profit for the year to net cash flows from operating activities
Cash flows from operating activities
Net (Loss) / profit after tax for the year
Add / (deduct):
Income tax expense recognised in profit or loss
Finance costs recognised in profit or loss
Gain on disposal of discontinued operation
Management incentive and share based payments
Depreciation and amortisation of non-current assets
Movements in working capital
(Increase) in trade and other receivables
Decrease in inventories
(Increase) in other assets
Increase / (decrease) in trade and other payables
Decrease / (increase) in provisions
(Decrease) / increase in other liabilities
Cash (used in)/ generated by operating activities
Net interest paid
Income taxes refund / (paid)
(9,669)
4,693
(5,359)
2,275
(6,041)
(1,186)
20,548
568
(5,775)
8,869
(18,041)
14,750
(2,291)
(1,086)
(3,006)
(2,275)
2,946
2,724
1,563
-
309
20,615
29,904
(4,080)
6,937
(15,713)
(2,305)
2,405
7,946
25,094
(1,563)
(9,800)
Net cash (used in) / generated from operating activities
(2,335)
13,731
Non-cash transactions
The Group acquired $10.579m of right-of-use assets during the financial ended 30 June 2022. The additions are non-cash
and not included within investing activities in the consolidated statement of cash flows.
90
Changes in liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-
cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be,
classified in the Group’s consolidated cash flow statement as cash flows from financing activities.
Notes
20
36
30 June 2021
$’000
Financing cash
flows
$’000
312
22,094
22,406
(26)
(12,940)
(12,966)
Non-cash
changes
New finance
leases
$’000
-
17,566
17,566
30 June 2022
$’000
286
26,720
27,006
Other borrowings
Finance lease liabilities
Total liabilities from financing activities
34. 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.
Statement of financial position
Current Assets
Non-current Assets
Total assets
Current Liability
Non-current Liability
Total liabilities
Net assets
Issued capital
Reserves
Accumulated profit
Total equity
Income statement
Dividends from subsidiaries
Operating profit / (loss) before tax
Tax (expense) / refund
Profit / (Loss) for the year
30 June 2022
$’000
30 June 2021
$’000
14,753
2,001
16,754
4,329
2,120
6,449
10,305
13,505
(35,048)
31,848
10,305
4,390
1,558
(2,435)
3,513
7,579
2,874
10,453
1,383
1,686
3,069
7,384
12,911
(33,862)
28,335
7,384
7,250
(1,551)
111
5,810
91
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
35. Contingent liabilities and contingent assets
Contingent Liabilities
Other guarantees (i)
30 June 2022
$’000
30 June 2021
$’000
2,299
1,920
(i) Represents guarantees for property rentals, project contracts, crossing deposits and merchant facility.
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.
Building Contracts
The Group has entered into a fixed price agreement with Development Victoria (DV) to build 86 units. Given delays in
the commencement coupled with unprecedented cost and supply chain pressure, the Group has approached DV with
alternative pricing proposals to offset the impact of the higher building cost.
The outcome of the negotiations is unknown but if not successful could result in losses when these units are constructed.
Given that the outcome of the negotiation is unknown the obligation cannot be measured reliably and has been classified
as a contingent liability.
Other Contracts
The Group has entered contracts to acquire properties. In the normal course of business, third parties will be assigned to
purchase the property, however if no third party can be reassigned, then the Group faces an exposure of $1.360m (2021:
$2.410m).
36. Leases
The Group leases commercial offices, display homes, display home furniture, IT equipment and motor vehicles. The leases
are typically with an option to renew and lease payments are reviewed when approaching the lease expiry date to reflect
market rentals.
The Group also leases equipment with contract terms of one to three years. These leases are short- term and/or leases
with value at or below $10,000. The Group has elected not to recognise right-of- use assets and lease liabilities for these
leases.
Information about leases for which the Group is a lessee is presented below.
92
Right of use assets
Cost
Balance at 1 July 2020
Additions
Changes in value from
lease modification and
cancellation
Disposal of assets
Balance at 30 June 2021
Cost
Balance at 1 July 2021
Additions
Changes in value from
lease modification and
cancellation
Disposal of assets
Balance at 30 June 2022
Accumulated amortisation
Balance at 1 July 2020
Charge for the year
Changes in value from
lease modification and
cancellation
Disposal of assets
Balance 30 June 2021
Accumulated amortisation
Balance at 1 July 2021
Charge for the year
Changes in value from
lease modification and
cancellation
Disposal of assets
Balance 30 June 2022
Carrying amount
As at 30 June 2021
As at 30 June 2022
Commercial
offices
$’000
16,067
-
4,824
(2,464)
18,427
18,427
945
1,134
(1,590)
18,916
(2,871)
(4,246)
(2)
1,189
(5,930)
(5,930)
(4,295)
(10)
1,516
(8,719)
12,497
10,197
Display
homes
$’000
5,640
4,047
885
(3,634)
6,938
6,938
4,073
311
(3,575)
7,747
(2,971)
(4,443)
26
3,514
(3,874)
(3,874)
(3,937)
-
3,445
(4,366)
3,064
3,381
5,091
2,309
121
(1,939)
5,582
5,582
1,967
-
(2,995)
4,554
(2,038)
(2,967)
56
1,836
(3,113)
(3,113)
(2,375)
-
2,934
(2,554)
2,469
2,000
Display
home
furniture
$’000
IT equipment
$’000
Motor
vehicles
$’000
Total
$’000
33,338
8,433
5,863
(8,243)
39,391
39,391
10,579
7,461
5,061
2,077
33
(206)
6,965
6,965
3,328
-
(981)
9,312
(10,620)
46,811
(2,084)
(1,357)
1
(10,638)
(13,696)
81
190
6,729
1,479
-
-
-
1,479
1,479
266
6,016
(1,479)
6,282
(674)
(683)
-
-
(1,357)
(3,250)
(17,524)
(1,357)
(1,203)
-
1,357
(1,203)
122
5,079
(3,250)
(1,968)
-
875
(4,343)
3,715
4,969
(17,524)
(13,778)
(10)
10,127
(21,185)
21,867
25,626
93
SIMONDS GROUP ANNUAL REPORT 2022 NOTES TO FINANCIAL STATEMENTS
(CONT'D)
Amount recognised in profit or loss
Lease under AASB 16
Interest on lease liabilities
Depreciation expense on right-of-use assets
Expenses relating to short-term leases
Expenses relating to low value assets
Gain on lease modification and cancellation
30 June 2022
$’000
30 June 2021
$’000
(1,594)
(13,788)
(3,779)
(323)
11
(1,100)
(13,696)
(1,644)
(317)
349
(19,463)
(16,408)
Commitment for short-term leases and low value assets
Relating to leases classified as short-term and/or low value leases, the Group is committed to payments of $0.237m for
leases under 1 year in duration and $nil for leases between 1 year and 5 years.
The total cash outflow for leases amounts to $14.534m (2021: $14.150m).
Lease liabilities
Current
Non-current
Leases expiring less than one year
Leases expiring between one and five years
Leases expiring more than five years
37. Disposal of subsidiaries
30 June 2022
$’000
30 June 2021
$’000
11,962
14,758
26,720
11,962
14,758
-
10,042
12,052
22,094
10,042
12,052
-
On 30 November 2021, the Group announced that it completed the sale of its wholly owned BAA business to Up
Education Australia Pty Ltd for an adjusted cash consideration of $8.980m1 .
Consideration received
Consideration received in cash and cash equivalents
Total Consideration
1 Consideration of $10.300m less net debt of the divested business of $1.320m.
30 June 2022
$’000
8,980
8,980
94
Net assets of BAA at the date of disposal
30 June 2022
$’000
Current Assets
Cash and cash equivalents
Trade receivables
Other Assets
Deferred Tax Assets
Non - Current Assets
Property, plant and equipment
Intangible assets
Goodwill
Current Liability
Trade and payables
Deposit and income in advance
Provisions
Non - Current Liability
Provisions
Net assets disposed
Profit on disposal of BAA
Net consideration
Net assets disposed
Cost of divestment
Profit on disposal
Net cash inflow on BAA
Consideration received in cash and cash equivalents
Less cash and cash equivalent balance disposed
Net cash generated from disposal of discontinued business- BAA
38. Subsequent Events
8
933
143
28
150
422
2,602
(370)
(13)
(1,663)
(155)
(2,085)
30 June 2022
$’000
8,980
(2,085)
(854)
6,041
30 June 2022
$’000
8,980
(8)
8,972
Subsequent to year end, the Group has obtained conditional approval on a new borrowing facilities term sheet of
$34.500 million, dated 26 August 2022, including revised related debt covenants, which aims to extend the Group’s
current borrowing facilities from September 2023 until 31 December 2023. The Directors expect to sign the final
borrowing documentation in the coming weeks in substantially the same form as the conditionally approved term sheet.
Apart from this, there are no other events that occurred subsequent to the reporting date that may significantly affect
Group’s operations, results or state of affairs in future periods.
95
SIMONDS GROUP ANNUAL REPORT 2022 SHAREHOLDER INFORMATION
In accordance with ASX Listing Rule 4.10, the Company provides the following information to shareholders not elsewhere
disclosed in this Annual Report. The information provided is current as at 31 August 2022 (Reporting Date).
Corporate governance statement
The Company has prepared a Corporate Governance Statement which sets out the corporate governance practices
that were in operation throughout the financial year for the Company. In accordance with ASX Listing Rule 4.10.3, the
Corporate Governance Statement will be available on Simonds website www.simondsgroup.com.au and will be lodged
with ASX at the same time that this Annual Report is lodged with ASX.
Distribution of equity securities
The distribution and number of holders of equity securities on issue in the Company as at the Reporting Date, and the
number of holders holding less than a marketable parcel of the Company’s ordinary shares, based on the closing market
price as at the Reporting Date, is as follows:
Ordinary shares
Performance rights
Performance options
Class of equity security
Holders
No. of shares
%
Holders
No. of
performance
rights
Holders
No. of
performance
options
529
90
53
123
50
212,268
242,431
394,417
4,466,294
0.14
0.16
0.27
3.03
141,918,858
96.39
-
-
-
-
-
-
-
-
-
-
-
-
2
2
1,482,353
1,482,353
Holding
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
845
147,234,268
100
There were 581 holders of less than a marketable parcel of ordinary shares ($500).
96
Twenty largest quoted equity security holders
The Company only has one class of quoted securities, being ordinary shares. The names of the twenty largest holders of
ordinary shares, the number of ordinary shares and the percentage of capital held by each holder is as follows:
Name
McDonald Jones Homes
Simonds Custodians Pty Ltd
Simonds Constructions Pty Ltd
FJP Pty Ltd
Simonds Corporation Pty Ltd
Mr Robert Geoffrey Stubbs
Moat Investments Pty Ltd
Madisson Constructions Pty Ltd
Poal Pty Ltd
Mast Financial Pty Ltd
Mr Michael Bonadio & Ms Mary Bonadio
Gliocas Investments Pty Ltd
Kelvin Ryan
Sutton Gardner Pty Ltd
Mr Kim Bee Tan & Mrs Verna Suiat Wah Tan
Dr Howard Vincent Bertram & Dr Gijsberdina Bertram
BNP Paribas Nominees Pty Ltd
Jet Invest Pty Ltd
April Pamela Waddell
Mr Peter Hollick & Ms Helen Pattinson
Other shareholders
Total shareholders
Number held
38,999,367
32,800,020
25,747,701
20,370,660
6,933,621
2,124,496
2,089,560
1,572,678
1,020,000
869,064
830,000
715,750
674,350
600,000
550,000
467,145
378,831
350,000
310,000
300,00
Percentage of
issued shared
26.48%
22.28%
17.49%
13.84%
4.71%
1.44%
1.42%
1.07%
0.69%
0.59%
0.56%
0.47%
0.46%
0.41%
0.37%
0.32%
0.26%
0.24%
0.21%
0.20%
137,703,243
9,531,025
147,234,268
93.53%
6.47%
100.00%
97
SIMONDS GROUP ANNUAL REPORT 2022
SHAREHOLDER INFORMATION (CONT'D)
Substantial Shareholders
As at the Reporting Date, the names of the substantial holders of Simonds and the number of equity securities in which
those substantial holders and their associates have a relevant interest, as disclosed in substantial holding notices given to
Simonds, are as follows:
Name
Vallence Gary Simonds
McDonald Jones Homes Pty Ltd
F.J.P. Pty Ltd
Total
Voting Rights
Numbers held
66,190,419
38,999,367
20,370,660
125,560,446
Percentage
of issued
shared
46.02%
26.69%
14.16%
86.87%
The voting rights attaching to each class of equity security are set out as follows:
Ordinary Shares
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 share held.
Performance Rights
Performance rights do not carry any voting rights.
Performance Options
Performance options do not carry any voting rights.
Unquoted equity securities
1,482,353 unlisted performance rights have been granted to two people. There are no people who hold 20% or more
performance rights or performance options that were not issued or acquired under an employee incentive scheme.
On-market buy-back
The Company is not currently conducting an on-market buy-back.
98
Share register
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
Auditor
Deloitte Touche Tohmatsu
477 Collins Street
Melbourne, VIC 3000
Stock exchange listing
Simonds Group Limited shares are listed on the Australian
Securities Exchange (ASX code: SIO)
Corporate website
simondsgroup.com.au
CORPORATE DIRECTORY
Directors
Rhett Simonds
(Chief Executive Officer and Executive Chairman)
Iain Kirkwood
(Independent, Non-Executive Director)
Piers O’Brien
(Non-Executive Director)
Mark Simonds
(Executive Director)
Andrew Bloore
(Non-Executive Director)
David Denny
(Independent, Non-Executive Director)
Company Secretary
Amanda Jones
Notice of annual general meeting
The details of the annual general meeting of Simonds
Group Limited are:
11 November 2022
11.30am (AEDT)
Date:
Time:
Venue: The View Hotel, 562 St Kilda Road,
Melbourne, Victoria 3004
Registered office
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
Email: company.secretary@simonds.com.au
99
SIMONDS GROUP ANNUAL REPORT 2022 simondsgroup.com.au