INNOVATIVE
INTEGRATED
INTERNATIONAL
ANNUAL REPORT 2020
CONTENTS
ABOUT WAGNERS
OUR BUSINESS MODEL
OUR STRATEGIC FOCUS 2020-22
FY20 KEY FACTS & FIGURES
WHAT WE PROMISED 2019 – WHAT WE ACHIEVED 2020
CHAIRMAN’S LETTER
CEO’S REPORT
BUSINESS ENVIRONMENT
OUR PEOPLE & COMMUNITY
OUR INNOVATION
OUR SUSTAINABILITY
NEW GENERATION BUILDING MATERIALS REPORT
CONSTRUCTION MATERIALS & SERVICES REPORT
GOVERNANCE
DIRECTORS
EXECUTIVE TEAM
FINANCIAL REPORT
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CORPORATE DIRECTORY
2
4
6
8
10
12
14
16
18
22
24
26
30
36
40
41
43
65
106
108
This annual report has been prepared with reference to the International Integrated Reporting (IR) Framework. The voluntary framework focuses on reporting how strategy, governance,
performance and outlook, in the context of external environment, contribute to the creation of value for an organisation. Wagners will continue to evolve its integrated reporting processes
over time, based on the principles outlined in the framework (www.theiirc.org). The Board of Directors and Senior Management Team have been closely involved in the preparation of this
report, and are satisfied with the accuracy of material issues and reported detail.
This annual report gives an overview of Wagners’ business activities and financial results for FY20. It also includes background to the current business environment in our sector and explains
our ongoing strategies for the future. It is designed to inform our shareholders and other stakeholders who are interested in the company’s policies, achievements and corporate responsibility.
INNOVATION SHAPES GLOBAL
AND LOCAL GROWTH.
INNOVATIVE
At Wagners, we
foster innovation
to differentiate our
business and improve
our efficiency, safety
and environmental
responsibility.
INTEGRATED
One of Wagners’ key
competitive strengths
is integration –
working together
across our business
divisions to achieve
great outcomes for
our people, customers,
community and
shareholders.
INTERNATIONAL
With a presence
in eight countries,
Wagners continues to
expand its international
operations, bringing
our excellence in
the construction
materials and services
industries to exciting
new markets.
GUIDING PRINCIPLES
At Wagners we strive for intrepid progress to achieve beneficial outcomes and we will:
I
T
S
F
A
I
R
Deal with
INTEGRITY
Work
TOGETHER
to overcome
challenges
Work in a SAFE
environment
Be FAMILY
conscious
Encourage and
ACKNOWLEDGE
success
Foster
INNOVATION
REQUIRE
quality and
excellence
Wagners Annual Report 2020
1
ABOUT
WAGNERS
Wagners is a leading producer of
construction materials and services
for Australian and international
markets. Established in 1989 in
Toowoomba, Queensland, the
company is an ASX‑listed business.
We are innovative, integrated and operate internationally.
Our Construction Materials and Services (CMS) include cement,
concrete, aggregates, bulk haulage services, precast concrete and
reinforcing steel. Our New Generation Building Materials (NGBM)
business creates higher-performing, more sustainable materials that
reduce the impact on the environment, and is delivering projects
globally. Our specialist in-house engineering and maintenance
workshop provides innovative maintenance and engineering
solutions across both the CMS and NGBM divisions, further
enhancing Wagners’ vertical integration of its businesses.
Our Guiding Principles underpin everything we do. They push us
to strive for intrepid progress to achieve beneficial outcomes for
all stakeholders – our people, our customers, our community and
our shareholders. We confront and overcome challenges that others
will not. We innovate, seek value and growth, and create rewarding
roles that encourage employees to deliver quality products
and services.
Safety is our number one commitment. Regardless of where in
the world we operate, we will never compromise on this commitment
to safety, our people and the community.
2
Wagners Annual Report 2020
Value drivers
» Highly skilled team with innovative and
entrepreneurial experience
»
»
»
»
»
»
Integrated supply chain for reliability and
competitive pricing
Agility and responsiveness
Lean manufacturing and continuing
process improvement
Reputation for delivering quality products and services
Strong relationships with customers and suppliers
Innovative products that better meet market needs
Business strengths
»
»
»
Innovation – continued investment into research
and development, particularly in our New Generation
Building Materials, a range of industry‑leading,
environmentally sustainable building materials
and technologies
Vertically integrated business
International presence – proven ability to operate
globally, with diverse domestic and international
market opportunities
» High‑performing safety culture
»
Targeted capital investment in facilities, people, plant
and equipment to enable strategic growth
» Our people – committed, skilled teams with shared
culture founded on our Guiding Principles
»
Sustainable approach to finance, community and
environment with well‑developed control mechanisms
»
Internal research laboratory and development facilities
Business dependencies
External
» Global economic challenges arising from
»
»
»
»
»
»
COVID‑19 impacts
Supply chain inputs and costs
Suitable domestic and global infrastructure projects
International demand for our NGBM products,
Composite Fibre Technologies and Earth
Friendly Concrete® (EFC®)
Exchange rates
Environmental legislation and community expectations
to support demand for NGBM products
Building code reform and international certification
for EFC®
Internal
»
Skilled, flexible workforce – in Australia and
internationally
»
»
»
»
»
Protection and enhancement of corporate and
business knowledge
Research and development in all aspects of business
Production costs
Safety, quality and environmental controls
Ability to leverage and sustain infrastructure/mining
development cycles
» Workforce culture and commitment to Guiding Principles
»
»
Reputation – quality, safety, environmental responsibility,
good corporate citizen
Policies and structures to support great customer
and supplier relationships
»
Capital investment
» High corporate and financial governance standards
Lizard Island CFT boardwalk, QLD.
Wagners Annual Report 2020
3
OUR BUSINESS
MODEL
The Wagners business model has two main business units – New Generation
Building Materials (NGBM) and Construction Materials and Services (CMS) –
with separate specialist divisions vertically integrated to support each other.
This means that divisions can supply materials or services to other divisions on a timely and cost-competitive basis. With external and internal
customers, a shared culture and strong cooperation, the business units are better able to control outcomes and manage fluctuations in the market.
CEMENT
Quarries
COMPOSITE FIBRE TECHNOLOGIES Factory
Concrete plant network + EFC® Capabilities
CROSS-ARMS and Poles
Walkways and Bridges
PRECAST concrete
STEEL
Customer
Customer
NEW ZEALAND
United Arab Emirates
United kingdom
united states of america
AUSTRALIA
Residential
Major projects/infrastructure
Mining and resources
Bulk haulage and crushing
4
Wagners Annual Report 2020
SAFETY IS OUR NUMBER ONE COMMITMENT.
WHEREVER WE OPERATE IN THE WORLD, WE WILL
NEVER COMPROMISE ON THIS COMMITMENT TO
SAFETY, OUR PEOPLE AND THE COMMUNITY.
CEMENT
Quarries
COMPOSITE FIBRE TECHNOLOGIES Factory
Concrete plant network + EFC® Capabilities
CROSS-ARMS and Poles
Walkways and Bridges
PRECAST concrete
STEEL
Customer
Customer
NEW ZEALAND
United Arab Emirates
United kingdom
united states of america
AUSTRALIA
Residential
Major projects/infrastructure
Mining and resources
Bulk haulage and crushing
Wagners Annual Report 2020
5
OUR STRATEGIC FOCUS
2020-22
Product, service or function
New Generation Building Material markets
»
Composite Fibre Technologies
»
Earth Friendly Concrete®
Construction Materials and Services
Cement
»
»
Pre-mix concrete
» Quarry materials
Precast and prestressed concrete
»
»
Reinforcing steel
» On-site crushing
»
Transport and haulage services
Major projects – Construction
Materials and Services
Capital investment
Skills and expertise
Customer and supplier
relationships
6
Wagners Annual Report 2020
Two-year outlook/focus
» Manufacture and supply of innovative and environmentally
sustainable construction materials and finished products globally
» New product development and innovation
»
»
Increasing our in-house capabilities and production efficiencies
Continued focus on global markets and opportunities for CFT –
USA, UK and Middle East
Establish USA manufacturing plant for CFT
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
Commercialisation on a global scale
Invest in environmental credentials for EFC® internationally
Invest in business and development teams to achieve sales growth
for EFC® in international and domestic markets
Establish international partnerships to support the distribution of EFC®
Provide long-term solutions to construction, infrastructure and
resource industry projects
Target opportunities for growth and acquisition that enhance
vertical integration or new geographic regions
Focus on production efficiencies
Competitive advantage over other suppliers
Focus on securing international and major infrastructure
opportunities for the CMS business
Target resource sector revenue growth through on-site concrete
batch plants, contract crushing and transport business
Continued investment in fixed concrete plant network
Focused approach on investment in opportunities that deliver
value to Wagners’ vertically integrated business model
Product development and innovation
Investment in CFT facilities, pultrusion capacity, and productivity
» Attract, retain and train highly qualified people
»
Continue to invest in our people, through training and
development activities
»
Increased resources in sales team
» Ability to deliver quality product at the best value
Increased customer base through quality products that
Strengths and dependencies/
key success factors
Outputs determining success
»
In-house capability in research and development, product
Revenue-generating new product lines with increasing
development, laboratories, maintenance, engineering
customer acceptance and demand
and fabrication
CFT manufacturing facility initial establishment in US, and
»
International demand for existing and new product lines
servicing international market with further expansion of the
»
Increased international demand for existing CFT products:
facility to meet demand
–
cross-arms
– pedestrian infrastructure and short-span road bridges
» Acceptance and demand for EFC® internationally
EFC® – revenue generated from international markets
EFC® – increased demand for product throughout Australia
» Achieving standards certification in international
jurisdictions to allow commercial application of EFC®
and major infrastructure products
» Domestic infrastructure construction activity and timing
Increased revenue and profit margins
» Our strength is our ability to capitalise on infrastructure/
Consistent increases in concrete volumes
Long-term contracts in the construction materials and
resources sector across all business divisions
of projects
» Operational costs
mining development cycles
» Marketing and brand reputation
Project start dates and availability of the opportunities
Increase in revenue and profitability in both domestic
Successful negotiation of appropriate commercial terms
» Wagners’ strengths are:
and offshore operations
Increased tendering activity
–
entrepreneurial and opportunistic approach
to domestic and international major
infrastructure projects
–
dedicated business development team
»
Continued innovation in plant, equipment and processes
to reduce costs to customers, and obtain a competitive
advantage over other suppliers of similar services
Product demand in South-East Queensland
Timely completion of new automated cross-arm
»
»
»
»
»
»
»
manufacturing cell
available to customers
People
Safety
Training
»
Supply chain value
» New range of products, particularly in CFT (e.g. poles)
production efficiencies
Increased sales and profitability across each business division
Increased revenue from new product lines
Increased profit margins through innovative
Increased staff retention statistics
Best-possible safety performance
Productivity and process enhancements
represent best value
Positive customer feedback metrics and Net Promoter Scores
Secure, long-term supply chain value
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
Wagners’ growth and strategic planning is focused on achieving
good financial, human and environmental outcomes while remaining
Innovative, Integrated and International.
This concise overview of our strategy shows some of the main areas of focus.
Strengths and dependencies/
key success factors
»
»
In-house capability in research and development, product
development, laboratories, maintenance, engineering
and fabrication
International demand for existing and new product lines
» Acceptance and demand for EFC® internationally
» Achieving standards certification in international
jurisdictions to allow commercial application of EFC®
and major infrastructure products
Provide long-term solutions to construction, infrastructure and
» Domestic infrastructure construction activity and timing
of projects
» Operational costs
» Our strength is our ability to capitalise on infrastructure/
mining development cycles
» Marketing and brand reputation
Outputs determining success
»
»
»
»
»
»
»
»
Revenue-generating new product lines with increasing
customer acceptance and demand
CFT manufacturing facility initial establishment in US, and
servicing international market with further expansion of the
facility to meet demand
Increased international demand for existing CFT products:
–
– pedestrian infrastructure and short-span road bridges
cross-arms
EFC® – revenue generated from international markets
EFC® – increased demand for product throughout Australia
Increased revenue and profit margins
Long-term contracts in the construction materials and
resources sector across all business divisions
Consistent increases in concrete volumes
Project start dates and availability of the opportunities
Successful negotiation of appropriate commercial terms
»
»
» Wagners’ strengths are:
»
»
Increase in revenue and profitability in both domestic
and offshore operations
Increased tendering activity
–
entrepreneurial and opportunistic approach
to domestic and international major
infrastructure projects
dedicated business development team
–
Continued innovation in plant, equipment and processes
to reduce costs to customers, and obtain a competitive
advantage over other suppliers of similar services
Product demand in South-East Queensland
Timely completion of new automated cross-arm
manufacturing cell
»
»
»
» New range of products, particularly in CFT (e.g. poles)
available to customers
»
»
»
People
Safety
Training
» Ability to deliver quality product at the best value
»
Supply chain value
»
»
»
»
»
»
»
»
»
Increased sales and profitability across each business division
Increased revenue from new product lines
Increased profit margins through innovative
production efficiencies
Increased staff retention statistics
Best-possible safety performance
Productivity and process enhancements
Increased customer base through quality products that
represent best value
Positive customer feedback metrics and Net Promoter Scores
Secure, long-term supply chain value
Wagners Annual Report 2020
7
Product, service or function
Two-year outlook/focus
New Generation Building Material markets
»
Composite Fibre Technologies
» Manufacture and supply of innovative and environmentally
sustainable construction materials and finished products globally
» New product development and innovation
Increasing our in-house capabilities and production efficiencies
Continued focus on global markets and opportunities for CFT –
USA, UK and Middle East
Establish USA manufacturing plant for CFT
»
Earth Friendly Concrete®
Commercialisation on a global scale
Construction Materials and Services
Cement
Pre-mix concrete
» Quarry materials
Reinforcing steel
» On-site crushing
»
»
»
»
»
Precast and prestressed concrete
Transport and haulage services
Major projects – Construction
Materials and Services
Invest in environmental credentials for EFC® internationally
Invest in business and development teams to achieve sales growth
for EFC® in international and domestic markets
Establish international partnerships to support the distribution of EFC®
resource industry projects
Target opportunities for growth and acquisition that enhance
vertical integration or new geographic regions
Focus on production efficiencies
Competitive advantage over other suppliers
Focus on securing international and major infrastructure
opportunities for the CMS business
Target resource sector revenue growth through on-site concrete
batch plants, contract crushing and transport business
Capital investment
Skills and expertise
Customer and supplier
relationships
Continued investment in fixed concrete plant network
Focused approach on investment in opportunities that deliver
value to Wagners’ vertically integrated business model
Product development and innovation
Investment in CFT facilities, pultrusion capacity, and productivity
» Attract, retain and train highly qualified people
»
Continue to invest in our people, through training and
development activities
»
Increased resources in sales team
»
»
»
»
»
»
»
»
»
»
»
»
»
»
»
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»
FY20 KEY
FACTS & FIGURES
Group revenue
$252 MILLION
5.1% increase
Quarry volumes
26%
increase
CFT
pultrusion
394,086 M
Employee
numbers
583
8
Wagners Annual Report 2020
Concrete volumes
100%
increase
NGBM Aus/NZ
custom build
44% GROWTH
Tonnes hauled
12.3
MILLION
Lost‑time
injuries
0
Innovation
NEW CFT
PRODUCTS
Wagners Annual Report 2020
9
WHAT WE PROMISED 2019 –
WHAT WE ACHIEVED 2020
What we promised 2019
Global expansion
What we achieved 2020
Planned expansion, particularly in NGBM, not realised due to impacts
of COVID‑19
Investment in business development team to pursue international
opportunities
Construction Materials and Services
»
Sales growth
Growth in sales in:
Concrete through execution of SEQ Concrete Strategy – while we have
experienced volume growth from the plants, the reduced selling price
has impacted profitability of plants in start‑up phase
Quarries – 26% increase in quarry volumes compared to FY19
Transport – currently operating nine bulk haulage projects across Queensland
and the Northern Territory
Secured three new haulage projects in the resource sector in FY20
Secured five new on‑site crushing projects and associated haulage
work, with some sites crushing more than one million tonnes on larger
long‑term projects
Constructed airfield to service resource project in
central Queensland
Investment into fixed concrete plant infrastructure – Wagners now has six
operational plants, of which five have EFC® capabilities
Significant investment in haulage fleet – $8 million on three‑ and four‑trailer
road train combinations to service long‑term haulage contracts in FY20
Acquisition of Shepton Quarry which should deliver strong results in
FY21 – business now has seven quarry operations from NSW border to far
north Queensland
Upgrades to plant and equipment in the quarry business to generate
operational efficiencies and increase profitability across the business
These investments made throughout FY20 will promote growth and enhanced
vertical integration across the business providing channels to market for Wagners’
Construction Materials and Services
»
Target resources sector revenue growth
through on‑site concrete batch plants,
contract crushing and transport business
»
Capital investment
10
Wagners Annual Report 2020
What we promised 2019
New Generation Building Materials – CFT
» New product development and innovation
What we achieved 2020
Design of new profile allowing manufacture of new product line –
circular poles suitable for replacing timber poles and use as light poles
»
Focus on offshore manufacturing and
export markets for CFT
Pultrusion machine manufactured and in USA awaiting commissioning
post COVID‑19
»
Capital investment
Establishment of USA manufacturing plant delayed as a result
of COVID‑19 restrictions
Supply to international markets during FY20, manufactured at Wellcamp
facility and exported from Port of Brisbane
Expansion of Wellcamp manufacturing facility providing increased
capacity for CFT
Manufacture and commissioning of a cross‑arm manufacturing cell which
will deliver significant production efficiencies
New pultrusion machine built – dedicated for manufacture in USA
Training and development of sales and technical personnel
New Generation Building Materials – EFC®
Invest in environmental credentials for EFC®
»
Product Carbon Footprint declaration obtained detailing the level
of embodied carbon in EFC®
»
Sales growth in project work and
domestic markets
Increase in EFC® batched and delivered
»
Integrated supply chain – target opportunities
that enhance vertical integration
»
Skills and expertise
» Develop customer and supplier relationships
Use in aircraft taxiway project and residential construction
EFC® batched and delivered in London and other international locations
Investment in a quarry, in‑house capabilities and expansion of concrete
network (with EFC® capabilities) enhances vertical integration across the
business providing channels to market for Wagners’ Construction Materials
and Services
Continued investment in staff development – apprenticeships, traineeship
and graduate programs in place
Supply chain risk analysis conducted across businesses to secure and
enhance supply chain value, and assessing and managing modern slavery
and COVID‑19 risk
Wagners Annual Report 2020
11
CHAIRMAN’S
LETTER
To all shareholders of Wagners Holding Company Limited (WGN)
There is no doubt that this year was
the most challenging year in Wagners’
history. Despite this, Cameron and
his team have continued to operate
the business to set a strong base
going forward.
We continue to have a focus on the safety of our people and operations.
Each month the Board attends a group safety session with a diverse
group of staff from across the business, from senior management to
our people at the workface. We encourage everyone at Wagners to take
responsibility for their own safety and the safety of others. This is driven
by a positive culture based on our Guiding Principles, ensuring we
protect our people, our environment, and the quality of our products.
Our financial results did not meet our initial expectations, however
given the circumstances and challenges we faced through the year,
we believe we now have a good platform for the business to improve
in this changing world.
Needless to say, COVID-19 had an impact on our performance. Our team
has adapted to the new way of doing business, which will ultimately
deliver more efficiencies in our operations and improvement throughout
the business.
The market conditions for our New Generation Building Materials
division look strong into the future. This year the export opportunities
for our Composite Fibre Technologies (CFT) business were impeded by
the restrictions implemented in the markets where we sell products.
We have not achieved our goal of establishing a production facility in
the USA, primarily due to travel restrictions and the inability to get our
people to the USA to commission the equipment. We see this as only
a short-term impediment and have confidence this division will see
significant growth in the export market in the future.
We are seeing all levels of government in Australia starting to develop
plans to rescue the economy, primarily by increasing government
spending on infrastructure. This should lead to more opportunities
for our products and the infrastructure we build using our composite
products. Our ability to deliver bridges, boardwalks, cross-arms and light
poles quickly and efficiently should translate into increased revenue as
government spend grows.
Much work has been done to progress our Earth Friendly Concrete®
(EFC®) through Europe, India and Australia. These markets continue
to seek more sustainable and environmentally responsible products,
so this fits well for our EFC® technology.
Construction materials in the Queensland market faced some headwinds
this year. We do expect both federal and state government spending
on infrastructure to support this industry into the future. The industry
has had a major reset, driven by the behaviour of some industry players.
Our structure, our assets and our innovative products in the heavy
construction materials markets in South-East Queensland place us in
a position where we can handle this disruption better than any of our
competitors. However, an industry restructure is likely to be the only
real solution to what will be a long road to recovery.
Our view on the mining services areas of our business is that they should
remain strong in the foreseeable future. We have enjoyed much success
in this area and we have a forward order book for this sector.
The executive management team has met and handled the challenges
well through the year. We do look forward to better conditions in FY21
and the team’s work in streamlining the business will stand us in good
stead. I would also like to thank all Board members for their contribution
and resilience over the past year.
Regards
Denis Wagner
Chairman
12
Wagners Annual Report 2020
WE LOOK FORWARD TO BETTER
CONDITIONS IN FY21 AND THE TEAM’S
WORK IN STREAMLINING THE BUSINESS
WILL STAND US IN GOOD STEAD.
Wagners' one millionth CFT cross-arm manufactured.
Wagners Annual Report 2020
13
CEO’S
REPORT
Innovative, integrated, international
While FY20 presented significant challenges to the Wagners business
with a disappointing financial result, we have experienced:
»
»
continued global expansion in our New Generation Building
Materials business (NGBM), and
a year that will ensure we are well positioned for the
future to capitalise on the imminent increase in activity
in infrastructure projects.
Financial results
The overall group achieved a proforma EBIT result of $9 million, which
was significantly below our expectations. While there was an overall
increase in revenue, the growth predominantly came from sectors
such as concrete that achieved lower EBIT margins, impacting the
overall EBIT result.
In our Construction Materials and Services (CMS) business, we continued
to see growth in our bulk transport haulage business servicing the
resources sector. This was complemented by growth in our quarries
business both from newly acquired sites and existing operations.
However, reduced volumes in our cement business negatively impacted
the overall financial result. On a positive note, recent months have seen
cement volumes return to that of prior periods and we expect this
volume to continue throughout FY21.
Our NGBM business achieved a proforma EBIT result of $2.2 million.
We have made significant capital investment in the global expansion
of this business, however with lockdowns in various countries and travel
restrictions in place, FY20 did not achieve the expected global financial
contribution. The investment has positioned us to take advantage of
the opportunities we expect FY21 will present as travel opens up and
governments commit funding to generate jobs and industry, particularly
in the construction sector.
In addition to investment overseas, our capital investment strategy
through FY20 will allow us to deliver on our future plans for growth across
the business. Targeted capital investment throughout FY20 included:
»
Investment in our concrete plant infrastructure to support the growth
of our fixed plant network throughout South-East Queensland,
particularly as demand increases with the commencement of some
large government-funded infrastructure projects. These plants provide
a critical channel to market for many of our construction materials and
services including cement, flyash, aggregates and haulage services –
enhancing vertical integration of our businesses.
14
Wagners Annual Report 2020
»
»
»
»
»
»
»
Acquisition of a hard rock quarry outside of Emerald in Queensland,
providing significant opportunities for the quarry and transport
businesses in that region in FY21. Wagners’ quarry business now
consists of seven quarry locations.
Expansion of our Composite Fibre Technologies (CFT) facility at
Wellcamp, Queensland providing increased capacity for NGBM’s
CFT business.
The manufacture and commissioning of a CFT cross-arm
manufacturing cell, which is now operational, delivering
significant production efficiencies for the NGBM business.
Investment in plant and equipment in our quarries business that will
drive production efficiencies, delivering more profitable operations.
Acquisition of four-trailer road train combinations to service the bulk
haulage contracts in place. In FY21, we expect to see high utilisation
from these assets as they meet contract work demands, delivering
increased margins as a result of this investment.
Implementation of our new enterprise resource planning (ERP)
system across all businesses.
Recruitment and training of our people to ensure we are ready to
capitalise on the opportunities in the CFT, EFC® and construction
materials businesses.
Significant achievements FY20
Some of our key achievements during the year included:
Continued global expansion of our CFT business
» Our fifth pultrusion machine was delivered to the USA, and
is awaiting commissioning when travel restrictions lift. Once
commissioned, we will be able to service US markets from a
local manufacturing facility.
» We delivered projects in Australia, New Zealand, USA and UAE
and now have sales teams on the ground in each of those locations.
Wagners is now in a strong position to secure opportunities in the
global market.
DIBt approval for Earth Friendly Concrete® (EFC®)
» Our EFC® secured DIBt approval, (German Standards Approval)
enabling us to pursue opportunities for the application of EFC®
in infrastructure projects in Europe.
»
Following DIBt approval, some EFC® trials were performed in the
UK. A number of companies are showing significant interest in
using EFC® for projects in the UK as they learn and understand
the environmental and performance benefits EFC® offers.
WE ARE WELL POSITIONED FOR THE FUTURE
TO CAPITALISE ON THE IMMINENT INCREASE IN
ACTIVITY IN INFRASTRUCTURE PROJECTS.
Future outlook
Although Wagners did not achieve expected results in FY20, our
outlook for FY21 is positive. I remain confident that the targeted capital
expenditure throughout FY20 and investment in our people stand us
in good stead for FY21 and beyond.
We expect there to be increased demand for construction materials
as a result of government-funded infrastructure and building projects
commencing in FY21. Wagners is now well positioned to secure these
as opportunities arise.
We remain committed to and are investing in business development
activities around the world, following project opportunities in industries
such as liquefied natural gas where we have a proven track-record
of winning and executing large service contracts, particularly in
remote locations.
Our investment, efforts and resourcing throughout FY20 will underpin
a positive impact during FY21 for our global NGBM business, both in
CFT and EFC®, as we continue to pursue opportunities worldwide.
Thank you to all the Wagners team who have shown great resilience
and focus during a challenging year, maintaining an innovative and
entrepreneurial mindset with the long-term growth of the business
as the goal. I am proud of our continued relentless focus on safety,
particularly in the uncharted waters of a pandemic.
The Board of Directors has provided guidance and valued advice,
as always. My thanks to them.
Cameron Coleman
Chief Executive Officer
Increased volumes from concrete plant network
» Our fixed concrete plant network continued to grow, with six plants
now operational. Although volumes are increasing at these plants
as they establish in new markets, reduced concrete pricing in the
industry has impacted profitability.
Key contracts secured
» While we secured a number of contracts for the supply of materials
and services across the Group throughout the year, some key
contracts won for the CMS business in FY20 will also contribute
to FY21 earnings, including:
–
–
The supply of precast concrete tunnel segments to Brisbane’s
Cross River Rail Project, valued at $40 million. Manufacture will
commence in late 2020.
The quarry operation and haulage agreement for the Carmichael
Mine Project, with a project value of over $35 million.
– An extension of existing haulage contracts providing secure
revenue for our bulk haulage business for a further four years.
»
In CFT, we renewed a number of our long-term cross-arm supply
contracts, securing volumes for FY21 and beyond.
Challenges
The result for FY20 did not meet our expectations. Our businesses
were presented with a number of challenges that contributed to the
disappointing result, including:
»
Significant reduction in cement volumes due to suspension of
supply to one of our key contracted customers – supply has since
resumed, however with a reduction in price that will continue to
impact the financial performance.
» Demand and pricing pressure in the concrete industry, the effects of
which have been compounded while working through the start-up
phase of these plants.
»
»
Increased operational costs, particularly in our bulk haulage
business, necessary for maintaining business stability during
COVID-19.
Inability to achieve our aspirations internationally given travel
and lockdown restrictions in various states and countries.
As an organisation, we are regularly confronted with challenges not
dissimilar to those we experienced in FY20. However, the focus and
determination shown by the team in managing these challenges
and planning for the future assures me – with FY20 now behind us –
that we are committed and well positioned to pursue new opportunities
and growth, both in Australia and internationally.
Wagners Annual Report 2020
15
BUSINESS
ENVIRONMENT
In the context of the sudden and
extreme impact of the COVID‑19
pandemic on the global economy
in the last few months of FY20, and a
range of Australian market conditions
affecting volumes, pricing and the
commencement of new projects,
it was a disappointing year for
Wagners financially.
Challenges notwithstanding, we continued to focus on executing our
strategy, innovation, and development of the expertise of the Wagners
team, and integration. We are energised by the many opportunities
our investment and global expansion in the New Generation Building
Materials (NGBM) sector are presenting, although our ability to capitalise
on the growing interest internationally was restricted due to travel
restrictions and lockdowns worldwide this year. We are also confident
an uplift in major infrastructure and resources work at home in Australia
will deliver significant contracts and growth for both NGBM and
Construction Materials and Services (CMS) from FY21.
Opportunities
Commitments from state and federal governments to construction
and infrastructure projects will provide many opportunities for both
our NGBM and CMS business in FY21 and beyond. Significant capital
investment during FY20 has positioned us to service these projects
through availability of efficient plant and equipment, highly trained
people and innovative, cost-effective solutions. Our flexible resourcing
abilities, allowing us to ‘ramp up’ and ‘ramp down’ quickly, are a core
strength of the Wagners business and mean we can competitively
manage market fluctuations.
Our NGBM business remains the greatest growth opportunity
with a strong focus on international markets. With clients seeking
environmentally sustainable outcomes for projects, we see exceptional
opportunities for our EFC®, particularly now with European DIBt
certification paving the way for EFC®’s commercial application in
infrastructure projects across a number of international markets.
Challenges and risks
While government funding commitments will provide a number
of future opportunities, there was little activity in large project and
infrastructure work during FY20. Commitment from infrastructure
owners around execution and timing of projects remains a significant
challenge for our business. Again, our flexible resourcing ability allows
us to effectively manage and mitigate the uncertainties project
work presents.
Market and competitive pressures – which can impact pricing,
margins and our ability to secure new work – remain critical challenges,
particularly in our core CMS business. Our innovative culture to drive
client solutions, brand reputation and commitment to delivering
quality products and services will allow us to remain competitive
and retain profitability.
Security of supply and pricing for raw materials is a potential risk, and
is always a key focus for our business managers. These challenges are
managed through long-term contracts and longstanding relationships
with our supply network, the members of which have a thorough and
accurate understanding of our business requirements. This approach
ensures our supply chain provides us the best value and service.
16
Wagners Annual Report 2020
OUR NGBM BUSINESS REMAINS THE GREATEST
GROWTH OPPORTUNITY WITH A STRONG FOCUS
ON INTERNATIONAL MARKETS.
Newcastle Boardwalk, NSW.
Wagners Annual Report 2020
17
OUR PEOPLE
& COMMUNITY
In a challenging year, the strength of
the Wagners culture has shone through
– our people have shown admirable
adaptability and resilience and have
continued to deliver great results in
changing circumstances.
As a company, our Guiding Principles are a genuine framework
for decision-making, with safety of our people and the community
as the core commitment for all divisions. This commitment
demonstrated its worth in abundance this year – with the
pandemic unfolding at the end of the summer of natural disasters,
the health and wellbeing of everyone played a prominent role in
planning and our operational response.
Continuing our tradition of supporting community events and
fundraising across our operating regions, our team proudly
contributed to and participated in a range of events and
fundraising campaigns.
FY20 at a glance
» 583 employees (includes Australia,
Malaysia, USA, NZ)
» 11 new apprentices and two trainees
» Seven enterprise agreements approved
» Improved employee engagement survey
participation – 397 participants
» Employee‑led projects and social activities
actioned through focus groups
» Over $2m raised for prostate cancer research
– Wagners’ It’s a Bloke Thing luncheon
» Zero lost‑time injuries – fourth year running
» Diversity reflected in more than 15
languages being spoken at home
18
Wagners Annual Report 2020
Dennis Higgins at Pfeiffer Big Sur trail bridge in California, USA.
INVESTING IN OUR PEOPLE AND OUR CULTURE AND
BUILDING THE RESILIENCE THAT WILL HELP US
THRIVE THROUGH UNCERTAIN TIMES.
Achievements FY20
Coping with COVID-19
The urgent response to the COVID-19 pandemic created challenges
across the business, and has also provided learnings that are shaping
our ‘new normal’. In these situations, the reliance on company values as
a decision-making framework is invaluable, and our Guiding Principles
were the foundation of our COVID planning.
A COVID-19 Response Team was established at the outset to monitor
the evolving situation and develop our COVID-19 Management Plan,
which covered health and safety procedures for all worksites.
Our technology systems supported us well, efficiency and productivity
were maintained, and we ramped up frequency of learning opportunities
with more webinar offerings. Some of the ‘work from home’ flexibility is
continuing as restrictions ease.
Operational adjustments at all worksites were also carefully and quickly
implemented to comply with physical distancing and other required
safety procedures.
For those working on site at client projects, we worked closely
with our client on risk management to ensure operations could
continue with wellbeing and safety of our people as the paramount
consideration. This required changes on short notice to rosters, transport
and accommodation arrangements. The Human Resources team
maintained close contact with these employees, conducting regular
wellbeing and health check-ins.
Wagners gratefully acknowledges the efforts made by everyone to adapt,
particularly those who experienced a significant change in personal
routines and family arrangements.
Going global
As Wagners continues to expand in global markets, the Human Resources
team has continued to grow its skills in managing the complexities of
recruiting, onboarding and supporting new employees in overseas
locations. With many late night and early morning meetings given
different timezones, the team has navigated employment laws and
processes in various countries, set up payroll, and organised visas for key
personnel moving from Australia to take up opportunities in Wagners’
subsidiary companies. New US and New Zealand arrangements are
in place, and the learnings mean Wagners now has a well-established
process for human resources planning in its new markets. Set-up of
the UK operation is the next focus.
CEO Cameron Coleman presents apprentice Jarrod Cook with his
personalised toolbox.
Enhancing employee experience
In such a diverse business with people in so many regions and
locations, our annual employee survey is a valued and vital tool
for helping us to shape our future with input from our teams.
After last year’s survey, the work of focus groups saw a range
of employee‑led initiatives introduced – including ideas such
as each apprentice receiving their own personalised toolbox
and improved mentoring through a buddy system, a new
internal bulletin to give more regular updates on company
news, tool policy and storage improvements at Pinkenba,
Wacol and Workshop, shared Toolbox Talks to improve cross‑
team information flow, a best‑practice recognition email
to share improvements and beneficial practices with other
areas, and more staff social events to build camaraderie.
The high survey participation rate of nearly 70 per cent
this year gave us a clear picture of improvements and areas
for further focus. For the first time, we could make data
comparisons with last year’s survey and provide detailed
interpretation of results to divisions.
Feedback shows improvements in training and development,
as well as recruitment and promotion, with employees
feeling satisfied and valued. More than 90 per cent said
they are looking forward to their continued employment
with Wagners. Topics for ongoing development include
teamwork and cooperation across the business, underpinned
by communication. Team focus groups to work through the
results and develop action plans were slightly delayed due
to COVID‑19 impacts, but are now under way.
These results clearly show the link between continued
development of employee experience initiatives and
our strong performance in attraction and retention.
Wagners Annual Report 2020
19
OUR PEOPLE
& COMMUNITY (CONTINUED)
Achievements FY20 (continued)
Enterprise Agreements approved
The completion of seven Enterprise Agreements (EAs) during the
year gives certainty and stability for our teams and the company.
The EAs represent a significant achievement given the diversity of
each division, the complexity of different underlying award structures,
and the associated configuration changes to and testing for human
resources systems. The contribution from employee representatives
to the negotiation process was appreciated, helping to provide insight
into potential areas for change and incorporation into agreements.
Long service and retention part of our culture
A true feature of Wagners’ culture is the long and loyal service of many
employees, and the deep knowledge and commitment that those careers
contribute to our success. This year, more than a quarter of our staff had
five years’ service, with 13.5 per cent clocking up more than 10 years.
Retention rates also continued to improve this year, with a reduction in
employee-initiated turnover across all categories, and a reduction from
16.7 per cent last year to 13.6 per cent for permanent staff.
Commitment to new generation workforce
Ensuring we have a pipeline of skilled people trained to our high standards
in safety, quality and environment is a major part of Wagners’ strategy.
Our apprenticeship program is one of the foundations, with 12 new
apprentices in 2020 bringing our current total to 30 at different stages of
training in different parts of the business. We also welcomed new trainees
and internships – some as part of the government’s Transfutures program,
which advocates for employment in the transport and logistics industry.
Our new Graduate Program launched during the year with plans to
expand the program in FY21, along with the introduction of a construction
material traineeship program.
Gender reporting improvements
We maintained our Workplace Gender Equality Agency compliance with
the Gender Equality Act, and each year we endeavour to improve equality.
In FY20, 20 per cent of promotions were awarded to women. Women
currently represent 10.2 per cent of our employees.
20
Wagners Annual Report 2020
Adriana Luther and Gemma Poole celebrate International Women’s Day.
Future focus
Being an employer of choice is a genuine commitment,
and our future focus is firmly on continuing to invest in our
people, our culture and building the resilience that will help
us thrive through uncertain times.
We are always seeking innovative ways to attract new talent,
including ensuring we have a leadership role in promotion
of our sector and an ongoing profile in key government
workforce initiatives. Recruitment and onboarding
timeframes and efficiencies will improve, with streamlined
services to our business units. Learning and development
is also high on the agenda, succession plans will be
incorporated, and more internships and work experience
opportunities will be offered.
We are also excited about the opportunities that will
come with significant growth in our NGBM division both
in Australia and internationally, where Wagners will expand
into new product markets and sectors.
INTERNATIONAL SAFETY MANAGEMENT
CERTIFICATION ENDORSES OUR SAFETY
ACHIEVEMENTS IN AUSTRALIA AND GLOBALLY.
Community
Incredible $2m raised for It’s a Bloke Thing
We continued our role as major sponsor for the Wagners It’s a Bloke Thing
Luncheon and Education Roadshow, held in Toowoomba in September.
This year, the event raised a truly extraordinary $2,049,600 for prostate
cancer research. Thanks to everyone who donated and made it such
a success.
Singer Ronan Keating revs up the crowd at this year's It's a Bloke Thing lunch.
Sponsorships, staff contributions and
recognition events
» Major sponsor of Downs Rugby – encouraging regional participation
in rugby union
»
Supporters of the Loads of Love Appeal – staff helping to collect
food and gift cards for families in need at Christmas- time across
southern Queensland
» Major sponsor of the Townes Contracting Charity Fundraiser event –
raising just under $32,000 for the Westpac Rescue Helicopter
»
»
»
Participation in R U OK? events and wellbeing initiatives
International Women’s Day event – acknowledging the contribution
and equality of women in our workforce and overall diversity
within Wagners
Recognition functions for staff celebrating service anniversaries
with Wagners.
Safety, Environment and Quality (SEQ)
Safety record maintained
Wagners’ employee Lost Time Injury (LTI) record remains at zero for
the fourth year running. Thanks to our SEQ team and the policies and
procedures we have in place, safe worksites are always at the forefront
of our planning and execution.
Managing Construction Dust Policy
Proactive identification and management of all risks and hazards is vital,
given the nature of our worksites and the work we do. Construction
materials dusts are generated by high-energy processes such as crushing,
cutting, sawing, and grinding, and via the handling of various construction
materials such as concrete, clinker, and rock. To ensure effective control of
construction dusts, the SEQ team has developed a Managing Construction
Dust Policy for all Wagners’ sites and operations. Each site has also developed
a customised management plan adhering to the policy and framework.
International safety management
certification achieved
Wagners is proud to have transitioned its safety management certification to
achieve international accreditation. Previously, we adhered to AS/NZS 4801,
the Australian and New Zealand standard for safety management. This year,
we successfully achieved the international standard, ISO 45001. This will help
the business to remain at the forefront of health and safety management
within Australia and for our various projects and business ventures globally.
Future focus
In FY21, the SEQ team’s focus is on developing a formalised
strategy with defined targets and objectives to drive
continuous improvement. The goal is to improve visibility
and reporting of risks and simplifying safety‑related
documents and processes for operational workers.
Improving the training and competence framework
to provide greater transparency of mandatory training
requirements, training completion, and the pathway for
skill development through to competency verification
are also strategic objectives. A monthly SEQ program will
also be introduced, aimed at helping operational staff with
the completion of critical safety tasks such as calibration,
training, competence, and maintenance.
Wagners Annual Report 2020
21
OUR
INNOVATION
‘Fostering Innovation’ is one of
Wagners’ Guiding Principles and has
been at the forefront of planning
and investment across the business
for many years. We prove time and
again that our approach gives us a
strong competitive advantage and
helps us to respond proactively to
increasing community expectations
about sustainability.
Research and development are key drivers, focusing not only
on new products and new markets, but embedding innovation
in every aspect of production and services. We constantly
look for win-win opportunities – to differentiate our business
while at the same time being more efficient, safer and more
environmentally responsible.
While innovation is reflected throughout this report, here we
focus on two of our major research and development initiatives
for FY20.
Construction of pultrusion machine.
22
Wagners Annual Report 2020
INNOVATION IS EMBEDDED IN
EVERY ASPECT OF PRODUCTION
AND SERVICES.
CFT light poles, Wellcamp, QLD.
Image caption to come.
Keltbray EFC® pour in London, UK.
New multi-use CFT product
Wagners’ CFT light poles are uniquely suited to provide a
long‑lasting, aesthetic lighting solution to any residential,
commercial or industrial project. The lightweight, rust‑proof
nature of using a CFT light pole results in quicker, safer and
more efficient installation.
Our light poles are traditionally square, but this year the
CFT team developed a profile that enables our pultrusion
machines to manufacture circular poles. Circular poles
create less drag than square profiles, improving the
efficiency for taller poles as they allow for greater ‘outreach
arms’ than previously manufactured. We supplied this new
design for use as light poles at the Qantas Group Pilot
Academy at Wellcamp Airport. Circular poles also work in
our pedestrian structure product range and will be fantastic
marine piles as an improved alternative to wood piles that
can rot, and steel piles that can rust.
This is a great example of the innovation across our
business, finding new ways to improve and diversify
our existing products.
Successful EFC® trials in UK
Trials and a plant demonstration of EFC® at UK‑based
Capital Concrete were a success this year. Leading UK
construction engineering specialist Keltbray also attended
the demonstration and invited Wagners to join them
in a specialist piling development program, aimed at
introducing a new type of low carbon, high‑performance
pile. The ability to physically demonstrate production
of EFC® in a real batch plant sets our technology apart
from other competing low carbon concrete products
in these markets.
Following the UK trials, London’s first‑ever EFC® geopolymer
concrete pile was supplied and installed at Nova East,
London Victoria project in January 2020. A 900mm
diameter, 25m deep anchor pile was constructed using
premixed EFC® supplied from Capital Concrete, and
installed by Keltbray.
In 2019, the UK legislated the pledge to achieve net‑zero
carbon emissions by 2050, motivating many companies
to adopt the same ambitions at corporate level. In the
construction field, producing concrete with the lowest‑
possible carbon emission is a significant step forward
and is driving the interest in Wagners’ EFC® in this market.
Wagners Annual Report 2020
23
OUR
SUSTAINABILITY
Wagners is proud of the role its
New Generation Building Materials
(NGBM) business plays in leading
the shift to more sustainable
construction materials.
Our product innovation goes hand-in-hand with our commitment
to applying environmental, social and economic sustainability
principles to all our strategic decision-making and operations.
A review of our sustainability policy has identified opportunities for
innovation and improvement, and we are incorporating the United
Nation’s Sustainability Development Goals into our approach so
we have a clear picture of where we can be most effective.
Active community membership and support, modern slavery,
our contribution to reducing emissions, and providing education
and training opportunities for our people are key focus areas.
Regular review and assessment of our commitments, compliance,
and sustainability performance gives us a platform for continual
improvement. We have a robust reporting system, using risk
management processes to ensure beneficial strategies and
controls are implemented, and by setting measurable targets
and objectives.
For a standard four‑bedroom
house requiring 120M3 of concrete,
EFC® WILL SAVE 28T OF
CARBON DIOXIDE EMISSIONS,
which is equivalent to taking
10 cars off the road for a year.
24
Wagners Annual Report 2020
Cairns Botanic Gardens, QLD.
WHEN EFC® IS USED IN PLACE OF ORDINARY CONCRETE FOR A
TYPICAL MAJOR INFRASTRUCTURE PROJECT REQUIRING 50,000M3 OF
CONCRETE, IT WILL SAVE 12,216T CO2 EMISSIONS – EQUIVALENT
TO 4,500 CARS OFF THE ROAD FOR A YEAR OR 814 TREES IN A
TYPICAL CARBON OFFSET PROGRAM.
Placement of EFC® at Wellcamp Airport, QLD.
EFC® achieves carbon footprint
declaration
Our NGBMs are leading the way in environmentally sustainable
construction materials. We are continuing to invest in developing
Earth Friendly Concrete® (EFC®) and promoting its carbon credentials.
This investment included completing a project to develop a Product
Carbon Footprint declaration, detailing the level of embodied carbon
in EFC®. Using scientific research methods to study the lifecycle of EFC®,
we are now able to promote the actual carbon savings EFC® delivers,
compared to ordinary concrete.
EFC® produces only 32 per cent of CO2 emissions compared to ordinary
concrete – a remarkable achievement. The built environment has a
vital role to play in achieving a greener world by focusing on embodied
carbon. Embodied carbon refers to the amount of emissions released
during the manufacturing of building and infrastructure products.
As concrete makes up a considerable portion of buildings and
infrastructure, EFC® has the potential to be a game-changer for our
industry. When EFC® is used in place of ordinary concrete for a typical
major infrastructure project requiring 50,000m3 of concrete, it will save
12,216t CO2 emissions, which is equivalent to 4,500 cars off the road
for a year1 or 814 trees in a typical carbon offset program2.
1 Source: Carbon Dioxide Emissions Intensity for New Australian Light Vehicles 2018.
2 Source: carbonneutral.com.au.
Wagners Annual Report 2020
25
NEW GENERATION BUILDING
MATERIALS REPORT
Wagners’ New Generation Building
Materials (NGBM) division is a
world‑leader in high‑strength,
lightweight, low‑carbon alternatives
to traditional construction materials.
Our Earth Friendly Concrete® (EFC®) and
Composite Fibre Technologies (CFT) are
pioneering more sustainable solutions
for concrete and hardwood. We operate
in Australian and overseas markets, with
EFC® now fully certified for European
and many Middle Eastern countries.
Global and local growth fuel
successful year
Our NGBM businesses took on new markets this year, and
expanded significantly both in Australia and internationally.
EFC® became the world’s first commercial geopolymer technology
to secure international certification, giving us a substantial
competitive boost in international markets. This achievement sets
us up to continue our global growth and reaffirms our position as
a world-leader in innovation. The CFT business took on two major
overseas projects in the USA and the UAE.
NGBM FY20 at a glance
» Revenue for FY20 of $33.8 million, with
earnings before interest and taxes (EBIT)
of $2.2 million
» 44% increase in domestic pedestrian
infrastructure sales
» 394,086 metres of CFT pultrusion
» Projects in Australia, USA, New Zealand,
UK, Canada, UAE
» EFC® obtained DIBt approval
26
Wagners Annual Report 2020
CFT boardwalk being installed Abu Dhabi, UAE.
OUR NGBM BUSINESSES EXPANDED
SIGNIFICANTLY BOTH IN AUSTRALIA
AND INTERNATIONALLY.
In the UK, we secured our first international order for EFC® from Capital
Concrete, and commenced operations supplying EFC® specialist
binder materials. The first-ever pile using EFC® was installed at the
Nova East project at London Victoria in January 2020, stimulating a
range of positive media coverage and many new opportunities for the
establishment of an EFC® business in the UK.
In India, we set up a joint-venture supply chain initiative with JSW Cement
Limited to develop the country’s market for zero-cement concrete.
Wagners’ Russell Genrich (left) and John Day (right) with Dr Niraj Lal from
ABC’s Catalyst program.
EFC® creates “the greenest
airport in the world”
In May 2020, ABC science program Catalyst featured
Wagners’ EFC® in its Building Greener Cities episode.
The EFC® product and our team members John Day and
Russell Genrich played starring roles, demonstrating
the sustainability credentials EFC® offers compared to
ordinary concrete. Filmed mostly at the Qantas Group Pilot
Academy at Wellcamp Airport, the episode showcased
the construction of the heavy‑duty aircraft pavements.
The program stated Wagners EFC® and Wellcamp Airport
have partnered to create “the greenest airport in the world”
– a great testament to Wagners’ culture of innovation and
our commitment to sustainability.
Wagners Annual Report 2020
27
Earth Friendly Concrete® (EFC®)
What is EFC®?
EFC® is a new class of concrete based on geopolymer
technology developed by Wagners. The geopolymer
binder system is based on the chemical activation of
industrial waste by‑products flyash (from coal‑fired power
stations) and slag (from the production of steel). This year,
we finalised a study on EFC® which confirmed concrete
produced through this process significantly reduces
carbon emissions compared to concrete produced with
ordinary Portland cement. EFC® has better performance
and durability than conventional concrete, particularly in
demanding applications such as corrosive sewerage and
chloride environments along with heavy load‑bearing
pavement applications. As this product continues to
develop, it will be a major disrupter to the traditional
concrete market internationally. EFC® will be available from
all Wagners’ concrete plants across South‑East Queensland.
FY20 achievements
In-house production of raw material
Throughout the year we developed our in-house skills and equipment,
enabling us to manufacture one of the key raw ingredients used to
produce EFC®, rather than import this material from offshore. This is an
important step for Wagners, further protecting our intellectual property
and reducing our cost base of this exciting technology.
International success
Wagners became a genuine world-leader in commercial production
of low-emission concrete and binder technologies this year, achieving
approval from Deutsches Institut für Bautechnik (DIBt) in Germany to
use EFC® across Europe and many Middle Eastern countries. EFC® is
the world’s first commercial geopolymer technology to achieve this
international certification.
NEW GENERATION BUILDING
MATERIALS REPORT
Earth Friendly Concrete® (EFC®)
(Continued)
Award-winning team
At the Queensland Major Contractors Association’s (QMCA) 2019
Innovation and Excellence Awards – held in September 2019 – Wagners
was presented the QMCA Sub-contractor and Supplier Award for the
Pinkenba wharf site. This project was constructed and commissioned in
FY19 to give us better access to seafaring vessels for both incoming and
outgoing cargo.
Pinkenba wharf.
Future focus
We look forward to establishing EFC® as a leader in overseas
markets and progressing its commercialisation on a
global scale. Following the DIBt certification, our portfolio
across Europe will expand, centred on Germany. We also
have product development in the pipeline with JSW
Cement Limited in India to work towards Bureau of Indian
Standards approval.
Closer to home, a priority will be establishing EFC® in the
South‑East Queensland concrete market for leading builders
working in the green space. Not only are we innovating in low
carbon construction, but we are also innovating manufacture
of our key inputs through our integrated supply chain. The
creation of strategic partnerships nationwide, where EFC®
forms part of manufactured construction solutions and is
used in sustainable projects, is also on the agenda.
28
Wagners Annual Report 2020
COMPOSITE FIBRE TECHNOLOGIES (CFT)
What is Composite Fibre
Technology?
CFT products, designed by Wagners, are durable construction
materials that can be used to replace timber and steel in many
outdoor applications. As well as saving hardwood resources,
CFT products are lightweight and resistant to rust, corrosion
and chemical attack. They are increasingly being specified
in Australia and overseas for boardwalks, bridges, walkways,
marinas and as cross‑arms for electrical distribution networks.
FY20 achievements
Research and development fuels innovation
We invest significant resources in research and development to inform
and facilitate our innovation. This year, we designed a profile that enables
our pultrusion machines to manufacture circular poles that can be used
as light poles and driven piles. Circular poles create less drag than square
profiles, improving the efficiency for taller poles as they allow for greater
‘outreach arms’ than previously manufactured. These have been installed
at the Qantas Group Pilot Academy at Wellcamp Airport as light poles.
Further research and development is being undertaken to enable use
of the circular poles as distribution poles, with anticipated supply to
electrical distribution networks in FY21.
We also commenced production of plastic inserts for cross-arms on site,
increasing our in-house capabilities and supply chain value.
Automated cross-arm line
Significant investment was made in the design, construction and
commissioning of an automated robotic cross-arm line, installed in
a new purpose-built shed at our Wellcamp CFT facility. This robotic
production cell doubles our cross-arm production, giving us additional
capacity to service a growing market. It also significantly lowers
production costs, enabling us to penetrate new markets.
International custom-build projects
We worked on a number of international custom-build projects for the
supply of CFT for pedestrian infrastructure and short-span road bridges.
Pfeiffer Big Sur trail, USA
When wildfire swept through the giant redwood forest at Pfeiffer Big
Sur State Park in 2008, much of the trail’s infrastructure was destroyed.
WAGNERS’ NGBM DIVISION IS A
WORLD‑LEADER IN HIGH-STRENGTH,
LIGHTWEIGHT, LOW-CARBON ALTERNATIVES
TO TRADITIONAL CONSTRUCTION MATERIALS.
Home-grown projects take shape
Our CFT products are increasingly in demand for projects that improve
community facilities and provide safe and enjoyable access to recreational
spaces in locations with harsh weather or environmental conditions. This
year, we designed and installed the new cliff-face staircase at the iconic
Steps and Boobs Surf Beach on Victoria’s surf coast and the beautiful new
Back Creek Bridge footbridge in South West Rocks (NSW), and supplied
materials for repurposing the Toogoolawah to Moore section of the Brisbane
Valley Rail Trail and the new Tench Reserve Jetty on the Nepean River (NSW).
Refurbishment of Brisbane City Council’s Mariners Reach Boardwalk also
features our CFT product, and we designed, supplied and installed the
boardwalk for the new North Queensland Stadium and pedestrian bridges
for the Airlie Beach Golf Course.
.
First pack of cross-arms on automated robotic line.
Future focus
–
–
–
–
Expansion into USA will remain a strong focus for
the business. The commissioning of USA pultrusion
machine will give impetus to the growth potential in
the US market.
Intention to increase production capacity with in‑house
design and manufacture of additional pultrusion
machines.
Further investment in research and development
to enhance product lines and improve operational
efficiencies.
The Middle East will be a key focus with a number of
projects now undertaken in the region, showcasing
the performance benefits of our products.
–
Continued focus on team skills and development.
Wagners Annual Report 2020
29
Completed pultrusion machine leaving Toowoomba for USA.
The California Department of Parks and Recreation (CAPR) spent many
years planning and obtaining permission to rebuild the steep and
difficult track. Wagners designed and fabricated a 21.5 metre x 2 metre
underslug truss, multi-section bridge solution to facilitate the movement
of equipment via highline through the redwoods. CAPR is using the slack
to rebuild critical infrastructure while the travel restrictions imposed due
to COVID-19 mean there are no visitors to the park. Wagners has been
on site supporting CAPR to ensure the rigging and installation team
has the technical support they need to get the job done.
Abu Dhabi boardwalk
With manufacture commencing in FY19, the supply of CFT for a 2.2
kilometre boardwalk through mangroves, with six education nodes,
was completed in FY20.
Corniche project, UAE
We secured the contract for and commenced manufacture of four over-
water viewing platforms, described as ‘nodes’ for the Corniche project
in Abu Dhabi. The first node was shipped from our Wellcamp facility
at the end of FY20 with the remainder of the project to be completed
early FY21.
Pultrusion machine for USA
A pultrusion machine – used for creating continuous lengths of our
composite material – was manufactured in-house at our Toowoomba
facility and shipped to Dallas, Texas. Due to COVID-19 travel restrictions,
the machine’s installation and commissioning was postponed. When it
is safe to travel again, a team of our Toowoomba-based staff will head
to our USA CFT manufacturing facility to establish and commission the
machine. We look forward to the further international growth of the
composites business once this unit is commissioned, and we have a
growing number of successful projects to demonstrate our high-quality,
sustainable solutions in challenging environments.
CONSTRUCTION MATERIALS
& SERVICES REPORT
Wagners’ Construction Materials and
Services (CMS) division manufactures
and sells cement, concrete, flyash,
reinforcing steel and aggregates.
With a growing network of concrete plants, Wagners is a
convenient source of pre-mixed concrete for projects, also
providing mobile and on-site concrete batching, crushing and
haulage services. Underlining the efficiencies achieved by vertical
integration and cross-division collaboration, our dedicated
maintenance and fabrication workshop supports other divisions
on projects and ensures the efficient operation of all machinery
and transport.
Our revenue for the FY20 year was $217.1 million. Earnings before
interest and taxes (EBIT) were $18 million.
Toowoomba laboratory, QLD.
30
Wagners Annual Report 2020
WE CONTINUED TO EXPAND
OUR SOUTH-EAST QUEENSLAND
CONCRETE NETWORK.
CONCRETE
FY20 achievements
Concrete network expansion continues
We continued to expand our South-East Queensland concrete network,
with operations at six concrete batching sites up and running. Thanks
to this expansion, we have almost doubled our production volume
from our plant network. These plants also provide a critical channel
to market for many of our other construction materials and services
that we manufacture or provide at Wagners, including cement, flyash,
aggregates from our quarry operations, and haulage services. A number
of the plants also have EFC® capabilities, allowing customers the option
of either EFC® or conventional concrete from our plants.
Volumes across the sector in FY20 were impacted by a lack of major
infrastructure projects in the South- East Queensland region, which
has resulted in a reduction in selling prices. However, improvements
are expected in FY21 with increased demand for concrete anticipated
as large government-funded infrastructure projects commence.
Concrete projects
Wagners operates a number of mobile batching plants, supplying
concrete for major construction projects, particularly in remote and
regional locations. Unfortunately, through the lack of activity in the
sector, we were unsuccessful in securing any new concrete projects.
With increased wind farm construction and other activity in large
infrastructure and resource projects, we are expecting increased
demand in FY21.
Our new fleet of agitator trucks.
Future focus
–
–
–
–
–
Identification of expansion and production increase
opportunities with the growth of our fixed and mobile
concrete plant network.
Expected increased demand for concrete, both from
our concrete plant network and major construction
and resource projects commencing.
Targeting efficiency and innovation will continue to
reduce costs and build our customer‑base.
Investment in business and personnel development
allows us to identify and win great project work.
Focusing marketing and brand positioning on
demonstrating the quality of our products and services,
and our ability to deliver regardless of a project’s location.
Narangba concrete batch plant, QLD.
Wagners Annual Report 2020
31
CONSTRUCTION MATERIALS
& SERVICES REPORT (CONTINUED)
CEMENT
FY20 achievements
Vertical integration
The expansion of Wagners’ fixed concrete plant network servicing
South-East Queensland has meant an increase in our own internal
cement requirements. This is expected to increase throughout FY21
as volumes through the concrete plants increase and they become
more established in their respective markets.
Unfortunately, these increased internal volumes were not sufficient
to off-set the significant reduction in cement volumes for FY20 as a
result of the suspension of supply to a key customer. Recent months
have seen volumes return to that of prior periods, which is expected
throughout FY21.
Townsville Distribution Facility
Our Townsville Distribution Facility experienced a 28 per cent increase
in bulk cement sales compared to FY19. This increase came both from
new customers and growth in our existing customer base.
Secure raw materials supply chain
Throughout the year we secured a number of longer-term contracts
with suppliers for our key raw materials consumed at the Pinkenba
Cement production facility, most notably for clinker and slag. Our slag
supply arrangement will also assist EFC® by allowing that business access
to a secure supply chain for slag, a key constituent in EFC®’s manufacture.
Future focus
–
–
Sales growth in both bulk and bagged supply
remains a focus, with increased demand expected for
construction materials and services in FY21.
As volumes increase from our fixed concrete plant
network, the integration of our business will ensure
increased cement volumes with the increased
concrete demand.
32
Wagners Annual Report 2020
Pinkenba cement plant and wharf.
Round-the-clock to meet demand
Our cement production team moved to a 12-hour shift for a 24-hour
operation this year, in order to meet the demand for our highly
sought-after bagged cement products. Our bagging team and two
new operators started the new roster in July 2019, moving the cement
production team to four operational units. Since all our operators have
worked on different shifts, they are now multi-skilled operators who
ensure our site runs to its full capacity.
OUR COMMITMENT TO SUPPORTING
LOCAL COMMUNITIES IS BOTH PART
OF OUR HERITAGE AND AN ONGOING
FOCUS FOR OUR FUTURE.
QUARRIES AND CONTRACT CRUSHING
Wagners’ quarries supply concrete aggregates, crusher dust, sealing
aggregates, pavement material asphalt aggregates, construction fills,
road base, railway ballast and other fine crushed rock. Customers include
builders, pre-mix concrete plants, road builders and regional councils,
as well as Wagners’ own concrete and project operations.
FY20 achievements
Supporting our staff
Wagners has supported a number of our long-term quarry and contract
crushing employees to gain formal Quarry Manager qualifications,
increasing our reputation for professional and efficient operations
and giving them additional skills and opportunities.
Fostering regional growth
Across the Wagners business, our commitment to supporting local
communities and contributing to regional economic prosperity is
both part of our heritage and an ongoing focus for our future. With
quarries located across regional Queensland, the team has focused
its efforts on local employment and engaging the local community
through procurement of products and services, and training and
development opportunities.
New quarry
The purchase of Shepton Quarry, a hard rock quarry north of Emerald,
brought our quarry locations to seven. Shepton Quarry complements
our other permanent quarries and project sites. It is strategically located
and well-positioned to service the Central Queensland resource industry
and our civil and infrastructure projects and customers. The quarry adds
significant capacity to our production and enables production and
supply of the full suite of quarry products including road base, concrete
and main road aggregates and rail ballast aggregates.
Future focus
–
–
–
Seeking opportunities to expand fixed operations
for the quarries and contract crushing team through
establishment or acquisition of sites.
Optimisation of processing equipment to increase
efficiency and reduce production costs is also a focus.
As part of our commitment to innovation, we are
experimenting with processed materials to reduce waste
generated, and look forward to continuing this research.
Shepton Quarry.
Castlereagh Quarry
The Castlereagh Quarry at Cloncurry produced and delivered a
large portion of the cover aggregate for reseal works in North-West
Queensland. Reseal works are seasonal and call for a high specification
of material that the team at Castlereagh can consistently produce.
The team crushed around the clock to meet the program schedule,
completing the 22,000-tonne campaign in November 2019. The overall
sales outputs from this quarry also grew in its first full year of operations.
South Back Creek Quarry
The South Back Creek Quarry (SBCQ), about 130 kilometres outside
Clermont, will supply quarry materials for the development of roads,
camps, pads, dams and mine civil works over a period of up to five years.
The SBCQ was established by Wagners in December 2019, with
earthworks and building construction commencing in January 2020.
The site is now operational and is set to supply the Carmichael Coal
Project with materials for an upgrade to 90 kilometres of gravel road
to bitumen. From the Gregory Downs Highway to the Adani Mine site
at Labona, 1.5 million tonnes of road base and associated material
is required.
Wagners Annual Report 2020
33
CONSTRUCTION MATERIALS
& SERVICES REPORT (CONTINUED)
Future focus
–
–
–
Safety and minimum environmental harm are key
objectives for the Transport division in the coming year.
Emissions reduction goals will see us continue to
employ the latest technology, particularly for engines
and power trains.
We are also working on innovative combinations
that allow increased payloads to reduce the required
fleet number.
Transport
Our transport division gives us a major advantage in controlling delivery
of our materials to customers and to project sites, boosting integration
across our supply chain. Our versatile fleet of prime movers and trailers
also has contracts for haulage throughout the Australian mainland.
FY20 achievements
In FY20, the transport team hauled 5.5 million tonnes of product and the
fleet travelled more than 6.8 million kilometres.
Resource projects
The resource sector provided many opportunities for our transport team
this year. We executed a new contract with long-term client MMG for
concentrate haulage from the Dugald River Mine, and secured haulage
works for Glencore from Round Oak Minerals Barbara Operations, and
for Malaco Resources for the Mt Cuthbert Mine. Our contract with
Glencore at its George Fisher and Lady Loretta haulage projects was
also extended.
Vertical integration
Transport continued to work with Wagners’ quarry and contract crushing
team to provide crushing services for the Malaco projects. Haulage
services were also provided for other Wagners’ quarry sites, mostly
at Castlereagh.
Lady Loretta Mine.
34
Wagners Annual Report 2020
OUR VERSATILE FLEET OF PRIME
MOVERS AND TRAILERS HAS CONTRACTS
FOR HAULAGE THROUGHOUT THE
AUSTRALIAN MAINLAND.
Steel and workshop
To support our larger businesses, Wagners’ reinforcing steel business in
Toowoomba provides steel for building foundations to our concrete and
building customers. Additionally, it services the steel requirements of our
precast business.
Our engineering and maintenance workshop is also located in
Toowoomba. This site is responsible for fabricating new equipment
required across the business and maintaining our large fleet of plant and
equipment. Our centralised purchasing team also operates from this site.
Precast
Our precast concrete and prestressed concrete products such as bridge
girders, deck units and parapets are manufactured at our Wacol facility,
which also has one of the only high-volume tunnel segment production
lines in Queensland. Because most precast concrete products contain
reinforcing steel, the integration of our businesses ensures that precast
provides a channel to market for our steel business.
FY20 achievements
Due to a lack of infrastructure projects requiring our precast products,
operations from our precast facility remained suspended for the majority
of the year. Operations have now recommenced to service the contract
for the supply of precast concrete tunnel segments to the Cross River
Rail’s tunnel project. Our scope of works requires manufacture of all the
precast concrete tunnel segments for the twin tunnels, with all segments
to be manufactured locally at our precast manufacturing facility in
Wacol. Manufacturing is due to commence late 2020 with first supply
to the project expected in January 2021.
Wacol precast facility.
Toowoomba workshop.
Wagners Annual Report 2020
35
GOVERNANCE
The Board is responsible for the overall corporate governance of Wagners,
monitoring financial position and corporate performance, and overseeing
business strategy, with a commitment to protecting and optimising
performance and building value.
A Board Charter and governance principles provide the framework for
the Board’s conduct. Appropriate internal controls, risk management
processes, and corporate governance policies and practices are
designed to promote the responsible management and conduct of
Wagners. The Board currently has a number of committees, including:
»
»
Audit and Risk Management Committee
Remuneration Committee
» Nomination Committee.
Wagners has also established a Risk Management Subcommittee.
The primary objective of the committee is to review and make
recommendations to the Board in relation to the risk management
policies and processes of Wagners.
A description of Wagners Holding Company Limited’s current
corporate governance practices is set out in the Wagners Holding
Company Limited’s corporate governance statement, which can be
viewed on the Wagners website at https://investors.wagner.com.au/
corporate-governance/.
BOARD FOCUS AREAS: ADVANCING STRATEGY AND VALUE
The Board recognises that strategy, good governance and risk management are what drives performance and value creation in our business. During
the year, in addition to responsibilities set out in the charter documents, the Board and its committees reviewed and discussed the following matters
specifically focused on future value and delivery of strategy.
VALUE CREATION
MATERIAL ISSUE
Growth
»
Revenue growth:
–
–
–
acquisition of businesses to provide
revenue growth
expansion into international markets
continued vertical integration to promote
growth in construction materials and
services business.
Innovation
»
Investment into research and development –
CFT and EFC® products.
Safety, quality,
environment
People
»
Ability to operate safely across all operations
and projects.
»
Positive employment culture and turnover.
BOARD DELIBERATION/ACTION
»
A number of acquisition opportunities were
investigated and considered. Board considered
and approved:
–
–
–
the purchase of the Shepton Quarry
continued investment into implementation
of the CFT US Strategy
investment in commercialisation of EFC
internationally.
Board approval was given to the continued
investment into research and development in
product development particularly in the NGBM
business and opportunities for operational
efficiencies across each of the businesses.
Board engagement in safety, quality and
environment sessions conducted monthly.
Regular engagement between Board and
employees. Board endorsement of implementation
of focus group initiatives.
»
»
»
36
Wagners Annual Report 2020
RISK MANAGEMENT
The Wagners business is subject to specific and general risk factors, which might affect the future operating performance of the organisation, and
the value of an investment in Wagners. Through the company’s governance structure of Board members, Risk Management Committee and senior
management, risks are assessed, categorised and monitored as part of a regular strategic and operational planning cycle. Appropriate mitigation
responses are actioned as needed, including through ongoing investment in systems and training, and implementation of new processes as required.
RISK
DETAIL OF POTENTIAL RISK
MITIGATION
Decreases in capital
investment and
construction activity
in the Australian
infrastructure sector
Manufacturing and
product quality
»
»
Reduced demand for Wagners’ products and services
resulting from reduction in or delays in current levels
of capital investments and construction activity
in the Australian and international infrastructure
sector may materially and adversely affect Wagners’
revenue, profitability and growth.
Failure to continuously comply with applicable
regulatory requirements or to take satisfactory
action in response to an adverse inspection could
result in enforcement actions such as shutdowns of,
or restrictions on, manufacturing operations, delay
in the approval of products, refusal.
Workplace health
and safety
Supplier contracts
» Workplace accidents and incidents resulting in
employee injury may result in penalties under
relevant work health and safety legislation, and
harm reputation and financial performance.
» Disruption in local and international supply contracts
(electricity, shipping, raw materials) could cause
product delays and potential loss of profitability.
» Multi-disciplinary exposure to a broad range
of revenue sectors – residential, commercial,
infrastructure, resources, oil and gas, renewable
energy, defence.
»
»
»
»
»
»
Recruitment of qualified personnel.
Investment in NATA-accredited laboratory and
highly skilled laboratory team.
Safety, Environment and QA system embedded.
Internal auditors conduct scheduled
compliance checks.
Insurance coverage.
SEQ compliance system.
» Ongoing safety training and communication.
»
»
Long-term contracts secured.
Strong relationships with suppliers.
» Multiple supply sources from various
geographical locations.
Operational
»
Failure to sell products or meet production demand.
»
» Unanticipated manufacturing problems, plant
Commitment to implementation of
business strategy.
breakdowns or mechanical failures.
» Multiple product lines, agility to enter into new
»
»
»
Cost and availability of raw material.
Adverse weather conditions.
All of the above may have an adverse effect
on Wagners’ profitability and ability to
service customers.
markets/products.
» Maintain surplus capacity beyond contractual
obligations.
»
»
»
Back-up plant and machinery to deal with
breakdowns, with regular repairs and
maintenance programs.
Securing long-term fixed-price supply contracts.
Force Majeure clauses in contracts.
Wagners Annual Report 2020
37
GOVERNANCE (CONTINUED)
RISK MANAGEMENT (Continued)
RISK
DETAIL OF POTENTIAL RISK
MITIGATION
Environmental
claims
People, training
and skills
»
»
»
»
Environmental issues may potentially delay
contract performance or result in a shutdown of
a project, causing a deferral or preventing receipt
of anticipated revenues.
Environmental risks may give rise to remediation
obligations, civil claims and criminal penalties.
Any potential liability or penalty could result in
a significant financial loss.
Ability to attract and retain qualified key personnel,
including key members of Wagners’ senior
management team, and maintain a motivated,
engaged workforce.
»
»
»
»
»
»
»
Strong focus on and commitment to the
environment.
SEQ compliance.
Environment Manager with specialist skills.
Internal audits ensure each site complies with
authorities to operate; external audits.
Strong reporting culture – potential environmental
hazards reported monthly.
Continued investment in the recruitment, training
and development of our people to attract, retain
and grow the best people.
Industry-based training is provided through internal
and external programs for all personnel.
»
Enterprise Agreements with employees.
Remote locations
» Difficulties of remote area operations for plant,
» Demonstrated ability to mobilise quickly and
equipment and materials and related inherent risk
to personnel.
efficiently – large mobile operations successfully
completed globally.
Competition
»
Intense competition in Australia and internationally
means other companies may be pursuing or have
existing products/services that target the same
markets as Wagners.
»
»
Proven track-record of safe operation in harsh/
remote locations.
Strong business model and growth underpinned by
continued investment in research and development
across new/existing divisions.
» Diverse range of products and services to limit
exposure in extremely competitive markets.
Relationships with
related parties may
deteriorate
» Wagners has various related party arrangements with
»
Secure long-term leases of sites on market terms.
Wagner Corporation (leases, licences, wharf services
agreement) of key operational sites. Breakdown of
relationships could destabilise harmony between
parties leading to less than optimal usage and
occupancy of site.
38
Wagners Annual Report 2020
RISK MANAGEMENT (Continued)
RISK
DETAIL OF POTENTIAL RISK
MITIGATION
Debt covenants
may be breached if
performance declines
Growth
Reliance on
third parties
»
»
»
Factors such as a decline in Wagners’ operational and
financial performance could lead to a breach of its
banking covenants.
»
Compliance system ensures covenants are
maintained, with auditing/reporting to the
Board monthly.
» Work well within Board-approved operational/capital
budgets to ensure covenants are not breached.
» Diversify business so that there are multiple revenue
streams through a broad range of industry sectors.
If a breach occurs, Wagners’ financiers may seek to
exercise enforcement rights under the debt facilities,
including requiring immediate repayment, which
may have a materially adverse effect of Wagners’
future financial performance and position.
There is a risk that the Company may be unable
to manage its future growth successfully, and no
guarantee Wagners can maintain or grow project
volume or pipeline – including potential negative
impacts from factors beyond Wagners’ control (e.g.
decline in industry growth, lack of/ slow market
acceptance of NGBM products, lack of available sites
to establish ready-mix concrete plants, inability to
obtain requisite approvals for quarry operations).
»
Problems caused by third parties may affect Wagners’
financial performance and prospects.
» No guarantee that current operations will be carried
out or managed in accordance with its preferred
direction or strategy, subject to inability to control
the actions of third parties.
» Due diligence/appropriate contractual
documentation setting out key responsibilities/
expectations for subcontractors.
Financial risk
»
Credit risk, liquidity risk and market risk consisting
of interest rate risk, foreign currency risk and other
price risk – see pages 91 to 94 for further detail
and analysis.
»
See pages 91 to 94 for detail on mitigation strategies
to manage these risks.
Wagners’ senior management and those charged with governance regularly assess material matters. A matter is considered material if they believe
it could significantly impact the value created and delivered in the short, medium and long term. Wagners manages material matters through:
»
»
»
capturing feedback through engagement and research during the financial year from key external stakeholders including investors, analysts
and other relevant groups
engagement with the Board
ensuring the business strategy and trends influencing strategic direction are aligned with and relevant to the information collected above.
Wagners Annual Report 2020
39
DIRECTORS
DENIS WAGNER
Non-executive Chairman
»
»
Co-founder of Wagners – involved
in the business since its inception
Instrumental in developing Wagners
into one of the leading construction
materials producers in South-East
Queensland
» Over 30 years’ experience in the
construction materials industry
Fellow of the Australian Institute
of Company Directors
»
JOHN WAGNER
Non-executive Director
»
»
Co-founder of Wagners – involved in the
business since its inception
Instrumental in developing Wagners into
one of the leading construction materials
producers in South-East Queensland
» Over 30 years’ experience in the construction
»
»
materials industry
Inaugural Chair of Darling Downs Tourism
Inaugural Chair of the Toowoomba and
Surat Basin Enterprises
ROSS WALKER
Independent Non-executive Director
Appointed as part of Wagners’ Initial
»
Public Offering
Specialises in working with small to medium
sized companies
Currently a Non-executive Director of
RPM Global
»
»
»
» Over 30 years’ public accounting experience
as a partner at Pitcher Partners, Brisbane
Bachelor of Commerce – University
of Queensland
Fellow of the Institute of Chartered
Accountants in Australia and New Zealand
»
40
Wagners Annual Report 2020
»
LYNDA O’GRADY
Independent Non-executive Director
Appointed as part of Wagners’ Initial
»
Public Offering
Previous senior roles at Executive/Managing
Director level at Telstra, including as Chief
of Product
Prior roles include as Commercial Director of
Australian Consolidated Press (the publishing
subsidiary of PBL), and General Manager of
Alcatel Australia
Inaugural Chairman of the Aged Care Financing
Authority (retired 30 April 2018)
»
»
» Non-executive Director of Domino’s Pizza
Enterprises Ltd
»
» Member of the Advisory Board of Jamieson Coote
Bonds, and Council of Southern Cross University
Previous service on the Council of Bond
University, boards of Screen Queensland, National
Electronic Health Transition Authority (NEHTA)
and TAB Queensland, and on the IT&T Board of
Advisors to the New South Wales Treasurer
Bachelor of Commerce (Hons) degree –
University of Queensland
Fellow of the Australian Institute of
Company Directors
»
»
JOE WAGNER
»
»
Appointed alternate Director to John Wagner
Instrumental in developing Wagners into
one of the leading construction materials
producers in South-East Queensland
» Over 20 years’ experience in the construction
materials industry
EXECUTIVE
TEAM
CAMERON COLEMAN
Chief Executive Officer
»
»
»
» Oversees more than 500 employees
»
Appointed Chief Executive Officer in July 2012
Employed by Wagners for 25 years
Experience across all areas of the business
Integral in Wagners’ journey, and has created
a culture that has enabled Wagners to
differentiate itself from its competitors
Completed the General Management Program
at Harvard Business School in 2012
»
FERGUS HUME
Chief Financial Officer
»
Joined Wagners in February 2016 as
Chief Financial Officer
» Over 20 years’ experience in chartered
»
»
»
accounting and corporate financial roles
Previously Financial Controller at Caltex Australia
Ltd and Namoi Cotton Co-operative Ltd
Chartered Accountant
Bachelor of Commerce – University
of Queensland
KAREN BROWN
Company Secretary and General Counsel
Appointed Company Secretary and General
»
Counsel in November 2017
» Over 20 years’ experience in the legal sector
»
»
Solicitor of the Supreme Court of Queensland
Bachelor of Laws and Bachelor of Commerce –
University of Queensland
Graduate Diploma in Applied Corporate
Governance
»
JOHN STARK
General Manager, Australian Projects
»
Appointed General Manager of Construction
Materials and Services in January 2013
» Over 25 years’ experience in management roles
at Wagners, including as Chief Executive Officer
of Wagners’ Joint Venture with Wood Group
» Oversees performance of Wagners’ quarries
and contract crushing, concrete projects,
transport and maintenance workshops
» Mechanical trade qualification
»
Completed AICD Company Directors Course
ANTHONY FREER
General Manager, South-East Queensland
Construction Materials
»
Appointed General Manager of Cement in
October 2016
19 years’ experience in management positions
Prior to General Manager appointment,
assisted with Wellcamp Airport and Business
Park construction for Wagners, coordinating
utility services and contract administration
Bachelor of Financial Administration –
University of New England
»
»
»
Wagners Annual Report 2020
41
EXECUTIVE
TEAM (CONTINUED)
MICHAEL KEMP
General Manager – New Generation
Building Materials
»
Appointed General Manager of CFT in March
2017 and New Generation Building Materials
in January 2020
Employed by Wagners for over 16 years
»
» Over 20 years’ experience in the construction
materials industry, including management/
design/installation of the first composite fibre
road bridge in Australia (Grafton NSW), as
well as the first in Queensland (Blackbutt –
Daguilar Highway)
Bachelor of Engineering – University of Adelaide
»
RACHEL ALLAN
Group Human Resources Manager
»
Appointed Human Resources Manager
in August 2010
»
Employed by Wagners for 12 years
» Oversees recruitment, training and
payroll functions
» Over 15 years’ experience in human resources
– manufacturing, industrial relations, and
hospitality prior to joining Wagners
HUGH STONE
Head of Safety, Environment and Quality
»
Joined Wagners as Head of Safety, Environment
& Quality in February 2020
» Over 20 years' experience as a Health, Safety,
»
»
& Environment professional
Previous roles include Risk & Systems Manager
with Energy Queensland and Ergon Energy,
Operations & Protection Manager with Forests NSW
Bachelor of Science (Forestry) – Australian
National University, Graduate Certificate Health
Science (Health & Safety) – Queensland University
of Technology
MATT GRULKE
General Manager – Concrete, Reinforcing
Steel and Precast
»
»
Appointed General Manager in 2019
Employed by Wagners for over 16 years in
roles throughout Australia and internationally
in the global division in Russia, New Caledonia
and Papua New Guinea
Experience in technical/laboratory, project
management and internationally as
Country Manager
»
»
Jason Zafiriadis
General Manager – Earth Friendly Concrete®
Joined Wagners as General Manager of EFC® in
»
March 2020
18 years' experience across industrial markets
in the areas of sales, marketing, strategy
and leadership
Bachelor of Business (Marketing and Economics) –
Queensland University of Technology
Currently completing an Executive MBA from
Queensland University of Technology
»
»
42
Wagners Annual Report 2020
FINANCIAL
REPORT
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
REMUNERATION REPORT (AUDITED)
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
44
53
54
61
62
63
64
65
102
103
CFT Bridge, Zealey Road, Nambour.
Wagners Annual Report 2020
43
The Directors of Wagners Holding Company Limited (Wagners, the ‘Company’) and its controlled entities (the ‘Group’), present their report together
with the consolidated financial statements for the year ended 30 June 2020.
Directors
The following persons were directors of the Group during the period and until the date of this report, unless otherwise stated:
DIRECTOR
Denis Wagner
John Wagner
Lynda O’Grady
Ross Walker
Peter Crowley
ALTERNATE DIRECTOR
Joseph Wagner
Principal activities
ROLE
Non-executive Chairman
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
ROLE
Non-executive Director
DATE OF RETIREMENT
DATE OF APPOINTMENT
2 November 2017
2 November 2017
8 November 2017
2 November 2017
9 November 2017
24 September 2019
DATE OF APPOINTMENT
13 March 2018
The principal activities of the Group consist of construction materials and services and new generation building materials.
Construction materials and services supplies a large range of construction materials and services to customers in the construction, infrastructure and
resources industries. Key products include cement, flyash, aggregates, ready-mix concrete, precast concrete products and reinforcing steel. Services
include project specific mobile and on-site concrete batching, contract crushing and haulage services.
New generation building materials provides innovative and environmentally sustainable building products and construction materials through
Composite Fibre Technologies (CFT) and Earth Friendly Concrete® (EFC®).
Significant changes in the state of affairs
In March 2019 the Group made a decision with respect to the ‘Cement Supply Agreement’ with Boral Limited to suspend supply of cement following
the issue of a pricing notice. The following points are noted:
»
»
»
»
The Group commenced proceedings against Boral regarding a dispute over the interpretation of a pricing clause in the Cement Supply Agreement
seeking declarations that a series of Pricing Notices issued by Boral were invalid and to the extent that any valid suspension of supply of cement
had commenced following receipt of those notices, that those suspensions had ended. The Company issued ASX announcements regarding this
dispute on 18 March 2019 and 23 April 2019.
Judgment on the matter was delivered on 10 June 2020 which determined that the both the Pricing Notices issued by Boral on 1 March 2019 and
1 April 2019 were not valid, however that a period of suspension had commenced from 18 March 2019 and ended on 18 September 2019. Boral
recommenced purchasing cement on 22 October 2019.
Both the Group and Boral have appealed the decision and the matter will be heard by the Court of Appeal on 22 October 2020.
The Group remains confident in its position in relation to the matters the subject of the appeal and asserts that any suspension of cement
products was either of no effect, due to the invalidity of the Pricing Notices issued, or ended earlier than the date determined by the Supreme
Court of Queensland.
» Given there are so many possible outcomes, a potential positive result from the appeal cannot be quantified at this time.
»
Regardless of the outcome of the appeal, the Cement Supply Agreement remains binding on the parties until 2031, requiring Boral to take a
contracted volume of cement in the form of a take-or-pay arrangement, on an annual basis.
On 19 June 2020, the Group acquired the Shepton Quarry from Central Highlands Regional Council. The quarry is located in Capella, Central
Queensland and enables the Group to expand its presence in the Central Queensland minerals province.
44
Wagners Annual Report 2020
Directors’ Report Dividends
No final fully franked dividend paid during period (2019: 3.5 cents per share)
No interim dividend paid during period (2019: 2.2 cents per share)
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
–
–
–
5,648
3,550
9,198
Operating and financial review
Group financial results
Statutory net loss after tax (NPAT) of $17,000 (30 June 2019: $12,779,000 profit) decreased by 100.13% compared to the 2019 result. Wagners recorded
a pro forma NPAT result of $3,992,000, allowing for fair value adjustments in derivatives and pre AASB 16 treatment of rental payments.
Non-IFRS measures
Throughout this report, Wagners has included certain non-IFRS financial information, including Earnings before Interest, Depreciation & Amortisation
(EBITDA), and pro forma equivalents of IFRS measures such as net profit after tax. Wagners believes that these non-IFRS measures provide useful
information to recipients for measuring the underlying operating performance of the Group.
Pro forma and statutory results
Pro forma results are provided for the financial year ended 30 June 2020 to allow shareholders to make a meaningful comparison with the pro forma
results for the year ended 30 June 2019 and to make an assessment of the Group's performance as a listed company. Pro forma and statutory results
are summarised in table 1 below.
Pro forma adjustments have been made on a consistent basis with those made in the prior year, and adjustments for the AASB 16 treatment of rental
payments. A reconciliation of the pro forma results to the statutory results is provided in table 2 on the following pages.
Table 1: Pro forma and statutory results actual compared to the prior financial year
Revenue
Direct material and cartage costs
Gross profit
Other income
Operating expenses
EBITDA
Depreciation & amortisation
EBIT
Net finance costs
Net profit before tax
Income tax expense
NPAT
FY2020
PRO FORMA
ACTUAL
$’000
FY2019
PRO FORMA
ACTUAL
$’000
FY2020
STATUTORY
ACTUAL
$’000
FY2019
STATUTORY
ACTUAL
$’000
249,668
236,888
249,668
236,888
(108,073)
(89,184)
(108,073)
(89,184)
141,595
147,704
141,595
147,704
2,311
2,898
2,311
2,898
(120,740)
(111,922)
(116,292)
(112,709)
23,166
(14,166)
9,000
(5,204)
3,796
196
3,992
38,680
(13,043)
25,637
(5,992)
19,645
(6,079)
13,566
27,614
(18,987)
8,627
(8,840)
(213)
196
(17)
37,893
(13,043)
24,850
(5,992)
18,858
(6,079)
12,779
Wagners Annual Report 2020
45
Directors’ Report Operating and financial review (continued)
Group financial results (continued)
Pro forma results 2020 vs 2019
Increased CFT sales, bulk haulage, increased quarry volumes and increased concrete volumes have contributed to the higher revenue in 2020, these
have partially been offset by the decreased cement volume as a result of the Company’s decision to suspend supply to Boral impacting the first half of
FY20 volumes. These increases have resulted in higher direct material and cartage costs, and increased operating expenses reflecting the nature of the
work involved.
Depreciation expense has been impacted by accelerated depreciation rates on bulk haulage equipment in line with the increased utilisation of
these assets.
Statutory results 2020 vs 2019
The major variances have been discussed in the previous section of Pro forma results compared to last year. Items included in the statutory results that
are not included in the Pro forma 2020 results include:
»
»
»
»
Fair value loss on derivative instruments, being $1.1m
AASB 16 Rental Payments, being $5.5m
AASB 16 Right of use depreciation, being $4.8m; and
AASB 16 Finance costs on lease liabilities, being $3.6m.
Table 2: Reconciliation of pro forma results to statutory results
GROUP RESULTS ($’000)
Statutory EBIT
Reversal of fair value on derivative instruments (gain)/loss
AASB 16 – Rental Payments
AASB 16 – Right of Use Depreciation
Pro forma EBIT
Statutory NPAT
Reversal of fair value on derivative instruments (gain)/loss
AASB 16 – Rental Payments
AASB 16 – Right of Use Depreciation
AASB 16 – Finance Costs Lease Liabilities
Pro forma NPAT
Operating results by segment
SEGMENT ($’000)
Construction Materials and Services
New Generation Building Materials
Other/Eliminations
Total
46
Wagners Annual Report 2020
NOTE
1
2
3
1
2
3
4
FY2020
8,627
1,065
(5,513)
4,821
9,000
(17)
1,065
(5,513)
4,821
3,636
3,992
FY2019
24,850
787
–
–
25,637
12,779
787
–
–
–
13,566
PRO FORMA FY2020
PRO FORMA FY2019
CHANGE
REVENUE
217,054
33,835
(1,221)
EBIT
17,989
2,143
(11,132)
REVENUE
209,902
29,266
(2,280)
249,668
9,000
236,888
EBIT
30,104
1,760
(6,227)
25,637
REVENUE
7,152
4,569
1,059
EBIT
(12,115)
383
(4,905)
12,780
(16,637)
Directors’ Report Operating and financial review (continued)
Group financial results (continued)
Construction Materials and Services
Construction Materials and Services revenue growth has been driven by increased revenues across bulk haulage, concrete and quarry operations,
partially offset by lower revenues in cement as a result of lower volumes.
Cement volumes have been impacted by the Company’s decision to suspend supply of cement to Boral, as reported to the ASX on 18 March 2019.
Transport revenue increased from long term bulk haulage contracts in the North West mineral province of Queensland and Northern Territory in the
resources sector.
Concrete revenues have increased due to the expansion of the South-East Queensland fixed plant network and growth in volumes.
Increased supply of quarry materials, as a result of the commencement of project at the Carmichael mine, the acquisition of the Shepton Quarry near
Emerald in June 2020 together with the continued supply from the Wellcamp and Castlereagh quarries.
EBIT reduction in the year was driven by the higher activity in lower margin areas such as contract haulage and fixed plant concrete, and delays in
major project work.
New Generation Building Materials
New Generation Building Materials revenue is predominantly CFT as EFC® continues to develop its market with negligible sales to date.
A 16.4% increase in revenue is all due to increased CFT sales of pedestrian infrastructure, short span road bridge and marine infrastructure.
The pedestrian infrastructure, road bridge and marine structure division of business enjoyed a 48% increase in revenue in FY20, with a 44% increase
in domestic and 68% increase in international markets. Whilst sales in the USA declined there was a large increase in sales to UAE and Europe.
EBIT was impacted by increased business development spend in USA, UK, Middle East and New Zealand and an increased spend on research
and development in both CFT and EFC® in the 2020 year.
Other/Eliminations
2019 results included a higher profit on sale of assets, mainly due to the sale and leaseback of concrete batch plant assets and the recognition of
contract assets relating to the contracts to fabricate, construct and install concrete batch plants, this amounted to a reduction in EBIT of $3.1m.
The remainder of the difference in EBIT is mainly due to increased legal costs associated with the Boral matter as well as increased insurance costs
during the 2020 financial year.
Financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets/(liabilities)
CONSOLIDATED GROUP
30 JUN 20
POST AASB 16
$’000
30 JUN 20
PRE AASB 16
$’000
30 JUN 19
PRE AASB 16
$’000
CHANGE
PRE AASB 16
$’000
84,552
245,438
329,990
64,295
163,288
227,583
84,552
152,949
237,501
61,923
70,227
132,150
102,407
105,351
69,124
131,707
200,831
53,251
84,975
138,226
62,605
15,428
21,242
36,670
8,672
(14,748)
(6,076)
42,746
The Group increased its Net asset position in 2020 following the successful rights issue in November 2019 which included 1 new ordinary share for
every 6.25 existing ordinary share held, at a price of $1.55.
Increased trade receivables as a result of timing at 30 June 2020, together with increased inventory due to the timing of a cement raw material
shipment have driven the increase in current assets.
Non-current assets have increased due to the investment in plant and equipment utilised for the increased bulk haulage work, contract crushing work
and the purchase of the Shepton Quarry.
Total liabilities have decreased as funds received from the rights issue was partly used to reduce debt.
Wagners Annual Report 2020
47
Directors’ Report Operating and financial review (continued)
Strategy and future prospects
Wagners remains focused on delivering future growth through the following principal strategies:
» New Generation Building Materials: the Group will continue its growth focus in international markets for its Composite Fibre Technologies
(CFT) and Earth Friendly Concrete® (EFC®) products, with significant opportunities for a broad range of applications, particularly in the US, UK,
New Zealand, Europe and Middle Eastern markets. Revenue growth is expected as a result of:
– CFT – the increased investment in our CFT international sales team and the establishment of a physical present in the US.
–
EFC® – DIBt approval having now been obtained allowing the commercialisation of the product in Europe and increased sales focus given the
capabilities of the concrete batch plant network to supply EFC® throughout South-East Queensland.
»
»
Increased efficiency of production: the Group is investing in automation and increased capacity of CFT and EFC® production facilities to allow
for higher productivity and lower cost of production for these New Generation Building Materials.
Continued expansion of ready-mix concrete plants: the Group is continuing to establish its ready-mix concrete plant network. These plants
will provide the Group's cement and quarry business with a secure and growing sales channel, and provide additional exposure to the expected
increased activity in South-East Queensland’s construction materials and services market. The Group had six plants operational as 30 June 2020
with two additional sites secured. We expect continued pressure on profitability during FY21, due to market conditions.
» Quarries: continued growth expected in the quarry business following the recent acquisition of the Shepton Quarry and contracts secured
for the Group’ contract crushing services. The Group’s fixed quarry operations and available mobile crushing equipment position the Group
well to capitalise on increased activity in the construction materials and services market as a result of the expected increase in public spend
on infrastructure and construction.
»
»
Transport: growth in the Group’s bulk haulage business is expected following significant investment in assets to service existing contracts and
positions the Group to capitalise on the increase in activity in the resources sector.
Cement: Boral have recommenced purchasing cement with requirements to take contracted volumes through until 2031. The Group will continue
to expand its customer base in South-East Queensland and look to develop new products and markets.
Environment regulation
The Group is subject to particular and significant environmental regulations. All relevant authorities have been provided with regular updates, and
to the best of the directors’ knowledge all activities have been undertaken in compliance with or in accordance with a process agreed with the
relevant authority.
Wagners recognises and accepts that proper care of the environment is a fundamental part of its corporate business strategy and concerns for
the environment must be integrated into all management programs. Wagners employs a number of substantial internal environmental policies,
procedures and monitoring processes, including the Board participation in monthly Environmental Quality and Safety reviews with a large number
of employee participants from throughout the Group.
Wagners believes that it must conduct business in an environmentally responsible manner that leaves the environment healthy, safe and does not
compromise the ability of future generations to sustain their needs. Our environmental performance is assured annually by SAI Global through our
compliance to ISO 14001:2015. Wagners is also subject to the National Greenhouse and Energy Reporting Act 1997 and is required to report on the energy
consumption and greenhouse gas emissions of its Australian operations.
Corporate governance
Wagners Holding Company Limited is committed to achieving and demonstrating the effective standards of corporate governance. The Group has
reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (3rd edition) published by the ASX
Corporate Governance Council.
A description of Wagners Holding Company Limited’s current corporate governance practices is set out in the Wagners Holding Company Limited’s
corporate governance statement, which can be viewed on the Wagners website at https://investors.wagner.com.au/corporate-governance/.
48
Wagners Annual Report 2020
Directors’ Report Indemnities and insurance of officers and auditors
Indemnification
In accordance with the constitution, except as may be prohibited by the Corporations Act 2001 every officer of the Company shall be indemnified out
of the property of the Company against any liability incurred by them in their capacity as officer or agent of the Company in respect of any act or
omission whatsoever and howsoever occurring or in defending any proceedings, whether civil or criminal.
The Group has not entered into any agreement to indemnify their auditor, BDO Audit Pty Ltd for any liabilities to another person (other than the
Company) that may arise from their position as auditor.
Insurances
During the reporting period and since the end of the reporting period, the Company has paid premiums in respect of a contract insuring directors
and officers of the Group in relation to certain liabilities. In accordance with normal commercial practices under the terms of the insurance contracts,
the nature of liabilities insured against and the amounts of premiums paid are confidential.
Auditor’s independence declaration
A copy of the lead auditor’s independence declaration, as required under section 307C of the Corporations Act 2001 is set out on page 53 and forms
part of the Directors’ Report for financial year ended 30 June 2020.
Non-audit services
The following non-audit services were provided by the Group’s auditor, BDO Audit Pty Ltd. The directors are satisfied that the provision of non-audit
services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each
type of non-audit service provided means that auditor independence was not compromised. This assessment has been confirmed to the Board by the
Audit & Risk Committee.
During the year, the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, its related practices and
non-related firms:
Tax compliance, advisory and other services
Due diligence services
Rounding
2020
$
13,000
–
13,000
2019
$
–
–
–
The Company is a kind referred to in Australian Securities & Investment Commission (ASIC) Legislative Instrument 2016/191, and in accordance with that
instrument all financial information presented in Australian dollars has been rounded to the nearest thousand dollars unless otherwise stated.
Proceedings on behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the Company, or intervene in any proceedings to which the Company is
a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The company was not a party to any such proceedings during the year.
Events occurring after the reporting date
The directors of the Company are not aware of any other matter or circumstance not otherwise dealt with in the financial report that significantly
affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs in the period subsequent to the
financial year ended 30 June 2020.
In addition, while the COVID-19 situation remains concerning, between 30 June 2020 the date of this report, there has been no COVID-19 impacts on
the operations of the Group. However, due to the fluid nature of this pandemic the Group will continue to monitor the unfolding situation and adjust
operations for minimal impacts where required.
Wagners Annual Report 2020
49
Directors’ Report Likely developments and expected results of operations
Construction Materials and Services
The Group is in a strong position to benefit from the large pipeline of infrastructure work in South-East Queensland which is scheduled to commence
in the 2021 financial year and continue for four to five years. This will provide significant benefit to the construction materials and services offered by
the Group, and will also provide opportunities for the use of the New Generation Building Materials.
The establishment of permanent concrete plants in South-East Queensland, with six currently operational, with two additional sites identified, delivers
on the strategy outlined in the prospectus. This, together with the development of a greenfield quarry site acquired in South-East Queensland, which,
unless the market improves is not expected to be operational within the next 2 years, strengthens the Group’s position as a preferred supplier of
construction materials in this market. We expect continued pressure on profitability during FY21, due to market conditions.
Composite Fibre Technologies
Increased production capacity through the commissioning of an automated cross-arm production line in Australia will enable CFT to continue to
meet the growing domestic demand for both electrical cross-arms and pedestrian infrastructure, short span road bridge and marine infrastructure
construction supply.
The international expansion of CFT into USA, UK and New Zealand is expected to further increase the demand for CFT products, with the first
installation of pedestrian infrastructure into the USA performed in late 2018, together with further installations in the USA, the first installations in
Canada, UK and United Arab Emirates, and further installations in New Zealand. A contract for supply of cross-arms in New Zealand was entered
into in 2018 and is being joined by further contracts. Cross-arm trials currently underway in the UK are expected to lead to supply into this market.
The increased production capacity as a result of the automation will allow the Group to tender for international supply into Asia and USA as well.
Earth Friendly Concrete®
Third party verification of the carbon reductions as a result of using EFC® compared to a traditional ordinary Portland cement based concrete will
allow the Group to have EFC® entered into third party models that are used to determine a projects carbon savings. These models are used by large
multi-national construction companies as they try to reduce the carbon emissions from projects both ongoing and embodied.
The receipt of Deutsches Institut für Bautechnik (DIBt) approval for Earth Friendly Concrete® (EFC®) in Germany now gives EFC® approval across Europe
and many Middle Eastern countries. This approval along with advanced discussion with several major parties for joint ventures or licencing agreements
in UK and Germany will provide a launch platform for a staged and measured commercialisation throughout Europe.
Continued work on the opportunities in India with cement, power and steel manufacturers as well as the development of the international
opportunities for the use of EFC® will see increased international acceptance and increased international commercialisation of this technology.
Information on Directors and Company Secretary
Name
Title
Denis Wagner
Non-executive Chairman
Qualifications
FAICD
Experience and expertise
Denis is one of the co-founders of Wagners and has been involved in the business since its inception and
has been instrumental in developing Wagners into one of the leading construction materials producers in
South-East Queensland. Denis brings over 30 years’ experience in the construction materials industry and
is a Fellow of the Australian Institute of Company Directors.
Other current directorships
Former directorships
(last 3 years)
None
None
Special responsibilities
Chair of Nomination Committee and Member of Remuneration Committee
Interests in shares
Interests in options
Interests in rights
Contractual rights to shares
36,324,048 Ordinary shares
None
None
None
50
Wagners Annual Report 2020
Directors’ Report Information on Directors and Company Secretary (continued)
Name
Title
Experience and expertise
John Wagner
Non-executive Director
John is one of the co-founders of Wagners and has been involved in the business since its inception and
has been instrumental in developing Wagners into one of the leading construction materials producers in
South-East Queensland. John brings over 30 years’ experience in the construction materials industry and was
the inaugural Chair of both Darling Downs Tourism and Toowoomba and Surat Basin Enterprises boards.
Other current directorships
Former directorships
(last 3 years)
None
None
Special responsibilities
Member of Audit and Risk Committee
Interests in shares
Interests in options
Interests in rights
Contractual rights to shares
Name
Title
36,614,431 Ordinary shares
None
None
None
Ross Walker
Independent, Non-executive Director
Qualifications
BCom, FCA
Experience and expertise
Ross is a Chartered Accountant, with more the 30 years’ corporate and accounting experience, and a
former managing partner of accounting and consulting firm, Pitcher Partners Brisbane.
Other current directorships
RPM Global Limited (ASX: RUL) (Appointed in 2008)
Former directorships
(last 3 years)
None
Special responsibilities
Chair of Audit and Risk Committee and Member of Nomination Committee
Interests in shares
Interests in options
Interests in rights
Contractual rights to shares
Name
Title
117,713 Ordinary shares
None
None
None
Lynda O’Grady
Independent, Non-executive Director
Qualifications
BCom(Hons), FAICD
Experience and expertise
Lynda has held Executive/Managing Director roles at Telstra, including Chief of Product. Prior to this Lynda
was Commercial Director of Australian Consolidated Press (PBL) and General Manager of Alcatel Australia.
She was Chairman of the Aged Care Financing Authority until her retirement effective 30 April 2018 and
is a member of the Advisory Board of Jamieson Coote Bonds and Council of Southern Cross University.
Other current directorships
Domino’s Pizza Enterprises Limited (ASX: DMP) (Appointed in 2015)
Former directorships
(last 3 years)
National Electronic Health Transition Authority – NEHTA
Special responsibilities
Member of Nomination Committee and Audit and Risk Committee and Chair Remuneration Committee
Interests in shares
Interests in options
Interests in rights
Contractual rights to shares
50,000 Ordinary shares
None
None
None
Wagners Annual Report 2020
51
Directors’ Report Information on Directors and Company Secretary (continued)
Name
Title
Qualifications
Experience and expertise
Other current directorships
Former directorships
(last 3 years)
Special responsibilities
Interests in shares
Interests in options
Interests in rights
Contractual rights to shares
Karen Brown
Company Secretary
LLB, BCom
Karen is a solicitor of the Supreme Court of Queensland and was appointed as General Counsel and
Company Secretary to Wagners in December 2017. Karen has over 20 years’ experience in the legal sector,
and is a former partner of Carter Newell Lawyers.
None
None
None
15,808 Ordinary shares
None
None
None
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities,
unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last three years for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Interests in shares' refers to shareholdings as at the date of the financial report.
Directors’ meetings
The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the year ended 30 June 2020,
and the number of meetings attended by each Director were:
Denis Wagner
John Wagner*
Ross Walker
Lynda O’Grady
Peter Crowley
Joseph Wagner*
FULL BOARD MEETINGS
AUDIT AND RISK
COMMITTEE MEETINGS
REMUNERATION
COMMITTEE MEETINGS
NOMINATION
COMMITTEE MEETINGS
HELD
ATTENDED
HELD
ATTENDED
HELD
ATTENDED
HELD
ATTENDED
11
11
11
11
2
11
11
7
11
11
2
3
–
3
3
1
1
–
–
3
3
1
1
–
3
–
3
3
1
–
3
–
3
3
1
–
–
–
–
–
–
–
–
–
–
–
–
–
*
John Wagner appointed Joseph Wagner as his alternate Director for an interim period where he could not attend to his full duties as a Director of the Company.
Held: represents the number of meetings held during the time the Director held office or was a member of the relevant committee.
52
Wagners Annual Report 2020
Directors’ Report Auditor's Independence Declaration
Auditor’s Independence Declaration
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION OF INDEPENDENCE BY C K HENRY TO THE DIRECTORS OF WAGNERS HOLDING
COMPANY LIMITED
As lead auditor of Wagners Holding Company Limited for the year ended 30 June 2020, I declare that,
to the best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Wagners Holding Company Limited and the entities it controlled during
the period.
C K Henry
Director
BDO Audit Pty Ltd
Brisbane
25 August 2020
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a
UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme
approved under Professional Standards Legislation.
Wagners Holding Company Limited | Auditor’s Independence Declaration
Page | 31
Wagners Annual Report 2020
53
Remuneration Report
(audited)
The Directors of Wagners Holding Company Limited are pleased to present the Remuneration Report (the ‘Report’) for the Company and its
subsidiaries (together, the ‘Group’) for the financial year ended 30 June 2020.
The information provided in the Report has been audited as required by section 308(3C) of the Corporations Act 2001.
The Report consists of the following sections:
1. Remuneration report overview
2. Remuneration governance
3. Executive remuneration policy and practices
4. Non-executive Director remuneration policy and practices
5. Overview of Group performance
6. Employment contracts of key management personnel
7. Details of remuneration
8. Equity instruments held by key management personnel
9. Other transactions with key management personnel.
1 Remuneration report overview
For the purposes of this Report, the Group’s key management personnel (‘KMP’) are its Non-executive Directors and executives who have been
identified as having authority and responsibility for planning, directing and controlling the major activities of the Group.
The table below outlines the KMP of Wagners and their movement during the financial year end 30 June 2020:
NAME
NON‑EXECUTIVE DIRECTORS
Denis Wagner
John Wagner
Peter Crowley
Lynda O’Grady
Ross Walker
SENIOR EXECUTIVES
Cameron Coleman
Fergus Hume
ROLE
Non-executive Chairman
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Chief Executive Officer (‘CEO’)
Chief Financial Officer (‘CFO’)
TERMS AS KMP
Full financial year
Full financial year
From 1 July until resignation
on 24th September 2019
Full financial year
Full financial year
Full financial year
Full financial year
2 Remuneration governance
Ultimately, the Board is responsible for the Group’s remuneration policies and practices. The role of the Remuneration Committee (the ‘Committee’)
is to assist the Board to ensure that appropriate and effective remuneration packages and policies are implemented within the Company and Group
in relation to the KMP and those reporting directly to the CEO.
Wagners has several policies to support a strong governance framework. These policies include a Diversity Policy, Continuous Disclosure Policy,
Whistle-blower Policy and Securities Trading Policy, and they have been implemented to promote responsible management and conduct.
Further information is available on the Group’s website https://investors.wagner.com.au/corporate-governance/
The Remuneration Committee’s functions include:
»
»
»
»
Review and evaluation of market practices and trends on remuneration matters;
Recommendations to the Board about the Group’s remuneration policies and procedures;
Recommendations to the Board about remuneration of senior management; and
Reviewing the Group’s reporting and disclosure practices in relation to the remuneration of senior executives.
The Committee's Charter allows the Committee access to specialist external advice about remuneration structure and levels, which it intends to utilise
periodically in support of its remuneration decision making process.
54
Wagners Annual Report 2020
Remuneration Report
(audited)
3 Executive remuneration policy and practices
The Group’s remuneration framework is designed to attract, retain, motivate and reward employees for performance that is competitive and
appropriate for the results delivered. The framework aligns remuneration with the achievement of strategic goals and the creation of value
for shareholders.
The key criteria supporting the Group’s remuneration framework are:
»
»
»
»
Competitiveness and reasonableness;
Acceptability to shareholders;
Performance linkage/alignment of executive compensation; and
Transparency.
Wagner’s Executive KMP remuneration consists of fixed remuneration, short-term incentives and long-term incentives plans. Executive KMP
remuneration includes both fixed and variable components, with variable rewards consisting of short and long term incentives that are based
on Group performance outcomes.
(a) Fixed remuneration
Fixed remuneration for employees reflects the complexity of the individual’s role and their experience, knowledge and performance. Internal and
external benchmarking is regularly undertaken, and fixed remuneration levels are set with regards to comparable market remuneration.
Fixed remuneration is comprised of base salary, salary sacrificed items and employer superannuation contributions, in line with statutory obligations.
Fixed remuneration is reviewed annually, taking into consideration the performance of the individual, business unit, and the Group as a whole.
(b) Short-term incentive plan
The Company has adopted a short-term incentive (STI) plan for key employees, and is designed to motivate and align employees with the Group’s
financial and strategic objectives.
Non-executive Directors are not entitled to participate in the STI. Key employees identified by the Board are entitled to receive STI payments, calculated
as a percentage of base salary, subject to achieving performance targets against key performance indicators agreed with the Board.
The Group’s proforma Earnings before Interest and Taxes (EBIT) has been assessed as the most suitable measure of financial performance for the STI.
The following table outlines the key features of the STI Plan for the financial year ended 30 June 2020:
Participants
Performance period
Opportunity
Performance target
Performance results
All KMP executives and senior management
Financial year ending 30 June 2020
Disclosed executives
CEO
CFO
On target
25% of base salary
25% of base salary
Performance was measured against a proforma reported EBIT as described above and ratified
by the Board.
The Group did not achieve the proforma reported EBIT result for the financial period, not
satisfying the Group STI performance target.
Payment method
100% of STI earned will be payable by way of cash in two equal tranches, over one year.
Other than in certain circumstances, if the employee ceases employment with the Group,
any tranches earned that have not yet been paid will be forfeited.
Wagners Annual Report 2020
55
Remuneration Report
(audited)
3 Executive remuneration policy and practices (Continued)
(c) Long-term incentive plan
The Company adopted a new long-term incentive plan in connection with its admission to the ASX, the Omnibus Incentive Plan (LTI).
Options are issued under the LTI, and it provides for KMP to receive a number of options, as determined by the Board, over ordinary shares.
Options issued under the LTI will be subject to performance conditions that are detailed below.
The Remuneration Committee consider this equity performance-linked remuneration structure to be appropriate as KMP only receive a benefit when
there is a corresponding direct benefit to shareholders.
Details of Key Management Personnel performance options issued, vested and expired during the financial year are set out below:
VESTING DATE
TRANCHE
VESTING
CONDITIONS
PERFORMANCE
PERIOD1
1 JULY 2019
31 August 2022
31 August 2021
31 August 2020
3
2
1
EPS
EPS
EPS
3 years
2 years
1 year
–
–
–
–
MOVEMENTS
EXERCISED
EXPIRED/
FORFEITED
30 JUNE 2020
–
–
–
–
–
–
–
–
74,075
74,074
74,074
222,223
ISSUED
74,075
74,074
74,074
222,223
1 Represents the relevant period of time to which both the performance vesting condition is measured and the period of time the recipient must remain employed with the Group.
Vesting Conditions
1. Vesting Dates
Tranche 1 – 31 August 2020
Tranche 2 – 31 August 2021
Tranche 3 and Remainder Options – 31 August 2022
2. Vesting Conditions
Offer Earnings Per Share (EPS)
Reported EPS as at 30 June 2019 of 7.9c
Tranche 1
On the Tranche 1 Vesting Date, if the earnings per share (EPS) of the Company as at 30 June 2020 (Tranche 1 EPS) is:
(a) at least 10% (but less than 12.5%) higher than the Offer EPS, 50% of the Tranche 1 Options shall vest; or
(b) at least 12.5% (but less than 15%) higher than the Offer EPS, 75% of the Tranche 1 Options shall vest; or
(c) at least 15% higher than the Offer EPS, 100% of the Tranche 1 Options shall vest.
Tranche 2
On the Tranche 2 Vesting Date, if the earnings per share (EPS) of the Company as at 30 June 2021 (Tranche 2 EPS) is:
(a) at least 10% (but less than 12.5%) higher than the Tranche 1 EPS, 50% of the Tranche 2 Options shall Vest; or
(b) at least 12.5% (but less than 15%) higher than the Tranche 1 EPS, 75% of the Tranche 2 Options shall Vest; or
(c) at least 15% higher than the Tranche 1 EPS, 100% of the Tranche 2 Options shall Vest.
Tranche 3
On the Tranche 3 Vesting Date, if the earnings per share (EPS) of the Company as at 30 June 2022 (Tranche 3 EPS) is:
(d) at least 10% (but less than 12.5%) higher than Tranche 2 EPS, 50% of the Tranche 3 Options shall Vest; or
(e) at least 12.5% (but less than 15%) higher than the Tranche 2 EPS, 75% of the Tranche 3 Options shall Vest; or
(f ) at least 15% higher than the Tranche 2 EPS, 100% of the Tranche 3 Options shall Vest.
Additional vesting terms
Any Tranche 1 or 2 Options which did not vest on the Tranche 1 Vesting Date or Tranche 2 Vesting Date respectively
(Remainder Options) will vest on the Tranche 3 Vesting Date if the Tranche 3 EPS is at least 20% higher than the
Tranche 2 EPS.
3. Expiry Date
5 years from the date the Options were issued.
56
Wagners Annual Report 2020
Remuneration Report
(audited)
3 Executive remuneration policy and practices (Continued)
(c) Long-term incentive plan (continued)
Fair value of performance rights granted
The assessed fair value at the date of grant of performance rights issued is determined using an option pricing model that takes into account the
exercise price, the underlying share price at the time of issue, the term of performance right, the underlying share’s expected volatility, expected
dividends and risk free interest rate for the expected life of the instrument.
Details of performance rights over ordinary shares in the company provided as remuneration to each of the key management personnel of the
Group are set out below. When exercisable, each performance right is convertible into one ordinary share of Wagners Holding Company Limited.
The value of the performance rights were calculated using the inputs shown below:
INPUTS INTO PRICING MODEL
Grant Date
Exercise Price
Vesting Conditions
Share price at grant date
Expiry date
Life of the instruments
Underlying share price volatility
Expected dividends
Risk free interest rate
Pricing model
Fair value per instrument
TRANCHE 1
TRANCHE 2
TRANCHE 3
20 November 2019
20 November 2019
20 November 2019
$0.00
Refer above
$2.10
$0.00
Refer above
$2.10
$0.00
Refer above
$2.10
20 November 2024
20 November 2024
20 November 2024
5 years
50%
1%
0.71%
5 years
50%
1.7%
0.71%
5 years
50%
2.1%
0.71%
Black Scholes Model
Black Scholes Model
Black Scholes Model
$1.88
$1.83
$1.78
4 Non-executive Director remuneration policy and practices
Fees and payments to non-executive Directors reflect the demands and responsibilities of their role. Non-executive Directors' fees and payments
are reviewed annually by the Remuneration Committee, and reflects the market salary for a position and individual of comparable responsibility
and experience whilst considering the Group’s stage of development.
Non-executive Directors’ fees were fixed, and they did not receive any performance based remuneration. Under the Company’s Constitution the
amount paid or provided for payments to Directors as a whole must not exceed the maximum aggregate amount of $750,000. The current Independent
Non-executive Directors fees are $100,000 per annum (inclusive of superannuation where applicable) and Directors may also be reimbursed for all
travelling and other expenses incurred in connection with their Company duties. Non-executive Chairman fees are $200,000 per annum.
5 Overview of group performance
Since the Company was not a disclosing entity prior to the financial year ended 30 June 2018, the relationship between remuneration policy and
Group performance is only assessed for the prior two and the current financial year.
Revenue ($’000)
EBITDA ($’000)
EBIT ($’000)
NPAT ($’000)
Dividends paid (cents per share)
Basic Earnings per share (cents)
Share price movement (cents per share)
2020
STATUTORY
249,668
27,614
8,627
(17)
0.0
(0.0)
(69)
2020
PRO FORMA
249,668
23,166
9,000
3,992
0.0
2.3
(69)
2019
STATUTORY
2019
PRO FORMA
2018
STATUTORY
2018
PRO FORMA
236,888
236,888
231,530
231,530
37,893
24,850
12,779
5.7
7.9
(254)
38,680
25,637
13,566
5.7
8.5
(254)
48,824
38,005
24,807
1.5
17.1
164
50,305
39,486
23,226
1.5
16.0
164
Wagners Annual Report 2020
57
Remuneration Report
(audited)
6 Employment contracts of key management personnel
The Company has entered into standard employment agreements (fixed remuneration and equity-based incentives) with all senior management.
None of the Non-executive Directors have employment contracts with the Company.
Key terms of the employment agreements for the executive KMP members are as follows:
EXECUTIVE KMP
Cameron Coleman
Fergus Hume
ROLE
CEO
CFO
CONTRACT
DURATION
Unlimited
NOTICE PERIOD
TERMINATION PAYMENTS
APPLICABLE
ANNUAL BASE SALARY
$
12 months (Wagner’s notice)/
6 months (employee’s notice)
Applicable notice
period
Unlimited
6 months
Notice period
500,000
300,000
7 Details of remuneration
(a) Performance against STI plan
For the executive KMP members, the applicable STI award payable against the performance of Pro forma EBIT for the financial year ended
30 June 2020 was:
EXECUTIVE KMP
MAXIMUM ‘AT‑RISK’
Cameron Coleman
25% of base salary
Fergus Hume
25% of base salary
% OF MAXIMUM STI
AWARDED/PAYABLE
% OF STI FORFEITED
ESTIMATE OF MAXIMUM
TOTAL VALUE
0%
0%
100%
100%
–
–
(b) Director and executive KMP remuneration
Details of the remuneration of Directors and other key management personnel of the Company in respect to their terms as a KMP outlined above,
for the financial years ended 30 June 2020 & 30 June 2019 are set out in the tables on the following pages:
SHORT‑TERM
SALARY
AND FEES1
$
STI
AWARDED2
$
NON‑CASH
BENEFITS
$
POST‑
EMPLOYMENT
SUPER‑
ANNUATION
$
LONG TERM
LONG SERVICE
LEAVE3
$
EQUITY BASED
BENEFITS
SHARE BASED
PAYMENTS6
$
TOTAL
REMUNERATION
$
PERFORMANCE
RELATED
%
200,000
100,000
25,000
100,000
100,000
501,899
303,389
1,330,288
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,028
16,433
25,000
24,452
9,641
2,051
23,586
14,152
200,000
100,000
25,000
100,000
100,000
568,154
360,477
24,461
49,452
11,692
37,738
1,453,631
–
–
–
–
–
4.2%
3.9%
2.6%
FINANCIAL YEAR ENDED
30 JUNE 2020
Non-executive Directors
Denis Wagner4
John Wagner
Peter Crowley5
Lynda O’Grady
Ross Walker
Executive KMP’s
Cameron Coleman
Fergus Hume
Total Directors’ and
Executive remuneration
Notes:
1 Amount includes the value of annual leave accrued during the year.
2
STI bonus is for performance during the respective financial year using the criteria set out on page 55. STI’s awarded is paid in two equal tranches over a one-year period,
with outstanding amounts forfeited should the employee terminate their contract.
Increased rate of Directors fees for the role of Chairman.
3 Amount includes the value of long service leave accrued during the year.
4
5 Peter Crowley resigned on 24th September 2019.
6 This reflects the value of options earnt in Tranche 2 and 3 as the Tranche 1 options did not meet the hurdle rate of the options issued in 2020.
58
Wagners Annual Report 2020
Remuneration Report
(audited)
7 Details of remuneration (Continued)
(b) Director and executive KMP remuneration (Continued)
SHORT‑TERM
SALARY
AND FEES1
$
STI
AWARDED2
$
NON‑CASH
BENEFITS
$
POST‑
EMPLOYMENT
SUPER‑
ANNUATION
$
LONG TERM
LONG SERVICE
LEAVE3
$
EQUITY BASED
BENEFITS
SHARE BASED
PAYMENTS
$
TOTAL
REMUNERATION
$
PERFORMANCE
RELATED
%
200,000
100,000
100,000
100,000
100,000
475,349
311,587
1,386,936
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
13,434
25,301
20,190
25,878
38,735
46,068
41,726
1,093
42,819
–
–
–
–
–
–
–
–
200,000
100,000
100,000
100,000
100,000
550,699
363,859
1,514,558
–
–
–
–
–
0%
0%
0%
FINANCIAL YEAR ENDED
30 JUNE 2019
Non-executive Directors
Denis Wagner4
John Wagner
Peter Crowley
Lynda O’Grady
Ross Walker
Executive KMP’s
Cameron Coleman
Fergus Hume
Total Directors’ and
Executive remuneration
Notes:
1 Amount includes the value of annual leave accrued during the year.
2
STI bonus is for performance during the respective financial year using the criteria set out on page 55. STI’s awarded is paid in two equal tranches over a one-year period,
with outstanding amounts forfeited should the employee terminate their contract.
3 Amount includes the value of long service leave accrued during the year.
4
Increased rate of Directors fees for the role of Chairman.
8 Equity instruments held by key management personnel
(a) Ordinary shares
The movement in number of ordinary shares in Wagners Holding Company Limited held directly, indirectly, or beneficially, by each key management
person during the 2020 financial year, is as follows:
KEY MANAGEMENT PERSON
OPENING BALANCE
PURCHASES ON
MARKET
PURCHASES OFF
MARKET
RIGHTS ISSUE
SHARE DISPOSALS
CLOSING BALANCE
Denis Wagner1
John Wagner1
Peter Crowley
Lynda O’Grady2
Ross Walker
Cameron Coleman
Fergus Hume
22,157,670
22,157,670
44,280
18,450
101,476
71,743
1,476
–
290,383
–
28,598
–
–
–
3,564
3,564
14,201,056
14,201,056
–
–
–
–
–
–
2,952
16,237
11,480
237
38,242
38,242
44,280
–
–
–
–
36,324,048
36,614,431
–
50,000
117,713
83,223
1,713
Notes:
1
The rights issue shares for Denis and John Wagner were taken up by an associated entity of theirs, Wagner Property Operations Pty Ltd. Denis Wagner and John Wagner’s balance
includes the total number of shares purchased and now held by the associated entity.
The closing balance includes 28,598 shares held by Lynda O’Grady’s spouse.
2
Wagners Annual Report 2020
59
Remuneration Report
(audited)
8 Equity instruments held by key management personnel (continued)
(b) STI/LTI instrument granted and issued during the year
The following LTI performance rights were issued during the financial year ended 30 June 2020 (2019: none).
KEY MANAGEMENT PERSON
Cameron Coleman
Fergus Hume
1 JULY 2019
–
–
GRANTED
138,889
83,334
MOVEMENTS
EXERCISED
–
–
EXPIRED/
FORFEITED
–
–
30 JUNE 2020
138,889
83,334
9 Other transactions with key management personnel and their related parties
(a) Loans to key management personnel and their related parties
There were no loans issued to any key management personnel, or their related parties during the financial year ended 30 June 2020.
(b) Other transactions with key management personnel and their related parties
Directors and related parties
All transactions between the Group and any Director and their related parties are conducted on the basis of normal commercial trading terms and
conditions as agreed upon between the parties as per normal arms-length business transactions. Such transactions with Director and their related
parties are detailed as follows:
DESCRIPTION
Sale of materials and services1
Indemnity of losses on onerous contract
On charge of costs processed by the Group
Shared service agreement2
Gain on sale of property, plant & equipment3
2020
REVENUE/(COST)
$
2019
REVENUE/(COST)
$
7,937,690
10,328,126
–
5,342
–
–
231,941
150,804
185,043
1,664,873
Payments for rent of property and plant, material royalties and other costs
(8,083,706)
(8,001,788)
1
2
3
The sale of materials and services includes amounts recognised over time under AASB 15 for contracts to fabricate, construct and install concrete batch plants on sites owned by
related parties.
The Group, as per the prospectus, had a shared service agreement with a related entity for shared resources & employees for a 12 month transition period from the IPO date.
These shared services were charged to the related entity monthly using a number of internal business drivers and conducted on the basis of normal commercial trading terms
and conditions as agreed between the parties.
The Group entered into a sale and leaseback contract to upgrade existing concrete batch plant assets owned by the Group and install these assets on a site owned by a related
party, which the Group has subsequently leased back. The contract price for the total works of this sale (including associated site improvements and installation) was externally
valuated at $6,250,000. The lease is at applicable market rates.
This ends the Audited Remuneration Report.
The Directors’ Report is signed in accordance with a resolution of the directors made pursuant to s298(2) of the Corporations Act 2001.
Mr Denis Wagner
Chairman
Dated at Toowoomba, Queensland on 25 August 2020.
60
Wagners Annual Report 2020
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
for the year ended 30 June 2020
Revenue from contracts with customers
Other income
Direct material and cartage costs
Employee benefits expense
Depreciation – right-of-use assets
Depreciation and amortisation expense – other
Finance costs – lease liabilities
Net finance cost – other
Fuel
Contract work and purchased services
Freight and postal
Legal and professional
Rent and hire
Repairs and maintenance
Travel and accommodation
Utilities
Fair value adjustment on derivative instruments
Impairment of trade receivables – gain/(loss)
Other expenses
Profit/(Loss) before income tax
Income tax (expense)/credit
Profit/(Loss) attributable to equity holders of the parent
Other comprehensive income (net of tax)
Items that may be reclassified to profit or loss
Adjustment from translation of foreign controlled entities, net of tax
Total comprehensive income attributable to equity holders of the parent
EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
249,668
236,888
2,311
(108,073)
(48,069)
(4,821)
(14,166)
(3,636)
(5,204)
(3,799)
(10,918)
(1,876)
(2,374)
(5,293)
2,898
(89,184)
(49,976)
–
(13,043)
–
(5,992)
(3,291)
(9,850)
(5,857)
(2,220)
(7,640)
(27,245)
(18,560)
(6,218)
(3,380)
(1,065)
(545)
(5,510)
(213)
196
(17)
126
126
109
CENTS
(0.0)
(0.0)
(4,157)
(4,206)
(787)
119
(6,284)
18,858
(6,079)
12,779
(26)
(26)
12,753
CENTS
7.9
7.9
NOTE
3(a)
3(b)
10(a)
9(a)
15
4
16
7(a)
5
19
NOTE
21
21
The accompanying notes form part of these financial statements.
Wagners Annual Report 2020
61
Consolidated Statement
of Financial Position
as at 30 June 2020
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative instruments
Current tax assets
Other assets
Total Current Assets
Non-current Assets
Other financial assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Total Non-current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Lease liabilities
Derivative instruments
Current tax liabilities
Provisions
Total Current Liabilities
Non-current Liabilities
Borrowings
Lease liabilities
Derivative instruments
Provisions
Total Non-current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Pre IPO distributions to related entities
Reserves
Retained earnings
Total Equity
The accompanying notes form part of these financial statements.
62
Wagners Annual Report 2020
NOTE
6
7
8
16
9
10
11
12
13
14
15
16
17
14
15
16
17
18
19
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
3,436
55,586
21,755
216
2,986
573
6,101
42,661
19,515
368
–
479
84,552
69,124
7
143,702
92,489
2,521
6,719
245,438
329,990
33,575
18,715
2,372
3,215
–
6,418
64,295
67,759
93,061
2,029
439
163,288
227,583
102,407
7
123,520
–
2,638
5,542
131,707
200,831
28,242
14,673
–
1,474
3,714
5,148
53,251
81,749
–
2,856
370
84,975
138,226
62,605
410,915
371,334
(354,613)
(354,613)
(159)
(397)
46,264
102,407
46,281
62,605
Consolidated Statement
of Changes in Equity
for the year ended 30 June 2020
PRE‑IPO
DISTRIBUTIONS
TO RELATED
ENTITIES
$’000
SHARE CAPITAL
$’000
NOTE
371,334
(354,613)
CONSOLIDATED GROUP
RESERVES
$’000
(371)
–
(26)
RETAINED
EARNINGS
$’000
42,952
12,779
–
TOTAL
$’000
59,302
12,779
(26)
(26)
12,779
12,753
–
–
(252)
(252)
(9,198)
(9,198)
–
–
–
–
–
–
–
–
–
–
371,334
(354,613)
(397)
46,281
62,605
–
–
–
–
39,581
–
–
–
–
–
–
126
126
112
–
(17)
–
(17)
–
–
(17)
126
109
112
39,391
20
19
18
Balance at 1 July 2018
Profit for the financial year
Exchange differences from translation of foreign
controlled entities, net of tax
Total comprehensive income for the financial year
Other equity transactions
Transactions with owners in their capacity as owners:
Dividends paid
Balance at 30 June 2019
Profit for the financial year
Exchange differences from translation of foreign
controlled entities, net of tax
Total comprehensive income for the financial year
Transactions with owners in their capacity as owners:
Recognition of share based payments
New shares issued (net of share issue costs)
Balance at 30 June 2020
410,915
(354,613)
(159)
46,264
102,407
The accompanying notes form part of these financial statements.
Wagners Annual Report 2020
63
CONSOLIDATED GROUP
NOTE
30 JUN 2020
$’000
30 JUN 2019
$’000
22(a)
32
260,554
261,932
(247,647)
(226,421)
71
967
(5,123)
(7,681)
1,141
900
(30,536)
(2,050)
29
570
(5,565)
(6,564)
23,981
6,216
(28,074)
(4,059)
(31,686)
(25,917)
16,943
40,023
(442)
–
(1,877)
(26,891)
27,756
(2,789)
6,101
124
3,436
26,838
–
–
(9,198)
–
(11,057)
6,583
4,647
1,500
(46)
6,101
Consolidated Statement
of Cash Flows
for the year ended 30 June 2020
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Dividends received
Finance costs
Income tax paid
Net cash provided by operating activities
Cash flow from investing activities
Proceeds from sale of property, plant and equipment
Payments for property, plant and equipment
Payments for acquired businesses
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Proceeds from share issue
Share issue costs
Dividends paid
Repayment of lease liabilities
Repayment of borrowings
Net cash provided by financing activities
Net increase/(decrease) in cash and cash equivalents
Cash at beginning of financial year
Effect of currency translation on cash and cash equivalents
Cash at end of financial year
The accompanying notes form part of these financial statements.
64
Wagners Annual Report 2020
1 Statement of Significant Accounting Policies
The consolidated financial statements of Wagners Holding Company Limited and its subsidiaries (together, the ‘Group’) for the year ended
30 June 2020 were authorised for issue in accordance with a resolution of the directors on 24 August 2020.
Wagners Holding Company Limited (the ‘Company’) is a for-profit company limited by shares incorporated on 2 November 2017 and domiciled
in Australia.
The principal activities of the Group during the year consisted of the production and sale of construction materials and its new generation building
materials, including the provision of ancillary services.
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been
consistently applied to all years presented, unless otherwise stated.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards (AASBs) and the Corporations
Act 2001, including interpretations issued by the Australian Accounting Standards Board (AASB). The consolidated financial statements comply with
International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB).
(i) Basis of measurement and reporting convention
Except for cash flow information, the consolidated financial statements have been prepared on an accruals basis and are based on historical costs,
modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
(ii) Critical accounting estimates and judgements
The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Estimates assume a reasonable expectation
of future events and are based on current trends and economic data, obtained both externally and within the Group. Actual results may differ from
these estimates. Areas where assumptions and estimates are significant to the financial statements, or involving a higher degree of judgement due
to complexity are as follows:
»
»
»
The determination of long service leave provision (Note 17 and Note 1(m));
The determination of depreciation rates on property, plant and equipment (Note 9 and Note 1(h)); and
The incremental borrowing rate and estimated exercise of option terms in relation to the calculations of right-of-use assets (Note 10) & lease
liabilities (Note 15).
(iii) New and revised accounting standards adoption
A number of new or amended standards became applicable for the current reporting period, and the Group had to change its accounting policies as
a result of adopting the following standard:
I. AASB 16 Leases
II.
Interpretation 23 Uncertainty over Income Tax Treatments
The impact of the adoption of AASB 16 and the new accounting policies are disclosed below. The other standards did not have any impact on the
Group’s accounting policies and did not require retrospective adjustments.
(i) AASB 16 Leases
The Group applied for the first time AASB 16 from 1 July 2019. AASB 16 introduced a single, on-balance sheet accounting model for lessees. As a
result, in relation to various leases, the Group has recognised right-of-use assets representing its right to use the underlying assets, and lease liabilities,
representing its obligation to make lease payments.
The Group transitioned to AASB 16 using the modified retrospective approach, where the right-of-use asset is recognised at the date of initial
application at an amount equal to the lease liability, for each lease using the entity’s current incremental borrowing rate that would be applicable if the
entity were to borrow using similar terms for purchase. The incremental borrowing rates ranged from 3.52% to 4.51%. Accordingly, prior comparative
information has not been restated and all leases are presented as previously reported under AASB 117 Leases (‘AASB 117’) and related interpretations.
Wagners Annual Report 2020
65
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 1 Statement of Significant Accounting Policies (continued)
(a) Basis of preparation (continued)
(iii) New and revised accounting standards adoption (continued)
(i) AASB 16 Leases (continued)
Accounting policies applied from 1 July 2019
As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially
all the risks and rewards of ownership. Under AASB 16, the Group recognises right-of-use assets and lease liabilities for most leases in the Consolidated
Statement of Financial Position.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The lease liability is initially measured at the present
value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot
be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. Lease liabilities are
remeasured when there is a change in future lease payments arising from a change in a rate, or changes in the assessment of whether a purchase or
extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.
The right-of-use asset is initially measured at the amount of lease liability plus any lease payments made before commencement less any lease
incentives received. It also includes and direct costs and restoration costs. Right-of-use assets are generally depreciated over the shorter of the
asset’s useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
The Group has elected not to recognise right-of-use assets and lease liabilities for leases with terms less than twelve months, and for leases of
low-value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include renewal options.
The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount
of lease liabilities and right-of-use assets recognised.
In applying AASB 16 for the first time, the Group has used the following practical expedients permitted by the standard:
I.
The use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
II. The use of hindsight in determining the lease term where the contract contains options to extend of terminate the lease;
III. The accounting for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 as short-term leases; and
IV. The exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application.
Impact of adoption
On transition to AASB 16, the Group recognised right-of-use assets and lease liabilities. The impact on transition is summarised below.
Right-of-use assets presented in property, plant and equipment
Lease liabilities
Statement of financial position impact
$’000
76,484
(76,484)
–
The Group used its incremental borrowing rates at 1 July 2019 ranging from 3.52% to 4.51%, depending on the lease terms, to discount lease payments
when measuring its lease liabilities.
Operating lease commitment at 30 June 2019
Discounted using the incremental borrowing rate at 1 July 2019
Exemption for lease with less than 12 months of lease term at transition date
Agreements considered leases not previously included as operating commitments
Reassessment of lease term
Lease liabilities recognised at 1 July 2019
66
Wagners Annual Report 2020
$’000
133,175
65,164
(188)
469
11,039
76,484
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 1 Statement of Significant Accounting Policies (Continued)
(a) Basis of preparation (Continued)
(iii) New and revised accounting standards adoption (continued)
(i) AASB 16 Leases (continued)
Impact of adoption (continued)
The impact of AASB 16 resulted in a $2.94 million lower profit before tax, as the Group has recognised depreciation and interest costs, rather than
operating lease expenses. During the financial year ended 30 June 2020, the Group recognised $4.82 million of depreciation charges, $3.64 million of
interest costs, with there being no cash impact of AASB 16 in relation to those leases previously classified as operating leases and new leases added
during the period.
(b) Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate all of the assets, liabilities and results of the Group and all of its subsidiaries. Subsidiaries are all
entities over which the Group has control. The Group controls an entity when it 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 over the entity.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is
obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and
unrealised gains or losses on transactions between group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been
changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.
(c) Revenue recognition
Sale of materials and goods
The Group derives revenue from the sale of cement, flyash, aggregates, ready-mix concrete, precast concrete products and reinforcing steel.
Sale of construction and new generation building materials contains only one performance obligation, with revenue recognised at the point in time
when the material or good is transferred to the customer.
Provision of services
The Group derives revenue from the provision of services including project specific mobile and on-site concrete batching, contract crushing and
haulage services.
Infrastructure & mining project services
Revenue from infrastructure and mining project services is recognised when the performance obligation to the customer has been satisfied,
which is generally when the service is performed on site.
Construction contracts
For fixed-price construction contracts, mainly concerning the Groups’ New Generation Building Materials division and the construction of concrete
batch plants, revenue is recognised over time based on the actual service provided to the end of the reporting period as a proportion of the total
services to be provided. This is measured by reference to actual labour hours incurred and actual costs incurred, relative to the total expected inputs
to the satisfaction of the individual performance obligations. Estimates of revenues, costs or extent of progress toward completion are revised if
circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the
circumstances that give rise to the revision become known by management.
Dividends and interest
Dividend revenue is recognised when the right to receive a dividend has been established, and interest revenue is recognised using the effective
interest method.
All revenue is stated net of the amount of goods and services tax.
Contract assets and contract liabilities
AASB 15 uses the terms ‘contract asset’ and ‘contract liability’ to describe what is commonly known as ‘accrued revenue’ and ‘deferred revenue’. Contract
assets are balances due from customers under contracts as work is performed and therefore a contract asset is recognised over the period in which
the performance obligation is fulfilled. This represents the entity’s right to consideration for the services transferred to date. Amounts are generally
reclassified to contract receivables when these have been certified or invoiced to a customer. Contract liabilities arise where payment is received prior
to work being performed.
Wagners Annual Report 2020
67
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 1 Statement of Significant Accounting Policies (Continued)
(d) Financial instruments
Classification
The Group classifies its financial assets in the following measurement categories:
»
»
those to be measured subsequently at fair value (either through Other Comprehensive Income (OCI), or through profit or loss), and
those to be measured at amortised cost.
The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt
instruments, this will depend on the business model in which the investment is held. For investments in equity instruments that are not held for
trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment
at Fair Value through Other Comprehensive Income (FVOCI). The Group reclassifies debt investments when and only when its business model for
managing those assets changes.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at Fair Value through Profit or Loss
(FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are
expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal
and interest. Measurement of cash and cash equivalents and trade and other receivables are measured at amortised cost.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the
asset. There are three measurement categories into which the Group classifies its debt instruments:
»
»
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and
interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest
rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses), together with
foreign exchange gains and losses. Impairment losses are presented as separate line item in the profit or loss.
Fair Value through Profit or Loss (FVPL): Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a
debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in
which it arises.
Impairment
The Group’s accounting for impairment losses relating to financial assets is on a forward looking basis using the Expected Credit Losses (ECL) approach.
For trade receivables and contract assets, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to
be recognised from initial recognition of the receivables. The Group has established a provision matrix that is based on the Group’s historical credit
losses against the receivables ageing profile.
Income tax
(e)
The income tax expense or benefit for the period is the tax payable on the current period's taxable income based on the applicable income tax rate
for each jurisdiction where the Company’s subsidiaries operate and generate taxable income, adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences, unused tax losses and prior period adjustments (where applicable).
Current and deferred tax is recognised in the consolidated income statement, except to the extent that it relates to items recognised in other
comprehensive income. In which case, the tax is also recognised in other comprehensive income.
Deferred tax assets and liabilities are recognised for temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the consolidated financial statements, at the tax rates expected to apply when the asset is realised or the liability is settled, except for:
» When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction other than a
business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss; or
» When the taxable temporary differences relate to interests in subsidiaries, associates or joint ventures, and the Company is able to control the
timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future; or
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable
profit will be available against which the benefits of the deferred tax asset can be utilised.
68
Wagners Annual Report 2020
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 Income tax (continued)
1 Statement of Significant Accounting Policies (Continued)
(e)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax
balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has legally enforceable right to offset and
intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Tax consolidation group
Wagners Holding Company Limited, the ultimate Australian controlling entity, and its Australian subsidiaries, have implemented the tax
consolidation legislation.
Wagners Holding Company Limited and its subsidiaries in the tax consolidated Group account for their own current and deferred tax amounts. These tax
amounts are measured as if each entity in the tax consolidated Group continues to be a stand-alone taxpayer in its own right. In addition to its own current
and deferred tax amounts, Wagners Holding Company Limited, the ultimate Australian controlling entity, also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from subsidiaries in the tax consolidated Group.
Assets or liabilities arising under tax funding arrangements within the tax consolidated entities are recognised as amounts receivable from or payable
to other entities in the Group. Under the tax funding arrangement, the members of the tax consolidated Group compensate Wagners Holding
Company Limited for any current tax payable assumed, and are compensated by Wagners Holding Company Limited for any current tax receivable
and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Wagners Holding Company Limited.
(f) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of the Company, excluding any costs of servicing equity other
than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial period, adjusted for bonus elements in
ordinary shares issued during the financial period.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of 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 shares assumed to have
been issued for no consideration in relation to dilutive potential ordinary shares.
Inventories
(g)
Inventories are stated at the lower of cost and net realisable value. The cost of manufactured products includes direct costs & direct labour, costs are
assigned on the basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimate
costs of completion and the necessary costs to make the sale.
Intangibles
(h)
Licenses and accreditations acquired as part of a prior business combination are recognised separately from goodwill. The licenses and accreditations
are carried at their fair value at the date of acquisition less accumulated amortisation and impairment losses. Amortisation is calculated based on the
timing of projected cash flows of the contracts over their estimated useful lives, which was estimated at 23 years.
(i) Property, plant and equipment
All property, plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated
impairment. In the event the carrying amount of property, plant and equipment is greater than the estimated recoverable amount, the carrying
amount is written down immediately to the estimated recoverable amount and impairment losses are recognised through profit or loss. A formal
assessment of recoverable amount is made when impairment indicators are present (refer to Note 1(j) for details of impairment).
The carrying amount of property, plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from
these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and
subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion
of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs
and maintenance are recognised as expenses in profit or loss during the financial period in which they are incurred.
Wagners Annual Report 2020
69
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 1 Statement of Significant Accounting Policies (Continued)
(i) Property, plant and equipment (continued)
Depreciation
The depreciable amount of all fixed assets including land improvements & buildings, is depreciated on a straight-line basis over the asset’s useful life to
the Group commencing from the time the asset is held ready for use. Estimated useful lives for each class of depreciable asset are as follows:
Land improvements and buildings
Plant and equipment
Motor vehicles
5–30 years
2–30 years
4–15 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are recognised in profit or loss
in the period in which they arise.
Impairment of non-financial assets
(j)
Non-financial assets are tested at the end of each reporting period for impairment, or more frequently if events or changes in circumstances indicate
that they might be impaired. An impairment test is carried out on an asset by comparing the recoverable amount of the asset, being the higher of the
asset’s fair value less costs of disposal and value in use, to the asset’s carrying amount. Any excess of the asset’s carrying amount over its recoverable
amount is recognised immediately in profit or loss. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units).
(k) Business combinations and goodwill
Business combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the
acquisition method, unless it is a combination involving entities or businesses under common control. The consideration transferred for the acquisition
of a business comprises of the:
»
»
»
»
»
Fair values of the assets transferred;
Liabilities incurred to the former owners of the acquired business;
Equity interests issued by the Group;
Fair value of any asset or liability resulting from a contingent consideration arrangement; and
Fair value of any pre-existing equity interest in the business.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially
at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred and the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less
than the fair value of the net identifiable assets of the business acquired and the measurement of all amounts has been reviewed, the difference is
recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date
of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to
fair value with changes in fair value recognised in profit or loss.
70
Wagners Annual Report 2020
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 1 Statement of Significant Accounting Policies (Continued)
(l) Foreign currency transactions and balances
(i)
The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which it operates.
The consolidated financial statements are presented in Australian dollars, which is Wagners Holding Company Limited’s functional and
presentation currency.
Functional and presentation currency
(ii) Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign
currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the
exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values
were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss. Exchange differences arising on the translation
of non-monetary items are recognised directly in other comprehensive income to the extent that the underlying gain or loss is recognised in other
comprehensive income; otherwise the exchange difference is recognised in profit or loss.
(iii) Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy), whose functional currency
is different from the presentation currency are translated into the presentation currency as follows:
»
»
Assets and liabilities in the statement of financial position are translated at the closing exchange rate at the reporting date of the reporting
period; and
Income and expenses in the statement of profit or loss and other comprehensive income are translated at average exchange rates for the
reporting period.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are recognised in other
comprehensive income and included in the foreign currency translation reserve in the statement of financial position. The cumulative amount of
these differences is reclassified into profit or loss in the period in which the operation is disposed of.
Short-term employee benefits
(m) Employee benefits
(i)
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled wholly within 12 months after the end of
the reporting period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting
period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is presented as provision for
employee benefits. All other short-term employee benefit obligations are presented as payables.
(ii) Other long-term employee benefits
The liabilities for long service leave and annual leave which is not expected to be settled wholly within 12 months after the end of the reporting period
in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected
future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit
method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future
payments are discounted using market yields at the end of the reporting period on corporate bonds with terms and currencies that match, as closely
as possible, the estimated future cash outflows.
The Group’s obligations for long-term employee benefits are presented as non-current provision for employee benefits the consolidated statement
of financial position, except where the Group does not have an unconditional right to defer settlement for at least 12 months after the end of the
reporting period, in which case the obligations are presented as a current provision for employee benefits.
(iii) Retirement benefit obligations
All Australian-resident employees of the Group are entitled to receive a superannuation guarantee contribution, currently 9.5% of the employee’s
average ordinary salary, to the employee’s superannuation fund of choice. All superannuation guarantee contributions are recognised as an expense
when they become payable. All obligations for unpaid superannuation guarantee contributions at the end of the reporting period are measured at
the (undiscounted) amounts expected to be paid when the obligation is settled and are presented as current liabilities in the Group’s statement of
financial position.
Other amounts charged to the financial statements in this respect represents the contribution made by the consolidated entity to employee
retirement benefit funds in other jurisdictions.
Wagners Annual Report 2020
71
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 1 Statement of Significant Accounting Policies (Continued)
(m) Employee benefits (continued)
(iv) Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or when an employee accepts
voluntary redundancy in exchange for these benefits. The Group recognises a liability and expense for termination benefits at the earlier of: (a) the date
when the Group can no longer withdraw the offer of those benefits; and (b) when the Group recognises costs for restructuring pursuant to AASB 137
Provisions, Contingent Liabilities and Contingent Assets and the costs include termination benefits. In either case, unless the number of employees affected
is known, the obligation for termination benefits is measured on the basis of the number of employees expected to be affected. Termination benefits
that are expected to be settled wholly before 12 months after the annual reporting period in which the benefits are recognised are measured at the
(undiscounted) amounts expected to be paid. All other termination benefits are accounted for on the same basis as other long-term employee benefits.
(v) Short-term incentive scheme
The Group recognises a liability and an expense for bonuses based on a formula that takes into consideration the earnings of the entity after certain
adjustments, subject to Board approval.
(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 are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.
(o) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term highly liquid investments with
original maturities of three months or less, and bank overdrafts. Bank overdrafts are reported within borrowings in current liabilities on the statement
of financial position.
(p) Trade and other receivables
Trade and other receivables include amounts due from customers for goods sold and services performed in the ordinary course of business.
Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receivables
are classified as non-current assets.
Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components,
when they are recognised at fair value. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore
measures them subsequently at amortised cost using the effective interest method.
(q) Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the reporting period which are unpaid.
Trade and other payables are presented as current liabilities and are normally paid within 45 days of recognition, unless payment is not due within
12 months after the reporting period where they are recognised as non-current liabilities.
(r) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any
difference between the proceeds and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective
interest method. Borrowing costs on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs.
Borrowings are removed from the consolidated statement of financial position when the obligation specified in the contract is discharged, cancelled
or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the
consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months
after the reporting period.
Borrowing costs incurred for the construction of any qualifying assets are capitalised during the period of time that is required to complete and
prepare the asset for its intended use or sale. Other borrowing costs not previously mentioned are expensed as incurred.
72
Wagners Annual Report 2020
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 1 Statement of Significant Accounting Policies (Continued)
(s) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(t) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Company, on or
before the end of the reporting period but not distributed at the end of the reporting period.
(u) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the
Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to,
the ATO is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from,
or payable to, the ATO are presented as operating cash flows included in receipts from customers or payments to suppliers.
(v) Rounding of amounts
The amounts contained in the financial report have been rounded to the nearest thousand dollars where noted ($’000), or in certain cases the nearest
dollar, under the option available to the Company under ASIC Legislative (Rounding in Financial/Directors’ Reports) Instrument 2016/191. The Company is
an entity to which this legislative instrument applies.
(w) Parent entity financial information
The financial information for the parent entity, Wagner Holding Company Limited, has been prepared on the same basis as the consolidated
financial statements.
(x) New accounting standards for application in future periods
New accounting standards and interpretations have been issued by the AASB that are not yet mandatory for the 30 June 2020 reporting periods and
have not been early adopted by the Group. The Group has assessed the impact of these new standards and interpretations and does not expect that
there would be any material impact on the Group in the current or future reporting periods and on foreseeable future transactions.
2 Segment reporting
AASB 8 Operating Segments requires the Group to identify operating segments and disclose segment information on the basis of internal reports that
are provided to, and reviewed by, the chief operating decision maker of the Group to allocate resources and assess performance. In the case of the
Group, the chief operating decision maker is the Board of Directors.
An operating segment is a component of the Group that engages in business activity from which it may earn revenues or incur expenditure, including
those that relate with other Group components. Each operating segment’s results are reviewed regularly by the Board to make decisions about
resources to be allocated to the segments and assess its performance. The Board monitors the operations of the Group based on the following
two segments:
»
Construction Materials & Services (CMS): supplies a range of construction materials and services predominantly to customers in the
construction, infrastructure, and resources industries. Key products include cement, flyash, ready-mix concrete, precast concrete products,
aggregates and reinforcing steel. Services include mobile concrete, crushing and haulage services, and are typically provided via medium to
long-term contracts both domestically and internationally.
» New Generation Building Materials (NGBM): provides innovative and environmentally sustainable new generation materials. Key products
are Composite Fibre Technology (CFT) materials and Earth Friendly Concrete® (EFC®).
Corporate amounts reflect corporate costs incurred by the Group, as well as the financing and investment activities of the Group.
Segment performance is evaluated based on profit before interest and tax. Inter-segment pricing is determined on an arm’s length basis and
inter-segment revenue is generated from the sales of materials and services between operations.
Allocations of assets and liabilities are not separately identified in internal reporting so are not disclosed in this note.
Wagners Annual Report 2020
73
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 2 Segment reporting (continued)
Reconciliations of reportable segment revenues and profit or loss
Financial year ended 30 June 2020
Segment revenue
Inter-segment elimination
Total revenue for the financial year
Profit before interest & income tax
Finance costs
Interest income
Income tax expense
Loss for the financial year
Financial year ended 30 June 2019
Segment revenue
Inter-segment elimination
Total revenue for the financial year
Profit before interest & income tax
Finance costs
Interest income
Income tax expense
Profit for the financial year
CMS
$’000
NGBM
$’000
CORPORATE
$’000
TOTAL
$’000
217,054
33,835
6
250,895
18,646
2,178
(12,197)
CMS
$’000
NGBM
$’000
CORPORATE
$’000
(1,227)
249,668
8,627
(8,911)
71
196
(17)
TOTAL
$’000
209,902
29,266
284
239,452
30,104
1,760
(7,014)
24,850
(2,564)
236,888
(6,021)
29
(6,079)
12,779
Major customers
The Group has a number of customers to whom it provides both materials and services. The Group supplies two external customers (2019: two) in the
CMS segment who account for 27% of external revenue (2019: 25%).
Geographical information
Refer to note 3(c) for disclosure of geographical information on revenue.
74
Wagners Annual Report 2020
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 Income
3
(a) Revenue from contracts with customers
Sales of goods and services
Sale of services
Total revenue from contracts with customers
CONSOLIDATED GROUP
NOTE
30 JUN 2020
$’000
30 JUN 2019
$’000
163,899
85,769
156,970
79,918
249,668
236,888
There were no partly satisfied performance obligations at the end of the previous reporting period for which revenue was recognised in the current period.
(b) Other income
Profit on sale of property, plant and equipment
Dividends received
Rent and hire received
Gain on bargain purchase
Other income
Total other income
CONSOLIDATED GROUP
NOTE
30 JUN 2020
$’000
30 JUN 2019
$’000
32
321
967
458
355
210
2,103
570
100
–
125
2,311
2,898
(c) Disaggregation of revenue
The Group earns revenue from several geographical location, the net revenue presented below is based on the selling entity.
Australia1
Point-in-time
Over-time
United States of America
Over-time
Papua New Guinea & Malaysia
Point-in-time
Total point-in-time
Total over-time
30 JUN 2020
30 JUN 2019
CMS
$’000
NGBM
$’000
CORPORATE
$’000
CMS
$’000
NGBM
$’000
CORPORATE
$’000
207,427
9,098
17,350
16,244
–
241
529
207,956
9,098
–
17,350
16,485
6
–
–
6
–
198,141
9,503
18,101
9,642
–
1,523
767
198,908
9,503
–
18,101
11,165
284
–
–
–
284
–
1
Australia NGBM has also earned export revenue from several geographical locations in 2020, including New Zealand $1,021,000 (2019: $811,000), United Arab Emirates $2,148,000
(2019: $1,271,000) & United Kingdom $606,000 (2019: $323,000).
Wagners Annual Report 2020
75
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020
4 Profit or loss items
Profit for the following year included the following specific items:
(a) Expenses
Net employee benefits expense (i)
Defined contributions plans (ii)
Performance Rights expense (iii)
Business combination costs (iv)
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
44,276
3,681
112
216
46,650
3,326
–
211
NOTE
26
32
(i)
Net employee benefits has reduced slightly in the period. This excludes the Groups defined contributions paid for its employees (ii) and
performance rights (iii).
(ii) Defined contributions plan is the compulsory superannuation payable on employee salaries and wages.
(iii) Performance rights expense recognised based on probability of vesting conditions being met.
(iv) Costs associated to acquire the Shepton Quarry (Note 32 Business combination) were recognised in the profit or loss in FY20.
(b) Net finance costs
Interest income
Interest costs and facility fees
Other finance costs/(income)
5
(a)
Income tax
Income tax expense
The components of income tax expense comprise:
Current tax on profits for the year
Adjustments for current tax of prior periods
Deferred tax expense/(benefit)
76
Wagners Annual Report 2020
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
(71)
5,468
(193)
5,204
(29)
6,021
–
5,992
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
1,165
5
(1,366)
(196)
5,755
1,298
(974)
6,079
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 Income tax (Continued)
5
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit from continuing activities before income tax expense
Prima facie tax payable using Australian tax rate of 30% (2019: 30%)
Adjusted for:
Net taxable impact of tax consolidation transition
Difference between Australian and overseas tax rates
Taxable losses not recognised as DTA
Business combination tax impacts
Other net non-deductible/(non-assessable) items
Under/(over) provision from prior years
Income tax expense
(c) Tax amounts recognised directly in equity
The following deferred tax amounts were (charged)/credited directly to equity during the year in respect of:
Net exchange difference taken to equity
Listing costs attributed to share capital
Recognised in comprehensive income
6 Cash and cash equivalents
Cash on hand
Cash at bank
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
(213)
(64)
–
43
78
(43)
(122)
(88)
(196)
18,858
5,657
412
29
–
–
(41)
22
6,079
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
–
189
189
–
–
–
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
6
3,430
3,436
6
6,095
6,101
Wagners Annual Report 2020
77
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020
7 Trade and other receivables
Current
Trade receivables
Provision for expected credit loss of trade receivables
Contract assets (i)
Other receivables
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
48,050
(844)
35,531
(299)
47,206
35,232
1,110
7,270
6,823
606
55,586
42,661
(i)
Contract assets has decreased due to the Group’s prior recognition of revenue over time under AASB 15 Revenue from contracts with customers
and the completion of the Group’s contracts for the fabrication, construction and installation of concrete batch plants in the financial year ended
30 June 2020.
(a) Provision for expected credit losses of trade receivables
Movement in the allowance for expected credit losses of trade receivables is as follows:
Balance at beginning of period
Impairment expense/(credit) recognised during the year
Receivables (written off )/recouped during the year as uncollectable
Balance at end of period
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
299
545
–
844
578
(119)
(160)
299
(b) Ageing of trade receivables and contract assets
Due to the short-term nature of current receivables, their carrying amount is assumed to approximate their fair value.
The Group has considered the collectability and recoverability of trade receivables. An allowance for expected credit loss is recognised for the specific
irrecoverable trade receivable amounts. The ageing of trade receivables are outlined for the current and prior financial periods as follows:
TRADE RECEIVABLE AGEING AS AT 30 JUNE 2020
Current
1 to 30
31 to 60
61 to 90
90+
Contract assets
Balance at end of period
78
Wagners Annual Report 2020
CONSOLIDATED GROUP
GROSS TRADE
RECEIVABLE
AND CONTRACT
ASSET
$’000
LOSS
ALLOWANCE
$’000
42,734
3,458
530
314
1,014
1,110
49,160
214
35
26
62
507
–
844
EXPECTED
LOSS RATE
0.5%
1.0%
5.0%
20.0%
50.0%
0%
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020
7 Trade and other receivables (Continued)
(b) Ageing of trade receivables and contract assets (Continued)
TRADE RECEIVABLE AGEING AS AT 30 JUNE 2019
Current
1 to 30
31 to 60
61 to 90
90+
Contract assets
Balance at end of period
CONSOLIDATED GROUP
GROSS TRADE
RECEIVABLE
AND CONTRACT
ASSET
$’000
LOSS
ALLOWANCE
$’000
32,645
1,316
1,201
15
55
6,823
42,055
163
13
60
3
27
33
299
EXPECTED
LOSS RATE
0.5%
1.0%
5.0%
20.0%
50.0%
0.5%
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade
receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and
the days past due. The contract assets relate to the Group’s right to consideration for performance complete to date before payment is due and
have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that
the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.
The expected loss rates are based on the payment profiles of sales over the last 3 years. The historical loss rates are adjusted to reflect current and
forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The Group has identified the
GDP, country specific unemployment rates and the outlook for customer industries as the most relevant factors, and accordingly adjusts the historical
loss rates based on expected changes in these factors.
While the COVID-19 situation remains fluid and has seen a number of industries severely economically impacted, the Group has not adjusted its
expected loss rate in the financial year ended 30 June 2020 due to it seeing no current trend with its customers extending outside payment terms.
In addition, the Group foresees significant Government backed spending in the construction and infrastructure sectors in the coming financial periods.
Trade receivables and contract assets are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable
expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make
contractual payments for a period of greater than 120 days past due.
Impairment losses on trade receivables and contract assets are presented as net impairment losses. Subsequent recoveries of amounts previously
written off are credited against the same line item.
8
Inventories
At cost
Raw materials and stores
Work in progress
Finished goods
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
19,725
940
1,090
14,904
1,973
2,638
21,755
19,515
The Group recognised $77,365,000 of inventory through profit or loss for the financial year ending 30 June 2020 (2019: $63,860,000).
Wagners Annual Report 2020
79
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 9 Property, plant and equipment
Land improvements & buildings
Land improvements & buildings – at cost
Less accumulated depreciation
Plant & equipment
Plant & equipment – at cost
Less accumulated depreciation
Motor vehicles
Motor vehicles – at cost
Less accumulated depreciation
Assets under construction – at cost
Total property, plant & equipment
(a) Movements in carrying amounts
FINANCIAL YEAR ENDED 30 JUNE 2020
$’000
Opening net book value
Additions
Transfers from asset under construction
Business combination assets
Depreciation
Disposals
LAND
IMPROVEMENTS
AND BUILDINGS
14,776
406
42
155
(671)
–
Closing net book value
14,708
FINANCIAL YEAR ENDED 30 JUNE 2019
$’000
Opening net book value
Additions
Transfers from under construction
Business combination assets
Depreciation
Disposals
LAND
IMPROVEMENTS
AND BUILDINGS
15,022
370
–
–
(616)
–
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
19,722
(5,014)
19,119
(4,343)
14,708
14,776
155,570
137,695
(68,398)
87,172
52,272
(21,296)
30,976
10,846
(61,152)
76,543
43,137
(16,848)
26,289
5,912
143,702
123,520
5,912
5,826
(892)
–
–
–
1,236
5,886
(1,210)
–
–
–
TOTAL
123,520
30,536
–
4,274
(14,049)
(579)
TOTAL
111,807
28,074
–
781
(12,942)
(4,200)
PLANT AND
EQUIPMENT
MOTOR VEHICLES
ASSETS UNDER
CONSTRUCTION
76,543
13,935
850
4,052
(7,784)
(424)
87,172
26,289
10,369
–
67
(5,594)
(155)
30,976
77,666
7,598
1,210
572
(7,455)
(3,048)
17,883
14,220
–
209
(4,871)
(1,152)
26,289
10,846
143,702
PLANT AND
EQUIPMENT
MOTOR VEHICLES
ASSETS UNDER
CONSTRUCTION
Closing net book value
14,776
76,543
5,912
123,520
As at 30 June 2020 the value of the Group’s assets pledged as security was $31,083,000 (2019: $29,370,000).
80
Wagners Annual Report 2020
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 10 Right-of-use assets
Property, Plant and Equipment
Property, Plant and Equipment
Less accumulated depreciation
Total right-of-use assets
(a) Movements in carrying amounts
FINANCIAL YEAR ENDED 30 JUNE 2020
$’000
Opening net book value
Recognition on initial application
Additions
Modifications
Depreciation to profit or loss
Closing net book value
11 Intangible assets
Licenses
Licenses – at cost
Less accumulated amortisation
Total intangible assets
(a) Movements in carrying amounts
FINANCIAL YEAR ENDED 30 JUNE 2020
$’000
Opening net book value
Amortisation
Closing net book value
FINANCIAL YEAR ENDED 30 JUNE 2020
$’000
Opening net book value
Additions
Amortisation
Closing net book value
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
97,310
(4,821)
92,489
LAND &
BUILDINGS
–
76,484
20,826
–
(4,821)
92,489
–
–
–
TOTAL
–
76,484
20,826
–
(4,821)
92,489
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
2,740
(219)
2,521
2,521
LICENSES
2,638
(117)
2,521
LICENSES
–
2,740
(102)
2,638
2,740
(102)
2,638
2,638
TOTAL
2,638
(117)
2,521
TOTAL
–
2,740
(102)
2,638
Wagners Annual Report 2020
81
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 12 Deferred tax assets and liabilities
(a) Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
$’000
Inventories
Property, plant & equipment
Expected credit loss
Employee benefits
Derivative financial instruments
Provisions
Leases
Contract liabilities
Contract assets
Other items
Deferred tax assets/(liabilities)
Set off deferred taxes
Net deferred tax assets
ASSETS
LIABILITIES
NET ASSETS/(LIABILITIES)
30 JUN 2020
30 JUN 2019
30 JUN 2020
30 JUN 2019
30 JUN 2020
30 JUN 2019
38
1,123
253
1,978
1,573
65
28,630
500
–
1,496
35,656
(28,937)
6,719
68
1,593
89
1,747
1,300
121
–
–
–
1,881
6,799
(1,257)
5,542
(233)
(408)
–
–
–
(427)
–
(27,747)
–
(297)
(233)
(28,937)
28,937
–
–
–
–
(653)
–
–
–
–
(196)
(1,257)
1,257
–
(195)
1,123
253
1,978
1,146
65
883
500
(297)
1,263
6,719
–
6,719
(b) Movement in temporary difference during the year
The movement in deferred tax balances for the Group are shown in the tables below:
OPENING
BALANCE
CHARGED TO
INCOME
CHARGED TO
EQUITY
EXCHANGE
DIFFERENCES
(340)
1,593
89
1,747
647
121
–
–
–
1,685
5,542
145
(470)
164
231
499
(56)
883
500
(297)
(233)
1,366
–
–
–
–
–
–
–
–
–
(189)
(189)
–
–
–
–
–
–
–
–
–
–
–
YEAR ENDED 30 JUNE 2020
$’000
Inventories
Property, plant & equipment
Expected credit loss
Employee benefits
Derivative financial instruments
Provisions
Leases
Contract liabilities
Contract assets
Other items
Net deferred tax assets
82
Wagners Annual Report 2020
(340)
1,593
89
1,747
647
121
–
–
–
1,685
5,542
–
5,542
CLOSING
BALANCE
(195)
1,123
253
1,978
1,146
65
883
500
(297)
1,263
6,719
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 12 Deferred tax assets and liabilities (continued)
(b) Movement in temporary difference during the year (continued)
YEAR ENDED 30 JUNE 2020
$’000
Inventories
Property, plant & equipment
Expected credit loss
Employee benefits
Derivative financial instruments
Provisions
Other items
Net deferred tax assets
13 Trade and other payables
Trade payables
Contract liabilities1
Sundry payables and accrued expenses2
OPENING
BALANCE
CHARGED TO
INCOME
CHARGED TO
EQUITY
EXCHANGE
DIFFERENCES
CLOSING
BALANCE
(340)
45
173
1,545
953
71
2,121
4,568
–
1,548
(84)
202
(306)
50
(436)
974
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(340)
1,593
89
1,747
647
121
1,685
5,542
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
10,797
1,665
21,113
33,575
14,336
–
13,906
28,242
The carrying amounts of trade and other payable are presumed to be at their fair values due to their short-term nature.
1
2
Contract liabilities have increased due to the CFT and Precast Concrete divisions receiving advanced payments as part of a number of secured contracts, totaling $1,385,000 and
$280,000 respectively.
The Groups sundry payables and accrued expenses has increased significantly as at 30 June 2020, and can be broken up into the following overarching categories:
Accrued expenses
Goods Received Not Invoiced payables
GST/VAT payables
Payroll accruals and payables3
30 JUN 2020
$’000
30 JUN 2019
$’000
8,060
5,822
2,935
4,296
3,915
5,228
1,643
3,120
21,113
13,906
3
As part of COVID-19 support the QLD Office of State Revenue granted payment deferral for a number of monthly payroll tax liabilities, allowing full payment of liabilities upon
submission of Annual Payroll Tax Return.
Wagners Annual Report 2020
83
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 14 Borrowings
Current
Secured liabilities
Finance facility
Chattel mortgages
Non-current
Secured liabilities
Finance facility
Chattel mortgages
Total current and non-current secured liabilities:
Finance facility1
Chattel mortgages2
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
7,050
11,665
18,715
56,500
11,259
64,277
63,550
22,924
86,474
6,000
8,673
14,673
74,000
7,749
81,749
80,000
16,422
96,422
1
2
As announced on 29 June 2020 via release to the ASX, the Group secured an extension with its current banks NAB & HSBC to its existing finance facilities, with an expiry date of
8 January 2022.
The products within the finance facility bear interest at the Bank Bill Swap Rate plus a predetermined margin.
Rates vary across the two club banks who cover the Groups finance facilities, and are affected by a number of factors including prior covenant ratios, date range within the facility
agreements and the sub-facility being utilised.
Along with its two existing fixed charge cover ratio and debt to EBITDA ratio covenants, as part of the extended facility agreement the Group must also adhere to a capitalisation
ratio covenant. All covenants have been complied with during the financial years ended 30 June 2020 & 30 June 2019.
A general security interest has been granted to NAB as security trustee, over all of the assets and undertakings of the Company. In addition, mortgages have been granted over
each of the real property leases.
The Group enters into agreements to fund certain plant and equipment purchases; these are assessed on a case by case basis. The underlying plant and equipment is held as
security over each Chattel mortgage until repayments are made in full.
15 Lease liabilities (Right of use Assets)
CONSOLIDATED GROUP
NOTE
30 JUN 2020
$’000
30 JUN 2019
$’000
Current
Lease liabilities
Non-current
Lease liabilities
Total current and non-current lease liabilities
22(b)
2,372
93,061
95,433
–
–
–
84
Wagners Annual Report 2020
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020
15 Lease liabilities (Right of use Assets) (CONTINUED)
(a) Movements in carrying amounts
FINANCIAL YEAR ENDED 30 JUNE 2020
$’000
Opening net book value
Recognition on initial application
Additions
Interest expense
Lease repayments
Closing net book value
(b) Amounts recognised in profit or loss
Interest expense on lease liabilities
Rent & hire expense – low value assets
Rent & hire expense – short-term
Total
TOTAL
–
76,484
20,826
3,636
(5,513)
95,433
CONSOLIDATED GROUP
NOTE
30 JUN 2020
$’000
30 JUN 2019
$’000
3,636
7
4,543
8,186
–
–
–
–
(c) Extension options
Extension options are included in a number of premises leases across the Group, these are used to maximise operational flexibility in terms of
managing assets in the Group’s operations. In determining the lease term, the Group considers all facts and circumstances available at the time.
Extension options are only included in the lease term if the lease is reasonably certain to be extended.
The majority of the Groups premises leases still have a considerable number of years left until expiry, as such no extension options on premises leases
have been included in the calculation of lease liabilities.
16 Derivative instruments
30 JUNE 2020
30 JUNE 2019
NOTE
CURRENT
$’000
NON‑CURRENT
$’000
CURRENT
$’000
NON‑CURRENT
$’000
Assets
Foreign exchange forward contracts
Liabilities
Foreign exchange forward contracts
Interest rate swap contracts
Total derivative assets/(liabilities)
23
Total movement in Derivatives recognised through Profit or Loss
216
(1,266)
(1,949)
(3,215)
(2,999)
(1,065)
–
–
(2,029)
(2,209)
(2,029)
368
(67)
(1,407)
(1,474)
(1,106)
(787)
–
–
(2,856)
(2,856)
(2,856)
Wagners Annual Report 2020
85
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 17 Provisions
(a) Provision balances
Current
Employee benefits (i)
Other (ii)
Non-current
Employee benefits (i)
Total Provision
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
5,271
1,147
6,418
439
6,857
4,600
548
5,148
370
5,518
(i) Provision for employee benefits represents amounts accrued for annual leave and long service leave.
The current portion for this provision includes the total amount accrued for annual leave entitlements and the amounts accrued for long service
leave entitlements that have vested due to employees having completed the required period of service. Based on past experience, the Group does
not expect the full amount of annual leave or long service leave balances classified as current liabilities to be settled within the next 12 months.
However, these amounts must be classified as current liabilities since the Group does not have an unconditional right to defer the settlement of
these amounts in the event employees wish to use their leave entitlement.
The non-current portion for this provision includes amounts accrued for long service leave entitlements that have not yet vested in relation to
those employees who have not yet completed the required period of service.
In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based on
historical data and the expected future payments are discounted using market yields at the end of the reporting period of corporate bonds with
terms and conditions which match, as closely as possible, the estimated future cash outflows. The measurement and recognition criteria relating
to employee benefits have been discussed in Note 1(m).
(ii)
Other provisions is predominantly made up of $923,000 balance estimated to be paid to a partner university as part of an CFT R&D grant funding
agreement once certain conditions and requirements are met.
(b) Movements in provisions
YEAR ENDED 30 JUNE 2020
$’000
Opening balance
Charged to profit and loss
Amounts used during the period
Closing balance
YEAR ENDED 30 JUNE 2019
$’000
Opening balance
Charged to profit and loss
Amounts used during the period
Closing balance
86
Wagners Annual Report 2020
EMPLOYEE
BENEFITS
4,970
4,017
(3,277)
5,710
EMPLOYEE
BENEFITS
3,716
3,650
(2,396)
4,970
OTHER
548
599
–
1,147
OTHER
237
311
–
548
TOTAL
5,518
4,616
(3,277)
6,857
TOTAL
3,953
3,961
(2,396)
5,518
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020
18 Issued capital
(a) Share capital
Ordinary shares
(b) Movement in share capital
DATE
1 July 2018
30 June 2019
22 November 2019
22 November 2019
30 June 2020
30 JUN 2020
SHARES
30 JUN 2019
SHARES
30 JUN 2020
$’000
30 JUN 2019
$’000
187,196,887
161,375,590
410,915
371,334
DETAILS
Opening balance
No transactions in the 2019 financial year
Closing balance
NO. OF SHARES
$’000
161,375,590
371,334
–
–
161,375,590
371,334
Shares issued – renounceable entitlement offer (i)
25,821,297
Renounceable entitlement offer costs – net of tax
–
40,023
(442)
Closing balance
187,196,887
410,915
(i)
On 29 October 2019 the Company issued a notice for a fully underwritten renounceable entitlement offer to its shareholders entitling them to
subscribe for 1 new ordinary share for every 6.25 existing ordinary shares held, at a price of $1.55. As the entitlement offer was fully underwritten,
all 25,821,297 ordinary shares available as part of the entitlement offer were issued on 22 November 2019.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
(c) Other securities issued
As part of the previously disclosed Long Term Incentive Plan (Omnibus Incentive Plan) for Company employees, the Company issued 657,095 options
on 20 December 2019 with more information to be found in Note 26.
(d) Pre IPO distributions of equity
Prior to listing on the ASX, transactions with other entities within the previous consolidated Group were recognised as a distribution of equity to
related parties.
(e) Capital risk management
The Board’s policy is to maintain a strong capital base as to maintain investor, creditor and market confidence and to sustain future development of
the business. Capital consists of ordinary shares and retained earnings of the Group. The Board of Directors monitors the return on capital as well as
considers the potential of future dividends to ordinary shareholders. The Board seeks to maintain a balance between the higher returns that might
be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.
19 Reserves
Share based payment reserve
Foreign exchange reserve
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
112
(271)
(159)
–
(397)
(397)
Wagners Annual Report 2020
87
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 17 Reserves (Continued)
(a) Movement in each class of reserve
Share based payment reserve
Opening balance
Share based payments fair value recognised in profit or loss
Closing balance
Foreign exchange reserve
Opening balance
Exchange differences on translation of foreign operations, net of tax
Closing balance
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
–
112
112
(397)
126
(271)
–
–
–
(371)
(26)
(397)
(b) Details of reserves
(i)
The share based payment reserve arises on the grant of performance rights to executives under the Long Term Incentive Plan (LTI). Further information
about LTI is made in note 26 to the financial statements. The Group settled the Wagner Limited Employee Share Trust to manage the share option plan.
Share based payment reserve
(ii) Foreign exchange reserve
The foreign currency translation reserve records exchange differences arising on the translation of foreign controlled subsidiaries, as described in note 1(l).
20 Dividends
(a) Dividends paid
No final fully franked dividend paid during the year (2019: 3.5c per share)
No fully franked interim dividend paid during period (2019: 2.2c per share)
(b) Dividends proposed
There are no dividends proposed to be paid as at the date of this report.
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
–
–
–
5,648
3,550
9,198
(c) Franking credits
The franking account balance available to the shareholders of the Company at year-end is $10,750,000 (2019: $6,061,000). This balance includes
adjustments made for franking credits arising from the payment of estimated provision for 2020 income tax.
88
Wagners Annual Report 2020
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 21 Earnings per share
EARNINGS USED IN CALCULATING EARNINGS PER SHARE
Profit attributable to the ordinary equity holders of the Company
WEIGHTED AVERAGE NUMBER OF SHARES USED AS DENOMINATOR
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustment for calculation of diluted EPS:
Performance rights on issue
Weighted average number of ordinary and potential ordinary shares used in calculating diluted
earnings per share
BASIC & DILUTED EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
22 Cash flow information
(a) Reconciliation of cash flow from operation with profit after income tax
Profit after income tax
Non-cash flows in profit
Depreciation of property, plant & equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Fair value adjustment on derivative instruments
Net (gain)/loss on disposal of non-current assets
Performance rights
Gain on bargain purchase
Changes in operating assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in other assets
(Increase)/decrease in inventories
Increase/(decrease) in trade and other payables
Increase/(decrease) in income taxes payable
Increase/(decrease) in deferred taxes payables
Increase/(decrease) in provisions
Net cash provided by operating activities
30 JUN 2020
$’000
30 JUN 2019
$’000
(17)
12,779
30 JUN 2020
NO.’000
30 JUN 2019
NO.’000
176,967,138
161,375,590
657,095
–
177,624,233
161,375,590
30 JUN 2020
CENTS
30 JUN 2019
CENTS
(0.0)
(0.0)
7.9
7.9
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
(17)
12,779
14,049
12,942
4,821
117
1,066
(321)
112
(355)
(12,924)
(94)
(2,083)
3,310
(6,700)
(1,177)
1,337
1,141
–
102
787
(2,016)
–
–
641
18
(2,654)
395
399
(884)
1,472
23,981
Wagners Annual Report 2020
89
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020
22 Cash flow information (Continued)
(b) Reconciliation of financial liabilities to cash flows from financing activities
YEAR ENDED 30 JUNE 2020
$’000
Opening balance
Cash inflows
Cash outflows
Non-cash flows in financial liabilities
Fair value change in derivatives
Lease liability recognition
Closing balance
YEAR ENDED 30 JUNE 2019
$’000
Opening balance
Cash inflows
Cash outflows
Non-cash flows in financial liabilities
Fair value change in derivatives
Closing balance
HIRE
PURCHASE
AND CHATTEL
MORTGAGES
16,422
16,943
LEASE
LIABILITIES
–
–
FINANCE
FACILITY
80,000
–
(1,877)
(10,441)
(16,450)
–
–
–
–
97,310
95,433
DERIVATIVES
HELD TO
HEDGE
BORROWINGS
4,330
–
–
914
–
TOTAL
100,752
16,943
(28,768)
914
97,310
22,924
63,550
5,244
187,151
HIRE PURCHASE
AND CHATTEL
MORTGAGES
12,641
14,838
(11,057)
–
FINANCE
FACILITY
68,000
12,000
–
–
16,422
80,000
DERIVATIVES
HELD TO HEDGE
BORROWINGS
3,648
–
–
682
4,330
TOTAL
84,289
26,838
(11,057)
682
100,752
23 Fair value measurements
The Group measures and recognises certain financial assets and liabilities at fair value on a recurring basis after initial recognition, currently being
only derivative financial instruments. The Group subsequently does not measure any other assets or liabilities at fair value on a non-recurring basis.
(a) Fair value hierarchy
AASB 13: Fair Value Measurement requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value
measurements into one of three possible levels as follows:
»
»
Level 1: measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date.
Level 2: measurements based on inputs, other than quoted prices in active markets (Level 1), which are observable for the asset or liability,
either directly or indirectly. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2.
»
Level 3: measurements based on inputs for the asset or liability that are not based on observable market data (unobservable inputs).
(b) Estimation of fair values
The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value.
The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured. The valuation
techniques selected by the Group are consistent with one or more of the following valuation approaches:
» Market approach: valuation techniques that use prices and other relevant information generated by market transactions for identical or similar
assets or liabilities.
»
»
Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a single discounted present value.
Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service capacity.
90
Wagners Annual Report 2020
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020
23 Fair value measurements (continued)
(b) Estimation of fair values (continued)
Fair value techniques and inputs are summarised as follows:
DESCRIPTION
FAIR VALUE HIERARCHY
Derivative instruments
Level 2
(c) Recurring fair value measurements
As at 30 June 2020
Interest rate swap contracts
Foreign exchange forward contracts
As at 30 June 2019
Interest rate swap contracts
Foreign exchange forward contracts
NOTE
16
NOTE
16
16
16
16
VALUATION TECHNIQUE
Income approach using discounted cash flow methodology.
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
TOTAL
$’000
–
–
–
–
–
–
(3,978)
(1,050)
(5,028)
(4,263)
301
(3,962)
–
–
–
–
–
–
(3,978)
(1,050)
(5,028)
(4,263)
301
(3,962)
There were no transfers between fair value hierarchies during the current and previous financial years.
24 Financial risk management
The Group's activities expose it to a variety of financial risks: credit risk, liquidity risk, and market risk consisting of interest rate risk, foreign currency
risk and other price risk (commodity and equity price risk). The Group's overall risk management program focuses on the unpredictability of financial
markets and seeks to minimize potential adverse effects on the financial performance of the Group. The Group uses different methods to measure
different types of risk to which it is exposed.
Risk management is carried out by a central finance department. Finance identifies, evaluates and hedges financial risks in close co-operation
with the Group's operating units. Finance provides overall risk management, covering specific areas, such as foreign exchange risk, interest rate
risk, credit risk, use of derivative financial instruments and non-derivative financial instruments in accordance with the Group’s facilities agreement
and company policies.
The Group uses derivative financial instruments such as foreign exchange forward contracts and interest rate swaps to hedge certain risk exposures.
Derivatives are exclusively used for economic hedging purposes and not as trading or speculative instruments. These derivatives are not designated
hedges and the Group has therefore not applied hedge accounting. The Group uses different methods to measure different types of risk to which it is
exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, and aging analysis for credit risk.
(a) Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead
to a financial loss to the Group.
Credit risk is managed through the maintenance of procedures such as the utilisation of systems for the approval, granting and renewal of credit limits,
regular monitoring of exposures against such limits and monitoring of the financial stability of significant customers and counterparties; ensuring to
the extent possible that customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables
for impairment.
Where the Group is unable to ascertain a satisfactory credit risk profile in relation to a customer or counterparty, these customers may be required
to pay upfront, or the risk may be further managed through obtaining security by way of personal or commercial guarantees over assets of sufficient
value which can be claimed against in the event of any default.
Wagners Annual Report 2020
91
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 24 Financial risk management (continued)
(a) Credit risk (continued)
Credit risk exposures
The maximum exposure to credit risk at the end of the reporting period is equivalent to the carrying amount of trade receivables and cash and cash equivalents.
The Group does not consider there to be any significant concentration of credit risk with any single/or group of customers. The Group derives revenue from two
key customers (2019: two), which accounted for 27% of revenue for the financial year ended 30 June 2020 (2019: 25%). Trade and other receivables that are neither
past due nor impaired are considered to be of high credit quality, aggregates of such amounts are detailed in note 7.
(b) Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to
financial liabilities. The Group manages this risk through the following mechanisms:
»
preparing forward-looking cash flow analyses in relation to its operating, investing and financing activities;
» monitoring undrawn credit facilities;
»
obtaining funding from a variety of sources;
» maintaining a reputable credit profile;
» managing credit risk related to financial assets;
»
»
only investing surplus cash with major financial institutions; and
comparing the maturity profile of financial liabilities with the realisation profile of financial assets.
The table below reflects an undiscounted contractual maturity analysis for financial liabilities. Bank overdrafts have been deducted in the analysis
as management does not consider there is any material risk of termination of such facilities. Financial guarantee liabilities are treated as payable on
demand since the Group has no control over the timing of any potential settlement of the liabilities. The table include both interest and principal
cash flows and therefore the total may different from their carrying amount in the balance sheet.
WITHIN 1 YEAR
$’000
1 TO 5 YEARS
$’000
OVER 5 YEARS
$’000
TOTAL
$’000
33,575
3,215
12,235
7,050
6,458
–
2,029
11,606
56,500
22,040
–
–
–
–
33,575
5,244
23,841
63,550
149,683
178,181
62,533
92,175
149,683
304,391
28,242
1,474
8,673
6,000
44,389
–
2,856
7,749
74,000
84,605
–
–
–
–
–
28,242
4,330
16,422
80,000
128,994
As at 30 June 2020
Trade and other payables
Derivative financial liabilities
Chattel mortgages
Finance facility
Lease liabilities
As at 30 June 2019
Trade and other payables
Derivative financial liabilities
Chattel mortgages
Finance facility
92
Wagners Annual Report 2020
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 24 Financial risk management (Continued)
(b) Liquidity risk (continued)
At the end of each reporting period the Group had access to the following undrawn borrowing facilities:
Expiring within one year
Expiring beyond one year
AS AT 30 JUNE 2020
AS AT 30 JUNE 2019
DRAWN
$’000
–
63,550
63,550
AVAILABLE
$’000
–
45,950
45,950
DRAWN
$’000
–
80,000
80,000
AVAILABLE
$’000
–
60,000
60,000
(c) Market risk
(i)
The Group’s main exposure to interest rate risk is long-term borrowings. Borrowings issued at variable rates, expose the Group to cash flow interest rate
risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk if the borrowings are carried at fair value.
Interest rate risk
Interest rate risk is managed using a mix of fixed and floating rate debt and the Group enters into interest rate swaps to convert the majority of debt
to fixed rate. At 30 June 2020 78.7% (2019: 62.5%) of Group debt is at a fixed rate. It is the policy of the Group going forward to keep between 50% and
100% of debt on fixed interest rates.
Interest rate swaps
The Group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Under these swaps, the Group agrees with other
parties to exchange, at specified intervals, the difference between fixed contract rates and floating rate interest amounts calculated by reference to
the agreed notional principal amounts.
The notional principal amounts of the swap contracts approximate the Group’s borrowing facilities, as described above. The net interest payment,
or receipt settlements of the swap contracts occur every 30 to 90 days and correspond with interest payment dates on the borrowings.
At the end of the reporting period, the Group had the following outstanding interest rate swap contracts:
Interest rate swaps
NOTIONAL PRINCIPLE AMOUNT
30 JUN 2020
$’000
30 JUN 2019
$’000
50,000
50,000
INTEREST
RATES
3.78%
Sensitivity analysis
The following table illustrates sensitivities to the Group’s exposures to changes in interest rates. Profit or loss is sensitive to the change in interest rates
from higher/lower interest income from cash and cash equivalents, and also the increase/decrease in fair value of derivative instruments as they are
designated fair value through profit or loss, per note 1(j).
+100bp variability in interest rate
-100bp variability in interest rate
IMPACT ON POST TAX PROFIT
30 JUN 2020
$’000
30 JUN 2019
$’000
239
(239)
573
(573)
Wagners Annual Report 2020
93
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 24 Financial risk management (Continued)
(c) Market risk (continued)
(ii) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures.
The Group is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales & purchases are denominated and
the respective functional currencies of Group companies. The functional currencies of Group companies is primarily the Australian dollar (AUD), with
currently minor subsidiaries operating in United States dollars (USD) & Malaysian ringgit (RM).
Foreign exchange forward contracts
At any point in time, the Group hedges 60% to 100% of its estimated foreign currency exposure in respect of forecast purchases in US Dollars (USD),
being the main exposure, over the following 12 months. The Group uses forward exchange contracts to hedge its currency risk. These contracts
commit the Group to buy and sell specified amounts of foreign currencies in the future at specified exchange rates, most have a maturity of less than
1 year from the reporting date. The Groups current foreign subsidiaries operations is collectively immaterial, and so the Group does not hedge against
these foreign currency exposures.
The following table summarises the notional amounts of the Group’s commitments in relation to foreign exchange forward contracts.
Buy USD/sell AUD
Settlement within six months
Settlement between six and twelve months
NOTIONAL AMOUNT
AVERAGE EXCHANGE RATES
30 JUN 2020
$’000
30 JUN 2019
$’000
30 JUN 2020
$
30 JUN 2019
$
3,000
3,000
6,000
4,104
1,500
5,604
0.7016
0.7050
0.7033
0.7307
0.7210
0.7281
Sensitivity analysis
The following table illustrates sensitivities to the Group’s exposures to changes in foreign exchange rates. Profit or loss is sensitive to the change in
foreign exchange rates from purchases, and also the change in fair value of derivative instruments as they are designated fair value through profit
or loss, per note 1(j).
+10% AUD/USD exchange rate
-10% AUD/USD exchange rate
IMPACT ON POST‑TAX PROFIT
30 JUN 2020
$’000
30 JUN 2019
$’000
684
(684)
516
(516)
(iii) Other price risk
Other price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices
largely due to demand and supply factors (other than those arising from interest rate risk or currency risk) for commodities.
The Group's exposure to commodity price risk arises from commercial transactions required for the operations of the business. To manage its
commodity price risk the Group enters into fixed price contracts with its main suppliers for raw materials in its cement business. There are no derivative
asset or liabilities in relation to commodity prices at year end, and so any commodity price movement would not impact reported profit for the year
ended 30 June 2020.
94
Wagners Annual Report 2020
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 25 Related party transactions
(a) Parent entity
Wagners Holding Company Limited is the Group’s ultimate parent entity.
(b) Controlled entities
Interests in controlled entities are set out in Note 27.
(c) Key management personnel
Compensation of key management personnel during the years was as follows:
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Termination benefits
Share based payments
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
1,354,749
1,425,671
49,452
11,692
–
37,737
42,819
–
–
–
1,453,631
1,514,555
Further disclosures relating to key management personnel compensation are set out in the Remuneration report, that can be found on pages 54 to 60
of the Directors’ Report.
No loans have been provided to key management personnel by the Group throughout the financial year.
(d) Transactions with other related parties
Directors and related parties
All transactions between the Group and any Director and their related parties are conducted on the basis of normal commercial trading terms and
conditions as agreed upon between the parties as per normal arm’s length business transactions. Such transactions and amounts owed or owing
with Director and their related parties are detailed as follows:
DESCRIPTION
Sale of materials and services1
Indemnity of losses on onerous contract
On charge of costs processed by the Group
Shared service agreement2
Gain on sale of property, plant & equipment3
2020
REVENUE/
(COSTS)
$
2020
OWED/
(OWING)
$
2019
REVENUE/
(COSTS)
$
2019
OWED/
(OWING)
$
7,937,690
67,701
10,328,126
8,269,078
–
5,342
–
–
–
–
–
–
231,941
150,804
185,043
1,664,873
–
1,098
–
–
Payments for rent of property and plant, material royalties & other
(8,083,706)
(138,447)
(8,001,788)
(365,664)
Totals
(140,674)
(70,746)
4,558,999
7,904,512
1
2
3
The sale of materials and services included amounts recognised over time under AASB 15 for contracts to fabricate, construct and install concrete batch plants on sites owned by
related parties. These were all sold within the 2020 financial year, as such there were no Contract Assets or balances owing from the batch plant sales on the Groups balance sheet
as at 30 June 2020.
The Group, as per the prospectus, had a shared service agreement with a related entity for shared resources & employees for a 12 month transition period from the IPO date.
These shared services were charged to the related entity monthly using a number of internal business drivers and conducted on the basis of normal commercial trading terms
and conditions as agreed between the parties. They expired last financial year.
The Group entered into a sale and leaseback contract to upgrade existing concrete batch plant assets owned by the Group and install these assets on a site owned by a related
party, which the Group has subsequently leased back. The contract price for the total works of this sale (including associated site improvements and installation) was externally
valuated at $6,250,000. The lease is at applicable market rates.
Wagners Annual Report 2020
95
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 26 Share based payments
The Company adopted a new long-term incentive plan in connection with its admission to the ASX, the Omnibus Incentive Plan (LTI).
Performance rights are issued under the LTI, and it provides senior executives to receive a number of options, as determined by the Board, over
ordinary shares. Options issued under the LTI will be subject to performance conditions that are detailed below.
The Remuneration Committee consider this equity performance-linked remuneration structure to be appropriate as senior executives only receive a
benefit when there is a corresponding direct benefit to shareholders.
Expense recognised through Profit or Loss
The total expense for share based payment recognised through Profit or Loss for the financial year 30 June 2020 was $111,586. The expense was calculated
based on the probability of vesting conditions being met and the fair value of options granted. There were vesting conditions met this financial year.
Overall Options movement
Details of performance options issued, vested and expired during the financial year are set out below:
VESTING DATE
TRANCHE
VESTING
CONDITIONS
PERFORMANCE
PERIOD1
31 August 2022
31 August 2021
31 August 2020
3
2
1
EPS
EPS
EPS
3 years
2 years
1 year
MOVEMENTS
1 JULY 2019
ISSUED
EXERCISED
EXPIRED/
FORFEITED
30 JUNE 2020
–
–
–
–
219,031
219,031
219,031
657,095
–
–
–
–
–
–
–
–
219,031
219,031
219,031
657,095
1
Represents the relevant period of time to which both the performance vesting condition is measured and the period of time the recipient must remain employed with the Group.
The weighted average remaining contractual life of performance options outstanding at the end of the year was 4.4 years.
Vesting Conditions
1. Vesting Dates
Tranche 1 – 31 August 2020
Tranche 2 – 31 August 2021
Tranche 3 and Remainder Options – 31 August 2022
2. Vesting Conditions
Offer Earnings Per Share (EPS)
Reported EPS as at 30 June 2019 of 7.9c
Tranche 1
On the Tranche 1 Vesting Date, if the earnings per share (EPS) of the Company as at 30 June 2020 (Tranche 1 EPS) is:
(a) at least 10% (but less than 12.5%) higher than the Offer EPS, 50% of the Tranche 1 Options shall vest; or
(b) at least 12.5% (but less than 15%) higher than the Offer EPS, 75% of the Tranche 1 Options shall vest; or
(c) at least 15% higher than the Offer EPS, 100% of the Tranche 1 Options shall vest.
Tranche 2
On the Tranche 2 Vesting Date, if the earnings per share (EPS) of the Company as at 30 June 2021 (Tranche 2 EPS) is:
(a) at least 10% (but less than 12.5%) higher than the Tranche 1 EPS, 50% of the Tranche 2 Options shall Vest; or
(b) at least 12.5% (but less than 15%) higher than the Tranche 1 EPS, 75% of the Tranche 2 Options shall Vest; or
(c) at least 15% higher than the Tranche 1 EPS, 100% of the Tranche 2 Options shall Vest.
Tranche 3
On the Tranche 3 Vesting Date, if the earnings per share (EPS) of the Company as at 30 June 2022 (Tranche 3 EPS) is:
(d) at least 10% (but less than 12.5%) higher than Tranche 2 EPS, 50% of the Tranche 3 Options shall Vest; or
(e) at least 12.5% (but less than 15%) higher than the Tranche 2 EPS, 75% of the Tranche 3 Options shall Vest; or
(f ) at least 15% higher than the Tranche 2 EPS, 100% of the Tranche 3 Options shall Vest.
Additional vesting terms
Any Tranche 1 or 2 Options which did not vest on the Tranche 1 Vesting Date or Tranche 2 Vesting Date respectively
(Remainder Options) will vest on the Tranche 3 Vesting Date if the Tranche 3 EPS is at least 20% higher than the Tranche 2 EPS.
3. Expiry Date
5 years from the date the Options were issued.
96
Wagners Annual Report 2020
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 26 Share based payments (continued)
Fair value of performance rights granted
The assessed fair value at the date of grant of performance rights issued is determined using an option pricing model that takes into account the
exercise price, the underlying share price at the time of issue, the term of performance right, the underlying share’s expected volatility, expected
dividends and risk free interest rate for the expected life of the instrument.
The expected price volatility is based on the historic volatility, adjusted for any expected changes to future volatility due to publicly
available information.
The value of the performance rights were calculated using the inputs shown below:
INPUTS INTO PRICING MODEL
Grant Date
Exercise Price
Vesting Conditions
Share price at grant date
Expiry date
Life of the instruments
Underlying share price volatility
Expected dividends
Risk free interest rate
Pricing model
Fair value per instrument
TRANCHE 1
TRANCHE 2
TRANCHE 3
20 November 2019
20 November 2019
20 November 2019
$0.00
Refer above
$2.10
$0.00
Refer above
$2.10
$0.00
Refer above
$2.10
20 November 2024
20 November 2024
20 November 2024
5 years
50%
1%
0.71%
5 years
50%
1.7%
0.71%
5 years
50%
2.1%
0.71%
Black Scholes Model
Black Scholes Model
Black Scholes Model
$1.88
$1.83
$1.78
Wagners Annual Report 2020
97
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 27 Subsidiaries and controlled entities
The consolidated financial statements include the financial statements of Wagners Holding Company Limited and the following subsidiaries:
COUNTRY OF INCORPORATION
EQUITY HOLDING
30 JUNE 2020
%
30 JUNE 2019
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Malaysia
Malaysia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Mozambique
98.75%
98.75%
Malaysia
Mongolia
Mongolia
Australia
Australia
Australia
United States
United States
United States
United States
New Zealand
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
–
–
–
NAME OF ENTITY
Wagners Queensland Pty Ltd
Wagner Investments Pty Ltd
Wagners Flyash Pty Ltd
Wagners Australian Operations Pty Ltd
Wagners Concrete Pty Ltd
Wagners Quarries Pty Ltd
Wagners Transport Pty Ltd
Wagners Industrial Services Pty Ltd
Wagners Cement Pty Ltd
Wagners Charter Pty Ltd
Wagners International Operations Pty Ltd
Wagners Global Projects Sdn Bhd
Wagners Global Services (Malaysia) Sdn Bhd
Wagners Services Mozambique Limiteda
Wagners Global Ventures Sdn Bhd
Wagners Global Services Mongolia LLC
Wagners Concrete Mongolia LLC
Wagners Composite Fibre Technologies Pty Ltd
Wagners CFT Manufacturing Pty Ltd
Wagners EFC Pty Ltd
Wagner USA Holding Company
Wagners CFT LLC
Wagners Manufacturing LLC*
Wagners Property Holdings LLC*
Wagners Holding NZ Limited*
* Entities incorporated during the financial year
98
Wagners Annual Report 2020
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020 28 Capital and leasing commitments
(a) Chattel mortgage commitments
Commitments for minimum chattel mortgage payments payable are as follows:
Minimum payments
Within twelve months
Between twelve months and five years
Total minimum payments
Less: future finance charges
Present value of minimum payments
Current liability
Non-current liability
(b) Operating lease commitments
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within twelve months
Between twelve months and five years
Greater than five years
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
12,235
11,606
23,841
(917)
22,924
11,665
11,259
22,924
9,216
7,979
17,195
(773)
16,422
8,673
7,749
16,422
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
–
–
–
–
4,725
17,138
111,312
133,175
The Group leases various properties under non-cancellable operating leases, the property leases have varying terms, clauses and renewal rights. From
1 July 2019, in line with AASB 16 Leases, the Group recognised right-of-use assets for the operating leases outstanding from the prior financial year
(see Note 10).
(c) Capital expenditure commitments
Capital expenditure commitments contracted for but not recognised as liabilities at the end of the financial year is as follows:
Within twelve months
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
487
776
Wagners Annual Report 2020
99
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020
29 Contingent assets and liabilities
The Group enters into arrangements in the normal course of business, whereby it is required to supply a performance guarantee to its customers.
These guarantees are provided in the form of performance bonds issued by the Group’s financial institution or insurance company.
The probability of having to make a payment in respect to these performance bonds is considered to be highly unlikely. As such, no provision has been
made in the consolidated financial statements in respect of these contingencies.
30 Auditor’s remuneration
During the financial year the following fees were paid or are payable to the Groups auditor:
BDO AUDIT PTY LTD & RELATED COMPANIES
Audit services
Audit and review of financial statements – BDO Audit Pty Ltd
Total audit services
Non-audit services
Taxation services – BDO (QLD) Pty Ltd
Total non-audit services
Total amount paid or payable to auditor
CONSOLIDATED GROUP
30 JUN 2020
$’000
30 JUN 2019
$’000
225,302
217,448
225,302
217,448
13,000
13,000
–
–
238,302
217,448
31 Parent entity financial information
The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian
Accounting Standards.
STATEMENT OF FINANCIAL POSITION
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Distribution to related entities
Reserves
Retained earnings
Total equity
Statement of profit or loss and other comprehensive income
Total profit for the financial year
Total comprehensive income for the financial year
100
Wagners Annual Report 2020
30 JUN 2020
$’000
30 JUN 2019
$’000
241
127,077
127,318
18,609
6,691
25,490
1,056
73,804
74,860
7,497
4,758
12,255
410,915
371,334
(355,010)
(355,010)
112
46,001
101,828
(280)
(280)
–
46,281
62,605
1,907
1,907
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020
31 Parent entity financial information (Continued)
(a) Contingent assets and liabilities
The parent entity does not have any contingent assets or liabilities as at 30 June 2020.
(b) Guarantees entered into by the parent entity
The parent entity has not entered into any guarantees.
(c) Contractual commitments for the acquisition of property, plant or equipment
The parent entity had no contractual commitments for the acquisition of property, plant or equipment (2019: $nil).
32 Business combinations
Shepton Quarry acquisition
On 19 June 2020, the Group acquired 100% of the interests of the Shepton Quarry from Central Highlands Regional Council. The quarry is located in
Capella, Central Queensland and enables the Group to expand its presence in the Central Queensland minerals province.
(i) Details of the purchase consideration are as follows:
Purchase consideration
Cash paid
Deferred payment
Total purchase consideration
(ii) The assets and liabilities recognised as a result of the acquisition are as follows:
Inventories
Property, plant & equipment
Deferred tax liability
Net assets acquired
Gain on bargain purchase
$’000
2,050
1,992
4,042
NOTE
FAIR VALUE
$’000
157
4,274
(34)
4,397
355
3
(iii) During the period from acquisition to 30 June 2020, Shepton Quarry contributed revenues of $579,000 and earnings before interest and tax of
$374,793. If the acquisition had occurred on 1 July 2019, revenue and earnings before interest and tax for the period ended would have been
$4,629,000 and $635,000 respectively. These amounts have been calculated using information provided by the vendors and adjusted for:
–
–
any differences in accounting policies; and
any additional depreciation or amortisation that would have been charged assuming the fair value of each asset had applied from 1 July 2019.
(iv) Acquisition related costs of $216,000 in respect of this acquisition is included in other expenses in the profit or loss.
33 Events occurring after the reporting period
To the Directors' best knowledge, there has not arisen in the interval between 30 June 2020 and the date of this report any item, any other transaction
or event of a material and unusual nature that will, or may, significantly affect the operations of the Group.
In addition, while the COVID-19 situation remains concerning, between 30 June 2020 the date of this report, there has been no COVID-19 impacts on
the operations of the Group. However, due to the fluid nature of this pandemic the Group will continue to monitor the unfolding situation and adjust
operations for minimal impacts where required.
Wagners Annual Report 2020
101
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2020
Directors’
declaration
In accordance with a resolution of the directors of Wagners Holding Company Limited, the directors of the Company declare that:
(a) the consolidated financial statements and notes, as set out on pages 61 to 101, are in accordance with the Corporations Act 2001, including:
i.
ii.
complying with the Corporations Regulations 2001 and Australian Accounting Standards and Interpretations, which, as stated in accounting
policy Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards; and
giving a true and fair view of the consolidated Group’s financial position as at 30 June 2020 and of its performance for the financial year ended
on that date; and
(b) 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; and
(c)
the directors have been given the declarations required by s295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial
Officer, for the financial year ended 30 June 2019.
Mr Denis Wagner
Chairman
Dated at Toowoomba, Queensland on 25 August 2020.
102
Wagners Annual Report 2020
Independent
auditor's report
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Wagners Holding Company Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Wagners Holding Company Limited (the Company) and its
subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30
June 2020, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, and notes to the financial report, including a summary of significant accounting policies
and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report 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.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a
UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme
approved under Professional Standards Legislation.
Wagners Holding Company Limited | Independent auditor’s report
Page | 88
Wagners Annual Report 2020
103
Independent
auditor's report
Revenue recognition and measurement
Key audit matter
How the matter was addressed in our audit
The Group’s disclosures about revenue recognition
are included in Note 1(c) and Note 3, which details
the accounting policies applied and disclosures
relating to AASB 15 Revenue from Contracts with
Customers.
The assessment of revenue recognition was
significant to our audit because revenue is a
material balance in the financial statements for
the year ended 30 June 2020.
The assessment of revenue recognition and
measurement required significant auditor effort.
Our procedures included, amongst others:
Assessing the revenue recognition policy for
compliance with AASB 15 Revenue from Contracts
with Customers
Documenting the processes and assessing the
internal controls relating to revenue processing
and recognition
Tracing a sample of revenue transactions to
supporting documentation
Performing substantive analytical procedures on
the monthly sales for each material component
Assessing the adequacy of the Group's disclosures
within the financial statements
Other information
The directors are responsible for the other information. The other information comprises the
information contained in the Annual Financial Report for the year ended 30 June 2020, but does not
include the financial report and our auditor’s report thereon, which we obtained prior to the date of
this auditor’s report, and the Annual Report, which is expected to be made available to us after that
date.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed on the other information that we obtained prior to the date
of this auditor’s report, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to the directors and will request that it is corrected. If it is not
corrected, we will seek to have the matter appropriately brought to the attention of users for whom
our report is prepared.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a
UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme
approved under Professional Standards Legislation.
104
Wagners Holding Company Limited | Independent auditor’s report
Wagners Annual Report 2020
Page | 89
Independent
auditor's report
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 18 to 29 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of Wagners Holding Company Limited, for the year ended 30
June 2020, 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.
BDO Audit Pty Ltd
C K Henry
Director
Brisbane, 25 August 2020
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a
UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme
approved under Professional Standards Legislation.
Wagners Holding Company Limited | Independent auditor’s report
Wagners Annual Report 2020
Page | 90
105
Additional
Information
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this report is set out below.
The information is current as at 31 August 2020 unless stated otherwise.
Distribution Schedule As Of 31 August 2020
RANGE
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Rounding
Total
TOTAL HOLDERS
UNITS
% UNITS
1,290
2,684
1,211
1,278
85
731,489
7,526,305
8,967,649
31,950,640
138,020,804
0.39
4.02
4.79
17.07
73.73
0.00
6,548
187,196,887
100.00
Shares and Voting Rights
All 187,196,887 shares in the Company are ordinary shares, held by 6,548 shareholders (as at 31 August 2020). Voting rights for ordinary shares are:
» On a show of hands, one vote for each shareholder
» On a poll, one vote for each fully paid ordinary share.
Option holders have no rights until the options are exercised. There is no current on-market buy-back.
Substantial Shareholders
The following information is extracted from the Company’s Register of Substantial Shareholders as at 31 August 2020 and as disclosed in substantial
notices to the ASX and Company.
NAME
Denis Wagner
John Wagner
Neill Wagner
Joe Wagner
Wagner Property Operations Pty Ltd.
UNMARKETABLE PARCELS
Minimum $ 500.00 parcel at $ 1.1400 per unit
DATE OF LAST NOTICE
RECEIVED
NUMBER OF ORDINARY
SHARES
% OF ISSUED CAPITAL
15 December 2017
15 December 2017
15 December 2017
15 December 2017
25 November 2019
102,957,631
103,248,014
102,957,631
102,957,631
14,201,056
55%
55.15%
55%
55%
7.58%
MINIMUM PARCEL SIZE
HOLDERS
UNITS
439
468
101,921
106
Wagners Annual Report 2020
Additional
Information
Top 20 Shareholders (as at 31 August 2020)
RANK
NAME
SHARES
% SHARES
1
1
1
1
5
6
7
8
9
10
11
12
13
14
15
16
16
18
19
20
DENIS PATRICK WAGNER
JOHN HENRY WAGNER
JOSEPH DOYLE WAGNER
NEILL THOMAS WAGNER
WAGNER PROPERTY OPERATIONS PTY LTD
CITICORP NOMINEES PTY LIMITED
CS THIRD NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ARCHERFIELD AIRPORT CORPORATION PTY LTD
JOHN WAGNER INVESTMENTS PTY LTD
NETWEALTH INVESTMENTS LIMITED
NATIONAL NOMINEES LIMITED
BRAZIL FARMING PTY LTD
DENIS WAGNER INVESTMENTS PTY LTD
NEILL WAGNER INVESTMENTS PTY LTD
NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT>
JOE WAGNER INVESTMENTS PTY LTD
MR MARK WILLIAM LEONARD
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES
Total Remaining Holders Balance
UNQUOTED OPTIONS
There are 8 holders of 657,095 unvested unquoted options.
21,321,928
21,321,928
21,321,928
21,321,928
14,201,056
8,190,572
3,086,397
2,476,587
1,831,456
1,776,983
1,100,000
1,091,447
1,020,297
1,013,172
1,007,974
801,064
801,064
722,306
642,643
640,000
11.39
11.39
11.39
11.39
7.59
4.38
1.65
1.32
0.98
0.95
0.59
0.58
0.55
0.54
0.54
0.43
0.43
0.39
0.34
0.34
125,690,730
61,506,157
67.16
32.84
Wagners Annual Report 2020
107
Corporate
Directory
Directors
Denis Wagner, Non-executive Chairman
John Wagner, Non-executive Director
Lynda O’Grady, Non-executive Director
Ross Walker, Non-executive Director
Company Secretary
Karen Brown
Registered office
Level 10, 12 Creek Street
Brisbane QLD 4000
Principal place of business
11 Ballera Ct, 1511 Toowoomba-Cecil Plains Road
Wellcamp QLD 4350
Share register
Computershare Investor Services Ltd
Auditor
BDO Audit Pty Ltd
Solicitors
McCullough Robertson Lawyers
Bankers
National Australia Bank Limited
HSBC Bank Australia Limited
Australian and New Zealand Banking Group Limited
Stock exchange listing
Wagners Holding Company Limited shares
are listed on the ASX (code: WGN)
Website
www.wagner.com.au
Corporate Governance Statement
The Company’s Corporate Governance Statement for the financial
year ended 30 June 2020 is available to download and access from
https://investors.wagner.com.au/corporate-governance/
108
Wagners Annual Report 2020
Townsville CFT boardwalk, QLD.
Postal Address
PO Box 151
Drayton North
Toowoomba QLD 4350, Australia
Street Address
11 Ballera Ct
1511 Toowoomba-Cecil Plains Rd
Wellcamp QLD 4350
Telephone +61 7 4637 7777
Fax +61 7 4637 7778
ACN 622 632 848
www.wagner.com.au