Annual Report
2017
INNOVATION I EXCELLENCE I GROWTH
(' SAUNDERS
I NTER N A T I O N AL
1 2 3 4 5 Saunders International Limited
Directors’ Report
DIRECTORS’ REPORT
The Directors present their report on Saunders International Limited (“Saunders” or the “Group”) for the financial year ended
30 June 2017 and the independent audit report thereon.
DIRECTORS
The following persons are directors of Saunders International Limited:
Timothy Burnett
Mark Benson
Malcolm McComas
Gregory Fletcher
The above-named directors held office during the whole of the financial year and since the end of the financial year up the date
of this report.
COMPANY SECRETARY
Steven Dadich was Company Secretary during the whole year and up to the date of this report.
PRINCIPAL ACTIVITIES
During the financial year, the principal activities of Saunders were the design, construction and maintenance of bulk liquid
storage facilities, tanks and road and rail bridges. The Group also manufactures precast concrete products for transport
infrastructure projects and provides a range of specialized services for the maintenance of commercial, industrial and marine
infrastructure and assets.
REVIEW OF OPERATIONS
A Summary of the revenues and results is as follows: -
Revenue
Profit before income tax
Income tax benefit / (expense)
2017
$’000
2016
$’000
45,805
41,828
1,336
3,705
92
(814)
Profit attributable to the member of Saunders International Limited
1,428
2,891
Operating and Financial Review
In February 2017, Saunders announced the acquisition of the business and assets of Civilbuild, a Newcastle based company
specialising in the design and construction of bridges for road and rail infrastructure. The acquisition was completed on 31
March 2017 for $6.32 million including earnout. The Saunders 2017 Financial Report reflects the acquisition and the
Civilbuild financial performance has been consolidated from the completion date.
During the 2017 financial year, Saunders’ revenue was $45.81 million including a $5.09 million contribution from Civilbuild.
This represents a 9.5% increase on the prior year (FY2016: $41.83 million). This increase essentially results from the Civilbuild
revenue. The lack of revenue growth in tank design construction is attributed to client initiated delays in commencement of
awarded contracts and slower than expected conversion of live tender projects into contracts. This has in part been offset by
a strong profit contribution from our maintenance operations in FY2017.
The net profit after tax was $1.43 million after some positive adjustments resulting from the Civilbuild acquisition, which was
50.5% lower than the previous corresponding period (FY2016: $2.89 million). This was the result of reduced margins in the
Engineering Construction group (resulting from the abovementioned delays), competitive pressures on margins and
inclement weather experienced on some sites in February and March.
6 Saunders International Limited
Directors’ Report
The activities of Saunders were generally Australia wide and the revenue was generated across all states and territories
(except the ACT and Tasmania).
Basic earnings per share were 1.76 cents, a 52.2% decrease on FY2016 (3.68 cents).
Cash outflows from operating activities were $0.32 million, a 120.4% decrease on FY2016 ($1.57 million inflows).
The directors consider the Group to be in a strong financial position at year end with cash and cash equivalents of $10.94 million
(FY2016: $14.35 million). The cash and cash equivalents of 30 June 2017 is equivalent to 12.78 cents per share (FY2016: 18.23
cps) and the Group has no interest bearing debt. Since the year end, out of this cash balance, the group has repaid a $2.50 million
interest free working capital loan from the previous Civilbuild owners. The net tangible assets per share is 23.07 cents (FY2016:
20.72 cents).
Outlook
The Group has experienced a good start to the new financial year which is the result of the solid foundations laid down in the
last 12 to 18 months. The strategy to work closely with our customers and expand our geographical footprint is starting to
deliver results.
Work in hand at 30 June 2017 was at $46.0 million, an increase of 88% (FY2016: $24.5 million) and tendering activity remains
strong with the value of live tenders at $216.0 million. The pipeline (yet to be tendered) is at $298.0 million.
The Group has made good progress in building the order book and we will continue in FY2018 to work closely with our key
clients to provide innovative engineering solutions. Our decision to expand internationally is already paying dividends with
the award of two new projects in Papua New Guinea.
Saunders is still experiencing challenging business conditions, but we remain confident that our strategic direction will deliver
benefits over the coming years as we convert some pipeline opportunities, continue with our diversification strategy and expand
our maintenance operations.
Employees
During this financial year, the number of employees averaged at 185.
The directors wish to recognise the contribution made by all employees during this year.
Safety
The safety and welfare of our employees is our highest priority and is a cornerstone of all the Group’s activities.
Continued management focus and active employee involvement helped the Group to an improved safety result over the
previous year with a reduction of 19% in our TRIFR.
Earnings per share
The basic and diluted earnings per share is calculated using the weighted average number of shares. This shows the
basic earnings per share at 1.76 cents (2016: 3.68 cents) and the diluted earnings per share at 1.76 cents (2016: 3.65 cents).
DIVIDEND
The Board has declared a final dividend of 1.0 cents per share fully franked and payable on 18 September 2017 (FY2016 final
dividend 2.0cps). The record date for determining dividends is 31 August 2017.
DIVIDEND REINVESTMENT PLAN
In accordance with the Dividend Reinvestment Plan (DRP) the Directors have decided to de-activate the DRP for the dividend
payable on 18 September 2017. The Directors will re-visit the DRP in the future.
DIRECTORS ATTENDANCE AT MEETINGS
Attendance at Meetings
The following table sets out the number of meetings in the year to 30 June 2017, held during the period that the individual was
a director and the number of meetings attended.
Directors
Meetings
Audit and Risk Committee
Meetings
Remuneration Committee
Meetings
Held
Attended
Held
Attended
Held
Attended
Timothy Burnett
Mark Benson
Greg Fletcher
Malcolm McComas
12
12
12
12
12
12
12
11
4
-
4
4
4
-
4
4
2
-
2
2
2
-
2
2
7 Saunders International Limited
Directors’ Report
INFORMATION ON DIRECTORS
Information on the directors who held office during and since the end of the financial year is as follows:-
Directors
Qualifications, Experience
and Special Responsibilities
Relevant Interest
in Shares of
Saunders International Limited
Timothy Burnett
Non-executive Chairman
10,272,487
Member of the Audit & Risk Committee
Member of the Remuneration Committee
Director since 28 November 1990
BE, MBA, FAICD
42 years of relevant industry experience
Other listed company directorships in the 3 years
immediately before the end of the financial year
- Nil
Mark Benson
Managing Director from 5 October 2015
220,419
Director since 10 August 2015
AdvDipMan, AdvDipProjMgt, GAICD
25 years of relevant industry experience
Other listed company directorships in the 3 years
Immediately before the end of the financial year
- Nil
Malcolm McComas
Non-executive Director
74,000
Chairman of the Remuneration Committee
Member of the Audit & Risk Committee
Director since 4 September 2012
B Ec, LLB, FAICD, SFFin
35 years of relevant experience as a lawyer,
investment banker and company director
Other listed company directorships in the 3 years
immediately before the end of the financial year –
Pharmaxis Ltd (Chairman)
BC Iron Ltd – Resigned November 2014
Fitzroy River Corporation Ltd (Chairman)
Royalco Resources Limited
8 Saunders International Limited
Directors’ Report
INFORMATION ON DIRECTORS (Cont’d)
Information on the directors who held office during and since the end of the financial year is as follows: -
Directors
Qualifications, Experience
and Special Responsibilities
Relevant Interest
in Shares of
Saunders International Limited
Greg Fletcher
Non-Executive Director
4,763
Chairman of the Audit & Risk Committee
Member of the Remuneration Committee
Director since 1 July 2015
BCom, CA
- Chairman SMEG Australia Pty Ltd
- Chairman of Audit and Risk Committees on a
number of Government owned businesses
Other listed company directorships
- Director Yancoal SCN Limited
- Director Yancoal Australia Limited
- WDS Limited - resigned November 2015
Greg was a Partner of Deloitte Touche Tohmatsu
until 31 May 2009, and Deloitte Touche Tohmatsu
has been the registered auditor of Saunders since
the year ended 30 June 2007
9 Saunders International Limited
Directors’ Report
AUDITED REMUNERATION REPORT
This remuneration report, which forms part of the directors’ report, contains information about the remuneration of Saunders
International Limited’s directors and its key management personnel for the financial year ended 30 June 2017. The
Remuneration Report sets out, in accordance with section 300A of the Corporations Act: (i) the Group’s governance relating
to remuneration, (ii) the policy for determining the nature and amount or value of remuneration of key management personnel;
(iii) the various components or framework of that remuneration; (iv) the prescribed details relating to the amount or value paid
to key management personnel, as well as a description of any performance conditions; (v) the relationship between the policy
and the performance of the Group.
Key management personnel are the non-executive directors, the executive directors and employees who have authority and
responsibility for planning, directing and controlling the activities of the entity.
Remuneration Policy and Governance
The board of directors, through the Remuneration Committee, review and approve remuneration of the non-executive directors,
the managing director and key management personnel. Remuneration policy is determined by the needs of the Group and the
individual talents, capabilities and experience of relevant executives, and the need to attract and retain talent are considered
important factors in assessing remuneration.
Non-executive Directors
Non-executive directors are paid fees and where applicable compulsory superannuation contributions are made on their behalf.
The current fees are based on the level of fees for comparable listed companies and were reviewed during the year.
The non-executive directors have not been granted options and have not participated in the Employee Share Plan or the
Performance Rights Plan.
Managing Director
The managing director is remunerated on a salary package basis which is a component of a formal employment contract. The
salary package is considered to be appropriate for the experience and expertise needed for the position and is comparable to
other similar sized companies and business units of larger companies. The salary package contains a fixed component and a
variable bonus component. The bonus is based on an annual performance appraisal as conducted by the remuneration
committee of the board of directors. The performance is measured against a range of objectives set annually by the board.
The important objectives are safety, quality, personnel development, quantitative Group financial performance and certain
other (subjective and objective) criteria.
The managing director has also participated in the Employee Share Plan and the Performance Rights Plan. Mark Benson holds
400,000 options within The Employee Share Plan and 1,307,884 performance rights under the Saunders International
Performance Rights Plan.
Key Management Personnel
Key management personnel are remunerated on salary packages which are considered appropriate for the positions they hold
and their experience. The remuneration includes a variable bonus which is determined annually based upon Group and
individual performance.
Key management personnel as disclosed on page 13 of the remuneration report have participated in the Employee Share
Plan.
Long Term Incentive
The board of directors have considered the issue of long term incentive as a component of the remuneration of executive
directors and key management personnel.
Saunders operates two Long Term Incentive (“LTI”) plans, which are described below:
• Employee Share Plan
• Performance Rights Plan
As of the date of this report a number of executive officers’ own shares in the Group or interests via the Employee Share Plan
and the Performance Rights Plan. Key management personnel, who are not directors, collectively own approximately 652,000
shares and have an interest in 430,000 shares under the Employee Share Plan. In addition, other employees own 775,000
shares.
The breadth and depth of share ownership fosters an alignment of objectives between shareholders and directors and
management of the Group. The Board of directors have also introduced a separate long-term incentive component of
remuneration for senior executives.
10 Saunders International Limited
Directors’ Report
AUDITED REMUNERATION REPORT (Cont’d)
Employee Share Plan
Under the Employee Share Plan, the Group provides interest free loans to employees to acquire shares in Saunders
International Limited, at a specified price per share. The loans are secured by the shares acquired by the eligible employees.
The shares will vest and the loans will be repaid, upon a specified anniversary of the issue of the shares. If an eligible
employee’s employment with the Group is terminated prior to the specified anniversary of the issue of the shares, the shares
will be forfeited, and the Group will be entitled to the total amount raised pursuant to the divestment of the shares. The shares
are accounted for as in substance options.
Each employee share option converts into one ordinary share of Saunders International Limited on exercise. No amounts are
paid or payable by the recipient on receipt of the option. The options carry neither right to dividends nor voting rights. Options
may be exercised at any time from the date of vesting to the date of their expiry.
During the year 95,000 options were granted to Key Management Personnel under the ESP. The aggregate fair value of the
options granted is $15,380 as set out on page 14.
Performance Right Plan
The Saunders International Rights Plan was approved by the Board and approved by shareholders at the Annual General
Meeting in November 2015.
The features of the long-term incentive comprise the grant of equity in the form of Performance Rights which vest over a three
year period. The maximum number of Performance Rights will vest only if stretch objectives for each tranche are achieved.
Half of the Performance Rights will vest if the target objectives are achieved. The end of the measurement period for a tranche
of Performance Rights will be extended by up to two years at the Board’s discretion if significantly less than target vesting
would have been achieved for that tranche at the end of the measurement period, adjusted for the pro-rata increase in hurdles
to take into account the additional time. The two vesting conditions that will be used will be relative total shareholder return
(RTSR) and normalised earnings per share growth (NEPSG).
RTSR will be measured by comparing the Group’s TSR over the measurement period with the TSRs achieved by companies
that are in a comparator group and remain listed on the ASX. TSR is the percentage return generated from an investment in a
Group’s shares over the measurement period assuming that dividends are reinvested into the Group’s shares. NEPSG will be
assessed as the compound annual growth rate (CAGR) reflected in the increase in normalised earnings per share (EPS) from
the base year (FY2016) for tranches 1 to 8 and (FY2017) for tranches 9 and 10 to normalised EPS for the final year of the
measurement period. Normalised EPS will relate to normal operations and will exclude abnormal items as determined by the
Board in its discretion.
For the phase in tranches where the measurement period is less than three years, performance will be evaluated by the Board’s
assessment of the establishment of strategic foundations for superior TSR and NESPG over the long term. For future grants,
it is currently intended that the qualitative vesting conditions will be removed (but retaining TSR and NESPG), and that
measurement periods will be no shorter than 3 years.
The vesting scale will be applied to the tranches subject to objective measurement of Saunders performing relative to the
comparator group and NEPSG, as appropriate, with the vesting scale ranging continuously from 0% for very poor performance
to 100% for very good performance with 50% for on-target performance.
The long-term incentive is aimed at aligning remuneration with the longer-term performance of the Group and retaining the
long-term services of the key management personnel.
During the year 476,190 Performance Rights were granted to the CEO under the LTI Plan. The aggregate fair value of the
Performance Rights granted is $185,714 as set out on page 14.
11 Saunders International Limited
Directors’ Report
AUDITED REMUNERATION REPORT (Cont’d)
Key Terms of Employment Contracts
The Group entered into an executive service agreement with Mark Benson as Managing Director and Chief Executive Officer
effective 5 October 2015. The remuneration component of the new agreement is in line with relevant industry comparables.
The variable component (Performance Bonus) can range anywhere between 0% to 60% of the fixed component based on
performance measured against a range of key performance indicators and targets, set annually by the directors. The attainment
of realistically achievable performance and targets on a weighted average measure would result in a bonus of 30% of the fixed
component and bonus above and below this would result from overall superior or poorer performance.
The executive service agreement contains the following key terms: -
Annual Salary:
Total fixed remuneration of $500,000
Performance Bonus:
Long Term Incentive:
Variable, ranging from 0% to 60% of total fixed annual remuneration, based on performance
measured against a range of key performance indicators
Variable, ranging from 0% to 40% of total fixed annual remuneration, based on performance
measured against a range of key performance indicators
Notice Period:
Six months’ notice
Executive officers are employed under ongoing employment arrangements. Their employment thus entails between one to
three months’ notice. This is considered appropriate because they have many years of service with the Group and are
shareholders of the Group.
Relationship between Remuneration Policy and Company Performance
The remuneration of executive officers contains an annual cash bonus. The total cash bonus paid in a year is discretionary,
and is closely related to and determined by the current profit levels of the Group.
Executive officers remuneration is aligned with the long-term Group performance via the shareholdings that these individuals
retain in the Group.
The tables below set out summary information about the Group’s earnings and movements in shareholder wealth for the five
years to June 2017:
30 June
2017
$’000
30 June
2016
$’000
30 June
2015
$’000
30 June
2014
$’000
30 June
2013
$’000
Revenue
45,805
41,828
43,954
69,359
60,508
Net profit before income tax
Net profit after income tax
1,336
1,428
3,705
2,891
6,324
4,431
9,106
6,375
8,262
5,783
Share price at end of year
Special dividend (cents per share)
Interim dividend (cents per share)
Final dividend (cents per share)
Basic earnings per share
Diluted earnings per share
30 June
2017
30 June
2016
30 June
2015
30 June
2014
30 June
2013
0.50
-
1.00
1.00
1.76
1.75
0.50
-
2.00
2.00
3.68
3.65
0.60
-
2.00
4.00
5.64
5.60
0.88
-
2.00
4.00
8.14
8.13
0.73
-
2.00
3.00
7.41
7.36
All dividends above were franked to 100% at 30% corporate tax rate.
12 Saunders International Limited
Directors’ Report
AUDITED REMUNERATION REPORT (Cont’d)
Particulars of Directors and Executive Officers interests, including interests under the ESP and Performance Rights Plan during the year ended 30 June 2017 were:
Fully paid
ordinary
shares
issued/
purchased
during 2017
Fully paid
ordinary
shares 2016
Fully paid
ordinary
shares 2017
Share options
2016
Share
options
vested
during 2017
Share
options
granted
during 2017
Share options
at end 2017
Performance
rights 2016
Performance
rights
granted
during 2017
Performance
Rights
vested
during 2017
Performance
rights at end
2017
Number
Number
Number
Number
Number
Number
Number
Number
Number
Number
Malcolm McComas
Greg Fletcher
TOTAL
Executive Officers
Mark Benson1
David Griffiths2
Robert Patterson3
Ian McLoughlin4
Johnathon Bromilow5
Non-executive Directors
Timothy Burnett
9,702,531
-
4,500
569,956
74,000
263
10,272,487
74,000
4,763
9,707,031
644,219
10,351,250
-
-
-
-
-
-
652,142
-
-
220,419
220,419
400,000
-
-
-
-
-
652,142
-
-
15,000
60,000
260,000
-
TOTAL
652,142
220,419
872,561
735,000
GRAND TOTAL
10,359,173
864,638
11,223,811
735,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,000
15,000
15,000
50,000
95,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
400,000
1,047,770
476,190
(216,076)
1,307,884
30,000
75,000
275,000
50,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
830,000
1,047,770
476,190
(216,076)
1,307,884
95,000
830,000
1,047,770
476,190
(216,076)
1,307,884
1. CEO Managing Director, 2. GM Commercial, 3. GM Engineering and Construction, 4.GM Asset Services East, 5.GM Saunders Civilbuild (From 1 April 2017)
13 Saunders International Limited
Directors’ Report
AUDITED REMUNERATION REPORT (Cont’d)
The following table summarises the value of options and performance rights granted during the financial year, in relation to options granted to key management personnel as part of their
remuneration:
Share options granted
during 2017
Share options forfeited
during 2017
Share options vested
during 2017
Performance rights
granted during 2017
Performance rights
forfeited during 2017
Performance rights
vested during 2017
Fair Value
$
Fair Value
$
Fair Value
$
Fair Value
$
Fair Value
$
Fair Value
$
Non-executive Directors
Timothy Burnett
Malcolm McComas
Greg Fletcher
TOTAL
Executive Officers
Mark Benson1
David Griffiths2
Robert Patterson3
Ian McLoughlin4
Johnathon Bromilow5
TOTAL
GRAND TOTAL
-
-
-
-
-
2,428
2,428
2,428
8,096
15,380
15,380
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
185,714
-
-
-
-
185,714
185,714
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The value of the options and rights granted to key management personnel as part of their remuneration is calculated as at the grant date using a Black-Scholes pricing model. The amounts
disclosed as part of remuneration for the financial year, as disclosed on page 10, have been determined by allocating the grant date value on a straight-line basis over the period from grant
date to vesting date. Further details are set out in Note 12.
1. CEO Managing Director, 2. GM Commercial, 3. GM Engineering and Construction, 4.GM Asset Services East, 5.GM Saunders Civilbuild (From 1 April 2017)
14 Saunders International Limited
Directors’ Report
AUDITED REMUNERATION REPORT (Cont’d)
Remuneration of Executive Officers and Key Management Personnel
2017
Short-term Benefits
Cash
Fees/Salary
Cash
Bonus6
Non-
monetary
Benefit7
Post-
employment
Benefits
Long term employee
benefits
Superannuation
Equity settled share
based payments
Total
Percentage of
remuneration
related to
performance
Percentage of
remuneration
related to
performance
which vested in
the year8
Non-executive
Directors
Timothy Burnett
Greg Fletcher
Malcolm McComas
TOTAL
Executive Officers
Mark Benson1
David Griffiths2
Robert Patterson3
Ian McLoughlin4
Johnathon Bromilow5
$
$
$
$
$
$
112,875
55,929
60,000
228,804
387,274
192,575
213,841
185,394
50,556
-
-
-
-
-
-
-
-
207,000
36,500
29,542
16,038
23,174
-
-
14,263
11,328
-
10,723
5,871
-
16,594
35,000
18,295
26,730
23,174
4,803
-
-
-
-
185,714
2,428
2,428
2,428
8,096
123,598
61,800
60,000
245,398
851,488
242,840
273,300
245,498
63,455
%
-
-
-
-
46.1
13.2
6.8
10.4
12.8
TOTAL
1,029,640
275,754
62,091
108,002
201,094
1,676,581
GRAND TOTAL
1,258,444
275,754
62,091
124,596
201,094
1,921,979
%
-
-
-
-
74%
n/a
n/a
n/a
n/a
No director or senior management person appointed during the year received a payment as part of his or her remuneration for agreeing to hold the position. Non-executive directors have no
entitlement to cash bonus or non-monetary benefits. The key management personnel are also the senior managers of the Group.The value of the options and rights granted to key management
personnel as part of their remuneration is calculated as at the grant date using a Black-Scholes pricing model. The amounts disclosed as part of remuneration for the financial year have been
determined by allocating the grant date value on a straight-line basis over the period from grant date to vesting date.
1. CEO Managing Director. 2. GM Commercial. 3. GM Engineering and Construction. 4. GM Asset Services East. 5. GM Saunders Civilbuild. The amount of remuneration covers the period
from 1 April 2017 to 30 June 2017. 6. Cash bonuses are disclosed on an accruals basis and represent the amount earned in respect of the current financial year. 7. Non-monetary benefits
relate to motor vehicle or other expenses packaged within the employee’s salary package. 8. Excludes equity settled share based payments. Cash bonuses are discretionary and are determined
by the Board at the end of the financial year.
15 AUDITED REMUNERATION REPORT (Cont’d)
2016
Short-term Benefits
Cash
Fees/Salary
Cash
Bonus7
Non-
monetary
Benefit8
Post-
employment
Benefits
Long term employee
benefits
Superannuation
Equity settled share
based payments
Total
Percentage of
remuneration
related to
performance
Percentage of
remuneration
related to
performance
which vested in
the year9
Saunders International Limited
Directors’ Report
$
$
$
$
$
$
Non-executive
Directors
Timothy Burnett
Greg Fletcher
(Appointed 1/07/15)
Malcolm McComas
TOTAL
Executive Officers
John Power1
Mark Benson2
Andrew Auzins3
Robert Patterson4
Ian McLoughlin5
Yong Wang6
123,599
55,929
56,000
235,528
298,092
368,774
210,258
213,841
185,394
134,914
-
-
-
-
30,491
234,667
-
27,025
22,750
6,300
TOTAL
1,411,273
321,233
-
-
-
-
1,524
32,850
13,180
15,049
14,575
14,273
91,451
-
5,871
-
5,871
13,058
32,083
24,203
26,730
23,174
14,857
134,105
%
-
-
-
-
8.9
47.8
-
9.8
11.1
4.0
123,599
61,800
56,000
241,399
343,165
830,603
247,641
283,352
251,093
170,815
%
-
-
-
-
50%
85%
n/a
n/a
n/a
n/a
-
-
-
-
-
162,229
-
707
5,200
471
168,607
2,126,669
GRAND TOTAL
1,646,801
321,233
91,451
139,976
168,607
2,368,068
1. Managing Director – Resigned as Managing Director on 4/10/15. Resigned as Director on 12/11/15.
2. CEO Managing Director – Appointed 5/10/15.
3. General Manager- Maintenance – Fully retired 30/04/16.
4. GM Commercial.
5. GM Engineering Construction & Facility Maintenance.
6. Engineering Manager.
7. Cash bonuses are disclosed on an accruals basis and represent the amount earned in respect of the current financial year.
8. Non-monetary benefits relate to motor vehicle or other expenses packaged within the employee’s salary package.
9. Excludes equity settled share based payments. Cash bonuses are discretionary and are determined by the Board at the end of the financial year.
16 Saunders International Limited
Directors’ Report
Changes in State of Affairs
There was no significant change in the state of affairs of the Group during the financial year.
Subsequent Events
There has not been any matter or circumstance, not already disclosed, occurring subsequent to the end of the financial year
that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the
state of affairs of the Group in future financial years.
Future Developments
Disclosure of other information regarding likely developments in the operations of the Group in future financial years and the
expected results of those operations is likely to result in unreasonable prejudice to the Group. Accordingly, this information has
not been disclosed in this report.
Indemnification of Officers and Auditors
During the financial year, the Group paid a premium in respect of a contract insuring the directors of the Group, the Group
secretary, and all executive officers of the Group 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 Group 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 Group or of any related body corporate against a liability incurred as such an
officer or auditor.
Non-audit Services
Details of amounts paid or payable to the auditor for non-audit services are outlined in Note 27 to the financial statements.
During this financial year there were no amounts paid or payable for non-audit services.
Auditor’s Independence Declaration
The auditor’s independence declaration is included on page 18 of the annual report.
Rounding Off of Amounts
The Group is of the kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191,
dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the directors’ report and the financial
statements are rounded off to the nearest thousand dollars, unless otherwise indicated.
This directors’ report is signed in accordance with a resolution of directors made pursuant to s298(2) of the Corporations Act
2001.
On behalf of the Directors
Mark Benson
Director
Sydney, 23 August 2017
Timothy Burnett
Director
Sydney, 23 August 2017
17 Auditor’s Independence Declaration
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Eclipse Tower
Level 19
60 Station Street
Parramatta NSW 2150
PO Box 38
Parramatta NSW 2124 Australia
DX: 28485
Tel: +61 (0) 2 9840 7000
Fax: 02 9840 7001
www.deloitte.com.au
23 August 2017
Dear Board Members
Saunders International Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of
independence to the directors of Saunders International Limited.
As lead audit partner for the audit of the financial statements of Saunders International Limited for the financial year
ended 30 June 2017, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Nathan Balban
Partner
Chartered Accountants
18 Deloitte Touche Tohmatsu
ABN 74 490 121 060
Eclipse Tower
Level 19
60 Station Street
Parramatta NSW 2150
PO Box 38
Parramatta NSW 2124 Australia
DX: 28485
Tel: +61 (0) 2 9840 7000
Fax: 02 9840 7001
www.deloitte.com.au
Independent Auditor’s Report to the Members of
Saunders International Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Saunders International Limited (the “Company”) and its subsidiaries (the
“Group”) which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial performance
for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the
directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited.
19 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.
Key Audit Matter
How the scope of our audit responded to the Key Audit
Matter
Recognition of revenue and work in progress on
construction contracts
Our procedures included, but were not limited to:
Refer to Note 1(b) ‘Construction Contracts’, Note 1(h)
‘Revenue’, Note 2 ‘Critical accounting judgements
and key sources of estimation uncertainty’, Note 3
‘Revenue’ and Note 10 ‘Construction Contracts’.
•
•
As at 30 June 2017 the Group’s revenue from
construction contracts is $45.6 million.
Construction revenue is recognised by management
after assessing all factors relevant to each contract.
Significant management estimation is required in
assessing the following:
•
•
•
•
Estimation of total contract revenue, including
determination of contractual entitlement and
assessment of
the probability of customer
approval of variations;
Estimation of total contract costs, including
revisions to total forecast costs for events or
conditions that occur during the performance of
the contract, or are expected to occur to
complete the contract;
Estimation of project contingencies; and
Estimation of stage of completion
determination of project completion date.
including
Evaluating management’s processes and key controls in
respect of the recognition of revenue and work in
progress on construction contracts; and
Testing a sample of contracts and:
§
§
agreed the contract terms to the initial contract price;
tested a sample of costs incurred to date to
supporting documentation;
assessed the forecast costs to complete through
discussion and challenge of project managers and
finance personnel;
recalculated the percentage of completion based on
costs incurred to date relative to total forecast costs;
obtained evidence of approved variations
to
supporting documentation;
assessed
allowances within forecast costs;
evaluated exposure to liquidated damages for late
delivery of works; and
challenged management’s ability to forecast
margins on contracts by analysing the accuracy of
previous margin forecasts to actual outcomes.
appropriateness
§
§
§
§
§
§
contingency
of
We also assessed the appropriateness of the disclosures in
notes 1(b), 1(h), 2, 3 and 10 to the financial statements.
Acquisition of Civilbuild Pty Ltd and Civilbuild
Precast Pty Ltd
Our procedures included, but were not limited to:
Refer to Note 25 ‘Business Combination’.
On 1 April 2017 the Group acquired the assets and
liabilities of Civilbuild Pty Ltd and Civilbuild Precast
Pty Ltd.
Significant judgment was required by management in
determining the fair value of the assets and liabilities
acquired, and the corresponding determination of the
bargain purchase recognised in profit or loss.
•
•
•
•
•
•
•
Reading the Sale & Purchase Agreement to understand
the transaction and ensure appropriate accounting;
Evaluating the purchase price allocation performed by
management including the assessment of the fair values
applied to the assets and liabilities acquired;
Subjecting the key assumptions to sensitivity analysis,
Engaging our valuation specialists to assess the key
assumptions and methodology used by management in
determining the valuation of the separately identifiable
assets acquired;
Recalculating the valuation of the purchase
consideration, including the amount attributable to the
equity component;
Verifying the calculation of the deferred liability amount
based on the normalised financial performance of the
acquired business between acquisition date and year
end; and
Recalculating the amount of the bargain purchase
recognised in profit or loss.
We also assessed the appropriateness of the disclosures in
Note 25 to the financial statements.
20 Other Information
The directors are responsible for the other information. The other information comprises the information included in the Group’s
annual report for the year ended 30 June 2017, but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
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 has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is 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.
21 •
•
•
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.
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, related safeguards.
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.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 10 to 16 of the Directors’ Report for the year ended 30 June
2017.
In our opinion, the Remuneration Report of Saunders International Limited, for the year ended 30 June 2017, 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
Nathan Balban
Partner
Chartered Accountants
Sydney, 23 August 2017
22 Saunders International Limited
Directors’ Declaration
Directors’ Declaration
The directors declare that: -
(a)
(b)
(c)
in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable;
in the directors’ opinion, the attached financial statements are in compliance with International Financial Reporting
Standard, as stated in Note 1 to the financial statements;
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
(d)
the directors have been given the declarations required by s.295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made pursuant to s295(5) of the Corporations Act 2001.
On behalf of the Directors
Mark Benson
Director
Sydney, 23 August 2017
Timothy Burnett
Director
Sydney, 23 August 2017
23 Saunders International Limited
Consolidated Statement of Profit or Loss and other Comprehensive Income
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the Financial Year Ended 30 June 2017
Revenue
Other income
Materials and third-party costs charged to projects
Employee benefits expense
Depreciation expense
Motor vehicle expenses
Occupancy and operating lease expenses
Acquisition costs
Other expenses
Profit before income tax
Income tax benefit / (expense)
Profit for the year
Other comprehensive income
Note
2017
$’000
2016
$’000
3
4
4
4
4
4
5
45,805
41,828
1,375
66
(21,843)
(15,814)
(17,212)
(18,099)
(726)
(276)
(882)
(740)
(619)
(365)
(1,110)
-
(4,165)
(2,182)
1,336
92
1,428
-
3,705
(814)
2,891
-
Total comprehensive income for the year
1,428
2,891
Earnings per share
Basic (cents per share)
Diluted (cents per share)
14
14
1.76
1.76
3.68
3.65
The accompanying notes form part of these financial statements.
24 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2017
Saunders International Limited
Consolidated Statement of Financial Position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax asset
Other
Total current assets
Non-current assets
Property Plant and equipment
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Deferred revenue
Provisions
Borrowings
Total current liabilities
Non-current liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Shares buy-back reserve under employee share plan
Share based payments reserve
Retained earnings
Total equity
The accompanying notes form part of these financial statements.
Note
19(a)
6
5
7
5
8
9
11
24
11
12
12
12
13
2017
$’000
2016
$’000
10,942
11,896
290
90
557
14,347
7,085
171
28
95
23,775
21,726
10,086
259
10,345
1,806
864
2,670
34,120
24,396
8,295
1,111
1,784
2,500
3,269
1,416
2,009
-
13,690
6,694
411
411
405
405
14,101
7,099
20,019
17,297
11,588
(351)
460
8,322
7,927
(336)
388
9,318
20,019
17,297
25 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Financial Year Ended 30 June 2017
Opening Balance
Profit for the year
Total comprehensive income
Treasury shares vested during the current year
Dividends paid
Shares issued during the current year
Share-based payments expense
Balance at 30 June 2016
Profit for the year
Total comprehensive income
Dividends paid
Shares Issued on Business Acquisition (Note 25)
Shares Issued under DRP (Note 12)
Shares issued during the current year
Share-based payments expense
Balance at 30 June 2017
The accompanying notes form part of these financial statements.
Saunders International Limited
Consolidated Statement of Changes in Equity
Shares
(Issued)/Vested
Under
Employee
share plan
$’000
(413)
Share
Based
Payments
reserve
$’000
216
Issued
capital
$’000
7,914
-
-
13
-
-
-
-
-
77
-
-
-
7,927
(336)
-
-
-
2,284
1,235
142
-
11,588
-
-
-
-
-
(15)
-
(351)
Retained
earnings
$’000
11,198
2,891
2,891
-
(4,771)
-
-
9,318
1,428
1,428
(2,424)
-
-
-
-
8,322
Total
$’000
18,915
2,891
2,891
90
(4,771)
-
172
17,297
1,428
1,428
(2,424)
2,284
1,235
-
199
20,019
-
-
-
-
-
172
388
-
-
-
-
-
(127)
199
460
26 CONSOLIDATED STATEMENT OF CASH FLOWS
for the Financial Year Ended 30 June 2017
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received and other costs of finance paid
Income taxes paid
Saunders International Limited
Consolidated Statement of Cash Flows
Note
2017
$’000
2016
$’000
47,860
42,268
(48,243)
(40,235)
230
(171)
357
(821)
Net cash (used in) / provided by operating activities
19(b)
(324)
1,569
Cash flows from investing activities
Payments for plant and equipment
Payments for Business Acquisition
Cash received on asset sales
7
25
(744)
(3,774)
-
(439)
-
24
Net cash used in investing activities
(4,518)
(415)
Cash flows from financing activities
Dividends paid to shareholders
Proceeds from borrowings
Proceeds from issue of shares
(2,424)
(4,771)
2,500
1,361
-
90
Net cash provided by / (used in) financing activities
1,437
(4,681)
Net (decrease) / increase in cash and cash equivalents
(3,405)
(3,527)
Cash and cash equivalents at the beginning of the financial year
14,347
17,874
Cash and cash equivalents at the end of the financial year
19(a)
10,942
14,347
The accompanying notes form part of these financial statements.
27 Saunders International Limited
Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
1.
SUMMARY OF ACCOUNTING POLICIES
Statement of Compliance
The financial statements are general purpose financial statements which have been prepared in accordance with the
Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law.
For the purpose of preparing the financial statements, the Group is a for-profit entity.
Accounting Standards include Australian Accounting Standards (‘AAS’). Compliance with AAS ensures that the financial
statements and notes of the Group comply with International Financial Reporting Standards (‘IFRS’).
The financial statements were authorised for issue by the directors on 23 August 2017.
Basis of Preparation
The financial statements for the Group have been prepared on the basis of historical cost. Cost is 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.
The Group is of the kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument
2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the directors’ report
and the financial statements are rounded off to the nearest thousand dollars, unless otherwise indicated.
Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the Group’s accounting policies, management is required to make judgments, estimates and
assumptions about carrying values 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.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods. Refer to Note 2 for a discussion of
critical judgements in applying the entity’s accounting policies, and key sources of estimation uncertainty.
Adoption of new and revised accounting standards
In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the
Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual
reporting period. There has been no material impact of these changes on the Group's accounting policies.
Impact of adoption of AASB 15 Revenue from Contracts with Customers
The AASB has issued AASB15 Revenue from Contracts with Customers, with an effective date of 1 January 2018. This
new standard will apply to the Group for the first time for the year ended 30 June 2019. The key principle of this standard
is that an entity will identify separate performance obligations and recognise revenue when it transfers promised goods
or services to customers for an amount that reflects its expected consideration. The Standard introduces far more
prescriptive and detailed implementation guidance than was included in AASB 118, particularly in relation to the
identification of separable performance obligations and revenue recognition criteria, including disclosures. Management
is still in the process of completing its AASB 15 impact study, including assessment and documentation of the key
changes and implications to revenue recognition policies and disclosures for the financial statements, for the year ended
30 June 2019.
Impact of adoption of AASB 16 Leases
AASB 16 introduces a comprehensive model for the identification of lease arrangements and accounting treatments for
both lessors and lessees. AASB 16 will supersede the current lease guidance including AASB 117 Leases and the
related interpretations when it becomes effective. The AASB 16 will be effective for annual periods beginning on or after
1 January 2019. This new standard will apply to the Group for the first time for the year ended 30 June 2020. Early
application is permitted, provided the new revenue standard, AASB 15 Revenue from Contracts with Customers, has
been applied, or is applied at the same date as AASB 16.
AASB 16 distinguishes leases and service contracts on the basis of whether an identified asset is controlled by a
customer. Distinctions of operating leases (off balance sheet) and finance leases (on balance sheet) are removed for
lessee accounting, and is replaced by a model where a right-of-use asset and a corresponding liability have to be
recognised for all leases by lessees (i.e. all on balance sheet) except for short-term leases and leases of low value
assets.
28 Saunders International Limited
Notes to the Financial Statements
Impact of adoption of AASB 16 Leases (cont.)
The right-of-use asset is initially measured at cost and subsequently measured at cost (subject to certain exceptions)
less accumulated depreciation and impairment losses, adjusted for any re-measurement of the lease liability. The lease
liability is initially measured at the present value of the lease payments that are not paid at that date. Subsequently, the
lease liability is adjusted for interest and lease payments, as well as the impact of lease modifications, amongst others.
Furthermore, the classification of cash flows will also be affected as operating lease payments under AASB 117 are
presented as operating cash flows; whereas under the AASB 16 model, the lease payments will be split into a principal
and an interest portion which will be presented as financing and operating cash flows respectively. Furthermore,
extensive disclosures are required by AASB 16.
At 30 June 2017, the Group has non-cancellable operating lease commitments of $1.5 million. AASB 117 does not
require the recognition of any right-of-use asset or liability for future payments for these leases; instead, certain
information is disclosed as operating lease commitments in note 18 to the financial statements. A preliminary assessment
indicates that these arrangements will meet the definition of a lease under AASB 16, and hence the Group will recognise
a right-of-use asset and a corresponding liability in respect of all these leases unless they qualify for low value or short-
term leases upon the application of AASB 16. The new requirement to recognise a right-of-use asset and a related lease
liability is expected to have a significant impact on the amounts recognised in the Group’s consolidated financial
statements and the directors are currently assessing its potential impact.
(a)
Cash and Cash Equivalents
Cash of the Group comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.
(b)
Construction Contracts
When the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference
to the stage of completion of the contract activity at the statement of financial position date, as measured by the proportion
of that contract costs incurred for work performed to date in relation to the estimated total contract costs, except where
this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments
are included to the extent that they have been agreed with the customer.
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent
of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period
in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an
expense immediately.
(c)
Employee Benefits
A liability of the Group 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 employee benefits expected to be settled within 12 months, are measured at their
nominal values using the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are measured
as 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.
(d)
Income Tax
Current Tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable
profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively
enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that
it is unpaid (or refundable).
Deferred Tax
Deferred tax is recognised on temporary differences between the tax base of an asset or liability and its carrying amount
in the financial statements. The tax base of an asset or liability is the amount attributed to that asset or liability for tax
purposes.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are
recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible
temporary differences or unused tax losses and tax offsets can be utilised.
29 Saunders International Limited
Notes to the Financial Statements
(d)
Income Tax (cont.)
However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from
the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither
taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable
temporary differences arising from the initial recognition of goodwill.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the
asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted by reporting date. 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 reporting date, to recover or settle
the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset 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 Period
Current and deferred tax is recognised as an expense or income in profit and loss, except when it relates to items credited
or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from
the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill
or excess.
(e)
Leased Assets
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where
another systematic basis is more representative of the time pattern in which economic benefits from the leased asset
are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which
they are incurred.
(f)
Plant and Equipment
Plant and equipment and leasehold improvements are stated at cost less accumulated depreciation and impairment.
Note 7 provides more detail. Cost includes expenditure that is directly attributable to the acquisition of the item. In the
event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the
amounts payable in the future to their present value as at the date of acquisition.
Depreciation is provided on plant and equipment. Depreciation is calculated on a straight-line basis so as to write off the
net cost 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, with the effect
of any changes recognised on a prospective basis. Freehold Land is not depreciated.
The following estimated useful lives are used in the calculation of depreciation: -
Buildings
Plant and Equipment
Office Furniture and Equipment
40 years
3 – 20 years
3 – 7 years
(g)
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 reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is
measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those
cashflows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,
the 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.
(h)
Revenue
Revenue is measured at the fair value of the consideration received or receivable.
Rendering of services
Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract.
Revenue from time and material contracts is recognised at the contractual rates as labour hours are derived and direct
expenses incurred.
Revenue from construction contracts is recognised in accordance with the accounting policy outlined in Note 1(b).
30 Saunders International Limited
Notes to the Financial Statements
(h)
Revenue (cont.)
Interest revenue
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial
asset.
(i)
Financial Assets
Loans and receivables
Trade receivables, loans and other receivables are recorded at amortised cost less impairment.
(j)
Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
i. 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
ii.
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 as operating
cash flows.
(k)
Impairment of Assets
At each reporting date, the Group reviews the carrying amounts of its tangible 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). Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating
unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows 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 (cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment
loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased
to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment or loss been recognised for the asset
(cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately, unless
the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation
increase.
(l)
Contributed Equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of income tax.
Incremental costs directly attributable to the issue of new shares for the acquisition of a business are not included in the
cost of the acquisition as part of the purchase consideration.
31 Saunders International Limited
Notes to the Financial Statements
(m)
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities (including
structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company:
- has power over the investee;
- is exposed, or has rights, to variable returns from its involvement with the investee; and
- has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the
voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The
Company considers all relevant facts and circumstances in assessing whether or not the Company's voting rights in an
investee are sufficient to give it power, including:
- the size of the Company's holding of voting rights relative to the size and dispersion of holdings of
- the other vote holders;
- potential voting rights held by the Company, other vote holders or other parties;
- rights arising from other contractual arrangements; and
- any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct
the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders'
meetings.
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 and to the non-controlling
interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-
controlling interests even if this results in the non-controlling interests having a deficit balance.
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.
Changes in the Group's ownership interests in existing subsidiaries
Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the
subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-
controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference
between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or
received is recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the
difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained
interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any
non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that
subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary
(i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable
IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded
as the fair value on initial recognition for subsequent accounting under IAS 39, when applicable, the cost on initial
recognition of an investment in an associate or a joint venture.
(n)
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 the assets
transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests
issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally 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 IAS 12 Income Taxes and IAS 19 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 IFRS 2 at the acquisition date); and
assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations are measured in accordance with that Standard.
-
-
32 Saunders International Limited
Notes to the Financial Statements
(n)
Business combinations (cont.)
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. If, after
reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed
exceeds 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 interest in the acquiree (if any), the excess is recognised immediately in
profit or loss as a bargain purchase gain. Non-controlling interests that are present ownership interests and entitle their
holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at
fair value or at the non-controlling interests' proportionate share of the recognised amounts of the acquiree's
identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of
non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.
When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from
a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and
included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent
consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding
adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information
obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and
circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as
measurement period adjustments depends on how the contingent consideration is classified.
Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its
subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a
liability is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent
Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.
When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is
remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognised in profit or loss.
Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in
other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest
were disposed of. If the initial accounting for a business combination is incomplete by the end of the reporting period in
which the combination occurs, the Group reports provisional amounts for the items for which the accounting is
incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets
or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the
acquisition date that, if known, would have affected the amounts recognised at that date.
(o)
Share Based Payments
Equity-settled share-based payments with employees and others providing similar services are measured at the fair
value of the equity instrument at the grant date. Fair value is measured by use of a Black-Scholes-Mertin model, which
requires the input of highly subjective assumptions.
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.
Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and
services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair
value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders
the service.
For cash-settled share-based payments, a liability equal to the portion of the goods or services received is recognised at
the current fair value determined at each reporting date.
33 Saunders International Limited
Notes to the Financial Statements
(p)
Adoption of new and revised Accounting Standards
At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but
not yet effective. Management is still assessing the impact on reported results on adoption of these pronouncements.
Adoption of these pronouncements may result in changes to information currently disclosed in the financial statement.
The Group does not intend to adopt any of these pronouncements before their effective dates.
Standard
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
AASB 2016-1 Amendments to Australian Accounting Standards
– Recognition of Deferred Tax Assets for Unrealised Losses
1 January 2017
30 June 2018
AASB 2016-2 Amendments to Australian Accounting Standards
– Disclosure Initiative: Amendments to AASB 107
1 January 2017
30 June 2018
AASB 2017-2 Amendments to Australian Accounting Standards
– Further Annual Improvements 2014 - 2016 Cycle
1 January 2017
30 June 2018
AASB 9 Financial Instruments
1 January 2018
30 June 2019
AASB 15 Revenue from Contracts with Customers
1 January 2018
30 June 2019
AASB 2014-10 Amendments to Australian Accounting Standards
– Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
AASB 2016-5 Amendments to Australian Accounting Standards
– Classification and Measurement of Share-based Payment
Transactions
1 January 2018
30 June 2019
1 January 2018
30 June 2019
AASB Interpretation 22 Foreign Currency Transactions and
Advance Consideration
1 January 2018
30 June 2019
AASB 16 Leases
1 January 2019
30 June 2020
IFRIC 23 Uncertainty over Income Tax Treatments
1 January 2019
30 June 2020
2. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of Saunders’ accounting policies, which are described in Note 1, the directors of the Group 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.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
Key Sources of Estimation Uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the
balance date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year.
Construction contracts
Revenue is recognised on each project by reference to the stage of completion of the project. The method of calculating
the percentage completion of the project involves an element of judgement based on future project costs and profitability
of each project. The information used to forecast these costs is based on historical events and current economic data on
a customer by customer basis. The value of construction contracts which are in progress at the statement of financial
position date is calculated in accordance with Note 1(b).
Fair value of net assets acquired
The fair value of property acquired as part of the acquisition of Civilbuild has been determined based on independent
third party valuations.The fair value of plant and equipment acquired as part of the business combination has been
estimated based on director valuations supported by third party valuations adjusted for other relevant considerations.
Any reassessment of fair values would impact the discount on acquisition.
34 Saunders International Limited
Notes to the Financial Statements
3.
REVENUE
Revenue from continuing operations consisted of the following items:
Revenue from rendering of services
Interest received
4.
PROFIT FOR THE YEAR
Other income
Discounts and rebates
Discount on acquisition (Note 25)
Profit on sale of asset
Profit before income tax has been arrived at after charging the following expenses:
Cost of sales
Depreciation
Plant and equipment
Office furniture and equipment
Transaction costs written off (Note 25)
Operating lease rental expenses:
Lease payments
Employee benefits expense:
Post-employment benefits – defined contributions
Payroll tax expense
Employee Share Plan
Salary and wages
2017
$’000
2016
$’000
45,577
41,471
228
357
45,805
41,828
2017
$’000
20
1,355
-
1,375
2016
$’000
42
-
24
66
35,142
34,185
676
50
726
740
561
58
619
-
882
1,110
1,326
935
199
14,752
17,212
1,503
1,003
172
15,421
18,099
35 5.
INCOME TAX
Saunders International Limited
Notes to the Financial Statements
Income tax recognised in profit
Income tax expense comprises:
Current income tax expense
R&D tax concession
Deferred tax expense relating to the origination and reversal of temporary
differences
Total income tax (benefit) / expense
The prima facie income tax expense on pre-tax accounting profit reconciles to
income tax expense in the financials as follows:
Profit before taxation
Income tax at 30%
Deferred tax asset in relation to transaction costs not brought to account
Non-taxable gain on acquisition
Other
R&D tax concession
Total income tax (benefit) / expense
Current tax asset – income tax receivable
2017
$’000
2016
$’000
102
(304)
110
(92)
1,336
401
170
(407)
48
(304)
(92)
90
984
(299)
129
814
3,705
1,113
-
-
-
(299)
814
28
The income tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate
entities on taxable profits under Australian tax law. There has been no change in the corporate tax rate when
compared with the previous reporting period.
Deferred Tax Balances
The deferred tax expense above is itemised as follows:
2017
Deferred tax assets
Employee benefits
Accruals and other
Deferred tax asset
2017
Deferred tax liabilities
Property, plant and equipment
Deferred tax liability
Net deferred tax asset
2016
Deferred tax assets
Employee benefits
Accruals and other
Deferred tax asset
Opening
balance
(Charged)/
Credited to
income
Acquisition
$’000
$’000
$’000
131
-
131
(626)
(626)
(495)
749
115
864
-
-
864
(156)
46
(110)
-
(110)
(110)
Opening
balance
Charged
to income
$’000
$’000
876
117
993
(127)
(2)
(129)
Closing
balance
$’000
724
161
885
(626)
(626)
259
Closing
Balance
$’000
749
115
864
36 6.
TRADE AND OTHER RECEIVABLES
Trade receivables(i)
Saunders International Limited
Notes to the Financial Statements
2017
$’000
11,896
2016
$’000
7,085
(i)
The average credit period on sale of goods and rendering of services is approximately 35 days. No interest is
charged on trade receivables. Each receivable 60 days overdue has been reviewed to assess whether there
is a risk that it might be irrecoverable. On the basis of this review, management has provided for trade
receivable balances which may be at risk of being irrecoverable.
Ageing of past due but not impaired.
60 days over the due date
96
375
7.
PROPERTY, PLANT AND EQUIPMENT
Impairment Testing
Saunders International Limited reviews the carrying amounts of its tangible assets annually at each reporting date to
determine whether there is any impairment. As at 30 June 2017 the directors reviewed the future budgets of the
Group to determine whether there are any indications of impairment. No indicators of impairment were noted and no
impairment losses are recorded.
Land at
Cost
Buildings
at Cost
Plant and
Equipment
at Cost
Office
Furniture
and
Equipment
at Cost
$’000
$’000
$’000
$’000
Total
$’000
9,082
439
(928)
8,593
744
8,286
-
-
-
-
-
-
1,150
-
8,379
378
(889)
7,868
706
3,707
-
703
61
(39)
725
38
29
-
1,150
12,281
792
17,623
-
-
-
-
-
7
7
-
6,622
(889)
561
6,294
-
693
6,987
1,574
5,294
468
(33)
58
493
-
50
543
232
249
7,090
(922)
619
6,787
-
750
7,537
1,806
10,086
3,400
1,143
-
-
-
-
-
3,400
-
3,400
-
-
-
-
-
-
-
-
Gross carrying amount
Balance at 1 July 2015
Additions
Disposals
Balance at 30 June 2016
Additions
Additions through Business Acquisition
(Note 25)
Disposals
Balance at 30 June 2017
Accumulated depreciation
Balance at 1 July 2015
Disposals
Depreciation expense
Balance at 30 June 2016
Disposals
Depreciation expense
Balance at 30 June 2017
Net book value
As at 30 June 2016
As at 30 June 2017
37 8.
TRADE AND OTHER PAYABLES
Current
Trade payables (i)
Goods and services tax payable
Accruals
Deferred consideration (ii) (Note 25)
Saunders International Limited
Notes to the Financial Statements
2017
$’000
5,916
245
1,543
591
8,295
2016
$’000
1,732
216
1,321
-
3,269
(i)
(ii)
The average credit period on purchases of goods is 1 month. No interest is charged on the trade payables.
The Group has a policy that all payables are paid within the agreed credit timeframe.
Represents earn out of $266,000 and Work in Progress purchased of $325,000.
9.
DEFERRED REVENUE
Revenue received in advance under construction contracts (Note 10)
10.
CONSTRUCTION CONTRACTS
2017
$’000
1,111
2016
$’000
1,416
2017
$’000
2016
$’000
Contracts in progress at the reporting date:
Construction costs incurred plus recognised profits less recognised losses to date
31,541
42,478
Less: progress billings
(32,652)
(43,894)
(1,111)
(1,416)
Recognised and included in the financial statements as revenue received in advance
under construction contracts (Note 9)
1,111
1,416
At 30 June 2017, no cash retentions were held by customers for contract work
(2016: $nil). Advances received from customers for contract work amounted to $Nil
(2016: $1,540,000).
11.
PROVISIONS
Current
Employee benefits
Non-current
Employee benefits
Lease make good
2017
$’000
2016
$’000
1,784
2,009
141
270
411
135
270
405
38 Saunders International Limited
Notes to the Financial Statements
12.
ISSUED CAPITAL
85,639,278 fully paid ordinary shares (2016: 78,720,000)
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Ordinary shares
Ordinary shares at beginning of financial year
Ordinary shares issued during the current year
Ordinary shares at end of financial year
Fully paid ordinary shares
Balance at beginning of financial year
Shares issued on business acquisition at fair value (i) (Note 25)
Shares issued under DRP
Shares issued during the year
Balance at end of financial year
Treasury shares under employee share plan
Balance at beginning of financial year
Treasury shares vested during the year
Share issued during the year
Balance at end of financial year
Issued capital
2017
$’000
11,237
2016
$’000
7,591
2017
Number
2016
Number
78,720,000
78,560,000
6,919,278
160,000
85,639,278
78,720,000
2017
$’000
7,927
2,284
1,235
142
2016
$’000
7,914
-
-
13
11,588
7,927
(336)
-
(15)
(351)
(413)
77
-
(336)
11,237
7,591
(i) Shares were issued at the market value on the day of settlement. The contract for the purchase stated a cap and
collar amount to which the shares would be issued.
Reserves`
Nature and purpose of reserves
(a) Share buyback reserve
The value of shares bought back are allocated to this reserve
(b) Share-based payments reserve
The share-based payments reserve is for the fair value of options granted and recognised to date but not yet exercised,
and treasury shares purchased and recognised to date which have not yet vested.
39 Saunders International Limited
Notes to the Financial Statements
Employee Share Plan
The Board has approved and implemented an Employee Share Plan (“ESP”).
Under the ESP, the Group provides interest free loans to employees to acquire shares in Saunders International Limited,
at a specified price per share. The loans are secured by the shares acquired by the eligible employees. The shares will
vest and the loans will be repaid, upon a specified anniversary of the issue of the shares. If an eligible employee’s
employment with the Group is terminated prior to the specified anniversary of the issue of the shares, the shares will be
forfeited, and the Group will be entitled to the total amount raised pursuant to the divestment of the shares. The shares are
accounted for as in substance options.
Each employee share option converts into one ordinary share of Saunders International Limited on exercise. No amounts
are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights.
Options may be exercised at any time from the date of vesting to the date of their expiry.
At balance date, a total of 10 tranches of the ESP have been issued.
Tranche 3: During the financial year 10,000 shares forfeited. 160,000 shares vested
Tranche 4: During the financial year 10,000 shares forfeited and have now been extended to February 2018
Tranche 5: During the financial year 10,000 shares forfeited
Tranche 6: During the financial year 10,000 shares forfeited
Tranche 7: Offer of 200,000 in October 2015 with all offers accepted
Tranche 8: Offer of 400,000 in January 2016 with all offers accepted
Tranche 9: Offer of 230,000 in February 2016 with all offers accepted. 20,000 shares forfeited
Tranche 10: Offer of 355,000 in February 2017 with all offers accepted.
The fair value of the share options granted during the financial year is included in below table. Options have been valued
using Black Scholes pricing model. Expected volatility is based on the historical share price volatility over the past 3 years.
Two individual employees hold more than 200,000 options under the ESP.
Details of the fair value assumptions used are as follows:
Tranche 4
Tranche 5
Tranche 6
Tranche 7
Tranche 8
Tranche 9
Tranche 10
Grant Date
Feb 2013
Feb 2014
Feb 2015
Oct 2015
Jan 2016
Feb 2016
Feb 2017
Grant Price
$0.83
$0.85
$0.72
$0.59
$0.58
$0.58
$0.58
Opening Volume
160,000
160,000
150,000
-
-
-
-
New grants
-
-
-
200,000
400,000
230,000
355,000
Forfeitures
(10,000)
(10,000)
(10,000)
-
-
(20,000)
-
Closing Volume
150,000
150,000
140,000
200,000
400,000
210,000
355,000
Exercise Price
Expected Volatility
$0.83
45%
$0.83
45%
$0.71
45%
$0.71
45%
$0.58
45%
Option Life
4 years
4 years
4 years
4 years
4 years
Dividend Yield
0%
0%
0%
Risk Free Interest
Rate
Grant date fair
value
3.00%
5.15%
6.25%
$0.12
$0.12
$0.16
7.50%
1.88%
$0.12
7.50%
2.05%
$0.12
$0.58
45%
4 years
10.00%
1.72%
$0.07
$0.58
45%
4 years
5.60%
1.72%
$0.06
There has been no alteration of the terms and conditions of the above share-based payment arrangements since the grant date except
for an extension of Tranche 4 until February 2018 as set out above.
40 Saunders International Limited
Notes to the Financial Statements
Movement in share options during the year
The following reconciles the share options outstanding at the beginning and end of the year.
Balance at beginning of year
Granted during the year
Forfeited during the year
Exercised during the year
Balance at end of year
Exercisable at end of year
2017
2016
Number of
options
Weighted
average
exercise price
Number of
options
Weighted
average
exercise price
1,250,000
355,000
-
-
1,605,000
-
0.67
0.58
-
-
0.65
690,000
830,000
(110,000)
(160,000)
1,250,000
-
0.72
0.60
0.73
0.48
0.67
The following share options were exercised during the year:
2017
Number
of
options
exercised
Share
price at
exercise
date
Exercise
date
2016
Number
of
options
exercised
Share
price at
exercise
date
Exercise
date
Tranche 3
-
-
-
3 Mar 2016
160,000
56 cents
Performance Right Plan
The Saunders International Rights Plan was approved by the Board and approved by shareholders at the Annual General
Meeting in October 2015.
The features of the long-term incentive comprises the grant of equity in the form of Performance Rights which vest over a three
year period. The maximum number of Performance Rights will vest only if stretch objectives for each tranche are achieved. Half
of the Performance Rights will vest if the target objectives are achieved. The end of the measurement period for a tranche of
Performance Rights will be extended by up to two years at the Board’s discretion if significantly less than target vesting would
have been achieved for that tranche at the end of the measurement period, adjusted for the pro-rata increase in hurdles to take
into account the additional time. The two vesting conditions that will be used will be relative total shareholder return (RTSR) and
normalised earnings per share growth (NEPSG).
RTSR will be measured by comparing the Group’s TSR over the measurement period with the TSRs achieved by companies
that are in a comparator group and remain listed on the ASX. TSR is the percentage return generated from an investment in a
Group’s shares over the measurement period assuming that dividends are reinvested into the Group’s shares. NEPSG will be
assessed as the compound annual growth rate (CAGR) reflected in the increase in normalised earnings per share (EPS) from
the base year (FY2016) for tranches 1 to 8 and (FY2017) for tranches 9 and 10 to normalised EPS for the final year of the
measurement period. Normalised EPS will relate to normal operations and will exclude abnormal items as determined by the
Board in its discretion.
For the phase in tranches where the measurement period is less than three years, performance will be evaluated by the Board’s
assessment of the establishment of strategic foundations for superior TSR and NESPG over the long term. For future grants, it
is currently intended that the qualitative vesting conditions will be removed (but retaining TSR and NESPG), and that
measurement periods will be no shorter than 3 years.
The vesting scale will be applied to the tranches subject to objective measurement of Saunders performing relative to the
comparator group and NEPSG, as appropriate, with the vesting scale ranging continuously from 0% for very poor performance
to 100% for very good performance with 50% for on-target performance.
The long-term incentive is aimed at aligning remuneration with the longer term performance of the Group and retaining the long-
term services of the key management personnel.
41 Saunders International Limited
Notes to the Financial Statements
The Managing Director participates in the Saunders International Rights Plan. This plan is part of the long term incentive
component of his remuneration package. The total number of Performance Rights issued under the plans is 1,523,960 of which
216,076 have vested.
Details of the fair value assumptions used are as follows:
Tranche 1 & 2
Tranche 3
Tranche 4 & 5
Tranche 6 & 7
Tranche 8
Tranche 9
Tranche 10
Grant Date
2 June 2016
2 June 2016
2 June 2016
2 June 2016
2 June 2016
1 Sept 2017
1 Sept 2017
Grant Price
$0
$0
$0
$0
$0
Opening Volume
388,954
194,477
216,076
186,197
62,066
$0
-
$0
-
New grants
Vested
-
-
-
-
Closing Volume
388,954
194,477
Exercise Price
$0
$0
-
(216,076)
-
$0
-
-
-
-
238,095
238,095
-
-
186,197
62,066
238,095
238,095
$0
$0
$0
$0
Expected Volatility
26.87%
26.87%
26.87%
26.87%
26.87%
26.87%
26.87%
Option Life
2.25 years
2.25 years
0.25 years
1.25 years
1.25 years
2.25 years
2.25 years
Dividend value
Risk Free Interest
Rate
Grant date fair
value
$0.06
1.93%
$0.41
$0.06
1.93%
$0.41
$0.06
1.93%
$0.53
$0.06
1.93%
$0.47
$0.06
1.93%
$0.47
$0.06
1.93%
$0.46
$0.06
1.93%
$0.46
There has been no alteration of the terms and conditions of the above share-based payment arrangements since the grant date
and number of options granted were outstanding at the end of the year. The weighted average exercise price of the option is
$0.00 per option and the share price on grant date was $0.54 per share for tranches 1 to 8 and $0.52 per share for tranches 9
and 10. The share options outstanding at the end of the year has a weighted average remaining contractual life of 1.25 years.
Tranche 4 and 5 were vested in September 2016.
13.
RETAINED EARNINGS
Balance at beginning of financial year
Profit for the year
Dividends provided for or paid
Balance at end of financial year
2017
$’000
9,318
1,428
(2,424)
8,322
2016
$’000
11,198
2,891
(4,771)
9,318
42 14.
EARNINGS PER SHARE
Saunders International Limited
Notes to the Financial Statements
Basic earnings per share
Diluted earnings per share
Basic earnings per share
The earnings and weighted average number of ordinary shares used in the
calculation of basic earnings per share are as follows:
Net profit
Earnings used in the calculation of basic EPS
Weighted average number of ordinary shares for the purposes of basic earnings
per share
Diluted earnings per share
Weighted average numbers of ordinary shares and potential ordinary shares used in
the calculation of diluted earnings per share reconciles to the weighted average
number of ordinary shares used in the calculation of basic earnings per share as
follows:
2017
Cents
per share
2016
Cents
per share
1.76
1.76
3.68
3.65
2017
$’000
1,428
1,428
2016
$’000
2,891
2,891
2017
No.’000
2016
No.’000
81,073
78,613
Weighted average number of ordinary shares used in the calculation of basic EPS
81,073
78,613
Shares deemed to be issued for no consideration in respect of employee options
and performance rights (a)
79
542
Weighted average number of ordinary shares and potential ordinary shares used in
the calculation of diluted earnings per share
81,152
79,155
(a) During the year ended 30 June 2017 the potential ordinary shares associated with the employee share option plan
as set out in Note 12 are anti-dilutive and therefore excluded from the weighted average number of ordinary shares
for the purposes of diluted earnings per share. The potential ordinary shares associated with the Performance
Rights, as set out in Note 12 are dilutive, and have been included in the weighted average number of ordinary shares
for the purposes of diluted earnings per share.
43 15.
DIVIDENDS
Recognised amounts
Fully paid ordinary shares
Final dividend (2016):
Fully franked at a 30% tax rate
Interim dividend (2017):
Fully franked at a 30% tax rate
Unrecognised amounts
Fully paid ordinary shares
Final dividend (2017):
Saunders International Limited
Notes to the Financial Statements
2017
Cents
per share
2.0
1.0
3.0
Total
$’000
1,574
850
2,424
2016
Cents
per share
4.0
2.0
6.0
Total
$’000
3,173
1,601
4,774
1.0
856
2.0
1,574
On 23 August 2017, the directors declared a fully franked final dividend of 1 cents per share to the holders of fully paid
ordinary shares in respect of the financial year ended 30 June 2017, to be paid to shareholders on 18 September 2017.
Franking account balance
Impact on franking account balance of dividends not recognised
Adjusted franking account balance
16.
SEGMENT INFORMATION
2017
$’000
2,648
(366)
2,282
2016
$’000
3,926
(686)
3,240
The Group operates in one reporting segment being the design, construction, and maintenance of steel storage tanks
and concrete bridges.
In the current period 4 customers made up 71.1% of the revenue earned (2016: 2 customers made up 39.4% of the
revenue earned). The first customer accounted for $15,186,354, the second customer $6,062,843, the third customer
$5,673,000 and the fourth for $5,658,391.
17.
CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Contract dispute
There are no contract disputes in the current year (2016:Nil)
44 Saunders International Limited
Notes to the Financial Statements
18.
LEASES
Operating Leases
Motor Vehicle
Operating leases relate to motor vehicles. These leases are non-cancellable leases of
less than five-year term, with rent payable monthly in advance. The monthly lease
payments are fixed for the term of the leases. Additional charges are required if
proposed kilometres travelled are exceeded. There is no renewal of terms or purchase
options at the end of the term of the leases.
Non-cancellable operating lease commitments
No longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
Workshop Property
The Group is committed to a lease of the workshop property and offices that it
occupies at Condell Park, Sydney until 31st December 2020.
Non-cancellable operating lease commitments
No longer than 1 year
Longer than 1 and not longer than 5 years
2017
$’000
2016
$’000
156
136
-
292
609
309
918
157
109
-
266
355
-
355
45 19.
NOTES TO THE STATEMENT OF CASH FLOWS
Saunders International Limited
Notes to the Financial Statements
2017
$’000
2016
$’000
(a) Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents includes
cash on hand and in banks and investments in money market instruments. Cash and
cash equivalents at the end of the financial year as shown in the statement of cash
flows is reconciled to the related items in the statement of financial position as follows:
Cash and cash equivalents
10,942
14,347
(b) Reconciliation of profit for the year to net cash flows from operating activities
Profit for the year
Share-based payments expense
(Gain)/ Loss on disposal/revaluation of non-current asset
Depreciation
Non-cash transactions relating to business acquisitions
Changes in net assets and liabilities (net of acquisition):
(Increase)/decrease in assets:
Increase/(decrease) in current tax liability
(Increase)/decrease in current tax asset
Decrease in deferred tax balances
Trade and other receivables
Inventories
Other assets
Increase/(decrease) in liabilities:
Trade and other payables
Deferred revenue
Provisions
Net cash from operating activities
(c) Financing facilities
The Group’s principal financing facilities for the provision of bank guarantees as
described in Note 20 is secured by a fixed and floating charge over the assets of the
Group.
Amount used
Amount unused
1,428
2,891
199
-
726
(1,355)
-
(62)
110
172
(18)
619
-
(107)
(28)
129
(4,811)
(2,071)
(119)
(462)
4,658
20
(656)
(324)
530
8
1,245
(1,379)
(422)
1,569
3,532
6,468
10,000
3,128
3,872
7,000
46 20.
FINANCIAL INSTRUMENTS
The Group has three significant categories of financial instruments which are described below together with the policies
and risk management processes which the Group utilises:
Saunders International Limited
Notes to the Financial Statements
(a) Cash and cash equivalents
The Group deposits its cash and cash equivalents with Australian banks. Funds can be deposited in cheque accounts,
cash management accounts and term deposits. The policy is to utilise at least two Australian banks for cash management
accounts and term deposits. The policy with term deposits is to provide for liquidity with a range of maturities up to 6
months.
(b) Debtors and credit risk management
The Group has a credit risk policy to protect against the risk of debtor default. The majority of the Group’s debtors are
long term customers and are multinational oil and gas companies, government authorities and large Australian
corporations where the credit risk is considered to be low. New customers are assessed for credit risk using credit
references and reports from credit agencies as necessary.
(c) Bank guarantees
The Group has a preference to provide bank guarantees to customers in lieu of the cash retention required under
contracts. This preference is pursued subject to specific contract requirements and the Group’s bank facility
requirements.
Capital risk management
The Group’s capital structure currently consists of equity and retained earnings and there is no external long-term debt
or short term debt except for an interest-free vendor loan. The operating cash flows of the Group are used to finance
short term capital. The capital risk management is continuously reviewed as the Group has surplus cash available for
investment.
Categories of financial instruments
Financial assets
Cash and cash equivalents
Loans and receivables
Financial liabilities
Trade payables and accruals
Borrowings
Financial risk management objectives
2017
$’000
10,942
11,896
22,838
8,295
2,500
2016
$’000
14,347
7,085
21,432
3,269
-
The Group’s exposure to market risk mainly arising from interest rate risk, is disclosed (including currency risk, fair value
interest rate risk and price risk) and cash flow interest rate risk is disclosed in the interest rate sensitivity analysis below.
Credit risk is monitored monthly through continuous management of the ongoing projects.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate
liquidity risk management framework for the management of the Group’s short, medium and long-term liquidity
management requirements. The Group manages liquidity risk by continually monitoring and maintaining adequate
banking facilities. Cash flows are monitored and matched to the maturity profiles of financial assets and liabilities.
Liquidity and interest risk tables
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial assets and liabilities.
The tables have been drawn up based on the undiscounted cash flows of financial assets and liabilities based on the
earliest date on which the Group can be required to receive or pay. The table includes both interest and principal cash
flows.
47 Saunders International Limited
Notes to the Financial Statements
Weighted
average
effective
interest rate
Less
than 1
month
1 to 3
months
3 months to
2 years
%
$’000
$’000
$’000
Total
$’000
2017
Financial assets
Cash and cash equivalents
0.83%
9,940
Trade receivables
Financial liabilities
Trade payables and accruals
Borrowings
2016
Financial assets
-
-
0.00%
10,567
7,137
2,500
Cash and cash equivalents
2.64%
6,347
Trade receivables
Financial liabilities
Trade payables and accruals
Interest rate sensitivity analysis
-
-
3,211
1,002
1,315
1,094
-
8,000
3,853
-
14
64
-
-
21
10,942
11,896
8,295
2,500
14,347
7,085
3,214
-
55
3,269
The sensitivity analysis below has been determined based on exposure to interest rates for cash and cash equivalents
that were subject to interest rate fluctuations at the reporting date. At reporting date, if interest rates had been 1% higher
or lower and all other variables were held constant, the Group’s profit or loss would increase or decrease by $126,445
(2016: $161,108).
Fair value of financial instruments
No financial asset or financial liability is held at fair value. The directors consider the fair value of the financial assets and
financials liabilities to approximate their carrying amounts.
21.
DIRECTORS AND KEY MANAGEMENT PERSONNEL COMPENSATION
The board of directors approves on an annual basis the amounts of compensation for directors and key management
personnel with reference to the Group’s performance and general compensation levels in equivalent companies and
industries.
(a) Remuneration of Directors and Key Management Personnel
Short-term employee benefits
Post-employment benefits
Share-based payments
2017
$
2016
$
1,596,289
2,059,485
124,596
201,094
139,976
168,607
1,921,979
2,368,068
The names of and positions held by the key management are set out on page 15 of the Remuneration Report. Further
details of the remuneration of key management are disclosed in the Remuneration Report.
(b) Other Transactions with Key Management Personnel
There were no transactions with directors and other key management personnel apart from those disclosed in this note.
(c) Directors’ and Key Management Equity Holdings
Refer to the table on page 13 of the Remuneration Report.
48 Saunders International Limited
Notes to the Financial Statements
22.
RELATED PARTY TRANSACTIONS
The Group leases a property containing its workshop and offices from a Group ultimately beneficially owned by some
directors and key management personnel of the Group. The details of this lease are contained in Note 18. These directors
and key management personnel have interest in the related party Group as follows:
Timothy Burnett
34%
The rental rate for the year was the market rental as assessed by a Certified Practicing Valuer on 1 January 2017 plus
CPI adjustment and the Lease Term extended until 31 December 2019. Rent paid during the year amounted to $685,247
(2016: $642,785).
23.
BORROWINGS
Non-interest- bearing loan for business acquisition
A Non-Interest-Bearing loan was obtained from the Vendor of Civilbuild Pty Limited
for working capital and was repaid on 31 July 2017.
24.
SUBSIDIARIES
2017
$’000
2,500
2,500
2016
$’000
-
-
Details of the Group's material subsidiaries at the end of the reporting period are as follows.
Name of subsidiary
Principal activity
Place of
incorporation
and operation
Proportion of ownership interest
and voting power held by the Group
2017
2016
Saunders Civilbuild Pty Ltd
Bridge
construction and
maintenance
Australia
100%
Saunders Property (NSW) Pty Ltd
Real property
investments
Australia
Saunders Asset Services Pty Ltd
Maintenance
Australia
Saunders PNG Limited
Tank construction
and maintenance
PNG
100%
100%
100%
Nil
Nil
100%
Nil
25.
BUSINESS COMBINATION
(a) Summary of the acquisition
On 1 April 2017 the Group, through its newly incorporated wholly owned companies Saunders Civilbuild Pty Ltd and
Saunders Property NSW Pty Ltd, acquired the business and various assets of the Civilbuild group of companies
(Civilbuild Pty Ltd and Civilbuild Precast Pty Ltd). The consideration for the acquisition was $6,324,000, comprising
cash, shares in Saunders International and a deferred payment of $266,000 based on the normalised financial
performance of the acquired business between acquisition date and 30 June 2017. No further deferred consideration will
be payable.
Civilbuild is a Newcastle, NSW based civil engineering business established in 1969 and it specialises in the design and
construction of bridges and associated precast concrete components. Civilbuild has a strong relationship with local
government and industry and has constructed more than 200 bridges over its 40+ year history. Its offices, factories and
precast operations are based in Newcastle where it produces beams, planks, abutments and parapets for Civilbuild
projects and for infrastructure projects being undertaken by other contractors. The business has a dedicated team of
approximately 40 Engineers, Project Managers and Construction staff with extensive industry experience who have
transferred to Saunders.
The acquisition of this niche engineering and construction business is strategically important in that it should enable
Saunders to deliver more sustainable growth across multiple sectors and through market cycles. The acquisition will
diversify Saunders’ sources of earnings and give it greater exposure to the growth of new road and rail infrastructure
projects.
49 The assets and liabilities recognised as a result of the acquisition are as follows:
Saunders International Limited
Notes to the Financial Statements
Work in Progress
Land and Buildings
Plant and equipment
Employee benefits
Deferred Tax Liability
Net identifiable assets acquired
Discount on Acquisition
Purchase Consideration
2017 Fair
Value
$000
325
4,550
3,736
(437)
(495)
7,679
1,355
6,324
The discount on acquisition is attributable to the fact that the fair value of the net assets acquired is higher than the
purchase consideration and Saunders did not pay any goodwill for the business.
The initial accounting for the acquisition of Civilbuild has only been provisionally determined at the end of the reporting
period.
(b) Revenue and profit contribution
The acquired business contributed revenues of $5,087,000 and a net gain before tax of $262,000 to the group for the
period from 1 April 2017 to 30 June 2017.
Had this business combination been effected at 1 July 2016, the directors estimate that the additional
revenue contribution to the Group from continuing operations would have been approximately $20,000,000.
(c) Purchase consideration
Consideration to acquire business
Cash consideration
Fair value of shares in Saunders International issued
Deferred consideration (i)
Purchase consideration
$’000
3,774
2,284
266
6,324
(i) Under the contingent consideration arrangement, the group is required to pay the vendors an additional $266,000,
based on the normalised financial performance of the acquired business between acquisition date and year end. No
further deferred consideration will be payable.
(d) Purchase consideration – cash outflow
Outflow of cash to acquire business
Cash consideration
Net outflow of cash – investing activities
(e) Acquisition-related costs
$’000
3,774
3,774
Acquisition-related costs of $740,000 that were not directly attributable to the issue of shares are included in other
expenses in profit or loss and in operating cash flows in the statement of cash flows in the year ended 30 June 2017.
26.
PARENT ENTITY INFORMATION
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 except as set out below. See Note 1 for a
summary of the significant accounting policies relating to the Group.
50 Saunders International Limited
Notes to the Financial Statements
Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures are accounted for at cost. Dividends received from
subsidiaries, associates and joint ventures are recognised in profit or loss when a right to receive the dividend is
established (provided that it is probable that the economic benefits will flow to the Parent and the amount of income can
be measured reliably).
Tax consolidation
The company and its wholly-owned Australian resident entities are members of a tax-consolidated group under Australian
tax law. The company is the head entity within the tax-consolidated group. In addition to its own current and deferred tax
amounts, the company also recognises the current tax liabilities and assets and deferred tax assets arising from unused
tax losses and relevant tax credits of the members of the tax-consolidated group.
Amounts payable or receivable under the tax-funding arrangement between the company and the entities in the tax
consolidated group are determined using a ‘separate taxpayer within group’* approach to determine the tax contribution
amounts payable or receivable by each member of the tax-consolidated group. This approach results in the tax effect of
transactions being recognised in the legal entity where that transaction occurred, and does not tax effect transactions
that have no tax consequences to the group. The same basis is used for tax allocation within the tax-consolidated group.
Summary financial information
The individual financial statements for the parent entity, Saunders International Limited show the following aggregate
amounts:
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Shares buy-back reserve under employee share plan
Share based payments reserve
Retained earnings
Total equity
Financial Performance
Profit for the year
Other comprehensive income
Total comprehensive income
27.
REMUNERATION OF AUDITOR
Audit or review of the financial report
The auditor of Saunders International Limited is Deloitte Touche Tohmatsu.
2017
$’000
2016
$’000
17,714
10,298
28,012
21,726
2,670
24,396
6,937
1,407
8,344
11,588
(351)
460
7,971
6,694
405
7,099
7,927
(336)
388
9,318
19,668
17,297
2017
$’000
2016
$’000
1,078
2,891
-
-
1,078
2,891
2017
$
2016
$
135,000
135,000
110,000
110,000
51 Saunders International Limited
Notes to the Financial Statements
28.
SUBSEQUENT EVENTS
There has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly
affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of
the Group in future financial years.
29.
ADDITIONAL COMPANY INFORMATION
General Information
Saunders International Limited is incorporated and operating in Australia.
Saunders International Limited’s registered office and its principal place of business is as follows:
Registered office
271 Edgar Street
Condell Park NSW 2200
Tel: (02) 9792 2444
Principal place of business
271 Edgar Street
Condell Park NSW 2200
Tel: (02) 9792 2444
52 53 Additional
Information
Stock Exchange
As at 4th August 2017
NUMBER OF HOLDERS OF EQUITY SECURITIES
Ordinary
Share Capital
There are 83,053,071
fully paid ordinary
shares held by 866 individual
shareholders.
In addition,
there are 2,586,207
fully paid ordinary
shares
issued to entities
associated
with the vendors
of the Civilbuild
business,
which are escrowed
until 31 March 2018. There are 1,605,000
shares
issued to employees
the totals
calculating
under the Employee
and percentages
Share Purchase
used in this section.
Plans (ESP).
These escrowed
There are no options issued.
and ESP shares are not included
for the purposes
of
SUBSTAINTIAL
SHAREHOLDERS
Shareholder
No. of Shares
Percentage
Mr. Desmond Bryant
Timothy
Burnett
23,837,580
10,272,487
28.70%
12.37%
DISTRIBUTION
Range
OF SHARES
1 -1,000
1,001 -5,000
5,001 -10,000
10,001 -100,000
100,000
and over
TOTAL
No. of Holders
53
178
152
410
73
866
THE TWENTY LARGEST REGISTERED HOLDERS
Name
No. of Shares
Percentage
Mr Desmond Bryant
Pty Ltd
Tivolico
Anacacia
Pty Ltd (Wattle
Fund NC)
Marlot
Pty Ltd
Mr John Power
JP Morgan Nominees
Australia
Limited
Sagimo Holdings
Ply Ltd
Mrs Karyn May McClelland
23,516,366
6,046,759
5,459,580
4,225,728
3,023,513
3,022,230
1,286,760
1,215,366
Corliaj
Pty Ltd (Civilbuild
Contructions
Pty Ltd Superannuation
Fund NC)
1,193,554
Donald Cant Pty Ltd
Anacacia
Pty Ltd (Wattle
Fund NC)
AET SFS Pty Ltd (NEOC NC)
Mr Trevor Ross Kennedy
Active
Air Spares Pty Ltd
Mr Robert Graburn
Patterson
Pty Ltd
Fretensis
Parmelia
Pty Ltd (Reilly
Family
Super Fund NC)
Anacacia
Capital
Ply Ltd (Wattle
Fund NC)
940,383
890,804
875,126
746,976
700,000
652,142
600,000
599,251
561,056
Civilbuild
Development
Pty Ltd (Wood Superannuation
Fund NC)
530,584
IMAJ Ply Ltd (Super
Fund NC)
500,000
28.70%
7.28%
6.57%
5.09%
3.64%
3.64%
1.55%
1.46%
1.44%
1.13%
1.07%
1.05%
0.90%
0.84%
0.79%
0.72%
0.72%
0.68%
0.64%
0.60%
TOP20SHAREHOLDERS
56,586,178
68.12%
54 55