Tubi Group ANNUAL REPORT 2019
02
Tubi Group Annual Report 2019
Consolidated Financial Statements
For the Year Ended 30 June 2019
Contents
Directors’ Report .......................................................... 03
Corporate Governance Statement ................................24
Auditor’s Independence Declaration .............................25
Consolidated Statement of Profit or Loss
and Other Comprehensive Income .............................. 26
Consolidated Statement of Financial Position................27
Consolidated Statement of Changes in Equity ............. 28
Consolidated Statement of Cash Flows ....................... 29
Notes to the Financial Statements ................................ 30
Directors’ Declaration ................................................... 62
Independent Audit Report
to the Members of Tubi Limited .................................... 63
Additional Information for Listed Public Companies ..... 68
Corporate Directory.......................................................70
Directors’ Report
tubigroup.com
03
For the Year Ended 30 June 2019
The directors present their report, together with the
financial statements of the Group, being Tubi Limited
(the Company) and its controlled entities, for the
financial year ended 30 June 2019.
Directors & Information on Directors
The Directors of the Company during the year ended
30 June 2019, and up to the date of this report are set
out below. All Directors held their position as a Director
throughout the entire year and up to the date of this
report unless otherwise stated.
Michael Tilley
Director
Experience: Chairman & Non-Executive Director
Interests in Shares: 104,014,980
Interests in Options: Nil
Michael Tilley is a highly experienced executive having
spent over 30 years advising and managing leading
companies in financial services, life insurance and
funds management in Australasia.
Michael Tilley retired from Challenger Financial Services
in 2008, having become Deputy Chairman in 2003 and
Chief Executive in 2004. Before taking the CEO role at
Challenger, Michael was a non-executive Director of
Incitec Limited, Chairman and Chief Executive of Merrill
Lynch Australasia, Regional Head of Mergers and
Acquisitions and a member of the Asian Executive
Committee of Merrill Lynch and was a partner at
Deloitte Touche Tohmatsu.
Michael was a non-executive Director at Orica Ltd
from November 2003 until 2013. He was the Chairman
of Orica’s Safety, Health & Environment Committee
and a member of the Audit and Risk and Corporate
Governance and Nominations Committees.
Michael is a former member of the Takeovers Panel.
Michael was appointed non-executive Chairman of
Hotel Property Investments Limited in November 2013.
Michael holds a Post Graduate Diploma in Business
Administration from Swinburne University and is a
Fellow of The Australian Institute of Company Directors.
Michael is Chairman of the Nomination Committee.
ASX Listed Company Directorships in the past
three years: Hotel Property Investments Limited
Marcello Russo
Executive Director Business Development & Founder
Interests in Shares: 35,727,420
Interests in Options: Nil
Marcello Russo is the Founder and executive Director
of Tubi, having steered the Company since its inception
in 2009. Marcello has had over 25 years of experience
in pipe strategy, innovation and manufacture, which is
reflected in Tubi’s focus on future growth and global
industry development.
Prior to his present position, Marcello was the general
manager of Cromford (previously known as Australian
Film & Pipe Manufacturing) where he led and managed
over 90 staff. During this period, he facilitated and
directed the construction of the Greenfield 70,000
square-metre manufacturing facility, covering a full
range of operational and directional imperatives.
ASX Listed Company Directorships in the past
three years: Nil
Jeffrey Shorter
Chief Executive Officer (Tubi Limited)
& Executive Chairman (Tubi USA)
Appointed 29 April 2019
Interests in Shares: Nil
Interests in Options: 4,500,000
Interests in TRSUs: 1,500,000
Jeffrey Shorter is based in Houston, Texas and reports
directly to the Board of Directors of Tubi Group and
is responsible for all aspects of the company, producing
HDPE pipe in mobile extrusion factories. Jeffrey was the
Energy Group CEO of Sturrock and Robson Group from
2013-2016, the President and CEO of Flexsteel Pipeline
Technologies Inc. from 2008-2013, the Commercial
Director – Line Pipe of Tenaris, United States from
2006-2008, the Vice President and General Manager
of Maverick Tube Corporation from 2003-2006 and
had various roles at Cargill from 1994-2003 including
General Manager of Horizon Milling from 2002-2003.
Jeffrey holds a Bachelors of Science Degree from
Michigan Technology University in Mechanical
Engineering and a Master’s Degree in Business
Administration from Youngstown State University.
ASX Listed Company Directorships in the past
three years: Nil
04
Tubi Group Annual Report 2019
Directors’ Report
Brent Emmett
Independent Non-Executive Director
Appointed 29 April 2019
Interests in Shares: 750,000
Interests in Options: Nil
Brent Emmett has over 40 years’ experience in petroleum
exploration, exploration and production management
and investment banking.
Brent began work as an explorationist in Australia,
Papua New Guinea and New Zealand for Esso (now
ExxonMobil) and then Elf Aquitaine. He joined Ampolex
as Exploration Manager in 1983 and filled general
management roles in North and South America,
International and Business Development, and was
a member of the Executive Committee.
From 1997 until 2001 Brent was Managing Director –
Oil & Gas Advisory with the investment banking firm
of CIBC World Markets.
Brent was the Chief Executive Officer and Managing
Director of Horizon Oil for 17 years, where he was a
member of the risk management and disclosure
committees. He retired as CEO of Horizon Oil in June
2018 and is currently an advisor to the board. He remains
actively involved in the oil business as a senior advisor
to industry participants.
He holds a Bachelor of Science First Class Honours
degree in physics and geophysics from
Adelaide University.
Brent is Chairman of the Human Resources Committee,
and a member of the Nominations Committee and
Audit Committee.
ASX Listed Company Directorships in the past
three years: Horizon Oil Limited. Resigned 30 June 2018.
Anthony Willsallen
Non-Executive Director
Interests in Shares: 104,014,980
Interests in Options: Nil
Tony Willsallen has 45 years in contracting, farming
and heavy equipment. He managed family agricultural
enterprises for 35 years before retiring in 2010.
He is currently Managing Director of a private company
involved in quarrying and waste services since 1987
which produces and supplies quarry products to large
infrastructure projects in Southern New South Wales.
He holds a Bachelor of Agricultural Economics from
the University of New England.
Tony is a member of the Nominations Committee,
Audit Committee and Human Resources Committee.
ASX Listed Company Directorships in the past
three years: Nil
Craig Lawn
Independent Non-Executive Director
Interests in Shares: 1,942,500
Interests in Options: Nil
Craig Lawn retired from Pricewaterhouse-Coopers after
joining the firm in 1983. Craig was a partner for 20 years,
working in the Parramatta, Sydney and Brisbane offices.
Craig has been directly involved in providing income
tax and business advice for over 34 years to a variety
of businesses including biotechnology, venture capital,
research and technology based organisations. He is
currently a business advisor to various charities and
private companies and is on the boards of Key Assets
Ltd, Cleanspace Pty Ltd and The Red Room
Company Ltd.
He holds a Bachelor of Economics and Law degree
from the University of Sydney.
Craig is Chairman of the Audit Committee, and a
member of the Nominations Committee and Human
Resources Committee.
ASX Listed Company Directorships in the past
three years: Nil
Directors’ Report
tubigroup.com
05
Brian Vowels
Independent Non-Executive Director
Resigned 29 April 2019
Interests in Shares: 6,323,800
Interests in Options: Nil
Directors & Committee Meetings
The number of meetings of the Group’s Board of
Directors and each Board Committee held during the
year ended 30 June 2019, and the number of meetings
attended by each director were:
Brian has more than 25 years experience as a finance
professional in the insurance industry, working both
locally and internationally in organisations ranging from
start-ups to established large listed corporates. Having
spent the early part of career in management, Brian has
spent the past 7 years holding directorships in numerous
companies. Brian is active in the not-for-profit and private
equity sectors, holding several positions including
Chairman and Trustee of the Australian Cord Blood
Foundation and President and Director the Financial
Services Accountants Association.
Brian holds a Graduate Diploma in Business
(Accounting), an MBA from Southern Cross University,
is a Fellow of Chartered Accountants Australia &
New Zealand and is a Graduate of the Australian Institute
of Company Directors.
Company Secretary
Ian Coates is the Company Secretary and is also the
Chief Financial Officer of the Group.
Ian Coates is a senior finance professional with extensive
experience gained working in both small start-ups and
large listed corporations. Over his career Ian has held
finance and strategy leadership roles in the insurance,
construction and manufacturing industries.
In 2012, after twenty years working in the finance
and insurance industry, having worked with the likes
of Suncorp Limited and IAG Limited, Ian moved across
to lead a major Finance transformation project at
CPB Contractors.
On completion of the assignment at CPB Contractors,
Ian has continued to provide financial consulting support
and services to Companies. Ian manages the finance
function for Tubi and is responsible for maintaining
relationships with key external stakeholders.
He is a Certified Practicing Accountant and holds
a Bachelor of Business degree from Southern
Cross University.
Director
Board Meetings
Audit Committee
Meetings
Eligible to
Attend
Number
Attended
Eligible to
Attend
Number
Attended
Michael Tilley
Marcello
Russo
Jeffrey
Shorter
Anthony
Willsallen
Craig Lawn
Brent Emmett
Brian Vowels
8
8
3
8
8
3
5
Principal Activities
8
7
3
8
8
3
5
–
–
–
1
1
1
–
–
–
–
1
1
1
–
The principal activities of the Group during the year were
the development, operation, leasing and sale of mobile
manufacturing plants for the production of high-density
polyethylene (“HDPE”) pipes for use in the oil and gas,
irrigation, mining and infrastructure sectors.
The Group continues to operate in Australia, New Zealand
and the United States.
On 14 June 2019, the Group completed an Initial Public
Offering (“IPO”) with its shares commencing trading on
the Australian Securities Exchange (“ASX”) on that date.
Apart from that noted above, there were no significant
changes in those activities during the year.
06
Tubi Group Annual Report 2019
Directors’ Report
Review of Operations
2019 Highlights
Highlights for the 2019 financial year include:
> revenues of $31.56 million (2018: $17.38 million);
> profit after tax attributable to Group shareholders
was $1.50 million (2018: $0.52 million);
> EBITDA of $3.15 million (2018: $1.90 million)1;
The Group continued to manufacture “HDPE” pipe from
its mobile extrusion Plant based in the Permian Basin,
United States.
Additional capital raising activities were undertaken
during the year which raised $13.2 million (includes the
conversion of related party loans less capital raising
costs) and allowed the Group to fund its new Plant
growth strategy.
On the 4 December 2018, the Group entered a second
Manufacturing and Supply contract with MPS Enterprises,
Inc. The second US mobile extrusion Plant is expected
to be commissioned and on-site late September 2019
to commence production.
The Group entered into an Equipment Purchase
Agreement with Iplex Pipelines NZ Limited (“IPLEX”) on
21 December 2018 (“Equipment Purchase Agreement’).
Under the Equipment Purchase Agreement Tubi agreed to
supply equipment including a Mobile Plant to IPLEX, which
it is currently building and assembling. The purchase price
is NZD$9,908,000. Milestone payment 1 – 40% of the
purchase price, was received in December 2018. Milestone
payment 2 is 50% of the purchase price and is due on
delivery of the Mobile Plant to the IPLEX site. Milestone 3
is 10% of the purchase price on IPLEX accepting that the
Mobile Plant is working in accordance with the
specifications.
Current Year Financial Performance
In the 12 months to 30 June 2019, the Group generated
operating revenues from the sale of HDPE pipe of
$31.56 million an increase of $14.18 million (81.6% increase
over the FY18 year). The increase in revenue was due to a
full year’s production in the United States, compared to 9
months in 2018 (relocation of the Plant from New Zealand
to the United States) and a higher average sales price per
kilogram experienced in the US market for the current year.
The Gross Profit margin for 2019 was in line with 2018.
Gross Profit achieved was $5.66 million (17.9% of
revenue) in the current year compared to $3.11 million
(17.9% of revenue) in the previous year.
Employee costs increased $0.37 million with the
strengthening of management team. Other Operating
costs increased by $1.10 million (122%) as a result of
listing expenses of $0.95 million, legal responses to suitor
interest pre IPO $0.1 million and audit fees of $0.1 million
(includes 2019 and prior year audits required for listing).
Depreciation and amortisation costs increased by
$0.30 million due to the purchase and full year depreciation
of equipment purchased for US production.
The Group net profit after tax for the year was
$1.50 million compared to a profit of $0.52 million
in the previous year.
Financial Position at 30 June 2019
The Group’s net assets were $21.63 million representing
net tangible assets per share of $0.09 (June 2018: $0.04).
Major current assets included cash of $7.61 million and
other current assets of $5.24 million (mainly comprising
trade receivables and inventories). Non-current assets
increased by $8.48 million on the previous year largely
due to the work in progress on the development of
new plants.
Current liabilities (excluding borrowings) increased by
$3.24 million mainly due to an increase in trade payables
resulting from a $3.8 million deposit payment from IPLEX.
Borrowings reduced by $2.71 million due to the conversion
of $2.63 million of related party loans to ordinary shares
prior to Listing.
Significant changes in the state of affairs
During the year, the following changes occurred within
the Group:
1. On 14 June 2019, the Group completed an Initial
Public Offering (“IPO”) with its shares commencing
trading on the Australian Securities Exchange (“ASX”)
on that date.
2. Issues of share capital:
On 8 February 2019 the Company raised an additional
$1,259,153 by the issue of 208,469 fully paid ordinary
shares at a share price of $6.04 per share.
1.
“EBITDA” is a non-statutory financial measures which are not prescribed by Australian Accounting Standards (“AAS”). EBITDA represents the
profit under AAS adjusted for interest, tax, depreciation and amortisation.
Directors’ Report
tubigroup.com
07
On 29 April 2019 the Company:
Risk management
a) Undertook a 1:30 share split where every
one (1) share held in the capital of the Company
converted to thirty (30) shares held in
the Company;
b) converted shareholder loans to the sum of
$2,628,484 to 13,142,400 fully paid ordinary
shares in the capital of the Company at an issue
price of $0.20; and
c) raised $10 million via the issue of 50,000,000
fully paid shares at $0.20.
The nature of the Group’s business exposes it to certain
risks. These risks are actively monitored and managed
by the Company’s Board Audit Committee who assists
the Board in fulfilling its responsibilities relating to the
oversight of the Tubi Group’s risk profile. During the
period, the Tubi Board reviewed and updated its risk
profile prior to Listing. Key risks were documented in
the Prospectus and have not changed since Listing.
The Company’s Board concluded that the material risks
to which Tubi Group is exposed remain consistent with
those identified in the Prospectus.
Likely developments, business
strategies and prospects
The Group continues to focus on executing its strategy
outlined in its prospectus issued on 17 May 2019.
The commissioning of the new plant for IPLEX in
New Zealand and the second plant for the US are on
schedule and the third and fourth plants are tracking to
commissioning timelines. A number of conversations
in respect of contracts for supply from the 3rd and
4th Mobile Plants are occurring, which are under
construction.
Dividends
There were no dividends paid, recommended or declared
during the current or previous financial year.
Subsequent Events
There have been no matters or events that have occurred
subsequent to 30 June 2019 that have 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 subsequent financial years.
Key priorities for the next twelve months include:
Options
> Scaling resources to enable the effective production
from one Mobile Plant to 4 Mobile Plants. This includes
hiring strong sales capability, production leaders and
plant operators.
As at the date of this report, the Group had 4,500,000
options on issue to Jeffrey Shorter. These options have
an exercise price of $0.20 per option and an expiry date
of 30 April 2024.
> Building raw material supplier relationships in the USA
during our growth phase. Recent volatility in pricing
makes it critical that strong raw material supplier
relationships are maintained to optimise profit
spreads.
> Building plant maintenance and generator capability.
Sourcing quality technical people and service
providers is difficult in remote locations.
Tenure Restricted Stock Units
The Company also has 1,500,000 Tenure Restricted Stock
Units (TRSUs) on issue to Jeffrey Shorter. The TRSUs vest
annually from 30 August 2020 in three equal tranches
with the only vesting condition being that Mr. Shorter
remains an employee on the vesting date. TRSUs
automatically convert to one ordinary share each
on satisfaction of the vesting conditions.
Environmental Issues
The Group’s operations are subject to local, state and
federal environmental legislation and regulations in the
jurisdictions in which it operates. The Board are responsible
for the regular monitoring of environmental exposure and
compliance with environmental regulations and are
not aware of any breaches of these regulations during
the year.
08
Tubi Group Annual Report 2019
Directors’ Report
Non-Audit Services
During the year, entities associated with PKF(NS) Audit
& Assurance Limited Partnership (external auditor to
the Group) have provided other services in addition
to the statutory audits, as disclosed in Note 27 of the
financial statements.
The Directors are satisfied that the provision of non-audit
services provided by the auditor are compatible with the
general standard of independence for auditors imposed
by the Corporations Act 2001. The Directors are satisfied
that these non-audit services do not compromise the
external auditor’s independence requirements of the
Corporations Act 2001 for the following reasons:
> all non-audit services have been reviewed and
approved to ensure that they do not impact the
integrity and objectivity of the auditor; and
> none of the services undermine the general principles
relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants
issued by the Accounting Professional and Ethical
Standards Board, including reviewing or auditing the
auditor’s own work, acting in a management of
decision-making capacity for the Group, acting as
advocate for the Group or jointly sharing economic
risks and rewards.
Indemnification & Insurance
of Directors & Officers
The Group has entered into deeds of indemnity, access
and insurance with each Director. Under these deeds,
the Group has agreed to indemnify, to the extent
permitted by the Corporations Act, each Director in
respect of certain liabilities which the Director may incur
as a result of, or by reason of (whether solely or in part),
being or acting as an officer of the Group. These liabilities
include losses or liabilities incurred by the Director to
any other person as an officer of the Group, including
legal expenses.
The Group has also agreed to maintain in favour of each
officer a directors’ and officers’ policy of insurance for the
period that they are officers and for seven years after they
cease to act as officers.
Proceedings on Behalf of the Company
No person has applied to the Court under section 237 of
the Corporations Act 2001 for leave to bring proceedings
on behalf of the Group, or to intervene in any proceedings
to which the Group is a party for the purpose of taking
responsibility on behalf of the Group for all or part of
those proceedings.
Auditor
PKF(NS) Audit & Assurance Limited Partnership
continues in office in accordance with section 327
of the Corporations Act 2001.
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as
required under section 307C of the Corporations Act 2001
is set out on page 25 of the Annual Report.
Directors’ Report
Remuneration Report (Audited)
tubigroup.com
09
Introduction
Remuneration Framework
The remuneration report details the key management
personnel (“KMP”) remuneration arrangements for the
Group, in accordance with the requirements of the
Corporations Act 2001 and its regulations.
KMP are those persons having authority and
responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all
Directors. The following persons of the Group were
classified as KMP during the 2019 financial year and
unless otherwise indicated, were classified as KMP
for the entire year:
Michael Tilley
Chairman & Non-Executive Director
Marcello Russo
Executive Director Business Development & Founder
Jeffrey Shorter
Chief Executive Officer (Tubi Limited)
& Executive Chairman (Tubi USA)
(Appointed 29 April 2019)
Anthony Willsallen
Non-Executive Director
Craig Lawn
Independent Non-Executive Director
Brent Emmett
Independent Non-Executive Director
(Appointed 29 April 2019)
Brian Vowels
Independent Non-Executive Director
(Resigned 29 April 2019)
The remuneration framework of the Group has been
designed to align KMP objectives with shareholder and
business objectives by providing a fixed remuneration
component and offering specific long term incentives
based on key performance areas affecting the Group’s
financial results. The Board believes the remuneration
policy to be appropriate and effective in its ability to
attract and retain the best key management personnel
to run and manage the Group, as well as create goal
congruence between directors, executives
and shareholders.
The Board’s policy for determining the nature and
amount of remuneration for key management personnel
of the Group is as follows:
> The remuneration policy has been developed by
the Remuneration Committee and approved by the
Board following professional advice from independent
external consultants.
> All key management personnel receive a base salary
(which is based on factors such as length of service
and experience), superannuation, fringe benefits,
and performance incentives.
> Performance incentives are based on predetermined
key performance indicators.
> Incentives paid in the form of options or rights are
intended to align the interests of the KMP and the
Group with those of the shareholders. In this regard,
key management personnel are prohibited from
limiting risk attached to those instruments by use
of derivatives or other means.
Ian Coates
Company Secretary & Chief Financial Officer
This remuneration report is set out under the following
main headings:
> The Remuneration Committee reviews key
management personnel packages annually by
reference to the Group’s performance, executive
performance and comparable information from
industry sectors.
> Remuneration Framework
> Equity Incentive Plans
> Service Agreements
> Details of Remuneration
> Share-Based Compensation
> Additional Disclosures Relating
to Key Management Personnel
The performance of KMP is measured against criteria
agreed annually with each executive and is based
predominantly on the forecast growth of the Group’s
profits and shareholders’ value. All bonuses and
incentives must be linked to predetermined performance
criteria. The Board may, however, exercise its discretion
in relation to approving incentives, bonuses and options,
and can recommend changes to the Committee’s
recommendations. Any changes must be justified by
reference to measurable performance criteria. The policy
is designed to attract the highest calibre of executives
and reward them for performance that results in long
term growth in shareholder wealth.
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Tubi Group Annual Report 2019
Directors’ Report
Remuneration Report (Audited)
Key management personnel receive a superannuation
guarantee contribution required by the law, which is
currently 9.5%, and do not receive any other retirement
benefits. Some individuals, however, may choose to
sacrifice part of their salary to increase payments
towards superannuation.
Upon retirement, key management personnel are paid
employee benefit entitlements accrued to the date of
retirement.
All remuneration paid to KMP is valued at the cost to
the Group and expensed.
The Board’s policy is to remunerate non executive
directors at market rates for time, commitment and
responsibilities. The Remuneration Committee determines
payments to the non executive directors and reviews their
remuneration annually, based on market practice, duties
and accountability. Independent external advice is sought
when required. The maximum aggregate amount of fees
that can be paid to non executive directors is subject to
approval by shareholders at the Annual General Meeting.
The current maximum is $750,000.
Certain KMP are also entitled to long-term incentives
(“LTIs”) in the form of share-based compensation to
further align their interests with shareholders’ interests.
Details regarding share-based compensation is set
out below.
Key management personnel who are subject to these
arrangements are subject to a policy governing the use
of external hedging arrangements. Such personnel are
prohibited from entering into hedge arrangements,
i.e. put options, on unvested shares and options which
form part of their remuneration package. Terms of
employment signed by such personnel contain details
of such restrictions.
Equity Incentive Plans
Australian Long-Term Incentive Plan
The Group has adopted an employee incentive plan
known as the Tubi Limited Long-Term Incentive Plan (“LTI
Plan”), to assist in the reward, retention and motivation
of the Group’s Directors, senior management, and other
employees. The LTI Plan is intended to assist with
aligning the interests of participants with shareholders
by providing an opportunity for Eligible Participants to
earn equity interests in the Company.
Under the rules of the LTI Plan, the Board has discretion
to offer:
> a full-time or part-time employee of any Group
Company or a Director Options to acquire shares
and/or Performance Rights to acquire Shares; and
> any other person who is declared by the Board in
its sole and absolute discretion to be eligible to
receive grants of Options to acquire shares and/or
Performance Rights to acquire Shares inclusive
of any Options, Performance Rights or similar
instruments issued under any other incentive plan
operated by the Company.
(each recipient is an Eligible Employee and the above
awards are collectively the Awards).
In each case the Awards can be made subject to vesting
conditions and/or performance hurdles as determined
by the Board.
The terms and conditions of the LTI Plan are set out
in comprehensive rules. A summary of the rules of the
LTI Plan is set out below:
> The LTI Plan is open to Eligible Employees as
determined by the Board. Participation is voluntary.
> The Board may determine the type and number
of Awards to be issued under the LTI Plan to each
participant and other terms of issue of the Awards,
including but not limited to:
• what conditions and/or performance hurdles must
be met by a participant in order for an Award to
vest (if any);
•
•
•
the amount payable to be paid by a participant
on the grant of Awards (if any);
the exercise price of any option granted to
a participant;
the period during which a vested option can
be exercised; and
• any forfeiture conditions or disposal restrictions
applying to the Awards and any Shares that a
participant receives upon exercise of their options
or vesting of Performance Rights.
> When any conditions and/or performance hurdles
have been satisfied, their Options/Performance
Rights will become vested and will be exercisable
into Shares.
Directors’ Report
Remuneration Report (Audited)
tubigroup.com
11
> Each vested Option and Performance Right enables
the participant to be issued or to be transferred one
Share upon exercise or vesting (as applicable), or an
equivalent cash value, subject to the rules governing
the LTI Plan and the terms of any particular offer.
> Participants holding Options or Performance Rights
are not permitted to participate in new issues of
Securities by the Company but adjustments may be
made to the number of Shares over which the options
or Performance Rights are granted and/or the exercise
price (if any) to take into account changes in the
capital structure of the Company that occur by way
of pro rata and bonus issues in accordance with the
rules of the LTI Plan and the ASX Listing Rules.
> If a “change of control event” occurs to the Company,
and unless the Board determines otherwise, all
granted Awards will immediately vest.
A “change of control” event will occur when a person
or entity becomes a legal or beneficial owner of 50%
or more of the issued capital of the Company; a person
or entity becomes entitled to, acquires, holds or has
an equitable interest in more than 50% of the issued
share capital of the Company; or the Board
determines that there are circumstances that have
occurred or are likely to occur which will result in
significant changes to the structure or control of the
Company which may adversely affect the value of the
Awards. A “change of control” event does not include
the listing of the Company on the ASX.
> If a participant becomes a “bad leaver”:
• all vested options which have not been exercised
will continue in force and remain exercisable for
30 days, unless the Board in its sole and absolute
discretion determines otherwise; and
• all unvested options and/or performance rights
will automatically be forfeited by the participant
for the payment by the Company to the
participant of nominal consideration.
A participant will be a “bad leaver” if the participant
resigns (other than because they have died or resign
due to incapacity arising from serious personal illness
or injury), is terminated for performance or is terminated
or dismissed for misconduct, unless the Board
determines otherwise in its absolute discretion.
> If a participant is a “good leaver”:
• unless the Board determines otherwise any and
all vested options held by the participant which
have not been exercised will continue in force and
remain exercisable for 12 months; and
> the Board may determine the manner in which
any unvested Awards held by the participant will
be dealt with.
A participant is a “good leaver” if they are not a
“bad leaver”.
> The LTI Plan limits the number of Awards that the
Company may grant without Shareholder approval,
such that the sum of all Awards on issue (assuming
all options and Performance Rights were exercised)
do not at any time exceed in aggregate 5% of the fully
diluted share capital of the Company as at the date
of any proposed new Awards.
> The Board may delegate management and
administration of the LTI Plan, together with any of
their powers or discretions under the LTI Plan, to a
committee of the Board or to any one or more
persons selected by them.
> Subject to the ASX Listing Rules and the Constitution,
the Board may at any time amend the LTI Plan or the
terms and conditions upon which Awards have been
issued under the LTI Plan provided, generally, that the
amendment does not materially reduce the rights of
any Participant in respect of Awards granted to them.
> The Board may elect to use an employee share trust
or other mechanism for the purposes of holding
Awards for Participants under the Plan and delivering
Plan Shares on behalf of Participants upon exercise
of Options and/or Performance Rights (as the case
may be).
United States Share Incentive Plan
The Company has adopted an employee incentive
plan known as the Tubi Limited Share Incentive Plan
(“SI Plan”), to assist in the reward, retention and
motivation of certain of the Group’s Directors, senior
management, and other employees. The SI Plan is
intended to assist with aligning the interests of
participants with shareholders by providing an
opportunity for eligible participants to earn equity
interests in the Company.
Under the rules of the SI Plan, the Board has discretion
to offer any person who is declared by the Board in
its sole and absolute discretion to be eligible (Eligible
Employee) to receive grants of options to acquire Shares
and/or restricted stock units to acquire Shares (Awards).
In each case the Awards can be made subject to vesting
conditions and/or performance hurdles as determined
by the Board.
12
Tubi Group Annual Report 2019
Directors’ Report
Remuneration Report (Audited)
The terms and conditions of the SI Plan are set out
in comprehensive rules. A summary of the rules of the
SI Plan is set out below:
> The SI Plan is open to Eligible Employees as
determined by the Board. Participation is voluntary.
> The Board may determine the type and number
of Awards to be issued under the SI Plan to each
participant and other terms of issue of the Awards,
including but not limited to:
holds or has an equitable interest in more than 50%
of the issued share capital of the Company; or the
Board determines that there are circumstances that
have occurred or are likely to occur which will result
in significant changes to the structure or control of
the Company which may adversely affect the value
of the Awards. A “change of control” event does not
include the listing of the Company on the ASX.
> If a participant becomes a “bad leaver”:
• what conditions and/or performance hurdles must
be met by a participant in order for an Award to
vest (if any);
•
•
•
the amount payable to be paid by a participant
on the grant of Awards (if any);
the exercise price of any option granted to
a participant;
the period during which a vested option can
be exercised; and
• any forfeiture conditions or disposal restrictions
applying to the Awards and any Shares that a
participant receives upon exercise of their options
or vesting of restricted stock units.
> When any conditions and/or performance hurdles
have been satisfied, their options/restricted stock
units will become vested and will be exercisable
into Shares.
> Each vested option and restricted stock unit enables
the participant to be issued or to be transferred one
Share upon exercise or vesting (as applicable),
subject to the rules governing the SI Plan and the
terms of any particular offer.
> Participants holding options or restricted stock
units are not permitted to participate in new issues of
Securities by the Company but adjustments may be
made to the number of Shares over which the options
or restricted stock units are granted and/or the
exercise price (if any) to take into account changes
in the capital structure of the Company that occur by
way of pro rata and bonus issues in accordance with
the rules of the SI Plan and the ASX Listing Rules.
> If a “change of control event” occurs to the Company,
and unless the Board determines otherwise, all
granted Awards will immediately vest.
A “change of control” event will occur when a person
or entity becomes a legal or beneficial owner of 50%
or more of the issued capital of the Company; a
person or entity becomes entitled to, acquires,
• all vested options which have not been exercised
will continue in force and remain exercisable
within 30 days of the participant becoming a bad
leaver, unless the Board in its sole and absolute
discretion determines otherwise;
• all vested restricted stock units which have not
been settled will be immediately settled in plan
shares, unless the Board in its sole and absolute
discretion determines otherwise; and
• all unvested Awards will automatically be forfeited
by the participant for the payment by the
Company to the participant of nominal
consideration.
A participant will be a “bad leaver” if the participant
resigns (other than because they have died or resign
due to incapacity arising from serious personal illness
or injury), is terminated for performance or is
terminated or dismissed for misconduct, unless
determined otherwise by the Board in its sole
discretion.
> If a participant is a “good leaver”:
• unless the Board determines otherwise any and
all vested Options held by the participant which
have not been exercised will continue in force and
remain exercisable for 12 months;
• all unvested Options will be automatically forfeited
by the participant for the payment by the
Company to the participant of nominal
consideration;
• all vested Restricted Stock Units which have
not been settled will be immediately settled in
Shares; and
•
the Board may determine, in its sole and absolute
discretion, the manner in which the unvested
Restricted Stock Units will be dealt with.
A participant is a “good leaver” if they are not a
“bad leaver”.
Directors’ Report
Remuneration Report (Audited)
tubigroup.com
13
> The SI Plan limits the number of Awards that the
Company may grant without Shareholder approval,
such that the sum of all Awards on issue (assuming
all options and restricted stock units were exercised)
do not at any time exceed in aggregate 5% of the fully
diluted share capital of the Company as at the date of
any proposed new Awards inclusive of any Options,
Restricted Stock Units or similar instruments issued
under any other incentive plan operated by
the Company.
> The Board may delegate management and
administration of the SI Plan, together with any
of their powers or discretions under the SI Plan,
to a committee of the Board or to any one or more
persons selected by them.
> Subject to the ASX Listing Rules and the Constitution,
the Board may at any time amend the SI Plan or the
terms and conditions upon which Awards have been
issued under the SI Plan provided, generally, that the
amendment does not materially reduce the rights of
any Participant in respect of Awards granted to them.
> The Board may elect to use an employee share
trust or other mechanism for the purposes of holding
Awards for Participants under the Plan, and delivering
Plan Shares on behalf of Participants upon exercise
of Options and/or restricted stock units (as the case
may be).
There are also certain rules of the SI Plan which are
applicable to Awards granted under the SI Plan to
participants who are residents of the USA (“U.S
Persons”), including that:
> A U.S Person may only be granted an Award if they
are a U.S employee, consultant or member of the
Board of a Group entity.
> A consultant is only eligible to become a participant
if they are a natural person providing bona fide
services to a Group entity and such services are not:
•
in connection with the offer or sale of securities
in a capital-raising transaction; or
• performed to directly or indirectly promote or
maintain a market for the Company’s securities.
> No U.S. Person shall be eligible to be granted an
Award prior to the date such person commences
employment or other personal service relationship
with a Group entity.
> No option granted to an eligible U.S. Person shall
have an exercise price that is less than 100% of the
fair market value of a Share on the date that the
option is granted.
The Tubi Board has resolved and adopted a policy that
there will be no option or share plan incentives awarded
to non-executive directors of the Company.
14
Tubi Group Annual Report 2019
Directors’ Report
Remuneration Report (Audited)
Service Agreements
Non-Executive Service Agreements
The Board’s policy is to remunerate non executive directors at market rates for time, commitment and responsibilities.
The Remuneration Committee determines payments to the non executive directors and reviews their remuneration
annually, based on market practice, duties and accountability. Independent external advice is sought when required.
The maximum aggregate amount of fees that can be paid to non executive directors is subject to approval by
shareholders at the Annual General Meeting. The current maximum is $750,000.
The Group has entered into an appointment letter with each of its non-executive directors. The following table sets out
the non-executive Directors’ annual remuneration commencing from 1 July 2019. No fees were paid to non-executive
Directors prior to 1 July 2019.
Director
Key Terms of Service Agreement
Michael Tilley
Term:
Chairman &
Non-Executive Director
Renewed a least every three years in accordance with the
Company’s Constitution and ASX Listing Rules.
Remuneration:
$75,000 per annum for services as Chairman of the Board.
Anthony Willsallen
Term:
Non-Executive Director
Renewed a least every three years in accordance with the
Company’s Constitution and ASX Listing Rules.
Remuneration:
$50,000 per annum for services as a Non-Executive Director
Remuneration:
$50,000 per annum for services as a Non-Executive Director
$5,000 for services as a member of the Audit Committee
$2,500 for services as a member of the Human Resources Committee
Renewed a least every three years in accordance with the
Company’s Constitution and ASX Listing Rules.
$10,000 for services as Chair of the Audit Committee
$2,500 for services as a member of the Human Resources Committee
Renewed a least every three years in accordance with the
Company’s Constitution and ASX Listing Rules.
Craig Lawn
Term:
Independent
Non-Executive Director
Brent Emmett
Term:
Independent
Non-Executive Director
Remuneration:
$50,000 per annum for services as a Non-Executive Director
Appointed 29 April 2019
$5,000 for services as a member of the Audit Committee
$5,000 for services as Chair of the Human Resources Committee
Directors’ Report
Remuneration Report (Audited)
tubigroup.com
15
Executive Service Agreements
The key terms concerning the employment of executives are set out in the following table:
Director
Key Terms of Service Agreement
Jeffrey Shorter
Chief Executive Officer
(Tubi Limited) & Executive
Chairman (Tubi USA)
Appointed 29 April 2019
Jeffrey Shorter is employed as Chief Executive Officer of Tubi Limited and executive
Chairman of the Board of Tubi USA. Jeffrey is employed on a full-time basis and his
fixed annual remuneration is US$225,000 per annum, less applicable deduction and
withholdings. Jeffrey’s fixed annual remuneration from 1 January 2020 will be
US$300,000, less applicable deductions and withholdings.
Jeffrey is eligible to receive short term cash incentive payments as follows:
> for the period to 30 June 2019, up to US$40,000 (gross) subject to achievement
of performance hurdles relating to Tubi’s HDPE pipe production volumes;
> for the period 1 July 2019 to 31 December 2019, up to US$56,250 (gross) subject
to achievement of performance hurdles relating to Tubi’s financial performance and
the commissioning of new Mobile Plants; and
> from 1 July 2020, eligible to participate in any senior executive short-term
incentive plan
Jeffrey is also eligible to participate in the Company’s USA Share Incentive (SI) Plan
and was granted 4,500,000 Options on 30 April 2019.
Jeffrey has also been granted 1,500,000 Tenure Restricted Stock Units (“TRSUs”)
under the SI Plan.
The Board has resolved to grant Performance Restricted Stock Units (“PRSUs”) to
Jeffrey on or about 30 November 2019 under the Company’s SI Plan. The aggregate
number of PRSUs to be granted will be calculated by dividing US$150,000 (converted
to A$) by the VWAP of the Shares over the five trading days immediately prior to
30 November 2019.
The general terms of the Options, TRSUs and PRSUs are summarised under the
heading “Share-Based Compensation” below.
Jeffrey is eligible to participate in any Tubi USA sponsored benefit plans or programs
in effect from time to time, including but not limited to a health plan and 401(k) plan,
subject to the terms and conditions of such plans.
Jeffrey’s employment contract is for an indefinite term and can be terminated by Tubi
USA with or without cause or due to Jeffrey’s death or disability, or by Jeffrey with or
without good reason. Tubi USA may terminate Jeffrey’s employment without cause
by providing 30 days’ written notice of termination. If Jeffrey is terminated by Tubi USA
without cause or if Jeffrey terminates his employment contract for good reason, the
company must pay him 6 months’ base salary then in effect and up to 6 months of
premiums under the company’s group health plan applicable to executive-level
employees, subject to Jeffrey executing a deed of release on terms mutually agreed
by Tubi USA and Jeffrey. For any other termination or resignation, Jeffrey will only be
owed any salary or other amounts accrued up through the date of termination.
16
Tubi Group Annual Report 2019
Directors’ Report
Remuneration Report (Audited)
Director
Key Terms of Service Agreement
Jeffrey Shorter
(continued)
Jeffrey’s employment contract contains mutual non-disparagement obligations which
survive the termination of employment. Jeffrey is also party to a separate agreement
which contains express provisions protecting Tubi USA’s confidential information and
intellectual property and includes a six month post-termination non-compete provision.
In the event that Jeffrey ceases to be employed by Tubi USA, he has agreed to cooperate
in good faith with Tubi USA in connection with ay defence, prosecution or investigation
or any proceeding involving the Group, in exchange for payment of a reasonable daily
rate, in certain circumstances and subject to all applicable law.
Marcello Russo
Executive Director
Business Development
& Founder
Marcello Russo is employed by the Company in the position of Executive Director
Business Development. Marcello is employed on a full-time basis and his fixed annual
remuneration for the year ending 31 December 2019 is $259,000 inclusive of
superannuation and subject to tax deductions. Marcello’s fixed annual remuneration
for the year commencing 1 January 2020 is $300,000 inclusive of superannuation
and subject to tax deductions.
Marcello is eligible to receive the following short-term cash incentives:
> for the financial year ending 30 June 2019, up to $66,000 (gross) subject to
achievement of performance hurdles relating to Tubi’s HDPE pipe
production volumes;
> for the financial year ending 30 June 2020, up to 50% of his base salary (gross),
subject to satisfactory achievement of individual and Company performance
hurdles as determined by the Company in its absolute discretion; and
> from 1 July 2020, eligible to participate in any senior executive short-term
incentive plan.
The Board has resolved to grant Performance Rights to Marcello on or about 30
November 2019 under the Company’s Long Term Incentive (LTI) Plan. The aggregate
number of Performance Rights to be granted will calculated by dividing $150,000 by the
VWAP of the Shares over the five trading days immediately prior to 30 November 2019.
The vesting conditions, performance hurdles and general terms of the Performance
Rights are summarised under the heading “Share-Based Compensation” below.
Marcello’s employment contract contains express provisions protecting the Company’s
confidential information and intellectual property. Marcello’s employment contract
contains mutual non-disparagement obligations which survive the termination of
employment.
Under the terms of Marcello’s employment contract, either party is entitled to terminate
Marcello’s employment by giving six months’ written notice.
After termination of employment, the employment contract provides that Marcello will
be subject to non-compete and non-solicitation of employee restrictions for a period
of 12 months following the termination or cessation of employment.
Directors’ Report
Remuneration Report (Audited)
tubigroup.com
17
Director
Ian Coates
Company Secretary &
Chief Financial Officer
Key Terms of Service Agreement
Ian Coates is employed by the Company in the position of Company Secretary
and Chief Financial Officer. Ian is employed on a full-time basis and his fixed annual
remuneration to 30 June 2019 is $225,000 per annum inclusive of superannuation
and subject to tax deductions. Ian’s fixed annual remuneration from 1 January 2020
will be $250,000 inclusive of superannuation and subject to tax deductions.
Ian is eligible to receive the following short-term cash incentives:
> for the financial year ending 30 June 2019, up to $40,000 subject to achievement
of performance hurdles relating to Tubi’s HDPE pipe production volumes;
> for the financial year ending 30 June 2020 50% of his base salary (gross) subject
to satisfactory achievement of individual and Company performance hurdles as
determined by the Company in its absolute discretion; and
> from 1 July 2020, eligible to participate in any senior executive short-term
incentive plan.
The Board has resolved to grant Performance Rights to Ian on or about 30 November
2019 under the Company’s LTI Plan. The aggregate number of Performance Rights to
be granted will calculated by dividing $125,000 by the VWAP of the Shares over the five
trading days immediately prior to 30 November 2019. The vesting conditions,
performance hurdles and general terms of the Performance Rights are summarised
under the heading “Share-Based Compensation” below.
Ian’s employment contract contains express provisions protecting the Company’s
confidential information and intellectual property. Ian’s employment contract contains
mutual non-disparagement obligations which survive the termination of employment.
Under the terms of Ian’s employment contract, either party is entitled to terminate Ian’s
employment by giving six months’ written notice.
After termination of employment, the employment contract provides that Ian will be
subject to non-compete and non-solicitation of employee restrictions for a period of
12 months following the termination or cessation of employment.
18
Tubi Group Annual Report 2019
Directors’ Report
Remuneration Report (Audited)
Details of Remuneration
Details of the remuneration of KMP of the Group are set out in the following tables:
Short-Term Benefits
Post
Employment
Benefits
Long-Term
Benefits
Share-
Based
Payments
Cash
Salaries,
Fees &
Bonuses
Annual
Leave
Accrued
–
–
285,423
12,582
210,283
14,235
–
–
–
–
–
–
–
–
244,879
14,473
740,585
41,290
Non-
Monetary
Super-
annuation
Long
Service
Leave
Accrued
Equity
Settled
Total
–
–
–
–
–
–
–
–
–
–
–
–
–
21,417
21,715
9,079
350,215
–
–
–
–
–
–
–
–
–
–
64,530
289,049
–
–
–
–
–
–
–
–
19,521
1,715
7,565
288,154
40,938
23,430
81,174
927,418
Short-Term Benefits
Post
Employment
Benefits
Long-Term
Benefits
Share-
Based
Payments
Cash
Salaries,
Fees &
Bonuses
Annual
Leave
Accrued
–
–
180,000
12,952
–
–
–
–
–
–
–
–
–
–
180,000
13,815
360,000
26,767
Non-
Monetary
Super-
annuation
Long
Service
Leave
Accrued
Equity
Settled
Total
–
–
–
–
–
–
–
–
–
–
–
17,100
4,755
–
–
–
–
–
–
–
–
–
–
17,100
34,200
398
5,154
–
–
–
–
–
–
–
–
–
–
214,807
–
–
–
–
–
211,314
426,121
2019
Directors:
Michael Tilley
Marcello Russo
Jeffrey Shorter
Anthony Willsallen
Craig Lawn
Brent Emmett
Brian Vowels
Other KMP:
Ian Coates
Total
2018
Directors:
Michael Tilley
Marcello Russo
Jeffrey Shorter
Anthony Willsallen
Craig Lawn
Brent Emmett
Brian Vowels
Other KMP:
Ian Coates
Total
Share-Based Payments
The accounting standards require share-based payments expense to be calculated using the fair value of the shares
at grant date, amortised over the relevant performance and service period. FY19 share based payments includes
the LTI plan and represents the FY19 portion of the fair value of rights granted in FY19. During FY19, the Group granted
the following share-based compensation to KMP:
Directors’ Report
Remuneration Report (Audited)
tubigroup.com
19
Options
During the year 4,500,000 options were granted to Jeffrey Shorter. The following terms apply to the options:
Term
Details
Expiry Date
30 April 2024
Vesting Dates
Tranche 1: 30 August 2020 (1,500,000 Options)
Tranche 2: 30 August 2021 (1,500,000 Options)
Tranche 3: 30 August 2022 (1,500,000 Options)
Vesting
Conditions
Jeffrey Shorter must be an employee of Tubi Limited or Tubi USA as at the applicable
vesting date.
Exercise Price
$0.20 per option.
The exercise price of an option will be adjusted in the following circumstances:
> pro rata issue – if the Group makes a pro rate issue of shares to existing shareholders
(except as a bonus issue), the exercise price of an option will be reduced proportionally
(in accordance with ASX Listing Rules); or
> bonus issue – if the Group makes a bonus issue of shares or equity securities (other than
an issue in lieu of, or in satisfaction of, dividends or by way of dividend reinvestment), the
number of shares which must be issued on exercise of an option will be increased
proportionally and no change will be made to the exercise price.
Exercise Rights
Each option will entitle the holder to subscribe for a share on payment of the exercise price.
Listing
Transfer
The options are not listed on the ASX or any other listing authority, stock exchange or market.
The options may only be transferred with the prior consent of the Board or by force of law.
20
Tubi Group Annual Report 2019
Directors’ Report
Remuneration Report (Audited)
Tenure Restricted Stock Units (TRSUs)
During the year 1,500,000 TRSUs were granted to Jeffrey Shorter. The following terms apply to the TRSUs:
Term
Details
Expiry Date
30 August 2023
Vesting
On satisfaction of the vesting conditions, each TRSU will automatically convert into one share.
PRSUs have a nil exercise price and no consideration is payable by the holder of the TRSU
on vesting.
Vesting Dates
Tranche 1: 30 August 2020 (500,000 TRSUs)
Tranche 2: 30 August 2021 (500,000 TRSUs)
Tranche 3: 30 August 2022 (500,000 TRSUs)
Vesting
Conditions
Listing
Transfer
Jeffrey Shorter must be an employee of Tubi Limited or Tubi USA as at the applicable
vesting date.
The TRSUs are not listed on the ASX or any other listing authority, stock exchange or market.
The TRSUs may only be transferred with the prior consent of the Board or by force of law.
Performance Restricted Stock Units (PRSUs)
During the year, the Board resolved to grant PRSUs to Jeffrey Shorter on or about 30 November 2019. The aggregate
number of PRSUs to be granted will be calculated by dividing US$150,000 (converted to $A) by the VWAP of the
Group’s shares over the five trading days immediately prior to 30 November 2019.
The following terms apply to the PRSUs:
Term
Details
Expiry Date
30 August 2023
Vesting
On satisfaction of the vesting conditions and performance hurdles, each PRSU will
automatically convert into one share. PRSUs have a nil exercise price and no consideration
is payable by the holder of the PRSU on vesting.
Vesting Dates
Tranche 1: 30 August 2020 (US$50,000)
Tranche 2: 30 August 2021 (US$50,000)
Tranche 3: 30 August 2022 (US$50,000)
Vesting
Conditions
Performance
Hurdles
Rollover
Listing
Transfer
Jeffrey Shorter must be an employee of Tubi Limited or Tubi USA as at the applicable
vesting date.
The performance hurdles for each tranche of PRSU are:
> positive total shareholder return during the prior financial year; and
> 10% per annum growth in earnings per share in the prior financial year.
If both the vesting condition and performance hurdles are not satisfied, the relevant tranche
of PRSUs will be added to the immediately subsequent tranche and the relevant performance
hurdle will be added to the immediately subsequent performance hurdle. If both the vesting
condition and performance hurdles are not satisfied by the third and final tranche, all PRSUs
will automatically lapse.
The PRSUs are not listed on the ASX or any other listing authority, stock exchange or market.
The PRSUs may only be transferred with the prior consent of the Board or by force of law.
Directors’ Report
Remuneration Report (Audited)
tubigroup.com
21
Performance Rights
During the year, the Board resolved to grant Performance Rights to Marcello Russo and Ian Coates on or about
30 November 2019. The aggregate number of Performance Rights to be granted will be calculated by dividing the
amount of the award (A$150,000 in the case of Marcello Russo and A$125,000 in the case of Ian Coates) by the
VWAP of the Group’s shares over the five trading days immediately prior to 30 November 2019.
The following terms apply to the Performance Rights:
Term
Details
Expiry Date
30 August 2023
Vesting
On satisfaction of the vesting conditions and performance hurdles, Performance Rights will
automatically convert into shares of the Group. Marcello Russo’s Performance Rights may
be cash settled at the discretion of the Board.
Performance Rights have a nil exercise price and no consideration is payable by the holder
of the Performance Rights on vesting.
Vesting Dates
The Performance Rights vest (subject to satisfaction of the vesting conditions and performance
hurdles, as follows:
Vesting Date
30 August 2020
30 August 2021
30 August 2022
Total
Marcello Russo
Ian Coates
$50,000
$50,000
$50,000
$41,667
$41,667
$41,667
Total
$91,667
$91,667
$91,667
$150,000
$125,000
$275,000
Vesting
Conditions
Performance
Hurdles
Rollover
Holders of the Performance Rights must be an employee of Tubi Limited as at the applicable
vesting date.
The performance hurdles for each tranche of Performance Rights are:
> positive total shareholder return during the prior financial year; and
> 10% per annum growth in earnings per share in the prior financial year.
If both the vesting condition and performance hurdles are not satisfied, the relevant tranche
of Performance Rights will be added to the immediately subsequent tranche and the relevant
performance hurdle will be added to the immediately subsequent performance hurdle. If both
the vesting condition and performance hurdles are not satisfied by the third and final tranche,
all Performance Rights will automatically lapse.
Listing
The Performance Rights are not listed on the ASX or any other listing authority, stock exchange
or market.
Transfer
The PRSUs may only be transferred with the prior consent of the Board or by force of law.
22
Tubi Group Annual Report 2019
Directors’ Report
Remuneration Report (Audited)
Additional Disclosures Relating to Key Management Personnel
Ordinary Shares Held by KMP
The number of Ordinary Shares in the Company during the 2019 reporting period held by each of the Group’s
key management personnel, including their related parties, is set out below:
Ordinary Shares
Held at 30
June 2018
Capital
Raising1
Impact
of Share
Split2
Conversion
of Loans3
IPO Offer4
Held at 30
June 2019
As a % of
Ordinary
Shares5
KMP
Directors:
Michael Tilley6,8
3,000,000
108,000
90,132,000
10,774,980
– 104,014,980
42.78%
Marcello Russo9
2,000,000
72,000
60,088,000
2,367,420
(28,800,000)
35,727,420
14.69%
Anthony Willsallen7,8
3,000,000
108,000
90,132,000
10,774,980
– 104,014,980
42.78%
Craig Lawn10
62,500
2,250
1,877,750
Brent Emmett11
Jeffrey Shorter
Other KMP:
Ian Coates12
–
–
–
–
–
–
50,000
1,771
1,501,359
–
–
–
–
–
1,942,500
750,000
750,000
–
–
0.80%
0.31%
–
–
1,553,130
0.64%
1 On 8 February 2019, the Company raised $1,259,153 via the issue of 208,469 Ordinary Shares at an issue price of $6.04 per Share.
2 On 29 April 2019, the Company undertook a 1:30 share split.
3 On 29 April 2019, the Company converted shareholders loans in the sum of $2,628,483.64 into Ordinary Shares at an issue price of $0.20 per Share.
4 As part of the IPO Offer, 28,800,000 Shares were sold by existing shareholders at a sale price of $0.20 per Share. Under the Offer, Brent Emmett
acquired 750,000 Ordinary Shares.
5 Based on 243,142,400 Ordinary Shares on issue.
6 51,882,480 shares are held by Oxleigh Pty Ltd, an entity associated with Michael Tilley. Oxleigh Pty Ltd has a relevant interest in the 52,132,500
shares held by Bald Hill Quarry Pty Ltd.
7 52,132,500 shares are held by Bald Hill Quarry Pty Ltd, an entity associated with Anthony Willsallen. Bald Hill Quarry Pty Ltd has a relevant interest
in the 51,822,480 shares held by Oxleigh Pty Ltd.
8 Oxleigh Pty Ltd and Bald Hill Quarry Pty Ltd are associates.
9 Held by Chiara Corporations Pty Ltd as trustee for the Russo Family Trust.
10 Held by Craig Lawn and Joy Lawn as trustee for the Lawn Family Superannuation Fund.
11 Held by VLH Pty Ltd, an entity associated with Brent Emmett
12 Held by Jecki Holdings Pty Ltd as trustee for the Coates Family Trust.
Options Held by KMP
The number of Options in the Company during the 2019 reporting period held by each of the Group’s key management
personnel, including their related parties, is set out below:
KMP
Directors
Jeffrey Shorter
Options
Held at
30 June 2018
Granted as
Remuneration
Exercised
Held at
30 June 2019
As a %
of Options
–
4,500,000
–
4,500,000
100.00%
Directors’ Report
Remuneration Report (Audited)
tubigroup.com
23
TRSUs Held by KMP
The number of TRSUs in the Company during the 2019 reporting period held by each of the Group’s key management
personnel, including their related parties, is set out below:
KMP
Directors
Jeffrey Shorter
TRUs
Held at
30 June 2018
Granted as
Remuneration
Exercised
Held at
30 June 2019
As a %
of TRUs
–
1,500,000
–
1,500,000
100.00%
KMP Related Party Transactions
During the year ended 30 June 2019, the following transactions occurred between the Group and its other related parties:
> Lawn Corporate Pty Ltd. a company of which Craig Lawn is a Director, performed certain contracting services
associated with the Initial Public Offering for which fees of $20,975 (2018: Nil) were charged.
> Tubi Saleco Limited (Saleco), was established on 6 May 2019 to facilitate the sale of Shares by Chiara Corporation
Pty Ltd, the Selling Shareholder, a company of which Marcello Russo is a Director. Saleco is wholly-owned by
Marcello Russo and its Directors are Michael Tilley, Anthony Willsallen and Brent Emmett.
Chiara Corporation, the Company and Saleco entered into an IPO Sell Down Deed under which Chiara Corporation
Pty Ltd agreed to sell 28,800,000 of its existing Shares to Saleco at a sale price of 20 cents each share, which were
sold by Saleco into the Offer, free from encumbrances and third party rights.
The existing Shares which Saleco acquired from the Selling Shareholder were transferred to Successful Applicants at
the Offer Price. Saleco has no material assets, liabilities or operations other than its interests in and obligations under
the Underwriting Agreement and the IPO Sell Down Deed.
Gross proceeds of $5,760,000 less underwriting fees of $345,600 were transferred from Saleco to Chiara Corporation
Pty Ltd on the completion of the offer.
End of Audited Remuneration Report
This directors’ report, incorporating the remuneration report, is signed in accordance with a resolution of the Board
of Directors
MIchael Tilley
Chairman
27 August 2019
24
Tubi Group Annual Report 2019
Corporate Governance Statement
The Board is committed to achieving and demonstrating the highest standards of corporate governance.
The Company has a detailed governance framework.
The Company has adopted the fourth edition of the ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations which was released by the ASX Corporate Governance Council in February 2019
and become effective for the financial years beginning on or after 1 January 2020 however the Company has elected
to apply early adoption.
The Company’s Corporate Governance Statement was adopted by the Company on 27 August 2019 and is available
on the Company’s website at https://tubigroup.com/investors/corporate-governance/.
Auditor’s Independence Declaration
tubigroup.com
25
Tubi Limited
ACN: 139 142 493
Auditorʼs Independence Declaration under section 307C of the Corporations Act 2001
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for
the audit of Tubi Limited for the year ended 30 June 2019, I declare that, to the best of my knowledge
and belief, there have been:
(i) No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(ii) No contraventions of any applicable code of professional conduct in relation to the audit.
PKF
SCOTT TOBUTT
PARTNER
27 AUGUST 2019
SYDNEY, NSW
PKF(NS) Audit & Assurance Limited
Partnership
ABN 91 850 861 839
Liability limited by a scheme
approved under Professional
Standards Legislation
Sydney
Newcastle
Level 8, 1 O’Connell Street
Sydney NSW 2000 Australia
GPO Box 5446 Sydney NSW 2001
755 Hunter Street
Newcastle West NSW 2302 Australia
PO Box 2368 Dangar NSW 2309
p
f
+61 2 8346 6000
+61 2 8346 6099
p
f
+61 2 4962 2688
+61 2 4962 3245
PKF(NS) Audit & Assurance Limited Partnership is a member firm of the PKF International Limited family of legally independent firms and does not
accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.
For office locations visit www.pkf.com.au
26
Tubi Group Annual Report 2019
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the Year Ended 30 June 2019
Revenue
Other income
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expense
Travel and accommodation
Repairs and maintenance
Legal and professional
Consultancy
Rental expense
Insurance
Other operating expenses
Finance expenses
Profit before income tax
Income tax expense
Profit for the year
Items that will be reclassified to profit or loss when specific
conditions are met
Exchange differences on translating foreign controlled entities
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit attributable to:
Members of the parent entity
Total comprehensive income attributable to:
Members of the parent entity
Earnings per share
From continuing operations:
Basic earnings per share (cents)
Diluted earnings per share (cents)
The accompanying notes form part of these financial statements.
Note
5
5
6
7
8
2019
$
2018
$
31,563,749
17,380,773
117,059
97,024
(25,902,032)
(14,273,676)
(626,368)
(520,782)
(1,019,454)
(721,942)
(290,072)
(227,594)
(40,893)
(68,145)
(1,220,195)
(269,116)
(157,261)
(123,822)
(29,406)
(67,604)
(27,133)
(56,097)
(234,006)
(89,515)
(9,683)
(8,296)
2,124,305
1,051,208
(625,252)
(535,489)
1,499,053
515,719
57,777
57,777
47,364
47,364
1,556,830
563,083
1,499,053
515,719
1,556,830
563,083
21
21
0.80
0.80
0.30
0.30
Consolidated Statement of Financial Position
tubigroup.com
27
For the Year Ended 30 June 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Property, plant and equipment
Deferred tax assets
Intangible assets
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Current tax liabilities
Employee benefits
TOTAL CURRENT LIABILITIES
NON CURRENT LIABILITIES
Deferred tax liabilities
TOTAL NON CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained earnings
Total equity attributable to equity holders of the Company
TOTAL EQUITY
The accompanying notes form part of these financial statements.
Note
2019
$
2018
$
10
11
12
15
13
24
14
16
17
24
18
7,605,594
3,690,804
3,623,199
1,352,344
1,593,012
555,540
23,143
106,184
12,844,948
5,704,872
16,814,696
8,576,802
227,337
–
275,223
255,979
17,317,256
8,832,781
30,162,204
14,537,653
5,641,538
2,881,294
140,395
2,846,172
597,855
169,833
187,494
135,962
6,567,282
6,033,261
24
1,966,825
1,717,694
1,966,825
1,717,694
8,534,107
7,750,955
21,628,097
6,786,698
19
20
18,042,218
4,838,823
191,645
52,694
3,394,234
1,895,181
21,628,097
6,786,698
21,628,097
6,786,698
28
Tubi Group Annual Report 2019
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2019
Ordinary
Shares
Retained
Earnings
Foreign
Currency
Translation
Reserve
Share Based
Payments
Reserve
2019
Note
$
$
$
Balance at 1 July 2018
4,838,823
1,895,181
52,694
Total
$
6,786,698
1,499,053
57,777
1,556,830
$
–
–
–
–
–
–
–
1,499,053
–
–
57,777
1,499,053
57,777
Profit attributable to members
of the parent entity
Total other comprehensive
income for the year
Total comprehensive income
for the year
Transactions with owners
in their capacity as owners
Contribution of equity, net
of transaction costs
Share based payment
transactions
19(a)
13,203,395
32
–
–
–
–
–
–
13,203,395
81,174
81,174
Balance at 30 June 2019
18,042,218
3,394,234
110,471
81,174
21,628,097
Ordinary
Shares
Retained
Earnings
Foreign
Currency
Translation
Reserve
Share Based
Payments
Reserve
2018
Note
$
$
$
Balance at 1 July 2017
4,165,000
1,379,462
5,330
Profit attributable to members
of the parent entity
Total other comprehensive
income for the year
Total comprehensive income
for the year
Transactions with owners
in their capacity as owners
Contribution of equity, net
of transaction costs
–
–
–
515,719
–
–
47,364
515,719
47,364
673,823
–
–
Balance at 30 June 2018
4,838,823
1,895,181
52,694
The accompanying notes form part of these financial statements.
$
–
–
–
–
–
–
Total
$
5,549,792
515,719
47,364
563,083
673,823
6,786,698
Consolidated Statement of Cash Flows
tubigroup.com
29
For the Year Ended 30 June 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income taxes paid
Notes
2019
$
2018
$
33,864,232
20,242,531
(31,122,037)
(17,022,923)
43,575
(10,264)
2,842
(8,296)
(175,436)
(191,845)
Net cash provided by operating activities
31
2,600,070
3,022,309
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of plant and equipment
Purchase of property, plant and equipment
Purchase of intangble assets
Net cash (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issue of shares
Proceeds from borrowings
Repayment of borrowings
Net cash by financing activities
Effects of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents held
Cash and cash equivalents at beginning of year
129,943
–
(9,334,574)
(1,868,625)
(36,044)
(43,064)
(9,240,675)
(1,911,689)
10,574,911
673,823
–
217,688
(77,293)
–
10,497,618
891,511
57,777
–
3,914,790
2,002,131
3,690,804
1,688,673
Cash and cash equivalents at end of financial year
10
7,605,594
3,690,804
The accompanying notes form part of these financial statements.
30
Tubi Group Annual Report 2019
Notes to the Financial Statements
The key changes to the Group’s accounting policy and
the impact on these financial statements from applying
AASB 9 are described below.
Changes in accounting policies resulting from the
adoption of AASB 9 have been applied retrospectively
except the Group has not restated any amounts relating
to classification and measurement requirements including
impairment which have been applied from 1 July 2018.
Classification of financial assets
The financial assets of the Group have been reclassified
into one of the following categories on adoption of
AASB 9 based on primarily the business model in which
a financial asset is managed and its contractual cash
flow characteristics:
> Measured at amortised cost
> Fair value through profit or loss (FVTPL)
Impairment of financial assets
The incurred loss model from AASB 139 has been
replaced with an expected credit loss model in
AASB 9 for assets measured at amortised cost.
Refer to Note 11(a) for further information.
Transition adjustments
There was no impact to reserves and retained earnings
on adoption of AASB 9 at 1 July 2018.
Classification of financial assets and
financial liabilities
The table below illustrates the classification and
measurement of financial assets and liabilities under
AASB 9 and AASB 139 at the date of initial application.
For the Year Ended 30 June 2019
The consolidated financial report covers Tubi Limited
and its controlled entities (‘the Group’). Tubi Limited
is a for profit Company limited by shares, incorporated
and domiciled in Australia.
Each of the entities within the Group prepare their
financial statements based on the currency of the
primary economic environment in which the entity
operates (functional currency). The consolidated financial
statements are presented in Australian dollars which is
the parent entity’s functional and presentation currency.
The financial report was authorised for issue by the
Directors on 27 August 2019.
Comparatives are consistent with prior years, unless
otherwise stated.
1 Basis of Preparation
The financial statements are general purpose financial
statements that have been prepared in accordance
with the Australian Accounting Standards and the
Corporations Act 2001.
These financial statements comply with International
Financial Reporting Standards as issued by the
International Accounting Standards Board.
2 Change in Accounting Policy
Financial Instruments Adoption of AASB 9
The Group has adopted AASB 9 Financial Instruments
for the first time in the current year with a date of initial
adoption of 1 July 2018 .
As part of the adoption of AASB 9, the Group adopted
consequential amendments to other accounting
standards arising from the issue of AASB 9 as follows:
> AASB 101 Presentation of Financial Statements
requires the impairment of financial assets to be
presented in a separate line item in the consolidated
statement of profit or loss and other comprehensive
income. In the comparative year, this information was
presented as part of other expenses.
> AASB 7 Financial Instruments: Disclosures requires
amended disclosures due to changes arising from
AASB 9, these disclosures have been provided for
the current year.
Notes to the Financial Statements
tubigroup.com
31
Classification
under
AASB 139
Classification
under
AASB 9
Carrying
amount
under AASB
139
$
Loans and
receivables
Amortised
cost
Loans and
receivables
Amortised
cost
Loans and
receivables
Amortised
cost
Other
financial
liabilities
Other
financial
liabilities
Other
financial
liabilities
Other
financial
liabilities
1,352,344
3,690,804
106,184
5,149,332
2,881,294
2,846,172
5,727,466
Financial assets
Trade and other
receivables
Cash and cash
equivalents
Other assets
Total financial assets
Financial liabilities
Trade payables
Borrowings
Total financial liabilities
Reclass-
ification
Remeasure-
ments
$
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
Carrying
amount
under AASB
9
$
1,352,344
3,690,804
106,184
5,149,332
2,881,294
2,846,172
5,727,466
Revenue from Contracts with Customers Adoption of AASB 15
The Group has adopted AASB 15 Revenue from Contracts with Customers for the first time in the current year
with a date of initial application of 1 July 2018.
The key changes to the Group’s accounting policies and the impact on these financial statements from applying
AASB 15 are described below.
The Group has applied AASB 15 using the cumulative effect method which means the comparative information
has not been restated and continues to be reported under AASB 111, AASB 118 and related interpretations.
Comparison of financial statement line items under AASB 15 compared to previous standards
for the current year
There has been no impact on the presentation of the financial statements as a result of the adoption of AASB 15.
The Group’s accounting policy in respect of Revenue from contracts with customers has been aligned to the
requirements of AASB 15 and this is detailed further in Note 3(d).
32
Tubi Group Annual Report 2019
Notes to the Financial Statements
3 Summary of Significant
Accounting Policies
(a) Basis for consolidation
The consolidated financial statements include the
financial position and performance of controlled entities
from the date on which control is obtained until the date
that control is lost.
Intragroup assets, liabilities, equity, income, expenses
and cashflows relating to transactions between entities
in the consolidated entity have been eliminated in full for
the purpose of these financial statements.
Appropriate adjustments have been made to a controlled
entity’s financial position, performance and cash flows
where the accounting policies used by that entity were
different from those adopted by the consolidated entity.
All controlled entities have a June financial year end.
A list of controlled entities is contained in Note 28 to
the financial statements.
Subsidiaries
Subsidiaries are all entities over which the parent has
control. Control is established when the parent is
exposed to, or has rights to variable returns from its
involvement with the entity and has the ability to affect
those returns through its power to direct the relevant
activities of the entity.
(b) Income Tax
The tax expense recognised in the consolidated
statement of profit or loss and other comprehensive
income comprises current income tax expense plus
deferred tax expense.
Current tax is the amount of income taxes payable
(recoverable) in respect of the taxable profit (loss) for
the year and is measured at the amount expected to
be paid to (recovered from) the taxation authorities,
using the tax rates and laws that have been enacted
or substantively enacted by the end of the reporting
period. Current tax liabilities (assets) are measured at
the amounts expected to be paid to (recovered from)
the relevant taxation authority.
Deferred tax is provided on temporary differences which
are determined by comparing the carrying amounts of
tax bases of assets and liabilities to the carrying amounts
in the consolidated financial statements.
Deferred tax is not provided for the following:
> The initial recognition of an asset or liability in a
transaction that is not a business combination and at
the time of the transaction, affects neither accounting
profit nor taxable profit (tax loss).
> Taxable temporary differences arising on the initial
recognition of goodwill.
> Temporary differences related to investment in
subsidiaries, associates and jointly controlled entities
to the extent that the Group is able to control the
timing of the reversal of the temporary differences
and it is probable that they will not reverse in the
foreseeable future.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on
tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax assets are recognised for all deductible
temporary differences and unused tax losses to the
extent that it is probable that taxable profit will be
available against which the deductible temporary
differences and losses can be utilised.
Current and deferred tax is recognised as income or
an expense and included in profit or loss for the period
except where the tax arises from a transaction which is
recognised in other comprehensive income or equity, in
which case the tax is recognised in other comprehensive
income or equity respectively.
(c) Leases
Leases of fixed assets where substantially all the risks
and benefits incidental to the ownership of the asset, but
not the legal ownership that are transferred to entities in
the Group, are classified as finance leases.
Finance leases are capitalised by recording an asset
and a liability at the lower of the amounts equal to the fair
value of the leased property or the present value of the
minimum lease payments, including any guaranteed
residual values. Lease payments are allocated between
the reduction of the lease liability and the lease interest
expense for the period.
Lease payments for operating leases, where substantially
all of the risks and benefits remain with the lessor, are
charged as expenses on a straight line basis over the life
of the lease term.
Notes to the Financial Statements
tubigroup.com
33
Lease incentives under operating leases are recognised
as a liability and amortised on a straight line basis over
the life of the lease term.
Other income
Other income is recognised on an accruals basis when
the Group is entitled to it.
(d) Revenue and other income
For comparative year
Revenue is recognised when the amount of the revenue
can be measured reliably, it is probable that economic
benefits associated with the transaction will flow to the
Group and specific criteria relating to the type of revenue
as noted below, has been satisfied.
Revenue is measured at the fair value of the consideration
received or receivable and is presented net of returns,
discounts and rebates.
Sale of goods
Revenue is recognised on transfer of goods to the
customer as this is deemed to be the point in time when
risks and rewards are transferred and there is no longer
any ownership or effective control over the goods.
Revenue from contracts with customers
For current year
The core principle of AASB 15 is that revenue is recognised
on a basis that reflects the transfer of promised goods
or services to customers at an amount that reflects the
consideration the Group expects to receive in exchange
for those goods or services. Revenue is recognised by
applying a five step model as follows:
1. Identify the contract with the customer
2. Identify the performance obligations
3. Determine the transaction price
4. Allocate the transaction price to the performance
obligations
5. Recognise revenue as and when control of the
performance obligations is transferred
(e) Borrowing costs
Borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying
asset are capitalised as part of the cost of that asset.
All other borrowing costs are recognised as an expense
in the period in which they are incurred.
(f) Goods and services tax (GST)
Revenue, expenses and assets are recognised net of the
amount of goods and services tax (GST), except where
the amount of GST incurred is not recoverable from the
Australian Taxation Office (ATO).
Receivables and payable are stated inclusive of GST.
Cash flows in the consolidated statement of cash flows
are included on a gross basis and 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.
(g) Inventories
Inventories are measured at the lower of cost and net
realisable value. Cost of inventory is determined using
the first in first out basis and is net of any rebates and
discounts received. Net realisable value is estimated
using the most reliable evidence available at the reporting
date and inventory is written down through an
obsolescence provision if necessary.
(h) Property, plant and equipment
Each class of property, plant and equipment is carried at
cost or fair value less, where applicable, any accumulated
depreciation and impairment.
Plant and equipment
Specific revenue streams
Plant and equipment are measured using the cost model.
The principal revenue stream of the Group is the operation
of Mobile Plants to manufacture High Density Polyethylene
(HDPE) pipes for industrial projects. Revenue is recognised
upon successful delivery of manufactured pipes under the
terms of the contract over the project term, being the point
at which the performance obligation has been met under
the terms of the contract with customers.
34
Tubi Group Annual Report 2019
Notes to the Financial Statements
Depreciation
Property, plant and equipment is depreciated on a
straight line or reducing balance basis (as appropriate)
over the assets useful life to the Group, commencing
when the asset is ready for use.
The depreciation rates used for each class of depreciable
asset are shown below:
Fixed asset class
Depreciation rate
Capital Works in Progress
Plant and Equipment
Furniture, Fixtures and Fittings
Motor Vehicles
See below
10–20%
20%
25%
At the end of each annual reporting period, the
depreciation method, useful life and residual value
of each asset is reviewed. Any revisions are accounted
for prospectively as a change in estimate.
Capital works in progress relate to the construction of
new mobile manufacturing plants which once completed
and commisioned as ready for use will be transferred to
plant and equipment and depreciated in line with the
respective rate above.
(i) Financial instruments
For comparative year
Financial instruments are recognised initially using trade
date accounting, i.e. on the date that the Group becomes
party to the contractual provisions of the instrument.
On initial recognition, all financial instruments are
measured at fair value plus transaction costs (except for
instruments measured at fair value through profit or loss
where transaction costs are expensed as incurred).
Financial assets
Financial assets are divided into the following categories
which are described in detail below:
> loans and receivables;
> held to maturity investments.
Financial assets are assigned to the different categories
on initial recognition, depending on the characteristics
of the instrument and its purpose. A financial instrument’s
category is relevant to the way it is measured and
whether any resulting income and expenses are
recognised in profit or loss or in other
comprehensive income.
All income and expenses relating to financial assets are
recognised in the consolidated statement of profit or loss
and other comprehensive income in the ‘finance income’
or ‘finance costs’ line item respectively.
Loans and receivables
Loans and receivables are non derivative financial assets
with fixed or determinable payments that are not quoted
in an active market. They arise principally through the
provision of goods and services to customers but also
incorporate other types of contractual monetary assets.
After initial recognition these are measured at amortised
cost using the effective interest method, less provision
for impairment. Any change in their value is recognised
in profit or loss.
The Group’s trade and other receivables fall into this
category of financial instruments.
Financial liabilities
Financial liabilities are classified as either financial
liabilities ‘at fair value through profit or loss’ or other
financial liabilities depending on the purpose for which
the liability was acquired.
The Group‘s financial liabilities include borrowings, trade
and other payables (including finance lease liabilities),
which are measured at amortised cost using the effective
interest rate method.
Impairment of Financial Assets
At the end of the reporting period the Group assesses
whether there is any objective evidence that a financial
asset or group of financial assets is impaired.
Financial assets at amortised cost
If there is objective evidence that an impairment loss
on financial assets carried at amortised cost has been
incurred, the amount of the loss is measured as the
difference between the asset’s carrying amount and
the present value of the estimated future cash flows
discounted at the financial assets original effective
interest rate.
Impairment on loans and receivables is reduced through
the use of an allowance accounts, all other impairment
losses on financial assets at amortised cost are taken
directly to the asset.
Subsequent recoveries of amounts previously written
off are credited against other expenses in profit or loss.
Notes to the Financial Statements
tubigroup.com
35
For current year
Impairment of financial assets
Financial instruments are recognised initially on the
date that the Group becomes party to the contractual
provisions of the instrument.
On initial recognition, all financial instruments are
measured at fair value plus transaction costs (except for
instruments measured at fair value through profit or loss
where transaction costs are expensed as incurred).
Financial assets
All recognised financial assets are subsequently
measured in their entirety at either amortised cost
or fair value, depending on the classification of the
financial assets.
Classification
On initial recognition, the Group classifies its financial
assets into the following categories, those measured at:
> amortised cost
> fair value through profit or loss FVTPL
Impairment of financial assets is recognised on an
expected credit loss (ECL) basis for the following assets:
> financial assets measured at amortised cost
When determining whether the credit risk of a financial
assets has increased significant since initial recognition
and when estimating ECL, the Group considers
reasonable and supportable information that is relevant
and available without undue cost or effort. This includes
both quantitative and qualitative information and analysis
based on the Group’s historical experience and informed
credit assessment and including forward
looking information.
The Group applies the simplified approach to providing
for expected credit losses prescribed by AASB 9, which
permits the use of the lifetime expected loss provision.
To measure the expected credit losses, financial assets
have been grouped based on shared credit risk
characteristics and the days past due. The loss allowance
provision incorporate forward looking information.
> fair value through other comprehensive income
Trade receivables
equity instrument (FVOCI equity)
> fair value through other comprehensive income
debt investments (FVOCI debt)
Financial assets are not reclassified subsequent to their
initial recognition unless the Group changes its business
model for managing financial assets.
Amortised cost
Assets measured at amortised cost are financial
assets where:
> the business model is to hold assets to collect
contractual cash flows; and
> the contractual terms give rise on specified dates
to cash flows are solely payments of principal and
interest on the principal amount outstanding.
The Group’s financial assets measured at amortised
cost comprise trade and other receivables and cash
and cash equivalents in the consolidated statement
of financial position.
Subsequent to initial recognition, these assets are carried
at amortised cost using the effective interest rate method
less provision for impairment.
Interest income, foreign exchange gains or losses and
impairment are recognised in profit or loss. Gain or loss
on derecognition is recognised in profit or loss.
Impairment of trade receivableshave been determined
using the simplified approach in AASB 9 which uses an
estimation of lifetime expected credit losses. The Group
has determined the probability of non payment of the
receivable and multiplied this by the amount of the
expected loss arising from default.
The amount of the impairment is recorded in a separate
allowance account with the loss being recognised in
finance expense. Once the receivable is determined to
be uncollectable then the gross carrying amount is
written off against the associated allowance.
Where the Group renegotiates the terms of trade
receivables due from certain customers, the new
expected cash flows are discounted at the original
effective interest rate and any resulting difference to
the carrying value is recognised in profit or loss.
Other financial assets measured at amortised cost
Impairment of other financial assets measured at
amortised cost are determined using the expected credit
loss model in AASB 9. On initial recognition of the asset,
an estimate of the expected credit losses for the next
12 months is recognised. Where the asset has experienced
significant increase in credit risk then the lifetime losses
are estimated and recognised.
36
Tubi Group Annual Report 2019
Notes to the Financial Statements
Financial liabilities
(l) Cash and cash equivalents
The Group measures all financial liabilities initially at
fair value less transaction costs, subsequently financial
liabilities are measured at amortised cost using the
effective interest rate method.
Cash and cash equivalents comprises cash on hand,
demand deposits and short term investments which are
readily convertible to known amounts of cash and which
are subject to an insignificant risk of change in value.
The financial liabilities of the Group comprise trade payables,
bank and other loans and finance lease liabilities.
(m) Employee benefits
(j) Impairment of non financial assets
At the end of each reporting period the Group determines
whether there is an evidence of an impairment indicator
for non financial assets.
Where an indicator exists and regardless for goodwill,
indefinite life intangible assets and intangible assets not
yet available for use, the recoverable amount of the asset
is estimated.
Where assets do not operate independently of other
assets, the recoverable amount of the relevant cash
generating unit (CGU) is estimated.
The recoverable amount of an asset or CGU is the higher
of the fair value less costs of disposal and the value in
use. Value in use is the present value of the future cash
flows expected to be derived from an asset or cash
generating unit.
Where the recoverable amount is less than the carrying
amount, an impairment loss is recognised in profit or loss.
Reversal indicators are considered in subsequent periods
for all assets which have suffered an impairment loss,
except for goodwill.
(k) Intangibles
Patents and trademarks
Patents and trademarks are recognised at cost of
acquisition. Patents and trademarks have a finite life and
are carried at cost less any accumulated amortisation
and any impairment losses. Patents and trademarks are
amortised over their useful life of 20 years.
Amortisation
Amortisation is recognised in profit or loss on a straight
line basis over the estimated useful lives of intangible
assets, other than goodwill, from the date that they are
available for use.
Amortisation methods, useful lives and residual values
are reviewed at each reporting date and adjusted
if appropriate.
Provision is made for the Group’s liability for employee
benefits arising from services rendered by employees to
the end of the reporting period. Employee benefits that
are expected to be wholly settled within one year have
been measured at the amounts expected to be paid
when the liability is settled.
Employee benefits expected to be settled more than
one year after the end of the reporting period have been
measured at the present value of the estimated future cash
outflows to be made for those benefits. In determining the
liability, consideration is given to employee wage increases
and the probability that the employee may satisfy vesting
requirements. Cashflows are discounted using market
yields on high quality corporate bond rates incorporating
bonds rated AAA or AA by credit agencies, with terms
to maturity that match the expected timing of cashflows.
Changes in the measurement of the liability are recognised
in profit or loss.
(n) Provisions
Provisions are recognised when the Group has a legal
or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits
will result and that outflow can be reliably measured.
Provisions recognised represent the best estimate
of the amounts required to settle the obligation at
the end of the reporting period.
(o) Earnings per share
Basic earnings per share is calculated by dividing
the profit attributable to owners of the company by
the weighted average number of ordinary shares
outstanding during the year.
Diluted earnings per share adjusts the basic earnings
per share to take into account the after income tax effect
of interest and other financing costs associated with
dilutive potential ordinary shares and the weighted
average number of additional ordinary shares that would
have been outstanding assuming the conversion of all
dilutive potential ordinary shares.
Notes to the Financial Statements
tubigroup.com
37
(p) Share capital
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of ordinary shares
and share options which vest immediately are recognised
as a deduction from equity, net of any tax effects.
Exchange differences arising on the settlement of
monetary items or on translating monetary items at
rates different from those at which they were translated
on initial recognition or in prior reporting periods are
recognised through profit or loss, except where they
relate to an item of other comprehensive income.
(q) Equity settled compensation
The Group operates equity settled share based payment
employee share and option schemes. The fair value of the
equity to which employees become entitled is measured at
grant date and recognised as an expense over the vesting
period, with a corresponding increase to an equity
account. The fair value of shares is ascertained as the
market bid price. The fair value of options is ascertained
using a Black Scholes pricing model which incorporates all
market vesting conditions. The amount to be expensed is
determined by reference to the fair value of the options or
shares granted, this expense takes in account any market
performance conditions and the impact of any non vesting
conditions but ignores the effect of any service and
non market performance vesting conditions.
Non market vesting conditions are taken into account
when considering the number of options expected to vest.
At the end of each reporting period, the Group revises its
estimate of the number of options which are expected
to vest based on the non market vesting conditions.
Revisions to the prior period estimate are recognised
in profit or loss and equity.
Group companies
The financial results and position of foreign operations
whose functional currency is different from the Group’s
presentation currency are translated as follows:
> assets and liabilities are translated at year end
exchange rates prevailing at that reporting date;
> income and expenses are translated at average
exchange rates for the period where the average
rate approximates the rate at the date of the
transaction; and
> retained earnings are translated at the exchange
rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign
operations are transferred directly to the Group’s foreign
currency translation reserve in the consolidated statement
of financial position. These differences are recognised
in the consolidated statement of profit or loss and other
comprehensive income in the period in which the
operation is disposed.
(s) Adoption of new and revised accounting
(r) Foreign currency transactions and balances
standards
The Group has adopted all standards which became
effective for the first time at 30 June 2019, the adoption of
these standards has not caused any material adjustments
to the reported financial position, performance or cash
flow of the Group or refer to Note 2 for details of the
changes due to standards adopted.
Transaction and balances
Foreign currency transactions are recorded at the spot
rate on the date of the transaction.
At the end of the reporting period:
> Foreign currency monetary items are translated using
the closing rate;
> Non monetary items that are measured at historical
cost are translated using the exchange rate at the
date of the transaction; and
> Non monetary items that are measured at fair value
are translated using the rate at the date when fair
value was determined.
38
Tubi Group Annual Report 2019
Notes to the Financial Statements
(t) New Accounting Standards and Interpretations
The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application
dates for future reporting periods. The Group has decided not to early adopt these Standards. The following table
summarises those future requirements, and their impact on the Group where the standard is relevant:
Standard Name
AASB 16
Leases
Effective date
for entity
1 July 2019
Requirements
Impact
Whilst the impact of AASB 16
has not yet been fully quantified,
management has made a
preliminary assessment of the
impact and have determined that
the effects of the Standard will
not be material for the entity.
AASB 16 will cause the majority of leases
of an entity to be brought onto the
statement of financial position. There are
limited exceptions relating to short term
leases and low value assets which may
remain off balance sheet.
The calculation of the lease liability will take
into account appropriate discount rates,
assumptions about lease term and
increases in lease payments.
A corresponding right to use asset will
be recognised which will be amortised
over the term of the lease.
Rent expense will no longer be shown, the
profit and loss impact of the leases will be
through amortisation and interest charges.
4 Critical Accounting Estimates and Judgments
The directors make estimates and judgements during the preparation of these consolidated financial statements
regarding assumptions about current and future events affecting transactions and balances.
These estimates and judgements are based on the best information available at the time of preparing the financial
statements, however as additional information is known then the actual results may differ from the estimates.
The significant estimates and judgements made have been described below.
Key estimates impairment of property, plant and equipment
The Group assesses impairment at the end of each reporting period by evaluating conditions specific to the Group
that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value in
use calculations which incorporate various key assumptions.
If such impairment indicators were to be triggered, management would perform such calculations incorporating the
use of cash flow projections for plant and equipment incorporating growth rates factored into valuation models for the
next five years on the basis of management’s expectations around the Group’s continued ability to capture market
share from competitors. Cash flow growth rates would then also be determined for periods subsequent to the five year
period to reflect historical industry averages. The rates would incorporate an allowance for inflation. Pre tax discount
rates would be used in all models based on management’s assessment of market factors relevant to the Group’s
business and industry.
Key estimates receivables
The receivables at reporting date have been reviewed to determine whether there is any objective evidence that
any of the receivables are impaired. An expected credit loss provision is included for any receivable where the entire
balance is not considered collectible. Refer to Note 11(a) for further details on the determination of the expected credit
loss provision.
Notes to the Financial Statements
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39
5 Revenue and Other Income
Revenue from continuing operations
Revenue from contracts with customers
Sale of goods
Total Revenue
Other Income
Interest
Other income
6 Finance Income and Expenses
Finance expenses
Interest expense
2019
$
2018
$
31,563,749
17,380,773
31,563,749
17,380,773
2019
$
19,789
97,270
117,059
2018
$
2,842
94,182
97,024
2019
$
9,683
2018
$
8,296
40
Tubi Group Annual Report 2019
Notes to the Financial Statements
7 Result for the Year
The result for the year includes the following specific expenses:
Cost of sales
Other expenses:
Employee benefit expenses
Superannuation contributions
Total employee benefit expense
Depreciation
Amortisation
Rental expense on operating leases:
Minimum lease payments
8 Income Tax Expense
(a) The major components of tax expense (income) comprise:
Current tax expense
Income tax current period
Deferred tax expense
Origination and reversal of temporary differences
Total income tax expense
2019
$
2018
$
25,902,032
14,273,676
582,930
478,982
43,438
41,800
626,368
520,782
2019
$
2018
$
1,002,654
706,895
16,800
15,047
375,090
177,679
2019
$
2018
$
609,471
191,845
15,781
343,644
625,252
535,489
Notes to the Financial Statements
(b) Reconciliation of income tax to accounting profit:
Profit
Tax
Add:
Tax effect of:
Non deductible depreciation and amortisation
Share options expensed during year
Less:
Tax effect of:
Other
Recoupment of prior year tax losses previously not brought to account
Income tax attributable to the Group
Difference in overseas tax rates
Income tax expense
tubigroup.com
41
2019
$
2018
$
2,124,305
1,051,208
27.50%
27.50%
584,184
289,082
387,509
246,407
24,352
–
996,045
535,489
80,094
226,627
–
–
689,324
535,489
(64,072)
–
625,252
535,489
Weighted average effective tax rate
29%
51%
The decrease in the weighted average effective consolidated tax rate for 2019 compared to 2018 is primarily as a result
of losses brought to account in 2019 that previously were not recognised in 2018.
(c) Income tax relating to each component of other comprehensive income:
2019
Tax
(Expense)
Benefit
Before tax
Amount
Net of tax
Amount
Before tax
Amount
2018
Tax
(Expense)
Benefit
Net of tax
Amount
Exchange differences on
translating foreign controlled
entities
79,692
(21,915)
57,777
72,681
(19,987)
52,694
42
Tubi Group Annual Report 2019
Notes to the Financial Statements
9 Operating Segments
Segment information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by
the Board of Directors (chief operating decision maker) in assessing performance and determining the allocation
of resources.
The Group is managed primarily on the basis of product category and service offerings as the diversification of the
Group’s operations inherently have notably different risk profiles and performance assessment criteria. Operating
segments are therefore determined on the same basis.
Reportable segments disclosed are based on aggregating operating segments where the segments are considered
to have similar economic characteristics and are also similar with respect to the following:
> the products sold and/or services provided by the segment;
> the manufacturing process;
> the type or class of customer for the products or services;
> the distribution method; and
> any external regulatory requirements.
Performance is measured based on segment profit before income tax as included in the internal financial reports.
The Group has one reportable segment, being the manufacturing of HDPE pipe and the sale of technology licenses
to manufacture HDPE pipe.
10 Cash and Cash Equivalents
Cash at bank and in hand
11 Trade and other receivables
CURRENT
Trade receivables
Provision for impairment
Deposits
Other receivables
Amounts due from related party
30(b)
Total current trade and other receivables
2019
$
2018
$
7,605,594
3,690,804
7,605,594
3,690,804
Notes
2019
$
2018
$
2,982,869
1,329,845
(a)
–
–
2,982,869
1,329,845
515,928
98,813
25,589
–
22,499
–
3,623,199
1,352,344
Notes to the Financial Statements
tubigroup.com
43
The carrying value of trade receivables is considered a reasonable approximation of fair value due to the short term
nature of the balances.
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable in the
financial statements.
(a) Impairment of receivables
The Group applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which
permits the use of the lifetime expected loss provision for all trade receivables. To measure the expected credit losses,
trade receivables have been grouped based on shared credit risk characteristics and the days past due. The loss
allowance provision as at 30 June 2019 is determined as follows, the expected credit losses incorporate forward
looking information.
The Group determines the loss allowance for trade receivables at an amount equal to lifetime expected credit loss
(ECL). The ECL on trade receivables are estimated using a provision matrix by reference to past default experience
of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the
debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the
current as well as the forecast direction of conditions at the reporting date.
Based on the the Group’s historical experience and assessment of these factors, no loss allowance has been required
for the year.
The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty
and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered
into bankruptcy proceedings.
12 Inventories
CURRENT
At cost:
Raw materials
Finished goods
2019
$
2018
$
1,218,187
555,540
374,825
–
1,593,012
555,540
Write downs of inventories to net realisable value during the year were $ NIL (2018: $ NIL).
44
Tubi Group Annual Report 2019
Notes to the Financial Statements
13 Property, plant and equipment
Capital works in progress
At cost
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
Furniture, fixtures and fittings
At cost
Accumulated depreciation
Total furniture, fixtures and fittings
Motor vehicles
At cost
Accumulated depreciation
Total motor vehicles
Notes
2019
$
(a)
8,453,616
2018
$
–
9,662,907
9,073,086
(1,564,606)
(780,360)
8,098,301
8,292,726
33,653
22,730
(18,106)
(16,355)
15,547
6,375
352,138
316,546
(104,906)
(38,845)
247,232
277,701
Total property, plant and equipment
(b)
16,814,696
8,576,802
(a) Capital works in progress
Capital works in progress relate to the construction of four new mobile manufacturing plants due to be commissioned
in the next 1 to 2 years. Details of the capital commitments in relation to these works are included in Note 22(c).
Notes to the Financial Statements
tubigroup.com
45
(b) Movements in carrying amounts of property, plant and equipment
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the
end of the current financial year:
Capital Works
in Progress
Plant and
Equipment
Furniture,
Fixtures and
Fittings
Motor
Vehicles
$
$
$
$
–
8,292,726
6,375
277,701
8,576,802
8,453,616
850,057
10,551
20,350
9,334,574
–
–
–
(138,902)
–
–
(138,902)
(934,967)
(1,626)
(66,061)
(1,002,654)
29,387
247
15,242
44,876
Year ended 30 June 2019
Balance at the beginning of year
Additions
Disposals
Depreciation expense
Foreign exchange movements
Balance at the end of the year
8,453,616
8,098,301
15,547
247,232
16,814,696
Capital Works
in Progress
Plant and
Equipment
Furniture,
Fixtures and
Fittings
Motor
Vehicles
$
$
$
Year ended 30 June 2018
Balance at the beginning of year
Additions
Depreciation expense
Foreign exchange movements
Balance at the end of the year
14 Intangible Assets
$
–
–
–
–
–
Patents and trademarks
Cost
Accumulated amortisation and impairment
Net carrying value
Total Intangibles
7,393,736
1,578,923
7,048
6,883
14,228
7,415,012
282,819
1,868,625
(682,861)
(7,593)
(19,346)
(709,800)
2,928
37
–
2,965
8,292,726
6,375
277,701
8,576,802
2019
$
2018
$
353,654
317,610
(78,431)
(61,631)
275,223
255,979
275,223
255,979
Total
$
Total
$
46
Tubi Group Annual Report 2019
Notes to the Financial Statements
(a) Movements in carrying amounts of intangible assets
Year ended 30 June 2019
Balance at the beginning of the year
Additions
Amortisation
Closing value at 30 June 2019
Year ended 30 June 2018
Balance at the beginning of the year
Additions
Amortisation
Closing value at 30 June 2018
15 Other non financial assets
CURRENT
Prepayments
16 Trade and Other Payables
Current
Trade payables
Deposits
GST payable
Accrued expenses
Other payables
Patents and
trademarks
$
Total
$
255,979
255,979
36,044
36,044
(16,800)
(16,800)
275,223
275,223
Patents and
trademarks
$
Total
$
227,962
227,962
43,064
43,064
(15,047)
(15,047)
255,979
255,979
2019
$
2018
$
23,143
106,184
2019
$
2018
$
1,540,310
2,804,806
3,798,785
–
276,562
25,881
–
10,793
34,317
31,378
5,641,538
2,881,294
Notes to the Financial Statements
tubigroup.com
47
Trade and other payables are unsecured, non interest bearing and are normally settled within 30 days. The carrying
value of trade and other payables is considered a reasonable approximation of fair value due to the short term nature
of the balances.
Deposits relate to payments received in advance for the commissioning of mobile manufacturing plants under the
terms of agreed contracts with customers. These plants are currently under construction and included as capital
works in progress in Property, plant and equipment refer to Note 13.
17 Borrowings
CURRENT
Unsecured liabilities:
Related party loans
Secured liabilities:
Lease liability secured
Total current borrowings
Total borrowings
2019
$
–
–
2018
$
2,628,484
2,628,484
140,395
217,688
140,395
2,846,172
140,395
2,846,172
(a) Borrowings related party loans
In April 2019, related party loans amounting to $2,628,484 payable by the Group to entities related to certain directors
and shareholders were converted in to Shares at an issue price of $6.00 (pre share split). Refer to Note 19.
(b) The carrying amounts of non current assets pledged as collateral for liabilities are:
Lease liabilities are secured by the related leased assets.
The financial assets pledged as collateral represent a floating charge and cannot be disposed of without consent
of the financier.
18 Employee Benefits
Current liabilities
Provision for employee benefits
2019
$
2018
$
187,494
135,962
187,494
135,962
48
Tubi Group Annual Report 2019
Notes to the Financial Statements
19 Issued Capital
243,142,400 (2018: 5,791,531) Ordinary shares
18,042,218
4,838,823
2019
$
2018
$
(a) Ordinary shares
Opening balance at 1 July 2017
Apr 2018: issue shares at $3.22 per share
Balance at 30 June 2018
Feb 2019: Rights issue at $6.04 per share
Sub total
Conversion on 1:30 share split
Apr 2019: Issue pre IPO shares at $0.20 per share
No.
$.
5,582,500
4,165,000
209,031
673,823
5,791,531
4,838,823
208,469
1,259,152
6,000,000
6,097,975
180,000,000
6,097,975
50,000,000
10,000,000
Apr 2019: Conversion of director and shareholder loans to shares
13,142,400
2,628,484
Transaction costs
Balance at 30 June 2019
–
(684,241)
243,142,400
18,042,218
The holders of ordinary shares are entitled to participate in dividends and the proceeds on winding up of the
Company. On a show of hands at meetings of the Company, each holder of ordinary shares has one vote in person
or by proxy, and upon a poll each share is entitled to one vote.
The Company does not have authorised capital or par value in respect of its shares.
(b) Capital Management
The key objectives of the Group when managing capital is to safeguard its ability to continue as a going concern
and maintain optimal benefits to stakeholders. The Group defines capital as its equity and net debt.
There has been no change to capital risk management policies during the year.
The Company manages its capital structure and makes funding decisions based on the prevailing economic
environment and has a number of tools available to manage capital risk. These include maintaining a diversified debt
portfolio, the ability to adjust the size and timing of dividends paid to shareholders and the issue of new shares.
The Board monitors a range of financial metrics including return on capital employed and gearing ratios.
20 Reserves
(a) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive
income foreign currency translation reserve. The cumulative amount is reclassified to profit or loss when the net
investment is disposed of.
(b) Share based payments reserve
This reserve records the cumulative value of employee service received for the issue of share options. When the option
is exercised the amount in the share option reserve is transferred to share capital.
Notes to the Financial Statements
tubigroup.com
49
21 Earnings per Share
(a) Reconciliation of earnings to profit or loss from continuing operations
Profit from continuing operations
2019
$
2018
$
1,499,053
515,719
Earnings used in the calculation of dilutive EPS from continuing operations
1,499,053
515,719
(b) Earnings used to calculate overall earnings per share
Earnings used to calculate overall earnings per share
1,499,053
515,719
(c) Weighted average number of ordinary shares outstanding during the year used in calculating
basic EPS
2019
$
2018
$
Weighted average number of ordinary shares outstanding during the year
used in calculating basic EPS
Weighted average number of dilutive options outstanding
Weighted average number of dilutive restricted share units on issue
Weighted average number of ordinary shares outstanding during
the year used in calculating dilutive EPS
22 Capital and Leasing Commitments
(a) Finance Leases
Minimum lease payments:
Not later than one year
Present value of minimum lease payments
2019
No.
2018
No.
192,378,671
169,325,467
764,384
254,795
–
–
193,397,850
169,325,467
2019
$
2018
$
140,395
217,688
140,395
217,688
Finance leases are in place for plant and equipment and normally have a term between 1 and 2 years. The leases
have terms of renewal but no purchase option or escalation clauses. Renewals are at the option of the entity holding
the lease.
50
Tubi Group Annual Report 2019
Notes to the Financial Statements
(b) Operating Leases
Minimum lease payments under non cancellable operating leases:
Not later than one year
Between one year and five years
2019
$
31,173
–
31,173
2018
$
37,317
32,191
69,508
Operating leases are in place for plant and equipment and normally have a term between 1 and 2 years. Lease
payments are increased on an annual basis to reflect market rentals.
(c) Contracted Commitments
Contracted commitments for:
Rental of storage facility in US
Not later than one year
Between one year and five years
Construction of mobile manufacturing plants
Not later than one year
Between one year and five years
Total contracted commitments
23 Financial Risk Management
2019
$
133,138
3,750
136,888
10,316,735
610,328
10,927,063
11,063,951
2018
$
–
–
–
–
–
–
–
The Group is exposed to a variety of financial risks through its use of financial instruments.
The Group‘s overall risk management plan seeks to minimise potential adverse effects due to the unpredictability
of financial markets.
The most significant financial risks to which the Group is exposed to are described below:
Specific risks
> Credit risk
> Market risk currency risk, interest rate risk and price risk
Financial instruments used
The principal categories of financial instrument used by the Group are:
> Trade receivables
> Cash at bank
> Trade and other payables
Notes to the Financial Statements
Financial assets
Loans and receivables
Held at amortised cost
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Financial liabilities at amortised cost
Total financial liabilities
Total
tubigroup.com
51
2019
$
–
2018
$
5,043,148
7,605,594
3,623,199
–
–
6,379,788
5,897,299
6,379,788
5,897,299
4,849,005
(854,151)
The Group has not restated comparatives when initially applying AASB 9, the comparative information has been
prepared under AASB 139 Financial Instruments: Recognition and Measurement.
Objectives, policies and processes
The Board of Directors have overall responsibility for the establishment of the Group’s financial risk management
framework. This includes the development of policies covering specific areas such as foreign exchange risk, interest
rate risk, credit risk and the use of derivatives.
Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the
Group’s activities.
The day to day risk management is carried out by the Group’s finance function under policies and objectives which
have been approved by the Board of Directors. The Chief Financial Officer has been delegated the authority for
designing and implementing processes which follow the objectives and policies. This includes monitoring the levels
of exposure to interest rate and foreign exchange rate risk and assessment of market forecasts for interest rate and
foreign exchange movements.
The Board of Directors receives monthly reports which provide details of the effectiveness of the processes and
policies in place.
Mitigation strategies for specific risks faced are described below:
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss
to the Group.
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and
financial institutions, as well as credit exposure to wholesale and retail customers, including outstanding receivables
and committed transactions.
The credit risk for liquid funds and other short term financial assets is considered negligible, since the counterparties
are reputable banks with high quality external credit ratings.
52
Tubi Group Annual Report 2019
Notes to the Financial Statements
Trade receivables
Trade receivables consist of a small number of customers, spread across similar industries and geographical areas.
Ongoing credit evaluation is performed on the financial condition of accounts receivable.
The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of
financial loss from defaults. The risk management committee has established a credit policy under which each new
customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and
conditions are offered. The Group review includes external ratings, if they are available, financial statements, credit
agency information and industry information. Credit limits are established for each customer and the utilisation of credit
limits by customers is regularly monitored by line management. Customers who subsequently fail to meet their credit
terms are required to make purchases on a prepayment basis until creditworthiness can be re established.
The Board receives monthly reports summarising the turnover, trade receivables balance and aging profile of each
of the key customers individually and the Group’s other customers analysed by industry sector as well as a list of
customers currently transacting on a prepayment basis or who have balances in excess of their credit limits.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However,
management also considers the factors that may influence the credit risk of its customer base, including the default
risk associated with the industry and country in which the customers operate.
Management considers that all the financial assets that are not impaired for each of the reporting dates under review
are of good credit quality, including those that are past due.
The Group is currently dependent on the credit worthiness of two key customers. In the event that either counterparty
were to fall into bankruptcy, fail financially or otherwise default on its payment obligations to the Group, the Group may
be exposed to significant financial loss both from a failure of that counterparty to pay amounts owing to the Group for
product or plant supplied, and from the failure of that party’s ability to meet its contractual obligations to the Group.
On a geographical basis, the Group has significant credit risk exposures in Australia, New Zealand and USA given
the location of its operations in those regions.
The following table details the Group’s trade and other receivables exposure to credit risk (prior to collateral and
other credit enhancements) with ageing analysis and impairment provided for thereon. Amounts are considered
as ‘past due’ when the debt has not been settled, within the terms and conditions agreed between the Group and
the customer or counter party to the transaction. Receivables that are past due are assessed for impairment by
ascertaining solvency of the debtors and are provided for where there is objective evidence indicating that the debt
may not be fully repaid to the Group.
Notes to the Financial Statements
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53
The balances of receivables that remain within initial trade terms (as detailed in the table) are considered to be of high
credit quality.
Gross
amount
$
2019
Trade receivables
2,982,869
Other receivables
Total
2018
640,330
3,623,199
Trade receivables
1,329,845
Other receivables
Total
22,499
1,352,344
Past due but not impaired (days overdue)
Past
due and
impaired
< 30
31-60
61-90
$
–
–
–
–
–
–
$
2,964,246
640,333
3,604,579
1,326,290
22,499
1,348,789
$
–
–
–
–
–
–
$
–
–
–
–
–
–
Within
initial trade
terms
$
–
–
–
> 90
$
18,623
–
18,623
–
–
–
3,555
–
3,555
The Group does not hold any financial assets with terms that have been renegotiated, but which would otherwise
be past due or impaired.
The other classes of receivables do not contain impaired assets.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market prices.
(i) Foreign exchange risk
Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating
due to movement in foreign exchange rates of currencies in which the Group holds financial instruments which are
other than the AUD functional currency of the Group.
Exposures to currency exchange rates arise from the Group’s overseas sales and purchases, which are primarily
denominated in US Dollars (USD) and New Zealnd Dollars (NZD).
To mitigate the Group’s exposure to foreign currency risk, non Australian Dollar cash flows are monitored. The Group
aims to hold sufficient cash and cash equivalents in these respective currencies to enable it to carry out its operations
and settle amounts primarily in the currency in which the overseas sales and purchases take place.
Therefore, the Group‘s risk management procedures distinguish short term foreign currency cash flows (due within
6 months) from longer term cash flows. Where the amounts to be paid and received in a specific currency are
expected to largely offset one another, no further hedging activity is undertaken.
54
Tubi Group Annual Report 2019
Notes to the Financial Statements
Foreign currency denominated financial assets and liabilities, translated into Australian Dollars at the closing rate,
are as follows,
2019
Nominal amounts
Financial assets
Financial liabilities
Short term exposure
2018
Nominal amounts
Financial assets
Financial liabilities
Short term exposure
USD
$
NZD
Total AUD
$
$
3,826,567
281,487
4,108,054
(1,433,075)
(419,537)
(1,852,612)
2,393,492
(138,050)
2,255,442
2,843,555
365,217
3,208,772
(2,872,839)
(140,837)
(3,013,676)
(29,284)
224,380
195,096
The following table illustrates the sensitivity of the net result for the year and equity in regards to the Group‘s financial
assets and financial liabilities and the US Dollar – Australian Dollar exchange rate and New Zealand Dollar – Australian
Dollar exchange rate. There have been no changes in the assumptions calculating this sensitivity from prior years.
It assumes a +/ 5% change of the Australian Dollar/USD exchange rate for the year ended 30 June 2019
(30 June 2018: 5%). A +/ 5% change is considered for the Australian Dollar/NZD exchange rate (30 June 2018: 5%).
Both of these percentages have been determined based on the average market volatility in exchange rates in the
previous 12 months.
The year end rate is 0.7013 for USD and 1.0424 for NZD.
The sensitivity analysis is based on the foreign currency financial instruments held at the reporting date and also takes
into account forward exchange contracts that offset effects from changes in currency exchange rates.
If the Australian Dollar had strengthened and weakened against the USD and NZD by 5% ((30 June 2018: 5%) and
5% ((30 June 2018: 5%) respectively then this would have had the following impact:
USD
Net results
Equity
NZD
Net results
Equity
2019
2018
+5%
5%
+5%
5%
113,411
(113,411)
(113,411)
113,411
1,464
(1,464)
(1,464)
1,464
7,364
(7,364)
(7,364)
7,364
11,219
(11,219)
(11,219)
11,219
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions.
Nonetheless, the analysis above is considered to be representative of the Group’s exposure to foreign currency risk.
tubigroup.com
55
2019
$
2018
$
597,855
169,833
Notes to the Financial Statements
24 Tax assets and liabilities
(a) Current Tax Liability
Income tax payable
(b) Deferred Tax Assets
Deferred tax assets
Provisions employee benefits
Accruals
Transaction costs on equity issue
Balance at 30 June 2019
(c) Deferred Tax Liabilities
Deferred tax liabilities
Property, plant & equipment
Balance at 30 June 2018
Property, plant & equipment
Other
Opening
Balance
Charged to
Income
Charged
directly to
Equity
Notes
$
–
–
–
–
$
30,652
16,752
179,933
227,337
Opening
Balance
Charged to
Income
$
$
1,374,050
343,644
1,374,050
343,644
1,717,694
198,841
–
50,290
Closing
Balance
$
30,652
16,752
179,933
227,337
Closing
Balance
$
1,717,694
1,717,694
1,916,535
50,290
1,966,825
$
–
–
–
–
Charged
directly to
Equity
$
–
–
–
–
–
Balance at 30 June 2019
1,717,694
249,131
(d) Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following:
Tax losses
2019
$
–
2018
$
824,099
Deferred tax assets with a potential tax benefit of $Nil (2018: $226,627) have not been recognised in respect of these
items because it is not probable that future taxable profit will be available against which the Group can utilise the
benefits therein.
56
Tubi Group Annual Report 2019
Notes to the Financial Statements
25 Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Franking account
The franking credits available for subsequent financial years at a tax rate of 30%
The above available balance is based on the dividend franking account at year end adjusted for:
(a) Franking credits that will arise from the payment of the current tax liabilities;
2019
2018
$
–
$
–
(b) Franking debits that will arise from the payment of dividends recognised as a liability at the year end;
(c) Franking credits that will arise from the receipt of dividends recognised as receivables at the end of the year.
As at 30 June 2019, the Group has franking debits amounting $2,878, 736 arising from R&D tax offsets. The franking
debits will be recouped against future dividends. The ability to use franking credits on future dividends will only be
available once the franking debits have been fully recouped and is dependent upon the Company’s future ability
to declare dividends.
26 Key Management Personnel Remuneration
Key management personnel remuneration included within employee expenses for the year is shown below:
Short term employee benefits
Long term benefits
Post employment benefits
Share based payments
27 Auditors’ Remuneration
Remuneration of the auditor PKF, for:
Auditing or reviewing the financial statements for the current year
Auditing the financial statements for prior years
Taxation services
Other services
Total
2019
$
2018
$
759,229
386,767
23,430
40,938
81,174
5,154
34,200
–
904,771
426,121
2019
$
48,878
–
7,304
96,435
2018
$
13,500
41,860
–
–
152,617
55,360
Other services relate to advisory services in relation to the initial public offering and listing of Tubi Limited on the
Australian Stock Exchange (ASX).
Notes to the Financial Statements
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57
28 Interests in Subsidiaries
(a) Composition of the Group
Principal place of business/Country of Incorporation
Subsidiaries:
Tubi USA Inc.
USA
Tubi NZ Limited
New Zealand
Percentage
Owned (%)*
Percentage
Owned (%)*
2019
2018
100
100
100
100
* The percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries.
The principal activities of both subsidiaries during the year was the development, operation, leasing and sale of mobile
manufacturing plants for the production of high density polyethylene (“HDPE”) pipes for use in the oil and gas,
irrigation, mining and infrastructure sectors.
29 Contingencies
On 14 August 2019 the Company identified that a production run of HDPE Pipe in April 2019 may not have met
the customer specifications. The batch in question has already been paid for in full by the customer. At the date of the
report, the Company is currently investigating the extent of the defective product with further Quality Assurance testing
being performed in conjunction with the customer. This is an isolated incident being the only time that the Company
has made pipe in this specification. The Company remains confident that the pipe manufactured remains saleable
in part under the original order and in part under a different specification. At this stage the potential liability cannot
be measured reliably due to uncertainty over the actual quantity and replacement cost involved.
30 Related Parties
(a) The Group’s main related parties are as follows:
Key management personnel refer to Note 26.
Subsidiaries refer to Note 28
Other related parties include close family members of key management personnel and entities that are controlled
or significantly influenced by those key management personnel or their close family members.
58
Tubi Group Annual Report 2019
Notes to the Financial Statements
(b) Transactions with related parties
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
The following transactions occurred with related parties:
Purchases
Sales
Other
Balance outstanding
Owed
to the
company
Owed
by the
company
Provision
for bad
debts
Bad
debts
expenses
KMP related parties
Lawn Corporate Pty Ltd(i)
Other related parties
Tubi Saleco Limted(ii)
Notes
$
–
–
$
–
$
20,585
$
–
– 5,414,500
25,589
$
–
–
$
–
–
$
–
–
(i) Lawn Corporate Pty Ltd. a company of which Craig Lawn is a Director, performed certain contracting services associated with the Initial Public
Offering for which fees of $20,585 (2018 Nil) were charged.
(ii) Tubi Saleco Limited (Saleco), was established on 6 May 2019 to facilitate the sale of Shares by Chiara Corporation Pty Ltd, the Selling Shareholder,
a company of which Marcello Russo is a Director. Saleco is wholly owned by Marcello Russo and its Directors are Michael Tilley, Anthony Willsallen
and Brent Emmett.
Chiara Corporation, the Company and Saleco entered into an IPO Sell Down Deed under which Chiara Corporation Pty Ltd agreed to sell
28,800,000 of its existing Shares to Saleco at a sale price of 20 cents each share, which were sold by Saleco into the Offer, free from
encumbrances and third party rights
The existing Shares which Saleco acquired from the Selling Shareholder were transferred to Successful Applicants
at the Offer Price. Saleco has no material assets, liabilities or operations other than its interests in and obligations under the Underwriting
Agreement and the IPO Sell Down Deed.
Gross proceeds of $5,760,000 less underwriting fees of $345,600 were transferred from Saleco to Chiara Corporation Pty Ltd on the completion
of the offer.
(c) Loans to/from related parties
Unsecured loans are made to the subsidiaries, key management personnel and other related parties on an arm’s
length basis. Loans are unsecured and repayable in cash.
Opening
balance
Closing
balance
Interest
not charged
Interest
paid/payable
Impairment
$
473,484
$
–
473,484
473,484
2,155,000
–
2,155,000
2,155,000
$
–
–
–
–
$
–
–
–
–
$
–
–
–
–
Loans from KMP
2019
2018
Loans from related parties
2019
2018
No interest is paid on the KMP loans.
Notes to the Financial Statements
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59
31 Cash Flow Information
(a) Reconciliation of result for the year to cashflows from operating activities
Reconciliation of net income to net cash provided by operating activities:
Profit for the year
Cash flows excluded from profit attributable to operating activities
Non cash flows in profit:
Amortisation
Depreciation
Share based payments expensed
Changes in assets and liabilities:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in other assets
(Increase)/decrease in inventories
(Increase) in deferred tax asset
Increase in trade and other payables
(Decrease) in other liabilities
Increase in income taxes payable
Increase in deferred tax liability
Increase in provisions
Cashflows from operations
32 Share based Payments
2019
$
2018
$
1,499,053
515,719
16,800
15,047
1,002,654
706,895
81,174
–
(2,270,855)
867,578
83,041
(43,395)
(1,037,472)
155,376
(227,337)
–
2,760,244
1,065,230
(35,917)
(809,524)
428,022
137,915
249,131
343,644
51,532
67,824
2,600,070
3,022,309
The Company provides benefits to employees (including senior executives) of the Group in the form of share based
payments whereby employees render services in exchange for options and shares.
At 30 June 2019 the Group has the following share based payment schemes:
> Australian Long Term Incentive Plan;
> United States Share Incentive Plan;
> Tenure Restricted Stock Units;
> Performance Restricted Stock Units.
60
Tubi Group Annual Report 2019
Notes to the Financial Statements
(a) Options granted
A summary of the Company options issued is as follows:
2019
Grant Date
Expiry Date
Exercise
price
Balance
at start of
the year
Granted
during the
year
Exercised
during the
year
Forfeited
during the
year
Balance
at the end
of the
year
Vested and
exercisable
at the end
of the year
30 April 2019
30 August 2022
0.20
– 4,500,000
–
– 4,500,000
–
The weighted average fair value of the options granted during the year was $ 0.07 (2018: $Nil). These values were
calculated by using a Black Scholes option pricing model applying the following inputs:
Grant date:
Expiry date:
Share price at grant date ($):
Exercise price ($):
Weighted average life of the option (years):
Expected share price volatility:
Risk free interest rate:
Fair value at grant date ($):
30 April 2019
30 April 2024
0.20
0.20
3
40.00%
1.70%
0.07
Historical volatility has been the basis for determining expected share price volatility as it assumed that this is indicative
of future movements.
The share price at 30 June 2019 was $ 0.27.
(b) Restricted stock units
A summary of the Restricted Stock Units (RSUs) issued is as follows:
Grant Date
Expiry Date
Balance at
start of year
Granted
during the
year
Vested
during the
year
Tenure RSUs
30 April 2019
30 August 2022
Performance RSUs
30 April 2019
30 August 2022
–
–
1,500,000
–
–
–
Balance at
end of year
1,500,000
–
33 Events Occurring After the Reporting Date
The consolidated financial report was authorised for issue on 27 August 2019 by the board of directors.
No matters or circumstances have arisen since the end of the financial year which significantly affected or could
significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group
in future financial years.
Notes to the Financial Statements
tubigroup.com
61
34 Parent entity
The following information has been extracted from the books and records of the parent, Tubi Limited and has been
prepared in accordance with Accounting Standards.
The financial information for the parent entity, Tubi Limited has been prepared on the same basis as the consolidated
consolidated financial statements except as disclosed below.
Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the consolidated financial
statements of the parent entity. Dividends received from associates are recognised in the parent entity profit or loss,
rather than being deducted from the carrying amount of these investments.
Statement of Financial Position
Assets
Current assets
Non current assets
Total Assets
Liabilities
Current liabilities
Non current liabilities
Total Liabilities
Equity
Issued capital
Retained earnings
Option reserve
Total Equity
Statement of Profit or Loss and Other Comprehensive Income
Total profit or (loss) for the year
Total comprehensive income
Contingent liabilities
2019
$
2018
$
6,560,376
3,350,220
15,978,678
3,598,025
22,539,054
6,948,245
4,765,471
3,108,628
1,728,074
1,606,152
6,493,545
4,714,780
18,042,218
4,838,823
(2,077,883)
(2,605,358)
81,174
–
16,045,509
2,233,465
(527,475)
(527,475)
299,994
299,994
The parent entity did not have any contingent liabilities as at 30 June 2019 or 30 June 2018.
Contractual commitments
The parent entity did not have any commitments as at 30 June 2019 or 30 June 2018.
35 Statutory Information
The registered office and principal place of business of the company is:
Tubi Limited
2 Hopetoun Street
Paddington NSW 2021
Australia
62
Tubi Group Annual Report 2019
Directors’ Declaration
The directors of the Company declare that:
1. the consolidated financial statements and notes for the year ended 30 June 2019 are in accordance with the
Corporations Act 2001 and:
a. comply with Accounting Standards, which, as stated in basis of preparation Note 1 to the consolidated financial
statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards
(IFRS); and
b. give a true and fair view of the financial position and performance of the consolidated group;
2. the Chief Executive Officer and Chief Finance Officer have given the declarations required by Section 295A that:
a. the financial records of the Company for the financial year have been properly maintained in accordance with
section 286 of the Corporations Act 2001;
b. the consolidated financial statements and notes for the financial year comply with the Accounting Standards; and
c. the consolidated financial statements and notes for the financial year give a true and fair view.
3. 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.
This declaration is made in accordance with a resolution of the Board of Directors.
MIchael Tilley
Chairman
27 August 2019
Independent Audit Report to
the Members of Tubi Limited
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63
INDEPENDENT AUDITORʼS REPORT
TO THE MEMBERS OF TUBI LIMITED
Report on the Financial Report
Opinion
We have audited the accompanying financial report of Tubi Limited (the company), which comprises the
consolidated statement of financial position as at 30 June 2019, 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, notes comprising a summary of significant accounting
policies and other explanatory information, and the directorsʼ declaration of the company and the
consolidated entity comprising the company and the entities it controlled at the yearʼs end or from time to
time during the financial year.
In our opinion, the financial report of Tubi Limited is in accordance with the Corporations Act 2001,
including:
a) Giving a true and fair view of the consolidated entityʼs financial position as at 30 June 2019 and of
its performance for the year ended on that date; and
b) Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement. Our
responsibilities under those standards are further described in the Auditorʼs Responsibility section of our
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the consolidated entity in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Boardʼs 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.
64
Tubi Group Annual Report 2019
Independent Audit Report to the Members of Tubi Limited
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
1. Capital Works in Progress
Why significant
How our audit addressed the key audit matter
As disclosed in note 13, the Group has
capital works in progress of $8,453,616
as at 30 June 2019.
This related to the construction of four
new mobile manufacturing plants due to
be commissioned in the next 1 to 2
years.
capital
commitments relating to these plants as
at 30 June 2019, as disclosed in Note 22,
was $10,927,063.
remaining
The
the
whether
The carrying value of capital works in
progress represents a significant asset of
the Group, and as such it is necessary to
capitalised
assess
expenditure
key
the
satisfies
assumptions of existence, ownership and
valuation,
the
in
appropriateness of the expenditure being
capitalised relating to these plants in
accordance with AASB 116 Property.
Plant & Equipment.
particular
and
The carrying value of capital expenditure
relating to the capital works in progress is
therefore considered a key audit matter.
Our audit procedures included but were not limited to:
•
•
•
reviewing the construction project plans relating to the mobile
manufacturing plants along with any key assumptions/ judgments
made by management. Discussions with key personnel responsible
for overseeing the projects;
testing and vouching a sample of capital works in progress
additions to supporting purchase invoices and tracing to bank
payment or supplier ledger balance as appropriate;
testing and vouching a sample of labour costs charged to the
projects for validity, including review of rationale around calculations
and allocation;
• assessing expenditure in line with the construction project plans to
confirm legitimacy of capital expenses allocated to each plant
project;
• assessing current progress of construction project plans
to
determine their continued viability and tracking to budget. This
includes reviewing progress reports to management and the Board
and related minutes of meetings;
•
verifying physical existence of the capitalised components of the
new plant through physical site visits or date stamped photographs;
Based on those procedures performed, we were satisfied with the
material accuracy of the capital works in progress.
Independent Audit Report to the Members of Tubi Limited
tubigroup.com
65
Other Information
Other information is financial and non-financial information in the annual report of the company which is
provided in addition to the Financial Report and the Auditorʼs Report. The directors are responsible for Other
Information in the annual report.
The Other Information we obtained prior to the date of this Auditorʼs Report was the Directorʼs Report. The
remaining Other Information is expected to be made available to us after the date of the Auditorʼs Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, the auditor does
not and will not express an audit opinion or any form of assurance conclusion thereon, with the exception of
the Remuneration Report.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other Information in
the Financial Report and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditorʼs Report we have nothing to report.
Directorsʼ Responsibilities 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 Note 1,
the Directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of
Financial Statements, that the financial report complies with International Financial Reporting Standards.
In preparing the financial report, the Directors are responsible for assessing the consolidated entityʼs ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using a
going concern basis of accounting unless the Directors either intend to liquidate the consolidated entity or to
cease operations, or have no realistic alternative but to do so.
Auditorʼs Responsibilities for the Audit of the Financial Report
Our responsibility is to express an opinion on the financial report based on our audit. 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 and auditorʼs 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 Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individual or in 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 Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report.
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Tubi Group Annual Report 2019
Independent Audit Report to the Members of Tubi Limited
The procedures selected depend on the auditorʼs judgement, including assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the entityʼs preparation of the financial report that gives a true
and fair view 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 entityʼs internal control.
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.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial
report.
We conclude on the appropriateness of the Directorsʼ 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 consolidated entityʼs ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditorʼs 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 auditorʼs report. However, future
events or conditions may cause the consolidated entity to cease to continue as a going concern.
We 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.
We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the consolidated entity to express an opinion on the financial report. We are responsible for
the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit
engagements. We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore key audit matters. We
describe these matters in our auditorʼs 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.
Independent Audit Report to the Members of Tubi Limited
tubigroup.com
67
Report on the Remuneration Report
Opinion
We have audited the Remuneration Report included in the directorsʼ report for the year ended 30 June
2019. In our opinion, the Remuneration Report of Tubi Limited for the year ended 30 June 2019, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
PKF
CHARTERED ACCOUNTANTS
SCOTT TOBUTT
PARTNER
27 AUGUST 2019
SYDNEY, NSW
68
Tubi Group Annual Report 2019
Additional Information
for Listed Public Companies
The following information is current as at 22 August 2019.
Distribution of Shareholders
Fully Paid Ordinary Shares
Holdings Ranges
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001–9,999,999,999
Totals
Top 20 Shareholders
No.
Name
Number
Holders
Total Units
21
102
146
381
81
731
823
289,874
1,331,603
13,785,882
227,734,218
243,142,400
%
0.000
0.119
0.548
5.670
93.663
100.000
No. of Ordinary
Shares Held
% of Issued
Capital
1.
2.
3.
4.
5.
6.
7.
8.
9
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
BALD HILL QUARRY PTY LTD
OXLEIGH PTY LTD
CHIARA CORPORATION PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
UBS NOMINEES PTY LTD
SEALIGHT CAPITAL PTY LTD
KTM VENTURES INNOVATION FUND LP
BETA GAMMA PTY LTD
GW BURKE INVESTMENTS LRD
MR DAVID ALAN VERSCHOOR & MRS DANIELLE MILINDA
VERSCHOOR
WHITS END PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
52,132,500
51,882,480
35,727,420
17,500,000
7,713,562
6,323,800
5,000,000
5,000,000
5,000,000
3,531,000
3,210,000
2,795,806
BANNABY INVESTMENTS PTY LIMITED
2,696,000
STRUCTURE INVESTMENTS PTY LTD
IFM PTY LTD
2,500,000
2,271,000
MR CRAIG LAWN & MRS JOY LAWN
1,942,500
JOHN DAHLSEN SUPERANNUATION FUND PTY LTD
JECKI HOLDINGS PTY LTD
JOHN LANGLEY HANCOCK
MR PETER JAMES NIXON
1,750,000
1,553,130
1,190,000
900,000
21.441%
21.338%
14.694%
7.197%
3.172%
2.601%
2.056%
2.056%
2.056%
1.452%
1.320%
1.150%
1.109%
1.028%
0.934%
0.799%
0.720%
0.639%
0.489%
0.370%
Total Securities of Top 20 Holdings
210,619,198
86.624%
Total of Securities
243,142,400
Additional Information for Listed Public Companies
tubigroup.com
69
Substantial Holders
The following shareholders are substantial holders:
Holder Name
Oxleigh Pty Ltd1
Bald Hill Quarry2
Chiara Corporation Pty Ltd3
1. Oxleigh Pty Ltd is controlled by director Mr. Michael Tilley
2. Bald Hill Quarry Pty Ltd is controlled by director Mr. Anthony Willsallen
3. Chiara Corporation Pty Ltd is controlled by director Mr. Marcello Russo
Number of
Shares % Voting Power
104,014,9804
104,014,9804
35,747,420
42.78%4
42.78%4
14.7%
4. Oxleigh Pty Ltd and Bald Hill Quarry Pty Ltd have entered in to a Consultation Deed Consultation Deed under which each has agreed to not
dispose of Shares without first notifying and consulting with the other party on (among other things) the terms, the manner and the extent to which
the other party may acquire those shares. The effect of the Consultation Deed is that each Related Party Shareholder (among other things) has a
“relevant interest” (as that term is defined in the Corporations Act) in each other’s Shares and has voting power of 42.78% in the Company.
Voting Rights
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by
proxy has one vote on a show of hands. There are no other classes of equity securities.
Unmarketable Holders
There are 38 shareholders holding less than a marketable parcel of shares based on the closing price of AUD 0.31 on
21 August 2019 representing a total of 26,165 shares.
Restricted Securities
The Company has the 69,871,200 fully paid ordinary restricted securities which are voluntarily escrowed for 24 months
from quotation (ending 16/06/2021) and 69,871,200 fully paid ordinary restricted securities which are voluntarily
escrowed for 12 months from quotation (ending 16/06/2020).
70
Tubi Group Annual Report 2019
Corporate Directory
Company
Tubi Limited ACN 139 142 493
2 Hopetoun Street
Paddington NSW 2021 Australia
Phone 02 9331 8725
Email companysecretary@tubigroup.com
Web www.tubigroup.com
Directors
Mr. Michael Tilley
Non-Executive Chairman
Mr. Jeffrey Shorter
Managing Director/Chief Executive Officer
Mr. Marcello Russo
Executive Director, Business Development and Founder
Mr. Tony Willsallen
Non-Executive Director
Mr. Craig Lawn
Independent Non-Executive Director
Mr. Brent Emmett
Independent Non-Executive Director
Company Secretary
Mr. Ian Coates
Company Secretary and Chief Financial Officer
Share Registry
Boardroom Pty Limited
Level 12, 225 George Street
Sydney NSW 2000 Australia
Telephone +61 2 9290 9600
Auditor
PKF(NS) Audit & Assurance Limited Partnership
Level 6, 1 O’Connell Street
Sydney NSW 2000 Australia
ASX Code: 2BE
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