Business Profile
Sustainability
Chairman’s Letter
Board of Directors
Financial Report
Director’s Report
Auditor’s Independence Declaration
Independent Audit Report
Director’s Declaration
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Consolidated Statement of Profit or Loss &
Other Comprehensive Income
25
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Corporate Governance
Additional Stock Exchange Information
Corporate Directory
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Our Vision
We are driven by a commitment to safety, innovation, excellence and growth
while delivering high quality engineered solutions across the complete asset life cycle.
Our Values
Saunders Company Values
Values Aligned Employee Behaviours
ZER
HARM
S A F E T Y
One team, one goal,
zero harm
• Safety first culture imbedded in everything we do
• Empowered to stop work
• In our behaviour at work and home
• Be accountable for our actions, results,
I N T E G R I T Y
In all of our decisions
successes and failures
• Be honest and reliable
• Deliver on our commitments
I N N O V A T I O N
Application of information,
imagination & initiative
• Continually challenge ourselves to improve
• Anticipate and create solutions that meet our
customers’ needs and exceed their expectations
• Collaborate with others to bring ideas to life
T E A M W O R K
Passionate people working
together to deliver excel-lence
• Inspire others to reach their full potential
• Collaborate with ourselves and our customers
in finding solutions
• Recognise and reward high performance
L E A D E R S H I P
The courage to shape our future
• Show personal drive - Engage with and motivate others
• Demonstrate the leadership to speak up and challenge
the status quo
• Give clear, candid and timely feedback
1 Saunders
Capabilities
Saunders International Ltd (SND) is an ASX-listed company
that provides construction, maintenance and civil engineering services
to the energy, resources and infrastructure sectors.
With over 65 years experience, Saunders uses in-house expertise to deliver a comprehensive range
of projects that includes design, manufacture, construction, installation and maintenance services.
Saunders is a company built on integrity with a commitment to safety, performance and excellence.
Our success is driven by our ability to build strong relationships and mutually beneficial partnerships
to produce positive outcomes for our clients, our people, and the wider community.
Over 65 years experience in
Over 65 years experience as
Over 47 years experience in
Engineering, Procurement and
a technology leader in asset
construction, maintenance
Construction (EPC) for oil and
maintenance.
and civil engineering services.
gas, water and mining projects.
• SMP construction
• EPC construction
• Bulk liquid tank products and
• Bridge construction
technologies, upgrades,
• Concrete tank construction
maintenance and 24/7 service
• Bridge maintenance
• Mechanical installation
• Marine port maintenance
• Turn key solutions for bulk
• Commercial building maintenance
• Road works
• Civil works
liquid fuel storage terminals
• Shutdown and maintenance
• Precast manufacturing facility
• Manufacture and fabrication
• Concrete repairs, waterproofing
• Blasting and protective coatings
2 Saunders
Sustainability
Sustainability is a three-legged stool of people, planet and profit
Saunders manages all three through the triple bottom line concept.
P E O P L E
Social
Performance
P L A N E T
Environmental
Performance
P R O F I T
Economic
Performance
Triple Bottom Line
Success
Our business strives to use sustainable development
In 2018 we have been successful in attracting high
to positively affect the environment, business growth
quality female candidates to project roles. We will
and society.
maintain our efforts into 2019.
2018 - 2019 Focus
Our focus in 2018 - 2019 is on society. Saunders is
striving to improve gender diversity in our workplaces.
Diversity has the following benefits:
1.
Improves our ability to attract the best people
2. Widens our talent pool
3.
Inclusive workforces create higher satisfaction
levels which in turn increases employee
engagement, resulting in increased performance
Saunders Project Manager in Melbourne
4.
Is a true representation of our customer base
5. Shows leadership in our industry
Actions
In 2018 - 2019 we are committed to:
• Attracting female employees to Saunders in
non-traditional roles
• Setting up our female employees for success
• Providing ongoing management support
Saunders Civilbuild Project Manager in Newcastle
3 Chairman’s
Letter
Dear Shareholder,
I present the Chairman’s Letter for the 2018 Annual Report
The revenue of $75 million was at a record level for the
company and 64% above the prior year.
This revenue included 12 months contribution from
Civilbuild, confirming the decision to make the acquisition
and demonstrating its ability to be an important contributor
to the Group’s profitability in the future.
The revenue included several large tank construction
projects and a strong contribution from maintenance
operations. It is pleasing that the decision to compete for
work in PNG and the Pacific Islands contributed to the
revenue for the year.
The net loss after tax of $2.84 million is a disappointing
outcome. Two projects incurred significant client delays
and increased costs which contributed to this loss. The
Group has developed a good understanding of the
underlying issues and has put in place measures to
mitigate such issues in future.
22nd August 2018
The restructure underway will deliver long term benefits to
the Group. The objective is to position the business to be
leaner and more agile so that it can operate profitably in the
current competitive and cyclical marketplace.
On 6 September 2017, Saunders successfully completed a
placement to institutional investors of 5.5 million new shares
at $0.50 each to raise a gross amount of $2.75 million. The
placement received strong support from existing institutional
shareholders as well as new institutional and sophisticated
investors.
On 12 October 2017, Saunders announced that it had
completed a 1 for 8 underwritten rights issue and 11.60
million new shares at $0.50 per share were issued to raise
a gross amount of $5.80 million. The rights issues was
strongly supported by Saunders shareholders and was
33% oversubscribed.
The placement and rights issue together raised a net amount
of $7.9 million cash after the costs of the capital raising.
The total dividend for the year was 1 cent per share,
this being the interim dividend paid in September 2017.
No final dividend is being paid.
The safety of our employees is our highest priority and
we continually review safety performance and invest in
improvements of the safety processes and systems. I am
pleased that proactive and ongoing management and
employee involvement has enabled the Group to achieve
a 12% reduction in the TRIFR key performance indicator.
I wish to thank my fellow directors and on behalf of the
board, I wish to thank all the Group’s employees for
their efforts during the year.
The above loss also includes a provision of $1.45 million for
a restructure of the tank related business and processes,
which is being progressively rolled out.
Tim Burnett
Chairman
4 Board of
Directors
M R T I M O T H Y B U R N E T T
Chairman & Non-Executive Director
Mr Burnett has over 38 years’ experience in the management of engineering
and construction projects and companies, of which 15 years was spent as
Managing Director of Saunders International. Prior to joining Saunders, he was
a Senior Manager with Brown & Root Inc for 9 years where he managed the
construction of marine oil and gas facilities in Europe, Asia and Australia. Mr Burnett
has a Bachelor of Engineering (Civil) degree from Melbourne University and a MBA
degree from Harvard University. Mr Burnett has been a Director of Saunders since
1990 and he is not considered to be an Independent Director.
M R M A R K B E N S O N
Managing Director & Chief Executive Officer
Mr Benson - GAICD - has 25 years’ experience in executive management roles in the
engineering and construction industry. His most recent role, prior to joining Saunders
International, was General Manager of RCR Energy, a division of ASX Company RCR
Tomlinson. In addition, he also held senior positions on several major utility alliances.
Mr Benson holds an Advanced Diploma in Management from Ballarat University,
along with an Advanced Diploma in Project Management, and has an electrical
engineering background. Mr Benson has been a Director of Saunders since
10 August 2015 and Managing Director since 5 October 2015. He is not
considered to be an Independent Director.
M R M A L C O L M M c C O M A S
Non-Executive Director
Malcolm McComas - BEc, LLB, SFFin, FAICD - is a company director and a former
investment banker and lawyer. Malcolm has experience in equity and debt capital
markets, mergers and acquisitions and has worked with many growth companies
across a number of sectors over a career at County NatWest (now Citi Group) where
he was Managing Director of investment banking for 10 years and at Grant Samuel
where he was a Director for 11 years. Mr McComas is currently Chairman of
Pharmaxis Limited and Fitzroy River Corporation Limited and a Director of Royalco
Resources Limited. His community roles include Director of the Australian Leukaemia
and Lymphoma Group (ALLG). Mr McComas has been a Director of Saunders since
5 September 2012, is Chairman of the Remuneration Committee and is considered
to be an Independent Director.
M R G R E G F L E T C H E R
Non-Executive Director
Greg Fletcher - Bcomm - is a company Director having retired from the Deloitte
partnership in 2009 to take on board roles. He is an independent Director of ASX
listed company Yancoal SCN Limited, Co-Vice Chairman of Yancoal Australia Limited,
Chairman of privately owned SMEG Australia Pty Ltd and the Director of TAFE NSW
Commission. He is the Chairman of the Audit and Risk Committee of a number of
government-owned businesses and entities. Mr Fletcher has been a Director of
Saunders since 1 July 2015 and he is considered to be an Independent Director.
5 Financial Report
2018
FOR THE FINANCIAL YEAR EN DE D 30 JUN E 2018
ACN 050 287 431
6 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 2018 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
(Loss)/Profit before restructure costs
Restructure costs
(Loss)/Profit after restructure costs
Income tax benefit / (expense)
2018
$’000
2017
$’000
75,368
45,805
(2,766)
1,336
(1,447)
-
(4,213)
1,336
1,373
92
(Loss)/Profit attributable to the members of Saunders International Limited
(2,840)
1,428
(Loss)/Profit attributable to the members of Saunders International Limited
(2,840)
1,428
Add: Restructure costs net of tax
1,013
-
Underlying (Loss)/Profit excluding restructure costs net of tax
(1,827)
1,428
2018
$’000
2017
$’000
7 Saunders International Limited
Directors’ Report
Operating and Financial Review
Over this past year we have achieved significant growth in revenue with our full year revenue at $75.37 million which was a
64.5% increase on the prior year (FY2017: $45.81 million). We believe that our strategic position as a market leader in the
bulk liquid storage sector and our diversification strategy into the transport infrastructure sector will continue to provide
growth opportunities over the coming years. This increased revenue is a result of the full year of Civilbuild’s contribution,
multiple lar ge tank construction projects both nationally and internationally and continued strong performance from our
maintenance operations in FY2018.
The Group’s decision to enter construction and maintenance work in PNG is paying dividends with one project complete and
the other nearing practical completion. During the year we also undertook a tank construction project in New Caledonia. The
group will continue to pursue opportunities in the pacific region and build on its current success.
Operating and Financial Review
The result has been primarily impacted by two loss -making projects, due mainly to client delays and increased cost to
complete these projects. Practical completion has now been achieved on one of these jobs in Victoria and a provision has
been made in respect to the other job in NSW that is ongoing.
The financial result also includes a provision of $1.45 million for a significant restructure, with the underlying result being a
net loss after tax of $1.83 million. During the year, the Group developed a business improvement plan to improve the tank
related business processes and project delivery performance. The restructure has commenced by 30 June 2018 and
involves significant changes and improvements to position the Group to operate profitably in the current competitive and
cyclical market conditions. The lo ng-term benefits will enable the business to be more agile and innovative. A busi ness
improvement manager has been engaged to ensure this process is implemented effectively.
The loss per share was 3.03 cents, a 272.2% decrease on FY2017 (1.76 cents earnings per share).
Cash outflows from operating activities were $ 1.37 million, a 328.1% decrease on FY2017 ($0.32 million outflows), driven
mainly by the two loss making projects mentioned above.
The directors consider the Group to be in a strong financial position at year end with cash and cash equivalents of $12.38
million (FY2017: $10.94 million). The cash and cash equivalents of 30 June 2018 is equivalent to 13.23 cents per share
(FY2017: 13.50 cents per share) and the Group has no interest-bearing loans. 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 23.12 cents (FY2017:
23.07cents).
On the 6 September 2017, Saunders successfully completed a placement to institutional investors of 5.50 million new shares
at $0.50 each to raise a gross amount of $2.75 million. On 12 October 2017, Saunders announced that it had completed a 1
for 8 underw ritten rights issue and 11.59 million new shares at $0.50 per share were issued to raise a gross amount of
approximately $5.70 million. The placement and the rights issue were strongly supported by current shareholders and
institutions with interest generated from new institutions for the placement.
Outlook
In recent months Saunders has secured $10.1 million in new and extended contracts bringing our current order book to $42.4
million at 30 June 2018. Tendering activity shows the value of live tenders at $170. 87 million. The pipeline (yet to be
tendered) is at $339.32 million.
Our international projects in Papua New Guinea and New Caledonia, have performed well with the business tendering
further opportunities with these clients.
Whilst Saunders management is expecting market conditions to remain challenging in the short term in our tank construction
group, we are confident that our expansion into the mining and infrastructure sector and the recent business improvement
process will deliver positive results over the coming years through increased pipeline and sound operational delivery.
The outlook for the Civilbuild is positive with a strong pipeline of suitable opportunities emerging from continuing and new
road and rail infrastructure projects in NSW.
Employees
The Group’s total workforce average was approximately 212 an increas e of 15% on 12 months earlier. The increase in
employee numbers is due to the increased levels of activity in the infrastructure and tank construction groups.
Saunders remain focused on attracting, developing and retaining high calibre employee s who live our values and actively
contribute to the achievement of our vision and strategic objectives.
The directors wish to recognise and thank the contribution made by all employees during this year.
8 Saunders International Limited
Directors’ Report
Safety
The safety and welfare of our employees is our highest priority and is a cornerstone of all the Group’s activities. The business
is continually reviewing current practises with a view to improve current processes and systems. We are currently evaluating
an enterprise wide Loss Prevention System.
Continued management focus and active employee involvement helped the Group to an improved safety result over the
previous year with a reduction of 12% in our TRIFR (FY2017 19% reduction on previous year).
Earnings per share
The basic and diluted earnings per share is calculated using the weighted average number of shares. This shows the basic
losses per share at 3.03 cents (2017: 1.76 cents earnings per share) and the diluted losses per share at 3.03 cents (2017:
1.76 cents earnings per share).
DIVIDEND
The Board has declared that due to the financial performance in FY2018 there will not be a final dividend payable for
FY2018. (FY2017 final dividend 1.0 cents per share).
DIRECTORS ATTENDANCE AT MEETINGS
Attendance at Meetings
The following table sets out the number of meetings in the year to 30 June 2018, 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
11
11
11
11
11
11
11
10
4
-
4
4
4
-
4
4
4
-
4
4
4
-
4
4
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
11,556,548
Member of the Audit & Risk Committee
Member of the Remuneration Committee
Director since 28 November 1990
BE, MBA, FAICD
43 years of relevant industry experience
Other listed company directorships in the 3 years
immediately before the end of the financial year
- Nil
9 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
Mark Benson
Managing Director from 5 October 2015
446,482
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
83,250
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
Greg Fletcher
Non-Executive Director
5,360
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
- Co Vice Chairman Yancoal Australia Limited
- Director TAFE NSW Commission
- 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
10 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 2018. 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 450,000 options within The Employee Share Plan and 859,943 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 14 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
675,000 shares and have an interest in 533,750 shares under the Employee Share Plan. In addition, other employees own
542,500 shares.
The breadth and depth of share ownership fosters an alignment of objectives between shareholders and directors and
management of the Group.
11 Saunders International Limited
Directors’ Report
AUDITED REMUNERATION REPORT (Cont’d)
Employee Share Plan
Under the Employee Share Plan (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 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 153,750 options were granted to Key Management Personnel under the ESP. The aggregate fair value of the
options granted is $31,270 as set out on page 15.
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 419,753 Performance Rights were granted to the CEO under the LTI Plan. The aggregate fair value of the
Performance Rights granted is $117,903 as set out on page 15.
12 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 $510,000
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 officer’s 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 2018:
30 June
2018
$’000
30 June
2017
$’000
30 June
2016
$’000
30 June
2015
$’000
30 June
2014
$’000
Revenue
75,368
45,805
41,828
43,954
69,359
Net (loss)/profit before income tax
Net (loss)/profit after income tax
(4,213)
(2,840)
1,336
1,428
3,705
2,891
6,324
4,431
9,106
6,375
30 June
2018
30 June
2017
30 June
2016
30 June
2015
30 June
2014
Share price at end of year
Interim dividend (cents per share)
Final dividend (cents per share)
Basic (losses)/earnings per share
Diluted (losses)/earnings per share
0.47
1.00
0.00
(3.03)
(3.03)
0.50
2.00
1.00
1.76
1.76
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
All dividends above were franked to 100% at 30% corporate tax rate.
13 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 2018 were:
Fully paid
ordinary
shares
issued/
purchased
during 2018
Fully paid
ordinary
shares 2017
Fully paid
ordinary
shares 2018
Share options
2017
Share
options
vested
during 2018
Share
options
granted
during 2018
Share options
at end 2018
Performance
rights 2017
Performance
rights
granted
during 2018
Performance
Rights
vested
during 2018
Performance
rights at end
2018
Number
Number
Number
Number
Number
Number
Number
Number
Number
Number Number
Non-executive Directors
Timothy Burnett
10,272,487
1,284,061
11,556,548
Malcolm McComas
Greg Fletcher
TOTAL
74,000
4,763
9,250
597
83,250
5,360
10,351,250
1,293,908
11,645,158
-
-
-
-
Executive Officers
Mark Benson1
Rudy Sheriff2
David Griffiths3
Robert Patterson4
Ian McLoughlin5
Jonathon Bromilow6
220,419
226,163
446,582
400,000
-
-
652,142
10,587
-
-
-
-
11,911
-
-
-
652,142
22,498
-
-
30,000
75,000
275,000
50,000
830,000
-
-
-
-
50,000
50,000
3,750
9,375
34,375
6,250
153,750
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
450,000
1,059,621
419,753
(583,431)
50,000
33,750
84,375
309,375
56,250
983,750
-
-
-
-
-
127,572
48,355
26,793
46,663
45,474
-
-
-
-
-
-
-
-
-
895,943
127,572
48,355
26,793
46,663
45,474
-
-
-
-
-
-
-
-
-
-
-
-
TOTAL
883,148
238,074
1,121,222
1,059,621
714,610
(583,431)
1,190,800
GRAND TOTAL
11,234,398
1,531,982
12,766,380
830,000
153,750
983,750
1,059,621
714,610
(583,431)
1,190,800
1.CEO Managing Director, 2. Chief Financial Officer (20th November 2017) 3. GM Business Development & Strategy 4. GM Engineering and Construction/Key Account Manager 5.GM
Construction and Asset Services, 6. GM Saunders Civilbuild.
14 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 2018
Share options forfeited
during 2018
Share options vested
during 2018
Performance rights
granted during 2018
Performance rights
forfeited during 2018
Performance rights
vested during 2018
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
Rudy Sheriff2
David Griffiths3
Robert Patterson4
Ian McLoughlin5
Jonathon Bromilow6
TOTAL
GRAND TOTAL
-
-
-
-
9,600
11,350
720
1,800
6,600
1,200
31,270
31,270
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
117,903
35,833
13,582
7,526
13,107
12,773
200,724
200,724
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
160,757
-
-
-
-
160,757
160,575
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 16, 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. Chief Financial Officer (20th November 2017) 3. GM Business Development & Strategy 4. GM Engineering & Construction/Key Account Manager
5.GM Construction & Asset Services, 6. GM Saunders Civilbuild.
15 AUDITED REMUNERATION REPORT (Cont’d)
Remuneration of Executive Officers and Key Management Personnel
2018
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
Saunders International Limited
Directors’ Report
$
$
$
$
$
$
Non-executive
Directors
Timothy Burnett
Greg Fletcher
Malcolm McComas
TOTAL
Executive Officers
Mark Benson1
Rudy Sheriff2
David Griffiths3
Robert Patterson4
Ian McLoughlin5
Jonathon Bromilow6
TOTAL
115,069
57,534
67,050
239,653
490,440
184,701
214,955
117,585
190,029
204,129
1,401,839
-
-
-
-
-
34,720
10,256
6,971
19,167
14,203
85,317
-
-
-
-
-
15,644
-
14,624
14,921
-
10,776
6,113
-
16,889
25,040
10,333
20,049
14,434
25,764
19,211
-
-
-
-
120,422
16,223
7,120
8,256
25,042
8,305
45,189
114,831
185,368
1,832,544
%
-
-
-
-
18.9%
19.5%
6.9%
9.4%
16.1%
9.2%
125,845
63,647
67,050
256,542
635,902
261,621
252,380
161,870
274,923
245,848
%
-
-
-
-
0%
n/a
n/a
n/a
n/a
n/a
GRAND TOTAL
1,641,492
85,317
45,189
131,720
185,368
2,089,086
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. Chief Financial Officer - The amount of remuneration covers the period from 20 November 2017 to 30 June 2017. 3. GM Business Development & Strategy. 4.
GM Engineering &Construction/Key Account Manager. 5.GM Construction & Asset Services 5. GM Saunders Civilbuild. 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 in September 2018.
16 Saunders International Limited
Directors’ Report
AUDITED REMUNERATION REPORT (Cont’d)
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
Jonathon Bromilow5
TOTAL
$
$
$
$
$
$
112,875
55,929
60,000
228,804
410,288
192,575
213,841
185,394
50,556
-
-
-
-
-
-
-
-
207,000
39,568
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
%
-
-
-
-
44.8%
13.2%
6.8%
10.4%
12.8%
123,598
61,800
60,000
245,398
877,570
242,840
273,300
245,498
63,455
%
-
-
-
-
74%
n/a
n/a
n/a
n/a
1,052,654
275,754
65,159
108,002
201,094
1,702,663
GRAND TOTAL
1,281,458
275,754
65,159
124,596
201,094
1,948,061
1. CEO Managing Director
2. GM Commercial.
3. GM Engineering and Construction / Key Account Manager
4. GM Construction and Asset Services
5. GM Civilbuild
6. Cash bonuses are disclosed in 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.
17 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
Details around the Operating and Financial Review and Outlook are disclosed on page 7 and 8. 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 was $14,979 paid or payable for non-audit services.
Auditor’s Independence Declaration
The auditor’s independence declaration is included on page 19 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, 22 August 2018
Timothy Burnett
Director
Sydney, 22 August 2018
18 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
22 August 2018
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 2018, 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
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited.
19 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 2018, 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 2018 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.
20 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 2018 the Group’s revenue from
construction contracts is $75.3 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 and acceptance of claims;
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 including
determination of project completion date.
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 contractual entitlements for changes,
variations and claims recognised within contract
revenue to supporting documentation, and by
reference to the underlying contract,
assessed management’s basis for estimates of
unapproved variations and claims brought to
account within contract revenue,
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;
assessed appropriateness of contingency
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.
•
•
•
•
•
•
•
•
We also assessed the appropriateness of the disclosures in
Notes 1(b), 1(h), 2, 3 and 10 to the financial statements.
Recognition of restructuring provision
Our procedures included, but were not limited to:
Refer to Note 11 ‘Provisions’.
As at 30 June 2018 the Group has recognised a
provision for restructuring for $1.4 million.
In considering whether a constructive obligation to
restructure has arisen, management have had regard
to the detailed formal plan for the restructure and
actions taken to raise a valid expectation in those
affected that it will carry out the restructuring by
starting to implement that plan or announcing its main
features to those affected by it.
•
•
•
•
Evaluating whether the requirements for raising a
restructuring provision are in accordance with the
relevant accounting standards;
Reading the formal restructure plan prepared by
management and considering whether the information is
sufficiently detailed to meet the constructive obligation
required to recognise a restructuring provision;
Verifying with management and obtaining evidence to
support that a valid expectation has been raised in those
affected by the restructure; and
Assessing the reasonableness of the estimated costs
associated with the various components of the
restructuring provision to supporting information.
We also assessed the appropriateness of the disclosures in
Note 11 to the financial statements
21 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 2018, 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.
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.
22 •
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, t he 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 w ith 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 11 to 17 of the Directors’ Report for the year ended 30 June
2018.
In our opinion, the Remuneration Report of Saunders International Limited, for the year ended 30 June 2018, complies with
section 300A of the Corporations Act 2001.
Responsibilities
the Company are responsible for the preparation and presentation of the Remuneration Report in
The directors of
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
23 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, 22 August 2018
Timothy Burnett
Director
Sydney, 22 August 2018
24 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 2018
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
Restructure costs
Other expenses
(Loss)/Profit before income tax
Income tax benefit
(Loss)/Profit for the year
Other comprehensive income
Total comprehensive (loss)/income for the year
(Losses)/Earnings per share
Basic (cents per share)
Diluted (cents per share)
The accompanying notes form part of these financial statements.
Note
2018
$’000
2017
$’000
3
4
4
4
4
4
4
5
75,368
282
(46,264)
(27,178)
(1,043)
(362)
(952)
-
(1,447)
45,805
1,375
(21,843)
(18,734)
(726)
(276)
(882)
(740)
-
(2,617)
(2,643)
(4,213)
1,373
(2,840)
-
1,336
92
1,428
-
(2,840)
1,428
14
14
(3.03)
(3.03)
1.76
1.76
25 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2018
Saunders International Limited
Consolidated Statement of Financial Position
Current assets
Cash and cash equivalents
Trade and other receivables
Amounts recoverable from contracts
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
Borrowings
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.
6
9
5
7
5
8
9
11
23
11
23
Note
2018
$’000
19(a)
12,377
6,590
3,540
277
241
108
2017
$’000
10,942
11,896
-
290
90
557
23,133
23,775
10,166
1,855
12,021
10,086
259
10,345
35,154
34,120
7,147
-
3,515
90
8,295
1,111
1,784
2,500
10,752
13,690
585
327
912
411
-
411
11,664
14,101
23,490
20,019
12
12
12
13
19,652
(351)
623
3,566
11,588
(351)
460
8,322
23,490
20,019
26 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Financial Year Ended 30 June 2018
Opening Balance
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
Loss for the year
Total comprehensive income
Dividends paid
Share capital issued under institutional placement and rights issue
Share issue costs
Income tax relating to share issue costs
Share-based payments expense
Balance at 30 June 2018
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
(336)
Share
Based
Payments
reserve
$’000
388
-
-
-
-
-
(15)
-
(351)
-
-
-
-
-
-
-
(351)
-
-
-
-
-
(127)
199
460
-
-
-
-
-
-
163
623
Issued
capital
$’000
7,927
-
-
-
2,284
1,235
142
-
11,588
-
-
-
8,447
(542)
159
-
19,652
Retained
earnings
$’000
9,318
1,428
1,428
(2,424)
-
-
-
-
8,322
(2,840)
(2,840)
(1,916)
-
-
-
-
3,566
Total
$’000
17,297
1,428
1,428
(2,424)
2,284
1,235
-
199
20,019
(2,840)
(2,840)
(1,916)
8,447
(542)
159
163
23,490
27 CONSOLIDATED STATEMENT OF CASH FLOWS
for the Financial Year Ended 30 June 2018
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
2018
$’000
2017
$’000
83,861
47,860
(85,075)
(48,243)
62
(215)
230
(171)
Net cash (used in) / provided by operating activities
19(b)
(1,367)
(324)
Cash flows from investing activities
Payments for plant and equipment
Payments for Business Acquisition
Cash received on asset sales
Net cash used in investing activities
Cash flows from financing activities
Dividends paid to shareholders
(Repayment of)/Proceeds from borrowings
Payments relating to finance leases
Proceeds from issue of shares
Net cash provided by / (used in) financing activities
7
25
(706)
-
19
(744)
(3,774)
-
(687)
(4,518)
(1,916)
(2,500)
(19)
7,905
(2,424)
2,500
-
1,361
3,470
1,437
Net increase / (decrease) in cash and cash equivalents
1,416
(3,405)
Cash and cash equivalents at the beginning of the financial year
10,942
14,347
Effects of exchange rate changes on the balance of cash held in foreign
currencies
19
-
Cash and cash equivalents at the end of the financial year
19(a)
12,377
10,942
The accompanying notes form part of these financial statements.
28 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 22 August 2018.
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.
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.
Accounting Standards in issue but not yet effective
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 15 Revenue from Contracts with Customers
1 January 2018
30 June 2019
AASB 16 Leases
1 January 2019
30 June 2020
AASB 9 Financial Instruments
1 January 2018
30 June 2019
AASB 2014-6 Amendments to Australian Accounting Standards
– Agriculture: Bearer Plants
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 17 Insurance Contracts
1 January 2021
30 June 2021
IFRIC 23 Uncertainty over Income Tax Treatments
1 January 2019
30 June 2020
29 Saunders International Limited
Notes to the Financial Statements
Impact of adoption of AASB 9 Financial Instruments
AASB 9 Financial Instruments (revised December 2014) and AASB 2014- 7 Amendments to Australian Accounting
Standards arising from AASB 9 (December 2014).
This standard replaces AA SB 13 9 Financial Instruments: Re cognition and Measurement. AASB 9 includes revised
guidance on the classification and measurement of financial instruments, including a new expected credit loss model
for calculation of impairment on financial assets, and new general hedge accounting requirements. It also carries
forward guidance on recognition and derecognition of financial instruments from AASB 139. The standard will become
mandatory for reporting periods beginning on or after 1 July 2018 . The Group does not intend to early adopt the
standard. Retrospective application is required with some exceptions.
Restatement of comparatives is not required; however, the comparative period can be restated if it can be done so
without the use of hindsight. The Group has undertaken an assessment of the classification and measurement impacts
of the new standard but does not expect the new standard to have a significant impact on the classification of its
financial assets.
Impact of adoption of AASB 15 Revenue from Contracts with Customers
AASB 15 establishes a comprehensive framework for determining the timing and quantum of revenue recognised. It
replaces existing guidance, including AASB 118 Revenue and AASB 111 Construction Contracts. The core principle of
AASB 15 is that an entity shall recognise revenue when control of a good or service transfers to a customer. This
standard will become mandatory for reporting periods beginning on or after 1 July 2018. The standard permits either a
full retrospective or a modified retrospective approach for the adoption.
Significant judgments and estimates are used in determining the impact, such as the assessment of the probability of
customer approval of variations and acceptance of claims, estimation of project completion date and assumed levels of
project execution productivity. The implementation project is ongoing and therefore all impacts are current estimates
which are subject to finalisation prior to final implementation
Construction revenue
The contractual terms and the way in which the Group operates its construction contracts is predominantly derived
from projects containing one p erformance obligation. Co ntracted revenue will continue to be recognised over time,
however the new s tandard provides new requirements for variable consideration such as incentives, as well as
accounting for claims and variations as contr act modifications which all impart a higher threshold of probability for
recognition. Revenue is currently recognised when it is probable that work performed will result in revenue whereas
under the new standard, revenue is recognised when it is highly probable that a significant reversal of revenue will not
occur for these odifications.
Services revenue
Services revenue arises from maintenance and other services supplied to infrastructure assets and facilities which may
involve a range of services and processes. Under AASB 15, these are predominantly to be recognised over time with
reference to inputs on satisfaction of the performance obligations. The services that have been determined to be one
performance obligation are highly inter -related and fulfilled over time therefore revenue continues to be recognised
over time. As with construction revenue, incentives, variations and claims exist which are subject to the same higher
threshold criteria of only recognising revenue to the extent it is highly probable that a significant reversal of revenue will
not happen.
Tender costs & contract costs
Currently under AASB 111 Construction Contracts, costs incurred during the tender process are capitalised within net
contract debtors when it is deemed probable the cont ract will be won. Under the new standard costs can only be
capitalised if they are both expected to be recovered and either would not have been incurred if the contract had not
been won or if they are intrinsic to the delivery of a project.
Conclusion
The expectation is that the above adjustments, across all controlled entities, are accounted for as a cumulative catch
up on the original
contract under AASB 15. T he Group has analysed each contract and determined t he higher
recognition thresholds in the new standard might lead to a currently estimated adjustment reducing equity by around
$0.61 million (after tax).
The new standard also introduces expanded disclosure requirements and changes in presentation, particularly in
relation to key judgements and future revenue expected to be generated. These are expected to change the nature
and extent of the Group’s disclosure about its revenue from contracts with customers and associated as sets,
particularly in the year of adoption of the new standard.
AASB 15 needs to be implemented either fully retrospectively, which would require restatement of comparatives,
or using the cumulative effect method, which would not require a restatement of comparatives, upon the effective date
of 1 July 2018. AASB 15 contains a number of practical expedients for the full retrospective approach including the
option to omit the restatement impact of completed contracts that begin and end within the same annual reporting
period and/or completed at the beginning of the earliest period presented.
The Group is in the process of assessing the available options for transition but expects to adopt a
modified retrospective approach on 1 July 2018.
30 Saunders International Limited
Notes to the Financial Statements
Impact of adoption of AASB 16 Leases
AASB 16 Leases specifies how to recognise, measure and disclose leases. The standard provides a single lessee
accounting model, requiring lessees to recognise right-of-use assets and lease liabilities for almost all leases. Lessor
accounting remains similar to the current standard – i.e. lessors continue to classify leases as finance or operating
leases. AASB 16 applies to annual reporting periods beginning on or after 1 January 2019 and replaces AASB 117
Leases and the related interpretations.
As at the reporting date, the Group has non-cancellable operating lease commitments of $0.4 million, refer to Note 18:
Leases.
The Group manages its owned and leased assets to ensure there is an appropriate level of equipment to meet its
current obligations and to tender for new work. The decision as to whether to lease or purchase an asset is dependent
on a broad range of considerations at the time including financing, risk management and operational strategies
following the anticipated completion of a project.
Some of the operating leases currently held expire prior to the implementation of the standard and decisions on future
leases will be made as projects are tendered for. As such the Group has not finalised its quantification of the effect of
the new standard, however the following impacts are expected:
- the total assets and liabilities on the balance sheet will increase with a decrease in total net assets, due to the
reduction of the capitalised asset being on a straight-line basis whilst the liability reduces by the principal amount of
repayments. Net current assets will show a decrease due to an element of the liability being disclosed as a current
liability;
- the straight-line operating lease expense will be replaced with a depreciation charge for the right-of-use assets and
interest expense on lease liabilities;
- interest expenses will increase due to the unwinding of the effective interest rate implicit in the lease. Interest expense
will be greater earlier in a leases life due to the higher principal value causing profit variability over the course of a
lease life. This effect maybe partially mitigated due to a number of leases held in the Group at different stages of their
terms; and
- repayment of the principal portion of all lease liabilities will be classified as financing activities.
AASB 16 needs to be implemented retrospectively, either with the restatement of comparatives or with the cumulative
impact of application recognised as at 1 July 2019 under the modified retrospective approach. AASB 16 contains
a number of practical expedients, one of which permits the classification of existing contracts as leases under
current accounting standards to be carried over to AASB 16. Under the modified retrospective approach, on a lease-
by-lease basis, the right of use of an asset may be deemed to be equivalent to the liability at transition or calculated
retrospectively as at inception of the lease. The Group is in the process of assessing the available options for
transition but expects to adopt a modified retrospective approach on 1 July 2019.
(a)
Cash and Cash Equivalents
Cash of the Group comprises cash on hand and demand deposits. Cash equivalents are short-t erm, 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.
31 Saunders International Limited
Notes to the Financial Statements
(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.
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.
32 Saunders International Limited
Notes to the Financial Statements
(g)
Provisions (cont.)
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.
A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and
has raised a valid expectations in those affected that it will carry out the restructuring by starting to implement the plan
or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the
direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the
restructuring and not associated with ongoing activities of the entity.
(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).
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 det ermine 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 se ll and value in u se. In assessing v alue 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 redu ced 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.
33 Saunders International Limited
Notes to the Financial Statements
(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.
(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
AASB’s). 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 AASB 139, when applicable, the cost on initial
recognition of an investment in an associate or a joint venture.
34 Saunders International Limited
Notes to the Financial Statements
(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 AASB 112 Income Taxes and AASB 119 respectively;
liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based
payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree
are measured in accordance with AASB 2 at the acquisition date); and
assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Non-current Assets
Held for Sale and Discontinued Operations are measured in accordance with that Standard.
-
-
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over
the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. 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 AASB.
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 AASB 139, or AASB 137 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.
35 Saunders International Limited
Notes to the Financial Statements
(p)
Comparative amounts
When required by accounting standards, comparative amounts have been adjusted to conform to changes in
presentation for the current financial year.
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
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 and acceptance of claims;
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 including determination of project complete date.
Restructuring provision
A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and
has raised a valid expectations in those affected that it will carry out the restructuring by starting to implement the plan
or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the
estimated direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed
by the restructuring and not associated with ongoing activities of the entity.
36 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)
Finance costs
Restructure Provision (Note 11)
Operating lease rental expenses:
Lease payments
Employee benefits expense:
Post-employment benefits – defined contributions
Payroll tax expense
Employee Share Plan1
Salary and wages
2018
$’000
2017
$’000
75,300
45,577
68
228
75,368
45,805
2018
$’000
263
-
19
282
2017
$’000
20
1,355
-
1,375
70,287
35,142
964
79
1,043
-
6
1,447
676
50
726
740
-
-
952
882
2,000
1,256
163
23,759
27,178
1,326
935
199
16,274
18,734
1. comparative amounts have been adjusted to conform to changes in presentation for the current financial year.
37 Saunders International Limited
Notes to the Financial Statements
5.
INCOME TAX
Income tax recognised in (loss)/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 financial statements as follows:
(Loss)/Profit before taxation
Income tax at 30%
Deferred tax asset in relation to transaction costs not brought to account
Effect of different rates of tax in foreign jurisdictions
Non-taxable gain on acquisition
Other
R&D tax concession
Total income tax (benefit) / expense
Current tax asset – income tax receivable
2018
$’000
385
(321)
(1,437)
(1,373)
(4,213)
(1,264)
-
63
-
149
(321)
(1,373)
241
2017
$’000
102
(304)
110
(92)
1,336
401
170
-
(407)
48
(304)
(92)
90
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:
2018
Deferred tax assets
Employee benefits
Restructure Provision
Amounts recoverable from contracts
Tax Losses
Share issue costs
Accruals and other
Deferred tax asset
2018
Deferred tax liabilities
Property, plant and equipment
Other
Deferred tax liabilities
Net deferred tax asset
Opening
balance
$’000
(Charged)/
Credited to
income
$’000
Recognised directly to
equity
$’000
Closing
balance
$’000
724
-
-
-
161
885
(626)
-
(626)
259
(27)
522
221
735
(31)
(19)
1,401
71
(35)
36
1,437
-
-
-
159
-
159
-
-
-
159
697
522
221
735
128
142
2,445
(555)
(35)
(590)
1,855
38 5.
INCOME TAX (continued)
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
6.
TRADE AND OTHER RECEIVABLES
Trade receivables(i)
Saunders International Limited
Notes to the Financial Statements
Opening
balance
$’000
Charged
to income
$’000
Acquisition
Closing
Balance
$’000
$’000
749
115
864
-
-
864
(156)
46
(110)
-
-
(110)
131
-
131
(626)
(626)
(495)
724
161
885
(626)
(626)
259
2018
$’000
6,590
2017
$’000
11,896
(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
484
96
39 Saunders International Limited
Notes to the Financial Statements
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 2018 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
$’000
Buildings
at cost
$’000
Plant and
Equipment at cost
$’000
Office furniture and
equipment at cost
$’000
7,868
706
3,707
-
12,281
1,229
(146)
13,364
6,294
-
693
6,987
(28)
991
7,950
5,294
5,414
Gross carrying amount
Balance at 1 July 2016
Additions
Additions through Business Acquisition
(Note 25)
Disposals
Balance at 30 June 2017
Additions
Disposals
Balance at 30 June 2018
Accumulated depreciation
Balance at 1 July 2016
Disposals
Depreciation expense
Balance at 30 June 2017
Disposals
Depreciation expense
Balance at 30 June 2018
Net book value
As at 30 June 2017
As at 30 June 2018
-
-
-
-
3,400
1,150
-
3,400
-
-
-
1,150
-
-
3,400
1,150
-
-
-
-
-
-
-
-
-
7
7
-
29
36
3,400
3,400
1,143
1,114
8.
TRADE AND OTHER PAYABLES
Current
Trade payables (i)
Goods and services tax payable
Accruals
Deferred consideration (ii) (Note 25)
Total
$’000
8,593
744
8,286
-
725
38
29
-
792
40
17,623
1,269
-
(146)
832
18,746
493
-
50
543
-
51
594
249
238
6,787
-
750
7,537
(28)
1,071
8,580
10,086
10,166
2018
$’000
6,018
233
896
-
7,147
2017
$’000
5,916
245
1,543
591
8,295
(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 for Civilbuild acquisition.
40 9.
AMOUNTS RECOVERABLE FROM CONTRACTS/DEFERRED REVENUE
Amounts recoverable from construction contracts (Note 10)
Revenue received in advance under construction contracts (Note 10)
10.
CONSTRUCTION CONTRACTS
Saunders International Limited
Notes to the Financial Statements
2018
$’000
3,540
2017
$’000
-
-
1,111
2018
$’000
2017
$’000
Contracts in progress at the reporting date:
Construction costs incurred plus recognised profits less recognised losses to date
96,568
31,541
Less: progress billings
Recognised and included in the financial statements as amounts recoverable from
construction contracts (Note 9)
Recognised and included in the financial statements as revenue received in advance
under construction contracts (Note 9)
At 30 June 2018, $147,000 cash retentions were held by customers for contract work
(2017: $Nil). Advances received from customers for contract work amounted to $Nil
(2017: $Nil).
11.
PROVISIONS
Current
Employee benefits
Restructure Provision (i)
Non-current
Employee benefits
Lease make good
(93,028)
(32,652)
3,540
(1,111)
3,540
-
-
1,111
2018
$’000
2,068
1,447
3,515
315
270
585
2017
$’000
1,784
-
1,784
141
270
411
(i) The restructure provision is inclusive of but not limited to; right sizing the business and redundancies, operational
improvements and relocation of plant and equipment to Newcastle.
41 12.
ISSUED CAPITAL
Saunders International Limited
Notes to the Financial Statements
102,730,469 fully paid ordinary shares (2017: 85,639,278)
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
Share capital issued under institutional placement and rights issue (ii)
Share issue costs
Tax on share issue costs
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
2018
$’000
19,301
2017
$’000
11,237
2018
Number
2017
Number
85,639,278
78,720,000
17,091,191
6,919,278
102,730,469
85,639,278
2018
$’000
11,588
-
-
8,447
(542)
159
2017
$’000
7,927
2,284
1,235
142
-
-
19,652
11,588
(351)
-
-
(351)
(336)
-
(15)
(351)
19,301
11,237
(i)
(ii)
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.
Saunders successfully completed a placement to institutional investors of 5,500 thousand new shares at
$0.50 each to raise a gross amount of $2,750 thousand.
Saunders also completed a 1 for 8 underwritten rights issue for 11,593,206 shares at $0.50 per share,
including 200,625 of treasury shares issued under the employee share plan to raise a gross amount of
$5,697 thousand, net of employee share plan issues.
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.
42 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 4: During the financial year 70,000 shares forfeited. The tranche has been modified to vest February 2019.
Tranche 5: During the financial year 70,000 shares forfeited. The tranche has been modified to vest February 2019.
Tranche 6: During the financial year 60,000 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: During the financial year 95,000 shares forfeited.
Tranche 10: During the financial year 140,000 shares forfeited.
Tranche 11: Offer of 173,125 in October 2017 with all offers accepted. During the financial year 26,875 shares forfeited.
Tranche 12: Offer of Offer of 310,000 in February 2018 with all offers accepted. During the financial year 110,000 shares
forfeited.
The fair value of the share options granted during the financial year is included in below table. Options have been valued
using the 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.
43 Details of the fair value assumptions used are as follows:
Saunders International Limited
Notes to the Financial Statements
Tranche 4
Tranche 5
Tranche 6
Tranche 7
Tranche 8
Tranche 9
Tranche 10
Tranche 11
Tranche 12
Grant Date
Feb 2013
Feb 2014
Feb 2015
Oct 2015
Jan 2016
Feb 2016
Feb 2017
Oct 2017
Feb 2018
Grant Price
$0.83
$0.85
$0.72
$0.59
$0.58
$0.58
$0.58
$0.50
$0.59
Opening
Volume
150,000
150,000
140,000
200,000
400,000
210,000
355,000
-
-
New grants
-
-
-
Forfeitures
(70,000)
(70,000)
(60,000)
-
-
-
-
-
-
173,125
320,000
(95,000)
(140,000)
(26,875)
(110,000)
Closing
Volume
Exercise
Price
Expected
Volatility
80,000
80,000
80,000
200,000
400,000
115,000
215,000
146,250
210,000
$0.83
45%
$0.85
45%
$0.72
45%
$0.59
45%
$0.58
45%
$0.58
45%
$0.58
45%
$0.50
45%
$0.59
45%
Option Life
4 years
4 years
4 years
4 years
4 years
4 years
4 years
4 years
4 years
Dividend
Yield
Risk Free
Interest Rate
Grant date
fair value
0%
3.00%
$0.39
0%
5.15%
$0.39
0%
6.25%
$0.31
0%
1.88%
$0.22
0%
2.05%
$0.22
0%
1.72%
$0.21
0%
2.00%
$0.22
0%
2.75%
$0.19
0%
2.82%
$0.23
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 and Tranche 5 until
February 2019 as set out above.
44 Movement in share options during the year
The following reconciles the share options outstanding at the beginning and end of the year.
Saunders International Limited
Notes to the Financial Statements
2018
2017
Weighted
average
exercise price
0.65
0.59
0.66
-
0.62
Number of
options
1,605,000
493,125
(571,875)
-
1,526,250
-
Number of
options
1,250,000
355,000
-
-
1,605,000
-
Weighted
average
exercise price
0.67
0.58
-
-
0.65
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
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.
45 Saunders International Limited
Notes to the Financial Statements
The Managing Director and certain Key Management Personnel participate in the Saunders International Rights Plan. This plan is part of the long term incentive component of the
respective remuneration packages. The total number of Performance Rights issued under the plans is 2,283,338 of which 1,047,770 have vested as at 30 June 2018.
Details of the fair value assumptions used are as follows:
Tranche 1 & 2
Tranche 3
Tranche 6 & 7
Tranche 8
Tranche 9
Tranche 10
Tranche 11
Tranche 12
Grant Date
2 June 2016
2 June 2016
2 June 2016
2 June 2016
1 Sept 2017
1 Sept 2017
1 Sept 2018
1 Sept 2018
Grant Price
$0
$0
$0
$0
Opening
Volume
388,954
194,477
186,197
62,066
$0
-
$0
-
$0
-
$0
-
New grants
-
-
-
-
238,095
238,095
379,689
379,689
Vested
Closing
Volume
Exercise
Price
Expected
Volatility
(388,954)
(194,477)
(186,197)
(62,066)
-
-
-
-
-
$0
-
$0
-
$0
-
$0
238,095
238,095
379,689
379,689
$0
$0
$0
$0
26.87%
26.87%
26.87%
26.87%
26.87%
26.87%
26.87%
26.87%
Option Life
1.25 years
1.25 years
0.25 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%
$0.47
$0.06
1.93%
$0.47
$0.06
1.93%
$0.46
$0.06
1.93%
$0.46
$0.06
1.93%
$0.49
$0.06
1.93%
$0.49
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, $0.52 per share for tranches 9 and 10
and $0.46 for tranches 11 and 12. The share options outstanding at the end of the year has a weighted average remaining contractual life of 0.25 years.
46 Saunders International Limited
Notes to the Financial Statements
13.
RETAINED EARNINGS
Balance at beginning of financial year
(Loss)/Profit for the year
Dividends provided for or paid
Balance at end of financial year
14.
EARNINGS PER SHARE
Basic (losses)/earnings per share
Diluted (losses)/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 (loss)/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:
Weighted average number of ordinary shares used in the calculation of basic EPS
Shares deemed to be issued for no consideration in respect of employee options and
performance rights (a)
2018
$’000
8,322
(2,840)
(1,916)
3,566
2017
$’000
9,318
1,428
(2,424)
8,322
2018
Cents
per share
2017
Cents
per share
(3.03)
(3.03)
1.76
1.76
2018
$’000
(2,840)
(2,840)
2017
$’000
1,428
1,428
2018
No.’000
2017
No.’000
93,586
81,073
93,586
81,073
-
79
Weighted average number of ordinary shares and potential ordinary shares used in
the calculation of diluted earnings per share
93,586
81,152
(a) During the year ended 30 June 2018 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 anti-dilutive, and have not been included in the weighted average
number of ordinary shares for the purposes of diluted earnings per share.
47
15.
DIVIDENDS
Recognised amounts
Fully paid ordinary shares
Final dividend (2017):
Fully franked at a 30% tax rate
Interim dividend (2018):
Fully franked at a 30% tax rate
Unrecognised amounts
Fully paid ordinary shares
Final dividend (2018):
Saunders International Limited
Notes to the Financial Statements
2018
Cents
per share
1.0
1.0
2.0
Total
$’000
856
1,060
1,916
2017
Cents
per share
2.0
1.0
3.0
Total
$’000
1,574
850
2,424
-
-
1.0
856
On 22 August 2018, the directors declared that there will not be a final dividend paid to shareholders for the financial
year ended 30 June 2018.
Adjusted franking account balance
16.
SEGMENT INFORMATION
2018
$’000
1,614
2017
$’000
2,282
The Group operates in one reporting segment being the design, construction, and maintenance of steel storage tanks
and concrete bridges.
In the current period 2 customers made up 32% of the revenue earned (2017: 4 customers made up 71.1% of the
revenue earned). The first customer accounted for $14,695,840 and the second customer $9,200,693.
17.
CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Contract dispute
There are no contingent liabilities and contingent assets in the current year (2017:Nil).
48
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 2018, with an option to extend
the lease by two years to 31st December 2020.
Non-cancellable operating lease commitments
No longer than 1 year
Longer than 1 and not longer than 5 years
2018
$’000
67
37
-
104
2017
$’000
156
136
-
292
300
-
300
609
309
918
49
19.
NOTES TO THE STATEMENT OF CASH FLOWS
Saunders International Limited
Notes to the Financial Statements
2018
$’000
2017
$’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
12,377
10,942
(b) Reconciliation of (loss)/profit for the year to net cash flows from operating activities
(Loss) Profit for the year
Share-based payments expense
Depreciation
Restructure costs
Non-cash transactions relating to business acquisitions
Changes in net assets and liabilities (net of acquisition):
(Increase)/decrease in assets:
Current tax asset
Deferred tax asset
Trade and other receivables
Amounts recoverable from contracts
Inventories
Other assets
Increase/(decrease) in liabilities:
Trade and other payables
Deferred revenue
Provisions
(2,840)
1,428
163
1,043
1,447
-
-
-
(151)
(1,437)
5,306
(3,540)
13
449
-
(1,167)
(1,111)
458
199
726
-
(1,355)
-
-
(62)
110
(4,811)
-
(119)
(462)
-
4,658
20
(656)
Net cash (outflow) / inflow from operating activities
(1,367)
(324)
(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
(d) Asset and liabilities
2,706
7,294
3,532
6,468
10,000
10,000
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and
non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash
flows will be, classified in the Group’s consolidated statement of cash flows from financing activities.
Cash
Non-Cash
Borrowing
Note
23
2017
$’000
2,500
Balance at
1 July
Financing
cash flows (i)
Movement in
finance leases
$’000
(2,521)
$’000
438
Balance at
30 June
2018
$’000
417
(i)
Financing cash flows comprise of repayment of borrowings and payments in relation to finance leases.
50
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
Obligations under finance leases
(a) Leasing arrangements
2018
$’000
12,377
6,590
18,967
7,147
417
7,564
2017
$’000
10,942
11,896
22,838
8,295
2,500
10,795
The Group leased certain of its construction equipment under finance leases. The average lease term is five years.
The Group’s obligations under finance leases are secured by the lessor’s title to the leased assets.
(b) Finance lease liabilities
Minimum Lease Payments
Not later than one year
Later than one year but not later than five years
2018
$’000
90
327
417
2017
$’000
-
-
-
51
20.
FINANCIAL INSTRUMENTS (cont.)
Financial risk management objectives
Saunders International Limited
Notes to the Financial Statements
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.
Weighted
average
effective
interest
rate
Less than 1
month
1 to 3
months
3 months to
2 years
%
$’000
$’000
$’000
2018
Financial assets
Cash and cash equivalents
0.16%
Trade receivables
Financial liabilities
Trade payables and accruals
Borrowings
2017
Financial assets
-
-
12.2%
Cash and cash equivalents
0.83%
Trade receivables
Financial liabilities
Trade payables and accruals
Borrowings
Interest rate sensitivity analysis
-
-
0.00%
11,375
5,314
5,003
8
9,940
10,567
7,137
2,500
1,002
792
2,114
16
1,002
1,315
1,094
-
-
484
30
393
-
14
64
-
Total
$’000
12,377
6,590
7,147
417
10,942
11,896
8,295
2,500
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
$123,769 (2017: $126,445).
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.
52
Saunders International Limited
Notes to the Financial Statements
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
2018
$
2017
$
1,771,998
1,622,371
131,720
185,368
124,596
201,094
2,089,086
1,948,061
The names of and positions held by the key management are set out on page 16 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 14 of the Remuneration Report.
22.
RELATED PARTY TRANSACTIONS
The Group leases a property containing its workshop and offices from an entity partly owned by a director of the Group.
The details of this lease are contained in Note 18. The director has an interest in the related party Group as follows:
Timothy Burnett
34%
The rental rate for the year was negotiated as assessed by a Certified Practicing Valuer on 1 January 2017, for the
calendar years 2017 and 2018. Rent paid during the year amounted to $600,000 (2017: $620,000).
23.
BORROWINGS
Current
Non-interest- bearing loan for business acquisition (i)
Finance Lease Liabilities
Non-current
Finance Lease Liabilities
2018
$’000
-
90
90
2017
$’000
2,500
-
2,500
327
-
(i)
A non-interest-bearing loan was obtained from the Vendor of Civilbuild Pty Limited for working capital and was
repaid on 31 July 2017.
53
Saunders International Limited
Notes to the Financial Statements
24.
SUBSIDIARIES
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
2018
2017
Saunders Civilbuild Pty Ltd
Bridge construction
and maintenance
Australia
100%
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%
100%
100%
100%
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.
The assets and liabilities recognised as a result of the acquisition are as follows:
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.
54
(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.
Saunders International Limited
Notes to the Financial Statements
(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.
55
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.
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
(Loss)/Profit for the year
Other comprehensive income
Total comprehensive income
2018
$’000
17,792
14,514
32,306
8,389
176
8,565
2017
$’000
17,714
10,298
28,012
6,937
1,407
8,344
19,301
11,588
-
623
3,817
23,741
(351)
460
7,971
19,668
2018
$’000
2017
$’000
(2,238)
1,078
-
-
(2,238)
1,078
56
27.
REMUNERATION OF AUDITOR
Audit or review of the financial report
PNG tax services
Saunders International Limited
Notes to the Financial Statements
2018
$
2017
$
135,000
14,979
149,979
135,000
-
135,000
The auditor of Saunders International Limited is Deloitte Touche Tohmatsu.
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
57
Corporate
Governance
The Board of Saunders has adopted a suite of Corporate Governance Practices
to ensure that the Company is effectively directed and managed risks are identified,
monitored and assess, and appropriate disclosures made.
In developing and adopting the Practices, the Board considered the third addition of the ASX Corporate Governance
Principles and Recommendations. The Board incorporates the Principles and Recommendations into its Practices to the
extent that they are appropriate, taking into account the Company’s size, activities and resources. The Board has adopted
the following Charters Policies and Codes: -
The Board Charter
The Board Charter sets out matters relating to the responsibilities of the Board and its directors and matters relating to
the composition of the Board and appointment of directors.
Board Committees and their Charters
In order to better manage its responsibilities, the Board has established an Audit and Risk Committee and a Remuneration
Committee. Each committee has adopted a Charted approved by the Board.
Policies and Codes of Conduct
The Company has adopted a number of Policies and Codes of Conduct as follows: -
• Security Trading Policy – Directors and Senior Executives
• Shareholder Communication Policy
• Continuous Disclosures Policy
• Code of Conduct for Directors and Senior Executives
Corporate Governance Statement and Appendix 4G
The Company reports on an annual basis, its compliance and/or reasons for non-compliance with the third edition of the
ASX Corporate Governance Principles and Recommendations. The Corporate Governance Statement follows and the
Appendix 4G has been released on the ASX Announcements platform.
Further information on the above Charters Policies and Codes
can be found on the Company’s website:
www.saundersint.com/investors/corporate-governance/
58 Saunders International Limited
Corporate Governance Summary
__________________________________________________________________________________
CORPORATE GOVERNANCE STATEMENT (22 AUGUST 2018)
The ASX has released the third edition of the Corporate Governance Principles and Recommendations. There
are 8 principles and 29 recommendations in this document. The following tables set out the Company’s position
in relation to the principles and recommendations. The board of the company has approved this document.
PRINCIPLES AND
RECOMMENDATIONS
PRINCIPLES AND RECOMMENDATIONS AND DISCLOSURE AS TO COMPLIANCE
AND/OR REASONS FOR NON-COMPLIANCE
PRINCIPLE 1:
LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
The Company complies with this principle and recommendations to the extent as
described below: -
Recommendation 1
The Company has a Board Charter which addresses Recommendation 1.1 in that it
identifies the respective roles and responsibilities of the board and management and
it identifies those matters expressly reserved for the board and those delegated to
management.
Recommendation 1.2 to 1.4
The Company complies with Recommendations 1.2 to 1.4 concerning the appointment
and engagement of directors and the accountability of the company secretary.
Recommendation 1.5
Recommendation 1.6
The Company does not comply with Recommendation 1.5, gender diversity. However,
the Company does comply with the Workplace Gender Equality Act for the latest
reporting period as confirmed by written advice from the Workplace Gender Equality
Agency, a copy of which is on the Company’s website.
The Company does not follow Recommendation 1.5 and therefore it does not have a
written policy. The reasons for not following this recommendation include that the
Company has a small number of employees (200 approx.), and a small board (4
persons). The Company considers that it is unrealistic or not in its interest to establish
measurable objectives for gender diversity across its workforce. However, the
Company’s Recruitment Strategy ensures that appropriate selection criteria based on
qualifications, experience and diverse skills are used when hiring new staff.
Additionally, the Company’s Harassment and Discrimination Strategy embraces the
principle of equal opportunity for all regardless of gender, race, sexual preference,
family responsibilities and any other attributes.
The Company has been successful in attracting several high quality female
candidates to project roles in the last year and has set a goal to further improve
gender diversity in this year.
The Company does not comply with Recommendation 1.6 in that although it does have
a formal process for the periodic evaluation of the performance of the board, this does
not extend to its committees and individual directors. Because the board is small, the
preferred method for evaluation of the committee and individual directors is ongoing
comment and review between board members.
Recommendation 1.7
The Company does comply with Recommendation 1.7 in that it does have a formal
process for the evaluation of the CEO and senior executives and this is conducted
annually with the latest being in June-August 2018.
59 PRINCIPLES AND
RECOMMENDATIONS
PRINCIPLES AND RECOMMENDATIONS AND DISCLOSURE AS TO COMPLIANCE
AND/OR REASONS FOR NON-COMPLIANCE
PRINCIPLE 2:
STRUCTURE THE BOARD TO ADD VALUE
The Company complies with this principle and recommendations to the extent as
described below: -
Recommendation 2.1
The board does not have a nomination committee. The board is a small board
(currently 4 persons) and therefore it is able to effectively undertake the relevant tasks
such as addressing succession issues and ensuring the board has the appropriate
balance of skills, knowledge, experience, independence and diversity to enable it to
discharge its duties and responsibilities effectively.
Recommendation 2.2
The board discloses the skills and experience of its directors on its website and in each
annual report.
Recommendation 2.3
The Company discloses on its website which directors are considered by the board to
be independent directors and also the length of service as a director of the Company.
Recommendation 2.4
A majority of the board should be independent directors. The Company does not
comply with this recommendation in that only 50% of the currently serving directors
are independent. The Company considers the composition to be in its best interests.
The size of the Company and the specialist nature of its activities is best served by a
small board with an adequate component of Company and industry specific
knowledge.
Recommendation 2.5
The chair should be an independent director. The Company does not comply with this
recommendation in that the Chairman is not independent. The Company considers
this to be appropriate and in its best interests. The size of the Company and specialist
nature of its activities is best served by a chairman who has Company and industry
specific knowledge and significant equity in the Company.
Recommendation 2.6
The Company has a process to induct a new director which is customized to meet each
director’s needs. The Company encourages directors to maintain their skills and
knowledge as needed.
PRINCIPLE 3:
ACT ETHICALLY AND RESPONSIBLY
The Company complies with this principle and recommendations to the extent as
described below: -
Recommendation 3.1:
The Company has a Code of Conduct for Directors and Senior Executives and this is
disclosed on the Company website.
60 PRINCIPLES AND
RECOMMENDATIONS
PRINCIPLES AND RECOMMENDATIONS AND DISCLOSURE AS TO COMPLIANCE
AND/OR REASONS FOR NON-COMPLIANCE
PRINCIPLE 4:
SAFEGUARD INTEGRITY IN CORPORATE REPORTING
The Company complies with this principle and recommendations to the extent as
described below: -
Recommendation 4.1:
The Company has an Audit and Risk Committee. The charter of this committee is
disclosed on the website. The committee is composed of a majority of independent
directors and is chaired by an independent director who is not the chairman of the
board.
The composition of the committee, the number of meetings and attendance is
disclosed annually in the Company’s Annual Report.
Recommendation 4.2:
With respect to the latest financial year, the CEO and the CFO have confirmed to the
board, in a written statement, that: -
•
•
The financial reports are complete and present a true and fair view, in all
material aspects, of the financial condition and operating results of the
Company.
These views are founded on a sound system of internal control and risk
management that implements the policies adopted by the board.
Recommendation 4.3:
The Company ensures that its external auditor attends the AGM and is available to
answer questions from security holders relevant to the audit.
PRINCIPLE 5:
MAKE TIMELY AND BALANCED DISCLOSURE
The Company complies with this principle and recommendations to the extent as
described below: -
Recommendation 5.1:
The Company has a written Continuous Disclosure Policy which is disclosed on the
Company’s website.
PRINCIPLE 6:
RESPECT THE RIGHTS OF SECURITY HOLDERS
The Company complies with this principle and recommendations to the extent as
described below: -
Recommendation 6.1
The Company discloses information about itself and its corporate governance via its
website.
Recommendations 6.2 and
6.3
The Company has a Shareholder Communication Policy which addresses these
recommendations.
Recommendation 6.4
The Company gives security holders the option to receive communications
electronically.
61 PRINCIPLES AND
RECOMMENDATIONS
PRINCIPLES AND RECOMMENDATIONS AND DISCLOSURE AS TO COMPLIANCE
AND/OR REASONS FOR NON-COMPLIANCE
PRINCIPLE 7:
RECOGNIZE AND MANAGE RISK
The Company complies with this principle and recommendations to the extent as
described below: -
Recommendation 7.1:
The Company does have an Audit and Risk Committee. See notes on the
Recommendation 4.1 concerning the composition of the committee.
The charter of the committee is disclosed via the Company’s website.
The composition of the committee, the number of meetings and attendance is
disclosed annually in the Company’s Annual Report.
Recommendation 7.2:
The Company does comply with this recommendation in that it has a Risk
Management Framework. This framework was reviewed by the board during the last
financial year.
Recommendation 7.3:
The Company does not have an all embracing internal audit function. The Company
does have comprehensive internal audit processes with respect to certain classes of
risk, namely OHS and Quality.
Other risks are monitored and managed by management and this process is
overseen by the board.
Recommendation 7.4:
The Company considers that its material exposure to economic, environmental and
social sustainability risks are low and within the spectrum of what would be typical
for a company of its size and activities.
PRINCIPLE 8:
REMUNERATION FAIRLY AND RESPONSIBLY
The Company complies with this principle and recommendations to the extent as
described below: -
Recommendation 8.1:
The Company has a remuneration committee which has a charter which is disclosed
via the Company’s website.
The remuneration committee is composed of a majority of independent non-
executive directors and is chaired by an independent director.
The composition of the committee, the number of meetings and attendance is
disclosed annually in the Company’s Annual Report.
Recommendation 8.2:
The Company discloses annually, information about the remuneration of non-
executive directors, the managing director and key management personnel in the
Remuneration Report section of the Annual Report.
Recommendation 8.3:
The Company discloses annually, information about its Employee Share Plan and
Performance Rights Plan in the notes to the Financial Statements contained in the
Annual Report.
62 Additional Stock Exchange
Information
As at 17th August 2018
NUMBER OF HOLDERS O F EQ UI T Y SECU RI TI E S
Ordinary Share Capital
There are 102,730,469 fully paid ordinary shares held by 763 individual shareholders. In addition there are 2,586,207 shares issued to employees
under the Employee Share Purchase Plans (ESP). These ESP shares are not included for the purposes of calculating the totals and percentages
used in this section. There are no options issued.
No. of Shares
23,955,912
11,556,548
SU B STAINTIAL SHA REHO LDER S
Shareholder
Mr. Desmond Bryant
Timothy Burnett
DI STRIBUTION OF SHARES
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,000 and over
TOTAL
Percentage
23.32%
11.25%
No. of Holders
57
168
120
352
66
763
THE TWENTY LARGEST REGI STERED HOLD E RS
Name
No. of Shares
Percentage
National Nominees Limited
Mr Desmond Bryant
Anacacia Pty Ltd (Wattle Fund A/C)
Tivolico Pty Ltd
Marlot Pty Ltd
Debry Pty Ltd
Mr John Power
Pacbay Pty Ltd
19,864,946
19,712,587
7,738,272
6,802,604
4,753,944
4,243,325
3,401,453
1,894,709
Corliaj Pty Ltd (Civilbuild Constructions Pty Ltd Superannuation Fund A/C)
1,317,300
Sagimo Holdings Pty Ltd
Mrs Karyn May McClelland
Donald Cant Pty Ltd
Anacacia Pty Ltd (Wattle Fund A/C)
Active Air Spares Pty Ltd
Parmelia Pty Ltd (Reilly Family Super Fund A/C)
Woodscenic Pty Ltd
Mr Robert Graburn Patterson
Mr Trevor Ross Kennedy
Anacacia Capital Pty Ltd (Wattle Fund A/C)
Pocry Investments Pty Limited (Pocry Investment A/C)
1,286,760
1,215,366
1,057,931
1,002,155
860,000
723,628
688,985
652,142
646,976
631,188
583,379
TOP 20 SHAREHOLDERS
79,077,650
19.34%
19.19%
7.53%
6.62%
4.63%
4.13%
3.31%
1.84%
1.28%
1.25%
1.18%
1.03%
0.98%
0.84%
0.70%
0.67%
0.63%
0.63%
0.61%
0.57%
76.98%
63
Corporate
Directory
Saunders International Limited
ABN 14 050 287 431
Saunders Asset Services
ABN 95 610 760 426
Saunders Civilbuild
ABN 86 617 431 562
Saunders (PNG) Limited
1-114512
Saunders Property Group
ABN 39 617 486 021
Board of Directors
Timothy Burnett – Chairman
Mark Benson – Managing Director
Malcolm McComas – Director
Greg Fletcher – Director
Secretary
Steven Dadich
Auditors
Deloitte Touche Tohmatsu
Eclipse Tower,
Level 19, 60 Station Street,
Parramatta NSW 2150
Principal Banker
Commonwealth Bank
Corporate Financial Services
Level 1, 430 Forest Road,
Hurstville NSW 2220
Registered Office &
Principal Administrative Office
Saunders International Limited
271 Edgar Street,
Condell Park NSW 2200
Telephone (02) 9792 2444
Facsimile (02)9771 2640
Saunders Civilbuild
74 Kalaroo Road,
Redhead NSW 2290
Telephone (02) 4946 0266
Saunders (PNG) Limited
Ground Floor, Century 21 House
Lot 51, Section 35
Kunai Street, Hohola
National Capital District,
Papua New Guinea
Share Register
Link Market Services Limited
Level 12, 680 George Street,
Sydney NSW 2000
Telephone (02) 8280 7111
Stock Exchange Listing
Australian Securities Exchange
20 Bridge Street,
Sydney NSW 2000
Website
www.saundersint.com
Email
mail@saundersint.com
64